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): March 17, 2015

LEUCADIA NATIONAL CORPORATION

(Exact name of registrant as specified in its charter)

New York

1-5721

13-2615557

(State or other jurisdiction of
incorporation)

(Commission File Number)

(IRS Employer Identification
No.)


520 Madison Avenue, New York, New York

10022

(Address of principal executive offices)

(Zip Code)


Registrant’s telephone number, including area code: 212-460-1900

 

(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))


Item 2.02.  Results of Operations and Financial Condition

On March 17, 2015, our wholly-owned subsidiary Jefferies Group LLC issued a press release announcing financial results for its fiscal quarter ended February 28, 2015.  A copy of the press release is attached hereto as Exhibit 99 and is incorporated herein by reference.

Item 9.01.  Financial Statements and Exhibits

  The following exhibit is furnished with this report:
 

Number

Exhibit

 
99 Press Release issued by Jefferies Group LLC on March 17, 2015



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.

LEUCADIA NATIONAL CORPORATION

 
 
Date:

March 17, 2015

/s/ Roland T. Kelly

Roland T. Kelly

Assistant Secretary and

Associate General Counsel



EXHIBIT INDEX

Exhibit No.

Exhibit

 

99

Press Release issued by Jefferies Group LLC on March 17, 2015



Exhibit 99

Jefferies Reports Fiscal First Quarter 2015 Financial Results

NEW YORK--(BUSINESS WIRE)--March 17, 2015--Jefferies Group LLC today announced financial results for its fiscal first quarter 2015.

Highlights for the three months ended February 28, 2015, with adjusted amounts excluding the operating results of our Bache business:

  • Total Net revenues of $592 million
  • Total Adjusted Net Revenues (excluding Bache) of $536 million1
  • Net earnings of $13 million
  • Adjusted Net earnings (excluding Bache) of $20 million1

Richard B. Handler, Chairman and Chief Executive Officer, and Brian P. Friedman, Chairman of the Executive Committee, commented: “We experienced a slow first quarter due to a tepid fixed income trading market and fewer new issues in leveraged finance capital markets. Despite these results, and in view of an improving environment, we believe Jefferies’ prospects for the remainder of 2015 are good. Our Investment Banking backlog is currently solid, and fixed income trading markets appear to have stabilized.”

The attached financial tables should be read in connection with our Annual Report on Form 10-K for the year ended November 30, 2014.

Jefferies, the global investment banking firm focused on serving clients for over 50 years, is a leader in providing insight, expertise and execution to investors, companies and governments. The firm provides a full range of investment banking, sales, trading, research and strategy across the spectrum of equities, fixed income, foreign exchange, futures and commodities, as well as wealth management, in the Americas, Europe and Asia. Jefferies Group LLC is a wholly-owned subsidiary of Leucadia National Corporation (NYSE:LUK), a diversified holding company.

1 Adjusted financial measures are non-GAAP financial measures. Management believes such measures provide meaningful information to investors as they enable investors to evaluate the Company's results in the context of our pursuing various strategic alternatives for the Bache business. Refer to the Supplemental Schedules on pages 3-4 for a reconciliation of Adjusted measures to the respective direct U.S. GAAP financial measures.


 
JEFFERIES GROUP LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in Thousands)
(Unaudited)
             
Quarter Ended Quarter Ended Quarter Ended
February 28, 2015 November 30, 2014 February 28, 2014
 
Revenues:
Commissions $ 166,922 $ 180,275 $ 162,063
Principal transactions 105,477 (33,841) 238,363
Investment banking 271,995 316,012 414,320

Asset management fees and investment income (loss) from managed funds

(9,837) 1,728 9,957
Interest income 228,870 237,911 249,268
Other revenues   19,905   20,919   23,069
Total revenues 783,332 723,004 1,097,040
Interest expense   191,660   198,195   198,012
Net revenues   591,672   524,809   899,028
 
