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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549
 FORM 10-K/A
Amendment No. 1 (Mark One)þ
    
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934For the
fiscal year ended December 31, 2004ORo
    
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934For
the transition period
from 
to .Commission file number 1-12043
 OPPENHEIMER HOLDINGS INC.  Ontario, Canada
    
    98-0080034(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)P.O. Box 2015, Suite 111020 Eglinton Avenue WestToronto, Ontario, Canada
    
    M4R 1K8(Address of principal executive offices)
    
    (Zip Code)
 Registrants Telephone number, including area code: (416) 322-1515 Securities registered pursuant to Section 12(b) of the Act: Name of each exchangeTitle of each class
    
    on which registeredClass A non-voting shares
    
    New York Stock Exchange
 Securities registered pursuant to Section 12(g) of the Act: Title of each classNot Applicable
 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes  þ     No  o Indicate by check mark 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 the 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.  þ Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of
the Securities Exchange Act of 1934).     Yes  þ     No  o The aggregate market value of the voting stock of the Company held by non-affiliates of the Company
cannot be calculated in a meaningful way because there is only limited trading in the class of
voting stock of the Company. The aggregate market value of the Class A non-voting shares held by
non-affiliates of the Company at June 30, 2004 was $371,701,000 based on the closing price of the
Class A non-voting shares on the New York Stock Exchange as at June 30, 2004 of $27.78. The number of shares of the Companys Class A non-voting shares and Class B voting shares (being
the only classes of common stock of the Company) outstanding on March 10, 2005 was 13,297,671 and
99,680 shares, respectively. DOCUMENTS INCORPORATED BY REFERENCE The Companys definitive proxy statement to be filed by the Company pursuant to Regulation 14A is
incorporated into Items 10, 11, 12, 13 and 14 of Part III of
this Form 10-K.




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EXPLANATORY NOTE This Amendment No. 1 to the Companys Annual Report on Form 10-K is being filed to amend and
reflect the restatement of its Consolidated Financial Statements as of and for the year ended
December 31, 2004. Subsequent to the issuance of its financial statements for the year ended
December 31, 2004, considering the open letter to the American Institute of Certified Public
Accountants from the Chief Accountant of the SEC dated February 7, 2005, the Company undertook a
review of its real estate lease accounting policies and is correcting its method of accounting for
certain leases by restating its financial statements for the year ended December 31, 2004. The
Company is also restating its financial statements for its fiscal quarters ended March 31, 2004,
June 30, 2004 and September 30, 2004 with respect to the same issue. The error resulted in the
understatement of property, plant and equipment, net and liabilities and the overstatement of
profit before taxes and net profit for the year ended December 31, 2004 as well as for the quarters
ended March 31, 2004, June 30, 2004 and September 30, 2004. The correction involves recording expense for leases with escalating rents on a straight-line basis
over the lease term, rather than as paid, and correctly accounting for landlord incentives, to
record leasehold amortization expense and deferred incentive amortization. The Company had previously either not recorded the landlord incentives, or recorded them as a reduction to leasehold improvements, rather than as a rental incentive. In addition, the Companys interest expense on its variable rate exchangeable debentures is
being adjusted amongst the four quarters of 2004. In its Annual Report on Form 10-K for the year
ended December 31, 2004, the Company had booked an immaterial cumulative net adjustment in the
fourth quarter of $355,000 . With the restatement of the 2004 quarters, the Company has chosen
to reflect the applicable interest expense in each quarter rather than record the impact of the
matter of the interest method as a fourth quarter adjustment. There is no impact on net profit for
the year ended December 31, 2004 of the interest method matter. The Company has restated its
Consolidated Balance Sheets as at December 31, 2004, as well as its Consolidated Statements of
Operations, Consolidated Statements of Cash Flows and Consolidated Statements of Shareholders
Equity as well as notes 1, 5, 10, 11, 13, 16 and 19 of Notes to Consolidated Financial Statements
for the year ended December 31, 2004 to reflect the restatement for the matters described above.
See Note 1(s) of Notes to Consolidated Financial Statements for further discussion. The impact of the restatement
on net profit is a reduction in net profit of $1,424,000 for the year
ended December 31, 2004, reductions of $1,185,000, $142,000 and $179,000, respectively, for the
quarters ended March 31, June 30 and September 30,
2004, and an increase of $82,000 for the quarter ended
December 31, 2004. The impact of the error on the quarters
and years prior to 2004 was immaterial. Consequently, the cumulative net effect of the error of
$779,000 as of December 31, 2003 has been recorded in the first quarter of 2004. Based on the Public Company Accounting Oversight Boards definition of material weakness,
restatement of financial statements in prior filings with the SEC is a strong indicator of the
existence of a material weakness in the design or operation of internal control over financial
reporting. The restatement of the Companys financial statements for the periods noted above as a
result of errors in its policies over accounting for certain real estate leases has led management
to conclude that a material weakness existed in the Companys internal control over financial
reporting as at December 31, 2004, and that Managements Report on Internal Control over Financial
Reporting as of December 31, 2004 should be restated. The Company has disclosed this to the Audit
Committee, the Board of Directors and the Companys independent registered public accounting firm.
In accordance with the rules of the Securities and Exchange Commission, the affected items of the
Form 10-K, Items 6, 7, 8 and 9A of Part II, are being amended and restated in their entirety.
Except as described above, no other amendments are being made to the Annual Report on Form 10-K.
This Form 10-K/A does not reflect events occurring after May 16, 2005 or substantively modify or
update the disclosure contained in the Form 10-K in any way other than as required to reflect the
amendments discussed above.




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TABLE OF CONTENTS ItemNumber
    
    
    
    
    
    PagePART I1.
    
    Business
    
    
    22.
    
    Properties
    
    
    153.
    
    Legal Proceedings
    
    
    154.
    
    Submission of Matters to a Vote of Security Holders
    
    
    16PART II5.
    
    Market for the Registrants
Common Equity and Related Stockholder Matters
    

    166.
    
    Selected Financial Data (restated)
    
    
    207.
    
    Managements Discussion and
Analysis of Financial Condition and Results of Operations (restated)
    
    
    217a.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    348.
    
    Financial Statements and Supplementary Data (restated)
    
    
    379.
    
    Changes in and Disagreements with
Accountants on Accounting and Financial Disclosure
    
    
    699a.
    
    Controls and Procedures (restated)
    
    
    699b.
    
    Other Information
    
    
    69PART III10.
    
    Directors and Executive Officers of the Registrant
    
    
    7011.
    
    Executive Compensation
    
    
    7012.
    
    Security Ownership of Certain
Beneficial Owners and Management
    
    
    7013.
    
    Certain Relationships and Related Transactions
    
    
    7014.
    
    Principal Accounting Fees and Services
    
    
    71PART IV15.
    
    Exhibits, Financial Statement
Schedules and Reports on Form 8-K
    
    
    72Signatures
    
    
    73Certifications
    
    
    77EX-31.1EX-31.2EX-32.1EX-32.2




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PART I 
 Item 1.  BUSINESS Oppenheimer Holdings Inc., formerly called Fahnestock Viner Holdings Inc., prior to that
called E.A. Viner Holdings Limited and immediately prior to that called Goldale Investments Limited
(the Company), maintains its registered office and principal place of business at 20 Eglinton
Avenue West, Suite 1110, Toronto, Ontario Canada M4R 1K8 and its telephone number is (416)
322-1515. The Company was originally incorporated under the laws of British Columbia. Pursuant to its
Certificate and Articles of Continuation effective October 12, 1977, the Companys legal existence
was continued under the Business Corporation Act (Ontario) as if it had been incorporated as an
Ontario corporation. The Company is a holding company and carries on no active business. It owns, directly or through
intermediate subsidiaries, Oppenheimer & Co. Inc. (formerly called Fahnestock & Co. Inc. and prior
to that called Edward A. Viner & Co., Inc.), a New York corporation (Oppenheimer); Freedom
Investments, Inc., a Delaware corporation (Freedom); Oppenheimer Asset Management Inc. (formerly
called Hudson Capital Advisors Inc.), a New York corporation (OAM); Evanston Financial, Inc., a
New York corporation (Evanston); since September 17, 2001, Josephthal & Co. Inc., a New York
corporation (Josephthal); and since November 9, 2001, Prime Charter, Ltd., a Delaware corporation
(Prime). Oppenheimer, OAM and Freedom are sometimes collectively referred to as the Operating
Subsidiaries. Through the Operating Subsidiaries, the Company is engaged in the securities
brokerage and trading business and offers investment advisory and other related financial services.
Oppenheimer and OAM are the principal Operating Subsidiaries. Oppenheimer is engaged in the
securities brokerage business in the United States, operates in Toronto, Canada as an International
Dealer and, through the agency of local licensed broker-dealers, operates offices in Buenos Aires,
Argentina and Caracas, Venezuela. OAM is engaged in the investment advisory business in the United
States. In addition, Oppenheimer conducts investment advisory business under the name Fahnestock
Asset Management, a division of Oppenheimer. The business formerly conducted by Josephthal and
Prime is now conducted by Oppenheimer. The private client business acquired from CIBC World Markets
Inc. in January 2003 discussed below is being conducted by Oppenheimer. The asset management
business acquired from CIBC World Markets in June 2003 discussed below is being conducted by OAM.
The Company operates a discount brokerage business through Freedom. In March 2002, through Freedom, the Company purchased the business of BUYandHOLD Securities
Corporation and affiliates for cash consideration of $2,297,000. BUYandHOLD is an on-line brokerage
business headquartered in Edison, NJ. The combination of the Freedom and BUYandHOLD technology
platforms provides clients with a comprehensive and diversified suite of online financial services.
BUYandHOLD operates as a division of Freedom. The acquisition was accounted for by the purchase
method. In May 2002, Oppenheimer Trust Company received a charter as a limited purpose bank domiciled in
New Jersey. Oppenheimer Trust Company offers trust services to the clients of Oppenheimer and OAM. 2




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On January 3, 2003, the Company acquired the U.S. Private Client Division of CIBC World Markets and
on June 4, 2003 acquired the U.S. Asset Management Division of CIBC World Markets (the Oppenheimer
divisions) for a total consideration of approximately $242 million, of which approximately $16
million was paid in cash at closing from cash on hand and the balance was paid from the proceeds of
the issuance of debt instruments. The private client business is being operated by Oppenheimer and
added approximately 620 account executives in 18 branches located in the major financial centers of
the United States to its business at the closing date. Client assets of the Private Client Division
were approximately $30 billion at the closing date. Assets under management in the Asset Management
Division were approximately $8.5 billion at the acquisition date. The asset management business is
being operated by OAM. The acquisition was accounted for by the purchase method. This transaction more than doubled the Companys retail exposure and asset base. At December 31, 2004,
Oppenheimer employed approximately 1,667 full-time registered representatives
and approximately 1,187 other employees in trading, research, investment banking, investment
advisory services, public finance and support positions in the United States for Oppenheimer, OAM
and Freedom, for a total of approximately 2,854 full-time employees. Oppenheimer and Freedom are broker-dealers registered with the Securities and Exchange Commission
(the SEC) and in all other jurisdictions where their respective businesses require registration.
Oppenheimer, in addition to its United States operations, has two additional offices: it conducts
business in Caracas and Buenos Aires through local broker-dealers who are licensed under the laws
of Venezuela and Argentina, respectively. The Operating Subsidiaries are collectively engaged in a broad range of activities in the
securities brokerage business, including retail securities brokerage, institutional sales, bond
trading and investment banking  offering both corporate and public finance services, underwriting,
research, market making and investment advisory and asset management services. No material part of
the Companys revenues, taken as a whole, are derived from a single customer or group of customers. Oppenheimer is a member of the New York Stock Exchange, Inc. (NYSE), the National
Association of Securities Dealers, Inc. (NASD), the American Stock Exchange, Inc. (AMEX), the
Chicago Stock Exchange Incorporated (CSE), the Chicago Board Options Exchange, Inc. (CBOE), the
New York Futures Exchange, Inc. (NYFE), the National Futures Association (NFA) and the
Securities Industry Association (SIA). In addition, Oppenheimer has satisfied the requirements of
the Municipal Securities Rulemaking Board (MSRB) for effecting customer transactions in municipal
securities. Freedom is a member of the NASD. Oppenheimer, which acts as a clearing broker for Freedom and carries an omnibus account for the
BUYandHOLD Division of Freedom, which is itself a self-clearing firm, is also a member of the
Securities Investor Protection Corporation (SIPC), which provides, in the event of the
liquidation of a broker-dealer, protection for customers accounts (including the customer accounts
of other securities firms when it acts on their behalf as a clearing broker) held by the firm of up
to $500,000 for each customer, subject to a limitation of $100,000 for claims for cash balances.
SIPC is funded through assessments on 3




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registered broker-dealers, which may not exceed 1% of a
broker-dealers gross revenues (as defined); SIPC assessments were a flat fee of $150 in 2004, 2003
and 2002. In addition, Oppenheimer has purchased an additional excess SIPC policy protection from
Lloyds of London of an additional $74,500,000 (and $900,000 for claims for cash balances) per
customer. The excess SIPC policy has an aggregate limit of liability of $400,000,000. The
Company has entered into an indemnity agreement with Lloyds of London pursuant to which the Company
has agreed to indemnify Lloyds of London for losses incurred by Lloyds under the policy. The Companys internet address is www.opco.com. The Company makes available free of charge through
its website its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form
8-K, and other SEC filings and all amendments to those reports within 24 hours of such material
being electronically filed with or furnished to the SEC. SOURCES OF REVENUE: The Company derives most of its revenues from the operations of its principal subsidiaries,
Oppenheimer and OAM. Although maintained as separate entities, the operations of the Companys
brokerage subsidiaries are closely related because Oppenheimer acts as clearing broker and
omnibus in transactions initiated by Freedom. Except as expressly otherwise stated, the discussion
below pertains to the operations of Oppenheimer. COMMISSIONS A significant portion of Oppenheimers revenues is derived from commissions from retail and, to a
lesser extent, institutional customers on brokerage transactions in exchange-listed and
over-the-counter corporate equity and debt securities. Brokerage commissions are charged on both
exchange and over-the-counter transactions in accordance with a schedule, which Oppenheimer has
formulated. Often, discounts are granted to customers, generally on large trades or to active
customers. Oppenheimer also provides a range of services in other financial products to retail and
institutional customers, including the purchase and sale of options on the CBOE, the AMEX and other
stock exchanges as well as futures on indexes listed on various exchanges. Commission business relies heavily on the services of financial consultants with good sales
production records and good reputations. Competition among securities firms for such personnel is
intense. Retail clients accounts are serviced by retail financial advisors (excluding the
institutional financial consultants referred to below) in Oppenheimers offices. Oppenheimers
institutional clients, which include mutual funds, banks, insurance companies, hedge funds, and
pension and profit-sharing funds, are serviced by institutional financial advisors. (For a
discussion of regulatory matters, see Regulation.) The institutional department is supported by
the equity research department which provides coverage of a number of commercial and industrial as
well as emerging growth companies and special situation investments. Securities Clearance Activities Oppenheimer provides a full range of securities clearance services to two non-affiliated securities
firms on a fully-disclosed basis. In addition to commissions and service charges, 4




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Oppenheimer derives
substantial interest revenue from its securities clearing activities.
See Interest 
Securities Borrowed And Loaned. Oppenheimer provides margin financing for the clients of the
securities firms for which it clears, with the securities firms guaranteeing the accounts of their
clients. Oppenheimer also extends margin credit directly to its correspondent firms to the extent
that such firms hold securities positions for their own account. Because Oppenheimer must rely on
the guarantees and general credit of its correspondent firms, Oppenheimer may be exposed to
significant risks of loss if any of its correspondents or its correspondents customers are unable
to meet their respective financial commitments. See Risk Management. Commodities Oppenheimer is a futures commission merchant and clears commodities transactions on a number of
commodities exchanges for its clients that trade commodities through a correspondent firm on an
omnibus basis. Such client commodity accounts contain significant leverage and thus have a greater
than average likelihood of becoming unsecured or for clients incurring substantial losses, that
ultimately could result in a loss to the Company. PRINCIPAL TRANSACTIONS In the regular course of its business, Oppenheimer takes securities positions as a market maker to
facilitate customer transactions and for investment purposes. In making markets and when trading
for its own account, Oppenheimer exposes its own capital to the risk of fluctuations in market
value. Oppenheimer monitors its risk by maintaining its securities positions at or below certain
pre-established levels. These levels reduce certain opportunities to realize profits in the event
that the values of such securities increase. However, they also reduce the risk of loss in the
event of decreases in such values and result in controlled interest costs incurred on funds
provided to maintain such positions. Oppenheimer also attempts to minimize risk with respect to its
principal transactions by re-selling (or buying) to offset its positions quickly after establishing
positions, thereby reducing the need to hold securities inventory positions for even short periods
of time. Trading profits or losses depend on (i) the skills of those employees engaged in market-making
activities, (ii) the capital allocated to holding positions in securities and (iii) the general
trend of prices in the securities markets. Trading as principal requires the commitment of capital
and creates an opportunity for profits or an exposure to risk of loss due to market fluctuations.
Oppenheimer takes both long and short positions in those securities in which it makes a market. Equities.Oppenheimer acts as both principal and agent in the execution of its customers orders
in the over-the-counter market. Oppenheimer buys, sells and maintains an inventory of a security in
order to make a market in that security. (To make a market in a security is to maintain firm
bid and offer prices by standing ready to buy or sell round lots at publicly quoted prices. In
order to make a market, it is necessary to commit capital to buy, sell and maintain an inventory of
a security.) In executing customer orders for over-the-counter securities in which it does not make
a market, Oppenheimer generally charges a commission and acts as agent, or will act as principal by
marking the security up or down in 5




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a riskless transaction, working with another firm which is a
market-maker acting as principal. However, when the buy or sell order is in a security in which
Oppenheimer makes a market, Oppenheimer normally acts as principal and purchases from or sells to
its customers at a price which is approximately equal to the current inter-dealer market price plus
or minus a mark-up or mark-down. The stocks in which Oppenheimer makes a market also may include
those of issuers which are followed by Oppenheimers research department. Oppenheimer makes markets
in over 800 over-the-counter equity securities, and trades securities for its own account, as well
as to facilitate customer transactions. As a result of the move to decimal trading in the NASDAQ,
which began for all stocks in April 2001, narrowing bid-ask spreads and smaller price increments
are being experienced and are resulting in a decrease in trading revenue earned from the Companys
market making operations. Oppenheimer also trades in OTC Bulletin Board and pink sheet securities.
These securities are typically more illiquid, have smaller capitalizations and may involve more
risk than NASDAQ-traded securities. High Yield.Oppenheimer also trades and positions non-investment grade public and private debt
securities, as well as distressed securities. Risk of loss upon default by the borrower is
significantly greater with respect to unrated or less than investment grade corporate debt
securities than with other corporate debt securities. These securities are generally unsecured and
are often subordinated to other creditors of the issuer. These issuers usually have high levels of
indebtedness and are more sensitive to adverse economic conditions, such as recession or increasing
interest rates, than are investment grade issuers. There is a limited market for some of these
securities and market quotes are available only from a small number of dealers. Other Trading and Investment Activities Oppenheimer holds positions in its trading accounts in over-the-counter securities and in
exchange-listed securities in which it does not make a market and may engage from time to time in
other types of principal transactions in securities. Oppenheimer has several trading departments
including: a convertible bond department, a risk arbitrage department, a corporate bond dealer
department, a municipal bond department, a government/mortgage backed securities department, and a
department that underwrites and trades U.S. government agency issues, taxable corporate bonds, and
UITs. These departments continually purchase and sell securities and make markets in order to
make a profit on the inter-dealer spread. Although Oppenheimer from time to time holds an inventory
of securities, more typically, it seeks to match customer buy and sell orders. In addition,
Oppenheimer or OAM hold proprietary positions in equity or fixed income securities in which it may
not act as a dealer. The size of its securities positions on any one day may not be representative of Oppenheimers
exposure on any other day because securities positions vary substantially based upon economic and
market conditions, allocations of capital, underwriting commitments and trading volume. Also, the
aggregate value of inventories of stocks which Oppenheimer may carry is limited by the Net Capital
Rule. See Net Capital Requirements and Item 7, Managements Discussion and Analysis of Financial
Condition and Results of Operations  Liquidity and Capital Resources. In the case of OAM, it holds investments as general partner in a range of investment 6




