<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
----- EXCHANGE ACT OF 1934.
For the quarterly period ended July 31, 1995
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: 1-9597
OPPENHEIMER CAPITAL, L.P.
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(Exact name of registrant as specified in its charter)
DELAWARE 13-3412614
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
OPPENHEIMER TOWER
WORLD FINANCIAL CENTER, NEW YORK, NEW YORK 10281
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(Address of principal executive office) (Zip Code)
(212) 667-7000
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(Registrant's telephone number including area code)
NOT APPLICABLE
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(Former name, address and 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 X No
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
The issuer is a Limited Partnership. There were 15,234,503 Units of
limited partnership interest outstanding at September 12, 1995.
<PAGE>
OPPENHEIMER CAPITAL, L.P.
INDEX
PAGE
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PART I - FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
OPPENHEIMER CAPITAL, L.P.
STATEMENTS OF FINANCIAL CONDITION 3
OPPENHEIMER CAPITAL, L.P.
STATEMENTS OF INCOME 4
OPPENHEIMER CAPITAL, L.P.
STATEMENTS OF CASH FLOWS 5
OPPENHEIMER CAPITAL, L.P.
NOTES TO THE FINANCIAL STATEMENTS 6
OPPENHEIMER CAPITAL
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION 8
OPPENHEIMER CAPITAL
CONSOLIDATED STATEMENTS OF INCOME 9
OPPENHEIMER CAPITAL
CONSOLIDATED STATEMENTS OF CASH FLOWS 10
OPPENHEIMER CAPITAL
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 13
PART II - OTHER INFORMATION 17
SIGNATURES 18
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<PAGE>
OPPENHEIMER CAPITAL, L.P.
STATEMENTS OF FINANCIAL CONDITION
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
JULY 31, 1995 APRIL 30, 1995
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<S> <C> <C>
Cash and short term investments $ 62 $ 60
Investment in Oppenheimer Capital 11,397 9,707
Distribution receivable (Note 3) 7,655 9,545
10% note due 2012 from Oppenheimer Equities, Inc. 32,193 32,193
Interest receivable 538 538
Other assets 112 109
Goodwill, net 43,829 44,481
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TOTAL ASSETS $95,786 $96,633
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LIABILITIES AND PARTNERS' CAPITAL
Distribution payable to partners $ 8,464 $10,321
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TOTAL LIABILITIES 8,464 10,321
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General partner's capital 887 876
Limited partners' capital 86,435 85,436
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TOTAL PARTNERS' CAPITAL 87,322 86,312
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TOTAL LIABILITIES AND
PARTNERS' CAPITAL $95,786 $96,633
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</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
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<PAGE>
OPPENHEIMER CAPITAL, L.P.
STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT FOR PER UNIT AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JULY 31,
---------------------
1995 1994
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<S> <C> <C>
REVENUES
Equity in earnings of Oppenheimer Capital $9,049 $8,040
Interest 813 813
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TOTAL REVENUES 9,862 8,853
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EXPENSES
Amortization of goodwill 652 652
Other expenses (Note 4) 33 325
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TOTAL EXPENSES 685 977
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NET INCOME $9,177 $7,876
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NET INCOME PER UNIT (NOTE 5) $ 0.60 $ 0.52
------ ------
------ ------
DISTRIBUTIONS DECLARED PER UNIT $ 0.55 $ 0.50
------ ------
------ ------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
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<PAGE>
OPPENHEIMER CAPITAL, L.P.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JULY 31,
----------------------------
1995 1994
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 9,177 $ 7,876
Adjustments to reconcile net income to net cash provided
by operating activities:
Distributions received in excess of equity in
earnings of Oppenheimer Capital 496 1,860
Amortization of goodwill 652 652
(Increase) in other assets (3) (29)
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Net cash provided by operating activities 10,322 10,359
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CASH FLOWS FROM INVESTING ACTIVITIES
Capital contributions to Oppenheimer Capital (48) (64)
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CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to partners:
General partner (103) (103)
Limited partners (10,217) (10,216)
Issuance of limited partnership units on exercise of
restricted options 48 64
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Net cash (used in) financing activities (10,272) (10,255)
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Net increase in cash and short term investments 2 40
Cash and short term investments at beginning of period 60 75
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Cash and short term investments at end of period $ 62 $ 115
-------- --------
-------- --------
Supplemental disclosure of cash flow information:
New York City unincorporated business taxes paid $ 36 $ 354
-------- --------
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</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
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<PAGE>
OPPENHEIMER CAPITAL, L.P.
