DISCUSSION ON EQUITY CAPITAL MARKETS

Tuesday, December 12th ,

2006

Chris Christina Elissa Kluever

Principal Associate
(612) 303-8521 (612) 303-6378
Christie.L.Christina@pjc.com Elissa.M.Kluever@pjc.com
PIPER JAFFRAY MANAGEMENT COMMITTEE
Andrew Duff
Chairman & Chief Executive Officer

Tom Schnettler Todd Firebaugh

Vice Chairman & Chief Financial Officer Chief Administrative Officer

Jim Chosy Jon Salveson

General Counsel Head of Investment Banking

Frank Fairman Bob Peterson

Head of Public Finance Services Head of Equities

Capital Markets
Ben May
Head of High -Yield & Structured Products Institutional Sales & Sales
Trading
Trading

Research

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CORPORATE & INSTITUTIONAL SERVICES
Investment Banking and Equities Groups

Investment Banking
Existing Industries New Industries
 Consumer  Alternative Energy
 FIG  Business Services
 Health Care  Industrial Growth
 Technology

Equities
Capital Markets Distribution Research

Equity Capital Markets

Institutional Sales &
Investment Research
Sales Trading
Convertible
Originations (Equity
&
Corporate & Venture Fixed Income)
Trading
Services

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EQUITY CAPITAL MARKETS TEAM
Organization Chart
Chad Abraham Maura Stoltz Hasan

Head of Equity Capital Markets Executive Assistant

Origination Execution

John Baumgartner Steve Schmidt Chris Christina Neil Riley

Principal Vice President Principal Vice President
Consumer & FIG Technology Consumer & FIG Health Care &
Technology
John Crowther Elissa Kluever Greg Klancher

Associate Associate Associate

Jonathan Jewett

Analyst

PIPEs / RDs

David Stadinski Chris Christina

Managing Director Principal

Eric Helenek Chad Huber

Vice President Analyst

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EQUITY CAPITAL MARKETS
Type of Transactions Completed on the Equity Capital Markets (ECM)
Desk
Initial Public Offerings
Types of
transactions
• An initial public offering (IPO) is when a
completed
through the
private company sells its stock for the
Piper Jaffray
FIRST time in the public markets
Equity Capital • 146 IPOs have been completed in 2006,
Markets desk raising nearly $33 billion in capital
• Piper has completed 28 IPOs in 2006,
raising over $4 billion in capital
• The average number of IPOs completed
since 2000 has been 163, with a high of
373 completed in 2000 and a low of 70
completed in 2002

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EQUITY CAPITAL MARKETS
Type of Transactions Completed on the Equity Capital Markets (ECM)
Desk Follow-on Offerings
Types of
• A follow-on offering is when an already public company
transactions sells its stock, either primary shares or shares from
completed selling shareholders, in the public markets
through the • 457 follow-ons have been completed in 2006, raising
nearly $92 billion in capital
Piper Jaffray
• Piper has completed 43 follow-ons in 2006, raising over
Equity Capital
$7 billion in capital
Markets desk
• The average number of follow-ons completed since 2000
has been 416, with a high of 520 completed in 2004 and
a low of 346 completed in 2002
Additional Types of Offerings – (Follow-on Offerings)
• Underwritten Shelf Takedowns
• 144 Block Trades
• PIPEs (Private Investment in Public Equity)
• Registered Direct Offerings

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 BROAD DEPTH OF EQUITY OFFERING ALTERNATIVES

There is a Growing Continuum of Offering Alternatives for Equity Issuers…

Traditional Follow-on Registered Direct (RD) Underwritten Shelf Takedown Bought

Deal
Initial Public Offering (IPO) Private Investment in Public Equity (PIPE) Block Trade (Rule 144
Institutional)

$64,687,500 $97,232,500 $44,845,338 $57,960,000 $12,000,000

Initial Public Traditional Follow- Bought Deal Initial Public PIPE

Offering on Offering
June 14th , 2006 August 9th , 2006
May 6 , 2005
th
November 8 , th May 1 , 2000
st

2005

$54,740,000 $40,089,000 $17,710,000 $120,000,000 $16,615,932 $95,737,500

Initial Public Traditional Follow- Rule 144 Block Initial Public Rule 144 Block Bought Deal
Offering on Trade Offering Trades
June 15th , 2006
June 25 , 1999
th
May 25 , 2004
th
August 26 , 2004
th
January 28 ,th
August/Sept 2005
2005

