SECURITIES
&
EXCHANGE
COMMISSION
|
WASHINGTON,
D.C. 20549
|
FORM
10-Q
|
(Mark
One)
|
[X]
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
[
]
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
GAMCO
INVESTORS, INC.
|
(Exact
name of Registrant as specified in its
charter)
|
New
York
|
13-4007862
|
||
(State
of other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
||
One
Corporate Center, Rye, NY
|
10580-1422
|
||
(Address
of principle executive offices)
|
(Zip
Code)
|
(914)
921-5100
|
Registrant’s
telephone number, including area
code
|
Large
accelerated filer ¨
|
Accelerated
filer x
|
Non-accelerated
filer ¨
|
Class
|
Outstanding
at October 31, 2007
|
||
Class
A Common Stock, .001 par value
|
7,438,369
|
|
|
Class
B Common Stock, .001 par value
|
20,645,816
|
INDEX
|
|
GAMCO
INVESTORS, INC. AND SUBSIDIARIES
|
|
PART
I.
|
FINANCIAL
INFORMATION
|
Item
1.
|
Financial
Statements (Unaudited)
|
Condensed
Consolidated Statements of Income:
|
|
- Three
months ended September 30, 2006 and 2007
|
|
- Nine months ended September 30, 2006 and 2007 | |
Condensed
Consolidated Statements of Financial Condition:
|
|
- December
31, 2006 (Audited)
|
|
- September
30, 2006
|
|
- September
30, 2007
|
|
Condensed
Consolidated Statements of Stockholders’ Equity and Comprehensive
Income:
|
|
- Three
months ended September 30, 2006 and 2007
|
|
- Nine
months ended September 30, 2006 and 2007
|
|
Condensed
Consolidated Statements of Cash Flows
|
|
- Three months ended September 30, 2006 and 2007 | |
- Nine
months ended September 30, 2006 and 2007
|
|
Notes
to Condensed Consolidated Financial Statements
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of Operations
(Including Quantitative and Qualitative Disclosure about Market
Risk)
|
Item
4.
|
Controls
and Procedures
|
PART
II.
|
OTHER
INFORMATION
|
Item
2.
|
Changes
in Securities, Use of Proceeds and Issuer Purchases of Equity
Securities
|
Item
6.
|
Exhibits
|
SIGNATURES
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
|
September
30,
|
September
30,
|
||||||||||||||
2007
|
2006
(a)
|
2007
|
2006
(a)
|
|||||||||||||
Revenues
|
||||||||||||||||
Investment
advisory and incentive fees
|
$ |
58,392
|
$ |
49,751
|
$ |
172,606
|
$ |
153,735
|
||||||||
Commission
revenue
|
3,494
|
2,799
|
11,550
|
9,179
|
||||||||||||
Distribution
fees and other income
|
6,583
|
5,444
|
19,196
|
16,023
|
||||||||||||
Total
revenues
|
68,469
|
57,994
|
203,352
|
178,937
|
||||||||||||
Expenses
|
||||||||||||||||
Compensation
and related costs
|
29,064
|
23,852
|
87,343
|
74,064
|
||||||||||||
Management
fee
|
3,541
|
3,058
|
10,391
|
8,293
|
||||||||||||
Distribution
costs
|
6,099
|
5,023
|
22,146
|
15,567
|
||||||||||||
Other
operating expenses
|
2,665
|
7,564
|
18,693
|
22,667
|
||||||||||||
Reserve
for settlement
|
-
|
-
|
-
|
11,900
|
||||||||||||
Total
expenses
|
41,369
|
39,497
|
138,573
|
132,491
|
||||||||||||
Operating
income
|
27,100
|
18,497
|
64,779
|
46,446
|
||||||||||||
Other
income (expense)
|
||||||||||||||||
Net
gain from investments
|
514
|
4,663
|
17,277
|
32,031
|
||||||||||||
Interest
and dividend income
|
6,810
|
7,665
|
20,978
|
20,149
|
||||||||||||
Interest
expense
|
(2,828 | ) | (3,368 | ) | (9,537 | ) | (10,637 | ) | ||||||||
Total
other income, net
|
4,496
|
8,960
|
28,718
|
41,543
|
||||||||||||
Income
before income taxes and minority interest
|
31,596
|
27,457
|
93,497
|
87,989
|
||||||||||||
Income
tax provision
|
13,340
|
10,296
|
37,403
|
34,197
|
||||||||||||
Minority
interest
|
(81
|
) |
118
|
596
|
8,845
|
|||||||||||
