Form 8-K GAMCO INVESTORS, INC. For: Nov 07

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November 7, 2014 5:29 PM EST

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

�

FORM 8-K

�

CURRENT REPORT

�

Pursuant to Section 13 or 15(d) of The

Securities Exchange Act of 1934

�

Date of Report (Date of earliest event reported) November 7, 2014

�

GAMCO INVESTORS, INC.

(Exact name of registrant as specified in its charter)

�

Delaware	�	1-14761	�	13-4007862
(State or other jurisdiction of incorporation)	�	(Commission File Number)	�	(IRS Employer Identification No.)
�	�		�
One Corporate Center, Rye, NY	�	�	�	10580
(Address of principal executive offices)	�	�	�	(Zip Code)

�

Registrant's telephone number, including area code�� (914) 921-3700

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

[ ] �Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] �Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] �Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] �Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

�	�	�
Item�2.02	�	Results of Operations and Financial Condition.

��The following information is furnished pursuant to Item 2.02, "Results of Operations and Financials Condition."

�

��

��On November 7, 2014, GAMCO Investors, Inc. ("GAMCO") announced its results of operations for the quarter and�nine months ended�September 30, 2014.� A copy of the related press release is being filed as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference in its entirety.

�

��The information furnished under Item 2.02, including the exhibit attached hereto, is not deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 and shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, except as otherwise expressly stated in such filing.

�

�	�	�
Item 9.01	�	Financial Statements and Exhibits.

��(d) Exhibits

�

��99.1��GAMCO's Press Release, dated November 7, 2014.

�

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

�

GAMCO Investors, Inc.

�

By: /s/ Robert S. Zuccaro

�

Robert S. Zuccaro

Executive Vice-President and Chief Financial Officer

�

Date:November 7, 2014

Exhibit Index

�

Exhibit No.

�

99.1��GAMCO's Press Release, dated November 7, 2014.

�

Exhibit 99.1

�

� For Immediate Release:	� Contact:	� Robert S. Zuccaro
�	�	Executive Vice President and Chief Financial Officer
�	�	(914) 921-5088
�	�	�
�	�	For further information please visit
�	�	www.gabelli.com

GAMCO Investors, Inc. Reports Third Quarter Results

��	Record 3^rd Quarter Revenues

��	Operating Income up 33.2%

� �	Third Quarter Earnings $0.93 per diluted share

�

Rye, New York, November 7, 2014 GAMCO Investors, Inc. ("GAMCO") (NYSE: GBL) today reported its 2014 third quarter results including revenues of $110.9 million, net income of $23.7 million and earnings of $0.93 per diluted share.� On a comparable basis, revenues were $96.4 million, net income was $33.1 million, and earnings were $1.29 per diluted share in the third quarter of 2013. Other income, primarily investment income, accounted for a $12.9 million reduction in net income, or $0.51 per share, on a quarter to quarter basis.

Assets Under Management ("AUM") were $46.9 billion at September 30, 2014, up 7.9% from $43.5 billion at September 30, 2013.

�

Financial Highlights

�

YTD

�

YTD

�

($'s in 000's except AUM and per share data)

�

2014

�

2013

�

2014

�

2013

�

AUM - end of period (in millions)

�

46,947

�

43,507

�

7.9

�

46,947

�

43,507

�

7.9

AUM - average (in millions)

�

48,399

�

42,620

�

13.6

�

47,840

�

40,478

�

18.2

�

Revenues

�

110,858

�

96,377

�

15.0

�

323,631

�

274,848

�

17.7

�

Operating income before management fee (a)

�

47,342

�

38,357

�

23.4

�

131,250

�

109,694

�

19.7

�

Operating margin before management fee

�

42.7

�

39.8

�

40.6

�

39.9

�

Operating income

�

43,586

�

32,728

�

33.2

�

117,622

�

95,239

�

23.5

�

Operating margin

�

39.3

�

34.0

�

36.3

�

34.7

�

Other income/(expense), net

�

(9,989

)

