GAMCO Investors, Inc. Reports Third Quarter Results

GAMCO Investors, Inc. ("GAMCO" or the "Company") (NYSE:GBL) today reported financial results for the third quarter including revenues of $87.7 million, net income of $30.9 million and earnings of $1.03 per diluted share. On a comparable continuing operations basis, revenues were $92.2 million, net income was $22.5 million, and earnings were $0.89 per diluted share in the third quarter of 2015.
Financial Highlights                    
Third Quarter YTD
($'s in 000's except AUM and per share data) 2016 (a) 2015 (b) 2016 (a) 2015 (b)
 
AUM - end of period (in millions) $ 39,581 $ 38,490 $ 39,581 $ 38,490
AUM - average (in millions) 39,883 41,586 38,727 44,231
 
Revenues 87,721 92,160 253,050 290,659
 
Operating income 48,076 37,276 139,765 114,847
Operating margin 54.8 % 40.4 % 55.2 % 39.5 %
 
Other expense, net (2,729 ) (1,190 ) (8,107 ) (3,771 )
 
Income before income taxes 45,347 36,086 131,658 111,076
Effective tax rate 31.9 % 37.8 % 35.9 % 37.5 %
 
Income from continuing operations 30,861 22,451 84,429 69,374
 
Loss from discontinued operations - (7,482 ) - (5,528 )
 
Net income 30,861 14,969 84,429 63,846
 
Income per share - continuing operations $ 1.03 $ 0.89 $ 2.85 $ 2.74
 
Loss per share - discontinued operations $ - (0.30 ) $ - (0.23 )
 
Net income per share $ 1.03 $ 0.59 $ 2.85 $ 2.51
 
Shares outstanding at September 30 (c) 29,548 25,538 29,548 25,538

 
(a)   See page 3 for discussion of deferred compensation impact.
(b) Adjusted for spin-off of AC.
(c) Shares outstanding consist of 29,121 non-RSA shares and 427 RSA shares at September 30, 2016 and 24,849 non-RSA shares and 689 RSA shares at September 30, 2015.
 

Assets Under Management
             
% Change From
September 30, December 31, September 30, December 31, September 30,
2016 2015 2015 2015 2015
Equities:
Open-end Funds $ 13,799 $ 13,811 $ 14,075 (0.1 %) (2.0 %)
Closed-end Funds 7,178 6,492 6,205 10.6 15.7
Institutional & PWM - direct 13,245 13,366 13,190 (0.9 ) 0.4
Institutional & PWM - sub-advisory 3,542 3,401 3,302 4.1 7.3
SICAV   42   37   36 13.5 16.7
Total Equities   37,806   37,107   36,808 1.9 2.7
Fixed Income:
Money-Market Fund 1,738 1,514 1,637 14.8 6.2
Institutional & PWM   37   38   45 (2.6 ) (17.8 )
Total Fixed Income   1,775   1,552   1,682 14.4 5.5
Total Assets Under Management $ 39,581 $ 38,659 $ 38,490 2.4 2.8

 
Institutional & PWM - direct includes $286 million, $226 million and $227 million of Money Market Fund AUM at September 30, 2016, December 31, 2015 and September 30, 2015, respectively.
 

Average AUM were $39.9 billion for the third quarter of 2016 versus $38.9 billion for the second quarter of 2016 and $41.6 billion for the third quarter of 2015.

Our third quarter 2016 increase in AUM versus June 30, 2016 AUM of $39.3 billion was due to market appreciation of $1.0 billion partially offset by net outflows of $0.5 billion and distributions of $0.2 billion.

Revenues
  • Total revenues for the third quarter of 2016 were $87.7 million, compared with $92.2 million in the prior year, reflecting investment advisory fees based on a lower level of assets and a decline in distribution and other income.
  • Investment advisory fees were $76.0 million in the third quarter of 2016 versus $79.9 million in the third quarter of 2015. Revenues from our open-end and closed-end funds tracked our average AUM in the funds. Lower billable assets at June 30, 2016 in Institutional and Private Wealth Management accounted for $26.2 million of the revenues.
  • Distribution fees from our open-end equity funds and other income were $11.8 million for the third quarter 2016, down from $12.3 million in the prior year quarter.