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partnerships (hedge funds), which are offered to Oppenheimer hedge fund qualified clients as well as qualified
clients of other broker-dealers. Investment Income Principal transactions with customers as well as market-making and other trading and investment
activities, dividends and interest earned on securities held in inventory, cash and cash
equivalents and cash and securities held in segregated accounts are treated as investment income. The Companys investment activities primarily include investing in equity and equity-related
securities and limited partnerships as well as general partnership interests in connection with
private investment transactions, either for the accounts of Company-sponsored private equity
partnerships, real estate partnerships or special purpose partnerships or for its own account.
These activities include mutual fund investments, insurance vehicles with investment options,
including those made in connection with its deferred compensation plans, venture capital
investments, and investments in portfolio and operating companies. The fair value of these
investments is subject to a higher degree of volatility and may include significant risks of loss
while attempting to obtain higher returns than those available from publiclytraded securities. INTEREST Oppenheimer derives a substantial portion of its interest revenue, and incurs a substantial portion
of its interest expense, in connection with its securities borrowed/securities loaned activity.
Oppenheimer also earns interest on its securities portfolio, on its operating and segregated
balances, on its margin lending activity and on certain of its investments. Oppenheimer also incurs
interest expense on its long-term debt, bank loans and free credit balances in the accounts of
customers. Securities Borrowed/Securities Loaned.In connection with both its trading and brokerage
activities, Oppenheimer borrows securities to cover short sales and to complete transactions in
which customers have failed to deliver securities by the required settlement date and lends
securities to other brokers and dealers for similar purposes. Oppenheimer has an active securities
borrowed and lending matched book business (Matched Book), in which Oppenheimer borrows
securities from one party and lends them to another party. When Oppenheimer borrows securities,
Oppenheimer provides cash to the lender as collateral, which is reflected in the Companys
financial statements as receivable from brokers and dealers. OPCO earns interest revenues on this
cash collateral. Similarly, when Oppenheimer lends securities to another party, that party provides
cash to Oppenheimer as collateral, which is reflected in the Companys financial statements as
payable to brokers and dealers. Oppenheimer pays interest expense on the cash collateral received
from the party borrowing the securities. Margin Lending.Customers transactions are executed on either a cash or margin basis. In a
margin transaction, Oppenheimer extends credit to the customer, collateralized by securities and
cash in the customers account, for a portion of the purchase price, and receives income from
interest charged on such extensions of credit. Margin lending by Oppenheimer is subject to the
margin rules of the Board of Governors of 7




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the Federal Reserve System, NYSE margin requirements and Oppenheimers internal policies. The primary source of funds to finance customers margin account borrowings are collateralized and
uncollateralized bank borrowings, funds generated by lending securities on a cash collateral basis
in excess of the amount of securities borrowed and free credit balances in customers accounts.
Free credit balances in customers accounts, to the extent not required to be segregated pursuant to SEC
rules, may be used in the conduct of Oppenheimers business, including the extension of margin
credit. Subject to applicable regulations, interest is paid by Oppenheimer on most, but not all, of
such free credit balances awaiting reinvestment by customers. The customer is charged for such
margin financing at interest rates derived from the companys base rate as defined, as well as
the brokers loan rate, and LIBOR, to which is added an additional amount of up to 2%. To the
extent that the use of free credit balances reduces borrowings, interest expense is reduced. In permitting a customer to purchase securities on margin, Oppenheimer is subject to the risk that
a market decline could reduce the value of its collateral below the amount of the customers
indebtedness and that the customer might otherwise be unable to repay the indebtedness. In addition to monitoring the creditworthiness of its customers, Oppenheimer also considers the
trading liquidity and volatility of the securities it accepts as collateral for its margin loans.
Trading liquidity and volatility may be dependent, in part, upon the market in which the security
is traded, the number of outstanding shares of the issuer, events affecting the issuer and/or
securities markets in general, and whether or not there are any legal restrictions on the sale of
the securities. Oppenheimer considers all of these factors at the time it agrees to extend credit
to customers and continues to review its extensions of credit on an ongoing basis. The majority of Oppenheimers margin loans are made to United States citizens or to corporations
which are domiciled in the United States. Oppenheimer may extend credit to investors or
corporations who are citizens of foreign countries or who may reside outside the United States.
Oppenheimer believes that should such foreign investors default upon their loans and should the
collateral for those loans be insufficient to satisfy the investors obligations, it may be more
difficult to collect such investors outstanding indebtedness than would be the case if investors
were citizens or residents of the United States. Although Oppenheimer attempts to minimize the risk associated with the extension of credit in
margin accounts, there is no assurance that the assumptions on which Oppenheimer bases its
decisions will be correct or that it is in a position to predict factors or events which will have
an adverse impact on any individual customer or issuer, or the securities markets in general. INVESTMENT BANKING BUSINESS Oppenheimer offers corporations (primarily middle-market growth companies) a full range of
financial advisory services as well as debt, equity, and convertible financing 8




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services. Products include acquisition financing, private placements and public offerings of debt and equity
securities, debt refinancings, restructuring, merger and acquisition and exclusive sales advice,
structured financings and securitizations. Investment banking activity involves both economic and
regulatory risks. An underwriter may incur losses if it is unable to sell the securities it is
committed to purchase or if it is forced to liquidate its commitments at less than the agreed upon
purchase price. In addition, under the Securities Act and other laws and court decisions with
respect to underwriters liability and limitations on indemnification of underwriters by issuers,
an underwriter is subject to substantial potential liability for material misstatements or
omissions in prospectuses and other communications with respect to underwritten offerings. Further,
underwriting commitments constitute a charge against net capital and Oppenheimers underwriting
commitments may be limited by the requirement that it must, at all times, be in compliance with the
Uniform Net Capital Rule 15c3-1 of the SEC. Oppenheimer intends to continue to pursue opportunities to provide services for its corporate
customers, which may require it to finance and/or underwrite the issuance of securities. Under
circumstances where Oppenheimer is required to act as an underwriter or to take a position in the
securities of its customers, Oppenheimer may assume greater risk than would normally be assumed in
its normal trading activity. Oppenheimer also participates as an underwriter in the syndication of
issues managed by other securities firms. INVESTMENT ADVISORY BUSINESS Oppenheimer (through its Fahnestock Asset Management and OMEGA Group divisions) and OAM provide
investment advisory services for a fee to its clients. These equity and debt management service
fees are based on the value of the portfolio under management. In addition to the management fee,
transactions executed for such accounts may be effected at standard rates of commission or at
discounts from Oppenheimer s customary commission schedule. At December 31, 2004, Oppenheimer and OAM had approximately $10.3 billion under management. The
agreements under which the portfolios are managed on behalf of institutions and other investors
generally provide for termination by either party at any time. OAM is a broad-based advisory platform that includes: Investment Advisory Services (IAS), Strategic
Asset Review (STAR), and Portfolio Advisory Services (PAS), collectively the consulting services;
Oppenheimer Investment Advisors (OIA), core internally managed client accounts; and Alternative
Investments Group, non-traditional investment strategies within SEC-registered funds. Fahnestock Asset Management and OMEGA Group (financial advisor discretionary fee-based advisory
accounts) provide customized discretionary investment management services and products to high net
worth individuals and families, endowments and foundations and institutions. They seek to provide
portfolio management, client service and other financial services in a disciplined manner that is
tailored to meet their clients particular needs and objectives. 9




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Oppenheimer Institutional Management is a newly formed division to offer investment management
services to a class of clients that includes corporate pension plans, Taft-Hartley Plans,
endowments, and the pension plans of municipal and governmental units. The division is still in
formation and has not yet begun offering services. (See Importance of Investment Performance). Importance of Investment Performance.
The Company believes that investment performance is one of the most important factors for the
growth of assets under management for a company in the asset management business. Poor investment
performance could impair growth of the Companys asset management business because existing clients
might withdraw funds and the Companys ability to attract funds from existing and new clients might
diminish. Investment advisory and administrative contracts are generally terminable at will or upon relatively
short notice. Institutional and individual clients can terminate their relationships with an asset
manager, reduce the aggregate amount of assets under management, or shift their funds to other
types of accounts with different rate structures for any number of reasons, including investment
performance, changes in prevailing interest rates, loss of key investment management personnel and
financial market performance. In a declining stock market, the withdrawal of assets from accounts
could accelerate. Other Business The Company operates a mortgage banking business through Evanston Financial Corporation. Evanston is an approved MAP/FHA lender and also a Ginnie Mae approved Multifamily Issuer.
Evanston directly provides all aspects of mortgage banking: origination, processing, underwriting, closing, securitizing and servicing of FHA mortgage loans. RISK MANAGEMENT For a discussion of risk management, see Item 7A, Quantitative and Qualitative Disclosures about
Market Risk. ADMINISTRATION AND OPERATIONS Administration and operations personnel are responsible for the processing of securities
transactions; the receipt, identification and delivery of funds and securities; the maintenance of
internal financial controls; accounting functions; custody of customers securities; the handling
of margin accounts for Oppenheimer and its correspondents; and general office services. Oppenheimer
employs approximately 395 persons in its administration and operations departments at its head
office, approximately 65 persons in its administration and operations departments in Detroit and
over 200 administrative and operations persons located in its branch offices. There is considerable fluctuation during any year and from year to year in the volume of
transactions Oppenheimer must process. Oppenheimer records transactions and posts its 10




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books on a
daily basis. Operations personnel monitor day-to-day operations to assure compliance with
applicable laws, rules and regulations. Failure to keep current and accurate books and records can
render Oppenheimer liable for disciplinary action by governmental and self-regulatory
organizations. Oppenheimer executes its own and certain of its correspondents securities transactions on all
United States exchanges of which it is a member and in the over-the-counter market. Oppenheimer
clears all of its securities transactions (i.e., it delivers securities that it has sold, receives
securities that it has purchased and transfers related funds) through its own facilities and
through memberships in various clearing corporations and custodian banks. Oppenheimer believes that its internal controls and safeguards are adequate, although fraud
and misconduct by customers and employees and the possibility of theft of securities are risks
inherent in the securities industry. As required by the NYSE and certain other authorities,
Oppenheimer carries an insurance policy (a brokers blanket bond) covering loss or theft of
securities, forgery of checks and drafts, embezzlement, fraud and misplacement of securities. This
bond provides coverage of up to an aggregate of $15,000,000 with a self-insurance retention of
$1,000,000. Our businesses entail the inherent risk of liability related to litigation from clients
or third party vendors and actions taken by regulatory agencies. To help protect against these
potential liabilities, we purchase insurance in amounts, and against risks, that we consider
appropriate. There can be no assurance, however, that a claim or claims will be covered by
insurance or, if covered, will not exceed the limits of available insurance coverage, that any
insurer will remain solvent and will meet its obligations to provide us with coverage or that
insurance coverage will continue to be available with sufficient limits at a reasonable cost. Over
the last several years, insurance expenses have increased and we expect further increases to be
significant going forward. In addition, certain insurance coverage may not be available or may only
be available at prohibitive costs. Renewals of insurance policies may expose Oppenheimer to
additional costs through higher premiums or the assumption of higher deductibles or co-insurance
liability. COMPETITION Oppenheimer encounters intense competition in all aspects of the securities business and competes
directly with other securities firms, a significant number of which have substantially greater
resources and offer a wider range of financial services. In addition, there has recently been
increasing competition from other sources, such as commercial banks, insurance companies and
certain major corporations that have entered the securities industry through acquisition, and from
other entities. Additionally, foreign-based securities firms and commercial banks regularly offer
their services in performing a variety of investment banking functions including: merger and
acquisition advice, leveraged buy-out financing, merchant banking, and bridge financing, all in
direct competition with U.S. broker-dealers. These developments have led to the creation of a
greater number of integrated financial services firms that may be able to compete more effectively
than Oppenheimer for investment funds by offering a greater range of financial services. Oppenheimer believes that the principal factors affecting competition in the securities industry
are the quality and ability of professional personnel and relative prices of services and products
offered. Oppenheimer and its competitors employ advertising and direct 11




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solicitation of potential
customers in order to increase business and furnish investment research publications in an effort
to retain existing, and attract potential, clients. Many of
Oppenheimers competitors engage in
these programs more extensively than does Oppenheimer. There is substantial commission discounting by broker-dealers competing for institutional and
retail brokerage business. Recently, full service firms have begun offering on-line trading
services to their clients at substantial discounts to their regular pricing. Oppenheimer intends to
compete in this area, but it is likely to reduce profitability per transaction, unless offset by
higher transaction volume. The continuation of such discounting and an increase in the incidence
thereof could adversely affect Oppenheimer. However, an increase in the use of discount brokerages could be beneficial to Freedom. DISASTER RECOVERY The events of September 11, 2001 heightened the need for comprehensive disaster recovery plans.
Disaster recovery plans exist for the Companys critical systems, and redundancies are built into
the systems as deemed appropriate. The Company believes that its disaster recovery program,
including off-site back-up technology and operational facilities, is adequate to handle a
reasonable business disruption. However, there can be no assurances that a disaster directly
affecting the Companys headquarters or its operations center would not have a material adverse
impact on the Company. Insurance and other safeguards might only partially reimburse the Company
for its losses. The Company also uses periodic self-assessments, internal audit reviews and
independent consultants as a further check on operational risk and exposure. The Company maintains disaster recovery procedures and a site remote from its main operations at
which it houses back-up facilities to its main operations in New York City. Subsequent to 9/11/01,
the Company has substantially upgraded its investment in such procedures and facilities, but there
remains substantial risk and uncertainty with respect to the efficacy of such planning due to the
complications of moving its personnel and business to any such facility. REGULATION The securities industry in the United States is subject to extensive regulation under both federal
and state laws. The SEC is the federal agency charged with administration of the federal securities
laws. Much of the regulation of broker-dealers has been delegated to self-regulatory organizations
(SROs) such as the NASD and national securities exchanges such as the NYSE and the National
Futures Association. The NYSE has been designated Oppenheimers primary regulator with respect to
securities activities and the National Futures Association has been designated Oppenheimers
primary regulator with respect to commodities activities. The CBOE has been designated
Oppenheimers primary regulator with respect to options trading activities. The NASD has been
designated Freedoms primary regulator with respect to securities activities. These self-regulatory
organizations adopt rules (subject to approval by the SEC or the Commodities Futures Trading
Commission (CFTC), as the case may be) governing the industry and conduct periodic examinations
of Oppenheimers and Freedoms operations. Securities firms are also subject to regulation by state
securities commissions in the states in which they do 12




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business. Oppenheimer and Freedom are each registered as a broker-dealer in the 50 states and Puerto Rico. Oppenheimer is also registered as
an International Dealer in Canada. The regulations to which broker-dealers are subject cover all aspects of the securities business,
including sales methods, trade practices among broker-dealers, the use and safekeeping of
customers funds and securities, capital structure of securities firms, record keeping and the
conduct of directors, officers and employees. The SEC has adopted rules requiring underwriters to
ensure that municipal securities issuers provide current financial information and imposing
limitations on political contributions to municipal issuers by brokers, dealers and other municipal
finance professionals. Additional legislation, changes in rules promulgated by the SEC, the CFTC
and by self-regulatory organizations, or changes in the interpretation or enforcement of existing
laws and rules may directly affect the method of operation and profitability of broker-dealers. The
SEC, self-regulatory organizations (including the NYSE) and state securities commissions may
conduct administrative proceedings which can result in censure, fine, issuance of cease and desist
orders or suspension or expulsion of a broker-dealer, its officers, or employees. These
administrative proceedings, whether or not resulting in adverse findings, can require substantial
expenditures and can have an adverse impact on the reputation of a broker-dealer. The principal
purpose of regulating and disciplining broker-dealers is to protect customers and the securities
markets rather than to protect creditors and shareholders of broker-dealers. During the last year, abuses by certain participants in the mutual fund industry, including
activities relating to market timing, late trading and selective disclosure of portfolio holdings,
prompted legislative and regulatory scrutiny of a wide range of fund-related activities. This
scrutiny resulted in the adoption of new rules and a number of legislative and regulatory proposals
relating to fund practices. In this regard, the SEC proposed rules designed to strengthen existing
prohibitions relating to late trading and adopted rules to enhance required disclosure of market
timing and pricing policies. The SEC also adopted and proposed additional rules requiring corporate
governance changes including the adoption of compliance policies and the requirement that funds and
investment advisors designate a chief compliance officer. Oppenheimer is also subject to regulation by the SEC and under certain state laws in
connection with its business as an investment advisor and in connection with its research
department activities. Margin lending by Oppenheimer is subject to the margin rules of the Board of Governors of the
Federal Reserve System and the NYSE. Under such rules, Oppenheimer is limited in the amount it may
lend in connection with certain purchases of securities and is also required to impose certain
maintenance requirements on the amount of securities and cash held in margin accounts. In addition,
Oppenheimer may (and currently does) impose more restrictive margin requirements than required by
such rules. See Customer Lending. Financial scandals have led to insecurity and uncertainty in the financial markets. In
response to these scandals, the Sarbanes-Oxley Act of 2002 effected significant changes to
corporate governance, accounting requirements and corporate reporting. This law generally applies
to all companies, including us, with equity or debt securities 13




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registered under the Securities
Exchange Act of 1934, as amended (the Exchange Act). We have taken numerous actions, and incurred
substantial expenses, over the last year and a half to comply with the Sarbanes-Oxley Act, related
regulations promulgated by the SEC and other corporate governance requirements of the NYSE. NET CAPITAL REQUIREMENTS As registered broker-dealers and member firms of the NYSE (Oppenheimer) or the NASD (Freedom), the
Operating Subsidiaries are subject to certain net capital requirements pursuant to Rule 15c3-1 (the
Net Capital Rule) promulgated under the Exchange Act. The Net Capital Rule, which specifies
minimum net capital requirements for registered brokers and dealers, is designed to measure the
general financial integrity and liquidity of a broker-dealer and requires that at least a minimum
part of its assets be kept in relatively liquid form. Oppenheimer elects to compute net capital under an alternative method of calculation permitted by
the Net Capital Rule. (Freedom computes net capital under the basic formula as provided by the Net
Capital Rule.) Under this alternative method, Oppenheimer is required to maintain a minimum net
capital, as defined in the Net Capital Rule, at least equal to 2% of the amount of its aggregate
debit items computed in accordance with the Formula for Determination of Reserve Requirements for
Brokers and Dealers (Exhibit A to Rule 15c3-3 under the Exchange Act) or $250,000, whichever is
greater. Aggregate debit items are assets that have as their source transactions with customers,
primarily margin loans. Failure to maintain the required net capital may subject a firm to
suspension or expulsion by the NYSE, the SEC and other regulatory bodies and ultimately may require
its liquidation. The Net Capital Rule also prohibits payments of dividends, redemption of stock and
the prepayment of subordinated indebtedness if net capital thereafter would be less than 5% of
aggregate debit items (or 7% of the funds required to be segregated pursuant to the Commodity
Exchange Act and the regulations thereunder, if greater) and payments in respect of principal of
subordinated indebtedness if net capital thereafter would be less than 5% of aggregate debit items
(or 6% of the funds required to be segregated pursuant to the Commodity Exchange Act and the
regulations thereunder, if greater). The Net Capital Rule also provides that the total outstanding
principal amounts of a broker-dealers indebtedness under certain subordination agreements (the
proceeds of which are included in its net capital) may not exceed 70% of the sum of the outstanding
principal amounts of all subordinated indebtedness included in net capital, par or stated value of
capital stock, paid in capital in excess of par, retained earnings and other capital accounts for a
period in excess of 90 days. Net capital is essentially defined in the Net Capital Rule as net worth (assets minus liabilities),
plus qualifying subordinated borrowings minus certain mandatory deductions that result from
excluding assets that are not readily convertible into cash and deductions for certain operating
charges. The Net Capital Rule values certain other assets, such as a firms positions in
securities, conservatively. Among these deductions are adjustments (called haircuts) in the
market value of securities to reflect the possibility of a market decline prior to disposition. Compliance with the Net Capital Rule could limit those operations of the brokerage subsidiaries of
the Company that require the intensive use of capital, such as underwriting 14




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and trading activities and the financing of customer account balances, and also could restrict the Companys ability to
withdraw capital from its brokerage subsidiaries, which in turn could limit the Companys ability
to pay dividends, repay debt and redeem or purchase shares of its outstanding capital stock. Under
the Net Capital Rule, broker-dealers are required to maintain certain records and provide the SEC
with quarterly reports with respect to, among other things, significant movements of capital,
including transfers to a holding company parent or other affiliate. The SEC and/or the SROs may in
certain circumstances restrict the Companys brokerage subsidiaries ability to withdraw excess net
capital and transfer it to the Company or to other of the Operating Subsidiaries or to expand the
Companys business. 
 Item 2.  PROPERTIES The Company maintains offices at 20 Eglinton Avenue West, Toronto, Ontario, Canada for general
administrative activities. Most day-to-day management functions are conducted at the executive
offices of Oppenheimer at 125 Broad Street, New York, New York. This office also serves as the base
for most of Oppenheimer s research, operations and trading and investment banking activities,
though other offices also have employees who work in these areas. Investment advisory services are
offered from the Companys office at 200 Park Avenue, New York, New York, although other offices
also have employees who work in this area. Generally, the offices outside of 125 Broad Street, New
York serve as bases for sales representatives who process trades and provide other brokerage
services in co-operation with Oppenheimer s New York office using the data processing facilities
located there. Freedom conducts its business from its offices located in Edison, N.J., where the
Company also maintains its disaster recovery site. Management believes that its present facilities
are adequate for the purposes for which they are used and have adequate capacity to provide for
presently contemplated future uses. The Company and its subsidiaries own no real property, but at December 31, 2004, occupied office
space totaling approximately 930,000 square feet in 84 locations under standard commercial terms
expiring between 2005 and 2015. If any leases are not renewed, the Company believes it could obtain
comparable space elsewhere on commercially reasonable rental terms. 
 Item 3.  LEGAL PROCEEDINGS Many aspects of the Companys business involve substantial risks of liability. In the normal course
of business, the Company has been named as defendant or co-defendant in lawsuits creating
substantial exposure. The Company is also involved from time to time in governmental and
self-regulatory agency investigations and proceedings. There has been an increased incidence of
litigation and regulatory investigations in the financial services industry in recent years,
including customer claims seeking, in total, substantial damages. The Company is the subject of customer complaints, has been named as defendant or codefendant
in various lawsuits seeking, in total, substantial damages and is involved in certain governmental
and self-regulatory agency investigations and proceedings. These 15




