GAMCO Reports 3rd Quarter 2009 Fully Diluted Earnings Per Share of $0.53
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AUM at September 30, 2009 Reached $24.5 billion up 14.5% from June 30, 2009
RYE, N.Y.--(BUSINESS WIRE)-- GAMCO Investors, Inc. (GAMCO) (NYSE: GBL) announced third quarter 2009 earnings of $0.53 per fully diluted share versus $0.43 per fully diluted share in the third quarter 2008. Net income was $14.7 million in the third quarter 2009 compared to $12.0 million in the third quarter 2008. On a sequential basis, Assets Under Management (AUM) were $24.5 billion as of September 30, 2009, 14.5% higher than June 30, 2009 AUM of $21.4 billion. Importantly, Institutional and Private Wealth Management AUM increased 17.0% to $10.3 billion at September 30, 2009 from $8.8 billion at June 30, 2009.
For the nine months ended September 30, 2009, earnings were $1.32 per fully diluted share equal to the $1.32 per fully diluted share in 2008. Net income was $36.2 million for the nine months ended September 30, 2009 compared to $36.9 million in the prior year's period.
The Company had adjusted cash and investments, net of debt, noncontrolling interest and mandatorily redeemable shares of $496.4 million or $17.97 per share at September 30, 2009. Book value was $482.0 million or $17.44 per share at September 30, 2009 which excludes noncontrolling interests of $3.9 million.
Investment Performance
Relative long-term investment performance remains strong. At least 68% of all our mutual funds performed in the top half of their Lipper categories on a one, three, five and ten-year total return basis as of September 30, 2009. See Lipper chart on page 16. The following funds that we distribute have a 4 or 5-star three year Morningstar RatingTM. See Morningstar chart that follows.
-- The Gabelli ABC Fund -- The GAMCO Westwood Mighty MitesSM
Fund
-- " Asset Fund -- " Global Telecommunications Fund
-- " Blue Chip Value Fund -- " Mathers Fund
-- " Equity Income Fund -- " Westwood Balanced Fund
-- " Small Cap Growth Fund -- " Westwood Equity Fund
-- " Utilities Fund
-- " Enterprise Mergers and Acquisitions
Fund
-- " Woodland Small Cap Value Fund
Gabelli Funds Morningstar Ratings Based on Risk Adjusted returns as of September 30, 2009 for
funds that we distribute
Overall 3 Year Rating 5 Year Rating 10 Year
Rating Rating
Morningstar # of # of # of # of
FUND Stars Funds Stars Funds Stars Funds Stars Funds
Category
Gabelli ABC AAA Mid-Cap Blend Five 387 Five 387 Five 306 Four 146
Stars Stars Stars Stars
Gabelli Asset AAA Mid-Cap Blend Four 387 Four 387 Four 306 Three 146
Stars Stars Stars Stars
Gabelli Blue Chip Large Value Three 1133 Four 1133 Four 933 Two 453
Value AAA Stars Stars Stars Stars
Gabelli Equity Large Value Five 1133 Five 1133 Five 933 Five 453
Income AAA Stars Stars Stars Stars
Gabelli Small Cap Small Blend Five 560 Five 560 Five 452 Four 234
Growth AAA Stars Stars Stars Stars
Gabelli SRI Green Mid-Cap Blend n/a n/a n/a n/a n/a n/a n/a n/a
AAA
Gabelli Utilities Specialty - Five 95 Four 95 Four 80 Five 52
AAA Utilities Stars Stars Stars Stars
Gabelli Value A Mid-Cap Blend Two 387 Two 387 Two 306 Two 146
Stars Stars Stars Stars
Gabelli Woodland Three Four Three
Small Cap Value Small Blend Stars 560 Stars 560 Stars 452 n/a 234
AAA
GAMCO Global One One One One
Convertible Secs Convertibles Star 66 Star 66 Star 61 Star 44
AAA
GAMCO Global World Stock Two 536 Three 536 Three 440 One 253
Growth AAA Stars Stars Stars Star
GAMCO Global World Stock Three 536 Three 536 Three 440 Three 253
Opportunity AAA Stars Stars Stars Stars
GAMCO Global Specialty - Four Four Four Three
Telecommunications Communications Stars 33 Stars 33 Stars 32 Stars 13
AAA
GAMCO Gold AAA Specialty - Three 61 Three 61 Three 61 Three 36
Precious Metals Stars Stars Stars Stars
GAMCO Growth AAA Large Growth Three 1515 Three 1515 Three 1255 Two 653
Stars Stars Stars Stars
GAMCO Foreign Large Three Three Three Three
International Growth Stars 202 Stars 202 Stars 153 Stars 81
Growth AAA
GAMCO Mathers Conservative Two 499 Four 499 Two 332 One 139
Allocation Stars Stars Stars Star
GAMCO Westwood Moderate Four 956 Four 956 Four 795 Four 455
Balanced AAA(a) Allocation Stars Stars Stars Stars
GAMCO Westwood Large Value Four 1133 Four 1133 Four 933 Four 453
Equity AAA(a) Stars Stars Stars Stars
GAMCO Westwood Moderate Two 956 One 956 Two 795 Five 455
Income AAA(a) Allocation Stars Star Stars Stars
GAMCO Westwood Intermediate-Term Three Three Three Three
Intermediate AAA Bond Stars 954 Stars 954 Stars 836 Stars 480
(a)
GAMCO Westwood Five Five Five Five
Mighty Mites AAA Small Blend Stars 560 Stars 560 Stars 452 Stars 234
(a)
GAMCO Westwood Two Three Four One
SmallCap Equity Small Blend Stars 560 Stars 560 Stars 452 Star 234
