Gamco (NYSE:GBL)
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2 Years : From May 2011 to May 2013
GAMCO Investors, Inc. (GAMCO) (NYSE: GBL) today announced fourth quarter
2011 earnings of $23.7 million or $0.89 per fully diluted share versus
$26.9 million or $0.99 per fully diluted share in the fourth quarter
2010.
Revenues were $85.0 million in the fourth quarter of 2011, down $10.4
million, or 10.9%, from $95.4 million in the prior year quarter.
Incentive fees for the fourth quarter of 2011 were $9.0 million vs.
$24.6 million in the fourth quarter of 2010. Revenues, excluding
incentive fees, rose $5.2 million. Operating income before management
fee was $35.5 million, a 3.8% increase from $34.2 million in the prior
year period. Operating margin before management fee increased to 41.8%
in the 2011 fourth quarter versus 35.8% in the 2010 fourth quarter.
Operating income was $31.4 million, a 6.1% increase from $29.6 million
in the prior year period. Operating margin increased to 36.9% in the
2011 fourth quarter versus 31.0% in the 2010 fourth quarter. Included in
the fourth quarter of 2010 was a $5.8 million charge from the
acceleration of vesting of restricted stock awards (“RSAs”) which
impacted operating income and margins, both before and after management
fee expense.
Financial Highlights
Fourth Quarter
Full Year
2011
2010
D %
2011
2010
D %
AUM (in millions)
$
34,085
$
32,522
4.8
%
$
34,085
$
32,522
4.8
%
Revenues
84,991
95,440
(10.9
)
327,128
280,380
16.7
Operating income:
before management fee
35,520
34,215
3.8
125,564
103,042
21.9
after management fee
31,376
29,570
6.1
113,294
91,029
24.5
Operating margin:
before management fee
41.8
%
35.8
%
38.4
%
36.8
%
after management fee
36.9
%
31.0
%
34.6
%
32.5
%
Other income (expense)
5,959
13,038
(54.3
)
(2,852
)
18,312
n/m
Net income attributable to GAMCO
23,693
26,911
(12.0
)
69,682
68,792
1.3
Net income attributable to GAMCO per share
$
0.89
$
0.99
(10.1
%)
$
2.61
$
2.52
3.6
%
Shares outstanding at December 31
26,755
27,053
For the year ended December 31, 2011, earnings were $69.7 million or
$2.61 per fully diluted share versus $68.8 million or $2.52 per fully
diluted share in 2010. The current year results include $5.6 million, or
$0.10 per diluted share, of one-time costs directly related to the
launch of a new closed end fund in the first quarter of 2011, while the
prior year’s results include the aforementioned charge of $5.8 million
($0.12 per diluted share, net of management fee and tax benefit) related
to the acceleration of the vesting of RSAs in the fourth quarter.
Shareholders’ book value was $404.0 million or $15.10 per share at
December 31, 2011. The Company ended the quarter with cash and
investments of approximately $674.8 million, $263.1 million of debt
(face value of $285.3 million), noncontrolling interests of $9.5 million
and mandatorily redeemable interests of $1.4 million.
Assets under Management – Up 4.8% from December 31, 2010 and 8.8%
above September 30, 2011
AUM were $34.1 billion as of December 31, 2011, an increase of 4.8% from
AUM of $32.5 billion at December 31, 2010 and 8.8% above the September
30, 2011 AUM of $31.3 billion. Highlights are as follows:
-
Our open-end equity funds’ AUM were $12.3 billion on December 31,
2011, 9.1% higher than the $11.3 billion on December 31, 2010 and 7.0%
above the $11.5 billion on September 30, 2011. Net cash flows into our
open-end equity funds topped $1.3 billion during 2011, almost 20%
ahead of the $1.1 billion in net cash flows in 2010.
-
Our closed-end funds had AUM of $5.8 billion on December 31, 2011,
climbing 6.0% from $5.5 billion on December 31, 2010 and increasing
8.3% from the $5.4 billion on September 30, 2011. Net additions to
AUM, largely comprised of preferred stock and rights offerings and the
launch of one new fund and offset by shareholder distributions and
share repurchases, totaled $0.4 billion in 2011 versus $0.1 billion in
2010.
-
Our institutional and private wealth management business ended the
quarter with $13.5 billion in AUM, down 0.7% from the $13.6 billion on
December 31, 2010 but 12.5% higher than the September 30, 2011 level
of $12.0 billion. Net cash flows, which encompassed new and closed
accounts as well as additional investments or withdrawals from
existing accounts, totaled $0.2 billion in 2011 versus net outflows of
$0.3 billion in 2010.
-
Our investment partnerships’ AUM were $605 million on December 31,
2011 versus $515 million on December 31, 2010 and $627 million on
September 30, 2011. Net cash inflows in 2011 were $77 million.
-
The GAMCO International SICAV, our Luxembourg based UCITS fund which
has two sub-funds, the GAMCO Strategic Value and the GAMCO Merger
Arbitrage, was initially seeded with $100 million of proprietary
money. At December 31, 2011, AUM was $105 million.
-
AUM in The Gabelli U.S. Treasury Money Market Fund, our 100% U.S.
