<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 28, 1997
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 1-11665
JEFFERIES GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-2848406
------------------------------ -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11100 Santa Monica Blvd, Los Angeles, California 90025
------------------------------------------------ ---------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 445-1199
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 [X] No [ ]
As of March 28, 1997, the registrant had 10,032,330 common shares, $.01 par
value, outstanding.
Page 1 of 16
<PAGE> 2
JEFFERIES GROUP, INC. AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
MARCH 28, 1997
<TABLE>
<CAPTION>
Page
----
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Consolidated Statements of Financial Condition -
March 28, 1997 (unaudited) and December 31, 1996........................ 3
Consolidated Statements of Earnings (unaudited) -
Three Months Ended March 28, 1997 and March 29, 1996.................... 4
Consolidated Statement of Changes in Stockholders' Equity (unaudited) -
Three Months Ended March 28, 1997....................................... 5
Consolidated Statements of Cash Flows (unaudited) -
Three Months Ended March 28, 1997 and March 29, 1996.................... 6
Notes to Consolidated Financial Statements (unaudited).................... 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................... 12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.......................................... 14
</TABLE>
Page 2 of 16
<PAGE> 3
JEFFERIES GROUP, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
March 28, December 31,
1997 1996
----------- -----------
(unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents .............................. $ 67,382 $ 114,142
Cash and securities segregated and on deposit for
regulatory purposes .................................. 49,519 23,849
Receivable from brokers and dealers .................... 1,570,875 965,625
Receivable from customers, officers and directors ...... 107,280 113,872
Securities owned ....................................... 244,783 197,770
Investments ............................................ 62,897 50,609
Premises and equipment ................................. 33,421 30,871
Other assets ........................................... 81,447 71,349
----------- -----------
$ 2,217,604 $ 1,568,087
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Bank loans ............................................. $ 28,500 $ --
Payable to brokers and dealers ......................... 1,423,301 805,713
Payable to customers ................................... 175,498 170,384
Securities sold, not yet purchased ..................... 159,089 124,315
Accrued expenses and other liabilities ................. 173,141 207,281
----------- -----------
1,959,529 1,307,693
Term debt .............................................. 53,030 52,987
Minority interest ...................................... 13,105 11,962
----------- -----------
2,025,664 1,372,642
----------- -----------
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value. Authorized 1,000,000
shares; none issued ................................ -- --
Common stock, $.01 par value. Authorized 25,000,000
shares; issued 18,780,062 shares in 1997 and
18,757,062 shares in 1996 .......................... 188 188
Additional paid-in capital ........................... 63,758 62,569
Retained earnings .................................... 243,595 232,741
Less treasury stock, at cost; 8,747,732 shares in 1997
and 8,394,113 shares in 1996 ....................... (114,539) (99,404)
Less currency translation adjustments ................ (509) (96)
Less additional minimum pension liability ............ (553) (553)
----------- -----------
Total stockholders' equity ..................... 191,940 195,445
----------- -----------
$ 2,217,604 $ 1,568,087
=========== ===========
</TABLE>
See accompanying unaudited notes to consolidated financial statements.
Page 3 of 16
<PAGE> 4
JEFFERIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended
-------------------------
March 28, March 29,
1997 1996
------------ ---------
<S> <C> <C>
Revenues:
Commissions................................ $ 69,898 $ 61,279
Principal transactions .................... 40,220 34,719
Corporate finance ......................... 28,135 16,707
Interest .................................. 13,895 13,059
Other ..................................... 1,263 994
----------- --------
Total revenues ......................... 153,411 126,758
Interest expense ............................ 11,899 10,066
----------- --------
Revenues, net of interest expense ........... 141,512 116,692
----------- --------
Non-interest expenses:
Compensation and benefits ................. 77,010 61,458
Floor brokerage and clearing fees ......... 8,451 6,362
Telecommunications and data
processing services ..................... 9,770 7,797
Occupancy and equipment rental ............ 4,692 3,785
Travel and promotional .................... 4,592 3,534
Software royalties ........................ 2,383 2,223
Other ..................................... 13,047 11,281
----------- --------
Total non-interest expenses ............ 119,945 96,440
----------- --------
Earnings before income taxes and
minority interest ....................... 21,567 20,252
Income taxes ................................ 9,005 8,632
----------- --------
Earnings before minority interest ........... 12,562 11,620
Minority interest ........................... 1,165 988
----------- --------
Net earnings............................ $ 11,397 $ 10,632
=========== ========
Earnings per share of common stock:
Primary................................. $ 1.01 $ 0.88
======== ========
Fully diluted........................... $ 1.01 $ 0.88
======== ========
Weighted average shares of common stock:
Primary ................................ 11,162 12,041
Fully diluted .......................... 11,167 12,091
</TABLE>
See accompanying unaudited notes to consolidated financial statements.