�

17,991

�

5,025

�

34,991

�

Income before income taxes

�

33,597

�

50,719

�

(33.8

)

�

122,647

�

130,230

�

(5.8

)

Effective tax rate

�

38.8

�

34.5

�

36.5

�

35.7

�

Net income

�

23,665

�

33,098

�

(28.5

)

�

80,569

�

83,536

�

(3.6

)

�

Operating income per share (a)

�

1.03

�

0.88

�

17.0

�

2.94

�

2.48

�

18.5

�

Other income/(expense) per share (a)

�

(0.10

)

�

0.41

�

0.21

�

0.77

�

Net income per share

�

0.93

�

1.29

�

(27.9

)

�

3.15

�

3.25

�

(b)

�

(3.1

)

�

Shares outstanding at September 30

�

25,879

�

26,017

�

25,879

�

26,017

�

(a) See GAAP to non-GAAP reconciliation on page 9.

�

(b) After a $0.11 per fully diluted share charge in the first quarter 2013 for our shareholder-designated charitable contribution program.

�

For the first nine months of 2014, the Company generated revenues of $323.6 million, net income of $80.6 million and earnings of $3.15 per diluted share, a decrease of 3.1% from earnings of $3.25 per diluted share in the first nine months of 2013.

Assets Under Management

�

% Change From

�

September 30,

�

June 30,

�

September 30,

�

June 30,

�

September 30,

�

2014

�

2014

�

2013

�

2014

�

2013

�

Equities:

�

Open-end Funds

�

17,458

�

18,508

�

15,581

�

(5.7

�

12.0

Closed-end Funds

�

6,963

�

7,224

�

6,721

�

(3.6

)

�

3.6

�

Institutional & PWM - direct

�

16,223

�

16,941

�

15,026

�

(4.2

)

�

8.0

�

Institutional & PWM - sub-advisory

�

3,525

�

3,883

�

3,503

�

(9.2

)

�

0.6

�

Investment Partnerships

�

899

�

897

�

805

�

0.2

�

11.7

�

SICAV (a)

�

121

�

28.7

�

28.7

�

Total Equities

�

45,189

�

47,547

�

41,730

�

(5.0

)

�

8.3

�

Fixed Income:

�

Money-Market Fund

�

1,698

�

1,766

�

1,714

�

(3.9

)

�

(0.9

)

Institutional & PWM

�

(6.3

)

�

(4.8

)

Total Fixed Income

�

1,758

�

1,830

�

1,777

�

(3.9

)

�

(1.1

)

Total Assets Under Management

�

46,947

�

49,377

�

43,507

�

(4.9

)

�

7.9

�

Total firm AUM were $46.9 billion at September 30, 2014.� Average AUM were $48.4 billion, an increase of 13.6% from $42.6 billion in the comparable 2013 quarter and $48.1 billion in the second quarter 2014.� Our third quarter 2014 decline was mostly due to market depreciation of $2.2 billion, net outflows of $36 million and open- and closed-end fund net distributions of $145 million.� (Details of our quarter and year to date fund flows�are found in tables I and II on page 6)

Revenues

-��	Total revenues for the third quarter of 2014 were $110.9 million, up 15.0% from $96.4 million in the prior year.

-��

Investment advisory and incentive fees were $92.6 million in the third quarter of 2014, an increase of $12.2 million or 15.1% from the comparable 2013 quarter.� Revenues are 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.� There were $0.1 million of incentive fees earned during the 2014 quarter versus $0.5 million in the third quarter of 2013.

�

-��	Distribution fees from our open-end funds and other income were $15.7 million for the third quarter 2014, an increase of $2.2 million, or 16.1%, from the prior year quarter of $13.5 million.

-��	Our institutional research services revenues were $2.5 million in the third quarter 2014 versus $2.4 million in the prior year period.

