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Jefferies Reports Second Quarter 2014 Financial Results


June 17, 2014 - New York, United States

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 Ended   Six Months Ended   Quarter Ended     Quarter Ended
    May 31, 2014   May 31, 2014   May 31, 2013     February 28, 2013
                           
Revenues:                          
Commissions   $ 167,378   $ 329,441   $ 162,759     $ 146,240
Principal transactions     183,416     421,779     134,571       300,278
Investment banking     331,149     745,469     277,134       288,278

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

    (3,101)     6,856     10,527       10,883
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 interests of consolidated subsidiaries

    -     -     3,368       10,961

Net revenues, less interest on mandatorily redeemable preferred interests of consolidated subsidiaries

    722,992     1,622,020     655,070       807,583
                           
Non-interest expenses:                          
Compensation and benefits     404,876     912,775     373,880       474,217
                           
Non-compensation expenses:                          
Floor brokerage and clearing fees     54,020     103,533     48,902       46,155
Technology and communications     70,257     134,563     63,839       59,878
Occupancy and equipment rental     26,673     53,175     32,225       24,309
Business development     24,917     51,393     22,732       24,927
Professional services     25,345     50,164     29,519       24,135
Other     17,767     35,011     18,720       14,475
Total non-compensation expenses     218,979     427,839     215,937       193,879
Total non-interest expenses     623,855     1,340,614     589,817       668,096
Earnings before income taxes     99,137     281,406     65,253       139,487
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 noncontrolling interests     488     3,448     738       10,704
Net earnings attributable to Jefferies Group LLC/common stockholders   $ 61,326   $ 173,758   $ 39,508     $ 80,138
                           

 

 
JEFFERIES GROUP LLC AND SUBSIDIARIES
SELECTED STATISTICAL INFORMATION
(Amounts in Thousands, Except Other Data)
(Unaudited)
                   
    Successor     Predecessor
    Quarter Ended   Six Months Ended   Quarter Ended     Quarter Ended
    May 31, 2014   May 31, 2014   May 31, 2013     February 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 markets     230,726       498,502       187,278         202,052  
Advisory     100,423       246,967       89,856         86,226  
Investment banking     331,149       745,469       277,134         288,278  
                   

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

                 
Asset management fees     4,927       14,373       11,332         11,083  
Investment loss from managed funds     (8,028 )     (7,517 )     (805 )       (200 )
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 interests of consolidated subsidiaries     -       -       3,368         10,961  
Net revenues, less mandatorily redeemable preferred interests of consolidated subsidiaries   $ 722,992     $ 1,622,020     $ 655,070       $ 807,583  
                   

Other Data

                 
Number of trading days     63       124       64         60  
                   
Average firmwide VaR (in millions) (A)   $ 14.94     $ 15.60     $ 8.77       $ 9.27  
Average firmwide VaR excluding Knight Capital (in millions) (A)   $ 8.63     $ 10.60     $ 5.77       $ 5.99  
Average firmwide VaR excluding Knight Capital and Harbinger Group Inc. (in millions) (A)   $ 7.97     $ 8.59     $ 5.77       $ 5.99  
                   

(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.

 

Source: Business Wire India

BusinessWireIndia

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JEFFERIES GROUP LLC AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Amounts in Millions, Except Where Noted)
(Unaudited)
                   
    Successor     Predecessor
    Quarter Ended   Six Months Ended   Quarter Ended     Quarter Ended
    May 31, 2014   May 31, 2014   May 31, 2013     February 28, 2013
                   

Results:

                 
Net earnings attributable to Jefferies Group LLC / common stockholders (in thousands)   $ 61,326     $ 173,758     $ 39,508       $ 80,138  
Pretax operating margin     13.7 %     17.3 %     10.0 %       17.3 %
Effective tax rate     37.6 %     37.0 %     38.3 %       34.9 %
                   

Financial position:

                 
Total assets (1)   $ 43,610     $ 43,610     $ 38,938       $ 37,800  
Average total assets for the period (1)   $ 50,379     $ 49,749     $ 47,150       $ 45,418  
Average total assets less goodwill and intangible assets for the period (1)   $ 48,394     $ 47,764     $ 45,157       $ 45,039  
                   
Cash and cash equivalents (1)   $ 3,958     $ 3,958     $ 3,403       $ 3,018  
Cash and cash equivalents and other sources of liquidity (1) (2)   $ 5,824     $ 5,824     $ 5,187       $ 4,726  
Cash and cash equivalents and other sources of liquidity - % total assets (1) (2)     13.4 %     13.4 %     13.3 %       12.5 %
Cash and cash equivalents and other sources of liquidity - % total assets less goodwill and intangible assets (1) (2)     14.0 %     14.0 %     14.0 %       12.6 %
                   
Financial instruments owned (1)   $ 17,144     $ 17,144     $ 15,270       $ 16,414  
Goodwill and intangible assets (1)   $ 1,984     $ 1,984     $ 1,982       $ 380  
                   
Total equity (including noncontrolling interests)   $ 5,527     $ 5,527     $ 5,183       $ 3,688  
Total member's / common stockholders' equity   $ 5,496     $ 5,496     $ 5,147       $ 3,332  
Tangible member's / common stockholders' equity (3)   $ 3,512     $ 3,512     $ 3,165       $ 2,952  
                   

Level 3 financial instruments:

                 
Level 3 financial instruments owned (1) (4)   $ 490     $ 490     $ 447       $ 505  
Level 3 financial instruments owned - % total assets (1)     1.1 %     1.1 %     1.1 %       1.3 %
Level 3 financial instruments owned - % total financial instruments owned (1)     2.9 %     2.9 %     2.9 %       3.1 %
Level 3 financial instruments owned - % tangible member's / common stockholders' equity (1)     14.0 %     14.0 %     14.1 %       17.1 %
                   

Other data and financial ratios:

                 
Total capital (1) (5)   $ 11,941     $ 11,941     $ 11,271       $ 9,624  
Leverage ratio (1) (6)     7.9       7.9       7.5         10.2  
Adjusted leverage ratio (1) (7)     10.0       10.0       9.9         10.4  
Tangible gross leverage ratio (1) (8)     11.9       11.9       11.7         12.7  
Leverage ratio - excluding merger impacts (1) (9)     10.0       10.0       9.5         N/A  
                   
Number of trading days     63       124       64         60  
                   
Average firmwide VaR (10)   $ 14.94     $ 15.60     $ 8.77       $ 9.27