Operating Income - Third Quarter - Operating margin 54.8% vs. 40.4%

Operating income, which is net of management fee expense, increased 29.0% or $10.8 million, to $48.1 million in the third quarter of 2016 versus $37.3 million in the prior year period. Lower revenues of $4.4 million in the third quarter were offset by reduced variable compensation expense of $12.5 million. The December 2015 Restricted Stock Units ("RSU") agreement with Mr. Gabelli reduced variable compensation by $13.3 million in the 2016 third quarter. There were $0.6 million of launch costs incurred during the third quarter of 2016 and $0.5 million of incremental RSA expense in the third quarter of 2015. After adjusting for removal of these items in the 2016 and 2015 periods, operating income was $35.4 million in the third quarter of 2016 versus $37.7 million, $2.3 million less than the comparable prior year period. Operating margin after these adjustments decreased to 40.4% versus 40.9% in the prior year period. See Notes to Non-GAAP measures on page 7 for further information.

Operating income before management fee was $49.2 million in the third quarter 2016 versus $41.3 million in the third quarter 2015. Operating margin before management fee was 56.1% versus 44.8% in the third quarter of 2015. After adjusting for the removal of the items in both the 2016 and 2015 periods, operating income before management fee was $38.4 million in the third quarter of 2016 as compared to $41.8 million in the third quarter of 2015 while operating margins before management fee was 43.7% vs. 45.3% in the prior year quarter. See Notes on Non-GAAP measures on page 7 for further information. Further information regarding Non-GAAP measures is included in Notes on Non-GAAP Financial Measures and Table V included elsewhere herein.

Other expense

We recognized $2.7 million in net other expenses in the 2016 quarter versus net other expenses of $1.2 million in the third quarter of 2015, principally due to the higher interest expense of $3.2 million in the 2016 quarter versus $1.8 million in the third quarter of 2015. In 2016, the AC 4% PIK Note issued in November 2015 was outstanding as was the 4.5% convertible note issued in August 2016, offset in part by the tender of $78 million of the Senior Notes in December 2015. Investment income for 2016 decreased $0.2 million to $0.4 million in 2016 vs. $0.6 million in 2015.

Income Taxes

The Company's effective tax rate ("ETR") for the quarter ended September 30, 2016 was 31.9% versus 37.8% for the quarter ended September 30, 2015. The current quarter benefited from the reversal of tax accruals related to the closing out of a state audit.

Deferred compensation

The GAAP-mandated treatment of the December 2015 deferred compensation agreement materially contributed to the year over year third quarter 2016 results. In 2016, certain variable compensation will be in the form of RSUs determined by the volume-weighted average price of the Company's Class A Stock. Margins for the third quarter 2016 therefore are not comparable with prior year periods. Under GAAP, only 25% of this deferred compensation expense is being recognized in the current year with the remainder amortized as expense in 2017, 2018, and 2019. Expressed another way, and assuming no renewal of the deferred compensation agreement, the 2016 third quarter (as well as the balance of 2016) benefit from a reduction of 75% of the compensation, and 2017, 2018, and 2019 will, in turn, be impacted by an additional 25% of the compensation from 2016 in each year. The Board's decision to grant these RSUs in December 2015 and thereby defer the cash payment of certain 2016 variable compensation until January 1, 2020 was to provide the Company with greater financial flexibility.

The balance sheet is also impacted; the compensation payable at September 30, 2016 and in each future period-end of 2016 is only 25% of the full amount of the 2016 compensation that will be due once the RSUs are fully vested. At September 30, 2016, the amount of unrecognized compensation was $38.9 million.

On an economic basis, there was $18.1 million of compensation subject to the deferred compensation agreement for the third quarter of 2016. Of this amount, only $4.8 million was recorded under GAAP, with the remaining $13.3 million to be expensed over the vesting period. Absent the deferred compensation arrangement during the third quarter of 2016, total compensation costs were $32.1 million, management fee expense was $3.6 million, income tax expense was $9.6 million, net income was $22.4 million and earnings per fully diluted share was $0.75.

The following tables show a reconciliation of our results for the third quarter of 2016 and our balance sheet at September 30, 2016 between the GAAP basis and the non-GAAP adjusted basis of the deferred compensation (the RSU grant) described above. We believe this adjusted measure, which removes the impact of the deferred compensation agreement, is useful in evaluating the ongoing operating results of the Company and increases the comparability of the results with prior periods.
       