�

Operating Income Third Quarter

Operating income, which is net of management fee expense, increased 33.2% or $10.9 million to $43.6 million in the third quarter of 2014 versus $32.7 million in the prior year period.� The operating margin rose to 39.3% in the third quarter of 2014 versus 34.0% in the comparable prior year period.� The lower management fee, which was impacted by lower non-operating income, partially offset by higher stock compensation costs in the current quarter, contributed to the higher operating margin.� The Company issued�restricted stock awards�during the second half of 2013 resulting in a $1.0 million increase in stock compensation costs in the 2014 quarter versus the prior year quarter.� Incentive management fee expense, which is entirely variable, is based on pre-tax income and is impacted by changes in both operating and non-operating income.

Operating income before management fee was $47.3 million in the third quarter 2014 versus $38.4 million in the third quarter 2013.� Operating margin before management fee rose to 42.7% versus 39.8% in the third quarter of 2013 due to increased leverage of our fixed costs as a result of higher revenues.� Management believes evaluating operating income before management fee is an important measure in analyzing the Company's operating results.� Further information regarding Non-GAAP measures is included in Notes on Non-GAAP Financial Measures and Table V included elsewhere herein.

Other income (expense)

We�recognized other expenses�of $10.0 million in the 2014 quarter versus income of $18.0 million in the third quarter of 2013.� Losses, due to lower market valuations from firm investments were $9.1 million in the 2014 quarter versus gains of $19.3 million in the third quarter of 2013.� Dividend and interest income remained the same quarter over quarter at $1.1 million.� The purchase of a portion of our zero coupon debentures over the last twelve months lowered interest expense to $2.0 million in the 2014 third quarter versus $2.2 million in the prior year quarter.

Income Taxes

The third quarter 2014 effective tax rate ("ETR") was 38.8% compared to 34.5% in the 2013 quarter.� Excluding net income (loss) attributable to noncontrolling interests the ETR was 35.5% and 34.6% for the third quarters of 2014 and 2013, respectively.

�

Business and Investment Highlights

-	Standard & Poor's Ratings Services issued a report on September 8, 2014 reaffirming its investment grade rating on GAMCO.

-	In July 2014, The Gabelli Healthcare & Wellness^Rx Trust (NYSE: GRX) and the Gabelli Multimedia Trust (NYSE: GGT) completed rights offerings raising $44 million and $54 million, respectively, of new equity.� Both offerings were heavily over-subscribed.

�

-	In September 2014, the Gabelli Healthcare & Wellness^Rx Trust (NYSE: GRX) completed an offering of 1.4 million shares of 5.875% Series B Cumulative Preferred Shares totaling $35 million.

-	Gabelli Funds, LLC launched�the RBI�Unit Investment Trust, sponsored by First Trust, focusing on Roads, Bridges and Infrastructure.

-	Six of G.research's analysts were recognized by StarMine as one of the top three stock pickers within their categories in Thomson Reuters StarMine 2014 Awards of Excellence.� Rosemarie Morbelli, CFA was named the top rated stock picker in the chemicals category.

-	In September 2014, Gabelli & Company hosted its 20^th Annual Aircraft Supplier Conference featuring presentations by senior management of several leading aerospace and defense companies.

-	Gabelli Securities, Inc., our 94% owned subsidiary,�announced that Salvatore F. Sodano joined its board of directors as Vice Chairman.� Mr. Sodano, Chairman & CEO of Worldwide Capital Advisory Partners, was formerly Chairman & CEO of the American Stock Exchange and Vice Chairman of the NASD.

Balance Sheet

We ended the quarter with cash and investments of $760.0 million, net payables of $96.6 million, debt of $111.9 million ($113.1 million face value) and equity attributable to GAMCO shareholders of $508.5 million.� We have $400 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 fund shareholder compensation including, share repurchases and dividends.

Shareholder Compensation

During the quarter ended September 30, 2014, we returned $8.9 million of our earnings to shareholders through dividends and stock repurchases.� We repurchased 94,942 shares at an average price of $77.67 per share through our stock buyback program, for a total investment of $7.4 million. We returned $1.5 million through cash dividends.� Since our IPO, in February 1999, we have returned $863.7 million to shareholders.

