XML 46 R32.htm IDEA: XBRL DOCUMENT v3.20.4
Schedule I (PARENT COMPANY ONLY)
 12 Months Ended
Nov. 30, 2020
Condensed Financial Information Disclosure [Abstract]  
Schedule I (PARENT COMPANY ONLY)
JEFFERIES GROUP LLC
(PARENT COMPANY ONLY)
CONDENSED STATEMENTS OF FINANCIAL CONDITION
(In thousands)
November 30,
20202019
ASSETS
Cash and cash equivalents
$1,281,786 $128,535 
Cash and securities segregated and on deposited for regulatory purposes or deposited with clearing and depository organizations
21,892 38,817 
Financial instruments owned, at fair value
69,856 72,736 
Loans to and investments in related parties
655,930 643,720 
Investment in subsidiaries
6,411,169 5,639,208 
Advances to subsidiaries
2,822,937 3,979,139 
Subordinated notes receivable
2,443,383 2,442,625 
Other assets
354,606 333,798 
Total assets
$14,061,559 $13,278,578 
LIABILITIES AND EQUITY
Short-term borrowings
$11,867 $20,989 
Financial instruments sold, not yet purchased, at fair value
— 2,307 
Accrued expenses and other liabilities
1,045,000 365,540 
Long-term debt
6,655,949 6,764,270 
Total liabilities
7,712,816 7,153,106 
EQUITY
Member’s paid-in capital
6,569,328 6,329,677 
Accumulated other comprehensive income (loss):
Currency translation adjustments
(141,843)(179,378)
Changes in instrument specific credit risk
(71,151)(18,889)
Additional minimum pension liability
(8,104)(6,079)
Available-for-sale securities
513 141 
Total accumulated other comprehensive loss
(220,585)(204,205)
Total member’s equity
6,348,743 6,125,472 
Total liabilities and equity
$14,061,559 $13,278,578 
See accompanying notes to condensed financial statements.
JEFFERIES GROUP LLC
(PARENT COMPANY ONLY)
CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(In thousands)
Year Ended November 30,
202020192018
Revenues:
Principal transactions
$58,148 $13,746 $20,875 
Investment banking
17 103 — 
Interest
214,833 271,369 262,042 
Other
(38,874)19,346 101,284 
Total revenues
234,124 304,564 384,201 
Interest expense
285,090 297,927 316,050 
Net revenues
(50,966)6,637 68,151 
Non-interest expenses:
Total non-interest expenses
14,854 6,482 5,016 
Earnings (loss) before income taxes(65,820)155 63,135 
Income tax expense (benefit)
(19,480)(3,316)104,649 
Net earnings (loss) before undistributed earnings of subsidiaries
(46,340)3,471 (41,514)
Undistributed earnings of subsidiaries
925,643 242,558 200,275 
Net earnings
879,303 246,029 158,761 
Other comprehensive income (loss), net of tax:
Currency translation and other adjustments
37,535 6,426 (85,554)
Change in instrument specific credit risk
(52,262)(13,161)22,160 
Cash flow hedges
— (470)1,406 
Minimum pension liability adjustments, net of tax
(2,025)(1,318)4,285 
Unrealized gain on available-for-sale securities
372 487 311 
Total other comprehensive loss, net of tax(16,380)(8,036)(57,392)
Comprehensive income
$862,923 $237,993 $101,369 
See accompanying notes to condensed financial statements.
JEFFERIES GROUP LLC
(PARENT COMPANY ONLY)
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended November 30,
202020192018
Cash flows from operating activities:
Net earnings
$879,303 $246,029 $158,761 
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Amortization
(36,708)(38,812)(53,296)
Undistributed earnings of subsidiaries
(925,643)(242,558)(200,275)
(Income) loss on loans to and investments in related parties
37,790 (21,946)(98,223)
Distributions received on investments in related parties
— 75,000 40,000 
Other adjustments
183,241 60,106 (116,307)
Net change in assets and liabilities:
Financial instruments owned
2,880 26,755 (25,604)
Other assets
(3,741)154,940 119,293 
Financial instruments sold, not yet purchased
(2,307)1,510 (17,264)
Accrued expenses and other liabilities
526,571 (51,821)(200,970)
Net cash provided by (used in) operating activities661,386 209,203 (393,885)
Cash flows from investing activities:
Investments in, advances to and subordinated notes receivable from subsidiaries
1,357,031 (1,035,619)(473,436)
Loans to and investments in related parties
(50,000)— — 
Net cash provided by (used in) investing activities1,307,031 (1,035,619)(473,436)
Cash flows from financing activities:
Proceeds from short-term borrowings11,820 20,236 70,482 
Payments on short-term borrowings(20,263)(55,773)(140,664)
Proceeds from issuance of long-term debt, net of issuance costs1,169,722 1,184,891 1,183,954 
Repayment of long-term debt(1,494,696)(823,875)(1,035,700)
Distribution to Jefferies Financial Group Inc.(498,674)(311,131)(248,684)
Net cash provided by (used in) financing activities(832,091)14,348 (170,612)
Net increase (decrease) in cash and cash equivalents1,136,326 (812,068)(1,037,933)
Cash, cash equivalents and restricted cash at beginning of period167,352 979,420 2,017,353 
Cash, cash equivalents and restricted cash at end of period$1,303,678 $167,352 $979,420 
Supplemental disclosures of cash flow information:
Cash paid (received) during the period for:
Interest$272,670 $291,298 $385,410 
Income taxes, net84,098 73,151 186,236 
Noncash financing activities:
On October 1, 2018, Jefferies Financial Group Inc. (“Jefferies”) transferred to the Parent Company its 50% interest in Berkadia Commercial Mortgage Holding LLC (“Berkadia”) and its capital investments in certain separately managed accounts and funds. The transfer of its interest in Berkadia and a portion of the transfer of its capital investments in certain separately managed accounts and funds were recorded as a capital contribution and increased member’s equity by $598.2 million. Refer to Note 21, Related Party Transactions, in the Company’s consolidated financial statements included in the Annual Report on Form 10-K for the year ended November 30, 2020 for further details.
