Original GBL Prospectus - Gabelli

SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
General
The selected historical Ñnancial data presented below has been derived in part from, and should be read
in conjunction with, the audited Consolidated Financial Statements of GFI and ""Management's Discussion
and Analysis of Financial Condition and Results of Operations,'' included elsewhere in this Prospectus. All
Ñnancial information for the nine months ended September 30, 1997 and 1998, which has not been audited,
has been derived from the unaudited Consolidated Financial Statements of GFI included elsewhere in this
Prospectus, and, in the opinion of management, reÖects all adjustments, which are of a normal recurring
nature, necessary to present fairly such information for the periods presented. Operating results for the nine
months ended September 30, 1998 are not necessarily indicative of the results that may be expected for the
year ended December 31, 1998.
The unaudited pro forma income statement data gives eÅect to (i) the Formation Transactions, including
the reduction in net gain from investments, the reduction in interest and dividend income, the lower
management fee and the increase in interest expense as if the Employment Agreement (see Note P to the
Consolidated Financial Statements) had been in eÅect for the year ended December 31, 1997 and nine
months ended September 30, 1998, and (ii) the additional income taxes which would have been recorded if
GFI had been a ""C'' corporation instead of an ""S'' corporation based on tax laws in eÅect for the respective
periods.
The unaudited pro forma adjustments are based upon available information and certain assumptions that
management of the Company believes are reasonable under the circumstances. The pro forma Ñnancial data
does not purport to represent the results of operations or the Ñnancial position of the Company which actually
would have occurred had the Formation Transactions been consummated on the aforesaid dates, or project the
results of operations or the Ñnancial position of the Company for any future date or period. See ""Certain
Relationships and Related Transactions Ì The Formation Transactions'' and the Unaudited Pro Forma
Consolidated Statements of Income and Financial Condition of the Company included elsewhere in this
Prospectus.
Impact of $50 Million Non-Recurring Charge ($1.10 per share) to be Recorded in First Quarter of 1999
Under the terms of the Employment Agreement, Mr. Gabelli, who indirectly beneÑcially owns shares of
Common Stock having 97.6% of the combined voting power of the Company, will receive, in addition to his
portfolio management compensation and account executive fees, an annual incentive-based management fee
of 10% of the aggregate pre-tax proÑts of the Company (before consideration of the management fee or the
$50 million deferred payment described below or any employment taxes thereon) and a deferred payment of
$50 million on January 2, 2002, with interest payable quarterly on such deferred amount at an annual rate of
6%. The $50 million deferred payment will be charged to the Company's earnings upon the eÅective date of
the Employment Agreement, which occurred in the Ñrst quarter of 1999. This payment, net of tax beneÑt, will
reduce earnings by $1.10 per share (based on the expected weighted average number of shares outstanding in
the Ñrst quarter of 1999 of 27.3 million). The $50 million payment is not reÖected in the pro forma income
statement data because it is a one-time event directly related to the OÅering; however, it is reÖected, net of tax
beneÑt, in pro forma stockholders' equity.
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