Jefferies Investor Meeting Presentation 2014

Jefferies Group 2014 Investor Day
October 9, 2014
Jefferies LLC
Member SIPC
Note on Forward Looking Statements
This document 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 business 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 our 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.
i
Agenda
Section
Jefferies Overview
1
Jefferies Operating Results
2
Jefferies Business Review
3

Investment Banking

Equities

Fixed Income, Futures & Commodities
Risk Management
4
Capital and Liquidity Management
5
1
Jefferies Overview
2
Leucadia – Jefferies Merger



Leucadia – Jefferies merger closed on March 1, 2013
Jefferies continues to operate in a manner consistent with its historical business
model and remains a client-focused, conservatively capitalized and full-service
global investment banking firm
Leucadia continues to pursue compelling value opportunities, consistent with its
track record established over more than three decades as one of the world’s leading
long-term investors
─
Investment criteria are consistent with the disciplined approach to risk that
Leucadia has publicly affirmed
3
Leucadia Overview
Leucadia National Corporation
Parent Capital – $11.5 Billion (1)
Financial Services
$6.2 Billion
Jefferies (100%)
$5.5 Billion
Merchant Banking
$2.4 Billion
Corporate / Liquidity
$2.9 Billion
Berkadia (50%)
$203 Million
National Beef (79%)
$775 Million
Foursight (90%) and
Chrome (53%)
$49 Million
Harbinger (20%)
$528 Million
Parent Company
Cash & Investments
$1.6 Billion (1, 5, 8, 9, 10)
Leucadia Asset Mgmt
$479 Million
Jefferies Finance (50%)
$343 Million
Topwater Capital
$93 Million
Jefferies LoanCore (49%)
$158 Million
Structured Alpha
$84 Million (3)
KCG Holdings (19%)
$269 Million
Mazama Capital
$255 Million
Common Equity – $10.4 Billion (2)
Preferred Equity – $0.125 Billion
Parent Debt – $1.0 Billion (1)
Vitesse Energy (96%) (5)
$239 Million
HomeFed (64%)
$227 Million
(6)
Linkem (53%)
$162 Million
Global Equity Events
$26 Million
Garcadia (~75%) (7)
$141 Million
CoreCommodity
$22 Million
Juneau Energy (98%) (8)
$104 Million
Conwed (100%)
$77 Million
Folger Hill (4)
Idaho Timber (100%)
$72 Million
Golden Queen (34%) (9)
$71 Million
Oregon LNG
See page 57 and 58 for footnotes and additional disclosures.
4
Deferred Tax Asset
$1.3 Billion (11)
Jefferies Group





Full-Service Capital Markets Platform: expertise and depth across equities, fixed
income, commodities and investment banking
Client-Focused: providing investor and issuer clients with the highest quality
advice and execution
Global Footprint: sales & trading and investment banking presence across the
United States, Europe and Asia
Strong, Stable Foundation: robust long-term capital base, comparatively low
leverage and free from dependence upon government support
Positioned to Seize Market Share: having broadened our product offering and
hired additional key talent during the downturn, Jefferies is positioned to
continue to grow rapidly
5
Global Full-Service Capabilities
Investment Banking
Consumer
Energy
Equities
Equity
Capital
Markets
Fixed Income, Futures
& Commodities
Cash
Equities
Electronic
Trading
Leveraged
Credit
Investment
Grade
Listed
Futures
Emerging
Markets
MBS / ABS /
CMBS
Base Metals
Financials
Healthcare
Debt Capital
Markets
Derivatives
Prime
Brokerage /
Securities
Finance
Industrials
TMT
M&A
ETFs
Convertibles
Rates
Municipals
Precious
Metals
REGAL
Financial
Sponsors
Restructuring
Wealth
Management
Research
ETFs
Research
Foreign
Exchange
Public
Finance
6
Global Footprint
Over 3,800 employees in over 30 cities worldwide
London
(European
Headquarters)
(1)
New York
(Global Headquarters)
Hong Kong
(Asian Headquarters)
(1)
(1)
(1)
(1)
(1) Jefferies distributes on a co-branded basis research issued by third-parties headquartered in the identified locations.
7
Revenue and Earnings Growth Post-Financial Crisis
($ Millions)
Net Revenues
$4,000
(1)
Predecessor Successor
Pre-Financial
Crisis
$3,000
$2,000
2,192
3,062
2,577
3,040
3,416
1,458
$1,000
$0
Net Earnings to Common Shareholders
$400
$300
$200
(1)
Pre-Financial
Crisis
206
Predecessor Successor
367
224
285
282
274
$100
$0
Note: All results as reported in Jefferies’ public filings.
(1) Excludes predecessor first quarter ending 2/28/13. Net Revenue and Net Earnings to Common Shareholders for the excluded quarter total $819 million and
$80 million, respectively.
8
Revenue and Earnings Growth Since 1990
($ Millions)
Net Revenues
$4,000
$3,500
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$0
Predecessor Successor
(1)
3,416
2,192
1,205
144
Net Earnings to Common Shareholders
$400
$200
$0
($200)
($400)
($600)
7
617
365
29
Predecessor Successor
(1)
55
157
224
Note: All results as reported in Jefferies’ public filings.
(1) Excludes predecessor first quarter ending 2/28/13. Net Revenue and Net Earnings to Common Shareholders for the excluded quarter total $819 million and
$80 million, respectively.
(2) Includes post-tax losses of $427 million related to the modification of the terms of Jefferies’ employee stock awards in Q4 2008, such that previously
granted awards were written off and current year employee stock compensation awards were expensed in the year in which service was provided, and costs
associated with the restructuring activities in the fourth quarter of 2008.
9
367
Consistent Tangible Common Equity Growth
($ Millions)


