UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1995 Commission file number 1-7421
PIPER JAFFRAY COMPANIES INC.
(Exact name of Registrant as specified in its charter)
Delaware 41-1233380
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Piper Jaffray Tower, 222 South 9th Street, Minneapolis, Minnesota 55402
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 342-6000
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
As of June 30, 1995, 17,444,101 shares of the Registrant's common stock were
issued and outstanding.
PIPER JAFFRAY COMPANIES INC.
INDEX
Page
Number
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Financial Condition
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
Signatures
Index of Exhibits
Exhibit
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
PIPER JAFFRAY COMPANIES INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In Thousands)
June 30, Sept. 30,
1995 1994
(Unaudited)
ASSETS
Cash (including $1,751 and $448,
respectively, required
to be segregated under
federal and other regulations) $ 30,215 $ 12,070
Receivable from other brokers and dealers 75,826 52,821
Receivable from customers 369,284 371,163
Trading securities owned, at market 113,665 49,132
Investments pursuant to mortgage-backed bonds 53,280 1,605
Office equipment and leasehold improvements,
at cost, less accumulated depreciation of
$49,454 and $44,033, respectively 26,697 25,979
Deferred income tax asset 21,464 4,190
Other assets 86,436 67,487
---------- ----------
$ 776,867 $ 584,447
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term borrowings $ 136,426 $ 108,132
Checks and drafts payable 46,149 43,935
Payable to other brokers and dealers 119,409 76,976
Payable to customers 101,348 72,478
Trading securities sold but not
yet purchased, at market 13,948 14,689
Mortgage-backed bonds payable 54,399 1,602
Employee compensation 44,527 59,087
Accrued litigation settlement 70,000 --
Federal and state income taxes 1,147 1,281
Other accounts payable and accrued expenses 38,642 38,464
---------- ----------
625,995 416,644
---------- ----------
Shareholders' equity:
Preferred stock, $1 par value; authorized,
300,000 shares; none issued and outstanding -- --
Common stock, $1 par value; authorized
40,000,000 shares; 17,568,744 and 17,461,521
shares issued, respectively 17,569 17,462
Additional paid-in capital 11,919 7,163
Retained earnings 123,206 146,601
Treasury stock, at cost; 124,643 and
273,360 shares, respectively (1,822) (3,423)
---------- ----------
150,872 167,803
---------- ----------
$ 776,867 $ 584,447
========== ==========
See accompanying notes to consolidated financial statements.
PIPER JAFFRAY COMPANIES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended Nine Months Ended
June 30, June 30,
1995 1994 1995 1994
REVENUES
Commissions $ 37,381 $ 34,161 $103,666 $113,945
Profits on principal transactions 32,681 24,780 88,194 75,499
Investment banking 14,268 11,766 36,348 47,206
Asset management fees 10,740 12,180 33,391 39,006
Interest 8,685 6,252 24,984 17,440
Other income 5,401 2,691 12,929 7,755
--------- --------- -------- --------
Total revenues 109,156 91,830 299,512 300,851
--------- --------- -------- --------
EXPENSES
Employee compensation 66,922 56,512 181,441 187,605
Floor brokerage and clearance 2,117 1,822 5,951 5,611
Interest 2,826 1,944 8,821 4,763
Occupancy and equipment 7,408 7,067 21,395 20,379
Communications 3,944 3,565 11,840 10,733
Travel and promotional 3,581 3,623 11,440 11,211
Charge for litigation settlement,
net (13,910) -- 56,090 --
Other operating expenses 14,800 9,359 34,057 24,952
--------- --------- -------- --------
Total expenses 87,688 83,892 331,035 265,254
--------- --------- -------- --------
Income (loss) before income taxes 21,468 7,938 (31,523) 35,597
Income taxes (benefit) 8,373 3,096 (11,994) 13,883
--------- --------- -------- --------
Net income (loss) $ 13,095 $ 4,842 $(19,529) $ 21,714
========= ========= ========= =========
Net income (loss) per common and
common equivalent share
(primary and fully diluted) $ .73 $ .27 $ (1.13) $ 1.20
Weighted average number of
common and common equivalent
shares outstanding 18,020 17,814 17,239 18,054
Dividends per share $ .075 $ .175 $ .225 $ .525
See accompanying notes to consolidated financial statements.
PIPER JAFFRAY COMPANIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Nine Months Ended
June 30,
1995 1994
Operating activities:
Net income (loss) $ (19,529) $ 21,714
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 5,421 5,109
Accrual for litigation settlement 70,000 --
Deferred income taxes (17,274) (2,906)
(Increase) decrease in:
Net receivable from customers 30,749 (16,781)
Net trading securities (65,274) (17,561)
Other (18,771) (9,079)
Increase (decrease) in:
Net payable to other brokers and dealers 19,428 (13,426)
Checks and drafts payable 2,214 (1,464)
Employee compensation (14,560) (23,849)
Federal and state income taxes payable (134) (2,232)
---------- ----------
Net cash used by operating activities (7,730) (60,475)
---------- ----------
Financing activities:
Net change in:
Short-term borrowings 28,294 78,916
Mortgage-backed bonds payable 52,797 (1,710)
Investments and funds pursuant
to mortgage-backed bonds (51,675) 1,403
Net common stock issued 6,824 1,240
Treasury shares repurchased (360) (2,722)
Dividends paid (3,866) (9,192)
---------- ----------
Net cash provided by financing activities 32,014 67,935
---------- ----------
Net cash used for purchase of office
equipment and leasehold improvements (6,139) (12,225)
---------- ----------
Net increase (decrease) in cash 18,145 (4,765)
Cash at beginning of period 12,070 19,884
---------- ----------
Cash at end of period $ 30,215 $ 15,119
========== ==========
Supplemental disclosure of cash flow information
Cash paid during the nine months ended for:
Interest $ 8,200 $ 4,531
Income taxes $ 1,476 $ 19,021
See accompanying notes to consolidated financial statements.
PIPER JAFFRAY COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Nine Months Ended June 30, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements of Piper Jaffray Companies
Inc. and its subsidiaries (the "Company") have been prepared in conformity with
generally accepted accounting principles and should be read in conjunction with
the Company's Annual Report for the year ended September 30, 1994. The results
of operations for the nine months ended June 30, 1995, are not necessarily
indicative of the results to be expected for the year ending September 30, 1995.
The consolidated statement of financial condition as of June 30, 1995 and
the other consolidated financial information for the periods ended June 30, 1995
and 1994, is unaudited, but management of the Company believes that all
adjustments (consisting of normal recurring accruals and the accrual for the
litigation settlement discussed in Note 3) necessary for a fair statement of the
results of operations for the periods have been included.
