GAMCO INVESTORS, INC. ET AL - FORM 10-Q

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EX-32.2 - EXHIBIT 32.2, DATED NOVEMBER 7, 2014 - GAMCO INVESTORS, INC. ET AL	ex32_2093014.htm
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SECURITIES & EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2014

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

Commission File No. 001-14761

GAMCO INVESTORS, INC.

(Exact name of Registrant as specified in its charter)

Delaware		13-4007862
(State of other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

One Corporate Center, Rye, NY		10580-1422
(Address of principle executive offices)		(Zip Code)

(914) 921-3700

Registrant's telephone number, including area code

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  No 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer", "accelerated filer", and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer 		Accelerated filer 

Non-accelerated filer 		Smaller reporting company 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  No 

Indicate the number of shares outstanding of each of the Registrant's classes of Common Stock, as of the latest practical date.

Class		Outstanding at October 31, 2014
Class A Common Stock, .001 par value	(Including 639,750 restriced stock awards)	6,540,443
Class B Common Stock, .001 par value		19,279,260

INDEX

GAMCO INVESTORS, INC. AND SUBSIDIARIES


PART I.	FINANCIAL INFORMATION


Item 1.	Unaudited Condensed Consolidated Financial Statements

	Condensed Consolidated Statements of Income:
	- Three months ended September 30, 2014 and 2013
	- Nine months ended September 30, 2014 and 2013

	Condensed Consolidated Statements of Comprehensive Income:
	- Three months ended September 30, 2014 and 2013
	- Nine months ended September 30, 2014 and 2013

	Condensed Consolidated Statements of Financial Condition:
	- September 30, 2014
	- December 31, 2013
	- September 30, 2013

	Condensed Consolidated Statements of Equity:
	- Nine months ended September 30, 2014 and 2013

	Condensed Consolidated Statements of Cash Flows:
	- Nine months ended September 30, 2014 and 2013

	Notes to Unaudited Condensed Consolidated Financial Statements

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 3.	Quantitative and Qualitative Disclosures About Market Risk (Included in Item 2)

Item 4.	Controls and Procedures

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds
Item 6.	Exhibits

SIGNATURES

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

UNAUDITED

(Dollars in thousands, except per share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Revenues
Investment advisory and incentive fees	$	92,591		$	80,438		$	270,544		$	230,488
Distribution fees and other income		15,727			13,545			46,367			37,420
Institutional research services		2,540			2,394			6,720			6,940
Total revenues		110,858			96,377			323,631			274,848
Expenses
Compensation		43,316			39,803			131,258			113,214
Management fee		3,756			5,629			13,628			14,455
Distribution costs		15,101			12,769			44,087			35,650
Other operating expenses		5,099			5,448			17,036			16,290
Total expenses		67,272			63,649			206,009			179,609

Operating income		43,586			32,728			117,622			95,239
Other income (expense)
Net gain/(loss) from investments		(9,086	)		19,334			7,602			43,766
Interest and dividend income		1,084			1,134			3,557			4,986
Interest expense		(1,987	)		(2,164	)		(6,000	)		(8,448	)
Shareholder-designated contribution		-			(313	)		(134	)		(5,313	)
Total other income (expense), net		(9,989	)		17,991			5,025			34,991
Income before income taxes		33,597			50,719			122,647			130,230
Income tax provision		13,045			17,515			44,796			46,434
Net income		20,552			33,204			77,851			83,796
Net income/(loss) attributable to noncontrolling interests		(3,113	)		106			(2,718	)		260
Net income attributable to GAMCO Investors, Inc.'s shareholders	$	23,665		$	33,098		$	80,569		$	83,536

Net income attributable to GAMCO Investors, Inc.'s shareholders per share:
Basic	$	0.94		$	1.29		$	3.17		$	3.25

Diluted	$	0.93		$	1.29		$	3.15		$	3.25

Weighted average shares outstanding:
Basic		25,296			25,625			25,385			25,682

Diluted		25,517			25,700			25,595			25,717

Dividends declared:	$	0.06		$	0.06		$	0.18		$	0.16

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

UNAUDITED

(Dollars in thousands, except per share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013

