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MINNEAPOLIS--(BUSINESS WIRE)--Apr. 23, 2015-- Piper Jaffray Companies (NYSE: PJC) today announced its financial results for the quarter ended March 31, 2015.

Financial Highlights

(1)

 

A non-U.S. GAAP ("non-GAAP") measure. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see "Reconciliation of U.S. GAAP to Selected Summary Financial Information." We believe that presenting our results and measures on an adjusted basis in conjunction with U.S. GAAP measures provides the most meaningful basis for comparison of our operating results across periods.

 

(2)

A non-GAAP measure. See the "Additional Shareholder Information" section for a detailed explanation of the adjustment made to the corresponding U.S. GAAP measure. We believe that the rolling 12 month return on average tangible common shareholders' equity is a meaningful measure of our return on tangible assets deployed in the business.

 
  Three Months Ended   Percent Inc/(Dec)
Mar. 31,   Dec. 31,   Mar. 31, 1Q '15   1Q '15
(Amounts in thousands, except per share data) 2015 2014 2014 vs. 4Q '14 vs. 1Q '14
As Adjusted(1)
Net revenues $ 155,739 $ 148,394 $ 161,497 4.9 % (3.6 )%
Net income $ 18,819 $ 14,700 $ 20,035 28.0 % (6.1 )%
Earnings per diluted common share $ 1.14 $ 0.90 $ 1.24 26.7 % (8.1 )%
Pre-tax operating margin 18.9 % 15.9 % 19.3 %
 
U.S. GAAP
Net revenues $ 161,871 $ 150,548 $ 168,133 7.5 % (3.7 )%
Net income $ 16,972 $ 12,543 $ 17,748 35.3 % (4.4 )%
Earnings per diluted common share $ 1.03 $ 0.77 $ 1.10 33.8 % (6.4 )%
Pre-tax operating margin 19.3 % 14.3 % 19.5 %
 

(1)

 

A non-U.S. GAAP ("non-GAAP") measure. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see "Reconciliation of U.S. GAAP to Selected Summary Financial Information." We believe that presenting our results and measures on an adjusted basis in conjunction with U.S. GAAP measures provides the most meaningful basis for comparison of our operating results across periods.

 

(2)

A non-GAAP measure. See the "Additional Shareholder Information" section for a detailed explanation of the adjustment made to the corresponding U.S. GAAP measure. We believe that the rolling 12 month return on average tangible common shareholders' equity is a meaningful measure of our return on tangible assets deployed in the business.

 

For the first quarter of 2015, on a U.S. GAAP basis, net revenues were $161.9 million, and net income was $17.0 million, or $1.03 per diluted common share.

“Our portfolio of businesses combined to produce steady results to begin the year,” said Andrew S. Duff chairman and chief executive officer “Strong performance in our capital raising businesses, both equity and public finance, led the way together with solid results in our Advisory business.”

First Quarter Results – Non-GAAP Basis
Throughout the Adjusted Consolidated Results and Business Segment Results sections of this press release we present financial measures that are not prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). The non-GAAP financial measures include adjustments to exclude (1) revenues and expenses related to noncontrolling interests, (2) amortization of intangible assets related to acquisitions and (3) compensation for acquisition-related agreements. Management believes that presenting results and measures on an adjusted basis in conjunction with U.S. GAAP measures provides the most meaningful basis for comparison of its operating results across periods. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see "Reconciliation of U.S. GAAP to Selected Summary Financial Information."

Adjusted Consolidated Results
For the first quarter of 2015, adjusted net revenues were $155.7 million, down 4% compared to $161.5 million in the first quarter of 2014 due primarily to lower advisory services revenues. Adjusted net revenues increased 5% compared to the fourth quarter of 2014 due to strong capital raising in our equity and debt businesses and higher investment income.

For the first quarter of 2015, adjusted compensation and benefits expenses were $94.6 million, down 5% compared to the first quarter of 2014 due to lower revenues. Adjusted compensation and benefits expenses increased 2% compared to the fourth quarter of 2014.

