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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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95-4719745
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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520 Madison Avenue, New York, New York
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10022
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(Address of principal executive offices)
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(Zip Code)
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Title of each class:
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Name of each exchange on which registered:
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5.125% Senior Notes Due 2023
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New York Stock Exchange
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4.850% Senior Notes Due 2027
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New York Stock Exchange
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Large accelerated filer
☐
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Accelerated filer
☐
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Non-accelerated filer
☒
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Smaller reporting company
☐
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Emerging growth company
☐
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Page
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Earnings Releases and Other Public Announcements;
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Annual and interim reports on Form 10-K;
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Quarterly reports on Form 10-Q;
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Current reports on Form 8-K;
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Code of Ethics;
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Reportable waivers, if any, from our Code of Ethics by our executive officers;
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Board of Directors Corporate Governance Guidelines;
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Charter of the Corporate Governance and Nominating Committee of the Board of Directors;
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Charter of the Compensation Committee of the Board of Directors;
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Charter of the Audit Committee of the Board of Directors; and
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Any amendments to the above-mentioned documents and reports.
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Capital Markets
includes our investment banking, sales and trading and other related services. Investment banking provides capital markets and financial advisory services to our clients across most industry sectors in the Americas, Europe and Asia. Our sales and trading businesses operate across the spectrum of equities, fixed income and foreign exchange products. Related services include, among other things, prime brokerage and equity finance, research and strategy, corporate lending and real estate finance, as well as other principal and corporate investing activities.
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Asset Management
provides investment management services to investors in the U.S. and overseas and makes capital investments in managed funds and accounts.
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A market downturn could lead to a decline in the volume of transactions executed for customers and, therefore, to a decline in the revenues we receive from commissions and spreads.
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Unfavorable conditions or changes in general political, economic or market conditions could reduce the number and size of transactions in which we provide underwriting, financial advisory and other services. Our investment banking revenues, in the form of financial advisory and sales and trading or placement fees, are directly related to the number and size of the transactions in which we participate and could therefore be adversely affected by unfavorable financial, economic or political conditions. In particular, the increasing trend toward sovereign protectionism and deglobalization resulting from the current populist political movement has resulted or could result in decreases in free trade, erosion of traditional international coalitions, the imposition of sanctions and tariffs, governmental closures and no-confidence votes, domestic and international strife, and general market upheaval in response to such results, all of which could negatively impact our business.
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Adverse changes in the market could also lead to a reduction in revenues from asset management fees and investment income from managed funds and losses on our own capital invested in managed funds. Even in the absence of a market downturn, below-market investment performance by our funds and portfolio managers could reduce asset management revenues and assets under management and result in reputational damage that might make it more difficult to attract new investors.
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Adverse changes in the market could lead to regulatory restrictions that may limit or halt certain of our business activities.
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Limitations on the availability of credit can affect our ability to borrow on a secured or unsecured basis, which may adversely affect our liquidity and results of operations. Global market and economic conditions have been particularly disrupted and volatile in the last several years and may be in the future. Our cost and availability of funding could be affected by illiquid credit markets and wider credit spreads.
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New or increased taxes on compensation payments such as bonuses or on balance sheet items may adversely affect our profits.
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Should one of our customers or competitors fail, our business prospects and revenue could be negatively impacted due to negative market sentiment causing customers to cease doing business with us and our lenders to cease loaning us money, which could adversely affect our business, funding and liquidity.
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the description of our business contained in this report under the caption “Business”;
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the risk factors contained in this report under the caption “Risk Factors”;
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the discussion of our analysis of financial condition and results of operations contained in this report under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” herein;
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the discussion of our risk management policies, procedures and methodologies contained in this report under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Risk Management” herein;
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the notes to the consolidated financial statements contained in this report; and
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cautionary statements we make in our public documents, reports and announcements.
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Net revenues for
2018
were
$3,183.4 million
, compared with
$3,198.1 million
for
2017
,
a decrease
of
$14.7 million
, or
0.5%
. A decline in our fixed income sales and trading and other net revenues was offset by an
increase
of
$129.8 million
in investment banking revenues, although our investment banking net revenues in
2018
included
$131.8 million
in net revenues as a result of the new revenue standard. (Refer to “Impact of Adopting Revenue Recognition Guidance” herein and
Note 2, Summary of Significant Accounting Policies
, and
Note 3, Accounting Developments
, in our consolidated financial statements included in this Annual Report on Form 10-K, for further details on the new revenue standard.)
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Our results for
2018
reflect record equity capital markets and advisory net revenues.
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Our 2017 results included a net gain of
$93.4 million
from our investment in KCG Holdings, Inc. (“KCG”), which was sold in July 2017.
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We continued to maintain strong leverage ratios and liquidity and a strong capital base throughout
2018
. See the “Liquidity, Financial Condition and Capital Resources” section herein for further information.
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Our equities net revenues had a slight decline of
1.3%
for
2018
compared to
2017
, as record results posted in
2018
for our overall global core sales and trading business and within the U.S., Europe and Asia Pacific regions were offset by losses in certain block positions in
2018
compared with gains in
2017
.
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Our fixed income net revenues for
2018
were below those for
2017
, primarily due to difficult market conditions in our global investment grade credit businesses predominately in the fourth quarter of 2018. Further, performance in the first quarter of 2017 was bolstered by robust trading activity following the 2016 U.S. Presidential election, which was not repeated in the current year.
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Our investment banking revenues for
2018
reflect continued strong performance in both our equity capital markets and advisory businesses, as we increased our fee market share in both businesses, as well as an increase of
$131.8 million
in investment banking net revenues during the
year ended November 30, 2018
, as a result of the new revenue standard. Refer to “Impact of Adopting Revenue Recognition Guidance” herein and
Note 2, Summary of Significant Accounting Policies
, and
Note 3, Accounting Developments
, in our consolidated financial statements included in this Annual Report on Form 10-K, for further details on the new revenue standard.
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Net revenues from our other business category for
2018
were
$45.3 million
, compared with
$93.0 million
for
2017
. Results in 2017 included a net gain of
$93.4 million
from our investment in KCG, which was sold in July 2017.
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Net revenues for
2018
also included losses from asset management of
$1.1 million
, compared with asset management revenues of
$28.2 million
for
2017
.
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Non-interest expenses for
2018
increased
$80.5 million
, or
3.0%
, to
$2,773.7 million
, compared with
$2,693.2 million
for
2017
, reflecting an increase in Non-compensation expenses, partially offset by a decrease in Compensation and benefits expense.
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Compensation and benefits expense for
2018
was
$1,736.3 million
,
a decrease
of
$92.8 million
, or
5.1%
, from
2017
. Compensation and benefits expense as a percentage of Net revenues was
54.5%
for
2018
, compared with
57.2%
in
2017
.
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Non-compensation expenses for
2018
increased
$173.4 million
, or
20.1%
, to
$1,037.4 million
, compared with
$864.1 million
for
2017
, primarily due to an increase of
$131.8 million
mostly across Business development expenses and Underwriting costs, as a result of applying the new revenue standard to our results of operations for
2018
. Refer to “Impact of Adopting Revenue Recognition Guidance” herein and
Note 2, Summary of Significant Accounting Policies
, and
Note 3, Accounting Developments
, in our consolidated financial statements included in this Annual Report on Form 10-K, for further details on the new revenue standard.
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At
November 30, 2018
, we had
3,596
employees globally,
an increase
of
146
employees from our headcount of
3,450
at November 30,
2017
. Our headcount increased primarily as a result of continued hiring in investment banking, as well as additions in our asset management and equities businesses.
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Net revenues for
2017
were an annual record of
$3,198.1 million
, compared with
$2,414.6 million
for
2016
, an increase of
$783.5 million
, or
32.4%
.
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The results for
2017
were due to then record investment banking revenues and higher equities net revenues, partially offset by lower fixed income net revenues.
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Then record investment banking revenues for 2017 reflect record debt capital markets revenues, previous record advisory revenues and significantly higher equity capital markets revenues, as a result of higher transaction volumes and values throughout 2017, driven in part by our effort to continue to expand our investment banking team through promotions and new hires. Our investment banking revenues also included income of
$90.8 million
from our joint venture investment in Jefferies Finance LLC (“Jefferies Finance”) in
2017
, compared with a loss of
$9.3 million
in
2016
.
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Our equities net revenues improved
12.9%
for
2017
compared to
2016
primarily due to gains in certain block positions in 2017 compared with losses in 2016.
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The
decrease
in fixed income net revenues is primarily due to lower volumes and volatility, which negatively impacted our client flow oriented fixed income businesses in the last nine months of
2017
.
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Net revenues from our other business category for
2017
were
$93.0 million
, compared with
$1.0 million
for
2016
. The increase in net revenues from our other business category was primarily attributable to a net gain of
$93.4 million
recognized during
2017
from our investment in KCG, compared with a net gain of
$19.6 million
in
2016
. KCG was sold in full on July 20, 2017.
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Net revenues for
2017
also included asset management revenues of
$28.2 million
, compared with
$76.3 million
in
2016
.
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Non-interest expenses for
2017
increased
$308.5 million
, or
12.9%
, to
$2,693.2 million
, compared with
$2,384.6 million
for
2016
, reflecting primarily an increase in Compensation and benefits expense, and a smaller
increase
in Non-compensation expenses.
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Compensation and benefits expense for
2017
was
$1,829.1 million
,
an increase
of
$260.1 million
, or
16.6%
, from
2016
, as a result of significantly higher net revenues. Compensation and benefits expenses as a percentage of Net revenues was
57.2%
for
2017
, compared with
65.0%
in
2016
. The unusually high compensation ratio in
2016
was due to the significantly lower net revenue results in
2016
and the relationship of non-discretionary compensation to the net revenue decline. The lower ratio in
2017
demonstrates the operating leverage inherent in our business model.
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Non-compensation expenses for
2017
were
$864.1 million
,
an increase
of
$48.4 million
, or
5.9%
, from
2016
. The
increase
was consistent with the increased activity associated with higher net revenues, as well as increased spending on technology. At the same time, non-compensation expenses as a percentage of Net revenues declined from
33.8%
to
27.0%
, again demonstrating strategically the operating leverage inherent in our business.
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At
November 30, 2017
, we had
3,450
employees globally,
an increase
of
121
employees from our headcount of
3,329
at November 30,
2016
. Our headcount
increased
primarily as a result of a 60 person increase in our investment banking headcount consistent with our strategic plan to drive growth in this effort, as well as increases in other core businesses and corporate services due to business growth.
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Equities revenues now represent the activities of our 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:
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Our share of net earnings from our Jefferies Finance joint venture, as well as any revenues from securities and loans received or acquired in connection with our investment banking efforts, are now presented as part of our investment banking business.
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Our share of net earnings from our historic Jefferies LoanCore LLC (“Jefferies LoanCore”) joint venture is presented as part of our fixed income business through its sale in October 2017.
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Revenues related to our principal investments in certain private equity funds and hedge funds managed by third parties or related parties, investments in strategic ventures (including 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 our other business.
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Revenue related to our capital invested in asset management funds that are managed by us is now presented within our asset management business.
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Revenues from our legacy futures business and revenues associated with structured notes issued by us are now presented as part of our other business. Additionally, revenues derived from securities or loans received or acquired in connection with our investment banking efforts are now presented as part of our investment banking revenues.
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Revenues from principal investments in certain private equity and asset management funds managed by related parties, which were previously presented within our asset management revenue, are now presented as part of our other business.
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% Change from
Prior Year |
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2018
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2017
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2016
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Amount
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% of Net Revenues
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Amount
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% of Net Revenues
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Amount
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% of Net Revenues
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2018
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|
2017
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Equities
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$
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665,557
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20.9
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%
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$
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674,424
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21.1
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%
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$
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597,445
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24.8
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%
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(1.3
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)%
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12.9
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%
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Fixed income
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559,712
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17.6
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|
618,388
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19.3
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654,337
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27.1
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(9.5
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)%
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(5.5
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)%
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Total sales and trading
|
1,225,269
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38.5
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|
1,292,812
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40.4
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|
1,251,782
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|
51.9
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(5.2
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)%
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|
3.3
|
%
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|||
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|
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|||||||||||
Equity (1)
|
454,555
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|
14.3
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|
344,973
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|
10.8
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|
|
235,207
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|
|
9.7
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|
|
31.8
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%
|
|
46.7
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%
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|||
Debt (1)
|
635,606
|
|
|
19.9
|
|
|
649,220
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|
|
20.3
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|
|
304,576
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|
|
12.6
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(2.1
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)%
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|
113.2
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%
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Capital markets
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1,090,161
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|
34.2
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|
|
994,193
|
|
|
31.1
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|
|
539,783
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|
|
22.3
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|
|
9.7
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%
|
|
84.2
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%
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|||
Advisory (1)
|
820,042
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|
|
25.8
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|
|
770,092
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|
|
24.1
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|
|
654,190
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|
|
27.1
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|
|
6.5
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%
|
|
17.7
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%
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|||
Other investment banking
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3,638
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|
|
0.1
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|
|
19,776
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|
|
0.6
|
|
|
(108,487
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)
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|
(4.5
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)
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(81.6
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)%
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|
N/M
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|||
Total investment banking
|
1,913,841
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|
|
60.1
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|
|
1,784,061
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|
|
55.8
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|
|
1,085,486
|
|
|
44.9
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|
|
7.3
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%
|
|
64.4
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%
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|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|||||||||||
Other
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45,316
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|
|
1.4
|
|
|
92,987
|
|
|
2.9
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|
|
999
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|
|
—
|
|
|
(51.3
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)%
|
|
9,208.0
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%
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|
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|
|
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|
|
|
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|
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Total Capital Markets
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3,184,426
|
|
|
100.0
|
|
|
3,169,860
|
|
|
99.1
|
|
|
2,338,267
|
|
|
96.8
|
|
|
0.5
|
%
|
|
35.6
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Asset management fees
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21,214
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|
|
0.7
|
|
|
19,224
|
|
|
0.6
|
|
|
23,711
|
|
|
1.0
|
|
|
10.4
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%
|
|
(18.9
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)%
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|||
Investment return
|
(22,264
|
)
|
|
(0.7
|
)
|
|
9,025
|
|
|
0.3
|
|
|
52,636
|
|
|
2.2
|
|
|
N/M
|
|
|
(82.9
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)%
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|||
Total Asset Management
|
(1,050
|
)
|
|
—
|
|
|
28,249
|
|
|
0.9
|
|
|
76,347
|
|
|
3.2
|
|
|
N/M
|
|
|
(63.0
|
)%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net revenues
|
$
|
3,183,376
|
|
|
100.0
|
%
|
|
$
|
3,198,109
|
|
|
100.0
|
%
|
|
$
|
2,414,614
|
|
|
100.0
|
%
|
|
(0.5
|
)%
|
|
32.4
|
%
|
(1)
|
As a result of the new revenue standard, investment banking net revenues for the
year ended November 30, 2018
reflect changes to the presentation of investment banking expenses and reimbursements thereof. Prior to the first quarter of 2018, certain investment banking expenses have been presented net against investment banking revenues. This change in presentation resulted in an increase of
$131.8 million
in investment banking net revenues during the
year ended November 30, 2018
, as compared to the years ended
November 30, 2017
and
2016
. Refer to “Impact of Adopting Revenue Recognition Guidance” herein and
Note 2, Summary of Significant Accounting Policies
, and
Note 3, Accounting Developments
, in our consolidated financial statements included in this Annual Report on Form 10-K, for further details on the new revenue standard.
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•
|
services provided to our clients from which we earn commissions or spread revenue by executing, settling and clearing transactions for clients;
|
•
|
advisory services offered to clients;
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•
|
financing, securities lending and other prime brokerage services offered to clients; and
|
•
|
wealth management services, which includes providing clients access to all of our institutional execution capabilities.
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•
|
In April 2018, our core U.S. sales and trading business received top ranks from Greenwich Associates for our 2017 performance. This includes ranking #1 in electronic trading service and product quality, #1 in small and mid-cap equities trading, #3 in healthcare research and #4 in sales capability. In September 2018, we ranked #2 in U.S. Convertibles from Greenwich Associates.
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•
|
Total equities net revenues were
$665.6 million
for
2018
,
a decrease
of
$8.8 million
, compared with
$674.4 million
for
2017
.
|
•
|
Equities posted record results in
2018
for our overall global core sales and trading business and within the U.S., Europe and Asia Pacific regions. Our results include records for our electronic trading, equity derivatives and prime brokerage businesses. The increase in equities net revenues from our core equities sales and trading businesses was offset by losses in certain block positions in
2018
compared with gains in
2017
.
|
•
|
The results in equities net revenues during
2018
reflect improved performance in various core global equities businesses, primarily driven by higher revenues in our equity derivatives, electronic trading and prime brokerage businesses, primarily due to higher equity volatility, overall improved market trading volumes and an increase in our commissions. This was partially offset by a decrease in our U.S. and European cash equities, convertibles and securities finance businesses, primarily due to lower customer activity. European revenues were also lower as a result of the delay in advisory payments and the impact of unbundling due to the Market in Financial Instruments Directive (“MiFID II”) regulation.
|
•
|
Total equities net revenues were
$674.4 million
for
2017
,
an increase
of
$77.0 million
compared with
$597.4 million
for
2016
.
|
•
|
Equities net revenues increased with higher revenues in our electronic trading, prime brokerage services, and Asia Pacific cash equities businesses, primarily due to increased customer activity and increased trading volumes. The increase was partially offset by lower revenues in our equity derivatives and Europe cash equities businesses, primarily due to reduced market making activities and lower equity volatility. In addition, results in
2017
included certain strategic investment gains compared with losses in
2016
.
|
•
|
Equities commission revenues declined in our equity derivative and U.S. cash equities businesses due to reduced trading volumes and lower levels of volatility, partially offset by higher revenues in our electronic trading and Asia Pacific cash equities businesses due to increased trading volumes.
|
•
|
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).
|
•
|
Fixed income net revenues totaled
$559.7 million
for
2018
,
a decrease
of
$58.7 million
compared with net revenues of
$618.4 million
in
2017
, primarily due to difficult market conditions in our global investment grade credit businesses predominately in the fourth quarter of 2018. Further, performance in the first quarter of 2017 was bolstered by robust trading activity following the 2016 U.S. Presidential election, which was not repeated in the current year. The following highlights the main components of the results:
|
◦
|
Revenues in our U.S. securitized markets group were significantly improved, primarily as our business continues to focus on the securitization of non-commoditized products.
|
◦
|
Revenues in our leveraged credit business were strong as we enhanced our trading and coverage team across loans, bonds and distressed products, as well as increased results from secondary trading of floating rate loans, while balancing market risk.
|
◦
|
Revenues declined in our global investment grade credit business as lack of volatility and higher interest rates reduced trading volumes resulting in increased competition chasing limited opportunities. During the fourth quarter, credit spreads widened and new issue activity slowed, further reducing client trading activity.
|
◦
|
Revenues in our international securitized markets group were down due to limited market opportunities as the European Central Bank’s quantitative easing program comes to an end.
|
◦
|
Global rates revenues in 2018 declined due to uncertainty over Brexit and international economic concerns. In addition, the opportunities in the prior year, primarily in the first quarter of 2017, from volatility from the U.S. Presidential Election and European election cycles were not replicated in the current year.
|
◦
|
Revenues in our municipal trading business were lower on reduced market activity driven by changes in federal tax legislation and the backdrop of increased interest rates dampened investor interest. The business outperformed in the prior year, as macro events drove a more favorable trading environment.
|
◦
|
The prior year also included revenues from our share of Jefferies LoanCore, which was sold in October 2017, as well as revenues from non-core fixed income products that have now been deemphasized.
|
•
|
Fixed income net revenues were
$618.4 million
for
2017
,
a decrease
of
$35.9 million
, compared with net revenues of
$654.3 million
in
2016
.
|
•
|
We recorded modestly lower revenues in 2017 as compared with 2016, primarily due to a more challenging trading environment across most products, including most credit and rates businesses. In 2017, volatility was dampened as quantitative easing continued across most markets we transact in. This was partially offset by better risk management, addition of staff in certain businesses, and refreshed strategies in some businesses. The following highlights the main components of the results:
|
◦
|
Net revenues in our leveraged credit business in 2017 were higher due to increased trading activities in high yield and distressed products as a result of additions to staff and repositioned risk. This was compared to relatively significant mark-to-market losses recognized in the early part of 2016.
|
◦
|
Higher revenues in our European credit and international securitized markets group businesses were due to repositioned strategies taking advantage of trading opportunities in certain industry sectors. This is compared to volatile oil prices and uncertainty as to bank liquidity in 2016, which negatively impacted revenues in this business in the prior year.
|
◦
|
Our municipal securities business performed well for the greater part of the year, driven by increased client activity as new team members were added and market share expanded. Performance for the municipal securities business was partially dampened at the end of the 2017 fiscal year as the municipal bond market dislocated over concerns around the potential impacts of pending U.S. tax reform on both municipal bond issuers and investors.
|
◦
|
Revenues in our corporates and emerging markets business declined in a maturing credit cycle as volatility and transaction spreads decreased from prior year levels, while demand for new issuances and higher yielding investments and higher levels of volatility were prevalent in 2016.
|
◦
|
Lower revenues in our global rates and U.S. securitized markets group business were due to lower levels of volatility resulting in lower transaction based revenues. In the U.S. securitized markets businesses this was partially offset by increased activity in origination businesses including collateralized loan obligations.
|
◦
|
Net revenues from our share of Jefferies LoanCore, which was sold in October 2017, increased slightly during 2017 as compared to 2016 due to an increase in loan closings and syndications.
|
•
|
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;
|
•
|
our share of net earnings from our corporate lending joint venture Jefferies Finance; and
|
•
|
securities and loans received or acquired in connection with our investment banking activities.
|
|
|
|
% Change from
Prior Year
|
||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
||||||||
Equity (1)
|
$
|
454,555
|
|
|
$
|
344,973
|
|
|
$
|
235,207
|
|
|
31.8
|
%
|
|
46.7
|
%
|
Debt (1)
|
635,606
|
|
|
649,220
|
|
|
304,576
|
|
|
(2.1
|
)%
|
|
113.2
|
%
|
|||
Capital markets
|
1,090,161
|
|
|
994,193
|
|
|
539,783
|
|
|
9.7
|
%
|
|
84.2
|
%
|
|||
Advisory (1)
|
820,042
|
|
|
770,092
|
|
|
654,190
|
|
|
6.5
|
%
|
|
17.7
|
%
|
|||
Other investment banking
|
3,638
|
|
|
19,776
|
|
|
(108,487
|
)
|
|
(81.6
|
)%
|
|
N/M
|
|
|||
Total investment banking
|
$
|
1,913,841
|
|
|
$
|
1,784,061
|
|
|
$
|
1,085,486
|
|
|
7.3
|
%
|
|
64.4
|
%
|
(1)
|
As a result of the new revenue standard, investment banking revenues for the
year ended November 30, 2018
reflect changes to the presentation of investment banking expenses and reimbursements thereof. Prior to the first quarter of 2018, certain investment banking expenses have been presented net against investment banking revenues. This change in presentation resulted in an increase of
$131.8 million
in investment banking net revenues during the
year ended November 30, 2018
, as compared to the years ended
November 30, 2017
and
2016
. Refer to “Impact of Adopting Revenue Recognition Guidance” herein and
Note 2, Summary of Significant Accounting Policies
, and
Note 3, Accounting Developments
, in our consolidated financial statements included in this Annual Report on Form 10-K, for further details on the new revenue standard.
|
|
Deals Completed
|
|
Aggregate Value
|
|||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|||||||||
Public and private debt financings
|
969
|
|
|
1,121
|
|
|
892
|
|
|
$
|
270.1
|
|
|
$
|
292.1
|
|
|
$
|
188.6
|
|
Public and private equity and convertible offerings (1)
|
193
|
|
|
173
|
|
|
129
|
|
|
43.3
|
|
|
59.7
|
|
|
24.4
|
|
|||
Advisory transactions (2)
|
195
|
|
|
181
|
|
|
179
|
|
|
193.9
|
|
|
180.6
|
|
|
135.2
|
|
(1)
|
We acted as sole or joint bookrunner on
179
,
164
and
125
offerings during
2018
,
2017
and
2016
, respectively.
|
(2)
|
The number of advisory deals completed includes
15
,
10
and
18
restructuring and recapitalization transactions during
2018
,
2017
and
2016
, respectively.
|
•
|
Total investment banking revenues were
$1,913.8 million
for
2018
, including an increase of $131.8 million in investment banking net revenues as a result of the new revenue standard. Refer to “Impact of Adopting Revenue Recognition Guidance” herein and
Note 2, Summary of Significant Accounting Policies
, and
Note 3, Accounting Developments
, in our consolidated financial statements included in this Annual Report on Form 10-K, for further details on the new revenue standard. Our results reflect continued strong performance in both our equity capital markets and advisory businesses, as we increased our fee market share in both businesses.
|
•
|
From equity and debt capital raising activities, we generated
$454.6 million
and
$635.6 million
in revenues, respectively, for
2018
, compared with
$345.0 million
and
$649.2 million
in revenues, respectively, in
2017
.
|
•
|
Other investment banking revenues were
$3.6 million
for
2018
, compared with
$19.8 million
in
2017
. The results reflect net revenues of
$98.6 million
and
$90.8 million
in
2018
and
2017
, respectively, from our share of the profits of the Jefferies Finance joint venture, which were offset by the amortization of costs and allocated interest expense related to our investment in the Jefferies Finance business.
|
•
|
Total investment banking revenues were a then record
$1,784.1 million
for
2017
,
64.4%
higher than
2016
. This increase was due to strong performance across our debt capital markets, equity capital markets and advisory businesses, supported by a strong overall capital raising and merger and acquisition environment. In
2016
, new issue equity and leveraged finance capital markets were virtually closed throughout January and February and remained slow throughout
2016
.
|
•
|
Capital markets revenues in
2017
increased
84.2%
from
2016
. Advisory revenues for
2017
increased
17.7%
compared to
2016
.
|
•
|
From equity and debt capital raising activities, we generated
$345.0 million
and
$649.2 million
in revenues, respectively, in
2017
, compared with
$235.2 million
and
$304.6 million
in revenues, respectively, in
2016
.
|
•
|
Other investment banking revenues were
$19.8 million
for
2017
, compared with a loss of
$108.5 million
in
2016
. The results reflect net revenues of
$90.8 million
and a net loss of
$9.3 million
in
2017
and
2016
, respectively, from our share of the profits of the Jefferies Finance joint venture, which were offset by the amortization of costs and allocated interest expense related to our investment in the Jefferies Finance business.
|
•
|
strategic investments other than Jefferies Finance (such as KCG through its sale in July 2017);
|
•
|
principal investments in private equity and hedge funds managed by third parties or related parties;
|
•
|
investments held as part of employee benefit plans, including deferred compensation plans (for which we incur corresponding compensation expenses); and
|
•
|
our legacy Futures business.
|
•
|
Net revenues from our other business category totaled
$45.3 million
for
2018
,
a decrease
of
$47.7 million
compared with
$93.0 million
in
2017
. Results for
2017
included a net gain of
$93.4 million
from our investment in KCG, which was sold in July 2017, partially offset by foreign currency gains. The results in
2018
include net revenues of $20.0 million due to our share of income from Berkadia.
|
•
|
Net revenues from our other business category totaled
$93.0 million
for
2017
,
an increase
of
$92.0 million
compared with
$1.0 million
in
2016
. Results for
2017
included a net gain of
$93.4 million
from our investment in KCG, compared with a net gain of
$19.6 million
for
2016
.
|
•
|
management and performance fees from funds and accounts managed by us; and
|
•
|
investment income from capital invested in and managed by our asset management business and other asset managers.
|
|
|
|
% Change from
Prior Year
|
||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
||||||||
Asset management fees:
|
|
|
|
|
|
|
|
|
|
||||||||
Equities
|
$
|
1,900
|
|
|
$
|
2,718
|
|
|
$
|
1,757
|
|
|
(30.1
|
)%
|
|
54.7
|
%
|
Multi-asset
|
19,314
|
|
|
16,506
|
|
|
21,954
|
|
|
17.0
|
%
|
|
(24.8
|
)%
|
|||
Total asset management fees
|
21,214
|
|
|
19,224
|
|
|
23,711
|
|
|
10.4
|
%
|
|
(18.9
|
)%
|
|||
Investment return
|
(22,264
|
)
|
|
9,025
|
|
|
52,636
|
|
|
N/M
|
|
|
(82.9
|
)%
|
|||
Total Asset Management
|
$
|
(1,050
|
)
|
|
$
|
28,249
|
|
|
$
|
76,347
|
|
|
N/M
|
|
|
(63.0
|
)%
|
(1)
|
Assets under management include assets actively managed by us, including hedge funds and certain managed accounts. Assets under management do not include the assets of funds that are consolidated due to the level or nature of our investment in such funds.
|
|
|
|
% Change from
Prior Year
|
||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
||||||||
Compensation and benefits
|
$
|
1,736,264
|
|
|
$
|
1,829,096
|
|
|
$
|
1,568,948
|
|
|
(5.1
|
)%
|
|
16.6
|
%
|
Non-compensation expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Floor brokerage and clearing fees
|
189,068
|
|
|
179,478
|
|
|
167,205
|
|
|
5.3
|
%
|
|
7.3
|
%
|
|||
Underwriting costs
|
64,317
|
|
|
—
|
|
|
—
|
|
|
N/M
|
|
|
N/M
|
|
|||
Technology and communications
|
305,655
|
|
|
279,242
|
|
|
262,396
|
|
|
9.5
|
%
|
|
6.4
|
%
|
|||
Occupancy and equipment rental
|
100,952
|
|
|
102,904
|
|
|
101,133
|
|
|
(1.9
|
)%
|
|
1.8
|
%
|
|||
Business development
|
163,756
|
|
|
99,884
|
|
|
93,105
|
|
|
63.9
|
%
|
|
7.3
|
%
|
|||
Professional services
|
139,885
|
|
|
114,711
|
|
|
112,562
|
|
|
21.9
|
%
|
|
1.9
|
%
|
|||
Other
|
73,812
|
|
|
87,870
|
|
|
79,293
|
|
|
(16.0
|
)%
|
|
10.8
|
%
|
|||
Total non-compensation expenses
|
1,037,445
|
|
|
864,089
|
|
|
815,694
|
|
|
20.1
|
%
|
|
5.9
|
%
|
|||
Total non-interest expenses
|
$
|
2,773,709
|
|
|
$
|
2,693,185
|
|
|
$
|
2,384,642
|
|
|
3.0
|
%
|
|
12.9
|
%
|
•
|
Compensation and benefits expense consists of salaries, benefits, commissions, annual cash compensation awards and the amortization of certain share-based and cash compensation awards to employees.
|
•
|
Cash and historical share-based awards and a portion of cash awards granted to employees as part of year end compensation generally contain provisions such that employees who terminate their employment or are terminated without cause may continue to vest in their awards, so long as those awards are not forfeited as a result of other forfeiture provisions (primarily non-compete clauses) of those awards. Accordingly, the compensation expense for a portion of awards granted at year end as part of annual compensation is recorded in the year of the award.
|
•
|
Included in Compensation and benefits expense are share-based amortization and cash-based expense for senior executive awards, non-annual share-based and cash-based awards to other employees and certain year end awards that contain future service requirements for vesting, all of which are being amortized over their respective future service periods. In addition, the senior executive awards contain market and performance conditions.
|
•
|
Refer to
Note 15, Compensation Plans
, included in this Annual Report on Form 10-K, for further details on compensation and benefits.
|
•
|
Compensation and benefits expense was
$1,736.3 million
for
2018
compared with
$1,829.1 million
for
2017
.
|
•
|
Compensation and benefits expense as a percentage of Net revenues was
54.5%
for
2018
and
57.2%
for
2017
.
|
•
|
Compensation expense related to the amortization of share- and cash-based awards amounted to
$302.0 million
for
2018
compared with
$278.2 million
for
2017
.
|
•
|
Employee headcount was
3,596
globally at
November 30, 2018
,
an increase
of
146
employees from our headcount of
3,450
at
November 30, 2017
. Our headcount
increased
, primarily as a result of continued hiring in investment banking, as well as additions in our asset management and equities businesses.
|
•
|
Compensation and benefits expense was
$1,829.1 million
for
2017
compared with
$1,568.9 million
for
2016
.
