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MINNEAPOLIS--(BUSINESS WIRE)--Jul. 22, 2009-- Piper Jaffray Companies (NYSE: PJC) today announced net income of $11.6 million from continuing operations, or $0.59 per diluted common share, for the quarter ended June 30, 2009. In the second quarter of last year, continuing operations generated a net loss of $1.5 million, or $0.09 per diluted common share. In the first quarter of 2009, continuing operations generated a net loss of $2.7 million, or $0.17 per diluted common share. Second quarter 2009 net revenues from continuing operations were $132.3 million, compared to $97.7 million in the year-ago period, and $83.9 million for the first quarter of 2009.

For the first six months of 2009, the company recorded net income from continuing operations of $8.9 million, or $0.45 per diluted common share, compared to a net loss from continuing operations of $2.9 million, or $0.18 per diluted common share, for the year-ago period. Net revenues of $216.2 million year-to-date represent a 12 percent increase over the same period last year, mainly driven by significantly improved performance in fixed income sales and trading.

“Our second quarter results reflect a significant rebound in investment banking revenues, continued strong fixed income sales and trading revenues, and importantly, the operating leverage we have created in our business model,” said Andrew S. Duff, chairman and chief executive officer. “Equity capital market conditions began to improve during the quarter, and we raised capital for or advised our clients in a number of successful transactions across all of our focus sectors. Also, higher fixed income sales and trading revenues were driven by solid client activity, favorable trading spreads and improved asset valuations. In addition, our revenues were positively impacted by the senior talent we have added across our platform. This is particularly true for our public finance business, where we are capturing an increased market share. Finally, the second quarter results demonstrate the operating leverage we have created by reducing our fixed costs. Our revenues increased 58 percent and our pre-tax operating income increased 420 percent, compared to the first quarter of 2009.”

Results of Continuing Operations

Second Quarter

Net Revenues

Investment Banking

For the second quarter of 2009, total investment banking revenues were $63.0 million, up 79 percent compared to the second quarter of 2008 and up 149 percent compared with the first quarter of 2009.

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

Institutional Sales and Trading

For the quarter ended June 30, 2009, institutional sales and trading generated net revenues of $65.6 million, an increase of 17 percent and 12 percent, compared to the same quarter last year and the first quarter of 2009, respectively.

Second Quarter

Non-Interest Expenses

For the second quarter of 2009, compensation and benefits expenses were $79.4 million, up 30 percent and 58 percent, compared to the second quarter of 2008 and first quarter of 2009, respectively. The increase was driven by the improved performance compared to the prior periods.

The compensation ratio for the second quarter of 2009 was 60.0 percent, compared to 62.5 percent in the second quarter of 2008, and 60.0 percent in the first quarter of 2009.

For the second quarter of 2009, non-compensation expenses were $34.5 million, which included $3.6 million in restructuring charges, primarily related to severance. Compared to the first quarter of 2009, the firm reduced net headcount by 3 percent.

Additional Shareholder Information

        As of June 30, 2009     As of March 31, 2009     As of June 30, 2008
  Number of employees:     1,001     1,029     1,175
  FAMCO AUM:     $5.9 billion     $5.5 billion     $8.1 billion
  Shareholders’ equity:     $778.1 million     $761.6 million    

$945.1 million

  Book value per share:     $48.30     $47.31     $58.72
 

Tangible book value per share:

    $37.51     $36.49     $40.04
             

Conference Call

Andrew S. Duff, chairman and chief executive officer, and Debbra L. Schoneman, chief financial officer, will host a conference call to discuss second quarter results on Wednesday, July 22 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) 891-6979. 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 July 22 at the same Web address or by calling (800) 633-8284 and referencing reservation #21430667.

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, market share gains and trends, the environment and prospects for capital markets transactions and activity, anticipated financial results (including expectations regarding revenue and expense levels, the compensation ratio, and our quarterly run rate for non-compensation expenses), liquidity and capital resources, 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 at reduced revenue levels, including our quarterly run rate for non-compensation expenses, 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) Six Months Ended
Jun. 30, Mar. 31, Jun. 30, 2Q '09 2Q '09 Jun. 30, Jun. 30, Percent
(Amounts in thousands, except per share data) 2009 2009 2008 vs. 1Q '09 vs. 2Q '08 2009 2008 Inc/(Dec)
Revenues:
Investment banking $ 62,150 $ 24,350 $ 32,184 155.2 % 93.1 % $ 86,500 $ 87,449 (1.1 ) %
Institutional brokerage 60,852 55,027 51,196 10.6 18.9 115,879 81,008 43.0
Interest 8,973 7,288 13,114 23.1 (31.6 ) 16,261 28,273 (42.5 )
Asset management 3,240 3,009 4,697 7.7 (31.0 ) 6,249 8,670 (27.9 )
Other income/(loss)   (950 )   (3,599 )   2,356   (73.6 ) N/M     (4,549 )   772   N/M  
Total revenues 134,265 86,075 103,547 56.0 29.7 220,340 206,172 6.9
 
