Jefferies Financial Group Announces Second Quarter 2021 Financial Results -- Jefferies Group LLC Delivers Record Second Quarter and Six Months Revenues and Net Income

Jefferies Financial Group Inc. (NYSE: JEF) today announced its financial results for the three and six months ended May 31, 2021. Net Income attributable to common shareholders for the second quarter was $353 million, or $1.30 per diluted share, and annualized adjusted return on tangible equity was 19.2%¹. For the six months ended May 31, 2021, Net income attributable to common shareholders was $935 million, or $3.43 per diluted share, and annualized adjusted return on tangible equity was 27.0%².

In addition, the Jefferies Board of Directors declared a quarterly cash dividend equal to $0.25 per Jefferies common share, a 25% increase on the prior dividend rate, payable on August 27, 2021 to record holders of Jefferies common shares on August 16, 2021. We expect to file our Form 10-Q on or about July 9, 2021.

Highlights for the three months ended May 31, 2021:

• Jefferies Group LLC
  • Net revenues of $1,617 million, a record for a second quarter and up 56% over the prior year second quarter's then all-time record quarterly net revenues
  • Pre-tax income of $429 million, also a record for a second quarter and up 148% over the prior year quarter, demonstrating the operating leverage inherent in our business model, and record second quarter net earnings of $318 million, up 147% over the prior year quarter
  • Annualized return on tangible equity of 26.9%³, compared with 11.6%⁴ in the prior year quarter
  • Record quarterly Investment Banking net revenues of $1,034 million, up 227% over the prior year quarter, including record quarterly Advisory net revenues of $391 million, record quarterly Debt Underwriting net revenues of $286 million and Equity Underwriting net revenues of $324 million, a record for a second quarter
  • Quarterly combined Capital Markets net revenues of $500 million, down 31.5% over the prior year quarter; Equities net revenues of $243 million, a record for a second quarter, and Fixed Income net revenues of $257 million
  • Record second quarter Asset Management revenues (before allocated net interest⁵) of $56 million, up 202% over the prior year quarter and including $15 million in management, performance and similar fees and revenues earned directly or through our strategic affiliates
  • Liquidity buffer of $8.3 billion of cash and unencumbered liquid collateral at May 31, 2021, which represented 16% of our total balance sheet

• Jefferies Financial Group
  • Net income attributable to common shareholders for the second quarter was $353 million, or $1.30 per diluted share, and annualized adjusted return on tangible equity was
    19.2%¹
  • Merchant Banking pre-tax income of $59 million, reflecting record quarterly results from Idaho Timber and mark-to-market increases in the value of several of our investments in public and private companies

Highlights for the six months ended May 31, 2021:

• Jefferies Group LLC
  • Record six months net revenues of $3,747 million, up 70% over the prior year comparable period's then all-time record net revenues
  • Record six months pre-tax income of $1,100 million, up 170% over the prior year period, and record six months net earnings of $812 million, up 171% over the prior year period
  • Annualized return on tangible equity of 35.8%⁶, compared with 14.1%⁷ in the prior year period
  • Record six months Investment Banking net revenues of $2,067 million, up 131% over the prior year period, including record Advisory net revenues of $702 million, record Equity Underwriting net revenues of $819 million and record Debt Underwriting net revenues of $483 million
  • Record six months combined Capital Markets net revenues of $1,395 million, up 14% over the prior year period; record Equities net revenues of $774 million and Fixed Income net revenues of $621 million
  • Record six months Asset Management revenues (before allocated net interest⁵) of $236 million, up 362% over the prior year period, including $52 million in management, performance and similar fees and revenues earned directly or through our strategic affiliates in the current year period; performance fees and similar revenues recorded in the first six months of the current year are attributable to performance realized in respect of the twelve months ended December 31, 2020
  • Liquidity buffer of $8.3 billion of cash and unencumbered liquid collateral at May 31, 2021, which represented 16% of our total balance sheet

• Jefferies Financial Group
  • For the six months ended May 31, 2021, Net income attributable to common shareholders was $935 million, or $3.43 per diluted share, and annualized adjusted return on tangible equity was 27.0%²
  • Merchant Banking pre-tax income of $167 million, reflecting record six month results from Idaho Timber and mark-to-market increases in the value of several of our investments in public and private companies
  • We repurchased 5.0 million shares for $128 million, or an average price of $25.51 per share during the first six months of 2021; since April 2018, Jefferies has repurchased 123 million shares for $2.6 billion in total, or an average price of $21.04 per share; our share buyback authorization remains at $250 million
  • At May 31, 2021, we had 247 million shares outstanding and 278 million shares were outstanding on a fully diluted basis⁸
  • Jefferies book value per share was $40.77 and tangible book value per fully diluted share⁹ was $30.29 at May 31, 2021
  • Since April 2018, Jefferies has returned to shareholders $3.6 billion, or 35% of shareholders' equity and 46% of tangible shareholders' equity¹⁰ at the beginning of this effort. Our shareholders' equity at May 31, 2021 is $10.1 billion. Even with our significant return of capital to our shareholders, Jefferies tangible shareholders' equity¹⁰ at May 31, 2021 is $8.2 billion, which is over $300 million higher than at March 31, 2018

