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Section 1: 8-K (8-K)

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false0000096223 0000096223 2020-01-08 2020-01-08



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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): January 8, 2020

JEFFERIES FINANCIAL GROUP INC.
(Exact name of registrant as specified in its charter)
New York
1-5721
13-2615557
 
(State or other jurisdiction of incorporation or organization)
(Commission File Number)
(I.R.S. Employer Identification No.)
 
 
 
520 Madison Avenue
New York,
New York
10022
 
(Address of Principal Executive Offices)
(Zip Code)
 
(212) 460-1900
Registrant's telephone number, including area code

(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))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock; Par Value $1.00 Per Share
JEF
New York Stock Exchange

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 January 8, 2020, we issued a press release announcing financial results for the quarter and year ended November 30, 2019.  A copy of the press release is attached hereto as Exhibit 99 and is incorporated herein by reference.

The information provided in this Item 2.02, including Exhibit 99, is intended to be "furnished" and shall not be deemed "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any other filing under the Securities Act of the Exchange Act, except as expressly set forth by specific reference in such a filing.
 

Item 9.01. Financial Statements and Exhibits

The following exhibit is furnished with this report:

Exhibit No.    Description

99        Press Release issued by Jefferies Financial Group Inc. on January 8, 2020



































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.




Date: January 8, 2020




JEFFERIES FINANCIAL GROUP INC.
 
 
 
 
By:
/s/ Teresa S. Gendron
Name:
Teresa S. Gendron
Title:
Vice President and Chief Financial Officer





































EXHIBIT INDEX


Exhibit No.        Exhibit

99            Press Release dated January 8, 2020




(Back To Top)

Section 2: EX-99 (PRESS RELEASE ISSUED BY JEFFERIES FINANCIAL GROUP INC. ON JANUARY 8, 2020)

Exhibit


FOR IMMEDIATE RELEASE                                 January 8, 2020

Jefferies Announces 2019 Financial Results

New York, New York, January 8, 2020--Jefferies Financial Group Inc. (NYSE: JEF) today announced its financial results for the three and twelve month periods ended November 30, 2019.

Highlights for the three months ended November 30, 2019:
Net income attributable to Jefferies Financial Group common shareholders of $196 million, or $0.62 per diluted share, primarily reflecting the previously reported $205 million pre-tax gain from the sale of our remaining 31% interest in National Beef, partially offset by a non-cash fair value reduction of $69 million to our investment in The We Company. Results also reflect strong performance in Equities and Fixed Income sales and trading, solid Investment Banking advisory revenues, continued modest results in Leveraged Finance new issuance and solid results at certain of our merchant banking investments
Jefferies Group (Investment Banking, Capital Markets and Asset Management) pre-tax income of $24 million and net earnings of $23 million
Total Net Revenues of $748 million
Investment Banking Net Revenues of $393 million
Total Equities and Fixed Income Net Revenues of $363 million
Asset Management Revenues (before Allocated net interest1) of $(4) million
Merchant Banking pre-tax income of $238 million, reflecting strong performance by National Beef prior to the closing of the sale of our interest, the related pre-tax gain of $205 million, and solid results at certain of our merchant banking investments, offset by the $69 million fair value adjustment to reduce the value of our investment in We
Return of excess capital, including special dividend of Spectrum Brands Common Stock, share repurchases and cash dividends, totaling approximately $642 million
Jefferies Financial Group had parent company liquidity of $2.2 billion at November 30, 2019

Highlights for the twelve months ended November 30, 2019:
Net income attributable to Jefferies Financial Group common shareholders of $960 million, or $3.03 per diluted share, including the impact of a nonrecurring tax benefit of $545 million; adjusted net income of $415 million2, or $1.32 per diluted share2 
Jefferies Group (Investment Banking, Capital Markets and Asset Management) pre-tax income of $325 million and net earnings of $244 million
Total Net Revenues of $3,113 million
Investment Banking Net Revenues of $1,522 million, down 20% from 2018 record of $1,914 million
Total Equities and Fixed Income Net Revenues of $1,455 million, up 19% from 2018
Asset Management Revenues (before Allocated net interest1) of $117 million
Merchant Banking pre-tax income of $267 million, reflecting strong operating performance from National Beef and Vitesse, the $205 million pre-tax gain related to the sale of our remaining 31% interest in National Beef and the $72 million gain related to the HomeFed transaction, offset by fair value adjustments to both our investment in We and some of our mark-to-market investments in public companies
Return of excess capital, including special dividend of Spectrum Brands common stock, share repurchases and cash dividends, totaling approximately $1.1 billion; share repurchases during the twelve months ended November 30, 2019 totaled 25.9 million shares for $506 million, or an average price of $19.52 per share

Please refer to the Jefferies Financial Group Annual Letter from our CEO and President for discussion of results and broader perspective on our strategy and outlook. We expect to file our Form 10-K on or about January 28, 2020.