Jefferies has significantly and consistently grown tangible common equity
Jefferies’ proactive equity capital raises helped the firm navigate the global
financial crisis and capitalize on growth opportunities
Tangible Common Equity (1)
Predecessor Successor
$4,000
$500 mm
Equity
Issuance
$3,500
$3,000
$2,500
$3,593
$434 mm
Equity
Issuance
$2,000
$1,500 $1,386
$1,000
(2)
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
08 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 14 14
Source: Jefferies.
(1) Tangible member's / common stockholders’ equity (a non-GAAP financial measure) represents total member's / common stockholders’ equity less goodwill and
identifiable intangible assets.
(2) Decrease primarily due to significant stock buyback in Q1 2013.
10
Jefferies’ Momentum and Ongoing Opportunity




Record revenues and earnings for the first nine months of the fiscal year
demonstrate the strength of Jefferies' operating model:
─
Significant growth across Investment Banking reflects the quality and increasing
momentum of Jefferies’ full service global platform
─
Ongoing growth and expansion of Jefferies Finance corporate lending platform
─
Solid growth in Equities revenues and market share
─
Durable Fixed Income, Futures and Commodities effort, despite less volatile
markets
Jefferies’ position as the only pure global investment banking and capital markets
firm headquartered in the U.S. creates a unique ongoing growth opportunity
Continued emphasis on margin expansion and earnings growth through investment
banking hiring, cross-product client penetration and increased employee
productivity
Jefferies continues to prudently manage risk, maintaining a disciplined approach to
leverage, funding and asset quality
11
Jefferies Operating Results
12
Earnings Update – Third Quarter 2014
($ Millions)
Third quarter ending August 31, 2014 performance:
Nine months ending August 31, 2014 performance:

Net Revenues: $843 million

Net Revenues: $2,465 million

Pre-Tax Earnings: $136 million

Pre-Tax Earnings: $417 million

Net Earnings: $84 million

Net Earnings: $257 million

Revenues by Source:

Revenues by Source:
Investment
Banking:
Advisory
$199
Investment
Banking:
Advisory
$446
Equities
$172
Equities
$538
Fixed
Income
$195
Investment
Banking:
Capital
Markets
$269
Asset
Mgmt. and
Other
$8
Investment
Banking:
Capital
Markets
$767
13
Fixed Income
$699
Asset Mgmt.
and Other
$15
Earnings Update – LTM Ending Q3 2014
($ Millions)
Last twelve months ending August 31, 2014 performance:

Net Revenues: $3,416 million

Pre-Tax Earnings: $593 million

Net Earnings: $367 million

Revenues by Source:
Investment
Banking:
Advisory
$583
Equities
$828
Investment
Banking:
Capital Markets
$1,048
Fixed Income
$926
Asset Mgmt.
and Other
$32
14
Balance Sheet
($ Millions)
Jefferies Group LLC
Balance Sheet as of 08/31/14
Assets
Cash & Cash Equivalents
Cash & Securities Segregated
Financial Instruments Owned
Investments in Managed Funds
Loans to and Investments in Related Parties
Securities Borrowed
Securities Purchased Under Agreements to Resell
Securities Received as Collateral
Receivables from Brokers, Dealers and Clearing Organizations
Receivables from Customers
Fees, Interest and Other Receivables
Premises and Equipment
Goodwill
Other Assets
Total Assets
Leverage: (1)
Leverage (excluding merger impacts):
Tangible Gross Leverage: (3)
Liabilities and Equity
$ 4,035
Short-term Borrowing
3,301
Financial Instruments Sold, Not Yet Purchased
18,420
Securities Loaned
78
Securities Sold Under Agreements to Repurchase
632
Other Secured Financings
6,270
Obligation to Return Securities Received as Collateral
4,571
Payables to Brokers, Dealers and Clearing Organizations
8
Payables to Customers
2,413
Accrued Expenses and Other Liabilities
1,660
Long-term Debt
258 Total Liabilities
242
1,724
Member's Equity
1,152
Noncontrolling Interests
Total Equity
$44,764 Total Liabilities and Equity
(2)
$
92
9,723
2,469
10,532
617
8
1,919
5,943
1,232
6,626
$39,162
5,571
31
$ 5,602
$44,764
8.0x
10.1x
11.9x
(1) Leverage ratio equals total assets divided by total equity.
(2) Leverage ratio (excluding merger impacts) (a non-GAAP financial measure) equals total assets less the increase in goodwill and asset fair values in acquisition accounting of
$1,957 million less amortization to date of $42 million on assets recognized at fair value in acquisition accounting divided by the sum of total equity less $1,359 million,
being the increase in equity arising from merger consideration of $1,426 million excluding the $125 million attributable to the assumption of Jefferies’ preferred stock by
Leucadia, and less the impact on equity due to amortization to date of $58 million on assets and liabilities recognized at fair value in acquisition accounting.
(3) Tangible gross leverage ratio (a non-GAAP financial measure) equals total assets less goodwill and identifiable intangible assets divided by tangible member’s equity.
Tangible member's equity (a non-GAAP financial measure) represents total member's equity less goodwill and identifiable intangible assets.
15
Compensation Overview
Jefferies has taken advantage of the challenges faced by our competitors by
upgrading talent across our firm


Our new professionals have been a key driver of growth
Lag between hiring senior employees and their achieving run-rate revenue
production has impacted Jefferies’ compensation ratio
─ This
lag is particularly pronounced with senior investment bankers, who have
comprised a meaningful portion of Jefferies’ senior hiring since 2010

Although Jefferies has successfully remained within our stated upper-bound 60%
compensation ratio, we expect the ratio to decline over time as our hires reach
their targeted productivity, overall net revenue grows and start-up amortization
declines
16
Jefferies Business Review
17
Investment Banking
18
Investment Banking Revenues Since 1990
($ Millions)
Net Revenues
Predecessor Successor
(1)
$1,750
1,630
$1,500
$1,250
$1,000
890
$750
495
$500
$250
$0
9
72
91
Note: All results as reported in Jefferies’ public filings.
(1) Excludes predecessor first quarter ending 2/28/13. Investment Banking Net Revenues for the excluded quarter totaled $288 million.
19
Investment Banking Overview

