8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 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): June 29, 2020

Jefferies Group LLC

(Exact name of registrant as specified in its charter)

Delaware	001-14947	95-4719745
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

520 Madison Ave., New York, New York	10022
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: 212-284-2550

(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
4.850% Senior Notes Due 2027	JEF /27A	New York Stock Exchange
5.125% Senior Notes Due 2023	JEF /23	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 2.02. Results of Operations and Financial Condition

On June 29, 2020, our parent company, Jefferies Financial Group Inc., issued a press release containing financial results for our quarter ended May 31, 2020. A copy of the press release is attached hereto as Exhibit 99 and is incorporated herein by reference.

The information provided in this Item 2.02, including Exhibit 99, is intended to be “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any other filing under the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits

The following exhibit is furnished with this report:

Number		Exhibit
	99	June 29, 2020 press release
	104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

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.

	Jefferies Group LLC
Date: June 29, 2020	/s/ Roland T. Kelly
	Roland T. Kelly
	Managing Director and Associate General Counsel

EX-99

Exhibit 99

FOR IMMEDIATE RELEASE June 29, 2020

Jefferies Financial Group Announces Second Quarter 2020 Financial Results —

Jefferies Group LLC Records Record Six Months Revenues

and Net Income for First Half 2020

Quarterly Cash Dividend of $0.15 per Jefferies Common Share Declared

Share Repurchase Authorization Increased to $250 Million

New York, New York — June 29, 2020 — Jefferies Financial Group Inc. (NYSE: JEF) today announced its financial results for the three and six month periods ended May 31, 2020. In addition, the Jefferies Board of Directors declared a quarterly cash dividend equal to $0.15 per Jefferies common share payable on August 28, 2020 to record holders of Jefferies common shares on August 17, 2020. The Jefferies Board of Directors also increased the Company’s stock buyback authorization by $177 million to a total of $250 million. We expect to file our Form 10-Q on or about July 9, 2020.

Highlights for the three months ended May 31, 2020:

• Jefferies Group LLC recorded quarterly net revenues of $1,034 million, pre-tax income of $173 million, net earnings of $129 million and return on tangible equity of 11.6%¹

• Record quarterly combined Capital Markets net revenues of $730 million; Equities net revenues of $237 million and record Fixed Income net revenues of $493 million

• Investment Banking net revenues of $316 million, including Advisory net revenues of $182 million

• Asset Management revenues (before allocated net interest²) of $19 million

• Merchant Banking recorded a pre-tax loss of $75 million, reflecting the positive impact of hedging gains at Vitesse, solid results at Idaho Timber and a record quarter for FXCM, that were more than offset by a $44 million non-cash charge to write-down the value of our investment in the We Company in light of Softbank’s withdrawal of its $3 billion tender offer and We’s current performance outlook, a total of $12 million in write-downs of HomeFed’s interests in a hotel and a retail center significantly impacted by the external events of the second quarter and a continued operating loss at Linkem, which experienced increased subscriber growth and network usage

• Net income attributable to Jefferies Financial Group common shareholders was $45 million, or $0.16 per diluted share

• We repurchased 10.1 million shares for $166 million, or an average price of $16.42 per share, including the 8.0 million shares repurchased early in March and previously disclosed; a further $250 million now authorized for repurchase; 267.1 million shares outstanding and 290.7 million shares outstanding on a fully diluted basis³ at May 31, 2020; Jefferies book value per share was $34.92 and tangible book value per fully diluted share⁴ was $25.51 at the end of the second quarter

• Jefferies Financial Group had parent company liquidity of $1.6 billion at May 31, 2020. Jefferies Group had a liquidity buffer of $6.5 billion of cash and unencumbered liquid collateral at May 31, 2020, which represented 15% of its total balance sheet.