Net income (loss) per common and common equivalent share is calculated by
dividing net income (loss) by the weighted average number of common shares and
common share equivalents outstanding, which includes the dilutive effect of all
outstanding stock options. For periods in which a net loss is reported, the
effect of common share equivalents is excluded from the calculation of per share
amounts as they are anti-dilutive.
2. NET CAPITAL REQUIREMENTS
At June 30, 1995, the Company's broker-dealer subsidiary's net capital
under applicable regulations was $76 million or 18.85% of aggregate debit
balances and $67.9 million in excess of the minimum required net capital.
3. LITIGATION ACCRUAL AND CONTINGENCIES
On July 20, 1995, the Company entered into a settlement agreement for
litigation relating to the Institutional Government Income Portfolio (PJIGX)
mutual fund, an open-ended fund managed by Piper Capital Management
Incorporated. The Company recorded a pre-tax charge of $70 million to accrue for
this proposed settlement in the second quarter of fiscal 1995. The $70 million
charge was offset in the third quarter by $13.9 million, which represents
anticipated insurance proceeds, net of related expenses.
The Company is currently a defendant in other lawsuits and arbitrations
related to various funds or assets managed by Piper Capital Management
Incorporated, certain shareholder litigation, and two related cases involving a
significant underwriting by Piper Jaffray Inc. The Company intends to defend
these actions vigorously. It is impossible to predict the outcome of these
lawsuits and arbitrations and, at the present time, the effect of the such
lawsuits and arbitrations on the consolidated financial statements cannot be
determined. Accordingly, no provision for liability, if any, that may result
has been recorded in the consolidated financial statements.
The Company is involved in various other lawsuits or arbitrations or
threatened lawsuits or arbitrations incidental to its securities business.
Management of the Company, after consultation with counsel, believes the
resolution of these various lawsuits, arbitrations and claims will have no
material adverse effect on the consolidated financial statements.
4. SHAREHOLDERS' EQUITY
During the nine months ended June 30, 1995, 35,900 shares of the Company's
common stock were repurchased by the Company pursuant to the Board of Directors'
authorizations to repurchase common stock to satisfy employee benefit plan
obligations.
Common shares authorized for repurchase - fiscal years:
1992 400,000
1994 500,000
-------
900,000
Common shares repurchased - fiscal years:
1992 201,000
1993 --
1994 378,100
1995 35,900
-------
615,000
-------
Common shares available at June 30, 1995 for
repurchase pursuant to authorizations 285,000
=======
Total common shares repurchased 615,000
Treasury shares reissued - fiscal years:
1992 6,262
1993 194,738
1994 104,740
1995 184,617
-------
490,357
-------
Treasury shares outstanding at June 30, 1995 124,643
=======
Item 2. Management's Discussion and Analysis of Financial Condition
Results of Operations
This discussion should be read in conjunction with Management's Financial
Discussion contained in the Company's Annual Report for the year ended
September 30, 1994.
OPERATIONS
The Company reported net income of $13.1 million for the quarter ended June 30,
1995. Third quarter earnings included a $13.9 million reduction in the charge
for the proposed settlement of the PJIGX litigation, representing anticipated
insurance proceeds, net of related expenses.
The Company's revenues for the nine months ended June 30, 1995 decreased .4%
over the first nine months of fiscal year 1994 to $299.5 million. The net loss
for the first nine months was $19.5 million, versus net income of $21.7 million
for the same period of the prior fiscal year. The net loss per share for the
first nine months was $1.13 versus net income per share of $1.20 a year earlier.
Revenues for the quarter ended June 30, 1995 were $109.2 million, an 18.9%
increase from the same period a year ago. The Company recorded net income of
$13.1 million for the quarter ended June 30, 1995 versus net income of $4.8
million for the same period of the prior fiscal year. The net income per share
for the quarter ended June 30, 1995 was $.73. Net income per share was $.27 for
the same period of the prior fiscal year. Excluding the settlement accrual, net
income would have been $.84 per share for the nine months ended June 30, 1995,
and $.26 for the third quarter of fiscal 1995.
Increases in profits on principal transactions during the nine months ended June
30, 1995 was offset by decreases in commissions and investment banking revenues
during the same period. Commissions and investment banking revenues for the
quarter ended June 30, 1995 exceeded those of the same period of the prior
fiscal year by 9.4% and 21.3%, respectively. Asset management revenue decreased
11.8% for the quarter and 14.4% for the nine months ended June 30, 1995 compared
to the same periods in fiscal 1994. The decrease in revenues was caused by a
drop in assets under management by Piper Capital Management Incorporated, which
declined by 13.3% to $10.4 billion at June 30, 1995 as compared to $12.0 billion
at June 30, 1994. The decrease in assets under management was due to both
declines in asset market value and to net liquidations.
Excluding the settlement accrual, expenses for the quarter and nine months ended
June 30, 1995 increased $17.7 million and $9.7 million, or 21.1% and 3.6%
respectively, as compared to the same periods in the prior year. Employee
compensation, including broker compensation and employee incentives, increased
by $10.4 million, or 18.4% as compared to the third quarter of fiscal 1994, and
was down $6.2 million, or 3.3%, year to date, in line with revenues. Other
operating expense increases were due primarily to higher fees and costs related
to ongoing litigation.
LIQUIDITY AND CAPITAL RESOURCES
The Company has a liquid balance sheet. Most of the Company's assets consist of
cash and assets readily convertible into cash. The fluctuations in cash flows
from financing activities are directly related to operating activities due to
the liquid nature of the Company's balance sheet.
Management believes that existing capital, funds from operations and current
credit lines will be sufficient to finance the Company's business. As part of
the proposed settlement of the PJIGX litigation, the Company was required to
deposit $20 million in cash into an escrow fund on August 3, 1995. This amount
was partially funded by the proceeds of the sale of the Company's $10 million
investment in the PJIGX fund, which was completed on April 17, 1995. The
remaining $10 million of escrow funds will be financed through the credit
facilities of the Company's broker/dealer subsidiary. The funding of the balance
of the proposed settlement, up to $50 million, is payable over a three-year
period with interest at 8 percent. This amount is expected to be financed by tax
refunds arising from the resulting net operating loss, cash flow from
operations, and available credit facilities.
In the normal course of business, the Company's customer, trading and
correspondent clearance activities involve the execution, settlement and
financing of various securities transactions. These activities may expose the
Company to off-balance sheet risk in the event the other party to the
transaction is unable to fulfill its contractual obligations. The Company
utilizes financial futures contracts to a limited extent to hedge fixed income
inventories against market interest rate fluctuations. Such transactions are
subject to the same controls as all trading for the Company's own account. The
Company also enters into government reverse repurchase agreements to facilitate
hedging. The Company does not, and has no plans to enter into, for either
hedging or speculative purposes, the following types of transactions: interest
rate swaps, foreign currency contracts or significant amounts of futures,
options, forwards, mortgage-backed derivatives, or other securities whose value
is derived from other investment products (derivatives).
