The purpose of this section is to discuss and analyze our consolidated financial condition, liquidity and capital resources and results of operations for the years endedNovember 30, 2021 and 2020. For a discussion of our results of operations and liquidity and capital resources for the year endedNovember 30, 2019 , see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year endedNovember 30, 2020 , which was filed with theSEC onJanuary 29, 2021 . This analysis should be read in conjunction with the consolidated financial statements and related footnote disclosures contained in this report and the following "Cautionary Statement for Forward-Looking Information." Cautionary Statement for Forward-Looking Information Statements included in this report may contain forward-looking statements. Such statements may relate, but are not limited, to projections of revenues, income or loss, development expenditures, plans for growth and future operations, competition and regulation, as well as assumptions relating to the foregoing. Such forward-looking statements are made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted or quantified. When used in this report, the words "will," "would," "could," "estimates," "expects," "anticipates," "believes," "plans," "intends" and variations of such words and similar expressions are intended to identify forward-looking statements that involve risks and uncertainties. Future events and actual results could differ materially from those set forth in, contemplated by or underlying the forward-looking statements. Factors that could cause actual results to differ materially from any results projected, forecasted, estimated or budgeted or may materially and adversely affect our actual results include, but are not limited to, those set forth in Item 1A. Risk Factors and elsewhere in this report and in our other public filings with theSEC . Undue reliance should not be placed on these forward-looking statements, which are applicable only as of the date hereof. Except as may be required by law, we undertake no obligation to revise or update these forward-looking statements to reflect events or circumstances that arise after the date of this report or to reflect the occurrence of unanticipated events. Results of Operations We are engaged in investment banking and capital markets and asset management, and own a legacy portfolio of businesses and investments that we have historically denominated as our "Merchant Banking" business. The following tables present a summary of our financial results. 26
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A summary of results of operations for the year endedNovember 30, 2021 is as follows (in thousands): Investment Banking and Asset Parent Company Consolidation Capital Markets Management Merchant Banking Corporate Interest Adjustments Total Net revenues$ 6,796,631 $ 336,690 $ 1,040,733 $ 3,042 $ - $ 8,233$ 8,185,329 Expenses: Cost of sales - - 470,870 - - - 470,870 Compensation and benefits 3,323,601 82,726 109,186 35,611 - - 3,551,124 Non-compensation expenses: Floor brokerage and clearing fees 266,035 35,825 - - - - 301,860 Selling, general and other expenses 1,024,617 48,913 160,337 19,253 26,004 (677) 1,278,447 Interest expense (1) - - 23,951 - 53,133 - 77,084 Depreciation and amortization 85,178 1,901 67,577 2,764 - - 157,420 Total non-compensation expenses 1,375,830 86,639 251,865 22,017 79,137 (677) 1,814,811 Total expenses 4,699,431 169,365 831,921 57,628 79,137 (677) 5,836,805 Income (loss) before income taxes and loss related to associated companies 2,097,200 167,325 208,812 (54,586) (79,137) 8,910 2,348,524 Loss related to associated companies - - (94,419) - - - (94,419)
Income (loss) before income taxes
$ 114,393$ (54,586) $ (79,137) $ 8,910 2,254,105 Income tax provision 576,729 Net income$ 1,677,376
(1) Interest expense within Merchant Banking of
A summary of results of operations for the year endedNovember 30, 2020 is as follows (in thousands): Investment Banking and Asset Merchant Parent Company Consolidation Capital Markets Management Banking Corporate Interest Adjustments Total Net revenues$ 4,989,138 $ 235,255 $ 764,460 $ 13,258 $ - $ 8,763$ 6,010,874 Expenses: Cost of sales - - 338,588 - - - 338,588 Compensation and benefits 2,735,080 89,527 77,072 39,184 - - 2,940,863 Non-compensation expenses: Floor brokerage and clearing fees 241,083 25,509 - - - - 266,592 Selling, general and other expenses 810,753 46,045 199,128 26,197 - (3,167) 1,078,956 Interest expense (1) - - 31,425 - 53,445 - 84,870 Depreciation and amortization 82,334 5,247 67,362 3,496 - - 158,439 Total non-compensation expenses 1,134,170 76,801 297,915 29,693 53,445 (3,167) 1,588,857 Total expenses 3,869,250 166,328 713,575 68,877 53,445 (3,167) 4,868,308 Income (loss) before income taxes and loss related to associated companies 1,119,888 68,927 50,885 (55,619) (53,445) 11,930 1,142,566 Loss related to associated companies - - (75,483) - - - (75,483) Income (loss) before income taxes$ 1,119,888 $ 68,927 $ (24,598) $ (55,619) $ (53,445) $ 11,930 1,067,083 Income tax provision 298,673 Net income$ 768,410
(1) Interest expense within Merchant Banking of
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A summary of results of operations for the year endedNovember 30, 2019 is as follows (in thousands): Investment Banking and Asset Merchant Parent Company Consolidation Capital Markets Management Banking Corporate Interest Adjustments Total Net revenues$ 3,035,988 $ 84,894 $ 735,213 $ 32,833 $ - $ 4,048$ 3,892,976 Expenses: Cost of sales - - 319,641 - - - 319,641 Compensation and benefits 1,641,814 63,305 61,767 58,005 - - 1,824,891 Non-compensation expenses: Floor brokerage and clearing fees 202,425 20,715 - - - - 223,140 Selling, general and other expenses 767,150 40,432 162,832 39,820 - (591) 1,009,643 Interest expense (1) - - 34,129 - 53,048 - 87,177 Depreciation and amortization 77,549 2,042 69,805 3,475 - - 152,871 Total non-compensation expenses 1,047,124 63,189 266,766 43,295 53,048 (591) 1,472,831 Total expenses 2,688,938 126,494 648,174 101,300 53,048 (591) 3,617,363 Income (loss) before income taxes and income related to associated companies 347,050 (41,600) 87,039 (68,467) (53,048) 4,639 275,613 Income related to associated companies - 474 202,453 - - 68 202,995 Income (loss) before income taxes$ 347,050 $ (41,126) $ 289,492 $ (68,467) $ (53,048) $ 4,707 478,608 Income tax benefit (483,955) Net income$ 962,563
(1) Interest expense within Merchant Banking of
The composition of our financial results has varied over time and we expect will continue to evolve. Our strategy focuses on continuing to build out our investment banking effort, enhancing our capital markets businesses and further developing ourLeucadia Asset Management alternative asset management platform, while returning excess cash to shareholders. The following factors and events should be considered in evaluating our financial results as they impact comparisons:
Our 2021 financial results were impacted by:
•Record results from Investment Banking and Capital Markets: •Record Investment Banking net revenues of$4.42 billion , including record advisory net revenues of$1.87 billion , record equity underwriting net revenues of$1.56 billion and record debt underwriting net revenues of$935.1 million ; •Combined Capital Markets net revenues of$2.26 billion , including record equities net revenues of$1.30 billion and fixed income net revenues of$959.1 million ; •Record Asset Management revenues (before allocated net interest) of$381.6 million ; and •Pre-tax income of$114.4 million related to our Merchant Banking businesses reflecting: •Record revenue and pre-tax income from Idaho Timber; and •Mark-to-market increases in the value of several of our investments in public and private companies.
Our 2020 financial results were impacted by:
•Then record results from Investment Banking and Capital Markets: •Then record Investment Banking net revenues of$2.40 billion , including advisory net revenues of$1.05 billion , equity underwriting net revenues of$902.0 million and debt underwriting net revenues of$546.0 million ; •Record combined Capital Markets net revenues of$2.47 billion , including then record equities net revenues of$1.13 billion and record fixed income net revenues of$1.34 billion ; •Then record Asset Management revenues (before allocated net interest) of$283.7 million ; and 28 -------------------------------------------------------------------------------- •Pre-tax loss of$24.6 million related to our Merchant Banking businesses reflecting: •Then record performance from Idaho Timber and a positive contribution from Vitesse Energy; •A gain of$61.5 million from effective short-term hedges against mark-to-market and fair value decreases in some of our other investments within Merchant Banking; •A$44.2 million non-cash charge to write down the value of our investment in WeWork in the first half of 2020; •Non-cash charges of$73.9 million related to write-downs of real estate investments atHomeFed ; and •Non-cash charge of$13.2 million to write down Vitesse Energy's oil and gas assets in theDenver-Julesburg Basin ("DJ Basin ") and$34.6 million to write down the value of our investment in JETX Energy to reflect the decline in oil prices. Our 2019 financial results were impacted by: •Investment Banking net revenues of$1.52 billion , including advisory net revenues of$767.4 million , equity underwriting net revenues of$362.0 million and debt underwriting net revenues of$407.3 million ; •Combined Capital Markets net revenues of$1.46 billion , including equities net revenues of$774.0 million and fixed income net revenues of$681.4 million ; •The special dividend of our interest in Spectrum Brands of$451.1 million , removing the investment from our Merchant Banking portfolio going forward; •A$205.0 million pre-tax gain on the sale of our remaining 31% interest in National Beef; •A$72.1 million pre-tax gain on the revaluation of our 70% interest inHomeFed to fair value in connection with the acquisition of the remaining common stock ofHomeFed ; •A reduction during 2019 to the estimated fair value of WeWork of$182.3 million ; and •A nonrecurring non-cash tax benefit of$544.6 million related to the closing of our available for sale portfolio, which triggered the realization of lodged tax benefits from earlier years; Investment Banking and Capital Markets, and Asset Management
Our Investment Banking and Capital Markets reportable segment and Asset
Management reportable segment primarily comprise our investment in
Investment Banking and Capital Markets
A summary of results of operations for our Investment Banking and Capital Markets reportable segment is as follows (in thousands):
2021 2020 2019 Net revenues$ 6,796,631 $ 4,989,138 $ 3,035,988 Expenses: Compensation and benefits 3,323,601 2,735,080
1,641,814
Non-compensation expenses: Floor brokerage and clearing fees 266,035 241,083 202,425 Selling, general and other expenses 1,024,617 810,753 767,150 Depreciation and amortization 85,178 82,334
77,549
Total non-compensation expenses 1,375,830 1,134,170 1,047,124 Total expenses 4,699,431 3,869,250 2,688,938 Income before income taxes$ 2,097,200 $ 1,119,888 $ 347,050 Our Investment Banking and Capital Markets reportable segment comprises many business units, with many interactions and much integration among them. Business activities include the sales, trading, origination and advisory effort for various equity, fixed income, commodities, foreign exchange and advisory services. Our results in any given period can be materially affected by conditions in global financial markets, economic conditions generally, and our own activities and positions. 29 --------------------------------------------------------------------------------
Revenues by Source
Net revenues presented for our Investment Banking and Capital Markets reportable segment include allocations of interest income and interest expense as we assess the profitability of these businesses inclusive of the net interest revenue or expense associated with the respective activities, including the net interest cost of allocated long-term debt, which is a function of the mix of each business's associated assets and liabilities and the related funding costs.
The following provides a summary of net revenues by source (in thousands):
2021 2020 2019 Advisory$ 1,873,560 $ 1,053,500 $ 767,421 Equity underwriting 1,557,364 902,016 361,972 Debt underwriting 935,131 545,978 407,336 Total underwriting 2,492,495 1,447,994 769,308 Other investment banking 57,196 (103,330) (14,617) Total investment banking 4,423,251
2,398,164 1,522,112 Equities 1,300,877 1,128,910 773,979 Fixed income 959,122 1,340,792 681,362 Total capital markets 2,259,999 2,469,702 1,455,341 Other 113,381 121,272 58,535 Total Investment Banking and Capital Markets (1)$ 6,796,631
(1)Allocated net interest is not separately disaggregated in presenting our Investment Banking and Capital Markets reportable segment within Net Revenues by Source. This presentation is aligned to our Investment Banking and Capital Markets internal performance measurement.
Investment Banking Revenues
Investment banking is comprised of revenues from: • advisory services with respect to mergers/acquisitions, restructurings/recapitalizations and private capital advisory transactions; • underwriting services, which include underwriting and placement services related to corporate debt, municipal bonds, mortgage-backed and asset-backed securities, equity and equity-linked securities and loan syndication; • our 50% share of net earnings fromJefferies Finance ; and • securities and loans received or acquired in connection with our investment banking activities. The following table sets forth our investment banking activities (dollars in billions): Deals Completed Aggregate Value 2021 2020 2019 2021 2020 2019 Advisory transactions 315 228 195$ 380.4 $ 217.5 $ 241.6 Public and private equity and convertible offerings 426 286 166$ 145.6 $ 103.5 $ 45.3 Public and private debt financings 812 639 779$ 390.9 $ 255.8 $ 190.7
Investment banking revenues were a record
Our 2021 advisory revenues were a record
Our underwriting revenues for 2021 were a record$2.49 billion , an increase of$1.04 billion , or 72.1%, from 2020, with record net revenues in equity underwriting of$1.56 billion and record net revenues of$935.1 million in debt underwriting, as clients 30
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took advantage of the strong equity environment and the low interest rate environment. Our equity underwriting results also include increased revenues from SPAC offerings, as well as strong revenues from at-the-money offerings.
Other investment banking revenues were$57.2 million for 2021, compared with a loss of$103.3 million for 2020. Other investment banking revenues include our share of the net earnings (loss) of theJefferies Finance joint venture. In 2021,Jefferies Finance achieved record underwriting volumes on the back of the strength of the leveraged loan market and an active private-equity backed mergers and acquisitions environment. TheJefferies Finance results in 2021 were partially offset by a$56.0 million one-time charge incurred byJefferies Finance related to refinancing outstanding debt. Results ofJefferies Finance in 2020 were impacted by unrealized losses related to the write-down of commitments and loans held-for-sale, primarily due to the impact of the COVID-19 pandemic on the markets and the economy. The prior year results were also impacted by unrealized write-downs of private equity investments received or acquired in connection with our investment banking activities. AtNovember 30, 2021 ,Jefferies Group's investment banking backlog is robust and consistent with levels from a year ago. As an indicator of net revenues in a given future period, backlog is subject to limitations. The time frame for the realization of revenues from these expected transactions varies and is influenced by factors we do not control. Transactions not included in the estimate may occur, and expected transactions may also be modified or cancelled.
Equities Net Revenues
Equities are comprised of net revenues from: •services provided to our clients from which we earn commissions or spread revenue by executing, settling and clearing transactions for clients; •advisory services offered to clients; •financing, securities lending and other prime brokerage services offered to clients, including capital introductions and outsourced trading; and •wealth management services. Total equities net revenues were a record$1.30 billion for 2021, an increase of 15.2%, over the previous year record of$1.13 billion for 2020. Overall, our record results were driven by strong client activity and trading performance across all regions. Our global cash equities business had record results driven by significant client activity and strong trading revenue, including trading gains from SPAC-related activity, and our electronic trading platform continues to expand and achieve record results. Our derivatives business achieved record results, driven by strong client activity and trading revenues. Our prime services franchise had record results driven by higher balances and increased client activity, as well as higher financing revenues in our securities finance business. Our results were slightly offset by lower revenues in our global convertibles businesses primarily driven by lower trading volumes and volatility. Our execution franchise continues to be top-ranked byGreenwich Associates in electronic trading and our global convertibles business was ranked #1 in global overall quality. Each of our research franchises in theU.S. ,Europe , and acrossAsia Pacific are now ranked within the top 8 by Institutional Investor. Our global distribution platform has received several top 5 rankings by Institutional Investor in sales and sector strategy.
