Delaware | 1-12043 | 98-0080034 | ||
(State or Other | (Commission File Number) | (I.R.S. Employer | ||
Jurisdiction | Identification No.) | |||
of Incorporation) |
Exhibit | Description | |
23.1
|
Consent of PricewaterhouseCoopers LLP. | |
99.1
|
Consolidated Financial Statements and Notes thereto for the year ended December 31, 2010, updated to disclose condensed consolidating guarantor financial information. | |
99.2
|
Consolidated Financial Statements and Notes thereto for the quarterly period ended March 31, 2011, updated to disclose condensed consolidating guarantor financial information. |
Oppenheimer Holdings Inc. |
||||
By: | /s/ E.K. Roberts | |||
Name: | E.K. Roberts | |||
Title: | President and Treasurer (Duly Authorized Officer and Principal Financial Officer) |
|||
Exhibit | Description | |
23.1
|
Consent of PricewaterhouseCoopers LLP. | |
99.1
|
Consolidated Financial Statements and Notes thereto for the year ended December 31, 2010, updated to disclose condensed consolidating guarantor financial information. | |
99.2
|
Consolidated Financial Statements and Notes thereto for the quarterly period ended March 31, 2011, updated to disclose condensed consolidating guarantor financial information. |
Page | ||||
Managements Report on Internal Control over Financial Reporting |
1 | |||
Report of Independent Registered Public Accounting Firm |
2 | |||
Consolidated Balance Sheets as at December 31, 2010 and 2009 |
3 | |||
Consolidated Statements of Operations for the three years ended
December 31, 2010, 2009 and 2008 |
5 | |||
Consolidated Statements of Comprehensive Income (Loss) for the three
years ended December 31, 2010, 2009 and 2008 |
6 | |||
Consolidated Statements of Changes in Stockholders Equity for the
three years ended December 31, 2010, 2009 and 2008 |
7 | |||
Consolidated Statements of Cash Flows for the three years ended
December 31, 2010, 2009 and 2008 |
8 | |||
Notes to Consolidated Financial Statements |
10 |
1
2
(Expressed in thousands of dollars) | 2010 | 2009 | ||||||
ASSETS |
||||||||
Cash and cash equivalents |
$ | 52,854 | $ | 68,918 | ||||
Cash and securities segregated for regulatory and
other purposes |
142,446 | 78,133 | ||||||
Deposits with clearing organizations |
23,228 | 25,798 | ||||||
Receivable from brokers and clearing organizations |
302,844 | 390,912 | ||||||
Receivable from customers, net of allowance for
credit losses of $2,716 ($2,378 in 2009) |
924,817 | 826,658 | ||||||
Income taxes receivable |
4,979 | 5,509 | ||||||
Securities purchased under agreements to resell |
347,070 | 163,825 | ||||||
Securities owned, including amounts pledged of $102,501
($156,248 in 2009), at fair value |
367,019 | 238,372 | ||||||
Notes receivable, net |
59,786 | 61,396 | ||||||
Office facilities, net |
22,875 | 22,356 | ||||||
Deferred income taxes, net |
| 15,359 | ||||||
Intangible assets, net |
40,979 | 45,303 | ||||||
Goodwill |
132,472 | 132,472 | ||||||
Other |
198,665 | 128,372 | ||||||
$ | 2,620,034 | $ | 2,203,383 | |||||
3
(Expressed in thousands of dollars, except share amounts) | 2010 | 2009 | ||||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Liabilities |
||||||||
Drafts payable |
$ | 61,055 | $ | 48,097 | ||||
Bank call loans |
147,000 | | ||||||
Payable to brokers and clearing organizations |
372,697 | 436,018 | ||||||
Payable to customers |
406,916 | 488,360 | ||||||
Securities sold under agreements to repurchase |
390,456 | 155,625 | ||||||
Securities sold, but not yet purchased, at fair value |
160,052 | 131,739 | ||||||
Accrued compensation |
175,938 | 202,525 | ||||||
Accounts payable and other liabilities |
262,506 | 150,049 | ||||||
Senior secured credit note |
22,503 | 32,503 | ||||||
Subordinated note |
100,000 | 100,000 | ||||||
Deferred income taxes, net |
16,295 | | ||||||
Excess of fair value of acquired assets over cost |
7,020 | 7,020 | ||||||
2,122,438 | 1,751,936 | |||||||
Stockholders equity |
||||||||
Share capital |
||||||||
Class A non-voting common stock (2010
13,268,522 shares issued and outstanding 2009
13,118,001 shares issued and outstanding) |
51,768 | 47,691 | ||||||
Class B voting common stock
99,680 shares issued and outstanding |
133 | 133 | ||||||
51,901 | 47,824 | |||||||
Contributed capital |
47,808 | 41,978 | ||||||
Retained earnings |
394,648 | 362,188 | ||||||
Accumulated other comprehensive income (loss) |
207 | (543 | ) | |||||
Total Oppenheimer Holdings Inc. stockholders equity |
494,564 | 451,447 | ||||||
Non-controlling interest |
3,032 | | ||||||
497,596 | 451,447 | |||||||
$ | 2,620,034 | $ | 2,203,383 | |||||
4
2010 | 2009 | 2008 | ||||||||||
(Expressed in thousands of dollars, except per share amounts) | ||||||||||||
REVENUE: |
||||||||||||
Commissions |
$ | 537,730 | $ | 555,574 | $ | 532,682 | ||||||
Principal transactions, net |
77,183 | 107,094 | 20,651 | |||||||||
Interest |
45,871 | 35,960 | 61,793 | |||||||||
Investment banking |
134,906 | 90,960 | 83,541 | |||||||||
Advisory fees |
187,888 | 160,705 | 198,960 | |||||||||
Other |
51,494 | 41,140 | 22,443 | |||||||||
1,035,072 | 991,433 | 920,070 | ||||||||||
EXPENSES: |
||||||||||||
Compensation and related expenses |
672,244 | 672,325 | 626,030 | |||||||||
Clearing and exchange fees |
25,754 | 26,748 | 31,007 | |||||||||
Communications and technology |
64,700 | 62,724 | 75,359 | |||||||||
Occupancy and equipment costs |
74,389 | 74,372 | 69,945 | |||||||||
Interest |
25,914 | 21,050 | 38,998 | |||||||||
Other |
101,305 | 99,401 | 114,774 | |||||||||
964,306 | 956,620 | 956,113 | ||||||||||
Profit (loss) before income taxes |
70,766 | 34,813 | (36,043 | ) | ||||||||
Income tax provision (benefit) |
30,187 | 15,326 | (15,273 | ) | ||||||||
Net profit (loss) for the year |
40,579 | 19,487 | (20,770 | ) | ||||||||
Less net profit attributable to non-controlling
interest, net of tax |
2,248 | | | |||||||||
Net profit attributable to Oppenheimer Holdings Inc. |
$ | 38,331 | $ | 19,487 | $ | (20,770 | ) | |||||
Earnings (loss) per share attributable to
Oppenheimer Holdings Inc. |
||||||||||||
Basic |
$ | 2.87 | $ | 1.49 | $ | (1.57 | ) | |||||
Diluted |
$ | 2.76 | $ | 1.45 | $ | (1.57 | ) | |||||
Weighted average common shares |
||||||||||||
Basic |
13,340,846 | 13,110,647 | 13,199,580 | |||||||||
Diluted |
13,897,261 | 13,441,279 | 13,199,580 |
5
2010 | 2009 | 2008 | ||||||||||
(Expressed in thousands of dollars) | ||||||||||||
Net profit (loss) for year |
$ | 40,579 | $ | 19,487 | $ | (20,770 | ) | |||||
Other Comprehensive income (loss): |
||||||||||||
Currency translation adjustment |
1,597 | (99 | ) | 31 | ||||||||
Change in cash flow hedges, net of tax |
(847 | ) | 884 | (388 | ) | |||||||
Comprehensive income (loss) for the year |
$ | 41,329 | $ | 20,272 | $ | (21,127 | ) | |||||
6
2010 | 2009 | 2008 | ||||||||||
(Expressed in thousands of dollars) | ||||||||||||
Share capital |
||||||||||||
Balance at beginning of year |
$ | 47,824 | $ | 43,653 | $ | 53,054 | ||||||
Issuance of Class A non-voting common stock |
4,077 | 4,730 | 7,786 | |||||||||
Repurchase of Class A non-voting common stock
for cancellation |
| (559 | ) | (17,187 | ) | |||||||
Balance at end of year |
$ | 51,901 | $ | 47,824 | $ | 43,653 | ||||||
Contributed capital |
||||||||||||
Balance at beginning of year |
$ | 41,978 | $ | 34,924 | $ | 16,760 | ||||||
Issuance of warrant to purchase 1 million shares
of Class A non-voting common stock |
| | 10,487 | |||||||||
Tax (shortfall) benefit from share-based awards |
(71 | ) | 230 | 698 | ||||||||
Share-based expense |
7,611 | 7,001 | 7,334 | |||||||||
Vested employee share plan awards |
(1,710 | ) | (177 | ) | (355 | ) | ||||||
Balance at end of year |
$ | 47,808 | $ | 41,978 | $ | 34,924 | ||||||
Retained earnings |
||||||||||||
Balance at beginning of year |
$ | 362,188 | $ | 348,477 | $ | 375,137 | ||||||
Net profit (loss) for year attributable to Oppenheimer
Holdings Inc. |
38,331 | 19,487 | (20,770 | ) | ||||||||
Dividends paid ($0.44 per share) |
(5,871 | ) | (5,776 | ) | (5,890 | ) | ||||||
Balance at end of year |
$ | 394,648 | $ | 362,188 | $ | 348,477 | ||||||
Accumulated other comprehensive income (loss) |
||||||||||||
Balance at beginning of year |
$ | (543 | ) | $ | (1,328 | ) | $ | (971 | ) | |||
Currency translation adjustment |
1,597 | (99 | ) | 31 | ||||||||
Change in cash flow hedges, net of tax |
(847 | ) | 884 | (388 | ) | |||||||
Balance at end of year |
$ | 207 | $ | (543 | ) | $ | (1,328 | ) | ||||
Stockholders Equity of Oppenheimer Holdings Inc. |
$ | 494,564 | $ | 451,447 | $ | 425,726 | ||||||
Non-controlling interest |
||||||||||||
Grant of non-controlling interest |
$ | 784 | | | ||||||||
Net profit attributable to non-controlling interest, net of tax |
2,248 | | | |||||||||
Balance at end of year |
$ | 3,032 | | | ||||||||
Total Stockholders Equity |
$ | 497,596 | $ | 451,447 | $ | 425,726 | ||||||
7
2010 | 2009 | 2008 | ||||||||||
(Expressed in thousands of dollars) | ||||||||||||
Cash flows from operating activities: |
||||||||||||
Net profit (loss) for year |
$ | 40,579 | $ | 19,487 | $ | (20,770 | ) | |||||
Adjustments to reconcile net profit to net cash provided by
operating activities: |
||||||||||||
Non-cash items included in net profit (loss): |
||||||||||||
Depreciation and amortization of office facilities
and leasehold improvements |
12,448 | 12,630 | 11,474 | |||||||||
Deferred income taxes |
31,652 | (14,271 | ) | (12,300 | ) | |||||||
Amortization of notes receivable |
19,657 | 18,462 | 16,761 | |||||||||
Amortization of debt issuance costs |
985 | 1,188 | 1,227 | |||||||||
Amortization of intangible assets |
4,324 | 4,814 | 5,058 | |||||||||
Provision for credit losses |
338 | 352 | 1,473 | |||||||||
Share-based compensation |
4,242 | 17,246 | (112 | ) | ||||||||
Decrease (increase) in operating assets: |
||||||||||||
Cash and securities segregated for
regulatory and other purposes |
(64,313 | ) | (21,100 | ) | 10,529 | |||||||
Deposits with clearing organizations |
2,570 | (11,443 | ) | 2,047 | ||||||||
Receivable from brokers and clearing
organizations |
88,068 | (112,677 | ) | 394,047 | ||||||||
Receivable from customers |
(98,497 | ) | (179,524 | ) | 230,773 | |||||||
Income taxes receivable |
4 | 7,138 | (12,647 | ) | ||||||||
Securities purchased under agreements to resell |
(183,245 | ) | (163,825 | ) | | |||||||
Securities owned |
(128,647 | ) | (110,893 | ) | 81,618 | |||||||
Notes receivable |
(18,047 | ) | (26,412 | ) | (25,284 | ) | ||||||
Other assets |
(70,489 | ) | (51,367 | ) | 43,990 | |||||||
Increase (decrease) in operating liabilities: |
||||||||||||
Drafts payable |
12,958 | (4,468 | ) | (4,360 | ) | |||||||
Payable to brokers and clearing
organizations |
(64,168 | ) | 277,254 | (649,734 | ) | |||||||
Payable to customers |
(81,445 | ) | 80,057 | (37,996 | ) | |||||||
Securities sold under agreements to repurchase |
234,831 | 155,625 | ||||||||||
Securities sold, but not yet purchased |
28,313 | 104,285 | (14,333 | ) | ||||||||
Accrued compensation |
(23,163 | ) | 14,141 | 34,334 | ||||||||
Accounts payable and other liabilities |
113,770 | 38,018 | 14,984 | |||||||||
Income taxes payable |
| | (11,020 | ) | ||||||||
Cash (used in) provided by operating activities |
(137,277 | ) | 54,717 | 59,759 | ||||||||
8
2010 | 2009 | 2008 | ||||||||||
(Expressed in thousands of dollars) | ||||||||||||
Cash flows from investing activities: |
||||||||||||
Acquisition, net of cash acquired |
| | (50,335 | ) | ||||||||
Purchase of office facilities |
(12,157 | ) | (7,762 | ) | (15,243 | ) | ||||||
Cash used in investing activities |
(12,157 | ) | (7,762 | ) | (65,578 | ) | ||||||
Cash flows from financing activities: |
||||||||||||
Cash dividends paid on Class A non-voting and
Class B voting common stock |
(5,871 | ) | (5,776 | ) | (5,890 | ) | ||||||
Issuance of Class A non-voting common stock |
2,312 | 3,043 | 5,740 | |||||||||
Repurchase of Class A non-voting common stock |
||||||||||||
for cancellation |
| (559 | ) | (17,187 | ) | |||||||
Tax benefit (shortfall) from share-based awards |
(71 | ) | 230 | 698 | ||||||||
Debt issuance costs |
| | (397 | ) | ||||||||
Issuance of subordinated note |
| | 100,000 | |||||||||
Repayments of senior secured credit note |
(10,000 | ) | (15,160 | ) | (35,662 | ) | ||||||
Increase (decrease) in bank call loans, net |
147,000 | (6,500 | ) | (22,500 | ) | |||||||
Cash provided by (used in) financing activities |
133,370 | (24,722 | ) | 24,802 | ||||||||
Net increase (decrease) in cash and cash
equivalents |
(16,064 | ) | 22,233 | 18,983 | ||||||||
Cash and cash equivalents, beginning of year |
68,918 | 46,685 | 27,702 | |||||||||
Cash and cash equivalents, end of year |
$ | 52,854 | $ | 68,918 | $ | 46,685 | ||||||
Schedule of non-cash investing and financing
activities: |
||||||||||||
Warrants issued |
| | $ | 10,487 | ||||||||
Employee share plan issuance |
$ | 1,765 | $ | 1,687 | $ | 2,046 | ||||||
Supplemental disclosure of cash flow
information: |
||||||||||||
Cash paid during the year for interest |
$ | 15,938 | $ | 16,248 | $ | 32,078 | ||||||
Cash paid during the year for income taxes |
$ | 13,913 | $ | 23,719 | $ | 13,750 |
9
10
11
12
13
14
15
16
17
As at December 31, | ||||||||
2010 | 2009 | |||||||
Receivable from brokers and clearing
organizations consist of: |
||||||||
Deposits paid for securities borrowed |
$ | 199,117 | $ | 299,925 | ||||
Receivable from brokers |
20,609 | 23,019 | ||||||
Securities failed to deliver |
23,673 | 20,532 | ||||||
Clearing organizations |
11,038 | 17,291 | ||||||
Omnibus accounts |
19,129 | 9,192 | ||||||
Other |
29,278 | 20,953 | ||||||
$ | 302,844 | $ | 390,912 | |||||
As at December 31, | ||||||||
2010 | 2009 | |||||||
Payable to brokers and clearing organizations consist of: |
||||||||
Deposits received for securities loaned |
$ | 345,462 | $ | 412,420 | ||||
Securities failed to receive |
24,944 | 21,728 | ||||||
Clearing organizations and other |
2,291 | 1,870 | ||||||
$ | 372,697 | $ | 436,018 | |||||
18
As at December 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Owned | Sold | Owned | Sold | |||||||||||||
