Jefferies 8-K Jefferies Reports Third Quarter Financial Results

Exhibit 99

Jefferies Reports Third Quarter Financial Results

NEW YORK & LONDON--(BUSINESS WIRE)--September 22, 2010--Jefferies Group, Inc. (NYSE: JEF) today announced financial results for its fiscal third quarter ended August 31, 2010.

Highlights for the three months ended August 31, 2010 versus the three months ended September 30, 2009:

• Net revenues of $520 million, versus $700 million.
• Net income to Common Shareholders of $46 million, versus $86 million.
• Net earnings per common share of $0.23, versus $0.42.
• Investment Banking revenues of $246 million, versus $123 million.

Highlights for the eight months ended August 31, 2010 versus the nine months ended September 30, 2009:

• Net revenues in the eight month period of $1,519 million, versus $1,633 million in the prior year nine month period.
• Net income to Common Shareholders of $165 million in the eight month period, versus $187 million in the prior year nine month period.
• Net earnings per common share of $0.81 in the eight month period, versus $0.92 in the prior year nine month period.
• Investment banking revenues of $598 million in the eight month period, versus $280 million in the prior year nine month period.

“Trading volumes across the board were painfully slow during the months of June, July and August. The normal seasonal slowdown was exacerbated by continued concerns over the state of the global economy. Jefferies Investment Banking results were solid for the quarter and reflect our ability to serve a broader and more global client base. We have made continued progress during the summer to diversify further by building upon the many initiatives we began during the global financial crises. We are in a strong position to finish 2010 and look forward to building upon our broad foundation in the years ahead,” commented Richard B. Handler, Chairman and Chief Executive Officer of Jefferies.

Conference Call

A conference call with management discussion of these financial results will be held today, September 22, 2010, at 9:00 AM Eastern. 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 800-642-1687 or 706-645-9291 (conference ID #97825015). A live audio webcast and delayed replay can be accessed at Jefferies.com.

About Jefferies

Jefferies, a global securities and investment banking firm, has served companies and their investors for more than 48 years. Jefferies & Company, Inc. is the principal US operating subsidiary of Jefferies Group, Inc. (NYSE: JEF: www.jefferies.com), and Jefferies International Limited is the principal UK operating subsidiary. Jefferies International Limited, a UK-incorporated company, is authorised and regulated by the UK Financial Services Authority.

JEFFERIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in Thousands, Except Per Share Amounts)
(Unaudited)
	Three Months Ended						Eight Months Ended			Nine Months Ended
	Aug 31, 2010			Sep 30, 2009			Aug 31, 2010			Sep 30, 2009
Revenues:
Commissions	$	118,571		$	127,800		$	347,527		$	395,085
Principal transactions		74,282			338,552			324,037			711,165
Investment banking		246,193			122,529			598,450			280,446
Asset management fees and investment income from managed funds		786			20,966			11,804			21,485
Interest		152,546			161,091			430,902			413,777
Other		16,879			6,239			44,241			28,699
Total revenues		609,257			777,177			1,756,961			1,850,657
Interest expense		89,159			76,756			237,493			218,086
Net revenues		520,098			700,421			1,519,468			1,632,571
Interest on mandatorily redeemable preferred interest of consolidated subsidiaries		(2,537	)		23,596			(26	)		30,620
Net revenues, less mandatorily redeemable preferred interest		522,635			676,825			1,519,494			1,601,951
Non-interest expenses:
Compensation and benefits		308,797			395,031			877,204			956,619
Floor brokerage and clearing fees		30,244			20,677			84,702			54,007
Technology and communications		46,135			36,141			114,189			104,508
Occupancy and equipment rental		18,433			18,121			49,448			52,168
Business development		17,420			10,293			42,405			29,273
Professional services		13,008			8,874			34,702			29,883
Other		9,404			12,658			37,224			28,953
Total non-interest expenses		443,441			501,795			1,239,874			1,255,411
Earnings before income taxes		79,194			175,030			279,620			346,540
Income tax expense		35,067			65,210			112,960			130,299
Net earnings		44,127			109,820			166,660			216,241
Net (loss) earnings to noncontrolling interests		(2,129	)		23,534			1,865			29,718
Net earnings to common shareholders	$	46,256		$	86,286		$	164,795		$	186,523
Earnings per common share:
Basic	$	0.23		$	0.42		$	0.81		$	0.92
Diluted	$	0.23		$	0.42		$	0.81		$	0.92
Weighted average common shares:
Basic		195,601			200,609			196,943			201,860
Diluted		195,612			204,736			201,062			205,986
Effective tax rate		44	%		37	%		40	%		38	%