Treasury money market fund, which is ranked #1 by Lipper based on
total return among 70 U.S. Treasury Money Market Funds for the twelve
month period ended December 31, 2011, were $1.8 billion at December
31, 2011, increasing 12.9% from the $1.6 billion at December 31, 2010
but 3.7% lower from the $1.9 billion at September 30, 2011. We
continue to provide financial support through fee waivers and expense
reimbursements to our money market fund during this unusually low
interest rate environment. 1
-
In addition to management fees, we earn incentive fees for certain
institutional client assets, assets attributable to preferred issues
for our closed-end funds, our GDL Fund (NYSE: GDL) and investment
partnership assets. As of December 31, 2011, assets with incentive
based fees were $3.6 billion, 2.7% lower than the $3.7 billion on
December 31, 2010 but 5.9% above the $3.4 billion on September 30,
2011. The majority of these assets have calendar year-end measurement
periods; therefore, our incentive fees are primarily recognized in the
fourth quarter when the uncertainty is removed at the end of the
annual measurement period.
Revenues
For the Quarter
Investment advisory and incentive fees for the fourth quarter 2011 were
$70.6 million, a decrease of 13.3% from the $81.4 million reported in
the 2010 fourth quarter:
-
Open-end fund revenues for the fourth quarter 2011 were $30.0 million
versus $27.3 million in the fourth quarter 2010, an increase of 9.9%.
Driving this growth was a 13.4% increase in revenues from the open-end
equity funds. Average AUM for open-end equity funds rose 13.1% from
the prior year quarter. Average AUM for all open-end funds were 12.9%
higher at $14.0 billion in the 2011 quarter versus $12.4 billion in
the prior year quarter.
-
Our closed-end fund revenues declined 26.1% to $16.7 million in the
fourth quarter 2011 from $22.6 million in the fourth quarter 2010,
entirely due to lower incentive fees earned. Fourth quarter 2011
incentive fees were $7.1 million lower, at $5.0 million compared to
$12.1 million earned in the 2010 fourth quarter. Average closed-end
fund AUM, excluding certain closed-end fund preferred share assets
that generate annual performance based fees, rose 10.2% from the prior
year quarter. Asset growth was driven by market performance and
benefited from the launch of our new fund, the GAMCO Natural
Resources, Gold & Income Trust by Gabelli (NYSE: GNT),
which added $392 million in AUM during the first quarter of 2011 as
well as $317 million from at the market offerings of the GAMCO Global
Gold, Natural Resources & Income Trust by Gabelli
(NYSE: GGN).
-
Institutional and private wealth management account revenues, which
are generally based upon beginning of quarter AUM, decreased 25.4% to
$20.3 million in the fourth quarter 2011 from $27.2 million in fourth
quarter 2010. The decrease was directly related to lower incentive
fees. During the fourth quarter 2011, we earned $1.7 million in
incentive fees, a decrease of $7.4 million from the fourth quarter
2010 amount of $9.1 million. Certain of the performance fee accounts
shifted from annual to quarterly measurement periods which contributed
to this decrease. Incentive fees earned in the first three quarters of
2011 which were previously measured and recorded in the fourth quarter
of 2010 totaled $3.7 million. In the fourth quarter of 2010 incentive
fees from these accounts totaled $4.7 million.
-
Investment partnership revenues for fourth quarter 2011 were $3.5
million, a decrease of 18.6% from $4.3 million in the fourth quarter
2010. Incentive fees were lower by $1.4 million in the 2011 fourth
quarter versus the 2010 fourth quarter and more than offset the
increase in investment advisory fees of $0.6 million, which were
driven by the 23.8% increase in average assets managed.
Our institutional research services generated revenues of $3.0 million
in the fourth quarter 2011, down 35.9% from $4.6 million in the fourth
quarter 2010 principally due to lower trading volume.
Revenues from the distribution of our open-end funds and other income
were $11.4 million for the fourth quarter 2011, an increase of $2.0
million or 21.4% from the prior year quarter of $9.4 million and were
largely driven by higher average AUM in open-end equity funds.
For the Year
Investment advisory and incentive fees for the year ended December 31,
2011 were $268.0 million, an increase of 15.9% from the $231.3 million
reported in the 2010 period:
-
Open-end fund revenues for the year ended December 31, 2011 were
$119.6 million versus $96.5 million for the year ended December 31,
2010, an increase of 23.9% resulting from a 24.2% increase in average
AUM.
-
Our closed-end fund revenues increased $3.5 million or 7.1% to $53.1
million for the year ended December 31, 2011 from $49.6 million in
2010. Investment advisory fees rose $10.6 million or $28.3%, to $48.1
million in 2011 versus $37.5 million in 2010, which were partially
offset by a $7.1 million decline in incentive fees, to $5.0 million in
2011 as compared to $12.1 million during 2010. Average AUM in our
closed-end funds, excluding certain closed-end fund preferred share
assets for which we earn our fees annually based upon performance,
rose 26.9% and include $392 million in AUM from the launch of GNT
during the first quarter of 2011.
-
Institutional and private wealth management account revenues increased
12.7% to $88.6 million for the year ended December 31, 2011 from $78.6
million for the year ended December 31, 2010. This increase was
primarily related to higher AUM resulting from market appreciation,
partially offset by lower incentive fees. For 2011, we earned $8.2
million in incentive fees as compared to $10.8 million in 2010.
-
Investment partnership revenues for the year ended December 31, 2011
fell 1.5% to $6.4 million from $6.5 million in 2010, due primarily to
$1.4 million in lower incentive fees partially offset by an increase
in investment advisory fees resulting from higher AUM.