Jefferies Investment Banking is a leading advisor and underwriter to our clients globally
─ 741 investment bankers with deep sector expertise and extensive experience across all major
industry verticals
─ On the ground presence in eleven countries across the world
 25% of our transactions in the last twelve months have been for clients domiciled outside of the
United States
(1)
─
540 advisory or bookrun transactions executed in the last twelve months (1)
 Well balanced mix across advisory, debt capital markets and equity capital markets
─
62% of our transactions in the last twelve months were on behalf of repeat clients
(1)
Investment Banking & Capital Markets
Product
Capabilities
Sector Focus
Consumer
Consumer Products, Restaurants,
Retailing
Financials
Banks, Broker / Dealers, Insurance,
Specialty Finance
Industrials
Aerospace & Defense, Business
Services, Capital Goods, Chemicals,
Construction & Building Materials,
Maritime, Metals & Mining, Paper &
Packaging, Power & Utilities,
Transportation & Logistics
REGAL
Real Estate, Gaming, Leisure &
Lodging
Energy
Healthcare
TMT
Regions
Equity Capital
Markets
Americas
United States, Canada,
Brazil
Biotechnology, Healthcare Services,
Managed Care, Medical Devices,
Pharmaceuticals
Debt Capital
Markets
Europe
U.K., Germany, France,
Sweden, Russia
Software, Internet, Semiconductors,
Wireless & Wireline, Financial
Technology, Technology Services,
Entertainment, Broadcasting,
Information Services & Publishing,
Communications Equipment, Telecom
Infrastructure
Mergers &
Acquisitions
Asia
China, India, Singapore
Oil & Gas Exploration, Oil & Gas
Midstream, Oil Field Services
Public
Finance
(1) Excludes public finance, mortgage and asset-backed capital markets transactions.
Restructuring
20
Investment Banking – Performance Update
($ Millions)


Net revenues have grown at a compounded rate of 15% per year since 2010
─ Recent performance strong across all major products, sectors and regions
─ Well balanced mix across advisory, debt capital markets and equity capital markets
Increased revenue per Managing Director in each of the last 5 years
─ Significant increase in the last twelve months
Investment Banking Net Revenues
(1)
Predecessor Successor
Equity Capital Markets
$2,000
$1,500
Debt Capital Markets
Advisory
1,428
1,126
1,123
$1,000
890
$500
$0
Note: All results as reported in Jefferies’ public filings.
(1) Excludes predecessor first quarter ending 2/28/13. Investment Banking Net Revenues for the excluded quarter totaled $288 million.
21
1,630
Jefferies Finance Update
($ Millions)



Jefferies Finance, our corporate lending joint venture with Massachusetts Mutual Life
Insurance Company, has grown rapidly since 2010
─ Established in 2004, Jefferies Finance has demonstrated growth and resilience across
multiple business cycles
Jefferies Finance has successfully built a leading franchise arranging leveraged loans for
distribution to the capital markets
─ Significant growth in arranged loans, with modest balance sheet expansion
Significant opportunities for expansion in core business and in complementary products
Total Arranged Deal Volume by Fiscal Year
138
Arranged Volume
120
118
# of Deals
100
64
80
69
$21,136
$24,951
40
$3,816
FY 2010
140
$7,689
60
40
$11,638
20
0
FY 2011
FY 2012
22
FY 2013
LTM 8/31/14
Selected Milestones in 2014


Increased the average size of both our bookrun leveraged finance and equity transactions for
the third consecutive year, now at approximately $474 million and $218 million,
respectively
Continued to increase the number of both bookrun leveraged finance and equity transactions
over $500 million in value
─ 15 equity offerings greater than $500 million in 2014 including 5 offerings executed in
Europe
Number of Deals
Jefferies Bookrun Leveraged Finance Transactions over $500 million
67
75
50
25
34
11
6
2010
2011
50
0
2012
2013
Number of Deals
Jefferies Bookrun Equity Offerings over $500 million
15
12
9
6
3
0
LTM 9/30/14
15
8
2
2010
4
4
2011
2012
23
2013
LTM 9/30/14
Selected Milestones in 2014 (Continued)

Our track record in winning M&A transactions exceeding $1 billion continued, with 19
transactions completed in the last twelve months, including marquis transactions for
Deutsche Telekom and Kinder Morgan
Number of Deals
Jefferies Completed M&A Transactions over $1 billion
25
20
15
10
5
0
8
2010