JEFFERIES GROUP, INC. AND SUBSIDIARIES
SELECTED STATISTICAL INFORMATION
(Amounts in Thousands, Except Per Share Amounts)
(Unaudited)
	Quarters Ended
	8/31/2010			5/31/2010			3/31/2010			12/31/2009			9/30/2009			6/30/2009
Statement of Earnings
Net revenues, less mandatorily redeemable preferred interest	$	522,635		$	667,512		$	581,194		$	531,578		$	676,825		$	577,866
Non-interest expenses:
Compensation and benefits		308,797			384,311			319,801			239,352			395,031			348,207
Non-compensation expenses		134,644			137,868			135,843			123,145			106,764			107,331
Earnings before income taxes		79,194			145,333			125,550			169,081			175,030			122,328
Income tax expense		35,067			56,836			47,541			68,742			65,210			48,333
Net earnings		44,127			88,497			78,009			100,339			109,820			73,995
Net (loss) / earnings to noncontrolling interests		(2,129	)		3,665			3,943			6,819			23,534			12,095
Net earnings to common shareholders	$	46,256		$	84,832		$	74,066		$	93,520		$	86,286		$	61,900
Diluted earnings per common share	$	0.23		$	0.41		$	0.36		$	0.46		$	0.42		$	0.30
Financial Ratios
Pretax operating margin		15	%		22	%		22	%		32	%		26	%		21	%
Compensation and benefits / net revenues		59	%		57	%		55	%		44	%		56	%		59	%
Effective tax rate		44	%		39	%		38	%		41	%		37	%		40	%

JEFFERIES GROUP, INC. AND SUBSIDIARIES
SELECTED STATISTICAL INFORMATION
(Amounts in Thousands, Except Per Share Amounts)
(Unaudited)
	Quarters Ended
	8/31/2010			5/31/2010		3/31/2010		12/31/2009		9/30/2009		6/30/2009
Revenues by Source
Equities	$	101,935		$	168,730	$	164,825	$	106,939	$	138,916	$	123,070
Fixed Income		171,184			230,913		213,481		222,996		418,010		344,098
Other		-			-		-		-		-		1,638
Total		273,119			399,643		378,306		329,935		556,926		468,806
Equity		15,911			55,064		34,099		25,177		24,201		38,645
Debt		80,804			128,380		101,964		80,056		54,772		45,572
Capital markets		96,715			183,444		136,063		105,233		78,973		84,217
Advisory		149,478			72,514		62,274		88,636		43,556		36,614
Investment banking		246,193			255,958		198,337		193,869		122,529		120,831
Asset management fees and investment income / (loss) from managed funds:
Asset management fees		3,996			7,165		4,017		8,472		12,564		3,714
Investment (loss) / income from managed funds		(3,210	)		6,764		2,582		5,930		8,402		(3,158	)
Total		786			13,929		6,599		14,402		20,966		556
Net revenues		520,098			669,530		583,242		538,206		700,421		590,193
Interest on mandatorily redeemable preferred interest of consolidated subsidiaries		(2,537	)		2,018		2,048		6,628		23,596		12,327
Net Revenues, less mandatorily redeemable preferred interest	$	522,635		$	667,512	$	581,194	$	531,578	$	676,825	$	577,866
Other Data
Number of trading days		65			64		61		64		64		63
Full time employees (end of period)		2,971			2,821		2,729		2,628		2,513		2,307
Common shares outstanding		171,241			171,591		171,845		165,638		169,332		171,927
Weighted average common shares:
Basic		195,601			196,944		198,507		196,255		200,609		201,902
Diluted		195,612			201,064		202,630		200,383		204,736		206,027