About GAMCO Investors, Inc.

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

�

NOTES ON NON-GAAP FINANCIAL MEASURES

A.��

Operating income before management fee expense is used by management to evaluate its business operations.��We believe this measure is useful in illustrating the operating results of GAMCO Investors, Inc. (the "Company") as management fee expense is based on pre-tax income before management fee expense, which includes non-operating items including investment gains and losses from the Company's proprietary investment portfolio and interest expense.��The reconciliation of operating income before management fee expense to operating income is provided in Table V.

�

B.��

Operating income before management fee expense per share and other income/(expense), net per share are used by management for purposes of evaluating its business operations.��We believe these measures are useful in comparing the operating and non-operating results of the Company for the purposes of understanding the composition of net income per fully diluted share.� The negative swings in other income/(expense), net of $0.51 and $0.56 per fully diluted share for the quarter and year to date, respectively, are derived by making certain necessary adjustments, as shown in the table below, to arrive at a net impact for each period and then calculating the difference.� The reconciliation of operating income before management fee expense per share and other income/(expense), net per share to net income per fully diluted share, is provided below.

�

3rd Quarter

�

YTD September

�

2013

�

2014

�

2013

�

2014

�

Operating income before management fee

�

38,357

�

47,342

�

109,694

�

131,250

�

Management fee expense

�

(3,836

)

�

(4,755

)

�

(10,956

)

�

(13,125

)

Tax expense

�

(11,921

)

�

(16,536

)

�

(35,205

)

�

(43,144

)

Noncontrolling interest expense

�

201

�

236

�

Operating income (after management fee and taxes)

�

22,605

�

26,117

�

63,734

�

75,217

�

Per fully diluted share

�

0.88

�

1.03

�

2.48

�

2.94

�

Other income/(expense), net

�

17,991

�

(9,989

)

�

34,991

�

5,025

�

Management fee (expense)/benefit

�

(1,793

)

�

999

�

(3,499

)

�

(503

)

Tax (expense)/benefit

�

(5,594

)

�

3,491

�

(11,229

)

�

(1,652

)

Noncontrolling interest (expense)/benefit

�

(111

)

�

3,047

�

(461

)

�

2,482

�

Other income, net (after management fee and taxes)

�

10,493

�

(2,452

)

�

19,802

�

5,352

�

Per fully diluted share

�

0.41

�

(0.10

)

�

0.77

�

0.21

�

Net income per fully diluted share

�

1.29

�

0.93

�

3.25

�

3.15

�

Diluted weighted average shares outstanding

�

25,700

�

25,517

�

25,717

�

25,595

�

��

�

The Company reported Assets Under Management as follows (in millions):

�

Table I: Fund Flows - 3rd Quarter 2014

�

Fund

�

Market

�

distributions,

�

June 30,

�

appreciation/

�

Net cash

�

net of

�

September 30,

�

2014

�

(depreciation)

�

flows

�

reinvestments

�

2014

Equities:

�

Open-end Funds

�

18,508

�

(839

)

�

(175

)

�

(36

)

�

17,458

Closed-end Funds

�

7,224

�

(326

)

�

174

�

(109

)

�

6,963

Institutional & PWM - direct

�

16,941

�

(772

)

�

16,223

Institutional & PWM - sub-advisory

�

3,883

�

(296

)

�

(62

)

�

3,525

Investment Partnerships

�

897

�

(12

)

�

899

SICAV (a)

�

)

�

121

Total Equities

�

47,547

�

(2,249

)

�

(145

)

�

45,189

Fixed Income:

�

Money-Market Fund

�

1,766

�

(68

)

�

1,698

Institutional & PWM

�

)

�

Total Fixed Income

�

1,830

�

(72

)

�

1,758

Total Assets Under Management

�

49,377

�

(2,249

)

�

(36

)

�

(145

)

�

46,947

�

(a) Includes $77 million and $70 million of proprietary seed capital at June 30, 2014 and September 30, 2014, respectively.