Rich Handler, our CEO, and Brian Friedman, our President, said:

"We would like to thank our colleagues and clients for Jefferies' spectacular results thus far in 2021. Our performance reflects the continued growth and strength of our global full-service business model and our increasing market share – particularly in Investment Banking, where net revenues for the first half of the year were more than $2 billion and our backlog¹¹ for the third quarter is at a record level. Additionally, our Equities, Fixed Income and Asset Management businesses all are performing well, even as the environment becomes more normalized relative to the uniquely exceptional first quarter.

"We intend to continue our relentless focus on serving our clients, while strategically investing in our global platform and over 4,000 employee-partners. We will strive to remain nimble, non-bureaucratic, entrepreneurial and mindful of risk, as well as continue to prioritize and value our people and culture. We are strategically hiring at all levels and we see this as a key driver of continuing growth. This is evident particularly in Investment Banking, as our capabilities, reach and brand are proving extremely scalable.

"As of our second quarter ending May 31, 2020, Jefferies Group had last twelve months ("LTM") net revenues, LTM earnings before income taxes and LTM net earnings of $3,730 million, $515 million and $388 million, respectively. For our current LTM ending May 31, 2021, our comparable numbers are $6,739 million, $1,870 million and $1,387 million, respectively. These significant increases of 81%, 263% and 257%, respectively, show the remarkable progress that we have achieved over the past year, as we rose to the unique challenges that were presented due to COVID-19 and emerged as an even stronger, more client focused and more diversified firm.

"We are humbled by the loyalty, tenacity, dedication and spirit of our employee-partners. We look forward to seeing more and more of them fully vaccinated, safe and heading back to our offices. We also plan on taking advantage of our newfound ability to offer flexibility to our team in a hybrid environment as we continue to build Jefferies together to best serve our clients."

* * * *

Amounts herein pertaining to May 31, 2021 represent a preliminary estimate as of the date of this earnings release and may be revised upon filing our Quarterly Report on Form 10-Q with the Securities and Exchange Commission ("SEC"). More information on our results of operations for the three and six months ended May 31, 2021 will be provided upon filing our Quarterly Report on Form 10-Q with the SEC.

This press release contains "forward-looking statements" within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include statements about our future and statements that are not historical facts. These forward-looking statements are usually preceded by the words "should," "expect," "intend," "may," "will," or similar expressions. Forward-looking statements may contain expectations regarding revenues, earnings, operations, and other results, and may include statements of future performance, plans, and objectives. Forward-looking statements also include statements pertaining to our strategies for future development of our businesses and products. Forward-looking statements represent only our belief regarding future events, many of which by their nature are inherently uncertain. It is possible that the actual results may differ, possibly materially, from the anticipated results indicated in these forward-looking statements. Information regarding important factors, including Risk Factors that could cause actual results to differ, perhaps materially, from those in our forward-looking statements is contained in reports we file with the SEC. You should read and interpret any forward-looking statement together with reports we file with the SEC.

Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy will be profitable or equal the corresponding indicated performance level(s).

