Jefferies Announces 2019 Financial Results

Jefferies Financial Group Inc. JEF today announced its financial results for the three and twelve month periods ended November 30, 2019.

Highlights for the three months ended November 30, 2019:

Net income attributable to Jefferies Financial Group common shareholders of $196 million, or $0.62 per diluted share, primarily reflecting the previously reported $205 million pre-tax gain from the sale of our remaining 31% interest in National Beef, partially offset by a non-cash fair value reduction of $69 million to our investment in The We Company. Results also reflect strong performance in Equities and Fixed Income sales and trading, solid Investment Banking advisory revenues, continued modest results in Leveraged Finance new issuance and solid results at certain of our merchant banking investments
Jefferies Group (Investment Banking, Capital Markets and Asset Management) pre-tax income of $24 million and net earnings of $23 million
- Total Net Revenues of $748 million
- Investment Banking Net Revenues of $393 million
- Total Equities and Fixed Income Net Revenues of $363 million
- Asset Management Revenues (before Allocated net interest¹) of $(4) million

Merchant Banking pre-tax income of $238 million, reflecting strong performance by National Beef prior to the closing of the sale of our interest, the related pre-tax gain of $205 million, and solid results at certain of our merchant banking investments, offset by the $69 million fair value adjustment to reduce the value of our investment in We
Return of excess capital, including special dividend of Spectrum Brands Common Stock, share repurchases and cash dividends, totaling approximately $642 million
Jefferies Financial Group had parent company liquidity of $2.2 billion at November 30, 2019

Highlights for the twelve months ended November 30, 2019:

Net income attributable to Jefferies Financial Group common shareholders of $960 million, or $3.03 per diluted share, including the impact of a nonrecurring tax benefit of $545 million; adjusted net income of $415 million², or $1.32 per diluted share²
Jefferies Group (Investment Banking, Capital Markets and Asset Management) pre-tax income of $325 million and net earnings of $244 million
- Total Net Revenues of $3,113 million
- Investment Banking Net Revenues of $1,522 million, down 20% from 2018 record of $1,914 million
- Total Equities and Fixed Income Net Revenues of $1,455 million, up 19% from 2018
- Asset Management Revenues (before Allocated net interest¹) of $117 million

Merchant Banking pre-tax income of $267 million, reflecting strong operating performance from National Beef and Vitesse, the $205 million pre-tax gain related to the sale of our remaining 31% interest in National Beef and the $72 million gain related to the HomeFed transaction, offset by fair value adjustments to both our investment in We and some of our mark-to-market investments in public companies
Return of excess capital, including special dividend of Spectrum Brands common stock, share repurchases and cash dividends, totaling approximately $1.1 billion; share repurchases during the twelve months ended November 30, 2019 totaled 25.9 million shares for $506 million, or an average price of $19.52 per share

Please refer to the Jefferies Financial Group Annual Letter from our CEO and President for discussion of results and broader perspective on our strategy and outlook. We expect to file our Form 10-K on or about January 28, 2020.

Amounts herein pertaining to November 30, 2019 represent a preliminary estimate as of the date of this earnings release and may be revised upon filing our Annual Report on Form 10-K with the Securities and Exchange Commission ("SEC"). More information on our results of operations for the three and twelve month periods ended November 30, 2019 will be provided upon filing our Annual Report on Form 10-K with the SEC.

This press 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 and statements that are not historical facts. These forward-looking statements are usually preceded by the words "should," "expect," "intend," "may," "will," or similar expressions. Forward-looking statements may contain expectations regarding revenues, earnings, operations, and other results, and may include statements of future performance, plans, and objectives. Forward-looking statements also include statements pertaining to our strategies for future development of our businesses and products. Forward-looking statements represent only our belief regarding future events, many of which by their nature are inherently uncertain. It is possible that the actual results may differ, possibly materially, from the anticipated results indicated in these forward-looking statements. Information regarding important factors, including Risk Factors that could cause actual results to differ, perhaps materially, from those in our forward-looking statements is contained in reports we file with the SEC. You should read and interpret any forward-looking statement together with reports we file with the SEC.

Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy will be profitable or equal the corresponding indicated performance level(s).