|
•
|
Compensation and benefits expense as a percentage of Net revenues was
57.2%
for
2017
and
65.0%
for
2016
. The unusually high compensation ratio in
2016
was due to the significantly lower revenue results in
2016
and the relationship of non-discretionary compensation to the net revenue decline.
|
•
|
Compensation expense related to the amortization of share- and cash-based awards amounted to
$278.2 million
for
2017
compared with
$287.2 million
for
2016
.
|
•
|
Employee headcount was
3,450
globally at
November 30, 2017
,
an increase
of
121
employees from our headcount of
3,329
at
November 30, 2016
. Our headcount has
increased
, primarily as a result of a 60 person increase in our investment banking headcount consistent with our strategic plan to drive growth in this effort, as well as increases in other core businesses and corporate services due to business growth.
|
•
|
Non-compensation expenses were
$1,037.4 million
for
2018
,
an increase
of
$173.4 million
, or
20.1%
, compared with
$864.1 million
for
2017
.
|
•
|
The
increase
in non-compensation expenses was primarily due to a
$131.8 million
increase mostly across Business development expenses and Underwriting costs, as a result of applying the new revenue standard to our results of operations for
2018
. Refer to “Impact of Adopting Revenue Recognition Guidance” herein and
Note 2, Summary of Significant Accounting Policies
, and
Note 3, Accounting Developments
, in our consolidated financial statements included in this Annual Report on Form 10-K, for further details on the new revenue standard. The increase was also due to an increase in Technology and communication expenses due to higher costs associated with the development of the various trading systems and our efforts to provide our professionals with modern digital tools to help them better serve our clients. The increase also includes higher Professional service expenses due to an increase in legal and consulting fees.
|
•
|
Non-compensation expenses as a percentage of Net revenues was
32.6%
and
27.0%
for
2018
and
2017
, respectively.
|
•
|
Non-compensation expenses were
$864.1 million
for
2017
, an increase of
$48.4 million
, or
5.9%
, compared with
$815.7 million
for
2016
.
|
•
|
The
increase
in non-compensation expenses was consistent with the increased activity associated with higher net revenues, as well as increased spending on technology. At the same time, non-compensation expenses as a percentage of Net revenues declined from
33.8%
to
27.0%
again demonstrating strategically the operating leverage inherent in our business.
|
•
|
The
increase
in non-compensation expenses was primarily due to
an increase
in Floor brokerage and clearing expenses due to the mix of costs across certain equities and fixed income businesses, Technology and communications expenses due to costs associated with the development of the various trading systems and projects associated with corporate support and core business infrastructures, and an increase in certain Other expenses.
|
•
|
For
2018
, the provision for income taxes was
$250.7 million
, an effective tax rate of
61.2%
, compared with a provision for income taxes of
$147.3 million
, an effective tax rate of
29.2%
, for
2017
.
|
•
|
The increase in the effective tax rate during
2018
as compared with
2017
is primarily due to the
$165.1 million
provisional tax charge related to the enactment of the Tax Act recorded in
2018
. This increase in our
2018
effective tax rate was partially offset by net tax benefits arising from the expiration of certain federal and state statutes of limitations. Additionally, the effective tax rate for 2017 included net tax benefits arising from the repatriation of earnings from certain foreign subsidiaries during the year, along with their associated foreign tax credits. Excluding the provisional tax charge related to the enactment of the Tax Act, our adjusted annual effective tax rate would have been approximately
20.9%
.
|
•
|
For
2017
, the provision for income taxes was
$147.3 million
, an effective tax rate of
29.2%
, compared with a provision for income taxes of
$14.6 million
, an effective tax rate of
48.6%
, for
2016
.
|
•
|
The change in the effective tax rate for
2017
as compared with
2016
is primarily a result of expenses included in our Consolidated Statements of Earnings in excess of tax deductions related to share-based compensation, which substantially increased our effective tax rate for
2016
given our modest
2016
earnings. The reduced effective tax rate in
2017
is primarily due to the repatriation of earnings from certain foreign subsidiaries during the year, along with their associated foreign tax credits, which reduced the
2017
effective income tax rate, but had no effect on the
2016
rate.
|
|
November 30,
|
|
|
|||||||
|
2018
|
|
2017
|
|
% Change
|
|||||
Total assets
|
$
|
41,168.8
|
|
|
$
|
39,705.7
|
|
|
3.7
|
%
|
Cash and cash equivalents
|
5,145.9
|
|
|
5,164.5
|
|
|
(0.4
|
)%
|
||
Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations
|
708.0
|
|
|
578.0
|
|
|
22.5
|
%
|
||
Financial instruments owned
|
16,399.5
|
|
|
14,193.4
|
|
|
15.5
|
%
|
||
Financial instruments sold, not yet purchased
|
9,478.9
|
|
|
8,171.9
|
|
|
16.0
|
%
|
||
Total Level 3 assets
|
336.7
|
|
|
327.7
|
|
|
2.7
|
%
|
||
|
|
|
|
|
|
|||||
Securities borrowed
|
$
|
6,538.2
|
|
|
$
|
7,721.8
|
|
|
(15.3
|
)%
|
Securities purchased under agreements to resell
|
2,785.8
|
|
|
3,689.6
|
|
|
(24.5
|
)%
|
||
Total securities borrowed and securities purchased under agreements to resell
|
$
|
9,324.0
|
|
|
$
|
11,411.4
|
|
|
(18.3
|
)%
|
|
|
|
|
|
|
|||||
Securities loaned
|
$
|
1,838.7
|
|
|
$
|
2,843.9
|
|
|
(35.3
|
)%
|
Securities sold under agreements to repurchase
|
8,643.1
|
|
|
8,660.5
|
|
|
(0.2
|
)%
|
||
Total securities loaned and securities sold under agreements to repurchase
|
$
|
10,481.8
|
|
|
$
|
11,504.4
|
|
|
(8.9
|
)%
|
|
Year Ended
|
||||||
|
2018
|
|
2017
|
||||
Securities Purchased Under Agreements to Resell:
|
|
|
|
||||
Year end
|
$
|
2,786
|
|
|
$
|
3,690
|
|
Month end average
|
5,232
|
|
|
6,195
|
|
||
Maximum month end
|
7,593
|
|
|
7,814
|
|
||
Securities Sold Under Agreements to Repurchase:
|
|
|
|
||||
Year end
|
$
|
8,643
|
|
|
$
|
8,661
|
|
Month end average
|
12,704
|
|
|
11,273
|
|
||
Maximum month end
|
15,579
|
|
|
13,679
|
|
|
|
November 30,
|
||||||
|
|
2018
|
|
2017
|
||||
Total assets
|
$
|
41,168,773
|
|
|
$
|
39,705,691
|
|
|
|
|
|
|
|||||
Total equity
|
$
|
6,182,404
|
|
|
$
|
5,759,559
|
|
|
|
|
|
|
|||||
Total Jefferies Group LLC member’s equity
|
$
|
6,180,493
|
|
|
$
|
5,758,822
|
|
|
Deduct:
|
Goodwill and intangible assets
|
(1,824,638
|
)
|
|
(1,842,882
|
)
|
||
Tangible Jefferies Group LLC member’s equity
|
$
|
4,355,855
|
|
|
$
|
3,915,940
|
|
|
|
|
|
|
|||||
Leverage ratio (1)
|
6.7
|
|
|
6.9
|
|
|||
Tangible gross leverage ratio (2)
|
9.0
|
|
|
9.7
|
|
(1)
|
Leverage ratio equals total assets divided by total equity.
|
(2)
|
Tangible gross leverage ratio (a non-GAAP financial measure) equals total assets less goodwill and identifiable intangible assets divided by tangible Jefferies Group LLC member’s equity. The tangible gross leverage ratio is used by rating agencies in assessing our leverage ratio.
|
•
|
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.
|
•
|
Global recession, default by a medium-sized sovereign, low consumer and corporate confidence, and general financial instability.
|
•
|
Severely challenged market environment with material declines in equity markets and widening of credit spreads.
|
•
|
Damaging follow-on impacts to financial institutions leading to the failure of a large bank.
|
•
|
A firm-specific crisis potentially triggered by material losses, reputational damage, litigation, executive departure, and/or a ratings downgrade.
|
•
|
Liquidity needs over a 30-day scenario.
|
•
|
A two-notch downgrade of our long-term senior unsecured credit ratings.
|
•
|
No support from government funding facilities.
|
•
|
A combination of contractual outflows, such as upcoming maturities of unsecured debt, and contingent outflows (
e.g
., actions though not contractually required, we may deem necessary in a crisis). We assume that most contingent outflows will occur within the initial days and weeks of a crisis.
|
•
|
No diversification benefit across liquidity risks. We assume that liquidity risks are additive.
|
•
|
All upcoming maturities of unsecured long-term debt, commercial paper, promissory notes and other unsecured funding products assuming we will be unable to issue new unsecured debt or rollover any maturing debt.
|
•
|
Repurchases of our outstanding long-term debt in the ordinary course of business as a market maker.
|
•
|
A portion of upcoming contractual maturities of secured funding trades due to either the inability to refinance or the ability to refinance only at wider haircuts (
i.e.
, on terms which require us to post additional collateral). Our assumptions reflect, among other factors, the quality of the underlying collateral and counterparty concentration.
|
•
|
Collateral postings to counterparties due to adverse changes in the value of our over-the-counter (“OTC”) derivatives and other outflows due to trade terminations, collateral substitutions, collateral disputes, collateral calls or termination payments required by a two-notch downgrade in our credit ratings.
|
•
|
Variation margin postings required due to adverse changes in the value of our outstanding exchange-traded derivatives and any increase in initial margin and guarantee fund requirements by derivative clearing houses.
|
•
|
Liquidity outflows associated with our prime services business, including withdrawals of customer credit balances, and a reduction in customer short positions.
|
•
|
Liquidity outflows to clearing banks to ensure timely settlements of cash and securities transactions.
|
•
|
Draws on our unfunded commitments considering, among other things, the type of commitment and counterparty.
|
•
|
Other upcoming large cash outflows, such as tax payments.
|
|
November 30, 2018
|
|
Average Balance Quarter ended
November 30, 2018 (1) |
|
November 30, 2017
|
||||||
Cash and cash equivalents:
|
|
|
|
|
|
||||||
Cash in banks
|
$
|
2,333,476
|
|
|
$
|
2,367,239
|
|
|
$
|
2,244,207
|
|
Money market investments
|
2,812,410
|
|
|
2,023,884
|
|
|
2,920,285
|
|
|||
Total cash and cash equivalents
|
5,145,886
|
|
|
4,391,123
|
|
|
5,164,492
|
|
|||
Other sources of liquidity:
|
|
|
|
|
|
||||||
Debt securities owned and securities purchased under agreements to resell (2)
|
958,539
|
|
|
966,541
|
|
|
1,031,252
|
|
|||
Other (3)
|
499,576
|
|
|
531,030
|
|
|
513,293
|
|
|||
Total other sources
|
1,458,115
|
|
|
1,497,571
|
|
|
1,544,545
|
|
|||
Total cash and cash equivalents and other liquidity sources
|
$
|
6,604,001
|
|
|
$
|
5,888,694
|
|
|
$
|
6,709,037
|
|
Total cash and cash equivalents and other liquidity sources as % of Total assets
|
16.0
|
%
|
|
|
|
16.9
|
%
|
||||
Total cash and cash equivalents and other liquidity sources as % of Total assets less goodwill and intangible assets
|
16.8
|
%
|
|
|
|
17.7
|
%
|
(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 USA; 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 our financial instruments owned that are currently not pledged after considering reasonable financing haircuts.
|
|
November 30,
|
||||||||||||||
|
2018
|
|
2017
|
||||||||||||
|
Liquid Financial
Instruments
|
|
Unencumbered Liquid Financial Instruments (2)
|
|
Liquid Financial Instruments
|
|
Unencumbered Liquid Financial Instruments (2)
|
||||||||
Corporate equity securities
|
$
|
1,907,064
|
|
|
$
|
317,189
|
|
|
$
|
1,718,617
|
|
|
$
|
272,380
|
|
Corporate debt securities
|
1,775,721
|
|
|
104,685
|
|
|
2,475,291
|
|
|
57,290
|
|
||||
U.S. government, agency and municipal securities
|
2,648,843
|
|
|
294,030
|
|
|
1,954,697
|
|
|
185,481
|
|
||||
Other sovereign obligations
|
2,626,212
|
|
|
840,578
|
|
|
2,050,942
|
|
|
996,421
|
|
||||
Agency mortgage-backed securities (1)
|
2,972,638
|
|
|
—
|
|
|
1,742,977
|
|
|
—
|
|
||||
Loans and other receivables
|
272,201
|
|
|
—
|
|
|
243,664
|
|
|
—
|
|
||||
Total
|
$
|
12,202,679
|
|
|
$
|
1,556,482
|
|
|
$
|
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, 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.
|
•
|
Intraday Credit Facility.
The Bank of New York Mellon has agreed to make revolving intraday credit advances (“Intraday Credit Facility”) for an aggregate committed amount of
$150.0 million
. The Intraday Credit Facility contains financial covenants, which includes a minimum regulatory net capital requirement for our U.S. broker-dealer, Jefferies LLC. Interest is based on the higher of the Federal funds effective rate plus
0.5%
or the prime rate. At
November 30, 2018
, we were in compliance with all debt covenants under the Intraday Credit Facility.
|
|
November 30,
|
||||||
|
2018
|
|
2017
|
||||
Long-Term Debt (1)
|
$
|
5,657,420
|
|
|
$
|
5,402,590
|
|
Total Equity
|
6,182,404
|
|
|
5,759,559
|
|
||
Total Long-Term Capital
|
$
|
11,839,824
|
|
|
$
|
11,162,149
|
|
(1)
|
Long-term debt at
November 30, 2018
excludes
$5.7 million
of our structured notes, as these notes mature on
February 26, 2019
,
$699.7 million
of our
8.500%
senior notes, as these notes mature on
July 15, 2019
, and
$183.5 million
of our outstanding borrowings under our senior secured revolving credit facility (“Revolving Credit Facility”). Long-term debt at
November 30, 2017
excludes
$7.1 million
of our structured notes, as these notes matured on May 4, 2018,
$324.8 million
of our
3.875%
convertible debentures due 2029 (principal amount of
$345.0 million
) (the “debentures”), as these debentures were redeemable beginning on November 1, 2017, and
$682.3 million
of our
5.125%
senior notes, as these notes matured on April 13, 2018. The
$324.8 million
of our convertible debentures were redeemed on January 5, 2018. Refer to
Note 12, Long-Term Debt
, in our consolidated financial statements included in this Annual Report on Form 10-K for further details on these notes.
|
|
Rating
|
|
Outlook
|
Moody’s Investors Service (1)
|
Baa3
|
|
Stable
|
Standard and Poor’s (2)
|
BBB-
|
|
Stable
|
Fitch Ratings (3)
|
BBB
|
|
Stable
|
(1)
|
On March 20, 2018, Moody’s Investors Services (“Moody’s”) reaffirmed our long-term debt rating of Baa3 and our rating outlook of stable.
|
(2)
|
On April 10, 2018, Standard and Poor’s (“S&P”) reaffirmed our long-term debt rating of BBB- and our rating outlook of stable.
|
(3)
|
On February 13, 2018, Fitch Ratings upgraded our long-term debt rating from BBB- to BBB and reaffirmed our rating outlook of stable.
|
|
Jefferies LLC
|
|
Jefferies International Limited
|
||||
|
Rating
|
|
Outlook
|
|
Rating
|
|
Outlook
|
Moody’s (1)
|
Baa2
|
|
Stable
|
|
Baa2
|
|
Stable
|
S&P (2)
|
BBB
|
|
Stable
|
|
BBB
|
|
Stable
|
(1)
|
On January 10, 2018, Moody’s reaffirmed our long-term debt rating of Baa2 and our rating outlook of stable.
|
(2)
|
On April 10, 2018, S&P reaffirmed our long-term debt rating of BBB and our rating outlook of stable.
|
|
Net Capital
|
|
Excess Net Capital
|
||||
Jefferies LLC
|
$
|
1,739,435
|
|
|
$
|
1,635,960
|
|
|
Expected Maturity Date
|
|
|
||||||||||||||||||||
|
2019
|
|
2020
|
|
2021
and 2022 |
|
2023
and 2024 |
|
2025
and Later |
|
Total
|
||||||||||||
Contractual obligations:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Unsecured long-term debt (contractual principal payments net of unamortized discounts and premiums) (1)
|
$
|
705.4
|
|
|
$
|
564.7
|
|
|
$
|
823.4
|
|
|
$
|
663.4
|
|
|
$
|
3,605.9
|
|
|
$
|
6,362.8
|
|
Revolving credit facility
|
—
|
|
|
—
|
|
|
183.5
|
|
|
—
|
|
|
—
|
|
|
183.5
|
|
||||||
Interest payment obligations on long term debt (2)
|
324.1
|
|
|
288.0
|
|
|
470.4
|
|
|
382.9
|
|
|
1,469.7
|
|
|
2,935.1
|
|
||||||
Operating leases (net of subleases) - premises and equipment (3)
|
60.5
|
|
|
52.5
|
|
|
112.2
|
|
|
112.6
|
|
|
371.3
|
|
|
709.1
|
|
||||||
Master sale and leaseback agreement (3)
|
0.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
||||||
Purchase obligations (4)
|
147.8
|
|
|
101.1
|
|
|
134.3
|
|
|
75.8
|
|
|
110.9
|
|
|
569.9
|
|
||||||
Total contractual obligations
|
$
|
1,238.0
|
|
|
$
|
1,006.3
|
|
|
$
|
1,723.8
|
|
|
$
|
1,234.7
|
|
|
$
|
5,557.8
|
|
|
$
|
10,760.6
|
|
(1)
|
For additional information on long-term debt, see
Note 12, Long-Term Debt
, in our consolidated financial statements included in this Annual Report on Form 10-K.
|
(2)
|
Amounts based on applicable interest rates at
November 30, 2018
.
|
(3)
|
For additional information on operating leases related to certain premises and equipment and a master sale and leaseback agreement, see
Note 17, Commitments, Contingencies and Guarantees
, in our consolidated financial statements included in this Annual Report on Form 10-K.
|
(4)
|
Purchase obligations for goods and services primarily include payments for outsourcing and computer and telecommunications maintenance agreements. Purchase obligations at
November 30, 2018
reflect the minimum contractual obligations under legally enforceable contracts.
|
•
|
RMC -
the principal committee that governs our risk-taking activities. The RMC meets weekly to discuss our risk profile and discuss business or market trends and their potential impact on the business. The Committee approves our limits as a whole, and across risk categories and business lines, reviews limit breaches, and approves risk policies and stress testing methodologies.
|
•
|
Executive Committee -
provides insight, perspective and guidance for the day-to-day operations and strategic direction of their respective businesses and us as a whole.
|
•
|
Operating Committee -
brings together the managers of all control areas and the business line chief operating officers, whereby each department presents issues regarding current and proposed business. This committee provides the key forum for coordination and communication between the control managers entirely focused on our activities as a whole.
|
•
|
Asset / Liability Committee -
seeks to ensure effective management and control of the balance sheet in terms of risk profile, adequacy of capital and liquidity resources, and funding profile and strategy. The committee is responsible for developing, implementing and enforcing our liquidity, funding and capital policies. This includes recommendations for capital and balance sheet size, as well as the allocation of capital to our businesses.
|
•
|
Independent Price Verification Committee -
establishes our valuation policies and procedures and is responsible for independently validating the fair value of our financial instruments. The committee, which is comprised of stakeholders represented by the CFO, Internal Audit, Risk Management and Controllers, meets monthly to assess and approve the results of our inventory price testing.
|
•
|
New Business Committee -
reviews new business, products and activities and extensions of existing businesses, products and activities that may introduce materially different or greater risks than those of a business’ existing activities. The new business approval process is a key control over new business activity. The objectives are to notify all relevant functions of the intention to introduce a new product, business or activity, to share information between functions and to ensure there is a thorough understanding of the proposal.
|
•
|
Vendor Risk Committee -
oversees our vendor assurance program, reviews the list of critical vendors annually, ensures that our vendor risk management policy is being applied consistently and operated effectively and that the overall level of vendor risk is in line with our approved risk levels.
|
•
|
Model Governance Committee -
approves the model risk policy and sets common standards for managing model risk, and reviews and approves all model validation reports. The committee also reviews model validation findings and monitors the completion of any remedial action.
|
•
|
Market Risk Management Policy;
|
•
|
Operational Risk Management Policy;
|
•
|
Credit Risk Management Policy;
|
•
|
Independent Price Verification Policy;
|
•
|
Model Risk Management Policy;
|
•
|
Vendor Risk Management Policy; and
|
•
|
New Business Approval Policy.
|
|
|
|
Daily VaR (1)
Value-at-Risk In Trading Portfolios
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
VaR at November 30, 2018
|
|
|
VaR at November 30, 2017
|
|
|
|||||||||||||||||||||||||
|
|
Daily VaR for 2018
|
|
|
Daily VaR for 2017
|
||||||||||||||||||||||||||
Risk Categories:
|
|
Average
|
|
High
|
|
Low
|
|
|
Average
|
|
High
|
|
Low
|
||||||||||||||||||
Interest Rates
|
$
|
5.33
|
|
|
$
|
4.88
|
|
|
$
|
6.82
|
|
|
$
|
2.18
|
|
|
$
|
3.38
|
|
|
$
|
5.11
|
|
|
$
|
9.59
|
|
|
$
|
2.63
|
|
Equity Prices
|
8.47
|
|
|
5.51
|
|
|
13.56
|
|
|
3.08
|
|
|
2.90
|
|
|
5.17
|
|
|
17.20
|
|
|
2.52
|
|
||||||||
Currency Rates
|
0.09
|
|
|
0.12
|
|
|
0.24
|
|
|
0.02
|
|
|
0.18
|
|
|
0.22
|
|
|
0.65
|
|
|
0.06
|
|
||||||||
Commodity Prices
|
0.48
|
|
|
0.53
|
|
|
1.51
|
|
|
0.24
|
|
|
0.35
|
|
|
0.73
|
|
|
2.20
|
|
|
0.27
|
|
||||||||
Diversification Effect (2)
|
(3.12
|
)
|
|
(3.48
|
)
|
|
N/A
|
|
|
N/A
|
|
|
(1.86
|
)
|
|
(3.44
|
)
|
|
N/A
|
|
|
N/A
|
|
||||||||
Firmwide
|
$
|
11.25
|
|
|
$
|
7.56
|
|
|
$
|
14.73
|
|
|
$
|
4.76
|
|
|
$
|
4.95
|
|
|
$
|
7.79
|
|
|
$
|
17.55
|
|
|
$
|
4.52
|
|
(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 the firmwide VaR and the VaR values for the four risk categories might have occurred on different days during the year.
|
|
10% Sensitivity
|
||
Private investments
|
$
|
20,088
|
|
Corporate debt securities in default
|
9,915
|
|
|
Trade claims
|
4,747
|
|
•
|
Loans and lending arising in connection with our capital markets activities, which reflects our exposure at risk on a default event with no recovery of loans. Current exposure represents loans that have been drawn by the borrower and lending commitments that are outstanding. In addition, credit exposures on forward settling traded loans are included within our loans and lending exposures for consistency with the balance sheet categorization of these items.
|
•
|
Securities and margin financing transactions, which reflect our credit exposure arising from reverse repurchase agreements, repurchase agreements and securities lending agreements to the extent the fair value of the underlying collateral differs from the contractual agreement amount and from margin provided to customers.
|
•
|
OTC derivatives, which are reported net by counterparty when a legal right of setoff exists under an enforceable master netting agreement. OTC derivative exposure is based on a contract at fair value, net of cash collateral received or posted under credit support agreements. In addition, credit exposures on forward settling trades are included within our derivative credit exposures.
|
•
|
Cash and cash equivalents, which includes both interest-bearing and non-interest-bearing deposits at banks.
|
•
|
Client on-boarding and approving counterparty credit limits;
|
•
|
Negotiating, approving and monitoring credit terms in legal and master documentation;
|
•
|
Determining the analytical standards and risk parameters for ongoing management and monitoring credit risk books;
|
•
|
Actively managing daily exposure, exceptions and breaches; and
|
•
|
Monitoring daily margin call activity and counterparty performance.