Table II: Fund Flows - Nine Months ended September 30, 2014

�

Fund

�

Market

�

distributions,

�

December 31,

�

appreciation/

�

Net cash

�

net of

�

September 30,

�

2013

�

(depreciation)

�

flows

�

reinvestments

�

2014

Equities:

�

Open-end Funds

�

17,078

�

158

�

320

�

(98

)

�

17,458

Closed-end Funds

�

6,945

�

180

�

178

�

(340

)

�

6,963

Institutional & PWM - direct

�

16,486

�

157

�

(420

)

�

16,223

Institutional & PWM - sub-advisory

�

3,797

�

(112

)

�

(160

)

�

3,525

Investment Partnerships

�

811

�

899

SICAV (a)

�

)

�

121

Total Equities

�

45,213

�

393

�

(438

)

�

45,189

Fixed Income:

�

Money-Market Fund

�

1,735

�

(37

)

�

1,698

Institutional & PWM

�

)

�

Total Fixed Income

�

1,797

�

(39

)

�

1,758

Total Assets Under Management

�

47,010

�

393

�

(18

)

�

(438

)

�

46,947

�

(a) Includes $94 million and $70 million of proprietary seed capital at December 31, 2013 and September 30, 2014, respectively.

�

Table III

�

GAMCO INVESTORS, INC.

�

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

�

(Dollars in thousands, except per share data)

�

For the Quarter Ended September 30,

�

% Inc.

�

2014

�

2013

�

(Dec.)

�

Revenues:

�

��Investment advisory and incentive fees

�

92,591

�

80,438

�

15.1

��Distribution fees and other income

�

15,727

�

13,545

�

16.1

�

��Institutional research services

�

2,540

�

2,394

�

6.1

�

Total revenues

�

110,858

�

96,377

�

15.0

�

Expenses:

�

��Compensation

�

43,316

�

39,803

�

8.8

�

��Distribution

�

15,101

�

12,769

�

18.3

�

��Other operating

�

5,099

�

5,448

�

(6.4

)

Total expenses

�

63,516

�

58,020

�

9.5

�

Operating income before management fee

�

47,342

�

38,357

�

23.4

�

Investment income

�

(8,002

)�

�

20,468

�

Interest expense

�

(1,987

)

�

(2,164

)

�

Shareholder-designated contribution

�

(313

)�

�

Other income/(expense), net

�

(9,989

)�

�

17,991

�

Income before management fee and income taxes

�

37,353

�

56,348

�

(33.7

)

Management fee expense

�

3,756

�

5,629

�

Income before income taxes

�

33,597

�

50,719

�

(33.8

)

Income tax expense

�

13,045

�

17,515

�

Net income

�

20,552

�

33,204

�

(38.1

)

Net income/(loss) attributable to noncontrolling interests

�

(3,113

)�

�

106

�

Net income attributable to GAMCO Investors, Inc.

�

23,665

�

33,098

�

(28.5

)

�

Net income per share attributable to GAMCO Investors, Inc.:

�

Basic

�

0.94

�

1.29

�

(27.1

)

�

Diluted

�

0.93

�

1.29

�

(27.9

)

�

Weighted average shares outstanding:

�

Basic

�

25,296

�

25,625

�

(1.3

)

�

Diluted

�

25,517

�

25,700

�

(0.7

)

�

Actual shares outstanding (a)

�

25,879

�

26,017

�

(0.5

�

Notes:

�

(a) Includes 639,750 and 427,700 of RSAs, respectively.

�

See GAAP to non-GAAP reconciliation on page 9.

�

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,

�

% Inc.

�

2014

�

2013

�

(Dec.)

