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MINNEAPOLIS, Oct. 20 /PRNewswire-FirstCall/ --Piper Jaffray Companies (NYSE: PJC) today announced net income of $11.8 million, or $0.61 per diluted share, for the quarter ended Sept. 30, 2004, down from $16.0 million, or $0.83 per diluted share, for the year-ago period. Net income totaled $13.0 million, or $0.67 per diluted share in the second quarter of 2004. Net revenues for the third quarter were $186.2 million, down 11.6 percent and 10.2 percent from the third quarter of 2003 and the second quarter of 2004, respectively.

For the first nine months, net income improved 31.3 percent to $38.5 million, and earnings per diluted share rose 30.1 percent to $1.99 compared to the year-ago period. Net revenues increased to $602.9 million year-to-date, up 3.1 percent over the first nine months of 2003.

"Our third quarter results reflect the continued challenging market conditions," said chairman and chief executive officer Andrew S. Duff. "Despite the short-term market challenges, we remain focused on positioning our firm for long-term, profitable growth. In that regard, during the quarter we were very pleased to announce the definitive agreement to acquire Vie Securities, LLC, which we believe will enable us to fulfill the increasing client demand for automated, cost-effective equity execution services."

Results of Operations

Net Revenues

Due to challenging market conditions, third quarter net revenues declined $24.5 million, or 11.6 percent, from the year-ago period, in which the firm recorded its strongest quarterly revenues for 2003. Revenues from principal transactions decreased by $11.8 million, or 22.8 percent, primarily driven by lower fixed-income institutional sales and trading activity. The fixed-income business had achieved near-record revenues in the third quarter of 2003, driven by high-yield corporate bonds where the firm has proprietary research capabilities. Third quarter investment banking revenues declined by $9.8 million, or 13.1 percent, due to fewer equity underwriting transactions, which were relatively strong in the year-ago period due to a rebound from soft markets in the first half of 2003. Commissions and fees declined by $2.6 million compared to the third quarter of 2003 as a result of reduced private client activity and fewer financial advisors.

Compared to the second quarter of 2004, net revenues declined $21.1 million. Contributing to the decline were lower revenues in Private Client Services, institutional sales and trading, and equity investment banking.

Non-Interest Expenses

For the quarter, non-interest expenses were $167.7 million, down 9.3 percent from the third quarter of 2003 due mainly to lower variable compensation costs. Non-compensation expenses were $53.5 million, an improvement of 3.5 percent compared to the third quarter of 2003. Lower litigation-related expenses were offset by increases from investments in technology and additional expenses to support expanded fixed-income sales and trading capabilities and new public company costs.

Compared to the second quarter of 2004, non-interest expenses improved 10.2 percent, primarily due to lower variable compensation costs.

For the quarter, pre-tax operating margin was 10.0 percent, down from the 12.3 percent recorded for the year-ago period but consistent with the pre-tax margin for the prior quarter.

Business Segment Review

Capital Markets

Capital Markets recorded $101.3 million in net revenues for the quarter, down $19.0 million, or 15.8 percent, from the year-ago period. Segment pre- tax operating income for the quarter decreased 31.0 percent to $17.3 million compared to the third quarter of 2003, in which Capital Markets recorded its strongest quarterly revenues for 2003. Fixed-income institutional sales and trading revenues declined by $8.6 million, as the third quarter of last year had very strong results in high-yield corporate bonds where the firm has proprietary research capabilities. Equity underwriting declined $8.2 million from the third quarter of 2003; equity underwriting revenues had rebounded in the year-ago period relative to soft markets in the first half of 2003. Public finance underwriting and mergers and acquisitions revenues were consistent with the year-ago period.

Compared to the second quarter of 2004, Capital Markets revenues declined $12.3 million, or 10.8 percent. The primary contributor of the decline was institutional sales and trading revenues, which softened by $9.7 million due to lower trading volumes during the summer months.

Segment operating expenses for the quarter were $84.0 million, a decrease of $11.3 million, or 11.8 percent, from the same period a year ago, primarily driven by lower variable compensation expenses.

Segment pre-tax operating margin was 17.1 percent, a decline from the 20.8 percent recorded in the year-ago period. The decline was primarily due to lower revenues.

Despite the challenging markets, the firm maintained or improved its industry rankings for completed deals. Public finance underwriting was the most active in terms of both the number of transactions and par amount since the second quarter of 2003. Following is a recap of completed deals and industry rankings (based on the number of transactions completed) during the third quarter of 2004.

Private Client Services

Private Client Services recorded net revenues of $83.7 million, down $6.0 million, or 6.6 percent, compared to the third quarter of 2003 due to lower private client activity and fewer financial advisors. Net revenues slowed 4.9 percent compared to second quarter of 2004 as private client activity decreased due to uncertainties in the financial markets and the slower summer trading months. Segment pre-tax operating income was $12.1 million, down 3.6 percent from the third quarter of 2003 and up 2.4 percent compared to the second quarter of 2004.

