UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
8-K
CURRENT REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of
report (Date of earliest event reported): December 20, 2016
Jefferies Group LLC |
(Exact name of registrant as specified in its charter) |
Delaware |
1-14947 |
95-4719745 |
(State or other jurisdiction of |
(Commission File Number) |
(IRS Employer Identification |
520 Madison Ave., New York, New York |
10022 |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including
area code: 212-284-2550
(Former name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition
On December 20, 2016, we issued a press release announcing financial results for the fiscal ended November 30, 2016. A copy of the press release is attached hereto as Exhibit 99.
Item 9.01. Financial Statements and Exhibits
The following exhibit is furnished with this report: |
||
Number |
Exhibit |
|
99 |
December 20, 2016 press release. |
|
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Jefferies Group LLC |
|||
Date: |
December 20, 2016 |
/s/ Roland T. Kelly |
|
Roland T. Kelly |
|||
Assistant Secretary |
EXHIBIT INDEX
Exhibit No. |
Description |
99 |
December 20, 2016 press release. |
Exhibit 99
Jefferies Reports Fiscal Fourth Quarter 2016 Financial Results
NEW YORK--(BUSINESS WIRE)--December 20, 2016--Jefferies Group LLC today announced financial results for its fiscal fourth quarter 2016.
Highlights for the three months ended November 30, 2016:
Rich Handler, Chairman and Chief Executive Officer, and Brian Friedman, Chairman of the Executive Committee, commented: "We are pleased with our fourth quarter results, which reflect a strong performance in investment banking, a solid performance from our core equities business, and a continuing significant improvement in our fixed income results. Our investment banking results benefited from a record quarter of advisory fees, as well as increasingly active new issue capital markets. Our strong finish to the year, combined with the continued positive momentum in all of our businesses, positions us well for 2017. We thank our clients, our employees, our shareholders, our bondholders and all our business partners for their continued support."
The attached financial tables should be read in conjunction with our Quarterly Report on Form 10-Q for the quarter ended August 31, 2016 and our Annual Report on Form 10-K for the year ended November 30, 2015. Amounts herein pertaining to November 30, 2016 represent a preliminary estimate as of the date of this earnings release and may be revised in our Annual Report on Form 10-K for the year ended November 30, 2016.
This 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 results and performance, including our future market share and expected financial results. It is possible that the actual results may differ materially from the anticipated results indicated in these forward-looking statements. Please refer to our most recent Annual Report on Form 10-K for a discussion of important factors that could cause actual results to differ materially from those projected in these forward-looking statements.
Jefferies, the world's only independent full-service global investment banking firm focused on serving clients for over 50 years, is a leader in providing insight, expertise and execution to investors, companies and governments. Our firm provides a full range of investment banking, sales, trading, research and strategy across the spectrum of equities, fixed income and foreign exchange, as well as wealth management, in the Americas, Europe and Asia. Jefferies Group LLC is a wholly-owned subsidiary of Leucadia National Corporation (NYSE:LUK), a diversified holding company.
_____________________
JEFFERIES GROUP LLC AND SUBSIDIARIES | ||||||||||||
CONSOLIDATED STATEMENTS OF EARNINGS | ||||||||||||
(Amounts in Thousands) | ||||||||||||
(Unaudited) | ||||||||||||
Quarter Ended | ||||||||||||
November 30, 2016 | August 31, 2016 | November 30, 2015 | ||||||||||
Revenues: | ||||||||||||
Commissions and other fees | $ | 157,549 | $ | 152,044 | $ | 146,288 | ||||||
Principal transactions | 137,362 | 167,483 | (38,534 | ) | ||||||||
Investment banking | 415,067 | 294,930 | 372,930 | |||||||||
Asset management fees and investment income from managed funds |
