EX-99.1 2 ex991080317.htm EXHIBIT 99.1, DATED AUGUST 3, 2017
Exhibit 99.1
 
 
 
For Immediate Release:
 
Contact:
 
Kieran Caterina or Diane M. LaPointe
 
 
SVPs and Co-Chief Accounting Officers
 
 
(914) 921-5149 or 7763
 
 
 
 
 
For further information please visit
 
 
www.gabelli.com
 
 
GAMCO Investors, Inc. Reports Second Quarter 2017 Results

- 
AUM of $41.3 billion, up 5.2% year over year
- 
Pretax profits of $37.4 million
- 
Second Quarter Earnings of $0.76 per diluted share

Rye, New York, August 3, 2017 – GAMCO Investors, Inc. (“GAMCO”) (NYSE: GBL) today reported financial results for the second quarter including revenues of $87.6 million, net income of $22.9 million and earnings of $0.76 per diluted share.
 
Financial Highlights
                                                
 
  
Second Quarter
          
YTD
        
($'s in 000's except AUM and per share data)
  
2017
          
2016
          
2017
          
2016
        
 
                                                
AUM - end of period (in millions)
  
$
41,310
          
$
39,273
          
$
41,310
          
$
39,273
        
AUM - average (in millions)
    
41,489
            
38,888
            
41,063
            
38,143
        
 
                                                        
GAAP
                                                        
Revenues
    
87,600
            
83,944
            
173,517
            
165,329
        
 
                                                        
Income before income taxes
    
37,448
            
44,184
            
77,568
            
86,311
        
Effective tax rate
            
38.9
%
            
37.7
%
            
38.5
%
            
37.9
%
 
                                                                
Net income
    
22,894
              
27,543
              
47,714
              
53,568
          
 
                                                                
Net income per fully diluted share
  
$
0.76
            
$
0.93
            
$
1.58
            
$
1.82
          
 
                                                                
Non-GAAP
                                                                
Adjusted income before income taxes
    
33,373
              
31,138
              
65,368
              
60,654
          
Adjusted effective tax rate
            
38.1
%
            
37.7
%
            
38.1
%
            
37.9
%
 
                                                                
Adjusted net income
    
20,657
              
19,413
              
40,450
              
37,647
          
 
                                                                
Adjusted net income per fully diluted share
  
$
0.69
            
$
0.66
            
$
1.35
            
$
1.28
          
 
                                                                
Weighted average diluted shares outstanding
    
31,100
              
29,522
              
31,130
              
29,510
          
 
                                                                
Shares outstanding at June 30
    
29,301
              
29,774
              
29,301
              
29,774
          
 
                                                                
See the reconciliation to the comparable U.S. GAAP measures starting on page 10.
                          
 
Assets Under Management

 
  
June 30,
    
June 30,
  
 
  
2017
    
2016
  
Equities:
            
Open-end Funds
  
$
13,574
    
$
13,981
  
Closed-end Funds
    
7,359
      
6,917
  
Institutional & PWM - direct (a)
    
13,437
      
13,326
  
Institutional & PWM - sub-advisory
    
5,048
      
3,459
  
SICAV
    
50
      
40
  
Total Equities
    
39,468
      
37,723
  
Fixed Income:
                
Money-Market Fund
    
1,813
      
1,518
  
Institutional & PWM
    
29
      
32
  
Total Fixed Income
    
1,842
      
1,550
  
Total Assets Under Management
  
$
41,310
    
$
39,273
  
(a) Includes $300 million and $307 million of Money Market Fund AUM at
  
June 30, 2017 and June 30, 2016, respectively.
          
 
                

Our second quarter 2017 AUM, while up 5.2% from the prior year was essentially unchanged from the $41.4 billion at March 31, 2017.  Net outflows of $0.6 billion and distributions of $0.1 billion were offset by market appreciation of $0.7 billion.

Average AUM were $41.5 billion for the second quarter of 2017 versus $40.6 billion for the first quarter of 2017 and $38.9 billion for the second quarter of 2016.

Revenues

-
Total revenues for the second quarter of 2017 were $87.6 million, compared with $83.9 million in the prior year.

