FOR IMMEDIATE DISTRIBUTION

JEFFERIES ANNOUNCES SECOND BEST QUARTERLY RESULTS EVER AND SEVENTH CONSECUTIVE RECORD ANNUAL RESULTS

Net revenues up 9% to $374 million

Net earnings up 19% to $56 million

Earnings per share up 12% to $0.38


NEW YORK, January 18, 2007 -- Jefferies Group, Inc. (NYSE: JEF) today announced financial results for the fourth quarter ended December 31, 2006.

Highlights for the record fourth quarter ended December 31, 2006:

• Net revenues were up 9% to $374.2 million
, versus $342.9 million for the fourth quarter of 2005.

• Net earnings were up 19% to $55.8 million
, compared to $46.7 million for the fourth quarter of 2005.

• Fully Diluted EPS were up 12% to $0.38
, compared to $0.34 for the fourth quarter of 2005.

Highlights for the record year ended December 31, 2006:

• Net revenues were up 21% to a record $1.5 billion
, versus $1.2 billion for 2005.

• Net earnings were up 31% to a record $205.8 million
, compared to $157.4 million for 2005.

• Fully Diluted EPS were up 22% to a record $1.42
, compared to $1.16 for 2005.

"We are proud of our 2,257 employee-partners who enabled our firm to provide record annual results across the board in Sales and Trading, Investment Banking, and Asset Management,” commented Richard B. Handler, Chairman and Chief Executive Officer of Jefferies. “2006 was a year of significant investment for Jefferies in all of our businesses. The fact that we were able to achieve these record results while investing so heavily for the future of our firm reflects the quality of our employee-partners and the loyalty of our clients."

“Jefferies has never had a stronger capital base, a more diversified business platform, or a more qualified group of employee-owners,” added Brian P. Friedman, Chairman, Executive Committee, Jefferies. “After seven consecutive years of growth and record financial performance, we are excited for the future as we look to further serve growing and mid-sized companies and their investors.”

Conference Call - Employee Access

A conference call with management discussion of financial results for the fourth quarter and year ended December 31, 2006 will be held January 18 at 9:00 AM (Eastern). Employees may access the conference call, either live or via replay, through Jefferies' teleconferencing system. Please do not use the more costly outside access numbers, which are intended for clients, analysts and non-employee shareholders.

Please use one of the following to access the conference call:

• Live access: x7330
, code 5326 (or 212-336-7330, 5326 from outside the system)

• Replay access: x7337
, code 131976 (or 212-336-7337, code: 131976 from outside the system)

The replay can be accessed 1 hour after the call and will be available for one week. An audio webcast of the conference call will also be available at www.jefferies.com/Q4Earnings2006.

Please contact Liz Bernstein (x5836) regarding toll-free access for clients.

Press Release in PDF format (financials included)

Contact:
Joseph A. Schenk
(212) 284-2338