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MINNEAPOLIS--(BUSINESS WIRE)--Apr. 15, 2009-- Piper Jaffray Companies (NYSE: PJC) today announced pre-tax income of $3.5 million, but an after-tax loss from continuing operations of $2.7 million, or $0.17 per diluted share, for the quarter ended March 31, 2009. In the first quarter of last year, continuing operations generated a net loss of $1.4 million, or $0.09 per diluted share. In the fourth quarter of 2008, continuing operations generated a net loss of $153.0 million, or $9.76 per diluted share. First quarter 2009 net revenues from continuing operations were $83.9 million, compared to $95.7 million in the year-ago period and $59.4 million for the fourth quarter of 2008.

“As a direct result of reducing our costs, we achieved a $3.5 million pre-tax profit on lower revenues than in the year-ago period,” said Andrew S. Duff, chairman and chief executive officer. “Revenues rebounded from the fourth quarter. We are seeing a benefit to our financial results from the senior talent we have added and from the disruption in the competitive landscape. For example, we have completed multiple municipal transactions for new clients and are achieving significant improvement in our fixed income sales and trading results. However, our global investment banking businesses remain challenged.”

Results of Continuing Operations

First Quarter

Net Revenues

Investment Banking

For the first quarter of 2009, total investment banking revenues were $25.3 million, down 59 percent compared to the first quarter of 2008 and flat with the fourth quarter of 2008.

The following is a recap of completed deal information for the first quarter of 2009:

Institutional Sales and Trading

For the quarter ended March 31, 2009, institutional sales and trading generated net revenues of $58.5 million, an increase of 74 percent from the same quarter last year and up 105 percent from the fourth quarter of 2008.

First Quarter

Non-Interest Expenses

For the first quarter of 2009, compensation and benefits expenses were $50.3 million, down 15 percent compared to the first quarter of 2008 driven by lower salaries and benefits expenses. Total compensation expenses rose 3 percent compared to the fourth quarter of 2008.

The compensation ratio for the first quarter of 2009 was 60.0 percent, compared to 61.9 percent in the first quarter of 2008, and 81.9 percent in the fourth quarter of 2008.

For the first quarter of 2009, non-compensation expenses were $30.0 million, down 20 percent compared to the first quarter of 2008. All expense categories reflected a significant decline or were at the same level compared to the year-ago period, primarily due to the expense reduction actions the firm implemented in 2008 and additional cost discipline in the first quarter. In the fourth quarter of 2008, non-compensation expenses were $179.3 million and included several significant items which increased expenses by $144.1 million pre-tax:

Tax expense for the first quarter of 2009 was $6.3 million compared to $0.3 million in the first quarter of 2008. The increased tax expense was due to generating income in the current period, the distribution of results between U.S. and non-U.S. entities, and approximately $3 million of one-time items.

Additional Shareholder Information

      As of Mar. 31, 2009   As of Dec. 31, 2008   As of Mar. 31, 2008
  Full time employees:   1,035   1,045   1,188
  FAMCO AUM:   $5.5 billion   $5.9 billion   $8.3 billion
  Shareholders’ equity:   $761.6 million   $748.0 million   $946.3 million
  Book value per share:   $47.31   $47.69   $59.00
  Tangible book value  

$36.49

 

$36.53

 

$40.22

  per share:  

 

 

 

 

 

 

Conference Call

Andrew S. Duff, chairman and chief executive officer, and Debbra L. Schoneman, chief financial officer, will host a conference call to discuss first quarter results on Wednesday, April 15 at 9 a.m. ET (8 a.m. CT). The call can be accessed via live audio webcast available through the firm's Web site at www.piperjaffray.com or by dialing (800) 732-5617. 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 April 15 at the same Web address or by calling (800) 633-8284 and referencing reservation #21421023.

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. Piper Jaffray headquarters are located in Minneapolis, Minnesota, with offices across the U.S. and in London, Hong Kong and Shanghai. Piper Jaffray & Co. is the firm's principal operating subsidiary. (www.piperjaffray.com)

Cautionary Note Regarding Forward-Looking Statements

This press release and the conference call to discuss the contents of this press release contain 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 (including expectations regarding revenue and expense levels, the compensation ratio, and break-even performance), liquidity and capital resources, expectations regarding inventory positions, 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, revenue levels 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) we may not be able to compete successfully with other companies in the financial services industry, (4) the disruption in the competitive landscape and our hiring of additional senior talent may not yield the benefits we anticipate or yield them within expected timeframes, (5) our ability to manage expenses to attain break-even performance at reduced revenue levels may be limited by the fixed nature of certain expenses as well as the impact from unanticipated expenses during the year, (6) 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, (7) an inability to readily divest or transfer inventory positions may result in future inventory levels that differ from management’s expectations and potential financial losses from a decline in value of illiquid positions, and (8) 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, 2008 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, 2008, and updated in our subsequent reports filed with the SEC (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 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.

