EX-99.1 2 ex991021816.htm EXHIBIT 99.1, DATED FEBRUARY 18, 2016
Exhibit 99.1
 
 
 
For Immediate Release:
 
Contact:
 
Douglas R. Jamieson
 
 
President
and Chief Operating Officer
 
 
(914) 921-5020
 
 
 
 
 
For further information please visit
 
 
www.gabelli.com

GAMCO Investors, Inc. Reports Fourth Quarter Results
·  
Fourth Quarter Earnings of $0.67 per diluted share from continuing operations
·  
Average AUM at $40.3 billion
·  
Completed Spin-off of Associated Capital Group, Inc.

Rye, New York, February 18, 2016 – GAMCO Investors, Inc. (“GAMCO” or the “Company”) (NYSE: GBL) today reported financial results for the fourth quarter and full year ended December 31, 2015.  These results reflect, on a continuing operations basis, the operations of our Funds and Institutional and Private Wealth Management businesses and, on a discontinued basis, the operations of the alternative asset management and institutional research services businesses, which were spun-off on November 30, 2015 as part of Associated Capital Group, Inc. (“AC”).

Financial Highlights
                 
As reported
              
As reported
  
     
Q4
        
Q4
        
Q4
    
Full Year
  
Full Year
    
Full Year
  
($'s in 000's except AUM and per share data)
    
2015
        
2014
        
2014
      
2015
        
2014
      
2014
  
                                                       
AUM - end of period (in millions)
  
$
38,659
      
$
46,447
      
$
47,487
    
$
38,659
      
$
46,447
    
$
47,487
  
AUM - average (in millions)
    
40,324
        
46,289
        
47,315
      
43,246
        
46,726
      
47,708
  
                                                       
Revenues before incentive fees
    
86,661
        
101,766
        
106,013
      
376,561
        
413,009
      
428,751
  
Incentive fee revenues
    
3,656
        
8,048
        
10,738
      
4,415
        
8,927
      
11,631
  
Total revenues
    
90,317
        
109,814
        
116,751
      
380,976
        
421,936
      
440,382
  
                                                       
Operating income before management fee (a)
    
36,220
  
(b)
    
48,928
        
46,903
      
163,452
  
(c)
    
188,115
      
178,153
  
Operating margin before management fee
    
40.1
%
      
44.6
%
      
40.2
%
    
42.9
%
      
44.6
%
    
40.5
%
                                                       
Operating income
    
33,102
  
(b)
    
44,158
        
41,904
      
147,949
  
(c)
    
169,452
      
159,526
  
Operating margin
    
36.7
%
      
40.2
%
      
35.9
%
    
38.8
%
      
40.2
%
    
36.2
%
                                                       
Other income/(expense), net
    
1,243
        
(1,228
)
      
3,070
      
(2,528
)
      
(1,301
)
    
8,229
  
                                                       
Shareholder-designated contribution
    
(6,396
)
      
-
        
-
      
(6,396
)
      
(134
)
    
(134
)
                                                       
Income before income taxes
    
27,949
        
42,930
        
44,974
      
139,025
        
168,017
      
167,621
  
Effective tax rate
    
35.9
%
      
38.3
%
      
39.4
%
    
37.2
%
      
36.7
%
    
37.3
%
                                                       
Income from continuing operations
    
17,925
        
26,479
                
87,299
        
106,283
          
                                                       
Income per share - continuing operations
  
$
0.67
      
$
1.04
              
$
3.40
      
$
4.16
          
                                                       
Gain/(loss) from discontinued operations
    
1,642
        
2,342
                
(3,887
)
      
3,107
          
                                                       
Discontinued operations per share
  
$
0.06
      
$
0.09
                
(0.15
)
    
$
0.12
          
                                                       
Net income
    
19,567
        
28,821
        
28,821
      
83,412
        
109,390
      
109,390
  
                                                       
Net income per share
  
$
0.73
      
$
1.13
      
$
1.13
    
$
3.24
      
$
4.28
    
$
4.28
  
                                                       
Shares outstanding at December 31
    
29,821
  
(d)
    
25,855
  
(d)
            
29,821
        
25,855
          
(a) See GAAP to non-GAAP reconciliation on page 10.
                                      
                                                       
(b) Fourth quarter 2015 included $3.5 million of incremental RSA expense as compared to fourth quarter 2014.
          
