Business Wire | Sep 23, 2020 04:15PM EDT

Jefferies Financial Group Announces Third Quarter 2020 Financial Results

Sep. 23, 2020

NEW YORK--(BUSINESS WIRE)--Sep. 23, 2020--Jefferies Financial Group Inc. (NYSE: JEF) today announced its financial results for the three and nine month periods ended August 31, 2020. In addition, the Jefferies Board of Directors declared a quarterly cash dividend equal to $0.15 per Jefferies common share payable on November 25, 2020 to record holders of Jefferies common shares on November 13, 2020. The Jefferies Board of Directors also increased the Company's stock buyback authorization by $128 million to a total of $250 million. We expect to file our Form 10-Q on or about October 9, 2020.

Highlights for the three months ended August 31, 2020:

* Jefferies Group LLC recorded record quarterly net revenues of $1,383 million, record pre-tax income of $363 million, record net earnings of $268 million and return on tangible equity of 23.2%1 Record Investment Banking net revenues of $589 million, including record Equity Underwriting net revenues of $305 million, Advisory net revenues of $171 million, and Debt Underwriting net revenues of $139 million Combined Capital Markets net revenues of $655 million; record Equities net revenues of $319 million and Fixed Income net revenues of $336 million Record Asset Management revenues (before allocated net interest2) of $122 million * Merchant Banking recorded pre-tax income of $71 million, reflecting record quarterly results from Idaho Timber and mark-to-market increases in the value of several of our investments in public companies, partially offset by a decrease in the fair value of Vitesse's hedges, as oil prices appreciated during the quarter * Net income attributable to Jefferies Financial Group common shareholders was $304 million, or $1.07 per diluted share * We repurchased 7.9 million shares for $128 million, or an average price of $16.26 per share; 259.2 million shares were outstanding and 283.0 million shares were outstanding on a fully diluted basis3 at August 31, 2020; Jefferies book value per share was $36.30 and tangible book value per fully diluted share4 was $26.49 at the end of the third quarter * Jefferies Financial Group had parent company liquidity of $1.6 billion at August 31, 2020. Jefferies Group had a record liquidity buffer of $8.1 billion of cash and unencumbered liquid collateral at August 31, 2020, which represented 17% of its total balance sheet.

Highlights for the nine months ended August 31, 2020:

* Jefferies Group LLC recorded record nine months net revenues of $3,589 million, record pre-tax income of $772 million, record net earnings of $568 million and return on tangible equity of 17.7%5 Record nine months Investment Banking net revenues of $1,483 million, including record nine months Advisory net revenues of $697 million, record Equity Underwriting net revenues of $561 million and Debt Underwriting net revenues of $337 million Record combined nine months Capital Markets net revenues of $1,879 million, including Equities net revenues of $802 million and Fixed Income net revenues of $1,078 million Record Asset Management revenues (before allocated net interest2) of $173 million * Merchant Banking pre-tax loss of $58 million, reflecting positive contributions from Idaho Timber, Vitesse and FXCM, and a gain of about $60 million from effective short-term hedges against mark-to-market and fair value decreases, more than offset by $145 million in previously reported non-cash charges in the first two quarters of 2020 to write-down our investments in The We Company, JETX and some of the real estate assets of HomeFed * Net income attributable to Jefferies Financial Group common shareholders of $462 million, or $1.57 per diluted share * Repurchases of 32.7 million shares for $620 million, or an average price of $18.98 per share

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

"We are very pleased to report Jefferies Financial Group quarterly net income of $304 million, driven by Jefferies Group record quarterly net revenues and record quarterly net earnings for the second time this year. Jefferies Group's return on tangible equity of 23.2%1 demonstrates the operating leverage inherent in our business model. Our strong results reflect Jefferies Group becoming an ever increasing portion of our overall business, greater productivity through growing market share with a limited increase in headcount and constant focus on control of operating costs. Our depth of capital markets knowledge and capabilities, combined with the breadth of our investment banking relationships, have positioned Jefferies as a leading firm serving an ever expanding client base across the world.

"Since the beginning of fiscal 2018, our tangible book value per fully diluted share4 has increased 29% to $26.49, while Jefferies issued dividends during this period of $2.90 per share. The tangible book value per fully diluted share increase, combined with the dividends per share during this period, represent a 14% compounded return per share. During this same period, we repurchased an aggregate of 108.6 million shares for an aggregate of $2.3 billion, or $20.90 per share. We remain relentlessly focused on maximizing the value of Jefferies Financial Group by continuing to build Jefferies Group, while managing our legacy Merchant Banking portfolio to a sensible set of final realizations. We will continue to re-purchase shares when prudent from a balance sheet and capital allocation perspective, as we believe there continues to be a significant gap between our intrinsic value and our stock price.

"We continue to make important investments in our people and technology needed to deliver the highest quality of service. With Jefferies Group's broad product offering, scalable platform, strong capital and liquidity position and the amazing talent of our approximately 3,900 employees, we believe there is tremendous potential to continue to increase our market share across all our businesses.

"Investment Banking's record net revenues of $589 million were driven by record performance in Equity Underwritings. The unknown future path of the COVID-19 pandemic and uncertainty in timing of a remedy, encouraged companies across the world to raise long-term and permanent capital. Although M&A and advisory activities were a bit muted in the third quarter, our fourth quarter backlog of Investment Banking activity remains robust across all products.

