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Press release from Business Wire

GAMCO Investors, Inc. Reports Record Second Quarter Results

<ul> <li class='bwlistitemmargb'> <b>Assets under Management Record $40.5 Billion</b> </li> <li class='bwlistitemmargb'> <b>Earnings Per Share increase to $1.09 per share from $0.57 per share, up 91%, Bolstered by a $0.40 Per Share Swing in Other Income</b> </li> <li class='bwlistitemmargb'> <b>$99 million Debt Repaid May 15, 2013</b> </li> </ul>

Tuesday, August 06, 2013

GAMCO Investors, Inc. Reports Record Second Quarter Results

16:05 EDT Tuesday, August 06, 2013

RYE, N.Y. (Business Wire) -- GAMCO Investors, Inc. (“GAMCO”) (NYSE: GBL) today reported its 2013 second quarter results including revenues of $92.3 million, net income of $27.9 million and earnings per diluted share of $1.09. On a comparable basis, revenues were $81.0 million, net income was $15.1 million, and earnings per diluted share were $0.57 in the second quarter of 2012.

Assets Under Management (“AUM”) rose to a record $40.5 billion, up 1.0% from $40.1 billion at March 31, 2013 and up 13.5% from $35.7 billion at June 30, 2012.

Results for the first half of 2013 include revenues of $178.5 million, net income of $50.4 million and earnings per diluted share of $1.96, an increase of 33.3% from earnings of $1.47 in the first half of 2012.

                             
Financial Highlights           Second Quarter     Year-to-date    
($'s in 000's except AUM and per share data)   2013         2012    

% ∆

  2013       2012  

% ∆

 
AUM - end of period (in millions) $ 40,478 $ 35,662 13.5 % $ 40,478 $ 35,662 13.5 %
AUM - average (in millions) 40,331 35,640 13.2 39,389 35,977 9.5
 
Revenues 92,290 81,024 13.9 178,471 162,773 9.6
 
Operating income before management fee 36,630 32,982 11.1 71,337 64,178 11.2
Operating margin before management fee 39.7 % 40.7 % 40.0 % 39.4 %
 
Operating income after management fee 31,784 30,367 4.7 62,511 57,379 8.9
Operating margin after management fee 34.4 % 37.5 % 35.0 % 35.3 %
 
Other income/(expense), net 11,852 (6,818 ) 17,000 (a) 3,892
 
Net income 27,893 15,105 84.7 50,438 38,941 29.5
Net income per share $ 1.09 $ 0.57 91.2 % $ 1.96 (a) $ 1.47 33.3 %
 
Shares outstanding at June 30               25,630         26,631               25,630         26,631        
(a) Includes $5.0 million pre-tax or $0.11 per fully diluted share charge in the first quarter for shareholder-designated charitable
contribution program.

Assets Under Management

Our second quarter 2013 net inflows were $240 million, market appreciation totaled $293 million and Fund distributions (net of reinvestments) were $145 million. This compares with net inflows of $498 million, market appreciation of $3.3 billion and Fund distributions of $145 million in the first quarter and net inflows of $111 million, market depreciation of $1.0 billion and Fund distributions of $109 million in the second quarter of 2012.

During the quarter total firm AUM increased $388 million to a record $40.5 billion at June 30, 2013 driven largely by net inflows of $417 million into our open-end equity funds. Open-end equity funds totaled $14.2 billion, 2.7% ahead of the previous quarter end AUM and 13.5% higher than the year ago period end.

Institutional and private wealth management business ended the quarter with $17.3 billion in AUM, 1.6% ahead of the March 2013 quarter end and 19.4% above the comparable 2012 quarter end.

Net inflows during the first six months of 2013 were $738 million, market appreciation totaled $3.6 billion and Fund distributions, net of reinvestments, were $290 million. This compares with net inflows of $466 million, market appreciation of $1.3 billion and Fund distributions of $217 million in the first half of 2012.

Revenues

Investment advisory and incentive fees were $77.4 million in the second quarter of 2013, an increase of $10.2 million or 15.2% from the comparable 2012 quarter. Revenues were generally driven by growth in average AUM in our open- and closed-end funds, higher billable assets in our institutional and private wealth management accounts and an increase in incentive fees earned. Average AUM in the open-end equity funds were $14.1 billion, an increase of 12.8% from $12.5 billion in the comparable 2012 quarter. Average AUM in the institutional and private wealth management accounts were $17.1 billion, 17.7% higher than the prior year period. Incentive fees earned during the 2013 quarter totaled $2.1 million versus $1.1 million in the second quarter of 2012.