Highlights for the six months ended May 31, 2020:

• Jefferies Group recorded record six months net revenues of $2,205 million, record pre-tax income of $408 million, record net earnings of $300 million and return on tangible equity of 14.1%⁵

• Investment Banking net revenues of $894 million, including record six months Advisory net revenues of $525 million

• Record combined six months Capital Markets net revenues of $1,224 million, including record Equities net revenues of $483 million and record Fixed Income net revenues of $741 million

• Asset Management revenues (before allocated net interest²) of $51 million

1

• Merchant Banking pre-tax loss of $128 million, reflecting positive contributions from Vitesse, Idaho Timber and FXCM, and a gain of about $60 million from effective short-term hedges against mark-to-market and fair value decreases, more than offset by a $44 million non-cash charge to write-down our investment in We, $45 million in non-cash charges to mark-to-market investments in public companies, $68 million in non-cash write-downs related to real estate investments at HomeFed, and a $33 million non-cash charge to write-down our investment in JETX

• Net income attributable to Jefferies Financial Group common shareholders of $158 million, or $0.53 per diluted share

• Repurchases of 24.8 million shares for $492 million, or an average price of $19.85 per share

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

“From the very start of our second fiscal quarter on March 1st and for the duration of our second quarter, all of us at Jefferies Group endured a surreal environment unlike anything we could ever have imagined. The most challenging health crisis to overtake the world in over a century caused a shutdown of a large portion of the global economy. We at Jefferies immediately pivoted to operate from nearly 4,000 different home offices across the globe, as we worked tirelessly to keep our team safe, do our best to help our clients navigate unprecedented volatility and opacity, and protect Jefferies from the incredible financial storm. Peg Broadbent, our longstanding esteemed Jefferies Group CFO tragically died from complications of the Coronavirus in March. We lost an incredible individual whom we all cherished and miss dearly. In Peg’s memory, our clients, employees and firm came together to contribute $9.25 million to over 85 front line charities aiding those most affected by COVID-19 and in greatest need.

“Despite the incredibly challenging, volatile and sad environment, our Jefferies team not only survived the quarter, but truly achieved remarkable results and continued momentum across our products, services and geographies. We collectively demonstrated the distinct value to our clients and our shareholders of a diversified and integrated investment banking and capital markets platform with a true global reach. Without hyperbole, the Jefferies team operated at peak performance and the two of us are in awe of our team that was remarkably resilient, passionately dedicated and impeccably skilled in serving our clients exactly when they needed Jefferies most. We have been through many challenging periods in our combined 50 years at Jefferies, and all we can say at this time to everyone at Jefferies is ‘thank you for being truly the best.’

“Our second quarter ended with the world beginning to come to grips with the racism, hatred, bigotry and unfairness that sadly still grips much of our nation and world today. As we move forward in our second half of 2020, we at Jefferies will be working to fully acknowledge and attempt to do our part to help eradicate the pain of racism so many African Americans (and others) have been living with for too long. We will listen intently and with open eyes, ears and hearts to learn how we can best be part of the solution. We are committed to action and results that will help make the world a better and more equal place for all people, and fully recognize that this likely will be an ongoing battle that will require long-term commitment and relentless dedication and passion, traits we have honed together in building Jefferies.

“Finally, we implore everyone to wear a mask when out in public. When you wear a mask, you do it out of respect for your fellow humans and we believe masks (and testing) will be critical to allowing all of us to protect those most at risk as our medical experts work tirelessly to develop the needed therapeutics, vaccines and methods of delivering them in mass quantities. Working together will allow us all to best navigate this incredibly difficult period and bridge our path to a more normal way of life that we will never take for granted.”

*    *    *    *

Amounts herein pertaining to May 31, 2020 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 month periods ended May 31, 2020 will be provided upon filing our Quarterly Report on Form 10-Q with the SEC.

2

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).

For further information, please contact:

Teresa S. Gendron

Chief Financial Officer

Jefferies Financial Group Inc.

Tel. (212) 460-1932

¹  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.

²  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 9 and 10.

