10-K
Table of Contents

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549 
 

FORM 10-K/A
(Amendment No. 1)
 
ý
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended November 30, 2015
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number 1-14947 
 
JEFFERIES GROUP LLC
(Exact name of registrant as specified in its charter)
 
Delaware
95-4719745
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
 
 
520 Madison Avenue, New York, New York
10022
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (212) 284-2550
Securities registered pursuant to Section 12(b) of the Act:
 
 
 
Title of each class:
 
Name of each exchange on which registered:
5.125% Senior Notes Due 2023
 
New York Stock Exchange
     Securities registered pursuant to Section 12(g) of the Act: Limited Liability Company Interests
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ý    No  ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  ý
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 232.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ý
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
 
 
 
 
 
 
Large accelerated filer
 
o
  
Accelerated filer
 
o
 
 
 
 
Non-accelerated filer
 
ý
  
Smaller Reporting company
 
o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  ý
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. $0 as of May 31, 2015.
The Registrant is a wholly-owned subsidiary of Leucadia National Corporation and meets the conditions set forth in General Instructions I(1)(a) and (b) of Form 10-K and is therefore filing this Form 10-K with a reduced disclosure format as permitted by Instruction I(2).


Table of Contents
JEFFERIES GROUP LLC
(PARENT COMPANY ONLY)
NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED

Explanatory Note

In reliance on General Instruction A. (4) to Form 10-K, we are filing this Amendment to our Form 10-K solely to add Schedule I as required pursuant to Rule 5.04 of Regulation S-X. This Amendment No. 1 on Form 10-K/A amends Jefferies Group LLC's Annual Report on Form 10-K for the fiscal year ended November 30, 2015, filed with the U.S. Securities and Exchange Commission on January 29, 2016 ("Original Report").

This Amendment does not reflect events occurring after the filing of the Original Report and does not modify or update disclosures as originally filed, except as required to reflect the additional information provided herein.


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Table of Contents

Part IV
 
Item 15. Exhibits and Financial Statement Schedules.
 
 
(a)1. Financial Statements
 
 
Report of Independent Registered Public Accounting Firm
52

*
Report of Independent Registered Public Accounting Firm
53

*
Consolidated Statements of Financial Condition at November 30, 2015 and 2014
54

*
Consolidated Statements of Earnings for the Year Ended November 30, 2015, Year Ended November 30, 2014, Nine Months Ended November  30, 2013 and for the Three Months Ended February 28, 2013
55

*
Consolidated Statements of Comprehensive Income for the Year Ended November 30, 2015, Year ended November  30, 2014, Nine Months Ended November 30, 2013 and for the Three Months Ended February 28, 2013
56

*
Consolidated Statements of Changes in Equity for the Year Ended November 30, 2015, Year Ended November  30, 2014, Nine Months Ended November 30, 2013 and for the Three Months Ended February 28, 2013
57

*
Consolidated Statements of Cash Flows for the Year Ended November 30, 2015, Year Ended November  30, 2014, Nine Months Ended November 30, 2013 and for the Three Months Ended February 28, 2013
58

*
Notes to Consolidated Financial Statements
60

*
 
 
 
(a)2. Financial Statement Schedules
 
 
Schedule I—Condensed Financial Information of Jefferies Group LLC (Parent Company Only) at November 30, 2015 and 2014 and for the Year Ended November 30, 2015, Year Ended November  30, 2014, Nine Months Ended November 30, 2013 and for the Three Months Ended February 28, 2013
3

 
 
 
 
(a)3. Exhibits
 
 
                       23** Consent of PricewaterhouseCoopers LLP.
 
 
                       31.1** Rule 13a-14(a)/15d-14(a) Certification by Chief Financial Officer.
 
 
                       31.2** Rule 13a-14(a)/15d-14(a) Certification by Chief Executive Officer.
 
 
                       32** Rule 13a-14(b)/15d-14(b) and Section 1350 of Title 18 U.S.C. Certification by the Chief
                                   Executive Officer and Chief Financial Officer.
 
 
                       101** Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed
                                   Statements of Financial Condition as of November 30, 2015 and November 30, 2014; (ii)
                                   the Condensed Statements of Earnings and Comprehensive Income for the year ended
                                   November 30, 2015, the year ended November 30, 2014, the nine months ended
                                   November 30, 2013 and for the three months ended February 28, 2013; (iii) the
                                   Condensed Statements of Cash Flows for the year ended November 30, 2015, the year
                                   ended November 30, 2014, the nine months ended November 30, 2013 and for the three
                                   months ended February 28, 2013; and (iv) the Notes to Condensed Financial Statements.
 
