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MINNEAPOLIS, Oct. 18 /PRNewswire-FirstCall/ -- Piper Jaffray Companies (NYSE: PJC) today announced net income from continuing operations of $9.5 million, or $0.50 per diluted share, for the quarter ended Sept. 30, 2006, down from $10.9 million, or $0.57 per diluted share in the year-ago period and up from $7.9 million, or $0.40 per diluted share in the second quarter of 2006.

For the quarter ended Sept. 30, 2006, net income including both continuing and discontinued operations was $186.6 million, which includes the gain from the sale of the company's Private Client Services branch network that closed in Aug. 2006. Total net income was up from $15.1 million in the comparable quarter a year ago and $4.1 million in the quarter ending June 30, 2006. For the quarter ended Sept. 30, 2006, diluted earnings per share totaled $9.79, up from $0.79 in the same quarter last year and $0.21 in the sequential quarter.

For the first nine months of 2006, net income from continuing operations was $36.2 million, or $1.87 per diluted share, up from $13.2 million, or $0.70 per diluted share, for the year-ago period. Net revenues from continuing operations of $356.3 million year-to-date represent an 18 percent increase over the year-ago period, due to increases across all capital markets businesses.

"We are pleased with our third quarter financial results given the more challenging market conditions," said Chairman and Chief Executive Officer Andrew S. Duff. "During the quarter we closed the sale of the Private Client Services branch network, paid off $180 million in subordinated debt and executed a $100 million accelerated share repurchase agreement. We continue to execute our growth strategy with investments in our business and the expansion of our international presence with the addition of locations in Madrid and Shanghai."

Results of Continuing Operations

Net Revenues

For the third quarter of 2006, net revenues from continuing operations totaled $116.1 million, down 3 percent from $120.1 million for the third quarter of 2005 and up 10 percent compared to the second quarter of 2006.

Investment Banking

For the third quarter of 2006, total investment banking revenues were $72.1 million, down 2 percent, compared to the third quarter of 2005, and up 18 percent compared to the second quarter of 2006.

    * Equity financing revenues were $27.8 million, up 53 percent compared to
      the third quarter of 2005, resulting from higher convertibles revenues
      and higher average revenues per transaction on other equity financings.
      Compared to the second quarter of 2006, equity financing revenues
      increased 8 percent, as higher average revenues per transaction more
      than offset fewer completed equity financings.

    * Advisory services revenues were $25.4 million, down 36 percent compared
      to record revenues in the year-ago period.  Compared to the second
      quarter of 2006, advisory services revenues increased 28 percent, mainly
      driven by higher average revenues per transaction.

    * Fixed income underwriting revenues were $18.9 million, up 20 percent and
      21 percent compared to the year-ago period and the second quarter of
      2006, respectively. The improvement in revenues compared to both periods
      primarily resulted from higher average public finance revenues per
      transaction.

Following is a recap of completed deal information for the third quarter of 2006:

    * 17 equity financings raising a total of $1.9 billion in capital, and the
      company was bookrunner on 8 of the equity financings.  Of the completed
      transactions, 12 were U.S. public offerings, placing the company 12th
      nationally, based on the number of completed transactions. (Source:
      Dealogic)

    * 8 mergers and acquisitions transactions with an aggregate enterprise
      value of $1.2 billion.  The number of deals and the enterprise value
      include disclosed and undisclosed transactions. (Source:  Piper Jaffray)

    * 111 tax-exempt issues with a total par value of $1.5 billion, ranking
      the company fourth nationally, based on the number of completed
      transactions. (Source:  Thomson Financial)

    Institutional Sales and Trading

For the quarter ended Sept. 2006, institutional sales and trading generated revenues of $43.3 million, down 10 percent from both the same quarter in 2005 and the second quarter of 2006. The main drivers of the declines compared to both periods were more challenging equity market conditions and lower revenues from interest rate products.

    * Equities sales and trading revenues were $28.6 million, down 12 percent
      from the year-ago period and down 9 percent compared to the second
      quarter of 2006. The declines compared to both periods were primarily
      driven by lower volumes. Partially offsetting the declines in the cash
      equities business were increased revenues from growth initiatives,
      specifically, algorithmic and program trading and convertibles.