³  Shares outstanding on a fully diluted basis, a non-GAAP measure, is defined as Jefferies Financial Group’s common shares outstanding plus restricted stock units and other shares. Refer to schedule on page 14 for reconciliation to U.S. GAAP amounts.

⁴  Tangible book value per fully diluted share, a non-GAAP measure, is defined as Tangible book value divided by shares outstanding on a fully diluted basis. Tangible book value, a non-GAAP measure, is defined as Jefferies Financial Group shareholders’ equity (book value) less Intangible assets, net and goodwill. Shares outstanding on a fully diluted basis, a non-GAAP measure, is defined as Jefferies Financial Group’s common shares outstanding plus restricted stock units and other shares. Refer to schedule on page 14 for reconciliation to U.S. GAAP amounts.

⁵  Return on tangible equity (a non-GAAP financial measure) equals our first six months of 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.

3

Summary for Jefferies Financial Group Inc. and Subsidiaries

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended May 31, 2020			Three Months Ended May 31, 2019			Six Months Ended May 31, 2020			Six Months Ended May 31, 2019
Net revenues	$	1,147,589		$	1,101,657		$	2,533,917		$	1,930,100
Income before income taxes and income (loss) related to associated companies	$	82,228		$	161,309		$	307,877		$	183,313
Income (loss) related to associated companies		(6,721	)		22,170			(74,576	)		49,483
Income before income taxes		75,507			183,479			233,301			232,796
Income tax provision (benefit)		31,962			(488,797	)		77,735			(486,495	)
Net income		43,545			672,276			155,566			719,291
Net (income) loss attributable to the noncontrolling interests		2,580			191			4,709			(875	)
Net (income) loss attributable to the redeemable noncontrolling interests		198			(427	)		480			(289	)
Preferred stock dividends		(1,404	)		(1,276	)		(2,826	)		(2,552	)
Net income attributable to Jefferies Financial Group Inc. common shareholders	$	44,919		$	670,764		$	157,929		$	715,575
Basic earnings per common share attributable to Jefferies Financial Group Inc. common shareholders:
Net income	$	0.16		$	2.17		$	0.53		$	2.29
Number of shares in calculation		286,764			307,010			294,590			311,108
Diluted earnings per common share attributable to Jefferies Financial Group Inc. common shareholders:
Net income	$	0.16		$	2.14		$	0.53		$	2.25
Number of shares in calculation		286,764			312,527			295,301			317,736

4

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

	Investment Banking and Capital Markets (1)		Asset Management (1)			Merchant Banking (1)			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 (2)		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) from 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

A summary of results for the three months ended May 31, 2019 is as follows (in thousands):

	Investment Banking and Capital Markets (1)		Asset Management (1)		Merchant Banking (1)		Corporate			Parent Company Interest			Consolidation Adjustments			Total
Net revenues	$	859,275	$	44,362	$	185,379	$	8,974		$	—		$	3,667		$	1,101,657
Expenses:
Compensation and benefits		470,530		13,338		13,931		12,761			—			—			510,560
Cost of sales (2)		50,218		10,169		80,415		—			—			—			140,802
Interest expense		—		—		8,372		—			14,766			—			23,138
Depreciation and amortization		18,588		505		16,826		867			—			—			36,786
Selling, general and other expenses		177,358		12,240		30,356		9,231			—			(123	)		229,062
Total expenses		716,694		36,252		149,900		22,859			14,766			(123	)		940,348
Income (loss) before income taxes and income related to associated companies		142,581		8,110		35,479		(13,885	)		(14,766	)		3,790			161,309
Income related to associated companies		—		120		22,050		—			—			—			22,170
Income (loss) before income taxes	$	142,581	$	8,230	$	57,529	$	(13,885	)	$	(14,766	)	$	3,790			183,479
Income tax benefit																	(488,797	)
Net income																$	672,276

(1) We now present Asset Management as a separate reporting segment. Prior year amounts have been reclassified to conform to current segment disclosure.