1,319 | 15,877 | 8,020 | |||||||||
Interest income | 202,002 | 213,716 | 221,962 | |||||||||
Other revenues | 26,661 | 19,791 | (8,736 | ) | ||||||||
Total revenues | 939,960 | 863,841 | 701,930 | |||||||||
Interest expense | 198,191 | 209,391 | 188,843 | |||||||||
Net revenues | 741,769 | 654,450 | 513,087 | |||||||||
Non-interest expenses: | ||||||||||||
Compensation and benefits | 427,451 | 376,438 | 284,647 | |||||||||
Non-compensation expenses: | ||||||||||||
Floor brokerage and clearing fees | 42,946 | 40,189 | 40,680 | |||||||||
Technology and communications | 66,396 | 64,512 | 78,918 | |||||||||
Occupancy and equipment rental | 26,635 | 24,987 | 26,567 | |||||||||
Business development | 25,405 | 20,259 | 27,098 | |||||||||
Professional services | 29,763 | 29,761 | 27,613 | |||||||||
Other | 26,644 | 17,582 | 18,026 | |||||||||
Total non-compensation expenses | 217,789 | 197,290 | 218,902 | |||||||||
Total non-interest expenses | 645,240 | 573,728 | 503,549 | |||||||||
Earnings before income taxes | 96,529 | 80,722 | 9,538 | |||||||||
Income tax expense (benefit) | 9,454 | 39,564 | (10,572 | ) | ||||||||
Net earnings | 87,075 | 41,158 | 20,110 | |||||||||
Net earnings (loss) attributable to noncontrolling interests | (105 | ) | (11 | ) | 148 | |||||||
Net earnings attributable to Jefferies Group LLC | $ | 87,180 | $ | 41,169 | $ | 19,962 | ||||||
Pretax operating margin | 13.0 | % | 12.3 | % | 1.9 | % | ||||||
Effective tax rate (1) | 9.8 | % | 49.0 | % | (110.8 | )% |
(1) | The effective tax rate for the three months ended November 30, 2016 is impacted by revisions to previously forecasted results. | |
JEFFERIES GROUP LLC AND SUBSIDIARIES | ||||||||
CONSOLIDATED STATEMENTS OF EARNINGS | ||||||||
(Amounts in Thousands) | ||||||||
(Unaudited) | ||||||||
Year Ended November 30, | ||||||||
2016 | 2015 | |||||||
Revenues: | ||||||||
Commissions and other fees | $ | 611,574 | $ | 659,002 | ||||
Principal transactions | 519,652 | 172,608 | ||||||
Investment banking | 1,193,973 | 1,439,007 | ||||||
Asset management fees and investment income from managed funds |
31,062 | 8,015 | ||||||
Interest income | 857,838 | 922,189 | ||||||
Other revenues | 19,724 | 74,074 | ||||||
Total revenues | 3,233,823 | 3,274,895 | ||||||
Interest expense | 819,209 | 799,654 | ||||||
Net revenues | 2,414,614 | 2,475,241 | ||||||
Non-interest expenses: | ||||||||
Compensation and benefits | 1,568,948 | 1,467,131 | ||||||
Non-compensation expenses: | ||||||||
Floor brokerage and clearing fees | 167,205 | 199,780 | ||||||
Technology and communications | 262,396 | 313,044 | ||||||
Occupancy and equipment rental | 101,133 | 101,138 | ||||||
Business development | 93,105 | 105,963 | ||||||
Professional services | 112,562 | 103,972 | ||||||
Other | 79,293 | 69,986 | ||||||
Total non-compensation expenses | 815,694 | 893,883 | ||||||
Total non-interest expenses | 2,384,642 | 2,361,014 | ||||||
Earnings before income taxes | 29,972 | 114,227 | ||||||
Income tax expense | 14,566 | 18,898 | ||||||
Net earnings | 15,406 | 95,329 | ||||||
Net earnings (loss) attributable to noncontrolling interests | (28 | ) | 1,795 | |||||
Net earnings attributable to Jefferies Group LLC | $ | 15,434 | $ | 93,534 | ||||
Pretax operating margin | 1.2 | % | 4.6 | % | ||||
Effective tax rate | 48.6 | % | 16.5 | % | ||||
JEFFERIES GROUP LLC AND SUBSIDIARIES | ||||||||||||
SELECTED STATISTICAL INFORMATION | ||||||||||||
(Amounts in Thousands, Except Other Data) | ||||||||||||
(Unaudited) | ||||||||||||
Quarter Ended | ||||||||||||
November 30, 2016 | August 31, 2016 | November 30, 2015 | ||||||||||
Revenues by Source |
||||||||||||
Equities | $ | 175,960 | $ | 148,308 | $ | 122,693 | ||||||
Fixed income (1) | 149,423 | 195,335 | 9,444 | |||||||||
Total Equities and Fixed Income | 325,383 | 343,643 | 132,137 | |||||||||
Equity | 62,085 | 68,218 | 93,547 | |||||||||
Debt | 128,706 | 72,473 | 68,705 | |||||||||
Capital markets | 190,791 | 140,691 | 162,252 | |||||||||
Advisory | 224,276 | 154,239 | 210,678 | |||||||||
Total investment banking | 415,067 | 294,930 | 372,930 | |||||||||
Asset management fees and investment income from managed funds: | ||||||||||||
Asset management fees | 633 | 7,610 | 5,864 | |||||||||
Investment income from managed funds | 686 | 8,267 | 2,156 | |||||||||
