8-K
Jefferies Financial Group Inc. (JEF)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (date of earliest event reported): April 8, 2022
JEFFERIES FINANCIAL GROUP INC.
(Exact name of registrant as specified in its charter)
| New York | 1-5721 | 13-2615557 | |
|---|---|---|---|
| (State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | |
| 520 Madison Avenue | New York, | New York | 10022 |
| (Address of Principal Executive Offices) | (Zip Code) |
(212) 460-1900
Registrant's telephone number, including area code
(Former name or former address, if changed since last report)
______________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock; Par Value $1.00 Per Share | JEF | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 8.01 Other Events
On December 1, 2021, Jefferies Financial Group Inc. (the "Company," "our," or "we") contributed $477 million of net assets, including both Merchant Banking and Asset Management investments, to Jefferies Group. The transferred Merchant Banking investments are now being managed by a different management team, while the Asset Management investments continue to be managed by the co-Presidents of Asset Management who oversee all asset management activities across the Company. As a result, we transferred $194 million of net assets out of our Merchant Banking segment: $139 million of these net assets, including $48 million of net assets relating to Foursight Capital LLC, were transferred into our Investment Banking and Capital Markets segment; the remaining $55 million of net assets transferred are now managed by the co-Presidents of Asset Management and are included in our Asset Management segment.
These changes to our business segments have no effect on our historical total net revenues, total income before income taxes, or total net income in the consolidated statements of operations or total assets or total liabilities in the consolidated statements of financial condition. Prior year amounts have been reclassified to conform to current segment reporting.
Our reclassified operating results by segment and additional parent company interest and consolidating adjustment reconciling items are as follows (in thousands):
| For the Three Months Ended | For the Year Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| February 28, 2021 | May 31,<br> 2021 | August 31, 2021 | November 30,<br> 2021 | November 30, 2021 | November 30, 2020 | |||||||
| Investment Banking and Capital Markets | ||||||||||||
| Net revenues | $ | 1,987,496 | $ | 1,598,862 | $ | 1,672,943 | $ | 1,648,085 | $ | 6,907,386 | $ | 5,072,640 |
| Expenses: | ||||||||||||
| Cost of sales | — | — | — | — | — | — | ||||||
| Compensation and benefits | 1,109,695 | 778,284 | 762,725 | 688,557 | 3,339,261 | 2,746,382 | ||||||
| Non-compensation expenses: | ||||||||||||
| Floor brokerage and clearing fees | 66,574 | 66,211 | 64,441 | 68,809 | 266,035 | 241,083 | ||||||
| Selling, general and other expenses | 228,733 | 293,276 | 222,357 | 311,344 | 1,055,710 | 846,941 | ||||||
| Interest expense (1) | 5,553 | 5,271 | 4,982 | 4,937 | 20,743 | 26,745 | ||||||
| Depreciation and amortization | 20,710 | 20,805 | 21,065 | 22,711 | 85,291 | 82,479 | ||||||
| Total non-compensation expenses | 321,570 | 385,563 | 312,845 | 407,801 | 1,427,779 | 1,197,248 | ||||||
| Total expenses | 1,431,265 | 1,163,847 | 1,075,570 | 1,096,358 | 4,767,040 | 3,943,630 | ||||||
| Income (loss) before income taxes and loss related to associated companies | 556,231 | 435,015 | 597,373 | 551,727 | 2,140,346 | 1,129,010 | ||||||
| Loss related to associated companies | — | — | — | — | — | — | ||||||
| Income (loss) before income taxes | $ | 556,231 | $ | 435,015 | $ | 597,373 | $ | 551,727 | $ | 2,140,346 | $ | 1,129,010 |
(1) Interest expense within Investment Banking and Capital Markets relates to Foursight.
