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

Goodwill
Goodwill pertains to the cost in excess of net assets acquired. Goodwill is deemed to have indefinite life and, therefore, is not subject to amortization, but is instead reviewed at least
annually for impairment in accordance with SFAS No. 142, “Goodwill and Other Intangible Assets.” During the first quarter of 2005, assets under management for our fixed
income business decreased approximately 42% from the beginning of the year, triggering under our accounting policies the need to reassess goodwill for this previously 80% owned
subsidiary. Using a present value cash flow method, we reassessed goodwill for this entity and determined that the value of the entity no longer justified the amount of
goodwill. Accordingly, we recorded a charge of $1.1 million for the impairment of goodwill which represented the entire amount of goodwill for this entity during 2005. At
December 31, 2006, there remains $3.5 million of goodwill related to our 92% owned subsidiary, Gabelli Securities, Inc.
At November 30, 2005 and November 30, 2006, management conducted its annual assessments and assessed the recoverability of goodwill and other intangible assets and
determined that there was no further impairment of the remaining goodwill on GBL’s consolidated financial statements. In assessing the recoverability of goodwill and other
intangible assets, projections regarding estimated future cash flows and other factors are made to determine the fair value of the respective assets. If these estimates or related
projections change in the future, it may result in an impairment charge for these assets to income.
Income Taxes
We account for income taxes under the liability method prescribed by SFAS No. 109, “Accounting for Income Taxes” (“SFAS 109”). Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to the differences between the financial statement carrying amount of existing assets and liabilities and their respective tax
basis. Future tax benefits are recognized only to the extent that realization of such benefits is more likely than not.
Minority Interest
For the year ended December 31, 2006, minority interest on the consolidated statement of income represents income attributable to the minority stockholders' of GSI and Advisers,
as well as for income for certain investment partnerships and offshore funds that are consolidated as required by FIN 46 and EITF 04-5. With the exception of GSI and investment
partnerships, these minority stockholders are principally employees, officers and directors of GBL. On December 31, 2005, the minority interest of Fixed Income was eliminated as
the Company acquired the remaining interest it did not own through a settlement with the minority interest stockholders.
As of December 31, 2006, minority interest on the consolidated statement of financial condition represents amounts attributable to the minority stockholders of GSI and Advisers,
as well as amounts attributable to the other investors for certain investment partnerships and offshore funds that are consolidated as required by FIN 46R and EITF 04-5.
Fair Values of Financial Instruments
The carrying amount of all assets and liabilities, other than goodwill, capital lease, fixed assets, and certain other assets in the consolidated statements of financial condition
approximate their fair values.
Earnings Per Share
Net income per share is computed in accordance with SFAS No. 128, “Earnings Per Share”. Basic net income per common share is calculated by dividing net income applicable to
common stockholders by the weighted average number of shares of common stock outstanding in the period.
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