1



* * * *

Amounts herein pertaining to November 30, 2019 represent a preliminary estimate as of the date of this earnings release and may be revised upon filing our Annual Report on Form 10-K with the Securities and Exchange Commission ("SEC"). More information on our results of operations for the three and twelve month periods ended November 30, 2019 will be provided upon filing our Annual Report on Form 10-K with the SEC.

This press 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 and statements that are not historical facts. These forward-looking statements are usually preceded by the words "should," "expect," "intend," "may," "will," or similar expressions. Forward-looking statements may contain expectations regarding revenues, earnings, operations, and other results, and may include statements of future performance, plans, and objectives. Forward-looking statements also include statements pertaining to our strategies for future development of our businesses and products. Forward-looking statements represent only our belief regarding future events, many of which by their nature are inherently uncertain. It is possible that the actual results may differ, possibly materially, from the anticipated results indicated in these forward-looking statements. Information regarding important factors, including Risk Factors that could cause actual results to differ, perhaps materially, from those in our forward-looking statements is contained in reports we file with the SEC. You should read and interpret any forward-looking statement together with reports we file with the SEC.

Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy will be profitable or equal the corresponding indicated performance level(s).

For further information, please contact:

Teresa S. Gendron
Chief Financial Officer
Jefferies Financial Group Inc.
Tel. (212) 460-1932

Peregrine C. Broadbent
Chief Financial Officer
Jefferies Group LLC
Tel. (212) 284-2338

 
 
 
 
1
Allocated net interest represents the allocation of Jefferies Group LLC's long-term debt interest expense to Jefferies Group LLC's Asset Management reportable segment, net of interest income on Jefferies Group LLC's Cash and cash equivalents and other sources of liquidity, which allocation is consistent with Jefferies Group LLC's policy of allocating such items to its business lines. Refer to Jefferies Group LLC's summary of Net Revenues by Source on pages 8 and 9.
2
Jefferies Financial Group adjusted net income, a non-GAAP measure, is defined as Jefferies Financial Group's net income less accumulated other comprehensive income nonrecurring tax benefit. Jefferies Financial Group adjusted diluted earnings per share, a non-GAAP measure, is defined as Jefferies Financial Group's diluted earnings per share less accumulated other comprehensive income non-recurring tax benefit. Refer to schedule on page 12 for reconciliation to U.S. GAAP amounts.


2



Summary for Jefferies Financial Group Inc. and Subsidiaries
(In thousands, except per share amounts)
(Unaudited)

 
Three Months Ended November 30, 2019
 
Two Months Ended November 30, 2018
 
Twelve Months Ended November 30, 2019
 
Eleven Months Ended November 30, 2018
 
 
 
 
 
 
 
 
Net revenues
$
1,106,098

 
$
806,594

 
$
3,892,976

 
$
3,764,034

 
 
 
 
 
 
 
 
Income (loss) from continuing operations before income taxes and income (loss) related to associated companies
$
151,320

 
$
(24,573
)
 
$
275,613

 
$
239,077

Income (loss) related to associated companies
81,229

 
(27,297
)
 
202,995

 
57,023

Income (loss) from continuing operations before income taxes
232,549

 
(51,870
)
 
478,608

 
296,100

Income tax provision (benefit)
38,671

 
(32,552
)
 
(483,955
)
 
19,008

Income (loss) from continuing operations
193,878

 
(19,318
)
 
962,563

 
277,092

Income from discontinued operations, net of income tax provision of $0, $0, $0 and $47,045

 

 

 
130,063

Gain on disposal of discontinued operations, net of income tax provision of $0, $0, $0 and $229,553

 

 

 
643,921

Net income (loss)
193,878

 
(19,318
)
 
962,563

 
1,051,076

Net (income) loss attributable to the noncontrolling interests
2,606

 
(233
)
 
1,847

 
12,975

Net (income) loss attributable to the redeemable noncontrolling interests
333

 
31

 
286

 
(37,263
)
Preferred stock dividends
(1,276
)
 
(851
)
 
(5,103
)
 
(4,470
)
Net income (loss) attributable to Jefferies Financial Group Inc. common shareholders
$
195,541

