10-Q/A

As filed with the Securities and Exchange Commission on August 10, 2011.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

Amendment No. 1

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period ended June 30, 2011

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 1-12043

OPPENHEIMER HOLDINGS INC.

(Exact name of registrant as specified in its charter)

Delaware	98-0080034
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

125 Broad Street
New York, New York 10004
(Address of principal executive offices) (Zip Code)

(212) 668-8000
(Registrant’s telephone number, including area code)

None
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). þ Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer þ Non-accelerated filer o Smaller reporting company o

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

The number of shares of the Company’s Class A non-voting common stock and Class B voting common stock (being the only classes of common stock of the Company) outstanding on July 29, 2011 was 13,570,945 and 99,680 shares, respectively.

TABLE OF CONTENTS

PART II OTHER INFORMATION
	ITEM 6. Exhibits
SIGNATURES
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

EXPLANATORY NOTE

The Company is amending its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011 to add Exhibit 101 consisting of its interactive data files pursuant to Rule 405 of Regulation S-T.

1

PART II
OTHER INFORMATION

ITEM 6. Exhibits

(d) Exhibits

101 Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed Consolidated Balance Sheets as of June 30, 2011 and December 31, 2010, (ii) the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2011 and June 30, 2010, (iii) the Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2011 and June 30, 2010, (iv) the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2011 and June 30, 2010, (v) the Condensed Consolidated Statements of Changes in Equity for the six months ended June 30, 2011 and June 30, 2010, and (vi) the notes to the Condensed Consolidated Financial Statements.*

* This information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, in the City of New York, New York on this 10th day of August, 2011.

OPPENHEIMER HOLDINGS INC.
By:	“A.G. Lowenthal”
	A.G. Lowenthal, Chairman and Chief Executive Officer
	(Principal Executive Officer)
By:	“E.K. Roberts”
	E.K. Roberts, President and Treasurer
	(Principal Financial and Accounting Officer)

3

XML



Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) In Thousands, except Share data	Jun. 30, 2011	Dec. 31, 2010
ASSETS
Allowance for doubtful accounts	$ 2,430	$ 2,716
Amounts pledged	$ 680,221	$ 102,501
Class A non-voting common stock
Oppenheimer Holdings Inc. stockholders' equity Share capital
Common stock, shares issued	13,568,945	13,268,522
Common stock, shares outstanding	13,568,945	13,268,522
Class B voting common stock
Oppenheimer Holdings Inc. stockholders' equity Share capital
Common stock, shares issued	99,680	99,680
Common stock, shares outstanding	99,680	99,680

XML



Condensed Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Share data	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
REVENUE:
Commissions	$ 120,790	$ 139,582	$ 257,645	$ 277,779
Principal transactions, net	13,313	16,778	24,304	36,957
Interest	13,649	11,198	28,438	20,776
Investment banking	33,717	36,336	62,158	61,520
Advisory fees	50,055	43,984	98,504	86,778
Other	12,994	9,118	26,886	19,361
Total revenue	244,518	256,996	497,935	503,171
EXPENSES:
Compensation and related expenses	160,436	164,304	330,851	322,483
Clearing and exchange fees	6,300	7,823	12,613	14,385
Communications and technology	16,069	16,300	32,008	32,740
Occupancy and equipment costs	18,524	18,262	37,070	36,722
Interest	10,669	6,389	18,443	11,690
Other	30,816	27,772	55,417	53,145
Total expenses	242,814	240,850	486,402	471,165
Profit before income taxes	1,704	16,146	11,533	32,006
Income tax provision	1,266	6,284	5,334	12,780
Net profit for the period	438	9,862	6,199	19,226
Less net profit attributable to non-controlling interest, net of tax	747	660	1,422	856
Net profit (loss) attributable to Oppenheimer Holdings Inc.	$ (309)	$ 9,202	$ 4,777	$ 18,370
Profit per share attributable to Oppenheimer Holdings Inc.:
Basic	$ (0.02)	$ 0.69	$ 0.35	$ 1.38
Diluted	$ (0.02)	$ 0.66	$ 0.34	$ 1.32
Weighted average common shares:
Basic	13,658,720	13,349,551	13,605,020	13,323,410
Diluted	13,937,375	13,899,367	13,929,521	13,890,861
Dividends declared per share	$ 0.11	$ 0.11	$ 0.22	$ 0.22

XML



Document and Entity Information (USD $) In Millions, except Share data	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jul. 29, 2011 Class A non-voting common stock	Jul. 29, 2011 Class B voting common stock
Entity Information [Line Items]
Entity Registrant Name	OPPENHEIMER HOLDINGS INC
Entity Central Index Key	0000791963
Document Type	10-Q
Document Period End Date	Jun. 30, 2011
Amendment Flag	false
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Public Float		$ 317.4
Entity Common Stock, Shares Outstanding			13,570,945	99,680

XML



Receivable from and payable to brokers and clearing organizations

6 Months Ended

Jun. 30, 2011

Receivable from and payable to brokers and clearing organizations [Abstract]

Receivable from and payable to brokers and clearing organizations

4. Receivable from and payable to brokers and clearing organizations

Expressed in thousands of dollars.

	June 30,		December 31,
	2011		2010
Receivable from brokers and clearing organizations consist of:
Deposits paid for securities borrowed	$	244,288	$	199,117
Receivable from brokers		33,959		20,609
Securities failed to deliver		27,348		23,673
Clearing organizations		37,442		11,038
Omnibus accounts		16,472		19,129
Other		395		29,278
	$	359,904	$	302,844

	June 30,		December 31,
	2011		2010
Payable to brokers and clearing organizations consist of:
Deposits received for securities loaned	$	309,915	$	345,462
Securities failed to receive		29,216		24,944
Clearing organizations and other		56,149		2,291
	$	395,280	$	372,697

XML



Related party transactions

6 Months Ended

Jun. 30, 2011

Related party transactions [Abstract]

Related party transactions

9. Related party transactions

The Company does not make loans to its officers and directors except under normal commercial terms pursuant to client margin account agreements. These loans are fully collateralized by employee-owned securities.

XML



Condensed Consolidated Statements of Changes in Equity (Unaudited) (Parenthetical) (Retained earnings, USD $)	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Retained earnings
Dividends per share	$ 0.11	$ 0.11

XML



Long-term debt

6 Months Ended

Jun. 30, 2011

Long-term debt [Abstract]

Long-term debt

6. Long-term debt

Expressed in thousands of dollars.

			Interest Rate at			June 30,		December 31,
Issued	Maturity Date		June 30, 2011			2011		2010
Senior Secured Notes (a)	4/15/2018			8.75	%	$	200,000	$	—
Senior Secured Credit Note (b)	7/31/2013	*				$	—	$	22,503
Subordinated Note (c)	1/31/2014	*				$	—	$	100,000

*	Retired on April 12, 2011
(a)	On April 12, 2011, the Company completed the private placement of $200.0 million in aggregate principal amount of 8.75 percent Senior Secured Notes due April 15, 2018 at par (the “Notes”).The interest on the Notes is payable semi-annually on April 15th and October 15th. Proceeds from the private placement were used to retire the Senior Secured Credit Note due 2013 ($22.4 million) and the Subordinated Note due 2014 ($100.0 million) (together, the “Debt”) and for other general corporate purposes. The private placement resulted in the fixing of the interest rate over the term of the Notes compared to the variable rate debt that was retired and an extension of the debt maturity dates as described above. The cost to issue the Notes was approximately $4.5 million which has been capitalized during the three months ending June 30, 2011 and amortized over the period of the Notes. The Company has written off $344,000 in unamortized debt issuance costs related to the Senior Secured Credit Note during the three months ending June 30, 2011. Additionally, as a result of the retirement of the Subordinated Note, the effective portion of the net loss of $1.3 million related to the interest rate cap cash flow hedge has been reclassified from accumulated other comprehensive income (loss) on the condensed consolidated balance sheet to interest expense in the condensed consolidated statement of operations during the three months ending June 30, 2011.
	The indenture for the Notes contains covenants which place restrictions on the incurrence of indebtedness, the payment of dividends, sale of assets, mergers and acquisitions and the granting of liens. The Notes provide for events of default including nonpayment, misrepresentation, breach of covenants and bankruptcy. The Company’s obligations under the Notes are guaranteed, subject to certain limitations, by the same subsidiaries that guaranteed the obligations under the Senior Secured Credit Note and the Subordinated Note which were retired. These guarantees may be shared, on a senior basis, under certain circumstances, with newly incurred debt outstanding in the future. At June 30, 2011, the Company was in compliance with all of its covenants.

	On July 12, 2011, the Company’s Registration Statement on Form S-4, filed to register the exchange of the Notes for fully registered Notes, was declared effective by the SEC. The Exchange Offer is currently scheduled to expire on August 9, 2011.
(b)	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 Inc., as agent. In accordance with the Senior Secured Credit Note, the Company provided certain covenants to the lenders with respect to the maintenance of a minimum fixed charge ratio and maximum leverage ratio and minimum net capital requirements with respect to Oppenheimer.
	The principal balance of the Senior Secured Credit Note in the amount of $22.4 million was repaid in full on April 12, 2011 in connection with the issuance of the Senior Secured Note described in (a) above.
	The effective interest rate on the Senior Secured Credit Note for the period outstanding in the three months ended June 30, 2011 was 4.88%. Interest expense, as well as interest paid on a cash basis for the three and six months ended June 30, 2011, on the Senior Secured Credit Note was $35,000 and $306,000, respectively ($388,000 and $775,000, respectively, in the three and six months ended June 30, 2010).
(c)	On January 14, 2008, in connection with the acquisition of certain businesses from CIBC World Markets Corp., CIBC made a loan in the amount of $100.0 million and the Company issued a Subordinated Note to CIBC in the amount of $100.0 million at a variable interest rate based on LIBOR. The purpose of this note was to support the capital requirements of the acquired business. In accordance with the Subordinated Note, the Company provided certain covenants to CIBC with respect to the maintenance of a minimum fixed charge ratio and maximum leverage ratio and minimum net capital requirements with respect to Oppenheimer.
	The principal balance of the Subordinated Note in the amount of $100.0 million was repaid in full on April 12, 2011 in connection with the issuance of the Senior Secured Notes described in (a) above.
	The effective interest rate on the Subordinated Note for the period outstanding in three months ended June 30, 2011 was 5.55%. Interest expense, as well as interest paid on a cash basis for the three and six months ended June 30, 2011, on the Subordinated Note was $185,000 and $1.6 million, respectively ($1.4 million and $2.8 million for the three and six months ended June 30, 2010).

