GAMCO INVESTORS, INC. ET AL - FORM 8-K - EX-99.1 - EXHIBIT 99.1, DATED AUGUST 5, 2015 - August 5, 2015

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8-K - FORM 8-K, DATED AUGUST 5, 2015 - GAMCO INVESTORS, INC. ET ALgblpr0805.htm
Exhibit 99.1
 
 
 
For Immediate Release:
 
Contact:
 
Douglas R. Jamieson
 
 
President
and Chief Operating Officer
 
 
(914) 921-5020
 
 
 
 
 
For further information please visit
 
 
www.gabelli.com

GAMCO Investors, Inc. Reports Second Quarter Results
·
 Second Quarter Earnings of $0.95 per diluted share
·
 AUM at $45.4 billion
 
Rye, New York, August 5, 2015 – GAMCO Investors, Inc. (“GAMCO”) (NYSE: GBL) today reported its 2015 second quarter results including revenues of $102.7 million, net income of $24.1 million and earnings of $0.95 per diluted share.  On a comparable basis, revenues were $108.3 million, net income was $29.0 million, and earnings were $1.13 per diluted share in the second quarter of 2014.

Assets Under Management (“AUM”) were $45.4 billion at June 30, 2015 versus $46.5 billion at March 31, 2015 and $49.4 billion at June 30, 2014.
 
Financial Highlights
    
Q2
      
Q2
          
YTD
      
YTD
      
($'s in 000's except AUM and per share data)
    
2015
      
2014
        
%D
 
    2015        2014      
%D
 
                                                     
AUM - end of period (in millions)
  
$
45,414
    
$
49,377
        
(8.0
%)
  
$
45,414
      
$
49,377
      
(8.0
%)
AUM - average (in millions)
    
46,448
      
48,132
        
(3.5
)
    
46,620
        
47,556
      
(2.0
)
                                                     
Revenues
    
102,704
      
108,296
        
(5.2
)
    
206,549
        
212,773
      
(2.9
)
                                                     
Operating income before management fee (a)
    
39,190
      
42,681
  
(b)
    
(8.2
)
    
77,572
  
(c)
    
83,908
      
(7.6
)
Operating margin before management fee
    
38.2
%
    
39.4
%
              
37.6
%
      
39.4
%
        
                                                     
Operating income
    
34,949
      
37,537
  
(b)
    
(6.9
)
    
68,894
  
(c)
    
74,036
      
(6.9
)
Operating margin
    
34.0
%
    
34.7
%
              
33.4
%
      
34.8
%
        
                                                     
Other income, net
    
3,221
      
8,921
                
9,214
        
15,014
          
                                                     
Income before income taxes
    
38,170
      
46,458
        
(17.8
)
    
78,108
        
89,050
      
(12.3
)
Effective tax rate
    
37.0
%
    
36.9
%
              
37.5
%
      
35.7
%
        
                                                     
Net income
    
24,101
      
28,950
        
(16.7
)
    
48,877
        
56,904
      
(14.1
)
                                                     
Net income per share
  
$
0.95
    
$
1.13
        
(15.9
%)
  
$
1.93
      
$
2.22
      
(13.1
%)
                                                     
Shares outstanding at June 30
    
25,725
      
25,899
                
25,725
        
25,899
          
 
(a) See GAAP to non-GAAP reconciliation on page 10.
                                              
(b) Second quarter 2015 included $1.2 million of incremental costs as compared to second quarter 2014:
          
$0.6 million for potential firm restructuring; and $0.6 million in non-cash RSA expense.
                    
(c) Year to date 2015 included $3.6 million of incremental costs as compared to year to date 2014:
                    
$1.0 million for the launch of a new closed-end fund; $1.5 million for potential firm restructuring; and $1.1 million in non-cash RSA expense.
  
