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Jefferies Reports Fourth Quarter And 2012 Fiscal Year Financial Results

A conference call with management discussion of these financial results will be held today, Tuesday, December 18, 2012, at 9:00 AM Eastern (date and time subject to change). Investors and securities industry professionals may access the management discussion by calling 877-710-9938 or 702-928-7183. A one-week replay of the call will also be available at 855-859-2056 or 404-537-3406 (conference ID # 73941351). A live audio webcast and delayed replay can also be accessed at www.jefferies.com.

Jefferies Group, Inc. (NYSE: JEF), 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. Jefferies provides a full range of investment banking, sales, trading, research and strategy across the spectrum of equities, fixed income, foreign exchange, futures and commodities, and also select asset and wealth management strategies, in the Americas, Europe and Asia.

      1.   Adjustments to net earnings to common shareholders and net earnings per common share on a non-GAAP basis include donations to Hurricane Sandy relief and transaction costs associated with the announced merger with Leucadia, amortization of intangibles and compensation awards related to our Bache and Hoare Govett acquisitions and interest expense incurred as a result of debt extinguishment accounting, from prior quarters, all on an after-tax basis.
2. Adjustments to net earnings to common shareholders and net earnings per common share on a non-GAAP basis include gain on debt extinguishment related to trading activities in our own debt, and amortization of intangible assets and compensation awards and other severance and bonus costs related to our Bache acquisition, all on an after-tax basis.
3. Adjustments to net earnings to common shareholders and net earnings per common share on a non-GAAP basis include a bargain purchase gain and compensation awards on our Hoare Govett acquisition, a gain on debt extinguishment relating to trading activities in our own debt and impairment charges on intangibles related to our Bache acquisition, all on an after-tax basis.
4. Adjustments to net earnings to common shareholders and net earnings per common share on a non-GAAP basis include a bargain purchase gain on our Bache acquisition, which is not a taxable item and transaction and integration expenses related to the Bache acquisition on an after-tax basis.

-- see financial tables in attached --

                 
JEFFERIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in Thousands, Except Per Share Amounts)
(Unaudited)
     
Three Months Ended Year Ended
November 30, November 30, November 30, November 30,
2012 2011 2012 2011
Revenues:
Commissions $ 127,074 $ 130,619 $ 485,569 $ 534,726
Principal transactions 242,140 36,571 1,035,974 428,035
Investment banking 282,962 261,298 1,125,883 1,122,528

Asset management fees and investment income from managed funds

16,318 6,623 26,966 44,125
Interest income 242,904 317,485 1,031,839 1,248,132
Other revenues   61,872     46,144     164,974     152,092  
Total revenues 973,270 798,740 3,871,205 3,529,638
Interest expense   204,421     244,757     872,421     980,825  
Net revenues 768,849 553,983 2,998,784 2,548,813
Interest on mandatorily redeemable preferred interests of

consolidated subsidiaries

  8,279     (2,561 )   42,883     3,622  
Net revenues, less mandatorily redeemable preferred

interests

  760,570     556,544     2,955,901     2,545,191  
 
Non-interest expenses:
Compensation and benefits 460,404 308,137 1,770,798 1,482,604
 

Non-compensation expenses:

Floor brokerage and clearing fees 29,106 33,837 120,145 126,313
Technology and communications 64,051 62,377 244,511 215,940
Occupancy and equipment rental 25,815 23,954 97,397 84,951
Business development 22,968 29,397 95,330 93,645
Professional services 27,771 17,868 73,427 66,305
Other   16,480     10,294     62,498     56,099  
Total non-compensation expenses   186,191     177,727     693,308     643,253  
Total non-interest expenses   646,595     485,864     2,464,106     2,125,857  
Earnings before income taxes 113,975 70,680 491,795 419,334
Income tax expense   34,243     25,066     168,646     132,966  
Net earnings 79,732 45,614 323,149 286,368
Net earnings (loss) to noncontrolling interests   8,128     (2,772 )   40,740     1,750  
Net earnings to common shareholders $ 71,604   $ 48,386   $ 282,409   $ 284,618  
Earnings per common share:
Basic $ 0.31   $ 0.21   $ 1.23   $ 1.28  
Diluted $ 0.31   $ 0.21   $ 1.22   $ 1.28  
 
Weighted average common shares:
Basic 214,415 215,628 215,989 211,056
Diluted 218,527 215,629 220,101 215,171
 
 
Compensation and benefits / Net revenues 59.9 % 55.6 % 59.1 % 58.2 %
 
Effective tax rate 30.0 % 35.5 % 34.3 % 31.7 %
 

     
JEFFERIES GROUP, INC. AND SUBSIDIARIES
SELECTED STATISTICAL INFORMATION
(Amounts in Thousands, Except Other Data)
(Unaudited)
             
Quarter Ended
November 30, August 31, November 30,
2012 2012 2011

Revenues by Source

Equities $ 176,595 $ 209,980 $ 124,305
Fixed Income 292,974 265,679 140,651
Other   -   -     21,106  
Total 469,569 475,659 286,062
 
 
Equity 52,919 39,068 26,936
Debt   145,772   87,894     62,090  
Capital markets 198,691 126,962 89,026
Advisory   84,271   133,201     172,272  
Investment banking 282,962 260,163 261,298
 

Asset management fees and investment income / (loss) from managed funds:

Asset management fees 9,680 8,583 9,162
Investment income / (loss) from managed funds   6,638   (5,467 )   (2,539 )
Total   16,318   3,116     6,623  
Net revenues   768,849   738,938     553,983  
Interest on mandatorily redeemable preferred interests of consolidated subsidiaries   8,279   8,304     (2,561 )
Net revenues, less mandatorily redeemable preferred interests $ 760,570 $ 730,634   $ 556,544  
 

Other Data

Number of trading days 63 65 63
 
Average firmwide VaR (in millions) (1) $ 13.38 $ 10.53 $ 9.43
Average firmwide VaR excluding Knight Capital (in millions) (1) $ 7.95 $ 8.35 N/a
 

(1) VaR is 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, 2011.

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