UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 14, 1995
Piper Jaffray Companies Inc.
(Exact name of registrant as specified in its charter)
Commission File Number 1-7421
Delaware 41-1233380
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
222 South Ninth Street, Minneapolis, Minnesota 55402
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612)-342-6000
Exhibit Index located at page 4.
Item 5. Other Events.
On February 14, 1995, Piper Jaffray Companies Inc. (the "Company") reached a
tentative settlement with the plaintiffs in a consolidated putative class
action lawsuit in which claims brought by eleven persons or entities have been
consolidated under the title In Re: Piper Funds Inc. Institutional Government
Income Portfolio Litigation (the "Litigation"). The proposed settlement
provides for the payment by the Company of a maximum of $70 million, less
attorneys' fees, to plaintiffs in the Litigation with respect to losses related
to their investments in the Institutional Government Income Portfolio Fund (the
"Fund"), an open-end mutual fund managed by Piper Capital Management
Incorporated ("Piper Capital"), a wholly-owned subsidiary of the Company. The
actual amount of the Company's payment obligation under the proposed settlement
will depend upon the number of plaintiffs who elect to "opt-out" of the
settlement. The proposed settlement must be approved by shareholders in the
Fund holding shares which represent more than 90% of aggregate losses incurred
by all Fund shareholders during the period covered by the Litigation. The
proposed settlement must also be approved by the United States District Court
(the "Court").
The payments by the Company pursuant to the proposed settlement will be made in
three phases. The first payment, equal to two-sevenths of the total obligation
of the Company under the proposed settlement, will be paid in cash to
participating shareholders upon final approval of the settlement by Fund
shareholders and the Court. The remaining five-sevenths of the Company's
payment obligation will be made pursuant to two promissory notes for which the
Company and Piper Capital are jointly and severally liable. The first note,
representing 46% of the total installment payments, will be payable to
participating plaintiffs in three equal annual installments and will bear
interest at 8% per annum. The second note, representing the remaining 54% of
the total installment payments, will be payable to participating plaintiffs
upon the Company's receipt of tax refunds anticipated as a result of the
payments by the Company pursuant to the proposed settlement and will bear
interest at 8% per annum.
The Company will record the settlement as a one-time charge against earnings.
As a result of the settlement, the Company's shareholders' equity will decrease
by approximately $4 3 million, or $2.52 per share. The settlement does not
reflect potential reimbursement by the Company's insurance carriers. The
resolution of these claims is currently being pursued by the Company.
The amount to be paid to each participating plaintiff will be calculated based
upon the dollar amount invested by the plaintiff in the Fund, including
reinvested dividends, during the Litigation period, plus interest through the
earlier of May 9 , 1994 or the date of redemption (using the rate of interest
payable on the Piper Jaffray Money Market Fund), less (1) the mount actually
received upon redemption of shares redeemed on or prior to May 9, 1994 or (2)
the amount which would have been received if the shares held after May 9, 1994
had been redeemed on May 9, 1994. The amount so calculated for an individual
plaintiff will be reduced to the extent of (1) any profit made by such
plaintiff on Fund shares purchased before the Litigation period and (2) the
value of dividends received by such plaintiff on Fund shares, whether received
in the form of cash or in the form of additional shares as a result of having
reinvested such dividends.
Item 7. Exhibits.
(c) 1. Press Release dated February 15, 1995.
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.
Date: February 17, 1995 By: /s/ Charles N. Hayssen
---------------------------
Charles N. Hayssen
Chief Financial Officer and
Managing Director
EXHIBIT INDEX
Exhibit No.
1. Press Release dated February 15, 1995 (filed electronically).
Exhibit 1
NEWS RELEASE
FOR IMMEDIATE RELEASE
CONTACT: Marie Uhrich
Public Relations
612/342-6583
Piper Jaffray Companies, Fund Shareholders Reach Settlement Agreement in PJIGX
Litigation
MINNEAPOLIS -- Feb. 15, 1995 -- Piper Jaffray Companies Inc. (NYSE: PJC) and
attorneys representing shareholders of the Company's Institutional Government
Income Portfolio (PJIGX) mutual fund today announced that they have reached a
$70 million agreement in principle to settle litigation brought on behalf of
PJIGX shareholders.