Non-interest expenses:
Compensation and benefits 365,215 308,487 507,899
 
Non-compensation expenses:
Floor brokerage and clearing fees 55,080 55,829 49,513
Technology and communications 72,387 66,363 64,306
Occupancy and equipment rental 24,184 26,115 26,502
Business development 21,937 27,791 26,476
Professional services 24,256 28,206 24,819
Bad debt provision (1,018) 50,772 2,614
Goodwill impairment - 54,000 -
Other   16,747   21,266   14,630
Total non-compensation expenses   213,573   330,342   208,860
Total non-interest expenses   578,788   638,829   716,759
Earnings (loss) before income taxes 12,884 (114,020) 182,269
Income tax expense (benefit)   331   (13,901)   66,877
Net earnings (loss) 12,553 (100,119) 115,392
Net earnings (loss) attributable to noncontrolling interests   871   (360)   2,960
Net earnings (loss) attributable to Jefferies Group LLC $ 11,682 $ (99,759) $ 112,432
 
Pretax operating margin 2.2% -21.7% 20.3%
Effective tax rate 2.6% 12.2% 36.7%
 

 
JEFFERIES GROUP LLC AND SUBSIDIARIES
CONSOLIDATED ADJUSTED SELECTED FINANCIAL DATA
(Amounts in Thousands)
(Unaudited)
           
Quarter Ended February 28, 2015
GAAP Adjustments Adjusted
 
 
Net revenues $ 591,672 $ 55,906 (1) $ 535,766
 
Non-interest expenses:
Compensation and benefits 365,215 27,067 (2) 338,148
Non-compensation expenses   213,573   41,785 (3)   171,788
Total non-interest expenses   578,788   68,852   509,936
 
Operating income (loss) $ 12,884 $ (12,946) $ 25,830
 
Net earnings (loss) $ 12,553 $ (7,724) $ 20,277
 
Compensation ratio (a) 61.7% 63.1%
 
 
Quarter Ended November 30, 2014
GAAP Adjustments Adjusted
 
 
Net revenues $ 524,809 $ 43,627 (1) $ 481,182
 
Non-interest expenses:
Compensation and benefits 308,487 27,163 (2) 281,324
Non-compensation expenses   330,342   148,287 (4)   182,055
Total non-interest expenses   638,829   175,450   463,379
 
Operating income (loss) $ (114,020) $ (131,823) $ 17,803
 
Net earnings (loss) $ (100,119) $ (111,899) $ 11,780
 
Compensation ratio (a) 58.8% 58.5%
 
 
Quarter Ended February 28, 2014
GAAP Adjustments Adjusted
 
Net revenues $ 899,028 $ 47,172 (1) $ 851,856
 
Non-interest expenses:
Compensation and benefits 507,899 28,617 (2) 479,282
Non-compensation expenses   208,860   32,840 (3)   176,020
Total non-interest expenses   716,759 61,457   655,302
 
Operating income (loss) $ 182,269 $ (14,285) $ 196,554
 
Net earnings (loss) $ 115,392 $ (8,969) $ 124,361
 
Compensation ratio (a) 56.5% 56.3%

(a) Reconciliation of the compensation ratio for U.S. GAAP to Adjusted is a derivation of the reconciliation of the components above.

This presentation of Adjusted financial information is an unaudited non-GAAP financial measure. Adjusted financial information begins with information prepared in accordance with U.S. GAAP and then those results are adjusted to exclude the operations of the Company's Bache business. The Company believes that the disclosed Adjusted measures and any adjustments thereto, when presented in conjunction with comparable U.S. GAAP measures are useful to investors as they enable investors to evaluate the Company's results in the context of pursuing various strategic alternatives for the Bache business. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP.


 
JEFFERIES GROUP LLC AND SUBSIDIARIES
CONSOLIDATED ADJUSTED SELECTED FINANCIAL DATA
FOOTNOTES
 
 
(1)   Revenues generated by the Bache business, including commissions, principal transaction revenues and net interest revenue, for the presented period have been classified as a reduction of revenue in the presentation of Adjusted financial measures.
 
(2) Compensation expense and benefits recognized during the presented period for employees whose sole responsibilities pertain to the activities of the Bache business, including front office personnel and dedicated support personnel, have been classified as a reduction of Compensation and benefits expense in the presentation of Adjusted financial measures.
 
(3)

Expenses directly related to the operations of the Bache business for the presented periods have been excluded from Adjusted non-compensation expenses. These expenses include Floor brokerage and clearing fees, amortization of capitalized software used directly by the Bache business in conducting its business activities, technology expenses directly related to conducting Bache business operations and business development and professional services expenses incurred by the Bache business as part of its client sales and trading activities, including estimates of certain support costs dedicated to the Bache business.

