Exhibit 99
GAMCO Reports Record Third Quarter Earnings of $0.64 vs. $0.43 Per Fully Diluted
Share; Higher Investment Income Boosts Results by $0.19 Per Share
RYE, N.Y.--(BUSINESS WIRE)--Oct. 21, 2005--GAMCO Investors, Inc.
(NYSE: GBL) reported revenues of $66.2 million for the third quarter
ended September 30, 2005, up 15.7% from the $57.2 million generated in
the prior year's quarter. Operating income increased 2.9% to $22.6
million from the $22.0 million reported in last year's third quarter.
Net income for the quarter was $19.4 million, or $0.64 per fully
diluted share, versus $13.0 million, or $0.43 per fully diluted share
in the prior year's quarter. The 2005 quarter was boosted by a $10.2
million swing in net investment income. In the short-run, our results
remain sensitive to changes in equity markets.
For the nine months ended September 30, 2005, revenues were $187.6
million, an increase of 3.7% from the prior year's comparable period
revenues of $181.0 million. Operating income was $62.4 million, down
12.9% from $71.7 million in the first nine months of 2004. In 2005,
operating income was impacted by one-time charges totaling $4.4
million or $0.08 per fully diluted share related to costs incurred for
a new closed-end fund launch, a charge recorded for the impairment of
goodwill, and compensation costs related to the acceleration of the
vesting of stock options. Net income for the first nine months of 2005
was $45.1 million, or $1.48 per fully diluted share, versus $43.0
million, or $1.41 per fully diluted share, in the comparable 2004
period.
Assets under management (AUM) were $27.6 billion on September 30,
2005, unchanged from June 30, 2005 AUM of $27.6 billion, and 1.4%
ahead of the $27.2 billion in AUM on September 30, 2004.
Financial Highlights
-- Assets Under Management (AUM) - Our equity mutual funds had a
record $12.8 billion in AUM on September 30, 2005, 2.6% ahead
of the $12.5 billion on June 30, 2005 and 13.8% ahead of the
$11.3 billion on September 30, 2004. GAMCO Asset Management
Inc., our institutional and high net worth business, had AUM
of $13.1 billion in separately managed equity accounts on
September 30, 2005, slightly below the $13.2 billion recorded
on June 30, 2005 and September 30, 2004. Fixed income AUM,
primarily money market mutual funds, totaled $954 million on
September 30, 2005, down 14.9% from the June 30, 2005 assets
of $1.1 billion and 48.9% lower than assets of $1.9 billion on
September 30, 2004. AUM in our investment partnerships
declined to $745 million versus $831 million on June 30, 2005
and $934 million on September 30, 2004.
-- Revenues - Investment advisory fees totaled $57.5 million
during the third quarter of 2005, an increase of $7.9 million
or 15.8% from the third quarter of 2004. The higher revenues
during the quarter were driven primarily by our closed-end
funds as revenues jumped 67.3% to $12.8 million from $7.6
million in the prior year's quarter. This increase was
principally due to management fees of $2.9 million recorded
for preferred shares in the third quarter 2005 covering the
first nine of months of 2005 versus a reversal of $200,000 in
revenue from preferred shares in the prior year's quarter. In
addition, we recorded approximately $0.9 million of revenues
from the inclusion of The Gabelli Global Gold, Natural
Resources & Income Trust (AMEX: GGN), our new closed-end fund,
which started on March 29, 2005. Unlike most money management
firms, we do not earn a management fee on closed-end preferred
shares (approximately $875 million in total assets) unless the
total return to common shareholders of the closed-end fund at
year-end exceeds the dividend rate of the preferred shares. As
a result, management fees accrued for preferred shares are
affected by current weak market conditions and may be subject
to reversal in the fourth quarter.
Revenues from our other investment advisory businesses also
included the following for the third quarter of 2005:
-- incentive fees from investment partnerships increased by $2.9
million from the prior year as the 2004 quarter included a
clawback in incentive fees that reduced revenues;
-- revenues of $20.4 million from open-end mutual funds were 3.9%
higher than the $19.6 million recorded in the 2004 quarter;
and
-- revenues from our institutional and high net worth separate
accounts declined by 2.3% to $19.9 million, down from $20.4
million in the 2004 quarter.
