Jefferies Financial (JEF) 8-K Other Events

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (date of earliest event reported): April 8, 2022

JEFFERIES FINANCIAL GROUP INC.

(Exact name of registrant as specified in its charter)

New York	1-5721		13-2615557
(State or other jurisdiction of incorporation or organization)	(Commission File Number)		(I.R.S. Employer Identification No.)
520 Madison Avenue	New York,	New York	10022
(Address of Principal Executive Offices)			(Zip Code)

(212) 460-1900

Registrant's telephone number, including area code

(Former name or former address, if changed since last report)

______________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock; Par Value $1.00 Per Share	JEF	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

1

Item 8.01 Other Events

On December 1, 2021, Jefferies Financial Group Inc. (the "Company," "our," or "we") contributed $477 million of net assets, including both Merchant Banking and Asset Management investments, to Jefferies Group. The transferred Merchant Banking investments are now being managed by a different management team, while the Asset Management investments continue to be managed by the co-Presidents of Asset Management who oversee all asset management activities across the Company. As a result, we transferred $194 million of net assets out of our Merchant Banking segment: $139 million of these net assets, including $48 million of net assets relating to Foursight Capital LLC, were transferred into our Investment Banking and Capital Markets segment; the remaining $55 million of net assets transferred are now managed by the co-Presidents of Asset Management and are included in our Asset Management segment.

These changes to our business segments have no effect on our historical total net revenues, total income before income taxes, or total net income in the consolidated statements of operations or total assets or total liabilities in the consolidated statements of financial condition. Prior year amounts have been reclassified to conform to current segment reporting.

Our reclassified operating results by segment and additional parent company interest and consolidating adjustment reconciling items are as follows (in thousands): 

	For the Three Months Ended								For the Year Ended
	February 28, 2021		May 31,  2021		August 31, 2021		November 30,  2021		November 30, 2021		November 30, 2020
Investment Banking and Capital Markets
Net revenues	$	1,987,496	$	1,598,862	$	1,672,943	$	1,648,085	$	6,907,386	$	5,072,640
Expenses:
Cost of sales	—		—		—		—		—		—
Compensation and benefits	1,109,695		778,284		762,725		688,557		3,339,261		2,746,382
Non-compensation expenses:
Floor brokerage and clearing fees	66,574		66,211		64,441		68,809		266,035		241,083
Selling, general and other expenses	228,733		293,276		222,357		311,344		1,055,710		846,941
Interest expense (1)	5,553		5,271		4,982		4,937		20,743		26,745
Depreciation and amortization	20,710		20,805		21,065		22,711		85,291		82,479
Total non-compensation expenses	321,570		385,563		312,845		407,801		1,427,779		1,197,248
Total expenses	1,431,265		1,163,847		1,075,570		1,096,358		4,767,040		3,943,630
Income (loss) before income taxes and loss related to associated companies	556,231		435,015		597,373		551,727		2,140,346		1,129,010
Loss related to associated companies	—		—		—		—		—		—
Income (loss) before income taxes	$	556,231	$	435,015	$	597,373	$	551,727	$	2,140,346	$	1,129,010

(1) Interest expense within Investment Banking and Capital Markets relates to Foursight.

2

	For the Three Months Ended								For the Year Ended
	February 28, 2021		May 31,  2021		August 31, 2021		November 30,  2021		November 30, 2021		November 30, 2020
Asset Management
Net revenues	$	229,202	$	50,675	$	13,327	$	42,809	$	336,013	$	234,910
Expenses:
Cost of sales	—		—		—		—		—		—
Compensation and benefits	22,785		21,671		15,468		22,802		82,726		89,527
Non-compensation expenses:
Floor brokerage and clearing fees	9,842		10,599		4,541		10,843		35,825		25,509
Selling, general and other expenses	12,164		10,768		10,719		15,282		48,933		46,095
Interest expense	—		—		—		—		—		—
Depreciation and amortization	479		489		494		439		1,901		5,228
Total non-compensation expenses	22,485		21,856		15,754		26,564		86,659		76,832
Total expenses	45,270		43,527		31,222		49,366		169,385		166,359
Income (loss) before income taxes and loss related to associated companies	183,932		7,148		(17,895)		(6,557)		166,628		68,551
Loss related to associated companies	—		—		—		—		—		—
Income (loss) before income taxes	$	183,932	$	7,148	$	(17,895)	$	(6,557)	$	166,628	$	68,551