1	Adjusted return on tangible equity (a non-GAAP financial measure) is defined as Jefferies Financial Group's three months ended May 31, 2021 annualized adjusted net income divided by our adjusted tangible shareholders' equity at February 28, 2021. Refer to schedule on page 14 for reconciliation to U.S. GAAP amounts.
2	Adjusted return on tangible equity (a non-GAAP financial measure) is defined as Jefferies Financial Group's six months ended May 31, 2021 annualized adjusted net income divided by our adjusted tangible shareholders' equity at November 30, 2020. Refer to schedule on page 14 for reconciliation to U.S. GAAP amounts.
3	Return on tangible equity (a non-GAAP financial measure) equals our three months ended May 31, 2021 annualized net earnings attributable to Jefferies Group LLC divided by our tangible Jefferies Group LLC member's equity (a non-GAAP financial measure) of $4,733 million at February 28, 2021. Tangible Jefferies Group LLC member's equity at February 28, 2021 equals Jefferies Group LLC member's equity of $6,540 million less goodwill and identifiable intangibles assets of $1,807 million.
4	Return on tangible equity (a non-GAAP financial measure) equals our three months ended May 31, 2020 annualized net earnings attributable to Jefferies Group LLC divided by our tangible Jefferies Group LLC member's equity (a non-GAAP financial measure) of $4,503 million at February 29, 2020. Tangible Jefferies Group LLC member's equity at February 29, 2020 equals Jefferies Group LLC member's equity of $6,313 million less goodwill and identifiable intangibles assets of $1,810 million.
5	Allocated net interest represents the allocation of a ratable portion of Jefferies Group LLC's long-term debt interest expense to Jefferies Group LLC's Asset Management reportable segment, net of interest income on Jefferies Group LLC's Cash and cash equivalents and other sources of liquidity, which allocation is consistent with Jefferies Group LLC's policy of allocating such items to all its business lines. Refer to Jefferies Group LLC's summary of Net Revenues by Source on page 10 and 11.
6	Return on tangible equity (a non-GAAP financial measure) equals our first six months ended May 31, 2021 annualized net earnings attributable to Jefferies Group LLC divided by our tangible Jefferies Group LLC member's equity (a non-GAAP financial measure) of $4,543 million at November 30, 2020. Tangible Jefferies Group LLC member's equity at November 30, 2020 equals Jefferies Group LLC member's equity of $6,349 million less goodwill and identifiable intangibles assets of $1,805 million.
7	Return on tangible equity (a non-GAAP financial measure) equals our first six months ended May 31, 2020 annualized net earnings attributable to Jefferies Group LLC divided by our tangible Jefferies Group LLC member's equity (a non-GAAP financial measure) of $4,311 million at November 30, 2019. Tangible Jefferies Group LLC member's equity at November 30, 2019 equals Jefferies Group LLC member's equity of $6,125 million less goodwill and identifiable intangibles assets of $1,814 million.
8	Shares outstanding on a fully diluted basis (a non-GAAP financial measure) is defined as Jefferies Financial Group's common shares outstanding plus restricted stock units, stock options, conversion of redeemable convertible preferred shares and other shares. Refer to schedule on page 15 for reconciliation to U.S. GAAP amounts.
9	Tangible book value per fully diluted share (a non-GAAP financial measure) is defined as adjusted tangible book value divided by shares outstanding on a fully diluted basis. Refer to schedule on page 15 for reconciliation to U.S. GAAP amounts.
10	Tangible shareholders' equity (a non-GAAP financial measure) is defined as Jefferies Financial Group shareholders' equity less Intangible assets, net and goodwill. Refer to schedule on page 15 for reconciliation to U.S. GAAP amounts.
11	Backlog represents an estimate of our net revenues from expected future transactions. As an indicator of net revenues in a given future period, it is subject to limitations. The time frame for the realization of revenues from these expected transactions varies and is influenced by factors we do not control. Transactions not included in the estimate may occur, and expected transactions may also be modified or cancelled.

Summary for Jefferies Financial Group Inc. and Subsidiaries (In thousands, except per share amounts) (Unaudited)
	Three Months Ended May 31,								Six Months Ended May 31,
	2021				2020				2021				2020
Net revenues	$	1,950,507			$	1,147,589			$	4,437,449			$	2,533,917
Income before income taxes and loss related to associated companies	$	497,665			$	82,228			$	1,309,018			$	307,877
Loss related to associated companies	(23,526		)		(6,721		)		(34,094		)		(74,576		)
Income before income taxes	474,139				75,507				1,274,924				233,301
Income tax provision	120,820				31,962				339,056				77,735
Net income	353,319				43,545				935,868				155,566
Net loss attributable to the noncontrolling interests	669				2,580				1,412				4,709
Net loss attributable to the redeemable noncontrolling interests	234				198				1,003				480
Preferred stock dividends	(1,626		)		(1,404		)		(3,252		)		(2,826		)
Net income attributable to Jefferies Financial Group Inc. common shareholders	$	352,596			$	44,919			$	935,031			$	157,929
Basic earnings per common share attributable to Jefferies Financial Group Inc. common shareholders:
Net income	$	1.33			$	0.16			$	3.51			$	0.53
Number of shares in calculation	263,280				286,764				264,829				294,589
Diluted earnings per common share attributable to Jefferies Financial Group Inc. common shareholders:
Net income	$	1.30			$	0.16			$	3.43			$	0.53
Number of shares in calculation	271,092				286,764				271,948				295,301

