MINNEAPOLIS, July 18 /PRNewswire-FirstCall/ -- Piper Jaffray
Companies (NYSE:PJC) today announced net income from continuing
operations of $10.4 million, or $0.58 per diluted share, for the
quarter ended June 30, 2007, up from $7.9 million, or $0.40 per
diluted share, in the year-ago period and down from $14.7 million,
or $0.82 per diluted share, in the first quarter of 2007. For the
quarter ended June 30, 2007, net income including discontinued
operations was $9.3 million, or $0.52 per diluted share, up from
$4.1 million, or $0.21 per diluted share, in the year-ago period,
and down from $13.4 million, or $0.74 per diluted share, in the
first quarter of 2007. For the first six months of 2007, net income
from continuing operations was $25.1 million, or $1.40 per diluted
share, compared to $26.6 million, or $1.37 per diluted share, for
the year-ago period. The first six months of 2006 included a net
gain of $5.6 million, or $0.29 per diluted share, related to the
company's ownership of two seats on the New York Stock Exchange,
Inc. Net revenues of $259.5 million year-to-date represent an 8
percent increase over the same period last year. "We improved our
performance over the year-ago period but our revenues and
profitability were below our strong results in the first quarter of
2007. Our equities financing and public finance revenues were
strong but were more than offset by lower advisory services
revenues," said Chairman and Chief Executive Officer Andrew S.
Duff. "We continue to execute our growth strategy, and recently we
were very pleased to announce a definitive agreement for the
acquisition of Goldbond Capital Holdings Limited with capital
markets capability in Hong Kong. With Goldbond, Piper Jaffray will
have the ability to raise capital for companies and serve
institutional clients globally," said Duff. Results of Continuing
Operations Second Quarter Net Revenues For the second quarter of
2007, continuing operations generated net revenues of $122.6
million, up 17 percent from $105.3 million for the second quarter
of 2006. Revenues declined 11 percent from the first quarter of
2007. Investment Banking For the second quarter of 2007, total
investment banking revenues were $77.8 million, up 19 percent
compared to the second quarter of 2006, and down 9 percent compared
to the first quarter of 2007. -- Equity and equity-linked financing
revenues were $40.8 million, up 51 percent compared to the year-ago
period, mainly due to the completion of more public equity
offerings. Equity financing revenues were essentially the same
compared to the first quarter of 2007. -- Advisory services
revenues were $11.7 million, down 35 percent and 53 percent
compared to the year-ago period and the first quarter of 2007,
respectively. The declines were due to fewer completed mergers and
acquisitions transactions and lower average revenue per
transaction. -- Debt financing revenues were $25.2 million, up 25
percent and 26 percent compared to the second quarter of 2006 and
the first quarter of 2007, respectively. The strong revenue growth
was driven by robust public finance underwritings. Following is a
recap of completed deal information for the second quarter of 2007:
-- 34 equity and equity-linked financings raising a total of $4.5
billion in capital. The company was bookrunner on 7 of the equity
financings. Of the completed transactions, 28 were U.S. public
offerings, placing the company 15th nationally, based on the number
of completed transactions. (Source: Dealogic) -- 7 mergers and
acquisitions transactions with an aggregate enterprise value of
$4.2 billion. The number of deals and aggregate value include
disclosed and undisclosed transactions. (Source: Piper Jaffray) --
138 tax-exempt issues with a total par value of $2.2 billion,
ranking the company fifth nationally, based on the number of
completed transactions. (Source: Thomson Financial) Institutional
Sales and Trading For the second quarter of 2007, institutional
sales and trading generated revenues of $44.0 million, essentially
the same as the year-ago quarter and down 12 percent compared to
the first quarter of 2007. -- Equities sales and trading revenues
were $28.0 million, down 9 percent from the year-ago period and
down 10 percent compared to the first quarter of 2007. The declines
were mainly driven by lower trading volumes. -- Fixed income sales
and trading revenues were $16.0 million, up 24 percent compared to
the year-ago period, mainly driven by stronger high-yield and
structured products revenues. Revenues declined 16 percent compared
to the first quarter of 2007, mainly due to lower high-yield and
structured products revenues, which were particularly strong in the
first quarter. Non-Interest Expenses For the second quarter of
2007, compensation and benefits expense was $71.7 million, up 18
percent compared to the year-ago period and down 11 percent
compared to the first quarter of 2007. The compensation ratio for
the second quarter was 58.5 percent, up from 57.6 percent in the
year-ago period and consistent with the first quarter of 2007.