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proceedings arise primarily from
securities brokerage, asset management and investment banking activities. While the ultimate
resolution of pending litigation and other matters cannot be currently determined, in the opinion
of management, after consultation with legal counsel, the Company has no reason to believe that the
resolution of these matters will have a material adverse effect on its financial condition.
However, the Companys results of operations could be materially affected during any period if
liabilities in that period differ from prior estimates. The materiality of legal matters to the
Companys future operating results depends on the level of future results of operations as well as
the timing and ultimate outcome of such legal matters. 
 Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Class B voting shares (the Class B Shares), the Companys only class of voting
securities, are not registered under the Exchange Act and are not required to be registered. The
Class B Shares are owned by fewer than 500 shareholders of record. Consequently, the Company is not
required under Section 14 of the Exchange Act to furnish proxy soliciting material or an
information statement to holders of the Class B Shares. However, the Company is required under
applicable Canadian securities laws to provide proxy soliciting material, including a management
information circular, to the holders of its Class B Shares. Pursuant to the Companys Articles of Incorporation, holders of Class A non-voting shares (the
Class A Shares), although not entitled to vote thereat, are entitled to receive notices of
shareholders meetings and to receive all informational documents required by law or otherwise to
be provided to holders of Class B Shares. In addition, holders of Class A Shares are entitled to
attend and speak at all meetings of shareholders, except class meetings not including the Class A Shares. In the event of either a take-over bid or an issuer bid (as those terms are defined in the
Securities Act (Ontario)) being made for the Class B Shares and no corresponding offer being made
to purchase Class A Shares, the holders of Class A Shares would have no right under the Articles of
Incorporation of the Company or under any applicable statute to require that a similar offer be
made to them to purchase their Class A Shares. No matters were submitted to the Companys shareholders during the fourth quarter of the Companys
2004 fiscal year. 
 PART II 
 Item 5.  MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Companys Class A Shares are listed and traded on The New York Stock Exchange (the NYSE) and
The Toronto Stock Exchange (the TSX) (trading symbol OPY). The Class B Shares are not traded on
any stock exchange in Canada or the United States and, as a consequence, there is only limited
trading in the Class B shares. The Company does not presently contemplate listing the Class B
Shares in the United States on any national or 16




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regional stock exchange or on Nasdaq. The following tables set forth the high and low sales prices of the Class A Shares on the TSX
and on the NYSE. Prices provided are in Canadian dollars or U.S. dollars as indicated and are based
on data provided by the TSX and the NYSE. Class A Shares: TSX
    
    
    NYSEHIGH
    
    
    LOW
    
    
    HIGH
    
    
    LOW(Cdn. Dollars)
    
    
    (U.S. dollars)2004 1st Quarter
    
    $
    45.10
    
    
    $
    40.90
    
    
    $
    34.40
    
    
    $
    30.962nd Quarter
    
    $
    42.75
    
    
    $
    35.80
    
    
    $
    32.22
    
    
    $
    26.233rd Quarter
    
    $
    36.75
    
    
    $
    30.15
    
    
    $
    27.80
    
    
    $
    22.704th Quarter
    
    $
    30.00
    
    
    $
    27.00
    
    
    $
    27.00
    
    
    $
    21.252003 1st Quarter
    
    $
    39.20
    
    
    $
    33.64
    
    
    $
    25.24
    
    
    $
    22.062nd Quarter
    
    $
    39.75
    
    
    $
    32.90
    
    
    $
    29.85
    
    
    $
    22.253rd Quarter
    
    $
    40.35
    
    
    $
    35.65
    
    
    $
    29.30
    
    
    $
    25.504th Quarter
    
    $
    46.11
    
    
    $
    39.00
    
    
    $
    35.10
    
    
    $
    29.15
 The following table sets forth information about the shareholders of the Company as at
December 31, 2004 as set forth in the records of the Companys transfer agent and registrar: Class A Shares: Number of
    
    
    
    
    
    
    Number ofShareholders of record having addresses in:
    
    shares
    
    
    Percentage
    
    
    shareholdersCanada
    
    
    5,115,458
    
    
    
    38
    %
    
    
    157United States
    
    
    8,180,804
    
    
    
    62
    %
    
    
    170Other
    
    
    614
    
    
    
    
    
    
    
    6Total issued and outstanding
    
    
    13,296,876
    
    
    
    100
    %
    
    
    333
 17




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Class B Shares Number of
    
    
    
    
    
    
    
    Number ofShareholders of record having addresses in:
    
    shares
    
    
    Percentage
    
    
    shareholdersCanada (1)
    
    
    97,813
    
    
    
    98
    %
    
    
    112United States
    
    
    1,739
    
    
    
    2
    %
    
    
    67Other
    
    
    128
    
    
    
    
    
    
    
    3Total issued and outstanding
    
    
    99,680
    
    
    
    100
    %
    
    
    182
   (1)
    
    The Company has been informed that 50,975 Class B shares held by Phase II Financial
Limited, an Ontario corporation, are beneficially owned by A.G. Lowenthal, Chairman, CEO and a
Director of the Company, a U.S. citizen and resident. See Item 12, Security Ownership of Certain
Beneficial Owners and Management. Dividends
The following table sets forth the frequency and amount of any cash dividends declared on the
Companys Class A and Class B Shares for the fiscal years ended December 31, 2004 and 2003 and the
first quarter of 2005. Type
    
    Declaration date
    
    Record date
    
    Payment date
    
    Amount per shareQuarterly
    
    January 24, 2003
    
    February 14, 2003
    
    February 28, 2003
    
    $
    0.09Quarterly
    
    April 24, 2003
    
    May 9, 2003
    
    May 23, 2003
    
    $
    0.09Quarterly
    
    July 24, 2003
    
    August 8, 2003
    
    August 22, 2003
    
    $
    0.09Quarterly
    
    October 24, 2003
    
    November 7, 2003
    
    November 21, 2003
    
    $
    0.09Quarterly
    
    January 27, 2004
    
    February 6, 2004
    
    February 20, 2004
    
    $
    0.09Quarterly
    
    April 26, 2004
    
    May 7, 2004
    
    May 21, 2004
    
    $
    0.09Quarterly
    
    July 27, 2004
    
    August 6, 2004
    
    August 20, 2004
    
    $
    0.09Quarterly
    
    October 25, 2004
    
    November 5, 2004
    
    November 19, 2004
    
    $
    0.09Quarterly
    
    January 28, 2005
    
    February 11, 2005
    
    February 25, 2005
    
    $
    0.09
 Future dividend policy will depend upon the earnings and financial condition of the Operating
Subsidiaries, the Companys need for funds and other factors. Dividends may be paid to holders of
Class A Shares and Class B Shares (pari passu), as and when declared by the Companys Board of
Directors, from funds legally available therefor. CERTAIN TAX MATTERS The following paragraphs summarize certain United States and Canadian federal income tax
considerations in connection with the receipt of dividends paid on the Class A and Class B Shares
of the Company. These tax considerations are stated in brief and general terms and are based on
United States and Canadian law currently in effect. There are other potentially significant United
States and Canadian federal income tax considerations and state, provincial or local income tax
considerations with respect to ownership and disposition of the Class A and Class B Shares which
are not discussed herein. The tax considerations relative to ownership and disposition of the Class
A and Class B Shares may vary from taxpayer to taxpayer depending on the taxpayers particular
status. Accordingly, prospective purchasers should consult with their tax advisors regarding tax 18




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considerations, which may apply to the particular situation. United States Federal Income Tax Considerations Dividends on Class A and Class B Shares paid to citizens or residents of the U.S. or to U.S.
corporations (including any Canadian federal income tax withheld) will be subject to U.S. federal
income taxation as qualified dividends to the extent paid out of the Companys earnings and
profits, determined under U.S. tax principles, subject to tax at 15%. Such dividends will not be
eligible for the deduction for dividends received by corporations (unless such corporation owns by
vote and value at least 10% of the stock of the Company, in which case a portion of such dividend
may be eligible for such exclusion). U.S. corporations, U.S. citizens and U.S. residents will generally be entitled, subject to certain
limitations, to a credit against their U.S. federal income tax for Canadian federal income taxes
withheld from such dividends. Taxpayers may claim a deduction for such taxes if they do not elect
to claim such tax credit. No deduction for foreign taxes may be claimed by an individual taxpayer
who does not itemize deductions. Because the application of the foreign tax credit depends upon the
particular circumstances of each shareholder, shareholders are urged to consult their own tax
advisors in this regard. Canadian Federal Income Tax Considerations Dividends paid on Class A and Class B Shares held by non-residents of Canada will generally be
subject to Canadian withholding tax. This withholding tax is levied at the basic rate of 25%,
although this rate may be reduced by the terms of any applicable tax treaty. The Canada  U.S. tax
treaty provides that the withholding rate on dividends paid to U.S. residents on Class A and Class
B Shares is generally 15%. Normal Course Issuer Bid On July 16, 2004, the Company announced that during the year commencing July 22, 2004 it intended
to purchase up to 669,000 Class A Shares by way of a Normal Course Issuer Bid through the
facilities of the TSX and/or the NYSE, representing approximately 5% of the outstanding Class A
Shares. During the fourth quarter of 2004, the Company purchased 1,300 Class A Shares for $22.50
per share in the month of November. The Company purchased 132,100 Class A Shares in 2004 at an
average price of $23.62 per share under the current Normal Course Issuer Bid. Any shares purchased
by the Company pursuant to the Normal Course Issuer Bid are cancelled. The Company may, at its
option, apply to extend the program for an additional year. 19




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Item 6.  SELECTED FINANCIAL DATA The following table presents selected financial information derived from the audited
consolidated financial statements of the Company for the five years ended December 31, 2004. The
selected financial information should be read in conjunction with, and is qualified in its entirety
by reference to, the Consolidated Financial Statements and notes thereto included elsewhere in this
report. In 2003, the Company purchased the U.S. private client and asset management divisions of
CIBC World Markets. The 2003 amounts include the assets and liabilities and operating results of
the private client division for the entire year and the assets and liabilities and operating
results of the asset management division as of and subsequent to June 4, 2003. In 2002, the Company
purchased the business of BUYandHOLD Securities Corporation. The 2002 amounts include the assets
and liabilities and operating results of BUYandHOLD as of and subsequent to the period after March
12, 2002. In 2001, the Company purchased Josephthal and Prime. The 2001 amounts include the assets
and liabilities and operating results of Josephthal and Prime as of and subsequent to the period
after September 17, 2001 and November 9, 2001, respectively. See also Item 1, Business and Item
7, Managements Discussion and Analysis of Financial Condition and Results of Operations. The
Company has restated its 2004 financial statements. See Note 1(s) of Notes to Consolidated
Financial Statements for further discussion. Restated2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000(In thousands of U.S. dollars except per share and share amounts)Revenue
    
    $
    655,140
    
    
    $
    689,993
    
    
    $
    283,333
    
    
    $
    261,261
    
    
    $
    316,499Net profit
    
    $
    21,077
    
    
    
    28,696
    
    
    $
    9,321
    
    
    $
    19,150
    
    
    $
    40,901Net profit per share (1)- basic
    
    $
    1.58
    
    
    $
    2.26
    
    
    $
    0.75
    
    
    $
    1.55
    
    
    $
    3.38- diluted
    
    $
    1.24
    
    
    $
    1.65
    
    
    $
    0.73
    
    
    $
    1.50
    
    
    $
    3.29Total assets
    
    $
    1,806,199
    
    
    $
    1,701,213
    
    
    $
    1,031,226
    
    
    $
    710,275
    
    
    $
    697,482Total liabilities
    
    $
    1,499,316
    
    
    $
    1,421,377
    
    
    $
    783,590
    
    
    $
    468,580
    
    
    $
    475,682Cash dividends per Class A
Share and Class B share
    
    $
    0.36
    
    
    $
    0.36
    
    
    $
    0.36
    
    
    $
    0.36
    
    
    $
    0.31Shareholders equity
    
    $
    306,883
    
    
    $
    279,836
    
    
    $
    247,636
    
    
    $
    241,695
    
    
    $
    221,800Book value per share (1)
    
    $
    22.91
    
    
    $
    21.66
    
    
    $
    19.82
    
    
    $
    19.43
    
    
    $
    18.34Number of shares of
capital stock outstanding
    
    
    13,396,556
    
    
    
    12,919,200
    
    
    
    12,496,687
    
    
    
    12,436,765
    
    
    
    12,090,649
   (1)
    
    The Class A Shares and Class B Shares are combined because they are of equal
rank for purposes of dividends and in the event of a distribution of assets upon
liquidation, dissolution or winding up. 20




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##### Table of Contents



Item 7.  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Companys financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America. The following discussion should be read in
conjunction with the consolidated financial statements and notes thereto which appear elsewhere in
this annual report. The Company has restated its 2004 financial statements. See Note 1(s) of Notes
to Consolidated Financial Statements for further discussion. The Company engages in a broad range of activities in the securities industry, including retail
securities brokerage, institutional sales and trading, investment banking (both corporate and
public finance), research, market-making, and investment advisory and asset management services.
The Company provides its services from 81 offices in 21 states located throughout the United
States. The Company conducts business in 2 offices in Latin America through local broker-dealers.
Client assets entrusted to the Company as at December 31, 2004 totaled approximately $48 billion.
The Company provides investment advisory services through Oppenheimer Asset Management Inc. and
Fahnestock Asset Management and OMEGA Group, each of which operates as a division of Oppenheimer.
The Company provides trust services and products through Oppenheimer Trust Company. The Company
provides discount brokerage services through Freedom Investments Inc. and through BUYandHOLD, a
division of Freedom. At December 31, 2004, client assets under management by the asset management
groups totaled $10.3 billion. At December 31, 2004, the Company employed approximately 2,854 people
full time, of whom 1,667 were financial advisors. Critical Accounting Policies The Companys accounting policies are essential to understanding and interpreting the financial
results reported in the consolidated financial statements. The significant accounting policies used
in the preparation of the Companys consolidated financial statements are summarized in note 1 to
those statements. Certain of those policies are considered to be particularly important to the
presentation of the Companys financial results because they require management to make difficult,
complex or subjective judgments, often as a result of matters that are inherently uncertain. The
following is a discussion of these policies. Valuation of Securities and Other Assets  21




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##### Table of Contents



securities if the Company were to sell them, and that any such sale would happen in an orderly
manner. However, these assumptions may be incorrect and the actual value realized upon disposition
could be different from the current carrying value. Intangible Assets and Goodwill  The Company reviews its goodwill on at least an annual basis in order to determine whether its
value is impaired. Goodwill is impaired when the carrying amount of the reporting unit exceeds the
implied fair value of the reporting unit. In estimating the fair value of the reporting unit, the
Company uses valuation techniques based on multiples of revenues, earnings, book value and
discounted cash flows similar to models employed in analyzing the purchase price of an acquisition
target. If the value of the goodwill is impaired, the difference between the value of the goodwill
reflected on the financial statements and its current fair value is recognized as an expense in the
period in which the impairment occurs. Reserves  The Company also records reserves or allowances for doubtful accounts related to receivables from
clients and financial consultants. Client loans are collateralized by 22




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##### Table of Contents



securities; however, if
there is a decline in the value of the collateral and the Company cannot obtain additional
collateral or collect on the loan, a reserve is established. The Company also makes loans or pays
advances to financial advisors as part of its hiring process. Reserves are established on these
receivables if the financial advisor is no longer associated with the Company and the receivable
has not been promptly repaid or if it is determined that it is probable the amount will not be
collected. The Company also estimates taxes payable and records income tax reserves. These reserves are based
on historic experience and may not reflect the ultimate liability. The Company monitors and adjusts
these reserves as necessary. Asset Management Operations  Business Environment The securities industry is directly affected by general economic and market conditions, including
fluctuations in volume and price levels of securities and changes in interest rates, inflation,
political events, investor participation levels, legal and regulatory, accounting, tax and
compliance requirements and competition, all of which have an impact on commissions, firm trading,
fees from accounts under investment management, and investment income as well as on liquidity.
Substantial fluctuations can occur in revenues and net income due to these and other factors. The Company faced poor market conditions in the second and third quarters of 2004, compared with
the same period of 2003, resulting in lower commission business and principal trading revenue in
fiscal 2004 compared to fiscal 2003. The Companys expenses in fiscal 2004 are lower compared to
fiscal 2003 due primarily to lower variable compensation costs although there has been an increased
burden of compliance and regulatory expenses. Interest rate changes also impact the Companys fixed income businesses as well as its cost of
borrowed funds. Fiscal 2004 produced rising rates and a less favorable rate environment compared to
the falling interest rate environment in fiscal 2003. Investor interest in fixed income securities
is driven by attractiveness of published rates, the direction of rates and economic expectations.
Volatility in bond prices also impacts opportunities for profits in fixed income proprietary
trading. Management constantly monitors its exposure to interest rate fluctuations to mitigate risk
of loss in volatile 23




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##### Table of Contents



environments. Regulatory Environment The brokerage business is subject to regulation by the SEC, the NYSE, the NASD and various
state securities regulators. Events in recent years surrounding corporate accounting and other
activities leading to investor losses resulted in the enactment of the Sarbanes-Oxley Act and have
caused increased surveillance of public companies. New regulations and new interpretations and
enforcement of existing regulations are creating increased costs of compliance and increased
investment in systems and procedures to comply with these more complex requirements. Investigations
by the SEC and state regulators into mutual fund trading practices are another indication of the
regulators heightened commitment to enforcement actions. Increasingly, the various states are
imposing their own regulations that make the uniformity of regulation a thing of the past, and make
compliance more difficult and more expensive to monitor. This regulatory environment has resulted
in increased costs of compliance with rules and regulations,in particular, the impact of the rules
and requirements that were created by the passage of the Patriot Act, and the anti-money laundering
regulations (AML) that are related thereto. The Companys increased exposure to regulatory actions
could potentially lead to the elimination of, or material changes to, certain lines of business.
The expectation is that the increased costs of compliance in todays regulatory environment are not
temporary. Mutual Fund Inquiry
Since the third quarter of 2003, Oppenheimer has been responding to the SEC, the NY State Attorney
General and other regulators as part of an industry-wide review of market timing, late trading and
other activities involving mutual funds. The Company has answered several document requests and
subpoenas and there have been on-the-record interviews of Company personnel. The inquiries have centered on
Oppenheimers activities as a broker/dealer and as a clearing firm. The Company is continuing to
cooperate with the governmental and regulatory authorities. The Company believes that a limited number of its financial advisors may have engaged in activities
that are the subject of the SECs inquiry. There is no evidence that either the Company or its
employees were engaged in late trading. The Company continues to closely monitor its mutual fund
activities and the activities of its employees. The Company has determined that there is no need to
set up any reserves with respect to these inquiries at this time. Outlook The Companys long-term plan is to continue to expand existing offices by hiring experienced
professionals as well as through the purchase of operating branch offices from other broker
dealers, thus maximizing the potential of each office and the development of existing trading,
investment banking, investment advisory and other activities. Equally important is the search for
viable acquisition candidates. As opportunities are presented, it is the long-term intention of the
Company to pursue growth by acquisition where a comfortable match can be found in terms of
corporate goals and personnel and at a price 24




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##### Table of Contents



that would provide the Companys shareholders with
incremental value. In the near term, the Company will not be seeking additional significant
acquisitions, but will continue to focus its attention on the management of recent acquisitions. In
addition, the Company is committed to improving its technology capabilities to support client
service and the expansion of its capital markets capabilities. Results of Operations The results of the year ended December 31, 2004, compared to the same period of 2003, reflect the
comparatively unfavorable market conditions in 2004 compared to 2003 as well as the impact on the
2003 results of transition costs described below. On January 3, 2003 the Company acquired the U.S. private client business of CIBC World Markets and
then on June 4, 2003 acquired the U.S. asset management business of CIBC World Markets (together,
the Oppenheimer divisions). The Company began self-clearing substantially all of the private client
business at the end of May 2003. Until that time, CIBC provided operational and administrative
services to the Company on a transition basis. That arrangement precluded the attainment of certain
operating efficiencies and cost savings that became available to the Company post-conversion of the
client accounts to the Companys clearing platform. The U.S. economy has continued to pick up momentum as reflected in growth in fourth quarter GNP.
For much of 2004 factors including the Iraq war, the U.S. Presidential election, a slow U.S.
economic recovery and the prospect of increasing interest rates kept investor participation in the
markets at low levels. After the election, the equity markets experienced a rally that allowed all
of the major indexes to close up for the year. The weakness in the U.S. dollar impacted money flows
including foreign investment in U.S. markets. It is expected, however, to help corporate earnings
for many U.S. corporations with foreign operations. The level of the dollar in relation to other
currencies, oil prices and the U.S. deficits will be significant factors in determining the
direction of markets in the coming months. The following table sets forth the amount and percentage of the Companys revenues from each
principal source for each of the following years ended December 31. 2004
    
