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MINNEAPOLIS, April 19 /PRNewswire-FirstCall/ -- Piper Jaffray Companies (NYSE: PJC) today announced net income of $23.9 million, or $1.25 per diluted share, for the quarter ended March 31, 2006, up from net income of $7.3 million, or $0.38 per diluted share, for the quarter ended March 31, 2005. Net income for the current quarter included a gain of $6.6 million after tax, or $.35 per diluted share, from the company's ownership of two seats on the New York Stock Exchange, Inc. (NYSE), which were exchanged for cash and shares of the NYSE Group, Inc. in its initial public offering in March 2006. Net income totaled $16.4 million, or $0.87 per diluted share, for the quarter ended Dec. 31, 2005.

    Business Highlights

    -- Generated total quarterly net revenues of $227.6 million, up 27.1
       percent from the year-ago period
    -- Recorded a 16.2 percent quarterly pre-tax operating margin
    -- Announced the signing of a definitive agreement to sell 100% of the
       Private Client Services branch network and related net assets to UBS
       AG for total cash consideration of approximately $800 million
    -- Completed a senior managed $309 million municipal underwriting for the
       Baltimore Convention Centre Hotel, one of the largest municipal
       transactions ever for Piper Jaffray measured by par value
    -- Acted as co-bookrunner on the $239 million Crocs, Inc. IPO, the third
       best performing consumer transaction in the first quarter
    -- Added a six-member restructuring team in New York to provide advisory
       services to financially distressed companies and their creditor and
       shareholder constituents

"We are very pleased to report another strong quarter of financial results and continued margin expansion," said chairman and chief executive officer Andrew S. Duff. "All businesses, including our expanded healthcare franchise in London and our new high yield and structured products initiative, contributed to the year-over-year improvement in top- and bottom-line performance. With the additional capital we will deploy from the sale of the Private Client Services branch network, we will be able to accelerate the momentum in our Capital Markets business."

Results of Operations

Net Revenues

Net revenues for the first quarter were $227.6 million, up 27.1 percent and 10.0 percent from the first quarter of 2005 and the fourth quarter of 2005, respectively. The increase compared to one year ago was driven by strong performance across all revenue types, including a gain related to the company's ownership of two seats on the NYSE.

Non-Interest Expenses

For the quarter, non-interest expenses were $190.7 million, up 13.8 percent from the first quarter of 2005 and up 4.8 percent compared to the sequential quarter. Compensation expense was $133.1 million, up 21.6 percent and 8.5 percent compared to the prior-year period and the fourth quarter of 2005, respectively. The increase compared to both periods was attributable to increased variable compensation driven by higher net revenues and profitability. Non-compensation expenses were $57.6 million, down slightly compared to both periods.

For the quarter, pre-tax operating margin was 16.2 percent, up from 6.4 percent in the comparable prior-year period and 12.1 percent in the preceding quarter. Excluding the gain related to the company's ownership of two NYSE seats, pre-tax operating margin would have been 12.3 percent for the quarter. For the first quarter of 2006, annualized return on average tangible shareholders' equity(1) was 21.1 percent compared to 7.1 percent for the first quarter of 2005 and 15.4 percent for the preceding quarter. Excluding the gain related to the company's ownership of two NYSE seats, annualized return on average tangible shareholders' equity would have been 15.3 percent.

Business Segment Review

On April 11, 2006 Piper Jaffray Companies announced the signing of a definitive agreement to sell 100 percent of its Private Client Services branch network to UBS AG. The sale is expected to close early in the third quarter. In accordance with U.S. generally accepted accounting principles related to the disposal of long-lived assets, the operations of Private Client Services will be presented in the financial statements as discontinued operations beginning in the second quarter of 2006.

The company has completed an analysis of its interest bearing assets and liabilities to determine how they are related to and driven by each business segment. As a result of this analysis, Piper Jaffray has restated net interest of its segments for each of the four quarters of 2005 and the full year of 2004. The restatement did not affect the company's aggregate financial results for those periods. A supplemental schedule showing the restated figures is included at the end of this release.