Net
income
|
$ |
18,337
|
$ |
17,043
|
$ |
55,498
|
$ |
44,947
|
||||||||
Net
income per share:
|
||||||||||||||||
Basic
|
$ |
0.65
|
$ |
0.60
|
$ |
1.97
|
$ |
1.57
|
||||||||
Diluted
|
$ |
0.64
|
$ |
0.60
|
$ |
1.95
|
$ |
1.55
|
||||||||
Weighted
average shares outstanding:
|
||||||||||||||||
Basic
|
28,106
|
28,254
|
28,164
|
28,644
|
||||||||||||
Diluted
|
29,099
|
29,235
|
29,148
|
29,635
|
||||||||||||
Dividends
declared:
|
$ |
1.03
|
$ |
0.03
|
$ |
1.09
|
$ |
0.09
|
December
31,
|
September
30,
|
September
30,
|
||||||||||
2006
|
2006
(a)
|
2007
|
||||||||||
ASSETS
|
(Unaudited)
|
(Unaudited)
|
||||||||||
Cash
and cash equivalents, including restricted cash of $2,079, $2,056
and
$447, respectively
|
$ |
138,113
|
$ |
112,089
|
$ |
195,893
|
||||||
Investments
in securities, including restricted securities of $52,116, $51,461
and
$51,637, respectively
|
507,595
|
503,801
|
386,190
|
|||||||||
Investments
in partnerships and affiliates
|
81,884
|
81,326
|
97,988
|
|||||||||
Receivable
from brokers
|
53,682
|
49,149
|
36,677
|
|||||||||
Investment
advisory fees receivable
|
31,094
|
16,218 |
18,591
|
|||||||||
Other
assets
|
24,863
|
15,452
|
17,432
|
|||||||||
Total
assets
|
$ |
837,231
|
$ |
778,035
|
$ |
752,771
|
||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||||||
Payable
to brokers
|
$ |
36,345
|
$ |
18,599
|
$ |
6,844
|
||||||
Income
taxes payable, including deferred taxes of $363, ($287), and $9,758,
respectively
|
13,922
|
6,101
|
21,251
|
|||||||||
Compensation
payable
|
30,174
|
38,387
|
43,613
|
|||||||||
Capital
lease obligation
|
2,781
|
2,837
|
2,593
|
|||||||||
Securities
sold, not yet purchased
|
8,244
|
8,465
|
10,914
|
|||||||||
Accrued
expenses and other liabilities
|
41,053
|
31,843
|
32,820
|
|||||||||
Total
operating liabilities
|
132,519
|
106,232
|
118,035
|
|||||||||
5.5%
Senior notes (due May 15, 2013)
|
100,000
|
100,000
|
100,000
|
|||||||||
6%
Convertible note, $50 million outstanding (due August 14, 2011)
(b)
|
49,504
|
50,000
|
49,584
|
|||||||||
5.22%
Senior notes (due February 17, 2007)
|
82,308
|
82,308
|
-
|
|||||||||
Total
liabilities
|
364,331
|
338,540
|
267,619
|
|||||||||
Minority
interest
|
21,324
|
20,316
|
9,497
|
|||||||||
Stockholders’
equity
|
||||||||||||
Class
A Common Stock, $0.001 par value; 100,000,000 shares authorized;
12,055,872, 12,022,762 and 12,173,423 issued, respectively;
7,487,018,
7,458,608 and 7,438,369 outstanding, respectively
|
12 | 12 | 12 | |||||||||
Class
B Common Stock, $0.001 par value; 100,000,000 shares
authorized;
24,000,000
shares issued, 20,754,217, 20,781,027
and 20,645,816
shares
outstanding, respectively
|
21 | 21 | 21 | |||||||||
Additional
paid-in capital
|
229,699
|
228,880
|
230,068
|
|||||||||
Retained
earnings
|
397,893
|
371,761
|
421,800
|
|||||||||
Accumulated
comprehensive gain
|
10,427
|
4,803
|
17,799
|
|||||||||
Treasury
stock, at cost (4,568,854, 4,564,154 and 4,735,054 shares,
respectively)
|
(186,476 | ) | (186,298 | ) | (194,045 | ) | ||||||
Total
stockholders' equity
|
451,576
|
419,179
|
475,655
|
|||||||||
Total
liabilities and stockholders' equity
|
$ |
837,231
|
$ |
778,035
|
$ |
752,771
|
(a) As
restated to reflect the reversal of certain previously-accrued expenses
for investment partnership compensation as described in Note A of
this
report on Form 10-Q.
|
(b) At
September 30, 2007 and December 31, 2006, the $50 million note conversion
price was $53 per share. At September 30, 2006, the convertible note
bore
interest at 5% with a conversion price of $52 per
share.
