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MINNEAPOLIS, Jan. 25 /PRNewswire-FirstCall/ -- Piper Jaffray Companies (NYSE: PJC) today announced net income of $16.4 million, or $0.87 per diluted share, for the quarter ended Dec. 31, 2005, up from net income of $11.8 million, or $0.61 per diluted share, for the quarter ended Dec. 31, 2004. Net income totaled $15.1 million, or $0.79 per diluted share, in the third quarter of 2005.

For the full year, net income was $40.1 million, or $2.10 per diluted share, compared to $50.3 million and $2.60 per diluted share in the prior year. Net revenues were $775.1 million for the full year, down 2.8 percent compared to 2004.

     Business Highlights
     -- Generated total quarterly net revenues of $207.0 million, up
        6.4 percent from the year-ago period
     -- Recorded a 12.1 percent quarterly pre-tax operating margin, the
        strongest level since becoming a public company
     -- Achieved the highest level ever for full-year fee-based revenues at
        21 percent of total private client revenues
     -- Generated record full-year advisory services net revenues of
        $100.7 million

"We are pleased to deliver strong back-to-back quarterly financial results. Strong Capital Markets performance was the key contributor to these results, and in particular, robust activity in advisory services," said chairman and chief executive officer Andrew S. Duff. "In the second half of 2005 we continued to strengthen our businesses and reduce costs. We remain intensely focused on driving the primary advisor strategy in our private client business to achieve consistent competitive performance and create shareholder value."

Consolidated Expenses

For the quarter, non-interest expenses were $182.0 million, up 3.2 percent from the fourth quarter of 2004, and down 2.3 percent compared to the third quarter of 2005. Compensation expense was $122.7 million, up 5.0 percent compared with the prior year due to increased variable compensation expenses driven by higher net revenues and profitability. Non-compensation expenses were $59.3 million, essentially unchanged compared to the year-ago period.

For the quarter, pre-tax operating margin was 12.1 percent, the highest level achieved since becoming a public company, up from 9.3 percent for the year-ago period, and 11.0 percent for the third quarter of 2005. For the fourth quarter, annualized return on average tangible shareholders' equity(1) was 15.4 percent, compared to 11.6 percent on an annualized basis for the same period last year.

For the full year, non-interest expenses were $713.9 million, essentially unchanged compared to last year. Compensation expense was $471.7 million, down $16.7 million, or 3.4 percent, compared to last year due to lower net revenues and profitability and the savings from the restructuring actions taken earlier this year. Non-compensation expenses were $242.3 million, up $12.8 million, or 5.6 percent, from the prior-year period, primarily resulting from the $8.6 million restructuring charge recorded in the second quarter of 2005 and higher litigation-related expenses.

For the full year, pre-tax operating margin was 7.9 percent, a decline from 10.0 percent last year. Return on average tangible shareholders' equity(1) was 9.7 percent compared to 12.9 percent for the prior year.

    Business Segment Review

    Capital Markets
    Fourth Quarter

Capital Markets generated $122.3 million in net revenues for the quarter, up $18.0 million, or 17.2 percent, from the prior-year period. Segment pre- tax operating income for the quarter improved 46.3 percent compared to the fourth quarter of 2004, to $23.6 million, and rose 4.1 percent compared to the third quarter of 2005.

Institutional Sales and Trading

For the fourth quarter of 2005, institutional sales and trading net revenues were $48.6 million, down 4.5 percent from the year-ago period.

     -- Equity sales and trading revenues were $27.5 million, an increase of
        5.0 percent from the year-ago period, as a result of increased
        revenues from algorithmic and program trading.  Compared to the third
        quarter of 2005, equity sales and trading revenues declined 13.0
        percent, largely driven by lower trading volumes.
     -- Fixed income sales and trading revenues were $21.1 million, down 14.6
        percent from the year-ago period, reflecting the negative impact on
        corporate bond spreads of TRACE (Trade Reporting and Compliance
        Engine) and lower customer volumes resulting from increased interest
        rates and a flattened yield curve.  Compared to the quarter ended
        September 30, 2005, fixed income sales and trading revenues rose 14.4
        percent, driven largely by stronger municipal sales and trading
        activity.

    Investment Banking

For the fourth quarter of 2005, investment banking revenues were $73.4 million, an increase of $20.5 million, or 38.8 percent, compared to the fourth quarter of 2004, driven by robust advisory services activity and stronger fixed income underwriting.

