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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
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Act of 1934
For the fiscal year ended April 30, 1996
or
Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange
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Act of 1934
For the transition period from _____ to _____
Commission file Number 1-9597
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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
1 WORLD FINANCIAL CENTER, NEW YORK, NEW YORK 10281
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(Address of principal executive office) Zip Code)
Registrant's telephone number, including area code (212) 667-7000
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Securities registered under Section 12(b) or Section 12(g) of the Act:
Units of limited partnership interest New York Stock Exchange
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Title of class Name of each exchange on which registered
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
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
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The aggregate market value of Units of limited partnership interest held by
non-affiliates of the registrant at July 18, 1996 (based on the closing price at
which the Units of limited partnership interest were sold on the New York Stock
Exchange on such date) was approximately $430,000,000.
The issuer is a limited partnership. There were 15,362,920 Units of limited
partnership interest outstanding at July 18, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
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Part IV, Item 14, incorporates by reference several exhibits from the
registrant's Registration Statement on Form S-3, as amended, filed on April 16,
1991 (File No. 33-39354) and Form S-8 filed on July 2, 1990 (File No. 33-35584).
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Part I
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Item 1. Business
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Oppenheimer Capital L.P. (the "Partnership") is a publicly-traded
limited partnership owned 1% by its general partner, Oppenheimer Financial Corp.
("Opfin"), and 99% by its public limited partners ("unitholders"). The
Partnership's primary business is holding a majority interest in Oppenheimer
Capital (the "Operating Partnership"), a registered investment adviser. Opfin
holds the remaining interest in the Operating Partnership. The Operating
Partnership is part of an affiliated group of companies operating in the
financial services industry. The financial statements of the Partnership should
be read in conjunction with the consolidated financial statements of the
Operating Partnership.
On July 9, 1987, the Partnership completed an initial public offering
of 7,920,000 units of limited partnership interest ("units") and contributed the
net proceeds of $98,028,000, as well as a $1,004,000 contribution by Opfin, to
the Operating Partnership in exchange for a 32.3% general partnership interest
in the Operating Partnership.
On April 23, 1991, the Partnership issued 6,200,000 units to Opfin in
exchange for an additional 31.77% general partnership interest in the Operating
Partnership (the "Exchange"). Such units were then sold by Opfin in a public
offering. On May 1, 1991, pursuant to the exercise of an over-allotment option
granted to the underwriters of the public offering of Partnership units, the
Partnership issued 355,000 units to Opfin in exchange for an additional 1.82%
general partnership interest in the Operating Partnership. Such units were then
sold by Opfin to the public.
Additional general partnership interests in the Operating Partnership
totaling 1.59% were acquired by the Partnership as a result of the issuance of
units pursuant to the Restricted Unit and Option Plans. At July 18, 1996, the
Partnership's and Opfin's general partnership interests in the Operating
Partnership were 67.48% and 32.52%, respectively.
Prior to the date of the Exchange, the Operating Partnership owned a
$98,000,000 par value 10% note (the "Equities Note") maturing in the year 2012
due from Oppenheimer Equities, Inc. ("Equities"), a direct wholly-owned
subsidiary of Opfin. At the time of the Exchange, the Equities Note was divided
into two promissory notes, based on each partner's interest in the Operating
Partnership prior to the Exchange. The Operating Partnership distributed a note
in the principal amount of $32,193,000 to the Partnership and a note in the
principal amount of $65,807,000 to Opfin. These two notes contained the same
terms and provisions as the Equities Note.
General
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The primary sources of income for the Partnership are its proportionate
share of the net income of the Operating Partnership and interest income on the
$32,193,000 note due from Equities. The following discussion will focus on the
activities of the Operating Partnership and provide a description of the note.
The Operating Partnership derives its revenue and net earnings
primarily from providing investment management services to institutions,
individuals and registered investment companies. In 1986, Oppenheimer Capital
Corp. ("Opcap"), a predecessor corporation, organized both Quest For Value
Advisors, Inc. ("Quest Advisors"), a wholly-owned investment management
subsidiary, for the purpose of managing mutual funds, and Quest For Value
Distributors, Inc. ("Quest Distributors"), a wholly-owned registered
broker-dealer subsidiary, for the purpose of distributing mutual funds. On July
9, 1987, Quest Advisors and Quest Distributors were reorganized as
subpartnerships of the Operating Partnership which retained a 99% general
partnership interest, while Opfin purchased a 1% general partnership interest,
in the subpartnerships. On November 22, 1995, upon the completion of the sale of
the investment advisory and other contracts and business relationships of its
twelve Quest for Value mutual funds (the "Quest sale"), Quest Advisors was
renamed Opcap Advisors and Quest Distributors was renamed OCC Distributors.
Opcap Advisors provides investment management services to 40 investment
portfolios, or "mutual funds", and OCC Distributors continues to distribute
money market mutual funds. In June 1991, Oppenheimer Capital Limited, a
wholly-owned U.K. investment management company, was established to provide
investment management services to foreign institutional investors. In January
1994, Oppenheimer Capital International was formed as a division of the
Operating Partnership to manage non-U.S. equities for clients. Investment
management and advisory fees are generally based on the net assets of the
investment portfolios under management and fluctuate due to changes in the total
value of the net assets under management.
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The asset management industry grew significantly during the five years
ended June 30, 1995 with tax-exempt and taxable assets managed by U.S.
investment advisers, bank trust departments and insurance companies increasing
from $4.2 trillion at June 30, 1990 to $8.8 trillion at June 30, 1995. (Source:
Directory of Pension Funds and their Investment Managers.) During this period,
the growth in assets under management at investment management firms exceeded
the corresponding growth at banks and insurance companies. At June 30, 1990,
investment management firms managed $2.6 trillion or approximately 61% of total
tax-exempt and taxable assets under management. At June 30, 1995, they accounted
for $6.6 trillion or approximately 75% of total tax-exempt and taxable assets
under management. The mutual fund industry has also experienced rapid growth
during the past five years. During the five years ended December 31, 1995,
assets of mutual funds (excluding money market and municipal mutual funds)
increased from $568.5 billion to $2,067.3 billion according to the Investment
Company Institute.
The investment management industry is fragmented and the Operating
Partnership's share of assets under management is less than one half of 1% of
all industry assets under management.
The Operating Partnership's staff of 348 employees includes 42
investment professionals. The average tenure of these professionals at the
Operating Partnership is 9 years, and their average investment experience is 20
years. Besides the staff of 42 investment professionals, the Operating
Partnership has a support staff of 306 individuals. The Operating Partnership's
brokerage affiliate, Oppenheimer & Co., Inc. ("Opco"), a registered
broker-dealer, has approximately 3,000 employees, including approximately 800
individuals who are engaged primarily in customer sales activities at its New
York headquarters or in its regional offices.
The Operating Partnership's investment strategy seeks to combine the
preservation of capital in falling markets with market or above-market
performance in rising markets. To achieve these results, all investment
professionals are involved in the security selection process. All portfolio
managers are experienced security analysts and have research responsibilities
which necessarily integrate the research and portfolio management functions. All
work together to maintain the Operating Partnership's list of approved
investments. Asset mix decisions are made by the chief investment officer,
economists and senior portfolio managers; however, all other investment
professionals participate in the process. The Operating Partnership believes
that this integrated structure gives the Operating Partnership the ability to
allocate assets to capitalize on shifts in relative value between asset
categories. The result has been above median long-term investment returns.
According to the most recent five-year and ten-year ranking by SEI
Corporation ("SEI"), the investment performance of the Operating Partnership's
composite of discretionary equity-oriented accounts ranked in the top 16% and
23%, respectively, of the equity funds in SEI's data base at March 31, 1996*.
The Operating Partnership's composite of discretionary equity-oriented accounts,
which consist of employee benefit plans that have market values of at least
$10,000,000, has produced positive returns in nineteen of the last twenty
calendar years while the S&P 500 declined in three of such years. There is no
assurance that the Operating Partnership's relative performance will continue in
the future.
During the 1996 fiscal year, the Operating Partnership made a strategic
decision to withdraw from selling open end mutual funds to the retail market and
to stop selling retail investment products directly to the medical community.
The Operating Partnership, in the past, has incurred significant expenditures
for the start up and expansion of these businesses. This is discussed in greater
detail on pages 6 and 8.
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* As of December 31, 1995, SEI's equity fund data base covered 899 equity
portfolios aggregating $130.6 billion in assets managed by 296 investment
advisers, and was compiled from information provided in most cases by
custodians of institutional advisory accounts. The Operating Partnership's
past performance and SEI rankings do not adjust for advisory fees or other
expenses and assume the reinvestment of distributions. Also, SEI does not rank
mutual fund performance, and the advisers rated may have managed their accounts
to achieve different investment objectives.
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Revenues.
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The Operating Partnership generates fee income from the accounts under
management based primarily on the value of assets in each account and also, to a
limited extent, on performance. For the five years ended April 30, 1996, the
Operating Partnership's investment management fee income has grown from $72.9
million to $151.3 million, representing a compound annual increase of 15.7%.
Investment management fee income for the year ended April 30, 1996, as compared
to the year ended April 30, 1995, increased 26.9% from $119.2 million.
The sources of the Operating Partnership's fee income are diversified
and balanced among the Public, Jointly Trusteed and Corporate Employee Benefit
Plans, Endowments and Foundations, and Individual and Small Tax-Exempt
Institutions which together account for 69% of fee income. Mutual funds and
other commingled products and Wrap Fee accounts contribute the balance. No
single separately managed account represented more than 2% of the Operating
Partnership's total investment management revenues during the year ended April
30, 1996.
Assets Under Management.
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The following table sets forth the amount of assets under the
Operating Partnership's management at April 30, 1996, 1995 and 1994 in millions.
<TABLE>
<CAPTION>
April 30, 1996 April 30, 1995 April 30, 1994
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<S> <C> <C> <C>
Separate Account Management
Public Employee Benefit Plans $ 10,928 $ 8,988 $ 8,306
Jointly Trusteed Benefit Plans 9,379 7,064 6,249
Corporate Employee Benefit Plans 5,857 4,737 4,135
Endowments & Foundations 1,106 925 883
Individuals & Small Institutions 825 623 622
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Total Separate Account Management 28,095 22,337 20,195
Wrap Fee 3,469 1,804 1,561
Mutual Funds & Other Commingled Products 9,003 6,256 5,228
Option Management (1) - 1,397 2,418
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Total $ 40,567 $ 31,794 $ 29,402
=============== =============== ===============
(1) During fiscal 1996, the Operating Partnership withdrew from the option
management business to concentrate on businesses offering higher returns.
</TABLE>
At April 30, 1991, 1992 and 1993, total assets under management were
(in millions) $21,944, $23,706 and $26,386, respectively. For the five years
ended April 30, 1996, assets under management grew at a compound annual rate of
13.1%.
Public employee benefit plans are organized by government agencies and
municipalities. Jointly trusteed benefit plans consist of collectively-bargained
employee benefit plans pursuant to which at least two unrelated employers
contribute to a common fund (with no one employer making more than 50% of the
contributions). Corporate employee benefit plans are organized by corporations
to provide employee benefits. Generally, the minimum size for new investment
management accounts is $10,000,000 for equity accounts and $15,000,000 for fixed
income accounts. Either the Operating Partnership or its clients may terminate
investment management agreements without penalty after a brief notice period.
Many factors influence a client's decision to select an investment
adviser, including the investment adviser's performance record, the adviser's
ability to implement consistently its investment strategy, the adviser's ability
to manage the assets within the investment parameters, if any, set by the client
and the marketing of such services.
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The Operating Partnership focuses its marketing efforts on
presentations directly to prospective clients and to independent consultants who
provide advice to such clients. This effort consists of a staff of 11 marketing
professionals whose primary responsibilities are to make presentations to
clients and consultants and to direct the efforts of the marketing and client
service support staff.
Each account is structured to satisfy the specific investment
objectives, guidelines and risk constraints, if any, agreed upon by each client
and the Operating Partnership. The Operating Partnership determines the
appropriate investment strategy, subject to each client's guidelines and
objectives. Furthermore, depending on the type of account, the Operating
Partnership determines whether investments are made in equities, fixed income
securities or cash equivalents, and in what proportion, based on prevailing
economic and monetary factors that influence the capital markets. The Operating
Partnership then selects the specific equities, fixed income securities and/or
short-term investments to be purchased for each portfolio, subject to the
strategy to be implemented and the objectives and guidelines of each account.
OCC Family of Funds (formerly the Quest for Value Family of Funds)
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In 1982, Mercantile House Holdings PLC ("Mercantile") acquired Opcap,
Opco and Oppenheimer Management Corporation, since renamed OppenheimerFunds,
Inc. ("OFI"), an investment adviser to the Oppenheimer group of mutual funds. In
March 1986, an 82% interest in Opcap and Opco was purchased by members of their
senior managements from Mercantile (the "Acquisition"). Prior to 1987, except
for the Quest for Value Fund, all mutual fund activity was carried on by OFI. In
connection with the Acquisition, OFI was granted an exclusive perpetual license
to use the "Oppenheimer" name in connection with its mutual fund business. The
Operating Partnership is not affiliated with OFI, which continues to manage a
family of mutual funds using the name "Oppenheimer".
After the Acquisition, the Operating Partnership began efforts to
expand its participation in all aspects of the mutual fund business using the
name "Quest for Value". Following the Acquisition, the Operating Partnership
formed four mutual funds: Quest for Value Cash Management Trust (which has been
replaced by the OCC Cash Reserves, formerly called Quest Cash Reserves), Quest
for Value Dual Purpose Fund, Inc., Quest for Value Family of Funds (the
investment advisory and other contracts and business relationships of the twelve
funds that comprised this family of funds were sold to OFI on November 22, 1995,
as described below) and OCC Accumulation Trust (comprised of seven portfolios,
formerly called the Quest for Value Accumulation Trust). The aggregate assets of
the funds listed above at April 30, 1996 was $3.1 billion and total mutual funds
and other commingled products assets under management at April 30, 1996 was $9.0
billion.
The Quest for Value Cash Management Trust, a money market fund
established in January 1987, was replaced by Quest Cash Reserves, a money market
fund with three portfolios, during the fiscal year ended April 30, 1990. During
the same year, Opco selected Quest Cash Reserves as the primary money market
fund for its customers' cash balances. Two portfolios were added during the
fiscal year ended April 30, 1991. On November 22, 1995 Quest Cash Reserves was
renamed OCC Cash Reserves. At April 30, 1996, the net assets of this fund were
$2.0 billion and substantially all the shares were owned by Opco customers.
In February 1987, Quest Advisors formed the Quest for Value Dual
Purpose Fund., Inc., a closed-end dual purpose registered investment company.
The Quest for Value Dual Purpose Fund offers the investor a leveraged investment
without interest costs that combines the traditional investment techniques of
the Operating Partnership, along with futures and options strategies. Total net
assets of this fund at April 30, 1996 amounted to $878 million.
The twelve portfolios in the Quest for Value Family of Funds, and the
year of introduction of such portfolios were: Quest for Value Fund (1980), U.S.
Government Income Fund (1988), Opportunity Fund (1989), Small Capitalization
Fund (1989), Global Equity Fund (1990), Investment Quality Income Fund (1990),
Growth and Income Fund (1991), Global Income Fund (1991), Officers Fund (1995)
and National, New York, and California Tax-Exempt Funds (1990). On November 22,
1995 the investment advisory and other contracts and business relationships of
these funds were sold to OFI. The six equity funds involved (Quest for Value,
Opportunity, Small Capitalization, Global Equity, Growth and Income, and
Officers) were renamed the Oppenheimer Quest Value funds. The six fixed income
funds were merged into existing OFI funds.
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In 1988, Quest Advisors was selected by Mutual of New York ("MONY") as
investment adviser for the Quest for Value Accumulation Trust, a series fund of
five portfolios supporting MONY's variable annuity insurance products. In
September 1994, the Quest for Value Accumulation Trust was effectively split
into two funds: the Enterprise Accumulation Trust, supporting MONY's MONYMaster
variable annuities and its EquityMaster variable life insurance policy, and the
"new" Quest for Value Accumulation Trust, supporting MONY's ValueMaster variable
annuities and Provident Mutual Life Insurance Company of Philadelphia's VIP II
variable annuities. MONY became adviser to the Enterprise Accumulation Trust.
Opcap Advisors continues as subadviser to the Equity, Managed and Small Cap
portfolios of that trust. This fund series had $1.9 billion of net assets under
management at April 30, 1996.
On November 22, 1995, the "new" Quest for Value Accumulation Trust was
renamed the OCC Accumulation Trust. The OCC Accumulation Trust, with assets
under management of $168 million at April 30, 1996, consists of seven
portfolios, including an Equity, Small-Cap, Global Equity, Managed, Bond, U.S.
Government Income and Money Market portfolio.
During fiscal 1992, the Board of Directors of the Quest For Value
Family of Funds approved agreements whereby funds managed by Quest Advisors,
having similar investment objectives and policies, would acquire all of the
assets, subject to liabilities, of each fund of the AMA Family of Funds. The
mergers of these funds were completed at various dates in September, November
and December 1991.