NOTES TO THE FINANCIAL STATEMENTS
1. ORGANIZATION:
Oppenheimer Capital, L.P. (the "Partnership") holds a 67.29% general
partnership interest in Oppenheimer Capital (the "Operating Partnership"), a
general partnership. The Partnership (through the Operating Partnership)
engages in the investment management business. The limited partners and
Oppenheimer Financial Corp., the Partnership's general partner (the "General
Partner"), hold a 99% interest and 1% interest, respectively, in the
Partnership.
The financial statements of the Partnership should be read in conjunction
with the consolidated financial statements of the Operating Partnership.
The Operating Partnership is part of an affiliated group of companies
operating in the financial services industry.
2. BASIS OF PRESENTATION:
The interim financial information in this report has not been audited. The
financial statements should be read in conjunction with the financial statements
included in the Partnership's 1995 Annual Report. In the opinion of management,
all adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position and results of operations for all periods
presented have been made. The results of operations for any interim period are
not necessarily indicative of the operating results for a full year.
3. DISTRIBUTION RECEIVABLE:
On July 31, 1995, the Operating Partnership declared distributions to its
partners, of which $7,655,000 was paid to the Partnership on August 31, 1995.
4. OTHER EXPENSES:
Other expenses consist of New York City unincorporated business tax at a
rate of 4% of taxable income. The Partnership is not subject to Federal or
local income taxes which are obligations of the individual partners. However,
under current tax law the Partnership will be taxed as a corporation beginning
in 1998.
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<PAGE>
OPPENHEIMER CAPITAL, L.P.
NOTES TO THE FINANCIAL STATEMENTS
(CONTINUED)
5. NET INCOME PER UNIT:
(IN THOUSANDS, EXCEPT FOR PER UNIT AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JULY 31,
----------------------
1995 1994
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<S> <C> <C>
Net Income $ 9,177 $ 7,876
Less 1% applicable to the General Partner 92 79
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Net income available to the Limited Partners $ 9,085 $ 7,797
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------- -------
Weighted average number of units outstanding 15,235 15,135
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Net income per unit $ .60 $ .52
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</TABLE>
6. SUBSEQUENT EVENT
On August 18, 1995, Oppenheimer Management Corporation ("OMC"), which is
unrelated to the Operating Partnership, and the Operating Partnership announced
the signing of a definitive agreement whereby OMC will, subject to certain
conditions, acquire investment advisory and other contracts and business
relationships of the Operating Partnership in twelve of the Quest for Value
Funds (the "Funds"). Under the terms of the agreement, the portfolios of the
six equity Funds involved will continue to be managed by Quest for Value
Advisors, an affiliated investment adviser, under subadvisory agreements with
OMC while the six fixed income Funds will be merged into funds currently managed
by OMC. The transaction is subject to the approval of the Funds' shareholders.
The purchase price for the acquisition will be based primarily on a formula
taking into account the assets of the Funds at closing. As of July 31, 1995,
that portion of the purchase price would be approximately $37.6 million. An
additional payment of up to $4.2 million may be made on the first anniversary of
the closing if the assets of the six merged Quest fixed income Funds are then at
stated levels.
