EX-99 2 a5313282ex99.txt EXHIBIT 99 Exhibit 99 Jefferies Announces Second Best Quarterly Results Ever and Seventh Consecutive Record Annual Results Net revenues up 9% to $374 million Net earnings up 19% to $56 million Earnings per share up 12% to $0.38 NEW YORK--(BUSINESS WIRE)--Jan. 18, 2007--Jefferies Group, Inc. (NYSE: JEF) today announced financial results for the fourth quarter ended December 31, 2006. Highlights for the record fourth quarter ended December 31, 2006: -- Net revenues were up 9% to $374.2 million, versus $342.9 million for the fourth quarter of 2005. -- Net earnings were up 19% to $55.8 million, compared to $46.7 million for the fourth quarter of 2005. -- Fully Diluted EPS were up 12% to $0.38, compared to $0.34 for the fourth quarter of 2005. Highlights for the record year ended December 31, 2006: -- Net revenues were up 21% to a record $1.5 billion, versus $1.2 billion for 2005. -- Net earnings were up 31% to a record $205.8 million, compared to $157.4 million for 2005. -- Fully Diluted EPS were up 22% to a record $1.42, compared to $1.16 for 2005. "We are proud of our 2,257 employee-partners who enabled our firm to provide record annual results across the board in Sales and Trading, Investment Banking, and Asset Management," commented Richard B. Handler, Chairman and Chief Executive Officer of Jefferies. "2006 was a year of significant investment for Jefferies in all of our businesses. The fact that we were able to achieve these record results while investing so heavily for the future of our firm reflects the quality of our employee-partners and the loyalty of our clients." "Jefferies has never had a stronger capital base, a more diversified business platform, or a more qualified group of employee-owners," added Brian P. Friedman, Chairman, Executive Committee, Jefferies. "After seven consecutive years of growth and record financial performance, we are excited for the future as we look to further serve growing and mid-sized companies and their investors." Conference Call A conference call with management discussion of financial results for the fourth quarter ended December 31, 2006 will be held January 18 at 9:00 AM Eastern and can be accessed at (706) 634-9290 (no code necessary). A replay of the call will be available approximately two hours post-call at (402) 977-9140 (reservation number: 21322716). A live audio webcast and delayed replay will also be available under "Investor Relations" at www.jefferies.com. Questions for consideration by management can be submitted in advance through the "Contact Us" function at www.jefferies.com or by calling 203-708-5975 by 8:30 AM Eastern on January 18. About Jefferies Jefferies, a global investment bank and institutional securities firm, has served growing and mid-sized companies and their investors for 45 years. Headquartered in New York, with more than 30 offices around the world, Jefferies provides clients with capital markets and financial advisory services, institutional brokerage, securities research and asset management. The firm is a leading provider of trade execution in equity, high yield, convertible and international securities for institutional investors and high net worth individuals. Jefferies & Company, Inc. is the principal operating subsidiary of Jefferies Group, Inc. (NYSE: JEF; www.jefferies.com). JEFFERIES GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Amounts in Thousands, Except Per Share Amounts) (Unaudited) Three Months Ended Year Ended ------------------- ----------------------- Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2006 2005 2006 2005 --------- --------- ----------- ----------- Revenues: Commissions $ 72,092 $ 61,639 $ 280,681 $ 246,943 Principal transactions 114,914 87,602 468,002 349,489 Investment banking 145,167 167,497 540,596 495,014 Asset management fees and investment income from managed funds 29,418 18,667 109,550 82,052 Interest 143,847 91,315 528,882 304,053 Other 7,910 5,013 35,497 20,322 --------- --------- ----------- ----------- Total revenues 513,348 431,733 1,963,208 1,497,873 Interest expense 139,113 88,881 505,606 293,173 --------- --------- ----------- ----------- Revenues, net of interest expense 374,235 342,852 1,457,602 1,204,700 --------- --------- ----------- ----------- Non-interest expenses: Compensation and benefits 197,425 188,933 791,255 669,957 Floor brokerage and clearing fees 16,201 11,294 62,564 46,644 Technology and communications 20,977 17,613 80,840 67,666 Occupancy and equipment rental 15,402 14,188 59,792 47,040 Business development 12,577 14,814 48,634 42,512 Other 17,458 17,623 65,863 62,474 --------- --------- ----------- ----------- Total non-interest expenses 280,040 264,465 1,108,948 936,293 --------- --------- ----------- ----------- Earnings before income taxes, minority interest and cumulative effect of change in accounting principle 94,195 78,387 348,654 268,407 Income taxes 38,018 30,880 137,541 104,089 --------- --------- ----------- ----------- Earnings before minority interest and cumulative effect of change in accounting principle 56,177 47,507 211,113 164,318 Minority interest in earnings of consolidated subsidiaries, net 394 768 6,969 6,875 --------- --------- ----------- ----------- Earnings before cumulative effect of change in accounting principle, net 55,783 46,739 204,144 157,443 Cumulative effect of change in accounting principle -- -- 1,606 -- --------- --------- ----------- ----------- Net earnings $ 55,783 $ 46,739 $ 205,750 $ 157,443 ========= ========= =========== =========== Earnings per share: Basic- Earnings before cumulative effect of change in accounting principle, net $ 0.41 $ 0.37 $ 1.53 $ 1.27 Cumulative effect of change in accounting principle -- -- 0.01 -- --------- --------- ----------- ----------- Net earnings $ 0.41 $ 0.37 $ 1.54 $ 1.27 ========= ========= =========== =========== Diluted- Earnings before cumulative effect of change in accounting principle, net $ 0.38 $ 0.34 $ 1.41 $ 1.16 Cumulative effect of change in accounting principle -- -- 0.01 -- --------- --------- ----------- ----------- Net earnings $ 0.38 $ 0.34 $ 1.42 $ 1.16 ========= ========= =========== =========== Weighted average shares: Basic 136,438 125,971 133,898 123,646 Diluted 150,599 137,959 147,531 135,569 Effective Tax Rate 40.4% 39.4% 39.4% 38.8% * All share and per share information has been restated to retroactively reflect the effect of the two-for-one stock split effected as a stock dividend on May 15, 2006. JEFFERIES GROUP, INC. AND SUBSIDIARIES SELECTED STATISTICAL INFORMATION (Dollars in Thousands, Except Per Share Amounts) (Unaudited) Quarters ended 12/31/2006 9/30/2006 6/30/2006 ----------- ---------- ----------- Statement of Earnings ----------------------------------- Revenues, net of interest expense $374,235 $340,610 $327,343 Non-interest expenses: Compensation and benefits 197,425 184,421 176,675 Non-personnel expenses 82,615 79,852 69,953 ----------- ---------- ----------- Earnings before income taxes, minority interest and cumulative effect of change in accounting principle 94,195 76,337 80,715 Income taxes 38,018 29,734 31,357 ----------- ---------- ----------- Earnings before minority interest and cumulative effect of change in accounting principle 56,177 46,603 49,358 Minority interest in earnings of consolidated subsidiaries, net 394 663 3,778 ----------- ---------- ----------- Earnings before cumulative effect of change in accounting principle 55,783 45,940 45,580 Cumulative effect of change in accounting principle -- -- -- ----------- ---------- ----------- Net earnings $55,783 $45,940 $45,580 =========== ========== =========== Diluted earnings per share $0.38 $0.32 $0.32 =========== ========== =========== Financial Ratios ----------------------------------- Pretax operating margin 25.2% 22.4% 24.7% Compensation and benefits / net revenues 52.8% 54.1% 54.0% Effective tax rate 40.4% 39.0% 38.8% Quarters ended 3/31/2006 12/31/2005 9/30/2005 ---------- ----------- ---------- Statement of Earnings ----------------------------------- Revenues, net of interest expense $415,414 $342,852 $299,280 Non-interest expenses: Compensation and benefits 232,734 188,933 167,033 Non-personnel expenses 85,273 75,532 64,710 ---------- ----------- ---------- Earnings before income taxes, minority interest and cumulative effect of change in accounting principle 97,407 78,387 67,537 Income taxes 38,432 30,880 26,143 ---------- ----------- ---------- Earnings before minority interest and cumulative effect of change in accounting principle 58,975 47,507 41,394 Minority interest in earnings of consolidated subsidiaries, net 2,134 768 2,799 ---------- ----------- ---------- Earnings before cumulative effect of change in accounting principle 56,841 46,739 38,595 Cumulative effect of change in accounting principle 1,606 -- -- ---------- ----------- ---------- Net earnings $58,447 $46,739 $38,595 ========== =========== ========== Diluted earnings per share $0.41 $0.34 $0.28 ========== =========== ========== Financial Ratios ----------------------------------- Pretax operating margin 23.4% 22.9% 22.6% Compensation and benefits / net revenues 56.0% 55.1% 55.8% Effective tax rate 39.5% 39.4% 38.7% JEFFERIES GROUP, INC. AND SUBSIDIARIES SELECTED STATISTICAL INFORMATION (Dollars and Shares in Thousands) (Unaudited) Quarters ended ---------------------------------- 12/31/2006 9/30/2006 6/30/2006 ----------- ---------- ----------- Revenues by Source ----------------------------------- Equities $151,974 $112,635 $101,173 Fixed Income & Commodities 42,942 62,059 71,636 Investment banking 145,167 144,763 122,932 Asset management fees and investment income from managed funds: Asset management fees 14,190 6,345 8,918 Investment income from managed funds 15,228 10,438 13,609 ----------- ---------- ----------- Total 29,418 16,783 22,527 Interest 143,847 132,424 138,851 ----------- ---------- ----------- Total revenues $513,348 $468,664 $457,119 =========== ========== =========== Other Data ----------------------------------- Number of trading days 63 63 63 Average employees 2,239 2,212 2,078 Common shares outstanding 119,547 118,876 118,540 Weighted average shares: Basic 136,438 135,140 133,621 Diluted 150,599 148,908 147,605 Quarters ended ----------------------------------- 3/31/2006 12/31/2005 9/30/2005 ---------- ----------- ---------- Revenues by Source ----------------------------------- Equities $173,109 $111,806 $118,990 Fixed Income & Commodities 68,652 42,448 48,404 Investment banking 127,734 167,497 107,556 Asset management fees and investment income from managed funds: Asset management fees 26,009 8,215 14,239 Investment income from managed funds 14,813 10,452 7,428 ---------- ----------- ---------- Total 40,822 18,667 21,667 Interest 113,760 91,315 81,467 ---------- ----------- ---------- Total revenues $524,077 $431,733 $378,084 ========== =========== ========== Other Data ----------------------------------- Number of trading days 62 63 64 Average employees 2,030 2,013 2,001 Common shares outstanding 118,502 116,221 116,166 Weighted average shares: Basic 130,358 125,971 124,447 Diluted 142,942 137,959 136,225 As of December 31, 2006, stockholders' equity amounted to $1.6 billion, resulting in book value of $13.23 per share. CONTACT: Jefferies Group, Inc. Joseph A. Schenk, 212-284-2338