LUK Leucadia National Corp.

Jefferies Group LLC today announced financial results for its fiscal fourth quarter 2015.

Highlights for the three months ended November 30, 2015, with adjusted amounts excluding the operating results and wind down costs of our Bache business:

• Investment Banking Net Revenues of $373 million
• Total Sales and Trading Net Revenues of $132 million
• Total Adjusted Net Revenues of $513 million (excluding Bache)
• Adjusted Net Earnings of $37 million (excluding Bache)
• Net Earnings of $25 million (including Bache)

Highlights for the year ended November 30, 2015, with adjusted amounts excluding the operating results and wind down costs of our Bache business:

• Investment Banking Net Revenues of $1,439 million
• Total Sales and Trading Net Revenues of $1,028 million
• Total Adjusted Net Revenues of $2,395 million (excluding Bache)
• Adjusted Net Earnings of $189 million (excluding Bache)
• Net Earnings of $100 million (including Bache)

Rich Handler, Chairman and Chief Executive Officer, and Brian Friedman, Chairman of the Executive Committee, commented: “Our full year results did not meet our expectations and we have made significant changes and are committed to improving our performance in 2016. On the positive side, our diversification and depth of capability came through in the form of solid full year results in Investment Banking and Equities, despite market challenges. We reported strong Investment Banking Net Revenues for the year of $1.4 billion that included record Net Revenue years in both Equity Capital Markets and Advisory of $408 million and $632 million, respectively, offsetting a market driven slowdown in our leveraged finance and energy investment banking businesses in both of which we have leading market positions. We continued to gain market share in our Equities sales and trading business. Despite the challenges experienced by most of our Fixed Income credit businesses, we saw solid Net Revenues recorded by our U.S. and International rates businesses, as well as our U.S. investment grade corporate credit business.”

"Fixed Income, which has been a solid to excellent business for Jefferies in prior years, did not perform well in 2015. Almost all our Fixed Income credit businesses were impacted by the prolonged anticipation of the lift-off in Federal Reserve rate-setting, the collapse in the global energy markets (where we have long been an active adviser, capital raiser and trader), reduced originations in leveraged finance and meaningfully reduced liquidity. There were a number of periods of extreme volatility, which were followed by periods of low trading volume."

“As discussed during our Leucadia Investor Day in October, we conducted a detailed review and analysis of all our businesses and support areas during 2015, and, as promised, have now implemented reductions in our commitments of risk, balance sheet and capital that are consistent with the market environment and opportunity we currently envision. In addition, we have been aligning our overall resource commitments to achieve further operating efficiencies and to better match our expectations for 2016. At the same time, we recruited new leadership in certain areas of our Fixed Income and Equities businesses to strengthen both our client offering and our results, and continue to selectively add accomplished senior professionals to our Investment Banking effort. In Fixed Income particularly, we expect these efforts to return our business to more normal profitability in 2016. We have methodically implemented a range of changes which we believe will result in less volatility and risk, greater efficiency and better returns, all with no meaningful impact to our clients or our ability to generate revenues.”

“Our balance sheet at November 30, 2015 was $38.5 billion, down $4.2 billion from three months prior and $6.0 billion from the end of fiscal 2014. Leverage (excluding the impact of the Leucadia transaction, which added significant goodwill and a corresponding increase in equity from the transaction's consideration) was less than nine times, its lowest level in about seven years. In addition to the absolute reduction in our balance sheet, our long securities inventory was $16.5 billion at November 30, 2015, down $2.4 billion from August 31, 2015, and down $2.1 billion from November 30, 2014. These reductions were substantially effected during our fourth quarter and, while the impact was to reduce our quarterly Fixed Income Net Revenues and profitability due to the challenge of liquidating positions in a volatile and less liquid environment, we believe this will best position Jefferies to succeed in 2016 and beyond. In this connection, we note that our net distressed trading energy exposure was $39 million at year-end. At the same time, the assets associated with our Prime Securities business, comprised primarily of securities held on behalf of clients, increased to $3.9 billion from $3.3 billion at the end of the prior quarter and $3.2 billion at the end of 2014. Separately, Jefferies Finance, our 50%-owned corporate lending joint venture with MassMutual, completed the syndication of a number of its committed financings during the quarter and, at year-end, our outstanding commitments were about 29% lower than the average of commitments outstanding at quarter-ends over the last two years and 33% lower when compared to the end of 2014. We remain actively involved serving our sponsor and corporate clients with leveraged finance solutions."

