This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Jefferies Reports Record Fiscal Fourth-Quarter 2013 Financial Results

Stocks in this article: LUK

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

Highlights for the three months ended November 30, 2013:

  • Net revenues of $936 million
  • Net earnings of $120 million
  • Investment banking net revenues of $417 million
  • Equities net revenues of $294 million
  • Fixed Income net revenues of $212 million

Richard B. Handler, Chairman and Chief Executive Officer of Jefferies, commented: “Our results reflect exceptional quarterly performance in our investment banking efforts, a solid performance from our core global equity businesses, and a very significant improvement in our fixed income results versus the third-quarter. Our investment banking performance benefited from a strong equities and leveraged finance new issues market and demonstrates our significant market presence and value added capabilities. Our equities results include the impact of $110 million in pre-tax unrealized mark-to-market gains on our holdings of shares of Knight Capital and Harbinger Group. Fixed income customer flows improved significantly from last quarter. While our results for the full fiscal year 2013 were below those of 2012, primarily due to the difficult mid-year fixed income environment, we believe the strong finish to the year, combined with the continued positive momentum in all of our core businesses, positions us well for 2014. We thank our clients, our employees, our bondholders and all our business partners for their continued support.”

The financial tables attached should be read in connection with our Quarterly Report on Form 10-Q for the quarter ended August 31, 2013 and our Annual Report on Form 10-K for the year ended November 30, 2012.

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, and also select asset and wealth management strategies, 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 Ended Quarter Ended Quarter Ended
November 30, 2013 August 31, 2013 November 30, 2012
 
Revenues:
Commissions

$

 

141,594

$

 

138,736

$

 

127,074

Principal transactions 289,430 (24,910) 242,140
Investment banking 417,044 309,339 282,962
Asset management fees and

investment income from managed funds

12,017 13,549 16,318
Interest income 224,911 230,672 242,904
Other revenues     39,320     28,630     61,872
Total revenues 1,124,316 696,016 973,270
Interest expense     188,609     178,987     204,421
Net revenues 935,707 517,029 768,849
Interest on mandatorily redeemable preferred interests of

consolidated subsidiaries

  -     -     8,279
Net revenues, less interest on mandatorily redeemable preferred

interests of consolidated subsidiaries

  935,707     517,029     760,570
 
Non-interest expenses:
Compensation and benefits 546,257 293,771 460,404
546,332
Non-compensation expenses:
Floor brokerage and clearing fees 37,866 34,500 29,106
Technology and communications 67,578 62,266 64,051
Occupancy and equipment rental 28,270 26,205 25,815
Business development 22,759 17,624 22,968
Professional services 18,014 25,269 27,771
Other     23,593     34,012     16,480
Total non-compensation expenses     198,080     199,876     186,191
Total non-interest expenses     744,337     493,647     646,595
Earnings before income taxes 191,370 23,382 113,975
Income tax expense     66,785     8,493     34,243
Net earnings 124,585 14,889 79,732
Net earnings attributable to noncontrolling interests (A)     4,531     3,149     8,128
Net earnings attributable to Jefferies Group LLC/ common shareholders

$

 

120,054

$

 

11,740

$

 

71,604

 
Compensation and benefits / Net revenues 58.4% 56.8% 59.9%
 
Effective tax rate 34.9% 36.3% 30.0%
 
(A) For the quarters ended November 30, 2013 and August 31, 2013, this line item represents net earnings attributable to third party interests in certain asset management entities and investment vehicles managed by us, including a Leucadia interest.

           
JEFFERIES GROUP LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in Thousands)
(Unaudited)
 
Successor Predecessor
Nine Months Three Months Twelve Months
Ended Ended Ended
November 30, 2013 February 28, 2013 (A) November 30, 2012
 