JEFFERIES GROUP, INC. AND SUBSIDIARIES
COMMON SHARES OUTSTANDING AND COMMON SHARES FOR BASIC AND DILUTED EPS CALCULATIONS
(UNAUDITED)
			August 31, 2010
Common shares outstanding			171,240,809
Outstanding restricted stock units			28,626,663
Adjusted shares outstanding			199,867,472
Note - All share information below for EPS purposes is based upon weighted-average balances for the applicable period.
			Three months ended		Eight months ended
			August 31, 2010		August 31, 2010
Shares outstanding (weighted average)		(1)	171,367,173		170,849,273
Unearned restricted stock		(2)	(4,068,957	)	(3,481,555	)
Earned restricted stock units		(3)	24,710,041		25,271,600
Other issuable shares		(4)	3,593,077		4,303,847
Common Shares for Basic EPS			195,601,334		196,943,165
Stock options		(5)	10,472		14,108
Mandatorily redeemable convertible preferred stock		(6)	-		4,105,138
Convertible debt		(7)	-		-
Common Shares for Diluted EPS			195,611,806		201,062,411
(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, 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 not pursuant to any contingency 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.  The conversion of our mandatorily redeemable convertible preferred stock is considered anti-dilutive to our three month EPS results and not included in Diluted EPS shares.  If dilutive, the conversion would result in 4,105,138 shares for the three month EPS results.
(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
Financial Highlights
(Amounts in Thousands, Except Per Share Amounts)
(Unaudited)
	Quarters Ended
	8/31/2010			5/31/2010			3/31/2010			12/31/2009			9/30/2009			6/30/2009
Net earnings to common shareholders	$	46,256		$	84,832		$	74,066		$	93,520		$	86,286		$	61,900
Basic EPS (1)	$	0.23		$	0.42		$	0.36		$	0.47		$	0.42		$	0.31
Diluted EPS (1)	$	0.23		$	0.41		$	0.36		$	0.46		$	0.42		$	0.30
Effective tax rate		44	%		39	%		38	%		41	%		37	%		40	%
Total assets (in millions) (2)	$	31,636		$	32,117		$	32,912		$	28,189		$	27,863		$	26,264
Average total assets for quarter (in millions) (2)	$	36,560		$	37,597		$	35,319		$	31,792		$	29,379		$	29,245
Cash and cash equivalents (in millions)	$	2,090		$	994		$	1,029		$	1,853		$	1,405		$	964
Level 3 assets (in millions) (2) (3)	$	488		$	512		$	657		$	884		$	842		$	661
Level 3 assets - % total assets (2)		1.5	%		1.6	%		2.0	%		3.1	%		3.0	%		2.5	%
Level 3 assets - % total financial instruments owned (2)		3.4	%		3.7	%		5.1	%		9.3	%		8.6	%		7.9	%
Level 3 assets - % common stockholders' equity (2)		20.9	%		22.4	%		28.4	%		38.3	%		39.3	%		30.9	%
Total common stockholders' equity (in millions)	$	2,340		$	2,288		$	2,317		$	2,309		$	2,145		$	2,140
Common book value per share (4)	$	13.67		$	13.33		$	13.48		$	13.94		$	12.66		$	12.45
Tangible common book value per share (5)	$	11.52		$	11.20		$	11.34		$	11.71		$	10.54		$	10.36
Total capitalization (in millions) (6)	$	6,358		$	5,762		$	5,821		$	5,802		$	5,348		$	4,983
Leverage ratio (2) (7)		12.0			12.3			12.4			10.7			11.3			10.8
Adjusted leverage ratio (2) (8)		12.2			12.3			11.2			9.0			9.8			8.3
Average firmwide VaR (in millions) (9)	$	8.62		$	8.25		$	11.21		$	6.46		$	7.51		$	6.17
Common shares outstanding		171,241			171,591			171,845			165,638			169,332			171,927
Share issued during quarter		372			1,659			8,682			819			1,039			2,680
Shares purchased during the quarter		525			1,620			2,474			4,479			3,532			72
Number of employees		2,971			2,821			2,729			2,628			2,513			2,307

