Welcome to the Piper Jaffray Companies’ conference call to discuss the financial results for the fourth quarter and full year of 2008. During the question and answer session securities industry professionals may ask questions of management. The company has asked that I remind you that statements on this call that are not historical or current facts including statements about beliefs and expectations are forward-looking statements that involve inherent risk and uncertainties. Factors that could cause actual results to differ materially from those anticipated are identified in the company’s reports on file with the SEC which are also available on the company’s website at www.PiperJaffray.com and on the SEC website at www.SEC.gov. Now, I’d like to turn the call over to Mr. Andrew Duff.

I believe we all recognize that during 2008 the capital markets industry faced a historically challenging operating environment. During the fourth quarter economic and financial market conditions deteriorated affecting nearly all of our businesses. We took actions to reduce our operating cost structure and to manage and mitigate risk exposures. Our actions were not able to overcome the severe market conditions and our operating results suffered. We have two top priorities for our firm as we look ahead, first to appropriately adjust our cost structure to enable us to operate through the near term difficult period and secondly, to make sure that we are well positioned when the markets eventually turn positive. In terms of the first priority, we took actions throughout the year to respond to the market conditions. We took additional measures in the fourth quarter as operating conditions further deteriorated. Let me review these actions with you. We reduced net headcount year-over-year by 13%, including significant senior hires during the year. In the fourth quarter we reduced headcount by an additional 8% from September 30th level but we have preserved senior client facing talent. We ended 2008 with 1,045 employees. As a result of the difficult fourth quarter, we reduced incentive compensation which was down significantly year-over-year. Accordingly, at my recommendation, our senior leadership team including me will not receive bonuses for 2008. For 2009 the vast majority of our incentive compensation will be variable. Most of our guarantees matured at the end of 2008 and are behind us. Going forward, our compensation will continue to be performance based but with firm results given first priority. In addition, 2009 expense will be reduced as a result of the revised accounting treatment for stock-base compensation which Deb will review with you in a moment. The lower expense will…

In the fourth quarter industry wide market conditions eroded further significantly reducing activity in equity financing, mergers and acquisitions and public finance. For example, during the fourth quarter of 2008 only one IPO was completed in the US ending the year with the lowest level of IPOs since the 1970s. In addition, compared to the third quarter of 2008 the number of completed merger and acquisition transactions declined by nearly 30% and the par value of total public finance underwriting declined by 23%. Furthermore, pricing in the aircraft [inaudible] securities market, further eroded and our hedges on the remaining TOB portfolio were negatively impacted by historic market aberrations. Against this difficult backdrop and due to a goodwill impairment we reported a net loss from continuing operations of $153 million or $9.76 per diluted share. These results compared to net income from continuing operations from $6.5 million or $0.37 per diluted share in the fourth quarter of last year. Net income from continuing operations in the third quarter of 2008 was a loss of $27.5 million or $1.75 per diluted share. Fourth quarter 2008 net revenue from continuing operations were $59.4 million compared to $147.9 million in the year ago period and $73.5 million in the third quarter of 2008. Comparative results for 2007 and 2008 in my comments have been restated as I’ll more fully describe in a minute. Equity financing advisory and public finance activity all declined significantly during the quarter. Equity sales and trading reported solid performance but client activity declined. Fixed income continued to erode and we recorded losses in structured products and in the TOB portfolio. However, municipal sales and trading, municipal proprietary trading and taxable sales and trading all performed well. Now, I’ll review the items that significantly contributed to our lower financial results. We…

(Operator Instructions) Your first question comes from Devin Ryan – Sandler O’Neill & Partners, LLP. Devin Ryan – Sandler O’Neill & Partners, LLP: Can you give us any additional detail in to what businesses or products the additional 8% reduction in headcount came from during the quarter?

It was really Devin spread out across all the businesses including support areas, the largest concentration being investment. Devin Ryan – Sandler O’Neill & Partners, LLP: Then just kind of a general question here, when the markets eventually do return to a kind of more normal environment, just given the platform that you have in place today, can you give us a sense of what you think is an attainable ROE or at least just some qualitative commentary around that?

