MINNEAPOLIS, Jan. 23 /PRNewswire-FirstCall/ -- Piper Jaffray
Companies (NYSE:PJC) today announced net income from continuing
operations of $15.1 million, or $0.91 per diluted share, for the
quarter ended December 31, 2007. These results compare to $26.7
million, or $1.49 per diluted share, in the year-ago period, which
included a benefit of $0.73 per diluted share due to a reduction of
a reserve related to a particular industry-wide litigation matter.
Excluding that benefit, net income from continuing operations was
$0.76 per diluted share in the fourth quarter of 2006. Net income
from continuing operations in the third quarter of 2007 was $4.8
million, or $0.28 per diluted share. For the fourth quarter of
2007, continuing operations generated net revenues of $146.5
million and were essentially the same as the fourth quarter of
2006, which was a record for the firm since becoming a public
company. Net revenues rose 58 percent compared to the third quarter
of 2007. "We are pleased to report solid quarterly financial
results for our firm. Our equity financing, equity sales and
trading, and advisory services reported very strong results," said
Chairman and Chief Executive Officer Andrew S. Duff. "Although
challenging capital markets conditions drove weaker results in high
yield and structured products, our other businesses more than
offset these lower revenues." Mr. Duff said, "In 2007, we
demonstrated meaningful progress against our growth initiatives,
including the acquisitions of FAMCO and Goldbond and enhancing our
capabilities in principal activities. Building on these initiatives
is key to expanding and diversifying our business." Results of
Continuing Operations Fourth Quarter Net Revenues Investment
Banking For the fourth quarter of 2007, total investment banking
revenues were $96.5 million, up 2 percent compared to the fourth
quarter of 2006, and up 84 percent compared to the third quarter of
2007. The improved revenues were driven by robust equity financings
and M&A activity. -- Equity financing revenues were $43.0
million, up 30 percent compared to the fourth quarter of 2006, and
up 136 percent compared to the third quarter of 2007. This strong
performance was driven by a higher number of completed
transactions. -- Advisory services revenues were $36.7 million, up
6 percent compared to the year-ago period, and up 128 percent
compared to the third quarter of 2007. The stronger performance was
driven by improved results from U.S. M&A activity. Europe and
Asia advisory services also contributed to the strong results. --
Fixed income financing revenues were $16.8 million, down 37 percent
compared to the same period last year, during which public finance
generated near record underwriting revenues. Fixed income financing
revenues decreased 8 percent compared to the third quarter of 2007,
although Public finance underwriting revenues remained consistent.
The following is a recap of completed deal information for the
fourth quarter of 2007: -- 40 equity financings raising a total of
$7.0 billion in capital, and the company was bookrunner on 9 of the
equity financings. Of the completed transactions, 26 were U.S.
public offerings, placing the company 13th nationally, based on the
number of completed transactions. (Source: Dealogic) -- 19 merger
and acquisition transactions with an aggregate enterprise value of
$6.3 billion. The number of deals and the enterprise value include
disclosed and undisclosed transactions. (Source: Piper Jaffray) --
97 tax-exempt issues with a total par value of $1.8 billion,
ranking the company seventh nationally, based on the number of
completed transactions. (Source: Thomson Financial) Institutional
Sales and Trading For the quarter ended December 31, 2007,
institutional sales and trading generated net revenues of $46.0
million, down 5 percent from the same quarter last year and up 19
percent compared to the third quarter of 2007. -- Equities sales
and trading revenues were $34.9 million, up 19 percent from the
year-ago period and up 39 percent compared to the third quarter of
2007. The increases resulted from stronger revenues from U.S.
equities and the addition of Hong Kong equities revenues from Piper
Jaffray Asia. -- Fixed income sales and trading revenues were $11.1
million, a decrease of 42 percent compared to the same period last
year, and a decrease of 19 percent compared to the third quarter of
2007. The declines were primarily driven by lower revenues from
high-yield and structured products, which continued to be
negatively impacted by the challenging market conditions. Fourth
Quarter Non-Interest Expenses For the fourth quarter of 2007,
compensation and benefits expenses were $85.7 million, down 3
percent compared to the fourth quarter of 2006 and up 58 percent
compared to the third quarter of 2007. The increase compared to the
sequential third quarter was due to higher revenues. The
compensation ratio for the fourth quarter of 2007 was 58.5 percent,
compared to 60.4 percent in the fourth quarter of 2006, and 58.5
percent in the third quarter of 2007. For the fourth quarter of
2007, non-compensation expenses were $41.7 million, of which $2.5
million were attributable to FAMCO and Goldbond. The prior-year
non-compensation expenses were $16.0 million, which included a
$21.3 million benefit due to the reduction of a litigation reserve.
