GAMCO Investors, Inc. Reports Record Third Quarter Results

GAMCO Investors, Inc. (“GAMCO”) (NYSE:GBL) today reported its 2013 third quarter results including revenues of $96.4 million, net income of $33.1 million and earnings per diluted share of $1.29. On a comparable basis, revenues were $82.2 million, net income was $19.0 million, and earnings per diluted share were $0.72 in the third quarter of 2012.

Assets Under Management (“AUM”) rose to a record $43.5 billion, up 7.5% from $40.5 billion at June 30, 2013 and up 17.8% from $36.9 billion at September 30, 2012.

Results for the first nine months of 2013 include revenues of $274.8 million, net income of $83.5 million and earnings per diluted share of $3.25, an increase of 48.4% from earnings of $2.19 in the first nine months of 2012.
 
Financial Highlights           Third Quarter     Year-to-date
($'s in 000's except AUM and per share data) 2012     2013

% ∆
    2012     2013    

% ∆
 
AUM - end of period (in millions) $ 36,945 $ 43,507 17.8 % $ 36,945 $ 43,507 17.8 %
AUM - average (in millions) 36,351 42,620 17.2 35,971 40,478 12.5
 
Revenues 82,231 96,377 17.2 245,004 274,848 12.2
 
Operating income before management fee 32,068 38,357 19.6 96,246 109,694 14.0
Operating margin before management fee 39.0 % 39.8 % 39.3 % 39.9 %
 
Operating income after management fee 29,012 32,728 12.8 86,391 95,239 10.2
Operating margin after management fee 35.3 % 34.0 % 35.3 % 34.7 %
 
Extinguishment of Debt (6,305 ) - (6,307 ) (137 )
Other income/(expense), net (1,446 ) 17,991 2,446 34,991
 
Income before income taxes 27,566 50,719 84.0 88,837 130,230 46.6
Effective tax rate 30.7 % 34.5 % 34.8 % 35.7 %
 
Net income 19,004 33,098 74.2 57,945 83,536 44.2
Net income per share $ 0.72 (a) $ 1.29 (b) 79.2 % $ 2.19 (a) $ 3.25 (b) 48.4 %
 
Shares outstanding at September 30             26,606           26,017                 26,606           26,017          

(a)
 

After a $0.08 per fully diluted share charge for the three and nine months ended September 30, 2012 related to the extinguishment of debt from the Dutch Auction of the 0% Subordinated Debentures.

(b)

After a $0.01 per fully diluted share charge in the third quarter of 2013 for shareholder-designated charitable contribution program and $0.12 per fully diluted share charge for the nine months ended September 30, 2013.
 

Assets Under Management

Total firm AUM increased to a record $43.5 billion at September 30, 2013, up $3.0 billion from the second quarter and $6.6 billion higher than the third quarter of 2012. Our third quarter 2013 net inflows were $618 million, market appreciation totaled $2.6 billion and net open- and closed-end fund distributions were $146 million.

AUM in our open end funds increased $1.4 billion during the quarter to $17.3 billion at September 30, 2013. Net inflows into our open-end funds totaled $522 million, reflecting an annualized organic growth rate of 13.2%, while distributions (net of reinvestments) totaled $28 million and market appreciation added $924 million. AUM in (y)our open-end equity funds totaled $15.6 billion, 9.8% ahead of the previous quarter end AUM and 22.1% higher than the year earlier period.

Institutional and private wealth management AUM increased 7.3% from the June 2013 quarter end to $18.6 billion and was 22.6% higher than the comparable 2012 quarter end.

Our investment partnerships’ AUM increased to $805 million on September 30, 2013 from $778 million on June 30, 2013.

Firm wide, net inflows during the first nine months of 2013 were $1.4 billion, market appreciation totaled $6.2 billion and net open- and closed-end fund distributions were $436 million. This compares with net inflows of $110 million, market appreciation of $3.1 billion and net open- and closed-end fund distributions of $331 million in the first nine months of 2012.