U.S. Treasury, agency and sovereign obligations |
$ | 160,114 | $ | 105,564 | $ | 84,168 | $ | 74,152 | ||||||||
Corporate debt and other obligations |
32,204 | 6,788 | 30,330 | 7,323 | ||||||||||||
Mortgage and other asset-backed securities |
2,895 | 25 | 4,035 | 5 | ||||||||||||
Municipal obligations |
55,089 | 383 | 34,606 | 1,707 | ||||||||||||
Convertible bonds |
39,015 | 11,093 | 35,001 | 12,121 | ||||||||||||
Corporate equities |
39,151 | 36,164 | 43,728 | 36,286 | ||||||||||||
Other |
38,551 | 35 | 6,504 | 145 | ||||||||||||
Total |
$ | 367,019 | $ | 160,052 | $ | 238,372 | $ | 131,739 | ||||||||
19
20
Fair | Unfunded | Redemption | ||||||||||
Value | Commit-ments | Redemption Frequency | Notice Period | |||||||||
Hedge Funds(1) |
$ | 1,472 | $ | | Quarterly - Annually | 30 - 120 Days | ||||||
Private Equity Funds(2) |
2,301 | 4,685 | N/A | N/A | ||||||||
Distressed Opportunities
Fund(3) |
12,285 | | Semi-Annually | 180 Days | ||||||||
Total |
$ | 16,058 | $ | 4,685 | ||||||||
(1) | Includes investments in hedge funds and hedge fund of funds that pursue long/short, event-driven, and activist strategies. | |
(2) | Includes private equity funds and private equity fund of funds with a focus on diversified portfolios, real estate and global natural resources. | |
(3) | Hedge fund that invests in distressed debt of U.S. companies. |
21
22
Fair Value Measurements | ||||||||||||||||
As of December 31, 2010 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: |
||||||||||||||||
Cash equivalents |
$ | 14,384 | $ | | $ | | $ | 14,384 | ||||||||
Securities segregated for regulatory
and other purposes |
14,497 | | | 14,497 | ||||||||||||
Deposits with clearing organizations |
9,094 | | | 9,094 | ||||||||||||
Securities owned: |
||||||||||||||||
U.S. Treasury obligations |
115,790 | | | 115,790 | ||||||||||||
U.S. Agency obligations |
23,963 | 20,348 | | 44,311 | ||||||||||||
Sovereign obligations |
13 | | | 13 | ||||||||||||
Corporate debt and other obligations |
| 32,204 | | 32,204 | ||||||||||||
Mortgage and other asset-backed securities |
| 2,881 | 14 | 2,895 | ||||||||||||
Municipal obligations |
| 53,302 | 1,787 | 55,089 | ||||||||||||
Convertible bonds |
| 39,015 | | 39,015 | ||||||||||||
Corporate equities |
31,798 | 7,353 | | 39,151 | ||||||||||||
Other |
2,643 | | 35,908 | 38,551 | ||||||||||||
Securities owned, at fair value |
174,207 | 155,103 | 37,709 | 367,019 | ||||||||||||
Investments (1) |
12,522 | 34,563 | 17,208 | 64,293 | ||||||||||||
Derivative contracts (2) |
| 513,790 | | 513,790 | ||||||||||||
Securities purchased under
agreement to resell (4) |
| 332,179 | | 332,179 | ||||||||||||
Total |
$ | 224,704 | $ | 1,035,635 | $ | 54,917 | $ | 1,315,256 | ||||||||
23
Fair Value Measurements | ||||||||||||||||
As of December 31, 2010 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Liabilities: |
||||||||||||||||
Securities sold, but not yet purchased: |
||||||||||||||||
U.S. Treasury obligations |
$ | 101,060 | $ | | $ | | $ | 101,060 | ||||||||
U.S. Agency obligations |
4,405 | 99 | | 4,504 | ||||||||||||
Sovereign obligations |
| | | | ||||||||||||
Corporate debt and other obligations |
| 6,788 | | 6,788 | ||||||||||||
Mortgage and other asset-backed
securities |
| 25 | | 25 | ||||||||||||
Municipal obligations |
| 383 | | 383 | ||||||||||||
Convertible bonds |
| 11,093 | | 11,093 | ||||||||||||
Corporate equities |
20,962 | 15,202 | | 36,164 | ||||||||||||
Other |
35 | | | 35 | ||||||||||||
Securities sold, but not yet
purchased, at fair value |
126,462 | 33,590 | | 160,052 | ||||||||||||
Investments |
12 | | | 12 | ||||||||||||
Derivative contracts (3) |
147 | 532,510 | | 532,657 | ||||||||||||
Securities sold under agreements to
repurchase (4) |
| 389,305 | | 389,305 | ||||||||||||
Total |
$ | 126,621 | $ | 955,405 | $ | | $ | 1,082,026 | ||||||||
(1) | Included in other assets on the consolidated balance sheet. | |
(2 | Primarily represents the fair value of purchases of To-Be-Announced securities (TBAs). See Derivatives used for trading and investment purposes below. | |
(3) | Primarily represents the fair value of sales of TBAs. See Derivatives used for trading and investment purposes below. | |
(4) | Includes securities purchased under agreements to resell and securities sold under agreements to repurchase where the Company has elected the fair value option. |
24
Fair Value Measurements | ||||||||||||||||
As of December 31, 2009 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: |
||||||||||||||||
Cash equivalents |
$ | 13,365 | $ | | $ | | $ | 13,365 | ||||||||
Securities segregated for regulatory and
other purposes |
11,499 | | | 11,499 | ||||||||||||
Deposits with clearing organizations |
7,995 | | | 7,995 | ||||||||||||
Securities owned: |
||||||||||||||||
U.S. Treasury obligations |
53,633 | | | 53,633 | ||||||||||||
U.S. Agency obligations |
15,928 | 14,604 | | 30,532 | ||||||||||||
Sovereign obligations |
3 | | | 3 | ||||||||||||
Corporate debt and other obligations |
| 30,330 | | 30,330 | ||||||||||||
Mortgage and other asset-backed securities |
| 3,718 | 317 | 4,035 | ||||||||||||
Municipal obligations |
| 33,531 | 1,075 | 34,606 | ||||||||||||
Convertible bonds |
| 35,001 | | 35,001 | ||||||||||||
Corporate equities |
35,178 | 8,550 | | 43,728 | ||||||||||||
Other |
2,054 | | 4,450 | 6,504 | ||||||||||||
Securities owned, at fair value |
106,796 | 125,734 | 5,842 | 238,372 | ||||||||||||
Investments (1) |
11,374 | 28,972 | 15,981 | 56,327 | ||||||||||||
Derivative contracts (2) |
| 5,854 | | 5,854 | ||||||||||||
Total |
$ | 151,029 | $ | 160,560 | $ | 21,823 | $ | 333,412 | ||||||||
Liabilities: |
||||||||||||||||
Securities sold, but not yet purchased: |
||||||||||||||||
U.S. Treasury obligations |
$ | 73,909 | $ | | $ | | $ | 73,909 | ||||||||
U.S. Agency obligations |
| 90 | | 90 | ||||||||||||
Sovereign obligations |
153 | | | 153 | ||||||||||||
Corporate debt and other obligations |
| 7,323 | | 7,323 | ||||||||||||
Mortgage and other asset-backed securities |
| 5 | | 5 | ||||||||||||
Municipal obligations |
| 1,707 | | 1,707 | ||||||||||||
Convertible bonds |
| 12,121 | | 12,121 | ||||||||||||
Corporate equities |
22,112 | 14,174 | | 36,286 | ||||||||||||
Other |
145 | | | 145 | ||||||||||||
Securities sold, but not yet purchased, at
fair value |
96,319 | 35,420 | | 131,739 | ||||||||||||
Investments (3) |
57 | | | 57 | ||||||||||||
Derivative contracts (4) |
178 | 972 | | 1,150 | ||||||||||||
Total |
$ | 96,554 | $ | 36,392 | $ | | $ | 132,946 | ||||||||
(1) | Included in other assets on the consolidated balance sheet. | |
(2) | Included in receivable from brokers and clearing organizations on the consolidated balance sheet. | |
(3) | Included in accounts payable and other liabilities on the consolidated balance sheet. | |
(4) | Included in payable to brokers and clearing organizations on the consolidated balance sheet. |
25
Level 3 Assets and Liabilities | ||||||||||||||||||||||||
Realized | Unrealized | Purchases, | ||||||||||||||||||||||
Gains | Gains | Sales, | ||||||||||||||||||||||
Opening | (Losses) | (Losses) (5) | Issuances, | Transfers | Ending | |||||||||||||||||||
Balance | (5) | (6) | Settlements | In / Out | Balance | |||||||||||||||||||
For the year ended December 31, 2010 | ||||||||||||||||||||||||
Assets: |
||||||||||||||||||||||||
Mortgage and other asset-backed
securities (1) |
$ | 317 | $ | 2 | $ | 8 | $ | (11 | ) | $ | (302 | ) | $ | 14 | ||||||||||
Municipal obligations
(2) |
1,075 | (4 | ) | (836 | ) | 1,990 | (438 | ) | 1,787 | |||||||||||||||
Other (3) |
4,450 | | (1,716 | ) | 32,674 | 500 | 35,908 | |||||||||||||||||
Investments (4) |
15,981 | (116 | ) | 1,113 | 10 | 220 | 17,208 | |||||||||||||||||
Total assets |
$ | 21,823 | $ | (118 | ) | $ | (1,431 | ) | $ | 34,663 | $ | (20 | ) | $ | 54,917 | |||||||||
(1) | Represents non-agency securities primarily collateralized by home equity and manufactured housing. | |
(2) | Includes Municipal Auction Rate Securities (MARS) issued by municipalities that failed in the auction. | |
(3) | Represents auction rate preferred securities and Student Loan Auction Rate Securities (SLARS) that failed in the auction rate market. | |
(4) | Primarily represents general partner ownership interests in hedge funds and private equity funds sponsored by the Company. | |
(5) | Included in principal transactions, net on the consolidated statement of operations, except for investments which are included in other income on the consolidated statement of operations. | |
(6) | Unrealized gains (losses) are attributable to assets or liabilities that are still held at the reporting date. |
Level 3 Assets and Liabilities | ||||||||||||||||||||||||
Realized | Unrealized | Purchases, | ||||||||||||||||||||||
Gains | Gains | Sales, | ||||||||||||||||||||||
Opening | (Losses) | (Losses) (5) | Issuances, | Transfers | Ending | |||||||||||||||||||
Balance | (5) | (6) | Settlements | In / Out | Balance | |||||||||||||||||||
For the year ended December 31, 2009 | ||||||||||||||||||||||||
Assets: |
||||||||||||||||||||||||
Convertible bonds |
$ | 815 | $ | (124 | ) | $ | | $ | (691 | ) | $ | | $ | | ||||||||||
Mortgage and other asset-backed
securities (1) |
1,610 | 323 | (160 | ) | (1,406 | ) | (50 | ) | 317 | |||||||||||||||
Municipal obligations |
| | | | 1,075 | 1,075 | ||||||||||||||||||
Other (2) |
5,325 | | | (875 | ) | | 4,450 | |||||||||||||||||
Investments (3) |
12,085 | (76 | ) | 4,742 | | (770 | ) | 15,981 | ||||||||||||||||
Total assets |
$ | 19,835 | $ | 123 | $ | 4,582 | $ | (2,972 | ) | $ | 255 | $ | 21,823 | |||||||||||
Liabilities: |
||||||||||||||||||||||||
Other (2) |
$ | (375 | ) | | | 375 | | $ | | |||||||||||||||
Derivative contracts (4) |
(2,516 | ) | 45 | | 2,471 | | | |||||||||||||||||
Total liabilities |
$ | (2,891 | ) | $ | 45 | | $ | 2,846 | | $ | | |||||||||||||
26
(1) | Represents non-agency securities primarily collateralized by home equity and manufactured housing. | |
(2) | Represents auction rate preferred securities that failed in the auction rate market. | |
(3) | Primarily represents general partner ownership interests in hedge funds and private equity funds sponsored by the Company. | |
(4) | Represents unrealized losses on excess retention exposure on leveraged finance underwriting activity described below under Credit Concentrations. | |
(5) | Included in principal transactions, net on the consolidated statement of operations, except for investments which is included in other income on the consolidated statement of operations. | |
(6) | Unrealized gains (losses) are attributable to assets or liabilities that are still held at the reporting date. |
27
28
Fair Value of Derivative Instruments | ||||||||||
As of December 31, 2010 | ||||||||||
Expressed in thousands of dollars | Description | Notional | Fair Value | |||||||
Assets: | ||||||||||
Derivatives designated as hedging instruments (1) | ||||||||||
Interest rate contracts |
Cap | $ | 100,000 | $ | 178 | |||||
Derivatives not designated as hedging instruments (1) | ||||||||||
Other contracts (4) |
TBAs | 496,266 | 513,612 | |||||||
Total Assets | $ | 596,266 | $ | 513,790 | ||||||
Liabilities: | ||||||||||
Derivatives designated as hedging instruments (1) | ||||||||||
Interest rate contracts |
Swaps | $ | 9,000 | $ | 116 | |||||
Derivatives not designated as hedging instruments (1) | ||||||||||
Commodity contracts |
U.S Treasury Futures | 14,000 | 147 | |||||||
Other contracts |
TBAs | 518,987 | 532,359 | |||||||
Forward Purchase Commitment (2) | 3,250,000 | 35 | ||||||||
Sub-total | 3,782,987 | 532,541 | ||||||||
Total Liabilities | $ | 3,791,987 | $ | 532,657 | ||||||
(1) | See Fair Value of Derivative Instruments above for description of derivative financial instruments. | |
(2) | Forward commitment to repurchase government securities that received sale treatment related to Repo-to-Maturity transactions. |
29
Fair Value of Derivative Instruments | ||||||||||
As of December 31, 2009 | ||||||||||
Expressed in thousands of dollars | Description | Notional | Fair Value | |||||||
Assets: | ||||||||||
Derivatives designated as hedging instruments (1) | ||||||||||
Interest rate contracts |
Cap | $ | 100,000 | $ | 2,356 | |||||
Derivatives not designated as hedging instruments (1) | ||||||||||
Other contracts |
TBAs | $ | 329,169 | $ | 3,498 | |||||
Total Assets | $ | 429,169 | $ | 5,854 | ||||||
Liabilities: | ||||||||||
Derivatives designated as hedging instruments (1) | ||||||||||
Interest rate contracts |
Swaps | $ | 36,000 | $ | 875 | |||||
Derivatives not designated as hedging instruments | ||||||||||
Commodity contracts |
U.S Treasury Futures | $ | 10,000 | $ | 178 | |||||
Other contracts |
TBAs | 329,169 | | |||||||
Forward Purchase | ||||||||||
Commitment (2) | 800,000 | 97 | ||||||||
Sub-total | $ | 1,139,169 | $ | 275 | ||||||
Total Liabilities | $ | 1,175,169 | $ | 1,150 | ||||||
(1) | See Fair Value of Derivative Instruments above for description of derivative financial instruments. | |
(2) | Forward commitment to repurchase government securities that received sale treatment related to Repo-to-Maturity transactions. |
30
Recognized | |||||||||||||||||||||
in Other | |||||||||||||||||||||
Comprehen- | |||||||||||||||||||||
sive Income | Reclassified from | ||||||||||||||||||||
on | Accumulated Other | ||||||||||||||||||||
Derivatives | Comprehensive | ||||||||||||||||||||
Recognized in Income | -Effective | Income into Income | |||||||||||||||||||
Expressed in thousands of dollars. | on Derivatives | Portion | -Effective Portion(2) | ||||||||||||||||||
(pre-tax) | (after-tax) | (after-tax) | |||||||||||||||||||
Hedging | Gain/ | Gain/ | Gain/ | ||||||||||||||||||
Relationship | Description | Location | (Loss) | (Loss) | Location | (Loss) | |||||||||||||||
Cash Flow Hedges used for asset and liability management: | |||||||||||||||||||||
Interest rate contracts |
Swaps (3) | N/A | $ | | $ | 451 | Interest expense |
$ | (813 | ) | |||||||||||
Caps (3) | N/A | | (1,298 | ) | Other revenue | (181 | ) | ||||||||||||||
