|
|
[X]
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
[ ]
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
New York
(State or other jurisdiction of
|
13-2615557
(I.R.S. Employer
|
incorporation or organization)
|
Identification Number)
|
|
|
520 Madison Avenue, New York, New York
(Address of principal executive offices)
|
10022
(Zip Code)
|
Large accelerated filer
x
|
Accelerated filer
o
|
Non-accelerated filer
o
|
|
|
(Do not check if a smaller reporting company)
|
Smaller reporting company
o
|
Emerging growth company
o
|
|
|
June 30,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
4,741,057
|
|
|
$
|
5,275,480
|
|
Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations
|
709,646
|
|
|
578,014
|
|
||
Financial instruments owned, including securities pledged of $11,079,600 and $10,842,051:
|
|
|
|
|
|
||
Trading assets, at fair value
|
18,318,992
|
|
|
16,082,676
|
|
||
Available for sale securities
|
1,242,475
|
|
|
716,561
|
|
||
Total financial instruments owned
|
19,561,467
|
|
|
16,799,237
|
|
||
Loans to and investments in associated companies
|
2,522,944
|
|
|
2,066,829
|
|
||
Securities borrowed
|
7,599,043
|
|
|
7,721,803
|
|
||
Securities purchased under agreements to resell
|
3,822,232
|
|
|
3,689,559
|
|
||
Receivables
|
5,876,389
|
|
|
5,419,015
|
|
||
Property, equipment and leasehold improvements, net
|
353,553
|
|
|
750,403
|
|
||
Intangible assets, net and goodwill
|
1,901,352
|
|
|
2,463,180
|
|
||
Deferred tax asset, net
|
537,063
|
|
|
743,811
|
|
||
Assets held for sale
|
249,825
|
|
|
—
|
|
||
Other assets
|
1,527,227
|
|
|
1,661,777
|
|
||
Total assets (1)
|
$
|
49,401,798
|
|
|
$
|
47,169,108
|
|
|
|
|
|
||||
LIABILITIES
|
|
|
|
|
|
||
Short-term borrowings
|
$
|
506,218
|
|
|
$
|
436,215
|
|
Trading liabilities, at fair value
|
10,183,242
|
|
|
8,454,965
|
|
||
Securities loaned
|
2,555,701
|
|
|
2,843,911
|
|
||
Securities sold under agreements to repurchase
|
8,773,506
|
|
|
8,660,511
|
|
||
Other secured financings
|
1,464,571
|
|
|
1,029,485
|
|
||
Payables, expense accruals and other liabilities
|
7,496,897
|
|
|
7,167,666
|
|
||
Long-term debt
|
7,714,970
|
|
|
7,885,783
|
|
||
Total liabilities (1)
|
38,695,105
|
|
|
36,478,536
|
|
||
|
|
|
|
||||
Commitments and contingencies
|
|
|
|
|
|
||
|
|
|
|
||||
MEZZANINE EQUITY
|
|
|
|
|
|
||
Redeemable noncontrolling interests
|
14,252
|
|
|
426,593
|
|
||
Mandatorily redeemable convertible preferred shares
|
125,000
|
|
|
125,000
|
|
||
|
|
|
|
||||
EQUITY
|
|
|
|
|
|
||
Common shares, par value $1 per share, authorized 600,000,000 shares; 333,310,944 and 356,227,038 shares issued and outstanding, after deducting 83,558,159 and 60,165,980 shares held in treasury
|
333,311
|
|
|
356,227
|
|
||
Additional paid-in capital
|
4,366,631
|
|
|
4,676,038
|
|
||
Accumulated other comprehensive income
|
314,973
|
|
|
372,724
|
|
||
Retained earnings
|
5,523,277
|
|
|
4,700,968
|
|
||
Total Jefferies Financial Group Inc. shareholders’ equity
|
10,538,192
|
|
|
10,105,957
|
|
||
Noncontrolling interests
|
29,249
|
|
|
33,022
|
|
||
Total equity
|
10,567,441
|
|
|
10,138,979
|
|
||
|
|
|
|
||||
Total
|
$
|
49,401,798
|
|
|
$
|
47,169,108
|
|
(1)
|
Total assets include assets related to variable interest entities of
$543.2 million
and
$382.9 million
at
June 30, 2018
and
December 31, 2017
, respectively, and Total liabilities include liabilities related to variable interest entities of
$1,465.8 million
and
$1,031.0 million
at
June 30, 2018
and
December 31, 2017
, respectively. See Note 8 for additional information related to variable interest entities.
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
|
||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Commissions and other fees
|
$
|
157,704
|
|
|
$
|
152,643
|
|
|
$
|
305,606
|
|
|
$
|
298,465
|
|
Principal transactions
|
53,755
|
|
|
225,234
|
|
|
199,418
|
|
|
641,637
|
|
||||
Investment banking
|
500,297
|
|
|
351,863
|
|
|
940,288
|
|
|
759,884
|
|
||||
Interest income
|
327,314
|
|
|
249,543
|
|
|
602,536
|
|
|
473,056
|
|
||||
Manufacturing revenues
|
114,735
|
|
|
81,329
|
|
|
213,100
|
|
|
161,543
|
|
||||
Other
|
90,021
|
|
|
53,584
|
|
|
143,989
|
|
|
298,524
|
|
||||
Total revenues
|
1,243,826
|
|
|
1,114,196
|
|
|
2,404,937
|
|
|
2,633,109
|
|
||||
Interest expense of Jefferies Group
|
332,667
|
|
|
257,335
|
|
|
598,343
|
|
|
469,722
|
|
||||
Net revenues
|
911,159
|
|
|
856,861
|
|
|
1,806,594
|
|
|
2,163,387
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Compensation and benefits
|
478,515
|
|
|
480,887
|
|
|
968,174
|
|
|
974,902
|
|
||||
Cost of sales
|
90,690
|
|
|
69,982
|
|
|
172,625
|
|
|
139,238
|
|
||||
Floor brokerage and clearing fees
|
45,046
|
|
|
44,435
|
|
|
87,222
|
|
|
90,293
|
|
||||
Interest expense
|
24,279
|
|
|
25,580
|
|
|
45,777
|
|
|
51,150
|
|
||||
Depreciation and amortization
|
31,905
|
|
|
26,258
|
|
|
60,065
|
|
|
53,369
|
|
||||
Selling, general and other expenses
|
236,562
|
|
|
177,566
|
|
|
462,906
|
|
|
352,714
|
|
||||
Total expenses
|
906,997
|
|
|
824,708
|
|
|
1,796,769
|
|
|
1,661,666
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations before income taxes and income (loss) related to associated companies
|
4,162
|
|
|
32,153
|
|
|
9,825
|
|
|
501,721
|
|
||||
Income (loss) related to associated companies
|
33,353
|
|
|
14,104
|
|
|
65,453
|
|
|
(114,470
|
)
|
||||
Income from continuing operations before income taxes
|
37,515
|
|
|
46,257
|
|
|
75,278
|
|
|
387,251
|
|
||||
Income tax provision (benefit)
|
9,598
|
|
|
26,185
|
|
|
(38,831
|
)
|
|
117,428
|
|
||||
Income from continuing operations
|
27,917
|
|
|
20,072
|
|
|
114,109
|
|
|
269,823
|
|
||||
Income from discontinued operations, net of income tax provision of $31,111, $24,435, $47,045 and $37,366
|
77,106
|
|
|
53,990
|
|
|
130,063
|
|
|
98,162
|
|
||||
Gain on disposal of discontinued operations, net of income tax provision of $229,553, $0, $229,553 and $0
|
643,921
|
|
|
—
|
|
|
643,921
|
|
|
—
|
|
||||
Net income
|
748,944
|
|
|
74,062
|
|
|
888,093
|
|
|
367,985
|
|
||||
Net (income) loss attributable to the noncontrolling interests
|
(136
|
)
|
|
1,446
|
|
|
1,208
|
|
|
1,969
|
|
||||
Net income attributable to the redeemable noncontrolling interests
|
(22,108
|
)
|
|
(16,300
|
)
|
|
(36,904
|
)
|
|
(28,322
|
)
|
||||
Preferred stock dividends
|
(1,171
|
)
|
|
(1,015
|
)
|
|
(2,343
|
)
|
|
(2,031
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to Jefferies Financial Group Inc. common shareholders
|
$
|
725,529
|
|
|
$
|
58,193
|
|
|
$
|
850,054
|
|
|
$
|
339,601
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
|
||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Basic earnings per common share attributable to Jefferies Financial Group Inc. common shareholders:
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
$
|
0.08
|
|
|
$
|
0.06
|
|
|
$
|
0.31
|
|
|
$
|
0.73
|
|
Income from discontinued operations
|
0.15
|
|
|
0.10
|
|
|
0.26
|
|
|
0.19
|
|
||||
Gain on disposal of discontinued operations
|
1.82
|
|
|
—
|
|
|
1.79
|
|
|
—
|
|
||||
Net income
|
$
|
2.05
|
|
|
$
|
0.16
|
|
|
$
|
2.36
|
|
|
$
|
0.92
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings per common share attributable to Jefferies Financial Group Inc. common shareholders:
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
$
|
0.08
|
|
|
$
|
0.06
|
|
|
$
|
0.31
|
|
|
$
|
0.72
|
|
Income from discontinued operations
|
0.15
|
|
|
0.10
|
|
|
0.25
|
|
|
0.19
|
|
||||
Gain on disposal of discontinued operations
|
1.80
|
|
|
—
|
|
|
1.77
|
|
|
—
|
|
||||
Net income
|
$
|
2.03
|
|
|
$
|
0.16
|
|
|
$
|
2.33
|
|
|
$
|
0.91
|
|
|
|
|
|
|
|
|
|
||||||||
Dividends per common share
|
$
|
0.1000
|
|
|
$
|
0.0625
|
|
|
$
|
0.2000
|
|
|
$
|
0.1250
|
|
|
|
|
|
|
|
|
|
||||||||
Amounts attributable to Jefferies Financial Group Inc. common shareholders:
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations, net of taxes
|
$
|
27,193
|
|
|
$
|
20,612
|
|
|
$
|
113,211
|
|
|
$
|
269,897
|
|
Income from discontinued operations, net of taxes
|
54,415
|
|
|
37,581
|
|
|
92,922
|
|
|
69,704
|
|
||||
Gain on disposal of discontinued operations, net of taxes
|
643,921
|
|
|
—
|
|
|
643,921
|
|
|
—
|
|
||||
Net income
|
$
|
725,529
|
|
|
$
|
58,193
|
|
|
$
|
850,054
|
|
|
$
|
339,601
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
|
||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
748,944
|
|
|
$
|
74,062
|
|
|
$
|
888,093
|
|
|
$
|
367,985
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net unrealized holding gains (losses) on investments arising during the period, net of income tax provision (benefit) of $227, $(203), $(143) and $5,704
|
818
|
|
|
(346
|
)
|
|
(408
|
)
|
|
9,797
|
|
||||
Less: reclassification adjustment for net (gains) losses included in net income, net of income tax provision of $42, $282, $37 and $271
|
(118
|
)
|
|
(485
|
)
|
|
(103
|
)
|
|
(467
|
)
|
||||
Net change in unrealized holding gains (losses) on investments, net of income tax provision (benefit) of $185, $(485), $(180) and $5,433
|
700
|
|
|
(831
|
)
|
|
(511
|
)
|
|
9,330
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net unrealized foreign exchange gains (losses) arising during the period, net of income tax provision (benefit) of $(2,719), $(10,066), $(793) and $(8,555)
|
(49,310
|
)
|
|
37,893
|
|
|
(31,407
|
)
|
|
37,875
|
|
||||
Less: reclassification adjustment for foreign exchange (gains) losses included in net income, net of income tax provision (benefit) of $(16), $0, $(16) and $1,097
|
(20,459
|
)
|
|
—
|
|
|
(20,459
|
)
|
|
5,290
|
|
||||
Net change in unrealized foreign exchange gains (losses), net of income tax provision (benefit) of $(2,703), $(10,066), $(777) and $(9,652)
|
(69,769
|
)
|
|
37,893
|
|
|
(51,866
|
)
|
|
43,165
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net unrealized gains (losses) on instrument specific credit risk arising during the period, net of income tax provision (benefit) of $8,875, $(1,074), $4,241 and $(7,419)
|
26,287
|
|
|
(2,683
|
)
|
|
14,718
|
|
|
(12,378
|
)
|
||||
Less: reclassification adjustment for instrument specific credit risk (gains) losses included in net income, net of income tax provision of $78, $0, $78 and $0
|
(270
|
)
|
|
—
|
|
|
(270
|
)
|
|
—
|
|
||||
Net change in unrealized instrument specific credit risk gains (losses), net of income tax provision (benefit) of $8,797, $(1,074), $4,163 and $(7,419)
|
26,017
|
|
|
(2,683
|
)
|
|
14,448
|
|
|
(12,378
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Net change in unrealized cash flow hedges gains (losses), net of income tax provision (benefit) of $(721), $0, $513 and $0
|
251
|
|
|
—
|
|
|
1,499
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Reclassification adjustment for pension (gains) losses included in net income, net of income tax provision (benefit) of $(188), $(199), $(339) and $(1,634)
|
457
|
|
|
426
|
|
|
6,263
|
|
|
(372
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss), net of income taxes
|
(42,344
|
)
|
|
34,805
|
|
|
(30,167
|
)
|
|
39,745
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Comprehensive income
|
706,600
|
|
|
108,867
|
|
|
857,926
|
|
|
407,730
|
|
||||
Comprehensive (income) loss attributable to the noncontrolling interests
|
(136
|
)
|
|
1,446
|
|
|
1,208
|
|
|
1,969
|
|
||||
Comprehensive income attributable to the redeemable noncontrolling interests
|
(22,108
|
)
|
|
(16,300
|
)
|
|
(36,904
|
)
|
|
(28,322
|
)
|
||||
Preferred stock dividends
|
(1,171
|
)
|
|
(1,015
|
)
|
|
(2,343
|
)
|
|
(2,031
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Comprehensive income attributable to Jefferies Financial Group Inc. common shareholders
|
$
|
683,185
|
|
|
$
|
92,998
|
|
|
$
|
819,887
|
|
|
$
|
379,346
|
|
|
2018
|
|
2017
|
||||
Net cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
888,093
|
|
|
$
|
367,985
|
|
Adjustments to reconcile net income to net cash provided by (used for) operations:
|
|
|
|
|
|
||
Pre-tax income from discontinued operations, including gain on disposal
|
(1,050,582
|
)
|
|
(135,176
|
)
|
||
Deferred income tax provision
|
203,493
|
|
|
131,957
|
|
||
Depreciation and amortization of property, equipment and leasehold improvements
|
52,516
|
|
|
44,724
|
|
||
Other amortization
|
(15,748
|
)
|
|
(14,162
|
)
|
||
Share-based compensation
|
25,198
|
|
|
20,375
|
|
||
Provision for doubtful accounts
|
16,647
|
|
|
17,579
|
|
||
(Income) loss related to associated companies
|
(90,287
|
)
|
|
59,975
|
|
||
Distributions from associated companies
|
42,952
|
|
|
34,463
|
|
||
Net (income) losses related to property and equipment, and other assets
|
9,006
|
|
|
(125
|
)
|
||
Gain on sale of subsidiary
|
—
|
|
|
(178,236
|
)
|
||
Net change in:
|
|
|
|
||||
Securities deposited with clearing and depository organizations
|
64,880
|
|
|
108
|
|
||
Trading assets
|
(2,245,744
|
)
|
|
(278,135
|
)
|
||
Securities borrowed
|
97,924
|
|
|
(143,554
|
)
|
||
Securities purchased under agreements to resell
|
(176,922
|
)
|
|
(452,154
|
)
|
||
Receivables from brokers, dealers and clearing organizations
|
(187,663
|
)
|
|
(969,962
|
)
|
||
Receivables from customers of securities operations
|
(419,506
|
)
|
|
(379,669
|
)
|
||
Other receivables
|
(86,984
|
)
|
|
(146,693
|
)
|
||
Other assets
|
(57,380
|
)
|
|
(161,807
|
)
|
||
Trading liabilities
|
1,799,908
|
|
|
683,987
|
|
||
Securities loaned
|
(266,028
|
)
|
|
616,701
|
|
||
Securities sold under agreements to repurchase
|
139,287
|
|
|
1,818,042
|
|
||
Payables to brokers, dealers and clearing organizations
|
518,671
|
|
|
(969,230
|
)
|
||
Payables to customers of securities operations
|
489,060
|
|
|
300,774
|
|
||
Trade payables, expense accruals and other liabilities
|
(351,950
|
)
|
|
107,562
|
|
||
Other
|
(87,605
|
)
|
|
20,585
|
|
||
Net cash provided by (used for) operating activities - continuing operations
|
(688,764
|
)
|
|
395,914
|
|
||
Net cash provided by operating activities - discontinued operations
|
164,650
|
|
|
77,578
|
|
||
Net cash provided by (used for) operating activities
|
(524,114
|
)
|
|
473,492
|
|
||
|
|
|
|
||||
Net cash flows from investing activities:
|
|
|
|
|
|
||
Acquisitions of property, equipment and leasehold improvements, and other assets
|
(240,864
|
)
|
|
(63,574
|
)
|
||
Proceeds from disposals of property and equipment, and other assets
|
8,138
|
|
|
21,229
|
|
||
Proceeds from sale of subsidiary, net of expenses and cash of operations sold
|
—
|
|
|
289,767
|
|
||
Advances on notes, loans and other receivables
|
—
|
|
|
(41,456
|
)
|
||
Collections on notes, loans and other receivables
|
11,785
|
|
|
171,320
|
|
||
Loans to and investments in associated companies
|
(1,921,671
|
)
|
|
(2,756,274
|
)
|
||
Capital distributions and loan repayments from associated companies
|
1,925,104
|
|
|
2,595,676
|
|
||
Purchases of investments (other than short-term)
|
(1,961,344
|
)
|
|
(522,310
|
)
|
||
Proceeds from maturities of investments
|
370,360
|
|
|
112,455
|
|
||
Proceeds from sales of investments
|
955,785
|
|
|
409,881
|
|
||
Other
|
1
|
|
|
1,250
|
|
||
Net cash provided by (used for) investing activities - continuing operations
|
(852,706
|
)
|
|
217,964
|
|
||
Net cash provided by (used for) investing activities - discontinued operations
|
860,827
|
|
|
(22,165
|
)
|
||
Net cash provided by investing activities
|
8,121
|
|
|
195,799
|
|
|
2018
|
|
2017
|
||||
Net cash flows from financing activities:
|
|
|
|
||||
Issuance of debt, net of issuance costs
|
$
|
1,863,299
|
|
|
$
|
1,013,886
|
|
Other changes in short-term borrowings, net
|
—
|
|
|
(85,158
|
)
|
||
Repayment of debt
|
(1,585,149
|
)
|
|
(346,838
|
)
|
||
Net change in other secured financings
|
434,188
|
|
|
(264,016
|
)
|
||
Net change in bank overdrafts
|
(2,722
|
)
|
|
(1,544
|
)
|
||
Distributions to noncontrolling interests
|
—
|
|
|
(9,347
|
)
|
||
Contributions from noncontrolling interests
|
113
|
|
|
24,669
|
|
||
Purchase of common shares for treasury
|
(562,429
|
)
|
|
(32,126
|
)
|
||
Dividends paid
|
(70,050
|
)
|
|
(45,409
|
)
|
||
Other
|
1,281
|
|
|
899
|
|
||
Net cash provided by financing activities - continuing operations
|
78,531
|
|
|
255,016
|
|
||
Net cash provided by (used for) financing activities - discontinued operations
|
120,322
|
|
|
(11,748
|
)
|
||
Net cash provided by financing activities
|
198,853
|
|
|
243,268
|
|
||
|
|
|
|
||||
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash
|
(9,582
|
)
|
|
4,895
|
|
||
|
|
|
|
||||
Change in cash classified as assets held for sale
|
—
|
|
|
(3,136
|
)
|
||
|
|
|
|
||||
Net increase in cash, cash equivalents and restricted cash
|
(326,722
|
)
|
|
914,318
|
|
||
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash at January 1,
|
5,774,505
|
|
|
4,597,113
|
|
||
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash at June 30,
|
$
|
5,447,783
|
|
|
$
|
5,511,431
|
|
|
June 30, 2018
|
|
June 30, 2017
|
||||
Cash and cash equivalents
|
$
|
4,741,057
|
|
|
$
|
4,661,937
|
|
Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations
|
674,796
|
|
|
819,226
|
|
||
Other assets
|
31,930
|
|
|
30,268
|
|
||
Total cash, cash equivalents and restricted cash
|
$
|
5,447,783
|
|
|
$
|
5,511,431
|
|
|
Jefferies Financial Group Inc. Common Shareholders
|
|
|
|
|
||||||||||||||||||||||
|
Common
Shares $1 Par Value |
|
Additional
Paid-In Capital |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Retained
Earnings |
|
Subtotal
|
|
Noncontrolling
Interests |
|
Total
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Balance, January 1, 2017
|
$
|
359,425
|
|
|
$
|
4,812,587
|
|
|
$
|
310,697
|
|
|
$
|
4,645,391
|
|
|
$
|
10,128,100
|
|
|
$
|
175,549
|
|
|
$
|
10,303,649
|
|
Net income
|
|
|
|
|
|
|
|
|
|
339,601
|
|
|
339,601
|
|
|
(1,969
|
)
|
|
337,632
|
|
|||||||
Other comprehensive income, net of taxes
|
|
|
|
|
|
|
39,745
|
|
|
|
|
|
39,745
|
|
|
|
|
|
39,745
|
|
|||||||
Contributions from noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
24,669
|
|
|
24,669
|
|
|||||||
Distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
(9,347
|
)
|
|
(9,347
|
)
|
|||||||
Change in interest in consolidated subsidiary
|
|
|
|
44
|
|
|
|
|
|
|
|
|
44
|
|
|
(44
|
)
|
|
—
|
|
|||||||
Share-based compensation expense
|
|
|
|
20,375
|
|
|
|
|
|
|
|
|
20,375
|
|
|
|
|
|
20,375
|
|
|||||||
Change in fair value of redeemable noncontrolling interests
|
|
|
|
39,965
|
|
|
|
|
|
|
|
|
39,965
|
|
|
|
|
|
39,965
|
|
|||||||
Purchase of common shares for treasury
|
(1,359
|
)
|
|
(32,713
|
)
|
|
|
|
|
|
|
|
(34,072
|
)
|
|
|
|
|
(34,072
|
)
|
|||||||
Dividends ($.125 per common share)
|
|
|
|
|
|
|
|
|
|
(46,738
|
)
|
|
(46,738
|
)
|
|
|
|
|
(46,738
|
)
|
|||||||
Other
|
579
|
|
|
3,708
|
|
|
|
|
|
|
|
|
4,287
|
|
|
|
|
|
4,287
|
|
|||||||
Balance, June 30, 2017
|
$
|
358,645
|
|
|
$
|
4,843,966
|
|
|
$
|
350,442
|
|
|
$
|
4,938,254
|
|
|
$
|
10,491,307
|
|
|
$
|
188,858
|
|
|
$
|
10,680,165
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Balance, January 1, 2018
|
$
|
356,227
|
|
|
$
|
4,676,038
|
|
|
$
|
372,724
|
|
|
$
|
4,700,968
|
|
|
$
|
10,105,957
|
|
|
$
|
33,022
|
|
|
$
|
10,138,979
|
|
Cumulative effect of the adoption of accounting standards
|
|
|
|
|
(27,584
|
)
|
|
45,396
|
|
|
17,812
|
|
|
|
|
|
17,812
|
|
|||||||||
Balance, January 1, 2018, as adjusted
|
356,227
|
|
|
4,676,038
|
|
|
345,140
|
|
|
4,746,364
|
|
|
10,123,769
|
|
|
33,022
|
|
|
10,156,791
|
|
|||||||
Net income
|
|
|
|
|
|
|
|
|
|
850,054
|
|
|
850,054
|
|
|
(1,208
|
)
|
|
848,846
|
|
|||||||
Other comprehensive loss, net of taxes
|
|
|
|
|
|
|
(30,167
|
)
|
|
|
|
|
(30,167
|
)
|
|
|
|
|
(30,167
|
)
|
|||||||
Contributions from noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
113
|
|
|
113
|
|
|||||||
Reversal of cumulative National Beef redeemable noncontrolling interests fair value adjustments prior to deconsolidation
|
|
|
|
237,669
|
|
|
|
|
|
|
|
|
237,669
|
|
|
—
|
|
|
237,669
|
|
|||||||
Change in interest in consolidated subsidiary
|
|
|
|
2,677
|
|
|
|
|
|
|
|
|
2,677
|
|
|
(2,677
|
)
|
|
—
|
|
|||||||
Share-based compensation expense
|
|
|
|
25,198
|
|
|
|
|
|
|
|
|
25,198
|
|
|
|
|
|
25,198
|
|
|||||||
Change in fair value of redeemable noncontrolling interests
|
|
|
|
(21,404
|
)
|
|
|
|
|
|
|
|
(21,404
|
)
|
|
|
|
|
(21,404
|
)
|
|||||||
Purchase of common shares for treasury
|
(24,249
|
)
|
|
(562,102
|
)
|
|
|
|
|
|
|
|
(586,351
|
)
|
|
|
|
|
(586,351
|
)
|
|||||||
Dividends ($.20 per common share)
|
|
|
|
|
|
|
|
|
|
(73,141
|
)
|
|
(73,141
|
)
|
|
|
|
|
(73,141
|
)
|
|||||||
Other
|
1,333
|
|
|
8,555
|
|
|
|
|
|
|
|
|
9,888
|
|
|
(1
|
)
|
|
9,887
|
|
|||||||
Balance, June 30, 2018
|
$
|
333,311
|
|
|
$
|
4,366,631
|
|
|
$
|
314,973
|
|
|
$
|
5,523,277
|
|
|
$
|
10,538,192
|
|
|
$
|
29,249
|
|
|
$
|
10,567,441
|
|
•
|
Advisory fees from mergers and acquisitions engagements are recognized at a point in time when the related transaction is completed.
|
•
|
Expenses associated with investment banking advisory engagements are deferred only to the extent they are explicitly reimbursable by the client and the related revenue is recognized at a point in time. All other investment banking advisory related expenses, including expenses incurred related to restructuring advisory engagements, are expensed as incurred.
|
•
|
All investment banking expenses are recognized within their respective expense category in the Consolidated Statements of Operations and any expenses reimbursed by clients are recognized as Investment banking revenues.
|
•
|
Performance fee revenue is generally recognized only at the end of the performance period to the extent that the benchmark return has been met.