1		Allocated net interest represents the allocation of Jefferies Group LLC's long-term debt interest expense to Jefferies Group LLC's Asset Management reportable segment, net of interest income on Jefferies Group LLC's Cash and cash equivalents and other sources of liquidity, which allocation is consistent with Jefferies Group LLC's policy of allocating such items to its business lines. Refer to Jefferies Group LLC's summary of Net Revenues by Source on pages 8 and 9.
2		Jefferies Financial Group adjusted net income, a non-GAAP measure, is defined as Jefferies Financial Group's net income less accumulated other comprehensive income nonrecurring tax benefit. Jefferies Financial Group adjusted diluted earnings per share, a non-GAAP measure, is defined as Jefferies Financial Group's diluted earnings per share less accumulated other comprehensive income non-recurring tax benefit. Refer to schedule on page 12 for reconciliation to U.S. GAAP amounts.

Summary for Jefferies Financial Group Inc. and Subsidiaries
(In thousands, except per share amounts)
(Unaudited)
	Three Months Ended November 30, 2019			Two Months Ended November 30, 2018			Twelve Months Ended November 30, 2019			Eleven Months Ended November 30, 2018

Net revenues	$	1,106,098		$	806,594		$	3,892,976		$	3,764,034

Income (loss) from continuing operations before income taxes and income (loss) related to associated companies	$	151,320		$	(24,573	)	$	275,613		$	239,077
Income (loss) related to associated companies	81,229			(27,297		)	202,995			57,023
Income (loss) from continuing operations before income taxes	232,549			(51,870		)	478,608			296,100
Income tax provision (benefit)	38,671			(32,552		)	(483,955		)	19,008
Income (loss) from continuing operations	193,878			(19,318		)	962,563			277,092
Income from discontinued operations, net of income tax provision of $0, $0, $0 and $47,045	—			—			—			130,063
Gain on disposal of discontinued operations, net of income tax provision of $0, $0, $0 and $229,553	—			—			—			643,921
Net income (loss)	193,878			(19,318		)	962,563			1,051,076
Net (income) loss attributable to the noncontrolling interests	2,606			(233		)	1,847			12,975
Net (income) loss attributable to the redeemable noncontrolling interests	333			31			286			(37,263		)
Preferred stock dividends	(1,276		)	(851		)	(5,103		)	(4,470		)
Net income (loss) attributable to Jefferies Financial Group Inc. common shareholders	$	195,541		$	(20,371	)	$	959,593		$	1,022,318

Basic earnings (loss) per common share attributable to Jefferies Financial Group Inc. common shareholders:
Income (loss) from continuing operations	$	0.63		$	(0.06	)	$	3.07		$	0.82
Income from discontinued operations	—			—			—			0.27
Gain on disposal of discontinued operations	—			—			—			1.84
Net income (loss)	$	0.63		$	(0.06	)	$	3.07		$	2.93

Number of shares in calculation	310,266			329,101			310,694			347,261

Diluted earnings (loss) per common share attributable to Jefferies Financial Group Inc. common shareholders:
Income (loss) from continuing operations	$	0.62		$	(0.06	)	$	3.03		$	0.81
Income from discontinued operations	—			—			—			0.26
Gain on disposal of discontinued operations	—			—			—			1.83
Net income (loss)	$	0.62		$	(0.06	)	$	3.03		$	2.90

Number of shares in calculation	316,566			329,101			317,032			351,275

A summary of results for the three months ended November 30, 2019 is as follows (in thousands):

	Jefferies Group		Merchant Banking		Corporate			Parent Company Interest			Consolidation Adjustments			Total
Net revenues	$	747,802	$	347,210	$	10,699		$	—		$	387		$	1,106,098

Expenses:
Compensation and benefits	422,548		19,036		16,273			—			—			457,857
Cost of sales	—		86,532		—			—			—			86,532
Floor brokerage and clearing fees	58,773		—		—			—			1,254			60,027
Interest expense	—		8,608		—			8,750			—			17,358
Depreciation and amortization	21,404		19,944		923			—			—			42,271
Selling, general and other expenses	221,206		55,783		14,963			—			(1,219		)	290,733
Total expenses	723,931		189,903		32,159			8,750			35			954,778
Income (loss) from continuing operations before income taxes and income related to associated companies	23,871		157,307		(21,460		)	(8,750		)	352			151,320
Income related to associated companies	—		81,161		—			—			68			81,229
Income (loss) from continuing operations before income taxes	$	23,871	$	238,468	$	(21,460	)	$	(8,750	)	$	420		232,549
Income tax provision from continuing operations														38,671
Net income														$	193,878

