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

Attached files

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EX-32.2 - EXHIBIT 32.2, DATED NOVEMBER 4, 2015 - GAMCO INVESTORS, INC. ET AL	ex32_2093015.htm
EX-32.1 - EXHIBIT 32.1, DATED NOVEMBER 4, 2015 - GAMCO INVESTORS, INC. ET AL	ex32_1093015.htm
EX-31.1 - EXHIBIT 31.1, DATED NOVEMBER 4, 2015 - GAMCO INVESTORS, INC. ET AL	ex31_1093015.htm
EX-31.2 - EXHIBIT 31.2, DATED NOVEMBER 4, 2015 - GAMCO INVESTORS, INC. ET AL	ex31_2093015.htm
EX-31.3 - EXHIBIT 31.3, DATED NOVEMBER 4, 2015 - GAMCO INVESTORS, INC. ET AL	ex31_3093015.htm

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, 2015

☐ 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, 2015
Class A Common Stock, .001 par value	(Including 556,100 restricted stock awards)	6,247,452
Class B Common Stock, .001 par value		19,196,792

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 March 31, 2015 and 2014
	- Nine months ended September 30, 2015 and 2014

	Condensed Consolidated Statements of Comprehensive Income:
	- Three months ended March 31, 2015 and 2014
	- Nine months ended September 30, 2015 and 2014

	Condensed Consolidated Statements of Financial Condition:
	- September 30, 2015
	- December 31, 2014
	- September 30, 2014

	Condensed Consolidated Statements of Equity:
	- Nine months ended September 30, 2015 and 2014

	Condensed Consolidated Statements of Cash Flows:
	- Nine months ended September 30, 2015 and 2014

	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,
	2015			2014			2015			2014
Revenues
Investment advisory and incentive fees	$	82,182		$	92,591		$	257,563		$	270,544
Distribution fees and other income		12,301			15,727			39,402			46,367
Institutional research services		2,063			2,540			6,130			6,720
Total revenues		96,546			110,858			303,095			323,631
Expenses
Compensation		39,731			43,316			127,627			131,258
Management fee		2,682			3,756			11,360			13,628
Distribution costs		12,344			15,101			39,747			44,087
Other operating expenses		5,593			5,099			19,271			17,036
Total expenses		60,350			67,272			198,005			206,009

Operating income		36,196			43,586			105,090			117,622
Other income (expense)
Net gain/(loss) from investments		(11,467	)		(9,086	)		(614	)		7,468
Interest and dividend income		884			1,084			3,227			3,557
Interest expense		(1,917	)		(1,987	)		(5,899	)		(6,000	)
Total other income/(expense), net		(12,500	)		(9,989	)		(3,286	)		5,025
Income before income taxes		23,696			33,597			101,804			122,647
Income tax provision		9,245			13,045			38,547			44,796
Net income		14,451			20,552			63,257			77,851
Net loss attributable to noncontrolling interests		(518	)		(3,113	)		(589	)		(2,718	)
Net income attributable to GAMCO Investors, Inc.'s shareholders	$	14,969		$	23,665		$	63,846		$	80,569

Net income attributable to GAMCO Investors, Inc.'s shareholders per share:
Basic	$	0.60		$	0.94		$	2.55		$	3.17

Diluted	$	0.59		$	0.93		$	2.52		$	3.15

Weighted average shares outstanding:
Basic		24,947			25,296			25,047			25,385

Diluted		25,241			25,517			25,337			25,595

Dividends declared:	$	0.07		$	0.06		$	0.21		$	0.18

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,
	2015			2014			2015			2014

Net income	$	14,451		$	20,552		$	63,257		$	77,851
Other comprehensive income/(loss), net of tax:
Foreign currency translation		(35	)		(45	)		(22	)		(15	)
Net unrealized losses on securities available for sale (a)		(6,696	)		(2,407	)		(7,417	)		(6,832	)
Other comprehensive income / (loss)		(6,731	)		(2,452	)		(7,439	)		(6,847	)