|
|
For the Six Months Ended June 30,
|
||||||
|
|||||||
|
2018
|
|
2017
|
||||
Cash paid during the year for:
|
(In thousands)
|
||||||
Interest
|
$
|
654,370
|
|
|
$
|
535,959
|
|
Income tax payments (refunds), net
|
$
|
15,804
|
|
|
$
|
9,977
|
|
|
For the Three Months Ended June 30, 2018
|
|
For the Six Months Ended June 30, 2018
|
||||||||||||||||||||
|
As Reported
|
|
Impact of Adoption of Revenue Recognition Standard
|
|
Financial Results Prior to Adoption of Revenue Recognition Standard
|
|
As Reported
|
|
Impact of Adoption of Revenue Recognition Standard
|
|
Financial Results Prior to Adoption of Revenue Recognition Standard
|
||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commissions and other fees
|
$
|
157,704
|
|
|
$
|
—
|
|
|
$
|
157,704
|
|
|
$
|
305,606
|
|
|
$
|
—
|
|
|
$
|
305,606
|
|
Principal transactions
|
53,755
|
|
|
—
|
|
|
53,755
|
|
|
199,418
|
|
|
—
|
|
|
199,418
|
|
||||||
Investment banking
|
500,297
|
|
|
32,342
|
|
|
467,955
|
|
|
940,288
|
|
|
64,827
|
|
|
875,461
|
|
||||||
Interest income
|
327,314
|
|
|
—
|
|
|
327,314
|
|
|
602,536
|
|
|
—
|
|
|
602,536
|
|
||||||
Manufacturing revenues
|
114,735
|
|
|
—
|
|
|
114,735
|
|
|
213,100
|
|
|
—
|
|
|
213,100
|
|
||||||
Other
|
90,021
|
|
|
—
|
|
|
90,021
|
|
|
143,989
|
|
|
—
|
|
|
143,989
|
|
||||||
Total revenues
|
1,243,826
|
|
|
32,342
|
|
|
1,211,484
|
|
|
2,404,937
|
|
|
64,827
|
|
|
2,340,110
|
|
||||||
Interest expense of Jefferies Group
|
332,667
|
|
|
—
|
|
|
332,667
|
|
|
598,343
|
|
|
—
|
|
|
598,343
|
|
||||||
Net revenues
|
911,159
|
|
|
32,342
|
|
|
878,817
|
|
|
1,806,594
|
|
|
64,827
|
|
|
1,741,767
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Compensation and benefits
|
478,515
|
|
|
—
|
|
|
478,515
|
|
|
968,174
|
|
|
—
|
|
|
968,174
|
|
||||||
Cost of sales
|
90,690
|
|
|
—
|
|
|
90,690
|
|
|
172,625
|
|
|
—
|
|
|
172,625
|
|
||||||
Floor brokerage and clearing fees
|
45,046
|
|
|
—
|
|
|
45,046
|
|
|
87,222
|
|
|
—
|
|
|
87,222
|
|
||||||
Interest expense
|
24,279
|
|
|
—
|
|
|
24,279
|
|
|
45,777
|
|
|
—
|
|
|
45,777
|
|
||||||
Depreciation and amortization
|
31,905
|
|
|
—
|
|
|
31,905
|
|
|
60,065
|
|
|
—
|
|
|
60,065
|
|
||||||
Selling, general and other expenses
|
236,562
|
|
|
32,342
|
|
|
204,220
|
|
|
462,906
|
|
|
64,827
|
|
|
398,079
|
|
||||||
Total expenses
|
906,997
|
|
|
32,342
|
|
|
874,655
|
|
|
1,796,769
|
|
|
64,827
|
|
|
1,731,942
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income from continuing operations before income taxes and income (loss) related to associated companies
|
$
|
4,162
|
|
|
$
|
—
|
|
|
$
|
4,162
|
|
|
$
|
9,825
|
|
|
$
|
—
|
|
|
$
|
9,825
|
|
|
June 30, 2018
|
||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Counterparty
and
Cash
Collateral
Netting (1)
|
|
Total
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Trading assets, at fair value:
|
|
|
|
|
|
|
|
|
|
||||||||||
Corporate equity securities
|
$
|
3,472,077
|
|
|
$
|
70,011
|
|
|
$
|
44,871
|
|
|
$
|
—
|
|
|
$
|
3,586,959
|
|
Corporate debt securities
|
821
|
|
|
2,858,014
|
|
|
28,066
|
|
|
—
|
|
|
2,886,901
|
|
|||||
Collateralized debt obligations and
collateralized loan obligations
|
—
|
|
|
82,399
|
|
|
42,517
|
|
|
—
|
|
|
124,916
|
|
|||||
U.S. government and federal agency securities
|
2,095,792
|
|
|
40,450
|
|
|
—
|
|
|
—
|
|
|
2,136,242
|
|
|||||
Municipal securities
|
—
|
|
|
827,478
|
|
|
—
|
|
|
—
|
|
|
827,478
|
|
|||||
Sovereign obligations
|
1,332,770
|
|
|
1,141,113
|
|
|
—
|
|
|
—
|
|
|
2,473,883
|
|
|||||
Residential mortgage-backed securities
|
—
|
|
|
2,037,431
|
|
|
3,655
|
|
|
—
|
|
|
2,041,086
|
|
|||||
Commercial mortgage-backed securities
|
—
|
|
|
941,432
|
|
|
27,239
|
|
|
—
|
|
|
968,671
|
|
|||||
Other asset-backed securities
|
—
|
|
|
281,821
|
|
|
55,535
|
|
|
—
|
|
|
337,356
|
|
|||||
Loans and other receivables
|
—
|
|
|
1,771,853
|
|
|
64,036
|
|
|
—
|
|
|
1,835,889
|
|
|||||
Derivatives (2)
|
27,435
|
|
|
3,369,641
|
|
|
5,743
|
|
|
(3,102,888
|
)
|
|
299,931
|
|
|||||
Investments at fair value
|
—
|
|
|
—
|
|
|
318,543
|
|
|
—
|
|
|
318,543
|
|
|||||
FXCM term loan
|
—
|
|
|
—
|
|
|
76,100
|
|
|
—
|
|
|
76,100
|
|
|||||
Total trading assets, excluding investments at fair value based on NAV
|
$
|
6,928,895
|
|
|
$
|
13,421,643
|
|
|
$
|
666,305
|
|
|
$
|
(3,102,888
|
)
|
|
$
|
17,913,955
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Available for sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
U.S. government securities
|
$
|
1,217,550
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,217,550
|
|
Residential mortgage-backed securities
|
—
|
|
|
661
|
|
|
—
|
|
|
—
|
|
|
661
|
|
|||||
Commercial mortgage-backed securities
|
—
|
|
|
10,756
|
|
|
—
|
|
|
—
|
|
|
10,756
|
|
|||||
Other asset-backed securities
|
—
|
|
|
13,508
|
|
|
—
|
|
|
—
|
|
|
13,508
|
|
|||||
Total available for sale securities
|
$
|
1,217,550
|
|
|
$
|
24,925
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,242,475
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Trading liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Corporate equity securities
|
$
|
2,344,870
|
|
|
$
|
4,313
|
|
|
$
|
87
|
|
|
$
|
—
|
|
|
$
|
2,349,270
|
|
Corporate debt securities
|
—
|
|
|
1,721,602
|
|
|
522
|
|
|
—
|
|
|
1,722,124
|
|
|||||
U.S. government and federal agency securities
|
1,914,531
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,914,531
|
|
|||||
Sovereign obligations
|
1,518,030
|
|
|
1,083,853
|
|
|
—
|
|
|
—
|
|
|
2,601,883
|
|
|||||
Loans
|
—
|
|
|
1,106,907
|
|
|
12,881
|
|
|
—
|
|
|
1,119,788
|
|
|||||
Derivatives
|
19,357
|
|
|
3,684,018
|
|
|
11,617
|
|
|
(3,239,346
|
)
|
|
475,646
|
|
|||||
Total trading liabilities
|
$
|
5,796,788
|
|
|
$
|
7,600,693
|
|
|
$
|
25,107
|
|
|
$
|
(3,239,346
|
)
|
|
$
|
10,183,242
|
|
Short-term borrowings
|
$
|
—
|
|
|
$
|
68,818
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
68,818
|
|
Long-term debt - structured notes
|
$
|
—
|
|
|
$
|
547,630
|
|
|
$
|
160,626
|
|
|
$
|
—
|
|
|
$
|
708,256
|
|
|
December 31, 2017
|
||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Counterparty
and
Cash
Collateral
Netting (1)
|
|
Total
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Trading assets, at fair value:
|
|
|
|
|
|
|
|
|
|
||||||||||
Corporate equity securities
|
$
|
2,975,463
|
|
|
$
|
60,300
|
|
|
$
|
22,270
|
|
|
$
|
—
|
|
|
$
|
3,058,033
|
|
Corporate debt securities
|
—
|
|
|
3,261,300
|
|
|
26,036
|
|
|
—
|
|
|
3,287,336
|
|
|||||
Collateralized debt obligations and
collateralized loan obligations
|
—
|
|
|
139,166
|
|
|
42,184
|
|
|
—
|
|
|
181,350
|
|
|||||
U.S. government and federal agency securities
|
1,269,230
|
|
|
39,443
|
|
|
—
|
|
|
—
|
|
|
1,308,673
|
|
|||||
Municipal securities
|
—
|
|
|
710,513
|
|
|
—
|
|
|
—
|
|
|
710,513
|
|
|||||
Sovereign obligations
|
1,381,552
|
|
|
1,035,907
|
|
|
—
|
|
|
—
|
|
|
2,417,459
|
|
|||||
Residential mortgage-backed securities
|
—
|
|
|
1,453,294
|
|
|
26,077
|
|
|
—
|
|
|
1,479,371
|
|
|||||
Commercial mortgage-backed securities
|
—
|
|
|
508,115
|
|
|
12,419
|
|
|
—
|
|
|
520,534
|
|
|||||
Other asset-backed securities
|
—
|
|
|
217,111
|
|
|
61,129
|
|
|
—
|
|
|
278,240
|
|
|||||
Loans and other receivables
|
—
|
|
|
1,620,581
|
|
|
47,304
|
|
|
—
|
|
|
1,667,885
|
|
|||||
Derivatives
|
165,396
|
|
|
3,323,278
|
|
|
9,295
|
|
|
(3,318,481
|
)
|
|
179,488
|
|
|||||
Investments at fair value
|
—
|
|
|
946
|
|
|
329,944
|
|
|
—
|
|
|
330,890
|
|
|||||
FXCM term loan
|
—
|
|
|
—
|
|
|
72,800
|
|
|
—
|
|
|
72,800
|
|
|||||
Total trading assets, excluding investments at fair value based on NAV
|
$
|
5,791,641
|
|
|
$
|
12,369,954
|
|
|
$
|
649,458
|
|
|
$
|
(3,318,481
|
)
|
|
$
|
15,492,572
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Available for sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Corporate equity securities (3)
|
$
|
88,486
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
88,486
|
|
U.S. government securities
|
552,805
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
552,805
|
|
|||||
Residential mortgage-backed securities
|
—
|
|
|
34,561
|
|
|
—
|
|
|
—
|
|
|
34,561
|
|
|||||
Commercial mortgage-backed securities
|
—
|
|
|
5,870
|
|
|
—
|
|
|
—
|
|
|
5,870
|
|
|||||
Other asset-backed securities
|
—
|
|
|
34,839
|
|
|
—
|
|
|
—
|
|
|
34,839
|
|
|||||
Total available for sale securities
|
$
|
641,291
|
|
|
$
|
75,270
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
716,561
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Trading liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Corporate equity securities
|
$
|
1,721,267
|
|
|
$
|
32,122
|
|
|
$
|
48
|
|
|
$
|
—
|
|
|
$
|
1,753,437
|
|
Corporate debt securities
|
—
|
|
|
1,688,825
|
|
|
522
|
|
|
—
|
|
|
1,689,347
|
|
|||||
U.S. government and federal agency securities
|
1,430,737
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,430,737
|
|
|||||
Sovereign obligations
|
1,216,643
|
|
|
956,992
|
|
|
—
|
|
|
—
|
|
|
2,173,635
|
|
|||||
Commercial mortgage-backed securities
|
—
|
|
|
—
|
|
|
105
|
|
|
—
|
|
|
105
|
|
|||||
Loans
|
—
|
|
|
1,148,824
|
|
|
3,486
|
|
|
—
|
|
|
1,152,310
|
|
|||||
Derivatives
|
249,361
|
|
|
3,480,506
|
|
|
16,041
|
|
|
(3,490,514
|
)
|
|
255,394
|
|
|||||
Total trading liabilities
|
$
|
4,618,008
|
|
|
$
|
7,307,269
|
|
|
$
|
20,202
|
|
|
$
|
(3,490,514
|
)
|
|
$
|
8,454,965
|
|
Short-term borrowings
|
$
|
—
|
|
|
$
|
23,324
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
23,324
|
|
Long-term debt - structured notes
|
$
|
—
|
|
|
$
|
606,956
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
606,956
|
|
(1)
|
Represents counterparty and cash collateral netting across the levels of the fair value hierarchy for positions with the same counterparty.
|
(2)
|
During the
six months ended June 30, 2018
, Jefferies Group transferred from Level 1 to Level 2
$20.8 million
of listed options included in Trading assets - Derivatives, which are measured based on broker quotes or mid-market valuations. There were no other material transfers of Trading assets and Trading liabilities between Level 1 and Level 2 for the
three and six months ended June 30, 2018 and 2017
.
|
(3)
|
As of January 1, 2018, the Company adopted the FASB's new guidance that affects the accounting for equity investments and the presentation and disclosure requirements for financial instruments. At
June 30, 2018
, equity investments are primarily classified as Trading assets, at fair value and the change in fair value of equity securities is now recognized through the Consolidated Statements of Operations. See Note 2 for additional information.
|
•
|
Exchange Traded Equity Securities:
Exchange traded equity securities are measured based on quoted closing exchange prices, which are generally obtained from external pricing services, and are categorized within Level 1 of the fair value hierarchy, otherwise they are categorized within Level 2 of the fair value hierarchy. To the extent these securities are actively traded, valuation adjustments are not applied.
|
•
|
Non-Exchange Traded Equity Securities
: Non-exchange traded equity securities are measured primarily using broker quotations, pricing data from external pricing services and prices observed from recently executed market transactions and are categorized within Level 2 of the fair value hierarchy. Where such information is not available, non-exchange traded equity securities are categorized within Level 3 of the fair value hierarchy and measured using valuation techniques involving quoted prices of or market data for comparable companies, similar company ratios and multiples (e.g., price/Earnings before interest, taxes, depreciation and amortization ("EBITDA"), price/book value), discounted cash flow analyses and transaction prices observed from subsequent financing or capital issuance by Jefferies Group. When using pricing data of comparable companies, judgment must be applied to adjust the pricing data to account for differences between the measured security and the comparable security (e.g., issuer market capitalization, yield, dividend rate, geographical concentration).
|
•
|
Equity Warrants:
Non-exchange traded equity warrants are measured primarily using pricing data from external pricing services, prices observed from recently executed market transactions and broker quotations and are categorized within Level 2 of the fair value hierarchy. Where such information is not available, non-exchange traded equity warrants are generally categorized within Level 3 of the fair value hierarchy and are measured using the Black-Scholes model with key inputs impacting the valuation including the underlying security price, implied volatility, dividend yield, interest rate curve, strike price and maturity date.
|
•
|
Corporate Bonds:
Corporate bonds are measured primarily using pricing data from external pricing services and broker quotations, where available, prices observed from recently executed market transactions and bond spreads or credit default swap spreads of the issuer adjusted for basis differences between the swap curve and the bond curve. Corporate bonds measured using these valuation methods are categorized within Level 2 of the fair value hierarchy. If broker quotes, pricing data or spread data is not available, alternative valuation techniques are used including cash flow models incorporating interest rate curves, single name or index credit default swap curves for comparable issuers and recovery rate assumptions. Corporate bonds measured using alternative valuation techniques are categorized within Level 3 of the fair value hierarchy and are a limited portion of our corporate bonds.
|
•
|
High Yield Corporate and Convertible Bonds:
A significant portion of our high yield corporate and convertible bonds are categorized within Level 2 of the fair value hierarchy and are measured primarily using broker quotations and pricing data from external pricing services, where available, and prices observed from recently executed market transactions of institutional size. Where pricing data is less observable, valuations are categorized within Level 3 and are based on pending transactions involving the issuer or comparable issuers, prices implied from an issuer’s subsequent financing or recapitalization, models incorporating financial ratios and projected cash flows of the issuer and market prices for comparable issuers.
|
•
|
U.S. Treasury Securities:
U.S. Treasury securities are measured based on quoted market prices and categorized within Level 1 of the fair value hierarchy.
|
•
|
U.S. Agency Debt Securities:
Callable and non-callable U.S. agency debt securities are measured primarily based on quoted market prices obtained from external pricing services and are generally categorized within Level 1 or Level 2 of the fair value hierarchy.
|
•
|
Agency Residential Mortgage-Backed Securities:
Agency residential mortgage-backed securities include mortgage pass-through securities (fixed and adjustable rate), collateralized mortgage obligations and principal-only securities and are generally measured using market price quotations from external pricing services and categorized within Level 2 of the fair value hierarchy.
|
•
|
Agency Residential Interest-Only and Inverse Interest-Only Securities:
The fair value is estimated using expected future cash flow techniques that incorporate prepayment models and other prepayment assumptions to amortize the underlying mortgage loan collateral. We use prices observed from recently executed transactions to develop market-clearing spread and yield curve assumptions. Valuation inputs with regard to the underlying collateral incorporate weighted average coupon, loan-to-value, credit scores, geographic location, maximum and average loan size, originator, servicer and weighted average loan age. Agency residential interest-only and inverse interest-only securities are categorized within Level 2 of the fair value hierarchy. We also use vendor data in developing our assumptions, as appropriate.
|
•
|
Non-Agency Residential Mortgage-Backed Securities:
The fair value of non-agency residential mortgage-backed securities is determined primarily using discounted cash flow methodologies and securities are categorized within Level 2 or Level 3 of the fair value hierarchy based on the observability and significance of the pricing inputs used. Performance attributes of the underlying mortgage loans are evaluated to estimate pricing inputs, such as prepayment rates, default rates and the severity of credit losses. Attributes of the underlying mortgage loans that affect the pricing inputs include, but are not limited to, weighted average coupon; average and maximum loan size; loan-to-value; credit scores; documentation type; geographic location; weighted average loan age; originator; servicer; historical prepayment, default and loss severity experience of the mortgage loan pool; and delinquency rate. Yield curves used in the discounted cash flow models are based on observed market prices for comparable securities and published interest rate data to estimate market yields. In addition, broker quotes, where available, are also referenced to compare prices primarily on interest-only securities.
|
•
|
Agency Commercial Mortgage-Backed Securities:
Government National Mortgage Association ("GNMA") project loan bonds are measured based on inputs corroborated from and benchmarked to observed prices of recent securitization transactions of similar securities with adjustments incorporating an evaluation of various factors, including prepayment speeds, default rates and cash flow structures, as well as the likelihood of pricing levels in the current market environment. Federal National Mortgage Association ("FNMA") Delegated Underwriting and Servicing ("DUS") mortgage-backed securities are generally measured by using prices observed from recently executed market transactions to estimate market-clearing spread levels for purposes of estimating fair value. GNMA project loan bonds and FNMA DUS mortgage-backed securities are categorized within Level 2 of the fair value hierarchy.
|
•
|
Non-Agency Commercial Mortgage-Backed Securities:
Non-agency commercial mortgage-backed securities are measured using pricing data obtained from external pricing services and prices observed from recently executed market transactions and are categorized within Level 2 and Level 3 of the fair value hierarchy.
|
•
|
Corporate Loans:
Corporate loans categorized within Level 2 of the fair value hierarchy are measured based on market price quotations where market price quotations from external pricing services are supported by transaction data. Corporate loans categorized within Level 3 of the fair value hierarchy are measured based on price quotations that are considered to be less transparent, market prices for debt securities of the same creditor and estimates of future cash flow incorporating assumptions regarding creditor default and recovery rates and consideration of the issuer’s capital structure.
|
•
|
Participation Certificates in Agency Residential Loans:
Valuations of participation certificates in agency residential loans are based on observed market prices of recently executed purchases and sales of similar loans and data provider pricing. The loan participation certificates are categorized within Level 2 of the fair value hierarchy given the observability and volume of recently executed transactions and availability of data provider pricing.
|
•
|
Project Loans and Participation Certificates in GNMA Project and Construction Loans:
Valuations of participation certificates in GNMA project and construction loans are based on inputs corroborated from and benchmarked to observed prices of recent securitizations with similar underlying loan collateral to derive an implied spread. Securitization prices are adjusted to estimate the fair value of the loans to account for the arbitrage that is realized at the time of securitization. The measurements are categorized within Level 2 of the fair value hierarchy given the observability and volume of recently executed transactions.
|
•
|
Consumer Loans and Funding Facilities:
Consumer and small business whole loans and related funding facilities are valued based on observed market transactions and incorporating valuation inputs including, but not limited to, delinquency and default rates, prepayment rates, borrower characteristics, loan risk grades and loan age. These assets are categorized within Level 2 or Level 3 of the fair value hierarchy.
|
•
|
Escrow and Trade Claim Receivables:
Escrow and trade claim receivables are categorized within Level 3 of the fair value hierarchy where fair value is estimated based on reference to market prices and implied yields of debt securities of the same or similar issuers. Escrow and trade claim receivables are categorized within Level 2 of the fair value hierarchy where fair value is based on recent trade activity in the same receivable.
|
•
|
Listed Derivative Contracts:
Listed derivative contracts that are actively traded are measured based on quoted exchange prices, broker quotes or vanilla option valuation models, such as Black-Scholes, using observable valuation inputs from the principal market. Exchange quotes and/or valuation inputs are generally obtained from external vendors and pricing services. Broker quotes are validated directly through observable and tradeable quotes. Listed derivative contracts that use unadjusted exchange close prices are generally categorized within Level 1 of the fair value hierarchy. All other listed derivative contracts are generally categorized within Level 2 of the fair value hierarchy.
|
•
|
Over-the-Counter ("OTC") Derivative Contracts:
OTC derivative contracts are generally valued using models, whose inputs reflect assumptions that we believe market participants would use in valuing the derivative in a current transaction. Inputs to valuation models are appropriately calibrated to market data. For many OTC derivative contracts, the valuation models do not involve material subjectivity as the methodologies do not entail significant judgment and the inputs to valuation models do not involve a high degree of subjectivity as the valuation model inputs are readily observable or can be derived from actively quoted markets. OTC derivative contracts are primarily categorized within Level 2 of the fair value hierarchy given the observability and significance of the inputs to the valuation models. Where significant inputs to the valuation are unobservable, derivative instruments are categorized within Level 3 of the fair value hierarchy.
|
•
|
Oil Futures Derivatives:
Vitesse Energy Finance uses swaps and call and put options in order to reduce exposure to future oil price fluctuations. Vitesse Energy Finance accounts for the derivative instruments at fair value, which are classified as either Level 1 or Level 2 within the fair value hierarchy. Fair values classified as Level 1 are measured based on quoted closing exchange prices obtained from external pricing services and Level 2 are determined under the income valuation technique using an option-pricing model that is based on directly or indirectly observable inputs.
|
|
Fair Value (1)
|
|
Unfunded
Commitments
|
|
Redemption
Frequency
(if currently eligible)
|
||||
June 30, 2018
|
|
|
|
|
|
||||
Equity Long/Short Hedge Funds (2)
|
$
|
107,384
|
|
|
$
|
—
|
|
|
(2)
|
Fixed Income and High Yield Hedge Funds (3)
|
342
|
|
|
—
|
|
|
—
|
||
Fund of Funds (4)
|
176
|
|
|
—
|
|
|
—
|
||
Equity Funds (5)
|
35,991
|
|
|
20,696
|
|
|
—
|
||
Multi-asset Funds (6)
|
261,144
|
|
|
—
|
|
|
—
|
||
Total
|
$
|
405,037
|
|
|
$
|
20,696
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2017
|
|
|
|
|
|
|
|
||
Equity Long/Short Hedge Funds (2)
|
$
|
407,895
|
|
|
$
|
—
|
|
|
(2)
|
Fixed Income and High Yield Hedge Funds (3)
|
417
|
|
|
—
|
|
|
—
|
||
Fund of Funds (4)
|
189
|
|
|
—
|
|
|
—
|
||
Equity Funds (5)
|
26,798
|
|
|
19,084
|
|
|
—
|
||
Multi-asset Funds (6)
|
154,805
|
|
|
—
|
|
|
—
|
||
Total
|
$
|
590,104
|
|
|
$
|
19,084
|
|
|
|
(1)
|
Where fair value is calculated based on NAV, fair value has been derived from each of the funds' capital statements.
|
(2)
|
This category includes investments in hedge funds that invest, long and short, primarily in equity securities in domestic and international markets in both the public and private sectors. At
December 31, 2017
,
73%
of these investments were redeemable with
10
business days or less prior written notice; these investments were primarily liquidated during 2018. At
June 30, 2018
and
December 31, 2017
,
33%
and
15%
, respectively, of these investments are redeemable with
30
to
60
days prior written notice.
|
(3)
|
This category includes investments in funds that invest in loans secured by a first trust deed on property, domestic and international public high yield debt, private high yield investments, senior bank loans, public leveraged equities, distressed debt and private equity investments. There are no redemption provisions.
|
(4)
|
This category includes investments in fund of funds that invest in various private equity funds. The investments in this category are managed by us and have no redemption provisions. These investments are gradually being liquidated or we have requested redemption, however, we are unable to estimate when these funds will be received.
|
(5)
|
The investments in this category include investments in equity funds that invest in the equity of various U.S. and foreign private companies in the energy, technology, internet service and telecommunication service industries. These investments cannot be redeemed; instead distributions are received through the liquidation of the underlying assets of the funds, which are expected to be liquidated in
one
to
ten
years.
|
(6)
|
This category includes investments in hedge funds that invest, long and short, primarily in multi-asset securities in domestic and international markets in both the public and private sectors. At
June 30, 2018
and
December 31, 2017
, investments representing approximately
17%
and
12%
, respectively, of the fair value of investments in this category are redeemable with
30
days prior written notice.
|
Three months ended June 30, 2018
|
|||||||||||||||||||||||||||||||||||
|
Balance, March 31, 2018
|
|
Total gains/ losses
(realized and unrealized) (1)
|
|
Purchases
|
|
Sales
|
|
Settlements
|
|
Issuances
|
|
Net transfers
into (out of)
Level 3
|
|
Balance at June 30, 2018
|
|
Changes in
unrealized gains/losses relating to instruments still held at
June 30, 2018 (1)
|
||||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Trading assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Corporate equity securities
|
$
|
35,753
|
|
|
$
|
2,951
|
|
|
$
|
1,485
|
|
|
$
|
(75
|
)
|
|
$
|
(110
|
)
|
|
$
|
—
|
|
|
$
|
4,867
|
|
|
$
|
44,871
|
|
|
$
|
3,241
|
|
Corporate debt securities
|
26,103
|
|
|
923
|
|
|
17,058
|
|
|
(13,481
|
)
|
|
—
|
|
|
—
|
|
|
(2,537
|
)
|
|
28,066
|
|
|
543
|
|
|||||||||
CDOs and CLOs
|
38,613
|
|
|
(2,616
|
)
|
|
251
|
|
|
(1,905
|
)
|
|
(431
|
)
|
|
—
|
|
|
8,605
|
|
|
42,517
|
|
|
(2,688
|
)
|
|||||||||
Residential mortgage-backed securities
|
21,762
|
|
|
(5,416
|
)
|
|
112
|
|
|
(13,113
|
)
|
|
(35
|
)
|
|
—
|
|
|
345
|
|
|
3,655
|
|
|
423
|
|
|||||||||
Commercial mortgage-backed securities
|
15,103
|
|
|
(2,213
|
)
|
|
—
|
|
|
—
|
|
|
(1,924
|
)
|
|
—
|
|
|
16,273
|
|
|
27,239
|
|
|
(2,706
|
)
|
|||||||||
Other asset-backed securities
|
51,288
|
|
|
(4,001
|
)
|
|
59,057
|
|
|
(62,905
|
)
|
|
(3,846
|
)
|
|
—
|
|
|
15,942
|
|
|
55,535
|
|
|
(2,670
|
)
|
|||||||||
Loans and other receivables
|
62,043
|
|
|
(6,051
|
)
|
|
19,029
|
|
|
(16,237
|
)
|
|
(1,940
|
)
|
|
—
|
|
|
7,192
|
|
|
64,036
|
|
|
(5,185
|
)
|
|||||||||
Investments at fair value
|
318,159
|
|
|
(807
|
)
|
|
3,501
|
|
|
(2,310
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
318,543
|
|
|
(807
|
)
|
|||||||||
FXCM term loan
|
73,200
|
|
|
6,488
|
|
|
—
|
|
|
—
|
|
|
(3,588
|
)
|
|
—
|
|
|
—
|
|
|
76,100
|
|
|
2,900
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Trading liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Corporate equity securities
|
$
|
61
|
|
|
$
|
26
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
87
|
|
|
$
|
(26
|
)
|
Corporate debt securities
|
522
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
522
|
|
|
—
|
|
|||||||||
Commercial mortgage-backed securities
|
35
|
|
|
(35
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Loans
|
10,323
|
|
|
(3,416
|
)
|
|
(10,543
|
)
|
|
8,685
|
|
|
(29
|
)
|
|
—
|
|
|
7,861
|
|
|
12,881
|
|
|
3,231
|
|
|||||||||
Net derivatives (2)
|
6,882
|
|
|
(1,580
|
)
|
|
—
|
|
|
—
|
|
|
569
|
|
|
—
|
|
|
3
|
|
|
5,874
|
|
|
(115
|
)
|
|||||||||
Long-term debt
|
—
|
|
|
(20,838
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23,362
|
|
|
158,102
|
|
|
160,626
|
|
|
20,838
|
|
(1)
|
Realized and unrealized gains (losses) are reported in Principal transactions revenues in the Consolidated Statements of Operations.
