Jefferies Reports Fourth Quarter and 2012 Fiscal Year Financial Results

Jefferies Reports Fourth Quarter and 2012 Fiscal Year Financial Results

NEW YORK & LONDON--(BUSINESS WIRE)-- Jefferies Group, Inc. (NYS: JEF) announced today financial results for its fiscal fourth quarter and year ended November 30, 2012.

Highlights for the three months ended November 30, 2012, versus the three months ended November 30, 2011:

  • Net revenues of $769 million, versus $554 million

  • Net earnings to common shareholders of $72 million ($81 million on a non-GAAP basis after excluding Hurricane Sandy relief donation, Leucadia merger costs and certain historical-related items [1]), versus $48 million ($39 million on a non-GAAP basis after excluding certain items [2])

  • Net earnings per common share of $0.31 ($0.35 on a non-GAAP basis after excluding Hurricane Sandy relief donation, Leucadia merger costs and certain historical-related items [1]), versus $0.21 ($0.17 on a non-GAAP basis after excluding certain items [2])

  • Investment Banking net revenues of $283 million, up 8%, versus $261 million

  • Fixed Income net revenues more than doubled to $293 million, versus $141 million


Highlights for the year ended November 30, 2012, versus the year ended November 30, 2011:

  • Record fiscal year net revenues of $2,999 million, up 18%, versus $2,549 million

  • Net earnings to common shareholders of $282 million ($302 million on a non-GAAP basis after excluding certain items [1][3]), versus $285 million ($232 million on a non-GAAP basis after excluding certain items [2][4])

  • Net earnings per common share of $1.22 ($1.31 on a non-GAAP basis after excluding certain items [1][3]), versus $1.28 ($1.04 on a non-GAAP basis after excluding certain items [2][4])

  • Fixed Income net revenues of $1,190 million, up 66%, versus $715 million

  • Investment Banking net revenues of $1,126 million versus $1,123 million

"2013 will mark the beginning of a new era for Jefferies. We believe our imminent merger with Leucadia will result in an even stronger Jefferies, as well as making us even more distinguished from our bank holding company competitors. The traditional, entrepreneurial Wall Street model has served us well historically and we believe this will continue to be an advantage into the future. Combining our company with an extremely well-capitalized parent will allow us to continue to aggressively add value to our clients. Our 3,804 employee partners look forward to working our hardest on behalf of Leucadia shareholders while protecting both of our collective bondholders."

A conference call with management discussion of these financial results will be held today, Tuesday, December 18, 2012, at 9:00 AM Eastern (date and time subject to change). Investors and securities industry professionals may access the management discussion by calling 877-710-9938 or 702-928-7183. A one-week replay of the call will also be available at 855-859-2056 or 404-537-3406 (conference ID # 73941351). A live audio webcast and delayed replay can also be accessed at www.jefferies.com.

Jefferies Group, Inc. (NYS: JEF) , 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. Jefferies 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.

1.

Adjustments to net earnings to common shareholders and net earnings per common share on a non-GAAP basis include donations to Hurricane Sandy relief and transaction costs associated with the announced merger with Leucadia, amortization of intangibles and compensation awards related to our Bache and Hoare Govett acquisitions and interest expense incurred as a result of debt extinguishment accounting, from prior quarters, all on an after-tax basis.

2.

Adjustments to net earnings to common shareholders and net earnings per common share on a non-GAAP basis include gain on debt extinguishment related to trading activities in our own debt, and amortization of intangible assets and compensation awards and other severance and bonus costs related to our Bache acquisition, all on an after-tax basis.

3.

Adjustments to net earnings to common shareholders and net earnings per common share on a non-GAAP basis include a bargain purchase gain and compensation awards on our Hoare Govett acquisition, a gain on debt extinguishment relating to trading activities in our own debt and impairment charges on intangibles related to our Bache acquisition, all on an after-tax basis.

4.

