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Section 1: 8-K (JEFFERIES GROUP LLC 8-K)


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549


FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): December 19, 2017

Jefferies Group LLC

(Exact name of registrant as specified in its charter)

Delaware

1-14947

95-4719745

(State or other jurisdiction of
incorporation)

(Commission File Number)

(IRS Employer Identification
No.)


520 Madison Ave, New York, New York

10022

(Address of principal executive offices)

(Zip Code)


Registrant’s telephone number, including area code: 212-284-2550

 

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company: 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 


Item 2.02.  Results of Operations and Financial Condition

On December 19, 2017, we issued a press release announcing financial results for our fiscal year ended November 30, 2017.  A copy of the press release is attached hereto as Exhibit 99.


Item 9.01.  Financial Statements and Exhibits

 

The following exhibit is furnished with this report:

 

Number

Exhibit

 

 

99

December 19, 2017 press release.



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Jefferies Group LLC

 
 
Date:

December 19, 2017

/s/ Roland T. Kelly

Roland T. Kelly

Assistant Secretary



EXHIBIT INDEX

Exhibit No.

Description

 

99

December 19, 2017 press release.

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Section 2: EX-99 (EXHIBIT 99)

Exhibit 99

Jefferies Reports Record 2017 Net Revenues and Net Income Led by 48% Increase in Investment Banking Net Revenues and 19% Increase in Total Equities and Fixed Income Net Revenues

NEW YORK--(BUSINESS WIRE)--December 19, 2017--Jefferies Group LLC today announced financial results for its fiscal fourth quarter and full year 2017.

Highlights for the twelve months ended November 30, 2017:

Highlights for the three months ended November 30, 2017:

Rich Handler, Chairman and Chief Executive Officer, and Brian Friedman, Chairman of the Executive Committee, commented: “We are pleased that Jefferies' 2017 net revenues and net income represent the best results in our 55-year history. Our strategy of prioritizing expansion of our investment banking effort continues to succeed and should yield further growth over the next several years. The competitive landscape continues to provide opportunities for Jefferies to grow further by leveraging the unique blend of our non-bank Wall Street culture and business model, deep and broad sectoral expertise, and global geographic reach in investment banking, equity and fixed income trading, and research. We enter 2018 with strong momentum throughout our Company.”

“Our fourth quarter performance was driven by $529 million in Investment Banking net revenues. These quarterly record Investment Banking results reflect solid contributions from equity and debt capital markets, strong performance in our merger and acquisition advisory business, and broad participation across our industry groups and regional efforts. Our Equities net revenues of $194 million were solid, while our Fixed Income net revenues of $95 million are reflective of a period of lighter volumes, particularly in November, and narrower bid - offer spreads.”

“We would like to express our sincere thanks to our 3,450 employee-partners around the globe for their commitment, hard work, loyalty, integrity and dedication in serving our clients and Leucadia's shareholders.”

The attached financial tables should be read in conjunction with our Quarterly Report on Form 10-Q for the quarter ended August 31, 2017, our Annual Report on Form 10-K for the year ended November 30, 2016 and our amended Annual Report on Form 10-K/A for the year ended November 30, 2016. Amounts herein pertaining to November 30, 2017 represent a preliminary estimate as of the date of this earnings release and may be revised in our Annual Report on Form 10-K for the year ended November 30, 2017.

This release contains "forward-looking statements" within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include statements about our future results and performance, including our future market share and expected financial results. It is possible that the actual results may differ materially from the anticipated results indicated in these forward-looking statements. Please refer to our most recent Annual Report on Form 10-K for a discussion of important factors that could cause actual results to differ materially from those projected in these forward-looking statements.

Jefferies, the world's only independent full-service global investment banking firm focused on serving clients for over 50 years, is a leader in providing insight, expertise and execution to investors, companies and governments. Our firm provides a full range of investment banking, sales, trading, research and strategy across the spectrum of equities, fixed income and foreign exchange, as well as wealth management, in the Americas, Europe and Asia. Jefferies Group LLC is a wholly-owned subsidiary of Leucadia National Corporation (NYSE: LUK), a diversified holding company.


 
JEFFERIES GROUP LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in Thousands)
(Unaudited)
     
Quarter Ended
November 30, 2017 August 31, 2017 November 30, 2016
 
Revenues:
Commissions and other fees $ 155,710 $ 139,082 $ 157,549
Principal transactions 107,418 185,215 137,362
Investment banking 528,699 475,702 415,067

Asset management fees and investment income from managed funds

4,769 5,465 1,319
Interest 245,278 230,496 202,002
Other 39,625 12,371 26,661
Total revenues 1,081,499 1,048,331 939,960
Interest expense 258,889 247,639 198,191
Net revenues 822,610 800,692 741,769
 