 
 
 
 
Signature
11

 
 
 
 
                                                     
 
 
* Included in Part II in Jefferies Group LLC's Annual Report on Form 10-K for the fiscal year ended
     November 30, 2015, which was initially filed with the U.S. Securities and Exchange Commission on
     January 29, 2016.
 
 
** Filed herewith
 
 



2
Table of Contents

JEFFERIES GROUP LLC
(PARENT COMPANY ONLY)
CONDENSED STATEMENTS OF FINANCIAL CONDITION
(In thousands)
 
November 30, 2015
 
November 30, 2014
ASSETS
 
 
 
Cash and cash equivalents
$
824,239

 
$
971,182

Cash and securities segregated and on deposited for regulatory purposes or
    deposited with clearing and depository organizations
66,203

 
61,489

Financial instruments owned, at fair value
138,820

 
192,110

Investments in managed funds
34,933

 
54,840

Loans to and investments in related parties
520,550

 
501,289

Investment in subsidiaries
4,892,454

 
5,226,946

Advances to subsidiaries
1,423,175

 
1,904,013

Subordinated notes receivable
2,924,479

 
2,485,000

Other assets
591,751

 
671,653

Total assets
$
11,416,604

 
$
12,068,522

LIABILITIES AND EQUITY
 
 
 
Financial instruments sold, not yet purchased, at fair value
$
21,024

 
$
29,826

Accrued expenses and other liabilities
271,779

 
300,496

Long-term debt
5,641,892

 
6,313,617

Total liabilities
5,934,695

 
6,643,939

EQUITY
 
 
 
Member’s paid-in capital
5,526,855

 
5,439,256

Accumulated other comprehensive loss:
 
 
 
Currency translation adjustments
(36,811
)
 
(9,654
)
Additional minimum pension liability
(8,135
)
 
(5,019
)
Total accumulated other comprehensive loss
(44,946
)
 
(14,673
)
Total member’s equity
5,481,909

 
5,424,583

Total liabilities and equity
$
11,416,604

 
$
12,068,522

See accompanying notes to condensed financial statements.

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Table of Contents

JEFFERIES GROUP LLC
(PARENT COMPANY ONLY)
CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(In thousands, except per share amounts)
 
Successor
 
 
Predecessor
 
Year Ended   November 30,   2015
 
Year Ended   November 30,   2014
 
Nine Months   Ended   November 30,   2013
 
 
Three Months   Ended   February 28,   2013
Revenues:
 
 
 
 
 
 
 
 
Principal transactions
$
68,720

 
$
46,416

 
$
13,171

 
 
$
6,330

Asset management fees and investment income (loss)
      from managed funds
(20,889
)
 
(7,452
)
 
13,239

 
 
879

Interest
201,632

 
194,568

 
138,720

 
 
47,831

Other
33,193

 
81,511

 
53,778

 
 
19,162

Total revenues
282,656

 
315,043

 
218,908

 
 
74,202

Interest expense
250,919

 
251,020

 
186,338

 
 
84,105

Net revenues
31,737

 
64,023

 
32,570

 
 
(9,903
)
Non-interest expenses:
 
 
 
 
 
 
 
 
       Total non-interest expenses
5,984

 
9,263

 
17,196

 
 
4,192

Earnings (loss) before income taxes
25,753

 
54,760

 
15,374

 
 
(14,095
)
Income tax expense (benefit)
3,958

 
22,650

 
7,934

 
 
(4,915
)
Net earnings (loss) before undistributed earnings
      of subsidiaries
21,795

 
32,110

 
7,440

 
 
(9,180
)
Undistributed earnings of subsidiaries
71,739

 
125,450

 
153,751

 
 
89,318

Net earnings
93,534

 
157,560

 
161,191

 
 
80,138

Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
 
Currency translation and other adjustments
(27,157
)
 
(30,995
)
 
21,341

 
 
(10,018
)
     Minimum pension liability adjustments, net
            of tax
(3,116
)
 
(7,778
)
 
2,759

 
 
—

Total other comprehensive income (loss), net of
     tax
(30,273
)
 
(38,773
)
 
24,100

 
 
(10,018
)
Comprehensive income
$
63,261

 
$
118,787

 
$
185,291

 
 
$
70,120

See accompanying notes to condensed financial statements.