AAA(a)
Gabelli Enterprise Four Four Four
Mergers & Mid-Cap Blend Stars 387 Stars 387 Stars 306 n/a 146
Acquisitions Y
Comstock Capital Bear Market n/a n/a n/a n/a n/a n/a n/a n/a
Value AAA
Percent of Rated
funds rated 4 or 5 43.48% 56.52% 52.17% 38.10%
stars
The Overall Morningstar Rating(TM) is derived from a weighted average of the performance figures associated with its three, five and ten year (if applicable) Morningstar Rating metrics. Data presented reflects past performance, which is no guarantee of future results. Ratings are for Class AAA, A or Y shares only, other classes may have different performance characteristics. For each fund with at least a three year history, Morningstar calculates a Morningstar Rating based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund's monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of the funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) Strong relative performance is not indicative of positive fund returns. 2008 absolute performance for most funds was negative. (C) 2009 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Investors should consider the investment objectives, risks, sales charges and expenses of the fund carefully before investing. The prospectus contains more information about this and other matters. The prospectus should be read carefully before investing. Distributed by Gabelli & Company, One Corporate Center, Rye, NY 10580 Call 1-800-GABELLI (422-3554) for a prospectus.
The inception date for the Gabelli SRI Green Fund was June 1, 2007. The inception date for the Gabelli Woodland Small Cap Value Fund was December 31, 2002. The inception date for the Gabelli Enterprise Mergers & Acquisitions Fund was February 28, 2001. The inception date for the Comstock Capital Value Fund was October 10, 1985.
(a) Managed by Teton Advisors, Inc. not Gabelli Funds, LLC.
Assets Under Management - Up 14.5% from June 30, 2009
Assets Under Management (AUM) were $24.5 billion as of September 30, 2009, 14.5% higher than June 30, 2009 AUM of $21.4 billion but 2.8% below September 30, 2008 AUM of $25.2 billion. Equity AUM were $22.8 billion on September 30, 2009, 16.3% above the June 30, 2009 equity AUM of $19.6 billion and 5.8% below the $24.2 billion on September 30, 2008. Highlights are as follows:
-- Our institutional and private wealth management business ended the
quarter with $10.3 billion in separately managed accounts, up 17.0% from
the June 30, 2009 level of $8.8 billion but 5.5% lower than the $10.9
billion on September 30, 2008.
-- Our closed-end funds had AUM of $4.4 billion on September 30, 2009,
rising 15.8% from the $3.8 billion on June 30, 2009 but 10.2% below the
$4.9 billion on September 30, 2008.
-- Our open-end equity funds AUM were $7.9 billion on September 30, 2009,
17.9% more than the $6.7 billion on June 30, 2009 nearly matching the
$8.0 billion on September 30, 2008.
-- AUM in The Gabelli U.S. Treasury Money Market Fund, our 100% U.S.
Treasury money market fund, ranked #2 for the first nine months of 2009
and #2 for the last twelve months ended September 30, 2009 by Lipper
based on total return among 74 U.S. Treasury Money Market Funds, was
down slightly to $1.6 billion at September 30, 2009 from $1.8 billion on
June 30, 2009 and was 60.0% higher than the September 30, 2008 AUM of
$1.0 billion.
-- Our investment partnerships AUM were $291 million on September 30, 2009
versus $266 million on June 30, 2009 and $340 million on September 30,
2008.
-- We have the opportunity to earn base fees and incentive fees for certain
institutional client assets, assets attributable to preferred issues for
our closed-end funds, our Gabelli Global Deal Fund (NYSE: GDL) and
investment partnership assets. As of September 30, 2009, assets with
incentive based fees were $2.7 billion, in line with the $2.7 billion on
June 30, 2009 and 12.9% below the $3.1 billion on September 30, 2008.
The Gabelli U.S. Treasury Money Market Fund ranked #2 out of 74 funds for the third quarter of 2009, #2 out of 74 funds for the one-year period, #2 out of 65 funds for the five-year period and #2 out of 44 funds for the ten-year period. The rankings are based on total return over the length of the period. Past performance is not indicative of future results. Investment returns and yield will fluctuate. Income will be subject to federal income tax. An investment in the Fund is not guaranteed nor insured by the Federal Deposit Insurance Corporation or any government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. During the respective periods, the Adviser has waived certain fees and reimbursed expenses. Without such reimbursements or waivers return and rankings would have been lower.
