Exhibit 99.1
As Anticipated, GAMCO Reports Lower Third Quarter Earnings
RYE, N.Y.--(BUSINESS WIRE)--Nov. 9, 2006--GAMCO Investors, Inc.
(GAMCO) (NYSE: GBL) reported third quarter 2006 earnings of $0.59 per
fully diluted share versus $0.64 per fully diluted share as reported
in the third quarter of 2005 and $0.59 per fully diluted share as
restated for the changes in accounting principle related to the
recognition of certain fees. Revenues were $58.0 million for the third
quarter versus $66.2 million as reported and $60.7 million as restated
for the changes in accounting principle in the comparable 2005 period.
For the nine months ended September 30, 2006, net income was $44.2
million versus $45.1 million as reported and $43.4 million as restated
for the changes in accounting principle and fully diluted earnings
were $1.53 per share versus $1.48 per share as reported in 2005 and
$1.43 per share as restated for the changes in accounting principle.
Revenues were $178.9 million for the nine months ended September 30,
2006 versus $187.6 million as reported in 2005 and $180.8 million as
restated for the changes in accounting principle.
Assets Under Management
Assets Under Management (AUM) were $26.6 billion as of September
30, 2006, nominally lower than June 30, 2006 AUM of $26.8 billion and
3.8% lower than September 30, 2005 AUM of $27.6 billion. Equity assets
under management were $25.9 billion on September 30, 2006, remaining
level with June 30, 2006 equity assets of $25.9 billion, but 3.1%
lower than the $26.7 billion on September 30, 2005.
-- Our equity closed-end funds reached record AUM of $5.3 billion
on September 30, 2006, slightly above AUM at June 30, 2006 and
9.8% higher than the $4.9 billion on September 30, 2005.
-- Our equity open-end funds were $7.9 billion in AUM on
September 30, 2006, 0.7% above the $7.8 billion level on June
30, 2006 and 1.3% lower than the $8.0 billion on September 30,
2005.
-- Our institutional and high net worth business had AUM of $12.2
billion in separately managed equity accounts on September 30,
2006, 0.6% lower than the $12.3 billion on June 30, 2006, and
7.1% lower than the $13.1 billion on September 30, 2005.
-- AUM in our investment partnerships were $488 million versus
$536 million on June 30, 2006 and $745 million on September
30, 2005.
-- Fixed income AUM, primarily money market mutual funds, totaled
$737 million on September 30, 2006, down 19.7% from the June
30, 2006 AUM of $918 million, and 22.7% lower than fixed
income AUM of $954 million on September 30, 2005.
Revenues
Investment advisory fees for the third quarter of 2006 were $49.8
million, a decrease of 4.4% from the $52.0 million generated in the
third quarter of 2005:
-- Our closed-end funds revenues increased 8.6% to $10.7 million
for the third quarter 2006, up from $9.8 million in the prior
year's period primarily due to increased average AUM.
-- Open-end mutual funds revenues decreased 3.8% to $19.6 million
from $20.4 million in the 2005 period primarily due to lower
average AUM.
-- Institutional and high net worth separate accounts revenues
decreased 8.2% to $18.3 million, down from the $19.9 million
reported in 2005 primarily due to a decrease in AUM.
-- Investment Partnership revenues decreased 37.5% to $1.2
million from $1.9 million in the prior year's period primarily
due to a decrease in AUM.
Commission revenues from our institutional research affiliate,
Gabelli & Company, Inc., were $2.8 million in the third quarter 2006,
down 14.1% from the prior year's comparable period. The decrease was
primarily due to a decline in trading volume and average revenue
earned per share traded.
Mutual fund distribution fees and other income were $5.4 million
for the third quarter 2006, level with the prior year's period.
Investment advisory fees for the nine months ended September 30,
2006 were $153.7 million, a decrease of $3.3 million, or 2.1%, from
the $157.1 million generated for the nine months ended September 30,
2005 as:
-- Revenues from our closed-end fund increased 15.4% to a record
$31.7 million for the nine months ended September 30, 2006, up
from $27.5 million in the prior year's period primarily due to
increased average AUM within our closed-end funds from $4.6
billion for the first nine months of 2005 to $5.3 billion for
the first nine months of 2006.
-- Open-end mutual funds revenues were $59.9 million, down 0.2%
from the $60.0 million in the 2005 period.
-- Institutional and high net worth separate accounts revenues
decreased 6.3% to $58.4 million from the $62.3 million
reported in 2005 primarily due to a decrease in AUM.
-- Investment Partnership revenues were $3.7 million, a decrease
of 48.8% from the $7.3 million in the 2005 period primarily
due to a decrease in AUM and lower performance fees.
Commission revenues from our institutional research affiliate,
Gabelli & Company, Inc., were $9.0 million for the nine months ended
September 30, 2006, up 8.1% from the prior year's comparable period
amount of $8.3 million primarily due to increased trading volume which
was partially offset by a decline in the average revenue earned per
share traded.
Mutual fund distribution fees and other income were $16.2 million
for the nine months ended September 30, 2006, 4.9% higher than the
$15.5 million reported in the 2005 period. The increase was primarily
due to higher distribution fees of $15.2 million for nine months ended
September 30, 2006 versus $14.4 million for prior year period,
principally as a result of an increase in average assets under
management from our increased wholesaling of funds sold through
unaffiliated broker dealers.
Operating Margin
Expenses not directly tied to revenues were $13.0 million, an
increase from the $12.2 million recorded in the third quarter of 2005.
The increase was primarily due to a $0.4 million increase in
compensation costs and a net $0.4 increase in operating expenses,
primarily legal and accounting fees resulting in operating margin,
before management fee, decreasing to 36.6% for the third quarter 2006
from 38.8% in the prior year's quarter.