Net income	$	20,552		$	33,204		$	77,851		$	83,796
Other comprehensive income/(loss), net of tax:
Foreign currency translation		(45	)		49			(15	)		1
Net unrealized gains/(losses) on securities available for sale (a)		(2,407	)		(2,170	)		(6,832	)		(3,030	)
Other comprehensive income/(loss)		(2,452	)		(2,121	)		(6,847	)		(3,029	)

Comprehensive income		18,100			31,083			71,004			80,767
Less: Comprehensive loss/(income) attributable to noncontrolling interests		3,113			(106	)		2,718			(260	)

Comprehensive income attributable to GAMCO Investors, Inc.	$	21,213		$	30,977		$	73,722		$	80,507

(a) Net of income tax benefit of ($1,414), ($1,274), ($4,013) and ($1,780), respectively.

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

UNAUDITED

(Dollars in thousands, except per share data)

	September 30,			December 31,			September 30,
	2014			2013			2013
ASSETS
Cash and cash equivalents	$	358,421		$	210,451		$	245,411
Investments in securities		254,630			231,228			237,744
Investments in sponsored registered investment companies		39,520			44,042			43,688
Investments in partnerships		107,434			95,992			97,752
Receivable from brokers		79,885			49,461			43,854
Investment advisory fees receivable		31,155			51,506			31,151
Income tax receivable		2,433			445			433
Other assets		25,282			26,360			34,589
Total assets	$	898,760		$	709,485		$	734,622

LIABILITIES AND EQUITY
Payable to brokers	$	46,790		$	10,765		$	14,675
Income taxes payable and deferred tax liabilities		27,412			39,846			28,726
Capital lease obligation		5,272			5,323			5,331
Compensation payable		93,535			34,663			86,174
Securities sold, not yet purchased		14,180			6,178			7,725
Mandatorily redeemable noncontrolling interests		1,304			1,355			1,327
Accrued expenses and other liabilities		31,007			32,511			28,906
Sub-total		219,500			130,641			172,864

5.5% Senior notes (repaid May 15, 2013)		-			0			0
5.875% Senior notes (due June 1, 2021)		100,000			100,000			100,000
Zero coupon subordinated debentures, Face value: $13.1 million at September 30, 2014, $13.8
million at December 31, 2013 and $20.5 million at September 30, 2013 (due December 31, 2015)		11,941			11,911			17,347
Total liabilities		331,441			242,552			290,211

Redeemable noncontrolling interests		56,086			6,751			5,765
Commitments and contingencies (Note J)
Equity
GAMCO Investors, Inc. stockholders' equity
Preferred stock, $.001 par value; 10,000,000 shares authorized;
none issued and outstanding
Class A Common Stock, $0.001 par value; 100,000,000 shares authorized;
15,230,433, 15,012,719 and 14,833,469 issued, respectively; 6,599,982,
6,701,930 and 6,592,649 outstanding, respectively		14			14			14
Class B Common Stock, $0.001 par value; 100,000,000 shares authorized;
24,000,000 shares issued; 19,279,260, 19,384,174 and 19,424,174 shares
outstanding, respectively		19			19			19
Additional paid-in capital		289,664			282,496			281,194
Retained earnings		582,357			506,441			487,702
Accumulated other comprehensive income		23,392			30,239			23,271
Treasury stock, at cost (8,630,451, 8,310,789 and 8,240,820 shares, respectively)		(386,952	)		(361,878	)		(356,343	)
Total GAMCO Investors, Inc. stockholders' equity		508,494			457,331			435,857
Noncontrolling interests		2,739			2,851			2,789
Total equity		511,233			460,182			438,646

Total liabilities and equity	$	898,760		$	709,485		$	734,622

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

UNAUDITED

(In thousands)