Non-compensation expenses were $35.7 million for the current
quarter, up 10 percent and 4 percent, compared to the year-ago
period and the first quarter of 2007, respectively. The increased
costs were mainly attributable to higher occupancy expenses related
to an office relocation, increased professional fees for
implementing a new capital markets back office system, and legal
expenses. For the second quarter of 2007, pre-tax operating margin
from continuing operations was 12.4 percent, compared to 11.6
percent in the year-ago period and 16.5 percent in the first
quarter of 2007. Results of Discontinued Operations Second Quarter
Discontinued operations relate to the Private Client Services
business, which the company sold to UBS Financial Services on Aug.
11, 2006. For the quarter ended June 30, 2007, discontinued
operations recorded a net loss of $1.1 million, or $0.06 per
diluted share, for costs primarily related to decommissioning a
retail-oriented back office system. The company anticipates it will
incur additional expenses in the third quarter of 2007 related to
decommissioning this system. Additional Shareholder Information As
of As of As of June 30, 2007 Mar. 31, 2007 June 30, 2006 Full time
employees: 1,095 1,091 2,638 Shareholders' equity: $947 million
$931 million $807 million Annualized Return on Average Tangible
Shareholders' Equity(1) 5.3% 7.7% 3.4% Book value per share: $55.46
$54.56 $43.51 Tangible book value per share: $41.86 $40.92 $26.30
(1) Tangible shareholders' equity equals total shareholders' equity
less goodwill and identifiable intangible assets. Annualized return
on average tangible shareholders' equity is computed by dividing
annualized net earnings by average monthly tangible shareholders'
equity. Management believes that annualized return on tangible
shareholders' equity is a meaningful measure of performance because
it reflects the tangible equity deployed in our businesses. This
measure excludes the portion of our shareholders' equity
attributable to goodwill and identifiable intangible assets. The
majority of our goodwill is a result of the 1998 acquisition of our
predecessor company, Piper Jaffray Companies Inc., and its
subsidiaries by U.S. Bancorp. The following table sets forth a
reconciliation of shareholders' equity to tangible shareholders'
equity. Shareholders' equity is the most directly comparable GAAP
financial measure to tangible shareholders' equity. Average for the
Three Months Ended Three Months Ended As of June 30, 2007 June 30,
2006 June 30, 2007 (Dollars in thousands) Shareholders' equity $
938,091 $ 802,229 $ 947,319 Deduct: Goodwill and identifiable
intangible assets $ 232,434 $ 319,634 $ 232,234 Tangible
shareholders' equity $ 705,657 $ 482,595 $ 715,085 Conference Call
Andrew S. Duff, chairman and chief executive officer, and Thomas P.
