Delaware
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1-14761
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13-4007862
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(State or other
jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer
Identification No.)
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One Corporate Center, Rye, NY
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10580
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(Address of principal executive offices)
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(Zip Code)
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Item 2.02
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Results of Operations and Financial Condition.
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Item 9.01
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Financial Statements and Exhibits.
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For Immediate Release:
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Contact:
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Douglas R. Jamieson
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President
and Chief Operating Officer
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(914) 921-5020
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For further information please visit
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www.gabelli.com
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·
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Fourth Quarter Earnings of $0.88 per diluted share
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·
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Average AUM at $37.5 billion
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Financial Highlights
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||||||||||||||||||
Q1
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Q1
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|||||||||||||||||
($'s in 000's except AUM and per share data)
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2016
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2015 (a)
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|||||||||||||||
AUM - end of period (in millions)
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$
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38,721
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$
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45,507
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||||||||||||||
AUM - average (in millions)
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37,542
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45,756
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||||||||||||||||
Revenues
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81,385
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99,806
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||||||||||||||||
Operating income before management fee (b)
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46,022
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42,725
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||||||||||||||||
Operating margin before management fee
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56.5
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%
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42.8
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%
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||||||||||||||
Operating income
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44,942
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38,590
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||||||||||||||||
Operating margin
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55.2
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%
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38.7
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%
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||||||||||||||
Other expense, net
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(2,815
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)
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(1,364
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) |
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|||||||||||||
Income before income taxes
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42,127
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37,226
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||||||||||||||||
Effective tax rate
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38.2
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%
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37.8
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%
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||||||||||||||
Income from continuing operations
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26,025
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23,148
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||||||||||||||||
Income per share - continuing operations
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$
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0.88
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$
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0.91
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||||||||||||||
Income from discontinued operations
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-
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1,628
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||||||||||||||||
Discontinued operations per share
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-
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$
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0.06
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|||||||||||||||
Net income
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26,025
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24,776
|
||||||||||||||||
Net income per share
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$
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0.88
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$
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0.97
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||||||||||||||
Shares outstanding at March 31 (c)
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29,790
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25,810
|
||||||||||||||||
(a) Adjusted for spin-off of AC.
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||||||||||||||||||
(b) See GAAP to non-GAAP reconciliation on page 8.
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||||||||||||||||||
(c) Shares outstanding consist of 29,237 non-RSA shares and 553 RSA shares at March 31,
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||||||||||||||||||
2016 and 25,103 non-RSA shares and 707 RSA shares at March 31, 2015.
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||||||||||||||||||
% Change From
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||||||||||||||||||||
March 31,
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December 31,
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March 31,
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December 31,
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March 31,
|
||||||||||||||||
2016
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2015
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2015
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2015
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2015
|
||||||||||||||||
Equities:
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||||||||||||||||||||
Open-end Funds
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$
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13,807
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$
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13,811
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$
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16,643
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(0.0
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%)
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(17.0
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%)
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||||||||||
Closed-end Funds
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6,663
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6,492
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7,071
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2.6
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(5.8
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)
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||||||||||||||
Institutional & PWM - direct
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13,280
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13,366
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16,407
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(0.6
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)
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(19.1
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)
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|||||||||||||
Institutional & PWM - sub-advisory
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3,427
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3,401
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3,814
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0.8
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(10.1
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)
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||||||||||||||
SICAV
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38
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37
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-
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2.7
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n/m
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|
||||||||||||||
Total Equities
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37,215
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37,107
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43,935
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0.3
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(15.3
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)
|
||||||||||||||
Fixed Income:
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||||||||||||||||||||
Money-Market Fund
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1,474
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1,514
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1,520
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(2.6
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)
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(3.0
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)
|
|||||||||||||
Institutional & PWM
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32
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38
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52
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(15.8
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)
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(38.5
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)
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|||||||||||||
Total Fixed Income
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1,506
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1,552
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1,572
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(3.0
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)
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(4.2
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)
|
|||||||||||||
Total Assets Under Management
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$
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38,721
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$
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38,659
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$
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45,507
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0.2
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(14.9
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)
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|||||||||||
-
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Total revenues for the first quarter of 2016 were $81.4 million, compared with $99.8 million in the prior year, reflecting fees earned in investment advisory services on a lower level of assets and a decline in distribution and other income.
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-
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Investment advisory fees were $70.8 million in the first quarter of 2016 versus $86.1 million in the first quarter of 2015. 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.
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-
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Distribution fees from our open-end equity funds and other income were $10.5 million for the first quarter 2016, down from $13.7 million in the prior year quarter.
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-
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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 RSUs 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 determined 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 through 2019.
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-
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On March 31, 2016, Gabelli Equity Trust completed the offering of $80 million of 5.45% Series J Cumulative Preferred Stock. The preferred stock is perpetual, non-callable for five years, and was issued at $25 per share.
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A.
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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 III.
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B.
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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.
|
1st Quarter
|
|||||||||
2016
|
2015
|
||||||||
Operating income before management fee
|
$
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46,022
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$
|
42,725
|
|||||
Adjustments:
|
|||||||||
Add back:
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Incremental RSA expense
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-
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603
|
||||||
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Costs to launch Closed-end fund
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-
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1,000
|
||||||
Deduct:
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Variable compensation reduction from RSU
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(10,412
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)
|
-
|
|||||
Adjusted operating income before management fee
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35,610
|
44,328
|
|||||||
Adjusted operating margin before management fee
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43.8
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%
|
44.4
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%
|
|||||
1st Quarter
|
|||||||||
2016
|
2015
|
||||||||
Operating income
|
$
|
44,942
|
$
|
38,590
|
|||||
Adjustments:
|
|||||||||
Add back:
|
Incremental RSA expense
|
-
|
603
|
||||||
|
Costs to launch Closed-end fund
|
-
|
1,000
|
||||||
Deduct:
|
Variable compensation reduction from RSU
|
(10,412
|
)
|
-
|
|||||
Adjusted operating income
|
34,530
|
40,193
|
|||||||
Adjusted operating margin
|
42.4
|
%
|
40.3
|
%
|
|||||