TORONTO, Oct. 31 /PRNewswire-FirstCall/ -- Expressed in thousands
of U.S. dollars, except Three Months ended Nine Months ended share
and per share September 30, September 30, amounts 2006 2005 2006
2005
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Unaudited REVENUE $188,463 $171,262 $582,537 $494,437 EXPENSES
$175,189 $159,822 $524,057 $467,963 PROFIT BEFORE TAXES $13,274
$11,440 $58,480 $26,474 NET PROFIT $7,673 $6,618 $34,027 $15,178
PROFIT PER SHARE: - BASIC $0.60 $0.51 $2.66 $1.16 - DILUTED $0.51
$0.38 $1.99 $0.91 WEIGHTED AVERAGE NUMBER OF BASIC CLASS A
NON-VOTING AND CLASS B SHARES FOR THE PERIOD 12,784,096 13,100,893
12,810,492 13,139,712 WEIGHTED AVERAGE NUMBER OF DILUTED CLASS A
NON-VOTING AND CLASS B SHARES FOR THE PERIOD 15,773,199 20,032,893
18,412,204 20,071,990 BOOK VALUE PER SHARE $27.00 $23.89 TOTAL
CLASS A NON-VOTING AND CLASS B SHARES OUTSTANDING 12,812,202
12,733,521 Oppenheimer Holdings Inc. (OPY on the New York and
Toronto Stock Exchanges) reported net profit for the three months
ended September 30, 2006 of $7,673,000 or $0.60 per share, an
increase of 16% when compared to $6,618,000 or $0.51 per share in
the same period of 2005. Revenue for the three months ended
September 30, 2006 was $188,463,000, an increase of 10% compared to
revenue of $171,262,000 in the same period of 2005. Expenses
increased by 10% in the three months ended September 30, 2006
compared to the same period of 2005, primarily reflecting increased
compensation and related costs and interest expense. The Company's
pre-tax profit for the three and nine months ended September 30,
2006 includes a net gain of $3.6 million on the extinguishment of
$140,822,400 of its variable rate exchangeable debentures on July
31, 2006. For the most part, this gain represents the difference
between interest expensed by the Company since the issuance of the
debentures on January 6, 2003 at a 4.5% interest rate (the annual
effective interest rate over the life of the debentures) compared
to the actual interest costs of 3% in 2003 and 4% thereafter until
July 31. Net profit for the nine months ended September 30, 2006
was $34,027,000 or $2.66 per share, an increase of 124% in net
profit when compared to $15,178,000 or $1.16 per share in the same
period of 2005. Revenue for the nine months ended September 30,
2006 was $582,537,000 compared to $494,437,000 for the same period
in 2005, an increase of 18%. Expenses increased by 12% in the nine
months ended September 30, 2006 compared to the same period of
2005, with increases in compensation and related expenses and
interest expense. The Company's pre-tax profit for the nine months
ended September 30, 2006 includes a gain (most of which was
generated in the first quarter of 2006) of approximately $12.4
million related to the conversion of its three New York Stock
Exchange memberships to NYSE Group common shares in March 2006 and
the sale, in May 2006, of approximately two thirds of its
investment in NYSE Group. The remaining investment in NYSE Group is
marked to market each period. At September 30, 2006, shareholders'
equity was approximately $346 million and book value per share was
$27.00 compared to shareholders' equity of approximately $304
million and book value per share of $23.89 at September 30, 2005.
Assets under fee-based management increased by 20% to $13.7 billion
at September 30, 2006 compared to $11.4 billion at September 30,
2005, reflecting organic growth and includes approximately $1
billion which relates to a transaction-based investment advisory
program that was introduced in January 2006. Economic and market
conditions continued strong in the third quarter of 2006. Defying
most expectations for the period, oil prices declined
significantly, driving down inflationary expectations and resulting
in lower interest rates and higher stock prices with the Dow Jones
Industrial Average setting new records. As the quarter came to a
close, the expectations for higher levels of economic activity were
being driven by high employment levels, strong retail sales and
stable prices despite the continued downturn in the housing market.