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2007
|
2006
(a)
|
2007
|
2006
(a)
|
|||||||||||||
Stockholders’
equity – beginning of period
|
$ |
490,793
|
$ |
402,442
|
$ |
451,576
|
$ |
424,502
|
||||||||
Cumulative
effect of applying the provisions of FIN 48
at
January 1, 2007
|
-
|
-
|
(822 | ) |
-
|
|||||||||||
Comprehensive
income:
|
||||||||||||||||
Net
income
|
18,337
|
17,043
|
55,498
|
44,947
|
||||||||||||
Foreign
currency translation adjustments
|
14
|
14 |
27
|
(40 | ) | |||||||||||
Net
unrealized (loss) gain on securities available for sale
|
(2,108
|
) | 2,367 |
7,244
|
4,234
|
|||||||||||
Total
comprehensive income
|
16,243
|
19,424
|
62,769
|
49,141
|
||||||||||||
Dividends
declared
|
(28,977 | ) | (847 | ) | (30,668 | ) | (2,565 | ) | ||||||||
Excess
tax benefit for exercised stock options
|
-
|
-
|
-
|
1,782
|
||||||||||||
Stock
based compensation expense
|
23
|
16
|
68
|
36
|
||||||||||||
Exercise
of stock options including tax benefit
|
35
|
290
|
301
|
708
|
||||||||||||
Purchase
of treasury stock
|
(2,462 | ) | (2,146 | ) | (7,569 | ) | (54,425 | ) | ||||||||
Stockholders’
equity – end of period
|
$ |
475,655
|
$ |
419,179
|
$ |
475,655
|
$ |
419,179
|
(a)
As restated to reflect the reversal of certain previously-accrued
expenses
for investment partnership compensation as described in Note A of
this
report on Form 10-Q.
|
See
accompanying notes.
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2007
|
2006
(a)
|
2007
|
2006
(a)
|
|||||||||||||
Operating
activities
|
||||||||||||||||
Net
income
|
$ |
18,337
|
$ |
17,043
|
$ |
55,498
|
$ |
44,947
|
||||||||
Adjustments
to reconcile net income to net cash
provided
by (used in) operating
activities:
|
||||||||||||||||
Cumulative
effect of applying the provisions of FIN 48
|
-
|
-
|
(822 | ) |
-
|
|||||||||||
Equity
in gains from partnerships and affiliates
|
(855 | ) | (1,090 | ) | (5,600 | ) | (4,428 | ) | ||||||||
Depreciation
and amortization
|
217
|
221
|
739
|
665
|
||||||||||||
Stock
based compensation expense
|
24
|
16
|
68
|
36
|
||||||||||||
Tax
benefit from exercise of stock options
|
5
|
79
|
62
|
166
|
||||||||||||
Foreign
currency loss
|
14
|
14
|
27
|
44
|
||||||||||||
Other-than-temporary
loss on available for sale securities
|
3
|
-
|
3
|
56
|
||||||||||||
Market
value of donated securities
|
151
|
-
|
273
|
-
|
||||||||||||
Impairment
of goodwill
|
-
|
-
|
56
|
-
|
||||||||||||
Amortization
of debt discount
|
24
|
-
|
80
|
-
|
||||||||||||
Minority
interest in net income of consolidated subsidiaries
|
90
|
158
|
610
|
501
|
||||||||||||
Realized
gains on sales of available for sale securities, net
|
(184 | ) |
-
|
(657 | ) | (442 | ) | |||||||||
Realized
gains on sales of trading investments in securities, net
|
(5,742 | ) | (4,244 | ) | (16,617 | ) | (14,218 | ) | ||||||||
Change
in unrealized (gains) losses of trading investments in securities,
net
|
6,951 | (1,923 | ) | 4,453 | (5,259 | ) | ||||||||||
Excess
tax benefit adjustment
|
-
|
-
|
-
|
1,782
|
||||||||||||
Increase
(decrease) in operating assets:
|
||||||||||||||||
Purchases
of trading investments in securities
|
(216,219 | ) | (300,255 | ) | (1,069,008 | ) | (837,871 | ) | ||||||||
Proceeds
from sales of trading investments in securities
|
336,992
|
277,225
|
1,212,842
|
804,747
|
||||||||||||
Investments
in partnerships and affiliates
|
(13,948 | ) | (354 | ) | (17,998 | ) | (4,402 | ) | ||||||||
Distributions
from partnerships and affiliates
|
2,570
|
3,925
|
15,719
|
11,838
|
||||||||||||
Investment
advisory fees receivable
|
(152
|
) |
(363
|
) |
12,529
|
5,763
|
||||||||||
Other
receivables from affiliates
|
87
|
325
|
5,193
|
10,417
|
||||||||||||
Receivable
from brokers
|
10,298 |
(9,222
|
) |
20,320
|
(36,781 | ) | ||||||||||
Other
assets
|
1,747
|
262
|
1,594 | 142 | ||||||||||||
Increase
(decrease) in operating liabilities:
|
||||||||||||||||
Payable
to brokers
|
(24,065 | ) |
9,404
|
(28,022 | ) |