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<PAGE>
OPPENHEIMER CAPITAL
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
JULY 31, 1995 APRIL 30, 1995
------------- --------------
<S> <C> <C>
Cash and short term investments $ 6,476 $ 9,214
Investment management fees receivable 36,168 33,177
Furniture, equipment and leasehold improvements
at cost, less accumulated depreciation and
amortization of $2,049 and $1,867 3,675 3,733
Intangible assets, less accumulated amortization
of $454 and $395 2,953 3,012
Investments in affiliated mutual funds and other
sponsored investment products 5,566 2,887
Other assets (Note 6) 5,312 4,106
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TOTAL ASSETS $60,150 $56,129
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LIABILITIES, MINORITY INTEREST AND PARTNERS' CAPITAL
Accrued employee compensation and benefits $ 7,708 $ 8,324
Accrued expenses and other liabilities 5,539 6,878
Note payable 800 1,200
Loan payable to bank 15,601 9,182
Deferred investment management fees 2,055 1,716
Distribution payable to partners 11,376 14,282
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TOTAL LIABILITIES 43,079 41,582
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Minority interest 136 87
PARTNERS' CAPITAL 16,935 14,460
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TOTAL LIABILITIES , MINORITY INTEREST
AND PARTNERS' CAPITAL $60,150 $56,129
------- -------
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</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
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<PAGE>
OPPENHEIMER CAPITAL
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JULY 31,
----------------------
1995 1994
------- -------
<S> <C> <C>
OPERATING REVENUES
Investment management fees $35,660 $30,022
Net distribution assistance and commission income 1,056 1,480
Interest and dividends 102 45
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TOTAL OPERATING REVENUES 36,818 31,547
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OPERATING EXPENSES
Compensation and benefits 16,379 13,330
Occupancy 1,669 1,625
General and administrative 2,629 2,217
Promotional 2,109 2,439
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TOTAL OPERATING EXPENSES 22,786 19,611
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OPERATING INCOME 14,032 11,936
Income taxes (Note 3) (551) (140)
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INCOME BEFORE MINORITY INTEREST 13,481 11,796
Minority interest (32) 39
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NET INCOME $13,449 $11,835
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</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
-9-
<PAGE>
OPPENHEIMER CAPITAL
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JULY 31,
---------------------------
1995 1994
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $13,449 $11,835
Adjustments to reconcile net income to net cash provided by
operating activities:
Amortization of restricted unit compensation expense 371 320
Depreciation and amortization 241 282
Minority interest, net of distributions 49 473
(Increase) in investment management fees receivable (2,991) (1,857)
(Increase) in other assets (1,291) (2,396)
(Decrease) in accrued employee compensation and benefits (616) (1,268)
Increase (decrease) in accrued expenses and other liabilities (1,339) 1,294
Increase in deferred investment management fees 339 7
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Net cash provided by operating activities 8,212 8,690
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of fixed assets (124) (516)
Intangible assets resulting from acquisitions - (1,689)
Proceeds from sales of mutual fund shares and other investments 399 367
Purchases of mutual fund shares and other investments (3,010) -
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Net cash (used in) investing activities (2,735) (1,838)
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CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from bank loans 6,419 9,025
Issuance of note payable - 1,200
Payment of note payable (400) -
Distributions to partners:
Oppenheimer Financial Corp. (4,737) (4,877)
Oppenheimer Capital, L.P. (9,545) (9,900)
Contributions by Oppenheimer Capital, L.P. 48 64
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Net cash (used in) financing activities (8,215) (4,488)
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Net increase (decrease) in cash and short term investments (2,738) 2,364
Cash and short term investments at beginning of period 9,214 4,308
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Cash and short term investments at end of period $ 6,476 $ 6,672
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Supplemental disclosure of cash flow information:
Interest paid $233 $124
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New York City unincorporated business taxes paid $422 $-
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</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
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<PAGE>
OPPENHEIMER CAPITAL
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION:
Oppenheimer Capital (the "Operating Partnership"), a general partnership,
engages in the investment management business. Oppenheimer Capital, L.P. (the
"Partnership") holds a 67.29% general partnership interest in the Operating
Partnership and Oppenheimer Financial Corp. ("Opfin") holds the remaining 32.71%
general partnership interest. The Operating Partnership is part of an
affiliated group of companies operating in the financial services industry.
2. BASIS OF PRESENTATION:
The interim financial information in this report has not been audited. The
financial statements should be read in conjunction with the financial statements
included in the Partnership's 1995 Annual Report. In the opinion of management,
all adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position and results of operations for all periods
presented have been made. The results of operations for any interim period are
not necessarily indicative of the operating results for a full year.