"Capital Markets quarterly net revenues of $655 million was led by record Equity revenues and strong Fixed Income results across virtually every business line, which included material contributions from Europe and Asia. The strong equity markets and more clarity from the Federal Reserve on future rate policy provided a supportive trading environment for investors.

"Jefferies Group experienced record net revenues across Leucadia Asset Management, which were $122 million for the third quarter and $173 million for the first nine months of the year, 44% higher than the first nine months of 2019 (before allocated net interest2) on allocated capital of approximately $1 billion. This included continued positive performance from our investments in multi-manager platforms (Dymon, Schonfeld, Topwater and Weiss) and certain single manager boutiques, particularly ESG, Energy, Event-Driven and Capital Markets-focused. We've further enhanced our marketing efforts with the addition of a Head of Asia and a Head of Investor Relations. Despite the slow-down in travel due to the pandemic, fund-raising efforts continue, with strong momentum in several of our strategies.

"Jefferies Group's balance sheet was $46.7 billion at quarter-end, which was 3% higher than at the end of the second quarter, almost entirely due to an increase in Cash and cash equivalents. Jefferies Group's balance sheet remains very liquid and our level 3 inventory remains low at $433 million, or approximately 2%, of total inventory. Our liquidity buffer totaled $8.1 billion, which represents an all-time record in liquidity that we believe is prudent considering the volatile environment."

* * * *

Amounts herein pertaining to August 31, 2020 represent a preliminary estimate as of the date of this earnings release and may be revised upon filing our Quarterly Report on Form 10-Q with the Securities and Exchange Commission ("SEC"). More information on our results of operations for the three and nine month periods ended August 31, 2020 will be provided upon filing our Quarterly Report on Form 10-Q 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).

_____________________________ Return on tangible equity (a non-GAAP financial measure) equals our three months ended August 31, 2020 annualized net earnings attributable to Jefferies Group LLC divided by our tangible Jefferies Group LLC member's1 equity (a non-GAAP financial measure) of $4,612 million at May 31, 2020. Tangible Jefferies Group LLC member's equity at May 31, 2020 equals Jefferies Group LLC member's equity of $6,412 million less goodwill and identifiable intangibles assets of $1,800 million.

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 on2 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 page 10 and 11.

Shares outstanding on a fully diluted basis, a non-GAAP measure, is defined3 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.

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 Jefferies4 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.

Return on tangible equity (a non-GAAP financial measure) equals our first nine months of 2020 annualized net earnings attributable to Jefferies Group LLC divided by our tangible Jefferies Group LLC member's equity (a non-GAAP5 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.

Summary for Jefferies Financial Group Inc. and Subsidiaries

(In thousands, except per share amounts)

(Unaudited)

Three Months EndedAugust 31, 2020

Three Months EndedAugust 31, 2019

Nine Months EndedAugust 31, 2020

Nine Months EndedAugust 31, 2019

Net revenues

$

1,616,170

$

856,778

$

4,150,087

$

2,786,878

Income (loss) before income taxes and income (loss) related to associated companies

$

407,189

$

(59,020)

$

715,066

$

124,293

Income (loss) related to associated companies

5,053

72,283

(69,523)

121,766

Income before income taxes

412,242

13,263

645,543

246,059

Income tax provision (benefit)

107,403

(36,131)

185,138

(522,626)

Net income

304,839

49,394

460,405

768,685

Net (income) loss attributable to the noncontrolling interests

324

116

5,033

(759)

Net (income) loss attributable to the redeemable noncontrolling interests

650

242

1,130

(47)

Preferred stock dividends

(1,404)

(1,275)

(4,230)

(3,827)

Net income attributable to Jefferies Financial Group Inc. common shareholders

$

304,409

$

48,477

$

462,338

$

764,052

Basic earnings per common share attributable to Jefferies Financial Group Inc. common shareholders:

Net income

$

1.08

$

0.16

$

1.58

$

2.44

Number of shares in calculation

280,695

310,288

289,959

310,838

Diluted earnings per common share attributable to Jefferies Financial Group Inc. common shareholders:

Net income

$

1.07

$

0.15

$

1.57

$

2.41

Number of shares in calculation

285,136

311,897

294,875

317,181

A summary of results for the three months ended August 31, 2020 is as follows (in thousands):

Summary for Jefferies Financial Group Inc. and Subsidiaries

(In thousands, except per share amounts)

(Unaudited)

Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended August 31, August 31, August 31, August 31, 2020 2019 2020 2019



Net revenues $ 1,616,170 $ 856,778 $ 4,150,087 $ 2,786,878



Income (loss)before incometaxes and income $ 407,189 $ (59,020) $ 715,066 $ 124,293 (loss) related toassociatedcompanies

Income (loss)related to 5,053 72,283 (69,523) 121,766 associatedcompanies

Income before 412,242 13,263 645,543 246,059 income taxes

Income taxprovision 107,403 (36,131) 185,138 (522,626) (benefit)

Net income 304,839 49,394 460,405 768,685

Net (income) lossattributable to 324 116 5,033 (759) the noncontrollinginterests

Net (income) lossattributable tothe redeemable 650 242 1,130 (47) noncontrollinginterests