During fiscal 1993, the Unified Family of Funds were merged into funds
managed by Quest Advisors. The mergers of these funds were completed in December
1992 and January 1993.
Gain on Quest Sale
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On November 22, 1995, the Operating Partnership completed the sale of
the investment advisory and other contracts and business relationships for its
twelve Quest for Value mutual funds (the "Quest sale") to OFI for a price of
$41.7 million. An additional purchase price payment of up to $3.8 million may be
received by the Operating Partnership on the first anniversary of the closing if
the assets of the six merged fixed income funds are then at stated levels. The
gain on the sale, before New York City unincorporated business tax and minority
interest, amounted to $27.7 million.
The net proceeds from the Quest sale were used to pay a special
distribution to partners, to eliminate bank borrowings and to fund the working
capital needs of the Operating Partnership.
Total assets of the twelve funds were $1.7 billion at November 21,
1995. The six equity funds involved, representing $1.4 billion of those assets,
continue to be managed by Opcap Advisors (formerly Quest for Value Advisors)
under a subadvisory contract with OFI, which allows the current portfolio
management teams to remain in place. The six equity funds have been renamed the
Oppenheimer Quest Value funds ("Quest funds"). The six fixed income funds,
representing approximately $300 million of those assets, have been merged into
comparable funds managed by OFI.
Annual sub-advisory fees related to the Quest funds are projected at
$7.7 million annually, based on assets under management at June 30, 1996, down
from the previous $15.7 million of annual advisory fees for the twelve Quest for
Value Funds at November 21, 1995. This decrease is more than offset by cost
reductions related to the Operating Partnership's withdrawal from the
distribution of open-end equity and fixed income mutual funds and by increased
sales of Quest funds by OFI. Assets in the six equity funds have increased 57.7%
to $2.2 billion at June 30, 1996 from $1.4 billion on November 21, 1995,
reflecting record fund sales and market appreciation.
The Operating Partnership implemented a portion of the mutual fund
distribution cost savings prior to the close of the Quest sale, and results for
the quarter ended April 30, 1996 reflected those savings. In addition, as a
result of the sale, significant expenditures that would have been made in
systems, technology, sales and marketing capabilities, and new product
development will not be necessary.
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On January 31, 1997, as spelled out in its public offering nine years
ago, the Operating Partnership's Quest for Value Dual Purpose Fund will redeem
all income shares and the capital shares are expected to convert to an open-end
fund, subject to shareholder approval. It is anticipated that the shares of the
open-end fund will be distributed by, and that management control and
shareholder services will be transferred to, OFI and that the Operating
Partnership will become a subadvisor. It is further anticipated that the
Operating Partnership will be compensated in connection with the transfer of
management control, distribution and shareholder servicing to OFI.
Cash Management Services.
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In December 1988, the Operating Partnership made a commitment to expand
substantially its presence in the cash management services business. The
overall market for such services is very large, and the Operating Partnership
believed its investment and distribution skills would help it obtain a
meaningful share of such market. The Operating Partnership established a
separate division, OCC Cash Management Services, for this business and hired key
management and marketing personnel who have developed an eight product line:
a primary money market fund, a government money market fund, a general
municipal money market fund, a New York municipal money market fund, a
California municipal money market fund, an insured money market deposit account,
a certificate of deposit marketing operation and a unit investment trust
business. This product line is designed principally for distribution through
financial intermediaries such as brokerage firms, banks, investment counselors,
financial planners and insurance companies.
OCC Cash Reserves, formerly Quest Cash Reserves, is a money market fund
comprised of five portfolios: Primary, Government and General Municipal (each
introduced in fiscal 1990); and a New York Municipal and California Municipal
(each introduced in fiscal 1991). Total assets under management at April 30,
1996 was $2.0 billion.
The OCC Insured account is a bank deposit account that offers FDIC
insurance for accounts up to $100,000. Assets under management at April 30, 1996
totaled $161 million.
The OCC Cash Management Services Division's certificate of deposit
("CD") marketing operation was established in August 1989. CD's are distributed
through a nationwide distribution network in excess of 120 broker dealers. On
June 16, 1992, legislation was finalized which allows banks with certain capital
ratios the continued ability to issue brokered CD's. Additional information on
the new legislation can be found in section 301 of The Federal Deposit Insurance
Corporation Improvement Act of 1991.
In April 1993, OCC Cash Management Services established the QUILTS
(Quest unit investment laddered trust) business, which sponsors unit investment
trusts.
The Operating Partnership has incurred significant expenditures for the
startup and expansion of the Mutual Fund and Cash Management Services
businesses. This expansion program is now complete.
Wrap Fee.
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The Operating Partnership's "wrap fee" accounts represent a service
which has a single-fee structure covering all charges, including
investment management services, brokerage services, custodial services, record
keeping and reporting. This product is specifically designed to meet the needs
of individuals and smaller institutions seeking professional management for
accounts of $100,000 or more. Investors may choose either an equity or balanced
account. This product is available through Opco, Smith Barney, Prudential
Securities, Inc., Paine Webber, GVTC, Morgan Keegan, and Everen and the
Operating Partnership is negotiating additional relationships. Assets under
management totaled $3.5 billion at April 30, 1996.
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Commingled Funds.
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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
("Opcap Trust"). Ownership of a trust company provides a more cost-effective
means for the Operating Partnership's investment professionals to manage total
fund assets for mid-sized institutional accounts, especially ERISA accounts, as
well as the capability to furnish a broader range of services to 401(k) and
other defined contribution programs. In addition, Opcap Trust offers
commingled portfolios of specialty classes, such as small-cap and international,
to institutional clients with larger equity and balanced separate accounts
seeking diversification.
During fiscal 1996, the Operating Partnership formed seven Securities
Investment Trusts ("SIT's"), including an Equity, Fixed Income, Small
Capitalization, Municipal Trust, Concentrated Value, International Equity and
International Fixed Income. These investment trusts, which are designed
primarily for not-for-profit organizations and high net worth individuals, are a
series of pooled investment portfolios which allow investors to diversify in a
cost-effective manner. Assets under management in commingled products (including
Opcap Trust and SIT's) at April 30, 1996 totaled $510 million.
AMA Investment Advisers.
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On May 1, 1994, 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%
partnership interest, respectively, for a total purchase price of $500,000 and a
$1,200,000 promissory note contributed in accordance with their respective
percentage interests. AMA Investment Advisers, L.P. offers investment services
and products tailored especially for members of the AMA and other health care
professionals and medical organizations.
During fiscal 1996, AMA Investment Advisers L.P.'s costs were reduced
as part of the strategic decision to withdraw from selling directly to the
retail market. The Operating Partnership will attempt to sell the remaining
wholesale operations and does not anticipate that any material gain or loss will
be realized.
Saratoga Capital Management.
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The Operating Partnership formed Saratoga Capital Management
("Saratoga") in May 1994. Saratoga is a joint venture that provides asset
allocation services to broker-dealers utilizing funds managed by independent
investment advisers and Opcap Advisors.
Investment Practices
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Asset Allocation
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The Operating Partnership is structured to give consideration to, and
closely monitor compliance with, the specific investment and social
responsibility guidelines of individual clients. The Operating Partnership
attempts to adapt to changing economic conditions by interrelating the Operating
Partnership's analysis of overall financial liquidity with the Operating
Partnership's judgments of the relative valuation of equities to the market.
During periods of low liquidity when short-term interest rates are
rising faster than longer-term rates, stock prices have generally fallen. At
such times the Operating Partnership emphasizes cash as an alternative
investment due to its high return and may reduce equity and fixed income
positions in its accounts in favor of cash equivalent positions.
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Value Investing.
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The Operating Partnership's value philosophy is aimed at producing
above average returns with below average risk. The Operating Partnership
believes its investment style is especially well suited to long term investors,
such as pension funds, endowments and individuals saving for retirement.
The Operating Partnership believes that the most important determinant of
whether a stock price will increase over time is the rate of return on invested
capital earned by the company. Through intensive research, the Operating
Partnership searches for companies with above average returns on capital which
are protected by strong competitive positions. The Operating Partnership
also seeks companies that use their cash flow to benefit shareholders through
stock repurchases or strategic acquisitions. Moreover, the Operating Partnership
will only buy stock in companies at reasonable prices.
The Operating Partnership also subscribes to a similar value oriented
philosophy with respect to fixed income investing. The Operating Partnership
seeks to identify the best relative fixed income values available on the market
by capitalizing on market inefficiencies which occur as a result of unusual
volatility, popular misconceptions, temporary supply or demand shocks, and other
short term conditions.
Competition.
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The investment management business is highly competitive. Thousands of
investment advisers offer their services to advisory clients. In addition,
various services and investments offered by insurance companies, banks and
securities dealers compete with the services and investment opportunities
offered by the Operating Partnership. Competition for investment advisory
services is influenced largely by investment performance, the quality and range
of services offered and the marketing of such services. Competition for sales of
mutual fund shares is affected by various factors, including investment
objectives and performance, compensation to brokers, marketing and methods of
distributing such shares.
Regulation.
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Virtually all aspects of the Operating Partnership's business are
subject to various federal and state laws and regulations. These laws and
regulations are primarily intended to benefit the Operating Partnership's
clients and shareholders of mutual funds and generally grant broad
administrative powers to the agencies that regulate the Operating Partnership,
including the power to limit or restrict the Operating Partnership from carrying
on its business if it fails to comply with such laws and regulations. Failure to
comply with such laws or regulations could result in the suspension of
individual employees, limitations on the Operating Partnership's (or its
Subpartnerships') conduct of business for specified periods of time, the
revocation of registration as an investment adviser and/or broker-dealer,
censures and/or fines.
The Operating Partnership is registered with the Securities and
Exchange Commission under the Investment Advisers Act of 1940 and is registered
as an investment adviser with various state securities authorities. Opcap
Advisors, AMA Investment Advisers, L.P. and Saratoga are registered investment
advisers. OCC Distributors is a registered broker-dealer. Oppenheimer Capital
Limited, a subsidiary of the Operating Partnership, operates in the United
Kingdom and is a registered investment adviser and a member of IMRO, an
investment management regulatory organization. Opcap Trust is a trust company
licensed under the banking laws of the State of New York.
- 9 -
<PAGE>
Oppenheimer Equities, Inc. $32,193,000 Par Value 10% Note Due 2012
------------------------------------------------------------------
The Partnership receives interest income from a $32,193,000 par value
10% note from Equities, due in the year 2012. Interest on the note is payable
quarterly on the last day of February, May, August and November of each year.
Equities may prepay all or any portion of the principal of the note. Under the
note, Equities covenants that its consolidated net worth will not be reduced
below $40 million and that it will not incur any indebtedness (outside the
ordinary course of business) which is not subordinated to the note. Such
restriction does not apply to Equities' subsidiaries. The note contains no other
restrictions or financial covenants.
Equities, and its wholly-owned subsidiary, Oppenheimer Holdings, Inc.,
are holding companies whose activities are generally limited to investments in
subsidiaries, including Opco, and to the performance of managerial services for
Opco and its affiliates. Income from subsidiaries, including Opco, and interest
payments from a promissory note issued by Oppenheimer Group Inc. ("OGI"),
Opfin's parent, to evidence a loan by Equities to OGI are Equities sole sources
of income. However, the promissory note issued by OGI will mature in 1997 and
may be prepaid at any time prior to such date. The payment or prepayment of such
note may or may not result in the prepayment by Equities of the note issued to
the Partnership.
Item 2. Properties
- ------------------
The Operating Partnership currently maintains office space at the
following locations: approximately 40,000 square feet at the Oppenheimer Tower,
New York, New York; 39,800 square feet at the Merrill Lynch Tower, New York, New
York; and 44,000 square feet at 33 Maiden Lane, New York, New York. Certain
information regarding the leases is set forth in Note 2 of Notes to Consolidated
Financial Statements of the Operating Partnership in Item 8.
The Operating Partnership is currently in negotiations to lease an
additional 7,500 square feet at Oppenheimer Tower.
Item 3. Legal Proceedings
- -------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
- -----------------------------------------------------------
Not applicable.
- 10 -
<PAGE>
Part II
-------
Item 5.Market for the Registrant's Common Equity and Related Stockholder Matters
- --------------------------------------------------------------------------------
Market Information
- ------------------
The Partnership's units of limited partnership interest are traded on
the New York Stock Exchange (Ticker Symbol: OCC). The high and low market price
by quarter for the years ended April 30, 1996 and 1995 were as follows:
Year Ended First Second Third Fourth
April 30, 1996 Quarter Quarter Quarter Quarter
-------------- ------- ------- ------- -------
Market price:
High $24.500 $28.000 $29.500 $30.750
Low $21.125 $24.000 $27.000 $27.750
Year Ended First Second Third Fourth
April 30, 1995 Quarter Quarter Quarter Quarter
-------------- ------- ------- ------- -------
Market price:
High $26.375 $24.625 $22.875 $24.000
Low $23.250 $21.750 $18.750 $20.750
At July 18, 1996, the closing price of the Units of limited partnership
interest was $28.00 and there were approximately 30,000 beneficial holders of
units.
Cash Distributions
- ------------------
The Partnership declared cash distributions to unitholders for the
fiscal years ended April 30, 1996 and 1995 amounting to $3.1750 and $2.1750 per
unit, respectively. The Partnership increased its regular quarterly distribution
rate three times during the current fiscal year to a new annual rate of $2.60,
which represents a 30% increase from the annual rate at the beginning of the
fiscal year. Included in the distributions for the fiscal year ended April 30,
1996 was a special distribution of $0.55 which represented part of the gain on
the Quest sale. Quarterly distributions are paid within 30 business days after
the last day of each July, October, January and April to unitholders of record
as of the last day of each fiscal quarter in respect to which such distributions
are made.
The Partnership makes quarterly distributions in an amount equal to 99%
of available cash flow to the unitholders and 1% to the general partner, Opfin.
The Operating Partnership intends to distribute substantially all of its net
income on a quarterly basis to its two partners, the Partnership and to Opfin.
The Operating Partnership may distribute excess cash, taking into account the
Operating Partnership's financial condition, results of operations, cash
requirements and general economic conditions. To the extent that additional
funds are required by the Operating Partnership (e.g., to support increased
management fees receivable, to expand its facilities or to accommodate the
growth of its business), the Operating Partnership has established a $20 million
credit facility with a commercial bank.
The Operating Partnership's cash flow will continue to be derived from
the operations of its investment management business. The Partnership's cash
flow will continue to be derived substantially from the Operating Partnership
plus interest income from Equities, less New York City unincorporated business
tax.
- 11 -
<PAGE>
<TABLE>
<CAPTION>
Item 6. Selected Financial Data (In thousands, except for per unit data and assets under management)
- ----------------------------------------------------------------------------------------------------
OPPENHEIMER CAPITAL, L.P.
(the "Partnership")
-------------------------------------
For the year ended April 30,
---------------------------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues $ 61,316 (1) $ 34,282 $ 35,091 $ 30,022 $ 27,145
Expenses $ 2,720 $ 3,461 $ 4,038 $ 3,704 $ 3,614
Net income $ 58,596 (1) $ 30,821 $ 31,053 $ 26,318 $ 23,531
Net income per unit $ 3.81 (1) $ 2.02 $ 2.04 $ 1.74 $ 1.57
Distributions declared per unit $ 3.175 (2) $ 2.175 $ 2.1375 $ 1.9375 $ 1.875
Weighted average number of units
outstanding 15,244 15,136 15,043 15,009 14,831
Financial condition data at April 30,: 1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
Total assets $ 110,099 $ 96,633 $ 98,116 $ 98,365 $ 99,675
Total liabilities $ 12,713 $ 10,321 $ 10,319 $ 9,683 $ 9,007
Partners' capital $ 97,386 $ 86,312 $ 87,797 $ 88,682 $ 90,668
(1) Includes revenues and a gain on Quest sale of $17.7 million, or $1.15 per unit.
(2) Includes special distribution related to the Quest sale of $.55 per unit.
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
OPPENHEIMER CAPITAL
(the "Operating Partnership")
-------------------------------------
For the year ended April 30,
---------------------------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues $ 158,215 $ 129,912 $ 112,290 $ 94,733 $ 82,024
=========== =========== =========== =========== ===========
Expenses $ 95,551 $ 83,066 $ 64,683 $ 54,707 $ 46,144
=========== =========== =========== =========== ===========
Operating Income $ 62,664 $ 46,846 $ 47,607 $ 40,026 $ 35,880
=========== =========== =========== =========== ===========
Gain on Quest sale (1) $ 27,725 $ - $ - $ - $ -
=========== =========== =========== =========== ===========
Income before income taxes
and minority interest $ 90,389 $ 46,846 $ 47,607 $ 40,026 $ 35,880
=========== =========== =========== =========== ===========
Assets under management
at period end (In Billions) $ 40.6 $ 31.8 $ 29.4 $ 26.4 $ 23.7
=========== =========== =========== =========== ===========
Financial condition data at April 30,: 1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
Total assets $ 76,338 $ 56,129 $ 43,034 $ 37,677 $ 31,765
Total liabilities $ 41,462 $ 41,582 $ 30,557 $ 27,830 $ 22,767
Minority interest $ 174 $ 87 $ 25 $ 18 $ 13
Partners' capital $ 34,702 $ 14,460 $ 12,452 $ 9,829 $ 8,985
(1) Reflects the gain realized by the Operating Partnership on the sale of the investment advisory and other
contracts and business relationships for its twelve Quest for Value mutual funds to OppenheimerFunds, Inc.
on November 22, 1995.