For the nine months ended September 30, 2006, operating margin,
before management fee, decreased to 29.8% from 37.2% in the prior
year's period primarily due to an $11.9 million litigation reserve
recorded during the second quarter of 2006. Without the reserve,
operating margin would have been 36.5% for 2006.
Expenses not directly tied to revenues were $50.7 million, an
increase of 31.9% from the $38.5 million recorded in the period ended
September 30, 2005. The increase was primarily the result of the
litigation reserve taken during second quarter 2006.
Other Income / Expense
Total other income, net of interest expense was $9.0 million for
the third quarter 2006, marginally higher than the $8.9 million in the
comparable 2005 period. A $2.4 million increase in interest and
dividend income from the prior quarter was partially offset by a $2.3
million decease in net gain from investments. For the quarter ended
September 30, 2006, we recorded no earnings from our investment in
optionXpress (Nasdaq: OXPS) as compared to $0.05 per fully diluted
share for the quarter ended September 30, 2005.
Total other income, net of interest expense, rose to $41.5 million
for the nine months ended September 30, 2006 from $10.3 million in the
2005 period.
For the third quarter 2006, interest expense was $3.4 million,
$0.1 million greater than the prior year's period. For the nine months
ended September 30, 2006, interest expense increased $0.1 million from
the prior year's comparable period to $10.6 million.
Management fee dropped to $3.0 million for the three months ended
September 30, 2006, versus $3.2 million for the comparable 2005
period.
Management fee was $8.2 million for the nine months ended
September 30, 2006, versus $7.8 million for the comparable 2005
period. The increase was due to higher operating income before
management fee, income taxes, and minority interest of $94.9 million
for the nine months ended September 30, 2006, as compared to $77.6
million for the comparable 2005 period.
The effective tax rate for the three and nine months ended
September 30, 2006, excluding the reserve taken during the second
quarter of 2006, remained at 37.5%, the same as the respective prior
year periods.
Change in Accounting Policy
GAMCO previously voluntarily changed its accounting method to
recognize management fee revenues on closed-end preferred shares at
the end of the measurement period, effective January 1, 2006. GAMCO
has now also voluntarily changed its accounting method to recognize
incentive fee revenues on investment partnerships at the end of the
measurement period, effective January 1, 2006. Prior to the accounting
change, GAMCO recognized these revenues during each interim reporting
period. Under this method, management and incentive fee revenues
recognized in prior interim periods during the measurement period were
subject to possible reversal in subsequent periods during that
measurement period.
The net effect of the change in accounting policy is as follows
(dollars in thousands, except for earnings per share):
2005 2006
-------------------------------- ------------------------
1st 2nd 3rd 4th 1st 2nd 3rd
Quarter Quarter Quarter Quarter Quarter Quarter Quarter
-------------------------------- ------------------------
Revenue (1,218) (23) (5,528) 7,738 (1,291) (1,138) (887)
Operating
Income
Before
Management
Fee (487) (91) (2,553) 3,372 941 (435) (282)
Earnings Per
Share ($0.01) ($0.01) ($0.05) $0.06 ($0.02) ($0.01) $0.00
Business Highlights
-- Our seven Closed End Funds reached a record total AUM of $5.3
billion at September 30, 2006, a 1.3% increase over June 30,
2005 AUM of $5.3 billion and a 9.8% increase over September
30, 2005 AUM of $4.9 billion. For the quarter ended September
30, 2006, these selected Closed End Funds performed as
follows:
-- Gabelli Dividend & Income Trust generated a return of
12.99% for its shareholders in the nine months ended
September 30, 2006 and an average annual return of 11.69%
for the one year period ended September 30, 2006. Total Net
Assets(a) for the fund were approximately $2.38 billion as
of September 30, 2006.
-- Gabelli Equity Trust generated a return of 14.99% for its
shareholders in the nine months ended September 30, 2006,
and average annual returns of 11.73%, 19.82%, 12.96% and
11.32% for the one, three, five and ten year periods ended
September 30, 2006, respectively. Total Net Assets(a) for
the fund were approximately $1.84 billion as of September
30, 2006.
a) Authorized the spin-off of a proposed newly-formed
closed-end investment company. The spin-off would be
subject to shareholder and other regulatory approvals
and would create The Gabelli Global Healthcare &
Wellness(Rx) Trust ("Healthcare & Wellness(Rx) Trust").
b) Increased the cash distribution from $0.19 per share to
$0.20 per share.
-- Gabelli Utility Trust generated a return of 16.42% for its
shareholders in the nine months ended September 30, 2006,
and average annual returns of 9.42%, 16.00%, and 10.81% for
the one, three, and five year periods ended September 30,
2006, respectively. Total Net Assets(a) for the fund were
approximately $277.8 million as of September 30, 2006.
-- Gabelli Global Multimedia Trust generated a return of 9.13%
for its shareholders in the nine months ended September 30,
2006, and average annual returns of 7.76%, 14.52%, 8.40%
and 11.18% for the one, three, five and ten year periods
ended September 30, 2006, respectively. Total Net Assets(a)
for the fund were approximately $224.1 million as of
September 30, 2006.
-- In our open end funds:
-- Our Gabelli ABC Fund, which focuses on absolute rates of
return, is one of the three funds according Lipper that has
had an up year every year since 1993 when it commenced
investing. This fund was up 8.83% through September 30,
2006 and is up 10.33% for the one year, 5.90% for the three
year and 4.49% and 7.15% for the five and ten year periods
ended June 30, 2006, respectively.
-- Gabelli Utilities Fund (AAA), a team managed fund,
delivered strong performance and record AUM as the fund
generated a return of 13.45% for its shareholders in the
first nine months of 2006, and average annual returns of
8.32%, 15.89%, 9.39%, and 9.34% for the one, three, and
five year and since inception (August 31, 1999) periods
ended September 30, 2006, respectively. Total Net Assets(a)
for the fund were approximately $443.2 million as of
September 30, 2006.