For the first quarter of 2015, adjusted compensation and benefits expenses were 60.7% of adjusted net revenues, compared to 61.4% and 62.4% for the first and fourth quarters of 2014, respectively. The adjusted compensation ratio decreased compared to the year-ago period due to a change in our mix of business, and decreased compared to the sequential quarter due to a higher revenue base. Also, our compensation ratio was higher in the fourth quarter of 2014 as we made adjustments to reflect our business activity for the full year.

Adjusted non-compensation expenses were $31.6 million for the first quarter of 2015, up 2% compared to the year-ago period and down 2% compared to the fourth quarter of 2014.

Business Segment Results
The firm has two reportable business segments: Capital Markets and Asset Management. Consolidated net revenues and expenses are fully allocated to these two segments.

Capital Markets
For the quarter, Capital Markets generated adjusted pre-tax operating income of $22.4 million, compared to $24.1 million and $18.0 million in the first and fourth quarters of 2014, respectively.

Adjusted net revenues were $136.0 million, down 4% compared to the year-ago period and up 5% from the fourth quarter of 2014.

Asset Management
For the quarter ended March 31, 2015, Asset Management generated adjusted pre-tax operating income of $7.1 million, essentially flat compared to the first quarter of 2014 and up 26% compared to the fourth quarter of 2014.

Net revenues were $19.7 million, essentially flat compared to the first quarter of 2014 and up 5% compared to the fourth quarter of 2014. The increase compared to the sequential quarter was due to investment income of $0.6 million for the current quarter, compared with a loss of $0.6 million in the fourth quarter of 2014.

Other Matters
In the first quarter of 2015, we granted $30.4 million, or 551,000 shares, of restricted stock to our employees as part of their 2014 earned compensation at a weighted average grant date fair value of $55.26 per share.

In the first quarter of 2015, we repurchased $32.7 million, or 605,000 shares of our common stock, at an average price of $54.08 per share. We have $67.3 million remaining on our share repurchase authorization, which expires on September 30, 2016.

In addition, we acquired $9.9 million, or 179,000 shares, related to employee tax obligations on the vesting of equity awards in the first quarter of 2015.

Additional Shareholder Information

  For the Quarter Ended
Mar. 31, 2015   Dec. 31, 2014   Mar. 31, 2014
Full time employees 1,030 1,026 1,015
Equity financings
# of transactions 35 18 31
Capital raised $6.5 billion $2.7 billion $5.3 billion
Negotiated tax-exempt issuances
# of transactions 99 92 57
Par value $2.9 billion $1.9 billion $1.6 billion
Mergers & acquisitions
# of transactions 15 22 17
Aggregate deal value $1.6 billion $2.5 billion $2.8 billion
Asset Management
AUM $11.4 billion $11.5 billion $11.5 billion
Common shareholders’ equity $831.0 million $819.9 million $767.5 million
Number of common shares outstanding (in thousands) 15,000 15,265 14,916
Rolling 12 month return on average common shareholders’ equity * 7.8% 8.1% 7.2%
Rolling 12 month return on average tangible common shareholders’ equity † 11.2% 11.8% 10.9%
Book value per share $55.40 $53.71 $51.45
Tangible book value per share ‡ $39.35 $37.82 $34.81
 
*   Rolling 12 month return on average common shareholders' equity is computed by dividing net income applicable to Piper Jaffray Companies' for the last 12 months by average monthly common shareholders' equity.
 
Rolling 12 month return on average tangible common shareholders' equity is computed by dividing net income applicable to Piper Jaffray Companies' for the last 12 months by average monthly common shareholders' equity less average goodwill and identifiable intangible assets. Management believes that the rolling 12 month return on average tangible common shareholders' equity is a meaningful measure of our return on tangible assets deployed in the business. Average common shareholders’ equity is the most directly comparable GAAP financial measure to average tangible shareholders’ equity. The following is a reconciliation of average common shareholders’ equity to average tangible common shareholders’ equity:
 
  As of   As of   As of
(Amounts in thousands) Mar. 31, 2015 Dec. 31, 2014 Mar. 31, 2014
Average common shareholders’ equity $ 803,670 $ 783,425 $ 732,386
Deduct: average goodwill and identifiable intangible assets 244,646   246,598   246,867
 
