Jefferies 8K Reports Quarterly Financial Results | SEC 22 Mar 11

Exhibit 99

Jefferies Reports Quarterly Financial Results

NEW YORK--(BUSINESS WIRE)--March 22, 2011--Jefferies Group, Inc. (NYSE: JEF) today announced financial results for its fiscal first quarter ended February 28, 2011.

Highlights for the three months ended February 28, 2011 versus the three months ended March 31, 2010:

Record net revenues of $758 million, up 31% versus $580 million
Net income to Common Shareholders of $87 million, up 21% versus $72 million
Net earnings per common share of $0.42, up 20% versus $0.35
Investment Banking revenues of $239 million, up 21% versus $198 million
Global Trading revenues of $495 million, up 32% versus $375 million

"We are pleased to report Jefferies best quarterly revenues in our history and our second most profitable quarter ever,” commented Richard B. Handler, Chairman and Chief Executive Officer of Jefferies. “We believe we are on the right track to balance the realization of solid short-term growth and results, with the important investment needed to allow Jefferies to continue to evolve long-term and continue to be the best firm possible to serve our clients, employees and shareholders."

A conference call with management discussion of these financial results will be held today, Tuesday, March 22, 2011, 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 # 49569122). A live audio webcast and delayed replay can also be accessed at Jefferies.com.

Jefferies Group, Inc. (NYSE: JEF), a global securities and investment banking firm, has served companies and investors for nearly 50 years.


JEFFERIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in Thousands, Except Per Share Amounts)
(Unaudited)

	Three Months Ended ⁽¹³⁾
	Feb 28, 2011			Mar 31, 2010
Revenues:
Commissions	$	119,921		$	134,438
Principal transactions		290,151			150,380
Investment banking		239,059			198,337
Asset management fees and investment income from managed funds		23,868			6,599
Interest		273,216			218,935
Other		20,461			16,679
Total revenues		966,676			725,368
Interest expense		208,294			145,313
Net revenues		758,382			580,055
Interest on mandatorily redeemable preferred interest of consolidated subsidiaries		16,438			2,048
Net revenues, less mandatorily redeemable preferred interest		741,944			578,007

Non-interest expenses:
Compensation and benefits		442,892			319,801
Floor brokerage and clearing fees		28,132			30,729
Technology and communications		43,675			40,209
Occupancy and equipment rental		17,979			19,706
Business development		19,938			13,361
Professional services		13,276			14,423
Other		13,121			17,322
Total non-interest expenses		579,013			455,551
Earnings before income taxes		162,931			122,456
Income tax expense		60,886			46,369
Net earnings		102,045			76,087
Net earnings to noncontrolling interests		14,704			3,943
Net earnings to common shareholders	$	87,341		$	72,144
Earnings per common share:
Basic	$	0.42		$	0.35
Diluted	$	0.42		$	0.35

Weighted average common shares:
Basic		199,141			198,507
Diluted		203,257			202,630

Effective tax rate		37	%		38	%


Jefferies Group, Inc. And Subsidiaries
Selected Statistical Information
(Amounts in Thousands, Except Per Share Amounts)
(Unaudited)

	Quarters Ended ⁽¹³⁾
		2/28/2011			11/30/2010			8/31/2010			5/31/2010			3/31/2010			12/31/2009
Statement of Earnings
Net revenues, less mandatorily redeemable preferred interest	$	741,944		$	664,870		$	519,806		$	665,518		$	578,007		$	529,804

Non-interest expenses:
Compensation and benefits		442,892			405,440			308,797			384,311			319,801			239,352
Non-compensation expenses		136,121			135,852			134,511			137,527			135,750			123,019
Earnings before income taxes		162,931			123,578			76,498			143,680			122,456			167,433
Income tax expense		60,886			46,126			33,873			56,189			46,369			68,006
Net earnings		102,045			77,452			42,625			87,491			76,087			99,427
Net earnings (loss) to noncontrolling interests		14,704			14,735			(2,129	)		3,665			3,943			6,819
Net earnings to common shareholders	$	87,341		$	62,717		$	44,754		$	83,826		$	72,144		$	92,608
Diluted earnings per common share	$	0.42		$	0.31		$	0.22		$	0.41		$	0.35		$	0.46