Investors should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. The prospectus, which contains more complete information about this and other matters, should be read carefully before investing. You can obtain a prospectus by calling Gabelli & Company, Inc. at 1-800-GABELLI (1-800-422-3554), or by visiting http://www.gabelli.com. Distributed by Gabelli & Company, Inc. One Corporate Center, Rye, NY 10580
Revenues
For the Quarter
Investment advisory fees for the third quarter 2009 were $41.0 million, a decline of 21.6% from $52.3 million in the 2008 third quarter (However, third quarter 2009 revenues were 13.9% higher than second quarter 2009):
-- Open-end fund revenues were $19.1 million versus $23.3 million in third
quarter 2008, a drop of 18.0% primarily due to lower average AUM.
-- Our closed-end fund revenues fell 27.6% to $7.6 million in the third
quarter 2009 from $10.5 million in 2008 on lower AUM.
-- Institutional and high net worth separate account revenues, which are
based primarily upon prior quarter-end AUM, decreased 23.0% to $13.7
million from $17.8 million in third quarter 2008.
-- Investment partnership revenues were $0.5 million, a decrease of $0.2
million or 28.6% from $0.7 million in 2008.
Our institutional research services subsidiary achieved revenues of $4.6 million in the third quarter 2009, up 12.2% from the third quarter 2008 amount of $4.1 million.
Open-end fund distribution fees and other income were $6.0 million for the third quarter 2009, a decrease of $0.6 million, or 9.1% from the prior year quarter of $6.6 million. The main driver of this decrease was reduced quarterly average assets in our open-end equity funds that generate distribution fees.
For the Nine Months
Investment advisory fees for the nine months ended September 30, 2009 were $112.1 million, a decline of 31.8% from $164.3 million in the 2008 period:
-- Open-end fund revenues were $51.7 million versus $71.8 million for the
nine months ended September 30, 2008, a drop of 28.0% primarily due to
lower average AUM.
-- Our closed-end fund revenues fell 41.0% to $20.0 million for the nine
months ended September 30, 2009 from $33.9 million in 2008 on lower AUM.
-- Institutional and high net worth separate account revenues, which are
based primarily upon prior quarter-end AUM, decreased 31.0% to $38.9
million from $56.4 million for the nine months ended September 30, 2008.
-- Investment partnership revenues were $1.5 million, a decrease of $0.7
million or 31.8% from $2.2 million in 2008.
Our institutional research services subsidiary achieved revenues of $12.2 million for the nine months ended September 30, 2009, up 10.9% from the nine months ended September 30, 2008 amount of $11.0 million reflecting an expanded client base attributable to increased sales and trade execution as well as the success of our research product offerings.
Open-end fund distribution fees and other income were $15.8 million for the nine months ended September 30, 2009, a decrease of $3.9 million, or 19.8% from the prior year nine month period of $19.7 million. The main driver of this decrease was lower average assets in our open-end equity funds that generate distribution fees.
Operating Income and Margin
Operating income before management fee was $19.5 million in the third quarter 2009, 15.2% lower than the $23.0 million in the third quarter 2008. For the third quarter 2009, the operating margin before management fee increased to 37.8%, versus 36.5% in the third quarter of 2008 and 33.1% in the second quarter of 2009. Attention to administrative expenses contributed to the improved margin.
Operating income before management fee was $47.3 million for the nine months ended September 30, 2009, 34.3% lower than the $72.0 million in the comparable 2008 period. For the nine months ended September 30, 2009, the operating margin before management fee was 33.8%, versus 37.0% for the nine months ended September 30, 2008.
At September 30, 2009, we had unearned incentive fee revenues of $16.7 million on the assets with incentive based fees representing $0.20 per diluted share after direct expenses (compensation) and taxes. These fees, which vary with the market value of the related AUM, are not recorded as revenues until the contract period has ended, which for the majority of these arrangements is December 31, 2009.
Other Income / (Expense)
Other income/(expense) (net of interest expense) was income of $7.0 million in the third quarter 2009 versus expense of $5.5 million in the prior year's third quarter on improved investment income.
Other income/(expense) (net of interest expense) was income of $15.7 million in the first nine months of 2009 versus expense of $9.2 million in the prior year's period on improved investment income.
Income Taxes
The effective tax rate for the third quarter 2009 was 37.4%, compared to the 2008 quarter's effective rate of 24.4%. The prior quarter's reduced rate was due to a reduction of income tax reserves.
The effective tax rate for the nine months ended September 30, 2009 was 35.3%, compared with the effective rate for the 2008 comparable period of 35.1%.
Investment Highlights
-- The Gabelli ABC Fund Class AAA shares (GABCX) and the Gabelli Enterprise
Mergers and Acquisitions Fund Class A shares (EMAAX) were named in a
BusinessWeek article on July 30, 2009 highlighting that an investment
strategy focused on deal making is coming back.
-- The Gabelli & Company "Focus Five", a selection of five equity
securities every quarter for clients, including portfolio managers at
hedge funds and institutional investment firms, was the focus of a
BusinessWeek article on August 11, 2009. The article highlights how
savvy stock picking through research analysis still works.
-- Howard Ward, team leader of the GAMCO Growth strategy and the portfolio
manager of The GAMCO Growth Fund (GABGX) since 1994, was highlighted in
several magazines noting his experience in providing alpha in up
markets.