�

Revenues:

�

��Investment advisory and incentive fees

�

270,544

�

230,488

�

17.4

��Distribution fees and other income

�

46,367

�

37,420

�

23.9

�

��Institutional research services

�

6,720

�

6,940

�

(3.2

)

Total revenues

�

323,631

�

274,848

�

17.7

�

Expenses:

�

��Compensation

�

131,258

�

113,214

�

15.9

�

��Distribution

�

44,087

�

35,650

�

23.7

�

��Other operating

�

17,036

�

16,290

�

4.6

�

Total expenses

�

192,381

�

165,154

�

16.5

�

Operating income before management fee

�

131,250

�

109,694

�

19.7

�

Investment income

�

11,159

�

48,752

�

Interest expense

�

(6,000

)

�

(8,448

)

�

Shareholder-designated contribution

�

(134

)

�

(5,313

)

�

Other income/(expense), net

�

5,025

�

34,991

�

Income before management fee and income taxes

�

136,275

�

144,685

�

(5.8

)

Management fee expense

�

13,628

�

14,455

�

Income before income taxes

�

122,647

�

130,230

�

(5.8

)

Income tax expense

�

44,796

�

46,434

�

Net income

�

77,851

�

83,796

�

(7.1

)

Net income/(loss) attributable to noncontrolling interests

�

(2,718

)�

�

260

�

Net income attributable to GAMCO Investors, Inc.

�

80,569

�

83,536

�

(3.6

)

�

Net income per share attributable to GAMCO Investors, Inc.:

�

Basic

�

3.17

�

3.25

�

(2.5

)

�

Diluted

�

3.17

�

3.25

�

(3.1

)

�

Weighted average shares outstanding:

�

Basic

�

25,385

�

25,682

�

(1.2

)

�

Diluted

�

25,595

�

25,717

�

(0.5

)

�

Actual shares outstanding (a)

�

25,879

�

26,017

�

(0.5

�

Notes:

�

(a) Includes 639,750 and 427,700 of RSAs, respectively.

�

See GAAP to non-GAAP reconciliation on page 9.

�

Table V

�

GAMCO INVESTORS, INC.

�

UNAUDITED QUARTERLY CONDENSED CONSOLIDATED STATEMENTS OF INCOME

�

(Dollars in thousands, except per share data)

�

2013

�

2014

�

1st

�

2nd

�

3rd

�

4th

�

1st

�

2nd

�

3rd

�

Quarter

�

Quarter

�

Quarter

�

Quarter

�

Full Year

�

Quarter

�

Quarter

�

Quarter

�

Income Statement Data:

�

Revenues

�

86,181

�

92,290

�

96,377

�

122,714

�

397,562

�

104,477

�

108,296

�

110,858

�

Expenses

�

51,474

�

55,660

�

58,020

�

71,167

�

236,321

�

63,250

�

65,615

�

63,516

�

Operating income before

�

��management fee

�

34,707

�

36,630

�

38,357

�

51,547

�

161,241

�

41,227

�

42,681

�

47,342

�

Investment income/(loss)

�

13,636

�

14,648

�

20,468

�

13,524

�

62,276

�

8,085

�

11,076

�

(8,002

)

Interest expense

�

(3,488

)

�

(2,796

)

�

(2,164

)

�

(2,063

)

�

(10,551

)

�

(1,992

)

�

(2,021

)

�

(1,987

)

Shareholder-designated contribution

�

(5,000

)

�

(313

)

�

(5,313

)

�

(10,626

)

�

(134

)

�

Other income/(expense), net

�

5,148

�

11,852

�

17,991

�

6,148

�

41,139

�

6,093

�

8,921

�

(9,989

)

�

Income before management

�

��fee and income taxes

�

39,855

�

48,482

�

56,348

�

57,695

�

202,380

�

47,320

�

51,602

�

37,353

�

Management fee expense

�

3,980

�

4,846

�

5,629

�

4,374

�

18,829

�

4,728

�

5,144

�

3,756

�

Income before income taxes

�

35,875

�

43,636

�

50,719

�

53,321

�

183,551

�

42,592

�

46,458

�

33,597

�

Income tax expense

�

13,195

�

15,724

�

17,515

�

19,752

�

66,186

�

14,616

�

17,135

�

13,045

�

Net income

�

22,680

�

27,912

�

33,204

�

33,569

�

117,365

�

27,976

�

29,323

�

20,552

�

Net income/(loss) attributable

�

��to noncontrolling interests

�

135

�

106

�

252

�

512

�

373

�

(3,113

)

Net income attributable to

�

��GAMCO Investors, Inc.