Derivatives used for trading and investment (1): | |||||||||||||||||||||
Commodity contracts
|
U.S Treasury Futures | Principal transaction revenue |
(1,454 | ) | | None | | ||||||||||||||
Federal Funds Futures |
Principal transaction revenue |
(84 | ) | | None | | |||||||||||||||
Euro-dollar Futures | Principal transaction revenue |
(31 | ) | | None | | |||||||||||||||
Foreign exchange contracts |
Options | Other revenue | 7 | | None | | |||||||||||||||
Other contracts
|
TBAs | Principal transaction revenue |
14,044 | | None | | |||||||||||||||
Forward purchase commitment (4) |
Principal transaction revenue |
(776 | ) | | None | | |||||||||||||||
Total
|
$ | 11,707 | $ | (847 | ) | $ | (994 | ) | |||||||||||||
(1) | See Fair Value of Derivative Instruments above for description of derivative financial instruments. | |
(2) | There is no ineffective portion included in income for the year ended December 31, 2010. | |
(3) | As noted above in Cash flow hedges used for asset and liability management, interest rate swaps and caps are used to hedge interest rate risk associated with the Senior Secured Credit Note and the Subordinated Note. As a result, changes in fair value of the interest rate swaps and caps are offset by interest rate changes on the outstanding Senior Secured Credit Note and Subordinated Note balances. There was no ineffective portion as at December 31, 2010. |
31
(4) | Forward commitment to repurchase government securities that received sale treatment related to Repo-to-Maturity transactions. |
Recognized | |||||||||||||||||||||
in Other | |||||||||||||||||||||
Comprehen- | |||||||||||||||||||||
sive Income | Reclassified from | ||||||||||||||||||||
on | Accumulated Other | ||||||||||||||||||||
Derivatives | Comprehensive | ||||||||||||||||||||
Recognized in Income | -Effective | Income into Income | |||||||||||||||||||
Expressed in thousands of dollars. | on Derivatives | Portion | -Effective Portion(2) | ||||||||||||||||||
(pre-tax) | (after-tax) | (after-tax) | |||||||||||||||||||
Hedging | Gain/ | Gain/ | Gain/ | ||||||||||||||||||
Relationship | Description | Location | (Loss) | (Loss) | Location | (Loss) | |||||||||||||||
Cash Flow Hedges: | |||||||||||||||||||||
Interest rate contracts |
Swaps (3) | N/A | $ | | $ | 861 | Interest Expense |
$ | (1,774 | ) | |||||||||||
Caps (3) | N/A | | 23 | Other | (61 | ) | |||||||||||||||
Derivatives used for trading and investment: | |||||||||||||||||||||
Commodity contracts
|
U.S Treasury Futures | Principal transaction revenue |
2,431 | | None | | |||||||||||||||
Federal Funds Futures |
Principal transaction revenue |
(59 | ) | ||||||||||||||||||
Euro-dollar Futures | Principal transaction revenue |
(19 | ) | ||||||||||||||||||
Foreign exchange contracts |
Forwards | Other revenue | 1 | | None | | |||||||||||||||
Other contracts
|
TBAs | Principal transaction revenue |
4,227 | | None | | |||||||||||||||
Forward purchase commitment (4) |
Principal transaction revenue |
(97 | ) | | None | | |||||||||||||||
Credit-Risk Related Contingent Features: | |||||||||||||||||||||
Warehouse facility |
Excess retention (1) | Principal transaction revenue |
47 | | None | | |||||||||||||||
Total
|
$ | 6,531 | $ | 884 | $ | (1,835 | ) | ||||||||||||||
32
(1) | See Fair Value of Derivative Instruments above for description of derivative financial instruments. | |
(2) | There is no ineffective portion included in income for the year ended December 31, 2009. | |
(3) | As noted above in Cash flow hedges used for asset and liability management, interest rate swaps and caps are used to hedge interest rate risk associated with the Senior Secured Credit Note and the Subordinated Note. As a result, changes in fair value of the interest rate swaps and caps are offset by interest rate changes on the outstanding Senior Secured Credit Note and Subordinated Note balances. There was no ineffective portion as at December 31, 2009. | |
(4) | Forward commitment to repurchase government securities that received sale treatment related to Repo-to-Maturity transactions. |
33
34
35
Carrying Value of the | Maximum | |||||||||||||||||||
Companys Variable | Exposure | |||||||||||||||||||
Total | Interest | to Loss in | ||||||||||||||||||
VIE Assets | Assets (2) | Capital | Non-consolidated | |||||||||||||||||
(1) | Liabilities | Commitments | VIEs | |||||||||||||||||
Hedge Funds |
$ | 1,769,382 | $ | 775 | $ | | $ | | $ | 775 | ||||||||||
Private Equity Funds |
157,196 | 22 | | 5 | 27 | |||||||||||||||
Total |
$ | 1,926,578 | $ | 797 | $ | | $ | 5 | $ | 802 | ||||||||||
(1) | Represents the total assets of the VIEs and does not represent the Companys interests in the VIEs. | |
(2) | Represents the Companys interests in the VIEs and is included in other assets on the consolidated balance sheet. |
Carrying Value of the | Maximum | |||||||||||||||||||
Companys Variable | Exposure | |||||||||||||||||||
Interest | to Loss in | |||||||||||||||||||
Total | Assets (1) | Capital | Non-consolidated | |||||||||||||||||
VIE Assets | Liabilities | Commitments | VIEs | |||||||||||||||||
Hedge Funds |
$ | 1,564,486 | $ | 830 | $ | | $ | | $ | 830 | ||||||||||
Private Equity Funds |
123,701 | 34 | | 5 | 39 | |||||||||||||||
Total |
$ | 1,688,187 | $ | 864 | $ | | $ | 5 | $ | 869 | ||||||||||
(1) | Included in other assets on the consolidated balance sheet. |
36
December 31, | December 31, | |||||||||||||||
2010 | 2009 | |||||||||||||||
Accumulated | ||||||||||||||||
depreciation/ | ||||||||||||||||
Cost | amortization | Net book value | Net book value | |||||||||||||
Furniture, fixtures
and equipment |
$ | 82,123 | 66,226 | $ | 15,897 | $ | 15,108 | |||||||||
Leasehold
improvements |
33,994 | 27,016 | 6,978 | 7,248 | ||||||||||||
$ | 116,117 | 93,242 | $ | 22,875 | $ | 22,356 | ||||||||||
2010 | 2009 | |||||||
Year-end balance
|
$ | 147,000 | Nil | |||||
Weighted interest rate (at end of year)
|
1.28 | % | | |||||
Maximum balance (at any month end)
|
$ | 147,000 | $ | 121,900 | ||||
Average amount outstanding (during the year)
|
$ | 61,639 | $ | 54,697 | ||||
Average interest rate (during the year)
|
1.28 | % | 1.73 | % |
Interest Rate at | ||||||||||||||
December 31, | December 31, | December 31, | ||||||||||||
Issued | Maturity Date | 2010 | 2010 | 2009 | ||||||||||
Senior Secured Credit Note (a)
|
7/31/2013 | 4.79 | % | $ | 22,503 | $ | 32,503 | |||||||
Subordinated Note (b)
|
1/31/2014 | 5.54 | % | $ | 100,000 | $ | 100,000 |
(a) | In 2006, the Company issued a Senior Secured Credit Note in the amount of $125.0 million at a variable interest rate based on LIBOR with a seven-year term to a syndicate led by Morgan Stanley Senior Funding |
37
38
2010 | 2009 | 2008 | ||||||||||
Class A Stock outstanding, beginning
of year |
13,118,001 | 12,899,465 | 13,266,596 | |||||||||
Issued pursuant to share-based
compensation plans |
150,521 | 268,536 | 282,869 | |||||||||
Repurchased and cancelled pursuant to
the issuer bid |
| (50,000 | ) | (650,000 | ) | |||||||
Class A Stock outstanding, end of year |
13,268,522 | 13,118,001 | 12,899,465 | |||||||||
2010 | 2009 | 2008 | ||||||||||
Class A Stock purchased and cancelled
pursuant to an Issuer Bid |
| 50,000 | 650,000 | |||||||||
Total consideration |
| $ | 559 | $ | 17,187 | |||||||
Average price per share |
| $ | 11.18 | $ | 26.44 |
1. Dividends per share | 2. Record Date | 3. Payment Date | ||
4. $0.11
|
5. February 12, 2010 | 6. February 26, 2010 | ||
7. $0.11
|
8. May 14, 2010 | 9. May 28, 2010 | ||
10. $0.11
|
11. August 13, 2010 | 12. August 27, 2010 | ||
13. $0.11
|
14. November 12, 2010 | 15. November 26, 2010 |
39
Year ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Basic weighted average number
of shares outstanding |
13,340,846 | 13,110,647 | 13,199,580 | |||||||||
Net dilutive effect of
warrants, treasury method (1) |
| | | |||||||||
Net dilutive effect of
share-based awards, treasury
method (2) |
556,415 | 330,632 | | |||||||||
Diluted common shares |
13,897,261 | 13,441,279 | 13,199,580 | |||||||||
Net profit (loss), for the year |
$ | 40,579 | $ | 19,487 | $ | (20,770 | ) | |||||
Net profit attributable to non-
controlling interests |
2,248 | | | |||||||||
Net profit (loss) available to
Oppenheimer Holdings Inc. stockholders
and assumed conversions |
$ | 38,331 | $ | 19,487 | $ | (20,770 | ) | |||||
Basic earnings (loss) per share |
$ | 2.87 | $ | 1.49 | $ | (1.57 | ) | |||||
Diluted earnings (loss) per share |
$ | 2.76 | $ | 1.45 | $ | (1.57 | ) |
(1) | As part of the consideration for the 2008 acquisition of certain businesses from CIBC World
Markets Corp., the Company issued a warrant to CIBC to purchase 1 million shares of Class A
Stock of the Company at $48.62 per share exercisable five years from the January 14, 2008
acquisition date. For the years ended December 31, 2010, 2009 and 2008, the effect of the
warrants is anti-dilutive. |
|
(2) | The diluted earnings per share computations do not include the antidilutive effect of the following items: |
40
Year ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Number of antidilutive warrants,
options and restricted shares, for
the period |
1,254,279 | 1,459,642 | 1,460,194 |
Year ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
U.S. federal statutory income tax rate |
35.0 | % | 35.0 | % | 35.0 | % | ||||||
U.S. state and local income taxes, net of U.S. federal
income tax benefits (1) |
7.0 | 6.9 | % | 5.2 | % | |||||||
Tax exempt income, including dividends |
-0.7 | % | -1.7 | % | 2.8 | % | ||||||
Business promotion and other non-deductible expenses |
0.7 | % | 0.9 | % | -1.5 | % | ||||||
Non-U.S. Operations |
-0.3 | % | -1.4 | % | -0.1 | % | ||||||
Other (2) |
1.0 | % | 4.3 | % | 1.0 | % | ||||||
Effective income tax rate |
42.7 | % | 44.0 | % | 42.4 | % | ||||||
(1) | In 2008, other primarily includes the effect of tax authority audits. | |
(2) | In 2009, other primarily includes the tax impact of $1.9 million related to moving the jurisdiction of incorporation of parent company from Canada to the United States. |
Year ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Current: |
||||||||||||
U.S. federal tax (benefit) |
$ | (4,854 | ) | $ | 21,280 | $ | (2,430 | ) | ||||
State and local tax (benefit) |
2,704 | 7,263 | (791 | ) | ||||||||
Non- U.S. operations |
685 | 1,054 | 248 | |||||||||
(1,465 | ) | 29,597 | (2,973 | ) | ||||||||
Deferred: |
||||||||||||
U.S. federal tax (benefit) |
27,839 | (10,261 | ) | (9,198 | ) | |||||||
State and local tax (benefit) |
3,361 | (3,502 | ) | (2,992 | ) | |||||||
Non U.S. operations (benefit) |
452 | (508 | ) | (110 | ) | |||||||
31,652 | (14,271 | ) | (12,300 | ) | ||||||||
$ | 30,187 | $ | 15,326 | $ | (15,273 | ) | ||||||
41
December 31, | ||||||||
2010 | 2009 | |||||||
Deferred tax assets: |
||||||||
Employee deferred compensation plans |
$ | 27,669 | $ | 33,672 | ||||
Reserve for litigation and legal fees |
5,893 | 4,545 | ||||||
Allowance for doubtful accounts |
1,175 | 1,091 | ||||||
Other |
12,032 | 12,697 | ||||||
Total deferred tax assets |
46,769 | 52,005 | ||||||
Deferred tax liabilities: |
||||||||
Goodwill amortization (Section 197) |
33,156 | 29,905 | ||||||
Change in accounting method |
17,012 | 0 | ||||||
Partnership investments |
6,863 | 3,104 | ||||||
Capital markets acquisition (2008) |
4,982 | 4,982 | ||||||
Involuntary conversion |
2,395 | 2,371 | ||||||
Book versus tax depreciation differences |
768 | 0 | ||||||
Other |
2,601 | 1,451 | ||||||
Total deferred tax liabilities |
67,777 | 41,813 | ||||||
U.S. deferred tax asset/(liabilities) , net |
(21,009 | ) | 10,192 | |||||
Non U.S. deferred tax asset/(liabilities) , net |
4,714 | 5,167 | ||||||
Deferred tax asset/(liabilities) , net |
$ | (16,295 | ) | $ | 15,359 | |||
42
43
Grant date assumptions | ||||||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||||||
Expected term (1) |
4.5 years | 5 years | 2.4 years | 5 years | 5 years | 5 years | ||||||||||||||||||
Expected volatility factor
(2) |
48.58 | % | 39.17 | % | 36.41 | % | 39.67 | % | 26.57 | % | 23.50 | % | ||||||||||||
Risk-free interest rate (3) |
2.62 | % | 3.32 | % | 2.13 | % | 4.54 | % | 4.51 | % | 3.89 | % | ||||||||||||
Actual dividends (4) |
$ | 0.44 | $ | 0.44 | $ | 0.44 | $ | 0.40 | $ | 0.38 | $ | 0.36 |
(1) | The expected term was determined based on actual awards. | |
(2) | The volatility factor was measured using the weighted average of historical daily price changes of the Companys Class A Stock over a historical period commensurate to the expected term of the awards. | |
(3) | The risk-free interest rate was based on periods equal to the expected term of the awards based on the U.S. Treasury yield curve in effect at the time of grant. | |
(4) | Actual dividends were used to compute the expected annual dividend yield. |
Year ended | Year ended | |||||||||||||||
December 31, 2010 | December 31, 2009 | |||||||||||||||
Weighted | ||||||||||||||||
average | Weighted average | |||||||||||||||
Number of shares | exercise price | Number of shares | exercise price | |||||||||||||
Options outstanding, beginning
of year |
420,707 | $ | 31.82 | 950,732 | $ | 31.04 | ||||||||||
Options granted |
17,799 | $ | 31.93 | 27,165 | $ | 12.31 | ||||||||||
Options exercised |
(101,500 | ) | $ | 22.80 | (146,934 | ) | $ | 20.71 | ||||||||
Options forfeited or expired |
(52,030 | ) | $ | 35.35 | (410,256 | ) | $ | 32.70 | ||||||||
Options outstanding, end of year |
284,976 | $ | 34.39 | 420,707 | $ | 31.82 | ||||||||||
Options vested, end of year |
196,314 | $ | 37.53 | 190,457 | $ | 29.70 | ||||||||||
Weighted average fair value of
options granted during the year |
$ | 12.97 | | $ | 3.40 | | ||||||||||
44
Weighted | Weighted average | Weighted average | ||||||||||||||||||
average | exercise price | exercise price of | ||||||||||||||||||
Range of exercise | Number | remaining | of outstanding | Number exercisable | vested | |||||||||||||||
prices | outstanding | contractual life | options | (vested) | options | |||||||||||||||
$9.60 - $25.00 |
33,396 | 2.96 years | $ | 14.18 | 2,674 | $ | 20.29 | |||||||||||||
$25.01 - $39.45 |