                                                       
(c) Full year 2015 included $5.6 million of incremental costs as compared to full year 2014:
                    
$4.6 million in RSA expense and $1.0 million for the launch of a new closed-end fund.
                    
                                                       
(d) Shares outstanding consist of 29,268 non-RSA shares and 553 RSA shares at December 31, 2015 and 25,144 non-RSA shares and 711 RSA shares at
  
       December 31, 2014.
                                                      
                                                       
 
Fourth quarter 2015 results from continuing operations included revenues of $90.3 million, income of $17.9 million and earnings of $0.67 per diluted share.  On a comparable basis, revenues were $109.8 million, income was $26.5 million, and earnings were $1.04 per diluted share in the fourth quarter of 2014.

Average AUM were $40.3 billion for the fourth quarter of 2015 versus $41.6 billion for the third quarter of 2015 and $46.3 billion for the fourth quarter of 2014.

Associated Capital - Spin-off

AC was spun-off effective November 30, 2015.  In connection with the spin-off, GAMCO, simply stated, issued a $250 million five year 4% promissory note (the “GAMCO Note”) to AC.  Also as part of the spin-off, AC now owns 4.4 million shares of GAMCO Class A common stock through its majority-owned subsidiary, Gabelli Securities, Inc.
 
The historical Assets under Management (“AUM”) within this release exclude the AUM that are now managed by AC.

Assets Under Management
 
               
% Change From
  
   
December 31,
    
September 30,
    
December 31,
    
September 30,
    
December 31,
  
   
2015
    
2015
    
2014
    
2015
    
2014
  
Equities:
                    
Open-end Funds
  
$
13,811
    
$
14,075
    
$
17,684
      
(1.9
%)
    
(21.9
%)
Closed-end Funds
    
6,492
      
6,205
      
6,949
      
4.6
      
(6.6
)
Institutional & PWM - direct
    
13,366
      
13,190
      
16,597
      
1.3
      
(19.5
)
Institutional & PWM - sub-advisory
    
3,401
      
3,302
      
3,704
      
3.0
      
(8.2
)
SICAV
    
37
      
36
      
-
      
2.8
      
n/
m
Total Equities
    
37,107
      
36,808
      
44,934
      
0.8
      
(17.4
)
Fixed Income:
                                        
Money-Market Fund
    
1,514
      
1,637
      
1,455
      
(7.5
)
    
4.1
  
Institutional & PWM
    
38
      
45
      
58
      
(15.6
)
    
(34.5
)
Total Fixed Income
    
1,552
      
1,682
      
1,513
      
(7.7
)
    
2.6
  
Total Assets Under Management
  
$
38,659
    
$
38,490
    
$
46,447
      
0.4
      
(16.8
)
                                         
Our fourth quarter 2015 increase in AUM versus September 30, 2015 was due to market appreciation of $1.1 billion and the initial inclusion of the Dinsmore Group’s two closed-end funds of $0.2 billion partially offset by net outflows of $1.0 billion and net distributions of $0.2 billion.
 
Revenues

-
Total revenues for the fourth quarter of 2015 were $90.3 million, compared with $109.8 million in the prior year, reflecting fees earned in investment advisory services on reduced assets and a decline in distribution and other income.

-
Investment advisory fees, excluding incentive fees, were $75.0 million in the fourth quarter of 2015 versus $86.9 million in the final quarter of 2014.  Revenues from our open-end and closed-end funds and Institutional and Private Wealth Management accounts tracked our decline of average AUM in the open-end and closed-end funds as well as lower billable assets in our Institutional and Private Wealth Management accounts.
 
2
 
-
Incentive fees earned were $3.7 million and $8.0 million during the fourth quarters ending December 31, 2015 and December 31, 2014, respectively.

-
Distribution fees from our open-end equity funds and other income were $11.6 million for the fourth quarter 2015, down from $14.9 million in the prior year quarter.

