Contact:
Terry Badger
Director of Communications
210.308.1221
tbadger@usfunds.com
(USGI LOGO)
For Immediate Release
U.S. Global Investors attains record earnings in FY 2006
Revenue rises 164%, net income up more than sevenfold compared to 2005
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SAN ANTONIO--Sept. 8, 2006--U.S. Global Investors, Inc. (NASDAQ: GROW), a
boutique registered investment advisory firm, today reported that its fiscal
year 2006 revenue rose 164 percent and its earnings grew more than sevenfold
compared to the previous fiscal year.
The company recorded net income of $10.44 million, or $1.38 cents per diluted
share, on revenue of $44.85 million for the 12 months ended June 30, 2006. That
compares to earnings of $1.45 million, or 19 cents per diluted share, on revenue
of $16.98 million during the fiscal year ended June 30, 2005.
For the fourth fiscal quarter, U.S. Global posted net income of $5.62 million,
or 74 cents per diluted share, on revenue of $18.96 million. The company earned
$350,000, or 5 cents per diluted share, on revenue of $5.03 million during the
final three months of fiscal year 2005.
The growth in revenue and earnings is mostly due to fee increases associated
with the substantial rise in assets under management. U.S. Global's average
mutual fund assets grew 94.1 percent during the year, most of that coming in the
natural resources and emerging market sectors. In addition, the company expanded
its outside advisory services.
"Performance drives new accounts and new assets, and this is where we generate
our revenue and earnings," says Frank Holmes, chief executive officer and chief
investment officer at U.S. Global Investors. "The bottom line is performance. At
the end of the fiscal year, 86 percent of our mutual fund assets were in funds
that carried a 4-star or 5-star rating from Morningstar."
The company has scheduled a conference call for 10 a.m. Central time today to
discuss the company's key financial results. Mr. Holmes will be accompanied on
the call by Susan B. McGee, president and general counsel, and Catherine A.
Rademacher, chief financial officer.
The financial results included in this release are unaudited. BDO Seidman, LLP
is now finishing its audit of the company's fiscal year 2006 financial
statements and internal controls over financial reporting at June 30, 2006. U.S.
Global Investors expects that the auditors will complete their work early next
week, and that the company will file its audited Form 10-K annual report for
fiscal year 2006 with the Securities and Exchange Commission on or before
September 13, 2006.
U.S. Global's mutual fund assets under management stood at $4.44 billion as of
June 30, 2006, more than double the $2.13 billion under management on June 30,
2005. The company also had $201.2 million under management for other advisory
clients. During the fourth quarter, the company averaged $5 billion in total
assets under management.
During the 2006 fiscal year, U.S. Global earned $7.06 million in fees for its
role in providing advisory services to Endeavour Mining Capital Corp., a
merchant banking company that invests in the natural resources sector. The
amount earned by U.S. Global included a $6.61 million annual performance fee.
For the year ended June 30, 2006, the company also earned $1.57 million in fees
for providing advisory services to other offshore funds.
Selected financial data (unaudited) for the year ended June 30
2006 2005
Revenue $44.85 million $16.98 million
Expenses $28.99 million $14.74 million
Tax expense $5.43 million $0.79 million
Net income $10.44 million $1.45 million
EPS (basic, in dollars) $1.39 $0.19
EPS (diluted, in dollars) $1.38 $0.19
Working capital $18.28 million $7.08 million
Total assets $29.05 million $12.10 million
Net cash from operations $5.46 million $0.99 million
Net cash from investing $0.27 million ($0.07 million)
Net cash from financing $0.52 million $0.06 million
Basic weighted avg. shares outstanding 7.52 million 7.48 million
Diluted weighted avg. shares outstanding 7.57 million 7.56 million
Avg. mutual fund assets under mgmt $3.44 billion $1.77 billion
An unaudited income statement can be found on the final page of this release.
As of June 30, 2006, the U.S. Global Investors fund family had several funds
among the leaders in their peer groups and the overall mutual-fund sector in
measures going back as far as five years, according to the rating company Lipper
Inc.
For the first six calendar months of 2006, U.S. Global's Gold Shares Fund
(USERX) was the top-performing gold fund and the company's World Precious
Minerals Fund (UNWPX) was #2. In the natural resources sector, the Global
Resources Fund (PSPFX) is ranked #1 for the same period.
In the year ended June 30, 2006, the Gold Shares Fund was ranked #2 and World
Precious Minerals Fund #3 in total return among all domestic funds, according to
Lipper.
For the five years ended June 30, 2006, the World Precious Minerals Fund ranked
#1 in total return among all domestic funds. The Gold Shares Fund was #3, U.S.
Global's Eastern European Fund (EUROX) was #4, and the Global Resources Fund
(PSPFX) was #5. No other fund family had more than one fund in Lipper's top 25
for the five-year period.
