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. June 2, 2006
Strengthen Returns as Dollar Weakens
Equity Derivatives • The U.S. dollar has depreciated nearly 6% since Q2 began. This is substantial; during the past
Strategy 134 quarters (since Q1 1973), the dollar has depreciated more on only 11 other occasions. In
Ryan Renicker, CFA addition, the degree of depreciation during those periods was only about 1% more than what has
1.212.526.9425 transpired thus far this quarter.
ryan.renicker@lehman.com
Devapriya Mallick
1.212.526.5429 • Naturally, a weakening dollar is expected to benefit U.S. exporters, particularly relative to U.S.
dmallik@lehman.com importers or domestic companies generating a relatively small percentage of their revenues
overseas.
• With earnings pre-announcement season approaching, we believe there is a relatively strong
probability that companies having exposure to fluctuations in the dollar could pre-announce prior
to their expected earnings report date, resulting in potentially high volatility for these names.
• Lehman’s U.S. Strategy team has identified the top 25 S&P 500 companies having the highest
percentage of foreign revenue share as well as the top 25 S&P 500 firms having the highest
proportion of foreign operating income share in 2005.
• We screen the stocks within these lists to identify those having relatively cheap short-dated options,
and thus being attractive long-volatility candidates, particularly given the heightened possibility of
an active currency-related earnings pre-announcement season.
• Options we identify as cheap include those on PFE, LLY, CL, CVX and NVDA.
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 compan y 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 AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 5.

2. Equity Derivatives Strategy | Strengthen Returns as Dollar Weakens
Since Q2 Began, Dollar Depreciation Significant
The U.S. dollar has depreciated nearly 6% since Q2 began. This is substantial; during the past 134
quarters (since Q1 1973), the dollar has depreciated more on only 11 other occasions (full quarters).
In addition, the degree of depreciation during those periods was only about 1% more than what has
transpired thus far this quarter. Below we plot the quarter-over-quarter percentage changes in the U.S.
Trade-Weighted Major Currency Index Bloomberg ticker: USTW$ Index). Note the substantial
(
depreciation in the dollar since this quarter began two months ago.
Figure 1: Quarterly Percentage Change s in the U.S. Trade -Weighted Major Currency Index (1973 – Present)
10%
8%
6%
% Change in Dollar Index
4%
2%
0%
-2%
-4%
-6%
Dollar depreciated substantially
-8%
since quarter began
-10%
Mar-74
Mar-77
Mar-80
Mar-83
Mar-86
Mar-89
Mar-92
Mar-95
Mar-98
Mar-01
Mar-04
Jun-73
Jun-76
Jun-79
Jun-82
Jun-85
Jun-88
Jun-91
Jun-94
Jun-97
Jun-00
Jun-03
Jun-06
Dec-74
Dec-77
Dec-80
Dec-83
Dec-86
Dec-89
Dec-92
Dec-95
Dec-98
Dec-01
Dec-04
Sep-75
Sep-78
Sep-81
Sep-84
Sep-87
Sep-90
Sep-93
Sep-96
Sep-99
Sep-02
Sep-05
Source: Lehman Brothers, Bloomberg.
Company Exposure to Declining Dollar
Naturally, one would expect a weakening dollar should benefit U.S. exporters, particularly relative to
U.S. importers or firms generating a relatively small percentage of their revenues outside of the U.S.,
depending of course on the degree to which each firm employs internal currency hedging strategies to
mitigate this exposure.
Lehman’s U.S. Strategy team has identified 1) the top 25 S&P 500 companies having the highest
percentage of foreign revenue share and 2) the top 25 S&P 500 firms having the highest proportion of
foreign operating income share in 2005 (Figures 2 and 3 on the following page). Please see A
Weaker Dollar’s Impact on U.S. Equities, Chip Dickson (5/8/06) for further details.
