NYSE - OPY NEW YORK and TORONTO, July 30 /PRNewswire-FirstCall/ --
Expressed in thousands of U.S. dollars, except share and per Three
Months ended Six Months ended share amounts June 30, June 30,
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(unaudited) 2008 2007 2008 2007 Revenue $256,241 $226,750 $488,116
$440,866 Expenses $254,056 $198,864 $512,719 $384,798 Profit (loss)
before taxes $2,185 $27,886 $(24,603) $56,068 Net profit (loss)
$1,646 $15,766 $(14,468) $32,556 Basic earnings (loss) per share
$0.12 $1.19 $(1.07) $2.48 Diluted earnings (loss) per share $0.12
$1.16 $(1.07) $2.43 Weighted average number of shares outstanding
13,508,262 13,213,663 13,567,150 13,125,172 Book value per share
$32.94 $30.17 Actual number of 13,340,094 13,233,630 Class A
non-voting and Class B shares outstanding The Company's financial
results are presented using accounting principles generally
accepted in the U.S.A. Oppenheimer Holdings Inc. reported net
profit of $1.6 million or $0.12 per share for the second quarter of
2008, compared to $15.8 million or $1.19 per share in the
second quarter of 2007. Revenue for the second quarter of 2008 was
$256.2 million, compared to revenue of $226.8 million in the second
quarter of 2007. The net loss for the six months ended June 30,
2008 was $14.5 million or $1.07 per share compared to a net profit
of $32.6 million or $2.48 per share in the first half of 2007.
Revenue for the six months ended June 30, 2008 was
$488.1 million, an increase of 11% compared to $440.9 million
for the same period in 2007. The Company's results for the three
and six months ended June 30, 2008 were impacted by the
current economic environment, as well as by its acquisition on
January 14, 2008 of a major part of CIBC World Markets' U.S.
Capital Markets Businesses. The acquired businesses (including the
operating results related to businesses to be acquired in the UK
and Asia) along with the Company's existing Investment Banking,
Corporate Syndicate, Institutional Sales and Trading and Equities
Research divisions were combined to form the Oppenheimer Investment
Banking Division (OIB Division). Albert (Bud) Lowenthal, Chairman
and CEO, commented on the results for the quarter: "The dramatic
turnaround from a significant loss in the first quarter to a
nominal profit in the second quarter is extremely gratifying and
shows the strength of our franchise, although on a comparative
basis with 2007, we are disappointed in our earnings performance.
Conditions in the securities markets remained quite stressed in the
period with equity markets down 8% and credit markets remaining
seized in many asset classes. Oppenheimer continues to be free of
asset write-downs of any significance from proprietary trading and
does not anticipate any major issues in this regard going forward.
While the results of our Capital Markets business remain quite
disappointing due to the environment, we did see some increase in
investment banking activity in the second quarter and our activity
levels in secondary market sales and trading remained quite good.
Leverage finance activity related to new issuance remains moribund,
although there was some pick-up during the period in the trading
markets for leveraged loans, and issuance by clients in the equity
and debt markets remained at significantly reduced levels due to
the lack of receptivity by investors. The OIB business remained
burdened with transition costs, which we anticipate will be
significantly reduced by the time we enter the fourth quarter of
2008. Our plans to fully complete the transition of the business
should be accomplished by that time. We continue to believe that
the long-term benefit of this acquisition will be substantial but
do not foresee a quick return to profitability for the enlarged
Capital Markets business, given the state of the markets and of the
U.S. economy. Oppenheimer's liquidity remains strong allowing us to
repurchase shares during the quarter as well as continue to pay
down long term debt. We do not anticipate any need for additional
capital to be raised in the near future either through the issuance
of debt or equity. We will continue to manage our business for the
long term with a close control of costs and risks within our
business. Our Private Client Business continues to be quite healthy
with strong financial advisor retention, and the attraction of
experienced new financial advisors as well as new clients to our
enhanced platform." The three and six months ended June 30, 2008
were marked by an extremely volatile market environment, with
investors focused on record high oil and food prices, a weak U.S.
dollar, liquidity problems in the credit markets and wide-spread
asset write-downs. The U.S. economy appears to be in a recession
brought on by the uncertainties mentioned above. Intervention by
the U.S. Treasury and the U.S. Federal Reserve in the credit
markets through their support of investment banks, Fannie Mae and
Freddie Mac will hopefully continue to bolster confidence, to
offset the severe decline in housing prices and shorten the time to
economic recovery. Revenues for the OIB Division, approximately
$70.2 million and $125.0 million, respectively, for the three
and six months ended June 30, 2008, were substantially
less (approximately 48% and 53%, respectively) than the comparable
fiscal period last year on a pro-forma combined basis, due to
significantly reduced investment banking activity. As previously
reported, the results of the OIB Division will be tracked for the
five years following the acquisition for purposes of determining
payments that may be due to CIBC as part of the purchase price.
