Jefferies Reports Second Quarter 2014 Financial Results

  Jefferies Reports Second Quarter 2014 Financial Results

Business Wire

NEW YORK -- June 17, 2014

Jefferies Group LLC today announced financial results for its fiscal second
quarter 2014.

Highlights for the three months ended May 31, 2014:

  *Net revenues of $723 million
  *Net earnings of $61 million
  *Investment banking net revenues of $331 million
  *Trading net revenues of $395 million

Highlights for the six months ended May 31, 2014:

  *Net revenues of $1,622 million
  *Net earnings of $174 million
  *Investment banking net revenues of $745 million
  *Trading net revenues of $870 million

Richard B. Handler, Chairman and Chief Executive Officer of Jefferies,
commented: “We are pleased to report quarterly results well-above those of the
same quarter last year, due to an over 19% increase in our investment banking
net revenues and an almost 7% increase in our overall trading net revenues.
Our momentum has continued in investment banking and we are continuing to add
to our team to capitalize further on our broad capabilities. Without the
impact of marking to market certain equity block holdings, our equity and
fixed income net revenues each declined about 5% in the most recent quarter
compared to the same quarter last year. During the second quarter, clients
have been cautious and generally less active in trading due to the unsettled
markets, but we believe Jefferies’ results reflect gains in market share. Our
industry and competitors are in the midst of significant changes. We believe
our platform, strategy, business mix and unique culture will allow us to
continue to provide a differentiated and value-added service to our clients.”

The attached financial tables should be read in connection with our Quarterly
Report on Form 10-Q for the quarter ended February 28, 2014 and our Annual
Report on Form 10-K for the year ended November 30, 2013.

Jefferies, the 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. The firm provides a full range of
investment banking, sales, trading, research and strategy across the spectrum
of equities, fixed income, foreign exchange, futures and commodities, 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)
                                                             
                     Successor                                     Predecessor
                     Quarter       Six Months      Quarter         Quarter
                     Ended         Ended           Ended           Ended
                     May 31,       May 31, 2014    May 31,         February
                     2014                          2013            28, 2013
                                                                     
Revenues:
Commissions          $  167,378    $  329,441      $  162,759      $ 146,240
Principal               183,416       421,779         134,571        300,278
transactions
Investment banking      331,149       745,469         277,134        288,278
Asset management
fees and
investment income       (3,101)       6,856           10,527         10,883
(loss) from
managed funds
Interest income         283,540       532,808         258,665        249,277
Other revenues         8,404        31,473         26,245        27,004
Total revenues          970,786       2,067,826       869,901        1,021,960
Interest expense       247,794      445,806        211,463       203,416
Net revenues            722,992       1,622,020       658,438        818,544
Interest on
mandatorily
redeemable
preferred              -            -              3,368         10,961
interests of
consolidated
subsidiaries
Net revenues, less
interest on
mandatorily
redeemable             722,992      1,622,020      655,070       807,583
preferred
interests of
consolidated
subsidiaries
                                                                     
Non-interest
expenses:
Compensation and        404,876       912,775         373,880        474,217
benefits
                                                                     
Non-compensation
expenses:
Floor brokerage         54,020        103,533         48,902         46,155
and clearing fees
Technology and          70,257        134,563         63,839         59,878
communications
Occupancy and           26,673        53,175          32,225         24,309
equipment rental
Business                24,917        51,393          22,732         24,927
development
Professional            25,345        50,164          29,519         24,135
services
Other                  17,767       35,011         18,720        14,475
Total
non-compensation       218,979      427,839        215,937       193,879
expenses
Total non-interest     623,855      1,340,614      589,817       668,096
expenses
Earnings before         99,137        281,406         65,253         139,487
income taxes
Income tax expense     37,323       104,200        25,007        48,645
Net earnings            61,814        177,206         40,246         90,842
Net earnings
attributable to        488          3,448          738           10,704
noncontrolling
interests
Net earnings
attributable to
Jefferies Group      $  61,326     $  173,758      $  39,508       $ 80,138
LLC/common
stockholders
                                                                     

JEFFERIES GROUP LLC AND SUBSIDIARIES
SELECTED STATISTICAL INFORMATION
(Amounts in Thousands, Except Other Data)
(Unaudited)
                                                             
                Successor                                          Predecessor
                Quarter Ended   Six Months Ended   Quarter         Quarter
                                                   Ended           Ended
                May 31, 2014    May 31, 2014       May 31,         February
                                                   2013            28, 2013
Revenues by
Source
Equities        $  177,238      $  366,061         $ 141,590       $ 167,354
Fixed income      217,706       503,634         229,187       352,029 
Total              394,944         869,695           370,777         519,383
                                                                   