Our institutional research services generated revenues of $14.3 million
for the year ended December 31, 2011, down 13.9% from the year ended
December 31, 2010 amount of $16.6 million principally due to lower
trading volume.
Revenues from the distribution of our open-end funds and other income
were $44.8 million for the year ended December 31, 2011, an increase of
$12.3 million or 37.8% from 2010 revenues of $32.5 million. This
increase resulted from the higher average AUM in open-end equity funds
and an increased level of sales of load shares of mutual funds.
Operating Income and Margin
Operating income, which is net of management fee expense, increased $1.8
million, or 6.1%, to $31.4 million in the 2011 fourth quarter versus
$29.6 million in the prior year period. The year over year increase in
operating income results from a combination of factors including lower
compensation costs, which in 2010 included a $5.8 million charge for the
accelerated vesting of RSAs, a reduction in non-compensation operating
expenses and a lower management fee expense partially offset by lower
incentive fee revenues and higher mutual fund distribution costs.
Operating margin was 36.9% in the 2011 fourth quarter versus 31.0% in
the prior year period. Operating income before management fee was $35.5
million in the fourth quarter 2011, versus $34.2 million in the fourth
quarter 2010. For the fourth quarter 2011, the operating margin before
management fee was 41.8% versus 35.8% in the fourth quarter of 2010.
Management believes evaluating operating income before management fee is
an important measure in analyzing the Company’s operating results.
Further information regarding Non-GAAP measures is included in Notes on
Non-GAAP Financial Measures and Table VII included elsewhere herein.
Operating income was $113.3 million for the year ended December 31,
2011, increasing 24.5% from the $91.0 million in the prior year. The
year over year increase in operating income was largely the result of
increased revenues partially offset by increased compensation expense,
higher mutual fund distribution costs, higher non-compensation operating
expenses, including a one-time pre-tax charge of $5.6 million directly
related to the launch of a new closed end fund in the first quarter of
2011, and an increase in management fee expense. Operating margin was
34.6% for the year ended December 31, 2011, versus 32.5% in the prior
year period. Operating income before management fee was $125.6 million
for the year ended 2011, versus $103.0 million in the prior year.
Operating margin before management fee was 38.4% in 2011 versus 36.8% in
2010. Included in the 2010 results is a charge of $5.8 million related
to the acceleration of the vesting of RSAs.
Other Income / (Expense)
Other income/(expense), net, was $6.0 million ($0.13 per diluted share
net of management fee and tax expense) in the fourth quarter of 2011
versus $13.0 million ($0.24 per diluted share, net of management fee and
tax expense) in the fourth quarter of 2010. Mark to market gains,
largely unrealized, from investments in our mutual funds as well as
proprietary capital in our alternative products were $10.3 million
versus $15.0 million in the 2010 fourth quarter. Interest expense was
$4.3 million in the 2011 fourth quarter, $2.4 million higher than the
prior year quarter due to an increase in total debt outstanding.
Other income/(expense), net, was an expense of $2.9 million for the year
ended December 31, 2011 versus income of $18.3 million for 2010.
Investment income was $18.2 million lower and interest expense was $3.0
million higher in the 2011 period versus the year earlier period.
Income Taxes
The effective tax rate for the year ended December 31, 2011 was 36.9%
compared to the 2010 effective tax rate of 36.0%. The increase was
principally due to increased state and local taxes in 2011 and the
release of reserves related to uncertain tax positions in 2010.
Business and Investment Highlights
-
GAMCO Merger Arbitrage, a sub-fund within the GAMCO International
SICAV, provides non-U.S. investors with direct access to GAMCO’s
merger arbitrage strategy in a UCITS form. The sub-fund is being
offered to retail and institutional investors and initially registered
retail shares in Switzerland, Germany and Italy with currency classes
being offered including U.S. Dollar, Swiss Franc and Euro. This fund
joins our initial offering, the GAMCO Strategic Value Fund. During
2011, we incurred $0.6 million in start-up costs associated with these
products.
-
In May 2011, Mitsuyoshi Kikuchi joined us to establish and lead our
Tokyo office, joining Caesar Bryan and Mark Yim in strengthening our
research in Japan. This new office, along with our current research
offices in Shanghai and Hong Kong, further underscores our commitment
to building our presence and capabilities in Asia and the Pacific Far
East.
-
As part of our rebranding efforts:(a) The GAMCO Gold Fund, Inc.
was renamed the Gabelli Gold Fund, Inc. The fund has been managed by
Caesar Bryan since its inception in 1994. For additional information
see our website www.gabelli.com/funds.(b)
Effective January 3, 2011, the Gabelli Woodland Small Cap Value Fund
was renamed the Gabelli Focus Five Fund, a concentrated fund that will
seek to invest up to 50% of the fund’s assets in five companies.
-
During the year, we received our highest ever single mandate in our
Private Wealth Management business.
-
During the year Gabelli & Company hosted its 35th
Automotive Aftermarket Symposium, 21st annual Pump Valve &
Motor Symposium, 17th annual Aircraft Supplier Conference, 4th
Annual Best Ideas Conference, 3rd annual Specialty
Chemicals Conference and 3rd annual Movie Industry
Conference.