"Our unsecured long-term debt has been reduced by $700 million to $5.6 billion at year-end 2015 from $6.3 billion one year ago. We plan to repay our $350 million March debt maturity from cash on hand. The reductions in our balance sheet are reflected in proportionate reductions in our risk and capital commitments, and should collectively dampen our volatility and downside in 2016, although one can never fully anticipate market conditions. As we reduced our balance sheet, our Level 3 assets remained at about 3% of our inventory, our liquidity buffer remained at $5.1 billion, despite the repayment of a $500 million debt maturity during the quarter, and our liquidity ratio increased to 13.2%. Average VaR for the quarter of $10 million was lower by 40% compared to $14 million for the third quarter.”

“These significant changes to our Fixed Income business follow our decision to exit our Bache futures and commodities business, which removes a significant drag on Jefferies profitability. In 2015 we incurred pre-tax losses of $135 million and a net operating loss, including wind down costs, of $90 million with respect to Bache. All client accounts have now been transferred to Société Générale or other service providers. Total final costs in 2016 should be less than $5 million in aggregate.”

“Our management team has navigated challenging periods at Jefferies before as 1990, 1994, 1998, 2001-02, 2008-09, 2011 and now 2015 each delivered unique dislocation. Each of these periods was also followed by similarly unique growth opportunities and a yet better competitive position for our firm. After all of the challenges and with the hard work and commitment of all our team, we believe we are now well positioned in our Investment Banking, Equities, and Fixed Income businesses. In addition, our tangible equity, total capital and liquidity profile are stronger than at the end of any of those prior periods of stress. During this year of challenges, we remained profitable every quarter, and were able to analyze, change and adapt our operating businesses, while we continued to serve our clients. In 2016, we will continue to focus on our clients, be relentless in finding areas where we can continue to improve our operating results, hire new quality partners, prudently manage our risk, and never stop appreciating our employee-partners whose hard work and dedication are the backbone and most important assets of Jefferies.”

The attached financial tables should be read in connection with our Quarterly Report on Form 10-Q for the quarter ended August 31, 2015 and our Annual Report on Form 10-K for the year ended November 30, 2014. Amounts pertaining to November 30, 2015 represent a preliminary estimate as of the date of this earnings release and may be revised in our Annual Report on Form 10-K for the year ended November 30, 2015. Adjusted financial measures referenced above are non-GAAP financial measures, which management believes provide meaningful information to enable investors to evaluate the Company's results in the context of exiting the Bache business. Refer to the Supplemental Schedules on pages 6-8 for a reconciliation of Adjusted measures to the respective direct U.S. GAAP financial measures.

This 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 results and performance, including our expectations for our Fixed Income business and overall positioning and performance for fiscal year 2016. It is possible that the actual results may differ materially from the anticipated results indicated in these forward-looking statements. Please refer to our most recent Annual Report on Form 10-K for a discussion of important factors that could cause actual results to differ materially from those projected in these forward-looking statements.

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 and foreign exchange, 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.

  JEFFERIES GROUP LLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Amounts in Thousands) (Unaudited)   Quarter Ended November 30, 2015     August 31, 2015     November 30, 2014       Revenues: Commissions $ 146,288 $ 172,284 $ 180,275 Principal transactions (38,525 ) (50,297 ) (33,841 ) Investment banking 372,930 389,820 316,012 Asset management fees and investment income from

managed funds

8,020 4,182 1,728 Interest income 221,962 230,805 237,911 Other revenues   (8,736 )   34,329     20,919   Total revenues 701,939 781,123 723,004 Interest expense   188,843     202,195     198,195   Net revenues   513,096     578,928     524,809     Non-interest expenses: Compensation and benefits 284,647 336,499 308,487   Non-compensation expenses: Floor brokerage and clearing fees 40,932 45,307 55,829 Technology and communications 78,918 89,378 66,363 Occupancy and equipment rental 26,567 25,967 26,115 Business development 27,098 30,527 27,791 Professional services 27,613 24,684 28,206 Bad debt provision (5,483 ) 5,158 50,772 Goodwill impairment — — 54,000 Other   15,693     14,315     21,266   Total non-compensation expenses   211,338     235,336     330,342   Total non-interest expenses   495,985     571,835     638,829   Earnings (loss) before income taxes 17,111 7,093 (114,020 ) Income tax expense (benefit)   (7,546 )   4,609     (13,901 ) Net earnings (loss) 24,657 2,484 (100,119 ) Net earnings (loss) attributable to noncontrolling

