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MINNEAPOLIS, Jan. 24 /PRNewswire-FirstCall/ -- Piper Jaffray Companies (NYSE: PJC) today announced net income from continuing operations of $26.7 million, or $1.49 per diluted share, for the quarter ended Dec. 31, 2006, up from $11.9 million, or $0.63 per diluted share, in the year-ago period and up from $9.5 million, or $0.50 per diluted share, in the third quarter of 2006.

Net income from continuing operations for the quarter ended Dec. 31, 2006 included a benefit of $0.73 per diluted share due to a reduction of the reserve related to developments in a particular industry-wide litigation matter.

For the quarter ended Dec. 31, 2006, net income (including discontinued operations) was $20.6 million, or $1.15 per diluted share, up from $16.4 million, or $0.87 per diluted share, in the same quarter last year, and down from $186.6 million, or $9.79 per diluted share, in the third quarter of 2006, which included the gain from the sale of the company's Private Client Services branch network.

For the full year of 2006, net income from continuing operations was $62.9 million, or $3.32 per diluted share, up from $25.2 million, or $1.32 per diluted share, in the prior year. Net revenues from continuing operations of $502.9 million represent a 19 percent increase over 2005, driven by increases across all capital markets businesses.

"We are extremely pleased to deliver a solid year of financial results, with strong top-line growth and improved profitability," said Chairman and Chief Executive Officer Andrew S. Duff. "2006 was a pivotal year for Piper Jaffray as we repositioned our company to focus all our resources on our capital markets businesses. Our financial results demonstrate our strategy is sound, and we are confident about our prospects to deepen our sector expertise, broaden our product offerings and expand our geographic presence. We thank our clients for placing their trust in us and our employees for their hard work and dedication to our clients."

    Results of Continuing Operations

    Fourth Quarter

    Net Revenues

For the fourth quarter of 2006, continuing operations generated net revenues of $146.6 million, up 24 percent from $118.6 million for the fourth quarter of 2005 and up 26 percent compared to the third quarter of 2006.

Investment Banking

For the fourth quarter of 2006, total investment banking revenues were $91.7 million, up 25 percent compared to the fourth quarter of 2005, and up 27 percent compared to the third quarter of 2006.

    -- Equity financing revenues were $31.3 million, up 60 percent compared to
       the fourth quarter of 2005, mainly driven by more completed
       transactions. Equity financing revenues increased 13 percent compared
       to the third quarter of 2006, primarily due to more completed
       transactions, offset in part by lower convertibles revenues and lower
       average revenues per transaction.
    -- Advisory services revenues were $36.0 million, up 8 percent compared to
       the year-ago period, and up 42 percent compared to the third quarter of
       2006, mainly driven by higher average revenues per transaction.
    -- Fixed income financing revenues were $24.4 million, up 19 percent and
       29 percent compared to the year-ago period and the third 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 fourth quarter of 2006:

    -- 30 equity financings raising a total of $4.3 billion in capital, and
       the company was bookrunner on 13 of the equity financings.  Of the
       completed transactions, 24 were U.S. public offerings, placing the
       company 15th nationally, based on the number of completed transactions.
       (Source:  Dealogic)
    -- 10 mergers and acquisitions transactions with an aggregate enterprise
       value of $2.1 billion.  The number of deals and the enterprise value
       include disclosed and undisclosed transactions. (Source:  Piper
       Jaffray)
    -- 126 tax-exempt issues with a total par value of $2.0 billion, ranking
       the company fifth nationally, based on the number of completed
       transactions. (Source:  Thomson Financial)

    Institutional Sales and Trading

For the quarter ended Dec. 31, 2006, institutional sales and trading generated revenues of $50.8 million, up 9 percent from the same quarter last year and up 17 percent compared to the third quarter of 2006.

    -- Equities sales and trading revenues were $29.5 million, up 5 percent
       from the year-ago period and up 3 percent compared to the third quarter
       of 2006.
    -- Fixed income sales and trading revenues were $21.2 million, up 14
       percent compared to the year-ago period, primarily due to higher
       revenues from high-yield and structured products.  Compared to the
       third quarter of 2006, revenues rose 44 percent, resulting from higher
       revenues from high-yield and structured products, interest rate
       products, and cash trading.