The agreement, which requires court approval and the acceptance of the
settlement by a large percentage of the approximately 7,000 fund shareholders,
will result in payment to fund shareholders by Piper Jaffray Companies of
approximately $70 million, less attorneys' fees. This compares to approximately
$118 million of alleged losses during the claimed class period of July 1, 1991,
through May 9, 1994, plus approximately $21 million in lost interest. Investors
who purchased shares during the class period are eligible to recover losses
regardless of whether they are current fund shareholders.
"We were prepared to go to trial with this case, however, the opportunity for
an early settlement that would remove us from a potentially long and costly
dispute with our clients surfaced as an option that met the needs of both PJIGX
fund shareholders and our company," said Addison L. Piper, chairman and chief
executive officer.
"While we do not guarantee investment results, we have said from the beginning
that we empathize with the investors in this fund. This has been an unfortunate
and painful experience for all of us. Settling early allows us to put this
dispute to rest and to give our full focus and attention to our clients, our
ongoing growth, and our goals as we begin our second century in business."
"We are pleased that we've achieved closure in a relatively swift manner that
addresses the financial interests of the investors in this fund," said Richard
A. Lockridge, of Schatz Paquin Lockridge Grindal & Holstein, an attorney
representing shareholders.
"The fund shareholders clearly benefit from this settlement and we believe they
will support it," added Vernon J. Vander Weide of Head, Seifert & Vander Weide,
co-counsel for shareholders.
Each shareholder's loss will be determined using the same formula, calculated
as follows:
- - Dollar amount invested during the class period (including reinvested
dividends and capital gains)
- - plus interest (to be paid at the variable rate paid by Piper Money Market
Fund - PJMXX) from the date of investment through the earlier of May 9,
1994, or the date of redemption
- - less the amount actually received upon redemption or the amount that would
have been received if shares had been redeemed on May 9, 1994, with the
following exceptions: (1) Profits made on shares purchased prior to July 1,
1991 (the beginning of the class period), will be deducted from settlement
proceeds, and (2) dividends and capital gains paid in cash or reinvested in
additional shares will be deducted from settlement proceeds.
All class members can expect to receive further information about the
settlement proposal via mail during the next 60-90 days.
The $70 million settlement will be paid in a combination of $20 million in cash
and $50 million in two notes payable from Piper Jaffray Companies and Piper
Capital Management Incorporated. The Company will record the settlement as a
one-time charge against earnings. The settlement payments do not reflect
potential reimbursement by Piper Jaffray Companies' insurance carriers. The
resolution of these claims is currently being pursued by the Company.
The first note will be payable upon receipt of the estimated $27 million in
federal and state income tax benefit the Company expects to receive from the
operating loss resulting from the settlement. The second note will be payable
in three equal installments over three years. Both notes will earn 8 percent
interest.
Settlement negotiations were facilitated by Brian Short who was appointed by
U.S. District Judge Magnuson to act as a special settlement master.
"After the settlement, our financial condition will remain sound and there will
be no effect on day-to-day operations," Piper said. "While this is a
substantial settlement, we have the existing financial strength along with
continued strong growth potential. Our future remains bright."
The Company's key financial measures remain well within accepted industry
standards and regulatory requirements. As of Dec. 31, 1994, Piper Jaffray
Companies' shareholders' equity was $170 million or $10.01 per share. As a
result of the settlement, Piper Jaffray Companies' shareholders' equity will
decrease by approximately $43 million or by $2.52 per share. Piper Jaffray
Companies currently has no long-term debt. After the settlement the Company's
debt-to-equity ratio will be 1:2.6.
The Institutional Government Income Portfolio is an open-end mutual fund
managed by Piper Capital Management, a subsidiary of Piper Jaffray Companies
Inc. As of Jan. 31, 1995, PJIGX had $376 million in net assets and a net asset
value per share of $7.50. The fund was closed to new investors on June 14,
1994. The fund, managed by Worth Bruntjen, pays a current monthly dividend of
$.085 per share and has paid 79 consecutive monthly dividends and capital gains
distributions totalling $6.53 since its inception in July 1988.
Founded in 1895, Piper Jaffray Companies is an investment firm headquartered in
Minneapolis. Through its main subsidiary, Piper Jaffray Inc., it operates 76
retail sales offices in 17 Midwest, Mountain, Southwest and Pacific Coast
states. Other subsidiaries include Piper Capital Management Incorporated, a
money management company, and Piper Trust Company, which provides trust
services to individuals and institutions.