    * Fixed income sales and trading revenues were $14.7 million, down 6
      percent compared to the year-ago period and down 11 percent compared to
      the second quarter of 2006.  The declines compared to both periods were
      attributable to lower revenues from interest rate products, which were
      partially offset by stronger revenues from high-yield and structured
      products.

    Non-Interest Expenses

For the third quarter of 2006, compensation and benefits expense was $69.1 million, down 5 percent compared to the prior-year period, primarily attributable to decreased variable compensation driven by lower net revenues and profitability. Compared to the second quarter of 2006, compensation and benefits expense increased 14 percent, mainly due to higher variable compensation driven by higher net revenues and profitability and due to investments in personnel.

Non-compensation expenses were $32.0 million for the current quarter, essentially flat compared to the third quarter of 2005 and the second quarter of 2006.

For the three months ended Sept. 30, 2006, pre-tax operating margin from continuing operations was 13.0 percent, down from 13.2 percent for the year- ago period and up from 11.6 percent for the second quarter of 2006.

On Aug. 17, 2006, Piper Jaffray announced that it had entered into an accelerated share repurchase (ASR) agreement to repurchase $100 million of the company's common stock. Piper Jaffray completed the ASR on Oct. 2, 2006, pursuant to which the company repurchased a total of approximately 1.6 million shares of common stock. The ASR is part of a previously announced repurchase program authorized by the company's board of directors to repurchase up to $180 million of common shares commencing with the closing of the company's sale of its Private Client Services branch network on Aug. 11, 2006 and ending on Dec. 31, 2007.

Results of Discontinued Operations

Discontinued operations include the operating results of the Private Client Services business, the gain on the sale of the Private Client Services branch network, and restructuring and transaction costs incurred in connection with the sale. The sale of the private client branch network to UBS AG closed on Aug. 11, 2006.

For the quarter ended Sept. 30, 2006, net income from discontinued operations was $177.1 million, or $9.29 per diluted share, up from $4.2 million, or $0.22 per diluted share, in the third quarter of 2005 and up from a loss of $3.8 million, or $0.19 per diluted share, in the second quarter of 2006.

    Additional Shareholder Information

                        As of September 30, As of June 30, As of September 30,
                               2006              2006             2005
    Full time employees:      1,134             2,638            2,879
    Shareholders' equity:  $893 million      $807 million     $734 million
    Annualized Return on
     Average Tangible
     Shareholders' Equity(1)    NM               3.4%            14.8%
    Book value per share:    $52.66            $43.51           $39.96
    Tangible book value
     per share:              $38.90            $26.30           $22.51

    NM-Not Meaningful

    (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
    (Dollars in thousands)  Sept. 30, 2006     Sept. 30, 2005   Sept. 30, 2006
    Shareholders' equity        $883,007           $729,848         $893,187
    Deduct: Goodwill and
     identifiable
     intangible assets           276,434            320,834          233,434
    Tangible
     shareholders' equity       $606,572           $409,013         $659,753

    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 2006 financial results on Wednesday, October 18, 2006, at 11 a.m. ET (10 a.m. CT). The call can be accessed via live audio webcast available through the company's web site at www.piperjaffray.com or by dialing (866) 244-9933, or (706) 758-0864 internationally, and referring to conference ID 7532300 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 on October 18, 2006 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 24 offices across the United States and international locations in London, Madrid 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 expected benefits of the sale of our Private Client Services branch network, including the growth of our Capital Markets business, increased profitability and shareholder returns, may take longer than anticipated to achieve and may not be achieved in their entirety or at all; (2) strategies with respect to the deployment of sale proceeds may take longer than anticipated to be realized or may not be achieved in their entirety or at all; (3) developments in market and economic conditions have in the past adversely affected, and may in the future adversely affect, our business and profitability, (4) developments in specific sectors of the economy have in the past adversely affected, and may in the future adversely affect, our business and profitability, (5) 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, (6) we have experienced significant pricing pressure in areas of our business, which may impair our revenues and profitability, (7) our ability to attract, develop and retain highly skilled and productive employees is critical to the success of our business, (8) our underwriting and market-making activities may place our capital at risk, (9) the volume of anticipated investment banking transactions may differ from actual results, (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, 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 and may not yield the benefits we expect, (14) 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, (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 to our company, (16) 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, (17) our exposure to legal liability is significant, and could lead to substantial damages, (18) the business operations that we conduct outside of the United States subject us to unique risks, (19) we may suffer losses if our reputation is harmed, (20) our stock price may fluctuate as a result of several factors, including but not limited to changes in our revenues and operating results, (21) 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 (22) 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, 2005, 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 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

