EX-99 2 a5736665ex99.htm EXHIBIT 99

Exhibit 99

Jefferies Announces Second Quarter Financial Results

NEW YORK--(BUSINESS WIRE)--Jefferies Group, Inc. (NYSE: JEF) today announced financial results for the second quarter ended June 30, 2008.

Highlights for the second quarter ended June 30, 2008:

  • Net revenues were $392 million.
  • Commissions and principal transactions (trading revenues) were a record $244 million.
  • The net loss for the second quarter of 2008 was $4.4 million after $15 million in severance costs.

“In the face of a market environment that continues to be challenging, Jefferies achieved significantly improved financial results in the second quarter,” commented Richard B. Handler, Chairman and Chief Executive Officer of Jefferies. “Our firm remains in a strong financial and market position with excess liquidity, a solid business base, and a platform positioned to perform as conditions improve. We thank our clients, employees and shareholders for their continued support,” he added.

Conference Call

A conference call with management discussion of financial results for the second quarter will be held on July 22, 2008 at 9:00 AM Eastern and can be accessed at (706) 634-9290. A one-week replay of the call will be available two hours post-call at (402) 977-9140 (code: 21388113). A live audio webcast and delayed replay will also be available under “Investor Relations” at www.jefferies.com.

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 25 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 Six Months Ended
June 30, 2008   June 30, 2007 June 30, 2008   June 30, 2007
 
Revenues:
Commissions $ 102,521 $ 83,094 $ 216,172 $ 160,126
Principal transactions 141,679 129,030 141,733 273,479
Investment banking 109,372 223,093 208,579 393,208

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

13,479 13,384 (14,317 ) 35,869
Interest 210,540 310,739 415,431 511,901
Other   6,434     7,005     12,914     15,046  
Total revenues 584,025 766,345 980,512 1,389,629
Interest expense   191,943     300,885     387,234     505,360  
Revenues, net of interest expense   392,082     465,460     593,278     884,269  
 
Non-interest expenses:
Compensation and benefits 277,514 251,602 537,465 479,268
Floor brokerage and clearing fees 18,588 16,527 31,536 31,109
Technology and communications 29,478 23,703 60,394 45,860
Occupancy and equipment rental 20,436 17,864 37,693 36,035
Business development 10,978 12,080 23,878 25,189
Other   20,617     15,293     41,098     34,924  
Total non-interest expenses   377,611     337,069     732,064     652,385  
 
Earnings/(loss) before income taxes and minority interest 14,471 128,391 (138,786 ) 231,884
Income tax (benefit)/expense   4,016     45,046     (53,876 )   85,704  
Earnings/(loss) before minority interest 10,455 83,345 (84,910 ) 146,180

 

Minority interest in (loss) earnings of consolidated subsidiaries, net

  14,840     15,510     (19,988 )   16,086  
Net (loss)/earnings   ($4,385 ) $ 67,835     ($64,922 ) $ 130,094  
 
(Loss)/earnings per share:
Basic   ($0.03 ) $ 0.48     ($0.42 ) $ 0.92  
 
Diluted   ($0.03 ) $ 0.45     ($0.42 ) $ 0.86  
 
Weighted average shares:
Basic 165,694 142,092 153,739 141,498
Diluted 165,694 154,301 153,739 153,183
 
Effective Tax Rate 27.8 % 35.1 % 38.8 % 37.0 %

JEFFERIES GROUP, INC. AND SUBSIDIARIES

SELECTED STATISTICAL INFORMATION

(Amounts in Thousands, Except Per Share Amounts)

(Unaudited)

 

 

Quarters ended
6/30/2008   3/31/2008   12/31/2007   9/30/2007   6/30/2007   3/31/2007

Statement of Earnings

Revenues, net of interest expense $ 392,082 $ 201,196 $ 349,397 $ 334,424 $ 465,460 $ 418,809
Non-interest expenses:
Compensation and benefits 277,514 259,951 283,538 183,503 251,602 227,666
Non-personnel expenses   100,097     94,502     107,330     95,600     85,467     87,650  

(Loss) / earnings before income taxes and minority interest

14,471 (153,257 ) (41,471 ) 55,321 128,391 103,493

Income tax (benefit) / expense

  4,016     (57,892 )   (14,134 )   21,608     45,046     40,658  

Earnings / (loss) before minority interest

10,455 95,365 (27,337 ) 33,713 83,345 62,835

Minority interest in earnings / (loss) of consolidated subsidiaries, net

  14,840     (34,828 )   (3,135 )   (5,060 )   15,510     576  

Net (loss) / earnings

  ($4,385 )   ($60,537 )   ($24,202 ) $ 38,773   $ 67,835   $ 62,259  
 

Diluted (loss) / earnings per share

  ($0.03 )   ($0.43 )   ($0.17 ) $ 0.26   $ 0.45   $ 0.42  
 

Financial Ratios

Pretax operating margin 3.7 % -76.2 % -11.9 % 16.5 % 27.6 % 24.7 %
Compensation and benefits / net revenues 70.8 % 129.2 % 81.2 % 54.9 % 54.1 % 54.4 %
Effective tax rate 27.8 % 37.8 % 34.1 % 39.1 % 35.1 % 39.3 %

