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MINNEAPOLIS, Oct. 17 /PRNewswire-FirstCall/ -- Piper Jaffray Companies (NYSE: PJC) today announced net income from continuing operations of $4.8 million, or $0.28 per diluted share, for the quarter ended September 30, 2007, down from $9.5 million, or $0.50 per diluted share, in the year-ago period and down from $10.4 million, or $0.58 per diluted share, in the second quarter of 2007.

For the third quarter of 2007, net income including discontinued operations was $4.4 million, or $0.26 per diluted share. Net income including discontinued operations for the comparable year-ago period was $186.6 million, or $9.79 per diluted share, which included the gain from the sale of the company's Private Client Services branch network that closed in August 2006. Net income including discontinued operations was $0.52 per diluted share in the second quarter of 2007.

For the first nine months of 2007, net income from continuing operations was $29.9 million, or $1.70 per diluted share, compared to $36.2 million, or $1.87 per diluted share, for the year-ago period. Year-to-date net revenues were $352.4 million, a decline of 1 percent over the same period last year.

"The turmoil in the credit markets created very challenging capital markets conditions in the third quarter. While our business is not focused on the most troubled aspects of the credit markets, namely subprime mortgages and LBO loan commitments, the fallout from the turbulence in these markets negatively impacted nearly all of our businesses," said chairman and chief executive officer Andrew S. Duff. "We believe the adverse conditions were largely concentrated in the third quarter. Our current deal pipelines are strong, and we believe that going forward, the environment will be more conducive to capital markets activity. In addition, despite the recent difficult conditions we continued to execute our growth strategy. We successfully closed our acquisitions of FAMCO and Goldbond, both of which will serve to broaden our capabilities and diversify our revenue base."

Results of Continuing Operations

Third Quarter
Net Revenues

For the third quarter of 2007, continuing operations generated net revenues of $92.9 million, down 20 percent and 24 percent from the third quarter of 2006 and the second quarter of 2007, respectively. The declines were primarily attributable to significantly lower investment banking revenues.

Investment Banking

For the third quarter of 2007, total investment banking revenues were $52.5 million, down 28 percent compared to the third quarter of 2006, and down 32 percent compared to the second quarter of 2007.

Following is a recap of completed deal information for the third quarter of 2007:

Institutional Sales and Trading

For the third quarter of 2007, institutional sales and trading generated revenues of $38.8 million, down 11 percent compared to the year-ago quarter and down 14 percent compared to the second quarter of 2007.

Non-Interest Expenses

For the third quarter of 2007, compensation and benefits expense was $54.3 million, down 21 percent and 24 percent compared to the year-ago period and the second quarter of 2007, respectively. The compensation ratio for the third quarter was 58.5 percent, down from 59.5 percent in the year-ago period and consistent with the second quarter of 2007.

Non-compensation expenses were $32.5 million for the current quarter, up 2 percent compared to the third quarter of 2006 and down 9 percent compared to the second quarter of 2007.

For the third quarter of 2007, pre-tax operating margin from continuing operations was 6.5 percent, compared to 13.0 percent in the year-ago period and 12.4 percent in the second quarter of 2007.

During the quarter the company repurchased $70 million, or 1.4 million shares, of its common stock. The average repurchase price was $48.87. This activity completed the $180 million share repurchase program authorized by the board of directors upon the closing of the company's sale of its Private Client Services branch network.

Results of Discontinued Operations

Third Quarter

Discontinued operations relate to the Private Client Services business, which the company sold to UBS Financial Services on August 11, 2006.

For the quarter ended September 30, 2007, discontinued operations recorded a net loss of $456,000, or $0.03 per diluted share, for costs primarily related to decommissioning a retail-oriented back office system, which was completed on schedule in the third quarter.