                       For the Three Months Ended         Percent Inc/(Dec)
                   Sept. 30,   June 30,    Sept. 30,    3Q06 vs.    3Q06 vs.
                      2006       2006        2005         2Q06        3Q05
    (Amounts in
     thousands,
     except per
     share data)
    Revenues:

      Investment
       banking     $72,107     $61,236      $73,407        17.8%      (1.8)%
      Institutional
       brokerage    34,964      40,898       42,476       (14.5)     (17.7)
      Interest      16,663      13,521       11,357        23.2       46.7
      Other income     863      (1,262)         949         N/M       (9.1)

        Total
         revenues  124,597     114,393      128,189         8.9       (2.8)

      Interest
       expense       8,490       9,143        8,064        (7.1)       5.3

        Net
         revenues  116,107     105,250      120,125        10.3       (3.3)


    Non-interest
     expenses:

      Compensation
       and benefits 69,079      60,653       72,649        13.9       (4.9)
      Occupancy and
       equipment     6,878       6,718        7,710         2.4      (10.8)
      Communications 5,761       5,593        5,683         3.0        1.4
      Floor brokerage
       and clearance 3,759       3,373        3,887        11.4       (3.3)
      Marketing and
       business
       development   5,887       6,122        4,827        (3.8)      22.0
      Outside
       services      6,344       6,836        5,237        (7.2)      21.1
      Cash award
       program         512         886        1,004       (42.2)     (49.0)
      Restructuring-
       related expense   -           -            -         N/M        N/M
      Other operating
       expenses      2,838       2,910        3,319        (2.5)     (14.5)

         Total
          non-
          interest
          expenses 101,058      93,091      104,316         8.6       (3.1)

    Income from
     continuing
     operations
     before income
     tax expense    15,049      12,159       15,809        23.8       (4.8)

       Income tax
        expense      5,521       4,230        4,871        30.5       13.3

    Net income from
     continuing
     operations      9,528       7,929       10,938        20.2      (12.9)

    Discontinued
     operations:
       Income/
        (loss)
        from
        discontinued
        operations,
        net of tax 177,085      (3,792)       4,210         N/M     4106.3


    Net Income    $186,613      $4,137      $15,148      4410.8%    1131.9%

    Earnings per
     basic common
     share
       Income from
        continuing
        operations   $0.53       $0.43        $0.58        23.3%      (8.6)%
       Income/(loss)
        from
        discontinued
        operations    9.82       (0.20)        0.22         N/M     4363.6%
          Earnings
           per basic
           common
           share    $10.35       $0.22        $0.80     4,604.6%    1193.8%

    Earnings per
     diluted common
     share
       Income from
        continuing
        operations   $0.50       $0.40        $0.57        25.0%     (12.3)%
       Income/(loss)
        from
        discontinued
        operations    9.29       (0.19)        0.22         N/M    4,122.7%
          Earnings
           per diluted
           common
           share     $9.79       $0.21        $0.79     4,561.9%   1,139.2%

    Weighted average
     number of common
     shares
       Basic        18,031      18,556       18,841        (2.8)%     (4.3)%
       Diluted      19,071      19,669       19,107        (3.0)%     (0.2)%