Preferred stock (1,404) (1,275) (4,230) (3,827) dividends

Net incomeattributable toJefferies $ 304,409 $ 48,477 $ 462,338 $ 764,052 Financial GroupInc. commonshareholders



Basic earnings percommon shareattributable toJefferies Financial GroupInc. commonshareholders:

Net income $ 1.08 $ 0.16 $ 1.58 $ 2.44



Number of shares 280,695 310,288 289,959 310,838 in calculation



Diluted earningsper common shareattributable toJefferies Financial GroupInc. commonshareholders:

Net income $ 1.07 $ 0.15 $ 1.57 $ 2.41



Number of shares 285,136 311,897 294,875 317,181 in calculation

A summary of results for the three months ended August 31, 2020 is as follows (in thousands):

Investment Asset Parent Banking and Management Merchant Corporate Company Consolidation Total Capital (1) Banking (1) Interest Adjustments Markets (1)

Net revenues $ 1,274,115 $ 118,558 $ 220,887 $ 591 $ - $ 2,019 $ 1,616,170



Expenses:

Compensation 719,822 10,652 20,573 9,790 - - 760,837 and benefits

Cost of 60,640 6,103 82,657 - - - 149,400 sales (2)

Interest - - 7,398 - 14,114 - 21,512 expense

Depreciationand 22,225 2,018 14,408 869 - - 39,520 amortization

Selling,general and 190,105 12,181 30,157 5,550 - (281) 237,712 otherexpenses

Total 992,792 30,954 155,193 16,209 14,114 (281) 1,208,981 expenses

Income(loss)beforeincome taxes 281,323 87,604 65,694 (15,618) (14,114) 2,300 407,189 and incomerelated toassociatedcompanies

Incomerelated to - - 5,053 - - - 5,053 associatedcompanies

Income(loss) $ 281,323 $ 87,604 $ 70,747 $ (15,618) $ (14,114) $ 2,300 412,242 beforeincome taxes

Income tax 107,403 provision

Net income $ 304,839

A summary of results for the three months ended August 31, 2019 is as follows (in thousands):

Investment Asset Parent Banking and Management Merchant Corporate Company Consolidation Total Capital (1) Banking (1) Interest Adjustments Markets (1)

Net revenues $ 757,363 $ 20,340 $ 73,754 $ 8,967 $ - $ (3,646) $ 856,778



Expenses:

Compensation 400,071 18,557 16,804 11,450 - - 446,882 and benefits

Cost of 51,358 (500) 85,773 - - - 136,631 sales (2)

Interest - - 8,893 - 14,770 - 23,663 expense

Depreciationand 20,754 512 17,784 830 - - 39,880 amortization

Selling,general and 198,986 9,441 51,897 8,466 - (48) 268,742 otherexpenses

Total 671,169 28,010 181,151 20,746 14,770 (48) 915,798 expenses

Income(loss)beforeincome taxes 86,194 (7,670) (107,397) (11,779) (14,770) (3,598) (59,020) and incomerelated toassociatedcompanies

Incomerelated to - 267 72,016 - - - 72,283 associatedcompanies

Income(loss) $ 86,194 $ (7,403) $ (35,381) $ (11,779) $ (14,770) $ (3,598) 13,263 beforeincome taxes

Income tax (36,131) benefit

Net income $ 49,394

(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.

A summary of results for the nine months ended August 31, 2020 is as follows (in thousands):

We now present Asset Management as a separate reporting segment. Prior(1) year amounts have been reclassified to conform to current segment disclosure.

(2) Includes Floor brokerage and clearing fees.

A summary of results for the nine months ended August 31, 2020 is as follows (in thousands):

Investment Asset Parent Banking and Management Merchant Corporate Company Consolidation Total Capital (1) Banking (1) Interest Adjustments Markets (1)

Net revenues $ 3,451,776 $ 146,278 $ 532,608 $ 11,908 $ - $ 7,517 $ 4,150,087



Expenses:

Compensation 1,892,567 59,375 51,736 25,819 - - 2,029,497 and benefits

Cost of 181,115 20,288 235,871 - - - 437,274 sales (2)

Interest - - 24,453 - 39,773 - 64,226 expense

Depreciationand 61,322 4,776 50,627 2,631 - - 119,356 amortization

Selling,general and 570,958 36,717 157,990 19,684 - (681) 784,668 otherexpenses

Total 2,705,962 121,156 520,677 48,134 39,773 (681) 3,435,021 expenses

Income(loss)beforeincome taxes 745,814 25,122 11,931 (36,226) (39,773) 8,198 715,066 and lossrelated toassociatedcompanies

Loss relatedto - - (69,523) - - - (69,523) associatedcompanies

Income(loss) $ 745,814 $ 25,122 $ (57,592) $ (36,226) $ (39,773) $ 8,198 645,543 beforeincome taxes

Income tax 185,138 provision

Net income $ 460,405

A summary of results for the nine months ended August 31, 2019 is as follows (in thousands):

Investment Asset Parent Banking and Management Merchant Corporate Company Consolidation Total Capital (1) Banking (1) Interest Adjustments Markets (1)

Net revenues $ 2,274,885 $ 95,447 $ 391,825 $ 22,134 $ - $ 2,587 $ 2,786,878



Expenses:

