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8-K - JEFFERIES GROUP, INC. 8-K - Jefferies Group LLC | a50510810.htm |
Exhibit 99
Jefferies Reports Fourth Quarter and 2012 Fiscal Year Financial Results
NEW YORK & LONDON--(BUSINESS WIRE)--December 17, 2012--Jefferies Group, Inc. (NYSE: JEF) announced today financial results for its fiscal fourth quarter and year ended November 30, 2012.
Highlights for the three months ended November 30, 2012, versus the three months ended November 30, 2011:
- Net revenues of $769 million, versus $554 million
- Net earnings to common shareholders of $72 million ($81 million on a non-GAAP basis after excluding Hurricane Sandy relief donation, Leucadia merger costs and certain historical-related items [1]), versus $48 million ($39 million on a non-GAAP basis after excluding certain items [2])
- Net earnings per common share of $0.31 ($0.35 on a non-GAAP basis after excluding Hurricane Sandy relief donation, Leucadia merger costs and certain historical-related items [1]), versus $0.21 ($0.17 on a non-GAAP basis after excluding certain items [2])
- Investment Banking net revenues of $283 million, up 8%, versus $261 million
- Fixed Income net revenues more than doubled to $293 million, versus $141 million
Highlights for the year ended November 30, 2012, versus the year ended November 30, 2011:
- Record fiscal year net revenues of $2,999 million, up 18%, versus $2,549 million
- Net earnings to common shareholders of $282 million ($302 million on a non-GAAP basis after excluding certain items [1][3]), versus $285 million ($232 million on a non-GAAP basis after excluding certain items [2][4])
- Net earnings per common share of $1.22 ($1.31 on a non-GAAP basis after excluding certain items [1][3]), versus $1.28 ($1.04 on a non-GAAP basis after excluding certain items [2][4])
- Fixed Income net revenues of $1,190 million, up 66%, versus $715 million
- Investment Banking net revenues of $1,126 million versus $1,123 million
“2013 will mark the beginning of a new era for Jefferies. We believe our imminent merger with Leucadia will result in an even stronger Jefferies, as well as making us even more distinguished from our bank holding company competitors. The traditional, entrepreneurial Wall Street model has served us well historically and we believe this will continue to be an advantage into the future. Combining our company with an extremely well-capitalized parent will allow us to continue to aggressively add value to our clients. Our 3,804 employee partners look forward to working our hardest on behalf of Leucadia shareholders while protecting both of our collective bondholders.”
A conference call with management discussion of these financial results will be held today, Tuesday, December 18, 2012, at 9:00 AM Eastern (date and time subject to change). Investors and securities industry professionals may access the management discussion by calling 877-710-9938 or 702-928-7183. A one-week replay of the call will also be available at 855-859-2056 or 404-537-3406 (conference ID # 73941351). A live audio webcast and delayed replay can also be accessed at www.jefferies.com.
Jefferies Group, Inc. (NYSE: JEF), the 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. Jefferies provides a full range of investment banking, sales, trading, research and strategy across the spectrum of equities, fixed income, foreign exchange, futures and commodities, and also select asset and wealth management strategies, in the Americas, Europe and Asia.