Adjustments to net earnings to common shareholders and net earnings per common share on a non-GAAP basis include a bargain purchase gain on our Bache acquisition, which is not a taxable item and transaction and integration expenses related to the Bache acquisition on an after-tax basis.

-- see financial tables in attached --

JEFFERIES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(Amounts in Thousands, Except Per Share Amounts)

(Unaudited)

Three Months Ended

Year Ended

November 30,

November 30,

November 30,

November 30,

2012

2011

2012

2011

Revenues:

Commissions

$

127,074

$

130,619

$

485,569

$

534,726

Principal transactions

242,140

36,571

1,035,974

428,035

Investment banking

282,962

261,298

1,125,883

1,122,528

Asset management fees and investment income from managed funds

16,318

6,623

26,966

44,125

Interest income

242,904

317,485

1,031,839

1,248,132

Other revenues

61,872

46,144

164,974

152,092

Total revenues

973,270

798,740

3,871,205

3,529,638

Interest expense

204,421

244,757

872,421

980,825

Net revenues

768,849

553,983

2,998,784

2,548,813

Interest on mandatorily redeemable preferred interests of

consolidated subsidiaries

8,279

(2,561

)

42,883

3,622

Net revenues, less mandatorily redeemable preferred

interests

760,570

556,544

2,955,901

2,545,191

Non-interest expenses:

Compensation and benefits

460,404

308,137

1,770,798

1,482,604

Non-compensation expenses:

Floor brokerage and clearing fees

29,106

33,837

120,145

126,313

Technology and communications

64,051

62,377

244,511

215,940

Occupancy and equipment rental

25,815

23,954

97,397

84,951

Business development

22,968

29,397

95,330

93,645

Professional services

27,771

17,868

73,427

66,305

Other

16,480

10,294

62,498

56,099

Total non-compensation expenses

186,191

177,727

693,308

643,253

Total non-interest expenses

646,595

485,864

2,464,106

2,125,857

Earnings before income taxes

113,975

70,680

491,795

419,334

Income tax expense

34,243

25,066

168,646

132,966

Net earnings

79,732

45,614

323,149

286,368

Net earnings (loss) to noncontrolling interests

8,128

(2,772

)

40,740

1,750

Net earnings to common shareholders

$

71,604

$

48,386

$

282,409

$

284,618

Earnings per common share:

Basic

$

0.31

$

0.21

$

1.23

$

1.28

Diluted

$

0.31

$

0.21

$

1.22

$

1.28

Weighted average common shares:

Basic

214,415

215,628

215,989

211,056

Diluted

218,527

215,629

220,101

215,171

Compensation and benefits / Net revenues

59.9

%

55.6

%

59.1

%

58.2

%

Effective tax rate

30.0

%

35.5

%

34.3

%

31.7

%

JEFFERIES GROUP, INC. AND SUBSIDIARIES

SELECTED STATISTICAL INFORMATION

(Amounts in Thousands, Except Other Data)

(Unaudited)

Quarter Ended

November 30,

August 31,

November 30,

2012

2012

2011

Revenues by Source

Equities

$

176,595

$

209,980

$

124,305

Fixed Income

292,974

265,679

140,651

Other

-

-

21,106

Total

469,569

475,659

286,062

Equity

52,919

39,068

26,936

Debt

145,772

87,894

62,090

Capital markets

198,691

126,962

89,026

Advisory

84,271

133,201

172,272

Investment banking

282,962

260,163

261,298

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

Asset management fees

9,680

8,583

9,162

Investment income / (loss) from managed funds

6,638

(5,467

)

(2,539

)

Total

16,318

3,116

6,623

Net revenues

768,849

738,938

553,983

Interest on mandatorily redeemable preferred interests of consolidated subsidiaries

8,279

8,304

(2,561

)

Net revenues, less mandatorily redeemable preferred interests

$

760,570

$

730,634

$

556,544