Compensation 1,231,915 48,749 44,638 41,732 - - 1,367,034 and benefits

Cost of 148,712 14,401 233,109 - - - 396,222 sales (2)

Interest - - 25,521 - 44,298 - 69,819 expense

Depreciationand 56,672 1,472 49,904 2,552 - - 110,600 amortization

Selling,general and 553,694 29,421 111,275 24,857 - (337) 718,910 otherexpenses

Total 1,990,993 94,043 464,447 69,141 44,298 (337) 2,662,585 expenses

Income(loss)beforeincome taxes 283,892 1,404 (72,622) (47,007) (44,298) 2,924 124,293 and incomerelated toassociatedcompanies

Incomerelated to - 607 121,159 - - - 121,766 associatedcompanies

Income(loss) $ 283,892 $ 2,011 $ 48,537 $ (47,007) $ (44,298) $ 2,924 246,059 beforeincome taxes

Income tax (522,626) benefit

Net income $ 768,685

(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.

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 August 31, 2020 represent a preliminary estimate as of the date of this earnings release and may be revised in Jefferies Group LLC's Quarterly Report on Form 10-Q for the quarter ended August 31, 2020.

We now present Asset Management as a separate reporting segment. Prior(1) year amounts have been reclassified to conform to current segment disclosure.

(2) Includes Floor brokerage and clearing fees.

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 August 31, 2020 represent a preliminary estimate as of the date of this earnings release and may be revised in Jefferies Group LLC's Quarterly Report on Form 10-Q for the quarter ended August 31, 2020.

Jefferies Group LLC and Subsidiaries

Consolidated Statements of Earnings

(Amounts in Thousands)

(Unaudited)



Quarter Ended

August 31, May 31, August 31, 2020 2020 2019

Revenues:

Commissions and other fees $ 204,313 $ 243,267 $ 171,003

Principal transactions 560,665 467,283 148,873

Investment banking 615,837 387,491 412,533

Asset management fees and revenues 6,772 4,576 4,220 (1)

Interest 195,960 211,941 383,596

Other (1) 11,526 (47,275) 21,406

Total revenues 1,595,073 1,267,283 1,141,631

Interest expense 211,629 232,916 364,472

Net revenues 1,383,444 1,034,367 777,159



Non-interest expenses:

Compensation and benefits 725,555 571,547 411,936



Non-compensation expenses:

Floor brokerage and clearing fees 66,744 77,619 54,247

Technology and communications 102,635 95,594 86,649

Occupancy and equipment rental 27,053 24,395 29,300

Business development 7,637 8,359 36,526

Professional services 41,173 41,994 42,379

Underwriting costs 29,071 12,485 14,647

Other 20,175 29,506 18,400

Total non-compensation expenses 294,488 289,952 282,148

Total non-interest expenses 1,020,043 861,499 694,084

Earnings before income taxes 363,401 172,868 83,075

Income tax expense 95,870 43,972 18,250

Net earnings 267,531 128,896 64,825

Net loss attributable to (531) (1,842) (143) noncontrolling interests

Net earnings attributable to $ 268,062 $ 130,738 $ 64,968 Jefferies Group LLC



Pre-tax operating margin 26.3 % 16.7 % 10.7 %

Effective tax rate 26.4 % 25.4 % 22.0 %

(1)

In the fourth quarter of 2019, Jefferies Group LLC reorganized the presentation of revenues from arrangements which entitle us to certain portions of revenues and/or profits of strategic asset management partners. Jefferies Group LLC's Consolidated Statement of Earnings reflects the reclassification of revenues of $0.9 million from Other revenues to Asset management fees and revenues for the three months ended August 31, 2019. There is no impact on Total revenues as a result of this change in presentation.

In the fourth quarter of 2019, Jefferies Group LLC reorganized the presentation of revenues from arrangements which entitle us to certain portions of revenues and/or profits of strategic asset management(1) partners. Jefferies Group LLC's Consolidated Statement of Earnings reflects the reclassification of revenues of $0.9 million from Other revenues to Asset management fees and revenues for the three months ended August 31, 2019. There is no impact on Total revenues as a result of this change in presentation.

Jefferies Group LLC and Subsidiaries

Consolidated Statements of Earnings

(Amounts in Thousands)

(Unaudited)

Nine Months Ended

August 31, 2020

August 31, 2019

Revenues:

Commissions and other fees

$

627,115

$

493,843

Principal transactions

1,399,850

632,002

Investment banking

1,595,330

1,128,216

Asset management fees and revenues (1)

23,068

16,350

Interest

702,569

1,163,022

Other (1)

(6,020)

77,563

Total revenues

4,341,912

3,510,996

Interest expense

753,405

1,146,268

Net revenues

3,588,507

2,364,728

Non-interest expenses:

Compensation and benefits

1,932,332

1,261,506

Non-compensation expenses:

Floor brokerage and clearing fees

204,943

168,698

Technology and communications

287,413

247,464

Occupancy and equipment rental

78,951

87,587

Business development

45,953

103,430

Professional services

127,832

117,372

Underwriting costs

59,085

36,045

Other

80,351

41,828

Total non-compensation expenses

884,528

802,424

Total non-interest expenses

2,816,860

2,063,930

Earnings before income taxes

771,647

300,798

Income tax expense

203,855

79,789

Net earnings

567,792

221,009

Net earnings (loss) attributable to noncontrolling interests

(4,397)