Page 4 of 16
<PAGE> 5
JEFFERIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
THREE MONTHS ENDED MARCH 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Additional Total
Additional Currency Minimum Stock-
Common Paid-in Retained Treasury Translation Pension holders'
Stock Capital Earnings Stock Adjustment Liability Equity
------ ---------- --------- ---------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1996 .......... $188 $62,569 $ 232,741 $ (99,404) $ (96) $(553) $ 195,445
Exercise of stock options
(23,000 shares) ............ -- 459 -- -- -- -- 459
Issuance of common
stock (91 shares) .......... -- -- -- 3 -- -- 3
Purchase of 408,084
shares of treasury stock ... -- -- -- (16,052) -- -- (16,052)
Capital Accumulation
Plan distributions
(54,374 shares) ............ -- 508 -- 914 -- -- 1,422
Increase in proportionate
share of subsidiary's
equity related to
subsidiary's purchase of
treasury stock ............. -- -- (45) -- -- -- (45)
Additional vesting of
restricted stock shares .... -- 222 -- -- -- -- 222
Quarterly dividends
($.05 per share) ........... -- -- (498) -- -- -- (498)
Translation adjustment ...... -- -- -- -- (413) -- (413)
Net earnings ................ -- -- 11,397 -- -- -- 11,397
---- ------- --------- --------- ----- ----- ---------
Balance,
March 28, 1997 ............. $188 $63,758 $ 243,595 $(114,539) $(509) $(553) $ 191,940
==== ======= ========= ========= ===== ===== =========
</TABLE>
See accompanying unaudited notes to consolidated financial statements.
Page 5 of 16
<PAGE> 6
JEFFERIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
------------------------
March 28, March 29,
1997 1996
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net earnings ............................................ $ 11,397 $ 10,632
--------- ---------
Adjustments to reconcile net earnings to
net cash provided (used) by operating activities:
Depreciation and/or amortization of premises and
equipment, capitalized software, goodwill and
discount on term debt ............................... 2,820 2,741
Additional vesting of restricted stock shares ......... 222 --
Increase in cash and securities segregated and on
deposit for regulatory purposes ..................... (25,670) --
(Increase) decrease in receivables:
Brokers and dealers ................................. (605,250) 318,306
Customers, officers and directors ................... 6,592 (20)
Increase in securities owned .......................... (47,013) (17,300)
Increase in investments ............................... (12,288) (1,687)
Increase in other assets .............................. (10,644) (14,941)
Increase (decrease) in operating payables:
Brokers and dealers ................................. 617,588 (186,107)
Customers ........................................... 5,114 (71,552)
Increase in securities sold, not yet purchased ........ 34,774 21,680
Increase (decrease) in accrued expenses and
other liabilities ................................... (34,140) 3,917
Increase in minority interest ......................... 1,143 504
--------- ---------
Total adjustments .............................. (66,752) 55,541
--------- ---------
Net cash provided (used) in operating activities (55,355) 66,173
--------- ---------
</TABLE>
Continued on next page.
See accompanying unaudited notes to consolidated financial statements.
Page 6 of 16
<PAGE> 7
JEFFERIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
-------------------------
March 28, March 29,
1997 1996
----------- ---------
Cash flows from financing activities:
<S> <C> <C>
Net proceeds from (payments on):
Bank loans ........................................... 28,500 --
Repurchase of treasury stock ......................... (16,052) (6,227)
Dividends paid ....................................... (498) (281)
Redemption of rights ................................. -- (55)
Exercise of stock options ............................ 459 2,218
Issuance of common stock shares ...................... 3 591
Capital Accumulation Plan distributions .............. 1,422 --
Issuance of restricted stock shares .................. -- 121
Increase in proportionate share of subsidiary's equity (45) (863)
--------- ---------
Net cash provided by (used in) financing
activities ................................ 13,789 (4,496)
--------- ---------
Cash flows from investing activities -
purchase of premises and equipment ........................ (4,781) (2,041)
--------- ---------
Effect of foreign currency translation on cash .............. (413) (69)
--------- ---------
Net (decrease) increase in cash and
cash equivalents .......................... (46,760) 59,567
Cash and cash equivalents - beginning of period ............. 114,142 68,318
--------- ---------
Cash and cash equivalents - end of period ................... $ 67,382 $ 127,885
========= =========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest ................................................ $ 9,258 $ 9,528
========= =========
Income taxes ............................................ $ 3,521 $ 4,491
========= =========
</TABLE>
See accompanying unaudited notes to consolidated financial statements.