     -- Advisory services revenues were $33.4 million, up $18.0 million, or
        116.6 percent, compared to the year-ago period.  The number of
        transactions declined year-over-year from 14 to 12, but this was more
        than offset by a higher average fee per transaction than in the same
        period last year.  Advisory services revenues decreased 15.2 percent
        compared to the third quarter of 2005.
     -- Fixed income underwriting revenues were $20.5 million, up
        $5.8 million, or 39.9 percent, compared to the year-ago period, and up
        $4.6 million, or 29.4 percent, compared to the third quarter of 2005.
        The increase compared to both periods resulted from higher public
        finance underwriting activity and additional revenue from structured
        products.
     -- Equity underwriting revenues were $19.6 million, down 14.4 percent
        compared to the fourth quarter of 2004, mainly due to decreased
        revenues from convertible transactions.  The decline in the number of
        IPO and follow on transactions year-over-year (from 18 to 12) was
        almost entirely offset by higher average revenue per transaction than
        the previous year.  Equity underwriting revenues were up 7.7 percent
        compared to the sequential quarter, largely driven by higher
        convertible underwriting.

Segment operating expenses for the quarter were $98.7 million, an increase of $10.5 million, or 11.9 percent, from the same period a year ago, primarily due to higher variable compensation expenses from increased net revenues and profitability. For the quarter, segment pre-tax operating margin was very strong at 19.3 percent, up from 15.4 percent achieved in the same quarter last year and 18.3 percent in the third quarter of 2005. The improvement compared to last year stemmed from higher revenues and the benefit of the restructuring actions taken earlier in the year.

Full Year

For the year, Capital Markets recorded net revenues of $435.8 million, up 1.0 percent compared to 2004. Robust mergers and acquisitions revenues and stronger fixed income underwriting revenues were offset by lower institutional fixed income sales and trading and equity underwriting.

Segment pre-tax operating income was $70.6 million, up 3.7 percent compared to the prior year. Segment operating expenses were $365.2 million, essentially flat compared to 2004. Segment pre-tax operating margin was 16.2 percent, compared to 15.8 percent last year.

Following is a recap of completed deals and industry rankings (based on the number of transactions completed) for the full year of 2005.

     -- 48 M&A transactions with an enterprise value of $8.1 billion, ranking
        the firm 15th nationally.  Last year the firm completed 49
        transactions with an enterprise value of $6.8 billion, which ranked
        the firm 20th. (Source:  Thomson Financial)
     -- 64 equity offerings, raising a total of $8.7 billion in capital, and
        placing the firm 15th nationally.  These results compare to a ranking
        of 13th last year with the completion of 94 equity offerings for a
        total of $12.9 billion in capital raised. (Source:  Dealogic)
     -- 473 tax-exempt issues with a total par value of $6.1 billion, ranking
        the firm fourth nationally.  Last year the firm also ranked fourth
        nationally, completing 504 tax-exempt issues, with a total par value
        of $5.9 billion.  In the Upper Midwest, the firm completed 290 public
        finance issues for the year with a total par value of $2.5 billion,
        again ranking the firm the lead underwriter of Upper Midwest tax-
        exempt issues. (Source:  Thomson Financial)

    Private Client Services
    Fourth Quarter

For the fourth quarter of 2005, Private Client Services recorded net revenues of $86.4 million, down 2.8 percent compared to the fourth quarter of 2004, resulting from fewer financial advisors, offset in part by an increase in revenues from fee-based accounts. Net revenues declined 1.0 percent compared to the third quarter of 2005. Segment pre-tax operating income was $6.1 million, up 5.8 percent from the fourth quarter of 2004, and up 14.1 percent compared to the third quarter of 2005. The increase compared to the prior-year period was largely due to lower compensation expenses from lower revenues, the cost reductions from restructuring actions and lower litigation- related expenses.

Segment operating expenses were $80.3 million for the quarter, down 3.4 percent from the prior-year period. Segment pre-tax operating margin for the quarter was 7.0 percent, up from the 6.4 percent margin in the fourth quarter of 2004, and up from 6.1 percent in the third quarter of 2005.

Full Year

For the year, segment net revenues were $347.0 million, down 3.5 percent compared to the prior-year period. Segment pre-tax operating income was $18.3 million, down $8.7 million, or 32.2 percent, reflecting the decrease in net revenues and higher litigation-related expenses compared to 2004. Segment pre-tax operating margin was 5.3 percent for the year, compared to 7.5 percent for 2004.

