UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of
report (Date of earliest event reported): December 16, 2014
LEUCADIA NATIONAL CORPORATION
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(Exact
name of registrant as specified in its charter)
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New York
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1-5721
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13-2615557
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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520 Madison Avenue, New York, New York
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10022
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s telephone number, including
area code: 212-460-1900
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(Former name or former address, if changed since last report)
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Check the
appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions (see General Instruction A.2.
below):
⃞
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
⃞
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
⃞
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
⃞
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition
On December 16, 2014, Leucadia National Corporation’s wholly-owned
subsidiary Jefferies Group LLC issued a press release announcing
financial results for its fourth fiscal quarter ended November 30,
2014. A copy of the press release is attached hereto as Exhibit 99 and
is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits
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The following exhibit is furnished with this report:
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Number
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Exhibit
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99
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Press Release issued by Jefferies Group LLC on December 16, 2014
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SIGNATURES
Pursuant to
the requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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LEUCADIA NATIONAL CORPORATION
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Date:
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December 16, 2014
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/s/ Roland T. Kelly
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Roland T. Kelly
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Assistant Secretary and
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Associate General Counsel
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EXHIBIT INDEX
Exhibit No.
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Exhibit
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99
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Press Release issued by Jefferies Group LLC on December 16, 2014
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Exhibit 99
Jefferies
Reports Fiscal Fourth-Quarter 2014 Financial Results; Pursuing Strategic
Alternatives for Bache Business
NEW YORK--(BUSINESS WIRE)--December 16, 2014--Jefferies Group LLC today
announced financial results for its fiscal fourth quarter 2014.
Highlights for the three months ended November 30, 2014, with adjusted
amounts excluding the operating results and goodwill and intangible
asset impairments attributable to our Bache business:
-
Total Net revenues of $538 million
-
Total Adjusted Net Revenues (excluding Bache) of $494 million1
-
Pre-tax earnings of negative $101 million, which includes both a
goodwill impairment of $52 million and a write off of $8 million of
intangible assets related to our Bache business, and a $52 million bad
debt provision in respect of a receivable from OW Bunker
-
Adjusted Operating income (excluding Bache) of positive $30 million1
-
Net earnings of negative $93 million, reflecting the same items as
noted in pre-tax earnings; the charge due to the impairment of Bache
goodwill is not tax-deductible and the full-year tax rate has been
trued up for the final regional mix of pre-tax earnings, which was
significantly impacted by the OW Bunker bad debt provision
-
Adjusted Net earnings (excluding Bache) of $19 million1
Highlights for the twelve months ended November 30, 2014:
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Total Net revenues of $3,003 million
-
Investment Banking Net revenues of $1,529 million
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Equities and Fixed Income Net revenues of $1,457 million
-
Total Adjusted Net revenues (excluding Bache) of $2,828 billion1
-
Pre-tax earnings of $316 million
-
Adjusted Operating income (excluding Bache) of $517 million1
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Net earnings of $168 million
-
Adjusted Net earnings of $325 million1
Richard B. Handler, Chairman and Chief Executive Officer, and Brian P.
Friedman, Chairman of the Executive Committee, commented: “After four
consecutive strong quarters, we experienced a very challenging fourth
quarter. Our Net revenues for the quarter were $538 million and our
pre-tax earnings were negative $101 million. Excluding Bache, our
adjusted Net revenues for the quarter were $494 million and our adjusted
pre-tax profits were $30 million. Despite these results and our decision
in respect of pursuing strategic alternatives for our Bache business, we
believe Jefferies’ prospects for 2015 are solid, with our Investment
Banking backlog currently robust, and an expectation of more normal
trading markets.”
1 Adjusted financial measures are non-GAAP financial
measures. Management believes such measures provide meaningful
information to investors as they enable investors to evaluate the
Company's results in the context of our pursuing various strategic
alternatives for the Bache business. Refer to the Supplemental Schedules
on pages 6-7 for a reconciliation of Adjusted measures to the respective
direct U.S. GAAP financial measures.
“Heightened volatility from mid-September through mid-November and a
tepid trading environment throughout the quarter led to poor Fixed
Income results, including mark-to-market write-downs in our inventory.
Fixed Income revenues were $61 million for the quarter, compared to $227
million for the fourth quarter of last year, a decline of 73%, or $166
million. In particular, our distressed trading revenues for the quarter
were negative $55 million versus positive $29 million for the comparable
quarter last year, a decline of $84 million, much of which is
unrealized. This decline was primarily due to mark to market inventory
losses as a result of the broad sell-off in distressed and
post-reorganization securities that followed the September 30 court
decision regarding Fannie Mae and Freddie Mac. Mark downs between about
$1 million and $5 million per name were recorded in securities of over
twenty distressed and post re-organization issuers held by our core
trading desks, including Freddie Mac and Fannie Mae, various issues in
the energy and transport sectors, as well as several high yield
municipal issuers, with most of the mark downs below $2 million per
issuer. As is the nature of the distressed market making business,
Jefferies holds positions of varying sizes across sectors where the firm
is most active, with mark to market gains and losses recognized on a
daily basis. The balance of our Fixed Income year-over-year quarterly
revenue decline of about $82 million is primarily attributable to slower
activity, heightened volatility and more modest inventory write downs in
our other U.S. and international credit businesses, where no write downs
exceeded $3 million for any individual security position.”