Commissions for the three and six months ended June 30, 2008
increased 33% and 37%, respectively, compared to the same periods
in 2007 primarily as a result of the acquired businesses. For the
three and six months ended June 30, 2008, 29% and 32%,
respectively, of total commissions were generated by the OIB
Division's institutional equity business. Proprietary trading
results increased 60% and 42%, respectively, for the three and six
months ended June 30, 2008 compared to the same periods in 2007,
with much of the increase attributable to the acquired businesses,
although preferred and corporate trading showed significant
increases for the period. Advisory fees increased 3% and 7%,
respectively, for the three and six months ended June 30, 2008
compared to the same periods in 2007, primarily as a result of
increased fees from money market funds. During the period, the
Company introduced a FDIC insured bank sweep product that has been
well accepted by clients and will show increasing profitability
over the next several fiscal periods. Assets under management by
the asset management group decreased 5% to $16.4 billion at June
30, 2008 compared to $17.3 billion at June 30, 2007, due
to declining market values despite the fact that the number of
client accounts under management increased 7% at June 30, 2008
compared to June 30, 2007. Included in assets under
management at June 30, 2008 were approximately $13.9 billion in
assets under the Company's fee-based programs ($15.3 billion at
June 30, 2007). Net interest revenue decreased by 58% in both the
three and six months ended June 30, 2008 compared to the same
periods of 2007, due primarily to falling interest rates over the
periods and reduced levels of client margin borrowing. On April 28,
2008, the Company repaid $20.0 million of its senior secured credit
note, thereby reducing its outstanding indebtedness under the
senior secured credit note to $63.0 million. The Company's expenses
for the three and six months ended June 30, 2008
increased 28% and 33%, respectively, compared to the same periods
of 2007, primarily due to the effect of the Company's recent
acquisition. Acquisition related expenses included accrued expenses
of $12.4 million and $27.7 million, respectively, for the
three and six months ended June 30, 2008 for future payments of
deferred incentive compensation to former CIBC employees for awards
made by CIBC prior to the January 14, 2008 acquisition by the
Company. Such payments will decline to $7.0 million in the fourth
quarter 2008 and continue to significantly decline in subsequent
periods.Transition service charges of $9.8 million and $20.6
million, respectively, in the three and six months ended June 30,
2008 to be paid to CIBC for interim support of the acquired
businesses which will terminate upon the transition of those
businesses to Oppenheimer's platform, which is anticipated in the
third quarter of 2008, resulting in substantially reduced costs
(with estimated savings of $2 million per month). Compensation
expense for the period was substantially affected by the
acquisition, due to the addition of approximately 500 employees.
Overall, in the three months ended June 30, 2008, compensation
costs increased 25% compared to the same period of 2007. Offsetting
the increase in compensation expense for the three and six months
ended June 30, 2008 was a decrease in share-based compensation
costs compared to the same periods in 2007. For the three and six
months ended June 30, 2008, clearing and exchange fees increased
109% and 113%, respectively, due to increased transaction volumes
associated with the acquired business. Communications and
technology costs and occupancy costs increased 51% and 45%,
respectively, in the three months ended June 30, 2008 and
38% and 40%, respectively, in the six months ended
June 30, 2008 compared to the same periods in 2007,
primarily to support the OIB Division. At June 30, 2008,
shareholders' equity was approximately $439.4 million and book
value per share was $32.94 compared to shareholders' equity of
approximately $399 million and book value per share of $30.17 at
June 30, 2007. The basic weighted average number of Class
A and Class B Shares outstanding for the three months ended June
30, 2008 was 13,508,262 compared to 13,213,663 outstanding for the
three months ended June 30, 2007, an increase of 2% due primarily
to the exercise of stock options and vesting of stock awards in the
fourth quarter of 2007 and the first quarter of 2008 which was
offset by the cancellation of Class A Shares purchased pursuant to
the Issuer Bid in the second quarter of 2008. The diluted weighted
average number of Class A and Class B Shares outstanding for the
three months ended June 30, 2008 was 13,649,203 compared
to 13,543,221 outstanding for the three months ended June 30, 2007,
a net increase of 1%. The actual number of Class A and Class B
Shares outstanding at June 30, 2008 was 13,340,094 shares. During
the second quarter of 2008, the Company purchased and cancelled
308,976 Class A Shares (at an average price of $30.54 per share)
pursuant to an Issuer Bid, which expires on August 8, 2008. In
accordance with its policy, the Company does not purchase its
shares pursuant to the Issuer Bid from the end of the fiscal
quarter until after the earnings release. Dividend The Company
today announced a quarterly dividend of U.S. $0.11 per share,
payable on August 29, 2008 to holders of Class A and Class B Shares
of record on August 15, 2008. Oppenheimer, through its principal
subsidiaries, Oppenheimer & Co. Inc. (a U.S. broker-dealer) and
Oppenheimer Asset Management Inc., offers a wide range of
investment banking, securities, investment management and wealth
management services from 86 offices in 21 states and through local
broker-dealers in 3 foreign jurisdictions. OPY Credit Corp. offers
syndication as well as trading of issued corporate loans.
Oppenheimer employs over 3,300 people. Oppenheimer 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,
Oppenheimer 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, 2007. DATASOURCE: Oppenheimer Holdings Inc.
CONTACT: A.G. LOWENTHAL, (212) 668-8000; or E.K. ROBERTS, (416)
322-1515
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