140

Net earnings attributable to Jefferies Group LLC

$

572,189

$

220,869

Pre-tax operating margin

21.5

%

12.7

%

Effective tax rate

26.4

%

26.5

%

Jefferies Group LLC and Subsidiaries

Consolidated Statements of Earnings

(Amounts in Thousands)

(Unaudited)



Nine Months Ended

August 31, August 31, 2020 2019

Revenues:

Commissions and other fees $ 627,115 $ 493,843

Principal transactions 1,399,850 632,002

Investment banking 1,595,330 1,128,216

Asset management fees and revenues (1) 23,068 16,350

Interest 702,569 1,163,022

Other (1) (6,020) 77,563

Total revenues 4,341,912 3,510,996

Interest expense 753,405 1,146,268

Net revenues 3,588,507 2,364,728



Non-interest expenses:

Compensation and benefits 1,932,332 1,261,506



Non-compensation expenses:

Floor brokerage and clearing fees 204,943 168,698

Technology and communications 287,413 247,464

Occupancy and equipment rental 78,951 87,587

Business development 45,953 103,430

Professional services 127,832 117,372

Underwriting costs 59,085 36,045

Other 80,351 41,828

Total non-compensation expenses 884,528 802,424

Total non-interest expenses 2,816,860 2,063,930

Earnings before income taxes 771,647 300,798

Income tax expense 203,855 79,789

Net earnings 567,792 221,009

Net earnings (loss) attributable to noncontrolling (4,397) 140 interests

Net earnings attributable to Jefferies Group LLC $ 572,189 $ 220,869



Pre-tax operating margin 21.5 % 12.7 %

Effective tax rate 26.4 % 26.5 %

(1)

In the fourth quarter of 2019, Jefferies Group LLC reorganized the presentation of revenues from arrangements which entitle us to certain portions of revenues and/or profits of strategic asset management partners. Jefferies Group LLC's Consolidated Statement of Earnings reflects the reclassification of revenues of $1.8 million from Other revenues to Asset management fees and revenues for the nine months ended August 31, 2019. There is no impact on Total revenues as a result of this change in presentation.

In the fourth quarter of 2019, Jefferies Group LLC reorganized the presentation of revenues from arrangements which entitle us to certain portions of revenues and/or profits of strategic asset management(1) partners. Jefferies Group LLC's Consolidated Statement of Earnings reflects the reclassification of revenues of $1.8 million from Other revenues to Asset management fees and revenues for the nine months ended August 31, 2019. There is no impact on Total revenues as a result of this change in presentation.

Jefferies Group LLC and Subsidiaries

Selected Statistical Information

(Amounts in Thousands, Except Other Data)

(Unaudited)

Quarter Ended

August 31, 2020

May 31, 2020

August 31, 2019

Net Revenues by Source:

Advisory

$

171,438

$

182,081

$

213,350

Equity underwriting

305,380

124,383

97,494

Debt underwriting

139,019

81,027

101,689

Total underwriting

444,399

205,410

199,183

Other investment banking

(27,013)

(71,234)

(9,108)

Total investment banking

588,824

316,257

403,425

Equities

318,824

237,131

193,229

Fixed income

336,347

493,144

148,334

Total capital markets

655,171

730,275

341,563

Other

30,120

(17,700)

12,374

Total Investment Banking and Capital Markets (1) (2)

1,274,115

1,028,832

757,362

Asset management fees and revenues (3)

6,772

4,576

4,220

Investment return (3) (4) (5)

115,556

13,944

24,866

Allocated net interest (4) (6)

(12,999)

(12,985)

(9,289)

Total Asset Management

109,329

5,535

19,797

Net Revenues

$

1,383,444

$

1,034,367

$

777,159

Other Data:

Number of trading days

65

63

64

Number of trading loss days

8

11

10

Average firmwide VaR (in millions) (7)

$

10.46

$

9.16

$

9.71

Jefferies Group LLC and Subsidiaries

Selected Statistical Information

(Amounts in Thousands, Except Other Data)

(Unaudited)



Quarter Ended

August 31, May 31, 2020 August 31, 2020 2019

Net Revenues by Source:



Advisory $ 171,438 $ 182,081 $ 213,350



Equity underwriting 305,380 124,383 97,494

Debt underwriting 139,019 81,027 101,689

Total underwriting 444,399 205,410 199,183

Other investment banking (27,013) (71,234) (9,108)

Total investment banking 588,824 316,257 403,425



Equities 318,824 237,131 193,229

Fixed income 336,347 493,144 148,334

Total capital markets 655,171 730,275 341,563



Other 30,120 (17,700) 12,374



Total Investment Banking and Capital 1,274,115 1,028,832 757,362 Markets (1) (2)



Asset management fees and revenues 6,772 4,576 4,220 (3)

Investment return (3) (4) (5) 115,556 13,944 24,866

Allocated net interest (4) (6) (12,999) (12,985) (9,289)

Total Asset Management 109,329 5,535 19,797



Net Revenues $ 1,383,444 $ 1,034,367 $ 777,159



Other Data:

Number of trading days 65 63 64

Number of trading loss days 8 11 10



Average firmwide VaR (in millions) $ 10.46 $ 9.16 $ 9.71 (7)

(1)

Includes net interest revenue (expense) of $3.3 million, $(0.8) million and $30.4 million for the quarters ended August 31, 2020, May 31, 2020, and August 31, 2019, respectively.