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EQUITY CAPITAL MARKETS
Piper’s Involvement in Equity Capital Markets Offerings
Piper Roles
Piper functions
as a • Sole-Bookrunner: ECM desk functions as the lead
Bookrunner, Co- manager on the deal and is responsible for
Lead Manager
coordinating the roadshow, building indications of
interest, pricing the deal, allocating stock, billing &
and Co-
delivering the stock offered in the issue and
Manager
stabilization in the immediate aftermarket; receives
depending upon senior economic fees on the deal and furthest to the
the deal left on the cover
• Joint-Bookrunner: same responsibilities as sole-
bookrunner, but split with another manager
Deal economics
• Co-Lead Manager: no bookrunning responsibilities;
depend upon however, receives differentiated economics on the
the status and deal and a better position on the cover
maturity of the • Co-Manager: most junior participating management
issuer position with no bookrun responsibilities; offers
additional sponsorship
8 to issuer; receives junior
economics and far right position on cover
EQUITY CAPITAL MARKETS
Piper’s Involvement in Equity Capital Markets Offerings
Deal Economics
Piper functions
as a • Fixed Economics: set gross spread to the banks on
Bookrunner, Co- the offering, which is comprised of management
Lead Manager
fees, underwriting fees, and the selling concession
and Co- • Jump-Ball: subset of the selling concession based on
Manager who the designated account gives credit for the
sale, bookrunner(s) frequently capped; underwriting
depending upon
and management fees fixed
the deal
• Bought Deal Spread: bank’s principal capital put at
risk to buy shares from the issuer/selling
shareholder at a discount to last trade and in turn
Deal economics
sold to institutions at a discount from last trade and
depend upon a premium to the price paid to the issuer/selling
the status and shareholder
maturity of the
issuer

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PIPER JAFFRAY COVER POSITIONS

Piper as Sole-Bookrunner Piper as Joint-Bookrunner

Piper as Co-Lead Manager Piper as Co-Manager

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PIPER JAFFRAY BOOKRUN OFFERINGS

$95,737

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EQUITY CAPITAL MARKETS
Overview of Equity Capital Markets

Primary roles
Origination of Transaction with Investment Banking

Origination
of the groups
Discussion of Economics and Number of Managers on Deal

within Equity
Capital Size and Time of Transaction
Markets – Constant Communication with Management during the Roadshow

Origination
Marketing the Deal with Sales – Roadshow Layout
and Execution
Execution

Distribution Strategy

Allocation Decisions

Deal Pricing

Opening and Trading Process

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CORPORATE CLIENT COMMUNICATION
The Role of the Equity Capital Markets Team
Situation Role
Client Targeting, Pitches, Update of Equity Capital Markets Conditions/Trends
and Industry Conferences Deal Strategy, Structure & Timing
Company Positioning & Piper J affray Marketing
Valuation Discussion
Prior to Roadshow Introduction Process
Presentation Coaching
Sales Force Education
During Roadshow Institutional Sales Feedback
Research Analyst Feedback
Order Book Updates
Market Updates
Institutional Account Profiles
Pricing Recap of Roadshow and Order Book
Offering Distribution Overview
Aftermarket Trading Intelligence
Aftermarket Trading Updates
Green Shoe Management
Trading Monitoring/Account Intelligence

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EQUITY CAPITAL MARKETS
Equity Capital Markets Role in deal offering

The role of Equity Capital Markets

Equity Capital Desk
Markets in the
pricing of an Corporate Client & Institutional Client &
offering is to Investment Banker Sales Force
balance the  Wants to sell for the  Wants to buy for the
desires of the highest price lowest price
corporate client  Maximize offering  Generate increased
and institutional value for the corporate value for the
client Institutional client
client
 Maximize profit for the  Increase likelihood
firm of long-term stock
The goal is to
appreciation
find the so-
called “market-
clearing” price
that pleases 14
both parties
GOLF GALAXY CASE STUDY
Golf Galaxy Inc. (NASDAQ: GGXY)
Golf Galaxy priced
• Initial Public Offering 7/29/2005 at $14.00 $63,595,000
an upsized, $63.6
million initial public • Filing Range $11.00 - $13.00

offering at $14.00, • Shares Filed 3,333,000

• Shares Offered 3,950,000 Piper Jaffray
one point above its • Shares Offered with Green Shoe 4,542,500
$11 - $13 filed – Primary 3,000,000 Sole Bookrun
– Secondary 1,542,500 Initial Public Offering
range
July 29th , 2005
• Post-Deal Market Capitalization $148.9 million