The Company intends to continue to repurchase shares of its common stock
periodically, as market conditions warrant, to satisfy obligations to present
and future employee benefit plans. See Note 4 to the consolidated financial
statements.
During the third quarter of fiscal 1995, the Company's broker/dealer subsidiary
entered into operating leases and service agreements for personal computer
hardware and software in a new workstation system for investment executives. The
Company plans to commit approximately $12 million for the system. There were no
other material commitments for capital expenditures as of June 30, 1995.
The Company is currently a defendant in other lawsuits and arbitrations
related to various funds or assets managed by Piper Capital Management
Incorporated (see Section A of Part II, Item 1), certain shareholder litigation
(see Section B of Part II, Item 1), and two related cases involving a
significant underwriting by Piper Jaffray Inc. (see Section C of Part II, Item
1). The Company intends to defend these actions vigorously. It is impossible to
predict the outcome of these lawsuits and arbitrations and, at the present time,
the effect of the such lawsuits and arbitrations on the consolidated financial
statements cannot be determined. Accordingly, no provision for liability, if
any, that may result has been recorded in the consolidated financial statements.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is involved in various lawsuits or arbitrations or threatened
lawsuits or arbitrations incidental to the securities business. The Company
denies liability and intends to defend each of the lawsuits or arbitrations
vigorously. Actions which individually, or when aggregated with similar actions,
make claims for a material amount are described in more detail below:
A. Lawsuits Related to Various Funds or Assets Managed by Piper Capital
Management Incorporated
1. Institutional Government Income Portfolio
a. In Re: Piper Funds, Inc. Institutional Government Income Portfolio
Litigation (United States District Court, District of Minnesota).
This is a consolidated putative class action in which claims brought by 13
persons or entities have been consolidated under the title In Re: Piper
Funds Inc. Institutional Government Income Portfolio Litigation (United
States District Court, District of Minnesota) ("PJIGX action"), pursuant to
an Amended Consolidated Class Action Complaint filed on October 5, 1994. The
named plaintiffs in that Amended Consolidated Class Action Complaint purport
to represent a class of individuals and groups who purchased shares of the
Institutional Government Income Portfolio, an open-ended fund managed by
Piper Capital Management Incorporated, during the putative class period of
July 1, 1991, through May 9, 1994.
The Amended Consolidated Class Action Complaint alleges violation of
Sections 11 and 12(2) of the Securities Act of 1933, as amended (the
"Securities Act"); violation of Section 10(b) of the Securities Exchange Act
of 1934, as amended (the "Securities Exchange Act"), and Rule 10b-5
promulgated thereunder; violation of Sections 13(a)(3), 18(f), 34(b) and
36(b) of the Investment Company Act of 1940, as amended (the "Investment
Company Act"); violation of Section 80A.01 of the Minnesota Statutes;
negligent misrepresentation; and breach of fiduciary duty. Plaintiffs seek
rescission or damages, plus prejudgment interest, and attorneys' fees and
costs. The Amended Consolidated Class Action Complaint claims that the
Institutional Government Income Portfolio lost 24.6% of its value during the
period from January 1, 1994 to May 6, 1994. The Amended Consolidated
Complaint does not specify an amount of damages sought. The defendants filed
an Answer to the Amended Consolidated Class Action Complaint on October 21,
1994, in which the defendants deny liability.
The named plaintiffs and defendants have reached a settlement of this
matter, subject to approval by the Court and a sufficiently large percentage
of the class. The terms of the settlement are set forth in a Settlement
Agreement dated July 20, 1995 which has been submitted to the Court for
approval. If approved by the Court and a sufficiently large percentage of
the conditionally certified class, the settlement agreement would provide up
to $70 million to class members in payments scheduled during the next three
years. Related arbitration actions have been stayed by the Court pending the
consideration by class members of the proposed settlement.
b. Other Lawsuits Brought by Investors in Institutional Government Income
Portfolio.
The Company is party to the following actions which are based on claims
similar to those asserted in In Re: Piper Funds, Inc. Institutional
Government Income Portfolio Litigation. These actions are at various stages
of development.
Idaho Association of Realtors(R), Inc., a non-Profit Idaho corporation v.
Piper Funds, Inc. Institutional Government Income Portfolio; Piper Capital
Management Incorporated; Piper Jaffray, Inc.; Piper Jaffray Companies Inc.;
William H. Ellis and Edward J. Kohler (United States District Court,
District of Minnesota).
Action commenced on November 1, 1994. This lawsuit has been consolidated
with the PJIGX action and transferred to the District of Minnesota for
pretrial proceedings pursuant to an order of the Panel on Multidistrict
Litigation. Plaintiff seeks rescission or damages, plus prejudgment
interest, and attorneys' fees and costs. The Complaint does not specify an
amount of damages sought.
Gary Pashel and Gregg S. Hayutin, Trustees of the Mae Pashel Trust; Mae
Pashel, individually; Gary Pashel and Michael H. Feinstein, Trustees of the
Robert Hayutin Insurance Trust; Dennis E. Hayutin, Gregg S. Hayutin and Gary
Pashel, Trustees of the Marie Ellen Hayutin Trust v. Piper Funds, Inc.,
Piper Capital Management Incorporated, Piper Jaffray Inc. and Piper Jaffray
Companies, Inc. (United States District Court, District of Colorado).
Action commenced on September 30, 1994. This lawsuit has been consolidated
with the PJIGX action and transferred to the District of Minnesota for
pretrial proceedings pursuant to an order of the Panel on Multidistrict
Litigation. Plaintiffs seek rescission of their alleged investment of
approximately $840,141.28 or monetary damages, plus interest, and attorneys'
fees and costs.
Eltrax Systems, Inc. v. Piper Funds Inc. Institutional Government Income
Portfolio, Piper Capital Management Incorporated, Piper Jaffray Inc., Piper
Jaffray Companies Inc., William H. Ellis and Edward J. Kohler (United States
District Court, District of Minnesota).
Action commenced on October 21, 1994. Discovery in this matter is stayed
pending final approval of the proposed settlement agreement in the
consolidated class action. Plaintiff seeks approximately $525,000 in
damages, plus prejudgment interest, and attorneys' fees and costs.
Frank R. Berman, Trustee of Frank R. Berman Professional CP Pension Plan
Trust v. Piper Jaffray Inc., Piper Fund, Inc., Morton Silverman and Worth
Bruntjen (Minnesota State District Court, Hennepin County).