For the first nine months of 2005, investment advisory fees were
$163.8 million, up 5.8% from the $154.9 million recorded in the prior
year period. Revenues from our closed-end funds increased 29.9% to
$30.7 million in the first nine months of 2005 up from $23.6 million
in the prior year's period. The increase in revenues from closed-end
funds for the first nine months of 2005 resulted principally from an
increase in management fees accrued on preferred shares, revenues from
GGN, our new closed-end fund, and the inclusion of The Gabelli Global
Utility and Income Trust (AMEX: GLU), which launched at the end of May
2004, for the entire 2005 period.
For the first nine months of 2005, our investment advisory
revenues also included the following:
-- investment partnership revenues rose $4.3 million versus the
comparable prior year period as an increase in incentive fees
was only slightly offset by a decrease in management fees;
-- revenues of $60.0 million from open-end mutual funds were 2.2%
lower than the $61.3 million recorded in the 2004 period; and
-- revenues from our institutional and high net worth separate
accounts business declined 1.8% to $62.3 million, down from
the $63.5 million reported during the first nine months of
2004.
Commission revenues from our institutional research affiliate,
Gabelli & Company, Inc., increased 10.0% in the third quarter 2005 to
$3.3 million, but declined 26.6% to $8.3 million for the first nine
months of 2005, versus $3.0 million and $11.3 million in the prior
year's periods, respectively. Mutual fund distribution fees of $5.4
million in the third quarter of 2005 were 18.3% higher than the $4.6
million recorded in the 2004 quarter, and were $15.5 million in the
first nine months of 2005, 5.0% higher than the $14.7 million recorded
in the 2004 period. The increase in fees is principally from higher
average assets under management in open-end equity mutual funds in the
2005 periods compared to the prior year.
In anticipation of results for the fourth quarter 2005, we note
that we recorded revenue of approximately $9.3 million in the fourth
quarter 2004 from management fees on closed-end fund preferred shares
and fulcrum fees earned on certain institutional separate accounts.
These revenues are dependent on the equity markets and may not recur
in the fourth quarter 2005.
-- Operating Margin - Variable compensation costs were 31.7% of
revenues for the third quarter 2005 compared to 29.1% in 2004
quarter, and 31.3% versus 28.7% for the nine-month period.
These increases are principally the result of a shift in
revenue mix within our mutual fund and investment partnership
businesses, as higher variable compensation costs were driven
by an increase in revenues from management fees of closed-end
preferred shares and investment partnership incentive fees in
the 2005 periods as compared to 2004.
Selling, general and administrative expenses increased 22.2% to
$12.5 million in the third quarter 2005 from $10.2 million in the
prior year's quarter, and 29.9% to $39.1 million for the first nine
months of 2005 from $30.1 million in the prior year's period. For the
third quarter, this was principally the result of an increase in
accounting and legal costs of approximately $0.8 million related to
Sarbanes-Oxley compliance as well as other regulatory and corporate
governance dynamics, higher total compensation costs of approximately
$0.5 million and approximately $0.3 million related to the elimination
of the use of soft dollars within our mutual fund business.
For the nine month period, the increase in selling, general and
administrative expenses included higher total compensation costs of
approximately $2.5 million, which included a one-time charge of $1.8
million relating to the accelerated vesting of stock options, a
one-time charge of $1.1 million recorded for the impairment of
goodwill related to our fixed income business and one-time launch
costs of $1.5 million for our new closed-end fund, The Gabelli Global
Gold, Natural Resources & Income Trust (AMEX: GGN). In addition, a
rise in accounting and legal costs of approximately $1.9 million and
higher costs related to the elimination of the use of soft dollars
within our mutual fund business of approximately $0.8 million
contributed to the increase.
The effective tax rate for both the third quarter and first nine
months of 2005 was adjusted to 37.5% versus 36.4% in the comparable
2004 periods to reflect our estimate of the current year-end tax
liability.
-- Investment Income/Expense - For the third quarter 2005, there
was a $10.2 million positive swing in other income from the
2004 quarter. The net return from our corporate investment
portfolio improved to $12.2 million in the 2005 third quarter
from $2.6 million in the prior year's quarter. For the first
nine months of 2005, investment income totaled $20.8 million
versus $8.5 million in the comparable 2004 period. Our
improved returns for 2005 included gains related to our
$100,000 venture capital investment in optionsXpress (NASDAQ:
OXPS) made in 2001 through our 92% owned subsidiary, Gabelli
Securities, Inc. OXPS completed its initial public offering
during the first quarter 2005. We recorded a total gain of
$2.7 million on OXPS during the third quarter of 2005,
bringing gains to $4.8 million for the first nine months of
2005. In addition, we had previously recorded a gain of
approximately $900,000 related to this investment in the
fourth quarter of 2003. The gains related to OXPS in 2005 have
been partially offset by a previously recorded $3.3 million
loss for the write down to fair value of certain securities
held as available for sale.