Revenues:
Commissions $ 427,178 $ 131,083 $ 485,569
Principal transactions 399,091 300,278 1,035,974
Investment banking 1,003,517 288,278 1,125,883
Asset management fees and

investment income from managed funds

36,093 10,883 26,966
Interest income 714,248 249,277 1,031,839
Other revenues   94,195   27,004   164,974
Total revenues 2,674,322 1,006,803 3,871,205
Interest expense   579,059   203,416   872,421
Net revenues 2,095,263 803,387 2,998,784
Interest on mandatorily redeemable preferred interests of

consolidated subsidiaries

3,368   10,961   42,883
Net revenues, less interest on mandatorily redeemable preferred

interests of consolidated subsidiaries

2,091,895   792,426   2,955,901
 
Non-interest expenses:
Compensation and benefits 1,213,908 474,217 1,770,798
 
Non-compensation expenses:
Floor brokerage and clearing fees 105,357 30,998 120,145
Technology and communications 193,683 59,878 244,511
Occupancy and equipment rental 86,700 24,309 97,397
Business development 63,115 24,927 95,330
Professional services 72,802 24,135 73,427
Other   76,325   14,475   62,498
Total non-compensation expenses   597,982   178,722   693,308
Total non-interest expenses   1,811,890   652,939   2,464,106
Earnings before income taxes 280,005 139,487 491,795
Income tax expense   100,285   48,645   168,646
Net earnings 179,720 90,842 323,149
Net earnings attributable to noncontrolling interests (B)   8,418   10,704   40,740
Net earnings attributable to Jefferies Group LLC/ common shareholders $ 171,302 $ 80,138 $ 282,409
 
Compensation and benefits / Net revenues 57.9% 59.0% 59.1%
 
Effective tax rate 35.8% 34.9% 34.3%
 
(A) Our consolidated net earnings for the three months ended February 28, 2013 reflects an adjustment of $5.3 million, after tax, to correct for the effect of an overstatement of professional service fees of $8.5 million relating to the Leucadia merger. We evaluated the effects of this error and concluded that it is not material to the previously issued Quarterly Report on Form 10-Q for the three month period ended February 28, 2013. Nevertheless, we revised our consolidated net earnings for the three month period ended February 28, 2013 to correct for the effect of this error and appropriately reflected the $8.5 million of professional service fees as an expense in the nine month period ended November 30, 2013.
(B) For the nine months ended November 30, 2013, this line item represents net earnings attributable to third party interests in certain asset management entities and investment vehicles managed by us, including a Leucadia interest.

       
JEFFERIES GROUP LLC AND SUBSIDIARIES
SELECTED STATISTICAL INFORMATION
(Amounts in Thousands, Except Other Data)
(Unaudited)
   
Quarter Ended
Successor Predecessor
November 30, August 31, November 30,
2013 2013 2012

Revenues by Source

Equities $ 294,351 $ 151,037 $ 176,595
Fixed income   212,295   33,103   292,974

Total

506,646 184,140 469,569
 
 
Equity 118,348 56,482 52,919
Debt   162,031   120,187   145,772

Capital markets

280,379 176,669 198,691
Advisory   136,665   142,670   84,271
Investment banking 417,044 319,339 282,962
 
 
Asset management fees and investment gain

from managed funds:

Asset management fees 5,563 9,579 9,680
Investment gain from managed funds   6,454   3,971   6,638

Total

  12,017   13,550   16,318
Net revenues   935,707   517,029   768,849

Interest on mandatorily redeemable preferred interests ofconsolidated subsidiaries

  -   -   8,279

Net revenues, less mandatorily redeemable preferred interests of consolidated subsidiaries

$ 935,707 $ 517,029 $ 760,570
 

Other Data

Number of trading days 63 64 63
 
Average firmwide VaR (in millions) (A) $ 12.61 $ 11.02 $ 13.38
Average firmwide VaR excluding Knight Capital (in millions) (A) $ 10.37 $ 7.24 $ 7.95

Average firmwide VaR excluding Knight Capital and HarbingerGroup Inc. (in millions) (A)

$ 7.32 $ 7.24 $ 7.95
 

(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, 2012.

