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 JuneSeptember 30, 2015
or
☐                  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’sRegistrant'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"large accelerated filer", "accelerated filer", and "smaller reporting company”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’sRegistrant's classes of Common Stock, as of the latest practical date.
Class Outstanding at JulyOctober 31, 2015
Class A Common Stock, .001 par value  (Including 705,050556,100 restricted stock awards)6,470,6776,247,452
Class B Common Stock, .001 par value 19,218,81419,196,792


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
 -    SixNine months ended March 31,September 30, 2015 and 2014
  
 Condensed Consolidated Statements of Comprehensive Income:
 -    Three months ended March 31, 2015 and 2014
 -    SixNine months ended March 31,September 30, 2015 and 2014
  
 Condensed Consolidated Statements of Financial Condition:
 -    JuneSeptember 30, 2015
 -    December 31, 2014
 -    JuneSeptember 30, 2014
  
 Condensed Consolidated Statements of Equity:
 -    SixNine months ended March 31,September 30, 2015 and 2014
  
 Condensed Consolidated Statements of Cash Flows:
 -    SixNine months ended March 31,September 30, 2015 and 2014
  
 Notes to Unaudited Condensed Consolidated Financial Statements
  
Item 2.Management’sManagement'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 


2

GAMCO INVESTORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
(Dollars in thousands, except per share data)

 Three Months Ended  Six Months Ended  Three Months Ended  Nine Months Ended 
 June 30,  June 30,  September 30,  September 30, 
 2015  2014  2015  2014  2015  2014  2015  2014 
Revenues                
Investment advisory and incentive fees $87,344  $90,156  $175,381  $177,953  $82,182  $92,591  $257,563  $270,544 
Distribution fees and other income  13,358   15,767   27,101   30,640   12,301   15,727   39,402   46,367 
Institutional research services  2,002   2,373   4,067   4,180   2,063   2,540   6,130   6,720 
Total revenues  102,704   108,296   206,549   212,773   96,546   110,858   303,095   323,631 
Expenses                                
Compensation  43,402   44,045   87,896   87,942   39,731   43,316   127,627   131,258 
Management fee  4,241   5,144   8,678   9,872   2,682   3,756   11,360   13,628 
Distribution costs  13,120   15,023   27,403   28,986   12,344   15,101   39,747   44,087 
Other operating expenses  6,992   6,547   13,678   11,937   5,593   5,099   19,271   17,036 
Total expenses  67,755   70,759   137,655   138,737   60,350   67,272   198,005   206,009 
                                
Operating income  34,949   37,537   68,894   74,036   36,196   43,586   105,090   117,622 
Other income (expense)                                
Net gain/(loss) from investments  3,895   9,610   10,853   16,554   (11,467)  (9,086)  (614)  7,468 
Interest and dividend income  1,289   1,332   2,343   2,473   884   1,084   3,227   3,557 
Interest expense  (1,963)  (2,021)  (3,982)  (4,013)  (1,917)  (1,987)  (5,899)  (6,000)
Total other income (expense), net  3,221   8,921   9,214   15,014 
Total other income/(expense), net  (12,500)  (9,989)  (3,286)  5,025 
Income before income taxes  38,170   46,458   78,108   89,050   23,696   33,597   101,804   122,647 
Income tax provision  14,123   17,135   29,302   31,751   9,245   13,045   38,547   44,796 
Net income  24,047   29,323   48,806   57,299   14,451   20,552   63,257   77,851 
Net income/(loss) attributable to noncontrolling interests  (54)  373   (71)  395 
Net loss attributable to noncontrolling interests  (518)  (3,113)  (589)  (2,718)
Net income attributable to GAMCO Investors, Inc.'s shareholders $24,101  $28,950  $48,877  $56,904  $14,969  $23,665  $63,846  $80,569 
                                
Net income attributable to GAMCO Investors, Inc.'s shareholders per share:                                
Basic $0.96  $1.14  $1.95  $2.24  $0.60  $0.94  $2.55  $3.17 
                                
Diluted $0.95  $1.13  $1.93  $2.22  $0.59  $0.93  $2.52  $3.15 
                                
Weighted average shares outstanding:                                
Basic  25,065   25,381   25,098   25,431   24,947   25,296   25,047   25,385 
                                
Diluted  25,358   25,586   25,386   25,635   25,241   25,517   25,337   25,595 
                                
Dividends declared: $0.07  $0.06  $0.14  $0.12  $0.07  $0.06  $0.21  $0.18 

See accompanying notes.
3

GAMCO INVESTORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
UNAUDITED
(Dollars in thousands, except per share data)

 Three Months Ended  Six Months Ended  Three Months Ended  Nine Months Ended 
 June 30,  June 30,  September 30,  September 30, 
 2015  2014  2015  2014  2015  2014  2015  2014 
                
Net income $24,047  $29,323  $48,806  $57,299  $14,451  $20,552  $63,257  $77,851 
Other comprehensive income/(loss), net of tax:                                
Foreign currency translation  55   22   13   30   (35)  (45)  (22)  (15)
Net unrealized losses on securities available for sale (a)  (255)  (1,728)  (722)  (4,425)  (6,696)  (2,407)  (7,417)  (6,832)
Other comprehensive loss  (200)  (1,706)  (709)  (4,395)
Other comprehensive income / (loss)  (6,731)  (2,452)  (7,439)  (6,847)
                                
Comprehensive income  23,847   27,617   48,097   52,904   7,720   18,100   55,818   71,004 
Less: Comprehensive loss/(income) attributable to noncontrolling interests  (54)   373   (71)   395 
Less: Comprehensive loss attributable to noncontrolling interests  (518)   (3,113)   (589)   (2,718) 
                                
Comprehensive income attributable to GAMCO Investors, Inc. $23,901  $27,244  $48,168  $52,509  $8,238  $21,213  $56,407  $73,722 

(a) Net of income tax benefit of ($150)3,932), ($1,015)1,414), ($424)4,356) and ($2,599)4,013),respectively.

See accompanying notes.
4

GAMCO INVESTORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
UNAUDITED
(Dollars in thousands, except per share data)

 June 30,  December 31,  June 30,  September 30,  December 31,  September 30, 
 2015  2014  2014  2015  2014  2014 
ASSETS            
Cash and cash equivalents $372,284  $298,224  $307,490  $425,616  $298,224  $358,421 
Investments in securities  144,008   259,537   225,596   126,917   259,537   254,630 
Investments in sponsored registered investment companies  126,305   39,537   40,791   115,046   39,537   39,520 
Investments in partnerships  108,950   107,637   107,896   101,025   107,637   107,434 
Receivable from brokers  56,579   76,079   58,945   52,918   76,079   79,885 
Investment advisory fees receivable  32,766   41,872   32,228   28,629   41,872   31,155 
Income tax receivable  2,303   2,477   1,077   2,409   2,477   2,433 
Other assets  22,791   41,067   30,779   20,109   41,067   25,282 
Total assets $865,986  $866,430  $804,802  $872,669  $866,430  $898,760 
                        
LIABILITIES AND EQUITY                        
Payable to brokers $48,858  $43,409  $19,859  $49,074  $43,409  $46,790 
Income taxes payable and deferred tax liabilities  21,266   27,939   31,029   10,529   27,939   27,412 
Capital lease obligation  5,213   5,253   5,290   5,191   5,253   5,272 
Compensation payable  68,889   39,983   68,908   88,747   39,983   93,535 
Securities sold, not yet purchased  9,825   10,595   14,329   5,577   10,595   14,180 
Mandatorily redeemable noncontrolling interests  1,281   1,302   1,339   1,257   1,302   1,304 
Accrued expenses and other liabilities  30,964   29,657   32,194   34,246   29,657   31,007 
Sub-total  186,296   158,138   172,948   194,621   158,138   219,500 
                        
5.875% Senior notes (due June 1, 2021)  100,000   100,000   100,000   100,000   100,000   100,000 
Zero coupon subordinated debentures, Face value: $6.9 million at June 30, 2015, $13.1            
million at December 31, 2014 and $13.2 million at June 30, 2014 (due December 31, 2015)  6,628   12,163   11,813 
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  292,924   270,301   284,761   301,371   270,301   331,441 
                        
Redeemable noncontrolling interests  5,943   68,334   22,806   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;                        
15,381,179, 15,341,433 and 15,108,373 issued, respectively; 6,506,477,            
6,616,212 and 6,572,864 outstanding, respectively  14   14   14 
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; 19,218,814, 19,239,260 and 19,325,820 shares            
24,000,000 shares issued; 19,196,792, 19,239,260 and 19,279,260 shares            
outstanding, respectively  19   19   19   19   19   19 
Additional paid-in capital  297,494   291,681   287,879   299,769   291,681   289,664 
Retained earnings  648,231   602,950   560,238   661,415   602,950   582,357 
Accumulated other comprehensive income  24,305   25,014   25,844   17,575   25,014   23,392 
Treasury stock, at cost (8,874,702, 8,725,221 and 8,535,509 shares, respectively)  (405,633)  (394,617)  (379,576)
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  564,430   525,061   494,418   562,645   525,061   508,494 
Noncontrolling interests  2,689   2,734   2,817   2,635   2,734   2,739 
Total equity  567,119   527,795   497,235   565,280   527,795   511,233 
                        
Total liabilities and equity $865,986  $866,430  $804,802  $872,669  $866,430  $898,760 

See accompanying notes.
5

GAMCO INVESTORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
UNAUDITED
(In thousands)

For the ThreeNine months ended JuneSeptember 30, 2015

   GAMCO Investors, Inc. stockholders      GAMCO Investors, Inc. stockholders   
         Accumulated                Accumulated       
     Additional    Other      Redeemable      Additional    Other      Redeemable 
 Noncontrolling  Common  Paid-in  Retained  Comprehensive  Treasury    Noncontrolling  Noncontrolling  Common  Paid-in  Retained  Comprehensive  Treasury    Noncontrolling 
 Interests  Stock  Capital  Earnings  Income  Stock  Total  Interests  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  $2,734  $33  $291,681  $602,950  $25,014  $(394,617) $527,795  $68,334 
Redemptions of                                
Redemptions of redeemable                                
noncontrolling interests  -   -   -   -   -   -   -   (441)  -   -   -   -   -   -   -   (602)
Contributions from                                
Contributions from redeemable                                
noncontrolling                                                                
interests  -   -   -   -   -   -   -   336   -   -   -   -   -   -   -   1,036 
Consolidation of a consolidated                                                                
feeder fund and a partnership  -   -   -   -   -   -   -   996   -   -   -   -   -   -   -   996 
Deconsolidation of offshore                                                                
fund  -   -   -   -   -   -   -   (63,256)  -   -   -   -   -   -   -   (63,256)
Net income (loss)  (45)  -   -   48,877   -   -   48,832   (26)  (99)  -   -   63,846   -   -   63,747   (490)
Net unrealized gains on                                
Net unrealized losses on                                
securities available for sale,                                                                
net of income tax benefit ($400)  -   -   -   -   (681)  -   (681)  - 
net of income tax benefit ($4,341)  -   -   -   -   (7,392)  -   (7,392)  - 
Amounts reclassified from                                                                
accumulated other                                                                
comprehensive income,                                                                
net of income tax benefit ($24)  -   -   -   -   (41)  -   (41)  - 
net of income tax benefit ($15)  -   -   -   -   (25)  -   (25)  - 
Foreign currency translation  -   -   -   -   13   -   13   -   -   -   -   -   (22)  -   (22)  - 
Dividends declared ($0.14 per                                
Dividends declared ($0.21 per                                
share)  -   -   -   (3,596)  -   -   (3,596)  -   -   -   -   (5,381)  -   -   (5,381)  - 
Stock based compensation                                                                
expense  -   -   4,544   -   -   -   4,544   -   -   -   6,819   -   -   -   6,819   - 
Exercise of stock options                                                                
including tax benefit ($102)  -   -   1,269   -   -   -   1,269   -   -   -   1,269   -   -   -   1,269   - 
Purchase of treasury stock  -   -   -   -   -   (11,016)  (11,016)  -   -   -   -   -   -   (21,530)  (21,530)  - 
Balance at June 30, 2015 $2,689  $33  $297,494  $648,231  $24,305  $(405,633) $567,119  $5,943 
Balance at September 30, 2015 $2,635  $33  $299,769  $661,415  $17,575  $(416,147) $565,280  $6,018 

See accompanying notes.
6
GAMCO INVESTORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
UNAUDITED
(In thousands)

For the ThreeNIne months ended JuneSeptember 30, 2014

   GAMCO Investors, Inc. stockholders      GAMCO Investors, Inc. stockholders   
         Accumulated                Accumulated       
     Additional    Other      Redeemable      Additional    Other      Redeemable 
 Noncontrolling  Common  Paid-in  Retained  Comprehensive  Treasury    Noncontrolling  Noncontrolling  Common  Paid-in  Retained  Comprehensive  Treasury    Noncontrolling 
 Interests  Stock  Capital  Earnings  Income  Stock  Total  Interests  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  $2,851  $33  $282,496  $506,441  $30,239  $(361,878) $460,182  $6,751 
Redemptions of noncontrolling                                
interests  -   -   -   -   -   -   -   (470)
Contributions from                                
Redemptions of redeemable                                
noncontrollin interests  -   -   -   -   -   -   -   (1,666)
Contributions from redeemable                                
noncontrolling                                                                
interests  -   -   -   -   -   -   -   16,096   -   -   -   -   -   -   -   53,607 
Net income (loss)  (34)  -   -   56,904   -   -   56,870   429   (112)  -   -   80,569   -   -   80,457   (2,606)
Net unrealized gains on                                
Net unrealized losses on                                
securities available for sale,                                                                
net of income tax benefit ($108)  -   -   -   -   (183)  -   (183)  - 
net of income tax ($1,393)  -   -   -   -   (2,371)  -   (2,371)  - 
Amount reclassed from                                                                
accumulated other                                                                
comprehensive income,                                                                
net of income tax benefit ($2,491)  -   -   -   -   (4,242)  -   (4,242)  - 
net of income tax benefit ($2,620)  -   -   -   -   (4,461)  -   (4,461)  - 
Foreign currency translation  -   -   -   -   30   -   30   -   -   -   -   -   (15)  -   (15)  - 
Dividends declared ($0.12 per                                
Dividends declared ($0.18 per                                
share)  -   -   -   (3,107)  -   -   (3,107)  -   -   -   -   (4,653)  -   -   (4,653)  - 
Stock based compensation                                                                
expense  -   -   3,397   -   -   -   3,397   -   -   -   5,182   -   -   -   5,182   - 
Exercise of stock options                                                                
including tax benefit ($349)  -   -   1,986   -   -   -   1,986   -   -   -   1,986   -   -   -   1,986   - 
Purchase of treasury stock  -   -   -   -   -   (17,698)  (17,698)  -   -   -   -   -   -   (25,074)  (25,074)  - 
Balance at June 30, 2014 $2,817  $33  $287,879  $560,238  $25,844  $(379,576) $497,235  $22,806 
Balance at September 30, 2014 $2,739  $33  $289,664  $582,357  $23,392  $(386,952) $511,233  $56,086 

See accompanying notes.
7

GAMCO INVESTORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
(In thousands)

 Six Months Ended  Nine Months Ended 
 June 30,  September 30, 
 2015  2014  2015  2014 
Operating activities        
Net income $48,806  $57,299  $63,257  $77,851 
Adjustments to reconcile net income to net cash provided by operating activities:                
Equity in net gains from partnerships  (3,666)  (2,884)  (681)  (572)
Depreciation and amortization  318   336   475   507 
Stock based compensation expense  4,544   3,397   6,819   5,182 
Deferred income taxes  (1,902)  (1,512)  (8,033)  (3,472)
Tax benefit from exercise of stock options  102   349   102   349 
Foreign currency translation gain/(loss)  13   30   (22)  (15)
Other-than-temporary loss on available for sale securities  -   69   150   69 
Cost basis of donated securities  64   1,480   104   1,502 
Gains on sales of available for sale securities  (30)  (3,163)  (30)  (3,511)
Accretion of zero coupon debentures  377   440   502   661 
Loss on extinguishment of debt  310   74   310   84 
(Increase) decrease in assets:                
Investments in trading securities  14,686   9,899   29,096   (22,376)
Investments in partnerships:                
Contributions to partnerships  (12,369)  (12,098)  (15,170)  (15,698)
Distributions from partnerships  15,060   3,077   22,800   4,828 
Receivable from brokers  (28,406)  (9,484)  (24,745)  (30,424)
Investment advisory fees receivable  8,909   19,278   13,046   20,351 
Income tax receivable and deferred tax assets  34   (632)  68   (1,988)
Other assets  17,899   (4,739)  20,402   563 
Increase (decrease) in liabilities:                
Payable to brokers  42,714   9,094   42,930   36,026 
Income taxes payable and deferred tax liabilities  (4,208)  (4,707)  (5,019)  (4,950)
Compensation payable  28,904   34,240   48,768   58,873 
Mandatorily redeemable noncontrolling interests  (20)  (16)  (45)  (51)
Accrued expenses and other liabilities  1,876   (405)  5,092   (1,639)
Total adjustments  85,209   42,123   136,919   44,299 
Net cash provided by operating activities $134,015  $99,422 ��$200,176  $122,150 

8

GAMCO INVESTORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED (continued)
(In thousands)

 Six Months Ended  Nine Months Ended 
 June 30,  September 30, 
 2015  2014  2015  2014 
Investing activities        
Purchases of available for sale securities $(41,603) $(5,354) $(43,030) $(6,252)
Proceeds from sales of available for sale securities  1,064   6,518   1,064   8,018 
Return of capital on available for sale securities  252   561   554   827 
Net cash provided by investing activities  (40,287)  1,725 
Net cash (used in) provided by investing activities  (41,412)  2,593 
                
Financing activities                
Contributions from redeemable noncontrolling interests  336   16,096   1,036   53,607 
Redemptions of redeemable noncontrolling interests  (441)  (470)  (602)  (1,666)
Redemptions of noncontrolling interests  -   - 
Proceeds from exercise of stock options  -   1,637   1,169   1,637 
Dividends paid  (3,510)  (3,050)  (5,252)  (4,567)
Repurchase of zero coupon subordinated debentures  (6,223)  (612)  (6,224)  (715)
Purchase of treasury stock  (11,016)  (17,698)  (21,530)  (25,074)
Net cash used in financing activities  (19,687)  (4,097)
Net cash (used in) provided by financing activities  (31,403)  23,222 
Effect of exchange rates on cash and cash equivalents  (4)  (11)  8   5 
Net increase in cash and cash equivalents  74,037   97,039   127,369   147,970 
Cash and cash equivalents at beginning of period  298,224   210,451   298,224   210,451 
Increase in cash from consolidation  10   -   10   - 
Increase in cash from deconsolidation  13   -   13   - 
Cash and cash equivalents at end of period $372,284  $307,490  $425,616  $358,421 
Supplemental disclosures of cash flow information:                
Cash paid for interest $3,575  $3,539  $3,897  $3,847 
Cash paid for taxes $34,836  $37,020  $49,590  $52,956 
                
Non-cash activity:                
- For the six months ended June 30, 2015 and June 30, 2014, the Company accrued dividends on restricted stock awards of $86 and $57, 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 nets assets and an increase of approximately $996 of redeemable noncontrolling interest.
 
- 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.
- 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.
9

GAMCO INVESTORS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JuneSeptember 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"GAMCO Investors, Inc.,” “GAMCO,” “the" "GAMCO," "the Company,” “GBL,” “we,” “us”" "GBL," "we," "us" and “our”"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”("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’syear'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”("FASB") issued Accounting Standards Update (“ASU”("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, 2016,2017, 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’sCompany'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.

10

In May 2015, the FASB issued new guidance amending the current disclosure requirementrequirements 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 position.condition.  This new guidance will be effective for the Company’sCompany's first quarter of 2016.  The Company is currently evaluating the potential impact on its condensed consolidated financial statements and related disclosures.

B.  Investment in Securities

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

 June 30, 2015  December 31, 2014  June 30, 2014  September 30, 2015  December 31, 2014  September 30, 2014 
 Cost  Fair Value  Cost  Fair Value  Cost  Fair Value  Cost  Fair Value  Cost  Fair Value  Cost  Fair Value 
 (In thousands)  (In thousands) 
Trading securities:                        
Government obligations $6,998  $7,000  $18,994  $18,996  $23,996  $23,998  $-  $-  $18,994  $18,996  $20,995  $20,999 
Common stocks  75,995   93,874   170,977   195,029   124,502   156,522   78,025   87,745   170,977   195,029   167,714   190,939 
Mutual funds  2,505   3,623   2,432   3,498   2,418   3,532   2,504   3,180   2,432   3,498   2,416   3,373 
Other investments  505   789   743   1,704   532   694   505   723   743   1,704   753   1,550 
Total trading securities  86,003   105,286   193,146   219,227   151,448   184,746   81,034   91,648   193,146   219,227   191,878   216,861 
                                                
Available for sale securities:                                                
Common stocks  13,578   37,429   13,637   38,942   15,009   39,334   13,561   34,095   13,637   38,942   14,228   36,380 
Mutual funds  627   1,293   681   1,368   700   1,516   627   1,174   681   1,368   681   1,389 
Total available for sale securities  14,205   38,722   14,318   40,310   15,709   40,850   14,188   35,269   14,318   40,310   14,909   37,769 
                                                
Total investments in securities $100,208  $144,008  $207,464  $259,537  $167,157  $225,596  $95,222  $126,917  $207,464  $259,537  $206,787  $254,630 

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

 June 30, 2015  December 31, 2014  June 30, 2014  September 30, 2015  December 31, 2014  September 30, 2014 
 Proceeds  Fair Value  Proceeds  Fair Value  Proceeds  Fair Value  Proceeds  Fair Value  Proceeds  Fair Value  Proceeds  Fair Value 
Trading securities: (In thousands)  (In thousands) 
Common stocks $9,705  $9,715  $9,835  $9,960  $11,662  $13,861  $6,123  $5,482  $9,835  $9,960  $11,699  $13,514 
Other investments  3   110   1   635   170   468   8   95   1   635   71   666 
Total securities sold, not yet purchased $9,708  $9,825  $9,836  $10,595  $11,832  $14,329  $6,131  $5,577  $9,836  $10,595  $11,770  $14,180 

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

 June 30, 2015  December 31, 2014  June 30, 2014  September 30, 2015  December 31, 2014  September 30, 2014 
 Cost  Fair Value  Cost  Fair Value  Cost  Fair Value  Cost  Fair Value  Cost  Fair Value  Cost  Fair Value 
 (In thousands)  (In thousands) 
Trading securities:                        
Mutual funds $42,416  $45,406  $1  $1  $19  $14  $40,097  $41,820  $1  $1  $1  $1 
Total trading securities  42,416   45,406   1   1   19   14   40,097   41,820   1   1   1   1 
                                                
Available for sale securities:                                                
Closed-end funds  62,780   77,616   21,962   36,323   21,531   37,138   63,068   70,349   21,962   36,323   21,819   36,142 
Mutual funds  1,887   3,283   1,898   3,213   1,931   3,639   1,883   2,877   1,898   3,213   1,922   3,377 
Total available for sale securities  64,667   80,899   23,860   39,536   23,462   40,777   64,951   73,226   23,860   39,536   23,741   39,519 
                                                
Total investments in sponsored                                                
registered investment companies $107,083  $126,305  $23,861  $39,537  $23,481  $40,791  $105,048  $115,046  $23,861  $39,537  $23,742  $39,520 
11

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”("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”("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 sixnine months ended JuneSeptember 30, 2015 and 2014 (in thousands):
 
AmountAmount Affected Line ItemsReason forAmount Affected Line ItemsReason for
ReclassifiedReclassified in the StatementsReclassificationReclassified in the StatementsReclassification
from AOCIfrom AOCI Of Incomefrom AOCIfrom AOCI Of Incomefrom AOCI
Three months ended June 30,    
Three months ended September 30,Three months ended September 30,    
20152015  2014    2015  2014    
$5  $1,551  Net gain/(loss) from investments Realized gain on sale of AFS securities$-  $348  Net gain/(loss) from investments Realized gain on sale of AFS securities
 35   498  Other operating expenses/net gain from investments Realized gain on donation of AFS securities 45   -  Other operating expenses/net gain from investments Realized gain on donation of AFS securities
 -   (69) Net gain/(loss) from investments OTT impairment of AFS securities (150)  -  Net gain/(loss) from investments OTT impairment of AFS securities
 40   1,980  Income before income taxes  (105)  348  Income before income taxes 
 (15)  (733) Income tax provision  39   (129) Income tax provision 
$25  $1,247  Net income $(66) $219  Net income 
                            
AmountAmount Affected Line ItemsReason forAmount Affected Line ItemsReason for
ReclassifiedReclassified in the StatementsReclassificationReclassified in the StatementsReclassification
from AOCIfrom AOCI Of Incomefrom AOCIfrom AOCI Of Incomefrom AOCI
Six months ended June 30,    
Nine months ended September 30,Nine months ended September 30,    
 2015   2014     2015   2014    
$30  $3,163  Net gain/(loss) from investments Realized gain on sale of AFS securities$30  $3,511  Net gain/(loss) from investments Realized gain on sale of AFS securities
 35   3,639  Other operating expenses/net gain from investments Realized gain on donation of AFS securities 80   3,639  Other operating expenses/net gain from investments Realized gain on donation of AFS securities
 -   (69) Net gain/(loss) from investments OTT impairment of AFS securities (150)  (69) Net gain/(loss) from investments OTT impairment of AFS securities
 65   6,733  Income before income taxes  (40)  7,081  Income before income taxes 
 (24)  (2,491) Income tax provision  15   (2,620) Income tax provision 
$41  $4,242  Net income $(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 JuneSeptember 30, 2015, December 31, 2014 and JuneSeptember 30, 2014, we held derivative contracts on 288,000170,000 equity shares, 3.8 million equity shares and 1.92.3 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 JuneSeptember 30, 2015, December 31, 2014 and JuneSeptember 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.
 
12
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    Asset Derivatives Fair Value   Liability Derivatives Fair Value 
Balance Sheet
Location
 June 30, 2015  December 31, 2014  June 30, 2014 
Balance Sheet
Location
 June 30, 2015  December 31, 2014  June 30, 2014 
Derivatives designated as hedging instruments under FASB ASC 815-20             
Balance Sheet LocationBalance 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 underDerivatives designated as hedging instruments under            
FASB ASC 815-20 FASB ASC 815-20                 
Foreign exchange contractsReceivable from brokers $-  $-  $- Payable to brokers $41,676  $-  $- Receivable from brokers $-  $-  $- Payable to brokers $36,354  $-  $- 
Sub total  $-  $-  $-   $41,676  $-  $-   $-  $-  $-   $36,354  $-  $- 
Derivatives Not Designated As Hedging Instruments Under Fasb Asc 815-20Derivatives Not Designated As Hedging Instruments Under Fasb Asc 815-20                         Derivatives Not Designated As Hedging Instruments Under Fasb Asc 815-20                      
Investments in             Securities sold,             
Equity contractsInvestments in securities $174  $896  $156 Securities sold, not yet purchased $110  $635  $456 securities $143  $896  $800  not yet purchased $95  $635  $666 
Foreign exchange contractsReceivable from brokers  -   -   - Payable to brokers  5,103   5,470   6,823 Receivable from brokers  -   -   - Payable to brokers  5,172   5,470   6,343 
Sub total  $174  $896  $156   $5,213  $6,105  $7,279   $143  $896  $800   $5,267  $6,105  $7,009 
Total derivatives  $174  $896  $156   $46,889  $6,105  $7,279   $143  $896  $800   $41,621  $6,105  $7,009 


Type of DerivativeIncome Statement LocationThree Months ended Six Months ended Income Statement LocationThree Months ended September 30, Nine Months ended September 30, 
 June 30, 2015 June 30, 2014 June 30, 2015 June 30, 2014   2015 2014 2015 2014 
Foreign exchange contractsNet gain/(loss) from investments $(697) $53  $(100) $59 Net gain/(loss) from investments $1,985  $482  $1,885  $541 
Equity contractsNet gain/(loss) from investments  41   120   172   (167)Net gain/(loss) from investments  27   758   199   591 
Total  $(656) $173  $72  $(108)  $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’sCompany'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        Gross Amounts Not Offset in the 
       Statements of Financial Condition        Statements of Financial Condition 
 Gross  Gross Amounts  Net Amounts of        Gross  Gross Amounts  Net Amounts of       
 Amounts of  Offset in the  Assets Presented        Amounts of  Offset in the  Assets Presented       
 Recognized  Statements of  in the Statements of  Financial  Cash Collateral    Recognized  Statements of  in the Statements of  Financial  Cash Collateral   
 Assets  Financial Condition  Financial Condition  Instruments  Received  Net Amount  Assets  Financial Condition  Financial Condition  Instruments  Received  Net Amount 
Swaps: (in thousands)  (in thousands) 
June 30, 2015 $174  $-  $174  $(107) $-  $67 
September 30, 2015 $143  $-  $143  $(89) $-  $54 
December 31, 2014  896   -   896   (634)  -   262   896   -   896   (634)  -   262 
June 30, 2014 $156  $-  $156  $(156) $-  $- 
September 30, 2014 $800  $-  $800  $(657) $-  $143 
                                                
             Gross Amounts Not Offset in the              Gross Amounts Not Offset in the 
             Statements of Financial Condition              Statements of Financial Condition 
 Gross  Gross Amounts  Net Amounts of              Gross  Gross Amounts  Net Amounts of             
 Amounts of  Offset in the  Liabilities Presented              Amounts of  Offset in the  Liabilities Presented             
 Recognized  Statements of  in the Statements of  Financial  Cash Collateral      Recognized  Statements of  in the Statements of  Financial  Cash Collateral     
 Liabilities  Financial Condition  Financial Condition  Instruments  Pledged  Net Amount  Liabilities  Financial Condition  Financial Condition  Instruments  Pledged  Net Amount 
Swaps: (in thousands)  (in thousands) 
June 30, 2015 $107  $-  $107  $(107) $-  $- 
September 30, 2015 $89  $-  $89  $(89) $-  $- 
December 31, 2014  634   -   634   (634)  -   -   634   -   634   (634)  -   - 
June 30, 2014 $205  $-  $205  $(156) $-  $49 
September 30, 2014 $657  $-  $657  $(657) $-  $- 
13

The following is a summary of the cost, gross unrealized gains, gross unrealized losses and fair value of available for sale investments as of JuneSeptember 30, 2015, December 31, 2014 and JuneSeptember 30, 2014:

 June 30, 2015  September 30, 2015 
   Gross  Gross      Gross  Gross   
   Unrealized  Unrealized      Unrealized  Unrealized   
 Cost  Gains  Losses  Fair Value  Cost  Gains  Losses  Fair Value 
 (In thousands)  (In thousands) 
Common stocks $13,578  $23,851  $-  $37,429  $13,561  $20,534  $-  $34,095 
Closed-end Funds  62,780   14,864   (28)  77,616   63,068   10,128   (2,847)  70,349 
Mutual funds  2,514   2,096   (34)  4,576   2,510   1,620   (79)  4,051 
Total available for sale securities $78,872  $40,811  $(62) $119,621  $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 

 June 30, 2014  September 30, 2014 
   Gross  Gross      Gross  Gross   
   Unrealized  Unrealized      Unrealized  Unrealized   
 Cost  Gains  Losses  Fair Value  Cost  Gains  Losses  Fair Value 
 (In thousands)  (In thousands) 
Common stocks $15,009  $24,325  $-  $39,334  $14,228  $22,152  $-  $36,380 
Closed-end Funds  21,531   15,607   -   37,138   21,819   14,325   (2)  36,142 
Mutual funds  2,631   2,524   -   5,155   2,603   2,163   -   4,766 
Total available for sale securities $39,171  $42,456  $-  $81,627  $38,650  $38,640  $(2) $77,288 

Unrealized changesChanges in fair value,net unrealized losses, net of taxes, for the three months ended JuneSeptember 30, 2015 and JuneSeptember 30, 2014 of ($0.3)6.7) million in losses and ($1.7)2.4) million in losses, respectively, have been included in other comprehensive income, a component of equity, at JuneSeptember 30, 2015 and JuneSeptember 30, 2014.  Return of capital on available for sale securities was $35,000$0.3 million and $0.2$0.3 million for the three months ended JuneSeptember 30, 2015 and JuneSeptember 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 $0.9 million and $2.6$1.5 million for the three months ended JuneSeptember 30, 2015 and June 30, 2014, respectively.2014.  For the three months ended June 30, 2015 and JuneSeptember 30, 2014, gross gains on the sale of investments available for sale amounted to $5,000 and $1.6$0.3 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 JuneSeptember 30, 2015 or JuneSeptember 30, 2014.  Unrealized changesChanges in fair value,net unrealized losses, net of taxes, for the sixnine months ended JuneSeptember 30, 2015 and JuneSeptember 30, 2014 of $(0.7)$(7.4) million in losses and $(4.4)$(6.8) million in losses, respectively, have been included in other comprehensive income, a component of equity, at JuneSeptember 30, 2015 and JuneSeptember 30, 2014.  Return of capital on available for sale securities was $0.3$0.6 million and $0.6$0.8 million for the sixnine months ended JuneSeptember 30, 2015 and JuneSeptember 30, 2014, respectively.  Proceeds from sales of investments available for sale were approximately $1.1 million and $6.5$8.0 million for the sixnine months ended JuneSeptember 30, 2015 and JuneSeptember 30, 2014, respectively.  For the sixnine months ended JuneSeptember 30, 2015 and JuneSeptember 30, 2014, gross gains on the sale of investments available for sale amounted to $30,000 and $3.2$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 sixnine months ended JuneSeptember 30, 2015 or JuneSeptember 30, 2014.  The basis on which the cost of a security sold is determined using specific identification.
14

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:

  June 30, 2015  December 31, 2014  June 30, 2014 
    Unrealized      Unrealized      Unrealized   
  Cost  Losses  Fair Value  Cost  Losses  Fair Value  Cost  Losses  Fair Value 
(in thousands)                  
Cosed-end funds $146  $(28) $118  $812  $(37) $775  $-  $-  $- 
Mutual Funds  303   (34)  269   303   (28)  275   -   -   - 
Total $449  $(62) $387  $1,115  $(65) $1,050  $-  $-  $- 
14
  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 JuneSeptember 30, 2015, there were threefour 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 JuneSeptember 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 month,holding was impaired for three months, one holding was impaired for seven months and one holding was impaired for eight months and one holding was impaired for ten months at JuneSeptember 30, 2015.  The value of these holdings at JuneSeptember 30, 2015 was $0.4$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 JuneSeptember 30, 2014, there were no holdingswas one holding in a loss positionsposition which werewas not deemed to be other-than-temporarily impaired.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 or six months ended JuneSeptember 30, 2015.2014.  For the three and sixnine months ended JuneSeptember 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.

15
C. Fair Value

The following tables present information about the Company’sCompany's assets and liabilities by major categories measured at fair value on a recurring basis as of JuneSeptember 30, 2015, December 31, 2014 and JuneSeptember 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 JuneSeptember 30, 2015 (in thousands)

 Quoted Prices in Active  Significant Other  Significant  Balance as of  Quoted Prices in Active  Significant Other  Significant  Balance as of 
 Markets for Identical  Observable  Unobservable  June 30,  Markets for Identical  Observable  Unobservable  September 30, 
Assets Assets (Level 1)  Inputs (Level 2)  Inputs (Level 3)  2015  Assets (Level 1)  Inputs (Level 2)  Inputs (Level 3)  2015 
Cash equivalents $372,079  $-  $-  $372,079  $425,392  $-  $-  $425,392 
Investments in partnerships  -   21,526   -   21,526   -   14,319   -   14,319 
Investments in securities:                                
AFS - Common stocks  37,429   -   -   37,429   34,095   -   -   34,095 
AFS - Mutual funds  1,293   -   -   1,293   1,174   -   -   1,174 
Trading - Gov't obligations  7,000   -   -   7,000 
Trading - Common stocks  92,954   -   920   93,874   86,970   -   775   87,745 
Trading - Mutual funds  3,623   -   -   3,623   3,180   -   -   3,180 
Trading - Other  318   173   298   789   263   143   317   723 
Total investments in securities  142,617   173   1,218   144,008   125,682   143   1,092   126,917 
Investments in sponsored registered investment companies:Investments in sponsored registered investment companies:             Investments in sponsored registered investment companies:             
AFS - Closed-end Funds  77,616   -   -   77,616   70,349   -   -   70,349 
AFS - Mutual Funds  3,283   -   -   3,283   2,877   -   -   2,877 
Trading - Mutual funds  45,406   -   -   45,406   41,820   -   -   41,820 
Total investments in sponsored                                
registered investment companies  126,305   -   -   126,305   115,046   -   -   115,046 
Total investments  268,922   21,699   1,218   291,839   240,728   14,462   1,092   256,282 
Total assets at fair value $641,001  $21,699  $1,218  $663,918  $666,120  $14,462  $1,092  $681,674 
Liabilities                                
Trading - Common stocks $9,715  $-  $-  $9,715  $5,482  $-  $-  $5,482 
Trading - Other  -   110   -   110   -   95   -   95 
Securities sold, not yet purchased $9,715  $110  $-  $9,825  $5,482  $95  $-  $5,577 

1516
Assets and Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2014 (in thousands)

  Quoted Prices in Active  Significant Other  Significant  Balance as of 
  Markets for Identical  Observable  Unobservable  December 31, 
Assets Assets (Level 1)  Inputs (Level 2)  Inputs (Level 3)  2014 
Cash equivalents $297,971  $-  $-  $297,971 
Investments in partnerships  -   23,803   -   23,803 
Investments in securities:                
AFS - Common stocks  38,942   -   -   38,942 
AFS - Mutual funds  1,368   -   -   1,368 
Trading - Gov't obligations  18,996   -   -   18,996 
Trading - Common stocks  193,735   1   1,293   195,029 
Trading - Mutual funds  3,498   -   -   3,498 
Trading - Other  513   897   294   1,704 
Total investments in securities  257,052   898   1,587   259,537 
Investments in sponsored registered investment companies:             
AFS - Closed-end Funds  36,323   -   -   36,323 
AFS - Mutual Funds  3,213   -   -   3,213 
Trading - Mutual funds  1   -   -   1 
Total investments in sponsored                
registered investment companies  39,537   -   -   39,537 
Total investments  296,589   24,701   1,587   322,877 
Total assets at fair value $594,560  $24,701  $1,587  $620,848 
Liabilities                
Trading - Common stocks $9,960  $-  $-  $9,960 
Trading - Other  -   635   -   635 
Securities sold, not yet purchased $9,960  $635  $-  $10,595 

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

 Quoted Prices in Active  Significant Other  Significant  Balance as of  Quoted Prices in Active  Significant Other  Significant  Balance as of 
 Markets for Identical  Observable  Unobservable  June 30,  Markets for Identical  Observable  Unobservable  September 30, 
Assets Assets (Level 1)  Inputs (Level 2)  Inputs (Level 3)  2014  Assets (Level 1)  Inputs (Level 2)  Inputs (Level 3)  2014 
Cash equivalents $307,154  $-  $-  $307,154  $358,210  $-  $-  $358,210 
Investments in partnerships  -   24,855   -   24,855   -   24,094   -   24,094 
Investments in securities:                                
AFS - Common stocks  39,334   -   -   39,334   36,380   -   -   36,380 
AFS - Mutual funds  1,516   -   -   1,516   1,389   -   -   1,389 
Trading - Gov't obligations  23,998   -   -   23,998   20,999   -   -   20,999 
Trading - Common stocks  155,805   1   716   156,522   190,215   -   724   190,939 
Trading - Mutual funds  3,532   -   -   3,532   3,373   -   -   3,373 
Trading - Other  243   157   294   694   453   803   294   1,550 
Total investments in securities  224,428   158   1,010   225,596   252,809   803   1,018   254,630 
Investments in sponsored registered investment companies:Investments in sponsored registered investment companies:             Investments in sponsored registered investment companies:             
AFS - Closed-end Funds  37,138   -   -   37,138   36,142   -   -   36,142 
AFS - Mutual Funds  3,639   -   -   3,639   3,377   -   -   3,377 
Trading - Mutual funds  14   -   -   14   1   -   -   1 
Total investments in sponsored                                
registered investment companies  40,791   -   -   40,791   39,520   -   -   39,520 
Total investments  265,219   25,013   1,010   291,242   292,329   24,897   1,018   318,244 
Total assets at fair value $572,373  $25,013  $1,010  $598,396  $650,539  $24,897  $1,018  $676,454 
Liabilities                                
Trading - Common stocks $13,861  $-  $-  $13,861  $13,514  $-  $-  $13,514 
Trading - Other  -   468   -   468   -   666   -   666 
Securities sold, not yet purchased $13,861  $468  $-  $14,329  $13,514  $666  $-  $14,180 
1617

The following tables present additional information about assets by major categories measured at fair value on a recurring basis and for which the Company has utilized Level 3 inputs to determine fair value.

Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for the Three Months Ended JuneSeptember 30, 2015 (in thousands)

     Total                Total           
     Unrealized                Unrealized           
     Gains or  Total              Gains or  Total         
   Total Realized and  (Losses)  Realized            Total Realized and  (Losses)  Realized         
 March 31,  Unrealized Gains or  Included in  and      Transfers    June  Unrealized Gains or  Included in  and      Transfers   
 2015  (Losses) in Income  Other  Unrealized      In and/or    30, 2015  (Losses) in Income  Other  Unrealized      In and/or   
 Beginning    AFS  Comprehensive  Gains or      (Out) of  Ending  Beginning    AFS  Comprehensive  Gains or      (Out) of  Ending 
Asset Balance  Trading  Investments  Income  (Losses)  Purchases  Sales  Level 3  Balance  Balance  Trading  Investments  Income  (Losses)  Purchases  Sales  Level 3  Balance 
Financial                                    
instruments owned:                  instruments owned:                 
                  
Trading - Common stocks $939  $(22) $-  $-  $(22) $3  $-  $-  $920 
Trading - CommonTrading - Common                
stocks $920  $(145) $-  $-  $(145) $-  $-  $-  $775 
Trading - Other  279   21   -   -   21   -   (2)  -   298   298   19   -   -   19   -   -   -   317 
Total $1,218  $(1) $-  $-  $(1)  3  $(2) $-  $1,218  $1,218  $(126) $-  $-  $(126)  -  $-  $-  $1,092 

There were no transfers between any Levels during the three months ended JuneSeptember 30, 2015.

Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for the Three Months Ended JuneSeptember 30, 2014 (in thousands)

     Total                Total           
     Unrealized                Unrealized           
     Gains or  Total              Gains or  Total         
   Total Realized and  (Losses)  Realized            Total Realized and  (Losses)  Realized         
 March 31,  Unrealized Gains or  Included in  and      Transfers    June  Unrealized Gains or  Included in  and      Transfers   
 2014  (Losses) in Income  Other  Unrealized      In and/or    30, 2014  (Losses) in Income  Other  Unrealized      In and/or   
 Beginning    AFS  Comprehensive  Gains or      (Out) of  Ending  Beginning    AFS  Comprehensive  Gains or      (Out) of  Ending 
Asset Balance  Trading  Investments  Income  (Losses)  Purchases  Sales  Level 3  Balance  Balance  Trading  Investments  Income  (Losses)  Purchases  Sales  Level 3  Balance 
Financial                                    
instruments owned:                  instruments owned:                 
Trading - Common stocks $700  $16  $-  $-  $16  $-  $-  $-  $716 
Trading - Common Trading - Common                          
stocks $716  $8  $-  $-  $8  $-  $-  $-  $724 
Trading - Other  284   -   -   -   -   10   -   -   294   294   -   -   -   -   -   -   -   294 
Total $984  $16  $-  $-  $16  $10  $-  $-  $1,010  $1,010  $8  $-  $-  $8  $-  $-  $-  $1,018 

There were no transfers between any Levels during the three months ended JuneSeptember 30, 2014.


Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for the SixNine Months Ended JuneSeptember 30, 2015 (in thousands)

     Total                Total           
     Unrealized                Unrealized           
     Gains or  Total              Gains or  Total         
   Total Realized and  (Losses)  Realized            Total Realized and  (Losses)  Realized         
 December 31,  Unrealized Gains or  Included in  and      Transfers    December  Unrealized Gains or  Included in  and      Transfers   
  2014  (Losses) in Income  Other  Unrealized      In and/or    31, 2014  (Losses) in Income  Other  Unrealized      In and/or   
 Beginning    AFS  Comprehensive  Gains or      (Out) of  Ending  Beginning    AFS  Comprehensive  Gains or      (Out) of  Ending 
Asset Balance  Trading  Investments  Income  (Losses)  Purchases  Sales  Level 3  Balance  Balance  Trading  Investments  Income  (Losses)  Purchases  Sales  Level 3  Balance 
Financial                                        
instruments owned:                    instruments owned:                 
                    
Trading - Common stocks $1,293  $(21) $-  $-  $(21) $6  $(358) $-  $920 
Trading - CommonTrading - Common                 
stocks $1,293  $(166) $-  $-  $(166) $6  $(358) $-  $775 
Trading - Other  294   83   -   -   83   5   (84)  -   298   294   102   -   -   102   5   (84)  -   317 
Total $1,587  $62  $-  $-  $62   11  $(442) $-  $1,218  $1,587  $(64) $-  $-  $(64)  11  $(442) $-  $1,092 
1718

There were securities with a value of $0.4 million that were transferred out of Level 3 as a result of the deconsolidation of an offshore fund during the first quarter of 2015 which are reflected in sales above.  There were no transfers between Levels 1 or 2 during the sixnine months ended JuneSeptember 30, 2015.

Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for the SixNine Months Ended JuneSeptember 30, 2014 (in thousands)

     Total                Total           
     Unrealized                Unrealized           
     Gains or  Total              Gains or  Total         
   Total Realized and  (Losses)  Realized            Total Realized and  (Losses)  Realized         
 December 31,  Unrealized Gains or  Included in  and      Transfers    December  Unrealized Gains or  Included in  and      Transfers   
 2013  (Losses) in Income  Other  Unrealized      In and/or    31, 2013  (Losses) in Income  Other  Unrealized      In and/or   
 Beginning    AFS  Comprehensive  Gains or      (Out) of  Ending  Beginning    AFS  Comprehensive  Gains or      (Out) of  Ending 
Asset Balance  Trading  Investments  Income  (Losses)  Purchases  Sales  Level 3  Balance  Balance  Trading  Investments  Income  (Losses)  Purchases  Sales  Level 3  Balance 
Financial                                        
instruments owned:                    instruments owned:                 
Trading - Common stocks $700  $16  $-  $-  $16  $-  $-  $-  $716 
Trading - CommonTrading - Common                         
stocks $700  $24  $-  $-  $24  $-  $-  $-  $724 
Trading - Other  284   -   -   -   -   10   -   -   294   284   -   -   -   -   10   -   -   294 
Total $984  $16  $-  $-  $16  $10  $-  $-  $1,010  $984  $24  $-  $-  $24  $10  $-  $-  $1,018 

There were no transfers between any Levels during the sixnine months ended JuneSeptember 30, 2014.

D. Investments in Partnerships, Offshore Funds and Variable Interest Entities (“VIEs”("VIEs")
 
The Company is general partner or co-general partner of various affiliated entities in which the Company has investments totaling $95.4$87.2 million, $94.2 million and $93.0$93.2 million at JuneSeptember 30, 2015, December 31, 2014 and JuneSeptember 30, 2014, respectively, and whose underlying assets consist primarily of marketable securities (the “affiliated entities”"affiliated entities"). We also have investments in unaffiliated entities of $13.6$13.8 million, $13.4 million and $14.9$14.2 million at JuneSeptember 30, 2015, December 31, 2014 and JuneSeptember 30, 2014, respectively (the “unaffiliated entities”"unaffiliated entities").  On a quarterly basis, we evaluate each entity for the appropriate accounting treatment and disclosure.  Certain of the affiliated entities, and none of the unaffiliated entities, are consolidated.

For those entities where consolidation is not deemed to be appropriate, we report them in our condensed consolidated statement of financial condition under the caption “Investments"Investments in partnerships”partnerships".  This caption includes those investments, in both affiliated and unaffiliated entities, which the Company accounts for under the equity method of accounting, as well as certain investments that the feeder funds hold that are carried at fair value, as described in Note C.  The Company reflects the equity in earnings of these equity method investees and the change in fair value of the consolidated feeder funds (“CFFs”("CFFs") under the caption Net gain/(loss) from investments on the condensed consolidated statements of income.

The following table highlights the number of entities, including voting interest entities (“VOEs”("VOEs"), that we consolidate as well as under which accounting guidance they are consolidated, including CFFs, which retain their specialized investment company accounting in consolidation, partnerships and offshore funds.

Entities consolidated                       
 CFFs Partnerships Offshore Funds Total CFFs Partnerships Offshore Funds Total
 VIEsVOEs VIEsVOEs VIEsVOEs VIEsVOEs VIEsVOEs VIEsVOEs VIEsVOEs VIEsVOEs
Entities consolidated at December 31, 2013 12 -1 -1 14 12 -1 -1 14
Additional consolidated entities -- -- - -- -- -- -- --
Deconsolidated entities -- -- - -- -- -- -- --
Entities consolidated at June 30, 2014 12 -1 -1 14
Entities consolidated at September 30, 2014 12 -1 -1 14
Additional consolidated entities -- -- - -- -- -- -- --
Deconsolidated entities -- -- - -- -- -- -- --
Entities consolidated at December 31, 2014 12 -1 -1 14 12 -1 -1 14
Additional consolidated entities -1 -1 1- 12 -1 -1 1- 12
Deconsolidated entities -(1) -- -(1) -(2) -(1) -- -(1) -(2)
Entities consolidated at June 30, 2015 12 -2 1- 24
Entities consolidated at September 30, 2015 12 -2 1- 24
1819

At and for the sixnine months ended JuneSeptember 30, 2015, the one CFF VIE is consolidated, as the Company has been determined to be the primary beneficiary because it has an equity interest and absorbs the majority of the expected losses and/or expected gains.  At and for the sixnine months ended JuneSeptember 30, 2015, the one CFF VOE and one Partnership VOE are consolidated because the unaffiliated partners or shareholders lack substantive kick-out rights, and the Company, as either the general partner or investment manager, is deemed to have control.  During the three months ended June 30, 2015, it was determined that an additional Partnership VOE should be consolidated when the Partnership was created on April 1, 2015 without unaffiliated capital and an Offshore Fund VIE should be consolidated as the last unaffiliated investor withdrew during the second quarter.  Additionally, during the three months ended March 31, 2015, an Offshore Fund VOE was deconsolidated as the Company’sCompany's ownership percentage fell below 50%, a CFF VOE was deconsolidated when it was closed and a different CFF VOE was consolidated as the last unaffiliated investor withdrew on March 31, 2015.

At and for the sixnine months ended JuneSeptember 30, 2014 and at December 31, 2014, one CFF VIE is consolidated, as the Company has been determined to be the primary beneficiary because it has an equity interest and absorbs the majority of the expected losses and/or expected gains.  At and for the sixnine months ended JuneSeptember 30, 2014 and at December 31, 2014, two CFF VOEs, one Partnership VOE and one Offshore Fund VOE are consolidated because the unaffiliated partners or shareholders lack substantive rights, and the Company, as either the general partner or investment manager, is deemed to have control.

The following table breaks down the investments in partnerships line by accounting method, either fair value or equity method, and investment type (in thousands):

 June 30, 2015  September 30, 2015
 Investment Type  Investment Type
 Affiliated  Unaffiliated    Affiliated Unaffiliated  
 Consolidated            Consolidated          
Accounting method Feeder Funds  Partnerships  Offshore Funds  Partnerships  Offshore Funds  Total   Feeder Funds Partnerships Offshore Funds Partnerships Offshore Funds Total
                        
Fair Value $21,526  $-  $-  $-  $-  $21,526  $               14,317 $               - $               - $               - $               - $               14,317
Equity Method  -   38,515   35,311   6,349   7,249   87,424  - 38,318 34,552 6,286 7,552 86,708
                                    
Total $21,526  $38,515  $35,311  $6,349  $7,249  $108,950  $               14,317 $               38,318 $               34,552 $               6,286 $               7,552 $              101,025

 December 31, 2014  December 31, 2014
 Investment Type  Investment Type
 Affiliated  Unaffiliated    Affiliated Unaffiliated  
 Consolidated            Consolidated          
Accounting method Feeder Funds  Partnerships  Offshore Funds  Partnerships  Offshore Funds  Total   Feeder Funds Partnerships Offshore Funds Partnerships Offshore Funds Total
                        
Fair Value $23,803  $-  $-  $-  $-  $23,803  $               23,803 $               - $               - $               - $               - $               23,803
Equity Method  -   34,385   36,033   6,552   6,864   83,834  - 34,385 36,033 6,552 6,864 83,834
                                    
Total $23,803  $34,385  $36,033  $6,552  $6,864  $107,637  $               23,803 $               34,385 $               36,033 $               6,552 $               6,864 $               107,637

 June 30, 2014  September 30, 2014
 Investment Type  Investment Type
 Affiliated  Unaffiliated    Affiliated Unaffiliated  
 Consolidated            Consolidated          
Accounting method Feeder Funds  Partnerships  Offshore Funds  Partnerships  Offshore Funds  Total   Feeder Funds Partnerships Offshore Funds Partnerships Offshore Funds Total
                        
Fair Value $24,856  $-  $-  $-  $-  $24,856  $               24,094 $               - $               - $               - $               - $               24,094
Equity Method  -   32,830   35,268   6,699   8,243   83,040  - 34,967 34,185 6,611 7,577 83,340
                                    
Total $24,856  $32,830  $35,268  $6,699  $8,243  $107,896  $               24,094 $               34,967 $               34,185 $               6,611 $               7,577 $               107,434
1920

The following table includes the net impact by line item on the condensed consolidated statements of financial condition for each category of entity consolidated (in thousands):

 June 30, 2015  September 30, 2015
 Prior to      Offshore    Prior to     Offshore  
 Consolidation  CFFs  Partnerships  Funds  As Reported  Consolidation CFFs Partnerships Funds As Reported
Assets                    
Cash and cash equivalents $372,204  $9  $66  $5  $372,284  $    425,549 $    2 $    52 $    13 $    425,616
Investments in securities  134,555   -   8,535   918   144,008  118,401 - 7,807 709 126,917
Investments in sponsored investment companies  126,305   -   -   -   126,305  115,046 - - - 115,046
Investments in partnerships  107,520   11,287   (9,391)  (466)  108,950  105,097 4,817 (8,504) (385) 101,025
Receivable from brokers  54,715   -   1,804   60   56,579  50,960 - 1,933 25 52,918
Investment advisory fees receivable  32,719   5   32   10   32,766  28,615 5 9 - 28,629
Other assets  31,066   (5,985)  8   5   25,094  22,363 16 137 2 22,518
Total assets $859,084  $5,316  $1,054  $532  $865,986  $    866,031 $    4,840 $    1,434 $    364 $    872,669
Liabilities and equity                              
Securities sold, not yet purchased $9,413  $-  $146  $266  $9,825  $    5,231 $    - $    140 $    206 $    5,577
Accrued expenses and other liabilities  175,924   53   326   168   176,471  188,770 38 155 81 189,044
Total debt  106,628   -   -   -   106,628  106,750 - - - 106,750
Redeemable noncontrolling interests  -   5,263   582   98   5,943  - 4,802 1,139 77 6,018
Total equity  567,119   -   -   -   567,119  565,280 - - - 565,280
Total liabilities and equity $859,084  $5,316  $1,054  $532  $865,986  $    866,031 $    4,840 $    1,434 $    364 $    872,669

 December 31, 2014  December 31, 2014
 Prior to      Offshore    Prior to     Offshore  
 Consolidation  CFFs  Partnerships  Funds  As Reported  Consolidation CFFs Partnerships Funds As Reported
Assets                    
Cash and cash equivalents $298,149  $(11) $86  $-  $298,224  $    298,149 $    (11) $    86 $    - $    298,224
Investments in securities  200,443   -   7,801   51,293   259,537  200,443 - 7,801 51,293 259,537
Investments in sponsored investment companies  39,537   -   -   -   39,537  39,537 - - - 39,537
Investments in partnerships  111,380   4,438   (8,181)  -   107,637  111,380 4,438 (8,181) - 107,637
Receivable from brokers  24,301   -   623   51,155   76,079  24,301 - 623 51,155 76,079
Investment advisory fees receivable  42,102   (6)  (2)  (222)  41,872  42,102 (6) (2) (222) 41,872
Other assets  43,393   -   -   151   43,544  43,393 - - 151 43,544
Total assets $759,305  $4,421  $327  $102,377  $866,430  $    759,305 $    4,421 $    327 $    102,377 $    866,430
Liabilities and equity                              
Securities sold, not yet purchased $9,991  $-  $-  $604  $10,595  $    9,991 $    - $    - $    604 $    10,595
Accrued expenses and other liabilities  109,356   22   24   38,141   147,543  109,356 22 24 38,141 147,543
Total debt  112,163   -   -   -   112,163  112,163 - - - 112,163
Redeemable noncontrolling interests  -   4,399   303   63,632   68,334  - 4,399 303 63,632 68,334
Total equity  527,795   -   -   -   527,795  527,795 - - - 527,795
Total liabilities and equity $759,305  $4,421  $327  $102,377  $866,430  $    759,305 $    4,421 $    327 $    102,377 $    866,430

 June 30, 2014  September 30, 2014
 Prior to      Offshore    Prior to     Offshore  
 Consolidation  CFFs  Partnerships  Funds  As Reported  Consolidation CFFs Partnerships Funds As Reported
Assets                    
Cash and cash equivalents $307,197  $6  $287  $-  $307,490  $    358,316 $    7 $    98 $    - $    358,421
Investments in securities  209,181   -   8,602   7,813   225,596  203,280 - 8,836 42,514 254,630
Investments in sponsored investment companies  40,777   -   14   -   40,791  39,520 - - - 39,520
Investments in partnerships  112,305   4,962   (9,371)  -   107,896  110,679 4,684 (7,929) - 107,434
Receivable from brokers  38,266   -   792   19,887   58,945  31,388 - 306 48,191 79,885
Investment advisory fees receivable  32,269   28   (2)  (67)  32,228  31,221 17 (1) (82) 31,155
Other assets  31,673   40   8   135   31,856  28,528 24 (1,000) 163 27,715
Total assets $771,668  $5,036  $330  $27,768  $804,802  $    802,932 $    4,732 $    310 $    90,786 $    898,760
Liabilities and equity                              
Securities sold, not yet purchased $13,995  $-  $-  $334  $14,329  $    13,549 $    - $    - $    631 $    14,180
Accrued expenses and other liabilities  148,625   84   21   9,889   158,619  166,209 71 31 39,009 205,320
Total debt  111,813   -   -   -   111,813  111,941 - - - 111,941
Redeemable noncontrolling interests  -   4,952   309   17,545   22,806  - 4,661 279 51,146 56,086
Total equity  497,235   -   -   -   497,235  511,233 - - - 511,233
Total liabilities and equity $771,668  $5,036  $330  $27,768  $804,802  $    802,932 $    4,732 $    310 $    90,786 
$  898,760
2021

The following table includes the net impact by line item on the condensed consolidated statements of income for each category of entity consolidated (in thousands):

 Three Months Ended June 30, 2015  Three Months Ended September 30, 2015
 Prior to      Offshore    Prior to     Offshore  
 Consolidation  CFFs  Partnerships  Funds  As Reported  Consolidation CFFs Partnerships Funds As Reported
Total revenues $102,715  $(10) $(1) $-  $102,704  $     96,558 $     (10) $     (2) $     - $     96,546
Total expenses  67,695   39   21   -   67,755  60,304 23 20 3 60,350
Operating income  35,020   (49)  (22)  -   34,949  36,254 (33) (22) (3) 36,196
Total other income/(expense), net  3,167   41   19   (6)  3,221  (12,093) (268) (120) (19) (12,500)
Income before income taxes  38,187   (8)  (3)  (6)  38,170  24,161 (301) (142) (22) 23,696
Income tax provision  14,123   -   -   -   14,123  9,245 - - - 9,245
Net income  24,064   (8)  (3)  (6)  24,047  14,916 (301) (142) (22) 14,451
Net loss attributable to noncontrolling interests  (37)  (8)  (3)  (6)  (54) (53) (301) (142) (22) (518)
Net income attributable to GAMCO $24,101  $-  $-  $-  $24,101  $     14,969 $     - $     - $     - $     14,969

 Three Months Ended June 30, 2014  Three Months Ended September 30, 2014
 Prior to      Offshore    Prior to     Offshore  
 Consolidation  CFFs  Partnerships  Funds  As Reported  Consolidation CFFs Partnerships Funds As Reported
Total revenues $108,513  $(7) $(1) $(209) $108,296  $     111,073 $     (7) $     - $     (208) $     110,858
Total expenses  70,515   (20)  14   250   70,759  66,980 20 12 260 67,272
Operating income  37,998   13   (15)  (459)  37,537  44,093 (27) (12) (468) 43,586
Total other income, net  8,093   130   33   665   8,921  (7,462) (186) (18) (2,323) (9,989)
Income before income taxes  46,091   143   18   206   46,458  36,631 (213) (30) (2,791) 33,597
Income tax provision  17,135   -   -   -   17,135  13,045 - - - 13,045
Net income  28,956   143   18   206   29,323  23,586 (213) (30) (2,791) 20,552
Net income attributable to noncontrolling interests  6   143   18   206   373  (79) (213) (30) (2,791) (3,113)
Net income attributable to GAMCO $28,950  $-  $-  $-  $28,950  $     23,665 $     - $     - $     - $     23,665


  Nine Months Ended September 30, 2015
  Prior to     Offshore  
  Consolidation CFFs Partnerships Funds As Reported
Total revenues $     303,139 $     (26) $     (4) $     (14) $     303,095
Total expenses 197,828 95 50 32 198,005
Operating income 105,311 (121) (54) (46) 105,090
Total other income/(expense), net (3,016) (177) (102) 9 (3,286)
Income before income taxes 102,295 (298) (156) (37) 101,804
Income tax provision 38,547 - - - 38,547
Net income 63,748 (298) (156) (37) 63,257
Net loss attributable to noncontrolling interests (98) (298) (156) (37) (589)
Net income attributable to GAMCO $     63,846 $     - $     - $     - $     63,846
 Six Months Ended June 30, 2015  Nine Months Ended September 30, 2014
 Prior to      Offshore    Prior to     Offshore  
 Consolidation  CFFs  Partnerships  Funds  As Reported  Consolidation CFFs Partnerships Funds As Reported
Total revenues $206,581  $(16) $(2) $(14) $206,549  $     324,287 $     (21) $     (2) $     (633) $     323,631
Total expenses  137,524   72   30   29   137,655  205,207 34 38 730 206,009
Operating income  69,057   (88)  (32)  (43)  68,894  119,080 (55) (40) (1,363) 117,622
Total other income/(expense), net  9,077   91   18   28   9,214 
Total other income, net 6,172 20 19 (1,186) 5,025
Income before income taxes  78,134   3   (14)  (15)  78,108  125,252 (35) (21) (2,549) 122,647
Income tax provision  29,302   -   -   -   29,302  44,796 - - - 44,796
Net income  48,832   3   (14)  (15)  48,806  80,456 (35) (21) (2,549) 77,851
Net loss attributable to noncontrolling interests  (45)  3   (14)  (15)  (71)
Net income/(loss) attributable to noncontrolling interests (113) (35) (21) (2,549) (2,718)
Net income attributable to GAMCO $48,877  $-  $-  $-  $48,877  $     80,569 $     - $     - $     - $     80,569

  Six Months Ended June 30, 2014 
  Prior to      Offshore   
  Consolidation  CFFs  Partnerships  Funds  As Reported 
Total revenues $213,214  $(14) $(2) $(425) $212,773 
Total expenses  138,227   14   26   470   138,737 
Operating income  74,987   (28)  (28)  (895)  74,036 
Total other income, net  13,634   206   37   1,137   15,014 
Income before income taxes  88,621   178   9   242   89,050 
Income tax provision  31,751   -   -   -   31,751 
Net income  56,870   178   9   242   57,299 
Net income/(loss) attributable to noncontrolling interests  (34)  178   9   242   395 
Net income attributable to GAMCO $56,904  $-  $-  $-  $56,904 

Variable Interest Entities

We sponsor a number of investment vehicles where we are the general partner or investment manager.  Certain of these vehicles are VIEs, but we are not the primary beneficiary, in all but two cases, because we do not absorb a majority of the entities’entities' expected losses and/or expected returns, and they are, therefore, not consolidated.  We consolidate the two VIEs where we are the primary beneficiary.  The Company has not provided any financial or other support to those VIEs where we are not the primary beneficiary.  The total net assets of these non-consolidated VIEs at JuneSeptember 30, 2015, December 31, 2014 and JuneSeptember 30, 2014 were $68.0$65.8 million, $71.6 million and $74.4$59.8 million, respectively.  On JuneSeptember 30, 2015, the maximum exposure to loss as a result of our involvement with the non-consolidated VIEs is limited to the investment in one VIE of $9.8$9.6 million and the deferred carried interest that we have in another of $41,000$38,000 which was included in investments in partnerships on the condensed consolidated statements of financial condition.  On December 31, 2014 and JuneSeptember 30, 2014, our maximum exposure to loss as a result of our involvement with the non-consolidated VIEs is limited to the investment in two VIEs of $10.6 million and $8.9$8.6 million, respectively, and the deferred carried interest that we have in another of $43,000 and $47,000,$44,000, respectively, which was included in investments in partnerships on the condensed consolidated statements of financial condition.   Additionally, as the general partner or investment manager to these VIEs the Company earns fees in relation to these roles, which given a decline in AUMs of the VIEs would result in lower fee revenues earned by the Company which would be reflected on the condensed consolidated statement of income, condensed consolidated statement of financial condition and condensed consolidated statement of cash flows.
2122

The assets of these VIEs may only be used to satisfy obligations of the VIEs.  The following table presents the balances related to the VIEs that are consolidated and are included on the condensed consolidated statements of financial condition as well as GAMCO’sGAMCO's net interest in the VIEs.  There are two VIEs consolidated at  JuneSeptember 30, 2015 and one VIE consolidated at December 31, 2014 and JuneSeptember 30, 2014:

 June 30, 2015  December 31, 2014  June 30, 2014  September 30, 2015 December 31, 2014 September 30, 2014
(In thousands)            
Cash and cash equivalents $5  $-  $-  $       13 $              - $              1
Investments in securities  918   -   -  709 - -
Investments in partnerships  11,665   13,434   14,125  5,116  13,434  13,618
Receivable from brokers  60   -   -  25 - -
Other assets  6   -   -  3 - -
Payable to brokers  (144)  -   -  (62) - -
Securities sold, not yet purchased  (266)  -   -  (206) - -
Accrued expenses and other liabilities  (6,027)  (12)  (18) (27) (12) (15)
Redeemable noncontrolling interests  (812)  (794)  (1,155) (615) (794) (962)
GAMCO's net interests in consolidated VIE $5,405  $12,628  $12,952  $     4,956 $     12,628 $     12,642

E. Income Taxes
 
The effective tax rate ("ETR) for the three months ended JuneSeptember 30, 2015 and JuneSeptember 30, 2014 was 37.0%39.0% and 36.9%38.8%, respectively.  The effective tax rate for the sixnine months ended JuneSeptember 30, 2015 was 37.5%37.9% compared to 35.7%36.5% for the prior year sixnine month period.  During the sixnine month period ended JuneSeptember 30, 2014 we benefitted from the donation of appreciated securities used to fund our shareholder designated charitable contribution program.

F. Earnings Per Share

The computations of basic and diluted net income per share are as follows:

 Three Months Ended June 30,  Six Months Ended June 30,  Three Months Ended September 30,  Nine Months Ended September 30, 
(in thousands, except per share amounts) 2015  2014  2015  2014  2015  2014  2015  2014 
Basic:                
Net income attributable to GAMCO Investors, Inc.'s shareholders $24,101  $28,950  $48,877  $56,904  $14,969  $23,665  $63,846  $80,569 
Weighted average shares outstanding  25,065   25,381   25,098   25,431   24,947   25,296   25,047   25,385 
Basic net income attributable to GAMCO Investors, Inc.'s                                
shareholders per share $0.96  $1.14  $1.95  $2.24  $0.60  $0.94  $2.55  $3.17 
                                
Diluted:                                
Net income attributable to GAMCO Investors, Inc.'s shareholders $24,101  $28,950  $48,877  $56,904  $14,969  $23,665  $63,846  $80,569 
                                
Weighted average share outstanding  25,065   25,381   25,098   25,431   24,947   25,296   25,047   25,385 
Dilutive stock options and restricted stock awards  293   205   288   204   294   221   290   210 
Total  25,358   25,586   25,386   25,635   25,241   25,517   25,337   25,595 
Diluted net income attributable to GAMCO Investors, Inc.'s                                
shareholders per share $0.95  $1.13  $1.93  $2.22  $0.59  $0.93  $2.52  $3.15 
2223

G. Debt

Debt consists of the following:

 June 30, 2015  December 31, 2014  June 30, 2014  September 30, 2015  December 31, 2014  September 30, 2014 
 Carrying  Fair Value  Carrying  Fair Value  Carrying  Fair Value  Carrying  Fair Value  Carrying  Fair Value  Carrying  Fair Value 
 Value  Level 2  Value  Level 2  Value  Level 2  Value  Level 2  Value  Level 2  Value  Level 2 
(In thousands)                        
5.875% Senior notes $100,000  $107,361  $100,000  $110,123  $100,000  $108,521  $100,000  $106,625  $100,000  $110,123  $100,000  $108,200 
0% Subordinated debentures  6,628   6,835   12,163   13,000   11,813   13,206   6,750   6,800   12,163   13,000   11,941   12,775 
Total $106,628  $114,196  $112,163  $123,123  $111,813  $121,727  $106,750  $113,425  $112,163  $123,123  $111,941  $120,975 

5.875% Senior notes

On May 31, 2011, the Company issued 10-year, $100 million senior notes.  The notes mature on June 1, 2021 and bear interest at 5.875% per annum, payable semi-annually on June 1 and December 1 of each year and commenced on December 1, 2011.  Upon the occurrence of a change of control triggering event, as defined in the indenture, the Company would be required to offer to repurchase the notes at 101% of their principal amount.

Zero coupon Subordinated debentures due December 31, 2015

On December 31, 2010, the Company issued $86.4 million in par value of five year zero coupon subordinated debentures due December 31, 2015 (“Debentures”("Debentures") to its shareholders of record on December 15, 2010 through the declaration of a special dividend of $3.20 per share.  The Debentures have a par value of $100 and are callable at the option of the Company, in whole or in part, at any time or from time to time, at a redemption price equal to 100% of the principal amount of the Debentures to be redeemed.  During the three month period ended JuneSeptember 30, 2015 and JuneSeptember 30, 2014 the Company repurchased 36,26916 Debentures and 5,7171,032 Debentures, respectively, having a face value of $3.6$1,600 and $0.1 million, and $572,000, respectively.  The redemptions were accounted for as extinguishments of debt and resulted in losses of $154,000less than $1,000 and $69,000,$10,000, respectively, which were included in net gain from investments on the condensed consolidated statements of income.  During the sixnine month periods ended JuneSeptember 30, 2015 and JuneSeptember 30, 2014, the Company repurchased 62,22662,242 Debentures and 6,1337,165 Debentures, respectively, having a face value of $6.2 million and $613,000,$0.7 million, respectively.  The redemptions were accounted for as extinguishments of debt and resulted in losses of $310,000 and $74,000,$84,000, respectively.  The debt is being accreted to its face value using the effective rate on the date of issuance of 7.45%.  At JuneSeptember 30, 2015, December 31, 2014 and JuneSeptember 30, 2014, the debt was recorded at its accreted value of $6.6$6.8 million, $12.2 million and $11.8$11.9 million, respectively.

The fair value of the Company’sCompany's debt, which is a Level 2 valuation, is estimated based on either quoted market prices for the same or similar issues or on the current rates offered to the Company for debt of the same remaining maturities or using market standard models.  Inputs in these standard models include credit rating, maturity and interest rate.

On May 4, 2015, the Securities and Exchange Commission (“SEC”("SEC") declared effective the “shelf”"shelf" registration statement filed by the Company.  The “shelf”"shelf" provides the Company with the flexibility of issuing any combination of senior and subordinated debt securities, convertible securities and common and preferred securities up to a total amount of $500 million and replaced the existing shelf registration which expired in May 2015.  As of JuneSeptember 30, 2015, $500 million is available on the shelf.

H. Stockholders’Stockholders' Equity
 
Shares outstanding were 25.725.5 million, 25.9 million and 25.9 million on JuneSeptember 30, 2015, December 31, 2014 and JuneSeptember 30, 2014, respectively.
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Dividends

 Payment
Record   
Payment DateRecord Date Amount  DateDateAmount
      
Three months ended March 31, 2015March 31, 2015March 17, 2015 $0.07 March 31, 2015March 17, 2015 $0.07 
Three months ended June 30, 2015June 30, 2015June 16, 2015  0.07 June 30, 2015June 16, 2015  0.07 
Six months ended June 30, 2015    $0.14 
Three months ended September 30, 2015September 29, 2015September 15, 2015  0.07 
Nine months ended September 30, 2015    $0.21 
          
Three months ended March 31, 2014March 25, 2014March 11, 2014 $0.06 March 25, 2014March 11, 2014 $0.06 
Three months ended June 30, 2014June 24, 2014June 10, 2014  0.06 June 24, 2014June 10, 2014  0.06 
Six months ended June 30, 2014    $0.12 
Three months ended September 30, 2014September 30, 2014September 16, 2014  0.06 
Nine months ended September 30, 2014    $0.18 

Voting Rights

The holders of Class A Common stock (“("Class A Stock”Stock") and Class B Common stock (“("Class B Stock”Stock") have identical rights except that (i) holders of Class A Stock are entitled to one vote per share, while holders of Class B Stock are entitled to ten votes per share on all matters to be voted on by shareholders in general, and (ii) holders of Class A Stock are not eligible to vote on matters relating exclusively to Class B Stock and vice versa.

Stock Award and Incentive Plan
 
The Company maintains two Plans approved by the shareholders, which are designed to provide incentives which will attract and retain individuals key to the success of GBL through direct or indirect ownership of our common stock.  Benefits under the Plans may be granted in any one or a combination of stock options, stock appreciation rights, restricted stock, restricted stock units, stock awards, dividend equivalents and other stock or cash based awards.  A maximum of 3.5 million shares of Class A Stock have been reserved for issuance under the Plans by a committee of the Board of Directors responsible for administering the Plans (“("Compensation Committee”Committee").  Under the Plans, the committee may grant RSAs and either incentive or nonqualified stock options with a term not to exceed ten years from the grant date and at an exercise price that the committee may determine.

On December 23, 2014, September 15, 2014 and January 9, 2014, the Company approved the granting of 73,000 RSA shares, 83,500 RSA shares and 2,100 RSA shares, respectively, at a grant date fair value of $87.99 per share, $73.41 per share and $81.99 per share, respectively.  As of JuneSeptember 30, 2015, December 31, 2014 and JuneSeptember 30, 2014, there were 704,050688,550 RSA shares, 710,750 RSA shares and 564,250639,750 RSA shares outstanding, respectively, that were previously issued at an average weighted grant price of $67.39,$67.34, $67.45 and $63.93,$65.12, respectively.  All grants of the RSA shares were recommended by the Company's Chairman, who did not receive a RSA, and approved by the Compensation Committee.  This expense, net of estimated forfeitures, is recognized over the vesting period for these awards which is either (1) 30% over three years from the date of grant and 70% over five years from the date of grant or (2) 30% over three years from the date of grant and 10% each year over years four through ten from the date of grant.  During the vesting period, dividends to RSA holders are held for them until the RSA vesting dates and are forfeited if the grantee is no longer employed by the Company on the vesting dates.  Dividends declared on these RSAs, less estimated forfeitures, are charged to retained earnings on the declaration date.
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For the three months ended JuneSeptember 30, 2015 and JuneSeptember 30, 2014, we recognized stock-based compensation expense of $2.3 million and $1.7$1.8 million, respectively.  For the sixnine months ended JuneSeptember 30, 2015 and JuneSeptember 30, 2014, we recognized stock-based compensation expense of $4.5$6.8 million and $3.4$5.2 million, respectively.  Actual and projected stock-based compensation expense for RSA shares and options for the years ended December 31, 2015 through December 31, 2024 (based on awards currently issued or granted) is as follows (in thousands):

  2014  2015  2016  2017  2018  2019   2014  2015  2016  2017  2018  2019 
Q1  $1,700  $2,277  $2,275  $1,485  $1,112  $612 Q1  $1,700  $2,277  $1,681  $1,143  $770  $612 
Q2   1,697   2,267   2,275   1,485   1,090   612 Q2   1,697   2,267   1,681   1,143   748   612 
Q3   1,785   2,275   1,920   1,355   1,011   547 Q3   1,785   2,275   1,327   1,013   669   547 
Q4   2,017   2,275   1,659   1,224   841   501 Q4   2,017   7,981   1,150   883   613   501 
Full YearFull Year  $7,199  $9,094  $8,129  $5,549  $4,054  $2,272 Full Year  $7,199  $14,800  $5,839  $4,182  $2,800  $2,272 
                                                    
    2020   2021   2022   2023   2024         2020   2021   2022   2023   2024     
Q1  $350  $227  $146  $76  $12     Q1  $350  $227  $146  $76  $12     
Q2   319   227   146   76   12     Q2   319   227   146   76   12     
Q3   264   179   104   38   9     Q3   264   179   104   38   9     
Q4   227   145   76   11   -     Q4   227   145   76   11   -     
Full YearFull Year  $1,160  $778  $472  $201  $33     Full Year  $1,160  $778  $472  $201  $33     
                                                    

The total compensation cost related to non-vested options not yet recognized is approximately $27.2$25.7 million as of JuneSeptember 30, 2015.  ForThere were no options exercised for the three months ended JuneSeptember 30, 2015 or September 30, 2014.  For the nine months ended September 30, 2015 and June 30, 2014, proceeds from the exercise of 26,000 stock options and 20,000 stock options, respectively, were $1.2 million and $0.8 million, respectively, resulting in a tax benefit to GAMCO of $102,000 and $175,000, respectively.  For the six months ended June 30, 2015 and JuneSeptember 30, 2014, proceeds from the exercise of 26,000 stock options and 40,000 stock options, respectively, were $1.2 million and $1.6 million, respectively, resulting in a tax benefit to GAMCO of $102,000$0.1 million and $349,000,$0.3 million, respectively.

Stock Repurchase Program
 
In March 1999, GAMCO's Board of Directors established the Stock Repurchase Program to grant management the authority to repurchase shares of our Class A Common Stock.  On February 5, 2013,August 4, 2015, our Board of Directors authorized an incremental 500,000 shares to be added to the current buyback authorization.  For the three months ended JuneSeptember 30, 2015 and JuneSeptember 30, 2014, the Company repurchased 108,088172,007 shares and 103,52894,942 shares, respectively, at an average price per share of $72.34$61.11 and $77.76,$77.67, respectively.  For the sixnine months ended JuneSeptember 30, 2015 and JuneSeptember 30, 2014, the Company repurchased 149,481321,488 shares and 224,720319,662 shares, respectively, at an average price per share of $73.68$66.96 and $78.75,$78.43, respectively.  From the inception of the program through JuneSeptember 30, 2015, 9,275,5069,447,513 shares have been repurchased at an average price of $44.40$44.70 per share.  At JuneSeptember 30, 2015, the total shares available under the program to be repurchased in the future were 359,302.687,295.

I. Goodwill and Identifiable Intangible Assets

At JuneSeptember 30, 2015, $3.5 million of goodwill is reflected within other assets on the condensed consolidated statements of financial condition with $3.3 million related to a 94%-owned subsidiary, Gabelli Securities, Inc. and $0.2 million related to G.distributors, LLC.  The Company assesses the recoverability of goodwill at least annually, or more often should events warrant, using a qualitative assessment of whether it is more likely than not that an impairment has occurred to determine if a quantitative analysis is required.  There were no indicators of impairment for the three months ended JuneSeptember 30, 2015 or JuneSeptember 30, 2014, and as such there was no impairment analysis performed or charge recorded.

As a result of becoming the advisor to the Gabelli Enterprise Mergers and Acquisitions Fund and the associated consideration paid, the Company maintains an identifiable intangible asset of $1.9 million within other assets on the condensed consolidated statements of financial condition at JuneSeptember 30, 2015, December 31, 2014 and JuneSeptember 30, 2014.  The investment advisory agreement is subject to annual renewal by the fund's Board of Directors, which the Company expects to be renewed, and the Company does not expect to incur additional expense as a result, which is consistent with other investment advisory agreements entered into by the Company.  The advisory contract is next up for renewal in February 2016.  The Company assesses the recoverability of this intangible asset at least annually, or more often should events warrant.  There were no indicators of impairment for the three months ended JuneSeptember 30, 2015 or JuneSeptember 30, 2014, and as such there was no impairment analysis performed or charge recorded.

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J. Commitments and Contingencies

From time to time, the Company may be named in legal actions and proceedings.  These actions may seek substantial or indeterminate compensatory as well as punitive damages or injunctive relief.  The Company is also subject to governmental or regulatory examinations or investigations.  The examinations or investigations could result in adverse judgments, settlements, fines, injunctions, restitutions or other relief.  For any such matters, the condensed consolidated financial statements include the necessary provisions for losses that the Company believes are probable and estimable.  Furthermore, the Company evaluates whether there exist losses which may be reasonably possible and will, if material, make the necessary disclosures.  However, management believes such amounts, both those that are probable and those that are reasonably possible, are not material to the Company’sCompany's financial condition, operations or cash flows at JuneSeptember 30, 2015.

The Company indemnifies the clearing brokers of G.research, Inc., our broker-dealer subsidiary, for losses they may sustain from the customer accounts that trade on margin introduced by it.  At JuneSeptember 30, 2015, the total amount of customer balances subject to indemnification (i.e. unsecured margin debits) was immaterial.  The Company also has entered into arrangements with various other third parties many of which provide for indemnification of the third parties against losses, costs, claims and liabilities arising from the performance of obligations under the agreements.  The Company has had no claims or payments pursuant to these or prior agreements and believes the likelihood of a claim being made is remote.  The Company’sCompany's estimate of the value of such agreements is de minimis, and therefore an accrual has not been made on the condensed consolidated financial statements.

K. Subsequent Events
 
From JulyOctober 1, 2015 to August 5,November 4, 2015, the Company repurchased 44,80091,740 shares at $68.23$57.53 per share.

On August 4,October 12, 2015, the Board of Directors increasedaccelerated the authorization underlapse of restrictions on the Stock Repurchase Program by an additional 500,000 shares.November 2013 grant of restricted stock awards ("RSAs") effective on October 19, 2015. There were 130,650 RSAs outstanding relating to this grant. As a result there are 814,502 shares available to be repurchased under this existing buyback plan at August 5, 2015.of the acceleration, GAMCO will incur a fourth quarter non-cash charge of $5.7 million or $0.13 per diluted share (after management fee and tax benefit).  557,900 RSAs will still remain outstanding after the acceleration of the November 2013 grant.

On AugustOctober 13, 2015 GAMCO announced that it had again adopted a Shareholder Designated Charitable Contribution program for all registered Class A and Class B shareholders. Based on the approximately 21 million shares currently registered in shareholders' names, the total contribution GAMCO is expected to make will be $5.3 million. If all shares outstanding are registered in their shareholders' name at the record date, the total contribution would increase to $6.4 million.
On November 2, 2015, GAMCO announced that its Board of Directors had approved the spin-off of Associated Capital Group, Inc. (“AC”), which will include GAMCO’s alternative investment management business, its institutional research services business and financial assets.  The distribution is expected to occur at 11:59 p.m. on November 30, 2015 with GAMCO shareholders receiving one share of Associated Capital Group class A common stock for each share of GAMCO class A common stock held on November 12, 2015, the record date, and one share of Associated Capital Group class B common stock for each share of GAMCO class B common stock held on the record date.

On November 4, 2015, the Board of Directors declared its regular quarterly dividend of $0.07 per share to all of its shareholders, payable on SeptemberDecember 29, 2015 to shareholders of record on SeptemberDecember 15, 2015.


GAMCO has received a commitment from a related party whereby it will provide to GAMCO a single purpose $100 million line of credit to be drawn upon only to prepay any or all of the outstanding 5.875% Senior Notes (due June 1, 2021).  This line of credit will be available for drawdown during a 90 day period to commence on a date to be determined.
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ITEM 2:  MANAGEMENT’SMANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (INCLUDING QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK)

Overview
 
GAMCO, through the Gabelli brand, well known for its Private Market Value (PMV) with a CatalystTM investment approach, is a widely-recognized provider of investment advisory services to open- and closed-end funds, institutional and private wealth management investors, and investment partnerships, principally in the United States.  Through G.research, Inc. (“G.research”LLC ("G.research"), we provide institutional research and brokerage services to institutional clients and investment partnerships.  Through G.distributors, LLC (“G.distributors”("G.distributors"), we provide mutual fund distribution.  We generally manage assets on a fully discretionary basis and invest in a variety of U.S. and international securities through various investment styles.  Our revenues are based primarily on the Company’sCompany's levels of assets under management and fees associated with our various investment products.
 
Our revenues are highly correlated to the level of assets under management and fees associated with our various investment products, rather than our own corporate assets.  Assets under management, which are directly influenced by the level and changes of the overall equity markets, can also fluctuate through acquisitions, the creation of new products, the addition of new accounts or the loss of existing accounts.  Since various equity products have different fees, changes in our business mix may also affect revenues.  At times, the performance of our equity products may differ markedly from popular market indices, and this can also impact our revenues.  General stock market trends will have the greatest impact on our level of assets under management and hence, on revenues.

We conduct our investment advisory business principally through the following subsidiaries: GAMCO Asset Management Inc. (Institutional and Private Wealth Management), Gabelli Funds, LLC (Funds) and Gabelli Securities, Inc. (Investment Partnerships).  We also act as an underwriter and provide institutional research through G.research, one of our broker-dealer subsidiaries.  The distribution of our open-end funds is conducted through G.distributors, our other broker-dealer subsidiary.
 
Assets under management (“AUM”("AUM") were $45.4$39.6 billion as of JuneSeptember 30, 2015, a decrease of 2.4%12.9% from AUM of $46.5$45.4 billion at March 31,June 30, 2015 and 8.0%15.7% from the JuneSeptember 30, 2014 AUM of $49.4$46.9 billion.  The secondthird quarter 2015 decrease in AUM of $1.1$5.8 billion which consisted of net cash outflows of $882 million,$1.9 billion, $3.8 billion of market depreciation and recurring distributions, net of reinvestments, from open-end and closed-end funds of $132 million  and $112 million of market depreciation.$0.1 million.  Average total AUM was $46.4$42.7 billion in the 2015 quarter versus $48.1$48.4 billion in the prior year period, a decrease of 3.5%11.8%.  Average AUM in our open-end equity funds, a key driver to our investment advisory fees, was $16.5$15.2 billion in the secondthird quarter of 2015, falling 7.3%16.0% from the 2014 quarter average AUM of $17.8$18.1 billion.

In addition to management fees, we earn incentive fees for certain institutional client assets, certain assets attributable to preferred issues of our closed-end funds, to our GDL Fund (NYSE: GDL) and investment partnership assets.  As of JuneSeptember 30, 2015, assets under management with incentive based fees were $4.9$3.9 billion, a decrease of $0.3$1.0 billion, or 5.8%20.4%, from the $5.2$4.9 billion at March 31,June 30, 2015 but 6.5% higherand 13.3% lower than the $4.6$4.5 billion on JuneSeptember 30, 2014. 

On May 12, 2015, a Form 10 was filed for the potential restructuring that will enable the Company to further increase its market focus.  While this may involve a split-upSubsequently, we filed subsequent amendments over the course of certain facetsseveral months with the most recent amendment having been filed on October 30, 2015.  On November 2, 2015, GAMCO announced that its Board of ourDirectors had approved the spin-off of Associated Capital Group, Inc. (“AC”), which will include GAMCO’s alternative investment management business, there are numerous regulatory relatedits institutional research services business and other issues that may preclude pursuitfinancial assets.  The distribution is expected to occur at 11:59 p.m. on November 30, 2015 with GAMCO shareholders receiving one share of any alternative.  Management does not plan to give periodic updatesAssociated Capital Group class A common stock for each share of GAMCO class A common stock held on November 12, 2015, the record date, and one share of Associated Capital Group class B common stock for each share of GAMCO class B common stock held on the Company’s progress.record date.
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The Company reported Assets Under Management as follows (in millions):The Company reported Assets Under Management as follows (in millions):       The Company reported Assets Under Management as follows (in millions):       
                    
Table I: Fund Flows - 2nd Quarter 2015         
Table I: Fund Flows - 3rd Quarter 2015Table I: Fund Flows - 3rd Quarter 2015         
       Fund          Fund   
   Market    distributions,      Market    distributions,   
 March 31,  appreciation/  Net cash  net of  June 30,  June 30,  appreciation/  Net cash  net of  September 30, 
 2015  (depreciation)  flows  reinvestments  2015  2015  (depreciation)  flows  reinvestments  2015 
Equities:                    
Open-end Funds $16,643  $(106) $(538) $(15) $15,984  $15,984  $(1,289) $(606) $(14) $14,075 
Closed-end Funds  7,071   29   (2)  (117)  6,981   6,981   (663)  (5)  (108)  6,205 
Institutional & PWM - direct  16,407   (15)  (381)  -   16,011   16,011   (1,497)  (1,324)  -   13,190 
Institutional & PWM - sub-advisory  3,814   (29)  (82)  -   3,703   3,703   (345)  (56)  -   3,302 
Investment Partnerships  928   8   1   -   937   937   (31)  41   -   947 
SICAV (a)  105   1   46   -   152   152   (5)  27   -   174 
Total Equities  44,968   (112)  (956)  (132)  43,768   43,768   (3,830)  (1,923)  (122)  37,893 
Fixed Income:                                        
Money-Market Fund  1,520   -   80   -   1,600   1,600   -   37   -   1,637 
Institutional & PWM  52   -   (6)  -   46   46   -   (1)  -   45 
Total Fixed Income  1,572   -   74   -   1,646   1,646   -   36   -   1,682 
Total Assets Under Management $46,540  $(112) $(882) $(132) $45,414  $45,414  $(3,830) $(1,887) $(122) $39,575 
                                        
(a)  Includes $40$45 million and $45$42 million of seed capital at March 31,June 30, 2015 and JuneSeptember 30, 2015, respectively.
 
The Company reported Assets Under Management as follows (in millions):
                    
Table II: Fund Flows - Year to date June 2015         
Table II: Fund Flows - Year to date September 2015Table II: Fund Flows - Year to date September 2015         
       Fund          Fund   
   Market    distributions,      Market    distributions,   
 December 31,  appreciation/  Net cash  net of  June 30,  December 31,  appreciation/  Net cash  net of  September 30, 
 2014  (depreciation)  flows  reinvestments  2015  2014  (depreciation)  flows  reinvestments  2015 
Equities:                    
Open-end Funds $17,684  $79  $(1,737) $(42) $15,984  $17,684  $(1,210) $(2,343) $(56) $14,075 
Closed-end Funds  6,949   122   143   (233)  6,981   6,949   (541)  138   (341)  6,205 
Institutional & PWM - direct  16,597   125   (711)  -   16,011   16,597   (1,372)  (2,035)  -   13,190 
Institutional & PWM - sub-advisory  3,704   143   (144)  -   3,703   3,704   (202)  (200)  -   3,302 
Investment Partnerships  905   27   5   -   937   905   (4)  46   -   947 
SICAV (a)  135   (4)  21   -   152   135   (8)  47   -   174 
Total Equities  45,974   492   (2,423)  (275)  43,768   45,974   (3,337)  (4,347)  (397)  37,893 
Fixed Income:                                        
Money-Market Fund  1,455   -   145   -   1,600   1,455   -   182   -   1,637 
Institutional & PWM  58   -   (12)  -   46   58   -   (13)  -   45 
Total Fixed Income  1,513   -   133   -   1,646   1,513   -   169   -   1,682 
Total Assets Under Management $47,487  $492  $(2,290) $(275) $45,414  $47,487  $(3,337)  $(4,178) $(397) $39,575 
                                        
(a)  Includes $71 million and $45$42 million of seed capital at December 31, 2014 and JuneSeptember 30, 2015, respectively.
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Table III: AUM Summary        % Change From        % Change From 
 June 30,  March 31,  June 30,  March 31,  June 30,  September 30,  June 30,  September 30,  June 30,  September 30, 
 2015  2015  2014  2015  2014  2015  2015  2014  2015  2014 
Equities:                    
Open-end Funds $15,984  $16,643  $18,508   (4.0%)  (13.6%) $14,075  $15,984  $17,458   (11.9%)  (19.4%)
Closed-end Funds  6,981   7,071   7,224   (1.3)  (3.4)  6,205   6,981   6,963   (11.1)  (10.9)
Institutional & PWM - direct  16,011   16,407   16,941   (2.4)  (5.5)  13,190   16,011   16,223   (17.6)  (18.7)
Institutional & PWM - sub-advisory  3,703   3,814   3,883   (2.9)  (4.6)  3,302   3,703   3,525   (10.8)  (6.3)
Investment Partnerships  937   928   897   1.0   4.5   947   937   899   1.1   5.3 
SICAV (a)  152   105   94   44.8   61.7   174   152   121   14.5   43.8 
Total Equities  43,768   44,968   47,547   (2.7)  (7.9)  37,893   43,768   45,189   (13.4)  (16.1)
Fixed Income:                                        
Money-Market Fund  1,600   1,520   1,766   5.3   (9.4)  1,637   1,600   1,698   2.3   (3.6)
Institutional & PWM  46   52   64   (11.5)  (28.1)  45   46   60   (2.2)  (25.0)
Total Fixed Income  1,646   1,572   1,830   4.7   (10.1)  1,682   1,646   1,758   2.2   (4.3)
Total Assets Under Management $45,414  $46,540  $49,377   (2.4)  (8.0) $39,575  $45,414  $46,947   (12.9)  (15.7)
                                        
(a)  Includes $42 million, $45 million $40 million and $77$70 million of seed capital at September 30, 2015, June 30, 2015 March 31, 2015 and JuneSeptember 30, 2014, respectively.

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The following discussion should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and the notes thereto included in Item 1 to this report.