	For the Three Months Ended								For the Year Ended
	February 28, 2021		May 31,  2021		August 31, 2021		November 30,  2021		November 30, 2021		November 30, 2020
Merchant Banking
Net revenues	$	267,004	$	296,815	$	248,690	$	118,068	$	930,577	$	681,574
Expenses:
Cost of sales	95,559		143,847		151,510		79,954		470,870		338,588
Compensation and benefits	24,529		24,252		17,584		27,161		93,526		65,770
Non-compensation expenses:
Floor brokerage and clearing fees	—		—		—		—		—		—
Selling, general and other expenses	26,520		32,631		39,849		30,146		129,146		163,161
Interest expense	912		843		762		691		3,208		4,680
Depreciation and amortization	16,714		17,268		16,554		16,928		67,464		67,236
Total non-compensation expenses	44,146		50,742		57,165		47,765		199,818		235,077
Total expenses	164,234		218,841		226,259		154,880		764,214		639,435
Income (loss) before income taxes and loss related to associated companies	102,770		77,974		22,431		(36,812)		166,363		42,139
Loss related to associated companies	(10,568)		(23,526)		(27,176)		(33,149)		(94,419)		(75,483)
Income (loss) before income taxes	$	92,202	$	54,448	$	(4,745)	$	(69,961)	$	71,944	$	(33,344)

3

	For the Three Months Ended								For the Year Ended
	February 28, 2021		May 31,  2021		August 31, 2021		November 30,  2021		November 30, 2021		November 30, 2020
Corporate
Net revenues	$	590	$	724	$	955	$	773	$	3,042	$	13,258
Expenses:
Cost of sales	—		—		—		—		—		—
Compensation and benefits	15,534		7,035		6,466		6,576		35,611		39,184
Non-compensation expenses:
Floor brokerage and clearing fees	—		—		—		—		—		—
Selling, general and other expenses	4,669		4,910		4,375		5,299		19,253		26,197
Interest expense	—		—		—		—		—		—
Depreciation and amortization	864		878		564		458		2,764		3,496
Total non-compensation expenses	5,533		5,788		4,939		5,757		22,017		29,693
Total expenses	21,067		12,823		11,405		12,333		57,628		68,877
Income (loss) before income taxes and loss related to associated companies	(20,477)		(12,099)		(10,450)		(11,560)		(54,586)		(55,619)
Loss related to associated companies	—		—		—		—		—		—
Income (loss) before income taxes	$	(20,477)	$	(12,099)	$	(10,450)	$	(11,560)	$	(54,586)	$	(55,619)

	For the Three Months Ended								For the Year Ended
	February 28, 2021		May 31,  2021		August 31, 2021		November 30,  2021		November 30, 2021		November 30, 2020
Parent Company Interest and Consolidation Adjustments
Net revenues	$	2,650	$	3,431	$	3,069	$	(839)	$	8,311	$	8,492
Expenses:
Cost of sales	—		—		—		—		—		—
Compensation and benefits	—		—		—		—		—		—
Non-compensation expenses:
Floor brokerage and clearing fees	—		—		—		—		—		—
Selling, general and other expenses	(149)		(25)		(38)		25,617		25,405		(3,438)
Interest expense	13,902		13,829		13,774		11,628		53,133		53,445
Depreciation and amortization	—		—		—		—		—		—
Total non-compensation expenses	13,753		13,804		13,736		37,245		78,538		50,007
Total expenses	13,753		13,804		13,736		37,245		78,538		50,007
Income (loss) before income taxes and loss related to associated companies	(11,103)		(10,373)		(10,667)		(38,084)		(70,227)		(41,515)
Loss related to associated companies	—		—		—		—		—		—
Income (loss) before income taxes	$	(11,103)	$	(10,373)	$	(10,667)	$	(38,084)	$	(70,227)	$	(41,515)