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Table of Contents

JEFFERIES GROUP LLC
(PARENT COMPANY ONLY)
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)

 
Successor
 
 
Predecessor
 
Year 
 Ended 
 November 30, 
 2015
 
Year 
 Ended 
 November 30, 
 2014
 
Nine Months 
 Ended 
 November 30, 
 2013
 
 
Three Months 
 Ended 
 February 28, 
 2013
Cash flows from operating activities:
 
 
 
 
 
 
 
 
Net earnings
$
93,534

 
$
157,560

 
$
161,191

 
 
$
80,138

Adjustments to reconcile net earnings to net cash (used in) provided
  by operating activities:
 
 
 
 
 
 
 
 
Amortization
(76,945
)
 
(80,424
)
 
(62,305
)
 
 
3,666

Undistributed earnings of subsidiaries
(71,739
)
 
(125,450
)
 
(153,751
)
 
 
(89,318
)
Income on loans to and investments in related parties
(40,460
)
 
(67,965
)
 
(58,197
)
 
 
—

Distributions received on investments in related parties
40,500

 
35,562

 
—

 
 
—

Other adjustments
(98,870
)
 
(78,064
)
 
(15,471
)
 
 
22,350

Net change in assets and liabilities:
 
 
 
 
 
 
 
 
Cash and securities segregated and on deposit for regulatory   purposes or deposited with clearing and depository   organizations
(4,714
)
 
(28,155
)
 
(7,151
)
 
 
(5,000
)
Financial instruments owned
53,290

 
(45,950
)
 
76,724

 
 
(63,244
)
Loans to and investments in related parties
—

 
—

 
—

 
 
(111,022
)
Investments in managed funds
19,907

 
(1,028
)
 
3,230

 
 
(2,300
)
Other assets
77,064

 
47,666

 
108,877

 
 
(1,544
)
Financial instruments sold, not yet purchased
(8,802
)
 
21,462

 
107

 
 
1,054

Accrued expenses and other liabilities
(36,397
)
 
38,477

 
(52,944
)
 
 
5,529

Net cash (used in) provided by operating activities
(53,632
)
 
(126,309
)
 
310

 
 
(159,691
)
Cash flows from investing activities:
 
 
 
 
 
 
 
 
Investments in, advances to and subordinated notes receivable
  from subsidiaries
420,797

 
82,143

 
(74,742
)
 
 
(235,097
)
Loans to and investments in related parties
(19,301
)
 
(469
)
 
128,638

 
 
—

Cash received from contingent consideration
4,444

 
6,253

 
3,796

 
 
1,203

Net cash provided by (used in) investing activities
405,940

 
87,927

 
57,692

 
 
(233,894
)

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Table of Contents

JEFFERIES GROUP LLC
(PARENT COMPANY ONLY)
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
 
Successor
 
 
Predecessor
 
Year 
 Ended 
 November 30, 
 2015
 
Year 
 Ended 
 November 30, 
 2014
 
Nine Months 
 Ended 
 November 30, 
 2013
 
 
Three Months 
 Ended 
 February 28, 
 2013
Cash flows from financing activities:
 
 
 
 
 
 
 
 
Excess tax benefits from the issuance of share-based awards
$
749

 
$
1,921

 
$
3,054

 
 
$
5,682

Proceeds from short-term borrowings
750,000

 
1,160,000

 
—

 
 
—

Payments on short-term borrowings
(750,000
)
 
(1,160,000
)
 
—

 
 
—

Net proceeds from issuance of senior notes, net of issuance
  costs
—

 
681,222

 
—

 
 
991,469

Repayment of long-term debt
(500,000
)
 
(250,000
)
 
—

 
 
—

Payments on repurchase of common stock
—

 
—

 
—

 
 
(166,541
)
Payments on dividends
—

 
—

 
—

 
 
(15,799
)
Proceeds from exercise of stock options, not including tax   benefits
—

 
—

 
—

 
 
57

Net cash (used in) provided by financing   activities
(499,251
)
 
433,143

 
3,054

 
 
814,868

Net (decrease) increase in cash and cash   equivalents
(146,943
)
 
394,761

 
61,056

 
 
