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Jefferies Group LLC Reports Fiscal Second Quarter 2018 Financial Results

Jefferies Group LLC, a wholly-owned subsidiary of Jefferies Financial
Group Inc. (NYSE: JEF), today announced financial results for its fiscal
second quarter 2018.

Highlights for the three months ended May 31, 2018:

Highlights for the six months ended May 31, 2018:

Rich Handler, Chairman and Chief Executive Officer, and Brian Friedman,
Chairman of the Executive Committee, commented: “Total net revenues for
the second quarter were $823 million, up 20% compared to a year ago,
excluding the $96 million mark-to-market gain in last year’s quarter on
the sale of our investment in KCG Holdings Inc.¹ Our second quarter
results reflect continued strong performance in Investment Banking, with
net revenues of $506 million, up 42% compared to last year’s second
quarter and 17% compared to the first quarter of 2018. Our Investment
Banking results reflect solid execution for our clients across the board
in both financing and merger and acquisition advisory.

“Our Investment Banking revenues of nearly $2 billion for the twelve
months ended May 31, 2018 represents our best twelve month Investment
Banking period ever and reflects the impact of our continuing effort to
both broaden and deepen our client coverage and product capabilities.
During the last year, we expanded our existing teams and built a
presence in new sectors and products, including Business Services,
Tech-Enabled Services, Insurance Services, Sporting and Outdoor
Products, SPACs and Rule 144a Equity Offerings. We opened new Investment
Banking offices in the Netherlands and Australia. We are also expanding
our sponsor coverage effort to more private equity firms managing funds
below $2 billion in equity commitments. Many of these newer activities
and services have yet to fully come on line and therefore represent
further growth opportunities for us. We believe this is an excellent
environment to pursue continued expansion of our Investment Banking
business.

“Equities revenues for the quarter were $175 million, consistent with
last year’s second quarter’s revenues. We are pleased with these results
given the rapid swings in volatility in the first half and the
uncertainties presented with the regulatory environment concerning
MiFID. We believe we are well positioned in equities for continued
market share gains. Fixed Income revenues were $120 million versus $156
million for the same period last year. Fixed Income volumes during March
were particularly light, but picked up in April and May. We are pleased
with the firm’s performance this quarter, but believe we have the
ability and the determination to do even better across every business
line at Jefferies.”

As mentioned last quarter, we expect that our effective tax rate
generally will be about 27%, excluding discrete items and assuming a
similar geographical mix of pre-tax profits. This quarter’s effective
tax rate of 20% includes the benefit from both the restructuring of
certain international entities and the refinement of the calculation of
last quarter’s estimated toll charge. This refinement was enabled by the
issuance of clarifying guidance under The Tax Cuts and Jobs Act.

The attached financial tables should be read in conjunction with our
Annual Report on Form 10-K for the year ended November 30, 2017. Amounts
herein pertaining to May 31, 2018 represent a preliminary estimate as of
the date of this earnings release and may be revised in our Quarterly
Report on Form 10-Q for the quarter ended May 31, 2018.

This release contains “forward-looking statements” within the meaning of
the safe harbor provisions of Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements include statements about our future results and performance,
including our future market share and expected financial results. It is
possible that the actual results may differ materially from the
anticipated results indicated in these forward-looking statements.
Please refer to our most recent Annual Report on Form 10-K for a
discussion of important factors that could cause actual results to
differ materially from those projected in these forward-looking
statements.

Jefferies Group LLC, the world’s only independent full-service global
investment banking firm focused on serving clients for over 50 years, is
a leader in providing insight, expertise and execution to investors,
companies and governments. Our firm provides a full range of investment
banking, advisory, sales and trading, research and wealth management
services across all products in the Americas, Europe and Asia. Jefferies
Group LLC is a wholly-owned subsidiary of Jefferies Financial Group Inc.
(NYSE: JEF), a diversified financial services company.

This presentation of Adjusted financial information is an unaudited
non-GAAP financial measure. Adjusted financial information begins with
information prepared in accordance with U.S. GAAP and then those results
are adjusted to exclude the provisional tax charge of $160 million
related to the enactment of the Tax Act in the first six months of 2018.
Adjusted financial information also begins with information prepared in
accordance with U.S. GAAP and then those results are adjusted to exclude
the $96 million and $91 million mark-to-market gains on the announcement
of the sale of our equity investment in KCG Holdings Inc. in the three
and six months ended May 31, 2017, respectively. The Company believes
that the disclosed Adjusted measures and any adjustments thereto, when
presented in conjunction with comparable U.S. GAAP measures, are useful
to investors as they enable investors to evaluate the Company’s results
excluding the impact of the provisional tax charge as a result of the
enactment of the Tax Act and the mark-to-market gain on the announcement
of the sale of our equity investment in KCG Holdings Inc. These measures
should not be considered a substitute for, or superior to, measures of
financial performance prepared in accordance with U.S. GAAP.

Net Revenues by Source

Other Data

Net Revenues by Source

Other Data

Financial position:

Level 3 financial instruments:

Other data and financial ratios:

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