(2)

Allocated net interest is not separately disaggregated in presenting our Investment Banking and Capital Markets reportable segment within Jefferies Group LLC's Net Revenues by Source. This presentation is aligned to our Investment Banking and Capital Markets internal performance measurement.

(3)

In the fourth quarter of 2019, Jefferies Group LLC reorganized the presentation of revenues from arrangements which entitle us to certain portions of revenues and/or profits of strategic asset management partners. Jefferies Group LLC's Net Revenues by Source reflects the reclassification of revenues of $0.9 million from Investment return revenues to Asset management fees and revenues for the three months ended August 31, 2019. There is no impact on Total Asset Management revenues as a result of this change in presentation.

(4)

Net revenues attributed to the Investment return in Jefferies Group LLC's Asset Management reportable segment have been disaggregated to separately present Investment return and Allocated net interest (see footnotes 5 and 6). 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, none of which are pertinent to the Investment returns generated by the performance of the portfolio.

(5)

Includes net interest expense of $6.0 million, $7.2 million and $2.0 million for the quarters ended May 31, 2020, February 29, 2020, and May 31, 2019, respectively.

(6)

Allocated net interest represents the allocation 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 (refer to page 12).

(7)

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.

Includes net interest revenue (expense) of $3.3 million, $(0.8) million(1) and $30.4 million for the quarters ended August 31, 2020, May 31, 2020, and August 31, 2019, respectively.

Allocated net interest is not separately disaggregated in presenting our(2) Investment Banking and Capital Markets reportable segment within Jefferies Group LLC's Net Revenues by Source. This presentation is aligned to our Investment Banking and Capital Markets internal performance measurement.

In the fourth quarter of 2019, Jefferies Group LLC reorganized the presentation of revenues from arrangements which entitle us to certain portions of revenues and/or profits of strategic asset management(3) partners. Jefferies Group LLC's Net Revenues by Source reflects the reclassification of revenues of $0.9 million from Investment return revenues to Asset management fees and revenues for the three months ended August 31, 2019. There is no impact on Total Asset Management revenues as a result of this change in presentation.

Net revenues attributed to the Investment return in Jefferies Group LLC's Asset Management reportable segment have been disaggregated to separately present Investment return and Allocated net interest (see footnotes 5 and 6). This disaggregation is intended to increase transparency and to make(4) 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, none of which are pertinent to the Investment returns generated by the performance of the portfolio.

Includes net interest expense of $6.0 million, $7.2 million and $2.0(5) million for the quarters ended May 31, 2020, February 29, 2020, and May 31, 2019, respectively.

Allocated net interest represents the allocation of Jefferies Group LLC's(6) 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 (refer to page 12).

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(7) 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.

Jefferies Group LLC and Subsidiaries

Selected Statistical Information

(Amounts in Thousands, Except Other Data)

(Unaudited)

Nine Months Ended

August 31, 2020

August 31, 2019

Net Revenues by Source:

Advisory

$

696,677

$

572,386

Equity underwriting

561,455

256,853

Debt underwriting

337,198

306,977

Total underwriting

898,653

563,830

Other investment banking

(112,776)

(7,116)

Total investment banking

1,482,554

1,129,100

Equities

801,596

573,851

Fixed income

1,077,673

518,346

Total capital markets

1,879,269

1,092,197

Other

89,953

53,587

Total Investment Banking and Capital Markets (1) (2)

3,451,776

2,274,884

Asset management fees and revenues (3)

23,068

16,350

Investment return (3) (4) (5)

150,339

104,442

Allocated net interest (4) (6)

(36,676)

(30,948)

Total Asset Management

136,731

89,844

Net Revenues

$

3,588,507

$

2,364,728

Other Data:

Number of trading days

189

187

Number of trading loss days

23

23

Average firmwide VaR (in millions) (7)

$

9.04

$

8.87

Jefferies Group LLC and Subsidiaries

Selected Statistical Information

(Amounts in Thousands, Except Other Data)

(Unaudited)



Nine Months Ended

August 31, August 31, 2020 2019

Net Revenues by Source:



Advisory $ 696,677 $ 572,386



Equity underwriting 561,455 256,853

Debt underwriting 337,198 306,977

Total underwriting 898,653 563,830

Other investment banking (112,776) (7,116)

Total investment banking 1,482,554 1,129,100



Equities 801,596 573,851

Fixed income 1,077,673 518,346

Total capital markets 1,879,269 1,092,197



Other 89,953 53,587



Total Investment Banking and Capital Markets 3,451,776 2,274,884 (1) (2)



Asset management fees and revenues (3) 23,068 16,350

Investment return (3) (4) (5) 150,339 104,442

Allocated net interest (4) (6) (36,676) (30,948)

Total Asset Management 136,731 89,844



Net Revenues $ 3,588,507 $ 2,364,728



Other Data:

Number of trading days 189 187

Number of trading loss days 23 23



Average firmwide VaR (in millions) (7) $ 9.04 $ 8.87

(1)

Includes net interest revenue of $5.4 million and $51.4 million for the nine months ended August 31, 2020 and 2019, respectively.

