EX-99 2 a5808972ex99.htm EXHIBIT 99

Exhibit 99

Jefferies Announces Third Quarter Financial Results

NEW YORK--(BUSINESS WIRE)--October 21, 2008--Jefferies Group, Inc. (NYSE: JEF) today announced financial results for the third quarter ended September 30, 2008.

Highlights for the third quarter ended September 30, 2008:

  • Net revenues were $274.6 million.
  • The net loss for the third quarter of 2008 was $(31.3) million.
  • The net loss per share (diluted) was $(0.18).
  • The net loss includes approximately $11 million, or $(0.06) per share, relating to amounts owed Jefferies by Lehman Brothers.

“With unprecedented market challenges and a very difficult environment, Jefferies realized relatively positive financial results for the third quarter, and our financial and market position remains strong,” commented Richard B. Handler, Chairman and Chief Executive Officer of Jefferies. “Our excess liquidity and solid business base will help to position our platform 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 third quarter ended September 30, 2008 will be held today, October 21, 2008, at 9:00 AM Eastern and can be accessed at 877-246-1929 or 706-634-9290. A one-week replay of the call will be available two hours post-call at 800-633-8284 or 402-977-9140 (reservation code # 21396018). 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 Nine Months Ended
Sep 30, 2008 Sep 30, 2007 Sep 30, 2008 Sep 30, 2007
Revenues:
Commissions 113,416 95,652 329,588 255,778
Principal Transactions (3,430 ) 47,325 138,303 320,804
Investment Banking 130,125 189,780 338,704 582,988

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

(3,431 ) (6,283 ) (17,748 ) 29,586
Interest 209,183 334,056 624,614 845,957
Other   7,388     6,434     20,302     21,480  
Total Revenues 453,251 666,964 1,433,763 2,056,593
Interest Expense   178,605     332,540     565,839     837,900  
Revenues, net of interest expense   274,646     334,424     867,924     1,218,693  
 
Non-Interest Expenses:
Compensation And benefits 246,186 183,503 783,651 662,771
Floor brokerage and clearing fees 18,946 19,155 50,482 50,264
Technology and communications 31,500 26,120 91,894 71,980
Occupancy and equipment rental 19,205 20,280 56,898 56,315
Business development 11,228 13,791 35,106 38,980
Other   25,342       16,254     66,440       51,178  
Total non-interest expenses   352,407       279,103     1,084,471       931,488  
(Loss) / earnings before income taxes and minority interest (77,761 ) 55,321 (216,547 ) 287,205
Income tax (benefit) / expense   (6,090 )     21,608     (59,966 )     107,312  
(Loss) / earnings before minority interest (71,671 ) 33,713 (156,581 ) 179,893
Minority interest in (loss) earnings of

consolidated subsidiaries, net

  (40,367 )     (5,060 )   (60,355 )     11,026  
Net (loss) / earnings   (31,304 )     38,773     (96,226 )     168,867  
(Loss) / earnings per share:
Basic $ (0.18 )   $ 0.27   $ (0.60 )   $ 1.19  
Diluted $ (0.18 )   $ 0.26   $ (0.60 )   $ 1.12  
 
Weighted Average Shares:
Basic 173,757 142,822 160,458 141,905
Diluted 173,757 155,480 160,458 153,911
 
Effective tax rate 7.8 % 39.1 % 27.7 % 37.4 %
JEFFERIES GROUP, INC. AND SUBSIDIARIES
SELECTED STATISTICAL INFORMATION
(Amounts in Thousands, Except Per Share Amounts)
(Unaudited)
 
  Quarters Ended
9/30/2008   6/30/2008   3/31/2008   12/31/2007   9/30/2007   6/30/2007

Statement of Earnings

         
Revenues, net of interest expense 274,646 392,082 201,196 349,397 334,424 465,460
 
Non Interest Expenses:
Compensation And Benefits 246,186 277,514 259,951 283,538 183,503 251,602