Financial Ratios
Pretax operating margin		22	%		19	%		15	%		22	%		21	%		32	%
Compensation and benefits / net revenues		58	%		60	%		60	%		58	%		55	%		45	%
Effective tax rate		37	%		37	%		44	%		39	%		38	%		41	%


Jefferies Group, Inc. And Subsidiaries
Selected Statistical Information
(Amounts in Thousands, Except Per Share Amounts)
(Unaudited)

		Quarters Ended ⁽¹³⁾
			2/28/2011		11/30/2010			8/31/2010			5/31/2010		3/31/2010		12/31/2009
Revenues by Source
Equities		$	177,358	$	155,071		$	109,280		$	179,505	$	174,299	$	116,414
Fixed Income			318,097		227,876			161,010			218,144		200,820		211,747
	Total		495,455		382,947			270,290			397,649		375,119		328,161


Equity			49,684		48,369			19,151			73,677		34,217		27,404
Debt			62,967		86,814			77,564			109,767		101,846		77,829
Capital markets			112,651		135,183			96,715			183,444		136,063		105,233
Advisory			126,408		156,701			149,478			72,514		62,274		88,636
Investment banking			239,059		291,884			246,193			255,958		198,337		193,869

Asset management fees and investment income / (loss) from managed funds:
Asset management fees			16,117		6,083			3,996			7,165		4,017		8,472
Investment (loss) / income from managed funds			7,751		(1,102	)		(3,210	)		6,764		2,582		5,930
	Total		23,868		4,981			786			13,929		6,599		14,402
	Net revenues		758,382		679,812			517,269			667,536		580,055		536,432
	Interest on mandatorily redeemable preferred interest of consolidated subsidiaries		16,438		14,942			(2,537	)		2,018		2,048		6,628
	Net Revenues, less mandatorily redeemable preferred interest	$	741,944	$	664,870		$	519,806		$	665,518	$	578,007	$	529,804

Other Data
Number of trading days			61		63			65			64		61		64
Full time employees (end of period)			-		3,084			2,971			2,821		2,729		2,628
Common shares outstanding			177,068		171,694			171,241			171,591		171,845		165,638
Weighted average common shares:
Basic			199,141		194,901			195,601			196,944		198,507		196,255
Diluted			203,257		199,017			195,612			201,064		202,630		200,383

JEFFERIES GROUP, INC. AND SUBSIDIARIES
COMMON SHARES OUTSTANDING AND COMMON SHARES FOR BASIC AND DILUTED EPS CALCULATIONS
(Unaudited)


			February 28, 2011

Common shares outstanding			177,067,710
	Outstanding restricted stock units		27,978,062
Adjusted shares outstanding			205,045,772

Note - All share information below for EPS purposes is based upon weighted-average balances for the applicable period.

			Three months ended
			February 28, 2011

Shares outstanding (weighted average)		(1)	176,056,990
Unearned restricted stock		(2)	(5,694,886)
Earned restricted stock units		(3)	24,242,055
Other issuable shares		(4)	4,536,424
Common Shares for Basic EPS			199,140,583

Stock options		(5)	11,013
Mandatorily redeemable convertible preferred stock		(6)	4,105,138
Convertible debt		(7)	-
Common Shares for Diluted EPS			203,256,734

(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 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
Financial Highlights
(Amounts in Thousands, Except Per Share Amounts)
(Unaudited)

	Quarters Ended ⁽¹³⁾
	2/28/2011			11/30/2010			8/31/2010			5/31/2010			3/31/2010			12/31/2009


Net earnings to common shareholders	$	87,341		$	62,717		$	44,754		$	83,826		$	72,144		$	92,608
Basic EPS (1)	$	0.42		$	0.31		$	0.22		$	0.41		$	0.35		$	0.46
Diluted EPS (1)	$	0.42		$	0.31		$	0.22		$	0.41		$	0.35		$	0.46
Effective tax rate		37	%		37	%		44	%		39	%		38	%		41	%