12,848
|
||||||||||
Income
taxes payable
|
7,608
|
2,132 | 3,773 | (6,877 | ) | |||||||||||
Compensation
payable
|
(2,097
|
) |
3,600
|
12,192
|
10,553
|
|||||||||||
Accrued
expenses and other liabilities
|
(2,845
|
) |
2,538
|
(7,892 | ) |
13,116
|
||||||||||
Effects
of consolidation of investment partnerships and offshore funds
consolidated under FIN 46R and EITF 04-5:
|
||||||||||||||||
Realized
gains on sales of investments in securities and securities sold short,
net
|
(115 | ) | (235 | ) | (722 | ) | (12,315 | ) | ||||||||
Change
in unrealized value of investments in securities and securities sold
short, net
|
462 | (304 | ) | 547 | (4,573 | ) | ||||||||||
Purchases
of trading investments in securities and securities sold
short
|
(7,615 | ) | (10,515 | ) | (42,051 | ) | (661,456 | ) | ||||||||
Proceeds
from sales of trading investments in securities and securities sold
short
|
11,921
|
9,849
|
46,472
|
639,070
|
||||||||||||
Investments
in partnerships and affiliates
|
-
|
(586 | ) |
(2,000)
|
(1,904 | ) | ||||||||||
Distributions
from partnerships and affiliates
|
4,764
|
-
|
5,589
|
380
|
||||||||||||
Equity
in earnings of partnerships and affiliates
|
(102
|
) | 240 |
(835)
|
(288 | ) | ||||||||||
Decrease
(increase) in advisory fees receivable
|
-
|
19
|
(26 | ) |
117
|
|||||||||||
(Increase)
decrease in receivable from brokers
|
(3,787 | ) |
1,399
|
(3,315
|
) | (10,028 | ) | |||||||||
Decrease
(increase) in other assets
|
107 | 172 | (138 | ) |
505
|
|||||||||||
(Decrease)
increase in payable to brokers
|
(64 | ) |
(33
|
) | (1,480 | ) |
7,597
|
|||||||||
(Decrease)
increase in accrued expenses and other liabilities
|
(80
|
) | (6 | ) |
237
|
(11,684 | ) | |||||||||
(Loss)
income related to investment partnerships and offshore funds consolidated
under FIN 46R and EITF 04-5, net
|
(157
|
) |
84
|
839
|
14,721
|
|||||||||||
Total
adjustments
|
106,008
|
(17,468 | ) |
147,034
|
(77,462 | ) | ||||||||||
Net
cash provided by (used in) operating activities
|
124,345
|
(425
|
) |
202,532
|
(32,515 | ) |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2007
|
2006
(a)
|
2007
|
2006
(a)
|
|||||||||||||
Investing
activities
|
||||||||||||||||
Purchases
of available for sale securities
|
(688 | ) | (1,680 | ) | (25,942 | ) | (4,933 | ) | ||||||||
Proceeds
from sales of available for sale securities
|
350
|
-
|
2,642
|
1,486
|
||||||||||||
Net
cash used in investing activities
|
(338
|
) | (1,680 | ) | (23,300 | ) | (3,447 | ) | ||||||||
Financing
activities
|
||||||||||||||||
Contributions
related to investment partnerships and offshore funds
consolidated
under FIN 46R and EITF 04-5, net
|
(1,156 | ) |
(89
|
) |
(645
|
) |
29,638
|
|||||||||
Retirement
of 5.22% senior notes
|
-
|
-
|
(82,308 | ) |
-
|
|||||||||||
Proceeds
from exercise of stock options
|
29
|
210
|
238
|
542
|
||||||||||||
Dividends
paid
|
(28,978 | ) | (847 | ) | (30,668 | ) | (2,565 | ) | ||||||||
Subsidiary
stock repurchased from minority shareholders
|
(290
|
) |
-
|
(531 | ) |
-
|
||||||||||
Purchase
of treasury stock
|
(2,461 | ) | (2,146 | ) | (7,569 | ) | (54,425 | ) | ||||||||
Net
cash used in financing activities
|
(32,856 | ) | (2,872 | ) | (121,483 | ) | (26,810 | ) | ||||||||
Net
increase (decrease) in cash and cash equivalents
|
91,151
|
(4,977 | ) | 57,749 | (62,772 | ) | ||||||||||
Effect
of exchange rates on cash and cash equivalents
|
16
|
10 |
31
|
(54 | ) | |||||||||||
Net
increase in cash from partnerships and offshore funds consolidated
under
FIN 46R and EITF 04-5
|
-
|
204
|
-
|
1,754
|
||||||||||||
Cash
and cash equivalents at beginning of period
|
104,726
|
116,852
|
138,113
|
173,161
|
||||||||||||
Cash
and cash equivalents at end of period
|
$ |
195,893
|
$ |
112,089
|
$ |
195,893
|
$ |
112,089
|
(a) As
restated to reflect the reversal of certain previously-accrued expenses
for investment partnership compensation as described in Note A of
this
report on Form 10-Q.
