Jefferies Financial Group Inc. · NYSE:JEF
Jefferies Financial — Merger or Acquisition (January 2013)
34 slides from Jefferies Financial's merger presentation, January 2013
Slide 1: Jefferies – A Global Investment Banking Firm
Jefferies – A Global Investment Banking Firm January 2013 Jefferies & Company, Inc. Member SIPC
Slide 2: Note on Forward Looking Statements
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 Jefferies’
Slide 3: Important Information for Investors and Shareholders
Important Information for Investors and Shareholders Leucadia National Corporation (Leucadia) has filed with the SEC a Registration Statement on Form S-4 in connection with the proposed transaction, and Leucadia and Jefferies Group, Inc. (Jefferies) will mail to their respective shareholders a Joint
Slide 4: Note on Financial Presentation and Assumptions
Note on Financial Presentation and Assumptions This document contains financial information of Leucadia and Jefferies on a combined basis. The presentation makes certain stated assumptions including (i) the spin-out of Leucadia’s Crimson Wine Group, (ii) the assumptions made pertaining to the financ
Slide 5: Table of Contents
Table of Contents Executive Summary 1 Leucadia – Jefferies 6 Jefferies Overview 10 Appendix 24 iv
Slide 6: Executive Summary
Executive Summary 1 Jefferies
Slide 7: Jefferies – A Global Investment Banking Firm
Jefferies – A Global Investment Banking Firm 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 & trad
Slide 8: Jefferies – FY 2012 Earnings Update
Jefferies – FY 2012 Earnings Update Jefferies has just recorded a very strong fiscal year (1): ─ Record adjusted net revenues: $2,990 million (versus FY 2011 $2,476 million) ─ Adjusted pre-tax earnings: $523 million (versus FY 2011 $366 million) ─ Adjusted net earnings: $302 million (versus FY 2011
Slide 9: Jefferies – Financial Performance
Jefferies – Financial Performance Financial Summary 11 Months Fiscal Year Fiscal Year Fiscal Year ($ Millions) 2010 2011 2012 Equities $ 557 $ 594 $ 642 Fixed Income 728 715 1,190 Securities 1,285 1,309 1,833 Equity 126 187 194 Debt 347 385 456 Capital Markets 474 572 650 Advisory 417 550 476 Invest
Slide 10: Jefferies – Balance Sheet
Jefferies – Balance Sheet As of August 31, 2012 ($Millions) Jefferies Group, Inc. Balance Sheet as of 08/31/12 Assets Liabilities Cash & Cash Equivalents $ 2,845 Short-term Borrowing $ 250 Cash & Securities Segregated 3,753 Financial Instruments Sold, Not Yet Purchased 8,354 Financial Instruments Ow
Slide 11: Leucadia – Jefferies
Leucadia — Jefferies ; Jefferies
Slide 12: Leucadia – Jefferies
Leucadia – Jefferies Background Robust Balance Sheet and Liquidity On November 12, 2012, Leucadia and Jefferies announced that the Board Leucadia has a highly liquid, equity- and cash-rich balance sheet, with a of Directors of each company had approved a definitive merger agreement diverse portfolio
Slide 13: Leucadia – Jefferies
Leucadia – Jefferies Leucadia – Jefferies merger creates a unique combination Leucadia will be in the business of merchant investing and owning Jefferies, an investment banking firm Jefferies will continue its over 50-year focus in the capital markets and maintain a highly liquid balance sheet Futur
Slide 14: Jefferies – Leucadia
Jefferies – Leucadia Post-merger, Jefferies will be in a position to more rapidly build its equity capital base through retention of a greater proportion of earnings, and will enjoy potential access to additional capital from the Leucadia holding company, ensuring greater balance sheet flexibility a
Slide 15: Jefferies Overview
Jefferies Overview 10 Jefferies
Slide 16: Core Operating Principles
Core Operating Principles Jefferies is focused on the following core principles to manage risk and deliver across-the-cycle revenue and earnings growth: Strong Liquidity ─ Jefferies’ maintains a very liquid, financeable and low-risk balance sheet Limited Leverage ─ Jefferies maintains a consistent,
Slide 17: Jefferies Revenues & Net Income – Since 1990
Jefferies Revenues & Net Income – Since 1990 ($ Millions) With the exception of our results during the global financial crisis in 2007-2008, Jefferies has not had a single loss quarter dating back to 1990 Jefferies raised $433 million of equity from Leucadia in 2008, more than mitigating the impact
Slide 18: Consistent Profitability Across the Cycle
Consistent Profitability Across the Cycle ($Millions) Jefferies has generated pre-tax earnings of $1.85 billion since 2009 ─ Average pre-tax margin of 18.0% $200 35.0% $167 $172 $175 $163 30.0% $150 $144 $143 $130 25.0% $119 $122 $124 $127 $127 $121 $125 20.0% $100 $76 15.0% $75 $54 $49 10.0% $50 $2