�

22,545

�

27,893

�

33,098

�

33,317

�

116,853

�

27,954

�

28,950

�

23,665

�

Net income per share

�

��attributable to GAMCO

�

��Investors, Inc.:

�

Basic

�

0.88

�

1.09

�

1.29

�

1.30

�

4.56

�

1.10

�

1.14

�

0.94

�

Diluted

�

0.88

�

1.09

�

1.29

�

1.29

�

4.54

�

1.09

�

1.13

�

0.93

�

Weighted average shares outstanding:

�

Basic

�

25,742

�

25,679

�

25,625

�

25,567

�

25,653

�

25,481

�

25,381

�

25,296

�

Diluted

�

25,758

�

25,689

�

25,700

�

25,733

�

25,712

�

25,684

�

25,586

�

25,517

�

Reconciliation of non-GAAP

�

��financial measures to GAAP:

�

Operating income before

�

��management fee

�

34,707

�

36,630

�

38,357

�

51,547

�

161,241

�

41,227

�

42,681

�

47,342

�

Deduct: management fee expense

�

3,980

�

4,846

�

5,629

�

4,374

�

18,829

�

4,728

�

5,144

�

3,756

�

Operating income

�

30,727

�

31,784

�

32,728

�

47,173

�

142,412

�

36,499

�

37,537

�

43,586

�

Operating margin before

�

��management fee

�

40.3

�

39.7

�

39.8

�

42.0

�

40.6

�

39.5

�

39.4

�

42.7

Operating margin after

�

��management fee

�

35.7

�

34.4

�

34.0

�

38.4

�

35.8

�

34.9

�

34.7

�

39.3

�

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,

�

2014

�

2013

�

2013

�

ASSETS

�

Cash and cash equivalents

�

358,421

�

210,451

�

245,411

�

Investments (a)

�

401,584

�

371,262

�

379,184

�

Receivable from brokers

�

79,885

�

49,461

�

43,854

�

Other receivables

�

40,569

�

60,390

�

38,975

�

Income tax receivable

�

2,433

�

445

�

433

�

Other assets

�

15,868

�

17,476

�

26,765

�

��Total assets

�

898,760

�

709,485

�

734,622

�

LIABILITIES AND EQUITY

�

Payable to brokers

�

46,790

�

10,765

�

14,675

�

Income taxes payable and deferred tax liabilities

�

27,412

�

39,846

�

28,726

�

Compensation payable

�

93,535

�

34,663

�

86,174

�

Securities sold short, not yet purchased

�

14,180

�

6,178

�

7,725

�

Accrued expenses and other liabilities

�

37,583

�

39,189

�

35,564

�

��Sub-total

�

219,500

�

130,641

�

172,864

�

5.875% Senior notes (due June 1, 2021)

�

100,000

�

100,000

�

100,000

�

0% Subordinated Debentures (due December 31, 2015) (b)

�

11,941

�

11,911

�

17,347

�

��Total debt

�

111,941

�

111,911

�

117,347

�

��Total liabilities

�

331,441

�

242,552

�

290,211

�

Redeemable noncontrolling interests

�

56,086

�

6,751

�

5,765

�

GAMCO Investors, Inc.'s stockholders' equity

�

508,494

�

457,331

�

435,857

�

Noncontrolling interests

�

2,739

�

2,851

�

2,789

�

Total equity

�

511,233

�

460,182

�

438,646

�

Total liabilities and equity

�

898,760

�

709,485

�

734,622

�

(a) Includes investments in sponsored registered investment companies of $39.5 million, $44.0 million and $43.7 million, respectively.

�

(b) The 0% Subordinated Debentures due December 31, 2015 have a face value of $13.1 million, $13.8 million and $20.5 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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