Page 7 of 16
<PAGE> 8
JEFFERIES GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements include the accounts
of Jefferies Group, Inc. and all subsidiaries, including Jefferies & Company,
Inc. (Jefferies) and Investment Technology Group, Inc. and all of its
subsidiaries (ITGI), including ITGI's wholly-owned subsidiary, ITG Inc. (ITG).
The accounts of W & D Securities, Inc. (W & D) are also consolidated because of
the nature and extent of the Company's ownership interest in W & D. Jefferies
Group, Inc. and its subsidiaries are primarily engaged in securities brokerage
and trading, corporate finance and other financial services. The term "Company"
refers, unless the context requires otherwise, to Jefferies Group, Inc., its
subsidiaries, predecessor entities, and W & D.
All significant intercompany accounts and transactions are eliminated
in consolidation. The consolidated financial statements reflect all adjustments
which are, in the opinion of management, necessary for the fair statement of the
results for the interim period and should be read in conjunction with the
Company's annual report for the year ended December 31, 1996.
SECURITIES TRANSACTIONS
All transactions in securities, commission revenues and related
expenses are recorded on a trade-date basis.
Securities owned, debt and equity investments, some partnership
interests and securities sold, not yet purchased are carried at market value,
and unrealized gains and losses relating thereto are reflected in revenues.
Market values are generally based on quoted market prices, when available. Some
partnership interests are recorded at their initial cost and are adjusted when
the market values are supported by quoted market prices, including discounts for
liquidity and other relevant factors. In addition, the carrying values are
reduced when the Company determines that the estimated realizable value is less
than the carrying value based on financial and market information relevant to
the investment. The equity ownerships in affiliates are accounted for under the
cost or the equity method dependent upon percentage ownership and other factors.
COMMON STOCK
On March 2, 1996, the Company's Board of Directors approved a
two-for-one split of all of the outstanding shares of the Company's common
stock, payable March 29, 1996 to stockholders of record at the close of business
on March 15, 1996. A total of 9,349,668 shares of common stock were issued in
connection with the split. The stated par value of each share was not changed
from $0.01. A total of $94,000 was reclassified from the Company's additional
paid-in capital account to the Company's common stock account. All share and per
share amounts have been restated to retroactively reflect the stock split.
On March 15, 1996, the Company's common stock began trading on the NYSE
under the symbol JEF. Previously, the common stock traded in the Nasdaq National
Market System under the symbol JEFG.
Page 8 of 16
<PAGE> 9
JEFFERIES GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
RECEIVABLE FROM, AND PAYABLE TO, BROKERS AND DEALERS
The components, at March 28, 1997, of receivable from and payable to
brokers and dealers are as follows (in thousands of dollars):
<TABLE>
<S> <C>
Receivable from brokers and dealers:
Securities borrowed.............................. $ 1,497,887
Other............................................ 72,988
-----------
$ 1,570,875
===========
</TABLE>
<TABLE>
<S> <C>
Payable to brokers and dealers:
Securities loaned................................ $ 1,392,832
Other............................................ 30,469
-----------
$ 1,423,301
===========
</TABLE>
SECURITIES OWNED AND SECURITIES SOLD, NOT YET PURCHASED
The following is a summary of the market value of major categories of
securities owned and securities sold, not yet purchased, as of March 28, 1997
(in thousands of dollars):
<TABLE>
<CAPTION>
Securities
Sold,
Securities Not Yet
Owned Purchased
---------- ----------
<S> <C> <C>
Corporate equity securities .................... $174,609 $148,209
High-yield securities .......................... 17,932 9,713
Corporate debt securities ...................... 19,225 836
U.S. Government and agency obligations ......... 28,781 --
Municipal obligations .......................... 4,125 --
Options ........................................ 111 331
-------- --------
$244,783 $159,089
======== ========
</TABLE>
In the regular course of its business, Jefferies takes securities
positions as a market-maker to facilitate customer transactions and for
investment purposes. In making markets and when trading for its own account,
Jefferies exposes its own capital to the risk of fluctuations in market value.