A summary of results for the three months ended May 31, 2021 is as follows (in thousands):

	Investment Banking and Capital Markets				Asset Management				Merchant Banking				Corporate				Parent Company Interest				Consolidation Adjustments				Total
Net revenues	$	1,572,964			$	54,554			$	318,828			$	724			$	—			$	3,437			$	1,950,507
Expenses:
Compensation and benefits	774,549				21,671				27,987				7,035				—				—				831,242
Cost of sales (1)	66,211				10,599				143,847				—				—				—				220,657
Interest expense	—				—				6,114				—				13,829				—				19,943
Depreciation and amortization	20,778				489				17,295				878				—				—				39,440
Selling, general and other expenses	284,868				10,740				41,061				4,910				—				(19		)		341,560
Total expenses	1,146,406				43,499				236,304				12,823				13,829				(19		)		1,452,842
Income (loss) before income taxes and loss related to associated companies	426,558				11,055				82,524				(12,099		)		(13,829		)		3,456				497,665
Loss related to associated companies	—				—				(23,526		)		—				—				—				(23,526		)
Income (loss) before income taxes	$	426,558			$	11,055			$	58,998			$	(12,099	)		$	(13,829	)		$	3,456			474,139
Income tax provision																									120,820
Net income																									$	353,319

A summary of results for the three months ended May 31, 2020 is as follows (in thousands):

	Investment Banking and Capital Markets				Asset Management				Merchant Banking				Corporate				Parent Company Interest				Consolidation Adjustments				Total
Net revenues	$	1,028,832			$	7,391			$	107,162			$	1,525			$	—			$	2,679			$	1,147,589
Expenses:
Compensation and benefits	551,821				26,502				13,973				6,171				—				—				598,467
Cost of sales (1)	67,601				7,878				80,771				—				—				—				156,250
Interest expense	—				—				8,282				—				12,878				—				21,160
Depreciation and amortization	19,981				2,133				17,378				874				—				—				40,366
Selling, general and other expenses	174,895				12,431				54,753				7,334				—				(295		)		249,118
Total expenses	814,298				48,944				175,157				14,379				12,878				(295		)		1,065,361
Income (loss) before income taxes and loss related to associated companies	214,534				(41,553		)		(67,995		)		(12,854		)		(12,878		)		2,974				82,228
Loss related to associated companies	—				—				(6,721		)		—				—				—				(6,721		)
Income (loss) before income taxes	$	214,534			$	(41,553	)		$	(74,716	)		$	(12,854	)		$	(12,878	)		$	2,974			75,507
Income tax provision																									31,962
Net income																									$	43,545
(1) Includes Floor brokerage and clearing fees.

A summary of results for the six months ended May 31, 2021 is as follows (in thousands):

	Investment Banking and Capital Markets				Asset Management				Merchant Banking				Corporate				Parent Company Interest				Consolidation Adjustments				Total
Net revenues	$	3,532,473			$	281,288			$	616,331			$	1,314			$	—			$	6,043			$	4,437,449
Expenses:
Compensation and benefits	1,880,761				44,456				55,999				22,569				—				—				2,003,785
Cost of sales (1)	132,785				20,441				239,406				—				—				—				392,632
Interest expense	—				—				12,579				—				27,731				—				40,310
Depreciation and amortization	41,462				968				34,035				1,742				—				—				78,207
Selling, general and other expenses	507,624				22,903				73,603				9,579				—				(212		)		613,497
Total expenses	2,562,632				88,768				415,622				33,890				27,731				(212		)		3,128,431
Income (loss) before income taxes and loss related to associated companies	969,841				192,520				200,709				(32,576		)		(27,731		)		6,255				1,309,018
Loss related to associated companies	—				—				(34,094		)		—				—				—				(34,094		)
Income (loss) before income taxes	$	969,841			$	192,520			$	166,615			$	(32,576	)		$	(27,731	)		$	6,255			1,274,924
Income tax provision																									339,056
Net income																									$	935,868

A summary of results for the six months ended May 31, 2020 is as follows (in thousands):

