Second Quarter 2007 Earnings, Dividend Announcement, $15 million Pay Down of Debt and TSX De-listing
July 27 2007 - 8:15AM
PR Newswire (US)
NYSE and TSX - OPY TORONTO, July 27 /PRNewswire-FirstCall/ --
Expressed in thousands of U.S. dollars, except share and per share
Three Months ended Six Months ended amounts June 30, June 30,
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(unaudited) 2007 2006 2007 2006 Revenue(x) $226,750 $193,024
$440,866 $394,074 Expenses $198,864 $177,229 $384,798 $348,868
Profit before taxes(x) $27,886 $15,795 $56,068 $45,206 Net profit
$15,766 $9,137 $32,556 $26,354 Basic earnings per share $1.19 $0.72
$2.48 $2.08 Diluted earnings per share $1.16 $0.52 $2.43 $1.45
Weighted average number of shares outstanding 13,213,663 12,666,526
13,125,172 12,696,302 Book value per share $30.17 $26.46 Actual
number of Class A non-voting and Class B shares outstanding
13,233,630 12,733,072 The Company's financial results are presented
using accounting principles generally accepted in the U.S.A. (x)
Revenue and profit before taxes for the six months ended June 30,
2006 includes a gain of $11.6 million (most of which was generated
in the first quarter of 2006) related to the exchange of the
Company's three NYSE memberships for cash and NYSE Group common
shares ($0.53 per share). Excluding this one-time gain in the six
months ended June 30, 2006, profit before taxes for the comparable
period of 2007 was up 67% compared to the same period of 2006.
Oppenheimer Holdings Inc. reported net profit of $15.8 million or
$1.19 per share for the second quarter of 2007, an increase of
approximately 73% in net profit when compared to $9.1 million or
$0.72 per share in the second quarter of 2006. Revenue for the
second quarter of 2007 was $226.8 million, an increase of 17%
compared to revenue of $193.0 million in the second quarter of
2006. Net profit for the six months ended June 30, 2007 was $32.6
million or $2.48 per share compared to $26.4 million or $2.08 per
share in the first half of 2006, an increase of 24% in net profit.
Revenue for the six months ended June 30, 2007 was $440.9 million
compared to $394.1 million for the same period in 2006, an increase
of 12%. Revenue and profit before taxes for the six months ended
June 30, 2006 includes a non-recurring gain of $11.6 million (most
of which was generated in the first quarter of 2006) related to the
exchange of the Company's three NYSE memberships for cash and NYSE
Group common shares ($0.53 per share). Excluding this one-time gain
in the six months ended June 30, 2006, revenue and profit before
taxes for the six months ended June 30, 2007 were up 15% and 67%,
respectively, compared to the same period of 2006. The Company's
profit before taxes for the six months ended June 30, 2007 was
significantly impacted by share-based expense totaling $9.6 million
($8.3 million in the second quarter of 2007) primarily related to
outstanding stock appreciation rights which, under accounting
guidelines, are re-measured at fair value at each period end. The
significant increase in the price of the Company's Class A Shares
during the second quarter of 2007 was a contributing factor to the
increase in share-based expense. Share-based expense for the six
months ended June 30, 2006 totaled $3.2 million ($2.8 million in
the second quarter of 2006). Results during the second quarter of
2007 reflected a rising, but often volatile market environment,
with investors focused on high oil prices, weak housing markets,
foreclosures in sub-prime mortgages, and a weak U.S. dollar.
Despite these issues, the U.S. economy continued to grow at a
moderate pace with low unemployment rates and relatively strong
consumer spending. Core inflation has been gradually easing and the
Federal Reserve continues to hold interest rates steady. Growth
over the next several quarters should be maintained as the weak
dollar fuels exports. The investment environment remains attractive
as global liquidity continues to fuel acquisitions and the
retirement of equity securities through corporate buy-backs,
privatizations, and mergers proceeds at a record pace. Investment
banking activity continued to produce strong results in the three
and six months ended June 30, 2007 compared to the same periods of
2006, resulting from the increased emphasis and staffing levels of
the investment banking effort as well as the capital markets'
appetite for the securities of small and mid-cap offerings.