    Fourth Quarter

    Non-Interest Expenses

For the fourth quarter of 2006, compensation and benefits expense was $88.6 million, up 33 percent and 28 percent, compared to the prior-year period and the third quarter of 2006, respectively. The increases compared to both periods were mainly attributable to increased variable compensation driven by higher profitability and investments in personnel.

Non-compensation expenses were $16.0 million for the current quarter, down 54 percent compared to the year-ago period and down 50 percent compared to the third quarter of 2006, mainly driven by a benefit from a reduction of the reserve for a particular litigation matter.

For the fourth quarter of 2006, pre-tax operating margin from continuing operations was 28.6 percent, of which 14.5 percentage points was due to a benefit from the litigation reserve reduction. Excluding that benefit, pre-tax operating margin from continuing operations was 14.1 percent, comparable to 14.3 percent for the year-ago period and up from 13.0 percent for the third quarter of 2006.


    Full Year 2006

Net Revenues

For the year, net revenues from continuing operations were $502.9 million, up 19 percent compared to 2005. Revenues increased across all businesses and were particularly strong in equity financings.

Following is a recap of completed deal information for the full year of 2006:

    -- 99 equity financings raising a total of $13.6 billion in capital, and
       the company was bookrunner on 41 of the equity financings.  Of the
       completed transactions, 80 were U.S. public offerings, placing the
       company 14th nationally, based on the number of completed transactions.
       (Source:  Dealogic)
    -- 41 mergers and acquisitions transactions with an aggregate enterprise
       value of $7.3 billion.  The number of deals and the enterprise value
       include disclosed and undisclosed transactions. (Source:  Piper
       Jaffray)
    -- 452 tax-exempt issues with a total par value of $6.6 billion, ranking
       the company fourth nationally, based on the number of completed
       transactions. (Source:  Thomson Financial)

    Full Year 2006

    Non-Interest Expenses

For the full year of 2006, compensation and benefits expense was $291.3 million, up 20 percent compared to 2005, mainly attributable to increased variable compensation driven by higher profitability and investments in personnel.

Non-compensation expenses for the full year were $113.8 million, down 20 percent from $141.4 million in 2005. The decrease was mainly due to a reduction of the reserve for a particular litigation matter in 2006 and the restructuring charge recorded in 2005.

For the full year of 2006, pre-tax operating margin from continuing operations was 19.5 percent, up from 8.6 percent in 2005. The significant improvement was driven by stronger net revenues, a benefit from the litigation reserve reduction, disciplined expense management, and the restructuring charge recorded in 2005.


    Results of Discontinued Operations

    Fourth Quarter

Discontinued operations include the restructuring and transaction costs incurred in connection with the company's sale of its Private Client Services branch network to UBS AG, which closed on Aug. 11, 2006.

For the quarter ended Dec. 31, 2006, discontinued operations recorded a loss of $6.1 million, or $0.34 per diluted share, which included costs primarily for occupancy, severance and litigation-related expense. The company anticipates it will incur additional restructuring expenses in the first and second quarters of 2007 related to a system conversion.


    Additional Shareholder Information

                                   As of           As of         As of
                                  Dec. 31,        Sept. 30,     Dec. 31,
                                    2006            2006          2005
    Full time employees:              1,108           1,134         2,871
    Shareholders' equity:      $924 million    $893 million  $755 million
    Annualized Return on
     Average Tangible
     Shareholders' Equity(1)          12.3%              NM         15.4%
    Book value per share:            $54.43          $52.66        $41.10
    Tangible book value per
     share:                          $40.71          $38.90        $23.66

    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   Three Months
                                          Ended         Ended       As of
                                         Dec. 31,      Dec. 31,    Dec. 31,
                                           2006         2005         2006
    (Dollars in thousands)
    Shareholders' equity                 $904,403     $745,648     $924,439
    Deduct: Goodwill and identifiable
     intangible assets                    233,234      320,434      233,034
    Tangible shareholders' equity        $671,169     $425,214     $691,405


