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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 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

SOURCE 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