Average tangible common shareholders’ equity $ 559,024   $ 536,827   $ 485,519
 
  Tangible book value per share is computed by dividing tangible common shareholders’ equity by common shares outstanding. Tangible common shareholders’ equity equals total common shareholders’ equity less goodwill and identifiable intangible assets. Management believes that tangible book value per share is a meaningful measure of the tangible assets deployed in our business. Shareholders’ equity is the most directly comparable GAAP financial measure to tangible shareholders’ equity. The following is a reconciliation of shareholders’ equity to tangible shareholders’ equity:
 
  As of   As of   As of
(Amounts in thousands) Mar. 31, 2015 Dec. 31, 2014 Mar. 31, 2014
Common shareholders’ equity $ 830,951 $ 819,912 $ 767,454
Deduct: goodwill and identifiable intangible assets 240,763   242,536   248,246
 
Tangible common shareholders’ equity $ 590,188   $ 577,376   $ 519,208
 

Conference Call

Andrew S. Duff, chairman and chief executive officer, and Debbra L. Schoneman, chief financial officer, will hold a conference call to review the financial results on Thur., Apr. 23 at 9 a.m. ET (8 a.m. CT). The earnings release will be available on or after Apr. 23 at the firm's Web site at www.piperjaffray.com. The call can be accessed via webcast or by dialing (888)810-0209 or (706)902-1361 (international) and referencing reservation #20655257. Callers should dial in at least 15 minutes prior to the call time. A replay of the conference call will be available beginning at approximately 12 p.m. ET Apr. 23 at the same Web address or by calling (855)859-2056 and referencing reservation #20655257

About Piper Jaffray

Piper Jaffray is an investment bank and asset management firm serving clients in the U.S. and internationally. Proven advisory teams combine deep industry, product and sector expertise with ready access to capital. Founded in 1895, the firm is headquartered in Minneapolis and has offices across the United States and in London, Hong Kong and Zurich. 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 (including the outlook for equity markets and the interest rate environment), the environment and prospects for corporate advisory transactions and capital markets (including our performance in specific sectors), anticipated financial results generally (including expectations regarding our non-compensation expenses, compensation and benefits expense, compensation ratio, revenue levels, operating margins, earnings per share, effective tax rate, and return on equity), current deal pipelines (or backlogs), the liquidity of fixed income markets and impact on our related inventory, our strategic priorities (including growth in public finance, asset management, and corporate advisory), potential acquisitions or strategic hires, or other similar matters.

Forward-looking 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. These risks, uncertainties and important factors include, but are not limited to, the following:

A further listing and description of these and other risks, uncertainties and important factors can be found in the sections titled “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2014 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, 2014, 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.

© 2015 Piper Jaffray Companies, 800 Nicollet Mall, Suite 1000, Minneapolis, Minnesota 55402-7020

Piper Jaffray Companies

Preliminary Results of Operations (U.S. GAAP – Unaudited)

  Three Months Ended   Percent Inc/(Dec)
Mar. 31,   Dec. 31,   Mar. 31, 1Q '15   1Q '15
(Amounts in thousands, except per share data) 2015 2014 2014 vs. 4Q '14 vs. 1Q '14
Revenues:
Investment banking $ 87,077 $ 82,613 $ 88,474 5.4 % (1.6 )%
Institutional brokerage 36,036 42,324 44,034 (14.9 ) (18.2 )
Asset management 20,522 20,242 20,959 1.4 (2.1 )
Interest 12,205 11,781 13,659 3.6 (10.6 )
Investment income 12,591   434   6,768   N/M   86.0  
Total revenues 168,431 157,394 173,894 7.0 (3.1 )
 
Interest expense 6,560   6,846   5,761   (4.2 ) 13.9  
 
Net revenues 161,871   150,548   168,133   7.5   (3.7 )
 