(2) Includes Floor brokerage and clearing fees.

5

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

	Investment Banking and Capital Markets (1)		Asset Management (1)			Merchant Banking (1)			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 (2)		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) from 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

A summary of results for the six months ended May 31, 2019 is as follows (in thousands):

	Investment Banking and Capital Markets (1)		Asset Management (1)		Merchant Banking (1)		Corporate			Parent Company Interest			Consolidation Adjustments			Total
Net revenues	$	1,517,522	$	75,107	$	318,071	$	13,167		$	—		$	6,233		$	1,930,100
Expenses:
Compensation and benefits		831,844		30,192		27,834		30,282			—			—			920,152
Cost of sales (2)		97,354		14,901		147,336		—			—			—			259,591
Interest expense		—		—		16,628		—			29,528			—			46,156
Depreciation and amortization		35,918		960		32,120		1,722			—			—			70,720
Selling, general and other expenses		354,708		19,980		59,378		16,391			—			(289	)		450,168
Total expenses		1,319,824		66,033		283,296		48,395			29,528			(289	)		1,746,787
Income (loss) before income taxes and income related to associated companies		197,698		9,074		34,775		(35,228	)		(29,528	)		6,522			183,313
Income related to associated companies		—		340		49,143		—			—			—			49,483
Income (loss) before income taxes	$	197,698	$	9,414	$	83,918	$	(35,228	)	$	(29,528	)	$	6,522			232,796
Income tax benefit																	(486,495	)
Net income																$	719,291

(1) We now present Asset Management as a separate reporting segment. Prior year amounts have been reclassified to conform to current segment disclosure.

(2) Includes Floor brokerage and clearing fees.

6

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, 2019. Amounts herein pertaining to May 31, 2020 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, 2020.

Jefferies Group LLC and Subsidiaries

Consolidated Statements of Earnings

(Amounts in Thousands)

(Unaudited)

	Quarter Ended
	May 31, 2020			February 29, 2020			May 31, 2019
Revenues:
Commissions and other fees (1)	$	243,267		$	179,535		$	167,698
Principal transactions		467,283			371,902			248,831
Investment banking		387,491			592,002			430,087
Asset management fees and revenues (2)		4,576			11,720			5,099
Interest		211,941			294,668			418,451
Other (1)(2)		(47,275	)		29,729			44,327
Total revenues		1,267,283			1,479,556			1,314,493
Interest expense		232,916			308,860			412,642
Net revenues		1,034,367			1,170,696			901,851
Non-interest expenses:
Compensation and benefits		571,547			635,230			477,885
Non-compensation expenses:
Floor brokerage and clearing fees		77,619			60,580			62,474
Technology and communications		95,594			89,184			81,645
Occupancy and equipment rental		24,395			27,503			29,748
Business development		8,359			29,957			36,349
Professional services		41,994			44,665			38,066
Underwriting costs		12,485			17,529			12,823
Other		29,506			30,670			7,723
Total non-compensation expenses		289,952			300,088			268,828
Total non-interest expenses		861,499			935,318			746,713
Earnings before income taxes		172,868			235,378			155,138
Income tax expense		43,972			64,013			45,319
Net earnings		128,896			171,365			109,819
Net loss attributable to noncontrolling interests		(1,842	)		(2,024	)		(101	)
Net earnings attributable to Jefferies Group LLC	$	130,738		$	173,389		$	109,920
Pre-tax operating margin		16.7	%		20.1	%		17.2	%
Effective tax rate		25.4	%		27.2	%		29.2	%

(1) In the third quarter of 2019, Jefferies Group LLC reorganized the presentation of certain other fees, primarily related to prime brokerage services offered to clients. Jefferies Group LLC’s Consolidated Statement of Earnings reflects the reclassification of revenues of $7.9 million from Other revenues to Commissions and other fees for the three months ended May 31, 2019. There is no impact on Total revenues as a result of this change in presentation.