Without including the gains from either the NYSE Group common
shares or the debt extinguishment, the Company's revenue for the
nine months ended September 30, 2006 increased by 15% compared to
revenue for the same period of 2005. The revenue increase in both
the three and nine months ended September 30, 2006 compared to the
same periods of 2005 came from higher transactional revenue from
both private client and capital markets sources and increased
interest income. Interest income was impacted by higher rates,
increased customer debit balances and increased stock borrow
activity. The Company's expenses increased by approximately 10% and
12%, respectively, for the three and nine months ended September
30, 2006 compared to the same periods in 2005 primarily due to
increased compensation and related costs as well as higher interest
expense. Compensation expense tracks the trend in transactional
revenue and includes the impact of the expensing of stock options
since January 1, 2006. Interest expense tracks the increase in
interest revenue and is the result of higher interest rates,
increased stock loan activity in 2006 and higher debt carrying
costs compared to 2005. As previously reported, on July 31, 2006,
the Company issued a senior secured credit note in the amount of
$125 million at a variable interest rate based on the London
Interbank Offering Rate (LIBOR) with a seven-year term to a
syndicate led by Morgan Stanley Senior Funding Inc, as agent.
Minimum principal repayments equal 0.25% per quarter and there are
required prepayments of principal based on a portion of the
Company's excess cash flow, the net cash proceeds of asset sales,
tax refunds over certain limits, awards over certain limits in
connection with legal actions or 'takings', and debt issuances or
other liability financings. For August and September of 2006, the
interest rate on the senior secured credit note was 8.2%. Effective
January 1, 2006, the Company adopted Statement of Financial
Accounting Standards ("SFAS") 123-R, "Share-Based Payment". The
Company recorded additional compensation expense in the three and
nine months ended September 30, 2006 of $733,000 and $2,699,000,
respectively, with respect to its equity incentive plan. In prior
years, the cost of stock options was presented on a pro forma basis
in the notes to the consolidated financial statements. The Company
has always recorded compensation expense with respect to its other
share-based plans, although the method of computation of the
expense may have changed with the adoption of SFAS 123-R. The basic
weighted average number of Class A non-voting and Class B shares
outstanding for the three months ended September 30, 2006 was
12,784,096 compared to 13,100,893 outstanding for the three months
ended September 30, 2005, a net decrease of 2% due to the effect of
the repurchase of shares pursuant to a Normal Course Issuer Bid in
the first nine months of 2006 and partially offset by the exercise
of employee stock options. During the third quarter of 2006, the
Company did not purchase any Class A Shares pursuant to a Normal
Course Issuer Bid (which commenced on August 9, 2006, and
terminates on August 8, 2007). The diluted weighted average number
of Class A non-voting and Class B shares outstanding for the three
months ended September 30, 2006 was 15,773,199 compared to
20,032,893 outstanding for the three months ended September 30,
2005, a net decrease of 21% due to the redemption, on July 31,
2006, of $140,822,400 of the Company's exchangeable debentures. The
three months ended September 30, 2006 represents the last quarterly
period impacted by the dilution related to the shares exchangeable
under the $140,822,400 exchangeable debentures (exchangeable into
6,069,931 Class A Shares). The three months ending December 31,
2006 will represent the last quarterly period in which the
remaining $20,000,000 in exchangeable debentures (exchangeable into
862,069 Class A Shares) will have a dilutive impact on earnings per
share. Today, the Company announced a regular quarterly cash
dividend of U.S. $0.10 per Class A and Class B Share payable on
November 24, 2006 to shareholders of record on November 10, 2006.
Oppenheimer Holdings Inc., through its principal subsidiaries,
Oppenheimer & Co. Inc. (a U.S. broker-dealer) and Oppenheimer
Asset Management Inc., offers a full range of services from 82
offices in 21 states and 2 foreign jurisdictions. In addition,
through its subsidiary, Freedom Investments, Inc. and the
BUYandHOLD division of Freedom, the Company offers online discount
brokerage and dollar-based investing services. Certain statements
in this release may constitute "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995. These statements involve a number of risks, uncertainties and
other factors that could cause actual results to differ materially,
as discussed in the Company's filings with the Securities and
Exchange Commission. DATASOURCE: Oppenheimer Holdings Inc. CONTACT:
A.G. LOWENTHAL, (212) 668-8000 or E.K. ROBERTS, (416) 322-1515
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