251,580 | 1.81 years | $ | 37.07 | 193,640 | $ | 37.77 | |||||||||||||
$9.60 - $39.45 |
284,976 | 1.95 years | $ | 34.39 | 196,314 | $ | 37.53 | |||||||||||||
Year ended December 31, 2010 | ||||||||||||||||||||
Number of | Weighted average fair | |||||||||||||||||||
Options | value | |||||||||||||||||||
Non-vested beginning of year |
230,250 | $ | 8.85 | |||||||||||||||||
Granted |
17,799 | $ | 12.97 | |||||||||||||||||
Vested |
(159,287 | ) | $ | 8.62 | ||||||||||||||||
Forfeited or expired |
(100 | ) | $ | 9.88 | ||||||||||||||||
Non-vested end of year |
88,662 | $ | 10.10 | |||||||||||||||||
45
Number of shares of | ||||||||||||
Class A Stock | Weighted | |||||||||||
subject to | average fair | Remaining | ||||||||||
ESP awards | value | contractual life | ||||||||||
Non-vested beginning of year |
753,022 | $ | 27.13 | 2.0 years | ||||||||
Granted |
194,500 | $ | 26.00 | 4.1 years | ||||||||
Vested |
(49,208 | ) | $ | 34.75 | | |||||||
Forfeited or expired |
(10,503 | ) | $ | 23.68 | 1.0 years | |||||||
Non-vested end of year |
887,811 | $ | 26.34 | 1.8 years | ||||||||
46
Number of | ||||||||||||||||
OARs | Remaining contractual | Fair value as at | ||||||||||||||
Grant date | outstanding | Strike price | life | December 31, 2010 | ||||||||||||
January 13, 2006 |
231,310 | $ | 20.53 | 13 days | $ | 5.68 | ||||||||||
January 12, 2007 |
330,825 | $ | 35.44 | 1 year | $ | 1.77 | ||||||||||
January 10, 2008 |
430,775 | $ | 37.78 | 2 years | $ | 6.73 | ||||||||||
January 12, 2009 |
404,700 | $ | 12.74 | 3 years | $ | 15.34 | ||||||||||
January 19, 2010 |
341,020 | $ | 30.68 | 4 years | $ | 9.43 | ||||||||||
Total |
1,738,630 | |||||||||||||||
Total
weighted average values |
$ | 29.93 | 2.6 years | $ | 8.80 |
47
Expressed in thousands of dollars. | ||||||||
2011 |
$ | 40,811 | ||||||
2012 |
33,683 | |||||||
2013 |
21,892 | |||||||
2014 |
16,928 | |||||||
2015 |
12,260 | |||||||
2016 and thereafter |
23,202 | |||||||
Total |
$ | 148,776 | ||||||
48
49
50
51
Expressed in thousands of dollars. | ||||||||||||
Year ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Revenue: |
||||||||||||
Private Client (1) (2) |
$ | 597,303 | $ | 543,890 | $ | 574,331 | ||||||
Capital Markets |
359,164 | 375,164 | 273,203 | |||||||||
Asset Management (1) |
69,197 | 58,616 | 61,527 | |||||||||
Other |
9,408 | 13,763 | 11,009 | |||||||||
Total |
$ | 1,035,072 | $ | 991,433 | $ | 920,070 | ||||||
Profit (loss) before income taxes: |
||||||||||||
Private Client (2) |
$ | 35,281 | $ | 24,825 | $ | 64,264 | ||||||
Capital Markets (3) (4) |
18,756 | (4,854 | ) | (93,975 | ) | |||||||
Asset Management |
22,391 | 15,892 | 12,303 | |||||||||
Other |
(5,662 | ) | (1,050 | ) | (18,635 | ) | ||||||
Total |
$ | 70,766 | $ | 34,813 | $ | (36,043 | ) | |||||
(1) | For the year ended December 31, 2010, the Asset Management and the Private Client segments earned performance fees of approximately $6.8 million and $6.1 million, respectively ($5.1 million and $5.4 million, respectively, in 2009 and $552,900 and $815,300, respectively, in 2008). These fees are based on participation as general partner in various alternative investments. |
52
(2) | For the years ended December 31, 2010, the Private Client segment continued to be negatively impacted by the low interest rate environment. Revenue from margin interest, money fund products and, since March 2008, sponsored FDIC-covered deposits totaled $37.7 million ($45.5 million in 2009 and $89.7 million in 2008). | |
(3) | For the year ended December 31, 2008, the Capital Markets segment included accrued expenses of $40.2 million for deferred incentive compensation to former CIBC employees for awards made by CIBC prior to the January 14, 2008 acquisition by the Company. | |
(4) | For the year ended December 31, 2008, the Capital Markets segment included transition service charges of $27.3 million paid to CIBC for interim support of the acquired businesses which substantially terminated upon the transition of such businesses to Oppenheimers platform in mid August 2008. |
53
54
Fiscal Quarters | ||||||||||||||||||||
Year ended December 31, 2010 | Fourth | Third | Second | First | Year | |||||||||||||||
Revenue |
$ | 296,760 | $ | 235,141 | $ | 256,996 | $ | 246,175 | $ | 1,035,072 | ||||||||||
Profit before income taxes |
$ | 31,274 | $ | 7,486 | $ | 16,146 | $ | 15,860 | $ | 70,766 | ||||||||||
Net profit attributable to
Oppenheimer Holdings Inc. |
$ | 16,540 | $ | 3,421 | $ | 9,202 | $ | 9,168 | $ | 38,331 | ||||||||||
Earnings per share: |
||||||||||||||||||||
Basic |
$ | 1.24 | $ | 0.26 | $ | 0.69 | $ | 0.69 | $ | 2.87 | ||||||||||
Diluted |
$ | 1.18 | $ | 0.25 | $ | 0.66 | $ | 0.66 | $ | 2.76 | ||||||||||
Dividends per share |
$ | 0.11 | $ | 0.11 | $ | 0.11 | $ | 0.11 | $ | 0.44 | ||||||||||
Market price of Class A Stock (1): |
||||||||||||||||||||
High |
$ | 28.74 | $ | 29.86 | $ | 30.41 | $ | 33.63 | $ | 33.63 | ||||||||||
Low |
$ | 23.25 | $ | 22.11 | $ | 23.79 | $ | 24.11 | $ | 22.11 |
Year ended | Fiscal Quarters | |||||||||||||||||||
December 31, 2009 | Fourth | Third | Second | First | Year | |||||||||||||||
Revenue |
$ | 273,377 | $ | 262,067 | $ | 250,724 | $ | 205,265 | $ | 991,433 | ||||||||||
Profit (loss)
before income
taxes |
$ | 10,609 | $ | 14,050 | $ | 12,976 | $ | (2,822 | ) | $ | 34,813 | |||||||||
Net profit (loss) |
$ | 6,463 | $ | 7,908 | $ | 7,130 | $ | (2,014 | ) | $ | 19,487 | |||||||||
Earnings (loss) per share: |
||||||||||||||||||||
Basic |
$ | 0.49 | $ | 0.60 | $ | 0.55 | $ | (0.15 | ) | $ | 1.49 | |||||||||
Diluted |
$ | 0.48 | $ | 0.59 | $ | 0.54 | $ | (0.15 | ) | $ | 1.45 | |||||||||
Dividends per share |
$ | 0.11 | $ | 0.11 | $ | 0.11 | $ | 0.11 | $ | 0.44 | ||||||||||
Market price of Class A Stock (1): |
||||||||||||||||||||
High |
$ | 34.16 | $ | 30.38 | $ | 22.83 | $ | 14.72 | $ | 34.16 | ||||||||||
Low |
$ | 22.85 | $ | 20.56 | $ | 9.00 | $ | 6.70 | $ | 6.70 |
(1) | The price quotations above were obtained from the New York Stock Exchange web site. |
55
Guarantor | Non-Guarantor | |||||||||||||||||||
(Expressed in thousands of dollars) | Parent | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
ASSETS |
||||||||||||||||||||
Cash and cash equivalents |
$ | 361 | $ | (241 | ) | $ | 52,734 | $ | | $ | 52,854 | |||||||||
Cash and securities
segregated for regulatory
and other purposes |
| | 142,446 | | 142,446 | |||||||||||||||
Deposits with clearing
organizations |
| | 23,228 | | 23,228 | |||||||||||||||
Receivable from brokers and
clearing organizations |
| 62 | 302,782 | | 302,844 | |||||||||||||||
Receivable
from customers, net of allowance for credit losses of
$2,716
|
| | 924,817 | | 924,817 | |||||||||||||||
Income taxes receivable |
| 33,557 | (702 | ) | (27,876 | ) | 4,979 | |||||||||||||
Securities purchased under
agreements to resell |
| | 347,070 | | 347,070 | |||||||||||||||
Securities owned,
including amounts pledged of $102,501,
at fair
value |
| | 367,019 | | 367,019 | |||||||||||||||
Subordinated loan receivable |
| 12,558 | 100,000 | (112,558 | ) | | ||||||||||||||
Notes
receivable, net |
| | 59,786 | | 59,786 | |||||||||||||||
Office facilities, net |
| | 22,875 | | 22,875 | |||||||||||||||
Intangible
assets, net |
| | 40,979 | | 40,979 | |||||||||||||||
Goodwill |
| | 132,472 | | 132,472 | |||||||||||||||
Other |
| (347 | ) | 198,954 | 58 | 198,665 | ||||||||||||||
Investment in subsidiaries |
484,639 | 782,915 | (152,852 | ) | (1,114,702 | ) | | |||||||||||||
Intercompany receivable |
12,135 | 21,862 | 1,847 | (35,844 | ) | | ||||||||||||||
$ | 497,135 | $ | 850,366 | $ | 2,563,455 | $ | (1,290,922 | ) | $ | 2,620,034 | ||||||||||
LIABILITIES
AND STOCKHOLDERS EQUITY |
||||||||||||||||||||
Liabilities |
||||||||||||||||||||
Drafts payable |
$ | | $ | | $ | 61,055 | $ | | $ | 61,055 | ||||||||||
Bank call loans |
| | 147,000 | | 147,000 | |||||||||||||||
Payable to brokers and
clearing organizations |
| | 372,697 | | 372,697 | |||||||||||||||
Payable to customers |
| | 406,916 | | 406,916 | |||||||||||||||
Securities sold under
agreements to repurchase |
| | 390,456 | | 390,456 | |||||||||||||||
Securities sold, but not
yet purchased, at fair
value |
| | 160,052 | | 160,052 | |||||||||||||||
Accrued compensation |
| | 175,938 | | 175,938 | |||||||||||||||
Accounts payable and other
liabilities |
131 | | 262,268 | 107 | 262,506 | |||||||||||||||
Income taxes payable |
2,440 | 22,188 | 3,248 | (27,876 | ) | | ||||||||||||||
Senior secured credit note |
| | 22,503 | | 22,503 | |||||||||||||||
Subordinated
note |
| | 212,558 | (112,558 | ) | 100,000 | ||||||||||||||
Deferred
income taxes, net |
| | 16,292 | 3 | 16,295 | |||||||||||||||
Excess of fair value of
acquired assets over cost |
| | 7,020 | | 7,020 | |||||||||||||||
Intercompany payables |
| 35,896 | | (35,896 | ) | | ||||||||||||||
2,571 | 58,084 | 2,238,003 | (176,220 | ) | 2,122,438 | |||||||||||||||
Stockholders
equity attributable to Oppenheimer Holdings Inc. |
494,564 | 792,282 | 322,420 | (1,114,702 | ) | 494,564 | ||||||||||||||
Non-controlling interest |
| | 3,032 | | 3,032 | |||||||||||||||
Stockholders equity |
494,564 | 792,282 | 325,452 | (1,114,702 | ) | 497,596 | ||||||||||||||
$ | 497,135 | $ | 850,366 | $ | 2,563,455 | $ | (1,290,922 | ) | $ | 2,620,034 | ||||||||||
56
Guarantor | Non-Guarantor | |||||||||||||||||||
(Expressed in thousands of dollars) | Parent | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
ASSETS |
||||||||||||||||||||
Cash and cash equivalents |
$ | 2,475 | $ | 2,359 | $ | 64,084 | $ | | $ | 68,918 | ||||||||||
Cash and securities
segregated for regulatory and other purposes
|
| | 78,133 | | 78,133 | |||||||||||||||
Deposits with clearing
organizations |
| | 25,798 | | 25,798 | |||||||||||||||
Receivable from brokers
and clearing organizations |
| 1,482 | 389,430 | | 390,912 | |||||||||||||||
Receivable
from customers,
net of allowance for credit losses of $2,378 |
| | 826,658 | | 826,658 | |||||||||||||||
Income taxes receivable |
| 20,098 | | (14,589 | ) | 5,509 | ||||||||||||||
Securities purchased under
agreements to resell |
| | 163,825 | | 163,825 | |||||||||||||||
Securities owned,
including amounts pledged of $156,248,
at
fair value |
| | 238,372 | | 238,372 | |||||||||||||||
Subordinated loan
receivable |
| 12,558 | 100,000 | (112,558 | ) | | ||||||||||||||
Notes
receivable, net |
| | 61,396 | | 61,396 | |||||||||||||||
Office facilities, net |
| | 18,751 | 3,605 | 22,356 | |||||||||||||||
Deferred
income taxes, net |
| | 43,030 | (27,671 | ) | 15,359 | ||||||||||||||
Intangible
assets, net |
| | 45,303 | | 45,303 | |||||||||||||||
Goodwill |
| | 132,472 | | 132,472 | |||||||||||||||
Other |
| 337 | 131,641 | (3,606 | ) | 128,372 | ||||||||||||||
Investments in subsidiaries |
448,315 | 797,309 | (133,399 | ) | (1,112,225 | ) | | |||||||||||||
Intercompany receivables |
771 | 37,445 | | (38,216 | ) | | ||||||||||||||
$ | 451,561 | $ | 871,588 | $ | 2,185,494 | $ | (1,305,260 | ) | $ | 2,203,383 | ||||||||||
LIABILITIES
AND STOCKHOLDERS EQUITY |
||||||||||||||||||||
Liabilities |
||||||||||||||||||||
Drafts payable |
$ | | $ | | $ | 48,097 | $ | | $ | 48,097 | ||||||||||
Bank call loans |
| | | | | |||||||||||||||
Payable to brokers and
clearing organizations |
| | 436,018 | | 436,018 | |||||||||||||||
Payable to customers |
| | 488,360 | | 488,360 | |||||||||||||||
Securities sold under
agreements to repurchase |
| | 155,625 | | 155,625 | |||||||||||||||
Securities sold, but not
yet purchased, at fair
value |
| | 131,739 | | 131,739 | |||||||||||||||
Accrued compensation |
| | 202,525 | | 202,525 | |||||||||||||||
Accounts payable and other
liabilities |
114 | 1,321 | 151,144 | (2,530 | ) | 150,049 | ||||||||||||||
Income taxes payable |
| 21,232 | (9,102 | ) | (12,130 | ) | | |||||||||||||
Senior secured credit note |
| | 32,503 | | 32,503 | |||||||||||||||
Subordinated
note |
| | 212,558 | (112,558 | ) | 100,000 | ||||||||||||||
Deferred
income taxes, net |
| | 27,672 | (27,672 | ) | | ||||||||||||||
Excess of fair value of
acquired assets over cost |
| | 7,020 | | 7,020 | |||||||||||||||
Intercompany payables |
| 35,879 | 2,266 | (38,145 | ) | | ||||||||||||||
114 | 58,432 | 1,886,425 | (193,035 | ) | 1,751,936 | |||||||||||||||
Stockholders equity |
451,447 | 813,156 | 299,069 | (1,112,225 | ) | 451,447 | ||||||||||||||
$ | 451,561 | $ | 871,588 | $ | 2,185,494 | $ | (1,305,260 | ) | $ | 2,203,383 | ||||||||||
57
Guarantor | Non-Guarantor | |||||||||||||||||||
(Expressed in thousands of dollars) | Parent | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
REVENUE: |
||||||||||||||||||||
Commissions |
$ | | $ | | $ | 537,730 | $ | | $ | 537,730 | ||||||||||
Principal transactions, net |
| (276 | ) | 77,459 | | 77,183 | ||||||||||||||
Interest |
| 7,111 | 45,869 | (7,109 | ) | 45,871 | ||||||||||||||
Investment banking |
| | 134,906 | | 134,906 | |||||||||||||||
Advisory fees |
| | 189,875 | (1,987 | ) | 187,888 | ||||||||||||||
Other |
| | 51,494 | | 51,494 | |||||||||||||||
| 6,835 | 1,037,333 | (9,096 | ) | 1,035,072 | |||||||||||||||
EXPENSES: |
||||||||||||||||||||
Compensation and related expenses |
292 | | 671,952 | | 672,244 | |||||||||||||||
Clearing and exchange fees |
| | 25,754 | | 25,754 | |||||||||||||||
Communications and technology |
18 | | 64,682 | | 64,700 | |||||||||||||||
Occupancy and equipment costs |
| | 74,389 | | 74,389 | |||||||||||||||
Interest |
| 6,487 | 26,536 | (7,109 | ) | 25,914 | ||||||||||||||
Other |
774 | 343 | 102,175 | (1,987 | ) | 101,305 | ||||||||||||||
1,084 | 6,830 | 965,488 | (9,096 | ) | 964,306 | |||||||||||||||
Profit (loss) before income taxes |
(1,084 | ) | 5 | 71,845 | | 70,766 | ||||||||||||||
Income tax provision (benefit) |
(422 | ) | 87 | 30,522 | | 30,187 | ||||||||||||||
Net profit (loss) for the year |
(662 | ) | (82 | ) | 41,323 | | 40,579 | |||||||||||||
Less net profit attributable to
non-controlling interest, net of
tax |
| | 2,248 | | 2,248 | |||||||||||||||
Equity in
income of subsidiaries |
38,993 | | | (38,993 | ) | | ||||||||||||||
Net
profit attributable to Oppenheimer Holdings Inc.