|
(2)
|
Net derivatives represent Trading assets - Derivatives and Trading liabilities - Derivatives.
|
•
|
CDOs and CLOs of
$20.3 million
, commercial mortgage-backed securities of
$17.1 million
, loans and other receivables of
$16.4 million
and other asset-backed securities of
$15.9 million
due to reduced pricing transparency.
|
•
|
CDOs and CLOs of
$11.7 million
and loans and other receivables of
$9.2 million
due to greater pricing transparency supporting classification into Level 2.
|
Six Months Ended June 30, 2018
|
|||||||||||||||||||||||||||||||||||
|
Balance, December 31, 2017
|
|
Total gains/ losses
(realized and unrealized) (1)
|
|
Purchases
|
|
Sales
|
|
Settlements
|
|
Issuances
|
|
Net transfers
into (out of)
Level 3
|
|
Balance at June 30, 2018
|
|
Changes in
unrealized gains/losses relating to instruments still held at
June 30, 2018 (1)
|
||||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Trading assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Corporate equity securities
|
$
|
22,270
|
|
|
$
|
15,052
|
|
|
$
|
5,383
|
|
|
$
|
(520
|
)
|
|
$
|
(1,779
|
)
|
|
$
|
—
|
|
|
$
|
4,465
|
|
|
$
|
44,871
|
|
|
$
|
14,419
|
|
Corporate debt securities
|
26,036
|
|
|
434
|
|
|
19,304
|
|
|
(15,704
|
)
|
|
(2,049
|
)
|
|
—
|
|
|
45
|
|
|
28,066
|
|
|
(1,048
|
)
|
|||||||||
CDOs and CLOs
|
42,184
|
|
|
(3,227
|
)
|
|
568
|
|
|
(2,374
|
)
|
|
(3,765
|
)
|
|
—
|
|
|
9,131
|
|
|
42,517
|
|
|
(5,641
|
)
|
|||||||||
Residential mortgage-backed securities
|
26,077
|
|
|
(4,193
|
)
|
|
112
|
|
|
(10,959
|
)
|
|
(88
|
)
|
|
—
|
|
|
(7,294
|
)
|
|
3,655
|
|
|
419
|
|
|||||||||
Commercial mortgage-backed securities
|
12,419
|
|
|
(2,292
|
)
|
|
1,208
|
|
|
(487
|
)
|
|
(3,209
|
)
|
|
—
|
|
|
19,600
|
|
|
27,239
|
|
|
(3,176
|
)
|
|||||||||
Other asset-backed securities
|
61,129
|
|
|
(5,476
|
)
|
|
132,291
|
|
|
(124,787
|
)
|
|
(7,622
|
)
|
|
—
|
|
|
—
|
|
|
55,535
|
|
|
(2,498
|
)
|
|||||||||
Loans and other receivables
|
47,304
|
|
|
(201
|
)
|
|
46,682
|
|
|
(25,456
|
)
|
|
(11,648
|
)
|
|
—
|
|
|
7,355
|
|
|
64,036
|
|
|
(1,756
|
)
|
|||||||||
Investments at fair value
|
329,944
|
|
|
1,483
|
|
|
3,740
|
|
|
(17,570
|
)
|
|
—
|
|
|
—
|
|
|
946
|
|
|
318,543
|
|
|
889
|
|
|||||||||
FXCM term loan
|
72,800
|
|
|
15,085
|
|
|
—
|
|
|
—
|
|
|
(11,785
|
)
|
|
—
|
|
|
—
|
|
|
76,100
|
|
|
7,839
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Trading liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Corporate equity securities
|
$
|
48
|
|
|
$
|
39
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
87
|
|
|
$
|
(39
|
)
|
Corporate debt securities
|
522
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
522
|
|
|
—
|
|
|||||||||
Commercial mortgage-backed securities
|
105
|
|
|
(105
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Loans
|
3,486
|
|
|
1,226
|
|
|
(5,100
|
)
|
|
12,092
|
|
|
—
|
|
|
—
|
|
|
1,177
|
|
|
12,881
|
|
|
106
|
|
|||||||||
Net derivatives (2)
|
6,746
|
|
|
(668
|
)
|
|
(6
|
)
|
|
—
|
|
|
(494
|
)
|
|
296
|
|
|
—
|
|
|
5,874
|
|
|
535
|
|
|||||||||
Long-term debt
|
—
|
|
|
(28,082
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
81,284
|
|
|
107,424
|
|
|
160,626
|
|
|
20,082
|
|
(1)
|
Realized and unrealized gains (losses) are reported in Principal transactions revenues in the Consolidated Statements of Operations.
|
(2)
|
Net derivatives represent Trading assets - Derivatives and Trading liabilities - Derivatives.
|
•
|
Commercial mortgage-backed securities of
$19.7 million
and CDOs and CLOs of
$12.7 million
due to reduced pricing transparency.
|
•
|
Residential mortgage-backed securities of
$9.0 million
due to greater pricing transparency supporting classification into Level 2.
|
Three Months Ended June 30, 2017
|
|||||||||||||||||||||||||||||||||||
|
Balance, March 31, 2017
|
|
Total gains/ losses
(realized and unrealized) (1)
|
|
Purchases
|
|
Sales
|
|
Settlements
|
|
Issuances
|
|
Net transfers
into (out of)
Level 3
|
|
Balance, June 30, 2017
|
|
Changes in
unrealized gains/ losses relating to instruments still held at
June 30, 2017 (1)
|
||||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Trading assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Corporate equity securities
|
$
|
20,580
|
|
|
$
|
(1,198
|
)
|
|
$
|
490
|
|
|
$
|
(1,263
|
)
|
|
$
|
(281
|
)
|
|
$
|
—
|
|
|
$
|
2,220
|
|
|
$
|
20,548
|
|
|
$
|
(1,428
|
)
|
Corporate debt securities
|
33,467
|
|
|
(1,420
|
)
|
|
8,789
|
|
|
(9,181
|
)
|
|
(6,986
|
)
|
|
—
|
|
|
58
|
|
|
24,727
|
|
|
(1,983
|
)
|
|||||||||
CDOs and CLOs
|
45,354
|
|
|
(1,668
|
)
|
|
16,334
|
|
|
(19,103
|
)
|
|
—
|
|
|
—
|
|
|
7,291
|
|
|
48,208
|
|
|
(745
|
)
|
|||||||||
Municipal securities
|
26,554
|
|
|
(70
|
)
|
|
—
|
|
|
(26,484
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Residential mortgage-backed securities
|
39,259
|
|
|
(2,188
|
)
|
|
3,176
|
|
|
(6,636
|
)
|
|
(4
|
)
|
|
—
|
|
|
(575
|
)
|
|
33,032
|
|
|
(1,024
|
)
|
|||||||||
Commercial mortgage-backed securities
|
20,653
|
|
|
98
|
|
|
534
|
|
|
(4,111
|
)
|
|
(1
|
)
|
|
—
|
|
|
(910
|
)
|
|
16,263
|
|
|
(546
|
)
|
|||||||||
Other asset-backed securities
|
37,702
|
|
|
(3,663
|
)
|
|
13,476
|
|
|
—
|
|
|
(2,241
|
)
|
|
—
|
|
|
(1,925
|
)
|
|
43,349
|
|
|
(3,642
|
)
|
|||||||||
Loans and other receivables
|
53,172
|
|
|
3,226
|
|
|
20,054
|
|
|
(19,378
|
)
|
|
(7,181
|
)
|
|
—
|
|
|
(528
|
)
|
|
49,365
|
|
|
1,687
|
|
|||||||||
Investments at fair value
|
307,830
|
|
|
4,940
|
|
|
2,800
|
|
|
—
|
|
|
(273
|
)
|
|
—
|
|
|
—
|
|
|
315,297
|
|
|
4,940
|
|
|||||||||
FXCM term loan
|
132,800
|
|
|
4,430
|
|
|
—
|
|
|
—
|
|
|
(8,180
|
)
|
|
—
|
|
|
—
|
|
|
129,050
|
|
|
(1,801
|
)
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Trading liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Corporate equity securities
|
$
|
324
|
|
|
$
|
30
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
354
|
|
|
$
|
(30
|
)
|
Corporate debt securities
|
523
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
522
|
|
|
1
|
|
|||||||||
Commercial mortgage-backed securities
|
—
|
|
|
70
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
70
|
|
|
(70
|
)
|
|||||||||
Net derivatives (2)
|
6,413
|
|
|
(3,617
|
)
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
218
|
|
|
11
|
|
|
3,022
|
|
|
(147
|
)
|
|||||||||
Loans
|
1,036
|
|
|
3,867
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
64
|
|
|
4,967
|
|
|
(3,867
|
)
|
|||||||||
Other secured financings
|
87
|
|
|
(87
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
(1)
|
Realized and unrealized gains (losses) are reported in Principal transactions revenues in the Consolidated Statements of Operations.
|
(2)
|
Net derivatives represent Trading assets - Derivatives and Trading liabilities - Derivatives.
|
•
|
Residential mortgage-backed securities of
$12.0 million
due to a lack of observable market transactions.
|
•
|
Residential mortgage-backed securities of
$12.6 million
due to greater pricing transparency supporting classification into Level 2.
|
Six Months Ended June 30, 2017
|
|||||||||||||||||||||||||||||||||||
|
Balance, December 31, 2016
|
|
Total gains/ losses
(realized and unrealized) (1)
|
|
Purchases
|
|
Sales
|
|
Settlements
|
|
Issuances
|
|
Net transfers
into (out of)
Level 3
|
|
Balance, June 30, 2017
|
|
Changes in
unrealized gains/ losses relating to instruments still held at
June 30, 2017 (1)
|
||||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Trading assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Corporate equity securities
|
$
|
21,739
|
|
|
$
|
(489
|
)
|
|
$
|
1,056
|
|
|
$
|
(1,117
|
)
|
|
$
|
(1,907
|
)
|
|
$
|
—
|
|
|
$
|
1,266
|
|
|
$
|
20,548
|
|
|
$
|
(1,215
|
)
|
Corporate debt securities
|
25,005
|
|
|
(3,300
|
)
|
|
15,133
|
|
|
(15,295
|
)
|
|
(1,693
|
)
|
|
—
|
|
|
4,877
|
|
|
24,727
|
|
|
(3,571
|
)
|
|||||||||
CDOs and CLOs
|
54,354
|
|
|
(8,709
|
)
|
|
24,741
|
|
|
(35,044
|
)
|
|
—
|
|
|
—
|
|
|
12,866
|
|
|
48,208
|
|
|
(9,431
|
)
|
|||||||||
Municipal securities
|
27,257
|
|
|
(1,547
|
)
|
|
—
|
|
|
(25,710
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Residential mortgage-backed securities
|
38,772
|
|
|
(3,000
|
)
|
|
5,886
|
|
|
(11,750
|
)
|
|
(16
|
)
|
|
—
|
|
|
3,140
|
|
|
33,032
|
|
|
(1,667
|
)
|
|||||||||
Commercial mortgage-backed securities
|
20,580
|
|
|
(1,119
|
)
|
|
534
|
|
|
(4,523
|
)
|
|
(2
|
)
|
|
—
|
|
|
793
|
|
|
16,263
|
|
|
(907
|
)
|
|||||||||
Other asset-backed securities
|
40,911
|
|
|
(5,489
|
)
|
|
17,029
|
|
|
(300
|
)
|
|
(5,576
|
)
|
|
—
|
|
|
(3,226
|
)
|
|
43,349
|
|
|
(5,461
|
)
|
|||||||||
Loans and other receivables
|
81,872
|
|
|
10,062
|
|
|
63,616
|
|
|
(61,423
|
)
|
|
(17,017
|
)
|
|
—
|
|
|
(27,745
|
)
|
|
49,365
|
|
|
(3,679
|
)
|
|||||||||
Investments at fair value
|
314,359
|
|
|
8,796
|
|
|
2,800
|
|
|
(10,119
|
)
|
|
(539
|
)
|
|
—
|
|
|
—
|
|
|
315,297
|
|
|
10,820
|
|
|||||||||
FXCM term loan
|
164,500
|
|
|
15,308
|
|
|
—
|
|
|
—
|
|
|
(50,758
|
)
|
|
—
|
|
|
—
|
|
|
129,050
|
|
|
1,471
|
|
|||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Trading liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Corporate equity securities
|
$
|
313
|
|
|
$
|
41
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
354
|
|
|
$
|
(41
|
)
|
Corporate debt securities
|
523
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
522
|
|
|
1
|
|
|||||||||
Commercial mortgage-backed securities
|
—
|
|
|
70
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
70
|
|
|
(70
|
)
|
|||||||||
Net derivatives (2)
|
3,441
|
|
|
(6,154
|
)
|
|
—
|
|
|
—
|
|
|
1,534
|
|
|
404
|
|
|
3,797
|
|
|
3,022
|
|
|
(614
|
)
|
|||||||||
Loans
|
378
|
|
|
4,091
|
|
|
(364
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
862
|
|
|
4,967
|
|
|
(4,091
|
)
|
|||||||||
Other secured financings
|
418
|
|
|
(418
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
(1)
|
Realized and unrealized gains (losses) are reported in Principal transactions revenues in the Consolidated Statements of Operations.
|
(2)
|
Net derivatives represent Trading assets - Derivatives and Trading liabilities - Derivatives.
|
•
|
CDOs and CLOs of
$12.4 million
and residential mortgage-backed securities of
$11.5 million
due to a lack of observable market transactions.
|
•
|
Loans and other receivables of
$30.8 million
due to a greater pricing transparency supporting classification into Level 2.
|
June 30, 2018
|
|||||||||||||
Financial Instruments Owned
|
|
Fair Value
(in thousands) |
|
Valuation
Technique |
|
Significant
Unobservable Input(s) |
|
Input/Range
|
|
Weighted
Average |
|||
Corporate equity securities
|
|
$
|
38,212
|
|
|
|
|
|
|
|
|
|
|
Non-exchange traded securities
|
|
|
|
|
Market approach
|
|
Price
|
|
$0 to $75
|
|
$18.0
|
||
|
|
|
|
|
|
Underlying stock price
|
|
$3 to $11
|
|
$9.0
|
|||
|
|
|
|
Comparable pricing
|
|
Comparable asset price
|
|
$9
|
|
—
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|||
Corporate debt securities
|
|
$
|
24,869
|
|
|
Market approach
|
|
Discount rate/yield
|
|
4%
|
|
—
|
|
|
|
|
|
|
|
Estimated recovery percentage
|
|
40%
|
|
—
|
|
||
|
|
|
|
|
|
Price
|
|
$10 to $89
|
|
$78.0
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
CDOs and CLOs
|
|
$
|
39,178
|
|
|
Discounted cash flows
|
|
Constant prepayment rate
|
|
20%
|
|
—
|
|
|
|
|
|
|
|
|
Constant default rate
|
|
1% to 2%
|
|
2
|
%
|
|
|
|
|
|
|
|
|
Loss severity
|
|
25% to 30%
|
|
26
|
%
|
|
|
|
|
|
|
|
|
Discount rate/yield
|
|
11% to 37%
|
|
18
|
%
|
|
|
|
|
|
Scenario analysis
|
|
Estimated recovery percentage
|
|
7% to 43%
|
|
27
|
%
|
||
|
|
|
|
|
|
|
|
|
|
|
|||
Residential mortgage-backed securities
|
|
$
|
3,655
|
|
|
Discounted cash flows
|
|
Cumulative loss rate
|
|
46%
|
|
—
|
|
|
|
|
|
|
|
|
Duration (years)
|
|
8 years
|
|
—
|
|
|
|
|
|
|
|
|
|
Discount rate/yield
|
|
4%
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Commercial mortgage-backed securities
|
|
$
|
27,239
|
|
|
Discounted cash flows
|
|
Cumulative loss rate
|
|
7% to 81%
|
|
39
|
%
|
|
|
|
|
|
|
|
Duration (years)
|
|
1 year to 3 years
|
|
1 year
|
||
|
|
|
|
|
|
Discount rate/yield
|
|
4% to 15%
|
|
9
|
%
|
||
|
|
|
|
Scenario analysis
|
|
Estimated recovery percentage
|
|
26%
|
|
—
|
|
||
|
|
|
|
|
|
Price
|
|
$49
|
|
—
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|||
Other asset-backed securities
|
|
$
|
55,535
|
|
|
Discounted cash flows
|
|
Cumulative loss rate
|
|
0% to 28%
|
|
21
|
%
|
|
|
|
|
|
|
|
Duration (years)
|
|
1 year to 6 years
|
|
2 years
|
||
|
|
|
|
|
|
|
Discount rate/yield
|
|
5% to 12%
|
|
8
|
%
|
|
|
|
|
|
Market approach
|
|
Price
|
|
$100
|
|
—
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|||
Loans and other receivables
|
|
$
|
64,036
|
|
|
Market approach
|
|
Estimated recovery percentage
|
|
0%
|
|
—
|
|
|
|
|
|
|
|
Price
|
|
$13 to $101
|
|
$84.0
|
|||
|
|
|
|
|
Scenario analysis
|
|
Estimated recovery percentage
|
|
57% to 107%
|
|
88
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Derivatives
|
|
$
|
5,743
|
|
|
|
|
|
|
|
|
|
|
Credit default swaps
|
|
|
|
Market approach
|
|
Credit spread
|
|
225 bps
|
|
—
|
|
||
Total return swaps
|
|
|
|
Market approach
|
|
Price
|
|
$101 to $103
|
|
$102.0
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
Investments at fair value
|
|
$
|
112,211
|
|
|
|
|
|
|
|
|
|
|
Private equity securities
|
|
|
|
Market approach
|
|
Price
|
|
$3 to $250
|
|
$172.0
|
|||
|
|
|
|
|
|
Transaction level
|
|
$7
|
|
—
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|||
Investment in FXCM
|
|
$
|
76,100
|
|
|
|
|
|
|
|
|
|
|
Term loan
|
|
|
|
Discounted cash flows
|
|
Term based on the pay off (years)
|
|
0 months to 0.5 years
|
|
0.5 years
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
Trading Liabilities
|
|
Fair Value
(in thousands) |
|
Valuation
Technique |
|
Significant
Unobservable Input(s) |
|
Input/Range
|
|
Weighted
Average |
|||
Loans
|
|
$
|
12,881
|
|
|
Market approach
|
|
Estimated recovery percentage
|
|
0%
|
|
—
|
|
|
|
|
|
|
|
Price
|
|
$13 to $101
|
|
$62.0
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
Derivatives
|
|
$
|
11,617
|
|
|
|
|
|
|
|
|
|
|
Equity options
|
|
|
|
Option model/default rate
|
|
Default probability
|
|
0%
|
|
—
|
|
||
Unfunded commitments
|
|
|
|
Market approach
|
|
Price
|
|
$98
|
|
—
|
|
||
Total return swaps
|
|
|
|
Market approach
|
|
Price
|
|
$101 to $103
|
|
$102.0
|
|||
Variable funding note swaps
|
|
|
|
|
Discounted cash flows
|
|
Constant prepayment rate
|
|
20%
|
|
—
|
|
|
|
|
|
|
|
|
|
Constant default rate
|
|
2%
|
|
—
|
|
|
|
|
|
|
|
|
|
Loss severity
|
|
25%
|
|
—
|
|
|
|
|
|
|
|
|
|
Discount rate/yield
|
|
37%
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Long-term debt
|
|
$
|
160,626
|
|
|
|
|
|
|
|
|
|
|
Structured notes
|
|
|
|
Market approach
|
|
Price
|
|
$71 to $99
|
|
$80.0
|
|||
|
|
|
|
|
|
Price
|
|
€79 to €110
|
|
€96.0
|
December 31, 2017
|
|||||||||||||
Financial Instruments Owned
|
|
Fair Value
(in thousands)
|
|
Valuation
Technique
|
|
Significant
Unobservable Input(s)
|
|
Input/Range
|
|
Weighted
Average
|
|||
Corporate equity securities
|
|
$
|
18,109
|
|
|
|
|
|
|
|
|
|
|
Non-exchange traded securities
|
|
|
|
Market approach
|
|
Price
|
|
$3 to $75
|
|
$33.0
|
|||
|
|
|
|
|
|
Underlying stock price
|
|
$6
|
|
—
|
|
||
|
|
|
|
Comparable pricing
|
|
Comparable asset price
|
|
$7
|
|
—
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|||
Corporate debt securities
|
|
$
|
26,036
|
|
|
Convertible bond model
|
|
Discount rate/yield
|
|
8%
|
|
—
|
|
|
|
|
|
|
|
Volatility
|
|
40%
|
|
—
|
|
||
|
|
|
|
Market approach
|
|
Estimated recovery percentage
|
|
17%
|
|
—
|
|
||
|
|
|
|
|
|
Price
|
|
$10
|
|
—
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|||
CDOs and CLOs
|
|
$
|
38,845
|
|
|
Discounted cash flows
|
|
Constant prepayment rate
|
|
20%
|
|
—
|
|
|
|
|
|
|
|
|
Constant default rate
|
|
2%
|
|
—
|
|
|
|
|
|
|
|
|
|
Loss severity
|
|
25% to 30%
|
|
26
|
%
|
|
|
|
|
|
|
|
|
Discount rate/yield
|
|
3% to 26%
|
|
12
|
%
|
|
|
|
|
|
Scenario analysis
|
|
Estimated recovery percentage
|
|
8% to 45%
|
|
26
|
%
|
||
|
|
|
|
|
|
|
|
|
|
|
|||
Residential mortgage-backed securities
|
|
$
|
26,077
|
|
|
Discounted cash flows
|
|
Cumulative loss rate
|
|
3% to 19%
|
|
10
|
%
|
|
|
|
|
|
|
|
Duration (years)
|
|
2 years to 4 years
|
|
3 years
|
||
|
|
|
|
|
|
|
Discount rate/yield
|
|
6% to 10%
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Commercial mortgage-backed securities
|
|
$
|
12,419
|
|
|
Discounted cash flows
|
|
Discount rate/yield
|
|
2% to 26%
|
|
12
|
%
|
|
|
|
|
|
|
|
Cumulative loss rate
|
|
8% to 65%
|
|
44
|
%
|
|
|
|
|
|
|
|
Duration (years)
|
|
1 year to 3 years
|
|
2 years
|
|||
|
|
|
|
Scenario analysis
|
|
Estimated recovery percentage
|
|
26% to 32%
|
|
28
|
%
|
||
|
|
|
|
|
|
Price
|
|
$52 to $56
|
|
$54.0
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
Other asset-backed securities
|
|
$
|
61,129
|
|
|
Discounted cash flows
|
|
Cumulative loss rate
|
|
0% to 33%
|
|
23
|
%
|
|
|
|
|
|
|
|
Duration (years)
|
|
1 year to 6 years
|
|
2 years
|
||
|
|
|
|
|
|
|
Discount rate/yield
|
|
5% to 39%
|
|
9
|
%
|
|
|
|
|
|
Market approach
|
|
Price
|
|
$100
|
|
—
|
|
||
|
|
|
|
Scenario analysis
|
|
Estimated recovery percentage
|
|
14%
|
|
—
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|||
Loans and other receivables
|
|
$
|
46,121
|
|
|
Market approach
|
|
Estimated recovery percentage
|
|
76%
|
|
—
|
|
|
|
|
|
|
|
|
Price
|
|
$54 to $100
|
|
$95.0
|
||
|
|
|
|
|
Scenario analysis
|
|
Estimated recovery percentage
|
|
13% to 107%
|
|
78
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Derivatives
|
|
$
|
9,295
|
|
|
|
|
|
|
|
|
|
|
Total return swaps
|
|
|
|
|
Market approach
|
|
Price
|
|
$101 to $106
|
|
$103.0
|
||
Interest rate swaps
|
|
|
|
Market approach
|
|
Credit spread
|
|
800 bps
|
|
—
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|||
Investments at fair value
|
|
$
|
110,010
|
|
|
|
|
|
|
|
|
|
|
Private equity securities
|
|
|
|
|
Market approach
|
|
Transaction level
|
|
$3 to $250
|
|
$172.0
|
||
|
|
|
|
|
|
Price
|
|
$7
|
|
—
|
|
||
|
|
|
|
|
|
Discount rate
|
|
20%
|
|
—
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|||
Investment in FXCM
|
|
$
|
72,800
|
|
|
|
|
|
|
|
|
|
|
Term loan
|
|
|
|
|
Discounted cash flows
|
|
Term based on the pay off (years)
|
|
0 months to 1 year
|
|
0.2 years
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||
Trading Liabilities
|
|
Fair Value
(in thousands)
|
|
Valuation
Technique
|
|
Significant
Unobservable Input(s)
|
|
Input/Range
|
|
Weighted
Average
|
|||
Derivatives
|
|
$
|
16,041
|
|
|
|
|
|
|
|
|
|
|
Equity options
|
|
|
|
|
Option model/default rate
|
|
Default probability
|
|
0%
|
|
—
|
|
|
Unfunded commitments
|
|
|
|
Market approach
|
|
Price
|
|
$99
|
|
—
|
|
||
Total return swaps
|
|
|
|
Market approach
|
|
Price
|
|
$101 to $106
|
|
$103.0
|
|||
Variable funding note swaps
|
|
|
|
Discounted cash flows
|
|
Constant prepayment rate
|
|
20%
|
|
—
|
|
||
|
|
|
|
|
|
|
Constant default rate
|
|
2%
|
|
—
|
|
|
|
|
|
|
|
|
Loss severity
|
|
25%
|
|
—
|
|
||
|
|
|
|
|
|
Discount rate/yield
|
|
26%
|
|
—
|
|
•
|
Non-exchange traded securities using comparable pricing valuation techniques. A significant increase (decrease) in the comparable asset price in isolation would result in a significantly higher (lower) fair value measurement.
|
•
|
Corporate debt securities using a convertible bond model. A significant increase (decrease) in the bond discount rate/yield would result in a significantly lower (higher) fair value measurement. A significant increase (decrease) in volatility would result in a significantly higher (lower) fair value measurement.
|
•
|
Non-exchange traded securities, corporate debt securities, loans and other receivables, unfunded commitments, interest rate swaps, total return swaps, credit default swaps, other asset-backed securities, private equity securities and structured notes using a market approach valuation technique. A significant increase (decrease) in the transaction level of a private equity security would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the underlying stock price of the non-exchange traded securities would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the credit spread of certain derivatives would result in a significantly lower (higher) fair value measurement. A significant increase (decrease) in the price of the private equity securities, non-exchange traded securities, corporate debt securities, unfunded commitments, total return swaps, other asset-backed securities, loans and other receivables or structured notes would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the estimated recovery rates of the cash flow outcomes underlying the corporate debt securities or loans and other receivables would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the bond discount rate/yield would result in a significantly lower (higher) fair value measurement.
|
•
|
Loans and other receivables, CDOs and CLOs, commercial mortgage-backed securities and other asset-backed securities using scenario analysis. A significant increase (decrease) in the possible recovery rates of the cash flow outcomes underlying the investment would result in a significantly higher (lower) fair value measurement for the financial instrument. A significant increase (decrease) in the price of the commercial mortgage-backed securities would result in a significantly higher (lower) fair value measurement.
|
•
|
CDOs and CLOs, residential and commercial mortgage-backed securities, other asset-backed securities and variable funding note swaps using a discounted cash flow valuation technique. A significant increase (decrease) in isolation in the constant default rate, loss severity or cumulative loss rate would result in a significantly lower (higher) fair value measurement. The impact of changes in the constant prepayment rate and duration would have differing impacts depending on the capital structure and type of security. A significant increase (decrease) in the discount rate/security yield would result in a significantly lower (higher) fair value measurement.
|
•
|
Derivative equity options using an option/default rate model. A significant increase (decrease) in default probability would result in a significantly lower (higher) fair value measurement.
|
•
|
FXCM term loan using a discounted cash flow valuation technique. A significant increase (decrease) in term based on the time to pay off the loan would result in a higher (lower) fair value measurement.