-
Mario Gabelli was named Money Manager of the Year by Institutional
Investor for its second annual U.S. Investment Management Awards. The
award selection is based on performance as well as a survey of U.S.
institutions. In 2010, GAMCO returned 28.6% for institutional clients;
and since inception in 1977, it has generated annualized returns of
16.3%.GAM STAR GAMCO US Equity Fund was awarded Standard &
Poor’s (“S&P”) AAA Rating for the eighth consecutive year. Our
investment team is especially honored by this S&P AAA rating, which
again underscores our research driven Private Market Value with a
CatalystTM approach to “stock picking”. The S&P AAA rating
is a widely acknowledged measure of excellence, awarded only when, in
S&P’s words:
“The fund demonstrates the highest standards of quality in its
sector based on its investment process and management’s
consistency of performance as compared to funds with similar
objectives.”
In affirming the AAA rating for the fund, S&P said:
“Performance success from a consistent process applied by an
experienced manager, results in the S&P AAA rating.”
The following is excerpted from the Standard & Poor’s AAA Report on
GAM STAR GAMCO US Equity:
“Gabelli follows a bottom-up, value-driven approach, developed
from Graham & Dodd. The approach uses detailed fundamental
analysis to highlight stocks that are currently undervalued, but
have a reasonable probability of realising a private market value
(PMV) through the intervention of a discernible catalyst. The PMV
is the value they believe an informed investor would be willing to
pay for a company. Catalysts might be a specific event or a range
of circumstances with varying time horizons.
GAMCO’s team of 34 global equity research analysts is
structured along seven broad sector categories. One of four senior
analysts leads each group. The analysts follow their sectors on a
global basis. Each analyst is responsible for gathering, arraying,
and projecting company data for making investment decisions.
Experience in the team varies considerably. The majority of the
analysts are US-based with offices in London, Hong Kong, Tokyo and
Shanghai.”
GAM STAR GAMCO US Equity fund has been sub-advised by GAMCO Asset
Management Inc. for London UK based Global Asset Management (“GAM”)
since the fund’s launch in October 1987. This fund is not available to
U.S. investors.
Financial Highlights
Statement of Financial Condition – Liquidity and Flexibility
We ended the quarter with approximately $674.8 million in cash and
investments versus $704.3 million at September 30, 2011 and $558.0
million at December 31, 2010. This included approximately $83.0 million
invested in The Gabelli Dividend & Income Trust, The GDL Fund and
Westwood Holdings Group, as well as other investments of $11.4 million,
all classified as available for sale securities at December 31, 2011.
Our balance sheet provides access to financial markets and the
flexibility to opportunistically add operating resources and consider
strategic initiatives, including acquisitions and lift-outs. We have a
BBB rating from Standard & Poor’s and a Baa3 rating from Moody’s.
The Company continues to have the flexibility of issuing any combination
of senior and subordinated debt securities, convertible debt securities
and common and preferred securities under its shelf of up to a total
amount of $300 million.
Shareholders’ book value was $404.0 million or $15.10 per share on
December 31, 2011 compared to $404.0 million or $15.09 per share on
September 30, 2011 and $386.0 million or $14.27 per share on December
31, 2010.
Shareholder Compensation
Dividends
On November 7, 2011, our Board of Directors approved a special dividend
of $1.00 per share payable on November 22, 2011 to its Class A and Class
B shareholders of record on November 17, 2011 as well as a quarterly
dividend of $0.04 per share payable on December 27, 2011 to its Class A
and Class B shareholders of record on December 13, 2011. The Board of
Directors had previously approved a 33% increase from $0.03 per share in
our regular quarterly dividend on May 6, 2011.
During 2011, we paid $30.8 million, or $1.15 per share, in dividends,
and since our IPO we have paid cumulative dividends of $344.0 million,
or $13.42 per share.
GAMCO announced on February 7, 2012 that its Board of Directors approved
a quarterly dividend of $0.04 per share payable on March 27, 2012 to its
Class A and Class B shareholders of record on March 13, 2012.
Share Repurchase and Stockholders’ Equity
During 2011, we repurchased 450,966 shares at an average price of $45.24
per share for an investment of $20.4 million. Since our IPO, we have
repurchased a total of 7.3 million shares at an average price of $40.63
per share for an investment of $298.4 million. There currently remain
571,905 shares available to be repurchased under our existing buyback
plan.
Since our IPO of six million shares at a price of $17.50 per share in
1999, we have returned, through dividends and stock repurchases, $642
million to our shareholders.
Fully diluted shares outstanding for the fourth quarter 2011 were 26.6
million, 2.6% lower than the fourth quarter 2010’s level of 27.3
million. Diluted shares outstanding were lower in the fourth quarter
2011 due to shares purchased under our Stock Repurchase Program. Fully
diluted shares outstanding for 2011 were 26.7 million, 5.7% lower than
2010’s level of 28.3 million. Dilutive shares outstanding were lower due
to the dilutive effect of the Cascade convertible notes during 2010
which increased fully diluted share by 1.1 million shares in 2010 and
due to shares purchased under our Stock Repurchase Program. The Cascade
convertible notes were paid in full during 2010. At December 31, 2011,
the Company had 275,600 RSAs outstanding. On January 3, 2012, the
compensation committee of the Board granted 105,300 RSAs to key staff
members for which amortization of the related expense will begin in the
first quarter of 2012.
NOTES ON NON-GAAP FINANCIAL MEASURES
A.
Stockholders’ book value per share:
(in millions, except per share data)
12/31/2011
9/30/2011
12/31/2010
Stockholders' book value
$
403.97
$
404.00
$
386.03
Shares outstanding
26.75
26.77
27.05
Stockholders' book value per share
$
15.10
$
15.09
$
14.27
B.