    Additional Shareholder Information

                          As of Sep. 30,   As of June 30,    As of Sep. 30,
                              2007              2007             2006

    Full time employees:  1,131            1,095             1,134
    Shareholders' equity: $889 million     $947 million      $893 million
    Annualized Return on
     Average Tangible     2.6%             5.3%              NM
     Shareholders'
     Equity(1)
    Book value per share: $56.80           $55.46            $52.66
    Tangible book value
     per share:           $38.73           $41.86            $38.90

    (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
    (Dollars in    Three Months Ended  Three Months Ended         As of
     thousands)      Sep. 30, 2007        Sep. 30, 2006        Sep. 30, 2007

    Shareholders'
     equity            $ 917,350           $ 883,007            $ 889,160
    Deduct: Goodwill
             and
             identifiable
             intangible
             assets      244,774             276,434              282,791
    Tangible
     shareholders'
     equity            $ 672,576           $ 606,572             $ 606,369



    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, October 17 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 19472919 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 October 17, 2007 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)
                                Sept. 30, Jun. 30, Sept. 30, 3Q '07   3Q '07
                                   2007    2007      2006      vs.      vs.
                                                             2Q '07   3Q '06
     (Amounts in thousands,
      except per share data)
     Revenues:
      Investment banking         $50,276  $74,872   $71,261  (32.9)%  (29.4)%
      Institutional brokerage     31,624   37,899    36,618  (16.6)   (13.6)
      Interest                    15,003   13,816    16,663    8.6    (10.0)
      Asset management               903       72         2    N/M      N/M
      Other income                   735      334        53  120.1      N/M
       Total revenues             98,541  126,993   124,597  (22.4)   (20.9)

      Interest expense             5,647    4,417     8,490   27.8    (33.5)

       Net revenues               92,894  122,576   116,107  (24.2)   (20.0)

     Non-interest expenses:
      Compensation and benefits   54,343   71,707    69,079  (24.2)   (21.3)
      Occupancy and equipment      7,201    8,849     6,878  (18.6)     4.7
      Communications               6,040    5,997     5,761    0.7      4.8
      Floor brokerage and
       clearance                   3,564    4,176     3,759  (14.7)    (5.2)
      Marketing and business
       development                 6,064    6,380     5,820   (5.0)     4.2
      Outside services             8,134    9,122     6,344  (10.8)    28.2
      Cash award program             450      390       512   15.4    (12.1)
      Other operating expenses     1,064      804     2,905   32.3    (63.4)
       Total non-interest
        expenses                  86,860  107,425   101,058  (19.1)   (14.0)

     Income from continuing
      operations before income
      tax expense                  6,034   15,151    15,049  (60.2)   (59.9)

     Income tax expense            1,222    4,774     5,521  (74.4)   (77.9)

     Net income from continuing
      operations                   4,812   10,377     9,528  (53.6)   (49.5)

     Income/(loss) from
      discontinued operations,
      net of tax                    (456)  (1,051)  177,085    N/M      N/M

     Net income                   $4,356   $9,326  $186,613  (53.3)%  (97.7)%

     Earnings per basic common
      share
      Income from continuing
       operations                  $0.30    $0.61     $0.53  (50.8)%  (43.4)%
      Income/(loss) from
       discontinued operations     (0.03)   (0.06)     9.82    N/M      N/M
       Earnings per basic common
        share                      $0.27    $0.55    $10.35  (50.9)%  (97.4)%

     Earnings per diluted common
      share
      Income from continuing
       operations                  $0.28    $0.58     $0.50  (51.7)%  (44.0)%
      Income/(loss) from
       discontinued operations     (0.03)   (0.06)     9.29    N/M      N/M
       Earnings per diluted common
        share                      $0.26    $0.52     $9.79  (50.0)%  (97.3)%

     Weighted average number of
      common shares outstanding
      Basic                       16,096   17,073    18,031   (5.7)%  (10.7)%
      Diluted                     16,904   17,919    19,071   (5.7)%  (11.4)%

     N/M - Not meaningful


                                              Nine Months Ended
                                            Sept. 30,   Sept. 30,   Percent
     (Amounts in thousands, except per        2007        2006     Inc/(Dec)
      share data)
     Revenues:
      Investment banking                    $208,881    $205,346      1.7%
      Institutional brokerage                111,451     119,436     (6.7)
      Interest                                46,229      44,869      3.0
      Asset management                         1,102          17      N/M
      Other income                             1,523      12,434    (87.8)
       Total revenues                        369,186     382,102     (3.4)