1. | Adjustments to net earnings to common shareholders and net earnings per common share on a non-GAAP basis include donations to Hurricane Sandy relief and transaction costs associated with the announced merger with Leucadia, amortization of intangibles and compensation awards related to our Bache and Hoare Govett acquisitions and interest expense incurred as a result of debt extinguishment accounting, from prior quarters, all on an after-tax basis. | ||||
2. | Adjustments to net earnings to common shareholders and net earnings per common share on a non-GAAP basis include gain on debt extinguishment related to trading activities in our own debt, and amortization of intangible assets and compensation awards and other severance and bonus costs related to our Bache acquisition, all on an after-tax basis. | ||||
3. | Adjustments to net earnings to common shareholders and net earnings per common share on a non-GAAP basis include a bargain purchase gain and compensation awards on our Hoare Govett acquisition, a gain on debt extinguishment relating to trading activities in our own debt and impairment charges on intangibles related to our Bache acquisition, all on an after-tax basis. | ||||
4. | Adjustments to net earnings to common shareholders and net earnings per common share on a non-GAAP basis include a bargain purchase gain on our Bache acquisition, which is not a taxable item and transaction and integration expenses related to the Bache acquisition on an after-tax basis. |
-- see financial tables in attached --
JEFFERIES GROUP, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF EARNINGS | ||||||||||||||||||||||||
(Amounts in Thousands, Except Per Share Amounts) | ||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||||||||||
November 30, | November 30, | November 30, | November 30, | |||||||||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Commissions | $ | 127,074 | $ | 130,619 | $ | 485,569 | $ | 534,726 | ||||||||||||||||
Principal transactions | 242,140 | 36,571 | 1,035,974 | 428,035 | ||||||||||||||||||||
Investment banking | 282,962 | 261,298 | 1,125,883 | 1,122,528 | ||||||||||||||||||||
Asset management fees and investment income from managed funds |
16,318 | 6,623 | 26,966 | 44,125 | ||||||||||||||||||||
Interest income | 242,904 | 317,485 | 1,031,839 | 1,248,132 | ||||||||||||||||||||
Other revenues | 61,872 | 46,144 | 164,974 | 152,092 | ||||||||||||||||||||
Total revenues | 973,270 | 798,740 | 3,871,205 | 3,529,638 | ||||||||||||||||||||
Interest expense | 204,421 | 244,757 | 872,421 | 980,825 | ||||||||||||||||||||
Net revenues | 768,849 | 553,983 | 2,998,784 | 2,548,813 | ||||||||||||||||||||
Interest on mandatorily redeemable preferred interests of
consolidated subsidiaries |
8,279 | (2,561 | ) | 42,883 | 3,622 | |||||||||||||||||||
Net revenues, less mandatorily redeemable preferred
interests |
760,570 | 556,544 | 2,955,901 | 2,545,191 | ||||||||||||||||||||
Non-interest expenses: | ||||||||||||||||||||||||
Compensation and benefits | 460,404 | 308,137 | 1,770,798 | 1,482,604 | ||||||||||||||||||||
Non-compensation expenses: |
||||||||||||||||||||||||
Floor brokerage and clearing fees | 29,106 | 33,837 | 120,145 | 126,313 | ||||||||||||||||||||
Technology and communications | 64,051 | 62,377 | 244,511 | 215,940 | ||||||||||||||||||||
Occupancy and equipment rental | 25,815 | 23,954 | 97,397 | 84,951 | ||||||||||||||||||||
Business development | 22,968 | 29,397 | 95,330 | 93,645 | ||||||||||||||||||||
Professional services | 27,771 | 17,868 | 73,427 | 66,305 | ||||||||||||||||||||
Other | 16,480 | 10,294 | 62,498 | 56,099 | ||||||||||||||||||||
Total non-compensation expenses | 186,191 | 177,727 | 693,308 | 643,253 | ||||||||||||||||||||
Total non-interest expenses | 646,595 | 485,864 | 2,464,106 | 2,125,857 | ||||||||||||||||||||
Earnings before income taxes | 113,975 | 70,680 | 491,795 | 419,334 | ||||||||||||||||||||
Income tax expense | 34,243 | 25,066 | 168,646 | 132,966 | ||||||||||||||||||||
Net earnings | 79,732 | 45,614 | 323,149 | 286,368 | ||||||||||||||||||||
Net earnings (loss) to noncontrolling interests | 8,128 | (2,772 | ) | 40,740 | 1,750 | |||||||||||||||||||
Net earnings to common shareholders | $ | 71,604 | $ | 48,386 | $ | 282,409 | $ | 284,618 | ||||||||||||||||