Slide 19: Substantial Investment in Human Capital, Including Infrastructure Support
Substantial Investment in Human Capital, Including Infrastructure Support Jefferies headcount has grown 275% since 2000 Jefferies Corporate headcount is up 53% since 2009 vs. 41% for the front office, enhancing support and controls Headcount Growth – Since 2000 4,000 3,898 3,804 3,084 3,000 2,568 2,
Slide 20: Liquidity and Funding Principles
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
Slide 21: Balance Sheet
Balance Sheet Strong Capital Structure and Ample Liquidity Jefferies maintains a highly liquid balance sheet, with low gross leverage and exposure to illiquid assets, and significant structural liquidity Jefferies continues to manage the size of its balance sheet in response to market conditions and
Slide 22: Consistent Common Equity Growth
Consistent Common Equity Growth Jefferies has grown common equity by $1.7 billion, or 99%, since the financial crisis began in Q1 2008 Jefferies’ proactive equity capital raises have helped the firm navigate the global financial crisis and capitalize on growth opportunities Common Equity Growth – Si
Slide 23: Limited Leverage
Limited Leverage ($Millions) 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 – Since 2006 $50,000 18.0x 17.0x
Slide 24: Strong Liquidity
Strong Liquidity Jefferies’ trading inventory is liquid and low-risk, rapidly turning in order to serve client flow Very liquid inventory ─ 77% of financial instruments owned are readily and consistently financeable at haircuts of 10% or less ─ Level 3 assets represent only 3% of long inventory – co
Slide 25: Level 3 Trading Assets Overview
Level 3 Trading Assets Overview 97% of inventory is Levels 1 and 2, with a minimal amount of Level 3 trading assets Level 3 Trading Assets (1) represent only 13% of common equity Level 3 Financial Instruments(1) as a Percentage of Financial Instruments Owned ($ Millions) $20,000 2% 3% 3% 2% 3% 3% $1
Slide 26: Liquidity Pool
Liquidity Pool ($Millions) Jefferies maintains significant excess liquidity on hand ─ Liquidity Pool has increased 23% since 11/30/11 Total Liquidity Pool $5,000 15.0% $4,229 $4,000 12.0% $3,441 $3,571 12.3% $3,379 $3,000 10.3% 9.0% 9.8% 9.5% $2,000 6.0% $1,000 3.0% $0 0.0% 11/30/11 02/29/12 05/31/1
Slide 27: Long-Term Debt Profile
Long-Term Debt Profile As of 08/31/12, our $4.5 billion of long-term debt has a weighted average maturity of 8 years No scheduled debt maturities until 2014 No maturity of long-term debt in a single year is greater than 20% of outstanding long-term debt Debt Maturity Schedule ($ Millions) $1,000 $80
Slide 28: Value-at-Risk (VaR)
Value-at-Risk (VaR) ($Millions) Daily VaR Risk Category Average VaR for the 3-month period ended 08/31/12 Adjusted Firmwide (1) $8.35 Interest Rates 7.31 Equity Prices 4.32 Currency Rates 0.68 Commodity Prices 1.31 Diversification Effect (3.09) Firmwide $10.53 (1) Excluding investment in Knight Capi
Slide 29: Appendix
Appendix os Jefferies
Slide 30: Leucadia – Jefferies Combined Balance Sheet
Leucadia – Jefferies Combined Balance Sheet ($Millions) Leucadia National Corporation – Unaudited Pro Forma Condensed Combined Balance Sheet Balance Sheet as of 09/30/12 Assets Liabilities Cash & Cash Equivalents $ 3,586 Short-term Borrowing $ 250 Cash & Securities Segregated 3,768 Financial Instrum
Slide 31: Reconciliations
Reconciliations Adjusted Jefferies Book Value Reconciliation Adjusted Combined Book Value Reconciliation Adjusted Jefferies Book Value Reconciliation Adjusted Combined Book Value Reconciliation ($ Millions) 09/30/12 ($ Millions) 09/30/12 LUK Share Price (11/09/12) $21.80 Leucadia Book Value (1) 6,19
Slide 32: Reconciliations
Reconciliations Leucadia Cash & Public Securities Reconciliation Deferred Tax Asset Reconciliation Leucadia Cash & Public Securities Reconciliation Deferred Tax Asset Reconciliation ($ Millions) 09/30/12 ($ Millions) 09/30/12 Leucadia Available Liquidity (1) 1,992.2 Current Deferred Tax Asset (1) 77
Slide 33: Reconciliations
Reconciliations Subsidiaries & Investments Capital Reconciliation Combined Assets Reconciliation Subsidiaries & Investments Capital Reconciliation Combined Assets Reconciliation ($ Millions) 09/30/12 ($ Millions) 09/30/12 Leucadia Book Value (1) 6,191.9 Leucadia Consolidated Assets (1) 8,740.2 Estim
Slide 34: Reconciliations
Reconciliations Leucadia Parent Company Debt Reconciliation Leucadia Parent Company Debt Reconciliation ($ Millions) 09/30/12 Debt Due Within 1 Year (1) 445.4 Long-term Debt (1) 911.8 Consolidated Long-term Debt, including Current Portion $ 1,357.2 Parent Company Debt, including Current Portion 959.
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