interests

  148     427     (360 ) Net earnings (loss) attributable to Jefferies Group LLC   $ 24,509     $ 2,057     $ (99,759 )   Pretax operating margin 3.3 % 1.2 % (21.7 )% Effective tax rate (44.1 )% 65.0 % 12.2 %   JEFFERIES GROUP LLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Amounts in Thousands) (Unaudited)   Year Ended November 30, 2015     November 30, 2014     Revenues: Commissions $ 659,002 $ 668,801 Principal transactions 172,617 532,292 Investment banking 1,439,007 1,529,274 Asset management fees and investment income from managed

funds

8,015 17,047 Interest income 922,189 1,019,970 Other revenues   74,074     78,881   Total revenues 3,274,904 3,846,265 Interest expense   799,654     856,127   Net revenues   2,475,250     2,990,138     Non-interest expenses: Compensation and benefits 1,467,131 1,698,530   Non-compensation expenses: Floor brokerage and clearing fees 200,032 215,329 Technology and communications 313,044 268,212 Occupancy and equipment rental 101,138 107,767 Business development 105,963 106,984 Professional services 103,972 109,601 Bad debt provision (396 ) 55,355 Goodwill impairment — 54,000 Other   62,566     71,339   Total non-compensation expenses   886,319     988,587   Total non-interest expenses   2,353,450     2,687,117   Earnings before income taxes 121,800 303,021 Income tax expense   21,924     142,061   Net earnings 99,876 160,960 Net earnings attributable to noncontrolling interests   1,795     3,400   Net earnings attributable to Jefferies Group LLC   $ 98,081     $ 157,560     Pretax operating margin 4.9 % 10.1 % Effective tax rate 18.0 % 46.9 %   JEFFERIES GROUP LLC AND SUBSIDIARIES CONSOLIDATED ADJUSTED SELECTED FINANCIAL DATA (Amounts in Thousands) (Unaudited)         Quarter Ended November 30, 2015 GAAP Adjustments Adjusted   Net revenues $ 513,096 $ (363 ) (1) $ 513,459   Non-interest expenses: Compensation and benefits 284,647 7,111 (2) 277,536 Non-compensation expenses   211,338     12,327   (3)   199,011   Total non-interest expenses   495,985     19,438   (4)   476,547     Operating income (loss)   $ 17,111     $ (19,801 )   $ 36,912   Net earnings (loss)   $ 24,657     $ (12,165 )   $ 36,822     Compensation ratio (a) 55.5 % 54.1 %   Quarter Ended August 31, 2015 GAAP Adjustments Adjusted   Net revenues $ 578,928 $ (4,289 ) (1) $ 583,217   Non-interest expenses: Compensation and benefits 336,499 22,117 (2) 314,382 Non-compensation expenses   235,336     37,708   (3)   197,628   Total non-interest expenses   571,835     59,825     512,010     Operating income (loss)   $ 7,093     $ (64,114 )   $ 71,207   Net earnings (loss)   $ 2,484     $ (44,318 )   $ 46,802     Compensation ratio (a) 58.1 % 53.9 %   Quarter Ended November 30, 2014 GAAP Adjustments Adjusted   Net revenues $ 524,809 $ 54,907 (1) $ 469,902   Non-interest expenses: Compensation and benefits 308,487 21,794 (2) 286,693 Non-compensation expenses   330,342     145,075   (3)   185,267   Total non-interest expenses   638,829     166,869     471,960     Operating income (loss)   $ (114,020 )   $ (111,962 )   $ (2,058 ) Net earnings (loss)   $ (100,119 )   $ (82,338 )   $ (17,781 )   Compensation ratio (a) 58.8 % 61.0 %  