|
Counterparty Credit Exposure by Credit Rating
|
|||||||||||||||||||||||||||||||||||||||||||||||
|
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
|
||||||||||||||||||||||||||||||||||||
|
November 30,
2018 |
|
November
30, 2017 |
|
November 30,
2018 |
|
November
30, 2017 |
|
November 30,
2018 |
|
November
30, 2017 |
|
November 30,
2018 |
|
November
30, 2017 |
|
November 30,
2018 |
|
November
30, 2017 |
|
November 30,
2018 |
|
November
30, 2017 |
||||||||||||||||||||||||
AAA Range
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3.2
|
|
|
$
|
6.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3.2
|
|
|
$
|
6.4
|
|
|
$
|
2,981.2
|
|
|
$
|
2,924.2
|
|
|
$
|
2,984.4
|
|
|
$
|
2,930.6
|
|
AA Range
|
45.1
|
|
|
47.7
|
|
|
45.3
|
|
|
61.3
|
|
|
4.2
|
|
|
3.8
|
|
|
94.6
|
|
|
112.8
|
|
|
111.6
|
|
|
158.6
|
|
|
206.2
|
|
|
271.4
|
|
||||||||||||
A Range
|
0.3
|
|
|
1.2
|
|
|
573.3
|
|
|
603.0
|
|
|
97.9
|
|
|
260.6
|
|
|
671.5
|
|
|
864.8
|
|
|
1,865.8
|
|
|
1,751.9
|
|
|
2,537.3
|
|
|
2,616.7
|
|
||||||||||||
BBB Range
|
0.1
|
|
|
0.5
|
|
|
206.6
|
|
|
232.5
|
|
|
15.5
|
|
|
28.5
|
|
|
222.2
|
|
|
261.5
|
|
|
2.3
|
|
|
152.3
|
|
|
224.5
|
|
|
413.8
|
|
||||||||||||
BB or Lower
|
—
|
|
|
12.5
|
|
|
5.5
|
|
|
8.1
|
|
|
15.7
|
|
|
16.7
|
|
|
21.2
|
|
|
37.3
|
|
|
107.5
|
|
|
100.6
|
|
|
128.7
|
|
|
137.9
|
|
||||||||||||
Unrated
|
80.0
|
|
|
70.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
80.0
|
|
|
70.1
|
|
|
77.5
|
|
|
76.9
|
|
|
157.5
|
|
|
147.0
|
|
||||||||||||
Total
|
$
|
125.5
|
|
|
$
|
132.0
|
|
|
$
|
833.9
|
|
|
$
|
911.3
|
|
|
$
|
133.3
|
|
|
$
|
309.6
|
|
|
$
|
1,092.7
|
|
|
$
|
1,352.9
|
|
|
$
|
5,145.9
|
|
|
$
|
5,164.5
|
|
|
$
|
6,238.6
|
|
|
$
|
6,517.4
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||||
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
|
||||||||||||||||||||||||||||||||||||
|
November 30,
2018 |
|
November
30, 2017 |
|
November 30,
2018 |
|
November
30, 2017 |
|
November 30,
2018 |
|
November
30, 2017 |
|
November 30,
2018 |
|
November
30, 2017 |
|
November 30,
2018 |
|
November
30, 2017 |
|
November 30,
2018 |
|
November
30, 2017 |
||||||||||||||||||||||||
Asia/Latin America/Other
|
$
|
—
|
|
|
$
|
3.0
|
|
|
$
|
30.2
|
|
|
$
|
45.8
|
|
|
$
|
0.1
|
|
|
$
|
0.3
|
|
|
$
|
30.3
|
|
|
$
|
49.1
|
|
|
$
|
304.0
|
|
|
$
|
280.7
|
|
|
$
|
334.3
|
|
|
$
|
329.8
|
|
Europe
|
0.3
|
|
|
1.0
|
|
|
427.0
|
|
|
403.5
|
|
|
27.3
|
|
|
54.0
|
|
|
454.6
|
|
|
458.5
|
|
|
170.8
|
|
|
540.0
|
|
|
625.4
|
|
|
998.5
|
|
||||||||||||
North America
|
125.2
|
|
|
128.0
|
|
|
376.7
|
|
|
462.0
|
|
|
105.9
|
|
|
255.3
|
|
|
607.8
|
|
|
845.3
|
|
|
4,671.1
|
|
|
4,343.8
|
|
|
5,278.9
|
|
|
5,189.1
|
|
||||||||||||
Total
|
$
|
125.5
|
|
|
$
|
132.0
|
|
|
$
|
833.9
|
|
|
$
|
911.3
|
|
|
$
|
133.3
|
|
|
$
|
309.6
|
|
|
$
|
1,092.7
|
|
|
$
|
1,352.9
|
|
|
$
|
5,145.9
|
|
|
$
|
5,164.5
|
|
|
$
|
6,238.6
|
|
|
$
|
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
|
||||||||||||||||||||||||||||||||||||
|
November 30,
2018 |
|
November
30, 2017 |
|
November 30,
2018 |
|
November
30, 2017 |
|
November 30,
2018 |
|
November
30, 2017 |
|
November 30,
2018 |
|
November
30, 2017 |
|
November 30,
2018 |
|
November
30, 2017 |
|
November 30,
2018 |
|
November
30, 2017 |
||||||||||||||||||||||||
Asset Managers
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.6
|
|
|
$
|
15.9
|
|
|
$
|
—
|
|
|
$
|
7.1
|
|
|
$
|
0.6
|
|
|
$
|
23.0
|
|
|
$
|
2,812.4
|
|
|
$
|
2,920.3
|
|
|
$
|
2,813.0
|
|
|
$
|
2,943.3
|
|
Banks, Broker-dealers
|
0.4
|
|
|
1.7
|
|
|
619.6
|
|
|
620.8
|
|
|
118.9
|
|
|
282.6
|
|
|
738.9
|
|
|
905.1
|
|
|
2,333.5
|
|
|
2,244.2
|
|
|
3,072.4
|
|
|
3,149.3
|
|
||||||||||||
Commodities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||||
Corporates
|
92.9
|
|
|
87.5
|
|
|
—
|
|
|
—
|
|
|
7.2
|
|
|
14.7
|
|
|
100.1
|
|
|
102.2
|
|
|
—
|
|
|
—
|
|
|
100.1
|
|
|
102.2
|
|
||||||||||||
Other
|
32.2
|
|
|
42.8
|
|
|
213.7
|
|
|
274.6
|
|
|
7.2
|
|
|
5.2
|
|
|
253.1
|
|
|
322.6
|
|
|
—
|
|
|
—
|
|
|
253.1
|
|
|
322.6
|
|
||||||||||||
Total
|
$
|
125.5
|
|
|
$
|
132.0
|
|
|
$
|
833.9
|
|
|
$
|
911.3
|
|
|
$
|
133.3
|
|
|
$
|
309.6
|
|
|
$
|
1,092.7
|
|
|
$
|
1,352.9
|
|
|
$
|
5,145.9
|
|
|
$
|
5,164.5
|
|
|
$
|
6,238.6
|
|
|
$
|
6,517.4
|
|
|
November 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
|
||||||||||||||||||
Finland
|
$
|
279.8
|
|
|
$
|
(6.7
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1.0
|
|
|
$
|
273.1
|
|
|
$
|
274.1
|
|
Japan
|
97.7
|
|
|
(92.8
|
)
|
|
8.0
|
|
|
—
|
|
|
11.3
|
|
|
—
|
|
|
136.9
|
|
|
24.2
|
|
|
161.1
|
|
|||||||||
Italy
|
1,778.1
|
|
|
(1,267.5
|
)
|
|
(354.5
|
)
|
|
—
|
|
|
0.2
|
|
|
0.1
|
|
|
—
|
|
|
156.4
|
|
|
156.4
|
|
|||||||||
United Kingdom
|
311.6
|
|
|
(168.2
|
)
|
|
(30.3
|
)
|
|
0.3
|
|
|
63.1
|
|
|
18.5
|
|
|
(56.4
|
)
|
|
195.0
|
|
|
138.6
|
|
|||||||||
Belgium
|
65.4
|
|
|
(39.8
|
)
|
|
2.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
107.3
|
|
|
28.4
|
|
|
135.7
|
|
|||||||||
Netherlands
|
317.4
|
|
|
(316.1
|
)
|
|
70.4
|
|
|
—
|
|
|
39.5
|
|
|
—
|
|
|
—
|
|
|
111.2
|
|
|
111.2
|
|
|||||||||
Germany
|
175.4
|
|
|
(384.8
|
)
|
|
129.4
|
|
|
—
|
|
|
89.7
|
|
|
1.3
|
|
|
93.3
|
|
|
11.0
|
|
|
104.3
|
|
|||||||||
Switzerland
|
100.5
|
|
|
(50.1
|
)
|
|
5.7
|
|
|
—
|
|
|
37.7
|
|
|
2.7
|
|
|
3.8
|
|
|
96.5
|
|
|
100.3
|
|
|||||||||
Hong Kong
|
13.8
|
|
|
(39.7
|
)
|
|
3.5
|
|
|
—
|
|
|
0.5
|
|
|
—
|
|
|
84.9
|
|
|
(21.9
|
)
|
|
63.0
|
|
|||||||||
Singapore
|
21.1
|
|
|
(1.4
|
)
|
|
1.0
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
31.2
|
|
|
20.8
|
|
|
52.0
|
|
|||||||||
Total
|
$
|
3,160.8
|
|
|
$
|
(2,367.1
|
)
|
|
$
|
(164.0
|
)
|
|
$
|
0.3
|
|
|
$
|
242.1
|
|
|
$
|
22.6
|
|
|
$
|
402.0
|
|
|
$
|
894.7
|
|
|
$
|
1,296.7
|
|
|
November 30, 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
|
|
|
Page
|
|
November 30,
|
||||||
|
2018
|
|
2017
|
||||
ASSETS
|
|
|
|
||||
Cash and cash equivalents ($1,096 and $7,514 at November 30, 2018 and 2017, respectively, related to consolidated VIEs)
|
$
|
5,145,886
|
|
|
$
|
5,164,492
|
|
Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations
|
707,960
|
|
|
578,014
|
|
||
Financial instruments owned, at fair value, (including securities pledged of $13,059,802 and $10,842,051 at November 30, 2018 and 2017, respectively; and $380 and $38,044 at November 30, 2018 and 2017, respectively, related to consolidated VIEs)
|
16,399,526
|
|
|
14,193,352
|
|
||
Loans to and investments in related parties
|
997,524
|
|
|
682,790
|
|
||
Securities borrowed
|
6,538,212
|
|
|
7,721,803
|
|
||
Securities purchased under agreements to resell
|
2,785,758
|
|
|
3,689,559
|
|
||
Securities received as collateral
|
—
|
|
|
103
|
|
||
Receivables:
|
|
|
|
||||
Brokers, dealers and clearing organizations
|
3,218,984
|
|
|
2,514,838
|
|
||
Customers
|
2,017,090
|
|
|
1,563,758
|
|
||
Fees, interest and other ($0 and $197 at November 30, 2018 and 2017, respectively, related to consolidated VIEs)
|
327,083
|
|
|
381,231
|
|
||
Premises and equipment
|
304,026
|
|
|
297,750
|
|
||
Goodwill
|
1,642,170
|
|
|
1,647,089
|
|
||
Other assets ($2 at both November 30, 2018 and 2017, respectively, related to consolidated VIEs)
|
1,084,554
|
|
|
1,270,912
|
|
||
Total assets
|
$
|
41,168,773
|
|
|
$
|
39,705,691
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Short-term borrowings (includes $0 and $23,324 at fair value at November 30, 2018 and 2017, respectively)
|
$
|
387,492
|
|
|
$
|
436,215
|
|
Financial instruments sold, not yet purchased, at fair value
|
9,478,944
|
|
|
8,171,929
|
|
||
Collateralized financings:
|
|
|
|
||||
Securities loaned
|
1,838,688
|
|
|
2,843,911
|
|
||
Securities sold under agreements to repurchase
|
8,643,069
|
|
|
8,660,511
|
|
||
Other secured financings ($881,472 and $722,108 at November 30, 2018 and 2017, respectively, related to consolidated VIEs)
|
881,472
|
|
|
722,108
|
|
||
Obligation to return securities received as collateral
|
—
|
|
|
103
|
|
||
Payables:
|
|
|
|
||||
Brokers, dealers and clearing organizations
|
2,448,059
|
|
|
2,226,768
|
|
||
Customers
|
3,176,727
|
|
|
2,664,023
|
|
||
Accrued expenses and other liabilities ($642 and $1,391 at November 30, 2018 and 2017, respectively, related to consolidated VIEs)
|
1,585,635
|
|
|
1,803,720
|
|
||
Long-term debt (includes $686,170 and $606,956 at fair value at November 30, 2018 and 2017, respectively)
|
6,546,283
|
|
|
6,416,844
|
|
||
Total liabilities
|
34,986,369
|
|
|
33,946,132
|
|
||
EQUITY
|
|
|
|
||||
Member’s paid-in capital
|
6,376,662
|
|
|
5,895,601
|
|
||
Accumulated other comprehensive loss:
|
|
|
|
||||
Currency translation adjustments
|
(185,804
|
)
|
|
(98,909
|
)
|
||
Changes in instrument specific credit risk
|
(5,728
|
)
|
|
(27,888
|
)
|
||
Cash flow hedges
|
470
|
|
|
(936
|
)
|
||
Additional minimum pension liability
|
(4,761
|
)
|
|
(9,046
|
)
|
||
Available-for-sale securities
|
(346
|
)
|
|
—
|
|
||
Total accumulated other comprehensive loss
|
(196,169
|
)
|
|
(136,779
|
)
|
||
Total Jefferies Group LLC member’s equity
|
6,180,493
|
|
|
5,758,822
|
|
||
Noncontrolling interests
|
1,911
|
|
|
737
|
|
||
Total equity
|
6,182,404
|
|
|
5,759,559
|
|
||
Total liabilities and equity
|
$
|
41,168,773
|
|
|
$
|
39,705,691
|
|
|
Year Ended November 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Commissions and other fees
|
$
|
635,190
|
|
|
$
|
593,257
|
|
|
$
|
611,574
|
|
Principal transactions
|
524,296
|
|
|
796,633
|
|
|
524,302
|
|
|||
Investment banking
|
1,910,203
|
|
|
1,764,285
|
|
|
1,193,973
|
|
|||
Asset management fees
|
21,214
|
|
|
20,490
|
|
|
26,412
|
|
|||
Interest
|
1,207,095
|
|
|
905,601
|
|
|
857,838
|
|
|||
Other
|
131,634
|
|
|
98,316
|
|
|
19,724
|
|
|||
Total revenues
|
4,429,632
|
|
|
4,178,582
|
|
|
3,233,823
|
|
|||
Interest expense
|
1,246,256
|
|
|
980,473
|
|
|
819,209
|
|
|||
Net revenues
|
3,183,376
|
|
|
3,198,109
|
|
|
2,414,614
|
|
|||
Non-interest expenses:
|
|
|
|
|
|
||||||
Compensation and benefits
|
1,736,264
|
|
|
1,829,096
|
|
|
1,568,948
|
|
|||
Non-compensation expenses:
|
|
|
|
|
|
||||||
Floor brokerage and clearing fees
|
189,068
|
|
|
179,478
|
|
|
167,205
|
|
|||
Underwriting costs
|
64,317
|
|
|
—
|
|
|
—
|
|
|||
Technology and communications
|
305,655
|
|
|
279,242
|
|
|
262,396
|
|
|||
Occupancy and equipment rental
|
100,952
|
|
|
102,904
|
|
|
101,133
|
|
|||
Business development
|
163,756
|
|
|
99,884
|
|
|
93,105
|
|
|||
Professional services
|
139,885
|
|
|
114,711
|
|
|
112,562
|
|
|||
Other
|
73,812
|
|
|
87,870
|
|
|
79,293
|
|
|||
Total non-compensation expenses
|
1,037,445
|
|
|
864,089
|
|
|
815,694
|
|
|||
Total non-interest expenses
|
2,773,709
|
|
|
2,693,185
|
|
|
2,384,642
|
|
|||
Earnings before income taxes
|
409,667
|
|
|
504,924
|
|
|
29,972
|
|
|||
Income tax expense
|
250,650
|
|
|
147,340
|
|
|
14,566
|
|
|||
Net earnings
|
159,017
|
|
|
357,584
|
|
|
15,406
|
|
|||
Net earnings (loss) attributable to noncontrolling interests
|
256
|
|
|
86
|
|
|
(28
|
)
|
|||
Net earnings attributable to Jefferies Group LLC
|
$
|
158,761
|
|
|
$
|
357,498
|
|
|
$
|
15,434
|
|
|
Year Ended November 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Net earnings
|
$
|
159,017
|
|
|
$
|
357,584
|
|
|
$
|
15,406
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Currency translation and other adjustments (1)
|
(85,554
|
)
|
|
53,396
|
|
|
(115,494
|
)
|
|||
Changes in instrument specific credit risk (2)
|
22,160
|
|
|
(21,394
|
)
|
|
(6,494
|
)
|
|||
Cash flow hedges (3)
|
1,406
|
|
|
(936
|
)
|
|
—
|
|
|||
Minimum pension liability adjustments (4)
|
4,285
|
|
|
312
|
|
|
(1,223
|
)
|
|||
Unrealized gain on available-for-sale securities (5)
|
311
|
|
|
—
|
|
|
—
|
|
|||
Total other comprehensive income (loss), net of tax (6)
|
(57,392
|
)
|
|
31,378
|
|
|
(123,211
|
)
|
|||
Comprehensive income (loss)
|
101,625
|
|
|
388,962
|
|
|
(107,805
|
)
|
|||
Net earnings (loss) attributable to noncontrolling interests
|
256
|
|
|
86
|
|
|
(28
|
)
|
|||
Comprehensive income (loss) attributable to Jefferies Group LLC
|
$
|
101,369
|
|
|
$
|
388,876
|
|
|
$
|
(107,777
|
)
|
(1)
|
The amount for the
year ended November 30, 2018
includes a gain of
$20.5 million
related to foreign currency gains, which was reclassified to Other revenues within the Consolidated Statements of Earnings, and
$8.9 million
related to the impact of certain discrete items related to tax planning for our non-U.S. subsidiaries in connection with the Tax Cuts and Jobs Act (the “Tax Act”).
|
(2)
|
The amounts include income tax expense of approximately
$15.5 million
, and income tax benefits of approximately
$13.2 million
and
$4.3 million
for the years ended
November 30, 2018
,
2017
and
2016
, respectively. The amount for the
year ended November 30, 2018
includes a gain of
$0.9 million
, net of taxes of
$0.3 million
, related to changes in instrument specific credit risk, which was reclassified to Principal transactions revenues within the Consolidated Statements of Earnings and
$(6.5) million
related to the Tax Act, which was reclassified to Member’s paid-in capital.
|
(3)
|
The amount for the
year ended November 30, 2018
includes
$(0.2) million
related to the Tax Act, which was reclassified to Member’s paid-in capital and income tax expense of approximately
$0.8 million
. The amount for the
year ended November 30, 2017
includes income tax benefit of approximately
$0.6 million
.
|
(4)
|
The amount for the
year ended November 30, 2018
includes
$5.3 million
related to the transfer of the German Pension Plan and
$(0.3) million
, net of taxes of
$0.1 million
, related to pension losses, which were reclassified to Compensation and benefits expenses within the Consolidated Statements of Earnings and
$(0.8) million
related to the Tax Act, which was reclassified to Member’s paid-in capital. The amounts include income tax expense of approximately
$0.1 million
and income tax benefits of approximately
$0.1 million
and
$0.3 million
for the years ended
November 30, 2018
,
2017
and
2016
, respectively.
|
(5)
|
The amount includes income tax expense of approximately
$0.1 million
.
|
(6)
|
None of the components of other comprehensive income (loss) are attributable to noncontrolling interests.
|
|
Year Ended November 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Member’s paid-in capital:
|
|
|
|
|
|
||||||
Balance, beginning of period
|
$
|
5,895,601
|
|
|
$
|
5,538,103
|
|
|
$
|
5,526,855
|
|
Cumulative effect of the adoption of the new revenue standard, net of tax
|
(6,121
|
)
|
|
—
|
|
|
—
|
|
|||
Net earnings attributable to Jefferies Group LLC
|
158,761
|
|
|
357,498
|
|
|
15,434
|
|
|||
Tax detriment for issuance of share-based awards
|
—
|
|
|
—
|
|
|
(4,186
|
)
|
|||
Contribution from Jefferies Financial Group Inc.
|
600,247
|
|
|
—
|
|
|
—
|
|
|||
Distribution to Jefferies Financial Group Inc.
|
(279,381
|
)
|
|
—
|
|
|
—
|
|
|||
Tax Cuts and Jobs Act adjustment
|
7,555
|
|
|
—
|
|
|
—
|
|
|||
Balance, end of period
|
$
|
6,376,662
|
|
|
$
|
5,895,601
|
|
|
$
|
5,538,103
|
|
Accumulated other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Balance, beginning of period
|
$
|
(136,779
|
)
|
|
$
|
(168,157
|
)
|
|
$
|
(44,946
|
)
|
Contribution from Jefferies Financial Group Inc.
|
(1,998
|
)
|
|
—
|
|
|
—
|
|
|||
Currency adjustments
|
(85,554
|
)
|
|
53,396
|
|
|
(115,494
|
)
|
|||
Changes in instrument specific credit risk
|
22,160
|
|
|
(21,394
|
)
|
|
(6,494
|
)
|
|||
Cash flow hedges
|
1,406
|
|
|
(936
|
)
|
|
—
|
|
|||
Pension adjustments
|
4,285
|
|
|
312
|
|
|
(1,223
|
)
|
|||
Unrealized gain on available-for-sale securities
|
311
|
|
|
—
|
|
|
—
|
|
|||
Balance, end of period
|
$
|
(196,169
|
)
|
|
$
|
(136,779
|
)
|
|
$
|
(168,157
|
)
|
Total Jefferies Group LLC member’s equity
|
$
|
6,180,493
|
|
|
$
|
5,758,822
|
|
|
$
|
5,369,946
|
|
Noncontrolling interests:
|
|
|
|
|
|
||||||
Balance, beginning of period
|
$
|
737
|
|
|
$
|
651
|
|
|
$
|
27,468
|
|
Net earnings (loss) attributable to noncontrolling interests
|
256
|
|
|
86
|
|
|
(28
|
)
|
|||
Contributions
|
10
|
|
|
—
|
|
|
9,390
|
|
|||
Distributions
|
(7,408
|
)
|
|
—
|
|
|
(563
|
)
|
|||
Consolidation (deconsolidation) of asset management entity
|
8,316
|
|
|
—
|
|
|
(35,616
|
)
|
|||
Balance, end of period
|
$
|
1,911
|
|
|
$
|
737
|
|
|
$
|
651
|
|
Total equity
|
$
|
6,182,404
|
|
|
$
|
5,759,559
|
|
|
$
|
5,370,597
|
|
|
Year Ended November 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net earnings
|
$
|
159,017
|
|
|
$
|
357,584
|
|
|
$
|
15,406
|
|
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
15,250
|
|
|
1,977
|
|
|
(2,365
|
)
|
|||
Deferred income taxes
|
126,265
|
|
|
(43,246
|
)
|
|
(14,013
|
)
|
|||
Income on loans to and investments in related parties
|
(73,662
|
)
|
|
(109,395
|
)
|
|
(17,184
|
)
|
|||
Distributions received on investments in related parties
|
62,949
|
|
|
21,038
|
|
|
38,180
|
|
|||
Other adjustments
|
(127,698
|
)
|
|
44,043
|
|
|
(32,711
|
)
|
|||
Net change in assets and liabilities:
|
|
|
|
|
|
||||||
Securities deposited with clearing and depository organizations
|
64,911
|
|
|
163
|
|
|
(99,893
|
)
|
|||
Receivables:
|
|
|
|
|
|
||||||
Brokers, dealers and clearing organizations
|
(406,509
|
)
|
|
(487,385
|
)
|
|
(477,273
|
)
|
|||
Customers
|
(453,360
|
)
|
|
(720,710
|
)
|
|
348,055
|
|
|||
Fees, interest and other
|
51,122
|
|
|
(68,177
|
)
|
|
(54,366
|
)
|
|||
Securities borrowed
|
1,137,134
|
|
|
50,660
|
|
|
(805,779
|
)
|
|||
Financial instruments owned
|
(1,194,791
|
)
|
|
(119,087
|
)
|
|
2,390,542
|
|
|||
Securities purchased under agreements to resell
|
807,619
|
|
|
234,740
|
|
|
(112,777
|
)
|
|||
Other assets
|
31,699
|
|
|
8,435
|
|
|
(173,127
|
)
|
|||
Payables:
|
|
|
|
|
|
||||||
Brokers, dealers and clearing organizations
|
252,698
|
|
|
(1,081,611
|
)
|
|
584,426
|
|
|||
Customers
|
512,760
|
|
|
366,721
|
|
|
(483,188
|
)
|
|||
Securities loaned
|
(964,137
|
)
|
|
381
|
|
|
(122,946
|
)
|
|||
Financial instruments sold, not yet purchased
|
311,998
|
|
|
(279,282
|
)
|
|
1,753,647
|
|
|||
Securities sold under agreements to repurchase
|
36,956
|
|
|
1,838,793
|
|
|
(3,144,433
|
)
|
|||
Accrued expenses and other liabilities
|
(224,157
|
)
|
|
524,304
|
|
|
296,067
|
|
|||
Net cash provided by (used in) operating activities
|
126,064
|
|
|
539,946
|
|
|
(113,732
|
)
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Contributions to loans to and investments in related parties
|
(1,929,603
|
)
|
|
(3,161,619
|
)
|
|
(538,186
|
)
|
|||
Distributions from loans to and investments in related parties
|
1,876,164
|
|
|
3,068,961
|
|
|
689,226
|
|
|||
Net payments on premises and equipment
|
(71,445
|
)
|
|
(72,653
|
)
|
|
(75,772
|
)
|
|||
Purchase of Leucadia Investment Management Limited, net of cash paid
|
3,125
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from sale of Jefferies LoanCore
|
—
|
|
|
173,105
|
|
|
—
|
|
|||
Payment on purchase of aircraft
|
—
|
|
|
—
|
|
|
(27,500
|
)
|
|||
Proceeds from sale of aircraft
|
—
|
|
|
—
|
|
|
29,450
|
|
|||
Consolidation (deconsolidation) of asset management entity
|
130
|
|
|
—
|
|
|
(77
|
)
|
|||
Cash received from contingent consideration
|
—
|
|
|
1,342
|
|
|
2,617
|
|
|||
Net cash provided by (used in) investing activities
|
(121,629
|
)
|
|
9,136
|
|
|
79,758
|
|
|
Year Ended November 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from short-term borrowings
|
$
|
1,083,416
|
|
|
$
|
274,230
|
|
|
$
|
520,207
|
|
Payments on short-term borrowings
|
(1,137,599
|
)
|
|
(369,992
|
)
|
|
(315,325
|
)
|
|||
Proceeds from issuance of long-term debt, net of issuance costs
|
1,367,243
|
|
|
1,116,798
|
|
|
299,779
|
|
|||
Repayment of long-term debt
|
(1,035,700
|
)
|
|
(186,444
|
)
|
|
(373,246
|
)
|
|||
Dividend distribution
|
(248,684
|
)
|
|
—
|
|
|
—
|
|
|||
Net proceeds from (payments on) other secured financings
|
159,364
|
|
|
(33,468
|
)
|
|
(7,333
|
)
|
|||
Net change in bank overdrafts
|
10,290
|
|
|
(5,650
|
)
|
|
(46,536
|
)
|
|||
Proceeds from contributions of noncontrolling interests
|
10
|
|
|
—
|
|
|
9,390
|
|
|||
Payments on distributions to noncontrolling interests
|
(7,408
|
)
|
|
—
|
|
|
(563
|
)
|
|||
Net cash provided by financing activities
|
190,932
|
|
|
795,474
|
|
|
86,373
|
|
|||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(19,116
|
)
|
|
11,707
|
|
|
(27,133
|
)
|
|||
Net increase in cash, cash equivalents and restricted cash
|
176,251
|
|
|
1,356,263
|
|
|
25,266
|
|
|||
Cash, cash equivalents and restricted cash at beginning of period
|
5,642,776
|
|
|
4,286,513
|
|
|
4,261,247
|
|
|||
Cash, cash equivalents and restricted cash at end of period
|
$
|
5,819,027
|
|
|
$
|
5,642,776
|
|
|
$
|
4,286,513
|
|
|
|
|
|
|
|
||||||
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
||||||
Cash paid (received) during the period for:
|
|
|
|
|
|
||||||
Interest
|
$
|
1,287,162
|
|
|
$
|
1,025,576
|
|
|
$
|
859,466
|
|
Income taxes, net
|
196,553
|
|
|
8,910
|
|
|
(6,410
|
)
|
|
November 30,
|
||||||
|
2018
|
|
2017
|
||||
Cash and cash equivalents
|
$
|
5,145,886
|
|
|
$
|
5,164,492
|
|
Cash and securities segregated and on deposit for regulatory purposes with clearing and depository organizations
|
673,141
|
|
|
478,284
|
|
||
Total cash, cash equivalents and restricted cash
|
$
|
5,819,027
|
|
|
$
|
5,642,776
|
|
Note
|
Page
|
Level 1:
|
Quoted prices are available in active markets for identical assets or liabilities at the reported date. Valuation adjustments and block discounts are not applied to Level 1 instruments.
|
Level 2:
|
Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable at the reported date. The nature of these financial instruments include cash instruments for which quoted prices are available but traded less frequently, derivative instruments that fair values for which have been derived using model inputs that are directly observable in the market, or can be derived principally from, or corroborated by, observable market data, and instruments that are fair valued using other financial instruments, the parameters of which can be directly observed.
|
Level 3:
|
Instruments that have little to no pricing observability at the reported date. These financial instruments are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.
|
•
|
Investment Banking Revenues.
Advisory fees from mergers and acquisitions engagements are recognized at a point in time when the related transaction is completed, as the performance obligation is to successfully broker a specific transaction.
|
•
|
Certain Capital Markets Revenues.
Revenues associated with price stabilization activities as part of a securities underwriting were historically recognized as part of Investment banking revenues. Under the new revenue standard, revenue from these activities is recognized within Principal transactions revenues, as these revenues are not considered to be within the scope of the new standard.
|
•
|
Investment Banking Advisory Expenses.
Historically, expenses associated with investment banking advisory assignments were deferred until reimbursed by the client, the related fee revenue is recognized or the engagement is otherwise concluded. Under the new revenue standard, expenses 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 assignments, are expensed as incurred.
|
•
|
Investment Banking Underwriting and Advisory Expenses.
Expenses have historically been recorded net of client reimbursements and/or netted against revenues. Under the new revenue standard, all investment banking expenses will be recognized within their respective expense category on the Consolidated Statements of Earnings and any expense reimbursements will be recognized as Investment banking revenues (
i.e.
, expenses are no longer recorded net of client reimbursements and are not netted against revenues).
|
•
|
Asset Management Fees.
In certain asset management fee arrangements, we receive performance-based fees, which vary with performance or, in certain cases, are earned when the return on assets under management exceed certain benchmark returns or other performance targets. Historically, performance fees have been accrued (or reversed) quarterly based on measuring performance to date versus any relevant benchmark return hurdles stated in the investment management agreement. Under the new revenue standard, performance fees are considered variable as they are subject to fluctuation (
e.g.
, based on market performance) and/or are contingent on a future event during the measurement period (
e.g.
, exceeding a specified benchmark index) and are recognized only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty is resolved. Accordingly, performance fee revenue will generally be recognized only at the end of the performance period to the extent that the benchmark return has been met.
|
|
Year Ended November 30, 2018
|
||||||||||
|
As Reported
|
|
ASC 606 Impact
|
|
Adjusted (1)
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Investment banking
|
$
|
1,910,203
|
|
|
$
|
131,789
|
|
|
$
|
1,778,414
|
|
Total revenues
|
4,429,632
|
|
|
131,789
|
|
|
4,297,843
|
|
|||
Net revenues
|
3,183,376
|
|
|
131,789
|
|
|
3,051,587
|
|
|||
Non-interest expenses:
|
|
|
|
|
|
||||||
Underwriting costs
|
64,317
|
|
|
64,317
|
|
|
—
|
|
|||
Technology and communications
|
305,655
|
|
|
489
|
|
|
305,166
|
|
|||
Business development
|
163,756
|
|
|
62,676
|
|
|
101,080
|
|
|||
Professional services
|
139,885
|
|
|
3,210
|
|
|
136,675
|
|
|||
Other expenses
|
73,812
|
|
|
1,097
|
|
|
72,715
|
|
|||
Total non-compensation expenses
|
1,037,445
|
|
|
131,789
|
|
|
905,656
|
|
|||
Total non-interest expenses
|
2,773,709
|
|
|
131,789
|
|
|
2,641,920
|
|
(1)
|
The amounts reflect each affected financial statement line item as they would have been reported under U.S. GAAP, prior to the adoption of the new revenue standard.
|
|
November 30, 2018
|
||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Counterparty and Cash Collateral Netting (1)
|
|
Total
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial instruments owned:
|
|
|
|
|
|
|
|
|
|
||||||||||
Corporate equity securities
|
$
|
1,907,945
|
|
|
$
|
118,681
|
|
|
$
|
51,040
|
|
|
$
|
—
|
|
|
$
|
2,077,666
|
|
Corporate debt securities
|
—
|
|
|
2,683,180
|
|
|
9,484
|
|
|
—
|
|
|
2,692,664
|
|
|||||
Collateralized debt obligations and collateralized loan obligations
|
—
|
|
|
72,949
|
|
|
25,815
|
|
|
—
|
|
|
98,764
|
|
|||||
U.S. government and federal agency securities
|
1,789,614
|
|
|
56,592
|
|
|
—
|
|
|
—
|
|
|
1,846,206
|
|
|||||
Municipal securities
|
—
|
|
|
894,253
|
|
|
—
|
|
|
—
|
|
|
894,253
|
|
|||||
Sovereign obligations
|
1,769,556
|
|
|
1,043,409
|
|
|
—
|
|
|
—
|
|
|
2,812,965
|
|
|||||
Residential mortgage-backed securities
|
—
|
|
|
2,163,629
|
|
|
19,603
|
|
|
—
|
|
|
2,183,232
|
|
|||||
Commercial mortgage-backed securities
|
—
|
|
|
819,406
|
|
|
10,886
|
|
|
—
|
|
|
830,292
|
|
|||||
Other asset-backed securities
|
—
|
|
|
239,381
|
|
|
53,175
|
|
|
—
|
|
|
292,556
|
|
|||||
Loans and other receivables
|
—
|
|
|
2,056,593
|
|
|
46,985
|
|
|
—
|
|
|
2,103,578
|
|
|||||
Derivatives
|
12,186
|
|
|
2,524,988
|
|
|
5,922
|
|
|
(2,412,486
|
)
|
|
130,610
|
|
|||||
Investments at fair value
|
—
|
|
|
—
|
|
|
113,831
|
|
|
—
|
|
|
113,831
|
|
|||||
Total financial instruments owned, excluding Investments at fair value based on NAV
|
$
|
5,479,301
|
|
|
$
|
12,673,061
|
|
|
$
|
336,741
|
|
|
$
|
(2,412,486
|
)
|
|
$
|
16,076,617
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial instruments sold, not yet purchased:
|
|
|
|
|
|
|
|
|
|
||||||||||
Corporate equity securities
|
$
|
1,685,071
|
|
|
$
|
1,444
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,686,515
|
|
Corporate debt securities
|
—
|
|
|
1,505,618
|
|
|
522
|
|
|
—
|
|
|
1,506,140
|
|
|||||
U.S. government and federal agency securities
|
1,384,295
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,384,295
|
|
|||||
Sovereign obligations
|
1,735,242
|
|
|
661,095
|
|
|
—
|
|
|
—
|
|
|
2,396,337
|
|
|||||
Loans
|
—
|
|
|
1,371,630
|
|
|
6,376
|
|
|
—
|
|
|
1,378,006
|
|
|||||
Derivatives
|
26,471
|
|
|
3,585,249
|
|
|
27,536
|
|
|
(2,511,605
|
)
|
|
1,127,651
|
|
|||||
Total financial instruments sold, not yet purchased
|
$
|
4,831,079
|
|
|
$
|
7,125,036
|
|
|
$
|
34,434
|
|
|
$
|
(2,511,605
|
)
|
|
$
|
9,478,944
|
|
Long-term debt
|
$
|
—
|
|
|
$
|
485,425
|
|
|
$
|
200,745
|
|
|
$
|
—
|
|
|
$
|
686,170
|
|
(1)
|
Represents counterparty and cash collateral netting across the levels of the fair value hierarchy for positions with the same counterparty.
|
|
November 30, 2017
|
||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Counterparty and Cash Collateral Netting (1)
|
|
Total
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial instruments owned:
|
|
|
|
|
|
|
|
|
|
||||||||||
Corporate equity securities
|
$
|
1,801,453
|
|
|
$
|
57,091
|
|
|
$
|
22,009
|
|
|
$
|
—
|
|
|
$
|
1,880,553
|
|
Corporate debt securities
|
—
|
|
|
3,261,300
|
|
|
26,036
|
|
|
—
|
|
|
3,287,336
|
|
|||||
Collateralized debt obligations and collateralized loan obligations
|
—
|
|
|
139,166
|
|
|
30,004
|
|
|
—
|
|
|
169,170
|
|
|||||
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
|
160,168
|
|
|
3,248,586
|
|
|
9,295
|
|
|
(3,254,216
|
)
|
|
163,833
|
|
|||||
Investments at fair value
|
—
|
|
|
946
|
|
|
93,454
|
|
|
—
|
|
|
94,400
|
|
|||||
Total financial instruments owned, excluding Investments at fair value based on NAV
|
$
|
4,612,403
|
|
|
$
|
12,292,053
|
|
|
$
|
327,727
|
|
|
$
|
(3,254,216
|
)
|
|
$
|
13,977,967
|
|
Securities received as collateral
|
$
|
103
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
103
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial instruments sold, not yet purchased:
|
|
|
|
|
|
|
|
|
|
||||||||||
Corporate equity securities
|
$
|
1,456,675
|
|
|
$
|
32,122
|
|
|
$
|
48
|
|
|
$
|
—
|
|
|
$
|
1,488,845
|
|
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
|
247,919
|
|
|
3,399,239
|
|
|
16,041
|
|
|
(3,426,249
|
)
|
|
236,950
|
|
|||||
Total financial instruments sold, not yet purchased
|
$
|
4,351,974
|
|
|
$
|
7,226,002
|
|
|
$
|
20,202
|
|
|
$
|
(3,426,249
|
)
|
|
$
|
8,171,929
|
|
Short-term borrowings
|
$
|
—
|
|
|
$
|
23,324
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
23,324
|
|
Long-term debt
|
$
|
—
|
|
|
$
|
606,956
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
606,956
|
|
Obligation to return securities received as collateral
|
$
|
103
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
103
|
|
(1)
|
Represents counterparty and cash collateral netting across the levels of the fair value hierarchy for positions with the same counterparty.
|
•
|
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 the company. 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 of the fair value hierarchy 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 obtained from external pricing services 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 (“RMBS”):
Agency RMBS include mortgage pass-through securities (fixed and adjustable rate), collateralized mortgage obligations and principal-only and interest-only (including inverse interest-only) securities. Agency RMBS are generally measured using recent transactions, pricing data from external pricing services or expected future cash flow techniques that incorporate prepayment models and other prepayment assumptions to amortize the underlying mortgage loan collateral and are categorized within Level 2 of the fair value hierarchy. 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 factors such as weighted average coupon, loan-to-value, credit scores, geographic location, maximum and average loan size, originator, servicer and weighted average loan age.
|
•
|
Non-Agency RMBS:
The fair value of non-agency RMBS 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 (“CMBS”):
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 CMBS:
Non-agency CMBS are measured using pricing data obtained from external pricing services, prices observed from recently executed market transactions or based on expected cash flow models that incorporate underlying loan collateral characteristics and performance. Non-Agency CMBS are categorized within Level 2 or Level 3 of the fair value hierarchy depending on the observability of the underlying inputs.
|
•
|
Corporate Loans:
Corporate loans categorized within Level 2 of the fair value hierarchy are measured based on market consensus pricing service quotations. Where available, market price quotations from external pricing services are reviewed to ensure they 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 flows 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 observations 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 or consensus pricing services. 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. Where available, valuation inputs are calibrated from observable 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.