Action commenced on April 11, 1995. Plaintiff appears to fall within the
definition of the conditionally certified class in the PJIGX action. The
parties have stipulated to a stay of this action pending notice to class
members of the settlement in the PJIGX action, and the opportunity of those
class members to opt-out of the settlement. Plaintiff seeks monetary
damages, plus interest, and attorneys' fees and costs. The Complaint does
not specify an amount of damages sought.
Beverly Muth vs. Piper Jaffray Inc. and Teresa L. Darnielle, (Montana
Thirteenth Judicial District Court, Yellowstone County).
Action commenced on June 22, 1995. Plaintiff appears to fall within the
definition of the conditionally certified class in the PJIGX action.
Plaintiff seeks monetary damages of over $12,000, a sum to be determined at
trial for extreme emotional distress and an award of punitive damages.
c. Arbitrations Brought by Investors in Institutional Government Income
Portfolio.
The following actions which are based on claims similar to those asserted
in the PJIGX action were commenced in arbitration by individual investors
in the Institutional Government Income Portfolio; these arbitrations appear
to be subject to the Court's stay order issued in In Re: Piper Funds, Inc.
Institutional Government Income Portfolio Litigation.
Fredrikson & Byron, P.A., Bertin A. Bisbee, William J. Brody, John P. Byron,
and Richard R. Hansen, as Trustees of the Fredrikson & Byron, P.A. Money
Purchase Pension Plan, Fredrikson & Byron, P.A. Money Purchase Pension
Trust, Fredrikson & Byron, P.A. Profit Sharing Plan and Fredrikson & Byron,
P.A. Profit Sharing Trust v. Piper Jaffray Incorporated, Piper Capital
Management Incorporated, Worth Bruntjen, and John Gibas (National
Association of Securities Dealers Arbitration).
Claim filed November 11, 1994. Claimants seek to recover in excess of $1
million.
Public Water Supply District No. 5 v. Piper Jaffray, Inc., Robert Williams,
Branch Manager, and Charles Greenway, Assistant Vice President Investments
(National Association of Security Dealers Arbitration).
Claim filed August 30, 1994. Claimant seeks to recover $12,263.37.
Edward Sterbenz, Stephany K. Sterbenz, Janice M. Spiegel and Linda Spiegel
Zielinski v. Piper Jaffray Inc. and Rick Kneiser, Account Executive
(National Association of Securities Dealers Arbitration).
Claim filed November 21, 1994. Claimants seek to recover $7,407.85.
Roger W. Arvold and Maxine E. Arvold v. Piper Jaffray, Inc. (National
Association of Securities Dealers Arbitration).
Claim filed December 30, 1994. Claimants seek to recover approximately
$30,000.
William T. Egan v. Piper Jaffray Inc., Piper Capital Management
Incorporated, and Piper Funds Inc. (National Association of Securities
Dealers Arbitration).
Claim filed December 29, 1994. Claimant seek to recover approximately
$59,000.
Park Nicollet Medical Foundation v. Piper Jaffray Inc. and Piper Capital
Management Incorporated (National Association of Securities Dealers
Arbitration).
Claim filed January 9, 1995. Claimant seek to recover $4,542,904.40.
Linda A. Ramirez cust. fbo Christina M. Ramirez and Daniel L. Ramirez, Joree
I. Ramirez and Linda A. Ramirez, JT Ten v. Daniel H. Ball and Piper Jaffray
Inc. (National Association of Securities Dealers Arbitration).
Claim filed in November, 1994. Claimants seek to recover approximately
$10,000.
Family Housing Fund of Minneapolis and St. Paul v. Piper Jaffray Inc., Piper
Capital Management Incorporated, Piper Jaffray Investment Trust Inc., Worth
Bruntjen, Kathleen Callahan, and Eric L. Siedband (National Association of
Securities Dealers Arbitration).
Claim filed January 31, 1995. Claimant seek to recover $1,394,715.
David S. Bradford, M.D. v. Piper Capital Management, Inc., Piper Jaffray
Inc., and Piper Jaffray Companies, Inc. (National Association of Securities
Dealers Arbitration).
Claim filed February 22, 1995. Claimant seeks to recover approximately
$400,000.
Judith B. Arterburn v. Piper Jaffray Inc. and Kirk A. Abrahamson (National
Association of Securities Dealers Arbitration).
Claim filed February 13, 1995. Claimant seeks to recover approximately
$21,000.
Herb Pilhofer v. Piper Jaffray Inc. (National Association of Securities
Dealers Arbitration).
Claim filed January 30, 1995. Claimant seeks to recover $37,663.37.
South Dakota School of Mines and Technology Foundation, Inc. v. Piper
Jaffray Inc., Piper Jaffray Companies, Inc., Piper Capital Management
Incorporated, Addison L. Piper, William H. Ellis, Dan L. Lastavich, Delos V.
Steenson, Worth Bruntjen, Jaye F. Dyer, Edward J. Kohler, John T. Golle, and
David T. Bennett (New York Stock Exchange Arbitration).
Claim filed January 4, 1995. Claimant seeks to recover approximately
$17,500,000.
Joseph H. Reynebeau v. Piper Jaffray Inc. and Gerard Johnson (National
Association of Securities Dealers Arbitration).
Claim filed April 18, 1995. Claimant seeks to recover $9,999.99.
City of Mound v. Piper Funds Inc. Institutional Government Income Portfolio,
Piper Capital Management Incorporated, Piper Jaffray, Inc., Piper Jaffray
Companies, Inc. and Bennett E. Marks (New York Stock Exchange Arbitration).
Claim filed May 31, 1995. Claimant seeks to recover in excess of $800,000.
Eric Wade Compton Russell v. Piper Funds Inc. Institutional Government
Income Portfolio, Piper Capital Management Incorporated, Piper Jaffray,
Inc., Piper Jaffray Companies, Inc. and Edwin Johnson (New York Stock
Exchange Arbitration).
Claim filed June 13, 1995. Claimant seeks to recover in excess of $37,500.
2. Adjustable Rate Term Trusts
a. Herman D. Gordon, Robert D. Moore, I.R.A., Frank Donio, I.R.A., Jane
Mazzagatte, I.R.A., Myra W. Smith, John M. Gobble, I.R.A., Morgan
Properties, Inc., Gerald D. Cashill, Richard Harbison, P. Joan Spengler,
I.R.A., James O. Chambers, and Mary A. Snively, on Behalf of Themselves and
All Others Similarly Situated v. American Adjustable Rate Term Trust, Inc.
