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(1)

The amounts during the nine months ended August 31, 2018 include $5.3 million related to the transfer of the German Pension Plan, which was reclassified to Compensation and benefits expenses within the Consolidated Statements of Earnings and ($0.8) million related to the Tax Cuts and Jobs Act (the “Tax Act”), which was reclassified to Member’s paid-in capital and a gain of $20.5 million related to foreign currency gains, which was reclassified to Other income within the Consolidated Statements of Earnings. The amounts during the three and nine months ended August 31, 2018 include $2.8 million related to the impact of certain discrete items related to our non-U.S. subsidiaries planning for the Tax Act.

(2)

The amounts include income tax expense of approximately $0.3 million and $11.0 million for the three and nine months ended August 31, 2018, respectively, and income tax expense of approximately $2.1 million and income tax benefit of approximately $5.3 million for the three and nine months ended August 31, 2017, respectively. The amounts during the three and nine months ended August 31, 2018 also include a gain of $0.1 million and $0.4 million, net of taxes of $0.1 million, respectively, related to changes in instrument specific credit risk, which was reclassified to Principal transaction revenues within the Consolidated Statements of Earnings. The amount during the nine months ended August 31, 2018 includes ($6.5) million related to the Tax Act, which was reclassified to Member’s paid-in capital.

(3)	The amount during the nine months ended August 31, 2018 includes ($0.2) million related to the Tax Act, which was reclassified to Member’s paid-in capital.

(4)	None of the components of other comprehensive income (loss) are attributable to noncontrolling interests.

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(1)	The components of other comprehensive income (loss) are attributable to Jefferies Group LLC. None of the components of other comprehensive income (loss) are attributable to noncontrolling interests.

(2)	There were no material reclassifications out of Accumulated other comprehensive income (loss) during the year ended November 30, 2017.

(3)	The amount during the nine months ended August 31, 2018 includes a gain of $20.5 million related to foreign currency gains, which was reclassified to earnings, and $2.8 million related to the impact of certain discrete items related to tax planning for our non-U.S. subsidiaries in connection with the Tax Act.

(4)	The amount during the nine months ended August 31, 2018 includes a gain of $0.4 million, net of taxes of $0.1 million, related to changes in instrument specific credit risk, which was reclassified to earnings, and ($6.5) million related to the Tax Act, which was reclassified to Member’s paid-in capital.

(5)	The amount during the nine months ended August 31, 2018 includes ($0.2) million related to the Tax Act, which was reclassified to Member’s paid-in capital.

(6)	The amount during the nine months ended August 31, 2018 includes $5.3 million related to the transfer of the German Pension Plan, which was reclassified to earnings, and ($0.8) million related to the Tax Act, which was reclassified to Member’s paid-in capital.

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•	Advisory fees from mergers and acquisitions engagements are recognized at a point in time when the related transaction is completed.

•	Expenses associated with investment banking advisory engagements are deferred only to the extent they are explicitly reimbursable by the client and the related revenue is recognized at a point in time. All other investment banking advisory related expenses, including expenses incurred related to restructuring advisory engagements, are expensed as incurred.

•	All investment banking expenses are recognized within their respective expense category on the Consolidated Statements of Earnings and any expenses reimbursed by clients are recognized as Investment banking revenues.

•	Performance fee revenue is generally recognized only at the end of the performance period to the extent that the benchmark return has been met.

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•	Investment Banking Revenues. Advisory fees from mergers and acquisitions engagements are recognized at a point in time when the related transaction is completed, as the performance obligation is to successfully broker a specific transaction.

•	Certain Capital Markets Revenues. Revenues associated with price stabilization activities as part of a securities underwriting were historically recognized as part of Investment banking revenues. Under the new revenue standard, revenue from these activities is recognized within Principal transaction revenues, as these revenues are not considered to be within the scope of the new standard.

•

Investment Banking Advisory Expenses. Historically, expenses associated with investment banking advisory assignments were deferred until reimbursed by the client, the related fee revenue is recognized or the engagement is otherwise concluded. Under the new revenue standard, expenses are deferred only to the extent they are explicitly reimbursable by the client and the related revenue is recognized at a point in time. All other investment banking advisory related expenses, including expenses incurred related to restructuring assignments, are expensed as incurred.

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Investment Banking Underwriting and Advisory Expenses. Expenses have historically been recorded net of client reimbursements and/or netted against revenues. Under the new revenue standard, all investment banking expenses will be recognized within their respective expense category on the Consolidated Statements of Earnings and any expense reimbursements will be recognized as Investment banking revenues (i.e., expenses are no longer recorded net of client reimbursements and are not netted against revenues).

•

Asset Management Fees. In certain asset management fee arrangements, we receive performance-based fees, which vary with performance or, in certain cases, are earned when the return on assets under management exceed certain benchmark returns or other performance targets. Historically, performance fees have been accrued (or reversed) quarterly based on measuring performance to date versus any relevant benchmark return hurdles stated in the investment management agreement. Under the new revenue standard, performance fees are considered variable as they are subject to fluctuation (e.g., based on market performance) and/or are contingent on a future event during the measurement period (e.g., exceeding a specified benchmark index) and are recognized only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty is resolved. Accordingly, performance fee revenue will generally be recognized only at the end of the performance period to the extent that the benchmark return has been met.

(1)	The amounts reflect each affected financial statement line item as they would have been reported under U.S. GAAP, prior to the adoption of the new revenue standard.

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(1)	Represents counterparty and cash collateral netting across the levels of the fair value hierarchy for positions with the same counterparty.

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(1)	Represents counterparty and cash collateral netting across the levels of the fair value hierarchy for positions with the same counterparty.

•

Exchange-Traded Equity Securities: Exchange-traded equity securities are measured based on quoted closing exchange prices, which are generally obtained from external pricing services, and are categorized within Level 1 of the fair value hierarchy, otherwise they are categorized within Level 2 of the fair value hierarchy. To the extent these securities are actively traded, valuation adjustments are not applied.

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Non-Exchange-Traded Equity Securities: Non-exchange-traded equity securities are measured primarily using broker quotations, pricing data from external pricing services and prices observed from recently executed market transactions and are categorized within Level 2 of the fair value hierarchy. Where such information is not available, non-exchange-traded equity securities are categorized within Level 3 of the fair value hierarchy and measured using valuation techniques involving quoted prices of or market data for comparable companies, similar company ratios and multiples (e.g., price/Earnings before interest, taxes, depreciation and amortization (“EBITDA”), price/book value), discounted cash flow analyses and transaction prices observed from subsequent financing or capital issuance by the company. When using pricing data of comparable companies, judgment must be applied to adjust the pricing data to account for differences between the measured security and the comparable security (e.g., issuer market capitalization, yield, dividend rate, geographical concentration).

•

Equity Warrants: Non-exchange-traded equity warrants are measured primarily using pricing data from external pricing services, prices observed from recently executed market transactions and broker quotations and are categorized within Level 2 of the fair value hierarchy. Where such information is not available, non-exchange-traded equity warrants are generally categorized within Level 3 of the fair value hierarchy and are measured using the Black-Scholes model with key inputs impacting the valuation including the underlying security price, implied volatility, dividend yield, interest rate curve, strike price and maturity date.

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Corporate Bonds: Corporate bonds are measured primarily using pricing data from external pricing services and broker quotations, where available, prices observed from recently executed market transactions and bond spreads or credit default swap spreads of the issuer adjusted for basis differences between the swap curve and the bond curve. Corporate bonds measured using these valuation methods are categorized within Level 2 of the fair value hierarchy. If broker quotes, pricing data or spread data is not available, alternative valuation techniques are used including cash flow models incorporating interest rate curves, single name or index credit default swap curves for comparable issuers and recovery rate assumptions. Corporate bonds measured using alternative valuation techniques are categorized within Level 3 of the fair value hierarchy and are a limited portion of our corporate bonds.

•

High Yield Corporate and Convertible Bonds: A significant portion of our high yield corporate and convertible bonds are categorized within Level 2 of the fair value hierarchy and are measured primarily using broker quotations and pricing data from external pricing services, where available, and prices observed from recently executed market transactions of institutional size. Where pricing data is less observable, valuations are categorized within Level 3 of the fair value hierarchy and are based on pending transactions involving the issuer or comparable issuers, prices implied from an issuer’s subsequent financing or recapitalization, models incorporating financial ratios and projected cash flows of the issuer and market prices for comparable issuers.

•	U.S. Treasury Securities: U.S. Treasury securities are measured based on quoted market prices and categorized within Level 1 of the fair value hierarchy.

•	U.S. Agency Debt Securities: Callable and non-callable U.S. agency debt securities are measured primarily based on quoted market prices obtained from external pricing services and are generally categorized within Level 1 or Level 2 of the fair value hierarchy.

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Agency Residential Mortgage-Backed Securities (“RMBS”): Agency RMBS include mortgage pass-through securities (fixed and adjustable rate), collateralized mortgage obligations and principal-only and interest-only (including inverse interest-only) securities. Agency RMBS are generally measured using recent transactions, pricing data from external pricing services or expected future cash flow techniques that incorporate prepayment models and other prepayment assumptions to amortize the underlying mortgage loan collateral and are categorized within Level 2 of the fair value hierarchy. We use prices observed from recently executed transactions to develop market-clearing spread and yield curve assumptions. Valuation inputs with regard to the underlying collateral incorporate factors such as weighted average coupon, loan-to-value, credit scores, geographic location, maximum and average loan size, originator, servicer and weighted average loan age.

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Non-Agency RMBS: The fair value of non-agency RMBS is determined primarily using discounted cash flow methodologies and securities are categorized within Level 2 or Level 3 of the fair value hierarchy based on the observability and significance of the pricing inputs used. Performance attributes of the underlying mortgage loans are evaluated to estimate pricing inputs, such as prepayment rates, default rates and the severity of credit losses. Attributes of the underlying mortgage loans that affect the pricing inputs include, but are not limited to, weighted average coupon; average and maximum loan size; loan-to-value; credit scores; documentation type; geographic location; weighted average loan age; originator; servicer; historical prepayment, default and loss severity experience of the mortgage loan pool; and delinquency rate. Yield curves used in the discounted cash flow models are based on observed market prices for comparable securities and published interest rate data to estimate market yields. In addition, broker quotes, where available, are also referenced to compare prices primarily on interest-only securities.

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Agency Commercial Mortgage-Backed Securities (“CMBS”): Government National Mortgage Association (“GNMA”) project loan bonds are measured based on inputs corroborated from and benchmarked to observed prices of recent securitization transactions of similar securities with adjustments incorporating an evaluation of various factors, including prepayment speeds, default rates and cash flow structures, as well as the likelihood of pricing levels in the current market environment. Federal National Mortgage Association (“FNMA”) Delegated Underwriting and Servicing (“DUS”) mortgage-backed securities are generally measured by using prices observed from recently executed market transactions to estimate market-clearing spread levels for purposes of estimating fair value. GNMA project loan bonds and FNMA DUS mortgage-backed securities are categorized within Level 2 of the fair value hierarchy.

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Non-Agency CMBS: Non-agency CMBS are measured using pricing data obtained from external pricing services, prices observed from recently executed market transactions or based on expected cash flow models that incorporate underlying loan collateral characteristics and performance. Non-Agency CMBS are categorized within Level 2 or Level 3 of the fair value hierarchy depending on the observability of the underlying inputs.

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Corporate Loans: Corporate loans categorized within Level 2 of the fair value hierarchy are measured based on market consensus pricing service quotations. Where available, market price quotations from external pricing services are reviewed to ensure they are supported by transaction data. Corporate loans categorized within Level 3 of the fair value hierarchy are measured based on price quotations that are considered to be less transparent, market prices for debt securities of the same creditor and estimates of future cash flows incorporating assumptions regarding creditor default and recovery rates and consideration of the issuer’s capital structure.

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Participation Certificates in Agency Residential Loans: Valuations of participation certificates in agency residential loans are based on observed market prices of recently executed purchases and sales of similar loans and data provider pricing. The loan participation certificates are categorized within Level 2 of the fair value hierarchy given the observability and volume of recently executed transactions and availability of data provider pricing.

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Project Loans and Participation Certificates in GNMA Project and Construction Loans: Valuations of participation certificates in GNMA project and construction loans are based on inputs corroborated from and benchmarked to observed prices of recent securitizations with similar underlying loan collateral to derive an implied spread. Securitization prices are adjusted to estimate the fair value of the loans to account for the arbitrage that is realized at the time of securitization. The measurements are categorized within Level 2 of the fair value hierarchy given the observability and volume of recently executed transactions.

•

Consumer Loans and Funding Facilities: Consumer and small business whole loans and related funding facilities are valued based on observed market transactions and incorporating valuation inputs including, but not limited to, delinquency and default rates, prepayment rates, borrower characteristics, loan risk grades and loan age. These assets are categorized within Level 2 or Level 3 of the fair value hierarchy.

•

Escrow and Trade Claim Receivables: Escrow and trade claim receivables are categorized within Level 3 of the fair value hierarchy where fair value is estimated based on reference to market prices and implied yields of debt securities of the same or similar issuers. Escrow and trade claim receivables are categorized within Level 2 of the fair value hierarchy where fair value is based on recent observations in the same receivable.

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Listed Derivative Contracts: Listed derivative contracts that are actively traded are measured based on quoted exchange prices, broker quotes or vanilla option valuation models, such as Black-Scholes, using observable valuation inputs from the principal market or consensus pricing services. Exchange quotes and/or valuation inputs are generally obtained from external vendors and pricing services. Broker quotes are validated directly through observable and tradeable quotes. Listed derivative contracts that use unadjusted exchange close prices are generally categorized within Level 1 of the fair value hierarchy. All other listed derivative contracts are generally categorized within Level 2 of the fair value hierarchy.

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Over-the-Counter (“OTC”) Derivative Contracts: OTC derivative contracts are generally valued using models, whose inputs reflect assumptions that we believe market participants would use in valuing the derivative in a current transaction. Inputs to valuation models are appropriately calibrated to market data. For many OTC derivative contracts, the valuation models do not involve material subjectivity as the methodologies do not entail significant judgment and the inputs to valuation models do not involve a high degree of subjectivity as the valuation model inputs are readily observable or can be derived from actively quoted markets. OTC derivative contracts are primarily categorized within Level 2 of the fair value hierarchy given the observability and significance of the inputs to the valuation models. Where significant inputs to the valuation are unobservable, derivative instruments are categorized within Level 3 of the fair value hierarchy.

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(1)	Where fair value is calculated based on NAV, fair value has been derived from each of the funds’ capital statements.

(2)	This category includes investments in hedge funds that invest, long and short, primarily in equity securities in domestic and international markets in both the public and private sectors. At August 31, 2018 and November 30, 2017, approximately 2% and 1%, respectively, of the fair value of investments in this category are classified as being in liquidation.

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(3)	This category includes investments in funds that invest in loans secured by a first trust deed on property, domestic and international public high yield debt, private high yield investments, senior bank loans, public leveraged equities, distressed debt and private equity investments. There are no redemption provisions.

(4)	This category includes investments in fund of funds that invest in various private equity funds. The investments in this category are managed by us and have no redemption provisions. These investments are gradually being liquidated or we have requested redemption, however, we are unable to estimate when these funds will be received.

(5)

At August 31, 2018 and November 30, 2017, the investments in this category include investments in equity funds that invest in the equity of various U.S. and foreign private companies in the energy, technology, internet service and telecommunication service industries. These investments cannot be redeemed; instead, distributions are received through the liquidation of the underlying assets of the funds which are expected to be liquidated in one to ten years.

(6)	This category includes investments in hedge funds that invest, long and short, primarily in commodities. Investments in this category are redeemable with 60 days prior written notice.

(7)

This category includes investments in hedge funds that invest, long and short, primarily in multi-asset securities in domestic and international markets in both the public and private sectors. At August 31, 2018 and November 30, 2017, investments representing approximately 17% and 12%, respectively, of the fair value of investments in this category are redeemable with 30 days prior written notice.

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(1)	Realized and unrealized gains/losses are primarily reported in Principal transaction revenues in our Consolidated Statements of Earnings. Changes in instrument-specific credit risk related to structured notes are included in our Consolidated Statements of Comprehensive Income, net of tax.

(2)	Net derivatives represent Financial instruments owned—Derivatives and Financial instruments sold, not yet purchased—Derivatives.

•	Other ABS of $3.9 million, RMBS of $2.9 million and CMBS of $2.6 million due to reduced pricing transparency.

•	CMBS of $4.6 million, CDOs and CLOs of $3.7 million and corporate equity securities of $2.6 million due to greater pricing transparency supporting classification into Level 2.

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(1)	Realized and unrealized gains/losses are primarily reported in Principal transaction revenues in our Consolidated Statements of Earnings. Changes in instrument-specific credit risk related to structured notes are included in our Consolidated Statements of Comprehensive Income, net of tax.

(2)	Net derivatives represent Financial instruments owned—Derivatives and Financial instruments sold, not yet purchased—Derivatives.

•	CMBS of $17.0 million, loans and other receivables of $15.3 million and CDOs and CLOs of $8.7 million due to reduced pricing transparency.

•	RMBS of $4.6 million and corporate equity securities of $2.5 million due to greater pricing transparency supporting classification into Level 2.

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(1)	Realized and unrealized gains/losses are reported in Principal transaction revenues in our Consolidated Statements of Earnings.

(2)	Net derivatives represent Financial instruments owned—Derivatives and Financial instruments sold, not yet purchased—Derivatives.

•	Other ABS of $46.4 million due to a lack of observable market transactions.

•	RMBS of $14.6 million and other ABS of $13.5 million due to greater pricing transparency supporting classification into Level 2.

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(1)	Realized and unrealized gains/losses are reported in Principal transaction revenues in our Consolidated Statements of Earnings.

(2)	Net derivatives represent Financial instruments owned—Derivatives and Financial instruments sold, not yet purchased—Derivatives.

•	CDOs and CLOs of $9.6 million and corporate debt securities of $8.1 million due to a lack of observable market transactions.

•	Loans and other receivables of $28.3 million due to greater pricing transparency supporting classification into Level 2.

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•	Non-exchange-traded securities using comparable pricing valuation techniques. A significant increase (decrease) in the comparable asset price in isolation would result in a significantly higher (lower) fair value measurement.

•	Corporate debt securities using a convertible bond model. A significant increase (decrease) in the bond discount rate/yield would result in a significantly lower (higher) fair value measurement. A significant increase (decrease) in volatility would result in a significantly higher (lower) fair value measurement.

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Non-exchange-traded securities, corporate debt securities, loans and other receivables, unfunded commitments, interest rate swaps, total return swaps, RMBS, other ABS, private equity securities and structured notes using a market approach valuation technique. A significant increase (decrease) in the transaction level of a private equity security would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the underlying stock price of the non-exchange-traded securities would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the credit spread of certain derivatives would result in a significantly lower (higher) fair value measurement. A significant increase (decrease) in the price of the private equity securities, non-exchange-traded securities, corporate debt securities, unfunded commitments, total return swaps, RMBS, other ABS, loans and other receivables or structured notes would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the estimated recovery rates of the cash flow outcomes underlying the corporate debt securities or loans and other receivables would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the bond discount rate/yield would result in a significantly lower (higher) fair value measurement. A significant increase (decrease) in the comparable asset price of the corporate debt securities in isolation would result in a significantly higher (lower) fair value measurement.

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Loans and other receivables, CDOs and CLOs, CMBS and other ABS using scenario analysis. A significant increase (decrease) in the possible recovery rates of the cash flow outcomes underlying the investment would result in a significantly higher (lower) fair value measurement for the financial instrument. A significant increase (decrease) in the price of the CMBS would result in a significantly higher (lower) fair value measurement.

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CDOs and CLOs, RMBS and CMBS and other ABS and variable funding note swaps using a discounted cash flow valuation technique. A significant increase (decrease) in isolation in the constant default rate, loss severity or cumulative loss rate would result in a significantly lower (higher) fair value measurement. The impact of changes in the constant prepayment rate and duration would have differing impacts depending on the capital structure and type of security. A significant increase (decrease) in the discount rate/security yield would result in a significantly lower (higher) fair value measurement.

•	Derivative equity options using an option/default rate model. A significant increase (decrease) in default probability would result in a significantly lower (higher) fair value measurement.

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(1)	Changes in instrument-specific credit risk related to structured notes are included in our Consolidated Statements of Comprehensive Income, net of tax.

(2)	Other changes in fair value are included in Principal transactions revenues in our Consolidated Statements of Earnings.

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(1)	Interest income is recognized separately from other changes in fair value and is included in Interest revenues in our Consolidated Statements of Earnings.

(2)	Amounts include loans and other receivables 90 days or greater past due by which contractual principal exceeds fair value of $33.7 million and $38.7 million at August 31, 2018 and November 30, 2017, respectively.

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(1)	Exchange-traded derivatives include derivatives executed on an organized exchange. Cleared OTC derivatives include derivatives executed bilaterally and subsequently novated to and cleared through central clearing counterparties. Bilateral OTC derivatives include derivatives executed and settled bilaterally without the use of an organized exchange or central clearing counterparty.

(2)	Number of exchange traded contracts may include open futures contracts. The unsettled fair value of these futures contracts is included in Receivables from/Payables to brokers, dealers and clearing organizations in our Consolidated Statements of Financial Condition.

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(3)	Amounts netted include both netting by counterparty and for cash collateral paid or received.

(4)	We have not received or pledged additional collateral under master netting agreements and/or other credit support agreements that is eligible to be offset beyond what has been offset in our Consolidated Statements of Financial Condition.

(1)	Exchange-traded derivatives include derivatives executed on an organized exchange. Cleared OTC derivatives include derivatives executed bilaterally and subsequently novated to and cleared through central clearing counterparties. Bilateral OTC derivatives include derivatives executed and settled bilaterally without the use of an organized exchange or central clearing counterparty.

(2)	Number of exchange traded contracts may include open futures contracts. The unsettled fair value of these futures contracts is included in Receivables from/Payables to brokers, dealers and clearing organizations in our Consolidated Statements of Financial Condition.

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(3)

Pursuant to a rule change by the London Clearing House in the first fiscal quarter of 2018, variation margin exchanged each day with this clearing organization on certain interest rate derivatives is characterized as settlement payments as opposed to cash posted as collateral. The impact of this rule change would have been a reduction in gross interest rate derivative assets and liabilities as of November 30, 2017 of approximately $800 million, and a corresponding decrease in counterparty and cash collateral netting, with no impact to our Consolidated Statement of Financial Condition.

(4)	Amounts netted include both netting by counterparty and for cash collateral paid or received.

(5)	We have not received or pledged additional collateral under master netting agreements and/or other credit support agreements that is eligible to be offset beyond what has been offset in our Consolidated Statements of Financial Condition.

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(1)	At August 31, 2018, we held exchange-traded derivative assets and other credit agreements with a fair value of $85.2 million, which are not included in this table.

(2)	OTC derivative assets in the table above are gross of collateral received. OTC derivative assets are recorded net of collateral received in our Consolidated Statements of Financial Condition. At August 31, 2018, cash collateral received was $158.2 million.

(3)	Derivative fair values include counterparty netting within product category.

(4)	Amounts represent the netting of receivable balances with payable balances for the same counterparty within product category across maturity categories.

(1)	At August 31, 2018, we held exchange-traded derivative liabilities and other credit agreements with a fair value of $472.0 million, which are not included in this table.

(2)	OTC derivative liabilities in the table above are gross of collateral pledged. OTC derivative liabilities are recorded net of collateral pledged in our Consolidated Statements of Financial Condition. At August 31, 2018, cash collateral pledged was $278.6 million.

(3)	Derivative fair values include counterparty netting within product category.

(4)	Amounts represent the netting of receivable balances with payable balances for the same counterparty within product category across maturity categories.

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(1)	We utilize internal credit ratings determined by our Risk Management department. Credit ratings determined by Risk Management use methodologies that produce ratings generally consistent with those produced by external rating agencies.

(1)	These outflows include initial margin received from counterparties at the execution of the derivative contract. The initial margin will be returned if counterparties elect to terminate the contract after a downgrade.

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(1)

Under master netting agreements with our counterparties, we have the legal right of offset with a counterparty, which incorporates all of the counterparty’s outstanding rights and obligations under the arrangement. These balances reflect additional credit risk mitigation that is available by counterparty in the event of a counterparty’s default, but which are not netted in the balance sheet because other netting provisions of U.S. GAAP are not met.

(2)	Includes securities received or paid under collateral arrangements with counterparties that could be liquidated in the event of a counterparty default and thus offset against a counterparty’s rights and obligations under the respective repurchase agreements or securities borrowing or lending arrangements.

(3)	Amounts include $5,717.1 million of securities borrowing arrangements, for which we have received securities collateral of $5,544.1 million, and $1,019.6 million of repurchase agreements, for which we have pledged securities collateral of $1,054.1 million, which are subject to master netting agreements but we have not determined the agreements to be legally enforceable.

(4)	Amounts include $5,678.6 million of securities borrowing arrangements, for which we have received securities collateral of $5,516.7 million, and $1,084.4 million of repurchase agreements, for which we have pledged securities collateral of $1,115.9 million, which are subject to master netting agreements but we have not determined the agreements to be legally enforceable.

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•	Purchases of securities in connection with our trading and secondary market-making activities;

•	Retained interests held as a result of securitization activities, including the resecuritization of mortgage- and other asset-backed securities and the securitization of commercial mortgage, corporate and consumer loans;

•	Acting as placement agent and/or underwriter in connection with client-sponsored securitizations;

•	Financing of agency and non-agency mortgage- and other asset-backed securities;

•	Warehouse funding arrangements for client-sponsored consumer loan vehicles and CLOs through participation certificates, forward sale agreements and revolving loan and note commitments; and

•	Loans to, investments in and fees from various investment vehicles.

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(1)	Securities purchased under agreements to resell represent amounts due under collateralized transactions on related consolidated entities, which are eliminated in consolidation.

(2)	Approximately $37.7 million and $44.1 million of the secured financing represents an amount held by us in inventory and is eliminated in consolidation at August 31, 2018 and November 30, 2017, respectively.

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•	Forward sale agreements whereby we commit to sell, at a fixed price, corporate loans and ownership interests in an entity holding such corporate loans to CLOs;

•	Warehouse funding arrangements in the form of participation interests in corporate loans held by CLOs and commitments to fund such participation interests;

•	Trading positions in securities issued in a CLO transaction; and

•	Investments in variable funding notes issued by CLOs.

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(1)

We engage in debt capital markets transactions with Jefferies Finance related to the originations and syndications of loans by Jefferies Finance. In connection with such services, we earned fees, which are recognized in Investment banking revenues in our Consolidated Statements of Earnings. In addition, we paid fees to Jefferies Finance in respect of certain loans originated by Jefferies Finance, which are recognized as Business development expenses in our Consolidated Statements of Earnings.

(2)

We act as a placement agent for CLOs managed by Jefferies Finance, for which we recognized fees, which are included in Investment banking revenues in our Consolidated Statements of Earnings. At August 31, 2018 and November 30, 2017, we held securities issued by CLOs managed by Jefferies Finance, which are included in Financial instruments owned. At November 30, 2016, we provided a guarantee whereby we were required to make certain payments to a CLO in the event that Jefferies Finance was unable to meet its obligations to the CLO, which was terminated in October 2017.

(3)	We have entered into participation agreements and derivative contracts with Jefferies Finance based upon certain securities issued by the CLO and we have recognized gains (losses) relating to the derivative contracts.

(4)	We acted as underwriter in connection with term loans issued by Jefferies Finance.

(5)	Under a service agreement, we charge Jefferies Finance for services provided.

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(1)	Financial information for JCP Fund V within our results of operations for the three and nine months ended August 31, 2018 and 2017 is included based on the presented periods.

(1)	Included in Loans to and investments in related parties in our Consolidated Statements of Financial Condition.

(2)	Financial information for Epic Gas in our results of operations for the three and nine months ended August 31, 2018 and 2017 is included based on the presented periods.

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(1)	Bank loans include loans entered into, pursuant to a Master Loan Agreement, between the Bank of New York Mellon and us.

(1)	These senior notes with a principal amount of $750.0 million were issued on January 17, 2017. The carrying value includes a gain of $24.1 million and a loss of $9.6 million in the nine months ended August 31, 2018 and 2017, respectively, associated with an interest rate swap based on its designation as a fair value hedge. See Note 5, Derivative Financial Instruments, for further information.

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(2)	The change in fair value of the conversion feature embedded in the debentures, which is included in Principal transaction revenues in our Consolidated Statements of Earnings, was not material for the three and nine months ended August 31, 2017.

(3)

The carrying value includes $709.6 million and $607.0 million of notes carried at fair value at August 31, 2018 and November 30, 2017, respectively. These structured notes contain various interest rate payment terms and are accounted for at fair value, with changes in fair value resulting from a change in the instrument-specific credit risk presented in other comprehensive income and changes in fair value resulting from non-credit components recognized in Principal transaction revenues. A weighted average coupon rate is not meaningful, as substantially all of the structured notes are carried at fair value.

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(1)	Revenues from contracts with customers associated with the equities and fixed income businesses primarily represent commissions and other fee revenue.

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(1)	Total compensation cost associated with restricted stock and restricted stock units (“RSUs”) includes the amortization of sign-on, retention and senior executive awards, less forfeitures and clawbacks.

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(1)	Equity, loan and other unfunded commitments are presented by contractual maturity date. The amounts, however, are available on demand.

(2)	At August 31, 2018, $3,141.9 million within forward starting securities purchased under agreements to resell and all of the securities sold under agreements to repurchase settled within three business days.

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•	Net revenues and non-interest expenses directly associated with each reportable business segment are included in determining earnings (loss) before income taxes.

•	Net revenues and non-interest expenses not directly associated with specific reportable business segments are allocated based on the most relevant measures applicable, including each reportable business segment’s net revenues, headcount and other factors.

•	Reportable business segment assets include an allocation of indirect corporate assets that have been fully allocated to our reportable business segments, generally based on each reportable business segment’s capital utilization.

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(1)	Substantially all relates to U.S. results.

(2)	Substantially all relates to U.K. results.

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•	At August 31, 2018 and November 30, 2017, we had $41.2 million and $45.6 million, respectively, of loans outstanding to certain of our officers and employees (none of whom are executive officers or directors) that are included in Other assets in our Consolidated Statements of Financial Condition.

•	Receivables from and payables to customers include balances arising from officers’, directors’ and employees’ individual security transactions. These transactions are subject to the same regulations as all customer transactions and are provided on substantially the same terms.

•	One of our directors has investments in a hedge fund managed by us of approximately $4.8 million and $4.9 million at August 31, 2018 and November 30, 2017, respectively.

•	We provide services to and receive services from Jefferies under service agreements. We also receive revenues from Jefferies under a revenue sharing agreement (in millions):

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•	We provide capital markets and asset management services to Jefferies and its affiliates. The following table presents the revenues earned by type of services provided (in millions):

•	Receivables from and payables to Jefferies, included in Other assets and Accrued expenses and other liabilities, respectively, in our Consolidated Statements of Financial Condition (in millions):

•

On January 11, 2018, our Board of Directors approved a distribution to our sole limited liability company member, Jefferies, in the amount of $200.0 million, which was paid on January 31, 2018. In addition, our Board of Directors approved a quarterly distribution policy authorizing us to pay a quarterly distribution to our limited liability company members following the end of each of our fiscal quarters. Beginning at the end of our fiscal quarter ending February 28, 2018 and on a quarterly basis thereafter, we will pay our limited liability company members a quarterly dividend equal to 50% of our positive net earnings attributable to us (as adjusted for preceding loss quarters, if any). During the three months ended August 31, 2018, we paid a dividend in the amount of $18.6 million to Jefferies, based on our results for the six months ended May 31, 2018. Our results at August 31, 2018 include a dividend payable in the amount of $30.1 million.

•

Pursuant to a tax sharing agreement entered into between us and Jefferies, payments are made between us and Jefferies to settle current tax receivables and payables. At August 31, 2018 and November 30, 2017, a net current tax payable to Jefferies of $44.0 million and $91.5 million, respectively, is included in Accrued expenses and other liabilities in our Consolidated Statements of Financial Condition. On April 3, June 15 and September 25, 2018, we made payments of $115.0 million, $36.0 million and $42.0 million, respectively, to Jefferies, which reduced the cumulative net current tax payable balance.

•	We entered into a foreign exchange prime brokerage agreement with an affiliate of Jefferies in 2017. The following table presents the balances relating to these foreign exchange contracts, which are included in our Consolidated Statements of Financial Condition (in millions).

•	Two of our directors have investments totaling $2.8 million and $3.6 million at August 31, 2018 and November 30, 2017, respectively, in a hedge fund managed by Jefferies.

•	We have investments in hedge funds managed by Jefferies of $218.1 million and $136.1 million at August 31, 2018 and November 30, 2017, respectively, included in Financial instruments owned in our Consolidated Statements of Financial Condition. Net gains on our investments in these hedge funds, which are included in Principal transactions in our Consolidated Statements of Earnings (in millions):

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•

As a result of a public offering by Landcadia Holdings Inc., an affiliate of Jefferies, we own 638,561 public units (each unit consisting of one share of Class A common stock and one public warrant) at August 31, 2018 and November 30, 2017, with a fair value of $7.1 million and $6.8 million, respectively, included in Financial instruments owned in our Consolidated Statements of Financial Condition.

•	A subsidiary of Jefferies had an investment in a hedge fund managed by us of $27.3 million at November 30, 2017. This investment was transferred to Jefferies LLC effective December 31, 2017, and we paid $26.7 million, the investment’s NAV, to Jefferies in January 2018.

•	We sold securities to Jefferies at fair value for cash during the following periods:

•	In connection with our sales and trading activities, from time to time we make a market in long-term debt securities of Jefferies (i.e., we buy and sell debt securities issued by Jefferies). At August 31, 2018 and November 30, 2017, approximately $1.5 million and $0.2 million, respectively, is included in Financial instruments owned in our Consolidated Statements of Financial Condition.

•	Its entire 50% interest in Berkadia and

•	Its membership interests in certain funds and separately managed accounts (collectively, “membership interests”), which are managed by Leucadia Asset Management, a subsidiary of Jefferies.

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•	the description of our business and risk factors contained in our Annual Report on Form 10-K for the year ended November 30, 2017 and filed with the Securities and Exchange Commission (“SEC”) on January 26, 2018;

•	the discussion of our analysis of financial condition and results of operations contained in this report under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” herein;

•	the discussion of our risk management policies, procedures and methodologies contained in this report under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Risk Management” herein;

•	the notes to the consolidated financial statements contained in this report; and

•	cautionary statements we make in our public documents, reports and announcements.

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Net revenues for the three months ended August 31, 2018 were $777.6 million, compared with $800.7 million for the three months ended August 31, 2017, a decrease of $23.1 million, or 2.9%. The decrease reflects a $24.1 million decrease in investment banking revenues, partially offset by an increase in our equities net revenues. (Our investment banking revenues in the three months ended August 31, 2018 included an increase of $36.3 million as a result of the new revenue standard. Refer to “Impact of Adopting Revenue Recognition Guidance” herein and Note 2, Summary of Significant Accounting Policies and Note 3, Accounting Developments in our consolidated financial statements included in this Quarterly Report on Form 10-Q, for further details on the new revenue standard.)

•	Our equities net revenues improved 4.7% compared to the prior year quarter.

•	Our fixed income net revenues were relatively flat as compared with those of the prior year quarter.

•	Lower investment banking revenues during the three months ended August 31, 2018 reflect a decrease in debt capital markets and advisory revenues, primarily due to lower transaction levels, partially offset by higher equity capital markets revenues.

•	Net revenues from our other business category in the three months ended August 31, 2018 were $9.1 million, compared with $9.4 million in the prior year quarter. The results in the prior year quarter included net gains of $2.2 million from our investment in KCG Holdings, Inc. (“KCG”), which was sold in July 2017.

•	Net revenues in the three months ended August 31, 2018 also included asset management revenues of $6.5 million, compared with $12.4 million in the prior year quarter.

•

Non-compensation expenses for the three months ended August 31, 2018 increased $47.0 million, or 21.8%, to $262.5 million, compared with $215.5 million for the three months ended August 31, 2017, primarily due to an increase of $36.3 million across Business development expenses and Underwriting costs, as a result of applying the new revenue standard to our results of operations for the three months ended August 31, 2018. (Refer to “Impact of Adopting Revenue Recognition Guidance” herein and Note 2, Summary of Significant Accounting Policies, and Note 3, Accounting Developments, in our consolidated financial statements included in this Quarterly Report on Form 10-Q, for further details on the new revenue standard.)

•	Compensation and benefits expense for the three months ended August 31, 2018 was $428.0 million, a decrease of $34.9 million, or 7.5%, from the comparable prior year quarter. Compensation and benefits expense as a percentage of Net revenues was 55.0% for the three months ended August 31, 2018, compared with 57.8% in the prior year quarter.

•

Net revenues for the nine months ended August 31, 2018 were $2,421.4 million, compared with $2,375.5 million for the nine months ended August 31, 2017, an increase of $45.9 million, or 1.9%. Our investment banking revenues in the nine months ended August 31, 2018 included an increase of $101.1 million as a result of the new revenue standard. (Refer to “Impact of Adopting Revenue Recognition Guidance” herein and Note 2, Summary of Significant Accounting Policies and Note 3, Accounting Developments in our consolidated financial statements included in this Quarterly Report on Form 10-Q, for further details on the new revenue standard.)

•	Our results in the nine months ended August 31, 2018 reflect continued strong investment banking revenues and solid performance in equities net revenues, partially offset by a decline in fixed income net revenues.

•	Our equities net revenues improved 1.6% compared to the prior year period.

•	Our fixed income net revenues were below those of the prior year period, primarily due to soft market conditions in the month of March 2018. Further, performance in the first quarter of 2017 was bolstered by robust trading activity following the 2016 U.S. Presidential election, which was not repeated in the current year period.

•	Higher investment banking revenues during the nine months ended August 31, 2018 reflect higher advisory and capital markets revenues, resulting from continued strength in our mergers and acquisitions business and strong equity issuance.

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•	Net revenues from our other business category in the nine months ended August 31, 2018 were $22.7 million, compared with $95.9 million in the prior year period. The prior year period included net gains of $93.4 million from our investment in KCG, which was sold in July 2017.

•	Net revenues in the nine months ended August 31, 2018 also included asset management revenues of $32.6 million, compared with $25.9 million in the prior year period.

•

Non-compensation expenses for the nine months ended August 31, 2018 increased $122.7 million, or 19.2%, to $762.0 million, compared with $639.2 million for the nine months ended August 31, 2017, primarily due to an increase of $101.1 million across Business development expenses and Underwriting costs, as a result of applying the new revenue standard to our results of operations for the nine months ended August 31, 2018. Refer to “Impact of Adopting Revenue Recognition Guidance” herein and Note 2, Summary of Significant Accounting Policies and Note 3, Accounting Developments in our consolidated financial statements included in this Quarterly Report on Form 10-Q, for further details on the new revenue standard.

•	Compensation and benefits expense for the nine months ended August 31, 2018 was $1,327.8 million, a decrease of $45.9 million, or 3.3%, from the comparable prior year period. Compensation and benefits expense as a percentage of Net revenues was 54.8% for the nine months ended August 31, 2018, compared with 57.8% in the prior year period.

•	At August 31, 2018, we had 3,526 employees globally, an increase of 88 employees from our headcount of 3,438 at August 31, 2017. Our headcount increased, primarily as a result of continued hiring in investment banking, as well as additions in asset management.

•	Equities revenues now represent the activities of our core equities sales and trading, securities finance, prime brokerage and wealth management businesses. Revenues from other activities previously presented within the Equities business have been disaggregated as follows:

◦	Our share of net earnings from our Jefferies Finance joint venture, as well as any revenues from securities and loans received or acquired in connection with our investment banking efforts, are now presented as part of our investment banking business.

◦	Our share of net earnings from our historic Jefferies LoanCore LLC (“Jefferies LoanCore”) joint venture is presented as part of our fixed income business through its sale in October 2017.

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◦

Revenues related to our principal investments in certain private equity funds and hedge funds managed by third parties or related parties, investments in strategic ventures (including KCG through its sale in July 2017), certain other securities owned, and investments held as part of obligations under employee benefit plans, including deferred compensation arrangements, are now presented as part of our other business.

◦	Revenue related to our capital invested in asset management funds that are managed by us is now presented within our asset management business.

•	Revenues from our legacy futures business and revenues associated with structured notes issued by us are now presented as part of our other business. Additionally, revenues derived from securities or loans received or acquired in connection with our investment banking efforts are now presented as part of our investment banking revenues.

•	Revenues from principal investments in certain private equity and asset management funds managed by related parties, which were previously presented within our asset management revenue, are now presented as part of our other business.

(1)

As a result of the new revenue standard, investment banking revenues for the three and nine months ended August 31, 2018 reflect changes to the presentation of investment banking expenses and reimbursements thereof. Prior to the first quarter of 2018, certain investment banking expenses have been presented net against investment banking revenues. This change in presentation resulted in an increase of $36.3 million and $101.1 million in investment banking net revenues during the three and nine months ended August 31, 2018, respectively, as compared to the three and nine months ended August 31, 2017. Refer to “Impact of Adopting Revenue Recognition Guidance” herein and Note 2, Summary of Significant Accounting Policies and Note 3, Accounting Developments in our consolidated financial statements included in this Quarterly Report on Form 10-Q, for further details on the new revenue standard.

•	services provided to our clients from which we earn commissions or spread revenue by executing, settling and clearing transactions for clients;

•	financing, securities lending and other prime brokerage services offered to clients; and

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•	wealth management services, which includes providing clients access to all of our institutional execution capabilities.

•	Total equities net revenues were $170.6 million for the three months ended August 31, 2018, compared with $163.0 million for the three months ended August 31, 2017, as markets continued to show improvement.

•

The results in equities net revenues during the three months ended August 31, 2018 increased across certain of our core global equities sales and trading business, offset by losses in certain block positions. The increase in our core global equities sales and trading business was primarily driven by higher revenues in our electronic trading, prime brokerage, U.S. cash equities and equity derivatives businesses, primarily due to overall improved market trading volumes, higher equity volatility and an increase in our commissions. The securities finance business saw an increase as compared to the prior year quarter, driven by increased trading revenues. This increase was partially offset by a decrease in our convertibles and European cash equities businesses, primarily due to lower trading revenues and customer activity.

•	Equities posted record quarterly revenues across the overall sales and trading business, as well as across several core businesses, including our global electronic trading, prime brokerage and Asia Pacific securities finance businesses.

•	In April 2018, our core U.S. sales and trading business received top ranks from Greenwich Associates for our 2017 performance. This includes ranking #1 in electronic trading service and product quality, #1 in small and mid-cap equities trading, #3 in healthcare research and #4 in sales capability.

•	Total equities net revenues were $501.5 million for the nine months ended August 31, 2018, compared with $493.4 million for the nine months ended August 31, 2017.

•

The results in equities net revenues during the nine months ended August 31, 2018 improved across various core global equities sales and trading business, offset by losses in certain block positions. The increase in our core global equities sales and trading business was primarily driven by higher revenues in our equity derivatives, electronic trading and prime brokerage businesses, primarily due to higher equity volatility, overall improved market trading volumes and an increase in our commissions. This was partially offset by a decrease in our U.S. and European cash equities businesses, primarily due to lower customer activity. European revenues were also lower as a result of the delay in advisory payments and the impact of unbundling due to the Market in Financial Instruments Directive (“MiFID II”) regulation. The securities finance business saw a decline as compared with the prior year period, driven by decreased trading revenues.

•	Equities posted record nine months results in the current year period across the overall sales and trading business, as well as across several core businesses, including our global electronic trading, European and Asia Pacific securities finance, and prime brokerage businesses.

•	executing transactions for clients and making markets in securitized products, investment grade, high-yield, emerging markets, municipal and sovereign securities and bank loans;

•	foreign exchange execution on behalf of clients; and

•	interest rate derivatives and credit derivatives (used primarily for hedging activities).

•

Fixed income net revenues of $139.8 million for the three months ended August 31, 2018 were relatively unchanged compared with net revenues of $140.2 million in the three months ended August 31, 2017, as improved performance in our leveraged credit, U.S. and international rates and U.S. securitized markets businesses were offset by reduced market activity and trading volumes in our global investment grade credit businesses and municipal securities businesses. The following highlights the main components of the results:

◦	The performance of our leveraged credit business continued to strengthen, primarily in our distressed trading business.

◦	Revenues in our U.S. and international rates businesses were higher due to increased interest rate volatility in certain markets.

◦	Results in our U.S. securitized markets group were higher due to increased trading activity and continued strong performance in our origination businesses.

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◦	Revenues in our global investment grade credit businesses declined on lower trading activity and reduced trading volatility.

◦	Revenues in our European credit business were lower due to reduced demand for higher yielding products.

◦	Revenues in our municipals businesses were down as client activity was muted by concerns of higher interest rates. This compares to a favorable market environment in the prior year quarter driven by activity leading up to changes in federal tax law.

◦	The prior year quarter also included revenues from our share of Jefferies LoanCore, which was sold in October 2017.

•

Fixed income net revenues totaled $472.9 million for the nine months ended August 31, 2018, a decrease of $44.3 million compared with net revenues of $517.2 million in the nine months ended August 31, 2017, primarily due to soft market conditions in the month of March 2018. This is compared to performance in the first quarter of 2017, which was bolstered by robust trading activity following the 2016 U.S. Presidential election. The following highlights the main components of the results:

◦	Revenues in our U.S. securitized markets group were significantly improved, primarily as more favorable trading conditions prevailed for our agency products. Additionally, increased securitization activity contributed to the period’s results.

◦	Revenues in our leveraged credit business were strong, as we increased our market share in high yield, leveraged loan and distressed products.

◦	Revenues declined in our global investment grade credit business due to a decline in new issuance trading activity and increased competition, as reduced volatility produced fewer trading opportunities.

◦	Revenue in our municipal trading business were lower on reduced market activity driven by changes in federal tax legislation, which shifted activity onto the prior year and the backdrop of increased interest rates dampened investor interest. The business outperformed in the prior year period, as macro events drove a more favorable trading environment.

◦

Global rates revenues in the nine months ended August 31, 2018 declined as the opportunities from volatility from the U.S. Presidential Election and European election cycles, primarily in the first quarter of 2017, were not replicated in the current year period. This was partially offset by improved performance in the current year period, as a result of increased volatility in global interest rates.

◦	The prior year nine month period also included revenues from our share of Jefferies LoanCore, which was sold in October 2017, as well as revenues from non-core fixed income products that have now been deemphasized.

•	capital markets services, which include underwriting and placement services related to corporate debt, municipal bonds, mortgage-and asset-backed securities and equity and equity-linked securities and loan syndication;

•	advisory services with respect to mergers and acquisitions and restructurings and recapitalizations;

•	our share of net earnings from our corporate lending joint venture Jefferies Finance; and

•	securities and loans received or acquired in connection with our investment banking activities.

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(1)

As a result of the new revenue standard, investment banking revenues for the three and nine months ended August 31, 2018 reflect changes to the presentation of investment banking expenses and reimbursements thereof. Prior to the first quarter of 2018, certain investment banking expenses have been presented net against investment banking revenues. This change in presentation resulted in an increase of $36.3 million and $101.1 million in investment banking net revenues during the three and nine months ended August 31, 2018, respectively, as compared to the three and nine months ended August 31, 2017. Refer to “Impact of Adopting Revenue Recognition Guidance” herein and Note 2, Summary of Significant Accounting Policies and Note 3, Accounting Developments in our consolidated financial statements included in this Quarterly Report on Form 10-Q, for further details on the new revenue standard.

(1)	We acted as sole or joint bookrunner on 56 and 138 offerings during the three and nine months ended August 31, 2018, respectively, and 33 and 118 offerings during the three and nine months ended August 31, 2017, respectively.

(2)	The number of advisory deals completed includes two and eleven restructuring and recapitalization transactions during the three and nine months ended August 31, 2018, respectively, and two and eight restructuring and recapitalization transactions during the three and nine months ended August 31, 2017, respectively.

•

Total investment banking revenues were $451.6 million for the three months ended August 31, 2018, 5.1% lower than the three months ended August 31, 2017, primarily due to a decrease in debt capital markets and advisory revenues due to lower transaction levels in our leverage finance and our mergers and acquisitions businesses, partially offset by record equity capital markets revenues led by continued strong issuances in the life sciences sector.

•	Advisory revenues for the three months ended August 31, 2018 decreased 7.8% compared to the prior year quarter. Capital markets revenues in the three months ended August 31, 2018 increased 2.0% from the prior year quarter.

•	From equity and debt capital raising activities, we generated $139.2 million and $138.5 million in revenues, respectively, for the three months ended August 31, 2018, compared with $86.1 million and $186.3 million in revenues, respectively, in the prior year quarter.

•

Other investment banking revenues were a loss of $13.7 million during the three months ended August 31, 2018 compared with revenues of $2,000 in the prior year quarter. The results reflect net revenues of $19.0 million in the current year quarter, compared with net revenues of $20.4 million in the prior year quarter, primarily due to our share of revenues from the Jefferies Finance joint venture, which were more than partially offset by the amortization of costs and allocated interest expense we incur associated with our Jefferies Finance business.

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•

The results in the quarter also include an increase of $36.3 million in investment banking net revenues as a result of the new revenue standard. Refer to “Impact of Adopting Revenue Recognition Guidance” herein and Note 2, Summary of Significant Accounting Policies and Note 3, Accounting Developments in our consolidated financial statements included in this Quarterly Report on Form 10-Q, for further details on the new revenue standard.

•	Total investment banking revenues were $1,391.7 million for the nine months ended August 31, 2018, 12.0% higher than for the nine months ended August 31, 2017, due to record equity capital markets and advisory revenues, resulting from continued strength in our mergers and acquisitions businesses and strong equity issuance in our life science business.

•	Capital markets revenues in the nine months ended August 31, 2018 increased 16.1% from the prior year period. Advisory revenues for the nine months ended August 31, 2018 increased 10.7% compared to the prior year period.

•	From equity and debt capital raising activities, we generated $326.6 million and $483.3 million in revenues, respectively, for the nine months ended August 31, 2018, compared with $222.5 million and $474.7 million in revenues, respectively, in the prior year period.

•

Other investment banking revenues were a loss of $13.9 million during the nine months ended August 31, 2018 compared with revenues of $7.4 million in the prior year period. The results reflect net revenues of $70.3 million in the current year quarter, compared with net revenues of $66.8 million in the prior year quarter, primarily due to our share of revenues from the Jefferies Finance joint venture, which were more than partially offset by the amortization of costs and allocated interest expense we incur associated with our Jefferies Finance business.

•

Results for the nine months ended August 31, 2018 also include an increase of $101.1 million in investment banking net revenues as a result of the new revenue standard. Refer to “Impact of Adopting Revenue Recognition Guidance” herein and Note 2, Summary of Significant Accounting Policies and Note 3, Accounting Developments in our consolidated financial statements included in this Quarterly Report on Form 10-Q, for further details on the new revenue standard.

•	principal investments in private equity and hedge funds managed by third parties or related parties;

•	strategic investments other than Jefferies Finance (such as KCG through its sale in July 2017);

•	investments held as part of employee benefit plans, including deferred compensation plans;

•	structured note activities on behalf of the firm; and

•	our legacy Futures business.

•	Net revenues from our other business category totaled $9.1 million for the three months ended August 31, 2018, a decrease of $0.3 million compared with net income of $9.4 million for the three months ended August 31, 2017. Results in the prior year quarter included a net gain of $2.2 million from our investment in KCG, which was sold in July 2017.

•	Net revenues from our other business category totaled $22.7 million for the nine months ended August 31, 2018, a decrease of $73.2 million compared with net income of $95.9 million for the nine months ended August 31, 2017, as results in the prior year period included a net gain of $93.4 million from our investment in KCG, which was sold in July 2017, partially offset by foreign currency gains.

•	management and performance fees from funds and accounts managed by us; and

•	investment income from capital invested in and managed by our asset management business.

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(1)	Assets under management include assets actively managed by us, including hedge funds and certain managed accounts. Assets under management do not include the assets of funds that are consolidated due to the level or nature of our investment in such funds.

•

Non-interest expenses increased due to an increase in non-compensation expenses for the three and nine months ended August 31, 2018. The increase in non-compensation expenses was primarily due to an increase in Business development expenses and Underwriting costs, as a result of applying the new revenue standard to our results of operations for the three and nine months ended August 31, 2018. Refer to “Impact of Adopting Revenue Recognition Guidance” herein and Note 2, Summary of Significant Accounting Policies, and Note 3, Accounting Developments, in our consolidated financial statements included in this Quarterly Report on Form 10-Q, for further details on the new revenue standard.

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•	Compensation and benefits expense consists of salaries, benefits, cash bonuses, commissions, annual cash compensation awards and the amortization of share-based and cash compensation awards to employees.

•

Cash and historical share-based awards and a portion of cash awards granted to employees as part of year end compensation generally contain provisions such that employees who terminate their employment or are terminated without cause may continue to vest in their awards, so long as those awards are not forfeited as a result of other forfeiture provisions (primarily non-compete clauses) of those awards. Accordingly, the compensation expense for a portion of awards granted at year end as part of annual compensation is recorded in the year of the award.

•

Included in Compensation and benefits expense are share-based amortization expense for senior executive awards granted in February 2016, January 2017 and January 2018, cash-based amortization expense for senior executive awards granted in January 2018, non-annual share-based and cash-based awards to other employees and certain year end awards that contain future service requirements for vesting, all of which are being amortized over their respective future service periods. In addition, the senior executive awards contain market and performance conditions.

•	Compensation and benefits expense was $428.0 million and $1,327.8 million and for the three and nine months ended August 31, 2018, respectively, compared with $462.9 million and $1,373.6 million for the three and nine months ended August 31, 2017, respectively.

•	Compensation and benefits expense as a percentage of Net revenues was 55.0% and 54.8% for the three and nine months ended August 31, 2018, respectively, compared with 57.8% for both the three and nine months ended August 31, 2017.

•	Compensation expense related to the amortization of share- and cash-based awards amounted to $67.1 million and $204.7 million for the three and nine months ended August 31, 2018, respectively, compared with $71.7 million and $206.5 million for three and nine months ended August 31, 2017, respectively.

•	Employee headcount was 3,526 at August 31, 2018 and 3,438 at August 31, 2017. Since August 31, 2017, our headcount increased, primarily as a result of continued hiring in investment banking, as well as additions in asset management.

•	Refer to Note 14, Compensation Plans in our consolidated financial statements included in this Quarterly Report on Form 10-Q, for further details on compensation and benefits.

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The increase in non-compensation expenses was essentially due to an increase in Business development expenses and Underwriting costs, as a result of applying the new revenue standard to our results of operations for the three and nine months ended August 31, 2018. Refer to “Impact of Adopting Revenue Recognition Guidance” herein and Note 2, Summary of Significant Accounting Policies and Note 3, Accounting Developments in our consolidated financial statements included in this Quarterly Report on Form 10-Q, for further details on the new revenue standard.

•

Non-compensation expenses were $262.5 million for the three months ended August 31, 2018, an increase of $47.0 million, or 21.8%, compared with $215.5 million in the three months ended August 31, 2017. The increase in non-compensation expenses was primarily due to a $36.3 million increase in Business development expenses and Underwriting costs, as a result of applying the new revenue standard to our results of operations for the three months ended August 31, 2018. The increase was also due to an increase in Professional service expenses due to an increase in legal and consulting fees.

•	Non-compensation expenses as a percentage of Net revenues was 33.8% and 26.9% for three months ended August 31, 2018 and 2017, respectively.

•

Non-compensation expenses were $762.0 million for the nine months ended August 31, 2018, an increase of $122.7 million, or 19.2%, compared with $639.2 million in the nine months ended August 31, 2017. The increase in non-compensation expenses was primarily due to a $101.1 million increase in Business development expenses and Underwriting costs, as a result of applying the new revenue standard to our results of operations for the nine months ended August 31, 2018. The increase was also due to an increase in Technology and communication expenses due to higher costs associated with the development of the various trading systems and projects associated with corporate support infrastructure and higher Professional service expenses due to an increase in legal and consulting fees.

•	Non-compensation expenses as a percentage of Net revenues was 31.5% and 26.9% for the nine months ended August 31, 2018 and 2017, respectively.

•

For the three and nine months ended August 31, 2018, the provision for income taxes was $26.9 million and $234.3 million, respectively, equating to an effective tax rate of 30.9% and 70.6%, respectively. For the three and nine months ended August 31, 2017, the provision for income taxes was $38.4 million and $95.0 million, respectively, equating to an effective tax rate of 31.4% and 26.2%, respectively.

•

The slight decrease in the effective tax rate for the three months ended August 31, 2018, as compared with the prior year quarter is primarily due to a lower tax rate resulting from the decrease in the Federal statutory tax rate from 35% to 21%, partially offset by the impact of certain discrete items related to tax planning for our non-U.S. subsidiaries in connection with the Tax Act. The increase in the effective tax rate during the nine months ended August 31, 2018, as compared with the prior year period is primarily due to the $160.2 million provisional tax charge related to the enactment of the Tax Act recorded in the nine months ended August 31, 2018, as well as net tax benefits arising from the repatriation of foreign earnings and their associated foreign tax credits from foreign subsidiaries, which occurred during last year’s first quarter. Excluding this charge, plus an unrelated net tax benefit of $11.6 million during the current nine month period, which primarily resulted from the expiration of certain federal and state statutes of limitation, our adjusted annual effective tax rate would have been approximately 26%.

•	Refer to Note 15, Income Taxes, in our consolidated financial statements included in this Quarterly Report on Form 10-Q, for further details on income taxes.

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(1)	Leverage ratio equals total assets divided by total equity.

(2)	Tangible gross leverage ratio (a non-GAAP financial measure) equals total assets less goodwill and identifiable intangible assets divided by tangible Jefferies Group LLC member’s equity. The tangible gross leverage ratio is used by rating agencies in assessing our leverage ratio.

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•	Repayment of all unsecured debt maturing within one year and no incremental unsecured debt issuance;

•	Maturity rolloff of outstanding letters of credit with no further issuance and replacement with cash collateral;

•	Higher margin requirements than currently exist on assets on securities financing activity, including repurchase agreements;

•	Liquidity outflows related to possible credit downgrade;

•	Lower availability of secured funding;

•	Client cash withdrawals;

•	The anticipated funding of outstanding investment and loan commitments; and

•	Certain accrued expenses and other liabilities and fixed costs.

•	Illiquid assets such as equipment, goodwill, net intangible assets, exchange memberships, deferred tax assets and certain investments;

•	A portion of securities inventory that is not expected to be financed on a secured basis in a credit stressed environment (i.e., margin requirements); and

•	Drawdowns of unfunded commitments.

•	Global recession, default by a medium-sized sovereign, low consumer and corporate confidence, and general financial instability.

•	Severely challenged market environment with material declines in equity markets and widening of credit spreads.

•	Damaging follow-on impacts to financial institutions leading to the failure of a large bank.

•	A firm-specific crisis potentially triggered by material losses, reputational damage, litigation, executive departure, and/or a ratings downgrade.

•	Liquidity needs over a 30-day scenario.

•	A two-notch downgrade of our long-term senior unsecured credit ratings.

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•	No support from government funding facilities.

•	A combination of contractual outflows, such as upcoming maturities of unsecured debt, and contingent outflows (e.g., actions though not contractually required, we may deem necessary in a crisis). We assume that most contingent outflows will occur within the initial days and weeks of a crisis.

•	No diversification benefit across liquidity risks. We assume that liquidity risks are additive.

•	All upcoming maturities of unsecured long-term debt, commercial paper, promissory notes and other unsecured funding products assuming we will be unable to issue new unsecured debt or rollover any maturing debt.

•	Repurchases of our outstanding long-term debt in the ordinary course of business as a market maker.

•	A portion of upcoming contractual maturities of secured funding trades due to either the inability to refinance or the ability to refinance only at wider haircuts (i.e., on terms which require us to post additional collateral). Our assumptions reflect, among other factors, the quality of the underlying collateral and counterparty concentration.

•	Collateral postings to counterparties due to adverse changes in the value of our over-the-counter (“OTC”) derivatives and other outflows due to trade terminations, collateral substitutions, collateral disputes, collateral calls or termination payments required by a two-notch downgrade in our credit ratings.

•	Variation margin postings required due to adverse changes in the value of our outstanding exchange-traded derivatives and any increase in initial margin and guarantee fund requirements by derivative clearing houses.

•	Liquidity outflows associated with our prime services business, including withdrawals of customer credit balances, and a reduction in customer short positions.

•	Liquidity outflows to clearing banks to ensure timely settlements of cash and securities transactions.

•	Draws on our unfunded commitments considering, among other things, the type of commitment and counterparty.

•	Other upcoming large cash outflows, such as tax payments.

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(1)	Average balances are calculated based on weekly balances.

(2)

Consists of high quality sovereign government securities and reverse repurchase agreements collateralized by U.S. government securities and other high quality sovereign government securities; deposits with a central bank within the European Economic Area, Canada, Australia, Japan, Switzerland or the USA; and securities issued by a designated multilateral development bank and reverse repurchase agreements with underlying collateral comprised of these securities.

(3)	Other includes unencumbered inventory representing an estimate of the amount of additional secured financing that could be reasonably expected to be obtained from our financial instruments owned that are currently not pledged after considering reasonable financing haircuts.

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(1)	Consists solely of agency mortgage-backed securities issued by Freddie Mac, Fannie Mae and Ginnie Mae. These securities include pass-through securities, securities backed by adjustable rate mortgages (“ARMs”), collateralized mortgage obligations, commercial mortgage-backed securities and interest- and principal-only securities.

(2)	Unencumbered liquid balances represent assets that can be sold or used as collateral for a loan, but have not been.

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•

Intraday Credit Facility. The Bank of New York Mellon has agreed to make revolving intraday credit advances (“Intraday Credit Facility”) for an aggregate committed amount of $150.0 million. The Intraday Credit Facility contains financial covenants, which includes a minimum regulatory net capital requirement for our U.S. broker-dealer, Jefferies LLC. Interest is based on the higher of the Federal funds effective rate plus 0.5% or the prime rate. During the nine months ended August 31, 2018, we were in compliance with all debt covenants under the Intraday Credit Facility.

(1)	These notes bear interest at a spread over the one month London Interbank Offered Rate (“LIBOR”).

(2)	This note is redeemable at the option of the noteholders.

(3)	These notes are redeemable at our option.

(1)

Long-term debt at August 31, 2018 excludes $5.8 million of our structured notes, as these notes mature on February 26, 2019, $707.1 million of our 8.500% senior notes, as these notes mature on July 15, 2019, and $158.5 million of our outstanding borrowings under our senior secured revolving credit facility. Long-term debt at November 30, 2017 excludes $7.1 million of our structured notes, as these notes matured on May 4, 2018, $324.8 million of our 3.875% convertible debentures due 2029 (principal amount of $345.0 million) (the “debentures”), as these debentures were redeemable beginning on November 1, 2017, and $682.3 million of our 5.125% senior notes, as these notes matured on April 13, 2018. The $324.8 million of our convertible debentures were redeemed on January 5, 2018. Refer to Note 12, Long-Term Debt, in our consolidated financial statements included in this Quarterly Report on Form 10-Q for further details on these notes.

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(1)	On March 20, 2018, Moody’s Investors Services (“Moody’s”) reaffirmed our long-term debt rating of Baa3 and our rating outlook of stable.

(2)	On April 10, 2018, Standard and Poor’s (“S&P”) reaffirmed our long-term debt rating of BBB- and our rating outlook of stable.

(3)	On February 13, 2018, Fitch Ratings upgraded our long-term debt rating from BBB- to BBB and reaffirmed our rating outlook of stable.

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(1)	On January 10, 2018, Moody’s reaffirmed our long-term debt rating of Baa2 and our rating outlook of stable.

(2)	On April 10, 2018, S&P reaffirmed our long-term debt rating of BBB and our rating outlook of stable.

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(1)	For additional information on long-term debt, see Note 12, Long-Term Debt, in our consolidated financial statements included in this Quarterly Report on Form 10-Q.

(2)	Amounts based on applicable interest rates at August 31, 2018.

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(1)	For the VaR numbers reported above, a one-day time horizon, with a one year look-back period, and a 95% confidence level were used.

(2)	The diversification effect is not applicable for the maximum and minimum VaR values as the firmwide VaR and the VaR values for the four risk categories might have occurred on different days during the period.

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•	Defining credit limit guidelines and credit limit approval processes;

•	Providing a consistent and integrated credit risk framework across the enterprise;

•	Approving counterparties and counterparty limits with parameters set by the Risk Management Committee;

•	Negotiating, approving and monitoring credit terms in legal and master documentation;

•	Delivering credit limits to all relevant sales and trading desks;

•	Maintaining credit reviews for all active and new counterparties;

•	Operating a control function for exposure analytics and exception management and reporting;

•	Determining the analytical standards and risk parameters for on-going management and monitoring of global credit risk books;

•	Actively managing daily exposure, exceptions, and breaches;

•	Monitoring daily margin call activity and counterparty performance (in concert with the Margin Department); and

•	Setting the minimum global requirements for systems, reports, and technology.

•	Loans and lending, arising in connection with our capital markets activities and forward settling traded loans;

•	Securities and margin finance, which represents securities financing transactions (reverse repurchase agreements, repurchase agreements and securities lending agreements);

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•	OTC derivatives, which are reported net by counterparty when a legal right of setoff exists under an enforceable master netting agreement, and includes forward settling trades; and

•	Cash and cash equivalents, which includes both interest-bearing and non-interest bearing deposits at banks.

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*	Filed herewith.

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