Segment operating expenses were $71.6 million for the quarter, a 7.1 percent improvement from the year-ago period, primarily due to reduced variable compensation costs. Segment pre-tax operating margin was 14.5 percent, up from both the 14.0 percent margin in the third quarter of 2003 and the 13.4 percent margin for the second quarter of 2004.

Corporate Support and Other

Corporate Support and Other pre-tax operating loss was $9.6 million for the third quarter, an improvement of $1.0 million over the third quarter of 2003 and essentially unchanged from the second quarter of 2004.


     Additional Shareholder Information

                              As of Sept. 30,  As of June 30,  As of Sept. 30,
                                      2004            2004            2003

     Full Time Employees:             3,029           3,043           2,994
     Financial Advisors:                853             850             883
     Client Assets:             $49 billion     $49 billion     $48 billion
     Shareholders' equity:   $715.0 million  $700.7 million  $634.4 million
     Book value per share:           $36.98          $36.24          $32.94
     Tangible book value per share:  $21.17          $20.43          $17.07

Conference Call

Andrew S. Duff, chairman and chief executive officer, and Sandra G. Sponem, chief financial officer, will host a conference call to discuss third quarter 2004 financial results on Wednesday, Oct. 20, 2004, at 11 a.m. ET (10 a.m. CT). The call can be accessed via live audio webcast available through the firm's web page, http://www.piperjaffray.com , or by dialing (800) 374-0255, or (706) 643-7489 international, and refer to conference ID 1077232 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 1 p.m. ET Oct. 20 at the same web address or by calling (800) 642-1687 or (706) 645-9291 international.

About Piper Jaffray Companies

Piper Jaffray Companies (NYSE: PJC) is a focused securities firm dedicated to delivering superior financial advice, investment products and transaction execution within selected sectors of the financial services marketplace. The company operates through two primary revenue-generating segments: Capital Markets and Private Client Services. Investment Research, an independent group reporting to the CEO, supports clients of both segments. Through its chief operating subsidiary, Piper Jaffray & Co., the firm has served corporations, government and non-profit entities, institutional investors and the financial advisory needs of private individuals since 1895. Headquartered in Minneapolis, Piper Jaffray has approximately 3,000 employees in 111 offices in 23 states across the country and in London. For more information about Piper Jaffray, visit us online at http://www.piperjaffray.com .

Since 1895. Member SIPC and NYSE.

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) we may experience increased costs resulting from decreased purchasing power and size compared to that previously provided by our association with U.S. Bancorp, (2) we compete with U.S. Bancorp with respect to clients we both serviced prior to our spin-off from U.S. Bancorp and may not be able to retain these clients, (3) the continued ownership of U.S. Bancorp common stock and options by our executive officers and some of our directors will create, or will appear to create, conflicts of interest, (4) we have agreed to certain restrictions to preserve the tax treatment of the spin-off, which reduce our strategic and operating flexibility, (5) we have agreed to indemnify U.S. Bancorp for taxes and related losses resulting from any actions we take that cause the spin-off to fail to qualify as a tax-free transaction, (6) the separation and distribution agreement entered into between U.S. Bancorp and us contains cross-indemnification obligations of U.S. Bancorp and us that either party may be unable to satisfy, (7) developments in market and economic conditions have in the past adversely affected, and may in the future adversely affect, our business and profitability, (8) we may not be able to compete successfully with other companies in the financial services industry, (9) our underwriting and market-making activities may place our capital at risk, (10) an inability to readily divest or transfer trading positions may result in financial losses to our business, (11) 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, (12) 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, (13) we may make strategic acquisitions of businesses or may 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, (14) our technology systems are critical components of our operations and the failure of those systems may disrupt our business, cause financial loss and constrain our growth, (15) 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, (16) regulatory capital requirements may adversely affect our ability to expand or maintain present levels of our business or impair our ability to meet our financial obligations, (17) our exposure to legal liability is significant, and could lead to substantial damages and restrictions on our business going forward, (18) we may suffer losses if our reputation is harmed, (19) 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, (20) other factors identified in the document entitled "Risk Factors" filed as Exhibit 99.1 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2004, and 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's 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.