Capital Markets

Capital Markets recorded $126.1 million in net revenues for the quarter, up $35.6 million, or 39.4 percent, from the first quarter of 2005. Segment pre-tax operating income for the quarter was $23.8 million, up 137.6 percent compared to the first quarter of 2005. Improved results in all businesses contributed to the increase.

Institutional Sales and Trading

For the first quarter of 2006, institutional sales and trading net revenues were $55.4 million, up 34.7 percent from the year-ago period and up 18.8 percent compared to the fourth quarter of 2005.

    -- Equity sales and trading revenues were $32.8 million, an increase of
       22.1 percent from the year-ago period and an increase of 16.8 percent
       compared to the fourth quarter of 2005.  The increase compared to both
       periods was primarily attributable to higher convertibles net revenues
       and higher revenues in U.S. and U.K. equity sales and trading.
    -- Fixed income sales and trading revenues were $22.6 million, up 58.5
       percent from the year-ago period and up 22.0 percent from the
       sequential quarter.  The increase compared to both periods was mainly
       driven by high yield and structured products and interest rate
       products.

    Investment Banking

Total investment banking revenues were $69.8 million, up 43.7 percent compared to the first quarter of 2005 and down 5.0 percent compared to the preceding quarter.

    -- Equity underwriting revenues were $30.0 million, up 47.7 percent
       compared to the first quarter of 2005 and up 53.6 percent from the
       sequential quarter.  The increase compared to both periods was mainly
       due to the completion of more IPOs and follow-on transactions, offset
       in part by lower revenues from convertible underwritings.
    -- Advisory services revenues were $24.0 million, up 44.6 percent compared
       to the first quarter of last year driven by an increased number of
       transactions.  Advisory services revenues declined 28.3 percent
       compared to a very strong fourth quarter of last year.
    -- Fixed income underwriting revenues were $15.8 million, up 35.4 percent
       compared to the first quarter of 2005 mainly driven by the Baltimore
       Convention Centre underwriting. Underwriting revenues declined 23.0
       percent compared to the fourth quarter of 2005, which included higher
       revenues from structured products.

Segment operating expenses for the quarter were $102.3 million, an increase of $21.9 million, or 27.2 percent, from the same period a year ago. The increase is primarily attributable to higher variable compensation expense due to increased net revenue and profitability.

For the first quarter of 2006, segment pre-tax operating margin was 18.8 percent, up from 11.1 percent in the same quarter of last year and up 17.9 percent from the sequential quarter. The increase compared to both periods was mainly due to containing non-compensation expenses on increased revenues.

Following is a recap of completed deal information for the first quarter of 2006.

    -- 24 equity offerings, raising a total of $4.0 billion in capital,
       placing the firm 13th nationally, based on the number of completed
       transactions. (Source:  Dealogic)
    -- 14 mergers and acquisitions transactions with an aggregate enterprise
       value of $2.2 billion, ranking the firm 19th nationally,  based on the
       number of completed transactions.  (Source:  Mergerstat and Piper
       Jaffray)
    -- 90 tax-exempt issues with a total par value of $1.4 billion, ranking
       the firm 6th nationally. In the Upper Midwest, the firm completed 47
       public finance issues for the quarter with a total par value of
       $413 million, again ranking the firm the lead underwriter of Upper
       Midwest tax-exempt issues. Rankings are based on the number of
       completed transactions.  (Source:  Thomson Financial)


    Private Client Services

Private Client Services recorded net revenues of $92.6 million for the quarter, up 2.1 percent compared to the first quarter of 2005 and up 4.8 percent compared to the fourth quarter of last year. Increased revenues from fee-based accounts were offset in part by fewer financial advisors. Segment pre-tax operating income was $8.2 million, up 29.2 percent from the first quarter of 2005 and up 2.1 percent sequentially. The increase compared to both periods was mainly attributable to containing non-compensation expenses on modestly increased revenues.