Revenues from the distribution of our open-end funds and other income were $12.5 million for the second quarter 2013, an increase of $1.5 million or 13.8% from the prior year quarter of $11.0 million.

Our institutional research services generated revenues of $2.3 million in the second quarter 2013, down 17.2% from the $2.8 million in the prior year period.

Operating Income

Operating income before management fee was $36.6 million in the second quarter 2013 versus $33.0 million in the second quarter 2012. For the second quarter 2013, the operating margin before management fee was 39.7% versus 40.7% in the second quarter of 2012. 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, which is net of management fee expense, was $31.8 million in the second quarter of 2013 versus $30.4 million in the prior year period, an increase of $1.4 million, or 4.6%. The operating margin was 34.4% in the second quarter of 2013 versus 37.5% in the comparable prior year period. Higher distribution costs related to increased sales through third party brokers and higher client services expense and regulatory costs impacted the 2013 quarter, partially offset by lower stock compensation costs and lower expense reimbursements for certain mutual funds resulting from increased levels of AUM.

Other income (expense)

Other income/(expense), net, was $11.9 million, or $0.26 per diluted share, in the 2013 quarter versus an expense of ($6.8) million, or ($0.14) per diluted share, in the second quarter of 2012. Gains from investments in mutual funds, alternative products and proprietary accounts were $12.1 million in the 2013 quarter versus losses of ($4.2) million in the second quarter of 2012. Included in the 2013 trading profits is $9.6 million, or $0.21 per diluted share, of gains from the sale of available for sale securities. Dividend and interest income totaled $2.5 million up from $1.8 million in the prior year period. Interest expense was $2.8 million in the 2013 second quarter, $1.6 million lower than the prior year quarter due to the third quarter 2012 repurchase of $64.1 million (face value) in 0% debentures through a tender offer as well as the $99 million of 5.5% senior notes which matured on May 15, 2013.

Income Taxes

The effective tax rate for the quarter ended June 30, 2013 was 36.0% compared to the 2012 quarter effective tax rate of 36.9%.

Business and Investment Highlights

  • In June 2013, the Gabelli Global Utility & Income Trust completed a rights offering in which the fund issued 1 million shares of common stock and 1 million shares of Series A Cumulative Puttable and Callable Preferred Shares totaling approximately $70 million. In the offering, the fund's existing common shareholders received one transferrable right (the “Right”) for each share of common stock held on the record date. The Rights entitled holders to purchase one common share and one share of Series A Preferred by submitting three Rights plus $68.50. The offering was greatly over-subscribed.
  • The Gabelli Healthcare & WellnessRx Trust commenced a rights offering of $33 million which was completed in July and heavily oversubscribed.
  • In the May 27, 2013 issue of Pensions & Investments Report on the Largest Money Managers-Worldwide Institutional Assets Under Management GAMCO was ranked #175 for the year ended December 31, 2012 and #182 for the year ended December 31, 2011.
  • Our “In the News” and “On the Air” section of our website features interviews with Portfolio Managers including Barbara Marcin, Howard Ward, Chris Marangi, Jeff Jonas, Kevin Dreyer, and Caesar Bryan as they address world markets, industries, and specific stocks. Please visit the Gabelli website at www.gabelli.com/inthenews.html.
  • In May 2013, the GAMCO Global Gold, Natural Resources & Income Trust completed an offering of 4 million 5.0% Series B Cumulative Preferred Shares valued at $100 million. The Series B Preferred is a perpetual preferred rated “A1” by Moody's Investor Service, Inc. and is non-callable for five years.
  • In May 2013, G.research, Inc. hosted its 7th annual Omaha research trip in conjunction with the Berkshire Hathaway Annual Meeting as well as its 5th annual Movie & Entertainment Conference.
  • On May 15, 2013 we repaid the remaining $99 million of outstanding 5.5% senior notes originally issued in May 2003.