Earnings per common share: | ||||||||||||||||||||||||
Basic | $ | 0.31 | $ | 0.21 | $ | 1.23 | $ | 1.28 | ||||||||||||||||
Diluted | $ | 0.31 | $ | 0.21 | $ | 1.22 | $ | 1.28 | ||||||||||||||||
Weighted average common shares: | ||||||||||||||||||||||||
Basic | 214,415 | 215,628 | 215,989 | 211,056 | ||||||||||||||||||||
Diluted | 218,527 | 215,629 | 220,101 | 215,171 | ||||||||||||||||||||
Compensation and benefits / Net revenues | 59.9 | % | 55.6 | % | 59.1 | % | 58.2 | % | ||||||||||||||||
Effective tax rate | 30.0 | % | 35.5 | % | 34.3 | % | 31.7 | % | ||||||||||||||||
JEFFERIES GROUP, INC. AND SUBSIDIARIES | ||||||||||||||||||
SELECTED STATISTICAL INFORMATION | ||||||||||||||||||
(Amounts in Thousands, Except Other Data) | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
Quarter Ended | ||||||||||||||||||
November 30, | August 31, | November 30, | ||||||||||||||||
2012 | 2012 | 2011 | ||||||||||||||||
Revenues by Source |
||||||||||||||||||
Equities | $ | 176,595 | $ | 209,980 | $ | 124,305 | ||||||||||||
Fixed Income | 292,974 | 265,679 | 140,651 | |||||||||||||||
Other | - | - | 21,106 | |||||||||||||||
Total | 469,569 | 475,659 | 286,062 | |||||||||||||||
Equity | 52,919 | 39,068 | 26,936 | |||||||||||||||
Debt | 145,772 | 87,894 | 62,090 | |||||||||||||||
Capital markets | 198,691 | 126,962 | 89,026 | |||||||||||||||
Advisory | 84,271 | 133,201 | 172,272 | |||||||||||||||
Investment banking | 282,962 | 260,163 | 261,298 | |||||||||||||||
Asset management fees and investment income / (loss) from managed funds: |
||||||||||||||||||
Asset management fees | 9,680 | 8,583 | 9,162 | |||||||||||||||
Investment income / (loss) from managed funds | 6,638 | (5,467 | ) | (2,539 | ) | |||||||||||||
Total | 16,318 | 3,116 | 6,623 | |||||||||||||||
Net revenues | 768,849 | 738,938 | 553,983 | |||||||||||||||
Interest on mandatorily redeemable preferred interests of consolidated subsidiaries | 8,279 | 8,304 | (2,561 | ) | ||||||||||||||
Net revenues, less mandatorily redeemable preferred interests | $ | 760,570 | $ | 730,634 | $ | 556,544 | ||||||||||||
Other Data |
||||||||||||||||||
Number of trading days | 63 | 65 | 63 | |||||||||||||||
Average firmwide VaR (in millions) (1) | $ | 13.38 | $ | 10.53 | $ | 9.43 | ||||||||||||
Average firmwide VaR excluding Knight Capital (in millions) (1) | $ | 7.95 | $ | 8.35 | N/a | |||||||||||||
(1) VaR is 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, 2011.
JEFFERIES GROUP, INC. AND SUBSIDIARIES | ||||||||||||||||||
FINANCIAL HIGHLIGHTS | ||||||||||||||||||
(Amounts in Thousands, Except Per Share Amounts) | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
Quarter Ended | ||||||||||||||||||
November 30, | August 31, | November 30, | ||||||||||||||||
2012 | 2012 | 2011 | ||||||||||||||||
Results: |
||||||||||||||||||
Net earnings to common shareholders | $ | 71,604 | $ | 70,171 | $ | 48,386 | ||||||||||||
Basic EPS (1) | $ | 0.31 | $ | 0.31 | $ | 0.21 | ||||||||||||
Diluted EPS (1) | $ | 0.31 | $ | 0.31 | $ | 0.21 | ||||||||||||
Pretax operating margin | 15.0 | % | 16.7 | % | 12.7 | % | ||||||||||||
Effective tax rate | 30.0 | % | 36.0 | % | 35.5 | % | ||||||||||||
Basic and Diluted EPS impact from share ownership in Knight Capital (13) | $ | 0.04 | $ | 0.08 | N/a | |||||||||||||
Common share data: |
||||||||||||||||||
Common shares outstanding | 203,312 | 203,070 | 197,160 | |||||||||||||||
Adjusted shares outstanding (2) | 214,616 | 214,177 | 218,406 | |||||||||||||||
Share issued during quarter | 945 | 926 | 2,072 | |||||||||||||||
Shares purchased during the quarter | 603 | 1,702 | 5,135 | |||||||||||||||
Weighted average common shares- Basic | 214,415 | 214,756 | 215,628 | |||||||||||||||
Weighted average common shares- Diluted | 218,527 | 218,867 | 215,629 | |||||||||||||||
Financial position: |
||||||||||||||||||
Total assets (in millions) (3) | $ | 36,294 | $ | 34,407 | $ | 34,971 | ||||||||||||
Average total assets for quarter (in millions) (3) | $ | 44,242 | $ | 42,594 | $ | 50,087 | ||||||||||||
Cash and cash equivalents (in millions) | $ | 2,693 | $ | 2,845 | $ | 2,394 | ||||||||||||
Financial instruments owned (in millions) (3) | $ | 16,670 | $ | 13,917 | $ | 16,679 | ||||||||||||
