Exhibit 99
GAMCO Reports Record 2005 Earnings of $2.09 per Fully Diluted Share vs.
$2.06 in 2004;
Fourth Quarter 2005 Earnings $0.61 per Fully Diluted Share vs.
$0.65 in 2004;
Seeks to Convert Interest Income to Operating Income
RYE, N.Y.--(BUSINESS WIRE)--Jan. 27, 2006--GAMCO Investors, Inc.
(NYSE:GBL) reported record net income for the full year ended December
31, 2005 of $63.4 million, or $2.09 per fully diluted share, versus
$62.6 million, or $2.06 per fully diluted share, in the comparable
2004 period. For 2005, revenues were $252.4 million, a slippage of
1.1% from the prior year's record revenues of $255.2 million.
Operating income was $86.6 million, down 12.6% from $99.1 million in
the full year 2004. During 2005, operating income was impacted by a
number of 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 accelerated vesting of stock
options.
For the fourth quarter ended December 31, 2005, revenues were
$64.8 million, down 12.7% from the $74.2 million generated in the
prior year's quarter. Operating income decreased 11.7% to $24.2
million from the $27.4 million reported in last year's fourth quarter.
Net income for the quarter was $18.3 million, or $0.61 per fully
diluted share, versus $19.5 million, or $0.65 per fully diluted share
in the prior year's quarter.
Selected Highlights
-- The Gabelli Global Gold, Natural Resources & Income Trust
(AMEX:GGN), our new closed-end fund, launched on March 29,
2005. Since inception, the net asset value has increased
21.97% and in addition to monthly distributions of $0.14 per
share, GGN shareholders received an additional year-end
distribution of $0.18 per share.
-- GAM GAMCO Equity Fund was awarded Standard & Poor's AAA Rating
for the second consecutive year in November 2005.
-- The Gabelli ABC Fund benefited from stepped up merger activity
and recorded its twelfth consecutive full year of positive
returns.
-- Clients of our high net worth and institutional asset
management business enjoyed another year of positive returns
bringing the over 28 year record for our separate account
composite to a compound annual net return of 17.6%.
-- The Gabelli Equity Trust (NYSE:GAB) closed on its
over-subscribed "eighth" rights offering. GAB shareholders
also received an extra $0.11 per share distribution in
December 2005.
-- The Gabelli U.S. Treasury Money Market Fund (GUSTO) is
currently the lowest cost money market fund in its class of
money market funds investing exclusively in U.S. Treasury
obligations.
Financial Results
Equity assets under management were $26.0 billion on December 31,
2005 versus $26.8 billion on December 31, 2004. Overall, assets under
management were $26.8 billion on December 31, 2005 versus $28.7
billion at the end of 2004.
Our equity mutual funds reached a record $13.0 billion in AUM on
December 31, 2005, 1.2% ahead of the $12.8 billion on September 30,
2005 and 4.8% ahead of the $12.4 billion on December 31, 2004. Our
institutional and high net worth business, had AUM of $12.4 billion in
separately managed equity accounts on December 31, 2005, 5.7% below
the $13.1 billion recorded on September 30, 2005 and 8.9% below the
$13.6 billion on December 31, 2004. AUM in our investment partnerships
declined to $634 million versus $745 million on September 30, 2005 and
$814 million on December 31, 2004. Fixed income AUM, primarily money
market mutual funds, totaled $819 million on December 31, 2005, down
14.2% from the September 30, 2005 assets of $954 million and 56.6%
lower than assets of $1.9 billion on December 31, 2004. The decline in
fixed income AUM during 2005 was principally related to the withdrawal
of assets from the Treasurer's Fund, which was closed during the
fourth quarter 2005.
For the full year 2005, investment advisory fees were $219.5
million, virtually unchanged from the $219.9 million generated in the
prior year period. Further details on our 2005 investment advisory
revenues included the following:
-- Closed-end fund revenues increased 15.4% to $43.4 million for
the full year 2005 up from $37.6 million in the prior year's
period. The increase in revenues from closed-end funds for
2005 resulted principally from an increase in AUM as well as
revenues from The Gabelli Global Gold, Natural Resources &
Income Trust (AMEX:GGN), our new closed-end fund, which
started on March 29, 2005.