-- Gabelli Equity Income Fund(b) (AAA) has a 4 star
Morningstar overall rating in the Large Value Fund
category, a 3 star Morningstar rating for three years, a
4 star Morningstar rating for five years and a 5 star
Morningstar rating for the ten year periods, all ended
September 30, 2006. Since its inception, the fund earned a
return of 11.42% for shareholders in the first nine months
of 2006, and average annual returns of 11.25%, 14.80%,
10.76%, and 11.51% for the one, three, five and ten year
periods ended September 30, 2006, respectively. Total Net
Assets(a) for the fund were approximately $810.3 million,
a new record, as of September 30, 2006. There were 1,083
Large Value Funds rated overall 1,083 rated for three
years, 802 rated for five years, and 391 rated for ten
years.
-- The Gabelli Asset Fund (AAA) generated a return of 11.48%
for its shareholders in the first nine months of 2006, and
average annual returns of 11.10%, 15.76%, 10.92%, and
12.31% for the one, three, five and ten year periods ended
September 30, 2006, respectively. Total Net Assets(a) for
the fund were approximately $2.3 billion as of September
30, 2006.
-- Our liquid balance sheet, coupled with an investment grade
credit rating, provides access to financial markets and the
flexibility to opportunistically add operating resources to
our firm, repurchase our stock and consider strategic
initiatives. As a result of GAMCO Investors, Inc.
(NYSE: GBL) shelf registration in the third quarter 2006,
we have the right to issue any combination of senior and
subordinate debt securities, convertible debt securities
and equity securities (including common and preferred
securities) up to a total amount of $520 million. This
includes the remaining $120 million available under our
previous shelf registration filed in 2001.
-- Gabelli & Company, Inc, our institutional equity research
firm, hosted two research symposiums in September as part of
the firm's institutional brokerage business.
-- Our 12th Annual Aircraft Supplier Conference in New York
hosted Boeing Company, Crane Corporation, and Honeywell
International among the seventeen presenting public
companies. The themes of this two-day research conference
included competitive dynamics, new technologies, and
company fundamentals.
-- Our 2nd Annual RFID (Radio Frequency Identification)
Conference in New York hosted Paxar Corporation, Intermec,
Inc., and eight other presenting companies. The keynote
speaker, Bill Hardgrave, PhD., Associate Professor and
Edwin & Karlee Bradberry Chair of the Information Systems
department of the University of Arkansas, highlighted the
conference as senior managements from many of the major
players in this leading supply chain management technology
discussed industry fundamentals, technology standards, and
their corporate outlooks.
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 carefully consider the investment
objectives, risks, charges and expenses of a fund 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. Equity funds involve the risk that
the underlying investments may lose value. Accordingly, it is possible
to lose money by investing in these funds. Funds investing in a single
sector such as utilities may be subject to more volatility than funds
that invest more broadly. The utilities industries can be affected by
government regulation, financing difficulties, supply or demand of
services or fuel and natural resources conservation.
(a) Total Net Assets are for the entire fund. The performance
provided is for the respective funds' class AAA shares. Performance
information on other fund classes are available on our website at
www.gabelli.com.
(b) 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 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 Rating metrics. Morningstar Ratings are shown
for the respective class shown; other classes may have different
performance characteristics. This information is (1) proprietary to
Morningstar and/or its content providers; (2) may not be copied or
distributed; and (3) is not warranted to be accurate, complete or
timely. Neither Morningstar nor its content providers are responsible
for any damages or losses arising from any use of this information.
Financial Highlights
Balance Sheet - Liquidity and Flexibility
We ended the quarter with approximately $719.6 million in cash and
investments in securities. This included approximately $92.6 million
of our investments in The Gabelli Dividend & Income Trust, The Gabelli
Global Utility & Income Trust, various Gabelli and GAMCO open-end
mutual funds as well as other investments classified as available for
sale securities. Our debt of $232.3 million consisted of $100 million
of 5.5% senior notes due May 2013, a $50 million 6% convertible note
due August 2011, and $82.3 million of 5.22% senior notes due February
2007. We had cash and investments in securities, net of debt and
minority interest of $16.54 per share on September 30, 2006, compared
with $15.52 per share on June 30, 2006, $15.31 per share on September
30, 2005 and $14.69 per share on December 31, 2005.
Our primary goal is to utilize our liquid resources to
opportunistically and strategically convert our investment 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
continue to return value to our shareholders through stock repurchases
and dividends and consider other options as well.
Stockholders' equity was $418.0 million or $14.80 per share on
September 30, 2006 compared with $401.5 million or $14.19 per share on
June 30, 2006, $430.5 million or $14.42 per share on September 30,
2005 and $424.1 million or $14.20 per share on December 31, 2005.
Shareholder Compensation
- Dividends
In August 2006, our Board of Directors declared our regular
quarterly dividend of $0.03 per share that was paid on September 28,
2006 to all shareholders of record on September 15, 2006. This
dividend was 50% higher than the $0.02 dividend paid during September
2005.
- Stock Buyback
Shares outstanding on September 30, 2006 were 28,239,635, 5.4%
lower than the 29,861,817 shares outstanding on September 30, 2005.
Fully diluted shares outstanding for the third quarter of 2006 were
29,235,083, 5.9% lower than our fully diluted shares of 31,079,413 for
the third quarter 2005.
In the third quarter of 2006, we repurchased 62,400 shares at an
average investment of $34.38 per share. The total amount of shares
currently available to be repurchased under the program is
approximately 653,000 shares at September 30, 2006. Through September
30, 2006, we have repurchased 4,664,958 class A common shares at an
average investment of $39.45 per share since our buyback program was
initiated in March 1999.