421,283

Cash and cash equivalents at beginning of period
971,182

 
576,421

 
515,365

 
 
94,082

Cash and cash equivalents at end of period
$
824,239

 
$
971,182

 
$
576,421

 
 
$
515,365

 
 
 
 
 
 
 
 
 
Supplemental disclosures of cash flow information:
 
 
 
 
 
 
 
 
Cash paid (received) during the period for:
 
 
 
 
 
 
 
 
Interest
$
329,926

 
$
330,261

 
$
238,817

 
 
$
70,385

Income taxes, net
(5,859
)
 
111,542

 
56,130

 
 
(33,103
)

Noncash financing activities:
In connection with the transaction with Leucadia National Corporation, Jefferies Group LLC recorded accounting adjustments for the Leucadia Transaction, which resulted in changes to equity. Refer to Note 1, Organization and Basis of Presentation, herein, and Note 4, Leucadia and Related Transactions, to the Company's consolidated financial statements included in the Company's Annual Report on From 10-K for the year ended November 30, 2015, for further details.
On March 31, 2013, Leucadia contributed its mandatorily redeemable preferred interests in JHYH to Jefferies Group, LLC. The contribution was recorded as a capital contribution and increased member's equity by $362.3 million. For further details, refer to Note 4, Leucadia and Related Transactions, to the Company's consolidated financial statements included in the Company's Annual Report on From 10-K for the year ended November 30, 2015.

See accompanying notes to condensed financial statements.


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Table of Contents

JEFFERIES GROUP LLC
(PARENT COMPANY ONLY)
NOTES TO CONDENSED FINANCIAL STATEMENTS



Note 1. Introduction and Basis of Presentation
The accompanying condensed financial statements (the "Parent Company Financial Statements"), including the notes thereto, should be read in conjunction with the consolidated financial statements of Jefferies Group LLC (the "Company") and the notes thereto found in the Company's Annual Report on Form 10-K for the year ended November 30, 2015. For purposes of these condensed non-consolidated financial statements, the Company's wholly owned and majority owned subsidiaries are accounted for using the equity method of accounting ("equity method subsidiaries").
On March 1, 2013, Jefferies Group LLC, through a series of transactions, became an indirect wholly owned subsidiary of Leucadia National Corporation (“Leucadia”) (referred to herein as the “Leucadia Transaction”). Each outstanding share of Jefferies Group LLC was converted into 0.81 of a share of Leucadia common stock (the “Exchange Ratio”). Leucadia did not assume nor guarantee any of the Company's outstanding debt securities. The Company's 3.875% Convertible Senior Debentures due 2029 are convertible into Leucadia common shares. The Leucadia Transaction is accounted for using the acquisition method of accounting, which requires that the assets, including identifiable intangible assets, and liabilities of Jefferies Group LLC be recorded at their fair values. The application of the acquisition method of accounting has been pushed down and reflected in the financial statements of Jefferies Group LLC as a wholly-owned subsidiary of Leucadia. The application of push down accounting represents the termination of the prior reporting entity and the creation of a new reporting entity, which do not have the same bases of accounting. As a result, the Company's financial statements are presented for periods subsequent to March 1, 2013 for the new reporting entity (the “Successor”), and before March 1, 2013 for the prior reporting entity (the “Predecessor.”) The Predecessor and Successor periods are separated by a vertical line to highlight the fact that the financial information for such periods has been prepared under two different cost bases of accounting.
The Parent Company Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for financial information. The significant accounting policies of the Parent Company Financial Statements are those used by the Company on a consolidated basis, to the extent applicable. For further information regarding the significant accounting policies refer to Note 2, Summary of Significant Accounting Policies in the Company's consolidated financial statements included in the Annual Report on Form 10-K for the year ended November 30, 2015.
The Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with U.S. GAAP. The most important of these estimates and assumptions relate to fair value measurements, goodwill and intangible assets, the ability to realize deferred tax assets and the recognition and measurement of uncertain tax positions. Although these and other estimates and assumptions are based on the best available information, actual results could be materially different from these estimates.


Note 2. Transactions with Subsidiaries

The Parent Company has transactions with its equity method subsidiaries, Leucadia and certain other affiliated entities determined on an agreed upon basis and has guaranteed certain unsecured lines of credit and contractual obligations of certain equity method subsidiaries. The Parent Company received cash distributions from its equity method subsidiaries totaling $176.7 million, $54.0 million, $677.7 million and $20.1 million for the years ended November 30, 2015 and 2014, the nine months ended November 30, 2013 and the three months ended February 28, 2013, respectively.


