Actionable trade ideas for stock market investors and traders seeking alpha by overlaying their portfolios with options, other derivatives, ETFs, and disciplined and applied Game Theory for hedge fund managers and other active fund managers worldwide. Ryan Renicker, CFA

1. EQUITY RESEARCH
September 19, 2006 North America
Energy & Power
Power & Utilities Power & Utilities
Daniel Ford, CFA Ryan Renicker
Industry Overview
1.212.526.0836 1.212.526.9425
Derivative Strategy for Commodity Names daford@lehman.com rrenicke@lehman.com
Sector View:
New: 3-Negative
Old: 3-Negative
Investment conclusion
We expect near-term downside for utilities names exposed to natural gas prices - EXC, D, TXU, and NRG. However, we are
fundamentally bullish on these names over the medium term, on the basis of tightening U.S. power markets and Q406 shareholder
events. This piece reflects our collaboration with the Ryan Renicker's Equity Derivatives Team at Lehman Brothers.
Summary
We suggest two derivatives strategies that efficiently express this fundamental view with different risk-reward characteristics.
Purchasing Oct puts and Jan call spreads lets investors gain from any near-term lows and provides participation to any upside in the
fourth quarter and early next year.
An alternative strategy involving higher risk would buy Oct puts and 1x2 call spreads expiring in January. This reduces the initial premium
and provides greater leverage, but leaves investors short the upside beyond the near-term target price.
Investment Conclusion
We expect near-term downside for utilities names exposed to natural gas prices - EXC, D, TXU, and NRG. However, we are
fundamentally bullish over the medium term based on expected catalysts. We explore two derivatives strategies for
expressing this view using relatively cheap options on these names. The first strategy is to buy Oct puts and Jan 07 call
spreads. A higher risk alternative is purchasing Oct puts and Jan 1x2 call spreads, with the higher strike close to the interim
target.
Fundamental View
Our fundamental view is that these 4 companies are advantaged by tightening U.S. power markets coupled with shareholder
events in Q4'06 that should propel them at least halfway to our 12 month price targets by January. These catalysts include:
EXC: a 12/12 analyst meeting where we expect a dividend hike, share repurchase and 2007/2008 EPS guidance. Our 12
month target is $71 is premised upon applying a 15% premium to the integrated utilities group, or 14.3x our $4.97 estimate for
‘08. However, our interim target is $65 which reflects ½ of the potential upside to our 12 month target.
D: completion of strategic business review, potential structural changes announced. Our 12 month D price target of $79
reflects an integrated multiple of 11.2x our 2008 EPS estimate of $7.12. However, our interim target is $78 which reflects ½ of
the potential upside to our 12 month target.
Our long-term rating on D is a 2-Equal weight as we are skeptical on the timeliness of recognizing the strategic upside of the
assets, however, we believe that within the derivatives context detailed herein, particularly due to the near-term weakness in
gas prices, there is a buying opportunity.
Lehman Brothers does and seeks to do business with companies covered in its research reports. As a result, investors should
be aware that the firm may have a conflict of interest that could affect the objectivity of this report.
Customers of Lehman Brothers in the United States can receive independent, third-party research on the company or companies
covered in this report, at no cost to them, where such research is available. Customers can access this independent research at
www.lehmanlive.com or can call 1-800-2LEHMAN to request a copy of this research.
Investors should consider this report as only a single factor in making their investment decision.
PLEASE SEE ANALYST(S) CERTIFICATION(S) ON PAGE 5 AND IMPORTANT DISCLOSURES BEGINNING
ON PAGE 6
1

2. EQUITY RESEARCH
TXU: the likely air permit for a major power plant in Texas in mid-October followed by development company debt and equity
financing in Q4'06. Our 12 month TXU price target is $69, however, our interim target is $65 which reflects ½ of the potential
upside to our 12 month target.