Increased Liquidity
We have approximately twenty-eight million shares outstanding.
GGCP, a private company and GAMCO's largest shareholder, distributed
2.7 million shares to its owners. Most of the shares have been
registered, potentially increasing liquidity for GAMCO's stock.
Investment Outlook
As the third quarter ended amid falling oil prices and growing
confidence in the economy and earnings, the equity markets closed near
their highest level in six years. For three years, corporate earnings
have increased at a double-digit rate, while the equity market posted
much more modest returns. This resulted in a dramatic compression of
price earnings multiples, from an average of about 31 in 2000 to 16
times earnings today.
At the same time, the economy is in transition from a strong one
to a more moderate economy, as evidenced by The Federal Reserve that
paused raising interest rates after 17 hikes of 25 basis points at
each, increasing the Federal Funds rate from 1% to 5.25% since June of
2004.
Two sectors that will determine a soft landing are housing and
energy. The housing slowdown has been declining since the record
housing starts reported in January. Oil has declined from $80 a barrel
at its peak in the third quarter to $56 by the beginning of the fourth
quarter. This is good news for consumption as well as inflation. This
has led also to a consensus that the next Federal Reserve action will
be to cut rates in 2007.
The decline in the price of oil and gas, generally low interest
rates, low unemployment, and continued consumer optimism and spending,
as well as flush corporate balance sheets and the potential for
capital spending are all reasons to be optimistic about a soft
landing.
Fourth Quarter Earnings Outlook
Since over 95% of our AUM are invested in equities, the primary
risk factor affecting our revenues and financial results is the
general market level of stock prices and interest rates. Our financial
results are also subject to the gain or loss of clients. In addition,
returns from our proprietary investment portfolio are also exposed to
interest rate and equity market risk. Should negative market
conditions that impact our AUM or proprietary investment portfolio
occur, we could report lower operating results in the fourth quarter
of 2006 than expected under current market conditions.
NOTES ON NON-GAAP FINANCIAL MEASURES AND CHANGE IN ACCOUNTING
METHOD
A. Cash and investments as adjusted have been computed as follows:
(in millions)
12/31/05 9/30/05 9/30/06
--------- -------- --------
Cash and cash equivalents $170.7 $205.1 $112.1
Investments (marketable securities) 412.0 399.6 469.5
--------- -------- --------
Total cash and investments (marketable
securities) 582.7 604.7 581.6
Net amounts receivable/(payable) from/to
brokers 8.5 8.6 45.4
--------- -------- --------
Adjusted cash and investments (marketable
securities) 591.2 613.3 627.0
Investments (available for sale) 81.2 82.0 92.6
--------- -------- --------
Total adjusted cash and investments $672.4 $695.3 $719.6
========= ======== ========
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
expense to operating income is provided in Table IV.
C. Beginning January 1, 2006, the provisions of FASB
Interpretation No. 46R ("FIN 46R") and Emerging Issue Task Force 04-5
("EITF 04-5") require consolidation of the majority of our investment
partnerships and offshore funds managed by our subsidiaries into our
consolidated financial statements. However, since we amended the
agreements of certain investment partnerships and an offshore fund on
March 31, 2006, FIN46R and EITF 04-5 only required us to consolidate
these entities on our income statement for the first quarter 2006, we
were not required to consolidate these entities on our balance sheet
at March 31, 2006. In addition, these partnerships and offshore funds,
for which the agreements were amended, are not required to be
consolidated within our statement of income or on our balance sheet in
the third quarter or future periods. However, for the nine months
ended September 30, 2006, the consolidation of these entities does
affect the classification of income between operating and other
income. As a result, we have provided our results for the nine month
period through September 30, 2006 before adjusting for FIN46R and EITF
04-5 as we believe this basis is comparable to our reported results
for the nine months ended September 30, 2005.
Although certain of our investments in partnerships and offshore
funds will continue to be consolidated as long as we have a direct or
indirect controlling financial interest, there will only be minor
adjustments for FIN 46R and EITF 04-5 for the remainder of 2006.
Please refer to Form 10-Q for the first quarter 2006 for a discussion
of FIN 46R and EITF 04-5.
D. GAMCO voluntarily changed its accounting method to recognize
management fee revenues on closed-end preferred shares at the end of
the measurement period, effective January 1, 2006. Unlike most money
management firms, GAMCO does not charge fees on leverage in its
closed-end funds unless the total return to the common shareholders
(of the closed-end fund at year-end) exceeds the dividend rate of the
preferred shares. In 2005, GAMCO recognized these revenues during each
interim reporting period if and when the total return to common
shareholders of the closed-end fund exceeded the dividend rate of the
preferred shares. Under this method, management fee revenues
recognized in prior interim periods during the measurement period were
subject to possible reversal in subsequent periods during that
measurement period. Had this method not changed, we would have
recorded approximately $1.5 million in management fee revenues on
closed-end preferred shares for the three month period ended March 31,
2006.
In addition, GAMCO has now changed its accounting method to
recognize incentive fee revenues on investment partnerships at the end
of the measurement period, effective January 1, 2006. Previously,
GAMCO recognized these revenues during each interim reporting period.
Under this method, incentive fee revenues recognized in prior interim
periods during the measurement period were subject to possible
reversal in subsequent periods during the measurement period. Had this
method not changed, we would have recorded approximately $1.3 million
in incentive fee revenues on investment partnerships for the three
month period ended March 31, 2006
After considering the guidance provided in EITF D-96, "Accounting
for Management Fees Based on Formula", GAMCO believes that the
preferable method of accounting is to recognize management fee
revenues on closed-end preferred shares and incentive fees on
investment partnerships at the end of the measurement period. This
method results in revenue recognition only when the measurement period
has been completed and when the management fees and incentive fees
have been earned. This eliminates the possibility of revenues that
have been recognized in interim measurement periods subsequently being
reversed in later periods during a fiscal year.