(2) In the fourth quarter of 2019, Jefferies Group LLC reorganized the presentation of revenues from arrangements which entitle us to certain portions of revenues and/or profits of strategic asset management partners. Jefferies Group LLC’s Consolidated Statement of Earnings reflects the reclassification of revenues of $0.5 million from Other revenues to Asset management fees and revenues for the three months ended May 31, 2019. There is no impact on Total revenues as a result of this change in presentation.

7

Jefferies Group LLC and Subsidiaries

Consolidated Statements of Earnings

(Amounts in Thousands)

(Unaudited)

	Six Months Ended
	May 31, 2020			May 31, 2019
Revenues:
Commissions and other fees (1)	$	422,802		$	322,840
Principal transactions		839,185			483,129
Investment banking		979,493			715,683
Asset management fees and revenues (2)		16,296			12,130
Interest		506,609			779,426
Other (1)(2)		(17,546	)		56,157
Total revenues		2,746,839			2,369,365
Interest expense		541,776			781,796
Net revenues		2,205,063			1,587,569
Non-interest expenses:
Compensation and benefits		1,206,777			849,570
Non-compensation expenses:
Floor brokerage and clearing fees		138,199			114,451
Technology and communications		184,778			160,815
Occupancy and equipment rental		51,898			58,287
Business development		38,316			66,904
Professional services		86,659			74,993
Underwriting costs		30,014			21,398
Other		60,176			23,428
Total non-compensation expenses		590,040			520,276
Total non-interest expenses		1,796,817			1,369,846
Earnings before income taxes		408,246			217,723
Income tax expense		107,985			61,539
Net earnings		300,261			156,184
Net earnings (loss) attributable to noncontrolling interests		(3,866	)		283
Net earnings attributable to Jefferies Group LLC	$	304,127		$	155,901
Pre-tax operating margin		18.5	%		13.7	%
Effective tax rate		26.5	%		28.3	%

(1) In the third quarter of 2019, Jefferies Group LLC reorganized the presentation of certain other fees, primarily related to prime brokerage services offered to clients. Jefferies Group LLC’s Consolidated Statement of Earnings reflects the reclassification of revenues of $15.7 million from Other revenues to Commissions and other fees for the six months ended May 31, 2019. There is no impact on Total revenues as a result of this change in presentation.

(2) In the fourth quarter of 2019, Jefferies Group LLC reorganized the presentation of revenues from arrangements which entitle us to certain portions of revenues and/or profits of strategic asset management partners. Jefferies Group LLC’s Consolidated Statement of Earnings reflects the reclassification of revenues of $0.9 million from Other revenues to Asset management fees and revenues for the six months ended May 31, 2019. There is no impact on Total revenues as a result of this change in presentation.

8

Jefferies Group LLC and Subsidiaries

Selected Statistical Information

(Amounts in Thousands, Except Other Data)

(Unaudited)

	Quarter Ended
	May 31, 2020			February 29, 2020			May 31, 2019
Net Revenues by Source:
Advisory	$	182,081		$	343,158		$	178,554
Equity underwriting		124,383			131,692			108,022
Debt underwriting		81,027			117,152			151,511
Total underwriting		205,410			248,844			259,533
Other investment banking		(71,234	)		(14,529	)		9,634
Total investment banking		316,257			577,473			447,721
Equities		237,131			245,641			206,083
Fixed income		493,144			248,182			173,253
Total capital markets		730,275			493,823			379,336
Other		(17,700	)		77,533			32,218
Total Investment Banking and Capital Markets (1) (2)		1,028,832			1,148,829			859,275
Asset management fees and revenues (3)		4,576			11,720			5,099
Investment return (3) (4) (5)		13,944			20,839			47,526
Allocated net interest (4) (6)		(12,985	)		(10,692	)		(10,049	)
Total Asset Management		5,535			21,867			42,576
Net Revenues	$	1,034,367		$	1,170,696		$	901,851
Other Data:
Number of trading days		63			61			64
Number of trading loss days		11			4			4
Average firmwide VaR (in millions) (7)	$	9.16		$	7.39		$	8.70

(1) Includes net interest revenue (expense) of $(0.8) million, $2.9 million and $16.4 million for the quarters ended May 31, 2020, February 29, 2020, and May 31, 2019, respectively.