Excluding that benefit, non-compensation expenses were $37.3
million. Compared to the third quarter of 2007, non-compensation
expenses increased 28 percent, which was mainly driven by business
expansion, including the addition of FAMCO and Goldbond, increased
business activity resulting in higher marketing and travel
expenses, and higher legal fees. For the fourth quarter of 2007,
pre-tax operating margin was 13.1 percent, compared to 28.6 percent
for the fourth quarter of 2006, which included a 14.5
percentage-point benefit due to the litigation reserve reduction.
Excluding that benefit, pre-tax operating margin was 14.1 percent.
For the third quarter of 2007, pre-tax operating margin was 6.5
percent. Full Year 2007 For the full year of 2007, net income from
continuing operations was $45.0 million, or $2.59 per diluted
share. For the full year of 2006, net income from continuing
operations was $62.9 million, or $3.32 per diluted share, which
included a $0.69 per diluted share benefit from the reduction of a
litigation reserve. Excluding that benefit, net income from
continuing operations was $2.63 per diluted share for 2006. For
2007, net revenues from continuing operations were $498.9 million,
slightly less than $502.9 million in revenues reported in 2006.
Despite challenging market conditions in the last half of 2007,
investment banking revenues rose 2 percent compared to 2006. Equity
financing revenues topped 2006 by 14 percent and more than offset
lower advisory services revenues and slightly lower debt financing
revenues. Equity sales and trading revenues were essentially flat
compared to 2006, while fixed income sales and trading revenues,
which were impacted by the turmoil in the financial markets during
the last half of the year, declined compared to 2006. The following
is a recap of completed deal information for the full year of 2007:
-- 117 equity financings raising a total of $17.5 billion in
capital, and the company was bookrunner on 28 of the equity
financings. Of the completed transactions, 82 were U.S. public
offerings, placing the company 15th nationally, based on the number
of completed transactions. (Source: Dealogic) -- 53 merger and
acquisition transactions with an aggregate enterprise value of
$15.7 billion. The number of deals and the enterprise value include
disclosed and undisclosed transactions. (Source: Piper Jaffray) --
420 tax-exempt issues with a total par value of $6.8 billion,
ranking the company seventh nationally, based on the number of
completed transactions. (Source: Thomson Financial) Full Year 2007
Non-Interest Expenses For the full year of 2007, compensation and
benefits expenses were $291.9 million, essentially unchanged
compared to 2006. The compensation ratio for 2007 was 58.5 percent
compared to 57.9 percent for 2006. Non-compensation expenses for
the full year were $144.1 million, compared to $113.8 million in
2006, which included a $21.3 million benefit due to the reduction
of a litigation reserve. Excluding that benefit, non-compensation
expenses were $135.0 million. Increased non-compensation expenses
in 2007 were driven by expansion of the business, including the
acquisitions of FAMCO and Goldbond, and implementation costs
related to a new back office system. For the full year of 2007,
pre-tax operating margin from continuing operations was 12.6
percent compared to 19.5 percent in 2006, which included a 4.3
percentage-point benefit due to the litigation reserve reduction.
Excluding that benefit, pre-tax operating margin was 15.2 percent.
Additional Shareholder Information As of As of As of Dec. 31, 2007
Sept. 30, 2007 Dec. 31, 2006 Full time employees: 1,238* 1,131
1,108 FAMCO AUM $9.0 billion $8.3 billion $8.8 billion
Shareholders' equity: $913 million $889 million $924 million
Annualized Return on Average Tangible Shareholders' Equity(1) 10.2%
2.6% 12.3% Book value per share: $58.26 $56.80 $54.43 Tangible book
value per share: $38.99 $38.73 $40.71 * Increase primarily due to
Goldbond acquisition. (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 Three Months Ended Ended As of (Dollars in thousands)
Dec. 31, 2007 Dec. 31, 2006 Dec. 31, 2007 Shareholders' equity $
900,953 $ 904,403 $ 912,589 Deduct: Goodwill and identifiable
intangible assets 310,876 233,234 301,948 Tangible shareholders'
equity $ 590,077 $ 671,169 $ 610,641 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 third quarter results on Wednesday,
January 23 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 30362326
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 January 23, 2008 at the same web address or by calling
(800) 642-1687, or (706) 645-9291 internationally. About Piper
Jaffray Piper Jaffray Companies (NYSE:PJC) 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, Shanghai and Hong Kong. Piper Jaffray &
Co. is the firm's principal operating subsidiary.