14
2011
19
21
19
2012
2013
LTM 9/30/14
The strength of our M&A sell-side franchise continued, with a greater percentage of our total
M&A revenue derived from sell-side transactions than any major investment bank
We made significant progress in penetrating the top tier of financial sponsors. In 2014, we
won or executed important “first-time” mandates with 10 of the largest 20 global sponsors
Since acquiring Hoare Govett in February 2012, we have added 21 U.K. corporate broking
clients (12 in 2014), including 15 clients with market caps greater than $1.5 billion. The
Hoare Govett franchise has been important to our winning and executing over 80 European
bookrun equity offerings since the acquisition
In the last 12 months, we have completed 15 bookrun equity offerings for China clients,
including 3 of the largest IPO’s in China (Huishan Dairy, Cinda Asset Management and
JD.com)
24
Select Jefferies Investment Banking Clients
Deutsche Telekom
Enterprise Value: $240bn
Enterprise Value: $70bn
Enterprise Value: $115bn
Enterprise Value: $190bn
Enterprise Value: $235bn
Total Liabilities : $30bn
Enterprise Value: $130bn
Description:
Description:
3rd largest energy company in
North America
Description:
Description:
Description:
Description:
Description:
One of the world's largest mobile
communications companies
Largest pharmaceutical company
in the world
2nd largest integrated energy
companies in the United States
Operator of one of the top 5
airlines in the world
One of the world’s leading
telecom and information
technology service companies
Recent Transactions:
Recent Transactions:
05/12 Sole advisor on sale of
Vodacom's Gateway Carrier
Services division to PCCW
Global Ltd.
Recent Transactions:
01/13 Joint bookrunner on
$2.6bn initial public
offering of Zoetis
Recent Transactions:
Recent Transactions:
09/14 Sole advisor on $295mm
12/13 Financial advisor to
sale of Chevron
Association of
Petrochemical Pipeline to
Professional Flight
Boardwalk Pipeline Partners
Attendants on $29.6bn
restructuring
09/14 Sole advisor on $235mm
sale of Gulf Coast Natural
Gas Pipeline Systems to
EnLink Midstream
Recent Transactions:
11/13 Joint advisor on $2.7bn
sale of 70% Stake in
Scout24 to Hellman &
Friedman LLC
3rd Largest pharmaceutical
company in the world
Recent Transactions:
05/12 Sole advisor on $1.5bn
acquisition of Fougera
Pharmaceuticals
08/14 Sole financial advisor to
Kinder Morgan Energy
Partners, L.P. and
Kinder Morgan
Management, LLC in
their $60bn sale to
Kinder Morgan, Inc.
10/12 Sole advisor on $700mm
acquisition of NextWave
Pharmaceuticals
Enterprise Value: $20bn
Description:
Enterprise Value: $30bn
Description:
Enterprise Value: $35bn
Description:
Enterprise Value: $15bn
Description:
Enterprise Value: $35bn
Description:
Enterprise Value: $180bn
Description:
Enterprise Value: $285bn
Description:
Largest independent animal
health company
Largest online direct sales
company in China
Leading global independent
copper producer
Largest pharmaceutical company
in Japan
4th largest Super Major oil
company in the world
Largest healthcare company in
the world
Recent Transactions:
01/13 Joint bookrunner on
$2.6bn initial public
offering
Recent Transactions:
05/14 Joint bookrunner on
$2.0bn initial public
offering
12th largest REIT in the world
and 6th largest in the United
States
Recent Transactions:
06/14 Joint bookrunner on
$1.2bn senior
unsecured notes offering
Recent Transactions:
12/12 Joint advisor on $5.1bn
acquisition of Inmet
Mining Corporation
Recent Transactions:
10/13 Sole placement agent on
$245mm sale of NPS
Pharmaceuticals, Inc.
common stock
Recent Transactions:
09/13 Sole advisor in the
$473mm sale of E&P
assets in Trinidad to The
National Gas Company of
Trinidad &Tobago
Recent Transactions:
06/13 Sole placement agent on
$311mm sale of Elan
Corp, plc common stock
Enterprise Value: $160bn
Description:
Enterprise Value: $30bn
Description:
Enterprise Value: $10bn
Description:
7th largest REIT in the United
States
One of the largest bottlers and
vendors of The Coca-Cola
Company’s products in the world
10/12 Joint bookrunner on
$350mm senior
unsecured notes offering
Enterprise Value: $20bn
Description:
Enterprise Value: $60bn
Description:
Enterprise Value: $85bn
Description:
Market Cap.: $25bn
Description:
Largest paints and coatings
company in the world
One of the world’s largest
independent oil and natural gas
companies
One of the largest pharmaceutical One of the largest financial
companies in the world
services holding companies in
the US
5th largest Super Major oil
company in the world
Recent Transactions:
07/14 Sole financial advisor on
$208mm sale of paper
chemicals business to
Kemira Oyj
Recent Transactions:
02/14 Sole advisor on $1.1bn
sale of China assets to
Brightoil Petroleum
Holdings Ltd.
Recent Transactions:
02/13 Sole advisor on $482mm
sale of Latin American
OTC business to Reckitt
Benckiser Group plc
Recent Transactions:
Recent Transactions:
12/12 Sole advisor on $288mm
12/12 Joint bookrunner on
sale of interest in the Sean
$225mm senior
unsecured notes offering
field to SSE plc
Recent Transactions:
11/12 Joint bookrunner on
$500mm senior
unsecured notes offering
11/12 Sole advisor on $1.1bn
(plus $250mm contingent
payments) Central North
Sea assets to TAQA
03/11 Joint advisor on $1.6bn
Maverick Basin Joint
Venture with Korea
National Oil Corp.
25
10/10 Joint advisor on $3.1bn
acquisition of Real Estate
Assets from Atria Senior
Living Group
Recent Transactions:
10/12 Sole advisor on $9.8bn
voluntary share exchange
offer with Coca-Cola HBC
AG
Top 20 Reported Investment Banking Revenues

Since 2010, our revenue growth has significantly exceeded the composite revenue growth
of our nine largest competitors
IB Revenue for Top 20
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
LTM Rev.
($mm)
6,444
6,398
6,208
4,922
4,478
3,867
3,812
3,810
2,791
1,820
1,673
1,632
1,555
1,265
1,105
952
844
831
798
762
Goldman Sachs
JP Morgan
Bank of America
Morgan Stanley
Citi
Barclays
Deutsche Bank
Credit Suisse
UBS
Jefferies (1)
Wells Fargo
RBC
HSBC
BNP Paribas
Lazard
RBS
Nomura
Mizuho
BMO Capital Markets
Macquarie
Total Assets
($bn)
860
2,520
2,171
835
1,910
2,239
2,272
1,000
1,102
45
1,599
840
2,754
2,602
3
1,722
433
1,794
540
145
Note: LTM Revenue, Total Assets and Exchange Rates for Competitors as of 6/30/14, except RBC through 7/31/14 and Macquarie through 3/31/14.
(1) Jefferies reported investment banking revenue plus $190 million Jefferies Finance fee income for LTM 8/31/14.
Source: Earnings reports. Where IB revenue is not broken out, Dealogic is used.
26
Our Business Today Compared to Other Former Major
Independent Investment Banking Firms
($ Millions)
Investment Banking Net Revenues
(1)
$2,118
$1,820
$1,824
LTM 8/31/14
LTM 12/31/00
$1,257
$862
LTM 6/30/97
LTM 2/29/08
(2)
(1) With the exception of Jefferies, represents investment banking revenues for last twelve month period as an independent firm.
(2) Jefferies reported investment banking revenue plus $190 million Jefferies Finance fee income for LTM 8/31/14.
Source: Public Company Filings.
27
LTM 12/31/97
Investment Banking – Growth Initiatives