“While adversely impacted by events in October, our core Equities
business otherwise performed well. Equities Net revenues for the period
were $158 million compared to $290 million in the same quarter last
year, a decrease of $132 million. $126 million of this decrease may be
attributed to the mark to market gains of $110 million recorded in last
year’s fourth quarter in respect of KCG and Harbinger, and the $16
million mark to market loss we recorded this quarter with respect to our
investment in KCG. The Harbinger position was sold to Leucadia, at the
then market price, during the second quarter of fiscal 2014.”
“Jefferies Investment Banking Net revenues of $316 million are below
last year’s $417 million fourth quarter, primarily as a result of
dampened capital markets activity due to the unsettled markets, which in
turn led to the postponement of deals into future periods. The impact
from the unusual publicity in late October and November was immaterial.”
“As a result of the growth and margin challenges we have recently faced
in the Bache business we acquired in mid-2011, we are pursuing strategic
alternatives for this business, and discussions with third parties in
this regard are already underway. We are focused on the potential
combination of Bache with another similar business that improves the
combined businesses’ competitive standing and margin. In connection with
this, we have reversed the entire $52 million in goodwill and $8 million
of the intangible assets that were both allocated to the Bache business
as a function of the purchase accounting that arose upon our 2013
transaction with Leucadia. This goodwill was not initially recorded as a
result of our acquisition of Bache, which we acquired below tangible
book value. This amount is included in our non-compensation expenses, as
is a 100% bad debt provision in respect of a $52 million receivable we
hold from OW Bunker, which abruptly declared bankruptcy in early
November after saying it uncovered risk-management issues that would
result in $150 million in losses and a separate fraud that would result
in a further $125 million in losses, the combined effect of which would
wipe out its equity. We provided futures clearing and execution services
to OW Bunker, which was a public company in Denmark, the stock market
capitalization of which was over $1 billion only six weeks before its
bankruptcy filing. The amount of our receivable was increased
considerably by the relatively high volatility in energy prices at the
time of OW Bunker’s failure to meet margin calls and during our
realization process. We are pursuing a recovery of the amounts owed to
us by OW Bunker. Since the bankruptcy process is in its early stages and
we cannot currently estimate what portion of the receivable is likely to
be recovered, we have written off the entire amount and value our
unsecured creditor position at zero.”
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. These forward looking
statements are usually preceded by the words “believe,” “intend,”
“expect” or similar expressions. Forward looking statements include our
belief as to our future prospects, including our strategy for our Bache
business. Forward looking statements represent only our belief regarding
future events, many of which by their nature are inherently uncertain.
We will not update any forward looking statement to reflect future
events or circumstances, except as required by applicable law.
The attached financial tables should be read in connection with our
Quarterly Report on Form 10-Q for the quarter ended August 31, 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.
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JEFFERIES GROUP LLC AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF EARNINGS
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(Amounts in Thousands)
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(Unaudited)
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Successor
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Quarter Ended
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Quarter Ended
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Quarter Ended
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November 30, 2014
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August 31, 2014
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November 30, 2013
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Revenues:
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Commissions
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$
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180,275
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$
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159,085
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$
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156,435
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Principal transactions
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(21,071)
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144,354
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289,430
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Investment banking
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316,012
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467,793
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417,044
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Asset management fees and investment income from managed funds
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1,728
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8,463
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12,017
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Interest income
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237,911
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249,251
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224,911
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Other revenues
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20,919
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26,489
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39,320
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Total revenues
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735,774
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1,055,435
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1,139,157
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Interest expense
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198,195