A summary of results for the two months ended November 30, 2018 is as follows (in thousands):

	Jefferies Group		Merchant Banking			Corporate			Parent Company Interest			Consolidation Adjustments			Total
Net revenues	$	761,958	$	42,204		$	7,525		$	—		$	(5,093	)	$	806,594

Expenses:
Compensation and benefits	408,504		17,662			7,177			—			—			433,343
Cost of sales	—		49,570			—			—			—			49,570
Floor brokerage and clearing fees	53,260		—			—			—			(842		)	52,418
Interest expense	—		4,796			—			9,839			—			14,635
Depreciation and amortization	17,467		9,920			570			—			—			27,957
Selling, general and other expenses	204,764		41,688			7,811			—			(1,019		)	253,244
Total expenses	683,995		123,636			15,558			9,839			(1,861		)	831,167
Income (loss) from continuing operations before income taxes and loss related to associated companies	77,963		(81,432		)	(8,033		)	(9,839		)	(3,232		)	(24,573		)
Loss related to associated companies	—		(27,297		)	—			—			—			(27,297		)
Income (loss) from continuing operations before income taxes	$	77,963	$	(108,729	)	$	(8,033	)	$	(9,839	)	$	(3,232	)	(51,870		)
Income tax benefit from continuing operations															(32,552		)
Net loss															$	(19,318	)

A summary of results for the twelve months ended November 30, 2019 is as follows (in thousands):

	Jefferies Group		Merchant Banking		Corporate			Parent Company Interest			Consolidation Adjustments			Total
Net revenues	$	3,112,530	$	746,369	$	32,833		$	—		$	1,244		$	3,892,976

Expenses:
Compensation and benefits	1,684,054		82,832		58,005			—			—			1,824,891
Cost of sales	—		319,641		—			—			—			319,641
Floor brokerage and clearing fees	227,471		—		—			—			(4,331		)	223,140
Interest expense	—		34,129		—			53,048			—			87,177
Depreciation and amortization	79,204		70,192		3,475			—			—			152,871
Selling, general and other expenses	797,132		175,650		39,820			—			(2,959		)	1,009,643
Total expenses	2,787,861		682,444		101,300			53,048			(7,290		)	3,617,363
Income (loss) from continuing operations before income taxes and income related to associated companies	324,669		63,925		(68,467		)	(53,048		)	8,534			275,613
Income related to associated companies	—		202,927		—			—			68			202,995
Income (loss) from continuing operations before income taxes	$	324,669	$	266,852	$	(68,467	)	$	(53,048	)	$	8,602		478,608
Income tax benefit from continuing operations														(483,955		)
Net income														$	962,563

A summary of results for the eleven months ended November 30, 2018 is as follows (in thousands):

	Jefferies Group		Merchant Banking			Corporate			Parent Company Interest			Consolidation Adjustments			Total
Net revenues	$	3,183,376	$	571,831		$	22,300		$	—		$	(13,473	)	$	3,764,034

Expenses:
Compensation and benefits	1,736,264		77,169			50,222			—			(873		)	1,862,782
Cost of sales	—		307,071			—			—			—			307,071
Floor brokerage and clearing fees	189,068		—			—			—			(4,858		)	184,210
Interest expense	—		35,159			—			54,090			—			89,249
Depreciation and amortization	68,296		48,852			3,169			—			—			120,317
Selling, general and other expenses	780,081		150,115			35,049			—			(3,917		)	961,328
Total expenses	2,773,709		618,366			88,440			54,090			(9,648		)	3,524,957
Income (loss) from continuing operations before income taxes and income related to associated companies	409,667		(46,535		)	(66,140		)	(54,090		)	(3,825		)	239,077
Income related to associated companies	—		57,023			—			—			—			57,023
Income (loss) from continuing operations before income taxes	$	409,667	$	10,488		$	(66,140	)	$	(54,090	)	$	(3,825	)	296,100
Income tax provision from continuing operations															19,008
Income from discontinued operations, net of income tax provision															130,063
Gain on disposal of discontinued operations, net of income tax provision															643,921
Net income															$	1,051,076

The following financial tables provide information for the results of Jefferies Group LLC and should be read in conjunction with Jefferies Group LLC's Quarterly Report on Form 10-Q for the quarter ended August 31, 2019 and Annual Report on Form 10-K for the year ended November 30, 2018. Amounts herein pertaining to November 30, 2019 represent a preliminary estimate as of the date of this earnings release and may be revised in Jefferies Group LLC's Annual Report on Form 10-K for the year ended November 30, 2019.