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
|
||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Financial Instruments Owned:
|
|
|
|
|
|
|
|
||||||||
Loans and other receivables
|
$
|
(8,754
|
)
|
|
$
|
(4,282
|
)
|
|
$
|
(6,428
|
)
|
|
$
|
(11,094
|
)
|
|
|
|
|
|
|
|
|
||||||||
Financial Instruments Sold:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loans
|
$
|
1
|
|
|
$
|
(1,734
|
)
|
|
$
|
260
|
|
|
$
|
(1,761
|
)
|
Loan commitments
|
$
|
26
|
|
|
$
|
3,332
|
|
|
$
|
(103
|
)
|
|
$
|
4,203
|
|
|
|
|
|
|
|
|
|
||||||||
Long-term Debt:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Changes in instrument specific credit risk (1)
|
$
|
34,787
|
|
|
$
|
(3,757
|
)
|
|
$
|
18,585
|
|
|
$
|
(19,797
|
)
|
Other changes in fair value (2)
|
$
|
(175
|
)
|
|
$
|
1,516
|
|
|
$
|
40,979
|
|
|
$
|
4,933
|
|
|
|
|
|
|
|
|
|
||||||||
Short-term Borrowings:
|
|
|
|
|
|
|
|
||||||||
Changes in instrument specific credit risk (1)
|
$
|
27
|
|
|
$
|
—
|
|
|
$
|
27
|
|
|
$
|
—
|
|
Other changes in fair value (2)
|
$
|
1,636
|
|
|
$
|
—
|
|
|
$
|
1,636
|
|
|
$
|
—
|
|
(1)
|
Changes in instrument specific credit risk related to structured notes are included in the Consolidated Statements of Comprehensive Income (Loss), net of tax.
|
(2)
|
Other changes in fair value are included in Principal transactions revenues in the Consolidated Statements of Operations.
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Financial Instruments Owned:
|
|
|
|
||||
Loans and other receivables (1)
|
$
|
992,124
|
|
|
$
|
752,076
|
|
Loans and other receivables on nonaccrual status and/or 90 days or greater past due (1) (2)
|
$
|
193,097
|
|
|
$
|
159,462
|
|
Long-term debt and short-term borrowings
|
$
|
96,576
|
|
|
$
|
32,839
|
|
(1)
|
Interest income is recognized separately from other changes in fair value and is included in Interest income in the Consolidated Statements of Operations.
|
(2)
|
Amounts include all loans and other receivables
90
days or greater past due by which contractual principal exceeds fair value of
$33.6 million
and
$38.7 million
at
June 30, 2018
and
December 31, 2017
, respectively.
|
|
Assets
|
|
Liabilities
|
||||||||||
|
Fair Value
|
|
Number of
Contracts
|
|
Fair Value
|
|
Number of
Contracts
|
||||||
June 30, 2018
|
|
|
|
|
|
|
|
||||||
Derivatives designated as accounting hedges - interest rate contracts
|
$
|
—
|
|
|
—
|
|
|
$
|
25,668
|
|
|
1
|
|
|
|
|
|
|
|
|
|
||||||
Derivatives not designated as accounting hedges:
|
|
|
|
|
|
|
|
||||||
Interest rate contracts
|
$
|
807,662
|
|
|
56,517
|
|
|
$
|
953,263
|
|
|
21,199
|
|
Foreign exchange contracts
|
290,275
|
|
|
6,519
|
|
|
282,540
|
|
|
5,609
|
|
||
Equity contracts
|
2,238,701
|
|
|
2,262,333
|
|
|
2,399,564
|
|
|
1,912,121
|
|
||
Commodity contracts
|
9,653
|
|
|
8,682
|
|
|
16,657
|
|
|
7,810
|
|
||
Credit contracts
|
56,528
|
|
|
166
|
|
|
37,300
|
|
|
111
|
|
||
Total
|
3,402,819
|
|
|
|
|
|
3,689,324
|
|
|
|
|
||
Counterparty/cash-collateral netting (1)
|
(3,102,888
|
)
|
|
|
|
|
(3,239,346
|
)
|
|
|
|
||
Total derivatives not designated as accounting hedges
|
$
|
299,931
|
|
|
|
|
|
$
|
449,978
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total per Consolidated Statement of Financial Condition (2)
|
$
|
299,931
|
|
|
|
|
$
|
475,646
|
|
|
|
||
|
|
|
|
|
|
|
|
||||||
December 31, 2017
|
|
|
|
|
|
|
|
||||||
Derivatives designated as accounting hedges - interest rate contracts
|
$
|
—
|
|
|
—
|
|
|
$
|
2,420
|
|
|
1
|
|
|
|
|
|
|
|
|
|
||||||
Derivatives not designated as accounting hedges:
|
|
|
|
|
|
|
|
||||||
Interest rate contracts
|
$
|
1,717,058
|
|
|
38,941
|
|
|
$
|
1,708,776
|
|
|
12,828
|
|
Foreign exchange contracts
|
366,541
|
|
|
6,463
|
|
|
349,512
|
|
|
4,612
|
|
||
Equity contracts
|
1,373,016
|
|
|
2,728,750
|
|
|
1,638,258
|
|
|
2,118,526
|
|
||
Commodity contracts
|
3,093
|
|
|
7,249
|
|
|
5,141
|
|
|
6,047
|
|
||
Credit contracts
|
38,261
|
|
|
130
|
|
|
41,801
|
|
|
191
|
|
||
Total
|
3,497,969
|
|
|
|
|
|
3,743,488
|
|
|
|
|
||
Counterparty/cash-collateral netting (1)(3)
|
(3,318,481
|
)
|
|
|
|
|
(3,490,514
|
)
|
|
|
|
||
Total derivatives not designated as accounting hedges
|
$
|
179,488
|
|
|
|
|
|
$
|
252,974
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total per Consolidated Statement of Financial Condition (2)(3)
|
$
|
179,488
|
|
|
|
|
$
|
255,394
|
|
|
|
(1)
|
Amounts netted include both netting by counterparty and for cash collateral paid or received.
|
(2)
|
We have not received or pledged additional collateral under master netting agreements and/or other credit support agreements that is eligible to be offset beyond what has been offset in the Consolidated Statements of Financial Condition.
|
(3)
|
Pursuant to a rule change by the London Clearing House in the first fiscal quarter of 2018, variation margin exchanged each day with this clearing organization on certain interest rate derivatives is characterized as settlement payments as opposed to cash posted as collateral. The impact of this rule change would have been a reduction in gross interest rate derivative assets and liabilities as of
December 31, 2017
of approximately
$800 million
, and a corresponding decrease in counterparty and cash collateral netting, with no impact to our Consolidated Statement of Financial Condition
.
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
|
||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Interest rate swaps
|
$
|
19
|
|
|
$
|
12,352
|
|
|
$
|
(21,202
|
)
|
|
$
|
7,743
|
|
Long-term debt
|
120
|
|
|
(10,295
|
)
|
|
22,835
|
|
|
(4,890
|
)
|
||||
Total
|
$
|
139
|
|
|
$
|
2,057
|
|
|
$
|
1,633
|
|
|
$
|
2,853
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
|
||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Interest rate contracts
|
$
|
(4,860
|
)
|
|
$
|
362
|
|
|
$
|
22,102
|
|
|
$
|
10,040
|
|
Foreign exchange contracts
|
8,390
|
|
|
357
|
|
|
11,518
|
|
|
2,860
|
|
||||
Equity contracts
|
(45,419
|
)
|
|
26,918
|
|
|
(250,565
|
)
|
|
(151,704
|
)
|
||||
Commodity contracts
|
(10,991
|
)
|
|
(3,792
|
)
|
|
(16,305
|
)
|
|
(1,838
|
)
|
||||
Credit contracts
|
1,731
|
|
|
3,888
|
|
|
740
|
|
|
14,080
|
|
||||
Total
|
$
|
(51,149
|
)
|
|
$
|
27,733
|
|
|
$
|
(232,510
|
)
|
|
$
|
(126,562
|
)
|
|
OTC Derivative Assets (1) (2) (3)
|
||||||||||||||||||
|
0-12 Months
|
|
1-5 Years
|
|
Greater Than
5 Years
|
|
Cross-
Maturity
Netting (4)
|
|
Total
|
||||||||||
Commodity swaps, options and forwards
|
$
|
392
|
|
|
$
|
675
|
|
|
$
|
—
|
|
|
$
|
(1,067
|
)
|
|
$
|
—
|
|
Equity swaps and options
|
940
|
|
|
4,178
|
|
|
—
|
|
|
(214
|
)
|
|
4,904
|
|
|||||
Credit default swaps
|
26
|
|
|
24,870
|
|
|
2,790
|
|
|
(1,203
|
)
|
|
26,483
|
|
|||||
Total return swaps
|
49,176
|
|
|
3,233
|
|
|
—
|
|
|
(756
|
)
|
|
51,653
|
|
|||||
Foreign currency forwards, swaps and options
|
58,329
|
|
|
17,637
|
|
|
—
|
|
|
(3,355
|
)
|
|
72,611
|
|
|||||
Fixed income forwards
|
477
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
477
|
|
|||||
Interest rate swaps, options and forwards
|
21,599
|
|
|
104,120
|
|
|
88,827
|
|
|
(86,399
|
)
|
|
128,147
|
|
|||||
Total
|
$
|
130,939
|
|
|
$
|
154,713
|
|
|
$
|
91,617
|
|
|
$
|
(92,994
|
)
|
|
284,275
|
|
|
Cross product counterparty netting
|
|
|
|
|
|
|
|
|
|
|
|
|
(34,466
|
)
|
|||||
Total OTC derivative assets included in Trading assets
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
249,809
|
|
(1)
|
At
June 30, 2018
, we held exchange traded derivative assets, other derivative assets and other credit agreements with a fair value of
$185.6 million
, which are not included in this table.
|
(2)
|
OTC derivative assets in the table above are gross of collateral received. OTC derivative assets are recorded net of collateral received in the Consolidated Statements of Financial Condition. At
June 30, 2018
, cash collateral received was
$135.6 million
.
|
(3)
|
Derivative fair values include counterparty netting within product category.
|
(4)
|
Amounts represent the netting of receivable balances with payable balances for the same counterparty within product category across maturity categories.
|
|
OTC Derivative Liabilities (1) (2) (3)
|
||||||||||||||||||
|
0-12 Months
|
|
1-5 Years
|
|
Greater Than
5 Years
|
|
Cross-Maturity
Netting (4)
|
|
Total
|
||||||||||
Commodity swaps, options and forwards
|
$
|
11,328
|
|
|
$
|
3,060
|
|
|
$
|
—
|
|
|
$
|
(1,067
|
)
|
|
$
|
13,321
|
|
Equity swaps and options
|
13,752
|
|
|
69,159
|
|
|
3,141
|
|
|
(214
|
)
|
|
85,838
|
|
|||||
Credit default swaps
|
64
|
|
|
7,829
|
|
|
6
|
|
|
(1,203
|
)
|
|
6,696
|
|
|||||
Total return swaps
|
64,750
|
|
|
101,271
|
|
|
—
|
|
|
(756
|
)
|
|
165,265
|
|
|||||
Foreign currency forwards, swaps and options
|
55,195
|
|
|
13,123
|
|
|
—
|
|
|
(3,355
|
)
|
|
64,963
|
|
|||||
Fixed income forwards
|
3,879
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,879
|
|
|||||
Interest rate swaps, options and forwards
|
35,661
|
|
|
135,417
|
|
|
215,891
|
|
|
(86,399
|
)
|
|
300,570
|
|
|||||
Total
|
$
|
184,629
|
|
|
$
|
329,859
|
|
|
$
|
219,038
|
|
|
$
|
(92,994
|
)
|
|
640,532
|
|
|
Cross product counterparty netting
|
|
|
|
|
|
|
|
|
|
|
|
|
(34,466
|
)
|
|||||
Total OTC derivative liabilities included in Trading liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
606,066
|
|
(1)
|
At
June 30, 2018
, we held exchange traded derivative liabilities, other derivative liabilities and other credit agreements with a fair value of
$141.6 million
, which are not included in this table.
|
(2)
|
OTC derivative liabilities in the table above are gross of collateral pledged. OTC derivative liabilities are recorded net of collateral pledged in the Consolidated Statements of Financial Condition. At
June 30, 2018
, cash collateral pledged was
$272.0 million
.
|
(3)
|
Derivative fair values include counterparty netting within product category.
|
(4)
|
Amounts represent the netting of receivable balances with payable balances for the same counterparty within product category across maturity categories.
|
(1)
|
Jefferies Group utilizes internal credit ratings determined by Jefferies Group's Risk Management department. Credit ratings determined by Risk Management use methodologies that produce ratings generally consistent with those produced by external rating agencies.
|
|
|
External Credit Rating
|
|
|
||||||||
|
|
Investment Grade
|
|
Non-investment grade
|
|
Total Notional
|
||||||
June 30, 2018
|
|
|
|
|
|
|
||||||
Credit protection sold:
|
|
|
|
|
|
|
||||||
Index credit default swaps
|
|
$
|
203.0
|
|
|
$
|
280.0
|
|
|
$
|
483.0
|
|
Single name credit default swaps
|
|
$
|
44.3
|
|
|
$
|
41.4
|
|
|
$
|
85.7
|
|
|
|
|
|
|
|
|
||||||
December 31, 2017
|
|
|
|
|
|
|
||||||
Credit protection sold:
|
|
|
|
|
|
|
||||||
Index credit default swaps
|
|
$
|
3.0
|
|
|
$
|
126.0
|
|
|
$
|
129.0
|
|
Single name credit default swaps
|
|
$
|
129.1
|
|
|
$
|
89.1
|
|
|
$
|
218.2
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
|
|
|
|
||||
Derivative instrument liabilities with credit-risk-related contingent features
|
$
|
186.1
|
|
|
$
|
95.1
|
|
Collateral posted
|
$
|
(56.1
|
)
|
|
$
|
(86.4
|
)
|
Collateral received
|
$
|
119.5
|
|
|
$
|
5.6
|
|
Return of and additional collateral required in the event of a credit rating downgrade below investment grade (1)
|
$
|
249.5
|
|
|
$
|
14.3
|
|
Collateral Pledged
|
|
Securities Lending Arrangements
|
|
Repurchase Agreements
|
|
Total
|
||||||
June 30, 2018
|
|
|
|
|
|
|
||||||
Corporate equity securities
|
|
$
|
2,210,311
|
|
|
$
|
430,084
|
|
|
$
|
2,640,395
|
|
Corporate debt securities
|
|
343,068
|
|
|
1,999,524
|
|
|
2,342,592
|
|
|||
Mortgage- and asset-backed securities
|
|
—
|
|
|
3,179,689
|
|
|
3,179,689
|
|
|||
U.S. government and federal agency securities
|
|
2,322
|
|
|
7,938,208
|
|
|
7,940,530
|
|
|||
Municipal securities
|
|
—
|
|
|
550,030
|
|
|
550,030
|
|
|||
Sovereign obligations
|
|
—
|
|
|
2,419,766
|
|
|
2,419,766
|
|
|||
Loans and other receivables
|
|
—
|
|
|
539,940
|
|
|
539,940
|
|
|||
Total
|
|
$
|
2,555,701
|
|
|
$
|
17,057,241
|
|
|
$
|
19,612,942
|
|
|
|
|
|
|
|
|
||||||
December 31, 2017
|
|
|
|
|
|
|
||||||
Corporate equity securities
|
|
$
|
2,353,798
|
|
|
$
|
214,413
|
|
|
$
|
2,568,211
|
|
Corporate debt securities
|
|
470,908
|
|
|
2,336,702
|
|
|
2,807,610
|
|
|||
Mortgage- and asset-backed securities
|
|
—
|
|
|
2,562,268
|
|
|
2,562,268
|
|
|||
U.S. government and federal agency securities
|
|
19,205
|
|
|
11,792,534
|
|
|
11,811,739
|
|
|||
Municipal securities
|
|
—
|
|
|
444,861
|
|
|
444,861
|
|
|||
Sovereign obligations
|
|
—
|
|
|
2,023,530
|
|
|
2,023,530
|
|
|||
Loans and other receivables
|
|
—
|
|
|
454,941
|
|
|
454,941
|
|
|||
Total
|
|
$
|
2,843,911
|
|
|
$
|
19,829,249
|
|
|
$
|
22,673,160
|
|
|
|
Contractual Maturity
|
||||||||||||||||||
|
|
Overnight and Continuous
|
|
Up to 30 Days
|
|
30 to 90 Days
|
|
Greater than 90 Days
|
|
Total
|
||||||||||
June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Securities lending arrangements
|
|
$
|
1,369,012
|
|
|
$
|
—
|
|
|
$
|
856,607
|
|
|
$
|
330,082
|
|
|
$
|
2,555,701
|
|
Repurchase agreements
|
|
8,515,963
|
|
|
2,261,426
|
|
|
3,998,685
|
|
|
2,281,167
|
|
|
17,057,241
|
|
|||||
Total
|
|
$
|
9,884,975
|
|
|
$
|
2,261,426
|
|
|
$
|
4,855,292
|
|
|
$
|
2,611,249
|
|
|
$
|
19,612,942
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Securities lending arrangements
|
|
$
|
1,676,940
|
|
|
$
|
—
|
|
|
$
|
741,971
|
|
|
$
|
425,000
|
|
|
$
|
2,843,911
|
|
Repurchase agreements
|
|
10,780,474
|
|
|
4,058,228
|
|
|
3,211,464
|
|
|
1,779,083
|
|
|
19,829,249
|
|
|||||
Total
|
|
$
|
12,457,414
|
|
|
$
|
4,058,228
|
|
|
$
|
3,953,435
|
|
|
$
|
2,204,083
|
|
|
$
|
22,673,160
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Transferred assets
|
$
|
1,042.6
|
|
|
$
|
715.1
|
|
|
$
|
3,800.3
|
|
|
$
|
1,668.6
|
|
Proceeds on new securitizations
|
$
|
1,043.4
|
|
|
$
|
723.6
|
|
|
$
|
3,802.3
|
|
|
$
|
1,686.1
|
|
Cash flows received on retained interests
|
$
|
7.8
|
|
|
$
|
8.2
|
|
|
$
|
23.8
|
|
|
$
|
14.6
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||
Securitization Type
|
Total
Assets
|
|
Retained
Interests
|
|
Total
Assets
|
|
Retained
Interests
|
||||||||
U.S. government agency residential mortgage-backed securities
|
$
|
10,472.8
|
|
|
$
|
376.2
|
|
|
$
|
6,383.5
|
|
|
$
|
28.2
|
|
U.S. government agency commercial mortgage-backed securities
|
$
|
1,350.1
|
|
|
$
|
123.3
|
|
|
$
|
2,075.7
|
|
|
$
|
81.4
|
|
CLOs
|
$
|
2,804.0
|
|
|
$
|
10.4
|
|
|
$
|
3,957.8
|
|
|
$
|
20.3
|
|
Consumer and other loans
|
$
|
331.0
|
|
|
$
|
44.4
|
|
|
$
|
247.6
|
|
|
$
|
47.8
|
|
|
Amortized
Cost |
|
Gross
Unrealized Gains |
|
Gross
Unrealized Losses |
|
Estimated
Fair Value |
||||||||
June 30, 2018
|
|
|
|
|
|
|
|
||||||||
Bonds and notes:
|
|
|
|
|
|
|
|
||||||||
U.S. government securities
|
$
|
1,217,384
|
|
|
$
|
169
|
|
|
$
|
3
|
|
|
$
|
1,217,550
|
|
Residential mortgage-backed securities
|
659
|
|
|
3
|
|
|
1
|
|
|
661
|
|
||||
Commercial mortgage-backed securities
|
10,963
|
|
|
—
|
|
|
207
|
|
|
10,756
|
|
||||
Other asset-backed securities
|
13,528
|
|
|
20
|
|
|
40
|
|
|
13,508
|
|
||||
Total fixed maturities
|
1,242,534
|
|
|
192
|
|
|
251
|
|
|
1,242,475
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total Available for sale securities
|
$
|
1,242,534
|
|
|
$
|
192
|
|
|
$
|
251
|
|
|
$
|
1,242,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
||||
Bonds and notes:
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. government securities
|
$
|
552,847
|
|
|
$
|
—
|
|
|
$
|
42
|
|
|
$
|
552,805
|
|
Residential mortgage-backed securities
|
34,381
|
|
|
272
|
|
|
92
|
|
|
34,561
|
|
||||
Commercial mortgage-backed securities
|
5,857
|
|
|
17
|
|
|
4
|
|
|
5,870
|
|
||||
Other asset-backed securities
|
34,837
|
|
|
46
|
|
|
44
|
|
|
34,839
|
|
||||
Total fixed maturities
|
627,922
|
|
|
335
|
|
|
182
|
|
|
628,075
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Common stocks:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Banks, trusts and insurance companies
|
35,071
|
|
|
17,500
|
|
|
—
|
|
|
52,571
|
|
||||
Industrial, miscellaneous and all other
|
17,504
|
|
|
18,411
|
|
|
—
|
|
|
35,915
|
|
||||
Total equity securities
|
52,575
|
|
|
35,911
|
|
|
—
|
|
|
88,486
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total Available for sale securities
|
$
|
680,497
|
|
|
$
|
36,246
|
|
|
$
|
182
|
|
|
$
|
716,561
|
|
|
Amortized
Cost
|
|
Estimated
Fair Value
|
||||
|
(In thousands)
|
||||||
Due within one year
|
$
|
1,217,384
|
|
|
$
|
1,217,550
|
|
|
1,217,384
|
|
|
1,217,550
|
|
||
Mortgage-backed and asset-backed securities
|
25,150
|
|
|
24,925
|
|
||
|
$
|
1,242,534
|
|
|
$
|
1,242,475
|
|
•
|
Purchases of securities in connection with our trading and secondary market-making activities;
|
•
|
Retained interests held as a result of securitization activities, including the resecuritization of mortgage- and other asset-backed securities and the securitization of commercial mortgage, corporate and consumer loans;
|
•
|
Acting as placement agent and/or underwriter in connection with client-sponsored securitizations;
|
•
|
Financing of agency and non-agency mortgage- and other asset-backed securities;
|
•
|
Warehouse funding arrangements for client-sponsored consumer loan vehicles and CLOs through participation certificates, forward sales agreements and revolving loan and note commitments; and
|
•
|
Loans to, investments in and fees from various investment vehicles.