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212,126
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188,609
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Net revenues
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537,579
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843,309
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950,548
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|
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Non-interest expenses:
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|
|
|
|
|
|
|
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|
Compensation and benefits
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|
|
308,187
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477,268
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546,257
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|
|
|
|
|
|
|
|
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Non-compensation expenses:
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|
|
|
|
|
|
|
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Floor brokerage and clearing fees
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|
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55,829
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|
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55,967
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|
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52,706
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Technology and communications
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66,363
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|
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67,286
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|
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67,578
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Occupancy and equipment rental
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26,115
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|
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28,477
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28,271
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Business development
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|
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27,791
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|
|
27,800
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|
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22,759
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Professional services
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|
|
28,206
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|
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31,231
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|
|
18,014
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Bad debt provision
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|
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48,989
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|
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927
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|
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(2,639)
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Goodwill impairment
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54,000
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|
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-
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-
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Other
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23,580
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18,718
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41,942
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Total non-compensation expenses
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330,873
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230,406
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|
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228,631
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Total non-interest expenses
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|
|
639,060
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|
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707,674
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|
774,888
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Earnings (loss) before income taxes
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|
|
(101,481)
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|
|
135,635
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|
|
175,660
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Income tax expense (benefit)
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|
|
(8,763)
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|
|
51,762
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|
|
61,186
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Net earnings (loss)
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|
|
(92,718)
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|
|
83,873
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|
|
114,474
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Net earnings attributable to noncontrolling interests
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|
|
(360)
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|
|
312
|
|
|
4,531
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Net earnings (loss) attributable to Jefferies Group LLC
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|
$
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(92,358)
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|
$
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83,561
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$
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109,943
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|
|
|
|
|
|
|
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Pretax operating margin
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|
-18.9%
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|
|
16.1%
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|
|
18.5%
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Effective tax rate
|
|
|
8.6%
|
|
|
38.2%
|
|
|
34.8%
|
|
|
|
|
|
|
|
|
|
|
|
JEFFERIES GROUP LLC AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF EARNINGS
|