Comprehensive income		7,720			18,100			55,818			71,004
Less: Comprehensive loss attributable to noncontrolling interests		(518	)		(3,113	)		(589	)		(2,718	)

Comprehensive income attributable to GAMCO Investors, Inc.	$	8,238		$	21,213		$	56,407		$	73,722

(a) Net of income tax benefit of ($3,932), ($1,414), ($4,356) and ($4,013),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,
	2015			2014			2014
ASSETS
Cash and cash equivalents	$	425,616		$	298,224		$	358,421
Investments in securities		126,917			259,537			254,630
Investments in sponsored registered investment companies		115,046			39,537			39,520
Investments in partnerships		101,025			107,637			107,434
Receivable from brokers		52,918			76,079			79,885
Investment advisory fees receivable		28,629			41,872			31,155
Income tax receivable		2,409			2,477			2,433
Other assets		20,109			41,067			25,282
Total assets	$	872,669		$	866,430		$	898,760

LIABILITIES AND EQUITY
Payable to brokers	$	49,074		$	43,409		$	46,790
Income taxes payable and deferred tax liabilities		10,529			27,939			27,412
Capital lease obligation		5,191			5,253			5,272
Compensation payable		88,747			39,983			93,535
Securities sold, not yet purchased		5,577			10,595			14,180
Mandatorily redeemable noncontrolling interests		1,257			1,302			1,304
Accrued expenses and other liabilities		34,246			29,657			31,007
Sub-total		194,621			158,138			219,500

5.875% Senior notes (due June 1, 2021)		100,000			100,000			100,000
Zero coupon subordinated debentures, Face value: $6.9 million at September 30, 2015, $13.1
million at December 31, 2014 and $13.1 million at September 30, 2014 (due December 31, 2015)		6,750			12,163			11,941
Total liabilities		301,371			270,301			331,441

Redeemable noncontrolling interests		6,018			68,334			56,086
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;
15,387,701, 15,341,433 and 15,230,433 issued, respectively; 6,340,992,
6,616,212 and 6,599,982 outstanding, respectively		14			14			14
Class B Common Stock, $0.001 par value; 100,000,000 shares authorized;
24,000,000 shares issued; 19,196,792, 19,239,260 and 19,279,260 shares
outstanding, respectively		19			19			19
Additional paid-in capital		299,769			291,681			289,664
Retained earnings		661,415			602,950			582,357
Accumulated other comprehensive income		17,575			25,014			23,392
Treasury stock, at cost (9,046,709, 8,725,221 and 8,630,451 shares, respectively)		(416,147	)		(394,617	)		(386,952	)
Total GAMCO Investors, Inc. stockholders' equity		562,645			525,061			508,494
Noncontrolling interests		2,635			2,734			2,739
Total equity		565,280			527,795			511,233

Total liabilities and equity	$	872,669		$	866,430		$	898,760

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

UNAUDITED

(In thousands)

For the Nine months ended September 30, 2015

				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, 2014	$	2,734		$	33	$	291,681	$	602,950		$	25,014		$	(394,617	)	$	527,795		$	68,334
Redemptions of redeemable
noncontrolling interests		-			-		-		-			-			-			-			(602	)
Contributions from redeemable
noncontrolling
interests		-			-		-		-			-			-			-			1,036
Consolidation of a consolidated
feeder fund and a partnership		-			-		-		-			-			-			-			996
Deconsolidation of offshore
fund		-			-		-		-			-			-			-			(63,256	)
Net income (loss)		(99	)		-		-		63,846			-			-			63,747			(490	)
Net unrealized losses on
securities available for sale,
net of income tax benefit ($4,341)		-			-		-		-			(7,392	)		-			(7,392	)		-
Amounts reclassified from
accumulated other
comprehensive income,
net of income tax benefit ($15)		-			-		-		-			(25	)		-			(25	)		-
Foreign currency translation		-			-		-		-			(22	)		-			(22	)		-
Dividends declared ($0.21 per
share)		-			-		-		(5,381	)		-			-			(5,381	)		-
Stock based compensation
expense		-			-		6,819		-			-			-			6,819			-
Exercise of stock options
including tax benefit ($102)		-			-		1,269		-			-			-			1,269			-
Purchase of treasury stock		-			-		-		-			-			(21,530	)		(21,530	)		-
Balance at September 30, 2015	$	2,635		$	33	$	299,769	$	661,415		$	17,575		$	(416,147	)	$	565,280		$	6,018