|
|
November 30, 2018
|
||||||||
|
Fair Value (1)
|
|
Unfunded Commitments
|
|
Redemption Frequency
(if currently eligible)
|
||||
Equity Long/Short Hedge Funds (2)
|
$
|
15,338
|
|
|
$
|
—
|
|
|
Quarterly
|
Equity Funds (3)
|
40,070
|
|
|
20,996
|
|
|
—
|
||
Commodity Funds (4)
|
10,129
|
|
|
—
|
|
|
Quarterly
|
||
Multi-asset Funds (5)
|
256,972
|
|
|
—
|
|
|
—
|
||
Other Funds (6)
|
400
|
|
|
—
|
|
|
—
|
||
Total
|
$
|
322,909
|
|
|
$
|
20,996
|
|
|
|
|
November 30, 2017
|
||||||||
|
Fair Value (1)
|
|
Unfunded Commitments
|
|
Redemption Frequency
(if currently eligible)
|
||||
Equity Long/Short Hedge Funds (2)
|
$
|
33,176
|
|
|
$
|
—
|
|
|
Monthly, Quarterly
|
Equity Funds (3)
|
26,798
|
|
|
19,084
|
|
|
—
|
||
Multi-asset Funds (5)
|
154,805
|
|
|
—
|
|
|
—
|
||
Other Funds (6)
|
606
|
|
|
—
|
|
|
—
|
||
Total
|
$
|
215,385
|
|
|
$
|
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
November 30, 2018
and
2017
, approximately
3%
and
1%
, respectively, of the fair value of investments in this category are classified as being in liquidation.
|
(3)
|
At
November 30, 2018
and
2017
, 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.
|
(4)
|
This category includes investments in hedge funds that invest, long and short, primarily in commodities. Investments in this category are redeemable quarterly with
60
days prior written notice.
|
(5)
|
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
November 30, 2018
and
2017
, investments representing approximately
15%
and
12%
, respectively, of the fair value of investments in this category are redeemable with
30
days prior written notice.
|
(6)
|
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 and there are no redemption provisions. This category also includes investments in fund of funds that invest in various private equity funds that 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.
|
|
Balance at November 30, 2017
|
|
Total gains/ losses (realized and unrealized) (1)
|
|
Purchases
|
|
Sales
|
|
Settlements
|
|
Issuances
|
|
Net transfers into/
(out of)
Level 3
|
|
Balance at November 30, 2018
|
|
For instruments still held at November 30, 2018, changes in unrealized gains/(losses) included in:
|
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
Earnings (1)
|
|
Other comprehensive income (1)
|
||||||||||||||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Financial instruments owned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Corporate equity securities
|
$
|
22,009
|
|
|
$
|
24,023
|
|
|
$
|
31,669
|
|
|
$
|
(22,759
|
)
|
|
$
|
(3,977
|
)
|
|
$
|
—
|
|
|
$
|
75
|
|
|
$
|
51,040
|
|
|
$
|
22,774
|
|
|
$
|
—
|
|
Corporate debt securities
|
26,036
|
|
|
(439
|
)
|
|
10,352
|
|
|
(23,364
|
)
|
|
(1,679
|
)
|
|
—
|
|
|
(1,422
|
)
|
|
9,484
|
|
|
(2,606
|
)
|
|
—
|
|
||||||||||
CDOs and CLOs
|
30,004
|
|
|
(14,368
|
)
|
|
356,650
|
|
|
(353,330
|
)
|
|
(10,247
|
)
|
|
—
|
|
|
17,106
|
|
|
25,815
|
|
|
(7,605
|
)
|
|
—
|
|
||||||||||
RMBS
|
26,077
|
|
|
(6,970
|
)
|
|
3,118
|
|
|
(12,816
|
)
|
|
(513
|
)
|
|
—
|
|
|
10,707
|
|
|
19,603
|
|
|
521
|
|
|
—
|
|
||||||||||
CMBS
|
12,419
|
|
|
(2,186
|
)
|
|
1,436
|
|
|
(471
|
)
|
|
(16,624
|
)
|
|
—
|
|
|
16,312
|
|
|
10,886
|
|
|
(4,000
|
)
|
|
—
|
|
||||||||||
Other ABS
|
61,129
|
|
|
(9,934
|
)
|
|
706,846
|
|
|
(677,220
|
)
|
|
(27,641
|
)
|
|
—
|
|
|
(5
|
)
|
|
53,175
|
|
|
(5,283
|
)
|
|
—
|
|
||||||||||
Loans and other receivables
|
47,304
|
|
|
(5,137
|
)
|
|
149,228
|
|
|
(130,832
|
)
|
|
(15,311
|
)
|
|
—
|
|
|
1,733
|
|
|
46,985
|
|
|
(8,457
|
)
|
|
—
|
|
||||||||||
Investments at fair value
|
93,454
|
|
|
2,353
|
|
|
34,648
|
|
|
(17,570
|
)
|
|
—
|
|
|
—
|
|
|
946
|
|
|
113,831
|
|
|
1,759
|
|
|
—
|
|
||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Financial instruments sold, not yet purchased:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Corporate equity securities
|
$
|
48
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(48
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Corporate debt securities
|
522
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
522
|
|
|
—
|
|
|
—
|
|
||||||||||
CMBS
|
105
|
|
|
(105
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Loans
|
3,486
|
|
|
84
|
|
|
(4,626
|
)
|
|
7,432
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,376
|
|
|
(28
|
)
|
|
—
|
|
||||||||||
Net derivatives (2)
|
6,746
|
|
|
(3,237
|
)
|
|
(17
|
)
|
|
14,920
|
|
|
(1,335
|
)
|
|
—
|
|
|
4,537
|
|
|
21,614
|
|
|
(646
|
)
|
|
—
|
|
||||||||||
Long-term debt
|
—
|
|
|
(30,347
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
84,860
|
|
|
146,232
|
|
|
200,745
|
|
|
10,951
|
|
|
19,396
|
|
(1)
|
Realized and unrealized gains/losses are primarily reported in Principal transactions revenues in our Consolidated Statements of Earnings. Changes in instrument-specific credit risk related to structured notes are included in our Consolidated Statement of Comprehensive Income, net of tax.
|
(2)
|
Net derivatives represent Financial instruments owned—Derivatives and Financial instruments sold, not yet purchased —Derivatives.
|
•
|
CDOs and CLOs of
$17.3 million
, CMBS of
$16.3 million
and RMBS of
$15.3 million
due to reduced pricing transparency.
|
•
|
RMBS of
$4.6 million
, corporate debt securities of
$3.6 million
and corporate equity securities of
$2.9 million
due to greater pricing transparency supporting classification into Level 2.
|
|
Balance at November 30, 2016
|
|
Total gains/ losses (realized and unrealized) (1)
|
|
Purchases
|
|
Sales
|
|
Settlements
|
|
Issuances
|
|
Net transfers into/
(out of) Level 3 |
|
Balance at November 30, 2017
|
|
Change in unrealized gains/ (losses) relating to instruments still held at November 30, 2017 (1)
|
||||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Financial instruments owned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Corporate equity securities
|
$
|
21,739
|
|
|
$
|
3,262
|
|
|
$
|
896
|
|
|
$
|
(1,623
|
)
|
|
$
|
52
|
|
|
$
|
—
|
|
|
$
|
(2,317
|
)
|
|
$
|
22,009
|
|
|
$
|
2,515
|
|
Corporate debt securities
|
25,005
|
|
|
(3,723
|
)
|
|
36,850
|
|
|
(34,077
|
)
|
|
(1,968
|
)
|
|
—
|
|
|
3,949
|
|
|
26,036
|
|
|
(3,768
|
)
|
|||||||||
CDOs and CLOs
|
54,354
|
|
|
(19,858
|
)
|
|
112,239
|
|
|
(110,907
|
)
|
|
(367
|
)
|
|
—
|
|
|
(5,457
|
)
|
|
30,004
|
|
|
(2,262
|
)
|
|||||||||
Municipal securities
|
27,257
|
|
|
(1,547
|
)
|
|
—
|
|
|
(25,710
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
RMBS
|
38,772
|
|
|
(10,817
|
)
|
|
6,805
|
|
|
(26,193
|
)
|
|
(115
|
)
|
|
—
|
|
|
17,625
|
|
|
26,077
|
|
|
(7,201
|
)
|
|||||||||
CMBS
|
20,580
|
|
|
(5,346
|
)
|
|
3,275
|
|
|
(5,263
|
)
|
|
(1,018
|
)
|
|
—
|
|
|
191
|
|
|
12,419
|
|
|
(6,976
|
)
|
|||||||||
Other ABS
|
40,911
|
|
|
(17,705
|
)
|
|
77,508
|
|
|
(8,613
|
)
|
|
(25,799
|
)
|
|
—
|
|
|
(5,173
|
)
|
|
61,129
|
|
|
(12,562
|
)
|
|||||||||
Loans and other receivables
|
81,872
|
|
|
24,794
|
|
|
63,768
|
|
|
(53,095
|
)
|
|
(34,622
|
)
|
|
—
|
|
|
(35,413
|
)
|
|
47,304
|
|
|
17,451
|
|
|||||||||
Investments at fair value
|
96,369
|
|
|
6,361
|
|
|
1,981
|
|
|
(10,157
|
)
|
|
(1,100
|
)
|
|
—
|
|
|
—
|
|
|
93,454
|
|
|
8,385
|
|
|||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Financial instruments sold, not yet purchased:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Corporate equity securities
|
$
|
313
|
|
|
$
|
60
|
|
|
$
|
(373
|
)
|
|
$
|
48
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
48
|
|
|
$
|
—
|
|
Corporate debt securities
|
523
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
522
|
|
|
1
|
|
|||||||||
CMBS
|
—
|
|
|
105
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
105
|
|
|
(105
|
)
|
|||||||||
Loans
|
378
|
|
|
196
|
|
|
(385
|
)
|
|
2,485
|
|
|
—
|
|
|
—
|
|
|
812
|
|
|
3,486
|
|
|
(2,639
|
)
|
|||||||||
Net derivatives (2)
|
3,441
|
|
|
(1,638
|
)
|
|
—
|
|
|
—
|
|
|
5,558
|
|
|
456
|
|
|
(1,071
|
)
|
|
6,746
|
|
|
(17,740
|
)
|
|||||||||
Other secured financings
|
418
|
|
|
(418
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
(1)
|
Realized and unrealized gains/losses are reported in Principal transactions revenues in our Consolidated Statements of Earnings.
|
(2)
|
Net derivatives represent Financial instruments owned—Derivatives and Financial instruments sold, not yet purchased —Derivatives.
|
•
|
RMBS of
$19.6 million
and corporate debt securities of
$8.3 million
due to a lack of observable market transactions.
|
•
|
Loans and other receivables of
$40.9 million
due to greater pricing transparency supporting classification into Level 2.
|
|
Balance at November 30, 2015
|
|
Total gains/ losses (realized and unrealized) (1)
|
|
Purchases
|
|
Sales
|
|
Settlements
|
|
Issuances
|
|
Net transfers into/ (out of) Level 3
|
|
Balance at November 30, 2016
|
|
Change in unrealized gain/ (losses) relating to instruments still held at November 30, 2016 (1)
|
||||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Financial instruments owned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Corporate equity securities
|
$
|
40,906
|
|
|
$
|
(8,463
|
)
|
|
$
|
3,365
|
|
|
$
|
(49
|
)
|
|
$
|
(671
|
)
|
|
$
|
—
|
|
|
$
|
(13,349
|
)
|
|
$
|
21,739
|
|
|
$
|
291
|
|
Corporate debt securities
|
25,876
|
|
|
(16,230
|
)
|
|
27,242
|
|
|
(29,347
|
)
|
|
(7,223
|
)
|
|
—
|
|
|
24,687
|
|
|
25,005
|
|
|
(18,799
|
)
|
|||||||||
CDOs and CLOs
|
85,092
|
|
|
(14,918
|
)
|
|
52,316
|
|
|
(69,394
|
)
|
|
(2,750
|
)
|
|
—
|
|
|
4,008
|
|
|
54,354
|
|
|
(7,628
|
)
|
|||||||||
Municipal securities
|
—
|
|
|
(1,462
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28,719
|
|
|
27,257
|
|
|
(1,462
|
)
|
|||||||||
Sovereign obligations
|
120
|
|
|
5
|
|
|
—
|
|
|
(125
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
RMBS
|
70,263
|
|
|
(9,612
|
)
|
|
623
|
|
|
(12,249
|
)
|
|
(931
|
)
|
|
—
|
|
|
(9,322
|
)
|
|
38,772
|
|
|
(1,095
|
)
|
|||||||||
CMBS
|
14,326
|
|
|
(7,550
|
)
|
|
3,132
|
|
|
(2,024
|
)
|
|
(2,229
|
)
|
|
—
|
|
|
14,925
|
|
|
20,580
|
|
|
(7,243
|
)
|
|||||||||
Other ABS
|
42,925
|
|
|
(14,381
|
)
|
|
133,986
|
|
|
(102,952
|
)
|
|
(8,769
|
)
|
|
—
|
|
|
(9,898
|
)
|
|
40,911
|
|
|
(18,056
|
)
|
|||||||||
Loans and other receivables
|
189,289
|
|
|
(42,566
|
)
|
|
75,264
|
|
|
(69,262
|
)
|
|
(46,851
|
)
|
|
—
|
|
|
(24,002
|
)
|
|
81,872
|
|
|
(52,003
|
)
|
|||||||||
Investments, at fair value
|
53,120
|
|
|
(13,278
|
)
|
|
26,228
|
|
|
(542
|
)
|
|
(1,107
|
)
|
|
—
|
|
|
31,948
|
|
|
96,369
|
|
|
(13,208
|
)
|
|||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Financial instruments sold, not yet purchased:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Corporate equity securities
|
$
|
38
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
313
|
|
|
$
|
(38
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
313
|
|
|
$
|
—
|
|
Corporate debt securities
|
—
|
|
|
(27
|
)
|
|
—
|
|
|
550
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
523
|
|
|
—
|
|
|||||||||
Loans
|
10,469
|
|
|
—
|
|
|
—
|
|
|
378
|
|
|
—
|
|
|
—
|
|
|
(10,469
|
)
|
|
378
|
|
|
—
|
|
|||||||||
Net derivatives (2)
|
(242
|
)
|
|
(1,760
|
)
|
|
—
|
|
|
11,101
|
|
|
31
|
|
|
2,067
|
|
|
(7,756
|
)
|
|
3,441
|
|
|
(6,458
|
)
|
|||||||||
Other secured financings
|
544
|
|
|
(126
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
418
|
|
|
(126
|
)
|
(1)
|
Realized and unrealized gains/losses are reported in Principal transactions revenues in our Consolidated Statements of Earnings.
|
(2)
|
Net derivatives represent Financial instruments owned—Derivatives and Financial instruments sold, not yet purchased —Derivatives.
|
•
|
CDOs and CLOs of
$19.4 million
, RMBS of
$17.5 million
, CMBS of
$17.4 million
and other ABS of
$16.9 million
, for which no recent trade activity was observed for purposes of determining observable inputs;
|
•
|
Loans and other receivables of
$13.8 million
due to a lower number of contributors for certain vendor quotes supporting classification within Level 2; and
|
•
|
Investments at fair value of
$31.9 million
, municipal securities of
$28.7 million
and corporate debt securities of
$28.1 million
due to a lack of observable market transactions.
|
•
|
RMBS of
$26.8 million
, other ABS of
$26.8 million
and CDOs and CLOs of
$15.4 million
, for which market trades were observed in the year for either identical or similar securities;
|
•
|
Loans and other receivables of
$37.8 million
due to a greater number of contributors for certain vendor quotes supporting classification into Level 2; and
|
•
|
Corporate equity securities of
$19.2 million
due to an increase in observable market transactions.
|
November 30, 2018
|
||||||||||||||
Financial Instruments Owned
|
|
Fair Value
(in thousands)
|
|
Valuation Technique
|
|
Significant Unobservable Input(s)
|
|
Input / Range
|
|
Weighted
Average
|
||||
Corporate equity securities
|
|
$
|
43,644
|
|
|
|
|
|
|
|
|
|
||
Non-exchange-traded securities
|
|
Market approach
|
|
Price
|
|
$1-$75
|
|
$
|
12
|
|
||||
|
|
|
|
|
|
Transaction level
|
|
$47
|
|
—
|
|
|||
Corporate debt securities
|
|
$
|
9,484
|
|
|
Market approach
|
|
Estimated recovery percentage
|
|
46%
|
|
—
|
|
|
|
|
|
|
|
|
Transaction level
|
|
$80
|
|
—
|
|
|||
CDOs and CLOs
|
|
$
|
25,815
|
|
|
Discounted cash flows
|
|
Constant prepayment rate
|
|
10%-20%
|
|
18
|
%
|
|
|
|
|
|
|
|
Constant default rate
|
|
1%-2%
|
|
2
|
%
|
|||
|
|
|
|
|
|
Loss severity
|
|
25%-30%
|
|
26
|
%
|
|||
|
|
|
|
|
|
Discount rate/yield
|
|
11%-16%
|
|
14
|
%
|
|||
|
|
|
|
Scenario analysis
|
|
Estimated recovery percentage
|
|
2%
|
|
—
|
|
|||
RMBS
|
|
$
|
19,603
|
|
|
Discounted cash flows
|
|
Cumulative loss rate
|
|
4%
|
|
—
|
|
|
|
|
|
|
|
|
Duration (years)
|
|
13
|
|
—
|
|
|||
|
|
|
|
|
|
Discount rate/yield
|
|
3%
|
|
—
|
|
|||
|
|
|
|
|
|
Loss severity
|
|
0%
|
|
—
|
|
|||
|
|
|
|
Market approach
|
|
Price
|
|
$100
|
|
—
|
|
|||
CMBS
|
|
$
|
9,444
|
|
|
Discounted cash flows
|
|
Cumulative loss rate
|
|
8%-85%
|
|
45
|
%
|
|
|
|
|
|
|
|
Duration (years)
|
|
1-3
|
|
1
|
|
|||
|
|
|
|
|
|
Discount rate/yield
|
|
2%-15%
|
|
6
|
%
|
|||
|
|
|
|
|
|
Loss severity
|
|
64%
|
|
—
|
|
|||
|
|
|
|
Scenario analysis
|
|
Estimated recovery percentage
|
|
26%
|
|
—
|
|
|||
|
|
|
|
|
|
Price
|
|
$49
|
|
—
|
|
|||
Other ABS
|
|
$
|
53,175
|
|
|
Discounted cash flows
|
|
Cumulative loss rate
|
|
12%-30%
|
|
22
|
%
|
|
|
|
|
|
|
|
Duration (years)
|
|
1-2
|
|
1
|
|
|||
|
|
|
|
|
|
Discount rate/yield
|
|
6%-12%
|
|
8
|
%
|
|||
|
|
|
|
Market approach
|
|
Price
|
|
$100
|
|
—
|
|
|||
Loans and other receivables
|
|
$
|
46,078
|
|
|
Market approach
|
|
Price
|
|
$50-$100
|
|
$
|
96
|
|
|
|
|
|
Scenario analysis
|
|
Estimated recovery percentage
|
|
13%-117%
|
|
105
|
%
|
|||
Derivatives
|
|
$
|
4,602
|
|
|
|
|
|
|
|
|
|
||
Total return swaps
|
|
|
|
Market approach
|
|
Price
|
|
$97
|
|
—
|
|
|||
Interest rate swaps
|
|
|
|
Market approach
|
|
Price
|
|
$20
|
|
—
|
|
|||
Investments at fair value
|
|
$
|
113,831
|
|
|
|
|
|
|
|
|
|
||
Private equity securities
|
|
|
|
Market approach
|
|
Price
|
|
$3-$250
|
|
$
|
108
|
|
||
|
|
|
|
|
|
Transaction level
|
|
$169
|
|
—
|
|
|||
|
|
|
|
Scenario analysis
|
|
Discount rate/yield
|
|
20%
|
|
—
|
|
|||
|
|
|
|
|
|
Revenue growth
|
|
0%
|
|
—
|
|
|||
Financial Instruments Sold, Not Yet Purchased:
|
|
|
|
|
|
|
|
|
||||||
Loans
|
|
$
|
6,376
|
|
|
Market approach
|
|
Price
|
|
$50-$101
|
|
$
|
74
|
|
Derivatives
|
|
$
|
27,536
|
|
|
|
|
|
|
|
|
|
||
Equity options
|
|
|
|
Option model/default rate
|
|
Default probability
|
|
0%
|
|
—
|
|
|||
|
|
|
|
Volatility benchmarking
|
|
Volatility
|
|
39%-62%
|
|
50
|
%
|
|||
Interest rate swaps
|
|
|
|
Market approach
|
|
Price
|
|
$20
|
|
—
|
|
|||
Total return swaps
|
|
|
|
Market approach
|
|
Price
|
|
$97
|
|
—
|
|
|||
Long-term debt
|
|
|
|
|
|
|
|
|
|
|
||||
Structured notes
|
|
$
|
200,745
|
|
|
Market approach
|
|
Price
|
|
$78-$94
|
|
$
|
86
|
|
|
|
|
|
|
|
Price
|
|
€68-€110
|
|
€
|
96
|
|
November 30, 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-$75
|
|
$
|
33
|
|
||||
|
|
|
|
|
|
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
|
|
$
|
30,004
|
|
|
Discounted cash flows
|
|
Constant prepayment rate
|
|
20%
|
|
—
|
|
|
|
|
|
|
|
|
Constant default rate
|
|
2%
|
|
—
|
|
|||
|
|
|
|
|
|
Loss severity
|
|
25%-30%
|
|
26
|
%
|
|||
|
|
|
|
|
|
Discount rate/yield
|
|
3%-26%
|
|
12
|
%
|
|||
|
|
|
|
Scenario analysis
|
|
Estimated recovery percentage
|
|
8%-40%
|
|
22
|
%
|
|||
RMBS
|
|
$
|
26,077
|
|
|
Discounted cash flows
|
|
Cumulative loss rate
|
|
3%-19%
|
|
10
|
%
|
|
|
|
|
|
|
|
Duration (years)
|
|
2-4
|
|
3
|
|
|||
|
|
|
|
|
|
Discount rate/yield
|
|
6%-10%
|
|
8
|
%
|
|||
CMBS
|
|
$
|
12,419
|
|
|
Discounted cash flows
|
|
Cumulative loss rate
|
|
8%-65%
|
|
44
|
%
|
|
|
|
|
|
|
|
Duration (years)
|
|
1-3
|
|
2
|
|
|||
|
|
|
|
|
|
Discount rate/yield
|
|
2%-26%
|
|
12
|
%
|
|||
|
|
|
|
Scenario analysis
|
|
Estimated recovery percentage
|
|
26%-32%
|
|
28
|
%
|
|||
|
|
|
|
|
|
Price
|
|
$52-$56
|
|
$
|
54
|
|
||
Other ABS
|
|
$
|
61,129
|
|
|
Discounted cash flows
|
|
Cumulative loss rate
|
|
0%-33%
|
|
23
|
%
|
|
|
|
|
|
|
|
Duration (years)
|
|
1-6
|
|
2
|
|
|||
|
|
|
|
|
|
Discount rate/yield
|
|
5%-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-$100
|
|
$
|
95
|
|
||
|
|
|
|
Scenario analysis
|
|
Estimated recovery percentage
|
|
13%-107%
|
|
78
|
%
|
|||
Derivatives
|
|
$
|
9,295
|
|
|
|
|
|
|
|
|
|
||
Total return swaps
|
|
|
|
Market approach
|
|
Price
|
|
$101-$106
|
|
$
|
103
|
|
||
Interest rate swaps
|
|
|
|
Market approach
|
|
Credit spread
|
|
800 bps
|
|
—
|
|
|||
Investments at fair value
|
|
$
|
77,423
|
|
|
|
|
|
|
|
|
|
||
Private equity securities
|
|
|
|
Market approach
|
|
Transaction level
|
|
$3-$250
|
|
$
|
172
|
|
||
|
|
|
|
|
|
Price
|
|
$7
|
|
—
|
|
|||
Financial Instruments Sold, Not Yet Purchased:
|
|
|
|
|
|
|
|
|
||||||
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-$106
|
|
$
|
103
|
|
||
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, RMBS, other ABS, private equity securities, and structured notes using a market approach valuation technique. A significant increase (decrease) in the transaction level of a non-exchange-traded security, corporate debt security and 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, interest rate swaps, RMBS, other ABS, 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.
|
•
|
Loans and other receivables, CDOs and CLOs, CMBS, other ABS and private equity 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 CMBS would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the discount rate/yield underlying the investment would result in a significantly lower (higher) fair value measurement. A significant increase (decrease) in the revenue growth underlying the investment would result in a significantly higher (lower) fair value measurement.
|
•
|
CDOs and CLOs, RMBS, CMBS, other ABS 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.
|
•
|
Derivative equity options using volatility benchmarking. A significant increase (decrease) in volatility would result in a significantly higher (lower) fair value measurement.
|
|
Year Ended November 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Financial instruments owned:
|
|
|
|
|
|
||||||
Loans and other receivables
|
$
|
(3,856
|
)
|
|
$
|
22,088
|
|
|
$
|
(68,812
|
)
|
Financial instruments sold:
|
|
|
|
|
|
||||||
Loans
|
$
|
(46
|
)
|
|
$
|
—
|
|
|
$
|
9
|
|
Loan commitments
|
(739
|
)
|
|
230
|
|
|
5,509
|
|
|||
Long-term debt:
|
|
|
|
|
|
||||||
Changes in instrument specific credit risk (1)
|
$
|
38,064
|
|
|
$
|
(34,609
|
)
|
|
$
|
(10,745
|
)
|
Other changes in fair value (2)
|
48,748
|
|
|
47,291
|
|
|
30,995
|
|
|||
Short-term borrowings:
|
|
|
|
|
|
||||||
Other changes in fair value (2)
|
$
|
—
|
|
|
$
|
(681
|
)
|
|
$
|
—
|
|
(1)
|
Changes in instrument-specific credit risk related to structured notes are included in our Consolidated Statements of Comprehensive Income, net of tax.
|
(2)
|
Other changes in fair value are included in Principal transactions revenues in our Consolidated Statements of Earnings.
|
|
November 30,
|
||||||
|
2018
|
|
2017
|
||||
Financial instruments owned:
|
|
|
|
||||
Loans and other receivables (1)
|
$
|
806,798
|
|
|
$
|
752,076
|
|
Loans and other receivables on nonaccrual status and/or 90 days or greater past due (1) (2)
|
24,389
|
|
|
159,462
|
|
||
Long-term debt and short-term borrowings
|
114,669
|
|
|
32,839
|
|
(1)
|
Interest income is recognized separately from other changes in fair value and is included in Interest revenues in our Consolidated Statements of Earnings.
|
(2)
|
Amounts include loans and other receivables
90
days or greater past due by which contractual principal exceeds fair value of
$20.5 million
and
$38.7 million
at
November 30, 2018
and
2017
, respectively.
|
|
Carrying Value at November 30, 2018
|
|
Level 2
|
|
Level 3
|
|
Impairment Losses for the Year Ended November 30, 2018
|
||||||||
Exchange ownership interests and registrations (1)
|
$
|
2,663
|
|
|
$
|
2,663
|
|
|
$
|
—
|
|
|
$
|
9
|
|
|
Carrying Value at November 30, 2017
|
|
Level 2
|
|
Level 3
|
|
Impairment Losses for the Year Ended November 30, 2017
|
||||||||
Exchange ownership interests and registrations (1)
|
$
|
2,672
|
|
|
$
|
2,672
|
|
|
$
|
—
|
|
|
$
|
613
|
|
|
Carrying Value at
November 30, 2016
|
|
Level 2
|
|
Level 3
|
|
Impairment Losses for the Year Ended November 30, 2016
|
||||||||
Exchange ownership interests and registrations (1)
|
$
|
2,716
|
|
|
$
|
2,716
|
|
|
$
|
—
|
|
|
$
|
1,284
|
|
(1)
|
Impairment losses for exchange memberships, which represent ownership interests in market exchanges on which trading business is conducted, and registrations, were recognized in Other expenses. The fair value of these exchange memberships is based on observed quoted sales prices for each individual membership. (See
Note 10, Goodwill and Intangible Assets
.) The intangible assets are recognized for the years ended November 30, 2018, 2017 and 2016, primarily in the Fixed income reporting unit.
|
|
November 30, 2018 (1)
|
||||||||||||
|
Assets
|
|
Liabilities
|
||||||||||
|
Fair Value
|
|
Number of Contracts (2)
|
|
Fair Value
|
|
Number of Contracts (2)
|
||||||
Derivatives designated as accounting hedges:
|
|
|
|
|
|
|
|
||||||
Interest rate contracts:
|
|
|
|
|
|
|
|
||||||
Cleared OTC
|
$
|
—
|
|
|
—
|
|
|
$
|
29,647
|
|
|
1
|
|
Total derivatives designated as accounting hedges
|
—
|
|
|
|
|
29,647
|
|
|
|
||||
|
|
|
|
|
|
|
|
||||||
Derivatives not designated as accounting hedges:
|
|
|
|
|
|
|
|
||||||
Interest rate contracts:
|
|
|
|
|
|
|
|
||||||
Exchange-traded
|
924
|
|
|
32,159
|
|
|
513
|
|
|
66,095
|
|
||
Cleared OTC
|
422,670
|
|
|
2,095
|
|
|
411,833
|
|
|
2,394
|
|
||
Bilateral OTC
|
372,899
|
|
|
1,398
|
|
|
491,697
|
|
|
816
|
|
||
Foreign exchange contracts:
|
|
|
|
|
|
|
|
||||||
Exchange-traded
|
42
|
|
|
538
|
|
|
2
|
|
|
690
|
|
||
Cleared OTC
|
—
|
|
|
—
|
|
|
36
|
|
|
3
|
|
||
Bilateral OTC
|
311,228
|
|
|
9,548
|
|
|
314,951
|
|
|
9,909
|
|
||
Equity contracts:
|
|
|
|
|
|
|
|
||||||
Exchange-traded
|
1,202,927
|
|
|
2,104,684
|
|
|
2,061,137
|
|
|
1,779,836
|
|
||
Bilateral OTC
|
207,221
|
|
|
5,126
|
|
|
315,996
|
|
|
2,764
|
|
||
Commodity contracts:
|
|
|
|
|
|
|
|
||||||
Exchange-traded
|
213
|
|
|
3,927
|
|
|
270
|
|
|
4,012
|
|
||
Credit contracts:
|
|
|
|
|
|
|
|
||||||
Cleared OTC
|
11,204
|
|
|
7
|
|
|
1,556
|
|
|
14
|
|
||
Bilateral OTC
|
13,768
|
|
|
123
|
|
|
11,618
|
|
|
79
|
|
||
Total derivatives not designated as accounting hedges
|
2,543,096
|
|
|
|
|
3,609,609
|
|
|
|
||||
Total gross derivative assets/ liabilities:
|
|
|
|
|
|
|
|
||||||
Exchange-traded
|
1,204,106
|
|
|
|
|
2,061,922
|
|
|
|
||||
Cleared OTC
|
433,874
|
|
|
|
|
443,072
|
|
|
|
||||
Bilateral OTC
|
905,116
|
|
|
|
|
1,134,262
|
|
|
|
||||
Amounts offset in our Consolidated Statements of Financial Condition (3):
|
|
|
|
|
|
|
|
||||||
Exchange-traded
|
(1,190,951
|
)
|
|
|
|
(1,190,951
|
)
|
|
|
||||
Cleared OTC
|
(407,351
|
)
|
|
|
|
(418,779
|
)
|
|
|
||||
Bilateral OTC
|
(814,184
|
)
|
|
|
|
(901,875
|
)
|
|
|
||||
Net amounts per Consolidated Statements of Financial Condition (4)
|
$
|
130,610
|
|
|
|
|
$
|
1,127,651
|
|
|
|
(1)
|
Exchange-traded derivatives include derivatives executed on an organized exchange. Cleared OTC derivatives include derivatives executed bilaterally and subsequently novated to and cleared through central clearing counterparties. Bilateral OTC derivatives include derivatives executed and settled bilaterally without the use of an organized exchange or central clearing counterparty.
|
(2)
|
Number of exchange-traded contracts may include open futures contracts. The unsettled fair value of these futures contracts is included in Receivables from/Payables to brokers, dealers and clearing organizations in our Consolidated Statements of Financial Condition.
|
(3)
|
Amounts netted include both netting by counterparty and for cash collateral paid or received.
|
(4)
|
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 our Consolidated Statements of Financial Condition.
