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Published: 2021-01-04 16:28:51 ET
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EX-99 2 jfgpressrelease11-30x20.htm EX-99 JEFFERIES FINANCIAL GROUP INC. PRESS RELEASE Document


FOR IMMEDIATE RELEASEJanuary 4, 2021


Jefferies Financial Group Announces 2020 Financial Results

All-Time Record Quarterly and Annual Results at Jefferies Group

Quarterly Cash Dividend Increase of 33% to $0.20 per Jefferies Common Share
Share Repurchase Authorization Increased to $250 million

New York, New York — January 4, 2021 — Jefferies Financial Group Inc. (NYSE: JEF) today announced its financial results for the three and twelve month periods ended November 30, 2020. In addition, the Jefferies Board of Directors declared a quarterly cash dividend equal to $0.20 per Jefferies common share payable on February 26, 2021 to record holders of Jefferies common shares on February 12, 2021. The Jefferies Board of Directors also increased the Company's stock buyback authorization by $193 million to a total of $250 million. We expect to file our Form 10-K on or about January 28, 2021.

Highlights for the three months ended November 30, 2020:
•Jefferies Group LLC recorded record quarterly net revenues of $1,609 million, record pre-tax income of $406 million, record net earnings of $307 million and return on tangible equity of 26.2%1
◦Record quarterly Investment Banking net revenues of $916 million, including record Equity Underwriting net revenues of $341 million, record Advisory net revenues of $357 million, and record Debt Underwriting net revenues of $209 million
◦Combined Capital Markets net revenues of $590 million; record quarterly Equities net revenues of $327 million and Fixed Income net revenues of $263 million
◦Asset Management revenues (before allocated net interest2) of $83 million
•Merchant Banking recorded pre-tax income of $33 million, reflecting record quarterly results from Idaho Timber and mark-to-market increases in the value of several of our investments in public companies
•Net income attributable to Jefferies Financial Group common shareholders was $307 million, or $1.11 per diluted share
•We repurchased 9.5 million shares for $193 million, or an average price of $20.34 per share; 249.8 million shares were outstanding and 273.6 million shares were outstanding on a fully diluted basis3 at November 30, 2020; Jefferies book value per share was $37.65 and tangible book value per fully diluted share4 was $27.38 at the end of the fourth quarter
•Jefferies Financial Group had parent company liquidity of $1.9 billion at November 30, 2020. Jefferies Group had a record liquidity buffer of $8.6 billion of cash and unencumbered liquid collateral at November 30, 2020, which represented 18% of its total balance sheet.

Highlights for the twelve months ended November 30, 2020:
•Jefferies Group LLC recorded record twelve months net revenues of $5,197 million, record pre-tax income of $1,177 million, record net earnings of $875 million and return on tangible equity of 20.4%5
◦Record twelve months Investment Banking net revenues of $2,398 million, including record Advisory net revenues of $1,054 million, record Equity Underwriting net revenues of $902 million and Debt Underwriting net revenues of $546 million
◦Record combined twelve months Capital Markets net revenues of $2,470 million, including record Equities net revenues of $1,129 million and record Fixed Income net revenues of $1,341 million
◦Record Asset Management revenues (before allocated net interest2) of $257 million
1

•Merchant Banking pre-tax loss of $25 million, reflecting record performance from Idaho Timber, a positive contribution from Vitesse, and the previously reported gain of about $60 million from effective short-term hedges in the first quarter, more than offset by $145 million in previously reported non-cash charges in the first half of 2020 related to write-downs of our investments in WeWork, JETX and some of the real estate assets of HomeFed
•Net income attributable to Jefferies Financial Group common shareholders of $770 million, or $2.65 per diluted share
•Repurchases of 42.1 million shares for $813 million, or an average price of $19.29 per share; together with $161 million in dividends, an aggregate of $974 million was returned to shareholders in 2020; over the past three fiscal years, Jefferies has returned to shareholders nearly $3.4 billion

Rich Handler, our CEO, and Brian Friedman, our President, said:

"The results for our fourth quarter and full year 2020 are outstanding and testament to the relentless dedication and tireless effort of the entire Jefferies team. We gained market share and have established Jefferies at yet another higher level of achievement and potential. We are optimistic that our momentum and strength will be sustained in 2021."