I think one of the things to look at there is given the performance awards that we have in place for management which looks at a low teens number, it’s actually 11%. So, as things return to normal we would look at something more in the low teens. Devin Ryan – Sandler O’Neill & Partners, LLP: Then just lastly here, the $3.9 million in charges related to the travel and legal expenses for deals that weren’t completed, did any of this reverse if the deals do get completed or are those just charges that are gone?

In theory yes, if those transactions completed in a timely basis where we felt that the expenses were indeed related to that specific deal then you could do that but we anticipate it is highly likely that would not occur.

Your next question comes from Steve Stelmach – Friedman, Billings, Ramsey & Co. Steve Stelmach – Friedman, Billings, Ramsey & Co.: Just a few questions, one first on the comp expense, a clarification, is the $49 million that you recorded in the fourth quarter, is that a decent run rate all else being equal given the changes in the stock-based comp or does that not reflect those changes that you made?

I think actually fourth quarter is fairly typical of what you’d see at these revenue levels given our change in account treatment because fourth quarter 2008 really reflects more of the go forward accounting treatment where we will have the accrual of equity based on the revenues that are generated in that quarter and don’t have the amortization of historical grants any longer occurring in that period. Steve Stelmach – Friedman, Billings, Ramsey & Co.: So we shouldn’t expect a big delta lower because of the change in the comp expense going in to 1Q?

Right. I think it really comes back to Andrew’s comments around our goal of 2009 of the 60% comp ratio.

And that reflects about a four percentage drop that would have been there with the prior year’s amortization which is no longer there. Steve Stelmach – Friedman, Billings, Ramsey & Co.: Then turning to public finance, it seems to me that eventually there’s going to be a large backlog for municipal underwriting at some point give the sort of strained budgets of the state and local municipalities. One, is that something you would agree with? And secondly, what has to happen either legislatively or a guarantee perspective to sort of jump start the muni market again?

Really, where I’m headed is I think we need to develop a broader investor base that does not get the traditional tax exempt benefit. Some of the things we’re ready that Congress is considering is other ways to support those state and local governments with a credit so they can actually issue on a taxable basis which I believe would significantly expand the investor base. Steve Stelmach – Friedman, Billings, Ramsey & Co.: Any sort of time horizon on that? Are we talking quarters or is it years would you think?

I would expect, I can’t personally predict what is going to come in the stimulus package but I do believe these are components being discussed so it could be certainly in 2009. Steve Stelmach – Friedman, Billings, Ramsey & Co.: Then just lastly on the public financing Andrew, if guarantees are necessary on some of the underwritings, are you seeing a divergence between underwriters that have or are affiliated with banks versus underwriters who aren’t affiliated with banks in terms of their ability to underwrite?

Could you clarify what you mean by guarantees Steve? Steve Stelmach – Friedman, Billings, Ramsey & Co.: In terms of letters of credit.

Our experience has always been that as an advisor to a client we’re very able to go out in to the market place and identify potential letter of credit banks and get them the most attractive terms and conditions. We certainly have not experienced any disadvantage by not being owned by a commercial bank in that way. Steve Stelmach – Friedman, Billings, Ramsey & Co.: Then the last topic, Piper Jaffray Asia, can you give me any comments there on what is going on in the business and maybe give us an idea of where headcount stands versus where it was maybe a year ago?

I’ll start with the last first, we’ve had headcount reductions there as well that look like the rest of the company and in fact, that’s probably the best way to articulate it. A similar dynamic, sales and trading reasonably active, performed reasonably well. The capital raising is no different than here or in Europe, very, very limited ability to get capital raised on a public basis. Steve Stelmach – Friedman, Billings, Ramsey & Co.: So other than just general market conditions, that acquisition is sort of moving along as you would expect?