(2) Allocated net interest is not separately disaggregated in presenting our Investment Banking and Capital Markets reportable segment within Jefferies Group LLC’s Net Revenues by Source. This presentation is aligned to our Investment Banking and Capital Markets internal performance measurement.

(3) In the fourth quarter of 2019, Jefferies Group LLC reorganized the presentation of revenues from arrangements which entitle us to certain portions of revenues and/or profits of strategic asset management partners. Jefferies Group LLC’s Net Revenues by Source reflects the reclassification of revenues of $0.5 million from Investment return revenues to Asset management fees and revenues for the three months ended May 31, 2019. There is no impact on Total Asset Management revenues as a result of this change in presentation.

(4) Net revenues attributed to the Investment return in Jefferies Group LLC’s Asset Management reportable segment have been disaggregated to separately present Investment return and Allocated net interest (see footnotes 5 and 6). 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, none of which are pertinent to the Investment returns generated by the performance of the portfolio.

(5) Includes net interest expense of $7.2 million, $6.4 million and $0.6 million for the quarters ended May 31, 2020, February 29, 2020, and May 31, 2019, respectively.

(6) Allocated net interest represents the allocation 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 (refer to page 11).

(7) 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, 2019.

9

Jefferies Group LLC and Subsidiaries

Selected Statistical Information

(Amounts in Thousands, Except Other Data)

(Unaudited)

	Six Months Ended
	May 31, 2020			May 31, 2019
Net Revenues by Source:
Advisory	$	525,239		$	359,036
Equity underwriting		256,075			159,359
Debt underwriting		198,179			205,288
Total underwriting		454,254			364,647
Other investment banking		(85,763	)		1,992
Total investment banking		893,730			725,675
Equities		482,772			380,622
Fixed income		741,326			370,012
Total capital markets		1,224,098			750,634
Other		59,833			41,213
Total Investment Banking and Capital Markets (1) (2)		2,177,661			1,517,522
Asset management fees and revenues (3)		16,296			12,130
Investment return (3) (4) (5)		34,783			79,576
Allocated net interest (4) (6)		(23,677	)		(21,659	)
Total Asset Management		27,402			70,047
Net Revenues	$	2,205,063		$	1,587,569
Other Data:
Number of trading days		124			123
Number of trading loss days		15			13
Average firmwide VaR (in millions) (7)	$	8.29		$	8.87

(1) Includes net interest revenue of $2.1 million and $21.0 million for the six months ended May 31, 2020 and 2019, respectively.

(2) Allocated net interest is not separately disaggregated in presenting our Investment Banking and Capital Markets reportable segment within Jefferies Group LLC’s Net Revenues by Source. This presentation is aligned to our Investment Banking and Capital Markets internal performance measurement.

(3) In the fourth quarter of 2019, Jefferies Group LLC reorganized the presentation of revenues from arrangements which entitle us to certain portions of revenues and/or profits of strategic asset management partners. Jefferies Group LLC’s Net Revenues by Source reflects the reclassification of revenues of $0.9 million from Investment return revenues to Asset management fees and revenues for the six months ended May 31, 2019. There is no impact on Total Asset Management revenues as a result of this change in presentation.

(4) Net revenues attributed to the Investment return in Jefferies Group LLC’s Asset Management reportable segment have been disaggregated to separately present Investment return and Allocated net interest (see footnotes 5 and 6). 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, none of which are pertinent to the Investment returns generated by the performance of the portfolio.

(5) Includes net interest expense of $13.6 million and $1.7 million for the six months ended May 31, 2020 and 2019, respectively.