-- Investment partnership revenues rose $0.8 million versus the
comparable prior year period due to an increase in incentive
fees of $1.8 million, partially offset by a decrease in
management fees.
-- Open-end mutual funds revenues of $79.9 million were 2.3%
lower than the $81.8 million recorded in the 2004 period,
principally due to the impact of lower money market fund
assets.
-- Institutional and high net worth separate accounts revenues
declined 5.9% to $82.4 million, down from the $87.6 million
reported during 2004. The majority of this decline is
attributable to the drop in fulcrum fees from the $5.6 million
recorded in the 2004 period to $2.7 million in the 2005 period
as well as the full year impact on revenues from the transfer
of a sub-advisory account to another asset manager in November
2004.
Total fourth quarter 2005 revenues fell $9.4 million or 12.7% to
$64.8 million from $74.2 million in the prior year's quarter. The
decline in revenues was principally the result of lower investment
advisory fees which totaled $55.7 million during the fourth quarter of
2005, a decrease of $9.4 million or 14.4% from the fourth quarter of
2004. Lower incentive fees from investment partnerships of $3.1
million, fulcrum fees on institutional separate accounts of $3.2
million, and management fees on closed-end preferred shares of $2.8
million ("preferred fees") caused this decline. The following provides
additional details on revenues from our investment advisory businesses
for the fourth quarter of 2005:
-- Closed-end fund revenues fell $1.3 million or 9.0% to $12.7
million from $14.0 million in the prior year's quarter. This
decrease was principally due to a decline of $2.8 million for
preferred fees in the 2005 fourth quarter from the prior year.
This decline was expected as stronger performance earlier in
2005 resulted in the recognition of $2.9 million of preferred
fees in the third quarter 2005 as compared to a reversal of
$0.2 million in the 2004 third quarter. While the timing of
the recording of preferred fees differed on a year over year
basis, our full year 2005 preferred fee revenues of $5.9
million were equal to 2004. Partially offsetting this decrease
in the 2005 fourth quarter was approximately $1.0 million of
revenues from the inclusion of The Gabelli Global Gold,
Natural Resources & Income Trust (AMEX:GGN).
-- Open-end mutual fund revenues of $19.9 million were 2.8% lower
than the $20.4 million recorded in the 2004 quarter due in
part to the decline in money market fund assets in the
Treasurer's Fund.
-- Institutional and high net worth separate accounts revenue
declined 16.7% to $20.1 million, down from $24.1 million in
the 2004 quarter. The primary reason for this decline was the
decrease in fulcrum fees from the $3.6 million recorded in the
2004 quarter to $0.4 million in the 2005 quarter.
-- Incentive fees from investment partnerships decreased by $3.1
million from the prior year as the 2004 quarter included $4.4
million in incentive fees.
Commission revenues from our institutional research affiliate,
Gabelli & Company, Inc., decreased to $12.2 million for the full year
2005 and to $3.9 million in the fourth quarter 2005, versus $15.6
million and $4.3 million in the prior year's periods, respectively.
Mutual fund distribution fees and other income were $20.7 million for
the full year 2005, 5.2% higher than the $19.7 million recorded in the
2004 period, and $5.2 million in the fourth quarter of 2005, 5.9%
higher than the $4.9 million recorded in the 2004 fourth quarter. The
increase in fees is principally from higher average assets under
management in class C shares, which have 12b-1 fees of 1%, in the 2005
periods as compared to the prior year's periods.
As discussed in our third quarter 2005 earnings press release,
fourth quarter 2005 operating profits were expected to decrease from
the previous year due to lower preferred fees from closed-end funds
and fulcrum fees from institutional accounts. However, the decline in
fourth quarter 2005 operating profit was less than anticipated as a
result of strong investment performance in December 2005 of our
absolute return focused equity portfolios.