June 2, 2006 2

3. Equity Derivatives Strategy | Strengthen Returns as Dollar Weakens
Figure 2: Top 25 S&P 500 Firms With Highest % of Foreign Figure 3: Top 25 S&P 500 Firms with Highest % of Foreign Pre-Tax
Revenue Share in 2005 Income Share in 2005
% Foreign
% Foreign
Ticker Name Sector Ticker Name Sector Pretax
Revenue
Income
FCX FREEPORT-MCMORAN COPPER-B Materials 100% JBL JABIL CIRCUIT INC Information Technology 98%
MOLX MOLEX INC Information Technology 90% MAT MATTEL INC Consumer Discretionary 96%
NVDA NVIDIA CORP Information Technology 86% ANDW ANDREW CORP Information Technology 93%
SLR SOLECTRON CORP Information Technology 86% MOLX MOLEX INC Information Technology 91%
INTC INTEL CORP Information Technology 85% FLR FLUOR CORP Industrials 91%
TXN TEXAS INSTRUMENTS INC Information Technology 84% AA ALCOA INC Materials 91%
QCOM QUALCOMM INC Information Technology 82% PFE PFIZER INC Health Care 89%
NSM NATIONAL SEMICONDUCTOR CORP Information Technology 80% WFT WEATHERFORD INTL LTD Energy 85%
MO ALTRIA GROUP INC Consumer Staples 80% NVDA NVIDIA CORP Information Technology 85%
AMD ADVANCED MICRO DEVICES Information Technology 79% ADI ANALOG DEVICES Information Technology 84%
AMAT APPLIED MATERIALS INC Information Technology 79% BMY BRISTOL-MYERS SQUIBB CO Health Care 82%
AES AES CORP Utilities 79% AVP AVON PRODUCTS INC Consumer Staples 82%
RIG TRANSOCEAN INC Energy 78% WWY WRIGLEY WM JR CO Consumer Staples 81%
TER TERADYNE INC Information Technology 78% WAT WATERS CORP Health Care 80%
NE NOBLE CORP Energy 77% PLL PALL CORP Industrials 79%
SANM SANMINA-SCI CORP Information Technology 76% ETN EATON CORP Industrials 79%
KLAC KLA-TENCOR CORPORATION Information Technology 76% CBE COOPER INDUSTRIES LTD-CL A Industrials 79%
XOM EXXON MOBIL CORP Energy 76% LLY ELI LILLY & CO Health Care 77%
ALTR ALTERA CORPORATION Information Technology 76% BAX BAXTER INTERNATIONAL INC Health Care 76%
ADI ANALOG DEVICES Information Technology 75% MMC MARSH & MCLENNAN COS Financials 75%
CTXS CITRIX SYSTEMS INC Information Technology 74%
AVP AVON PRODUCTS INC Consumer Staples 75%
CVX CHEVRON CORP Energy 73%
CL COLGATE-PALMOLIVE CO Consumer Staples 74%
CL COLGATE-PALMOLIVE CO Consumer Staples 73%
MXIM MAXIM INTEGRATED PRODUCTS Information Technology 74%
HAL HALLIBURTON CO Energy 73% IR INGERSOLL-RAND CO LTD-CL A Industrials 73%
PX PRAXAIR INC Materials 73%
SLB SCHLUMBERGER LTD Energy 73%
Source: Lehman Br others, FactSet, A Weaker Dollar ’s Impact on U.S. Equities, Chip Source: Lehman Br others, FactSet, A Weaker Dollar ’s Impact on U.S. Equities, Chip
Dickson (5/8/06) Dickson (5/8/06)
Although individual firms included in Figures 2 and 3 may employ currency hedging techniques to
reduce potential FX exposure, we find both groups – on an aggregate basis – have tended to
outperform (underperform) the S&P 500 Index during periods of dollar weakness (strength).
Specifically, we plot the relative performance of each basket (Figure 2 basket, Figure 3 basket) versus
the S&P 500 Index during the past year. For simplicity purposes, each basket is calculated on an
equal-weighted basis. In addition, we scale the value of each basket to 100 as of one year ago.
Furthermore, we scale the value of the U.S. Trade Weighted Major Currency Index to 100 as of one
year ago (for comparative purposes).