Total common stockholders' equity (in millions) | $ | 3,436 | $ | 3,369 | $ | 3,224 | ||||||||||||
Tangible common stockholders' equity (in millions) (4) | $ | 3,055 | $ | 2,988 | $ | 2,839 | ||||||||||||
Common book value per share (5) | $ | 16.90 | $ | 16.59 | $ | 16.35 | ||||||||||||
Adjusted book value per share (6) | $ | 16.01 | $ | 15.73 | $ | 14.76 | ||||||||||||
Tangible common book value per share (4) | $ | 15.03 | $ | 14.71 | $ | 14.40 | ||||||||||||
Adjusted tangible book value per share (6) | $ | 14.24 | $ | 13.95 | $ | 13.00 | ||||||||||||
Level 3 financial instruments: |
||||||||||||||||||
Level 3 financial instruments owned (in millions) (3) (7) | $ | 504 | $ | 487 | $ | 498 | ||||||||||||
Level 3 financial instruments owned with economic exposure (in millions) (3)(8) | $ | 450 | $ | 436 | $ | 452 | ||||||||||||
Level 3 financial instruments owned - % total assets (3) | 1.4 | % | 1.4 | % | 1.4 | % | ||||||||||||
Level 3 financial instruments owned - % total financial instruments owned (3) | 3.0 | % | 3.5 | % | 3.0 | % | ||||||||||||
Level 3 financial instruments owned with economic exposure - % total financial instruments owned (3) | 2.7 | % | 3.1 | % | 2.7 | % | ||||||||||||
Level 3 financial instruments owned with economic exposure - % common stockholders' equity (3) | 13.1 | % | 12.9 | % | 14.0 | % | ||||||||||||
Other data and financial ratios: |
||||||||||||||||||
Total capital (in millions) (9) | $ | 8,710 | $ | 8,622 | $ | 8,227 | ||||||||||||
Leverage ratio (3) (10) | 9.6 | 9.3 | 9.9 | |||||||||||||||
Adjusted leverage ratio (3) (11) | 9.0 | 8.8 | 9.4 | |||||||||||||||
Number of trading days | 63 | 65 | 63 | |||||||||||||||
Average firmwide VaR (in millions) (12) | $ | 13.38 | $ | 10.53 | $ | 9.43 | ||||||||||||
Average firmwide VaR excluding Knight Capital (in millions) (12) | $ | 7.95 | $ | 8.35 | N/a | |||||||||||||
Number of employees, at quarter end | 3,804 | 3,814 | 3,898 | |||||||||||||||
Compensation and benefits / Net revenues | 59.9 | % | 59.6 | % | 55.6 | % | ||||||||||||
Footnotes | ||
(1) | The following details the calculation of basic and diluted earnings per share as included in our quarterly and annual reports. |
Quarter Ended | |||||||||||||||||
November 30, | August 31, |
November 30, |
|||||||||||||||
2012 | 2012 | 2011 | |||||||||||||||
Earnings for basic earnings per common share: | |||||||||||||||||
Net earnings | $ | 79,732 | $ | 78,321 | $ | 45,614 | |||||||||||
Net earnings (loss) to noncontrolling interests | 8,128 | 8,150 | (2,772 | ) | |||||||||||||
Net earnings to common shareholders | 71,604 | 70,171 | 48,386 | ||||||||||||||
Less: Allocation of earnings to participating securities (A) | 5,143 | 3,913 | 2,560 | ||||||||||||||
Net earnings available to common shareholders | $ | 66,461 | $ | 66,258 | $ | 45,826 | |||||||||||
Earnings for diluted earnings per common share: | |||||||||||||||||
Net earnings | $ | 79,732 | $ | 78,321 | $ | 45,614 | |||||||||||
Net earnings (loss) to noncontrolling interests | 8,128 | 8,150 | (2,772 | ) | |||||||||||||
Net earnings to common shareholders | 71,604 | 70,171 | 48,386 | ||||||||||||||
Add: Convertible preferred stock dividends (B) | 1,016 | 1,016 | - | ||||||||||||||
Less: Allocation of earnings to participating securities (A) | 5,146 | 3,916 | 2,560 | ||||||||||||||
Net earnings available to common shareholders | $ | 67,474 | $ | 67,271 | $ | 45,826 | |||||||||||
Weighted Average Common Shares: | |||||||||||||||||
Basic | 214,415 | 214,756 | 215,628 | ||||||||||||||
Diluted | 218,527 | 218,867 | 215,629 | ||||||||||||||
Earnings per common share: | |||||||||||||||||
Basic | $ | 0.31 | $ | 0.31 | $ | 0.21 | |||||||||||
Diluted | $ | 0.31 | $ | 0.31 | $ | 0.21 |
(A) Represents dividends declared during the period on participating securities plus an allocation of undistributed earnings to participating securities. Losses are not allocated to participating securities. Participating securities represent restricted stock and restricted stock units for which requisite service has not yet been rendered and amounted to weighted average shares of 16,406,000, 12,732,000 and 11,755,000 for the three months ended November 30, 2012, August 31, 2012 and November 30, 2011, respectively. Dividends declared on participating securities during the three months ended November 30, 2012, August 31, 2012 and November 30, 2011 amounted to approximately $1,270,000, $924,000 and $959,000, respectively. Undistributed earnings are allocated to participating securities based upon their right to share in earnings if all earnings for the period had been distributed. | ||
