424B5 1 file1.htm

Filed Pursuant to Rule 424(b)(5)
Registration Statment No. 333-134553

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The information in this preliminary pricing supplement is not complete and may
be changed. This preliminary pricing supplement and the accompanying prospectus
supplements and prospectus are not an offer to sell these securities and we are
not soliciting an offer to buy these securities in any jurisdiction where the
offer or sale is not permitted.

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SUBJECT TO COMPLETION, DATED OCTOBER 5, 2006

PRELIMINARY PRICING SUPPLEMENT
to Prospectus Supplement dated October 5, 2006
to Prospectus Supplement dated May 30, 2006
and Prospectus dated May 30, 2006

$26,000,000
LEHMAN BROTHERS HOLDINGS INC.
MEDIUM-TERM NOTES, SERIES I
0.25% Notes Due October 12, 2011
Performance Linked to the iShares(R) S&P Global
Financials Sector Index Fund ("IXG")

Because these notes are part of a series of Lehman Brothers Holdings' debt
securities called Medium-Term Notes, Series I, this preliminary pricing
supplement and the accompanying prospectus supplement, dated October 5, 2006
(the "synthetic convertible prospectus supplement") should also be read with the
accompanying prospectus supplement, dated May 30, 2006 (the "MTN prospectus
supplement") and the accompanying prospectus dated May 30, 2006 (the "base
prospectus"). Terms used here have the meanings given them in the synthetic
convertible prospectus supplement, the MTN prospectus supplement or the base
prospectus, unless the context requires otherwise.

o EXCHANGE TRADED FUND: iShares(R) S&P Global Financials Sector Index Fund.
iShares(R) S&P Global Financials Sector Index Fund is not involved in this
offering and has no obligation with respect to the notes.

o PRINCIPAL AMOUNT: $1,000 per note, and in the aggregate, $26,000,000.

o STATED MATURITY DATE: October 12, 2011, subject to postponement if the
valuation date is postponed.

o VALUATION DATE RELATED TO THE STATED MATURITY DATE: October 6, 2011,
subject to postponement if a market disruption event occurs or if such day
is not a scheduled trading day, as described under the caption "Description
of the Notes-Settlement value" on page SS-18 of the synthetic convertible
prospectus supplement.

o INTEREST RATE: 0.25% per annum.

o INTEREST PAYMENT DATES: April 12 and October 12 of each year, beginning on
April 12, 2007.

o INTEREST PAYMENT RECORD DATES: 15 calendar days prior to each interest
payment date.

o THRESHOLD VALUE: $88.5911, which is 104.52% of $84.76. $84.76 is the
average execution price per share that an affiliate of Lehman Brothers
Holdings paid to hedge Lehman Brothers Holdings' obligations under the
notes.

o EARLIEST REDEMPTION DATE: October 4, 2009.

o REDEMPTION NOTICE PERIOD: 30 calendar days.

o OPTIONAL REPURCHASE NOTICE PERIOD: Eight business days.

o DETERMINATION PERIOD: Three business days.

o MULTIPLIER: The initial multiplier for the shares of iShares(R) S&P Global
Financials Sector Index Fund is 1.00. The multiplier is subject to
adjustment under various circumstances and during various dividend
adjustment periods, as described under the caption "Description of the
Notes-Adjustments to multipliers and to securities included in the
calculation of the settlement value" on page SS-19 of the synthetic
convertible prospectus supplement, including if iShares(R) S&P Global
Financials Sector Index Fund pays an annual cash dividend of more or less
than the base dividend of $1.20 per share on its shares. The effective
adjustment date for adjusting the multiplier will be the first business day
immediately following the 30th day of each June and the valuation date, as
applicable.

o STOCK SETTLEMENT: Yes, upon exercise by the holder of the repurchase option
and at the option of Lehman Brothers Holdings at maturity, all as described
under the caption "Description of the Notes-Stock settlement" on page SS-18
of the synthetic convertible prospectus supplement. Lehman Brothers
Holdings will provide the trustee with written notice no later than the
valuation date related to the stated maturity date if it elects the stock
settlement option.

o DENOMINATIONS: $1,000 and whole multiples of $1,000.

o LISTING: The notes will not be listed on any exchange.

o CUSIP NO.: 524908TX8

o ISIN NO.: US524908TX85

Investing in the notes involves risks. Risk Factors begin on page SS-6
of the synthetic convertible prospectus supplement.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
preliminary pricing supplement, any accompanying prospectus supplement or any
accompanying prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.