-- Morningstar rated 43% of the Class AAA share open-end funds that we
distribute five or four stars overall as of September 30, 2009.
-- On August 21, 2009, a Wall Street Journal SmartMoney Fund Screen report
titled 13 Small-Cap Funds on a Tear featured The Gabelli Small Cap
Growth Fund Class AAA shares (GABSX) among thirteen small-cap equity
funds using the following criteria: the funds must first be beating the
2009 return of the S&P 500... performance track records during the
trailing three and five year periods that put each fund in the top 10%
of their respective categories...do not charge a sales load... a minimum
investment under $5,000... open to new money... charge less than a 1.5%
expense ratio. Through September 30, 2009 the 1, 5 and 10 year total
return for The Gabelli Small Cap Growth Fund Class AAA shares was
-1.70%, 6.25% and 9.08%, respectively. The current expense ratio for The
Gabelli Small Cap Growth Fund is 1.45% for the Class AAA shares.
Past performance is no guarantee of future results. The average annual returns and total returns shown above are historical and reflect changes in share price, reinvested dividends and capital gains and are net of expenses. Investment returns and the principal value of an investment will fluctuate. When shares are redeemed, they may be worth more or less than their original cost. As a non-diversified fund, the Gabelli ABC Fund may have a larger portion of its assets in a single issuer than a more diversified fund. Because the fund invests in announced mergers and acquisitions, the Fund is subject to the risk that the announced merger or acquisition may not be completed, may be negotiated at a less attractive price, or may not close on the expected date. Securities of smaller companies present greater risk than securities of larger, more established companies. The stocks of smaller companies may trade less frequently and experience more abrupt price movements than stocks of larger companies. Stocks are subject to market, economic and business risks that cause their prices to fluctuate. Call 1-800-GABELLI for performance as of the most recent month-end. Investors should consider the investment objectives, risks, sales charges and expense of the fund carefully before investing. The prospectus contains more complete information about this and other matters. The prospectus should be read carefully before investing. Distributed by Gabelli & Company, Inc. The performance results are for the Class AAA shares, other share classes have different performance characteristics. The S&P 500 is an unmanaged index of stock market performance. Although the Funds noted had strong relative performance, many of the funds had negative absolute performance over the past twelve months.
Business Highlights
-- In September, the Company announced that Kevin V. Dreyer has been named
Associate Portfolio Manager to The Gabelli Asset Fund, the first
open-end fund organized by Gabelli Funds, LLC in March 1986. Mr. Dreyer
joins Mario J. Gabelli, who has been the Fund's sole portfolio manager
since the inception of the Fund, to manage a portion of the assets of
the Fund.
-- In September, Gabelli & Company, Inc. held its 15th Annual Aircraft
Supplier Conference featuring management presentations from several
leading aerospace and defense companies, with an emphasis on industry
dynamics, new technologies, and company fundamentals.
-- GAMCO, under the aegis of Bruce C. Greenwald, the Heilbrunn Professor of
Finance and Asset Management at Columbia Gradudate School of Business,
along with the Heilbrunn Center for Graham and Dodd Investing at
Columbia University, hosted the 19th Annual Graham and Dodd Investing
Seminar on October 7, 2009 in New York which was telecast to London and
Hong Kong and staffed by our Gabelli international offices.
Other Financial Highlights
Statement of Financial Condition - Liquidity and Flexibility
Our liquid balance sheet provides access to financial markets and the flexibility to opportunistically add operating resources to our firm, repurchase our stock and consider strategic initiatives, including acquisitions and lift-outs.
The Company's shelf registration provides GAMCO with the flexibility of issuing any combination of senior and subordinate debt securities, convertible debt securities and equity securities (including common and preferred securities) up to a total amount of $400 million.
We ended the quarter with approximately $702.2 million in cash and investments versus $677.9 million at June 30, 2009. This included approximately $80.8 million of our investments in The Gabelli Dividend & Income Trust, The Gabelli Global Deal Fund and Westwood Holdings Group, as well as other investments of $10.7 million, all classified as available for sale securities.
Our debt at September 30, 2009 consisted of $99 million of 5.5% senior notes due May 2013, a $40 million 6% convertible note due August 2011 and a $60 million 6.5% convertible note due October 2018. We had adjusted cash and investments in securities, net of debt, noncontrolling interest and mandatorily redeemable shares, of $17.97 per share on September 30, 2009 compared with $17.03 per share on June 30, 2009. We caution that this metric, while correct from a mathematical point of view, is not always the same as investors would view cash-on-hand.
Book value was $482.0 million or $17.44 per share on September 30, 2009 compared to $471.1 million or $16.98 per share on June 30, 2009.
Shareholder Compensation
Dividends
On August 4, 2009, our Board of Directors declared a quarterly dividend of $.03 per share to all of its Class A and Class B shareholders, payable on September 29, 2009 to shareholders of record on September 15, 2009. We returned $0.8 million and $28.7 million in dividends during the third quarter of 2009 and 2008, respectively, and $2.8 million and $30.4 million in dividends during the first nine months of 2009 and 2008, respectively.