JEFFERIES GROUP, INC. AND SUBSIDIARIES

SELECTED STATISTICAL INFORMATION

(Amounts in Thousands, Except Per Share Amounts)

(Unaudited)

   
Quarters ended
6/30/2008   3/31/2008   12/31/2007   9/30/2007   6/30/2007   3/31/2007

Revenues by Source

         
Equities $ 149,142 $ 138,193 $ 139,248 $ 140,296 $ 144,563 $ 173,057
Fixed Income & Commodities

Fixed Income (excluding high yield) and Commodities

69,499 33,668 36,201 16,502 40,443 46,128
High Yield   31,993     (51,676 )     (3,225 )     (7,387 )     34,123     10,337
Fixed Income & Commodities Total   101,492     (18,008 )     32,976       9,115       74,566     56,465
                     
Total 250,634 120,185 172,224 149,411 219,129 229,522
 
Investment banking 109,372 99,207 167,204 189,780 223,093 170,115
 
Asset management fees and investment income (loss) from managed funds:
Asset management fees 4,758 6,285 6,419 5,369 7,294 9,451
Investment income (loss) from managed funds   8,721     (34,081 )     (12,471 )     (11,652 )     6,090     13,034
Total 13,479 (27,796 ) (6,052 ) (6,283 ) 13,384 22,485
Interest   210,540     204,891       328,926       334,056       310,739     201,162
Total revenues $ 584,025   $ 396,487     $ 662,302     $ 666,964     $ 766,345   $ 623,284
 

Other Data

Number of trading days 64 61 64 63 63 61
Average employees 2,327 2,486 2,521 2,472 2,319 2,265
Common shares outstanding 162,121 132,762 124,453 125,657 125,740 124,238
Weighted average shares:
Basic 165,694 141,784 140,726 142,822 142,092 140,897
Diluted 165,694 141,784 140,726 155,480 154,301 152,058
 
As of June 30, 2008, stockholders' equity amounted to $2.2 billion, resulting in book value of $13.60 per share.
JEFFERIES GROUP, INC. AND SUBSIDIARIES
SHARES OUTSTANDING AND BASIC AND DILUTED EARNINGS PER SHARE
   
 
June 30, 2008
 
Shares outstanding 162,121,394
 
 
Note - All share information below for EPS purposes is based upon weighted-average balances for the applicable period.

 

Three months ended

Six months ended
June 30, 2008 June 30, 2008
 
Shares Outstanding (weighted average) (1) 155,260,503 142,087,743
Unvested restricted stock (2) (12,963,720 ) (11,533,344 )
Vested restricted stock units (3) 17,994,077 17,879,055
Other issuable shares (4) 5,402,918   5,305,653  
Basic EPS Shares 165,693,779 153,739,107
 
Stock Options (5) 42,671 49,988
Convertible Debt Pfd (6) 4,099,511 4,093,795
Unvested restricted stock/ restricted stock units (5) 7,932,425   7,667,067  
Diluted EPS Shares 177,768,386 165,549,957
(1)   Shares outstanding represents shares issued less shares repurchased in treasury stock. Shares issued includes public and private offerings, vested and unvested restricted stock, distributions related to restricted stock units, deferred compensation plans, employee stock purchase plan and stock option exercises. Shares issued does not include undistributed vested and unvested restricted stock units.
 
(2) As restricted stock is contingent upon a future service condition, unvested shares are removed from shares outstanding in the calculation of basic EPS as Jefferies obligation to issue these shares remains contingent.
 
(3) As vested restricted stock units are no longer contingent upon a future service condition or any other contingency and are issuable upon a certain date in the future, vested restricted stock units are added to shares outstanding in the calculation of basic EPS.
 
(4) Other shares issuable not pursuant to any contingency include shares issuable under certain deferred compensation plans and shares issuable in connection with earnout agreements.
 
(5) Calculated under the treasury stock method in accordance with FASB 128, Earnings per Share. The treasury stock method assumes the issuance of only a net incremental number of shares as proceeds from issuance are assumed to be used to repurchase shares at the average stock price for the period.
 
(6) Calculated under the if-converted method in accordance with FASB 128, Earnings per Share. The if-converted method assumes the conversion of convertible securities at the beginning of the period.

CONTACT:
Jefferies Group, Inc.
Peregrine C. Broadbent, 212-284-2338
Chief Financial Officer