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Cash
|
$
|
4.1
|
|
|
$
|
11.7
|
|
Financial instruments owned
|
0.9
|
|
|
37.6
|
|
||
Securities purchased under agreement to resell (1)
|
1,022.0
|
|
|
729.3
|
|
||
Receivables
|
509.2
|
|
|
318.1
|
|
||
Other
|
29.0
|
|
|
15.5
|
|
||
Total assets
|
$
|
1,565.2
|
|
|
$
|
1,112.2
|
|
|
|
|
|
||||
Other secured financings (2)
|
$
|
1,518.6
|
|
|
$
|
1,073.5
|
|
Other (3)
|
45.9
|
|
|
38.3
|
|
||
Total liabilities
|
$
|
1,564.5
|
|
|
$
|
1,111.8
|
|
(1)
|
Securities purchased under agreements to resell represent an amount due under a collateralized transaction on a related consolidated entity, which is eliminated in consolidation.
|
(2)
|
Approximately
$54.0 million
and
$44.1 million
of the secured financings represent an amount held by Jefferies Group in inventory and eliminated in consolidation at
June 30, 2018
and
December 31, 2017
, respectively.
|
(3)
|
Includes
$41.0 million
and
$32.0 million
at
June 30, 2018
and
December 31, 2017
, respectively, of intercompany payables that are eliminated in consolidation.
|
|
Financial Statement
Carrying Amount
|
|
Maximum
Exposure to Loss
|
|
VIE Assets
|
||||||||||
|
Assets
|
|
Liabilities
|
|
|
||||||||||
|
|
||||||||||||||
June 30, 2018
|
|
|
|
|
|
|
|
||||||||
CLOs
|
$
|
304.2
|
|
|
$
|
3.9
|
|
|
$
|
1,710.4
|
|
|
$
|
4,343.6
|
|
Consumer loan vehicles
|
315.6
|
|
|
—
|
|
|
627.2
|
|
|
2,856.2
|
|
||||
Related party private equity vehicles
|
33.8
|
|
|
—
|
|
|
52.0
|
|
|
106.7
|
|
||||
Other private investment vehicles
|
149.7
|
|
|
—
|
|
|
160.5
|
|
|
5,249.4
|
|
||||
Total
|
$
|
803.3
|
|
|
$
|
3.9
|
|
|
$
|
2,550.1
|
|
|
$
|
12,555.9
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
||||
CLOs
|
$
|
168.1
|
|
|
$
|
8.9
|
|
|
$
|
1,030.4
|
|
|
$
|
5,364.3
|
|
Consumer loan vehicles
|
254.8
|
|
|
—
|
|
|
759.8
|
|
|
2,322.7
|
|
||||
Related party private equity vehicles
|
23.7
|
|
|
—
|
|
|
45.4
|
|
|
75.0
|
|
||||
Other private investment vehicles
|
133.0
|
|
|
—
|
|
|
142.0
|
|
|
4,624.9
|
|
||||
Total
|
$
|
579.6
|
|
|
$
|
8.9
|
|
|
$
|
1,977.6
|
|
|
$
|
12,386.9
|
|
•
|
Forward sale agreements whereby Jefferies Group commits to sell, at a fixed price, corporate loans and ownership interests in an entity holding such corporate loans to CLOs;
|
•
|
Warehouse funding arrangements in the form of participation interests in corporate loans held by CLOs and commitments to fund such participation interests;
|
•
|
Trading positions in securities issued in a CLO transaction; and
|
•
|
Investments in variable funding notes issued by CLOs.
|
|
Loans to and investments in associated companies as of January 1,
|
|
Income (losses) related to associated companies
|
|
Income (losses) related to Jefferies Group's associated companies (1)
|
|
Contributions to (distributions from) associated companies, net
|
|
Other, including foreign exchange and unrealized gains (losses)
|
|
Loans to and investments in associated companies as of June 30,
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Jefferies Finance
|
$
|
655,467
|
|
|
$
|
—
|
|
|
$
|
30,566
|
|
|
$
|
31,461
|
|
|
$
|
—
|
|
|
$
|
717,494
|
|
National Beef (2)
|
—
|
|
|
24,401
|
|
|
—
|
|
|
(13,099
|
)
|
|
592,239
|
|
|
603,541
|
|
||||||
Berkadia
|
210,594
|
|
|
51,742
|
|
|
—
|
|
|
(17,853
|
)
|
|
(720
|
)
|
|
243,763
|
|
||||||
FXCM (3)
|
158,856
|
|
|
(15,040
|
)
|
|
—
|
|
|
—
|
|
|
(34
|
)
|
|
143,782
|
|
||||||
Garcadia companies (4)
|
179,143
|
|
|
20,955
|
|
|
—
|
|
|
(22,915
|
)
|
|
(177,183
|
)
|
|
—
|
|
||||||
Linkem
|
192,136
|
|
|
(12,764
|
)
|
|
—
|
|
|
542
|
|
|
(2,321
|
)
|
|
177,593
|
|
||||||
HomeFed
|
341,874
|
|
|
4,445
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
346,319
|
|
||||||
Golden Queen (5)
|
105,005
|
|
|
(3,296
|
)
|
|
—
|
|
|
8,441
|
|
|
—
|
|
|
110,150
|
|
||||||
Other
|
223,754
|
|
|
(4,990
|
)
|
|
(5,732
|
)
|
|
(33,853
|
)
|
|
1,123
|
|
|
180,302
|
|
||||||
Total
|
$
|
2,066,829
|
|
|
$
|
65,453
|
|
|
$
|
24,834
|
|
|
$
|
(47,276
|
)
|
|
$
|
413,104
|
|
|
$
|
2,522,944
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Jefferies Finance
|
$
|
490,464
|
|
|
$
|
—
|
|
|
$
|
50,176
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
540,640
|
|
Jefferies LoanCore
|
154,731
|
|
|
—
|
|
|
6,374
|
|
|
56,950
|
|
|
—
|
|
|
218,055
|
|
||||||
Berkadia
|
184,443
|
|
|
33,140
|
|
|
—
|
|
|
(4,567
|
)
|
|
32
|
|
|
213,048
|
|
||||||
FXCM (3)
|
336,258
|
|
|
(162,015
|
)
|
|
—
|
|
|
—
|
|
|
87
|
|
|
174,330
|
|
||||||
Garcadia companies
|
185,815
|
|
|
25,971
|
|
|
—
|
|
|
(29,407
|
)
|
|
—
|
|
|
182,379
|
|
||||||
Linkem
|
154,000
|
|
|
(17,024
|
)
|
|
—
|
|
|
31,996
|
|
|
22,765
|
|
|
191,737
|
|
||||||
HomeFed
|
302,231
|
|
|
9,684
|
|
|
—
|
|
|
31,316
|
|
|
—
|
|
|
343,231
|
|
||||||
Golden Queen
|
111,302
|
|
|
(1,709
|
)
|
|
—
|
|
|
(53
|
)
|
|
—
|
|
|
109,540
|
|
||||||
Other
|
205,854
|
|
|
(2,517
|
)
|
|
(2,055
|
)
|
|
65,181
|
|
|
—
|
|
|
266,463
|
|
||||||
Total
|
$
|
2,125,098
|
|
|
$
|
(114,470
|
)
|
|
$
|
54,495
|
|
|
$
|
151,416
|
|
|
$
|
22,884
|
|
|
$
|
2,239,423
|
|
(1)
|
Primarily classified in Investment banking revenues and Other revenues.
|
(2)
|
As discussed more fully in Notes 1 and 24, in June 2018, we completed the sale of
48%
of National Beef to Marfrig, reducing our ownership in National Beef to
31%
. As of the closing of the sale on June 5, 2018, we have deconsolidated our investment in National Beef and account for our remaining interest under the equity method of accounting.
|
(3)
|
As further described in Note 3, our investment in FXCM includes both our equity method investment in FXCM and our term loan with FXCM. Our equity method investment is included as Loans to and investments in associated companies and our term loan is included as Trading assets, at fair value in our Consolidated Statements of Financial Condition.
|
(4)
|
As more fully discussed in Note 1, in April 2018, we entered into an agreement to sell
100%
of our equity interests in Garcadia and our associated real estate to our current partners, the Garff family. At
June 30, 2018
, our investment in Garcadia is classified as Assets held for sale in our Consolidated Statement of Financial Condition.
|
(5)
|
At
June 30, 2018
and
December 31, 2017
, the balance reflects
$27.0 million
and
$30.5 million
, respectively, related to a noncontrolling interest.
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
National Beef
|
$
|
24,401
|
|
|
$
|
—
|
|
|
$
|
24,401
|
|
|
$
|
—
|
|
Berkadia
|
25,461
|
|
|
16,186
|
|
|
51,742
|
|
|
33,140
|
|
||||
FXCM
|
(6,816
|
)
|
|
(12,115
|
)
|
|
(15,040
|
)
|
|
(162,015
|
)
|
||||
Garcadia companies
|
9,572
|
|
|
12,677
|
|
|
20,955
|
|
|
25,971
|
|
||||
Linkem
|
(5,309
|
)
|
|
(8,876
|
)
|
|
(12,764
|
)
|
|
(17,024
|
)
|
||||
HomeFed
|
(7,165
|
)
|
|
9,348
|
|
|
4,445
|
|
|
9,684
|
|
||||
Golden Queen
|
673
|
|
|
(412
|
)
|
|
(3,296
|
)
|
|
(1,709
|
)
|
||||
Other
|
(7,464
|
)
|
|
(2,704
|
)
|
|
(4,990
|
)
|
|
(2,517
|
)
|
||||
Total
|
$
|
33,353
|
|
|
$
|
14,104
|
|
|
$
|
65,453
|
|
|
$
|
(114,470
|
)
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Jefferies Finance
|
$
|
20,733
|
|
|
$
|
25,211
|
|
|
$
|
30,566
|
|
|
$
|
50,176
|
|
Jefferies LoanCore
|
—
|
|
|
4,042
|
|
|
—
|
|
|
6,374
|
|
||||
Other
|
(1,504
|
)
|
|
(1,021
|
)
|
|
(5,732
|
)
|
|
(2,055
|
)
|
||||
Total
|
$
|
19,229
|
|
|
$
|
28,232
|
|
|
$
|
24,834
|
|
|
$
|
54,495
|
|
|
For the Six Months Ended June 30,
|
||||||
|
2018
|
|
2017
|
||||
Revenues
|
$
|
1,154,927
|
|
|
$
|
479,598
|
|
Income from continuing operations before extraordinary items
|
$
|
296,620
|
|
|
$
|
163,952
|
|
Net income
|
$
|
296,620
|
|
|
$
|
163,952
|
|
(In thousands)
|
Gross
Amounts
|
|
Netting in Consolidated Statements of Financial Condition
|
|
Net Amounts in Consolidated Statements of Financial Condition
|
|
Additional Amounts Available for Setoff (1)
|
|
Available Collateral (2)
|
|
Net Amount (3)
|
||||||||||||
Assets at June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivative contracts
|
$
|
3,402,819
|
|
|
$
|
(3,102,888
|
)
|
|
$
|
299,931
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
299,931
|
|
Securities borrowing arrangements
|
$
|
7,599,043
|
|
|
$
|
—
|
|
|
$
|
7,599,043
|
|
|
$
|
(434,474
|
)
|
|
$
|
(966,570
|
)
|
|
$
|
6,197,999
|
|
Reverse repurchase agreements
|
$
|
12,105,967
|
|
|
$
|
(8,283,735
|
)
|
|
$
|
3,822,232
|
|
|
$
|
(286,116
|
)
|
|
$
|
(3,508,358
|
)
|
|
$
|
27,758
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Liabilities at June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Derivative contracts
|
$
|
3,714,992
|
|
|
$
|
(3,239,346
|
)
|
|
$
|
475,646
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
475,646
|
|
Securities lending arrangements
|
$
|
2,555,701
|
|
|
$
|
—
|
|
|
$
|
2,555,701
|
|
|
$
|
(434,474
|
)
|
|
$
|
(2,056,484
|
)
|
|
$
|
64,743
|
|
Repurchase agreements
|
$
|
17,057,241
|
|
|
$
|
(8,283,735
|
)
|
|
$
|
8,773,506
|
|
|
$
|
(286,116
|
)
|
|
$
|
(7,269,369
|
)
|
|
$
|
1,218,021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Assets at December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Derivative contracts
|
$
|
3,497,969
|
|
|
$
|
(3,318,481
|
)
|
|
$
|
179,488
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
179,488
|
|
Securities borrowing arrangements
|
$
|
7,721,803
|
|
|
$
|
—
|
|
|
$
|
7,721,803
|
|
|
$
|
(966,712
|
)
|
|
$
|
(1,032,629
|
)
|
|
$
|
5,722,462
|
|
Reverse repurchase agreements
|
$
|
14,858,297
|
|
|
$
|
(11,168,738
|
)
|
|
$
|
3,689,559
|
|
|
$
|
(463,973
|
)
|
|
$
|
(3,207,147
|
)
|
|
$
|
18,439
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Liabilities at December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Derivative contracts
|
$
|
3,745,908
|
|
|
$
|
(3,490,514
|
)
|
|
$
|
255,394
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
255,394
|
|
Securities lending arrangements
|
$
|
2,843,911
|
|
|
$
|
—
|
|
|
$
|
2,843,911
|
|
|
$
|
(966,712
|
)
|
|
$
|
(1,795,408
|
)
|
|
$
|
81,791
|
|
Repurchase agreements
|
$
|
19,829,249
|
|
|
$
|
(11,168,738
|
)
|
|
$
|
8,660,511
|
|
|
$
|
(463,973
|
)
|
|
$
|
(7,067,512
|
)
|
|
$
|
1,129,026
|
|
(1)
|
Under master netting agreements with our counterparties, we have the legal right of offset with a counterparty, which incorporates all of the counterparty’s outstanding rights and obligations under the arrangement. These balances reflect additional credit risk mitigation that is available by a counterparty in the event of a counterparty’s default, but which are not
|
(2)
|
Includes securities received or paid under collateral arrangements with counterparties that could be liquidated in the event of a counterparty default and thus offset against a counterparty’s rights and obligations under the respective repurchase agreements or securities borrowing or lending arrangements.
|
(3)
|
At
June 30, 2018
, amounts include
$6,148.2 million
of securities borrowing arrangements, for which we have received securities collateral of
$5,972.9 million
, and
$1,205.5 million
of repurchase agreements, for which we have pledged securities collateral of
$1,244.0 million
, which are subject to master netting agreements but we have not determined the agreements to be legally enforceable. At
December 31, 2017
, amounts include
$5,678.6 million
of securities borrowing arrangements, for which we have received securities collateral of
$5,516.7 million
, and
$1,084.4 million
of repurchase agreements, for which we have pledged securities collateral of
$1,115.9 million
, which are subject to master netting agreements but we have not determined the agreements to be legally enforceable.
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Indefinite-lived intangibles:
|
|
|
|
||||
Exchange and clearing organization membership interests and registrations
|
$
|
8,550
|
|
|
$
|
8,551
|
|
|
|
|
|
||||
Amortizable intangibles:
|
|
|
|
|
|
||
Customer and other relationships, net of accumulated amortization of $98,672 and $230,074
|
72,397
|
|
|
347,767
|
|
||
Trademarks and tradenames, net of accumulated amortization of $19,358 and $95,627
|
109,694
|
|
|
293,851
|
|
||
Supply contracts, net of accumulated amortization of $0 and $57,440
|
—
|
|
|
86,160
|
|
||
Other, net of accumulated amortization of $3,850 and $3,885
|
5,100
|
|
|
4,701
|
|
||
Total intangible assets, net
|
195,741
|
|
|
741,030
|
|
||
|
|
|
|
||||
Goodwill:
|
|
|
|
|
|
||
National Beef
|
—
|
|
|
14,991
|
|
||
Jefferies Group
|
1,701,752
|
|
|
1,703,300
|
|
||
Other operations
|
3,859
|
|
|
3,859
|
|
||
Total goodwill
|
1,705,611
|
|
|
1,722,150
|
|
||
|
|
|
|
||||
Total intangible assets, net and goodwill
|
$
|
1,901,352
|
|
|
$
|
2,463,180
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Bank loans (1)
|
$
|
378,930
|
|
|
$
|
304,651
|
|
Floating rate puttable notes
|
58,470
|
|
|
108,240
|
|
||
Equity-linked notes
|
68,818
|
|
|
23,324
|
|
||
Total short-term borrowings
|
$
|
506,218
|
|
|
$
|
436,215
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Parent Company Debt:
|
|
|
|
||||
Senior Notes:
|
|
|
|
||||
5.50% Senior Notes due October 18, 2023, $750,000 principal
|
$
|
742,914
|
|
|
$
|
742,348
|
|
6.625% Senior Notes due October 23, 2043, $250,000 principal
|
246,697
|
|
|
246,673
|
|
||
Total long-term debt – Parent Company
|
989,611
|
|
|
989,021
|
|
||
|
|
|
|
||||
Subsidiary Debt (non-recourse to Parent Company):
|
|
|
|
|
|
||
Jefferies Group:
|
|
|
|
|
|
||
5.125% Senior Notes, due April 13, 2018, $0 and $678,300 principal (1)
|
—
|
|
|
682,338
|
|
||
8.50% Senior Notes, due July 15, 2019, $680,800 principal
|
714,411
|
|
|
728,872
|
|
||
2.375% Euro Medium Term Notes, due May 20, 2020, $584,700 and $594,725 principal
|
583,602
|
|
|
593,334
|
|
||
6.875% Senior Notes, due April 15, 2021, $750,000 principal
|
800,075
|
|
|
808,157
|
|
||
2.25% Euro Medium Term Notes, due July 13, 2022, $4,678 and $4,758 principal
|
4,351
|
|
|
4,389
|
|
||
5.125% Senior Notes, due January 20, 2023, $600,000 principal
|
614,331
|
|
|
615,703
|
|
||
4.85% Senior Notes, due January 15, 2027, $750,000 principal (2)
|
713,764
|
|
|
736,357
|
|
||
6.45% Senior Debentures, due June 8, 2027, $350,000 principal
|
374,746
|
|
|
375,794
|
|
||
3.875% Convertible Senior Debentures, due November 1, 2029, $0 and $324,779 principal
|
—
|
|
|
324,779
|
|
||
4.15% Senior Notes, due January 23, 2030, $1,000,000 and $0 principal
|
987,365
|
|
|
—
|
|
||
6.25% Senior Debentures, due January 15, 2036, $500,000 principal
|
511,854
|
|
|
512,040
|
|
||
6.50% Senior Notes, due January 20, 2043, $400,000 principal
|
420,810
|
|
|
420,990
|
|
||
Structured Notes (3)
|
708,256
|
|
|
614,091
|
|
||
Jefferies Group Revolving Credit Facility
|
158,335
|
|
|
—
|
|
||
National Beef Reducing Revolver Loan
|
—
|
|
|
120,000
|
|
||
National Beef Revolving Credit Facility
|
—
|
|
|
76,809
|
|
||
Foursight Capital Credit Facilities
|
54,151
|
|
|
170,455
|
|
||
Other
|
79,308
|
|
|
112,654
|
|
||
Total long-term debt – subsidiaries
|
6,725,359
|
|
|
6,896,762
|
|
||
|
|
|
|
||||
Long-term debt
|
$
|
7,714,970
|
|
|
$
|
7,885,783
|
|
(1)
|
On April 13, 2018, these
5.125%
Senior Notes were redeemed by Jefferies Group with cash on hand.
|
(2)
|
Amount includes a gain of
$22.8 million
and a loss of
$4.9 million
during the
six months ended June 30, 2018 and 2017
, respectively, associated with an interest rate swap based on its designation as a fair value hedge. See Note 4 for further information.
|
(3)
|
Includes
$708.3 million
and
$607.0 million
at fair value at
June 30, 2018
and
December 31, 2017
, respectively. These structured notes contain various interest rate payment terms and are accounted for at fair value, with changes in fair value resulting from a change in the instrument specific credit risk presented in Accumulated other comprehensive income and changes in fair value resulting from non-credit components recognized in Principal transactions revenues.
|
|
For the Six Months Ended June 30,
|
||||||
|
2018
|
|
2017
|
||||
As of January 1,
|
$
|
412,128
|
|
|
$
|
321,962
|
|
Income allocated to redeemable noncontrolling interests
|
37,141
|
|
|
28,458
|
|
||
Distributions to redeemable noncontrolling interests
|
(70,681
|
)
|
|
(17,062
|
)
|
||
Increase (decrease) in fair value of redeemable noncontrolling interests
|
21,404
|
|
|
(39,965
|
)
|
||
Reversal of cumulative National Beef redeemable noncontrolling interests fair value adjustment prior to deconsolidation
|
(237,669
|
)
|
|
—
|
|
||
Deconsolidation of National Beef
|
(162,323
|
)
|
|
—
|
|
||
Balance, June 30,
|
$
|
—
|
|
|
$
|
293,393
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Net unrealized gains on available for sale securities
|
$
|
543,990
|
|
|
$
|
572,085
|
|
Net unrealized foreign exchange losses
|
(153,266
|
)
|
|
(101,400
|
)
|
||
Net unrealized losses on instrument specific credit risk
|
(19,984
|
)
|
|
(34,432
|
)
|
||
Net unrealized gains (losses) on cash flow hedges
|
361
|
|
|
(1,138
|
)
|
||
Net minimum pension liability
|
(56,128
|
)
|
|
(62,391
|
)
|
||
|
$
|
314,973
|
|
|
$
|
372,724
|
|
Details about Accumulated Other Comprehensive Income Components
|
|
Amount Reclassified from
Accumulated Other
Comprehensive Income
|
|
Affected Line Item in the
Consolidated Statements
of Operations
|
||||||
|
|
2018
|
|
2017
|
|
|
||||
Net unrealized losses on available for sale securities, net of income tax provision of $37 and $271
|
|
$
|
103
|
|
|
$
|
467
|
|
|
Other revenues
|
Net unrealized foreign exchange losses, net of income tax provision (benefit) of $(16) and $1,097
|
|
20,459
|
|
|
(5,290
|
)
|
|
Other income and other expenses
|
||
Net unrealized losses on instrument specific credit risk, net of income tax provision of $78 and $0
|
|
270
|
|
|
—
|
|
|
Principal transactions
|
||
Amortization of defined benefit pension plan actuarial losses, net of income tax benefit of $(339) and $(403)
|
|
(919
|
)
|
|
(859
|
)
|
|
Selling, general and other expenses, which includes pension expense
|
||
Other pension, net of income tax benefit of $0 and $(1,231)
|
|
(5,344
|
)
|
|
1,231
|
|
|
Compensation and benefits expense and Income tax provision (benefit)
|
||
Total reclassifications for the period, net of tax
|
|
$
|
14,569
|
|
|
$
|
(4,451
|
)
|
|
|
|
For the Three Months Ended June 30, 2018
|
|
For the Six Months Ended June 30, 2018
|
||||
|
|
|
|
||||
Revenues from contracts with customers:
|
|
|
|
||||
Commissions and other fees
|
$
|
157,704
|
|
|
$
|
305,606
|
|
Investment banking
|
500,297
|
|
|
940,288
|
|
||
Manufacturing revenues
|
114,735
|
|
|
213,100
|
|
||
Other
|
61,817
|
|
|
103,975
|
|
||
Total revenue from contracts with customers
|
834,553
|
|
|
1,562,969
|
|
||
|
|
|
|
||||
Other sources of revenue:
|
|
|
|
||||
Principal transactions
|
53,755
|
|
|
199,418
|
|
||
Interest income
|
327,314
|
|
|
602,536
|
|
||
Other
|
28,204
|
|
|
40,014
|
|
||
Total revenue from other sources
|
409,273
|
|
|
841,968
|
|
||
|
|
|
|
||||
Total revenues
|
$
|
1,243,826
|
|
|
$
|
2,404,937
|
|
|
Three months ended June 30, 2018
|
||||||||||||||
|
Reportable Segments
|
|
|
|
|
||||||||||
|
Jefferies Group
|
|
Corporate
|
|
All Other
|
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Major Business Activity:
|
|
|
|
|
|
|
|
||||||||
Jefferies Group:
|
|
|
|
|
|
|
|
||||||||
Equities (1)
|
$
|
159,960
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
159,960
|
|
Fixed Income (1)
|
4,546
|
|
|
—
|
|
|
—
|
|
|
4,546
|
|
||||
Investment Banking
|
500,297
|
|
|
—
|
|
|
—
|
|
|
500,297
|
|
||||
Asset Management
|
6,016
|
|
|
—
|
|
|
—
|
|
|
6,016
|
|
||||
Manufacturing revenues
|
—
|
|
|
—
|
|
|
114,735
|
|
|
114,735
|
|
||||
Oil and gas revenues
|
—
|
|
|
—
|
|
|
39,905
|
|
|
39,905
|
|
||||
Other revenues
|
—
|
|
|
—
|
|
|
9,094
|
|
|
9,094
|
|
||||
Total revenues from contracts with customers
|
$
|
670,819
|
|
|
$
|
—
|
|
|
$
|
163,734
|
|
|
$
|
834,553
|
|
|
|
|
|
|
|
|
|
||||||||
Primary Geographic Region:
|
|
|
|
|
|
|
|
||||||||
Americas
|
$
|
571,976
|
|
|
$
|
—
|
|
|
$
|
163,454
|
|
|
$
|
735,430
|
|
Europe, Middle East and Africa
|
78,861
|
|
|
—
|
|
|
207
|
|
|
79,068
|
|
||||
Asia
|
19,982
|
|
|
—
|
|
|
73
|
|
|
20,055
|
|
||||
Total revenues from contracts with customers
|
$
|
670,819
|
|
|
$
|
—
|
|
|
$
|
163,734
|
|
|
$
|
834,553
|
|
|
Six months ended June 30, 2018
|
||||||||||||||
|
Reportable Segments
|
|
|
|
|
||||||||||
|
Jefferies Group
|
|
Corporate
|
|
All Other
|
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Major Business Activity:
|
|
|
|
|
|
|
|
||||||||
Jefferies Group:
|
|
|
|
|
|
|
|
||||||||
Equities (1)
|
$
|
311,590
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
311,590
|
|
Fixed Income (1)
|
7,504
|
|
|
—
|
|
|
—
|
|
|
7,504
|
|
||||
Investment Banking
|
940,288
|
|
|
—
|
|
|
—
|
|
|
940,288
|
|
||||
Asset Management
|
10,946
|
|
|
—
|
|
|
—
|
|
|
10,946
|
|
||||
Manufacturing revenues
|
—
|
|
|
—
|
|
|
213,100
|
|
|
213,100
|
|
||||
Oil and gas revenues
|
—
|
|
|
—
|
|
|
60,235
|
|
|
60,235
|
|
||||
Other revenues
|
—
|
|
|
—
|
|
|
19,306
|
|
|
19,306
|
|
||||
Total revenues from contracts with customers
|
$
|
1,270,328
|
|
|
$
|
—
|
|
|
$
|
292,641
|
|
|
$
|
1,562,969
|
|
|
|
|
|
|
|
|
|
||||||||
Primary Geographic Region:
|
|
|
|
|
|
|
|
||||||||
Americas
|
$
|
1,092,830
|
|
|
$
|
—
|
|
|
$
|
292,031
|
|
|
$
|
1,384,861
|
|
Europe, Middle East and Africa
|
140,189
|
|
|
—
|
|
|
462
|
|
|
140,651
|
|
||||
Asia
|
37,309
|
|
|
—
|
|
|
148
|
|
|
37,457
|
|
||||
Total revenues from contracts with customers
|
$
|
1,270,328
|
|
|
$
|
—
|
|
|
$
|
292,641
|
|
|
$
|
1,562,969
|
|
(1)
|
Revenues from contracts with customers associated with the equities and fixed income businesses primarily represent commissions and other fee revenue.
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Numerator for earnings per share:
|
|
|
|
|
|
|
|
||||||||
Net income attributable to Jefferies Financial Group Inc. common shareholders
|
$
|
725,529
|
|
|
$
|
58,193
|
|
|
$
|
850,054
|
|
|
$
|
339,601
|
|
Allocation of earnings to participating securities (1)
|
(3,870
|
)
|
|
(219
|
)
|
|
(3,831
|
)
|
|
(1,338
|
)
|
||||
Net income attributable to Jefferies Financial Group Inc. common shareholders for basic earnings per share
|
721,659
|
|
|
57,974
|
|
|
846,223
|
|
|
338,263
|
|
||||
Adjustment to allocation of earnings to participating securities related to diluted shares (1)
|
37
|
|
|
(2
|
)
|
|
29
|
|
|
5
|
|
||||
Mandatorily redeemable convertible preferred share dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
2,031
|
|
||||
Net income attributable to Jefferies Financial Group Inc. common shareholders for diluted earnings per share
|
$
|
721,696
|
|
|
$
|
57,972
|
|
|
$
|
846,252
|
|
|
$
|
340,299
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator for earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common shares outstanding
|
342,719
|
|
|
359,519
|
|
|
349,647
|
|
|
359,543
|
|
||||
Weighted average shares of restricted stock outstanding with future service required
|
(1,868
|
)
|
|
(1,380
|
)
|
|
(1,578
|
)
|
|
(1,406
|
)
|
||||
Weighted average RSUs outstanding with no future service required
|
11,198
|
|
|
11,073
|
|
|
11,168
|
|
|
11,069
|
|
||||
Denominator for basic earnings per share – weighted average shares
|
352,049
|
|
|
369,212
|
|
|
359,237
|
|
|
369,206
|
|
||||
Stock options
|
7
|
|
|
25
|
|
|
18
|
|
|
20
|
|
||||
Senior executive compensation plan awards
|
4,019
|
|
|
2,315
|
|
|
3,430
|
|
|
2,296
|
|
||||
Mandatorily redeemable convertible preferred shares
|
—
|
|
|
—
|
|
|
—
|
|
|
4,162
|
|
||||
Denominator for diluted earnings per share
|
356,075
|
|
|
371,552
|
|
|
362,685
|
|
|
375,684
|
|
(1)
|
Represents dividends declared during the period on participating securities plus an allocation of undistributed earnings to participating securities. Net losses are not allocated to participating securities. Participating securities represent restricted stock and RSUs for which requisite service has not yet been rendered and amounted to weighted average shares of
1,887,100
and
1,435,400
for the
three months ended June 30, 2018 and 2017
, respectively, and
1,603,500
and
1,467,500
for the
six months ended June 30, 2018 and 2017
, respectively. Dividends declared on participating securities were not material during
three and six months ended June 30, 2018 and 2017
. Undistributed earnings are allocated to participating securities based upon their right to share in earnings if all earnings for the period had been distributed.
|
|
Expected Maturity Date
|
|
|
||||||||||||||||||||
|
2018
|
|
2019
|
|
2020
and
2021
|
|
2022
and
2023
|
|
2024
and
Later
|
|
Maximum
Payout
|
||||||||||||
Equity commitments (1)
|
$
|
276.4
|
|
|
$
|
62.7
|
|
|
$
|
18.8
|
|
|
$
|
—
|
|
|
$
|
10.4
|
|
|
$
|
368.3
|
|
Loan commitments (1)
|
12.0
|
|
|
250.0
|
|
|
54.4
|
|
|
29.2
|
|
|
—
|
|
|
345.6
|
|
||||||
Mortgage-related and other purchase commitments
|
—
|
|
|
177.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
177.7
|
|
||||||
Underwriting commitments
|
65.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
65.0
|
|
||||||
Forward starting reverse repos (2)
|
3,634.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,634.7
|
|
||||||
Forward starting repos (2)
|
3,040.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,040.7
|
|
||||||
Other unfunded commitments (1)
|
145.3
|
|
|
116.8
|
|
|
19.2
|
|
|
110.5
|
|
|
5.1
|
|
|
396.9
|
|
||||||
|
$
|
7,174.1
|
|
|
$
|
607.2
|
|
|
$
|
92.4
|
|
|
$
|
139.7
|
|
|
$
|
15.5
|
|
|
$
|
8,028.9
|
|
(1)
|
Equity commitments, loan commitments and other unfunded commitments are presented by contractual maturity date. The amounts are however mostly available on demand.
|
(2)
|
At
June 30, 2018
,
$3,628.6 million
of the forward starting securities purchased under agreements to resell and
all
of the securities sold under agreements to repurchase settled within
three
business days.
|
|
Expected Maturity Date
|
|
|
||||||||||||||||||||
Guarantee Type
|
2018
|
|
2019
|
|
2020
and
2021
|
|
2022
and
2023
|
|
2024
and
Later
|
|
Notional/
Maximum
Payout
|
||||||||||||
Derivative contracts – non-credit related
|
$
|
15,858.9
|
|
|
$
|
3,454.3
|
|
|
$
|
2,486.5
|
|
|
$
|
494.1
|
|
|
$
|
458.2
|
|
|
$
|
22,752.0
|
|
Written derivative contracts – credit related
|
—
|
|
|
—
|
|
|
48.2
|
|
|
23.9
|
|
|
—
|
|
|
72.1
|
|
||||||
Total derivative contracts
|
$
|
15,858.9
|
|
|
$
|
3,454.3
|
|
|
$
|
2,534.7
|
|
|
$
|
518.0
|
|
|
$
|
458.2
|
|
|
$
|
22,824.1
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
||||||||
Receivables:
|
|
|
|
|
|
|
|
||||||||
Notes and loans receivable (1)
|
$
|
644,760
|
|
|
$
|
627,208
|
|
|
$
|
579,071
|
|
|
$
|
565,285
|
|
|
|
|
|
|
|
|
|
||||||||
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Short-term borrowings (2)
|
$
|
437,400
|
|
|
$
|
437,400
|
|
|
$
|
412,891
|
|
|
$
|
412,891
|
|
Long-term debt (3)
|
$
|
7,006,714
|
|
|
$
|
7,076,485
|
|
|
$
|
7,278,827
|
|
|
$
|
7,678,210
|
|
(1)
|
Notes and loans receivable: The fair values are estimated principally based on a discounted future cash flows model using market interest rates for similar instruments. If measured at fair value in the financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy.
|
(2)
|
Short-term borrowings: The fair values of short-term borrowings are estimated to be the carrying amount due to their short maturities. If measured at fair value in the financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy.
|
(3)
|
Long-term debt: The fair values are estimated using quoted prices, pricing information obtained from external data providers and, for certain variable rate debt, is estimated to be the carrying amount. If measured at fair value in the financial statements, these financial instruments would be classified as Level 2 and Level 3 in the fair value hierarchy.