(B) The conversion of our mandatorily redeemable convertible preferred stock was considered anti-dilutive for our three-months ended November 30, 2011. | ||
(2) | The following details the calculation of adjusted shares outstanding: |
November 30, | August 31, | November 30, | ||||||||||||||
2012 | 2012 | 2011 | ||||||||||||||
Common shares outstanding | 203,312 | 203,070 | 197,160 | |||||||||||||
Unearned restricted stock | (8,058 | ) | (8,166 | ) | (9,032 | ) | ||||||||||
Earned restricted stock units | 16,656 | 17,331 | 18,994 | |||||||||||||
Other issuable shares | 2,706 | 1,942 | 11,284 | |||||||||||||
Adjusted shares outstanding | 214,616 | 214,177 | 218,406 |
(3) | This amount represents 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, 2012. | |
(4) | Tangible common stockholders’ equity represents total common stockholders’ equity less goodwill and identifiable intangible assets. As of November 30, 2012, tangible common stockholders' equity equals total common stockholders' equity of $3,436.0 million less goodwill and identifiable intangible assets of $380.9 million. Tangible common book value per share equals tangible common stockholders' equity divided by common shares outstanding. We believe that tangible common book value per share and tangible common stockholders' equity is meaningful as a valuation of financial companies are often measured as a multiple of tangible common stockholders' equity, making these ratios meaningful for investors. | |
(5) | Common book value per share equals total common stockholders' equity divided by common shares outstanding. | |
(6) | Adjusted book value per share (non-GAAP financial measure) equals total common stockholders’ equity divided by adjusted shares outstanding. Adjusted tangible book value per share (non-GAAP financial measure) equals tangible common stockholders’ equity divided by adjusted shares outstanding. We believe these are meaningful measures as investors often incorporate the dilutive effects of outstanding capital in their valuations. | |
(7) | Level 3 financial instruments represent those financial instruments classified as such under ASC 820, accounted for at fair value and included within Financial instruments owned. | |
(8) | Level 3 financial instruments owned with economic exposure represents Level 3 financial instruments owned adjusted for Level 3 financial instruments that are financed by nonrecourse secured financing or attributable to third party or employee noncontrolling interests in certain consolidated entities. | |
(9) | Total capital includes our long-term debt, mandatorily redeemable convertible preferred stock, mandatorily redeemable preferred interest of consolidated subsidiaries and total stockholders' equity. Long-term debt included in total capitalization at November 30 and August 31, 2012 and November 30, 2011 is reduced by amounts outstanding under the revolving credit facility. | |
(10) | Leverage ratio equals total assets divided by total stockholders' equity. | |
(11) | Adjusted leverage ratio (non-GAAP financial measure) equals adjusted assets divided by tangible stockholders' equity. Adjusted assets (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). As of November 30, 2012, August 31, 2012 and November 30, 2011 adjusted assets were $30,604 million, $29,232 million and $29,534 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. | |
(12) | VaR is 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, 2011. | |
(13) | Principal transaction revenues of $48.7 million and $103.3 million from our share ownership of Knight Capital had a positive impact on our basic and diluted EPS of $0.04 and $0.08 for the three months ended November 30, 2012 and August 31, 2012, respectively, on a non-GAAP basis after considering compensation costs at a ratio of 59.5% and 59.6%, allocations to mandatorily redeemable preferred interests of $2.6 million and $5.5 million, net earnings to noncontrolling interests of $2.5 million and $5.4 million, and income tax expense at an effective rate of 36.8% and 41.5%, for the three months ended November 30 and August 31, 2012, respectively. | |