Under SFAS No. 154, which GAMCO adopted on January 1, 2006, a
voluntary change in accounting principle requires retrospective
application to each period presented as if the different accounting
principle had always been used and requires an adjustment at the
beginning of the first period presented for the cumulative effect of
the change to the new accounting principle. Therefore, this change in
accounting principle will result in a reduction of revenues of
approximately $1.2 million in the first quarter of 2005, approximately
$23,000 in the second quarter of 2005, $5.5 million in the third
quarter of 2005 and an increase in revenues of $7.7 million in the
fourth quarter of 2005.
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.
What are FIN46R and EITF 04-5?
In January 2003, the Financial Accounting Standards Board ("FASB")
issued Interpretation No. 46, "Consolidation of Variable Interest
Entities" which was subsequently revised in December 2003 by FASB
Interpretation No. 46(R) ("FIN46R"). FIN46R provides new criteria for
determining whether or not consolidation accounting is required for
activities which prior to FIN46R were off-balance sheet activities
conducted through certain types of entities.
In June 2005, the FASB ratified the consensus EITF 04-5,
"Determining Whether a General Partner, or the General Partners as a
Group, Controls a Limited Partnership or Similar Entity When the
Limited Partners Have Certain Rights", which provides guidance in
determining whether a general partner controls a limited partnership.
The provisions of EITF 04-5 are not applicable to limited partnerships
or similar entities accounted for as Variable Interest Entities
("VIEs") pursuant to FIN46R.
How do FIN46R and EITF 04-5 apply to GBL?
We have reviewed the provisions of FIN46R and EITF 04-5 and
beginning January 1, 2006 consolidated the majority of our investment
partnerships and offshore funds that are managed by our subsidiaries
and are not determined to be VIEs. We amended the agreements of
certain investment partnerships and an offshore fund on March 31,
2006. Accordingly, these partnerships have not been consolidated at
March 31, 2006. The results of operations of these entities are
included in the statement of income for the nine months ended
September 30, 2006, which includes the period from the effective date
of EITF 04-5 through the date the partnerships and offshore fund
agreements were amended. Furthermore, these partnerships and offshore
funds, for which the agreements were amended, will not be consolidated
within our statement of income or on our statement of financial
condition in future periods as long as we continue to not have any
direct or indirect controlling financial interest.
In addition, we have consolidated five investment partnerships and
two offshore funds in which we have a direct or indirect controlling
financial interest. These entities will continue to be consolidated in
future periods as long as we continue to maintain a direct or indirect
controlling financial interest.
The company reported Assets Under Management as follows:
Table I: Assets Under Management
(millions)
--------------------------
September 30 %
-----------------
Inc.
2005 2006 (Dec.)
-------- -------- --------
Mutual Funds:
Equities
Open-end $7,959 $7,854 (1.3)%
Closed-end 4,851 5,327 9.8
Fixed Income 796 683 (14.2)
-------- --------
Total Mutual Funds 13,606 13,864 1.9
-------- --------
Institutional & High Net Worth Separate
Accounts:
Equities 13,129 12,195 (7.1)
Fixed Income 158 54 (65.8)
-------- --------
Total Institutional & High Net Worth
Separate Accounts 13,287 12,249 (7.8)
-------- --------
Investment Partnerships 745 488 (34.5)
-------- --------
Total Assets Under Management $27,638 $26,601 (3.8)
======== ========
Equities 26,684 25,864 (3.1)
Fixed Income 954 737 (22.7)
-------- --------
Total Assets Under Management $27,638 $26,601 (3.8)
======== ========
Table II: Assets Under Management (millions)
--------------------------------------------
9/05 12/05 3/06 6/06 9/06
-------- -------- -------- -------- --------
Mutual Funds
Open-end $ 7,959 $ 7,888 $ 8,176 $ 7,796 $ 7,854
Closed-end 4,851 5,075 5,284 5,258 5,327
Fixed income 796 735 807 863 683
-------- -------- -------- -------- --------
Total Mutual Funds 13,606 13,698 14,267 13,917 13,864
-------- -------- -------- -------- --------
Institutional & HNW
Separate Accounts:
Equities 13,129 12,382 12,639 12,270 12,195
Fixed Income 158 84 59 55 54
-------- -------- -------- -------- --------
Total Institutional &
HNW Separate Accounts 13,287 12,466 12,698 12,325 12,249
-------- -------- -------- -------- --------
Investment Partnerships 745 634 681 536 488
-------- -------- -------- -------- --------
Total Assets Under
Management $27,638 $26,798 $27,646 $26,778 $26,601
======== ======== ======== ======== ========
% Increase/(decrease)
6/06 9/05
----------------- ----------------
Mutual Funds
Open-end 0.7% (1.3)%
Closed-end 1.3 9.8
Fixed income (20.9) (14.2)
Total Mutual Funds (0.4) 1.9
Institutional & HNW
Separate Accounts:
Equities (0.6) (7.1)
Fixed Income (1.8) (65.8)
Total Institutional & HNW
Separate Accounts (0.6) (7.8)
Investment Partnerships (9.0) (34.5)
Total Assets Under
Management (0.7) (3.8)
Table III: Fund Flows - 3rd Quarter 2006 (millions)
-----------------------------------------
June 30, Net Market September
2006 Cash Appreciation / 30,
Flows (Depreciation) 2006
-------- ------ --------------- ---------
Mutual Funds:
Equities $13,054 ($94) $221 $13,181
Fixed Income 863 (188) 8 683
-------- ------ --------------- ---------
Total Mutual Funds 13,917 (282) 229 13,864
-------- ------ --------------- ---------
Institutional & HNW Separate
Accounts
Equities 12,270 (182) 107 12,195
Fixed Income 55 (2) 1 54
-------- ------ --------------- ---------
Total Institutional & HNW
Separate Accounts 12,325 (184) 108 12,249
-------- ------ --------------- ---------
Investment Partnerships 536 (51) 3 488
-------- ------ --------------- ---------
Total Assets Under
Management $26,778 ($517) $340 $26,601
======== ====== =============== =========
Table IV
GAMCO INVESTORS, INC
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
For the Three
Months Ended
September 30,
-------------------
2005
-------------------
As
As Restated % Inc.