    
    %
    
    
    2003
    
    
    %
    
    
    2002
    
    
    %(Dollars in thousands, except percentages)Commissions
    
    $
    327,040
    
    
    
    50
    %
    
    $
    325,071
    
    
    
    47
    %
    
    $
    135,747
    
    
    
    48
    %Principal transactions, net
    
    
    112,277
    
    
    
    17
    %
    
    
    136,672
    
    
    
    20
    %
    
    
    58,227
    
    
    
    21
    %Interest
    
    
    45,418
    
    
    
    7
    %
    
    
    42,600
    
    
    
    6
    %
    
    
    27,622
    
    
    
    10
    %Investment banking
    
    
    44,804
    
    
    
    7
    %
    
    
    50,623
    
    
    
    7
    %
    
    
    22,760
    
    
    
    8
    %Advisory fees
    
    
    102,531
    
    
    
    16
    %
    
    
    80,550
    
    
    
    12
    %
    
    
    26,365
    
    
    
    9
    %Arbitration awards
    
    
    3,900
    
    
    
    
    
    
    
    21,750
    
    
    
    3
    %
    
    
    
    
    
    
    Other
    
    
    19,170
    
    
    
    3
    %
    
    
    32,727
    
    
    
    5
    %
    
    
    12,612
    
    
    
    4
    %Total revenues
    
    $
    655,140
    
    
    
    100
    %
    
    $
    689,993
    
    
    
    100
    %
    
    $
    283,333
    
    
    
    100
    %
 The Company derives most of its revenues from the operations of its principal subsidiaries, 25




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##### Table of Contents



Oppenheimer and OAM. Although maintained as separate entities, the operations of the Companys
brokerage subsidiaries are closely related because Oppenheimer acts as clearing broker and omnibus
clearing agent in transactions initiated by Freedom. Except as expressly otherwise stated, the
discussion below pertains to the operations of Oppenheimer. It is important to note when comparing the results of the year ended December 31, 2004, 2003
and 2002, that the 2003 first quarter results were substantially impacted by non-operating items
resulting from a favorable arbitration award in the amount of $21,750,000, The following table and discussion summarizes the changes in the major revenue and expense
categories for the past two years (in thousands of dollars). Period to Period ChangeIncrease (Decrease)Restated 2004 versus 2003
    
    
    2003 versus 2002Amount
    
    
    Percentage
    
    
    Amount
    
    
    PercentageRevenue
Commissions
    
    $
    1,969
    
    
    
    +1
    %
    
    $
    189,324
    
    
    
    +139
    %Principal transactions, net
    
    
    (24,395
    )
    
    
    18
    %
    
    
    78,445
    
    
    
    +135
    %Interest
    
    
    2,818
    
    
    
    +7
    %
    
    
    14,978
    
    
    
    +54
    %Underwriting fees
    
    
    (5,819
    )
    
    
    11
    %
    
    
    27,863
    
    
    
    +122
    %Advisory fees
    
    
    21,981
    
    
    
    +27
    %
    
    
    54,185
    
    
    
    +206
    %Arbitration awards
    
    
    (17,850
    )
    
    
    82
    %
    
    
    21,750
    
    
    
    +100
    %Other
    
    
    (13,557
    )
    
    
    41
    %
    
    
    20,115
    
    
    
    +159
    %Total revenue
    
    
    (34,853
    )
    
    
    -5
    %
    
    
    406,660
    
    
    
    +144
    %Expenses
Compensation
    
    
    (6,778
    )
    
    
    2
    %
    
    
    265,215
    
    
    
    +156
    %Clearing and exchanges fees
    
    
    (5,188
    )
    
    
    25
    %
    
    
    11,127
    
    
    
    +116
    %Communications and data
processing
    
    
    (4,381
    )
    
    
    7
    %
    
    
    26,425
    
    
    
    +80
    %Occupancy costs
    
    
    1,712
    
    
    
    +4
    %
    
    
    21,868
    
    
    
    +82
    %Interest
    
    
    3,045
    
    
    
    +18
    %
    
    
    8,512
    
    
    
    +102
    %Other
    
    
    (10,456
    )
    
    
    17
    %
    
    
    37,715
    
    
    
    +166
    %Total expenses
    
    
    (22,046
    )
    
    
    4
    %
    
    
    370,862
    
    
    
    +137
    %Profit before taxes
    
    
    (12,807
    )
    
    
    26
    %
    
    
    35,798
    
    
    
    +277
    %Income taxes
    
    
    (5,188
    )
    
    
    26
    %
    
    
    14,649
    
    
    
    +273
    %Net profit
    
    $
    (7,619
    )
    
    
    27
    %
    
    $
    21,149
    
    
    
    +280
    %
 Fiscal 2004 (restated) compared to Fiscal 2003 Revenue, other than interest
Commission income and, to a large extent, income from principal transactions depend 26




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on
investor participation in the markets. In the year ended December 31, 2004, commission revenue
increased by 1% compared to fiscal 2003 primarily as a result of overall investor activity in the
markets. The markets were relatively robust in the first quarter of 2004, however, investor
activity in the markets fell dramatically in the second and third quarters of 2004 only picking up
again after the U.S. Presidential election was over. Net revenue from principal transactions
decreased by 18% in the year ended December 31, 2004 compared to fiscal 2003 due to the lack of
volatility in the equity and fixed income markets as well as lower trading volumes for much of 2004
compared to 2003. Investment banking revenues decreased 11% in the year ended December 31, 2004
compared with fiscal 2003 due to the drop in new issue and secondary issuance in 2004 compared to
2003. Advisory fees increased by 27% for the year ended December 31, 2004 compared to fiscal 2003.
The year ended December 31, 2004 includes the operations of Oppenheimer Asset Management Inc. for
the full period, while the 2003 comparative period includes results following its acquisition on
June 4, 2003. Assets under management by the asset management group were $10.3 billion at December
31, 2004 compared to $9.6 billion at December 31, 2003. Other revenue decreased by 41% in the year
ended December 31, 2004 compared to fiscal 2003 due to incentive fees received with respect to 2003
in the amount of $10.7 million compared to approximately $1.4 million in 2004. Interest
Net interest revenue (interest revenue less interest expense) remained relatively unchanged in
the year ended December 31, 2004 compared to fiscal 2003. Interest revenue, which primarily relates
to revenue from customer margin balances and securities lending activities, remained relatively
unchanged in 2004 from 2003. Expenses, other than interest
Compensation expense decreased by 2% in the year ended December 31, 2004 compared to fiscal
2003. Compensation expense has volume-related components and, therefore, will increase with the
increased level of commission business conducted in the year ended December 31, 2004, compared to
fiscal 2003. The amortization of forgivable loans to financial advisors is included in compensation
expense. This expense is relatively fixed and is not influenced by increases or decreases in
revenue levels. The Companys notes receivable balance peaked in July 2003 as a result of the
acquisition of the Oppenheimer divisions, resulting in higher amortization levels beginning in the
third quarter of 2003, which will continue through most of 2006. The cost of clearing and exchange
fees decreased by 25% in the year ended December 31, 2004 compared to fiscal 2003. The change in
the year to year comparison is primarily due to the elimination of clearing costs of approximately
$9.4 million associated with the clearing of Oppenheimer private client division customer accounts
by CIBC World Markets during the transition period from the January 3, 2003 acquisition date
through the May 27, 2003 conversion of client accounts; however, the Companys employment costs and
associated expenses for self-clearing this additional business increased when compared to the same periods of 2003. The cost of
communications and technology decreased 7% in the year ended December 31, 2004, compared to fiscal
2003 due to costs associated with upgrading the technology base across the firm after the
conversion of the Oppenheimer private client division accounts in May 2003. The level of investment
tapered off in 2004. Occupancy costs increased by 4% in the year ended December 31, 2004 compared
to fiscal 2003. Occupancy costs remained relatively flat in 2004 compared to 2003, without
the effect of the restatement. 27




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##### Table of Contents



The effect of the
cumulative impact of the change in accounting for leases with rent escalation clauses and landlord
incentives of $2,454,000 (of which $779,000 represents the cumulative
effect of the error as at December 31, 2003) was booked in the restated results for the year ended December 31, 2004,
resulting in the net increase in occupancy costs compared to the same period in 2003. Other
expenses decreased by 17% for the year ended December 31, 2004 compared to fiscal 2003. Included
in other expenses in 2004 is approximately $14 million of fee expense paid to third party money
managers by OAM ($8 million in 2003); approximately $3.8 million of solicitor fee expense paid to
third parties by Oppenheimer for introduced business ($4 million in 2003); approximately $6 million
in litigation and legal costs ($15 million in 2003); approximately $2.6 million in audit and
accounting fees ($1.7 million in 2003); and a credit of approximately $1 million with respect to
bad debt expense ($4.5 million charge in 2003). The Company continued to be affected by litigation
settlement costs. Much of the Companys unfavorable litigation experience in the past several years
arose from its acquisitions of Josephthal Group Inc. and Prime Charter Inc. in 2001. These matters
were substantially resolved by the end of fiscal 2004. The Company may face additional unfavorable
judgments in future quarters. The Company has used its best estimate to provide adequate reserves
to cover potential litigation losses. Fiscal 2003 compared to Fiscal 2002 The results of the year ended December 31, 2003, compared to the same period of 2002, reflect the
changed face of the Company after the acquisition by the Company on January 3, 2003 and June 4,
2003 of the Oppenheimer divisions. This acquisition more than doubled the Companys private client
presence, adding approximately 620 financial advisors in 18 offices, at the date of closing. The
number of financial advisors increased to 1,704 at December 31, 2003 compared to 1,102 at December
31, 2002. Client assets entrusted to the Company were approximately $46 billion at December 31,
2003 compared to approximately $17.8 billion at December 31, 2002. The acquisition on June 4, 2003
of the U.S. Asset Management business of CIBC World Markets added new business lines and increased
managed assets from approximately $869 million at December 31, 2002 to approximately $9.6 billion
at December 31, 2003. Revenue, other than interest
Commission income (income realized in securities transactions for which Oppenheimer acts as agent)
increased by 139% for the year ended December 31, 2003 compared to fiscal 2002. This increase was
primarily the result of the additional business generated by the acquired Oppenheimer branches, as
well as improved market conditions. Revenues from principal transactions (revenues from
transactions in which Oppenheimer acts as principal in the secondary market trading of
over-the-counter equities and municipal, corporate and government bonds) increased by 135% for the
year ended December 31, 2003 compared to fiscal 2002 due to the business generated by the acquired
divisions and stronger activity in the trading of fixed income securities as a result of lower
interest rates and higher bond prices in 2003 compared to 2002. Investment banking revenues
increased by 122% for the year ended December 31, 2003 compared to fiscal 2002, related to
increased participation in the issuance of closed-end funds and debt securities, particularly as a
result of the impact of the acquired Oppenheimer divisions. Advisory fees increased 28




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##### Table of Contents



by 206% for
the year ended December 31, 2003 compared to fiscal 2002 primarily as a result of the acquisition
of the U.S. Asset Management business of CIBC World Markets in June 2003. In January 2003, the
Company was awarded $21,750,000 in an arbitration award in connection with a raiding case involving
the sales force of First of Michigan Corporation, a company acquired by the Company in 1997. Other
revenue increased by 159% for the year ended December 31, 2003 compared to fiscal 2002 due to incentive fees of $10.7 million in 2003 derived from the OAM business acquired in June
2003. Interest
Net interest revenue (interest revenue less interest expense) increased by 36% in the year
ended December 31, 2003 compared to fiscal 2002 due to an increase in average customer margin
balances due to the conversion of the customer accounts of the acquired Oppenheimer branches in May
2003 and lower interest rates in 2003 compared to 2002 and partially offset by interest expense of
$7,217,000 on the variable rate exchangeable debentures issued in January 2003 as part of the
purchase price of the Oppenheimer divisions. Expenses, other than interest
Compensation and related expenses in 2003 increased by 156% from 2002. Compensation expense
has volume-related components and increased with the increase in commission business conducted in
2003 compared to 2002. In addition, the increase in compensation expense reflects increased
retention and severance costs and a general increase in staff levels in both acquired branch
offices and in head office departments which were required to handle the business volume of the
larger entity. Retention costs relate to the amortization of broker notes acquired and new broker
notes issued in January and July as part of the acquisition of the Oppenheimer divisions.
Amortization costs of notes receivable amounted to $31.4 million in 2003 compared to $6.3 million
in 2002. Clearing and exchange fees in 2003 increased by 116% compared to 2002 due to increased
volume generated by the larger post-acquisition sales force. In addition, until May 2003, the
business generated from the acquired Oppenheimer branches was being cleared by a third party. The
cost of third party clearing is higher than the cost of clearing trades in-house. Transition costs
related to clearing amounted to approximately $9.4 million in 2003. Communications and data
processing expenses in 2003 increased by 80% compared to 2002 reflecting additional costs of a
larger branch system, after the acquisition of the Oppenheimer divisions. Occupancy costs in 2003
increased by 82% compared to 2002 as a result of the increased size of the organization with the
acquisition of the Oppenheimer divisions. The increase in communications, technology and occupancy
expenses reflects the additional costs associated with connecting and housing approximately 55%
more financial consultants in 16 more branch offices in 2003 compared to December 31, 2002, before
the acquisitions of the Oppenheimer divisions. During 2003, the Company was able to utilize
previously underutilized space and was able to reassign employees to maximize the usage of space.
Other expenses increased by 166% in 2003 compared to 2002. The increase relates primarily to
increased levels of general and administrative expense due to the larger organization size.
Included in other expenses in 2003 is approximately $8 million of fee expense paid to third party
money managers by OAM (nil in 2002); approximately $4 million of solicitor fee expense paid by
Oppenheimer for introduced business ($nil in 2002); approximately $15 million in litigation and
legal costs ($6 million in 2002); approximately $1.7 million in audit and accounting fees ($900,000
in 2002); and approximately $4.5 million with respect to bad debt expense 29




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##### Table of Contents



($3.3 million in 2002).
Over 50% of the legal expenses relate to the Josephthal acquisition which was made in September
2001. Liquidity and Capital Resources Total assets at December 31, 2004 increased by approximately 6% from December 31, 2003 due
primarily to an increase in receivables from brokers and clearing organizations and partly offset
by decreases in receivable from customers, securities owned and notes receivable. The Company satisfies its need for funds from its own cash resources, internally generated funds,
collateralized and uncollateralized borrowings, consisting primarily of bank loans, and uncommitted
lines of credit. The amount of Oppenheimer s bank borrowings fluctuates in response to changes in
the level of the Companys securities inventories and customer margin debt, changes in stock loan
balances and changes in notes receivable from employees. Oppenheimer has arrangements with banks
for borrowings on an unsecured and on a fully collateralized basis. At December 31, 2004,
$2,373,000 of such borrowings were outstanding, a decrease of 97% compared to outstanding borrowings at December 31, 2003. At December 31, 2004, the
Company had available collateralized and uncollateralized letters of credit of $124,000,000 In connection with the acquisition of the Oppenheimer divisions, the Company issued debentures in
the amount of approximately $161 million and a zero coupon promissory note in the amount of
approximately $66 million. The notes to the consolidated financial statements contain a description
of these instruments. The debentures, if exchanged, would represent the addition of approximately
35% of the then-issued Class A Shares of the Company. The interest due on the debentures is payable
semi-annually and is being financed from internally-generated funds. The principal payments on the
zero coupon promissory note are also being financed from internally-generated funds. The Company
believes that the necessary internally-generated funds will be available to service these
obligations from funds generated by normal operations, including funds generated by the acquired
business. In connection with the acquisition of the Oppenheimer divisions, the Company has arranged a
credit facility in the amount of $50 million with CIBC. In January 2003, the Company borrowed $25
million under this facility and borrowed the balance in July 2003. The borrowings were used to
finance broker notes and are repayable, together with interest, at the CIBC U.S. base rate plus 2%,
over five years or earlier if any broker notes become due earlier. The interest and principal
repayments are being made out of internally-generated funds and the Company believes that the cash
flow from funds generated by normal operations, including funds generated by the acquired business,
will be adequate to enable the Company to meet its obligations. In accordance with the credit
arrangement, the Company has provided certain covenants to CIBC with respect to the maintenance of
minimum debt/equity ratios and net capital of Oppenheimer. In the Companys view, the most
restrictive of the covenants requires that Oppenheimer maintain minimum excess net capital of $100
million. As at December 31, 2004, the Company was in compliance with the covenants. The Company
does not foresee any difficulties in complying with the covenants. 30




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The Company is committed to an on-going investment in its technology and communications
infrastructure including extensive business continuity planning and investment. These costs are
on-going and the Company believes that current and future costs will exceed historic levels due to
business and regulatory requirements. The Company believes that internally-generated funds from
operations are sufficient to finance its expenditure program. Funding Risk The following table summarizes the Companys cash flows for the years ended December 31, 2004, 2003
and 2002. 2004
    
    
    2003
    
    
    2002Cash provided by (used in) operations
    
    $
    125,611
    
    
    $
    (56,693
    )
    
    $
    (3,240
    )Cash used in investing activities
    
    $
    (10,219
    )
    
    $
    (27,826
    )
    
    $
    (3,633
    )Cash provided by (used in) financing activities
    
    $
    (116,480
    )
    
    $
    102,882
    
    
    $
    (1,229
    )Net increase (decrease) in cash and cash
equivalents
    
    $
    (1,088
    )
    
    $
    18,363
    
    
    $
    (8,102
    )
 The Company was successful in achieving strong cash inflows from operations in 2004 after the major
acquisition it undertook in 2003 with the purchase of the Oppenheimer divisions. With this cash
flow, in 2004 the Company was able to significantly reduce bank call loans as well as paying down
approximately $30 million of long-term debt. In 2003 the Company experienced large cash out-flows from operations despite strong earnings as it
adjusted to the larger size of the post-acquisition business. These out-flows as well as the cash
portion of the purchase price of the Oppenheimer divisions were covered by increases in both short
and long-term bank borrowings. Management believes that funds from operations, combined with the Companys capital base and
available credit facilities, are sufficient for the Companys liquidity needs in the foreseeable
future. (See factors affecting forward-looking statements). However, there is no guarantee that
the Company will continue to be able to meet its debt repayment and other obligations. Other Matters The Company paid cash dividends to its shareholders totaling $4,828,000, during 2004, from
internally-generated cash. During 2004, the Company purchased a total of 132,100 of its Class A non-voting shares at an
average cost of $23.62 per share through the facilities of the New York and Toronto Stock Exchanges
by way of a Normal Course Issuer Bid, using internally generated cash. The Company has expressed an
intention to purchase up to 669,000 of its shares from time to time between July 22, 2004 and July
21, 2005 from internally generated funds. Because of the Companys strong financial condition, size and earnings history, management believes
adequate sources of credit would be available to finance higher
trading volumes, branch expansion, and major capital expenditures, as needed. See 31




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factors affecting forward-looking statements. The book value of the Companys Class A and Class B Shares was $22.91 (restated) at December 31,
2004, an increase of approximately 6% compared to book value of $21.66 at December 31, 2003, based
on total outstanding shares of 13,396,556 and 12,919,200, respectively. Off-Balance Sheet Arrangements Information concerning the Companys off balance sheet arrangements is included in note 15 of the
Notes to the Consolidated Financial Statements. Such information is hereby incorporated by
reference. Contractual and Contingent Obligations The Company has contractual obligations to make future payments in connection with non-cancelable
lease obligations, certain retirement plans and debt assumed upon the acquisition of the
Oppenheimer divisions. The following table sets forth these contractual and contingent commitments as at December 31,
2004. Lessthan 1
    
    
    1 - 3
    
    
    3 - 5
    
    
    More thanContractual Obligations
    
    Total
    
    
    year
    
    
    years
    
    
    years
    
    
    5 years(In millions of dollars)Minimum rentals
    
    $
    160
    
    
    $
    23
    
    
    $
    44
    
    
    $
    35
    
    
    $
    58Supplemental
Executive
Retirement Plan
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    Bank loans
    
    
    25
    
    
    
    10
    
    
    
    15
    
    
    
    
    
    
    
    Debentures
    
    
    161
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    161Zero coupon notes
    
    
    35
    
    
    
    13
    
    
    
    14
    
    
    
    8
    
    
    
    Total
    
    $
    382
    
    
    $
    46
    
    
    $
    73
    
    
    $
    44
    
    
    $
    219
 Inflation Because the assets of the Companys brokerage subsidiaries are highly liquid, and because
securities inventories are carried at current market values, the impact of inflation generally is
reflected in the financial statements. However, the rate of inflation affects the Companys costs
relating to employee compensation, rent, communications and certain other operating costs, and such
costs may not be recoverable in the level of commissions charged. To the extent inflation results
in rising interest rates and has other adverse effects upon the securities markets, it may
adversely affect the Companys financial position and results of operations. Newly Issued Accounting Standards 32




