Oppenheimer Holdings Inc. - Fourth Quarter 2007 Earnings and Dividend Declaration



    OPY on the NYSE

    TORONTO and NEW YORK, Jan. 30 /CNW/ -

    
    Expressed in thousands       Three Months ended          Year ended
    of U.S. dollars, except          December 31,           December 31,
    per share amounts             2007        2006        2007       2006
    -------------------------------------------------------------------------
    Unaudited
    REVENUE                     $258,358    $218,286    $914,397    $800,823
    EXPENSES                    $214,053    $196,316    $787,003    $720,373
    PROFIT BEFORE TAXES          $44,305     $21,970    $127,394     $80,450
    NET PROFIT                   $26,537     $10,550     $75,367     $44,577
    PROFIT PER SHARE:
      - BASIC                      $2.00       $0.82       $5.70       $3.50
      - DILUTED                    $1.94       $0.80       $5.57       $2.76
    WEIGHTED BASIC AVERAGE
     NUMBER OF CLASS A
     NON-VOTING AND CLASS B
     SHARES OUTSTANDING       13,298,336  12,866,552  13,223,442  12,749,712

    BOOK VALUE PER SHARE          $33.21      $27.76
    TOTAL CLASS A NON-VOTING
     AND CLASS B SHARES
     OUTSTANDING              13,366,276  12,934,362
    

    Oppenheimer Holdings Inc. reported net profit for the three months ended
December 31, 2007 of $26.5 million or $2.00 per share, an increase of 152%
when compared to $10.6 million or $0.82 per share in the same period of 2006.
Revenue for the three months ended December 31, 2007 was $258.4 million, an
increase of 18% compared to revenue of $218.3 million in the same period of
2006, primarily reflecting strong equity markets, a significant increase in
annual performance fees for managed hedge funds and strong investment banking
revenue. Expenses increased by 9% in the three months ended December 31, 2007
compared to the same period of 2006, primarily reflecting increased
compensation and related costs. The fourth quarter of 2007 was the strongest
quarter in the Company's history in terms of both revenue and net profit.
    Net profit for the year ended December 31, 2007 was $75.4 million or
$5.70 per share, an increase of 69% when compared to $44.6 million or
$3.50 per share in the same period of 2006 and a record for the Company.
Revenue for the year ended December 31, 2007 was $914.4 million compared to
$800.8 million for the same period in 2006, an increase of 14%. Expenses
increased by 9% in the year ended December 31, 2007 compared to the same
period of 2006, with increases in compensation and related expenses, clearing
and exchange fees and communications and technology offset by lower interest
expense. The Company's pre-tax results for the year ended December 31, 2007
include a gain of approximately $2.5 million arising from the early
extinguishment of its zero coupon note, issued in January 2003 in connection
with an acquisition. The pre-tax results for the year ended December 31, 2006
included 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, as
well as 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 $140.8 million of
the Debentures on July 31, 2006 and the remaining $20.0 million on October 23,
2006. The decrease in the effective tax rate for the year ended December 31,
2007 was the result of favorable resolutions of tax matters during 2007.
    Against a background of a deteriorating U.S. dollar, oil prices reaching
$100 per barrel, and an unparalleled debt crisis based on record defaults in
sub prime mortgages, the U.S. economy and the stock market held up remarkably
well during most of the 4th quarter. Popular averages reached new all-time
highs in October and steadily eroded to leave them up modestly for the full
year of 2007. While U.S Treasuries rallied against an uncertain credit market,
most corporate and structured issuers prices deteriorated significantly as
their spreads off of treasuries widened substantially. Volatility increased in
the fourth quarter of 2007 but volumes remained high and certain sectors such
as technology, oil and gas and consumer durables remained at their highest
levels of the year. The impact of defaults and foreclosures in the sub-prime
mortgage market and the inability of the credit markets to assess the
creditworthiness of various issuers of commercial paper and asset-backed
securities are likely to lead to continued turmoil in capital markets and with
home prices declining amid rising unemployment, the probabilities of a
recession have dramatically increased.
    Oppenheimer's business continued to thrive despite this economic backdrop
with increases in commissions, fee-based revenues, income derived from
investment activity and a record level of performance fees from general
partner participations in alternative investments owned by clients. At
December 31, 2007, shareholders' equity was approximately $444 million and
book value per share was $33.21 compared to shareholders' equity of
approximately $359 million and book value per share of $27.76 at December 31,
2006, an increase of 20%. Assets under fee-based management increased by 13%
to $17.5 billion at December 31, 2007 compared to $15.5 billion at
December 31, 2006, reflecting organic growth and increased market value.
    As previously reported, the Company acquired a major part of CIBC World
Markets' U.S. Capital Markets Businesses on January 14, 2008, including U.S.
Investment Banking, Corporate Syndicate, Institutional Sales and Trading,
Equity Research, Options Trading, Convertible Bond Trading, Loan Syndication,
High Yield Origination and Trading as well as related Israeli investment
banking and equities business. The results for the year ended December 31,
2007 do not include any results of the Capital Markets Businesses acquired on
January 14, 2008.
    As previously reported, the Company is not involved in the sub-prime
mortgage business, and does not have any exposure to that business as a result
of its recent acquisition.
    The Company's expenses increased by approximately 9% both for the three
months and year ended December 31, 2007 compared to the same periods in 2006
primarily due to increased compensation and related costs. Compensation
expense tracks the trend in transactional revenue and includes the impact of
the expensing share-based compensation since January 1, 2006. Interest expense
decreased in both the three months and year ended December 31, 2007 compared
to the comparable periods in 2006 due lower interest rates and the impact of
debt reduction undertaken by the Company in 2006 and the second quarter of
2007. As previously reported, in the third quarter of 2006, the Company
retired its Debentures ($160.8 million) which had been issued in January 2003
in connection with an acquisition. 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 in July 2006. The Company
made two prepayments in 2007 totaling $40 million such that the outstanding
debt at December 31, 2007 is $83.3 million.
    The basic weighted average number of Class A non-voting and Class B
shares outstanding for the three months ended December 31, 2007 was 13,298,336
compared to 12,866,552 outstanding for the three months ended December 31,
2006, a net increase of 3.4% due primarily to the exercise of employee stock
options. During the fourth quarter of 2007, the Company did not purchase any
Class A Shares pursuant to its Normal Course Issuer Bid (which commenced on
August 14, 2007, and terminates on August 13, 2008). The diluted weighted
average number of Class A non-voting and Class B shares outstanding for the
three months ended December 31, 2007 was 13,646,546 compared to 13,191,501
outstanding for the three months ended December 31, 2006, a net increase of
3.4% due to the exercise of employee stock options and the vesting of
restricted shares in 2007.

    Dividend

    Today, the Company announced a regular quarterly cash dividend of
U.S. $0.11 per Class A and Class B Share payable on February 29, 2008 to
shareholders of record on February 15, 2008.

    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 Oppenheimer's Annual Report on Form 10-K for the year ended December 31,
2006.

    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. Oppenheimer employs over 3,500
people, approximately 1,250 of whom are financial advisers. 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.





For further information:

For further information: A.G. LOWENTHAL, (212) 668-8000 or E.K. ROBERTS,
(416) 322-1515


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