Fixed Income Net Revenues
Fixed income is comprised of net revenues from: •executing transactions for clients and making markets in securitized products, investment grade, high yield, distressed, emerging markets, municipal and sovereign securities and bank loans, as well as foreign exchange execution on behalf of clients; •interest rate derivatives and credit derivatives; and •financing services offered to clients. Fixed income net revenues totaled$959.1 million for 2021, a decrease of 28.5% compared with record net revenues of$1.34 billion for 2020, driven by reduced global trading volumes across several products. While 2021 revenues decreased from 2020, our fixed income franchise produced solid overall trading results across most of our businesses, reflecting continued strength in certain of our credit-focused businesses and strong client demand in structuring and financing credit products and for trading securitized products. The results in 2020 significantly benefited from strong trading volumes due to extremely active markets and high levels of volatility. 31 -------------------------------------------------------------------------------- Net revenues for 2021 were higher in our securitized markets groups and distressed trading business, as compared with the prior year. In addition, 2021 results benefited from trading gains in our municipal securities business compared to 2020 when markets experienced a significant sell-off due to the impact of COVID-19. Our revenues also benefited from ongoing investments across our European credit franchise. Our 2021 results also include lower revenues in ourU.S. and International rates businesses due to a decline in trading opportunities, as a result of lower volatility, as the prior year benefited from significant client activity and wider bid-offer spreads. Lower results across our investment grade corporates and emerging markets businesses, as well as our high yield and loan trading businesses, were driven by reduced client activity and lower levels of volatility in 2021.
Other
Other is comprised of revenues from: • Berkadia and other investments (other thanJefferies Finance , which is included in Other investment banking); • principal investments in private equity and hedge funds managed by third-parties and are not part of our asset management platform and other strategic investment positions; and • investments held as part of employee benefit plans, including deferred compensation plans (for which we incur an equal and offsetting amount of compensation expenses).
Our net revenues from our other business category totaled
Results for 2021 include net revenues of$130.6 million from our share of the income from Berkadia compared with$68.9 million in 2020. The higher net revenues for 2021 are due to significant increases in debt and investment sales volumes. The net revenues for 2020 were impacted by the impairment of mortgage servicing rights as a result of lower interest rates, higher loan loss provisions and a decline in loan originations due to the impact of COVID-19. Other revenues also include allocated interest expense related to our investment in Berkadia.
Results for 2020 also include gains of
Compensation and Benefits Compensation and benefits expense consists of salaries, benefits, commissions, annual cash compensation and share-based awards and the amortization of share-based and cash compensation awards to employees. Cash and share-based awards and a portion of cash awards granted to employees as part of year end compensation generally contain provisions such that employees who terminate their employment or are terminated without cause may continue to vest in their awards, so long as those awards are not forfeited as a result of other forfeiture provisions (primarily non-compete clauses) of those awards. Accordingly, the compensation expense for a portion of awards granted at year end as part of annual compensation is recorded during the year of the award. Compensation and benefits expense includes amortization expense associated with these awards to the extent vesting is contingent on future service. In addition, the awards to our Chief Executive Officer and President contain market and performance conditions and the awards are amortized over their service periods.
Compensation and benefits expense increased to
2021 2020 Compensation expense without future service requirements$ 2,935,311 $ 2,242,701 Amortization of share-based and cash-based awards 201,487 312,761 Amendment of certain service provisions 186,803 179,618 Total Compensation and benefits expense $
3,323,601
Compensation and benefits expense as a percentage of Net revenues
48.9 % 54.8 % Compensation and benefits expense as a percentage of Net revenues, excluding the impact of the amendment of certain service provisions 46.2 % 51.2 % 32
-------------------------------------------------------------------------------- A significant portion of compensation expense is highly variable with net revenues. Compensation and benefits expense increased at a lower rate than the increase in net revenues. During the fourth quarter of 2021 and the fourth quarter of 2020,Jefferies Group amended the service requirement provisions of certain cash-based awards that had been granted during previous years. Compensation expense of$186.8 million and$179.6 million , respectively, was recorded to reflect the acceleration of amortization that resulted from these amendments. Amortization of share-based and cash-based awards decreased in 2021 as a result of the accelerated amortization recognized in 2020. Non-Compensation Expenses Non-compensation expenses include floor brokerage and clearing fees, underwriting costs, technology and communications expense, occupancy and equipment rental expense, business development, professional services, bad debt provision, impairment charges, depreciation and amortization expense and other costs. All of these expenses, other than floor brokerage and clearing fees, and depreciation and amortization expense, are included in Selling, general and other expenses in the Consolidated Statements of Operations. Non-compensation expenses were$1.38 billion for 2021, an increase of$241.7 million , or 21.3%, compared with$1.13 billion for 2020. Non-compensation expenses as a percentage of Investment Banking and Capital Markets net revenues were 20.2% and 22.7% for 2021 and 2020, respectively, demonstrating the operating leverage inherent in our business. The increase in non-compensation expenses was largely due to higher Floor brokerage and clearing fees on increased trading volumes in equities and higher underwriting costs and business development expenses as investment banking activity increased and higher costs associated with our increased recruiting efforts. The increase also included higher technology and communication expenses, primarily related to the development of various trading and management systems and increased market data costs. Professional services expenses were also higher primarily due to legal and agency fees to support growing activity across our businesses. Results in 2021 also included higher non-compensation expenses, primarily due to an increase in bad debt expense mostly related to a specific default in our prime brokerage business and$38.2 million in costs related to the early redemption ofJefferies Group's senior notes, partially offset by a reduction in the loss provision for investment banking receivables.
Asset Management
Our asset management business is a diversified alternative asset management platform offering institutional clients an innovative range of investment strategies and asset classes directly and through our affiliated asset managers. We provide access to capital and provide certain of our affiliated asset managers with operational infrastructure and global marketing and distribution. A summary of results of operations for our Asset Management reportable segment is as follows (in thousands): 2021 2020 2019 Net revenues$ 336,690 $ 235,255 $ 84,894 Expenses: Compensation and benefits 82,726 89,527 63,305 Non-compensation expenses: Floor brokerage and clearing fees 35,825 25,509 20,715 Selling, general and other expenses 48,913 46,045 40,432 Depreciation and amortization 1,901 5,247 2,042 Total non-compensation expenses 86,639 76,801 63,189 Total expenses 169,365 166,328 126,494
Income (loss) before income taxes and income related to associated companies
167,325 68,927 (41,600) Income related to associated companies - - 474 Income (loss) before income taxes$ 167,325 $ 68,927 $ (41,126) 33
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Revenues
Asset management net revenues include the following: • Total asset management fees: management and performance fees from funds and accounts managed by us; • Revenue from arrangements with strategic affiliates: revenues from affiliated asset managers in which we hold interests that entitle us to portions of their revenues and/or profits, as well as earnings on our ownership interests in our affiliated asset managers; and • Investment return: this includes investment income from capital invested in and managed by us and our affiliated asset managers. The key components of asset management revenues are the level of assets under management and the performance return, for the most part on an absolute basis and, in certain cases, relative to a benchmark or hurdle. These components can be affected by financial markets, profits and losses in the applicable investment portfolios and client capital activity. Further, asset management fees vary with the nature of investment management services. The terms under which clients may terminate our investment management authority, and the requisite notice period for such termination, varies depending on the nature of the investment vehicle and the liquidity of the portfolio assets. In some instances, performance fees and similar revenues are generally recognized once a year when they become fixed and determinable and are not probable of being significantly reversed, typically in December. As a result, a significant portion of our performance fees and similar revenues generated from investment returns in a calendar year are recognized in our following fiscal year.
The following summarizes the results of our Asset Management businesses revenues by asset class (in thousands):
2021 2020 2019 Asset management fees: Equities$ 6,927 $ 6,158 $ 4,390 Multi-asset 7,909 8,544 18,798 Total asset management fees 14,836 14,702 23,188
Revenue from arrangements with strategic affiliates (1) 105,897
11,837 1,807 Total asset management fees and revenues 120,733 26,539 24,995 Investment return (2) 260,864 257,200 100,447 Allocated net interest (2) (44,907) (48,484) (40,548) Total Asset Management revenues$ 336,690
(1)The amounts include our share of fees received by affiliated asset management companies with which we have revenue and profit share arrangements, as well as earnings on our ownership interest in affiliated asset managers. (2)Allocated net interest represents an allocation to Asset Management of long-term debt interest expense, net of interest income on our Cash and cash equivalents and other sources of liquidity. Allocated net interest has been disaggregated to increase transparency and to make clearer actual Investment return. We believe that aggregating Investment return and Allocated net interest would obscure the Investment return by including an amount that is unique to our credit spreads, debt maturity profile, capital structure, liquidity risks and allocation methods.
Asset management net revenues for 2021 were a record
34
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Expenses
The increase in expenses in the 2021 as compared with 2020 primarily reflects an increase in Floor brokerage and clearing fees in 2021 partially offset by the wind down of one of our businesses in the second quarter of 2020.
Assets under Management
The tables below include only third-party assets under management by us, excluding those of our affiliated asset managers.
Assets under management by predominant asset class were as follows (in millions): November 30, 2021 2020 Assets under management: Equities$ 349 $ 481 Multi-asset 482 293 Total$ 831 $ 774 Changes in assets under management during the year were as follows (in millions): 2021 2020 Balance, beginning of period$ 774 $ 1,216 Net cash flow in (out) 21 (319) Net market appreciation (depreciation) 36 (123) Balance, end of period$ 831 $ 774 The change in assets under management in our wholly-owned managers during 2021 is primarily due to new subscriptions and investments from third-parties and net market appreciation, partially offset by redemptions from and liquidations of certain funds. The change in assets under management in our wholly-owned managers during 2020 is primarily due to the liquidation and redemptions from certain funds related to the wind down of our quantPORT asset management platform and market depreciation, partially offset by increased investments by third-parties in certain funds and managed accounts. Our definition of assets under management is not based on any definition contained in any of our investment management agreements and differs from the manner in which "Regulatory Assets Under Management" is reported to theSEC on Form ADV. 35
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Asset Management Investments
Our asset management business makes seed and additional strategic investments directly in alternative asset management separately managed accounts and co-mingled funds where we act as the asset manager or in affiliated asset managers where we have strategic relationships and participate in the revenues or profits of the affiliated manager. Our asset management investments generated an investment return of$260.9 million and$257.2 million for 2021 and 2020, respectively. The following table reflects amounts invested by asset manager (in thousands): November 30, 2021 2020Jefferies Financial Group Inc. , as manager: Fund investments (1)$ 221,359 $ 258,893 Separately managed accounts (2) 251,665 352,084 Total 473,024 610,977 Third-party, as manager: Fund investments 831,508 650,585 Separately managed accounts (2) 368,377 323,943 Investments in asset managers 222,661 162,268 Total 1,422,546
1,136,796
Total asset management investments$ 1,895,570 $
1,747,773
(1) Due to the level or nature of an investment in a fund, we may consolidate that fund, and accordingly, the assets and liabilities of the fund are included in the representative line items in the consolidated financial statements. AtNovember 30, 2021 and 2020,$76.5 million and$0.1 million , respectively, represents net investments in funds that have been consolidated in our financial statements. (2) Where we have investments in a separately managed account, the assets and liabilities of such account are presented in the Consolidated Statements of Financial Condition within each respective line item. Collectively, we and our affiliated asset managers have aggregate net asset values or net asset value equivalent assets under management of approximately$23.6 billion and$16.0 billion atNovember 30, 2021 and 2020, respectively. Net asset values or net asset value equivalent assets under management are comprised of the fair value of the net assets of a fund or the net capital invested in a separately managed account. (In the third quarter of 2021, we made changes to our disclosure of aggregate assets under management to exclude the aggregate par value of collateralized loan obligations that are managed byJefferies Finance , in order to better align the manner in which we evaluate our asset management businesses, and have presented the amount atNovember 30, 2020 on a comparable basis.) These include the following: •$20.1 billion and$12.6 billion as ofNovember 30, 2021 and 2020, respectively - This includes the assets under management raised by affiliated asset managers with whom we have an ongoing profit or revenue sharing arrangement. In some instances, due to the timing of payments and crystallization of profits or revenue, the majority of revenue related to these relationships will be realized at their calendar year end (during our first fiscal quarter). •$2.6 billion and$2.6 billion as ofNovember 30, 2021 and 2020, respectively - Net asset values of investments made by us in funds or separately managed accounts. At times, we will incubate strategies using our own capital during the institutional build-out phase before opening investments to outside capital. This net asset value includes our seed capital of$1.6 billion and$1.5 billion as ofNovember 30, 2021 and 2020, respectively, in addition to amounts financed of$1.0 billion and$1.1 billion as ofNovember 30, 2021 and 2020, respectively, invested in funds and separately managed accounts that are managed by us and our affiliated asset managers. •$0.8 billion and$0.8 billion as ofNovember 30, 2021 and 2020, respectively - This includes third-party investments actively managed by wholly-owned divisions. 36 --------------------------------------------------------------------------------
Merchant Banking
A summary of results for Merchant Banking is as follows (in thousands):
2021 2020 2019 Net revenues$ 1,040,733 $ 764,460 $ 735,213 Expenses: Cost of sales 470,870 338,588 319,641 Compensation and benefits 109,186 77,072 61,767 Non-compensation expenses: Selling, general and other expenses 160,337 199,128 162,832 Interest 23,951 31,425 34,129 Depreciation and amortization 67,577 67,362 69,805 Total non-compensation expenses 251,865 297,915 266,766 Total expenses 831,921 713,575 648,174
Income before income taxes and income (loss) related to associated companies
208,812 50,885 87,039 Income (loss) related to associated companies (94,419) (75,483) 202,453 Income (loss) before income taxes$ 114,393
The increase in Net revenues in 2021 as compared to 2020 is primarily due to increased revenues at Idaho Timber and in our real estate businesses, and an increase in realized and unrealized gains on financial instruments. The increase in Compensation and benefits expense in 2021 as compared to 2020 is primarily due to increases at Vitesse, Idaho Timber andHomeFed . The increase in Cost of sales in 2021 as compared to 2020 primarily correlates to the increased sales at Idaho Timber and in our real estate businesses. The decrease in Selling, general and other expenses in 2021 as compared to 2020 primarily reflects non-cash charges in 2020 to JETX Energy's and Vitesse Energy's oil and gas assets and write-downs to some of our real estate investments atHomeFed . 37
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A summary of results for Merchant Banking by significant business and investment is as follows (in thousands): Income (Loss) from Associated Total Pre-Tax Revenues Expenses Companies Income (Loss) 2021 Oil and gas$ 151,807 $ 146,811 $ -$ 4,996 Idaho Timber 538,692 433,683 - 105,009 Real estate 130,051 108,022 (6,177) 15,852 Other 220,183 143,405 (88,242) (11,464) Total$ 1,040,733 $ 831,921 $ (94,419) $ 114,393 2020 Oil and gas$ 141,973 $ 178,679 $ -$ (36,706) Idaho Timber 421,497 341,796 - 79,701 Real estate 47,160 66,043 (46,050) (64,933) Other 153,830 127,057 (29,433) (2,660) Total$ 764,460 $ 713,575 $ (75,483) $ (24,598) 2019 Oil and gas$ 150,224 $ 170,680 $ -$ (20,456) Idaho Timber 324,786 306,832 - 17,954 Real estate 37,405 39,940 7,549 5,014 National Beef - - 232,042 232,042 Spectrum Brands 89,497 - - 89,497 Other 133,301 130,722 (37,138) (34,559) Total$ 735,213 $ 648,174 $ 202,453 $ 289,492 Oil and Gas Oil and gas results for 2021 were higher than 2020 primarily due to slightly increased production revenues and impairment charges recorded during the first half of 2020, partially offset by increased unrealized losses related to oil hedge derivatives. Oil and gas net revenues totaled$151.8 million and$142.0 million during 2021 and 2020, respectively, and primarily consist of three components: •Production revenues (include the impact of realized gains and losses related to oil hedges) were$172.1 million and$156.8 million in 2021 and 2020, respectively. The increase in production revenues related to higher oil and gas prices and slightly higher volumes due to fewer inactive wells, partially offset by greater realized losses on oil hedges due to the higher oil prices. Production revenues included realized gains (losses) on oil hedges of$(12.4) million and$52.7 million in 2021 and 2020, respectively. •Net unrealized losses related to oil hedge derivatives were$20.3 million and$7.0 million in 2021 and 2020, respectively. As discussed further in Note 4 to the consolidated financial statements, Vitesse Energy uses swaps and call and put options to reduce exposure to future oil price fluctuations. For 2021, approximately 48% of oil production was hedged at a weighted average price of approximately$54 /barrel. For 2022, approximately 45% of expected oil production is hedged at a weighted average price of approximately$59 /barrel. •Mark-to-market gains (losses) related to a financial instrument owned held at fair value were not material in 2021 and$(7.8) million during 2020. Total expenses for Oil and gas were$146.8 million during 2021 as compared to$178.7 million in 2020. The decrease in expenses was primarily due to non-cash charges in 2020 of$34.6 million to write down JETX Energy's oil and gas assets to reflect the impact of oil price declines during the period and$13.2 million to write down Vitesse Energy's oil and gas assets in theDJ Basin . 38 -------------------------------------------------------------------------------- IdahoTimber High demand for wood for home improvement and construction, primarily in the first half of the year, led to favorable pricing and record results forIdaho Timber in 2021. Net revenues increased during 2021 as compared to 2020, primarily due to an increase in average selling price of 43%. The increase in total expenses for Idaho Timber during 2021 as compared to 2020 primarily reflects increased cost of sales and increased compensation expense. Real Estate The increase in real estate revenues and expenses in 2021 as compared to 2020 reflects increased revenues from sales of properties and the related cost of sales. During 2021, we sold a self-storage facility and recognized revenues of$26.4 million and cost of sales of$12.4 million related to this sale. Income (loss) related to real estate associated companies for 2020, includes a non-cash charge of$55.6 million to fully write off the value ofHomeFed's RedSky JZ Fulton Investors ("RedSky JZ Fulton Mall ") joint venture investment due to the softening of theBrooklyn real estate market and a non-cash charge of$6.9 million to fully write offHomeFed's interest in theBrooklyn Renaissance Plaza hotel related to the significant impact of COVID-19.