Trading profits (or losses) depend primarily upon the skills of the employees
engaged in market-making and position taking, the amount of capital allocated to
positions in securities and the general trend of prices in the securities
markets.
Jefferies monitors its risk by maintaining its securities positions at
or below certain pre-established levels. These levels reduce certain
opportunities to realize profits in the event that the value of such securities
increases. However, they also reduce the risk of loss in the event of a decrease
in such value and result in controlled interest costs incurred on funds provided
to maintain such positions.
The Taxable Fixed Income Division trades high grade and non-investment
grade public and private debt securities. The Division specializes in trading
and making markets in over 300 unrated or less than investment grade corporate
debt securities and accounts for these positions at market value. Risk of loss
upon default by the borrower is significantly greater with respect to unrated or
less than investment grade corporate debt securities than with other corporate
debt securities. These securities are generally unsecured and are often
subordinated to other creditors of the issuer. These issuers usually have high
levels of indebtedness and are more sensitive to adverse
Page 9 of 16
<PAGE> 10
JEFFERIES GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
economic conditions, such as recession or increasing interest rates, than are
investment grade issuers. There is a limited market for some of these securities
and market quotes are generally available from a small number of dealers.
INVESTMENTS
Investments consist of the following as of March 28, 1997 (in thousands
of dollars):
<TABLE>
<S> <C>
Partnership interests................................ $ 31,295
Debt and equity investments.......................... 24,028
Equity and debt interests in affiliates.............. 7,574
-----------
$ 62,897
===========
</TABLE>
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash in banks and short term
investments. Cash equivalents are part of the cash management activities of the
Company and generally mature within 90 days. The following is a summary of cash
and cash equivalents as of March 28, 1997 (in thousands of dollars):
<TABLE>
<S> <C>
Cash in banks........................................ $ 16,964
Short term investments............................... 50,418
-----------
$ 67,382
===========
</TABLE>
MINORITY INTEREST
Minority interest represents the minority stockholders' proportionate
share of the equity of ITGI. At March 28, 1997, Jefferies Group, Inc. owned
approximately 82% of ITGI's common stock.
INCOME TAXES
Deferred tax liabilities and assets are determined based on the
difference between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.
NET CAPITAL REQUIREMENTS
As registered broker-dealers, Jefferies, ITG and W & D are subject to
the Securities and Exchange Commission's Uniform Net Capital Rule (Rule 15c3-1),
which requires the maintenance of minimum net capital. Jefferies, ITG and W & D
have elected to use the alternative method permitted by the Rule, which requires
that they each maintain minimum net capital, as defined, equal to the greater of
$250,000 or 2% of the aggregate debit balances arising from customer
transactions, as defined.
Net capital changes from day to day, but as of March 28, 1997,
Jefferies', ITG's and W&D's net capital was $56.0 million, $34.5 million and
$982,000, respectively, which exceeded minimum net capital requirements by $52.5
million, $34.2 million and $732,000, respectively.
Page 10 of 16
<PAGE> 11
JEFFERIES GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
QUARTERLY DIVIDENDS
In 1988, the Company instituted a policy of paying regular quarterly
dividends. There are no restrictions on the Company's present ability to pay
dividends on common stock, other than the governing provisions of the Delaware
General Corporation Law. On March 2, 1996, the Board of Directors approved a
two-for-one stock split and the continuation after the split of the quarterly
dividend rate at $0.05 per share. This effectively doubled the quarterly
dividend rate.
Dividends per Common Share (declared and paid):
<TABLE>
<CAPTION>
1st Qtr.
--------
<S> <C>
1997....... $.050
1996....... $.025
</TABLE>
OFF-BALANCE SHEET RISK
The Company has contractual commitments arising in the ordinary course
of business for securities loaned or purchased under agreements to sell,
securities sold but not yet purchased, future purchases and sales of foreign
currencies, securities transactions on a when-issued basis, options contracts,
futures index contracts, commodities futures and underwriting. Each of these
financial instruments and activities contains varying degrees of off-balance
sheet risk whereby the market values of the securities underlying the financial
instruments may be in excess of, or less than, the contract amount. The
settlement of these transactions is not expected to have a material effect upon
the Company's consolidated financial statements.
In the normal course of business, the Company had letters of credit
outstanding aggregating $22.9 million at March 28, 1997, to satisfy various
collateral requirements in lieu of depositing cash or securities.