Higher short-term interest rates lifted interest income for both
the third quarter 2005 and first nine months of 2005. Interest expense
fell to $3.3 million and $10.5 million in the third quarter and first
nine months of 2005 compared to $4.0 million and $12.1 million in the
prior year's periods, respectively. This decrease is principally due
to the April 1, 2005 repurchase of $50 million of the $100 million 5%
convertible note.
Management fee was $3.5 million for the third quarter of 2005
versus $2.3 million for the comparable 2004 period and $8.1 million
for the first nine months of 2005 versus the $7.6 million in the first
nine months of 2004.
Growth Initiatives and Other Highlights
-- Re-Branding - As part of our initiative to accelerate growth,
our corporate name change to GAMCO Investors, Inc. became
effective August 29, 2005. Since the firm was founded in 1977,
GAMCO has been the name of our asset management business,
representing our institutional and high net worth effort. We
believe changing our corporate name to GAMCO helps us achieve
our vision for assets entrusted to us, that is, to earn a
superior return for our clients by providing various
value-added (alpha) products. GAMCO is a more inclusive parent
company name, and more appropriately represents the various
investment strategies and asset management brands contributing
to the continued growth of our company. The Gabelli brand will
continue to represent our absolute return, research driven
Value style that focuses on our unique Private Market Value
with a Catalyst (TM) investment approach. Our class A common
stock will continue to trade on the New York Stock Exchange
under the ticker symbol "GBL".
-- During July and August, following a tradition of underwriting
value investor oriented symposiums, the firm sponsored a
series of lectures in Milan and London with Bruce C.N.
Greenwald, the Robert Heilbrunn Professor of Finance and Asset
Management at Columbia University Graduate School of Business
and the academic Director of the Heilbrunn Center for Graham &
Dodd Investing (DVDs and podcasts are available).
-- We have strengthened our investment team through the addition
of eleven sell-side research analysts and two portfolio
managers. Gabelli & Company, Inc., our institutional research
affiliate, now has twenty-five sell-side analysts covering
companies and sectors on a global basis.
-- Gabelli & Company hosted its eleventh Annual Aircraft Supplier
Conference in September. Portfolio managers and securities
analysts met with the senior managements of public companies
in the aerospace and defense industries as they presented
updates on their industry, competition, and new strategies for
creating value. It was a terrific opportunity for Gabelli &
Company's institutional clients to gain insight into the
strong recovery our research points to in the commercial
aircraft market.
-- Earl V. Gould, CFA, joined the firm as portfolio manager of
the GAMA Select Energy+ Fund, a long/short private partnership
focused on the energy sector. Mr. Gould's investment career
spans over forty years, starting as a trader at European
American Bank following his graduation from University of
Alberta in 1964. He served as an investment analyst and
portfolio manager for institutions, most recently with
Atlantic Richfield before joining GAMCO. Born and raised in
Denmark, Mr. Gould has an MA in Economics from City College in
New York.
-- We remain over-capitalized. Our challenge is to convert our
liquidity to growing operating income. Until we can achieve
this, we will enhance shareholder value through stock buybacks
and dividend increases. In line with this, GAMCO Investors,
Inc. commenced a tender offer to purchase all outstanding
stock options to purchase shares of class A common stock of
the Company in August. The offer expired on October 4th. After
completing the tender offer, approximately 214,000 stock
options remain outstanding.
-- During September, The Gabelli Equity Trust Inc. (the "Equity
Trust") (NYSE:GAB) completed the acquisition of substantially
all of the assets of Sterling Capital Corporation ("Sterling
Capital") in a tax-free exchange for shares of the Equity
Trust's common stock. The Equity Trust, a non-diversified,
closed-end investment company with $1.7 billion in total
assets whose primary objective is long-term growth of capital
and whose secondary objective is income, is managed by Gabelli
Funds, LLC, a subsidiary of GAMCO Investors, Inc.