Schnettler, vice chairman and chief financial officer, will host a
conference call to discuss second quarter results on Wednesday,
July 18 at 9 a.m. ET (8 a.m. CT). The call can be accessed via live
audio webcast available through the company's web site at
http://www.piperjaffray.com/ or by dialing (866) 244-9933, or (706)
758-0864 internationally, and referring to conference ID 5690643
and the leader's name, Andrew Duff. Callers should dial in at least
15 minutes early to receive instructions. A replay of the
conference call will be available beginning at approximately 11
a.m. ET on July 18, 2007 at the same web address or by calling
(800) 642-1687, or (706) 645-9291 internationally. About Piper
Jaffray Piper Jaffray Companies is a leading, international
middle-market investment bank and institutional securities firm,
serving the needs of middle market corporations, private equity
groups, public entities, nonprofit clients and institutional
investors. Founded in 1895, Piper Jaffray provides a comprehensive
set of products and services, including equity and debt capital
markets products; public finance services; mergers and acquisitions
advisory services; high-yield and structured products;
institutional equity and fixed-income sales and trading; and equity
and high-yield research. With headquarters in Minneapolis, Piper
Jaffray has 25 offices across the United States and international
locations in London and Shanghai. Piper Jaffray & Co. is the
firm's principal operating subsidiary. (NYSE:PJC)
(http://www.piperjaffray.com/) Cautionary Note Regarding
Forward-Looking Statements This press release contains
forward-looking statements. Statements that are not historical or
current facts, including statements about beliefs and expectations,
are forward-looking statements. These forward-looking statements
cover, among other things, the future prospects of Piper Jaffray
Companies. Forward-looking statements involve inherent risks and
uncertainties, and important factors could cause actual results to
differ materially from those anticipated, including the following:
(1) the acquisition of Fiduciary Asset Management, LLC (FAMCO) or
of Goldbond Capital Holdings Limited (Goldbond) may not be
completed, or completed within the expected timeframe, (2) costs or
difficulties relating to the integration of the FAMCO or Goldbond
and Piper Jaffray businesses may be greater than expected and may
adversely affect our results of operations and financial condition,
(3) the expected benefits of the FAMCO or Goldbond acquisitions may
take longer than anticipated to achieve and may not be achieved in
their entirety or at all, (4) the proposed transaction with
Goldbond would expand our international operations, which are
subject to unique risks such as the risk of non-compliance with
foreign laws and regulations and economic and political conditions
in the countries where we operate; (5) developments in market and
economic conditions have in the past adversely affected, and may in
the future adversely affect, our business and profitability, (6)
developments in specific sectors of the economy have in the past
adversely affected, and may in the future adversely affect, our
business and profitability, (7) we may not be able to compete
successfully with other companies in the financial services
industry who are often larger and better capitalized than we are,
(8) we have experienced significant pricing pressure in areas of
our business, which may impair our revenues and profitability, (9)
the volume of anticipated investment banking transactions may
differ from actual results, (10) our ability to attract, develop
and retain highly skilled and productive employees is critical to
the success of our business, (11) our underwriting and
market-making activities may place our capital at risk, (12) an
inability to readily divest or transfer trading positions may
result in financial losses to our business, (13) use of derivative
instruments as part of our risk management techniques may place our
capital at risk, while our risk management techniques themselves
may not fully mitigate our market risk exposure, (14) an inability
to access capital readily or on terms favorable to us could impair
our ability to fund operations and could jeopardize our financial
condition, (15) it is inherently difficult to predict accurately
the timing and outcome of legal proceedings and the amounts of
legal reserves are difficult to determine and subject to future
revision; accordingly future results of operations could be
adversely affected if reserves are required to be increased or
legal proceedings are resolved in excess of established reserves,
(16) increases in capital commitments in our proprietary trading,
investing and similar activities increase the potential for
significant losses, (17) we may make strategic acquisitions of
businesses, engage in joint ventures or divest or exit existing
businesses, which could cause us to incur unforeseen expense and
have disruptive effects on our business but may not yield the
benefits we expect, (18) our technology systems, including
outsourced systems, are critical components of our operations, and
failure of those systems or other aspects of our operations
infrastructure may disrupt our business, cause financial loss and
constrain our growth, (19) our business is subject to extensive
regulation that limits our business activities, and a significant
regulatory action against our company may have a material adverse
financial effect or cause significant reputational harm to our
company, (20) regulatory capital requirements may limit our ability
to expand or maintain present levels of our business or impair our
ability to meet our financial obligations, (21) the amount and
timing of restructuring expenses associated with acquisition and
divestiture activity are difficult to predict accurately, and our
estimates may differ from actual results, (22) our exposure to
legal liability is significant, and could lead to substantial
damages, (23) we may suffer losses if our reputation is harmed,
(24) our stock price may fluctuate as a result of several factors,
including but not limited to changes in our revenues and operating
results, (25) provisions in our certificate of incorporation and
bylaws and of Delaware law may prevent or delay an acquisition of
our company, which could decrease the market value of our common
stock, and (26) other factors identified under "Risk Factors" in
Part I, Item 1A of our Annual Report on Form 10-K for the year
ended December 31, 2006, and updated in our subsequent reports
filed with the SEC. These reports are available at our Web site at
http://www.piperjaffray.com/ and at the SEC Web site at
http://www.sec.gov/. Forward-looking statements speak only as of
the date they are made, and we undertake no obligation to update
them in light of new information or future events. Since 1895.
