Item 8.01 Other Events
OnDecember 1, 2021 ,Jefferies Financial Group Inc. (the "Company," "our," or "we") contributed$477 million of net assets, including both Merchant Banking and Asset Management investments, toJefferies Group . The transferred Merchant Banking investments are now being managed by a different management team, while the Asset Management investments continue to be managed by the co-Presidents of Asset Management who oversee all asset management activities across the Company. As a result, we transferred$194 million of net assets out of our Merchant Banking segment:$139 million of these net assets, including$48 million of net assets relating toFoursight Capital LLC , were transferred into our Investment Banking and Capital Markets segment; the remaining$55 million of net assets transferred are now managed by the co-Presidents of Asset Management and are included in our Asset Management segment. These changes to our business segments have no effect on our historical total net revenues, total income before income taxes, or total net income in the consolidated statements of operations or total assets or total liabilities in the consolidated statements of financial condition. Prior year amounts have been reclassified to conform to current segment reporting. Our reclassified operating results by segment and additional parent company interest and consolidating adjustment reconciling items are as follows (in thousands): For the Three Months Ended For the Year Ended February 28, May 31, November 30, November 30, November 30, 2021 2021 August 31, 2021 2021 2021 2020 Investment Banking and Capital Markets Net revenues$ 1,987,496 $ 1,598,862 $ 1,672,943 $ 1,648,085 $ 6,907,386 $ 5,072,640 Expenses: Cost of sales - - - - - - Compensation and benefits 1,109,695 778,284 762,725 688,557 3,339,261
2,746,382
Non-compensation expenses: Floor brokerage and clearing fees 66,574 66,211 64,441 68,809 266,035 241,083 Selling, general and other expenses 228,733 293,276 222,357 311,344 1,055,710 846,941 Interest expense (1) 5,553 5,271 4,982 4,937 20,743 26,745 Depreciation and amortization 20,710 20,805 21,065 22,711 85,291
82,479
Total non-compensation expenses 321,570 385,563 312,845 407,801 1,427,779 1,197,248 Total expenses 1,431,265 1,163,847 1,075,570 1,096,358 4,767,040 3,943,630 Income (loss) before income taxes and loss related to associated companies 556,231 435,015 597,373 551,727 2,140,346 1,129,010 Loss related to associated companies - - - - - - Income (loss) before income taxes$ 556,231 $ 435,015 $ 597,373 $ 551,727 $ 2,140,346 $ 1,129,010
(1) Interest expense within Investment Banking and Capital Markets relates to Foursight.
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For the Three Months Ended For the Year Ended February 28, May 31, August 31, November 30, November 30, November 30, 2021 2021 2021 2021 2021 2020 Asset Management Net revenues$ 229,202 $ 50,675 $ 13,327 $ 42,809 $ 336,013 $ 234,910 Expenses: Cost of sales - - - - - - Compensation and benefits 22,785 21,671 15,468 22,802 82,726 89,527 Non-compensation expenses: Floor brokerage and clearing fees 9,842 10,599 4,541 10,843 35,825 25,509 Selling, general and other expenses 12,164 10,768 10,719 15,282 48,933 46,095 Interest expense - - - - - - Depreciation and amortization 479 489 494 439 1,901 5,228 Total non-compensation expenses 22,485 21,856 15,754 26,564 86,659 76,832 Total expenses 45,270 43,527 31,222 49,366 169,385 166,359 Income (loss) before income taxes and loss related to associated companies 183,932 7,148 (17,895) (6,557) 166,628 68,551 Loss related to associated companies - - - - - - Income (loss) before income taxes$ 183,932 $ 7,148 $ (17,895) $ (6,557) $ 166,628 $ 68,551 For the Three Months Ended For the Year Ended February 28, May 31, August 31, November 30, November 30, November 30, 2021 2021 2021 2021 2021 2020 Merchant Banking Net revenues$ 267,004 $ 296,815 $ 248,690 $ 118,068 $ 930,577 $ 681,574 Expenses: Cost of sales 95,559 143,847 151,510 79,954 470,870 338,588 Compensation and benefits 24,529 24,252 17,584 27,161 93,526 65,770 Non-compensation expenses: Floor brokerage and clearing fees - - - - - - Selling, general and other expenses 26,520 32,631 39,849 30,146 129,146 163,161 Interest expense 912 843 762 691 3,208 4,680 Depreciation and amortization 16,714 17,268 16,554 16,928 67,464 67,236 Total non-compensation expenses 44,146 50,742 57,165 47,765 199,818 235,077 Total expenses 164,234 218,841 226,259 154,880 764,214 639,435 Income (loss) before income taxes and loss related to associated companies 102,770 77,974 22,431 (36,812) 166,363 42,139 Loss related to associated companies (10,568) (23,526) (27,176) (33,149) (94,419) (75,483) Income (loss) before income taxes$ 92,202 $ 54,448 $ (4,745) $ (69,961) $ 71,944 $ (33,344) 3