Note 3. Guarantees

In the normal course of its business, the Parent Company issues guarantees in respect of obligations of certain of its wholly owned subsidiaries under trading and other financial arrangements, including guarantees to various trading counterparties and banks. The Parent Company records all derivative contracts and Financial instruments owned and Financial instruments sold, not yet purchased at fair value on its consolidated statements of financial condition.

Certain of the Parent Company's equity method subsidiaries are members of various exchanges and clearing houses.In the normal course of business, the Parent Company provides guarantees to securities clearinghouses and exchanges. These guarantees generally are required under the standard membership agreements, such that members are required to guarantee the performance of other

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Table of Contents
JEFFERIES GROUP LLC
(PARENT COMPANY ONLY)
NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED

members. Additionally, if a member becomes unable to satisfy its obligations to the clearinghouse, other members would be required to meet these shortfalls. To mitigate these performance risks, the exchanges and clearinghouses often require members to post collateral. The Parent Company's obligations under such guarantees could exceed the collateral amounts posted. The maximum potential liability under these arrangements cannot be quantified; however, the potential for the Parent Company to be required to make payments under such guarantees is deemed remote. Accordingly no liability has been recognized for these arrangements.

The Parent Company has provided a guarantee in respect of certain obligations of Jefferies Finance LLC that matures in January 2021, whereby the Parent Company is required to make certain payments to an SPE sponsored by Jefferies Finance in the event that Jefferies Finance is unable to meet its obligations to the SPE and a guarantee of a credit agreement for a fund owned by employees. At November 30, 2015, the maximum amount payable under these guarantees is $21.8 million.

The Parent Company guarantees certain financing arrangements of subsidiaries. The financing arrangements totaled a maximum obligation of $62.0 million at November 30, 2015.


Note 4. Regulatory Requirements

For a discussion of the Company’s regulatory requirements, see Note 21 to the Company’s consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended November 30, 2015. At November 30, 2015 and 2014, $5,203 million and $5,358 million, respectively, of net assets of the Parent Company's equity method subsidiaries are restricted as they reflect regulatory capital requirements or require regulatory approval prior to the payment of cash dividends and advances to the Parent Company.


8


Report of Independent Registered Public Accounting Firm on
Financial Statement Schedule



To the Board of Directors and Member of Jefferies Group LLC,

Our audits of the consolidated financial statements and of the effectiveness of internal control over financial reporting of Jefferies Group LLC referred to in our report dated January 29, 2016 appearing in the 2015 Annual Report on Form 10-K also included an audit of the financial statement schedule listed in Item 15(a)(2) of this Form 10-K/A. In our opinion, this financial statement schedule, which consists of the condensed statements of financial condition as of November 30, 2015 and 2014 and the related condensed statements of operations and comprehensive income, and of cash flows of Jefferies Group LLC (Successor company) for the years ended November 30, 2015 and 2014 and the nine months ended November 30, 2013, present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.
 
/s/ PricewaterhouseCoopers LLP
New York, NY
March 10, 2016






















9

Report of Independent Registered Public Accounting Firm on
Financial Statement Schedule



To the Board of Directors and Shareholders of Jefferies Group, Inc.

Our audit of the consolidated financial statements of Jefferies Group, Inc. referred to in our report dated January 29, 2016 appearing in the 2015 Annual Report on Form 10-K also included an audit of the financial statement schedule listed in Item 15(a)(2) of this Form 10-K/A. In our opinion, this financial statement schedule, which consists of the condensed statements of operations and comprehensive income, and of cash flows of Jefferies Group, Inc.(Predecessor company) for the three months ended February 28, 2013, present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.

/s/ PricewaterhouseCoopers LLP
New York, NY
March 10, 2016



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Table of Contents
JEFFERIES GROUP LLC
(PARENT COMPANY ONLY)
NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED

SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Form 10-K/A report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
 
JEFFERIES GROUP LLC
 
 
(Registrant)
Dated: March 10, 2016
By:
/s/ Peregrine C. Broadbent
 
 
Peregrine C. Broadbent
 
 
Chief Financial Officer
 
 
(duly authorized officer)



11