| For the Three Months Ended | For the Year Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| February 28, 2021 | May 31,<br> 2021 | August 31, 2021 | November 30,<br> 2021 | November 30, 2021 | November 30, 2020 | |||||||
| Asset Management | ||||||||||||
| Net revenues | $ | 229,202 | $ | 50,675 | $ | 13,327 | $ | 42,809 | $ | 336,013 | $ | 234,910 |
| Expenses: | ||||||||||||
| Cost of sales | — | — | — | — | — | — | ||||||
| Compensation and benefits | 22,785 | 21,671 | 15,468 | 22,802 | 82,726 | 89,527 | ||||||
| Non-compensation expenses: | ||||||||||||
| Floor brokerage and clearing fees | 9,842 | 10,599 | 4,541 | 10,843 | 35,825 | 25,509 | ||||||
| Selling, general and other expenses | 12,164 | 10,768 | 10,719 | 15,282 | 48,933 | 46,095 | ||||||
| Interest expense | — | — | — | — | — | — | ||||||
| Depreciation and amortization | 479 | 489 | 494 | 439 | 1,901 | 5,228 | ||||||
| Total non-compensation expenses | 22,485 | 21,856 | 15,754 | 26,564 | 86,659 | 76,832 | ||||||
| Total expenses | 45,270 | 43,527 | 31,222 | 49,366 | 169,385 | 166,359 | ||||||
| Income (loss) before income taxes and loss related to associated companies | 183,932 | 7,148 | (17,895) | (6,557) | 166,628 | 68,551 | ||||||
| Loss related to associated companies | — | — | — | — | — | — | ||||||
| Income (loss) before income taxes | $ | 183,932 | $ | 7,148 | $ | (17,895) | $ | (6,557) | $ | 166,628 | $ | 68,551 |
| For the Three Months Ended | For the Year Ended | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| February 28, 2021 | May 31,<br> 2021 | August 31, 2021 | November 30,<br> 2021 | November 30, 2021 | November 30, 2020 | |||||||
| Merchant Banking | ||||||||||||
| Net revenues | $ | 267,004 | $ | 296,815 | $ | 248,690 | $ | 118,068 | $ | 930,577 | $ | 681,574 |
| Expenses: | ||||||||||||
| Cost of sales | 95,559 | 143,847 | 151,510 | 79,954 | 470,870 | 338,588 | ||||||
| Compensation and benefits | 24,529 | 24,252 | 17,584 | 27,161 | 93,526 | 65,770 | ||||||
| Non-compensation expenses: | ||||||||||||
| Floor brokerage and clearing fees | — | — | — | — | — | — | ||||||
| Selling, general and other expenses | 26,520 | 32,631 | 39,849 | 30,146 | 129,146 | 163,161 | ||||||
| Interest expense | 912 | 843 | 762 | 691 | 3,208 | 4,680 | ||||||
| Depreciation and amortization | 16,714 | 17,268 | 16,554 | 16,928 | 67,464 | 67,236 | ||||||
| Total non-compensation expenses | 44,146 | 50,742 | 57,165 | 47,765 | 199,818 | 235,077 | ||||||
| Total expenses | 164,234 | 218,841 | 226,259 | 154,880 | 764,214 | 639,435 | ||||||
| Income (loss) before income taxes and loss related to associated companies | 102,770 | 77,974 | 22,431 | (36,812) | 166,363 | 42,139 | ||||||
| Loss related to associated companies | (10,568) | (23,526) | (27,176) | (33,149) | (94,419) | (75,483) | ||||||
| Income (loss) before income taxes | $ | 92,202 | $ | 54,448 | $ | (4,745) | $ | (69,961) | $ | 71,944 | $ | (33,344) |
| For the Three Months Ended | For the Year Ended | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| February 28, 2021 | May 31,<br> 2021 | August 31, 2021 | November 30,<br> 2021 | November 30, 2021 | November 30, 2020 | |||||||
| Corporate | ||||||||||||
| Net revenues | $ | 590 | $ | 724 | $ | 955 | $ | 773 | $ | 3,042 | $ | 13,258 |
| Expenses: | ||||||||||||
| Cost of sales | — | — | — | — | — | — | ||||||
| Compensation and benefits | 15,534 | 7,035 | 6,466 | 6,576 | 35,611 | 39,184 | ||||||
| Non-compensation expenses: | ||||||||||||