JEFFERIES GROUP, INC. AND SUBSIDIARIES | |||||||||
COMMON SHARES OUTSTANDING AND COMMON SHARES FOR BASIC AND DILUTED EPS CALCULATIONS | |||||||||
(Amounts in Thousands) | |||||||||
(Unaudited) | |||||||||
November 30, 2012 | |||||||||
Common shares outstanding | 203,312 | ||||||||
Unearned restricted stock | (8,058) | ||||||||
Earned restricted stock units | 16,656 | ||||||||
Other issuable shares | 2,706 | ||||||||
Adjusted shares outstanding | 214,616 | ||||||||
Note - All share information below for EPS purposes is based upon weighted-average balances for the applicable period. |
|||||||||
Quarter Ended | Year Ended | ||||||||
November 30, 2012 | November 30, 2012 | ||||||||
Shares outstanding (weighted average) | (1) | 203,145 | 203,369 | ||||||
Unearned restricted stock | (2) | (7,998) | (8,549) | ||||||
Earned restricted stock units | (3) | 17,154 | 17,942 | ||||||
Other issuable shares | (4) | 2,114 | 3,227 | ||||||
Common Shares for Basic EPS | 214,415 | 215,989 | |||||||
Stock options | (5) | 2 | 2 | ||||||
Mandatorily redeemable convertible preferred stock | (6) | 4,110 | 4,110 | ||||||
Convertible debt | (7) | - | - | ||||||
Common Shares for Diluted EPS | 218,527 | 220,101 | |||||||
(1) | Shares outstanding represents shares issued less shares repurchased in treasury stock. Shares issued includes public and private offerings, earned and unearned restricted stock, distributions related to restricted stock units, deferred compensation plans, and employee stock purchase plan and stock option exercises. Shares issued does not include undistributed earned and unearned restricted stock units. | |
(2) | As certain restricted stock is contingent upon a future service condition, unearned shares are removed from shares outstanding in the calculation of basic EPS as Jefferies' obligation to issue these shares remains contingent. | |
(3) | As earned restricted stock units are no longer contingent upon a future service condition and are issuable upon a certain date in the future, earned restricted stock units are added to shares outstanding in the calculation of basic EPS. | |
(4) | Other shares issuable include shares issuable to settle previously granted restricted stock awards and shares issuable under certain deferred compensation plans. | |
(5) | Calculated under the treasury stock method. 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. The if-converted method assumes the conversion of convertible securities at the beginning of the period. | |
(7) | Represents the potential common shares issuable under the conversion spread (the excess conversion value over the accreted debt value) based on the average stock price for the period. | |
JEFFERIES GROUP, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||||
RECONCILIATION OF GAAP TO NON GAAP FINANCIAL MEASURES | |||||||||||||||||||||||||||||||||
(Amounts in Thousands, Except Per Share Amounts) | |||||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||||
Three Months Ended
November 30, 2012 |
Amortization of Debt Discount, Certain Acquisition Items and Hurricane Sandy Relief | Three Months Ended November 30, 2012 (Excluding Amortization of Debt Discount, Certain Acquisition Items and Hurricane Sandy Relief) |
Year Ended
November 30, 2012 |
Debt Accounting Gain and Amortization of Debt Discount, Impairment Charge, Certain Acquisition Items and Hurricane Sandy Relief | Year Ended November 30, 2012 (Excluding Debt Accounting Gain and Amortization of Debt Discount, Impairment Charge, Certain Acquisition Items and Hurricane Sandy Relief) | ||||||||||||||||||||||||||||
Net revenues | $ | 768,849 | $ | (1,245 | ) | (A) | $ | 770,094 | $ | 2,998,784 | $ | 8,416 | (E) | $ | 2,990,368 | ||||||||||||||||||
Compensation and benefits | 460,404 | 2,496 | (B) | $ | 457,908 | 1,770,798 | 24,675 | (F) | 1,746,123 | ||||||||||||||||||||||||
Noncompensation expenses | 186,191 | 9,014 | (C) | $ | 177,177 | 693,308 | 14,510 | (G) | 678,798 | ||||||||||||||||||||||||
Total non-interest expenses | 646,595 | 11,510 | 635,085 | 2,464,106 | 39,185 | 2,424,921 | |||||||||||||||||||||||||||