XML



Subsequent events

6 Months Ended

Jun. 30, 2011

Subsequent events [Abstract]

Subsequent events

11. Subsequent events

On July 29, 2011, the Company announced a cash dividend of $0.11 per share (totaling $1.4 million) payable on August 26, 2011 to Class A and Class B Stockholders of record on August 12, 2011.

On July 15, 2011, the Company signed a lease to occupy seven floors at 85 Broad Street in New York City for a term of 15 years. The Company will occupy approximately 270,000 rentable square feet in the building. This lease represents a commitment of approximately $186.0 million over the 15 year term.

On July 12, 2011, the Company’s Registration Statement on Form S-4, filed to register the exchange of the Notes for fully registered Notes, was declared effective by the SEC. The Exchange Offer is currently scheduled to expire on August 9, 2011.

XML



Share capital

6 Months Ended

Jun. 30, 2011

Share capital [Abstract]

Share capital

7. Share capital

The following table reflects changes in the number of shares of Class A Stock outstanding for the periods indicated:

	Three months ended				Six months ended
	June 30,				June 30,
	2011		2010		2011		2010
Class A Stock outstanding, beginning of period		13,535,063		13,241,552		13,268,522		13,118,001
Issued pursuant to the share-based compensation plans		33,882		11,470		300,423		135,021
Class A Stock outstanding, end of period		13,568,945		13,253,022		13,568,945		13,253,022

XML



Financial instruments

6 Months Ended

Jun. 30, 2011

Financial instruments [Abstract]

Financial instruments

5. Financial instruments

Securities owned and securities sold but not yet purchased, investments and derivative contracts are carried at fair value with changes in fair value recognized in earnings each period. The Company’s other financial instruments are generally short-term in nature or have variable interest rates and as such their carrying values approximate fair value, with the exception of notes receivable from employees which are carried at cost.

Securities Owned and Securities Sold, But Not Yet Purchased at Fair Value

Expressed in thousands of dollars.

	June 30,				December 31,
	2011				2010
	Owned		Sold		Owned		Sold
U.S. Treasury, agency and sovereign obligations	$	790,260	$	119,976	$	160,114	$	105,564
Corporate debt and other obligations		21,899		10,986		32,204		6,788
Mortgage and other asset-backed securities		3,550		19		2,895		25
Municipal obligations		83,881		536		55,089		383
Convertible bonds		46,783		7,513		39,015		11,093
Corporate equities		37,110		42,414		39,151		36,164
Other		64,145		30		38,551		35
Total	$	1,047,628	$	181,474	$	367,019	$	160,052

Securities owned and securities sold, but not yet purchased, consist of trading and investment securities at fair values. Included in securities owned at June 30, 2011 are corporate equities with estimated fair values of approximately $14.9 million ($14.3 million at December 31, 2010), which are related to deferred compensation liabilities to certain employees included in accrued compensation on the condensed consolidated balance sheet.

Valuation Techniques

A description of the valuation techniques applied and inputs used in measuring the fair value of the Company’s financial instruments is as follows:

U.S. Treasury Obligations

U.S. Treasury securities are valued using quoted market prices obtained from active market makers and inter-dealer brokers and, accordingly, are categorized in Level 1 in the fair value hierarchy.

U.S. Agency Obligations

U.S. agency securities consist of agency issued debt securities and mortgage pass-through securities. Non-callable agency issued debt securities are generally valued using quoted market prices. Callable agency issued debt securities are valued by benchmarking model-derived prices to quoted market prices and trade data for identical or comparable securities. The fair value of mortgage pass-through securities are model driven with respect to spreads of the comparable To-be-announced (“TBA”) security. Actively traded non-callable agency issued debt securities are categorized in Level 1 of the fair value hierarchy. Callable agency issued debt securities and mortgage pass-through securities are generally categorized in Level 2 of the fair value hierarchy.

Sovereign Obligations

The fair value of sovereign obligations is determined based on quoted market prices when available or a valuation model that generally utilizes interest rate yield curves and credit spreads as inputs. Sovereign obligations are categorized in Level 1 or 2 of the fair value hierarchy.

Corporate Debt & Other Obligations

The fair value of corporate bonds is estimated using recent transactions, broker quotations and bond spread information. Corporate bonds are generally categorized in Level 2 of the fair value hierarchy.

Mortgage and Other Asset-Backed Securities

The Company holds non-agency securities primarily collateralized by home equity and manufactured housing which are valued based on external pricing and spread data provided by independent pricing services and are generally categorized in Level 2 of the fair value hierarchy. When specific external pricing is not observable, the valuation is based on yields and spreads for comparable bonds and, consequently, the positions are categorized in Level 3 of the fair value hierarchy.

Municipal Obligations

The fair value of municipal obligations is estimated using recently executed transactions, broker quotations, and bond spread information. These obligations are generally categorized in Level 2 of the fair value hierarchy; in instances where significant inputs are unobservable, they are categorized in Level 3 of the hierarchy.

Convertible Bonds

The fair value of convertible bonds is estimated using recently executed transactions and dollar-neutral price quotations, where observable. When observable price quotations are not available, fair value is determined based on cash flow models using yield curves and bond spreads as key inputs. Convertible bonds are generally categorized in Level 2 of the fair value hierarchy; in instances where significant inputs are unobservable, they are categorized in Level 3 of the hierarchy.

Corporate Equities

Equity securities and options are generally valued based on quoted prices from the exchange or market where traded and categorized as Level 1 in the fair value hierarchy. To the extent quoted prices are not available, prices are generally derived using bid/ask spreads, and these securities are generally categorized in Level 2 of the fair value hierarchy.

Other

In February 2010, Oppenheimer finalized settlements with each of the New York Attorney General’s office (“NYAG”) and the Massachusetts Securities Division (“MSD” and, together with the NYAG, the “Regulators”) concluding investigations and administrative proceedings by the Regulators concerning Oppenheimer’s marketing and sale of auction rate securities (“ARS”). Pursuant to those settlements, as at June 30, 2011, the Company had purchased approximately $67.3 million in ARS from its clients pursuant to several purchase offers and expects to purchase at least an additional $6.0 million of ARS from its clients under the current client purchase offer. The Company’s purchases of ARS from its clients will continue on a periodic basis thereafter pursuant to the settlements with the Regulators. In addition, the Company is committed to purchase another $49.0 million in ARS as a result of legal settlements with clients. The ultimate amount of ARS to be repurchased by the Company cannot be predicted with any certainty and will be impacted by redemptions by issuers and client actions during the period, which cannot be predicted. In addition to the ARS purchases from clients of $67.3 million as of June 30, 2011 referred to above, the Company also held $2.1 million in ARS in its proprietary trading account as of June 30, 2011 as a result of the failed auctions in February 2008. These ARS positions primarily represent Auction Rate Preferred Securities issued by closed-end funds and, to a lesser extent, Municipal Auction Rate Securities which are municipal bonds wrapped by municipal bond insurance and Student Loan Auction Rate Securities which are asset-backed securities backed by student loans (collectively referred to as “ARS”).

Interest rates on ARS typically reset through periodic auctions. Due to the auction mechanism and generally liquid markets, ARS have historically been categorized as Level 1 in the fair value hierarchy. Beginning in February 2008, uncertainties in the credit markets resulted in substantially all of the ARS market experiencing failed auctions. Once the auctions failed, the ARS could no longer be valued using observable prices set in the auctions. The Company has used less observable determinants of the fair value of ARS, including the strength in the underlying credits, announced issuer redemptions, completed issuer redemptions, and announcements from issuers regarding their intentions with respect to their outstanding ARS. The Company has also developed an internal methodology to discount for the lack of liquidity and non-performance risk of the failed auctions. Key inputs include spreads on comparable Treasury yields to derive a discount rate, an estimate of the ARS duration, and yields based on current auctions in comparable securities that have not failed. Due to the less observable nature of these inputs, the Company categorizes ARS in Level 3 of the fair value hierarchy. As of June 30, 2011, the Company had a valuation adjustment (unrealized loss) of $4.9 million for ARS.

Investments

In its role as general partner in certain hedge funds and private equity funds, the Company, through its subsidiaries, holds direct investments in such funds. The Company uses the net asset value of the underlying fund as a basis for estimating the fair value of its investment. Due to the illiquid nature of these investments and difficulties in obtaining observable inputs, these investments are included in Level 3 of the fair value hierarchy.

The following table provides information about the Company’s investments in Company-sponsored funds at June 30, 2011.

Expressed in thousands of dollars.

			Unfunded
			Commit-		Redemption	Redemption
	Fair Value		ments		Frequency	Notice Period
Hedge Funds(1)	$	1,293	$	—	Quarterly - Annually	30 - 120 Days
Private Equity Funds(2)		2,488		4,685	N/A	N/A
Distressed Opportunities Fund(3)		10,991		—	Semi-Annually	180 Days
Total	$	14,772	$	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.

Derivative Contracts

From time to time, the Company transacts in exchange-traded and over-the-counter derivative transactions to manage its interest rate risk. Exchange-traded derivatives, namely U.S. Treasury futures, Federal funds futures, and Eurodollar futures, are valued based on quoted prices from the exchange and are categorized in Level 1 of the fair value hierarchy. Over-the-counter derivatives, namely interest rate swap and interest rate cap contracts, are valued using a discounted cash flow model and the Black-Scholes model, respectively, using observable interest rate inputs and are categorized in Level 2 of the fair value hierarchy.

As described below in “Credit Concentrations”, the Company participates in loan syndications and operates as underwriting agent in leveraged financing transactions where it utilizes a warehouse facility provided by Canadian Imperial Bank of Commerce (“CIBC”) to extend financing commitments to third-party borrowers identified by the Company. The Company uses broker quotations on loans trading in the secondary market as a proxy to determine the fair value of the underlying loan commitment which is categorized in Level 3 of the fair value hierarchy. The Company also purchases and sells loans in its proprietary trading book where CIBC provides the financing through a loan trading facility. The Company uses broker quotations to determine the fair value of loan positions held which are categorized in Level 2 of the fair value hierarchy.

The Company from time to time enters into securities financing transactions that mature on the same date as the underlying collateral. Such transactions are treated as a sale of financial assets and a forward repurchase commitment, or conversely as a purchase of financial assets and a forward resale commitment. The forward repurchase and resale commitments are valued based on the spread between the market value of the government security and the underlying collateral and are categorized in Level 2 of the fair value hierarchy.