| Floor brokerage and clearing fees | — | — | — | — | — | — | ||||||
| Selling, general and other expenses | 4,669 | 4,910 | 4,375 | 5,299 | 19,253 | 26,197 | ||||||
| Interest expense | — | — | — | — | — | — | ||||||
| Depreciation and amortization | 864 | 878 | 564 | 458 | 2,764 | 3,496 | ||||||
| Total non-compensation expenses | 5,533 | 5,788 | 4,939 | 5,757 | 22,017 | 29,693 | ||||||
| Total expenses | 21,067 | 12,823 | 11,405 | 12,333 | 57,628 | 68,877 | ||||||
| Income (loss) before income taxes and loss related to associated companies | (20,477) | (12,099) | (10,450) | (11,560) | (54,586) | (55,619) | ||||||
| Loss related to associated companies | — | — | — | — | — | — | ||||||
| Income (loss) before income taxes | $ | (20,477) | $ | (12,099) | $ | (10,450) | $ | (11,560) | $ | (54,586) | $ | (55,619) |
| For the Three Months Ended | For the Year Ended | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| February 28, 2021 | May 31,<br> 2021 | August 31, 2021 | November 30,<br> 2021 | November 30, 2021 | November 30, 2020 | |||||||
| Parent Company Interest and Consolidation Adjustments | ||||||||||||
| Net revenues | $ | 2,650 | $ | 3,431 | $ | 3,069 | $ | (839) | $ | 8,311 | $ | 8,492 |
| Expenses: | ||||||||||||
| Cost of sales | — | — | — | — | — | — | ||||||
| Compensation and benefits | — | — | — | — | — | — | ||||||
| Non-compensation expenses: | ||||||||||||
| Floor brokerage and clearing fees | — | — | — | — | — | — | ||||||
| Selling, general and other expenses | (149) | (25) | (38) | 25,617 | 25,405 | (3,438) | ||||||
| Interest expense | 13,902 | 13,829 | 13,774 | 11,628 | 53,133 | 53,445 | ||||||
| Depreciation and amortization | — | — | — | — | — | — | ||||||
| Total non-compensation expenses | 13,753 | 13,804 | 13,736 | 37,245 | 78,538 | 50,007 | ||||||
| Total expenses | 13,753 | 13,804 | 13,736 | 37,245 | 78,538 | 50,007 | ||||||
| Income (loss) before income taxes and loss related to associated companies | (11,103) | (10,373) | (10,667) | (38,084) | (70,227) | (41,515) | ||||||
| Loss related to associated companies | — | — | — | — | — | — | ||||||
| Income (loss) before income taxes | $ | (11,103) | $ | (10,373) | $ | (10,667) | $ | (38,084) | $ | (70,227) | $ | (41,515) |
| For the Three Months Ended | For the Year Ended | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| February 28, 2021 | May 31,<br> 2021 | August 31, 2021 | November 30,<br> 2021 | November 30, 2021 | November 30, 2020 | |||||||
| Jefferies Financial Group Consolidated | ||||||||||||
| Net revenues | $ | 2,486,942 | $ | 1,950,507 | $ | 1,938,984 | $ | 1,808,896 | $ | 8,185,329 | $ | 6,010,874 |
| Expenses: | ||||||||||||
| Cost of sales | 95,559 | 143,847 | 151,510 | 79,954 | 470,870 | 338,588 | ||||||
| Compensation and benefits | 1,172,543 | 831,242 | 802,243 | 745,096 | 3,551,124 | 2,940,863 | ||||||
| Non-compensation expenses: | ||||||||||||
| Floor brokerage and clearing fees | 76,416 | 76,810 | 68,982 | 79,652 | 301,860 | 266,592 | ||||||
| Selling, general and other expenses | 271,937 | 341,560 | 277,262 | 387,688 | 1,278,447 | 1,078,956 | ||||||
| Interest expense | 20,367 | 19,943 | 19,518 | 17,256 | 77,084 | 84,870 | ||||||
| Depreciation and amortization | 38,767 | 39,440 | 38,677 | 40,536 | 157,420 | 158,439 | ||||||
| Total non-compensation expenses | 407,487 | 477,753 | 404,439 | 525,132 | 1,814,811 | 1,588,857 | ||||||
| Total expenses | 1,675,589 | 1,452,842 | 1,358,192 | 1,350,182 | 5,836,805 | 4,868,308 | ||||||