(2)

Allocated net interest is not separately disaggregated in presenting our Investment Banking and Capital Markets reportable segment within Jefferies Group LLC's Net Revenues by Source. This presentation is aligned to our Investment Banking and Capital Markets internal performance measurement.

(3)

In the fourth quarter of 2019, Jefferies Group LLC reorganized the presentation of revenues from arrangements which entitle us to certain portions of revenues and/or profits of strategic asset management partners. Jefferies Group LLC's Net Revenues by Source reflects the reclassification of revenues of $1.8 million from Investment return revenues to Asset management fees and revenues for the nine months ended August 31, 2019. There is no impact on Total Asset Management revenues as a result of this change in presentation.

(4)

Net revenues attributed to the Investment return in Jefferies Group LLC's Asset Management reportable segment have been disaggregated to separately present Investment return and Allocated net interest (see footnotes 5 and 6). 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, none of which are pertinent to the Investment returns generated by the performance of the portfolio.

(5)

Includes net interest expense of $19.6 million and $3.7 million for the nine months ended August 31, 2020 and 2019, respectively.

(6)

Allocated net interest represents the allocation 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 (refer to page 12).

(7)

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.

(1) Includes net interest revenue of $5.4 million and $51.4 million for the nine months ended August 31, 2020 and 2019, respectively.

Allocated net interest is not separately disaggregated in presenting our(2) Investment Banking and Capital Markets reportable segment within Jefferies Group LLC's Net Revenues by Source. This presentation is aligned to our Investment Banking and Capital Markets internal performance measurement.

In the fourth quarter of 2019, Jefferies Group LLC reorganized the presentation of revenues from arrangements which entitle us to certain portions of revenues and/or profits of strategic asset management(3) partners. Jefferies Group LLC's Net Revenues by Source reflects the reclassification of revenues of $1.8 million from Investment return revenues to Asset management fees and revenues for the nine months ended August 31, 2019. There is no impact on Total Asset Management revenues as a result of this change in presentation.

Net revenues attributed to the Investment return in Jefferies Group LLC's Asset Management reportable segment have been disaggregated to separately present Investment return and Allocated net interest (see footnotes 5 and 6). This disaggregation is intended to increase transparency and to make(4) 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, none of which are pertinent to the Investment returns generated by the performance of the portfolio.

(5) Includes net interest expense of $19.6 million and $3.7 million for the nine months ended August 31, 2020 and 2019, respectively.

Allocated net interest represents the allocation of Jefferies Group LLC's(6) 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 (refer to page 12).

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(7) 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.

Jefferies Group LLC and Subsidiaries

Financial Highlights

(Amounts in Millions, Except Where Noted)

(Unaudited)

Quarter Ended

August 31, 2020

May 31, 2020

August 31, 2019

Financial position:

Total assets (1)

$

46,660

$

45,084

$

43,094

Average total assets for the period (1)

$

54,654

$

56,480

$

53,097

Average total assets less goodwill and intangible assets for the period (1)

$

52,965

$

54,673

$

51,281

Cash and cash equivalents (1)

$

6,750

$

5,252

$

4,665

Cash and cash equivalents and other sources of liquidity (1) (2)

$

8,089

$

6,542

$

6,074

Cash and cash equivalents and other sources of liquidity - % total assets (1) (2)

17.3

%

14.5

%

14.1

%

Cash and cash equivalents and other sources of liquidity - % total assets less goodwill and intangible assets (1) (2)

18.0

%

15.1

%

14.7

%

Financial instruments owned (1)

$

17,556

$

18,125

$

16,371

Goodwill and intangible assets (1)

$

1,806

$

1,800

$

1,811

Right-of-use assets (1) (3)

$

500

$

501

N/A

Total equity (including noncontrolling interests) (1)

$

6,504

$

6,430

$

6,190

Total Jefferies Group LLC member's equity (1)

$

6,488

$

6,412

$

6,183

Tangible Jefferies Group LLC member's equity (1) (4)

$

4,682

$

4,612

$

4,372

Level 3 financial instruments:

Level 3 financial instruments owned (1) (5)

$

433

$

413

$

363

Level 3 financial instruments owned - % total assets (1) (5)

0.9

%

0.9

%

0.8

%

Level 3 financial instruments owned - % total financial instruments (1) (5)

2.5

%

2.3

%

2.2

%

Level 3 financial instruments owned - % tangible Jefferies Group LLC member's equity (1) (5)

9.2

%

9.0

%

8.3

%

Other data and financial ratios:

Total long-term capital (1) (6)

$

12,492

$

12,102

$

12,219

Leverage ratio (1) (7)

7.2

7.0

7.0

Tangible gross leverage ratio (1) (8)

9.6

9.4

9.4

Adjusted tangible gross leverage ratio (1) (3) (9)

10.6

10.4

N/A

Number of trading days

65

63

64

Number of trading loss days

8

11

10

Average firmwide VaR (10)

