NYSE and TSX - OPY TORONTO, Jan. 26 /PRNewswire-FirstCall/ --
Expressed in thousands Three Months ended Year ended of U.S.
dollars, except December 31, December 31, per share amounts 2006
2005 2006 2005
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Unaudited REVENUE $218,286 $185,309 $800,823 $679,746 EXPENSES
$196,316 $170,094 $720,373 $638,057 PROFIT BEFORE TAXES $21,970
$15,215 $80,450 $41,689 NET PROFIT $10,550 $7,738 $44,577 $22,916
PROFIT PER SHARE: - BASIC $0.82 $0.59 $3.50 $1.76 - DILUTED $0.80
$0.44 $2.76 $1.36 WEIGHTED BASIC AVERAGE NUMBER OF CLASS A
NON-VOTING AND CLASS B SHARES OUTSTANDING 12,866,552 13,063,122
12,749,712 13,020,341 BOOK VALUE PER SHARE $27.76 $24.46 TOTAL
CLASS A NON-VOTING AND CLASS B SHARES OUTSTANDING 12,934,362
12,595,821 Oppenheimer Holdings Inc. reported net profit for the
three months ended December 31, 2006 of $10,550,000 or $0.82 per
share, an increase of 36% when compared to $7,738,000 or $0.59 per
share in the same period of 2005. Revenue for the three months
ended December 31, 2006 was $218,286,000, an increase of 18%
compared to revenue of $185,309,000 in the same period of 2005,
primarily reflecting strong equity markets, an increase in
performance fees for managed hedge funds and strong investment
banking revenue. Expenses increased by 15% in the three months
ended December 31, 2006 compared to the same period of 2005,
primarily reflecting increased compensation and related costs and
interest expense. Net profit and earnings for the three months
ended December 31, 2006 include increased tax provisions, which
raised the effective tax rate to 52% because of reserves
established for matters identified during tax examinations dating
back to 2003. Net profit for the year ended December 31, 2006 was
$44,577,000 or $3.50 per share, an increase of 95% in net profit
when compared to $22,916,000 or $1.76 per share in the same period
of 2005. Revenue for the year ended December 31, 2006 was
$800,823,000 compared to $679,746,000 for the same period in 2005,
an increase of 18%. Expenses increased by 13% in the year ended
December 31, 2006 compared to the same period of 2005, with
increases in compensation and related expenses and interest
expense. The Company's pre-tax results for the year ended December
31, 2006 include a gain (most of which was generated in the first
quarter of 2006) of approximately $13.7 million from 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.
In addition, the Company's pre-tax profit for the year ended
December 31, 2006 includes a net gain of $4.1 million ($3.6 million
of which was recognized in the third quarter of 2006), on the
extinguishment of its variable rate exchangeable debentures
("Debentures"). The Company redeemed $141 million of the Debentures
on July 31, 2006 and the remaining $20 million on October 23, 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
October 23, 2006. At December 31, 2006, shareholders' equity was
approximately $359 million and book value per share was $27.76
compared to shareholders' equity of approximately $308 million and
book value of $24.46 at December 31, 2005. Assets under fee-based
management increased by 41% to $15.5 billion at December 31, 2006
compared to $11 billion at December 31, 2005, reflecting organic
growth and includes approximately $1.2 billion, which relates to a
transaction-based investment advisory program that was introduced
in January 2006. The U.S. economy continued to perform well,
however its rate of growth moderated as it approached the end of
the year. Despite continued softness in the housing market and
higher short-term interest rates, the markets reacted to
significant declines in oil and other commodity prices and modest
improvements in the U.S. trade deficit. Employment remained strong
and the increase in the level of spending by the U.S. consumer
provided the impetus for strong equity gains in the three months
ended December 31, 2006. Excluding the gains from both the NYSE
Group common shares and the debt extinguishment, the Company's
revenue for the year ended December 31, 2006 increased by 15%
compared to revenue for the same period of 2005. The revenue
increase in both the three months and year ended December 31, 2006
compared to the same periods of 2005 came from higher transactional
revenue from both private client and capital markets and increased
fees from fee based programs. Interest income for the full year was
impacted by higher rates, increased customer debit balances and
increased activity in the securities lending business. The
Company's performance in the three months ended December 31, 2006
was positively impacted by its participation as general partner in
various alternative investments that had significantly better
performance in 2006 compared to 2005. The Company's expenses
increased by approximately 15% and 13%, respectively, for the three
months and year ended December 31, 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, to retire the Debentures, 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
the five months ended December 31, 2006, the interest rate on the
senior secured credit note was 8.15% (compared to 4.5% on the
retired Debentures). 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 months and year ended December 31, 2006 of
$553,000 and $3,250,000, 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 has 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 December 31, 2006 was 12,866,552 compared to 13,063,122
outstanding for the three months ended December 31, 2005, a net
decrease of 1.5% due to the effect of the repurchase of shares
pursuant to a Normal Course Issuer Bid in the first half of 2006
partially offset by the exercise of employee stock options
primarily in the second half of 2006. During the fourth quarter of
2006, the Company did not purchase any Class A Shares pursuant to
its 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 December 31, 2006 was 13,191,501 compared to
19,952,341 outstanding for the three months ended December 31,
2005, a net decrease of 34% due to the redemption, on July 31,
2006, of $141 million of the Debentures and redemption, on October
23, 2006, of the remaining $20 million of Debentures. Today, the
Company announced a regular quarterly cash dividend of U.S. $0.10
per Class A and Class B Share payable on February 23, 2007 to
shareholders of record on February 9, 2007. 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
recent 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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