Revenues
  • Revenues for the third quarter of 2013 were $96.4 million versus $82.2 million in the prior year.
  • Investment advisory and incentive fees were $80.4 million in the third quarter of 2013, an increase of $12.6 million or 18.7% from the comparable 2012 quarter. Revenues were generally driven by growth in average AUM in our open- and closed-end funds and higher billable assets in our institutional and private wealth management accounts.
  • Average AUM in the open-end equity funds were $15.1 billion, an increase of 19.8% from $12.6 billion in the comparable 2012 quarter.
  • Average AUM in the institutional and private wealth management accounts were $18.1 billion, 21.8% higher than the prior year period.
  • Incentive fees earned during the 2013 quarter totaled $0.5 million versus $0.8 million in the third quarter of 2012.
  • Revenues from the distribution of our open-end funds and other income were $13.5 million for the third quarter 2013, an increase of $2.4 million, or 21.6%, from the prior year quarter of $11.1 million.
  • Our institutional research services generated revenues of $2.4 million in the third quarter 2013 versus $3.3 million in the prior year period.

Operating Income

Operating income before management fee was $38.4 million in the third quarter 2013 versus $32.1 million in the third quarter 2012. Operating margin before management fee improved to 39.8% versus 39.0% in the third quarter of 2012. 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 VII included elsewhere herein.

Operating income, which is net of management fee expense, was $32.7 million in the third quarter of 2013 versus $29.0 million in the prior year period, an increase of $3.7 million, or 12.8%. The operating margin was 34.0% in the third quarter of 2013 versus 35.3% in the comparable prior year period. Management fee expense, which is incentive based and entirely variable, resulted in the lower operating margin quarter over quarter.

Other income (expense)

Other income/(expense), net, was $18.0 million, or $0.41 per diluted share, in the 2013 quarter versus an expense of $1.4 million, or ($0.03) per diluted share, in the third quarter of 2012. Gains from investments in mutual funds, alternative products and proprietary accounts were $19.3 million in the 2013 quarter versus gains of $7.5 million in the third quarter of 2012. Included in the 2013 trading profits is $5.5 million, or $0.12 per diluted share, of gains from the sale of available for sale securities. Last year’s results included a charge of $6.3 million related to purchases of the Company’s 0% subordinated debentures. Dividend and interest income totaled $1.1 million up from $0.9 million in the prior year period. Interest expense was $2.2 million in the 2013 third quarter; $1.4 million lower than the prior year quarter due to the third quarter 2012 repurchase of $64.1 million (face value) in 0% subordinated debentures through a tender offer as well as the maturity of the $99 million of 5.5% senior notes on May 15, 2013.

Income Taxes

The effective tax rate for the quarter ended September 30, 2013 was 34.5% compared to the 2012 quarter effective tax rate of 30.7%. The third quarter 2012 rate included a benefit of 5.1% resulting from the difference between the tax and book basis of the 0% debentures repurchased in the tender offer completed in July 2012.

Business and Investment Highlights

  • On September 5, 2013, GAMCO announced the final results of its Shareholder-Designated Charitable Contribution Program with 75% of all registered shareholders, comprising more than 99% of eligible shares, participating in distributing over $5.3 million to 86 different 501(c)(3) charities. Each shareholder was eligible to direct a donation of $0.25 per registered share owned to a designated charity of their choice.
  • Standard & Poor’s Ratings Services issued a report on August 29, 2013 reaffirming its investment grade rating on GAMCO.
  • The Board of Trustees of The Gabelli Dividend & Income Trust (NYSE: GDV) approved, subject to shareholder and other regulatory approvals, the creation of a newly formed diversified, closed-end fund that draws upon our global research to invest in the equities of SMID (small- and mid-capitalization) value stocks within and outside the U.S. GDV would contribute approximately $100 million of its cash and/or securities and would then distribute shares of the new fund pro rata to the common shareholders of GDV.
  • On July 25, 2013, The Gabelli Healthcare & WellnessRx Trust (NYSE: GRX) completed a rights offering raising $33 million of new equity. The offering was heavily over-subscribed.
  • Our “In the News” and “On the Air” section of our website features interviews with Portfolio Managers including Barbara Marcin, Howard Ward, Chris Marangi, Jeff Jonas, Kevin Dreyer, Caesar Bryan and Dan Miller as they address world markets, industries, and portfolio specifics. Please visit the Gabelli website at www.gabelli.com/inthenews.html.
  • Sergey Dluzhevskiy was named the #2 stock picker in the Diversified Telecommunications Services sector by Thomson Reuters for their 2013 annual The Financial Times/StarMine Analyst Awards.

Balance Sheet – $624.6 million of Cash and Investments at Quarter End

We ended the quarter with cash and investments of $624.6 million, debt of $117.3 million ($120.5 million face value) and equity attributable to GAMCO shareholders of $435.9 million. We have $400 million available on our universal shelf registration which allows us the flexibility to issue any combination of senior and subordinated debt securities, convertible debt securities and common and preferred equity. Together with earnings from operations, the shelf provides us with opportunities to do acquisitions, lift-outs, seed new investment strategies, co-invest as well as shareholder compensation including share repurchase and dividends.

