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    • Jefferies Group, Inc. – Our Mission To build the leading investment bank serving growing and mid- sized companies and their investors – led by the strongest capital markets trading platform in the industry Sales & Trading Investment Securities Banking Growing and mid-sized companies Research Asset Management 1
    • Key Franchise Highlights Leading middle-market focused franchise Client-oriented culture based on long-term institutional relationships Outstanding trading platform: equity, high yield and convertibles Diversified business mix focused on serving growing and mid-sized companies and investors – trading, investment banking, research, asset management Strong and liquid capital position with over $1.5 billion, pro forma, in cash and short-term investments 2,045 employee-shareholders own approximately 53% of Jefferies. Human capital is our most significant investment Management: Aligned, experienced and motivated 6 Consecutive Years of Record Revenues and Earnings 2
    • 2005 Highlights – Record Results Record Gross Revenues $1.5 Billion Record Net Revenues $1.2 Billion Record EBITDA $575 million (1) Record Net Earnings $157 million Record EPS $2.32 Book Value (Approximately 83% Tangible) $1.3 billion Current Market Capitalization (fully diluted) (2) $3.5 Billion RATED BBB+ BY FITCH IN JANUARY 2006 UPGRADED TO BAA1 BY MOODY'S IN JANUARY 2005 (1) A reconciliation to the most comparable GAAP financial measure is located on page 26. (2) As of close on January 20, 2006; based on the number of diluted shares outstanding as used in the Company’s diluted EPS calculation for the reported period. 3
    • Recent Strong Performance Net Revenues Net Earnings Book Value CAGR 16% CAGR 27% $157 CAGR 22% $131 $1,287 $1,205 $1,058 $1,039 $830 $84 $838 $670 $675 $60 $63 $629 $566 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 ($ in Millions) ($ in Millions) ($ in Millions) ($ in Millions) ($ in Millions) ($ in Millions) (1) EBITDA EPS Market Cap CAGR 25% $575 CAGR 19% $2.32 CAGR 31% $3,461 $2.06 $2,608 $382 $1.42 $2,016 $257 $235 $204 $1.14 $1.14 $1,153 $1,159 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 2001 2002 2003 2004 Current ($ in Millions) ($ in Millions) ($ in Millions) ($ in Millions) (1) Based on the number of diluted shares outstanding as used in the Company’s diluted EPS calculation for the reported period. Note: CAGR represents compounded annual growth rate over 4 year period. 4
    • JEF Stock Performance Relative to Peers Lehman Raymond Bear Broker Merrill A.G. Goldman Morgan Charles Knight Jefferies Brothers James Stearns Index (1) Lynch Edwards Sachs Stanley Schwab Trading 356% 350% Change in Stock Price January 1, 2000 – January 20, 2006 300% 250% 218% 213% 200% 180% 150% 129% 100% 70% 43% 40% 50% 0% (17%) (50%) (43%) (100%) (77%) (1) AMEX Securities Broker/Dealer Index ®. 5
    • Diversified Revenues – Focused on the Middle Market Net Revenues 1990 (1) 2000 2005 7% 15% 5% 0% 8% 3% 7% 15% 2% 2% 85% 78% 41% 49% 85% 78% $128mm 7% $617mm $1.2 Billion Sales & Trading Investment Banking Asset Management Interest & Other (1) Excludes discontinued Investment Technology operations. 6
    • Investment in Human Capital Total Headcount 2,500 2,045 2,000 1,783 1,594 1,357 1,500 1,211 1,014 885 1,000 500 1999 2000 2001 2002 2003 2004 2005 Headcount Increases by Division Since 1999 Investment Banking Division 477 Research 92 Equity Sales, Trading & Execution 170 Asset Management 56 Bonds Direct 97 High Yield Division 19 7
    • Aligned & Motivated Management Team Years at Years in the Name Title Jefferies Industry Ownership % (1) Richard B. Handler (2) Chairman and CEO 15 18 9.5% Brian P Friedman (3) Chairman, Executive 4 21 2.4% Committee Joseph A. Schenk (2) CFO 11 15 0.6% Other 6 Executive Committee Members 90 144 6.2% Total Executive Committee 120 198 18.7% The Jefferies "Family" (4) 53.2% (1) Includes all equity holdings, options, interests in compensation and incentive plans, and economic interests. Assumes expiration of all vesting and deferral periods. (2) Based on information contained in Jefferies’ Proxy Statement filed with the SEC on April 15, 2005. (3) Based on information contained in Mr. Friedman’s Form 3 and Form 4s filed with the SEC. (4) Includes all Jefferies employees, management, directors and retirees currently working as consultants to the Company. 8