Non-interest expenses:
Compensation and benefits 95,857 93,765 100,489 2.2 (4.6 )
Occupancy and equipment 6,783 6,080 6,778 11.6 0.1
Communications 6,328 5,684 5,955 11.3 6.3
Trade execution and clearance 1,997 2,094 1,834 (4.6 ) 8.9
Marketing and business development 6,982 7,473 6,251 (6.6 ) 11.7
Outside services 8,184 9,218 8,768 (11.2 ) (6.7 )
Intangible asset amortization expense 1,773 2,318 2,318 (23.5 ) (23.5 )
Other operating expenses 2,675   2,427   3,027   10.2   (11.6 )
Total non-interest expenses 130,579   129,059   135,420   1.2   (3.6 )
 
Income before income tax expense 31,292 21,489 32,713 45.6 (4.3 )
 
Income tax expense 9,490   7,514   9,827   26.3   (3.4 )
 
Net income 21,802 13,975 22,886 56.0 (4.7 )
 
Net income applicable to noncontrolling interests 4,830   1,432   5,138   237.3   (6.0 )
 
Net income applicable to Piper Jaffray Companies (a) $ 16,972   $ 12,543   $ 17,748   35.3 % (4.4 )%
 
Net income applicable to Piper Jaffray Companies’ common shareholders (a) $ 15,810   $ 11,700   $ 16,089   35.1 % (1.7 )%
 
Earnings per common share
Basic $ 1.03 $ 0.77 $ 1.10 33.8 % (6.4 )%
Diluted $ 1.03 $ 0.77 $ 1.10 33.8 % (6.4 )%
 
Weighted average number of common shares outstanding
Basic 15,294 15,241 14,612 0.3 % 4.7 %
Diluted 15,332 15,293 14,657 0.3 % 4.6 %
 

(a)

 

Net income applicable to Piper Jaffray Companies is the total net income earned by the Company. Piper Jaffray Companies calculates earnings per common share using the two-class method, which requires the allocation of consolidated net income between common shareholders and participating security holders, which in the case of Piper Jaffray Companies, represents unvested restricted stock with dividend rights.

 

N/M — Not meaningful

 

Piper Jaffray Companies

Preliminary Segment Data (U.S. GAAP – Unaudited)

  Three Months Ended   Percent Inc/(Dec)
Mar. 31,   Dec. 31,   Mar. 31, 1Q '15   1Q '15
(Dollars in thousands) 2015 2014 2014 vs. 4Q '14 vs. 1Q '14
Capital Markets
Investment banking
Financing
Equities $ 36,489 $ 23,056

$

35,301 58.3 % 3.4 %
Debt 21,738 19,583 13,539 11.0 60.6
Advisory services 29,266   40,433   39,728   (27.6 ) (26.3 )
Total investment banking 87,493 83,072 88,568 5.3 (1.2 )
 
Institutional sales and trading
Equities 18,905 22,874 24,260 (17.4 ) (22.1 )
Fixed income 21,217   23,140   25,238   (8.3 ) (15.9 )
Total institutional sales and trading 40,122 46,014 49,498 (12.8 ) (18.9 )
 
Management and performance fees 1,407 886 1,737 58.8 (19.0 )
 
Investment income 14,705 3,446 10,378 326.7 41.7
 
Long-term financing expenses (1,560 ) (1,597 ) (1,740 ) (2.3 ) (10.3 )
 
Net revenues 142,167 131,821 148,441 7.8 (4.2 )
 
Operating expenses 116,203   114,039   120,930   1.9   (3.9 )
 
Segment pre-tax operating income $ 25,964   $ 17,782   $ 27,511   46.0 % (5.6 )%
 
Segment pre-tax operating margin 18.3 % 13.5 % 18.5 %
 
Asset Management
Management and performance fees
Management fees $ 19,107 $ 19,298 $ 19,136 (1.0 )% (0.2 )%
Performance fees 8   58   86   (86.2 ) (90.7 )
Total management and performance fees 19,115 19,356 19,222 (1.2 ) (0.6 )
 
Investment income/(loss) 589   (629 ) 470   (193.6 ) 25.3  
 
Net revenues 19,704 18,727 19,692 5.2 0.1
 
Operating expenses 14,376   15,020   14,490   (4.3 ) (0.8 )
 