Non-personnel expenses

106,221     100,097     94,502     107,330       95,600       85,467  
(Loss) / earnings before income taxes and

minority interest

(77,761 ) 14,471 (153,257 ) (41,471 ) 55,321 128,391
Income tax (benefit) / expense (6,090 )   4,016     (57,892 )   (14,134 )     21,608       45,046  
(Loss)/earnings before minority interest (71,671 ) 10,455 (95,365 ) (27,337 ) 33,713 83,345
Minority interest in (loss) earnings of

consolidated subsidiaries, net

(40,367 )   14,840     (34,828 )   (3,135 )     (5,060 )     15,510  
Net (loss) / earnings ($31,304 )   ($4,385 )   ($60,537 )   ($24,202 )   $ 38,773     $ 67,835  
Diluted (loss) / earnings per share ($0.18 )   ($0.03 )   ($0.43 )   ($0.17 )   $ 0.26     $ 0.45  
 

Financial Ratios

Pretax Operating Margin -28.3 % 3.7 % -76.2 % -11.9 % 16.5 % 27.6 %
Compensation and Benefits / Net Revenues 89.6 % 70.8 % 129.2 % 81.2 % 54.9 % 54.1 %
Effective Tax Rate 7.8 % 27.8 % 37.8 % 34.1 % 39.1 % 35.1 %
JEFFERIES GROUP, INC. AND SUBSIDIARIES
SELECTED STATISTICAL INFORMATION
(Amounts in Thousands, Except Per Share Amounts)
(Unaudited)
 
  Quarters Ended
9/30/2008   6/30/2008   3/31/2008   12/31/2007   9/30/2007   6/30/2007

Revenues by Source

         
Equities 122,465 149,142 138,193 139,248 140,296 144,563
Fixed Income & Commodities
Fixed Income (excluding high yield)
and Commodities 56,213 69,499 33,668 36,201 16,502 40,443
High Yield (61,304 )   31,993   (51,676 )   (3,225 )   (7,387 )   34,123
Fixed Income & Commodities Total (5,091 )   101,492   (18,008 )   32,976     9,115     74,566
                     
Total 117,374     250,634   120,185     172,224     149,411     219,129
 
Investment banking 130,125 109,372 99,207 167,204 189,780 223,093
 
Asset management fees and investment income (loss) from managed funds:
Asset management fees 3,804 4,758 6,285 6,419 5,369 7,294
Investment income (loss) from managed funds (7,235 )   8,721   (34,081 )   (12,471 )   (11,652 )   6,090
Total (3,431 )   13,479   (27,796 )   (6,052 )   (6,283 )   13,384
Interest 209,183     210,540   204,891     328,926     334,056     310,739
Total Revenues 453,251     584,025   396,487     662,302     666,964     766,345
 

Other Data

Number of Trading Days 64 64 61 64 63 63
Average Employees 2,403 2,327 2,486 2,521 2,472 2,319
Common Shares Outstanding 163,429 162,121 132,762 124,453 125,657 125,740
Weighted Average Shares:
Basic 173,757 165,694 141,784 140,726 142,822 142,092
Diluted 173,757 165,694 141,784 140,726 155,480 154,301
 
As of September 30, 2008, stockholder's equity amounted to $2.2 billion, resulting in book value of $13.38 per share
JEFFERIES GROUP, INC. AND SUBSIDIARIES
SELECTED STATISTICAL INFORMATION
Shares Outstanding and Shares for Basic and Diluted EPS Calculations
(Unaudited)
       
 
September 30, 2008
 
Shares outstanding 163,429,054
 
 

Note - All share information below for EPS purposes is based upon weighted-average balances for the applicable period.

 
 
Three months ended Nine months ended
September 30, 2008 September 30, 2008
 
Shares Outstanding (weighted average) (1 ) 162,437,704 148,920,577
Unvested restricted stock (2 ) (12,844,633 ) (11,973,630 )
Vested restricted stock units (3 ) 18,604,220 18,120,776
Other issuable shares (4 ) 5,559,791   5,390,413  
Basic EPS Shares 173,757,083 160,458,136
 
Stock Options (5 ) 26,158 42,191
Mandatorily redeemable convertible preferred stock (6 ) 4,105,138 4,097,603
Unvested restricted stock/ restricted stock units (5 ) 9,433,723   8,255,952  
Diluted EPS Shares * 187,322,102 172,853,883
 
* For purposes of diluted EPS in the event of a net loss, only basic shares will be used due to anti-dilution factors
 
(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