(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 and are subject to significant risks
and uncertainties that are difficult to predict. These
forward-looking statements cover, among other things, statements
made about general economic and market conditions, our current deal
pipelines, the environment and prospects for capital markets
transactions and activity, management expectations, anticipated
financial results, the expected benefits of acquisitions, the
amount and timing of restructuring expenses associated with
transaction activity, or other similar matters. These statements
involve inherent risks and uncertainties, both known and unknown,
and important factors could cause actual results to differ
materially from those anticipated or discussed in the
forward-looking statements including (1) market and economic
conditions or developments may be unfavorable, including in
specific sectors in which we operate, and these conditions or
developments (including market fluctuations or volatility) may
adversely affect the environment for capital markets transactions
and activity and our business and profitability, (2) the volume of
anticipated investment banking transactions as reflected in our
deal pipelines (and the net revenues we earn from such
transactions) may differ from expected results if any transactions
are delayed or not completed at all or if the terms of any
transactions are modified, (3) acquisitions may not yield the
benefits we anticipate or yield them within expected timeframes,
(4) we may not be able to compete successfully with other companies
in the financial services industry, (5) restructuring costs
associated with transaction activity are difficult to predict
accurately and may be higher than we anticipate due to unforeseen
expenses or other difficulties, and (6) the other factors described
under "Risk Factors" in Part I, Item 1A of our Annual Report on
Form 10-K for the year ended December 31, 2006 and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" in Part II, Item 7 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 (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 readers are cautioned not to place
undue reliance on them. We undertake no obligation to update them
in light of new information or future events. Piper Jaffray
Companies Preliminary Unaudited Results of Operations Three Months
Ended Percent Inc/(Dec) 4Q '07 4Q '07 (Amounts in thousands, Dec.
31, Sept. 30, Dec. 31, vs. 3Q vs. 4Q except per share data) 2007
2007 2006 '07 '06 Revenues: Investment banking $93,480 $50,276
$92,963 85.9% 0.6% Institutional brokerage 39,881 31,419 39,421
26.9 1.2 Interest 14,644 15,003 19,241 (2.4) (23.9) Asset
management 5,071 903 205 N/M N/M Other income 349 940 1,305 N/M N/M
Total revenues 153,425 98,541 153,135 55.7 0.2 Interest expense
6,923 5,647 6,517 22.6 6.2 Net revenues 146,502 92,894 146,618 57.7
(0.1) Non-interest expenses: Compensation and benefits 85,704
54,343 88,609 57.7 (3.3) Occupancy and equipment 8,710 7,201 8,955
21.0 (2.7) Communications 6,476 6,040 6,452 7.2 0.4 Floor brokerage
and clearance 3,446 3,564 3,485 (3.3) (1.1) Marketing and business
development 8,494 6,064 7,543 40.1 12.6 Outside services 10,021
8,134 8,581 23.2 16.8 Cash award program 481 450 307 6.9 56.7 Other
operating expenses 4,025 1,064 (19,294) 278.3 N/M Total
non-interest expenses 127,357 86,860 104,638 46.6 21.7 Income from
continuing operations before income tax expense 19,145 6,034 41,980
217.3 (54.4) Income tax expense 4,029 1,222 15,244 229.7 (73.6) Net
income from continuing operations 15,116 4,812 26,736 214.1 (43.5)
Income/(loss) from discontinued operations, net of tax - (456)
(6,090) N/M N/M Net income $15,116 $4,356 $20,646 247.0% (26.8)%
Earnings per basic common share Income from continuing operations