	Investment Banking and Capital Markets				Asset Management				Merchant Banking				Corporate				Parent Company Interest				Consolidation Adjustments				Total
Net revenues	$	2,177,661			$	27,720			$	311,721			$	11,317			$	—			$	5,498			$	2,533,917
Expenses:
Compensation and benefits	1,172,745				48,723				31,163				16,029				—				—				1,268,660
Cost of sales (1)	120,475				14,185				153,214				—				—				—				287,874
Interest expense	—				—				17,055				—				25,659				—				42,714
Depreciation and amortization	39,097				2,758				36,219				1,762				—				—				79,836
Selling, general and other expenses	380,853				24,536				127,833				14,134				—				(400		)		546,956
Total expenses	1,713,170				90,202				365,484				31,925				25,659				(400		)		2,226,040
Income (loss) before income taxes and loss related to associated companies	464,491				(62,482		)		(53,763		)		(20,608		)		(25,659		)		5,898				307,877
Loss related to associated companies	—				—				(74,576		)		—				—				—				(74,576		)
Income (loss) before income taxes	$	464,491			$	(62,482	)		$	(128,339	)		$	(20,608	)		$	(25,659	)		$	5,898			233,301
Income tax provision																									77,735
Net income																									$	155,566
(1) Includes Floor brokerage and clearing fees.

The following financial tables provide information for the results of Jefferies Group LLC and should be read in conjunction with Jefferies Group LLC's Annual Report on Form 10-K for the year ended November 30, 2020. Amounts herein pertaining to May 31, 2021 represent a preliminary estimate as of the date of this earnings release and may be revised in Jefferies Group LLC's Quarterly Report on Form 10-Q for the quarter ended May 31, 2021.

Jefferies Group LLC and Subsidiaries
Consolidated Statements of Earnings
(Amounts in Thousands)
(Unaudited)
		Quarter Ended
		May 31, 2021				February 28, 2021				May 31, 2020
Revenues:
Commissions and other fees		$	222,643			$	236,938			$	243,267
Principal transactions		325,059				791,219				467,283
Investment banking		1,000,700				1,003,662				387,491
Asset management fees and revenues		14,567				37,383				4,576
Interest		206,958				219,021				211,941
Other		66,769				60,588				(47,275		)
Total revenues		1,836,696				2,348,811				1,267,283
Interest expense		219,278				219,445				232,916
Net revenues		1,617,418				2,129,366				1,034,367
Non-interest expenses:
Compensation and benefits		789,836				1,119,894				571,547
Non-compensation expenses:
Floor brokerage and clearing fees		76,617				76,580				77,619
Technology and communications		107,962				104,341				95,594
Occupancy and equipment rental		32,839				27,990				24,395
Business development		27,023				17,981				8,359
Professional services		59,780				44,288				41,994
Underwriting costs		33,031				36,136				12,485
Other		61,031				30,986				29,506
Total non-compensation expenses		398,283				338,302				289,952
Total non-interest expenses		1,188,119				1,458,196				861,499
Earnings before income taxes		429,299				671,170				172,868
Income tax expense		110,846				177,305				43,972
Net earnings		318,453				493,865				128,896
Net loss attributable to noncontrolling interests		(363		)		(203		)		(1,842		)
Net earnings attributable to Jefferies Group LLC		$	318,816			$	494,068			$	130,738
Pre-tax operating margin		26.5		%		31.5		%		16.7		%
Effective tax rate		25.8		%		26.4		%		25.4		%

Jefferies Group LLC and Subsidiaries
Consolidated Statements of Earnings
(Amounts in Thousands)
(Unaudited)
		Six Months Ended
		May 31, 2021				May 31, 2020
Revenues:
Commissions and other fees		$	459,581			$	422,802
Principal transactions		1,116,278				839,185
Investment banking		2,004,362				979,493
Asset management fees and revenues		51,950				16,296
Interest		425,979				506,609
Other		127,357				(17,546		)
Total revenues		4,185,507				2,746,839
Interest expense		438,723				541,776
Net revenues		3,746,784				2,205,063
Non-interest expenses:
Compensation and benefits		1,909,730				1,206,777
Non-compensation expenses:
Floor brokerage and clearing fees		153,197				138,199
Technology and communications		212,303				184,778
Occupancy and equipment rental		60,829				51,898
Business development		45,004				38,316
Professional services		104,068				86,659
Underwriting costs		69,167				30,014
Other		92,017				60,176
Total non-compensation expenses		736,585				590,040
Total non-interest expenses		2,646,315				1,796,817
Earnings before income taxes		1,100,469				408,246
Income tax expense		288,151				107,985
Net earnings		812,318				300,261
Net loss attributable to noncontrolling interests		(566		)		(3,866		)
Net earnings attributable to Jefferies Group LLC		$	812,884			$	304,127
Pre-tax operating margin		29.4		%		18.5		%
Effective tax rate		26.2		%		26.5		%

