investment income from managed funds

Interest on mandatorily redeemable preferred interest of consolidated subsidiaries

Net revenues, less mandatorily redeemable preferred interest

Statement of Earnings

Net revenues, less mandatorily redeemable preferred interest

Financial Ratios

Revenues by Source

Asset management fees and investment (loss)/income from managed funds:

Other Data

Note - All share information below for EPS purposes is based upon weighted-average balances for the applicable period.

(1) Shares outstanding represents shares issued less shares repurchased in treasury stock. Shares issued includes public and private offerings, earned and unearned restricted stock, distributions related to restricted stock units, deferred compensation plans, employee stock purchase plan and stock option exercises. Shares issued does not include undistributed earned and unearned restricted stock units.

(2) As certain restricted stock is contingent upon a future service condition, unearned shares are removed from shares outstanding in the calculation of basic EPS as Jefferies' obligation to issue these shares remains contingent.

(3) As earned restricted stock units are no longer contingent upon a future service condition and are issuable upon a certain date in the future, earned restricted stock units are added to shares outstanding in the calculation of basic EPS.

(4) Other shares issuable include shares issuable to settle previously granted restricted stock awards and shares issuable under certain deferred compensation plans.

(5) Calculated under the treasury stock method. The treasury stock method assumes the issuance of only a net incremental number of shares as proceeds from issuance are assumed to be used to repurchase shares at the average stock price for the period.

(6) Calculated under the if-converted method. The if-converted method assumes the conversion of convertible securities at the beginning of the period.

(7) Represents the potential common shares issuable under the conversion spread (the excess conversion value over the accreted debt value) based on the average stock price for the period.

(1) The following details the calculation of basic and diluted earnings per share as included in our quarterly and annual reports.

Net (loss) earnings to noncontrolling interests

(2) This amount represents a preliminary estimate as of the date of this earnings release and may be revised in our Quarterly Report on Form 10-Q for the period ended August 31, 2011.

(3) Level 3 assets represent those financial instruments classified as such under ASC 820, accounted for at fair value and included within Financial instruments owned. Level 3 assets for which we bear no economic exposure were $69.0 million at August 31, 2011, which is reflective of the portion of our Level 3 assets that are financed by nonrecourse secured financing or attributable to third party or employee noncontrolling interests in certain consolidated entities.

(4) Level 3 assets with economic exposure represents Level 3 assets adjusted for Level 3 assets that are either financed by nonrecourse secured financings or attributable to third party or employee noncontrolling interests in certain consolidated subsidiaries.

(5) Adjusted common stockholders’ equity (non-GAAP financial measure) represents total common stockholders’ equity plus the unrecognized compensation cost related to nonvested share based awards, i.e. granted restricted stock and restricted stock units which contain future service requirements. As of August 31, 2011, unrecognized compensation cost related to nonvested share based awards was $185.1 million. We believe that adjusted common stockholders’ equity is a meaningful measure as it reflects the current capital outstanding to stockholders, including employee common shareholders, that would be required to be paid out in liquidation.

(6) Common book value per share equals total common stockholders' equity divided by common shares outstanding.

(7) Adjusted book value per share (non-GAAP financial measure) equals adjusted common stockholders’ equity divided by adjusted shares outstanding. Adjusted tangible book value per share (non-GAAP financial measure) equals adjusted common stockholders’ equity less goodwill and identifiable intangible assets divided by adjusted common shares outstanding. As of August 31, 2011, goodwill and identifiable intangible assets equals $376.2 million. Previous quarters have been conformed to reflect this calculation. We believe these are meaningful measures as investors often incorporate the dilutive effects of outstanding capital in their valuations.

(8) Tangible common book value per share (non-GAAP financial measure) equals tangible common stockholders' equity divided by common shares outstanding. As of August 31, 2011, tangible common stockholders' equity equals total common stockholders' equity of $3,174.7 million less goodwill and identifiable intangible assets of $376.2 million. We believe that tangible common book value per share and tangible common stockholders' equity is meaningful as a valuation of financial companies are often measured as a multiple of tangible common stockholders' equity making these ratios meaningful for investors.

(9) Total capital includes our long-term debt, mandatorily redeemable convertible preferred stock, mandatorily redeemable preferred interest of consolidated subsidiaries and total stockholders' equity. Long-term debt included in total capitalization at August 31, 2011 is reduced by the amount of debt maturing in less than one year.

(10) Leverage ratio equals total assets divided by total stockholders' equity.