Reported (A) 2006 (Dec.)
--------- --------- -------- ------
Revenues $66,234 $60,706 $57,994 (4.5)%
Expenses 40,141 37,166 36,748 (1.1)
--------- --------- --------
Operating income before management
fee 26,093 23,540 21,246 (9.7)
Investment income 12,153 12,153 12,328 1.4
Interest expense (3,298) (3,298) (3,368) 2.1
--------- --------- --------
Other income (expense), net 8,855 8,855 8,960 1.2
--------- --------- --------
Income before management fee,
income taxes and minority
interest 34,948 32,395 30,206 (6.8)
Management fee 3,495 3,240 3,026
--------- --------- --------
Income before income taxes and
minority interest 31,453 29,155 27,180
Income taxes 11,795 10,933 10,192
Minority interest 210 176 104
--------- --------- --------
Net income $19,448 $18,046 $16,884 (6.4)
========= ========= ========
Net income per share:
Basic $0.65 $0.60 $0.60 (0.9)
========= ========= ========
Diluted $0.64 $0.59 $0.59 (0.3)
========= ========= ========
Weighted average shares
outstanding:
Basic 29,935 29,935 28,254 (5.6)
========= ========= ========
Diluted 31,079 31,079 29,235 (5.9)
========= ========= ========
Reconciliation of Non-GAAP
Financial Measures to GAAP:
Operating income before management
fee $26,093 $23,540 $21,246 (9.7)
Deduct: management fee 3,495 3,240 3,026
--------- --------- --------
Operating income $22,598 $20,300 $18,220 (10.2)
--------- --------- --------
Operating margin before management
fee 39.4% 38.8% 36.6%
--------- --------- --------
Operating margin after management
fee 34.1% 33.4% 31.4%
--------- --------- --------
(A) As restated for the change in accounting method to recognize
management fee revenues on closed-end preferred shares and incentive
fee revenues on investment partnerships at the end of the measurement
period, effective January 1, 2006.
Table IV
GAMCO INVESTORS, INC
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
For the Nine Months
Ended
September 30,
----------------------
2005
----------------------
As As % Inc.
Reported Restated(A) 2006 (Dec.)
--------- ------------ --------- ------
Revenues $187,606 $180,837 $178,937 (1.1)%
Expenses 117,151 113,513 125,594 10.6
--------- ------------ ---------
Operating income before
management fee 70,455 67,324 53,343 (20.8)
Investment income 20,764 20,764 52,181 151.3
Interest expense (10,502) (10,502) (10,637) 1.3
--------- ------------ ---------
Other income (expense), net 10,262 10,262 41,544 304.8
--------- ------------ ---------
Income before management fee,
income taxes and minority
interest 80,717 77,586 94,887 22.3
Management fee 8,072 7,759 8,153
--------- ------------ ---------
Income before income taxes
and minority interest 72,645 69,827 86,734
Income taxes 27,242 26,186 33,726
Minority interest 318 266 8,783
--------- ------------ ---------
Net income $45,085 $43,375 $44,225 2.0
========= ============ =========
Net income per share:
Basic $1.51 $1.45 $1.54 6.3
========= ============ =========
Diluted $1.48 $1.43 $1.53 6.9
========= ============ =========
Weighted average shares
outstanding:
Basic 29,859 29,859 28,644 (4.1)
========= ============ =========
Diluted 31,323 31,323 29,635 (5.4)
========= ============ =========
Reconciliation of Non-GAAP
Financial Measures
to GAAP:
Operating income before
management fee $70,455 $67,324 $53,343 (20.8)
Deduct: management fee 8,072 7,759 8,153
--------- ------------ ---------
Operating income $62,383 $59,565 $45,190 (24.1)
--------- ------------ ---------
Operating margin before
management fee 37.6% 37.2% 29.8%
--------- ------------ ---------
Operating margin after
management fee 33.3% 32.9% 25.3%
--------- ------------ ---------
(A) As restated for the change in accounting method to recognize
management fee revenues on closed-end preferred shares and incentive
fee revenues on investment partnerships at the end of the measurement
period, effective January 1, 2006.
Table IV
GAMCO INVESTORS, INC
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
To provide a better understanding of core results and trends, GAMCO
has provided our results before adjusting for FASB Interpretation No.
46R ("FIN 46R") and Emerging Issue Task Force 04-5 ("EITF 04-5").
These results are not presented in accordance with generally accepted
accounting principles ("GAAP") in the United States. A reconciliation
of these non-GAAP financial measures to results presented in
accordance with GAAP is presented herein.