Fair Value Measurements

The Company’s assets and liabilities, recorded at fair value on a recurring basis as of June 30, 2011 and December 31, 2010, have been categorized based upon the above fair value hierarchy as follows:

Assets and liabilities measured at fair value on a recurring basis as of June 30, 2011:

Expressed in thousands of dollars.

	Fair Value Measurements
	As of June 30, 2011
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	53,732	$	—	$	—	$	53,732
Securities segregated for regulatory and other purposes		14,500		—		—		14,500
Deposits with clearing organizations		9,095		—		—		9,095
Securities owned:
U.S. Treasury obligations		710,488		—		—		710,488
U.S. Agency obligations		39,859		39,913		—		79,772
Corporate debt and other obligations		—		21,899		—		21,899
Mortgage and other asset-backed securities		—		3,445		105		3,550
Municipal obligations		—		80,052		3,829		83,881
Convertible bonds		—		46,783		—		46,783
Corporate equities		27,692		9,418		—		37,110
Other		1,047		—		63,098		64,145
Securities owned, at fair value		779,086		201,510		67,032		1,047,628
Investments (1)		981		36,292		16,141		53,414
Derivative contracts (2)		—		3,822		—		3,822
Securities purchased under agreements to resell (3)		—		556,916		—		556,916
Total	$	857,394	$	798,540	$	83,173	$	1,739,107

Expressed in thousands of dollars.

	Fair Value Measurements
	As of June 30, 2011
	Level 1		Level 2		Level 3		Total
Liabilities:
Securities sold, but not yet purchased:
U.S. Treasury obligations	$	119,903	$	—	$	—	$	119,903
U.S. Agency obligations		—		73		—		73
Corporate debt and other obligations		—		10,986		—		10,986
Mortgage and other asset-backed securities		—		8		11		19
Municipal obligations		—		536		—		536
Convertible bonds		—		7,513		—		7,513
Corporate equities		22,158		20,256		—		42,414
Other		30		—		—		30
Securities sold, but not yet purchased		142,091		39,372		11		181,474
Investments		32		—		—		32
Derivative contracts (2)		244		2,652		—		2,896
Total	$	142,367	$	42,024	$	11	$	184,402

(1)	Included in other assets on the condensed consolidated balance sheet.
(2	Primarily represents the fair value of “To-Be-Announced” securities (TBAs). See “Derivatives used for trading and investment purposes” below.
(3)	Includes securities purchased under agreements to resell where the Company has elected the fair value option.

Assets and liabilities measured at fair value on a recurring basis as of December 31, 2010:

Expressed in thousands of dollars.

	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)		—		26,067		—		26,067
Total	$	224,704	$	215,734	$	54,917	$	495,355

Expressed in thousands of dollars.

	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		178		—		325
Securities sold under agreements to repurchase (2)		—		352,706		—		352,706
Total	$	126,621	$	386,474	$	—	$	513,093

(1)	Included in other assets on the consolidated balance sheet.
(2	Primarily represents the fair value 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.

There were no significant transfers between Level 1 and Level 2 assets and liabilities in the three and six months ended June 30, 2011.

The following tables present changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the three months ending June 30, 2011 and 2010.

Expressed in thousands of dollars.

			Realized		Unrealiz-			Purch-
			Gains		ed Gains			ases,		Sales,			Trans-		Ending
	Opening		(Losses)		(Losses)			Issu-		Settle-			fers In		Bal-
	Balance		(4)		(4) (5)			ances		ments			/ Out		ance
For the three months ended June 30, 2011
Assets:
Mortgage and other asset-backed securities (1)	$	—		—		3			102		—			—	$	105
Municipal obligations		2,165		—		(43	)		1,882		(175	)		—		3,829
Other (2)		36,582		—		1,966			27,575		(3,025	)		—		63,098
Investments (3)		17,308		—		1			426		(1,607	)		13		16,141
Liabilities:
Mortgage and other asset-backed securities (1)	$	—		—		—			—		11			—	$	11

			Realized		Unrealiz-			Purchases,
			Gains		ed Gains			Sales,			Trans-
	Opening		(Losses)		(Losses)			Issuances,			fers In /			Ending
	Balance		(4)		(4) (5)			Settlements			Out			Balance
For the three months ended June 30, 2010
Assets:
Mortgage and other asset-backed securities (1)	$	380		8		8			(53	)		(301	)	$	42
Municipal obligations		975		—		(157	)		1,035			—			1,853
Other (2)		4,450		—		(355	)		16,775			—			20,870
Investments (3)		16,890		—		(308	)		348			—			16,930
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 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.

The following tables present changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the six months ending June 30, 2011 and 2010.

Expressed in thousands of dollars.

			Realized		Unrealiz-			Purch-
			Gains		ed Gains			ases,		Sales,			Trans-			Ending
	Opening		(Losses)		(Losses)			Issu-		Settle-			fers In			Bal-
	Balance		(4)		(4) (5)			ances		ments			/ Out			ance
For the six months ended June 30, 2011
Assets:
Mortgage and other asset-backed securities (1)	$	14		—		3			102		(14	)		—		$	105
Municipal obligations		1,787		—		(190	)		2,407		(175	)		—			3,829
Other (2)		35,909		—		(936	)		34,150		(6,025	)		—			63,098
Investments (3)		17,208		—		(1	)		552		(1,607	)		(11	)		16,141
Liabilities:
Mortgage and other asset-backed securities (1)	$	—		—		—			—		11			—		$	11

			Realized			Unrealiz-			Purchases,
			Gains			ed Gains			Sales,			Trans-
	Opening		(Losses)			(Losses)			Issuances,			fers In /			Ending
	Balance		(4)			(4) (5)			Settlements			Out			Balance
For the six months ended June 30, 2010
Assets:
Mortgage and other asset-backed securities (1)	$	317		6			8			(12	)		(301	)	$	42
Municipal obligations		1,075		(4	)		(315	)		1,035			62			1,853
Other (2)		4,450		—			(355	)		16,775			—			20,870
Investments (3)		15,891		—			326			403			220			16,930
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 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.

Fair Value Option

The Company has the option to measure certain financial assets and financial liabilities at fair value with changes in fair value recognized in earnings each period. The Company may make a fair value option election on an instrument-by-instrument basis at initial recognition of an asset or liability or upon an event that gives rise to a new basis of accounting for that instrument. The Company has elected to apply the fair value option to its loan trading portfolio which resides in OPY Credit Corp. and is included in other assets on the condensed consolidated balance sheet. Management has elected this treatment as it is consistent with the manner in which the business is managed as well as the way that financial instruments in other parts of the business are recorded. There were no loan positions held in the secondary loan trading portfolio at June 30, 2011 (None at December 31, 2010).

The Company also elected the fair value option for those securities sold under agreements to repurchase (“repurchase agreements”) and securities purchased under agreements to resell (“resale agreements”) that do not settle overnight or have an open settlement date or that are not accounted for as purchase and sale agreements (such as repo-to-maturity transactions). The Company has elected the fair value option for these instruments to more accurately reflect market and economic events in its earnings and to mitigate a potential imbalance in earnings caused by using different measurement attributes (i.e. fair value versus carrying value) for certain assets and liabilities. At June 30, 2011, the fair value of the resale agreement and repurchase agreements were $556.9 million and $nil, respectively. During the three and six months ended June 30, 2011, the amount of losses related to resale agreements was $27,000 and $6,000, respectively. During the three and six months ended June 30, 2011, the amount of gains/losses related to repurchase agreements was $nil and $nil, respectively.

Fair Value of Derivative Instruments

The Company transacts, on a limited basis, in exchange traded and over-the-counter derivatives for both asset and liability management as well as for trading and investment purposes. Risks managed using derivative instruments include interest rate risk and, to a lesser extent, foreign exchange risk. Interest rate swaps and interest rate caps are entered into to manage the Company’s interest rate risk associated with floating-rate borrowings. All derivative instruments are measured at fair value and are recognized as either assets or liabilities on the consolidated balance sheet. The Company designates interest rate swaps and interest rate caps as cash flow hedges of floating-rate borrowings.

Cash flow hedges used for asset and liability management

For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains or losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings.

On September 29, 2006, the Company entered into interest rate swap transactions to hedge the interest payments associated with its floating rate Senior Secured Credit Note, which is subject to change due to changes in 3-Month LIBOR. See note 6 for further information. These swaps have been designated as cash flow hedges. Changes in the fair value of the swap hedges are expected to be highly effective in offsetting changes in the interest payments due to changes in 3-Month LIBOR. For the three and six months ended June 30, 2011, the effective portion of the net gain on the interest rate swaps, after tax, was approximately $nil and $69,000, respectively ($73,000 and $330,000, respectively, for the three and six months ended June 30, 2010) and has been recorded as other comprehensive income on the condensed consolidated statement of comprehensive income (loss). The swaps expired on March 31, 2011.

On January 20, 2009, the Company entered into an interest rate cap contract, incorporating a series of purchased caplets with fixed maturity dates ending December 31, 2012, to hedge the interest payments associated with its floating rate Subordinated Note, which is subject to changes in 3-Month LIBOR. See note 6 for further information. With the repayment of the Subordinated Note in the second quarter of 2011, this cap is no longer designated as a cash flow hedge. The loss of $1.3 million related to this hedge that was previously included in other comprehensive income (loss) was reversed and included in interest expense in the condensed consolidated statement of operations in the second quarter of 2011.

Foreign exchange hedges

From time to time, the Company also utilizes forward and options contracts to hedge the foreign currency risk associated with compensation obligations to Oppenheimer Israel (OPCO) Ltd. employees denominated in New Israeli Shekels. Such hedges have not been designated as accounting hedges. At June 30, 2011, the Company did not have any such hedges in place.

Derivatives used for trading and investment purposes

Futures contracts represent commitments to purchase or sell securities or other commodities at a future date and at a specified price. Market risk exists with respect to these instruments. Notional or contractual amounts are used to express the volume of these transactions, and do not represent the amounts potentially subject to market risk. The futures contracts the Company used included U.S. Treasury notes, Federal Funds and Eurodollar contracts. At June 30, 2011, the Company had 240 open short contracts for 10-year U.S. Treasury notes with a fair value of $244,000 used primarily as an economic hedge of interest rate risk associated with a portfolio of fixed income investments. At June 30, 2011, the Company had 5.2 billion open contracts for Federal Funds futures with a fair value of approximately $245,000 and 224 million open contracts for Eurodollar futures with a fair value of $13,000 both used as economic hedges of interest rate risk associated with government trading activities.