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
|
||||||||||||||
|
2018 (1)
|
|
2017
|
|
2018 (1)
|
|
2017
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Beef processing services
|
$
|
1,355,691
|
|
|
$
|
1,874,495
|
|
|
$
|
3,137,611
|
|
|
$
|
3,433,518
|
|
Interest income
|
63
|
|
|
55
|
|
|
131
|
|
|
172
|
|
||||
Other
|
959
|
|
|
969
|
|
|
4,329
|
|
|
3,285
|
|
||||
Total revenues
|
1,356,713
|
|
|
1,875,519
|
|
|
3,142,071
|
|
|
3,436,975
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Compensation and benefits
|
7,207
|
|
|
9,832
|
|
|
17,414
|
|
|
19,144
|
|
||||
Cost of sales
|
1,214,207
|
|
|
1,750,569
|
|
|
2,884,983
|
|
|
3,214,407
|
|
||||
Interest expense
|
2,207
|
|
|
2,254
|
|
|
4,316
|
|
|
4,068
|
|
||||
Depreciation and amortization
|
18,440
|
|
|
24,459
|
|
|
43,959
|
|
|
46,858
|
|
||||
Selling, general and other expenses
|
6,435
|
|
|
9,980
|
|
|
14,291
|
|
|
16,970
|
|
||||
Total expenses
|
1,248,496
|
|
|
1,797,094
|
|
|
2,964,963
|
|
|
3,301,447
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income from discontinued operations before income taxes
|
108,217
|
|
|
78,425
|
|
|
177,108
|
|
|
135,528
|
|
||||
Income tax provision
|
31,111
|
|
|
24,435
|
|
|
47,045
|
|
|
37,366
|
|
||||
Income from discontinued operations, net of income tax provision
|
$
|
77,106
|
|
|
$
|
53,990
|
|
|
$
|
130,063
|
|
|
$
|
98,162
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(In thousands)
|
||||||||||||||
Net revenues:
|
|
|
|
|
|
|
|
||||||||
Reportable Segments:
|
|
|
|
|
|
|
|
||||||||
Jefferies Group
|
$
|
823,742
|
|
|
$
|
781,672
|
|
|
$
|
1,644,661
|
|
|
$
|
1,579,058
|
|
Corporate
|
2,994
|
|
|
1,236
|
|
|
6,061
|
|
|
2,342
|
|
||||
Total net revenues related to reportable segments
|
826,736
|
|
|
782,908
|
|
|
1,650,722
|
|
|
1,581,400
|
|
||||
All other (1)
|
84,423
|
|
|
73,953
|
|
|
155,872
|
|
|
581,987
|
|
||||
Total consolidated net revenues
|
$
|
911,159
|
|
|
$
|
856,861
|
|
|
$
|
1,806,594
|
|
|
$
|
2,163,387
|
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations before income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Reportable Segments:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Jefferies Group
|
$
|
125,038
|
|
|
$
|
122,712
|
|
|
$
|
250,768
|
|
|
$
|
254,982
|
|
Corporate
|
(20,199
|
)
|
|
(18,838
|
)
|
|
(41,145
|
)
|
|
(40,505
|
)
|
||||
Income from continuing operations before income taxes related to reportable segments
|
104,839
|
|
|
103,874
|
|
|
209,623
|
|
|
214,477
|
|
||||
All other (1)
|
(52,574
|
)
|
|
(42,883
|
)
|
|
(104,849
|
)
|
|
202,238
|
|
||||
Parent Company interest
|
(14,750
|
)
|
|
(14,734
|
)
|
|
(29,496
|
)
|
|
(29,464
|
)
|
||||
Total consolidated income from continuing operations before income taxes
|
$
|
37,515
|
|
|
$
|
46,257
|
|
|
$
|
75,278
|
|
|
$
|
387,251
|
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Reportable Segments:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Jefferies Group
|
$
|
17,288
|
|
|
$
|
15,348
|
|
|
$
|
33,654
|
|
|
$
|
30,949
|
|
Corporate
|
877
|
|
|
867
|
|
|
1,747
|
|
|
1,734
|
|
||||
Total depreciation and amortization expenses related to reportable segments
|
18,165
|
|
|
16,215
|
|
|
35,401
|
|
|
32,683
|
|
||||
All other
|
13,740
|
|
|
10,043
|
|
|
24,664
|
|
|
20,686
|
|
||||
Total consolidated depreciation and amortization expenses
|
$
|
31,905
|
|
|
$
|
26,258
|
|
|
$
|
60,065
|
|
|
$
|
53,369
|
|
(1)
|
All other Net revenues and Income from continuing operations before income taxes include realized and unrealized gains (losses) relating to our investment in FXCM of
$6.5 million
and
$(0.3) million
, respectively, for the
three months ended June 30, 2018
;
$15.1 million
and
$0.0 million
, respectively, for the
six months ended June 30, 2018
;
$4.4 million
and
$(7.7) million
, respectively, for the
three months ended June 30, 2017
; and
$15.3 million
and
$(146.7) million
, respectively, for the
six months ended June 30, 2017
.
|
Item 2
.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
.
|
|
Financial Services
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Jefferies Group
|
|
Other Financial Services
|
|
Merchant Banking Portfolio
|
|
Corporate
|
|
Parent Company Interest
|
|
Total
|
||||||||||||
Net revenues
|
$
|
823,742
|
|
|
$
|
35,770
|
|
|
$
|
48,653
|
|
|
$
|
2,994
|
|
|
$
|
—
|
|
|
$
|
911,159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Compensation and benefits
|
444,094
|
|
|
9,320
|
|
|
10,782
|
|
|
14,319
|
|
|
—
|
|
|
478,515
|
|
||||||
Cost of sales
|
—
|
|
|
—
|
|
|
90,690
|
|
|
—
|
|
|
—
|
|
|
90,690
|
|
||||||
Floor brokerage and clearing fees
|
45,046
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
45,046
|
|
||||||
Interest expense
|
—
|
|
|
7,874
|
|
|
1,655
|
|
|
—
|
|
|
14,750
|
|
|
24,279
|
|
||||||
Depreciation and amortization
|
17,288
|
|
|
1,624
|
|
|
12,116
|
|
|
877
|
|
|
—
|
|
|
31,905
|
|
||||||
Selling, general and other expenses
|
192,276
|
|
|
15,297
|
|
|
20,992
|
|
|
7,997
|
|
|
—
|
|
|
236,562
|
|
||||||
Total expenses
|
698,704
|
|
|
34,115
|
|
|
136,235
|
|
|
23,193
|
|
|
14,750
|
|
|
906,997
|
|
||||||
Income (loss) from continuing operations before income taxes and income related to associated companies
|
125,038
|
|
|
1,655
|
|
|
(87,582
|
)
|
|
(20,199
|
)
|
|
(14,750
|
)
|
|
4,162
|
|
||||||
Income related to associated companies
|
—
|
|
|
11,657
|
|
|
21,696
|
|
|
—
|
|
|
—
|
|
|
33,353
|
|
||||||
Income (loss) from continuing operations before income taxes
|
$
|
125,038
|
|
|
$
|
13,312
|
|
|
$
|
(65,886
|
)
|
|
$
|
(20,199
|
)
|
|
$
|
(14,750
|
)
|
|
37,515
|
|
|
Income tax provision from continuing operations
|
|
|
|
|
|
|
|
|
|
|
9,598
|
|
|||||||||||
Income from discontinued operations, net of income tax provision
|
|
|
|
|
|
|
|
|
|
|
77,106
|
|
|||||||||||
Gain on disposal of discontinued operations, net of income tax provision
|
|
|
|
|
|
|
|
|
|
|
643,921
|
|
|||||||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
$
|
748,944
|
|
|
Financial Services
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Jefferies Group
|
|
Other Financial Services
|
|
Merchant Banking Portfolio
|
|
Corporate
|
|
Parent Company Interest
|
|
Total
|
||||||||||||
Net revenues
|
$
|
1,644,661
|
|
|
$
|
7,840
|
|
|
$
|
148,032
|
|
|
$
|
6,061
|
|
|
$
|
—
|
|
|
$
|
1,806,594
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Compensation and benefits
|
898,854
|
|
|
19,962
|
|
|
20,084
|
|
|
29,274
|
|
|
—
|
|
|
968,174
|
|
||||||
Cost of sales
|
—
|
|
|
—
|
|
|
172,625
|
|
|
—
|
|
|
—
|
|
|
172,625
|
|
||||||
Floor brokerage and clearing fees
|
87,222
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
87,222
|
|
||||||
Interest expense
|
—
|
|
|
13,644
|
|
|
2,637
|
|
|
—
|
|
|
29,496
|
|
|
45,777
|
|
||||||
Depreciation and amortization
|
33,654
|
|
|
3,458
|
|
|
21,206
|
|
|
1,747
|
|
|
—
|
|
|
60,065
|
|
||||||
Selling, general and other expenses
|
374,163
|
|
|
38,073
|
|
|
34,485
|
|
|
16,185
|
|
|
—
|
|
|
462,906
|
|
||||||
Total expenses
|
1,393,893
|
|
|
75,137
|
|
|
251,037
|
|
|
47,206
|
|
|
29,496
|
|
|
1,796,769
|
|
||||||
Income (loss) from continuing operations before income taxes and income related to associated companies
|
250,768
|
|
|
(67,297
|
)
|
|
(103,005
|
)
|
|
(41,145
|
)
|
|
(29,496
|
)
|
|
9,825
|
|
||||||
Income related to associated companies
|
—
|
|
|
41,702
|
|
|
23,751
|
|
|
—
|
|
|
—
|
|
|
65,453
|
|
||||||
Income (loss) from continuing operations before income taxes
|
$
|
250,768
|
|
|
$
|
(25,595
|
)
|
|
$
|
(79,254
|
)
|
|
$
|
(41,145
|
)
|
|
$
|
(29,496
|
)
|
|
75,278
|
|
|
Income tax (benefit) from continuing operations
|
|
|
|
|
|
|
|
|
|
|
(38,831
|
)
|
|||||||||||
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
|
|
|
|
|
|
|
|
|
|
|
$
|
888,093
|
|
|
Financial Services
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Jefferies Group
|
|
Other Financial Services
|
|
Merchant Banking Portfolio
|
|
Corporate
|
|
Parent Company Interest
|
|
Total
|
||||||||||||
Net revenues
|
$
|
781,672
|
|
|
$
|
45,054
|
|
|
$
|
28,899
|
|
|
$
|
1,236
|
|
|
$
|
—
|
|
|
$
|
856,861
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Compensation and benefits
|
450,522
|
|
|
8,893
|
|
|
10,459
|
|
|
11,013
|
|
|
—
|
|
|
480,887
|
|
||||||
Cost of sales
|
—
|
|
|
—
|
|
|
69,982
|
|
|
—
|
|
|
—
|
|
|
69,982
|
|
||||||
Floor brokerage and clearing fees
|
44,435
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
44,435
|
|
||||||
Interest expense
|
—
|
|
|
4,691
|
|
|
6,155
|
|
|
—
|
|
|
14,734
|
|
|
25,580
|
|
||||||
Depreciation and amortization
|
15,348
|
|
|
2,472
|
|
|
7,571
|
|
|
867
|
|
|
—
|
|
|
26,258
|
|
||||||
Selling, general and other expenses
|
148,655
|
|
|
9,530
|
|
|
11,187
|
|
|
8,194
|
|
|
—
|
|
|
177,566
|
|
||||||
Total expenses
|
658,960
|
|
|
25,586
|
|
|
105,354
|
|
|
20,074
|
|
|
14,734
|
|
|
824,708
|
|
||||||
Income (loss) from continuing operations before income taxes and income related to associated companies
|
122,712
|
|
|
19,468
|
|
|
(76,455
|
)
|
|
(18,838
|
)
|
|
(14,734
|
)
|
|
32,153
|
|
||||||
Income related to associated companies
|
—
|
|
|
13,555
|
|
|
549
|
|
|
—
|
|
|
—
|
|
|
14,104
|
|
||||||
Income (loss) from continuing operations before income taxes
|
$
|
122,712
|
|
|
$
|
33,023
|
|
|
$
|
(75,906
|
)
|
|
$
|
(18,838
|
)
|
|
$
|
(14,734
|
)
|
|
46,257
|
|
|
Income tax provision from continuing operations
|
|
|
|
|
|
|
|
|
|
|
26,185
|
|
|||||||||||
Income from discontinued operations, net of income tax provision
|
|
|
|
|
|
|
|
|
|
|
53,990
|
|
|||||||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
$
|
74,062
|
|
|
Financial Services
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Jefferies Group
|
|
Other Financial Services
|
|
Merchant Banking Portfolio
|
|
Corporate
|
|
Parent Company Interest
|
|
Total
|
||||||||||||
Net revenues
|
$
|
1,579,058
|
|
|
$
|
86,542
|
|
|
$
|
495,445
|
|
|
$
|
2,342
|
|
|
$
|
—
|
|
|
$
|
2,163,387
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Compensation and benefits
|
911,194
|
|
|
17,176
|
|
|
22,325
|
|
|
24,207
|
|
|
—
|
|
|
974,902
|
|
||||||
Cost of sales
|
—
|
|
|
—
|
|
|
139,238
|
|
|
—
|
|
|
—
|
|
|
139,238
|
|
||||||
Floor brokerage and clearing fees
|
90,293
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
90,293
|
|
||||||
Interest expense
|
—
|
|
|
8,864
|
|
|
12,822
|
|
|
—
|
|
|
29,464
|
|
|
51,150
|
|
||||||
Depreciation and amortization
|
30,949
|
|
|
5,191
|
|
|
15,495
|
|
|
1,734
|
|
|
—
|
|
|
53,369
|
|
||||||
Selling, general and other expenses
|
291,640
|
|
|
20,700
|
|
|
23,468
|
|
|
16,906
|
|
|
—
|
|
|
352,714
|
|
||||||
Total expenses
|
1,324,076
|
|
|
51,931
|
|
|
213,348
|
|
|
42,847
|
|
|
29,464
|
|
|
1,661,666
|
|
||||||
Income (loss) from continuing operations before income taxes and income (loss) related to associated companies
|
254,982
|
|
|
34,611
|
|
|
282,097
|
|
|
(40,505
|
)
|
|
(29,464
|
)
|
|
501,721
|
|
||||||
Income (loss) related to associated companies
|
—
|
|
|
(118,957
|
)
|
|
4,487
|
|
|
—
|
|
|
—
|
|
|
(114,470
|
)
|
||||||
Income (loss) from continuing operations before income taxes
|
$
|
254,982
|
|
|
$
|
(84,346
|
)
|
|
$
|
286,584
|
|
|
$
|
(40,505
|
)
|
|
$
|
(29,464
|
)
|
|
387,251
|
|
|
Income tax provision from continuing operations
|
|
|
|
|
|
|
|
|
|
|
117,428
|
|
|||||||||||
Income from discontinued operations, net of income tax provision
|
|
|
|
|
|
|
|
|
|
|
98,162
|
|
|||||||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
$
|
367,985
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net revenues
|
$
|
823,742
|
|
|
$
|
781,672
|
|
|
$
|
1,644,661
|
|
|
$
|
1,579,058
|
|
|
|
|
|
|
|
|
|
||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Compensation and benefits
|
444,094
|
|
|
450,522
|
|
|
898,854
|
|
|
911,194
|
|
||||
Floor brokerage and clearing fees
|
45,046
|
|
|
44,435
|
|
|
87,222
|
|
|
90,293
|
|
||||
Depreciation and amortization
|
17,288
|
|
|
15,348
|
|
|
33,654
|
|
|
30,949
|
|
||||
Selling, general and other expenses
|
192,276
|
|
|
148,655
|
|
|
374,163
|
|
|
291,640
|
|
||||
Total expenses
|
698,704
|
|
|
658,960
|
|
|
1,393,893
|
|
|
1,324,076
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations before income taxes
|
$
|
125,038
|
|
|
$
|
122,712
|
|
|
$
|
250,768
|
|
|
$
|
254,982
|
|
•
|
Equities revenues now represent the activities of Jefferies Group's core equities sales and trading, securities finance, prime brokerage and wealth management businesses. Revenues from other activities previously presented within the Equities business have been disaggregated as follows:
|
◦
|
Jefferies Group's share of net earnings from its Jefferies Finance joint venture, as well as any revenues from securities and loans received or acquired in connection with its investment banking efforts, are now presented as part of Jefferies Group's investment banking business.
|
◦
|
Jefferies Group's share of net earnings from its historic Jefferies LoanCore LLC ("Jefferies LoanCore") joint venture is presented as part of its fixed income business through its sale in October 2017.
|
◦
|
Revenues related to Jefferies Group's principal investments in certain private equity funds and hedge funds managed by third parties or related parties, investments in strategic ventures (including KCG Holdings, Inc. ("KCG") through its sale in July 2017), certain other securities owned, and investments held as part of obligations under employee benefit plans, including deferred compensation arrangements, are now presented as part of its other business.
|
◦
|
Revenue related to Jefferies Group's capital invested in asset management funds that are managed by Jefferies Group is now presented within Jefferies Group's asset management business.
|
•
|
Revenues from Jefferies Group's legacy Futures business and revenues associated with structured notes issued by Jefferies Group are now presented as part of its other business. Additionally, revenues derived from securities or loans received or acquired in connection with Jefferies Group's investment banking efforts are now presented as part of investment banking revenues.
|
•
|
Revenues from principal investments in certain private equity and asset management funds managed by related parties, are now presented as part of its other business.
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Equities
|
$
|
175,059
|
|
|
$
|
174,937
|
|
|
$
|
330,758
|
|
|
$
|
331,402
|
|
Fixed income
|
120,621
|
|
|
157,158
|
|
|
333,543
|
|
|
379,122
|
|
||||
Total sales and trading
|
295,680
|
|
|
332,095
|
|
|
664,301
|
|
|
710,524
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity
|
107,553
|
|
|
74,902
|
|
|
187,393
|
|
|
136,468
|
|
||||
Debt
|
175,762
|
|
|
125,847
|
|
|
344,756
|
|
|
288,475
|
|
||||
Capital markets
|
283,315
|
|
|
200,749
|
|
|
532,149
|
|
|
424,943
|
|
||||
Advisory
|
216,982
|
|
|
151,114
|
|
|
408,139
|
|
|
334,941
|
|
||||
Other investment banking
|
6,390
|
|
|
3,959
|
|
|
105
|
|
|
8,022
|
|
||||
Total investment banking
|
506,687
|
|
|
355,822
|
|
|
940,393
|
|
|
767,906
|
|
||||
Other
|
3,988
|
|
|
92,951
|
|
|
13,754
|
|
|
86,873
|
|
||||
Total capital markets
|
806,355
|
|
|
780,868
|
|
|
1,618,448
|
|
|
1,565,303
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Asset Management
|
17,387
|
|
|
804
|
|
|
26,213
|
|
|
13,755
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total net revenues
|
$
|
823,742
|
|
|
$
|
781,672
|
|
|
$
|
1,644,661
|
|
|
$
|
1,579,058
|
|
•
|
services provided to Jefferies Group's clients from which it earns commissions or spread revenue by executing, settling and clearing transactions for clients;
|
•
|
financing, securities lending and other prime brokerage services offered to clients; and
|
•
|
wealth management services, which includes providing clients access to all of its institutional execution capabilities.
|
•
|
executing transactions for clients and making markets in securitized products, investment grade, high-yield, emerging markets, municipal and sovereign securities and bank loans;
|
•
|
foreign exchange execution on behalf of clients; and
|
•
|
interest rate derivatives and credit derivatives (used primarily for hedging activities).
|
•
|
capital markets services, which include underwriting and placement services related to corporate debt, municipal bonds, mortgage- and asset-backed securities and equity and equity-linked securities and loan syndication;
|
•
|
advisory services with respect to mergers and acquisitions and restructurings and recapitalizations;
|
•
|
Jefferies Group's share of net earnings from its corporate lending joint venture Jefferies Finance; and
|
•
|
securities and loans received or acquired in connection with Jefferies Group's investment banking activities.
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net revenues
|
$
|
35,770
|
|
|
$
|
45,054
|
|
|
$
|
7,840
|
|
|
$
|
86,542
|
|
|
|
|
|
|
|
|
|
||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Compensation and benefits
|
9,320
|
|
|
8,893
|
|
|
19,962
|
|
|
17,176
|
|
||||
Interest expense
|
7,874
|
|
|
4,691
|
|
|
13,644
|
|
|
8,864
|
|
||||
Depreciation and amortization
|
1,624
|
|
|
2,472
|
|
|
3,458
|
|
|
5,191
|
|
||||
Selling, general and other expenses
|
15,297
|
|
|
9,530
|
|
|
38,073
|
|
|
20,700
|
|
||||
Total expenses
|
34,115
|
|
|
25,586
|
|
|
75,137
|
|
|
51,931
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations before income taxes and income (loss) related to associated companies
|
1,655
|
|
|
19,468
|
|
|
(67,297
|
)
|
|
34,611
|
|
||||
Income (loss) related to associated companies
|
11,657
|
|
|
13,555
|
|
|
41,702
|
|
|
(118,957
|
)
|
||||
Income (loss) from continuing operations before income taxes
|
$
|
13,312
|
|
|
$
|
33,023
|
|
|
$
|
(25,595
|
)
|
|
$
|
(84,346
|
)
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net revenues
|
$
|
48,653
|
|
|
$
|
28,899
|
|
|
$
|
148,032
|
|
|
$
|
495,445
|
|
|
|
|
|
|
|
|
|
||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Compensation and benefits
|
10,782
|
|
|
10,459
|
|
|
20,084
|
|
|
22,325
|
|
||||
Cost of sales
|
90,690
|
|
|
69,982
|
|
|
172,625
|
|
|
139,238
|
|
||||
Interest expense
|
1,655
|
|
|
6,155
|
|
|
2,637
|
|
|
12,822
|
|
||||
Depreciation and amortization
|
12,116
|
|
|
7,571
|
|
|
21,206
|
|
|
15,495
|
|
||||
Selling, general and other expenses
|
20,992
|
|
|
11,187
|
|
|
34,485
|
|
|
23,468
|
|
||||
Total expenses
|
136,235
|
|
|
105,354
|
|
|
251,037
|
|
|
213,348
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations before income taxes and income related to associated companies
|
(87,582
|
)
|
|
(76,455
|
)
|
|
(103,005
|
)
|
|
282,097
|
|
||||
Income related to associated companies
|
21,696
|
|
|
549
|
|
|
23,751
|
|
|
4,487
|
|
||||
Income (loss) from continuing operations before income taxes
|
$
|
(65,886
|
)
|
|
$
|
(75,906
|
)
|
|
$
|
(79,254
|
)
|
|
$
|
286,584
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net revenues
|
$
|
2,994
|
|
|
$
|
1,236
|
|
|
$
|
6,061
|
|
|
$
|
2,342
|
|
|
|
|
|
|
|
|
|
||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Compensation and benefits
|
14,319
|
|
|
11,013
|
|
|
29,274
|
|
|
24,207
|
|
||||
Depreciation and amortization
|
877
|
|
|
867
|
|
|
1,747
|
|
|
1,734
|
|
||||
Selling, general and other expenses
|
7,997
|
|
|
8,194
|
|
|
16,185
|
|
|
16,906
|
|
||||
Total expenses
|
23,193
|
|
|
20,074
|
|
|
47,206
|
|
|
42,847
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Loss from continuing operations before income taxes and income (loss) related to associated companies
|
$
|
(20,199
|
)
|
|
$
|
(18,838
|
)
|
|
$
|
(41,145
|
)
|
|
$
|
(40,505
|
)
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
2018 (1)
|
|
2017
|
|
2018 (1)
|
|
2017
|
||||||||
Net revenues
|
$
|
1,356,713
|
|
|
$
|
1,875,519
|
|
|
$
|
3,142,071
|
|
|
$
|
3,436,975
|
|
|
|
|
|
|
|
|
|
||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Compensation and benefits
|
7,207
|
|
|
9,832
|
|
|
17,414
|
|
|
19,144
|
|
||||
Cost of sales
|
1,214,207
|
|
|
1,750,569
|
|
|
2,884,983
|
|
|
3,214,407
|
|
||||
Interest expense
|
2,207
|
|
|
2,254
|
|
|
4,316
|
|
|
4,068
|
|
||||
Depreciation and amortization
|
18,440
|
|
|
24,459
|
|
|
43,959
|
|
|
46,858
|
|
||||
Selling, general and other expenses
|
6,435
|
|
|
9,980
|
|
|
14,291
|
|
|
16,970
|
|
||||
Total expenses
|
1,248,496
|
|
|
1,797,094
|
|
|
2,964,963
|
|
|
3,301,447
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income from discontinued operations before income taxes
|
108,217
|
|
|
78,425
|
|
|
177,108
|
|
|
135,528
|
|
||||
Income tax provision
|
31,111
|
|
|
24,435
|
|
|
47,045
|
|
|
37,366
|
|
||||
Income from discontinued operations, net of income tax provision
|
$
|
77,106
|
|
|
$
|
53,990
|
|
|
$
|
130,063
|
|
|
$
|
98,162
|
|
|
June 30, 2018
|
||||||||||||||||||||||
|
Financial Services
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Jefferies Group
|
|
Other Financial Services
|
|
Merchant Banking Portfolio
|
|
Corporate
|
|
Inter-company Eliminations
|
|
Total
|
||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents
|
$
|
4,549,214
|
|
|
$
|
21,082
|
|
|
$
|
39,265
|
|
|
$
|
131,496
|
|
|
$
|
—
|
|
|
$
|
4,741,057
|
|
Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations
|
709,646
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
709,646
|
|
||||||
Financial instruments owned
|
15,705,657
|
|
|
1,518,820
|
|
|
1,094,515
|
|
|
1,242,475
|
|
|
—
|
|
|
19,561,467
|
|
||||||
Loans to and investments in associated companies
|
740,804
|
|
|
736,995
|
|
|
1,045,145
|
|
|
—
|
|
|
—
|
|
|
2,522,944
|
|
||||||
Securities borrowed
|
7,599,043
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,599,043
|
|
||||||
Securities purchased under agreements to resell
|
3,822,232
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,822,232
|
|
||||||
Receivables
|
4,831,168
|
|
|
921,017
|
|
|
99,623
|
|
|
24,581
|
|
|
—
|
|
|
5,876,389
|
|
||||||
Property, equipment and leasehold improvements, net
|
304,859
|
|
|
1,031
|
|
|
30,278
|
|
|
17,385
|
|
|
—
|
|
|
353,553
|
|
||||||
Intangible assets, net and goodwill
|
1,891,133
|
|
|
1,368
|
|
|
8,851
|
|
|
—
|
|
|
—
|
|
|
1,901,352
|
|
||||||
Deferred tax asset, net
|
273,926
|
|
|
—
|
|
|
—
|
|
|
263,137
|
|
|
—
|
|
|
537,063
|
|
||||||
Assets held for sale
|
—
|
|
|
—
|
|
|
249,825
|
|
|
—
|
|
|
—
|
|
|
249,825
|
|
||||||
Other assets
|
717,855
|
|
|
81,652
|
|
|
715,818
|
|
|
55,248
|
|
|
(43,346
|
)
|
|
1,527,227
|
|
||||||
Total Assets
|
41,145,537
|
|
|
3,281,965
|
|
|
3,283,320
|
|
|
1,734,322
|
|
|
(43,346
|
)
|
|
49,401,798
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Long-term debt (1)
|
6,591,900
|
|
|
60,573
|
|
|
72,886
|
|
|
989,611
|
|
|
—
|
|
|
7,714,970
|
|
||||||
Other liabilities
|
28,948,512
|
|
|
1,776,831
|
|
|
132,064
|
|
|
166,074
|
|
|
(43,346
|
)
|
|
30,980,135
|
|
||||||
Total liabilities
|
35,540,412
|
|
|
1,837,404
|
|
|
204,950
|
|
|
1,155,685
|
|
|
(43,346
|
)
|
|
38,695,105
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
14,252
|
|
|
—
|
|
|
—
|
|
|
14,252
|
|
||||||
Mandatorily redeemable convertible preferred shares
|
—
|
|
|
—
|
|
|
—
|
|
|
125,000
|
|
|
—
|
|
|
125,000
|
|
||||||
Noncontrolling interests
|
750
|
|
|
1,056
|
|
|
27,443
|
|
|
—
|
|
|
—
|
|
|
29,249
|
|
||||||
Total Jefferies Financial Group Inc. Shareholders' Equity
|
$
|
5,604,375
|
|
|
$
|
1,443,505
|
|
|
$
|
3,036,675
|
|
|
$
|
453,637
|
|
|
$
|
—
|
|
|
$
|
10,538,192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Reconciliation to Tangible Capital
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total Jefferies Financial Group Inc. shareholders' equity
|
$
|
5,604,375
|
|
|
$
|
1,443,505
|
|
|
$
|
3,036,675
|
|
|
$
|
453,637
|
|
|
$
|
—
|
|
|
10,538,192
|
|
|
Less: Intangible assets, net and goodwill
|
(1,891,133
|
)
|
|
(1,368
|
)
|
|
(8,851
|
)
|
|
—
|
|
|
—
|
|
|
(1,901,352
|
)
|
||||||
Tangible Capital, a non-GAAP measure
|
$
|
3,713,242
|
|
|
$
|
1,442,137
|
|
|
$
|
3,027,824
|
|
|
$
|
453,637
|
|
|
$
|
—
|
|
|
$
|
8,636,840
|
|
(1)
|
Long-term debt within Other financial services businesses and investments of $60.6 million at
June 30, 2018
includes $54.2 million for Foursight Capital and $6.4 million for Chrome Capital. Long-term debt within the Merchant banking portfolio of $72.9 million at
June 30, 2018
relates to Vitesse Energy Finance.