Operating income before management fee expense 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. The
reconciliation of operating income before management fee expense to
operating income is provided in Table VII.
C.
Accelerated RSA expense, net of management fee and tax benefit, per
diluted share:
Fourth
(in thousands, except per share data)
Quarter 2010
Accelerated RSA expense
$
5,797
Related benefits and tax benefit
2,521
Net expense
$
3,276
Accelerated RSA expense per share
$
0.12
Diluted weighted average shares outstanding
27,260
D.
Operating income before management fee expense per share and other
income, net per share is used by management for purposes of
evaluating its business operations. We believe this measure is
useful in comparing the operating and non-operating results of the
Company for the purposes of understanding the composition of net
income per fully diluted share. The negative swing of $21.2
million in other income is calculated by taking the expense of
$2.9 million in 2011 and subtracting the income of $18.3 million
in 2010. The impact on fully diluted earnings per share of ($0.48)
is derived by making certain necessary adjustments, as shown in
the table below, to arrive at a net impact for each period and
then calculating the difference. The reconciliation of operating
income before management fee expense per share and other income,
net per share to net income per fully diluted share, is provided
below.
4th Quarter
Full Year
2011
2010
2011
2010
Operating income before management fee
$
35,520
$
34,215
$
125,564
$
103,042
Management fee expense
(3,561
)
(3,341
)
(12,568
)
(10,182
)
Tax expense
(11,803
)
(10,829
)
(41,710
)
(33,398
)
Noncontrolling interest (expense)/income
37
305
609
461
Operating income (after management fee and taxes)
20,193
20,350
71,895
59,923
Per fully diluted share
$
0.76
$
0.75
$
2.69
$
2.12
Other income, net
$
5,959
$
13,038
$
(2,852
)
$
18,312
Management fee expense
(583
)
(1,304
)
298
(1,831
)
Tax expense
(1,986
)
(4,116
)
943
(5,928
)
Noncontrolling interest expense
110
(1,057
)
(602
)
(1,684
)
Other income, net (after management fee and taxes)
$
3,500
$
6,561
$
(2,213
)
$
8,869
Add back interest on convertible notes
$
-
$
139
$
-
$
4,461
Management fee expense
-
(14
)
-
(446
)
Tax expense
-
(47
)
-
(1,494
)
Net income attributable to interest add back
-
78
-
2,521
Per fully diluted share
$
0.13
$
0.24
$
(0.08
)
$
0.40
Net income per fully diluted share
$
0.89
$
0.99
$
2.61
$
2.52
Diluted weighted average shares outstanding
26,584
27,260
26,724
28,348
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
Our disclosure and analysis in this press release 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 our Form 10-K and other public filings.
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.
The Company reported Assets Under Management as follows (in
millions):
Table I: Fund Flows - 4th Quarter 2011
Closed-end Fund
Market
distributions,
September 30,
appreciation/
Net cash
net of
December 31,
2011
(depreciation)
flows
reinvestments
2011
Equities:
Open-end Funds
$
11,469
$
919
$
(115
)
$
-
$
12,273
Closed-end Funds
5,355
476
79
(111
)
5,799
Institutional & PWM - direct
9,644
1,207
2
-
10,853
Institutional & PWM - sub-advisory
2,326
297
(23
)
-
2,600
Investment Partnerships
627
5
(27
)
-
605
SICAV
-
-
105
(b)
-
105
Total Equities
29,421
2,904
21
(111
)
32,235
Fixed Income:
Money-Market Fund
1,895
-
(71
)
-
1,824
Institutional & PWM
26
-
-
-
26
Total Fixed Income
1,921
-
(71
)
-
1,850
Total Assets Under Management
$
31,342
$
2,904
$
(50
)
$
(111
)
$
34,085
Table II: Fund Flows - Full Year 2011
Closed-end Fund
Market
distributions,
December 31,
appreciation/
Net cash
net of
December 31,
2010
(depreciation)
flows
reinvestments
2011
Equities:
Open-end Funds
$
11,252
$
(309
)
$
1,330
$
-
$
12,273
Closed-end Funds
5,471
(80
)
804
(a)
(396
)
5,799
Institutional & PWM - direct
11,005
(316
)
164
-
10,853
Institutional & PWM - sub-advisory
2,637
(78
)
41
-
2,600
Investment Partnerships
515
13
77
-
605
SICAV
-
-
105
(b)
-
105
Total Equities
30,880
(770
)
2,521
(396
)
32,235
Fixed Income:
Money-Market Fund
1,616
-
208
-
1,824
Institutional & PWM
26
-
-
-
26
Total Fixed Income
1,642
-
208
-
1,850
Total Assets Under Management
$
32,522
$
(770
)
$
2,729
$
(396
)
$
34,085
(a) Includes $392 million from the launch of a new closed-end fund.
(b) Includes $100 million of proprietary seed capital.
Table III: Assets Under Management
December 31,
December 31,
%
2010
2011
Inc. (Dec.)