Balance Sheet – $590.1 million of Cash and Investments at Quarter End

We ended the quarter with cash and investments of $590.1 million, debt of $117.0 million ($120.5 million face value) and equity attributable to GAMCO shareholders of $408.4 million. We have $400 million available on our universal shelf registration which provides us with the flexibility to issue any combination of senior and subordinated debt securities, convertible debt securities and common and preferred equity. Together with earnings from operations, the shelf provides us with opportunities to do acquisitions, lift-outs, seed new investment strategies, co-invest as well as shareholder compensation including share repurchase and dividends.

Shareholder Compensation

During the first half of 2013 we returned $8.9 million of our earnings to shareholders through dividends and stock repurchases. We repurchased 118,402 shares at an average price of $52.99 per share through our stock buyback program, for a total investment of $6.3 million. We also returned $2.6 million in regular quarterly cash dividends of $0.10 per share.

On August 6, 2013 GAMCO's Board of Directors increased its quarterly dividend by 20% to $0.06 per share payable on September 24, 2013 to its Class A and Class B shareholders of record on September 10, 2013.

NOTES ON NON-GAAP FINANCIAL MEASURES

A.     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.
B. Operating income before management fee expense per share and other income, net per share are 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 positive swing of $0.40 per fully diluted share 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.
                   
2nd Quarter YTD June
  2013     2012     2013     2012  
Operating income before management fee $ 36,630 $ 32,982 $ 71,337 $ 64,178
Management fee expense (3,667 ) (3,297 ) (7,126 ) (6,410 )
Tax expense (11,878 ) (10,949 ) (23,354 ) (21,159 )
Noncontrolling interest expense   91     77     177     185  
Operating income (after management fee and taxes)   21,176     18,813     41,034     36,794  
Per fully diluted share $ 0.83   $ 0.71   $ 1.59   $ 1.39  
 
Other income/(expense), net $ 11,852 $ (6,818 ) $ 17,000 $ 3,892
Management fee (expense)/benefit (1,179 ) 682 (1,700 ) (389 )
Tax (expense)/benefit (3,846 ) 2,263 (5,565 ) (1,283 )
Noncontrolling interest (expense)/benefit   (110 )   165     (331 )   (73 )
Other income/(expense), net (after management fee and taxes) $ 6,717   $ (3,708 ) $ 9,404   $ 2,147  
Per fully diluted share $ 0.26   $ (0.14 ) $ 0.37   $ 0.08  
 
Net income per fully diluted share $ 1.09   $ 0.57   $ 1.96   $ 1.47  
Diluted weighted average shares outstanding   25,689     26,426     25,723     26,501  
C.    

Shareholder-designated charitable contribution program expense, net of management fee and tax benefit, per diluted share:

 

        YTD
(in thousands, except per share data) 2013
Shareholder-designated charitable contribution program $ 5,000
Management fee and tax benefit   2,156
Net loss $ 2,844
 
Shareholder-designated charitable contribution program charge per share $ 0.11
Diluted weighted average shares outstanding   25,723
D.    

Realized gains from sales of available for sale securities, net of management fee and tax benefit, per diluted share:

 

        2nd Quarter     YTD
(in thousands, except per share data)   2013   2013
Realized gains from sales of available for sale securities $ 9,576 $ 9,576
Management fee and tax benefit   4,146   4,146
Net gain $ 5,430 $ 5,430
 
Realized gains from sales of available for sale securities per share $ 0.21 $ 0.21
Diluted weighted average shares outstanding   25,689   25,723
 

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 - 2nd Quarter 2013
Fund
Market distributions,
March 31, appreciation/ Net cash net of June 30,
  2013 (depreciation) flows reinvestments   2013
Equities:
Open-end Funds $ 13,813 $ (11 ) $ 417 $ (31 ) $ 14,188
Closed-end Funds 6,557 (128 ) 94 (114 ) 6,409
Institutional & PWM - direct 13,690 358 21 - 14,069
Institutional & PWM - sub-advisory 3,299 69 (183 ) - 3,185
Investment Partnerships 796 5 (23 ) - 778
SICAV (a)   113   -     (20 )   -     93
Total Equities   38,268   293     306     (145 )   38,722
Fixed Income:
Money-Market Fund 1,758 - (69 ) - 1,689
Institutional & PWM   64   -     3     -     67
Total Fixed Income   1,822   -     (66 )   -     1,756
Total Assets Under Management $ 40,090 $ 293   $ 240   $ (145 ) $ 40,478
 