GAMCO announced that on November 6, 2009 its Board of Directors declared a quarterly dividend of $.03 per share to all of its Class A and Class B shareholders, payable on December 29, 2009 to shareholders of record on December 15, 2009.
Stockholders' Equity and Stock Repurchase
In the third quarter of 2009, the Company repurchased 115,900 of the Company's shares at an average price of $45.14. During the first nine months of 2009, the Company has repurchased $5.4 million, representing 119,400 shares, at an average price of $45.24 per share.
Since our IPO of six million shares at a price of $17.50 per share in 1999, the Company has repurchased 6,171,983 shares at an average price of $39.88 per share for an investment of $246 million and has paid cumulative dividends of $148.2 million.
Shares outstanding on September 30, 2009 were 27.6 million, slightly lower than the June 30, 2009 shares of 27.7 million and 0.3 million shares, or 1.1%, below the 27.9 million shares outstanding on September 30, 2008. The decline in the outstanding shares from September 2008 to September 2009 primarily reflects open market repurchases of 316,500 shares. Fully diluted shares outstanding for the third quarter of 2009 were 27.5 million, largely unchanged from the second quarter 2009's level of 27.5 million and third quarter 2008's level of 27.6 million.
NOTES ON NON-GAAP FINANCIAL MEASURES
A.
9/30/09 12/31/08 9/30/08
Cash and cash equivalents 463.4 $ 338.3 $ 165.1
Investments (trading) 135.3 209.5 328.8
Total cash and investments (trading) 598.7 547.8 493.9
Net amounts receivable from/(payable to) brokers 12.0 14.6 35.4
Adjusted cash and investments (trading) 610.7 562.4 529.3
Investments (available for sale) 91.5 76.1 116.9
Total adjusted cash and investments $ 702.2 $ 638.5 $ 646.2
We believe adjusted cash and investments is a more useful measure of the company's liquidity for analytical purposes.
Net amounts receivable from/(payable to) brokers reflect cash and cash equivalents held with brokers and cash payable for securities purchased and recorded on a trade date basis for which settlement occurs subsequent to period-end.
Operating income before management fee expense is used by management for
purposes of evaluating its business operations. We believe this measure is
useful in illustrating the operating results of GAMCO Investors, Inc. (the
B. "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 VI.
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 (millions):
Table I: Fund Flows - 3rdQuarter 2009 (millions)
Closed-end
Fund
June 30, Net Cash Market September
2009 distributions, Appreciation 30, 2009
Flows (a)
net of
reinvestments
Equities:
Open-end $ 6,684 $ - $ 188 $ 1,034 $ 7,906
Funds
Closed-end 3,822 (70 ) 66 551 4,369
Funds
Institutional
& PWM - 7,332 - (107 ) 1,266 8,491
direct
Institutional
& PWM - 1,476 - (7 ) 308 1,777
sub-advisory
Investment 266 - 13 12 291
Partnerships
Total 19,580 (70 ) 153 3,171 22,834
Equities
Fixed Income:
Money-Market 1,765 - (150 ) 1 1,616
Fund
Institutional 21 - 5 - 26
& PWM
Total Fixed 1,786 - (145 ) 1 1,642
Income
Total Assets
Under $ 21,366 $ (70 ) $ 8 $ 3,172 $ 24,476
Management
(a) Includes $66 million of shares issued for closed-end funds.
Table II:
September 30, September 30, %
Equities: 2008 2009 Inc.(Dec.)
Open-end Funds $8,015 $7,906 (1.4 %)
Closed-end Funds 4,869 4,369 (10.3 )
Institutional & PWM - direct 8,964 8,491 (5.3 )
Institutional & PWM - sub-advisory 1,964 1,777 (9.5 )
Investment Partnerships 340 291 (14.4 )
Total Equities 24,152 22,834 (5.5 )
Fixed Income:
Money-Market Fund 1,003 1,616 61.1
Institutional & PWM 19 26 36.8
Total Fixed Income 1,022 1,642 60.7
Total Assets Under Management $ 25,174 $ 24,476 (2.8 %)
Note: Teton's AUM at September 30, 2008 were $418 million and have been excluded from Table II.
Table III: Assets Under Management By Quarter (millions)
% Increase/
(decrease) from
Equities: 9/08 12/08 3/09 6/09 9/09 9/08 6/09
Open-end $ 8,015 $ 6,139 $ 5,627 $ 6,684 $ 7,906 (1.4 %) 18.3 %
Funds
Closed-end 4,869 3,792 3,359 3,822 4,369 (10.3 ) 14.3
Funds
Institutional
& PWM - 8,964 6,861 6,227 7,332 8,491 (5.3 ) 15.8
direct
Institutional
& PWM - 1,964 1,585 1,202 1,476 1,777 (9.5 ) 20.4
sub-advisory
Investment 340 295 265 266 291 (14.4 ) 9.4
Partnerships
Total 24,152 18,672 16,680 19,580 22,834 (5.5 ) 16.6
Equities
Fixed Income:
Money-Market 1,003 1,507 1,794 1,765 1,616 61.1 (8.4 )
Fund
Institutional 19 22 21 21 26 36.8 23.8
& PWM
Total Fixed 1,022 1,529 1,815 1,786 1,642 60.7 (8.1 )
Income
Total Assets
Under $ 25,174 $ 20,201 $ 18,495 $ 21,366 $ 24,476 (2.8 %) 14.6 %
Management
Note: Teton's AUM at September 30, 2008 and December 31, 2008 were $418 million and $450 million, respectively, and have been excluded from Table III.