(Amounts in Thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
Predecessor
|
|
|
Year Ended
|
|
Nine Months Ended
|
|
Quarter Ended
|
|
|
November 30, 2014
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|
November 30, 2013
|
|
February 28, 2013
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|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Commissions
|
|
$
|
668,801
|
|
$
|
472,596
|
|
$
|
146,240
|
Principal transactions
|
|
|
545,062
|
|
|
399,091
|
|
|
300,278
|
Investment banking
|
|
|
1,529,274
|
|
|
1,003,517
|
|
|
288,278
|
Asset management fees and investment income from managed funds
|
|
|
17,047
|
|
|
36,093
|
|
|
10,883
|
Interest income
|
|
|
1,019,970
|
|
|
714,248
|
|
|
249,277
|
Other revenues
|
|
|
78,881
|
|
|
94,195
|
|
|
27,004
|
Total revenues
|
|
|
3,859,035
|
|
|
2,719,740
|
|
|
1,021,960
|
Interest expense
|
|
|
856,127
|
|
|
579,059
|
|
|
203,416
|
Net revenues
|
|
|
3,002,908
|
|
|
2,140,681
|
|
|
818,544
|
Interest on mandatorily redeemable preferred interests of
consolidated subsidiaries
|
|
|
-
|
|
|
3,368
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|
|
10,961
|
Net revenues, less interest on mandatorily redeemable preferred
interests of consolidated subsidiaries
|
|
|
3,002,908
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|
|
2,137,313
|
|
|
807,583
|
|
|
|
|
|
|
|
|
|
|
Non-interest expenses:
|
|
|
|
|
|
|
|
|
|
Compensation and benefits
|
|
|
1,698,230
|
|
|
1,213,908
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|
|
474,217
|
|
|
|
|
|
|
|
|
|
|
Non-compensation expenses:
|
|
|
|
|
|
|
|
|
|
Floor brokerage and clearing fees
|
|
|
215,329
|
|
|
150,774
|
|
|
46,155
|
Technology and communications
|
|
|
268,212
|
|
|
193,683
|
|
|
59,878
|
Occupancy and equipment rental
|
|
|
107,767
|
|
|
86,701
|
|
|
24,309
|
Business development
|
|
|
106,984
|
|
|
63,115
|
|
|
24,927
|
Professional services
|
|
|
109,601
|
|
|
72,802
|
|
|
24,135
|
Bad debt provision
|
|
|
53,572
|
|
|
179
|
|
|
1,945
|
Goodwill impairment
|
|
|
54,000
|
|
|
-
|
|
|
-
|
Other
|
|
|
73,653
|
|
|
91,856
|
|
|
12,530
|
Total non-compensation expenses
|
|
|
989,118
|
|
|
659,110
|
|
|
193,879
|
Total non-interest expenses
|
|
|
2,687,348
|
|
|
1,873,018
|
|
|
668,096
|
Earnings before income taxes
|
|
|
315,560
|
|
|
264,295
|
|
|
139,487
|
Income tax expense
|
|
|
147,199
|
|
|
94,686
|
|
|
48,645
|
Net earnings
|
|
|
168,361
|
|
|
169,609
|
|
|
90,842
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Net earnings attributable to noncontrolling interests
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|
|
3,400
|
|
|
8,418
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|
|
10,704
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Net earnings attributable to Jefferies Group LLC/common stockholders
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|
$
|
164,961
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|
$
|
161,191
|
|
$
|
80,138
|
|
|
|
|
|
|
|
|
|
|
Pretax operating margin
|
|
|
10.5%
|
|
|
12.4%
|
|
|
17.3%
|
Effective tax rate
|
|
|
46.6%
|
|
|
35.8%
|
|
|
34.9%
|
|
|
|
|
|
|
|
|
|
|
|
JEFFERIES GROUP LLC AND SUBSIDIARIES
|
CONSOLIDATED ADJUSTED SELECTED FINANCIAL DATA
|
(Amounts in Thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
Quarter Ended November 30, 2014
|
|
|
GAAP
|
|
Adjustments
|
|
|
Adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
537,579
|
|
$
|
43,627
|
(1)
|
|
$
|
493,952
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expenses:
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits
|
|
|
308,187
|
|
|
27,163
|
(2)
|
|
|
281,024
|
Non-compensation expenses
|
|
|
330,873
|
|
|
148,287
|
(3)
|
|
|
182,586
|
Total non-interest expenses
|
|
|
639,060
|
|
|
175,450
|
|
|
|
463,610
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
$
|
(101,481)
|
|
$
|
(131,823)
|
|
|
$
|
30,342
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
|
|
$
|
(92,718)
|
|
$
|
(111,899)
|
|
|
$
|
19,181
|
|
|
|
|
|
|
|
|
|
|
|
Compensation ratio (a)
|
|
|
57.3%
|
|
|
|
|
|
|
56.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
Quarter Ended August 31, 2014
|
|
|
GAAP
|
|
Adjustments
|
|
|
Adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
843,309
|
|
$
|
43,350
|
(1)
|
|
$
|
799,959
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expenses:
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits
|
|
|
477,268
|
|
|
26,416
|
(2)
|
|
|
450,852
|
Non-compensation expenses
|
|
|
230,406
|
|
|
38,944
|
(4)
|
|
|
191,462
|
Total non-interest expenses
|
|
|
707,674
|
|
|
65,360
|
|
|
|
642,314
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
$
|
135,635
|
|
$
|
(22,010)
|
|
|
$
|
157,645
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
|
|
$
|
83,873
|
|
$
|
(13,591)
|
|
|
$
|
97,464
|
|
|
|
|
|
|
|
|
|
|
|
Compensation ratio (a)
|
|
|
56.6%
|
|
|
|
|
|
|
56.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
Quarter Ended November 30, 2013
|
|
|
GAAP
|
|
Adjustments
|
|
|
Adjusted
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
950,548
|
|
$
|
45,760
|
(1)
|
|
$
|
904,788
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expenses:
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits
|
|
|
546,257
|
|
|
42,816
|
(2)
|
|
|
503,441
|
Non-compensation expenses
|
|
|
228,631
|
|
|
35,037
|
(4)
|
|
|
193,594
|
Total non-interest expenses
|
|
|
774,888
|
|
|
77,853
|
|
|
|
697,035
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
175,660
|
|
$
|
(32,093)
|
|
|
$
|
207,753
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
|
|
$
|
114,474
|
|
$
|
(22,311)
|
|
|
$
|
136,785
|
|
|
|
|
|
|
|
|
|
|
|
Compensation ratio (a)
|
|
|
57.5%
|
|
|
|
|
|
|
55.6%
|
|
|
|
|
|
|
|
|
|
|
|
(a) Reconciliation of the compensation ratio for U.S. GAAP to Adjusted
is a derivation of the reconciliation of the components above.
This presentation of Adjusted financial information is an unaudited
non-GAAP financial measure. Adjusted financial information begins with
information prepared in accordance with U.S. GAAP and then those results
are adjusted to exclude the operations of the Company's Bache business.
The Company believes that the disclosed Adjusted measures and any
adjustments thereto, when presented in conjunction with comparable U.S.
GAAP measures are useful to investors as they enable investors to
evaluate the Company's results in the context of pursuing various
strategic alternatives for the Bache business. These measures should not
be considered a substitute for, or superior to, measures of financial
performance prepared in accordance with U.S. GAAP.