 
$
(20,371
)
 
$
959,593

 
$
1,022,318

 
 
 
 
 
 
 
 
Basic earnings (loss) per common share attributable to Jefferies Financial Group Inc. common shareholders:
 
 
 
 
 
 
 
Income (loss) from continuing operations
$
0.63

 
$
(0.06
)
 
$
3.07

 
$
0.82

Income from discontinued operations

 

 

 
0.27

Gain on disposal of discontinued operations

 

 

 
1.84

Net income (loss)
$
0.63

 
$
(0.06
)
 
$
3.07

 
$
2.93

 
 
 
 
 
 
 
 
Number of shares in calculation
310,266

 
329,101

 
310,694

 
347,261

 
 
 
 
 
 
 
 
Diluted earnings (loss) per common share attributable to Jefferies Financial Group Inc. common shareholders:
 
 
 
 
 
 
 
Income (loss) from continuing operations
$
0.62

 
$
(0.06
)
 
$
3.03

 
$
0.81

Income from discontinued operations

 

 

 
0.26

Gain on disposal of discontinued operations

 

 

 
1.83

Net income (loss)
$
0.62

 
$
(0.06
)
 
$
3.03

 
$
2.90

 
 
 
 
 
 
 
 
Number of shares in calculation
316,566

 
329,101

 
317,032

 
351,275


3



A summary of results for the three months ended November 30, 2019 is as follows (in thousands):
 
Jefferies Group
 
Merchant Banking
 
Corporate
 
Parent Company Interest
 
Consolidation Adjustments
 
Total
Net revenues
$
747,802

 
$
347,210

 
$
10,699

 
$

 
$
387

 
$
1,106,098

 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
Compensation and benefits
422,548

 
19,036

 
16,273

 

 

 
457,857

Cost of sales

 
86,532

 

 

 

 
86,532

Floor brokerage and clearing fees
58,773

 

 

 

 
1,254

 
60,027

Interest expense

 
8,608

 

 
8,750

 

 
17,358

Depreciation and amortization
21,404

 
19,944

 
923

 

 

 
42,271

Selling, general and other expenses
221,206

 
55,783

 
14,963

 

 
(1,219
)
 
290,733

Total expenses
723,931

 
189,903

 
32,159

 
8,750

 
35

 
954,778

Income (loss) from continuing operations before income taxes and income related to associated companies
23,871

 
157,307

 
(21,460
)
 
(8,750
)
 
352

 
151,320

Income related to associated companies

 
81,161

 

 

 
68

 
81,229

Income (loss) from continuing operations before income taxes
$
23,871

 
$
238,468

 
$
(21,460
)
 
$
(8,750
)
 
$
420

 
232,549

Income tax provision from continuing operations
 
 
 
 
 
 
 
 
 
 
38,671

Net income
 
 
 
 
 
 
 
 
 
 
$
193,878


A summary of results for the two months ended November 30, 2018 is as follows (in thousands):
 
Jefferies Group
 
Merchant Banking
 
Corporate
 
Parent Company Interest
 
Consolidation Adjustments
 
Total
Net revenues
$
761,958

 
$
42,204

 
$
7,525

 
$

 
$
(5,093
)
 
$
806,594

 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
Compensation and benefits
408,504

 
17,662

 
7,177

 

 

 
433,343

Cost of sales

 
49,570

 

 

 

 
49,570

Floor brokerage and clearing fees
53,260

 

 

 

 
(842
)
 
52,418

Interest expense

 
4,796

 

 
9,839

 

 
14,635

Depreciation and amortization
17,467

 
9,920

 
570

 

 

 
27,957

Selling, general and other expenses
204,764

 
41,688

 
7,811

 

 
(1,019
)
 
253,244

Total expenses
683,995

 
123,636

 
15,558

 
9,839

 
(1,861
)
 
831,167

Income (loss) from continuing operations before income taxes and loss related to associated companies
77,963

 
(81,432
)
 
(8,033
)
 
(9,839
)
 
(3,232
)
 
(24,573
)
Loss related to associated companies

 
(27,297
)
 

 

 

 
(27,297
)
Income (loss) from continuing operations before income taxes
$
77,963

 
$
(108,729
)
 
$
(8,033
)
 
$
(9,839
)
 
$
(3,232
)
 
(51,870
)
Income tax benefit from continuing operations
 
 
 
 
 
 
 
 
 
 
(32,552
)
Net loss
 
 
 
 
 
 
 
 
 
 
$
(19,318
)

4



A summary of results for the twelve months ended November 30, 2019 is as follows (in thousands):
 