                                                     
 
1
Assets Under Management
 
               
% Change From
  
   
June 30,
    
March 31,
    
June 30,
    
March 31,
    
June 30,
  
   
2015
    
2015
    
2014
    
2015
    
2014
  
Equities:
                    
Open-end Funds
  
$
15,984
    
$
16,643
    
$
18,508
      
(4.0
%)
    
(13.6
%)
Closed-end Funds
    
6,981
      
7,071
      
7,224
      
(1.3
)
    
(3.4
)
Institutional & PWM - direct
    
16,011
      
16,407
      
16,941
      
(2.4
)
    
(5.5
)
Institutional & PWM - sub-advisory
    
3,703
      
3,814
      
3,883
      
(2.9
)
    
(4.6
)
Investment Partnerships
    
937
      
928
      
897
      
1.0
      
4.5
  
SICAV (a)
    
152
      
105
      
94
      
44.8
      
61.7
  
Total Equities
    
43,768
      
44,968
      
47,547
      
(2.7
)
    
(7.9
)
Fixed Income:
                                        
Money-Market Fund
    
1,600
      
1,520
      
1,766
      
5.3
      
(9.4
)
Institutional & PWM
    
46
      
52
      
64
      
(11.5
)
    
(28.1
)
Total Fixed Income
    
1,646
      
1,572
      
1,830
      
4.7
      
(10.1
)
Total Assets Under Management
  
$
45,414
    
$
46,540
    
$
49,377
      
(2.4
)
    
(8.0
)
                                         

(a)  Includes $45 million, $40 million and $77 million of seed capital at June 30, 2015, March 31, 2015 and June 30, 2014, respectively.

Our second quarter 2015 decline in AUM was due to net outflows of $882 million, open- and closed-end fund net distributions of $132 million and market depreciation of $112 million.

Revenues

-
Total revenues for the second quarter of 2015 were $102.7 million, down 5.2% from $108.3 million in the prior year reflecting lower fees earned in investment advisory, distribution and other income and institutional research services.

-
Investment advisory fees, excluding incentive fees, were lower at $87.1 million in the second quarter of 2015 from $89.7 million in the comparable 2014 quarter.  Revenues in our open-end funds and Institutional and Private Wealth Management decreased due to a decline of average AUM in the open-end funds and lower billable assets in our Institutional and Private Wealth Management accounts which were partially offset by revenue increases in investment partnerships and closed-end funds on higher levels of average AUM.

-
Incentive fees earned were $0.2 million during the 2015 quarter versus $0.5 million reported in the second quarter of 2014.

-
Distribution fees from our open-end equity mutual funds and other income were $13.4 million for the second quarter 2015, a reduction of $2.4 million, or 15.3%, from $15.8 million in the prior year quarter.  Driving this decrease is a 15.2% decline in quarter over quarter average AUM and a shift to Class I shares for which we do not collect a distribution fee.

-
Our institutional research services revenues were $2.0 million in the second quarter 2015, compared to $2.4 million in the prior year period.

2

Operating Income – Second Quarter

Operating income, which is net of management fee expense decreased 6.9%, or $2.6 million, to $34.9 million in the second quarter of 2015 versus $37.5 million in the prior year period.  Management fee expense, which is entirely variable, is based on pre-tax income.  The second quarter of 2015 was impacted by lower revenues and $1.2 million of incremental costs: $0.6 million related to a potential firm restructuring; and $0.6 million in incremental non-cash expenses related to RSAs issued subsequent to the second quarter of 2014.  Excluding those incremental costs identified above, adjusted operating income was $36.1 million in the second quarter of 2015, a decline of $1.4 million, from the $37.5 million in the second quarter of 2014.

Operating income before management fee was $39.2 million in the second quarter 2015 versus $42.7 million in the second quarter 2014.  Operating margin before management fee was 38.2% versus 39.4% in the second quarter of 2014.  Excluding those incremental costs identified above, adjusted operating income before management fee was $40.4 million in the second quarter of 2015 as compared to $42.7 million in the second quarter of 2014.  Operating margins, before management fee and adjusted for those items identified above, was 39.3% in the 2015 quarter as compared to 39.4% in the 2014 quarter.  Management believes evaluating operating income before management fee is an important measure in analyzing the Company’s operating results.  Further information regarding Non-GAAP measures is included in Notes on Non-GAAP Financial Measures and Table V included elsewhere herein.