Please refer to the Jefferies Financial Group Annual Letter from our CEO and President for broader perspective on 2020, as well as our strategy and outlook.

* * * *

Amounts herein pertaining to November 30, 2020 represent a preliminary estimate as of the date of this earnings release and may be revised upon filing our Annual Report on Form 10-K with the Securities and Exchange Commission ("SEC"). More information on our results of operations for the three and twelve month periods ended November 30, 2020 will be provided upon filing our Annual Report on Form 10-K with the SEC.

This press 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 and statements that are not historical facts. These forward-looking statements are usually preceded by the words "should," "expect," "intend," "may," "will," or similar expressions. Forward-looking statements may contain expectations regarding revenues, earnings, operations, and other results, and may include statements of future performance, plans, and objectives. Forward-looking statements also include statements pertaining to our strategies for future development of our businesses and products. Forward-looking statements represent only our belief regarding future events, many of which by their nature are inherently uncertain. It is possible that the actual results may differ, possibly materially, from the anticipated results indicated in these forward-looking statements. Information regarding important factors, including Risk Factors that could cause actual results to differ, perhaps materially, from those in our forward-looking statements is contained in reports we file with the SEC. You should read and interpret any forward-looking statement together with reports we file with the SEC.

Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy will be profitable or equal the corresponding indicated performance level(s).

2

For further information, please contact:

Teresa S. Gendron
Chief Financial Officer
Jefferies Financial Group Inc.
Tel. (212) 460-1932

Matt Larson
Chief Financial Officer
Jefferies Group LLC
Tel. (212) 284-2338

1
Return on tangible equity (a non-GAAP financial measure) equals our three months ended November 30, 2020 annualized net earnings attributable to Jefferies Group LLC divided by our tangible Jefferies Group LLC member's equity (a non-GAAP financial measure) of $4,682 million at August 31, 2020. Tangible Jefferies Group LLC member's equity at August 31, 2020 equals Jefferies Group LLC member's equity of $6,488 million less goodwill and identifiable intangibles assets of $1,806 million.
2
Allocated net interest represents the allocation of a ratable portion of Jefferies Group LLC's long-term debt interest expense to Jefferies Group LLC's Asset Management reportable segment, net of interest income on Jefferies Group LLC's Cash and cash equivalents and other sources of liquidity, which allocation is consistent with Jefferies Group LLC's policy of allocating such items to all its business lines. Refer to Jefferies Group LLC's summary of Net Revenues by Source on pages 9 and 10.
3
Shares outstanding on a fully diluted basis, a non-GAAP measure, is defined as Jefferies Financial Group's common shares outstanding plus restricted stock units and other shares. Refer to schedule on page 14 for reconciliation to U.S. GAAP amounts.
4
Tangible book value per fully diluted share, a non-GAAP measure, is defined as Tangible book value divided by shares outstanding on a fully diluted basis. Tangible book value, a non-GAAP measure, is defined as Jefferies Financial Group shareholders' equity (book value) less Intangible assets, net and goodwill. Shares outstanding on a fully diluted basis, a non-GAAP measure, is defined as Jefferies Financial Group's common shares outstanding plus restricted stock units and other shares. Refer to schedule on page 14 for reconciliation to U.S. GAAP amounts.
5
Return on tangible equity (a non-GAAP financial measure) equals our twelve months ended November 30, 2020 net earnings attributable to Jefferies Group LLC divided by our tangible Jefferies Group LLC member's equity (a non-GAAP financial measure) of $4,311 million at November 30, 2019. Tangible Jefferies Group LLC member's equity at November 30, 2019 equals Jefferies Group LLC member's equity of $6,125 million less goodwill and identifiable intangibles assets of $1,814 million.