|
$ | 38,331 | $ | (82 | ) | $ | 39,075 | $ | (38,993 | ) | $ | 38,331 | ||||||||
58
Guarantor | Non-Guarantor | |||||||||||||||||||
(Expressed in thousands of dollars) | Parent | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
REVENUE: |
||||||||||||||||||||
Commissions |
$ | | $ | | $ | 555,574 | $ | | $ | 555,574 | ||||||||||
Principal transactions, net |
| | 107,094 | | 107,094 | |||||||||||||||
Interest |
2 | 7,646 | 35,595 | (7,283 | ) | 35,960 | ||||||||||||||
Investment banking |
| | 90,960 | | 90,960 | |||||||||||||||
Advisory fees |
475 | | 162,622 | (2,392 | ) | 160,705 | ||||||||||||||
Other |
| | 41,140 | | 41,140 | |||||||||||||||
477 | 7,646 | 992,985 | (9,675 | ) | 991,433 | |||||||||||||||
EXPENSES: |
||||||||||||||||||||
Compensation
and related expenses |
442 | | 671,883 | | 672,325 | |||||||||||||||
Clearing and exchange fees |
| | 26,748 | | 26,748 | |||||||||||||||
Communications and technology |
39 | | 62,685 | | 62,724 | |||||||||||||||
Occupancy and equipment costs |
9 | | 74,363 | | 74,372 | |||||||||||||||
Interest |
28 | 7,949 | 20,356 | (7,283 | ) | 21,050 | ||||||||||||||
Other |
2,470 | 1,850 | 97,473 | (2,392 | ) | 99,401 | ||||||||||||||
2,988 | 9,799 | 953,508 | (9,675 | ) | 956,620 | |||||||||||||||
Profit (loss) before income
taxes |
(2,511 | ) | (2,153 | ) | 39,478 | | 34,813 | |||||||||||||
Income tax provision (benefit) |
(967 | ) | (1,718 | ) | 18,012 | | 15,326 | |||||||||||||
Equity in
income of subsidiaries |
21,031 | | | (21,031 | ) | | ||||||||||||||
Net profit (loss) for the year |
$ | 19,487 | $ | (435 | ) | $ | 21,466 | $ | (21,031 | ) | $ | 19,487 | ||||||||
59
Guarantor | Non-Guarantor | |||||||||||||||||||
(Expressed in thousands of dollars) | Parent | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
REVENUE: |
||||||||||||||||||||
Commissions |
$ | | $ | | $ | 532,682 | $ | | $ | 532,682 | ||||||||||
Principal transactions, net |
| | 20,651 | | 20,651 | |||||||||||||||
Interest |
111 | 8,497 | 61,785 | (8,600 | ) | 61,793 | ||||||||||||||
Investment banking |
| | 83,541 | | 83,541 | |||||||||||||||
Advisory fees |
905 | | 199,942 | (1,887 | ) | 198,960 | ||||||||||||||
Other |
| | 22,443 | | 22,443 | |||||||||||||||
1,016 | 8,497 | 921,044 | (10,487 | ) | 920,070 | |||||||||||||||
EXPENSES: |
||||||||||||||||||||
Compensation and related
expenses |
525 | | 625,505 | | 626,030 | |||||||||||||||
Clearing and exchange fees |
| | 31,007 | | 31,007 | |||||||||||||||
Communications and
technology |
106 | | 75,253 | | 75,359 | |||||||||||||||
Occupancy and equipment
costs |
25 | | 69,920 | | 69,945 | |||||||||||||||
Interest |
204 | 8,111 | 39,283 | (8,600 | ) | 38,998 | ||||||||||||||
Other |
266 | 743 | 115,652 | (1,887 | ) | 114,774 | ||||||||||||||
1,126 | 8,854 | 956,620 | (10,487 | ) | 956,113 | |||||||||||||||
Loss before income taxes |
(110 | ) | (357 | ) | (35,576 | ) | | (36,043 | ) | |||||||||||
Income tax provision
(benefit) |
15 | (291 | ) | (14,997 | ) | | (15,273 | ) | ||||||||||||
Equity in
income of subsidiaries |
(20,645 | ) | | | 20,645 | | ||||||||||||||
Net loss for the year |
$ | (20,770 | ) | $ | (66 | ) | $ | (20,579 | ) | $ | 20,645 | $ | (20,770 | ) | ||||||
60
Guarantor | Non-Guarantor | |||||||||||||||||||
(Expressed in thousands of dollars) | Parent | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Cash
flows from operating activities: |
||||||||||||||||||||
Net profit
(loss) for year |
$ | 38,331 | $ | (82 | ) | $ | 41,323 | (38,993 | ) | $ | 40,579 | |||||||||
Adjustments
to reconcile net profit (loss) to net cash provided by operating
activities: |
||||||||||||||||||||
Non-Cash
items included in net profit (loss): |
||||||||||||||||||||
Depreciation and amortization |
| | 12,448 | | 12,448 | |||||||||||||||
Deferred income taxes |
| | 31,652 | | 31,652 | |||||||||||||||
Amortization of notes
receivable |
| | 19,657 | | 19,657 | |||||||||||||||
Amortization of debt
issuance costs |
| | 985 | | 985 | |||||||||||||||
Amortization of intangible
assets |
| | 4,324 | | 4,324 | |||||||||||||||
Provision for credit losses |
| | 338 | | 338 | |||||||||||||||
Share-based compensation
|
| | 4,242 | | 4,242 | |||||||||||||||
Decrease
(Increase) in operating assets and
liabilities: |
||||||||||||||||||||
Cash (used
in) provided by operating activities |
(491 | ) | 3,880 | (253,873 | ) | (1,017 | ) | (251,502 | ) | |||||||||||
Cash (used
in) provided by operating activities |
37,840 | 3,798 | (138,905 | ) | (40,010 | ) | (137,277 | ) | ||||||||||||
Cash
flows from investing activities: |
||||||||||||||||||||
Purchase of office facilities |
| | (12,157 | ) | | (12,157 | ) | |||||||||||||
Cash used
in investing activities |
| | (12,157 | ) | | (12,157 | ) | |||||||||||||
Cash
flows from financing activities: |
||||||||||||||||||||
Cash dividends paid on Class A
non-voting and Class B voting
common stock |
(5,871 | ) | | | | (5,871 | ) | |||||||||||||
Issuance of Class A non-voting
common stock |
2,312 | | | | 2,312 | |||||||||||||||
Repayments of senior secured
credit note |
| | (10,000 | ) | | (10,000 | ) | |||||||||||||
Other financing activities |
(36,395 | ) | (6,398 | ) | 149,712 | 40,010 | 146,929 | |||||||||||||
Cash provided by (used
in) financing activities |
(39,954 | ) | (6,398 | ) | 139,712 | 40,010 | 133,370 | |||||||||||||
Net
decrease
in cash and
cash equivalents |
(2,114 | ) | (2,600 | ) | (11,350 | ) | | (16,064 | ) | |||||||||||
Cash and cash equivalents,
beginning of year |
2,475 | 2,359 | 64,084 | | 68,918 | |||||||||||||||
Cash and cash equivalents, end of
year |
$ | 361 | $ | (241 | ) | $ | 52,734 | $ | | $ | 52,854 | |||||||||
61
Guarantor | Non-Guarantor | |||||||||||||||||||
(Expressed in thousands of dollars) | Parent | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Cash
flows from operating activities: |
||||||||||||||||||||
Net profit
(loss) for year |
$ | 19,487 | $ | (435 | ) | $ | 21,466 | $ | (21,031 | ) | $ | 19,487 | ||||||||
Adjustments
to reconcile net profit (loss) to net cash provided by operating
activities: |
||||||||||||||||||||
Non-cash
items included in net profit (loss): |
||||||||||||||||||||
Depreciation and
amortization |
| | 12,630 | | 12,630 | |||||||||||||||
Deferred income taxes |
| | (14,271 | ) | | (14,271 | ) | |||||||||||||
Amortization of notes
receivable |
| | 18,462 | | 18,462 | |||||||||||||||
Amortization of debt
issuance costs |
| | 1,188 | | 1,188 | |||||||||||||||
Amortization of intangible
assets |
| | 4,814 | | 4,814 | |||||||||||||||
Provision for credit losses |
| | 352 | | 352 | |||||||||||||||
Share-based compensation
|
| | 17,246 | | 17,246 | |||||||||||||||
Decrease
(Increase) in operating assets
and liabilities: |
||||||||||||||||||||
Cash
(used in) provided by operating activities |
(830 | ) | 14,909 | (19,305 | ) | 35 | (5,191 | ) | ||||||||||||
Cash
(used in) provided by operating activities |
18,657 | 14,474 | 42,582 | (20,996 | ) | 54,717 | ||||||||||||||
Cash
flows from investing activities: |
||||||||||||||||||||
Purchase of
office facilities |
| | (7,762 | ) | | (7,762 | ) | |||||||||||||
Cash
used in investing
activities |
| | (7,762 | ) | | (7,762 | ) | |||||||||||||
Cash
flows from financing activities: |
||||||||||||||||||||
Cash dividends paid on Class A
non-voting and Class B voting
common stock |
(5,776 | ) | | | | (5,776 | ) | |||||||||||||
Issuance of Class A non-voting
common stock |
3,043 | | | | 3,043 | |||||||||||||||
Repurchase of Class A
non-voting common stock for
cancellation |
(559 | ) | | | | (559 | ) | |||||||||||||
Repayments of senior secured
credit note |
| | (15,160 | ) | | (15,160 | ) | |||||||||||||
Other financing activities |
(14,444 | ) | (12,377 | ) | (445 | ) | 20,996 | (6,270 | ) | |||||||||||
Cash provided by
(used in) financing
activities |
(17,736 | ) | (12,377 | ) | (15,605 | ) | 20,996 | (24,722 | ) | |||||||||||
Net increase in cash and
cash equivalents |
920 | 2,097 | 19,216 | | 22,233 | |||||||||||||||
Cash and cash equivalents,
beginning of year |
1,555 | 262 | 44,868 | | 46,685 | |||||||||||||||
Cash and cash equivalents, end
of year |
$ | 2,475 | $ | 2,359 | $ | 64,084 | $ | | $ | 68,918 | ||||||||||
62
Guarantor | Non-Guarantor | |||||||||||||||||||
(Expressed in thousands of dollars) | Parent | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Cash flows from operating activities: |
||||||||||||||||||||
Net profit
(loss) for year |
$ | (20,770 | ) | $ | (66 | ) | $ | (20,579 | ) | 20,645 | $ | (20,770 | ) | |||||||
Adjustments
to reconcile net profit (loss) to net cash provided by operating
activities: |
||||||||||||||||||||
Non-cash items included in net profit (loss): |
||||||||||||||||||||
Depreciation and
amortization |
| | 11,474 | | 11,474 | |||||||||||||||
Deferred income taxes |
| | (12,300 | ) | | (12,300 | ) | |||||||||||||
Amortization of notes
receivable |
| | 16,761 | | 16,761 | |||||||||||||||
Amortization of debt
issuance costs |
| | 1,227 | | 1,227 | |||||||||||||||
Amortization of intangible
assets |
| | 5,058 | | 5,058 | |||||||||||||||
Provision for credit losses |
| | 1,473 | | 1,473 | |||||||||||||||
Share-based compensation
|
| | (112 | ) | | (112 | ) | |||||||||||||
Decrease (Increase) in operating assets
and liabilities: |
||||||||||||||||||||
Cash (used
in) provided by operating activities |
14,128 | 5,271 | 38,519 | (971 | ) | 56,948 | ||||||||||||||
Cash
(used in) provided by operating activities |
(6,640 | ) | 5,205 | 41,521 | 19,673 | 59,759 | ||||||||||||||
Cash
flows from investing activities: |
||||||||||||||||||||
Acquisition, net of cash
acquired |
| | (50,335 | ) | | (50,335 | ) | |||||||||||||
Purchase of office facilities |
| | (15,243 | ) | | (15,243 | ) | |||||||||||||
Cash
used in investing
activities |
| | (65,578 | ) | | (65,578 | ) | |||||||||||||
Cash
flows from financing activities: |
||||||||||||||||||||
Cash dividends paid on Class
A non-voting and Class B
voting common stock |
(5,890 | ) | | | | (5,890 | ) | |||||||||||||
Issuance of Class A
non-voting common stock |
5,740 | | | | 5,740 | |||||||||||||||
Repurchase of Class A
non-voting common stock for
cancellation |
(17,187 | ) | | | | (17,187 | ) | |||||||||||||
Issuance of subordinated note |
| | 100,000 | | 100,000 | |||||||||||||||
Repayments of senior secured
credit note |
| | (35,662 | ) | | (35,662 | ) | |||||||||||||
Other financing activities |
22,160 | (5,110 | ) | (19,576 | ) | (19,673 | ) | (22,199 | ) | |||||||||||
Cash provided by
(used in) financing
activities |
4,823 | (5,110 | ) | 44,762 | (19,673 | ) | 24,802 | |||||||||||||
Net increase (decrease) in cash and
cash equivalents |
(1,817 | ) | 95 | 20,705 | | 18,983 | ||||||||||||||
Cash and cash equivalents,
beginning of year |
3,372 | 167 | 24,163 | | 27,702 | |||||||||||||||
Cash and cash equivalents, end
of year |
$ | 1,555 | $ | 262 | $ | 44,868 | $ | | $ | 46,685 | ||||||||||
63
(Expressed in thousands of dollars) |
March 31, 2011 | December 31, 2010 | ||||||
ASSETS |
||||||||
Cash and cash equivalents |
$ | 52,940 | $ | 52,854 | ||||
Cash and securities segregated for regulatory and
other purposes |
150,157 | 142,446 | ||||||
Deposits with clearing organizations |
26,487 | 23,228 | ||||||
Receivable from brokers and clearing organizations |
348,663 | 302,844 | ||||||
Receivable from customers, net of allowance for
doubtful accounts of $2,716 ($2,716 in 2010) |
974,658 | 924,817 | ||||||
Income taxes receivable |
3,482 | 4,979 | ||||||
Securities purchased under agreement to resell |
201,500 | 347,070 | ||||||
Securities owned, including amounts pledged of $434,315
($102,501 in 2010), at fair value |
962,336 | 367,019 | ||||||
Notes receivable, net |
57,231 | 59,786 | ||||||
Office facilities, net |
21,099 | 22,875 | ||||||
Intangible assets, net |
39,897 | 40,979 | ||||||
Goodwill |
132,472 | 132,472 | ||||||
Other |
185,746 | 198,665 | ||||||
$ | 3,156,668 | $ | 2,620,034 | |||||
1
(Expressed in thousands of dollars) |
March 31, 2011 | December 31, 2010 | ||||||
LIABILITIES AND EQUITY |
||||||||
Liabilities |
||||||||
Drafts payable |
$ | 42,436 | $ | 61,055 | ||||
Bank call loans |
113,200 | 147,000 | ||||||
Payable to brokers and clearing organizations |
531,529 | 372,697 | ||||||
Payable to customers |
520,471 | 406,916 | ||||||
Securities sold under agreement to repurchase |
542,301 | 390,456 | ||||||
Securities sold, but not yet purchased, at fair value |
377,747 | 160,052 | ||||||
Accrued compensation |
105,859 | 175,938 | ||||||
Accounts payable and other liabilities |
274,711 | 262,506 | ||||||
Senior secured credit note |
22,378 | 22,503 | ||||||
Subordinated note |
100,000 | 100,000 | ||||||
Deferred income tax, net |
20,180 | 16,295 | ||||||
Excess of fair value of acquired assets over cost |
7,020 | 7,020 | ||||||
2,657,832 | 2,122,438 | |||||||
Equity |
||||||||
Oppenheimer Holdings Inc. stockholders equity |
||||||||
Share capital |
||||||||
Class A non-voting common stock (2011 13,535,063 shares issued and outstanding
2010 13,268,522 shares issued and outstanding) |
61,548 | 51,768 | ||||||
Class B voting common stock
99,680 shares issued and outstanding |
133 | 133 | ||||||
61,681 | 51,901 | |||||||
Contributed capital |
34,696 | 47,808 | ||||||
Retained earnings |
398,234 | 394,648 | ||||||
Accumulated other comprehensive income |
518 | 207 | ||||||
Total Oppenheimer Holdings Inc. stockholders equity |
495,129 | 494,564 | ||||||