Corporate Support and Other

Corporate Support and Other pre-tax operating loss was $3.6 million for the fourth quarter, an increase of $1.2 million compared to the fourth quarter of 2004. For the full year, pre-tax operating loss was $15.0 million, compared to a loss of $10.7 million in 2004. The increase in pre-tax operating loss for both periods was due primarily to increasing interest rates on subordinated debt and lower gains on private equity investments.

    Additional Shareholder Information


                             As of Dec. 31,    As of Sept. 30,  As of Dec. 31,
                                  2005              2005            2004
     Full time employee:      2,871            2,879            3,027
     Financial advisors:      842              856              860
     Client assets:           $52 billion      $52 billion      $51 billion
     Shareholders' equity:    $754.8 million   $734.2 million   $725.4 million
     Book value per share:    $41.10           $39.96           $37.52
     Tangible book value per
      share:                  $23.66           $22.51           $20.88

     (1) Tangible shareholders' equity equals total shareholders' equity less
         goodwill and identifiable intangible assets.  Return on average
         tangible shareholders' equity is calculated by dividing trailing
         12-month net income, for each period presented, by the average
         quarterly tangible common equity for the trailing 12-month period.
         Management believes that return on tangible shareholders' equity is a
         meaningful measure of performance as 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 Ended  Three Months Ended     As of
     (Dollars in thousands)  Dec. 31, 2005       Dec. 31, 2004   Dec. 31, 2005
     Shareholders' equity       $745,648            $721,342        $754,827
     Deduct: Goodwill and
      identifiable intangible
      assets                     320,434             313,716         320,234
     Tangible shareholders'
      equity                    $425,214            $407,626        $434,593


                                    Average for the
                          Twelve Months Ended Twelve Months Ended    As of
     (Dollars in thousands)  Dec. 31, 2005       Dec. 31, 2004   Dec. 31, 2005
     Shareholders' equity       $735,580            $699,747        $754,827
     Deduct: Goodwill and
      identifiable intangible
      assets                     321,034             308,122         320,234
     Tangible shareholders'
      equity                    $414,546            $391,625        $434,593


    Conference Call

Andrew S. Duff, chairman and chief executive officer, and Sandra G. Sponem, chief financial officer, will host a conference call to discuss fourth quarter and full year 2005 financial results on Wednesday, Jan. 25, 2006, at 11 a.m. ET (10 a.m. CT). The call can be accessed via live audio webcast available through the firm's web page, http://www.piperjaffray.com , or by dialing (866) 244-9933, or (706) 758-0864 international, and referring to conference ID 3973254 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 1 p.m. ET Jan. 25 at the same web address or by calling (800) 642-1687 or (706) 645-9291 international.

About Piper Jaffray Companies

Piper Jaffray Companies (NYSE: PJC) is a focused securities firm dedicated to delivering superior financial advice, investment products and transaction execution within selected sectors of the financial services marketplace. The company operates through two primary revenue-generating segments: Capital Markets and Private Client Services. Through its chief operating subsidiary, Piper Jaffray & Co., the firm has served corporations, government and non- profit entities, institutional investors and the financial advisory needs of private individuals since 1895. Headquartered in Minneapolis, Piper Jaffray has approximately 2,900 employees in 107 offices in 23 states across the country and in London. For more information about Piper Jaffray, visit us online at 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) developments in market and economic conditions have in the past adversely affected, and may in the future adversely affect, our business and profitability, (2) we may not be able to compete successfully with other companies in the financial services industry, (3) our underwriting and market-making activities may place our capital at risk, (4) an inability to readily divest or transfer trading positions may result in financial losses to our business, (5) 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 risk exposure, (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) 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 but may not yield the benefits we expect, (8) our technology systems are critical components of our operations, and the failure of those systems may disrupt our business, cause financial loss and constrain our growth, (9) 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, (10) regulatory capital requirements may adversely affect our ability to expand or maintain present levels of our business or impair our ability to meet our financial obligations, (11) our exposure to legal liability is significant and could lead to substantial damages, (12) we may suffer losses if our reputation is harmed, (13) 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, and (14) other factors identified in the document entitled "Risk Factors" filed as Exhibit 99.1 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 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


                                For the Three Months Ended  Percent Inc/(Dec)
                               Dec. 31, Sept. 30,  Dec. 31, 4Q05 vs. 4Q05 vs.
    (Amounts in thousands,       2005      2005      2004    3Q05     4Q04
     except per share data)