Yes. I would say too, I would reiterate that we are very competed to our global footprint. We think it’s very important to most of our clients and our investors.

Your next question comes from David Trone – Fox-Pitt Kelton. David Trone – Fox-Pitt Kelton: I don’t know if you mentioned it and I missed it but, what was the cash loss in the quarter?

We didn’t actually disclose an actual cash loss. The important thing to note is that the goodwill which was the largest piece of that loss was actually non-cash. David Trone – Fox-Pitt Kelton: So you had a balance of $38 million at the end of the third quarter and presumably I guess you’re not going to say either what the fourth quarter is now but can you at least mentioned if you took any steps to boost the cash?

I think really when you look at the way that we manage our balance sheet, we do borrow from the banks on a routine basis and from the repo markets to finance our inventory positions. Now, those positions have actually been coming down so from that standpoint it’s really not as if we’re trying to maintain a particular cash balance per say. We have adequate bank lines, we’ve actually increased that by one bank during the quarter and have previously announced we moved half of that to committed lines. So, we feel very good about that. David Trone – Fox-Pitt Kelton: So the US Bancorp is still $250?

Correct. I think overall from a general perspective, we did utilize – there was a negative cash of operations if you look at full year 2008. Now, as we look to go in to ’09 as Andrew made comments about, our view towards profitability in ’09, we don’t believe that will continue.

Your next question comes from Horst Hueniken – Thomas Weisel Partners. Horst Hueniken – Thomas Weisel Partners: I’d like to just delve in to the accounting change just so I better understand it, you’ve disclosed that the accounting change had an impact of $0.28 for the nine month period ended September 30th which is equal to $0.093 per quarter. I’m wondering whether that is firstly sort of linear over the nine month period and whether we could infer that had you not made the change in accounting, your loss would have been $0.093 less in the first quarter. Am I understanding that correct?

I haven’t looked at it specifically from that perspective. I think what you’re saying generally though is accurate from the standpoint that in 2008 you ultimately saw a benefit in the nine month restatement because we were taking previous year’s amortization expense which was coming through pushing that back to 2006 and 2007. So, I think from that perspective if you look at generally in concept what you’re talking about I think that is accurate. Horst Hueniken – Thomas Weisel Partners: You also mentioned that you’re no longer meeting the criteria of FAS 123R, recognizing that there were a number of criteria and that it is all complex, I guess I’m just trying to get my head around is it that you expect the employees to behave differently in this environment and therefore you’re not meeting the criteria anymore or am I little bit off the mark here?

I think the historic changes to the industry during the fourth quarter did cause us to analyze all of our facts and circumstances relative to whether or not our post termination provisions actually did meet the in substance service qualifications that are needed to amortize the expense under FAS 123R and what we learned during that analysis is really that we hadn’t ever met that from the standpoint that we learned that the SEC has stated that they don’t believe that non-compete provisions really qualify for in substance service conditions. We also just gained a better understanding how the complex criteria, as you mentioned, it does get complex, how that criteria is actually interpreted in practice since 123R came out at the beginning of January ’06. So, it wasn’t so much – Horst Hueniken – Thomas Weisel Partners: So it seems like it is a combination of experience plus the environment forced you just to take a harder look at whether you were in compliance or not which led to your conclusion?

That is absolutely correct.

Your next question comes from Lauren Smith – Keefe, Bruyette & Woods. Lauren Smith – Keefe, Bruyette & Woods: A couple of questions, I guess first off with respect to compensation and going forward, I guess there’s really been a psychological shift where focus on firm results first and then allocate and then focus on the various business or product areas. I guess the question really is what kind of hurdles can you give us a sense for are you kind of gauging? Can you give me maybe a little more framework around that if you can?