Operating Income – Fourth Quarter – Adjusted operating margin 44.0% vs. 44.6%

Operating income, which is net of management fee expense, decreased 25.1% or $11.1 million, to $33.1 million in the fourth quarter of 2015 versus $44.2 million in the prior year period.  The fourth quarter of 2015 was impacted by lower revenues and $3.5 million of incremental non-cash expenses related to RSAs (primarily due to the acceleration of vesting of 130,650 shares during the fourth quarter of 2015).  Excluding those incremental costs identified above, adjusted operating income was $36.6 million in the fourth quarter of 2015, a decline of $7.6 million, from the $44.2 million in the fourth quarter of 2014.

Operating income before management fee was $36.2 million in the fourth quarter 2015 versus $48.9 million in the fourth quarter 2014.  Operating margin before management fee was 40.1% versus 44.6% in the fourth quarter of 2014.  Excluding the incremental $3.5 million of RSA expense, adjusted operating income before management fee was $39.7 million in the fourth quarter of 2015 as compared to $48.9 million in the fourth quarter of 2014.  Adjusted operating margins, before management fee, was 44.0% in the 2015 quarter as compared to 44.6% in the 2014 quarter.  Management believes evaluating operating income before management fee is an important measure in analyzing the Company’s operating results.  Further information regarding Non-GAAP measures is included in Notes on Non-GAAP Financial Measures and Table V included elsewhere herein.

Other income (expense)

We recognized net other expense of $5.2 million in the 2015 quarter versus an expense of $1.2 million in the fourth quarter of 2014.  This is comprised of investment gains of $3.7 million in the 2015 quarter versus $0.2 million in the 2014 quarter, dividend and interest income of $0.6 million in the 2015 quarter versus $0.5 million in the 2014 quarter, and interest expense of $3.1 million in the 2015 quarter versus $2.0 million in the 2014 quarter.

Other items in the fourth quarter 2015 included:
(a) $6.4 million related to our 501(c)(3) program,
(b) $0.4 million from the repurchase of $75.8 million of the 5.875% Senior Note debt, and
(c) $0.8 million of non-cash interest expense for one month related to the GAMCO Note.
3

Income Taxes

The Company’s effective tax rate (“ETR”) for the quarter ended December 31, 2015 was 35.9% versus 38.3% for the quarter ended December 31, 2014.  The current quarter’s ETR benefitted from the donation of securities to fund the Shareholder Designated Charitable Contribution Program.  On a full year basis, the ETR for 2015 was 37.2% versus 36.7% for 2014.

Business and Investment Highlights

-
On October 13, 2015, GAMCO announced that its Board of Directors had again adopted a $0.25 per share contribution under its existing Shareholder Designated Charitable Contribution Program created in 2013 for all registered shareholders.  As a result of our shareholders participation in the 2015 program, GAMCO will donate $6.4 million. Under the two previous programs, GAMCO donated $10.8 million to eligible 501(c)(3) organizations on behalf of its shareholders.

-
On November 1, 2015, Gabelli Funds, LLC became the advisor to the Bancroft and Ellsworth Growth and Income Funds.  Tom Dinsmore, Jane O’Keeffe, and James Dinsmore will continue to manage the Bancroft and Ellsworth Growth and Income closed-end funds as well as join our convertible team.

-
On December 21, 2015, GAMCO announced that the Compensation Committee of the Board of Directors had unanimously approved a deferred compensation agreement with Mario J. Gabelli, Chief Executive Officer of GAMCO.  Mr. Gabelli’s variable compensation for 2016 will be in the form of Restricted Stock Units (“RSUs”) determined by the volume-weighted average price of the Company’s Class A stock during 2016.  The RSU will vest 100% on January 1, 2020.  As a result, in 2016, Mr. Gabelli will not be paid any cash compensation that he is entitled to under the Employment Agreement approved by shareholders on May 5, 2015, and consistent with Mr. Gabelli’s agreement since 1977.  The Board decided that deferring Mr. Gabelli’s 2016 variable compensation will provide the Company with greater financial flexibility.  For GAAP reporting, the Company will recognize the RSU expense ratably over the four-year vesting period, and accordingly, this reduced compensation expense will materially enhance 2016 earnings and cash flows, and reduce earnings in 2017 - 2019

-
In connection with the spin-off of AC, GAMCO entered into a tender offer for up to all of its $100 million 5.875% Senior Notes due June 1, 2021.  Approximately $75.8 million of the Notes were tendered pursuant to the Offer.  In connection with the Offer, GAMCO borrowed $35 million from an affiliate.  The loan has a term of one year and bears interest at 90 day-LIBOR plus 3.25%, reset quarterly.