    Revenues:

      Commissions and fees     $72,397   $73,045   $67,255   (0.9)%    7.6 %
      Principal transactions    34,732    35,637    46,394   (2.5)   (25.1)
      Investment banking        78,321    81,091    59,686   (3.4)    31.2
      Interest                  20,586    18,231    14,627   12.9     40.7
      Other income              12,358    11,336    13,589    9.0     (9.1)

        Total revenues         218,394   219,340   201,551   (0.4)     8.4

      Interest expense          11,435     9,979     6,981   14.6     63.8

        Net revenues           206,959   209,361   194,570   (1.1)     6.4

    Non-interest expenses:

      Compensation and
       benefits                122,693   129,196   116,800   (5.0)     5.0
      Occupancy and equipment   14,886    14,295    14,683    4.1      1.4
      Communications             9,725     9,362    10,470    3.9     (7.1)
      Floor brokerage and
       clearance                 4,160     4,473     3,882   (7.0)     7.2
      Marketing and business
       development               9,956     9,243    10,952    7.7     (9.1)
      Outside services          13,071    10,894    11,182   20.0     16.9
      Cash award program         1,004     1,005     1,158   (0.1)   (13.3)
      Restructuring-related
       expense                       -         -         -    N/M      N/M
      Other operating expenses   6,494     7,828     7,259  (17.0)   (10.5)

        Total non-interest
         expenses              181,989   186,296   176,386   (2.3)     3.2

    Income before income tax
     expense                    24,970    23,065    18,184    8.3     37.3

    Income tax expense           8,607     7,917     6,375    8.7     35.0

    Net income                 $16,363   $15,148   $11,809    8.0 %   38.6 %


    Earnings Per Common Share
      Basic                      $0.89     $0.80     $0.61   11.3 %   45.9 %
      Diluted                    $0.87     $0.79     $0.61   10.1 %   42.6 %

    Weighted average number of
     common shares
      Basic                     18,365    18,841    19,333   (2.5)%   (5.0)%
      Diluted                   18,850    19,107    19,445   (1.3)%   (3.1)%


                                                  For the Year Ended
                                              Dec. 31,   Dec. 31,   Percent
    (Amounts in thousands, except per           2005       2004    Inc/(Dec)
     share data)

    Revenues:

      Commissions and fees                    $283,481   $263,730      7.5 %
      Principal transactions                   143,391    188,526    (23.9)
      Investment banking                       270,758    257,932      5.0
      Interest                                  71,471     54,784     30.5
      Other income                              45,688     57,967    (21.2)

        Total revenues                         814,789    822,939     (1.0)

      Interest expense                          39,736     25,441     56.2

        Net revenues                           775,053    797,498     (2.8)

    Non-interest expenses:

      Compensation and benefits                471,674    488,394     (3.4)
      Occupancy and equipment                   57,627     57,066      1.0
      Communications                            39,791     42,198     (5.7)
      Floor brokerage and clearance             17,568     17,309      1.5
      Marketing and business development        39,863     42,468     (6.1)
      Outside services                          46,978     41,477     13.3
      Cash award program                         4,206      4,717    (10.8)
      Restructuring-related expense              8,595        -        N/M
      Other operating expenses                  27,645     24,248     14.0

        Total non-interest expenses            713,947    717,877     (0.5)

    Income before income tax expense            61,106     79,621    (23.3)

    Income tax expense                          21,023     29,273    (28.2)

    Net income                                 $40,083    $50,348    (20.4)%


    Earnings Per Common Share
      Basic                                      $2.13      $2.60    (18.1)%
      Diluted                                    $2.10      $2.60    (19.2)%

    Weighted average number of common shares
      Basic                                     18,813     19,333     (2.7)%
      Diluted                                   19,081     19,399     (1.6)%



    Piper Jaffray Companies
    Preliminary Unaudited Segment Data

                               For the Three Months Ended   Percent Inc/(Dec)
                              Dec. 31,  Sept. 30, Dec. 31,  4Q05 vs. 4Q05 vs.
    (Dollars in thousands)      2005      2005      2004      3Q05     4Q04

    Capital Markets

          Institutional Sales
            Fixed Income      $21,090   $18,439   $24,683     14.4 %  (14.6)%
            Equities           27,475    31,576    26,157    (13.0)     5.0

        Total Institutional
         Sales                 48,565    50,015    50,840     (2.9)    (4.5)