|
|
November 30, 2017 (1)
|
||||||||||||
|
Assets
|
|
Liabilities
|
||||||||||
|
Fair Value
|
|
Number of Contracts (2)
|
|
Fair Value
|
|
Number of Contracts (2)
|
||||||
Derivatives designated as accounting hedges:
|
|
|
|
|
|
|
|
||||||
Interest rate contracts:
|
|
|
|
|
|
|
|
||||||
Cleared OTC (3)
|
$
|
—
|
|
|
—
|
|
|
$
|
2,420
|
|
|
1
|
|
Total derivatives designated as accounting hedges
|
—
|
|
|
|
|
2,420
|
|
|
|
||||
|
|
|
|
|
|
|
|
||||||
Derivatives not designated as accounting hedges:
|
|
|
|
|
|
|
|
||||||
Interest rate contracts:
|
|
|
|
|
|
|
|
||||||
Exchange-traded
|
1,957
|
|
|
33,972
|
|
|
66
|
|
|
8,515
|
|
||
Cleared OTC (3)
|
1,334,878
|
|
|
2,711
|
|
|
1,263,994
|
|
|
2,948
|
|
||
Bilateral OTC
|
380,223
|
|
|
1,804
|
|
|
444,716
|
|
|
1,346
|
|
||
Foreign exchange contracts:
|
|
|
|
|
|
|
|
||||||
Exchange-traded
|
157
|
|
|
2,045
|
|
|
20
|
|
|
101
|
|
||
Bilateral OTC
|
303,091
|
|
|
4,338
|
|
|
286,582
|
|
|
4,361
|
|
||
Equity contracts:
|
|
|
|
|
|
|
|
||||||
Exchange-traded
|
1,288,295
|
|
|
2,654,555
|
|
|
1,375,832
|
|
|
2,090,935
|
|
||
Bilateral OTC
|
78,812
|
|
|
1,847
|
|
|
247,750
|
|
|
1,722
|
|
||
Commodity contracts:
|
|
|
|
|
|
|
|
||||||
Exchange-traded
|
209
|
|
|
3,723
|
|
|
18
|
|
|
3,819
|
|
||
Credit contracts:
|
|
|
|
|
|
|
|
||||||
Cleared OTC
|
5,506
|
|
|
18
|
|
|
8,613
|
|
|
27
|
|
||
Bilateral OTC
|
24,921
|
|
|
110
|
|
|
33,188
|
|
|
164
|
|
||
Total derivatives not designated as accounting hedges
|
3,418,049
|
|
|
|
|
3,660,779
|
|
|
|
||||
Total gross derivative assets/liabilities:
|
|
|
|
|
|
|
|
||||||
Exchange-traded
|
1,290,618
|
|
|
|
|
1,375,936
|
|
|
|
||||
Cleared OTC
|
1,340,384
|
|
|
|
|
1,275,027
|
|
|
|
||||
Bilateral OTC
|
787,047
|
|
|
|
|
1,012,236
|
|
|
|
||||
Amounts offset in our Consolidated Statements of Financial Condition (4):
|
|
|
|
|
|
|
|
||||||
Exchange-traded
|
(1,268,043
|
)
|
|
|
|
(1,268,043
|
)
|
|
|
||||
Cleared OTC (3)
|
(1,319,895
|
)
|
|
|
|
(1,274,900
|
)
|
|
|
||||
Bilateral OTC
|
(666,278
|
)
|
|
|
|
(883,306
|
)
|
|
|
||||
Net amounts per Consolidated Statements of Financial Condition (5)
|
$
|
163,833
|
|
|
|
|
$
|
236,950
|
|
|
|
(1)
|
Exchange-traded derivatives include derivatives executed on an organized exchange. Cleared OTC derivatives include derivatives executed bilaterally and subsequently novated to and cleared through central clearing counterparties. Bilateral OTC derivatives include derivatives executed and settled bilaterally without the use of an organized exchange or central clearing counterparty.
|
(2)
|
Number of exchange-traded contracts may include open futures contracts. The unsettled fair value of these futures contracts is included in Receivables from/Payables to brokers, dealers and clearing organizations in our 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 November 30, 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
.
|
(4)
|
Amounts netted include both netting by counterparty and for cash collateral paid or received.
|
(5)
|
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 our Consolidated Statements of Financial Condition.
|
|
Year Ended November 30,
|
||||||||||
Gains (Losses)
|
2018
|
|
2017
|
|
2016
|
||||||
Interest rate swaps
|
$
|
(25,539
|
)
|
|
$
|
(2,091
|
)
|
|
$
|
—
|
|
Long-term debt
|
27,363
|
|
|
8,124
|
|
|
—
|
|
|||
Total
|
$
|
1,824
|
|
|
$
|
6,033
|
|
|
$
|
—
|
|
|
Year Ended November 30,
|
||||||||||
Gains (Losses)
|
2018
|
|
2017
|
|
2016
|
||||||
Interest rate contracts
|
$
|
67,291
|
|
|
$
|
2,959
|
|
|
$
|
(34,319
|
)
|
Foreign exchange contracts
|
(304
|
)
|
|
4,735
|
|
|
18,122
|
|
|||
Equity contracts
|
(232,873
|
)
|
|
(303,953
|
)
|
|
(650,815
|
)
|
|||
Commodity contracts
|
1,112
|
|
|
(4,911
|
)
|
|
1,310
|
|
|||
Credit contracts
|
2,715
|
|
|
8,508
|
|
|
13,039
|
|
|||
Total
|
$
|
(162,059
|
)
|
|
$
|
(292,662
|
)
|
|
$
|
(652,663
|
)
|
|
OTC Derivative Assets (1) (2) (3)
|
||||||||||||||||||
|
0 – 12 Months
|
|
1 – 5 Years
|
|
Greater Than
5 Years
|
|
Cross-Maturity
Netting (4)
|
|
Total
|
||||||||||
Equity swaps and options
|
$
|
1,769
|
|
|
$
|
13,966
|
|
|
$
|
4,934
|
|
|
$
|
(1,889
|
)
|
|
$
|
18,780
|
|
Credit default swaps
|
66
|
|
|
12,060
|
|
|
3,984
|
|
|
(899
|
)
|
|
15,211
|
|
|||||
Total return swaps
|
95,130
|
|
|
19,519
|
|
|
—
|
|
|
(1,786
|
)
|
|
112,863
|
|
|||||
Foreign currency forwards, swaps and options
|
39,162
|
|
|
15,942
|
|
|
—
|
|
|
(12,528
|
)
|
|
42,576
|
|
|||||
Fixed income forwards
|
3,911
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,911
|
|
|||||
Interest rate swaps, options and forwards
|
27,851
|
|
|
93,303
|
|
|
103,165
|
|
|
(77,874
|
)
|
|
146,445
|
|
|||||
Total
|
$
|
167,889
|
|
|
$
|
154,790
|
|
|
$
|
112,083
|
|
|
$
|
(94,976
|
)
|
|
339,786
|
|
|
Cross product counterparty netting
|
|
|
|
|
|
|
|
|
(18,743
|
)
|
|||||||||
Total OTC derivative assets included in Financial instruments owned
|
|
|
|
|
|
|
|
|
$
|
321,043
|
|
(1)
|
At
November 30, 2018
, we held exchange-traded derivative assets and other credit agreements with a fair value of
$14.8 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 our Consolidated Statements of Financial Condition. At
November 30, 2018
, cash collateral received was
$205.3 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
|
||||||||||
Equity swaps and options
|
$
|
52,466
|
|
|
$
|
83,938
|
|
|
$
|
35,730
|
|
|
$
|
(1,889
|
)
|
|
$
|
170,245
|
|
Credit default swaps
|
164
|
|
|
1,197
|
|
|
1,548
|
|
|
(899
|
)
|
|
2,010
|
|
|||||
Total return swaps
|
64,296
|
|
|
11,549
|
|
|
—
|
|
|
(1,786
|
)
|
|
74,059
|
|
|||||
Foreign currency forwards, swaps and options
|
43,593
|
|
|
15,546
|
|
|
—
|
|
|
(12,528
|
)
|
|
46,611
|
|
|||||
Interest rate swaps, options and forwards
|
30,518
|
|
|
135,874
|
|
|
196,171
|
|
|
(77,874
|
)
|
|
284,689
|
|
|||||
Total
|
$
|
191,037
|
|
|
$
|
248,104
|
|
|
$
|
233,449
|
|
|
$
|
(94,976
|
)
|
|
577,614
|
|
|
Cross product counterparty netting
|
|
|
|
|
|
|
|
|
(18,743
|
)
|
|||||||||
Total OTC derivative liabilities included in Financial instruments sold, not yet purchased
|
|
|
|
|
|
|
|
|
$
|
558,871
|
|
(1)
|
At
November 30, 2018
, we held exchange-traded derivative liabilities and other credit agreements with a fair value of
$873.5 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 our Consolidated Statements of Financial Condition. At
November 30, 2018
, cash collateral pledged was
$304.7 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)
|
We utilize internal credit ratings determined by our Risk Management department. Credit ratings determined by Risk Management use methodologies that produce ratings generally consistent with those produced by external rating agencies.
|
|
November 30, 2018
|
||||||||||||||
|
External Credit Rating
|
|
|
|
|
||||||||||
|
Investment Grade
|
|
Non-investment Grade
|
|
Unrated
|
|
Total Notional
|
||||||||
Credit protection sold:
|
|
|
|
|
|
|
|
||||||||
Index credit default swaps
|
$
|
25.7
|
|
|
$
|
167.4
|
|
|
$
|
—
|
|
|
$
|
193.1
|
|
Single name credit default swaps
|
57.7
|
|
|
84.5
|
|
|
3.0
|
|
|
145.2
|
|
|
November 30, 2017
|
||||||||||
|
External Credit Rating
|
|
|
||||||||
|
Investment Grade
|
|
Non-investment Grade
|
|
Total Notional
|
||||||
Credit protection sold:
|
|
|
|
|
|
||||||
Index credit default swaps
|
$
|
3.0
|
|
|
$
|
46.0
|
|
|
$
|
49.0
|
|
Single name credit default swaps
|
129.1
|
|
|
89.1
|
|
|
218.2
|
|
|
November 30,
|
||||||
|
2018
|
|
2017
|
||||
Derivative instrument liabilities with credit-risk-related contingent features
|
$
|
93.5
|
|
|
$
|
95.1
|
|
Collateral posted
|
(61.5
|
)
|
|
(86.4
|
)
|
||
Collateral received
|
91.5
|
|
|
5.6
|
|
||
Return of and additional collateral required in the event of a credit rating downgrade below investment grade (1)
|
123.3
|
|
|
14.3
|
|
(1)
|
These potential outflows include initial margin received from counterparties at the execution of the derivative contract. The initial margin will be returned if counterparties elect to terminate the contract after a downgrade.
|
|
November 30, 2018
|
||||||||||
|
Securities Lending Arrangements
|
|
Repurchase Agreements
|
|
Total
|
||||||
Collateral Pledged:
|
|
|
|
|
|
||||||
Corporate equity securities
|
$
|
1,505,218
|
|
|
$
|
487,124
|
|
|
$
|
1,992,342
|
|
Corporate debt securities
|
333,221
|
|
|
1,853,309
|
|
|
2,186,530
|
|
|||
Mortgage- and asset-backed securities
|
249
|
|
|
2,820,543
|
|
|
2,820,792
|
|
|||
U.S. government and federal agency securities
|
—
|
|
|
8,181,947
|
|
|
8,181,947
|
|
|||
Municipal securities
|
—
|
|
|
604,274
|
|
|
604,274
|
|
|||
Sovereign obligations
|
—
|
|
|
2,945,521
|
|
|
2,945,521
|
|
|||
Loans and other receivables
|
—
|
|
|
300,768
|
|
|
300,768
|
|
|||
Total
|
$
|
1,838,688
|
|
|
$
|
17,193,486
|
|
|
$
|
19,032,174
|
|
|
November 30, 2017
|
||||||||||||||
|
Securities Lending Arrangements
|
|
Repurchase Agreements
|
|
Obligation To Return Securities Received As Collateral
|
|
Total
|
||||||||
Collateral Pledged:
|
|
|
|
|
|
|
|
||||||||
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
|
|
|
103
|
|
|
2,023,633
|
|
||||
Loans and other receivables
|
—
|
|
|
454,941
|
|
|
—
|
|
|
454,941
|
|
||||
Total
|
$
|
2,843,911
|
|
|
$
|
19,829,249
|
|
|
$
|
103
|
|
|
$
|
22,673,263
|
|
|
November 30, 2018
|
||||||||||||||||||
|
Overnight and Continuous
|
|
Up to 30 Days
|
|
31-90 Days
|
|
Greater than 90 Days
|
|
Total
|
||||||||||
Securities lending arrangements
|
$
|
807,347
|
|
|
$
|
—
|
|
|
$
|
560,417
|
|
|
$
|
470,924
|
|
|
$
|
1,838,688
|
|
Repurchase agreements
|
7,849,052
|
|
|
1,915,325
|
|
|
6,042,951
|
|
|
1,386,158
|
|
|
17,193,486
|
|
|||||
Total
|
$
|
8,656,399
|
|
|
$
|
1,915,325
|
|
|
$
|
6,603,368
|
|
|
$
|
1,857,082
|
|
|
$
|
19,032,174
|
|
|
November 30, 2017
|
||||||||||||||||||
|
Overnight and Continuous
|
|
Up to 30 Days
|
|
31-90 Days
|
|
Greater than 90 Days
|
|
Total
|
||||||||||
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
|
|
|||||
Obligation to return securities received as collateral
|
103
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
103
|
|
|||||
Total
|
$
|
12,457,517
|
|
|
$
|
4,058,228
|
|
|
$
|
3,953,435
|
|
|
$
|
2,204,083
|
|
|
$
|
22,673,263
|
|
|
November 30, 2018
|
||||||||||||||||||||||
|
Gross Amounts
|
|
Netting in Consolidated Statement of Financial Condition
|
|
Net Amounts in Consolidated Statement of Financial Condition
|
|
Additional Amounts Available for Setoff (1)
|
|
Available Collateral (2)
|
|
Net Amount (3)
|
||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Securities borrowing arrangements
|
$
|
6,538,212
|
|
|
$
|
—
|
|
|
$
|
6,538,212
|
|
|
$
|
(468,778
|
)
|
|
$
|
(1,193,986
|
)
|
|
$
|
4,875,448
|
|
Reverse repurchase agreements
|
11,336,175
|
|
|
(8,550,417
|
)
|
|
2,785,758
|
|
|
(609,225
|
)
|
|
(2,126,730
|
)
|
|
49,803
|
|
||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Securities lending arrangements
|
$
|
1,838,688
|
|
|
$
|
—
|
|
|
$
|
1,838,688
|
|
|
$
|
(468,778
|
)
|
|
$
|
(1,343,704
|
)
|
|
$
|
26,206
|
|
Repurchase agreements
|
17,193,486
|
|
|
(8,550,417
|
)
|
|
8,643,069
|
|
|
(609,225
|
)
|
|
(7,070,967
|
)
|
|
962,877
|
|
|
November 30, 2017
|
||||||||||||||||||||||
|
Gross Amounts
|
|
Netting in Consolidated Statement of Financial Condition
|
|
Net Amounts in Consolidated Statement of Financial Condition
|
|
Additional Amounts Available for Setoff (1)
|
|
Available Collateral (2)
|
|
Net Amount (4)
|
||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
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
|
|
||||||
Securities received as collateral
|
103
|
|
|
—
|
|
|
103
|
|
|
—
|
|
|
(103
|
)
|
|
—
|
|
||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
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
|
|
||||||
Obligation to return securities received as collateral
|
103
|
|
|
—
|
|
|
103
|
|
|
—
|
|
|
(103
|
)
|
|
—
|
|
(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 counterparty in the event of a counterparty’s default, but which are not netted in the balance sheet because other netting provisions of U.S. GAAP are not met.
|
(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)
|
Amounts include
$4,825.7 million
of securities borrowing arrangements, for which we have received securities collateral of
$4,711.7 million
, and
$931.7 million
of repurchase agreements, for which we have pledged securities collateral of
$963.6 million
, which are subject to master netting agreements but we have not determined the agreements to be legally enforceable.
|
(4)
|
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.
|
|
Year Ended November 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Transferred assets
|
$
|
7,159.3
|
|
|
$
|
4,552.9
|
|
|
$
|
5,786.0
|
|
Proceeds on new securitizations
|
7,165.3
|
|
|
4,594.5
|
|
|
5,809.0
|
|
|||
Cash flows received on retained interests
|
48.5
|
|
|
28.7
|
|
|
28.2
|
|
|
November 30,
|
||||||||||||||
|
2018
|
|
2017
|
||||||||||||
Securitization Type
|
Total Assets
|
|
Retained Interests
|
|
Total Assets
|
|
Retained Interests
|
||||||||
U.S. government agency RMBS
|
$
|
13,633.5
|
|
|
$
|
365.3
|
|
|
$
|
6,383.5
|
|
|
$
|
28.2
|
|
U.S. government agency CMBS
|
2,027.6
|
|
|
185.6
|
|
|
2,075.7
|
|
|
81.4
|
|
||||
CLOs
|
3,512.0
|
|
|
20.9
|
|
|
3,957.8
|
|
|
20.3
|
|
||||
Consumer and other loans
|
604.1
|
|
|
48.9
|
|
|
247.6
|
|
|
47.8
|
|
•
|
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 sale agreements and revolving loan and note commitments; and
|
•
|
Loans to, investments in and fees from various investment vehicles.
|
|
November 30,
|
||||||||||||||
|
2018
|
|
2017
|
||||||||||||
|
Securitization Vehicles
|
|
Other
|
|
Securitization Vehicles
|
|
Other
|
||||||||
Cash
|
$
|
—
|
|
|
$
|
1.1
|
|
|
$
|
6.5
|
|
|
$
|
1.1
|
|
Financial instruments owned
|
—
|
|
|
0.4
|
|
|
37.6
|
|
|
0.4
|
|
||||
Securities purchased under agreements to resell (1)
|
883.1
|
|
|
—
|
|
|
729.3
|
|
|
—
|
|
||||
Fees, interest and other receivables
|
—
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
||||
Total assets
|
$
|
883.1
|
|
|
$
|
1.5
|
|
|
$
|
773.6
|
|
|
$
|
1.5
|
|
Other secured financings (2)
|
$
|
882.5
|
|
|
$
|
—
|
|
|
$
|
766.2
|
|
|
$
|
—
|
|
Other liabilities
|
0.6
|
|
|
0.2
|
|
|
5.9
|
|
|
0.2
|
|
||||
Total liabilities
|
$
|
883.1
|
|
|
$
|
0.2
|
|
|
$
|
772.1
|
|
|
$
|
0.2
|
|
(1)
|
Securities purchased under agreements to resell represent amounts due under collateralized transactions on related consolidated entities, which are eliminated in consolidation.
|
(2)
|
Approximately
$1.0 million
and
$44.1 million
of the secured financing represent amounts held by us in inventory and are eliminated in consolidation at
November 30, 2018
and
2017
, respectively.
|
|
November 30, 2018
|
||||||||||||||
|
Carrying Amount
|
|
Maximum Exposure to Loss
|
|
VIE Assets
|
||||||||||
|
Assets
|
|
Liabilities
|
|
|
||||||||||
CLOs
|
$
|
42.1
|
|
|
$
|
—
|
|
|
$
|
568.3
|
|
|
$
|
3,088.9
|
|
Consumer loan and other asset-backed vehicles
|
462.1
|
|
|
—
|
|
|
807.1
|
|
|
3,273.1
|
|
||||
Related party private equity vehicles
|
35.5
|
|
|
—
|
|
|
53.5
|
|
|
108.3
|
|
||||
Other investment vehicles
|
95.0
|
|
|
—
|
|
|
99.1
|
|
|
3,558.1
|
|
||||
Total
|
$
|
634.7
|
|
|
$
|
—
|
|
|
$
|
1,528.0
|
|
|
$
|
10,028.4
|
|
|
November 30, 2017
|
||||||||||||||
|
Carrying Amount
|
|
Maximum Exposure to Loss
|
|
VIE Assets
|
||||||||||
|
Assets
|
|
Liabilities
|
|
|
||||||||||
CLOs
|
$
|
163.5
|
|
|
$
|
8.9
|
|
|
$
|
1,020.5
|
|
|
$
|
5,210.4
|
|
Consumer loan and other asset-backed vehicles
|
254.8
|
|
|
—
|
|
|
759.8
|
|
|
2,322.7
|
|
||||
Related party private equity vehicles
|
23.7
|
|
|
—
|
|
|
45.4
|
|
|
75.0
|
|
||||
Other investment vehicles
|
48.0
|
|
|
—
|
|
|
48.7
|
|
|
2,938.4
|
|
||||
Total
|
$
|
490.0
|
|
|
$
|
8.9
|
|
|
$
|
1,874.4
|
|
|
$
|
10,546.5
|
|
•
|
Forward sale agreements whereby we commit 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.
|
|
Year Ended November 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Interest income
|
$
|
1.2
|
|
|
$
|
2.9
|
|
|
$
|
0.1
|
|
Unfunded commitment fees
|
1.2
|
|
|
1.0
|
|
|
1.2
|
|
|
November 30,
|
||||||
|
2018
|
|
2017
|
||||
Total assets
|
$
|
7,779.4
|
|
|
$
|
8,164.9
|
|
Total liabilities
|
6,389.8
|
|
|
6,892.6
|
|
||
Total equity
|
1,389.6
|
|
|
1,272.3
|
|
||
Our total equity balance
|
694.8
|
|
|
636.2
|
|
|
Year Ended November 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Net earnings (loss)
|
$
|
197.2
|
|
|
$
|
181.7
|
|
|
$
|
(19.6
|
)
|
|
Year Ended November 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Origination and syndication fee revenues (1)
|
$
|
377.7
|
|
|
$
|
327.9
|
|
|
$
|
112.6
|
|
Origination fee expenses (1)
|
56.6
|
|
|
2.4
|
|
|
0.5
|
|
|||
CLO placement fee revenues (2)
|
3.7
|
|
|
6.1
|
|
|
2.6
|
|
|||
Derivative gains (losses) (3)
|
(1.6
|
)
|
|
(1.1
|
)
|
|
0.5
|
|
|||
Underwriting fees (4)
|
0.3
|
|
|
—
|
|
|
—
|
|
|||
Service fees (5)
|
61.7
|
|
|
50.7
|
|
|
46.1
|
|
(1)
|
We engage in debt capital markets transactions with Jefferies Finance related to the originations and syndications of loans by Jefferies Finance. In connection with such services, we earned fees, which are recognized in Investment banking revenues in our Consolidated Statements of Earnings. In addition, we paid fees to Jefferies Finance in respect of certain loans originated by Jefferies Finance, which are recognized as Business development expenses in our Consolidated Statements of Earnings.
|
(2)
|
We act as a placement agent for CLOs managed by Jefferies Finance, for which we recognized fees, which are included in Investment banking revenues in our Consolidated Statements of Earnings. At
November 30, 2018
and
2017
, we held securities issued by CLOs managed by Jefferies Finance, which are included in Financial instruments owned.
|
(3)
|
We have entered into participation agreements and derivative contracts with Jefferies Finance based upon certain securities issued by the CLO and we have recognized gains (losses) relating to the derivative contracts.
|
(4)
|
We acted as underwriter in connection with term loans issued by Jefferies Finance.
|
(5)
|
Under a service agreement, we charge Jefferies Finance for services provided.
|
|
November 30, 2018
|
||
Total assets
|
$
|
3,875.8
|
|
Total liabilities
|
3,331.5
|
|
|
Total equity
|
544.3
|
|
|
Our total equity balance
|
245.2
|
|
|
Two Months Ended November 30, 2018
|
||
Net earnings
|
$
|
44.4
|
|
|
Year Ended November 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Net gains (losses) from our investments in JCP Fund V
|
$
|
12.1
|
|
|
$
|
(10.7
|
)
|
|
$
|
(1.1
|
)
|
|
September 30,
|
||||||
|
2018 (1)
|
|
2017 (1)
|
||||
Total assets
|
$
|
90,731
|
|
|
$
|
55,788
|
|
Total liabilities
|
76
|
|
|
96
|
|
||
Total partners’ capital
|
90,655
|
|
|
55,692
|
|
|
Nine Months Ended September 30, 2018 (1)
|
|
Three Months Ended December 31, 2017 (1)
|
|
Nine Months Ended September 30, 2017 (1)
|
|
Three Months Ended December 31, 2016 (1)
|
|
Nine Months Ended September 30, 2016 (1)
|
|
Three Months Ended December 31, 2015 (1)
|
||||||||||||
Net increase (decrease) in net assets resulting from operations
|
$
|
15,252
|
|
|
$
|
19,712
|
|
|
$
|
(24,630
|
)
|
|
$
|
(2,294
|
)
|
|
$
|
6,159
|
|
|
$
|
(7,886
|
)
|
(1)
|
Financial information for JCP Fund V in our financial position and results of operations at
November 30, 2018
and
2017
and for the years ended
November 30,
2018
,
2017
and
2016
is included based on the presented periods.
|
|
November 30,
|
||||||
|
2018
|
|
2017
|
||||
Our investment in Epic Gas (1)
|
$
|
21.7
|
|
|
$
|
22.2
|
|
(1)
|
Included in Loans to and investments in related parties in our Consolidated Statements of Financial Condition.
|
|
Nine Months Ended September 30, 2018 (1)
|
|
Three Months Ended December 31, 2017 (1)
|
|
Nine Months Ended September 30, 2017 (1)
|
|
Three Months Ended December 31, 2016 (1)
|
|
Nine Months Ended September 30, 2016 (1)
|
|
Three Months Ended December 31, 2015 (1)
|
||||||||||||
Net losses
|
$
|
(3.7
|
)
|
|
$
|
(16.4
|
)
|
|
$
|
(14.5
|
)
|
|
$
|
(15.9
|
)
|
|
$
|
(7.4
|
)
|
|
$
|
(11.4
|
)
|
(1)
|
Financial information for Epic Gas in our financial position and results of operations at
November 30, 2018
and
2017
and for the years ended
November 30,
2018
,
2017
and
2016
is included based on the presented periods.
|
|
November 30,
|
||||||
|
2018
|
|
2017
|
||||
Capital Markets (1)
|
$
|
1,638,778
|
|
|
$
|
1,644,089
|
|
Asset Management (1)
|
3,392
|
|
|
3,000
|
|
||
Total goodwill
|
$
|
1,642,170
|
|
|
$
|
1,647,089
|
|
(1)
|
Accumulated goodwill impairments related to the Capital Markets business segment were
$51.9 million
at both December 1,
2018
and
2017
, and goodwill prior to these impairments was
$1,690.7 million
and
$1,696.0 million
at December 1,
2018
and
2017
, respectively. Accumulated goodwill impairments related to the Asset Management business segment were
$2.1 million
at both December 1,
2018
and
2017
, and goodwill prior to these impairments was
$5.5 million
and
$5.1 million
at December 1,
2018
and
2017
, respectively.
|
|
Year Ended November 30,
|
||||||
|
2018
|
|
2017
|
||||
Balance, at beginning of period
|
$
|
1,647,089
|
|
|
$
|
1,640,653
|
|
Translation adjustments
|
(5,319
|
)
|
|
6,436
|
|
||
Goodwill acquired during the period (1)
|
400
|
|
|
—
|
|
||
Balance, at end of period
|
$
|
1,642,170
|
|
|
$
|
1,647,089
|
|
(1)
|
Goodwill was acquired in connection with our purchase of LIML and relates to our Asset Management business segment.
|
|
November 30, 2018
|
|
Weighted average remaining lives (years)
|
||||||||||||||||||||||
|
Gross cost
|
|
Disposals (1)
|
|
Impairment losses
|
|
Accumulated amortization
|
|
Intangible Assets Acquired (2)
|
|
Net carrying amount
|
|
|||||||||||||
Customer relationships
|
$
|
125,574
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(58,892
|
)
|
|
$
|
—
|
|
|
$
|
66,682
|
|
|
10.6
|
Trade name
|
128,348
|
|
|
—
|
|
|
—
|
|
|
(21,086
|
)
|
|
—
|
|
|
107,262
|
|
|
29.3
|
||||||
Exchange and clearing organization membership interests and registrations
|
8,450
|
|
|
(93
|
)
|
|
(9
|
)
|
|
—
|
|
|
176
|
|
|
8,524
|
|
|
N/A
|
||||||
Total
|
$
|
262,372
|
|
|
$
|
(93
|
)
|
|
$
|
(9
|
)
|
|
$
|
(79,978
|
)
|
|
$
|
176
|
|
|
$
|
182,468
|
|
|
|
(1)
|
Activity is primarily related to the disposal of certain exchange membership interests in the Capital Markets business segment due to the closing of a branch location in Dubai.
|
(2)
|
Intangible assets were acquired in connection with our purchase of LIML and relates to our Asset Management business segment.
|
|
November 30, 2017
|
|
Weighted average remaining lives (years)
|
||||||||||||||
|
Gross cost
|
|
Impairment losses
|
|
Accumulated amortization
|
|
Net carrying amount
|
|
|||||||||
Customer relationships
|
$
|
126,412
|
|
|
$
|
—
|
|
|
$
|
(50,983
|
)
|
|
$
|
75,429
|
|
|
11.3
|
Trade name
|
129,370
|
|
|
—
|
|
|
(17,557
|
)
|
|
111,813
|
|
|
30.3
|
||||
Exchange and clearing organization membership interests and registrations
|
9,164
|
|
|
(613
|
)
|
|
—
|
|
|
8,551
|
|
|
N/A
|
||||
Total
|
$
|
264,946
|
|
|
$
|
(613
|
)
|
|
$
|
(68,540
|
)
|
|
$
|
195,793
|
|
|
|
Year ending November 30, 2019
|
$
|
12,198
|
|
Year ending November 30, 2020
|
12,198
|
|
|
Year ending November 30, 2021
|
12,198
|
|
|
Year ending November 30, 2022
|
9,256
|
|
|
Year ending November 30, 2023
|
8,268
|
|
|
November 30,
|
||||||
|
2018
|
|
2017
|
||||
Bank loans (1)
|
$
|
330,942
|
|
|
$
|
304,651
|
|
Floating rate puttable notes
|
56,550
|
|
|
108,240
|
|
||
Equity-linked notes
|
—
|
|
|
23,324
|
|
||
Total short-term borrowings
|
$
|
387,492
|
|
|
$
|
436,215
|
|
(1)
|
Bank loans include loans entered into, pursuant to a Master Loan Agreement, with the Bank of New York Mellon.
|
|
|
|
Effective Interest Rate
|
|
November 30,
|
||||||
|
Maturity
|
|
|
2018
|
|
2017
|
|||||
Unsecured long-term debt
|
|
|
|
|
|
|
|
||||
5.125% Senior Notes
|
April 13, 2018
|
|
—%
|
|
$
|
—
|
|
|
$
|
682,338
|
|
8.500% Senior Notes
|
July 15, 2019
|
|
3.99%
|
|
699,659
|
|
|
728,872
|
|
||
2.375% Euro Medium Term Notes
|
May 20, 2020
|
|
2.42%
|
|
564,702
|
|
|
593,334
|
|
||
6.875% Senior Notes
|
April 15, 2021
|
|
4.40%
|
|
791,814
|
|
|
808,157
|
|
||
2.250% Euro Medium Term Notes
|
July 13, 2022
|
|
4.08%
|
|
4,243
|
|
|
4,389
|
|
||
5.125% Senior Notes
|
January 20, 2023
|
|
4.55%
|
|
612,928
|
|
|
615,703
|
|
||
4.850% Senior Notes (1)
|
January 15, 2027
|
|
4.93%
|
|
709,484
|
|
|
736,357
|
|
||
6.450% Senior Debentures
|
June 8, 2027
|
|
5.46%
|
|
373,669
|
|
|
375,794
|
|
||
3.875% Convertible Senior Debentures (2)
|
November 1, 2029
|
|
—%
|
|
—
|
|
|
324,779
|
|
||
4.150% Senior Notes
|
January 23, 2030
|
|
4.26%
|
|
987,788
|
|
|
—
|
|
||
6.250% Senior Debentures
|
January 15, 2036
|
|
6.03%
|
|
511,662
|
|
|
512,040
|
|
||
6.500% Senior Notes
|
January 20, 2043
|
|
6.09%
|
|
420,625
|
|
|
420,990
|
|
||
Structured notes (3) (4)
|
Various
|
|
Various
|
|
686,170
|
|
|
614,091
|
|
||
Total unsecured long-term debt
|
|
|
|
|
6,362,744
|
|
|
6,416,844
|
|
||
Secured long-term debt
|
|
|
|
|
|
|
|
||||
Revolving Credit Facility
|
|
|
|
|
183,539
|
|
|
—
|
|
||
Total long-term debt
|
|
|
|
|
$
|
6,546,283
|
|
|
$
|
6,416,844
|
|
(1)
|
These senior notes with a principal amount of
$750.0 million
were issued on January 17, 2017. The carrying value includes
gain
s of
$27.4 million
and
$8.1 million
during
2018
and
2017
, respectively, associated with an interest rate swap based on its designation as a fair value hedge. See
Note 2, Summary of Significant Accounting Policies
, and
Note 5, Derivative Financial Instruments
, for further information.
