Jefferies Group LLC today announced financial results for its
fiscal fourth quarter 2016.
Highlights for the three months ended November 30, 2016:
- Total Net Revenues of $742 million
- Investment Banking Net Revenues of $415
million
- Total Equities and Fixed Income Net
Revenues of $325 million
- Earnings Before Income Taxes of $97
million
- Net Earnings of $87 million
Rich Handler, Chairman and Chief Executive Officer, and Brian
Friedman, Chairman of the Executive Committee, commented: "We are
pleased with our fourth quarter results, which reflect a strong
performance in investment banking, a solid performance from our
core equities business, and a continuing significant improvement in
our fixed income results. Our investment banking results benefited
from a record quarter of advisory fees, as well as increasingly
active new issue capital markets. Our strong finish to the year,
combined with the continued positive momentum in all of our
businesses, positions us well for 2017. We thank our clients, our
employees, our shareholders, our bondholders and all our business
partners for their continued support."
The attached financial tables should be read in conjunction with
our Quarterly Report on Form 10-Q for the quarter ended
August 31, 2016 and our Annual Report on Form 10-K for the
year ended November 30, 2015. Amounts herein pertaining to
November 30, 2016 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, 2016.
This release contains "forward-looking statements" within the
meaning of the safe harbor provisions of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. Forward-looking statements include statements about
our future results and performance, including our future market
share and expected financial results. It is possible that the
actual results may differ materially from the anticipated results
indicated in these forward-looking statements. Please refer to our
most recent Annual Report on Form 10-K for a discussion of
important factors that could cause actual results to differ
materially from those projected in these forward-looking
statements.
Jefferies, the world's only independent full-service 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. Our firm provides a full
range of investment banking, sales, trading, research and strategy
across the spectrum of equities, fixed income and foreign exchange,
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) Quarter Ended
November 30, 2016 August 31, 2016 November 30,
2015 Revenues: Commissions and other fees $ 157,549 $
152,044 $ 146,288 Principal transactions 137,362 167,483 (38,534 )
Investment banking 415,067 294,930 372,930 Asset management fees
and investmentincome from managed funds 1,319 15,877 8,020 Interest
income 202,002 213,716 221,962 Other revenues 26,661 19,791
(8,736 ) Total revenues 939,960 863,841 701,930 Interest
expense 198,191 209,391 188,843 Net revenues
741,769 654,450 513,087 Non-interest
expenses: Compensation and benefits 427,451 376,438 284,647
Non-compensation expenses: Floor brokerage and clearing fees 42,946
40,189 40,680 Technology and communications 66,396 64,512 78,918
Occupancy and equipment rental 26,635 24,987 26,567 Business
development 25,405 20,259 27,098 Professional services 29,763
29,761 27,613 Other 26,644 17,582 18,026 Total
non-compensation expenses 217,789 197,290 218,902
Total non-interest expenses 645,240 573,728
503,549 Earnings before income taxes 96,529 80,722 9,538
Income tax expense (benefit) 9,454 39,564 (10,572 )
Net earnings 87,075 41,158 20,110 Net earnings (loss) attributable
to noncontrolling interests (105 ) (11 ) 148 Net earnings
attributable to Jefferies Group LLC $ 87,180 $ 41,169
$ 19,962 Pretax operating margin 13.0 % 12.3 % 1.9 %
Effective tax rate (1) 9.8 % 49.0 % (110.8 )% (1) The
effective tax rate for the three months ended November 30, 2016 is
impacted by revisions to previously forecasted results.