Earnings before income taxes | 113,975 | (12,755 | ) | 126,730 | 491,795 | (30,769 | ) | 522,564 | |||||||||||||||||||||||||
Income tax expense (benefit) | 34,243 | (3,499 | ) | (D) | 37,742 | 168,646 | (11,404 | ) | (D) | 180,050 | |||||||||||||||||||||||
Net earnings | 79,732 | (9,256 | ) | 88,988 | 323,149 | (19,365 | ) | 342,514 | |||||||||||||||||||||||||
Net earnings to common shareholders | $ | 71,604 | $ | (9,256 | ) | $ | 80,860 | $ | 282,409 | $ | (19,365 | ) | $ | 301,774 | |||||||||||||||||||
Earnings per common share: | |||||||||||||||||||||||||||||||||
Basic | $ | 0.31 | $ | 0.35 | $ | 1.23 | $ | 1.31 | |||||||||||||||||||||||||
Diluted | $ | 0.31 | $ | 0.35 | $ | 1.22 | $ | 1.31 | |||||||||||||||||||||||||
Weighted average common shares: | |||||||||||||||||||||||||||||||||
Basic | 214,415 | 214,415 | 215,989 | 215,989 | |||||||||||||||||||||||||||||
Diluted | 218,527 | 218,527 | 220,101 | 220,101 | |||||||||||||||||||||||||||||
Compensation and benefits/Net revenues | 59.9 | % | 59.5 | % | 59.1 | % | 58.4 | % | |||||||||||||||||||||||||
Effective tax rate | 30.0 | % | 29.8 | % | 34.3 | % | 34.5 | % | |||||||||||||||||||||||||
Three Months Ended
November 30, 2011 |
Debt Accounting Gain and Certain Bache Acquisition Items | Three Months Ended November 30, 2011 (Excluding Debt Accounting Gain and Certain Bache Acquisition Items) |
Year Ended
November 30, 2011 |
Debt Accounting Gain and Certain Bache Acquisition Items | Year Ended November 30, 2011 (Excluding Debt Accounting Gain and Certain Bache Acquisition Items) | ||||||||||||||||||||||||||||
Net revenues | $ | 553,983 | $ | 20,175 | (H) | $ | 533,808 | $ | 2,548,813 | $ | 72,684 | (H) | $ | 2,476,129 | |||||||||||||||||||
Compensation and benefits | 308,137 | 2,721 | (I) | $ | 305,416 | 1,482,604 | 11,785 | (I) | 1,470,819 | ||||||||||||||||||||||||
Noncompensation expenses | 177,727 | 704 | (J) | $ | 177,023 | 643,253 | 7,826 | (K) | 635,427 | ||||||||||||||||||||||||
Total non-interest expenses | 485,864 | 3,425 | 482,439 | 2,125,857 | 19,611 | 2,106,246 | |||||||||||||||||||||||||||
Earnings before income taxes | 70,680 | 16,750 | 53,930 | 419,334 | 53,073 | 366,261 | |||||||||||||||||||||||||||
Income tax expense (benefit) | 25,066 | 6,985 | (L) | 18,081 | 132,966 | 235 | (L) | 132,731 | |||||||||||||||||||||||||
Net earnings | 45,614 | 9,765 | 35,849 | 286,368 | 52,838 | 233,530 | |||||||||||||||||||||||||||
Net earnings to common shareholders | $ | 48,386 | $ | 9,765 | $ | 38,621 | $ | 284,618 | $ | 52,838 | $ | 231,780 | |||||||||||||||||||||
Earnings per common share: | |||||||||||||||||||||||||||||||||
Basic | $ | 0.21 | $ | 0.17 | $ | 1.28 | $ | 1.04 | |||||||||||||||||||||||||
Diluted | $ | 0.21 | $ | 0.17 | $ | 1.28 | $ | 1.04 | |||||||||||||||||||||||||
Weighted average common shares: | |||||||||||||||||||||||||||||||||
Basic | 215,628 | 215,628 | 211,056 | 211,056 | |||||||||||||||||||||||||||||
Diluted | 215,629 | 215,629 | 215,171 | 215,171 | |||||||||||||||||||||||||||||
Compensation and benefits/Net revenues | 55.6 | % | 57.2 | % | 58.2 | % | 59.4 | % | |||||||||||||||||||||||||
Effective tax rate | 35.5 | % | 33.5 | % | 31.7 | % | 36.2 | % | |||||||||||||||||||||||||
The selected financial information for the three months and year ended November 30, 2012 and 2011 excluding the effects of purchases and sales of our debt in November and December 2011, certain items identified and recognized in connection with the acquisition of Hoare Govett from The Royal Bank of Scotland Group plc on February 1, 2012 and the acquisition of the Global Commodities Group (the "Bache entities") from Prudential Financial, Inc. ("Prudential") on July 1, 2011, the impairment of certain intangible assets in the three months ended May 31, 2012, donations to Hurricane Sandy relief in November 2012 and transaction costs associated with the announced merger with Leucadia National Corporation incurred in the third and fourth fiscal quarter of 2012, are non-GAAP financial measures. We believe this presentation provides meaningful information to shareholders as it provides comparability for our results of operations for the three months and year ended November 30, 2012 with the results for periods ended November 30, 2011.