Footnotes
(1)	The following details the calculation of basic and diluted earnings per share as included in our quarterly and annual reports.
		Quarters Ended
		8/31/2010			5/31/2010		3/31/2010		12/31/2009		9/30/2009		6/30/2009
	Earnings for basic earnings per common share:
	Net earnings	$	44,127		$	88,497	$	78,009	$	100,339	$	109,820	$	73,995
	Net earnings to noncontrolling interests		(2,129	)		3,665		3,943		6,819		23,534		12,095
	Net earnings to common shareholders		46,256			84,832		74,066		93,520		86,286		61,900
	Less: Allocation of earnings to participating securities (A)		1,731			2,875		2,163		1,451		1,108		236
	Net earnings available to common shareholders	$	44,525		$	81,957	$	71,903	$	92,069	$	85,178	$	61,664
	Earnings for diluted earnings per common share:
	Net earnings	$	44,127		$	88,497	$	78,009	$	100,339	$	109,820	$	73,995
	Net earnings to noncontrolling interests		(2,129	)		3,665		3,943		6,819		23,534		12,095
	Net earnings to common shareholders		46,256			84,832		74,066		93,520		86,286		61,900
	Add: Convertible preferred stock dividends (B)		-			1,016		1,016		1,016		1,016		1,016
	Less: Allocation of earnings to participating securities (A)		1,730			2,863		2,158		1,437		1,098		235
	Net earnings available to common shareholders	$	44,526		$	82,985	$	72,924	$	93,099	$	86,204	$	62,681
	Weighted Average Common Shares:
	Basic		195,601			196,944		198,507		196,255		200,609		201,902
	Diluted		195,612			201,064		202,630		200,383		204,736		206,027
	Earnings per common share:
	Basic	$	0.23		$	0.42	$	0.36	$	0.47	$	0.42	$	0.31
	Diluted	$	0.23		$	0.41	$	0.36	$	0.46	$	0.42	$	0.30
	(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 7,661,000, 6,780,000, 5,815,000, 3,092,000, 2,609,000, and 774,000 for the three months ended August 31, 2010, May 31, 2010, March 31, 2010, December 31, 2009, September 30, 2009 and June 30, 2009, respectively. Dividends declared on participating securities during the three months ended August 31, 2010, May 31, 2010 and March 31, 2010 amounted to approximately $559,000, $568,000 and $494,000, respectively. No dividends were declared during 2009. 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 is considered anti-dilutive for our three-months ended August 31, 2010.
(2)	This amount represents 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 period ended August 31, 2010.
(3)	Level 3 assets represent those financial instruments classified as such under ASC 820, accounted for at fair value and included within Financial instruments owned. Level 3 assets for which we bear no economic exposure were $371 million at August 31, 2010, which is reflective of the portion of our Level 3 assets that are attributable to third party and employee noncontrolling interests in certain consolidated entities.
(4)	Common book value per share equals common stockholders' equity divided by common shares outstanding.
(5)	Tangible common book value per share equals tangible common stockholders' equity divided by common shares outstanding. As of August 31, 2010, tangible common stockholders' equity equals common stockholders' equity of $2,340,278 less goodwill and identifiable intangible assets of $367,705. 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.
(6)	Total capitalization includes our long-term debt, mandatorily redeemable convertible preferred stock, mandatorily redeemable preferred interest of consolidated subsidiaries and total stockholders' equity.
(7)	Leverage ratio equals total assets divided by total stockholders' equity.
(8)	Adjusted leverage ratio equals adjusted assets divided by tangible stockholders' equity. Adjusted assets equals total assets less securities borrowed, securities purchased under agreements to resell, cash and securities segregated, goodwill and indentifiable intangibles plus financial instruments sold, not yet purchased (net of derivative liabilities). As of August 31, 2010, adjusted assets were $27,737,413. 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.
(9)	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 "Market Risk" in Part 1, Item 3 "Quantitative and Qualitative Disclosures About Market Risk" in our Quarterly Report on Form 10-Q for the period ended May 31, 2010.

CONTACT:
Jefferies Group, Inc.
Peregrine C. Broadbent, 212-284-2338
Chief Financial Officer