The Company also transacts in pass-through mortgage-backed securities eligible to be sold in the “To-Be-Announced” or TBA market. TBAs provide for the forward or delayed delivery of the underlying instrument with settlement up to 180 days. The contractual or notional amounts related to these financial instruments reflect the volume of activity and do not reflect the amounts at risk. Unrealized gains and losses on TBAs are recorded in the condensed consolidated balance sheets in receivable from brokers and clearing organizations and payable to brokers and clearing organizations, respectively, and in the condensed consolidated statement of operations as principal transactions revenue. See Fair Value of Derivative Instruments tables below for TBAs outstanding at June 30, 2011.

From time-to-time, the Company enters into securities financing transactions that mature on the same date as the underlying collateral. These transactions are treated as a sale of financial assets and a forward repurchase commitment, or conversely as a purchase of financial assets and a forward resale commitment. At June 30, 2011, the fair value of the forward repurchase commitment was approximately $354,000.

The notional amounts and fair values of the Company’s derivatives at June 30, 2011 by product were as follows:

Expressed in thousands of dollars.

Fair Value of Derivative Instruments
As of June 30, 2011

	Description	Notional		Fair Value
Assets:
Derivatives designated as hedging instruments (1)
Interest rate contracts	Cap	$	100,000	$	34
Derivatives not designated as hedging instruments (1)
Commodity contracts	Eurodollar Futures		9,000		—
Other contracts	TBAs		361,450		3,788
			370,450		3,788
Total Assets		$	470,450	$	3,822
Liabilities:
Derivatives not designated as hedging instruments (1)
Commodity contracts	U.S Treasury Futures	$	24,000	$	244
	Federal Funds Futures		5,220,000		245
	Eurodollar Futures		224,000		13
Other contracts	TBAs		11,072		98
	Forward Purchase Commitment (2)		500,000		354
	Auction rate securities purchase commitment		45,843		1,941
Total Liabilities		$	6,024,916	$	2,896

(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.

Expressed in thousands of dollars.

Fair Value of Derivative Instruments
As of December 31, 2010

	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		516,987		25,889
Total Assets		$	616,987	$	26,067
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		2,000		26
	Forward Purchase Commitment (2)		3,250,000		35
Sub-total			3,266,000		209
Total Liabilities		$	3,275,000	$	325

(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.

The following table presents the location and fair value amounts of the Company’s derivative instruments and their effect on the statement of operations for the three months ended June 30, 2011.

Expressed in thousands of dollars.

						Recognized
						in Other
						Comprehen-
						sive Income
						on		Reclassified from
						Derivatives -		Accumulated Other
						Effective		Comprehensive
		Recognized in Income on				Portion		Income into Income-
		Derivatives				(after-tax)		Effective Portion(2)
		(pre-tax)				Gain/		(after-tax)
Hedging Relationship	Description	Location	Gain/ (Loss)			(Loss)		Location	Gain/ (Loss)
Cash Flow Hedges used for asset and liability management:
Interest rate contracts	Caps (3)	N/A	$	(1,950	)	$	—	Interest expense	$	(1,233	)
	Swaps	N/A		—			—	Interest expense		61
Derivatives used for trading and investment (1):
Commodity contracts	U.S Treasury Futures	Principal transaction revenue		(1,136	)		—	None		—
	Federal Funds Futures	Principal transaction revenue		(221	)		—	None		—
	Euro-dollar Futures	Principal transaction revenue		(333	)		—	None		—
	Euro FX	Principal transaction revenue		(37	)		—	None		—
Other contracts	TBAs	Principal transaction revenue		3,391			—	None		—
	Forward purchase commitment (4)	Principal transaction revenue		114			—	None		—
	Auction rate securities purchase commitment	Principal transaction revenue		(1,941	)		—	None		—
Total			$	(2,113	)	$	—		$	(1,172	)

(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 June 30, 2011.
(3)	As noted above in “Cash flow hedges used for asset and liability management”, interest rate caps are used to hedge interest rate risk associated with the Subordinated Note. With the repayment of the Subordinated Note in the second quarter of 2011, this cap is no longer designated as a cash flow hedge and, as a result, a loss of $1.6 million has been reclassified from other comprehensive income (loss) to other expenses on the condensed consolidated statement of operations.
(4)	Forward commitment to repurchase government securities that received sale treatment related to “Repo-to-Maturity” transactions.

The following table presents the location and fair value amounts of the Company’s derivative instruments and their effect on the statement of operations for the six months ended June 30, 2011.

Expressed in thousands of dollars.

						Recognized
						in Other
						Comprehen-
						sive Income
						on		Reclassified from
						Derivatives -		Accumulated Other
						Effective		Comprehensive
		Recognized in Income on				Portion		Income into Income-
		Derivatives				(after-tax)		Effective Portion(2)
		(pre-tax)				Gain/		(after-tax)
Hedging Relationship	Description	Location	Gain/ (Loss)			(Loss)		Location	Gain/ (Loss)
Cash Flow Hedges used for asset and liability management:
Interest rate contracts	Swaps	N/A	$	—		$	—	Interest expense	$	(50	)
	Caps (3)	N/A		(1,950	)		—	Interest expense		(1,272	)
Derivatives used for trading and investment (1):
Commodity contracts	U.S Treasury Futures	Principal transaction revenue		(1,180	)		—	None		—
	Federal Funds Futures	Principal transaction revenue		(250	)		—	None		—
	Euro-dollar Futures	Principal transaction revenue		(410	)		—	None		—
	Euro FX	Principal transaction revenue		(131	)		—	None		—
Other contracts	TBAs	Principal transaction revenue		4,645			—	None		—
	Forward purchase commitment (4)	Principal transaction revenue		(784	)		—	None		—
	Auction rate	Principal
	securities purchase commitment	transaction revenue		(1,941	)		—	None		—
Total			$	(2,001	)	$	—		$	(1,322	)

(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 six months ended June 30, 2011.
(3)	As noted above in “Cash flow hedges used for asset and liability management”, interest rate caps are used to hedge interest rate risk associated with the Subordinated Note. With the repayment of the Subordinated Note in the second quarter of 2011, this cap is no longer designated as a cash flow hedge and, as a result, a loss of $1.3 million, net of tax, has been reclassified from other comprehensive income (loss) to other expenses on the condensed consolidated statement of operations.
(4)	Forward commitment to repurchase government securities that received sale treatment related to “Repo-to-Maturity” transactions.

Collateralized Transactions

The Company enters into collateralized borrowing and lending transactions in order to meet customers’ needs and earn residual interest rate spreads, obtain securities for settlement and finance trading inventory positions. Under these transactions, the Company either receives or provides collateral, including U.S. government and agency, asset-backed, corporate debt, equity, and non-U.S. government and agency securities.

The Company obtains short-term borrowings primarily through bank call loans. Bank call loans are generally payable on demand and bear interest at various rates but not exceeding the broker call rate. At June 30, 2011, bank call loans were $159.0 million ($147.0 million at December 31, 2010).

At June 30, 2011, the Company had collateralized loans, collateralized by firm and customer securities with market values of approximately $106.9 million and $268.3 million, respectively, at June 30, 2011, are primarily with two U.S. money center banks. At June 30, 2011, the Company had approximately $1.3 billion of customer securities under customer margin loans that are available to be pledged, of which the Company has repledged approximately $286.0 million under securities loan agreements.

At June 30, 2011, the Company had deposited $220.2 million of customer securities directly with the Options Clearing Corporation to secure obligations and margin requirements under option contracts written by customers.

At June 30, 2011, the Company had no outstanding letters of credit.

The Company finances its government trading operations through the use of repurchase agreements and resale agreements. Except as described below, repurchase and resale agreements, principally involving government and agency securities, are carried at amounts at which securities subsequently will be resold or reacquired as specified in the respective agreements and include accrued interest. Repurchase and resale agreements are presented on a net-by-counterparty basis, when the repurchase and resale agreements are executed with the same counterparty, have the same explicit settlement date, are executed in accordance with a master netting arrangement, the securities underlying the repurchase and resale agreements exist in “book entry” form and certain other requirements are met.

Certain of the Company’s repurchase agreements and resale agreements are carried at fair value as a result of the Company’s fair value option election. The Company elected the fair value option for those repurchase agreements and resale agreements that do not settle overnight or have an open settlement date or that are not accounted for as purchase and sale agreements (such as repo-to-maturity transactions described above). The Company has elected the fair value option for these instruments to more accurately reflect market and economic events in its earnings and to mitigate a potential imbalance in earnings caused by using different measurement attributes (i.e. fair value versus carrying value) for certain assets and liabilities. At June 30, 2011, the fair value of the resale agreement and repurchase agreements were $556.9 million and $nil, respectively. During the three and six months ended June 30, 2011, the amount of losses related to resale agreements was $27,000 and $6,000, respectively. During the three and six months ended June 30, 2011, the amount of gains/losses related to repurchase agreements was $nil and $nil, respectively.

At June 30, 2011, the gross balances of resale agreements and repurchase agreements were $7.7 billion and $8.2 billion, respectively ($4.0 billion and $4.1 billion, respectively at December 31, 2010).

The Company receives collateral in connection with securities borrowed and resale agreement transactions and customer margin loans. Under many agreements, the Company is permitted to sell or repledge the securities received (e.g., use the securities to enter into securities lending transactions, or deliver to counterparties to cover short positions). At June 30, 2011, the fair value of securities received as collateral under securities borrowed transactions and resale agreements was $239.8 million ($192.1 million at December 31, 2010) and $7.7 billion ($3.9 billion at December 31, 2010), respectively, of which the Company has re-pledged approximately $15.7 million ($47.3 million at December 31, 2010) under securities loaned transactions and $7.7 billion under repurchase agreements ($3.9 billion at December 31, 2010).

The Company pledges certain of its securities owned for securities lending and repurchase agreements and to collateralize bank call loan transactions. The carrying value of pledged securities owned that can be sold or re-pledged by the counterparty was $680.2 million, as presented on the face of the condensed consolidated balance sheet at June 30, 2011 ($102.5 million at December 31, 2010). The carrying value of securities owned by the Company that have been loaned or pledged to counterparties where those counterparties do not have the right to sell or re-pledge the collateral was $145.6 million as at June 30, 2011 ($149.9 million at December 31, 2010).

The Company manages credit exposure arising from repurchase and resale agreements by, in appropriate circumstances, entering into master netting agreements and collateral arrangements with counterparties that provide the Company, in the event of a customer default, the right to liquidate and the right to offset a counterparty’s rights and obligations. The Company also monitors the market value of collateral held and the market value of securities receivable from others. It is the Company’s policy to request and obtain additional collateral when exposure to loss exists. In the event the counterparty is unable to meet its contractual obligation to return the securities, the Company may be exposed to off-balance sheet risk of acquiring securities at prevailing market prices.