For the three months ended September 30, 2016
  Impact of
Reported Deferred
GAAP Compensation Non-GAAP
 
Total revenues $ 87,721 $ - $ 87,721
 
Compensation costs 21,233 10,885 32,118
Distribution costs 11,568 - 11,568
Other operating expenses   5,681     -     5,681  
Total expenses 38,482 10,885 49,367
 
Operating income before management fee 49,239 (10,885 ) 38,354
 
Other expense, net (2,729 ) - (2,729 )
 
Income before management fee and income taxes 46,510 (10,885 ) 35,625
Management fee expense   1,163     2,400     3,563  
Income before income taxes 45,347 (13,285 ) 32,062
Income tax expense   14,486     (5,075 )   9,411  
Net income attributable to GAMCO Investors, Inc. $ 30,861   $ (8,210 ) $ 22,651  
 
Net income per share attributable to GAMCO Investors, Inc.:
Basic $ 1.06   $ (0.28 ) $ 0.78  
Diluted $ 1.03   $ (0.27 ) $ 0.76  
 
 
September 30, 2016
Impact of
Reported Deferred
GAAP Compensation Non-GAAP
 
ASSETS
 
Other assets $ 110,013 $ - $ 110,013
Income tax receivable   11,293     14,811     26,104  
Total assets $ 121,306   $ 14,811   $ 136,117  
 
LIABILITIES AND EQUITY
 
Compensation payable $ 31,469 $ 38,942 $ 70,411
Accrued expenses and other liabilities   54,979     -     54,979  
Sub-total 86,448 38,942 125,390
 
5.875% Senior notes (due June 1, 2021) 24,115 - 24,115
4.5% Convertible note (due August 15, 2021) 109,826 - 109,826
4% PIK note (due November 30, 2020)   100,000     -     100,000  
Total debt   233,941     -     233,941  
Total liabilities 320,389 38,942 359,331
 
GAMCO Investors, Inc.'s stockholders' equity (deficit)   (199,083 )   (24,131 )   (223,214 )
 
Total liabilities and equity $ 121,306   $ 14,811   $ 136,117  
 

The following table further illustrates the effect that the GAAP accounting for the compensation deferral will have on our results for 2016 through 2019 under certain assumptions. For simplicity in arriving at the 2016 through 2019 illustrative effects, we have assumed that the third quarter RSU expense is predictive of the full year results but there is no assurance that this will be the case. Please see the note regarding forward-looking information on page 13 of this release.

Effect of recording RSU on a GAAP basis:

       
2016 2017 2018 2019
 
RSU expense (52,228 ) 17,409 17,409 17,409
 

Business and Investment Highlights
  • On August 15, 2016, the Company issued a $110 million five year convertible note to Cascade Investment, L.L.C. in a private transaction. The note has a coupon of 4.5% and is convertible into GBL Class A common stock at $55 per share.
  • On July 1, 2016, Gabelli Dividend & Income Trust completed the offering of $100 million of 5.25% Series G Cumulative Preferred Stock. The preferred stock is perpetual, non-callable for five years, and was issued at $25 per share.
  • On August 9, 2016, the Bancroft Fund Ltd. completed the offering of $30 million of 5.375% Series A Cumulative Preferred Stock. The preferred stock is perpetual, non-callable for five years, and was issued at $25 per share.
  • On September 2, 2016, GAMCO completed the initial public offering of The Gabelli Go Anywhere Trust, the Company's 15 th closed-end fund. This newly organized closed-end fund initially traded on the NYSE MKT as a $100 combination consisting of one preferred share at $40 and three common shares at $20 each under the symbol GGO.C. This innovative offering demonstrates the flexibility of the closed-end fund structure. Separate trading on the NYSE MKT for the common shares ("GGO") and the Series A Preferred shares ("GGO.A") commenced on November 2, 2016.

Balance Sheet

During the quarter, we issued $110 million of five year 4.5% convertible notes and paid down $150 million of the $250 million PIK Note due November 30, 2020. We ended the quarter with cash and investments of $66.7 million and debt of $233.9 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 September 30, 2016, we returned $7.6 million of our earnings to shareholders through dividends and stock repurchases. We repurchased 223,811 shares at an average price of $31.50 per share for a total investment of $7.0 million and distributed $0.6 million in dividends. Since our IPO, in February 1999, we have returned $1.9 billion in total to shareholders comprised of $1.0 billion of spin-offs, $488 million in the form of dividends and $436 million through stock buybacks of 9,819,499 shares.

On November 4, 2016, GAMCO's Board of Directors declared a regular quarterly dividend of $0.02 per share payable on December 27, 2016 to its Class A and Class B shareholders of record on December 13, 2016.