Segment operating expense was $84.4 million for the quarter, essentially unchanged from the first quarter of 2005. Segment pre-tax operating margin was 8.9 percent, up from 7.0 percent in the same quarter of last year and down from 9.1 percent in the fourth quarter of 2005.

Corporate Support and Other

Corporate Support and Other pre-tax operating income was $6.2 million for the first quarter, compared to a loss of $3.7 million in the year-ago period and a loss of $3.6 million in the fourth quarter of last year. The increase was primarily attributable to a gain related to the company's ownership of two seats on the NYSE, which were exchanged for cash and shares of the NYSE Group, Inc. in its initial public offering in March 2006.


    Additional Shareholder Information

                                      As of           As of            As of
                                   March 31,        Dec. 31,        March 31,
                                       2006            2005             2005
    Full time employees:              2,793           2,871            2,976
    Financial advisors:                 817             842              866
    Client assets:              $54 billion     $52 billion      $50 billion
    Shareholders' equity:    $794.5 million  $754.8 million   $736.6 million
    Book value per share:            $42.82          $41.10           $38.01
    Tangible book value per share:   $25.58          $23.66           $21.43

    (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
                               March 31, 2006  March 31, 2005  March 31, 2006

    (Dollars in thousands)

    Shareholders' equity           $771,335       $732,787       $794,512
    Deduct: Goodwill and
     identifiable intangible
     assets                         320,034        321,634        319,834
    Tangible shareholders' equity  $451,301       $411,153       $474,678


    Conference Call

Andrew S. Duff, chairman and chief executive officer, and Sandra G. Sponem, chief financial officer, will host a conference call to discuss first quarter 2006 financial results on Wednesday, April 19, 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 site at http://www.piperjaffray.com or by dialing (866) 244- 9933, or (706) 758-0864 internationally, and referring to conference ID 6993879 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 on April 19, 2006 at the same web address or by calling (800) 642-1687, or (706) 645-9291 internationally.

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 currently operates through two primary revenue-generating segments: Capital Markets and Private Client Services. The sale of the company's Private Client Services branch network, announced April 11, 2006, is currently pending. The company's Capital Markets business generates revenue through two groups, Corporate and Institutional Services and Public Finance 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 currently has approximately 2,800 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) developments in specific sectors of the economy have in the past adversely affected, and may in the future adversely affect, our business and profitability, (3) 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, (4) we have experienced significant pricing pressure in areas of our business, which may impair our revenues and profitability, (5) our ability to attract, develop and retain highly skilled and productive employees is critical to the success of our business, (6) our underwriting and market-making activities may place our capital at risk, (7) an inability to readily divest or transfer trading positions may result in financial losses to our business, (8) 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, (9) 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, (10) 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, (11) 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, (12) 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, (13) 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, (14) our exposure to legal liability is significant, and could lead to substantial damages, (15) the business operations that we conduct outside of the United States subject us to unique risks, (16) we may suffer losses if our reputation is harmed, (17) our stock price may fluctuate as a result of several factors, including but not limited to changes in our revenues and operating results, (18) 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 (19) 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  1Q06     1Q06
    (Amounts in thousands,       March 31, Dec. 31, March 31, vs.      vs.
     except per share data)        2006     2005     2005    4Q05     1Q05
    Revenues:

     Commissions and fees        $78,300  $72,397  $70,160    8.2 %   11.6 %
     Principal transactions       38,566   34,732   34,864   11.0     10.6
     Investment banking           74,904   78,321   56,322   (4.4)    33.0
     Interest                     22,587   20,586   15,602    9.7     44.8
     Other income                 23,660   12,358   10,727   91.5    120.6

      Total revenues             238,017  218,394  187,675    9.0     26.8

     Interest expense             10,463   11,435    8,607   (8.5)    21.6

      Net revenues               227,554  206,959  179,068   10.0     27.1

    Non-interest expenses:

     Compensation and benefits   133,087  122,693  109,402    8.5     21.6
     Occupancy and equipment      14,678   14,886   14,027   (1.4)     4.6
     Communications                9,443    9,725   10,405   (2.9)    (9.2)
     Floor brokerage and
      clearance                    3,042    4,160    4,203  (26.9)   (27.6)
     Marketing and business
      development                  9,631    9,956   10,650   (3.3)    (9.6)
     Outside services             11,909   13,071   10,639   (8.9)    11.9
     Cash award program            1,275    1,004    1,136   27.0     12.2
     Other operating expenses      7,608    6,494    7,127   17.2      6.7

      Total non-interest
       expenses                  190,673  181,989  167,589    4.8     13.8

    Income before income tax
     expense                      36,881   24,970   11,479   47.7    221.3

     Income tax expense           13,024    8,607    4,144   51.3    214.3

    Net income                   $23,857  $16,363   $7,335   45.8 %  225.2 %


    Earnings Per Common Share
     Basic                         $1.29    $0.89    $0.38   44.9 %  239.5 %
     Diluted                       $1.25    $0.87    $0.38   43.7 %  228.9 %

    Weighted average number of
     common shares
     Basic                        18,462   18,365   19,378    0.5 %   (4.7)%
     Diluted                      19,146   18,850   19,523    1.6 %   (1.9)%


    Piper Jaffray Companies
    Preliminary Unaudited Segment Data

                                                                Percent
                                                                Inc/(Dec)
                             For the Three Months Ended       1Q06    1Q06
                              March 31, Dec. 31,  March 31,    vs.     vs.
    (Dollars in thousands)      2006      2005      2005      4Q05    1Q05
    Capital Markets

        Institutional
         sales and trading
          Fixed income        $22,615   $18,541   $14,268     22.0 %  58.5 %
          Equities             32,759    28,058    26,838     16.8    22.1

      Total institutional
       sales and trading       55,374    46,599    41,106     18.8    34.7

        Investment banking
          Underwriting
            Fixed income       15,752    20,450    11,632    (23.0)   35.4
            Equities           30,043    19,562    20,338     53.6    47.7
          Advisory services    23,969    33,426    16,574    (28.3)   44.6

      Total investment
       banking                 69,764    73,438    48,544     (5.0)   43.7

      Other income                922       275       763    235.3    20.8

    Net revenues              126,060   120,312    90,413      4.8    39.4

    Operating expenses        102,309    98,723    80,418      3.6    27.2

    Segment pre-tax operating
     income                   $23,751   $21,589    $9,995     10.0 % 137.6 %

    Segment pre-tax operating
     margin                      18.8 %    17.9 %    11.1 %


    Private Client Services

      Net revenues            $92,595   $88,345   $90,731      4.8 %   2.1 %
      Operating expenses       84,399    80,319    84,388      5.1     0.0
      Segment pre-tax
       operating income        $8,196    $8,026    $6,343      2.1 %  29.2 %

      Segment pre-tax
       operating margin           8.9 %     9.1 %     7.0 %


    Corporate Support and Other

      Net revenues             $8,899   $(1,698)  $(2,076)     N/M     N/M
      Operating expenses        2,690     1,943     1,647     38.4 %  63.3 %
      Segment pre-tax operating
       income (loss)           $6,209   $(3,641)  $(3,723)     N/M     N/M

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


    Reconciliation to total income
     before taxes:

      Total segment pre-tax
       operating income       $38,156   $25,974   $12,615     46.9 % 202.5 %
      Cash award program        1,275     1,004     1,136     27.0    12.2
      Total income before tax
       expense                $36,881   $24,970   $11,479     47.7 % 221.3 %

      Pre-tax operating margin   16.2 %    12.1 %     6.4 %


    N/M - Not Meaningful


    Piper Jaffray Companies
    Preliminary Unaudited Segment Data


                                       For the Three Months Ended
                            March 31,  Dec. 31, Sept. 30, June 30,  March 31,
    (Dollars in thousands)    2006      2005      2005      2005      2005
    Capital Markets

        Institutional sales
         and trading
          Fixed income      $22,615   $18,541   $15,616   $17,391   $14,268
          Equities           32,759    28,058    32,455    30,029    26,838