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 redeemable
noncontrollin interests		-			-		-		-			-			-			-			(1,666	)
Contributions from redeemable
noncontrolling
interests		-			-		-		-			-			-			-			53,607
Net income (loss)		(112	)		-		-		80,569			-			-			80,457			(2,606	)
Net unrealized losses on
securities available for sale,
net of income tax ($1,393)		-			-		-		-			(2,371	)		-			(2,371	)		-
Amount reclassed 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 CASH FLOWS

UNAUDITED

(In thousands)

	Nine Months Ended
	September 30,
	2015			2014
Operating activities
Net income	$	63,257		$	77,851
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in net gains from partnerships		(681	)		(572	)
Depreciation and amortization		475			507
Stock based compensation expense		6,819			5,182
Deferred income taxes		(8,033	)		(3,472	)
Tax benefit from exercise of stock options		102			349
Foreign currency translation gain/(loss)		(22	)		(15	)
Other-than-temporary loss on available for sale securities		150			69
Cost basis of donated securities		104			1,502
Gains on sales of available for sale securities		(30	)		(3,511	)
Accretion of zero coupon debentures		502			661
Loss on extinguishment of debt		310			84
(Increase) decrease in assets:
Investments in trading securities		29,096			(22,376	)
Investments in partnerships:
Contributions to partnerships		(15,170	)		(15,698	)
Distributions from partnerships		22,800			4,828
Receivable from brokers		(24,745	)		(30,424	)
Investment advisory fees receivable		13,046			20,351
Income tax receivable and deferred tax assets		68			(1,988	)
Other assets		20,402			563
Increase (decrease) in liabilities:
Payable to brokers		42,930			36,026
Income taxes payable and deferred tax liabilities		(5,019	)		(4,950	)
Compensation payable		48,768			58,873
Mandatorily redeemable noncontrolling interests		(45	)		(51	)
Accrued expenses and other liabilities		5,092			(1,639	)
Total adjustments		136,919			44,299
Net cash provided by operating activities	$	200,176		$	122,150

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED (continued)

(In thousands)

	Nine Months Ended
	September 30,
	2015			2014
Investing activities
Purchases of available for sale securities	$	(43,030	)	$	(6,252	)
Proceeds from sales of available for sale securities		1,064			8,018
Return of capital on available for sale securities		554			827
Net cash (used in) provided by investing activities		(41,412	)		2,593

Financing activities
Contributions from redeemable noncontrolling interests		1,036			53,607
Redemptions of redeemable noncontrolling interests		(602	)		(1,666	)
Redemptions of noncontrolling interests		-			-
Proceeds from exercise of stock options		1,169			1,637
Dividends paid		(5,252	)		(4,567	)
Repurchase of zero coupon subordinated debentures		(6,224	)		(715	)
Purchase of treasury stock		(21,530	)		(25,074	)
Net cash (used in) provided by financing activities		(31,403	)		23,222
Effect of exchange rates on cash and cash equivalents		8			5
Net increase in cash and cash equivalents		127,369			147,970
Cash and cash equivalents at beginning of period		298,224			210,451
Increase in cash from consolidation		10			-
Increase in cash from deconsolidation		13			-
Cash and cash equivalents at end of period	$	425,616		$	358,421
Supplemental disclosures of cash flow information:
Cash paid for interest	$	3,897		$	3,847
Cash paid for taxes	$	49,590		$	52,956

Non-cash activity:
- For the nine months ended September 30, 2015 and September 30, 2014, the Company accrued dividends on restricted stock awards of $129 and $86, respectively. - On January 1, 2015, GAMCO Investors, Inc. was no longer deemed to have control over a certain offshore fund and a certain consolidated feeder fund which resulted in the deconsolidation of that offshore fund and consolidated feeder fund and an increase of approximately $13 of cash and cash equivalents, a decrease of approximately $63,280 of net assets and a decrease of $63,267 of noncontrolling interests. - On April 1, 2015, GAMCO Investors, Inc. was deemed to have control over a certain offshore fund and a certain partnership which resulted in the consolidation of that one offshore fund and one partnership and an increase of approximately $10 of cash and cash equivalents, an increase of approximately $986 of other net assets and an increase of approximately $996 of redeemable noncontrolling interest.