More specifically, our 12 month target is premised upon the average of three valuation methodologies, which are: 14.9x the
Utility business and 17.7x the Energy Business plus a value of the retail business of $1,178 per customer which yields $63;
7.4x '07E EBITDA of $5.4B less $12.4B in debt which is $63; and a free cash yield of 7.9% on $2.8B in '07 which is $80.
NRG: investor meeting on 10/17 to review a generation development program. Our 12 month target is $59, however, our
interim target is $53 which reflects ½ of the potential upside to our 12 month target.
More specifically, our 12 month target for NRG reflects the average of four valuation methodologies following and $2/share of
NOLs NPV including: IPP average 7.5x 2008 EBITDA of $1.72B less $5.9B of net debt and 144M diluted shares; free cash
yield of 10.5% on $846M or $56; asset based values of $53 and Open EBITDA average of $2.35B 2008 EBITDA of 6.6x less
$6.0B of net debt.
Near-term this fundamental view is challenged by collapsing natural gas prices due to unprecedented storage levels, coupled
with lack of supply disruptions (hurricanes) and normal seasonal declines in usage. In similar past periods these stocks have
tracked gas down and corrected 10-15% notably in 10/05 and 5/06. We believe this trough could last until winter heating
season begins to ramp-up in November.
Based upon past patterns, we posit that the stocks could see lows of $59-$57 for TXU, $46-$43 for NRG, $57-$54 for EXC,
and $72-$68 for D. Figure 1 summarizes the key catalysts along with the expected downside and recovery target for each of
these stocks.
We would begin buying these stocks at the high end of the correction range and aggressively purchase at the bottom end.
Our point of view is backed by a long-term view of gas and power prices outlined in "Just the Beginning" 8/21/06.
Figure 1: Nat Gas Trade Milestones
Interim
Current Recovery
Stock 9/18/06 Downside Positive Catalysts Target
D $76.87 $72-$68 Strategic review announcements $78
EXC $58.73 $57-$54 Dividend hike, stock buyback, '07/'08 guidance $65
NRG $48.08 $46-$43 10/17 investor meeting in TX. $53
TXU $62.29 $59-$57 Air permit for TX plant and devco financing. $65
Source: Bloomberg, Lehman Brothers
Figure 2: Average Implied Vol for EXC, D, TXU andNRG
30%
28%
26%
24%
22%
20%
Avg 3m Implied Vol
18% Avg 1m Implied Vol
16%
06
06
06
6
06
06
06
06
06
l-0
p-
-
n-
n-
b-
-
g-
r-
ay
ar
Ju
Ja
Ju
Fe
Ap
Se
Au
M
M
Source: Bloomberg, Option Metrics
2

3. EQUITY RESEARCH
Implied Vols Still Fairly Low
Implied volatility for Utilities names has been rising concurrently with the sell-off over the last two weeks. Figure 2 shows that
average implied vols for these 4 stocks have been on the ascent over this period. However, these options are still trading
cheap relative to their vols since the beginning of the year. In the event of a near-term trough being attained, volatility could
rise even further, hence biasing us towards long option strategies.
We suggest two possible options strategies with different risk-reward profiles that efficiently express our fundamental view.
Strategy I: Oct Puts vs Jan Call Spreads
• Expectations of a near-term pullback merit purchasing short-dated puts expiring in October.
• Long call spreads expiring in January give participation to any potential upside in the later part of the fourth quarter
and early next year.
• We show the payoff from a strategy of buying TXU Oct 60 puts and TXU Jan 07 62.5-65 call spreads (Figure 3).
• The trade benefits from any downside below $60 as of the October expiration and gains from TXU rising to $65 by the
January expiration.
• The up-front premium is $2.15, or approximately 3.5% of TXU’s closing price last night. This represents the maximum
downside from the trade.
• Figure 4 shows the expiration payoff of the strategy for TXU, for different underlying prices as of the October 20th and
January 19th expirations.