Jefferies Group LLC and Subsidiaries
Consolidated Statements of Earnings
(Amounts in Thousands)
(Unaudited)

	Quarter Ended
	November 30, 2019			August 31, 2019			November 30, 2018
Revenues:
Commissions and other fees (1)	$	182,466		$	171,003		$	181,271
Principal transactions (2)	135,981			147,993			25,713
Investment banking	400,513			412,533			504,589
Asset management fees and revenues (2)	3,935			4,220			5,084
Interest	333,507			383,596			336,605
Other (1)	17,134			22,286			44,681
Total revenues	1,073,536			1,141,631			1,097,943
Interest expense	325,734			364,472			335,985
Net revenues	747,802			777,159			761,958

Non-interest expenses:
Compensation and benefits	422,548			411,936			408,504

Non-compensation expenses:
Floor brokerage and clearing fees	58,773			54,247			53,260
Technology and communications	87,931			86,649			83,320
Occupancy and equipment rental	31,885			29,300			25,809
Business development	34,728			36,526			39,523
Professional services	45,296			42,379			38,170
Underwriting costs	14,617			14,647			16,485
Other	28,153			18,400			18,924
Total non-compensation expenses	301,383			282,148			275,491
Total non-interest expenses	723,931			694,084			683,995
Earnings before income taxes	23,871			83,075			77,963
Income tax expense	495			18,250			16,313
Net earnings	23,376			64,825			61,650
Net earnings (loss) attributable to noncontrolling interests	(1,784		)	(143		)	257
Net earnings attributable to Jefferies Group LLC	$	25,160		$	64,968		$	61,393

Pre-tax operating margin	3.2		%	10.7		%	10.2		%
Effective tax rate	2.1		%	22.0		%	20.9		%

(1)

In the third quarter of 2019, Jefferies Group LLC reorganized the presentation of certain other fees, primarily related to prime brokerage services offered to clients. Jefferies Group LLC's Consolidated Statement of Earnings reflects the reclassification of revenues of $7.6 million from Other revenues to Commissions and other fees for the three months ended November 30, 2018. There is no impact on Total revenues as a result of this change in presentation.

(2)

In the fourth quarter of 2019, Jefferies Group LLC reorganized the presentation of revenues from arrangements which entitle us to certain portions of revenues and/or profits of strategic asset management partners. Such arrangements did not exist prior to the first quarter of 2019 and Jefferies Group LLC's Consolidated Statement of Earnings reflects the reclassification of revenues of $0.9 million from Principal transactions revenues to Asset management fees and revenues for the three months ended August 31, 2019. There is no impact on Total revenues as a result of this change in presentation.

Jefferies Group LLC and Subsidiaries
Consolidated Statements of Earnings
(Amounts in Thousands)
(Unaudited)

	Twelve Months Ended
	November 30, 2019			November 30, 2018
Revenues:
Commissions and other fees (1)	$	676,309		$	663,465
Principal transactions	766,192			524,296
Investment banking	1,528,729			1,910,203
Asset management fees and revenues	20,285			21,214
Interest	1,496,529			1,207,095
Other (1)	96,488			103,359
Total revenues	4,584,532			4,429,632
Interest expense	1,472,002			1,246,256
Net revenues	3,112,530			3,183,376

Non-interest expenses:
Compensation and benefits	1,684,054			1,736,264

Non-compensation expenses:
Floor brokerage and clearing fees	227,471			189,068
Technology and communications	335,395			305,655
Occupancy and equipment rental	119,472			100,952
Business development	138,158			163,756
Professional services	162,668			139,885
Underwriting costs	50,662			64,317
Other	69,981			73,812
Total non-compensation expenses	1,103,807			1,037,445
Total non-interest expenses	2,787,861			2,773,709
Earnings before income taxes	324,669			409,667
Income tax expense	80,284			250,650
Net earnings	244,385			159,017
Net earnings (loss) attributable to noncontrolling interests	(1,644		)	256
Net earnings attributable to Jefferies Group LLC	$	246,029		$	158,761