1996, American Adjustable Rate Term Trust, Inc. 1997, American Adjustable
Rate Term Trust 1998; American Adjustable Rate Trust 1999; Piper Jaffray
Companies, Inc.; Piper Capital Management Inc., Piper Jaffray Inc.; Benjamin
Rinkey; Jeffrey Griffin; Charles N. Hayssen, Edward J. Kohler; and William
H. Ellis (United States District Court, District of Minnesota).
Frank Donio, I.R.A., Jane Mazzagatte, I.R.A., Myra Smith, John M. Gobble,
I.R.A., and Morgan Properties, Inc., on Behalf of Themselves and All Others
Similarly Situated v. American Adjustable Rate Term Trust Inc. 1996;
American Adjustable Rate Term Trust Inc. 1997; American Adjustable Rate Term
Trust Inc. 1998; American Adjustable Rate Term Trust Inc. 1999; Piper
Jaffray Companies, Inc.; Piper Capital Management Inc.; Piper Jaffray Inc.;
Benjamin Rinkey; Jeffrey Griffin; Charles N. Hayssen, Edward J. Kohler and
William H. Ellis (United States District Court, District of Minnesota).
Plaintiff Gordon, an investor in the American Adjustable Rate Term Trusts
Inc. 1998 and 1999, filed a putative class action lawsuit on October 20,
1994. Plaintiffs Donio, et al., investors in the American Adjustable Rate
Term Trusts Inc. 1996, 1997, 1998 and 1999 ("Trusts"), filed a putative
class action lawsuit on April 14, 1995. Plaintiffs in both actions filed a
Consolidated Amended Class Action Complaint on May 23, 1995. The court has
not formally consolidated the two putative class actions. Plaintiffs purport
to represent a class of persons who purchased shares in the 1996 and 1997
Trusts during the period from April 15, 1992, through October 31, 1994, and
in the 1998 and 1999 Trusts during the period from January 23, 1992, through
October 31, 1994.
Plaintiffs allege violation of Sections 11, 12 (2) and 15 of the Securities
Act; violation of Sections 10(b) and 20(a) of the Securities Exchange Act,
and Rule 10b-5 promulgated thereunder; violation of Sections 17(j), 34(b),
36(a) and 36(b) of the Investment Company Act; violation of Section 80A.01
of the Minnesota Statutes; negligent misrepresentation and breach of
fiduciary duty. Plaintiffs seek rescission or damages, plus interest, and
attorneys' fees and costs. The Complaint does not specify an amount of
damages sought.
Although the plaintiffs in this action allege that it has been brought as a
class action, the Court has not yet determined whether a class will be
certified. Although the defendants have not yet filed a formal answer, the
defendants deny liability.
b. Arbitration Claims Brought by Investors in Adjustable Rate Term Trusts
The Company is a party to the following arbitrations which are based on
claims similar to those asserted in Gordon, et al. v. American Adjustable
Rate Term Trust 1996, et al.
Charles P. Belgarde and May E. Belgarde v. American Adjustable Rate Term
Trust, Inc. - 1998; Piper Capital Management Incorporated; Piper Jaffray,
Inc.; and Piper Jaffray Companies, Inc. (National Association of Securities
Dealers Arbitration).
Claim filed November 28, 1994. Claimants seek to recover approximately
$222,000.
William J. Kenney v. John P. Murphy, Piper Capital Management Inc., and
Kemper Securities, Inc. (National Association of Securities Dealers
Arbitration).
Claim filed February 24, 1995. Claimant seeks to recover approximately
$97,500.
Daniel J. Epstein and Continental America Properties, Ltd. v. Dickinson &
Company, Inc., Richard C. Barrett, Jr., Advest Company, Inc., Piper Jaffray
Inc., and Piper Capital Management Incorporated (National Association of
Securities Dealers Arbitration)
Claim filed June 21, 1995. Claimant seeks to recover in excess of $30,000 in
damages and in excess of $1 million in punitive damages.
Richard C. Mollin, Trustee, and Richard C. Mollin v. Piper Jaffray Inc. and
Philip H. Strom (National Association of Securities Dealers Arbitration)
Claim filed May 5, 1995. Claimants seek to recover $42,656.13.
Robert Albright v. Piper Jaffray, Inc. (National Association of Securities
Dealers Arbitration).
Claim filed May 8, 1995. Claimant seeks $68,000 in compensatory damages and
$182,000 in punitive damages.
Mia Stoick v. Piper Jaffray, Inc., Piper Jaffray Co., Inc., and David J.
Lehrer (National Association of Securities Dealers Arbitration).
Claim filed July 28, 1995. Claimant seeks to recover lost profits in an
amount to be determined and rescission of certain transactions.
Satish C. & Roopa Bansal v. Gregory Schaff & Piper Jaffray, Inc. (National
Association of Securities Dealers Arbitration).
Claim filed July 17, 1995. Claimants seek to recover $57,168.
3. American Strategic Income Portfolio
Gary E. Nelson v. American Strategic Income Portfolio Inc. II, Piper Jaffray
Companies Inc., Piper Capital Management Incorporated, Piper Jaffray Inc.,
Worth Bruntjen, Charles Hayssen, Michael Jansen, William Ellis and Edward
Kohler (United States District Court, Western District of Washington).
Plaintiff, an investor in the American Strategic Income Portfolio Inc. II
("American Strategic Portfolio"), filed this putative class action lawsuit
on June 28, 1995. Plaintiff purports to represent a class of persons who
purchased shares of American Strategic Portfolio during the period from July
30, 1992, through October 3, 1994.
Plaintiff alleges violation of Sections 11, 12(2) and 15 of the Securities
Act; violation of Section 10(b) and 20(a) of the Securities Exchange Act,
and Rule 10b-5 promulgated thereunder; violation of Sections 17(j), 34(b),
36(a), and 36(b) of the Investment Company Act; violation of the Washington
State Securities Act and the Washington Consumer Protection Act; negligent
misrepresentation and breach of fiduciary duty. Plaintiff seeks treble
compensatory damages, prejudgment interest, and attorneys' fees. The
Complaint does not specify an amount of damages sought.
Although the plaintiff in this action alleges that it has been brought as a
class action, the Court has not yet determined whether a class will be
certified. Although the defendants have not yet filed a formal answer, the
defendants deny liability.
4. American Opportunity Income Fund
a. Gary E. Nelson v. American Opportunity Income Fund, Inc., Piper Jaffray
Companies, Inc., Piper Capital Management Incorporated, Piper Jaffray Inc.,
Worth Bruntjen, Charles Hayssen, Michael Jansen, William H. Ellis, and
Edward J. Kohler (United States District Court, Western District of
Washington)
Plaintiff, an investor in the American Opportunity Income Fund, Inc.
