FORM 10-K/A GAMCO Investors, Inc. - Gabelli
FORM 10-K/A GAMCO Investors, Inc. - Gabelli FORM 10-K/A GAMCO Investors, Inc. - Gabelli
Distribution fees and other income primarily include distribution fee revenue in accordance with Rule 12b-1 (“12b-1”) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), along with sales charges and underwriting fees associated with the sale of the Mutual Funds plus other revenues. Distribution fees fluctuate based on the level of assets under management and the amount and type of Mutual Funds sold directly by Gabelli & Company and through various distribution channels. Compensation costs include variable and fixed compensation and related expenses paid to officers, portfolio managers, sales, trading, research and all other professional staff. Other operating expenses include marketing, product distribution and promotion costs, clearing charges and fees for Gabelli & Company’s brokerage operation, and other general and administrative operating costs. Other income and expenses include net gain from investments (which includes both realized and unrealized gains), interest and dividend income, and interest expense. Net gain from investments is derived from our proprietary investment portfolio consisting of various public and private investments. Minority interest represents the share of net income attributable to the minority stockholders, as reported on a separate company basis, of our consolidated majority-owned subsidiaries and for certain partnerships and offshore funds whose net income we consolidate under FIN-46 and EITF 04-5. Please refer to Note C in our Consolidated Financial Statements. Consolidated Statements of Financial Condition We ended 2006 with approximately $729.0 million in cash and investments, which is net of $16.0 million of cash and investments held by our consolidated investment partnerships. This included approximately $102.0 million of our investments in The Gabelli Dividend & Income Trust, The Gabelli Global Utility & Income Trust, Westwood Holdings Group, various Gabelli and GAMCO open-end mutual funds as well as other investments classified as “available for sale securities” for accounting purposes but should be viewed as highly illiquid because of restrictions. Our debt of $231.8 million consisted of $100 million of 5.5% senior notes due May 2013, a $49.5 million 6% convertible note due August 2011, and $82.3 million of 5.22% senior notes due February 17, 2007. We had cash and investments, net of debt and minority interest of $17.42 per share, excluding cash and investments held by our consolidated investment partnerships, on December 31, 2006, compared with $14.79 per share on December 31, 2005. Stockholders' equity was $451.6 million or $15.99 per share on December 31, 2006 compared to $424.5 million or $14.37 per share on December 31, 2005. The increase in stockholder’s equity from the end of 2005 was principally related to a $81.8 million increase in total comprehensive income, which was partially offset by our purchase of treasury stock during 2006 of $54.6 million. 48
Our liquid balance sheet, coupled with an investment grade credit rating, provides access to financial markets and the flexibility to opportunistically add operating resources to our firm, repurchase our stock and consider strategic initiatives. As a result of a shelf registration which was filed in June 2005 and which became effective in the third quarter of 2006, we have the right to issue any combination of senior and subordinate debt securities, convertible debt securities and equity securities (common and/or preferred securities) up to a total amount of $520 million, including the remaining $120 million available under our initial shelf registration filed in 2001. Our primary goal is to use our liquid resources to opportunistically and strategically convert our interest income to operating income. While this goal is our priority, if opportunities are not present with what we consider a margin of safety, we will consider other ways to return capital to our shareholders including stock repurchase and dividends. Asset Highlights We reported assets under management as follows (dollars in millions): % Inc(Dec) 2002 2003 2004 2005 2006 2006/2005 CAGR (a) Mutual Funds Open-End $ 6,482 $ 8,088 $ 8,029 $ 7,888 $ 8,389 6.4% 0.1% Closed-End 1,609 3,530 4,342 5,075 5,806 14.4 26.0 Fixed Income 1,977 1,714 1,499 735 744 1.2 (16.1) Total Mutual Funds 10,068 13,332 13,870 13,698 14,939 9.1 4.6 Institutional & Separate Accounts Equities: direct 7,376 9,106 9,881 9,550 10,282 7.7 3.0 “ sub-advisory 2,614 3,925 3,706 2,832 2,340 (17.4) (2.5) Fixed Income 613 504 388 84 50 (40.5) (41.3) Total Institutional & Separate Accounts 10,603 13,535 13,975 12,466 12,672 1.7 0.7 Investment Partnerships 578 692 814 634 491 (22.6) (3.0) Total Assets Under Management $ 21,249 $ 27,559 $ 28,659 $ 26,798 $ 28,102 4.9 2.6 (a) The % CAGR is computed for the five-year period January 1, 2002 through December 31, 2006 Net outflows in 2006 totaled $3.0 billion compared to net outflows of $2.3 billion and $1.7 billion in 2005 and 2004, respectively. Total net outflows from equities products were approximately $2.9 billion in 2006, and net outflows from fixed income products were $0.1 billion in 2006. 49