    • Equity Sales & Trading – Deep Institutional Relationships Relationships with over 2,000 accounts 220 person sales force – average senior sales trader has been with Jefferies for approximately 14 years Primarily low risk agency and principal trading Diversified customer base – over 300 accounts make up approximately 80% of equity trading revenues, significantly more than most Wall Street firms Jefferies traded an average of 75 million shares per trading day in U.S. Equities during 2004 Jefferies Execution Services executes over 145 million shares per day on the NYSE, representing nearly 10% of average daily reported NYSE volume Nasdaq Market Maker in more than 2,400 securities, including 500 ADRs New Product Opportunities - Bulletin Boards (2002), ADR (2002), ETF (2004), Options (2005) 500 Gaining market share Rev (millions)/Vol (billions 425 $446 350 $382 $396 $392 amid declining industry- 275 wide block trading 275 200 212 188 volumes 181 125 50 2002 2003 2004 2005 JEF Equity Trading Revenues ($ millions) Industry Block Trading Volumes (billions) 9
    • Investment Banking – Dominant Player in the Middle Market Nearly 400 professionals with world class expertise and experience focused primarily on middle market companies Name The 2005 Middle Market Investment Bank of the Year by Investment Banking Revenues ($ in Millions) Investment Dealers’ Digest In 2005, Jefferies completed more than $600 $495 250 transactions valued over $65 billion CAGR-35% $500 Leading M&A Advisor, announcing $353 $400 nearly 500 M&A transactions worth nearly $85 billion since 1997 $300 $230 Top 15 – Deals under $1 billion $124 $140 $200 $91 #2 – Deals under $250mm $81 $100 Top in-house restructuring practice, with over $100 billion in restructured $0 1999 2000 2001 2002 2003 2004 2005 liabilities since 1993 Note: CAGR represents compounded annual growth rate over 6-year period. 10
    • High Yield Rankings 2001 – 2005 Single B New Issues Under $150 Million 2005 Single B New Issues Under $150 Million Manager Proceeds Rank Deals Manager Proceeds Rank Deals Jefferies & Co Inc $3,026.8 1 34 Jefferies & Co Inc $415.5 1 5 Banc of America Securities LLC 1,734.9 2 27 Banc of America Securities LLC 348.4 2 6 JP Morgan 1,593.5 3 26 Bear Stearns & Co Inc 250.7 3 4 Deutsche Bank AG 1,542.4 4 22 Lehman Brothers 228.0 4 3 Credit Suisse First Boston 1,524.0 5 23 JP Morgan 169.8 5 3 Citigroup 959.3 6 13 Citigroup 150.8 6 3 UBS 909.9 7 13 UBS 136.5 7 3 Wachovia Corp 796.8 8 12 Merrill Lynch & Co Inc 127.5 8 2 Goldman Sachs & Co 734.7 9 9 Wachovia Corp 61.5 9 1 Bear Stearns & Co Inc 674.4 10 9 Deutsche Bank AG 60.0 10 1 Lehman Brothers 633.8 11 9 Credit Suisse First Boston 30.8 11 1 Morgan Stanley 552.5 12 9 Merrill Lynch & Co Inc 403.9 13 7 CIBC World Markets Inc 262.5 14 5 Morgan Joseph & Co Inc 125.0 15 1 Note: Excludes split rated, mortgage and asset-backed securities. Full credit to book runner, equal credit if joint-book runners. Source: Securities Data Corporation and Jefferies & Company, Inc. 11
    • M&A Ranking Deals <$1,000 million Deals <$500 million Deals <$250 million Rank Financial Advisor Deals Rank Financial Advisor Deals Rank Financial Advisor Deals 1 Houlihan Lokey 121 1 Houlihan Lokey 117 1 Houlihan Lokey 112 2 Goldman Sachs 99 2 UBS 80 2 Jefferies & Company 64 3 Credit Suisse First Boston 94 3 Goldman Sachs 78 3 UBS 62 4 UBS 93 4 Credit Suisse First Boston 74 4 Credit Suisse First Boston 54 5 Citigroup 90 5* Citigroup 72 5 Morgan Stanley 53 6 JP Morgan 89 5* JP Morgan 72 6 Banc of America Securities 52 7* Banc of America Securities 78 7 Jefferies & Company 68 7 Keefe Bruyette & Woods 50 7* Merrill Lynch 78 8 Banc of America Securities 67 8* Citigroup 48 7* Morgan Stanley 78 9 Morgan Stanley 65 8* JP Morgan 48 10 Lehman Brothers 76 10 Merrill Lynch 64 10 Goldman Sachs 47 11 Jefferies & Company 71 11 Lehman Brothers 62 11 Wachovia Corp 46 Source: SDC Platinum. Transactions Announced 1/1/2005 - 9/30/2005. All Tables Include Transactions Where Value Is Undisclosed. Excludes: Tender Offers, Exchange Offers, Self-tenders, Repurchases, Remaining Interests, Privatizations. 12