                                                                   
Equity             83,726          178,464           53,564          61,380
Debt              147,000       320,038         133,714       140,672 
Capital            230,726         498,502           187,278         202,052
markets
Advisory          100,423       246,967         89,856        86,226  
Investment         331,149         745,469           277,134         288,278
banking
                                                                   
Asset
management
fees and
investment
income (loss)
from managed
funds:
Asset
management         4,927           14,373            11,332          11,083
fees
Investment
loss from         (8,028   )     (7,517     )     (805    )      (200    )
managed funds
Total             (3,101   )     6,856           10,527        10,883  
Net revenues      722,992       1,622,020       658,438       818,544 
Interest on
mandatorily
redeemable
preferred         -             -               3,368         10,961  
interests of
consolidated
subsidiaries
Net revenues,
less
mandatorily
redeemable      $  722,992     $  1,622,020      $ 655,070      $ 807,583 
preferred
interests of
consolidated
subsidiaries
                                                                   
Other Data
Number of          63              124               64              60
trading days
                                                                   
Average
firmwide VaR    $  14.94        $  15.60           $ 8.77          $ 9.27
(in millions)
(A)
Average
firmwide VaR
excluding       $  8.63         $  10.60           $ 5.77          $ 5.99
Knight
Capital (in
millions) (A)
Average
firmwide VaR
excluding
Knight
Capital and     $  7.97         $  8.59            $ 5.77          $ 5.99
Harbinger
Group Inc.
(in millions)
(A)
                                                                   

(A) 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, 2013.

JEFFERIES GROUP LLC AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Amounts in Millions, Except Where Noted)
(Unaudited)
                                                             
                  Successor                                        Predecessor
                  Quarter Ended   Six Months       Quarter         Quarter
                                  Ended            Ended           Ended
                  May 31, 2014    May 31, 2014     May 31,         February
                                                   2013            28, 2013
                                                                   
Results:
Net earnings
attributable to
Jefferies Group   $  61,326       $  173,758       $  39,508       $  80,138
LLC / common
stockholders
(in thousands)
Pretax
operating            13.7    %       17.3     %       10.0   %        17.3   %
margin
Effective tax        37.6    %       37.0     %       38.3   %        34.9   %
rate
                                                                   
Financial
position:
Total assets      $  43,610       $  43,610        $  38,938       $  37,800
(1)
Average total
assets for the    $  50,379       $  49,749        $  47,150       $  45,418
period (1)
Average total
assets less
goodwill and      $  48,394       $  47,764        $  45,157       $  45,039
intangible
assets for the
period (1)
                                                                   
Cash and cash     $  3,958        $  3,958         $  3,403        $  3,018
equivalents (1)
Cash and cash
equivalents and
other sources     $  5,824        $  5,824         $  5,187        $  4,726
of liquidity
(1) (2)
Cash and cash
equivalents and
other sources        13.4    %       13.4     %       13.3   %        12.5   %
of liquidity -
% total assets
(1) (2)
Cash and cash
equivalents and
other sources
of liquidity -       14.0    %       14.0     %       14.0   %        12.6   %
% total assets
less goodwill
and intangible
assets (1) (2)
                                                                   
Financial
instruments       $  17,144       $  17,144        $  15,270       $  16,414
owned (1)
Goodwill and
intangible        $  1,984        $  1,984         $  1,982        $  380
assets (1)
                                                                   
Total equity
(including        $  5,527        $  5,527         $  5,183        $  3,688
noncontrolling
interests)
Total member's
/ common          $  5,496        $  5,496         $  5,147        $  3,332
stockholders'
equity
Tangible
member's /
common            $  3,512        $  3,512         $  3,165        $  2,952
stockholders'
equity (3)
                                                                   
Level 3
financial
instruments:
Level 3
financial         $  490          $  490           $  447          $  505
instruments
owned (1) (4)
Level 3
financial
instruments          1.1     %       1.1      %       1.1    %        1.3    %
owned - % total
assets (1)
Level 3
financial
instruments
owned - % total      2.9     %       2.9      %       2.9    %        3.1    %
financial
instruments
owned (1)
Level 3
financial
instruments
owned - %
tangible             14.0    %       14.0     %       14.1   %        17.1   %
member's /
common
stockholders'
equity (1)
                                                                   