    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 fourth quarter and full year 2006 financial results on Wednesday, January 24, 2007, 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 5543041 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 January 24, 2007 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 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) it is inherently difficult to predict accurately the timing and outcome of legal proceedings and the amounts of legal reserves are difficult to determine and subject to future revision; accordingly future results of operations could be adversely affected if reserves are required to be increased or legal proceedings are resolved in excess of established reserves, (15) 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, (16) 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, (17) 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, (18) our exposure to legal liability is significant, and could lead to substantial damages, (19) the amount and timing of restructuring expenses associated with acquisition and divestiture activity are difficult to predict accurately, and our estimates may differ from actual results, (20) the business operations that we conduct outside of the United States subject us to unique risks, (21) we may suffer losses if our reputation is harmed, (22) our stock price may fluctuate as a result of several factors, including but not limited to changes in our revenues and operating results, (23) 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, (24) increases in capital commitments in our proprietary trading, principal investing and similar activities increase the potential for significant losses, and (25) 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 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 we undertake no obligation to update them in light of new information or future events.

    Since 1895. Member SIPC and NYSE.



    Piper Jaffray Companies
    Preliminary Unaudited Results of Operations

                                                             Percent Inc/(Dec)
                                  For the Three Months Ended  4Q06    4Q06
    (Amounts in thousands,        Dec. 31, Sept. 30, Dec. 31,  vs.     vs.
     except per share data)        2006      2006     2005    3Q06    4Q05
    Revenues:

     Investment banking          $91,701   $72,107  $73,438   27.2  %  24.9  %
     Institutional brokerage      40,270    34,964   40,369   15.2     (0.2)
     Interest                     19,241    16,663   12,842   15.5     49.8
     Other income                  1,923       863    1,127  122.8     70.6

      Total revenues             153,135   124,597  127,776   22.9     19.8

     Interest expense              6,517     8,490    9,162  (23.2)   (28.9)

      Net revenues               146,618   116,107  118,614   26.3     23.6

    Non-interest expenses:

     Compensation and benefits    88,609    69,079   66,571   28.3     33.1
     Occupancy and equipment       8,955     6,878    7,896   30.2     13.4
     Communications                6,452     5,761    5,906   12.0      9.2
     Floor brokerage and
      clearance                    3,485     3,759    3,449   (7.3)     1.0
     Marketing and business
      development                  7,543     5,887    5,744   28.1     31.3
     Outside services              8,581     6,344    6,970   35.3     23.1
     Cash award program              307       512    1,004  (40.0)   (69.4)
     Restructuring-related
      expense                        -         -        -       N/M      N/M
     Other operating expenses    (19,294)    2,838    4,130     N/M      N/M

      Total non-interest
       expenses                  104,638   101,058  101,670    3.5      2.9

    Income from continuing
     operations before income
     tax expense                  41,980    15,049   16,944  179.0    147.8

     Income tax expense           15,244     5,521    5,009  176.1    204.3

    Net income from continuing
     operations                   26,736     9,528   11,935  180.6    124.0

    Discontinued operations:
     Income/(loss) from
      discontinued operations,
      net of tax                  (6,090)  177,085    4,428     N/M      N/M

    Net Income                   $20,646  $186,613  $16,363  (88.9) %  26.2  %

    Earnings per basic common
     share
     Income from continuing
      operations                   $1.58     $0.53    $0.65  198.1  % 143.1  %
     Income/(loss) from
      discontinued operations      (0.36)     9.82     0.24     N/M      N/M
      Earnings per basic common
       share                       $1.22    $10.35    $0.89  (88.2) %  37.1  %

    Earnings per diluted common
     share
     Income from continuing
      operations                   $1.49     $0.50    $0.63  198.0  % 136.5  %
     Income/(loss) from
      discontinued operations      (0.34)     9.29     0.23     N/M     N/M
      Earnings per diluted
       common share                $1.15     $9.79    $0.87  (88.3) %  32.2  %

    Weighted average number of
     common shares
     Basic                        16,973    18,031   18,365   (5.9) %  (7.6) %
     Diluted                      18,004    19,071   18,850   (5.6) %  (4.5) %