Non-interest expenses:
Compensation and benefits 455,469 462,933 427,451
 
Non-compensation expenses:
Floor brokerage and clearing fees 41,257 44,869 42,946
Technology and communications 73,817 72,440 66,396
Occupancy and equipment rental 25,759 27,736 26,635
Business development 27,661 23,125 25,405
Professional services 31,167 25,007 29,763
Other 25,200 22,318 26,644
Total non-compensation expenses 224,861 215,495 217,789
Total non-interest expenses 680,330 678,428 645,240
Earnings before income taxes 142,280 122,264 96,529
Income tax expense 52,331 38,439 9,454
Net earnings 89,949 83,825 87,075
Net earnings (loss) attributable to noncontrolling interests 36 10 (105)
Net earnings attributable to Jefferies Group LLC $ 89,913 $ 83,815 $ 87,180
 
Pretax operating margin 17.3% 15.3% 13.0%
Effective tax rate (1) 36.8% 31.4% 9.8%
(1)   The effective tax rate for the three months ended November 30, 2016 was impacted by revisions to previously forecasted results.
 

 
JEFFERIES GROUP LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in Thousands)
(Unaudited)
   
Twelve Months Ended
November 30, 2017 November 30, 2016
 
Revenues:
Commissions and other fees $ 593,257 $ 611,574
Principal transactions 800,660 519,652
Investment banking 1,764,285 1,193,973

Asset management fees and investment income from managed funds

16,463 31,062
Interest 905,601 857,838
Other 98,316 19,724
Total revenues 4,178,582 3,233,823
Interest expense 980,473 819,209
Net revenues 3,198,109 2,414,614
 
Non-interest expenses:
Compensation and benefits 1,829,096 1,568,948
 
Non-compensation expenses:
Floor brokerage and clearing fees 179,478 167,205
Technology and communications 279,242 262,396
Occupancy and equipment rental 102,904 101,133
Business development 99,884 93,105
Professional services 114,711 112,562
Other 87,870 79,293
Total non-compensation expenses 864,089 815,694
Total non-interest expenses 2,693,185 2,384,642
Earnings before income taxes 504,924 29,972
Income tax expense 147,340 14,566
Net earnings 357,584 15,406
Net earnings (loss) attributable to noncontrolling interests 86 (28)
Net earnings attributable to Jefferies Group LLC $ 357,498 $ 15,434
 
Pretax operating margin 15.8% 1.2%
Effective tax rate 29.2% 48.6%
 

 
JEFFERIES GROUP LLC AND SUBSIDIARIES
SELECTED STATISTICAL INFORMATION
(Amounts in Thousands, Except Other Data)
(Unaudited)
     
Quarter Ended
November 30, 2017 August 31, 2017 November 30, 2016

Revenues by Source

Equities $ 194,426 $ 176,789 $ 175,960
Fixed income 94,716 142,736 149,423
Total Equities and Fixed income 289,142 319,525 325,383
 
Equity 122,424 86,081 62,085
Debt 174,484 186,261 128,706
Capital markets 296,908 272,342 190,791
Advisory 231,791 203,360 224,276
Total Investment banking 528,699 475,702 415,067
 

Asset management fees and investment income from managed funds:

Asset management fees 4,122 4,272 633
Investment income from managed funds 647 1,193 686
Total 4,769 5,465 1,319
Net revenues $ 822,610 $ 800,692 $ 741,769
 

Other Data

Number of trading days 63 65 63
Number of trading loss days 5 3 11
 
Average firmwide VaR (in millions) (1) $ 5.29 $ 6.51 $ 8.46
(1)   VaR estimates the potential loss in value of our trading positions due to adverse market movements over a one-day time horizon with a 95% confidence level. For a further discussion of the calculation of VaR, see "Value-at-Risk" in Part II, Item 7 "Management's Discussion and Analysis" in our Annual Report on Form 10-K for the year ended November 30, 2016.
 

 
JEFFERIES GROUP LLC AND SUBSIDIARIES
SELECTED STATISTICAL INFORMATION
(Amounts in Thousands, Except Other Data)
(Unaudited)
   
Twelve Months Ended
November 30, 2017 November 30, 2016

Revenues by Source

Equities $ 799,451 $ 549,553
Fixed income 617,910 640,026
Total Equities and Fixed income 1,417,361 1,189,579
 
Equity 344,973 235,207
Debt 649,220 304,576
Capital markets 994,193 539,783
Advisory 770,092 654,190
Total Investment banking 1,764,285 1,193,973
 
Asset management fees and investment income (loss) from managed funds:
Asset management fees 20,490 26,412
Investment income (loss) from managed funds (4,027) 4,650
Total 16,463 31,062
Net revenues $ 3,198,109 $ 2,414,614
 

Other Data

Number of trading days 252 253
Number of trading loss days 14 38
 
Average firmwide VaR (in millions) (1) $ 7.79 $ 7.91
(1)   VaR estimates the potential loss in value of our trading positions due to adverse market movements over a one-day time horizon with a 95% confidence level. For a further discussion of the calculation of VaR, see "Value-at-Risk" in Part II, Item 7 "Management's Discussion and Analysis" in our Annual Report on Form 10-K for the year ended November 30, 2016.
 