$

10.46

$

9.16

$

9.71

Number of employees, at period end

3,893

3,850

3,776

N/A - Not Applicable

Jefferies Group LLC and Subsidiaries

Financial Highlights

(Amounts in Millions, Except Where Noted)

(Unaudited)



Quarter Ended

August 31, May 31, August 31, 2020 2020 2019

Financial position:

Total assets (1) $ 46,660 $ 45,084 $ 43,094

Average total assets for the period (1) $ 54,654 $ 56,480 $ 53,097

Average total assets less goodwill and $ 52,965 $ 54,673 $ 51,281 intangible assets for the period (1)



Cash and cash equivalents (1) $ 6,750 $ 5,252 $ 4,665

Cash and cash equivalents and other $ 8,089 $ 6,542 $ 6,074 sources of liquidity (1) (2)

Cash and cash equivalents and othersources of liquidity - % total assets (1) 17.3 % 14.5 % 14.1 %(2)

Cash and cash equivalents and othersources of liquidity - % total assets less 18.0 % 15.1 % 14.7 %goodwill and intangible assets (1) (2)



Financial instruments owned (1) $ 17,556 $ 18,125 $ 16,371

Goodwill and intangible assets (1) $ 1,806 $ 1,800 $ 1,811

Right-of-use assets (1) (3) $ 500 $ 501 N/A



Total equity (including noncontrolling $ 6,504 $ 6,430 $ 6,190 interests) (1)

Total Jefferies Group LLC member's equity $ 6,488 $ 6,412 $ 6,183 (1)

Tangible Jefferies Group LLC member's $ 4,682 $ 4,612 $ 4,372 equity (1) (4)



Level 3 financial instruments:

Level 3 financial instruments owned (1) $ 433 $ 413 $ 363 (5)

Level 3 financial instruments owned - % 0.9 % 0.9 % 0.8 %total assets (1) (5)

Level 3 financial instruments owned - % 2.5 % 2.3 % 2.2 %total financial instruments (1) (5)

Level 3 financial instruments owned - %tangible Jefferies Group LLC member's 9.2 % 9.0 % 8.3 %equity (1) (5)



Other data and financial ratios:

Total long-term capital (1) (6) $ 12,492 $ 12,102 $ 12,219

Leverage ratio (1) (7) 7.2 7.0 7.0

Tangible gross leverage ratio (1) (8) 9.6 9.4 9.4

Adjusted tangible gross leverage ratio (1) 10.6 10.4 N/A (3) (9)



Number of trading days 65 63 64

Number of trading loss days 8 11 10

Average firmwide VaR (10) $ 10.46 $ 9.16 $ 9.71



Number of employees, at period end 3,893 3,850 3,776

N/A - Not Applicable

Jefferies Group LLC and Subsidiaries

Financial Highlights - Footnotes

(1)

Amounts pertaining to August 31, 2020 represent a preliminary estimate as of the date of this earnings release and may be revised in Jefferies Group LLC's Quarterly Report on Form 10-Q for the quarter ended August 31, 2020.

(2)

At August 31, 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 $1,123 million, in aggregate, and $216 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 May 31, 2020 were $998 million and $292 million, respectively, and at August 31, 2019, were $1,063 million and $345 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 August 31, 2020, May 31, 2020, and August 31, 2019, total long-term capital includes Jefferies Group LLC's long-term debt of $5,987 million, $5,672 million and $6,030 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.

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):

Jefferies Group LLC and Subsidiaries

Financial Highlights - Footnotes



Amounts pertaining to August 31, 2020 represent a preliminary estimate(1) as of the date of this earnings release and may be revised in Jefferies Group LLC's Quarterly Report on Form 10-Q for the quarter ended August 31, 2020.

At August 31, 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 $1,123 million, in aggregate, and $216 million, being the estimated amount of additional secured financing(2) 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 May 31, 2020 were $998 million and $292 million, respectively, and at August 31, 2019, were $1,063 million and $345 million, respectively.

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(3) 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.

Tangible Jefferies Group LLC member's equity (a non-GAAP financial measure) represents total Jefferies Group LLC member's equity less(4) 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.

Level 3 financial instruments represent those financial instruments(5) classified as such under Accounting Standards Codification 820, accounted for at fair value and included within Financial instruments owned.

At August 31, 2020, May 31, 2020, and August 31, 2019, total long-term capital includes Jefferies Group LLC's long-term debt of $5,987 million, $5,672 million and $6,030 million, respectively, and total equity.(6) 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.

Tangible gross leverage ratio (a non-GAAP financial measure) equals total assets less goodwill and identifiable intangible assets divided by(8) 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.

Adjusted tangible gross leverage ratio (a non-GAAP financial measure)(9) 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.

VaR estimates the potential loss in value of Jefferies Group LLC's trading positions due to adverse market movements over a one-day time(10) 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.

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, August 31, 2020



Book value (GAAP) $ 9,410,665

Less: Intangibles assets, net and goodwill (1,914,542)

Tangible book value (non-GAAP) $ 7,496,123



Common shares outstanding (GAAP) 259,246

Restricted stock units ("RSUs") 22,632

Other 1,105

Fully diluted shares outstanding (non-GAAP) (1) 282,983



Book value per share outstanding $ 36.30

Tangible book value per fully diluted share $ 26.49 outstanding

(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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20200923005897/en/

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

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