    • Investment Banking – New Strategic Partners JEF acquired Broadview for approximately $36.4mm JEF acquired Quarterdeck for approximately $29.5mm in initial consideration (57% cash & 43% JEF stock) in initial consideration and a 5 year contingency for and a 5 year contingency for additional additional consideration. The initial consideration, net consideration. of cash acquired in the acquisition, was comprised of 75 professionals in New York, Silicon Valley, Boston approximately 55% cash and 45% JEF restricted stock and London; Expands investment banking for aerospace, defense, Over the last 5 years, Broadview has completed 321 space and government IT; leverages JEF platform M&A transactions worth $54.3 billion; JEF acquired Randall & Dewey for approximately JEF acquired Helix for approximately $35.1mm in initial $43.2mm in initial consideration and a 5 year consideration and a five year contingency for additional contingency for additional consideration. consideration. Expands investment banking for global oil and gas Expands the array of services that JEF can offer private companies; leverages JEF platform equity firms as Helix is one of Europe's leading independent placement agents with over $17.5 billion Over 100 professionals in Houston, London and raised since 1998. Calgary. Five Executive Directors and seven other placement professionals in London with expansion plans for New York and Los Angeles. 13
    • Investment Banking – Diversified Service and Industry Focus Services Industries Equity Media Convertibles Telecom Growth Capital High Yield Healthcare Industries Markets Investment Grade Technology Products Loans Financial Sponsors / General Structured Finance Exploration and Production Private Placements Industrials Advisory M&A Advisory Aerospace / Defense Products Basic Restructuring Gaming Industries Fund Placement Oil Services & Maritime Consumer New since 2000 Financial Services 14
    • Investment Banking – Diversified by Product and Industry By Product – FY 2005 By Industry – FY 2005 Aerospace/ Restructuring Defense Consumer 8% Telecom 7% 12% 5% M&A Gaming 38% 4% Equity 18% Industrial 15% Energy General 24% 6% Advisory Healthcare Debt 3% 10% 24% Convertible Media/ 3% Telecomm Fin Svcs Technology 2% 6% 15% 15
    • Investment Banking – Jefferies Babson Finance, LLC Partners: Jefferies and MassMutual’s Babson Capital Objective: Provide senior lending to middle market customers Estimated loans to be written over 3-4 years: $10 billion Estimated hold capacity of JV: $2 billion in loans Equity: $250 million commitment by each partner Partners’ responsibilities: – Jefferies - origination – Babson - analytical and portfolio management services 16
    • High Yield Sales & Trading A top secondary market trader, trading approximately $20 billion face value in securities annually Makes markets in more than 500 issues with over 300 institutions Focus on “Single B” credits and distressed debt Each high yield trader has at least 14 years industry experience Consistently profitable in all environments since 1990 Asset Management – Jefferies Partners Family of Opportunity Funds High Yield Secondary Trading Revenues ($ in millions) $62 $80 $40 $45 $60 $27 $40 $20 $0 2002 2003 2004 2005 17
    • Research – Small and Mid-Cap Focus Covered Sectors Professionals Companies Under Coverage Equity 89 597 Media & High Yield 14 300 Consumer Entertainment Converts 1 80 International 12 123 Energy Oil Services and Maritime Total 116 1,100 Financials Post-Reorganization Services Equity - Covered Companies by Market Cap Gaming & Leisure Special Situations $0-$500mm 22% Healthcare Technology $500mm-$2.0B 37% $2.0B-$5.0B 17% Industrials Telecommunications $5.0B + 24% Equity Research – Companies Covered Ranked No. 2 Firm in the Wall Street Journal’s 597 “2005 Best on the Street” survey and a Top 10 firm in the 600 505 2004 Forbes/StarMine Analyst Awards 500 412 343 400 262 300 216 200 2000 2001 2002 2003 2004 Q3 2005 18
    • Asset Management – Leveraging the Platform Continued to build the infrastructure for a substantial asset management business - total headcount of 56 Leverage relationships with trading, investment banking and sponsor groups Current strategies – High Yield, Private Equity, International Convertible Bonds, Long/Short, CDO, and Real Assets Fees largely performance-based Asset Management Revenues ($ in millions) Asset Under Management ($ in millions) $81 $82 $3.3BB $100 $4,000 $3.0BB $190 $140 $80 $505 $3,000 $1.6BB $464 $1,038 $60 $33 $1.1BB $602 $20 $2,000 $22 $40 $417 $581 $1,767 $1,656 $20 $1,000 $732 $971 $0 $0 2002 2003 2004 2005 2002 2003 2004 2005 Strategy Equity-linked Debt Equities Commodities 19