Equities:
Open-end Funds
$
11,252
$
12,273
9.1
%
Closed-end Funds
5,471
5,799
6.0
Institutional & PWM - direct
11,005
10,853
(1.4
)
Institutional & PWM - sub-advisory
2,637
2,600
(1.4
)
Investment Partnerships
515
605
17.5
SICAV
-
105
n/m
Total Equities
30,880
32,235
4.4
Fixed Income:
Money-Market Fund
1,616
1,824
12.9
Institutional & PWM
26
26
-
Total Fixed Income
1,642
1,850
12.7
Total Assets Under Management
$
32,522
$
34,085
4.8
%
Table IV: Assets Under Management by Quarter
% Increase/
(decrease) from
12/10
3/11
6/11
9/11
12/11
12/10
9/11
Equities:
Open-end Funds
$
11,252
$
12,348
$
12,912
$
11,469
$
12,273
9.1
%
7.0
%
Closed-end Funds
5,471
6,170
6,259
5,355
5,799
6.0
8.3
Institutional & PWM - direct
11,005
11,780
11,735
9,644
10,853
(1.4
)
12.5
Institutional & PWM - sub-advisory
2,637
2,937
2,953
2,326
2,600
(1.4
)
11.8
Investment Partnerships
515
547
609
627
605
17.5
(3.5
)
SICAV
-
-
-
-
105
n/m
n/m
Total Equities
30,880
33,782
34,468
29,421
32,235
4.4
9.6
Fixed Income:
Money-Market Fund
1,616
1,583
1,643
1,895
1,824
12.9
(3.7
)
Institutional & PWM
26
26
26
26
26
-
-
Total Fixed Income
1,642
1,609
1,669
1,921
1,850
12.7
(3.7
)
Total Assets Under Management
$
32,522
$
35,391
$
36,137
$
31,342
$
34,085
4.8
%
8.8
%
Table V
GAMCO INVESTORS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
For the Three Months Ended December 31,
% Inc.
2011
2010
(Dec.)
Investment advisory and incentive fees
$
70,617
$
81,407
(13.3
%)
Institutional research services
2,977
4,647
(35.9
)
Distribution fees and other income
11,397
9,386
21.4
Total revenues
84,991
95,440
(10.9
)
Compensation costs
33,178
45,095
(26.4
)
Distribution costs
10,319
9,208
12.1
Other operating expenses
5,974
6,922
(13.7
)
Total expenses
49,471
61,225
(19.2
)
Operating income before management fee
35,520
34,215
3.8
Investment income
10,268
15,029
(31.7
)
Interest expense
(4,309
)
(1,991
)
116.4
Other income, net
5,959
13,038
(54.3
)
Income before management fee and income taxes
41,479
47,253
(12.2
)
Management fee expense
4,144
4,645
(10.8
)
Income before income taxes
37,335
42,608
(12.4
)
Income tax expense
13,789
14,945
(7.7
)
Net income
23,546
27,663
(14.9
)
Net income attributable to noncontrolling interests
(147
)
752
(119.5
)
Net income attributable to GAMCO Investors, Inc.
$
23,693
$
26,911
(12.0
)
Net income attributable to GAMCO Investors, Inc. per share:
Basic
$
0.89
$
1.00
(11.0
)
Diluted
$
0.89
$
0.99
(10.1
)
Weighted average shares outstanding (a):
Basic
26,488
26,851
(1.4
)
Diluted
26,584
27,260
(2.5
%)
Notes:
(a) Actual shares outstanding at December 31, 2011 were 26,754,895,
including 275,600 RSAs.
See GAAP to non-GAAP reconciliation on page 16.
Table VI
GAMCO INVESTORS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
For the Years Ended December 31,
% Inc.
2011
2010
(Dec.)
Investment advisory and incentive fees
$
268,024
$
231,269
15.9
%
Institutional research services
14,288
16,600
(13.9
)
Distribution fees and other income
44,816
32,511
37.8
Total revenues
327,128
280,380
16.7
Compensation costs
132,970
123,840
7.4
Distribution costs
44,427
31,048
43.1
Other operating expenses
24,167
22,450
7.6
Total expenses
201,564
(a)
177,338
13.7
Operating income before management fee
125,564
103,042
21.9
Investment income
12,145
30,296
(59.9
)
Interest expense
(14,997
)
(11,984
)
25.1
Other income/(expense), net
(2,852
)
18,312
n/m
Income before management fee and income taxes
122,712
121,354
1.1
Management fee expense
12,270
12,013
2.1
Income before income taxes
110,442
109,341
1.0
Income tax expense
40,767
39,326
3.7
Net income
69,675
70,015
(0.5
)
Net income attributable to noncontrolling interests
(7
)
1,223
(100.6
)
Net income attributable to GAMCO Investors, Inc.
$
69,682
$
68,792
1.3
Net income attributable to GAMCO Investors, Inc. per share:
Basic
$
2.62
$
2.55
2.7
Diluted
$
2.61
$
2.52
3.6
Weighted average shares outstanding (b):
Basic
26,636
26,959
(1.2
)
Diluted
26,724
28,348
(5.7
%)
Notes:
(a) Includes $0.4 million in compensation, $4.7 million in
distribution costs and $0.5 million in other operating
expenses directly related to the launch of a new closed-end fund.
(b) Actual shares outstanding at December 31, 2011 were 26,754,895,
including 275,600 RSAs.
See GAAP to non-GAAP reconciliation on page 16.
Table VII
GAMCO INVESTORS, INC.
