EX-99.1 3 ex99-1_12215.txt PRESS RELEASE DATED SEPTEMBER 16, 2003 EXHIBIT 99.1 ------------ For Immediate Release: Contact: Michael R. Anastasio Chief Accounting Officer (914) 921-5147 For further information visit our website at: WWW.GABELLI.COM GABELLI TO CONSOLIDATE VARIABLE INTEREST ENTITIES Rye, New York, September 16, 2003 - Gabelli Asset Management Inc. (NYSE: "GBL") today announced it will consolidate certain entities managed by its Alternative Investment Group beginning with its September 30, 2003 quarterly report using the guidance provided by FASB Interpretation No. 46, "Consolidation of Variable Interest Entities" (referred to as "VIEs"). FASB Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46"), provides new criteria for determining whether or not consolidation accounting is required for VIEs. FIN 46 focuses on financial interests of VIEs that indicate control despite the absence of clear control through voting interest. It concludes that a company's exposure (variable interest) to the economic risks and rewards from the VIE's assets and activities are the best evidence of control. In light of FIN 46, Gabelli will be consolidating certain partnerships and offshore funds managed by its Alternative Investment Group that are deemed to be VIEs. As the general partner or investment manager of these entities, Gabelli generally receives both a management fee and performance fee and makes decisions regarding the investment activities. These factors can create a situation where Gabelli may be considered the primary beneficiary of the VIE depending on the level of its variable interest relative to other investors. As it has been explained, as the primary beneficiary Gabelli would be required to consolidate the VIEs' assets, liabilities and results of operations in its financial statements. The primary beneficiary is the party that absorbs a majority of the entity's expected losses, receives a majority of its expected residual returns, or both, as a result of holding variable interests, which are the ownership, contractual, or other pecuniary interest in an entity. Table I and II depict the pro forma impact of consolidating VIEs for which Gabelli is the primary beneficiary on its Statement of Financial Condition and Statement of Operations for the quarter ended June 30, 2003. Expressed another way, if the consolidation occurred on June 30, 2003, our balance sheet assets increased by $495 million, our operating liabilities by $137 million and our minority interest by $358 million. There would be no change in our GAAP net worth and net income. Obviously, the amounts at September 30, 2003 will differ. To repeat, this change will impact detailed line items reported within the consolidated financial statements but will have no impact on consolidated net income or stockholders' equity. These VIEs were previously accounted for utilizing the equity method. Gabelli Asset Management Inc. through its subsidiaries manages $23 billion in assets in mutual funds and closed end funds (Gabelli Funds LLC), partnerships (Alternative Investment Group), and private investment advisory accounts (GAMCO). TABLE I STATEMENT OF FINANCIAL CONDITION
June 2003 10-Q June 2003 GBL Adjusted GBL Reported Adjustments Balances Change ------------------------------------------------------ ------------ Assets Cash and cash equivalents $ 404,849,000 $ 15,407,000 $ 420,256,000 3.81% Investment in securities 190,083,000 321,648,000 511,731,000 169.21% Investment in partnerships and affiliates 57,022,000 (42,698,000) 14,324,000 -74.88% Receivable from brokers 456,000 199,636,000 200,092,000 43779.82% Investment advisory fees receivable 13,845,000 -- 13,845,000 0.00% Other assets 29,245,000 534,000 29,779,000 1.83% -------------- -------------- -------------- Total assets $ 695,500,000 $ 494,527,000 $1,190,027,000 71.10% ============== ============== ============== Liabilities Payable to brokers $ 6,195,000 $ -- $ 6,195,000 0.00% Income taxes payable 7,077,000 -- 7,077,000 0.00% Capital lease obligaion 3,249,000 -- 3,249,000 0.00% Compensation payable 21,403,000 -- 21,403,000 0.00% Securities sold, not yet purchased 742,000 119,603,000 120,345,000 16119.00% Accrued expenses and other liabilities 17,624,000 17,208,000 34,832,000 97.64% -------------- -------------- -------------- Total operating liabilities 56,290,000 136,811,000 193,101,000 243.05% 6% Convertible note 100,000,000 -- 100,000,000 0.00% 5.5% Senior notes 100,000,000 -- 100,000,000 0.00% Mandatory convertible securities 84,163,000 -- 84,163,000 0.00% -------------- -------------- -------------- Total liabilities 340,453,000 136,811,000 477,264,000 40.18% Minority Interest 7,830,000 357,716,000 365,546,000 4568.53% Stockholders' equity: Stockholders' equity 347,217,000 -- 347,217,000 0.00% -------------- -------------- -------------- Total stockholders' equity 347,217,000 -- 347,217,000 0.00% -------------- -------------- -------------- Total liabilities and stockholders' equity $ 695,500,000 $ 494,527,000 $1,190,027,000 71.10% ============== ============== ==============
TABLE II STATEMENT OF OPERATIONS
June 2003 10-Q June 2003 GBL Adjusted GBL Reported Adjustments Balances Change ------------------------------------------------- ------------ Revenues Investment advisory and incentive fees $ 80,260,000 $ (3,285,000) $ 76,975,000 -4.09% Commission revenue 5,191,000 -- 5,191,000 0.00% Distribution fees and other income 8,558,000 -- 8,558,000 0.00% ------------ ------------ ------------ Total revenues 94,009,000 (3,285,000) 90,724,000 -3.49% ------------ ------------ ------------ Expenses Compensation costs 41,399,000 -- 41,399,000 0.00% Management fees 3,766,000 -- 3,766,000 0.00% Other operating expenses 16,099,000 610,000 16,709,000 3.79% ------------ ------------ ------------ Total expenses 61,264,000 610,000 61,874,000 1.00% ------------ ------------ ------------ Operating income 32,745,000 (3,895,000) 28,850,000 -11.89% ------------ ------------ ------------ Other Income (Expense) Net gain from investments 5,145,000 12,869,000 18,014,000 250.13% Interest and dividend income 2,624,000 4,094,000 6,718,000 156.02% Interest expense (6,616,000) (1,365,000) (7,981,000) 20.63% ------------ ------------ ------------ Total other income (expense), net 1,153,000 15,598,000 16,751,000 1352.82% ------------ ------------ ------------ Income before income taxes and minority interest 33,898,000 11,703,000 45,601,000 34.52% Income taxes 12,746,000 -- 12,746,000 0.00% Minority Interest 268,000 11,703,000 11,971,000 4366.79% ------------ ------------ ------------ Net income $ 20,884,000 $ -- $ 20,884,000 0.00% ============ ============ ============
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