One of the Company’s funds in which a subsidiary of the Company acts as a general partner and also owns a limited partnership interest utilized Lehman Brothers International (Europe) as a prime broker. As of June 30, 2011, Lehman Brothers International (Europe) held securities with a fair value of $9.1 million that were segregated and not re-hypothecated.

Credit Concentrations

Credit concentrations may arise from trading, investing, underwriting and financing activities and may be impacted by changes in economic, industry or political factors. In the normal course of business, the Company may be exposed to risk in the event customers, counterparties including other brokers and dealers, issuers, banks, depositories or clearing organizations are unable to fulfill their contractual obligations. The Company seeks to mitigate these risks by actively monitoring exposures and obtaining collateral as deemed appropriate. Included in receivable from brokers and clearing organizations as of June 30, 2011 are receivables from three major U.S. broker-dealers totaling approximately $133.0 million.

The Company participates in loan syndications through its Debt Capital Markets business. Through OPY Credit Corp., the Company operates as underwriting agent in leveraged financing transactions where it utilizes a warehouse facility provided by CIBC to extend financing commitments to third-party borrowers identified by the Company. The Company has exposure, up to a maximum of 10%, of the excess underwriting commitment provided by CIBC over CIBC’s targeted loan retention (defined as “Excess Retention”). The Company quantifies its Excess Retention exposure by assigning a fair value to the underlying loan commitment provided by CIBC (in excess of what CIBC has agreed to retain) which is based on the fair value of the loans trading in the secondary market. To the extent that the fair value of the loans has decreased, the Company records an unrealized loss on the Excess Retention. Underwriting of loans pursuant to the warehouse facility is subject to joint credit approval by the Company and CIBC. As of June 30, 2011, the maximum aggregate principal amount of the warehouse facility was $1.5 billion, of which the Company utilized $147.5 million ($78.0 million as of December 31, 2010) and had $nil in Excess Retention ($nil as of December 31, 2010).

The Company is obligated to settle transactions with brokers and other financial institutions even if its clients fail to meet their obligations to the Company. Clients are required to complete their transactions on settlement date, generally one to three business days after trade date. If clients do not fulfill their contractual obligations, the Company may incur losses. The Company has clearing/participating arrangements with the National Securities Clearing Corporation (“NSCC”), the Fixed Income Clearing Corporation (“FICC”), R.J. O’Brien & Associates (commodities transactions) and others. With respect to its business in resale and repurchase agreements, substantially all open contracts at June 30, 2011 are with the FICC. In addition, the Company recently began clearing its non-U.S. international equities buusiness carried on through Oppenheimer Europe through BNP Paribas Securities Services. The clearing corporations have the right to charge the Company for losses that result from a client’s failure to fulfill its contractual obligations. Accordingly, the Company has credit exposures with these clearing brokers. The clearing brokers can re-hypothecate the securities held on behalf of the Company. As the right to charge the Company has no maximum amount and applies to all trades executed through the clearing brokers, the Company believes there is no maximum amount assignable to this right. At June 30, 2011, the Company had recorded no liabilities with regard to this right. The Company’s policy is to monitor the credit standing of the clearing brokers and banks with which it conducts business.

Through its Debt Capital Markets business, the Company also participates, with other members of loan syndications, in providing financing commitments under revolving credit facilities in leveraged financing transactions. As of June 30, 2011, the Company had $6.7 million committed under such financing arrangements.

OMHHF, which is engaged in mortgage brokerage and servicing, has obtained an uncommitted warehouse facility line through PNC Bank (“PNC”) under which OMHHF pledges Federal Housing Administration (“FHA”) guaranteed mortgages for a period of up to 10 business days and PNC table funds the principal payment to the mortgagee. OMHHF repays PNC upon the securitization of the mortgage by the Government National Mortgage Association (“GNMA”) and the delivery of the security to the counter party for payment pursuant to a contemporaneous sale on the date the mortgage is funded. At June 30, 2011, OMHHF had $14.5 million outstanding under the warehouse facility line at a variable interest rate of 1 month LIBOR plus 2.75%. Interest expense for the three and six months ended June 30, 2011 was $835,000 and $1.2 million, respectively.

Variable Interest Entities (VIEs)

VIEs are entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The primary beneficiary of a VIE is the party that absorbs a majority of the entity’s expected losses, receives a majority of its expected residual returns, or both, as a result of holding variable interests. The enterprise that is considered the primary beneficiary of a VIE consolidates the VIE.

A subsidiary of the Company serves as general partner of hedge funds and private equity funds that were established for the purpose of providing investment alternatives to both its institutional and qualified retail clients. The Company holds variable interests in these funds as a result of its right to receive management and incentive fees. The Company’s investment in and additional capital commitments to these hedge funds and private equity funds are also considered variable interests. The Company’s additional capital commitments are subject to call at a later date and are limited in amount.

The Company assesses whether it is the primary beneficiary of the hedge funds and private equity funds in which it holds a variable interest in the context of the total general and limited partner interests held in these funds by all parties. In each instance, the Company has determined that it is not the primary beneficiary and therefore need not consolidate the hedge funds or private equity funds. The subsidiaries’ general partnership interests, additional capital commitments, and management fees receivable represent its maximum exposure to loss. The subsidiaries’ general partnership interests and management fees receivable are included in other assets on the condensed consolidated balance sheet.

The following tables set forth the total VIE assets, the carrying value of the subsidiaries’ variable interests, and the Company’s maximum exposure to loss in Company-sponsored non-consolidated VIEs in which the Company holds variable interests and other non-consolidated VIEs in which the Company holds variable interests as at June 30, 2011 and December 31, 2010:

As of June 30, 2011

Expressed in thousands of dollars.

			Carrying Value of the						Maximum
	Total		Company’s Variable						Exposure
	VIE Assets		Interest				Capital		to Loss in Non-
	(1)		Assets (2)		Liabilities		Commitments		consolidated VIEs
Hedge Funds	$	1,825,118	$	219	$	—	$	—	$	219
Private Equity Funds		139,775		24		—		—		24
Total	$	1,964,893	$	243	$	—	$	—	$	243

As of December 31, 2010

Expressed in thousands of dollars.

			Carrying Value of the						Maximum
	Total		Company’s Variable						Exposure
	VIE Assets		Interest				Capital		to Loss in Non-
	(1)		Assets (2)		Liabilities		Commitments		consolidated 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 Company’s interests in the VIEs.
(2)	Represents the Company’s interests in the VIEs and is included in other assets on the condensed consolidated balance sheet.

XML



Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Cash flows from operating activities:
Net profit for the period	$ 6,199	$ 19,226
Non-cash items included in net profit:
Depreciation and amortization	6,437	6,007
Deferred income tax	2,177	8,960
Amortization of notes receivable	10,140	10,005
Amortization of debt issuance costs	571	391
Amortization of intangibles	2,163	2,162
Provision for credit losses	(286)	359
Share-based compensation	2,720	(408)
Decrease (increase) in operating assets:
Cash and securities segregated for regulatory and other purposes	(38,052)	(28,814)
Deposits with clearing organizations	(1,830)	(9,710)
Receivable from brokers and clearing organizations	(57,060)	77,364
Receivable from customers	1,437	(16,857)
Income taxes receivable	1,824	(8,667)
Securities purchased under agreement to resell	(215,412)	(267,103)
Securities owned	(680,609)	(155,031)
Notes receivable	(10,404)	(13,587)
Other	36,805	(13,485)
Increase (decrease) in operating liabilities:
Drafts payable	(22,765)	(10,917)
Payable to brokers and clearing organizations	23,905	(30,976)
Payable to customers	153,570	8,173
Securities sold under agreement to repurchase	777,999	308,419
Securities sold, but not yet purchased	21,422	50,131
Accrued compensation	(58,966)	(61,102)
Accounts payable and other liabilities	12,528	48,789
Cash used in operating activities	(25,487)	(76,671)
Cash flows from investing activities:
Purchase of office facilities	(3,013)	(5,607)
Cash used in investing activities	(3,013)	(5,607)
Cash flows from financing activities:
Cash dividends paid on Class A non-voting and Class B voting common stock	(3,003)	(2,932)
Issuance of Class A non-voting common stock	337	2,002
Tax shortfall from share-based compensation	(1,624)	(104)
Senior secured note issuance	200,000
Senior secured credit note repayments	(22,503)	(1,000)
Subordinate note repayment	(100,000)
Increase (decrease) in bank call loans, net	12,000	62,400
Cash provided by financing activities	85,207	60,366
Net increase (decrease) in cash and cash equivalents	56,707	(21,912)
Cash and cash equivalents, beginning of period	52,854	68,918
Cash and cash equivalents, end of period	109,561	47,006
Schedule of non-cash investing and financing activities:
Employee share plan issuance	10,392	1,765
Supplemental disclosure of cash flow information:
Cash paid during the periods for interest	13,345	10,189
Cash paid during the periods for income taxes	$ 4,087	$ 8,020

XML



Summary of significant accounting policies

6 Months Ended

Jun. 30, 2011

Summary of significant accounting policies [Abstract]

Summary of significant accounting policies

1. Summary of significant accounting policies

Oppenheimer Holdings Inc. (“OPY”) is incorporated under the laws of the State of Delaware. The consolidated financial statements include the accounts of OPY and its subsidiaries (together, the “Company”). The principal subsidiaries of OPY are Oppenheimer & Co. Inc. (“Oppenheimer”), a registered broker dealer in securities, Oppenheimer Asset Management Inc. (“OAM”) and its wholly owned subsidiary, Oppenheimer Investment Management Inc. (“OIM”), both registered investment advisors under the Investment Advisors Act of 1940, Oppenheimer Trust Company, a limited purpose trust company chartered by the State of New Jersey to provide fiduciary services such as trust and estate administration and investment management, Oppenheimer Multifamily Housing and Healthcare Finance, Inc. (formerly Evanston Financial Corporation) (“OMHHF”), which is engaged in mortgage brokerage and servicing, and OPY Credit Corp., which offers syndication as well as trading of issued corporate loans. Oppenheimer Europe Ltd. (formerly Oppenheimer E.U. Ltd.) (“Oppenheimer Europe”), based in the United Kingdom, provides institutional equities and fixed income brokerage and corporate financial services and is regulated by the Financial Services Authority. Oppenheimer Investments Asia Limited, based in Hong Kong, China, provides assistance in accessing the U.S. equities markets and limited mergers and acquisitions advisory services to Asia-based companies. Oppenheimer operates as Fahnestock & Co. Inc. in Latin America. Oppenheimer owns Freedom Investments, Inc. (“Freedom”), a registered broker dealer in securities, which also operates as the BUYandHOLD division of Freedom, offering on-line discount brokerage and dollar-based investing services, and Oppenheimer Israel (OPCO) Ltd., which is engaged in offering investment services in the State of Israel as a local broker dealer.