3. INCOME TAXES:
The Operating Partnership is not subject to Federal or local income taxes.
The Operating Partnership was subject to New York City unincorporated business
tax of $551,000 for the three months ended July 31, 1995 and $140,000 for the
three months ended July 31, 1994.
4. ACQUISITIONS OF BUSINESSES:
In May, 1994, a subsidiary of the American Medical Association ("AMA") and
the Operating Partnership formed AMA Investment Advisers, L.P. to acquire the
assets of AMA Investment Advisers, Inc. and American Medical Investment Company,
Inc. The Operating Partnership and Opfin acquired a 79.1% and 1.0% partnership
interest, respectively, for their pro rata portions of $500,000 and a $1,200,000
promissory note bearing interest at the prime rate. On May 1, 1995, $400,000
was paid on the promissory note, with the remainder due in two equal
installments of $400,000 on May 1, 1996 and May 1, 1997. AMA Investment
Advisers, L.P. and its subsidiary offer investment services and products
tailored especially for members of the AMA, other health care professionals and
medical organizations.
On May 1, 1994, the Operating Partnership acquired Liberty Street Trust
Company from Oppenheimer Holdings, Inc., an affiliate, for its net book value of
approximately $1,629,000 and renamed it Oppenheimer Capital Trust Company. This
company offers collectively managed portfolios of specialized asset classes.
On May 10, 1994, the Operating Partnership formed Saratoga Capital
Management, a joint venture, to provide asset allocation services to broker-
dealers utilizing mutual funds managed by independent investment advisers and
Quest for Value Advisors ("Advisors"), an affiliated investment adviser.
5. PRIOR PERIOD FINANCIAL INFORMATION:
Certain prior period financial information has been reclassified to conform
with the current period's presentation.
6. OTHER ASSETS:
Included in other assets is an investment in Orange County securities. On
December 7, 1994, in response to the bankruptcy filing by Orange County,
California, the Operating Partnership voluntarily purchased $2,000,000 principal
amount at par of Orange County Tax and Revenue Anticipation Notes from a mutual
fund for which Advisors acts as the sole investment adviser. This investment is
being recorded at the market value. On February 2, 1995 and February 8, 1995,
the Operating Partnership sold a total of $1,000,000 principal amount of the
Orange County Tax and Revenue Anticipation Notes and realized a loss of
approximately $100,000.
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<PAGE>
OPPENHEIMER CAPITAL
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. SUBSEQUENT EVENTS
RESTRICTED UNIT PLAN AND RESTRICTED OPTION PLAN
On August 15, 1995, the Board of Directors of Opfin approved (i) the
extension of the term of the Restricted Unit Plan and the Restricted Option Plan
(the "Plans"), effective as of July 9, 1994, until July 9, 1999 or until such
earlier time as the units authorized for issuance under the Plans have been
granted and have been vested, and (ii) an increase in the aggregate number of
units authorized for issuance under the Plans to 2,475,000.
OPPENHEIMER MANAGEMENT CORPORATION
On August 18, 1995, Oppenheimer Management Corporation ("OMC"), which is
unrelated to the Operating Partnership, and the Operating Partnership announced
the signing of a definitive agreement whereby OMC will, subject to certain
conditions, acquire investment advisory and other contracts and business
relationships of the Operating Partnership in twelve of the Quest for Value
Funds (the "Funds"). Under the terms of the agreement, the portfolios of the
six equity Funds involved will continue to be managed by Advisors under
subadvisory agreements with OMC while the six fixed income Funds will be merged
into funds currently managed by OMC. The transaction is subject to the approval
of the Funds' shareholders.
The purchase price for the acquisition will be based primarily on a formula
taking into account the assets of the Funds at closing. As of July 31, 1995,
that portion of the purchase price would be approximately $37.6 million. An
additional payment of up to $4.2 million may be made on the first anniversary of
the closing if the assets of the six merged Quest fixed income Funds are then at
stated levels.
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<PAGE>
PART I, ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OPPENHEIMER CAPITAL, L.P.