For the Nine months ended September 30, 2014

				GAMCO Investors, Inc. stockholders
											Accumulated
						Additional					Other									Redeemable
	Noncontrolling			Common		Paid-in		Retained			Comprehensive			Treasury						Noncontrolling
	Interests			Stock		Capital		Earnings			Income			Stock			Total			Interests
Balance at December 31, 2013	$	2,851		$	33	$	282,496	$	506,441		$	30,239		$	(361,878	)	$	460,182		$	6,751
Redemptions of
noncontrolling interests		-			-		-		-			-			-			-			(1,666	)
Contributions from
noncontrolling
interests		-			-		-		-			-			-			-			53,607
Net income (loss)		(112	)		-		-		80,569			-			-			80,457			(2,606	)
Net unrealized gains on
securities available for sale,
net of income tax benefit ($1,393)		-			-		-		-			(2,371	)		-			(2,371	)		-
Amounts reclassified from
accumulated other
comprehensive income,
net of income tax benefit ($2,620)		-			-		-		-			(4,461	)		-			(4,461	)		-
Foreign currency translation		-			-		-		-			(15	)		-			(15	)		-
Dividends declared ($0.18 per
share)		-			-		-		(4,653	)		-			-			(4,653	)		-
Stock based compensation
expense		-			-		5,182		-			-			-			5,182			-
Exercise of stock options
including tax benefit ($349)		-			-		1,986		-			-			-			1,986			-
Purchase of treasury stock		-			-		-		-			-			(25,074	)		(25,074	)		-
Balance at September 30, 2014	$	2,739		$	33	$	289,664	$	582,357		$	23,392		$	(386,952	)	$	511,233		$	56,086

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

UNAUDITED

(In thousands)

For the Nine months ended September 30, 2013

				GAMCO Investors, Inc. stockholders
											Accumulated
						Additional					Other									Redeemable
	Noncontrolling			Common		Paid-in		Retained			Comprehensive			Treasury						Noncontrolling
	Interests			Stock		Capital		Earnings			Income			Stock			Total			Interests
Balance at December 31, 2012	$	3,326		$	33	$	280,089	$	408,295		$	26,300		$	(347,109	)	$	370,934		$	17,362
Redemptions of noncontrolling
interests		(524	)		-		-		-			-			-			(524	)		(15,356	)
Contributions from
noncontrolling
interests		-			-		-		-			-			-			-			3,486
Net income (loss)		(13	)		-		-		83,536			-			-			83,523			273
Net unrealized gains on
securities available for sale,
net of income tax ($5,479)		-			-		-		-			9,331			-			9,331			-
Amount reclassed from
accumulated other
comprehensive income,
net of income tax benefit ($7,259)		-			-		-		-			(12,361	)		-			(12,361	)		-
Income tax effect of transaction
with shareholders		-			-		243		-			-			-			243			-
Foreign currency translation		-			-		-		-			1			-			1			-
Dividends declared ($0.16 per
share)		-			-		-		(4,129	)		-			-			(4,129	)		-
Stock based compensation
expense		-			-		770		-			-			-			770			-
Exercise of stock options
including tax benefit		-			-		92		-			-			-			92			-
Purchase of treasury stock		-			-		-		-			-			(9,234	)		(9,234	)		-
Balance at September 30, 2013	$	2,789		$	33	$	281,194	$	487,702		$	23,271		$	(356,343	)	$	438,646		$	5,765

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

(In thousands)

	Nine Months Ended
	September 30,
	2014			2013
Operating activities
Net income	$	77,851		$	83,796
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in net gains from partnerships		(572	)		(1,211	)
Depreciation and amortization		507			605
Stock based compensation expense		5,182			770
Deferred income taxes		(3,472	)		1,495
Tax benefit from exercise of stock options		349			16
Foreign currency translation gain/(loss)		(15	)		1
Other-than-temporary loss on available for sale securities		69			14
Cost basis of donated securities		1,502			1,880
Gains on sales of available for sale securities		(3,511	)		(16,191	)
Accretion of zero coupon debentures		661			964
Loss on extinguishment of debt		84			137
(Increase) decrease in assets:
Investments in trading securities		(22,376	)		(11,730	)
Investments in partnerships:
Contributions to partnerships		(15,698	)		(10,124	)
Distributions from partnerships		4,828			11,134
Receivable from brokers		(30,424	)		6,801
Investment advisory fees receivable		20,351			11,278
Income tax receivable and deferred tax assets		(1,988	)		584
Other assets		563			(7,436	)
Increase (decrease) in liabilities:
Payable to brokers		36,026			329
Income taxes payable and deferred tax liabilities		(4,950	)		3,613
Compensation payable		58,873			75,639
Mandatorily redeemable noncontrolling interests		(51	)		(15	)
Accrued expenses and other liabilities		(1,639	)		3,144
Total adjustments		44,299			71,697
Net cash provided by operating activities	$	122,150		$	155,493

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED (continued)

(In thousands)