Member SIPC and NYSE. (C) 2007 Piper Jaffray & Co., 800
Nicollet Mall, Suite 800, Minneapolis, Minnesota 55402-7020 Piper
Jaffray Companies Preliminary Unaudited Results of Operations Three
Months Ended Percent Inc/(Dec) Jun. 30, Mar. 31, Jun. 30, 2Q'07
2Q'07 (Amounts in thousands, 2007 2007 2006 vs.1Q'07 vs.2Q'06
except per share data) Revenues: Investment banking $75,597 $83,733
$63,604 (9.7) % 18.9 % Institutional brokerage 37,174 41,928 38,157
(11.3) (2.6) Interest 13,816 17,410 13,521 (20.6) 2.2 Other income
406 581 (889) (30.1) N/M Total revenues 126,993 143,652 114,393
(11.6) 11.0 Interest expense 4,417 6,702 9,143 (34.1) (51.7) Net
revenues 122,576 136,950 105,250 (10.5) 16.5 Non-interest expenses:
Compensation and benefits 71,707 80,116 60,653 (10.5) 18.2
Occupancy and equipment 8,849 7,722 6,718 14.6 31.7 Communications
5,997 6,259 5,593 (4.2) 7.2 Floor brokerage and clearance 4,176
3,515 3,373 18.8 23.8 Marketing and business development 6,380
5,681 6,122 12.3 4.2 Outside services 9,122 7,317 6,836 24.7 33.4
Cash award program 390 356 886 9.6 (56.0) Other operating expenses
804 3,400 2,910 (76.4) (72.4) Total non-interest expenses 107,425
114,366 93,091 (6.1) 15.4 Income from continuing operations before
income tax expense 15,151 22,584 12,159 (32.9) 24.6 Income tax
expense 4,774 7,862 4,230 (39.3) 12.9 Net income from continuing
operations 10,377 14,722 7,929 (29.5) 30.9 Income/(loss) from
discontinued operations, net of tax (1,051) (1,304) (3,792) (19.4)
(72.3) Net income $9,326 $13,418 $4,137 (30.5) % 125.4 % Earnings
per basic common share Income from continuing operations $0.61
$0.86 $0.43 (29.1) % 41.9 % Income/(loss) from discontinued
operations (0.06) (0.08) (0.20) (25.0) (70.0) Earnings per basic
common share $0.55 $0.79 $0.22 (30.4) % 150.0 % Earnings per
diluted common share Income from continuing operations $0.58 $0.82
$0.40 (29.3) % 45.0 % Income/(loss) from discontinued operations
(0.06) (0.07) (0.19) (14.3) (68.4) Earnings per diluted common
share $0.52 $0.74 $0.21 (29.7) % 147.6 % Weighted average number of
common shares outstanding Basic 17,073 17,071 18,556 - % (8.0) %
Diluted 17,919 18,018 19,669 (0.5) % (8.9) % N/M - Not meaningful
Piper Jaffray Companies Preliminary Unaudited Results of Operations
Six Months Ended (Amounts in thousands, Jun. 30, Jun. 30, Percent
except per share data) 2007 2006 Inc/(Dec) Revenues: Investment
banking $159,330 $134,085 18.8 % Institutional brokerage 79,102
82,818 (4.5) Interest 31,226 28,206 10.7 Other income 987 12,396
(92.0) Total revenues 270,645 257,505 5.1 Interest expense 11,119
17,296 (35.7) Net revenues 259,526 240,209 8.0 Non-interest
expenses: Compensation and benefits 151,823 133,577 13.7 Occupancy