("American Opportunity Fund"), filed this putative class action lawsuit on
July 12, 1995. Plaintiff purports to represent a class of persons who
purchased shares of American Opportunity Fund during the period from
September 25, 1989, through January 11, 1995.
Plaintiff alleges that all defendants except the American Opportunity Fund
violated the Racketeer Influenced and Corrupt Organizations Act, Sections
1962(a), (b), (c) and (d) by allegedly committing predicate acts of (1) mail
fraud in violation of 18 U.S.C. 'S1341; (2) wire fraud, in violation of 18
U.S.C. 'S1343, (3) interstate transportation of money or property obtained
through theft or fraud in violation of 18 U.S.C. 'S2314, and (4) securities
fraud, in violation of Sections 11 and 12(2) of the Securities Act, Section
10(b) of the Securities Exchange Act and Rule 10b-5 promulgated thereunder,
and Sections 13(a)(3), 17(j), and 36(a) and (b) of the Investment Company
Act. Plaintiff further alleges that all defendants violated the Washington
State Securities Act and the Washington Consumer Protection Act, negligent
misrepresentation and breach of fiduciary duty. Plaintiff seeks treble
compensatory damages, prejudgment interest, and attorneys' fees. The
Complaint does not specify an amount of damages sought.
Although the plaintiff in this action alleges that it has been brought as a
class action, the Court has not yet determined whether a class will be
certified. Although the defendants have not yet filed a formal answer, the
defendants deny liability.
b. Arbitration Claim Brought by Investor in American Opportunity Income Fund
The following arbitration seeks recovery by an investor in the American
Opportunity Income Fund.
Penny DiRocco v. Piper Jaffray, Inc. (National Association of Securities
Dealers Arbitration).
Claim filed March 27, 1995. Claimant seeks damages in excess of $500,000.
5. Managers Intermediate Mortgage Fund
a. Florence R. Hosea, Bobby W. Hosea, Getrud B. Dale and Peter M. Dale,
Andrew Poffel and Diane Poffel as tenants by the Entireties, Myrone Barone,
Donna M. DiPalo, Bernard B. Geltner as IRA custodian, IRA and Bernard B.
Geltner and Gail Geltner and Paul Delman v. The Managers Funds, The Managers
Funds, L.P., Robert P. Watson, Piper Capital Management Incorporated, Piper
Jaffray Inc., Worth Bruntjen and Managers Intermediate Mortgage Fund (United
States District Court, District of Connecticut).
Karen E. Kopelman v. The Managers Fund, The Managers Funds, L.P., Robert P.
Watson, Piper Capital Management Incorporated, Piper Jaffray Inc., Worth
Bruntjen and Managers Intermediate Mortgage Fund (United States District
Court, District of Connecticut).
By court order dated December 13, 1994, these two putative class action
lawsuits were consolidated. The plaintiffs purport to represent a class of
persons who purchased shares in the Managers Intermediate Mortgage Fund
("Managers Intermediate") during the period from May 1, 1992, through June
14, 1994. Managers Intermediate is a no-load, open-end mutual fund that was
generally managed by The Managers Funds, L.P. During the class period, Piper
Capital Management Incorporated was the portfolio asset manager.
In their Amended and Restated Complaint, filed on July 19, 1995, plaintiffs
allege that defendants Piper Capital Management Incorporated, Piper Jaffray
Inc. and Worth Bruntjen (the "Piper Defendants") violated Sections 11, 12(2)
and 15 of the Securities Act; Section 10(b) of the Securities Exchange Act,
and Rule 10b-5 promulgated thereunder; Sections 13(a)(3), 34(b) and 36(b) of
the Investment Company Act; and engaged in negligent misrepresentation;
breach of fiduciary duty; and common law fraud. Plaintiffs seek rescission
or monetary damages, plus prejudgment interest, punitive damages "where
appropriate," and attorneys' fees and costs. The Complaints do not specify
an amount of damages sought.
Although the plaintiffs in this consolidated action allege that they have
been brought as class actions, the Court has not yet determined whether a
class will be certified. The defendants have filed a motion to dismiss the
consolidated action in its entirety.
b. Arbitration Claim Brought by Investor in Managers Intermediate Mortgage
Fund
The following arbitration claim which is based on claims similar to those
asserted in Florence R. Hosea et al v. The Managers Funds et al seeks
recovery for investment in the Managers Intermediate Mortgage Fund.
George P. Stacey v. The Managers Funds, The Managers Funds L.P., Piper
Jaffray, Inc. and Piper Capital Management Inc. (National Association of
Securities Dealers Arbitration).
Claim filed July 27, 1995. Claimant seeks to recover approximately $45,000
in actual damages and $50,000 in punitive damages.
6. Managers Short Government Income Fund
Robert Fleck, on behalf of himself and all others similarly situated v. The
Managers Funds, The Managers Funds, L.P., Piper Jaffray Inc., Piper Capital
Management Incorporated, Worth Bruntjen, Evaluation Associates, Inc., Robert
P. Watson, John E. Rosati, William M. Graulty, Madeline H. McWhinney, Steven
J. Paggioli, Thomas R. Schneeweis and Managers Short Government Fund, F/K/A
Managers Short Government Income Fund.
Plaintiff, a shareholder of the Managers Short Government Income Fund
("Managers Short"), filed this putative class action lawsuit on November 18,
1994. Plaintiff purports to represent a class of persons who purchased
shares of Managers Short during the period from May 1, 1993, through
September 12, 1994. Managers Short is a no-load, open-end mutual fund that
was generally managed by The Managers Funds, L.P. Piper Capital Management
Incorporated was the portfolio asset manager until August 12, 1994.
Plaintiff alleges that defendants Piper Jaffray Inc., Piper Capital
Management Incorporated and Worth Bruntjen (the "Piper Defendants") violated
Section 10(b) of the Securities Exchange Act, and Rule 10b-5 promulgated
thereunder; Section 13(a)(3) of the Investment Company Act; and engaged in
negligent misrepresentation. Plaintiff seeks rescission and monetary
damages, plus prejudgment interest, punitive damages if appropriate, and
attorneys' fees and costs. The Complaint does not specify an amount of
damages sought.
Although the plaintiff in this action alleges that it has been brought as a
class action, the Court has not yet determined whether a class will be
certified. On January 24, 1995, the Piper Defendants filed a motion to
dismiss the claims against them.
7. American Government Income Portfolio and the American Government Income
Fund
a. Carson H. Bradley v. American Government Income Fund, American Government
Income Portfolio, Piper Capital Management, Inc., Piper Jaffray, Inc. and
Worth Bruntjen (United States District Court, District of Idaho).