Segment pre-tax operating income $ 5,328   $ 3,707   $ 5,202   43.7 % 2.4 %
 
Segment pre-tax operating margin 27.0 % 19.8 % 26.4 %
 
Total
Net revenues $ 161,871 $ 150,548 $ 168,133 7.5 % (3.7 )%
 
Operating expenses 130,579   129,059   135,420   1.2   (3.6 )
 
Pre-tax operating income $ 31,292   $ 21,489   $ 32,713   45.6 % (4.3 )%
 
Pre-tax operating margin 19.3 % 14.3 % 19.5 %
 

Piper Jaffray Companies

Preliminary Selected Summary Financial Information (Non-GAAP – Unaudited) (1)

  Three Months Ended   Percent Inc/(Dec)
Mar. 31,   Dec. 31,   Mar. 31, 1Q '15   1Q '15
(Amounts in thousands, except per share data) 2015 2014 2014 vs. 4Q '14 vs. 1Q '14
Revenues:
Investment banking $ 87,077 $ 82,613 $ 88,474 5.4 % (1.6 )%
Institutional brokerage 36,036 42,324 44,034 (14.9 ) (18.2 )
Asset management 20,522 20,242 20,959 1.4 (2.1 )
Interest 9,245 8,853 10,356 4.4 (10.7 )
Investment income 8,452   125   2,581   N/M   227.5  
Total revenues 161,332 154,157 166,404 4.7 (3.0 )
 
Interest expense 5,593   5,763   4,907   (2.9 ) 14.0  
 
Adjusted net revenues (2) $ 155,739   $ 148,394   $ 161,497   4.9 % (3.6 )%
 
Non-interest expenses:
Adjusted compensation and benefits (3) $ 94,606   $ 92,552   $ 99,200   2.2 % (4.6 )%
Ratio of adjusted compensation and benefits to adjusted net revenues 60.7 % 62.4 % 61.4 %
 
Adjusted non-compensation expenses (4) $ 31,647   $ 32,254   $ 31,115   (1.9 )% 1.7 %
Ratio of adjusted non-compensation expenses to adjusted net revenues 20.3 % 21.7 % 19.3 %
 
Adjusted income:
Adjusted income before adjusted income tax expense (5) $ 29,486   $ 23,588   $ 31,182   25.0 % (5.4 )%
Adjusted operating margin (6) 18.9 % 15.9 % 19.3 %
 
Adjusted income tax expense (7) 10,667   8,888   11,147   20.0   (4.3 )
 
Adjusted net income (8) $ 18,819   $ 14,700   $ 20,035   28.0 % (6.1 )%
Effective tax rate (9) 36.2 % 37.7 % 35.7 %
 
Adjusted net income applicable to Piper Jaffray Companies’ common shareholders (10) $ 17,531   $ 13,712   $ 18,162   27.9 % (3.5 )%
 
Adjusted earnings per diluted common share $ 1.14   $ 0.90   $ 1.24   26.7 % (8.1 )%
 
Weighted average number of common shares outstanding
Diluted 15,332 15,293 14,657 0.3 % 4.6 %
 

This presentation includes non-GAAP measures. The non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see "Reconciliation of U.S. GAAP to Selected Summary Financial Information."

N/M — Not meaningful

Piper Jaffray Companies

Preliminary Adjusted Segment Data (Non-GAAP – Unaudited)

  Three Months Ended   Percent Inc/(Dec)
Mar. 31,   Dec. 31,   Mar. 31, 1Q '15   1Q '15
(Dollars in thousands) 2015 2014 2014 vs. 4Q '14 vs. 1Q '14
Capital Markets
Investment banking
Financing
Equities $ 36,489 $ 23,056 $ 35,301 58.3 % 3.4 %
Debt 21,738 19,583 13,539 11.0 60.6
Advisory services 29,266   40,433   39,728   (27.6 ) (26.3 )
Total investment banking 87,493 83,072 88,568 5.3 (1.2 )
 
Institutional sales and trading
Equities 18,905 22,874 24,260 (17.4 ) (22.1 )
Fixed income 21,217   23,140   25,238   (8.3 ) (15.9 )
Total institutional sales and trading 40,122 46,014 49,498 (12.8 ) (18.9 )
 