Shareholder Compensation

During the first nine months of 2013, we returned $13.3 million of our earnings to shareholders through dividends and stock repurchases. We repurchased 159,259 shares at an average price of $57.97 per share through our stock buyback program, for a total investment of $9.2 million. Reflecting our 20% increase in the quarterly dividend, we returned $4.1 million in cash dividends.

On November 6, 2013, GAMCO’s Board of Directors declared a special dividend of $0.50 per share and a regular quarterly dividend of $0.06 per share both payable on December 24, 2013 to its Class A and Class B shareholders of record on December 10, 2013.

GAMCO announced on November 6, 2013, that its Board of Directors increased the share buyback authorization by an additional 500,000 shares. As a result, there are 986,684 shares available to be repurchased under our existing buyback plan.

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 VII.
 
B. Operating income before management fee expense per share and other income, 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 positive swing of $0.44 per fully diluted share is 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, net per share to net income per fully diluted share, is provided below.
 
          3rd Quarter       YTD September
2012       2013 2012       2013
Operating income before management fee $ 32,068 $ 38,357 $ 96,246 $ 109,694
Management fee expense (3,201 ) (3,836 ) (9,610 ) (10,956 )
Tax expense (8,867 ) (11,921 ) (30,143 ) (35,205 )
Noncontrolling interest expense   (189 )   5     242     201  
Operating income (after management fee and taxes)   19,811     22,605     56,735     63,734  
Per fully diluted share $ 0.75   $ 0.88   $ 2.14   $ 2.48  
 
Other income/(expense), net $ (1,446 ) $ 17,991 $ 2,446 $ 34,991
Management fee (expense)/benefit 145 (1,793 ) (245 ) (3,499 )
Tax (expense)/benefit 400 (5,594 ) (766 ) (11,229 )
Noncontrolling interest (expense)/benefit   94     (111 )   (225 )   (461 )
Other income/(expense), net (after management fee and taxes) $ (807 ) $ 10,493   $ 1,210   $ 19,802  
Per fully diluted share $ (0.03 ) $ 0.41   $ 0.05   $ 0.77  
 
Net income per fully diluted share $ 0.72   $ 1.29   $ 2.19   $ 3.25  
Diluted weighted average shares outstanding   26,439     25,700     26,480     25,717  
C.   Shareholder-designated charitable contribution program expense, net of management fee and tax benefit, per diluted share:
 
          3rd Quarter       YTD
(in thousands, except per share data) 2013 2013
Shareholder-designated charitable contribution program $ 313 $ 5,313
Management fee and tax benefit   135   2,291
Net expense $ 178 $ 3,022
 
Shareholder-designated charitable contribution program charge per share $ 0.01 $ 0.12
Diluted weighted average shares outstanding   25,700   25,717
D.   Realized gains from sales of available for sale securities, net of management fee and tax benefit, per diluted share:
 
          3rd Quarter       YTD
(in thousands, except per share data) 2013 2013
Realized gains from sales of available for sale securities $ 5,539 $ 15,116
Management fee and tax benefit   2,398   6,545
Net gain $ 3,141 $ 8,571
 
Realized gains from sales of available for sale securities per share $ 0.12 $ 0.33
Diluted weighted average shares outstanding   25,700   25,717
 

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.

 
The Company reported Assets Under Management as follows (in millions):
 
Table I: Fund Flows - 3rd Quarter 2013
              Fund    
    Market     distributions,
June 30, appreciation/ Net cash net of September 30,
2013 (depreciation) flows reinvestments 2013
Equities:
Open-end Funds $ 14,188 $ 924 $ 497 $ (28 ) $ 15,581
Closed-end Funds 6,409 374 56 (118 ) 6,721
Institutional & PWM - direct 14,069 946 11 - 15,026
Institutional & PWM - sub-advisory 3,185 294 24 - 3,503
Investment Partnerships 778 17 10 - 805
SICAV (a)   93   2   (1 )   -     94
Total Equities   38,722   2,557   597     (146 )   41,730
Fixed Income:
Money-Market Fund 1,689 - 25 - 1,714
Institutional & PWM   67   -   (4 )   -     63
Total Fixed Income   1,756   -   21     -     1,777
Total Assets Under Management $ 40,478 $ 2,557 $ 618   $ (146 ) $ 43,507
 