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For the Three Months Ended For the Year Ended February 28, May 31, August 31, November 30, November 30, November 30, 2021 2021 2021 2021 2021 2020 Corporate Net revenues$ 590 $ 724 $ 955 $ 773$ 3,042 $ 13,258 Expenses: Cost of sales - - - - - - Compensation and benefits 15,534 7,035 6,466 6,576 35,611 39,184 Non-compensation expenses: Floor brokerage and clearing fees - - - - - - Selling, general and other expenses 4,669 4,910 4,375 5,299 19,253 26,197 Interest expense - - - - - - Depreciation and amortization 864 878 564 458 2,764 3,496 Total non-compensation expenses 5,533 5,788 4,939 5,757 22,017 29,693 Total expenses 21,067 12,823 11,405 12,333 57,628 68,877 Income (loss) before income taxes and loss related to associated companies (20,477) (12,099) (10,450) (11,560) (54,586) (55,619) Loss related to associated companies - - - - - - Income (loss) before income taxes$ (20,477) $ (12,099) $ (10,450) $ (11,560) $ (54,586) $ (55,619) For the Three Months Ended For the Year Ended February 28, May 31, August 31, November 30, November 30, November 30, 2021 2021 2021 2021 2021 2020
Parent Company Interest and Consolidation Adjustments Net revenues$ 2,650 $ 3,431 $ 3,069 $ (839) $ 8,311 $ 8,492 Expenses: Cost of sales - - - - - - Compensation and benefits - - - - - - Non-compensation expenses: Floor brokerage and clearing fees - - - - - - Selling, general and other expenses (149) (25) (38) 25,617 25,405
(3,438)
Interest expense 13,902 13,829 13,774 11,628 53,133 53,445 Depreciation and amortization - - - - - - Total non-compensation expenses 13,753 13,804 13,736 37,245 78,538 50,007 Total expenses 13,753 13,804 13,736 37,245 78,538 50,007 Income (loss) before income taxes and loss related to associated companies (11,103) (10,373) (10,667) (38,084) (70,227)
(41,515)
Loss related to associated companies - - - - - -
Income (loss) before income taxes
$ (10,667) $ (38,084) $ (70,227) $ (41,515) 4
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For the Three Months Ended For the Year Ended February 28, May 31, November 30, November 30, November 30, 2021 2021 August 31, 2021 2021 2021 2020Jefferies Financial Group Consolidated Net revenues$ 2,486,942 $ 1,950,507 $ 1,938,984 $ 1,808,896 $ 8,185,329 $ 6,010,874 Expenses: Cost of sales 95,559 143,847 151,510 79,954 470,870 338,588 Compensation and benefits 1,172,543 831,242 802,243 745,096 3,551,124
2,940,863
Non-compensation expenses: Floor brokerage and clearing fees 76,416 76,810 68,982 79,652 301,860 266,592 Selling, general and other expenses 271,937 341,560 277,262 387,688 1,278,447 1,078,956 Interest expense 20,367 19,943 19,518 17,256 77,084 84,870 Depreciation and amortization 38,767 39,440 38,677 40,536 157,420
158,439
Total non-compensation expenses 407,487 477,753 404,439 525,132 1,814,811 1,588,857 Total expenses 1,675,589 1,452,842 1,358,192 1,350,182 5,836,805 4,868,308 Income (loss) before income taxes and loss related to associated companies 811,353 497,665 580,792 458,714 2,348,524 1,142,566 Loss related to associated companies (10,568) (23,526) (27,176) (33,149) (94,419) (75,483) Income (loss) before income taxes$ 800,785 $ 474,139 $ 553,616 $ 425,565 $ 2,254,105 $ 1,067,083 5
-------------------------------------------------------------------------------- In addition to the segment changes, we also changed where we presentedJefferies Group's share of the net earnings ofBerkadia Commercial Mortgage Holding LLC in our "Revenues by Source." The net earnings were previously presented within Other revenues and are now presented within Other investment banking revenues. We believe that this change to our revenue reporting better aligns with management's current view of our business activities related to commercial real estate investment banking and management reporting. Our reclassified "Revenues by Source" by segment are as follows (in thousands): For the Three Months Ended For the Year Ended February 28, May 31, November 30, November 30, November 30, 2021 2021 August 31, 2021 2021 2021 2020 Revenues by Source Investment Banking and Capital Markets Net Revenues: Advisory$ 311,439 $ 390,508 $ 583,887 $ 587,726 $ 1,873,560 $ 1,053,500 Equity underwriting 494,806 324,462 367,460 370,636 1,557,364 902,016 Debt underwriting 197,367 285,730 229,273 222,655 935,025 545,978 Total underwriting 692,173 610,192 596,733 593,291 2,492,389 1,447,994 Other investment banking 83,022 82,461 42,997 66,631 275,111 32,346 Total investment banking 1,086,634 1,083,161 1,223,617 1,247,648 4,641,060 2,533,840 Equities 531,016 242,949 236,532 291,032 1,301,529 1,128,910 Fixed income 363,359 257,197 205,795 132,771 959,122 1,340,792 Total capital markets 894,375 500,146 442,327 423,803 2,260,651 2,469,702 Other 6,487 15,555 6,999 (23,366) 5,675 69,098 Total Investment Banking and Capital Markets Net Revenues 1,987,496 1,598,862 1,672,943 1,648,085 6,907,386
5,072,640
Asset Management Net Revenues: Asset management fees and revenues 66,309 22,490 18,869 13,065 120,733 26,539 Investment return 173,292 39,624 5,613 41,658 260,187 256,855 Allocated net interest (10,399) (11,439) (11,155) (11,914) (44,907) (48,484) Total Asset Management Net Revenues 229,202 50,675 13,327 42,809 336,013 234,910 Merchant Banking Net Revenues 267,004 296,815 248,690 118,068 930,577 681,574 Corporate Net Revenues 590 724 955 773 3,042 13,258 Consolidating Adjustments 2,650 3,431 3,069 (839) 8,311 8,492 Total Net Revenues$ 2,486,942 $ 1,950,507 $ 1,938,984 $ 1,808,896 $ 8,185,329 $ 6,010,874 6
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