 
(4) The following expenses incurred as part of the Bache business during the period presented are excluded from Adjusted non-compensation expenses:
 
 
$ thousands      

Quarter Ended
November 30,
2014

Floor brokerage, technology and communications, business

development, professional services and other estimated

expenses directly incurred by the Bache business in

conducting operations

$ 36,553
Bad debt expense incurred on customer default and close-out 52,300
Impairment of goodwill attributed to the Bache reporting unit 51,900

Impairment of certain intangible assets attributed to the Bache

reporting unit

  7,534
$ 148,287
 

 
JEFFERIES GROUP LLC AND SUBSIDIARIES
SELECTED STATISTICAL INFORMATION
(Amounts in Thousands, Except Other Data)
(Unaudited)
             
Quarter Ended Quarter Ended Quarter Ended
February 28, 2015 November 30, 2014 February 28, 2014

Revenues by Source

Equities $ 203,479 $ 158,452 $ 188,823
Fixed income   126,035     48,617     285,928
Total 329,514 207,069 474,751
 
Equity 79,071 67,910 94,738
Debt   60,876     131,901     173,038
Capital markets 139,947 199,811 267,776
Advisory   132,048     116,201     146,544
Investment banking 271,995 316,012 414,320
 
Asset management fees and investment income (loss)

from managed funds:

Asset management fees 13,985 4,930 9,446
Investment (loss) income from managed funds   (23,822 )   (3,202 )   511
Total   (9,837 )   1,728     9,957
Net revenues $ 591,672   $ 524,809   $ 899,028
 

Other Data

Number of trading days 61 63 61
 
Average firmwide VaR (in millions) (A) $ 13.27 $ 12.75 $ 16.27
Average firmwide VaR excluding Knight Capital (in millions) (A) $ 9.29 $ 8.77 $ 12.64
Average firmwide VaR excluding Knight Capital and Harbinger Group Inc. (in millions) (A) $ 9.29 $ 8.77 $ 9.23
(A)   VaR estimates the potential loss in value of our 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 our Annual Report on Form 10-K for the year ended November 30, 2014.
 

 
JEFFERIES GROUP LLC AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Amounts in Millions, Except Where Noted)
(Unaudited)
             
Quarter Ended Quarter Ended Quarter Ended
February 28, 2015 November 30, 2014 February 28, 2014
 

Financial position:

Total assets (1) $ 43,787 $ 44,518 $ 43,440
Average total assets for the period (1) $ 49,862 $ 51,030 $ 49,075
Average total assets less goodwill and intangible assets for the period (1) $ 47,961 $ 49,077 $ 47,089
 
Cash and cash equivalents (1) $ 3,340 $ 4,080 $ 2,865
Cash and cash equivalents and other sources of liquidity (1) (2) $ 4,647 $ 5,500 $ 4,467
Cash and cash equivalents and other sources of liquidity - % total assets (1) (2) 10.6 % 12.4 % 10.3 %
Cash and cash equivalents and other sources of liquidity - % total assets less goodwill and intangible assets (1) (2) 11.1 % 12.9 % 10.8 %
 
Financial instruments owned (1) $ 19,099 $ 18,637 $ 18,126
Goodwill and intangible assets (1) $ 1,900 $ 1,904 $ 1,987
 
Total equity (including noncontrolling interests) $ 5,466 $ 5,463 $ 5,462
Total member's equity $ 5,427 $ 5,425 $ 5,432
Tangible member's equity (3) $ 3,527 $ 3,520 $ 3,445
 
Bache assets (4) $ 3,926 $ 4,202 $ 3,839
 

Level 3 financial instruments:

Level 3 financial instruments owned (1) (5) $ 579 $ 527 $ 495
Level 3 financial instruments owned - % total assets (1) 1.3 % 1.2 % 1.1 %
Level 3 financial instruments owned - % total financial instruments owned (1) 3.0 % 2.8 % 2.7 %
Level 3 financial instruments owned - % tangible member's equity (1) 16.4 % 15.0 % 14.4 %
 

Other data and financial ratios:

Total capital (1) (6) $ 11,193 $ 11,269 $ 11,219
Leverage ratio (1) (7) 8.0 8.1 8.0
Adjusted leverage ratio (1) (8) 10.1 10.4 10.4
Tangible gross leverage ratio (1) (9) 11.9 12.1 12.0
Leverage ratio - excluding impacts of the Leucadia transaction (1) (10) 10.1 10.3 10.0
 