Other
Other revenues reflect realized and unrealized gains (losses) on financial instruments owned, which are held at fair value, of$73.3 million and$54.7 million during 2021 and 2020, respectively. The gains (losses) on financial instruments owned include mark-to-market changes in the value of our investments in public companies of$69.3 million and$31.8 million for 2021 and 2020, respectively. The gains (losses) on financial instruments owned for 2020, also include a gain of$61.5 million from effective short-term hedges against mark-to-market and fair value decreases in our portfolio investments. During 2013, we invested$9.0 million in WeWork. We sold our remaining interest in WeWork during 2021 and recognized principal transaction revenues of$25.3 million during the year. We received total cumulative proceeds related to our investment in WeWork of$67.1 million .
Corporate
A summary of results of operations for Corporate is as follows (in thousands): 2021 2020 2019 Net revenues$ 3,042 $ 13,258 $ 32,833 Expenses: Compensation and benefits 35,611 39,184 58,005 Non-compensation expenses: Selling, general and other expenses 19,253 26,197 39,820 Depreciation and amortization 2,764 3,496
3,475
Total non-compensation expenses 22,017 29,693 43,295 Total expenses 57,628 68,877 101,300 Loss before income taxes$ (54,586) $ (55,619) $ (68,467) Net revenues primarily include realized and unrealized securities gains and interest income for investments held at the holding company. Total expenses include share-based compensation expense of$16.3 million and$13.7 million for 2021 and 2020, respectively. Share-based compensation expense for 2021 includes$7.0 million related to the full current fair value of certain share-based grants made during 2021, which were fully vested upon grant. 39 -------------------------------------------------------------------------------- Parent Company Interest Parent company interest totaled$53.1 million and$53.4 million for 2021 and 2020, respectively. In connection with the acquisition ofHomeFed in 2019, we began capitalizing interest. Total amounts of interest expense may fluctuate due to capitalization of interest. During the fourth quarter of 2021, we repurchased$308.3 million principal amount of our$750.0 million outstanding 5.50% Senior Notes dueOctober 18, 2023 and incurred$26.0 million of costs relating to the early redemption of these notes. As a result of the debt repurchase, interest expense in future periods will be reduced. Income Taxes Our provision for income taxes was$576.7 million for 2021, representing an effective tax rate of 25.6%. For 2020, our provision for income taxes was$298.7 million , representing an effective tax rate of 28.0%. The decrease in the effective tax rate is primarily related to decreases in our unrecognized tax benefits and related interest, and favorable settlements with taxing authorities. For further information on income taxes, see Note 19 to our consolidated financial statements. 40
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Selected Statement of Financial Condition Data
The tables below reconcile the balance sheet for each of our reportable segments to our consolidated balance sheet (in thousands):
November 30, 2021 Investment Banking and Asset Consolidation Capital Markets Management Merchant Banking Corporate Adjustments Total Assets Cash and cash equivalents$ 8,810,427 $ 3,651 $ 149,576$ 1,791,479 $ -$ 10,755,133 Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations 1,015,107 - - - -
1,015,107
Financial instruments owned, at fair value 17,059,950 2,382,323 386,397 - -
19,828,670
Loans to and investments in associated companies 1,150,782 191,342 403,666 - - 1,745,790 Securities borrowed 6,409,420 - - - - 6,409,420 Securities purchased under agreements to resell 7,618,652 23,832 - - -
7,642,484
Securities received as collateral, at fair value 7,289 - - - - 7,289 Receivables 6,602,549 384,377 844,694 7,620 - 7,839,240 Property, equipment and leasehold improvements, net 860,448 6,319 35,146 9,317 - 911,230 Intangible assets, net and goodwill 1,707,807 143,304 46,389 - - 1,897,500 Other assets 731,887 15,521 1,386,462 619,412 (401,035) 2,352,247 Total assets 51,974,318 3,150,669 3,252,330 2,427,828 (401,035) 60,404,110 Liabilities Long-term debt (1) (2) 6,955,658 1,084,168 398,911 687,008 - 9,125,745 Other liabilities 38,582,504 1,089,864 962,354 314,638 (401,035) 40,548,325 Total liabilities 45,538,162 2,174,032 1,361,265 1,001,646 (401,035) 49,674,070 Redeemable noncontrolling interests - - 25,400 - - 25,400 Mandatorily redeemable convertible preferred shares - - - 125,000 - 125,000 Noncontrolling interests 737 10,387 14,761 - - 25,885Total Jefferies Financial Group Inc. shareholders' equity$ 6,435,419 $ 966,250 $ 1,850,904 $ 1,301,182 $ -$ 10,553,755 (1)Jefferies Group long-term debt of$8.04 billion atNovember 30, 2021 is allocated to Investment Banking and Capital Markets, and Asset Management reportable segments based on an internal management view only and may not be reflective of what long-term debt would be on a stand-alone segment basis. (2) Long-term debt within Merchant Banking of$398.9 million atNovember 30, 2021 , primarily includes$248.7 million for real estate businesses,$67.6 million for Vitesse Energy and$82.6 million forFoursight Capital . AtNovember 30, 2021 , Vitesse Energy had$68.0 million drawn out of the maximum$140.0 million borrowing base on its credit facility andFoursight Capital had$82.8 million drawn out of the maximum$175.0 million credit commitment on its credit facilities. See Note 12 in our consolidated financial statements for additional information. 41 -------------------------------------------------------------------------------- November 30, 2020 Investment Banking and Asset Consolidation Capital Markets Management Merchant Banking Corporate Adjustments Total Assets Cash and cash equivalents$ 7,102,004 $ 10,109 $ 212,668$ 1,730,367 $ -$ 9,055,148 Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations 604,321 - - - - 604,321 Financial instruments owned, at fair value 15,249,686 2,534,860 340,031 - -
18,124,577
Loans to and investments in associated companies 995,730 148,005 542,828 - - 1,686,563 Securities borrowed 6,934,762 - - - - 6,934,762 Securities purchased under agreements to resell 5,096,769 - - - -
5,096,769
Securities received as collateral, at fair value 7,517 - - - - 7,517 Receivables 5,470,104 378,037 762,382 52 (1,808) 6,608,767 Property, equipment and leasehold improvements, net 847,108 8,121 30,670 11,305 -
897,204
Intangible assets, net and goodwill 1,721,277 143,310 48,880 - - 1,913,467 Other assets 805,848 8,617 1,235,605 436,975 (297,788) 2,189,257 Total assets 44,835,126 3,231,059 3,173,064 2,178,699 (299,596) 53,118,352 Liabilities Long-term debt (1) (2) 6,218,797 676,883 463,648 992,711 - 8,352,039 Other liabilities 32,752,740 1,758,373 727,088 239,507 (299,596) 35,178,112 Total liabilities 38,971,537 2,435,256 1,190,736 1,232,218 (299,596) 43,530,151 Redeemable noncontrolling interests - - 24,676 - -
24,676
Mandatorily redeemable convertible preferred shares - - - 125,000 - 125,000 Noncontrolling interests 712 16,677 17,243 - - 34,632Total Jefferies Financial Group Inc. shareholders' equity$ 5,862,877 $ 779,126 $ 1,940,409 $ 821,481 $ -$ 9,403,893 (1)Jefferies Group long-term debt of$6.90 billion atNovember 30, 2020 is allocated to Investment Banking and Capital Markets, and Asset Management reportable segments based on an internal management view only and may not be reflective of what long-term debt would be on a stand-alone segment basis. (2) Long-term debt within Merchant Banking of$463.6 million atNovember 30, 2020 , primarily includes$236.8 million for real estate businesses,$97.9 million for Vitesse Energy and$129.0 million forFoursight Capital . AtNovember 30, 2020 , Vitesse Energy had$98.5 million drawn out of the maximum$120.0 million borrowing base on its credit facility andFoursight Capital had$129.3 million drawn out of the maximum$175.0 million credit commitment on its credit facilities. See Note 12 in our consolidated financial statements for additional information. 42
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The table below presents our capital by significant business and investment (in thousands): November 30, 2021 2020 Jefferies Group$ 7,127,095 $ 6,407,954 Assets held on behalf of Asset Management (excluding Jefferies Group) 274,574 234,049 Merchant Banking: Oil and gas 510,798 526,642 Real estate 476,939 531,553 Linkem 133,778 198,991 FXCM 99,441 133,375 Idaho Timber 87,527 85,595 Investments in public companies 246,510 192,363 Other 295,911 271,890 Total Merchant Banking 1,850,904 1,940,409
Corporate liquidity and other assets, net of Corporate liabilities including long-term debt
1,301,182 821,481 Total Capital$ 10,553,755 $ 9,403,893 Liquidity and Capital Resources Parent Company Liquidity Our strategy focuses on continuing to build out our investment banking effort, enhancing our capital markets businesses and further developing ourLeucadia Asset Management alternative asset management platform, while returning excess capital to shareholders. We own a legacy portfolio of businesses and investments that we historically denominated as our "Merchant Banking" business and are reflected in our consolidated results as consolidated subsidiaries, equity investments, securities or in other ways. We are well along in the process of liquidating this portfolio, with the intention of selling to third parties, distributing to shareholders or transferring the balance of this portfolio to our Asset Management reportable segment over the next few years. Over our last four fiscal years, we generated significant excess liquidity from operations and sales of Merchant Banking businesses. In keeping with our strategy,$3.9 billion was returned to shareholders, including 127 million shares repurchased at an average price of$21.55 per share (equal to 38% of book value at the beginning of this four-year period). In addition, in light of our performance and prospects, as well as our limited need for incremental equity capital, inJanuary 2022 , our Board of Directors increased our quarterly dividend to$0.30 per share, a 140% increase from two years ago, and increased our share buyback authorization back to a total of$250 million . We expect to continue to return capital to shareholders via dividends and buybacks, as well as, if financial conditions and circumstances permit, in-kind distributions or special cash dividends as we complete the wind down of the legacy Merchant Banking portfolio. Parent company liquidity, which includes cash and investments that are easily convertible into cash within a relatively short period of time total$2.00 billion atNovember 30, 2021 , and are primarily comprised of cash, prime and government money market funds and other publicly traded securities. These are classified in the Consolidated Statement of Financial Condition as cash and cash equivalents and financial instruments owned, at fair value. AtNovember 30, 2021 ,$1.56 billion of this amount is invested inU.S. government money funds that invest at least 99.5% of its total assets in cash, securities issued by theU.S. government andU.S. government-sponsored entities and repurchase agreements that are fully collateralized by cash or government securities. During the year endedNovember 30, 2021 , our parent company received cash distributions of$1.05 billion from our subsidiary businesses, including$769.9 million fromJefferies Group . We also received$118.2 million from divestitures and repayments of advances. 43 -------------------------------------------------------------------------------- Our annual recurring cash requirements, including the payment of interest on our parent company debt, dividends and corporate cash overhead expenses, are estimated to aggregate to approximately$387.7 million in the upcoming year. Dividends paid during the year endedNovember 30, 2021 of$222.8 million include quarterly dividends of$0.20 per share for each of the first two quarters of 2021 and$0.25 per share for each of the last two quarters of 2021. InJanuary 2022 , our Board of Directors increased our quarterly dividend by 20% to$0.30 per share. The payment of dividends is subject to the discretion of our Board of Directors and depends upon general business conditions, legal and contractual restrictions on the payment of dividends and other factors that our Board of Directors may deem to be relevant. For many years, we benefited from federal net operating loss carryovers ("NOLs") which substantially offset our federal cash tax requirements. As a result of full utilization of our federal NOLs and other tax attributes, we incurred and paid in cash federal taxes in 2021. Our primary long-term parent company cash requirement is our$691.7 million principal outstanding as ofNovember 30, 2021 under our long-term debt, of which$441.7 million is due in 2023 and$250.0 million in 2043. During the fourth quarter of 2021, we completed a tender offer for any and all of our 5.5% Senior Notes dueOctober 18, 2023 .$308.3 million in aggregate principal amount of the notes were repurchased, for an aggregate cash payment of$332.7 million . Shares Outstanding During the year endedNovember 30, 2021 , we purchased a total of 8,540,000 of our common shares for$266.8 million , or an average price per share of$31.25 . AtNovember 30, 2021 , we have approximately$162.5 million available for future repurchases. InJanuary 2022 , the Board of Directors increased the share repurchase authorization back up to$250.0 million . AtNovember 30, 2021 , we had outstanding 243,541,431 common shares, 21,234,000 share-based awards that do not require the holder to pay any exercise price and 5,109,000 stock options that require the holder to pay an average exercise price of$23.70 per share. The 21,234,000 share-based awards include the target number of shares under the senior executive award plan. Additionally, we have mandatorily redeemable convertible preferred shares that are currently convertible into 4,440,863 common shares, at an effective conversion price of$28.15 per share. AtNovember 30, 2021 , the maximum potential increase to common shares outstanding resulting from these outstanding awards and the preferred shares is 30,784,000 (potentially an aggregate of 274,325,431 outstanding common shares if all awards and preferred shares become outstanding common shares). Long-term Debt Ratings From time to time in the past, we have accessed public and private credit markets and raised capital in underwritten bond financings. The funds raised have been used by us for general corporate purposes, including for our existing businesses and new investment opportunities. In addition, the ratings of Jefferies are a factor considered by rating agencies that rate the debt of our subsidiary companies, includingJefferies Group , whose access to external financing is important to its day to day operations. Ratings issued by bond rating agencies, subject to change at any time. Our long-term debt ratings as ofNovember 30, 2021 are as follows: Rating Outlook Moody's Investors Service (1) Baa2 Stable Standard and Poor's BBB Stable Fitch Ratings (2) BBB Stable (1) OnNovember 10, 2021 , Moody's Investors Service revised our rating of Baa3 to Baa2 and revised our rating outlook from positive to stable. (2) Subsequent to year end, onJanuary 24, 2022 , Fitch Ratings affirmed our rating of BBB and revised our rating outlook from stable to positive. 44 -------------------------------------------------------------------------------- Consolidated Statements of Cash Flows As discussed above, we have historically relied on our available liquidity to meet short-term and long-term needs, and to make acquisitions of new businesses and investments. Except as otherwise disclosed herein, our operating businesses do not generally require significant funds to support their operating activities. The mix of our operating businesses and investments can change frequently as a result of acquisitions or divestitures, the timing of which is impossible to predict but which often have a significant impact on the Consolidated Statements of Cash Flows in any one period. Further, the timing and amounts of distributions from investments in associated companies may be outside our control. As a result, reported cash flows from operating, investing and financing activities do not generally follow any particular pattern or trend, and reported results in the most recent period should not be expected to recur in any subsequent period.