Balance Sheet

We ended the year with cash and investments of $46.7 million and debt of $309.2 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.

4
Shareholder Compensation

During the quarter ended December 31, 2015, we returned $7.8 million of our earnings to shareholders through dividends and stock repurchases.  We repurchased 105,140 shares, 91,740 shares at an average price of $57.53 per share prior to the spin-off of AC and 13,400 shares at an average price of $32.56 subsequent to the spin-off of AC, for a total investment of $5.7 million and distributed $2.1 million in dividends.   Since our IPO, in February 1999, we have returned $914 million in total to shareholders comprised of $486 million in the form of dividends and $428 million through stock buybacks of 9,552,653.

On February 17, 2016, GAMCO’s Board of Directors declared a regular quarterly dividend of $0.02 per share payable on March 29, 2016 to its Class A and Class B shareholders of record on March 15, 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).


5

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 measures are useful in evaluating the ongoing operating results of the Company absent any of these adjustments.

      
4th Quarter
    
Full Year
  
     
2015
    
2014
    
2015
    
2014
  
Operating income before management fee
  
$
36,220
    
$
48,928
    
$
163,452
    
$
188,115
  
Adjustments:
                                
   Add back:
Incremental RSA expense
    
3,478
      
-
      
4,591
      
-
  
Costs to launch Closed-end fund
    
-
      
-
      
1,000
      
-
  
   Deduct:
Reimbursement of prior year expense
    
-
      
-
      
-
      
(1,286
)
Adjusted operating income before management fee
    
39,698
      
48,928
      
169,043
      
186,829
  
Adjusted operating margin before management fee
    
44.0
%
    
44.6
%
    
44.4
%
    
44.3
%
                                   
 
      
4th Quarter
    
Full Year
  
     
2015
    
2014
    
2015
    
2014
  
Operating income
  
$
33,102
    
$
44,158
    
$
147,949
    
$
169,452
  
Adjustments:
                                
   Add back:
Incremental RSA expense
    
3,478
      
-
      
4,591
      
-
  
Costs to launch Closed-end fund
    
-
      
-
      
1,000
      
-
  
   Deduct:
Reimbursement of prior year expense
    
-
      
-
      
-
      
(1,286
)
Adjusted operating income
    
36,580
      
44,158
      
153,540
      
168,166
  
Adjusted operating margin
    
40.5
%
    
40.2
%
    
40.3
%
    
39.9
%
                                   


6
The Company reported Assets Under Management as follows (in millions):
            
                       
Table I: Fund Flows - 4th Quarter 2015
                    
                 
Fund
      
       
Market
           
distributions,
      
   
September 30,
    
appreciation/
    
Net cash
      
net of
    
December 31,
  
   
2015
    
(depreciation)
    
flows
      
reinvestments
    
2015
  
Equities:
                      
Open-end Funds
  
$
14,075
    
$
385
    
$
(597
)
    
$
(52
)
  
$
13,811
  
Closed-end Funds
    
6,205
      
171
      
236
  
(a)
    
(120
)
    
6,492
  
Institutional & PWM - direct
    
13,190
      
415
      
(239
)
      
-
      
13,366
  
Institutional & PWM - sub-advisory
    
3,302
      
136
      
(37
)
      
-
      
3,401
  
SICAV
    
36
      
1
      
-
        
-
      
37
  
Total Equities
    
36,808
      
1,108
      
(637
)
      
(172
)
    
37,107
  
Fixed Income:
                                          
Money-Market Fund
    
1,637
      
-
      
(123
)
      
-
      
1,514
  
Institutional & PWM
    
45
      
-
      
(7
)
      
-
      
38
  
Total Fixed Income
    
1,682
      
-
      
(130
)
      
-
      
1,552
  
Total Assets Under Management
  
$
38,490
    
$
1,108
    
$
(767
)
    
$
(172
)
  
$
38,659
  
(a) Includes assets from Dinsmore Group from November 1, 2015.
                    