3

Summary for Jefferies Financial Group Inc. and Subsidiaries
(In thousands, except per share amounts)
(Unaudited)

Three Months Ended
November 30, 2020		Three Months Ended
November 30, 2019		Twelve Months Ended
November 30, 2020		Twelve Months Ended
November 30, 2019
Net revenues$1,860,787 $1,106,098 $6,010,874 $3,892,976 
Income before income taxes and income (loss) related to associated companies$427,500 $151,320 $1,142,566 $275,613 
Income (loss) related to associated companies(5,960)81,229 (75,483)202,995 
Income before income taxes
421,540 232,549 1,067,083 478,608 
Income tax provision (benefit)113,535 38,671 298,673 (483,955)
Net income308,005 193,878 768,410 962,563 
Net loss attributable to the noncontrolling interests238 2,606 5,271 1,847 
Net loss attributable to the redeemable noncontrolling interests428 333 1,558 286 
Preferred stock dividends(1,404)(1,276)(5,634)(5,103)
Net income attributable to Jefferies Financial Group Inc. common shareholders
$307,267 $195,541 $769,605 $959,593 
Basic earnings per common share attributable to Jefferies Financial Group Inc. common shareholders:
Net income
$1.12 $0.63 $2.68 $3.07 
Number of shares in calculation
272,901 310,266 285,693 310,694 
Diluted earnings per common share attributable to Jefferies Financial Group Inc. common shareholders:
Net income
$1.11 $0.62 $2.65 $3.03 
Number of shares in calculation
277,342 316,566 290,490 317,032 

4

A summary of results for the three months ended November 30, 2020 is as follows (in thousands):
Investment Banking and Capital Markets (1)Asset Management (1)Merchant Banking (1)Corporate Parent Company InterestConsolidation AdjustmentsTotal
Net revenues
$1,537,362 $88,977 $231,852 $1,350 $— $1,246 $1,860,787 
Expenses:
Compensation and benefits
842,513 30,152 25,336 13,365 — — 911,366 
Cost of sales (2)59,968 5,221 102,717 — — — 167,906 
Interest expense— — 6,972 — 13,672 — 20,644 
Depreciation and amortization
21,012 471 16,735 865 — — 39,083 
Selling, general and other expenses
239,795 9,328 41,138 6,513 — (2,486)294,288 
Total expenses
1,163,288 45,172 192,898 20,743 13,672 (2,486)1,433,287 
Income (loss) before income taxes and loss related to associated companies374,074 43,805 38,954 (19,393)(13,672)3,732 427,500 
Loss related to associated companies— — (5,960)— — — (5,960)
Income (loss) before income taxes
$374,074 $43,805 $32,994 $(19,393)$(13,672)$3,732 421,540 
Income tax provision
113,535 
Net income
$308,005 

A summary of results for the three months ended November 30, 2019 is as follows (in thousands):
Investment Banking and Capital Markets (1)Asset Management (1)Merchant Banking (1)Corporate Parent Company InterestConsolidation AdjustmentsTotal
Net revenues
$761,104 $(10,554)$343,388 $10,699 $— $1,461 $1,106,098 
Expenses:
Compensation and benefits
409,899 14,556 17,129 16,273 — — 457,857 
Cost of sales (2)53,713 6,314 86,532 — — — 146,559 
Interest expense— — 8,608 — 8,750 — 17,358 
Depreciation and amortization
20,877 570 19,901 923 — — 42,271 
Selling, general and other expenses
213,457 11,010 51,557 14,963 — (254)290,733 
Total expenses
697,946 32,450 183,727 32,159 8,750 (254)954,778 
Income (loss) before income taxes and income (loss) related to associated companies63,158 (43,004)159,661 (21,460)(8,750)1,715 151,320 
Income (loss) related to associated companies— (133)81,294 — — 68 81,229 
Income (loss) before income taxes
$63,158 $(43,137)$240,955 $(21,460)$(8,750)$1,783 232,549 
Income tax provision38,671 
Net income
$193,878 