Jefferies Group LLC and Subsidiaries
Selected Statistical Information
(Amounts in Thousands, Except Other Data)
(Unaudited)
		Quarter Ended
		May 31, 2021				February 28, 2021				May 31, 2020
Net Revenues by Source:
Advisory		$	390,508			$	311,439			$	182,081
Equity underwriting		324,462				494,806				124,383
Debt underwriting		285,730				197,417				81,027
Total underwriting		610,192				692,223				205,410
Other investment banking		32,971				29,825				(71,234		)
Total investment banking		1,033,671				1,033,487				316,257
Equities		242,949				531,016				237,131
Fixed income		257,197				363,359				493,144
Total capital markets		500,146				894,375				730,275
Other		39,147				31,647				(17,700		)
Total Investment Banking and Capital Markets (1) (2)		1,572,964				1,959,509				1,028,832
Asset management fees and revenues		14,567				37,383				4,576
Investment return (3) (4)		41,326				142,873				13,944
Allocated net interest (3) (5)		(11,439		)		(10,399		)		(12,985		)
Total Asset Management		44,454				169,857				5,535
Net Revenues		$	1,617,418			$	2,129,366			$	1,034,367
Other Data:
Number of trading days		64				60				63
Number of trading loss days		20				9				11
Average firmwide VaR (in millions) (6)		$	15.77			$	16.02			$	9.16

(1)	Includes net interest revenues (expense) of $3.7 million, $12.2 million and $(0.8) million for the quarters ended May 31, 2021, February 28, 2021 and May 31, 2020, respectively.
(2)	Allocated net interest is not separately disaggregated for Investment Banking and Capital Markets. This presentation is aligned to our Investment Banking and Capital Markets internal performance measurement.
(3)	Net revenues attributed to the Investment return in Jefferies Group LLC Asset Management have been disaggregated to separately present Investment return and Allocated net interest (see footnote 5 below). This disaggregation is intended to increase transparency and to make clearer actual Investment return. We believe that aggregating Investment return and Allocated net interest would obscure the Investment return by including an amount that is unique to Jefferies Group LLC's credit spreads, debt maturity profile, capital structure, liquidity risks and allocation methods.
(4)	Includes direct net interest expense of $4.5 million, $2.3 million and $7.2 million for the quarters ended May 31, 2021, February 28, 2021 and May 31, 2020, respectively.
(5)	Allocated net interest represents the allocation of Jefferies Group LLC's long-term debt interest expense to Jefferies Group LLC's Asset Management, net of interest income on Jefferies Group LLC's Cash and cash equivalents and other sources of liquidity (refer to page 12).
(6)	VaR estimates the potential loss in value of Jefferies Group LLC's trading positions due to adverse market movements over a one-day time horizon with a 95% confidence level. For a further discussion of the calculation of VaR, see "Value-at-Risk" in Part II, Item 7 "Management's Discussion and Analysis" in Jefferies Group LLC's Annual Report on Form 10-K for the year ended November 30, 2020.

Jefferies Group LLC and Subsidiaries
Selected Statistical Information
(Amounts in Thousands, Except Other Data)
(Unaudited)
		Six Months Ended
		May 31, 2021				May 31, 2020
Net Revenues by Source:
Advisory		$	701,947			$	525,239
Equity underwriting		819,268				256,075
Debt underwriting		483,147				198,179
Total underwriting		1,302,415				454,254
Other investment banking		62,796				(85,763		)
Total investment banking		2,067,158				893,730
Equities		773,965				482,772
Fixed income		620,556				741,326
Total capital markets		1,394,521				1,224,098
Other		70,794				59,833
Total Investment Banking and Capital Markets (1) (2)		3,532,473				2,177,661
Asset management fees and revenues		51,950				16,296
Investment return (3) (4)		184,199				34,783
Allocated net interest (3) (5)		(21,838		)		(23,677		)
Total Asset Management		214,311				27,402
Net Revenues		$	3,746,784			$	2,205,063
Other Data:
Number of trading days		124				124
Number of trading loss days		29				15
Average firmwide VaR (in millions) (6)		$	15.89			$	8.29