Pre-tax operating margin	10.4		%	12.9		%
Effective tax rate (2)	24.7		%	61.2		%

(1)		In the third quarter of 2019, Jefferies Group LLC reorganized the presentation of certain other fees, primarily related to prime brokerage services offered to clients. Jefferies Group LLC's Consolidated Statement of Earnings reflects the reclassification of revenues of $28.3 million from Other revenues to Commissions and other fees for the twelve months ended November 30, 2018. There is no impact on Total revenues as a result of this change in presentation.
(2)		The effective tax rate for the twelve months ended November 30, 2018 includes an estimated provisional tax charge of approximately $165 million as a result of the Tax Cuts and Jobs Act ("Tax Act").

Jefferies Group LLC and Subsidiaries
Selected Statistical Information
(Amounts in Thousands, Except Other Data)
(Unaudited)

	Quarter Ended
	November 30, 2019			August 31, 2019			November 30, 2018
Net Revenues by Source:
Equities	$	200,128		$	193,229		$	164,086
Fixed income	163,016			148,334			86,826
Total sales and trading	363,144			341,563			250,912

Equity	105,119			97,494			127,942
Debt	100,359			101,689			152,335
Capital markets	205,478			199,183			280,277
Advisory	195,035			213,350			224,312
Other investment banking	(7,501		)	(9,108		)	17,523
Total investment banking	393,012			403,425			522,112

Other	4,948			12,374			22,448

Total Capital Markets (1) (2)	761,104			757,362			795,472

Asset management fees and revenues (3)	3,935			4,220			5,084
Investment return (3) (4) (5)	(7,637		)	24,866			(23,783		)
Allocated net interest (4) (6)	(9,600		)	(9,289		)	(14,815		)
Total Asset Management	(13,302		)	19,797			(33,514		)

Net Revenues	$	747,802		$	777,159		$	761,958

Other Data:
Number of trading days	63			64			63
Number of trading loss days	10			10			18

Average firmwide VaR (in millions) (7)	$	7.70		$	9.71		$	9.59

(1)		Includes net interest revenue of $22.6 million, $30.4 million and $19.7 million for the quarters ended November 30, 2019, August 31, 2019, and November 30, 2018, respectively.
(2)		Allocated net interest is not separately disaggregated in presenting our Capital Markets reportable segment within Jefferies Group LLC's Net Revenues by Source. This presentation is aligned to our Capital Markets internal performance measurement.
(3)		In the fourth quarter of 2019, Jefferies Group LLC reorganized the presentation of revenues from arrangements which entitle us to certain portions of revenues and/or profits of strategic asset management partners. Such arrangements did not exist prior to the first quarter of 2019 and Jefferies Group LLC's Net Revenues by Source reflects the reclassification of revenues of $0.9 million from Investment return revenues to Asset management fees and revenues for the three months ended August 31, 2019. There is no impact on Total Asset Management revenues as a result of this change in presentation.
(4)		Beginning with the first quarter of 2019, Net revenues attributed to the Investment return in Jefferies Group LLC's Asset Management reportable segment have been disaggregated to separately present Investment return and Allocated net interest (see footnotes 5 and 6). This disaggregation is intended to increase transparency and to make clearer actual Investment return. We offer third-party investors the opportunity to co-invest in our asset management funds and separately managed accounts alongside Jefferies Group LLC. We believe that aggregating Investment return and Allocated net interest would obscure the Investment return by including an amount that is unique to Jefferies Group LLC's credit spreads, debt maturity profile, capital structure, liquidity risks and allocation methods, none of which are pertinent to the Investment returns generated by the performance of the portfolio.
(5)		Includes net interest expense of $5.2 million, $2.0 million and $4.2 million for the quarters ended November 30, 2019, August 31, 2019, and November 30, 2018, respectively.
(6)		Allocated net interest represents the allocation of Jefferies Group LLC's long-term debt interest expense to Jefferies Group LLC's Asset Management reportable segment, net of interest income on Jefferies Group LLC's Cash and cash equivalents and other sources of liquidity (refer to page 10).
(7)		VaR estimates the potential loss in value of Jefferies Group LLC's 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 Jefferies Group LLC's Annual Report on Form 10-K for the year ended November 30, 2019.