JEFFERIES GROUP LLC AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF EARNINGS (Amounts in Thousands)
(Unaudited) Year Ended November 30,
2016 2015 Revenues: Commissions and other fees
$ 611,574 $ 659,002 Principal transactions 519,652 172,608
Investment banking 1,193,973 1,439,007 Asset management fees and
investmentincome from managed funds 31,062 8,015 Interest income
857,838 922,189 Other revenues 19,724 74,074 Total
revenues 3,233,823 3,274,895 Interest expense 819,209
799,654 Net revenues 2,414,614 2,475,241
Non-interest expenses: Compensation and benefits 1,568,948
1,467,131 Non-compensation expenses: Floor brokerage and
clearing fees 167,205 199,780 Technology and communications 262,396
313,044 Occupancy and equipment rental 101,133 101,138 Business
development 93,105 105,963 Professional services 112,562 103,972
Other 79,293 69,986 Total non-compensation expenses
815,694 893,883 Total non-interest expenses 2,384,642
2,361,014 Earnings before income taxes 29,972 114,227
Income tax expense 14,566 18,898 Net earnings 15,406
95,329 Net earnings (loss) attributable to noncontrolling interests
(28 ) 1,795 Net earnings attributable to Jefferies Group LLC
$ 15,434 $ 93,534 Pretax operating margin 1.2
% 4.6 % Effective tax rate 48.6 % 16.5 %
JEFFERIES
GROUP LLC AND SUBSIDIARIES SELECTED STATISTICAL
INFORMATION (Amounts in Thousands, Except Other Data)
(Unaudited)
Quarter Ended November 30, 2016 August 31,
2016 November 30, 2015
Revenues by
Source
Equities $ 175,960 $ 148,308 $ 122,693 Fixed income (1) 149,423
195,335 9,444 Total Equities and Fixed Income 325,383 343,643
132,137 Equity 62,085 68,218 93,547 Debt 128,706 72,473
68,705 Capital markets 190,791 140,691 162,252 Advisory 224,276
154,239 210,678 Total investment banking 415,067 294,930 372,930
Asset management fees and investment income from managed
funds: Asset management fees 633 7,610 5,864 Investment income from
managed funds 686 8,267 2,156
Total
1,319 15,877 8,020
Net revenues $ 741,769
$ 654,450 $ 513,087
Other
Data
Number of trading days 63 65 63 Number of trading loss days 11 8 22
Number of trading loss days excluding KCG 4 4 23 Average
firmwide VaR (in millions) (2) $ 8.46 $ 6.62 $ 9.72 Average
firmwide VaR excluding KCG (in millions) (2) $ 5.93 $ 4.48 $ 8.46
(1) The results for the quarter ended November 30, 2015
include $0.4 million of negative revenues globally from the Bache
business. During the second quarter of 2016, we completed the exit
of the Bache business. (2) 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, 2015.
JEFFERIES GROUP LLC AND SUBSIDIARIES SELECTED
STATISTICAL INFORMATION (Amounts in Thousands, Except Other
Data) (Unaudited) Twelve
Months Ended November 30, 2016 November 30, 2015
Revenues by
Source
Equities $ 549,553 $ 757,447 Fixed income (1) 640,026 270,772 Total
Equities and Fixed income 1,189,579 1,028,219 Equity 235,207
408,474 Debt 304,576 398,179 Capital markets 539,783 806,653
Advisory 654,190 632,354 Total investment banking 1,193,973
1,439,007 Asset management fees and investment income
(losses) from managed funds: Asset management fees 26,412 31,819
Investment income (losses) from managed funds 4,650 (23,804) Total
31,062 8,015
Net revenues $ 2,414,614 $
2,475,241
Other
Data
Number of trading days 253 252 Number of trading loss days 38 64
Number of trading loss days excluding KCG 21 55 Average
firmwide VaR (in millions) (2) $ 7.91 $ 12.39 Average firmwide VaR
excluding KCG (in millions) (2) $ 5.77 $ 9.97 (1) The
results for the nine months ended November 30, 2015 include $80.2
million of net revenues globally from the Bache business. During
the second quarter of 2016, we completed the exit of the Bache
business. (2) 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, 2015.