(6) Allocated net interest represents the allocation 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 (refer to page 11).

(7) 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, 2019.

10

Jefferies Group LLC and Subsidiaries

Financial Highlights

(Amounts in Millions, Except Where Noted)

(Unaudited)

	Quarter Ended
	May 31, 2020			February 29, 2020			May 31, 2019
Financial position:
Total assets (1)	$	45,084		$	46,203		$	42,818
Average total assets for the period (1)	$	56,480		$	55,333		$	53,675
Average total assets less goodwill and intangible assets for the period (1)	$	54,673		$	53,518		$	51,851
Cash and cash equivalents (1)	$	5,252		$	4,901		$	4,213
Cash and cash equivalents and other sources of liquidity (1) (2)	$	6,542		$	6,371		$	5,701
Cash and cash equivalents and other sources of liquidity - % total assets (1) (2)		14.5	%		13.8	%		13.3	%
Cash and cash equivalents and other sources of liquidity - % total assets less goodwill and intangible assets (1) (2)		15.1	%		14.4	%		13.9	%
Financial instruments owned (1)	$	18,125		$	17,897		$	16,096
Goodwill and intangible assets (1)	$	1,800		$	1,810		$	1,818
Right-of-use assets (1) (3)	$	501		$	512			N/A
Total equity (including noncontrolling interests) (1)	$	6,430		$	6,332		$	6,179
Total Jefferies Group LLC member’s equity (1)	$	6,412		$	6,313		$	6,173
Tangible Jefferies Group LLC member’s equity (1) (4)	$	4,612		$	4,503		$	4,355
Level 3 financial instruments:
Level 3 financial instruments owned (1) (5)	$	413		$	346		$	367
Level 3 financial instruments owned - % total assets (1) (5)		0.9	%		0.7	%		0.9	%
Level 3 financial instruments owned - % total financial instruments (1) (5)		2.3	%		1.9	%		2.3	%
Level 3 financial instruments owned - % tangible Jefferies Group LLC member’s equity (1) (5)		9.0	%		7.7	%		8.4	%
Other data and financial ratios:
Total long-term capital (1) (6)	$	12,102		$	12,706		$	11,444
Leverage ratio (1) (7)		7.0			7.3			6.9
Tangible gross leverage ratio (1) (8)		9.4			9.9			9.4
Adjusted tangible gross leverage ratio (1) (3) (9)		10.4			11.0			N/A
Number of trading days		63			61			64
Number of trading loss days		11			4			4
Average firmwide VaR (10)	$	9.16		$	7.39		$	8.70
Number of employees, at period end		3,850			3,822			3,656

N/A — Not Applicable

11

Jefferies Group LLC and Subsidiaries

Financial Highlights - Footnotes

(1) Amounts pertaining to May 31, 2020 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, 2020.

(2) At May 31, 2020, 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 $998 million, in aggregate, and $292 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 29, 2020 were $638 million and $832 million, respectively, and at May 31, 2019, were $1,175 million and $313 million, respectively.

(3) Jefferies Group LLC adopted the new lease standard on December 1, 2019 using a modified retrospective transition approach. Accordingly, reported financial information for historical comparable periods is not revised and continues to be reported under the accounting standards in effect during those historical periods. We elected not to reassess whether existing contracts are or contain leases, or the lease classification and initial direct costs of existing leases upon transition. At transition on December 1, 2019, the adoption of this standard resulted in the recognition of ROU assets of $520 million, reflected in Premises and equipment in Jefferies Group LLC’s Consolidated Statement of Financial Condition.

(4) 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.

(5) 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.

(6) At May 31, 2020, February 29, 2020, and May 31, 2019, total long-term capital includes Jefferies Group LLC’s long-term debt of $5,672 million, $6,374 million and $5,265 million, respectively, and total equity. Long-term debt included in total long-term capital is reduced by amounts outstanding under the revolving credit facility, amounts from secured term loans and the amount of debt maturing in less than one year, as applicable.