Jefferies Group LLC and Subsidiaries
Selected Statistical Information
(Amounts in Thousands, Except Other Data)
(Unaudited)

	Twelve Months Ended
	November 30, 2019			November 30, 2018
Net Revenues by Source:
Equities	$	773,979		$	665,557
Fixed income	681,362			559,712
Total sales and trading	1,455,341			1,225,269

Equity	361,972			454,555
Debt	407,336			635,606
Capital markets	769,308			1,090,161
Advisory	767,421			820,042
Other investment banking	(14,617		)	3,638
Total investment banking	1,522,112			1,913,841

Other	58,535			45,316

Total Capital Markets (1) (2)	3,035,988			3,184,426

Asset management fees and revenues	20,285			21,214
Investment return (3) (4)	96,805			16,971
Allocated net interest (3) (5)	(40,548		)	(39,235		)
Total Asset Management	76,542			(1,050		)

Net Revenues	$	3,112,530		$	3,183,376

Other Data:
Number of trading days	250			252
Number of trading loss days	33			45

Average firmwide VaR (in millions) (6)	$	8.79		$	7.56

(1)		Includes net interest revenue of $74.0 million and $8.5 million for the twelve months ended November 30, 2019 and 2018, respectively.
(2)		Allocated net interest is not separately disaggregated in presenting our Capital Markets reportable segment within Jefferies Group LLC's Net Revenues by Source. This presentation is aligned to our Capital Markets internal performance measurement.
(3)		Beginning with the first quarter of 2019, Net revenues attributed to the Investment return in Jefferies Group LLC's Asset Management reportable segment have been disaggregated to separately present Investment return and Allocated net interest (see footnotes 4 and 5). This disaggregation is intended to increase transparency and to make clearer actual Investment return. We offer third-party investors the opportunity to co-invest in our asset management funds and separately managed accounts alongside Jefferies Group LLC. We believe that aggregating Investment return and Allocated net interest would obscure the Investment return by including an amount that is unique to Jefferies Group LLC's credit spreads, debt maturity profile, capital structure, liquidity risks and allocation methods, none of which are pertinent to the Investment returns generated by the performance of the portfolio.
(4)		Includes net interest expense of $8.9 million and $8.4 million for the twelve months ended November 30, 2019 and 2018, respectively.
(5)		Allocated net interest represents the allocation of Jefferies Group LLC's long-term debt interest expense to Jefferies Group LLC's Asset Management reportable segment, net of interest income on Jefferies Group LLC's Cash and cash equivalents and other sources of liquidity (refer to page 10).
(6)		VaR estimates the potential loss in value of Jefferies Group LLC's 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 Jefferies Group LLC's Annual Report on Form 10-K for the year ended November 30, 2019.

Jefferies Group LLC and Subsidiaries
Financial Highlights
(Amounts in Millions, Except Where Noted)
(Unaudited)

	Quarter Ended
	November 30, 2019			August 31, 2019			November 30, 2018
Financial position:
Total assets (1)	$	43,516		$	43,094		$	41,169
Average total assets for the period (1)	$	52,539		$	53,097		$	49,427
Average total assets less goodwill and intangible assets for the period (1)	$	50,727		$	51,281		$	47,653

Cash and cash equivalents (1)	$	5,568		$	4,665		$	5,146
Cash and cash equivalents and other sources of liquidity (1) (2)	$	6,918		$	6,074		$	6,604
Cash and cash equivalents and other sources of liquidity - % total assets (1) (2)	15.9		%	14.1		%	16.0		%
Cash and cash equivalents and other sources of liquidity - % total assets less goodwill and intangible assets (1) (2)	16.6		%	14.7		%	16.8		%

Financial instruments owned (1)	$	16,363		$	16,371		$	16,400
Goodwill and intangible assets (1)	$	1,814		$	1,811		$	1,825

Total equity (including noncontrolling interests) (1)	$	6,130		$	6,190		$	6,182
Total Jefferies Group LLC member's equity (1)	$	6,125		$	6,183		$	6,180
Tangible Jefferies Group LLC member's equity (1) (3)	$	4,311		$	4,372		$	4,356