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The Financial Accounting Standards Board issued SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities, FIN No. 45, Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others, FIN No. 46-R, Consolidation
of Variable Interest Entities, SFAS No. 149, Amendment of Statement 133 on Derivative Instruments
and Hedging Activities, and SFAS No. 150, Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity. The Company has adopted these statements and
interpretations and their adoption has not had a material impact on its financial results. In December 2004, the FASB issued a revision to SFAS No. 123, Accounting for Stock-Based
Compensation, SFAS No. 123-R, Share-Based Payment. SFAS No. 123-R focuses primarily on
transactions in which an entity exchanges its equity instruments for employee services and
generally establishes standards for accounting for transactions in which an entity obtains goods or
services in share-based transactions. The implementation date for SFAS No. 123-R has recently been
extended. Consequently, the Company will commence expensing stock-based compensation awards on
January 1, 2006 using the modified prospective method. The Company anticipates that the impact of
the adoption of SFAS No. 123-R may be material to its statement of operations. Factors Affecting Forward-Looking Statements From time to time, the Company may publish Forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended ( the Act), and Section 21E of the Exchange
Act or make oral statements that constitute forward-looking statements. These forward-looking
statements may relate to such matters as anticipated financial performance, future revenues or
earnings, business prospects, projected ventures, new products, anticipated market performance, and
similar matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements. In order to comply with the terms of the safe harbor, the Company
cautions readers that a variety of factors could cause the Companys actual results to differ
materially from the anticipated results or other expectations expressed in the Companys
forward-looking statements. These risks and uncertainties, many of which are beyond the Companys
control, include, but are not limited to: (i) transaction volume in the securities markets, (ii)
the volatility of the securities markets, (iii) fluctuations in interest rates, (iv) changes in
regulatory requirements which could affect the cost of doing business, (v) fluctuations in currency
rates, (vi) general economic conditions, both domestic and international, (vii) changes in the rate
of inflation and the related impact on the securities markets, (viii) competition from existing
financial institutions and other new participants in the securities markets, (ix) legal
developments affecting the litigation experience of the securities industry, (x) changes in federal
and state tax laws which could affect the popularity of products sold by the Company,(xi) the
effectiveness of efforts to reduce costs and eliminate overlap, (xii) war and nuclear
confrontation, (xiii) the Companys ability to achieve its business plan, and (xiv) corporate
governance issues. There can be no assurance that the Company has correctly or completely
identified and assessed all of the factors affecting the Companys business. The Company does not
undertake any obligation to publicly update or revise any forward-looking statements. 33




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Item 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Risk Management The Companys principal business activities by their nature involve significant market, credit and
other risks. The Companys effectiveness in managing these risks is critical to its success and
stability. As part of its normal business operations, the Company engages in the trading of both fixed income
and equity securities in both a proprietary and market-making capacity. The Company makes markets
in over-the-counter equities in order to facilitate order flow and accommodate its institutional
and retail customers. The Company also makes markets in municipal bonds, mortgage-backed
securities, government bonds and high yield bonds. Market Risk.Market risk generally means the risk of loss that may result from the potential change
in the value of a financial instrument as a result of fluctuations in interest and currency
exchange rates and in equity and commodity prices. Market risk is inherent in all types of
financial instruments, including both derivatives and non-derivatives. The Companys exposure to
market risk arises from its role as a financial intermediary for its customers transactions and
from its proprietary trading and arbitrage activities. Oppenheimer monitors market risks through daily profit and loss statements and position reports.
Each trading department adheres to internal position limits determined by senior management and
regularly reviews the age and composition of its proprietary accounts. Positions and profits and
losses for each trading department are reported to senior management on a daily basis. In its market-making activities, Oppenheimer must provide liquidity in the equities for which it
makes markets. As a result of this, Oppenheimer has risk containment policies in place, which limit
position size and monitor transactions on a minute-to-minute basis. Credit Risk.Credit risk represents the loss that the Company would incur if a client, counterparty
or issuer of securities or other instruments held by the Company fails to perform its contractual
obligations. The Company follows industry practice to reduce credit risk related to various
investing and financing activities by obtaining and maintaining collateral. The Company adjusts
margin requirements if it believes the risk exposure is not appropriate based on market conditions.
When Oppenheimer advances funds or securities to a counterparty in a principal transaction or to a
customer in a brokered transaction, it is subject to the risk that the counterparty or customer
will not repay such advances. If the market price of the securities purchased or loaned has
declined or increased, respectively, Oppenheimer may be unable to recover some or all of the value
of the amount advanced. A similar risk is also present where a customer is unable to respond to a
margin call and the market price of the collateral has dropped. In addition, Oppenheimers
securities positions are subject to fluctuations in market value and liquidity. In addition to monitoring the credit-worthiness of its customers, Oppenheimer imposes
more conservative margin requirements than those of the NYSE. Generally, Oppenheimer limits
customer loans to an amount not greater than 65% of the value of the securities (or 34




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50% if the
securities in the account are concentrated in a limited number of issues). Particular attention and
more restrictive requirements are placed on more highly volatile securities traded in the NASDAQ
market. In comparison, the NYSE permits loans of up to 75% of the value of the equity securities in
a customers account. Further discussion of credit risk appears in Item 8, Notes to the
Consolidated Financial Statements. Operational Risk.Operational risk generally refers to the risk of loss resulting from the
Companys operations, including, but not limited to, improper or unauthorized execution and
processing of transactions, deficiencies in its operating systems, business disruptions and
inadequacies or breaches in its internal control processes. The Company operates in diverse markets
and it is reliant on the ability of its employees and systems to process high numbers of
transactions often within short time frames. In the event of a breakdown or improper operation of
systems, human error or improper action by employees, the Company could suffer financial loss,
regulatory sanctions or damage to its reputation. In order to mitigate and control operational
risk, the Company has developed and continues to enhance policies and procedures that are designed
to identify and manage operational risk at appropriate levels. With respect to its trading
activities, the Company has procedures designed to ensure that all transactions are accurately
recorded and properly reflected on the Companys books on a timely basis. With respect to client
activities, the Company operates a system of internal controls designed to ensure that transactions
and other account activity (new account solicitation, transaction authorization, transaction
processing, billing and collection) are properly approved, processed, recorded and reconciled. The
Company has procedures designed to assess and monitor counterparty risk. For a discussion of
funding risk, see Item 7, Liquidity and Capital Resources. Legal and Regulatory Risk. Legal and regulatory risk includes the risk of non-compliance with
applicable legal and regulatory requirements, client claims and the possibility of sizeable adverse
legal judgments. The Company is subject to extensive regulation in the different jurisdictions in
which it conducts its activities. Regulatory oversight of the securities industry has become
increasingly intense over the past few years and the Company, as well as others in the industry,
has been directly affected by this increased regulatory scrutiny. The Company has comprehensive procedures for addressing issues such as regulatory capital
requirements, sales and trading practices, use of and safekeeping of customer funds and securities,
granting of credit, collection activities, money laundering, and record keeping. The Company has
designated Anti-Money Laundering Compliance Officers who monitor compliance with regulations under
the U.S.A. Patriot Act. See further discussion on the Companys reserve policy under Item 7,
Critical Accounting Policies, Item 3, Legal Proceedings and Item 1, Regulation. Off-Balance Sheet Arrangements. The Company does not rely on off-balance sheet arrangements or
transactions with unconsolidated, special purpose or limited purpose entities to manage risk. Value-at-Risk   35




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to adverse movements in underlying risk factors. In response to the Securities and Exchange
Commissions market risk disclosure requirements, the Company has performed a value-at-risk
analysis of its trading financial instruments and derivatives. The value-at-risk calculation uses
standard statistical techniques to measure the potential loss in fair value based upon a one-day
holding period and a 95% confidence level. The calculation is based upon a variance-covariance
methodology, which assumes a normal distribution of changes in portfolio value. The forecasts of
variances and co-variances used to construct the model, for the market factors relevant to the
portfolio, were generated from historical data. Although value-at-risk models are sophisticated
tools, their use can be limited as historical data is not always an accurate predictor of future
conditions. The Company attempts to manage its market exposure using other methods, including
trading authorization limits and concentration limits. At December 31, 2004 and 2003, the Companys value-at-risk for each component of market risk was as
follows (in thousands of U.S. dollars): Fiscal 2004
    
    
    As at December 31,High
    
    
    Low
    
    
    Average
    
    
    2004
    
    
    2003Interest rate risk
    
    $
    147
    
    
    $
    158
    
    
    $
    145
    
    
    $
    158
    
    
    $
    168Equity price risk
    
    
    585
    
    
    
    236
    
    
    
    368
    
    
    
    236
    
    
    
    412Diversification benefit
    
    
    (167
    )
    
    
    (105
    )
    
    
    (49
    )
    
    
    (105
    )
    
    
    (169
    )Total
    
    $
    565
    
    
    $
    289
    
    
    $
    464
    
    
    $
    289
    
    
    $
    411
 The potential future loss presented by the total value-at-risk generally falls within predetermined
levels of loss that should not be material to the Companys results of operations, financial
condition or cash flows. The changes in the value-at-risk amounts reported in 2004 from those
reported in 2003 reflect changes in the size and composition of the Companys trading portfolio at
December 31, 2004 compared to December 31, 2003, which include a larger position in equities on an
overall portfolio which is 18% less than at December 31, 2003. The Companys portfolio as at
December 31, 2004 includes approximately $15,097,000 ($15,781,000 in 2003) in corporate equities,
which are co-related to deferred compensation liabilities and which do not bear any value-at-risk
to the Company. The Company did not use derivative financial instruments to hedge market risk in
fiscal 2004 and 2003. Further discussion of risk management appears in Item 7, Managements
Discussion and Analysis of the Results of Operations and Item 1, Risk Management. The value-at-risk estimate has limitations that should be considered in evaluating the Companys
potential future losses based on the year-end portfolio positions. Recent market conditions
including increased volatility, may result in statistical relationships that result in higher
value-at-risk than would be estimated from the same portfolio under different market conditions.
Likewise, the converse may be true. Critical risk management strategy involves the active
management of portfolio levels to reduce market risk. The Companys market risk exposure is
continuously monitored as the portfolio risks and market conditions change. 36




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Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
OPPENHEIMER HOLDINGS INC. Managements Report on Internal Control over Financial Reporting
    
    
    38Reports of Independent Registered Public Accounting Firm
    
    
    40Consolidated Balance Sheets as at December 31, 2004 (restated) and 2003
    
    
    43Consolidated Statements of Operations for the three years ended
December 31, 2004 (restated), 2003 and 2002
    
    
    45Consolidated Statements of Changes in Shareholders Equity for the
three years ended
December 31, 2004 (restated), 2003 and 2002
    
    
    46Consolidated Statements of Cash Flows for the three years ended
December 31, 2004 (restated), 2003 and 2002
    
    
    47Notes to Consolidated Financial Statements
    
    
    49
 37




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Managements Report on Internal Control over Financial Reporting (as restated) Management of Oppenheimer Holdings Inc. (the Company),
is responsible for establishing and maintaining adequate control over financial reporting. The
Companys internal control over financial reporting is a process designed under the supervision of
the Companys principal executive and principal financial officers to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of the Companys financial
statements for external reporting purposes in accordance with U.S. generally accepted accounting
principles. The Companys internal control over financial reporting includes policies and procedures that
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect
transactions and dispositions of assets; provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with U.S.
generally accepted accounting principles, and that receipts and expenditures are being made only in
accordance with authorizations of management and the directors of the Company; and provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of the Companys assets that could have a material effect on the Companys financial
statements. As of December 31, 2004, management conducted an assessment of the effectiveness of the Companys
internal control over financial reporting based on the framework
established in Internal Control 
Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). Subsequent to filing the Annual
Report on Form 10-K for the year ended December 31, 2004, management became aware of errors in the Companys accounting for leases. As
a result of the discovery of these errors, the Company, after consultation with the Audit
Committee, determined that the audited financial statements included in the Companys Form 10-K for
the year ended December 31, 2004 and its unaudited financial statements included in the Form 10-Qs
for the quarters ended March 31, June 30 and
September 30, 2004 should be restated to correct the
errors. A material weakness is a control deficiency, or combination of control deficiencies, that results
in more than a remote likelihood that a material misstatement of the annual or interim financial
statements will not be prevented or detected. As of December 31, 2004, management has concluded
that the Company did not maintain effective controls over the selection and application of its accounting policies related to rent escalations, leasehold
improvements and landlord incentives to ensure that such transactions were
recorded in accordance with accounting principles generally accepted in the United States of
America. Specifically, the deficiency in the Companys controls over the selection and application
of its accounting policies failed to identify misstatements in property and equipment, deferred
rent liability, rent expense and amortization expense, which resulted in restatements of the
Companys 2004 consolidated financial statements and the interim condensed consolidated financial
statements for the quarters ended March 31, June 30 and
September 30, 2004 as described in Note 1(s) to the consolidated financial statements. Additionally, this control deficiency could result in a misstatement of property and
equipment, deferred rent liability, rent expense and amortization expense that would result in a
material misstatement to annual or interim financial statements that would not be prevented or
detected. Accordingly, management has determined that this control deficiency constitutes a material weakness. 38




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Management previously concluded that the Company maintained effective
internal control over financial reporting as of December 31, 2004.  In
connection with the restatement described above, management has determined
that the material weakness described above existed as of
December 31, 2004. Because of this material weakness, management has concluded that the Company
did not maintain effective internal control over financial reporting as of
December 31, 2004 based on the criteria established in Internal
Control  Integrated Framework issued by the COSO. Accordingly, management
has restated this report on internal control over financial reporting. Managements assessment of the effectiveness of the Companys internal control over financial
reporting as of December 31, 2004 has been audited by PricewaterhouseCoopers LLP, an independent
registered public accounting firm, as stated in their report appearing on page 40.  A.G. Lowenthal,
Chairman of the Board
And Chief Executive Officer E.K. Roberts,
President and Treasurer 
May 16, 2005 39




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of Oppenheimer Holdings Inc.: We have completed an
integrated audit of Oppenheimer Holdings Inc.s 2004 consolidated financial
statements and of its internal control over financial reporting as of December 31, 2004 and audits
of its 2003 and 2002 consolidated financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are
presented below. Consolidated financial statements In our opinion, the accompanying consolidated balance sheets and the related consolidated
statements of operations, changes in shareholders equity and cash flows present fairly, in all
material respects, the financial position of Oppenheimer Holdings Inc. (the Company) and its subsidiaries at
December 31, 2004 and 2003, and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 2004 in conformity with accounting principles
generally accepted in the United States of America. 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 the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit of financial
statements 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 our opinion. As discussed in Note 1(g), in 2002 the Company adopted the goodwill provisions of Statement of
Accounting Standards No. 142, Goodwill and Other Intangibles. As discussed in Note 1(s),
the Company has restated its 2004 financial statements to correct its
method of accounting for rent escalations, leasehold improvements, and landlord incentives. Internal control over financial reporting Also, we have audited managements assessment, included in Managements Report on Internal Control
over Financial Reporting appearing under Item 9A, that Oppenheimer Holdings Inc. did not maintain
effective internal control over financial reporting as of December 31, 2004, because the Company
did not maintain effective controls over the accounting for rent escalations, leasehold improvements, and landlord
incentives in accordance with generally accepted accounting principles, based on criteria
established in Internal Control  Integrated Frameworkissued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). The Companys management is responsible for
maintaining effective internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting. Our responsibility is to express
opinions on managements assessment and on the effectiveness of the Companys internal control over
financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the
standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in all material
respects. An 40




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audit of internal control over financial reporting includes obtaining an understanding
of internal control over financial reporting, evaluating managements assessment, testing and
evaluating the design and operating effectiveness of internal control, and performing such other
procedures as we consider necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinions. A companys internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A
companys internal control over financial reporting includes those policies and procedures that (i)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the Company
are being made only in accordance with authorizations of management and directors of the Company;
and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the Companys assets that could have a material effect on the
financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate. A material weakness is a control deficiency, or combination of control deficiencies, that results
in more than a remote likelihood that a material misstatement of the annual or interim financial
statements will not be prevented or detected. The following material weakness has been identified
and included in managements assessment. As of December 31,
2004, management has concluded that the Company did not maintain
effective controls over the selection and application of accounting policies related to
rent escalations, leasehold improvements and landlord incentives to ensure that such transactions
were recorded in accordance with accounting principles generally accepted in the United States of
America. Specifically, the deficiency in the Companys controls over the selection and application
of its accounting policies failed to identify misstatements in property and equipment, deferred rent
liability, rent expense and amortization expense, which resulted in
the restatements of the 2004
consolidated financial statements and the interim condensed consolidated financial statements for the
quarters ended March 31, June 30 and September 30,
2004 as described in Note 1(s) to the
consolidated financial statements. Additionally, this control deficiency could result in a
misstatement of property and equipment, deferred rent liability, rent
expense and amortization
expense that would result in a material misstatement to annual or interim financial statements that
would not be prevented or detected. Accordingly, management has determined that this
control deficiency constitutes a material weakness. This material weakness was considered in
determining the nature, timing, and extent of audit tests applied in our audit of the 2004
consolidated financial statements, and our opinion regarding the effectiveness of the Companys
internal control over financial reporting does not affect our opinion on those consolidated
financial statements. Management and we previously concluded that the Company maintained effective internal control over
financial reporting as of December 31, 2004. In connection with the restatement of the Companys
consolidated financial statements described in Note 1(s) to the consolidated financial statements,
management has determined that the material weakness described above existed as of December 31,
2004. Accordingly, Managements Report on Internal Control Over Financial Reporting has been
restated and our present opinion on internal control over financial reporting, as presented herein,
is different from that expressed in our previous report. 41




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In our opinion, managements assessment that the Company did not maintain effective internal
control over financial reporting as of December 31, 2004 is fairly stated, in all material
respects, based on criteria established in Internal Control  Integrated Frameworkissued by the
COSO. Also, in our opinion, because of the effects of the material weakness resulting from the
restatement of its financial statements, the Company has not maintained effective internal control
over financial reporting as of December 31, 2004, based on criteria established in Internal Control
 Integrated Frameworkissued by the COSO. PricewaterhouseCoopers LLP
New York, New York March 10, 2005, except for the restatement described in Note 1(s) to the consolidated financial
statements and the matter described in the fourth and fifth paragraphs of Managements Report on Internal Control Over Financial
Reporting, as to which the date is May 16, 2005 42




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OPPENHEIMER HOLDINGS INC.
CONSOLIDATED BALANCE SHEETS
AS AT DECEMBER 31, Restated2004
    
    
    2003(Expressed in thousands of U.S. dollars)ASSETSCash and cash equivalents
    
    $
    33,390
    
    
    $
    34,478Restricted deposits
    
    
    15,291
    
    
    
    14,466Deposits with clearing organizations
    
    
    17,006
    
    
    
    17,858Receivable from brokers and clearing organizations
    
    
    474,523
    
    
    
    278,521Receivable from customers
    
    
    864,304
    
    
    
    906,487Securities owned, including amounts pledged, at market value
    
    
    78,445
    
    
    
    95,223Notes receivable
    
    
    70,070
    
    
    
    97,919Other
    
    
    53,612
    
    
    
    55,706Stock exchange seats (approximate market value
$3,643; $4,968 in 2003)
    
    
    2,994
    
    
    
    2,994Property, plant and equipment, net
    
    
    23,545
    
    
    
    23,807Intangible assets, net of amortization
    
    
    35,130
    
    
    
    35,865Goodwill
    
    
    137,889
    
    
    
    137,889$
    1,806,199
    
    
    $
    1,701,213
 43




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OPPENHEIMER HOLDINGS INC.
CONSOLIDATED BALANCE SHEETS
AS AT DECEMBER 31, Restated2004
    
    
    2003(Expressed in thousands of U.S. dollars)LIABILITIES AND SHAREHOLDERS EQUITYLiabilitiesDrafts payable
    
    $
    59,239
    
    
    $
    68,148Bank call loans
    
    
    2,373
    
    
    
    91,500Payable to brokers and clearing organizations
    
    
    671,953
    
    
    
    467,966Payable to customers
    
    
    383,700
    
    
    
    406,137Securities sold, but not yet purchased, at market value
    
    
    10,536
    
    
    
    10,687Accrued compensation
    
    
    73,086
    
    
    
    88,864Accounts payable and other liabilities
    
    
    66,659
    
    
    
    35,450Income taxes payable
    
    
    2,399
    
    
    
    67Bank loans
    
    
    24,643
    
    
    
    39,655Long term debt
    
    
    35,378
    
    
    
    50,875Exchangeable debentures
    
    
    160,822
    
    
    
    160,822Deferred income tax, net
    
    
    8,528
    
    
    
    1,2061,499,316
    
    
    
    1,421,377Commitments and contingencies (note 13)Shareholders equityShare capital13,296,876 Class A non-voting shares issued
(2003-12,819,520 shares issued)
    