Total assets (in millions) (2)	$	40,428		$	36,727		$	32,672		$	33,145		$	34,023		$	28,121
Average total assets for quarter (in millions) (2)	$	42,598		$	40,184		$	36,475		$	36,329		$	35,976		$	30,407
Cash and cash equivalents (in millions)	$	1,164		$	2,189		$	2,090		$	994		$	1,025		$	1,853
Level 3 assets (in millions) (2) (3)	$	607		$	572		$	486		$	503		$	648		$	884
Level 3 assets - % total assets (2)		1.5	%		1.6	%		1.5	%		1.5	%		1.9	%		3.1	%
Level 3 assets - % total financial instruments owned (2)		3.3	%		3.6	%		3.4	%		3.7	%		5.0	%		9.3	%
Level 3 assets - % common stockholders' equity (2)		23.5	%		23.1	%		20.9	%		22.1	%		28.1	%		38.5	%

Total common stockholders' equity (in millions)	$	2,578		$	2,478		$	2,326		$	2,275		$	2,305		$	2,298
Adjusted common stockholders' equity (in millions) (4)	$	2,737		$	2,639		$	2,469		$	2,416		$	2,435		$	2,352
Common book value per share (5)	$	14.56		$	14.43		$	13.58		$	13.26		$	13.41		$	13.87
Adjusted book value per share (6)	$	13.35		$	13.17		$	12.36		$	12.06		$	12.11		$	12.18
Tangible common book value per share (7)	$	12.47		$	12.29		$	11.44		$	11.12		$	11.27		$	11.65
Adjusted tangible book value per share (6)	$	11.55		$	11.33		$	10.52		$	10.23		$	10.28		$	10.27

Total capitalization (in millions) (8)	$	7,164		$	7,031		$	6,344		$	5,749		$	5,808		$	5,792
Leverage ratio (2) (9)		13.8			13.1			12.4			12.8			12.9			10.7
Adjusted leverage ratio (2) (10)		14.4			13.2			12.2			12.3			11.3			9.0

Average firmwide VaR (in millions) (11)	$	10.51			6.45			8.64			8.25			11.21			6.46

Common shares outstanding		177,068			171,694			171,241			171,591			171,845			165,638
Adjusted shares outstanding (12)		205,046			200,429			199,867			200,286			201,101			193,042
Share issued during quarter		7,084			1,888			372			1,659			8,682			819
Shares purchased during the quarter		1,482			1,082			525			1,620			2,474			4,479

Number of employees		3,082			3,084			2,971			2,821			2,729			2,628


		Footnotes ⁽¹³⁾

(1	)	The following details the calculation of basic and diluted earnings per share as included in our quarterly and annual reports.

			Quarters Ended
				2/28/2011		11/30/2010		8/31/2010			5/31/2010		3/31/2010		12/31/2009
		Earnings for basic earnings per common share:
		Net earnings	$	102,045	$	77,452	$	42,625		$	87,491	$	76,087	$	99,427
		Net earnings (loss) to noncontrolling interests		14,704		14,735		(2,129	)		3,665		3,943		6,819
		Net earnings to common shareholders		87,341		62,717		44,754			83,826		72,144		92,608
		Less: Allocation of earnings to participating securities (A)		3,925		2,650		1,674			2,842		2,108		1,437
		Net earnings available to common shareholders	$	83,416	$	60,067	$	43,080		$	80,984	$	70,036	$	91,171
		Earnings for diluted earnings per common share:
		Net earnings	$	102,045	$	77,452	$	42,625		$	87,491	$	76,087	$	99,427
		Net earnings (loss) to noncontrolling interests		14,704		14,735		(2,129	)		3,665		3,943		6,819
		Net earnings to common shareholders		87,341		62,717		44,754			83,826		72,144		92,608
		Add: Convertible preferred stock dividends (B)		1,016		1,016		-			1,016		1,016		1,016
		Less: Allocation of earnings to participating securities (A)		3,907		2,653		1,674			2,830		2,104		1,423
		Net earnings available to common shareholders	$	84,450	$	61,080	$	43,080		$	82,012	$	71,056	$	92,201
		Weighted Average Common Shares:
		Basic		199,141		194,901		195,601			196,944		198,507		196,255
		Diluted		203,257		199,017		195,612			201,064		202,630		200,383
		Earnings per common share:
		Basic	$	0.42	$	0.31	$	0.22		$	0.41	$	0.35	$	0.46
		Diluted	$	0.42	$	0.31	$	0.22		$	0.41	$	0.35	$	0.46