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Per Note Total
-------- -----------
Public offering price.................................. 100.00% $26,000,000
Underwriting discount.................................. 0.25% $ 65,000
Proceeds to Lehman Brothers Holdings................... 99.75% $25,935,000

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Lehman Brothers Holdings has granted the underwriter an option to purchase,
within 13 days of the original issuance, up to an additional $3,900,000
aggregate principal amount of notes on the same terms and conditions set forth
above solely to cover over-allotments, if any.

The notes are expected to be ready for delivery in book-entry form only through
The Depository Trust Company on or about October 12, 2006.

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LEHMAN BROTHERS

[_____], 2006

iShares(R) is a registered mark of Barclays Global Investors, N.A. ("BGI"). BGI
has licensed certain trademarks and trade names of BGI to Lehman Brothers
Holdings Inc. The notes are not sponsored, endorsed, sold, or promoted by BGI.
BGI makes no representations or warranties to the owners of the notes or any
member of the public regarding the advisability of investing in the notes. BGI
has no obligation or liability in connection with the operation, marketing,
trading or sale of the notes.

EXAMPLES OF AMOUNT PAYABLE AT MATURITY OR UPON REDEMPTION OR REPURCHASE

Here are two examples of hypothetical alternative redemption amount
calculations. In each of these examples, it is assumed that (a) during the term
of the notes iShares(R) S&P Global Financials Sector Index Fund does not change
the amount of the annual cash dividends that it pays on its shares and (b) the
threshold value is $88.5911.

EXAMPLE 1. ASSUMING THE SETTLEMENT VALUE IS $70.00:

Alternative redemption amount per $1,000 note =

$70.00
$1,000 x -------- = $790.14
$88.5911

As a result, on the maturity date or upon redemption, you would receive $1,000,
plus accrued but unpaid interest, per $1,000 note because $1,000 is greater than
$790.14.

In the case of stock settlement on the stated maturity date or upon repurchase
in this example, you would receive, if you held a $1,000 note, 14 shares of
iShares(R) S&P Global Financials Sector Index Fund plus $20.00 in cash, plus
accrued but unpaid interest, at maturity, or 11 shares of the exchange traded
fund plus $20.14 in cash, plus accrued but unpaid interest, upon repurchase. To
the extent that you hold more than $1,000 aggregate principal amount of notes,
the calculations of cash payments in lieu of fractional shares would be made on
an aggregate, rather than on a per $1,000 note, basis. For example, if you held
$26,000,000 aggregate principal amount of notes, you would receive, in total,
371,428 shares of iShares(R) S&P Global Financials Sector Index Fund plus $40.00
in cash, plus accrued but unpaid interest, at maturity, or 293,480 shares of
iShares(R) S&P Global Financials Sector Index Fund plus $40.00 in cash, plus
accrued but unpaid interest, upon repurchase.

EXAMPLE 2. ASSUMING THE SETTLEMENT VALUE IS $100.00:

Alternative redemption amount per $1,000 note =

$100.00
$1,000 x -------- = $1,128.78
$88.5911

As a result, on the maturity date or upon redemption, you would receive
$1,128.78, plus accrued but unpaid interest, per $1,000 note because $1,128.78
is greater than $1,000.