Continue to increase productivity
─ Further
increases in revenue per Managing Director expected as senior hires from 2011 through 2013
reach targeted productivity levels and as recent hires begin to gain traction
─ Continued

increases in transaction size will help to drive overall productivity
Increase U.S. market share across entire platform
─ Significant
─ Recent

entry into several new subsectors
Capitalize on footprint, full-service capabilities and momentum in Europe and Asia
─ 192
investment bankers in Europe and Asia
─ Expand

business in Continental Europe and capitalize on our momentum in China
Financial Sponsor Coverage
─ Mid-Cap
Sponsors

Expand the number of existing mid-cap sponsor clients with whom we do M&A sell-side business

Broaden our overall coverage universe of mid-cap sponsors
─ Large-Cap


growth opportunities across all major sector verticals and products
Sponsors
Expand market share with top 25 financial sponsors in both ECM and Leveraged Finance
Continue to drive growth of Jefferies Finance corporate lending platform
─ Opportunities
for growth in targeted corporate lending areas (middle-market, asset based, Europe,
distressed) as well as incremental opportunities in core U.S. acquisition finance practice
28
Equities
29
Equities Overview

Jefferies is a leading global institutional equities franchise
─
Sales and trading across North America, EMEA and Asia Pacific, with major trading hubs in New
York, London and Hong Kong
─
255 research professionals covering over 1,800 companies
─
Leading client-offerings across cash equities, electronic trading, equity derivatives, convertible
bonds, ETFs, prime brokerage, securities finance and equity capital markets

Core U.S. equity sales & trading business pioneered block trading more than 50 years ago

Focused on providing best-in-class ideas, execution and service to our clients
Global Equities
Americas
EMEA
Asia Pacific
Cash Equities
Equity Derivatives
Cash Equities
Equity Derivatives
Cash Equities
Electronic Trading
Electronic Trading
Convertibles
Electronic Trading
Convertibles
Research
Convertibles
Research
Capital Markets
Research
Investment
Companies
Securities Finance
Capital Markets
Securities Finance
Capital Markets
Prime Services
30
Equities – Market Update
Market Environment (1)
 Global equity turnover is up 4% YTD 2014, however, down 38% from its peak in 2008
─ Global turnover breakdown: Americas 52%, Asia 24% and Europe 24%
Jefferies Change in Market Share
(2) vs.
Market Turnover (1)
Jefferies’ Market Share Growth (% ∆)
YTD Market Turnover (% ∆)
Global
Americas
20%
10%
8%
12%
Asia
40%
20%
20%
15%
2%
10%
10%
8%
0%
0%
5%
-10%
-2%
0%
-20%
-4%
-30%
-3%
33%
30%
25%
4%
4%
U.K.
30%
6%
10%
0%
35%
8%
34%
-21%
Global Market Wallets – Cash Equities (2)
 Global market wallet up $962 million from CY 2013 to annualized 1H 2014 (+4%)
─ Americas market wallet has increased $149 million from CY 2013 to annualized 1H 2014 (+1%)
─ EMEA market wallet has increased $1.1 billion from CY 2013 to annualized 1H 2014 (+17%)
 U.K. market wallet has increased $367 million during the same period
─ Asia market wallet has decreased $257 million from CY 2013 to annualized 1H 2014 (-4%)
Equity Derivatives (3)
 Demand for U.S. listed options remains strong despite low volatility
 Year to date ADV is tracking at 16.6 million contracts through August, surpassed only by 2011 volumes in the history of U.S.
options trading
 Jefferies ranks 5th in U.S. Convertible Trading market share at 8.6% for 1H 2014 (2)
Note: Turnover measured in $ Notional Value Traded for Calendar 2014 through August 31.
(1) Thomson.
(2) Third Party Market Surveys conducted in the first half of 2014 (includes cash, algorithms and program trading).
(3) The Options Clearing Corporation, www.theocc.com.
31
Equities – Performance Update
($ Millions)


Jefferies has significantly grown revenues and market share post-financial crisis
Major ongoing growth opportunities: momentum in Europe and Asia; further client penetration and
cross-selling globally; electronic trading; prime brokerage
Equities Net Revenues
(1)
Predecessor Successor
699
$750
557
697
594
490
$500
$250
$0
Note: All results as reported in Jefferies’ public filings. 2012, LTM Q1 2014 and LTM Q3 2014 exclude gains and losses from holdings in Knight Capital
and Harbinger Group.
(1) Excludes predecessor first quarter ending 2/28/13. Equities Net Revenues for the excluded quarter totaled $141 million (excluding gains from holdings
in Knight Capital).
32
Equities – Strategic Priorities



Continue to drive market share growth, leveraging Jefferies’ global capabilities
─
Leading U.S. franchise
─
Full service trading, research and capital markets offering across the Americas, EMEA and
Asia Pacific
─
Unique value offering to our clients through Asia research alliances
Ongoing expansion of equities products that leverage Jefferies’ status as a leading global cash
equities franchise
─
Capitalize on advantage of having no legacy dark pool and utilizing our strong, liquidityseeking algorithms and execution transparency
─
Opportunities to serve mid-sized prime brokerage clients that are increasingly underserved by
the large bank holding companies
─
Continued growth in our options trading platform and expansion opportunities in low risk
structured products
Leverage Jefferies’ global research platform to serve clients and win market share
─
Jefferies’ research platform provides our clients with insight and expertise across the U.S.,
EMEA and Asia Pacific
─
Ongoing elevation and enhancement of Jefferies’ global research offering has provided
significant momentum to our market share drive
33
Fixed Income, Futures & Commodities
34
Fixed Income, Futures & Commodities Overview