The following table provides a summary of our cash flows (in thousands):
2021 2020 2019 Cash, cash equivalents and restricted cash at beginning of period$ 9,664,972 $ 8,480,435 $ 6,012,662 Net cash provided by (used for) operating activities 1,573,018 2,075,948 (827,837) Net cash provided by (used for) investing activities (400,593) (186,192) 1,707,095 Net cash provided by (used for) financing activities 994,294 (723,525) 1,589,578 Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash (3,387) 18,306 (1,063) Cash, cash equivalents and restricted cash at end of period$ 11,828,304
During the year endedNovember 30, 2021 , net cash provided by operating activities primarily reflects funds provided byJefferies Group of$1.93 billion , funds provided by our Merchant Banking operations of$226.2 million and Corporate tax payments of$625.1 million . During the year endedNovember 30, 2020 , net cash provided by operating activities primarily relates to funds provided byJefferies Group of$1.19 billion . Net losses related to property and equipment, and other assets includes non-cash charges of$61.0 million to write down the value of certain of our assets during the year endedNovember 30, 2020 . During the year endedNovember 30, 2021 , net cash used for investing activities principally reflects$2.34 billion of loans to and investments in associated companies and$611.5 million for advances on notes, loans and other receivables, partially offset by$2.32 billion of capital distributions and loan repayments from associated companies and$394.4 million of collections on notes, loans and other receivables. During the year endedNovember 30, 2020 , net cash used for investing activities principally reflects$1.69 billion of loans to and investments in associated companies and$813.9 million for advances on notes, loans and other receivables, partially offset by$1.56 billion of capital distributions and loan repayments from associated companies and$686.1 million of collections on notes, loans and other receivables. During the year endedNovember 30, 2021 , net cash provided by financing activities primarily relates to funds provided byJefferies Group of$1.71 billion , including funds provided by the issuance of debt of$3.17 billion and proceeds from other secured financings of$1.02 billion , partially offset by funds used for the repayment of debt of$2.48 billion . Additionally, funds provided by financing activities includes the issuance of debt of$321.6 million and proceeds from other secured financings of$173.6 million in our Merchant Banking reportable segment. This was partially offset by funds used to repurchase common shares for treasury of$269.4 million , funds used for the repayment of debt of$389.7 million in our Merchant Banking reportable segment and$332.7 million in our Corporate reportable segment, and funds used to pay dividends of$222.8 million . During the year endedNovember 30, 2020 , net cash used for financing activities primarily relates to funds used to repurchase common shares for treasury of$816.9 million and funds used to pay dividends of$160.9 million . This was partially offset by funds provided byJefferies Group of$215.5 million , including funds provided by the issuance of debt of$2.79 billion and proceeds from other secured financings of$305.9 million , partially offset by funds used for the repayment of debt of$2.86 billion . 45
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The following below provides information about our contractual obligations at
Expected Maturity Date (Fiscal Years) 2024 2026 and and Contractual Obligations Total 2022 2023 2025 2027 After 2027 (In millions) Long-term debt$ 9,095.6 $ 57.1 $ 1,320.3 $ 1,140.9 $ 1,178.2 $ 5,399.1 Estimated interest payments on debt 3,504.6 373.0 311.2 544.0 494.7 1,781.7 Operating leases 635.5 75.4 71.4 134.0 125.9 228.8 Other 532.9 264.9 141.0 79.7 38.0 9.3 Total contractual obligations$ 13,768.6 $ 770.4
Amounts related to ourU.S. pension obligations ($27.5 million ) are not included in the above table as the timing of payments is uncertain; however, we do not expect to make any contributions to these plans in 2022. For further information, see Note 17 in our consolidated financial statements. In addition, the above amounts do not include liabilities for unrecognized tax benefits as the timing of payments, if any, is uncertain. Such amounts aggregated$436.9 million atNovember 30, 2021 ; for more information, see Note 19 in our consolidated financial statements. OurU.S. pension obligations relate to frozen defined benefit pension plans, principally the defined benefit plan ofWilTel Communications Group, LLC ("WilTel"), our former telecommunications subsidiary. When we soldWilTel in 2005, its defined benefit pension plan was not transferred in connection with the sale. AtNovember 30, 2021 , we had recorded a liability of$18.9 million in our Consolidated Statement of Financial Condition forWilTel's unfunded defined benefit pension plan obligation. This amount represents the difference between the present value of amounts owed to former employees ofWilTel (referred to as the projected benefit obligation) and the market value of plan assets set aside in segregated trust accounts. Since the benefits in this plan have been frozen, future changes to the unfunded benefit obligation are expected to principally result from benefit payments, changes in the market value of plan assets, differences between actuarial assumptions and actual experience and interest rates. Calculations of pension expense and projected benefit obligations are prepared by actuaries based on assumptions provided by management. These assumptions are reviewed on an annual basis, including assumptions about discount rates, interest credit rates and expected long-term rates of return on plan assets. The timing of expected future benefit payments was used in conjunction with the Citigroup Pension Discount Curve to develop a discount rate for theWilTel plan that is representative of the high quality corporate bond market. Holding all other assumptions constant, a 0.25% change in the discount rate would affect pension expense in 2022 by$0.1 million and the benefit obligation by$5.7 million , of which$4.1 million relates to theWilTel plan. The deferred losses in accumulated other comprehensive income (loss) have not yet been recognized as components of net periodic pension cost in the Consolidated Statements of Operations ($44.9 million atNovember 30, 2021 ). These deferred amounts primarily result from differences between the actual and assumed return on plan assets and changes in actuarial assumptions, including changes in discount rates and changes in interest credit rates. They are amortized to expense if they exceed 10% of the greater of the projected benefit obligation or the market value of plan assets as of the beginning of the year. The estimated net loss that will be amortized from accumulated other comprehensive income (loss) into pension expense in 2022 is$2.5 million . The assumed long-term rates of return on plan assets are based on the investment objectives of the plans, which are more fully discussed in Note 17 in our consolidated financial statements. Jefferies Group Liquidity General The Chief Financial Officer and Global Treasurer ofJefferies Group are responsible for developing and implementing liquidity, funding and capital management strategies forJefferies Group . These policies are determined by the nature and needs of day to day business operations, business opportunities, regulatory obligations and liquidity requirements. 46 -------------------------------------------------------------------------------- The actual levels of capital, total assets and financial leverage are a function of a number of factors, including asset composition, business initiatives and opportunities, regulatory requirements and cost and availability of both long-term and short-term funding.Jefferies Group has historically maintained a balance sheet consisting of a large portion of total assets in cash and liquid marketable securities, arising principally from traditional securities brokerage and trading activity. The liquid nature of these assets provides flexibility in financing and managing our business.Jefferies Group maintains modest leverage to support its investment grade ratings. The growth of its balance sheet is supported by its equity and we have quantitative metrics in place to monitor leverage and double leverage.Jefferies Group capital plan is robust, in order to sustain its operating model through stressed conditions. We maintain adequate financial resources to support business activities in both normal and stressed market conditions, including a buffer in excess of regulatory, or other internal or external, requirements.Jefferies Group's access to funding and liquidity is stable and efficient to ensure that there is sufficient liquidity to meet its financial obligations in normal and stressed market conditions. A business unit level balance sheet and cash capital analysis are prepared and reviewed with senior management on a weekly basis. As a part of this balance sheet review process, capital is allocated to all assets and gross balance sheet limits are adjusted, as necessary. This process ensures that the allocation of capital and costs of capital are incorporated into business decisions. The goals of this process are to protect the firm's platform, enable the businesses to remain competitive, maintain the ability to manage capital proactively and hold businesses accountable for both balance sheet and capital usage. We actively monitor and evaluate our financial condition and the composition of assets and liabilities. The overall securities inventory is continually monitored, including the inventory turnover rate, which confirms the liquidity of overall assets. Substantially all ofJefferies Group's financial instruments are valued on a daily basis and we monitor and employ balance sheet limits for its various businesses. AtNovember 30, 2021 , the Consolidated Statement of Financial Condition includesJefferies Group's Level 3 financial instruments owned, at fair value that are approximately 2% of total financial instruments owned, at fair value. Securities financing assets and liabilities include financing for financial instruments trading activity, matched book transactions and mortgage finance transactions. Matched book transactions accommodate customers, as well as obtain securities for the settlement and financing of inventory positions. The following table presents period end balance, average balance and maximum balance at any month end within the periods presented for Securities purchased under agreements to resell and Securities sold under agreements to repurchase (in millions): 2021 2020 Securities purchased under agreements to resell: Period end$ 7,642 $ 5,097 Month end average 9,425 8,040 Maximum month end 12,321 12,061 Securities sold under agreements to repurchase: Period end$ 8,446 $ 8,316 Month end average 11,515 13,501 Maximum month end 19,207 18,979 Fluctuations in the balance of repurchase agreements from period to period and intraperiod are dependent on business activity in those periods. Additionally, the fluctuations in the balances of securities purchased under agreements to resell are influenced in any given period by our clients' balances and our clients' desires to execute collateralized financing arrangements via the repurchase market or via other financing products. Average balances and period end balances will fluctuate based on market and liquidity conditions and we consider the fluctuations intraperiod to be typical for the repurchase market. Liquidity Management The key objectives ofJefferies Group's liquidity management framework are to support the successful execution of its business strategies while ensuring sufficient liquidity through the business cycle and during periods of financial distress. The liquidity management policies are designed to mitigate the potential risk that adequate financing may not be accessible to service financial obligations without material franchise or business impact. 47 -------------------------------------------------------------------------------- The principal elements ofJefferies Group's liquidity management framework are the Contingency Funding Plan, the Cash Capital Policy and the assessment of Modeled Liquidity Outflow. Contingency Funding Plan.Jefferies Group's Contingency Funding Plan is based on a model of a potential liquidity contraction over a one year time period. This incorporates potential cash outflows during a market or our idiosyncratic liquidity stress event, including, but not limited to, the following: •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. Cash Capital Policy. A cash capital model is maintained that measures long-term funding sources against requirements. Sources of cash capital include equity and the noncurrent portion of long-term borrowings. Uses of cash capital include the following: •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. To ensure that inventory does not need to be liquidated in the event of a funding stress, we seek to maintain surplus cash capital.Jefferies Group's total long-term capital of$14.38 billion atNovember 30, 2021 exceeded its cash capital requirements. Modeled Liquidity Outflow.Jefferies Group's businesses are diverse, and liquidity needs are determined by many factors, including market movements, collateral requirements and client commitments, all of which can change dramatically in a difficult funding environment. During a liquidity stress, credit-sensitive funding, including unsecured debt and some types of secured financing agreements, may be unavailable, and the terms (e.g., interest rates, collateral provisions and tenor) or availability of other types of secured financing may change. As a result ofJefferies Group's policy to ensure it has sufficient funds to cover estimates of what may be needed in a liquidity stress,Jefferies Group holds more cash and unencumbered securities and has greater long-term debt balances than the businesses would otherwise require. As part of this estimation process, we calculate a Modeled Liquidity Outflow that could be experienced in a liquidity stress. Modeled Liquidity Outflow is based on a scenario that includes both a market-wide stress and firm-specific stress. Based on the sources and uses of liquidity calculated under the Modeled Liquidity Outflow scenarios,Jefferies Group determines, based on a calculated surplus or deficit, additional long-term funding that may be needed versus funding through the repurchase financing market and consider any adjustments that may be necessary toJefferies Group's inventory balances and cash holdings. AtNovember 30, 2021 ,Jefferies Group had sufficient excess liquidity to meet all contingent cash outflows detailed in the Modeled Liquidity Outflow.Jefferies Group regularly refines its model to reflect changes in market or economic conditions and the firm's business mix. 48 -------------------------------------------------------------------------------- Sources of LiquidityWithin Jefferies Group , the following are financial instruments that are cash and cash equivalents or are deemed by management to be generally readily convertible into cash, marginable or accessible for liquidity purposes within a relatively short period of time, as reflected in the Consolidated Statements of Financial Condition (in thousands): Average Balance Fourth Quarter November 30, November 30, 2021 2021 (1) 2020 Cash and cash equivalents: Cash in banks $
1,888,693