-- The Equity Trust also finalized the terms of its Rights
Offering during September. Pursuant to the Offer, the Equity
Trust has distributed to shareholders of record one
transferable right for each share of its common stock held on
the September 21, 2005 record date. Seven rights enable a
shareholder to purchase one additional share of common stock
at a price of $7.00 per share. If fully subscribed, the fund
will raise in excess of $140 million. The Rights Offering
expires on October 26, 2005.
Financial Highlights - Raises Quarterly Dividend 50%
Balance Sheet Strong
We ended the quarter with roughly $695 million in cash and
investments in securities. This includes approximately $82 million, at
market value, in shares of The Gabelli Dividend & Income Trust, The
Gabelli Global Utility & Income Trust, various Gabelli open-end mutual
funds as well as other investments classified as available for sale
securities. Our debt of $232.3 million consists of a $50 million 5%
convertible note, $100 million of 5.5% senior notes, and $82.3 million
of 5.22% senior notes issued in connection with our mandatory
convertible securities. Expressed another way, we had $15.51 per share
of net cash and investments in securities on September 30, 2005
compared with $14.18 per share on September 30, 2004 and $12.54 per
share on December 31, 2004. The increase in net cash per share from
the end of 2004 is attributable in part to the February 2005
settlement of the purchase contracts issued in connection with our
mandatory convertible securities.
Our liquid balance sheet coupled with investment grade borrowing
power provides us the flexibility to opportunistically add to our
business, repurchase our stock and consider other strategic
initiatives.
Stockholders' equity was $432.4 million or $14.48 per share on
September 30, 2005 compared with $396.1 million or $13.40 per share on
September 30, 2004 and $334.9 million or $11.61 per share on December
31, 2004.
Shareholder Compensation
-- Dividends: Quarterly Rate increased 50%
Our Board of Directors increased our regular quarterly dividend
50% to $0.03 per share beginning with the fourth quarter 2005
dividend. During the first nine months of 2005, we have paid total
dividends of $0.66 per share to all shareholders, including a special
dividend of $0.60 per share on January 18, 2005. This follows the
$1.16 per share in dividends paid during 2004, including special
dividends of $0.10 per share in the second quarter 2004 and $1.00 per
share in the fourth quarter 2004.
-- Stock Buyback
Shares outstanding on September 30, 2005 were 29,861,817,
approximately 0.3% lower than June 30, 2005 outstanding shares of
29,949,142, and approximately 1.0% above the 29,557,853 shares
outstanding on September 30, 2004. Fully diluted shares outstanding
for the third quarter of 2005 were 31,079,413 approximately 0.4% lower
than second quarter 2005 fully diluted shares of 31,211,347 and
approximately 2.3% lower than our fully diluted shares of 31,820,157
for the third quarter 2004.
Our stock buyback program was initiated in March 1999. Since that
time, 3,307,826 class A common shares have been repurchased through
September 30, 2005 at an average investment of $37.33 per share.
During 2005, we have repurchased 534,200 shares at an average
investment of $42.25, including 106,600 at an average investment of
$44.93 during the third quarter 2005 During August 2005, our Board of
Directors authorized an additional 500,000 shares to be repurchased
under the current stock repurchase program. At the end of September,
the shares currently available to be repurchased under the program was
approximately 910,000 shares.
Fourth Quarter Earnings Outlook
Since over 95% of our AUM are equities, our interim financial
results are equity-market sensitive. In this context, we point out
that the robust market conditions that unfolded in last year's fourth
quarter added approximately $0.10 per fully diluted share to our
income from management fees earned on preferred shares issued by our
closed-end funds and fulcrum fees from institutional accounts. These
revenues from our money management services and investment income are
sensitive to stock market dynamics. We also note that management fees
on preferred shares of closed-end funds accrued in the third quarter
2005 may have to be partially or totally reversed in the fourth
quarter if the stock market declines from third quarter levels. Should
this occur, we will report a larger negative swing in our operating
results for the fourth quarter 2005, than would otherwise be the case.