-
Investment advisory fees were $76.6 million in the second quarter of 2017 versus $72.8 million in the second quarter of 2016.  Revenues from our open-end and closed-end funds tracked our average AUM in the funds and were $49.2 million in the second quarter of 2017, an increase from the $47.0 million in the year ago quarter.  Institutional and Private Wealth Management accounted for $26.4 million of the revenues in 2017 versus $25.2 million in 2016.  SICAV revenues increased to $1.0 million in 2017 from $0.6 million in 2016.

-
Distribution fees from our open-end equity funds and other income were $11.0 million for the second quarter 2017, versus the $11.2 million in the prior year quarter.

Operating Income – Second Quarter – Operating margin 45.3% vs. 55.7%

Operating income, which is net of management fee expense, was $39.7 million in the second quarter of 2017 versus $46.7 million in the prior year period.  During the second quarter of 2017, we recorded an additional $3.7 million of stock compensation expense relating to the accelerated vesting of all the outstanding RSAs that were issued by Associated Capital Group, Inc. (“AC”) at the time of the spin-off from GAMCO.  This expense related to GAMCO teammates who held these AC RSAs.  There will be no further expense related to AC RSAs recorded after the second quarter of 2017; however, there will continue to be expense related to the outstanding GBL RSAs.
2
As previously disclosed, the Company has deferred the cash compensation of the Chief Executive Officer relating to all of 2016 (“2016 DCCA”) and the first half of 2017 (“2017 DCCA”) to provide the Company with flexibility to pay down debt.  We have made substantial progress toward this objective, having reduced our debt since the November 2015 spin-off of AC, resulting in Standard & Poor’s recent revision of its outlook to stable from negative and reaffirmation of our debt rating of BBB-.

Absent the cash compensation deferrals, we would have recorded $7.4 million and $13.0 million of additional expenses in the second quarters of 2017 and 2016, respectively.  In total, there is $67.5 million of deferred cash compensation that has not been recorded yet but will be in the remainder of 2017, 2018 and 2019 in accordance with GAAP.

Operating income before management fee was $42.0 million in the second quarter 2017 versus $47.9 million in the second quarter 2016.  Operating margin before management fee was 48.0% versus 57.0% in the second quarter of 2016.

See supplemental information and notes to non-GAAP measures on pages 8 and 10 for further information regarding non-GAAP measures.

Other expense

We recognized $2.2 million in net other expenses in the 2017 second quarter versus net other expenses of $2.6 million in the second quarter of 2016.  Interest expense decreased by $0.5 million year over year reflecting lower debt outstanding of $214.0 million at June 30, 2017 versus $274.1 million at June 30, 2016.  Investment income for 2017 was $0.5 million vs. $0.6 million in 2016.

Income Taxes

The Company’s effective tax rate (“ETR”) for the quarter ended June 30, 2017 was 38.9% versus 37.7% for the quarter ended June 30, 2016.

Business and Investment Highlights

-
On July 10, 2017, Standard & Poor’s revised its outlook on GAMCO to stable from negative and reaffirmed its BBB- rating.
 
Balance Sheet

We ended the quarter with cash of $90.4 million and investments of $35.2 million and gross debt of $214.0 million (excluding deferred cash compensation of $105.5 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.
 
3
Shareholder Compensation

During the quarter ended June 30, 2017, we repurchased 33,410 shares at an average price of $28.80 per share for a total investment of $1.0 million and distributed $0.6 million in dividends.  Since our IPO in February 1999, we have returned $1.9 billion in total to shareholders comprised of $1.0 billion of spin-offs, $489.8 million in the form of dividends and $443.6 million through stock buybacks of 10,060,160 shares.

On August 3, 2017, GAMCO’s Board of Directors declared a regular quarterly dividend of $0.02 per share payable on September 26, 2017 to its Class A and Class B shareholders of record on September 12, 2017.

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).
 