CREDIT RISK
In the normal course of business, the Company is involved in the
execution, settlement and financing of various customer and principal securities
transactions. Customer activities are transacted on a cash, margin or
delivery-versus-payment basis. Securities transactions are subject to the risk
of counterparty or customer nonperformance. However, transactions are
collateralized by the underlying security, thereby reducing the associated risk
to changes in the market value of the security through settlement date or to the
extent of margin balances.
The Company seeks to control the risk associated with these
transactions by establishing and monitoring credit limits and by monitoring
collateral and transaction levels daily. The Company may require counterparties
to deposit additional collateral or return collateral pledged. In the case of
aged securities failed to receive, the Company may, under industry regulations,
purchase the underlying securities in the market and seek reimbursement for any
losses from the counterparty.
CONCENTRATION OF CREDIT RISK
As a major securities firm, the Company's activities are executed
primarily with and on behalf of other financial institutions, including brokers
and dealers, banks and other institutional customers. Concentrations of credit
risk can be affected by changes in economic, industry or geographical factors.
The Company seeks to control its credit risk and the potential risk
concentration through a variety of reporting and control procedures, including
those described in the preceding discussion of credit risk.
Page 11 of 16
<PAGE> 12
JEFFERIES GROUP, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
ANALYSIS OF FINANCIAL CONDITION
Total assets increased $649.5 million from $1,568.1 million at December
31, 1996 to $2,217.6 million at March 28, 1997. The increase is mostly due to an
increase in receivable from brokers and dealers related to securities borrowed.
The increase in securities borrowed is related to an increase in securities
loaned (included in payable to brokers and dealers).
FIRST QUARTER 1997 VERSUS FIRST QUARTER 1996
Revenues, net of interest expense, increased 21% to $141.5 million,
compared to $116.7 million for the first quarter of 1996. The increase was due
primarily to an $11.4 million, or 68%, increase in corporate finance, a $8.6
million, or 14%, increase in commissions, and a $5.5 million, or 16%, increase
in principal transactions. Commission revenues increased, led by ITG and the
Equities Division. Revenues from principal transactions increased primarily due
to increased trading gains in the Taxable Fixed Income Division. Corporate
finance revenues benefited from increased fees from financings. Net interest
income (interest revenues less interest expense) decreased $1.0 million as the
increase in income on securities borrowed was outpaced by the increase in
expense on securities loaned.
Total non-interest expenses increased 24% to $119.9 million, compared
to $96.4 million for the first quarter of 1996. Compensation and benefits
increased $15.6 million, or 25%, mostly due to higher incentive based
compensation accruals. Floor brokerage and clearing fees increased $2.1 million,
or 33%, due to increased volume of business executed on the various exchanges.
Telecommunications and data processing services increased $2.0 million, or 25%,
primarily due to increased trade volume, personnel, and system upgrades. Other
expense increased $1.8 million, or 16%, largely due to higher soft dollar
expenses. Travel and promotional increased $1.1 million, or 30%, mostly due to
increased business travel related to corporate finance activities. Occupancy and
equipment rental increased $907,000, or 24%, largely due to office space
relocation and expansion in several divisions. Software royalties increased
$160,000, or 7%, due to higher POSIT(R) commission revenues.
Earnings before income taxes and minority interest were up 6% to $21.6
million, compared to $20.3 million for the same prior year period. The effective
tax rate was approximately 42% for the first quarter of 1997 versus
approximately 43% for the first quarter of 1996.
Minority interest (approximately 18% of the earnings of ITGI) was $1.2
million for the first quarter of 1997 as compared to $1.0 million in the
comparable 1996 period. The increase in minority interest expense was due to
increased ITGI earnings.
Primary earnings per share were $1.01 for the first quarter of 1997 on
11,162,000 shares compared to $0.88 in the 1996 period on 12,041,000 shares.
Fully diluted earnings per share were $1.01 for the first quarter of 1997 on
11,167,000 shares compared to $0.88 in the 1996 period on 12,091,000 shares.
During the first quarter of 1997, the Company repurchased 408,084
shares (including 53,500 shares purchased in connection with the Company's
Capital Accumulation Plan) of its common stock versus 243,758 shares (including
62,112 shares purchased in connection with the Company's Capital Accumulation
Plan) for the comparable 1996 period.
Page 12 of 16
<PAGE> 13
JEFFERIES GROUP, INC. AND SUBSIDIARIES
The Company's principal activities, securities brokerage and the
trading of and market-making in securities, are highly competitive and extremely
volatile. The earnings of the Company are subject to wide fluctuations since
many factors over which the Company has little or no control, particularly the
overall volume of trading and the volatility and general level of market prices,
may significantly affect its operations. The following provides a breakdown of
total revenues by source for the three months ended March 28, 1997 and March 29,
1996.