|
(2)
|
The change in fair value of the conversion feature embedded in the debentures, which is included in Principal transactions revenues in our Consolidated Statements of Earnings, was not material for the years ended November 30,
2017
and
2016
.
|
(3)
|
The carrying value includes
$686.2 million
and
$607.0 million
of notes carried at fair value at
November 30, 2018
and
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 other comprehensive income and changes in fair value resulting from non-credit components recognized in Principal transactions revenues. A weighted average coupon rate is not meaningful, as all of the structured notes are carried at fair value.
|
(4)
|
Of the
$686.2 million
of structured notes at
November 30, 2018
,
$5.7 million
matures in
2019
,
$27.3 million
matures in
2022
, and the remaining
$653.2 million
matures in
2024 or thereafter
.
|
|
Year Ended
November 30, 2018 |
||
Revenues from contracts with customers:
|
|
||
Commissions and other fees
|
$
|
635,190
|
|
Investment banking
|
1,910,203
|
|
|
Asset management fees
|
21,214
|
|
|
Other
|
28,280
|
|
|
Total revenue from contracts with customers
|
2,594,887
|
|
|
Other sources of revenue:
|
|
||
Principal transactions
|
524,296
|
|
|
Interest
|
1,207,095
|
|
|
Other
|
103,354
|
|
|
Total revenues
|
$
|
4,429,632
|
|
|
Reportable Segment
|
||||||||||
|
Year Ended November 30, 2018
|
||||||||||
|
Capital Markets
|
|
Asset Management
|
|
Total
|
||||||
Major business activity:
|
|
|
|
|
|
||||||
Equities (1)
|
$
|
649,631
|
|
|
$
|
—
|
|
|
$
|
649,631
|
|
Fixed income (1)
|
13,839
|
|
|
—
|
|
|
13,839
|
|
|||
Investment banking - Capital markets
|
1,090,161
|
|
|
—
|
|
|
1,090,161
|
|
|||
Investment banking - Advisory
|
820,042
|
|
|
—
|
|
|
820,042
|
|
|||
Asset management
|
—
|
|
|
21,214
|
|
|
21,214
|
|
|||
Total
|
$
|
2,573,673
|
|
|
$
|
21,214
|
|
|
$
|
2,594,887
|
|
Primary geographic region:
|
|
|
|
|
|
||||||
Americas
|
$
|
2,186,955
|
|
|
$
|
20,871
|
|
|
$
|
2,207,826
|
|
Europe
|
304,027
|
|
|
343
|
|
|
304,370
|
|
|||
Asia
|
82,691
|
|
|
—
|
|
|
82,691
|
|
|||
Total
|
$
|
2,573,673
|
|
|
$
|
21,214
|
|
|
$
|
2,594,887
|
|
(1)
|
Revenues from contracts with customers associated with the equities and fixed income businesses primarily represent commissions and other fee revenue.
|
|
Year Ended November 30,
|
||||||
|
2018
|
|
2017
|
||||
Change in projected benefit obligation:
|
|
|
|
||||
Projected benefit obligation, beginning of period
|
$
|
60,559
|
|
|
$
|
58,731
|
|
Service cost
|
400
|
|
|
450
|
|
||
Interest cost
|
2,129
|
|
|
2,232
|
|
||
Actuarial (gains)/losses
|
(3,777
|
)
|
|
2,327
|
|
||
Administrative expenses paid
|
(502
|
)
|
|
(395
|
)
|
||
Benefits paid
|
(952
|
)
|
|
(2,786
|
)
|
||
Settlements
|
(3,133
|
)
|
|
—
|
|
||
Projected benefit obligation, end of period
|
$
|
54,724
|
|
|
$
|
60,559
|
|
Change in plan assets:
|
|
|
|
||||
Fair value of assets, beginning of period
|
$
|
52,949
|
|
|
$
|
49,992
|
|
Benefits paid
|
(952
|
)
|
|
(2,786
|
)
|
||
Administrative expenses paid
|
(502
|
)
|
|
(395
|
)
|
||
Actual return on plan assets
|
(1,186
|
)
|
|
5,138
|
|
||
Contributions
|
1,000
|
|
|
1,000
|
|
||
Settlements
|
(3,133
|
)
|
|
—
|
|
||
Fair value of assets, end of period
|
$
|
48,176
|
|
|
$
|
52,949
|
|
Funded status at end of period
|
$
|
(6,548
|
)
|
|
$
|
(7,610
|
)
|
|
November 30,
|
||||||
|
2018
|
|
2017
|
||||
Consolidated statements of financial condition:
|
|
|
|
||||
Accrued expenses and other liabilities
|
$
|
6,548
|
|
|
$
|
7,610
|
|
Accumulated other comprehensive income, before taxes:
|
|
|
|
||||
Net losses
|
$
|
(6,382
|
)
|
|
$
|
(6,092
|
)
|
|
Year Ended November 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Components of net periodic pension cost:
|
|
|
|
|
|
||||||
Service cost
|
$
|
400
|
|
|
$
|
450
|
|
|
$
|
400
|
|
Interest cost on projected benefit obligation
|
2,129
|
|
|
2,232
|
|
|
2,311
|
|
|||
Expected return on plan assets
|
(3,247
|
)
|
|
(3,021
|
)
|
|
(2,917
|
)
|
|||
Net amortization
|
—
|
|
|
19
|
|
|
—
|
|
|||
Settlement losses
|
365
|
|
|
—
|
|
|
—
|
|
|||
Net periodic pension cost
|
$
|
(353
|
)
|
|
$
|
(320
|
)
|
|
$
|
(206
|
)
|
|
Year Ended November 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Amounts recognized in Other comprehensive income:
|
|
|
|
|
|
||||||
Net losses arising during the period
|
$
|
655
|
|
|
$
|
210
|
|
|
$
|
646
|
|
Amortization of net loss
|
—
|
|
|
(19
|
)
|
|
—
|
|
|||
Settlements during the period
|
365
|
|
|
—
|
|
|
—
|
|
|||
Total losses recognized in Other comprehensive income
|
$
|
1,020
|
|
|
$
|
191
|
|
|
$
|
646
|
|
Net losses/(gains) recognized in net periodic benefit cost and Other comprehensive income
|
$
|
667
|
|
|
$
|
(129
|
)
|
|
$
|
440
|
|
|
Year Ended November 30,
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
Discount rate used to determine benefit obligation
|
4.30
|
%
|
|
3.60
|
%
|
|
3.90
|
%
|
Weighted average assumptions used to determine net pension cost:
|
|
|
|
|
|
|||
Discount rate
|
3.60
|
%
|
|
3.90
|
%
|
|
4.10
|
%
|
Expected long-term rate of return on plan assets
|
6.25
|
%
|
|
6.25
|
%
|
|
6.25
|
%
|
2019
|
$
|
2,364
|
|
2020
|
2,152
|
|
|
2021
|
2,015
|
|
|
2022
|
2,892
|
|
|
2023
|
5,147
|
|
|
2024 through 2028
|
22,864
|
|
|
Year Ended November 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Components of compensation cost:
|
|
|
|
|
|
||||||
Restricted cash awards
|
$
|
274.4
|
|
|
$
|
251.6
|
|
|
$
|
263.7
|
|
Restricted stock and RSUs (1)
|
27.6
|
|
|
26.6
|
|
|
23.5
|
|
|||
Profit sharing plan
|
6.5
|
|
|
6.0
|
|
|
6.0
|
|
|||
Total compensation cost
|
$
|
308.5
|
|
|
$
|
284.2
|
|
|
$
|
293.2
|
|
(1)
|
Total compensation cost associated with restricted stock and restricted stock units (“RSUs”) includes the amortization of sign-on, retention and senior executive awards, less forfeitures and clawbacks. Additionally, we recognize compensation cost related to the discount provided to employees in electing to defer compensation under the Deferred Compensation Plan. This compensation cost was approximately
$346,000
,
$227,000
and
$150,000
for the years ended
November 30, 2018
,
2017
and
2016
, respectively.
|
|
Remaining Unamortized Amounts
|
|
Weighted Average Vesting Period
(in Years)
|
||
Non-vested share-based awards
|
$
|
63.2
|
|
|
3
|
Restricted cash awards
|
395.0
|
|
|
2
|
|
Total
|
$
|
458.2
|
|
|
|
|
Year Ended November 30,
|
|
|
|
|
||||||||||||||
|
2018
|
|
2019
|
|
2020
|
|
Thereafter
|
|
Total
|
||||||||||
Restricted cash awards
|
$
|
58.2
|
|
|
$
|
47.6
|
|
|
$
|
57.0
|
|
|
$
|
125.2
|
|
|
$
|
288.0
|
|
|
Year Ended November 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Income tax expense
|
$
|
250,650
|
|
|
$
|
147,340
|
|
|
$
|
14,566
|
|
Stockholders’ equity, compensation expense for tax purposes less than amounts recognized for financial reporting purposes
|
—
|
|
|
—
|
|
|
4,186
|
|
|
Year Ended November 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Current:
|
|
|
|
|
|
||||||
U.S. Federal
|
$
|
106,761
|
|
|
$
|
147,065
|
|
|
$
|
27,473
|
|
U.S. state and local
|
7,485
|
|
|
30,611
|
|
|
6,196
|
|
|||
Foreign
|
10,139
|
|
|
12,910
|
|
|
(5,090
|
)
|
|||
Total current
|
124,385
|
|
|
190,586
|
|
|
28,579
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
U.S. Federal
|
131,233
|
|
|
(53,157
|
)
|
|
(11,249
|
)
|
|||
U.S. state and local
|
975
|
|
|
1,760
|
|
|
(4,819
|
)
|
|||
Foreign
|
(5,943
|
)
|
|
8,151
|
|
|
2,055
|
|
|||
Total deferred
|
126,265
|
|
|
(43,246
|
)
|
|
(14,013
|
)
|
|||
Total income tax expense
|
$
|
250,650
|
|
|
$
|
147,340
|
|
|
$
|
14,566
|
|
|
Year Ended November 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
U.S.
|
$
|
370,600
|
|
|
$
|
403,445
|
|
|
$
|
34,178
|
|
Non-U.S. (1)
|
39,067
|
|
|
101,479
|
|
|
(4,206
|
)
|
|||
Income before income tax expense
|
$
|
409,667
|
|
|
$
|
504,924
|
|
|
$
|
29,972
|
|
(1)
|
For purposes of this table, non-U.S. income is defined as income generated from operations located outside the U.S.
|
|
Year Ended November 30,
|
|||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
|||||||||
Computed expected income taxes
|
$
|
90,945
|
|
|
22.2
|
%
|
(1)
|
$
|
176,724
|
|
|
35.0
|
%
|
|
$
|
10,490
|
|
|
35.0
|
%
|
Increase (decrease) in income taxes resulting from:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
State and city income taxes, net of Federal income tax benefit
|
20,419
|
|
|
5.0
|
|
|
23,898
|
|
|
4.7
|
|
|
1,832
|
|
|
6.1
|
|
|||
International operations (including foreign rate differential)
|
2,258
|
|
|
0.6
|
|
|
(11,577
|
)
|
|
(2.3
|
)
|
|
(3,404
|
)
|
|
(11.4
|
)
|
|||
Tax exempt income
|
(2,202
|
)
|
|
(0.5
|
)
|
|
(3,850
|
)
|
|
(0.8
|
)
|
|
(4,640
|
)
|
|
(15.5
|
)
|
|||
Foreign tax credits, net
|
(8,006
|
)
|
|
(2.0
|
)
|
|
(32,974
|
)
|
|
(6.5
|
)
|
|
—
|
|
|
—
|
|
|||
Meals and entertainment
|
4,528
|
|
|
1.1
|
|
|
4,129
|
|
|
0.8
|
|
|
4,640
|
|
|
15.5
|
|
|||
Excess stock detriment
|
—
|
|
|
—
|
|
|
406
|
|
|
0.1
|
|
|
9,755
|
|
|
32.6
|
|
|||
Federal benefits related to prior year tax filings
|
—
|
|
|
—
|
|
|
(3,786
|
)
|
|
(0.8
|
)
|
|
(2,928
|
)
|
|
(9.8
|
)
|
|||
Change in unrecognized tax benefits related to prior years
|
(18,497
|
)
|
|
(4.5
|
)
|
|
(2,953
|
)
|
|
(0.6
|
)
|
|
(1,280
|
)
|
|
(4.3
|
)
|
|||
Deferred tax asset remeasurement related to the Tax Act
|
112,733
|
|
|
27.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Transition tax on foreign earnings related to the Tax Act
|
52,417
|
|
|
12.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Other, net
|
(3,945
|
)
|
|
(1.0
|
)
|
|
(2,677
|
)
|
|
(0.4
|
)
|
|
101
|
|
|
0.4
|
|
|||
Total income tax expense
|
$
|
250,650
|
|
|
61.2
|
%
|
|
$
|
147,340
|
|
|
29.2
|
%
|
|
$
|
14,566
|
|
|
48.6
|
%
|
(1)
|
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Act which reduced the U.S. federal corporate tax rate from
35%
to
21%
, as well as other changes. The statutory U.S. federal corporate tax rate for companies with a fiscal year end of November 30, 2018 is a blended rate of
22.2%
, which will be reduced to
21%
in fiscal 2019 and thereafter.
|
|
Year Ended November 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Balance at beginning of period
|
$
|
129,544
|
|
|
$
|
109,527
|
|
|
$
|
107,902
|
|
Increases based on tax positions related to the current period
|
19,840
|
|
|
18,619
|
|
|
5,045
|
|
|||
Increases based on tax positions related to prior periods
|
5,002
|
|
|
7,310
|
|
|
1,447
|
|
|||
Decreases based on tax positions related to prior periods
|
(28,760
|
)
|
|
(5,912
|
)
|
|
(4,520
|
)
|
|||
Decreases related to settlements with taxing authorities
|
—
|
|
|
—
|
|
|
(347
|
)
|
|||
Balance at end of period
|
$
|
125,626
|
|
|
$
|
129,544
|
|
|
$
|
109,527
|
|
|
November 30,
|
||||||
|
2018
|
|
2017
|
||||
Deferred tax assets:
|
|
|
|
||||
Compensation and benefits
|
$
|
240,785
|
|
|
$
|
376,642
|
|
Net operating loss
|
17,867
|
|
|
20,094
|
|
||
Long-term debt
|
39,623
|
|
|
26,476
|
|
||
Accrued expenses and other
|
65,265
|
|
|
121,746
|
|
||
Sub-total
|
363,540
|
|
|
544,958
|
|
||
Valuation allowance
|
(10,650
|
)
|
|
(14,217
|
)
|
||
Total deferred tax assets
|
352,890
|
|
|
530,741
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Amortization of intangibles
|
69,095
|
|
|
102,739
|
|
||
Other
|
40,556
|
|
|
17,282
|
|
||
Total deferred tax liabilities
|
109,651
|
|
|
120,021
|
|
||
Net deferred tax asset, included in Other assets
|
$
|
243,239
|
|
|
$
|
410,720
|
|
|
Expected Maturity Date (fiscal years)
|
|
|
||||||||||||||||||||
|
2019
|
|
2020
|
|
2021 and 2022
|
|
2023 and 2024
|
|
2025 and Later
|
|
Maximum Payout
|
||||||||||||
Equity commitments (1)
|
$
|
305.2
|
|
|
$
|
18.4
|
|
|
$
|
0.3
|
|
|
$
|
—
|
|
|
$
|
3.6
|
|
|
$
|
327.5
|
|
Loan commitments (1)
|
250.0
|
|
|
—
|
|
|
54.0
|
|
|
3.5
|
|
|
—
|
|
|
307.5
|
|
||||||
Underwriting commitments
|
377.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
377.5
|
|
||||||
Forward starting reverse repos (2)
|
4,262.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,262.7
|
|
||||||
Forward starting repos (2)
|
2,931.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,931.8
|
|
||||||
Other unfunded commitments (1)
|
194.8
|
|
|
—
|
|
|
69.4
|
|
|
4.9
|
|
|
—
|
|
|
269.1
|
|
||||||
Total commitments
|
$
|
8,322.0
|
|
|
$
|
18.4
|
|
|
$
|
123.7
|
|
|
$
|
8.4
|
|
|
$
|
3.6
|
|
|
$
|
8,476.1
|
|
(1)
|
Equity, loan and other unfunded commitments are presented by contractual maturity date. The amounts, however, are available on demand.
|
(2)
|
At
November 30, 2018
,
$4,232.8 million
within forward starting securities purchased under agreements to resell and all of the securities sold under agreements to repurchase settled within
three
business days.
|
Fiscal Year
|
Operating Leases
|
||
2019
|
$
|
60,500
|
|
2020
|
52,465
|
|
|
2021
|
54,644
|
|
|
2022
|
57,593
|
|
|
2023
|
56,725
|
|
|
Thereafter
|
427,181
|
|
|
Total
|
$
|
709,108
|
|
|
Expected Maturity Date (Fiscal Years)
|
|
|
||||||||||||||||||||
|
2019
|
|
2020
|
|
2021 and 2022
|
|
2023 and 2024
|
|
2025 and Later
|
|
Notional/ Maximum Payout
|
||||||||||||
Guarantee Type:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivative contracts—non-credit related
|
$
|
12,024.2
|
|
|
$
|
2,372.3
|
|
|
$
|
2,976.1
|
|
|
$
|
281.1
|
|
|
$
|
330.3
|
|
|
$
|
17,984.0
|
|
Written derivative contracts—credit related
|
—
|
|
|
32.4
|
|
|
—
|
|
|
112.8
|
|
|
—
|
|
|
145.2
|
|
||||||
Total derivative contracts
|
$
|
12,024.2
|
|
|
$
|
2,404.7
|
|
|
$
|
2,976.1
|
|
|
$
|
393.9
|
|
|
$
|
330.3
|
|
|
$
|
18,129.2
|
|
|
Net Capital
|
|
Excess Net Capital
|
||||
Jefferies LLC
|
$
|
1,739,435
|
|
|
$
|
1,635,960
|
|
•
|
Net revenues and non-interest expenses directly associated with each reportable business segment are included in determining earnings (loss) before income taxes.
|
•
|
Net revenues and non-interest expenses not directly associated with specific reportable business segments are allocated based on the most relevant measures applicable, including each reportable business segment’s net revenues, headcount and other factors.
|
•
|
Reportable business segment assets include an allocation of indirect corporate assets that have been fully allocated to our reportable business segments, generally based on each reportable business segment’s capital utilization.
|
|
Year Ended November 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Capital Markets:
|
|
|
|
|
|
||||||
Net revenues
|
$
|
3,184.4
|
|
|
$
|
3,169.9
|
|
|
$
|
2,338.3
|
|
Non-interest expenses
|
2,719.5
|
|
|
2,634.2
|
|
|
2,319.7
|
|
|||
Earnings before income taxes
|
$
|
464.9
|
|
|
$
|
535.7
|
|
|
$
|
18.6
|
|
Asset Management:
|
|
|
|
|
|
||||||
Net revenues
|
$
|
(1.0
|
)
|
|
$
|
28.2
|
|
|
$
|
76.3
|
|
Non-interest expenses
|
54.2
|
|
|
59.0
|
|
|
64.9
|
|
|||
Earnings (loss) before income taxes
|
$
|
(55.2
|
)
|
|
$
|
(30.8
|
)
|
|
$
|
11.4
|
|
Total:
|
|
|
|
|
|
||||||
Net revenues
|
$
|
3,183.4
|
|
|
$
|
3,198.1
|
|
|
$
|
2,414.6
|
|
Non-interest expenses
|
2,773.7
|
|
|
2,693.2
|
|
|
2,384.6
|
|
|||
Earnings before income taxes
|
$
|
409.7
|
|
|
$
|
504.9
|
|
|
$
|
30.0
|
|
|
Year Ended November 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Americas (1)
|
$
|
2,652.9
|
|
|
$
|
2,602.7
|
|
|
$
|
1,870.4
|
|
Europe (2)
|
434.9
|
|
|
489.6
|
|
|
458.0
|
|
|||
Asia
|
95.6
|
|
|
105.8
|
|
|
86.2
|
|
|||
Net revenues
|
$
|
3,183.4
|
|
|
$
|
3,198.1
|
|
|
$
|
2,414.6
|
|
(1)
|
Substantially all relates to U.S. results.
|
(2)
|
Substantially all relates to U.K. results.
|
|
Year Ended November 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Other revenues and investment income (loss)
|
$
|
11,788
|
|
|
$
|
(11,718
|
)
|
|
$
|
(2,328
|
)
|
Service charges
|
381
|
|
|
726
|
|
|
760
|
|
•
|
At
November 30, 2018
and
2017
, we had
$39.3 million
and
$45.6 million
, respectively, of loans outstanding to certain of our officers and employees (none of whom are executive officers or directors) that are included in Other assets in our Consolidated Statements of Financial Condition.
|
•
|
Receivables from and payables to customers include balances arising from officers’, directors’ and employees’ individual security transactions. These transactions are subject to the same regulations as all customer transactions and are provided on substantially the same terms.
|
•
|
At November 30, 2016, we had provided a guarantee of a credit agreement for a private equity fund owned by our employees. This guarantee was terminated in April 2017.
|
•
|
One of our directors has investments in a hedge fund managed by us of approximately
$4.6 million
and
$4.9 million
at
November 30,
2018
and
2017
, respectively.
|
•
|
We provide services to and receive services from Jefferies under service agreements. We also receive revenues from Jefferies under a revenue sharing agreement (in millions):
|
|
Year Ended November 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Charges to Jefferies for services provided
|
$
|
61.2
|
|
|
$
|
42.2
|
|
|
$
|
38.8
|
|
Charges from Jefferies for services received
|
9.1
|
|
|
14.2
|
|
|
11.2
|
|
•
|
We provide capital markets and asset management services to Jefferies and its affiliates. The following table presents the revenues earned by type of services provided (in millions):
|
|
Year Ended November 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Investment banking
|
$
|
15.7
|
|
|
$
|
14.7
|
|
|
$
|
1.8
|
|
Asset management
|
—
|
|
|
—
|
|
|
0.2
|
|
|||
Commissions and other fees
|
0.9
|
|
|
0.1
|
|
|
0.1
|
|
|||
Principal transactions
|
0.1
|
|
|
—
|
|
|
—
|
|
|||
Other revenues
|
0.8
|
|
|
0.3
|
|
|
—
|
|
•
|
Receivables from and payables to Jefferies are included in Other assets and Accrued expenses and other liabilities, respectively, in our Consolidated Statements of Financial Condition:
|
|
Year Ended November 30,
|
||||||
|
2018
|
|
2017
|
||||
Receivable from Jefferies
|
$
|
1.2
|
|
|
$
|
2.5
|
|
Payable to Jefferies
|
2.9
|
|
|
3.1
|
|
•
|
On January 11, 2018, our Board of Directors approved a distribution to our sole limited liability company member, Jefferies, in the amount of
$200.0 million
, which was paid on January 31, 2018. In addition, our Board of Directors approved a quarterly distribution policy authorizing us to pay a quarterly distribution to our limited liability company members following the end of each of our fiscal quarters. Beginning at the end of our fiscal quarter ending February 28, 2018 and on a quarterly basis thereafter, we will pay our limited liability company members a quarterly dividend equal to
50%
of our positive net earnings attributable to us (as adjusted for preceding loss quarters, if any). In addition, during the year ended
November 30, 2018
, we paid additional dividends of
$48.7 million
to Jefferies, based on our results for the nine months ended August 31, 2018. For the three months ended
November 30, 2018
, we have accrued a dividend payable in the amount of
$30.7 million
.
|
•
|
Pursuant to a tax sharing agreement entered into between us and Jefferies, payments are made between us and Jefferies to settle current tax receivables and payables. At
November 30, 2018
and
2017
, a net current tax payable to Jefferies of
$34.1 million
and
$91.5 million
, respectively, is included in Accrued expenses and other liabilities in our Consolidated Statements of Financial Condition. We made payments of
$193.0 million
during the year ended
November 30, 2018
to Jefferies, which reduced the cumulative net current tax payable balance. Additionally, we made a payment of
$35.0 million
in December 2018.
|
•
|
On October 1, 2018, Jefferies transferred its
50%
interest in Berkadia and capital investments in certain separately managed accounts and funds to us. On November 1, 2018, we purchased LIML, an investment advisory company, from Jefferies. These transfers were accomplished as a capital contribution from Jefferies of approximately
$598.2 million
and cash payments of
$70.5 million
to Jefferies during the fourth quarter of 2018. In addition, we paid cash of approximately
$5.5 million
, representing LIML’s net book value as at October 31, 2018, including goodwill of
$0.4 million
and intangible assets of
$0.2 million
. In connection with these transfers, related deferred tax liabilities of approximately
$50.9 million
were transferred to us, for which Jefferies has indemnified us. See
Note 9, Investments
, for further details on our
50%
interest in Berkadia.
|
•
|
We entered into a foreign exchange prime brokerage agreement with an affiliate of Jefferies in 2017. In connection with the foreign exchange contracts entered into under this agreement we have
$9.9 million
and
$17.0 million
at
November 30,
2018
and
2017
, respectively, included in Payables—brokers, dealers and clearing organizations in our Consolidated Statements of Financial Condition.
|
•
|
Two of our directors have investments totaling
$2.7 million
and
$3.6 million
at
November 30,
2018
and
2017
, respectively, in a hedge fund managed by Jefferies.
|
•
|
Jefferies had an investment in a hedge fund managed by us of
$27.3 million
at November 30, 2017. This investment was transferred to us effective December 31, 2017, for which we paid
$26.7 million
, the investment’s NAV, to Jefferies.
|
•
|
We have investments in hedge funds managed by Jefferies of
$218.7 million
and
$136.1 million
at
November 30,
2018
and
2017
, respectively, included in Financial instruments owned, at fair value in our Consolidated Statements of Financial Condition. Net gains on our investments in these hedge funds, which are included in Principal transactions revenues in our Consolidated Statements of Earnings (in millions):
|
|
Year Ended November 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Net gains on our investments
|
$
|
5.0
|
|
|
$
|
8.0
|
|
|
$
|
3.6
|
|
•
|
We own
638,561
common shares and warrants of Waitr Holdings Inc. (previously Landcadia Holdings Inc.), an affiliate of Jefferies. At
November 30, 2018
and
2017
, these investments have fair values of
$8.3 million
and
$6.8 million
, respectively, which are included in Financial instruments owned, at fair value in our Consolidated Statements of Financial Condition.
|
•
|
We sold securities to Jefferies at fair value for cash during the periods presented below. There was no gain or loss on these transactions.
|
Date
|
|
Amount
(in millions)
|
||
August 2017
|
|
$
|
7.1
|
|
April 2017
|
|
21.9
|
|
|
February 2017
|
|
25.6
|
|
•
|
In connection with our sales and trading activities, from time to time we make a market in long-term debt securities of Jefferies (
i.e.,
we buy and sell debt securities issued by Jefferies). At
November 30, 2018
and
2017
, approximately
$0.3 million
and
$0.2 million
, respectively, of debt securities issued by Jefferies are included in Financial instruments owned in our Consolidated Statements of Financial Condition.
|
|
Year Ended November 30, 2016
|
||
Severance costs
|
$
|
279
|
|
Accelerated amortization of restricted stock and restricted cash awards
|
41
|
|
|
Contract termination costs
|
1,234
|
|
|
Other expenses
|
300
|
|
|
Total
|
$
|
1,854
|
|
|
Year Ended November 30, 2016
|
||
Compensation and benefits
|
$
|
320
|
|
Technology and communications
|
1,234
|
|
|
Other expenses
|
300
|
|
|
Total
|
$
|
1,854
|
|
|
Three Months Ended
|
||||||||||||||
|
November 30, 2018
|
|
August 31,
2018
|
|
May 31,
2018
|
|
February 28, 2018
|
||||||||
Total revenues
|
$
|
1,097,943
|
|
|
$
|
1,088,285
|
|
|
$
|
1,156,809
|
|
|
$
|
1,086,595
|
|
Net revenues
|
761,958
|
|
|
777,615
|
|
|
822,557
|
|
|
821,246
|
|
||||
Earnings before income taxes
|
77,963
|
|
|
87,101
|
|
|
121,865
|
|
|
122,738
|
|
||||
Net earnings attributable to Jefferies Group LLC
|
61,393
|
|
|
60,182
|
|
|
98,004
|
|
|
(60,818
|
)
|
|
Three Months Ended
|
||||||||||||||
|
November 30, 2017
|
|
August 31,
2017
|
|
May 31,
2017
|
|
February 28, 2017
|
||||||||
Total revenues
|
$
|
1,081,499
|
|
|
$
|
1,048,331
|
|
|
$
|
1,038,955
|
|
|
$
|
1,009,797
|
|
Net revenues
|
822,610
|
|
|
800,692
|
|
|
779,294
|
|
|
795,513
|
|
||||
Earnings before income taxes
|
142,280
|
|
|
122,264
|
|
|
116,181
|
|
|
124,199
|
|
||||
Net earnings attributable to Jefferies Group LLC
|
89,913
|
|
|
83,815
|
|
|
69,751
|
|
|
114,019
|
|
Exhibit No.
|
|
Description
|
|
|
|
3.1
|
|
|
3.2
|
|
|
3.3*
|
|
Limited Liability Company Agreement of Jefferies Group LLC dated as of March 1, 2013
(with Schedule A supplemented effective May 23, 2018).
|
4.1
|
|
|
4.2
|
|
|
4.3
|
|
|
4.4
|
|
|
4.5
|
|
|
4.6
|
|
Other instruments defining the rights of holders of long-term debt securities of the Registrant and its subsidiaries are omitted pursuant to Item 601(b)(4)(iii) of Regulation S-K. Registrant hereby agrees to furnish copies of these instruments to the Commission upon request.
|
23.1*
|
|
|
23.2*
|
|
|
23.3*
|
|
|
31.1*
|
|
|
31.2*
|
|
|
32*
|
|
Exhibit No.
|
|
Description
|
|
|
|
101*
|
|
Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Statements of Financial Condition as of November 30, 2018 and November 30, 2017; (ii) the Consolidated Statements of Earnings for the years ended November 30, 2018, 2017 and 2016; (iii) the Consolidated Statements of Comprehensive Income for the years ended November 30, 2018, 2017 and 2016; (iv) the Consolidated Statements of Changes in Equity for the years ended November 30, 2018, 2017 and 2016; (v) the Consolidated Statements of Cash Flows for the years ended November 30, 2018, 2017 and 2016; and (vi) the Notes to Consolidated Financial Statements.