4
The Company reported Assets Under Management as follows (in millions):
                    
 
                              
Table I: Fund Flows - 2nd Quarter 2017
                          
 
                    
Fund
        
 
        
Market
          
distributions,
        
 
  
March 31,
    
appreciation/
    
Net cash
    
net of
    
June 30,
  
 
  
2017
    
(depreciation)
    
flows
    
reinvestments
    
2017
  
Equities:
                              
Open-end Funds
  
$
13,708
    
$
215
    
$
(339
)
  
$
(10
)
  
$
13,574
  
Closed-end Funds
    
7,315
      
172
      
(10
)
    
(118
)
    
7,359
  
Institutional & PWM - direct
    
13,492
      
234
      
(289
)
    
-
      
13,437
  
Institutional & PWM - sub-advisory
    
5,019
      
80
      
(51
)
    
-
      
5,048
  
SICAV
    
49
      
2
      
(1
)
    
-
      
50
  
Total Equities
    
39,583
      
703
      
(690
)
    
(128
)
    
39,468
  
Fixed Income:
                                        
Money-Market Fund
    
1,752
      
4
      
57
      
-
      
1,813
  
Institutional & PWM
    
34
      
-
      
(5
)
    
-
      
29
  
Total Fixed Income
    
1,786
      
4
      
52
      
-
      
1,842
  
Total Assets Under Management
  
$
41,369
    
$
707
    
$
(638
)
  
$
(128
)
  
$
41,310
  
 
                                        
 
                                        

Table II: Fund Flows - Year to date June 2017
              
 
            
 
                  
 
  
Fund
        
 
        
Market
        
  
  
distributions,
        
 
  
December 31,
    
appreciation/
    
Net cash
  
 
  
net of
    
June 30,
  
 
  
2016
    
(depreciation)
    
flows
  
 
  
reinvestments
    
2017
  
Equities:
                  
 
            
Open-end Funds
  
$
13,462
    
$
837
    
$
(704
)
 
  
$
(21
)
  
$
13,574
  
Closed-end Funds
    
7,150
      
463
      
(14
)
 
    
(240
)
    
7,359
  
Institutional & PWM - direct
    
13,441
      
910
      
(914
)
 
    
-
      
13,437
  
Institutional & PWM - sub-advisory
    
3,783
      
154
      
1,111
  
(a)
    
-
      
5,048
  
SICAV
    
50
      
4
      
(4
)
 
    
-
      
50
  
Total Equities
    
37,886
      
2,368
      
(525
)
 
    
(261
)
    
39,468
  
Fixed Income:
                        
 
                
Money-Market Fund
    
1,767
      
5
      
41
  
 
    
-
      
1,813
  
Institutional & PWM
    
31
      
-
      
(2
)
 
    
-
      
29
  
Total Fixed Income
    
1,798
      
5
      
39
  
 
    
-
      
1,842
  
Total Assets Under Management
  
$
39,684
    
$
2,373
    
$
(486
)
 
  
$
(261
)
  
$
41,310
  
 
                        
 
                
(a) Includes $1.2 billion from being approved as the sub-advisor on two sub-advisory entities as of February 27, 2017.
          
 
                        
 
                
 
5
Table III
            
 
            
GAMCO INVESTORS, INC.
  
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
  
(Dollars in thousands, except per share data)
  
 
            
 
  
For the Quarter Ended
  
 
  
June 30,
  
 
  
2017
    
2016
  
 
            
Investment advisory and incentive fees
  
$
76,625
    
$
72,794
  
Distribution fees and other income
    
10,975
      
11,150
  
Total revenues
    
87,600
      
83,944
  
 
                
Compensation costs
    
29,437
      
20,623
  
Distribution costs
    
10,795
      
10,501
  
Other operating expenses
    
5,352
      
4,940
  
Total expenses
    
45,584
      
36,064
  
 
                
Operating income before management fee
    
42,016
      
47,880
  
 
                
Investment income
    
537
      
605
  
Interest expense
    
(2,749
)
    
(3,168
)
Other expense, net
    
(2,212
)
    
(2,563
)
 
                
Income before management fee and income taxes
    
39,804
      
45,317
  
Management fee expense
    
2,356
      
1,133
  
Income before income taxes
    
37,448
      
44,184
  
Income tax expense
    
14,554
      
16,641
  
Net income attributable to GAMCO Investors, Inc.
  
$
22,894
    
$
27,543
  
 
                
Net income per share attributable to GAMCO Investors, Inc.:
                
Basic
  
$
0.79
    
$
0.94
  
 
                
Diluted
  
$
0.76
    
$
0.93
  
 
                
Weighted average shares outstanding:
                
Basic
    
28,896
      
29,234
  
 
                
Diluted
    
31,100
      
29,522
  
 
                
Actual shares outstanding (a)
    
29,301
      
29,774
  
 
                
Notes:
                
(a) Includes 420,240 and 549,700 of RSAs, respectively.
                