The following presents the Parent Company’s cash, cash equivalents and restricted cash by category within the Condensed Statements of Financial Condition (in thousands):
November 30,
20202019
Cash and cash equivalents$1,281,786 $128,535 
Cash and securities segregated and on deposit for regulatory purposes with clearing and depository organizations
21,892 38,817 
Total cash, cash equivalents and restricted cash$1,303,678 $167,352 
See accompanying notes to condensed financial statements.
Note 1. Introduction and Basis of Presentation
The accompanying condensed financial statements (the “Parent Company Financial Statements”), including the notes thereto, should be read in conjunction with the consolidated financial statements of Jefferies Group LLC (the “Company”) and the notes thereto found in the Company’s Annual Report on Form 10-K for the year ended November 30, 2020. For purposes of these condensed non-consolidated financial statements, the Company’s wholly-owned and majority owned subsidiaries are accounted for using the equity method of accounting (“equity method subsidiaries”).
The Parent Company is an indirect wholly-owned subsidiary of Jefferies. Jefferies does not guarantee any of our outstanding debt securities.
The Parent Company Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for financial information. The significant accounting policies of the Parent Company Financial Statements are those used by the Company on a consolidated basis, to the extent applicable. For further information regarding the significant accounting policies refer to Note 2, Summary of Significant Accounting Policies, in the Company’s consolidated financial statements included in the Annual Report on Form 10-K for the year ended November 30, 2020.
The Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with U.S. GAAP. The most important of these estimates and assumptions relate to fair value measurements, compensation and benefits, goodwill and intangible assets, the ability to realize deferred tax assets and the recognition and measurement of uncertain tax positions. Although these and other estimates and assumptions are based on the best available information, actual results could be materially different from these estimates.
Note 2. Transactions with Subsidiaries
The Parent Company has transactions with its consolidated subsidiaries, Jefferies and certain other affiliated entities determined on an agreed upon basis and has guaranteed certain unsecured lines of credit and contractual obligations of certain equity method subsidiaries.
Note 3. Guarantees
In the normal course of its business, the Parent Company issues guarantees in respect of obligations of certain of its wholly- owned subsidiaries under trading and other financial arrangements, including guarantees to various trading counterparties and banks. The Parent Company records all derivative contracts and Financial instruments owned and Financial instruments sold, not yet purchased at fair value in its Consolidated Statements of Financial Condition.
Certain of the Parent Company’s equity method subsidiaries are members of various exchanges and clearing houses. In the normal course of business, the Parent Company provides guarantees to securities clearinghouses and exchanges. These guarantees generally are required under the standard membership agreements, such that members are required to guarantee the performance of other members. Additionally, if a member becomes unable to satisfy its obligations to the clearinghouse, other members would be required to meet these shortfalls. To mitigate these performance risks, the exchanges and clearinghouses often require members to post collateral. The Parent Company’s obligations under such guarantees could exceed the collateral amounts posted. The maximum potential liability under these arrangements cannot be quantified; however, the potential for the Parent Company to be required to make payments under such guarantees is deemed remote. Accordingly, no liability has been recognized for these arrangements.
The Parent Company has provided a guarantee in respect of an obligation of an SPE sponsored by one of its subsidiaries, whereby the Parent Company is required to make payments to a certain auction house in the event that the SPE is unable to meet its obligation to the auction house. At November 30, 2020, the maximum amount payable under this guarantee is $3.4 million.
The Parent Company guarantees certain financing arrangements of subsidiaries. The maximum amount payable under these guarantees is $687.5 million at November 30, 2020. For further information, refer to Note 11, Short-Term Borrowings, and Note 12, Long-Term Debt, in the Company’s consolidated financial statements included in the Annual Report on Form 10-K for the year ended November 30, 2020.
Structured Notes. Structured notes of $1,017.5 million at November 30, 2020 were jointly and severally co-issued by our wholly-owned subsidiary Jefferies Group Capital Finance Inc.