|
|
(c)
|
Financial Statement Schedules
|
|
Jefferies Finance LLC financial statements as of November 30, 2018 and 2017, and for the years ended November 30, 2018, 2017 and 2016
|
|
JEFFERIES GROUP LLC
|
|
/s/ RICHARD B. HANDLER
|
Richard B. Handler
|
Chairman of the Board of Directors,
|
Chief Executive Officer
|
|
|
Name
|
|
Title
|
|
Date
|
|
|
|
|
|||
/s/
|
|
RICHARD B. HANDLER
|
|
Chairman of the Board of Directors,
Chief Executive Officer
|
|
January 28, 2019
|
|
|
Richard B. Handler
|
|
|
||
|
|
|
|
|||
/s/
|
|
PEREGRINE C. BROADBENT
|
|
Executive Vice President and
Chief Financial Officer
(Principal Accounting Officer)
|
|
January 28, 2019
|
|
|
Peregrine C. Broadbent
|
|
|
||
|
|
|
|
|||
/s/
|
|
BRIAN P. FRIEDMAN
|
|
Director and Chairman,
Executive Committee
|
|
January 28, 2019
|
|
|
Brian P. Friedman
|
|
|
||
|
|
|
|
|||
/s/
|
|
W. PATRICK CAMPBELL
|
|
Director
|
|
January 28, 2019
|
|
|
W. Patrick Campbell
|
|
|
||
|
|
|
|
|||
/s/
|
|
BARRY J. ALPERIN
|
|
Director
|
|
January 28, 2019
|
|
|
Barry J. Alperin
|
|
|
||
|
|
|
|
|||
/s/
|
|
MARYANNE GILMARTIN
|
|
Director
|
|
January 28, 2019
|
|
|
MaryAnne Gilmartin
|
|
|
||
|
|
|
|
|||
/s/
|
|
JOSEPH S. STEINBERG
|
|
Director
|
|
January 28, 2019
|
|
|
Joseph S. Steinberg
|
|
|
||
|
|
|
|
|
|
|
/s/
|
|
JACOB M. KATZ
|
|
Director
|
|
January 28, 2019
|
|
|
Jacob M. Katz
|
|
|
||
|
|
|
|
|
|
|
/s/
|
|
LINDA L. ADAMANY
|
|
Director
|
|
January 28, 2019
|
|
|
Linda L. Adamany
|
|
|
||
|
|
|
|
|
|
|
/s/
|
|
ROBERT D. BEYER
|
|
Director
|
|
January 28, 2019
|
|
|
Robert D. Beyer
|
|
|
/s/
|
|
FRANCISCO L. BORGES
|
|
Director
|
|
January 28, 2019
|
|
|
Francisco L. Borges
|
|
|
||
|
|
|
|
|
|
|
/s/
|
|
ROBERT E. JOYAL
|
|
Director
|
|
January 28, 2019
|
|
|
Robert E. Joyal
|
|
|
||
|
|
|
|
|
|
|
/s/
|
|
JEFFREY C. KEIL
|
|
Director
|
|
January 28, 2019
|
|
|
Jeffrey C. Keil
|
|
|
||
|
|
|
|
|
|
|
/s/
|
|
MICHAEL T. O’KANE
|
|
Director
|
|
January 28, 2019
|
|
|
Michael T. O’Kane
|
|
|
||
|
|
|
|
|
|
|
/s/
|
|
STUART H. REESE
|
|
Director
|
|
January 28, 2019
|
|
|
Stuart H. Reese
|
|
|
|
Page
|
Financial Statements
|
|
|
|
Financial Statement Schedules
|
|
Schedule I - Condensed Financial Information of Jefferies Group LLC (Parent Company Only) at November 30, 2018 and 2017 and for each of the three fiscal years ended November 30, 2018, 2017 and 2016
|
|
November 30,
|
||||||
|
2018
|
|
2017
|
||||
ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
921,603
|
|
|
$
|
1,959,536
|
|
Cash and securities segregated and on deposited for regulatory purposes or deposited with clearing and depository organizations
|
57,817
|
|
|
57,817
|
|
||
Financial instruments owned, at fair value
|
99,491
|
|
|
73,887
|
|
||
Loans to and investments in related parties
|
696,774
|
|
|
638,551
|
|
||
Investment in subsidiaries
|
5,850,168
|
|
|
5,084,726
|
|
||
Advances to subsidiaries
|
2,488,026
|
|
|
1,801,573
|
|
||
Subordinated notes receivable
|
2,434,411
|
|
|
2,708,685
|
|
||
Other assets
|
483,770
|
|
|
610,555
|
|
||
Total assets
|
$
|
13,032,060
|
|
|
$
|
12,935,330
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Short-term borrowings
|
$
|
56,555
|
|
|
$
|
131,567
|
|
Financial instruments sold, not yet purchased, at fair value
|
797
|
|
|
18,061
|
|
||
Accrued expenses and other liabilities
|
431,471
|
|
|
610,036
|
|
||
Long-term debt
|
6,362,744
|
|
|
6,416,844
|
|
||
Total liabilities
|
6,851,567
|
|
|
7,176,508
|
|
||
EQUITY
|
|
|
|
||||
Member’s paid-in capital
|
6,376,662
|
|
|
5,895,601
|
|
||
Accumulated other comprehensive loss:
|
|
|
|
||||
Currency translation adjustments
|
(185,804
|
)
|
|
(98,909
|
)
|
||
Changes in instrument specific credit risk
|
(5,728
|
)
|
|
(27,888
|
)
|
||
Cash flow hedges
|
470
|
|
|
(936
|
)
|
||
Additional minimum pension liability
|
(4,761
|
)
|
|
(9,046
|
)
|
||
Available-for-sale securities
|
(346
|
)
|
|
—
|
|
||
Total accumulated other comprehensive loss
|
(196,169
|
)
|
|
(136,779
|
)
|
||
Total member’s equity
|
6,180,493
|
|
|
5,758,822
|
|
||
Total liabilities and equity
|
$
|
13,032,060
|
|
|
$
|
12,935,330
|
|
|
Year Ended November 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Principal transactions
|
$
|
20,875
|
|
|
$
|
576
|
|
|
$
|
(308
|
)
|
Asset management fees
|
—
|
|
|
1,266
|
|
|
2,482
|
|
|||
Interest
|
262,042
|
|
|
241,357
|
|
|
226,781
|
|
|||
Other
|
101,284
|
|
|
78,812
|
|
|
(8,156
|
)
|
|||
Total revenues
|
384,201
|
|
|
322,011
|
|
|
220,799
|
|
|||
Interest expense
|
316,050
|
|
|
276,727
|
|
|
235,556
|
|
|||
Net revenues
|
68,151
|
|
|
45,284
|
|
|
(14,757
|
)
|
|||
Non-interest expenses:
|
|
|
|
|
|
||||||
Total non-interest expenses
|
5,016
|
|
|
13,598
|
|
|
5,187
|
|
|||
Earnings (loss) before income taxes
|
63,135
|
|
|
31,686
|
|
|
(19,944
|
)
|
|||
Income tax expense (benefit)
|
104,649
|
|
|
(21,292
|
)
|
|
(9,574
|
)
|
|||
Net earnings (loss) before undistributed earnings of subsidiaries
|
(41,514
|
)
|
|
52,978
|
|
|
(10,370
|
)
|
|||
Undistributed earnings of subsidiaries
|
200,275
|
|
|
304,520
|
|
|
25,804
|
|
|||
Net earnings
|
158,761
|
|
|
357,498
|
|
|
15,434
|
|
|||
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Currency translation and other adjustments
|
(85,554
|
)
|
|
53,396
|
|
|
(115,494
|
)
|
|||
Change in instrument specific credit risk
|
22,160
|
|
|
(21,394
|
)
|
|
(6,494
|
)
|
|||
Cash flow hedges
|
1,406
|
|
|
(936
|
)
|
|
—
|
|
|||
Minimum pension liability adjustments, net of tax
|
4,285
|
|
|
312
|
|
|
(1,223
|
)
|
|||
Unrealized gain on available-for-sale securities
|
311
|
|
|
—
|
|
|
—
|
|
|||
Total other comprehensive income (loss), net of tax
|
(57,392
|
)
|
|
31,378
|
|
|
(123,211
|
)
|
|||
Comprehensive income (loss)
|
$
|
101,369
|
|
|
$
|
388,876
|
|
|
$
|
(107,777
|
)
|
|
Year Ended November 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net earnings
|
$
|
158,761
|
|
|
$
|
357,498
|
|
|
$
|
15,434
|
|
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
|
|
|
|
|
|
||||||
Amortization
|
(53,296
|
)
|
|
(61,634
|
)
|
|
(63,681
|
)
|
|||
Undistributed earnings of subsidiaries
|
(200,275
|
)
|
|
(304,520
|
)
|
|
(25,804
|
)
|
|||
(Income) loss on loans to and investments in related parties
|
(98,223
|
)
|
|
(90,724
|
)
|
|
10,251
|
|
|||
Distributions received on investments in related parties
|
40,000
|
|
|
—
|
|
|
17,050
|
|
|||
Other adjustments
|
(116,307
|
)
|
|
39,513
|
|
|
(34,496
|
)
|
|||
Net change in assets and liabilities:
|
|
|
|
|
|
||||||
Financial instruments owned
|
(25,604
|
)
|
|
90,399
|
|
|
9,467
|
|
|||
Other assets
|
119,293
|
|
|
(29,031
|
)
|
|
21,475
|
|
|||
Financial instruments sold, not yet purchased
|
(17,264
|
)
|
|
10,776
|
|
|
(13,739
|
)
|
|||
Accrued expenses and other liabilities
|
(200,970
|
)
|
|
324,446
|
|
|
15,125
|
|
|||
Net cash provided by (used in) operating activities
|
(393,885
|
)
|
|
336,723
|
|
|
(48,918
|
)
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Investments in, advances to and subordinated notes receivable from subsidiaries
|
(473,436
|
)
|
|
(415,100
|
)
|
|
327,110
|
|
|||
Loans to and investments in related parties
|
—
|
|
|
(73,915
|
)
|
|
19,337
|
|
|||
Cash received from contingent consideration
|
—
|
|
|
1,342
|
|
|
2,617
|
|
|||
Net cash provided by (used in) investing activities
|
(473,436
|
)
|
|
(487,673
|
)
|
|
349,064
|
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from short-term borrowings
|
70,482
|
|
|
55,652
|
|
|
101,538
|
|
|||
Payments on short-term borrowings
|
(140,664
|
)
|
|
(32,326
|
)
|
|
(5,086
|
)
|
|||
Proceeds from issuance of long-term debt, net of issuance costs
|
1,183,954
|
|
|
1,116,798
|
|
|
277,583
|
|
|||
Repayment of long-term debt
|
(1,035,700
|
)
|
|
(186,444
|
)
|
|
(350,000
|
)
|
|||
Dividend distribution
|
(248,684
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash provided by (used in) financing activities
|
(170,612
|
)
|
|
953,680
|
|
|
24,035
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
(1,037,933
|
)
|
|
802,730
|
|
|
324,181
|
|
|||
Cash, cash equivalents and restricted cash at beginning of period
|
2,017,353
|
|
|
1,214,623
|
|
|
890,442
|
|
|||
Cash, cash equivalents and restricted cash at end of period
|
$
|
979,420
|
|
|
$
|
2,017,353
|
|
|
$
|
1,214,623
|
|
|
|
|
|
|
|
||||||
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
||||||
Cash paid (received) during the period for:
|
|
|
|
|
|
||||||
Interest
|
$
|
385,410
|
|
|
$
|
332,135
|
|
|
$
|
300,680
|
|
Income taxes, net
|
186,236
|
|
|
2,494
|
|
|
(8,654
|
)
|
|
November 30,
|
||||||
|
2018
|
|
2017
|
||||
Cash and cash equivalents
|
$
|
921,603
|
|
|
$
|
1,959,536
|
|
Cash and securities segregated and on deposit for regulatory purposes with clearing and depository organizations
|
57,817
|
|
|
57,817
|
|
||
Total cash, cash equivalents and restricted cash
|
$
|
979,420
|
|
|
$
|
2,017,353
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
NOVEMBER 30, 2018
|
|
NOVEMBER 30, 2017
|
|
||||
ASSETS
|
|
|
|
|
|
||||
Cash
|
|
$
|
1,033,048
|
|
|
$
|
1,555,484
|
|
|
Restricted cash
|
|
468,934
|
|
|
875,270
|
|
|
||
Loans receivable, net of deferred loan fees
|
|
4,479,225
|
|
|
4,813,182
|
|
|
||
Less allowance for loan losses
|
|
(35,353
|
)
|
|
(61,788
|
)
|
|
||
Loans receivable, net
|
|
4,443,872
|
|
|
4,751,394
|
|
|
||
Loans held for sale, net
|
|
1,550,175
|
|
|
712,546
|
|
|
||
Accrued interest receivable
|
|
33,382
|
|
|
32,393
|
|
|
||
Held-to-maturity securities (includes $39,480 CLO notes pledged as collateral)
|
|
45,735
|
|
|
—
|
|
|
||
Investments
|
|
57,779
|
|
|
46,148
|
|
|
||
Other assets
|
|
143,618
|
|
|
191,708
|
|
|
||
TOTAL ASSETS
|
|
$
|
7,776,543
|
|
|
$
|
8,164,943
|
|
|
LIABILITIES AND MEMBERS’ EQUITY
|
|
|
|
|
|
||||
LIABILITIES:
|
|
|
|
|
|
||||
Credit facilities, net
|
|
$
|
186,232
|
|
|
$
|
318,103
|
|
|
Secured notes payable, net
|
|
3,620,191
|
|
|
3,882,817
|
|
|
||
Interest payable
|
|
49,235
|
|
|
46,686
|
|
|
||
Securities sold under agreement to repurchase
|
|
39,480
|
|
|
—
|
|
|
||
Other liabilities
|
|
393,613
|
|
|
525,403
|
|
|
||
Due to affiliates
|
|
44,214
|
|
|
46,130
|
|
|
||
Long-term debt, net
|
|
2,054,023
|
|
|
2,073,479
|
|
|
||
Total liabilities
|
|
6,386,988
|
|
|
6,892,618
|
|
|
||
MEMBERS’ EQUITY
|
|
1,389,555
|
|
|
1,272,325
|
|
|
||
TOTAL LIABILITIES AND MEMBERS’ EQUITY
|
|
$
|
7,776,543
|
|
|
$
|
8,164,943
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
NOVEMBER 30, 2018
|
|
NOVEMBER 30, 2017
|
|
||||
ASSETS
|
|
|
|
|
|
||||
Restricted cash
|
|
$
|
410,045
|
|
|
$
|
817,890
|
|
|
Loans receivable, net of deferred loan fees
|
|
3,881,340
|
|
|
4,226,943
|
|
|
||
Less allowance for loan losses
|
|
(31,061
|
)
|
|
(47,364
|
)
|
|
||
Loans receivable, net
|
|
3,850,279
|
|
|
4,179,579
|
|
|
||
Accrued interest receivable
|
|
16,589
|
|
|
18,788
|
|
|
||
Investments
|
|
29,934
|
|
|
27,452
|
|
|
||
Other assets
|
|
63,265
|
|
|
105,042
|
|
|
||
TOTAL ASSETS
|
|
$
|
4,370,112
|
|
|
$
|
5,148,751
|
|
|
LIABILITIES
|
|
|
|
|
|
||||
Credit facilities, net
|
|
$
|
—
|
|
|
$
|
154,772
|
|
|
Secured notes payable, net
|
|
3,620,555
|
|
|
3,882,817
|
|
|
||
Interest payable
|
|
22,252
|
|
|
18,772
|
|
|
||
Other liabilities
|
|
120,549
|
|
|
278,155
|
|
|
||
Due to affiliates
|
|
8,111
|
|
|
11,249
|
|
|
||
TOTAL LIABILITIES
|
|
$
|
3,771,467
|
|
|
$
|
4,345,765
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
NOVEMBER 30,
2018
|
|
NOVEMBER 30,
2017
|
|
NOVEMBER 30,
2016
|
|
||||||
NET FEE AND INTEREST INCOME:
|
|
|
|
|
|
|
|
||||||
Fee income, net
|
|
$
|
282,856
|
|
|
$
|
270,023
|
|
|
$
|
130,356
|
|
|
Interest income
|
|
405,534
|
|
|
356,533
|
|
|
292,457
|
|
|
|||
Total interest and net fee income
|
|
688,390
|
|
|
626,556
|
|
|
422,813
|
|
|
|||
Interest expense
|
|
396,229
|
|
|
341,143
|
|
|
273,833
|
|
|
|||
Net interest and net fee income
|
|
292,161
|
|
|
285,413
|
|
|
148,980
|
|
|
|||
Provision for loan losses
|
|
18,897
|
|
|
33,854
|
|
|
37,880
|
|
|
|||
Net interest and fee income after provision for loan losses
|
|
273,264
|
|
|
251,559
|
|
|
111,100
|
|
|
|||
OTHER GAINS (LOSSES), NET
|
|
9,123
|
|
|
6,680
|
|
|
(75,548
|
)
|
|
|||
OTHER EXPENSES:
|
|
|
|
|
|
|
|
||||||
Compensation and benefits
|
|
32,093
|
|
|
28,806
|
|
|
24,533
|
|
|
|||
General, administrative and other
|
|
45,564
|
|
|
41,464
|
|
|
32,148
|
|
|
|||
Total other expenses
|
|
77,657
|
|
|
70,270
|
|
|
56,681
|
|
|
|||
EARNINGS (LOSSES) BEFORE INCOME TAX EXPENSE
|
|
204,730
|
|
|
187,969
|
|
|
(21,129
|
)
|
|
|||
INCOME TAX EXPENSE (BENEFIT)
|
|
7,500
|
|
|
6,300
|
|
|
(1,514
|
)
|
|
|||
NET EARNINGS (LOSS)
|
|
$
|
197,230
|
|
|
$
|
181,669
|
|
|
$
|
(19,615
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
CLASS A
MEMBERS |
|
CLASS B
MEMBERS |
|
TOTAL
MEMBERS’ EQUITY |
||||||
BALANCE—December 1, 2016
|
$
|
873,136
|
|
|
$
|
67,923
|
|
|
$
|
941,059
|
|
Contributions
|
149,597
|
|
|
—
|
|
|
149,597
|
|
|||
Net earnings
|
145,335
|
|
|
36,334
|
|
|
181,669
|
|
|||
BALANCE—November 30, 2017
|
$
|
1,168,068
|
|
|
$
|
104,257
|
|
|
$
|
1,272,325
|
|
Distributions
|
(64,000
|
)
|
|
(16,000
|
)
|
|
(80,000
|
)
|
|||
Net earnings
|
157,784
|
|
|
39,446
|
|
|
197,230
|
|
|||
BALANCE—November 30, 2018
|
$
|
1,261,852
|
|
|
$
|
127,703
|
|
|
$
|
1,389,555
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
NOVEMBER 30,
2018
|
|
NOVEMBER 30,
2017
|
|
NOVEMBER 30,
2016
|
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
||||||
Net earnings (loss)
|
|
$
|
197,230
|
|
|
$
|
181,669
|
|
|
$
|
(19,615
|
)
|
|
Adjustments to reconcile net earnings (loss) to net cash
(used in) provided by operating activities: |
|
|
|
|
|
|
|
||||||
Amortization of deferred loan fees and discounts
|
|
(74,471
|
)
|
|
(81,050
|
)
|
|
(50,022
|
)
|
|
|||
Amortization of deferred structuring fees
|
|
23,418
|
|
|
21,281
|
|
|
19,797
|
|
|
|||
Amortization of discount on secured notes
|
|
12,576
|
|
|
12,671
|
|
|
9,611
|
|
|
|||
Issuance costs associated with extinguishment of debt
|
|
18,305
|
|
|
14,122
|
|
|
—
|
|
|
|||
Provision for loan losses
|
|
18,897
|
|
|
33,854
|
|
|
37,880
|
|
|
|||
Realized (gain) loss on sale of loans held for sale
|
|
(10,445
|
)
|
|
(6,467
|
)
|
|
34,545
|
|
|
|||
Change in fair value of loans held for sale
|
|
5
|
|
|
4,634
|
|
|
8,267
|
|
|
|||
Realized (gain) loss on sales of investments
|
|
(492
|
)
|
|
(1,047
|
)
|
|
24,597
|
|
|
|||
Unrealized loss (gain) on investments
|
|
2,116
|
|
|
(1,863
|
)
|
|
8,139
|
|
|
|||
Deferred income tax (benefit) expense
|
|
(91
|
)
|
|
550
|
|
|
55
|
|
|
|||
(Increase) decrease in operating assets:
|
|
|
|
|
|
|
|
||||||
Origination of loans held for sale
|
|
(33,441,105
|
)
|
|
(27,330,698
|
)
|
|
(9,570,812
|
)
|
|
|||
Proceeds from sales of loans held for sale
|
|
32,278,095
|
|
|
27,398,380
|
|
|
8,842,177
|
|
|
|||
Principal collections on loans held for sale
|
|
368,127
|
|
|
65,904
|
|
|
3,215
|
|
|
|||
Accrued interest receivable
|
|
(989
|
)
|
|
401
|
|
|
(445
|
)
|
|
|||
Other assets
|
|
22,798
|
|
|
(15,522
|
)
|
|
(12,051
|
)
|
|
|||
Increase (decrease) in operating liabilities:
|
|
|
|
|
|
|
|
||||||
Interest payable
|
|
2,550
|
|
|
12,563
|
|
|
6,297
|
|
|
|||
Other liabilities
|
|
85,799
|
|
|
12,183
|
|
|
4,679
|
|
|
|||
Due to affiliates
|
|
(1,916
|
)
|
|
22,159
|
|
|
15,796
|
|
|
|||
Net cash (used in) provided by operating activities
|
|
(499,593
|
)
|
|
343,724
|
|
|
(637,890
|
)
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
||||||
Origination and purchases of loans receivable
|
|
(5,686,660
|
)
|
|
(4,209,182
|
)
|
|
(3,824,179
|
)
|
|
|||
Principal collections of loans receivable
|
|
4,037,095
|
|
|
3,190,000
|
|
|
2,714,137
|
|
|
|||
Proceeds from sales of loans held for sale
|
|
1,772,021
|
|
|
799,869
|
|
|
790,602
|
|
|
|||
Net change in restricted cash
|
|
406,336
|
|
|
100,621
|
|
|
300,009
|
|
|
|||
Purchases of investments
|
|
(14,564
|
)
|
|
(159,379
|
)
|
|
(661,896
|
)
|
|
|||
Purchases of HTM Securities
|
|
(45,735
|
)
|
|
—
|
|
|
—
|
|
|
|||
Proceeds from sales of investments
|
|
17,716
|
|
|
317,235
|
|
|
690,183
|
|
|
|||
Net cash provided by investing activities
|
|
486,209
|
|
|
39,164
|
|
|
8,856
|
|
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
||||||
Contributions from members
|
|
—
|
|
|
149,597
|
|
|
—
|
|
|
|||
Distributions to members
|
|
(80,000
|
)
|
|
—
|
|
|
(34,100
|
)
|
|
|||
Proceeds from borrowings on credit facilities
|
|
8,459,941
|
|
|
9,900,244
|
|
|
1,108,814
|
|
|
|||
Repayments on credit facilities
|
|
(8,598,345
|
)
|
|
(9,929,577
|
)
|
|
(1,147,242
|
)
|
|
|||
Proceeds from secured notes, net of issuance costs
|
|
1,500,979
|
|
|
1,749,986
|
|
|
326,478
|
|
|
|||
Repayments of secured notes payable
|
|
(1,819,759
|
)
|
|
(1,779,088
|
)
|
|
(454,780
|
)
|
|
|||
Purchases of secured notes
|
|
—
|
|
|
—
|
|
|
(3,263
|
)
|
|
|||
Proceeds from sale of secured notes
|
|
15,142
|
|
|
—
|
|
|
—
|
|
|
|||
Securities sold under agreement to repurchase
|
|
39,201
|
|
|
—
|
|
|
—
|
|
|
Proceeds from long-term debt, net of issuance costs
|
|
—
|
|
|
637,191
|
|
|
—
|
|
|
|||
Payment of issuance costs on long-term debt
|
|
(1,031
|
)
|
|
—
|
|
|
—
|
|
|
|||
Repayment of long-term debt
|
|
(2,500
|
)
|
|
(212,313
|
)
|
|
(2,150
|
)
|
|
|||
Repurchase of long-term debt
|
|
(22,680
|
)
|
|
—
|
|
|
—
|
|
|
|||
Net cash (used in) provided by financing activities
|
|
(509,052
|
)
|
|
516,040
|
|
|
(206,243
|
)
|
|
|||
NET (DECREASE) INCREASE IN CASH
|
|
(522,436
|
)
|
|
898,928
|
|
|
(835,277
|
)
|
|
|||
CASH—Beginning of the year
|
|
1,555,484
|
|
|
656,556
|
|
|
1,491,833
|
|
|
|||
CASH—End of the year
|
|
$
|
1,033,048
|
|
|
$
|
1,555,484
|
|
|
$
|
656,556
|
|
|
SUPPLEMENTAL INFORMATION:
|
|
|
|
|
|
|
|
||||||
Cash paid for interest
|
|
$
|
331,561
|
|
|
$
|
277,348
|
|
|
$
|
237,719
|
|
|
Cash paid for income taxes, net
|
|
$
|
593
|
|
|
$
|
193
|
|
|
$
|
279
|
|
|
NONCASH ITEMS:
|
|
|
|
|
|
|
|
||||||
Transfer of loans held for sale, net to loans receivable, net
|
|
$
|
—
|
|
|
$
|
44,136
|
|
|
$
|
—
|
|
|
Restructuring of loans receivable to investments
|
|
$
|
60,476
|
|
|
$
|
54,028
|
|
|
$
|
24,414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
2018
|
|
2017
|
||||
Principal and interest collections on loans held in credit facilities and CLOs
|
$
|
207,763
|
|
|
$
|
265,064
|
|
Reserves held in credit facilities and CLOs to support future operations
|
261,171
|
|
|
610,206
|
|
||
Total restricted cash
|
$
|
468,934
|
|
|
$
|
875,270
|
|
|
|
|
|
|
|
|
|
|
||||
|
2018
|
|
2017
|
||||
Loans receivable:
|
|
|
|
||||
Originated
|
$
|
1,770,247
|
|
|
$
|
1,687,531
|
|
Secondary
|
2,771,751
|
|
|
3,203,298
|
|
||
Total loans receivable
|
4,541,998
|
|
|
4,890,829
|
|
||
Less: original issue discount
|
(56,048
|
)
|
|
(68,650
|
)
|
||
Total loans receivable, net of original issue discount
|
4,485,950
|
|
|
4,822,179
|
|
||
Less: deferred loan fees
(1)
|
(6,725
|
)
|
|
(8,997
|
)
|
||
Total loans receivable, net of deferred loan fees
|
4,479,225
|
|
|
4,813,182
|
|
||
Less: allowance for loan losses
|
(35,353
|
)
|
|
(61,788
|
)
|
||
Total loans receivable, net
|
$
|
4,443,872
|
|
|
$
|
4,751,394
|
|
|
|
|
|
(1)
|
Unamortized deferred loan fees received in connection with revolving credit facilities are classified within Other liabilities on the Consolidated Balance Sheets.
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
LOANS
30-89 DAYS PAST DUE |
|
LOANS
90 OR MORE DAYS PAST DUE |
|
TOTAL
PAST DUE LOANS |
|
CURRENT
LOANS |
|
TOTAL
LOANS |
||||||||||
Originated
|
$
|
—
|
|
|
$
|
1,268
|
|
|
$
|
1,268
|
|
|
$
|
1,730,644
|
|
|
$
|
1,731,912
|
|
Secondary
|
—
|
|
|
—
|
|
|
—
|
|
|
2,754,038
|
|
|
2,754,038
|
|
|||||
Total
|
$
|
—
|
|
|
$
|
1,268
|
|
|
$
|
1,268
|
|
|
$
|
4,484,682
|
|
|
$
|
4,485,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
LOANS
30-89 DAYS PAST DUE |
|
LOANS
90 OR MORE DAYS PAST DUE |
|
TOTAL
PAST DUE LOANS |
|
CURRENT
LOANS |
|
TOTAL
LOANS |
||||||||||
Originated
|
$
|
8,098
|
|
|
$
|
—
|
|
|
$
|
8,098
|
|
|
$
|
1,635,842
|
|
|
$
|
1,643,940
|
|
Secondary
|
—
|
|
|
—
|
|
|
—
|
|
|
3,178,239
|
|
|
3,178,239
|
|
|||||
Total
|
$
|
8,098
|
|
|
$
|
—
|
|
|
$
|
8,098
|
|
|
$
|
4,814,081
|
|
|
$
|
4,822,179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
RECORDED
INVESTMENT |
|
UNPAID
PRINCIPAL BALANCE |
|
RELATED
ALLOWANCE |
|
AVERAGE
RECORDED INVESTMENT |
||||||||
Originated
|
$
|
98,447
|
|
|
$
|
118,602
|
|
|
$
|
5,584
|
|
|
$
|
103,417
|
|
Secondary
|
—
|
|
|
—
|
|
|
—
|
|
|
6,139
|
|
||||
Total
|
$
|
98,447
|
|
|
$
|
118,602
|
|
|
$
|
5,584
|
|
|
$
|
109,556
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
RECORDED
INVESTMENT |
|
UNPAID
PRINCIPAL BALANCE |
|
RELATED
ALLOWANCE |
|
AVERAGE
RECORDED INVESTMENT |
||||||||
Originated
|
$
|
108,386
|
|
|
$
|
143,295
|
|
|
$
|
20,363
|
|
|
$
|
85,344
|
|
Secondary
|
12,277
|
|
|
30,146
|
|
|
9,590
|
|
|
12,595
|
|
||||
Total
|
$
|
120,663
|
|
|
$
|
173,441
|
|
|
$
|
29,953
|
|
|
$
|
97,939
|
|
|
|
|
|
|
|
|
|
|
■
|
the types of loans;
|
■
|
the expected loss with regard to the loan type;
|
■
|
the internal credit rating assigned to the loans; and
|
■
|
type of industry for a given loan.
|
|
|
|
|
|
CONSOLIDATED
BALANCE SHEETS |
|
CONSOLIDATED
STATEMENTS OF EARNINGS |
Allowance for losses on:
|
|
|
|
Loans
|
Allowance for loan losses
|
|
Provision for loan losses
|
Unfunded loan commitments
|
Other liabilities
|
|
General, administrative and other
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
ORIGINATED
|
|
SECONDARY
|
|
TOTAL
|
||||||
Balance, November 30, 2017
|
$
|
29,369
|
|
|
$
|
32,419
|
|
|
$
|
61,788
|
|
Provision for (recovery of) loan losses—general
|
1,604
|
|
|
(3,670
|
)
|
|
(2,066
|
)
|
|||
Provision for loan losses—specific
|
20,862
|
|
|
101
|
|
|
20,963
|
|
|||
Transfers to loans held for sale, net
|
—
|
|
|
(1,726
|
)
|
|
(1,726
|
)
|
|||
Charge-offs
|
(35,641
|
)
|
|
(7,965
|
)
|
|
(43,606
|
)
|
|||
Balance, November 30, 2018
|
16,194
|
|
|
19,159
|
|
|
35,353
|
|
|||
Balance, end of period—general
|
$
|
10,610
|
|
|
$
|
19,159
|
|
|
$
|
29,769
|
|
Balance, end of period—specific
|
$
|
5,584
|
|
|
$
|
—
|
|
|
$
|
5,584
|
|
Loans receivable:
|
|
|
|
|
|
||||||
Loans collectively evaluated—general
|
$
|
1,633,465
|
|
|
$
|
2,754,038
|
|
|
$
|
4,387,503
|
|
Loans individually evaluated—specific
|
98,447
|
|
|
—
|
|
|
98,447
|
|
|||
Total
|
$
|
1,731,912
|
|
|
$
|
2,754,038
|
|
|
$
|
4,485,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
ORIGINATED
|
|
SECONDARY
|
|
TOTAL
|
||||||
Balance, November 30, 2016
|
$
|
35,603
|
|
|
$
|
30,294
|
|
|
$
|
65,897
|
|
(Recovery of) provision for loan losses—general
|
(5,788
|
)
|
|
2,778
|
|
|
(3,010
|
)
|
|||
Provision for loan losses—specific
|
33,301
|
|
|
3,563
|
|
|
36,864
|
|
|||
Transfers to loans held for sale, net
|
(2,240
|
)
|
|
(500
|
)
|
|
(2,740
|
)
|
|||
Charge-offs
|
(31,507
|
)
|
|
(3,716
|
)
|
|
(35,223
|
)
|
|||
Balance, November 30, 2017
|
29,369
|
|
|
32,419
|
|
|
61,788
|
|
|||
Balance, end of period—general
|
$
|
9,006
|
|
|
$
|
22,829
|
|
|
$
|
31,835
|
|
Balance, end of period—specific
|
$
|
20,363
|
|
|
$
|
9,590
|
|
|
$
|
29,953
|
|
Loans receivable:
|
|
|
|
|
|
||||||
Loans collectively evaluated—general
|
$
|
1,535,554
|
|
|
$
|
3,165,962
|
|
|
$
|
4,701,516
|
|
Loans individually evaluated—specific
|
108,386
|
|
|
12,277
|
|
|
120,663
|
|
|||
Total
|
$
|
1,643,940
|
|
|
$
|
3,178,239
|
|
|
$
|
4,822,179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
ORIGINATED
|
|
SECONDARY
|
|
TOTAL
|
||||||
Balance, November 30, 2015
|
$
|
17,454
|
|
|
$
|
36,516
|
|
|
$
|
53,970
|
|
Provision for loan losses—general
|
3,751
|
|
|
5,857
|
|
|
9,608
|
|
|||
Provision for loan losses—specific
|
15,045
|
|
|
13,227
|
|
|
28,272
|
|
|||
Transfers to loans held for sale, net
|
—
|
|
|
(12,654
|
)
|
|
(12,654
|
)
|
|||
Charge-offs
|
(647
|
)
|
|
(12,652
|
)
|
|
(13,299
|
)
|
|||
Balance, November 30, 2016
|
35,603
|
|
|
30,294
|
|
|
65,897
|
|
|||
Balance, end of period—general
|
$
|
14,787
|
|
|
$
|
20,051
|
|
|
$
|
34,838
|
|
Balance, end of period—specific
|
$
|
20,816
|
|
|
$
|
10,243
|
|
|
$
|
31,059
|
|
Loans receivable:
|
|
|
|
|
|
||||||
Loans collectively evaluated—general
|
$
|
1,895,992
|
|
|
$
|
2,527,816
|
|
|
$
|
4,423,808
|
|
Loans individually evaluated—specific
|
61,948
|
|
|
12,912
|
|
|
74,860
|
|
|||
Total
|
$
|
1,957,940
|
|
|
$
|
2,540,728
|
|
|
$
|
4,498,668
|
|
|
|
|
|
|
|
■
|
Industry segment
|
■
|
Position within the industry
|
■
|
Earnings/Operating Cash Flows
|
■
|
Asset/Liability values
|
■
|
Financial flexibility/debt capacity
|
■
|
Management and controls
|
■
|
Grade 1—Issuers assigned this grade are characterized as substantially risk free and having an extremely strong capacity to meet all financial obligations.