6,924,871 4,149,368 5,132,871 Total cash and cash equivalents 8,813,564 7,387,707 7,111,929 Other sources of liquidity: Debt securities owned and securities purchased under agreements to resell (3) 1,621,118 1,516,547 1,180,410 Other (4) 311,641 484,528 312,511 Total other sources 1,932,759 2,001,075 1,492,921 Total cash and cash equivalents and other liquidity sources$ 10,746,323 $ 9,388,782 $ 8,604,850 (1)Average balances are calculated based on weekly balances. (2)AtNovember 30, 2021 and 2020,$6.91 billion and$5.12 billion , respectively, was invested inU.S. government money funds that invest at least 99.5% of its total assets in cash, securities issued by theU.S. government andU.S. government-sponsored entities, and repurchase agreements that are fully collateralized by cash or government securities. The remaining$14.9 million at bothNovember 30, 2021 and 2020 are invested in AAA rated prime money funds. The average balance ofU.S. government money funds for the quarter endedNovember 30, 2021 was$4.13 billion . (3)Consists of high quality sovereign government securities and reverse repurchase agreements collateralized byU.S. government securities and other high quality sovereign government securities; deposits with a central bank within the European Economic Area,U.K. ,Canada ,Australia ,Japan ,Switzerland or theU.S. ; and securities issued by a designated multilateral development bank and reverse repurchase agreements with underlying collateral comprised of these securities. (4)Other includes unencumbered inventory representing an estimate of the amount of additional secured financing that could be reasonably expected to be obtained from financial instruments owned that are currently not pledged after considering reasonable financing haircuts. In addition to the cash balances and liquidity pool presented above, the majority of financial instruments (both long and short) inJefferies Group's trading accounts are actively traded and readily marketable. AtNovember 30, 2021 , repurchase financing can be readily obtained for 63.8% ofJefferies Group's inventory at haircuts of 10% or less, which reflects the liquidity of the inventory. In addition, as a matter of our policy, all of these assets have internal capital assessed, which is in addition to the funding haircuts provided in the securities finance markets. Additionally, certain ofJefferies Group's financial instruments owned, primarily consisting of bank loans, consumer loans and investments, are predominantly funded byJefferies Group's long-term capital. UnderJefferies Group's cash capital policy, capital allocation levels are modeled that are more stringent than the haircuts used in the market for secured funding; and surplus capital is maintained at these more stringent levels. We continually assess the liquidity ofJefferies Group's inventory based on the level at whichJefferies Group could obtain financing in the marketplace for a given asset. Assets are considered to be liquid if financing can be obtained in the repurchase market or the securities lending market at collateral haircut levels of 10% or less. 49 -------------------------------------------------------------------------------- The following summarizesJefferies Group's financial instruments owned by asset class that are considered to be of a liquid nature and the amount of such assets that have not been pledged as collateral as reflected in the Consolidated Statements of Financial Condition (in thousands): November 30, 2021 November 30, 2020 Unencumbered Unencumbered Liquid Financial Liquid Financial Liquid Financial Liquid Financial Instruments Instruments (2) Instruments Instruments (2) Corporate equity securities$ 2,635,956 $ 347,157$ 2,191,536 $ 238,129 Corporate debt securities 2,943,135 31,935 2,298,591 50,217U.S. Government , agency and municipal securities 3,610,885 109,325 3,336,361 110,586 Other sovereign obligations 1,528,100 1,463,968 2,518,928 1,101,272 Agency mortgage-backed securities (1) 1,487,165 - 1,652,743 - Loans and other receivables 132,989 - 564,112 - Total$ 12,338,230 $ 1,952,385 $ 12,562,271 $ 1,500,204 (1)Consists solely of agency mortgage-backed securities issued by Freddie Mac, Fannie Mae and theGovernment National Mortgage Association ("Ginnie Mae"). (2)Unencumbered liquid balances represent assets that can be sold or used as collateral for a loan, but have not been. In addition to being able to be readily financed at reasonable haircut levels, it is estimated that each of the individual securities within each asset class above could be sold into the market and converted into cash within three business days under normal market conditions, assuming that the entire portfolio of a given asset class was not simultaneously liquidated. There are no restrictions on the unencumbered liquid securities, nor have they been pledged as collateral. Sources ofFunding and Capital Resources Jefferies Group's assets are funded by equity capital, senior debt, securities loaned, securities sold under agreements to repurchase, customer free credit balances, bank loans and other payables. Secured Financing Readily available secured funding is used to financeJefferies Group's inventory of financial instruments.Jefferies Group's ability to support increases in total assets is largely a function of the ability to obtain short and intermediate-term secured funding, primarily through securities financing transactions. Repurchase or reverse repurchase agreements (collectively "repos"), respectively, are used to finance a portion of long inventory and cover some of short inventory by pledging and borrowing securities. AtNovember 30, 2021 , approximately 60.9% ofJefferies Group's cash and noncash repurchase financing activities used collateral that was considered eligible collateral by central clearing corporations. During the year endedNovember 30, 2021 , an average of approximately 70.2% ofJefferies Group's cash and noncash repurchase financing activities used collateral that was considered eligible collateral by central clearing corporations. Central clearing corporations are situated between participating members who borrow cash and lend securities (or vice versa); accordingly, repo participants contract with the central clearing corporation and not one another individually. Therefore, counterparty credit risk is borne by the central clearing corporation which mitigates the risk through initial margin demands and variation margin calls from repo participants. The comparatively large proportion ofJefferies Group's total repo activity that is eligible for central clearing reflects the high quality and liquid composition of the inventoryJefferies Group carries in its trading books. For those asset classes not eligible for central clearing house financing,Jefferies Group seeks to execute its bi-lateral financings on an extended term basis and the tenor ofJefferies Group's repurchase and reverse repurchase agreements generally exceeds the expected holding period of the assetsJefferies Group is financing. The weighted average maturity of cash and noncash repurchase agreements for non-clearing corporation eligible funded inventory is approximately eight months atNovember 30, 2021 .Jefferies Group's ability to finance its inventory via central clearinghouses and bi-lateral arrangements is augmented byJefferies Group's ability to draw bank loans on an uncommitted basis under its various banking arrangements. AtNovember 30, 2021 , short-term borrowings, which must be repaid within one year or less and include bank loans and overdrafts, borrowings under revolving credit facilities and floating rate puttable notes, totaled$221.9 million . Interest under the bank lines is generally at a spread over the federal funds rate. Letters of credit are used in the normal course of business mostly to satisfy various collateral 50 -------------------------------------------------------------------------------- requirements in favor of exchanges in lieu of depositing cash or securities. Average daily short-term borrowings outstanding forJefferies Group were$346.8 million and$656.3 million for 2021 and 2020, respectively.Jefferies Group's short-term borrowings include facilities that contain certain covenants that, among other things, require it to maintain a specified level of tangible net worth and impose certain restrictions on the future indebtedness of certain of its subsidiaries that are borrowers. AtNovember 30, 2021 ,Jefferies Group was in compliance with all covenants under these facilities. The outstanding balance ofJefferies Group's facilities, which are with a bank and are included within short-term borrowings, were$200.0 million atNovember 30, 2021 . Interest is based on a rate per annum at spreads over the federal funds rate as defined in the credit agreements.
A bank has agreed to make revolving intraday credit advances ("Jefferies Group Intraday Credit Facility") for an aggregate committed amount of$150.0 million . The Jefferies Group Intraday Credit Facility is structured so that advances are generally repaid before the end of each business day. However, if an advance is not repaid by the end of any business day, the advance is converted to an overnight loan. Intraday loans accrue interest at a rate of 0.12% based on the number of minutes in a day the advance is outstanding. Overnight loans are charged interest at the base rate plus 3% on a daily basis. The base rate is the higher of the federal funds rate plus 0.50% or the prime rate in effect at that time. The Jefferies Group Intraday Credit Facility contains financial covenants, which include a minimum regulatory net capital requirement forJefferies Group's U.S. broker-dealer,Jefferies LLC . AtNovember 30, 2021 ,Jefferies Group was in compliance with all debt covenants under the Jefferies Group Intraday Credit Facility. In addition, this bank also provides a$200.0 million revolving credit facility with a termination date ofSeptember 12, 2022 , which is used for margin calls at a domestic clearing corporation. Overnight loans are charged interest at a spread over the federal funds rate. Another bank provides committed revolving credit facilities for a total of$200.0 million , including a$150.0 million intraday component and a$50.0 million overnight component, that are used to fund ourAsia Pacific business activity. The intraday component is structured so that advances are generally repaid before the end of each business day. However, if an advance is not repaid by the end of any business day, the advance is converted to an overnight loan. Intraday loans accrue interest at a rate of 1.00%. Overnight loans are charged as agreed between the bank andJefferies Group in reference to the bank's cost of funding. In addition to the above financing arrangements,Jefferies Group issues notes backed by eligible collateral under master repurchase agreements, which provides an additional financing source for its inventory ("repurchase agreement financing program"). The notes issued under the program are presented within Other secured financings in the Consolidated Statements of Financial Condition. AtNovember 30, 2021 , the outstanding notes were$3.69 billion , bear interest at a spread over London Interbank Offered Rate ("LIBOR") and mature fromDecember 2021 toAugust 2023 . Long-Term DebtJefferies Group's long-term debt reflected in the Consolidated Statement of Financial Condition atNovember 30, 2021 is$8.04 billion . During the year endedNovember 30, 2021 ,Jefferies Group's long-term debt increased by$1.14 billion , primarily due to the issuance of 2.625% senior notes with a principal amount of$1.0 billion , dueOctober 15, 2031 , and floating rate senior notes with a principal amount of$62.3 million , due 2071, partially offset by the early redemption of its 5.125% senior notes with a principal amount of$750.0 million , dueJanuary 20, 2023 . The change was also due to an increase of$349.0 million from its borrowings under its unsecured revolving credit facility ("Jefferies Group Unsecured Revolving Credit Facility"), an increase of$484.3 million from secured long-term borrowings and approximately$175.6 million of structured notes issuances, net of retirements. AtNovember 30, 2021 , all ofJefferies Group's 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 Accumulated other comprehensive income (loss) and changes in fair value resulting from non-credit components recognized in Principal transactions revenue. The fair value of all ofJefferies Group's structured notes atNovember 30, 2021 was$1.84 billion . DuringApril 2021 ,Jefferies Group entered into a Revolving Credit Facility ("Jefferies Group Revolving Credit Facility") with a group of commercial banks following the maturity of its previous revolving credit facility. AtNovember 30, 2021 , borrowings under the Jefferies Group Revolving Credit Facility amounted to$249.0 million . Interest is based on an adjusted LIBOR Rate, as defined in the credit agreement. The Jefferies Group Revolving Credit Facility contains certain covenants that, 51 -------------------------------------------------------------------------------- among other things, requireJefferies Group LLC to maintain specified levels of tangible net worth and liquidity amounts, and impose certain restrictions on future indebtedness of and require specified levels of regulated capital for certain of its subsidiaries. Throughout the period and atNovember 30, 2021 , no instances of noncompliance with the Jefferies Group Revolving Credit Facility covenants occurred andJefferies Group expects to remain in compliance given its current liquidity and anticipated funding requirements given its business plan and profitability expectations. DuringMay 2021 ,Jefferies Group entered into a Secured Credit Facility agreement ("Jefferies Group Secured Credit Facility") with a bank under which it has borrowed$375.0 million atNovember 30, 2021 . Interest is based on a rate per annum at spreads over an Adjusted LIBOR Rate, as defined in the credit agreement. The Jefferies Group Secured Credit Facility contains certain covenants that, among other things, requireJefferies Group LLC to maintain a specified level of tangible net worth. The covenants also require a certain subsidiary ofJefferies Group to maintain specified leverage amounts and impose certain restrictions on its future indebtedness. AtNovember 30, 2021 ,Jefferies Group was in compliance with all debt covenants under theJefferies Group Secured Credit Facility. DuringAugust 2021 ,Jefferies Group entered into the Jefferies Group Unsecured Revolving Credit Facility agreement with SMBC under whichJefferies Group has borrowed$349.0 million atNovember 30, 2021 . Interest is based on a rate per annum at spreads over an Adjusted LIBOR Rate or a Base Rate, as defined in the credit agreement. The Jefferies Group Unsecured Revolving Credit Facility contains certain covenants that, among other things, requireJefferies Group LLC to maintain a specified level of tangible net worth, net cash capital and a minimum regulatory net capital requirement forJefferies LLC . AtNovember 30, 2021 ,Jefferies Group was in compliance with all covenants under the Jefferies Group Unsecured Revolving Credit Facility. DuringSeptember 2021 , one ofJefferies Group's subsidiaries amended a Loan and Security Agreement with a bank for a term loan ("Jefferies Group Secured Bank Loan") due to the maturity of its previous secured bank loan. AtNovember 30, 2021 , borrowings under the Jefferies Group SecuredBank Loan amounted to$100.0 million . The Jefferies Group SecuredBank Loan matures onSeptember 13, 2024 and is collateralized by certain trading securities. Interest on theJefferies Group SecuredBank Loan is 1.25% plus LIBOR. The agreement contains certain covenants that, among other things, restrict lien or encumbrance upon any of the pledged collateral. AtNovember 30, 2021 ,Jefferies Group was in compliance with all covenants under the Jefferies Group SecuredBank Loan .Jefferies Group's unsecured long-term debt, which excludes theJefferies Group Revolving Credit Facility, the Jefferies Group Secured Credit Facility and the Jefferies Group SecuredBank Loan , has a weighted average maturity of approximately 10.9 years atNovember 30, 2021 .Jefferies Group's long-term debt ratings as ofNovember 30, 2021 are as follows: Rating Outlook Moody's Investors Service (1) Baa2 Stable Standard and Poor's BBB Stable Fitch Ratings (2) BBB Stable (1) OnNovember 10, 2021 , Moody's Investors Service revisedJefferies Group's rating of Baa3 to Baa2 and revised its rating outlook from positive to stable. (2) Subsequent to year end, onJanuary 24, 2022 , Fitch Ratings affirmedJefferies Group's rating of BBB and revised its rating outlook from stable to positive.Jefferies Group's access to external financing to finance its day to day operations, as well as the cost of that financing, is dependent upon various factors, including its debt ratings.Jefferies Group's current debt ratings are dependent upon many factors, including industry dynamics, operating and economic environment, operating results, operating margins, earnings trend and volatility, balance sheet composition, liquidity and liquidity management, capital structure, overall risk management, business diversification and market share and competitive position in the markets in which it operates. Deterioration in any of these factors could impactJefferies Group's credit ratings. While certain aspects of a credit rating downgrade are quantifiable pursuant to contractual provisions, the impact on business and trading results in future periods is inherently uncertain and depends on a number of factors, including the magnitude of the downgrade, the behavior of individual clients and future mitigating action taken by us. In connection with certain over-the-counter derivative contract arrangements and certain other trading arrangements,Jefferies Group may be required to provide additional collateral to counterparties, exchanges and clearing organizations in the event of a 52 -------------------------------------------------------------------------------- credit rating downgrade. AtNovember 30, 2021 , the amount of additional collateral that could be called by counterparties, exchanges and clearing organizations under the terms of such agreements in the event of a downgrade ofJefferies Group's long-term credit rating below investment grade was$72.2 million . For certain foreign clearing organizations, credit rating is only one of several factors employed in determining collateral that could be called. The above represents management's best estimate for additional collateral to be called in the event of a credit rating downgrade. The impact of additional collateral requirements is considered inJefferies Group's Contingency Funding Plan and calculation of Modeled Liquidity Outflow, as described above. Ratings issued by credit rating agencies are subject to change at any time.Net Capital Jefferies Group operates a broker-dealer,Jefferies LLC , registered with theSEC and a member firm ofFINRA .Jefferies LLC is subject to the SEC Uniform Net Capital Rule ("Rule 15c3-1"), which requires the maintenance of minimum net capital and has elected to calculate minimum capital requirements using the alternative method permitted by Rule 15c3-1 in calculating net capital.Jefferies LLC , as a dually-registeredU.S. broker-dealer and FCM, is also subject to Rule 1.17 of the CFTC, which sets forth minimum financial requirements. The minimum net capital requirement in determining excess net capital for a dually-registeredU.S. broker-dealer and FCM is equal to the greater of the requirement under Rule 15c3-1 or CFTC Rule 1.17. The Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") contains provisions that require the registration of all swap dealers, major swap participants, security-based swap dealers, and/or major security-based swap participants. OnOctober 6, 2021 , JFSI, a registered swap dealer, became subject to the CFTC's regulatory capital requirements and holds regulatory capital in excess of the minimum regulatory requirement. Additionally, JFSI registered as a security-based swap dealer with theSEC onNovember 1, 2021 , and became subject to theSEC's security-based swap dealer regulatory rules. Further, subsequent to year end, onDecember 16, 2021 , JFSI was approved by theSEC as an OTC derivatives dealer, and is subject to compliance with theSEC's net capital requirements. AtNovember 30, 2021 , JFSI is in compliance with theseSEC and CFTC requirements. As a security-based swap dealer and swap dealer, JFSI is subject to the net capital requirements of theSEC , CFTC and the NFA, as a member of the NFA. JFSI is required to maintain minimum net capital, as defined under SEC Rule 18a-1 of not less than the greater of 2% of the risk margin amount, as defined, or$20 million .Jefferies LLC's net capital and excess net capital atNovember 30, 2021 were$2.23 billion and$2.11 billion , respectively. JFSI's net capital and excess net capital atNovember 30, 2021 were$452.3 million and$432.3 million , respectively.