      Interest expense                        16,766      25,786    (35.0)

       Net revenues                          352,420     356,316     (1.1)

     Non-interest expenses:
      Compensation and benefits              206,166     202,656      1.7
      Occupancy and equipment                 23,772      21,705      9.5
      Communications                          18,296      16,737      9.3
      Floor brokerage and clearance           11,255       9,807     14.8
      Marketing and business development      18,125      17,121      5.9
      Outside services                        24,573      19,472     26.2
      Cash award program                       1,196       2,673    (55.3)
      Other operating expenses                 5,268      10,252    (48.6)
       Total non-interest expenses           308,651     300,423      2.7

     Income from continuing operations
      before income tax expense               43,769      55,893    (21.7)

     Income tax expense                       13,858      19,730    (29.8)

     Net income from continuing
      operations                              29,911      36,163    (17.3)

     Income/(loss) from discontinued
      operations, net of tax                  (2,811)    178,444      N/M

     Net income                              $27,100    $214,607    (87.4)%

     Earnings per basic common share
      Income from continuing operations        $1.79       $1.97     (9.1)%
      Income/(loss) from discontinued
       operations                              (0.17)       9.73      N/M
       Earnings per basic common share         $1.62      $11.70    (86.2)%

     Earnings per diluted common share
      Income from continuing operations        $1.70       $1.87     (9.1)%
      Income/(loss) from discontinued
       operations                              (0.16)       9.25      N/M
       Earnings per diluted common share       $1.54      $11.12    (86.2)%

     Weighted average number of common
      shares outstanding
      Basic                                   16,743      18,348     (8.7)%
      Diluted                                 17,610      19,294     (8.7)%

     N/M - Not meaningful




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

                                    Three Months Ended       Percent Inc/(Dec)
                               Sept. 30, Jun. 30,  Sept. 30, 3Q '07   3Q '07
                                 2007      2007     2006       vs.      vs.
                                                             2Q '07   3Q '06
     (Dollars in thousands)
     Investment banking
      Financing
       Equities                $18,211   $40,075   $31,417  (54.6)%  (42.0)%
       Debt                     18,211    25,256    19,395  (27.9)    (6.1)
      Advisory services         16,120    11,706    21,948   37.7    (26.6)
     Total investment banking   52,542    77,037    72,760  (31.8)   (27.8)

     Institutional sales and
      trading
       Equities                 25,192    28,735    27,946  (12.3)    (9.9)
       Fixed income             13,649    16,169    15,814  (15.6)   (13.7)
     Total institutional sales
      and trading               38,841    44,904    43,760  (13.5)   (11.2)

     Asset management              903        72         2    N/M      N/M

     Other income                  608       563      (415)   8.0      N/M

     Net revenues              $92,894  $122,576  $116,107  (24.2)%  (20.0)%

     N/M - Not meaningful


                                              Nine Months Ended
                                            Sept. 30,   Sept. 30,   Percent
                                               2007        2006    Inc/(Dec)
     (Dollars in thousands)
     Investment banking
      Financing
       Equities                              $98,996     $91,171      8.6%
       Debt                                   63,513      56,120     13.2
      Advisory services                       52,702      62,473    (15.6)
     Total investment banking                215,211     209,764      2.6

     Institutional sales and trading
      Equities                                85,049      90,907     (6.4)
      Fixed income                            48,978      48,877      0.2
     Total institutional sales and
      trading                                134,027     139,784     (4.1)

     Asset management                          1,102          17      N/M

     Other income                              2,080       6,751    (69.2)

     Net revenues                           $352,420    $356,316     (1.1)%

     N/M - Not meaningful

SOURCE Piper Jaffray Companies

/CONTACT:
investors,
Jennifer A. Olson-Goude,
+1-612-303-6277,
or media,
Rob Litt,
+1-612-303-8266,
both of Piper Jaffray Companies