(1)    We now present Asset Management as a separate reporting segment. Prior year amounts have been reclassified to conform to current segment disclosure.
(2)    Includes Floor brokerage and clearing fees.
5

A summary of results for the twelve months ended November 30, 2020 is as follows (in thousands):
Investment Banking and Capital Markets (1)Asset Management (1)Merchant Banking (1)Corporate Parent Company InterestConsolidation AdjustmentsTotal
Net revenues
$4,989,138 $235,255 $764,460 $13,258 $— $8,763 $6,010,874 
Expenses:
Compensation and benefits
2,735,080 89,527 77,072 39,184 — — 2,940,863 
Cost of sales (2)241,083 25,509 338,588 — — — 605,180 
Interest expense— — 31,425 — 53,445 — 84,870 
Depreciation and amortization
82,334 5,247 67,362 3,496 — — 158,439 
Selling, general and other expenses
810,753 46,045 199,128 26,197 — (3,167)1,078,956 
Total expenses
3,869,250 166,328 713,575 68,877 53,445 (3,167)4,868,308 
Income (loss) before income taxes and loss related to associated companies
1,119,888 68,927 50,885 (55,619)(53,445)11,930 1,142,566 
Loss related to associated companies
— — (75,483)— — — (75,483)
Income (loss) before income taxes
$1,119,888 $68,927 $(24,598)$(55,619)$(53,445)$11,930 1,067,083 
Income tax provision
298,673 
Net income
$768,410 

A summary of results for the twelve months ended November 30, 2019 is as follows (in thousands):
Investment Banking and Capital Markets (1)Asset Management (1)Merchant Banking (1)Corporate Parent Company InterestConsolidation AdjustmentsTotal
Net revenues
$3,035,988 $84,894 $735,213 $32,833 $— $4,048 $3,892,976 
Expenses:
Compensation and benefits
1,641,814 63,305 61,767 58,005 — — 1,824,891 
Cost of sales (2)202,425 20,715 319,641 — — — 542,781 
Interest expense— — 34,129 — 53,048 — 87,177 
Depreciation and amortization
77,549 2,042 69,805 3,475 — — 152,871 
Selling, general and other expenses
767,150 40,432 162,832 39,820 — (591)1,009,643 
Total expenses
2,688,938 126,494 648,174 101,300 53,048 (591)3,617,363 
Income (loss) before income taxes and income related to associated companies
347,050 (41,600)87,039 (68,467)(53,048)4,639 275,613 
Income related to associated companies
— 474 202,453 — — 68 202,995 
Income (loss) before income taxes
$347,050 $(41,126)$289,492 $(68,467)$(53,048)$4,707 478,608 
Income tax benefit
(483,955)
Net income
$962,563 

(1)    We now present Asset Management as a separate reporting segment. Prior year amounts have been reclassified to conform to current segment disclosure.
(2)    Includes Floor brokerage and clearing fees.
6

The following financial tables provide information for the results of Jefferies Group LLC and should be read in conjunction with Jefferies Group LLC's Annual Report on Form 10-K for the year ended November 30, 2019. Amounts herein pertaining to November 30, 2020 represent a preliminary estimate as of the date of this earnings release and may be revised in Jefferies Group LLC's Annual Report on Form 10-K for the year ended November 30, 2020.
Jefferies Group LLC and Subsidiaries
Consolidated Statements of Earnings
(Amounts in Thousands)
(Unaudited)
Quarter Ended
November 30, 2020August 31, 2020November 30, 2019
Revenues:
Commissions and other fees
$196,143 $204,313 $182,466 
Principal transactions 467,163 560,665 137,256 
Investment banking
906,164 615,837 400,513 
Asset management fees and revenues 5,626 6,772 3,935 
Interest
191,646 195,960 333,507 
Other 43,652 11,526 15,859 
Total revenues
1,810,394 1,595,073 1,073,536 
Interest expense201,424 211,629 325,734 
Net revenues1,608,970 1,383,444 747,802 
Non-interest expenses:
Compensation and benefits
860,243 725,555 422,548 
Non-compensation expenses:
Floor brokerage and clearing fees
65,189 66,744 58,773 
Technology and communications
99,417 102,635 87,931 
Occupancy and equipment rental
28,229 27,053 31,885 
Business development
21,650 7,637 34,728 
Professional services
52,056 41,173 45,296 
Underwriting costs
36,551 29,071 14,617 
Other
39,828 20,175 28,153 
Total non-compensation expenses
342,920 294,488 301,383 
Total non-interest expenses1,203,163 1,020,043 723,931 
Earnings before income taxes405,807 363,401 23,871 
Income tax expense98,893 95,870 495 
Net earnings306,914 267,531 23,376 
Net loss attributable to noncontrolling interests(200)(531)(1,784)
Net earnings attributable to Jefferies Group LLC$307,114 $268,062 $25,160 
Pre-tax operating margin25.2 %26.3 %3.2 %
Effective tax rate24.4 %26.4 %2.1 %