The Company reported Assets Under Management as follows (in millions):
 
Table II: Fund Flows - Nine months ended September 30, 2013
                      Fund    
Market distributions,
December 31, appreciation/ Net cash net of September 30,
2012 (depreciation) flows reinvestments 2013
Equities:
Open-end Funds $ 12,502 $ 2,053 $ 1,116 $ (90 ) $ 15,581
Closed-end Funds 6,288 627 152 (346 ) 6,721
Institutional & PWM - direct 12,030 2,789 207 - 15,026
Institutional & PWM - sub-advisory 2,924 679 (100 ) - 3,503
Investment Partnerships 801 30 (26 ) - 805
SICAV (a)   119   4   (29 )   -     94
Total Equities   34,664   6,182   1,320     (436 )   41,730
Fixed Income:
Money-Market Fund 1,681 - 33 - 1,714
Institutional & PWM   60   -   3     -     63
Total Fixed Income   1,741   -   36     -     1,777
Total Assets Under Management $ 36,405 $ 6,182 $ 1,356   $ (436 ) $ 43,507
 
 
Table III: Assets Under Management
          September 30,       September 30,       %
2012 2013 Inc.(Dec.)
Equities:
Open-end Funds $ 12,758 $ 15,581 22.1 %
Closed-end Funds 6,365 6,721 5.6
Institutional & PWM - direct 12,189 15,026 23.3
Institutional & PWM - sub-advisory 2,912 3,503 20.3
Investment Partnerships 785 805 2.5
SICAV (a)   121   94 (22.3 )
Total Equities   35,130   41,730 18.8
Fixed Income:
Money-Market Fund 1,752 1,714 (2.2 )
Institutional & PWM   63   63 -
Total Fixed Income   1,815   1,777 (2.1 )
Total Assets Under Management $ 36,945 $ 43,507 17.8 %
 
 
Table IV: Assets Under Management by Quarter
 
                                       

% ∆
9/12 12/12 3/13 6/13 9/13 9/12       6/13
Equities:
Open-end Funds $ 12,758 $ 12,502 $ 13,813 $ 14,188 $ 15,581 22.1 % 9.8 %
Closed-end Funds 6,365 6,288 6,557 6,409 6,721 5.6 4.9
Institutional & PWM - direct 12,189 12,030 13,690 14,069 15,026 23.3 6.8
Institutional & PWM - sub-advisory 2,912 2,924 3,299 3,185 3,503 20.3 10.0
Investment Partnerships 785 801 796 778 805 2.5 3.5
SICAV (a)   121   119   113   93   94 (22.3 ) 1.1
Total Equities   35,130   34,664   38,268   38,722   41,730 18.8 7.8
Fixed Income:
Money-Market Fund 1,752 1,681 1,758 1,689 1,714 (2.2 ) 1.5
Institutional & PWM   63   60   64   67   63 - (6.0 )
Total Fixed Income   1,815   1,741   1,822   1,756   1,777 (2.1 ) 1.2
Total Assets Under Management $ 36,945 $ 36,405 $ 40,090 $ 40,478 $ 43,507 17.8 % 7.5 %
 

(a)
 

Includes $102 million, $104 million, $99 million, $90 million and $92 million of proprietary seed capital at September 30, 2012, December 31, 2012, March 31, 2013, June 30, 2013 and September 30, 2013, respectively.
 
 
Table V
 
GAMCO INVESTORS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
 
          For the Quarter Ended September 30,
            % Inc.
2012 2013 (Dec.)
 
Investment advisory and incentive fees $ 67,790 $ 80,438 18.7 %
Distribution fees and other income 11,139 13,545 21.6
Institutional research services   3,302     2,394   (27.5 )
Total revenues 82,231 96,377 17.2
 
Compensation costs 32,948 39,803 20.8
Distribution costs 10,386 12,769 22.9
Other operating expenses   6,829     5,448   (20.2 )
Total expenses 50,163 58,020 15.7
 
Operating income before management fee 32,068 38,357 19.6
 
Investment income 8,445 20,468
Extinguishment of debt (6,305 ) -
Interest expense (3,586 ) (2,164 )
Shareholder-designated contribution   -     (313 )
Other income/(expense), net   (1,446 )   17,991  
 
