Good morning, ladies and gentlemen, and welcome to the Piper Jaffray Company's Conference Call to discuss the financial results for the Second Quarter of 2012. [Operator Instructions] The company has asked that I remind you, statements on this call that are not historical or current facts, including statements about beliefs and expectations and forward-looking statements that involve inherent risks and uncertainties. Factors that could cause actual results to differ materially from those anticipated are identified in the company's earnings release and reports on file with the SEC, which are available on the company's website at www.piperjaffray.com, and on the SEC website at www.sec.gov. As a reminder, this call is being recorded. And now, I'd like to turn the call over to Mr. Andrew Duff. Mr. Duff, you may begin your call.

Good morning, and thank you for joining us to review our second quarter results. This morning, I'll provide remarks in 3 areas: Our performance in the quarter, our decision to exit the Hong Kong market and our outlook. In the second quarter, Hong Kong Capital Markets results continued to lay on our overall performance as the business generated a $4 million pretax operating loss. I'll come back to our decision in a moment. Setting aside the impact from Hong Kong, our main businesses performed reasonably well against more difficult operating conditions. Total investment banking revenues held up well, led by very solid public finance revenues, which rose 57%, compared to the sequential first quarter. Given the low interest rate environment, public finance refinancing activity continued to represent a large percentage of the issuance during the quarter, both for us and the industry. We had several notable transactions during the quarter, including our California School short-term note program, which this year totaled just over $800 million; a $180 million sole-managed lease transaction for Owen [ph] University in New Jersey; a $104 million sole-managed bond issue for new senior living project in Minnesota; and a $300 million lead-managed general obligation issue for the city of Phoenix. Our public finance market share is 4.8%, up 100 basis points or 26% through the first 6 months of 2012, compared to the full-year of 2011. Also for the first half of 2012, we were ranked #10 nationally in par value of senior managed negotiated issues. Both metrics are evidence of our growing national franchise. Turning to Corporate Advisory, we were encouraged that we closed more transactions compared to the sequential first quarter, reflected in higher revenues. Our health care and TMT groups were more active in the quarter, and consumer also contributed. If you'll expect…

Thank you, Andrew. First, I'll provide comments on our results for the quarter and then provide additional financial detail around the Hong Kong business decision. In the second quarter of 2012, we generated net revenues of $106 million and net income of $6.9 million or $0.37 per diluted common share. Our pretax operating margin was 1.6%. There were 3 items that significantly impacted our result: first, we recorded a $7.1 million or $0.39 per diluted share tax benefit resulting from the resolution of a state income tax matter. Second, we recorded a restructuring charge of $2.2 million after-tax or $0.12 per diluted share. On a pretax basis, the restructuring charge was $3.6 million, below the $4 million to $5 million range we discussed in April. The charge included $2.4 million for severance, as we pared headcounts primarily in areas where we were not realizing revenues. The remainder of the charge was $1.2 million for occupancy, as we reviewed our space needs. We estimate that this component will have a payback period of less than one year, and that we'll reduce our future occupancy liabilities by approximately $10 million. We'll begin to realize the full benefits from these actions beginning in July. And third, our Hong Kong capital market business generated a net loss of $3.9 million, which reduced our EPS by $0.21. In the second quarter of 2012, compensation and benefits expenses were 62.5% of net revenues, compared to 60.4% and 62.2% in the second quarter of 2011 and first quarter of 2012, respectively. Non-compensation expenses were $38.3 million or $34.7 million, excluding the $3.6 million restructuring charge, compared to the $35.4 million in the year-ago period, and $31.8 million in the first quarter of 2012. As I stated earlier, the positive impact from the reduction in occupancy cost will…

That concludes our formal remarks. Operator, we will now open the line for questions.

[Operator Instructions] Our first question comes from the line of Joel Jeffrey with KBW.

Just quickly, I mean, thanks for all the disclosure in terms of what the charges were. We're just kind of struggling a little bit to get the kind of an operating EPS number. I mean, would you say based -- backing out all the after-tax impact that's sort of more in line with the $0.31 number, or is it more of -- or is the $0.37 number appropriate?

[indiscernible]

Yes, operator, are there additional questions?

And again, we do have Mr. Jeffrey on line.

I'm sorry, I didn't hear the answer. I apologize.

Oh, I'm sorry. Yes, the $0.31 is what we believe is appropriate from a continuing operations perspective.

And then, so thinking about the expense levels going forward, I mean, can you give us any sort of thoughts on sort of maybe a non-comp number we should be thinking about in the future quarters based on the absence of Asia and then some of the other things you've done?

Yes. So given, as you mentioned, those 2 items, the absence of Asia and the cost reduction issues that we've been working on, and so from a continuing operations perspective, we believe that non-comps in the range of $30 million to $31 million are appropriate.

Per quarter.

Per quarter, yes.

Okay, great. And then thinking about a very strong public finance quarter, I mean, is this kind of level sustainable going forward? Or is there something specific to this quarter in the market that just led to higher issuance levels?

It was a very strong quarter both for us and issuance. And I would think of the back half looking very much like the first half of the year for us.

Okay, great. And then just lastly, in terms of the share repurchase, I think you said you had reached your covenant level. So is there any way you can buy back additional shares or are you sort of maxed out for the remainder of the year?

For the remainder of this year, we are maxed out. Next year then, we have the ability to buy back shares to offset dilution again under our bank line of credit.

And your next question comes from the line of Devin Ryan with Sandler O'Neill.

Within the equity sales and trading business, were there any trading losses in that line? Or was the kind of softer quarter purely a function of just lower client volumes?

It was largely volumes. There was a small loss.

Okay. And in the Asset Management business, you guys highlighted some net cash outflows. What products were those in? And what was the driver of the outflows?

They were spread out across a number of the equity products, to some degree offset by our solo yield product which is MLPs, which had modest inflows. So it wasn't a very significant number in any given product. So the driver for the quarter was that market valuation.

Okay. And then just on the exiting of the Asia business. To the extent you ceased operations there, reimburses in actual sale, should we expect your further restructuring charges this quarter? Do you have any estimation of what those would be at this point?

Yes. So if we do shut down versus a sale, again the range from the net cash proceeds, we believe, is within that $13 million to $18 million range. And either of those situations, but from a restructuring perspective, specifically with a shut down, it would be somewhere in the range of $8 million to $10 million is what we anticipate, which is already contemplated in that net cash proceed range, that of the $13 million to $18 million.

Great. Helpful.

All of that then gets reported in discontinued operations starting in the third quarter.

[Operator Instructions] We do have a question from the line of Joel Jeffrey from KBW.

I just have one more follow-up question. On the cash benefit you talked about from exiting Asia, will that actually flow through the P&L? Or is that just a cash benefit?

So we would have a modest gain. The majority -- the cash -- the $13 million to $18 million cash benefit is larger than what will actually flow through the P&L, but we do anticipate recording a modest gain on either of those situations, whether it's a shutdown or a sale.

We have a question from the line of Michael Wong.

Michael Wong from Morningstar. Just a really quick question. What's your AUM breakout between equity-type funds and fixed income or yield-type funds?

The vast majority is equity. There's approximately a little over $3 billion in MLP. And then some modest additional fixed income assets. All-in for yield is probably something like $3.5 billion.

[Operator Instructions] There are no further questions in the queue at this time.

Thank you for joining us this morning. Operator, that concludes our call.

Thank you, ladies and gentlemen. This does conclude today's conference call. You may now disconnect.