|
|
December 31, 2017
|
||||||||||||||||||||||||||
|
Financial Services
|
|
Merchant Banking Portfolio
|
|
|
|
|
|
|
||||||||||||||||||
|
Jefferies Group
|
|
Other Financial Services
|
|
National Beef
|
|
Other Merchant Banking
|
|
Corporate
|
|
Inter-company Eliminations
|
|
Total
|
||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cash and cash equivalents
|
$
|
5,164,492
|
|
|
$
|
13,681
|
|
|
$
|
18,516
|
|
|
$
|
42,240
|
|
|
$
|
36,551
|
|
|
$
|
—
|
|
|
$
|
5,275,480
|
|
Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations
|
578,014
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
578,014
|
|
|||||||
Financial instruments owned
|
14,193,352
|
|
|
779,306
|
|
|
2,880
|
|
|
1,195,624
|
|
|
628,075
|
|
|
—
|
|
|
16,799,237
|
|
|||||||
Loans to and investments in associated companies
|
682,790
|
|
|
715,892
|
|
|
—
|
|
|
668,147
|
|
|
—
|
|
|
—
|
|
|
2,066,829
|
|
|||||||
Securities borrowed
|
7,721,803
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,721,803
|
|
|||||||
Securities purchased under agreements to resell
|
3,689,559
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,689,559
|
|
|||||||
Receivables
|
4,459,827
|
|
|
677,211
|
|
|
201,675
|
|
|
77,355
|
|
|
2,947
|
|
|
—
|
|
|
5,419,015
|
|
|||||||
Property, equipment and leasehold improvements, net
|
297,750
|
|
|
2,681
|
|
|
401,148
|
|
|
29,927
|
|
|
18,897
|
|
|
—
|
|
|
750,403
|
|
|||||||
Intangible assets, net and goodwill
|
1,899,093
|
|
|
1,561
|
|
|
554,541
|
|
|
7,985
|
|
|
—
|
|
|
—
|
|
|
2,463,180
|
|
|||||||
Deferred tax asset, net
|
212,954
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
530,857
|
|
|
—
|
|
|
743,811
|
|
|||||||
Other assets
|
676,098
|
|
|
79,993
|
|
|
281,779
|
|
|
612,713
|
|
|
81,515
|
|
|
(70,321
|
)
|
|
1,661,777
|
|
|||||||
Total Assets
|
39,575,732
|
|
|
2,270,325
|
|
|
1,460,539
|
|
|
2,633,991
|
|
|
1,298,842
|
|
|
(70,321
|
)
|
|
47,169,108
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Long-term debt (1)
|
6,416,844
|
|
|
187,478
|
|
|
199,221
|
|
|
93,219
|
|
|
989,021
|
|
|
—
|
|
|
7,885,783
|
|
|||||||
Other liabilities
|
27,514,235
|
|
|
656,996
|
|
|
332,111
|
|
|
56,333
|
|
|
103,399
|
|
|
(70,321
|
)
|
|
28,592,753
|
|
|||||||
Total liabilities
|
33,931,079
|
|
|
844,474
|
|
|
531,332
|
|
|
149,552
|
|
|
1,092,420
|
|
|
(70,321
|
)
|
|
36,478,536
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
412,128
|
|
|
14,465
|
|
|
—
|
|
|
—
|
|
|
426,593
|
|
|||||||
Mandatorily redeemable convertible preferred shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
125,000
|
|
|
—
|
|
|
125,000
|
|
|||||||
Noncontrolling interests
|
737
|
|
|
1,382
|
|
|
—
|
|
|
30,903
|
|
|
—
|
|
|
—
|
|
|
33,022
|
|
|||||||
Total Jefferies Financial Group Inc. Shareholders' Equity
|
$
|
5,643,916
|
|
|
$
|
1,424,469
|
|
|
$
|
517,079
|
|
|
$
|
2,439,071
|
|
|
$
|
81,422
|
|
|
$
|
—
|
|
|
$
|
10,105,957
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Reconciliation to Tangible Capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Total Jefferies Financial Group Inc. shareholders' equity
|
$
|
5,643,916
|
|
|
$
|
1,424,469
|
|
|
$
|
517,079
|
|
|
$
|
2,439,071
|
|
|
$
|
81,422
|
|
|
$
|
—
|
|
|
10,105,957
|
|
|
Less: Intangible assets, net and goodwill
|
(1,899,093
|
)
|
|
(1,561
|
)
|
|
(554,541
|
)
|
|
(7,985
|
)
|
|
—
|
|
|
—
|
|
|
(2,463,180
|
)
|
|||||||
Tangible Capital, a non-GAAP measure
|
$
|
3,744,823
|
|
|
$
|
1,422,908
|
|
|
$
|
(37,462
|
)
|
|
$
|
2,431,086
|
|
|
$
|
81,422
|
|
|
$
|
—
|
|
|
$
|
7,642,777
|
|
•
|
Jefferies Group is our consolidated wholly-owned global full-service, integrated securities and investment banking firm.
|
•
|
Other Financial Services include:
|
◦
|
Leucadia Asset Management supports and develops focused alternative asset management businesses led by distinct management teams.
|
◦
|
Berkadia, our 50-50 equity method joint venture with Berkshire Hathaway Inc., is a U.S. commercial real estate finance company providing capital solutions, investment sales advisory and mortgage servicing for multifamily and commercial properties.
|
◦
|
We own an approximate 70% equity method interest in HomeFed, which owns and develops residential and mixed-use real estate properties. HomeFed is a public company traded on the NASD OTC Bulletin Board.
|
◦
|
Our investment in FXCM currently consists of a senior secured term loan due January 2019 (
$70.4 million
outstanding at
June 30, 2018
) and a 50% voting interest in FXCM and up to 75% of all distributions. FXCM is a provider of online foreign exchange trading, contract for difference trading, spread betting and related services.
|
◦
|
Foursight Capital purchases automobile installment contracts originated by franchised and independent dealerships in conjunction with the sale of new and used automobiles and services these loans throughout the life cycle. Chrome Capital owns and manages a portfolio of leases on used Harley-Davidson motorcycles and is in the process of winding down. We consolidate both of these subsidiaries.
|
◦
|
We own approximately 14% of Spectrum Brands Holdings, Inc. ("Spectrum Brands"), a publicly traded global consumer products company on the NYSE, and we reflect this investment at fair value based on quoted market prices. On July 13, 2018, HRG merged into its 62% owned subsidiary, Spectrum Brands. Our approximately 23% interest in HRG thereby converted into approximately 14% of Spectrum Brands outstanding shares.
|
◦
|
We own an approximate 31% interest in National Beef, which processes and markets fresh and chilled boxed beef, ground beef and beef by-products, consumer-ready beef and pork, and wet blue leather for domestic and international markets. On June 5, 2018, we sold 48% of our interest in National Beef to Marfrig and deconsolidated our investment in National Beef. Our retained 31% interest is accounted for under the equity method.
|
◦
|
Vitesse Energy Finance is our 97% owned consolidated subsidiary that acquires and invests in non-operated working and royalty oil and gas interests in the Bakken Shale oil field in North Dakota and Montana, as well as the Denver-Julesburg Basin in Wyoming.
|
◦
|
JETX is our 98% owned consolidated subsidiary that engages in the development and production of oil and gas from onshore, unconventional resource areas. JETX currently has non-operated working interests and acreage in east Texas.
|
◦
|
Garcadia is an equity method joint venture that owns and operates 28 automobile dealerships in California, Texas, Iowa and Michigan. We own approximately 75% of Garcadia.
|
◦
|
We own approximately 42% of the common shares of Linkem, as well as convertible preferred shares which, if converted, would increase our ownership to approximately 54% of Linkem’s common equity at
June 30, 2018
. Linkem provides residential broadband services using LTE technologies deployed over the 3.5 GHz spectrum band. Linkem operates in Italy, which has few cable television systems and poor broadband alternatives. Linkem is accounted for under the equity method.
|
◦
|
Idaho Timber is our consolidated subsidiary engaged in the manufacture and distribution of various wood products, including the following principal activities: remanufacturing dimension lumber; remanufacturing, bundling and bar coding of home center boards for large retailers; and production of pine dimension lumber and 5/4" radius-edge pine decking.
|
◦
|
Golden Queen Mining Company, LLC ("Golden Queen") owns the Soledad Mountain project, an open pit, heap leach gold and silver mining project in Kern County, California, which commenced gold and silver production in March 2016. We and the Clay family have formed and made contributions to a limited liability company, controlled by us, through which we invested in Golden Queen for the development and operation of the project. Our effective ownership of Golden Queen is approximately 38% and is accounted for under the equity method.
|
•
|
Corporate liquidity and other assets, net of Corporate liabilities, primarily consist of financial instruments owned, the deferred tax asset (exclusive of Jefferies Group's deferred tax asset), cash and cash equivalents, net of long-term debt, trade payables and accruals, as well as our outstanding mandatorily redeemable convertible preferred shares.
|
|
Rating
|
Outlook
|
Moody’s Investors Service
|
Ba1
|
Positive
|
Standard and Poor’s
|
BBB-
|
Stable
|
Fitch Ratings
|
BBB
|
Stable
|
Liquidity reserve (in thousands):
|
June 30, 2018
|
||
Minimum reserve under liquidity target
|
$
|
597,241
|
|
Actual liquidity
|
$
|
1,788,890
|
|
Leverage target (dollars in thousands):
|
June 30, 2018
|
|
||
Total Jefferies Financial Group Inc. shareholders' equity
|
$
|
10,538,192
|
|
|
Less, investment in Jefferies Group
|
(5,604,375
|
)
|
|
|
Equity excluding Jefferies Group
|
4,933,817
|
|
|
|
Less, our two largest investments:
|
|
|
|
|
National Beef
|
(603,541
|
)
|
|
|
HRG, at cost
|
(475,600
|
)
|
|
|
Equity in a stressed scenario
|
3,854,676
|
|
|
|
Less, net deferred tax asset excluding Jefferies Group's amount
|
(263,137
|
)
|
|
|
Equity in a stressed scenario less net deferred tax asset
|
$
|
3,591,539
|
|
|
Parent company debt (see Note 13 to our consolidated financial statements)
|
$
|
989,611
|
|
|
Ratio of parent company debt to stressed equity:
|
|
|
|
|
Maximum
|
0.50
|
|
x
|
|
Actual, equity in a stressed scenario
|
0.26
|
|
x
|
|
Actual, equity in a stressed scenario excluding net deferred tax asset
|
0.28
|
|
x
|
•
|
Jefferies Group used funds of $579.2 million and generated funds of $600.3 million during the
six months ended June 30, 2018 and 2017
, respectively. Included in these amounts are distributions received from associated companies of $1.9 million and $6.2 million during
2018
and
2017
, respectively.
|
•
|
Within Other Financial Services, net cash of $55.7 million and $124.6 million, respectively, was used during the
six months ended June 30, 2018 and 2017
to make additional investments in the Leucadia Asset Management platform. We received distributions from Berkadia, an associated company, of $17.0 million during
2018
and $4.3 million during
2017
. Cash used for operating activities also includes net cash used of $75.2 million during
2018
and $62.0 million during
2017
relating to automobile installment contracts, which is reflected in the net change in other receivables.
|
•
|
Within our Merchant Banking portfolio, manufacturing generated funds of $31.2 million and $13.6 million during the
six months ended June 30, 2018 and 2017
, respectively. Cash of $13.6 million and $28.0 million was used to make additional investments in our trading portfolio during the
six months ended June 30, 2018 and 2017
, respectively. We received distributions from Garcadia, an associated company, of $22.4 million during
2018
and $22.4 million during
2017
.
|
•
|
Net cash provided by operating activities of discontinued operations reflects funds generated by National Beef of $164.7 million and $77.6 million during the
six months ended June 30, 2018 and 2017
, respectively.
|
•
|
Acquisitions of property, equipment and leasehold improvements, and other assets related to Jefferies Group include $36.1 million during
2018
and $39.9 million during
2017
. Jefferies Group made loans to and investments in associated
|
•
|
Within Other Financial Services, acquisitions of property, equipment and leasehold improvements, and other assets were $0.5 million during
2018
and $0.9 million during
2017
. Collections on notes, loans and other receivables during
2018
and
2017
include $11.8 million and $50.8 million, respectively, related to FXCM. Loans to and investments in associated companies during
2017
include $31.3 million in HomeFed.
|
•
|
Within our Merchant Banking portfolio, acquisitions of property, equipment and leasehold improvements, and other assets primarily reflect activity in our oil and gas businesses. They totaled $204.0 million during
2018
and $22.8 million during
2017
. Proceeds from sale of subsidiary during
2017
relates to the sale of Conwed. Advances on notes, loans and other receivables during
2017
primarily relate to real estate projects in 54 Madison. Collections on notes, loans and other receivables during
2017
include $102.1 million related to real estate projects in 54 Madison. Loans to and investments in associated companies include $11.0 million to Golden Queen during
2018
, and $32.0 million to Linkem and $35.4 million to 54 Madison, of which $19.9 million was contributed by noncontrolling interests, during
2017
. We received capital distributions and loan repayments from associated companies of $13.1 million from National Beef, $2.6 million from Golden Queen, $7.9 million from 54 Madison and $0.6 million from Garcadia during
2018
and $7.0 million from Garcadia and $8.3 million from 54 Madison during
2017
.
|
•
|
Net cash provided by (used for) investing activities of discontinued operations includes acquisitions of property, equipment and leasehold improvements, and other assets related to National Beef of $33.7 million during
2018
and $24.0 million during
2017
, and net proceeds from sale of National Beef of $898.8 million during
2018
.
|
•
|
Issuance of debt includes $1,694.2 million during
2018
and $866.6 million during
2017
related to Jefferies Group. Repayment of debt includes $1,320.3 million during
2018
and $75.7 million during
2017
related to Jefferies Group. Other changes in short-term borrowings, net all related to Jefferies Group. Net change in bank overdrafts of $2.7 million in
2018
and $1.5 million in
2017
related to Jefferies Group. Net change in other secured financings includes proceeds of $246.7 million during
2018
and payments of $369.6 million during
2017
related to Jefferies Group.
|
•
|
Within Other Financial Services, issuance of debt includes $122.2 million during
2018
and $124.1 million during
2017
. Their repayment of debt includes $249.7 million during
2018
and $186.0 million during
2017
. Net change in other secured financings includes proceeds of $187.5 million during
2018
and $105.6 million during
2017
related to Foursight Capital.
|
•
|
Within our Merchant Banking portfolio, issuance of debt includes $46.9 million during
2018
and $23.1 million during
2017
. Their repayment of debt includes $15.2 million during
2018
and $85.1 million during
2017
. During
2017
, contributions from noncontrolling interests include $24.4 million and distributions to noncontrolling interests include $9.3 million related to 54 Madison.
|
•
|
Purchases of common shares for treasury relate to shares purchased in the open market and shares received from participants in our stock compensation plans in
2018
and
2017
.
|
•
|
Net cash provided by (used for) financing activities of discontinued operations includes the issuance of debt by National Beef of $366.1 million during
2018
and $82.9 million during
2017
of borrowings under its bank credit facility and repayment of debt by National Beef of $175.1 million in
2018
and $77.6 million during
2017
.
|
|
Six Months Ended
June 30, 2018 |
|
Year Ended
December 31, 2017
|
||||
Securities purchased under agreements to resell:
|
|
|
|
||||
Period end
|
$
|
3,822
|
|
|
$
|
3,690
|
|
Month end average
|
5,470
|
|
|
6,195
|
|
||
Maximum month end
|
7,593
|
|
|
7,814
|
|
||
|
|
|
|
||||
Securities sold under agreements to repurchase:
|
|
|
|
|
|
||
Period end
|
$
|
8,774
|
|
|
$
|
8,661
|
|
Month end average
|
12,735
|
|
|
11,273
|
|
||
Maximum month end
|
15,579
|
|
|
13,679
|
|
•
|
Repayment of all unsecured debt maturing within one year and no incremental unsecured debt issuance;
|
•
|
Maturity rolloff of outstanding letters of credit with no further issuance and replacement with cash collateral;
|
•
|
Higher margin requirements than currently exist on assets on securities financing activity, including repurchase agreements;
|
•
|
Liquidity outflows related to possible credit downgrade;
|
•
|
Lower availability of secured funding;
|
•
|
Client cash withdrawals;
|
•
|
The anticipated funding of outstanding investment and loan commitments; and
|
•
|
Certain accrued expenses and other liabilities and fixed costs.
|
•
|
Illiquid assets such as equipment, goodwill, net intangible assets, exchange memberships, deferred tax assets and certain investments;
|
•
|
A portion of securities inventory that is not expected to be financed on a secured basis in a credit stressed environment (i.e., margin requirements); and
|
•
|
Drawdowns of unfunded commitments.
|
|
June 30, 2018
|
|
Average Balance
Second Quarter 2018 (1)
|
|
December 31, 2017
|
||||||
Cash and cash equivalents:
|
|
|
|
|
|
||||||
Cash in banks
|
$
|
2,160,424
|
|
|
$
|
2,362,348
|
|
|
$
|
2,244,207
|
|
Money market investments
|
2,388,790
|
|
|
1,473,341
|
|
|
2,920,285
|
|
|||
Total cash and cash equivalents
|
4,549,214
|
|
|
3,835,689
|
|
|
5,164,492
|
|
|||
|
|
|
|
|
|
||||||
Other sources of liquidity:
|
|
|
|
|
|
|
|
|
|||
Debt securities owned and securities purchased under agreements to resell (2)
|
940,374
|
|
|
914,819
|
|
|
1,031,252
|
|
|||
Other (3)
|
360,842
|
|
|
492,922
|
|
|
513,293
|
|
|||
Total other sources
|
1,301,216
|
|
|
1,407,741
|
|
|
1,544,545
|
|
|||
|
|
|
|
|
|
||||||
Total cash and cash equivalents and other liquidity sources
|
$
|
5,850,430
|
|
|
$
|
5,243,430
|
|
|
$
|
6,709,037
|
|
(1)
|
Average balances are calculated based on weekly balances.
|
(2)
|
Consists of high quality sovereign government securities and reverse repurchase agreements collateralized by U.S. government securities and other high quality sovereign government securities; deposits with a central bank within the European Economic Area, Canada, Australia, Japan, Switzerland or the U.S.; and securities issued by a designated multilateral development bank and reverse repurchase agreements with underlying collateral comprised of these securities.
|
(3)
|
Other includes unencumbered inventory representing an estimate of the amount of additional secured financing that could be reasonably expected to be obtained from financial instruments owned that are currently not pledged after considering reasonable financing haircuts.
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||
|
Liquid Financial
Instruments
|
|
Unencumbered
Liquid Financial
Instruments (2)
|
|
Liquid Financial
Instruments
|
|
Unencumbered
Liquid Financial
Instruments (2)
|
||||||||
Corporate equity securities
|
$
|
1,644,030
|
|
|
$
|
218,548
|
|
|
$
|
1,718,617
|
|
|
$
|
272,380
|
|
Corporate debt securities
|
2,643,298
|
|
|
127,353
|
|
|
2,475,291
|
|
|
57,290
|
|
||||
U.S. Government, agency and municipal securities
|
2,752,626
|
|
|
150,705
|
|
|
1,954,697
|
|
|
185,481
|
|
||||
Other sovereign obligations
|
2,326,809
|
|
|
804,334
|
|
|
2,050,942
|
|
|
996,421
|
|
||||
Agency mortgage-backed securities (1)
|
2,921,338
|
|
|
—
|
|
|
1,742,977
|
|
|
—
|
|
||||
Loans and other receivables
|
261,127
|
|
|
—
|
|
|
243,664
|
|
|
—
|
|
||||
|
$
|
12,549,228
|
|
|
$
|
1,300,940
|
|
|
$
|
10,186,188
|
|
|
$
|
1,511,572
|
|
(1)
|
Consists solely of agency mortgage-backed securities issued by Freddie Mac, Fannie Mae and Ginnie Mae. These securities include pass-through securities, securities backed by adjustable rate mortgages ("ARMs"), collateralized mortgage obligations, commercial mortgage-backed securities and interest- and principal-only securities.
|
(2)
|
Unencumbered liquid balances represent assets that can be sold or used as collateral for a loan, but have not been.
|
|
Rating
|
Outlook
|
Moody’s Investors Service
|
Baa3
|
Stable
|
Standard and Poor’s
|
BBB-
|
Stable
|
Fitch Ratings
|
BBB
|
Stable
|
•
|
The description of our business and risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 2017 and filed with the Securities and Exchange Commission on February 26, 2018;
|
•
|
The discussion and analysis of financial condition and result of operations contained in this report under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" herein;
|
•
|
The notes to the consolidated financial statements in this report; and
|
•
|
Cautionary statements we make in our public documents, reports and announcements.
|
|
|
Daily VaR (1)
Value-at-Risk in Trading Portfolios
|
|
||||||||||||||||||||||||||||||
|
|
(In millions)
|
|
||||||||||||||||||||||||||||||
Risk Categories
|
|
VaR at
June 30, 2018
|
|
Daily VaR for the
Three Months Ended
June 30, 2018
|
|
VaR at
March 31, 2018
|
|
Daily VaR for the
Three Months Ended
March 31, 2018
|
|
||||||||||||||||||||||||
|
|
|
|
Average
|
|
High
|
|
Low
|
|
|
|
Average
|
|
High
|
|
Low
|
|
||||||||||||||||
Interest Rates
|
|
$
|
4.24
|
|
|
$
|
4.64
|
|
|
$
|
5.76
|
|
|
$
|
3.56
|
|
|
$
|
4.36
|
|
|
$
|
4.97
|
|
|
$
|
6.82
|
|
|
$
|
3.24
|
|
|
Equity Prices
|
|
3.31
|
|
|
4.82
|
|
|
8.05
|
|
|
3.25
|
|
|
4.70
|
|
|
4.23
|
|
|
6.23
|
|
|
3.08
|
|
|
||||||||
Currency Rates
|
|
0.13
|
|
|
0.11
|
|
|
0.17
|
|
|
0.04
|
|
|
0.07
|
|
|
0.14
|
|
|
0.24
|
|
|
0.02
|
|
|
||||||||
Commodity Prices
|
|
0.86
|
|
|
0.50
|
|
|
0.73
|
|
|
0.29
|
|
|
0.36
|
|
|
0.41
|
|
|
0.95
|
|
|
0.26
|
|
|
||||||||
Diversification Effect (2)
|
|
(3.33
|
)
|
|
(3.29
|
)
|
|
N/A
|
|
|
N/A
|
|
|
(3.27
|
)
|
|
(3.45
|
)
|
|
N/A
|
|
|
N/A
|
|
|
||||||||
Firmwide
|
|
$
|
5.21
|
|
|
$
|
6.78
|
|
|
$
|
10.32
|
|
|
$
|
5.21
|
|
|
$
|
6.22
|
|
|
$
|
6.30
|
|
|
$
|
7.58
|
|
|
$
|
4.76
|
|
|
(1)
|
For the VaR numbers reported above, a one-day time horizon, with a one year look-back period, and a 95% confidence level were used.
|
(2)
|
The diversification effect is not applicable for the maximum and minimum VaR values as Jefferies Group's VaR and VaR values for the four risk categories might have occurred on different days during the period.
