Segment Information

3 Months Ended

Feb. 29, 2020

We are a diversified financial services company engaged in investment banking and capital markets, asset management and direct investing. During the three months ended February 29, 2020, we changed our internal structure with regard to our operating segments. Previously, our segments consisted of: 1) Investment Banking, Capital Markets and Asset Management, which included all of the financial results of Jefferies Group; 2) Merchant Banking; and 3) Corporate. In the first quarter of 2020, we appointed co-Presidents of Asset Management and created a separate operating segment that consists of the asset management activity previously included in our Investment Banking, Capital Markets and Asset Management segment, together with asset management activity previously included in our Merchant Banking segment. In order to compare results with prior periods, we have recast our segment results for the first quarter of 2019.

The Investment Banking and Capital Markets segment includes investment banking, capital markets and other related services. Investment banking provides underwriting and financial advisory services to clients across most industry sectors in the Americas, Europe and Asia. Capital markets businesses operate across the spectrum of equities, fixed income and foreign exchange products. Related services include, among other things, prime brokerage and equity finance, research and strategy, corporate lending and real estate finance.

Our Asset Management segment includes both the operations of LAM as well as the asset management operations within Jefferies Group. Within Asset Management, we manage, invest in and provide services to a diverse group of alternative asset management platforms across a spectrum of investment strategies and asset classes. Asset Management offers institutional clients an innovative range of investment strategies through its affiliated managers.

Merchant Banking consists of our various merchant banking businesses and investments, primarily including Linkem, Vitesse Energy Finance and JETX Energy, real estate, Idaho Timber, FXCM and The We Company. Our Merchant Banking businesses and investments also included National Beef, prior to its sale in November 2019 and Spectrum Brands, prior to its distribution to shareholders in October 2019.

Corporate assets primarily consist of cash and cash equivalents, financial instruments owned and the deferred tax asset (exclusive of Jefferies Group's deferred tax asset). Corporate revenues primarily include interest income.

Certain information concerning our segments is presented in the following table. Consolidated subsidiaries are reflected as of the date a majority controlling interest was acquired.



	For the Three Months Ended
	February 29, 2020			February 28, 2019
	(In thousands)
Net revenues:
Reportable Segments:
Investment Banking and Capital Markets	$	1,148,829		$	658,247
Asset Management	20,329			30,745
Merchant Banking	204,559			132,692
Corporate	9,792			4,193
Total net revenues related to reportable segments	1,383,509			825,877
Consolidation adjustments	2,819			2,566
Total consolidated net revenues	$	1,386,328		$	828,443

Income (loss) before income taxes:
Reportable Segments:
Investment Banking and Capital Markets	$	249,957		$	55,117
Asset Management	(20,929		)	1,184
Merchant Banking	(53,623		)	26,389
Corporate	(7,754		)	(21,343		)
Income before income taxes related to reportable segments	167,651			61,347
Parent Company interest	(12,781		)	(14,762		)
Consolidation adjustments	2,924			2,732
Total consolidated income before income taxes	$	157,794		$	49,317

Depreciation and amortization expenses:
Reportable Segments:
Investment Banking and Capital Markets	$	19,116		$	17,330
Asset Management	625			455
Merchant Banking	18,841			15,294
Corporate	888			855
Total consolidated depreciation and amortization expenses	$	39,470		$	33,934

Interest expense classified as a component of Net revenues relates to Jefferies Group. For the three months ended February 29, 2020 and February 28, 2019, interest expense classified as a component of Expenses was primarily comprised of parent company interest ($12.8 million and $14.8 million, respectively) and Merchant Banking ($8.8 million and $8.3 million, respectively).