                                           


Table II: Fund Flows - Full Year 2015
                    
                 
Fund
      
       
Market
           
distributions,
      
   
December 31,
    
appreciation/
    
Net cash
      
net of
    
December 31,
  
   
2014
    
(depreciation)
    
flows
      
reinvestments
    
2015
  
Equities:
                      
Open-end Funds
  
$
17,684
    
$
(820
)
  
$
(2,940
)
    
$
(113
)
  
$
13,811
  
Closed-end Funds
    
6,949
      
(370
)
    
374
  
(a)
    
(461
)
    
6,492
  
Institutional & PWM - direct
    
16,597
      
(957
)
    
(2,274
)
      
-
      
13,366
  
Institutional & PWM - sub-advisory
    
3,704
      
(66
)
    
(237
)
      
-
      
3,401
  
SICAV
    
-
      
(2
)
    
39
        
-
      
37
  
Total Equities
    
44,934
      
(2,215
)
    
(5,038
)
      
(574
)
    
37,107
  
Fixed Income:
                                          
Money-Market Fund
    
1,455
      
-
      
59
        
-
      
1,514
  
Institutional & PWM
    
58
      
-
      
(20
)
      
-
      
38
  
Total Fixed Income
    
1,513
      
-
      
39
        
-
      
1,552
  
Total Assets Under Management
  
$
46,447
    
$
(2,215
)
  
$
(4,999
)
    
$
(574
)
  
$
38,659
  
(a) Includes assets from Dinsmore Group from November 1, 2015.
                    
                                           


 

7

Table III
        
         
GAMCO INVESTORS, INC.
  
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
  
(Dollars in thousands, except per share data)
  
         
   
For the Quarter Ended December 31,
  
         
   
2015
    
2014
  
         
Investment advisory and incentive fees
  
$
78,696
    
$
94,903
  
Distribution fees and other income
    
11,621
      
14,911
  
Total revenues
    
90,317
      
109,814
  
                 
Compensation costs
    
37,195
      
41,021
  
Distribution costs
    
11,897
      
15,144
  
Other operating expenses
    
5,005
      
4,721
  
Total expenses
    
54,097
      
60,886
  
                 
Operating income before management fee
    
36,220
      
48,928
  
                 
Investment income
    
4,304
      
686
  
Interest expense
    
(3,061
)
    
(1,914
)
Shareholder-designated contribution
    
(6,396
)
    
-
  
Other income/(expense), net
    
(5,153
)
    
(1,228
)
                 
Income before management fee and income taxes
    
31,067
      
47,700
  
Management fee expense
    
3,118
      
4,770
  
Income before income taxes
    
27,949
      
42,930
  
Income tax expense
    
10,024
      
16,451
  
Income from continuing operations
    
17,925
      
26,479
  
Gain from discontinued operations, net of taxes
    
1,642
      
2,342
  
Net income attributable to GAMCO Investors, Inc.
  
$
19,567
    
$
28,821
  
                 
Net income per share attributable to GAMCO Investors, Inc.:
                
Basic - Continuing operations
  
$
0.68
    
$
1.05
  
Basic - Discontinued operations
    
0.06
      
0.09
  
Basic - Total
  
$
0.74
    
$
1.14
  
                 
Diluted - Continuing operations
  
$
0.67
    
$
1.04
  
Diluted - Discontinued operations
    
0.06
      
0.09
  
Diluted - Total
  
$
0.73
    
$
1.13
  
                 
Weighted average shares outstanding:
                
Basic
    
26,547
      
25,184
  
                 
Diluted
    
26,813
      
25,449
  
                 
Actual shares outstanding (a)
    
29,821
      
25,855
  
                 
Notes:
                
(a) Includes 553,100 and 710,750 of RSAs, respectively.
                
See GAAP to non-GAAP reconciliation on page 10.
                
 
8
 
Table IV
        
         
GAMCO INVESTORS, INC.
  