|
|
10% Sensitivity
|
||
Private investments
|
$
|
16,372
|
|
Corporate debt securities in default
|
$
|
16,388
|
|
Trade claims
|
$
|
3,165
|
|
•
|
Defining credit limit guidelines and credit limit approval processes;
|
•
|
Providing a consistent and integrated credit risk framework across the enterprise;
|
•
|
Approving counterparties and counterparty limits with parameters set by its Risk Management Committee;
|
•
|
Negotiating, approving and monitoring credit terms in legal and master documentation;
|
•
|
Delivering credit limits to all relevant sales and trading desks;
|
•
|
Maintaining credit reviews for all active and new counterparties;
|
•
|
Operating a control function for exposure analytics and exception management and reporting;
|
•
|
Determining the analytical standards and risk parameters for on-going management and monitoring of global credit risk books;
|
•
|
Actively managing daily exposure, exceptions, and breaches;
|
•
|
Monitoring daily margin call activity and counterparty performance (in concert with the Margin Department); and
|
•
|
Setting the minimum global requirements for systems, reports, and technology.
|
•
|
Loans and lending, arising in connection with Jefferies Group's capital markets activities and forward settling traded loans;
|
•
|
Securities and margin finance, which represents securities financing transactions (reverse repurchase agreements, repurchase agreements and securities lending agreements);
|
•
|
OTC derivatives, which are reported net by counterparty when a legal right of setoff exists under an enforceable master netting agreement, and includes forward settling trades; and
|
•
|
Cash and cash equivalents, which include both interest-bearing and non-interest bearing deposits at banks.
|
Counterparty Credit Exposure by Region
|
|||||||||||||||||||||||||||||||||||||||||||||||
|
Loans and Lending
|
|
Securities and
Margin Finance
|
|
OTC Derivatives
|
|
Total
|
|
Cash and Cash
Equivalents
|
|
Total with Cash and
Cash Equivalents
|
||||||||||||||||||||||||||||||||||||
|
At
|
|
At
|
|
At
|
|
At
|
|
At
|
|
At
|
||||||||||||||||||||||||||||||||||||
|
June 30, 2018
|
|
December 31, 2017
|
|
June 30, 2018
|
|
December 31, 2017
|
|
June 30, 2018
|
|
December 31, 2017
|
|
June 30, 2018
|
|
December 31, 2017
|
|
June 30, 2018
|
|
December 31, 2017
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||||||
Asia/Latin America/Other
|
$
|
—
|
|
|
$
|
3.0
|
|
|
$
|
40.5
|
|
|
$
|
45.8
|
|
|
$
|
0.2
|
|
|
$
|
0.3
|
|
|
$
|
40.7
|
|
|
$
|
49.1
|
|
|
$
|
242.2
|
|
|
$
|
280.7
|
|
|
$
|
282.9
|
|
|
$
|
329.8
|
|
Europe
|
0.5
|
|
|
1.0
|
|
|
361.5
|
|
|
403.5
|
|
|
56.9
|
|
|
54.0
|
|
|
418.9
|
|
|
458.5
|
|
|
290.8
|
|
|
540.0
|
|
|
709.7
|
|
|
998.5
|
|
||||||||||||
North America
|
119.7
|
|
|
128.0
|
|
|
451.4
|
|
|
462.0
|
|
|
272.2
|
|
|
255.3
|
|
|
843.3
|
|
|
845.3
|
|
|
4,016.2
|
|
|
4,343.8
|
|
|
4,859.5
|
|
|
5,189.1
|
|
||||||||||||
Total
|
$
|
120.2
|
|
|
$
|
132.0
|
|
|
$
|
853.4
|
|
|
$
|
911.3
|
|
|
$
|
329.3
|
|
|
$
|
309.6
|
|
|
$
|
1,302.9
|
|
|
$
|
1,352.9
|
|
|
$
|
4,549.2
|
|
|
$
|
5,164.5
|
|
|
$
|
5,852.1
|
|
|
$
|
6,517.4
|
|
Counterparty Credit Exposure by Industry
|
|||||||||||||||||||||||||||||||||||||||||||||||
|
Loans and Lending
|
|
Securities and
Margin Finance
|
|
OTC Derivatives
|
|
Total
|
|
Cash and Cash
Equivalents
|
|
Total with Cash and
Cash Equivalents
|
||||||||||||||||||||||||||||||||||||
|
At
|
|
At
|
|
At
|
|
At
|
|
At
|
|
At
|
||||||||||||||||||||||||||||||||||||
|
June 30, 2018
|
|
December 31, 2017
|
|
June 30, 2018
|
|
December 31, 2017
|
|
June 30, 2018
|
|
December 31, 2017
|
|
June 30, 2018
|
|
December 31, 2017
|
|
June 30, 2018
|
|
December 31, 2017
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||||||
Asset Managers
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6.7
|
|
|
$
|
15.9
|
|
|
$
|
0.3
|
|
|
$
|
7.1
|
|
|
$
|
7.0
|
|
|
$
|
23.0
|
|
|
$
|
2,438.8
|
|
|
$
|
2,920.3
|
|
|
$
|
2,445.8
|
|
|
$
|
2,943.3
|
|
Banks, Broker-dealers
|
0.8
|
|
|
1.7
|
|
|
565.4
|
|
|
620.8
|
|
|
307.3
|
|
|
282.6
|
|
|
873.5
|
|
|
905.1
|
|
|
2,110.4
|
|
|
2,244.2
|
|
|
2,983.9
|
|
|
3,149.3
|
|
||||||||||||
Corporates
|
99.8
|
|
|
87.5
|
|
|
—
|
|
|
—
|
|
|
12.8
|
|
|
14.7
|
|
|
112.6
|
|
|
102.2
|
|
|
—
|
|
|
—
|
|
|
112.6
|
|
|
102.2
|
|
||||||||||||
Other
|
19.6
|
|
|
42.8
|
|
|
281.3
|
|
|
274.6
|
|
|
8.9
|
|
|
5.2
|
|
|
309.8
|
|
|
322.6
|
|
|
—
|
|
|
—
|
|
|
309.8
|
|
|
322.6
|
|
||||||||||||
Total
|
$
|
120.2
|
|
|
$
|
132.0
|
|
|
$
|
853.4
|
|
|
$
|
911.3
|
|
|
$
|
329.3
|
|
|
$
|
309.6
|
|
|
$
|
1,302.9
|
|
|
$
|
1,352.9
|
|
|
$
|
4,549.2
|
|
|
$
|
5,164.5
|
|
|
$
|
5,852.1
|
|
|
$
|
6,517.4
|
|
|
June 30, 2018
|
||||||||||||||||||||||||||||||||||
|
Issuer Risk
|
|
Counterparty Risk
|
|
Issuer and Counterparty Risk
|
||||||||||||||||||||||||||||||
|
Fair Value of
Long Debt
Securities
|
|
Fair Value of
Short Debt
Securities
|
|
Net Derivative
Notional
Exposure
|
|
Loans
and
Lending
|
|
Securities
and Margin
Finance
|
|
OTC Derivatives
|
|
Cash and
Cash Equivalents
|
|
Excluding
Cash and Cash Equivalents
|
|
Including
Cash and
Cash Equivalents
|
||||||||||||||||||
Germany
|
$
|
173.1
|
|
|
$
|
(469.7
|
)
|
|
$
|
656.4
|
|
|
$
|
—
|
|
|
$
|
84.1
|
|
|
$
|
2.2
|
|
|
$
|
89.3
|
|
|
$
|
446.1
|
|
|
$
|
535.4
|
|
United Kingdom
|
444.6
|
|
|
(246.6
|
)
|
|
(37.9
|
)
|
|
0.5
|
|
|
67.8
|
|
|
50.1
|
|
|
49.2
|
|
|
278.5
|
|
|
327.7
|
|
|||||||||
Canada
|
109.1
|
|
|
(61.1
|
)
|
|
(80.9
|
)
|
|
—
|
|
|
2.4
|
|
|
229.2
|
|
|
7.9
|
|
|
198.7
|
|
|
206.6
|
|
|||||||||
Japan
|
53.2
|
|
|
(32.4
|
)
|
|
—
|
|
|
—
|
|
|
20.1
|
|
|
—
|
|
|
126.1
|
|
|
40.9
|
|
|
167.0
|
|
|||||||||
Belgium
|
130.3
|
|
|
(101.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
104.0
|
|
|
29.0
|
|
|
133.0
|
|
|||||||||
Italy
|
1,167.5
|
|
|
(998.8
|
)
|
|
(36.8
|
)
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|
—
|
|
|
132.4
|
|
|
132.4
|
|
|||||||||
Austria
|
175.5
|
|
|
(54.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
120.8
|
|
|
120.8
|
|
|||||||||
Switzerland
|
101.8
|
|
|
(29.7
|
)
|
|
—
|
|
|
—
|
|
|
25.6
|
|
|
2.7
|
|
|
3.7
|
|
|
100.4
|
|
|
104.1
|
|
|||||||||
Brazil
|
161.6
|
|
|
(58.8
|
)
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
102.6
|
|
|
102.8
|
|
|||||||||
Finland
|
84.0
|
|
|
(12.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.6
|
|
|
71.5
|
|
|
72.1
|
|
|||||||||
Total
|
$
|
2,600.7
|
|
|
$
|
(2,065.6
|
)
|
|
$
|
500.6
|
|
|
$
|
0.5
|
|
|
$
|
200.0
|
|
|
$
|
284.7
|
|
|
$
|
381.0
|
|
|
$
|
1,520.9
|
|
|
$
|
1,901.9
|
|
|
December 31, 2017
|
||||||||||||||||||||||||||||||||||
|
Issuer Risk
|
|
Counterparty Risk
|
|
Issuer and Counterparty Risk
|
||||||||||||||||||||||||||||||
|
Fair Value of
Long Debt
Securities
|
|
Fair Value of
Short Debt
Securities
|
|
Net Derivative
Notional
Exposure
|
|
Loans
and
Lending
|
|
Securities
and Margin
Finance
|
|
OTC Derivatives
|
|
Cash and
Cash Equivalents
|
|
Excluding
Cash and Cash Equivalents
|
|
Including
Cash and
Cash Equivalents
|
||||||||||||||||||
Germany
|
$
|
493.3
|
|
|
$
|
(396.2
|
)
|
|
$
|
98.2
|
|
|
$
|
—
|
|
|
$
|
78.9
|
|
|
$
|
2.1
|
|
|
$
|
181.9
|
|
|
$
|
276.3
|
|
|
$
|
458.2
|
|
United Kingdom
|
634.6
|
|
|
(394.4
|
)
|
|
(72.1
|
)
|
|
0.7
|
|
|
97.8
|
|
|
26.9
|
|
|
45.0
|
|
|
293.5
|
|
|
338.5
|
|
|||||||||
Spain
|
217.9
|
|
|
(181.3
|
)
|
|
7.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
151.6
|
|
|
44.1
|
|
|
195.7
|
|
|||||||||
Japan
|
100.1
|
|
|
(81.3
|
)
|
|
4.1
|
|
|
—
|
|
|
25.8
|
|
|
—
|
|
|
136.3
|
|
|
48.7
|
|
|
185.0
|
|
|||||||||
Canada
|
205.3
|
|
|
(164.7
|
)
|
|
(128.5
|
)
|
|
—
|
|
|
17.3
|
|
|
222.8
|
|
|
7.4
|
|
|
152.2
|
|
|
159.6
|
|
|||||||||
Netherlands
|
315.9
|
|
|
(210.9
|
)
|
|
0.9
|
|
|
—
|
|
|
44.1
|
|
|
2.2
|
|
|
—
|
|
|
152.2
|
|
|
152.2
|
|
|||||||||
Switzerland
|
31.0
|
|
|
(16.9
|
)
|
|
(1.1
|
)
|
|
—
|
|
|
54.3
|
|
|
3.3
|
|
|
4.5
|
|
|
70.6
|
|
|
75.1
|
|
|||||||||
Hong Kong
|
23.0
|
|
|
(25.1
|
)
|
|
—
|
|
|
—
|
|
|
1.0
|
|
|
—
|
|
|
58.7
|
|
|
(1.1
|
)
|
|
57.6
|
|
|||||||||
Australia
|
50.5
|
|
|
(14.0
|
)
|
|
0.3
|
|
|
—
|
|
|
15.0
|
|
|
0.3
|
|
|
4.7
|
|
|
52.1
|
|
|
56.8
|
|
|||||||||
Singapore
|
36.0
|
|
|
(4.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24.7
|
|
|
31.8
|
|
|
56.5
|
|
|||||||||
Total
|
$
|
2,107.6
|
|
|
$
|
(1,489.0
|
)
|
|
$
|
(90.7
|
)
|
|
$
|
0.7
|
|
|
$
|
334.2
|
|
|
$
|
257.6
|
|
|
$
|
614.8
|
|
|
$
|
1,120.4
|
|
|
$
|
1,735.2
|
|
|
(a) Total
Number of
Shares
Purchased (1)
|
|
(b) Average
Price Paid
per Share
|
|
(c) Total Number of
Shares Purchased as
Part of Publicly
Announced Plans
or Programs (2)
|
|
(d) Maximum Number of Shares
that May Yet Be
Purchased Under the
Plans or Programs (2)
|
|||||
April 1, 2018 to April 30, 2018
|
11,819,310
|
|
|
$
|
24.37
|
|
|
11,819,310
|
|
|
13,180,690
|
|
May 1, 2018 to May 31, 2018
|
8,180,690
|
|
|
$
|
24.44
|
|
|
8,180,690
|
|
|
5,000,000
|
|
June 1, 2018 to June 30, 2018 (3)
|
4,148,552
|
|
|
$
|
23.08
|
|
|
4,084,080
|
|
|
915,920
|
|
Total
|
24,148,552
|
|
|
|
|
|
24,084,080
|
|
|
|
(1)
|
Includes an aggregate 64,472 shares repurchased other than as part of our publicly announced Board authorized repurchase program. We repurchased these securities in connection with our share compensation plans which allow participants to use shares to satisfy certain tax liabilities arising from the vesting of restricted shares and the distribution of restricted share units. The total number of shares purchased does not include unvested shares forfeited back to us pursuant to the terms of our share compensation plans.
|
(2)
|
In November 2012, our Board of Directors authorized the repurchase of up to 25,000,000 of our common shares. Between 2012 and 2017 we bought 12,500,000 common shares under this authorization. In April 2018, the Board of Directors approved an increase to our share repurchase program to 25,000,000 common shares from the 12,500,000 remaining under its prior authorization. In July 2018, the Board of Directors approved an increase to our share repurchase program of 25,000,000 common shares, bringing our total authorization to 25,915,920 common shares.
|
(3)
|
Includes 1,041,000 shares that settled in July 2018.
|
Item 6.
|
Exhibits.
|
|
|
3.1
|
|
|
|
3.2
|
|
|
|
10.1*
|
|
|
|
10.2*
|
|
|
|
10.3*
|
|
|
|
10.4*
|
|
|
|
31.1
|
|
|
|
31.2
|
|
|
|
32.1
|
|
|
|
32.2
|
|
|
|
101
|
Financial statements from the Quarterly Report on Form 10-Q of Jefferies Financial Group Inc. for the quarter ended June 30, 2018, formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Statements of Financial Condition, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income (Loss), (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Changes in Equity and (vi) the Notes to Consolidated Financial Statements.
|
|
JEFFERIES FINANCIAL GROUP INC.
|
|
|
|
|
(Registrant)
|
|
|
|
|
|
Date: August 1, 2018
|
By:
|
/s/ John M. Dalton
|
|
|
|
Name: John M. Dalton
|
|
|
|
Title: Vice President and Controller
|
|
|
|
(Chief Accounting Officer)
|
|
(i)
|
the Corporation shall fail to pay in full accrued and unpaid dividends for an aggregate of twenty (20) or more Dividend Payment Dates; or
|
(ii)
|
a failure of the Corporation to comply in any material respect with its obligations set forth in this Certificate or a failure of Jefferies Group, Inc. (or its successor-in-interest) to comply in any material respect with its obligations set forth in the Purchase Agreement, which failure is not remedied within 10 days upon either the Corporation’s receipt of notice from any holder of the Series A Cumulative Convertible Preferred Shares or actual knowledge of the failure by any Officer, or the occurrence under the Registration Rights Agreement of a Registration Default, as defined under Section 2(g) of such agreement, which failure is not remedied within 60 days upon either the Corporation’s receipt of notice from any holder of the Series A Cumulative Convertible Preferred Shares or actual knowledge of the Registration Default by any Officer; or
|
(iii)
|
the Corporation or any of its material subsidiaries shall (A) apply for or consent to the appointment of a receiver, trustee or liquidator for itself or any of its property; (8) admit in writing its inability to pay debts as they mature; (C) make a general assignment for the benefit of creditors; (D) be adjudicated bankrupt or insolvent; (E) file a voluntary petition in bankruptcy, a petition or answer seeking reorganization or an arrangement with creditors to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against it in any proceeding under any such law; (F) have failed to have in involuntary petition in bankruptcy filed against it dismissed and discharged within sixty (60) calendar days after the date of such filing; (G) corporate actions shall be taken for the purpose of effecting any of the foregoing; or (H) an order judgment or decree shall be entered without the application, approval or consent of the Corporation or such material subsidiary, by any court of competent jurisdiction, approving a petition seeking reorganization of the Corporation or of all or a substantial part of its assets, and such order, judgment or decree shall continue unstayed and in effect for sixty (60) calendar days; or
|
(iv)
|
the Termination of Trading; or
|
(v)
|
any of the representations and warranties contained in the Purchase Agreement in relation thereto shall be false or misleading in any material respect.
|
Year
|
$24.19
|
$27.50
|
$30.84
|
$35.00
|
$40.00
|
$50.00
|
$60.00
|
$75.00
|
$90.00
|
$110.00
|
$130.00
|
$150.00
|
$175.00
|
$200.00
|
1/29/2013
|
8.905
|
7.347
|
6.172
|
5.078
|
4.117
|
2.868
|
2.104
|
1.402
|
0.974
|
0.619
|
0.399
|
0.256
|
0.141
|
0.070
|
1/15/2014
|
8.905
|
6.875
|
5.752
|
4.711
|
3.803
|
2.632
|
1.922
|
1.274
|
0.881
|
0.556
|
0.355
|
0.225
|
0.121
|
0.058
|
1/15/2015
|
8.905
|
6.387
|
5.315
|
4.330
|
3.476
|
2.387
|
1.734
|
1.143
|
0.786
|
0.492
|
0.311
|
0.194
|
0.101
|
0.045
|
1/15/2016
|
8.905
|
5.891
|
4.870
|
3.939
|
3.141
|
2.136
|
1.542
|
1.010
|
0.691
|
0.429
|
0.268
|
0.164
|
0.082
|
0.034
|
1/15/2017
|
8.905
|
5.402
|
4.426
|
3.546
|
2.803
|
1.883
|
1.349
|
0.878
|
0.598
|
0.369
|
0.228
|
0.137
|
0.066
|
0.025
|
1/15/2018
|
8.905
|
4.931
|
3.991
|
3.156
|
2.464
|
1.629
|
1.158
|
0.749
|
0.509
|
0.312
|
0.191
|
0.112
|
0.052
|
0.017
|
1/15/2019
|
8.905
|
4.457
|
3.544
|
2.751
|
2.109
|
1.363
|
0.959
|
0.618
|
0.419
|
0.256
|
0.155
|
0.090
|
0.039
|
0.010
|
1/15/2020
|
8.905
|
3.958
|
3.062
|
2.305
|
1.717
|
1.073
|
0.746
|
0.480
|
0.327
|
0.200
|
0.120
|
0.068
|
0.027
|
0.005
|
1/15/2021
|
8.905
|
3.408
|
2.511
|
1.788
|
1.262
|
0.745
|
0.512
|
0.333
|
0.229
|
0.142
|
0.085
|
0.047
|
0.017
|
0.001
|
1/15/2022
|
8.905
|
2.758
|
1.819
|
1.126
|
0.695
|
0.369
|
0.256
|
0.172
|
0.121
|
0.076
|
0.045
|
0.024
|
0.007
|
0.000
|
1/15/2023
|
8.905
|
2.106
|
0.000
|
0.000
|
0.000
|
0.000
|
0.000
|
0.000
|
0.000
|
0.000
|
0.000
|
0.000
|
0.000
|
0.000
|
(1)
|
dividends, distributions and rights, warrants, options, other securities or convertible securities referred to in Sections 9(a)(i)or 9(a)(ii);
|
(2)
|
dividends or distributions paid exclusively in cash; and
|
(3)
|
Spin-Offs described in this Section 9(a)(iii) below,
|
(1)
|
If the Corporation at any time or from time to time after the Issue Date shall issue any Options or Convertible Securities (other than Options or Convertible Securities which are themselves Exempted Securities) or shall fix a record date for the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares of Common Stock (as set forth in the instrument relating thereto, assuming the satisfaction of any conditions to exercisability, convertibility or exchangeability but without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be New Shares of Common Stock issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date.
|
(2)
|
If the terms of any Option or Convertible Security, the issuance of which resulted in an adjustment to the Conversion Price pursuant to the terms of Section 9(b)(iii) below, are revised as a result of an amendment to such terms or any other adjustment pursuant to the provisions of such Option or Convertible Security (but excluding automatic adjustments to such terms pursuant to anti-dilution or similar provisions of such Option or Convertible Security) to provide for either (A) any increase or decrease in the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any such Option or Convertible Security or (B) any increase or decrease in the consideration payable to the Corporation upon such exercise, conversion and/or exchange, then, effective upon such increase or decrease becoming effective, the Conversion Price computed upon the original issue of such Option or Convertible Security (or upon the occurrence of a record date with respect thereto) shall be readjusted to such Conversion Price as would have obtained had such revised terms been in effect upon the original date of issuance of such Option or Convertible Security. Notwithstanding the foregoing, no readjustment pursuant to this clause (i) shall have the effect of increasing the Conversion Price to an amount which exceeds the lower of (x) the Conversion Price in effect immediately prior to the original adjustment made as a result of the issuance of such Option or Convertible Security, or (y) the Conversion Price that would have resulted from any issuances of New Shares of Common Stock (other than deemed issuances of New Shares of Common Stock as a result of the issuance of such Option or Convertible Security) between the original adjustment date and such readjustment date.
|
(3)
|
If the terms of any Option or Convertible Security, the issuance of which did not result in an adjustment to the Conversion Price pursuant to the terms of Section 9(b)(iii) (either because the consideration per share (determined pursuant to Section 9(b)(iv)) of the New Shares of Common Stock subject thereto was equal to or greater than the Conversion Price then in effect. or because such Option or Convertible Security was issued before the Issue Date) or Section 9(g), are revised after the Issue Date as a result of an amendment to such terms or any other adjustment pursuant to the provisions of such Option or Convertible Security (but excluding automatic adjustments to such terms pursuant to anti-dilution or similar provisions of such Option or Convertible Security) to provide for either (A) any increase or decrease in the number of shares of Common Stock issuable upon the exercise, conversion or exchange of any such Option or Convertible Security or (B) any increase or decrease in the consideration payable to the Corporation upon such exercise, conversion or exchange, then such Option or Convertible Security, as so amended or adjusted, and the New Shares of Common Stock subject thereto (determined in the manner provided in Section 9(b)(ii)(l) above) shall be deemed to have been issued effective upon such increase or decrease becoming effective.
|
(4)
|
Upon the expiration or termination of any unexercised Option or unconverted or unexchanged Convertible Security (or portion thereof) which resulted (either upon its original issuance or upon a revision of its terms) in an adjustment to the Conversion Price pursuant to the terms of Section 9(b)(iii), the Conversion Price shall be readjusted to such Conversion Price as would have obtained had such Option or Convertible Security (or portion thereof) never been issued.
|
(5)
|
If the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any Option or Convertible Security, or the consideration payable to the Corporation upon such exercise, conversion and/or exchange, is calculable at the time such Option or Convertible Security is issued or amended but is subject to adjustment based upon Subsequent events, any adjustment to the Conversion Price provided for in this Section 9(b)(ii) shall be effected at the time of such issuance or amendment based on such number of shares or amount of consideration without regard to any provisions for subsequent adjustments (and any subsequent adjustments shall be treated as provided in clauses (2) and (3) of this Section 9(b)(ii)). If the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any Option or Convertible Security, or the consideration payable to the Corporation upon such exercise, conversion and/or exchange, cannot be calculated at all at the time such Option or Convertible Security is issued or amended, any adjustment to the Conversion Price that would result under the terms of this Section 9(b)(ii) at the time of such issuance or amendment shall instead be effected at the time such number of shares and/or amount of consideration is first calculable (even if subject to subsequent adjustments), assuming for purposes of calculating such adjustment to the Conversion Price that such issuance or amendment took place at the time such calculation can first be made.
|
(1)
|
Consideration which consists of cash or property shall:
|
(A)
|
insofar as it consists of cash, be computed at the aggregate amount of cash received by the Corporation, excluding amounts paid or payable for accrued interest and calculated without reduction for any customary fees, commissions, discounts or allowances payable by the Corporation in connection with the issuance and sale of New Shares of Common Stock;
|
(B)
|
insofar as it consists of property other than cash, be computed at the Fair Market Value thereof at the time of such issue, as determined in good faith by the Board of Directors; and
|
(C)
|
in the event New Shares of Common Stock are issued together with other shares or securities or other assets of the Corporation for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (A) and (B) above, as determined in good faith by the Board of Directors.
|
(2)
|
The consideration per share received by the Corporation for New Shares of Common Stock deemed to have been issued pursuant to Section 9(b)(i), relating to Options and Convertible Securities, shall be determined by dividing
|
(A)
|
the total amount, if any, received or receivable by the Corporation as consideration and calculated without reduction for any customary fees, commissions, discounts or allowances payable by the Corporation in connection with the issuance and sale of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Corporation upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by
|
(B)
|
the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities.
|
(a)
|
complete, sign and submit all questionnaires required of the Corporation’s Board of Directors within five business days of receipt of each such questionnaire from the Corporation; and
|
(b)
|
provide within five business days of the Corporation’s request such additional information as the Corporation determines may be necessary to permit the Board of Directors to determine whether such Proxy Access Nominee meets the requirements of this Section 2.C. and/or the Corporation’s requirements with regard to director qualifications and policies and guidelines applicable to directors, including whether (1) such Proxy Access Nominee is independent under the listing standards of each U.S. exchange upon which the capital stock of the Corporation is listed, any applicable rules of the SEC, and any publicly disclosed standards used by the Board of Directors in determining and disclosing the independence of the directors (the “Independence Standards”), (2) such Proxy Access Nominee has any direct or indirect relationship with the Corporation, and (3) such Proxy Access Nominee is not and has not been subject to (A) any event specified in Item 401(f) of Regulation S-K under the Securities Act of 1933, as amended (the “Securities Act”), or (B) any order of the type specified in Rule 506(d) of Regulation D under the Securities Act.
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Jefferies Financial Group Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
|
|
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
|
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
|
|
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
|
|
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
|
|
|
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
|
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
|
|
Date: August 1, 2018
|
By:
|
/s/ Richard B. Handler
|
|
|
Richard B. Handler
|
|
|
Chief Executive Officer
|
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Jefferies Financial Group Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
|
|
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
|
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
|
|
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
|
|
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
|
|
|
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
|
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
|
|
|
|
|
|
|
Date: August 1, 2018
|
By:
|
/s/ Teresa S. Gendron
|
|
|
|
Teresa S. Gendron
|
|
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
Date: August 1, 2018
|
By:
|
/s/ Richard B. Handler
|
|
|
|
Richard B. Handler
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
Date: August 1, 2018
|
By:
|
/s/ Teresa S. Gendron
|
|
|
|
Teresa S. Gendron
|
|
|
|
Chief Financial Officer
|
|
|