Operating margins before management fee for the full year 2005
declined to 38.8% from 43.1% due to an increase in selling, general
and administrative expenses including a number of one-time charges
described below. For the fourth quarter 2005, operating margins
improved to 42.5% from 41.6% in the fourth quarter 2004 principally
due to lower variable compensation costs.
Selling, general and administrative expenses increased 20.8% to
$49.9 million for the full year 2005 from $41.3 million in the prior
year's period. This increase included higher total compensation costs
of approximately $1.5 million, (of which $1.0 million was related to
stock option expense), a one-time charge of $1.1 million from the
impairment of goodwill related to our fixed income business and the
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, for the year, there was an increase in accounting and legal
costs of approximately $2.6 million as well as $1.2 million of higher
costs directly related to the elimination of soft dollars in our
mutual fund business.
For the fourth quarter 2005, selling, general and administrative
expenses decreased slightly to $11.4 million from $11.5 million in the
prior year's quarter. A decline in stock option expense and incentive
compensation costs of approximately $0.7 million partially was offset
by an increase in legal costs related to regulatory and corporate
governance dynamics.
The effective tax rate for both the fourth quarter and full year
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.
Total other income, net of interest expense, rose to $15.6 million
for the full year 2005 from $0.1 million in 2004 and increased to $5.4
million for the fourth quarter 2005 from the $3.7 million recorded in
the prior year quarter. As expected, our 2005 results benefited from a
rise in investment income from higher interest rates, as compared to
the prior year periods.
The net return from our corporate investment portfolio for the
full year 2005 totaled $10.9 million versus $5.6 million in the
comparable 2004 period. For the fourth quarter 2005, the net return
declined to $3.0 million from the $3.7 million generated in the prior
year's quarter. The higher full year 2005 investment gains are mostly
due 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 $0.6 million on OXPS
during the fourth quarter of 2005, bringing gains to $5.4 million for
the full year 2005. 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 were partially offset by a $3.3 million
loss recorded in the first quarter of 2005 for the write down to fair
value of certain securities held as available for sale.
Higher short-term interest rates lifted interest income to $12.4
million and $3.7 million for the full year 2005 and the fourth quarter
2005, respectively, versus $4.8 million and $1.7 million in the
respective 2004 periods. For the twelve months and fourth quarter
2005, interest expense fell to $13.8 million and $3.3 million,
respectively compared to $16.0 million and $3.9 million in the prior
year's periods. This decrease is principally due to the April 1, 2005
repurchase of $50 million of the $100 million 5% convertible note.
Management fee was $11.4 million for the full year 2005 versus the
$11.0 million for 2004 and $3.3 million for the fourth quarter of 2005
versus $3.5 million for the comparable 2004 period.
Business Highlights
-- Branding - As part of a firm-wide branding initiative, the
names of eight mutual funds managed by Gabelli Funds, LLC, a
subsidiary of GAMCO Investors, Inc., were changed to GAMCO.
The GAMCO brand more appropriately differentiates the various
investment strategies offered to investors including growth,
gold, convertible securities and contrarian. Funds continuing
to use the Gabelli name primarily represent value portfolios
managed in the absolute return, research-driven Private Market
Value with a Catalyst(TM) investment approach.
-- Clients of our institutional and high net worth asset
management business achieved a compound annual net return of
17.8% in our separate accounts composite(a) for the over 28
years since inception. This composite has been managed in the
absolute return, research-driven Private Market Value (PMV)
with a Catalyst(TM) style since inception.
(a) The GAMCO composite does not track all assets under
management. It consists of fully discretionary, tax-exempt accounts
managed for at least one full quarter and meeting minimum account size
requirements. The minimum size requirement for inclusion in 1985 was
$500,000; 1986, $1 million; and 1987 and thereafter, $5 million. The
performance calculations include accounts under management during the
respective periods. As of 12/31/05 the GAMCO composite included 46
accounts with aggregate market value of $3.7 billion. A complete list
of composites is available upon request. No two portfolios are
identical. Accounts not within this size and type may have experienced
different results. The inception date of the GAMCO composite is
10/1/77.