 
                
See GAAP to non-GAAP reconciliation on page 8.
                


6
Table IV
            
 
            
GAMCO INVESTORS, INC.
  
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
  
(Dollars in thousands, except per share data)
  
 
            
 
  
For the Six Months Ended
  
 
  
June 30,
  
 
  
2017
    
2016
  
 
            
Investment advisory and incentive fees
  
$
151,614
    
$
143,642
  
Distribution fees and other income
    
21,903
      
21,687
  
Total revenues
    
173,517
      
165,329
  
 
                
Compensation costs
    
54,715
      
40,897
  
Distribution costs
    
21,708
      
21,218
  
Other operating expenses
    
10,471
      
9,312
  
Total expenses
    
86,894
      
71,427
  
 
                
Operating income before management fee
    
86,623
      
93,902
  
 
                
Investment income
    
1,046
      
1,196
  
Interest expense
    
(5,581
)
    
(6,574
)
Other expense, net
    
(4,535
)
    
(5,378
)
 
                
Income before management fee and income taxes
    
82,088
      
88,524
  
Management fee expense
    
4,520
      
2,213
  
Income before income taxes
    
77,568
      
86,311
  
Income tax expense
    
29,854
      
32,743
  
Net income attributable to GAMCO Investors, Inc.
  
$
47,714
    
$
53,568
  
 
                
Net income per share attributable to GAMCO Investors, Inc.:
                
Basic
  
$
1.65
    
$
1.83
  
 
                
Diluted
  
$
1.58
    
$
1.82
  
 
                
Weighted average shares outstanding:
                
Basic
    
28,933
      
29,241
  
 
                
Diluted
    
31,130
      
29,510
  
 
                
Actual shares outstanding (a)
    
29,301
      
29,774
  
 
                
Notes:
                
(a) Includes 420,240 and 549,700 of RSAs, respectively.
                
See GAAP to non-GAAP reconciliation on page 8.
                

 
7
Table V
                                                
GAMCO INVESTORS, INC.
  
UNAUDITED QUARTERLY CONDENSED CONSOLIDATED STATEMENTS OF INCOME
  
(Dollars in thousands, except per share data)
  
 
                                                
 
  
2017
    
2016
  
 
  
1st
    
2nd
          
1st
    
2nd
    
3rd
    
4th
        
 
  
Quarter
    
Quarter
    
Full Year
    
Quarter
    
Quarter
    
Quarter
    
Quarter
    
Full Year
  
Income Statement Data:
                                                
 
                                                
Revenues
  
$
85,917
    
$
87,600
    
$
173,517
    
$
81,385
    
$
83,944
    
$
87,721
    
$
99,950
    
$
353,000
  
 
                                                                
Expenses
    
41,310
      
45,584
      
86,894
      
35,363
      
36,064
      
38,482
      
44,777
      
154,686
  
 
                                                                
Operating income before
                                                                
  management fee
    
44,607
      
42,016
      
86,623
      
46,022
      
47,880
      
49,239
      
55,173
      
198,314
  
 
                                                                
Investment income
    
509
      
537
      
1,046
      
591
      
605
      
426
      
1,483
      
3,105
  
Interest expense
    
(2,832
)
    
(2,749
)
    
(5,581
)
    
(3,406
)
    
(3,168
)
    
(3,155
)
    
(2,945
)
    
(12,674
)
Other expense, net
    
(2,323
)
    
(2,212
)
    
(4,535
)
    
(2,815
)
    
(2,563
)
    
(2,729
)
    
(1,462
)
    
(9,569
)
 
                                                                
Income before management
                                                                
  fee and income taxes
    
42,284
      
39,804
      
82,088
      
43,207
      
45,317
      
46,510
      
53,711
      
188,745
  
Management fee expense
    
2,164
      
2,356
      
4,520
      
1,080
      
1,133
      
1,163
      
3,142
      
6,518
  
Income before income taxes
    
40,120
      
37,448
      
77,568
      
42,127
      
44,184
      
45,347
      
50,569
      
182,227
  
Income tax expense
    
15,300
      
14,554
      
29,854
      
16,102
      
16,641
      
14,486
      
17,877
      
65,106
  
Net income attributable to
                                                                
  GAMCO Investors, Inc.
  