The Company’s condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These accounting principles are set out in the notes to the Company’s consolidated financial statements for the year ended December 31, 2010 included in its Annual Report on Form 10-K for the year then ended.

Accounting standards require the Company to present non-controlling interests (previously referred to as minority interests) as a separate component of stockholders’ equity on the Company’s condensed consolidated balance sheet. As of June 30, 2011, the Company owns 67.34% of OMHHF and the non-controlling interest recorded in the condensed consolidated balance sheet was $4.5 million.

The condensed consolidated financial statements include all adjustments, which in the opinion of management are normal and recurring and necessary for a fair statement of the results of operations, financial position and cash flows for the interim periods presented. The nature of the Company’s business is such that the results of operations for the interim periods are not necessarily indicative of the results to be expected for a full year.

Disclosures reflected in these condensed consolidated financial statements comply in all material respects with those required pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) with respect to quarterly financial reporting.

Certain prior period amounts appearing in the notes to the condensed consolidated financial statements pertaining to the fair value measurement of derivative contracts have been reclassified to conform with current presentation.

XML



New Accounting Pronouncements

6 Months Ended

Jun. 30, 2011

New Accounting Pronouncements [Abstract]

New Accounting Pronouncements

2. New Accounting Pronouncements

Recently Adopted

In December 2010, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2010-28, “Intangibles — Goodwill and Other,” which modified Step 1 of the goodwill impairment test for reporting units with a zero or negative carrying value, stating that under such circumstances an entity should perform Step 2 of the impairment analysis when it is more likely than not that goodwill is impaired. The Company adopted this requirement in the period ending March 31, 2011 with no impact on its financial statements.

In February 2010, the FASB issued ASU No. 2010-10, “Consolidation — Amendments for Certain Investment Funds”, that will indefinitely defer the effective date of the updated Variable Interest Entity (“VIE”) accounting guidance for certain investment funds. To qualify for the deferral, the investment fund needs to meet certain attributes of an investment company, does not have explicit or implicit obligations to fund losses of the entity and is not a securitization entity, an asset-backed financing entity, or an entity formerly considered a qualifying special-purpose entity (“QSPE”). The Company’s investment funds meet the conditions in ASU No. 2010-10 and qualify for the deferral adoption. Therefore, the Company is not required to consolidate any of its investment funds which are VIEs until further guidance is issued.

In January 2010, the FASB issued ASU No. 2010-06, “Fair Value Measurement”. ASU No. 2010-06 requires new disclosures regarding transfers of assets and liabilities measured at fair value in and out of Level 1 and 2 of the fair value hierarchy. A reporting entity should disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfer. ASU No. 2010-06 also provides additional guidance on the level of disaggregation of fair value measurements and disclosures regarding inputs and valuation techniques. The Company adopted this disclosure requirement in the three months ended March 31, 2010. In addition, ASU No. 2010-06 requires the reconciliation of beginning and ending balances for fair value measurements using significant unobservable inputs (i.e., Level 3) to be presented on a gross basis. The Company adopted this requirement in the period ending March 31, 2011. See note 5 for further information.

Recently Issued

In April 2011, the FASB issued ASU No. 2011-03, “Transfers and Servicing: Reconsideration of Effective Control for Repurchase Agreements,” which removes the requirement to consider whether sufficient collateral is held when determining whether to account for repurchase agreements and other agreements that both entitle and obligate the transferor to repurchase or redeem financial assets before their maturity as sales or as secured financings. The guidance is effective prospectively for transactions beginning on January 1, 2012. We do not believe that the adoption of this guidance will have an impact on our financial condition, results of operations or cash flows.

In May 2011, the FASB issued ASU No. 2011-04, “Fair Value Measurement: Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS,” which provides clarifying guidance on how to measure fair value and has additional disclosure requirements. The amendments prohibit the use of blockage factors at all levels of the fair value hierarchy and provide guidance on measuring financial instruments that are managed on a net portfolio basis. Additional disclosure requirements include transfers between Levels 1 and 2 and, for Level 3 fair value measurements, a description of our valuation processes and additional information about unobservable inputs impacting Level 3 measurements. The updates are effective for the reporting period ending December 31, 2011. We are currently evaluating the impact, if any, that these updates will have on our financial condition, results of operations and cash flows.

In June 2011, the FASB issued ASU No. 2011-05, “Presentation of Comprehensive Income”, requiring entities to present items of net income and other comprehensive income either in one continuous statement (referred to as the statement of comprehensive income) or in two separate, but consecutive, statements of net income and other comprehensive income. The Company will adopt this requirement in the period ending December 31, 2011.

XML



Segment information

6 Months Ended

Jun. 30, 2011

Segment information [Abstract]

Segment information

10. Segment information

The table below presents information about the reported revenue and profit before income taxes of the Company for the periods noted. The Company’s segments are described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010. The Company has allocated all revenue and expenses to its segments and has eliminated the “Other” category. Previously reported segment information has been revised to reflect this change. The Company’s business is conducted primarily in the United States with additional operations in the United Kingdom, Israel, Asia, and South America.

The table below presents information about the reported revenue and profit before income taxes of the Company for the three and six months ended June 30, 2011 and 2010. Asset information by reportable segment is not reported, since the Company does not produce such information for internal use. Substantially all assets are located in the United States.

Expressed in thousands of dollars.

	Three months ended					Six months ended
	June 30,					June 30,
	2011			2010		2011			2010
Revenue:
Private Client (1)	$	136,092		$	138,684	$	283,157		$	277,019
Capital Markets		88,929			102,078		177,017			193,006
Asset Management (1)		19,497			16,237		37,761			33,146
Total	$	244,518		$	256,996	$	497,935		$	503,171
Profit before income taxes:
Private Client (1)	$	741		$	3,552	$	4,139		$	10,329
Capital Markets		(4,077	)		9,012		(2,712	)		13,850
Asset Management (1)		5,040			3,582		10,106			7,827
Total	$	1,704		$	16,146	$	11,533		$	32,006

(1) Asset management revenue is allocated 77.5% to the Private Client segment and 22.5% to the Asset Management segment.

Revenues, classified by the major geographic areas in which they were earned for the three and six months ended June 30, 2011 and 2010, were as follows:

Expressed in thousands of dollars.

	Three months ended				Six months ended
	June 30,				June 30,
	2011		2010		2011		2010
United States	$	232,272	$	242,099	$	471,562	$	476,913
Europe / Middle East		6,554		8,010		14,787		14,291
Asia		3,246		4,895		6,385		8,165
South America		2,446		1,992		5,201		3,802
Total	$	244,518	$	256,996	$	497,935	$	503,171

The effective tax rate for the three-month period ended June 30, 2011 was negatively impacted by remeasurements of deferred tax assets arising from net operating losses related to the Company’s Israeli subsidiary, resulting in tax expense of $466,000, and from state net operating losses and gross timing differences, resulting in net tax expense of $188,000.

XML



Earnings per share

6 Months Ended

Jun. 30, 2011

Earnings Per Share [Abstract]

Earnings per share

3. Earnings per share

Earnings per share was computed by dividing net profit attributable to Oppenheimer Holdings Inc. by the weighted average number of shares of Class A non-voting common stock (“Class A Stock”) and Class B voting common stock (“Class B Stock”) outstanding. Diluted earnings per share includes the weighted average Class A and Class B Stock outstanding and the effects of warrants issued and Class A Stock granted under share-based compensation arrangements using the treasury stock method, if dilutive.

Earnings per share has been calculated as follows:

Expressed in thousands of dollars, except share and per share amounts

	Three months ended June 30,					Six months ended June 30,
	2011			2010		2011		2010
Basic weighted average number of shares outstanding		13,658,720			13,349,551		13,605,020		13,323,410
Net dilutive effect of warrant, treasury method (1)		—			—		—		—
Net dilutive effect of share-based awards, treasury method (2)		278,655			549,816		324,500		567,451
Diluted weighted average number of shares outstanding		13,937,375			13,899,367		13,929,521		13,890,861
Net profit for the period	$	438		$	9,862	$	6,199	$	19,226
Net profit attributable to non-controlling interests		747			660		1,422		856
Net profit (loss) attributable to Oppenheimer Holdings Inc.	$	(309	)	$	9,202	$	4,777	$	18,370
Basic profit (loss) per share	$	(0.02	)	$	0.69	$	0.35	$	1.38
Diluted profit (loss) per share	$	(0.02	)	$	0.66	$	0.34	$	1.32

(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 and six months ended June 30, 2011 and 2010, the effect of the warrant is anti-dilutive.

(2)

For the three and six months ended June 30, 2011, the diluted earnings per share computations do not include the anti-dilutive effect of 1,139,695 and 1,142,028 shares of Class A Stock granted under share-based compensation arrangements together with the warrant described in (1) (1,273,416 shares of Class A Stock for both the three and six months ended June 30, 2010).