   
JEFFERIES GROUP LLC AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Amounts in Millions, Except Where Noted)
(Unaudited)
       
Quarter Ended
Successor Predecessor
November 30, August 31, November 30,
2013 2013 2012
 

Results:

Net earnings attributable to Jefferies Group LLC / common shareholders (in thousands) $ 120,054 $ 11,740 $ 71,604
Pretax operating margin 20.5 % 4.5 % 15.0 %
Effective tax rate 34.9 % 36.3 % 30.0 %
 

Financial position:

Total assets (1) $ 40,176 $ 38,830 $ 36,294
Average total assets for quarter (1) $ 46,439 $ 45,824 $ 44,242
Average total assets less goodwill and intangible assets for quarter (1) $ 44,455 $ 43,840 $ 43,848
 
Cash and cash equivalents (1) $ 3,561 $ 4,119 $ 2,693
Cash and cash equivalents and other sources of liquidity (1) (2) $ 5,282 $ 5,574 $ 4,424
Cash and cash equivalents and other sources of liquidity - % total assets (1) (2) 13.1 % 14.4 % 12.2 %
Cash and cash equivalents and other sources of liquidity - % total assets less goodwill and intangible assets (1) (2) 13.8 % 15.1 % 12.3 %
 
Financial instruments owned (1) $ 16,650 $ 13,698 $ 16,670
Goodwill and intangible assets (1) $ 1,982 $ 1,988 $ 381
 
Total equity (including noncontrolling interests) $ 5,432 $ 5,241 $ 3,783
Total member's / common stockholders' equity $ 5,315 $ 5,164 $ 3,436
Tangible member's / common stockholders' equity (3) $ 3,333 $ 3,176 $ 3,055
 

Level 3 financial instruments:

Level 3 financial instruments owned (1) (4) $ 457 $ 444 $ 504
Level 3 financial instruments owned - % total assets (1) 1.1 % 1.1 % 1.4 %
Level 3 financial instruments owned - % total financial instruments owned (1) 2.7 % 3.2 % 3.0 %
Level 3 financial instruments owned - % tangible member's / common stockholders' equity (1) 13.7 % 14.0 % 16.5 %
 

Other data and financial ratios:

Total capital (1) (5) $ 11,209 $ 11,034 $ 8,710
Leverage ratio (1) (6) 7.4 7.4 9.6
Adjusted leverage ratio (1) (7) 9.4 9.3 9.0
Tangible gross leverage ratio (1) (8) 11.5 11.6 11.8
Leverage ratio - excluding merger impacts (1) (9) 9.3 9.4 N/A
 
Number of trading days 63 64 63
 
Average firmwide VaR (10) $ 12.61 $ 11.02 $ 13.38
Average firmwide VaR excluding Knight Capital (10) $ 10.37 $ 7.24 $ 7.95
Average firmwide VaR excluding Knight Capital and Harbinger Group Inc. (10) $ 7.32 $ 7.24 $ 7.95
 
Number of employees, at quarter end 3,797 3,805 3,804
 
Compensation and benefits / Net revenues 58.4 % 56.8 % 59.9 %
 

 
JEFFERIES GROUP LLC AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS - FOOTNOTES
 
 
(1) Amounts pertaining to November 30, 2013 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, 2013.
 
(2) As of November 30, 2013, 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 $1,317 million, in aggregate, and $404 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 August 31, 2013 were $1,145 million and $310 million, and as of November 30, 2012 were $1,307 million and $424 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 November 30 and August 31, 2013, total capital includes our long-term debt of $5,777 million and $5,793 million, respectively, and total equity. As of November 30, 2012 total capital includes our long-term debt, mandatorily redeemable convertible preferred stock, mandatorily redeemable preferred interest of consolidated subsidiaries, in aggregate $4,928 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 November 30, 2013, August 31, 2013 and November 30, 2012 adjusted assets were $32,562 million, $30,112 million and $30,591 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:

    November 30,     August 31,
$ millions 2013 2013
Total assets $ 40,176 $ 38,830
Goodwill and acquisition accounting fair value adjustments on the merger with Leucadia (1,953 ) (1,953 )
Net amortization to date on asset related purchase accounting adjustments   27     18  
Total assets excluding the impact of the merger $ 38,250   $ 36,895  
 
Total equity $ 5,432 $ 5,241
Equity arising from merger consideration (1,422 ) (1,422 )
Preferred stock assumed by Leucadia 125 125
Net amortization to date of purchase accounting adjustments, net of tax   (25 )   (17 )
Total equity excluding the impact of the merger $ 4,110   $ 3,927  
 
Leverage ratio - excluding merger impacts   9.3     9.4  
 
(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 calcuation 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, 2012.
 




1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,356.87 +288.00 1.69%
S&P 500 2,012.89 +40.15 2.04%
NASDAQ 4,644.3120 +96.4780 2.12%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs