Leucadia National: Jefferies Financial Group Inc Unaudited Pro Forma Condensed Consolidated Financial Information

The following excerpt is from the company's SEC filing.

On November 29, 2019, Jefferies Financial Group Inc. ("Jefferies", "we" or the "Company") completed the previously announced sale of its remaining 31% equity interest in National Beef Packing Company, LLC ("National Beef") to Marfrig Global Foods S.A. ("Marfrig") and certain other shareholders. We received a total of $970 million in cash, including $790.6 million from Marfrig and other shareholders and $179.4 million from final distributions from National Beef. Effective November 29, 2019, we no longer hold an equity interest in National Beef.

The Unaudited Pro Forma Condensed Consolidated Statement of Finan cial Condition is presented as if the transaction had occurred as of the most recently filed Consolidated Statement of Financial Condition (as of August 31, 2019). The Unaudited Pro Forma Condensed Consolidated Statements of Operations for the nine months ended August 31, 2019 and the eleven months ended November 30, 2018 are presented as if the transaction had occurred immediately prior to the first day of the earliest period presented (prior to January 1, 2018).

On June 5, 2018, we completed the sale of 48% of National Beef to Marfrig, reducing our ownership in National Beef from 79% to 31%. As of the closing of the sale on June 5, 2018, we deconsolidated our investment in National Beef and accounted for our remaining 31% interest in National Beef under the equity method of accounting. We classified the results of National Beef prior to June 5, 2018 as discontinued operations in the Consolidated Statements of Operations. As such, pro forma adjustments to remove the remaining 31% interest in National Beef in these financial statements are from June 5, 2018 forward.

This unaudited pro forma condensed consolidated financial information has been prepared in accordance with Article 11 of Regulation S-X and should be read in conjunction with the Company’s Transition Report on Form 10–K for the eleven months ended November 30, 2018 ("2018 10-K") and the Company’s Quarterly Report on Form 10-Q for the quarterly period ended August 31, 2019 ("2019 Q3 10-Q"), as filed with the Securities and Exchange Commission.

The following unaudited pro forma condensed consolidated financial information is derived from the Company’s historical consolidated financial statements. Historical financial information for the eleven months ended November 30, 2018 has been derived from audited historical consolidated financial statements included in the Company's 2018 10-K. Historical financial information for the Company as of and for the nine months ended August 31, 2019 has been derived from unaudited historical consolidated financial statements included in the Company’s 2019 Q3 10-Q.

The unaudited pro forma condensed consolidated financial statements are based upon available information and certain assumptions considered reasonable by the Company. This unaudited pro forma condensed consolidated financial information is provided for illustrative purposes only and is not necessarily indicative of the results of operations that would have occurred had the transaction been effected on the assumed dates, nor is it necessarily indicative of our future operating results.

JEFFERIES FINANCIAL GROUP INC. AND SUBSIDIARIES

August 31, 2019

(Dollars in thousands, except par value)

Pro Forma Adjustments

Jefferies Historical

Sale of 31% Interest in National Beef

ASSETS

Cash and cash equivalents

6,011,350

969,850

6,981,200

Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations

658,335

Trading assets, at fair value, including securities pledged of $12,087,982

17,195,916

Loans to and investments in associated companies

2,346,297

(718,771

1,627,526

Securities borrowed

7,895,149

Securities purchased under agreements to resell

4,499,995

Receivables

5,826,350

Intangible assets, net and goodwill

1,921,793

Deferred tax asset, net

509,772

(63,448

446,324

Other assets

2,398,251

Total assets

49,263,208

187,631

49,450,839

LIABILITIES

Short-term borrowings

518,914

Trading liabilities, at fair value

10,296,315

Securities loaned

2,182,865

Securities sold under agreements to repurchase

8,236,981

Other secured financings

2,508,589

Payables, expense accruals and other liabilities

7,350,914

Long-term debt

7,968,785

Total liabilities

39,063,363

Commitments and contingencies

MEZZANINE EQUITY

Redeemable noncontrolling interests

27,064

Mandatorily redeemable convertible preferred shares

125,000

Common shares, par value $1 per share, authorized 600,000,000 shares; 299,867,942 shares issued and outstanding, after deducting 17,178,934 shares held in treasury

299,868

Additional paid-in capital

3,731,712

Accumulated other comprehensive income (loss)

(266,452

(266,429

Retained earnings

6,255,314

187,608

6,442,922

Total Jefferies Financial Group Inc. shareholders’ equity

10,020,442

10,208,073

Noncontrolling interests

27,339

Total equity

10,047,781

10,235,412

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For the nine months ended August 31, 2019