Noncontrolling interest |
3,707 | 3,032 | ||||||
Total equity |
498,836 | 497,596 | ||||||
$ | 3,156,668 | $ | 2,620,034 | |||||
2
Three months ended | ||||||||
March 31, | ||||||||
Expressed in thousands of dollars, except share and per share amounts | 2011 | 2010 | ||||||
REVENUE: |
||||||||
Commissions |
$ | 136,855 | $ | 138,197 | ||||
Principal transactions, net |
10,991 | 20,179 | ||||||
Interest |
14,789 | 9,578 | ||||||
Investment banking |
28,441 | 25,184 | ||||||
Advisory fees |
48,449 | 42,794 | ||||||
Other |
13,892 | 10,243 | ||||||
253,417 | 246,175 | |||||||
EXPENSES: |
||||||||
Compensation and related expenses |
170,415 | 158,179 | ||||||
Clearing and exchange fees |
6,313 | 6,562 | ||||||
Communications and technology |
15,939 | 16,440 | ||||||
Occupancy and equipment costs |
18,546 | 18,460 | ||||||
Interest |
7,774 | 5,301 | ||||||
Other |
24,601 | 25,373 | ||||||
243,588 | 230,315 | |||||||
Profit before income taxes |
9,829 | 15,860 | ||||||
Income tax provision |
4,068 | 6,496 | ||||||
Net profit for the period |
5,761 | 9,364 | ||||||
Less net profit attributable to non-controlling
interest, net of tax |
675 | 196 | ||||||
Net profit attributable to Oppenheimer
Holdings Inc. |
$ | 5,086 | $ | 9,168 | ||||
Profit per share attributable to Oppenheimer
Holdings Inc.: |
||||||||
Basic |
$ | 0.38 | $ | 0.69 | ||||
Diluted |
$ | 0.36 | $ | 0.66 | ||||
Weighted average common shares |
||||||||
Basic |
13,550,723 | 13,296,980 | ||||||
Diluted |
14,203,413 | 13,855,982 | ||||||
Dividends declared per share |
$ | 0.11 | $ | 0.11 |
3
Three months ended | ||||||||
March 31, | ||||||||
Expressed in thousands of dollars |
2011 | 2010 | ||||||
Net profit for the period |
$ | 5,761 | $ | 9,364 | ||||
Other comprehensive income: |
||||||||
Currency translation adjustment |
239 | 285 | ||||||
Change in cash flow hedges, net of tax |
72 | (367 | ) | |||||
Comprehensive income for the period |
6,072 | 9,282 | ||||||
Comprehensive income attributable to
non-controlling interests |
675 | 196 | ||||||
Comprehensive income attributable to Oppenheimer
Holdings Inc. |
$ | 5,397 | $ | 9,086 | ||||
4
Three months ended | ||||||||
March 31, | ||||||||
Expressed in thousands of dollars |
2011 | 2010 | ||||||
Cash flows from operating activities: |
||||||||
Net profit for the period |
$ | 5,761 | $ | 9,364 | ||||
Adjustments to reconcile net profit to net cash used in operating activities: |
||||||||
Non-cash items included in net profit: |
||||||||
Depreciation and amortization |
3,527 | 3,088 | ||||||
Deferred income tax |
3,885 | 10,263 | ||||||
Amortization of notes receivable |
5,087 | 4,916 | ||||||
Amortization of debt issuance costs |
273 | 233 | ||||||
Amortization of intangibles |
1,082 | 1,081 | ||||||
Provision for doubtful accounts |
| 29 | ||||||
Share-based compensation |
4,836 | (1,769 | ) | |||||
Decrease (increase) in operating assets: |
||||||||
Cash and securities segregated for regulatory and other purposes |
(7,711 | ) | (8,534 | ) | ||||
Deposits with clearing organizations |
(3,259 | ) | (3,400 | ) | ||||
Receivable from brokers and clearing organizations |
(45,819 | ) | 38,646 | |||||
Receivable from customers |
(49,841 | ) | 31,408 | |||||
Income taxes receivable |
1,497 | (8,226 | ) | |||||
Securities purchased under agreement to resell |
145,570 | (186,425 | ) | |||||
Securities owned |
(595,317 | ) | (157,333 | ) | ||||
Notes receivable |
(2,532 | ) | (3,116 | ) | ||||
Other |
12,684 | (2,914 | ) | |||||
Increase (decrease) in operating liabilities: |
||||||||
Drafts payable |
(18,619 | ) | (12,748 | ) | ||||
Payable to brokers and clearing organizations |
158,904 | 22,932 | ||||||
Payable to customers |
113,555 | (82,418 | ) | |||||
Securities sold under agreement to repurchase |
151,845 | 186,731 | ||||||
Securities sold, but not yet purchased |
217,695 | 147,078 | ||||||
Accrued compensation |
(76,647 | ) | (75,015 | ) | ||||
Accounts payable and other liabilities |
12,205 | 33,163 | ||||||
Cash provided by (used in) operating activities |
38,661 | (52,966 | ) | |||||
5
Three months ended | ||||||||
March 31, | ||||||||
Expressed in thousands of dollars |
2011 | 2010 | ||||||
Cash flows from investing activities: |
||||||||
Purchase of office facilities |
(1,549 | ) | (1,337 | ) | ||||
Cash used in investing activities |
(1,549 | ) | (1,337 | ) | ||||
Cash flows from financing activities: |
||||||||
Cash dividends paid on Class A non-voting and Class B voting common
stock |
(1,500 | ) | (1,463 | ) | ||||
Issuance of Class A non-voting common stock |
71 | 2,002 | ||||||
Tax shortfall from share-based compensation |
(1,672 | ) | (64 | ) | ||||
Senior secured credit note repayments |
(125 | ) | (500 | ) | ||||
Increase (decrease) in bank call loans, net |
(33,800 | ) | 37,600 | |||||
Cash (used in) provided by financing activities |
(37,026 | ) | 37,575 | |||||
Net increase (decrease) in cash and cash equivalents |
86 | (16,728 | ) | |||||
Cash and cash equivalents, beginning of period |
52,854 | 68,918 | ||||||
Cash and cash equivalents, end of period |
$ | 52,940 | $ | 52,190 | ||||
Schedule of non-cash investing and financing activities: |
||||||||
Employee share plan issuance |
$ | 9,709 | $ | 1,332 | ||||
Supplemental disclosure of cash flow information: |
||||||||
Cash paid during the periods for interest |
$ | 11,232 | $ | 5,214 | ||||
Cash paid during the periods for income taxes |
$ | 526 | $ | 4,079 |
6
Expressed in thousands of dollars |
2011 | 2010 | ||||||
Share capital |
||||||||
Balance at beginning of period |
$ | 51,901 | $ | 47,824 | ||||
Issuance of Class A non-voting common stock |
9,780 | 3,334 | ||||||
Balance at end of period |
$ | 61,681 | $ | 51,158 | ||||
Contributed capital |
||||||||
Balance at beginning of period |
$ | 47,808 | $ | 41,978 | ||||
Vested employee share plan awards |
(12,662 | ) | (1,287 | ) | ||||
Tax shortfall from share-based awards |
(1,672 | ) | (64 | ) | ||||
Share-based expense |
1,222 | 2,260 | ||||||
Balance at end of period |
$ | 34,696 | $ | 42,887 | ||||
Retained earnings |
||||||||
Balance at beginning of period |
$ | 394,648 | $ | 362,188 | ||||
Net profit for the period attributable to Oppenheimer Holdings Inc. |
5,086 | 9,168 | ||||||
Dividends ($0.11 per share in 2011 and 2010) |
(1,500 | ) | (1,463 | ) | ||||
Balance at end of period |
$ | 398,234 | $ | 369,893 | ||||
Accumulated other comprehensive income (loss) |
||||||||
Balance at beginning of period |
$ | 207 | $ | (543 | ) | |||
Currency translation adjustment |
239 | 285 | ||||||
Change in cash flow hedges, net of tax |
72 | (367 | ) | |||||
Balance at end of period |
$ | 518 | $ | (625 | ) | |||
Stockholders Equity of Oppenheimer Holdings Inc. |
$ | 495,129 | $ | 463,313 | ||||
Non-controlling interest |
||||||||
Balance at beginning of period |
$ | 3,032 | $ | | ||||
Grant of non-controlling interest |
| 784 | ||||||
Net profit attributable to non-controlling interest for the period, net of tax |
675 | 196 | ||||||
Balance at end of period |
$ | 3,707 | $ | 980 | ||||
Total equity |
$ | 498,836 | $ | 464,293 | ||||
7
8
9
Three months ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Basic weighted average number of shares
outstanding |
13,550,723 | 13,296,980 | ||||||
Net dilutive effect of warrant, treasury method
(1) |
| | ||||||
Net dilutive effect of share-based awards,
treasury method (2) |
652,690 | 559,002 | ||||||
Diluted weighted average number of shares
outstanding |
14,203,413 | 13,855,982 | ||||||
Net profit for the period |
$ | 5,761 | $ | 9,364 | ||||
Net profit attributable to non-controlling
interests |
675 | 196 | ||||||
Net income attributable to Oppenheimer Holdings
Inc. |
$ | 5,086 | $ | 9,168 | ||||
Basic earnings per share |
$ | 0.38 | $ | 0.69 | ||||
Diluted earnings per share |
$ | 0.36 | $ | 0.66 |
(1) | As part of the consideration for the 2008 acquisition of a portion of CIBC World Markets Corp.s U.S. capital markets businesses, the Company issued a warrant to purchase 1 million shares of Class A Stock of the Company at $48.62 per share exercisable five years from the January 14, 2008 acquisition date. For the three months ended March 31, 2011 and 2010, the effect of the warrant is anti-dilutive. | |
(2) | For the three months ended March 31, 2011 and 2010, respectively, the diluted earnings per share computations do not include the anti-dilutive effect of 1,142,028 and 1,273,416 shares of Class A Stock granted under share-based compensation arrangements and the warrant described in (1). |
March 31, 2011 | December 31, 2010 | |||||||
Receivable from brokers and clearing
organizations consist of: |
||||||||
Deposits paid for securities borrowed |
$ | 239,138 | $ | 199,117 | ||||
Receivable from brokers |
19,364 | 20,609 | ||||||
Securities failed to deliver |
42,401 | 23,673 | ||||||
Clearing organizations |
7,475 | 11,038 | ||||||
Omnibus accounts |
19,122 | 19,129 | ||||||
Other |
21,163 | 29,278 | ||||||
$ | 348,663 | $ | 302,844 | |||||
10
March 31, 2011 | December 31, 2010 | |||||||
Payable to brokers and clearing organizations consist of: |
||||||||
Deposits received for securities loaned |
$ | 401,607 | $ | 345,462 | ||||
Securities failed to receive |
28,906 | 24,944 | ||||||
Clearing organizations and other |
101,016 | 2,291 | ||||||
$ | 531,529 | $ | 372,697 | |||||
March 31, 2011 | December 31, 2010 | |||||||||||||||
Owned | Sold | Owned | Sold | |||||||||||||
U.S. Treasury, agency and sovereign obligations |
$ | 753,105 | $ | 315,939 | $ | 160,114 | $ | 105,564 | ||||||||
Corporate debt and other obligations |
41,122 | 10,961 | 32,204 | 6,788 | ||||||||||||
Mortgage and other asset-backed securities |
2,914 | 12 | 2,895 | 25 | ||||||||||||
Municipal obligations |
40,430 | 714 | 55,089 | 383 | ||||||||||||
Convertible bonds |
40,412 | 9,046 | 39,015 | 11,093 | ||||||||||||
Corporate equities |
45,266 | 41,006 | 39,151 | 36,164 | ||||||||||||
Other |
39,087 | 69 | 38,551 | 35 | ||||||||||||
Total |
$ | 962,336 | $ | 377,747 | $ | 367,019 | $ | 160,052 | ||||||||
11
12
13
Unfunded | Redemption | |||||||||||
Fair Value | Commit-ments | Redemption Frequency | Notice Period | |||||||||
Hedge Funds(1) |
$ | 1,215 | $ | | Quarterly - Annually | 30 - 120 Days | ||||||
Private Equity Funds(2) |
2,269 | 4,685 | N/A | N/A | ||||||||
Distressed Opportunities
Fund(3) |
12,439 | | Semi-Annually | 180 Days | ||||||||
Total |
$ | 15,923 | $ | 4,685 | ||||||||
(1) | Includes investments in hedge funds and hedge fund of funds that pursue long/short, event-driven, and activist strategies. | |
(2) | Includes private equity funds and private equity fund of funds with a focus on diversified portfolios, real estate and global natural resources. | |
(3) | Hedge fund that invests in distressed debt of U.S. companies. |
14
Fair Value Measurements | ||||||||||||||||
As of March 31, 2011 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: |
||||||||||||||||
Cash equivalents |
$ | 12,330 | $ | | $ | | $ | 12,330 | ||||||||
Securities segregated for regulatory and other
purposes |
14,498 | | | 14,498 | ||||||||||||
Deposits with clearing organizations |
9,094 | | | 9,094 | ||||||||||||
Securities owned: |
||||||||||||||||
U.S. Treasury obligations |
682,670 | | | 682,670 | ||||||||||||
U.S. Agency obligations |
37,733 | 32,702 | | 70,435 | ||||||||||||
Corporate debt and other obligations |
| 41,122 | | 41,122 | ||||||||||||
Mortgage and other asset-backed securities |
| 2,914 | | 2,914 | ||||||||||||
Municipal obligations |
| 38,266 | 2,165 | 40,431 | ||||||||||||
Convertible bonds |
| 40,412 | | 40,412 | ||||||||||||
Corporate equities |
33,981 | 11,285 | | 45,266 | ||||||||||||
Other |
2,504 | | 36,582 | 39,086 | ||||||||||||
Securities owned, at fair value |
756,888 | 166,701 | 38,747 | 962,336 | ||||||||||||
Investments (1) |
1,336 | 37,059 | 17,308 | 55,703 | ||||||||||||
Derivative contracts (2) |
| 550,827 | | 550,827 | ||||||||||||
Securities purchased under agreements to resell |
| 201,473 | | 201,473 | ||||||||||||
Total |
$ | 794,146 | $ | 956,060 | $ | 56,055 | $ | 1,806,261 | ||||||||
Liabilities: |
||||||||||||||||
Securities sold, but not yet purchased: |
||||||||||||||||
U.S. Treasury obligations |
$ | 302,646 | $ | | $ | | $ | 302,646 | ||||||||
U.S. Agency obligations |
2,023 | 11,270 | | 13,293 | ||||||||||||
Corporate debt and other obligations |
| 10,961 | | 10,961 | ||||||||||||
Mortgage and other asset-backed securities |
| 12 | | 12 | ||||||||||||
Municipal obligations |
| 714 | | 714 | ||||||||||||
Convertible bonds |
| 9,046 | | 9,046 | ||||||||||||
Corporate equities |
28,938 | 12,068 | | 41,006 | ||||||||||||
Other |
69 | | | 69 | ||||||||||||
Securities sold, but not yet purchased |
333,676 | 44,071 | | 377,747 | ||||||||||||
Investments |
30 | | | 30 | ||||||||||||
Derivative contracts (3) |
526 | 884,680 | | 885,206 | ||||||||||||
Total |
$ | 334,232 | $ | 928,751 | $ | | $ | 1,262,983 | ||||||||
(1) | Included in other assets on the consolidated balance sheet. |
|
(2) | Primarily represents the fair value of purchases of To-Be-Announced
securities (TBAs). See Derivatives used for trading and investment purposes
below. |
15
Fair Value Measurements | ||||||||||||||||
As of December 31, 2010 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: |
||||||||||||||||
Cash equivalents |
$ | 14,384 | $ | | $ | | $ | 14,384 | ||||||||
Securities segregated for regulatory and