XML



Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $) In Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Condensed Consolidated Statements of Comprehensive Income [Abstract]
Net profit for the period	$ 438	$ 9,862	$ 6,199	$ 19,226
Other comprehensive income:
Currency translation adjustment	(120)	(516)	119	(231)
Change in cash flow hedges, net of tax	1,250	(450)	1,322	(817)
Comprehensive income for the period	1,568	8,896	7,640	18,178
Comprehensive income attributable to non-controlling interests, net of tax	747	660	1,422	856
Comprehensive income attributable to Oppenheimer Holdings Inc.	$ 821	$ 8,236	$ 6,218	$ 17,322

XML



Condensed Consolidated Statements of Changes in Equity (Unaudited) (USD $) In Thousands	Total	Share capital	Contributed capital	Retained earnings	Accumulated other comprehensive income (loss)	Non-controlling interest	Class A non-voting common stock
Beginning Balance at Dec. 31, 2009		$ 47,824	$ 41,978	$ 362,188	$ (543)
Issuance of Class A non-voting common stock							3,767
Vested employee share plan awards			(1,710)
Tax shortfall from share-based awards			(104)
Share-based expense			4,101
Net profit for the period attributable to Oppenheimer Holdings Inc.	18,370			18,370
Dividends ($0.11 per share in 2011 and 2010)				(2,932)
Currency translation adjustment	(231)				(231)
Change in cash flow hedges, net of tax	(817)				(817)
Stockholders' Equity	471,891
Grant of non-controlling interest						784
Net profit attributable to non-controlling interest for the period, net of tax	856					856
Ending Balance at Jun. 30, 2010	473,531	51,591	44,265	377,626	(1,591)	1,640
Beginning Balance at Dec. 31, 2010	497,596	51,901	47,808	394,648	207	3,032
Issuance of Class A non-voting common stock							10,729
Vested employee share plan awards			(13,303)
Tax shortfall from share-based awards			(1,624)
Share-based expense			2,179
Net profit for the period attributable to Oppenheimer Holdings Inc.	4,777			4,777
Dividends ($0.11 per share in 2011 and 2010)				(3,003)
Currency translation adjustment	119				119
Change in cash flow hedges, net of tax	1,322				1,322
Stockholders' Equity	495,760
Net profit attributable to non-controlling interest for the period, net of tax	1,422					1,422
Ending Balance at Jun. 30, 2011	$ 500,214	$ 62,630	$ 35,060	$ 396,422	$ 1,648	$ 4,454

XML



Net capital requirements

6 Months Ended

Jun. 30, 2011

Net capital requirements [Abstract]

Net capital requirements

8. Net capital requirements

The Company’s U.S. broker dealer subsidiaries, Oppenheimer and Freedom, are subject to the uniform net capital requirements of the SEC under Rule 15c3-1 (the “Rule”). Oppenheimer computes its net capital requirements under the alternative method provided for in the Rule which requires that Oppenheimer maintain net capital equal to two percent of aggregate customer-related debit items, as defined in SEC Rule 15c3-3. At June 30, 2011, the net capital of Oppenheimer as calculated under the Rule was $162.9 million or 13.2% of Oppenheimer’s aggregate debit items. This was $138.2 million in excess of the minimum required net capital at that date. Freedom computes its net capital requirement under the basic method provided for in the Rule, which requires that Freedom maintain net capital equal to the greater of $250,000 or 6 2/3% of aggregate indebtedness, as defined. At June 30, 2011, Freedom had net capital of $4.9 million, which was $4.6 million in excess of the $250,000 required to be maintained at that date.

At June 30, 2011, the regulatory capital of Oppenheimer Europe was $4.2 million, which was $1.9 million in excess of the $2.3 million required to be maintained at that date. Oppenheimer Europe computes its regulatory capital pursuant to the Fixed Overhead Method prescribed by the Financial Services Authority of the United Kingdom.

At June 30, 2011, the regulatory capital of Oppenheimer Investments Asia Ltd. was $1.6 million, which was $1.3 million in excess of the $385,000 required to be maintained on that date. Oppenheimer Investments Asia Ltd. computes its regulatory capital pursuant to the requirements of the Securities and Futures Commission in Hong Kong.

XML



Supplemental Guarantor Condensed Consolidated Financial Statements

6 Months Ended

Jun. 30, 2011

Supplemental Guarantor Financial Statements Abstract

Supplemental Guarantor Condensed Consolidated Financial Statements

12. Supplemental Guarantor Condensed Consolidated Financial Statements

The Company’s Senior Secured Notes are jointly and severally and fully and unconditionally guaranteed on a senior basis by E.A. Viner International Co. and Viner Finance Inc. (together, the Guarantors). Each of the Guarantors is 100% owned by the Company. The following condensed consolidating financial statements present the financial position, results of operations and cash flows of the Company (referred to as “Parent” for purposes of this note only), the Guarantor subsidiaries, the Non-Guarantor subsidiaries and elimination entries necessary to consolidate the Company. Investments in subsidiaries are accounted for using the equity method for purposes of the consolidated presentation.

OPPENHEIMER HOLDINGS INC.
CONDENSED CONSOLIDATING BALANCE SHEET (unaudited)
AS AT JUNE 30, 2011

			Guarantor			Non-guarantor			Elimin-
Expressed in thousands of dollars.	Parent		Subsidiaries			Subsidiaries			ations			Consolidated
ASSETS
Cash and cash equivalents	$	748	$	49,472		$	59,341		$	—		$	109,561
Cash and securities segregated for regulatory and other purposes		—		—			180,498			—			180,498
Deposits with clearing organizations		—		—			25,058			—			25,058
Receivable from brokers and clearing organizations		—		34			359,871			(1	)		359,904
Receivable from customers, net of allowance for credit losses of $2,430		—		—			923,666			—			923,666
Income taxes receivable		2,099		27,094			(702	)		(25,337	)		3,155
Securities purchased under agreement to resell		—		—			562,482			—			562,482
Securities owned, including amounts pledged of $434,315, at fair value		12,000		—			1,035,628			—			1,047,628
Subordinated loan receivable		—		112,558			—			(112,558	)		—
Notes receivable, net		—		—			60,050			—			60,050
Office facilities, net		—		—			19,855			—			19,855
Deferred tax asset		93		—			16,920			(17,013	)		—
Intangible assets, net		—		—			38,816			—			38,816
Goodwill		—		—			132,472			—			132,472
Other		4,296		169			156,480			59			161,004
Investment in subsidiaries		491,174		890,664			(191,593	)		(1,190,245	)		—
Intercompany receivables		191,755		(156,624	)		816			(35,947	)		—
	$	702,165	$	923,368		$	3,379,659		$	(1,381,042	)	$	3,624,149

OPPENHEIMER HOLDINGS INC.
CONDENSED CONSOLIDATING BALANCE SHEET (unaudited)
AS AT JUNE 30, 2011

			Guarantor			Non-guarantor		Elimin-
Expressed in thousands of dollars.	Parent		Subsidiaries			Subsidiaries		ations			Consolidated
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Drafts payable	$	—	$	—		$	38,290	$	—		$	38,290
Bank call loans		—		—			159,000		—			159,000
Payable to brokers and clearing organizations		—		—			395,280		—			395,280
Payable to customers		—		—			560,486		—			560,486
Securities sold under agreement to repurchase		—		—			1,168,455		—			1,168,455
Securities sold, but not yet purchased, at fair value		—		—			181,474		—			181,474
Accrued compensation		—		—			120,424		—			120,423
Accounts payable and other liabilities		3,965		843			270,183		42			275,033
Income taxes payable		2,440		22,564			333		(25,337	)		—
Senior secured note		—		—			—		200,000			200,000
Subordinated indebtedness		200,000		—			112,558		(312,558	)		—
Deferred income tax, net		—		(943	)		36,429		(17,013	)		18,473
Excess of fair value of acquired assets over cost		—		—			7,020		—			7,020
Intercompany payables		—		35,931			—		(35,931	)		—
		206,405		58,395			3,049,931		(190,797	)		3,123,936
Stockholders’ equity attributable to the Oppenheimer Holdings Inc.		495,760		864,973			325,272		(1,190,245	)		495,760
Noncontrolling interest							4,454					4,454
Stockholders’ equity		495,760		864,973			329,726		(1,190,245	)		500,214
	$	702,165	$	923,338		$	3,379,659		(1,381,042	)	$	3,624,149

OPPENHEIMER HOLDINGS INC.
CONDENSED CONSOLIDATING BALANCE SHEET (unaudited)
AS AT DECEMBER 31, 2010

			Guarantor			Non-guarantor			Elimin-
Expressed in thousands of dollars.	Parent		Subsidiaries			Subsidiaries			ations			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 agreement 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 receivables		12,135		21,862			1,847			(35,846	)		—
	$	497,135	$	850,366		$	2,563,455		$	(1,290,922	)	$	2,620,034

OPPENHEIMER HOLDINGS INC.
CONDENSED CONSOLIDATING BALANCE SHEET (unaudited)
AS AT DECEMBER 31, 2010

			Guarantor		Non-guarantor		Elimin-
Expressed in thousands of dollars.	Parent		Subsidiaries		Subsidiaries		ations			Consolidated
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 agreement 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 tax, 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 the Oppenheimer Holdings Inc.		494,564		792,282		322,420		(1,114,702	)		494,564
Noncontrolling 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

OPPENHEIMER HOLDINGS INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (unaudited)
FOR THE THREE MONTHS ENDED JUNE 30, 2011

				Guarantor			Non-guarantor		Elimin-
Expressed in thousands of dollars.	Parent			Subsidiaries			Subsidiaries		ations			Consolidated
REVENUE
Commissions	$	—		$	—		$	120,790	$	—		$	120,790
Principal transactions, net		—			(308	)		13,621		—			13,313
Interest		—			2,671			13,441		(2,463	)		13,649
Investment banking		—			—			34,717		(1,000	)		33,717
Advisory fees		—			—			50,662		(607	)		50,055
Other		—			—			12,994					12,994
		—			2,363			246,225		(4,070	)		244,518
EXPENSES
Compensation and related expenses		48			—			160,388		—			160,436
Clearing and exchange fees		—			—			6,300		—			6,300
Communications and technology		7			—			16,062		—			16,069
Occupancy and equipment costs		—			—			18,524		—			18,524
Interest		3,791			1,924			7,417		(2,463	)		10,669
Other		1,331			11			31,081		(1,607	)		30,816
		5,177			1,935			239,772		(4,070	)		242,814
Profit (loss) before income taxes		(5,177	)		428			6,453		—			1,704
Income tax provision (benefit)		(2,058	)		240			3,084		—			1,266
Net profit (loss) for the period		(3,119	)		188			3,369		—			438
Less net profit attributable to non- Controlling interest, net of tax		—			—			747		—			747
Equity in subsidiaries		2,810			—			—		(2,810	)		—
Net profit (loss) attributable to Oppenheimer Holdings Inc.	$	(309	)	$	188		$	2,622		—		$	(309	)

OPPENHEIMER HOLDINGS INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (unaudited)
FOR THE SIX MONTHS ENDED JUNE 30, 2011