      Total institutional
       sales and trading     55,374    46,599    48,071    47,420    41,106

         Investment banking
           Underwriting
             Fixed income    15,752    20,450    15,809    19,758    11,632
             Equities        30,043    19,562    18,166    16,960    20,338
           Advisory services 23,969    33,426    39,432    11,240    16,574

      Total investment
       banking               69,764    73,438    73,407    47,958    48,544

      Other income              922       275       565       868       763

    Net revenues            126,060   120,312   122,043    96,246    90,413

    Operating expenses      102,309    98,723   101,355    84,726    80,418

    Segment pre-tax
     operating income       $23,751   $21,589   $20,688   $11,520    $9,995

    Segment pre-tax
     operating margin          18.8 %    17.9 %    17.0 %    12.0 %    11.1 %


    Private Client Services

      Net revenues          $92,595   $88,345   $89,236   $85,433   $90,731
      Operating expenses     84,399    80,319    81,980    81,983    84,388
      Segment pre-tax
       operating income      $8,196    $8,026    $7,256    $3,450    $6,343

      Segment pre-tax
       operating margin         8.9 %     9.1 %     8.1 %     4.0 %     7.0 %


    Corporate Support and
     Other

      Net revenues           $8,899   $(1,698)  $(1,918)  $(2,014)  $(2,076)
      Operating expenses      2,690     1,943     1,956     1,708     1,647
      Segment pre-tax
       operating income
       (loss)                $6,209   $(3,641)  $(3,874)  $(3,722)  $(3,723)
      Segment pre-tax
       operating margin         N/M       N/M       N/M       N/M       N/M

    Reconciliation to total
     income before taxes:

      Total segment pre-tax
       operating income     $38,156   $25,974   $24,070   $11,248   $12,615
      Cash award program      1,275     1,004     1,005     1,061     1,136
      Restructuring related
       expense                    -         -         -     8,595         -
      Total income before
       tax expense          $36,881   $24,970   $23,065    $1,592   $11,479

      Pre-tax operating
       margin                  16.2 %    12.1 %    11.0 %     0.9 %     6.4 %

    N/M - Not Meaningful


    Piper Jaffray Companies
    Preliminary Unaudited Segment Data

                                                  For the Year Ended
                                               December 31,      December 31,
    (Dollars in thousands)                         2005              2004
    Capital Markets

        Institutional sales and trading
          Fixed income                           $65,816           $80,188
          Equities                               117,380           118,150

      Total institutional sales and trading      183,196           198,338

        Investment banking
          Underwriting
            Fixed income                          67,649            62,096
            Equities                              75,026            87,505
          Advisory services                      100,672            78,066

      Total investment banking                   243,347           227,667

      Other income                                 2,471             1,678

    Net revenues                                 429,014           427,683

    Operating expenses                           365,222           363,249

    Segment pre-tax operating income             $63,792           $64,434

    Segment pre-tax operating margin                14.9 %            15.1 %


    Private Client Services

      Net revenues                              $353,745          $363,292
      Operating expenses                         328,670           332,709
      Segment pre-tax operating income           $25,075           $30,583

      Segment pre-tax operating margin               7.1 %             8.4 %

    Corporate Support and Other

      Net revenues                               $(7,706)           $6,523
      Operating expenses                           7,254            17,202
      Segment pre-tax operating income
       (loss)                                   $(14,960)         $(10,679)
      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
      Cash award program                           4,206             4,717
      Restructuring related expense                8,595                 -
      Total income before tax expense            $61,106           $79,621

      Pre-tax operating margin                       7.9 %            10.0 %

    N/M - Not Meaningful
SOURCE  Piper Jaffray Companies
    -0-                             04/19/2006
    /CONTACT: Investor Relations, Jennifer A. Olson-Goude, +1-612 303-6277, or
Media Relations, Susan L. Beatty, +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

CM-AB
-- CGW005 --
1370 04/19/2006 08:00 EDT http://www.prnewswire.com

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