For the Nine Months Ended September 30,
-----------------------------------------------
Adjust-
ments
2005 (a) 2006 (b) (c) 2006 (d)
--------- --------- ------- ---------
Revenues $187,606 $179,900 $(963) $178,937
Expenses 117,151 125,405 189 125,594
--------- --------- ------- ---------
Operating income before
management fee 70,455 54,495 (1,152) 53,343
Investment income 20,764 37,084 15,097 52,181
Interest expense (10,502) (10,046) (591) (10,637)
--------- --------- ------- ---------
Other income (expense), net 10,262 27,038 14,506 41,544
--------- --------- ------- ---------
Income before management fee,
income taxes and minority
interest 80,717 81,533 13,354 94,887
Management fee 8,072 8,153 - 8,153
--------- --------- ------- ---------
Income before income taxes and
minority interest 72,645 73,380 13,354 86,734
Income taxes 27,242 28,718 5,008 33,726
Minority interest 318 437 8,346 8,783
--------- --------- ------- ---------
Net income $45,085 $44,225 $- $44,225
========= ========= ======= =========
Net income per share:
Basic $1.51 $1.54 $- $1.54
========= ========= ======= =========
Diluted $1.48 $1.53 $- $1.53
========= ========= ======= =========
Weighted average shares
outstanding:
Basic 29,859 28,644 28,644
========= ========= =========
Diluted 31,323 29,635 29,635
========= ========= =========
^ ^
06(b)/05 % 06(d)/05 %
----------- ------ ---------- ------
Revenues $(7,706) (4.1)% $(8,669) (4.6)%
Expenses 8,254 7.0 8,443 7.2
----------- ----------
Operating income before
management fee (15,960) (22.7) (17,112) (24.3)
Investment income 16,320 NM 31,417 NM
Interest expense 456 4.3 (135) (1.3)
----------- ----------
Other income (expense), net 16,776 NM 31,282 NM
----------- ----------
Income before management fee,
income taxes and minority
interest 816 1.0 14,170 17.6
Management fee 81 81
----------- ----------
Income before income taxes and
minority interest 738 14,089
Income taxes 1,476 6,484
Minority interest 119 8,465
----------- ----------
Net income $(860) (1.9) $(860) (1.9)
=========== ==========
Net income per share:
Basic $0.03 2.0 $0.03 2.0
=========== ==========
Diluted $0.05 3.4 $0.05 3.4
=========== ==========
Weighted average shares
outstanding:
Basic (1,215) (4.1) (1,215) (4.1)
=========== ==========
Diluted (1,688) (5.4) (1,688) (5.4)
=========== ==========
(a) As reported - GAAP at that time.
(b) Under a comparable reporting methodology as in 2005 - Non-GAAP
in 2006.
(c) Represents the effects of consolidation for the first quarter
of 2006 of those entities in which GBL holds a direct or indirect
controlling interest and the consolidation of entities under
FIN 46R and EITF 04-5.
(d) GAAP basis.
Please refer to Notes On Non-GAAP Financial Measures and Change In
Accounting Method on page 9 for discussion of FIN46R and EITF 04-5.
Table IV
GAMCO INVESTORS, INC
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
For the Nine Months Ended September
30,
--------------------------------------
Adjustments
2005 (a) 2006 (b) (c) 2006 (d)
-------- -------- ----------- --------
Reconciliation of Non-GAAP
Financial
Measures to GAAP:
Operating income before
management fee $70,455 $54,495 $53,343
Deduct: management fee 8,072 8,153 8,153
-------- -------- --------
Operating income $62,383 $46,342 $45,190
-------- -------- --------
Operating margin before
management fee 37.6 % 30.3 % 29.8 %
-------- -------- --------
Operating margin after
management fee 33.3 % 25.8 % 25.3 %
-------- -------- --------
Table V
GAMCO INVESTORS, INC
UNAUDITED QUARTERLY CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
2005 (As Restated)*
---------------------------------------------
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Total
-------- -------- -------- -------- ---------
Income Statement Data:
Revenues $60,313 $59,818 $60,706 $72,495 $253,332
Expenses 38,391 37,956 37,166 41,630 155,143
-------- -------- -------- -------- ---------
Operating income before
management fee 21,922 21,862 23,540 30,865 98,189
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 22,060 23,131 32,395 36,216 113,802
Management fee 2,206 2,313 3,240 3,621 11,380
-------- -------- -------- -------- ---------
Income before income
taxes and minority
interest 19,854 20,818 29,155 32,595 102,422
Income taxes 7,445 7,808 10,933 12,222 38,408
Minority interest (20) 110 176 232 498
-------- -------- -------- -------- ---------
Net income $12,429 $12,900 $18,046 $20,141 $ 63,516
======== ======== ======== ======== =========
Net income per share:
Basic $ 0.42 $ 0.43 $ 0.60 $ 0.68 $ 2.13
======== ======== ======== ======== =========
Diluted $ 0.41 $ 0.42 $ 0.59 $ 0.67 $ 2.10
======== ======== ======== ======== =========
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 $21,922 $21,862 $23,540 $30,865 $ 98,189
Deduct: management fee 2,206 2,313 3,240 3,621 11,380
-------- -------- -------- -------- ---------
Operating income $19,716 $19,549 $20,300 $27,244 $ 86,809
-------- -------- -------- -------- ---------
Operating margin before
management fee 36.3% 36.5% 38.8% 42.6% 38.8%
-------- -------- -------- -------- ---------
Operating margin after
Management fee 32.7% 32.7% 33.4% 37.6% 34.3%
-------- -------- -------- -------- ---------
2006
------------------------------------
1st 2nd 3rd
Quarter* Quarter* Quarter Total
-------- -------- -------- ---------
Income Statement Data:
Revenues $59,284 $61,659 $57,994 $178,937
Expenses 37,883 50,963 36,748 125,594
--------- -------- -------- ---------
Operating income before
management fee 21,401 10,696 21,246 53,343
Investment income 29,498 10,355 12,328 52,181
Interest expense (3,875) (3,394) (3,368) (10,637)
--------- -------- -------- ---------
Other income (expense), net 25,623 6,961 8,960 41,544
--------- -------- -------- ---------
Income before management fee,
income taxes and minority
interest 47,024 17,657 30,206 94,887
Management fee 3,367 1,760 3,026 8,153
--------- -------- -------- ---------
Income before income taxes and
minority interest 43,657 15,897 27,180 86,734
Income taxes 16,371 7,163 10,192 33,726
Minority interest 8,586 93 104 8,783
--------- -------- -------- ---------
Net income $18,700 $ 8,641 $16,884 $ 44,225
========= ======== ======== =========
Net income per share:
Basic $ 0.64 $ 0.30 $ 0.60 $ 1.54
========= ======== ======== =========
Diluted $ 0.63 $ 0.30 $ 0.59 $ 1.53
========= ======== ======== =========
Weighted average shares
outstanding:
Basic 29,180 28,507 28,254 28,644
========= ======== ======== =========
Diluted 30,185 29,496 29,235 29,635
========= ======== ======== =========
Reconciliation of Non-GAAP
Financial Measures to GAAP:
Operating income before
management fee $21,401 $10,696 $21,246 $ 53,343
Deduct: management fee 3,367 1,760 3,026 8,153
--------- -------- -------- ---------
Operating income $18,034 $ 8,936 $18,220 $ 45,190
--------- -------- -------- ---------
Operating margin before
management fee 36.1% 17.3% 36.6% 29.8%
--------- -------- -------- ---------
Operating margin after
Management fee 30.4% 14.5% 31.4% 25.3%
--------- -------- -------- ---------
* As restated for the change in accounting method to recognize
management fee revenues on closed-end preferred shares and incentive
fee revenues on investment partnerships at the end of the measurement
period, effective January 1, 2006.