(1)	Includes net interest revenues of $15.9 million and $2.1 million for the six months ended May 31, 2021 and 2020, respectively.
(2)	Allocated net interest is not separately disaggregated for Investment Banking and Capital Markets. This presentation is aligned to our Investment Banking and Capital Markets internal performance measurement.
(3)	Net revenues attributed to the Investment return in Jefferies Group LLC Asset Management have been disaggregated to separately present Investment return and Allocated net interest (see footnote 5 below). This disaggregation is intended to increase transparency and to make clearer actual Investment return. We believe that aggregating Investment return and Allocated net interest would obscure the Investment return by including an amount that is unique to Jefferies Group LLC's credit spreads, debt maturity profile, capital structure, liquidity risks and allocation methods.
(4)	Includes direct net interest expense of $6.8 million and $13.6 million for the six months ended May 31, 2021 and 2020, respectively.
(5)	Allocated net interest represents the allocation of Jefferies Group LLC's long-term debt interest expense to Jefferies Group LLC's Asset Management, net of interest income on Jefferies Group LLC's Cash and cash equivalents and other sources of liquidity (refer to page 12).
(6)	VaR estimates the potential loss in value of Jefferies Group LLC's trading positions due to adverse market movements over a one-day time horizon with a 95% confidence level. For a further discussion of the calculation of VaR, see "Value-at-Risk" in Part II, Item 7 "Management's Discussion and Analysis" in Jefferies Group LLC's Annual Report on Form 10-K for the year ended November 30, 2020.

Jefferies Group LLC and Subsidiaries
Financial Highlights
(Amounts in Millions, Except Where Noted)
(Unaudited)
	Quarter Ended
	May 31, 2021				February 28, 2021				May 31, 2020
Financial position:
Total assets (1)	$	52,171			$	51,386			$	45,084
Average total assets for the period (1)	$	59,841			$	59,774			$	56,480
Average total assets less goodwill and intangible assets for the period (1)	$	58,038			$	57,967			$	54,673
Cash and cash equivalents (1)	$	6,221			$	6,707			$	5,252
Cash and cash equivalents and other sources of liquidity (1) (2)	$	8,259			$	8,114			$	6,542
Cash and cash equivalents and other sources of liquidity - % total assets (1) (2)	15.8		%		15.8		%		14.5		%
Cash and cash equivalents and other sources of liquidity - % total assets less goodwill and intangible assets (1) (2)	16.4		%		16.4		%		15.1		%
Financial instruments owned (1)	$	19,412			$	18,571			$	18,125
Goodwill and intangible assets (1)	$	1,805			$	1,807			$	1,800
Total equity (including noncontrolling interests) (1)	$	6,687			$	6,556			$	6,430
Total Jefferies Group LLC member's equity (1)	$	6,681			$	6,540			$	6,412
Tangible Jefferies Group LLC member's equity (1) (3)	$	4,876			$	4,733			$	4,612
Level 3 financial instruments:
Level 3 financial instruments owned (1) (4)	$	399			$	365			$	413
Level 3 financial instruments owned - % total assets (1) (4)	0.8		%		0.7		%		0.9		%
Level 3 financial instruments owned - % total financial instruments (1) (4)	2.1		%		2.0		%		2.3		%
Level 3 financial instruments owned - % tangible Jefferies Group LLC member's equity (1) (4)	8.2		%		7.7		%		9.0		%
Other data and financial ratios:
Total long-term capital (1) (5)	$	13,406			$	13,237			$	12,102
Leverage ratio (1) (6)	7.8				7.8				7.0
Tangible gross leverage ratio (1) (7)	10.3				10.5				9.4
Number of trading days	64				60				63
Number of trading loss days	20				9				11
Average firmwide VaR (8)	$	15.77			$	16.02			$	9.16
Number of employees, at period end	4,121				3,984				3,850

Jefferies Group LLC and Subsidiaries
Financial Highlights - Footnotes
(1)	Amounts pertaining to May 31, 2021 represent a preliminary estimate as of the date of this earnings release and may be revised in Jefferies Group LLC's Quarterly Report on Form 10-Q for the quarter ended May 31, 2021.
(2)	At May 31, 2021, other sources of liquidity include high quality sovereign government securities and reverse repurchase agreements collateralized by U.S. government securities and other high quality sovereign government securities of $1,651 million, in aggregate, and $387 million, being the estimated amount of additional secured financing that could be reasonably expected to be obtained from Jefferies Group LLC's financial instruments that are currently not pledged after considering reasonable financing haircuts. The corresponding amounts included in other sources of liquidity at February 28, 2021 were $991 million and $416 million, respectively, and at May 31, 2020, were $998 million and $292 million, respectively.
(3)	Tangible Jefferies Group LLC member's equity (a non-GAAP financial measure) represents total Jefferies Group LLC member's equity less goodwill and identifiable intangible assets. We believe that tangible Jefferies Group LLC member's equity is meaningful for valuation purposes, as financial companies are often measured as a multiple of tangible equity, making these ratios meaningful for investors.
(4)	Level 3 financial instruments represent those financial instruments classified as such under Accounting Standards Codification 820, accounted for at fair value and included within Financial instruments owned.
(5)	At May 31, 2021, February 28, 2021 and May 31, 2020, total long-term capital includes Jefferies Group LLC's long-term debt of $6,719 million, $6,681 million and $5,672 million, respectively, and total equity. Long-term debt included in total long-term capital is reduced by amounts outstanding under secured credit facilities, amounts from secured term loans and the amount of debt maturing in less than one year, as applicable.
(6)	Leverage ratio equals total assets divided by total equity.
(7)	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 Jefferies Group LLC's leverage ratio.
(8)	VaR estimates the potential loss in value of Jefferies Group LLC's trading positions due to adverse market movements over a one-day time horizon with a 95% confidence level. For a further discussion of the calculation of VaR, see "Value-at-Risk" in Part II, Item 7 "Management's Discussion and Analysis" in Jefferies Group LLC's Annual Report on Form 10-K for the year ended November 30, 2020.

