FORM 10-K/A GAMCO Investors, Inc. - Gabelli

If we had elected for 2001 and 2002 to account for our stock options under the fair value method of SFAS No. 123 “Accounting for Stock Based Compensation,” our net income
and net income per share would have been reduced to the pro forma amounts indicated below:
2004 (a) 2005 (a) (b) 2006 (b)
Net income (in thousands):
As reported $ 62,591 $ 63,941 $ 71,927
Additional stock based compensation expense estimated using the fair value based method (137) - -
Related income tax benefits 51 - -
Pro forma $ 62,505 $ 63,941 $ 71,927
Net income per share – Basic
As reported $ 2.11 $ 2.15 $ 2.52
Pro forma $ 2.11 $ 2.15 $ 2.52
Net income per share – Diluted
As reported $ 2.06 $ 2.11 $ 2.49
Pro forma $ 2.06 $ 2.11 $ 2.49
Stock Repurchase Program
In 1999, the Board of Directors established the Stock Repurchase Program through which we have been authorized to purchase up to $9 million of our class A common
stock. We completed the Stock Repurchase Program during the first quarter of 2001 and on March 2, 2001 the Board of Directors authorized the repurchase of an additional $3
million of our class A common stock. On September 17, 2001, the Board of Directors raised the amount authorized to repurchase shares to $10 million. In 2002, the Board of
Directors raised the amount authorized by $5 million in July and an additional $10 million in December. In 2004, the Board of Directors raised the amount authorized by $12 million
in May, an additional $25 million in August and by an additional 1 million shares in October. In addition, the Board of Directors also authorized $25 million to be used for an
accelerated stock repurchase program as further discussed below. During 2005, the Board of Directors authorized additional repurchases of 500,000 shares each in August and
November. During 2006, the Board of Directors authorized additional repurchases of 500,000 shares in March, and 400,000 shares in May and November. We also repurchased
300,000 shares of our class B common stock held by GGCP, our parent, which was converted to class A common stock in December 2002 at $28.20 per share and an aggregate
cost of $8.46 million. The repurchase of these shares are not included in determining the total dollars available under the Stock Repurchase Program. In 2005 and 2006, we
repurchased 861,000 and 1,335,032 shares at an average price of $43.22 per share and $40.88 per share, respectively. There remain 1,047,761 shares available under this
program at December 31, 2006. Under the program, we have repurchased 4,669,658 shares at an average price of $39.45 per share and an aggregate cost of $184.2 million
through December 31, 2006.
In November 2004, we entered into an accelerated stock repurchase program (“ASR”) whereby we repurchased 400,000 shares of stock from an investment bank for
approximately $18.8 million. The ASR permitted us to repurchase the shares immediately, while the investment bank would purchase the shares in the market over time. The
400,000 shares repurchased under the agreement were subject to a future contingent price adjustment based on the actual prices paid by the investment bank to purchase our stock
in the market over time. At December 31, 2004, the investment bank had purchased 203,500 shares resulting in a contingent purchase liability of approximately $120,000 for the
Company. During 2005, the investment bank completed its share repurchases resulting in a reduction to the original purchase agreement of approximately $35,000.
Dividends
(a) Restated as described in note A of item 8 of this report on Form 10-K/A.
(b) Restated as described in the explanatory note of this report on Form 10-K/A.
During 2004, we paid dividends of $1.16 per share to class A and class B shareholders totaling $34,006,352. During 2005, we paid dividends of $0.69 per share to class A and
class B shareholders totaling $20,121,556. During 2006, we paid dividends of $0.12 per share to class A and class B shareholders totaling $3,412,501.
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