Other income

We recognized net other income of $3.2 million in the 2015 quarter versus $8.9 million in the second quarter of 2014.  Investment gains were $3.9 million in the 2015 quarter versus $9.6 million in the 2014 quarter.  Dividend and interest income were $1.3 million in both  quarters.  Interest expense was $2.0 million in each period.

Income Taxes

The firm’s effective tax rate (“ETR”) for the quarter ended June 30, 2015 was 37.0% versus 36.9% for the quarter ended June 30, 2014.

Business and Investment Highlights
 
-
On May 12, 2015, we filed a Form 10 detailing the planned spin-off of our Alternative Investments and Institutional Research Services businesses as a separate public company.

-
On July 23, 2015, Dinsmore Capital Management and Gabelli Funds announced the signing of an alliance to manage convertible portfolios.  Subject to approval by the shareholders of the Bancroft Fund and the Ellsworth Growth and Income Fund, Gabelli Funds will form the Dinsmore Group which will contribute to the management of The Gabelli Convertible and Income Securities Fund.

-
In May 2015, Gabelli & Company hosted its 9th annual Omaha research trip in conjunction with the Berkshire Hathaway Annual Meeting as well as its 7th annual Movie & Entertainment Conference
 
3
-
At our 30th GAMCO client conference held at the Pierre Hotel in New York City on May 15th, we inducted four new members into our GAMCO Management Hall of Fame.  The inductees were: Ward M. Klein of Energizer Holdings, Inc., Michael D. White of DIRECTV, David F. Melcher of Exelis, Inc. and James F. Cleary, Jr. of MWI Veterinary Supply, Inc.  Additionally, we named Leon Cooperman as the 2015 recipient of the Graham & Dodd, Murray, Greenwald Prize for Value Investing.

-
We hosted our 7th symposium on July 22nd at the Paley Center for Media entitled the “The Tug of War Over Capital Allocation”.  The focus of our highly regarded panelists was on the critical interplay between shareholder compensation and expenditures for R&D and capex.

-
On July 21st GAMCO announced a reorganization of its Sales & Marketing leadership designed to re-organize and coordinate our organization’s focus on sales and marketing initiatives in our various investment segments.
 
Balance Sheet

We ended the quarter with cash and investments, excluding noncontrolling interests, of $742.9 million, debt of $106.6 million ($106.9 million face value) and equity attributable to GAMCO shareholders of $564.4 million.  We have $500 million available on our universal shelf registration.  Together with earnings from operations, the shelf provides us with flexibility to do acquisitions, lift-outs, seed new investment strategies, and co-invest, as well as to fund shareholder compensation, including share repurchases and dividends.

Shareholder Compensation

During the quarter ended June 30, 2015, we returned $9.6 million of our earnings to shareholders through dividends and stock repurchases.  We repurchased 108,088 shares at an average price of $72.34 per share, for a total investment of $7.8 million and distributed $1.8 million in dividends.   Since our IPO, in February 1999, we have returned nearly $894 million in total to shareholders of which $482 million was in the form of dividends and $412 million was through stock buybacks of 9,275,506 shares at an average investment of $44.40 per share.

On August 4, 2015, GAMCO’s Board of Directors declared a regular quarterly dividend of $0.07 per share payable on September 29, 2015 to its Class A and Class B shareholders of record on September 15, 2015.  Additionally, the Board of Directors increased the share buyback authorization by an additional 500,000 shares.  As a result, there are 814,502 shares available to be repurchased under our existing buyback plan.
 
4

About GAMCO Investors, Inc.

GAMCO Investors, Inc., through its subsidiaries, manages private advisory accounts (GAMCO Asset Management Inc.), mutual funds and closed-end funds (Gabelli Funds, LLC), and partnerships and offshore funds (Gabelli Securities, Inc.).

 
NOTES ON NON-GAAP FINANCIAL MEASURES

A.  
Operating income before management fee expense is used by management to evaluate its business operations.  We believe this measure is useful in illustrating the operating results of GAMCO Investors, Inc. (the “Company”) as management fee expense is based on pre-tax income before management fee expense, which 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 V.
 