© 2009 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)
Mar. 31 Dec. 31, Mar. 31, 1Q '09 1Q '09

(Amounts in thousands, except per share data)

2009

2008 2008

vs. 4Q '08

vs. 1Q '08
Revenues:
Investment banking $ 24,350 $ 23,985 $ 55,265 1.5 % (55.9 ) %
Institutional brokerage 55,027 23,359 29,812 135.6 84.6
Interest 7,288 9,714 15,159 (25.0 ) (51.9 )
Asset management 3,009 3,985 3,973 (24.5 ) (24.3 )
Other income     (3,599 )     1,170       (1,584 ) N/M   127.2  

Total revenues

86,075 62,213 102,625 38.4 (16.1 )
 
Interest expense     2,193       2,803       6,878   (21.8 ) (68.1 )
 
Net revenues     83,882       59,410       95,747   41.2   (12.4 )
 

Non-interest expenses:

Compensation and benefits 50,324 48,653 59,277 3.4 (15.1 )
Occupancy and equipment 6,518 8,699 8,110 (25.1 ) (19.6 )
Communications 6,099 5,893 6,739 3.5 (9.5 )
Floor brokerage and clearance 2,882 2,892 2,654 (0.3 ) 8.6
Marketing and business development 4,445 5,673 6,096 (21.6 ) (27.1 )
Outside services 7,519 11,992 8,642 (37.3 ) (13.0 )
Restructuring-related expenses - 9,712 2,854 N/M N/M
Goodwill impairment - 130,500 - N/M -
Other operating expenses     2,551       3,923       2,464   (35.0 ) 3.5  
Total non-interest expenses     80,338       227,937       96,836   (64.8 ) (17.0 )
 

 

Income/(loss) from continuing operations before income tax expense/(benefit)

3,544 (168,527 ) (1,089 ) N/M N/M
 
Income tax expense/(benefit)     6,269       (15,496 )     305   N/M   N/M  
 
Net loss from continuing operations     (2,725 )     (153,031 )     (1,394 ) (98.2 ) 95.5  
 
Loss from discontinued operations, net of tax     -       (287 )     -   N/M   -  
 
Net loss $   (2,725 ) $   (153,318 ) $   (1,394 ) (98.2 ) % 95.5   %
 
Earnings per basic common share
Loss from continuing operations $ (0.17 ) $ (9.76 ) $ (0.09 ) (98.2 ) % 95.0 %
Loss from discontinued operations     -       (0.02 )     -   N/M   -  
Earnings per basic common share $ (0.17 ) $ (9.78 ) $ (0.09 ) (98.2 ) % 95.0 %
 
Earnings per diluted common share
Loss from continuing operations $ (0.17 ) $ (9.76 ) $ (0.09 ) (98.2 ) % 95.0 %
Loss from discontinued operations     -       (0.02 )  

 

-   N/M   -  
Earnings per diluted common share $ (0.17 ) $ (9.78 ) $ (0.09 ) (98.2 ) % 95.0 %
 
Weighted average number of common shares outstanding
Basic 15,868 15,676 15,829 1.2 % 0.2 %
Diluted 15,868 15,676 15,829 1.2 % 0.2 %
 
N/M - Not meaningful
 
     
Piper Jaffray Companies
Preliminary Unaudited Revenues From Continuing Operations (Detail)
 
 
Three Months Ended Percent Inc/(Dec)
Mar. 31, Dec. 31, Mar. 31, 1Q '09 1Q '09
(Dollars in thousands) 2009 2008 2008 vs. 4Q '08 vs. 1Q '08
Investment banking
Financing
Equities $   4,063 $   4,225 $   16,518 (3.8 ) % (75.4 ) %

Debt

12,388 10,687 19,370 15.9 (36.0 )
Advisory services     8,815       10,584     25,325   (16.7 ) (65.2 )
Total investment banking 25,266 25,496 61,213 (0.9 ) (58.7 )
 
Institutional sales and trading
Equities 30,662 28,040 31,180 9.4 (1.7 )
Fixed income  

 

27,805       432     2,339   N/M   N/M  
Total institutional sales and trading 58,467 28,472 33,519 105.3 74.4
 
Asset management 3,009 3,985 3,973 (24.5 ) (24.3 )
 

Other income/(loss)

(2,860 ) 1,457 (2,958 ) N/M (3.3 )
         
Net revenues $   83,882   $   59,410 $   95,747   41.2   % (12.4 ) %
 
N/M - Not meaningful
 

Source: Piper Jaffray Companies

Piper Jaffray Companies
Jennifer A. Olson-Goude, 612-303-6277
Investor Relations
or
Rob Litt, 612-303-8266
Media Relations