|
As restated |
2006
Quarter
|
|||||||||||||||||||
(in
thousands, except per share data)
|
1st
|
2nd
|
3rd
|
4th
|
Full
Year
|
|||||||||||||||
Revenues
|
$ |
59,284
|
$ |
61,659
|
$ |
57,994
|
$ |
82,526
|
$ |
261,463
|
||||||||||
Operating
income
|
18,486
|
9,463
|
18,497
|
29,901
|
76,347
|
|||||||||||||||
Net
income
|
18,959
|
8,945
|
17,043
|
26,980
|
71,927
|
|||||||||||||||
Net
income per share:
|
||||||||||||||||||||
Basic
|
0.65
|
0.31
|
0.60
|
0.96
|
2.52
|
|||||||||||||||
Diluted
|
0.64
|
0.31
|
0.60
|
0.94
|
2.49
|
As reported |
2006
Quarter
|
|||||||||||||||||||
(in
thousands, except per share data)
|
1st
|
2nd
|
3rd
|
4th
|
Full
Year
|
|||||||||||||||
Revenues
|
$ |
59,284
|
$ |
61,659
|
$ |
57,994
|
$ |
82,526
|
$ |
261,463
|
||||||||||
Operating
income
|
18,034
|
8,936
|
18,220
|
26,971
|
72,161
|
|||||||||||||||
Net
income
|
18,700
|
8,641
|
16,884
|
25,293
|
69,518
|
|||||||||||||||
Net
income per share:
|
||||||||||||||||||||
Basic
|
0.64
|
0.30
|
0.60
|
0.90
|
2.44
|
|||||||||||||||
Diluted
|
0.63
|
0.30
|
0.59
|
0.88
|
2.40
|
(in
thousands, except per share amounts)
|
Three
Months Ended
September
30, 2007
|
Three
Months Ended
September
30, 2006 (a)
|
Nine
Months Ended
September
30, 2007
|
Nine
Months Ended
September
30, 2006 (a)
|
||||||||||||
Basic:
|
||||||||||||||||
Net
income
|
$ |
18,337
|
$ |
17,043
|
$ |
55,498
|
$ |
44,947
|
||||||||
Average
shares outstanding
|
28,106
|
28,254
|
28,164
|
28,644
|
||||||||||||
Basic
net income per share
|
$ |
0.65
|
$ |
0.60
|
$ |
1.97
|
$ |
1.57
|
||||||||
Diluted:
|
||||||||||||||||
Net
income
|
$ |
18,337
|
$ |
17,043
|
$ |
55,498
|
$ |
44,947
|
||||||||
Add
interest expense on convertible note, net of management fee
and taxes
|
429
|
364
|
1,286
|
1,067
|
||||||||||||
Total
|
$ |
18,766
|
$ |
17,407
|
$ |
56,784
|
$ |
46,014
|
||||||||
Average
shares outstanding
|
28,106
|
28,254
|
28,164
|
28,644
|
||||||||||||
Dilutive
stock options
|
50
|
22
|
41
|
30
|
||||||||||||
Assumed
conversion of convertible note
|
943
|
959
|
943
|
961
|
||||||||||||
Total
|
29,099
|
29,235
|
29,148
|
29,635
|
||||||||||||
Diluted
net income per share
|
$ |
0.64
|
$ | 0.60 | $ |
1.95
|
$ |
1.55
|
(a)
|
As
restated to reflect the reversal of certain
previously-accrued expenses for investment partnership compensation
as
described in Note A of this report on Form
10-Q.