In the case of stock settlement on the stated maturity date or upon repurchase
in this example, you would receive, if you held a $1,000 note, 11 shares of
iShares(R) S&P Global Financials Sector Index Fund plus $28.78 in cash, plus
accrued but unpaid interest, at maturity or upon repurchase. To the extent that
you hold more than $1,000 aggregate principal amount of notes, the calculations
of cash payments in lieu of fractional shares would be made on an aggregate,
rather than on a per $1,000 note, basis. For example, if you held $26,000,000
aggregate principal amount of notes, you would receive, in total, 293,482 shares
of iShares(R) S&P Global Financials Sector Index Fund plus $80.00 in cash, plus
accrued but unpaid interest, at maturity or upon repurchase.

To the extent the actual settlement value or threshold value differs from the
values assumed above or that iShares(R) S&P Global Financials Sector Index Fund
changes the amount of the annual cash dividends it pays on its shares, the
results indicated above would be different.

PS-1

THE EXCHANGE TRADED FUND

iSHARES(R) S&P GLOBAL FINANCIALS SECTOR INDEX FUND

Lehman Brothers Holdings obtained all information contained in this preliminary
pricing supplement regarding the iShares(R) S&P Global Financials Sector Index
Fund from publicly available information.

The iShares(R) S&P Global Financials Sector Index Fund is issued by iShares(R)
Trust, a registered investment company. Barclays Global Fund Advisors ("BGFA")
is the investment advisor to the iShares(R) S&P Global Financials Sector Index
Fund. The iShares(R) S&P Global Financials Sector Index Fund seeks investment
results that correspond generally to the price and yield performance, before
fees and expenses, of the S&P Global Financials Sector Index (the "Index").

The iShares(R) S&P Global Financials Sector Index Fund uses a representative
sampling strategy to try to track the Index. In order to improve its portfolio
liquidity and its ability to track the Index, the iShares(R) S&P Global
Financials Sector Index Fund may invest up to 10% of its assets in shares of
other iShares(R) Funds that seek to track the performance of equity securities
of constituent countries of the Index. BGFA will not charge portfolio management
fees on that portion of the iShares(R) S&P Global Financials Sector Index Fund's
assets invested in shares of other iShares(R) Funds.

For additional information regarding iShares(R) Trust, BGFA, the iShares(R) S&P
Global Financials Sector Index Fund, and the risk factors attributable to the
iShares(R) S&P Global Financials Sector Index Fund, please see the relevant
portion of the Prospectus, dated January 1, 2006 (as revised March 8, 2006),
filed as Definitive Materials on Form 497 with the SEC on March 8, 2006 under
the Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended (File No. 033-97598). Information provided to or filed with the
SEC can be inspected and copied at the public reference facilities maintained by
the SEC or through the SEC's website at www.sec.gov. In addition, information
regarding the iShares(R) S&P Global Financials Sector Index Fund, including its
top portfolio holdings, may be obtained from other sources including, but not
limited to, press releases, newspaper articles, other publicly disseminated
documents, and the iShares(R) website at www.ishares.com.

THE S&P GLOBAL FINANCIALS SECTOR INDEX

The S&P Global Financials Sector Index measures the performance of companies
that Standard & Poor's deems to be part of the financial sector of the economy
and that Standard & Poor's believes are important to global markets. It is a
subset of the Standard & Poor's Global 1200 Index. The S&P Global Financials
Sector Index's component companies include major banks, diversified financial
companies, insurance companies, real estate companies, savings and loan
associations, and securities brokers. As of the close of business on May 31,
2006, the S&P Global Financials Sector Index was comprised of stocks of
companies in the following countries: Argentina, Australia, Austria, Belgium,
Brazil, Canada, Chile, Denmark, Finland, France, Germany, Greece, Hong Kong,
Ireland, Italy, Japan, South Korea, Netherlands, Norway, Portugal, Singapore,
Spain, Sweden, Switzerland, Taiwan, the United Kingdom and the United States.