NOTES ON NON-GAAP FINANCIAL MEASURES
A. Cash and investments as adjusted have been computed as follows:
(in millions)
12/31/04 9/30/04 9/30/05
--------- -------- --------
Cash and cash equivalents $257.1 $337.8 $205.1
Investments (marketable securities) 305.9 267.9 399.6
--------- -------- --------
Total cash and investments (marketable
securities) 563.0 605.7 604.7
Net amounts receivable/(payable) to
brokers 5.2 22.6 8.6
--------- -------- --------
Adjusted cash and investments (marketable
securities) 568.2 628.3 613.3
Investments (available for sale) 75.8 73.1 82.0
--------- -------- --------
Total adjusted cash and investments $644.0 $701.4 $695.3
========= ======== ========
We believe adjusted cash and investments is a more useful measure
of the company's liquidity for analytical purposes.
Net amounts receivable/(payable) from/to brokers reflects cash and
cash equivalents held with brokers and cash payable for securities
purchased and recorded on a trade date basis for which settlement
occurs subsequent to period end.
B. Operating income before management fee expense is used by
management for purposes of evaluating its business operations. We
believe this measure is useful in illustrating the operating
results of the Company as management fee expense is based on
pre-tax income and includes non-operating items including
investment gains and losses from the company's proprietary
investment portfolio and interest expense. The reconciliation of
operating income before management fee to operating income is
provided in Table IV.
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
Our disclosure and analysis in this press release 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.
Assets Under Management
The company reported assets under management as follows:
Table I:
Assets Under Management
(in millions)
------------------------------
September 30
------------ %
2004 2005 Inc. (Dec.)
------- ------- ------------
Mutual Funds:
Equities
Open end $ 7,534 $ 7,959 5.6%
Closed-end 3,727 4,851 30.2
Fixed Income 1,524 796 (47.8)
------- -------
Total Mutual Funds 12,785 13,606 6.4
------- -------
Institutional & High Net Worth Separate
Accounts:
Equities 13,185 13,129 (0.4)
Fixed Income 344 158 (54.1)
------- -------
Total Institutional & High Net Worth
Separate Accounts 13,529 13,287 (1.8)
------- -------
Investment Partnerships 934 745 (20.2)
------- -------
Total Assets Under Management $27,248 $27,638 1.4
======= =======
Table II: Fund Flows - 3rd Quarter 2005 (in millions)
Market
June Net Appreciation/ September
30, 2005 Cash Flows (Depreciation) 30, 2005
-------- ---------- --------------- ---------
Mutual Funds:
Equities $12,482 ($ 212) $540 $12,810
Fixed Income 852 (62) 6 796
------- ---------- ---- -------
Total Mutual Funds 13,334 (274) 546 13,606
------- ---------- ---- -------
Institutional & HNW
Separate Accounts
Equities 13,189 (340) 280 13,129
Fixed Income 269 (113) 2 158
------- ---------- ---- -------
Total Institutional &
HNW Separate Accounts 13,458 (453) 282 13,287
------- ---------- ---- -------
Investment Partnerships 831 (103) 17 745
------- ---------- ---- -------
Total Assets Under
Management $27,623 ($ 830) $845 $27,638
======= ========== ==== =======
Assets Under Management (in millions)
------------------------------------------
Table III:
9/04 12/04 3/05 6/05
------- ------- ------- -------
Mutual Funds
Open end $ 7,534 $ 8,029 $ 7,808 $ 7,798
Closed-end 3,727 4,342 4,602 4,684
Fixed income 1,524 1,499 1,154 852
------- ------- ------- -------
Total Mutual Funds 12,785 13,870 13,564 13,334
------- ------- ------- -------
Institutional & HNW Separate
Accounts:
Equities 13,185 13,587 13,364 13,189
Fixed Income 344 388 266 269
------- ------- ------- -------
Total Institutional & HNW
Separate Accounts 13,529 13,975 13,630 13,458
------- ------- ------- -------
Investment Partnerships 934 814 854 831
------- ------- ------- -------
Total Assets Under Management $27,248 $28,659 $28,048 $27,623
======= ======= ======= =======
Assets Under Management (in millions)
------------------------------------------
Table III: % Increase/
(decrease)
9/05 6/05 9/04
--------- -------- ------
Mutual Funds
Open end $ 7,959 2.1% 5.6
Closed-end 4,851 3.6 30.2
Fixed income 796 (6.6) (47.8)
---------
Total Mutual Funds 13,606 2.0 6.4
---------
Institutional & HNW Separate Accounts:
Equities 13,129 (0.5) (0.4)
Fixed Income 158 (41.3) (54.1)
---------
Total Institutional & HNW Separate Accounts 13,287 (1.3) (1.8)
---------
Investment Partnerships 745 (10.3) (20.2)
---------
Total Assets Under Management $ 27,638 0.1 1.4
=========
Table IV
GAMCO INVESTORS, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
-------------------------- ---------------------------
%Inc. %Inc.