- Page 1 and 2: UNITED STATES SECURITIES AND EXCHAN
- Page 3 and 4: The aggregate market value of the c
- Page 5 and 6: Our assets under management are org
- Page 7 and 8: - GAM GAMCO Equity Fund, managed by
- Page 9 and 10: As in prior years, we experienced c
- Page 11 and 12: To further extend “value investin
- Page 13 and 14: · Diversified Product Offerings: S
- Page 15 and 16: Open-end Funds On December 31, 2006
- Page 17 and 18: Assets Under Management The followi
- Page 19 and 20: The following table lists the Mutua
- Page 21 and 22: Net Assets as of December 31, Fund
- Page 23 and 24: Net Assets as of December 31, Fund
- Page 25 and 26: Shareholders of the open-end Funds
- Page 27 and 28: Gabelli & Company also offers our o
- Page 29 and 30: Investments by GBL on behalf of our
- Page 31 and 32: ITEM 1A: RISK FACTORS Business Risk
- Page 33 and 34: Catastrophic and unpredictable even
- Page 35 and 36: During 2006, as in prior years, we
- Page 37 and 38: Our businesses are subject to exten
- Page 39 and 40: PART II ITEM 5: MARKET FOR THE REGI
- Page 41 and 42: The following table shows informati
- Page 43 and 44: December 31, 2002 (a) 2003 (a) 2004
- Page 45 and 46: As a result of the first material w
- Page 47: Consolidated Statements of Income I
- Page 51 and 52: For the three years ended December
- Page 53 and 54: Expenses Compensation: Compensation
- Page 55 and 56: Mutual fund revenues increased $3.9
- Page 57 and 58: Liquidity and Capital Resources Our
- Page 59 and 60: Our revenues are primarily driven b
- Page 61 and 62: Critical Accounting Policies In the
- Page 63 and 64: Recent Accounting Developments In F
- Page 65 and 66: ITEM 8: FINANCIAL STATEMENTS AND SU
- Page 67 and 68: REPORT OF INDEPENDENT REGISTERED PU
- Page 69 and 70: GAMCO INVESTORS, INC. AND SUBSIDIAR
- Page 71 and 72: (In thousands) See accompanying not
- Page 73 and 74: GAMCO INVESTORS, INC. AND SUBSIDIAR
- Page 75 and 76: Gabelli Direct, Inc. (“Gabelli Di
- Page 77 and 78: Goodwill Goodwill pertains to the c
- Page 79 and 80: Restatement As discussed within the
- Page 81 and 82: In February 2007, the FASB issued F
- Page 83 and 84: We were not required to consolidate
- Page 85 and 86: E. Debt Debt consists of the follow
- Page 87 and 88: The table below represents for vari
- Page 89 and 90: Shelf Registration On December 28,
- Page 91 and 92: We serve as the investment advisor
- Page 93 and 94: N. Goodwill In accordance with SFAS
- Page 95 and 96: As a result of the first material w
- Page 97 and 98: ITEM 14: PRINCIPAL ACCOUNTANT FEES
Our liquid balance sheet, coupled with an investment grade credit rating, provides access to financial markets and the flexibility to opportunistically add operating resources to our<br />
firm, repurchase our stock and consider strategic initiatives. As a result of a shelf registration which was filed in June 2005 and which became effective in the third quarter of 2006,<br />
we have the right to issue any combination of senior and subordinate debt securities, convertible debt securities and equity securities (common and/or preferred securities) up to a<br />
total amount of $520 million, including the remaining $120 million available under our initial shelf registration filed in 2001.<br />
Our primary goal is to use our liquid resources to opportunistically and strategically convert our interest income to operating income. While this goal is our priority, if opportunities<br />
are not present with what we consider a margin of safety, we will consider other ways to return capital to our shareholders including stock repurchase and dividends.<br />
Asset Highlights<br />
We reported assets under management as follows (dollars in millions):<br />
% <strong>Inc</strong>(Dec)<br />
2002 2003 2004 2005 2006 2006/2005 CAGR (a)<br />
Mutual Funds<br />
Open-End $ 6,482 $ 8,088 $ 8,029 $ 7,888 $ 8,389 6.4% 0.1%<br />
Closed-End 1,609 3,530 4,342 5,075 5,806 14.4 26.0<br />
Fixed <strong>Inc</strong>ome 1,977 1,714 1,499 735 744 1.2 (16.1)<br />
Total Mutual Funds <strong>10</strong>,068 13,332 13,870 13,698 14,939 9.1 4.6<br />
Institutional & Separate<br />
Accounts<br />
Equities: direct 7,376 9,<strong>10</strong>6 9,881 9,550 <strong>10</strong>,282 7.7 3.0<br />
“ sub-advisory 2,614 3,925 3,706 2,832 2,340 (17.4) (2.5)<br />
Fixed <strong>Inc</strong>ome 613 504 388 84 50 (40.5) (41.3)<br />
Total Institutional &<br />
Separate Accounts <strong>10</strong>,603 13,535 13,975 12,466 12,672 1.7 0.7<br />
Investment Partnerships 578 692 814 634 491 (22.6) (3.0)<br />
Total Assets Under<br />
Management $ 21,249 $ 27,559 $ 28,659 $ 26,798 $ 28,<strong>10</strong>2 4.9 2.6<br />
(a) The % CAGR is computed for the five-year period January 1, 2002 through December 31, 2006<br />
Net outflows in 2006 totaled $3.0 billion compared to net outflows of $2.3 billion and $1.7 billion in 2005 and 2004, respectively.<br />
Total net outflows from equities products were approximately $2.9 billion in 2006, and net outflows from fixed income products were $0.1 billion in 2006.<br />
49
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