REPRESENTATIVE SAMPLING

BGFA, as the investment advisor to the iShares(R) S&P Global Financials Sector
Index Fund, employs a technique known as representative sampling to track the
S&P Global Financials Sector Index. Representative sampling is a strategy in
which a fund invests in a representative sample of stocks in its underlying
index, which have a similar investment profile as the underlying index. Stocks
selected have aggregate investment characteristics (based on market
capitalization and industry weightings), fundamental characteristics, and
liquidity measures similar to those of the relevant underlying index. Funds that
use representative sampling generally do not hold all of the stocks that are
included in the relevant underlying index.

CORRELATION

The iShares(R) S&P Global Financials Sector Index Fund is an actual investment
portfolio. The performance of the iShares(R) S&P Global Financials Sector Index
Fund and the S&P Global Financials Sector Index will vary somewhat due to
transaction costs, market impact, corporate actions (such as mergers and
spin-offs), and timing variances. A figure of 100% would indicate perfect
correlation. Any correlation of less than 100% is called "tracking error." The
iShares(R) S&P Global Financials Sector Index Fund, using representative
sampling, can be expected to have a greater tracking error than a fund

PS-2

using replication. Replication is a strategy in which a fund invests in
substantially all of the securities in its underlying index in approximately the
same proportions as in the underlying index.

INDUSTRY CONCENTRATION POLICY

The iShares(R) S&P Global Financials Sector Index Fund will not concentrate its
investments (i.e., hold 25% or more of its total assets), in a particular
industry or group of industries, except that the iShares(R) S&P Global
Financials Sector Index Fund will concentrate its investments to approximately
the same extent that the S&P Global Financials Sector Index is so concentrated.

HISTORICAL INFORMATION ABOUT THE EXCHANGE TRADED FUND

You can obtain the prices of the iShares(R) S&P Global Financials Sector Index
Fund at any time from the Bloomberg(R) service under the symbol "IXG". The
shares of the iShares(R) S&P Global Financials Sector Index Fund trade on the
American Stock Exchange LLC under the symbol "IXG".

The following table presents the high and low closing prices of the iShares(R)
S&P Global Financials Sector Index Fund during each quarter of 2003, 2004, 2005
and 2006 (through the business day immediately prior to the date of this
preliminary pricing supplement), and the closing price at the end of each
quarter of 2003, 2004, 2005 and 2006 (through the business day immediately prior
to the date of this preliminary pricing supplement).

The historical prices of the exchange traded fund are not necessarily indicative
of future performance. Lehman Brothers Holdings cannot assure you that the price
of the exchange traded fund will increase enough so that the alternative
redemption amount will be greater than or equal to $1,000.

All information in the table that follows was obtained from Bloomberg L.P.,
without independent verification.

PS-3

HIGH LOW PERIOD END
------ ------ ----------
2003
First Quarter ............. $45.85 $37.25 $40.10
Second Quarter............. $51.84 $41.15 $49.14
Third Quarter.............. $53.54 $49.14 $51.85
Fourth Quarter............. $58.34 $51.98 $58.34

2004
First Quarter ............. $62.74 $58.46 $60.94
Second Quarter............. $61.98 $54.66 $59.40
Third Quarter.............. $60.75 $56.45 $59.85
Fourth Quarter............. $67.04 $58.95 $66.95

2005
First Quarter ............. $67.60 $63.66 $64.04
Second Quarter ............ $65.69 $62.35 $65.10
Third Quarter.............. $69.16 $63.60 $68.70
Fourth Quarter............. $75.44 $66.30 $73.53

2006
First Quarter ............. $80.00 $73.38 $79.23
Second Quarter ............ $84.40 $73.02 $78.75
Third Quarter.............. $84.26 $75.07 $84.25
Fourth Quarter (through the
business day immediately
prior to the date of
this preliminary pricing
supplement)............. $85.53 $83.78 $85.53

LICENSE AGREEMENT BETWEEN BGI AND LEHMAN BROTHERS HOLDINGS

We have entered into a non-exclusive license agreement with BGI pursuant to
which BGI has licensed us the right to use the iShares(R) mark in connection
with the iShares(R) S&P Global Financials Sector Index Fund.