Total |
1,319 | 15,877 | 8,020 | |||||||||
Net revenues | $ | 741,769 | $ | 654,450 | $ | 513,087 | ||||||
Other Data |
||||||||||||
Number of trading days | 63 | 65 | 63 | |||||||||
Number of trading loss days | 11 | 8 | 22 | |||||||||
Number of trading loss days excluding KCG | 4 | 4 | 23 | |||||||||
Average firmwide VaR (in millions) (2) | $ | 8.46 | $ | 6.62 | $ | 9.72 | ||||||
Average firmwide VaR excluding KCG (in millions) (2) | $ | 5.93 | $ | 4.48 | $ | 8.46 |
(1) | The results for the quarter ended November 30, 2015 include $0.4 million of negative revenues globally from the Bache business. During the second quarter of 2016, we completed the exit of the Bache business. | |
(2) | VaR estimates the potential loss in value of our 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 our Annual Report on Form 10-K for the year ended November 30, 2015. | |
JEFFERIES GROUP LLC AND SUBSIDIARIES | ||||||||
SELECTED STATISTICAL INFORMATION | ||||||||
(Amounts in Thousands, Except Other Data) | ||||||||
(Unaudited) | ||||||||
Twelve Months Ended | ||||||||
November 30, 2016 | November 30, 2015 | |||||||
Revenues by Source |
||||||||
Equities | $ | 549,553 | $ | 757,447 | ||||
Fixed income (1) | 640,026 | 270,772 | ||||||
Total Equities and Fixed income | 1,189,579 | 1,028,219 | ||||||
Equity | 235,207 | 408,474 | ||||||
Debt | 304,576 | 398,179 | ||||||
Capital markets | 539,783 | 806,653 | ||||||
Advisory | 654,190 | 632,354 | ||||||
Total investment banking | 1,193,973 | 1,439,007 | ||||||
Asset management fees and investment income (losses) from managed funds: | ||||||||
Asset management fees | 26,412 | 31,819 | ||||||
Investment income (losses) from managed funds | 4,650 | (23,804) | ||||||
Total | 31,062 | 8,015 | ||||||
Net revenues | $ | 2,414,614 | $ | 2,475,241 | ||||
Other Data |
||||||||
Number of trading days | 253 | 252 | ||||||
Number of trading loss days | 38 | 64 | ||||||
Number of trading loss days excluding KCG | 21 | 55 | ||||||
Average firmwide VaR (in millions) (2) | $ | 7.91 | $ | 12.39 | ||||
Average firmwide VaR excluding KCG (in millions) (2) | $ | 5.77 | $ | 9.97 |
(1) | The results for the nine months ended November 30, 2015 include $80.2 million of net revenues globally from the Bache business. During the second quarter of 2016, we completed the exit of the Bache business. | |
(2) | VaR estimates the potential loss in value of our 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 our Annual Report on Form 10-K for the year ended November 30, 2015. | |
JEFFERIES GROUP LLC AND SUBSIDIARIES | ||||||||||||
FINANCIAL HIGHLIGHTS | ||||||||||||
(Amounts in Millions, Except Where Noted) | ||||||||||||
(Unaudited) | ||||||||||||
Quarter Ended | ||||||||||||
November 30, 2016 | August 31, 2016 | November 30, 2015 | ||||||||||
Financial position: |
||||||||||||
Total assets (1) | $ | 36,941 | $ | 38,128 | $ | 38,564 | ||||||
Average total assets for the period (1) | $ | 43,412 | $ | 42,270 | $ | 48,722 | ||||||
Average total assets less goodwill and intangible assets for the period (1) | $ | 41,560 | $ | 40,408 | $ | 46,835 | ||||||
Cash and cash equivalents (1) | $ | 3,529 | $ | 3,159 | $ | 3,510 | ||||||
Cash and cash equivalents and other sources of liquidity (1) (2) | $ | 5,303 | $ | 4,873 | $ | 4,940 | ||||||
Cash and cash equivalents and other sources of liquidity - % total assets (1) (2) | 14.4% | 12.8% | 12.8% | |||||||||
Cash and cash equivalents and other sources of liquidity - % total assets less goodwill and intangible assets (1) (2) | 15.1% | 13.4% | 13.5% | |||||||||
Financial instruments owned (1) | $ | 13,810 | $ | 14,328 | $ | 16,559 | ||||||
Goodwill and intangible assets (1) | $ | 1,847 | $ | 1,856 | $ | 1,882 | ||||||
Total equity (including noncontrolling interests) | $ | 5,371 | $ | 5,327 | $ | 5,509 | ||||||
Total member's equity | $ | 5,370 | $ | 5,321 | $ | 5,482 | ||||||
Tangible member's equity (3) | $ | 3,523 | $ | 3,465 | $ | 3,600 | ||||||
Level 3 financial instruments: |
||||||||||||
Level 3 financial instruments owned (1) (4) | $ | 413 | $ | 434 | $ | 542 | ||||||
Level 3 financial instruments owned - % total assets (1) | 1.1% | 1.1% | 1.4% | |||||||||
Level 3 financial instruments owned - % total financial instruments (1) | 3.0% | 3.0% | 3.3% | |||||||||