• Per our fundamental expectations, if TXU retreats to $57 by October 20 and rallies back to $65 by January 19, the
trade stands to pay off $5.5 at expiration, over 250% of the initial premium.
Figure 3: Puts vs Call Spreads Payoff – TXU
6
5 Payoff (9/18/06)
4 Benefit from Payoff (10/20/06)
pullback till Oct Payoff (1/19/07)
3
Strategy Payoff
2
1
0
-1
-2
-3
50
52
54
56
58
60
62
64
66
68
70
72
74
76
78
80
TXU Price
Source: Bloomberg, Lehman Brothers
3

4. EQUITY RESEARCH
Figure 4: Strategy I P/L for TXU Under Different Scenarios
Maximum downside limited to Max gain if TXU retracts in near-term
premium paid and rallies before Jan
TXU Price as of Jan 07 Expiration
50 52 54 56 58 60 62 64 66 68 70
50 7.9 7.9 7.9 7.9 7.9 7.9 7.9 9.4 10.4 10.4 10.4
TXU Price as of Oct Expiration
52 5.9 5.9 5.9 5.9 5.9 5.9 5.9 7.4 8.4 8.4 8.4
54 3.9 3.9 3.9 3.9 3.9 3.9 3.9 5.4 6.4 6.4 6.4
56 1.9 1.9 1.9 1.9 1.9 1.9 1.9 3.4 4.4 4.4 4.4
58 -0.2 -0.2 -0.2 -0.2 -0.2 -0.2 -0.2 1.4 2.4 2.4 2.4
60 -2.2 -2.2 -2.2 -2.2 -2.2 -2.2 -2.2 -0.7 0.4 0.4 0.4
62 -2.2 -2.2 -2.2 -2.2 -2.2 -2.2 -2.2 -0.7 0.4 0.4 0.4
64 -2.2 -2.2 -2.2 -2.2 -2.2 -2.2 -2.2 -0.7 0.4 0.4 0.4
66 -2.2 -2.2 -2.2 -2.2 -2.2 -2.2 -2.2 -0.7 0.4 0.4 0.4
68 -2.2 -2.2 -2.2 -2.2 -2.2 -2.2 -2.2 -0.7 0.4 0.4 0.4
70 -2.2 -2.2 -2.2 -2.2 -2.2 -2.2 -2.2 -0.7 0.4 0.4 0.4
Source: Bloomberg, Lehman Brothers
Strategy II: Oct Puts vs Jan 1x2 Call Spreads
• A higher risk alternative to the previous strategy would be to purchase 1x2 call spreads expiring in January.
• This reduces the initial premium and provides greater leverage but leaves the investor short the upside beyond the
near-term target price.
• The strategy makes more sense for stocks with an upward sloping term structure of implied volatility, such as NRG.
• Figure 5 shows the payoff on different dates from a long position in NRG Oct 45 puts and NRG Jan 07 50-55 1x2 call
spreads.
• The initial cost of setting up the trade is $1.5, or about 3.1% of NRG’s closing price last night.
• Figure 6 shows the suggested strikes and breakevens for the other stocks. The upper is the price above which the
stock has to finish in order for the 1x2 call spreads to start losing.
Figure 5: Puts vs 1x2 Call Spreads Payoff – NRG
10
8 1x2 call spreads start losing
6 beyond upper breakeven
4
Strategy Payoff
2
0
-2
-4 Payoff (9/18/06)
-6 Payoff (10/20/06)
-8 Payoff (1/19/07)
-10
35
37
39
41
43
45
47
49
51
53
55
57
59
61
63
65
NRG Price
Source: Bloomberg, Lehman Brothers
4

5. EQUITY RESEARCH
Figure 6: Puts vs 1x2 Call Spreads Payoff – Suggested Strikes
Lower Upper
Net
Ticker Oct Leg Jan Leg Breakeven Breakeven
Premium
(Oct 06) (Jan 07)
D B 75 Put B 75-80 1x2 Call Spread 1.7 74.3 81.6
EXC B 60 Put B 60-65 1x2 Call Spread 3.05 58.1 71.35
NRG B 45 Put B 50-55 1x2 Call Spread 1.5 44.4 58.1
TXU B 60 Put B 60-65 1x2 Call Spread 0.9 59.1 66.3
Source: Bloomberg, Lehman Brothers
Analyst Certification:
We, Daniel Ford, CFA and Ryan Renicker, hereby certify (1) that the views expressed in this research Industry Note accurately reflect our
personal views about any or all of the subject securities or issuers referred to in this Industry Note and (2) no part of our compensation was,
is or will be directly or indirectly related to the specific recommendations or views expressed in this Industry Note.