Jefferies serves clients across all major cash and futures products in the U.S. and Europe
─
860 sales, trading, research and strategy professionals globally
─
Primary Dealer or equivalent in U.S., U.K., Germany, Netherlands, Portugal, Slovenia and
Belgium
─
Focused on providing best-in-class ideas, facilitation and execution to our clients
─
Minimal exposure to OTC swaps or illiquid, hard-to-value securities; over 99% of our
trading is in cash or exchange traded products
Fixed Income, Futures & Commodities
Investment
Grade
Leveraged
Credit
Rates
MBS / ABS /
CMBS
Municipal
Securities
Emerging
Markets
Futures &
Commodities
U.S. Corporates
Sales & Trading
U.S. Sales &
Trading
U.S. Treasuries
Global ABS
Sales & Trading
Global Sales &
Trading
Listed Futures
International
Sales & Trading
International
Sales & Trading
U.S. Agencies
Global MBS
Capital Markets
Capital Markets
Base Metals
Capital Markets
Capital Markets
European
Government Bonds
Global CMBS
Public Finance
Research
European Supras
& Agencies
Global CDO/CLO
Covered Bonds
Global Capital
Markets
U.S. & Euro
Repo Financing
Project Finance
35
Precious Metals
Foreign
Exchange
Fixed Income – Market Update


Markets are currently being driven by central bank intervention and balance
sheet deleveraging
Since 1H 2013, global fixed income markets have seen low volatility, moderate
secondary market volumes and tightening yields and spreads
─

This has been offset by robust capital market activity across all credit products
Significant regulation has also come into force; most notably Dodd Frank, the
Volcker Rule and additional capital requirements
─ This
has resulted in a decrease in RWA, reduced products offerings and
increased capital and compliance costs across bank holding company trading
platforms

Given Jefferies’ relatively smaller balance sheet and minimal legacy activity,
these trends have been less severe
─
Narrowed the gap with our competitors in available balance sheet to facilitate
client flow
─
Leaves us in a relatively stronger and more competitive position
36
Fixed Income – Performance Update
($ Millions)


2008 financial crisis and subsequent downturn across the financial sector allowed Jefferies to
expand its fixed income capabilities significantly
─
Pre-crisis, Jefferies Fixed Income was a niche U.S. High Yield focused trading and new issue
platform, with modest credit and MBS/ABS offerings
─
Jefferies Fixed Income is now a global franchise with highly competitive capabilities across
credit, rates and MBS/ABS
The consistency of our revenues demonstrates the strength, quality and diversification of our
global franchise, despite the reduction of activity in fixed income markets since 2012
Fixed Income Net Revenues
Pre-Financial
Crisis
$1,500
$1,000
$500
(1)
Predecessor Successor
1,253
728
790
743
245
$0
Note: All results as reported in Jefferies’ public filings.
(1) Excludes predecessor first quarter ending 2/28/13. Fixed Income Net Revenues for the excluded quarter totaled $352 million.
37
926
Fixed Income, Futures & Commodities – Strategic Priorities






Continue to execute our proven strategy
─ Client focused ideas and execution, providing leading solutions and service
Continue to drive our performance by leveraging existing platform to selectively target opportunities
─ Opportunistically add top-tier talent to our firm
─ Selectively grow in complementary areas and products based on market opportunities
Increased global coordination
─ Leverage global footprint and relationships across Jefferies to grow market and client penetration
─ Think globally to match our clients and their opportunities
Leverage existing areas of new issue strength
─ Leverage existing strengths to grow new issue capabilities in other products and regions
─ Grow average transaction size for increased profitability
Take advantage of increased market volatility and resultant volume growth
─ Opportunities in rates, futures and foreign exchange
Capitalize on changing landscape driven by regulation and new technology developments
─ Implementation of Dodd-Frank will drive OTC securities increasingly onto exchange
─ Rates and credit derivatives – products we could not previously offer competitively, but mandatory
clearing will ‘level the playing field’
─ eTrading in credit and rates
─ New issue structured notes – as our competitors look to decrease RWA and exit more capital
intensive products, we will look to grow our low risk new issue structured notes activity
38
Risk Management
39
Risk Principles
Jefferies' comprehensive risk management framework has been a foundation for our success
across market cycles

Culture
─ We
are all risk managers. Our firm is built on every individual taking responsibility for risk
management, including our senior management

Hands-on
─ Our
senior management and Board are deeply involved in the “nuts and bolts” of how and
where we are taking risks across the firm

Integrated
─ Our
independent risk management group and our business leaders are deeply integrated
into our trading desks, ensuring a clear and comprehensive view of the firm’s risk

Asset Quality
─ Jefferies
is dedicated to serving our clients in liquid, transparent products. We limit
illiquid assets and derivatives to ensure the overall liquidity and health of our balance
sheet
40
Risk Management Governance and Structure
Jefferies has a comprehensive risk management approach, with a formal governance
structure and processes to identify, assess, monitor, and manage risk

Board of Directors and Audit Committee of the Board of Directors
─ Board

Our Chief Risk Officer and Global Treasurer meet with the Board of Directors on at least a
quarterly basis to present our risk profile and liquidity profile
─ Audit

─

of Directors comprised of three executive officers and four independent outside directors
Committee of the Board of Directors comprised of four independent outside directors
Responsible for discussing with management Jefferies’ major financial risk exposures and steps
management has taken to monitor and control such exposures, including Jefferies’ risk
assessment and risk management policies (from the Charter of the Audit Committee)
Our Board of Directors and its Audit Committee play an important role in reviewing risk
management and risk tolerance, reviewing risk-related data at each regular meeting
Risk Oversight Structure (Committees)
─ Risk
─ Capital
Management
and Liquidity
─ Executive
─ Asset
─ Operating
─ Margin
─ Market
─ Underwriting
─ Credit
Risk Management
─ New
Risk Management
─ Operational
/ Liability
Oversight
Business
─ Independent
Risk Management
41
Acceptance
Price Verification
Risk Management Summary Framework
Jefferies Group
Board of Directors
Compensation
Corporate
Governance and
Nominating
Audit
Chief Risk Officer /
Global Treasurer
Firm Management
Risk
Management
Operating
Executive
Firmwide
Committees
Independent
Price
Verification
Asset / Liability
Business Line
Committees
Market Risk
Management
Credit Risk
Management
Operational
Risk
Management
Note: Dotted lines represent communication lines.
42
Capital and
Liquidity
New Business
Margin
Oversight
Underwriting
Acceptance
Key Risk Areas