-- GAM GAMCO Equity Fund, managed by Mario Gabelli, was awarded
Standard & Poor's AAA Rating(b) for the second consecutive
year in November 2005. There are only eleven S&P AAA Rated
funds in S&P's U.S. Mainstream Sector peer group which is
comprised of 1,120 funds, including all share classes. GAM
GAMCO Equity Fund has been sub-advised by GAMCO Asset
Management Inc. for Global Asset Management (GAM), since the
fund's launch in October 1987.
-- In 2005, The Gabelli ABC Fund recorded its twelfth consecutive
full year of positive returns. According to Lipper, Inc.(c),
The Gabelli ABC Fund is one of only three equity-oriented
funds (among 1,487 funds) that has had a positive return for
each of the last twelve years. The fund seeks to achieve total
returns that are attractive to investors in various market
conditions without excessive risk of capital with a current
fee structure that is lower than some money market funds. The
performance of The Gabelli ABC Fund has been enhanced since
April 2002 by fee waivers initiated by the Adviser.
-- The Gabelli Blue Chip Value Fund, managed by Barbara Marcin,
has a Lipper ranking of 6 out of 386 (2nd percentile) funds
within the Large Cap Value category for the three year period
ended December 31, 2005. The fund's Class AAA shares had an
average annual return of 19.96% during this period.
Additionally, for the one year, five year and period since
inception on August 26, 1999, the average annual returns were
6.69%, 0.81% and 4.98%, respectively. The Lipper rankings for
the fund for the one year and five year periods were 156 out
of 469 funds and 229 out of 259 funds, respectively.
-- The Gabelli Equity Income Fund's Class AAA shares had an
average annual return of 15.53% for the three year period
ended December 31, 2005 and has an overall Morningstar
Rating(TM)(d) of four stars. The one-year, five year and ten
year average annual returns for the fund through December 31,
2005 were 6.36%, 7.12% and 11.29%, respectively. The fund was
rated three stars for the three year period, four stars for
the five year period and five stars for the ten year period
out of 1,014, 697 and 333 funds, respectively among equity
income funds.
-- The GAMCO Gold Fund(e), managed by Caesar Bryan, continues to
deliver strong performance as the fund generated a return of
33.63% for its shareholders in 2005 and average annual returns
of 21.18%, 33.22%, 6.92% for the three year, five year and ten
year periods ended December 31, 2005, respectively.
-- Our Growth team, headed by Howard Ward, believes the
investment cycle is turning and growth stocks are in the early
stages of returning to favor. For the one year, three year and
10 year periods ended December 31, 2005, GAMCO Growth Fund and
GAMCO Global Growth Fund are both ranked in the first quartile
of Lipper rankings within the Large-Cap Growth and Global
Multi-Cap Core category, respectively. The GAMCO Growth Fund's
Class AAA shares generated average annual returns of 10.30%,
14.91%, -5.28% and 8.23% for the one year, three year, five
year and 10 year periods, respectively, during this period and
the Lipper rankings were 111 out of 687 funds, 146 out of 593
funds, 315 out of 475 funds, and 47 out of 158 funds for each
of the respective periods. The GAMCO Global Growth Fund had
average annual returns for the one year, three year, five year
and ten year periods of 13.72%, 20.73%, 0.08% and 10.79%,
respectively and the Lipper rankings for these respective
periods were 9 out of 69 funds, 11 out of 55 funds, 37 out of
42 funds, and 1 out of 13 funds.
-- The Gabelli U.S. Treasury Money Market Fund (GUSTO) is
currently the lowest cost money market fund in its class of
money market funds investing exclusively in U.S. Treasury
obligations(f). Gabelli Funds, LLC, the adviser of the fund,
has voluntarily waived a larger portion of its management fee
and will maintain total expenses at eight basis points or
0.08% of the average net assets at least for the period from
December 1, 2005 through June 30, 2006.
Past performance is no guarantee of future results. Other share
classes are available and have different performance characteristics.