				Guarantor			Non-guarantor		Elimin-
Expressed in thousands of dollars.	Parent			Subsidiaries			Subsidiaries		ations			Consolidated
REVENUE
Commissions	$	—		$	—		$	257,645	$	—		$	257,645
Principal transactions, net		—			(307	)		24,611		—			24,304
Interest		—			4,419			28,230		(4,211	)		28,438
Investment banking		—			—			63,158		(1,000	)		62,158
Advisory fees		—			—			99,695		(1,191	)		98,504
Other		—			—			26,886					26,886
		—			4,112			500,225		(6,402	)		497,935
EXPENSES
Compensation and related expenses		152			—			330,699		—			330,851
Clearing and exchange fees		—			—			12,613		—			12,613
Communications and technology		21			—			31,987		—			32,008
Occupancy and equipment costs		—			—			37,070		—			37,070
Interest		3,791			3,428			15,435		(4,211	)		18,443
Other		1,546			262			55,800		(2,191	)		55,417
		5,510			3,690			483,604		(6,402	)		486,402
Profit (loss) before income taxes		(5,510	)		422			16,621					11,533
Income tax provision (benefit)		(2,192	)		265			7,261		—			5,334
Net profit (loss) for the period		(3,318	)		157			9,360		—			6,199
Less net profit attributable to non- Controlling interest, net of tax		—			—			1,422		—			1,422
Equity in subsidiaries		8,095			—			—		(8,095	)		—
Net profit  attributable to Oppenheimer Holdings Inc.	$	4,777		$	157		$	7,938		—		$	4,777

OPPENHEIMER HOLDINGS INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (unaudited)
FOR THE THREE MONTHS ENDED JUNE 30, 2010

				Guarantor		Non-guarantor		Elimin-
Expressed in thousands of dollars.	Parent			Subsidiaries		Subsidiaries		ations			Consolidated
REVENUE
Commissions	$	—		$	—	$	139,582	$	—		$	139,582
Principal transactions, net		—			—		16,778		—			16,778
Interest		—			1,761		11,197		(1,760	)		11,198
Investment banking		—			—		36,336		—			36,336
Advisory fees		—			—		44,480		(496	)		43,984
Other		—			—		9,118					9,118
		—			1,761		257,491		(2,256	)		256,996
EXPENSES
Compensation and related expenses		95			—		164,209		—			164,304
Clearing and exchange fees		—			—		7,823		—			7,823
Communications and technology		14			—		16,286		—			16,300
Occupancy and equipment costs		—			—		18,262		—			18,262
Interest		—			1,518		6,631		(1,760	)		6,389
Other		188			87		27,993		(496	)		27,772
		297			1,605		241,204		(2,256	)		240,850
Profit (loss) before income taxes		(297	)		156		16,287		—			16,146
Income tax provision (benefit)		(119	)		54		6,349		—			6,284
Net profit (loss) for the period		(178	)		102		9,938		—			9,862
Less net profit attributable to non- controlling interest, net of tax		—			—		660		—			660
Equity in subsidiaries		9,380			—		—		(9,380	)		—
Net profit  attributable to Oppenheimer Holdings Inc.	$	9,202		$	102	$	9,278		—		$	9,202

OPPENHEIMER HOLDINGS INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (unaudited)
FOR THE SIX MONTHS ENDED JUNE 30, 2010

				Guarantor			Non-guarantor		Elimin-
Expressed in thousands of dollars.	Parent			Subsidiaries			Subsidiaries		ations			Consolidated
REVENUE
Commissions	$	—		$	—		$	277,779	$	—		$	277,779
Principal transactions, net		—			(276	)		37,233		—			36,957
Interest		—			3,496			20,776		(3,496	)		20,776
Investment banking		—			—			61,520		—			61,520
Advisory fees		—			—			87,766		(988	)		86,778
Other		—			—			19.361		—			19,361
		—			3,220			504,435		(4,484	)		503,171
EXPENSES
Compensation and related expenses		102			—			322,381		—			322,483
Clearing and exchange fees		—			—			14,385		—			14,385
Communications and technology		29			—			32,711		—			32,740
Occupancy and equipment costs		—			—			36,722		—			36,722
Interest		—			3,360			11,826		(3,496	)		11,690
Other		477			100			53,556		(988	)		53,145
		608			3,460			471,581		(4,484	)		471,165
Profit (loss) before income taxes		(608	)		(240	)		32,854		—			32,006
Income tax provision (benefit)		(243	)		(97	)		13,120		—			12,780
Net profit (loss) for the period		(365	)		(143	)		19,734		—			19,226
Less net profit attributable to non- controlling interest, net of tax		—			—			856		—			856
Equity in subsidiaries		18,735			—			—		(18,735	)		—
Net profit  attributable to Oppenheimer Holdings Inc.	$	18,370		$	(143	)	$	18,878		—		$	18,370

OPPENHEIMER HOLDINGS INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (unaudited)
FOR THE SIX MONTHS ENDED JUNE 30, 2011

				Guarantor			Non-guarantor			Elimin-
Expressed in thousands of dollars.	Parent			Subsidiaries			Subsidiaries			ations			Consolidated
Cash flows from operations:
Net profit (loss) for the period	$	(3,318	)	$	157		$	9,360		$	—		$	6,199
Adjustments to reconcile net profit (loss) to net cash used in operating activities:
Depreciation and amortization		—			—			6,437			—			6,437
Deferred income tax		(93	)		(943	)		3,213			—			2,177
Amortization of notes receivable		—			—			10,140			—			10,140
Amortization of debt issuance costs		—			—			571			—			571
Amortization of intangibles		—			—			2,163			—			2,163
Provision for credit losses		—			—			(286	)		—			(286	)
Share-based compensation		—			—			2,720			—			2,720
Changes in operating assets and liabilities		(194,182	)		85,714			52,793			69			(55,608	)
Cash provided by (used in) continuing operations		(197,594	)		84,928			87,111			69			(25,487	)
Cash flows from investing activities:
Purchase of office facilities		—			—			(3,013	)		—			(3,013	)
Cash used in investing activities		—			—			(3,013	)		—			(3,013	)
Cash flows from financing activities:
Cash dividends paid on Class A non-voting and Class B voting common stock		(3,003	)		—			—			—			(3,003	)
Issuance of Class A non-voting common Stock		337			—			—			—			337
Senior secured note issuance		200,000			—			—			—			200,000
Senior secured credit note repayments		—			—			(22,503	)		—			(22,503	)
Subordinated note repayments		—			—			(100,000	)		—			(100,000	)
Other financing activities		646			(35,215	)		45,014			(69	)		10,376
Cash provided by (used in) financing activities		197,980			(35,215	)		(77,489	)		(69	)		85,207
Net increase (decrease) in cash and cash equivalents		387			49,713			6,607			—			56,707
Cash and cash equivalents, beginning of period		361			(241	)		52,734			—			52,854
Cash and cash equivalents, end of period	$	748		$	49,472		$	59,341			—		$	109,561

OPPENHEIMER HOLDINGS INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (unaudited)
FOR THE SIX MONTHS ENDED JUNE 30, 2010

				Guarantor			Non-guarantor			Elimin-
Expressed in thousands of dollars.	Parent			Subsidiaries			Subsidiaries			ations			Consolidated
Cash flows from operations:
Net profit (loss) for the period		($365	)		($143	)	$	19,734					$	19,226
Adjustments to reconcile net profit (loss) to net cash used in operating activities:		—			—			—						—
Depreciation and amortization		—			—			6,007						6,007
Deferred income tax		—			—			8,960						8,960
Amortization of notes receivable		—			—			10,005						10,005
Amortization of debt issuance costs		—			—			391						391
Amortization of intangibles		—			—			2,162						2,162
Provision for credit losses		—			—			359						359
Share-based compensation		—			—			(408	)					(408	)
Changes in operating assets and liabilities		(56	)		(5,702	)		(113,949	)		(3,666	)		(123,373	)
Cash provided by (used in) continuing operations		(421	)		(5,845	)		(66,739	)		(3,666	)		(76,671	)
Cash flows from investing activities:
Purchase of office facilities		—			—			(5,607	)		—			(5,607	)
Cash used in investing activities		—			—			(5,607	)		—			(5,607	)
Cash flows from financing activities:
Cash dividends paid on Class A non- voting and Class B voting common stock		(2,932	)		—			—			—			(2,932	)
Issuance of Class A non-voting common Stock		2,002			—			—			—			2,002
Senior secured credit note repayments					—			(1,000	)		—			(1,000	)
Other financing activities		4,531			8,689			45,409			(3,666	)		62,296
Cash provided by (used in) financing activities		3,601			31,731			9,050			(3,666	)		60,366
Net increase (decrease) in cash and cash equivalents		3,180			2,845			(27,937	)		—			(21,912	)
Cash and cash equivalents, beginning of period		2,475			2,359			64,084			—			68,918
Cash and cash equivalents, end of period	$	5,655		$	5,204		$	36,147			—		$	47,006

XML



Condensed Consolidated Balance Sheets (Unaudited) (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
ASSETS
Cash and cash equivalents	$ 109,561	$ 52,854
Cash and securities segregated for regulatory and other purposes	180,498	142,446
Deposits with clearing organizations	25,058	23,228
Receivable from brokers and clearing organizations	359,904	302,844
Receivable from customers, net of allowance for doubtful accounts of $2,430 ($2,716 in 2010)	923,666	924,817
Income taxes receivable	3,155	4,979
Securities purchased under agreement to resell	562,482	347,070
Securities owned, including amounts pledged of $434,315 ($102,501 in 2010), at fair value	1,047,628	367,019
Notes receivable, net	60,050	59,786
Office facilities, net	19,855	22,875
Intangible assets, net	38,816	40,979
Goodwill	132,472	132,472
Other	161,004	198,665
Total assets	3,624,149	2,620,034
Liabilities
Drafts payable	38,290	61,055
Bank call loans	159,000	147,000
Payable to brokers and clearing organizations	395,280	372,697
Payable to customers	560,486	406,916
Securities sold under agreement to repurchase	1,168,455	390,456
Securities sold, but not yet purchased, at fair value	181,474	160,052
Accrued compensation	120,423	175,938
Accounts payable and other liabilities	275,034	262,506
Senior secured note	200,000	0
Senior secured credit note	0	22,503
Subordinated note	0	100,000
Deferred income tax, net	18,472	16,295
Excess of fair value of acquired assets over cost	7,020	7,020
Total liabilities	3,123,935	2,122,438
Oppenheimer Holdings Inc. stockholders' equity Share capital
Common stock	62,630	51,901
Contributed capital	35,060	47,808
Retained earnings	396,422	394,648
Accumulated other comprehensive income	1,648	207
Total Oppenheimer Holdings Inc. stockholders' equity	495,760	494,564
Noncontrolling interest	4,454	3,032
Total equity	500,214	497,596
Total Liabilities and Equity	3,624,149	2,620,034
Class A non-voting common stock
Oppenheimer Holdings Inc. stockholders' equity Share capital
Common stock	62,497	51,768
Class B voting common stock
Oppenheimer Holdings Inc. stockholders' equity Share capital
Common stock	$ 133	$ 133