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FOOTNOTES TO SELECTED FINANCIAL INFORMATION | ||
(A) | Net revenues in the fourth quarter of 2012 includes additional interest expense from the amortization of discounts on long-term debt re-issued in November and December 2011 in connection with trading activities in our own debt. | |
(B) | Compensation expense for the three months ended November 30, 2012 includes expense related to the amortization of retention and stock replacement awards granted in connection with the acquisition of the Bache entities and Hoare Govett. | |
(C) | Reflects amortization of intangible assets recognized in connection with the acquisitions of Hoare Govett and the Bache entities, donations to Hurricane Sandy relief of $4.1 million and transaction costs (primarily professional fees) associated with the announced merger with Leucadia National Corporation of $4.2 million. | |
(D) | For the three months and year ended November 30, 2012, reflects the tax benefit on the additional interest expense, Hoare Govett and Bache related expense items, Hurricane Sandy relief donations and transaction costs associated with the announced merger with Leucadia at a domestic and foreign marginal tax rate of 42.3% and 24.7%, respectively. | |
(E) | Includes a gain on debt extinguishment of $9.9 million in accordance with debt extinguishment accounting under ASC 405 and 470 relating to trading activities in our own long term debt and a bargain purchase gain of $3.4 million resulting from the acquisition of Hoare Govett recorded in Other revenues, partially offset by additional interest expense of $4.8 million from subsequent amortization of debt discounts upon reissuance of our long-term debt. | |
(F) | Includes compensation expense related to the amortization of retention and stock replacement awards granted in connection with the acquisition of the Bache entities and Hoare Govett and bonus costs for employees as a result of the completion of the Hoare Govett acquisition. | |
(G) | Reflects an impairment charge of $2.9 million on indefinite-lived intangible assets and amortization of intangible assets recognized in connection with the acquisitions of Hoare Govett and the Bache entities, donations to Hurricane Sandy relief of $4.1 million and transaction costs (primarily professional fees) associated with the announced merger with Leucadia National Corporation of $4.7 million. | |
(H) | In accordance with debt extinguishment accounting under ASC 405 and 470, we recorded a gain on debt extinguishment of $20.2 million in Other revenues for the three and twelve months ended November 30, 2011, relating to trading activities in our own long term debt. The twelve months ended November 30, 2011 includes a bargain purchase gain of $52.5 million resulting from the acquisition of the Bache entities from Prudential recorded in Other revenues in the third quarter of 2011. | |
(I) | In connection with the acquisition of the Bache entities, compensation expense was recognized for the three months and year ended November 30, 2011 related to 1) severance costs for certain employees of the acquired Bache entities that were terminated subsequent to the acquisition, 2) the amortization of stock awards granted to former Bache employees as replacement awards for previous Prudential stock awards that were forfeited in the acquisition and 3) bonus costs for employees as a result of the completion of the acquisition. | |
(J) | Reflects the amortization of intangible assets recognized in connection with the acquisition of the Bache entities. | |
(K) | Includes the amortization of intangible assets of $0.7 million recognized during the three months ended November 30, 2011 in connection with the acquisition of the Bache entities as well as expenses (primarily professional fees) totaling $7.1 million related to the acquisition and/or integration of the Bache entities within the Jefferies Group, Inc. | |
(L) | For the three and twelve months ended November 30, 2011, the total domestic marginal tax rate of 41.7% was applied. The bargain purchase gain of $52.5 million on the acquisition of the Bache entities is not a taxable item. |
CONTACT:
Jefferies Group, Inc.
Peregrine C. Broadbent, 212-284-2338
Chief
Financial Officer