Certain otherU.S. and non-U.S. subsidiaries ofJefferies Group are subject to capital adequacy requirements as prescribed by the regulatory authorities in their respective jurisdictions, includingJefferies International Limited which is subject to the regulatory supervision and requirements of theFinancial Conduct Authority in theU.K.
The regulatory capital requirements referred to above may restrict
Some of our other consolidated subsidiaries also have credit agreements which may restrict the payment of cash dividends, or the ability to make loans or advances to the parent company.
Other Developments
OnDecember 31, 2020 , theU.K. left the EU single market and customs union andJefferies Group's U.K. broker dealer,Jefferies International Limited , was no longer able to provide services to European clients under the passport regime.Jefferies Group had already taken steps to ensure its ability to provide services to its European clients without interruption by establishing a wholly-owned subsidiary inGermany ("Jefferies GmbH "), which is authorized and regulated inGermany by theFederal Financial Services Authority ("BaFin").Jefferies Group's European clients were migrated toJefferies GmbH to conduct business across all ofJefferies Group's European investment banking, fixed income and equity platforms with no client disruptions or settlement issues. Central banks and regulators around the world have convened working groups to find, and implement the transition to, suitable replacements for IBORs. During 2021, theU.K. Financial Conduct Authority announced that the publication of the one-week and two-monthU.S. Dollar LIBOR maturities and all non-U.S. Dollar LIBOR maturities will cease immediately afterDecember 31, 2021 , with the remainingU.S. Dollar LIBOR maturities ceasing immediately afterJune 30, 2023 . Jefferies 53 -------------------------------------------------------------------------------- Group is a counterparty to a number of LIBOR-based contracts, with maturity dates subsequent to 2021, composed primarily of cleared derivative contracts and floating rate notes.Jefferies Group's IBOR transition plan is overseen by a global steering committee and it has an active transition program focused on an orderly transition from IBORs to alternative reference rates in accordance with industry transition timelines.Jefferies Group continues to make progress on its transition plan, which is designed to enable operational readiness and robust risk management and are taking steps to update operational processes, models and contracts for any changes that may be required as well as reduce our overall exposure to LIBOR.Jefferies Group is actively engaged with its counterparties to ensure that our contracts adhere to theInternational Swaps and Derivative Association, Inc. ("ISDA") Off-Balance Sheet Arrangements AtNovember 30, 2021 , our commitments and guarantees, substantially all of which related toJefferies Group , are as follows: Expected Maturity Date (Fiscal Years) 2024 2026 and and Commitments and Guarantees Total 2022 2023 2025 2027 After 2027 (In millions) Equity commitments$ 375.3 $ 333.2 $ 27.5 $ 3.6 $ 4.6 $ 6.4 Loan commitments 335.5 250.0 25.5 - 60.0 - Underwriting commitments 167.0 167.0 - - - - Forward starting reverse repos 7,682.3 7,682.3 - - - - Forward starting repos 4,572.0 4,572.0 - - - - Other unfunded commitments 601.7 25.0 571.3 5.4 - - Derivative contracts (1): Non-credit related 27,997.5 16,978.6
7,849.4 3,081.8 87.7 - Credit related 17.8 - - 17.8 - - Standby letters of credit 6.7 5.1 0.6 0.5 - 0.5
Total commitments and guarantees
(1) Certain of our derivative contracts meet the definition of a guarantee and are therefore included in the above table. For additional information on commitments, see Note 22 in our consolidated financial statements. We have agreed to reimburse Berkshire Hathaway for up to one-half of any losses incurred under a$1.5 billion surety policy securing outstanding commercial paper issued by an affiliate of Berkadia. As ofNovember 30, 2021 , the aggregate amount of commercial paper outstanding was$1.47 billion . This commitment is not included in the table above as the timing of payments, if any, is uncertain. In the normal course of business, we engage in other off-balance sheet arrangements, including derivative contracts. Neither derivatives' notional amounts nor underlying instrument values are reflected as assets or liabilities in the Consolidated Statements of Financial Condition. Rather, the fair values of derivative contracts are reported in the Consolidated Statements of Financial Condition as Financial instruments owned, at fair value or Financial instruments sold, not yet purchased, at fair value, as applicable. Derivative contracts are reflected net of cash paid or received pursuant to credit support agreements and are reported on a net by counterparty basis when a legal right of offset exists under an enforceable master netting agreement. For additional information about our accounting policies and our derivative activities see Notes 2, 4 and 5 in our consolidated financial statements. We are routinely involved with variable interest entities ("VIEs") in the normal course of business. AtNovember 30, 2021 , we did not have any commitments to purchase assets from our VIEs. For additional information regarding VIEs, see Notes 7 and 8 in our consolidated financial statements. 54
--------------------------------------------------------------------------------
Critical Accounting Estimates
The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Actual results could significantly differ from those estimates. We believe that the following discussion addresses our most critical accounting estimates, which are those that are important to the presentation of our financial condition and results of operations and require our most difficult, subjective and complex judgments. Fair Value of Financial Instruments - Financial instruments owned, at fair value and Financial instruments sold, not yet purchased, at fair value are recorded at fair value, either as required by accounting pronouncements or through the fair value option election. Gains and losses on Financial instruments owned, at fair value and Financial instruments sold, not yet purchased, at fair value are recognized in the Consolidated Statements of Operations in Principal transactions. Fair value is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). In determining fair value, we maximize the use of observable inputs and minimize the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from independent sources. Unobservable inputs reflect our assumptions that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. We apply a hierarchy to categorize our fair value measurements broken down into three levels based on the transparency of inputs as follows: Level 1: Quoted prices are available in active markets for identical assets or liabilities at the reported date. Valuation adjustments and
block discounts are
not applied to Level 1 instruments.
Level 2: Pricing inputs other than quoted prices in active markets, which are either
directly or indirectly observable at the reported date. The
nature of these
financial instruments include cash instruments for which
quoted prices are
available but traded less frequently, derivative instruments
for which fair
values have been derived using model inputs that are
directly observable in the
market, or can be derived principally from, or corroborated
by, observable
market data, and financial instruments that are fair valued
by reference to
other similar financial instruments, the parameters of which
can be directly
observed. Level 3: Instruments that have little to no pricing observability at the reported date. These financial instruments are measured using
management's best estimate of
fair value, where the inputs into the determination of fair
value require
significant management judgment or estimation. Fair value is a market based measure; therefore, when market observable inputs are not available, our judgment is applied to reflect those judgments that a market participant would use in valuing the same asset or liability. The availability of observable inputs can vary for different products. We use prices and inputs that are current as of the measurement date even in periods of market disruption or illiquidity. The valuation of financial instruments classified in Level 3 of the fair value hierarchy involves the greatest amount of management judgment.Jefferies Group's Independent Price Verification Group , independent of its trading function, plays an important role in determining that financial instruments are appropriately valued and that fair value measurements are reliable. This is particularly important where prices or valuations that require inputs are less observable. In the event that observable inputs are not available, the control processes are designed to assure that the valuation approach utilized is appropriate and consistently applied and that the assumptions are reasonable. Where a pricing model is used to determine fair value, these control processes include reviews of the pricing model's theoretical soundness and appropriateness by risk management personnel with relevant expertise who are independent from the trading desks. In addition, recently executed comparable transactions and other observable market data are considered for purposes of validating assumptions underlying the model.
For further information on the fair value definition, Level 1, Level 2, Level 3 and related valuation techniques, see Notes 2 and 4 in our consolidated financial statements.
Income Taxes - We record a valuation allowance to reduce our net deferred tax asset to the amount that is more likely than not to be realized. We are required to consider all available evidence, both positive and negative, and to weigh the evidence when determining whether a valuation allowance is required and the amount of such valuation allowance. Generally, greater weight is required to be placed on objectively verifiable evidence when making this assessment, in particular on recent historical operating results. 55 -------------------------------------------------------------------------------- We also record reserves for unrecognized tax benefits based on our assessment of the probability of successfully sustaining tax filing positions. Management exercises significant judgment when assessing the probability of successfully sustaining tax filing positions, and in determining whether a contingent tax liability should be recorded and if so, estimating the amount. If our tax filing positions are successfully challenged, payments could be required that are in excess of reserved amounts or we may be required to reduce the carrying amount of our net deferred tax asset, either of which could be significant to our Consolidated Statements of Financial Condition or results of operations. Impairment of Long-Lived Assets - We evaluate our long-lived assets for impairment whenever events or changes in circumstances indicate, in management's judgment, that the carrying value of such assets may not be recoverable. When testing for impairment, we group our long-lived assets with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities (or asset group). The determination of whether an asset group is recoverable is based on management's estimate of undiscounted future cash flows directly attributable to the asset group as compared to its carrying value. If the carrying amount of the asset group is greater than the undiscounted cash flows, an impairment loss would be recognized for the amount by which the carrying amount of the asset group exceeds its estimated fair value. Due to a decline in oil and gas prices during the second quarter of 2020, Vitesse Energy performed impairment analyses on its proven oil and gas properties in theDJ Basin ofWyoming andColorado and theWilliston Basin inNorth Dakota andMontana . Vitesse Energy first determined the estimated undiscounted cash flows based on the reserves and costs utilized in its reserve report and then updated those cash flows based on strip pricing as ofMay 31, 2020 . The expected undiscounted future net cash flows were then compared to the end of quarter net carrying value of the oil and gas properties. No impairment of theWilliston Basin assets was necessary as the undiscounted future net cash flows significantly exceeded the carrying value of these assets. As undiscounted future net cash flows were lower than the carrying value of theDJ Basin properties, Vitesse Energy then determined the estimated fair value of the proven properties. To measure the estimated fair value of its proven properties, Vitesse Energy used unobservable Level 3 inputs, including a 10.0% discount rate and estimated future cash flows from its reserve report. The estimated fair value of Vitesse Energy's proven oil and gas properties in theDJ Basin totaled$26.8 million , which was$13.2 million lower than the carrying value as of the end of the second quarter of 2020. As a result, an impairment charge of$13.2 million was recorded in Selling, general and other expenses during 2020. Due to a decline in oil and gas prices during the first quarter of 2020, JETX Energy performed an impairment analysis for its oil and gas properties in the EastEagle Ford . JETX Energy first determined the estimated undiscounted cash flows based on the reserves and costs utilized in its reserve report and then updated those cash flows based on strip pricing as ofFebruary 29, 2020 . The expected undiscounted future net cash flows were then compared to the end of quarter net carrying value of the proven properties. As the undiscounted future net cash flows were lower than the carrying value, JETX Energy then determined the estimated fair value of the proven properties. To measure the estimated fair value of its proven properties, JETX Energy used unobservable Level 3 inputs, including a 10.0% discount rate and estimated future cash flows from its reserve report. The estimated fair value of JETX Energy's proven oil and gas properties in the EastEagle Ford totaled$9.6 million , which was$33.0 million lower than the carrying value as of the end of first quarter of 2020. As a result, an impairment charge of$33.0 million was recorded in Selling, general and other expenses during 2020. Impairment of Equity Method Investments - We evaluate equity method investments for impairment when operating losses or other factors may indicate a decrease in value which is other than temporary. We consider a variety of factors including economic conditions nationally and in their geographic areas of operation, adverse changes in the industry in which they operate, declines in business prospects, deterioration in earnings, increasing costs of operations and other relevant factors specific to the investee. Whenever we believe conditions or events indicate that one of these investments might be significantly impaired, we obtain from such investee updated cash flow projections. We use this information and, together with discussions with the investee's management and comparable public company analysis, evaluate if the book value of its investment exceeds its fair value, and if so and the situation is deemed other than temporary, record an impairment charge.HomeFed has a 49% membership interest in theRedSky JZ Fulton Mall joint venture, which owns a property inBrooklyn, New York . The property consists of 14 separate tax lots, divided into two development sites which may be redeveloped with buildings consisting of up to 540,000 square feet of floor area development rights. During the first quarter of 2020, difficulties were encountered with attempts to refinance debt within the investment. We viewed this, combined with a softening of theBrooklyn, New York real estate market during the quarter, as a triggering event and evaluatedHomeFed's equity method investment inRedSky JZ Fulton Mall to determine if there was an impairment. In connection with this evaluation, we obtained an appraisal which reflected a reduction in the value of the investment in comparison to an earlier appraisal obtained shortly before the beginning of the quarter. The appraisal was based off of Level 3 inputs consisting of prices of comparable properties and the appraisal indicated that the value of the property was worth less than the debt outstanding.HomeFed recorded an 56 -------------------------------------------------------------------------------- impairment charge of$55.6 million within Income (loss) related to associated companies during 2020, which represented all of its carrying value in the joint venture.Goodwill - We allocate the acquisition cost of consolidated businesses to the specific tangible and intangible assets acquired and liabilities assumed based upon their fair values. Significant judgments and estimates are often made by management to determine these values, and may include the use of appraisals, consideration of market quotes for similar transactions, use of discounted cash flow techniques or consideration of other information we believe to be relevant. Any excess of the cost of a business acquisition over the fair values of the assets and liabilities acquired is recorded as goodwill, which is not amortized to expense. Substantially all of our goodwill was recognized in connection with theJefferies Group acquisition. At least annually, and more frequently if warranted, we will assess whether goodwill has been impaired at the reporting unit level. The fair value of the reporting unit is compared with its carrying value, including goodwill and allocated intangible assets. If the fair value is in excess of the carrying value, the goodwill for the reporting unit is considered not to be impaired. If the fair value is less than the carrying value, an impairment loss is recognized as the difference between the fair value and carrying value of the reporting unit. The fair values are based on widely accepted valuation techniques that we believe market participants would use, although the valuation process requires significant judgment and often involves the use of significant estimates and assumptions. The methodologies we utilize in estimating fair value include market capitalization, price-to-book multiples of comparable exchange traded companies, multiples of merger and acquisitions of similar businesses and/or projected cash flows. In addition, as the fair values determined under a market approach represent a noncontrolling interest, we apply a control premium to arrive at the estimated fair value of our reporting units on a controlling basis. The estimates and assumptions used in determining fair value could have a significant effect on whether or not an impairment charge is recorded and the magnitude of such a charge. Adverse market or economic events could result in impairment charges in future periods. An independent valuation specialist was engaged to assist with the valuation process relating to the Investment Banking and Capital Markets, and Asset Management reportable segments for our annual goodwill impairment test as ofAugust 1, 2021 . The results of our annual goodwill impairment test for both the Investment Banking and Capital Markets reportable segment and the Asset Management reportable segment did not indicate any goodwill impairment. Intangible Assets - Intangible assets deemed to have finite lives are generally amortized on a straight-line basis over their estimated useful lives, where the useful life is the period over which the asset is expected to contribute directly, or indirectly, to our future cash flows. Intangible assets are reviewed for impairment on an interim basis when certain events or circumstances exist. If future undiscounted cash flows are estimated to be less than the carrying amounts of the asset groups used to generate those cash flows in subsequent reporting periods, particularly for those with large investments in amortizable intangible assets, impairment charges would have to be recorded. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when certain events or circumstances exist indicating an assessment for impairment is necessary. Impairment exists when the carrying amount exceeds its fair value. Fair value is determined using valuation techniques consistent with what a market participant would use. All of our indefinite-lived intangible assets were recognized in connection with the 2013Jefferies Group acquisition, which consists of exchange and clearing organization membership interests and registrations. Our annual impairment testing date wasAugust 1, 2021 . AtAugust 1, 2021 , we utilized quantitative assessments of membership interests and registrations that have available quoted sales prices as well as certain other membership interests and registrations that have declined in utilization and qualitative assessments were performed on the remainder of our indefinite-life intangible assets. In applying our quantitative assessments, we recognized immaterial impairment losses on certain exchange membership interests and registrations. With regard to our qualitative assessments of the remaining indefinite-life intangible assets, based on our assessments of market conditions, the utilization of the assets and the replacement costs associated with the assets, we have concluded that it is not more likely than not that the intangible assets are impaired. Contingencies - In the normal course of business, we have been named, from time to time, as a defendant in legal and regulatory proceedings. We are also involved, from time to time, in other exams, investigations and similar reviews (both formal and informal) by governmental and self-regulatory agencies regarding our businesses, certain of which may result in judgments, settlements, fines, penalties or other injunctions. We recognize a liability for a contingency when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. If the reasonable estimate of a probable loss is a range, we accrue the most likely amount of such loss, and if such amount is not determinable, then we accrue the minimum in the range as the loss accrual. The determination of the outcome and loss estimates requires significant judgment on the part of management, can be highly subjective and is subject to 57 -------------------------------------------------------------------------------- significant change with the passage of time as more information becomes available. Estimating the ultimate impact of litigation matters is inherently uncertain, in particular because the ultimate outcome will rest on events and decisions of others that may not be within our power to control. We do not believe that any of our current litigation will have a significant adverse effect on our consolidated financial position, results of operations or liquidity; however, if amounts paid at the resolution of litigation are in excess of recorded reserve amounts, the excess could be significant in relation to results of operations for that period. For further information, see Note 22 in our consolidated financial statements. Item 7A. Quantitative and Qualitative Disclosures About Market Risk. The following includes "forward-looking statements" that involve risk and uncertainties. Actual results could differ materially from those projected in the forward-looking statements. The discussion of risk is presented separately forJefferies Group and the balance of our company. Exclusive ofJefferies Group , our market risk arises principally from equity price risk. ExcludingJefferies Group , Financial instruments owned, at fair value include corporate equity securities with an aggregate fair value of$353.8 million atNovember 30, 2021 . Assuming a decline of 10% in market prices, the value of these investments could decrease by approximately$35.4 million .Jefferies Group Overview Risk is an inherent part of our business and activities. The extent to which we properly and effectively identify, assess, monitor and manage each of the various types of risk involved in our activities is critical to our financial soundness, viability and profitability. Accordingly, we have a comprehensive risk management approach, with a formal governance structure and policies and procedures outlining frameworks and processes to identify, assess, monitor and manage risk. Principal risks involved in our business activities include market, credit, liquidity and capital, operational, legal and compliance, new business and reputational risk. Risk management is a multifaceted process that requires communication, judgment and knowledge of financial products and markets. Our risk management process encompasses the active involvement of executive and senior management, and also many departments independent of the revenue-producing business units, includingJefferies Group's Risk Management, Information Technology, Compliance,Legal and Finance Departments . Our risk management policies, procedures and methodologies are flexible in nature and are subject to ongoing review and modification. In achieving our strategic business objectives, our risk appetite incorporates keeping our clients' interests as top priority and ensuring we are in compliance with applicable laws, rules and regulations, as well as adhering to the highest ethical standards. We undertake prudent risk-taking that protects the capital base and franchise, utilizing risk limits and tolerances that avoid outsized risk-taking. We maintain a diversified business mix and avoid significant concentrations to any sector, product, geography, or activity and set quantitative concentration limits to manage this risk. We consider contagion, second order effects and correlation in our risk assessment process and actively seek out value opportunities of all sizes. We manage the risk of opportunities larger than our approved risk levels through risk sharing and risk distribution, sell-down and hedging, as appropriate. We have a limited appetite for illiquid assets and complex derivative financial instruments. We maintain the asset quality of our balance sheet through conducting trading activity in liquid markets and generally ensure high turnover of our inventory. We subject less liquid positions and derivative financial instruments to particular scrutiny and use a wide variety of specific metrics, limits, and constraints to manage these risks. We protect our reputation and franchise, as well as our standing within the market. We operate a federated approach to risk management with risk oversight responsibilities to a number of functions with specific areas of focus.
For a discussion of liquidity and capital risk management, refer to the "Liquidity and Capital Resources" section herein.
Risk Considerations
We apply a comprehensive framework of limits on a variety of key metrics to constrain the risk profile of our business activities. The size of the limits reflects our risk appetite for a certain activity under normal business conditions. Key metrics included in our risk management framework include inventory position and exposure limits on a gross and net basis, scenario analysis and stress tests, Value-at-Risk ("VaR"), sensitivities, exposure concentrations, aged inventory, Level 3 assets, counterparty exposure, leverage and cash capital. 58
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Market Risk
Market risk is defined as the risk of loss due to fluctuations in the market value of financial assets and liabilities attributable to changes in market variables. Our market risk principally arises from interest rate risk, from exposure to changes in the yield curve, the volatility of interest rates, and credit spreads, and from equity price risks from exposure to changes in prices and volatilities of individual equities, equity baskets and equity indices. In addition, commodity price risk results from exposure to the changes in prices and volatilities of individual commodities, commodity baskets and commodity indices, and foreign exchange risk results from changes in foreign currency rates. Market risk is present in our market-making, proprietary trading, underwriting, and investing activities, including our investments in Asset Management separately managed accounts, and is principally managed by diversifying exposures, controlling position sizes, and establishing economic hedges in related securities or derivatives. Due to imperfections in correlations, gains and losses can occur even for positions that are economically hedged. Position limits in trading and inventory accounts are established and monitored on an ongoing basis. Each day, consolidated position and exposure reports are prepared and distributed to various levels of management, which enable management to monitor inventory levels and the results of its trading businesses. Trader Mandates Trading is principally managed through front office trader mandates, where each trader is provided a specific mandate in line with our product registry. Mandates set out the activities, currencies, countries and products that the desk is permitted to trade in and set the limits applicable to the desk. Traders are responsible for knowing their trading limits and trading in a manner consistent with their mandate. Value-at-Risk VaR is a statistical estimate of the potential loss from adverse market movements over a specified time horizon within a specified probability (confidence level). It provides a common risk measure across financial instruments, markets and asset classes. We estimate VaR using a model that simulates revenue and loss distributions onJefferies Group's trading portfolios by applying historical market changes to the current portfolio.Jefferies Group calculates a one day VaR using a one year look-back period measured at a 95% confidence level. As with all measures of VaR, the estimate has inherent limitations due to the assumption that historical changes in market conditions are representative of the future. Furthermore, the VaR model measures the risk of a current static position over a one day horizon and might not capture the market risk over a longer time horizon where moves may be more extreme. Previous changes in market risk factors may not generate accurate predictions of future market movements. While we believe the assumptions and inputs in our risk model are reasonable, we could incur losses greater than the reported VaR. Consequently, this VaR estimate is only one of a number of tools we use in our daily risk management activities. There was an increase inJefferies Group's average daily VaR to$13.63 million for 2021 from$10.51 million for 2020. The increase was primarily due to higher equity VaR as a result of increased equity exposure and market volatility, as the historical volatility from 2020 remained in its rolling one year look-back period for most of 2021. Interest rate and credit spreads VaR was lower driven by a decrease in fixed income interest rate exposure over the period. This decrease was offset by a lower diversification benefit across asset classes and business divisions. 59
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The following table illustrates each separate component of VaR for each
component of market risk by interest rate and credit spreads, equity, currency
and commodity products, as well as for
Daily VaR (1)
Value-at-Risk in Trading Portfolios
VaR at VaR at November 30, November 30, Risk Categories 2021 Daily VaR for 2021 2020 Daily VaR for 2020 Average High Low Average High Low Interest Rates and Credit Spreads$ 4.60 $ 5.46 $ 11.15 $ 3.21 $ 7.66 $ 7.90 $ 12.50 $ 3.93 Equity Prices 9.85 11.66 18.98 6.17 12.54 8.01 14.91 3.68 Currency Rates 0.12 0.12 0.31 0.03 0.16 0.21 2.17 0.03 Commodity Prices 0.15 0.39 0.77 0.13 0.44 0.70 1.56 0.24 Diversification Effect (2) (2.06) (4.00) N/A N/A (2.04) (6.31) N/A N/A Firmwide$ 12.66 $ 13.63 $ 22.91 $ 6.94 $ 18.76 $ 10.51 $ 22.78 $ 5.02 (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 asJefferies Group's firmwide VaR and the VaR values for the four risk categories might have occurred on different days during the year. The aggregated VaR presented here is less than the sum of the individual components (i.e., interest rate risk, foreign exchange rate risk, equity risk and commodity price risk) due to the benefit of diversification among the four risk categories. Diversification benefit equals the difference between aggregated VaR and the sum of VaRs for the four risk categories and arises because the market risk categories are not perfectly correlated.Jefferies Group performs daily back-testing of its VaR model comparing realized revenue and loss with the previous day's VaR. Back-testing results are included in the quarterly risk review pack for its Board of Directors. The primary method used to test the efficacy of the VaR model is to compare actual daily net revenue for those positions included in the VaR calculation with the daily VaR estimate. This evaluation is performed at various levels of the trading portfolio, from the overall level down to specific business lines. For the VaR model, trading related revenue is defined as principal transactions revenues, trading related commissions, revenue from securitization activities and net interest income. For a 95% confidence one day VaR model (i.e., no intra-day trading), assuming current changes in market value are consistent with the historical changes used in the calculation, net trading losses would not be expected to exceed the VaR estimates more than twelve times on an annual basis (i.e., once in every 20 days). During 2021, results of the evaluation at the aggregate level demonstrated eight days when the net trading loss exceeded the 95% one day VaR. 60 -------------------------------------------------------------------------------- The chart below reflects our daily VaR over the last four quarters. The increases frommid-December 2020 throughmid-January 2021 were driven by the high historical volatility observed throughout the initial period in 2020 driven by the impact of COVID-19. The lower trend fromJanuary 2021 to the end ofFebruary 2021 was driven by exposure reductions, while equity exposure increased at various points fromMarch 2021 through earlyJune 2021 . VaR trended lower fromJune 2021 and throughout most of the remainder of 2021 due to position reductions and as the remaining volatile days from 2020 dropped out of the time series. The uptick in VaR towards the end of 2021 was driven by increased equity exposure. [[Image Removed: jef-20211130_g2.jpg]] Daily Net Trading Revenue There were 60 days with trading losses out of a total of 252 trading days in 2021. The loss days in 2021 were primarily driven by certain equity funds inJefferies Group's Asset Management business, SPAC-related activity and idiosyncratic positions in its equity trading business and certain block positions that were liquidated during the year. The histogram below presents the distribution of actual daily net trading revenue for substantially all ofJefferies Group's trading activities for 2021 (in millions). [[Image Removed: jef-20211130_g3.jpg]] 61 -------------------------------------------------------------------------------- Other Risk Measures Certain positions within financial instruments are not included in the VaR model because VaR is not the most appropriate measure of risk. Accordingly,Jefferies Group's Risk Management has additional procedures in place to assure that the level of potential loss that would arise from market movements are within acceptable levels. Such procedures include performing stress test and profit and loss analysis. The table below presents the potential reduction in net income associated with a 10% stress of the fair value ofJefferies Group's positions that are not included in the VaR model atNovember 30, 2021 (in thousands): 10% Sensitivity Investment in funds (1)$ 101,233 Private investments 14,918 Corporate debt securities in default 9,297 Trade claims 3,190
(1) Includes investments in hedge funds, fund of funds and private equity funds. For additional information on these investments, see Note 4 in our consolidated financial statements.
VaR also excludes the impact of changes inJefferies Group's own credit spreads on its structured notes for which the fair value option was elected. The estimated credit spread risk sensitivity for each one basis point widening inJefferies Group's own credit spreads on financial liabilities for which the fair value option was elected was an increase in value of approximately$1.5 million atNovember 30, 2021 , which is included in Accumulated other comprehensive income (loss). Stress Tests and Scenario Analysis Stress tests are used to analyze the potential impact of specific events or extreme market moves on the current portfolio both firm wide and within business segments. Stress testing is an important part of our risk management approach because it allows us to quantify our exposure to tail risks, highlight potential loss concentrations, undertake risk/reward analysis, set risk controls and overall assess and mitigate its risk. We employ a range of stress scenarios, which comprise both historical market price and rate changes and hypothetical market environments, and generally involve simultaneous changes of many risk factors. Indicative market changes in our scenarios include, but are not limited to, a large widening of credit spreads, a substantial decline in equities markets, significant moves in selected emerging markets, large moves in interest rates and changes in the shape of the yield curve. Unlike VaR, which measures potential losses within a given confidence interval, stress scenarios do not have an associated implied probability. Rather, stress testing is used to estimate the potential loss from market moves that tend to be larger than those embedded in the VaR calculation. Stress testing complements VaR to cover for potential limitations of VaR such as the breakdown in correlations, non-linear risks, tail risk and extreme events and capturing market moves beyond the confidence levels assumed in the VaR calculations. Stress testing is performed and reported at least weekly as part of our risk management process and on an ad hoc basis in response to market events or concerns. Current stress tests provide estimated revenue and loss of the current portfolio through a range of both historical and hypothetical events. The stress scenarios are reviewed and assessed at least annually so that they remain relevant and up to date with market developments. Additional hypothetical scenarios are also conducted on a sub-portfolio basis to assess the impact of any relevant idiosyncratic stress events as needed. 62 -------------------------------------------------------------------------------- Counterparty Credit Risk Credit risk is the risk of loss due to adverse changes in a counterparty's credit worthiness or its ability or willingness to meet its financial obligations in accordance with the terms and conditions of a financial contract. We are exposed to credit risk as a trading counterparty to other broker-dealers and customers, as a counterparty to derivative contracts, as a direct lender and through extending loan commitments and providing securities-based lending and as a member of exchanges and clearing organizations. Credit exposure exists across a wide-range of products, including cash and cash equivalents, loans, securities finance transactions and over-the-counter derivative contracts. The main sources of our credit risk are: •Loans and lending arising in connection with our investment banking and capital markets activities, which reflects our exposure at risk on a default event with no recovery of loans. Current exposure represents loans that have been drawn by the borrower and lending commitments that are outstanding. In addition, credit exposures on forward settling traded loans are included within our loans and lending exposures for consistency with the balance sheet categorization of these items. Loans and lending also arise in connection with our portion ofJefferies Group's Secured Revolving Credit Facility that is withJefferies Group andMassachusetts Mutual Life Insurance Company , to be funded equally, to support loan underwritings byJefferies Finance . See Note 9 for additional information on this facility. In addition,Jefferies Group has loans outstanding to certain of its officers and employees (none of whom are executive officers or directors). See Note 25 for additional information on these employee loans. •Securities and margin financing transactions, which reflect our credit exposure arising from reverse repurchase agreements, repurchase agreements and securities lending agreements to the extent the fair value of the underlying collateral differs from the contractual agreement amount and from margin provided to customers. •OTC derivatives, which are reported net by counterparty when a legal right of setoff exists under an enforceable master netting agreement. OTC derivative exposure is based on a contract at fair value, net of cash collateral received or posted under credit support agreements. In addition, credit exposures on forward settling trades are included within derivative credit exposures. •Cash and cash equivalents, which include both interest-bearing and non-interest-bearing deposits at banks.