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

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

These interim 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, 2014 from which the accompanying condensed consolidated financial statements were derived.

Use of Estimates

The preparation of the interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported on the interim 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, 2017, 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 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 consolidated financial statements.

In February 2015, the FASB issued an accounting update amending the consolidation requirements under GAAP. This guidance is effective for the Company beginning January 1, 2016. Early adoption is permitted. The Company is continuing to analyze the impact, if any, that this update may have on its consolidated financial statements.

In May 2015, the FASB issued new guidance amending the current disclosure requirements for investments in certain entities that calculate net asset value per share. The guidance requires investments for which fair value is measured using the net asset value per share practical expedient be removed from the fair value hierarchy. Instead, those investment amounts shall be provided as a separate item to permit reconciliation of the fair value of investments included in the fair value hierarchy to the line items presented in the statement of financial condition. This new guidance will be effective for the Company's first quarter of 2016. The Company is currently evaluating the potential impact on its consolidated financial statements and related disclosures.

B. Investment in Securities

Investments in securities at September 30, 2015, December 31, 2014 and September 30, 2014 consisted of the following:

	September 30, 2015				December 31, 2014				September 30, 2014
	Cost		Fair Value		Cost		Fair Value		Cost		Fair Value
	(In thousands)
Trading securities:
Government obligations	$	-	$	-	$	18,994	$	18,996	$	20,995	$	20,999
Common stocks		78,025		87,745		170,977		195,029		167,714		190,939
Mutual funds		2,504		3,180		2,432		3,498		2,416		3,373
Other investments		505		723		743		1,704		753		1,550
Total trading securities		81,034		91,648		193,146		219,227		191,878		216,861

Available for sale securities:
Common stocks		13,561		34,095		13,637		38,942		14,228		36,380
Mutual funds		627		1,174		681		1,368		681		1,389
Total available for sale securities		14,188		35,269		14,318		40,310		14,909		37,769

Total investments in securities	$	95,222	$	126,917	$	207,464	$	259,537	$	206,787	$	254,630

Securities sold, not yet purchased at September 30, 2015, December 31, 2014 and September 30, 2014 consisted of the following:

	September 30, 2015				December 31, 2014				September 30, 2014
	Proceeds		Fair Value		Proceeds		Fair Value		Proceeds		Fair Value
Trading securities:	(In thousands)
Common stocks	$	6,123	$	5,482	$	9,835	$	9,960	$	11,699	$	13,514
Other investments		8		95		1		635		71		666
Total securities sold, not yet purchased	$	6,131	$	5,577	$	9,836	$	10,595	$	11,770	$	14,180

Investments in sponsored registered investment companies at September 30, 2015, December 31,2014 and September 30, 2014 consisted of the following:

	September 30, 2015				December 31, 2014				September 30, 2014
	Cost		Fair Value		Cost		Fair Value		Cost		Fair Value
	(In thousands)
Trading securities:
Mutual funds	$	40,097	$	41,820	$	1	$	1	$	1	$	1
Total trading securities		40,097		41,820		1		1		1		1

Available for sale securities:
Closed-end funds		63,068		70,349		21,962		36,323		21,819		36,142
Mutual funds		1,883		2,877		1,898		3,213		1,922		3,377
Total available for sale securities		64,951		73,226		23,860		39,536		23,741		39,519

Total investments in sponsored
registered investment companies	$	105,048	$	115,046	$	23,861	$	39,537	$	23,742	$	39,520

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 consolidated 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, 2015 and 2014 (in thousands):