Interest expense   1,975     2,193     5,826   (9.9 ) (66.1 )   4,168     12,704   (67.2 )
 
Net revenues   132,290     83,882     97,721   57.7   35.4     216,172     193,468   11.7  
 
Non-interest expenses:
Compensation and benefits 79,377 50,324 61,087 57.7 29.9 129,701 120,364 7.8
Occupancy and equipment 7,680 6,518 8,133 17.8 (5.6 ) 14,198 16,243 (12.6 )
Communications 5,430 6,099 5,869 (11.0 ) (7.5 ) 11,529 12,608 (8.6 )
Floor brokerage and clearance 3,232 2,882 3,899 12.1 (17.1 ) 6,114 6,553 (6.7 )
Marketing and business development 3,419 4,445 7,381 (23.1 ) (53.7 ) 7,864 13,477 (41.6 )
Outside services 7,415 7,519 11,308 (1.4 ) (34.4 ) 14,934 19,950 (25.1 )
Restructuring-related expenses 3,572 - 729 N/M 390.0 3,572 3,583 (0.3 )
Other operating expenses   3,747     2,551     6,604   46.9   (43.3 )   6,298     9,068   (30.5 )
Total non-interest expenses   113,872     80,338     105,010   41.7   8.4   %   194,210     201,846   (3.8 ) %
 

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

18,418 3,544 (7,289 ) 419.7 N/M 21,962 (8,378 ) N/M
 
Income tax expense/(benefit)   6,842     6,269     (5,776 ) 9.1   % N/M     13,111     (5,471 ) N/M  
 
Net income/(loss) from continuing operations   11,576     (2,725 )   (1,513 ) N/M   N/M     8,851     (2,907 ) N/M  
 
Income from discontinued operations, net of tax   -     -     1,439   N/M   N/M     -     1,439   N/M  
 
Net income/(loss) 11,576 $ (2,725 ) $ (74 ) N/M N/M 8,851 $ (1,468 ) N/M
 
Earnings allocated to participating stock awards   (2,101 )   N/A     N/A   N/M   N/M     (1,582 )   N/A   N/M  
 

Net income applicable to Piper Jaffray Companies common shareholders

$ 9,475     N/A     N/A   N/M   N/M   $ 7,269     N/A   N/M  
 
Earnings per basic common share
Income/(loss) from continuing operations $ 0.59 $ (0.17 ) $ (0.09 ) $ 0.45 $ (0.18 )
Income from discontinued operations   -     -     0.09     -     0.09  
Earnings per basic common share $ 0.59 $ (0.17 ) $ - $ 0.45 $ (0.09 )
 
Earnings per diluted common share
Income/(loss) from continuing operations $ 0.59 $ (0.17 ) $ (0.09 ) $ 0.45 $ (0.18 )
Income from discontinued operations   -     -     0.09     -     0.09  
Earnings per diluted common share $ 0.59 $ (0.17 ) $ - $ 0.45 $ (0.09 )
 
Weighted average number of common shares outstanding
Basic 16,104 15,868 16,072 15,987 15,951
Diluted 16,117 15,868 16,072 15,995 15,951
 
N/M - Not meaningful
N/A - Not applicable as no allocation of income was made due to net loss position
 
Piper Jaffray Companies
Preliminary Unaudited Revenues From Continuing Operations (Detail)
                 
Three Months Ended Percent Inc/(Dec) Six Months Ended
Jun. 30, Mar. 31, Jun. 30, 2Q '09 2Q '09 Jun. 30, Jun. 30, Percent
(Dollars in thousands) 2009 2009 2008 vs. 1Q '09 vs. 2Q '08 2009 2008 Inc/(Dec)
Investment banking
Financing
Equities $ 23,294 $ 4,063 $ 8,705 473.3 % 167.6 % $ 27,357 $ 25,223 8.5 %
Debt 20,126 12,388 15,297 62.5 31.6 32,514 34,667 (6.2 )
Advisory services   19,574     8,815     11,256   122.1   73.9     28,389     36,581   (22.4 )
Total investment banking 62,994 25,266 35,258 149.3 78.7 88,260 96,471 (8.5 )
 
Institutional sales and trading
Equities 30,384 30,662 35,345 (0.9 ) (14.0 ) 61,046 66,525 (8.2 )
Fixed income   35,166     27,805     20,804   26.5   69.0     62,971     23,143   172.1  
Total institutional sales and trading 65,550 58,467 56,149 12.1 16.7 124,017 89,668 38.3
 
Asset management 3,240 3,009 4,697 7.7 (31.0 ) 6,249 8,670 (27.9 )
 
Other income/(loss) 506 (2,860 ) 1,617 N/M (68.7 ) (2,354 ) (1,341 ) 75.5
                   
Net revenues $ 132,290   $ 83,882   $ 97,721   57.7   % 35.4   % $ 216,172   $ 193,468   11.7   %
 
N/M - Not meaningful
 

Source: Piper Jaffray

Piper Jaffray Companies
Jennifer A. Olson-Goude, 612-303-6277
Investor and Media Relations