Original GBL Prospectus - Gabelli

GABELLI FUNDS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
consideration of this management fee. This fee approximated $9,423,000, $10,192,000 and $10,580,000 for the
years ended December 31, 1995, 1996 and 1997, respectively. The Chairman of the Board and Chief
Executive OÇcer also received portfolio management compensation and account executive fees of
approximately $19,533,000, $21,260,000 and $23,005,000 for the years ended December 31, 1995, 1996 and
1997, respectively, which have been included in compensation costs.
The Company contributed approximately $1,628,000 and $1,014,000 for the years ended December 31,
1996 and 1997, respectively, to an accredited charitable foundation, of which the Chairman of the Board and
Chief Executive OÇcer of the Company is an oÇcer.
In March 1997, the Company made a secured loan of $10 million to Lynch Corporation which accrued
interest at the prime rate and included a 1% commitment fee. The loan and all accrued interest were repaid in
June 1997.
K. Financial Requirements
The Company is required to maintain minimum capital levels with aÇliated partnerships. At
December 31, 1997, the minimum capital requirements approximated $1,298,000. In addition, at
December 31, 1997, the Company had commitments to make investments in unaÇliated partnerships of
approximately $1,600,000.
As a registered broker-dealer, Gabelli & Company is subject to Uniform Net Capital Rule 15c3-1 (the
""Rule'') of the Securities and Exchange Commission. Gabelli & Company computes its net capital under the
alternative method permitted by the Rule which requires minimum net capital of $250,000. At December 31,
1997, Gabelli & Company had net capital in excess of the minimum requirement of approximately $6,300,000.
L. Administration Fees
The Company has entered into administration agreements with other companies (the ""Administrators''),
whereby the Administrators provide certain services on behalf of several of the Funds. Such services do not
include the investment advisory and portfolio management services provided by the Company. The fees are
negotiated based on predetermined percentages of the net assets of each of the Funds for which such
agreements have been entered into.
M. ProÑt Sharing Plan and Incentive Savings Plan
The Company has a qualiÑed contributory employee proÑt sharing plan and incentive savings plan
covering substantially all employees. Company contributions to the plans are determined annually by the
Board of Directors but may not exceed the amount permitted as a deductible expense under the Internal
Revenue Code. The Company accrued contributions of approximately $102,000, $121,000 and $80,000 to the
plans for the years ended December 31, 1995, 1996 and 1997, respectively.
N. Derivative Financial Instruments
During 1997 and 1996, the Company's trading activities included transactions in domestic equity index
futures contracts. These Ñnancial instruments represent future commitments to purchase or sell an underlying
index for speciÑed amounts at speciÑed future dates. Such contracts create oÅ-balance sheet risk for the
Company as the future satisfaction of these contracts may be for amounts in excess of the amounts recognized
in the consolidated statements of Ñnancial condition. The amounts disclosed below represent the notional
amounts outstanding, end of year fair values and average fair values of domestic equity index futures contracts
sold as of and for the years ended December 31, 1996 and 1997:
Notional
Average Fair
Amounts
Value for the
Outstanding at Fair Value at Year ended
Year December 31 December 31 December 31
(In thousands)
1997 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $33,246 $ 202 $(776)
1996 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $32,877 $(626) $(425)
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