Commitments, Contingencies and Guarantees

12 Months Ended

Nov. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments, Contingencies and Guarantees

Commitments

The following table summarizes our commitments at November 30, 2019 (in millions):



	Expected Maturity Date (fiscal years)
	2020		2021		2022 and 2023		2024 and 2025		2026 and Later		Maximum Payout
Equity commitments (1)	$	115.8	$	1.4	$	—	$	—	$	8.4	$	125.6
Loan commitments (1)	250.0		45.0		10.0		9.3		—		314.3
Underwriting commitments	13.5		—		—		—		—		13.5
Forward starting reverse repos (2)	5,475.3		—		—		—		—		5,475.3
Forward starting repos (2)	2,168.8		—		—		—		—		2,168.8
Other unfunded commitments (1)	72.3		132.2		—		4.9		—		209.4
Total commitments	$	8,095.7	$	178.6	$	10.0	$	14.2	$	8.4	$	8,306.9


(1)	Equity, loan and other unfunded commitments are presented by contractual maturity date. The amounts, however, are available on demand.


(2)	All of the securities purchased under agreements to resell and $2,157.7 million within forward starting securities sold under agreements to repurchase at November 30, 2019 settled within three business days.

Equity Commitments. Includes a commitment to invest in our joint venture, Jefferies Finance, and commitments to invest in private equity funds and in Jefferies Capital Partners, LLC, the manager of the private equity funds, which consists of a team led by one of our directors and Chairman of the Executive Committee. At November 30, 2019, our outstanding commitments relating to Jefferies Capital Partners, LLC and its private equity funds were $11.5 million.

See Note 9, Investments, for additional information regarding our investments in Jefferies Finance.

Additionally, at November 30, 2019, we had other outstanding equity commitments to invest up to $7.8 million in various other investments.

Loan Commitments. From time to time we make commitments to extend credit to investment banking and other clients in loan syndication, acquisition finance and securities transactions and to SPE sponsors in connection with the funding of CLO and other asset-backed transactions. These commitments and any related drawdowns of these facilities typically have fixed maturity dates and are contingent on certain representations, warranties and contractual conditions applicable to the borrower. At November 30, 2019, we had $64.3 million of outstanding loan commitments to clients.

Loan commitments outstanding at November 30, 2019 also include our portion of the outstanding secured revolving credit facility provided to Jefferies Finance, to support loan underwritings by Jefferies Finance. See Note 9, Investments, for additional information.

Underwriting Commitments. In connection with investment banking activities, we may from time to time provide underwriting commitments to our clients in connection with capital raising transactions.

Forward Starting Reverse Repos and Repos. We enter into commitments to take possession of securities with agreements to resell on a forward starting basis and to sell securities with agreements to repurchase on a forward starting basis that are primarily secured by U.S. government and agency securities.

Other Unfunded Commitments. Other unfunded commitments include obligations in the form of revolving notes, warehouse financings and debt securities to provide financing to asset-backed and CLO vehicles. Upon advancing funds, drawn amounts are collateralized by the assets of an entity.

Leases. As lessee, we lease certain premises and equipment under non-cancelable agreements expiring at various dates through 2039 which are operating leases. At November 30, 2019, future minimum aggregate annual lease payments under such leases (net of subleases) for fiscal years ended November 30, 2020 through 2024 and the aggregate amount thereafter, are as follows (in thousands):



Fiscal Year	Operating Leases
2020	$	57,952
2021	60,395
2022	62,916
2023	57,574
2024	56,878
Thereafter	389,245
Total	$	684,960

The total minimum payments to be received in the future under non-cancelable subleases at November 30, 2019 was $16.2 million.

Rental expense, net of subleases, amounted to $61.2 million, $52.3 million and $56.1 million for the years ended November 30, 2019, 2018 and 2017, respectively.

Guarantees

Derivative Contracts. As a dealer, we make markets and trade in a variety of derivative instruments. Certain derivative contracts that we have entered into meet the accounting definition of a guarantee under U.S. GAAP, including credit default swaps, written foreign currency options and written equity put options. On certain of these contracts, such as written interest rate caps and foreign currency options, the maximum payout cannot be quantified since the increase in interest or foreign exchange rates are not contractually limited by the terms of the contract. As such, we have disclosed notional values as a measure of our maximum potential payout under these contracts.

The following table summarizes the notional amounts associated with our derivative contracts meeting the definition of a guarantee under U.S. GAAP at November 30, 2019 (in millions):



	Expected Maturity Date (Fiscal Years)
	2020		2021		2022 and 2023		2024 and 2025		2026 and Later		Notional/ Maximum Payout
Guarantee Type:
Derivative contracts—non-credit related	$	9,854.0	$	3,150.8	$	4,453.6	$	1,044.8	$	48.2	$	18,551.4
Written derivative contracts—credit related	1.5		—		2.7		29.7		—		33.9
Total derivative contracts	$	9,855.5	$	3,150.8	$	4,456.3	$	1,074.5	$	48.2	$	18,585.3

The derivative contracts deemed to meet the definition of a guarantee under U.S. GAAP are before consideration of hedging transactions and only reflect a partial or “one-sided” component of any risk exposure. Written equity options and written credit default swaps are often executed in a strategy that is in tandem with long cash instruments (e.g., equity and debt securities). We substantially mitigate our exposure to market risk on these contracts through hedges, such as other derivative contracts and/or cash instruments, and we manage the risk associated with these contracts in the context of our overall risk management framework. We believe notional amounts overstate our expected payout and that fair value of these contracts is a more relevant measure of our obligations. At November 30, 2019, the fair value of derivative contracts meeting the definition of a guarantee is approximately $170.9 million.

Standby Letters of Credit. At November 30, 2019, we provided guarantees to certain counterparties in the form of standby letters of credit in the amount of $36.9 million, all of which expire within one year. Standby letters of credit commit us to make payment to the beneficiary if the guaranteed party fails to fulfill its obligation under a contractual arrangement with that beneficiary. Since commitments associated with these collateral instruments may expire unused, the amount shown does not necessarily reflect the actual future cash funding requirement.

Other Guarantees. We are members of various exchanges and clearing houses. In the normal course of business we provide guarantees to securities clearing houses and exchanges. These guarantees generally are required under the standard membership agreements, such that members are required to guarantee the performance of other members. Additionally, if a member becomes unable to satisfy its obligations to the clearing house, other members would be required to meet these shortfalls. To mitigate these performance risks, the exchanges and clearing houses often require members to post collateral. Our obligations under such guarantees could exceed the collateral amounts posted. Our maximum potential liability under these arrangements cannot be quantified; however, the potential for us to be required to make payments under such guarantees is deemed remote. Accordingly, no liability has been recognized for these arrangements.