UNAUDITED QUARTERLY CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
2011
2010
1st
2nd
3rd
4th
1st
2nd
3rd
4th
Quarter
Quarter
Quarter
Quarter
Full Year
Quarter
Quarter
Quarter
Quarter
Full Year
Income Statement Data:
Revenues
$
76,905
$
85,081
$
80,151
$
84,991
$
327,128
$
59,998
$
62,499
$
62,443
$
95,440
$
280,380
Expenses
53,032
(a)
50,958
48,103
49,471
201,564
38,180
38,539
39,394
61,225
(b)
177,338
Operating income before
management fee
23,873
34,123
32,048
35,520
125,564
21,818
23,960
23,049
34,215
103,042
Investment income/(loss)
10,676
5,530
(14,329
)
10,268
12,145
6,047
(6,708
)
15,928
15,029
30,296
Interest expense
(2,867
)
(3,403
)
(4,418
)
(4,309
)
(14,997
)
(3,292
)
(3,406
)
(3,295
)
(1,991
)
(11,984
)
Other income/(expense), net
7,809
2,127
(18,747
)
5,959
(2,852
)
2,755
(10,114
)
12,633
13,038
18,312
Income before management
fee and income taxes
31,682
36,250
13,301
41,479
122,712
24,573
13,846
35,682
47,253
121,354
Management fee expense
3,113
3,626
1,387
4,144
12,270
2,448
1,380
3,540
4,645
12,013
Income before income taxes
28,569
32,624
11,914
37,335
110,442
22,125
12,466
32,142
42,608
109,341
Income tax expense
10,288
11,945
4,745
13,789
40,767
8,294
4,401
11,686
14,945
39,326
Net income
18,281
20,679
7,169
23,546
69,675
13,831
8,065
20,456
27,663
70,015
Net income/(loss) attributable
to noncontrolling interests
638
32
(530
)
(147
)
(7
)
105
16
350
752
1,223
Net income attributable to
GAMCO Investors, Inc.
$
17,643
$
20,647
$
7,699
$
23,693
$
69,682
$
13,726
$
8,049
$
20,106
$
26,911
$
68,792
Net income attributable to
GAMCO Investors, Inc.
per share:
Basic
$
0.66
$
0.77
$
0.29
$
0.89
$
2.62
$
0.50
$
0.30
$
0.75
$
1.00
$
2.55
Diluted
$
0.65
$
0.77
$
0.29
$
0.89
$
2.61
$
0.50
$
0.30
$
0.73
$
0.99
$
2.52
Weighted average shares outstanding:
Basic
26,901
26,665
26,496
26,488
26,636
27,184
26,979
26,828
26,851
26,959
Diluted
27,008
26,733
26,576
26,584
26,724
28,148
27,219
28,364
27,260
28,348
Reconciliation of non-GAAP
financial measures to GAAP:
Operating income before
management fee
$
23,873
$
34,123
$
32,048
$
35,520
$
125,564
$
21,818
$
23,960
$
23,049
$
34,215
$
103,042
Deduct: management fee expense
3,113
3,626
1,387
4,144
12,270
2,448
1,380
3,540
4,645
12,013
Operating income
$
20,760
$
30,497
$
30,661
$
31,376
$
113,294
$
19,370
$
22,580
$
19,509
$
29,570
$
91,029
Operating margin before
management fee
31.0
%
40.1
%
40.0
%
41.8
%
38.4
%
36.4
%
38.3
%
36.9
%
35.8
%
36.8
%
Operating margin after
management fee
27.0
%
35.8
%
38.3
%
36.9
%
34.6
%
32.3
%
36.1
%
31.2
%
31.0
%
32.5
%
(a) Includes $5.6 million in expenses directly related to the launch
of a new closed-end fund.
(b) Includes $5.8 million in expense from the acceleration of
vesting of RSAs.
Table VIII
GAMCO INVESTORS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
December 31,
December 31,
2011
2010
ASSETS
Cash and cash equivalents
$
261,340
$
169,601
Investments
413,440
388,357
Receivable from brokers
20,913
46,621
Other receivables
43,424
51,744
Income tax receivable
39
325
Other assets
17,593
16,088
Total assets
$
756,749
$
672,736
LIABILITIES AND EQUITY
Payable to brokers
$
10,770
$
1,554
Income taxes payable and deferred tax liabilities
15,296
23,225
Compensation payable
17,695
23,771
Securities sold short, not yet purchased
5,488
19,299
Accrued expenses and other liabilities
30,899
29,715
Sub-total
80,148
97,564
5.5% Senior notes (due May 15, 2013)
99,000
99,000
5.875% Senior notes (due June 1, 2021)
100,000
-
Zero coupon subordinated debentures (due December 31, 2015) (a)
64,119
59,580
Total debt
263,119
158,580
Total liabilities
343,267
256,144
Redeemable noncontrolling interests
1,150
26,984
GAMCO Investors, Inc.'s stockholders' equity
403,972
386,029
Noncontrolling interests
8,360
3,579
Total equity
412,332
389,608
Total liabilities and equity
$
756,749
$
672,736
(a) The zero coupon subordinated debentures due December 31, 2015
have a face value of $86.3 million.