About GAMCO Investors, Inc.

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

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.

Adjusted operating income and adjusted operating income before management fee expense are used by management to evaluate its ongoing business operations. We believe these adjusted measures, which remove these items, are useful in evaluating the ongoing operating results of the Company as the nature of these items reduces the comparability of the results with prior periods and is not indicative of results for future periods.
 
           
3rd Quarter YTD September
2016 2015 2016   2015

Operating income before management fee
$ 49,239 $ 41,332 $ 143,141 $ 127,232

Adjustments:

 

Add back:

Incremental RSA expense
- 458 - 1,665

 
Costs to launch Closed-end fund 638 - 638 1,000

Deduct:

Variable compensation reduction from RSU
  (10,886 )   -     (32,016 )   -  

Adjusted operating income before management fee
  38,991     41,790     111,763     129,897  
Adjusted operating margin before management fee   44.4 %   45.3 %   44.2 %   44.7 %
 
 
3rd Quarter YTD September
2016 2015 2016 2015
Operating income $ 48,076 $ 37,276 $ 139,765 $ 114,847
Adjustments:

Add back:

Incremental RSA expense
- 458 - 1,665
Costs to launch Closed-end fund 638 - 638 1,000

Deduct:

Variable compensation reduction from RSU
  (13,285 )   -     (38,942 )   -  
Adjusted operating income   35,429     37,734     101,461     117,512  
Adjusted operating margin   40.4 %   40.9 %   40.1 %   40.4 %
 
   
The Company reported Assets Under Management as follows (in millions):
         
Table I: Fund Flows - 3rd Quarter 2016
Fund
Market distributions,
June 30, appreciation/ Net cash net of September 30,
2016 (depreciation) flows reinvestments   2016
Equities:
Open-end Funds $ 13,981 $ 259 $ (416 ) $ (25 ) $ 13,799
Closed-end Funds 6,917 131 257 (127 ) 7,178
Institutional & PWM - direct 13,326 429 (510 ) - 13,245
Institutional & PWM - sub-advisory 3,459 186 (103 ) - 3,542
SICAV   40   1   1     -     42
Total Equities   37,723   1,006   (771 )   (152 )   37,806
Fixed Income:
Money-Market Fund 1,518 1 219 - 1,738
Institutional & PWM   32   -   5     -     37
Total Fixed Income   1,550   1   224     -     1,775
Total Assets Under Management $ 39,273 $ 1,007 $ (547 ) $ (152 ) $ 39,581
 
 
Table II: Fund Flows - Year to date September 2016
Fund
Market distributions,
December 31, appreciation/ Net cash net of September 30,
2015 (depreciation) flows reinvestments   2016
Equities:
Open-end Funds $ 13,811 $ 1,204 $ (1,170 ) $ (46 ) $ 13,799
Closed-end Funds 6,492 619 437 (370 ) 7,178
Institutional & PWM - direct 13,366 904 (1,025 ) - 13,245
Institutional & PWM - sub-advisory 3,401 314 (173 ) - 3,542
SICAV   37   3   2     -     42
Total Equities   37,107   3,044   (1,929 )   (416 )   37,806
Fixed Income:
Money-Market Fund 1,514 2 222 - 1,738
Institutional & PWM   38   -   (1 )   -     37
Total Fixed Income   1,552   2   221     -     1,775
Total Assets Under Management $ 38,659 $ 3,046 $ (1,708 ) $ (416 ) $ 39,581
 
       
Table III
 
GAMCO INVESTORS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
 
For the Quarter Ended
September 30,
2016 2015
 
Investment advisory and incentive fees $ 75,952 $ 79,900
Distribution fees and other income   11,769     12,260  
Total revenues 87,721 92,160
 
Compensation costs 21,233 34,022
Distribution costs 11,568 12,363
Other operating expenses   5,681     4,443  
Total expenses 38,482 50,828
 
Operating income before management fee 49,239 41,332
 
Investment income 426 625
Interest expense   (3,155 )   (1,815 )
Other expense, net   (2,729 )   (1,190 )
 
Income before management fee and income taxes 46,510 40,142
Management fee expense   1,163     4,056  
Income before income taxes 45,347 36,086
Income tax expense   14,486     13,635  
Income from continuing operations 30,861 22,451
Loss from discontinued operations, net of taxes   -     (7,482 )
Net income attributable to GAMCO Investors, Inc. $ 30,861   $ 14,969  
 