Jefferies Group
 
Merchant Banking
 
Corporate
 
Parent Company Interest
 
Consolidation Adjustments
 
Total
Net revenues
$
3,112,530

 
$
746,369

 
$
32,833

 
$

 
$
1,244

 
$
3,892,976

 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
Compensation and benefits
1,684,054

 
82,832

 
58,005

 

 

 
1,824,891

Cost of sales

 
319,641

 

 

 

 
319,641

Floor brokerage and clearing fees
227,471

 

 

 

 
(4,331
)
 
223,140

Interest expense

 
34,129

 

 
53,048

 

 
87,177

Depreciation and amortization
79,204

 
70,192

 
3,475

 

 

 
152,871

Selling, general and other expenses
797,132

 
175,650

 
39,820

 

 
(2,959
)
 
1,009,643

Total expenses
2,787,861

 
682,444

 
101,300

 
53,048

 
(7,290
)
 
3,617,363

Income (loss) from continuing operations before income taxes and income related to associated companies
324,669

 
63,925

 
(68,467
)
 
(53,048
)
 
8,534

 
275,613

Income related to associated companies

 
202,927

 

 

 
68

 
202,995

Income (loss) from continuing operations before income taxes
$
324,669

 
$
266,852

 
$
(68,467
)
 
$
(53,048
)
 
$
8,602

 
478,608

Income tax benefit from continuing operations
 
 
 
 
 
 
 
 
 
 
(483,955
)
Net income
 
 
 
 
 
 
 
 
 
 
$
962,563


A summary of results for the eleven months ended November 30, 2018 is as follows (in thousands):
 
Jefferies Group
 
Merchant Banking
 
Corporate
 
Parent Company Interest
 
Consolidation Adjustments
 
Total
Net revenues
$
3,183,376

 
$
571,831

 
$
22,300

 
$

 
$
(13,473
)
 
$
3,764,034

 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
Compensation and benefits
1,736,264

 
77,169

 
50,222

 

 
(873
)
 
1,862,782

Cost of sales

 
307,071

 

 

 

 
307,071

Floor brokerage and clearing fees
189,068

 

 

 

 
(4,858
)
 
184,210

Interest expense

 
35,159

 

 
54,090

 

 
89,249

Depreciation and amortization
68,296

 
48,852

 
3,169

 

 

 
120,317

Selling, general and other expenses
780,081

 
150,115

 
35,049

 

 
(3,917
)
 
961,328

Total expenses
2,773,709

 
618,366

 
88,440

 
54,090

 
(9,648
)
 
3,524,957

Income (loss) from continuing operations before income taxes and income related to associated companies
409,667

 
(46,535
)
 
(66,140
)
 
(54,090
)
 
(3,825
)
 
239,077

Income related to associated companies

 
57,023

 

 

 

 
57,023

Income (loss) from continuing operations before income taxes
$
409,667

 
$
10,488

 
$
(66,140
)
 
$
(54,090
)
 
$
(3,825
)
 
296,100

Income tax provision from continuing operations
 
 
 
 
 
 
 
 
 
 
19,008

Income from discontinued operations, net of income tax provision
 
 
 
 
 
 
 
 
 
 
130,063

Gain on disposal of discontinued operations, net of income tax provision
 
 
 
 
 
 
 
 
 
 
643,921

Net income
 
 
 
 
 
 
 
 
 
 
$
1,051,076



5



The following financial tables provide information for the results of Jefferies Group LLC and should be read in conjunction with Jefferies Group LLC's Quarterly Report on Form 10-Q for the quarter ended August 31, 2019 and Annual Report on Form 10-K for the year ended November 30, 2018. Amounts herein pertaining to November 30, 2019 represent a preliminary estimate as of the date of this earnings release and may be revised in Jefferies Group LLC's Annual Report on Form 10-K for the year ended November 30, 2019.
 