          Investment Banking
            Underwriting
              Fixed Income     20,450    15,809    14,613     29.4     39.9
              Equities         19,562    18,166    22,863      7.7    (14.4)
            Advisory Services  33,426    39,432    15,432    (15.2)   116.6

        Total Investment
         Banking               73,438    73,407    52,908      0.0     38.8

        Other Income              275       565       546    (51.3)   (49.6)

      Net revenues            122,278   123,987   104,294     (1.4)    17.2

      Operating expenses       98,723   101,355    88,192     (2.6)    11.9

      Segment pre-tax
       operating income       $23,555   $22,632   $16,102      4.1 %   46.3 %

      Segment pre-tax
       operating margin          19.3 %    18.3 %    15.4 %


    Private Client Services

      Net revenues            $86,379   $87,292   $88,895     (1.0)%   (2.8)%
      Operating expenses       80,319    81,980    83,166     (2.0)    (3.4)
      Segment pre-tax operating
       income                  $6,060    $5,312    $5,729     14.1 %    5.8 %

      Segment pre-tax operating
       margin                     7.0 %     6.1 %     6.4 %


    Corporate Support and Other

      Net revenues            $(1,698)  $(1,918)   $1,381    (11.5)%    N/M
      Operating expenses        1,943     1,956     3,870     (0.7)   (49.8)%
      Segment pre-tax
       operating loss         $(3,641)  $(3,874)  $(2,489)    (6.0)%   46.3 %

      Segment pre-tax
       operating margin           N/M       N/M       N/M


    Reconciliation to total
     income before taxes:

      Total segment pre-tax
       operating income       $25,974   $24,070   $19,342      7.9 %   34.3 %
      Cash award program        1,004     1,005     1,158     (0.1)   (13.3)
      Restructuring-related
       expense                      -         -         -      N/M      N/M
      Total income before tax
       expense                $24,970   $23,065   $18,184      8.3 %   37.3 %

      Pre-tax operating margin   12.1 %    11.0 %     9.3 %


                                               For the Year Ended
                                              Dec. 31,    Dec. 31,    Percent
    (Dollars in thousands)                      2005        2004     Inc/(Dec)

    Capital Markets

          Institutional Sales
            Fixed Income                       $75,201     $84,685    (11.2)%
            Equities                           114,789     117,272     (2.1)

        Total Institutional Sales              189,990     201,957     (5.9)

          Investment Banking
            Underwriting
              Fixed Income                      67,649      62,096      8.9
              Equities                          75,026      87,505    (14.3)
            Advisory Services                  100,672      78,066     29.0

        Total Investment Banking               243,347     227,667      6.9

        Other Income                             2,471       1,678     47.3

      Net revenues                             435,808     431,302      1.0

      Operating expenses                       365,222     363,249      0.5

      Segment pre-tax operating income         $70,586     $68,053      3.7 %

      Segment pre-tax operating margin            16.2 %      15.8 %


    Private Client Services

      Net revenues                            $346,951    $359,668     (3.5)%
      Operating expenses                       328,670     332,709     (1.2)
      Segment pre-tax operating income         $18,281     $26,959    (32.2)%

      Segment pre-tax operating margin             5.3 %       7.5 %


    Corporate Support and Other

      Net revenues                             $(7,706)     $6,528      N/M
      Operating expenses                         7,254      17,202    (57.8)%
      Segment pre-tax operating loss          $(14,960)   $(10,674)    40.2 %

      Segment pre-tax operating margin             N/M         N/M


    Reconciliation to total income before taxes:

      Total segment pre-tax operating income   $73,907     $84,338    (12.4)%
      Cash award program                         4,206       4,717    (10.8)
      Restructuring-related expense              8,595           -      N/M
      Total income before tax expense          $61,106     $79,621    (23.3)%

      Pre-tax operating margin                     7.9 %      10.0 %


    N/M - Not Meaningful
SOURCE  Piper Jaffray Companies
    -0-                             01/25/2006
    /CONTACT:  Jennifer A. Olson-Goude, Investor Relations, +1-612-303-6277,
or Susan L. Beatty, Media Relations, +1-612-303-5680, both of Piper Jaffray
Companies/
    /Web site:  http://www.piperjaffray.com /
    (PJC)

CO:  Piper Jaffray Companies
ST:  Minnesota
IN:  FIN
SU:  ERN CCA

JK-CM
-- CGW003 --
3218 01/25/2006 08:00 EST http://www.prnewswire.com

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