Other Team Members:
Orrill, Gregg 1.212.526.0865 gorrill@lehman.com
Mallick, Devapriya 1.212.526.5429 dmallik@lehman.com
5

6. EQUITY RESEARCH
Important Disclosures:
Dominion Resources (D) US$ 77.16 (15-Sep-2006) 2-Equal weight / 3-Negative
Rating and Price Target Chart:
DOMINION RESOURCES
As of 29-Aug-2006
Currency = USD
96.00
94.00
92.00
90.00
88.00
86.00
84.00
82.00
80.00
78.00
76.00
74.00
72.00
70.00
68.00
66.00
64.00
62.00
60.00
58.00
56.00
8-03 11-03 2-04 5-04 8-04 11-04 2-05 5-05 8-05 11-05 2-06 5-06 8-06
Closing Price Price Target
Recommendation Change Drop Coverage
Source: FactSet
Currency=US$
Date Closing Price Rating Price Target Date Closing Price Rating Price Target
03-May-06 74.46 84.00 03-Aug-05 77.90 88.00
10-Mar-06 71.41 84.00 05-May-05 72.28 76.00
09-Mar-06 71.65 93.00 24-Nov-04 66.73 71.00
31-Jan-06 75.53 84.00 07-May-04 62.98 67.00
08-Nov-05 75.76 83.00
04-Nov-05 75.30 83.00
FOR EXPLANATIONS OF RATINGS REFER TO THE STOCK RATING KEYS LOCATED ON THE PAGE FOLLOWING THE LAST PRICE CHART.
Lehman Brothers Inc. and/or an affiliate has managed or co-managed within the past 12 months a 144A and/or public offering of securities
for Dominion Resources.
Lehman Brothers Inc. and/or an affiliate has received compensation for investment banking services from Dominion Resources in the past
12 months.
Lehman Brothers Inc. and/or an affiliate expects to receive or intends to seek compensation for investment banking services from Dominion
Resources within the next 3 months.
Lehman Brothers Inc and/or an affiliate trade regularly in the shares of Dominion Resources.
Lehman Brothers Inc. has received non-investment banking related compensation from Dominion Resources within the last 12 months.
Dominion Resources is or during the past 12 months has been an investment banking client of Lehman Brothers Inc. and/or an affiliate.
Dominion Resources is or during the last 12 months has been a non-investment banking client (securities related services) of Lehman
Brothers Inc.
Risks Which May Impede the Achievement of the Price Target: Dominion is exposed to the electricity, natural gas, and oil commodity
markets which can create earnings volatility.