|
■
|
Grade 2—Issuers assigned this grade are characterized as representing minimal risk.
|
|
■
|
Grade 3—Issuers assigned this grade are characterized as representing modest risk.
|
■
|
Grade 4—Issuers assigned this grade are characterized as representing better than average risk.
|
■
|
Grade 5—Issuers assigned this grade are characterized as representing average risk.
|
■
|
Grade 6—Issuers assigned this grade are characterized as representing acceptable risk.
|
■
|
Grade 7—Issuers assigned this grade are currently vulnerable to adverse business, financial and economic conditions and are characterized by increasing credit risk. They possess potential weakness that may, if not checked or corrected, weaken the asset or result in a likelihood of default at some future date. The increasing risk has or may result in discounted pricing levels or decreased trading liquidity.
|
■
|
Grade 8—Issuers assigned this grade are characterized by inadequate repayment capacity and/or recovery of the obligor or of the collateral pledged resulting in potential loss if deficiencies are not corrected.
|
■
|
Grade 9—Issuers assigned this grade are in (a) payment default at any level in its debt structure or (b) bankruptcy. In addition, asset weaknesses may make collection or liquidation in full, on the basis of existing facts, highly questionable and improbable.
|
■
|
Grade 10—Issuers assigned this grade are charged-off.
|
|
|
|
|
|
|
|
||||||
ICG
|
|
ORIGINATED
|
|
SECONDARY
|
|
TOTAL
|
||||||
5.2
|
|
$
|
—
|
|
|
$
|
10,466
|
|
|
$
|
10,466
|
|
5.5
|
|
—
|
|
|
70,622
|
|
|
70,622
|
|
|||
5.8
|
|
18,902
|
|
|
336,214
|
|
|
355,116
|
|
|||
6.2
|
|
186,438
|
|
|
579,700
|
|
|
766,138
|
|
|||
6.5
|
|
650,182
|
|
|
910,136
|
|
|
1,560,318
|
|
|||
6.8
|
|
468,457
|
|
|
602,168
|
|
|
1,070,625
|
|
|||
7.2
|
|
185,593
|
|
|
130,332
|
|
|
315,925
|
|
|||
7.5
|
|
111,694
|
|
|
99,814
|
|
|
211,508
|
|
|||
7.8
|
|
50,602
|
|
|
236
|
|
|
50,838
|
|
|||
8.2
|
|
12,496
|
|
|
14,350
|
|
|
26,846
|
|
|||
8.5
|
|
16,649
|
|
|
—
|
|
|
16,649
|
|
|||
9.2
|
|
30,899
|
|
|
—
|
|
|
30,899
|
|
|||
Total
|
|
$
|
1,731,912
|
|
|
$
|
2,754,038
|
|
|
$
|
4,485,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
ICG
|
|
ORIGINATED
|
|
SECONDARY
|
|
TOTAL
|
||||||
5.2
|
|
$
|
—
|
|
|
$
|
4,460
|
|
|
$
|
4,460
|
|
5.5
|
|
—
|
|
|
60,891
|
|
|
60,891
|
|
|||
5.8
|
|
17,709
|
|
|
351,776
|
|
|
369,485
|
|
|||
6.2
|
|
132,084
|
|
|
785,241
|
|
|
917,325
|
|
|||
6.5
|
|
681,244
|
|
|
1,119,830
|
|
|
1,801,074
|
|
|||
6.8
|
|
430,524
|
|
|
690,347
|
|
|
1,120,871
|
|
|||
7.2
|
|
165,412
|
|
|
82,632
|
|
|
248,044
|
|
|||
7.5
|
|
106,642
|
|
|
40,148
|
|
|
146,790
|
|
|||
7.8
|
|
37,379
|
|
|
17,756
|
|
|
55,135
|
|
|||
8.2
|
|
53,403
|
|
|
11,474
|
|
|
64,877
|
|
|||
8.5
|
|
1,266
|
|
|
—
|
|
|
1,266
|
|
|||
9.2
|
|
18,277
|
|
|
13,684
|
|
|
31,961
|
|
|||
Total
|
|
$
|
1,643,940
|
|
|
$
|
3,178,239
|
|
|
$
|
4,822,179
|
|
|
|
|
|
|
|
|
■
|
Payment default of principal and/or interest
|
■
|
Bankruptcy declaration
|
■
|
Going concern opinion issued by the borrower’s auditors
|
■
|
Insufficient cash flow to service debt with low likelihood of turnaround in the short term
|
■
|
Securities (public) are de-listed
|
■
|
Refinancing sources are unlikely
|
■
|
Financial covenants breach is unlikely to be amended
|
■
|
Modification of interest rate below market rate
|
■
|
The borrower does not otherwise have access to funding for debt with similar risk characteristics in the market at the restructured rate and terms
|
■
|
Capitalization of interest
|
■
|
Delaying principal and/or interest for a period of year or more
|
■
|
Forgiveness of some or all of the principal balance
|
|
|
|
|
|
|
|
||||||
|
PRE-
MODIFICATION OUTSTANDING RECORDED AMOUNT |
|
POST-
MODIFICATION OUTSTANDING RECORDED AMOUNT |
|
INVESTMENT IN
TDR SUBSEQUENTLY DEFAULTED |
||||||
Primary
|
$
|
149,712
|
|
|
$
|
85,427
|
|
|
$
|
—
|
|
Secondary
|
34,216
|
|
|
24,943
|
|
|
—
|
|
|||
Total
|
$
|
183,928
|
|
|
$
|
110,370
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
PRE-
MODIFICATION OUTSTANDING RECORDED AMOUNT |
|
POST-
MODIFICATION OUTSTANDING RECORDED AMOUNT |
|
INVESTMENT IN
TDR SUBSEQUENTLY DEFAULTED |
||||||
Primary
|
$
|
118,923
|
|
|
$
|
92,546
|
|
|
$
|
—
|
|
Secondary
|
68,982
|
|
|
38,371
|
|
|
—
|
|
|||
Total
|
$
|
187,905
|
|
|
$
|
130,917
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
2018
|
|
2017
|
||||
Loans held for sale
|
$
|
1,574,923
|
|
|
$
|
722,551
|
|
Less:
|
|
|
|
||||
Original issue discount
|
(15,198
|
)
|
|
(2,636
|
)
|
||
Valuation allowance
|
(2,880
|
)
|
|
—
|
|
||
Deferred loan fees, net
|
(6,670
|
)
|
|
(7,369
|
)
|
||
Loans held for sale, net
|
$
|
1,550,175
|
|
|
$
|
712,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Contractual Maturity
|
|||||||||||||||
|
Overnight and
Continuous |
|
Up to 30 days
|
|
30-90 days
|
|
Greater than
90 days |
|
Total
|
|||||||
Repurchase-to-maturity transactions
|
|
|
|
|
|
|
|
|
|
|||||||
CLO notes
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
39,480
|
|
|
$
|
39,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
1-5 YEARS
|
|
TOTAL
|
||||
Interest rate swaps
|
$
|
246,858
|
|
|
$
|
246,858
|
|
|
|
|
|
|
|
|
|
||||
|
1-5 YEARS
|
|
TOTAL
|
||||
Interest rate swaps
|
$
|
1,080,889
|
|
|
$
|
1,080,889
|
|
TRS
|
$
|
3,442
|
|
|
$
|
3,442
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
NOVEMBER 30, 2018
|
|
LEVEL 1
|
|
LEVEL 2
|
|
LEVEL 3
|
|
NET ASSET
VALUE |
|
TOTAL
|
||||||||||
Assets, nonrecurring basis:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Loans held for sale, net
|
|
$
|
—
|
|
|
$
|
1,550,175
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,550,175
|
|
Assets, recurring basis:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Investments
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Investments in affiliates
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1,810
|
)
|
|
$
|
(1,810
|
)
|
CLO Notes
|
|
—
|
|
|
10,900
|
|
|
—
|
|
|
—
|
|
|
10,900
|
|
|||||
Interest rate swaps
|
|
—
|
|
|
1,496
|
|
|
—
|
|
|
—
|
|
|
1,496
|
|
|||||
Corporate equity securities
|
|
—
|
|
|
11
|
|
|
47,182
|
|
|
—
|
|
|
47,193
|
|
|||||
Total Investments
|
|
$
|
—
|
|
|
$
|
12,407
|
|
|
$
|
47,182
|
|
|
$
|
(1,810
|
)
|
|
$
|
57,779
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
NOVEMBER 30, 2017
|
|
LEVEL 1
|
|
LEVEL 2
|
|
LEVEL 3
|
|
TOTAL
|
||||||||
Assets, nonrecurring basis:
|
|
|
|
|
|
|
|
|
||||||||
Loans held for sale, net
|
|
$
|
—
|
|
|
$
|
712,546
|
|
|
$
|
—
|
|
|
$
|
712,546
|
|
Assets, recurring basis:
|
|
|
|
|
|
|
|
|
||||||||
Investments
|
|
|
|
|
|
|
|
|
||||||||
Bonds
|
|
$
|
—
|
|
|
$
|
4,145
|
|
|
$
|
—
|
|
|
$
|
4,145
|
|
Notes
|
|
—
|
|
|
—
|
|
|
2,351
|
|
|
2,351
|
|
||||
Interest rate swaps
|
|
—
|
|
|
1,698
|
|
|
—
|
|
|
1,698
|
|
||||
Corporate equity securities
|
|
—
|
|
|
631
|
|
|
32,511
|
|
|
33,142
|
|
||||
Total return swap
|
|
—
|
|
|
—
|
|
|
4,812
|
|
|
4,812
|
|
||||
Total Investments
|
|
$
|
—
|
|
|
$
|
6,474
|
|
|
$
|
39,674
|
|
|
$
|
46,148
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
BALANCE AT
DECEMBER 1,
2017
|
|
PURCHASES/
ADDITIONS
|
|
SETTLEMENTS,
NET
|
|
TOTAL GAINS/
LOSSES
(REALIZED
AND
UNREALIZED)
(1)
|
|
NET
TRANSFERS
IN AND
OUT OF
LEVEL 3
|
|
BALANCE AT
NOVEMBER 30,
2018
|
|
NET CHANGE IN
UNREALIZED
GAINS/LOSSES
RELATING TO
INSTRUMENTS
STILL
HELD AT
NOVEMBER 30,
2018
|
||||||||||||||
Corporate equity securities
|
|
$
|
32,511
|
|
|
$
|
18,126
|
|
|
$
|
—
|
|
|
$
|
(3,455
|
)
|
|
$
|
—
|
|
|
$
|
47,182
|
|
|
$
|
(3,455
|
)
|
Notes
|
|
$
|
2,351
|
|
|
$
|
—
|
|
|
$
|
(2,767
|
)
|
|
$
|
416
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total return swap
|
|
$
|
4,812
|
|
|
$
|
296
|
|
|
$
|
(5,814
|
)
|
|
$
|
706
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
BALANCE AT
DECEMBER 1,
2016
|
|
PURCHASES/
ADDITIONS
|
|
SETTLEMENTS,
NET
|
|
TOTAL GAINS/
LOSSES
(REALIZED
AND
UNREALIZED)
(1)
|
|
NET
TRANSFERS
IN AND
OUT OF
LEVEL 3
|
|
BALANCE AT
NOVEMBER 30,
2017
|
|
NET CHANGE IN
UNREALIZED
GAINS/LOSSES
RELATING TO
INSTRUMENTS
STILL
HELD AT
NOVEMBER 30,
2017
|
||||||||||||||
Corporate equity securities
|
|
$
|
8,877
|
|
|
$
|
20,802
|
|
|
$
|
—
|
|
|
$
|
2,832
|
|
|
$
|
—
|
|
|
$
|
32,511
|
|
|
$
|
2,832
|
|
Notes
|
|
$
|
2,370
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(19
|
)
|
|
$
|
—
|
|
|
$
|
2,351
|
|
|
$
|
(19
|
)
|
Total return swap
|
|
$
|
3,309
|
|
|
$
|
456
|
|
|
$
|
—
|
|
|
$
|
1,047
|
|
|
$
|
—
|
|
|
$
|
4,812
|
|
|
$
|
1,047
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Total gains and losses (realized and unrealized) are recorded in Other gains (losses), net on the Consolidated Statements of Earnings.
|
|
|
|
|
|
|
|
|
|
|
|
|
||
FINANCIAL INSTRUMENTS OWNED
|
|
FAIR VALUE
(IN THOUSANDS) |
|
VALUATION
TECHNIQUE
|
|
SIGNIFICANT
UNOBSERVABLE INPUT(S)
|
|
INPUT
RANGE
|
|
WEIGHTED
AVERAGE
|
||
Corporate equity securities
|
|
|
|
|
|
|
|
|
|
|
||
Non-exchange traded
securities |
|
$
|
47,182
|
|
|
|
|
EBITDA multiple
|
|
1.6x-13.7x
|
|
7.8x
|
|
|
|
|
Market Approach
|
|
Revenue multiple
|
|
1.0x-2.4x
|
|
1.6x
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
FINANCIAL INSTRUMENTS OWNED
|
|
FAIR VALUE
(IN THOUSANDS) |
|
VALUATION
TECHNIQUE
|
|
SIGNIFICANT
UNOBSERVABLE INPUT(S)
|
|
INPUT
RANGE
|
|
WEIGHTED
AVERAGE
|
||||
Corporate equity securities
|
|
|
|
|
|
|
|
|
|
|
||||
Non-exchange traded
securities |
|
$
|
32,511
|
|
|
|
|
EBITDA multiple
|
|
5.6x-10.7x
|
|
|
7.8x
|
|
|
|
|
|
Market Approach
|
|
|
|
|
|
|
||||
|
|
|
|
Discounted Cash Flows
|
|
Revenue multiple
|
|
0.5x-2.0x
|
|
|
1.3x
|
|
||
Investments
|
|
|
|
|
|
|
|
|
|
|
||||
Notes
|
|
$
|
2,351
|
|
|
Asset Approach
|
|
Collateral Liquidation Values
|
|
N/A
(1)
|
|
|
N/A
(1)
|
|
Derivatives
|
|
|
|
|
|
|
|
|
|
|
||||
Total return swap
|
|
$
|
4,812
|
|
|
Discounted Cash Flows
|
|
—
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
Constant prepayment rate
|
|
20.0
|
%
|
|
20.0
|
%
|
||
|
|
|
|
|
|
Constant default rate
|
|
2.0
|
%
|
|
2.0
|
%
|
||
|
|
|
|
|
|
Loss severity
|
|
25.0
|
%
|
|
25.0
|
%
|
||
|
|
|
|
|
|
Yield
|
|
26.0
|
%
|
|
26.0
|
%
|
||
|
|
|
|
|
|
|
|
|
|
|
(1)
|
There is no meaningful quantitative information to provide as the methods of valuation are investment specific.
|
|
|
|
|
|
||||||||||||
|
NOVEMBER 30, 2018
|
|
NOVEMBER 30, 2017
|
||||||||||||
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
||||||||
Financial assets:
|
|
|
|
|
|
|
|
||||||||
Cash
|
$
|
1,033,048
|
|
|
$
|
1,033,048
|
|
|
$
|
1,555,484
|
|
|
$
|
1,555,484
|
|
Restricted cash
|
468,934
|
|
|
468,934
|
|
|
875,270
|
|
|
875,270
|
|
||||
Loans receivable, net
|
4,443,872
|
|
|
4,328,669
|
|
|
4,751,394
|
|
|
4,688,556
|
|
||||
CLO notes
(1)
|
45,735
|
|
|
43,962
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
5,991,589
|
|
|
$
|
5,874,613
|
|
|
$
|
7,182,148
|
|
|
$
|
7,119,310
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
NOVEMBER 30, 2018
|
|
NOVEMBER 30, 2017
|
||||||||||||
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
||||||||
Financial liabilities:
|
|
|
|
|
|
|
|
||||||||
Credit facilities, net
|
$
|
186,232
|
|
|
$
|
192,083
|
|
|
$
|
318,103
|
|
|
$
|
323,806
|
|
Secured notes payable, net
|
3,620,191
|
|
|
3,646,054
|
|
|
3,882,817
|
|
|
3,976,732
|
|
||||
Securities sold under agreement to repurchase
|
39,480
|
|
|
38,929
|
|
|
—
|
|
|
—
|
|
||||
Long-term debt, net
|
2,054,023
|
|
|
2,062,584
|
|
|
2,073,479
|
|
|
2,152,397
|
|
||||
Total
|
$
|
5,899,926
|
|
|
$
|
5,939,650
|
|
|
$
|
6,274,399
|
|
|
$
|
6,452,935
|
|
|
|
|
|
|
|
|
|
(1)
|
For the year ended November 30, 2018 the Company did not record any OTTI.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
THIRD
PARTY FRONTING LINE |
|
MEMBERS’
FRONTING LINE |
|
APEX
CLO 2017 III WH |
|
APEX
CLO 2018 WH II |
|
CLO 2012
WH |
|
JFIN
BUSINESS CREDIT FUND I LLC |
|
JFUND III
LLC |
|
TOTAL
|
||||||||||||||||
Total availability under
the facility |
$
|
800.0
|
|
|
$
|
500.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
100.0
|
|
|
$
|
300.0
|
|
|
$
|
1,700.0
|
|
Outstanding
balance |
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
54.0
|
|
|
138.1
|
|
|
192.1
(1)
|
|
||||||||
Current availability
|
$
|
800.0
|
|
|
$
|
500.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
46.0
|
|
|
$
|
161.9
|
|
|
$
|
1,507.9
|
|
Principal balance of loans pledged as collateral
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
73.2
|
|
|
$
|
249.0
|
|
|
322.2
|
|
|
Largest outstanding amounts during the periods
|
977.2
|
|
|
500.0
|
|
|
359.3
|
|
|
259.6
|
|
|
126.7
|
|
|
55.4
|
|
|
148.6
|
|
|
2,426.8
|
|
||||||||
Interest expense incurred
|
3.4
|
|
|
2.0
|
|
|
3.0
|
|
|
3.0
|
|
|
0.9
|
|
|
1.3
|
|
|
6.5
|
|
|
20.1
|
|
||||||||
Undrawn facility fees incurred
|
5.9
|
|
|
2.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
2.0
|
|
|
10.8
|
|
||||||||
Variable interest rate based on LIBOR
|
4.67
|
%
|
|
5.30
|
%
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
4.04
|
%
|
|
4.76
|
%
|
|
|
|||||||||
Maturity Date
|
2/20/2019
(2&3)
|
|
|
3/1/2019
(4&5)
|
|
|
Terminated
|
|
|
Terminated
|
|
|
Terminated
|
|
|
9/12/2021
|
|
|
2/10/2022
(6)
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Outstanding balance does not include $5.9 million of deferred structuring fees which is recorded as a direct reduction of the credit facility on the consolidated balance sheet.
|
(2)
|
On February 21, 2018, the Third Party Fronting Line was increased to $800.0 million from $500.0 million.
|
(3)
|
Third Party Fronting line included a temporary increase of $233.0 million from 2/27/2018 to 3/27/2018.
|
(4)
|
The Member’s $500 million Fronting Line was renewed until March 1, 2019.
|
(5)
|
Each Member, at their discretion may make available additional advances in excess of its committed amount.
|
(6)
|
On February 10, 2017, the maturity of the facility was extended until February 10, 2022.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
THIRD
PARTY FRONTING LINE |
|
MEMBERS’
FRONTING LINE |
|
APEX
CLO 2017 III WH |
|
CLO 2016
II WH |
|
JFIN
BUSINESS CREDIT FUND I LLC |
|
JFUND III
LLC |
|
JFUND V
LLC |
|
TOTAL
|
||||||||||||||||
Total availability under the
facility |
$
|
500.0
|
|
|
$
|
500.0
|
|
|
$
|
250.0
|
|
|
$
|
—
|
|
|
$
|
100.0
|
|
|
$
|
300.0
|
|
|
$
|
—
|
|
|
$
|
1,650.0
|
|
Outstanding balance
|
—
|
|
|
—
|
|
|
154.8
|
|
|
—
|
|
|
23.4
|
|
|
145.6
|
|
|
—
|
|
|
323.8
(1)
|
|
||||||||
Current availability
|
$
|
500.0
|
|
|
$
|
500.0
|
|
|
$
|
95.2
|
|
|
$
|
—
|
|
|
$
|
76.6
|
|
|
$
|
154.4
|
|
|
$
|
—
|
|
|
$
|
1,326.2
|
|
Principal balance of loans
pledged as collateral |
$
|
—
|
|
|
$
|
—
|
|
|
$
|
246.6
|
|
|
$
|
—
|
|
|
$
|
32.0
|
|
|
$
|
251.1
|
|
|
$
|
—
|
|
|
$
|
529.7
|
|
Largest outstanding
amounts during the periods |
500.0
|
|
|
1,100.0
(2)
|
|
|
154.8
|
|
|
325.3
|
|
|
43.9
|
|
|
193.1
|
|
|
345.6
|
|
|
2,662.7
|
|
||||||||
Interest expense incurred
|
4.4
|
|
|
5.1
|
|
|
0.9
|
|
|
1.6
|
|
|
0.7
|
|
|
6.7
|
|
|
3.1
|
|
|
22.5
|
|
||||||||
Undrawn facility fees incurred
|
3.0
|
|
|
1.7
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
1.2
|
|
|
1.0
|
|
|
7.2
|
|
||||||||
Variable interest rate based on LIBOR
|
4.19
|
%
|
|
4.92
|
%
|
|
3.34
|
%
|
|
2.98
|
%
|
|
2.88
|
%
|
|
3.75
|
%
|
|
3.05
|
%
|
|
—
|
|
||||||||
Maturity Date
|
2/26/2018
(3)
|
|
|
3/1/2018
(4)
|
|
|
8/4/2018
|
|
|
Terminated
|
|
|
9/12/2021
|
|
|
2/10/2022
(5)
|
|
|
Terminated
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Outstanding balance does not include $5.7 million of deferred structuring fees which is recorded as a direct reduction of the credit facility on consolidated balance sheet.
|
(2)
|
Each Member, at their discretion may make available additional advances in excess of its committed amount.
|
(3)
|
On February 27, 2016, the Third Party Fronting Line was increased to $500.0 million from $481.7 million.
|
(4)
|
After March 1, 2016, the Members’ Fronting Line contains annual automatic one-year extensions, absent a 60-day termination notice by either party.
|
(5)
|
On February 10, 2017, the maturity of the facility was extended until February 10, 2022.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
THIRD
PARTY FRONTING LINE |
|
MEMBERS’
FRONTING LINE |
|
JFIN CLO
2016-II WH |
|
JFIN CLO
2016 WH |
|
JFIN
BUSINESS CREDIT FUND I LLC |
|
JFUND III
LLC |
|
TOTAL
|
||||||||||||||
Total availability under the facility
|
$
|
500.0
|
|
|
$
|
500.0
|
|
|
$
|
200.0
|
|
|
$
|
—
|
|
|
$
|
100.0
|
|
|
$
|
300.0
|
|
|
$
|
1,600.0
|
|
Outstanding balance
|
—
|
|
|
—
|
|
|
124.2
|
|
|
—
|
|
|
33.4
|
|
|
189.3
|
|
|
346.9
(1)
|
|
|||||||
Current availability
|
$
|
500.0
|
|
|
$
|
500.0
|
|
|
$
|
75.8
|
|
|
$
|
—
|
|
|
$
|
66.6
|
|
|
$
|
110.7
|
|
|
$
|
1,253.1
|
|
Principal balance of loans pledged as
collateral |
$
|
—
|
|
|
$
|
—
|
|
|
$
|
219.4
|
|
|
$
|
—
|
|
|
$
|
45.0
|
|
|
$
|
312.1
|
|
|
$
|
576.5
|
|
Largest outstanding amounts during the
periods |
218.6
|
|
|
300.0
|
|
|
124.2
|
|
|
227.8
|
|
|
50.1
|
|
|
247.3
|
|
|
1,168.0
|
|
|||||||
Interest expense incurred
|
0.3
|
|
|
0.1
|
|
|
0.3
|
|
|
1.3
|
|
|
0.7
|
|
|
7.1
|
|
|
9.8
|
|
|||||||
Undrawn facility fees incurred
|
4.5
|
|
|
2.7
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
0.4
|
|
|
7.8
|
|
|||||||
Variable interest rate based on
LIBOR |
3.88
|
%
|
|
4.19
|
%
|
|
2.88
|
%
|
|
1.95
|
%
|
|
2.39
|
%
|
|
3.22
|
%
|
|
—
|
|
|||||||
Maturity Date
|
2/25/2017
|
|
|
3/1/2017
|
|
|
6/30/2017
|
|
|
Terminated
|
|
|
9/12/2021
|
|
|
2/12/2019
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Outstanding balance does not include $4.1 million of deferred structuring fees.
|
|
|
|
|
|
|
|
||||
|
|
NOVEMBER 30,
2018
|
|
NOVEMBER 30,
2017
|
|
||||
Due in 2019
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Due in 2020
|
|
—
|
|
|
37,378
|
|
|
||
Due in 2021
|
|
—
|
|
|
—
|
|
|
||
Due in 2022
|
|
—
|
|
|
137,141
|
|
|
||
Due in 2023
|
|
—
|
|
|
177,096
|
|
|
||
Thereafter
|
|
3,620,192
|
|
|
3,531,202
|
|
|
||
Total
|
|
$
|
3,620,192
|
|
|
$
|
3,882,817
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
DESCRIPTION
|
|
ISSUE DATE
|
|
OUTSTANDING
PRINCIPAL AMOUNT |
|
MATURITY
|
|
INTEREST
RATE
|
|
INTEREST
PAYMENT
DATES
|
|||
2020 Notes
(1)
|
|
3/26/2013
|
|
$
|
600.0
|
|
|
April 1, 2020
|
|
7.375
|
%
|
|
April and October 1
|
2021 Notes
(1)
|
|
10/14/2014
|
|
$
|
425.0
|
|
|
April 15, 2021
|
|
7.500
|
%
|
|
April and October 15
|
2022 Notes
(1)
|
|
3/31/2014
|
|
$
|
415.0
|
|
|
April 15, 2022
|
|
6.875
|
%
|
|
April and October 15
|
2024 Notes
(1)
|
|
8/03/2017
|
|
$
|
387.3
|
|
|
August 15, 2024
|
|
7.250
|
%
|
|
February and August 15
|
Secured Term Loan
(2)
|
|
8/03/2017
|
|
$
|
247.5
|
|
|
August 3, 2024
(3)
|
|
Libor +2.500%
|
|
|
Last business day of each fiscal quarter
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Collectively, the 2020 Notes, 2021 Notes, 2022 Notes and the 2024 Notes are referred to as the “Senior Notes”.
|
(2)
|
Issued with a Libor floor of 1%.
|
(3)
|
The Secured Term Loan matures on August 3, 2024, or December 31, 2019 if the amount outstanding on the 2020 Notes, 2021 Notes, 2022 Notes exceeds $100.0 million on such date.
|
|
|
|
|
|
|
|
|
||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Underwriting fees
|
$
|
641,094
|
|
|
$
|
625,754
|
|
|
$
|
262,933
|
|
Administration fees
|
11,137
|
|
|
8,399
|
|
|
9,508
|
|
|||
Other fees
|
67,887
|
|
|
61,024
|
|
|
52,104
|
|
|||
|
720,118
|
|
|
695,177
|
|
|
324,545
|
|
|||
Less:
|
|
|
|
|
|
||||||
Deferred underwriting fees
|
(136,292
|
)
|
|
(113,179
|
)
|
|
(72,227
|
)
|
|||
Jefferies LLC fees, net
(1)
|
(268,705
|
)
|
|
(279,337
|
)
|
|
(99,013
|
)
|
|||
Third party fees
|
(32,265
|
)
|
|
(32,638
|
)
|
|
(22,949
|
)
|
|||
Fee income, net
|
$
|
282,856
|
|
|
$
|
270,023
|
|
|
$
|
130,356
|
|
|
|
|
|
|
|
(1)
|
Jefferies LLC is a wholly owned subsidiary of JGL.
|
|
|
|
|
|
|
||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Realized gain (loss) on sale of loans held for sale
|
$
|
10,445
|
|
|
$
|
6,467
|
|
|
$
|
(34,545
|
)
|
Change in fair value of loans held for sale
|
(5
|
)
|
|
(4,634
|
)
|
|
(8,267
|
)
|
|||
Realized gain (loss) on investments
|
492
|
|
|
1,047
|
|
|
(24,597
|
)
|
|||
Unrealized gain (loss) on investments
|
(2,116
|
)
|
|
1,863
|
|
|
(8,139
|
)
|
|||
Dividends
|
307
|
|
|
1,937
|
|
|
—
|
|
|||
Other gains (losses), net
|
$
|
9,123
|
|
|
$
|
6,680
|
|
|
$
|
(75,548
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
2018
|
|
2017
|
|
2016
|
|
||||||
Current—local
|
|
$
|
7,591
|
|
|
$
|
5,750
|
|
|
$
|
(1,569
|
)
|
|
Deferred—local
|
|
(91
|
)
|
|
550
|
|
|
55
|
|
|
|||
Total income tax expense (benefit)
|
|
$
|
7,500
|
|
|
$
|
6,300
|
|
|
$
|
(1,514
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Management fees charged by BCM
|
$
|
912
|
|
|
$
|
2,807
|
|
|
$
|
1,488
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Compensation and benefits
|
$
|
31,661
|
|
|
$
|
24,222
|
|
|
$
|
28,919
|
|
Administration expenses
|
26,003
|
|
|
22,938
|
|
|
13,935
|
|
|||
Occupancy expenses
|
3,322
|
|
|
2,928
|
|
|
2,999
|
|
|||
New York City Unincorporated Business Tax
|
635
|
|
|
291
|
|
|
347
|
|
|||
Expenses charged by Jefferies
|
$
|
61,621
|
|
|
$
|
50,379
|
|
|
$
|
46,200
|
|
|
|
|
|
|
|
|
|
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
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal controls 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:
|
January 28, 2019
|
By:
|
/s/ Peregrine C. Broadbent
|
|
|
|
Peregrine C. Broadbent
Chief Financial Officer
|
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
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal controls 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:
|
January 28, 2019
|
By:
|
/s/ Richard B. Handler
|
|
|
|
Richard B. Handler
Chief Executive Officer
|
CHIEF EXECUTIVE OFFICER
|
|
CHIEF FINANCIAL OFFICER
|
||
|
|
|
||
/s/ Richard B. Handler
|
|
/s/ Peregrine C. Broadbent
|
||
Richard B. Handler
|
|
Peregrine C. Broadbent
|
||
|
|
|
||
Date:
|
January 28, 2019
|
|
Date:
|
January 28, 2019
|