Operator: Good morning, ladies and gentlemen, and welcome to the Piper Jaffray Companies’ conference call to discuss the financial results for the third quarter of 2011.
During the question-and-answer session, securities and 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 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. Now I would like to turn the call over to Mr. Andrew Duff. Mr. Duff, you may begin your call.
Andrew S. Duff - Chairman and CEO: Good morning and thank you for joining us to review our third quarter results. We faced an extremely tough operating environment during the third quarter. Increased volatility and uncertain macro issues weighed heavily on the Capital Markets. As a result, most of our businesses were negatively impacted. We were profitable in our U.S. entities. We were not profitable in Asia. Overall, we recorded a small pre-tax operating profit and a net loss for the quarter. Given the current challenging climate, we are closely managing expenses and took additional steps to reduce non-compensation costs, aggregating to approximately $7 million on a full year basis.
Let me comment on several of the key revenue drivers for the quarter. Capital raising activity was particularly weak in the third quarter. We completed just two IPOs. Within the U.S., no IPOs were completed in September. Business in Asia has been difficult throughout 2011.
During the third quarter, the environment became even more challenging. A hard reality is that the Asia IPO market is narrow at best for China-based companies raising capital on the U.S. or Hong Kong exchanges at this time. Without the ability to raise capital markets in these markets, our results will be negatively impacted.
The China market still represents a large growth opportunity and a natural fit with our middle market expertise. We have established an early lead in the market and have a credible brand. We will hold off an additional hiring and are evaluating ideas to lower costs and reduce losses to weather the downturn.
Public finance revenues declined in the quarter. Our par value of senior negotiated issuance remained essentially the same as the sequential second quarter. In general, however, we have lower spreads on the transactions that we completed. Conversely, we had several large higher spread transactions in the second quarter. We remain competitive in the market and continue to gain share. In the first nine months of 2011, our par value of negotiated issuance was down 8%, while the industry was down 40%. We are committed to growing our business.