Table IV
GAMCO INVESTORS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
For the Three Months Ended September 30,
2009 2008 % Inc. (Dec.)
Investment advisory and incentive $ 40,957 $ 52,297 (21.7 %)
fees
Institutional research services 4,588 4,098 12.0
Distribution fees and other income 6,037 6,585 (8.3 )
Total revenues 51,582 62,980 (18.1 )
Compensation costs 21,590 26,233 (17.7 )
Distribution costs 6,089 6,658 (8.5 )
Other operating expenses 4,405 7,076 (37.7 )
Total expenses 32,084 39,967 (19.7 )
Operating income before management 19,498 23,013 (15.3 )
fee
Investment income 10,257 (3,446 ) n/m
Interest expense (3,296 ) (2,091 ) 57.6
Other income / (expense), net 6,961 (5,537 ) n/m
Income before management fee and 26,459 17,476 51.4
income taxes
Management fee expense 2,638 1,740 51.6
Income before income taxes 23,821 15,736 51.4
Income taxes expense 8,913 3,837 132.3
Net income 14,908 11,899 25.3
Net income / (loss) attributable to 257 (86 ) n/m
the noncontrolling interests
Net income attributable to GAMCO $ 14,651 $ 11,985 22.2
Investors, Inc.
Net income attributable to GAMCO
Investors, Inc. per share:
Basic $ 0.54 $ 0.43 25.6
Diluted $ 0.53 $ 0.43 23.3
Weighted average shares
outstanding:
Basic 27,366 (a) 27,602 (0.9 )
Diluted 27,505 27,647 (0.5 %)
Notes:
(a) Shares outstanding at September 30, 2009 were 27,630,264, including 361,600
RSAs.
See GAAP to Non-GAAP reconciliation at page 14.
Table V
GAMCO INVESTORS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
For the Nine Months Ended September 30,
2009 2008 % Inc. (Dec.)
Investment advisory and incentive $ 112,145 $ 164,269 (31.7 %)
fees
Institutional research services 12,187 11,018 10.6
Distribution fees and other income 15,780 19,665 (19.8 )
Total revenues 140,112 194,952 (28.1 )
Compensation costs 62,056 83,013 (25.2 )
Distribution costs 17,094 19,691 (13.2 )
Other operating expenses 13,648 20,204 (32.4 )
Total expenses 92,798 122,908 (24.5 )
Operating income before management 47,314 72,044 (34.3 )
fee
Investment income / (loss) 25,658 (2,855 ) n/m
Interest expense (9,965 ) (6,295 ) 58.3
Other income / (expense), net 15,693 (9,150 ) n/m
Income before management fee and 63,007 62,894 0.2
income taxes
Management fee expense 6,291 6,307 (0.3 )
Income before income taxes 56,716 56,587 0.2
Income taxes expense 20,034 19,882 0.8
Net income 36,682 36,705 (0.1 )
Net income / (loss) attributable 503 (225 ) n/m
to the noncontrolling interests
Net income attributable to GAMCO $ 36,179 $ 36,930 (2.0 )
Investors, Inc.
Net income attributable to GAMCO
Investors, Inc. per share:
Basic $ 1.32 $ 1.32 -
Diluted $ 1.32 $ 1.32 -
Weighted average shares
outstanding:
Basic 27,376 (a) 27,930 (2.0 )
Diluted 27,464 27,973 (1.8 %)
Notes:
(a) Shares outstanding at September 30, 2009 were 27,630,264, including 361,600
RSAs.
See GAAP to Non-GAAP reconciliation at page 14.
Table VI
GAMCO INVESTORS, INC.