GENERAL
The primary sources of income for Oppenheimer Capital, L.P. ( the
"Partnership") are its proportionate share of the net income of Oppenheimer
Capital (the "Operating Partnership") and interest income on a $32,193,000 par
value 10% note due 2012 from Oppenheimer Equities, Inc. ("Equities").
REVENUES AND EXPENSES
The Partnership recorded equity in earnings of the Operating Partnership
for the three months ended July 31, 1995 and July 31, 1994 of $9,049,000 and
$8,040,000, respectively.
Other expenses consist of New York City unincorporated business tax
("UBT"). For the three months ended July 31, 1995 and July 31, 1994, New York
City UBT totaled $33,000 and $325,000, respectively. The decline in New York
City UBT is due to a change in the tax law effective January 1, 1995. After
that date, the New York City UBT is imposed on the total income of the Operating
Partnership and the Partnership is allowed to claim a credit for its pro rata
share of any New York City UBT paid by the Operating Partnership.
Net income for the three months ended July 31, 1995 and July 31, 1994
amounted to $9,177,000 and $7,876,000, respectively, or $.60 per unit and $.52
per unit, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The only business activity carried on by the Partnership is its investment
in the Operating Partnership. The Partnership receives quarterly cash
distributions from the Operating Partnership and receives interest income from
Equities. The Partnership distributes its available cash flow to its partners,
which equals cash distributions from the Operating Partnership plus interest
income from the Equities note less New York City UBT. Consequently, the
Partnership does not require any additional liquidity or capital resources.
The Partnership makes quarterly distributions in an amount equal to 99% of
available cash flow to the limited partners (the "Unitholders") and 1% to the
general partner, Oppenheimer Financial Corp. ("Opfin"). For the three months
ended July 31, 1995 and July 31, 1994, the Partnership declared distributions to
Unitholders of $.55 per unit and $.50 per unit, respectively.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
OPPENHEIMER CAPITAL
GENERAL
The Operating Partnership's results of operations include those of its
basic institutional investment management business and those of Quest For Value
Advisors ("Advisors"), Quest For Value Distributors ("Distributors"),
Oppenheimer Capital Futures Management, Oppenheimer Capital Limited, AMA
Investment Advisers, L.P., American Medical Investment Co., L.P. ("Amico"),
Oppenheimer Capital Trust Company and Saratoga Capital Management.
For the periods presented, the Operating Partnership's operations have been
characterized by increases in assets under management. This growth has been
from three principal sources. First, new clients have entered into investment
management agreements with the Operating Partnership and existing clients have
added funds to their accounts under management. Second, rising securities price
levels have increased the market values of investment portfolios. Third, mutual
funds managed by Advisors have added to assets under management. Revenues are
generally derived from charging a fee based on the net assets of clients'
portfolios. Revenues for all periods presented consist principally of investment
management fees.
The value of assets under management increased 18.4% to $35.3 billion at
July 31, 1995 from $29.8 billion at July 31, 1994. Institutional and private
account assets under management increased 15.4% to $28.2 billion from $24.4
billion. Mutual fund assets under management increased 32.2% to $7.1 billion
from $5.4 billion for the same period.
REVENUES
Total operating revenues increased 16.7% for the three months ended July
31, 1995 to $36,818,000 from $31,547,000 for the three months ended July 31,
1994. Total operating revenues include investment management fees, net
distribution assistance and commission income, and interest and dividends.
Investment management fees increased 18.8% for the three months ended July
31, 1995 to $35,660,000 from $30,022,000 for the three months ended July 31,
1994 as average assets under management for the three months ended July 31, 1995
increased 14.4% to $33.7 billion from $29.5 billion for the three months ended
July 31, 1994. In addition, investment management fees increased due to higher
fee realizations resulting from a shift in the asset mix toward higher effective
fee rate businesses, including mutual funds, variable annuities and wrap fee
accounts and the loss of low fee rate option management accounts.