B.  
Operating income before management fee expense per share and other income/(expense), net per share are used by management for purposes of evaluating its business operations.  We believe these measures are useful in comparing the operating and non-operating results of the Company for the purposes of understanding the composition of net income per fully diluted share.  The negative swings in other income/(expense), net of $0.11 and $0.12 per fully diluted share for the quarter and year to date, respectively, are derived by making certain necessary adjustments, as shown in the table below, to arrive at a net impact for each period and then calculating the difference.  The reconciliation of operating income before management fee expense per share and other income/(expense), net per share to net income per fully diluted share, is provided below.
 
 
   
2nd Quarter
    
YTD June
  
   
2015
    
2014
    
2015
    
2014
  
Operating income before management fee
  
$
39,190
    
$
42,681
    
$
77,572
    
$
83,908
  
Management fee expense
    
(3,919
)
    
(4,252
)
    
(7,757
)
    
(8,371
)
Tax expense
    
(13,050
)
    
(14,174
)
    
(26,191
)
    
(26,933
)
Noncontrolling interest expense
    
138
      
87
      
259
      
166
  
Operating income (after management fee and taxes)
    
22,359
      
24,342
      
43,883
      
48,770
  
Per fully diluted share
  
$
0.88
    
$
0.95
    
$
1.73
    
$
1.90
  
                                 
Other income, net
  
$
3,221
    
$
8,921
    
$
9,214
    
$
15,014
  
Management fee expense
    
(322
)
    
(892
)
    
(921
)
    
(1,501
)
Tax expense
    
(1,073
)
    
(2,961
)
    
(3,111
)
    
(4,818
)
Noncontrolling interest (expense)/benefit
    
(84
)
    
(460
)
    
(188
)
    
(561
)
Other income, net (after management fee and taxes)
  
$
1,742
    
$
4,608
    
$
4,994
    
$
8,134
  
Per fully diluted share
  
$
0.07
    
$
0.18
    
$
0.20
    
$
0.32
  
                                 
Net income per fully diluted share
  
$
0.95
    
$
1.13
    
$
1.93
    
$
2.22
  
Diluted weighted average shares outstanding
    
25,358
      
25,586
      
25,386
      
25,635
  
                                 
 
 
5


C.  
Adjusted operating income and adjusted operating income before management fee expense is used by management to evaluate its ongoing business operations.  We believe this measure is useful in evaluating the ongoing operating results of the Company absent any of these adjustments.

      
2nd Quarter
    
YTD June
  
     
2015
    
2014
    
2015
    
2014
  
Operating income before management fee
  
$
39,190
    
$
42,681
    
$
77,572
    
$
83,908
  
Adjustments:
                                
   Add back:
       Incremental RSA expense
    
570
      
-
      
1,147
      
-
  
 
Costs to launch Closed-end fund
    
-
      
-
      
1,000
      
-
  
 
Costs related to potential firm restructuring
    
625
      
-
      
1,475
      
-
  
   Deduct:
       Reimbursement of prior year expense
    
-
      
-
      
-
      
(438
)
Adjusted operating income before management fee
    
40,385
      
42,681
      
81,194
      
83,470
  
Adjusted operating margin before management fee
    
39.3
%
    
39.4
%
    
39.3
%
    
39.2
%
                                   

      
2nd Quarter
    
YTD June
  
     
2015
    
2014
    
2015
    
2014
  
Operating income
  
$
34,949
    
$
37,537
    
$
68,894
    
$
74,036
  
Adjustments:
                                
   Add back:
       Incremental RSA expense
    
570
      
-
      
1,147
      
-
  
 
Costs to launch Closed-end fund
    
-
      
-
      
1,000
      
-
  
 
Costs related to potential firm restructuring
    
625
      
-
      
1,475
      
-
  
   Deduct:
       Reimbursement of prior year expense
    
-
      
-
      
-
      
(438
)
Adjusted operating income
    
36,144
      
37,537
      
72,516
      
73,598
  
Adjusted operating margin
    
35.2
%
    
34.7
%
    
35.1
%
    
34.6
%
                                   

 