7

Jefferies Group LLC and Subsidiaries
Consolidated Statements of Earnings
(Amounts in Thousands)
(Unaudited)
Twelve Months Ended
November 30, 2020November 30, 2019
Revenues:
Commissions and other fees$823,258 $676,309 
Principal transactions 1,867,013 769,258 
Investment banking2,501,494 1,528,729 
Asset management fees and revenues28,694 20,285 
Interest894,215 1,496,529 
Other 37,632 93,422 
Total revenues6,152,306 4,584,532 
Interest expense954,829 1,472,002 
Net revenues5,197,477 3,112,530 
Non-interest expenses:
Compensation and benefits2,792,575 1,684,054 
Non-compensation expenses:
Floor brokerage and clearing fees270,132 227,471 
Technology and communications386,830 335,395 
Occupancy and equipment rental107,180 119,472 
Business development67,603 138,158 
Professional services179,888 162,668 
Underwriting costs95,636 50,662 
Other120,179 69,981 
Total non-compensation expenses1,227,448 1,103,807 
Total non-interest expenses4,020,023 2,787,861 
Earnings before income taxes1,177,454 324,669 
Income tax expense302,748 80,284 
Net earnings874,706 244,385 
Net loss attributable to noncontrolling interests(4,597)(1,644)
Net earnings attributable to Jefferies Group LLC$879,303 $246,029 
Pre-tax operating margin22.7 %10.4 %
Effective tax rate25.7 %24.7 %

8

Jefferies Group LLC and Subsidiaries
Selected Statistical Information
(Amounts in Thousands, Except Other Data)
(Unaudited)
Quarter Ended
November 30, 2020August 31,
2020		November 30, 2019
Net Revenues by Source:
Advisory$356,823 $171,438 $195,035 
Equity underwriting340,561 305,380 105,119 
Debt underwriting208,780 139,019 100,359 
Total underwriting549,341 444,399 205,478 
Other investment banking
9,446 (27,013)(7,501)
Total investment banking
915,610 588,824 393,012 
Equities327,314 318,824 200,128 
Fixed income263,119 336,347 163,016 
Total capital markets
590,433 655,171 363,144 
Other
31,319 30,120 4,948 
Total Investment Banking and Capital Markets (1) (2)
1,537,362 1,274,115 761,104 
Asset management fees and revenues 5,626 6,772 3,935 
Investment return (3) (4) 77,790 115,556 (7,637)
Allocated net interest (3) (5)(11,808)(12,999)(9,600)
Total Asset Management
71,608 109,329 (13,302)
Net Revenues$1,608,970 $1,383,444 $747,802 
Other Data:
Number of trading days63 65 63 
Number of trading loss days3 8 10 
Average firmwide VaR (in millions) (6)$14.92 $10.46 $7.70 
(1)
Includes net interest revenues of $6.9 million, $3.3 million and $22.6 million for the quarters ended November 30, 2020, August 31, 2020 and November 30, 2019, respectively.
(2)Allocated net interest is not separately disaggregated for Investment Banking and Capital Markets. This presentation is aligned to our Investment Banking and Capital Markets internal performance measurement.
(3)Net revenues attributed to the Investment return in Jefferies Group LLC Asset Management have been disaggregated to separately present Investment return and Allocated net interest (see footnote 5 below). This disaggregation is intended to increase transparency and to make clearer actual Investment return. We believe that aggregating Investment return and Allocated net interest would obscure the Investment return by including an amount that is unique to Jefferies Group LLC's credit spreads, debt maturity profile, capital structure, liquidity risks and allocation methods.
(4)
Includes net interest expense of $4.9 million, $6.0 million and $5.2 million for the quarters ended November 30, 2020, August 31, 2020 and November 30, 2019, respectively.
(5)Allocated net interest represents the allocation of Jefferies Group LLC's long-term debt interest expense to Jefferies Group LLC's Asset Management, net of interest income on Jefferies Group LLC's Cash and cash equivalents and other sources of liquidity (refer to page 11).
(6)VaR estimates the potential loss in value of Jefferies Group LLC's 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 Jefferies Group LLC's Annual Report on Form 10-K for the year ended November 30, 2019.