</TABLE>
- 12 -
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
- -------------------------------------------------------------------------------
of Operations
- -------------
Oppenheimer Capital, L.P.
- -------------------------
General
- -------
The primary source of income for Oppenheimer Capital, L.P. (the
"Partnership") is 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 from Oppenheimer Equities, Inc. in the year 2012 (the
"Equities note").
Revenues and Expenses
- ---------------------
The Partnership recorded equity in earnings of the Operating
Partnership for the years ended April 30, 1996, 1995 and 1994 of $58,093,000,
$31,054,000 and $31,864,000, respectively. Equity in earnings of the Operating
Partnership increased for the year ended April 30, 1996 as a result of higher
operating income of the Operating Partnership and due to a gain recognized by
the Operating Partnership on the sale of the Quest for Value investment advisory
and other contracts and business relationships (the "Quest sale") to
OppenheimerFunds, Inc. Equity in earnings of the Operating Partnership for the
year ended April 30, 1996 included $17,734,000 related to the Quest sale.
Interest income on the Equities note for each of the years ended April 30, 1996,
1995 and 1994 totaled $3,219,000.
Amortization of goodwill for each of the years ended April 30, 1996,
1995 and 1994 amounted to $2,588,000. Other expenses consist of New York City
unincorporated business tax ("UBT") computed at a rate of 4% of taxable income.
For the years ended April 30, 1996, 1995 and 1994, New York City UBT amounted to
$132,000, $873,000 and $1,450,000, respectively. The decline in New York City
UBT reflects a change in the tax law effective on January 1, 1995. New York City
UBT is now 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. Previously, New York City UBT was
assessed directly at the Partnership level.
Net income amounted to $58,596,000 or $3.81 per unit based on an
average of 15,244,000 units outstanding for the year ended April 30, 1996;
$30,821,000 or $2.02 per unit based on an average of 15,136,000 units
outstanding for the year ended April 30, 1995; and $31,053,000 or $2.04 per unit
based on an average of 15,043,000 units outstanding for the year ended April 30,
1994. Included in the net income for the year ended April 30, 1996 is the gain
on the Quest sale, which amounted to $17,734,000, or $1.15 per unit.
Income Taxes
- ------------
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.
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
Oppenheimer Equities, Inc. (See Note 4B to the financial statements). 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.
- 13 -
<PAGE>
Oppenheimer Capital, L.P. (continued)
- -------------------------
Liquidity and Capital Resources (continued)
- -------------------------------
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 years ended
April 30, 1996, 1995 and 1994, the Partnership declared total distributions to
Unitholders of $3.175, $2.175 and $2.1375 per unit, respectively. The total
distributions for the year ended April 30, 1996 included a special distribution
of $0.55 related to the Quest sale.
- 14 -
<PAGE>
Oppenheimer Capital
- -------------------
General
- -------
The Operating Partnership's results of operations include those of its
basic institutional investment management business and those of its subsidiary
entities Opcap Advisors (formerly Quest for Value Advisors), OCC Distributors
(formerly Quest for Value Distributors), Oppenheimer Capital Limited, Saratoga
Capital Management ("Saratoga"), Oppenheimer Capital Trust Company ("Opcap
Trust"), AMA Investment Advisers, L.P. and American Medical Investment Company,
L.P. (collectively "AMA Investment Advisers").
For the periods presented, the Operating Partnership's operations have
been characterized by substantial increases in assets under management. This
growth has been from three principal sources. First, new clients have entered
into investment management agreements 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 Opcap Advisors have added to assets under management due to increased
fund sales and market appreciation. The growth in assets under management has
been tempered by the Operating Partnership's withdrawal from the low fee rate
option management business in order to concentrate on businesses offering higher
returns. For all periods presented, the option management business had no
material effect on revenues or profitability. Revenues are generally derived
from charging a fee based on the net assets of clients' portfolios. All periods
presented show increased operating revenue. Revenues for all periods presented
consist principally of investment management fees.
During the 1996 fiscal year, costs were reduced as a result of OCC
Distributors withdrawal from the distribution of open-end mutual funds and the
elimination of retail operations at AMA Investment Advisers. These cost savings
reflect a strategic decision to withdraw from selling directly to the retail
market, and to instead market directly to institutions with strong retail
distribution capabilities.
The value of assets under management increased 27.6% to $40.6 billion
at April 30, 1996 from $31.8 billion at April 30, 1995. The growth of assets
under management was tempered by the loss of $1.5 billion in option management
accounts with a low effective fee rate and a reduction of $300 million in fixed
income mutual fund assets as a result of the Quest sale (see below).
Institutional and private account assets under management increased 23.6% to
$31.6 billion from $25.5 billion and mutual fund assets under management
increased 43.9% to $9.0 billion from $6.3 billion for the same period.
The value of assets under management increased 8.1% to $31.8 billion at
April 30, 1995 from $29.4 billion at April 30, 1994. Institutional and private
account assets under management increased 5.6% to $25.5 billion from $24.2
billion and mutual fund assets under management increased 19.7% to $6.3 billion
from $5.2 billion for the same period.
Gain on Quest Sale
- ------------------
On November 22, 1995, the Operating Partnership completed the sale of
the investment advisory and other contracts and business relationships for its
twelve Quest for Value mutual funds (the "Quest sale") to OppenheimerFunds, Inc.
("OFI"), which is unrelated to the Operating Partnership, for a price of $41.7
million. An additional purchase price payment of up to $3.8 million may be
received by the Operating Partnership on the first anniversary of the closing if
the assets of the six merged fixed income funds are then at stated levels. The
gain on the sale, before New York City unincorporated business tax ("UBT") and
minority interest, amounted to $27.7 million.
Total assets of the twelve funds were $1.7 billion at November 21,
1995. The six equity funds involved, representing $1.4 billion of those assets,
continue to be managed by Opcap Advisors under a subadvisory contract with OFI,
which allows the current portfolio management teams to remain in place. The six
equity funds have been renamed the Oppenheimer Quest Value funds ("Quest
funds"). The six fixed income funds, representing approximately $300 million of
those assets, have been merged into comparable funds managed by OFI.
- 15 -
<PAGE>
Oppenheimer Capital (continued)
- -------------------
Gain on Quest Sale (continued)
- ------------------
Annual sub-advisory fees related to the Quest funds are projected at
$7.7 million annually, based on assets under management as of June 30, 1996,
down from the previous $15.7 million of annual advisory fees for the twelve
Quest for Value Funds at November 22, 1995. This decrease is more than offset by
cost reductions related to the Operating Partnership's withdrawal from the
distribution of open-end equity and fixed income mutual funds and by increased
sales of Quest funds. Assets in the six equity funds have increased 57.7% to
$2.2 billion at June 30, 1996 from $1.4 billion on November 21, 1995, reflecting
record fund sales and market appreciation.
The Operating Partnership implemented a portion of the mutual fund
distribution cost savings prior to the close of the Quest sale, and results for
the quarter ended April 30, 1996 reflected those savings. In addition, as a
result of the sale, significant expenditures that would have been made in
systems, technology, sales and marketing capabilities, and new product
development will not be necessary.
On January 31, 1997, as spelled out in its public offering nine years
ago, the Operating Partnership's Quest for Value Dual Purpose Fund will redeem
all income shares and the capital shares are expected to convert to an open-end
fund, subject to shareholder approval. It is anticipated that the shares of the
open-end fund will be distributed by, and that management control and
shareholder services will be transferred to, OFI and that the Operating
Partnership will become a subadvisor. It is further anticipated that the
Operating Partnership will be compensated in connection with the transfer of
management control, distribution and shareholder servicing to OFI.
Operating Revenues
- ------------------
Total operating revenues increased 21.8% for the year ended April 30,
1996 to $158,215,000 from $129,912,000 for the year ended April 30, 1995 and
increased 15.7% for the year ended April 30, 1995 from $112,290,000 for the year
ended April 30, 1994. Total operating revenues includes investment management
fees, net distribution assistance and commission income, and interest and
dividends.
Investment management fees increased 26.9% to $151,264,000 for the year
ended April 30, 1996 from $119,194,000 for the year ended April 30, 1995. This
increase is a result of average assets under management increasing 23.8% to
$36.7 billion for the year ended April 30, 1996 from $29.7 billion for the year
ended April 30, 1995. In addition, investment management fees increased due to
higher fee realizations as the result of a shift in the asset mix toward higher
effective fee rate businesses, including mutual funds, variable annuities and
wrap fee accounts and the withdrawal from the option management business, which
had very low fee rates. Offsetting the above increase in part, the fee rate the
Operating Partnership receives for subadvising the Quest funds was reduced
compared to the previous advisory fee rate. Performance fees earned in fiscal
1996 totaled $3.0 million.
Investment management fees increased 9.9% for the year ended April 30,
1995 from $108,491,000 for the year ended April 30, 1994, primarily as a result
of average assets under management increasing 4.0% for the year ended April 30,
1995 from $28.5 billion for the year ended April 30, 1994. This increase
reflects higher fee realizations in the Operating Partnership's newer businesses
and its institutional investment management business, increased performance fees
earned in fiscal 1995 ($2.8 million in 1995 vs. $.7 million in 1994), and the
loss of two option management accounts with significantly lower fee rates than
the Operating Partnership's existing businesses with assets of approximately $1
billion. These accounts had fee rates significantly below the fee rates on the
Operating Partnership's existing businesses.
Net distribution assistance and commission income decreased 42.0% to
$6,048,000 for the year ended April 30, 1996 from $10,436,000 for the year ended
April 30, 1995. This decrease reflects a $3.5 million decline in certificate of
deposit commission income as a result of lower demand for funds by banks. In
addition, net distribution assistance and commission declined due to lower unit
investment trust commission income due to reduced demand for fixed income unit
investment trusts, and reduced commission and distribution income as a result of
the Quest sale in November 1995.
- 16 -
<PAGE>
Oppenheimer Capital (continued)
- -------------------
Operating Revenues (continued)
- ------------------
Net distribution assistance and commission income increased
significantly for the year ended April 30, 1995 from $3,675,000 for the year
ended April 30, 1994 primarily as a result of a $4.0 million increase in
certificate of deposit commission income as a result of increased demand for
funds by banks and increased unit investment trust commission income.
Interest and dividend income increased to $903,000 for the year ended
April 30, 1996 from $282,000 for the year ended April 30, 1995. This increase
can be primarily attributed to the interest earned on the proceeds received from
the Quest sale. Interest and dividend income for the year ended April 30, 1994
was $124,000.
Operating Expenses
- ------------------
Total operating expenses increased 15.0% for the year ended April 30,
1996 to $95,551,000 from $83,066,000 for the year ended April 30, 1995 and
increased 28.4% for the year ended April 30, 1995 from $64,683,000 for the year
ended April 30, 1994.
The Operating Partnership's most significant expense category is
compensation and benefits, which includes salaries, bonuses, sales commissions,
incentive compensation and other payroll related expenses. Compensation and
benefits expense increased 24.2% to $68,781,000 for the year ended April 30,
1996 from $55,367,000 for the year ended April 30, 1995 and increased 25.4% for
the year ended April 30, 1995 from $44,137,000 for the year ended April 30,
1994. For the year ended April 30, 1996, compensation and benefits increased due
to staff salary increases, as well as higher incentive compensation costs due to
increased new business, record operating profits and increased participation by
key executives in incentive compensation plans as a result of industry
competitive pressures and their individual contributions to firm profitability.
Compensation and benefits expense also increased due to additions to staff to
support the growth of products offered by Opcap Trust, Saratoga, and the
International and Wrap Fee divisions. These increases were offset in part by
significant staff reductions at OCC Distributors, AMA Investment Advisers and in
mutual fund accounting. Most staff reductions took place after the Quest sale in
November 1995. Reflecting these reductions, staff size declined from 417 at
April 30, 1995 to 348 at April 30, 1996. For the year ended April 30, 1995,
compensation and benefits expense increased as a result of adding personnel to
manage the increasing client and asset base and the expansion into new
businesses.
Occupancy expense increased 6.8% for the year ended April 30, 1996 to
$6,873,000 from $6,436,000 for the year ended April 30, 1995 and increased 22.9%
for the year ended April 30, 1995 from $5,235,000 for the year ended April 30,
1994. The increase for the year ending April 30, 1996 reflects increased
amortization expense relating to leasehold improvements made during the past
fiscal year and increased equipment rental costs. For the year ended April 30,
1995, the increase was attributable to the acquisition of additional space to
expand a growing institutional and mutual fund business, as well as the new
businesses entered into during the year.
The Operating Partnership subleases a portion of its space at the
Oppenheimer Tower, World Financial Center, from Oppenheimer & Co., Inc.
("Opco"), an affiliated broker-dealer, paying a pro rata share of Opco's lease
payments, based on the percentage of total space leased.
General and administrative expenses increased 15.4% for the year ended
April 30, 1996 to $12,293,000 from $10,652,000 for the year ended April 30, 1995
and increased 60.7% for the year ended April 30, 1995 from $6,630,000 for the
year ended April 30, 1994. The rate of growth of general and administrative
expenses slowed in fiscal 1996 as the Operating Partnership realized cost
savings from the Quest sale and cost reductions at AMA Investment Advisers.
General and administrative expenses increased in both fiscal 1996 and 1995 due
to increased costs incurred in connection with the start up and development of
new businesses, including AMA Investment Advisers (in 1995 only), Opcap Trust,
Saratoga and the expansion of the International Division, and the increased
activities in our traditional businesses. The increase in general and
administrative expenses reflects the significant investment made by the
Operating Partnership in computer equipment and software to support
professional and administrative staff, and higher professional services
expenses due to the expansion of businesses and products, including higher
custodial and processing charges for Opcap Trust.
- 17 -
<PAGE>
Oppenheimer Capital (continued)
- -------------------
Operating Expenses (continued)
- ------------------
Promotional expenses decreased 28.3% for the year ended April 30, 1996
to $7,604,000 from $10,611,000 for the year ended April 30, 1995 and increased
22.2% for the year ended April 30, 1995 from $8,681,000 for the year ended April
30, 1994. The decrease in promotional expenses for the current fiscal year was
due primarily to a reduction in expenses incurred by OCC Distributors, as a
result of the elimination of the open-end mutual fund distribution effort, and
the retail operations of AMA Investment Advisers, and was offset in part by
increased expenses in the Operating Partnership's new businesses due to
increased travel and entertainment expenses as a result of increased staff size
and increased new business activities. For the year ended April 30, 1995
promotional expenses increased due to increased marketing activities and new
product introductions in both the Operating Partnership's investment management
business, mutual fund business and other new businesses.
Operating Income
- ----------------
Operating income increased 33.8% for the year ended April 30, 1996 to
$62,664,000 from $46,846,000 for the year ended April 30, 1995 and decreased
1.8% for the year ended April 30, 1995 from $47,607,000 for the year ended April
30, 1994. For the year ended April 30, 1996, the operating profit margin
expanded to 39.6% from 36.1% for the year ended April 30, 1995; and in the year
ended April 30, 1995, the operating profit margin declined from 42.4% for the
year ended April 30, 1994. The increase in operating income and operating profit
margin from 1995 to 1996 is principally due to rising securities price levels
and the resultant revenue increase, as well as cost reductions as a result of
the termination of retail activities at OCC Distributors and AMA Investment
Advisers. In fiscal 1996, losses from new businesses increased $300,000 while
income from existing businesses increased $16.1 million The decrease in fiscal
1995 operating income and operating profit margin is due to the increased costs
associated with the Operating Partnership's expansion into new businesses.
During fiscal 1995 the Operating Partnership acquired AMA Investment Advisers,
Opcap Trust, and formed Saratoga. In addition, the Operating Partnership
continued to significantly expand its International Investment Management
Division. These new businesses incurred an operating loss of $4.8 million in
fiscal 1995 which was offset in part by a $4.0 million increase in operating
income from existing businesses.
Income Taxes
- ------------
Although the Operating Partnership is not otherwise subject to Federal,
state, or local income taxes, it was subject to New York City UBT of $3,667,000
and $1,201,000, respectively, for the years ended April 30, 1996 and 1995. There
are two reasons for the significant increase in New York City UBT. First, due to
a change in the tax law effective January 1, 1995, 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. Previously, New York City UBT was assessed
directly at the Partnership level. A second reason for the increase is the
Operating Partnership's higher earnings, including the gain realized on the
Quest sale.
A corporate subsidiary of the Operating Partnership is subject to
Federal, state and local income taxes. A foreign corporate subsidiary is subject
to taxes in the foreign jurisdiction in which it is located.
Liquidity and Capital Resources
- -------------------------------
The gain on the Quest sale totaled $27.7 million. The net proceeds from
the sale were used to pay a special distribution to partners of $12.6 million
and the remaining funds were used to eliminate bank borrowings and to fund the
working capital needs of the Operating Partnership. At April 30, 1996 working
capital totaled $27.6 million as compared with $4.5 million at April 30, 1995
and partners capital increased to $34.7 million from $14.5 million during this
same period.