   
The Company reported Assets Under Management as follows (in millions):
     
Table II: Fund Flows - Six months ended June 30, 2013
Fund
Market distributions,
December 31, appreciation/ Net cash net of June 30,
2012 (depreciation) flows reinvestments 2013
Equities:
Open-end Funds $ 12,502 $ 1,129 $ 619 $ (62 ) $ 14,188
Closed-end Funds 6,288 253 96 (228 ) 6,409
Institutional & PWM - direct 12,030 1,843 196 - 14,069
Institutional & PWM - sub-advisory 2,924 385 (124 ) - 3,185
Investment Partnerships 801 13 (36 ) - 778
SICAV (a)   119   2   (28 )   -     93
Total Equities   34,664   3,625   723     (290 )   38,722
Fixed Income:
Money-Market Fund 1,681 - 8 - 1,689
Institutional & PWM   60   -   7     -     67
Total Fixed Income   1,741   -   15     -     1,756
 
Total Assets Under Management $ 36,405 $ 3,625 $ 738   $ (290 ) $ 40,478
 
       
Table III: Assets Under Management
      June 30, June 30, %
2012 2013 Inc.(Dec.)
Equities:
Open-end Funds $ 12,496 $ 14,188 13.5 %
Closed-end Funds 5,860 6,409 9.4
Institutional & PWM - direct 11,655 14,069 20.7
Institutional & PWM - sub-advisory 2,788 3,185 14.2
Investment Partnerships 781 778 (0.4 )
SICAV (a)   126   93 (26.2 )
Total Equities   33,706   38,722 14.9
Fixed Income:
Money-Market Fund 1,893 1,689 (10.8 )
Institutional & PWM   63   67 6.3
Total Fixed Income   1,956   1,756 (10.2 )
Total Assets Under Management $ 35,662 $ 40,478 13.5 %
 
                   
Table IV: Assets Under Management by Quarter
            % Increase/
(decrease) from
6/12 9/12 12/12 3/13 6/13 6/12 3/13
Equities:
Open-end Funds $ 12,496 $ 12,758 $ 12,502 $ 13,813 $ 14,188 13.5 % 2.7 %
Closed-end Funds 5,860 6,365 6,288 6,557 6,409 9.4 (2.3 )
Institutional & PWM - direct 11,655 12,189 12,030 13,690 14,069 20.7 2.8
Institutional & PWM - sub-advisory 2,788 2,912 2,924 3,299 3,185 14.2 (3.5 )
Investment Partnerships 781 785 801 796 778 (0.4 ) (2.3 )
SICAV (a)   126   121   119   113   93 (26.2 ) (17.7 )
Total Equities   33,706   35,130   34,664   38,268   38,722 14.9 1.2
Fixed Income:
Money-Market Fund 1,893 1,752 1,681 1,758 1,689 (10.8 ) (3.9 )
Institutional & PWM   63   63   60   64   67 6.3 4.7
Total Fixed Income   1,956   1,815   1,741   1,822   1,756 (10.2 ) (3.6 )
Total Assets Under Management $ 35,662 $ 36,945 $ 36,405 $ 40,090 $ 40,478 13.5 % 1.0 %
(a) Includes $101 million, $102 million, $104 million, $99 million and $90 million of proprietary seed capital at June 30, 2012,
September 30, 2012, December 31, 2012, March 31, 2013 and June 30, 2013, respectively.
 
               
Table V
 
GAMCO INVESTORS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
 
For the Three Months Ended June 30,
% Inc.
2013 2012 (Dec.)
 
Investment advisory and incentive fees $ 77,443 $ 67,210 15.2 %
Distribution fees and other income 12,522 11,006 13.8
Institutional research services   2,325     2,808   (17.2 )
Total revenues 92,290 81,024 13.9
 
Compensation costs 37,759 32,921 14.7
Distribution costs 11,871 10,012 18.6
Other operating expenses   6,030     5,109   18.0
Total expenses 55,660 48,042 15.9
 
Operating income before management fee 36,630 32,982 11.1
 
Investment income/(loss) 14,648 (2,389 )
Interest expense   (2,796 )   (4,429 )
Other income/(expense), net   11,852     (6,818 )
 