	Nine Months Ended
	September 30,
	2014			2013
Investing activities
Purchases of available for sale securities	$	(6,252	)	$	(8,427	)
Proceeds from sales of available for sale securities		8,018			32,422
Return of capital on available for sale securities		827			1,094
Net cash provided by investing activities		2,593			25,089

Financing activities
Contributions from redeemable noncontrolling interests		53,607			3,486
Redemptions of redeemable noncontrolling interests		(1,666	)		(15,356	)
Redemption of 5.5% Senior Notes		-			(99,000	)
Redemptions of noncontrolling interests		-			(524	)
Proceeds from exercise of stock options		1,637			76
Dividends paid		(4,567	)		(4,108	)
Repurchase of zero coupon subordinated debentures		(715	)		(1,119	)
Purchase of treasury stock		(25,074	)		(9,234	)
Net cash provided by/(used in) financing activities		23,222			(125,779	)
Effect of exchange rates on cash and cash equivalents		5			-
Net increase in cash and cash equivalents		147,970			54,803
Cash and cash equivalents at beginning of period		210,451			190,608
Cash and cash equivalents at end of period	$	358,421		$	245,411
Supplemental disclosures of cash flow information:
Cash paid for interest	$	3,847		$	6,607
Cash paid for taxes	$	52,956		$	40,500

Non-cash activity:
- For the nine months ended September 30, 2014 and September 30, 2013, the Company accrued dividends on restricted stock awards of $86 and $21, respectively.

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2014

(Unaudited)

A. Significant Accounting Policies

Basis of Presentation

Unless we have indicated otherwise, or the context otherwise requires, references in this report to "GAMCO Investors, Inc.," "GAMCO," "the Company," "GBL," "we," "us" and "our" or similar terms are to GAMCO Investors, Inc., its predecessors and its subsidiaries.

The unaudited interim condensed consolidated financial statements of GAMCO included herein have been prepared in conformity with generally accepted accounting principles ("GAAP") in the United States for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. GAAP in the United States for complete financial statements. In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of financial position, results of operations and cash flows of GAMCO for the interim periods presented and are not necessarily indicative of a full year's results.

The condensed consolidated financial statements include the accounts of GAMCO and its subsidiaries. Intercompany accounts and transactions are eliminated.

These condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2013 from which the accompanying condensed consolidated financial statements were derived.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported on the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Recent Accounting Developments

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers," which supersedes the revenue recognition requirements in the Accounting Standards Codification ("Codification") Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the Codification. The core principle of the new ASU No. 2014-09 is for companies to recognize revenue from the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. The new standard provides a five-step approach to be applied to all contracts with customers and also requires expanded disclosures about revenue recognition. The ASU is effective for annual reporting periods beginning after December 15, 2016, including interim periods and is to be retrospectively applied. Early adoption is not permitted. The Company is currently evaluating this guidance and the impact it will have on its condensed consolidated financial statements.

In June 2014, the FASB issued an accounting update clarifying that entities should treat performance targets that could be met after the requisite service period of a share-based payment award as performance conditions that affect vesting. Therefore, an entity would not record compensation expense (measured as of the grant date) for an award where transfer to the employee is contingent upon satisfaction of the performance target until it becomes probable that the performance target will be met. The guidance is effective for the Company beginning January 1, 2016. Early adoption is permitted. This guidance is not expected to have a material impact on the Company's condensed consolidated financial statements.

B. Investment in Securities

Investments in securities at September 30, 2014, December 31, 2013 and September 30, 2013 consisted of the following:

	September 30, 2014				December 31, 2013				September 30, 2013
	Cost		Fair Value		Cost		Fair Value		Cost		Fair Value
	(In thousands)
Trading securities:
Government obligations	$	20,995	$	20,999	$	37,986	$	37,994	$	20,993	$	21,000
Common stocks		167,714		190,939		96,225		124,634		143,731		166,443
Mutual funds		2,416		3,373		21,074		23,285		11,073		12,010
Other investments		753		1,550		287		582		406		419
Total trading securities		191,878		216,861		155,572		186,495		176,203		199,872

Available for sale securities:
Common stocks		14,228		36,380		13,389		43,046		16,372		36,297
Mutual funds		681		1,389		843		1,687		843		1,575
Total available for sale securities		14,909		37,769		14,232		44,733		17,215		37,872