    
    49,504
    
    
    
    41,52099,680 Class B voting shares issued
    
    
    133
    
    
    
    13349,637
    
    
    
    41,653Contributed capital
    
    
    8,780
    
    
    
    5,966Retained earnings
    
    
    248,466
    
    
    
    232,217306,883
    
    
    
    279,836$
    1,806,199
    
    
    $
    1,701,213
 The accompanying notes are an integral part of these consolidated financial statements. 44




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OPPENHEIMER HOLDINGS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, Restated2004
    
    
    2003
    
    
    2002(Expressed in thousands of U.S. dollars, except per share amounts)REVENUE:Commissions
    
    $
    327,040
    
    
    $
    325,071
    
    
    $
    135,747Principal transactions, net
    
    
    112,277
    
    
    
    136,672
    
    
    
    58,227Interest
    
    
    45,418
    
    
    
    42,600
    
    
    
    27,622Underwriting fees
    
    
    44,804
    
    
    
    50,623
    
    
    
    22,760Advisory fees
    
    
    102,531
    
    
    
    80,550
    
    
    
    26,365Arbitration award
    
    
    3,900
    
    
    
    21,750
    
    
    
    Other
    
    
    19,170
    
    
    
    32,727
    
    
    
    12,612655,140
    
    
    
    689,993
    
    
    
    283,333EXPENSES:Compensation and related expenses
    
    
    428,247
    
    
    
    435,025
    
    
    
    169,810Clearing and exchange fees
    
    
    15,546
    
    
    
    20,734
    
    
    
    9,607Communications and data processing costs
    
    
    55,271
    
    
    
    59,652
    
    
    
    33,227Occupancy and equipment costs
    
    
    50,191
    
    
    
    48,479
    
    
    
    26,611Interest
    
    
    19,936
    
    
    
    16,891
    
    
    
    8,379Other
    
    
    50,041
    
    
    
    60,497
    
    
    
    22,782619,232
    
    
    
    641,278
    
    
    
    270,416Profit before income taxes
    
    
    35,908
    
    
    
    48,715
    
    
    
    12,917Income tax provision
    
    
    14,831
    
    
    
    20,019
    
    
    
    5,370Profit before cumulative effect of a change in
accounting principle
    
    
    21,077
    
    
    
    28,696
    
    
    
    7,547Cumulative effect of a change in accounting principle
    
    
    
    
    
    
    
    
    
    
    1,774NET PROFIT FOR YEAR
    
    $
    21,077
    
    
    $
    28,696
    
    
    $
    9,321Earnings per
shareBasic earnings per share
    
    $
    1.58
    
    
    $
    2.26
    
    
    $
    0.75- Before the effect of a change in accounting
principle
    
    $
    1.58
    
    
    $
    2.26
    
    
    $
    0.61- Cumulative effect of a change in accounting
principle
    
    
    
    
    
    
    
    
    
    $
    0.14Diluted earnings per share
    
    $
    1.24
    
    
    $
    1.65
    
    
    $
    0.73
 The accompanying notes are an integral part of these consolidated financial statements. 45




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OPPENHEIMER HOLDINGS INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
FOR THE YEAR ENDED DECEMBER 31, Restated2004
    
    
    2003
    
    
    2002(Expressed in thousands of U.S. dollars)SHARE CAPITALBalance at beginning of year
    
    $
    41,653
    
    
    $
    34,471
    
    
    $
    34,257Issue of Class A Shares
    
    
    11,104
    
    
    
    7,767
    
    
    
    3,503Repurchase of Class A Shares for cancellation
    
    
    (3,120
    )
    
    
    (585
    )
    
    
    (3,289
    )Balance at end of year
    
    $
    49,637
    
    
    $
    41,653
    
    
    $
    34,471CONTRIBUTED CAPITALBalance at beginning of year
    
    $
    5,966
    
    
    $
    5,028
    
    
    $
    4,113Tax benefit from employee stock options exercised
    
    
    2,814
    
    
    
    938
    
    
    
    915Balance at end of year
    
    $
    8,780
    
    
    $
    5,966
    
    
    $
    5,028RETAINED EARNINGSBalance at beginning of year
    
    $
    232,217
    
    
    $
    208,137
    
    
    $
    203,325Net profit for year
    
    
    21,077
    
    
    
    28,696
    
    
    
    9,321Dividends paid
    
    
    (4,828
    )
    
    
    (4,616
    )
    
    
    (4,509
    )Balance at end of year
    
    $
    248,466
    
    
    $
    232,217
    
    
    $
    208,137Total Shareholders Equity
    
    $
    306,883
    
    
    $
    279,836
    
    
    $
    247,636
 The accompanying notes are an integral part of these consolidated financial statements. 46




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OPPENHEIMER HOLDINGS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, Restated2004
    
    
    2003
    
    
    2002(Expressed in thousands of U.S. dollars)Cash flows from operating activities:Net profit for year
    
    
    $21,077
    
    
    
    $28,696
    
    
    
    $9,321Adjustments to reconcile net profit to net cash provided
by (used in) operating activities:Non-cash items included in net profit:Depreciation and amortization
    
    
    11,217
    
    
    
    9,518
    
    
    
    4,864Write off of negative goodwill
    
    
    
    
    
    
    
    
    
    
    (1,774
    )Deferred income tax, net
    
    
    7,322
    
    
    
    963
    
    
    
    57Tax benefit from employee stock options exercised
    
    
    2,814
    
    
    
    938
    
    
    
    915Amortization of notes receivable
    
    
    29,174
    
    
    
    31,405
    
    
    
    6,319Change in allowance for doubtful accounts
    
    
    3,100
    
    
    
    (3,577
    )
    
    
    2,056Decrease (increase) in operating assets, net of the effect of acquisitions
in 2002 and 2003:Restricted deposits
    
    
    (825
    )
    
    
    (7,026
    )
    
    
    (5,047
    )Deposits with clearing organizations
    
    
    852
    
    
    
    (14,252
    )
    
    
    4,080Receivable from brokers and clearing organizations
    
    
    (196,002
    )
    
    
    213,573
    
    
    
    (391,400
    )Receivable from customers
    
    
    42,183
    
    
    
    (513,558
    )
    
    
    71,057Securities owned
    
    
    16,778
    
    
    
    (32,267
    )
    
    
    699Notes receivable
    
    
    (1,325
    )
    
    
    (46,800
    )
    
    
    (10,841
    )Other assets
    
    
    (1,007
    )
    
    
    (10,259
    )
    
    
    (5,433
    )Increase (decrease) in operating liabilities, net of the effect of
acquisitions in 2002 and 2003:Drafts
payable
    
    
    (8,909
    )
    
    
    46,495
    
    
    
    1,031Payable to brokers and clearing organizations
    
    
    203,987
    
    
    
    (52,777
    )
    
    
    341,531Payable to customers
    
    
    (22,437
    )
    
    
    243,794
    
    
    
    (26,044
    )Securities sold, but not yet purchased
    
    
    (151
    )
    
    
    1,081
    
    
    
    685Accrued compensation
    
    
    (15,778
    )
    
    
    47,543
    
    
    
    1,558Accounts payable and other liabilities
    
    
    31,208
    
    
    
    1,807
    
    
    
    (7,439
    )Income taxes payable
    
    
    2,332
    
    
    
    (1,990
    )
    
    
    565Cash provided by (used in) operating activities
    
    
    125,611
    
    
    
    (56,693
    )
    
    
    (3,240
    )Cash flows from investing activities:Purchase of the Oppenheimer divisions
    
    
    
    
    
    
    (15,611
    )
    
    
    Purchase of the business of BUYandHOLD
    
    
    
    
    
    
    
    
    
    
    (2,297
    )Proceeds from sale of exchange seat
    
    
    
    
    
    
    
    
    
    
    24Purchase of property, plant and equipment
    
    
    (10,219
    )
    
    
    (12,215
    )
    
    
    (1,360
    )Cash (used in) investing activities
    
    
    (10,219
    )
    
    
    (27,826
    )
    
    
    (3,633
    )
 47




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OPPENHEIMER HOLDINGS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
FOR THE YEAR ENDED DECEMBER 31, Restated2004
    
    
    2003
    
    
    2002(Expressed in thousands of U.S. dollars)Cash flows from financing activities:Cash dividends paid on Class A and
Class B Shares
    
    
    (4,828
    )
    
    
    (4,616
    )
    
    
    (4,509
    )Issuance of Class A Shares
    
    
    11,104
    
    
    
    7,767
    
    
    
    3,503Repurchase of Class A Shares for cancellation
    
    
    (3,120
    )
    
    
    (585
    )
    
    
    (3,289
    )Zero coupon promissory note repayments
    
    
    (15,497
    )
    
    
    (14,639
    )
    
    
    Proceeds from issuance of bank loans
    
    
    
    
    
    
    50,000
    
    
    
    Bank loan repayments
    
    
    (15,012
    )
    
    
    (10,345
    )
    
    
    Increase (decrease) in bank call loans
    
    
    (89,127
    )
    
    
    75,300
    
    
    
    3,066Cash (used in) provided by financing activities
    
    
    (116,480
    )
    
    
    102,882
    
    
    
    (1,229
    )Net (decrease) increase in cash and cash equivalents
    
    
    (1,088
    )
    
    
    18,363
    
    
    
    (8,102
    )Cash and cash equivalents, beginning of year
    
    
    34,478
    
    
    
    16,115
    
    
    
    24,217Cash and cash equivalents, end of year
    
    $
    33,390
    
    
    $
    34,478
    
    
    $
    16,115
 The accompanying notes are an integral part of these financial statements 48




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OPPENHEIMER HOLDINGS INC.
Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)
December 31, 2004 GENERAL   1.  Summary of significant accounting policies
These consolidated financial statements have been prepared in conformity with accounting principles
generally accepted in the United States of America for purpose of inclusion in the Companys annual
report on Form 10-K and in its annual report to shareholders. 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 disclosures of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during the reporting periods. The most
significant estimates are related to income taxes and contingencies. Actual results could be
materially different from these estimates. Since operations are predominantly based in the United States of America, these consolidated
financial statements are presented in U.S. dollars. Certain prior period amounts in the balance sheet and the statements of operations and cash flows
have been reclassified to conform to the current presentation. The following is a summary of significant accounting policies followed in the preparation of these
consolidated financial statements: 49




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(a)  Basis of consolidation  Oppenheimer & Co. Inc.
    
    -broker/dealer in securitiesOppenheimer Asset Management Inc.
    
    -investment advisory servicesFreedom Investments, Inc.
    
    -discount broker in securities
 Significant intercompany balances and transactions have been eliminated in the preparation of the
consolidated financial statements. (b)  Brokerage operations  (c)  Asset management operations  (d)  Fair value  (e)  Cash and cash equivalents  (f)  Drafts payable  (g)  Goodwill  50




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determine if the fair value of goodwill of a reporting unit is less than its carrying amount.
Goodwill recorded as at December 31, 2004 has been tested for impairment and no such impairment was
recorded. On January 1, 2002, the Company wrote off unamortized negative goodwill in the amount of
$1,774,000, as required by the standard. Negative goodwill represents the excess fair value of net
assets acquired above the cost of acquisition. The write-off was recognized in the statement of
operations for the year ended December 31, 2002 as a gain from the cumulative effect of a change in
accounting principle. (h)  Intangible Assets  (i)  Property, plant and equipment, lease accounting and landlord incentives  (i)  Foreign currency translations  (k)  Income taxes  (l)  Securities lending activities  Securities borrowed transactions require the Company to deposit cash or other collateral with the
lender. The Company receives cash or collateral in an amount generally in excess of the market
value of securities loaned. The Company monitors the market value of securities borrowed and loaned on a daily basis and may
require counterparties to deposit additional collateral or return collateral pledged, when
appropriate. Included in receivable from brokers and clearing organizations are deposits paid for securities
borrowed of $415,288,000 ($237,329,000 in 2003). Included in payable to brokers and clearing 51




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organizations are deposits received for securities loaned of $641,393,000 ($444,977,000 in 2003). (m)  Resale and repurchase agreements  The Company obtains possession of collateral with a market value equal to or in excess of the
principal amount loaned under reverse repurchase agreements. Collateral is valued daily and
adjusted when appropriate. (n)  Investment banking revenues  (o)  Interest expense  Interest expense relating to the variable rate exchangeable debentures is computed using the
interest method. The interest method requires the application of the effective interest rate over
the life of increasing rate debt instruments. The effective annual interest rate under the interest
method of the variable rate exchangeable debentures is 4.5% over the life of the debentures. (p)  Stock-based compensation plans  (q)  Reserves  The Company also records reserves or allowances for doubtful accounts related to receivables from
clients and financial consultants. Client loans are collateralized by securities; however, if
there is a decline in the value of the collateral and the Company cannot obtain additional
collateral or collect on the loan, a reserve may be established. The Company also makes loans or
pays advances to financial advisors as part of its hiring process. Reserves are
established on these receivables if the financial advisor is no longer associated with the 52




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Company
and the receivable has not been promptly repaid or if it is determined that it is probable the
amount will not be collected. The Company also estimates taxes payable and records income tax reserves. These reserves are based
on historic experience and may not reflect the ultimate liability. The Company monitors and adjusts
these reserves as necessary. (r)  Notes receivable  (s)  Restatement of 2004 financial statements  The correction involves recording expense for leases with escalating rents on a straight-line basis
over the lease term, rather than as paid, and correctly accounting for landlord incentives,
to record leasehold amortization expense and deferred incentive amortization. The Company had previously either not recorded the landlord incentives, or recorded them as a reduction to leasehold improvements, rather than as a rental incentive. In addition, the Companys interest expense on its variable rate exchangeable debentures is being
adjusted amongst the four quarters of 2004. In its Annual Report on Form 10-K for the year ended
December 31, 2004, the Company had booked an immaterial cumulative net adjustment in the fourth
quarter of $355,000. With the restatement of the 2004 quarters, the Company has chosen to record
the applicable interest expense in each quarter rather than record the impact of the matter of the
interest method as a fourth quarter adjustment. There is no impact on net profit for the year ended
December 31, 2004 of the interest method matter. The Company has restated its Consolidated Balance
Sheets as at December 31, 2004, as well as its Consolidated Statements of Operations, Consolidated
Statements of Cash Flows and Consolidated Statements of Shareholders Equity as well as notes 1, 5,
10, 11, 13, 16 and 19 of Notes to Consolidated Financial Statements for the year ended December 31,
2004 to reflect the restatement for the matters described above. The impact of the restatement on net profit is a reduction in net profit of $1,424,000 for the year
ended December 31, 2004, and reductions of $1,185,000, $142,000 and $179,000, respectively, for the
quarters ended March 31, June 30 and September 30, 2004. The impact of the error on the quarters
and years prior to 2004 was immaterial. Consequently, the cumulative
net effect of the error of $779,000 as of December 31, 2003 has been recorded in the first 53




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quarter
of 2004. The following table isolates each of the restated amounts in the Companys consolidated financial
statements for the year ended December 31, 2004. December 31, 2004As Restated
    
    
    As originally reportedConsolidated Balance Sheets:Other assets
    
    $
    53,612
    
    
    $
    53,063Property, plant and equipment, net
    
    $
    23,545
    
    
    $
    20,368Total assets
    
    $
    1,806,199
    
    
    $
    1,802,473Accounts payable and other liabilities
    
    $
    66,658
    
    
    $
    60,478Deferred income tax, net
    
    $
    8,528
    
    
    $
    9,559Total liabilities
    
    $
    1,499,316
    
    
    $
    1,494,166Retained earnings
    
    $
    248,466
    
    
    $
    249,890Total shareholders equity
    
    $
    306,883
    
    
    $
    308,307Total liabilities and shareholders equity
    
    $
    1,806,199
    
    
    $
    1,802,473
 For the year ended December 31, 2004As Restated
    
    
    As originally reportedConsolidated Statements of Operations:Occupancy costs
    
    $
    50,191
    
    
    $
    47,737Total expenses
    
    $
    619,232
    
    
    $
    616,778Profit before income taxes
    
    $
    35,908
    
    
    $
    38,362Income tax provision
    
    $
    14,831
    
    
    $
    15,861Net profit for period
    
    $
    21,077
    
    
    $
    22,501Basic earnings per share
    
    $
    1.58
    
    
    $
    1.68Diluted earnings per share
    
    $
    1.24
    
    
    $
    1.31
 54




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For the year ended December 31, 2004As Restated
    
    

As
OriginallyReportedConsolidated Statements of Changes in
Shareholders Equity:Net profit for period
    
    $
    21,077
    
    
    $
    22,501Retained earnings, end of period
    
    $
    248,466
    
    
    $
    249,890Total shareholders equity
    
    $
    306,883
    
    
    $
    308,307Condensed Consolidated Statements of Cash
Flows:Cash provided by operating activities
    
    $
    125,611
    
    
    $
    121,992Cash used in investing activities
    
    $
    (10,219
    )
    
    $
    (6,600
    )
 2.  Recently Issued Accounting Standards The Financial Accounting Standards Board issued SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities, FIN No. 45, Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others, FIN No. 46-R, Consolidation
of Variable Interest Entities, SFAS No. 149, Amendment of Statement 133 on Derivative Instruments
and Hedging Activities, and SFAS No. 150, Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity. The Company has adopted these statements and
interpretations and their adoption did not have a material impact on its financial results. In December 2004, the FASB issued a revision to SFAS No. 123, Accounting for Stock-Based
Compensation, SFAS No. 123-R, Share-Based Payment. SFAS No. 123-R focuses primarily on
transactions in which an entity exchanges its equity instruments for employee services and
generally establishes standards for accounting for transactions in which an entity obtains goods or
services in share-based transactions. The implementation date for SFAS No. 123-R has recently been
extended. Consequently, the Company will commence expensing stock-based compensation awards on
January 1, 2006 using the modified prospective method. The Company anticipates that the impact of
the adoption of SFAS No. 123-R may be material to its statement of operations. 55




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3.  Restricted deposits
Deposits of $15,291,000 (2003  $14,466,000) were held at year-end in special reserve bank accounts
for the exclusive benefit of customers in accordance with regulatory requirements. To the extent
permitted, these deposits are invested in interest bearing accounts collateralized by qualified
securities. 4.  Securities owned and Securities sold, but not yet purchased (at fair market value) 2004
    
    
    2003Securities owned consist of:Corporate equities
    
    $
    37,111,000
    
    
    $
    34,877,000Corporate and sovereign debt
    
    
    14,326,000
    
    
    
    24,962,000U.S. government and agency and state and
municipal government obligations
    
    
    23,592,000
    
    
    
    32,070,000Money market funds
    
    
    3,402,000
    
    
    
    3,288,000Other
    
    
    14,000
    
    
    
    26,000$
    78,445,000
    
    
    $
    95,223,000Securities sold, but not yet purchased
consist of:Corporate equities
    
    $
    5,321,000
    
    
    $
    3,128,000Corporate debt
    
    
    3,266,000
    
    
    
    5,115,000U.S. government and agency and state and
municipal government obligations and other
    
    
    1,949,000
    
    
    
    2,444,000$
    10,536,000
    
    
    $
    10,687,000
 Securities owned and Securities sold, but not yet purchased, consist of trading and investment
securities at fair market values. Included in securities owned at December 31, 2004 are corporate
equities with fair market values of approximately $15,097,000 ($15,781,000 in 2003), which are
correlated to deferred compensation liabilities to certain employees. At December 31, 2004, the
Company has pledged securities owned of approximately $3,333,000 ($1,427,000 in 2003) as collateral
to counterparties for securities loan transactions, which can be sold or repledged. 5.  Property, plant and equipment  Accumulated
    
    
    Restateddepreciation/
    
    
    2004
    
    
    2003Cost
    
    
    amortization
    
    
    Net book value
    
    
    Net book valueFurniture, fixtures
and equipment
    
    $
    45,633
    
    
    $
    32,667
    
    
    $
    12,966
    
    
    $
    14,671Leasehold
improvements
    
    
    19,818
    
    
    
    9,239
    
    
    
    10,579
    
    
    
    9,136$
    65,450
    
    
    $
    41,906
    
    
    $
    23,545
    
    
    $
    23,807
 Depreciation and amortization expense, included in occupancy and equipment costs, was $10,482,000
(restated), $8,783,000 and $4,864,000 in the years ended December 31, 2004, 2003 56




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and 2002,
respectively. 6.  Bank call loans  2004
    
    
    2003
    
    
    2002Year-end balance
    
    $
    2,373,000
    
    
    $
    91,500,000
    
    
    $
    16,200,000Weighted interest rate
(at end of year)
    
    
    2.6875
    %
    
    
    1.41
    %
    
    
    1.38
    %Maximum balance (at any
month end)
    
    $
    121,700,000
    
    
    $
    170,100,000
    
    
    $
    49,281,000Average amount
outstanding (during the
year) (1)
    
    $
    50,083,000
    
    
    $
    86,026,000
    
    
    $
    19,760,000Weighted average
interest rate (during
the year) (2)
    
    
    1.43
    %
    
    
    2.96
    %
    
    
    2.10
    %
   (1)
    