<TABLE>
<CAPTION>
Three Months Ended
----------------------------------------
March 28, March 29,
1997 1996
------------------- ------------------
% of % of
Total Total
Amount Revenues Amount Revenues
-------- -------- ------ --------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Commissions and principal transactions:
Equities ......................... $ 52,303 34% $ 44,814 35%
Investment Technology Group ...... 30,954 20 27,228 21
International .................... 12,173 8 13,333 11
Taxable Fixed Income ............. 8,638 6 4,764 4
Convertible ...................... 2,110 1 1,989 2
Other proprietary trading ........ 3,940 3 3,870 3
Corporate finance ..................... 28,135 18 16,707 13
Interest .............................. 13,895 9 13,059 10
Other ................................. 1,263 1 994 1
-------- --- -------- ---
Total revenues ................. $153,411 100% $126,758 100%
======== === ======== ===
</TABLE>
Page 13 of 16
<PAGE> 14
JEFFERIES GROUP, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11. Computation of Earnings Per Share (page 15 attached)
(b) Reports on Form 8-K.
There were no reports filed on Form 8-K during the quarter ended
March 28, 1997.
Page 14 of 16
<PAGE> 15
EXHIBIT 11
JEFFERIES GROUP, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(AMOUNTS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended
-----------------------
March 28, March 29,
1997 1996
--------- ----------
<S> <C> <C>
Net Earnings ....................................... $ 11,397 $10,632
Adjustment to subsidiary earnings - common
stock equivalents on subsidiary ............... (156) --
======== =======
Adjusted earnings ............................... $ 11,241 $10,632
======== =======
Shares of common stock and common stock equivalents:
Average number of common shares ................. 10,115 11,237
Average common stock equivalent shares
related to employee stock based plans ......... 1,047 804
-------- -------
Average shares used in primary computation ...... 11,162 12,041
Adjust average common stock equivalents to
period-end market price, if higher than
average price ................................. 5 50
-------- -------
Average shares used in fully diluted computation 11,167 12,091
======== =======
Earnings per share:
Primary ......................................... $ 1.01 $ 0.88
======== =======
Fully diluted ................................... $ 1.01 $ 0.88
======== =======
</TABLE>
Page 15 of 16
<PAGE> 16
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JEFFERIES GROUP, INC.
-----------------------
(Registrant)
Date: May 9, 1997 By: /s/ Clarence Schmitz
-------------- --------------------------
Clarence Schmitz
Chief Financial Officer
Page 16 of 16
<TABLE> <S> <C>
<ARTICLE> BD
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION AND THE CONSOLIDATED STATEMENTS
OF EARNINGS AS OF MARCH 28, 1997 AND FOR THE THREE MONTHS ENDED AND THE NOTES
THERETO AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS FILED IN THE 1997 JEFFERIES GROUP, INC. FIRST QUARTER 10-Q FILING.
</LEGEND>
<CIK> 0000717867
<NAME> JEFFERIES GROUP, INC.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-28-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-28-1997
<EXCHANGE-RATE> 1
<CASH> 116,901
<RECEIVABLES> 180,268
<SECURITIES-RESALE> 0
<SECURITIES-BORROWED> 1,497,887
<INSTRUMENTS-OWNED> 244,783
<PP&E> 33,421
<TOTAL-ASSETS> 2,217,604
<SHORT-TERM> 28,500
<PAYABLES> 205,967
<REPOS-SOLD> 0
<SECURITIES-LOANED> 1,392,832
<INSTRUMENTS-SOLD> 159,089
<LONG-TERM> 53,030
0
0
<COMMON> 188
<OTHER-SE> 191,752
<TOTAL-LIABILITY-AND-EQUITY> 2,217,604
<TRADING-REVENUE> 40,220
<INTEREST-DIVIDENDS> 13,895
<COMMISSIONS> 69,898
<INVESTMENT-BANKING-REVENUES> 28,135
<FEE-REVENUE> 0
<INTEREST-EXPENSE> 11,899
<COMPENSATION> 77,010
<INCOME-PRETAX> 21,567
<INCOME-PRE-EXTRAORDINARY> 21,567
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,397
<EPS-PRIMARY> 1.01
<EPS-DILUTED> 1.01
</TABLE>