Income before management fee and income taxes 30,622 56,348 84.0
Management fee expense   3,056     5,629  
Income before income taxes 27,566 50,719 84.0
Income tax expense   8,467     17,515  
Net income 19,099 33,204 73.9
Net income/(loss) attributable to noncontrolling interests   95     106  
Net income attributable to GAMCO Investors, Inc. $ 19,004   $ 33,098   74.2
 
Net income per share attributable to GAMCO Investors, Inc.:
Basic $ 0.72   $ 1.29   79.2
 
Diluted $ 0.72   $ 1.29   79.2
 
Weighted average shares outstanding:
Basic   26,250     25,625   (2.4 )
 
Diluted   26,439     25,700   (2.8 )
 
Actual shares outstanding (a)   26,606     26,017   (2.2 %)
 
Notes:

(a) Includes 371,500 and 427,700 of RSAs, respectively. See GAAP to non-GAAP reconciliation on page 12.
 
 
Table VI
 
GAMCO INVESTORS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
 
          For the Nine Months Ended September 30,
            % Inc.
2012 2013 (Dec.)
 
Investment advisory and incentive fees $ 202,783 $ 230,488 13.7 %
Distribution fees and other income 33,768 37,420 10.8
Institutional research services   8,453     6,940   (17.9 )
Total revenues 245,004 274,848 12.2
 
Compensation costs 100,423 113,214 12.7
Distribution costs 30,575 35,650 16.6
Other operating expenses   17,760     16,290   (8.3 )
Total expenses 148,758 165,154 11.0
 
Operating income before management fee 96,246 109,694 14.0
 
Investment income 21,172 48,889
Extinguishment of debt (6,307 ) (137 )
Interest expense (12,419 ) (8,448 )
Shareholder-designated contribution   -     (5,313 )
Other income, net   2,446     34,991  
 
Income before management fee and income taxes 98,692 144,685 46.6
Management fee expense   9,855     14,455  
Income before income taxes 88,837 130,230 46.6
Income tax expense   30,909     46,434  
Net income 57,928 83,796 44.7
Net income attributable to noncontrolling interests   (17 )   260  
Net income attributable to GAMCO Investors, Inc. $ 57,945   $ 83,536   44.2
 
Net income per share attributable to GAMCO Investors, Inc.:
Basic $ 2.20   $ 3.25   47.7
 
Diluted $ 2.19   $ 3.25   48.4
 
Weighted average shares outstanding:
Basic   26,309     25,682   (2.4 )
 
Diluted   26,480     25,717   (2.9 )
 
Actual shares outstanding (a)   26,606     26,017   (2.2 %)
 
Notes:

(a) Includes 371,500 and 427,700 of RSAs, respectively. See GAAP to non-GAAP reconciliation on page 12.
 
 
Table VII
GAMCO INVESTORS, INC.
UNAUDITED QUARTERLY CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
 
          2012       2013
1st       2nd       3rd     YTD     4th     1st       2nd       3rd       YTD
Quarter   Quarter Quarter 2012 Quarter Full Year Quarter Quarter Quarter 2013
Income Statement Data:
 
Revenues $ 81,749 $ 81,024 $ 82,231 $ 245,004 $ 99,277 $ 344,281 $ 86,181 $ 92,290 $ 96,377 $ 274,848
 
Expenses   50,553     48,042     50,163     148,758     71,375   (a)   220,133     51,474     55,660     58,020     165,154  
 
Operating income before
management fee 31,196 32,982 32,068 96,246 27,902 124,148 34,707 36,630 38,357 109,694
 
Investment income/(loss) 15,114 (2,389 ) 2,140 (b) 14,865 (b) 7,220 22,085 13,636 14,648 20,468 48,752
Interest expense (4,404 ) (4,429 ) (3,586 ) (12,419 ) (3,480 ) (15,899 ) (3,488 ) (2,796 ) (2,164 ) (8,448 )
Shareholder-designated contribution   -     -     -     -     -     -     (5,000 )   -     (313 )   (5,313 )
Other income/(expense), net 10,710 (6,818 ) (1,446 ) 2,446 3,740 6,186 5,148 11,852 17,991 34,991
 