GABELLI/GAMCO FUNDS
Gabelli/GAMCO Funds Lipper Rankings as of December 31, 2011
1 Yr - 12/31/10-12/31/11
3 Yrs - 12/31/08-12/31/11
5 Yrs - 12/31/06-12/31/11
10 Yrs - 12/31/01-12/31/11
Percentile
Rank /
Percentile
Rank /
Percentile
Rank /
Percentile
Rank /
Fund Name
Lipper Category
Rank
Total Funds
Rank
Total Funds
Rank
Total Funds
Rank
Total Funds
Gabelli Asset; AAA
Multi-Cap Core Funds
31
221/729
20
123/629
9
48/549
10
28/291
Gabelli Value Fund; A
Multi-Cap Core Funds
25
176/729
4
19/629
16
85/549
25
71/291
Gabelli SRI; AAA
Global Small/Mid-Cap Funds
54
44/81
57
41/72
-
-
-
-
Gabelli Eq:Eq Inc; AAA
Equity Income Funds
64
182/285
17
40/248
27
57/212
7
7/106
GAMCO Growth; AAA
Large-Cap Core Funds
80
849/1066
11
98/958
40
325/827
92
456/498
Gabelli Eq:SC Gro; AAA
Small-Cap Core Funds
69
478/692
54
335/629
15
72/498
11
32/303
Gabelli Eq:Wd SCV; AAA
Small-Cap Core Funds
85
583/692
65
409/629
46
227/498
-
-
GAMCO Gl:Oppty; AAA
Global Large-Cap Growth
67
69/102
15
13/88
38
28/74
5
2/41
GAMCO Gl:Growth; AAA
Global Large-Cap Growth
24
24/102
5
4/88
23
17/74
41
17/41
GAMCO Gold; AAA
Precious Metal Funds
30
22/73
46
27/58
55
28/50
39
13/33
GAMCO Intl Gro; AAA
International Large-Cap Growth
20
47/240
6
12/222
25
46/190
31
35/112
Gabelli Dividend Growth Fund; AAA
Large-Cap Core Funds
50
532/1066
35
328/958
45
369/827
32
155/498
Gabelli Inv:ABC; AAA
Specialty Diversified Equity Funds
23
11/47
58
19/32
38
10/26
10
1/9
GAMCO Mathers; AAA
Specialty Diversified Equity Funds
59
28/47
70
23/32
67
18/26
50
5/9
Comstock Cap Val; A
Specialty Diversified Equity Funds
50
24/47
88
29/32
86
23/26
70
7/9
GAMCO Gl:Telecom; AAA
Telecommunications Funds
70
27/38
69
26/37
47
14/29
19
4/21
GAMCO Gl:Vertumnus; AAA
Convertible Securities Funds
71
46/64
48
24/49
95
37/38
91
30/32
Gabelli Utilities; AAA
Utility Funds
60
44/73
60
41/68
26
16/61
40
16/40
787:Gabelli Merg&Acq A
Mid-Cap Core Funds
16
48/308
97
260/268
64
147/231
83
129/156
Gabelli Capital Asset Fund
Distributed through Insurance Channel
28
87/309
5
16/292
15
36/240
11
16/142
% of funds in top half
50.0%
55.0%
73.7%
77.8%
Data presented reflects past performance, which is no guarantee
of future results. Strong rankings are not indicative of
positive fund performance. Absolute performance for some funds was
negative for certain periods. Other share classes are available
which may have different performance characteristics.
Lipper, a wholly-owned subsidiary of Reuters, provides independent
insight on global collective investments including mutual funds,
retirement funds, hedge funds, fund fees and expenses to the asset
management and media communities. Lipper ranks the performance of
mutual funds within a classification of funds that have similar
investment objectives. Rankings are historical with capital gains
and dividends reinvested and do not include the effect of loads.
If an expense waiver was in effect, it may have had a material
effect on the total return or yield for the period.
Relative long-term investment performance remained strong with
approximately 50%, 55%, 74% and 78% of firmwide mutual funds in
the top half of their Lipper categories on a one-, three-, five-,
and ten-year total-return basis, respectively, as of December 31,
2011.
Investors should carefully consider the investment objective,
risks, charges, and expenses of each fund before investing. Each
fund's prospectus contains information about these and other
matters and should be read carefully before investing. Each fund’s
share price will fluctuate with changes in the market value of the
fund’s portfolio securities. Stocks are subject to market,
economic and business risks that cause their prices to fluctuate.
When you sell fund shares, they may be worth less than what you
paid for them. Consequently, you can lose money by investing in a
fund. You can obtain a prospectus by calling 800-GABELLI
(422-3554), online at www.gabelli.com, or from your financial
advisor. Distributed by G.distributors, LLC., One Corporate
Center, Rye New York, 10580. Other share classes are available
that have different performance characteristics.
The inception date for the Gabelli SRI Green Fund was June 1, 2007.
The inception date for the Gabelli Woodland Small Cap Value Fund was
December 31, 2002.
1 The Gabelli U.S. Treasury Money Market Fund (Fund) ranked
#1 out of 70 funds for the one-year period ended December 31, 2011, #2
out of 62 funds for the five-year period and #2 out of 47 funds for the
ten-year period. The rankings are based on total return over the length
of the period. Past performance is not indicative of future results.
Investment returns and yield will fluctuate. Income will be subject
to federal income tax. An investment in the Fund is not guaranteed nor
insured by the Federal Deposit Insurance Corporation or any government
agency. Although the Fund seeks to preserve the value of your investment
at $1.00 per share, it is possible to lose money by investing in the
Fund. During the respective periods, the Adviser has waived
certain fees and reimbursed expenses. Without such reimbursements
or waivers, return and rankings would have been lower.
Investors should consider the investment objectives, risks,
charges and expenses of the Fund carefully before investing. The
prospectus, which contains more information about this and other
matters, should be read carefully before investing. You can
obtain a prospectus by calling G.distributors, LLC at 1-800-GABELLI
(1-800-422-3554), or by visiting http://www.gabelli.com.
Distributed by G.distributors, LLC One Corporate Center, Rye, NY 10580
|