Other Material Conflicts: Lehman Brothers is acting as financial advisor to Equitable Resources in connection with the potential
acquisition of Dominion Peoples and Dominion Hope from Dominion Resources
6

7. EQUITY RESEARCH
Important Disclosures Continued:
Exelon Corp (EXC) US$ 59.21 (15-Sep-2006) 1-Overweight / 3-Negative
Rating and Price Target Chart:
EXELON CORP
As of 29-Aug-2006
Currency = USD
68.00
64.00
60.00
56.00
52.00
48.00
44.00
40.00
36.00
32.00
28.00
24.00
20.00
16.00
12.00
8.00
4.00
0.00
8-03 11-03 2-04 5-04 8-04 11-04 2-05 5-05 8-05 11-05 2-06 5-06 8-06
Closing Price Price Target
Recommendation Change Drop Coverage
Source: FactSet
Currency=US$
Date Closing Price Rating Price Target Date Closing Price Rating Price Target
01-Aug-06 58.92 66.00 28-Jan-04 33.14 39.50
27-Apr-06 54.16 63.00 04-Dec-03 31.55 39.00
09-Feb-06 55.51 66.00 24-Nov-03 30.93 38.00
26-Jan-06 57.27 65.00 03-Nov-03 32.52 39.00
25-Jul-05 52.28 1-Overweight 23-Oct-03 31.95 40.00
25-Jul-05 52.28 65.00 03-Oct-03 32.06 39.50
20-Dec-04 43.05 0.00 29-Sep-03 31.85 39.00
17-Nov-04 41.11 45.00 18-Sep-03 31.45 38.50
18-Oct-04 37.73 41.00 12-Sep-03 30.36 38.00
07-May-04 32.34 40.00 13-Aug-03 29.79 36.50
27-Apr-04 33.36 39.50 06-Aug-03 29.30 36.00
29-Jan-04 33.33 40.50
FOR EXPLANATIONS OF RATINGS REFER TO THE STOCK RATING KEYS LOCATED ON THE PAGE FOLLOWING THE LAST PRICE CHART.
Lehman Brothers Inc. and/or an affiliate has received compensation for investment banking services from Exelon Corp in the past 12
months.
Lehman Brothers Inc and/or an affiliate trade regularly in the shares of Exelon Corp.
Exelon Corp is or during the past 12 months has been an investment banking client of Lehman Brothers Inc. and/or an affiliate.
Risks Which May Impede the Achievement of the Price Target: Risks to the outlook include wholesale commodity prices, generation
development market conditions, the outcome of regulatory proceedings, rating agency actions, interest rates, and access to the capital
markets.
Other Material Conflicts: Lehman Brothers is currently acting as a financial advisor to Exelon Corp. with respect to its restructuring of
Commonwealth Edison.
7

8. EQUITY RESEARCH
Important Disclosures Continued:
NRG Energy (NRG) US$ 47.30 (15-Sep-2006) 1-Overweight / 3-Negative
Rating and Price Target Chart:
NRG ENERGY
As of 29-Aug-2006
Currency = USD
60.00
56.00
52.00
48.00
44.00
40.00
36.00
32.00
28.00
24.00
20.00
16.00
8-03 11-03 2-04 5-04 8-04 11-04 2-05 5-05 8-05 11-05 2-06 5-06 8-06
Closing Price Price Target
Recommendation Change Drop Coverage
Source: FactSet
Currency=US$
Date Closing Price Rating Price Target Date Closing Price Rating Price Target
02-Aug-06 48.85 59.00 12-Dec-05 44.81 55.00
29-Dec-05 46.14 54.00 12-Dec-05 44.81 1-Overweight
28-Dec-05 46.00 55.00
FOR EXPLANATIONS OF RATINGS REFER TO THE STOCK RATING KEYS LOCATED ON THE PAGE FOLLOWING THE LAST PRICE CHART.
Lehman Brothers Inc. and/or an affiliate has received compensation for investment banking services from NRG Energy in the past 12
months.
Lehman Brothers Inc. and/or its affiliates beneficially owns 1% or more of any class of common equity securities of NRG Energy as of the
end of last month.
Lehman Brothers Inc and/or an affiliate trade regularly in the shares of NRG Energy.
NRG Energy is or during the past 12 months has been an investment banking client of Lehman Brothers Inc. and/or an affiliate.
Risks Which May Impede the Achievement of the Price Target: Key risks include power and gas prices, weather volatility, higher
interest rates and wider credit spreads, and power markets regulation.