4

	For the Three Months Ended								For the Year Ended
	February 28, 2021		May 31,  2021		August 31, 2021		November 30,  2021		November 30, 2021		November 30, 2020
Jefferies Financial Group Consolidated
Net revenues	$	2,486,942	$	1,950,507	$	1,938,984	$	1,808,896	$	8,185,329	$	6,010,874
Expenses:
Cost of sales	95,559		143,847		151,510		79,954		470,870		338,588
Compensation and benefits	1,172,543		831,242		802,243		745,096		3,551,124		2,940,863
Non-compensation expenses:
Floor brokerage and clearing fees	76,416		76,810		68,982		79,652		301,860		266,592
Selling, general and other expenses	271,937		341,560		277,262		387,688		1,278,447		1,078,956
Interest expense	20,367		19,943		19,518		17,256		77,084		84,870
Depreciation and amortization	38,767		39,440		38,677		40,536		157,420		158,439
Total non-compensation expenses	407,487		477,753		404,439		525,132		1,814,811		1,588,857
Total expenses	1,675,589		1,452,842		1,358,192		1,350,182		5,836,805		4,868,308
Income (loss) before income taxes and loss related to associated companies	811,353		497,665		580,792		458,714		2,348,524		1,142,566
Loss related to associated companies	(10,568)		(23,526)		(27,176)		(33,149)		(94,419)		(75,483)
Income (loss) before income taxes	$	800,785	$	474,139	$	553,616	$	425,565	$	2,254,105	$	1,067,083

5

In addition to the segment changes, we also changed where we presented Jefferies Group's share of the net earnings of Berkadia Commercial Mortgage Holding LLC in our "Revenues by Source." The net earnings were previously presented within Other revenues and are now presented within Other investment banking revenues. We believe that this change to our revenue reporting better aligns with management's current view of our business activities related to commercial real estate investment banking and management reporting. Our reclassified "Revenues by Source" by segment are as follows (in thousands): 

	For the Three Months Ended								For the Year Ended
	February 28, 2021		May 31,  2021		August 31, 2021		November 30,  2021		November 30, 2021		November 30, 2020
Revenues by Source
Investment Banking and Capital Markets Net Revenues:
Advisory	$	311,439	$	390,508	$	583,887	$	587,726	$	1,873,560	$	1,053,500
Equity underwriting	494,806		324,462		367,460		370,636		1,557,364		902,016
Debt underwriting	197,367		285,730		229,273		222,655		935,025		545,978
Total underwriting	692,173		610,192		596,733		593,291		2,492,389		1,447,994
Other investment banking	83,022		82,461		42,997		66,631		275,111		32,346
Total investment banking	1,086,634		1,083,161		1,223,617		1,247,648		4,641,060		2,533,840
Equities	531,016		242,949		236,532		291,032		1,301,529		1,128,910
Fixed income	363,359		257,197		205,795		132,771		959,122		1,340,792
Total capital markets	894,375		500,146		442,327		423,803		2,260,651		2,469,702
Other	6,487		15,555		6,999		(23,366)		5,675		69,098
Total Investment Banking and Capital Markets Net Revenues	1,987,496		1,598,862		1,672,943		1,648,085		6,907,386		5,072,640
Asset Management Net Revenues:
Asset management fees and revenues	66,309		22,490		18,869		13,065		120,733		26,539
Investment return	173,292		39,624		5,613		41,658		260,187		256,855
Allocated net interest	(10,399)		(11,439)		(11,155)		(11,914)		(44,907)		(48,484)
Total Asset Management Net Revenues	229,202		50,675		13,327		42,809		336,013		234,910
Merchant Banking Net Revenues	267,004		296,815		248,690		118,068		930,577		681,574
Corporate Net Revenues	590		724		955		773		3,042		13,258
Consolidating Adjustments	2,650		3,431		3,069		(839)		8,311		8,492
Total Net Revenues	$	2,486,942	$	1,950,507	$	1,938,984	$	1,808,896	$	8,185,329	$	6,010,874

6

SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: April 8, 2022

JEFFERIES FINANCIAL GROUP INC.
By:	/s/ Teresa S. Gendron
Name:	Teresa S. Gendron
Title:	Vice President and Chief Financial Officer

7