FORM 10-K/A GAMCO Investors, Inc. - Gabelli

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PART I Forward-Looking Information Our disclosure and analysis in this report and in documents that are incorporated by reference contain some forward-looking statements. Forward-looking statements give 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, there can be no assurance that our actual results will not differ materially from what we expect or believe. Some of the factors that could cause our actual results to differ from our expectations or beliefs include, without limitation: the adverse effect from a decline in the securities markets; a decline in the performance of our products; a general downturn in the economy; changes in government policy or regulation; changes in our ability to attract or retain key employees; and unforeseen costs and other effects related to legal proceedings or investigations of governmental and self-regulatory organizations. We also direct your attention to any more specific discussions of risk contained in Item 1A below and in our other public filings or in documents incorporated by reference here or in prior filings or reports. We are providing these statements as permitted by the Private Litigation Reform Act of 1995. We do not undertake to update publicly any forward-looking statements if we subsequently learn that we are unlikely to achieve our expectations or if we receive any additional information relating to the subject matters of our forward-looking statements. ITEM 1: BUSINESS Unless we have indicated otherwise, or the context otherwise requires, references in this report to “GAMCO Investors, Inc.,” “GBL,” “we,” “us” and “our” or similar terms are to GAMCO Investors, Inc., its predecessors and its subsidiaries. Overview GAMCO Investors, Inc. (NYSE: GBL), well known for its Private Market Value (PMV) with a Catalyst TM investment approach, is a widely-recognized provider of investment advisory services to mutual funds, institutional and high net worth investors, and investment partnerships, principally in the United States. Through Gabelli & Company, Inc., we provide institutional research services to institutional clients and investment partnerships. We generally manage assets on a discretionary basis and invest in a variety of U.S. and international securities through various investment styles. Our revenues are based primarily on the firm’s levels of assets under management and fees associated with our various investment products. Since 1977, we have been identified with and enhanced the “value” style approach to investing. Over the 29 years since the inception of the firm, consistent with our fundamental objective of providing an absolute rate of return for our clients, GBL generated over $15 billion in investment returns for our institutional and high net worth clients. The 29 year CARR (compounded annual rate of return) for the institutional client (as measured by our composite return) approached 19% on a gross basis and 18% on a net basis, and in 2006 we produced $2.1 billion and 23.2% net returns for our institutional clients. Our mission statement, our investment objective is to earn a superior risk-adjusted return for our clients over the long-term through our proprietary fundamental research. In addition to our value portfolios, we offer our clients a broad array of investment strategies that include global, growth, international and convertible products. We also offer a series of investment partnership (performance fee-based) vehicles that provide a series of long-short investment opportunities in market and sector specific opportunities, including offerings of non-market correlated investments in merger arbitrage, as well as fixed income strategies. As of December 31, 2006, we had $28.1 billion of assets under management (AUM), 97% of which were in equity products. We conduct our investment advisory business principally through: GAMCO Asset Management Inc. (Separate Accounts), Gabelli Funds, LLC (Mutual Funds) and Gabelli Securities, Inc. (Investment Partnerships). We also act as an underwriter, are a distributor of our open-end mutual funds and provide institutional research through Gabelli & Company, Inc., our broker-dealer subsidiary. 4
Our assets under management are organized into three groups: · Investment Partnerships: we provide advisory services to limited partnerships, offshore funds and separate accounts, and also serve as a sub-advisor to certain third-party investment funds across merger arbitrage, global and regional long/short equity, and sector-focused strategies (“Investment Partnerships”). We managed a total of $491 million in Investment Partnership assets on December 31, 2006. · Separate Accounts: we provide advisory services to a broad range of investors, including high net worth individuals, corporate pension and profit -sharing plans, foundations, endowments, jointly-trusteed plans and municipalities, and also serve as sub-advisor to certain other third-party investment funds including registered investment companies (“Separate Accounts”). Each Separate Account portfolio is managed to meet the specific needs and objectives of the particular client by utilizing investment strategies and techniques within our areas of expertise. On December 31, 2006, we had $12.7 billion of Separate Account assets under management. · Open and Closed-End Funds: we provide advisory services to (i) twenty open-end mutual funds and seven closed-end funds under Gabelli, GAMCO and Comstock brands; and (ii) six mutual funds within the Westwood family of funds (collectively, the “Mutual Funds”). The Mutual Funds had $14.9 billion of assets under management on December 31, 2006. In January 2007, we launched the Gabelli Global Deal Fund (NYSE: GDL), a closed-end fund that invests primarily in announced merger and acquisition transactions and, to a lesser extent, in corporate reorganizations involving stubs, spin-offs and liquidations. GAMCO Investors, Inc. is a holding company formed in connection with our initial public offering (“Offering”) in February 1999. GGCP, Inc. owns a majority of the outstanding shares of class B common stock of GAMCO Investors, Inc., which ownership represented approximately 95% of the combined voting power of the outstanding common stock and approximately 72% of the equity interest on December 31, 2006. GGCP, Inc. is majority-owned by Mr. Mario J. Gabelli (“Mr. Gabelli”) with the balance owned by our professional staff and other individuals. Accordingly, Mr. Gabelli could be deemed to control GAMCO Investors, Inc. Our corporate name change to GAMCO Investors, Inc. became effective August 29, 2005. GAMCO is a more inclusive parent company name and more appropriately represents the various investment strategies and asset management brands of our company. Our principal executive offices are located at One Corporate Center, Rye, New York 10580. Our telephone number is (914) 921-5100. We post or provide a link on our website, www.gabelli.com, to the following filings as soon as reasonably practicable after they are electronically filed with or furnished to the Securities and Exchange Commission (“SEC”): our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934. All such filings on our website are available free of charge. Performance Highlights Separate Accounts Institutional clients of our institutional and high net worth asset management business have achieved a compound annual return of approximately 18% on a net basis in our separate accounts composite for over 29 years since inception through December 31, 2006. In 2006, the institutional composite return was a 23.2% net return. These accounts in this composite have been managed in the absolute return, research-driven PMV with a Catalyst TM style since inception. 5
Page 1 and 2: UNITED STATES SECURITIES AND EXCHAN
Page 3: The aggregate market value of the c
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 and 48: Consolidated Statements of Income I
Page 49 and 50: Our liquid balance sheet, coupled w
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
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Liquidity and Capital Resources Our
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Our revenues are primarily driven b
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Critical Accounting Policies In the
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Recent Accounting Developments In F
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ITEM 8: FINANCIAL STATEMENTS AND SU
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REPORT OF INDEPENDENT REGISTERED PU
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GAMCO INVESTORS, INC. AND SUBSIDIAR
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(In thousands) See accompanying not
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GAMCO INVESTORS, INC. AND SUBSIDIAR
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Gabelli Direct, Inc. (“Gabelli Di
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Goodwill Goodwill pertains to the c
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Restatement As discussed within the
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In February 2007, the FASB issued F
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We were not required to consolidate
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E. Debt Debt consists of the follow
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The table below represents for vari
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Shelf Registration On December 28,
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We serve as the investment advisor
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N. Goodwill In accordance with SFAS
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As a result of the first material w
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ITEM 14: PRINCIPAL ACCOUNTANT FEES
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POWER OF ATTORNEY Each person whose
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Exhibit 21.1 Subsidiaries of GAMCO
Page 103 and 104:
Exhibit 31.1 Certifications I, Mari
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Certifications Exhibit 31.3 I, Dian
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Exhibit 32.2 Certification of Actin
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FORM 10-K/A GAMCO Investors, Inc. - Gabelli

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