Management and performance fees 1,407 886 1,737 58.8 (19.0 )
 
Investment income 8,573 1,292 3,742 563.5 129.1
 
Long-term financing expenses (1,560 ) (1,597 ) (1,740 ) (2.3 ) (10.3 )
 
Adjusted net revenues (2) 136,035 129,667 141,805 4.9 (4.1 )
 
Adjusted operating expenses (12) 113,601   111,682   117,721   1.7   (3.5 )
 
Adjusted segment pre-tax operating income (5) $ 22,434   $ 17,985   $ 24,084   24.7 % (6.9 )%
 
Adjusted segment pre-tax operating margin (6) 16.5 % 13.9 % 17.0 %
 
Asset Management
Management and performance fees
Management fees $ 19,107 $ 19,298 $ 19,136 (1.0 )% (0.2 )%
Performance fees 8   58   86   (86.2 ) (90.7 )
Total management and performance fees 19,115 19,356 19,222 (1.2 ) (0.6 )
 
Investment income/(loss) 589   (629 ) 470   (193.6 ) 25.3  
 
Net revenues 19,704 18,727 19,692 5.2 0.1
 
Adjusted operating expenses (13) 12,652   13,124   12,594   (3.6 ) 0.5  
 
Adjusted segment pre-tax operating income (13) $ 7,052   $ 5,603   $ 7,098   25.9 % (0.6 )%
 
Adjusted segment pre-tax operating margin (6) 35.8 % 29.9 % 36.0 %
 
Total
Adjusted net revenues (2) $ 155,739 $ 148,394 $ 161,497 4.9 % (3.6 )%
 
Adjusted operating expenses (12) 126,253   124,806   130,315   1.2   (3.1 )
 
Adjusted pre-tax operating income (5) $ 29,486   $ 23,588   $ 31,182   25.0 % (5.4 )%
 
Adjusted pre-tax operating margin (6) 18.9 % 15.9 % 19.3 %
 

This presentation includes non-GAAP measures. The non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see "Reconciliation of U.S. GAAP to Selected Summary Financial Information."

Piper Jaffray Companies

Reconciliation of U.S. GAAP to Selected Summary Financial Information (1) (Unaudited)

  Three Months Ended
Mar. 31,   Dec. 31,   Mar. 31,
(Amounts in thousands, except per share data) 2015 2014 2014
Net revenues:
Net revenues – U.S. GAAP basis $ 161,871 $ 150,548 $ 168,133
Adjustments:
Revenue related to noncontrolling interests (11) (6,132 ) (2,154 ) (6,636 )
Adjusted net revenues $ 155,739   $ 148,394   $ 161,497  
 
Compensation and benefits:
Compensation and benefits – U.S. GAAP basis $ 95,857 $ 93,765 $ 100,489
Adjustments:
Compensation from acquisition-related agreements (1,251 ) (1,213 ) (1,289 )
Adjusted compensation and benefits $ 94,606   $ 92,552   $ 99,200  
 
Non-compensation expenses:
Non-compensation expenses – U.S. GAAP basis $ 34,722 $ 35,294 $ 34,931
Adjustments:
Non-compensation expenses related to noncontrolling interests (11) (1,302 ) (722 ) (1,498 )
Amortization of intangible assets related to acquisitions (1,773 ) (2,318 ) (2,318 )
Adjusted non-compensation expenses $ 31,647   $ 32,254   $ 31,115  
 
Income before income tax expense:
Income before income tax expense – U.S. GAAP basis $ 31,292 $ 21,489 $ 32,713
Adjustments:
Revenue related to noncontrolling interests (11) (6,132 ) (2,154 ) (6,636 )
Expenses related to noncontrolling interests (11) 1,302 722 1,498
Compensation from acquisition-related agreements 1,251 1,213 1,289
Amortization of intangible assets related to acquisitions 1,773   2,318   2,318  
Adjusted income before adjusted income tax expense $ 29,486   $ 23,588   $ 31,182  
 