    N/M - Not meaningful


                                        For the Nine Months Ended
                                   Sept. 30,       Sept. 30,         Percent
                                      2006            2005          Inc/(Dec)
    (Amounts in thousands,
     except per share data)
    Revenues:

      Investment banking           $203,107        $169,909          19.5%
      Institutional brokerage       122,136         121,699           0.4
      Interest                       44,728          32,015          39.7
      Other income                   12,131           2,403         404.8

        Total revenues              382,102         326,026          17.2

      Interest expense               25,786          23,332          10.5

        Net revenues                356,316         302,694          17.7


    Non-interest expenses:

      Compensation and benefits     202,656         177,262          14.3
      Occupancy and equipment        21,705          22,912          (5.3)
      Communications                 16,737          18,081          (7.4)
      Floor brokerage and clearance   9,807          11,336         (13.5)
      Marketing and business
       development                   17,188          15,793           8.8
      Outside services               19,472          16,911          15.1
      Cash award program              2,673           3,201         (16.5)
      Restructuring-related expense       -           8,595           N/M
      Other operating expenses       10,185           9,516           7.0

        Total non-interest
         expenses                   300,423         283,607           5.9

    Income from continuing
     operations
     before income tax expense       55,893          19,087         192.8

      Income tax expense             19,730           5,854         237.0

    Net income from continuing
     operations                      36,163          13,233         173.3


    Discontinued operations:
      Income/(loss) from
       discontinued operations,
       net of tax                   178,444          10,487       1,601.6

    Net Income                     $214,607         $23,720         804.8%


    Earnings per basic
     common share
      Income from continuing
       operations                     $1.97           $0.70         181.4%
      Income/(loss) from
       discontinued operations         9.73            0.56        1637.5%
        Earnings per basic
         common share                $11.70           $1.26         828.6%


    Earnings per diluted common share
      Income from continuing
       operations                     $1.87           $0.70         167.1%
      Income/(loss) from
       discontinued operations         9.25            0.55        1581.8%
        Earnings per diluted
         common share                $11.12           $1.25         789.6%


    Weighted average number
     of common shares
       Basic                         18,348          18,814          (2.5)%
       Diluted                       19,294          19,007           1.5%

    N/M - Not meaningful



    Piper Jaffray Companies
    Preliminary Unaudited Revenue From Continuing Operations (Detail)

                     For the Three Months Ended          Percent Inc/(Dec)
               September 30,  June 30,  September 30,   3Q06 vs.    3Q06 vs.
                   2006         2006         2005         2Q06        3Q05
    (Dollars in
     thousands)

    Institutional
     sales and
     trading
      Fixed
       income    $14,723       $16,621      $15,616      (11.4)%      (5.7)%
      Equities    28,591        31,530       32,455       (9.3)      (11.9)
    Total
     institutional
     sales and
     trading      43,314        48,151      $48,071      (10.0)       (9.9)

    Investment
     banking
      Underwriting
        Fixed
         income   18,920        15,675       15,809       20.7        19.7
        Equities  27,792        25,648       18,166        8.4        53.0
      Advisory
       services   25,395        19,913       39,432       27.5       (35.6)
    Total
     investment
     banking      72,107        61,236       73,407       17.8        (1.8)

    Other income     686        (4,137)      (1,353)       N/M         N/M

    Net
     revenues   $116,107      $105,250     $120,125       10.3%       (3.3)%


    N/M - Not meaningful


                                   For the Nine Months Ended
                                  September 30,   September 30,    Percent
                                      2006            2005        Inc/(Dec)
    (Dollars in thousands)

    Institutional sales and trading
      Fixed income                  $53,959         $47,275          14.1%
      Equities                       92,880          89,322           4.0
    Total institutional sales and
     trading                        146,839         136,597           7.5

    Investment banking
      Underwriting
        Fixed income                 50,347          47,199           6.7
        Equities                     83,483          55,464          50.5
      Advisory services              69,277          67,246           3.0
    Total investment banking        203,107         169,909          19.5

    Other income                      6,370          (3,812)          N/M

    Net revenues                   $356,316        $302,694          17.7%


    N/M - Not meaningful

SOURCE 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