$0.97 $0.30 $1.58 223.3% (38.6)% Income/(loss) from discontinued
operations - (0.03) (0.36) N/M N/M Earnings per basic common share
$0.97 $0.27 $1.22 259.3% (20.5)% Earnings per diluted common share
Income from continuing operations $0.91 $0.28 $1.49 225.0% (38.9)%
Income/(loss)from discontinued operations - (0.03) (0.34) N/M N/M
Earnings per diluted common share $0.91 $0.26 $1.15 250.0% (20.9)%
Weighted average number of common shares outstanding Basic 15,663
16,096 16,973 (2.7)% (7.7)% Diluted 16,587 16,904 18,004 (1.9)%
(7.9)% For the Year Ended (Amounts in thousands, Dec. 31, Dec. 31,
Percent except per share data) 2007 2006 Inc/(Dec) Revenues:
Investment banking $302,361 $298,309 1.4% Institutional brokerage
151,591 160,502 (5.6) Interest 60,873 64,110 (5.0) Asset management
6,173 222 N/M Other income 1,613 12,094 (86.7) Total revenues
522,611 535,237 (2.4) Interest expense 23,689 32,303 (26.7) Net
revenues 498,922 502,934 (0.8) Non-interest expenses: Compensation
and benefits 291,870 291,265 0.2 Occupancy and equipment 32,482
30,660 5.9 Communications 24,772 23,189 6.8 Floor brokerage and
clearance 14,701 13,292 10.6 Marketing and business development
26,619 24,664 7.9 Outside services 34,594 28,053 23.3 Cash award
program 1,677 2,980 (43.7) Other operating expenses 9,293 (9,042)
N/M Total non-interest expenses 436,008 405,061 7.6 Income from
continuing operations before income tax expense 62,914 97,873
(35.7) Income tax expense 17,887 34,974 (48.9) Net income from
continuing operations 45,027 62,899 (28.4) Income/(loss) from
discontinued operations, net of tax (2,811) 172,354 N/M Net income
$42,216 $235,253 (82.1)% Earnings per basic common share Income
from continuing operations $2.73 $3.49 (21.8)% Income/(loss) from
discontinued operations (0.17) 9.57 N/M Earnings per basic common
share $2.56 $13.07 (80.4)% Earnings per diluted common share Income
from continuing operations $2.59 $3.32 (22.0)% Income/(loss) from
discontinued operations (0.16) 9.09 N/M Earnings per diluted common
share $2.43 $12.40 (80.4)% Weighted average number of common shares
outstanding Basic 16,474 18,002 (8.5)% Diluted 17,355 18,968 (8.5)%
N/M - Not meaningful Piper Jaffray Companies Preliminary Unaudited
Revenues From Continuing Operations (Detail) Three Months Ended
Percent Inc/(Dec) 4Q '07 4Q '07 Dec. 31, Sept. 30, Dec. 31, vs. 3Q
vs. 4Q (Dollars in thousands) 2007 2007 2006 '07 '06 Investment
banking Financing Equities $42,985 $18,211 $33,133 136.0% 29.7%
Debt 16,810 18,211 26,741 (7.7) (37.1) Advisory services 36,747
16,120 34,752 128.0 5.7 Total investment banking 96,542 52,542
94,626 83.7 2.0 Institutional sales and trading Equities 34,912
25,192 29,434 38.6 18.6 Fixed income 11,079 13,612 19,033 (18.6)
(41.8) Total institutional sales and trading 45,991 38,804 48,467
18.5 (5.1) Asset management 5,071 903 205 N/M N/M Other
income/(loss) (1,102) 645 3,320 N/M N/M Net revenues $146,502
$92,894 $146,618 57.7% (0.1)% For the Year Ended Dec. 31, Dec. 31,
Percent (Dollars in thousands) 2007 2006 Inc/(Dec) Investment
banking Financing Equities $141,981 $124,304 14.2% Debt 80,323
82,861 (3.1) Advisory services 89,449 97,225 (8.0) Total investment
banking 311,753 304,390 2.4 Institutional sales and trading
Equities 119,961 120,341 (0.3) Fixed income 60,834 70,134 (13.3)
Total institutional sales and trading 180,795 190,475 (5.1) Asset
management 6,173 222 N/M Other income/(loss) 201 7,847 (97.4) Net
revenues $498,922 $502,934 (0.8)% N/M - Not meaningful DATASOURCE:
Piper Jaffray Companies CONTACT: Jennifer A. Olson-Goude, Investor
Relations, +1-612-303-6277, or Rob Litt, Media Relations,
+1-612-303-8266, both of Piper Jaffray Companies Web site:
http://www.piperjaffray.com/
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