Lehman Brothers Holdings Inc. has announced that its year-over-year net income fell 3% to $887 million in the fiscal quarter ended Aug. 31, citing "very substantial valuation reductions" for mortgages and other assets hurt by the current liquidity crunch.The Wall Street firm said the valuation concerns were most significant "on leveraged loan commitments and residential mortgage-related positions." Lehman has been partially offsetting these valuation declines with hedging and gains in other areas such as investment management, investment banking, equities, and non-U.S. revenues, as well as previously disclosed cost-cutting in the mortgage area. The company can be found online at http://www.lehman.com.

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