$
24,820
    
$
22,894
    
$
47,714
    
$
26,025
    
$
27,543
    
$
30,861
    
$
32,692
    
$
117,121
  
 
                                                                
Net income per share
                                                                
  attributable to GAMCO
                                                                
  Investors, Inc.:
                                                                
Basic
  
$
0.86
    
$
0.79
    
$
1.65
    
$
0.89
    
$
0.94
    
$
1.06
    
$
1.12
    
$
4.01
  
 
                                                                
Diluted
  
$
0.82
    
$
0.76
    
$
1.58
    
$
0.88
    
$
0.93
    
$
1.03
    
$
1.07
    
$
3.92
  
 
                                                                
Weighted average shares outstanding:
                                                                
Basic
    
28,970
      
28,896
      
28,933
      
29,247
      
29,234
      
29,185
      
29,062
      
29,182
  
 
                                                                
Diluted
    
31,160
      
31,100
      
31,130
      
29,684
      
29,522
      
30,406
      
31,241
      
30,170
  
 
                                                                
Reconciliation of non-GAAP
                                                                
  financial measures to GAAP:
                                                                
Operating income before
                                                                
  management fee
    
44,607
      
42,016
      
86,623
      
46,022
      
47,880
      
49,239
      
55,173
      
198,314
  
Deduct: management fee expense
    
2,164
      
2,356
      
4,520
      
1,080
      
1,133
      
1,163
      
3,142
      
6,518
  
Operating income
  
$
42,443
    
$
39,660
    
$
82,103
    
$
44,942
    
$
46,747
    
$
48,076
    
$
52,031
    
$
191,796
  
 
                                                                
Operating margin before
                                                                
  management fee
    
51.9
%
    
48.0
%
    
49.9
%
    
56.5
%
    
57.0
%
    
56.1
%
    
55.2
%
    
56.2
%
Operating margin after
                                                                
  management fee
    
49.4
%
    
45.3
%
    
47.3
%
    
55.2
%
    
55.7
%
    
54.8
%
    
52.1
%
    
54.3
%
 
                                                                
 
                                                                
Notes on Non-GAAP Financial Measures:
  
Operating income before management fee 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.
  

8
Table VI
                  
GAMCO INVESTORS, INC.
  
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
  
(Dollars in thousands, except per share data)
  
 
                  
 
  
June 30,
    
December 31,
    
June 30,
  
 
  
2017
    
2016
    
2016
  
 
                  
ASSETS
                  
 
                  
Cash and cash equivalents
  
$
90,405
    
$
39,812
    
$
24,224
  
Investments
    
35,225
      
37,285
      
32,079
  
Receivable from brokers
    
843
      
453
      
230
  
Other receivables
    
33,707
      
50,756
      
31,811
  
Income tax receivable and deferred tax asset
    
19,361
      
9,349
      
11,905
  
Other assets
    
11,390
      
11,574
      
13,665
  
 
                        
  Total assets
  
$
190,931
    
$
149,229
    
$
113,914
  
 
                        
LIABILITIES AND EQUITY
                        
 
                        
Payable to brokers
  
$
4,670
    
$
66
    
$
45
  
Income taxes payable and deferred tax liabilities
    
3,486
      
3,815
      
822
  
Compensation payable
    
53,642
      
42,384
      
25,592
  
Accrued expenses and other liabilities
    
36,186
      
35,656
      
36,829
  
  Sub-total
    
97,984
      
81,921
      
63,288
  
 
                        
5.875% Senior notes (due June 1, 2021)
    
24,132
      
24,120
      
24,109
  
4.5% Convertible note (due August 15, 2021)
    
109,853
      
109,835
      
-
  
4% PIK note (due November 30, 2020)
    
80,000
      
100,000
      
250,000
  
  Total debt
    
213,985
      
233,955
      
274,109
  
  Total liabilities
    
311,969
      
315,876
      
337,397
  
 
                        
GAMCO Investors, Inc.'s stockholders' deficit
    
(121,038
)
    
