EXHIBIT 99.1
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For Immediate Release: Contact: Michael R. Anastasio
Chief Accounting Officer
(914) 921-5147
For further information visit our
website at: WWW.GABELLI.COM
GABELLI TO CONSOLIDATE VARIABLE INTEREST ENTITIES
Rye, New York, September 16, 2003 - Gabelli Asset Management Inc. (NYSE:
"GBL") today announced it will consolidate certain entities managed by its
Alternative Investment Group beginning with its September 30, 2003 quarterly
report using the guidance provided by FASB Interpretation No. 46, "Consolidation
of Variable Interest Entities" (referred to as "VIEs").
FASB Interpretation No. 46, "Consolidation of Variable Interest Entities"
("FIN 46"), provides new criteria for determining whether or not consolidation
accounting is required for VIEs. FIN 46 focuses on financial interests of VIEs
that indicate control despite the absence of clear control through voting
interest. It concludes that a company's exposure (variable interest) to the
economic risks and rewards from the VIE's assets and activities are the best
evidence of control.
In light of FIN 46, Gabelli will be consolidating certain partnerships and
offshore funds managed by its Alternative Investment Group that are deemed to be
VIEs. As the general partner or investment manager of these entities, Gabelli
generally receives both a management fee and performance fee and makes decisions
regarding the investment activities. These factors can create a situation where
Gabelli may be considered the primary beneficiary of the VIE depending on the
level of its variable interest relative to other investors.
As it has been explained, as the primary beneficiary Gabelli would be
required to consolidate the VIEs' assets, liabilities and results of operations
in its financial statements. The primary beneficiary is the party that absorbs a
majority of the entity's expected losses, receives a majority of its expected
residual returns, or both, as a result of holding variable interests, which are
the ownership, contractual, or other pecuniary interest in an entity.
Table I and II depict the pro forma impact of consolidating VIEs for which
Gabelli is the primary beneficiary on its Statement of Financial Condition and
Statement of Operations for the quarter ended June 30, 2003. Expressed another
way, if the consolidation occurred on June 30, 2003, our balance sheet assets
increased by $495 million, our operating liabilities by $137 million and our
minority interest by $358 million. There would be no change in our GAAP net
worth and net income. Obviously, the amounts at September 30, 2003 will differ.
To repeat, this change will impact detailed line items reported within the
consolidated financial statements but will have no impact on consolidated net
income or stockholders' equity. These VIEs were previously accounted for
utilizing the equity method.
Gabelli Asset Management Inc. through its subsidiaries manages $23 billion
in assets in mutual funds and closed end funds (Gabelli Funds LLC), partnerships
(Alternative Investment Group), and private investment advisory accounts
(GAMCO).
TABLE I
STATEMENT OF FINANCIAL CONDITION
June 2003 10-Q June 2003
GBL Adjusted GBL
Reported Adjustments Balances Change
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Assets
Cash and cash equivalents $ 404,849,000 $ 15,407,000 $ 420,256,000 3.81%
Investment in securities 190,083,000 321,648,000 511,731,000 169.21%
Investment in partnerships and affiliates 57,022,000 (42,698,000) 14,324,000 -74.88%
Receivable from brokers 456,000 199,636,000 200,092,000 43779.82%
Investment advisory fees receivable 13,845,000 -- 13,845,000 0.00%
Other assets 29,245,000 534,000 29,779,000 1.83%
-------------- -------------- --------------
Total assets $ 695,500,000 $ 494,527,000 $1,190,027,000 71.10%
============== ============== ==============
Liabilities
Payable to brokers $ 6,195,000 $ -- $ 6,195,000 0.00%
Income taxes payable 7,077,000 -- 7,077,000 0.00%
Capital lease obligaion 3,249,000 -- 3,249,000 0.00%
Compensation payable 21,403,000 -- 21,403,000 0.00%
Securities sold, not yet purchased 742,000 119,603,000 120,345,000 16119.00%
Accrued expenses and other liabilities 17,624,000 17,208,000 34,832,000 97.64%
-------------- -------------- --------------
Total operating liabilities 56,290,000 136,811,000 193,101,000 243.05%