The license agreement between us and BGI requires that the following language be
stated in the pricing supplement:

PS-4

HYPOTHETICAL RETURNS

The table below illustrates, for a range of hypothetical settlement values
calculated on the valuation date, in each case assuming that (a) the investment
is held from the date on which the notes are first issued until the stated
maturity date, (b) iShares(R) S&P Global Financials Sector Index Fund does not
change the amount of the annual cash dividend that it pays on its shares and (c)
the threshold value is $88.5911:

o the hypothetical alternative redemption amount per $1,000 note;

o the percentage change from the principal amount to the hypothetical
alternative redemption amount;

o the hypothetical total amount payable on the stated maturity date per
$1,000 note (without interest);

o the hypothetical total rate of return (without interest);

o the hypothetical annualized pre-tax rate of return (without interest);

o the hypothetical total rate of return (including interest); and

o the hypothetical annualized pre-tax rate of return (including interest).

PERCENTAGE CHANGE HYPOTHETICAL TOTAL HYPOTHETICAL HYPOTHETICAL
HYPOTHETICAL FROM THE PRINCIPAL AMOUNT PAYABLE ON HYPOTHETICAL ANNUALIZED HYPOTHETICAL ANNUALIZED
HYPOTHETICAL ALTERNATIVE AMOUNT TO THE THE STATED TOTAL RATE PRE-TAX RATE TOTAL RATE OF PRE-TAX RATE
SETTLEMENT REDEMPTION HYPOTHETICAL MATURITY DATE PER OF RETURN OF RETURN RETURN OF RETURN
LEVEL ON THE AMOUNT PER ALTERNATIVE $1,000 NOTE (WITHOUT (WITHOUT (INCLUDING (INCLUDING
VALUATION DATE $1,000 NOTE REDEMPTION AMOUNT (WITHOUT INTEREST) INTEREST) INTEREST) INTEREST) INTEREST)
-------------- ------------ ------------------ ------------------ ------------ ------------ ------------- ------------

$ 70.00 $ 790.14 -20.99% $1,000.00 0.00% 0.00% 1.25% 0.25%
75.00 846.58 -15.34 1,000.00 0.00 0.00 1.25 0.25
80.00 903.02 -9.70 1,000.00 0.00 0.00 1.25 0.25
85.00 959.46 -4.05 1,000.00 0.00 0.00 1.25 0.25
88.5911 (1) 1,000.00 0.00 1,000.00 0.00 0.00 1.25 0.25
90.00 1,015.90 1.59 1,015.90 1.59 0.32 2.84 0.56
95.00 1,072.34 7.23 1,072.34 7.23 1.41 8.48 1.64
100.00 1,128.78 12.88 1,128.78 12.88 2.45 14.13 2.68

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(1) This figure reflects the threshold value.

The above figures are for purposes of illustration only. The actual amount
received by investors and the resulting total and pre-tax rates of return will
depend entirely on the actual settlement value determined by the calculation
agent. In particular, the actual settlement value could be lower or higher than
those reflected in the table.

The table above only provides hypothetical return information with regard to
notes held to maturity. It is not applicable in the case of notes repurchased or
redeemed prior to the stated maturity date.

You should compare the features of the notes to other available investments
before deciding to purchase the notes. Due to the uncertainty as to whether the
alternative redemption amount, at stated maturity or in connection with a
repurchase or redemption, will be greater than $1,000 per $1,000 note or whether
the notes will be redeemed prior to the stated maturity date, the return on
investment with respect to the notes may be higher or lower than the return
available on other securities issued by Lehman Brothers Holdings or by others
and available through Lehman Brothers Inc. You should reach an investment
decision only after carefully considering the suitability of the notes in light
of your particular circumstances.