Jefferies Group LLC and Subsidiaries
 
Consolidated Statements of Earnings
 
(Amounts in Thousands)
 
(Unaudited)
 
 
 
 
 
 
 
 
 
Quarter Ended
 
 
November 30, 
 2019
 
August 31, 
 2019
 
November 30, 
 2018
Revenues:
 
 
 
 
 
Commissions and other fees (1)
$
182,466

 
$
171,003

 
$
181,271

Principal transactions (2)
135,981

 
147,993

 
25,713

Investment banking
400,513

 
412,533

 
504,589

Asset management fees and revenues (2)
3,935

 
4,220

 
5,084

Interest
333,507

 
383,596

 
336,605

Other (1)
17,134

 
22,286

 
44,681

Total revenues
1,073,536

 
1,141,631

 
1,097,943

Interest expense
325,734

 
364,472

 
335,985

Net revenues
747,802

 
777,159

 
761,958

 
 
 
 
 
 
 
Non-interest expenses:
 
 
 
 
 
Compensation and benefits
422,548

 
411,936

 
408,504

 
 
 
 
 
 
 
Non-compensation expenses:
 
 
 
 
 
Floor brokerage and clearing fees
58,773

 
54,247

 
53,260

Technology and communications
87,931

 
86,649

 
83,320

Occupancy and equipment rental
31,885

 
29,300

 
25,809

Business development
34,728

 
36,526

 
39,523

Professional services
45,296

 
42,379

 
38,170

Underwriting costs
14,617

 
14,647

 
16,485

Other
28,153

 
18,400

 
18,924

Total non-compensation expenses
301,383

 
282,148

 
275,491

Total non-interest expenses
723,931

 
694,084

 
683,995

Earnings before income taxes
23,871

 
83,075

 
77,963

Income tax expense
495

 
18,250

 
16,313

Net earnings
23,376

 
64,825

 
61,650

Net earnings (loss) attributable to noncontrolling interests
(1,784
)
 
(143
)
 
257

Net earnings attributable to Jefferies Group LLC
$
25,160

 
$
64,968

 
$
61,393

 
 
 
 
 
 
 
Pre-tax operating margin
3.2
%
 
10.7
%
 
10.2
%
Effective tax rate
2.1
%
 
22.0
%
 
20.9
%
 
 
 
 
 
 
 
(1)
In the third quarter of 2019, Jefferies Group LLC reorganized the presentation of certain other fees, primarily related to prime brokerage services offered to clients. Jefferies Group LLC's Consolidated Statement of Earnings reflects the reclassification of revenues of $7.6 million from Other revenues to Commissions and other fees for the three months ended November 30, 2018. There is no impact on Total revenues as a result of this change in presentation.

(2)
In the fourth quarter of 2019, Jefferies Group LLC reorganized the presentation of revenues from arrangements which entitle us to certain portions of revenues and/or profits of strategic asset management partners. Such arrangements did not exist prior to the first quarter of 2019 and Jefferies Group LLC's Consolidated Statement of Earnings reflects the reclassification of revenues of $0.9 million from Principal transactions revenues to Asset management fees and revenues for the three months ended August 31, 2019. There is no impact on Total revenues as a result of this change in presentation.

6



 
Jefferies Group LLC and Subsidiaries
 
Consolidated Statements of Earnings
 
(Amounts in Thousands)
 
(Unaudited)
 
 
 
 
 
 
 
Twelve Months Ended
 
 
November 30, 2019
 
November 30, 2018
Revenues:
 
 
 
Commissions and other fees (1)
$
676,309

 
$
663,465

Principal transactions
766,192

 
524,296

Investment banking
1,528,729

 
1,910,203

Asset management fees and revenues
20,285

 
21,214

Interest
1,496,529

 
1,207,095

Other (1)
96,488

 
103,359

Total revenues
4,584,532

 
4,429,632

Interest expense
1,472,002

 
1,246,256

Net revenues
3,112,530

 
3,183,376

 
 
 
 
 
Non-interest expenses:
 
 
 
Compensation and benefits
1,684,054

 
1,736,264

 
 
 
 
 
Non-compensation expenses:
 
 
 
Floor brokerage and clearing fees
227,471

 
189,068

Technology and communications
335,395

 
305,655

Occupancy and equipment rental
119,472

 
100,952

Business development
138,158

 
163,756

Professional services
162,668

 
139,885

Underwriting costs
50,662

 
64,317

Other
69,981

 
73,812

Total non-compensation expenses
1,103,807

 
1,037,445

Total non-interest expenses
2,787,861

 
2,773,709

Earnings before income taxes
324,669

 
409,667

Income tax expense
80,284

 
250,650

Net earnings
244,385

 
159,017

Net earnings (loss) attributable to noncontrolling interests
(1,644
)
 
256

Net earnings attributable to Jefferies Group LLC
$
246,029

 
$
158,761

 
 
 
 
 
Pre-tax operating margin
10.4
%
 
12.9
%
Effective tax rate (2)
24.7
%
 
61.2
%
 
 
 
 
 
(1)
In the third quarter of 2019, Jefferies Group LLC reorganized the presentation of certain other fees, primarily related to prime brokerage services offered to clients. Jefferies Group LLC's Consolidated Statement of Earnings reflects the reclassification of revenues of $28.3 million from Other revenues to Commissions and other fees for the twelve months ended November 30, 2018. There is no impact on Total revenues as a result of this change in presentation.
(2)
The effective tax rate for the twelve months ended November 30, 2018 includes an estimated provisional tax charge of approximately $165 million as a result of the Tax Cuts and Jobs Act ("Tax Act").