We label the relative performance of the basket of stocks having the top 25 S&P 500 firms with the
highest percentage of foreign revenue share in 2005 versus the S&P 500 Index as “% Revenue
Relative Performance”. We label the relative performance of the basket of stocks including the top 25
S&P 500 firms with the highest percentage of foreign pre-tax income share in 2005 versus the S&P
500 as “% Pretax Relative Performance”.
Figure 4: % Revenue Relative Performance vs. Currency Index Figure 5: % Pretax Relative Performance vs. Currency Index
114 104 106 104
112 103 103
104
102 102
110
102
RelativePerformance
101 101
Relative Performance
108
CurrencyIndex
Currency Index
100 100
106 100
99 99
104
98
98 98
102
97 Appreciating Dollar 97
Depreciating Dollar 96
100
96 96
% Revenue Relative Performance 94 % Pretax Relative Performance
98 95 95
US Trade-Weighted Major Currency US Trade-Weighted Major Currency
96 94 92 94
Nov-05
May-06
Mar-06
Jun-05
Jan-06
Jul-05
May-06
Aug-05
Sep-05
Dec-05
Feb-06
Oct-05
Apr-06
Aug-05
Sep-05
Nov-05
Dec-05
Jun-05
Jan-06
Jul-05
Feb-06
Mar-06
Oct-05
Apr-06
Source: Lehman Brothers, Bloomberg Source: Lehman Brothers, Bloomberg
June 2, 2006 3

4. Equity Derivatives Strategy | Strengthen Returns as Dollar Weakens
Cheap Options for Stocks Exposed to Cheap Dollar
With earnings pre-announcement season approaching, we believe there is a relatively high probability
that companies having exposure to fluctuations in the dollar could pre-announce prior to their expected
earnings report date, which would likely result in relatively high realized volatility for such names.
We list the stocks within each basket identified as potentially having exposure to the declining dollar
that also have relatively inexpensive 1 month implied volatility versus both1) their 22-day realized
volatility and 2) S&P 500 1-month implied volatility (versus each spread’s trailing 12-month history).
In addition, we believe the names presented below also have relatively cheap 2 month implied
volatility versus both 1) their 44-day realized volatility and 2) S&P 500 2-month implied volatility
(again, versus each spread’s trailing 12-month history).
Figure 6: Stocks Having Relatively Cheap Options and Likely Exposure to Declining Dollar
Expected
Ticker Name Sector Earnings
Date
PFE PFIZER INC Health Care 07/20/06
LLY ELI LILLY & CO Health Care 07/21/06
CL COLGATE-PALMOLIVE CO Consumer Staples 07/27/06
CVX CHEVRON CORP Energy 07/28/06
NVDA NVIDIA CORP Information Technology 08/11/06
Source: Lehman Brothers, OptionMetrics, Bloomberg
We believe investors should consider expressing directional views or going long volatility in these
names by purchasing short-dated options (1 or 2 month expiry), ahead of a potentially volatile,
currency-related earnings pre-announcement season.
Please call for details.
June 2, 2006 4

5. Equity Derivatives Strategy | Strengthen Returns as Dollar Weakens
Analyst Certification:
The respective research analysts responsible for the fundamental ratings hereby certify (1) that the views expressed in this research email accurately reflect our
personal views about any or all of the subject securities or issuers referred to in this email 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 email.
I, Ryan Renicker, hereby certify (1) that the views expressed in this research email accurately reflect my personal views about any or all of the subject securities or
issuers referred to in this email and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed
in this email.
To the extent that any of the conclusions are based on a quantitative model, Lehman Brothers hereby certifies (1) that the views expressed in this research email
accurately reflect the firm's quantitative research model (2) no part of the firm's compensation was, is or will be directly or indirectly related to the specific
recommendations or views expressed in this research report.
Important Disclosures
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 email communication.
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 1-800-2-LEHMAN to request a copy of
this research.
Investors should consider this communication as only a single factor in making their investment decision.
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.