(166,647
)
    
(223,483
)
 
                        
Total liabilities and equity
  
$
190,931
    
$
149,229
    
$
113,914
  
 
                        


9
Non-GAAP information and reconciliation:

GAMCO’s non-GAAP measures include adjusted income before taxes, adjusted effective tax rate, adjusted net income and adjusted net income per fully diluted share.  GAMCO’s calculation of these non-GAAP measures may not be comparable to similarly titled measures of other companies due to potential differences between companies in  the method of calculation.  As a result, the use of these non-GAAP measures has limitations and should not be considered superior to, in isolation from, or a substitute for, related U.S. GAAP measures.
 
These non-GAAP measures allow management and investors to view operating trends, perform analytical comparisons and benchmark performance between periods to understand operating performance without regard to items that we do not consider to be a component of our core operating performance.  Management uses these measures in its financial, investment and operational decision-making processes, for internal reporting and as part of its forecasting and budgeting processes.  For these reasons we believe these non-GAAP measures are useful for our investors.
 
Adjusted income before taxes, adjusted effective tax rate, adjusted net income and adjusted net income per fully diluted share can be used by investors to review our results on a consistent basis.  Examples of adjustments to these measures include the GAAP impact of the 2016 DCCA and 2017 DCCA that were put in place to enable the Company to more quickly pay down its debt as well as the acceleration of outstanding RSAs by AC.

The following tables reconcile adjusted income before taxes, adjusted effective tax rate, adjusted net income and adjusted net income per share to their closest GAAP equivalent:

 
  
For the three months ended June 30, 2017
  
 
                              
 
                    
Impact of
        
 
  
Reported
    
Impact of
    
Impact of
    
AC RSA
        
 
  
GAAP
    
2017 DCCA
    
2016 DCCA
    
Acceleration
    
Non-GAAP
  
 
                              
Total revenues
  
$
87,600
    
$
-
    
$
-
    
$
-
    
$
87,600
  
 
                                        
Compensation costs
    
29,437
      
9,666
      
(3,260
)
    
(3,683
)
    
32,160
  
Distribution costs
    
10,795
      
-
      
-
      
-
      
10,795
  
Other operating expenses
    
5,352
      
-
      
-
      
-
      
5,352
  
Total expenses
    
45,584
      
9,666
      
(3,260
)
    
(3,683
)
    
48,307
  
 
                                        
Operating income before management fee
    
42,016
      
(9,666
)
    
3,260
      
3,683
      
39,293
  
 
                                        
Other expense, net
    
(2,212
)
    
-
      
-
      
-
      
(2,212
)
 
                                        
Income before management fee and income taxes
    
39,804
      
(9,666
)
    
3,260
      
3,683
      
37,081
  
Management fee expense
    
2,356
      
1,688
      
(704
)
    
368
      
3,708
  
Income before income taxes
    
37,448
      
(11,354
)
    
3,964
      
3,315
      
33,373
  
Income tax expense
    
14,554
      
(4,413
)
    
1,541
      
1,034
      
12,716
  
Net income attributable to GAMCO Investors, Inc.
  
$
22,894
    
$
(6,941
)
  
$
2,423
    
$
2,281
    
$
20,657
  
 
                                        
Net income per share attributable to GAMCO Investors, Inc.:
                                  
Basic
  
$
0.79
    
$
(0.24
)
  
$
0.08
    
$
0.08
    
$
0.71
  
Diluted
  
$
0.76
    
$
(0.22
)
  
$
0.08
    
$
0.07
    
$
0.69
  
 
                                        

 
10
 
  
For the three months ended June 30, 2016
  
 
  
Reported
    
Impact of
        
 
  
GAAP
    
2016 DCCA
    
Non-GAAP
  
 
                  
Total revenues
  
$
83,944
    
$
-
    
$
83,944
  
 
                        
Compensation costs
    
20,623
      
10,719
      
31,342
  
Distribution costs
    
10,501
      
-
      
10,501
  
Other operating expenses
    
4,940
      
-
      
4,940
  
Total expenses
    
36,064
      
10,719
      
46,783
  
 
                        
Operating income before management fee
    
47,880
      
(10,719
)
    
37,161
  
 
                        
Other expense, net
    
(2,563
)
    
-
      
(2,563
)
 
                        
Income before management fee and income taxes
    
45,317
      
(10,719
)
    
34,598
  
Management fee expense
    
1,133
      
2,327
      
3,460
  
Income before income taxes
    
44,184
      
(13,046
)
    
31,138
  
Income tax expense
    
16,641
      
(4,916
)
    
11,725
  
Net income attributable to GAMCO Investors, Inc.
  