Credit is extended to counterparties in a controlled manner and in order to generate acceptable returns, whether such credit is granted directly or is incidental to a transaction. All extensions of credit are monitored and managed as a whole to limit exposure to loss related to credit risk. Credit risk is managed according to the Credit Risk Management Policy, which sets out the process for identifying counterparty credit risk, establishing counterparty limits, and managing and monitoring credit limits. The policy includes our approach for:
•Client on-boarding and approving counterparty credit limits; •Negotiating, approving and monitoring credit terms in legal and master documentation; •Determining the analytical standards and risk parameters for ongoing management and monitoring credit risk books; •Actively managing daily exposure, exceptions and breaches; and •Monitoring daily margin call activity and counterparty performance. Counterparty credit exposure limits are granted within our credit ratings framework, as detailed in the Credit Risk Management Policy.Jefferies Group's Credit Risk Department assesses counterparty credit risk and sets credit limits at the counterparty master agreement level. Limits must be approved by appropriate credit officers and initiated in our credit and trading systems before trading commences. All credit exposures are reviewed against approved limits on a daily basis.Jefferies Group's Secured Revolving Credit Facility, which supports loan underwritings byJefferies Finance , is governed under separate policies other than the Credit Risk Management Policy and is approved byJefferies Group's Board of Directors. The loans outstanding to certain ofJefferies Group's officers and employees are extended pursuant to a review by its most senior management. Current counterparty credit exposures are summarized in the tables below and provided by credit quality, region and industry. Credit exposures presented take netting and collateral into consideration by counterparty and master agreement. Collateral taken into consideration includes both collateral received as cash as well as collateral received in the form of securities or other arrangements. Current exposure is the loss that would be incurred on a particular set of positions in the event of default by the counterparty, assuming no recovery. Current exposure equals the fair value of the positions less collateral. Issuer risk is the credit risk arising from inventory positions (for example, corporate debt securities and secondary bank loans). Issuer risk is included in our country risk exposure tables below. 63 -------------------------------------------------------------------------------- The amounts in the tables below are for amounts included in the Consolidated Statements of Financial Condition atNovember 30, 2021 and 2020 (in millions). Counterparty Credit Exposure byCredit Rating Securities and Cash and Cash Total with Cash and Loans and Lending Margin Finance OTC Derivatives Total Equivalents Cash Equivalents At At At At At AtNovember 30 ,November 30 ,November 30 ,November 30 ,November 30 ,November 30 ,November 30 ,November 30 ,November 30 ,November 30 ,November 30 ,November 30, 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020AAA Range $ - $ -$ 0.8 $ 1.1 $ -$ 0.1 $ 0.8 $ 1.2 $ 6,924.9 $ 5,132.9 $ 6,925.7 $ 5,134.1 AA Range 60.0 45.2 111.7 111.7 13.0 9.8 184.7 166.7 5.1 7.8 189.8 174.5 A Range 0.4 0.2 530.4 542.2 338.0 147.2 868.8 689.6 1,869.4 1,967.9 2,738.2 2,657.5BBB Range 250.3 250.5 170.9 110.2 37.2 18.1 458.4 378.8 0.8 2.2 459.2 381.0 BB or Lower 40.0 50.0 11.4 8.3 71.0 201.6 122.4 259.9 0.1 0.1 122.5 260.0 Unrated 164.2 142.0 - - - 0.2 164.2 142.2 13.3 1.0 177.5 143.2 Total$ 514.9 $ 487.9 $ 825.2
Counterparty Credit Exposure by Region
Securities and Cash and Cash Total with Cash and Loans and Lending Margin Finance OTC Derivatives Total Equivalents Cash Equivalents At At At At At At November 30, November 30, November
30,
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020Asia /Latin America /Other$ 14.9 $ 15.0 $ 63.7 $ 72.6 $ 0.9 $ 6.9 $ 79.5 $ 94.5 $ 268.1 $ 248.4 $ 347.6 $ 342.9 Europe 0.3 0.1 300.8 313.0 66.4 42.5 367.5 355.6 57.0 96.4 424.5 452.0North America 499.7 472.8 460.7 387.9 391.9 327.6 1,352.3 1,188.3 8,488.5 6,767.1 9,840.8 7,955.4 Total$ 514.9 $ 487.9 $
825.2
1,799.3
Counterparty Credit Exposure by Industry
Securities and Cash and Cash Total with Cash and Loans and Lending Margin Finance OTC Derivatives Total Equivalents Cash Equivalents At At At At At At November 30, November 30, November 30, November 30, November 30, November 30,
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 Asset Managers $ -$ 0.2 $ - $ - $ - $ - $
-
250.7 250.7 602.9 558.6 388.9 178.8 1,242.5 988.1 1,888.7 1,979.0 3,131.2 2,967.1 Corporates 158.2 132.7 - - 68.0 183.9 226.2 316.6 - - 226.2 316.6 As Agent Banks - - 185.2 190.0 - - 185.2 190.0 - - 185.2 190.0 Other 106.0 104.3 37.1 24.9 2.3 14.3 145.4 143.5 - - 145.4 143.5 Total$ 514.9 $ 487.9 $ 825.2 $ 773.5 $ 459.2 $ 377.0 $ 1,799.3 $ 1,638.4 $ 8,813.6 $ 7,111.9 $ 10,612.9 $ 8,750.3 For additional information regarding credit exposure to over-the-counter derivative contracts, see Note 5 in the consolidated financial statements. Country Risk Exposure Country risk is the risk that events or developments that occur in the general environment of a country or countries due to economic, political, social, regulatory, legal or other factors, will affect the ability of obligors of the country to honor their obligations. We define the country of risk as the country of jurisdiction or domicile of the obligor, and monitors country risk resulting from both trading positions and counterparty exposure, which may not include the offsetting benefit of any financial instruments utilized to manage market risk. 64 -------------------------------------------------------------------------------- The following tables reflect our top exposure to the sovereign governments, corporations and financial institutions in those non-U.S. countries in which we have a net long issuer and counterparty exposure, as reflected in the Consolidated Statements of Financial Condition atNovember 30, 2021 and 2020 (in millions): November 30, 2021 Issuer Risk Counterparty Risk Issuer and Counterparty Risk Including Fair Value of Fair Value of Net Derivative Loans Securities Excluding Cash and Long Debt Short Debt Notional and and Margin OTC Cash and Cash and Cash Cash Securities Securities Exposure Lending Finance Derivatives Cash Equivalents Equivalents EquivalentsCanada $ 196.4 $ (94.2) $ 1.3 $ -$ 63.1 $ 259.5 $ 1.7 $ 426.1$ 427.8 United Kingdom 570.6 (350.1) (1.4) 0.3 68.9 24.9 26.7 313.2 339.9Hong Kong 27.9 (18.3) (1.8) - 2.5 - 160.6 10.3 170.9Japan 247.3 (205.4) (3.1) - 18.3 0.1 51.4 57.2 108.6Spain 191.4 (111.8) (0.1) - 25.3 0.3 - 105.1 105.1Australia 134.1 (78.5) 0.6 - 25.5 - 7.5 81.7 89.2Netherlands 220.2 (142.0) 0.7 - 3.9 0.1 1.3 82.9 84.2Switzerland 97.3 (67.6) 3.5 - 40.3 2.5 2.7 76.0 78.7France 210.7 (201.7) (59.5) - 99.6 26.9 - 76.0 76.0China 458.4 (356.9) (34.1) - - - - 67.4 67.4 Total$ 2,354.3 $ (1,626.5) $ (93.9) $ 0.3 $ 347.4 $ 314.3 $ 251.9$ 1,295.9 $ 1,547.8 November 30, 2020 Issuer Risk Counterparty Risk Issuer and Counterparty Risk Fair Value of Fair Value of Net Derivative Loans Securities Excluding Including Long Debt Short Debt Notional and and Margin OTC Cash and Cash and Cash Cash and Securities Securities Exposure Lending Finance Derivatives Cash Equivalents Equivalents Cash EquivalentsItaly $ 1,929.5 $ (921.6) $ (618.9) $ - $ - $ 0.1 $ - $ 389.1 $ 389.1United Kingdom 464.0 (235.8) (46.7) 0.1 67.4 5.2 64.8 254.2 319.0France 357.3 (290.9) 48.3 - 140.8 24.3 - 279.8 279.8Germany 470.7 (352.7) 40.2 - 63.1 11.3 26.7 232.6 259.3Australia 32.7 (17.8) 173.9 - 24.9 - 12.8 213.7 226.5Hong Kong 35.2 (11.8) 0.7 - 0.1 - 157.4 24.2 181.6Canada 417.3 (326.8) 1.3 - 20.4 64.3 2.1 176.5 178.6Austria 151.2 (73.6) - - - - - 77.6 77.6India 50.9 (6.7) - - - - 24.3 44.2 68.5Switzerland 104.0 (72.2) 2.9 - 31.6 1.3 0.4 67.6 68.0 Total$ 4,012.8 $ (2,309.9) $ (398.3) $ 0.1 $ 348.3 $ 106.5 $ 288.5$ 1,759.5 $ 2,048.0 Operational Risk Operational risk is the risk of financial or non-financial impact, resulting from inadequate or failed internal processes, people and systems or from external events. We interpret this definition as including not only financial loss or gain but also other negative impacts to our objectives such as reputational impact, legal/regulatory impact and impact on our clients. Third-party risk is also included as a subset of Operational Risk and is defined as the potential threat presented to us, or our employees or clients, from our supply chain and other third-parties used to perform a process, service or activity on our behalf. Our Operational Risk framework includes governance as well as operational risk processes, which is comprised of operational risk event capture and analysis, risk and control self-assessments, operational risk key indicators, action tracking, risk monitoring and reporting, deep dive risk assessments, new business approvals and vendor risk management. Each revenue producing and support department is responsible for the management and reporting of operational risks and the implementation of the Operational Risk Management Policy and processes within the department with regular operational risk training provided to our employees. 65 -------------------------------------------------------------------------------- Operational Risk events are mapped to Risk Categories used for the consistent classification of risk data to support root cause and trend analysis. These include: • Fraud and Theft; • Clients and Business Practices; • Market Conduct/Regulatory Compliance; • Business Disruption; • Technology; • Data Protection and Privacy; • Trading; • Transaction and Process Management; • People; • Cyber; and • Vendor Risk. Operational Risk Management Policy, framework, infrastructure, methodology, processes, guidance and oversight of the operational risk processes are centralized and consistent firm wide and additionally subject to regional and legal entity operational risk governance as required. We also maintain a firm wide Third-Party ("Vendor") Risk Management Policy & Framework to ensure adequate control and monitoring over our critical third parties which includes processes for conducting periodic reviews covering areas of risk including financial health, information security, privacy, business continuity management, disaster recovery and operational risk. Our leadership is continuously monitoring circumstances around COVID-19, as well as economic and capital market conditions, and providing frequent communications to both our clients and our employees. We continue to adopt enhanced cleaning practices across our offices, have established protocols for office access, travel, meetings and entertainment to ensure the safety of our people and clients, and continue to work actively with our employees to navigate the constantly changing environment. Our Business Continuity Plan is operating effectively across a hybrid remote working environment across all functions without any meaningful disruptions to our business or control processes. Additionally, we are working continuously with all of our critical vendors regarding their own pandemic responses to ensure there is minimal impact on our business operations. Model Risk Model risk refers to the risk of losses resulting from decisions that are based on the output of models, due to errors or weaknesses in the design and development, implementation, or improper use of models. We use quantitative models primarily to value certain financial assets and liabilities and to monitor and manage our risk. Model risk is a function of the model materiality, frequency of use, complexity and uncertainty around inputs and assumptions used in a given model. Robust model risk management is a core part of our risk management approach and is overseen through our risk governance structure and risk management controls. Legal and Compliance Risk Legal and compliance risk includes the risk of noncompliance with applicable legal and regulatory requirements. We are subject to extensive regulation in the different jurisdictions in which we conduct our business. We have various procedures addressing issues such as regulatory capital requirements, sales and trading practices, use of and safekeeping of customer funds, credit granting, collection activities, anti-money laundering and record keeping. These risks also reflect the potential impact that changes in local and international laws and tax statutes have on the economics and viability of current or future transactions. In an effort to mitigate these risks, we continuously review new and pending regulations and legislation and participate in various industry interest groups. We also maintain an anonymous hotline for employees or others to report suspected inappropriate actions by us or by our employees or agents.
New Business Risk
New business risk refers to the risks of entering into a new line of business or offering a new product. By entering a new line of business or offering a new product, we may face risks that we are unaccustomed to dealing with and may increase the magnitude of the risks we currently face. The New Business Committee reviews proposals for new businesses and new products to determine if we are prepared to handle the additional or increased risks associated with entering into such activities. 66
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Reputational Risk
We recognize that maintaining our reputation among clients, investors, regulators and the general public is an important aspect of minimizing legal and operational risks. Maintaining our reputation depends on a large number of factors, including the selection of our clients and the conduct of our business activities. We seek to maintain our reputation by screening potential clients and by conducting our business activities in accordance with high ethical standards. Our reputation and business activity can be affected by statements and actions of third-parties, even false or misleading statements by them. We actively monitor public comment concerning us and are vigilant in seeking to assure accurate information and perception prevails.
Other Risk
We are also subject to interest rate risk on our long-term fixed interest rate debt. Generally, the fair market value of debt securities with a fixed interest rate will increase as interest rates fall, and the fair market value will decrease as interest rates rise. The following table represents principal cash flows by expected maturity dates and the related weighted-average interest rate on those maturities for our consolidated long-term debt obligations. For the variable rate borrowings, the weighted-average interest rates are based on the rates in effect at the reporting date. Our market risk with respect to foreign currency exposure on our long-term debt is also shown below. For additional information, see Note 12 to our consolidated financial statements.
Expected Maturity Date (Fiscal Years)
2022 2023 2024 2025 2026 Thereafter Total Fair Value (Dollars in thousands) Rate Sensitive Liabilities: Fixed Interest Rate Borrowings $ -$ 1,166,748
Weighted-Average Interest Rate - % 3.44 % 1.23 % 0.42 % 0.71 % 4.07 %
Variable Interest Rate Borrowings
Weighted-Average Interest Rate 2.79 % 2.29 % 1.90 % 1.81 % 0.64 % 2.67 %
Borrowings with Foreign Currency Exposure $ - $ -
$ 566,150 $ - $ -$ 742,789 $ 1,308,939 $ 1,341,254 Weighted-Average Interest Rate - % - % 1.00 % - % - % 2.52 % 67
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