7



Jefferies Group LLC and Subsidiaries
Selected Statistical Information
(Amounts in Thousands, Except Other Data)
(Unaudited)
 
 
 
 
 
 
 
 
 
Quarter Ended
 
 
November 30, 2019
 
August 31, 
 2019
 
November 30, 2018
Net Revenues by Source:
 
 
 
 
 
Equities
$
200,128

 
$
193,229

 
$
164,086

Fixed income
163,016

 
148,334

 
86,826

Total sales and trading
363,144

 
341,563

 
250,912

 
 
 
 
 
 
 
Equity
105,119

 
97,494

 
127,942

Debt
100,359

 
101,689

 
152,335

Capital markets
205,478

 
199,183

 
280,277

Advisory
195,035

 
213,350

 
224,312

Other investment banking
(7,501
)
 
(9,108
)
 
17,523

Total investment banking
393,012

 
403,425

 
522,112

 
 
 
 
 
 
 
Other
4,948

 
12,374

 
22,448

 
 
 
 
 
 
 
Total Capital Markets (1) (2)
761,104

 
757,362

 
795,472

 
 
 
 
 
 
 
Asset management fees and revenues (3)
3,935

 
4,220

 
5,084

Investment return (3) (4) (5)
(7,637
)
 
24,866

 
(23,783
)
Allocated net interest (4) (6)
(9,600
)
 
(9,289
)
 
(14,815
)
Total Asset Management
(13,302
)
 
19,797

 
(33,514
)
 
 
 
 
 
 
 
Net Revenues
$
747,802

 
$
777,159

 
$
761,958

 
 
 
 
 
 
 
Other Data:
 
 
 
 
 
Number of trading days
63

 
64

 
63

Number of trading loss days
10

 
10

 
18

 
 
 
 
 
 
 
Average firmwide VaR (in millions) (7)
$
7.70

 
$
9.71

 
$
9.59

 
 
 
 
 
 
 
(1)
Includes net interest revenue of $22.6 million, $30.4 million and $19.7 million for the quarters ended November 30, 2019, August 31, 2019, and November 30, 2018, respectively.
(2)
Allocated net interest is not separately disaggregated in presenting our Capital Markets reportable segment within Jefferies Group LLC's Net Revenues by Source. This presentation is aligned to our Capital Markets internal performance measurement.
(3)
In the fourth quarter of 2019, Jefferies Group LLC reorganized the presentation of revenues from arrangements which entitle us to certain portions of revenues and/or profits of strategic asset management partners. Such arrangements did not exist prior to the first quarter of 2019 and Jefferies Group LLC's Net Revenues by Source reflects the reclassification of revenues of $0.9 million from Investment return revenues to Asset management fees and revenues for the three months ended August 31, 2019. There is no impact on Total Asset Management revenues as a result of this change in presentation.
(4)
Beginning with the first quarter of 2019, Net revenues attributed to the Investment return in Jefferies Group LLC's Asset Management reportable segment have been disaggregated to separately present Investment return and Allocated net interest (see footnotes 5 and 6). This disaggregation is intended to increase transparency and to make clearer actual Investment return. We offer third-party investors the opportunity to co-invest in our asset management funds and separately managed accounts alongside Jefferies Group LLC. We believe that aggregating Investment return and Allocated net interest would obscure the Investment return by including an amount that is unique to Jefferies Group LLC's credit spreads, debt maturity profile, capital structure, liquidity risks and allocation methods, none of which are pertinent to the Investment returns generated by the performance of the portfolio.
(5)
Includes net interest expense of $5.2 million, $2.0 million and $4.2 million for the quarters ended November 30, 2019, August 31, 2019, and November 30, 2018, respectively.
(6)
Allocated net interest represents the allocation of Jefferies Group LLC's long-term debt interest expense to Jefferies Group LLC's Asset Management reportable segment, net of interest income on Jefferies Group LLC's Cash and cash equivalents and other sources of liquidity (refer to page 10).
(7)
VaR estimates the potential loss in value of Jefferies Group LLC's 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 Jefferies Group LLC's Annual Report on Form 10-K for the year ended November 30, 2019.