Income tax expense:
Income tax expense – U.S. GAAP basis $ 9,490 $ 7,514 $ 9,827
Tax effect of adjustments:
Compensation from acquisition-related agreements 487 472 501
Amortization of intangible assets related to acquisitions 690   902   819  
Adjusted income tax expense $ 10,667   $ 8,888   $ 11,147  
 
Net income applicable to Piper Jaffray Companies:
Net income applicable to Piper Jaffray Companies – U.S. GAAP basis $ 16,972 $ 12,543 $ 17,748
Adjustments:
Compensation from acquisition-related agreements 764 741 788
Amortization of intangible assets related to acquisitions 1,083   1,416   1,499  
Adjusted net income $ 18,819   $ 14,700   $ 20,035  
 
Net income applicable to Piper Jaffray Companies' common shareholders:
Net income applicable to Piper Jaffray Companies' common stockholders – U.S. GAAP basis $ 15,810 $ 11,700 $ 16,089
Adjustments:
Compensation from acquisition-related agreements 712 691 714
Amortization of intangible assets related to acquisitions 1,009   1,321   1,359  
Adjusted net income applicable to Piper Jaffray Companies' common stockholders $ 17,531   $ 13,712   $ 18,162  
 
Earnings per diluted common share:
Earnings per diluted common share – U.S. GAAP basis $ 1.03 $ 0.77 $ 1.10
Adjustments:
Compensation from acquisition-related agreements 0.05 0.05 0.05
Amortization of intangible assets related to acquisitions 0.07   0.09   0.09  
Adjusted earnings per diluted common share $ 1.14   $ 0.90   $ 1.24  
 

This presentation includes non-GAAP measures. The non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP.

Piper Jaffray Companies

Notes to Non-GAAP Financial Schedules

(1)   Selected Summary Financial Information are non-GAAP measures. Management believes that presenting results and measures on an adjusted basis in conjunction with U.S. GAAP measures provides the most meaningful basis for comparison of its operating results across periods.
 
(2) A non-GAAP measure which excludes revenues related to noncontrolling interests (see (11) below).
 
(3) A non-GAAP measure which excludes compensation expense from acquisition-related agreements.
 
(4) A non-GAAP measure which excludes (a) non-compensation expenses related to noncontrolling interests (see (11) below) and (b) amortization of intangible assets related to acquisitions.
 
(5) A non-GAAP measure which excludes (a) revenues and expenses related to noncontrolling interests (see (11) below), (b) compensation from acquisition-related agreements and (c) amortization of intangible assets related to acquisitions.
 
(6) A non-GAAP measure which represents adjusted income before adjusted income tax expense as a percentage of adjusted net revenues.
 
(7) A non-GAAP measure which excludes the income tax benefit from (a) compensation from acquisition-related agreements and (b) amortization of intangible assets related to acquisitions.
 
(8) A non-GAAP measure which represents net income earned by the Company excluding (a) compensation expense from acquisition-related agreements, (b) amortization of intangible assets related to acquisitions and (c) the income tax expense/(benefit) allocated to the adjustments.
 
(9) Effective tax rate is a non-GAAP measure which is computed based on a quotient, the numerator of which is adjusted income tax expense and the denominator of which is adjusted income before adjusted income tax expense.
 
(10) Piper Jaffray Companies calculates earnings per common share using the two-class method, which requires the allocation of consolidated adjusted net income between common shareholders and participating security holders, which in the case of Piper Jaffray Companies, represents unvested stock with dividend rights.
 
(11) Noncontrolling interests include revenue and expenses from consolidated alternative asset management entities that are not attributable, either directly or indirectly, to Piper Jaffray Companies.
 
(12) A non-GAAP measure which excludes (a) expenses related to noncontrolling interests (see (11) above), (b) compensation from acquisition-related agreements and (c) amortization of intangible assets related to acquisitions.
 
(13) A non-GAAP measure which excludes (a) compensation from acquisition-related agreements and (b) amortization of intangible assets related to acquisitions.

Source: Piper Jaffray Companies

Piper Jaffray Companies
Investor Relations Contact
Tom Smith, 612-303-6336