|
|
|
|
|
|
|
|
JEFFERIES GROUP LLC AND SUBSIDIARIES
|
CONSOLIDATED ADJUSTED SELECTED FINANCIAL DATA
|
(Amounts in Thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
Year Ended November 30, 2014
|
|
|
GAAP
|
|
Adjustments
|
|
|
Adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues, less interest on mandatorily redeemable preferred
interests of consolidated subsidiaries
|
|
$
|
3,002,908
|
|
$
|
175,283
|
(1)
|
|
$
|
2,827,625
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expenses:
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits
|
|
|
1,698,230
|
|
|
118,412
|
(2)
|
|
|
1,579,818
|
Non-compensation expenses
|
|
|
989,118
|
|
|
258,760
|
(3)
|
|
|
730,358
|
Total non-interest expenses
|
|
|
2,687,348
|
|
|
377,172
|
|
|
|
2,310,176
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
$
|
315,560
|
|
$
|
(201,889)
|
|
|
$
|
517,449
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
|
|
$
|
168,361
|
|
$
|
(156,442)
|
|
|
$
|
324,803
|
|
|
|
|
|
|
|
|
|
|
|
Compensation ratio (a)
|
|
|
56.6%
|
|
|
|
|
|
|
55.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
Nine Months Ended November 30, 2013
|
|
|
GAAP
|
|
Adjustments
|
|
|
Adjusted
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues, less interest on mandatorily redeemable preferred
interests of consolidated subsidiaries
|
|
$
|
2,137,313
|
|
$
|
140,701
|
(1)
|
|
$
|
1,996,612
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expenses:
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits
|
|
|
1,213,908
|
|
|
101,414
|
(2)
|
|
|
1,112,494
|
Non-compensation expenses
|
|
|
659,110
|
|
|
106,129
|
(4)
|
|
|
552,981
|
Total non-interest expenses
|
|
|
1,873,018
|
|
|
207,543
|
|
|
|
1,665,475
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
$
|
264,295
|
|
$
|
(66,842)
|
|
|
$
|
331,137
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
|
|
$
|
169,609
|
|
$
|
(44,925)
|
|
|
$
|
214,534
|
|
|
|
|
|
|
|
|
|
|
|
Compensation ratio (a)
|
|
|
56.8%
|
|
|
|
|
|
|
55.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor
|
|
|
Quarter Ended February 28, 2013
|
|
|
GAAP
|
|
Adjustments
|
|
|
Adjusted
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues, less interest on mandatorily redeemable preferred
interests of consolidated subsidiaries
|
|
$
|
807,583
|
|
$
|
59,532
|
(1)
|
|
$
|
748,051
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expenses:
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits
|
|
|
474,217
|
|
|
35,981
|
(2)
|
|
|
438,236
|
Non-compensation expenses
|
|
|
193,879
|
|
|
36,441
|
(4)
|
|
|
157,438
|
Total non-interest expenses
|
|
|
668,096
|
|
|
72,422
|
|
|
|
595,674
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
$
|
139,487
|
|
$
|
(12,890)
|
|
|
$
|
152,377
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
|
|
$
|
90,842
|
|
$
|
(7,249)
|
|
|
$
|
98,091
|
|
|
|
|
|
|
|
|
|
|
|
Compensation ratio (a)
|
|
|
58.7%
|
|
|
|
|
|
|
58.6%
|
|
|
|
|
|
|
|
|
|
|
|
(a) Reconciliation of the compensation ratio for U.S. GAAP to Adjusted
is a derivation of the reconciliation of the components above.
This presentation of Adjusted financial information is an unaudited
non-GAAP financial measure. Adjusted financial information begins with
information prepared in accordance with U.S. GAAP and then those results
are adjusted to exclude the operations of the Company's Bache business.
The Company believes that the disclosed Adjusted measures and any
adjustments thereto, when presented in conjunction with comparable U.S.
GAAP measures are useful to investors as they enable investors to
evaluate the Company's results in the context of pursuing various
strategic alternatives for the Bache business. These measures should not
be considered a substitute for, or superior to, measures of financial
performance prepared in accordance with U.S. GAAP.
JEFFERIES GROUP LLC AND SUBSIDIARIES
|
CONSOLIDATED ADJUSTED SELECTED FINANCIAL DATA
|
FOOTNOTES
|
(1)
|
|
Revenues generated by the Bache business, including commissions,
principal transaction revenues and net interest revenue, for the
presented period have been classified as a reduction of revenue in
the presentation of Adjusted financial measures.
|
|
|
|
(2)
|
|
Compensation expense and benefits recognized during the presented
period for employees whose sole responsibilities pertain to the
activities of the Bache business, including front office personnel
and dedicated support personnel, have been classified as a reduction
of Compensation and benefits expense in the presentation of Adjusted
financial measures.
|
|
|
|
(3)
|
|
The following expenses incurred as part of the Bache business during
the period presented are excluded from Adjusted non-compensation
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
Year Ended November
|
|
|
|
|
|
|
November 30,
|
|
30, 2014
|
|
|
|
|
$ thousands
|
|
2014
|
|
|
|
|
|
|
Floor brokerage, technology and communications, business
development, professional services and other estimated expenses
directly incurred by the Bache business in conducting operations
|
|
$
|
36,553
|
|
$
|
147,026
|
|
|
|
|
Bad debt expense incurred on customer default and close-out
|
|
|
52,300
|
|
|
52,300
|
|
|
|
|
Impairment of goodwill attributed to the Bache reporting unit
|
|
|
51,900
|
|
|
51,900
|
|
|
|
|
Impairment of certain intangible assets attributed to the Bache
reporting unit
|
|
|
7,534
|
|
|
7,534
|
|
|
|
|
|
|
$
|
148,287
|
|
$
|
258,760
|
|
|
|
|
|
|
|
|
|
|
|
(4)
|
|
Expenses directly related to the operations of the Bache business
for the presented periods have been excluded from Adjusted
non-compensation expenses. These expenses include Floor brokerage
and clearing fees, amortization of capitalized software used
directly by the Bache business in conducting its business
activities, technology expenses directly related to conducting
Bache business operations and business development and
professional services expenses incurred by the Bache business as
part of its client sales and trading activities, including
estimates of certain support costs dedicated to the Bache business.