- 18 -
<PAGE>
Oppenheimer Capital (continued)
- -------------------
Liquidity and Capital Resources (continued)
- -------------------------------
The Operating Partnership has established a $20 million credit facility
with a commercial bank to meet operating and financing needs. These funds have
been used in the past to support increased management fees receivable, to expand
facilities, to accommodate the growth of its business and to finance
acquisitions.
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.
- 19 -
<PAGE>
Item 8. Financial Statements and Supplementary Data
- ----------------------------------------------------
INDEX OF FINANCIAL STATEMENTS AND ACCOMPANYING NOTES OF OPPENHEIMER CAPITAL,
L.P. AND CONSOLIDATED FINANCIAL STATEMENTS AND ACCOMPANYING NOTES OF OPPENHEIMER
CAPITAL FOR THE YEARS ENDED APRIL 30, 1996, 1995 AND 1994.
CONTENTS Pages
--------
OPPENHEIMER CAPITAL, L.P.
Report of Independent Accountants F-2
Statements of Financial Condition F-3
Statements of Income F-4
Statements of Changes in Partners' Capital F-5
Statements of Cash Flows F-6
Notes to Financial Statements F-7
OPPENHEIMER CAPITAL
Report of Independent Accountants F-12
Consolidated Statements of Financial Condition F-13
Consolidated Statements of Income F-14
Consolidated Statements of Changes in Partners' Capital F-15
Consolidated Statements of Cash Flows F-16
Notes to Consolidated Financial Statements F-17
Item 9. Changes in and Disagreements with Accountants on Accounting and
- -------------------------------------------------------------------------
Financial Disclosure
- --------------------
None
- 20 -
<PAGE>
OPPENHEIMER CAPITAL, L.P.
FINANCIAL STATEMENTS
APRIL 30, 1996 AND 1995
F - 1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
June 17, 1996
To The General Partner and Limited Partners of
Oppenheimer Capital, L.P.
In our opinion, the accompanying statements of financial condition and the
related statements of income, changes in partners' capital and cash flows
present fairly, in all material respects, the financial position of Oppenheimer
Capital, L.P. (the "Partnership") at April 30, 1996 and 1995, and the results of
its operations and its cash flows for each of the three years in the period
ended April 30, 1996, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the
Partnership's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
F - 2
<PAGE>
OPPENHEIMER CAPITAL, L.P.
STATEMENTS OF FINANCIAL CONDITION
(IN THOUSANDS)
<TABLE>
<CAPTION>
AT APRIL 30,
------------------------------------------
1996 1995
---------------- ----------------
<S> <C> <C>
ASSETS
Cash and short term investments (Note 4) $ 35 $ 60
Investment in Oppenheimer Capital (Note 2) 23,362 9,707
Distribution receivable 11,950 9,545
10% note due 2012 from Oppenheimer Equities, Inc. (Note 4) 32,193 32,193
Interest receivable 538 538
Other assets 128 109
Goodwill, net (Note 2) 41,893 44,481
---------------- ----------------
TOTAL ASSETS $ 110,099 $ 96,633
================ ================
LIABILITIES AND PARTNERS' CAPITAL
Distribution payable to partners $ 12,713 $ 10,321
---------------- ----------------
TOTAL LIABILITIES 12,713 10,321
---------------- ----------------
General partner's capital 987 876
Limited partners' capital; 16,950,000 Units authorized;
15,255,070 and 15,136,837 Units outstanding, respectively 96,399 85,436
---------------- ----------------
TOTAL PARTNERS' CAPITAL 97,386 86,312
---------------- ----------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 110,099 $ 96,633
================ ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F - 3
<PAGE>
OPPENHEIMER CAPITAL, L.P.
STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT FOR PER UNIT AMOUNTS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
APRIL 30,
----------------------------------------------------
1996 1995 1994
-------------- -------------- --------------
<S> <C> <C> <C>
REVENUES:
Equity in earnings of Oppenheimer Capital (Note 2):
Operating earnings $ 40,359 $ 31,054 $ 31,864
Gain on Quest sale (Note 7) 17,734 - -
-------------- -------------- --------------
Total equity in earnings of Oppenheimer Capital 58,093 31,054 31,864
Interest 3,223 3,228 3,227
-------------- -------------- --------------
TOTAL REVENUES 61,316 34,282 35,091
-------------- -------------- --------------
EXPENSES:
Amortization of goodwill (Note 2) 2,588 2,588 2,588
Other expenses (Note 2) 132 873 1,450
-------------- -------------- --------------
TOTAL EXPENSES 2,720 3,461 4,038
-------------- -------------- --------------
NET INCOME $ 58,596 $ 30,821 $ 31,053
============== ============== ==============
NET INCOME PER UNIT (NOTE 3) $ 3.81 $ 2.02 $ 2.04
============== ============== ==============
DISTRIBUTIONS DECLARED PER UNIT $ 3.175 $ 2.175 $ 2.1375
============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F - 4
<PAGE>
OPPENHEIMER CAPITAL, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
(IN THOUSANDS)
<TABLE>
<CAPTION>
GENERAL LIMITED TOTAL
PARTNER'S PARTNERS' PARTNERS'
CAPITAL CAPITAL CAPITAL
------------- ------------- -------------
<S> <C> <C> <C>
BALANCES AT APRIL 30, 1993 $ 900 $ 87,782 $ 88,682
Net income 311 30,742 31,053
Distributions declared (325) (32,217) (32,542)
Amortization of restricted unit compensation expense 6 552 558
Capital contributions - 46 46
------------- ------------- -------------
BALANCES AT APRIL 30, 1994 892 86,905 87,797
Net income 308 30,513 30,821
Distributions declared (332) (32,923) (33,255)
Amortization of restricted unit compensation expense 8 851 859
Capital contributions - 90 90
------------- ------------- -------------
BALANCES AT APRIL 30, 1995 876 85,436 86,312
Net income 586 58,010 58,596
Distributions declared (489) (48,416) (48,905)
Amortization of restricted unit compensation expense 11 1,127 1,138
Capital contributions 3 242 245
------------- -------------- -------------
BALANCES AT APRIL 30, 1996 $ 987 $ 96,399 $ 97,386
============= ============== =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F - 5
<PAGE>
OPPENHEIMER CAPITAL, L.P.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
APRIL 30,
----------------------------------------------------
1996 1995 1994
-------------- -------------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 58,596 $ 30,821 $ 31,053
Adjustments to reconcile net income to net cash
provided by operating activities:
Distributions received (less than) the equity
in earnings of Oppenheimer Capital (14,677) (60) (1,854)
Amortization of goodwill 2,588 2,588 2,588
(Increase) decrease in other assets (19) (109) 116
-------------- -------------- --------------
Net cash provided by operating activities 46,488 33,240 31,903
-------------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital contributions to Oppenheimer Capital (300) (86) (68)
-------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to partners:
General partner (465) (332) (319)
Limited partners (46,048) (32,923) (31,587)
Issuance of limited partnership units on exercise of
restricted options 300 86 68
-------------- -------------- --------------
Net cash (used in) financing activities (46,213) (33,169) (31,838)
-------------- -------------- --------------
Net (decrease) in cash and short term investments (25) (15) (3)
Cash and short term investments at beginning of period 60 75 78
-------------- -------------- --------------
Cash and short term investments at end of period $ 35 $ 60 $ 75
============== ============== ==============
Supplemental disclosure of cash flow information (Note 6):
New York City unincorporated business taxes paid $ 151 $ 985 $ 1,333
============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F - 6
<PAGE>
OPPENHEIMER CAPITAL, L.P.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION
- ---------------------
Oppenheimer Capital, L.P. (the "Partnership"), is a publicly traded
limited partnership owned 1% by its general partner, Oppenheimer Financial Corp.
("Opfin") and 99% by its public limited partners ("Unitholders"). The
Partnership's sole business is its holding of a 67.3% interest in Oppenheimer
Capital (the "Operating Partnership"), a registered investment adviser. Opfin
holds the remaining 32.7% interest in the Operating Partnership. The Operating
Partnership is part of an affiliated group of companies operating in the
financial services industry. The financial statements of the Partnership should
be read in conjunction with the consolidated financial statements of the
Operating Partnership.
NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- -----------------------------------------------------------------------------
(a) Investment in Oppenheimer Capital
The Partnership records its investment in the Operating Partnership in
accordance with the equity method of accounting. The Partnership records as
income its proportionate share of the net income of the Operating Partnership
and credits distributions from the Operating Partnership to its investment in
Oppenheimer Capital.
(b) Goodwill
The excess of the initial contribution of capital to the Operating
Partnership over fair value of the net assets acquired is being amortized on a
straight-line basis over a period of 25 years. Accumulated amortization at April
30, 1996 and 1995 was $22,800,000 and $20,213,000, respectively. Impairment of
goodwill is measured on the basis of anticipated undiscounted cash flows. At
April 30, 1996, 1995 and 1994, the Partnership determined there was no
impairment of goodwill.
(c) 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.
(d) Statements of Cash Flows
For purposes of reporting cash flows, cash and short term investments
include highly- liquid investments with maturities of three months or less.
F - 7
<PAGE>
OPPENHEIMER CAPITAL, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 3 - NET INCOME PER UNIT
- ----------------------------
<TABLE>
<CAPTION>
(In Thousands, Except For Per Unit Amounts)
- ----------------------------------------------------------------------------------------------------------
For the year ended April 30,
------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Net income $ 58,596 $ 30,821 $ 31,053
- ----------------------------------------------------------------------------------------------------------
Less 1% applicable to the General Partner 586 308 311
- ----------------------------------------------------------------------------------------------------------
Net income available to the Limited Partners $ 58,010 $ 30,513 $ 30,742
- ----------------------------------------------------------------------------------------------------------
Weighted average number of units outstanding 15,244 15,136 15,043
- ----------------------------------------------------------------------------------------------------------
Net income per unit $ 3.81 $ 2.02 $ 2.04
==========================================================================================================
</TABLE>
NOTE 4 - TRANSACTIONS WITH AFFILIATED COMPANIES
- -----------------------------------------------
(a) Cash and Short Term Investments
On occasion the Partnership deposits excess funds with an affiliate and
receives interest at money market rates. In addition, excess funds are also
invested in a money market fund managed by an affiliate. Included in cash and
short term investments at April 30, 1996 and 1995 was $34,000 and $5,000,
respectively, on deposit with Oppenheimer & Co., Inc. ("Opco"), an affiliated
broker-dealer, and $1,000 and $55,000, respectively, invested in the OCC Cash
Reserves Primary Portfolio, which is managed by Opcap Advisors ("Advisors"), an
affiliated investment adviser.
(b) 10% par value Note due 2012 from Oppenheimer Equities, Inc.
In April 1991, the Partnership received a distribution from the
Operating Partnership of a $32,193,000, 10% par value note due 2012 from
Oppenheimer Equities, Inc., ("Equities"), a direct wholly-owned subsidiary of
Opfin.
The summary financial position of Equities is as follows:
<TABLE>
<CAPTION>
(In Millions)
- ----------------------------------------------------------------------------------------------------------
April 30, 1996
--------------
<S> <C>
Total assets $ 4,470
- ----------------------------------------------------------------------------------------------------------
Total liabilities, exclusive of subordinated liabilities 4,135
- ----------------------------------------------------------------------------------------------------------
Liabilities subordinated to claims of general creditors 4
- ----------------------------------------------------------------------------------------------------------
Total shareholder's equity 331
- ----------------------------------------------------------------------------------------------------------
Total liabilities and shareholder's equity $ 4,470
==========================================================================================================
For the year ended April 30, 1996, Equities' net income was $44 million on total revenues of
$902 million.
</TABLE>
F - 8
<PAGE>
OPPENHEIMER CAPITAL, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 5 - SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
- ------------------------------------------------------
<TABLE>
<CAPTION>
(In Thousands, Except For Per Unit Amounts)
===================================================================================================================
Year ended First Second Third Fourth
April 30, 1996 Quarter Quarter Quarter Quarter
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total revenues $ 9,862 $ 10,527 $ 29,322 (1) $ 11,605
- -------------------------------------------------------------------------------------------------------------------
Net income $ 9,177 $ 9,841 $ 28,637 (1) $ 10,941
- -------------------------------------------------------------------------------------------------------------------
Net income per unit $ .60 $ .64 $ 1.86 (1) $ .71
- -------------------------------------------------------------------------------------------------------------------
Distributions declared per unit $ .55 $ .625 $ 1.175 (2) $ .825
- -------------------------------------------------------------------------------------------------------------------
Market price:
High $24.500 $ 28.000 $ 29.500 $ 30.750
Low $21.125 $ 24.000 $ 27.000 $ 27.750
===================================================================================================================
Year ended First Second Third Fourth
April 30, 1995 Quarter Quarter Quarter Quarter
- -------------------------------------------------------------------------------------------------------------------
Total revenues $ 8,853 $ 9,017 $ 8,093 $ 8,319
- -------------------------------------------------------------------------------------------------------------------
Net income $ 7,876 $ 7,969 $ 7,223 $ 7,753
- -------------------------------------------------------------------------------------------------------------------
Net income per unit $ .52 $ .52 $ .47 $ .51
- -------------------------------------------------------------------------------------------------------------------
Distributions declared per unit $ .50 $ .50 $ .50 $ .675
- -------------------------------------------------------------------------------------------------------------------
Market price:
High $26.375 $ 24.625 $ 22.875 $ 24.000
Low $23.250 $ 21.750 $ 18.750 $ 20.750
===================================================================================================================
(1) Includes a gain on the Quest sale of $17.7 million, or $1.15 per unit (see Note 7).
(2) Includes a special distribution related to the Quest sale of $.55 per unit (see Note 7).
</TABLE>
NOTE 6 - SUPPLEMENTAL CASH FLOW INFORMATION
- -------------------------------------------
Supplemental information of non-cash activities for the fiscal year ended April
30, 1996:
Oppenheimer Capital, L.P. issued 118,233 units of limited partnership interest
under the Restricted Unit and Restricted Option Plans in exchange for an
additional .18% general partnership interest in Oppenheimer Capital.
Supplemental information of non-cash activities for the fiscal year ended April
30, 1995:
Oppenheimer Capital, L.P. issued 93,668 units of limited partnership interest
under the Restricted Unit and Restricted Option Plans in exchange for an
additional .14% general partnership interest in Oppenheimer Capital.
Supplemental information of non-cash activities for the fiscal year ended April
30, 1994:
Oppenheimer Capital, L.P. issued 5,166 units of limited partnership interest
under the Restricted Unit and Restricted Option Plans in exchange for an
additional .01% general partnership interest in Oppenheimer Capital.
F - 9
<PAGE>
OPPENHEIMER CAPITAL, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 7 - GAIN ON QUEST SALE
- ---------------------------
Included in "Equity in earnings of Oppenheimer Capital" for the fiscal
year ended April 30, 1996 is a gain resulting from the Operating Partnership's
sale of the investment advisory and other contracts and business relationships
for its twelve Quest for Value mutual funds to Oppenheimer Management
Corporation (since renamed OppenheimerFunds, Inc.), which is unrelated to the
Operating Partnership. The Partnership's share of the gain on the sale, which
was completed on November 22, 1995, totaled $17,734,000, or $1.15 per unit. An
additional purchase price payment of up to $3.8 million may be received by the
Operating Partnership on the first anniversary of the closing if the assets of
the six merged fixed income funds are then at stated levels.