(In thousands, except per share amounts)

Revenues:

Commissions and other fees

493,560

Principal transactions

465,451

Investment banking

1,126,479

Interest income

1,243,278

Manufacturing revenues

248,227

351,544

Total revenues

3,928,539

Interest expense of Jefferies Group

1,141,661

Net revenues

2,786,878

Expenses:

Compensation and benefits

1,367,034

Cost of sales

233,109

Floor brokerage and clearing fees

163,113

69,819

Depreciation and amortization

110,600

Selling, general and other expenses

718,910

Total expenses

2,662,585

Income before income taxes and income (loss) related to associated companies

124,293

Income (loss) related to associated companies

121,766

(137,918

(16,152

246,059

108,141

Income tax provision (benefit)

(522,626

(34,851

(557,477

Net income

768,685

(103,067

665,618

Net income attributable to the noncontrolling interests

Net income attributable to the redeemable noncontrolling interests

Preferred stock dividends

(3,827

Net income attributable to Jefferies Financial Group Inc. common shareholders

764,052

660,985

Basic earnings per common share attributable to Jefferies Financial Group Inc. common shareholders:

Number of shares used in calculation

310,838

Diluted earnings per common share attributable to Jefferies Financial Group Inc. common shareholders:

317,181

For the eleven months ended November 30, 2018

Elimination of Discontinued Operations

634,271

232,224

1,904,870

1,294,325

357,427

586,611

5,009,728

1,245,694

3,764,034

1,862,782

307,071

184,210

89,249

120,317

961,328

3,524,957

Income from continuing operations before income taxes and income (loss) related to associated companies

239,077

57,023

(110,049

(53,026

296,100

186,051

19,008

(27,787

(8,779

277,092

(82,262

194,830

Income from discontinued operations, including gain on disposal, net of taxes

773,984

(773,984

1,051,076

Net loss attributable to the noncontrolling interests

12,975

(37,263

37,141

(4,470

1,022,318

(736,843

203,213

347,261

351,275

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

Note 1. Basis of Presentation

The Company's Unaudited Pro Forma Condensed Consolidated Statement of Financial Condition is presented as if the sale of the 31% interest in National Beef had occurred as of the most recently filed Consolidated Statement of Financial Condition (as of August 31, 2019). The Company's Unaudited Pro Forma Condensed Consolidated Statements of Operations for the nine months ended August 31, 2019 and the eleven months ended November 30, 2018 are presented as if the sale of the 31% interest in National Beef had occurred immediately prior to the first day of the earliest period presented (prior to January 1, 2018).

The pro forma adjustments reflect the sale of the 31% interest in National Beef. Retained earnings in the Unaudited Pro Forma Condensed Consolidated Statement of Financial Condition includes the after-tax gain on sale that would have been recorded if the transaction had occurred on August 31, 2019. The estimated gain (including related estimated transaction costs) is not included in the Unaudited Pro Forma Condensed Consolidated Statements of Operations as it represents a non-recurring item.

Note 2. Adjustments to Unaudited Pro Forma Condensed Consolidated Financial Statements

Represents the increase in cash and cash equivalents resulting from the pro forma consideration received ($970.0 million), net of estimated transaction costs ($0.2 million).

Represents the elimination of National Beef's historical financial information.

(c) Adjustment to record tax effect of pro forma gain at a combined federal and state statutory tax rate of 25.3%.

To record the pro forma after-tax gain of $187.6 million that would have been recorded if the transaction had occurred on August 31, 2019. As such, this pro forma gain is based on the net book value of National Beef as of August 31, 2019 and does not reflect activity subsequent to that date. The Company estimates that it will recognize a pre-tax gain from the sale of about $210 million ($157 million after-tax) in the fourth quarter of 2019.

Adjustment to record the tax effect of the pro forma adjustments at a combined federal and state statutory tax rate of 25.3% for the nine months ended August 31, 2019 and 25.2% for the eleven months ended November 30, 2018.

The above information was disclosed in a filing to the SEC. To see the filing, click here.

To receive a free e-mail notification whenever Leucadia National Corporation makes a similar move, sign up!

Other recent filings from the company include the following:

Major owner of Leucadia National Corporation just declared 0 ownership of the company. - Nov. 24, 2020
Quarterly report filed by institutional managers, Holdings - Nov. 13, 2020

Auto Refresh

Feedback