|
|
|
|
|
JEFFERIES GROUP LLC AND SUBSIDIARIES
|
SELECTED STATISTICAL INFORMATION
|
(Amounts in Thousands, Except Other Data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
Quarter Ended
|
|
Quarter Ended
|
Quarter Ended
|
|
|
November 30, 2014
|
|
August 31, 2014
|
|
November 30, 2013
|
Revenues by Source
|
|
|
|
|
|
|
Equities
|
|
$
|
158,452
|
|
|
$
|
171,708
|
|
$
|
289,727
|
Fixed income
|
|
|
61,387
|
|
|
|
195,345
|
|
|
227,136
|
Total
|
|
|
219,839
|
|
|
|
367,053
|
|
|
516,863
|
|
|
|
|
|
|
|
Other
|
|
|
-
|
|
|
|
-
|
|
|
4,624
|
|
|
|
|
|
|
|
Equity
|
|
|
67,910
|
|
|
|
93,309
|
|
|
118,348
|
Debt
|
|
|
131,901
|
|
|
|
175,597
|
|
|
162,031
|
Capital markets
|
|
|
199,811
|
|
|
|
268,906
|
|
|
280,379
|
Advisory
|
|
|
116,201
|
|
|
|
198,887
|
|
|
136,665
|
Investment banking
|
|
|
316,012
|
|
|
|
467,793
|
|
|
417,044
|
|
|
|
|
|
|
|
Asset management fees and investment income (loss) from managed
funds:
|
|
|
|
|
|
Asset management fees
|
|
|
4,930
|
|
|
|
7,379
|
|
|
5,563
|
Investment (loss) income from managed funds
|
|
|
(3,202
|
)
|
|
|
1,084
|
|
|
6,454
|
Total
|
|
|
1,728
|
|
|
|
8,463
|
|
|
12,017
|
Net revenues
|
|
$
|
537,579
|
|
|
$
|
843,309
|
|
$
|
950,548
|
|
|
|
|
|
|
|
Other Data
|
|
|
|
|
|
|
Number of trading days
|
|
|
63
|
|
|
|
64
|
|
|
63
|
|
|
|
|
|
|
|
Average firmwide VaR (in millions) (A)
|
|
$
|
12.75
|
|
|
$
|
13.50
|
|
$
|
12.61
|
Average firmwide VaR excluding Knight Capital (in millions) (A)
|
|
$
|
8.77
|
|
|
$
|
8.25
|
|
$
|
10.37
|
Average firmwide VaR excluding Knight Capital and Harbinger Group
Inc. (in millions) (A)
|
|
$
|
8.77
|
|
|
$
|
8.25
|
|
$
|
7.32
|
|
|
|
|
|
|
|
|
|
|
|
(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.
|
|
|
|
|
|
|
|
JEFFERIES GROUP LLC AND SUBSIDIARIES
|
SELECTED STATISTICAL INFORMATION
|
(Amounts in Thousands, Except Other Data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Successor
|
|
Predecessor
|
|
|
Year Ended
|
|
Nine Months Ended
|
|
Quarter Ended
|
|
|
November 30, 2014
|
|
November 30, 2013
|
|
February 28, 2013
|
Revenues by Source
|
|
|
|
|
|
|
Equities
|
|
$
|
696,221
|
|
|
$
|
582,355
|
|
$
|
167,354
|
|
Fixed income
|
|
|
760,366
|
|
|
|
504,092
|
|
|
352,029
|
|
Total
|
|
|
1,456,587
|
|
|
|
1,086,447
|
|
|
519,383
|
|
|
|
|
|
|
|
|
Other
|
|
|
-
|
|
|
|
4,624
|
|
|
-
|
|
|
|
|
|
|
|
|
Equity
|
|
|
339,683
|
|
|
|
228,394
|
|
|
61,380
|
|
Debt
|
|
|
627,536
|
|
|
|
415,932
|
|
|
140,672
|
|
Capital markets
|
|
|
967,219
|
|
|
|
644,326
|
|
|
202,052
|
|
Advisory
|
|
|
562,055
|
|
|
|
369,191
|
|
|
86,226
|
|
Investment banking
|
|
|
1,529,274
|
|
|
|
1,013,517
|
|
|
288,278
|
|
|
|
|
|
|
|
|
Asset management fees and investment income (loss) from managed
funds:
|
|
|
|
|
|
Asset management fees
|
|
|
26,682
|
|
|
|
26,473
|
|
|
11,083
|
|
Investment (loss) income from managed funds
|
|
|
(9,635
|
)
|
|
|
9,620
|
|
|
(200
|
)
|
Total
|
|
|
17,047
|
|
|
|
36,093
|
|
|
10,883
|
|
Net revenues
|
|
|
3,002,908
|
|
|
|
2,140,681
|
|
|
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
|
|
$
|
3,002,908
|
|
|
$
|
2,137,313
|
|
$
|
807,583
|
|
|
|
|
|
|
|
|
Other Data
|
|
|
|
|
|
|
Number of trading days
|
|
|
251
|
|
|
|
191
|
|
|
60
|
|
|
|
|
|
|
|
|
Average firmwide VaR (in millions) (A)
|
|
$
|
14.35
|
|
|
$
|
10.79
|
|
$
|
9.27
|
|
Average firmwide VaR excluding Knight Capital (in millions) (A)
|
|
$
|
9.54
|
|
|
$
|
7.78
|
|
$
|
5.99
|
|
Average firmwide VaR excluding Knight Capital and Harbinger Group
Inc. (in millions) (A)
|
|
$
|
8.55
|
|
|
$
|
6.77
|
|
$
|
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.