8



Jefferies Group LLC and Subsidiaries
Selected Statistical Information
(Amounts in Thousands, Except Other Data)
(Unaudited)
 
 
 
 
 
 
 
Twelve Months Ended
 
 
November 30, 2019
 
November 30, 2018
Net Revenues by Source:
 
 
 
Equities
$
773,979

 
$
665,557

Fixed income
681,362

 
559,712

Total sales and trading
1,455,341

 
1,225,269

 
 
 
 
 
Equity
361,972

 
454,555

Debt
407,336

 
635,606

Capital markets
769,308

 
1,090,161

Advisory
767,421

 
820,042

Other investment banking
(14,617
)
 
3,638

Total investment banking
1,522,112

 
1,913,841

 
 
 
 
 
Other
58,535

 
45,316

 
 
 
 
 
Total Capital Markets (1) (2)
3,035,988

 
3,184,426

 
 
 
 
 
Asset management fees and revenues
20,285

 
21,214

Investment return (3) (4)
96,805

 
16,971

Allocated net interest (3) (5)
(40,548
)
 
(39,235
)
Total Asset Management
76,542

 
(1,050
)
 
 
 
 
 
Net Revenues
$
3,112,530

 
$
3,183,376

 
 
 
 
 
Other Data:
 
 
 
Number of trading days
250

 
252

Number of trading loss days
33

 
45

 
 
 
 
 
Average firmwide VaR (in millions) (6)
$
8.79

 
$
7.56

 
 
 
 
 
(1)
Includes net interest revenue of $74.0 million and $8.5 million for the twelve months ended November 30, 2019 and 2018, respectively.
(2)
Allocated net interest is not separately disaggregated in presenting our Capital Markets reportable segment within Jefferies Group LLC's Net Revenues by Source. This presentation is aligned to our Capital Markets internal performance measurement.
(3)
Beginning with the first quarter of 2019, Net revenues attributed to the Investment return in Jefferies Group LLC's Asset Management reportable segment have been disaggregated to separately present Investment return and Allocated net interest (see footnotes 4 and 5). This disaggregation is intended to increase transparency and to make clearer actual Investment return. We offer third-party investors the opportunity to co-invest in our asset management funds and separately managed accounts alongside Jefferies Group LLC. We believe that aggregating Investment return and Allocated net interest would obscure the Investment return by including an amount that is unique to Jefferies Group LLC's credit spreads, debt maturity profile, capital structure, liquidity risks and allocation methods, none of which are pertinent to the Investment returns generated by the performance of the portfolio.
(4)
Includes net interest expense of $8.9 million and $8.4 million for the twelve months ended November 30, 2019 and 2018, respectively.
(5)
Allocated net interest represents the allocation of Jefferies Group LLC's long-term debt interest expense to Jefferies Group LLC's Asset Management reportable segment, net of interest income on Jefferies Group LLC's Cash and cash equivalents and other sources of liquidity (refer to page 10).
(6)
VaR estimates the potential loss in value of Jefferies Group LLC's 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 Jefferies Group LLC's Annual Report on Form 10-K for the year ended November 30, 2019.

9



Jefferies Group LLC and Subsidiaries
Financial Highlights
(Amounts in Millions, Except Where Noted)
(Unaudited)
 
 
 
 
 
 
 
Quarter Ended
 
November 30, 
 2019
 
August 31, 
 2019
 
November 30, 
 2018
Financial position:
 
 
 
 
 
Total assets (1)
$
43,516

 
$
43,094

 
$
41,169

Average total assets for the period (1)
$
52,539

 
$
53,097

 
$
49,427

Average total assets less goodwill and intangible assets for the period (1)
$
50,727

 
$
51,281

 
$
47,653

 
 
 
 
 
 
Cash and cash equivalents (1)
$
5,568

 
$
4,665

 
$
5,146

Cash and cash equivalents and other sources of liquidity (1) (2)
$
6,918

 
$
6,074

 
$
6,604

Cash and cash equivalents and other sources of liquidity - % total assets (1) (2)
15.9
%
 
14.1
%
 
16.0
%
Cash and cash equivalents and other sources of liquidity - % total assets less goodwill and intangible assets (1) (2)
16.6
%
 
14.7
%
 
16.8
%
 
 
 
 
 
 
Financial instruments owned (1)
$
16,363

 
$
16,371

 
$
16,400

Goodwill and intangible assets (1)
$
1,814

 
$
1,811

 
$
1,825

 
 
 
 