Market

Credit

Liquidity and capital

Operational

Legal and compliance

New business

Reputational
43
Key Risk Practices

Comprehensive risk framework across risk types and across the firm

Sophistication and granularity of risk quantification

Control through detailed limits and strong breach procedures

Conservative limit setting relative to available capital and liquidity




Ongoing holistic assessment of risk interdependence and contagion risk across
the firm
Formal contingency planning
Rapid upward visibility to management by means of a culture of rapid escalation
and short lines of communication
History of demonstrated management actions ahead of and during times of
market stress and external events
44
VaR Report
Quarterly VaR Average
($ Millions)
$20
Avg. VaR related to KCG & HRG
Avg. Firmwide VaR Excl. KCG & HRG
$15
$10
$5
$0
Annual VaR Average
($ Millions)
$20
Avg. VaR related to KCG & HRG
Avg. Firmwide VaR Excl. KCG & HRG
$15
$10
$5
$0
2004
2005
2006
2007
2008
2009
45
2010
2011
2012
2013
2014 YTD
VaR Report and Trading Revenues
Distribution of Daily Net Trading Revenues
140
2011
120
2012
2013
LTM 8/31/14
# of Days
100
80
60
40
20
0
<(8)
(8)-(4)
(4)-(0)
0-4
4-8
8-12
12-16
16-20
>20
$ Millions
Historical Negative Trading Revenues Days
2011
Q1
Number of Negative
Trading Revenues Days:
Excluding Knight and Harbinger
Number of Breaches (1)
Q2
2012
Q3
Q4
Q1
Q2
2013
Q3
Q4
Q1
Q2
Q3
Q4
2014
Q2
Q1
Q3
10
na
10
na
26
na
6
na
2
na
na
1
na
1
na
1
na
5
1
18
11
7
4
7
1
11
6
9
2
-
-
2
-
-
-
-
-
-
1
1
-
-
1
-
(1) Number of Breaches represents the number of days during a given period where net trading losses were greater than VaR estimates.
46
Capital and Liquidity Management
47
Liquidity and Funding Principles
Jefferies’ long-standing liquidity and funding principles have maintained the strength and
soundness of our platform across market cycles






Owning inventory that is composed of liquid assets that turn over regularly, with a
minimal amount of Level 3 Assets
Maintaining a sound, long-term capital base and reasonable leverage relative to our
business activity
No material reliance on short-term unsecured funding or customer balances. No
commercial paper program
Short-term secured funding that is readily and consistently available through clearing
houses, or fixed for periods of time that exceed the expected tenure of the inventory
they are funding
Assessing capital reserves and maintaining liquidity (including intraday liquidity) to
withstand adverse changes in the trading or financing markets
Where appropriate, entering into partnerships and joint ventures with complementary
long-term partners to pursue business opportunities that otherwise will exceed our
capital capacity or risk tolerance (Jefferies Finance, Jefferies LoanCore)
48
Limited Leverage


Jefferies has a long-standing policy of carefully managing balance sheet leverage
In periods of stress, Jefferies has demonstrated the ability to rapidly reduce leverage
without unduly impacting our business
Historical Quarterly Leverage
($ Millions)
Successor
Predecessor
$50,000
17.0x
15.0x
$40,000
13.0x
$30,000
11.0x
$20,000
9.0x
$10,000
7.0x
$-
5.0x
Total Capital
Gross Assets
Leverage
(1) Total assets divided by total equity. Q2 2013 through Q3 2014 exclude merger impacts. See page 59 for further detail.
49
(1)
Asset and Capital Growth

Consistent capital growth to support business expansion
Total Assets and Total Capital
($ Millions)
Predecessor
Successor
$50,000
6.0x
$45,000
5.0x
$40,000
$35,000
4.0x
$30,000
$25,000
3.0x
$20,000
2.0x
$15,000
$10,000
1.0x
$5,000
$0
0.0x
1Q 08
4Q 08
4Q 09
Gross Assets
4Q 10
4Q 11
Total Capital
50
4Q 12
Assets / Capital
4Q 13
3Q 14
Level 3 Trading Assets Overview

97% of inventory is Levels 1 and 2, with a minimal amount of Level 3 Trading Assets

Level 3 Trading Assets
(1)
represent only 13% of tangible common equity
Level 3 Financial Instruments Owned (1) as a Percentage of Financial Instruments Owned
($ Millions)
Predecessor
$20,000
$16,000
3%
$12,000
$8,000
$4,000
7%
6%
5%
5%
3%
3%
2%
2%
Successor
3%
3%
3%
3%
3%
3%
3%
3%
3%
3%
3%
3%
3%
3%
5%
$4Q 08 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 3Q 10 4Q 10 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 3Q 14
Level 1 and 2 Inventory
Level 3 Inventory
Level 3 Financial Instruments Owned (1) as a Percentage of Tangible Common Equity
($ Millions)
Predecessor
Successor
$5,000
14% 14% 13%
14% 14% 14%
19% 20% 16% 15% 15% 15% 15% 16%
$4,000
$3,000
$2,000
26% 22% 18% 19% 17% 18%
18% 23% 23% 26%
$1,000
$-
4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14
Tangible Common Equity
Level 3 Assets
(1) Excludes Level 3 trading inventory assets attributable to third party or employee noncontrolling interests in certain consolidated entities.
51
Stable Secured Funding Model
Portion of Inventory Deemed Liquid (Fundable at Haircuts of 10% or Better)
Predecessor
85%
Successor
80%
Mean: 76%
75%
70%
80%
73%
77%
78%
3Q 2012
4Q 2012
77%
72%
77%
73%
76%
74%
75%
1Q 2014
2Q 2014
3Q 2014
65%
1Q 2012
2Q 2012
1Q 2013
2Q 2013
3Q 2013
4Q 2013
Clearing Corp Eligible Repo – Limited reliance on bilateral and tri-party repo
Predecessor
95%
Successor
90%
Mean: 85%
85%
80%
89%
88%
90%
89%
85%
82%
87%
84%
82%
81%
82%
1Q 2014
2Q 2014
3Q 2014
75%
1Q 2012
2Q 2012
3Q 2012
4Q 2012
1Q 2013
2Q 2013
3Q 2013
4Q 2013
Average Term for Non-Clearing Corp Eligible Repo – Secured funding in excess of asset liquidation timeframe
Predecessor
Successor
# of Days
150
Mean: 89 days
100
50
48
55
47
1Q 2012
2Q 2012
3Q 2012
69
78
88
4Q 2012
1Q 2013
2Q 2013
139
125
3Q 2013
4Q 2013
103
104
120
1Q 2014
2Q 2014
3Q 2014
0
Note: Dark blue lines represent 3-year averages.
52
Liquidity Pool