| Income (loss) before income taxes and loss related to associated companies | 811,353 | 497,665 | 580,792 | 458,714 | 2,348,524 | 1,142,566 | ||||||
| Loss related to associated companies | (10,568) | (23,526) | (27,176) | (33,149) | (94,419) | (75,483) | ||||||
| Income (loss) before income taxes | $ | 800,785 | $ | 474,139 | $ | 553,616 | $ | 425,565 | $ | 2,254,105 | $ | 1,067,083 |
In addition to the segment changes, we also changed where we presented Jefferies Group's share of the net earnings of Berkadia Commercial Mortgage Holding LLC in our "Revenues by Source." The net earnings were previously presented within Other revenues and are now presented within Other investment banking revenues. We believe that this change to our revenue reporting better aligns with management's current view of our business activities related to commercial real estate investment banking and management reporting. Our reclassified "Revenues by Source" by segment are as follows (in thousands):
| For the Three Months Ended | For the Year Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| February 28, 2021 | May 31,<br> 2021 | August 31, 2021 | November 30,<br> 2021 | November 30, 2021 | November 30, 2020 | |||||||
| Revenues by Source | ||||||||||||
| Investment Banking and Capital Markets Net Revenues: | ||||||||||||
| Advisory | $ | 311,439 | $ | 390,508 | $ | 583,887 | $ | 587,726 | $ | 1,873,560 | $ | 1,053,500 |
| Equity underwriting | 494,806 | 324,462 | 367,460 | 370,636 | 1,557,364 | 902,016 | ||||||
| Debt underwriting | 197,367 | 285,730 | 229,273 | 222,655 | 935,025 | 545,978 | ||||||
| Total underwriting | 692,173 | 610,192 | 596,733 | 593,291 | 2,492,389 | 1,447,994 | ||||||
| Other investment banking | 83,022 | 82,461 | 42,997 | 66,631 | 275,111 | 32,346 | ||||||
| Total investment banking | 1,086,634 | 1,083,161 | 1,223,617 | 1,247,648 | 4,641,060 | 2,533,840 | ||||||
| Equities | 531,016 | 242,949 | 236,532 | 291,032 | 1,301,529 | 1,128,910 | ||||||
| Fixed income | 363,359 | 257,197 | 205,795 | 132,771 | 959,122 | 1,340,792 | ||||||
| Total capital markets | 894,375 | 500,146 | 442,327 | 423,803 | 2,260,651 | 2,469,702 | ||||||
| Other | 6,487 | 15,555 | 6,999 | (23,366) | 5,675 | 69,098 | ||||||
| Total Investment Banking and Capital Markets Net Revenues | 1,987,496 | 1,598,862 | 1,672,943 | 1,648,085 | 6,907,386 | 5,072,640 | ||||||
| Asset Management Net Revenues: | ||||||||||||
| Asset management fees and revenues | 66,309 | 22,490 | 18,869 | 13,065 | 120,733 | 26,539 | ||||||
| Investment return | 173,292 | 39,624 | 5,613 | 41,658 | 260,187 | 256,855 | ||||||
| Allocated net interest | (10,399) | (11,439) | (11,155) | (11,914) | (44,907) | (48,484) | ||||||
| Total Asset Management Net Revenues | 229,202 | 50,675 | 13,327 | 42,809 | 336,013 | 234,910 | ||||||
| Merchant Banking Net Revenues | 267,004 | 296,815 | 248,690 | 118,068 | 930,577 | 681,574 | ||||||
| Corporate Net Revenues | 590 | 724 | 955 | 773 | 3,042 | 13,258 | ||||||
| Consolidating Adjustments | 2,650 | 3,431 | 3,069 | (839) | 8,311 | 8,492 | ||||||
| Total Net Revenues | $ | 2,486,942 | $ | 1,950,507 | $ | 1,938,984 | $ | 1,808,896 | $ | 8,185,329 | $ | 6,010,874 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: April 8, 2022
| JEFFERIES FINANCIAL GROUP INC. | |
|---|---|
| By: | /s/ Teresa S. Gendron |
| Name: | Teresa S. Gendron |
| Title: | Vice President and Chief Financial Officer |
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