$
27,543
    
$
(8,130
)
  
$
19,413
  
 
                        
Net income per share attributable to GAMCO Investors, Inc.:
                  
Basic
  
$
0.94
    
$
(0.28
)
  
$
0.66
  
Diluted
  
$
0.93
    
$
(0.28
)
  
$
0.66
  
 
                        

 
  
For the six months ended June 30, 2017
  
 
                              
 
                    
Impact of
        
 
  
Reported
    
Impact of
    
Impact of
    
AC RSA
        
 
  
GAAP
    
2017 DCCA
    
2016 DCCA
    
Acceleration
    
Non-GAAP
  
 
                              
Total revenues
  
$
173,517
    
$
-
    
$
-
    
$
-
    
$
173,517
  
 
                                        
Compensation costs
    
54,715
      
19,206
      
(5,759
)
    
(3,683
)
    
64,479
  
Distribution costs
    
21,708
      
-
      
-
      
-
      
21,708
  
Other operating expenses
    
10,471
      
-
      
-
      
-
      
10,471
  
Total expenses
    
86,894
      
19,206
      
(5,759
)
    
(3,683
)
    
96,658
  
 
                                        
Operating income before management fee
    
86,623
      
(19,206
)
    
5,759
      
3,683
      
76,859
  
 
                                        
Other expense, net
    
(4,535
)
    
-
      
-
      
-
      
(4,535
)
 
                                        
Income before management fee and income taxes
    
82,088
      
(19,206
)
    
5,759
      
3,683
      
72,324
  
Management fee expense
    
4,520
      
3,552
      
(1,484
)
    
368
      
6,956
  
Income before income taxes
    
77,568
      
(22,758
)
    
7,243
      
3,315
      
65,368
  
Income tax expense
    
29,854
      
(8,761
)
    
2,791
      
1,034
      
24,918
  
Net income attributable to GAMCO Investors, Inc.
  
$
47,714
    
$
(13,997
)
  
$
4,452
    
$
2,281
    
$
40,450
  
 
                                        
Net income per share attributable to GAMCO Investors, Inc.:
                                  
Basic
  
$
1.65
    
$
(0.48
)
  
$
0.15
    
$
0.08
    
$
1.40
  
Diluted
  
$
1.58
    
$
(0.45
)
  
$
0.14
    
$
0.07
    
$
1.35
  
 
                                        


 
11
 
  
For the six months ended June 30, 2016
  
 
  
Reported
    
Impact of
        
 
  
GAAP
    
2016 DCCA
    
Non-GAAP
  
 
                  
Total revenues
  
$
165,329
    
$
-
    
$
165,329
  
 
                        
Compensation costs
    
40,897
      
21,131
      
62,028
  
Distribution costs
    
21,218
      
-
      
21,218
  
Other operating expenses
    
9,312
      
-
      
9,312
  
Total expenses
    
71,427
      
21,131
      
92,558
  
 
                        
Operating income before management fee
    
93,902
      
(21,131
)
    
72,771
  
 
                        
Other expense, net
    
(5,378
)
    
-
      
(5,378
)
 
                        
Income before management fee and income taxes
    
88,524
      
(21,131
)
    
67,393
  
Management fee expense
    
2,213
      
4,526
      
6,739
  
Income before income taxes
    
86,311
      
(25,657
)
    
60,654
  
Income tax expense
    
32,743
      
(9,736
)
    
23,007
  
Net income attributable to GAMCO Investors, Inc.
  
$
53,568
    
$
(15,921
)
  
$
37,647
  
 
                        
Net income per share attributable to GAMCO Investors, Inc.:
                  
Basic
  
$
1.83
    
$
(0.54
)
  
$
1.29
  
Diluted
  
$
1.82
    
$
(0.54
)
  
$
1.28
  
 
                        

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