Original GBL Prospectus - Gabelli

GABELLI FUNDS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
The provision (beneÑt) for income taxes for the years ended December 31, 1995, 1996 and 1997
consisted of the following:
1995 1996 1997
(In thousands)
Federal:
CurrentÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $5,667 $6,232 $2,399
Deferred ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 854 (93) (8)
State and local:
CurrentÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,218 1,514 628
Deferred ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 30 (22) 58
$7,769 $7,631 $3,077
The Company's deferred income tax liability at December 31, 1996 and 1997 relates primarily to
unrealized gains and losses on investments in securities and partnerships.
The Company's provision for income taxes diÅers from the amount of income tax determined by applying
the applicable U.S. federal statutory income tax rate to income before income taxes and minority interest
principally due to GFI's status as a Subchapter ""S'' corporation.
F. Bank Loan and Notes Payable
In 1997, the Company, through Rivgam Communicators, LLC (""Rivgam''), a wholly-owned subsidiary
of GAMCO, entered into a credit facility with The Chase Manhattan Bank under which Rivgam has
borrowed $30 million. Interest is variable based upon changes in the London Interbank OÅering Rate or the
Federal Funds Rate. The loan, which is guaranteed by GAMCO, is due in four equal annual installments
starting May 12, 1998. The Company believes that the fair value of the loan approximates its carrying value.
Under the terms of the loan, GAMCO is required to comply with certain debt covenants, which it complied
with through December 31, 1997.
At December 31, 1996 and 1997, the Company had notes payable outstanding of approximately
$5,779,000 and $4,900,000, respectively, which mature on May 31, 2003, unless certain circumstances arise
which allow for an accelerated repayment. The notes accrue interest at 2% over the prime rate, subject to a
minimum interest rate of 9% and a maximum interest rate of 15%, payable quarterly. Interest expense on these
notes amounted to approximately $636,000, $636,000 and $557,000 for the years ended December 31, 1995,
1996 and 1997, respectively.
On September 30, 1996, a note payable amounting to $1,232,000 was issued as consideration for
repurchase of the Company's common stock. The note matured and was fully paid on January 2, 1998. The
note accrued interest at an annual rate of 10%, payable quarterly. Interest expense on this note amounted to
approximately $31,000 and $123,000 for the years ended December 31, 1996 and 1997, respectively.
In connection with the restructuring of GAMCO's ownership, GAMCO issued a note payable in 1997 of
approximately $976,000 to an employee and director of the Company and GAMCO, respectively, in
consideration for repurchase of GAMCO common stock. The note matures on January 2, 2000, unless certain
circumstances arise which allow for an accelerated repayment. GAMCO also has the option to redeem the
note at any time prior to maturity at predetermined rates. The note accrues interest at an annual rate of 12%,
payable quarterly. Interest expense on this note amounted to approximately $117,000 for the year ended
December 31, 1997.
G. Stockholders' Equity
Upon their disassociation with the Company, certain stockholders of the Company are required to sell
their shares to the Company at book value (approximately $14.5 million at December 31, 1997).
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