2004 2005 (Dec.) 2004 2005 (Dec.)
--------- -------- ------- --------- --------- -------
Revenues $ 57,237 $66,234 15.7% $180,980 $187,606 3.7%
Expenses 33,002 40,141 21.6 101,760 117,151 15.1
--------- -------- --------- ---------
Operating
income before
management fee 24,235 26,093 7.7 79,220 70,455 (11.1)
Investment
income 2,620 12,153 363.9 8,459 20,764 145.5
Interest
expense (4,014) (3,298) (17.8) (12,095) (10,502) (13.2)
--------- -------- --------- ---------
Other income
(expense), net (1,394) 8,855 735.2 (3,636) 10,262 382.2
--------- -------- --------- ---------
Income before
management
fee, income
taxes and
minority
interest 22,841 34,948 53.0 75,584 80,717 6.8
Management
fee 2,284 3,495 7,558 8,072
--------- -------- --------- ---------
Income before
income taxes
and minority
interest 20,557 31,453 68,026 72,645
Income taxes 7,483 11,795 24,768 27,242
Minority
interest 43 210 238 318
--------- -------- --------- ---------
Net income $ 13,031 $19,448 49.2 $ 43,020 $ 45,085 4.8
========= ======== ========= =========
Net income per
share:
Basic $ 0.44 $ 0.65 47.7 $ 1.44 $ 1.51 4.9
========= ======== ========= =========
Diluted $ 0.43 $ 0.64 48.8 $ 1.41 $ 1.48 5.0
========= ======== ========= =========
Weighted
average shares
outstanding:
Basic 29,707 29,935 0.8 29,886 29,859 (0.1)
========= ======== ========= =========
Diluted 31,820 31,079 (2.3) 32,011 31,323 (2.1)
========= ======== ========= =========
Reconciliation
of Non-GAAP
Financial
Measures
to GAAP:
Operating
income before
management fee $ 24,235 $26,093 7.7 $ 79,220 $ 70,455 (11.1)
Deduct:
management fee 2,284 3,495 7,558 8,072
--------- -------- --------- ---------
Operating
income $ 21,951 $22,598 2.9 $ 71,662 $ 62,383 (12.9)
--------- -------- --------- ---------
Operating
margin before
management fee 42.3% 39.4 % 43.8% 37.6 %
--------- -------- --------- ---------
Operating
margin after
management fee 38.4% 34.1 % 39.6% 33.3 %
--------- -------- --------- ---------
Table V
GAMCO INVESTORS, INC.
UNAUDITED QUARTERLY CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
2004
---------------------------------------------
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Total
-------- -------- -------- -------- ---------
Income Statement Data:
Revenues $63,539 $60,204 $57,237 $74,183 $255,163
Expenses 35,426 33,332 33,002 43,318 145,078
------- ------- ------- ------- --------
Operating income before
management fee 28,113 26,872 24,235 30,865 110,085
Investment income 4,290 1,549 2,620 7,649 16,108
Interest expense (4,046) (4,035) (4,014) (3,932) (16,027)
------- ------- ------- ------- --------
Other income (expense),
net 244 (2,486) (1,394) 3,717 81
------- ------- ------- ------- --------
Income before management
fee, income taxes and
minority interest 28,357 24,386 22,841 34,582 110,166
Management fee 2,836 2,438 2,284 3,459 11,017
------- ------- ------- ------- --------
Income before income
taxes and minority
interest 25,521 21,948 20,557 31,123 99,149
Income taxes 9,296 7,989 7,483 11,329 36,097
Minority interest 154 41 43 255 493
------- ------- ------- ------- --------
Net income $16,071 $13,918 $13,031 $19,539 $ 62,559
======= ======= ======= ======= ========
Net income per share:
Basic $ 0.53 $ 0.47 $ 0.44 $ 0.67 $ 2.11
======= ======= ======= ======= ========
Diluted $ 0.52 $ 0.46 $ 0.43 $ 0.65 $ 2.06
======= ======= ======= ======= ========
Weighted average shares outstanding:
Basic 30,064 29,890 29,707 29,037 29,673
======= ======= ======= ======= ========
Diluted 32,202 32,010 31,820 31,179 31,804
======= ======= ======= ======= ========
Reconciliation of Non-GAAP
Financial Measures to GAAP:
Operating income before
management fee $28,113 $26,872 $24,235 $30,865 $110,085
Deduct: management fee 2,836 2,438 2,284 3,459 11,017