JEFFERIES GROUP LLC AND SUBSIDIARIES FINANCIAL
HIGHLIGHTS (Amounts in Millions, Except Where Noted)
(Unaudited)
Quarter Ended November 30, 2016 August 31,
2016 November 30, 2015
Financial
position:
Total assets (1) $ 36,941 $ 38,128 $ 38,564 Average total assets
for the period (1) $ 43,412 $ 42,270 $ 48,722 Average total assets
less goodwill and intangible assets for the period (1) $ 41,560 $
40,408 $ 46,835 Cash and cash equivalents (1) $ 3,529 $
3,159 $ 3,510 Cash and cash equivalents and other sources of
liquidity (1) (2) $ 5,303 $ 4,873 $ 4,940 Cash and cash equivalents
and other sources of liquidity - % total assets (1) (2) 14.4% 12.8%
12.8% Cash and cash equivalents and other sources of liquidity - %
total assets less goodwill and intangible assets (1) (2) 15.1%
13.4% 13.5% Financial instruments owned (1) $ 13,810 $
14,328 $ 16,559 Goodwill and intangible assets (1) $ 1,847 $ 1,856
$ 1,882 Total equity (including noncontrolling interests) $
5,371 $ 5,327 $ 5,509 Total member's equity $ 5,370 $ 5,321 $ 5,482
Tangible member's equity (3) $ 3,523 $ 3,465 $ 3,600
Level 3 financial
instruments:
Level 3 financial instruments owned (1) (4) $ 413 $ 434 $ 542 Level
3 financial instruments owned - % total assets (1) 1.1% 1.1% 1.4%
Level 3 financial instruments owned - % total financial instruments
(1) 3.0% 3.0% 3.3% Level 3 financial instruments owned - % tangible
member's equity (1) 11.7% 12.5% 15.1%
Other data and
financial ratios:
Total long-term capital (1) (5) $ 10,501 $ 10,803 $ 10,797 Leverage
ratio (1) (6) 6.9 7.2 7.0 Adjusted leverage ratio (1) (7) 8.6 8.7
8.7 Tangible gross leverage ratio (1) (8) 10.0 10.5 10.2
Number of trading days 63 65 63 Number of trading loss days 11 8 22
Number of trading loss days excluding KCG 4 4 23 Average firmwide
VaR (9) $ 8.46 $ 6.62 $ 9.72 Average firmwide VaR excluding KCG (9)
$ 5.93 $ 4.48 $ 8.46 Number of employees, at period end
3,329 3,323 3,557
JEFFERIES GROUP LLC AND
SUBSIDIARIES FINANCIAL HIGHLIGHTS - FOOTNOTES
(1) Amounts pertaining to November 30, 2016 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, 2016. (2) At November 30, 2016, 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 $1,455 million, in aggregate, and $319 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. The corresponding amounts included in other sources of
liquidity at August 31, 2016 were $1,384 million and $330 million,
respectively, and at November 30, 2015, were $1,266 million and
$164 million, respectively. The amounts included in other sources
of liquidity at August 31, 2016 and November 30, 2015 have been
reduced by $147 million and $141 million, respectively, from what
was previously disclosed, to reflect adjustments for certain
securities that have subsequently been identified to have been
encumbered at such dates. (3) Tangible member's equity (a
non-GAAP financial measure) represents total member's equity less
goodwill and identifiable intangible assets. We believe that
tangible member's equity is meaningful for valuation purposes, as
financial companies are often measured as a multiple of tangible
member's 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) At November 30, 2016,
August 31, 2016 and November 30, 2015, total long-term capital
includes our long-term debt of $5,131 million, $5,476 million and
$5,288 million, respectively, and total equity. Long-term debt
included in total long-term capital is reduced by 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). At November 30, 2016, August 31, 2016
and November 30, 2015, adjusted assets were $30,352 million,
$30,318 million and $31,675 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 equity.
The tangible gross leverage ratio is used by rating agencies in
assessing our leverage ratio. (9) 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, 2015.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161220005196/en/
For further information:Jefferies Group LLCPeregrine C.
Broadbent, 212-284-2338Chief Financial Officer
Leucadia (NYSE:LUK)
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