(7) Leverage ratio equals total assets divided by total equity.

(8) 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.

(9) Adjusted tangible gross leverage ratio (a non-GAAP financial measure) equals total assets less goodwill and identifiable intangible assets and right-of-use assets divided by tangible Jefferies Group LLC member’s equity less right-of-use assets.

(10) 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, 2019.

12

Merchant Banking Net Asset Overview

As of May 31, 2020

($ Millions)

	(Unaudited) Book Value		Estimated Fair Value (2)		Basis for Fair Value Estimate
Linkem	$	214	$	630	Income approach and market comparable method
Real estate assets (1)		541		557	Various
Oil and Gas (Vitesse and JETX)		576		547	Income approach, market comparable and market transaction method
Idaho Timber		85		155	Income approach, market comparable and market transaction method
FXCM		130		144	Income approach and market comparable method
Investments in Public Companies		127		127	Mark-to-market (same for GAAP book value)
Other		266		323	Various
Total Portfolio	$	1,939	$	2,483

(1) Primarily HomeFed

(2) The following table reconciles financial results reported in accordance with U.S. GAAP to non-GAAP financial results. The table above contains non-GAAP financial information to aid investors in viewing our businesses and investments through the eyes of management while facilitating a comparison across historical periods. However, these non-GAAP financial measures should be viewed in addition to, and not as a substitute for, reported results prepared in accordance with U.S. GAAP.

Reconciliation of Book Value of Merchant Banking Investments to Estimated Fair Value

($ Millions)

	(Unaudited) Book Value May 31, 2020		Fair Value Adjustments			Estimated Fair Value May 31, 2020
	(GAAP)					(Non-GAAP)
Linkem	$	214	$	416		$	630
Real estate assets		541		16			557
Oil and Gas (Vitesse and JETX)		576		(29	)		547
Idaho Timber		85		70			155
FXCM		130		14			144
Investments in Public Companies		127		—			127
Other		266		57			323
Total Portfolio	$	1,939	$	544		$	2,483

13

Jefferies Financial Group Inc.

Non-GAAP Reconciliation

The following table reconciles 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 Book Value and Shares Outstanding GAAP Reconciliation

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

	As Reported, May 31, 2020
Book value (GAAP)	$	9,326,554
Less: Intangibles assets, net and goodwill		(1,910,204	)
Tangible book value (non-GAAP)	$	7,416,350
Common shares outstanding (GAAP)		267,111
Restricted stock units (“RSUs”)		22,471
Other		1,092
Fully diluted shares outstanding (non-GAAP) (1)		290,674
Book value per share outstanding	$	34.92
Tangible book value per fully diluted share outstanding	$	25.51

(1) Fully diluted shares outstanding exclude preferred shares as they are antidilutive. Fully diluted shares outstanding include vested RSUs as well as the target number of RSUs issuable under the senior executive compensation plans.

14

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Document and Entity Information	Jun. 29, 2020
Document And Entity Information [Line Items]
Amendment Flag	false
Entity Central Index Key	0001084580
Document Type	8-K
Document Period End Date	Jun. 29, 2020
Entity Registrant Name	Jefferies Group LLC
Entity Incorporation State Country Code	DE
Entity File Number	001-14947
Entity Tax Identification Number	95-4719745
Entity Address, Address Line One	520 Madison Ave.
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10022
City Area Code	212
Local Phone Number	284-2550
Written Communications	false
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Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
M 4.850 Senior Notes Due 2027 [Member]
Document And Entity Information [Line Items]
Security 12b Title	4.850% Senior Notes Due 2027
Trading Symbol	JEF /27A
Security Exchange Name	NYSE
M 5.125 Senior Notes Due 2023 [Member]
Document And Entity Information [Line Items]
Security 12b Title	5.125% Senior Notes Due 2023
Trading Symbol	JEF /23
Security Exchange Name	NYSE