6
The Company reported Assets Under Management as follows (in millions):
          
                     
Table I: Fund Flows - 2nd Quarter 2015
                  
               
Fund
      
       
Market
        
distributions,
      
   
March 31,
    
appreciation/
    
Net cash
    
net of
    
June 30,
  
   
2015
    
(depreciation)
    
flows
    
reinvestments
    
2015
  
Equities:
                    
Open-end Funds
  
$
16,643
    
$
(106
)
  
$
(538
)
  
$
(15
)
  
$
15,984
  
Closed-end Funds
    
7,071
      
29
      
(2
)
    
(117
)
    
6,981
  
Institutional & PWM - direct
    
16,407
      
(15
)
    
(381
)
    
-
      
16,011
  
Institutional & PWM - sub-advisory
    
3,814
      
(29
)
    
(82
)
    
-
      
3,703
  
Investment Partnerships
    
928
      
8
      
1
      
-
      
937
  
SICAV (a)
    
105
      
1
      
46
      
-
      
152
  
Total Equities
    
44,968
      
(112
)
    
(956
)
    
(132
)
    
43,768
  
Fixed Income:
                                        
Money-Market Fund
    
1,520
      
-
      
80
      
-
      
1,600
  
Institutional & PWM
    
52
      
-
      
(6
)
    
-
      
46
  
Total Fixed Income
    
1,572
      
-
      
74
      
-
      
1,646
  
Total Assets Under Management
  
$
46,540
    
$
(112
)
  
$
(882
)
  
$
(132
)
  
$
45,414
  
                                         

(a)  Includes $40 million and $45 million of seed capital at March 31, 2015 and June 30, 2015, respectively.
 
Table II: Fund Flows - Year to date June 2015
                  
               
Fund
      
       
Market
        
distributions,
      
   
December 31,
    
appreciation/
    
Net cash
    
net of
    
June 30,
  
   
2014
    
(depreciation)
    
flows
    
reinvestments
    
2015
  
Equities:
                    
Open-end Funds
  
$
17,684
    
$
79
    
$
(1,737
)
  
$
(42
)
  
$
15,984
  
Closed-end Funds
    
6,949
      
122
      
143
      
(233
)
    
6,981
  
Institutional & PWM - direct
    
16,597
      
125
      
(711
)
    
-
      
16,011
  
Institutional & PWM - sub-advisory
    
3,704
      
143
      
(144
)
    
-
      
3,703
  
Investment Partnerships
    
905
      
27
      
5
      
-
      
937
  
SICAV (a)
    
135
      
(4
)
    
21
      
-
      
152
  
Total Equities
    
45,974
      
492
      
(2,423
)
    
(275
)
    
43,768
  
Fixed Income:
                                        
Money-Market Fund
    
1,455
      
-
      
145
      
-
      
1,600
  
Institutional & PWM
    
58
      
-
      
(12
)
    
-
      
46
  
Total Fixed Income
    
1,513
      
-
      
133
      
-
      
1,646
  
Total Assets Under Management
  
$
47,487
    
$
492
    
$
(2,290
)
  
$
(275
)
  
$
45,414
  
                                         
 
(a)  Includes $71 million and $45 million of seed capital at December 31, 2014 and June 30, 2015, respectively.
 
7
Table III
            
             
GAMCO INVESTORS, INC.
  
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
  
(Dollars in thousands, except per share data)
  
             
   
For the Quarter Ended June 30,
      
           
% Inc.
  
   
2015
    
2014
    
(Dec.)
  