Sure. Well, if you look historically, as you may recall we’ve been right in this area, I think we were 58.5 for the prior couple of years. It’s a mix of product areas and traditional payouts and what we’re trying to articulate is we’re going to think of that first as firm results, secondly in those areas and the comp ratio that we’re inferring here now of 60% is really the driver. If you start there as opposed to end up there, if you follow me, I think you get a different result. Lauren Smith – Keefe, Bruyette & Woods: Then when you look at your breakeven revenue run rate now, you’ve lowered from mid $400s to mid $300s and we all certainly hope this environment gets better sooner not later but, as you continue to look at your business and manage it and deem whether further costs savings, headcount reductions or what have you might be necessary I mean how far out are you looking? Right now you might just want to be playing catch up but at what point, how far out will you look and then say, “Market environment doesn’t look like it’s getting better, maybe we need to retool again.”

I think Lauren for us it’s an ongoing basis and I think I would most directly give you a timeframe that it is quarter-by-quarter that we kind of access or current performance and say what, if anything, do we see as a trend line is change that and if it’s deteriorating we need to move quickly and if it’s improving consistent with our view in ’09 we’d proceed as we have. Lauren Smith – Keefe, Bruyette & Woods: A separate question, can you just comment again or give us with respect to the goodwill, did you say 52% of the capital markets goodwill, did I hear that right has been written down? Is that what you said?

That is correct. Lauren Smith – Keefe, Bruyette & Woods: So does that imply there is, if we were to remain, or God forbid things were to get worse in this lackluster kind of capital markets environment is it possible you could have another goodwill write down or charge?

I think it is something that we have to continually look at in terms of the goodwill valuation so I think that is possible if the markets continue to deteriorate. Lauren Smith – Keefe, Bruyette & Woods: Just one more, FAMCO, the AUM declined pretty meaningfully, can you give us a sense of what was flows versus market depreciation?

That was almost entirely market depreciation. Again, if you looked at it on a percentage basis, it pretty closely attracts the S&P 500 which is actually the benchmark for the bulk of their products and they really preformed right around their benchmark across the board. So, no real significant flows either direction in the quarter.

Your next question comes from Brian Hagler – Kennedy Capital. Brian Hagler – Kennedy Capital: I just had a couple of follow up questions on your aircraft ABS portfolio and your tender option bond portfolio. I believe you said the balance on the aircraft, the ABS is down to $15 million, is that correct?

Yes.

That is correct. Brian Hagler – Kennedy Capital: The tender option bond portfolio is what?

It’s a little under $30. Brian Hagler – Kennedy Capital: You talked about obviously the additional write down in the aircraft portfolios due to deterioration in that market so it sounds like both of these portfolios are mark-to-market quarterly?

Yes, that’s correct. Brian Hagler – Kennedy Capital: At what levels roughly do you have kind of these two portfolios written down to? For example, if the aircraft ABS down to, I don’t know, $0.30 on the dollar? Can you give us any sense of that?

What we actually look at there is because of the illiquidity in that market right now we look at really what investors would require for returns in similar types of products and so we have been continually increasing the level of that return we view is expected in that market place and marking them appropriately. Depending on the security and the risk associated, that varies. Brian Hagler – Kennedy Capital: Depending on what kind of package we may see from the government in the next week or so, could these potentially be assets that could be positively influenced by that if your company is deemed eligible to participate in that program?

Actually, we don’t anticipate tapping in to any of those programs. We haven’t to date nor would we expect to. I don’t believe we anticipate a significant impact either in the aircraft market or – well, it depends on the municipal markets and again, I would just highlight after when we brought it on the balance sheet we had sold roughly a third of it quite quickly and had said our intention was to wind it down in an orderly matter and exit the product completely, the TOB and we’re down to less than 10% of it so that is our intention.

There are no further questions at this time.

Thank you very much. While we expect the 2009 business environment to remain challenging, it is in these kinds of environments that firms can distinguish themselves. At Piper Jaffray we believe this environment presents a once in a generation opportunity to substantially advance our long term competitive position, market impact and contribution. Our opportunity is real and we are wholly committed to it. Thank you all for joining us this morning.

This concludes today’s conference call. Thank you for your participation. You may now disconnect.