|
|
|
Remainder
of
2007
|
2008
|
2009
|
2010
|
|||||||||||
$ |
24,000
|
$ |
89,000
|
$ |
47,000
|
$ |
10,000
|
ITEM
2:
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (INCLUDING QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET
RISK)
|
Table I: |
Assets
Under Management
(millions)
|
|||||||||||
Mutual
Funds:
|
September
30, 2006
|
September
30, 2007
|
%
Inc. (Dec.)
|
|||||||||
Open-end
|
$ |
7,854
|
$ |
9,866
|
25.6 | % | ||||||
Closed-end
|
5,327
|
6,443
|
20.9
|
|||||||||
Fixed
Income
|
683
|
1,048
|
53.4 | |||||||||
Total
Mutual Funds
|
13,864
|
17,357
|
25.2
|
|||||||||
Institutional
&
Separate
Accounts:
|
||||||||||||
Equities:
direct
|
9,470
|
11,266
|
19.0
|
|||||||||
“ sub-advisory
|
2,725
|
2,494
|
(8.5 | ) | ||||||||
Fixed
Income
|
54
|
27
|
(50.0 | ) | ||||||||
Total
Institutional & Separate Accounts
|
12,249
|
13,787
|
12.6
|
|||||||||
Investment
Partnerships
|
488
|
491
|
0.6 | |||||||||
Total
Assets Under Management
|
$ |
26,601
|
$ |
31,635
|
18.9
|
|||||||
Equities
|
$ |
25,864
|
$ |
30,560
|
18.2
|
|||||||
Fixed
Income
|
737
|
1,075
|
45.9 | |||||||||
Total
Assets Under Management
|
$ |
26,601
|
$ |
31,635
|
18.9
|
Table II: |
Assets
Under Management (millions)
|
|||||||||||||||||||||||||||
%
Increase/(decrease)
|
||||||||||||||||||||||||||||
Mutual
Funds
|
9/06
|
12/06
|
3/07
|
6/07
|
9/07
|
6/07
|
9/06
|
|||||||||||||||||||||
Open-end
|
$ |
7,854
|
$ |
8,389
|
$ |
8,858
|
$ |
9,529
|
$ |
9,866
|
3.5 | % | 25.6 | % | ||||||||||||||
Closed-end
|
5,327
|
5,806
|
6,188
|
6,412
|
6,443
|
0.5
|
20.9
|
|||||||||||||||||||||
Fixed
income
|
683
|
744
|
591
|
684
|
1,048
|
53.2
|
53.4 | |||||||||||||||||||||
Total
Mutual Funds
|
13,864
|
14,939
|
15,637
|
16,625
|
17,357
|
4.4 |
25.2
|
|||||||||||||||||||||
Institutional
& Separate Accounts:
|
||||||||||||||||||||||||||||
Equities:
direct
|
9,470
|
10,282
|
10,587
|
11,116
|
11,266
|
1.3
|
19.0
|
|||||||||||||||||||||
“ sub-advisory
|
2,725
|
2,340
|
2,608
|
2,383
|
2,494
|
4.7 | (8.5 | ) | ||||||||||||||||||||
Fixed
Income
|
54
|
50
|
49
|
21
|
27
|
28.6 | (50.0 | ) | ||||||||||||||||||||
Total
Institutional & Separate Accounts
|
12,249
|
12,672
|
13,244
|
13,520
|
13,787
|
2.0
|
12.6
|
|||||||||||||||||||||
Investment
Partnerships
|
488
|
491
|
477
|
486
|
491
|
1.0
|
0.6 | |||||||||||||||||||||
Total
Assets Under Management
|
$ |
26,601
|
$ |
28,102
|
$ |
29,358
|
$ |
30,631
|
$ |
31,635
|
3.3
|
18.9
|
Table
III:
|
Fund
Flows – 3rd Quarter 2007 (millions)
|
|||
|
|
|||
June
30,
2007
|
Net
Cash
Flows
|
Market Appreciation
/ (Depreciation) |
September
30,
2007
|
Mutual
Funds:
|
||||||||||||||||
Equities
|
$ |
15,941
|
$ |
88
|
$ |
280
|
$ |
16,309
|
||||||||
Fixed
Income
|
684
|
356
|
8
|
1,048
|
||||||||||||
Total
Mutual Funds
|
16,625
|
444
|
288
|
17,357
|
||||||||||||
Institutional
&
Separate
Accounts
|
||||||||||||||||
Equities:
direct
|
11,116
|
34 |
116
|
11,266
|
||||||||||||
“ sub-advisory
|
2,383
|
85 |
26
|
2,494
|
||||||||||||
Fixed
Income
|
21
|
6 |
-
|
27
|
||||||||||||
Total
Institutional & Separate Accounts
|
13,520
|
125 |
142
|
13,787
|
||||||||||||
Investment
Partnerships
|
486
|
2 |
3
|
491
|
||||||||||||
Total
Assets Under Management
|
$ |
30,631
|
$ | 571 | $ |
433
|
$ |
31,635
|
2007
|
2006
(a)
|
|||||||
Revenues
|
||||||||
Investment
advisory and incentive fees
|
$ |
58,392
|
$ | 49,751 | ||||
Commission
revenue
|
3,494
|
2,799 | ||||||
Distribution
fees and other income
|
6,583