9

Jefferies Group LLC and Subsidiaries
Selected Statistical Information
(Amounts in Thousands, Except Other Data)
(Unaudited)
Twelve Months Ended
November 30, 2020November 30, 2019
Net Revenues by Source:
Advisory$1,053,500 $767,421 
Equity underwriting902,016 361,972 
Debt underwriting545,978 407,336 
Total underwriting1,447,994 769,308 
Other investment banking(103,330)(14,617)
Total investment banking2,398,164 1,522,112 
Equities1,128,910 773,979 
Fixed income1,340,792 681,362 
Total capital markets2,469,702 1,455,341 
Other121,272 58,535 
Total Investment Banking and Capital Markets (1) (2)4,989,138 3,035,988 
Asset management fees and revenues28,694 20,285 
Investment return (3) (4)228,129 96,805 
Allocated net interest (3) (5)(48,484)(40,548)
Total Asset Management208,339 76,542 
Net Revenues$5,197,477 $3,112,530 
Other Data:
Number of trading days252 250 
Number of trading loss days26 33 
Average firmwide VaR (in millions) (6)$10.51 $8.79 
(1)
Includes net interest revenues of $12.3 million and $74.0 million for the twelve months ended November 30, 2020 and 2019, respectively.
(2)Allocated net interest is not separately disaggregated for Investment Banking and Capital Markets. This presentation is aligned to our Investment Banking and Capital Markets internal performance measurement.
(3)Net revenues attributed to the Investment return in Jefferies Group LLC Asset Management have been disaggregated to separately present Investment return and Allocated net interest (see footnote 5 below). This disaggregation is intended to increase transparency and to make clearer actual Investment return. We believe that aggregating Investment return and Allocated net interest would obscure the Investment return by including an amount that is unique to Jefferies Group LLC's credit spreads, debt maturity profile, capital structure, liquidity risks and allocation methods.
(4)
Includes net interest expenses of $24.5 million and $8.9 million for the twelve months ended November 30, 2020 and 2019, respectively.
(5)Allocated net interest represents the allocation of Jefferies Group LLC's long-term debt interest expense to Jefferies Group LLC's Asset Management, net of interest income on Jefferies Group LLC's Cash and cash equivalents and other sources of liquidity (refer to page 11).
(6)VaR estimates the potential loss in value of Jefferies Group LLC's 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 Jefferies Group LLC's Annual Report on Form 10-K for the year ended November 30, 2019.
10