Please refer to Notes On Non-GAAP Financial Measures and Change
In Accounting Method on page 9 for discussion of our restatement
of revenues.
Table V
GAMCO INVESTORS, INC
UNAUDITED QUARTERLY CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
2005 (As Reported)*
----------------------------------------------
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%
--------- -------- -------- -------- ---------
2006 (As Reported)*
1st 2nd
Quarter Quarter
--------- ---------
Income Statement Data:
Revenues $ 60,575 $ 62,797
Expenses 40,115 51,666
--------- ---------
Operating income before management fee 20,460 11,131
Investment income 29,498 10,355
Interest expense (3,875) (3,394)
--------- ---------
Other income (expense), net 25,623 6,961
--------- ---------
Income before management fee, income taxes and
minority interest
46,083 18,092
Management fee 3,478 1,804
--------- ---------
Income before income taxes and minority interest 42,605 16,288
Income taxes 15,977 7,308
Minority interest 7,350 108
--------- ---------
Net income $ 19,278 $ 8,872
========= =========
Net income per share:
Basic $ 0.66 $ 0.31
========= =========
Diluted $ 0.65 $ 0.31
========= =========
Weighted average shares
outstanding:
Basic 29,180 28,507
========= =========
Diluted 30,185 29,496
========= =========
Reconciliation of Non-GAAP
Financial Measures to GAAP:
Operating income before management fee $ 20,460 $ 11,131
Deduct: management fee 3,478 1,804
--------- ---------
Operating income $ 16,982 $ 9,327
--------- ---------
Operating margin before management fee 33.8% 17.7%
--------- ---------
Operating margin after Management fee 28.0% 14.9%
--------- ---------
*As originally reported during the year ended December 31, 2005 and
quarters ended March 31, 2006 and June 30, 2006.
Table VI
GAMCO INVESTORS, INC
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
(thousands)
December 31, September 30, September 30,
2005 (a)(c) 2005 (a) (c) 2006 (a)(b)
------------- ------------- -------------
ASSETS (unaudited) (unaudited)
Cash and cash equivalents $ 170,659 $ 205,050 $ 112,089
Investments 493,187 481,725 562,083
Receivables 45,198 34,230 68,986
Other assets 11,888 12,395 11,290
------------- ------------- -------------
Total assets $ 720,932 $ 733,400 $ 754,448
============= ============= =============
LIABILITIES AND
STOCKHOLDERS' EQUITY
Compensation payable $ 27,820 $ 36,614 $ 40,381
Income taxes payable 10,097 5,408 5,353
Accrued expenses and other
liabilities 20,485 22,686 38,157
------------- ------------- -------------
Total operating
liabilities 58,402 64,708 83,891
5.5% Senior notes (due May
15, 2013) 100,000 100,000 100,000
6% Convertible note
(conversion price, $53 per
share; note due August 14,
2011) 50,000 50,000 50,000
5.22% Senior notes (due
February 17, 2007) 82,308 82,308 82,308
------------- ------------- -------------
Total liabilities 290,710 297,016 316,199
Minority interest 6,147 5,915 20,218
Stockholders' equity 424,075 430,469 418,031
------------- ------------- -------------
Total liabilities and
stockholders' equity $ 720,932 $ 733,400 $ 754,448
============= ============= =============
(a) As restated for the change in accounting method to recognize
management fee revenues on closed-end preferred shares and incentive
fee revenues on investment partnerships at the end of the measurement
period, effective January 1, 2006.
(b) September 30, 2006 balance sheet includes $16.5 million in assets,
$2.8 million in liabilities and $13.6 million in minority interest
that pertain to investment partnerships and offshore funds in which
we have a direct or indirect controlling financial interest. These
entities have been consolidated and will be consolidated in future
periods as long as we continue to maintain a direct or indirect
controlling financial interest.
(c) Convertible note was 5% with a conversion price of $52 per share.
CONTACT: GAMCO Investors, Inc.
Douglas R. Jamieson, 914-921-5020
President & Chief Operating Officer
or
John C. Ferrara, 914-921-5147
Interim Chief Financial Officer
www.gabelli.com