    • Other Products Convertibles Sales & Trading $37 million in 2005 revenues 75 experienced professions located on trading desks in New York, London, Tokyo, Zurich and Paris who have relationships with over 350 accounts Make markets in over 400 convertible securities Jefferies Bonds Direct $29 million in 2005 revenues Management team with over 125 years of combined experience; 95 employees Securities Lending $27 million in 2005 revenues Approximately $7.7 billion matched assets / liabilities Significant cash flows Low risk with high margins Correspondent Clearing $23 million in 2005 revenues Jefferies Financial Products $46 million in 2005 revenues 20
    • Highly Variable Cost Structure Jefferies’ highly variable expense structure is responsive to all economic environments – more than 60% of total compensation expense is variable Restricted / retention stock is a significant and meaningful portion of employee compensation ($ in millions) 2005 Compensation & Benefits $ 670 Comp & Benefits 56% of Net Revenues Floor Brokerage & Clearing 46 Comp & Benefits as a % of Net Revenues 70% Other Non-Compensation Costs 220 61% 60% 57% 57% 60% 56% 56% Total Non-Interest Expense $ 936 50% Pretax Income Margin 22% 2000 2001 2002 2003 2004 2005 Net Income $ 157 21
    • Strong Risk Management Trading is primarily agency and low risk principal trading – identifying natural buyers and sellers Majority of customers are top-tier, high-quality institutions All traders subject to real-time monitoring and strict trading limits Expanded legal and compliance departments High employee ownership and long-term tenure of key employees 22
    • Strong Capital Position Almost $2 billion in capital Over $1.5 billion, pro forma, in cash and short-term investments Investment grade since debt offering in 1994 Upgraded to Baa1 by Moody’s in January 2005 BBB by S&P since November 2003 BBB+ by Fitch in January 2006 Jefferies continues to maintain relatively low leverage and strong liquidity Pro forma long-term Debt/Equity ratio of approximately 107% (versus approximately 380% for comparable broker-dealers As of September 30, 2005 Pro Forma As Reported Adjustments Pro Forma Long-Term Debt $781 $500 $1,281 Series A Convertible Preferred $125 $125 Total Stockholder's Equity 1,201 1,201 Total Capitalization $1,982 $625 $2,607 Credit Statistics: Long-Term Debt/Equity 65% 107% Liquid Assets/Total Assets 93% 94% Total Assets/Stockholders' Equity 11.3x 11.8x 23
    • Pro Forma Debt Statistics Adjusted Leverage (excluding Stock Borrow & Repos) 18x 15x 12x 9x 6x 3x x Jefferies (1) Lehman Merrill Goldman Bear MSDW Long Term Debt to Stockholders’ Equity 500% 400% 300% 200% 100% 0% Jefferies Merrill MSDW Goldman Lehman Bear Note: Pro forma debt statistics assumes an issue size of $500 million. (1) Calculated as Total Assets less Securities Borrowed / Stockholders’ Equity as of Sep 30, 2005. 24
    • CONCLUSION A global investment bank and institutional securities firm serving growing and mid-sized companies and their investors. 25
    • Appendix A – EBITDA Reconciliation EBITDA represents earnings (loss) before income taxes, interest expense, depreciation and amortization and is an approximation of cash flow from operations before tax. The Company uses EBITDA as an internal measure of performance and believes it is a useful and commonly used measure of financial performance in addition to earnings (loss) before taxes and other profitability measures under generally accepted accounting principles (GAAP). EBITDA is not a measure of performance under GAAP. EBITDA should not be construed as an alternative to operating income and earnings (loss) before taxes as an indicator of the company’s operations in accordance with GAAP. Nor is EBITDA an alternative to cash flow from operating activities in accordance with GAAP. The Company’s definition of EBITDA can differ from that of other companies. The following table reconciles net earnings, the most comparable measure under GAAP, to EBITDA for the stated periods (in thousands). Years Ended 2001 2002 2003 2004 2005 Net Earnings $59,539 $62,571 $84,051 $131,366 $157,443 Add: Minority Interest - - 7,631 11,668 6,875 Interest Expense 114,709 80,087 97,102 140,394 293,173 Income Taxes 43,113 41,121 52,851 83,955 104,089 Depreciation and amortization 17,230 20,281 15,519 14,544 12,965 EBITDA $234,591 $204,060 $257,154 $381,927 $574,545 26