(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 exiting 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 (Amounts in Thousands) (Unaudited)         Year Ended November 30, 2015 GAAP Adjustments Adjusted   Net revenues $ 2,475,250 $ 80,199 (1) $ 2,395,051   Non-interest expenses: Compensation and benefits 1,467,131 87,681 (2) 1,379,450 Non-compensation expenses   886,319     127,168   (3)   759,151   Total non-interest expenses   2,353,450     214,849   (4)   2,138,601     Operating income (loss)   $ 121,800     $ (134,650 )   $ 256,450     Net earnings (loss)   $ 99,876     $ (89,602 )   $ 189,478     Compensation ratio (a) 59.3 % 57.6 %     Year Ended November 30, 2014 GAAP Adjustments Adjusted   Net revenues $ 2,990,138 $ 202,797 (1) $ 2,787,341   Non-interest expenses: Compensation and benefits 1,698,530 98,618 (2) 1,599,912 Non-compensation expenses   988,587     249,586   (3)   739,001   Total non-interest expenses   2,687,117     348,204     2,338,913     Operating income (loss)   $ 303,021     $ (145,407 )   $ 448,428     Net earnings (loss)   $ 160,960     $ (99,468 )   $ 260,428     Compensation ratio (a) 56.8 % 57.4 %  

(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 exiting 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 and occupancy 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) Total non-interest expenses for the quarter and year ended November 30, 2015 include costs of $11.2 million and $73.1 million, respectively, on a pre-tax basis, related to our exit of the Bache business. The after-tax effect of these costs is $8.1 million and $52.6 million for the quarter and year ended November 30, 2015, respectively. These costs consist primarily of severance, retention and benefit payments for employees, incremental amortization of outstanding restricted stock and cash awards, contract termination costs and incremental amortization expense of capitalized software expected to no longer be used subsequent to the wind-down of the business.

JEFFERIES GROUP LLC AND SUBSIDIARIES SELECTED STATISTICAL INFORMATION (Amounts in Thousands, Except Other Data) (Unaudited)               Quarter Ended November 30, 2015 August 31, 2015 November 30, 2014

Revenues by Source

Equities $ 123,702 $ 203,077 $ 158,452 Fixed income 8,444   (18,151 ) 48,617   Total sales and trading 132,146   184,926   207,069     Equity 93,547 127,051 67,910 Debt 68,705   113,928   131,901   Capital markets 162,252 240,979 199,811 Advisory 210,678   148,841   116,201   Total investment banking 372,930   389,820   316,012     Asset management fees and investment income (loss)from managed funds: Asset management fees 5,864 7,067 4,930 Investment (loss) income from managed funds 2,156   (2,885 ) (3,202 ) Total 8,020   4,182   1,728   Net revenues $ 513,096   $ 578,928   $ 524,809    

Other Data

Number of trading days 63 65 63 Number of trading loss days 22 21 17 Number of trading loss days excluding KCG 23 18 16   Average firmwide VaR (in millions) (A) $ 9.72 $ 13.77 $ 12.75 Average firmwide VaR excluding KCG (in millions) (A) $ 8.46 $ 12.16 $ 8.77  

(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 SELECTED STATISTICAL INFORMATION (Amounts in Thousands, Except Other Data) (Unaudited)           Year Ended November 30, 2015 November 30, 2014

Revenues by Source

Equities $ 758,456 $ 696,221 Fixed income 269,772   747,596   Total sales and trading 1,028,228   1,443,817     Equity 408,474 339,683 Debt 398,179   627,536   Capital markets 806,653 967,219 Advisory 632,354   562,055   Total investment banking 1,439,007   1,529,274     Asset management fees and investment income (loss)from managed funds: Asset management fees 31,819 26,682 Investment (loss) income from managed funds (23,804 ) (9,635 ) Total 8,015   17,047   Net revenues $ 2,475,250   $ 2,990,138    

Other Data

Number of trading days 252 251 Number of trading loss days 64 44 Number of trading loss days excluding KCG 55 26   Average firmwide VaR (in millions) (A) $ 12.40 $ 14.35

Average firmwide VaR excluding KCG (in millions) (A)

$ 9.97 $ 9.54  

(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 November 30, 2015 August 31, 2015 November 30, 2014  

Financial position:

Total assets (1) $ 38,537 $ 42,785 $ 44,518 Average total assets for the period (1) $ 48,720 $ 48,327 $ 51,030 Average total assets less goodwill and intangible assets for the period (1) $ 46,831 $ 46,432 $ 49,077   Cash and cash equivalents (1) $ 3,510 $ 3,442 $ 4,080 Cash and cash equivalents and other sources of liquidity (1) (2) $ 5,081 $ 5,151 $ 5,500 Cash and cash equivalents and other sources of liquidity - % total assets (1) (2) 13.2 % 12.0 % 12.4 %