Net income/(loss) per share attributable to GAMCO Investors, Inc.:
Basic - Continuing operations $ 1.06 $ 0.90
Basic - Discontinued operations   -     (0.30 )
Basic - Total $ 1.06   $ 0.60  
 
Diluted - Continuing operations $ 1.03 $ 0.89
Diluted - Discontinued operations   -     (0.30 )
Diluted - Total $ 1.03   $ 0.59  
 
Weighted average shares outstanding:
Basic   29,185     24,947  
 
Diluted   30,406     25,241  
 
Actual shares outstanding (a)   29,548     25,538  
 
Notes:
(a) Includes 427,290 and 688,550 of RSAs, respectively.
See GAAP to non-GAAP reconciliation on page 11.
 
       
Table IV
 
GAMCO INVESTORS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
 
For the Nine Months Ended
September 30,
2016 2015
 
Investment advisory and incentive fees $ 219,594 $ 251,269
Distribution fees and other income   33,456     39,390  
Total revenues 253,050 290,659
 
Compensation costs 62,130 109,177
Distribution costs 32,786 40,093
Other operating expenses   14,993     14,157  
Total expenses 109,909 163,427
 
Operating income before management fee 143,141 127,232
 
Investment income 1,622 1,804
Interest expense   (9,729 )   (5,575 )
Other expense, net   (8,107 )   (3,771 )
 
Income before management fee and income taxes 135,034 123,461
Management fee expense   3,376     12,385  
Income before income taxes 131,658 111,076
Income tax expense   47,229     41,702  
Income from continuing operations 84,429 69,374
Loss from discontinued operations, net of taxes   -     (5,528 )
Net income attributable to GAMCO Investors, Inc. $ 84,429   $ 63,846  
 
Net income/(loss) per share attributable to GAMCO Investors, Inc.:
Basic - Continuing operations $ 2.89 $ 2.77
Basic - Discontinued operations   -     (0.22 )
Basic - Total $ 2.89   $ 2.55  
 
Diluted - Continuing operations $ 2.85 $ 2.74
Diluted - Discontinued operations   -     (0.23 )
Diluted - Total $ 2.85   $ 2.51  
 
Weighted average shares outstanding:
Basic   29,222     25,047  
 
Diluted   29,811     25,337  
 
Actual shares outstanding (a)   29,548     25,538  
 
Notes:
(a) Includes 427,290 and 688,550 of RSAs, respectively.
See GAAP to non-GAAP reconciliation on page 11.
 
                     
Table V
 
GAMCO INVESTORS, INC.
UNAUDITED QUARTERLY CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
 
2016 2015
1st 2nd 3rd 1st 2nd 3rd 4th
Quarter Quarter Quarter YTD Quarter Quarter Quarter Quarter Full Year
Income Statement Data:
 
Revenues $ 81,385 $ 83,944 $ 87,721 $ 253,050 $ 99,806 $ 98,693 $ 92,160 $ 90,317 $ 380,976
 
Expenses   35,363     36,064     38,482     109,909     57,081     55,518     50,828     54,097     217,524  
 
Operating income before
management fee 46,022 47,880 49,239 143,141 42,725 43,175 41,332 36,220 163,452
 
Investment income 591 605 426 1,622 541 638 625 4,304 6,108
Interest expense (3,406 ) (3,168 ) (3,155 ) (9,729 ) (1,905 ) (1,855 ) (1,815 ) (3,061 ) (8,636 )
Shareholder-designated contribution   -     -     -     -     -     -     -     (6,396 )   (6,396 )
Other expense, net (2,815 ) (2,563 ) (2,729 ) (8,107 ) (1,364 ) (1,217 ) (1,190 ) (5,153 ) (8,924 )
 
Income before management
fee and income taxes 43,207 45,317 46,510 135,034 41,361 41,958 40,142 31,067 154,528
Management fee expense   1,080     1,133     1,163     3,376     4,135     4,194     4,056     3,118     15,503  
Income before income taxes 42,127 44,184 45,347 131,658 37,226 37,764 36,086 27,949 139,025
Income tax expense   16,102     16,641     14,486     47,229     14,078     13,989     13,635     10,024     51,726  
Income from continuing operations 26,025 27,543 30,861 84,429 23,148 23,775 22,451 17,925 87,299
Income/(loss) from discontinued
operations, net of taxes   -     -     -     -     1,628     326     (7,482 )   1,641     (3,887 )
Net income attributable to
GAMCO Investors, Inc. $ 26,025   $ 27,543   $ 30,861   $ 84,429   $ 24,776   $ 24,101   $ 14,969   $ 19,566   $ 83,412  
 