 
 
Total equity (including noncontrolling interests) (1)
$
6,130

 
$
6,190

 
$
6,182

Total Jefferies Group LLC member's equity (1)
$
6,125

 
$
6,183

 
$
6,180

Tangible Jefferies Group LLC member's equity (1) (3)
$
4,311

 
$
4,372

 
$
4,356

 
 
 
 
 
 
Level 3 financial instruments:
 
 
 
 
 
Level 3 financial instruments owned (1) (4)
$
307

 
$
363

 
$
337

Level 3 financial instruments owned - % total assets (1) (4)
0.7
%
 
0.8
%
 
0.8
%
Level 3 financial instruments owned - % total financial instruments (1) (4)
1.9
%
 
2.2
%
 
2.1
%
Level 3 financial instruments owned - % tangible Jefferies Group LLC member's equity (1) (4)
7.1
%
 
8.3
%
 
7.7
%
 
 
 
 
 
 
Other data and financial ratios:
 
 
 
 
 
Total long-term capital (1) (5)
$
12,343

 
$
12,219

 
$
11,840

Leverage ratio (1) (6)
7.1

 
7.0

 
6.7

Tangible gross leverage ratio (1) (7)
9.7

 
9.4

 
9.0

 
 
 
 
 
 
Number of trading days
63

 
64

 
63

Number of trading loss days
10

 
10

 
18

Average firmwide VaR (8)
$
7.70

 
$
9.71

 
$
9.59

 
 
 
 
 
 
Number of employees, at period end
3,815

 
3,776

 
3,596













10



Jefferies Group LLC and Subsidiaries
Financial Highlights - Footnotes
 
 
 
 
 
 
 
 
(1)
Amounts pertaining to November 30, 2019 represent a preliminary estimate as of the date of this earnings release and may be revised in Jefferies Group LLC's Annual Report on Form 10-K for the fiscal year ended November 30, 2019.

(2)
At November 30, 2019, 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 $973 million, in aggregate, and $377 million, being the estimated amount of additional secured financing that could be reasonably expected to be obtained from Jefferies Group LLC's financial instruments that are currently not pledged after considering reasonable financing haircuts. The corresponding amounts included in other sources of liquidity at August 31, 2019 were $1,063 million and $345 million, respectively, and at November 30, 2018, were $959 million and $499 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, 2019, August 31, 2019 and November 30, 2018, total long-term capital includes Jefferies Group LLC's long-term debt of $6,214 million, $6,030 million and $5,657 million, respectively, and total equity. Long-term debt included in total long-term capital is reduced by amounts outstanding under the revolving credit facility, amounts from secured term loans and 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 Jefferies Group LLC's leverage ratio.

(8)
VaR estimates the potential loss in value of Jefferies Group LLC's 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 Jefferies Group LLC's Annual Report on Form 10-K for the year ended November 30, 2019.


11




Jefferies Financial Group Inc.
Non-GAAP Reconciliations

The following tables reconcile Jefferies Financial Group non-GAAP measures to their respective U.S. GAAP measures. Management believes such non-GAAP measures are useful to investors as they allow them to view our results through the eyes of management, while facilitating a comparison across historical periods. These measures should not be considered a substitute for, or superior to, measures prepared in accordance with U.S. GAAP.

Jefferies Financial Group Net Income and Earnings Per Share GAAP Reconciliation

Reconciliation of Jefferies Financial Group net income to adjusted net income (a non-GAAP measure) and diluted earnings per share to adjusted diluted earnings per share (a non-GAAP measure) (in thousands, except per share amounts):
 
 
Twelve months ended
 November 30, 2019
 
 
 
Jefferies Financial Group net income (GAAP)
 
$
959,593

Accumulated other comprehensive income tax benefit (1)
 
(544,583
)
Jefferies Financial Group adjusted net income (non-GAAP)
 
$
415,010

 
 
 
Jefferies Financial Group diluted earnings per share (GAAP)
 
$
3.03

Accumulated other comprehensive income tax benefit (1)
 
(1.71
)
Jefferies Financial Group adjusted diluted earnings per share (non-GAAP)
 
$
1.32

 
 
 
(1) During the second quarter of 2019, in connection with the closing of our corporate available for sale portfolio, we realized a non-cash tax benefit of $545 million. This tax benefit was generated primarily through activity during 2008 to 2010 and since then has remained an unrealized balance within equity until the liquidation of the portfolio. This realization did not impact total equity, as the increase in retained earnings was offset by a corresponding decrease in accumulated other comprehensive income.







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