Total investments in securities	$	206,787	$	254,630	$	169,804	$	231,228	$	193,418	$	237,744

Securities sold, not yet purchased at September 30, 2014, December 31, 2013 and September 30, 2013 consisted of the following:

	September 30, 2014				December 31, 2013				September 30, 2013
	Proceeds		Fair Value		Proceeds		Fair Value		Proceeds		Fair Value
Trading securities:	(In thousands)
Common stocks	$	11,699	$	13,514	$	5,319	$	6,023	$	6,411	$	7,003
Other investments		71		666		-		155		526		722
Total securities sold, not yet purchased	$	11,770	$	14,180	$	5,319	$	6,178	$	6,937	$	7,725

Investments in sponsored registered investment companies at September 30, 2014, December 31,2013 and September 30, 2013 consisted of the following:

	September 30, 2014				December 31, 2013				September 30, 2013
	Cost		Fair Value		Cost		Fair Value		Cost		Fair Value
	(In thousands)
Trading securities:
Mutual funds	$	1	$	1	$	19	$	10	$	19	$	12
Total trading securities		1		1		19		10		19		12

Available for sale securities:
Closed-end funds		21,819		36,142		23,100		40,624		23,850		40,272
Mutual funds		1,922		3,377		1,951		3,408		2,031		3,404
Total available for sale securities		23,741		39,519		25,051		44,032		25,881		43,676

Total investments in sponsored
registered investment companies	$	23,742	$	39,520	$	25,070	$	44,042	$	25,900	$	43,688

Management determines the appropriate classification of debt and equity securities at the time of purchase and reevaluates such designation as of the date of each statement of financial condition. Investments in United States Treasury Bills and Notes with maturities of greater than three months at the time of purchase are classified as investments in securities, and those with maturities of three months or less at the time of purchase are classified as cash equivalents. The portion of investments in securities held for resale in anticipation of short-term market movements are classified as trading securities. Trading securities are stated at fair value, with any unrealized gains or losses reported in current period earnings. Available for sale ("AFS") investments are stated at fair value, with any unrealized gains or losses, net of taxes, reported as a component of equity except for losses deemed to be other than temporary ("OTT") which are recorded as realized losses in the condensed consolidated statements of income.

The following table identifies all reclassifications out of accumulated other comprehensive income ("AOCI") into income for the three and nine months ended September 30, 2014 and 2013 (in thousands):

Amount							Affected Line Items	Reason for
Reclassified							in the Statements	Reclassification
from AOCI							Of Income	from AOCI
Three months ended September 30,
2014				2013
	$	348		$	5,745		Net gain/(loss) from investments	Realized gain on sale of AFS securities
		-			3,112		Other operating expenses/net gain from investments	Realized gain on donation of AFS securities
		348			8,857		Income before income taxes
		(129	)		(3,277	)	Income tax provision
	$	219		$	5,580		Net income

Amount							Affected Line Items	Reason for
Reclassified							in the Statements	Reclassification
from AOCI							Of Income	from AOCI
Nine months ended September 30,
		2014			2013
	$	3,511		$	16,191		Net gain/(loss) from investments	Realized gain on sale of AFS securities
		3,639			3,443		Other operating expenses/net gain from investments	Realized gain on donation of AFS securities
		(69	)		(14	)	Net gain/(loss) from investments	OTT impairment of AFS securities
		7,081			19,620		Income before income taxes
		(2,620	)		(7,259	)	Income tax provision
	$	4,461		$	12,361		Net income

The Company recognizes all derivatives as either assets or liabilities measured at fair value and includes them in either investments in securities or securities sold, not yet purchased on the condensed consolidated statements of financial condition. From time to time, the Company and/or the partnerships and offshore funds that the Company consolidates will enter into hedging transactions to manage their exposure to foreign currencies and equity prices related to their proprietary investments. For the three months ended September 30, 2014 and 2013, the Company had transactions in equity derivatives which resulted in net gains of $661,000 and $191,000, respectively. For the nine months ended September 30, 2014 and 2013, the Company had transactions in equity derivatives which resulted in net gains of $591,000 and $471,000, respectively. At September 30, 2014, December 31, 2013 and September 30, 2013, we held derivative contracts on 2.3 million equity shares, 1.3 million equity shares and 1.6 million equity shares, respectively, and the fair value was $134,000, $120,000 and ($143,000), respectively; these are included in investments in securities in the condensed consolidated statements of financial condition. These transactions are not designated as hedges for accounting purposes, and therefore changes in fair values of these derivatives are included in net gain/(loss) from investments in the condensed consolidated statements of income.