Income before management fee and income taxes 48,482 26,164 85.3
Management fee expense   4,846     2,615  
Income before income taxes 43,636 23,549 85.3
Income tax expense   15,724     8,686  
Net income 27,912 14,863 87.8
Net income/(loss) attributable to noncontrolling interests   19     (242 )
Net income attributable to GAMCO Investors, Inc. $ 27,893   $ 15,105   84.7
 
Net income per share attributable to GAMCO Investors, Inc.:
Basic $ 1.09   $ 0.58   87.9
 
Diluted $ 1.09   $ 0.57   91.2
 
Weighted average shares outstanding:
Basic   25,679     26,258   (2.2 )
 
Diluted   25,689     26,426   (2.8 )
 
Actual shares outstanding (a)   25,630     26,631   (3.8 %)
 
Notes:
(a) Includes 0 and 373,500 of RSAs, respectively.
See GAAP to non-GAAP reconciliation on page 11.
 
               
Table VI
 
GAMCO INVESTORS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
 
For the Six Months Ended June 30,
% Inc.
2013 2012 (Dec.)
 
Investment advisory and incentive fees $ 150,050 $ 134,993 11.2 %
Distribution fees and other income 23,875 22,629 5.5
Institutional research services   4,546     5,151   (11.7 )
Total revenues 178,471 162,773 9.6
 
Compensation costs 73,411 67,475 8.8
Distribution costs 22,881 20,189 13.3
Other operating expenses   10,842     10,931   (0.8 )
Total expenses 107,134 98,595 8.7
 
Operating income before management fee 71,337 64,178 11.2
 
Investment income 28,284 12,725
Interest expense (6,284 ) (8,833 )
Shareholder-designated contribution   (5,000 )   -  
Other income, net   17,000     3,892  
 
Income before management fee and income taxes 88,337 68,070 29.8
Management fee expense   8,826     6,799  
Income before income taxes 79,511 61,271 29.8
Income tax expense   28,919     22,442  
Net income 50,592 38,829 30.3
Net income attributable to noncontrolling interests   154     (112 )
Net income attributable to GAMCO Investors, Inc. $ 50,438   $ 38,941   29.5
 
Net income per share attributable to GAMCO Investors, Inc.:
Basic $ 1.96   $ 1.48   32.4
 
Diluted $ 1.96   $ 1.47   33.3
 
Weighted average shares outstanding:
Basic   25,710     26,338   (2.4 )
 
Diluted   25,723     26,501   (2.9 )
 
Actual shares outstanding (a)   25,630     26,631   (3.8 %)
 
Notes:
(a) Includes 0 and 373,500 of RSAs, respectively.
See GAAP to non-GAAP reconciliation on page 11.
 
                                     
Table VII
GAMCO INVESTORS, INC.
UNAUDITED QUARTERLY CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
 
2013 2012
1st 2nd YTD 1st 2nd YTD 3rd 4th
Quarter Quarter 2013 Quarter Quarter   2012   Quarter Quarter Full Year
Income Statement Data:
 
Revenues $ 86,181 $ 92,290 $ 178,471 $ 81,749 $ 81,024 $ 162,773 $ 82,231 $ 99,277 $ 344,281
 
Expenses   51,474     55,660     107,134     50,553     48,042     98,595     50,163     71,375   (a)   220,133  
 
Operating income before
management fee 34,707 36,630 71,337 31,196 32,982 64,178 32,068 27,902 124,148
 
Investment income/(loss) 13,636 14,648 28,284 15,114 (2,389 ) 12,725 2,140 (b) 7,220 22,085
Interest expense (3,488 ) (2,796 ) (6,284 ) (4,404 ) (4,429 ) (8,833 ) (3,586 ) (3,480 ) (15,899 )
Shareholder-designated contribution   (5,000 )   -     (5,000 )   -     -     -     -     -     -  
Other income/(expense), net 5,148 11,852 17,000 10,710 (6,818 ) 3,892 (1,446 ) 3,740 6,186
 