Level 3 financial instruments owned - % tangible member's equity (1) | 11.7% | 12.5% | 15.1% | |||||||||
Other data and financial ratios: |
||||||||||||
Total long-term capital (1) (5) | $ | 10,501 | $ | 10,803 | $ | 10,797 | ||||||
Leverage ratio (1) (6) | 6.9 | 7.2 | 7.0 | |||||||||
Adjusted leverage ratio (1) (7) | 8.6 | 8.7 | 8.7 | |||||||||
Tangible gross leverage ratio (1) (8) | 10.0 | 10.5 | 10.2 | |||||||||
Number of trading days | 63 | 65 | 63 | |||||||||
Number of trading loss days | 11 | 8 | 22 | |||||||||
Number of trading loss days excluding KCG | 4 | 4 | 23 | |||||||||
Average firmwide VaR (9) | $ | 8.46 | $ | 6.62 | $ | 9.72 | ||||||
Average firmwide VaR excluding KCG (9) | $ | 5.93 | $ | 4.48 | $ | 8.46 | ||||||
Number of employees, at period end | 3,329 | 3,323 | 3,557 | |||||||||
JEFFERIES GROUP LLC AND SUBSIDIARIES | |||
FINANCIAL HIGHLIGHTS - FOOTNOTES | |||
(1) | Amounts pertaining to November 30, 2016 represent a preliminary estimate as of the date of this earnings release and may be revised in our Annual Report on Form 10-K for the year ended November 30, 2016. | ||
(2) | At November 30, 2016, 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 $1,455 million, in aggregate, and $319 million, being the total of the estimated amount of additional secured financing that could be reasonably expected to be obtained from our financial instruments that are currently not pledged at reasonable financing haircuts. The corresponding amounts included in other sources of liquidity at August 31, 2016 were $1,384 million and $330 million, respectively, and at November 30, 2015, were $1,266 million and $164 million, respectively. The amounts included in other sources of liquidity at August 31, 2016 and November 30, 2015 have been reduced by $147 million and $141 million, respectively, from what was previously disclosed, to reflect adjustments for certain securities that have subsequently been identified to have been encumbered at such dates. | ||
(3) | Tangible member's equity (a non-GAAP financial measure) represents total member's equity less goodwill and identifiable intangible assets. We believe that tangible member's equity is meaningful for valuation purposes, as financial companies are often measured as a multiple of tangible member's equity, making these ratios meaningful for investors. | ||
(4) | 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. | ||
(5) | At November 30, 2016, August 31, 2016 and November 30, 2015, total long-term capital includes our long-term debt of $5,131 million, $5,476 million and $5,288 million, respectively, and total equity. Long-term debt included in total long-term capital is reduced by the amount of debt maturing in less than one year, where applicable. | ||
(6) | Leverage ratio equals total assets divided by total equity. | ||
(7) | Adjusted leverage ratio (a non-GAAP financial measure) equals adjusted assets divided by tangible total equity, being total equity less goodwill and identifiable intangible assets. Adjusted assets (a non-GAAP financial measure) equals total assets less securities borrowed, securities purchased under agreements to resell, cash and securities segregated, goodwill and identifiable intangibles plus financial instruments sold, not yet purchased (net of derivative liabilities). At November 30, 2016, August 31, 2016 and November 30, 2015, adjusted assets were $30,352 million, $30,318 million and $31,675 million, respectively. We believe that adjusted assets is a meaningful measure as it excludes certain assets that are considered of lower risk as they are generally self-financed by customer liabilities through our securities lending activities. | ||
(8) | Tangible gross leverage ratio (a non-GAAP financial measure) equals total assets less goodwill and identifiable intangible assets divided by tangible member's equity. The tangible gross leverage ratio is used by rating agencies in assessing our leverage ratio. | ||
(9) | VaR estimates the potential loss in value of our 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 our Annual Report on Form 10-K for the year ended November 30, 2015. | ||
CONTACT:
For further information:
Jefferies Group LLC
Peregrine
C. Broadbent, 212-284-2338
Chief Financial Officer