Net distribution assistance and commission income decreased 28.6% to
$1,056,000 for the three months ended July 31, 1995 from $1,480,000 for the
three months ended July 31, 1994. The decrease is primarily due to lower
certificate of deposit commission income resulting from less demand for funds by
banks. This decrease was offset in part by increased unit investment trust
commission income due to increased sales of unit investment trusts.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
OPPENHEIMER CAPITAL (Continued)
EXPENSES
Total expenses increased 16.2% for the three months ended July 31, 1995 to
$22,786,000 from $19,611,000 for the three months ended July 31, 1994. The
increase in expenses reflected the expansion of the Operating Partnership's
business, including new products and services, entered into during the past
year. New businesses added during the past year included: AMA Investment
Advisers, L.P., Amico, Oppenheimer Capital Trust Company, and Saratoga Capital
Management. In order to service an expanding institutional investment
management business, the Operating Partnership added to its client service
staff. To increase efforts to obtain new institutional business, additional
marketing and support staff likewise was added. In addition, the international
division continued to expand with additional portfolio managers, researchers,
and support staff. As a result of the expansion outlined above, staff support
services such as Information Systems, Legal, Accounting and Human Resources were
expanded.
The major category of expense of the Operating Partnership is employee
compensation and benefits. Compensation and benefits expense increased 22.9%
for the three months ended July 31, 1995 to $16,379,000 from $13,330,000 for the
three months ended July 31, 1994. Compensation and benefits expense increased
due to additions to staff in the new businesses entered into during the past
year and to the core investment management business. Compensation and benefits
expense also increased due to staff salary increases. In addition, compensation
and benefits increased as a result of higher incentive compensation accruals due
to increased new business and higher operating profits.
Occupancy expenses increased 2.7% for the three months ended July 31, 1995
to $1,669,000 from $1,625,000 for the three months ended July 31, 1994. This
slight increase was due to increased amortization expense relating to leasehold
improvements made during the past year.
General and administrative expenses increased 18.6% for the three months
ended July 31, 1995 to $2,629,000 from $2,217,000 for the three months ended
July 31, 1994. General and administrative expenses increased as a result of
costs incurred in connection with the development of new businesses and
increased activities in our traditional businesses. This increase reflects
increased investments in computer equipment and software, higher professional
services expenses due to the expansion of the Operating Partnership's business
and higher interest expense due to higher average bank borrowings.
Promotional expenses decreased 13.5% for the three months ended July 31,
1995 to $2,109,000 from $2,439,000 for the three months ended July 31, 1994.
The decrease in promotional expenses was due primarily to a reduction in
promotional expenses incurred by Distributors and was offset in part by
increased expenses in the Operating Partnership's new businesses due to
increased staff size and increased new business.
OPERATING INCOME
Operating income for the three months ended July 31, 1995 increased 17.6%
to $14,032,000 from $11,936,000 for the three months ended July 31, 1994. The
increase in operating income was a result of a greater increase in operating
revenues than in operating expenses as described above.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
OPPENHEIMER CAPITAL (Continued)
INCOME TAXES
The Operating Partnership is not subject to Federal, state, or local income
taxes, which are the obligations of the individual partners. The Operating
Partnership, however, was subject to New York City UBT of $551,000 for the three
months ended July 31, 1995 and $140,000 for the three months ended July 31,
1994.
LIQUIDITY AND CAPITAL RESOURCES
The Operating Partnership has established a $20 million credit facility
with a commercial bank to meet operating and financing needs. These funds have
currently been used to support increased management fees receivable, to expand
its facilities to accommodate the growth of its business and to finance
acquisitions. The Operating Partnership has entered into an agreement with a
commercial bank to sell the right to receive 12b-1 fees and contingent deferred
sales charges from the sale of Class B shares of the Quest for Value Family of
Funds as a means to raise funds for the payment of commissions paid to brokers
associated with the sale of Class B shares.
The Operating Partnership intends to distribute on a quarterly basis
substantially all its net income to the Partnership and to Opfin. The Operating
Partnership may distribute to the Partnership and to Opfin excess cash, taking
into account the Operating Partnership's financial condition, results of
operations, cash requirements and general economic conditions. On July 31,
1995, the Operating Partnership declared a distribution to its partners of
$11,376,000, payable on August 31, 1995.