Stock price and ratings histor y charts along with other important disclosures are available on our disclosure website at www.lehman.com/disclosures
And may also be obtained by sending a written request to: LEHMAN BROTHERS CONTROL ROOM , 745 SEVENTH AVENUE, 19TH FLOOR NEW YORK, NY
10019
Mentioned Stocks
Colgate Palmolive (CL - USD60.77) 1-Overweight / Neutral J
Risks Which May Impede the Achievement of the Price Target: Various risk factors which could affect our rating and price target include raw material cost inflation
(among others: plastics, paper/ packaging, chemicals, and tallow), geo-political & economic instability (developing markets are estimated to contribute 40%+ of
Colgate's sales), foreign currency translation (roughly 75% of Colgate's sales are in non-US $ currencies), acquisition integration, competitive pricing environment,
marketing/advertising effectiveness, consumer acceptance of new products, ongoing retailer consolidation / retail shelf space rationalization (Colgate derives
roughly 45% of sales from mature retail markets) and fixed asset utilization levels.
Chevron Corporation (CVX - USD59.98) 1-Overweight / Neutral D/J/L
Risks Which May Impede the Achievement of the Price Target: Our earnings estimates are based on Lehman Brothers' current commodity price assumption on oil &
gas, refining and marketing margins as well as chemical produc margins. Thus, results could be subject to changes due to fluctuations in the macro commodity
t
market environment.
Lilly, Eli (LLY - USD51.99) 2-Equal weight / Positive E/J/L
Risks Which May Impede the Achievement of the Price Target: Lilly is currently in litigation with Ivax over the exclusivity of Zyprexa. Losing the case would open up
the possibility of generics for their top product. Lilly also faces risk from the Deparment of Justice investigation of marketing practices of some products. Risks
associated with the pharmaceutical industry include pipeline product delays due to discouraging clinical trial results and FDA conflicts. The pharmaceutical industry is
also at risk towards FDA/regulatory conflicts, patent disputes, loss of patent exclusivity, and competitive pressure from other drugs. Lastly, a Medicare drug benefit
could be enacted in a form which would give the Federal Government some purchasing power over the industry, leading to potential downward pressure on margins.
NVIDIA Corp. (NVDA - USD24.18) 1-Overweight / Positive C/J
Risks Which May Impede the Achievement of the Price Target: (a) dependence on short product cycles (b) dependence on PC industry (c) dependence on external
foundries (d) dependence on the cycli cal semiconductor industry
Pfizer Inc (PFE - USD23.90) 1-Overweight / Positive G/J/K/M
Risks Which May Impede the Achievement of the Price Target: Competitive threats to Lipitor through AZN's Crestor and MRK/SGP's Vytorin (SGP/MRK), and Zoloft
(LLY's Cymbalta). Exclusivity for Diflucan, Zithromax, Zoloft, Accupril, and others will be lost in the next few years. Risks associated with the pharmaceutical industry
include pipeline product delays due to discouraging clinical trial results and FDA conflicts. The pharmaceutical industry is also at risk towards FDA/regulatory
conflicts, patent disputes, loss of patent exclusivity, and competitive pressure from other drugs. Lastly, a Medicare drug benefit could be enacted in a form which
would give the Federal G overnment some purchasing power over the industry, leading to potential downward pressure on margins.
June 2, 2006 5

6. Equity Derivatives Strategy | Strengthen Returns as Dollar Weakens
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Options are not suitable for all investors and the risks of option trading should be weighed against the potential rewards.
Supporting documents that form the basis of the recommendations are available on request. Please note that the trade ideas within
this report in no way relate to the fundamental ratings applied to European stocks by Lehman Brothers' Equity Research.
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including when Lehman Brothers is acting in an advisory capacity on a merger or strategic transaction involving the company.Sector View
1-Positive - sector coverage universe fundamentals are improving.
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Lehman Brothers Equity Research has 1838 companies under coverage.
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June 2, 2006 6

7. Equity Derivatives Strategy | Strengthen Returns as Dollar Weakens
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June 2, 2006 7