Original GBL Prospectus - Gabelli

DILUTION
The pro forma net tangible book value of the Common Stock at September 30, 1998 after giving eÅect to
the Formation Transactions, but before adjustment for the OÅering, was $13.1 million, or $0.54 per share. Net
tangible book value per share represents the amount of total tangible assets less total liabilities, divided by the
number of shares of Common Stock outstanding. After giving eÅect to the sale of the 6,000,000 shares of
Class A Common Stock in the OÅering, and applying the estimated net proceeds therefrom as set forth in
""Use of Proceeds,'' the pro forma net tangible book value of the Company at September 30, 1998 would have
been $108.9 million, or $3.63 per share, calculated as follows:
Initial public oÅering price per share (1) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $17.50
Pro forma net tangible book value per share before the OÅering ÏÏÏ $ 0.54
Increase in pro forma net tangible book value per share attributable to
the OÅering ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3.09
As adjusted pro forma net tangible book value per share after the OÅering ÏÏÏÏ 3.63
Dilution in pro forma net tangible book value per share to new investors (2)(3) ÏÏ $13.87
(1) Initial public oÅering price is before deduction of underwriting discounts and commissions and estimated expenses of the OÅering to
be paid by the Company.
(2) Dilution is determined by subtracting the pro forma net tangible book value per share of Class A Common Stock after the OÅering
from the initial public oÅering price paid by purchasers in the OÅering for a share of Class A Common Stock.
(3) Assumes no exercise of outstanding stock options. As of the date of this Prospectus, the Company expects that there will be options
outstanding to purchase a total of approximately 1,200,000 shares of Class A Common Stock at an exercise price equal to the initial
public oÅering price of the Class A Common Stock (net of the discount payable to the Underwriters). See ""Management Ì 1999
Stock Award and Incentive Plan.'' If any of these options were exercised, there would be further dilution to purchasers of Class A
Common Stock in the OÅering.
Assuming the Underwriters' over-allotment option is exercised in full, the pro forma net tangible book
value at September 30, 1998 would be $123.5 million or $4.00 per share, the immediate increase in pro forma
net tangible book value of shares owned by existing shareholders would be $3.46 per share, and the immediate
dilution to purchasers of shares of Class A Common Stock in the OÅering would be $13.50 per share.
The following table summarizes at September 30, 1998, after giving eÅect to the sale of the shares of
Class A Common Stock in the OÅering, (i) the number and percentage of shares of Common Stock issued by
the Company, (ii) the total cash consideration paid for the Common Stock, and (iii) the average price per
share of Common Stock paid by GFI prior to the OÅering and by the public shareholders of Class A Common
Stock in the OÅering:
Shares of Common
Average
Stock Owned Total Consideration Price
Number Percentage Amount Percentage Per Share
GFI ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 24,000,000 80% $ 45,000,000(1) 30% $ 1.88(1)
Public ShareholdersÏÏÏÏÏÏÏÏÏÏÏ 6,000,000 20 105,000,000 70 17.50
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 30,000,000 100% $150,000,000 100%
(1) Represents the net assets transferred to the Company by GFI in exchange for the 24 million shares of Class B Common Stock. Prior
to the OÅering, the Company entered into an Employment Agreement (see ""Management Ì Employment Agreements'') which,
among other things, provides for a one time lump sum payment to Mr. Gabelli of $50 million on January 2, 2002. This payment, net
of tax beneÑt, will be charged to the Company's earnings in the Ñrst quarter of 1999. If it were treated as a distribution instead of
being charged to the Company's earnings, this payment would reduce Mr. Gabelli's eÅective consideration to zero.
The calculations in the tables set forth above do not reÖect an aggregate of 1,500,000 shares of Class A
Common Stock reserved for issuance under the 1999 Stock Award and Incentive Plan of the Company,
including approximately 1,200,000 shares of Class A Common Stock subject to outstanding options that will
be granted at the initial public oÅering price of the Class A Common Stock (net of the discount payable to the
Underwriters). See ""Management Ì 1999 Stock Award and Incentive Plan.''
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