		(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 9,403,000, 8,599,000, 7,661,000, 6,780,000, 5,815,000 and 3,092,000 for the three months ended February 28, 2011, November 30, 2010, August 31, 2010, May 31, 2010, March 31, 2010 and December 31, 2009, respectively. Dividends declared on participating securities during the three months ended February 28, 2011, November, 30, 2010, August 31, 2010, May 31, 2010 and March 31, 2010 amounted to approximately $686,000, $632,000, $559,000, $568,000 and $494,000, respectively. No dividends were declared during three months ended December 31, 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 was 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 three months ended February 28, 2011.

(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 $209.8 million at February 28, 2011, which is reflective of the portion of our Level 3 assets that are financed by nonrecourse secured financing attributable to third party or employee noncontrolling interests in certain consolidated entities.

(4)		Adjusted common stockholders’ equity (non-GAAP financial measure) represents total common stockholders’ equity plus the unrecognized compensation cost related to nonvested share based awards, i.e. granted restricted stock and restricted stock units which contain future service requirements. As of February 28, 2011, unrecognized compensation cost related to nonvested share based awards was $159,508. We believe that adjusted common stockholders’ equity is a meaningful measure as it reflects the current capital outstanding to stockholders, including employee common shareholders, that would be required to be paid out in liquidation.

(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 adjusted common stockholders’ equity divided by adjusted shares outstanding. Adjusted tangible book value per share (non-GAAP financial measure) equals adjusted common stockholders’ equity less goodwill and identifiable intangible assets divided by adjusted common shares outstanding. As of February 28, 2011, goodwill and identifiable intangible assets equals $369,414. Previous quarters have been conformed to reflect this calculation. We believe these are meaningful measures as investors often incorporate the dilutive effects of outstanding capital in their valuations.

(7)		Tangible common book value per share (non-GAAP financial measure) equals tangible common stockholders' equity divided by common shares outstanding. As of February 28, 2011, tangible common stockholders' equity equals total common stockholders' equity of $2,577,703 less goodwill and identifiable intangible assets of $369,414. 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.

(8)		Total capitalization includes our long-term debt, mandatorily redeemable convertible preferred stock, mandatorily redeemable preferred interest of consolidated subsidiaries and total stockholders' equity.

(9)		Leverage ratio equals total assets divided by total stockholders' equity.

(10)		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 indentifiable intangibles plus financial instruments sold, not yet purchased (net of derivative liabilities). As of February 28, 2011, adjusted assets were $36,709,148. 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.

(11)		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 II, Item 7A "Quantitative and Qualitative Disclosures About Market Risk" in our Transition Report on Form 10-K for the eleven months ended November 30, 2010.

(12)		Adjusted shares outstanding equals common shares outstanding plus outstanding restricted stock units.

(13)		As indicated in our Transition Report on Form 10-K for the eleven months ended November 30, 2010, we made correcting adjustments to our historical financial statements for the quarters of 2010 and 2009. For additional information on these adjustments, see Note 1, Organization and Basis of Presentation, and Note 23, Selected Quarterly Financial Data (Unaudited), of the Consolidated Financial Statements of our Transition Report on Form 10-K for the eleven months ended November 30, 2010.

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

Jefferies 8-KJefferies Reports Quarterly Financial Results