and equipment 16,571 14,827 11.8 Communications 12,256 10,976 11.7
Floor brokerage and clearance 7,691 6,048 27.2 Marketing and
business development 12,061 11,301 6.7 Outside services 16,439
13,128 25.2 Cash award program 746 2,161 (65.5) Other operating
expenses 4,204 7,347 (42.8) Total non-interest expenses 221,791
199,365 11.2 Income from continuing operations before income tax
expense 37,735 40,844 (7.6) Income tax expense 12,636 14,209 (11.1)
Net income from continuing operations 25,099 26,635 (5.8)
Income/(loss) from discontinued operations, net of tax (2,355)
1,359 (273.3) Net income $22,744 $27,994 (18.8) % Earnings per
basic common share Income from continuing operations $1.47 $1.44
2.1 % Income/(loss) from discontinued operations (0.14) 0.07 N/M
Earnings per basic common share $1.33 $1.51 (11.9) % Earnings per
diluted common share Income from continuing operations $1.40 $1.37
2.2 % Income/(loss) from discontinued operations (0.13) 0.07 N/M
Earnings per diluted common share $1.27 $1.44 (11.8) % Weighted
average number of common shares outstanding Basic 17,072 18,509
(7.8) % Diluted 17,969 19,408 (7.4) % N/M - Not meaningful Piper
Jaffray Companies Preliminary Unaudited Revenues From Continuing
Operations (Detail) Three Months Ended Percent Inc/(Dec) Jun. 30,
Mar. 31, Jun. 30, 2Q'07 2Q'07 (Dollars in thousands) 2007 2007 2006
vs.1Q'07 vs.2Q'06 Investment banking Financing Equities $40,801
$40,710 $26,967 0.2 % 51.3 % Debt 25,247 20,026 20,272 26.1 24.5
Advisory services 11,706 24,876 17,934 (52.9) (34.7) Total
investment banking 77,754 85,612 65,173 (9.2) 19.3 Institutional
sales and trading Equities 28,013 31,110 30,800 (10.0) (9.0) Fixed
income 16,036 19,133 12,890 (16.2) 24.4 Total institutional sales
and trading 44,049 50,243 43,690 (12.3) 0.8 Other income 773 1,095
(3,613) (29.4) N/M Net revenues $122,576 $136,950 $105,250 (10.5) %
16.5 % N/M - Not meaningful Piper Jaffray Companies Preliminary
Unaudited Revenues From Continuing Operations (Detail) Six Months
Ended Jun. 30, Jun. 30, Percent (Dollars in thousands) 2007 2006
Inc/(Dec) Investment banking Financing Equities $81,511 $59,754
36.4 % Debt 45,273 36,725 23.3 Advisory services 36,582 40,525
(9.7) Total investment banking 163,366 137,004 19.2 Institutional
sales and trading Equities 59,123 62,961 (6.1) Fixed income 35,169
33,063 6.4 Total institutional sales and trading 94,292 96,024
(1.8) Other income 1,868 7,181 (74.0) Net revenues $259,526
$240,209 8.0 % N/M - Not meaningful DATASOURCE: Piper Jaffray
Companies CONTACT: Investor Relations, Jennifer A. Olson-Goude,
+1-612-303-6277, or Media Relations, Rob Litt, +1-612-303-8266,
both of Piper Jaffray Companies Web site:
http://www.piperjaffray.com/
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