F - 10
<PAGE>
OPPENHEIMER CAPITAL
CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1996 AND 1995
F - 11
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
June 17, 1996
To The General Partners of
Oppenheimer Capital
In our opinion, the accompanying statements of financial condition and the
related statements of income, changes in partners' capital and cash flows
present fairly, in all material respects, the financial position of Oppenheimer
Capital and its subsidiaries (the "Partnership") at April 30, 1996 and 1995, and
the results of their operations and their cash flows for each of the three years
in the period ended April 30, 1996, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Partnership's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
F - 12
<PAGE>
OPPENHEIMER CAPITAL
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(IN THOUSANDS)
<TABLE>
<CAPTION>
APRIL 30,
------------------------------------------
1996 1995
---------------- ----------------
<S> <C> <C>
ASSETS
Cash and short term investments (Notes 1 and 4) $ 21,019 $ 9,214
Investment management fees receivable 43,016 33,177
Investments in affiliated mutual funds and other sponsored
investment products (Note 4) 4,644 2,887
Furniture, equipment and leasehold improvements at cost
less accumulated depreciation and amortization of $2,179
and $1,867 (Note 1) 3,515 3,733
Intangible assets, less accumulated amortization of $377
and $470 (Notes 1 and 5) 1,699 3,313
Other assets (Note 6) 2,445 3,805
---------------- ----------------
TOTAL ASSETS $ 76,338 $ 56,129
================ ================
LIABILITIES, MINORITY INTEREST AND PARTNERS' CAPITAL
LIABILITIES
Accrued employee compensation and benefits $ 12,873 $ 8,324
Accrued expenses and other liabilities 7,168 6,878
Note payable (Note 9) 800 1,200
Loan payable to bank (Note 7) - 9,182
Deferred investment management fees 2,870 1,716
Distribution payable to partners 17,751 14,282
---------------- ----------------
TOTAL LIABILITIES 41,462 41,582
---------------- ----------------
Minority interest 174 87
PARTNERS' CAPITAL 34,702 14,460
---------------- ----------------
TOTAL LIABILITIES, MINORITY INTEREST
AND PARTNERS' CAPITAL $ 76,338 $ 56,129
================ ================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F - 13
<PAGE>
OPPENHEIMER CAPITAL
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
APRIL 30,
----------------------------------------------------
1996 1995 1994
-------------- -------------- --------------
<S> <C> <C> <C>
OPERATING REVENUES:
Investment management fees (Note 1) $ 151,264 $ 119,194 $ 108,491
Net distribution assistance and
commission income (Note 4) 6,048 10,437 3,675
Interest and dividends 903 281 124
-------------- -------------- --------------
TOTAL OPERATING REVENUES 158,215 129,912 112,290
-------------- -------------- --------------
OPERATING EXPENSES:
Compensation and benefits (Note 3) 68,781 55,367 44,137
Occupancy 6,873 6,436 5,235
General and administrative 12,293 10,652 6,630
Promotional 7,604 10,611 8,681
-------------- -------------- --------------
TOTAL OPERATING EXPENSES 95,551 83,066 64,683
-------------- -------------- --------------
OPERATING INCOME 62,664 46,846 47,607
Gain on Quest sale (Note 10) 27,725 - -
-------------- -------------- --------------
INCOME BEFORE INCOME TAXES AND
MINORITY INTEREST 90,389 46,846 47,607
Income taxes (Note 8) (3,627) (1,201) -
-------------- -------------- --------------
INCOME BEFORE MINORITY INTEREST 86,762 45,645 47,607
Minority interest (452) - (47)
-------------- -------------- --------------
NET INCOME $ 86,310 $ 45,645 $ 47,560
============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F - 14
<PAGE>
OPPENHEIMER CAPITAL
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
(IN THOUSANDS)
BALANCE AT APRIL 30, 1993 $ 9,829
Net income 47,560
Amortization of restricted unit compensation expense 833
Distributions declared to partners:
Oppenheimer Financial Corp. (15,128)
Oppenheimer Capital, L.P. (30,710)
Contributions by Oppenheimer Capital, L.P. 68
---------------
BALANCE AT APRIL 30, 1994 12,452
Net income 45,645
Amortization of restricted unit compensation expense 1,280
Distributions declared to partners:
Oppenheimer Financial Corp. (14,313)
Oppenheimer Capital, L.P. (30,690)
Contributions by Oppenheimer Capital, L.P. 86
---------------
BALANCE AT APRIL 30, 1995 14,460
Net income 86,310
Amortization of restricted unit compensation expense 1,691
Distributions declared to partners:
Oppenheimer Financial Corp. (22,247)
Oppenheimer Capital, L.P. (45,812)
Contributions by Oppenheimer Capital, L.P. 300
---------------
BALANCE AT APRIL 30, 1996 $ 34,702
===============
The accompanying notes are an integral part of these consolidated financial
statements.
F - 15
<PAGE>
OPPENHEIMER CAPITAL
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
APRIL 30,
----------------------------------------------------
1996 1995 1994
-------------- -------------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 86,310 $ 45,645 $ 47,560
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of restricted unit compensation expense 1,691 1,280 833
Depreciation and amortization 2,413 1,082 905
Minority interest, net of distributions 87 62 7
(Increase) in investment management fees receivable (9,839) (4,517) (2,557)
(Increase) decrease in other assets 80 1,300 (1,442)
Increase (decrease) in accrued employee compensation
and benefits 4,549 1,637 (1,105)
Increase in accrued expenses and other liabilities 290 2,144 594
Increase in deferred investment management fees 1,154 93 342
-------------- -------------- --------------
Net cash provided by operating activities 86,735 48,726 45,137
-------------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of fixed assets (498) (1,634) (1,057)
Intangible assets resulting from acquisitions - (1,689) (613)
Proceeds from sales of mutual funds shares and other investments 7,296 2,048 1,596
Purchases of mutual funds shares and other investments (7,844) (4,384) (2,259)
-------------- -------------- --------------
Net cash (used in) investing activities (1,046) (5,659) (2,333)
-------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net (repayments of) proceeds from bank loans (9,182) 6,446 2,736
Issuance (repayment) of note payable (400) 1,200 -
Distributions to partners:
Oppenheimer Financial Corp. (21,187) (14,898) (15,669)
Oppenheimer Capital, L.P. (43,415) (30,995) (30,009)
Contributions by Oppenheimer Capital, L.P. 300 86 68
-------------- -------------- --------------
Net cash (used in) financing activities (73,884) (38,161) (42,874)
-------------- -------------- --------------
Net increase (decrease) in cash and short term investments 11,805 4,906 (70)
Cash and short term investments at beginning of period 9,214 4,308 4,378
-------------- -------------- --------------
Cash and short term investments at end of period $ 21,019 $ 9,214 $ 4,308
============== ============== ==============
Supplemental disclosure of cash flow information:
Interest paid $ 638 $ 738 $ 164
============== ============== ==============
New York City unincorporated business taxes paid $ 3,701 $ 1,049 $ -
============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F - 16
<PAGE>
OPPENHEIMER CAPITAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
(a) Organization and Consolidation
Oppenheimer Capital (the "Operating Partnership"), a general
partnership between Oppenheimer Financial Corp. ("Opfin") and Oppenheimer
Capital, L.P. (the "Partnership"), is a registered investment adviser and is
part of an affiliated group of companies operating in the financial services
industry.
At May 1, 1993, the Partnership and Opfin held general partnership
interests of 66.99% and 33.01%, respectively.
During fiscal 1994, 1995 and 1996, the Partnership issued 5,166, 93,668
and 118,233 units of limited partnership interest ("units"), respectively, under
the Restricted Unit Plan and Restricted Option Plan which increased its general
partnership interest in the Operating Partnership to 67.00%, 67.14% and 67.32%,
respectively, and reduced Opfin's general partnership interest in the Operating
Partnership to 33.00%, 32.86% and 32.68%, respectively.
The consolidated financial statements include the accounts of the
Operating Partnership and its subsidiaries, Opcap Advisors ("Advisors"), OCC
Distributors ("Distributors"), AMA Investment Advisers, L.P., American Medical
Investment Company, L.P. and Saratoga Capital Management (collectively, the
"Subpartnerships"), Oppenheimer Capital Limited and Oppenheimer Capital Trust
Company. All material intercompany balances and transactions have been
eliminated in consolidation.
(b) Cash and Short Term Investments
Short term investments are recorded at cost which approximates market
value and include holdings in money market mutual funds and highly-liquid
investments with maturities of three months or less. Also included in cash and
short term investments are unit investment trust and certificate of deposit
positions which are recorded at market.
(c) Furniture, Equipment and Leasehold Improvements
Furniture and equipment are depreciated on a straight-line basis over
five to seven year periods. Amortization of leasehold improvements is on a
straight-line basis over the lesser of their economic useful life or the term of
the lease.
(d) Investment Management Fees
Investment management fees are based on written contracts and are
generally computed on the net assets of the managed accounts and recognized in
the period earned.
F - 17
<PAGE>
OPPENHEIMER CAPITAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
- ---------------------------------------------------
(e) Statements of Cash Flows
For purposes of reporting cash flows, cash and short term investments
include highly- liquid investments with maturities of three months or less.
(f) Intangible Assets
Impairment of intangible assets is measured on the basis of anticipated
undiscounted cash flows. At April 30, 1996, 1995 and 1994, the Operating
Partnership determined that there was no impairment of the intangible assets.
(g) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
(h) Reclassifications
Certain prior year amounts have been reclassified to conform to the
current year's presentation.
NOTE 2 - LONG TERM LEASE COMMITMENTS
- ------------------------------------
The Operating Partnership occupies office premises at various
locations, including the Oppenheimer Tower under an agreement to sublease with
Oppenheimer & Co., Inc. ("Opco"), an affiliated broker-dealer. The Operating
Partnership's lease commitments for office space under operating leases having
noncancelable lease terms in excess of one year provide for the following
minimum annual rentals:
Years ending April 30,
----------------------
1997 $ 3,909,000
1998 3,909,000
1999 3,909,000
2000 3,909,000
2001 3,630,000
Thereafter 13,498,000
-------------
Total minimum lease payments $ 32,764,000
=============
F - 18
<PAGE>
OPPENHEIMER CAPITAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 2 - LONG TERM LEASE COMMITMENTS (Continued)
- ------------------------------------
The agreements expire at various dates through 2006 and contain
provisions for additional charges (e.g., ground rent, real estate taxes and
operating expenses). Office rent expense for the years ended April 30, 1996,
1995 and 1994 was $5,348,000, $5,100,000 and $4,144,000, respectively.
NOTE 3 - COMPENSATION PLANS
- ---------------------------
The Operating Partnership has established a Restricted Unit Plan and a
Restricted Option Plan for the benefit of certain key executive employees.
Pursuant to these plans, an eligible executive will be granted the right to
receive a number of units of the Partnership at no cost to the executive
("Rights"), in the case of the Restricted Unit Plan and/or the right to purchase
a number of units at the fair market value of such units on the date of grant
("Options"), in the case of the Restricted Option Plan. The right to receive or
purchase units will vest 33 1/3% per year at the end of each of the third,
fourth and fifth years from the date of grant. The Partnership will transfer to
the Operating Partnership the proceeds of such purchases in exchange for an
increase in its general partnership interest in the Operating Partnership. Opfin
and the limited partners of the Partnership will incur dilution, in accordance
with their respective percentage interests in the Operating Partnership, upon
the vesting of these Rights and the exercise of any Options to purchase units. A
total of 2,475,000 restricted units and/or restricted options have been
authorized under these plans. The following table shows the Rights granted and
the Options granted with exercise prices of $13.50 to $28.125 at April 30, 1996.
As a result of the grant of Rights, the Operating Partnership recorded deferred
restricted unit compensation expense in partners' capital of $4,738,000 for the
fiscal year ended April 30, 1996, $343,000 for the fiscal year ended April 30,
1995, and $(175,000) for the fiscal year ended April 30, 1994 which amounts are
amortized over a five year period. Amortization of $1,691,000, $1,280,000, and
$833,000 has been recorded for each of the years ended April 30, 1996, 1995 and
1994, respectively. This amortization results in a charge to compensation and
benefits and a corresponding credit to partners' capital.
F - 19
<PAGE>
OPPENHEIMER CAPITAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 3 - COMPENSATION PLANS (Continued)
- ---------------------------
<TABLE>
<CAPTION>
Exercise
Rights Options Price
Outstanding Outstanding Per Option
------------- ------------- -----------------
<S> <C> <C> <C>
Balances at April 30, 1993 337,000 52,167 $10.875-$20.625
Rights granted 33,450 - -
Rights canceled (47,500) - -
Units issued with respect to Rights - - -
Options granted - 97,000 $25.00-$28.125
Options exercised - (5,166) $10.875-$14.875
Options canceled - (2,500) $20.625-$25.00
------------- ------------- -----------------
Balances at April 30, 1994 322,950 141,501 $11.375-$25.00
Rights granted 16,300 - -
Rights canceled (3,333) - -
Units issued with respect to Rights (88,167) - -
Options granted - 140,500 $23.625-$24.875
Options exercised - (5,501) $11.375-$23.875
Options canceled - (9,667) $11.375-$25.00
------------- ------------- -----------------
Balances at April 30, 1995 247,750 266,833 $13.50-$28.125
Rights granted 188,540 - -
Rights canceled (8,333) - -
Units issued with respect to Rights (103,200) - -
Options granted - 153,000 $20.75
Options exercised - (15,033) $13.50-$25.00
Options canceled - (30,333) $20.625-$25.00
------------- ------------- -----------------
Balances at April 30, 1996 324,757 374,467 $13.50-$28.125
============= ============= =================
</TABLE>
NOTE 4 - TRANSACTIONS WITH AFFILIATED COMPANIES
- -----------------------------------------------
(a) Cash and Short Term Investments
On occasion the Operating Partnership deposits excess funds with an
affiliate and receives interest at money market rates. In addition, excess funds
are also invested in a money market fund managed by Advisors. Included in cash
and short term investments at April 30, 1996 and 1995 was $275,000 and $196,000,
respectively, on deposit with Opco and $1,675,000 and $3,595,000, respectively,
invested in the OCC Cash Reserves Primary Portfolio, for which Advisors acts as
investment adviser.
F - 20
<PAGE>
OPPENHEIMER CAPITAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 4 - TRANSACTIONS WITH AFFILIATED COMPANIES (Continued)
- -----------------------------------------------
(b) Investments in Affiliated Mutual Funds and Other Sponsored
Investment Products
Investments in affiliated mutual funds and other sponsored investment
products are carried at market value.
(c) Distribution Assistance Fees and Expenses
The Operating Partnership receives distribution assistance fees from
various mutual funds and has entered into agreements with various broker-dealers
including Opco to obtain sales-related services in rendering distribution
assistance. Payments to Opco for the Quest for Value equity and fixed income
mutual funds were recorded as distribution assistance expenses and for financial
statement purposes are netted against distribution assistance fees. Payments to
Opco for OCC Cash Reserves are netted against investment management fees. Such
payments totaled $9,522,000, $8,496,000 and $8,074,000 for the years ended April
30, 1996, 1995 and 1994, respectively.
(d) Other Services
Opco provides various services to the Operating Partnership and its
subsidiaries at its cost. Charges pursuant to these agreements are not material.
(e) Affiliated Mutual Funds and Commingled Products - Investment
Management Fees
The Operating Partnership provides investment management services to
affiliated mutual funds and other commingled products. For the years ended April
30, 1996, 1995 and 1994 amounts earned for these services totaled $22,778,000,
$23,088,000 and $22,982,000, respectively.
NOTE 5 - INTANGIBLE ASSETS
- --------------------------
On June 19, 1991, the Board of Directors of the Quest For Value Family
of Funds approved agreements whereby funds managed by the Subpartnerships having
similar investment objectives and policies, would acquire all of the assets,
subject to liabilities, of each fund of the American Medical Association Family
of Funds. The acquisition of these assets was completed at various dates in
September, November and December 1991. As part of this transaction, the
Subpartnerships entered into a non-compete agreement with the American Medical
Association ("AMA"), whereby AMA agreed not to compete with the Subpartnerships
for the three year period ending on December 15, 1994. In consideration of such
agreement, the Subpartnerships paid AMA $1,000,000 on December 16, 1991.
F - 21
<PAGE>
OPPENHEIMER CAPITAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 5 - INTANGIBLE ASSETS (Continued)
- --------------------------
In addition, the Subpartnerships entered into a distribution and
shareholder servicing assistance contract with AMA Investment Advisers, Inc.
("AMA Advisers"), whereby AMA Advisers agreed to provide the Subpartnerships
with assistance in the provision of distribution services and shareholder
servicing to the Quest for Value Family of Funds. Under this contract, the
Subpartnerships paid AMA Advisers an annual retainer for three years equal to
50% of the annual management fee earned with respect to assets attributable to
AMA Advisers. The cumulative payments to AMA Advisers under this contract
amounted to $1,707,000. As a result of the Quest sale, this shareholder
servicing agreement was written-off in November 1995.
The fee for the non-compete agreement was recorded as an intangible
asset and was amortized on a straight-line basis over a three year period.
NOTE 6 - OTHER ASSETS
- ---------------------
Included in other assets at April 30, 1995 is an investment in Orange
County, California Tax and Revenue Anticipation Notes ("Orange County Notes").
On December 7, 1994, in response to the bankruptcy filing by Orange County, the
Operating Partnership voluntarily purchased $2,000,000 principal amount of
Orange County Notes at par from a mutual fund for which Advisors acts as the
sole investment adviser. This investment was recorded at market value. In
February 1995, the Operating Partnership sold a total of $1,000,000 principal
amount of the Orange County Notes and realized a loss of approximately $100,000.
The remaining principal amount was sold in November 1995 and the Operating
Partnership realized an additional loss of approximately $60,000.
NOTE 7 - LOAN PAYABLE TO BANK
- -----------------------------
Through an agreement with a commercial bank, the Operating Partnership
has the ability to meet its short term financing needs by obtaining bank loans
that are collateralized by investment management fees receivable and other
assets. Short term bank loans are generally made at one and one quarter percent
below the prime rate. Interest expense relating to these loans during fiscal
1996, 1995 and 1994, amounted to $513,000, $648,000 and $146,000, respectively.
NOTE 8 - INCOME TAXES
- ---------------------
Although the Operating Partnership is not otherwise subject to Federal,
state, or local income taxes, it was subject to New York City unincorporated
business tax of $3,667,000 and $1,201,000, respectively, for the years ended
April 30, 1996 and 1995.
A domestic corporate subsidiary of the Operating Partnership is subject
to Federal, state and local income taxes. A foreign corporate subsidiary is
subject to taxes in the foreign jurisdiction in which it is located.