• Sole Bookrunner Piper Jaffray

• Co-Lead Manager William Blair
• Co-Managers A.G. Edwards, Wedbush Morgan

• Use of Proceeds Fund new store openings, general corporate purposes, pay all accrued
The Company is and unpaid dividends due to preferred shareholders
Transaction Highlights
headquartered in
Eden Prairie, • Roadshow 9 Days, 14 Cities (Domestic Only); approximately 175 accounts on
the roadshow via 62 institutional 1-on-1 meetings and 6 group functions
Minnesota and is a
leading specialty • Order Book 16x oversubscribed; 210 accounts indicating on the deal; 85% of 1-on-1
meetings converted into orders; 90 orders of 10% or greater
retailer of golf
• 1 Day Aftermarket Performance Offer = $14.00; Open = $17.05; Close = $18.61; +33% from
equipment, apparel offer price
and accessories
• Post-IPO/ Aftermarket Piper Jaffray served as the sole sell-side advisor to Golf Galaxy
in their sale to Dick’s Sporting Goods (11/13/06) at a price of $18.82 (+32%
from IPO)

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 Introduction
GOLF GALAXY CASE STUDY
IPO Execution Timeline
Week of May 16th File IPO

Deal kick-off. Piper Jaffray research analyst gives a “teach-in” to the

Week of July 13 th
sales force giving them a better understanding of the business and
its growth outlook.
Golf Galaxy travels to the Piper Jaffray office and presents its story
to the sales force. This is the same presentation that will be used on
the IPO roadshow with institutional investors.
Golf Galaxy begins its roadshow. The company management travels
Week of July 20th with the Piper Jaffray investment banker and a member of the
institutional sales force. The roadshow will take them to
institutional investors throughout the United States. The roadshow
begins in Chicago and continues through Kansas City, Denver, San
Diego, Los Angeles, San Francisco, Minneapolis and Milwaukee.
Company continues its roadshow through Boston, New York, Baltimore
Week of July 27 th
and Philadelphia. Roadshow ends on Thursday afternoon. All-in-all, Golf
Galaxy presented in front of 175 institutional investors via 62 1-on-1
appointments and 6 group functions
IPO is priced at $14.00 per share – above the $11-$13 filing range.
Piper Jaffray receives orders for 16x the number of shares that are
Pricing on July 29th
being offered in the deal. 85% of 1-on-1 meeting attendees submit
and order to Piper Jaffray. Piper Jaffray’s Equity Capital Markets
team works to allocate all of the shares to the institutional investors.

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EQUITY CAPITAL MARKETS OVERVIEW

Piper Jaffray has consistently been a Top Equity Underwriter…

IPOs, Follow-ons & Convertibles in 2006 IPOs in 2006 YTD

YTD
Rank Manager No. Rank Manager No.
1 J .P. Morgan Securities Inc. 160 1 J .P. Morgan Securities Inc. 46
1 Citigroup Global Markets Inc. 160 2 Credit Suisse 40
3 Banc of America Securities 150 3 Banc of America Securities 35
4 Merrill Lynch & Co. 149 4 Merrill Lynch & Co. 34
5 UBS Securities Inc. 137 5 Goldman Sachs & Co. 32
6 Wachovia Capital Markets LLC 124 5 UBS Securities Inc. 32
6 Goldman Sachs & Co. 124 5 Citigroup Global Markets Inc. 32
8 Credit Suisse 121 8 Deutsche Bank Securities Inc. 31
9 Lehman Brothers 119 9 Cowen & Co., LLC 29
10 Morgan Stanley 118 10 Piper Jaffray & Co 28
11 Deutsche Bank Securities Inc. 110 10 Morgan Stanley 28
12 Bear Stearns & Co Inc. 80 12 Bear Stearns & Co Inc. 27
13 Piper Jaffray & Co 78 13 Lehman Brothers 26
14 Cowen & Co., LLC 71 14 Wachovia Capital Markets LLC 24
15 J efferies & Co Inc. 66 14 Thomas Weisel Partners L.L.C. 24
16 Raymond J ames 62 16 CIBC World Markets 19
17 Thomas Weisel Partners L.L.C. 59 17 J efferies & Co Inc. 17
18 RBC Capital Markets 54 18 Raymond J ames 13
19 CIBC World Markets 47 19 RBC Capital Markets 12
19 A.G. Edwards & Sons Inc. 47 19 WilliamBlair & Co 12
21 KeyBanc Capital Markets 37 19 Keefe Bruyette & Woods Inc. 12
22 Keefe Bruyette & Woods Inc. 36 22 A.G. Edwards & Sons Inc. 11
23 Stifel Nicolaus & Co 35 22 J MP Securities LLC 11
23 J MP Securities LLC 35 24 Pacific Growth Equities 8
25 Robert W. Baird & Co. Inc 32 25 Lazard Capital Markets 7
EQUITY CAPITAL MARKETS OVERVIEW
Sector Rank – IPOs & Follow-On Offerings Completed in 2006
Consumer Financial