Amount							Affected Line Items	Reason for
Reclassified							in the Statements	Reclassification
from AOCI							Of Income	from AOCI
Three months ended September 30,
2015				2014
	$	-		$	348		Net gain/(loss) from investments	Realized gain on sale of AFS securities
		45			-		Other operating expenses/net gain from investments	Realized gain on donation of AFS securities
		(150	)		-		Net gain/(loss) from investments	OTT impairment of AFS securities
		(105	)		348		Income before income taxes
		39			(129	)	Income tax provision
	$	(66	)	$	219		Net income

Amount							Affected Line Items	Reason for
Reclassified							in the Statements	Reclassification
from AOCI							Of Income	from AOCI
Nine months ended September 30,
		2015			2014
	$	30		$	3,511		Net gain/(loss) from investments	Realized gain on sale of AFS securities
		80			3,639		Other operating expenses/net gain from investments	Realized gain on donation of AFS securities
		(150	)		(69	)	Net gain/(loss) from investments	OTT impairment of AFS securities
		(40	)		7,081		Income before income taxes
		15			(2,620	)	Income tax provision
	$	(25	)	$	4,461		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. At September 30, 2015, December 31, 2014 and September 30, 2014, we held derivative contracts on 170,000 equity shares, 3.8 million equity shares and 2.3 million equity shares, respectively, that are included in investments in securities or securities sold, not yet purchased on the condensed consolidated statements of financial condition. We had two, one and one foreign exchange contracts outstanding at September 30, 2015, December 31, 2014 and September 30, 2014, respectively, that are included in receivable from brokers or payable to brokers on the condensed consolidated statements of financial condition. Aside from one foreign exchange contract, 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 on the condensed consolidated statements of income. The one foreign exchange contract that is designated as a hedge was for a short of British Pounds to hedge the long investment that we have in our London Stock Exchange listed Gabelli Value Plus+ Trust Ltd. closed-end fund which is denominated in British Pounds. As the underlying investment that is being hedged is an available for sale security, the portion of the change in value of the closed-end fund that is currency related is recorded in net gain/(loss) from investments on the condensed consolidated statements of income and not in accumulated comprehensive income.

The following tables identify the fair values and gains and losses of all derivatives held by the Company (in thousands):

		Asset Derivatives Fair Value							Liability Derivatives Fair Value
Balance Sheet Location		September 30, 2015		December 31, 2014		September 30, 2014		Balance Sheet Location	September 30, 2015		December 31, 2014		September 30, 2014
Derivatives designated as hedging instruments under
FASB ASC 815-20
Foreign exchange contracts	Receivable from brokers	$	-	$	-	$	-	Payable to brokers	$	36,354	$	-	$	-
Sub total		$	-	$	-	$	-		$	36,354	$	-	$	-
Derivatives Not Designated As Hedging Instruments Under Fasb Asc 815-20
	Investments in							Securities sold,
Equity contracts	securities	$	143	$	896	$	800	not yet purchased	$	95	$	635	$	666
Foreign exchange contracts	Receivable from brokers		-		-		-	Payable to brokers		5,172		5,470		6,343
Sub total		$	143	$	896	$	800		$	5,267	$	6,105	$	7,009
Total derivatives		$	143	$	896	$	800		$	41,621	$	6,105	$	7,009

Type of Derivative	Income Statement Location	Three Months ended September 30,						Nine Months ended September 30,
		2015			2014			2015			2014
Foreign exchange contracts	Net gain/(loss) from investments		$	1,985		$	482		$	1,885		$	541
Equity contracts	Net gain/(loss) from investments			27			758			199			591
Total			$	2,012		$	1,240		$	2,084		$	1,132

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, 2015	$	143	$	-	$	143	$	(89	)	$	-	$	54
December 31, 2014		896		-		896		(634	)		-		262
September 30, 2014	$	800	$	-	$	800	$	(657	)	$	-	$	143

							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, 2015	$	89	$	-	$	89	$	(89	)	$	-	$	-
December 31, 2014		634		-		634		(634	)		-		-
September 30, 2014	$	657	$	-	$	657	$	(657	)	$	-	$	-

