Total Equity

3 Months Ended

Feb. 29, 2024

Equity [Abstract]

Total Equity

Total Equity

Non-Voting Convertible Preferred Shares

On April 27, 2023, we established Series B Non-Voting Convertible Preferred Shares with a par value of $1.00 per share (“Series B Preferred Stock”) and designated 70,000 shares as Series B Preferred Stock. The Series B Preferred Stock has a liquidation preference of $17,500 per share and ranks senior to our voting common stock upon dissolution, liquidation or winding up of Jefferies Financial Group Inc. Each share of Series B Preferred Stock is automatically convertible into 500 shares of non-voting common stock, subject to certain anti-dilution adjustments, three years after issuance. The Series B Preferred Stock participates in cash dividends and distributions alongside our voting common stock on an as-converted basis.

Additionally, on April 27, 2023, we entered into an Exchange Agreement with Sumitomo Mitsui Banking Corporation (“SMBC”), which entitles SMBC to exchange shares of our voting common stock for shares of the Series B Preferred Stock at a rate of 500 shares of voting common stock for one share of Series B Preferred Stock. The Exchange Agreement is limited to 55,125 shares of Preferred Stock and SMBC will pay $1.50 per share of voting common stock so exchanged. During the year ended November 30, 2023, SMBC exchanged 21.0 million shares of voting common stock for 42,000 shares of Series B Preferred Stock and we received cash of $31.5 million from SMBC in connection with the exchange. As a result of the exchange, our equity attributed to our voting common stock decreased by $21.0 million, our equity attributed to the Series B Preferred Stock increased by $42,000 and additional paid-in capital increased by $52.4 million.

At February 29, 2024, SMBC owns 9.0% of our common stock on an as-converted basis and 8.3% on a fully-diluted, as-converted, basis. During the three months ended February 29, 2024, we paid $6.3 million, or $0.30 per share on an as-converted basis, of cash dividends in respect of the Series B Preferred Stock.

On June 28, 2023, shareholders approved an Amended and Restated Certificate of Incorporation, which authorized the issuance of non-voting common stock with a par value of $1.00 per share (the “Non-Voting Common Shares”). The Non-Voting Common Shares are entitled to share equally, on a per share basis, with the voting common stock, in dividends and distributions. Upon the effectiveness of the Amended and Restated Certificate of Incorporation on June 30, 2023, the number of authorized shares of common stock remains at 600,000,000 shares, comprised of 565,000,000 shares of voting common stock and 35,000,000 shares of Non-Voting Common Shares.

Mandatorily Redeemable Convertible Preferred Shares

Our $125.0 million of callable mandatorily redeemable cumulative convertible preferred shares (“Preferred Shares”) were converted during the first quarter of 2023 at a price of $1,000 per preferred share, plus accrued interest, into 4,654,362 common shares for $125.0 million, or $26.86 per common share. 

Earnings Per Common Share

Basic and diluted earnings per common share amounts were calculated by dividing net earnings by the weighted-average number of common shares outstanding. The numerators and denominators used to calculate basic and diluted earnings per common share are as follows (in thousands, except per share amounts):