------- ------- ------- ------- --------
Operating income $25,277 $24,434 $21,951 $27,406 $ 99,068
------- ------- ------- ------- --------
Operating margin before
management fee 44.2% 44.6% 42.3% 41.6% 43.1%
------- ------- ------- ------- --------
Operating margin after
Management fee 39.8% 40.6% 38.4% 36.9% 38.8%
------- ------- ------- ------- --------
2005
------------------------------------------
1st 2nd 3rd
Quarter Quarter Quarter Total
-------- -------- -------- ---------------
Income Statement
Data:
Revenues $61,531 $59,841 $66,234 $187,606
Expenses 39,122 37,888 40,141 117,151
-------- -------- -------- ---------------
Operating income
before management
fee 22,409 21,953 26,093 70,455
Investment income 4,067 4,544 12,153 20,764
Interest expense (3,929) (3,275) (3,298) (10,502)
-------- -------- -------- ---------------
Other income
(expense), net 138 1,269 8,855 10,262
-------- -------- -------- ---------------
Income before
management fee,
income taxes and
minority interest 22,547 23,222 34,948 80,717
Management fee 2,255 2,322 3,495 8,072
-------- -------- -------- ---------------
Income before income
taxes and minority
interest 20,292 20,900 31,453 72,645
Income taxes 7,609 7,838 11,795 27,242
Minority interest 1 107 210 318
-------- -------- -------- ---------------
Net income $12,682 $12,955 $19,448 $45,085
======== ======== ======== ===============
Net income per share:
Basic $0.43 $0.43 $0.65 $1.51
======== ======== ======== ===============
Diluted $0.42 $0.43 $0.64 $1.48
======== ======== ======== ===============
Weighted average shares outstanding:
Basic 29,560 30,079 29,935 29,859
======== ======== ======== ===============
Diluted 31,684 31,211 31,079 31,323
======== ======== ======== ===============
Reconciliation of Non- GAAP
Financial Measures to GAAP:
Operating income before
management fee $22,409 $21,953 $26,093 $70,455
Deduct: management fee 2,255 2,322 3,495 8,072
-------- -------- -------- ---------------
Operating income $20,154 $19,631 $22,598 $62,383
-------- -------- -------- ---------------
Operating margin before
management fee 36.4% 36.7% 39.4% 37.6%
-------- -------- -------- ---------------
Operating margin after
Management fee 32.8% 32.8% 34.1% 33.3%
-------- -------- -------- ---------------
Table VI
GAMCO INVESTORS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
(In thousands)
December September September
31, 2004 30, 2004 30, 2005
--------- ----------- -----------
ASSETS (unaudited) (unaudited)
Cash and cash equivalents $257,096 $337,830 $205,050
Investments 381,689 340,928 481,725
Receivables 46,571 51,369 42,129
Other assets 13,616 14,196 12,395
-------- -------- --------
Total assets $698,972 $744,323 $741,299
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Compensation payable $ 27,645 $ 33,871 $ 41,388
Dividends payable 17,302 - -
Income taxes payable 8,526 5,608 6,580
Accrued expenses and other
liabilities 22,142 20,504 22,684
-------- -------- --------
Total operating liabilities 75,615 59,983 70,652
5.5% Senior notes (due May 15, 2013) 100,000 100,000 100,000
5% Convertible note (conversion
price, $52 per share; note due
August 14, 2011) 100,000 100,000 50,000
5.22% Senior notes (due February 17,
2007) - - 82,308
Mandatory convertible securities
(purchase contract settlement date,
February 17, 2005; notes due
February 17, 2007) 82,308 82,308 -
-------- -------- --------
Total liabilities 357,923 342,291 302,960
Minority interest 6,171 5,916 5,981
Stockholders' equity 334,878 396,116 432,358
-------- -------- --------
Total liabilities and stockholders'
equity $698,972 $744,323 $741,299
======== ======== ========
CONTACT: GAMCO Investors, Inc.
Douglas R. Jamieson, 914-921-5020
or
Michael R. Anastasio, 914-921-5147