The Company is a party to enforceable master netting arrangements for swaps entered into as part of the investment strategy of the Company's proprietary portfolio. They are typically not used as hedging instruments. These swaps, while settled on a net basis with the counterparties, major U.S. financial institutions, are shown gross in assets and liabilities on the condensed consolidated statements of financial condition. The swaps have a firm contract end date and are closed out and settled when each contract expires.

							Gross Amounts Not Offset in the
							Statements of Financial Condition
	Gross		Gross Amounts		Net Amounts of
	Amounts of		Offset in the		Assets Presented
	Recognized		Statements of		in the Statements of		Financial			Cash Collateral
	Assets		Financial Condition		Financial Condition		Instruments			Received		Net Amount
Swaps:	(in thousands)
September 30, 2014	$	800	$	-	$	800	$	(657	)	$	-	$	143
December 31, 2013		275		-		275		(155	)		-		120
September 30, 2013	$	101	$	-	$	101	$	(101	)	$	-	$	-

							Gross Amounts Not Offset in the
							Statements of Financial Condition
	Gross		Gross Amounts		Net Amounts of
	Amounts of		Offset in the		Liabilities Presented
	Recognized		Statements of		in the Statements of		Financial			Cash Collateral
	Liabilities		Financial Condition		Financial Condition		Instruments			Pledged		Net Amount
Swaps:	(in thousands)
September 30, 2014	$	657	$	-	$	657	$	(657	)	$	-	$	-
December 31, 2013		155		-		155		(155	)		-		-
September 30, 2013	$	135	$	-	$	135	$	(101	)	$	-	$	34

The following is a summary of the cost, gross unrealized gains, gross unrealized losses and fair value of available for sale investments as of September 30, 2014, December 31, 2013 and September 30, 2013:

	September 30, 2014
			Gross		Gross
			Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
	(In thousands)
Common stocks	$	14,228	$	22,152	$	-		$	36,380
Closed-end Funds		21,819		14,325		(2	)		36,142
Mutual funds		2,603		2,163		-			4,766
Total available for sale securities	$	38,650	$	38,640	$	(2	)	$	77,288

	December 31, 2013
			Gross		Gross
			Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
	(In thousands)
Common stocks	$	13,389	$	29,657	$	-		$	43,046
Closed-end Funds		23,100		17,654		(130	)		40,624
Mutual funds		2,794		2,325		(24	)		5,095
Total available for sale securities	$	39,283	$	49,636	$	(154	)	$	88,765

	September 30, 2013
			Gross		Gross
			Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
	(In thousands)
Common stocks	$	16,372	$	19,925	$	-		$	36,297
Closed-end Funds		23,850		16,545		(123	)		40,272
Mutual funds		2,874		2,141		(36	)		4,979
Total available for sale securities	$	43,096	$	38,611	$	(159	)	$	81,548

Unrealized changes in fair value, net of taxes, for the three months ended September 30, 2014 and September 30, 2013 of $2.4 million in losses and $2.2 million in losses, respectively, have been included in other comprehensive income, a component of equity, at September 30, 2014 and September 30, 2013. Return of capital on available for sale securities was $0.3 million and $0.5 million for the three months ended September 30, 2014 and September 30, 2013, respectively. Proceeds from sales of investments available for sale were approximately $1.5 million and $10.4 million for the three months ended September 30, 2014 and September 30, 2013, respectively. For the three months ended September 30, 2014 and September 30, 2013, gross gains on the sale of investments available for sale amounted to $0.3 million and $5.7 million, respectively, and were reclassified from other comprehensive income into net gain from investments in the condensed consolidated statements of income. There were no losses on the sale of investments available for sale for the three months ended September 30, 2014 or September 30, 2013. Unrealized changes in fair value, net of taxes, for the nine months ended September 30, 2014 and September 30, 2013 of $6.8 million in losses and $3.0 million in losses, respectively, have been included in other comprehensive income, a component of equity, at September 30, 2014 and September 30, 2013. Return of capital on available for sale securities was $0.8 million and $1.1 million for the nine months ended September 30, 2014 and September 30, 2013, respectively. Proceeds from sales of investments available for sale were approximately $8.0 million and $32.4 million for the nine months ended September 30, 2014 and September 30, 2013, respectively. For the nine months ended September 30, 2014 and September 30, 2013, gross gains on the sale of investments available for sale amounted to $3.5 million and $16.2 million, respectively, and were reclassified from other comprehensive income into net gain from investments in the condensed consolidated statements of income. There were no losses on the sale of investments available for sale for the nine months ended September 30, 2014 or September 30, 2013.The basis on which the cost of a security sold is determined using specific identification.