PS-5

SUPPLEMENTAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

Lehman Brothers Holdings is required to provide the comparable yield to you and,
solely for tax purposes, is also required to provide a projected payment
schedule that includes the actual interest payments on the notes and estimates
the amount and timing of contingent payments on the notes. Lehman Brothers
Holdings will not determine the actual comparable yield of the notes until they
are issued. You can obtain the comparable yield of the notes and the projected
payment schedule by submitting a written request for them to Lehman Brothers
Holdings at the following address:

Controller's Office
Lehman Brothers Holdings Inc.
745 Seventh Avenue
New York, New York 10019
(212) 526-7000

Lehman Brothers Holdings agrees and, by purchasing a note, you agree, for United
States federal income tax purposes, to be bound by Lehman Brothers Holdings'
determination of the comparable yield and projected payment schedule. As a
consequence, for United States federal income tax purposes, you must use the
comparable yield determined by Lehman Brothers Holdings and the projected
payments set forth in the projected payment schedule prepared by Lehman Brothers
Holdings in determining your interest accruals, and the adjustments thereto, in
respect of the notes.

PS-6

SUPPLEMENTAL PLAN OF DISTRIBUTION

Lehman Brothers Holdings has agreed to sell to Lehman Brothers Inc. and Lehman
Brothers Inc. has agreed to purchase, all of the notes at the price indicated on
the cover of this preliminary pricing supplement.

Lehman Brothers Holdings has agreed to indemnify Lehman Brothers Inc. against
liabilities, including liabilities under the Securities Act of 1933, as amended,
or to contribute to payments that Lehman Brothers Inc. may be required to make
relating to these liabilities as described in the MTN prospectus supplement and
the base prospectus.

Lehman Brothers Inc. will offer the notes initially at a public offering price
equal to the issue price set forth on the cover of this preliminary pricing
supplement. After the initial public offering, the public offering price may
from time to time be varied by Lehman Brothers Inc.

Lehman Brothers Holdings has granted to Lehman Brothers Inc. an option to
purchase, at any time within 13 days of the original issuance of the notes, up
to $3,900,000 additional aggregate principal amount of notes solely to cover
over-allotments. To the extent that the option is exercised, Lehman Brothers
Inc. will be committed, subject to certain conditions, to purchase the
additional notes. If this option is exercised in full, the total public offering
price, the underwriting discount and proceeds to Lehman Brothers Holdings would
be $29,900,000, $74,750 and $29,825,250, respectively.

Lehman Brothers Holdings expects to deliver the notes against payment on or
about October 12, 2006, which is the fifth business day following the date of
this preliminary pricing supplement.

Under Rule 15c6-1 of the Exchange Act, trades in the secondary market generally
are required to settle in three business days, unless the parties to any such
trade expressly agree otherwise. Accordingly, if any purchaser wishes to trade
the notes on the date of the pricing supplement, it will be required, by virtue
of the fact that the notes initially will settle on the fifth business day
following the date of the pricing supplement, to specify an alternate settlement
cycle at the time of any such trade to prevent a failed settlement.

Lehman Brothers Holdings or an affiliate has entered into swap agreements or
related hedge transactions with one of Lehman Brothers Holdings' other
affiliates or unaffiliated counterparties in connection with the sale of the
notes and Lehman Brothers Inc. and/or an affiliate has earned additional income
as a result of payments pursuant to the swap, or related hedge transactions.

PS-7



                                   $26,000,000

                          LEHMAN BROTHERS HOLDINGS INC.

                           MEDIUM-TERM NOTES, SERIES I

                        0.25% NOTES DUE OCTOBER 12, 2011
                            PERFORMANCE LINKED TO THE
           iSHARES(R) S&P GLOBAL FINANCIALS SECTOR INDEX FUND ("IXG")

                                   ----------

                         PRELIMINARY PRICING SUPPLEMENT
                                 OCTOBER 5, 2006

                        (INCLUDING PROSPECTUS SUPPLEMENT
                             DATED OCTOBER 5, 2006,

                              PROSPECTUS SUPPLEMENT
                             DATED MAY 30, 2006 AND

                                   PROSPECTUS
                               DATED MAY 30, 2006)

                                   ----------

                                 LEHMAN BROTHERS