    The average amount outstanding during the year was computed by adding amounts outstanding at
the end of each month and dividing by twelve.(2)
    
    The weighted average interest rate during the year was computed by dividing the actual
interest expense by the average bank call loans outstanding at the end of each month. Aggregate interest paid on bank call loans by the Company on a cash basis during the years ended
December 31, 2004, 2003 and 2002 was $9,546,000, $6,523,000 and $6,473,000, respectively. 7.  Long term liabilities Issued
    

Maturity
Date
    
    
    Interest Rate
    
    
    December 31, 2004Bank loans (a)
    
    
    1/2/2008
    
    
    
    6.5
    %
    
    $
    24,643,000Less current portion
    
    
    
    
    
    
    
    
    
    
    10,119,000Long term portion of bank loans
    
    
    
    
    
    
    
    
    
    $
    14,524,000Zero Coupon Promissory Note,
issued January 2, 2003 (b)
    
    
    
    
    
    
    0
    %
    
    $
    35,378,000Less current portion
    
    
    
    
    
    
    
    
    
    
    13,019,000Long term portion of long-term debt
    
    
    
    
    
    
    
    
    
    $
    22,359,000First and Second Variable Rate
Exchangeable
Debentures,issued
January 6, 2003 and May 12, 2003,
respectively (c)
    
    
    1/2/2013
    
    
    
    4.5
    %
    
    $
    160,822,000
 57




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##### Table of Contents



a)
    
    Bank loans are subject to a credit arrangement with Canadian Imperial Bank of Commerce (CIBC)
dated January 2, 2003 in the aggregate amount of $50 million dollars, and bear interest at the U.S.
base rate plus 2% per annum. The minimum annual principle repayment under the agreement is
approximately $10,119,000. The principle repayments are tied to certain employee notes receivable
issued during 2003 and repayments above the minimum level are triggered by the termination of
employment of these employees. In accordance with the credit arrangement, the Company has provided
certain covenants to CIBC with respect to the maintenance of minimum debt/equity ratios and net
capital of Oppenheimer. In the Companys view, the most restrictive of the covenants requires that
Oppenheimer maintain minimum excess net capital of $100 million. As at December 31, 2004, the
Company was in compliance with the covenants. Interest expense in 2004 on bank loans was $2,118,000
($2,021,000 in 2003), of which $2,177,000 ($1,802,000 in 2003) was paid on a cash basis.(b)The Zero Coupon Promissory Note is repayable as related employee notes receivable, which are
assigned to Oppenheimer, become due and are forgiven. Such payments are to be made notwithstanding
whether any of the employees loans default.(c)The first and second variable rate exchangeable debentures are exchangeable for approximately
6.9 million Class A Shares of the Company at the rate of $23.20 per share. The annual interest rate
is 3% in 2003, 4% in 2004  2006, and 5% in 2007 through maturity. The first and second variable
rate exchangeable debentures, which mature on January 2, 2013, contain a retraction clause, which
may be activated by the holder for a period of 120 days at the end of year seven. Interest is
payable semi-annually in June and December. Interest expense for the year ended December 31, 2004
on the first and second variable rate exchangeable debentures was $7,357,000 ($7,217,000 in 2003)
of which $6,540,000 ($4,811,000 in 2003) was paid on a cash basis. Under the interest method, the
effective annual interest rate over the life of the first and second variable rate exchangeable
debentures is 4.5%. 8.  Share capital
The Companys authorized share capital, all of which is without par value, consists of (a) an
unlimited number of first preference shares issuable in series; (b) an unlimited number of Class A
non-voting shares (Class A Shares); and (c) 99,680 Class B voting shares (Class B Shares). The Class A and the Class B Shares are equal in all respects except that the Class A Shares are
non-voting. The Companys issued and outstanding share capital is as follows (no first preference shares have
been issued): 2004
    
    
    2003
    
    
    200213,296,876 (12,819,520 in
2003 and 12,397,007 in 2002)
Class A Shares
    
    $
    49,504,000
    
    
    $
    41,520,000
    
    
    $
    34,338,00099,680 Class B Shares
    
    
    133,000
    
    
    
    133,000
    
    
    
    133,000$
    49,637,000
    
    
    $
    41,653,000
    
    
    $
    34,471,000
 Issuance of shares
The Company issued 75,137 Class A Shares from Treasury for a total consideration of $2,547,000 to
the Companys 401(k) plan in the year ended December 31, 2004 (23,042 for $613,000 in 2003 and nil
in 2002). 58




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##### Table of Contents



In addition, the Company issued 534,319 Class A Shares from Treasury for a total consideration of
$8,557,000 pursuant to its Equity Incentive Plan in the year ended December 31, 2004 (425,171 for
$7,154,000 for 2003 and 211,322 for $3,503,000 in 2002). See note 12. Issuer Bid
The Company may purchase up to 669,000 Class A Shares by way of a Normal Course Issuer Bid through
the facilities of The Toronto Stock Exchange and/or the New York Stock Exchange until July 21,
2005. During the year ended December 31, 2004, the Company purchased 132,100 Class A Shares for a
total consideration of $3,120,000, pursuant to the Normal Course Issuer Bid (25,700 for $585,000 in
2003 and 151,400 shares for $3,289,000 in 2002). All shares purchased pursuant to the Normal Course
Issuer Bid have been cancelled. Dividends
In 2004, the Company paid cash dividends to holders of Class A and Class B Shares as follows ($0.36
in 2003 and 2002): Dividend per share
    
    Record Date
    
    Payment Date$0.09
    
    February 6, 2004
    
    February 20, 2004$0.09
    
    May 7, 2004
    
    May 21, 2004$0.09
    
    August 6, 2004
    
    August 20, 2004$0.09
    
    November 5, 2004
    
    November 19, 2004
 9.  Contributed capital Contributed capital represents the tax benefit on the difference between market price and exercise
price on employee stock options exercised. 10.  Income taxes The income tax provision shown in the consolidated statement of operations is reconciled to amounts
of tax that would have been payable (recoverable) from the application of combined federal, state,
provincial and local tax rates to pre-tax profit as follows: Restated2004
    
    
    2003
    
    
    2002Profit before income tax
    
    $
    35,908,000
    
    
    $
    48,715,000
    
    
    $
    12,917,000U.S. federal tax at 35%
    
    
    12,568,000
    
    
    $
    17,700,000
    
    
    $
    4,521,000Canadian tax at 44%
    
    
    
    
    
    
    
    
    
    
    74,000Combined state and local tax, net of
federal benefit
    
    
    2,365,000
    
    
    
    1,915,000
    
    
    
    497,000Income taxes at statutory rates
    
    
    14,933,000
    
    
    
    19,615,000
    
    
    
    5,092,000Tax effect of non-taxable interest and
dividends
    
    
    (343,000
    )
    
    
    (329,000
    )
    
    
    (148,000
    )Tax effect of business promotion expense
    
    
    548,000
    
    
    
    686,000
    
    
    
    484,000Impact of non-taxable death benefits
    
    
    (278,000
    )
    
    
    
    
    
    
    Other
    
    
    (29,000
    )
    
    
    47,000
    
    
    
    (58,000
    )Income taxes
    
    $
    14,831,000
    
    
    $
    20,019,000
    
    
    $
    5,370,000Profit before income tax provision:Canadian operations
    
    $
    (41,000
    )
    
    $
    (1,857,000
    )
    
    $
    (10,000
    )U.S. operations
    
    $
    35,949,000
    
    
    $
    50,572,000
    
    
    $
    12,927,000
 59




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##### Table of Contents



Income taxes included in the consolidated statements of operations represent the following: Restated2004
    
    
    2003
    
    
    2002Current:Canadian tax
    
    
    
    
    
    
    
    
    
    $
    74,000U.S. federal tax
    
    $
    18,263,000
    
    
    $
    18,776,000
    
    
    
    5,176,000State and local tax
    
    
    5,951,000
    
    
    
    3,493,000
    
    
    
    1,226,00024,214,000
    
    
    
    22,269,000
    
    
    
    6,476,000Deferred:U.S. federal tax
    
    
    (7,077,000
    )
    
    
    (1,819,000
    )
    
    $
    (885,000
    )State and local tax
    
    
    (2,306,000
    )
    
    
    (431,000
    )
    
    
    (221,000
    )(9,383,000
    )
    
    
    (2,250,000
    )
    
    
    (1,106,000
    )$
    14,831,000
    
    
    $
    20,019,000
    
    
    $
    5,370,000
 Deferred income taxes reflect the net tax effects of temporary differences between the financial
reporting and tax bases of assets and liabilities and are measured using enacted tax rates and laws
that will be in effect when such differences are expected to reverse. Significant components of the
Companys deferred tax assets and liabilities at December 31, 2004 and 2003 were as follows: December 31,Restated2004
    
    
    2003Deferred tax assets:Employee deferred compensation plans
    
    $
    5,495,000
    
    
    $
    4,115,000Allowance for doubtful accounts
    
    
    1,168,000
    
    
    
    1,799,000Reserve for litigation and legal fees
    
    
    3,717,000
    
    
    
    3,780,000Interest method on exchangeable debentures
    
    
    1,354,000
    
    
    
    1,010,000Other
    
    
    1,262,000
    
    
    
    1,172,000Total deferred tax assets
    
    $
    12,996,000
    
    
    $
    11,876,000Deferred tax liabilities:Investment in partnerships
    
    $
    3,103,000
    
    
    
    Section 197 amortization of goodwill
    
    
    8,929,000
    
    
    $
    4,242,000Involuntary conversion
    
    
    6,891,000
    
    
    
    5,616,000Difference between book and tax depreciation
    
    
    2,601,000
    
    
    
    3,224,000Total deferred tax liabilities
    
    $
    21,524,000
    
    
    $
    13,082,000
 Goodwill arising from the acquisitions of Josephthal Group Inc. and the Oppenheimer divisions is
being amortized for tax purposes on a straight-line basis over 15 years. The difference between
book and tax is recorded as a deferred tax liability. On a cash basis, the Company paid income taxes for the years ended December 31, 2004, 2003 and 2002
in the amounts of $10,654,000, $13,342,000 and $8,411,000, respectively. 60




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11.  Earnings per share  Earnings per share has been calculated as follows: Restated2004
    
    
    2003
    
    
    2002Basic weighted average
number of shares
outstanding
    
    
    13,365,453
    
    
    
    12,692,634
    
    
    
    12,429,264Net effect, if converted
method
    
    
    6,932,000
    
    
    
    6,932,000
    
    
    
    Net effect, treasury method
    
    
    100,916
    
    
    
    317,850
    
    
    
    280,278Diluted common shares (1)
    
    
    20,398,369
    
    
    
    19,942,484
    
    
    
    12,709,542Net profit, as reported
    
    $
    21,077,000
    
    
    $
    28,696,000
    
    
    $
    9,321,000Effect of dilutive
exchangeable debentures
    
    
    4,267,000
    
    
    
    4,186,000
    
    
    
    Net profit available to
shareholders and assumed
conversions
    
    $
    25,344,000
    
    
    $
    32,882,000
    
    
    $
    9,321,000Basic earnings per share
    
    $
    1.58
    
    
    $
    2.26
    
    
    $
    0.75- Before cumulative effect
of a change in accounting
principle
    
    $
    1.58
    
    
    $
    2.26
    
    
    $
    0.61- Cumulative effect of a
change in accounting
principle
    
    
    
    
    
    
    
    
    
    $
    0.14Diluted earnings per share
    
    $
    1.24
    
    
    $
    1.65
    
    
    $
    0.73(1) The diluted earnings
per share computations do
not include the
antidilutive effect of the
following options:Number of antidilutive
options, end of period
    
    
    739,116
    
    
    
    291,995
    
    
    
    509,630
 Stock-based compensation  In accordance with SFAS 123, the following presents the pro forma income and earnings per share
impact, using a fair value calculation, of the Companys stock-based
compensation. Amounts are expressed in thousands of U.S. dollars, except per share amounts. 61




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Year ended December 31,Restated2004
    
    
    2003
    
    

2002Stock based employee compensation
expense included in reported net
income
    
    $
    808
    
    
    $
    468
    
    
    
    nilNet profit as reported
    
    $
    21,077
    
    
    $
    28,696
    
    
    $
    9,321Additional compensation expense
    
    
    1,561
    
    
    
    1,840
    
    
    
    1,906Pro forma net profit
    
    $
    19,516
    
    
    $
    26,856
    
    
    $
    7,415Basic profit per share as reported
    
    $
    1.58
    
    
    $
    2.26
    
    
    $
    0.75Diluted profit per share as reported
    
    $
    1.24
    
    
    $
    1.65
    
    
    $
    0.73Pro forma basic profit per share
    
    $
    1.46
    
    
    $
    2.12
    
    
    $
    0.60Pro forma diluted profit per share
    
    $
    1.17
    
    
    $
    1.56
    
    
    $
    0.58
 For purposes of the pro forma presentation, the Company determined fair value using the
Black-Scholes option pricing model with the following weighted average assumptions for grants in
fiscal 2004, 2003 and 2002, respectively: expected dividend yields of 1.1%, 1.3% and 1.4%;
risk-free interest rates ranging from 2.9% to 3.8%, 2.87% to 3.4% and 3.75% to 4.55%; expected
volatility ranging from 18% to 21%, 21% to 23%, and 27% to 28%; and expected life of 5 years. The
weighted average fair value of options granted during 2004, 2003 and 2002, respectively was
$2,961,000, $1,697,000 and $1,946,000. The fair value is being amortized over five years on an
after-tax basis, where applicable for purposes of pro forma presentation. Stock options generally
expire five years after the date of grant or three months after the date of retirement, if earlier.
Stock options generally vest over a five year period with 0% vesting in year one, 25% of the shares
becoming exercisable on each of the next three anniversaries of the grant date and the balance
vesting in the last six months of the option life. The vesting period is at the discretion of the
Compensation and Stock Option Committee and is determined at the time of grant. The calculation of fair value in this pro forma presentation is not indicative of future amounts
because it does not take into consideration future grants or any difference between actual and
assumed forfeitures. 12.  Employee Compensation Plans Equity Incentive Plan
 62




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##### Table of Contents



2004
    
    
    2003
    
    
    2002Number of
    
    
    Weighted average
    
    
    Number of
    
    
    Weighted average
    
    
    Number of
    
    
    Weighted averageshares
    
    
    exercise price
    
    
    shares
    
    
    exercise price
    
    
    shares
    
    
    exercise priceOptions
outstanding,
beginning of year
    
    
    1,884,983
    
    
    $
    21.81
    
    
    
    1,978,959
    
    
    $
    20.16
    
    
    
    1,907,503
    
    
    $
    17.36Options granted
    
    
    510,606
    
    
    $
    32.58
    
    
    
    376,500
    
    
    $
    24.97
    
    
    
    383,128
    
    
    $
    27.14Options exercised
    
    
    (534,319
    )
    
    $
    16.02
    
    
    
    (425,171
    )
    
    $
    16.83
    
    
    
    (211,322
    )
    
    $
    16.57Options forfeited
    
    
    (201,900
    )
    
    $
    13.64
    
    
    
    (45,305
    )
    
    $
    22.34
    
    
    
    (100,350
    )
    
    $
    26.35Options
outstanding, end of
year
    
    
    1,659,370
    
    
    $
    27.19
    
    
    
    1,884,983
    
    
    $
    21.81
    
    
    
    1,978,959
    
    
    $
    20.16Options vested, end
of year
    
    
    312,171
    
    
    $
    23.45
    
    
    
    581,723
    
    
    $
    16.63
    
    
    
    462,185
    
    
    $
    16.13
 The following table summarizes stock options outstanding and exercisable as at December 31, 2004. Weighted averageWeighted average
    
    
    exercise price
    
    
    Number
    
    
    Weighted averageRange of
    
    Number
    
    
    remaining
    
    
    of outstanding
    
    
    exercisable
    
    
    exercise price ofexercise prices
    
    outstanding
    
    
    contractual life
    
    
    options
    
    
    (vested)
    
    
    vested options$14.938 - $25.00
    
    
    770,254
    
    
    2.06 years
    
    $
    23.17
    
    
    
    235,546
    
    
    $
    22.18$25.00 - $34.51
    
    
    889,116
    
    
    3.27 years
    
    $
    30.68
    
    
    
    76,625
    
    
    $
    27.35$14.938 - $34.51
    
    
    1,659,370
    
    
    2.69 years
    
    $
    27.19
    
    
    
    312,171
    
    
    $
    23.45
 Stock Appreciation Rights
The Company has granted Stock Appreciation Rights to certain employees as part of their
compensation package based on a formula reflecting gross production and length of service. The
value of Stock Appreciation Rights granted in 2004 total approximately $1,028,000 ($635,000 in 2003
and nil in 2002) and will vest five years from the end of the related fiscal year. The liability is
being recognized on a straight-line basis over the vesting period. Other stock-related compensation awards
In 2003, the Company awarded 36,110 Class A Shares to certain employees, which will vest if the
employees are continuously employed by the Company until January 3, 2006. The aggregate value of
this award has been estimated at $211,000. The liability is being recognized over the vesting
period. The amount expensed in 2004 for stock appreciation rights and other stock-related compensation
awards was $808,000 ($468,000 in 2003 and nil in 2002). 63




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Defined Benefit Plan
The Company, through its subsidiaries, maintains a defined contribution plan covering substantially
all full-time U.S. employees. The Oppenheimer & Co. Inc. 401(k) Plan provides that Oppenheimer may
make discretionary contributions. The Company made contributions to the plans of $3,168,000,
$3,491,000 and $1,398,000 in 2004, 2003 and 2002, respectively. FOM sponsors an unfunded Supplemental Executive Retirement Program (SERP), which is a
non-qualified plan that provides certain former officers additional retirement benefits. Benefits
payable under the SERP were approximately $955,000 at December 31,2004. Deferred Compensation Plans
The Company maintains an Executive Deferred Compensation Plan (EDCP) and a Deferred Incentive
Plan (DIP) in order to offer certain qualified high-performing financial advisors, a bonus based
upon a formula reflecting years of service, production, net commissions and a valuation of their
clients assets. The bonus amounts resulted in deferrals in fiscal 2004 of approximately $1,366,000
($1,254,000 in 2003 and $966,000 in 2002). These deferrals normally vest after five years. The
liability is being recognized over the vesting period. The Company maintains a company-owned life
insurance policy, which is designed to offset 60% of the EDCP liability. The EDCP liability is
being tracked against the value of a phantom investment portfolio held for this purpose. The Company is maintaining a Deferred Compensation Plan on behalf of certain employees who were
formerly employed by CIBC World Markets. The liability is being tracked against the value of an
investment portfolio held by the Company for this purpose. The total amount expensed in 2004 for the Companys deferred compensation plans was $2,440,000
($4,186,000 in 2003 and $373,000 in 2002). 13.  Commitments and contingencies (a)

The Company and its subsidiaries have operating leases for office space expiring at
various dates through 2014. Future minimum rental commitments under such office and equipment
leases as at December 31, 2004 are as follows: 2005
    
    $
    23,095,0002006
    
    
    23,024,0002007
    
    
    21,248,0002008
    
    
    18,513,0002009
    
    
    16,249,0002010 and thereafter
    
    
    57,810,000Total
    
    $
    159,939,000
 Certain of the leases contain provisions for rent increases based on changes in costs incurred by
the lessor.  (b)

The Companys rent expense for the years ended December 31, 2004, 2003 and 2002 was $32,454,000
(restated), $31,028,000 and $14,108,000, respectively.(c)

At December 31, 2004, the Company had collateralized and uncollateralized letters of credit for
$124,000,000. Collateral for these letters of credit include marketable customer securities of
approximately $188,198,000, pledged to two financial institutions.(d)

Many aspects of the Companys business involve substantial risks of liability. In the
normal 64