other purposes |
14,497 | | | 14,497 | ||||||||||||
Deposits with clearing organizations |
9,094 | | | 9,094 | ||||||||||||
Securities owned: |
||||||||||||||||
U.S. Treasury obligations |
115,790 | | | 115,790 | ||||||||||||
U.S. Agency obligations |
23,963 | 20,348 | | 44,311 | ||||||||||||
Sovereign obligations |
13 | | | 13 | ||||||||||||
Corporate debt and other obligations |
| 32,204 | | 32,204 | ||||||||||||
Mortgage and other asset-backed |
| 2,881 | 14 | 2,895 | ||||||||||||
securities |
||||||||||||||||
Municipal obligations |
| 53,302 | 1,787 | 55,089 | ||||||||||||
Convertible bonds |
| 39,015 | | 39,015 | ||||||||||||
Corporate equities |
31,798 | 7,353 | | 39,151 | ||||||||||||
Other |
2,643 | | 35,908 | 38,551 | ||||||||||||
Securities owned, at fair value |
174,207 | 155,103 | 37,709 | 367,019 | ||||||||||||
Investments (1) |
12,522 | 34,563 | 17,208 | 64,293 | ||||||||||||
Derivative contracts (2) |
| 513,790 | | 513,790 | ||||||||||||
Securities purchased under agreement to
resell (4) |
| 332,179 | | 332,179 | ||||||||||||
Total |
$ | 224,704 | $ | 1,035,635 | $ | 54,917 | $ | 1,315,256 | ||||||||
16
Fair Value Measurements | ||||||||||||||||
As of December 31, 2010 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Liabilities: |
||||||||||||||||
Securities sold, but not yet purchased: |
||||||||||||||||
U.S. Treasury obligations |
$ | 101,060 | $ | | $ | | $ | 101,060 | ||||||||
U.S. Agency obligations |
4,405 | 99 | | 4,504 | ||||||||||||
Sovereign obligations |
| | | | ||||||||||||
Corporate debt and other obligations |
| 6,788 | | 6,788 | ||||||||||||
Mortgage and other asset-backed
securities |
| 25 | | 25 | ||||||||||||
Municipal obligations |
| 383 | | 383 | ||||||||||||
Convertible bonds |
| 11,093 | | 11,093 | ||||||||||||
Corporate equities |
20,962 | 15,202 | | 36,164 | ||||||||||||
Other |
35 | | | 35 | ||||||||||||
Securities sold, but not yet purchased,
at fair value |
126,462 | 33,590 | | 160,052 | ||||||||||||
Investments |
12 | | | 12 | ||||||||||||
Derivative contracts (3) |
147 | 532,510 | | 532,657 | ||||||||||||
Securities sold under agreements to
repurchase (4) |
| 389,305 | | 389,305 | ||||||||||||
Total |
$ | 126,621 | $ | 955,405 | $ | | $ | 1,082,026 | ||||||||
(1) | Included in other assets on the consolidated balance sheet. | |
(2 | Primarily represents the fair value of purchases of To-Be-Announced securities (TBAs). See Derivatives used for trading and investment purposes below. | |
(3) | Primarily represents the fair value of sales of TBAs. See Derivatives used for trading and investment purposes below. | |
(4) | Includes securities purchased under agreements to resell and securities sold under agreements to repurchase where the Company has elected the fair value option. |
17
Realized | Unrealiz-ed | |||||||||||||||||||||||||||
Gains | Gains | |||||||||||||||||||||||||||
Opening | (Losses) | (Losses) (4) | Purch-ases, | Sales, | Trans-fers | |||||||||||||||||||||||
Balance | (4) | (5) | Issu-ances | Settle-ments | In/Out | Ending Bal-ance | ||||||||||||||||||||||
For the three months ended March 31, 2011 | ||||||||||||||||||||||||||||
Assets: |
||||||||||||||||||||||||||||
Mortgage and other
asset-backed
securities (1) |
$ | 14 | 1 | | (15 | ) | | $ | | |||||||||||||||||||
Municipal
obligations |
1,787 | | (147 | ) | 525 | | | 2,165 | ||||||||||||||||||||
Other (2) |
35,908 | | (2,901 | ) | 6,575 | (3,000 | ) | | 36,582 | |||||||||||||||||||
Investments (3) |
17,208 | | (2 | ) | 127 | | (25 | ) | 17,308 | |||||||||||||||||||
Liabilities: |
||||||||||||||||||||||||||||
none |
Realized | Unrealized | Purchases, | ||||||||||||||||||||||
Gains | Gains | Sales, | ||||||||||||||||||||||
Opening | (Losses) | (Losses) (4) | Issuances | Trans-fers | Ending | |||||||||||||||||||
Balance | (4) | (5) | Settlements | In / Out | Balance | |||||||||||||||||||
For the three months ended March 31, 2010 | ||||||||||||||||||||||||
Assets: |
||||||||||||||||||||||||
Mortgage and other
asset-backed
securities (1) |
$ | 317 | 1 | (1 | ) | 64 | (1 | ) | $ | 380 | ||||||||||||||
Municipal obligations |
1,075 | | (162 | ) | | 62 | 975 | |||||||||||||||||
Other (2) |
4,450 | | | | | 4,450 | ||||||||||||||||||
Investments (3) |
15,981 | | 634 | 55 | 220 | 16,890 | ||||||||||||||||||
Liabilities: |
||||||||||||||||||||||||
none |
(1) | Represents private placements of non-agency collateralized mortgage obligations. | |
(2) | Represents auction rate preferred securities that failed in the auction rate market. | |
(3) | Primarily represents general partner ownership interests in hedge funds and private equity funds sponsored by the Company. | |
(4) | Included in principal transactions, net on the condensed consolidated statement of operations, except for investments which are included in other income on the condensed consolidated statement of operations. | |
(5) | Unrealized gains (losses) are attributable to assets or liabilities that are still held at the reporting date. |
18
19
20
Description | Notional | Fair Value | ||||||||
Assets: |
||||||||||
Derivatives designated as hedging instruments (1) | ||||||||||
Interest rate contracts |
Cap | $ | 100,000 | $ | 182 | |||||
Derivatives not designated as hedging instruments (1) | ||||||||||
Other contracts |
TBAs | 537,631 | 550,645 | |||||||
Total Assets |
$ | 637,631 | $ | 550,827 | ||||||
Liabilities: |
||||||||||
Derivatives not designated as hedging instruments (1) | ||||||||||
Commodity contracts |
U.S Treasury Futures | $ | 24,000 | $ | 526 | |||||
Federal Funds Futures | 3,310,000 | 275,185 | ||||||||
Eurodollar Futures | 205,000 | 50,962 | ||||||||
Euro Fx Futures | 2,832 | 2,836 | ||||||||
Other contracts |
TBAs | 537,631 | 555,645 | |||||||
Forward Purchase Commitment(2) | 4,150,000 | 52 | ||||||||
Total Liabilities |
$ | 8,229,463 | $ | 885,206 | ||||||
(1) | See Fair value of Derivative Instruments below for description of derivative financial instruments. | |
(2) | Forward commitment to repurchase government securities that received sale treatment related to Repo-to-Maturity transactions. |
21
Description | Notional | Fair Value | ||||||||
Assets: |
||||||||||
Derivatives designated as hedging instruments (1) | ||||||||||
Interest rate contracts |
Cap | $ | 100,000 | $ | 178 | |||||
Derivatives not designated as hedging instruments (1) | ||||||||||
Other contracts |
TBAs | 496,266 | 513,612 | |||||||
Total Assets |
$ | 596,266 | $ | 513,790 | ||||||
Liabilities: |
||||||||||
Derivatives designated as hedging instruments (1) | ||||||||||
Interest rate contracts |
Swaps | $ | 9,000 | $ | 116 | |||||
Derivatives not designated as hedging instruments (1) | ||||||||||
Commodity contracts |
U.S Treasury Futures | 14,000 | 147 | |||||||
Other contracts |
TBAs | 518,987 | 532,359 | |||||||
Forward Purchase Commitment (2) | 3,250,000 | 35 | ||||||||
Sub-total |
3,782,987 | 532,541 | ||||||||
Total Liabilities |
$ | 3,791,987 | $ | 532,657 | ||||||
(1) | See Fair Value of Derivative Instruments above for description of derivative financial instruments. | |
(2) | Forward commitment to repurchase government securities that received sale treatment related to Repo-to-Maturity transactions. |
22
Recognized in Other | ||||||||||||||||||
Comprehensive | Reclassified from Accumulated | |||||||||||||||||
Income on | Other Comprehensive Income | |||||||||||||||||
Derivatives | into Income-Effective | |||||||||||||||||
Expressed in thousands of dollars. | Recognized in Income on Derivatives | -Effective Portion | Portion(2) | |||||||||||||||
(pre-tax) | (after-tax) | (after-tax) | ||||||||||||||||
Hedging Relationship | Description | Location | Gain/(Loss) | Gain/(Loss) | Location | Gain/(Loss) | ||||||||||||
Cash Flow Hedges used for asset and liability management: | ||||||||||||||||||
Interest rate contracts |
Swaps (3) | N/A | $ | | $ | | Interest expense | $ | (111 | ) | ||||||||
Caps (3) | N/A | | 3 | Other revenue | (38 | ) | ||||||||||||
Derivatives used for trading and investment (1): | ||||||||||||||||||
Commodity contracts |
U.S Treasury Futures | Principal transaction revenue | (44 | ) | | None | | |||||||||||
Federal Funds Futures | Principal transaction revenue | (28 | ) | | None | | ||||||||||||
Euro-dollar Futures | Principal transaction revenue | (77 | ) | | None | | ||||||||||||
Euro FX | Principal transaction revenue | (94 | ) | | None | | ||||||||||||
Other contracts |
TBAs | Principal transaction revenue | 1,254 | | None | | ||||||||||||
Forward purchase commitment (4) | Principal transaction revenue | (898 | ) | | None | | ||||||||||||
Total |
$ | 113 | $ | 3 | $ | (149 | ) | |||||||||||
(1) | See Fair Value of Derivative Instruments above for description of derivative financial instruments. | |
(2) | There is no ineffective portion included in income for the three months ended March 31, 2011. | |
(3) | As noted above in Cash flow hedges used for asset and liability management, interest rate swaps and caps are used to hedge interest rate risk associated with the Senior Secured Credit Note and the Subordinated Note. As a result, changes in fair value of the interest rate swaps and caps are offset by interest rate changes on the outstanding Senior Secured Credit Note and Subordinated Note balances. There was no ineffective portion as at March 31, 2011. | |
(4) | Forward commitment to repurchase government securities that received sale treatment related to Repo-to-Maturity transactions. |
23
24
25
26
Carrying Value of the | ||||||||||||||||||||
Companys Variable | Maximum Exposure | |||||||||||||||||||
Interest | to Loss in | |||||||||||||||||||
Total | Assets (2) | Non-consolidated | ||||||||||||||||||
VIE Assets (1) | Liabilities | Capital Commitments | VIEs | |||||||||||||||||
Hedge Funds |
$ | 1,749,118 | $ | 343 | $ | | $ | | $ | 343 | ||||||||||
Private Equity Funds |
159,873 | 23 | | | 23 | |||||||||||||||
Total |
$ | 1,908,991 | $ | 366 | $ | | $ | | $ | 366 | ||||||||||
Carrying Value of the | ||||||||||||||||||||
Companys Variable | Maximum Exposure | |||||||||||||||||||
Interest | to Loss in | |||||||||||||||||||
Total | Assets (2) | Non-consolidated | ||||||||||||||||||
VIE Assets (1) | Liabilities | Capital Commitments | VIEs | |||||||||||||||||
Hedge Funds |
$ | 1,769,382 | $ | 775 | $ | | $ | | $ | 775 | ||||||||||
Private Equity Funds |
157,196 | 22 | | 5 | 27 | |||||||||||||||
Total |
$ | 1,926,578 | $ | 797 | $ | | $ | 5 | $ | 802 | ||||||||||
(1) | Represents the total assets of the VIEs and does not represent the Companys interests in the VIEs. | |
(2) | Represents the Companys interests in the VIEs and is included in other assets on the condensed consolidated balance sheet. |
27
Interest Rate at | ||||||||||||||||
Issued | Maturity Date | March 31, 2011 | March 31, 2011 | December 31, 2010 | ||||||||||||
Senior Secured Credit Note (a) |
7/31/2013 | 4.81 | % | $ | 22,378 | $ | 22,503 | |||||||||
Subordinated Note (b) |
1/31/2014 | 5.55 | % | $ | 100,000 | $ | 100,000 |
28
Three months ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Class A Stock outstanding, beginning of period |
13,268,522 | 13,118,001 | ||||||
Issued pursuant to the share-based compensation
plans |
266,541 | 123,551 | ||||||
Class A Stock outstanding, end of period |
13,535,063 | 13,241,552 | ||||||
29
Three months ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Revenue: |
||||||||
Private Client (1) |
$ | 145,399 | $ | 136,822 | ||||
Capital Markets |
89,753 | 92,444 | ||||||
Asset Management (1) |
18,265 | 16,909 | ||||||
Total |
$ | 253,417 | $ | 246,175 | ||||
Profit before income taxes: |
||||||||
Private Client (1) |
$ | 1,732 | $ | 5,260 | ||||
Capital Markets |
3,031 | 6,355 | ||||||
Asset Management (1) |
5,066 | 4,245 | ||||||
Total |
$ | 9,829 | $ | 15,860 | ||||
(1) | Asset management revenue is allocated 77.5% to the Asset Management segment and 22.5% to the Private Client segment. |
30
Three months ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
United States |
$ | 239,290 | $ | 234,814 | ||||
Europe / Middle East |
8,234 | 6,281 | ||||||
Asia |
3,139 | 3,270 | ||||||
South America |
2,755 | 1,810 | ||||||
$ | 253,418 | $ | 246,175 | |||||
31
Guarantor | Non-Guarantor | |||||||||||||||||||
(Expressed in thousands of dollars) | Parent | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
ASSETS |
||||||||||||||||||||
Cash and cash equivalents |
$ | 243 | $ | 14 | $ | 52,683 | $ | | $ | 52,940 | ||||||||||
Cash and securities
segregated for regulatory and other purposes |
| | 150,157 | | 150,157 | |||||||||||||||
Deposits with clearing
organizations |
| | 26,487 | | 26,487 | |||||||||||||||
Receivable from brokers and
clearing organizations |
| 182 | 348,481 | | 348,663 | |||||||||||||||
Receivable
from customers, net of allowance for credit losses of $2,716 |
| | 974,658 | | 974,658 | |||||||||||||||
Income taxes receivable |
| 27,818 | (702 | ) | (23,634 | ) | 3,482 | |||||||||||||
Securities purchased under
agreements to resell |
| | 201,500 | | 201,500 | |||||||||||||||
Securities
owned, including amounts pledged of $434,315, at fair value |
| | 962,336 | | 962,336 | |||||||||||||||
Subordinated
note |
| 12,558 | 100,000 | (112,558 | ) | |||||||||||||||
Notes
receivable, net |
| | 57,231 | | 57,231 | |||||||||||||||
Office facilities, net |
| | 21,099 | | 21,099 | |||||||||||||||
Deferred
income tax, net |