|
|
JEFFERIES GROUP LLC AND SUBSIDIARIES
|
FINANCIAL HIGHLIGHTS
|
(Amounts in Millions, Except Where Noted)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
Quarter Ended
|
|
Quarter Ended
|
|
Quarter Ended
|
|
|
November 30, 2014
|
|
August 31, 2014
|
|
November 30, 2013
|
|
|
|
|
|
|
|
Financial position:
|
|
|
|
|
|
|
Total assets (1)
|
|
$
|
44,517
|
|
$
|
44,764
|
|
$
|
40,177
|
Average total assets for the period (1)
|
|
$
|
51,030
|
|
$
|
51,369
|
|
$
|
46,439
|
Average total assets less goodwill and intangible assets for the
period (1)
|
|
$
|
49,077
|
|
$
|
49,387
|
|
$
|
44,455
|
|
|
|
|
|
|
|
Cash and cash equivalents (1)
|
|
$
|
4,080
|
|
$
|
4,035
|
|
$
|
3,561
|
Cash and cash equivalents and other sources of liquidity (1) (2)
|
|
$
|
5,500
|
|
$
|
5,913
|
|
$
|
5,282
|
Cash and cash equivalents and other sources of liquidity - % total
assets (1) (2)
|
|
|
12.4%
|
|
|
13.2%
|
|
|
13.1%
|
Cash and cash equivalents and other sources of liquidity - % total
assets less goodwill and intangible assets (1) (2)
|
|
12.9%
|
|
|
13.8%
|
|
|
13.8%
|
|
|
|
|
|
|
|
Financial instruments owned (1)
|
|
$
|
18,648
|
|
$
|
18,420
|
|
$
|
16,650
|
Goodwill and intangible assets (1)
|
|
$
|
1,904
|
|
$
|
1,978
|
|
$
|
1,986
|
|
|
|
|
|
|
|
Total equity (including noncontrolling interests)
|
|
$
|
5,471
|
|
$
|
5,602
|
|
$
|
5,422
|
Total member's equity
|
|
$
|
5,432
|
|
$
|
5,571
|
|
$
|
5,305
|
Tangible member's equity (3)
|
|
$
|
3,527
|
|
$
|
3,593
|
|
$
|
3,318
|
|
|
|
|
|
|
|
Bache assets (4)
|
|
$
|
4,202
|
|
$
|
3,641
|
|
$
|
3,534
|
|
|
|
|
|
|
|
Level 3 financial instruments:
|
|
|
|
|
|
|
Level 3 financial instruments owned (1) (5)
|
|
$
|
527
|
|
$
|
499
|
|
$
|
457
|
Level 3 financial instruments owned with economic exposure (1) (6)
|
|
$
|
527
|
|
$
|
480
|
|
$
|
457
|
Level 3 financial instruments owned - % total assets (1)
|
|
|
1.2%
|
|
|
1.1%
|
|
|
1.1%
|
Level 3 financial instruments owned - % total financial instruments
owned (1)
|
|
|
2.8%
|
|
|
2.7%
|
|
|
2.7%
|
Level 3 financial instruments owned with economic exposure - % total
financial instruments owned (1)
|
|
2.8%
|
|
|
2.6%
|
|
|
2.7%
|
Level 3 financial instruments owned with economic exposure - %
tangible member's equity (1)
|
|
14.9%
|
|
|
13.4%
|
|
|
13.8%
|
|
|
|
|
|
|
|
Other data and financial ratios:
|
|
|
|
|
|
|
Total capital (1) (7)
|
|
$
|
11,276
|
|
$
|
11,970
|
|
$
|
11,199
|
Leverage ratio (1) (8)
|
|
|
8.1
|
|
|
8.0
|
|
|
7.4
|
Adjusted leverage ratio (1) (9)
|
|
|
10.3
|
|
|
10.5
|
|
|
9.5
|
Tangible gross leverage ratio (1) (10)
|
|
|
12.1
|
|
|
11.9
|
|
|
11.5
|
Leverage ratio - excluding impacts of the Leucadia transaction (1)
(11)
|
|
|
10.3
|
|
|
10.1
|
|
|
9.3
|
|
|
|
|
|
|
|
Number of trading days
|
|
|
63
|
|
|
64
|
|
|
63
|
|
|
|
|
|
|
|
Average firmwide VaR (12)
|
|
$
|
12.75
|
|
$
|
13.50
|
|
$
|
12.61
|
Average firmwide VaR excluding Knight Capital (12)
|
|
$
|
8.77
|
|
$
|
8.25
|
|
$
|
10.37
|
Average firmwide VaR excluding Knight Capital and Harbinger Group
Inc. (12)
|
|
$
|
8.77
|
|
$
|
8.25
|
|
$
|
7.32
|
|
|
|
|
|
|
|
Number of employees, at period end
|
|
|
3,915
|
|
|
3,885
|
|
|
3,797
|
|
|
|
|
|
|
|
|
|
|
|
JEFFERIES GROUP LLC AND SUBSIDIARIES
|
FINANCIAL HIGHLIGHTS - FOOTNOTES
|
|
|
|
(1)
|
|
Amounts pertaining to November 30, 2014 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 fiscal year ended November