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course of business, the Company has been named as defendant or co-defendant in lawsuits
creating substantial exposure. The Company is also involved from time to time in governmental and
self-regulatory agency investigations and proceedings. There has been an increased incidence of
litigation and regulatory investigations in the financial services industry in recent years. The Company is the subject of customer complaints, has been named as defendant or codefendant
in various lawsuits seeking, in total, substantial damages and is involved in certain governmental
and self-regulatory agency investigations and proceedings. These proceedings arise primarily from
securities brokerage, asset management and investment banking activities. In accordance with SFAS
No. 5 Accounting for Contingencies, the Company has established provisions for estimated losses
from pending complaints, legal actions, investigations and proceedings. While the ultimate
resolution of pending litigation and other matters cannot be currently determined, in the opinion
of management, after consultation with legal counsel, the Company has no reason to believe that the
resolution of these matters will have a material adverse effect on its financial condition.
However, the Companys results of operations and cash flows could be materially affected during any
period if liabilities in that period differ from prior estimates. The materiality of legal matters
to the Companys future operating results depends on the level of future results of operations as
well as the timing and ultimate outcome of such legal matters. 14.  Regulatory Requirements
The Companys major subsidiaries, Oppenheimer and Freedom, are subject to the uniform net
capital requirements of the Securities and Exchange Commission (SEC) under Rule 15c3-1 (the
Rule). Oppenheimer computes its net capital requirements under the alternative method provided
for in the Rule which requires that Fahnestock maintain net capital equal to two percent of
aggregate customer related debit items, as defined in SEC Rule 15c3-3. At December 31, 2004,
Oppenheimer had net capital of $201,002,000, which was $180,461,000 in excess of the $20,541,000
required to be maintained at that date. Freedom computes its net capital requirement under the
basic method provided for in the Rule, which requires that Freedom maintain net capital equal to
the greater of $250,000 or 6 2/3% of aggregate indebtedness, as defined. At December 31, 2004,
Freedom had net capital of $5,276,000, which was $5,026,000 in excess of the $250,000 required to
be maintained at that date. At December 31, 2004, Oppenheimer and Freedom had $4,241,000 and $11,050,000, respectively, in cash
and securities segregated under Federal and other regulations. Oppenheimer Trust Company is subject to regulation by the New Jersey Department of Banking. In accordance with the Securities and Exchange Commissions No Action Letter dated November 3,
1998, the Company has computed a reserve requirement for the proprietary accounts of introducing firms as of December 31, 2004. The Company had no deposit requirements as
of December 31, 2004. 15.  Financial instruments with off-balance sheet risk and concentration of credit risk
In the normal course of business, the Companys securities activities involve execution, settlement
and financing of various securities transactions for customers. These activities may expose the
Company to risk in the event customers, other brokers and dealers, banks, depositories or clearing
organizations are unable to fulfill their contractual obligations. The Company is exposed to off-balance sheet risk of loss on unsettled transactions in the event
customers and other counterparties are unable to fulfill their contractual obligations. It is the 65




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Companys policy to periodically review, as necessary, the credit standing of each counterparty
with which it conducts business. Securities sold, but not yet purchased represent obligations of the Company to deliver the
specified security at the contracted price and thereby create a liability to repurchase the
security in the market at prevailing prices. Accordingly, these transactions result in
off-balance-sheet risk, as the Companys ultimate obligation to satisfy the sale of securities
sold, but not yet purchased may exceed the amount recognized on the balance sheet. Securities
positions are monitored on a daily basis. The Companys customer financing and securities lending activities require the Company to pledge
customer securities as collateral for various financing sources such as bank loans and securities
lending. At December 31, 2004, the Company had approximately $1.3 billion of customer securities
under customer margin loans that are available to be pledged of which the Company has repledged
approximately $321,069,000 under securities loan agreements. In addition, the Company has received
collateral of approximately $403,697,000 under securities borrow agreements of which the Company
has repledged approximately $316,872,000 as collateral under securities loans agreements. Included
in receivable from brokers and clearing organizations are receivables from three major U.S.
broker-dealers totaling $212,902,000. The Company monitors the market value of collateral held and the market value of securities
receivable from others. It is the Companys policy to request and obtain additional collateral when
exposure to loss exists. In the event the counterparty is unable to meet its contractual obligation
to return the securities, the Company may be exposed to off-balance sheet risk of acquiring
securities at prevailing market prices. At December 31, 2004 the Company had outstanding commitments to buy and sell of $98,000 and
$150,000, respectively, primarily of mortgage-backed securities on a when issued basis. These
commitments have off-balance sheet risks similar to those described above. The Company has a clearing arrangement with Pershing LLC to clear certain transactions in foreign
securities. Accordingly, the Company has credit exposures with this clearing broker. The clearing
broker can rehypothecate the securities held on behalf of the Company. The clearing broker has the
right to charge the Company for losses that result from a clients failure to fulfill its
contractual obligations. As the right to charge the Company has no maximum amount and applies to all trades executed through the clearing broker, the
Company believes there is no maximum amount assignable to this right. At December 31, 2004, the
Company has recorded no liabilities with regard to this right. The Companys policy is to monitor
the credit standing of this clearing broker, all counterparties and all clients with which it
conducts business. The Company has entered into an indemnity agreement with Lloyds of London pursuant to which the
Company has agreed to indemnify Lloyds for losses incurred by Lloyds under the excess SIPC
policy. 16.  Segment Information  66




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trading, trading in mortgage-backed
securities, corporate underwriting activities, public finance activities, and syndicate
participation; and Asset Management which includes fees from money market funds and the investment
management services of Oppenheimer Asset Management Inc. and Oppenheimers asset management
divisions employing various programs to professionally manage client assets either in individual
accounts or in funds. The Company evaluates the performance of its segments and allocates
resources to them based upon profitability. The table below presents information about the reported revenue and operating income (profit before
income taxes) of the Company for the years ended December 31, 2004, 2003 and 2002. The Companys
business is predominantly in the U.S. Asset information by reportable segment is not reported,
since the Company does not produce such information for internal use. Year ended December 31,Restated2004
    
    
    2003
    
    
    2002Revenue:Private Client
    
    $
    502,547,000
    
    
    $
    525,812,000
    
    
    $
    202,356,000Capital Markets
    
    
    95,213,000
    
    
    
    120,109,000
    
    
    
    73,114,000Asset Management
    
    
    52,438,000
    
    
    
    39,809,000
    
    
    
    4,985,000Other
    
    
    4,942,000
    
    
    
    4,263,000
    
    
    
    2,878,000Total
    
    $
    655,140,000
    
    
    $
    689,993,000
    
    
    $
    283,333,000Operating Income:Private Client*
    
    $
    17,492,000
    
    
    $
    13,245,000
    
    
    $
    (5,959,000
    )Capital Markets
    
    
    15,839,000
    
    
    
    18,193,000
    
    
    
    14,008,000Asset Management**
    
    
    1,013,000
    
    
    
    14,347,000
    
    
    
    708,000Other
    
    
    1,564,000
    
    
    
    2,930,000
    
    
    
    4,160,000Total
    
    $
    35,908,000
    
    
    $
    48,715,000
    
    
    $
    12,917,000
   *
    
    Losses in the Private Client segment in 2002 were the result of unfavorable market conditions as
well as operating losses and acquisition costs relating to Josephthal, Prime Charter and BUYandHOLD
and included litigation, settlement costs, retention and severance costs and the costs of
under-utilized facilities.**
    
    OAM earned incentive fees of approximately $1.4 million in 2004 compared to approximately $10.7
million in 2003. These fees are based on the performance of certain limited partnerships (hedge
funds) of which OAM is a general partner. 17.  Related party transactions  67




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18.  Subsequent events On January 27, 2005, a cash dividend of U.S.$0.09 per share (totaling $1,214,000) was declared
payable on February 25, 2005 to Class A non-voting and Class B shareholders of record on February
11, 2005. 19.  Quarterly Information (unaudited)  Fiscal QuartersFourth
    
    
    Third
    
    
    Second
    
    
    First
    
    
    TotalYear ended December 31, 2004Revenue
    
    $
    172,307
    
    
    $
    142,321
    
    
    $
    154,743
    
    
    $
    185,769
    
    
    $
    655,140Profit before tax, as reported
    
    $
    14,342
    
    
    $
    2,794
    
    
    $
    2,722
    
    
    $
    18,504
    
    
    $
    38,362Profit before taxes, as restated
    
    $
    14,484
    
    
    $
    2,485
    
    
    $
    2,477
    
    
    $
    16,462
    
    
    $
    35,908Net profit, as reported
    
    $
    8,337
    
    
    $
    1,596
    
    
    $
    1,579
    
    
    $
    10,989
    
    
    $
    22,501Net profit, as restated
    
    $
    8,419
    
    
    $
    1,417
    
    
    $
    1,437
    
    
    $
    9,804
    
    
    $
    21,077Earnings per share:Basic, as reported
    
    $
    0.62
    
    
    $
    0.12
    
    
    $
    0.12
    
    
    $
    0.83
    
    
    $
    1.68Basic, as restated
    
    $
    0.63
    
    
    $
    0.11
    
    
    $
    0.11
    
    
    $
    0.74
    
    
    $
    1.58Diluted, as reported
    
    $
    0.48
    
    
    $
    0.12
    
    
    $
    0.12
    
    
    $
    0.58
    
    
    $
    1.31Diluted, as restated
    
    $
    0.48
    
    
    $
    0.11
    
    
    $
    0.11
    
    
    $
    0.52
    
    
    $
    1.24Dividends per share
    
    $
    0.09
    
    
    $
    0.09
    
    
    $
    0.09
    
    
    $
    0.09
    
    
    $
    0.36Market price of Class A Shares:High
    
    $
    27.00
    
    
    $
    27.80
    
    
    $
    32.22
    
    
    $
    34.40
    
    
    $
    34.40Low
    
    $
    21.25
    
    
    $
    22.70
    
    
    $
    26.23
    
    
    $
    30.96
    
    
    $
    21.25Year ended December 31, 2003Revenue
    
    $
    188,341
    
    
    $
    176,404
    
    
    $
    164,397
    
    
    $
    160,851
    
    
    $
    689,993Profit before taxes
    
    $
    10,919
    
    
    $
    11,298
    
    
    $
    13,601
    
    
    $
    12,897
    
    
    $
    48,715Net profit
    
    $
    6,674
    
    
    $
    6,616
    
    
    $
    7,919
    
    
    $
    7,487
    
    
    $
    28,696Earnings per share:Basic
    
    $
    0.52
    
    
    $
    0.52
    
    
    $
    0.62
    
    
    $
    0.59
    
    
    $
    2.26Diluted
    
    $
    0.43
    
    
    $
    0.36
    
    
    $
    0.43
    
    
    $
    0.49
    
    
    $
    1.65Dividends per share
    
    $
    0.09
    
    
    $
    0.09
    
    
    $
    0.09
    
    
    $
    0.09
    
    
    $
    0.36Market price of Class A Shares:High
    
    $
    35.10
    
    
    $
    29.30
    
    
    $
    29.85
    
    
    $
    25.24
    
    
    $
    35.10Low
    
    $
    29.15
    
    
    $
    25.50
    
    
    $
    22.25
    
    
    $
    22.06
    
    
    $
    22.06
 The price quotations above were supplied by the New York Stock Exchange. 68




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Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 
 Item 9A.  CONTROLS AND PROCEDURES At December 31, 2004, Oppenheimers management, including the Chief Executive Officer and the
Principal Financial Officer, evaluated the effectiveness of the design and operation of the
Companys disclosure controls and procedures (as defined in Rule 13a-15(a) under the Exchange Act).
In connection with the restatement described in Note 1(s) to the Companys consolidated financial
statements, management determined that there was a material weakness in the Companys internal
control over financial reporting as of December 31, 2004, as more fully described in Managements
Report on Internal Control Over Financial Reporting. Based on that evaluation and because of the
material weakness described in Managements Report on Internal Control Over Financial Reporting,
the Chief Executive Officer and the Principal Financial Officer have concluded that the Companys
disclosure controls and procedures were not effective as of December 31, 2004. Managements Report on Internal Control over Financial Reporting and the Report of Independent
Registered Public Accounting Firm thereon are set forth in Part II, Item 8 of this Annual Report on
Form 10-K/A. Section 303A.12(a) CEO Certification
The Company submitted a Section 12(a) CEO Certification to the New York Stock Exchange on May 17,
2004 with respect to fiscal 2003. Sarbanes-Oxley Act Section 302 CEO and CFO Certifications
The Company submitted the CEO and CFO Certifications required under Section 302 of the
Sarbanes-Oxley Act as exhibits to its annual report on Form 10-K /A (Amendment No. 1) for the year
ended December 31, 2003. 
 Item 9B.  OTHER INFORMATION None 69




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PART III 
 Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required by this item will be contained under the caption Election of
Directors in our definitive proxy statement for the 2005 Annual and Special Meeting of
Shareholders. Information about compliance with Section 16(a) of the Securities Exchange Act of
1934 required by this form will be contained under the caption Compliance with Section 16(a) of
the Securities Act of 1934 in that proxy statement. That information is incorporated herein by
reference to the proxy statement. A copy of the Companys Statement of Corporate Governance Practices as well as copies of the
Charters of the Audit Committee, Compensation and Stock Option Committee and Nominating/Corporate
Governance Committee are posted on the Companys website at www.opco.com. These documents can be
requested by writing to the Company at its head office or by making an email request to
investorrelations@opy.ca. CODE OF ETHICS
The Company has adopted a Code of Conduct and Business Ethics for Directors, Officers and
Employees, which can be found on its website at www.opco.com. These documents can be requested by
writing to the Company at its head office or by making an email request to
investorrelations@opy.ca. 
 Item 11.  EXECUTIVE COMPENSATION The information required by this item will be contained under the captions Election of
Directors  Directors Compensation and Executive Compensation in our definitive proxy statement
for the 2005 Annual and Special Meeting of Shareholders. That information is incorporated herein by
reference to the proxy statement. 
 Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this item will be contained under the caption Security Ownership of
Beneficial Owners and Management in our definitive proxy statement for the 2005 Annual and Special
Meeting of Shareholders. That information is incorporated herein by reference to the proxy
statement. 
 Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this item will be contained under the caption Indebtedness of
Directors and Executive Officers under (1) Securities Purchase and (2) Other Programs in our
definitive proxy statement for the 2005 Annual and Special Meeting of Shareholders. That
information is incorporated herein by reference to the proxy statement. 70




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Item 14.   PRINCIPAL ACCOUNTING FEES AND SERVICES The information required by this item will be contained under the caption Appointment of
Auditors in our definitive proxy statement for the 2005 Annual and Special Meeting of
Shareholders. That information is incorporated herein by reference to the proxy statement. 71




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PART IV 
 Item 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a)
    
    (i)
    
    Financial Statements
See Item 8 (pages 37  64)(ii)
    
    Financial Statement Schedules
Not Applicable.(iii)
    
    Listing of Exhibits
The exhibits which are filed with this Form 10-K or are incorporated herein
by reference are set forth in the Exhibit Index (pages 70  72)(b)
    
    
    
    Reports on Form 8-K
None(c)
    
    
    
    Exhibits
See the Exhibit Index included hereinafter.(d)
    
    
    
    Financial Statement Schedules excluded from the annual report to shareholders
None
 72




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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, in the City of New York, State of New York, on the 16th day of May, 2005. OPPENHEIMER HOLDINGS INC. BY: E.K. Roberts
E.K. Roberts, President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by
the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature
    

Title
    

DateJ.L. Bitove

J.L. Bitove
    
    Director
    
    May 16, 2005R. Crystal

R. Crystal
    
    Director
    
    May 16, 2005A.G. Lowenthal

A.G. Lowenthal
    
    Chairman, Chief Executive
Officer (Principal Executive Officer),
Director
    
    May 16, 2005K.W. McArthur

K.W. McArthur
    
    Director
    
    May 16, 2005A.W. Oughtred

A.W. Oughtred
    
    Secretary, Director
    
    May 16, 2005E.K. Roberts

E.K. Roberts
    
    President & Treasurer,
(Principal Financial and Accounting
Officer), Director
    
    May 16, 2005B. Winberg

B. Winberg
    
    Director
    
    May 16, 2005
 73




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EXHIBIT INDEX Unless designated by an asterisk indicating that such document has been filed herewith, the
Exhibits listed below have been heretofore filed by the Company pursuant to Section 13 or 15(d) of
the Exchange Act and are hereby incorporated herein by reference to the pertinent prior filing. Number
    
    Description
    
    Page2.1
    
    Asset Purchase Agreement dated as of December 9,
2002 and Amendment No. 1 to the Asset Purchase
Agreement dated as of January 2, 2003, by and among
Fahnestock Viner Holdings Inc., Viner Finance Inc.,
Canadian Imperial Bank of Commerce and CIBC World
Markets Corp. (previously filed as an exhibit to
Form 8-K dated January 17, 2003).2.2
    
    Asset Management Acquisition Agreement dated as of
January 2, 2003, by and among Fahnestock Viner
Holdings Inc., Fahnestock & Co. Inc., Canadian
Imperial Bank of Commerce and CIBC World Markets
Corp. (previously filed as an exhibit to Form 8-K
dated January 17, 2003).3(a)
    
    Articles of Incorporation, as amended, of Fahnestock
Viner Holdings Inc. (previously filed as exhibits to
Form 20-F for the fiscal year ended December 31,
1986 and 1988).3(b)
    
    By-Laws, as amended, of Fahnestock Viner Holdings
Inc. (previously filed as an exhibit to Form 20-F
for the fiscal year ended December 31, 1987).4.1
    
    Stakeholders Agreement dated December 9, 2002, by
and among Fahnestock Viner Holdings Inc., Canadian
Imperial Bank of Commerce, Albert G. Lowenthal,
Phase II Financial L.P., Phase II Financial Limited,
The Albert G. Lowenthal Foundation, Olga Roberts and
Elka Estates Limited (previously filed as an exhibit
to Form 8-K dated January 17, 2003).4.2
    
    Registration Rights Agreement dated January 2, 2003,
issued by Fahnestock Viner Holdings Inc. to Canadian
Imperial Bank of Commerce (previously filed as an
exhibit to Form 8-K dated January 17, 2003).4.3
    
    Exchangeable Debenture dated January 6, 2003, issued
by E. A. Viner International Co. to Canadian
Imperial Bank of Commerce (previously filed as an
exhibit to Form 8-K dated January 17, 2003).4.4
    
    Interim Exchangeable Debenture dated January 6,
2003, issued by E. A. Viner International Co. to
Canadian Imperial Bank of Commerce (previously filed
as an exhibit to Form 8-K dated January 17, 2003).4.5
    
    Exchangeable Debenture dated May 17, 2003, issued by
E. A. Viner International Co. to Canadian Imperial
Bank of Commerce (previously filed as an exhibit to
Form 10-K for the year ended December 31, 2003 dated
March 11, 2004).10(f)
    
    Fahnestock Viner Holdings Inc. 1996 Equity Incentive
Plan, Amended and Restated as at May 17, 1999
(previously filed as an exhibit to Form S-8 dated
May 15, 2000).
 74




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##### Table of Contents



10(k)
    
    Performance-Based Compensation Agreement between Fahnestock Viner
Holdings Inc. and Albert G. Lowenthal dated March 25, 1997
(previously filed as an exhibit filed to Form 10-K for the year
ended December 31, 1997).10(l)
    
    Securities Purchase Agreement dated June 11, 1997, between 1888
Limited Partnership and DST Systems Inc. and Purchaser (previously
filed as an exhibit to Schedule 14D-1 and Schedule 13D for First of
Michigan Capital Corporation dated June 18, 1997).10(m)
    
    Fahnestock Viner Holdings Inc. 1996 Equity Incentive Plan Amendment
No. 1 dated February 29, 2000 (previously filed as an exhibit to
Form 10-K for the year ended December 31, 1999).10(n)
    
    Fahnestock Viner Holdings Inc. 1996 Equity Incentive Plan Amendment
No. 2 dated May 19, 2001 (previously filed as an exhibit to Form
10-K for the year ended December 31, 2001).10(o)
    
    Performance-Based Compensation Agreement between Fahnestock Viner
Holdings Inc. and Albert G. Lowenthal dated January 1, 2001
(previously filed as an exhibit to Form 10-K for the year ended
December 31, 2001).10(p)
    
    Credit Agreement dated January 2, 2003, by and between Fahnestock
Viner Holdings Inc. and Canadian Imperial Bank of Commerce
(previously filed as an exhibit to Form 8-K dated January 17, 2003).10(q)
    
    Amended and Restated Promissory Note dated January 15, 2003, made by
Viner Finance Inc. for the benefit of CIBC World Markets Corp
(previously filed as an exhibit to Form 8-K dated January 17, 2003).10(r)
    
    Non-Competition Agreement dated January 2, 2003, by and among
Canadian Imperial Bank of Commerce and CIBC World Markets Corp.,
Fahnestock & Co. Inc. and Viner Finance Inc. (previously filed as an
exhibit to Form 8-K dated January 17, 2003).10(s)
    
    Non-Solicitation Agreement dated January 2, 2003 by and among
Fahnestock Viner Holdings Inc., Fahnestock & Co. Inc., Canadian
Imperial Bank of Commerce and CIBC World Markets Corp. (previously
filed as an exhibit to Form 8-K dated January 17, 2003).10(t)
    
    Clearing Agreement dated January 2, 2003 between Fahnestock & Co.
Inc. and CIBC World Markets Corp. (previously filed as an exhibit to
Form 8-K dated January 17, 2003).
 75




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10(u)
    
    Shareholders Agreement dated December 9, 2002, by and among
Fahnestock Viner Holdings Inc., Albert G. Lowenthal, Phase II
Financial L.P., Phase II Financial Limited, The Albert G. Lowenthal
Foundation, Olga Roberts and Elka Estates Limited (previously filed
as an exhibit to Form 8-K dated January 17, 2003).31.1
    
    Rule 13a-14(a) 15d-14(a) Certification signed by A.G. Lowenthal
(filed herewith) *31.2
    
    Rule 13a-14(a) 15d-14(a) Certification signed by E.K. Roberts
(filed herewith) *32.1
    
    Certification pursuant to 18 U.S.C. Section 1350 signed by A.G.
Lowenthal (filed herewith) *32.2
    
    Certification pursuant to 18 U.S.C. Section 1350 signed by E.K.
Roberts (filed herewith) *
 76