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
  
(Dollars in thousands, except per share data)
  
         
   
For the Year Ended December 31,
  
         
   
2015
    
2014
  
         
Investment advisory and incentive fees
  
$
329,965
    
$
360,498
  
Distribution fees and other income
    
51,011
      
61,438
  
Total revenues
    
380,976
      
421,936
  
                 
Compensation costs
    
146,371
      
156,533
  
Distribution costs
    
51,990
      
59,746
  
Other operating expenses
    
19,163
      
17,542
  
Total expenses
    
217,524
      
233,821
  
                 
Operating income before management fee
    
163,452
      
188,115
  
                 
Investment income
    
6,108
      
6,352
  
Interest expense
    
(8,636
)
    
(7,653
)
Shareholder-designated contribution
    
(6,396
)
    
(134
)
Other income/(expense), net
    
(8,924
)
    
(1,435
)
                 
Income before management fee and income taxes
    
154,528
      
186,680
  
Management fee expense
    
15,503
      
18,663
  
Income before income taxes
    
139,025
      
168,017
  
Income tax expense
    
51,726
      
61,734
  
Income from continuing operations
    
87,299
      
106,283
  
Gain/(Loss) from discontinued operations, net of taxes
    
(3,887
)
    
3,107
  
Net income attributable to GAMCO Investors, Inc.
  
$
83,412
    
$
109,390
  
                 
Net income per share attributable to GAMCO Investors, Inc.:
                
Basic - Continuing operations
  
$
3.43
    
$
4.20
  
Basic - Discontinued operations
    
(0.15
)
    
0.12
  
Basic - Total
  
$
3.28
    
$
4.32
  
                 
Diluted - Continuing operations
  
$
3.40
    
$
4.16
  
Diluted - Discontinued operations
    
(0.15
)
    
0.12
  
Diluted - Total
  
$
3.24
    
$
4.28
  
                 
Weighted average shares outstanding:
                
Basic
    
25,425
      
25,335
  
                 
Diluted
    
25,711
      
25,558
  
                 
Actual shares outstanding (a)
    
29,821
      
25,855
  
                 
Notes:
                
(a) Includes 553,100 and 710,750 of RSAs, respectively.
                
See GAAP to non-GAAP reconciliation on page 10.
                
 
 
9
 
Table V
                                        
GAMCO INVESTORS, INC.
  
UNAUDITED QUARTERLY CONDENSED CONSOLIDATED STATEMENTS OF INCOME
  
(Dollars in thousands, except per share data)
  
                                         
   
2015
    
2014
  
   
1st
    
2nd
    
3rd
    
4th
        
1st
    
2nd
    
3rd
    
4th
      
   
Quarter
    
Quarter
    
Quarter
    
Quarter
    
YTD
    
Quarter
    
Quarter
    
Quarter
    
Quarter
    
Full Year
  
Income Statement Data:
                                        
                                         
Revenues
  
$
99,806
    
$
98,693
    
$
92,160
    
$
90,317
    
$
380,976
    
$
101,150
    
$
104,345
    
$
106,627
    
$
109,814
    
$
421,936
  
                                                                                 
Expenses
    
57,081
      
55,518
      
50,828
      
54,097
      
217,524
      
56,697
      
58,739
      
57,499
      
60,886
      
233,821
  
                                                                                 
Operating income before
                                                                                
  management fee
    
42,725
      
43,175
      
41,332
      
36,220
      
163,452
      
44,453
      
45,606
      
49,128
      
48,928
      
188,115
  
                                                                                 
Investment income
    
541
      
638
      
625
      
4,304
      
6,108
      
4,280
      
833
      
553
      
686
      
6,352
  
Interest expense
    
(1,905
)
    
(1,855
)
    
(1,815
)
    
(3,061
)
    
(8,636
)
    
(1,915
)
    
(1,912
)
    
(1,912
)
    
(1,914
)
    
(7,653
)
Shareholder-designated contribution
    
-
      
-
              
(6,396
)
    
(6,396
)
    
-
      
(134
)
    
-
      
-
      
(134
)
Other income/(expense), net
    
(1,364
)
    
(1,217
)
    
(1,190
)
    
(5,153
)
    
(8,924
)
    