|
5,444 | ||||||
Total
revenues
|
68,469
|
57,994 | ||||||
Expenses
|
||||||||
Compensation
and related costs
|
29,064
|
23,852 | ||||||
Management
fee
|
3,541
|
3,058 | ||||||
Distribution
costs
|
6,099
|
5,023 | ||||||
Other
operating expenses
|
2,665
|
7,564 | ||||||
Total
expenses
|
41,369
|
39,497 | ||||||
Operating
income
|
27,100
|
18,497 | ||||||
Other
income (expense)
|
||||||||
Net
gain from investments
|
514
|
4,663 | ||||||
Interest
and dividend income
|
6,810
|
7,665 | ||||||
Interest
expense
|
(2,828 | ) | (3,368 | ) | ||||
Total
other income, net
|
4,496
|
8,960
|
||||||
Income
before taxes and minority interest
|
31,596
|
27,457 | ||||||
Income
tax provision
|
13,340
|
10,296 | ||||||
Minority
interest
|
(81
|
) |
118
|
|||||
Net
income
|
$ |
18,337
|
$ | 17,043 | ||||
Net
income per share:
|
||||||||
Basic
|
$ |
0.65
|
$ |
0.60
|
||||
Diluted
|
$ |
0.64
|
$ |
0.60
|
||||
Reconciliation
of Net income to Adjusted EBITDA:
|
||||||||
Net
income
|
$ |
18,337
|
$ | 17,043 | ||||
Interest
Expense
|
2,828
|
3,368 | ||||||
Income
tax provision and minority interest
|
13,259 | 10,414 | ||||||
Depreciation
and amortization
|
217
|
221
|
||||||
Adjusted
EBITDA(b)
|
$ |
34,641
|
$ |
31,046
|
|
(a)
As restated to reflect the reversal of certain previously-accrued
expenses
for investment partnership compensation as described in note A in
item 1
of this report on Form 10-Q.
|
|
(b)
Adjusted EBITDA is defined as earnings before interest, taxes,
depreciation and amortization, and minority interest. Adjusted
EBITDA is a non-GAAP measure and should not be considered as an
alternative to any measure of performance as promulgated under accounting
principles generally accepted in the United States nor should it
be
considered as an indicator of our overall financial
performance. We use Adjusted EBITDA as a supplemental measure
of performance as we believe it gives investors a more complete
understanding of our operating results before the impact of investing
and
financing activities as a tool for determining the private market
value of
an enterprise.
|
2006
(a)
|
2006
(b)
|
Adjust-
ments(c)
|
2006
(d)
|
2007
(e)
|
||||||||||||||||
Revenues
|
||||||||||||||||||||
Investment
advisory and incentive fees
|
$ |
154,698
|
$ |
154,622
|
$ | (887 | ) | $ |
153,735
|
$ |
172,606
|
|||||||||
Commission
revenue
|
8,973
|
9,179
|
-
|
9,179
|
11,550
|
|||||||||||||||
Distribution
fees and other income
|
16,229
|
16,023
|
-
|
16,023
|
19,196
|
|||||||||||||||
Total
revenues
|
179,900
|
179,824
|
(887 | ) |
178,937
|
203,352
|
||||||||||||||
Expenses
|
||||||||||||||||||||
Compensation
and related costs
|
75,459
|
74,064
|
-
|
74,064
|
87,343
|
|||||||||||||||
Management
fee
|
8,153
|
8,293
|
-
|
8,293
|
10,391
|
|||||||||||||||
Distribution
costs
|
15,568
|
15,567
|
-
|
15,567
|
22,146
|
|||||||||||||||
Other
operating expenses
|
22,478
|
22,505
|
162
|
22,667
|
18,693
|
|||||||||||||||
Reserve
for settlement
|
11,900
|
11,900
|
-
|
11,900
|
-
|
|||||||||||||||
Total
expenses
|
133,558
|
132,329
|
162
|
132,491
|
138,573
|
|||||||||||||||
Operating
income
|
46,342
|
47,495
|
(1,049 | ) |
46,446
|
64,779
|
||||||||||||||
Other
income (expense)
|
||||||||||||||||||||
Net
gain from investments
|
18,260
|
18,522
|
13,509
|
32,031
|
17,277
|
|||||||||||||||
Interest
and dividend income
|
18,824
|
18,899
|
1,250
|
20,149
|
20,978
|
|||||||||||||||
Interest
expense
|