Jefferies Group LLC and Subsidiaries
Financial Highlights
(Amounts in Millions, Except Where Noted)
(Unaudited)
Quarter Ended
November 30,
2020		August 31,
2020		November 30,
2019
Financial position:
Total assets (1)$47,752 $46,660 $43,516 
Average total assets for the period (1)$56,503 $54,654 $52,539 
Average total assets less goodwill and intangible assets for the period (1)
$54,807 $52,965 $50,727 
Cash and cash equivalents (1)
$7,112 $6,750 $5,568 
Cash and cash equivalents and other sources of liquidity (1) (2)
$8,605 $8,089 $6,918 
Cash and cash equivalents and other sources of liquidity - % total assets (1) (2)18.0 %17.3 %15.9 %
Cash and cash equivalents and other sources of liquidity - % total assets less goodwill and intangible assets (1) (2)
18.7 %18.0 %16.6 %
Financial instruments owned (1)$17,686 $17,556 $16,363 
Goodwill and intangible assets (1)$1,805 $1,806 $1,814 
Right-of-use assets (1) (3)$487 $500 N/A
Total equity (including noncontrolling interests) (1)$6,366 $6,504 $6,130 
Total Jefferies Group LLC member's equity (1)$6,349 $6,488 $6,125 
Tangible Jefferies Group LLC member's equity (1) (4)$4,543 $4,682 $4,311 
Level 3 financial instruments:
Level 3 financial instruments owned (1) (5)$379 $433 $307 
Level 3 financial instruments owned - % total assets (1) (5)0.8 %0.9 %0.7 %
Level 3 financial instruments owned - % total financial instruments (1) (5)2.1 %2.5 %1.9 %
Level 3 financial instruments owned - % tangible Jefferies Group LLC member's equity (1) (5)
8.3 %9.2 %7.1 %
Other data and financial ratios:
Total long-term capital (1) (6)$13,022 $12,492 $12,343 
Leverage ratio (1) (7)7.5 7.2 7.1 
Tangible gross leverage ratio (1) (8)10.1 9.6 9.7 
Adjusted tangible gross leverage ratio (1) (3) (9)11.2 10.6 N/A
Number of trading days63 65 63 
Number of trading loss days 3 8 10 
Average firmwide VaR (10)$14.92 $10.46 $7.70 
Number of employees, at period end3,922 3,893 3,815 

N/A — Not Applicable






11

Jefferies Group LLC and Subsidiaries
Financial Highlights - Footnotes
(1)
Amounts pertaining to November 30, 2020 represent a preliminary estimate as of the date of this earnings release and may be revised in Jefferies Group LLC's Annual Report on Form 10-K for the fiscal year ended November 30, 2020.

(2)
At November 30, 2020, 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 $1,180 million, in aggregate, and $313 million, being the estimated amount of additional secured financing that could be reasonably expected to be obtained from Jefferies Group LLC's financial instruments that are currently not pledged after considering reasonable financing haircuts. The corresponding amounts included in other sources of liquidity at August 31, 2020 were $1,123 million and $216 million, respectively, and at November 30, 2019, were $973 million and $377 million, respectively.

(3)Jefferies Group LLC adopted the new lease standard on December 1, 2019 using a modified retrospective transition approach. Accordingly, reported financial information for historical comparable periods is not revised and continues to be reported under the accounting standards in effect during those historical periods. We elected not to reassess whether existing contracts are or contain leases, or the lease classification and initial direct costs of existing leases upon transition. At transition on December 1, 2019, the adoption of this standard resulted in the recognition of right-of-use assets of $520 million, reflected in Premises and equipment in Jefferies Group LLC's Consolidated Statement of Financial Condition.
(4)Tangible Jefferies Group LLC member's equity (a non-GAAP financial measure) represents total Jefferies Group LLC member's equity less goodwill and identifiable intangible assets. We believe that tangible Jefferies Group LLC member's equity is meaningful for valuation purposes, as financial companies are often measured as a multiple of tangible equity, making these ratios meaningful for investors.
(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)
At November 30, 2020, August 31, 2020 and November 30, 2019, total long-term capital includes Jefferies Group LLC's long-term debt of $6,656 million, $5,987 million and $6,214 million, respectively, and total equity. Long-term debt included in total long-term capital is reduced by amounts outstanding under the revolving credit facility, amounts from secured term loans and the amount of debt maturing in less than one year, as applicable.