UNAUDITED QUARTERLY CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
2009 2008
1st 2nd 3rd YTD 1st 2nd 3rd YTD 4th
Full-Year
Quarter Quarter Quarter 2009 Quarter Quarter Quarter 2008 Quarter
Income
Statement
Data:
Revenues $ 43,359 $ 45,171 $ 51,582 $ 140,112 $ 66,548 $ 65,424 $ 62,980 $ 194,952 $ 50,060 $245,012
Expenses 30,508 30,206 32,084 92,798 41,310 41,631 39,967 122,908 33,001 155,909
Operating
income before 12,851 14,965 19,498 47,314 25,238 23,793 23,013 72,044 17,059 89,103
management fee
Investment
income / 3,870 11,531 10,257 25,658 (3,615 ) 4,206 (3,446 ) (2,855 ) (36,308 ) (39,163)
(loss)
Interest (3,234 ) (3,435 ) (3,296 ) (9,965 ) (2,017 ) (2,187 ) (2,091 ) (6,295 ) (3,146 ) (9,441)
expense
Other income / 636 8,096 6,961 15,693 (5,632 ) 2,019 (5,537 ) (9,150 ) (39,454 ) (48,604)
(expense), net
Income/(loss)
before manage-
13,487 23,061 26,459 63,007 19,606 25,812 17,476 62,894 (22,395 ) 40,499
ment fee and
income taxes
Management fee
1,349 2,304 2,638 6,291 1,981 2,586 1,740 6,307 (2,221 ) 4,086
expense/
(income)
Income/(loss)
before income 12,138 20,757 23,821 56,716 17,625 23,226 15,736 56,587 (20,174 ) 36,413
taxes
Income tax
expense/ 3,988 7,133 8,913 20,034 7,326 8,719 3,837 19,882 (7,559 ) 12,323
(benefit)
Net income/ 8,150 13,624 14,908 36,682 10,299 14,507 11,899 36,705 (12,615 ) 24,090
(loss)
Net income/
(loss)
attributable
to the
noncontrolling (62 ) 308 257 503 (187 ) 48 (86 ) (225 ) (551 ) (776)
interests
Net income/
(loss)
attributable $ 8,212 $ 13,316 $ 14,651 $ 36,179 $ 10,486 $ 14,459 $ 11,985 $ 36,930 $ (12,064 ) $ 24,866
to GAMCO
Investors,
Inc.
Net income/
(loss)
attributable
to
GAMCO
Investors,
Inc. per
share:
Basic $ 0.30 $ 0.49 $ 0.54 $ 1.32 $ 0.37 $ 0.52 $ 0.43 $ 1.32 $ (0.44 ) $ 0.89
Diluted $ 0.30 $ 0.48 $ 0.53 $ 1.32 $ 0.37 $ 0.51 $ 0.43 $ 1.32 $ (0.44 ) $ 0.89
Weighted
average shares
outstanding:
Basic 27,379 27,384 27,366 27,376 28,175 27,948 27,602 27,930 27,472 27,805
Diluted 27,386 27,508 27,505 27,464 28,277 28,743 27,647 27,973 27,482 27,841
Table VI continued
GAMCO INVESTORS, INC.
UNAUDITED QUARTERLY CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
2009 2008
1st 2nd 3rd YTD 1st 2nd 3rd YTD 4th
Full-Year
Quarter Quarter Quarter 2009 Quarter Quarter Quarter 2008 Quarter
Reconciliation
of Non-GAAP
Financial
measures to
GAAP:
Operating
income before 12,851 14,965 19,498 47,314 25,238 23,793 23,013 72,044 17,059 89,103
management fee
Deduct:
management fee 1,349 2,304 2,638 6,291 1,981 2,586 1,740 6,307 (2,221 ) 4,086
expense/
(income)
Operating 11,502 12,661 16,860 41,023 23,257 21,207 21,273 65,737 19,280 85,017
income
Operating
margin before 29.6 % 33.1 % 37.8 % 33.8 % 37.9 % 36.4 % 36.5 % 37.0 % 34.1 % 36.4 %
management fee
Operating
margin after 26.5 % 28.0 % 32.7 % 29.3 % 34.9 % 32.4 % 33.8 % 33.7 % 38.5 % 34.7 %
management fee
Table VII
GAMCO INVESTORS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands, except per share data)
September 30, December 31, September 30,
2009 2008 2008
ASSETS
Cash and cash equivalents (a) $ 463,361 $ 338,330 $ 165,098
Investments (a) 236,567 287,201 452,306
Receivable from brokers 21,991 16,460 37,929
Other receivables 17,775 16,233 21,611
Income tax receivable and deferred 4,538 23,952 4,388
tax assets
Other assets 14,219 15,458 17,867
Total assets $ 758,451 $ 697,634 $ 699,199
LIABILITIES AND STOCKHOLDERS' EQUITY
Payable to brokers $ 10,006 $ 1,857 $ 2,492
Compensation payable 20,974 15,862 28,253
Securities sold short, not yet 9,738 1,677 6,620
purchased
Accrued expenses and other 31,534 30,330 30,885
liabilities
Sub-total 72,252 49,726 68,250
5.5% Senior notes (due May 15, 2013) 99,000 99,000 100,000
6.5% Convertible note (due October 60,000 60,000 -
2, 2018)
6% Convertible note (due August 14, 39,829 39,766 39,746
2011)
Total debt 198,829 198,766 139,746
Total liabilities 271,081 248,492 207,996
Redeemable noncontrolling interest 1,424 4,201 4,333
GAMCO Investors, Inc.'s 481,998 440,153 481,728
stockholders' equity
Noncontrolling interest 3,948 4,788 5,142
Total stockholders' equity 485,946 444,941 486,870
Total liabilities and stockholders' $ 758,451 $ 697,634 $ 699,199
equity
At September 30, 2009 and December 31, 2008, $62.2 million and $0 million
(a) and $2.1 million and $59.9 million are held in escrow for the Cascade Note
and classified as Cash and cash equivalents and Investments, respectively.