Jefferies Financial Group Inc.
Non-GAAP Reconciliation

The following tables reconcile Jefferies Financial Group non-GAAP measures to their respective U.S. GAAP measures. Management believes such non-GAAP measures are useful to investors as they allow them to view our results through the eyes of management, while facilitating a comparison across historical periods. These measures should not be considered a substitute for, or superior to, measures prepared in accordance with U.S. GAAP.

Jefferies Financial Group Adjusted Return on Tangible Equity Reconciliation

The table below reconciles our Net income attributable to Jefferies Financial Group to adjusted net income and our Shareholders' equity to adjusted tangible shareholders' equity (in thousands):

		Three Months Ended May 31, 2021				Six Months Ended May 31, 2021
Net income attributable to Jefferies Financial Group common shareholders (GAAP)		$	352,596			$	935,031
Intangible amortization expense, net of tax		2,664				5,251
Adjusted net income (non-GAAP)		$	355,260			$	940,282
Annualized adjusted net income (non-GAAP)		$	1,421,040			$	1,880,564
		February 28, 2021				November 30, 2020
Shareholders' equity (GAAP)		$	9,745,862			$	9,403,893
Less: Intangible assets, net and goodwill		(1,914,322)				(1,913,467)
Less: Deferred tax asset		(410,420)				(393,687)
Less: Weighted average quarter-to-date or year-to-date impact of 2021 cash dividends and share repurchases		(36,759)				(142,189)
Adjusted tangible shareholders' equity (non-GAAP)		$	7,384,361			$	6,954,550
Adjusted return on tangible equity		19.2		%		27.0		%

Jefferies Financial Group Book Value and Shares Outstanding GAAP Reconciliation

The table below reconciles our book value (shareholders' equity) to adjusted tangible book value and our common shares outstanding to fully diluted shares outstanding (in thousands, except per share amounts):

		May 31, 2021
Book value (GAAP)		$	10,072,634
Redeemable convertible preferred shares converted to common shares (1)		125,000
Stock options (2)		122,062
Intangible assets, net and goodwill		(1,912,480		)
Adjusted tangible book value (non-GAAP)		$	8,407,216
Common shares outstanding (GAAP)		247,032
Restricted stock units ("RSUs")		19,842
Redeemable convertible preferred shares converted to common shares (1)		4,441
Stock options (2)		5,156
Other		1,110
Fully diluted shares outstanding (non-GAAP) (3)		277,581
Book value per share outstanding		$	40.77
Tangible book value per fully diluted share outstanding		$	30.29

(1) Redeemable convertible preferred shares added to book value and fully diluted shares assume that the redeemable convertible preferred shares are converted to common shares.

(2) Stock options added to book value are equal to the total number of stock options outstanding as of May 31, 2021 of 5,156,000 multiplied by the weighted average exercise price of $23.67 on May 31, 2021. Stock options added to fully diluted shares are equal to the total stock options outstanding on May 31, 2021.

(3) Fully diluted shares outstanding include vested and unvested RSUs as well as the target number of RSUs issuable under the senior executive compensation plans. Fully diluted shares outstanding also include all stock options and the additional common shares if our redeemable convertible preferred shares were converted to common shares.

Jefferies Financial Group Shareholders' Equity GAAP Reconciliation

The table below reconciles our shareholders' equity to tangible shareholders' equity (in thousands):

		May 31, 2021				March 31, 2018
Shareholders' equity (GAAP)		$	10,072,634			$	10,259,080
Intangible assets, net and goodwill		(1,912,480		)		(2,450,957		)
Tangible shareholders' equity (non-GAAP)		$	8,160,154			$	7,808,123

 

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