Proprietary trading results were positive for the quarter, but less
of a factor as the Company scaled back its exposure in light of
increased volatility. The Company has no exposure to the issues
surrounding sub-prime mortgages. Advisory fee income in the three
and six months ended June 30, 2007 showed improvement compared to
the same periods in 2006 as a result of increases in traditional
fee-based assets under management. Assets under management by the
asset management group increased 27% to $17.3 billion at June 30,
2007 compared to $13.6 billion at June 30, 2006, reflecting organic
growth and increases in market value. The Company continues to
build its base of annualized revenues through employee and client
education emphasizing the benefits of a professionally directed
asset allocation process. The Company's expenses for the three and
six months ended June 30, 2007 increased 12% and 10%, respectively,
compared to the same periods of 2006, primarily due to increased
compensation and related costs. As discussed above, a large
component of the increase is attributable to share-based
compensation costs. Communications and data processing costs
increased in the three and six months ended June 30, 2007 compared
to the same periods in 2006, reflecting the Company's continuing
efforts to upgrade its technology platform. Despite higher interest
rates, interest expense declined in the three and six months ended
June 30, 2007 compared to the same periods in 2006, primarily
reflecting lower levels of bank borrowing in 2007. The Company
announced today its intention to repay $15 million of its senior
secured credit note by July 31, 2007, thereby reducing its
outstanding indebtedness under the senior secured credit note to
$83.8 million, subject to regulatory approval. This amount
represents a voluntary prepayment. As previously announced, on
April 27, 2007, the Company repaid $25 million of its senior
secured credit note ($10.4 million was required under the terms of
the senior secured credit note and $14.6 million was a voluntary
prepayment). With strong earnings and cash flow thus far in 2007,
the Company determined that it is appropriate to further reduce
indebtedness under the senior secured credit note at this time. At
June 30, 2007, shareholders' equity was approximately $399 million
and book value per share was $30.17 compared to shareholders'
equity of approximately $337 million and book value per share of
$26.46 at June 30, 2006. The weighted average number of Class A and
Class B Shares outstanding for the six months ended June 30, 2007
was 13,125,172 compared to 12,696,302 outstanding for the six
months ended June 30, 2006, an increase of 3% due to the exercise
of employee stock options, awards of Class A Shares pursuant to the
Employee Share Plan and the purchase of Class A Shares by the
Company's 401(K) Plan. The actual number of Class A and Class B
Shares outstanding at June 30, 2007 was 13,233,630. During the
second quarter of 2007, 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 and Class B Shares outstanding
for the six months ended June 30, 2007 was 13,380,514 compared to
19,630,155 outstanding for the three months ended June 30, 2006, a
net decrease of 32% due to the redemption, on July 31, 2006, of
$141 million of its variable rate exchangeable debentures (the
"Debentures") and the redemption, on October 23, 2006, of the
remaining $20 million of Debentures issued on January 6, 2003 as
partial payment for the acquisition of the U.S. Private Client and
Asset Management Divisions of CIBC World Markets, Inc. The
Debentures were exchangeable into 6.9 million Class A Shares of the
Company. These redemptions were funded by the issuance of a senior
secured credit note in the amount of $125 million, increased bank
call loans and internally available funds. Dividend The Company
announced an increase in the quarterly dividend of U.S. $0.01 per
share to U.S. $0.11 per share, payable on August 24, 2007 to
holders of Class A and Class B Shares of record on August 10, 2007.
Stock Exchange Listings The Class A non-voting shares of the
Company are listed on the New York Stock Exchange and the Toronto
Stock Exchange. The preponderance of trading in the Class A Shares
take place on the New York Stock Exchange. Substantially all of the
Company's active business is carried on in the United States
through Oppenheimer & Co. Inc. and other subsidiaries. The
directors of the Company have assessed the cost and benefits of
maintaining the Toronto Stock Exchange Listing and have determined
that there are no material benefits to the Company or its
shareholders to continue such listing. Accordingly, the directors
have approved an application to voluntarily de-list the Class A
non-voting shares from the Toronto Stock Exchange effective August
31, 2007 or such other date as may be agreed. The Company as a
Canadian federally incorporated corporation and as a Canadian
reporting issuer will continue to be subject to Canadian corporate
law and provincial securities regulations. Canadian investors will
continue to be able to trade in the Class A Shares of the Company
through Canadian securities dealers that can trade through the
facilities of the New York Stock Exchange. The Company, through its
principal subsidiaries, Oppenheimer & Co. Inc. (a U.S.
broker-dealer) and Oppenheimer Asset Management Inc., offers a full
range of services from 88 offices in 21 states and through local
broker-dealers in 2 foreign jurisdictions. The Company offers trust
and estate services through Oppenheimer Trust Company. Evanston
Financial Corporation is engaged in mortgage brokerage and
servicing. 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. This press release includes certain "forward-looking
statements" relating to anticipated future performance. For a
discussion of the factors that could cause future performance to be
different than anticipated, reference is made to the Company's
Annual Report on Form 10-K for the year ended December 31, 2006.
DATASOURCE: Oppenheimer Holdings Inc. CONTACT: A.G. LOWENTHAL,
(212) 668-8000; or E.K. ROBERTS, (416) 322-1515
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