Cash and cash equivalents and other sources of liquidity - % total assets less goodwilland intangible assets (1) (2)

 

13.9 % 12.6 % 12.9 %   Financial instruments owned (1) $ 16,540 $ 18,892 $ 18,637 Goodwill and intangible assets (1) $ 1,891 $ 1,891 $ 1,904   Total equity (including noncontrolling interests) $ 5,513 $ 5,514 $ 5,463 Total member's equity $ 5,486 $ 5,481 $ 5,425 Tangible member's equity (3) $ 3,595 $ 3,590 $ 3,520   Bache assets (4) $ 45 $ 263 $ 4,202  

Level 3 financial instruments:

Level 3 financial instruments owned (1) (5) (6) $ 501 $ 474 $ 485 Level 3 financial instruments owned - % total assets (1) (6) 1.3 % 1.1 % 1.1 % Total Level 3 financial instruments owned - % total financial instruments (1) (6) 3.0 % 2.5 % 2.6 % Level 3 financial instruments owned - % tangible member's equity (1) (6) 13.9 % 13.2 % 13.8 %  

Other data and financial ratios:

Total capital (1) (7) $ 10,802 $ 10,850 $ 11,269 Leverage ratio (1) (8) 7.0 7.8 8.1 Adjusted leverage ratio (1) (9) 8.8 10.3 10.4 Tangible gross leverage ratio (1) (10) 10.2 11.4 12.1 Leverage ratio - excluding impacts of the Leucadia transaction (1) (11) 8.8 9.8 10.3   Number of trading days 63 65 63 Number of trading loss days 22 21 17 Number of trading loss days excluding KCG 23 18 16 Average firmwide VaR (12) $ 9.72 $ 13.77 $ 12.75 Average firmwide VaR excluding KCG (12) $ 8.46 $ 12.16 $ 8.77   Number of employees, at period end 3,557 3,665 3,915   JEFFERIES GROUP LLC AND SUBSIDIARIES FINANCIAL HIGHLIGHTS - FOOTNOTES  

(1) Amounts pertaining to November 30, 2015 represent a preliminary estimate as of the date of this earnings release and may be revised in our Annual Report on Form 10-K for the year ended November 30, 2015.

(2) At November 30, 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 $1,266 million, in aggregate, and $305 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. At November 30, 2014 amounts also included additional funds that were 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 August 31, 2015 were $1,263 million and $446 million, respectively, and at November 30, 2014, were $1,057 million and $364 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) In May 2015, the Financial Accounting Standards Board issued Accounting Standards Update No. 2015-07, “Fair Value Measurement (Topic 820) - Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent).” The guidance removes the requirement to include investments in the fair value hierarchy for which the fair value is measured at net asset value using the practical expedient under “Fair Value Measurements and Disclosures (Topic 820).” The guidance also removes the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value practical expedient. Rather, those disclosures are limited to investments for which we have elected to measure the fair value using that practical expedient. The guidance is effective retrospectively and we have early adopted this guidance during the second quarter of fiscal 2015.

(7) At November 30, 2015, August 31, 2015 and November 30, 2014, total capital includes our long-term debt of $5,289 million, $5,337 million and $5,806 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.

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

(9) 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 November 30, 2015, August 31, 2015 and November 30, 2014, adjusted assets were $31,639 million, $37,241 million and $36,906 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.

(10) 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.

(11) Leverage ratio - excluding impacts of the Leucadia transaction (a non-GAAP financial measure) is calculated as follows:

          November 30, August 31 November 30, $ millions 2015 2015 2014 Total assets $ 38,537 $ 42,785 $ 44,518

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

 

124   120   108   Total assets excluding transaction impacts $ 36,704   $ 40,948   $ 42,669     Total equity $ 5,513 $ 5,514 $ 5,463 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

 

(52 ) (41 ) (9 ) Total equity excluding transaction impacts $ 4,160   $ 4,172   $ 4,153     Leverage ratio - excluding impacts of the Leucadia transaction 8.8   9.8   10.3    

(12) 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.

View source version on businesswire.com: http://www.businesswire.com/news/home/20151215005672/en/

Jefferies Group LLCPeregrine C. Broadbent, 212-284-2338Chief Financial Officer