Other data and
financial
ratios:
Total capital     $  11,941       $  11,941        $  11,271       $  9,624
(1) (5)
Leverage ratio       7.9             7.9              7.5             10.2
(1) (6)
Adjusted
leverage ratio       10.0            10.0             9.9             10.4
(1) (7)
Tangible gross
leverage ratio       11.9            11.9             11.7            12.7
(1) (8)
Leverage ratio
- excluding          10.0            10.0             9.5             N/A
merger impacts
(1) (9)
                                                                   
Number of            63              124              64              60
trading days
                                                                   
Average
firmwide VaR      $  14.94        $  15.60         $  8.77         $  9.27
(10)
Average
firmwide VaR
excluding         $  8.63         $  10.60         $  5.77         $  5.99
Knight Capital
(10)
Average
firmwide VaR
excluding         $  7.97         $  8.59          $  5.77         $  5.99
Knight Capital
and Harbinger
Group Inc. (10)
                                                                   
Number of
employees, at        3,785           3,785            3,785           3,841
period end
                                                                             

                     JEFFERIES GROUP LLC AND SUBSIDIARIES
                       FINANCIAL HIGHLIGHTS - FOOTNOTES

(1) Amounts pertaining to May 31, 2014 represent a preliminary estimate as of
the date of this earnings release and may be revised in our Quarterly Report
on Form 10-Q for the three months ended May 31, 2014.

(2) As of May 31, 2014, 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 $1,202 million, in aggregate, and $664 million, being
the total of the estimated amount of additional secured financing that could
be reasonably expected to be obtained from our financial instruments that are
currently not pledged at reasonable financing haircuts and additional funds
available under the committed senior secured revolving credit facility
available for working capital needs of Jefferies Bache. The corresponding
amounts included in other sources of liquidity as of May 31, 2013 were $1,221
million and $562 million, and as of February 28, 2013, were $1,132 million and
$576 million, respectively.

(3) Tangible member's / common stockholders' equity (a non-GAAP financial
measure) represents total member's / common stockholders' equity less goodwill
and identifiable intangible assets. We believe that tangible member's / common
stockholders' equity is meaningful for valuation purposes, as financial
companies are often measured as a multiple of tangible member's / common
stockholders' 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) As of May 31, 2014 and 2013, total capital includes our long-term debt of
$6,414 million and $6,088 million, respectively, and total equity. As of
February 28, 2013, total capital includes our long term debt, mandatorily
redeemable convertible preferred stock, mandatorily redeemable preferred
interest of consolidated subsidiaries, in aggregate $5,936 million, and total
equity. Long-term debt included in total capital is reduced by amounts
outstanding under the revolving credit facility and the amount of debt
maturing in less than one year, where applicable.

(6) Leverage ratio equals total assets divided by total equity.

(7) Adjusted leverage ratio (a non-GAAP financial measure) equals adjusted
assets divided by tangible total equity, being total equity less goodwill and
identifiable intangible assets. Adjusted assets (a non-GAAP financial measure)
equals total assets less securities borrowed, securities purchased under
agreements to resell, cash and securities segregated, goodwill and
identifiable intangibles plus financial instruments sold, not yet purchased
(net of derivative liabilities). As of May 31, 2014, May 31, 2013 and February
28, 2013 adjusted assets were $35,577 million, $31,648 million and $34,343
million, respectively. We believe that adjusted assets is a meaningful measure
as it excludes certain assets that are considered of lower risk as they are
generally self-financed by customer liabilities through our securities lending
activities.

(8) Tangible gross leverage ratio (a non-GAAP financial measure) equals total
assets less goodwill and identifiable intangible assets divided by tangible
member's / common stockholders' equity. The tangible gross leverage ratio is
used by Rating Agencies in assessing our leverage ratio.

(9) Leverage ratio - excluding merger impacts (a non-GAAP financial measure)
is calculated as follows:

                                                May 31,       May 31,
$ millions                                         2014             2013
Total assets                                       $ 43,610         $ 38,938
Goodwill and acquisition accounting fair
value adjustments on the merger with                 (1,957 )         (1,957 )
Leucadia
Net amortization to date on asset related           37             9      
purchase accounting adjustments
Total assets excluding the impact of the           $ 41,690        $ 36,990 
merger
                                                                    
Total equity                                       $ 5,527          $ 5,183
Equity arising from merger consideration             (1,426 )         (1,426 )
Preferred stock assumed by Leucadia                  125              125
Net amortization to date of purchase                (48    )        (8     )
accounting adjustments, net of tax
Total equity excluding the impact of the           $ 4,178         $ 3,874  
merger
                                                                    
Leverage ratio - excluding merger impacts           10.0           9.5    
                                                                             

(10) 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, 2013.

Contact:

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