8

9. EQUITY RESEARCH
Important Disclosures Continued:
TXU Corp (TXU) US$ 61.45 (15-Sep-2006) 1-Overweight / 3-Negative
Rating and Price Target Chart:
TXU CORP
As of 29-Aug-2006
Currency = USD
76.00
72.00
68.00
64.00
60.00
56.00
52.00
48.00
44.00
40.00
36.00
32.00
28.00
24.00
20.00
16.00
12.00
8.00
8-03 11-03 2-04 5-04 8-04 11-04 2-05 5-05 8-05 11-05 2-06 5-06 8-06
Closing Price Price Target
Recommendation Change Drop Coverage
Source: FactSet
Currency=US$
Date Closing Price Rating Price Target Date Closing Price Rating Price Target
02-Aug-06 65.72 72.00 25-Oct-04 30.63 36.00
03-May-06 57.05 68.00 09-Sep-04 21.68 28.50
19-Apr-06 47.57 67.00 01-Jul-04 20.55 Dropped
12-Jan-06 51.34 70.00 14-Jun-04 18.47 25.00
02-Dec-05 52.15 70.00 19-May-04 18.75 24.00
07-Nov-05 50.62 35.00 18-May-04 19.02 22.50
28-Oct-05 48.21 69.00 27-Apr-04 17.39 21.00
05-Oct-05 53.77 71.00 24-Feb-04 13.63 17.50
31-Aug-05 48.51 66.00 24-Feb-04 13.63 1-Overweight
03-Aug-05 45.92 59.50 13-Feb-04 12.18 13.00
18-Apr-05 41.31 48.00 27-Oct-03 11.49 2-Equal weight
31-Mar-05 39.81 47.00 04-Aug-03 10.49 12.50
21-Mar-05 39.91 44.50 04-Aug-03 10.49 1-Overweight
03-Feb-05 36.74 41.50
FOR EXPLANATIONS OF RATINGS REFER TO THE STOCK RATING KEYS LOCATED ON THE PAGE FOLLOWING THE LAST PRICE CHART.
Lehman Brothers Inc. and/or an affiliate has managed or co-managed within the past 12 months a 144A and/or public offering of securities
for TXU Corp.
Lehman Brothers Inc. and/or an affiliate has received compensation for investment banking services from TXU Corp in the past 12 months.
Lehman Brothers Inc. and/or an affiliate expects to receive or intends to seek compensation for investment banking services from TXU Corp
within the next 3 months.
Lehman Brothers Inc. and/or its affiliates beneficially owns 1% or more of any class of common equity securities of TXU Corp as of the end
of last month.
Lehman Brothers Inc and/or an affiliate trade regularly in the shares of TXU Corp.
TXU Corp is or during the past 12 months has been an investment banking client of Lehman Brothers Inc. and/or an affiliate.
Risks Which May Impede the Achievement of the Price Target: Key risks are Texas regulation, U.S. power and gas prices, interest
rates, and credit rating downgrades.