    Piper Jaffray Companies
    Preliminary Unaudited Results of Operations

                                                             Percent Inc/(Dec)
                                 For the Three Months Ended      3Q04    3Q04
    (Amounts in           September 30, June 30, September 30,    vs.     vs.
      thousands, except          2004      2004       2003       2Q04    3Q03
      per share data)
    Revenues:

     Commissions and fees       $61,187  $65,776    $63,797     (7.0)%  (4.1)%
     Principal transactions      39,813   50,243     51,592    (20.8)  (22.8)
     Investment banking          65,204   68,180     74,992     (4.4)  (13.1)
     Interest                    10,667   11,088     10,358     (3.8)    3.0
     Other income                13,571   16,407     14,161    (17.3)   (4.2)

      Total revenues            190,442  211,694    214,900    (10.0)  (11.4)

     Interest expense             4,217    4,391      4,225     (4.0)   (0.2)

      Net revenues              186,225  207,303    210,675    (10.2)  (11.6)

    Non-interest expenses:

     Compensation and benefits  114,197  127,690    129,455    (10.6)  (11.8)
     Occupancy and equipment     14,968   13,683     13,623      9.4     9.9
     Communications              10,558   10,712      9,100     (1.4)   16.0
     Floor brokerage and
      clearance                   4,068    4,559      5,700    (10.8)  (28.6)
     Marketing and business
      development                 9,723   11,131      8,576    (12.6)   13.4
     Outside services            11,215    9,922      9,763     13.0    14.9
     Cash award program           1,219    1,269          -     (3.9)    N/M
     Royalty fee                      -        -      1,128      N/M     N/M
     Other operating expenses     1,702    7,647      7,476    (77.7)  (77.2)

      Total non-interest
       expenses                 167,650  186,613    184,821    (10.2)   (9.3)

    Income before income tax
     expense                     18,575   20,690     25,854    (10.2)  (28.2)

    Income tax expense            6,806    7,710      9,824    (11.7)  (30.7)

    Net income                  $11,769  $12,980    $16,030     (9.3)% (26.6)%


    Earnings per common share
      Basic                       $0.61    $0.67      $0.83     (9.0)% (26.5)%
      Diluted                     $0.61    $0.67      $0.83     (9.0)% (26.5)%

    Weighted average number of
     common shares
      Basic                      19,333   19,333     19,260      0.0 %   0.4 %
      Diluted                    19,387   19,395     19,260     (0.0)%   0.7 %

    N/M - Not Meaningful



    Piper Jaffray Companies
    Preliminary Unaudited Results of Operations

                                               For the Nine Months Ended
                                        September 30, September 30,  Percent
    (Amounts in thousands, except per          2004        2003     Inc/(Dec)
     share data)
    Revenues:

     Commissions and fees                   $196,475     $189,139       3.9 %
     Principal transactions                  142,132      162,126     (12.3)
     Investment banking                      198,246      170,750      16.1
     Interest                                 34,218       33,665       1.6
     Other income                             44,378       44,231       0.3

      Total revenues                         615,449      599,911       2.6

     Interest expense                         12,521       14,979     (16.4)

      Net revenues                           602,928      584,932       3.1

    Non-interest expenses:

     Compensation and benefits               371,594      365,431       1.7
     Occupancy and equipment                  42,383       40,297       5.2
     Communications                           31,728       27,584      15.0
     Floor brokerage and clearance            13,427       17,527     (23.4)
     Marketing and business development       31,516       27,284      15.5
     Outside services                         30,295       27,355      10.7
     Cash award program                        3,559            -       N/M
     Royalty fee                                   -        3,107       N/M
     Other operating expenses                 16,989       30,090     (43.5)

      Total non-interest expenses            541,491      538,675       0.5

    Income before income tax expense          61,437       46,257      32.8

    Income tax expense                        22,898       16,912      35.4

    Net income                               $38,539      $29,345      31.3 %


    Earnings per common share
      Basic                                    $1.99        $1.53      30.1 %
      Diluted                                  $1.99        $1.53      30.1 %

    Weighted average number of common
     shares
      Basic                                   19,333       19,224       0.6 %
      Diluted                                 19,383       19,224       0.8 %

    N/M - Not Meaningful



    Piper Jaffray Companies
    Preliminary Unaudited Segment Data

                                                             Percent Inc/(Dec)
                                 For the Three Months Ended     3Q04    3Q04
                         September 30,  June 30, September 30,   vs.     vs.
    (Dollars in thousands)      2004      2004       2003       2Q04    3Q03
    Capital Markets
      Net revenues           $101,282  $113,598    $120,323   (10.8)%  (15.8)%
      Operating expenses       83,984    93,565      95,248   (10.2)   (11.8)
      Segment pre-tax
       operating income       $17,298   $20,033     $25,075   (13.7)%  (31.0)%
      Segment operating
       margin                   17.1%     17.6%       20.8%


    Private Client Services
      Net revenues            $83,727   $88,071     $89,688    (4.9)%   (6.6)%
      Operating expenses       71,623    76,251      77,137    (6.1)    (7.1)
      Segment pre-tax
       operating income       $12,104   $11,820     $12,551     2.4 %   (3.6)%
      Segment operating
       margin                   14.5%     13.4%       14.0%