GABELLI/GAMCO FUNDS Gabelli Funds Lipper Rankings as of September 30, 2009
1 Yr - 3 Yrs - 5 Yrs - 10 Yrs -
09/30/08-09/30/09 09/30/06-09/30/09 09/30/04-09/30/09 09/30/99-09/30/09
Percentile Rank / Percentile Rank / Percentile Rank / Percentile Rank /
Fund Name Lipper Category
Rank Total Rank Total Rank Total Rank Total
Funds Funds Funds Funds
Gabelli Multi-Cap Core 47 366/785 12 76/641 9 42/489 21 41/197
Asset; AAA Funds
Gabelli Multi-Cap Core
Value Fund; Funds 41 315/785 65 412/641 62 303/489 44 87/197
A
Gabelli Multi-Cap Core 2 12/785 - - - - - -
SRI; AAA Funds
Gabelli Equity Income
Eq:Eq Inc; Funds 18 52/303 17 39/233 13 24/184 11 11/104
AAA
GAMCO Equity Income
Ww:Income; Funds 61 183/303 66 153/233 - - - -
AAA
GAMCO Large-Cap Growth 31 254/830 41 293/717 32 190/598 71 217/307
Growth; AAA Funds
GAMCO Small-Cap Core
Ww:SmCp Eq; Funds 28 207/742 22 134/614 16 79/496 99 254/256
AAA
Gabelli Small-Cap Core
Eq:SC Gro; Funds 25 180/742 9 51/614 10 49/496 21 53/256
AAA
GAMCO Small-Cap Core
Ww:Mhty M; Funds 11 75/742 2 12/614 2 9/496 19 48/256
AAA
Gabelli Small-Cap Core
Eq:Wd SCV; Funds 59 438/742 18 107/614 41 203/496 - -
AAA
GAMCO Global Multi-Cap
Gl:Oppty; Growth 9 8/95 26 17/65 37 19/51 31 11/35
AAA
GAMCO Global Large-Cap
Gl:Growth; Core 32 30/95 11 7/65 27 14/51 84 30/35
AAA
GAMCO Gold; Gold Oriented 39 27/69 38 20/53 36 18/50 24 7/29
AAA Funds
GAMCO Intl International 14 22/160 50 64/127 78 70/89 48 25/52
Gro; AAA Large-Cap Growth
GAMCO Large-Cap Value
Ww:Eqty; Funds 97 524/542 22 101/472 10 36/388 25 45/185
AAA
Gabelli Bl Large-Cap Core
Chp Val; Funds 16 145/907 33 245/761 21 126/628 8 26/368
AAA
Gabelli Specialty
Inv:ABC; Diversified Equity 40 16/40 16 5/32 14 2/14 30 3/9
AAA Funds
GAMCO Specialty
Mathers; Diversified Equity 52 21/40 40 13/32 40 6/14 50 5/9
AAA Funds
Comstock Specialty
Cap Val; A Diversified Equity 57 23/40 19 6/32 80 12/14 70 7/9
Funds
GAMCO Telecommunications
Gl:Telecom; Funds 59 23/38 20 6/29 22 6/27 20 2/9
AAA
GAMCO Convertible
Gl:Convert; Securities Funds 90 63/69 95 56/58 93 52/55 98 41/41
AAA
Gabelli
Utilities; Utility Funds 20 19/98 12 10/85 53 37/70 11 5/45
AAA
GAMCO Mixed-Asset Target
Ww:Bal - Alloc. Moderate 96 487/511 49 191/396 19 58/305 20 29/147
AAA Funds
787:Gabelli Mid-Cap Core Funds 18 69/386 18 53/307 39 97/249 - -
Merg&Acq Y
Gabelli Distributed
Capital through Insurance 44 155/354 41 117/289 28 60/216 15 12/80
Asset Fund Channel
% of funds 68.0% 87.5% 78.3% 76.2%
in top half
Data presented reflects past performance, which is no guarantee of future results. Strong rankings are not indicative of positive fund performance. Absolute performance for some funds was negative.
Lipper, a wholly-owned subsidiary of Reuters, provides independent insight on global collective investments including mutual funds, retirement funds, hedge funds, fund fees and expenses to the asset management and media communities. Lipper ranks the performance of mutual funds within a classification of funds that have similar investment objectives. Rankings are historical with capital gains and dividends reinvested and do not include the effect of loads. If an expense waiver was in effect, it may have had a material effect on the total return or yield for the period.
Relative long-term investment performance remained strong with approximately 68%, 88%, 78% and 76% of firmwide mutual funds in the top half of their Lipper categories on a one-, three-, five-, and ten-year total-return basis, respectively, as of September 30, 2009.
Investors should consider carefully the investment objective, risks, charges and expenses of a fund before investing. The Prospectus which contains more information about this and other matters, should be read carefully before investing. You can obtain a prospectus by calling 1-800 GABELLI. Distributed by Gabelli & Company. Other share classes are available that have different performance characteristics.
The inception date for the Gabelli SRI Green Fund was June 1, 2007. The inception date for the Gabelli Woodland Small Cap Value Fund was December 31, 2002. The inception date for the Gabelli Enterprise Mergers & Acquisitions Fund was February 28, 2001.
Source: GAMCO Investors, Inc.
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