Income before management
fee and income taxes 39,855 48,482 88,337 41,906 26,164 68,070 30,622 31,642 130,334
Management fee expense   3,980     4,846     8,826     4,184     2,615     6,799     3,056     3,163     13,018  
Income before income taxes 35,875 43,636 79,511 37,722 23,549 61,271 27,566 28,479 117,316
Income tax expense   13,195     15,724     28,919     13,756     8,686     22,442     8,467     10,812     41,721  
Net income 22,680 27,912 50,592 23,966 14,863 38,829 19,099 17,667 75,595
Net income/(loss) attributable
to noncontrolling interests   135     19     154     130     (242 )   (112 )   95     73     56  
Net income attributable to
GAMCO Investors, Inc. $ 22,545   $ 27,893   $ 50,438   $ 23,836   $ 15,105   $ 38,941   $ 19,004   $ 17,594   $ 75,539  
 
Net income per share
attributable to GAMCO
Investors, Inc.:
Basic $ 0.88   $ 1.09   $ 1.96   $ 0.90   $ 0.58   $ 1.48   $ 0.72   $ 0.67   $ 2.87  
 
Diluted $ 0.88   $ 1.09   $ 1.96   $ 0.90   $ 0.57   $ 1.47   $ 0.72   $ 0.67   $ 2.86  
 
Weighted average shares outstanding:
Basic   25,742     25,679     25,710     26,415     26,258     26,338     26,250     26,208     26,283  
 
Diluted   25,758     25,689     25,723     26,533     26,426     26,501     26,439     26,305     26,436  
Reconciliation of non-GAAP
financial measures to GAAP:
Operating income before
management fee $ 34,707 $ 36,630 $ 71,337 $ 31,196 $ 32,982 $ 64,178 $ 32,068 $ 27,902 $ 124,148
Deduct: management fee expense   3,980     4,846     8,826     4,184     2,615     6,799     3,056     3,163     13,018  
Operating income $ 30,727   $ 31,784   $ 62,511   $ 27,012   $ 30,367   $ 57,379   $ 29,012   $ 24,739   $ 111,130  
 
Operating margin before
management fee   40.3 %   39.7 %   40.0 %   38.2 %   40.7 %   39.4 %   39.0 %   28.1 %   36.1 %
Operating margin after
management fee   35.7 %   34.4 %   35.0 %   33.0 %   37.5 %   35.3 %   35.3 %   24.9 %   32.3 %
(a) Includes $10.1 million in expenses from the acceleration of RSAs.
(b) Includes $6.3 million loss on extinguishment of $64.6 million (face value) of 0% Subordinated Debentures.
     
Table VIII
GAMCO INVESTORS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
 
June 30, December 31, June 30,
2013 2012 2012
 
ASSETS
 
Cash and cash equivalents $ 222,776 $ 190,608 $ 324,440
Investments (a) 367,315 378,263 411,310
Receivable from brokers 39,669 50,655 41,513
Other receivables 35,722 52,600 32,847
Income tax receivable 413 1,014 402
Other assets   17,606   17,589   16,218
 
Total assets $ 683,501 $ 690,729 $ 826,730
 
LIABILITIES AND EQUITY
 
Payable to brokers $ 14,986 $ 14,346 $ 20,113
Income taxes payable and deferred tax liabilities 27,864 25,394 12,846
Compensation payable 59,643 10,535 28,985
Securities sold short, not yet purchased 7,598 3,136 7,010
Accrued expenses and other liabilities   38,170   32,656   36,006
Sub-total 148,261 86,067 104,960
 
5.5% Senior notes (repaid May 15, 2013) - 99,000 99,000
5.875% Senior notes (due June 1, 2021) 100,000 100,000 100,000
0% Subordinated Debentures (due December 31, 2015) (b)   17,028   17,366   66,598
Total debt   117,028   216,366   265,598
Total liabilities 265,289 302,433 370,558
 
Redeemable noncontrolling interests 7,021 17,362 26,162
 
GAMCO Investors, Inc.'s stockholders' equity 408,413 367,608 426,659
Noncontrolling interests   2,778   3,326   3,351
Total equity   411,191   370,934   430,010
 
Total liabilities and equity $ 683,501 $ 690,729 $ 826,730
(a) Includes investments in sponsored registered investment companies of $52.3 million, $61.9 million and $59.6 million, respectively.
(b) The 0% Subordinated Debentures due December 31, 2015 have a face value of $20.5 million, $86.3 million and $86.3 million,
respectively.

GAMCO Investors, Inc.
Robert S. Zuccaro, 914-921-5088
Executive Vice President
and Chief Financial Officer
www.gabelli.com

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