6% Convertible note 100,000,000 -- 100,000,000 0.00%
5.5% Senior notes 100,000,000 -- 100,000,000 0.00%
Mandatory convertible securities 84,163,000 -- 84,163,000 0.00%
-------------- -------------- --------------
Total liabilities 340,453,000 136,811,000 477,264,000 40.18%
Minority Interest 7,830,000 357,716,000 365,546,000 4568.53%
Stockholders' equity:
Stockholders' equity 347,217,000 -- 347,217,000 0.00%
-------------- -------------- --------------
Total stockholders' equity 347,217,000 -- 347,217,000 0.00%
-------------- -------------- --------------
Total liabilities and stockholders' equity $ 695,500,000 $ 494,527,000 $1,190,027,000 71.10%
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TABLE II
STATEMENT OF OPERATIONS
June 2003 10-Q June 2003
GBL Adjusted GBL
Reported Adjustments Balances Change
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Revenues
Investment advisory and incentive fees $ 80,260,000 $ (3,285,000) $ 76,975,000 -4.09%
Commission revenue 5,191,000 -- 5,191,000 0.00%
Distribution fees and other income 8,558,000 -- 8,558,000 0.00%
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Total revenues 94,009,000 (3,285,000) 90,724,000 -3.49%
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Expenses
Compensation costs 41,399,000 -- 41,399,000 0.00%
Management fees 3,766,000 -- 3,766,000 0.00%
Other operating expenses 16,099,000 610,000 16,709,000 3.79%
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Total expenses 61,264,000 610,000 61,874,000 1.00%
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Operating income 32,745,000 (3,895,000) 28,850,000 -11.89%
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Other Income (Expense)
Net gain from investments 5,145,000 12,869,000 18,014,000 250.13%
Interest and dividend income 2,624,000 4,094,000 6,718,000 156.02%
Interest expense (6,616,000) (1,365,000) (7,981,000) 20.63%
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Total other income (expense), net 1,153,000 15,598,000 16,751,000 1352.82%
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Income before income taxes and minority interest 33,898,000 11,703,000 45,601,000 34.52%
Income taxes 12,746,000 -- 12,746,000 0.00%
Minority Interest 268,000 11,703,000 11,971,000 4366.79%
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Net income $ 20,884,000 $ -- $ 20,884,000 0.00%
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SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
Our disclosure and analysis in this press release report contain some
forward-looking statements. Forward-looking statements give our current
expectations or forecasts of future events. You can identify these statements
because they do not relate strictly to historical or current facts. They use
words such as "anticipate," "estimate," "expect," "project," "intend," "plan,"
"believe," and other words and terms of similar meaning. They also appear in any
discussion of future operating or financial performance. In particular, these
include statements relating to future actions, future performance of our
products, expenses, the outcome of any legal proceedings, and financial results.
Although we believe that we are basing our expectations and beliefs on
reasonable assumptions within the bounds of what we currently know about our
business and operations, there can be no assurance that our actual results will
not differ materially from what we expect or believe. Some of the factors that
could cause our actual results to differ from our expectations or beliefs
include, without limitation: the adverse effect from a decline in the securities
markets; a decline in the performance of our products; a general downturn in the
economy; changes in government policy or regulation; changes in our ability to
attract or retain key employees; and unforeseen costs and other effects related
to legal proceedings or investigations of governmental and self-regulatory
organizations. We also direct your attention to any more specific discussions of
risk contained in our Form 10-K and other public filings. We are providing these
statements as permitted by the Private Litigation Reform Act of 1995. We do not
undertake to update publicly any forward-looking statements if we subsequently
learn that we are unlikely to achieve our expectations or if we receive any
additional information relating to the subject matters of our forward-looking
statements.