                                            For the Year Ended
    (Amounts in thousands, except per       Dec. 31,    Dec. 31,    Percent
     share data)                             2006        2005      Inc/(Dec)
    Revenues:

     Investment banking                    $294,808    $243,347       21.1  %
     Institutional brokerage                162,406     162,068        0.2
     Interest                                63,969      44,857       42.6
     Other income                            14,054       3,530      298.1

      Total revenues                        535,237     453,802       17.9

     Interest expense                        32,303      32,494       (0.6)

      Net revenues                          502,934     421,308       19.4

    Non-interest expenses:

     Compensation and benefits              291,265     243,833       19.5
     Occupancy and equipment                 30,660      30,808       (0.5)
     Communications                          23,189      23,987       (3.3)
     Floor brokerage and clearance           13,292      14,785      (10.1)
     Marketing and business development      24,731      21,537       14.8
     Outside services                        28,053      23,881       17.5
     Cash award program                       2,980       4,205      (29.1)
     Restructuring-related expense              -         8,595         N/M
     Other operating expenses                (9,109)     13,646         N/M

      Total non-interest expenses           405,061     385,277        5.1

    Income from continuing operations
     before income tax expense               97,873      36,031      171.6

     Income tax expense                      34,974      10,863      222.0

    Net income from continuing
     operations                              62,899      25,168      149.9

    Discontinued operations:
     Income/(loss) from discontinued
      operations, net of tax                172,354      14,915    1,055.6

    Net Income                             $235,253     $40,083      486.9  %

    Earnings per basic common share
     Income from continuing operations        $3.49       $1.34      160.4  %
     Income/(loss) from discontinued
      operations                               9.57        0.79     1111.4  %
      Earnings per basic common share        $13.07       $2.13      513.6  %

    Earnings per diluted common share
     Income from continuing operations        $3.32       $1.32      151.5  %
     Income/(loss) from discontinued
      operations                               9.09        0.78    1,065.4  %
      Earnings per diluted common share      $12.40       $2.10      490.5  %

    Weighted average number of common
     shares
     Basic                                   18,002      18,813       (4.3) %
     Diluted                                 18,968      19,081       (0.6) %


    N/M - Not meaningful



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

                                                            Percent Inc/(Dec)
                                 For the Three Months Ended   4Q06     4Q06
                                 Dec. 31, Sept. 30, Dec. 31,   vs.      vs.
    (Dollars in thousands)        2006      2006      2005    3Q06     4Q05

    Institutional sales and
     trading
      Fixed income              $21,211   $14,723   $18,541   44.1  % 14.4 %
      Equities                   29,542    28,591    28,058    3.3     5.3
    Total institutional sales
     and trading                 50,753    43,314    46,599   17.2     8.9

    Investment banking
      Underwriting
        Fixed income             24,404    18,920    20,450   29.0    19.3
        Equities                 31,253    27,792    19,562   12.5    59.8
      Advisory services          36,044    25,395    33,426   41.9     7.8
    Total investment banking     91,701    72,107    73,438   27.2    24.9

    Other income                  4,164       686    (1,423) 507.0     N/M

    Net revenues               $146,618  $116,107  $118,614   26.3  % 23.6 %


                                              For the Year Ended
                                             Dec. 31,     Dec. 31,   Percent
    (Dollars in thousands)                    2006          2005     Inc/(Dec)

    Institutional sales and trading
      Fixed income                          $75,170       $65,816      14.2  %
      Equities                              122,422       117,380       4.3
    Total institutional sales and
     trading                                197,592       183,196       7.9

    Investment banking
      Underwriting
        Fixed income                         74,751        67,649      10.5
        Equities                            114,736        75,026      52.9
      Advisory services                     105,321       100,672       4.6
    Total investment banking                294,808       243,347      21.1

    Other income                             10,534        (5,235)      N/M

    Net revenues                           $502,934      $421,308      19.4  %


    N/M - Not meaningful

SOURCE Piper Jaffray Companies

CONTACT:
Investor Relations, Jennifer A. Olson-Goude, +1-612-303-6277
or
Media Relations, Rob Litt, +1-612-303-8266,
both of Piper Jaffray Companies