Piper Jaffray Rank

1
Manager
Wachovia Capital Markets LLC
No.
17
Rank
1
Manager
Keefe Bruyette & Woods Inc.
No.
36
2 Piper Jaffray & Co 16 2 Citigroup Global Markets Inc. 31
continues to 2 J .P. Morgan Securities Inc. 16 3 Wachovia Capital Markets LLC 25
4 Goldman Sachs & Co. 15 4 Banc of America Securities 22
5 Citigroup Global Markets Inc. 13 5 J .P. Morgan Securities Inc. 21
be one of the 5 Banc of America Securities 13 5 Merrill Lynch & Co. 21
7 Merrill Lynch & Co. 12 7 Credit Suisse 20
most active 8 Cowen & Co., LLC 10 7 UBS Securities Inc. 20
8 Lehman Brothers 10 7 Sandler, O'Neill & Partners, L.P. 20
8 Credit Suisse 10 10 Bear Stearns & Co Inc. 15
managers 11 Thomas Weisel Partners L.L.C. 9 10 Deutsche Bank Securities Inc. 15
12 Deutsche Bank Securities Inc. 8 15 Piper Jaffray & Co 12
across key
growth sectors
Health Care Technology
Rank Manager No. Rank Manager No.
1 Cowen & Co., LLC 27 1 Credit Suisse 28
2 Piper Jaffray & Co 25 2 Goldman Sachs & Co. 26
3 UBS Securities Inc. 21 3 Morgan Stanley 23
3 J .P. Morgan Securities Inc. 21 4 Lehman Brothers 22
5 CIBC World Markets 20 5 Piper Jaffray & Co 21
6 Banc of America Securities 19 5 J .P. Morgan Securities Inc. 21
6 Morgan Stanley 19 5 Deutsche Bank Securities Inc. 21
8 Merrill Lynch & Co. 17 8 Thomas Weisel Partners L.L.C. 20
9 Thomas Weisel Partners L.L.C. 16 9 Citigroup Global Markets Inc. 19
9 Lehman Brothers 16 10 Cowen & Co., LLC 17
11 Goldman Sachs & Co. 15 11 UBS Securities Inc. 16
11 Rodman & Renshaw, Inc. 15 12 Banc of America Securities 15

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EQUITY CAPITAL MARKETS OVERVIEW
Historical IPO Volume

600
Number of IPOs by
531 Year
Number of IPOs Completed
500
450
409
400 373

300 252
210
200 170
146
80 70 76
100

0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
YTD

IPO Capital Raised by Year

$80
$69.2 $71.2
Capital Raised ($B)

$60
$46.9
$42.6 $44.1
$37.8 $39.0
$40 $35.0
$33.4
$24.8
$20 $14.5

$0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 YTD

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EQUITY CAPITAL MARKETS OVERVIEW
Historical Follow-on Volume
Number of Follow-ons by
700
617 Year
628

Number of FOs Completed

600
520
500 464 415 457
398 431 424
374
400 346

300
200
100
0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
YTD

$150
Follow-on Capital Raised by
Year $124.8
$125 $111.9
Capital Raised ($B)

$90.3 $85.0
$100 $84.2
$92.2
$81.2
$74.6 $75.4
$75 $69.3 $68.8

$50

$25

$0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
YTD

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EQUITY CAPITAL MARKETS
What is Equity Capital Markets
to You? – Equity Capital Markets is a dedicated resource for equity offering
Equity Capital information and analysis, related trading intelligence, and broader
market information/color
Markets is a
– Equity Capital Markets provides a weekly update of the following:
dedicated Week in Review Deal Commentary Industry Calendar
YTD Performance Tables YTD Deal Performance
resource for
Week Pricings Current Backlog
equity offering Week Filings League Tables
Withdrawn/Postponed Piper Transactions
information
and analysis – Equity Capital Markets works with Investment Banking to tailor the best
advice/approach for IPOs, follow-on offerings, and other equity-linked
transactions

– Equity Capital Markets works with our corporate clients, Investment

Banking, company/underwriter’s counsel, and Institutional Sales and
Sales Trading to manage all aspects of the deal execution process

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EQUITY CAPITAL MARKETS

Questions?
Comments?

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