F - 22
<PAGE>
OPPENHEIMER CAPITAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 9 - ACQUISITIONS
- ---------------------
On May 1, 1994, the American Medical Association 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
"AMA Acquisition"). The Operating Partnership and Opfin acquired a 79.1% and 1%
partnership interest, respectively, for $500,000 and a $1,200,000 promissory
note. The promissory note is payable in three installments of $400,000 on May 1,
1995, May 1, 1996 and May 1, 1997 and is based on the prime rate. AMA Investment
Advisers, L.P. offers investment services and products tailored especially for
members of AMA and 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 Advisors.
NOTE 10 - GAIN ON QUEST SALE
- ----------------------------
On November 22, 1995, the Operating Partnership completed the sale of
the investment advisory and other contracts and business relationships for its
twelve Quest for Value mutual funds to Oppenheimer Management Corporation (since
renamed OppenheimerFunds, Inc.), which is unrelated to the Operating
Partnership, for a price of $41.7 million. An additional purchase price payment
of up to $3.8 million may be received by the Operating Partnership on the first
anniversary of the closing if the assets of the six merged fixed income funds
are then at stated levels. The gain on the sale, shown separately from the
operating income on the consolidated statements of income, amounted to
$27,725,000.
The six equity funds involved will continue to be managed by the
Operating Partnership under a subadvisory contract with OppenheimerFunds, Inc.
("OFI"), which allows the portfolio management teams to remain in place. The six
fixed income funds have been merged into comparable funds managed by OFI.
F - 23
<PAGE>
Part III
Item 10. Directors and Executive Officers of the Registrant
- ------------------------------------------------------------
The Partnership is managed under the direction of the board of
directors of the General Partner. Unitholders, as limited partners, have no
power to direct or participate in the control of the business of the
Partnership.
The following table sets forth certain information with respect to the
directors and executive officers of the General Partner and of the Operating
Partnership. The business address of each of the individuals listed below is
Oppenheimer Tower, World Financial Center, New York, New York 10281.
Age as of
Name April 30, 1996 Positions Held
- ------------ -------------- ----------------------
Stephen Robert 55 Chairman of the Board
and Chief Executive
Officer of Opfin
Nathan Gantcher 55 President, Chief
Operating Officer and
Director of Opfin
Joseph M. La Motta 63 Executive Vice President
and Director of Opfin;
Chairman and Chief
Executive Officer of the
Operating Partnership
George A. Long 55 President and Chief
Investment Officer of
the Operating
Partnership
Roger W. Einiger 48 Executive Vice
President, Chief
Administrative Officer
and Director of Opfin
Sheldon M. Siegel 53 Managing Director and
Chief Financial Officer
of the Operating
Partnership
Frederick M. Bohen 59 Director of Opfin
Michael C. Stoddart 64 Director of Opfin
Mr. Robert has been a director of Opfin since January 1986; Chairman of
the Board and Chief Executive Officer of Opfin since February 1986; Chairman and
Chief Executive Officer of OGI from February 1986 to May 1995; Co-Chief
Executive Officer and President of OGI since May 1995; a director of Opco since
January 1979; Chairman of the Board of Opco since January 1983; Chief Executive
Officer of Opco from January 1983 to April 1995; Co-Chief Executive Officer of
Opco since May 1995; a director of NacRe Corporation since August 1985; a
director of Electra Investment Trust PLC since February 1996; and an executive
officer or a director of current and/or former affiliates of Opfin.
Mr. Gantcher has been a director of Opfin since January 1986; President
and Chief Operating Officer of Opfin since February 1986; President of OGI from
February 1986 to May 1995; Co-Chief Executive Officer and Chairman of OGI since
May 1995; a director of Opco since January 1979; President of Opco since January
1983; Co-Chief Executive Officer of Opco since May 1995; a director of Donkenny,
Inc. from June 1993 to April 1995; and an executive officer or a director of
current and/or former affiliates of Opfin.
- 21 -
<PAGE>
Mr. La Motta has been a director of Opfin since January 1986; Executive
Vice President of Opfin since February 1986; Executive Vice President and a
director of OGI since February 1986; Executive Vice President of Opco from July
1985 to September 1993; Chief Executive Officer of the Operating Partnership and
its predecessor since January 1984; President of the Operating Partnership from
January 1984 to April 1996; Chairman of the Operating Partnership since May
1996; and an executive officer or a director of current and/or former affiliates
of Opfin.
Mr. Long has been President of the Operating Partnership since May
1996; a Managing Director of the Operating Partnership and its predecessor from
September 1982 to April 30, 1996; and Chief Investment Officer of the Operating
Partnership and its predecessor since January 1987.
Mr. Einiger has been a director of Opfin since January 1986; Executive
Vice President of Opfin since February 1986; Chief Administrative Officer of
Opfin since March 1986; Executive Vice President, Chief Administrative Officer,
and Chairman of the Management Committee of OGI from March 1988 to April 1995
and a director of OGI since February 1986; Vice Chairman of Opco since March
1992; Executive Vice President of Opco from December 1982 to March 1992; a
director of Opco since July 1985; and an executive officer or a director of
current and/or former affiliates of Opfin.
Mr. Siegel has been a Managing Director of the Operating Partnership
since July 1987; and Chief Financial Officer of the Operating Partnership and
its predecessor since March 1987.
Mr. Bohen has been a director of Opfin since July 1993; Executive Vice
President and Chief Operating Officer, The Rockefeller University since
September 1990; Senior Vice President, Brown University from September 1983 to
August 1990; a director of Student Loan Marketing Association (Sallie Mae) since
January 1984; a director of the Apache Corporation since November 1981; a
Trustee, Endowment Realty Advisors, Inc., a Real Estate Investment Trust since
August 1988; and a director of The Mexico Equity and Income Fund Inc., an
investment company managed by an affiliate of Opco, since April 1990.
Mr. Stoddart has been a director of Opfin since July 1988; Chairman of
Electra Investment Trust P.L.C., an English corporation, since July 1986; a
director of Mezzanine Capital Corporation Ltd. (an investment company) since May
1983; a director of Opco since July 1975; and a director of affiliates of the
Operating Partnership.
Mr. Bohen and Mr. Stoddart are unaffiliated with the management of
Opfin and serve on the Audit Committee which reports to the Board of Directors
of Opfin with respect to the selection and terms of engagement of the
Partnership's, the Operating Partnership's, the Subpartnerships' and Opfin's
independent accountants, and reviews various matters relating to accounting and
audit policies and procedures.
All directors of Opfin, with the exceptions of Messrs. Bohen and
Stoddart, are general partners of Oppenheimer & Co., L.P., the parent of OGI.
Messrs. Bohen and Stoddart receive annual director's fees of $18,000, none of
which are charged to the Partnership or the Operating Partnership. All other
directors, who are executive officers of Opfin, do not receive any additional
compensation for their service as directors.
- 22 -
<PAGE>
Item 11. Executive Compensation
- --------------------------------
The Partnership does not have any employees.
The following summary compensation table sets forth compensation
awarded to, earned by or paid to each of the three executive officers of the
Operating Partnership for the three years ended April 30, 1996 for services
rendered in all capacities to the Operating Partnership and its Subpartnerships.
The officers of the Operating Partnership perform management functions on behalf
of the Partnership; however, the Partnership is not charged directly for any
compensation paid by the Operating Partnership. However, the Partnership is
charged to the extent of its pro rata share of the Operating Partnership's
profits for any compensation paid by the Operating Partnership.
<TABLE>
<CAPTION>
All Other
Name and Year Ended Annual Compensation Compensation
Principal Position April 30, Salary ($) Bonus ($) ($) (1)
------------------ --------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Joseph M. La Motta 1996 500,000 3,825,000 (2) 11,000
Chairman and 1995 500,000 2,200,000 11,000
Chief Executive 1994 500,000 2,350,000 6,000
Officer of the
Operating Partnership
George A. Long 1996 350,000 3,825,000 (2) 10,000
President and 1995 350,000 2,000,000 7,000
Chief Investment 1994 350,000 2,050,000 3,000
Officer of the
Operating Partnership
Sheldon M. Siegel 1996 175,000 1,417,000 (2) 7,000
Managing Director and 1995 150,000 650,000 6,000
Chief Financial 1994 150,000 675,000 2,000
Officer of the
Operating Partnership
</TABLE>
(1) Represents amounts paid by the Operating Partnership as insurance
premiums on behalf of each executive officer.
(2) Includes a special bonus related to the Quest sale of $1,000,000,
$1,000,000, and $548,000 paid to Messrs. La Motta, Long, and Siegel,
respectively.
Compensation Committee Interlocks and Insider Participation.
- ------------------------------------------------------------
Joseph M. La Motta, the Chairman and Chief Executive Officer of the
Operating Partnership, serves on the board of directors of Opfin, which is the
general partner of the Partnership and the managing general partner of the
Operating Partnership (the "Managing General Partner") (along with Messrs.
Robert, Gantcher and Einiger) and participated in deliberations of such board
concerning executive compensation.
Item 12. Security Ownership of Certain Beneficial Owners and Management
- ------------------------------------------------------------------------
Opfin is the sole general partner of the Partnership and the managing
general partner of the Operating Partnership. Opfin is a wholly-owned subsidiary
of OGI, a Delaware corporation which is a holding, service and financing
company, and is controlled by a partnership, Oppenheimer & Co., L.P., the
general and limited partnership interests in which are owned by employees of the
Operating Partnership and its affiliates and include certain executive officers
of the Operating Partnership. Oppenheimer & Co., L.P. is controlled by Messrs.
Robert and Gantcher, its two managing general partners, who may be deemed to
beneficially own all of the shares of common stock of OGI owned by Oppenheimer &
Co., L.P. Prior to the March 1986 acquisition of the stock of Opfin by OGI,
Opfin was an indirect wholly-owned subsidiary of Mercantile.
- 23 -
<PAGE>
Disclosure of Beneficial Interest
- ---------------------------------
The following table shows at July 18, 1996, the beneficial ownership of
the units held by each director of Opfin, each executive officer of the
Operating Partnership and all directors and executive officers as a group:
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name of Beneficial Owner Beneficial Ownership Class
- ------------------------ -------------------- ----------
<S> <C> <C>
Stephen Robert (1) -0- -0-
Nathan Gantcher (1) 5,000 .03%
Joseph M. La Motta 17,500 .11%
George A. Long 320 *
Roger W. Einiger -0- -0-
Sheldon M. Siegel 27,400 .18%
Frederick M. Bohen -0- -0-
Michael C. Stoddart -0- -0-
-------------------- ----------
All directors and executive
officers as a group 50,220 .33%
==================== ==========
* Less than .01%
</TABLE>
(1) At July 18, 1996, Opfin held a 1% general partnership interest in
the Partnership and a 32.52% managing general partnership interest in the
Operating Partnership. Opfin, in turn, is indirectly controlled by Oppenheimer &
Co., L.P., a limited partnership, of which Messrs. Robert and Gantcher serve as
managing general partners.
Item 13. Certain Relationships and Related Transactions
- --------------------------------------------------------
Intercompany Relationship - Conflicts of Interest
- -------------------------------------------------
Opfin owns certain other financial services businesses, including Opco.
Opfin and its subsidiaries provide numerous services to the Operating
Partnership. Opco has over 800 individuals who are engaged primarily in customer
sales activities at its New York headquarters and in regional offices through
the brokerage and securities business. Opco's account executives introduce
corporate, institutional and individual clients to the Operating Partnership.
Substantial commission revenues accrue to Opco from accounts introduced to the
Operating Partnership, but such commissions are paid by the accounts themselves
and are not an expense of the Operating Partnership. However, Opfin and its
affiliates may also be subject to various conflicts of interest in managing and
dealing with the Partnership and the Operating Partnership, including the
following:
Allocation of Costs and Business Opportunities
- ----------------------------------------------
The Managing General Partner incurs certain costs and expenses in
connection with the ownership of its financial services businesses, including
certain costs incurred on behalf of, and reimbursable by, the Operating
Partnership. In addition, income producing opportunities may arise which could
be allocated to the Operating Partnership or one or more of the Managing General
Partner's other businesses. For example, Opco is a registered investment adviser
and conflicts may arise with respect to opportunities in the investment
management business.
Although both the Operating Partnership and Opco provide investment
management services, actual conflicts between them seldom arise. The Managing
General Partner intends to make determinations on behalf of the Operating
Partnership as to appropriate business opportunities, consistent with its past
practices. Nevertheless, if conflicts arise between the Operating Partnership
and Opfin, a three-person Conflicts Committee, consisting of Joseph M. La Motta,
Chairman and Chief Executive Officer of the Operating Partnership, Stephen
Robert, Chairman of the Board and Chief Executive Officer of Opfin, and an
unaffiliated Board member of Opfin, has the authority to resolve such conflicts.
- 24 -
<PAGE>
Administrative, overhead or facilities (e.g., occupancy costs and
telephone) are provided to the Operating Partnership by Opfin and its
affiliates. The Operating Partnership is charged approximate cost, which may, in
some cases, be determined on the basis of a reasonable allocation. To the extent
Opfin or its affiliates perform services which are in the ordinary course of its
business (e.g., brokerage, trading, investment banking or underwriting), the
Partnership or the Operating Partnership will be charged an amount which is no
greater than that which would be charged by a comparable unaffiliated third
party. Opfin was reimbursed $3 million by the Operating Partnership for the
Operating Partnership's share of occupancy costs during fiscal 1996, all other
expenses charged by Opfin to the Operating Partnership were not material.
Allocation of Management Time
- -----------------------------
Other than Mr. La Motta, the Chairman and Chief Executive Officer of
the Operating Partnership who devotes substantially all of his time to the
Operating Partnership, the remaining officers and directors of Opfin are also
officers and directors of other businesses affiliated with Opfin and devote
substantially all of their time to the affairs of Opfin and other affiliated
businesses. However, the non-executive employees of the Operating Partnership
devote their full time to the business of the Operating Partnership.
Transactions with Affiliated Companies
- --------------------------------------
Opco receives brokerage commissions on trades executed on behalf of the
Operating Partnership's management clients and fees on mutual fund distribution
services and expects to receive fees from the Operating Partnership for
investment banking and underwriting services. In fiscal 1996, prior to the Quest
sale, Opco was the Operating Partnership's largest distributor of load mutual
funds and received sales concessions from the Operating Partnership of $3.3
million on Quest For Value mutual fund sales. In fiscal 1996, Opco also
distributed certain of the Operating Partnership's cash management products and
received sales concessions and distribution payments totaling $9.3 million.
- 25 -
<PAGE>
Part IV
-------
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
- --------------------------------------------------------------------------
(a)(1) Please see the index in item 8 for a list of the financial statements
filed as part of this report.
(2) Please see the index in item 8 for a list of the financial statements
filed as part of this report.
(3) The following exhibits are filed as part of this report:
21 List of subsidiaries
23 Consent of Independent Public Accountant
27 Financial data schedule
99 Oppenheimer Equities, Inc. and Subsidiaries Financial
Statements for the Years Ended April 30, 1996 and 1995.
(b) The Partnership did not file any Reports on Form 8-K during the three
months ended April 30, 1996. The Partnership did file a Report on Form
8-K on August 30, 1995.
(c) The following exhibits required to be filed by Item 601 of Regulation
S-K are filed herewith and incorporated by reference herein:
(3.1) Amended and Restated Agreement of Limited Partnership of
Oppenheimer Capital, L.P. (Incorporated by reference from
Registration Statement on Form S-3 Registration No. 33-39354)
(3.2) Amended and Restated Partnership Agreement of Oppenheimer
Capital (Incorporated by reference from Registration Statement
on Form S-3 Registration No. 33-39354)
(10.1) Promissory Note Issued by Oppenheimer Equities, Inc. (Incorporated
by reference from Registration Statement on Form S-3 Registration
No. 33-39354)
(10.2) Form of lease with respect to premises at Oppenheimer Tower.
(Incorporated by reference from Registration Statement on Form
S-3 Registration No. 33-39354)
(10.3) Lease with respect to premises at World Financial Center, Tower B,
New York. (Incorporated by reference in the Annual Report on Form
10-K of the Partnership for its fiscal year ended April 30, 1993)
(10.4)* Amended and Restated Oppenheimer Past Service Benefit Plan.
(Incorporated by reference from Registration Statement on Form S-3
Registration No. 33-39354)
(10.5)* First Amendment to the Oppenheimer Past Service Benefit Plan.
(Incorporated by reference from Registration Statement on Form S-3
Registration No. 33-39354)
(10.6)* Oppenheimer Capital Deferred Compensation Plan. (Incorporated by
reference from Registration Statement on Form S-3 Registration No.
33-39354)
(10.7)* Restricted Unit Plan. (Incorporated by reference from Registration
Statement on Form S-8 filed on July 2, 1990 Registration No.
33-35584)
- 26 -
<PAGE>
(10.8)* Restricted Option Plan. (Incorporated by reference from
Registration Statement on Form S-8 filed on July 2, 1990
Registration No. 33-35584)
(10.9) Lease with respect to premises at 33 Maiden Lane, New York.
