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Jefferies Reports Fiscal Second Quarter 2013 Financial Results

Jefferies Group LLC today announced financial results for its fiscal second quarter 2013.

Highlights for the three months ended May 31, 2013:

  • Net revenues of $646 million
  • Net earnings of $42 million
  • Investment banking net revenues of $277 million
  • Trading revenues of $359 million

Richard B. Handler, Chairman and Chief Executive Officer of Jefferies, commented: “Our results reflect improved performance in our core equity sales and trading business, and the continued durability of our investment banking efforts. By contrast, there was a significant slowdown in fixed income activity during March and April, that offset better fixed income results in May. Concerns about the tapering of the Federal Reserve's Quantitative Easing programs led to subdued fixed income secondary volumes and opportunities, particularly when compared to our exceptionally strong first quarter performance. There were no meaningful trading losses during the quarter and the fixed income trading environment can best be characterized as 'tepid and cautious'. Our investment in Knight Capital was marked down by $6 million, reflecting the change in the Knight stock price in the second quarter. Second quarter investment banking performance was respectable and momentum appears to be building for our third and fourth quarters, as our backlog is strong and improving.”

Peregrine C. Broadbent, Chief Financial Officer of Jefferies commented: “As the table below shows, every balance sheet, capital, liquidity and other risk metric continues to demonstrate our prudent risk management philosophy. At period end our gross leverage ratio, excluding the impact of the Leucadia purchase accounting, was 9.5 1 times equity and Level 3 assets were $502 million and remain at about 3% of inventory. Without Knight, there was 1 day where a trading loss occurred during the quarter.”

  Successor May 31, 2013   Predecessor February 28, 2013
  • Total assets, excluding goodwill and intangibles 1
$ 37.0 billion $ 37.4 billion
  • Tangible member's/common shareholders' equity 1
$ 3.17 billion $ 2.95 billion
  • Liquidity buffer 1

$ 5.2 billion

$ 4.7 billion

  • Level 3 assets
$ 502 million $ 565 million
  • Average VaR 2
$ 8.77 million $ 9.27 million
  • Average VaR excluding Knight Capital holdings 2
$ 5.77 million $ 5.99 million

1 This represents a non-GAAP measure. Refer to the Financial Highlights table on page 5 and related footnotes. 2 This measure is reflected on a period basis.

On March 1, 2013, Jefferies Group, Inc. (the “Predecessor Company”), in connection with our merger with Leucadia National Corporation (“Leucadia”), converted into a limited liability company, Jefferies Group LLC (the ”Successor Company”) and became a wholly-owned subsidiary of Leucadia. The acquisition method of accounting, which involves recording all of our assets and liabilities at their fair values on the merger date, has been pushed down to form a new accounting basis for the Successor Company.

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