	Three Months Ended
	February 29, 2024		February 28, 2023
Numerator for earnings per common share from continuing operations:
Net earnings from continuing operations	$	164,283	$	129,324
Less: Net losses attributable to noncontrolling interests	(6,452)		(6,311)
Mandatorily redeemable convertible preferred share dividends	—		(2,016)
Allocation of earnings to participating securities (1)	(14,189)		(528)
Net earnings from continuing operations attributable to common shareholders for basic earnings per share	$	156,546	$	133,091
Adjustment to allocation of earnings to participating securities related to diluted shares (1)	—		(54)
Mandatorily redeemable convertible preferred share dividends	—		2,016
Net earnings from continuing operations attributable to common shareholders for diluted earnings per share	$	156,546	$	135,053
Numerator for earnings per common share from discontinued operations:
Net loss from discontinued operations, net of income tax benefit	(7,891)		—
Less: Net losses attributable to noncontrolling interests	(986)		—
Net earnings from discontinued operations attributable to common shareholders for basic and diluted earnings per share	$	(6,905)	$	—
Net earnings attributable to common shareholders for basic earnings per share	$	149,641	$	133,091
Net earnings attributable to common shareholders for diluted earnings per share	$	149,641	$	135,053
Denominator for earnings per common share:
Weighted average common shares outstanding	211,535		227,543
Weighted average shares of restricted stock outstanding with future service required	(2,402)		(2,128)
Weighted average RSUs outstanding with no future service required	10,913		13,686
Weighted average common shares	220,046		239,101
Stock options and other share-based awards	2,894		2,303
Senior executive compensation plan RSU awards	2,351		2,917
Preferred shares and mandatorily redeemable convertible preferred shares (2)	—		3,774
Weighted average diluted common shares (3)	225,291		248,095
Earnings (losses) per common share:
Basic from continuing operations	$	0.71	$	0.56
Basic from discontinued operations	(0.03)		—
Basic	$	0.68	$	0.56
Diluted from continuing operations	$	0.69	$	0.54
Diluted from discontinued operations	(0.03)		—
Diluted	$	0.66	$	0.54

(1)Represents dividends declared during the period on participating securities plus an allocation of undistributed earnings to participating securities. Net losses are not allocated to participating securities. Participating securities represent certain preferred stock, restricted stock and RSUs for which requisite service has not yet been rendered and amounted to weighted average shares of 21.2 million for the three months ended February 29, 2024, compared with 0.7 million during the three months ended February 28, 2023. Dividends paid on participating securities were not material during the three months ended February 29, 2024 and February 28, 2023. Undistributed earnings are allocated to participating securities based upon their right to share in earnings if all earnings for the period had been distributed.

(2)The two-class method was more dilutive for each period presented.

(3)Certain securities have been excluded as they would be antidilutive. However, these securities could potentially dilute earnings per common share in the future. Antidilutive shares at February 29, 2024, were 10.0% of the weighted average common shares outstanding for the three months ended February 29, 2024.

Accumulated Other Comprehensive Income (Loss)

Activity in accumulated other comprehensive income (loss) is reflected in the Consolidated Statements of Comprehensive Income and Consolidated Statements of Changes in Equity but not in the Consolidated Statements of Earnings. A summary of accumulated other comprehensive income (loss), net of taxes is as follows (in thousands):

	February 29, 2024		November 30, 2023
Net unrealized losses on available-for-sale securities	$	(2,637)	$	(4,595)
Net currency translation adjustments and other	(162,729)		(162,541)
Net unrealized losses related to instrument-specific credit risk	(184,698)		(181,946)
Net minimum pension liability	(46,374)		(46,463)
Total accumulated other comprehensive loss, net of tax	$	(396,438)	$	(395,545)

Amounts reclassified out of accumulated other comprehensive income (loss) to net earnings are as follows (in thousands):

	Three Months Ended
	February 29, 2024		February 28, 2023
Net unrealized gains (losses) on instrument-specific credit risk at fair value (1)	$	2,119	$	(246)
Amortization of defined benefit pension plan actuarial losses (2)	(121)		(397)
Total reclassifications for the period, net of tax	$	1,998	$	(643)

(1)Includes income tax expense of approximately $0.7 million during the three months ended February 29, 2024, compared with a tax benefit of approximately $0.1 million during the three months ended February 28, 2023, which were reclassified to Principal transactions revenues in our Consolidated Statements of Earnings.

(2)Include income tax benefit of approximately $31 thousand during the three months ended February 29, 2024, compared with tax benefit of approximately $49 thousand during the three months ended February 28, 2023, which were reclassified to Compensation and benefits expenses in our Consolidated Statements of Earnings. Refer to Note 16, Benefit Plans, for information included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended November 30, 2023.