Level 3 financial instruments:
Level 3 financial instruments owned (1) (4)	$	307		$	363		$	337
Level 3 financial instruments owned - % total assets (1) (4)	0.7		%	0.8		%	0.8		%
Level 3 financial instruments owned - % total financial instruments (1) (4)	1.9		%	2.2		%	2.1		%
Level 3 financial instruments owned - % tangible Jefferies Group LLC member's equity (1) (4)	7.1		%	8.3		%	7.7		%

Other data and financial ratios:
Total long-term capital (1) (5)	$	12,343		$	12,219		$	11,840
Leverage ratio (1) (6)	7.1			7.0			6.7
Tangible gross leverage ratio (1) (7)	9.7			9.4			9.0

Number of trading days	63			64			63
Number of trading loss days	10			10			18
Average firmwide VaR (8)	$	7.70		$	9.71		$	9.59

Number of employees, at period end	3,815			3,776			3,596

Jefferies Group LLC and Subsidiaries
Financial Highlights - Footnotes

(1)		Amounts pertaining to November 30, 2019 represent a preliminary estimate as of the date of this earnings release and may be revised in Jefferies Group LLC's Annual Report on Form 10-K for the fiscal year ended November 30, 2019.
(2)		At November 30, 2019, 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 $973 million, in aggregate, and $377 million, being the estimated amount of additional secured financing that could be reasonably expected to be obtained from Jefferies Group LLC's financial instruments that are currently not pledged after considering reasonable financing haircuts. The corresponding amounts included in other sources of liquidity at August 31, 2019 were $1,063 million and $345 million, respectively, and at November 30, 2018, were $959 million and $499 million, respectively.
(3)		Tangible Jefferies Group LLC member's equity (a non-GAAP financial measure) represents total Jefferies Group LLC member's equity less goodwill and identifiable intangible assets. We believe that tangible Jefferies Group LLC member's equity is meaningful for valuation purposes, as financial companies are often measured as a multiple of tangible 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, 2019, August 31, 2019 and November 30, 2018, total long-term capital includes Jefferies Group LLC's long-term debt of $6,214 million, $6,030 million and $5,657 million, respectively, and total equity. Long-term debt included in total long-term capital is reduced by amounts outstanding under the revolving credit facility, amounts from secured term loans and the amount of debt maturing in less than one year, as applicable.
(6)		Leverage ratio equals total assets divided by total equity.
(7)		Tangible gross leverage ratio (a non-GAAP financial measure) equals total assets less goodwill and identifiable intangible assets divided by tangible Jefferies Group LLC member's equity. The tangible gross leverage ratio is used by rating agencies in assessing Jefferies Group LLC's leverage ratio.
(8)		VaR estimates the potential loss in value of Jefferies Group LLC's 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 Jefferies Group LLC's Annual Report on Form 10-K for the year ended November 30, 2019.

Jefferies Financial Group Inc.

Non-GAAP Reconciliations

The following tables reconcile Jefferies Financial Group non-GAAP measures to their respective U.S. GAAP measures. Management believes such non-GAAP measures are useful to investors as they allow them to view our results through the eyes of management, while facilitating a comparison across historical periods. These measures should not be considered a substitute for, or superior to, measures prepared in accordance with U.S. GAAP.

Jefferies Financial Group Net Income and Earnings Per Share GAAP Reconciliation

Reconciliation of Jefferies Financial Group net income to adjusted net income (a non-GAAP measure) and diluted earnings per share to adjusted diluted earnings per share (a non-GAAP measure) (in thousands, except per share amounts):

	Twelve months ended November 30, 2019

Jefferies Financial Group net income (GAAP)	$	959,593
Accumulated other comprehensive income tax benefit (1)	(544,583		)
Jefferies Financial Group adjusted net income (non-GAAP)	$	415,010

Jefferies Financial Group diluted earnings per share (GAAP)	$	3.03
Accumulated other comprehensive income tax benefit (1)	(1.71		)
Jefferies Financial Group adjusted diluted earnings per share (non-GAAP)	$	1.32

(1)

During the second quarter of 2019, in connection with the closing of our corporate available for sale portfolio, we realized a non-cash tax benefit of $545 million. This tax benefit was generated primarily through activity during 2008 to 2010 and since then has remained an unrealized balance within equity until the liquidation of the portfolio. This realization did not impact total equity, as the increase in retained earnings was offset by a corresponding decrease in accumulated other comprehensive income.

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