             
Investment advisory and incentive fees
  
$
87,344
    
$
90,156
      
(3.1
%)
Distribution fees and other income
    
13,358
      
15,767
      
(15.3
)
Institutional research services
    
2,002
      
2,373
      
(15.6
)
Total revenues
    
102,704
      
108,296
      
(5.2
)
                         
Compensation costs
    
43,402
      
44,045
      
(1.5
)
Distribution costs
    
13,120
      
15,023
      
(12.7
)
Other operating expenses
    
6,992
      
6,547
      
6.8
  
Total expenses
    
63,514
      
65,615
      
(3.2
)
                         
Operating income before management fee
    
39,190
      
42,681
      
(8.2
)
                         
Investment income
    
5,184
      
10,942
          
Interest expense
    
(1,963
)
    
(2,021
)
        
Other income, net
    
3,221
      
8,921
          
                         
Income before management fee and income taxes
    
42,411
      
51,602
      
(17.8
)
Management fee expense
    
4,241
      
5,144
          
Income before income taxes
    
38,170
      
46,458
      
(17.8
)
Income tax expense
    
14,123
      
17,135
          
Net income
    
24,047
      
29,323
      
(18.0
)
Net income/(loss) attributable to noncontrolling interests
    
(54
)
    
373
          
Net income attributable to GAMCO Investors, Inc.
  
$
24,101
    
$
28,950
      
(16.7
)
                         
Net income per share attributable to GAMCO Investors, Inc.:
                        
Basic
  
$
0.96
    
$
1.14
      
(15.8
)
                         
Diluted
  
$
0.95
    
$
1.13
      
(15.9
)
                         
Weighted average shares outstanding:
                        
Basic
    
25,065
      
25,381
      
(1.2
)
                         
Diluted
    
25,358
      
25,586
      
(0.9
)
                         
Actual shares outstanding (a)
    
25,725
      
25,899
      
(0.7
)
                         
Notes:
                        
(a) Includes 704,050 and 564,250 of RSAs, respectively.
                        
See GAAP to non-GAAP reconciliation on page 10.
                        
 
8
Table IV
            
             
GAMCO INVESTORS, INC.
  
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
  
(Dollars in thousands, except per share data)
             
   
For the Six Months Ended June 30,
      
           
% Inc.
  
   
2015
    
2014
    
(Dec.)
  
             
Investment advisory and incentive fees
  
$
175,381
    
$
177,953
      
(1.4
%)
Distribution fees and other income
    
27,101
      
30,640
      
(11.6
)
Institutional research services
    
4,067
      
4,180
      
(2.7
)
Total revenues
    
206,549
      
212,773
      
(2.9
)
                         
Compensation costs
    
87,896
      
87,942
      
(0.1
)
Distribution costs
    
27,403
      
28,986
      
(5.5
)
Other operating expenses
    
13,678
      
11,937
      
14.6
  
Total expenses
    
128,977
      
128,865
      
0.1
  
                         
Operating income before management fee
    
77,572
      
83,908
      
(7.6
)
                         
Investment income
    
13,196
      
19,027
          
Interest expense
    
(3,982
)
    
(4,013
)
        
Other income, net
    
9,214
      
15,014
          
                         
Income before management fee and income taxes
    
86,786
      
98,922
      
(12.3
)
Management fee expense
    
8,678
      
9,872
          
Income before income taxes
    
78,108
      
89,050
      
(12.3
)
Income tax expense
    
29,302
      
31,751
          
Net income
    
48,806
      
57,299
      
(14.8
)
Net income/(loss) attributable to noncontrolling interests
    
(71
)
    
395
          
Net income attributable to GAMCO Investors, Inc.
  
$
48,877
    
$
56,904
      
(14.1
)
                         
Net income per share attributable to GAMCO Investors, Inc.:
                        
Basic
  
$
1.95
    
$
2.24
      
(12.9
)
                         
Diluted
  
$
1.93
    
$
2.22
      
(13.1
)
                         
Weighted average shares outstanding:
                        
Basic
    
25,098
      
25,431
      
(1.3
)
                         
Diluted
    
25,386
      
25,635
      
(1.0
)
                         
Actual shares outstanding (a)
    
25,725
      
25,899
      
(0.7
)
                         
Notes:
                        
(a) Includes 704,050 and 564,250 of RSAs, respectively.
                        
See GAAP to non-GAAP reconciliation on page 10.
                        
 
9
Table V
                                
GAMCO INVESTORS, INC.
  