Plaintiff, an individual investor in the American Government Income
Portfolio and the American Government Income Fund, both closed-end funds
offered by the defendants, filed this action on February 22, 1995. Plaintiff
invested approximately $62,000 in the Funds, alleges a loss of approximately
$12,000, and seeks rescission of his investments in those funds or monetary
damages, based on negligent misrepresentation, breach of fiduciary duty,
and breach of contract. The action was filed in Idaho State Court, Bannock
County, but has now been removed to Federal District Court for the District
of Idaho. Defendants filed a motion to dismiss on May 1, 1995.
b. Arbitration Claim Brought by Investor in the American Government Income
Portfolio.
The following arbitration claim, which is based on claims simliar to those
asserted in Carson H. Bradley, et al v. American Government Income Fund
et al, seeks recovery for investment in the American Government Income
Portfolio.
Devorah Max Koster v. Piper Jaffray Inc. (New York Stock Exchange
Arbitration).
Claim filed April 18, 1995. Claimant seeks to recover $20,250.
8. American Strategic Income Portfolio III
The following arbitrations seek recovery for investments in American
Strategic Income Portfolio-III, another closed-end fund.
a. Daniel K. Nordby and Barbara L. Rawley v. Piper Jaffray Inc. and Gary M.
Petrucci (National Association of Securities Dealers Arbitration).
Claim filed in February, 1995. Claimants seek to recover approximately
$31,500.
b. Stanley E. Williams and Grayce E. Williams v. Piper Jaffray Inc.
(National Association of Securities Dealers Arbitration).
Claim filed December 28, 1994. Claimants seek to recover approximately
$21,200.
9. The Americas Income Trust
The following arbitration seeks recovery for investments in the Americas
Income Trust, another closed-end fund.
Norb Willging v. Piper Jaffray, Inc. (National Association of Securities
Dealers Arbitration).
Claim filed May 4, 1995. Claimant seek to recover approximately $15,513.75.
10. Privately Managed Accounts
a. Minnesota Orchestral Association v. Piper Capital Management Incorporated,
Piper Jaffray Inc. and Piper Jaffray Companies Inc. (National Association
of Securities Dealers Arbitration).
The claimant, a nonprofit organization, alleges that (i) Piper Capital
Management Incorporated ("Piper Capital") breached a September 14, 1993
investment management agreement with claimant by virtue of investments in
derivative securities; (ii) Piper Capital breached its fiduciary duties to
claimant by virtue of investment in "unsuitable derivative securities,
without [claimant's] knowledge or consent and contrary to [claimant's]
directions and expectations, and by failing to disclose such investment
strategy until after the portfolio had sustained huge losses . . ."; (iii)
Piper Capital misrepresented material facts to claimant and failed to
disclose to claimant that, in order to achieve higher returns than other
investment advisors on claimant's bond portfolio, Piper Capital had to
invest heavily in derivative securities; (iv) Piper Capital violated the
Minnesota Securities Act; (v) Piper Jaffray Inc. and Piper Jaffray Companies
Inc. are liable under the Minnesota securities laws as controlling persons
of Piper Capital; (vi) Piper Capital violated the Minnesota Consumer Fraud
Act; and (vii) Piper Capital violated the Investment Advisers Act. Claimant
alleges that it has incurred damages in the principal amount of at least
$5,513,077, and requests "an award of substantial damages . . . along with
an award of reasonable attorneys' fees, forum fees, costs and disbursement .
. ."
The claimant filed its Statement of Claim on September 26, 1994. The
defendants filed an answer on December 30, 1994, denying liability.
b. The Valspar Corporation and The Valspar Profit Sharing Retirement Plan v.
Piper Capital Management Incorporated, and Piper Jaffray Companies, Inc.
(National Association of Securities Dealers Arbitration).
Claim filed February 7, 1995. Claimant seeks to recover $3.6 million. Like
the Minnesota Orchestral Association, Valspar had individually managed
accounts which included investments in derivative products. Valspar's claims
are similar to those brought by the Minnesota Orchestral Association.
c. Rodney P. Burwell v. Piper Jaffray Inc., Piper Capital Management, Jeff
Griffin and Piper Jaffray Companies, Inc. (National Association of
Securities Dealers Arbitration).
Claim filed January 26, 1995. Claimant seeks to recover in excess of $2.5
million for losses sustained in a foreign index linked product purchased
through Piper.
d. Hunter, Keith Industries, Inc. v. Piper Capital Management Incorporated
and Piper Jaffray, Inc. (National Association of Securities Dealers
Arbitration).
Claim filed July 27, 1995. Claimant seeks to recover in excess of $500,000,
based on claims similar to those brought by the Minnesota Orchestral
Association. Like the Minnesota Orchestral Association, Hunter, Keith
Industries, Inc. had individually managed accounts which included
investments in derivative products.
B. Shareholder Litigation
Edward B. McDaid and Ronald Goldstein v. Piper Jaffray Companies Inc.,
Addison L. Piper, William H. Ellis and Charles N. Hayssen
This putative class action lawsuit consolidates separate lawsuits previously
filed by Edward McDaid and Ronald Goldstein. Plaintiffs purport to represent
a class of persons who purchased Piper Jaffray Companies Inc. ("PJCI")
common stock during the period from May 12, 1993, through August 24, 1994.
In their consolidated complaint filed January 9, 1995, plaintiffs allege
that PJCI and the individual defendants made misleading statements and
omissions which artificially inflated the market price of PJCI common stock
throughout the class period. Plaintiffs allege that the defendants violated
Sections 10(b) and 20(a) of the Securities Exchange Act, and Rule 10b-5
promulgated thereunder.
Although the plaintiffs in this action allege that it has been brought as a
class action, the Court has not yet determined whether a class will be
certified. Discovery in the consolidated action is proceeding.
C. Bonneville Pacific Corporation
Piper Jaffray Inc. ("Piper Jaffray") has been named as one of many
defendants in two lawsuits separately filed in the United States District
Court for the District of Utah resulting from Piper Jaffray's dealings with
Bonneville Pacific Corporation ("BPCO"). Other defendants include BPCO's
attorneys, accountants, lenders and other investment bankers. BPCO is
currently in Chapter 11 reorganization proceedings in Utah.