Investments classified as available for sale that are in an unrealized loss position for which other-than-temporary impairment has not been recognized consisted of the following:

	September 30, 2014							December 31, 2013							September 30, 2013
			Unrealized							Unrealized							Unrealized
	Cost		Losses			Fair Value		Cost		Losses			Fair Value		Cost		Losses			Fair Value
(in thousands)
Cosed-end funds	$	79	$	(2	)	$	77	$	912	$	(130	)	$	782	$	941	$	(123	)	$	818
Mutual Funds		-		-			-		303		(24	)		279		365		(36	)		329
Total	$	79	$	(2	)	$	77	$	1,215	$	(154	)	$	1,061	$	1,306	$	(159	)	$	1,147

At September 30, 2014, there was one holding in a loss position which was not deemed to be other-than-temporarily impaired due to the length of time that it had been in a loss position and because it passed scrutiny in our evaluation of issuer-specific and industry-specific considerations. In this specific instance, the investment at September 30, 2014 was a closed-end fund with diversified holdings across multiple companies and across multiple industries. The one holding was impaired for one month at September 30, 2014. The value of this holding at September 30, 2014 was $0.1 million.

At December 31, 2013, there were four holdings in loss positions which were not deemed to be other-than-temporarily impaired due to the length of time that they had been in a loss position and because they passed scrutiny in our evaluation of issuer-specific and industry-specific considerations. In these specific instances, the investments at December 31, 2013 were open-end funds and closed-end funds with diversified holdings across multiple companies and across multiple industries. One holding was impaired for one month, one for two months, one for four months and one for seven months at December 31, 2013. The value of these holdings at December 31, 2013 was $1.1 million.

At September 30, 2013, there were four holdings in loss positions which were not deemed to be other-than-temporarily impaired due to the length of time that they had been in a loss position and because they passed scrutiny in our evaluation of issuer-specific and industry-specific considerations. In these specific instances, the investments at September 30, 2013 were open- and closed-end funds with diversified holdings across multiple companies and across multiple industries. All holdings were impaired for four months at September 30, 2013. The value of these holdings at September 30, 2013 was $1.1 million.

There were no losses on AFS securities for the three months ended September 30, 2014 or September 30, 2013. For the nine months ended September 30, 2014 and September 30, 2013, there were $69,000 and $14,000 of losses, respectively, on available for sale securities deemed to be other than temporary and a loss has been recorded in net gain from investments.

C. Fair Value

The following tables present information about the Company's assets and liabilities by major categories measured at fair value on a recurring basis as of September 30, 2014, December 31, 2013 and September 30, 2013 and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value:

Assets and Liabilities Measured at Fair Value on a Recurring Basis as of September 30, 2014 (in thousands)

	Quoted Prices in Active		Significant Other		Significant		Balance as of
	Markets for Identical		Observable		Unobservable		September 30,
Assets	Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		2014
Cash equivalents	$	358,210	$	-	$	-	$	358,210
Investments in partnerships		-		24,094		-		24,094
Investments in securities:
AFS - Common stocks		36,380		-		-		36,380
AFS - Mutual funds		1,389		-		-		1,389
Trading - Gov't obligations		20,999		-		-		20,999
Trading - Common stocks		190,215		-		724		190,939
Trading - Mutual funds		3,373		-		-		3,373
Trading - Other		453		803		294		1,550
Total investments in securities		252,809		803		1,018		254,630
Investments in sponsored registered investment companies:
AFS - Closed-end Funds		36,142		-		-		36,142
AFS - Mutual Funds		3,377		-		-		3,377
Trading - Mutual funds		1		-		-

GAMCO INVESTORS, INC. ET AL - FORM 10-Q - November 7, 2014

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