(Incorporated by reference from exhibit 10.9 on Form 10-K of the
Partnership for its fiscal year ended April 30, 1994)
(10.10) Acquisition Agreement dated August 17, 1995 among Oppenheimer
Capital, Quest for Value Advisors, Quest for Value Distributors
and Oppenheimer Management Corporation. (Incorporated by reference
from exhibit 10.1 on Form 10-Q of the Partnership for the second
fiscal quarter ended October 31, 1995.
(d) No separate financial statements are required.
* Indicates a management contract or compensatory plan or arrangement.
- 27 -
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) 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.
(Registrant)
By: /s/Stephen Robert
--------------
Stephen Robert
Chairman of the Board,
Chief Executive Officer of Opfin
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
Signature Title Date
- ----------------- ----------------------- --------------
/s/ Stephen Robert
- ------------------
Stephen Robert Chairman of the Board,
Chief Executive Officer
of Opfin July 18, 1996
- -------------------
Nathan Gantcher President, Chief Operating
Officer and Director of
Opfin July __, 1996
/s/ Joseph M. La Motta
- ----------------------
Joseph M. La Motta Executive Vice President and
Director of Opfin; Chairman
and Chief Executive Officer
of the Operating Partnership July 18, 1996
/s/ Roger W. Einiger
- --------------------
Roger W. Einiger Executive Vice President,
Chief Administrative Officer
and Director of Opfin July 18, 1996
/s/ Sheldon M. Siegel
- ---------------------
Sheldon M. Siegel Managing Director and Chief
Financial Officer of the
Operating Partnership July 18, 1996
- ----------------------
Frederick M. Bohen Director of Opfin July __, 1996
/s/ Michael C. Stoddart
- -----------------------
Michael C. Stoddart Director of Opfin July 18, 1996
- 28 -
<PAGE>
EXHIBIT 21
OPPENHEIMER CAPITAL
The following list sets forth, as of July 18, 1996, the name of
Oppenheimer Capital and each of its Subpartnerships and/or Subsidiaries and the
states or other jurisdictions under which they are organized.
State or Jurisdiction
Entity under which organized
- ------------------------------------ ---------------------
Oppenheimer Capital Delaware
Opcap Advisors Delaware
OCC Distributors Delaware
Oppenheimer Capital Limited United Kingdom
AMA Investment Advisers, L.P. Delaware
Oppenheimer Capital Trust Company New York
Saratoga Capital Management Delaware
<PAGE>
EXHIBIT 23
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-35584) of Oppenheimer Capital, L.P. of our reports
dated June 17, 1996 appearing on pages F-2 and F-12 of the Oppenheimer Capital,
L.P. Annual Report on Form 10-K for the year ended April 30, 1996.
PRICE WATERHOUSE LLP
New York, New York
June 17, 1996
<PAGE>
EXHIBIT 99
OPPENHEIMER EQUITIES, INC.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED
APRIL 30, 1996 AND 1995
<PAGE>
OPPENHEIMER EQUITIES, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
PAGE
--------
REPORT OF INDEPENDENT ACCOUNTANTS E - 2
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION E - 3
CONSOLIDATED STATEMENTS OF OPERATIONS E - 5
CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDER'S EQUITY E - 6
CONSOLIDATED STATEMENTS OF CASH FLOWS E - 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS E - 9
E - 1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
June 21, 1996
To the Board of Directors
and Shareholder of
Oppenheimer Equities, Inc.
In our opinion, the accompanying consolidated statements of financial condition
and the related consolidated statements of operations, changes in shareholder's
equity and cash flows present fairly, in all material respects, the financial
position of Oppenheimer Equities, Inc. and its subsidiaries at April 30, 1996
and 1995, and the results of their operations and their cash flows for the years
then ended, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
E - 2
<PAGE>
OPPENHEIMER EQUITIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands)
ASSETS
<TABLE>
<CAPTION>
April 30,
------------------------------
1996 1995
------------------------------
<S> <C> <C>
Cash $ 10,364 $ 12,417
Cash segregated pursuant to Federal and other regulations 1,587 775
Securities borrowed 1,598,114 1,458,433
Receivables from broker-dealers and clearing organizations 97,700 63,386
Receivables from customers 736,986 637,363
Securities owned - at market value 1,211,453 820,550
Securities purchased under agreements to resell 638,870 447,286
Exchange memberships - at cost
(market value $8,549 and $6,000, respectively) 1,434 1,434
Furniture, fixtures and leasehold improvements -
at cost less accumulated depreciation and
amortization of $34,779 and $31,589, respectively 19,331 18,218
Goodwill 3,079 3,276
Note receivable from affiliate 69,700 69,700
Other assets 80,929 90,983
------------------------------
TOTAL ASSETS $ 4,469,547 $ 3,623,821
==============================
</TABLE>
The accompanying notes are an integral part of these financial statements.
E - 3
<PAGE>
OPPENHEIMER EQUITIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Continued)
(In thousands, except share data)
LIABILITIES AND SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
April 30,
------------------------------
1996 1995
------------------------------
<S> <C> <C>
Short-term borrowings $ 170,733 $ 193,000
Drafts payable 22,923 25,418
Securities sold under agreements to repurchase 733,555 471,898
Securities loaned 1,349,683 1,383,002
Payables to broker-dealers and clearing organizations 304,818 314,126
Payables to customers 326,986 237,501
Securities sold but not yet purchased - at market value 897,975 455,069
Accrued employee compensation and benefits 117,327 64,881
Notes payable 90,000 90,000
Note payable to affiliate 32,193 32,193
Other liabilities and accrued expenses 88,788 62,948
------------------------------
TOTAL LIABILITIES $ 4,134,981 $ 3,330,036
------------------------------
COMMITMENTS AND CONTINGENCIES (Notes 7 and 11)
LIABILITIES SUBORDINATED TO CLAIMS OF GENERAL
CREDITORS 3,493 3,938
------------------------------
SHAREHOLDER'S EQUITY
Series A Preferred stock, par value $.01 per share;
6,581 shares authorized; 6,581 shares issued
and outstanding - -
Common stock, par value $1 per share;
1,000 shares authorized; 1,000
shares issued and outstanding 1 1
Additional paid-in capital 141,242 136,427
Retained earnings 189,830 153,419
------------------------------
TOTAL SHAREHOLDER'S EQUITY 331,073 289,847
------------------------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $ 4,469,547 $ 3,623,821
==============================
</TABLE>
The accompanying notes are an integral part of these financial statements.
E - 4
<PAGE>
OPPENHEIMER EQUITIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)
<TABLE>
<CAPTION>
For the Year Ended
April 30,
------------------------------
1996 1995
------------------------------
<S> <C> <C>
REVENUES
Commissions $ 279,331 $ 192,596
Trading and investments 209,846 135,218
Investment banking 96,845 42,630
Investment management fees 59,415 51,638
Interest and dividends 235,477 190,387
Other 20,923 18,832
------------------------------
TOTAL REVENUES 901,837 631,301
------------------------------
EXPENSES
Employee compensation and benefits 420,927 306,218
Occupancy and equipment 55,937 52,795
Data processing and communications 51,038 43,212
Brokerage, exchange and clearance fees 50,068 31,797
Interest 194,142 155,554
Other 57,778 56,950
------------------------------
TOTAL EXPENSES 829,890 646,526
------------------------------
INCOME (LOSS) BEFORE INCOME TAX EXPENSE
(BENEFIT) AND EXTRAORDINARY LOSS 71,947 (15,225)
INCOME TAX EXPENSE (BENEFIT) 28,433 (11,237)
------------------------------
INCOME (LOSS) BEFORE EXTRAORDINARY LOSS 43,514 (3,988)
EXTRAORDINARY LOSS, NET OF TAXES - (1,141)
------------------------------
NET INCOME (LOSS) $ 43,514 $ (5,129)
==============================
</TABLE>
The accompanying notes are an integral part of these financial statements.
E - 5
<PAGE>
OPPENHEIMER EQUITIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
(In thousands)
<TABLE>
<CAPTION>
Additional
Preferred Common Paid-in Retained
Stock Stock Capital Earnings Total
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balances at April 30, 1994 $ - $ 1 $ 131,417 $ 165,622 $ 297,040
Net loss (5,129) (5,129)
Contributed capital 5,010 5,010
Dividends paid on preferred
stock (7,074) (7,074)
--------------------------------------------------------------------------------
Balances at April 30, 1995 - 1 136,427 153,419 289,847
Net income 43,514 43,514
Contributed capital 4,815 4,815
Dividends paid on preferred
stock (7,103) (7,103)
--------------------------------------------------------------------------------
Balances at April 30, 1996 $ - $ 1 $ 141,242 $ 189,830 $ 331,073
================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
E - 6
<PAGE>
OPPENHEIMER EQUITIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
For the Year Ended
April 30,
------------------------------
1996 1995
------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 43,514 $ (5,129)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Non-cash charges (credits) included in net income (loss):
Extraordinary loss, net of taxes - 1,141
Deferred income tax expense (benefit) 4,343 (3,878)
Depreciation and amortization 4,455 4,325
Amortization of original issue discount and
deferred issuance costs on subordinated debentures - 58
Amortization of goodwill 197 197
(Increases) decreases in assets:
Cash segregated pursuant to Federal and
other regulations (812) (100)
Securities borrowed (139,681) (398,440)
Receivables from broker-dealers and
clearing organizations (34,314) 33,366
Receivables from customers (99,623) 31,885
Securities owned (390,903) (552,038)
Securities purchased under agreements to resell (191,584) 289,917
Other assets 5,711 1,594
Increases (decreases) in liabilities:
Drafts payable (2,495) (6,510)
Securities sold under agreements to repurchase 261,657 (269,075)
Securities loaned (33,319) 441,202
Payables to broker-dealers and clearing organizations (9,308) 261,687
Payables to customers 89,485 (90,785)
Securities sold but not yet purchased 442,906 252,325
Accrued employee compensation and benefits 52,446 (33,138)
Other liabilities and accrued expenses 25,840 (16,956)
------------------------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 28,515 (58,352)
------------------------------
Cash flows (used in) investing activities:
Sales (purchases) of:
Exchange memberships - 1,945
Furniture, fixtures and leasehold
improvements - net (5,568) (6,995)
------------------------------
NET CASH (USED IN) INVESTING
ACTIVITIES (5,568) (5,050)
------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
E - 7
<PAGE>
OPPENHEIMER EQUITIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In thousands)
<TABLE>
<CAPTION>
For the Year Ended
April 30,
------------------------------
1996 1995
------------------------------
<S> <C> <C>
Cash flows from financing activities: Net (decrease) increase in:
Short-term borrowings (22,267) 25,740
Issuance of notes payable - 90,000
Additions to Account Executive Subordinated
Indebtedness 242 250
Payments on Account Executive Subordinated
Indebtedness (687) (993)
Redemption of 12 3/4% Subordinated
Debentures Due 2002 - (23,193)
Redemption of 12 3/4% Subordinated
Debentures Due 2003 - (25,500)
Contributed capital 4,815 5,010
Dividends paid on preferred stock (7,103) (7,074)
------------------------------
NET CASH (USED IN) PROVIDED
BY FINANCING ACTIVITIES (25,000) 64,240
------------------------------
NET (DECREASE) INCREASE IN CASH (2,053) 838
Cash, beginning of year 12,417 11,579
------------------------------
Cash, end of year $ 10,364 $ 12,417
==============================
</TABLE>
SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION
Interest paid approximated $192,740,000 and $150,268,000 for the years ended
April 30, 1996 and 1995, respectively, and net payments to an affiliate under a
tax sharing agreement approximated $16,181,000 and $2,384,000, respectively.
The accompanying notes are an integral part of these financial statements.
E - 8
<PAGE>
OPPENHEIMER EQUITIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1996 AND 1995
NOTE l. SIGNIFICANT ACCOUNTING POLICIES
- ----------------------------------------
(a) Ownership and Consolidation
The consolidated financial statements include the accounts of
Oppenheimer Equities, Inc. ("Equities") and its wholly-owned subsidiaries
(collectively, the "Company"). The Company is a wholly-owned subsidiary of
Oppenheimer Financial Corp. ("OPFIN") and an indirect subsidiary of Oppenheimer
Group, Inc. ("OGI"). The Company's principal subsidiary is Oppenheimer & Co.,
Inc. ("OPCO"), a registered broker-dealer. All material intercompany balances
and transactions have been eliminated.
(b) Securities and Commodities Transactions
Customers' securities and commodities transactions are recorded on a
settlement date basis with related commission income and expenses recorded on a
trade date basis. Securities and commodities transactions of the Company are
recorded on a trade date basis.
Securities owned and securities sold but not yet purchased are valued
at market and the resulting unrealized gains and losses are reflected in
revenues.
One-half of the total round-turn commission revenue and related
expenses are recorded at the time futures contracts are opened.
(c) Securities purchased under agreements to resell and Securities
sold under agreements to repurchase
Securities purchased under agreements to resell and securities sold
under agreements to repurchase are treated as collateralized financing
transactions and are included in the financial statements at their original
purchase or sale amounts plus accrued interest. It is the Company's policy to
take possession or control of securities purchased under agreements to resell.
The fair value of repurchase and resale agreements approximates their carrying
value, as such financial instruments are predominantly short-term in nature. The
Company monitors the risk of loss by assessing the market value of the
underlying securities as compared to the related receivable or payable,
including accrued interest, and requests additional collateral where deemed
appropriate.
(d) Furniture, Fixtures and Leasehold Improvements
Furniture, fixtures and leasehold improvements are carried at cost,
less accumulated depreciation and amortization. Depreciation of furniture and
fixtures is provided on a straight-line basis over three to eight year periods.
Amortization of leasehold improvements is provided on a straight-line basis over
the lesser of the economic useful lives of the improvements or the terms of the
leases.
(e) Investment Management Fees
Investment management fees are based on written contracts and computed
based on (i) the net asset value of the managed account, and/or (ii) the
performance of the managed account over a specified period. Such fees are
recognized in the period earned.
E - 9
<PAGE>
OPPENHEIMER EQUITIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(f) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(g) Goodwill
The excess of cost over the value of certain assets acquired in 1982
is reflected as goodwill and amortized on a straight-line basis over a period of
30 years. At April 30, 1996 and 1995, the accumulated amortization was
$2,830,000 and $2,633,000, respectively.
NOTE 2. CASH SEGREGATED PURSUANT TO FEDERAL AND OTHER REGULATIONS
- ------------------------------------------------------------------
Cash segregated pursuant to Federal and other regulations includes cash
segregated under the requirements of the Commodity Exchange Act and represents
funds deposited by customers and funds accruing to customers as a result of
trades or contracts.
NOTE 3. RECEIVABLES FROM AND PAYABLES TO CUSTOMERS
- ---------------------------------------------------
(a) Balances receivable from customers are generally collateralized by
marketable securities. Payables to customers primarily represents free credit
balances of customers and amounts payable against receipts of marketable
securities.
(b) Receivables from customers is net of an allowance for doubtful
accounts of $2,847,000 and $2,823,000 at April 30, 1996 and 1995, respectively.
E - 10
<PAGE>
OPPENHEIMER EQUITIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 4. SECURITIES OWNED AND SECURITIES SOLD BUT NOT YET PURCHASED
- -------------------------------------------------------------------
The positions at April 30, 1996 and 1995 are recorded at market value
and consist of the following securities:
<TABLE>
<CAPTION>
Sold But Not
Owned Yet Purchased
April 30, April 30,
----------------------- -----------------------
1996 1995 1996 1995
-------------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C>
U.S. Government and
Agency Obligations $ 972,035 $ 578,520 $ 821,477 $ 397,892
State and Municipal
Obligations 20,616 57,014 926 1,084
Corporate Bonds 80,775 84,846 16,739 13,595
Stocks and Warrants 134,187 99,689 58,517 42,455
Other 3,840 481 316 43
-------------------------------------------------------
$ 1,211,453 $ 820,550 $ 897,975 $ 455,069
=======================================================
</TABLE>
NOTE 5. SHORT-TERM BORROWINGS
- ------------------------------
Short-term borrowings are obtained from banks generally at market rates
and include both secured and unsecured borrowings payable upon demand, as
follows:
<TABLE>
<CAPTION>
April 30,
------------------------------
1996 1995
------------------------------
(In thousands)
<S> <C> <C>
Borrowings secured by:
Securities owned (market value
$40,908,000 and $72,143,000,
respectively) $ 23,000 $ 46,500
Securities owned by customers,
(market value $46,078,000 and
$12,675,000, respectively) 34,230 9,500
------------------------------
Total secured borrowings 57,730 56,000
Unsecured borrowings 113,503 137,000
------------------------------
Total short-term borrowings $ 170,733 $ 193,000
==============================
</TABLE>
E - 11
<PAGE>
OPPENHEIMER EQUITIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Company has satisfied collateral requirements with clearing
corporations and others at April 30, 1996 by obtaining letters of credit in the
aggregate amount of $109,000,000, which are secured by firm-owned securities
(market value $135,617,000), and unsecured letters of credit in the aggregate
amount of $85,495,000.
NOTE 6. NOTES PAYABLE
- ----------------------
On June 15, 1995, the Company issued $32,500,000 of 8.98% Series A
Senior Secured Notes which mature on June 15, 1999 and $57,500,000 of 9.10%
Series B Senior Secured Notes which mature on June 15, 2000. The note purchase
agreement requires the Company to maintain certain financial levels and places
restrictions on certain business transactions. As of April 30, 1996, the Company
was in compliance with these requirements.