UNAUDITED QUARTERLY CONDENSED CONSOLIDATED STATEMENTS OF INCOME
  
(Dollars in thousands, except per share data)
  
                                 
   
2015
    
2014
  
   
1st
    
2nd
        
1st
    
2nd
    
3rd
    
4th
      
   
Quarter
    
Quarter
    
YTD
    
Quarter
    
Quarter
    
Quarter
    
Quarter
    
Full Year
  
Income Statement Data:
                                
                                 
Revenues
  
$
103,845
    
$
102,704
    
$
206,549
    
$
104,477
    
$
108,296
    
$
110,858
    
$
116,751
    
$
440,382
  
                                                                 
Expenses
    
65,463
      
63,514
      
128,977
      
63,250
      
65,615
      
63,516
      
69,848
      
262,229
  
                                                                 
Operating income before
                                                                
  management fee
    
38,382
      
39,190
      
77,572
      
41,227
      
42,681
      
47,342
      
46,903
      
178,153
  
                                                                 
Investment income/(loss)
    
8,012
      
5,184
      
13,196
      
8,085
      
11,076
      
(8,002
)
    
5,119
      
16,278
  
Interest expense
    
(2,019
)
    
(1,963
)
    
(3,982
)
    
(1,992
)
    
(2,021
)
    
(1,987
)
    
(2,049
)
    
(8,049
)
Shareholder-designated contribution
    
-
      
-
      
-
      
-
      
(134
)
    
-
      
-
      
(134
)
Other income/(expense), net
    
5,993
      
3,221
      
9,214
      
6,093
      
8,921
      
(9,989
)
    
3,070
      
8,095
  
                                                                 
Income before management
                                                                
  fee and income taxes
    
44,375
      
42,411
      
86,786
      
47,320
      
51,602
      
37,353
      
49,973
      
186,248
  
Management fee expense
    
4,437
      
4,241
      
8,678
      
4,728
      
5,144
      
3,756
      
4,999
      
18,627
  
Income before income taxes
    
39,938
      
38,170
      
78,108
      
42,592
      
46,458
      
33,597
      
44,974
      
167,621
  
Income tax expense
    
15,179
      
14,123
      
29,302
      
14,616
      
17,135
      
13,045
      
17,709
      
62,505
  
Net income
    
24,759
      
24,047
      
48,806
      
27,976
      
29,323
      
20,552
      
27,265
      
105,116
  
Net income/(loss) attributable
                                                                
  to noncontrolling interests
    
(17
)
    
(54
)
    
(71
)
    
22
      
373
      
(3,113
)
    
(1,556
)
    
(4,274
)
Net income attributable to
                                                                
  GAMCO Investors, Inc.
  
$
24,776
    
$
24,101
    
$
48,877
    
$
27,954
    
$
28,950
    
$
23,665
    
$
28,821
    
$
109,390
  
                                                                 
Net income per share
                                                                
  attributable to GAMCO
                                                                
  Investors, Inc.:
                                                                
Basic
  
$
0.99
    
$
0.96
    
$
1.95
    
$
1.10
    
$
1.14
    
$
0.94
    
$
1.14
    
$
4.32
  
                                                                 
Diluted
  
$
0.97
    
$
0.95
    
$
1.93
    
$
1.09
    
$
1.13
    
$
0.93
    
$
1.13
    
$
4.28
  
                                                                 
Weighted average shares outstanding:
                                                                
Basic
    
25,132
      
25,065
      
25,098
      
25,481
      
25,381
      
25,296
      
25,184
      
25,335
  
                                                                 
Diluted
    
25,414
      
25,358
      
25,386
      
25,684
      
25,586
      
25,517
      
25,449
      
25,558
  
Reconciliation of non-GAAP
                                                                
  financial measures to GAAP:
                                                                
Operating income before
                                                                
  management fee
    
38,382
      
39,190
      
77,572
      
41,227
      
42,681
      
47,342
      
46,903
      
178,153
  
Deduct: management fee expense
    
4,437
      
4,241
      
8,678
      
4,728
      
5,144
      
3,756
      
4,999
      
18,627
  
Operating income
  
$
33,945
    
$
34,949
    
$
68,894
    
$
36,499
    
$
37,537
    
$
43,586
    
$
41,904
    
$
159,526
  
                                                                 
Operating margin before
                                                                
  management fee
    
37.0
%
    
38.2
%
    
37.6
%
    
39.5
%
    
39.4
%
    
42.7
%
    
40.2
%
    
40.5
%
Operating margin after
                                                                
  management fee
    
32.7
%
    
34.0
%
    
33.4
%
    
34.9
%
    
34.7
%
    
39.3
%
    
35.9
%
    
36.2
%
                                                                 
 
10
Table VI
            
GAMCO INVESTORS, INC.
  