Number of trading days 61 63 61
 
Average firmwide VaR (11) $ 13.27 $ 12.75 $ 16.27
Average firmwide VaR excluding Knight Capital (11) $ 9.29 $ 8.77 $ 12.64
Average firmwide VaR excluding Knight Capital and Harbinger Group Inc. (11) $ 9.29 $ 8.77 $ 9.23
 
Number of employees, at period end 3,936 3,915 3,838
 

 
JEFFERIES GROUP LLC AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS - FOOTNOTES
 
(1)   Amounts pertaining to February 28, 2015 represent a preliminary estimate as of the date of this earnings release and may be revised in our Quarterly Report on Form 10-Q for the quarterly period ended February 28, 2015.
 
(2) At February 28, 2015, 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 $911 million, in aggregate, and $396 million, being the total of the estimated amount of additional secured financing that could be reasonably expected to be obtained from our financial instruments that are currently not pledged at reasonable financing haircuts and additional funds available under the committed senior secured revolving credit facility available for working capital needs of Jefferies Bache. The corresponding amounts included in other sources of liquidity at November 30, 2014 were $1,057 million and $364 million, and at February 28, 2014, were $1,130 million and $472 million, respectively.
 
(3) Tangible member's equity (a non-GAAP financial measure) represents total member's equity less goodwill and identifiable intangible assets. We believe that tangible member's' equity is meaningful for valuation purposes, as financial companies are often measured as a multiple of tangible member's equity, making these ratios meaningful for investors.
 
(4) Bache assets (a non-GAAP financial measure) includes Cash and cash equivalents, Cash and securities segregated, Financial instruments owned, Securities purchased under agreements to resell and Receivables attributable to our Bache business.
 
(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 February 28, 2015, November 30, 2014 and February 28, 2014, total capital includes our long-term debt of $5,726 million, $5,806 million and $5,757 million, respectively, and total equity. Long-term debt included in total capital is reduced by amounts outstanding under the revolving credit facility and the amount of debt maturing in less than one year, where applicable.
 
(7) Leverage ratio equals total assets divided by total equity.
 
(8) Adjusted leverage ratio (a non-GAAP financial measure) equals adjusted assets divided by tangible total equity, being total equity less goodwill and identifiable intangible assets. Adjusted assets (a non-GAAP financial measure) equals total assets less securities borrowed, securities purchased under agreements to resell, cash and securities segregated, goodwill and identifiable intangibles plus financial instruments sold, not yet purchased (net of derivative liabilities). At February 28, 2015, November 30, 2014 and February 28, 2014, adjusted assets were $35,977 million, $36,906 million and $36,273 million, respectively. We believe that adjusted assets is a meaningful measure as it excludes certain assets that are considered of lower risk as they are generally self-financed by customer liabilities through our securities lending activities.
 
(9) Tangible gross leverage ratio (a non-GAAP financial measure) equals total assets less goodwill and identifiable intangible assets divided by tangible member's equity. The tangible gross leverage ratio is used by rating agencies in assessing our leverage ratio.
 
(10) Leverage ratio - excluding impacts of the Leucadia transaction (a non-GAAP financial measure) is calculated as follows:
 
 
      February 28,     November 30,     February 28,
$ millions 2015 2014 2014
Total assets $ 43,787 $ 44,518 $ 43,440
Goodwill and acquisition accounting fair value adjustments on the transaction with Leucadia (1,957 ) (1,957 ) (1,957 )
Net amortization to date on asset related purchase accounting adjustments   112     108     32  
Total assets excluding transaction impacts $ 41,942   $ 42,669   $ 41,515  
 
Total equity $ 5,466 $ 5,463 $ 5,462
Equity arising from transaction consideration (1,426 ) (1,426 ) (1,426 )
Preferred stock assumed by Leucadia 125 125 125
Net amortization to date of purchase accounting adjustments, net of tax   (20 )   (9 )   (36 )
Total equity excluding transaction impacts $ 4,145   $ 4,153   $ 4,125  
 
Leverage ratio - excluding impacts of the Leucadia transaction   10.1     10.3     10.0  
 
(11)   VaR estimates the potential loss in value of our 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 our Annual Report on Form 10-K for the year ended November 30, 2014.
 

CONTACT:
Jefferies Group LLC
Peregrine C. Broadbent, 212-284-2338
Chief Financial Officer

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