NOTE 7. COMMITMENTS AND CONTINGENCIES
- --------------------------------------
(a) Long-Term Lease Commitments
The Company occupies office premises under non-cancelable leases
expiring at various dates through 2013. The Company's principal offices are
located at Oppenheimer Tower, World Financial Center, New York, New York. At
April 30, 1996, aggregate minimum rental commitments for office space leases are
$31,569,000, $32,315,000, $31,129,000, $30,216,000 and $30,262,000 for each of
the years ending April 30, 1997 through April 30, 2001, respectively, and
$165,779,000 in aggregate thereafter. Such rentals include only fixed rentals.
The leases contain provisions for additional charges for operating expenses. For
the years ended April 30, 1996 and 1995, rent expense was $34,165,000 and
$32,178,000, respectively, net of sublease income of $6,687,000 and $6,817,000,
respectively.
(b) Litigation
Many aspects of the Company's business involve substantial risks of
potential liability. In the normal course of business, the Company has been
named a defendant in numerous civil actions. Several of these actions are class
actions, purportedly brought on behalf of various classes of claimants, which
demand damages in large or indeterminate amounts.
In view of the number and diversity of claims against the Company, the
number of jurisdictions in which litigation is pending and the inherent
difficulty of predicting the outcome of litigation and other claims, the Company
cannot state with certainty what the eventual outcome of pending litigation or
other claims will be. The amounts sought from the Company in pending litigation
and other claims are substantial and in the aggregate exceed the Company's net
worth. Nevertheless, after considering all relevant facts and the opinions of
the Company's General Counsel as well as outside counsel, it is the opinion of
the management of the Company that such litigation and other claims will not in
the aggregate have a material adverse effect on the Company's financial
position.
E - 12
<PAGE>
OPPENHEIMER EQUITIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 8. LIABILITIES SUBORDINATED TO CLAIMS OF GENERAL CREDITORS
- ----------------------------------------------------------------
Liabilities subordinated to claims of general creditors consist of
account executive subordinated indebtedness of $3,493,000 and $3,938,000 at
April 30, 1996 and 1995, respectively.
The liabilities subordinated to claims of general creditors are
subordinated to all existing and future claims of all non-subordinated creditors
of the Company and constitute part of the Company's Net Capital under the
Securities and Exchange Commission's (the "SEC") Uniform Net Capital Rule 15c3-1
(the "Uniform Net Capital Rule") and Commodity Exchange, Inc. ("COMEX") Rule
7.01, Commodity Futures Trading Commission Regulation ("CFTC") 1.17(d) and
1.17(h) and may be repaid only if, after giving effect to such repayment, the
Company meets the specified requirements of the SEC, COMEX and CFTC.
(a) The Debentures
On July 18, 1994, OPCO redeemed the 12.75% Subordinated Debentures
Due 2002 and the 12.75% Subordinated Debentures Due 2003, which resulted in
an extraordinary loss, net of taxes, of $1,141,000.
(b) The Capital Loan
On December 28, 1993, OPCO entered into a Senior Subordinated
Revolving/Term Loan commitment (the "Capital Loan") with a group of banks which
are committed to lend, at OPCO's option, a maximum of $50,000,000. The Capital
Loan will be a revolving loan until December 28, 1997 at which time it will
convert to a term loan due one year later. The Capital Loan interest is based on
an index of the lender's reference rate and will be senior in right of payment
to the Debentures. At April 30, 1996, there was no outstanding balance on this
loan.
(c) Account Executive Subordinated Indebtedness
Account Executive Subordinated Indebtedness represents unpaid bonuses
plus accrued interest related to plan years prior to May 1, 1991 under an
Account Executive Bonus Plan and subordinated debt agreement for retail sales
account executives who met certain eligibility requirements. These bonus
earnings are payable at the employee's option to the employee upon vesting,
which occurs over a five year period. Unpaid balances accrue interest annually
at a rate equal to the Company's average base lending rate. Effective May 1,
1991, bonuses declared under the Account Executive Bonus Plan are no longer
subject to a subordinated debt agreement.
NOTE 9. INCOME TAXES
- ---------------------
(a) Income Tax Allocation Agreement
The Company, its parent and indirect parents are part of a group which
files consolidated Federal and certain combined state and city income tax
returns. Pursuant to a tax allocation agreement, each entity is essentially
charged or credited with an amount equal to its separate tax liability or
benefit for the period. However, the current tax benefits realized from the
ownership by an affiliate of a limited partnership interest in the Oppenheimer
Tower are allocated to the members of the affiliated group based upon the
relative proportion of the Oppenheimer Tower office space which they occupy. The
Company receives a significant benefit because it occupies substantially all of
the Oppenheimer Tower office space.
E - 13
<PAGE>
OPPENHEIMER EQUITIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(b) Income Tax Expense
The effective income tax rates for the years ended April 30, 1996
and 1995 differ from the statutory Federal tax rate for the following reasons:
<TABLE>
<CAPTION>
For the Year
Ended April 30,
------------------------------
1996 1995
------------------------------
<S> <C> <C>
Statutory Federal income tax rate 35% 35%
Exempt interest income (1) 4
State and city income taxes, net
of Federal taxes 11 10
Deduction for qualifying dividends - 2
Allocation of current tax benefits
realized by an affiliate from a
certain limited partnership
interest (See (a) above) (8) 32
Foreign operations 1 (1)
Disallowed expenses 1 (7)
Other, net 1 (1)
------------------------------
Effective income tax rate 40% 74%
==============================
</TABLE>
<TABLE>
<CAPTION>
For the Year
Ended April 30,
------------------------------
1996 1995
------------------------------
(In Thousands)
<S> <C> <C>
Income tax expense (benefit) consists of the following:
Current: Federal income taxes $ 14,014 $ (7,745)
Foreign income taxes 497 (265)
State and city income taxes 9,789 651
------------------------------
24,300 (7,359)
------------------------------
Deferred: Federal income taxes 2,175 (970)
State and city income taxes 1,958 (2,908)
------------------------------
4,133 (3,878)
------------------------------
Total income tax expense (benefit) $ 28,433 $ (11,237)
==============================
</TABLE>
E - 14
<PAGE>
OPPENHEIMER EQUITIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(c) Income Taxes Payable To and Receivable From Affiliate
At April 30, 1996, other assets includes $10,832,000 of deferred
income taxes receivable and other liabilities and accrued expenses include
$5,659,000 of current taxes payable. At April 30, 1995, other assets includes
$1,498,000 of current income taxes receivable and $14,965,000 of deferred income
taxes receivable.
<TABLE>
<CAPTION>
April 30,
------------------------------
1996 1995
------------------------------
(In thousands)
<S> <C> <C>
The deferred tax receivable (payable) consists of the following items:
Deferred compensation and other
accrued expenses $ 17,703 $ 17,210
Investment in partnerships (3,698) (3,528)
Net unrealized appreciation in trading
and investment accounts (3,269) (335)
Depreciation 648 726
Net operating loss carryforward - 1,359
Other (552) (467)
------------------------------
Total $ 10,832 $ 14,965
==============================
</TABLE>
NOTE 10. TRANSACTIONS WITH AFFILIATED COMPANIES
- ------------------------------------------------
(a) Investment Management Fees
The Company received investment management fees from affiliated
entities in the amounts of $14,547,000 and $11,390,000 during the years ended
April 30, 1996 and 1995, respectively.
(b) Other Services
The Company paid $9,392,000 and $8,221,000 during the years ended
April 30, 1996 and 1995, respectively, under the terms of a service agreement
with OGI, under which OGI provides certain services to the Company. The Company
provides various services to certain of its affiliates without charge or at the
Company's cost. The cost of providing services without charge is not material.
(c) Other Receivables and Payables
The Company loans and borrows funds to or from affiliates including
its parent and indirect parents. Other assets included non-interest bearing
receivables from affiliates in the amounts of $9,547,000 and $14,723,000, at
April 30, 1996 and 1995, respectively. At April 30, 1996 and 1995, other
liabilities included $17,095,000 and $3,045,000, respectively, of non-interest
bearing payables to affiliates.
E - 15
<PAGE>
OPPENHEIMER EQUITIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(d) Notes With Affiliates
Note receivable from affiliate represents a $69,700,000 note maturing
in 1997 bearing 10 1/2% interest, receivable from OGI. Note payable to affiliate
represents a $32,193,000 note to Oppenheimer Capital, L.P., maturing in 2012 and
bearing interest at 10%.
NOTE 11. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK AND CONCENTRATION
- ------------------------------------------------------------------------------
OF CREDIT RISK
- --------------
In the normal course of business, the Company enters into securities
transactions. If the securities subject to such transactions are not in the
possession of the Company, the Company is subject to risk of loss if the
security is not received and the market value has increased over the contract
amount of the transactions.
The Company has sold securities that it does not currently own and will
therefore be obligated to purchase such securities at a future date. The Company
has recorded this obligation in the financial statements at the April 30, 1996
market value of the securities. The Company will incur a loss if the market
price of the securities increases subsequent to April 30, 1996.
The Company enters into various transactions in financial instruments
with off-balance-sheet risk in order to meet the needs of its clients, to manage
its exposure to market risks and in connection with its normal proprietary
trading activities. These transactions include the purchase and sale of forward
and futures contracts and the writing of exchange traded and over-the-counter
options. Each of these transactions contain varying degrees of off-
balance-sheet risks. Risks arise in financial futures and forward contracts from
unfavorable changes in currency exchange rates or in the market price of the
underlying financial instruments. In written options contracts, the firm
receives premiums at the outset and then bears the risk of unfavorable changes
in market values of the underlying instruments.
The contractual or notional amounts of these instruments are set forth
below:
<TABLE>
<CAPTION>
April 30,
------------------------------
1996 1995
------------------------------
(In thousands)
<S> <C> <C>
Financial Futures Contracts:
Commitments to purchase $ 460,270 $ 322,150
Commitments to sell 469,228 337,100
Forward Foreign Currency Contracts:
Commitments to purchase 16,223 22,293
Commitments to sell 22,014 19,023
Options written:
Securities and stock indexes 57,243 33,474
Interest rate and other 5,550 5,400
</TABLE>
E - 16
<PAGE>
OPPENHEIMER EQUITIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The notional or contractual amounts above do not represent the
potential market risk to the Company, but are an indication of the volume of
these transactions. Generally, these instruments are hedged with offsetting
positions or are utilized to reduce the Company's market risk.
The notional or contractual amounts of these instruments do not
represent the Company's exposure to credit risk. Credit risk arises from the
failure of the counterparty to perform according to the terms of the contract.
The Company's exposure to credit risk associated with these contracts is limited
to the current cost of replacing the contracts.
In the normal course of business, the Company executes, as agent,
securities and commodities transactions on behalf of its customers. If either
the customer or a counterparty fails to perform, the Company may be required to
discharge the obligations of the nonperforming party. In such circumstances, the
Company may sustain a loss if the market value of the security or futures
contract is different from the contract value of the transaction.
In the normal course of business, the Company may deliver securities as
collateral in support of various secured financing sources such as bank loans,
securities loaned and repurchase agreements. Additionally, the Company delivers
customer securities as collateral to satisfy margin deposits of various
exchanges. In the event the counterparty is unable to meet its contractual
obligation to return customer securities delivered as collateral, the Company
may be obligated to purchase the securities in order to return them to the
owner. In such circumstances, the Company may incur a loss up to the amount by
which the market value of the securities exceeds the value of the loan or other
collateral received or in the possession or control of the Company.
In the normal course of business, the Company, as general partner, is
contingently liable for the obligations of various limited partnerships engaged
primarily in securities investments and real estate activities. In the opinion
of the Company, such liabilities, if any, for the obligations of the
partnerships will not in the aggregate have a material adverse effect on the
Company's consolidated financial position.
The majority of the Company's transactions and, consequently, the
concentration of its credit exposure is with customers, broker-dealers and other
financial institutions in the United States. These activities primarily involve
collateralized arrangements and may result in credit exposure in the event that
the counterparty fails to meet its contractual obligations. The Company's
exposure to credit risk can be directly impacted by volatile securities markets
which may impair the ability of counterparties to satisfy their contractual
obligations. The Company seeks to control its credit risk through a variety of
reporting and control procedures, including establishing credit limits based
upon a review of the counterparties' financial condition and credit ratings. The
Company monitors collateral levels on a daily basis for compliance with
regulatory and internal guidelines and requests changes in collateral levels as
appropriate.
E - 17
<PAGE>
OPPENHEIMER EQUITIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 12. ESTIMATED FAIR VALUE OF DERIVATIVE INSTRUMENTS
- --------------------------------------------------------
Statement of Financial Accounting Standards No. 119, "Disclosure about
Derivative Financial Instruments and Fair Value of Financial Instruments",
requires the disclosure of information regarding derivative instruments, which
include financial futures, options, and forward contracts.
Derivative instruments held for trading purposes are reflected at fair
value at April 30, 1996. The following table presents the fair value and average
fair value (calculated using month end balances) of derivative financial
instruments at and for the year ended April 30, 1996.
Average
Fair Fair
Value Value
----------------------
(In thousands)
Assets
Futures contracts $ 1,430 $ 454
Options 4,015 1,758
Forward contracts 366 1,511
Liabilities
Futures contracts 3,943 1,706
Options 337 250
Forward contracts 363 1,329
Trading and Investment Revenue for the year ended April 30, 1996, originated
from the following:
(In thousands)
Equity Instruments - (including Convertible,
and related Derivatives) $ 118,484
Debt Instruments - (including U.S. Government,
Government Agencies, Mortgage Backed,
Money Market, Corporate and Municipal
Debt, High Yield and related Derivatives) 91,362
--------------
Total Trading and Investment Revenue $ 209,846
==============
E - 18
<PAGE>
OPPENHEIMER EQUITIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 13. NET CAPITAL REQUIREMENTS
- ---------------------------------
As a registered broker-dealer and member firm of the New York Stock
Exchange ("NYSE"), OPCO is subject to the Uniform Net Capital Rule. OPCO has
elected to use the alternative method, permitted by the Uniform Net Capital
Rule, which requires that OPCO maintain minimum net capital, as defined, equal
to 2% of Aggregate Debit Items arising from customer transactions, as defined.
The NYSE may require a member firm to reduce its business if its net capital is
less than 4% of Aggregate Debit Items and may prohibit a member firm from
expanding its business and declaring dividends if its net capital is less than
5% of Aggregate Debit Items.
At April 30, 1996, OPCO's Net Capital under the Uniform Net Capital
Rule was $211,300,000, and the amounts in excess of 2%, 4% and 5% of Aggregate
Debit Items were $192,683,000, $174,066,000 and $164,758,000, respectively.
As a Futures Commission Merchant regulated by the CFTC, OPCO is subject
to the minimum capital requirements adopted and administered by the CFTC and by
certain commodity exchanges in the United States and overseas. In the United
States, OPCO is required to maintain "adjusted net capital" equivalent to
$250,000 or 4% of funds required to be segregated, as defined by CFTC, whichever
is greater.
OPCO is required to maintain net capital in accordance with the Uniform
Net Capital Rule or CFTC Regulation 1.17, whichever is greater. At April 30,
1996, OPCO had a net capital requirement of $18,617,000.
E - 19
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENTS OF FINANCIAL CONDITION AND STATEMENTS OF INCOME FOUND ON PAGES F-3
AND F-4 OF THE PARTNERSHIP'S FORM 10-K FOR THE 1996 FISCAL YEAR, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000814562
<NAME> OPPENHEIMER CAPITAL, L.P.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-01-1995
<PERIOD-END> APR-30-1996
<CASH> 35
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 12,523<F1>
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 110,099<F2>
<CURRENT-LIABILITIES> 12,713
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 97,386<F3>
<TOTAL-LIABILITY-AND-EQUITY> 110,099
<SALES> 0
<TOTAL-REVENUES> 61,316<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,720
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 58,596<F4>
<INCOME-TAX> 0
<INCOME-CONTINUING> 58,596<F4>
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 58,596<F4>
<EPS-PRIMARY> 3.81
<EPS-DILUTED> 3.81
<FN>
<F1> CURRENT ASSETS IS COMPRISED OF CASH ($35), DISTRIBUTION RECEIVABLE
($11,950), AND INTEREST RECEIVABLE ($538)
<F2> TOTAL ASSETS INCLUDE CURRENT ASSETS PLUS INVESTMENT IN OPPENHEIMER CAPITAL
($23,362), A NON-TRADE NOTE RECEIVABLE ($32,193), OTHER ASSETS ($128),
AND GOODWILL ($41,893)
<F3> OTHER SHAREHOLDERS EQUITY IS COMPRISED OF GENERAL PARTNER'S CAPITAL
($987) AND LIMITED PARTNERS' CAPITAL ($96,399)
<F4> TOTAL REVENUES AND THE RELATED INCOME CATEGORIES INCLUDE A $17,734 GAIN
RESULTING FROM THE QUEST SALE - SEE THE FOOTNOTES TO THE FINANCIAL
STATEMENTS FOR FURTHER DETAILS
</FN>
</TABLE>