(10,046 | ) | (10,057 | ) | (580 | ) | (10,637 | ) | (9,537 | ) | ||||||||||
Total
other income, net
|
27,038
|
27,364
|
14,179
|
41,543
|
28,718
|
|||||||||||||||
Income
before taxes and minority interest
|
73,380
|
74,859
|
13,130
|
87,989
|
93,497
|
|||||||||||||||
Income
tax provision
|
28,718
|
29,273
|
4,924
|
34,197
|
37,403
|
|||||||||||||||
Minority
interest
|
437
|
639
|
8,206
|
8,845
|
596
|
|||||||||||||||
Net
income
|
$ |
44,225
|
$ |
44,947
|
$ |
-
|
$ |
44,947
|
$ |
55,498
|
||||||||||
Net
income per share:
|
||||||||||||||||||||
Basic
|
$ |
1.54
|
$ |
1.57
|
$ |
-
|
$ |
1.57
|
$ |
1.97
|
||||||||||
Diluted
|
$ |
1.53
|
$ |
1.55
|
$ |
-
|
$ |
1.55
|
$ |
1.95
|
||||||||||
Reconciliation
of Net income to Adjusted EBITDA:
|
||||||||||||||||||||
Net
income
|
$ |
44,225
|
$ |
44,947
|
$ |
-
|
$ |
44,947
|
$ |
55,498
|
||||||||||
Interest
Expense
|
10,046
|
10,057
|
580
|
10,637
|
9,537
|
|||||||||||||||
Income
tax provision and minority interest
|
29,155
|
29,912
|
13,130
|
43,042
|
37,999
|
|||||||||||||||
Depreciation
and amortization
|
665
|
665
|
-
|
665
|
739
|
|||||||||||||||
Adjusted
EBITDA (f)
|
$ |
84,091
|
$ |
85,581
|
$ |
13,710
|
$ |
99,291
|
$ |
103,773
|
(a)
|
As
originally reported. Non-GAAP.
|
(b)
|
Financial
results before adjustments relating to FIN 46R and EITF 04-5 as described
above and in Note D to the condensed consolidated financial statements
in
this report on Form 10-Q (not GAAP), and as restated to reflect the
reversal of certain previously-accrued expenses for investment partnership
compensation.
|
(c)
|
Adjustments
relating to FIN 46R and EITF 04-5 on five partnerships and one offshore
fund on which substantive kick-out rights were added on March 31,
2006.
|
(d)
|
GAAP
basis as restated to reflect the reversal of certain previously-accrued
expenses for investment partnership compensation as described in
note A in
item 1 of this report on Form 10-Q.
|
(e)
|
GAAP
basis.
|
(f)
|
Adjusted
EBITDA is defined as earnings before interest, taxes, depreciation
and
amortization, and minority interest. Adjusted EBITDA is a
Non-GAAP measure and should not be considered as an alternative to
any
measure of performance as promulgated under accounting principles
generally accepted in the United States nor should it be considered
as an
indicator of our overall financial performance. We use Adjusted
EBITDA as a supplemental measure of performance as we believe it
gives
investors a more complete understanding of our operating results
before
the impact of investing and financing activities as a tool for determining
the private market value of an
enterprise.
|
Nine
Months Ended
September
30,
(in
thousands)
|
||||||||
Cash
flows provided by (used in):
|
2007
|
2006
(a)
|
||||||
Operating
activities
|
$ |
202,532
|
$ | (32,515 | ) | |||
Investing
activities
|
(23,300 | ) | (3,447 | ) | ||||
Financing
activities
|
(121,483 | ) | (26,810 | ) | ||||
Decrease
|
57,749 | (62,772 | ) | |||||
Effect
of exchange rates on cash and cash equivalents
|
31
|
(54 | ) | |||||
Net
increase in cash from partnerships and offshore funds
consolidated under FIN 46R and EITF 04-5
|
-
|
1,754
|
||||||
Cash
and cash equivalents at beginning of period
|
138,113
|
173,161
|
||||||
Cash
and cash equivalents at end of period
|
$ |
195,893
|
$ |
112,089
|
(a)
As restated to reflect the reversal of certain previously-accrued
expenses
for investment partnership compensation as described in Note A of
this
report on Form 10-Q.
|