2,365
      
(1,213
)
    
(1,359
)
    
(1,228
)
    
(1,435
)
                                                                                 
Income before management
                                                                                
  fee and income taxes
    
41,361
      
41,958
      
40,142
      
31,067
      
154,528
      
46,818
      
44,393
      
47,769
      
47,700
      
186,680
  
Management fee expense
    
4,135
      
4,194
      
4,056
      
3,118
      
15,503
      
4,676
      
4,423
      
4,794
      
4,770
      
18,663
  
Income before income taxes
    
37,226
      
37,764
      
36,086
      
27,949
      
139,025
      
42,142
      
39,970
      
42,975
      
42,930
      
168,017
  
Income tax expense
    
14,078
      
13,989
      
13,635
      
10,024
      
51,726
      
14,650
      
15,028
      
15,605
      
16,451
      
61,734
  
Income from continuing operations
    
23,148
      
23,775
      
22,451
      
17,925
      
87,299
      
27,492
      
24,942
      
27,370
      
26,479
      
106,283
  
Gain/(Loss) from discontinued
                                                                                
  operations, net of taxes
    
1,628
      
326
      
(7,483
)
    
1,642
      
(3,887
)
    
462
      
4,008
      
(3,705
)
    
2,342
      
3,107
  
Net income attributable to
                                                                                
  GAMCO Investors, Inc.
  
$
24,776
    
$
24,101
    
$
14,968
    
$
19,567
    
$
83,412
    
$
27,954
    
$
28,950
    
$
23,665
    
$
28,821
    
$
109,390
  
                                                                                 
Net income per share
                                                                                
  attributable to GAMCO
                                                                                
  Investors, Inc.:
                                                                                
Basic - Continuing operations
  
$
0.92
    
$
0.95
    
$
0.90
    
$
0.68
    
$
3.43
    
$
1.08
    
$
0.98
    
$
1.08
    
$
1.05
    
$
4.20
  
Basic - Discontinued operations
    
0.07
      
0.01
      
(0.30
)
    
0.06
      
(0.15
)
    
0.02
      
0.16
      
(0.14
)
    
0.09
      
0.12
  
Basic - Total
  
$
0.99
    
$
0.96
    
$
0.60
    
$
0.74
    
$
3.28
    
$
1.10
    
$
1.14
    
$
0.94
    
$
1.14
    
$
4.32
  
                                                                                 
Diluted - Continuing operations
  
$
0.91
    
$
0.94
    
$
0.89
    
$
0.67
    
$
3.40
    
$
1.07
    
$
0.97
    
$
1.07
    
$
1.04
    
$
4.16
  
Diluted - Discontinued operations
    
0.06
      
0.01
      
(0.30
)
    
0.06
      
(0.15
)
    
0.02
      
0.16
      
(0.14
)
    
0.09
      
0.12
  
Diluted - Total
  
$
0.97
    
$
0.95
    
$
0.59
    
$
0.73
    
$
3.24
    
$
1.09
    
$
1.13
    
$
0.93
    
$
1.13
    
$
4.28
  
                                                                                 
Weighted average shares outstanding:
                                                                                
Basic
    
25,132
      
25,065
      
24,947
      
26,547
      
25,425
      
25,481
      
25,381
      
25,296
      
25,184
      
25,335
  
                                                                                 
Diluted
    
25,414
      
25,358
      
25,241
      
26,813
      
25,711
      
25,684
      
25,586
      
25,517
      
25,449
      
25,558
  
Reconciliation of non-GAAP
                                                                                
  financial measures to GAAP:
                                                                                
Operating income before
                                                                                
  management fee
    
42,725
      
43,175
      
41,332
      
36,220
      
163,452
      
44,453
      
45,606
      
49,128
      
48,928
      
188,115
  
Deduct: management fee expense
    
4,135
      
4,194
      
4,056
      
3,118
      
15,503
      
4,676
      
4,423
      
4,794
      
4,770
      
18,663
  
Operating income
  
$
38,590
    
$
38,981
    
$
37,276
    
$
33,102
    
$
147,949
    
$
39,777
    
$
41,183
    
$
44,334
    
$
44,158
    
$
169,452
  
                                                                                 
Operating margin before
                                                                                
  management fee
    
42.8
%
    
43.7
%
    
44.8
%
    
40.1
%
    
42.9
%
    
43.9
%
    
43.7
%
    
46.1
%
    
44.6
%
    
44.6
%
Operating margin after
                                                                                
  management fee
    
38.7
%
    
39.5
%
    
40.4
%
    
36.7
%
    
38.8
%
    
39.3
%
    
39.5
%
    
41.6
%
    
40.2
%
    
40.2
%
                                                                                 
 
 