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
  
(Dollars in thousands, except per share data)
  
             
   
June 30,
    
December 31,
    
June 30,
  
   
2015
    
2014
    
2014
  
             
ASSETS
            
             
Cash and cash equivalents
  
$
372,284
    
$
298,224
    
$
307,490
  
Investments (a)
    
379,263
      
406,711
      
374,283
  
Receivable from brokers
    
56,579
      
76,079
      
58,945
  
Other receivables
    
40,001
      
67,228
      
43,875
  
Income tax receivable
    
2,303
      
2,477
      
1,077
  
Other assets
    
15,556
      
15,711
      
19,132
  
                         
  Total assets
  
$
865,986
    
$
866,430
    
$
804,802
  
                         
LIABILITIES AND EQUITY
                        
                         
Payable to brokers
  
$
48,858
    
$
43,409
    
$
19,859
  
Income taxes payable and deferred tax liabilities
    
21,266
      
27,939
      
31,029
  
Compensation payable
    
68,889
      
39,983
      
68,908
  
Securities sold short, not yet purchased
    
9,825
      
10,595
      
14,329
  
Accrued expenses and other liabilities
    
37,458
      
36,212
      
38,823
  
  Sub-total
    
186,296
      
158,138
      
172,948
  
                         
5.875% Senior notes (due June 1, 2021)
    
100,000
      
100,000
      
100,000
  
0% Subordinated Debentures (due December 31, 2015) (b)
    
6,628
      
12,163
      
11,813
  
  Total debt
    
106,628
      
112,163
      
111,813
  
  Total liabilities
    
292,924
      
270,301
      
284,761
  
                         
Redeemable noncontrolling interests
    
5,943
      
68,334
      
22,806
  
                         
GAMCO Investors, Inc.'s stockholders' equity
    
564,430
      
525,061
      
494,418
  
Noncontrolling interests
    
2,689
      
2,734
      
2,817
  
Total equity
    
567,119
      
527,795
      
497,235
  
                         
Total liabilities and equity
  
$
865,986
    
$
866,430
    
$
804,802
  
                         
(a) Includes investments in sponsored registered investment companies of $126.3 million, $39.5 million and $40.8 million, respectively.
  
(b) The 0% Subordinated Debentures due December 31, 2015 have a face value of $6.9 million, $13.1 million and $13.2 million, respectively.
  
 
 

11

SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION

The financial results set forth in this press release are preliminary. Our disclosure and analysis in this press release, which do not present historical information, contain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.  Forward-looking statements convey 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, the economy and other conditions, there can be no assurance that our actual results will not differ materially from what we expect or believe.  Therefore, you should proceed with caution in relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance.

Forward-looking statements involve a number of known and unknown risks, uncertainties and other important factors, some of which are listed below, that are difficult to predict and could cause actual results and outcomes to differ materially from any future results or outcomes expressed or implied by such forward-looking statements.  Some of the factors that could cause our actual results to differ from our expectations or beliefs include a decline in the securities markets that adversely affect our assets under management, negative performance of our products, the failure to perform as required under our investment management agreements, a general downturn in the economy that negatively impacts our operations. We also direct your attention to the more specific discussions of these and other risks, uncertainties and other important factors  contained in our Form 10-K and other public filings.  Other factors that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We do not undertake to update publicly any forward-looking statements if we subsequently learn that we are unlikely to achieve our expectations whether as a result of new information, future developments or otherwise, except as may be required by law.

12
 
 

GAMCO INVESTORS, INC. ET AL Reports