Jefferies maintains significant excess liquidity on hand
Total Liquidity Pool
($ Millions)
Predecessor
Successor
$6,000
$5,574
$5,187
$5,000
$4,229
$4,000
$3,000
$3,441
$3,571
9.8%
10.2%
$3,379
12.3%
$4,423
12.2%
$5,824
$5,913
18.0%
$5,282
$4,726
15.0%
$4,467
14.4%
12.5%
13.3%
13.4%
13.1%
13.2%
10.3%
9.4%
12.0%
9.0%
$2,000
6.0%
$1,000
3.0%
$0
0.0%
11/30/11 02/29/12 05/31/12 08/31/12 11/30/12 02/28/13 05/31/13 08/31/13 11/30/13 02/28/14 05/31/14 08/31/14
Cash & Cash Equivalents
(1)
Other Liquidity Sources
Liquidity Pool as % of Total Assets
(2)
(1) Consists primarily of securities purchased under agreements to resell, our U.K. liquidity pool, unencumbered inventory representing an estimate of the amount of additional
secured financing that could be reasonably obtained and funds available under our senior secured revolving credit facility.
(2) Cash & Cash Equivalents plus Other Liquidity Sources, divided by Total Assets.
53
Long-Term Debt Profile

As of 8/31/14, our $6.2 billion notional of long-term debt had a weighted average maturity of 8.2 years

No scheduled debt maturities until November 2015 ($500 million)

No maturity of long-term debt in a single year is greater than 20% of outstanding long-term debt

Includes May 2014 2.375% EMTN issuance of €500 million ($685 million)
Debt Maturity Schedule (Notional)
($ Millions)
$1,000
$800
$600
$400
$200
$0
54
Credit Ratings
Jefferies Group LLC – Credit Ratings
Agency
Rating
Outlook
Standard & Poor’s
BBB
Stable
Moody’s
Baa3
Stable
Fitch
BBB-
Stable
Note: As of October 8, 2014.
55
Appendix
56
Notes and Disclosures to Leucadia Overview
Note: Dollar amounts are Leucadia’s net carrying amount for each investment, for
consolidated subsidiaries equal to their assets less liabilities.
1) Adjusted for assumed maturity of 2015 8.125% Sr. Notes using Parent Company
Cash.
2) Includes $2.8 billion of goodwill and intangibles.
3) Classified within Parent Cash and Investments in Leucadia’s filings.
4) Investment commitment of $400 million contingent on Folger Hill raising at least
$400 million of outside capital.
5) Adjusted for the $192 million EnerVest acquisition, which closed in September 2014.
6) Carrying amount is net of deferred gain on real estate sale.
7) Represents Leucadia’s approximate weighted average ownership; ownership varies by
dealership between 65% and 90%.
8) Adjusted for the $63 million EOG acquisition, which closed in September 2014.
9) Adjusted for the $71 million Golden Queen investment, which closed in September
2014.
10) Adjusted to include $250 million from the sale of Premier Entertainment to Twin River
Management Group, Inc., closed July 2014.
11) Excludes Jefferies Net Deferred Tax Asset of $445 million.
57
Leucadia – Cash and Investments and Parent Debt GAAP
Reconciliations
Reconciliation of Cash and Investments
($ millions)
Available Cash and Investments (GAAP) at June 30, 2014
Structured Alpha classified with Asset Management
Maturity of 8.125% Senior Notes due 2015
Acquisition of EOG by Juneau
Acquisition of Golden Queen
Acquisition of EnerVest by Vitesse
Proceeds from Premier Entertainment Sale
Available Cash and Investments, As Adjusted
$
$
2,224.8
(82.7)
(457.1)
(63.0)
(71.0)
(192.0)
250.0
1,609.0
Reconciliation of Parent Debt
($ millions)
Parent Debt, Excluding Redeemable Preferred Shares (GAAP) at June 30, 2014
Assumed Redemption of 8.125% Senior Notes due 2015
Parent Debt, As Adjusted
58
$
$
1,444.4
(457.1)
987.3
Leverage Ratio GAAP Reconciliation
($ Millions)
Leverage Ratio - Excluding Merger Impacts
May 31,
August 31, November 30, February 28,
2013
2013
2013
2014
Total Assets
Goodwill and Acquisition Accounting Fair Value
Adjustments on the Merger with Leucadia
Net Amortization to Date on Asset Related
Purchase Accounting Adjustments
Total Assets Excluding the Impact of the Merger
$
Total Equity
Equity Arising from Merger Consideration
Preferred Stock Assumed by Leucadia
Net Amortization to Date of Purchase Accounting
Adjustments, net of tax
Total Equity Excluding the Impact of the Merger
$
Leverage Ratio - Excluding Merger Impacts
38,938
$
(1,957)
$
$
9
36,990
38,830
$
(1,957)
$
18
36,891
40,177
$
(1,957)
$
27
38,247
43,440
May 31,
2014
$
(1,957)
$
32
41,515
43,610
August 31,
2014
$
(1,957)
$
37
41,690
44,764
(1,957)
$
42
42,849
5,183 $
(1,426)
125
5,241 $
(1,426)
125
5,422 $
(1,426)
125
5,462 $
(1,426)
125
5,527 $
(1,426)
125
5,602
(1,426)
125
(8)
3,874 $
(17)
3,923 $
(25)
4,096 $
(36)
4,125 $
(48)
4,178 $
(58)
4,243
9.5x
9.4x
9.3x
59
10.0x
10.0x
10.1x