144 | | 14,959 | (15,103 | ) | | ||||||||||||||
Intangible
assets, net |
| | 40,387 | (490 | ) | 39,897 | ||||||||||||||
Goodwill |
| | 132,472 | | 132,472 | |||||||||||||||
Other |
| (562 | ) | 186,248 | 60 | 185,746 | ||||||||||||||
Investment
in subsidiaries |
488,683 | 779,168 | (212,604 | ) | (1,055,247 | ) | | |||||||||||||
Intercompany receivable |
8,739 | 24,339 | 2,871 | (35,949 | ) | | ||||||||||||||
$ | 497,809 | $ | 843,517 | $ | 3,058,263 | $ | (1,242,921 | ) | $ | 3,156,668 | ||||||||||
LIABILITIES
AND STOCKHOLDERS EQUITY |
||||||||||||||||||||
Liabilities |
||||||||||||||||||||
Drafts payable |
$ | | $ | | $ | 42,436 | $ | | $ | 42,436 | ||||||||||
Bank call loans |
| | 113,200 | | 113,200 | |||||||||||||||
Payable to brokers and
clearing organizations |
| | 531,529 | | 531,529 | |||||||||||||||
Payable to customers |
| | 520,471 | | 520,471 | |||||||||||||||
Securities sold under
agreement to repurchase |
| | 542,301 | | 542,301 | |||||||||||||||
Securities sold, but not yet
purchased, at fair value |
| | 377,747 | | 377,747 | |||||||||||||||
Accrued compensation |
| | 105,859 | | 105,859 | |||||||||||||||
Accounts payable and other
liabilities |
231 | | 274,747 | (267 | ) | 274,711 | ||||||||||||||
Income taxes payable |
2,449 | 22,324 | (923 | ) | (23,850 | ) | ||||||||||||||
Senior secured credit note |
| | 22,378 | | 22,378 | |||||||||||||||
Subordinated
note |
| | 212,558 | (112,558 | ) | 100,000 | ||||||||||||||
Deferred
income taxes, net |
| | 35,283 | (15,103 | ) | 20,180 | ||||||||||||||
Excess of
fair value of acquired assets over cost |
| | 7,020 | | 7,020 | |||||||||||||||
Intercompany payables |
| 35,896 | | (35,896 | ) | | ||||||||||||||
2,680 | 58,220 | 2,784,606 | (187,674 | ) | 2,657,832 | |||||||||||||||
Stockholders
equity attributable to the company |
495,129 | 785,297 | 269,950 | (1,055,247 | ) | 495,129 | ||||||||||||||
Non-controlling interest |
| | 3,707 | | 3,707 | |||||||||||||||
Stockholders equity |
495,129 | 785,297 | 273,657 | (1,055,247 | ) | 498,836 | ||||||||||||||
$ | 497,809 | $ | 843,517 | $ | 3,058,263 | $ | (1,242,921 | ) | $ | 3,156,668 | ||||||||||
32
Guarantor | Non-Guarantor | |||||||||||||||||||
(Expressed in thousands of dollars) | Parent | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
ASSETS |
||||||||||||||||||||
Cash and cash equivalents |
$ | 361 | $ | (241 | ) | $ | 52,734 | $ | | $ | 52,854 | |||||||||
Cash and securities
segregated for regulatory
and other purposes |
| | 142,446 | | 142,446 | |||||||||||||||
Deposits with clearing
organizations |
| | 23,228 | | 23,228 | |||||||||||||||
Receivable from brokers and
clearing organizations |
| 62 | 302,782 | | 302,844 | |||||||||||||||
Receivable
from customers, net of allowance for credit losses of
$2,716
|
| | 924,817 | | 924,817 | |||||||||||||||
Income taxes receivable |
| 33,557 | (702 | ) | (27,876 | ) | 4,979 | |||||||||||||
Securities purchased under
agreements to resell |
| | 347,070 | | 347,070 | |||||||||||||||
Securities owned,
including amounts pledged of $102,501,
at fair
value |
| | 367,019 | | 367,019 | |||||||||||||||
Subordinated loan receivable |
| 12,558 | 100,000 | (112,558 | ) | | ||||||||||||||
Notes
receivable, net |
| | 59,786 | | 59,786 | |||||||||||||||
Office facilities, net |
| | 22,875 | | 22,875 | |||||||||||||||
Intangible
assets, net |
| | 40,979 | | 40,979 | |||||||||||||||
Goodwill |
| | 132,472 | | 132,472 | |||||||||||||||
Other |
| (347 | ) | 198,954 | 58 | 198,665 | ||||||||||||||
Investment in subsidiaries |
484,639 | 782,915 | (152,852 | ) | (1,114,702 | ) | | |||||||||||||
Intercompany receivable |
12,135 | 21,862 | 1,847 | (35,846 | ) | | ||||||||||||||
$ | 497,135 | $ | 850,366 | $ | 2,563,455 | $ | (1,290,922 | ) | $ | 2,620,034 | ||||||||||
LIABILITIES
AND STOCKHOLDERS EQUITY |
||||||||||||||||||||
Liabilities |
||||||||||||||||||||
Drafts payable |
$ | | $ | | $ | 61,055 | $ | | $ | 61,055 | ||||||||||
Bank call loans |
| | 147,000 | | 147,000 | |||||||||||||||
Payable to brokers and
clearing organizations |
| | 372,697 | | 372,697 | |||||||||||||||
Payable to customers |
| | 406,916 | | 406,916 | |||||||||||||||
Securities sold under
agreements to repurchase |
| | 390,456 | | 390,456 | |||||||||||||||
Securities sold, but not
yet purchased, at fair
value |
| | 160,052 | | 160,052 | |||||||||||||||
Accrued compensation |
| | 175,938 | | 175,938 | |||||||||||||||
Accounts payable and other
liabilities |
131 | | 262,268 | 107 | 262,506 | |||||||||||||||
Income taxes payable |
2,440 | 22,188 | 3,248 | (27,876 | ) | | ||||||||||||||
Senior secured credit note |
| | 22,503 | | 22,503 | |||||||||||||||
Subordinated
note |
| | 212,558 | (112,558 | ) | 100,000 | ||||||||||||||
Deferred
income taxes, net |
| | 16,292 | 3 | 16,295 | |||||||||||||||
Excess of fair value of
acquired assets over cost |
| | 7,020 | | 7,020 | |||||||||||||||
Intercompany payables |
| 35,896 | | (35,896 | ) | | ||||||||||||||
2,571 | 58,084 | 2,238,003 | (176,220 | ) | 2,122,438 | |||||||||||||||
Stockholders
equity attributable to Oppenheimer Holdings Inc. |
494,564 | 792,282 | 322,420 | (1,114,702 | ) | 494,564 | ||||||||||||||
Non-controlling interest |
| | 3,032 | | 3,032 | |||||||||||||||
Stockholders equity |
494,564 | 792,282 | 325,452 | (1,114,702 | ) | 497,596 | ||||||||||||||
$ | 497,135 | $ | 850,366 | $ | 2,563,455 | $ | (1,290,922 | ) | $ | 2,620,034 | ||||||||||
33
Guarantor | Non-Guarantor | |||||||||||||||||||
(Expressed in thousands of dollars) | Parent | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
REVENUE: |
||||||||||||||||||||
Commissions |
$ | | $ | | $ | 136,855 | $ | | $ | 136,855 | ||||||||||
Principal transactions, net |
| | 10,991 | | 10,991 | |||||||||||||||
Interest |
| 1,748 | 14,789 | (1,748 | ) | 14,789 | ||||||||||||||
Investment banking |
| | 28,441 | | 28,441 | |||||||||||||||
Advisory fees |
| | 49,033 | (584 | ) | 48,449 | ||||||||||||||
Other |
| | 13,892 | | 13,892 | |||||||||||||||
| 1,748 | 254,001 | (2,332 | ) | 253,417 | |||||||||||||||
EXPENSES: |
||||||||||||||||||||
Compensation
and related expenses |
105 | | 170,310 | | 170,415 | |||||||||||||||
Clearing and exchange fees |
| | 6,313 | | 6,313 | |||||||||||||||
Communications and technology |
14 | | 15,925 | | 15,939 | |||||||||||||||
Occupancy and equipment costs |
| | 18,546 | | 18,546 | |||||||||||||||
Interest |
| 1,504 | 8,018 | (1,748 | ) | 7,774 | ||||||||||||||
Other |
214 | 251 | 24,720 | (584 | ) | 24,601 | ||||||||||||||
333 | 1,755 | 243,832 | (2,332 | ) | 243,588 | |||||||||||||||
Profit (loss) before income taxes |
(333 | ) | (7 | ) | 10,169 | | 9,829 | |||||||||||||
Income tax
provision (benefit) |
(133 | ) | 25 | 4,176 | | 4,068 | ||||||||||||||
Net profit (loss) for the period |
(200 | ) | (32 | ) | 5,993 | | 5,761 | |||||||||||||
Less net profit attributable to
non-controlling interest, net of
tax |
| | 675 | | 675 | |||||||||||||||
Equity in
income of subsidiaries |
5,286 | | | 5,286 | | |||||||||||||||
Net profit (loss) attributable
to Oppenheimer Holdings Inc. |
$ | 5,086 | $ | (32 | ) | $ | 5,318 | $ | (5,286 | ) | $ | 5,086 | ||||||||
34
Guarantor | Non-Guarantor | |||||||||||||||||||
(Expressed in thousands of dollars) | Parent | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
REVENUE: |
||||||||||||||||||||
Commissions |
$ | | $ | | $ | 138,197 | $ | | $ | 138,197 | ||||||||||
Principal transactions, net |
| (276 | ) | 20,455 | | 20,179 | ||||||||||||||
Interest |
| 1,735 | 9,578 | (1,735 | ) | 9,578 | ||||||||||||||
Investment banking |
| | 25,184 | | 25,184 | |||||||||||||||
Advisory fees |
| | 43,286 | (492 | ) | 42,794 | ||||||||||||||
Other |
| | 10,243 | | 10,243 | |||||||||||||||
| 1,459 | 246,943 | (2,227 | ) | 246,175 | |||||||||||||||
EXPENSES: |
||||||||||||||||||||
Compensation and related expenses |
7 | | 158,172 | | 158,179 | |||||||||||||||
Clearing and exchange fees |
| | 6,562 | | 6,562 | |||||||||||||||
Communications and technology |
16 | | 16,425 | | 16,440 | |||||||||||||||
Occupancy and equipment costs |
| | 18,460 | | 18,460 | |||||||||||||||
Interest |
| 1,842 | 5,193 | (1,735 | ) | 5,301 | ||||||||||||||
Other |
288 | 13 | 25,564 | (492 | ) | 25,373 | ||||||||||||||
311 | 1,855 | 230,376 | (2,227 | ) | 230,315 | |||||||||||||||
Profit (loss) before income taxes) |
(311 | ) | (396 | ) | 16,567 | | 15,860 | |||||||||||||
Income tax provision (benefit) |
(124 | ) | (152 | ) | 6,772 | | 6,496 | |||||||||||||
Net profit (loss) for the period |
(187 | ) | (244 | ) | 9,795 | | 9,364 | |||||||||||||
Less net profit attributable to
non-controlling interest, net of tax |
| | 196 | | 196 | |||||||||||||||
Equity in income of subsidiaries |
9,355 | | | (9,355 | ) | | ||||||||||||||
Net profit (loss) attributable to
Oppenheimer Holdings Inc. |
$ | 9,168 | $ | (244 | ) | $ | 9,599 | $ | (9,355 | ) | $ | 9,168 | ||||||||
35
Guarantor | Non-Guarantor | |||||||||||||||||||
(Expressed in thousands of dollars) | Parent | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Cash flows from operations: |
||||||||||||||||||||
Net profit
(loss) for year |
$ | 5,086 | $ | (32 | ) | $ | 5,993 | (5,286 | ) | $ | 5,761 | |||||||||
Adjustments
to reconcile net profit (loss) to net cash used in operating
activities: |
||||||||||||||||||||
Depreciation and
amortization |
| 3,527 | | 3,527 | ||||||||||||||||
Deferred income tax |
(143 | ) | | 4,028 | | 3,885 | ||||||||||||||
Amortization of notes
receivable |
| | 5,087 | | 5,087 | |||||||||||||||
Amortization of debt
issuance costs |
| | 273 | | 273 | |||||||||||||||
Amortization of
intangibles |
| | 1,082 | | 1,082 | |||||||||||||||
Share-based
compensation |
| | 4,836 | | 4,836 | |||||||||||||||
Changes in operating assets
and liabilities: |
||||||||||||||||||||
Cash (used
in) provided by continuing
operations |
2,139 | 3,493 | 9,552 | (975 | ) | 14,210 | ||||||||||||||
Cash (used in) provided by
continuing
operations |
7,082 | 3,461 | 34,378 | (6,260 | ) | 38,661 | ||||||||||||||
Cash
flows from investing activities: |
||||||||||||||||||||
Purchase of office facilities |
| | (1,549 | ) | | (1,549 | ) | |||||||||||||
Cash used
in investing
activities |
| | (1,549 | ) | | (1,549 | ) | |||||||||||||
Cash
flows from financing activities: |
||||||||||||||||||||
Cash dividends paid on Class
A non-voting and Class B
voting common stock |
(1,500 | ) | | | | (1,500 | ) | |||||||||||||
Issuance of Class A
non-voting common stock |
71 | | | | 71 | |||||||||||||||
Senior secured
credit note repayments |
| | (125 | ) | | (125 | ) | |||||||||||||
Other financing activities |
(5,771 | ) | (3,206 | ) | (32,755 | ) | 6,260 | (35,472 | ) | |||||||||||
Cash provided
by (used in)
financing
activities |
(7,200 | ) | (3,206 | ) | (32,880 | ) | 6,260 | (37,026 | ) | |||||||||||
Net increase (decrease) in cash and cash
equivalents |
(118 | ) | 255 | (51 | ) | | 86 | |||||||||||||
Cash and cash equivalents, beginning of
year |
361 | (241 | ) | 52,734 | | 52,854 | ||||||||||||||
Cash and cash equivalents, end of year |
$ | 243 | $ | 14 | $ | 52,683 | $ | | $ | 52,940 | ||||||||||
36
Guarantor | Non-Guarantor | |||||||||||||||||||
(Expressed in thousands of dollars) | Parent | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Cash flows from operations: |
||||||||||||||||||||
Net profit (loss) for year |
$ | 9,168 | $ | (244 | ) | $ | 9,795 | $ | (9,355 | ) | $ | 9,364 | ||||||||
Adjustments to reconcile net profit (loss)
to net cash used in operating activities: |
||||||||||||||||||||
Depreciation and amortization |
| | 3,088 | | 3,088 | |||||||||||||||
Deferred income tax |
| | 10,263 | | 10,263 | |||||||||||||||
Amortization of notes receivable |
| | 4,916 | | 4,916 | |||||||||||||||
Amortization of debt issuance costs |
| | 233 | | 233 | |||||||||||||||
Amortization of intangibles |
| | 1,081 | | 1,081 | |||||||||||||||
Provision for credit losses |
| | 29 | | 29 | |||||||||||||||
Share-based compensation |
| | (1,769 | ) | | (1,769 | ) | |||||||||||||
Changes in operating assets and liabilities |
||||||||||||||||||||
Cash (used in) provide by
continuing operations |
1,500 | 9,029 | (92,987 | ) | 2,287 | (80,171 | ) | |||||||||||||
Cash (used in) provided by
continuing operations |
10,668 | 8,785 | (65,351 | ) | (7,068 | ) | (52,966 | ) | ||||||||||||
Cash flows from investing activities: |
||||||||||||||||||||
Purchase of office facilities |
| | (1,337 | ) | | (1,337 | ) | |||||||||||||
Cash used in investing activities |
| | (1,337 | ) | | (1,337 | ) | |||||||||||||
Cash flows from financing activities: |
||||||||||||||||||||
Cash dividends paid on Class A non-voting
and Class B voting common stock |
(1,463 | ) | | | | (1,463 | ) | |||||||||||||
Issuance of Class A non-voting common stock |
2,002 | | | | 2,002 | |||||||||||||||
Senior secured credit note repayments |
| | (500 | ) | | (500 | ) | |||||||||||||
Other financing activities |
(8,168 | ) | (7,461 | ) | 46,097 | 7,068 | 37,536 | |||||||||||||
Cash provided by (used in)
financing activities |
(7,629 | ) | (7,461 | ) | 45,597 | 7,068 | 37,575 | |||||||||||||
Net increase (decrease) in cash and cash
equivalents |
3,039 | 1,324 | (21,091 | ) | | (16,728 | ) | |||||||||||||
Cash and cash equivalents, beginning of year |
2,475 | 2,359 | 64,084 | | 68,918 | |||||||||||||||
Cash and cash equivalents, end of year |
$ | 5,514 | $ | 3,683 | $ | 42,993 | $ | | $ | 52,190 | ||||||||||
37