10
 
Table VI
        
GAMCO INVESTORS, INC.
  
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
  
(Dollars in thousands, except per share data)
  
         
   
December 31,
    
December 31,
  
   
2015
    
2014
  
         
ASSETS
        
         
Cash and cash equivalents
  
$
13,719
    
$
12,694
  
Investments
    
32,979
      
38,945
  
Receivable from brokers
    
1,091
      
1,683
  
Other receivables
    
37,252
      
64,947
  
Income tax receivable
    
6,787
      
2,477
  
Other assets
    
12,199
      
12,046
  
Assets of discontinued operations
    
-
      
733,638
  
                 
  Total assets
  
$
104,027
    
$
866,430
  
                 
LIABILITIES AND EQUITY
                
                 
Payable to brokers
  
$
12
    
$
12
  
Income taxes payable and deferred tax liabilities
    
4,823
      
17,980
  
Compensation payable
    
24,426
      
30,803
  
Securities sold short, not yet purchased
    
129
      
-
  
Accrued expenses and other liabilities
    
41,739
      
33,413
  
Liabilities of discontinued operations
    
-
      
75,930
  
  Sub-total
    
71,129
      
158,138
  
                 
5.875% Senior notes (due June 1, 2021)
    
24,225
      
100,000
  
4% PIK note (due November 30, 2020)
    
250,000
      
-
  
Loan from GGCP (due December 28, 2016)
    
35,000
      
-
  
0% Subordinated Debentures (due December 31, 2015) (b)
    
-
      
12,163
  
  Total debt
    
309,225
      
112,163
  
  Total liabilities
    
380,354
      
270,301
  
                 
Redeemable noncontrolling interests of discontinued operations
    
-
      
68,334
  
                 
GAMCO Investors, Inc.'s stockholders' equity
    
(276,327
)
    
525,061
  
Noncontrolling interests
    
-
      
2,734
  
Total equity
    
(276,327
)
    
527,795
  
                 
Total liabilities and equity
  
$
104,027
    
$
866,430
  
                 
(b) The 0% Subordinated Debentures due December 31, 2015 have a face value of $0.0 million and $13.1 million,
  
respectively.
                

11

SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION

The financial results set forth in this press release are preliminary. Our disclosure and analysis in this press release, which do not present historical information, contain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.  Forward-looking statements convey our current expectations or forecasts of future events. You can identify these statements because they do not relate strictly to historical or current facts. They use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” and other words and terms of similar meaning. They also appear in any discussion of future operating or financial performance. In particular, these include statements relating to future actions, future performance of our products, expenses, the outcome of any legal proceedings, and financial results.  Although we believe that we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know about our business and operations, the economy and other conditions, there can be no assurance that our actual results will not differ materially from what we expect or believe.  Therefore, you should proceed with caution in relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance.

Forward-looking statements involve a number of known and unknown risks, uncertainties and other important factors, some of which are listed below, that are difficult to predict and could cause actual results and outcomes to differ materially from any future results or outcomes expressed or implied by such forward-looking statements.  Some of the factors that could cause our actual results to differ from our expectations or beliefs include a decline in the securities markets that adversely affect our assets under management, negative performance of our products, the failure to perform as required under our investment management agreements, a general downturn in the economy that negatively impacts our operations. We also direct your attention to the more specific discussions of these and other risks, uncertainties and other important factors  contained in our Form 10-K and other public filings.  Other factors that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We do not undertake to update publicly any forward-looking statements if we subsequently learn that we are unlikely to achieve our expectations whether as a result of new information, future developments or otherwise, except as may be required by law.
 
 
12