9

10. EQUITY RESEARCH
Important Disclosures Continued:
The analysts responsible for preparing this report have received compensation based upon various factors including the firm's total
revenues, a portion of which is generated by investment banking activities
Company Name Ticker Price (15-Sep-2006) Stock / Sector Rating
Dominion Resources D US$ 77.16 2-Equal weight / 3-Negative
Exelon Corp EXC US$ 59.21 1-Overweight / 3-Negative
NRG Energy NRG US$ 47.30 1-Overweight / 3-Negative
TXU Corp TXU US$ 61.45 1-Overweight / 3-Negative
Sector Coverage Universe
Below is the list of companies that constitute the sector coverage universe:
AES Corp (AES) Alliant Energy (LNT)
Ameren Corp (AEE) American Electric Power (AEP)
Aquila, Inc (ILA) CMS Energy (CMS)
Consolidated Edison (ED) Constellation Energy (CEG)
Dominion Resources (D) DPL Inc (DPL)
DTE Energy (DTE) Duke Energy (DUK)
Duquesne Light Holdings (DQE) Edison International (EIX)
Empire District Electric (EDE) Entergy Corp (ETR)
Exelon Corp (EXC) FirstEnergy Corp (FE)
FPL Group (FPL) Great Plains Energy (GXP)
Hawaiian Electric Inds (HE) ITC Holdings (ITC)
Mirant Corp. (MIR) NiSource, Inc (NI)
Northeast Utilities (NU) NRG Energy (NRG)
OGE Energy (OGE) Ormat Technologies (ORA)
Pepco Holdings (POM) PG&E Corp (PCG)
Pinnacle West Capital (PNW) PPL Corporation (PPL)
Progress Energy (PGN) Public Service Enterprise Gp (PEG)
Puget Energy (PSD) Reliant Energy Inc. (RRI)
Sempra Energy (SRE) Sierra Pacific Resources (SRP)
Southern Co (SO) TECO Energy (TE)
TXU Corp (TXU) Westar Energy (WR)
Wisconsin Energy (WEC) Xcel Energy (XEL)
Guide to Lehman Brothers Equity Research Rating System:
Our coverage analysts use a relative rating system in which they rate stocks as 1-Overweight, 2-Equal weight or 3-Underweight (see
definitions below) relative to other companies covered by the analyst or a team of analysts that are deemed to be in the same industry
sector (the “sector coverage universe”). To see a list of the companies that comprise a particular sector coverage universe, please go to
www.lehman.com/disclosures
In addition to the stock rating, we provide sector views which rate the outlook for the sector coverage universe as 1-Positive, 2-Neutral or 3-
Negative (see definitions below). A rating system using terms such as buy, hold and sell is not the equivalent of our rating system.
Investors should carefully read the entire research report including the definitions of all ratings and not infer its contents from ratings alone.
Stock Rating
1-Overweight - The stock is expected to outperform the unweighted expected total return of the sector coverage universe over a 12-month
investment horizon.
2-Equal weight - The stock is expected to perform in line with the unweighted expected total return of the sector coverage universe over a
12- month investment horizon.
3-Underweight - The stock is expected to underperform the unweighted expected total return of the sector coverage universe over a 12-
month investment horizon.
RS-Rating Suspended - The rating and target price have been suspended temporarily to comply with applicable regulations and/or firm
policies in certain circumstances including when Lehman Brothers is acting in an advisory capacity in a merger or strategic transaction
involving the company.
Sector View
1-Positive - sector coverage universe fundamentals/valuations are improving.
2-Neutral - sector coverage universe fundamentals/valuations are steady, neither improving nor deteriorating.
3-Negative - sector coverage universe fundamentals/valuations are deteriorating.
Distribution of Ratings:
Lehman Brothers Equity Research has 1879 companies under coverage.
44% have been assigned a 1-Overweight rating which, for purposes of mandatory regulatory disclosures, is classified as Buy rating, 35% of
companies with this rating are investment banking clients of the Firm.
10

11. EQUITY RESEARCH
40% have been assigned a 2-Equal weight rating which, for purposes of mandatory regulatory disclosures, is classified as Hold rating, 6%
of companies with this rating are investment banking clients of the Firm.
16% have been assigned a 3-Underweight rating which, for purposes of mandatory regulatory disclosures, is classified as Sell rating, 67%
of companies with this rating are investment banking clients of the Firm.
This material has been prepared and/or issued by Lehman Brothers Inc., member SIPC, and/or one of its affiliates (“Lehman Brothers”) and has been
approved by Lehman Brothers International (Europe), authorized and regulated by the Financial Services Authority, in connection with its distribution in the
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exception of disclosures relating to Lehman Brothers, this research report is based on current public information that Lehman Brothers considers reliable, but
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ownership of securities is based upon the methodology used to compute ownership under Section 13(d) of the United States' Securities Exchange Act of
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