Net income per share
attributable to GAMCO
Investors, Inc.:
Basic - Continuing operations $ 0.89 $ 0.94 $ 1.06 $ 2.89 $ 0.92 $ 0.95 $ 0.90 $ 0.68 $ 3.43
Basic - Discontinued operations   -     -     -     -     0.07     0.01     (0.30 )   0.06     (0.15 )
Basic - Total $ 0.89   $ 0.94   $ 1.06   $ 2.89   $ 0.99   $ 0.96   $ 0.60   $ 0.74   $ 3.28  
 
Diluted - Continuing operations $ 0.88 $ 0.93 $ 1.03 $ 2.85 $ 0.91 $ 0.94 $ 0.89 $ 0.67 $ 3.40
Diluted - Discontinued operations   -     -     -     -     0.06     0.01     (0.30 )   0.06     (0.15 )
Diluted - Total $ 0.88   $ 0.93   $ 1.03   $ 2.85   $ 0.97   $ 0.95   $ 0.59   $ 0.73   $ 3.24  
 
Weighted average shares outstanding:
Basic   29,247     29,234     29,185     29,222     25,132     25,065     24,947     26,547     25,425  
 
Diluted   29,684     29,522     30,406     29,811     25,414     25,358     25,241     26,813     25,711  
Reconciliation of non-GAAP
financial measures to GAAP:
Operating income before
management fee 46,022 47,880 49,239 143,141 42,725 43,175 41,332 36,220 163,452
Deduct: management fee expense   1,080     1,133     1,163     3,376     4,135     4,194     4,056     3,118     15,503  
Operating income $ 44,942   $ 46,747   $ 48,076   $ 139,765   $ 38,590   $ 38,981   $ 37,276   $ 33,102   $ 147,949  
 
Operating margin before
management fee   56.5 %   57.0 %   56.1 %   56.6 %   42.8 %   43.7 %   44.8 %   40.1 %   42.9 %
Operating margin after
management fee   55.2 %   55.7 %   54.8 %   55.2 %   38.7 %   39.5 %   40.4 %   36.7 %   38.8 %
 
Table VI          
 
GAMCO INVESTORS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
 
September 30, December 31, September 30,
2016 2015 2015
 
ASSETS
 
Cash and cash equivalents $ 33,852 $ 13,719 $ 62,561
Investments 32,889 32,979 34,098
Receivable from brokers 344 1,091 1,157
Other receivables 32,429 37,252 55,577
Income tax receivable 10,634 6,787 2,409
Other assets 11,120 12,071 9,791
Assets of discontinued operations   -     -     706,523
 
Total assets $ 121,268   $ 103,899   $ 872,116
 
LIABILITIES AND EQUITY
 
Payable to brokers $ 10,203 $ 12 $ 533
Income taxes payable and deferred tax liabilities 164 4,823 5,963
Compensation payable 31,469 24,426 83,700
Securities sold short, not yet purchased - 129 -
Accrued expenses and other liabilities 44,574 41,739 37,811
Liabilities of discontinued operations   -     -     66,614
Sub-total 86,410 71,129 194,621
 
5.875% Senior notes (due June 1, 2021) 24,115 24,097 99,447
4.5% Convertible note (due August 15, 2021) 109,826 - -
4% PIK note (due November 30, 2020) 100,000 250,000 -
Loan from GGCP (due December 28, 2016) - 35,000 -
0% Subordinated Debentures (due December 31, 2015) (a)   -     -     6,750
Total debt   233,941     309,097     106,197
Total liabilities 320,351 380,226 300,818
 
Redeemable noncontrolling interests of discontinued operations - - 6,018
 
GAMCO Investors, Inc.'s stockholders' equity (deficit) (199,083 ) (276,327 ) 562,645
Noncontrolling interests   -     -     2,635
Total equity (deficit)   (199,083 )   (276,327 )   565,280
 
Total liabilities and equity $ 121,268   $ 103,899   $ 872,116
 
(a) The 0% Subordinated Debentures due December 31, 2015 have a face value of $0.0 million, $0.0 million and $6.9 million, respectively.
 

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.

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