The average annual returns and total returns are historical and
reflect changes in share price, reinvested dividends and capital gains
and are net of expenses. Investment returns and principal value of an
investment will fluctuate. When shares are redeemed, they may be worth
more or less than their original costs. Current performance may be
lower or higher than the performance presented. Performance
information as of the most recent month-end is available at
www.gabelli.com. Investors should consider the investment objectives,
risks, charges and expenses of a fund carefully before investing. The
prospectus for a fund contains information about this and other
matters and should be read carefully before investing. Call
800-GABELLI to obtain a prospectus.
(b) Standard & Poor's is a globally recognized provider of
objective fund information and a leading authority in the investment
world. S&P's evaluation process is based on an in-depth analysis of
both quantitative and qualitative factors that are considered key
contributors to long-term investment performance. These include the
historic performance, volatility and portfolio construction of a fund;
the manager's investment process, risk control, skill, experience and
resources; and the group's corporate management, investment culture
and stability.
(c) Lipper, Inc. is a nationally recognized organization which
tracks the performance of all registered investment companies.
(d) 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 the
funds in an investment category receive five stars, the next 22.5%
receive four stars, the next 35% receive three stars, the next 22.5%
receive two stars and the bottom 10% receive one star. The Overall
Morningstar Rating for a fund is derived from a weighted average of
the performance figures associated with its three, five, and ten-year
(if applicable) Morningstar metrics. Morningstar Ratings are shown for
the respective class shown; other classes may have different
performance characteristics.
(e) An investment in gold stocks is considered speculative and is
affected by a variety of worldwide economic, financial and political
factors. GAMCO Gold Fund invests in foreign securities, which involves
risks not ordinarily associated with investments in domestic stocks
including currency fluctuations, economic and political risks.
(f) According to iMoneyNet, Inc. An investment in a money market
fund is not insured or guaranteed by The Federal Deposit Insurance
Corporation or any other government agency. Although the fund seeks to
preserve the value of an investment at $1.00 per share, it is possible
to lose money by investing in the fund. There is no guarantee that the
fund can achieve its objective. Yields fluctuate. Yields are enhanced
by a fee waiver initiated by the Adviser.
-- In November 2005, The Gabelli Equity Trust (NYSE: GAB) raised
a record $143 million through an over-subscribed "eighth"
rights offering. Shareholders received one transferable right
for each share of common stock held on the record date and
seven rights entitled shareholders to purchase one newly
issued share of common stock of the Fund at the subscription
price of $7.00 per share. GAB received subscriptions for
nearly 150% of the shares available to be issued. GAB
shareholders also received an additional $0.11 per share
distribution in November 2005.
-- The Gabelli Dividend & Income Trust (NYSE: GDV) completed an
offering of two series of preferred shares totaling $200
million. The issuance consisted of $65 million of 6.00% Series
D Cumulative Preferred Shares and $135 million of Series E
Auction Preferred Shares. Citigroup, Merrill Lynch, A.G.
Edwards and Gabelli & Company, Inc. served as underwriters of
the offering, which closed on November 3, 2005.
-- Gabelli & Company, Inc. hosted its 29th Annual Automotive
Aftermarket Symposium in Las Vegas, Nevada. Over 25 automotive
suppliers, retailers, and dealers presented their investment
thesis to the firm's institutional clients at this interactive
symposium. Participating companies included Genuine Parts,
Autozone, Midas Inc, and UnitedAutoGroup, which are benefiting
from the aging of the global car fleet. This year's conference
also included a special panel discussion, moderated by Mario
Gabelli, on the impact of wage rates, healthcare, pensions,
and productivity as they relate to General Motors and Delphi
Automotive.
Financial Highlights - Quarterly Dividend Raised 50% in Fourth
Quarter
Balance Sheet Strong
We ended the quarter with roughly $672.4 million in cash and
investments in securities. This includes approximately $81.2 million
of 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 $100 million of
5.5% senior notes due May 2013, a $50 million 5% convertible note due
August 2011, and $82.3 million of 5.22% senior notes due February 2007
issued in connection with our mandatory convertible securities.
Expressed another way, we had $14.90 per share of net cash and
investments in securities on December 31, 2005 compared with $12.54
per share on December 31, 2004.