Income before management
fee and income taxes 41,906 26,164 30,622 98,692 31,642 130,334 39,855 48,482 56,348 144,685
Management fee expense   4,184     2,615     3,056     9,855     3,163     13,018     3,980     4,846     5,629     14,455  
Income before income taxes 37,722 23,549 27,566 88,837 28,479 117,316 35,875 43,636 50,719 130,230
Income tax expense   13,756     8,686     8,467     30,909     10,812     41,721     13,195     15,724     17,515     46,434  
Net income 23,966 14,863 19,099 57,928 17,667 75,595 22,680 27,912 33,204 83,796
Net income/(loss) attributable
to noncontrolling interests   130     (242 )   95     (17 )   73     56     135     19     106     260  
Net income attributable to
GAMCO Investors, Inc. $ 23,836   $ 15,105   $ 19,004   $ 57,945   $ 17,594   $ 75,539   $ 22,545   $ 27,893   $ 33,098   $ 83,536  
 
Net income per share
attributable to GAMCO
Investors, Inc.:
Basic $ 0.90   $ 0.58   $ 0.72   $ 2.20   $ 0.67   $ 2.87   $ 0.88   $ 1.09   $ 1.29   $ 3.25  
 
Diluted $ 0.90   $ 0.57   $ 0.72   $ 2.19   $ 0.67   $ 2.86   $ 0.88   $ 1.09   $ 1.29   $ 3.25  
 
Weighted average shares outstanding:
Basic   26,415     26,258     26,250     26,309     26,208     26,283     25,742     25,679     25,625     25,682  
 
Diluted   26,533     26,426     26,439     26,480     26,305     26,436     25,758     25,689     25,700     25,717  
Reconciliation of non-GAAP
financial measures to GAAP:
Operating income before
management fee $ 31,196 $ 32,982 $ 32,068 $ 96,246 $ 27,902 $ 124,148 $ 34,707 $ 36,630 $ 38,357 $ 109,694
Deduct: management fee expense   4,184     2,615     3,056     9,855     3,163     13,018     3,980     4,846     5,629     14,455  
Operating income $ 27,012   $ 30,367   $ 29,012   $ 86,391   $ 24,739   $ 111,130   $ 30,727   $ 31,784   $ 32,728   $ 95,239  
 
Operating margin before
management fee   38.2 %   40.7 %   39.0 %   39.3 %   28.1 %   36.1 %   40.3 %   39.7 %   39.8 %   39.9 %
Operating margin after
management fee   33.0 %   37.5 %   35.3 %   35.3 %   24.9 %   32.3 %   35.7 %   34.4 %   34.0 %   34.7 %
 

(a)
 

Includes $10.1 million in expenses from the acceleration of RSAs.

(b)

Includes $6.3 million loss on extinguishment of $64.6 million (face value) of 0% Subordinated Debentures.
 
 
Table VIII
GAMCO INVESTORS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
       
September 30,     December 31,     September 30,
2012 2012 2013
 
ASSETS
 
Cash and cash equivalents $ 288,685 $ 190,608 $ 245,411
Investments (a) 402,272 378,263 379,184
Receivable from brokers 55,159 50,655 43,854
Other receivables 36,205 52,600 38,975
Income tax receivable 1,018 1,014 433
Other assets   15,232   17,589   26,765
 
Total assets $ 798,571 $ 690,729 $ 734,622
 
LIABILITIES AND EQUITY
 
Payable to brokers $ 28,039 $ 14,346 $ 14,675
Income taxes payable and deferred tax liabilities 16,445 25,394 28,726
Compensation payable 33,998 10,535 86,174
Securities sold short, not yet purchased 3,856 3,136 7,725
Accrued expenses and other liabilities   36,513   32,656   35,564
Sub-total 118,851 86,067 172,864
 
5.5% Senior notes (repaid May 15, 2013) 99,000 99,000 -
5.875% Senior notes (due June 1, 2021) 100,000 100,000 100,000
0% Subordinated Debentures (due December 31, 2015) (b)   17,118   17,366   17,347
Total debt   216,118   216,366   117,347
Total liabilities 334,969 302,433 290,211
 
Redeemable noncontrolling interests 20,228 17,362 5,765
 
GAMCO Investors, Inc.'s stockholders' equity 440,013 367,608 435,857
Noncontrolling interests   3,361   3,326   2,789
Total equity   443,374   370,934   438,646
 
Total liabilities and equity $ 798,571 $ 690,729 $ 734,622
 

(a)
 

Includes investments in sponsored registered investment companies of $64.2 million, $61.9 million and $43.7 million, respectively.

(b)

The 0% Subordinated Debentures due December 31, 2015 have a face value of $21.8 million, $21.7 million and $20.5 million, respectively.
 

Copyright Business Wire 2010

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