The Operating Partnership has two broker-dealer subpartnerships,
Distributors and Amico, both of which are subject to the rules and regulations
of the Securities and Exchange Commission, which require the maintenance of
minimum net capital. For the three months ended July 31, 1995, these broker-
dealer subpartnerships met these minimum net capital requirements.
SUBSEQUENT EVENT
On August 18, 1995, Oppenheimer Management Corporation ("OMC"), which is
not related to the Operating Partnership, and the Operating Partnership
announced the signing a definitive agreement whereby OMC will, subject to
certain conditions, acquire the investment advisory and other contracts and
business relationships of the Operating Partnership in twelve of the Quest for
Value Funds (the "Funds"). The agreement covers funds with total net assets of
approximately $1.6 billion. The transaction is subject to the approval of the
Funds' shareholders.
The six equity funds involved will continue to be managed by Advisors under
a subadvisory contract with OMC. This will allow the current portfolio
management teams to remain in place once the acquisition is completed. At July
31, 1995, total net assets in those Funds was approximately $1.25 billion. The
six Quest for Value fixed income funds will be merged into funds currently
managed by OMC. Total net assets of the six fixed income funds was
approximately $330 million at July 31, 1995.
The purchase price for the acquisition will be based primarily on a formula
taking into account the assets of the Funds at closing. As of July 31, 1995,
that portion of the purchase price would be approximately $37.6 million. An
additional payment of up to $4.2 million may be made on the first anniversary of
the closing if the assets of the six merged Quest fixed income funds are then at
stated levels.
After the completion of the transaction, the annualized advisory fees
(based on assets under management at July 31, 1995) is projected to decline to
$4.9 million from the current $13.7 million. However, the Operating Partnership
expects expense reductions from the curtailment of distribution efforts with
respect to the funds being sold to exceed the reduction in management fees. As
a result of the above, the Operating Partnership expects operating profits from
mutual fund activities to increase.
-16-
<PAGE>
PART II. OTHER INFORMATION
ITEMS 1-5. Not applicable.
ITEM 6. The Partnership filed a Form 8-K on August 30, 1995 to disclose
the definitive agreement between Oppenheimer Management
Corporation and the Operating Partnership regarding the sale of
the investment advisory and other contracts and business
relationships of twelve of the Operating Partnership's Quest for
Value Funds.
-17-
<PAGE>
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.
OPPENHEIMER CAPITAL, L.P.
BY: OPPENHEIMER FINANCIAL CORP.,
ITS GENERAL PARTNER
Date: September 12, 1995 By: /s/ Joseph M. La Motta
-------------------------------------
Joseph M. La Motta
Executive Vice President and Director
of Oppenheimer Financial Corp.;
President and Chief Executive Officer
of Oppenheimer Capital
By: /s/Sheldon M.Siegel
-------------------------------------
Sheldon M. Siegel
Managing Director and Chief Financial
Officer of Oppenheimer Capital
-18-
<PAGE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE STATEMENTS OF FINANCIAL CONDITION AND STATEMENTS OF
INCOME FOUND ON PAGES 3 AND 4 OF THE PARTNERSHIP'S FORM 10-Q FOR
THE YEAR-TO-DATE, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000814562
<NAME> OPPENHEIMER CAPITAL, LP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1995
<PERIOD-START> MAY-01-1995
<PERIOD-END> JUL-31-1995
<CASH> 62
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,367<F1>
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 95,786<F2>
<CURRENT-LIABILITIES> 8,464
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 87,322<F3>
<TOTAL-LIABILITY-AND-EQUITY> 95,786
<SALES> 0
<TOTAL-REVENUES> 9,862
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 685
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 9,177
<INCOME-TAX> 0
<INCOME-CONTINUING> 9,177
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,177
<EPS-PRIMARY> .60
<EPS-DILUTED> .60
<FN>
<F1>Current assets is comprised of cash ($62), distribution receivable
($7,655), interest receivable ($538), and other assets ($112).
<F2>Total assets include current assets plus investment in Oppenheimer
Capital ($11,397), a non-trade note receivable ($32,193) and goodwill
($43,829).
<F3>Other shareholders equity is comprised of general partner's capital
($887) and limited partners' capital ($86,435).
</FN>
</TABLE>