As of June 30, 2006, according to Lipper, the World Precious Minerals Fund
ranked #3 of 54, #1 of 48, #1 of 39, and #14 of 24 among gold-oriented funds for
total return for the 1-, 3-, 5-, and 10-year periods. The Gold Shares Fund
ranked #1 of 54, #2 of 48, #2 of 39 and #23 of 24 among gold-oriented funds for
the 1-, 3-, 5- and 10-year periods. The Eastern European Fund ranked #26 of 200,
#1 of 177 and #2 of 140 among emerging-market funds for the 1-, 3- and 5-year
periods. The Global Resources Fund ranked #16 of 101, #1 of 74, #1 of 69 and #12
of 29 among natural resources funds for the 1-, 3-, 5- and 10-year periods.
ABOUT U.S. GLOBAL INVESTORS, INC.
U.S. Global Investors, Inc. (www.us-global.com) is a registered investment
adviser that focuses on profitable niche markets around the world. Headquartered
in San Antonio, Texas, the company offers financial solutions and provides
transfer agency and other services to U.S. Global Investors Funds and U.S.
Global Accolade Funds.
With an average of $5 billion in assets under management in the quarter ended
June 30, 2006, U.S. Global Investors includes 13 no-load mutual funds that offer
a variety of investment options, from emerging markets to money markets. In
general, trends in assets are the critical drivers of revenue and earnings
trends.
Please consider carefully the fund's investment objectives, risks, charges and
expenses. For this and other important information, obtain a fund prospectus by
visiting www.usfunds.com or by calling 1-800-US-FUNDS (1-800-873-8637). Read it
carefully before investing. Distributed by U.S. Global Brokerage Inc.
Performance data quoted above is historical. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
data quoted. The principal value and investment return of an investment will
fluctuate so that your shares, when redeemed, may be worth more or less than
their original cost. Performance does not include the effect of any fees
described in the fund's prospectus (e.g. short-term trading fees) which, if
applicable, would lower your total returns. Obtain performance data current to
the most recent month-end at www.usfunds.com or 1-800-US-FUNDS, option 5.
Foreign and emerging-market investing involves special risks, such as currency
fluctuation and less public disclosure, as well as economic and political risk.
Gold funds may be susceptible to adverse economic, political or regulatory
developments due to concentrating in a single theme. The price of gold is
subject to substantial price fluctuations over short periods of time and may be
affected by unpredicted international monetary and political policies. We
suggest investing no more than 3% to 5% of your portfolio in gold or gold
stocks.
Lipper Disclaimer: Lipper ratings for Total Return reflect funds' historical
total return performance relative to peers as of June 30, 2006. Although Lipper
makes reasonable efforts to ensure the accuracy and reliability of the data
contained herein, the accuracy is not guaranteed by Lipper. Users acknowledge
that they have not relied upon any warranty, condition, guarantee, or
representation made by Lipper. Any use of the data for analyzing, managing, or
trading financial instruments is at the user's own risk. This is not an offer to
buy or sell securities.
For each fund with at least a three-year history, Morningstar calculates a
Morningstar Rating(TM) based on a Morningstar Risk-Adjusted Return measure that
accounts for variation in a fund's monthly performance (including the effects of
sales charges, loads, and redemption fees), placing more emphasis on downward
variations and rewarding consistent performance. The top 10% of funds in each
category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3
stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each
share class is counted as a fraction of one fund within this scale and rated
separately, which may cause slight variations in the distribution percentages.)
U.S. Global Investors, Inc.
Unaudited Consolidated Statements of Operations and Comprehensive Income
Year Ended June 30,
2006 2005 2004
Revenue
Investment advisory fees $37,143,150 $14,006,508 $9,179,200
Transfer agent fees 5,332,066 3,187,487 2,610,029
Investment income (loss) 2,203,393 (351,248) 1,023,441
Other 174,979 138,592 170,830
----------- ----------- ----------
44,853,588 16,981,339 12,983,500
---------- ---------- ----------
Expenses
Employee compensation and benefits 10,359,365 5,891,162 4,985,449
General and administrative 5,460,442 3,821,129 2,622,773
Subadvisory fees 7,618,466 2,719,603 1,018,572
Omnibus Fees 4,882,144 1,833,096 959,523
Advertising 513,076 369,927 373,492
Depreciation 152,755 109,899 108,065
Interest -- 81 73,145
------------- ------------- ----------
28,986,248 14,744,897 10,141,019
---------- ----------- ----------
Income Before Income Taxes 15,867,340 2,236,442 2,842,481
Provision for Federal Income Taxes
Tax Expense 5,431,978 789,971 675,839
---------- ---------- ---------
Net Income 10,435,362 1,446,471 2,166,642
Other comprehensive income, net of tax:
Unrealized gains (losses) on available-for-sale (2,473) (142,745) 646,244
securities arising during period
Less: reclassification adjustment for gains (363,596) (102,287)
included in net income ---------- --------- ---------
Comprehensive Income $ 10,069,293 $ 1,303,726 $ 2,710,599
============ =========== ===========
Basic Net Income per Share $ 1.39 $ 0.19 $ 0.29
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Diluted Net Income per Share $ 1.38 $ 0.19 $ 0.29
======== ======== ========
Basic weighted average number of common shares 7,515,789 7,479,998 7,469,164
outstanding
Diluted weighted average number of common shares 7,573,115 7,564,269 7,533,134
outstanding