 
JEFFERIES GROUP LLC AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Amounts in Millions, Except Where Noted)
(Unaudited)
         
Quarter Ended
November 30, 2017 August 31, 2017 November 30, 2016
 

Financial position:

Total assets (1) $ 39,706 $ 39,358 $ 36,941
Average total assets for the period (1) $ 47,058 $ 45,311 $ 43,412
Average total assets less goodwill and intangible assets for the period (1) $ 45,215 $ 43,467 $ 41,560
 
Cash and cash equivalents (1) $ 5,164 $ 4,807 $ 3,529
Cash and cash equivalents and other sources of liquidity (1) (2) $ 6,709 $ 6,191 $ 5,303
Cash and cash equivalents and other sources of liquidity - % total assets (1) (2) 16.9% 15.7% 14.4%

Cash and cash equivalents and other sources of liquidity - % total assets less goodwill and intangible assets (1) (2)

17.7% 16.5% 15.1%
 
Financial instruments owned (1) $ 13,998 $ 14,037 $ 13,810
Goodwill and intangible assets (1) $ 1,843 $ 1,841 $ 1,847
 
Total equity (including noncontrolling interests) (1) $ 5,760 $ 5,655 $ 5,371
Total Jefferies Group LLC member's equity (1) $ 5,759 $ 5,654 $ 5,370
Tangible Jefferies Group LLC member's equity (1) (3) $ 3,916 $ 3,813 $ 3,523
 
 

Level 3 financial instruments:

Level 3 financial instruments owned (1) (4) $ 328 $ 348 $ 413
Level 3 financial instruments owned - % total assets 0.8% 0.9% 1.1%
Level 3 financial instruments owned - % total financial instruments (1) 2.3% 2.5% 3.0%

Level 3 financial instruments owned - % tangible Jefferies Group LLC member's equity

8.4% 9.1% 11.7%
 

Other data and financial ratios:

Total long-term capital (1) (5) $ 11,162 $ 11,038 $ 10,501
Leverage ratio (1) (6) 6.9 7.0 6.9
Tangible gross leverage ratio (1) (7) 9.7 9.8 10.0
 
Number of trading days 63 65 63
Number of trading loss days 5 3 11
Average firmwide VaR (8) $ 5.29 $ 6.51 $ 8.46
 
Number of employees, at period end 3,450 3,438 3,329
 

 
JEFFERIES GROUP LLC AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS - FOOTNOTES
 
(1) Amounts pertaining to November 30, 2017 represent a preliminary estimate as of the date of this earnings release and may be revised in our Annual Report on Form 10-K for the year ended November 30, 2017.
 
(2) At November 30, 2017, other sources of liquidity include high quality sovereign government securities and reverse repurchase agreements collateralized by U.S. government securities and other high quality sovereign government securities of $1,031 million, in aggregate, and $514 million, being the estimated amount of additional secured financing that could be reasonably expected to be obtained from our financial instruments that are currently not pledged after considering reasonable financing haircuts. The corresponding amounts included in other sources of liquidity at August 31, 2017 were $1,083 million and $301 million, respectively, and at November 30, 2016, were $1,455 million and $319 million, respectively.
 
(3) Tangible Jefferies Group LLC member's equity (a non-GAAP financial measure) represents total Jefferies Group LLC member's equity less goodwill and identifiable intangible assets. We believe that tangible Jefferies Group LLC member's equity is meaningful for valuation purposes, as financial companies are often measured as a multiple of tangible equity, making these ratios meaningful for investors.
 
(4) Level 3 financial instruments represent those financial instruments classified as such under Accounting Standards Codification 820, accounted for at fair value and included within Financial instruments owned.
 
(5) At November 30, 2017, August 31, 2017 and November 30, 2016, total long-term capital includes our long-term debt of $5,403 million, $5,383 million and $5,131 million, respectively, and total equity. Long-term debt included in total long-term capital is reduced by the amount of debt maturing in less than one year, as applicable.
 
(6) Leverage ratio equals total assets divided by total equity.
 
(7) Tangible gross leverage ratio (a non-GAAP financial measure) equals total assets less goodwill and identifiable intangible assets divided by tangible Jefferies Group LLC member's equity. The tangible gross leverage ratio is used by rating agencies in assessing our leverage ratio.
 
(8) VaR estimates the potential loss in value of our trading positions due to adverse market movements over a one-day time horizon with a 95% confidence level. For a further discussion of the calculation of VaR, see "Value-at-Risk" in Part II, Item 7 "Management's Discussion and Analysis" in our Annual Report on Form 10-K for the year ended November 30, 2016.
 

CONTACT:
Jefferies Group LLC
Peregrine C. Broadbent, 212-284-2338
Chief Financial Officer

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