Jefferies (JEF) Completes Changes Aimed at Restoring Profitability in '09
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Jefferies Group, Inc. (NYSE: JEF) announced today that it has completed a strategic review and implemented changes designed to restore profitability in 2009. These changes include a substantial reduction in its headcount, changes in compensation plans, operating expense reductions, office closings, continuing risk reductions and other structural changes.
Jefferies expects to end 2008 with approximately 2,150 employees, as compared to 2,508 at the beginning of this year. The firm has now reduced its headcount by 18% year-over-year, not including approximately 85 new hires previously announced in mortgages and international equities. Jefferies is also closing its offices in Dubai, Singapore and Tokyo, and will restore its presence in these markets when appropriate. In addition, over the last several months, Jefferies has taken a number of steps aimed at reducing operating expenses, and otherwise improving productivity and its bottom line.
Jefferies currently expects to record a net operating loss for Q408 similar to that recorded in Q108 due to the extraordinary operating environment, before the impact of the severance costs, the office closing costs and the non-cash cost of writing off all unamortized stock-based compensation expense in respect of prior periods, as described above. The firm currently estimates that the aggregate impact of these costs will increase its Q4 loss by $340 million on an after tax basis. $320 million, or 95%, of this charge will be non-cash. Despite this loss, Jefferies expects its Shareholders' Equity at year-end will increase to an all-time, year-end high of approximately $2.3 billion, compared to $1.8 billion at December 31, 2007 and $2.2 billion at September 30, 2008.
Jefferies Group, Inc., together with its subsidiaries, operates as an investment bank and institutional securities company in the Americas, Europe, Asia, and the Middle East.
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