Our liquid balance sheet coupled with an investment grade credit
rating provides access to financial markets and the flexibility to
opportunistically add to our business, repurchase our stock and
consider other strategic initiatives. Our challenge and opportunities
remain converting our liquidity to growing operating income.
Our primarily goal is to use our liquid resources to
opportunistically and strategically convert our interest income to
operating income. While this goal is our priority, if opportunities
are not present with what we consider a margin of safety, we will
consider other ways to return capital to our shareholders including
stock repurchase and dividends.
Stockholders' equity was $424.1 million or $14.36 per share on
December 31, 2005 compared with $334.9 million or $11.61 per share on
December 31, 2004. The increase in stockholder's equity from the end
of 2004 is principally related to the issuance of 1,517,483 shares of
Class A common stock at $46.50 per share in connection with the
settlement of the purchase contracts issued pursuant to our mandatory
convertible securities in February 2005.
Shareholder Compensation
- Dividends
Our Board of Directors increased our regular quarterly dividend
50% to $0.03 per share beginning with the fourth quarter 2005
dividend. During the full year 2005, we have paid total dividends of
$0.69 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 December 31, 2005 were 29,543,017,
approximately 1.1% lower than September 30, 2005 outstanding shares of
29,861,817, and approximately 2.4% above the 28,837,034 shares
outstanding on December 31, 2004. The increase in shares outstanding
from the end of 2004 reflects the issuance of 1,517,483 shares of
Class A common stock in connection with the settlement of the purchase
contracts issued pursuant to our mandatory convertible securities in
February 2005 which was partially offset by stock buyback. Fully
diluted shares outstanding for the fourth quarter of 2005 were
30,652,102 approximately 1.4% lower than third quarter 2005 fully
diluted shares of 31,079,413 and approximately 1.7% lower than our
fully diluted shares of 31,178,652 for the fourth quarter 2004.
Our stock buyback program was initiated in March 1999. Since that
time, 3,634,626 class A common shares have been repurchased through
December 31, 2005 at an average investment of $38.00 per share. During
2005, we have repurchased 861,000 shares at an average investment of
$43.22, including 326,800 at an average investment of $44.71 during
the fourth quarter 2005. During November 2005, our Board of Directors
authorized an additional 500,000 shares to be repurchased under the
current stock repurchase program. At the end of December, the shares
currently available to be repurchased under the program was
approximately 1,083,000 shares.
NOTES ON NON-GAAP FINANCIAL MEASURES
A. Cash and investments as adjusted have been computed as follows:
(in millions)
12/31/04 12/31/05
---------- ---------
Cash and cash equivalents $257.1 $170.7
Investments (marketable securities) 305.9 412.0
---------- ---------
Total cash and investments (marketable securities) 563.0 582.7
Net amounts receivable/(payable) to brokers 5.2 8.5
---------- ---------
Adjusted cash and investments (marketable
securities) 568.2 591.2
Investments (available for sale) 75.8 81.2
---------- ---------
Total adjusted cash and investments $644.0 $672.4
====================
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)
----------------------------------
December 31
------------------------ %
Inc.
2004 2005 (Dec.)
----------- ----------- ---------
Mutual Funds:
Equities
Open end $ 8,029 $ 7,888 (1.8%)
Closed-end 4,342 5,075 16.9
Fixed Income 1,499 735 (51.0)
----------- -----------
Total Mutual Funds 13,870 13,698 (1.2)
----------- -----------
Institutional & High Net Worth
Separate Accounts:
Equities 13,587 12,382 (8.9)
Fixed Income 388 84 (78.4)
----------- -----------
Total Institutional & High Net Worth
Separate Accounts 13,975 12,466 (10.8)
----------- -----------
Investment Partnerships 814 634 (22.1)
----------- -----------
Total Assets Under Management $ 28,659 $ 26,798 (6.5)
=========== ===========
Table II:
Fund Flows - 4th Quarter 2005 (in millions)
-------------------------------------------
Market
September Net Appreciation / December
30, Cash Flows (Depreciation) 31,
2005 2005
---------- ----------- --------------- --------
Mutual Funds:
Equities $12,810 $275 $(122) $12,963
Fixed Income 796 (68) 7 735
---------- ----------- --------------- --------
Total Mutual Funds 13,606 207 (115) 13,698
---------- ----------- --------------- --------
Institutional & HNW
Separate Accounts
Equities 13,129 (318) (429) 12,382
Fixed Income 158 (75) 1 84
---------- ----------- --------------- --------
Total Institutional &
HNW Separate Accounts 13,287 (393) (428) 12,466
---------- ----------- --------------- --------
Investment Partnerships 745 (112) 1 634
---------- ----------- --------------- --------
Total Assets Under
Management $27,638 ($ 298) $(542) $26,798
========== =========== =============== ========
Table III: Assets Under Management (in millions)
--------------------------------------------------
% Increase/
(decrease)
12/04 3/05 6/05 9/05 12/05 9/05 12/04
------- ------- ------- ------- ------ ----- ------
Mutual Funds
Open end $ 8,029 $ 7,808 $ 7,798 $ 7,959 $ 7,888 (0.9%)(1.8%)
Closed-end 4,342 4,602 4,684 4,851 5,075 4.6 16.9
Fixed income 1,499 1,154 852 796 735 (7.7)(51.0)
------- ------- ------- ------- -------
Total Mutual Funds 13,870 13,564 13,334 13,606 13,698 0.7 (1.2)
------- ------- ------- ------- -------
Institutional &
HNW Separate
Accounts:
Equities 13,587 13,364 13,189 13,129 12,382 (5.7) (8.9)
Fixed Income 388 266 269 158 84 (46.8)(78.4)
------- ------- ------- ------- -------
Total
Institutional &
HNW Separate
Accounts 13,975 13,630 13,458 13,287 12,466 (6.2)(10.8)
------- ------- ------- ------- -------
Investment
Partnerships 814 854 831 745 634 (14.9)(22.1)
------- ------- ------- ------- -------
Total Assets Under
Management $28,659 $28,048 $27,623 $27,638 $26,798 (3.0) (6.5)
======= ======= ======= ======= =======
Table IV
GAMCO INVESTORS, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
----------------------- ------------------------
% Inc. % Inc.
2004 2005 (Dec.) 2004 2005 (Dec.)
------- ------ ------- -------- ------- -------
Revenues $74,183 $64,757 (12.7%)$255,163 $252,363 (1.1%)
Expenses 43,318 37,264 (14.0) 145,078 154,415 6.4
------- ------- -------- --------
Operating income
before management fee 30,865 27,493 (10.9) 110,085 97,948 (11.0)
Investment income 7,649 8,631 12.8 16,108 29,395 82.5
Interest expense (3,932) (3,280) (16.6) (16,027) (13,782) (14.0)
------- ------- -------- --------
Other income
(expense), net 3,717 5,351 44.0 81 15,613 19,175
------- ------- -------- --------
Income before
management fee,
income taxes and
minority interest 34,582 32,844 (5.0) 110,166 113,561 3.1
Management fee 3,459 3,284 11,017 11,356
------- ------- -------- --------
Income before income
taxes and minority
interest 31,123 29,560 99,149 102,205
Income taxes 11,329 11,085 36,097 38,327
Minority interest 255 169 493 487
------- ------- -------- --------
Net income $19,539 $18,306 (6.3)$ 62,559 $ 63,391 1.3
======= ======= ======== ========
Net income per share:
Basic $ 0.67 $ 0.62 (7.5)$ 2.11 $ 2.13 0.9
======= ======= ======== ========
Diluted $ 0.65 $ 0.61 (6.2)$ 2.06 $ 2.09 1.5
======= ======= ======== ========
Weighted average