30, 2014.
|
|
|
|
(2)
|
|
At November 30, 2014, 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 $1,057 million, in
aggregate, and $364 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 at
August 31, 2014 were $1,530 million and $348 million, and at
November 30, 2013, were $1,317 million and $404 million,
respectively.
|
|
|
|
(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)
|
|
Bache assets (a non-GAAP financial measure) includes Cash and cash
equivalents, Cash and securities segregated, Financial instruments
owned, Securities purchased under agreements to resell and
Receivables attributable to our Bache business.
|
|
|
|
(5)
|
|
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.
|
|
|
|
(6)
|
|
Level 3 financial instruments owned with economic exposure
represent Level 3 financial instruments owned adjusted for Level 3
financial instruments that are financed by nonrecourse secured
financing or attributable to third party or employee
noncontrolling interests in certain consolidated entities.
|
|
|
|
(7)
|
|
As of November 30, 2014, August 31, 2014 and November 30, 2013,
total capital includes our long-term debt of $5,806 million, $6,368
million and $5,777 million, respectively, 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.
|
|
|
|
(8)
|
|
Leverage ratio equals total assets divided by total equity.
|
|
|
|
(9)
|
|
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, 2014, August 31, 2014 and November 30,
2013, adjusted assets were $36,906 million, $38,100 million and
$32,559 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.
|
|
|
|
(10)
|
|
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.
|
|
|
|
(11)
|
|
Leverage ratio - excluding impacts of the Leucadia transaction (a
non-GAAP financial measure) is calculated as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 30,
|
|
August 31,
|
|
November 30,
|
|
|
|
$ millions
|
|
2014
|
|
2014
|
|
2013
|
|
|
|
Total assets
|
|
$
|
44,517
|
|
|
$
|
44,764
|
|
|
$
|
40,177
|
|
|
|
|
Goodwill and acquisition accounting fair value adjustments on the
transaction with Leucadia
|
|
|
(1,957
|
)
|
|
|
(1,957
|
)
|
|
|
(1,957
|
)
|
|
|
|
Net amortization to date on asset related purchase accounting
adjustments
|
|
|
108
|
|
|
|
42
|
|
|
|
27
|
|
|
|
|
Total assets excluding transaction impacts
|
|
$
|
42,668
|
|
|
$
|
42,849
|
|
|
$
|
38,247
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
$
|
5,471
|
|
|
$
|
5,602
|
|
|
$
|
5,422
|
|
|
|
|
Equity arising from transaction consideration
|
|
|
(1,426
|
)
|
|
|
(1,426
|
)
|
|
|
(1,426
|
)
|
|
|
|
Preferred stock assumed by Leucadia
|
|
|
125
|
|
|
|
125
|
|
|
|
125
|
|
|
|
|
Net amortization to date of purchase accounting adjustments, net of
tax
|
|
|
(9
|
)
|
|
|
(58
|
)
|
|
|
(25
|
)
|
|
|
|
Total equity excluding transaction impacts
|
|
$
|
4,161
|
|
|
$
|
4,243
|
|
|
$
|
4,096
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leverage ratio - excluding impacts of the Leucadia transaction
|
|
|
10.3
|
|
|
|
10.1
|
|
|
|
9.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12)
|
|
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.
|
CONTACT:
Jefferies Group LLC
Peregrine C. Broadbent, 212-284-2338
Chief
Financial Officer
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