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, 2015, December 31, 2014 and September 30, 2014:

	September 30, 2015
			Gross		Gross
			Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
	(In thousands)
Common stocks	$	13,561	$	20,534	$	-		$	34,095
Closed-end Funds		63,068		10,128		(2,847	)		70,349
Mutual funds		2,510		1,620		(79	)		4,051
Total available for sale securities	$	79,139	$	32,282	$	(2,926	)	$	108,495

	December 31, 2014
			Gross		Gross
			Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
	(In thousands)
Common stocks	$	13,637	$	25,305	$	-		$	38,942
Closed-end Funds		21,962		14,398		(37	)		36,323
Mutual funds		2,579		2,030		(28	)		4,581
Total available for sale securities	$	38,178	$	41,733	$	(65	)	$	79,846

	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

Changes in net unrealized losses, net of taxes, for the three months ended September 30, 2015 and September 30, 2014 of ($6.7) million in losses and ($2.4) million in losses, respectively, have been included in other comprehensive income, a component of equity, at September 30, 2015 and September 30, 2014. Return of capital on available for sale securities was $0.3 million and $0.3 million for the three months ended September 30, 2015 and September 30, 2014, respectively. During the three months ended September 30, 2015, there were no proceeds from the sales of investments available for sale and no gross gains on the sale of investments available for sale. Proceeds from sales of investments available for sale were approximately $1.5 million for the three months ended September 30, 2014. For the three months ended September 30, 2014, gross gains on the sale of investments available for sale amounted to $0.3 million 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, 2015 or September 30, 2014. Changes in net unrealized losses, net of taxes, for the nine months ended September 30, 2015 and September 30, 2014 of $(7.4) million in losses and $(6.8) million in losses, respectively, have been included in other comprehensive income, a component of equity, at September 30, 2015 and September 30, 2014. Return of capital on available for sale securities was $0.6 million and $0.8 million for the nine months ended September 30, 2015 and September 30, 2014, respectively. Proceeds from sales of investments available for sale were approximately $1.1 million and $8.0 million for the nine months ended September 30, 2015 and September 30, 2014, respectively. For the nine months ended September 30, 2015 and September 30, 2014, gross gains on the sale of investments available for sale amounted to $30,000 and $3.5 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, 2015 or September 30, 2014. 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, 2015							December 31, 2014							September 30, 2014
			Unrealized							Unrealized							Unrealized
	Cost		Losses			Fair Value		Cost		Losses			Fair Value		Cost		Losses			Fair Value
(in thousands)
Cosed-end funds	$	40,537	$	(2,847	)	$	37,690	$	812	$	(37	)	$	775	$	79	$	(2	)	$	77
Mutual Funds		303		(79	)		224		303		(28	)		275		-		-			-
Total available for sale securities	$	40,840	$	(2,926	)	$	37,914	$	1,115	$	(65	)	$	1,050	$	79	$	(2	)	$	77

At September 30, 2015, 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, 2015 were mutual funds and closed-end funds with diversified holdings across multiple companies and across multiple industries. One holding was impaired for two months, one holding was impaired for three months, one holding was impaired for seven months and one holding was impaired for eight months at September 30, 2015. The value of these holdings at September 30, 2015 was $37.9 million.

At December 31, 2014, 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, 2014 were mutual funds and closed-end funds with diversified holdings across multiple companies and across multiple industries. One holding was impaired for one month, one for three months and two for four months at December 31, 2014. The value of these holdings at December 31, 2014 was $1.1 million.

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.

For the three months ended September 30, 2015 there were $150,000 of losses on available for sale securities deemed to be other than temporary and a loss has been recorded in net gain from investments. There were no losses recognized on AFS securities for the three months ended September 30, 2014. For the nine months ended September 30, 2015 and September 30, 2014, there were $150,000 and $69,000, respectively, of losses 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, 2015, December 31, 2014 and September 30, 2014 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, 2015 (in thousands)

Quoted Prices in Active

Significant Other

Significant

Balance as of

GAMCO INVESTORS, INC. ET AL - FORM 10-Q - November 4, 2015

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