    Corporate Support and Other
      Net revenues             $1,216    $5,634        $664   (78.4)%   83.1 %
      Operating expenses       10,824    15,528      11,308   (30.3)    (4.3)
      Segment pre-tax
       operating loss         $(9,608)  $(9,894)   $(10,644)   (2.9)%   (9.7)%
      Segment operating
       margin                     N/M       N/M         N/M


    Reconciliation to total income
     before taxes:
      Total segment pre-tax
       operating income       $19,794   $21,959     $26,982    (9.9)%  (26.6)%
      Royalty fee                   -         -       1,128     N/M      N/M
      Cash award program        1,219     1,269           -    (3.9)     N/M
      Total income before
       tax expense            $18,575   $20,690     $25,854   (10.2)%  (28.2)%
      Pre-tax operating
       margin                   10.0%     10.0%       12.3%

    N/M - Not Meaningful


    Piper Jaffray Companies
    Preliminary Unaudited Segment Data

                                                For the Nine Months Ended
                                          September 30, September 30,  Percent
    (Dollars in thousands)                        2004      2003     Inc/(Dec)
    Capital Markets
      Net revenues                            $326,760    $319,616      2.2 %
      Operating expenses                       269,790     260,768      3.5
      Segment pre-tax operating income         $56,970     $58,848     (3.2)%
      Segment operating margin                   17.4%       18.4%


    Private Client Services
      Net revenues                            $267,340    $263,292      1.5 %
      Operating expenses                       231,146     243,478     (5.1)
      Segment pre-tax operating income         $36,194     $19,814     82.7 %
      Segment operating margin                   13.5%        7.5%


    Corporate Support and Other
      Net revenues                              $8,828      $2,024    336.2 %
      Operating expenses                        36,996      31,322     18.1
      Segment pre-tax operating loss          $(28,168)   $(29,298)    (3.9)%
      Segment operating margin                    N/M         N/M


    Reconciliation to total income
     before taxes:
      Total segment pre-tax operating
       income                                  $64,996     $49,364     31.7 %
      Royalty fee                                    -       3,107      N/M
      Cash award program                         3,559           -      N/M
      Total income before tax expense          $61,437     $46,257     32.8 %
      Pre-tax operating margin                   10.2%        7.9%

    N/M - Not Meaningful


    Piper Jaffray Companies
    Preliminary Unaudited Supplemental Information

                                                             Percent Inc/(Dec)
                                 For the Three Months Ended     3Q04    3Q04
                         September 30,  June 30, September 30,   vs.     vs.
    (Dollars in thousands)      2004      2004       2003       2Q04    3Q03
    Capital Markets

    Institutional Sales
     Fixed Income             $13,154   $18,876    $21,717    (30.3)%  (39.4)%
     Equities                  26,318    30,268     29,789    (13.1)   (11.7)

    Total Institutional Sales  39,472    49,144     51,506    (19.7)   (23.4)

    Investment Banking
     Underwriting
      Fixed Income             18,223    14,540     18,727     25.3     (2.7)
      Equities                 16,836    20,888     25,066    (19.4)   (32.8)
     Mergers and Acquisitions  23,083    26,399     22,454    (12.6)     2.8

    Total Investment Banking   58,142    61,827     66,247     (6.0)   (12.2)

    Net Interest                3,196     3,151      2,362      1.4     35.3

    Other Income                  472      (524)       208    190.1    126.9

      Capital Markets Net
       Revenues              $101,282  $113,598   $120,323    (10.8)%  (15.8)%



    Piper Jaffray Companies
    Preliminary Unaudited Supplemental Information

                                                 For the Nine Months Ended
                                          September 30, September 30,  Percent
    (Dollars in thousands)                       2004        2003    Inc/(Dec)
    Capital Markets

    Institutional Sales
      Fixed Income                             $51,326     $75,459    (32.0)%
      Equities                                  91,073      88,882      2.5

    Total Institutional Sales                  142,399     164,341    (13.4)

    Investment Banking
      Underwriting
        Fixed Income                            47,484      49,862     (4.8)
        Equities                                64,642      47,400     36.4
      Mergers and Acquisitions                  62,634      48,870     28.2

    Total Investment Banking                   174,760     146,132     19.6

    Net Interest                                 8,653       6,904     25.3

    Other Income                                   948       2,239    (57.7)

        Capital Markets Net Revenues          $326,760    $319,616      2.2 %

SOURCE Piper Jaffray Companies

CONTACT: Jennifer A. Olson-Goude, Investor Relations, +1-612-303-6277, or
Dana H. Wade, Public Affairs and Media Relations, +1-415-277-1556, both of Piper Jaffray Companies
Web site: http://www.piperjaffray.com