(11) Adjusted leverage ratio (non-GAAP financial measure) equals adjusted assets divided by tangible stockholders' equity. Adjusted assets (non-GAAP financial measure) equals total assets less securities borrowed, securities purchased under agreements to resell, cash and securities segregated, goodwill and indentifiable intangibles plus financial instruments sold, not yet purchased (net of derivative liabilities). As of August 31, 2011, adjusted assets were $36,831.2 million. We believe that adjusted assets is a meaningful measure as it excludes certain assets that are considered of lower risk as they are generally self-financed by customer liabilities through our securities lending activities.

(12) VaR is the potential loss in value of our trading positions due to adverse market movements over a one-day time horizon with a 95% confidence level. For a further discussion of the calculation of VaR, see "Market Risk" in Part II, Item 7A "Quantitative and Qualitative Disclosures About Market Risk" in our Transition Report on Form 10-K for the eleven months ended November 30, 2010.

(13) Adjusted shares outstanding equals common shares outstanding plus outstanding restricted stock units.

(14) As indicated in our Transition Report on Form 10-K for the eleven months ended November 30, 2010, we made correcting adjustments to our historical financial statements for the 2010 quarters. For additional information on these adjustments, see Note 1, Organization and Basis of Presentation, and Note 23, Selected Quarterly Financial Data (Unaudited), of the Consolidated Financial Statements of our Transition Report on Form 10-K for the eleven months ended November 30, 2010.

169,075

(A) The acquisition of the Global Commodities Group from Prudential resulted in a bargain purchase gain of $52.5 million recorded in Other revenues in the third quarter of 2011 as the fair value of the assets acquired and liabilities assumed exceeded the purchase price of $422 million, which was paid as cash consideration.

(B) In connection with the acquisition, compensation expense of $9.1 million was recognized for the three and nine month periods ended August 31, 2011 related to 1) severance costs for certain employees of the acquired Bache entities that were terminated subsequent to the acquisition, 2) the amortization of stock awards granted to former Bache employees as replacement awards for previous Prudential stock awards that were forfeited in the acquisition and 3) bonus costs for employees as a result of the completion of the acquisition.

(C) In connection with the acquisition, expenses (primarily professional fees) were recognized during the three and nine months ended August 31, 2011 directly related to the acquistion and/or integration of the acquired entities within Jefferies Group, Inc.

(D) Reflects the tax benefit associated with deducting total non-interest expenses of $11.4 million and $16.2 million during the three and nine months ended August 31, 2011, respectively, attributed to the acquisition of the Bache entities at an effective tax rate of 37%, which reflects our estimate of our full year tax rate. The bargain purchase gain is not a taxable item.

(E) The effects on basic and diluted earnings per share attributed to certain revenue and expense items recognized during the three months ended August 31, 2011 pertaining to the acquisition of Bache entities from Prudential were calculated using weighted average common shares of 218,426 and 218,431, respectively. The effects on basic and diluted earnings per share attributed to certain revenue and expense items recognized during the nine months ended August 31, 2011 pertaining to the acquisition of Bache entities from Prudential were calculated using weighted average common shares of 209,544 and 209,553, respectively. The conversion of our mandatorily redeemable convertible preferred stock was considered anti-dilutive for purposes of these calculations.

(F) Basic and diluted earnings per share excluding the effects of certain revenue and expense items recognized during the third quarter of 2011 pertaining to the acquisition of Bache entities from Prudential were calculated using weighted average common shares of 218,426 and 218,431, respectively. Basic and diluted earnings per share excluding the effects of certain revenue and expense items recognized during the nine months ended August 31, 2011 pertaining to the acquisition of Bache entities from Prudential were calculated using weighted average common shares of 209,544 and 213,661, respectively. The conversion of our mandatorily redeemable convertible preferred stock was considered anti-dilutive for purposes of the third quarter 2011 calculation.

(G) Reflects Compensation and benefits expense of $290.6 million and $1,165.4 million for the three and nine months ended August 31, 2011, respectively, after excluding certain compensation charges associated with the acquisition divided by Net revenues excluding the bargain purchase gain recognized in Other revenues during the third quarter of 2011 in connection with the acquisition of the Global Commodities Group from Prudential.

(H) Reflects Income tax expense after adjusting for the tax benefits of $4.3 million and $6.0 million for the three and nine months ended August 31, 2011, respectively, due to certain expense items identified as specifically incurred during those periods due to the acquisition of the Global Commodities Group from Prudential.