(7)Leverage ratio equals total assets divided by total equity.
(8)Tangible gross leverage ratio (a non-GAAP financial measure) equals total assets less goodwill and identifiable intangible assets divided by tangible Jefferies Group LLC member's equity. The tangible gross leverage ratio is used by rating agencies in assessing Jefferies Group LLC's leverage ratio.
(9)Adjusted tangible gross leverage ratio (a non-GAAP financial measure) equals total assets less goodwill and identifiable intangible assets and right-of-use assets divided by tangible Jefferies Group LLC member's equity less right-of-use assets.
(10)VaR estimates the potential loss in value of Jefferies Group LLC's 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 Jefferies Group LLC's Annual Report on Form 10-K for the year ended November 30, 2019.

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Merchant Banking Net Asset Overview

The table below presents estimated fair values of our largest Merchant Banking investments. We anticipate discontinuing this disclosure going forward as we believe the wind down of the portfolio diminishes the value of this information, which requires meaningful management time and expenditure to produce. We will continue to discuss developments at the portfolio companies as they arise.

As of November 30, 2020
($ Millions)

(Unaudited) Book ValueEstimated Fair Value (2)Basis for Fair Value Estimate
Linkem$199 $685 Income approach and market comparable method
Real estate assets (1)532 542 Various
Oil and Gas (Vitesse and JETX)527 529 Income approach, market comparable and market
transaction method
Idaho Timber86 165 Income approach and market comparable method
FXCM133 164 Income approach and market comparable method
Investments in Public Companies192 192 Mark-to-market (same for GAAP book value)
Other271 382 Various
   Total Portfolio$1,940 $2,659 

(1) Primarily HomeFed
(2) The following table reconciles financial results reported in accordance with U.S. GAAP to non-GAAP financial results. The table above contains non-GAAP financial information to aid investors in viewing our businesses and investments through the eyes of management while facilitating a comparison across historical periods. However, these non-GAAP financial measures should be viewed in addition to, and not as a substitute for, reported results prepared in accordance with U.S. GAAP.

Reconciliation of Book Value of Merchant Banking Investments to Estimated Fair Value
($ Millions)

(Unaudited)
Book Value
November 30, 2020		Fair Value AdjustmentsEstimated
Fair Value
November 30, 2020
(GAAP)(Non-GAAP)
Linkem$199 $486 $685 
Real estate assets 532 10 542 
Oil and Gas (Vitesse and JETX)527 2 529 
Idaho Timber86 79 165 
FXCM133 31 164 
Investments in Public Companies192 — 192 
Other271 111 382 
   Total Portfolio$1,940 $719 $2,659 




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Jefferies Financial Group Inc.
Non-GAAP Reconciliation

The following table reconciles Jefferies Financial Group non-GAAP measures to their respective U.S. GAAP measures. Management believes such non-GAAP measures are useful to investors as they allow them to view our results through the eyes of management, while facilitating a comparison across historical periods. These measures should not be considered a substitute for, or superior to, measures prepared in accordance with U.S. GAAP.

Jefferies Financial Group Book Value and Shares Outstanding GAAP Reconciliation

The table below reconciles our book value to tangible book value and our common shares outstanding to fully diluted shares outstanding (in thousands, except per share amounts):
As Reported, November 30, 2020
Book value (GAAP)$9,403,893 
Less: Intangibles assets, net and goodwill(1,913,467)
Tangible book value (non-GAAP)$7,490,426 
Common shares outstanding (GAAP)249,751 
Restricted stock units ("RSUs")22,753 
Other1,115 
Fully diluted shares outstanding (non-GAAP) (1)273,619 
Book value per share outstanding$37.65 
Tangible book value per fully diluted share outstanding$27.38 
(1) Fully diluted shares outstanding exclude preferred shares as they are antidilutive. Fully diluted shares outstanding include vested RSUs as well as the target number of RSUs issuable under the senior executive compensation plans.






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