Jefferies

Press Release

FOR IMMEDIATE RELEASE
Jefferies Reports Fiscal Third Quarter 2016 Financial Results

NEW YORK– September 20, 2016 -- Jefferies Group LLC today announced financial results for its fiscal third quarter 2016.

Highlights for the three months ended August 31, 2016:

  • Total Net Revenues of $654 million
  • Total Sales and Trading Net Revenues of $344 million
  • Investment Banking Net Revenues of $295 million
  • Earnings Before Income Taxes of $81 million
  • Net Earnings of $41 million (tax rate 49.0%)

Rich Handler, Chairman and Chief Executive Officer, and Brian Friedman, Chairman of the Executive Committee, commented: “We are pleased to report quarterly revenues well above those for the same period last year and consistent with our recent second quarter, excluding the impact of the markup last quarter in two listed equity positions, which had no meaningful impact on our third quarter results. Aside from a volatile two week period following the unexpected outcome of the UK ‘Brexit’ referendum in June, fixed income and equity secondary market conditions remained reasonably steady for much of the third quarter. However, new issue activity continued to be slow industry-wide for most of the period.

Our equity net revenues were $148 million, compared to $224 million for the second quarter and $203 million for the third quarter of last year. Two listed equity block positions, including KCG, that were marked up by $60 million in the second quarter, generated only about $2 million of further net total mark ups during the third quarter. The same two positions, as well as two additional securities positions that had an immaterial impact on the third quarter results, were marked up by a net total of $66 million in the third quarter of last year.

Fixed Income net revenues were $195 million, compared to $238 million for the second quarter and up significantly from the poor year-ago quarter of negative $18 million. Our sales and trading credit businesses, including mortgages, corporates, leveraged credit and our recently enhanced emerging markets business, continued to perform well.

Investment banking net revenues were $295 million and reflect solid advisory revenues, but a slower new issuance environment. Our backlog for the fourth quarter represents the highest level of backlog we have experienced this year. We have continued to expand into new sub-sectors and geographies, as well as enhance existing coverage.

Our average daily VaR for the third quarter was $6.62 million, versus $8.25 million for the second quarter. The quarter-over-quarter decrease reflects both a reduction in risk, as well as lower asset price volatility. Average daily VaR for the third quarter was the lowest we have recorded since the fourth quarter of 2010."

The attached financial tables should be read in conjunction with our Quarterly Report on Form 10-Q for the quarter ended May 31, 2016 and our Annual Report on Form 10-K for the year ended November 30, 2015. Amounts herein pertaining to August 31, 2016 represent a preliminary estimate as of the date of this earnings release and may be revised in our Quarterly Report on Form 10-Q for the quarterly period ended August 31, 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.

(click here for the full report)

For further information, please contact:

Peregrine C. Broadbent
Chief Financial Officer
Jefferies Group LLC
(212) 284-2338