shares outstanding:
Basic 29,037 29,643 2.1 29,673 29,805 0.4
======= ======= ======== ========
Diluted 31,179 30,652 (1.7) 31,804 31,155 (2.0)
======= ======= ======== ========
Reconciliation of Non-
GAAP Financial
Measures
to GAAP:
Operating income
before management fee$30,865 $27,493 (10.9)$110,085 $ 97,948 (11.0)
Deduct: management
fee 3,459 3,284 11,017 11,356
------- ------- -------- --------
Operating income $27,406 $24,209 (11.7)$ 99,068 $ 86,592 (12.6)
------- ------- -------- --------
Operating margin
before management fee 41.6% 42.5% 43.1% 38.8%
------- ------- -------- --------
Operating margin after
management fee 36.9% 37.4% 38.8% 34.3%
------- ------- -------- --------
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 4th
Quarter Quarter Quarter Quarter Total
-------- ------- ------- ------- --------
Income Statement Data:
Revenues $61,531 $59,841 $66,234 $64,757 $252,363
Expenses 39,122 37,888 40,141 37,264 154,415
------- ------- ------- ------- --------
Operating income before
management fee 22,409 21,953 26,093 27,493 97,948
Investment income 4,067 4,544 12,153 8,631 29,395
Interest expense (3,929) (3,275) (3,298) (3,280) (13,782)
------- ------- ------- ------- --------
Other income (expense), net 138 1,269 8,855 5,351 15,613
------- ------- ------- ------- --------
Income before
management fee,
income taxes and
minority interest 22,547 23,222 34,948 32,844 113,561
Management fee 2,255 2,322 3,495 3,284 11,356
------- ------- ------- ------- --------
Income before income
taxes and minority
interest 20,292 20,900 31,453 29,560 102,205
Income taxes 7,609 7,838 11,795 11,085 38,327
Minority interest 1 107 210 169 487
------- ------- ------- ------- --------
Net income $12,682 $12,955 $19,448 $18,306 $ 63,391
======= ======= ======= ======= ========
Net income per share:
Basic $ 0.43 $ 0.43 $ 0.65 $ 0.62 $ 2.13
======= ======= ======= ======= ========
Diluted $ 0.42 $ 0.43 $ 0.64 $ 0.61 $ 2.09
======= ======= ======= ======= ========
Weighted average shares
outstanding:
Basic 29,560 30,079 29,935 29,643 29,805
======= ======= ======= ======= ========
Diluted 31,684 31,211 31,079 30,652 31,155
======= ======= ======= ======= ========
Reconciliation of Non-GAAP
Financial Measures to
GAAP:
Operating income before
management fee $22,409 $21,953 $26,093 $27,493 $ 97,948
Deduct: management fee 2,255 2,322 3,495 3,284 11,356
------- ------- ------- ------- --------
Operating income $20,154 $19,631 $22,598 $24,209 $ 86,592
------- ------- ------- ------- --------
Operating margin before
management fee 36.4% 36.7% 39.4% 42.5% 38.8%
------- ------- ------- ------- --------
Operating margin after
Management fee 32.8% 32.8% 34.1% 37.4% 34.3%
------- ------- ------- ------- --------
Table VI
GAMCO INVESTORS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
(In thousands)
December 31, December 31,
2004 2005
------------- ------------
ASSETS (unaudited)
Cash and cash equivalents $ 257,096 $ 170,659
Investments 381,689 493,187
Receivables 46,571 45,360
Other assets 13,616 11,888
------------- ------------
Total assets $ 698,972 $ 721,094
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Compensation payable $ 27,645 $ 27,889
Dividends payable 17,302 -
Income taxes payable 8,526 10,132
Accrued expenses and other liabilities 22,142 20,485
------------- ------------
Total operating liabilities 75,615 58,506
5.5% Senior notes (due May 15, 2013) 100,000 100,000
5% Convertible note (conversion price, $52
per share; note due August 14, 2011) 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 -
------------- ------------
Total liabilities 357,923 290,814
Minority interest 6,171 6,151
Stockholders' equity 334,878 424,129
------------- ------------
Total liabilities and stockholders' equity $ 698,972 $ 721,094
============= ============
CONTACT: GAMCO Investors, Inc.
Douglas R. Jamieson, 914-921-5020
or
Michael R. Anastasio, 914-921-5147
www.gabelli.com