The plaintiffs in the first-filed lawsuit originally brought their complaint
as a purported class action relating to the $63.25 million offering of
convertible subordinated debentures of BPCO in August 1989, for which Piper
Jaffray was a co-managing underwriter in a syndicate led by Kidder, Peabody
& Co. and secondary trading in BPCO's Common Stock from August 1989 through
the inception of BPCO's bankruptcy proceeding in January 1992. The
plaintiffs in their complaint alleged violations of federal and state
securities laws, common law fraud and negligent misrepresentation. On March
14, 1994, the plaintiffs filed a motion to amend their complaint seeking
leave to add additional parties and claims. The proposed amended complaint
seeks to add claims under the Racketeer Influenced and Corrupt Organizations
Act ("RICO") and to expand the class period, under a common law fraud
theory, to include the $22.5 million initial public offering of BPCO's
Common Stock in August 1986, for which Piper Jaffray acted as the sole
underwriter, and the $31 million secondary offering of BPCO's Common Stock
in August 1987, for which Piper Jaffray acted as co-managing underwriter. In
addition to actual damages, the proposed amended complaint also seeks treble
damages under RICO, punitive damages, interest, costs and attorneys' fees.
On April 29, 1994, motions to dismiss brought by Piper Jaffray and the other
underwriter defendants with respect to the plaintiffs' claims of violations
of Section 10(b) of the Securities Exchange Act and Rule 10b-5 promulgated
thereunder, conspiracy, aiding and abetting, common-law fraud and negligent
misrepresentation were granted. The judge in the case certified to the Utah
Supreme Court issues related to the plaintiffs' claims under the Utah
Uniform Securities Act and further denied plaintiffs' March 14, 1994 motion
for leave to file an amended complaint as premature. The plaintiffs were
given leave to amend all dismissed claims except the conspiracy and aiding
and abetting claims under Section 10(b), which were dismissed with
prejudice. By date of June 14, 1994, plaintiffs served a second amended
complaint, realleging claims under Sections 11 and 15 of the Securities Act
and Section 10 of the Securities Exchange Act and Rule 10b-5 promulgated
thereunder. Plaintiffs also asserted RICO claims and claims under the Utah
Uniform Securities Act, among others. On August 2, 1994, Piper Jaffray and
the other defendants moved to dismiss the RICO, Securities Exchange Act and
Utah Uniform Securities Act claims and that motion is pending.
The second lawsuit was brought by the BPCO bankruptcy trustee. The most
recent amendment to the complaint filed on February 3, 1995 asserts
conspiracy, RICO, common law fraud, breach of fiduciary duty and similar
theories arising out of the activities of BPCO from approximately 1984
through the inception of its bankruptcy proceeding. The plaintiff seeks
actual damages, treble damages under RICO, punitive damages, interest, costs
and attorneys' fees. On October 7, 1994, the plaintiff served its
preliminary damage calculations indicating that it sought $647,346,549 in
damages (before trebling under RICO) from the Company. The plaintiff seeks a
similar amount from the other defendant underwriters and BPCO's accountants,
attorneys, lenders and others. Piper Jaffray and other defendants have made
motions to dismiss the complaint or for a judgment on the pleadings which
are currently pending and the case is in the discovery stage.
D. Other Litigation
The Company is involved in various other lawsuits or arbitrations or
threatened lawsuits or arbitrations incidental to its securities business.
Management of the Company, after consultation with counsel, believes the
resolution of these various lawsuits, arbitrations and claims will have no
material adverse effect on its consolidated financial statements.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11 - Statement Regarding Computation of Per Share Earnings
27 - Financial Data Schedules (filed electronically)
(b) Reports on Form 8-K
On July 20, 1995, the Company filed a report on Form 8-K relating
to the execution of a settlement agreement for the PJIGX
litigation.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PIPER JAFFRAY COMPANIES INC.
(Registrant)
Dated August 14, 1995 /s/ Deborah K. Roesler
--------------------------------------
DEBORAH K. ROESLER
Chief Financial Officer and
Managing Director
Dated August 14, 1995 /s/ William H. Ellis
--------------------------------------
WILLIAM H. ELLIS
President and Chief Operating Officer
PIPER JAFFRAY COMPANIES INC.
INDEX OF EXHIBITS TO QUARTERLY REPORT ON FORM 10Q
Exhibit Description of Exhibit Form of Filing
11 Statement Regarding Computation of Per Share Earnings Electronic
transmission
27 Financial Data Schedule Electronic
transmission
Exhibit 11
PIPER JAFFRAY COMPANIES INC.
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended Nine Months Ended
June 30 June 30
1995 1994 1995 1994
PRIMARY NET INCOME (LOSS)
PER SHARE:
Net income (loss) $ 13,095 $ 4,842 $(19,529) $21,714
--------- -------- --------- --------
Average number of common
and common equivalent
shares outstanding:
Average common shares
outstanding 17,425 17,396 17,239 17,498
Dilutive effect of CSE's:
Book value plan options 212 277 -- 330
Executive incentive
stock options 301 141 -- 226
--------- -------- --------- --------
17,938 17,814 17,239 18,054
--------- -------- --------- --------
Primary net income (loss)
per share $ .73 $ .27 $ (1.13) $ 1.20
========= ======== ========= ========
NET INCOME (LOSS) PER SHARE
ASSUMING FULL DILUTION:
Net income (loss) $ 13,095 $ 4,842 $(19,529) $21,714
--------- -------- --------- --------
Average number of common
and common equivalent
shares outstanding:
Average common shares
outstanding 17,425 17,396 17,239 17,498
Dilutive effect of CSE's:
Book value plan options 224 277 -- 330
Executive incentive
stock options 371 141 -- 226
--------- -------- --------- --------
18,020 17,814 17,239 18,054
--------- -------- --------- --------
Fully diluted net income
(loss) per share $ .73 $ .27 $ (1.13) $ 1.20
========= ======== ========= ========
<TABLE> <S> <C>
<ARTICLE> BD
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF PIPER JAFFRAY COMPANIES INC. AS OF
AND FOR THE PERIODS ENDED JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 30,215
<RECEIVABLES> 445,110
<SECURITIES-RESALE> 0
<SECURITIES-BORROWED> 0
<INSTRUMENTS-OWNED> 166,945
<PP&E> 26,697
<TOTAL-ASSETS> 776,867
<SHORT-TERM> 136,426
<PAYABLES> 420,075
<REPOS-SOLD> 0
<SECURITIES-LOANED> 0
<INSTRUMENTS-SOLD> 13,948
<LONG-TERM> 54,399
<COMMON> 17,569
0
0
<OTHER-SE> 133,303
<TOTAL-LIABILITY-AND-EQUITY> 776,867
<TRADING-REVENUE> 88,194
<INTEREST-DIVIDENDS> 24,984
<COMMISSIONS> 103,666
<INVESTMENT-BANKING-REVENUES> 36,348
<FEE-REVENUE> 46,320
<INTEREST-EXPENSE> 8,821
<COMPENSATION> 181,441
<INCOME-PRETAX> (31,523)
<INCOME-PRE-EXTRAORDINARY> (31,523)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (19,529)
<EPS-PRIMARY> (1.13)
<EPS-DILUTED> (1.13)
</TABLE>