RESULTS OF OPERATIONS
 
Three Months Ended JuneSeptember 30, 2015 Compared To Three Months Ended JuneSeptember 30, 2014
 
(Unaudited; in thousands, except per share data)    
 2015  2014  2015  2014 
Revenues        
Investment advisory and incentive fees $87,344  $90,156  $82,182  $92,591 
Distribution fees and other income  13,358   15,767   12,301   15,727 
Institutional research services  2,002   2,373   2,063   2,540 
Total revenues  102,704   108,296   96,546   110,858 
Expenses                
Compensation  43,402   44,045   39,731   43,316 
Management fee  4,241   5,144   2,682   3,756 
Distribution costs  13,120   15,023   12,344   15,101 
Other operating expenses  6,992   6,547   5,593   5,099 
Total expenses  67,755   70,759   60,350   67,272 
Operating income  34,949   37,537   36,196   43,586 
Other income        
Other income (expense)        
Net gain from trading securities  3,895   9,610   (11,467)  (9,086)
Interest and dividend income  1,289   1,332   884   1,084 
Interest expense  (1,963)  (2,021)  (1,917)  (1,987)
Total other income, net  3,221   8,921 
Total other income/(expense), net  (12,500)  (9,989)
Income before income taxes  38,170   46,458   23,696   33,597 
Income tax provision  14,123   17,135   9,245   13,045 
Net income  24,047   29,323   14,451   20,552 
Net income/(loss) attributable to noncontrolling interests  (54)  373   (518)  (3,113)
Net income attributable to GAMCO Investors, Inc.'s shareholders $24,101  $28,950  $14,969  $23,665 
                
Net income attributable to GAMCO Investors, Inc.'s shareholders per share:                
Basic $0.96  $1.14  $0.60  $0.94 
Diluted $0.95  $1.13  $0.59  $0.93 
                

Overview

Net income attributable to shareholders of GAMCO for the quarter was $24.1$15.0 million, or $0.95$0.59 per fully diluted share, versus $29.0$23.7 million, or $1.13$0.93 per fully diluted share, in the prior year’syear's quarter.  The quarter to quarter comparison was impacted by lower revenues, lower income from firm investments and increased stock compensation costs.

Revenues
 
Investment advisory and incentive fees for the secondthird quarter 2015 were $87.3$82.2 million, 3.2%11.2% lower than the 2014 comparative figure of $90.2$92.6 million.  Open-end fund revenues decreased by 7.9%16.7% to $39.7$36.8 million from $43.1$44.2 million in the secondthird quarter of 2014 driven by a 7.4%16.0% decrease in average open-end equity AUM.  Our closed-end fund revenues rose 3.3%decreased 8.9% to $15.5$14.3 million in the secondthird quarter 2015 from $15.0$15.7 million in 2014 due to a 2.5% increase7.6% decrease in non-performance fee based average AUM.  Institutional and private wealth management account revenues, excluding incentive fees, which are generally based on beginning of quarter AUM, decreased $0.1$2.0 million to $29.9$28.8 million from $30.0$30.8 million in secondthird quarter 2014.  There were no incentive fees earned during the third quarter 2015. Incentive fees decreased $0.3 million, on aearned during the third quarter to quarter basis, to $0.2 million in the 2015 quarter from $0.5 million in the prior year period.2014 were $0.1 million.  Investment partnership revenues were $2.0$2.3 million, an increase of 25.0%27.8% from $1.6$1.8 million in secondthird quarter 2014 due to an increase in average AUM resulting from a combination of market performance and net inflows.

Open-end fund distribution fees and other income were $13.4$12.3 million for the secondthird quarter 2015, a decrease of $2.4$3.4 million or 15.2%21.7% from $15.8$15.7 million in the prior year period, primarily due to lower average AUM in open-end equity funds that generate distribution fees and decreased level of sales of load shares of open-end funds.
 
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Our institutional research revenues were $2.0$2.1 million in the secondthird quarter 2015 compared to $2.4$2.5 million reported in the prior year period.

Expenses
 
Compensation costs, which are largely variable, were $43.4$39.7 million or 1.4%8.3% lower than prior year compensation costs of $44.0$43.3 million.  The quarter over quarter decrease was comprised of a $1.5$3.1 million decrease in variable compensation related to the decreased levels of AUM partially offset by a $0.6$0.5 million increase in stock compensation expense recognized for RSAs issued in 2014 and a $0.3$1.0 million increasedecrease in fixed compensation.compensation, primarily relating to reduced bonus accruals in the current quarter.

Management fee expense, which is wholly variable and based on pretax income, decreased to $4.2$2.7 million in the secondthird quarter of 2015 from $5.1$3.8 million in the 2014 period.
 
Distribution costs were $13.1$12.3 million, a decrease of $1.9$2.8 million or 12.7%18.5% from $15.0$15.1 million in the prior year’syear's period.  The decline in distribution costs was driven by lower AUM largely from the direct to intermediary channel, which resulted in reduced payments to third parties for distribution of $1.3$2.2 million and lower amortization of advanced commissions of $0.5 million.
 
Other operating expenses were $7.0$5.6 million in the secondthird quarter of 2015, an increase of $0.5 million, or 7.7%9.8%, from $6.5$5.1 million in the secondthird quarter of 2014.  The currentprior year quarter includes approximately $0.6benefitted from insurance reimbursements of $0.8 million infor legal and regulatory costs associated with the possible restructuring that the Company is exploring.previously incurred and expensed.  Excluding these costs in the current quarter and reimbursements in the prior year quarter other operating expenses were decreased $0.1,$0.3, or 1.5%5.1% to $6.4$5.6 million in the secondthird quarter of 2015 from $6.5$5.9 million in the prior year quarter.

Operating income for the secondthird quarter of 2015 was $34.9$36.2 million, a decrease of $2.6$7.4 million, or 6.9%17.0%, from the $37.5$43.6 million in the secondthird quarter of 2014.  Operating income, as a percentage of revenues, was 34.0%37.5% in the 2015 quarter as compared to 34.7%39.3% in the 2014 quarter.

Other
 
Total other income,expense was $3.2a net expense of $12.5 million for the secondthird quarter 2015 versus $8.9a net expense of $10.0 million in the prior year’syear's quarter.  Realized and unrealized gainslosses in our trading portfolio were $3.9$11.5 million in the 2015 quarter versus $9.6$9.1 million in the 2014 quarter.  Interest and dividend income was unchanged at $1.3decreased to $0.9 million forin the secondthird quarter 2015.2015 from $1.1 million in the third quarter 2014.  Interest expense remaineddecreased $0.1 million to $1.9 million in the same atthird quarter 2015 from $2.0 million in the second quartersthird quarter of 2015 and 2014.
 
The effective tax rates (“ETR”("ETR") for the three months ended JuneSeptember 30, 2015 and JuneSeptember 30, 2014 were 37.0%39.0% and 36.9%38.8%, respectively.  Excluding net income (loss) attributable to noncontrolling interests, the ETR was 38.2% and 35.5% for the third quarters of 2015 and 2014, respectively.  The ETR for the three months ended September 30, 2014 was reduced by 2.6% for a state refund.


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SixNine Months Ended JuneSeptember 30, 2015 Compared To SixNine Months Ended JuneSeptember 30, 2014

(Unaudited; in thousands, except per share data)    
 2015  2014  2015  2014 
Revenues        
Investment advisory and incentive fees $175,381  $177,953  $257,563  $270,544 
Distribution fees and other income  27,101   30,640   39,402   43,367 
Institutional research services  4,067   4,180   6,130   6,720 
Total revenues  206,549   212,773   303,095   323,631 
Expenses                
Compensation  87,896   87,942   127,627   131,258 
Management fee  8,678   9,872   11,360   13,628 
Distribution costs  27,403   28,986   39,747   44,087 
Other operating expenses  13,678   11,937   19,271   17,036 
Total expenses  137,655   138,737   198,005   206,009 
Operating income  68,894   74,036   105,090   117,622 
Other income                
Net gain from trading securities  10,853   16,554   (614)  7,468 
Interest and dividend income  2,343   2,473   3,227   3,557 
Interest expense  (3,982)  (4,013)  (5,899)  (6,000)
Total other income, net  9,214   15,014 
Total other income/(expense), net  (3,286)  5,025 
Income before income taxes  78,108   89,050   101,804   122,647 
Income tax provision  29,302   31,751   38,547   44,796 
Net income  48,806   57,299   63,257   77,851 
Net income/(loss) attributable to noncontrolling interests  (71)  395   (589)  (2,718)
Net income attributable to GAMCO Investors, Inc.'s shareholders $48,877  $56,904  $63,846  $80,569 
                
Net income attributable to GAMCO Investors, Inc.'s shareholders per share:                
Basic $1.95  $2.24  $2.55  $3.17 
Diluted $1.93  $2.22  $2.52  $3.15 
                
 
Overview

Net income attributable to shareholders of GAMCO for the first sixnine months of 2015 was $48.9$63.8 million or $1.93$2.52 per fully diluted share versus $56.9$80.6 million or $2.22$3.15 per fully diluted share in the prior year’syear's first sixnine months.  The period to period comparison was impacted by lower revenues, lower income from firm investments and increased stock compensation costs.

Revenues
 
Investment advisory and incentive fees for the sixnine months ended JuneSeptember 30, 2015 were $175.4$257.6 million, 1.5%4.8% below the comparable 2014 figure of $178.0$270.5 million.  Open-end fund revenues decreased by 4.4%8.7% to $80.2$117.0 million from $83.9$128.1 million in first halfnine months 2014 driven by a 4.1%8.3% decrease in average open-end equity AUM.  Our closed-end fund revenues rose 2.4%decreased 1.5% to $30.3$44.6 million in the first halfnine months of 2015 from $29.6$45.3 million in 2014 due to a 2.3% increase1.3% decrease in non-performance fee based average AUM.  Institutional and private wealth management account revenues, excluding incentive fees, which are generally based on beginning of quarter AUM, decreased $0.4$2.4 million, or 0.7%2.6%, to $60.0$88.8 million from $60.4$91.2 million in first halfnine months of 2014.  During the first halfnine months of 2015 and the first half of 2014 we earned $0.8 million in incentive fees.fees versus the $0.9 million earned in the first nine months of 2014.  Investment partnership revenues were $4.1$6.3 million, an increase of 28.1%26.0% from $3.2$5.0 million for the sixnine months ended JuneSeptember 30, 2014 due to an increase in average AUM resulting from net inflows.
 
Open-end fund distribution fees and other income were $27.1$39.4 million for the first sixnine months of 2015, a decrease of $3.5$7.0 million or 11.4%15.1% from $30.6$46.4 million in the prior year period, primarily due to lower average AUM in open-end equity funds that generate distribution fees and decreased level of sales of load shares of open-end funds.

Our institutional research revenues were $4.1$6.1 million in the first halfnine months of 2015 versus $4.2$6.7 million in the prior year period.


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Expenses
 
Compensation costs, which are largely variable, remainedwere $127.6 million, or 2.8% lower, than the same at $87.9prior year compensation costs of $131.3 million.  The $1.8$5.0 million decrease in variable compensation related to the decreased levels of AUM and a $0.3 million decrease in fixed compensation was entirelypartially offset by a $1.1$1.6 million increase in stock compensation expense recognized for RSAs issued in 2014 and a $0.7 million increase in fixed compensation.2014.

Management fee expense, which is wholly variable and based on pretax income, decreased to $8.7$11.4 million for the sixnine months ended JuneSeptember 30, 2015 from $9.9$13.6 million in the 2014 period.
 
Distribution costs were $27.4$39.7 million, a decrease of $1.6$4.4 million or 5.5%10.0% from $29.0$44.1 million in the prior year’syear's period.  The decline in distribution costs was driven by lower AUM largely from the direct to intermediary channel, which resulted in reduced payments to third parties for distribution of $1.5$2.7 million and lower amortization of advanced commissions of $1.1$1.6 million partially offset by $1.0 million of expenses in the current period for launching of our first London stock exchange listed closed-end fund.

Other operating expenses were $13.7$19.3 million in the first sixnine months of 2015, an increase of $1.8$2.3 million, or 15.1%13.5%, from $11.9$17.0 million in the first halfnine months of 2014.  The current year period includes approximately $1.5 million in costs associated with the possible restructuring that the Company is exploring while the prior year period benefitted from additional insurance reimbursements of $0.4$1.3 million for legal and regulatory costs previously incurred and expensed as compared to the current year period.expensed.  Excluding these costs in the current period and the reimbursements in the prior period other operating expenses decreased $0.1$0.5 million, or 0.8%2.7%, to $12.2$17.8 million in the first sixnine months of 2015 from $12.3$18.3 million in the first halfnine months of 2014.

Operating income for the first sixnine months of 2015 was $68.9$105.1 million, a decrease of $5.1$12.5 million, or 6.9%10.6%, from the $74.0$117.6 million in the first halfnine months of 2014.  Operating income, as a percentage of revenues, was 33.4%34.7% in the 2015 period as compared to 34.8%36.3% in the 2014 period.

Other
 
Total other income,income/(expense), net of interest expense, was $9.2$3.3 million for the first sixnine months of 2015 versus $15.0income of $5.0 million in the prior year’syear's quarter.  Realized and unrealized gains in our trading portfolio were $10.8 million$614,000 in the 2015 period versus $16.6$7.6 million in the 2014 period.  The 2014 period included $4.1 million in gains related to sales and donations of one AFS security.  There are no similar gains in the 2015 period.  Interest and dividend income were $2.3$3.2 million in the 2015 period versus $2.5$3.6 million in the 2014 period.  Interest expense remained the same at $4.0decreased to $5.9 million in the first halves of 2015 and 2014.period compared to $6.0 million in the 2014 period.
 
The effective tax rate for the sixnine months ended JuneSeptember 30, 2015 was 37.5%37.9% as compared to the prior year period’speriod's effective rate of 35.7%36.5%.  DuringExcluding net income (loss) attributable to noncontrolling interests, the ETR was 37.6% and 35.7% for the first nine months of 2015 and 2014, respectively.  The primary contributor to the lower ETR in the 2014 period the ETR benefitted fromwas the donation of appreciated securities used to fund our shareholder designated charitable contribution program.

LIQUIDITY AND CAPITAL RESOURCES

Our principal assets are highly liquid in nature and consist of cash and cash equivalents, short-term investments, securities held for investment purposes, investments in funds, and investment partnerships.  Cash and cash equivalents are comprised primarily of 100% U.S. Treasury money market funds managed by GAMCO.  Although investments in partnerships and offshore funds are subject to restrictions as to the timing of distributions, the underlying investments of such partnerships or funds are, for the most part, liquid, and the valuations of these products reflect that underlying liquidity.

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Summary cash flow data is as follows:
 Six months ended  Nine months ended 
 June 30,  September 30, 
 2015  2014  2015  2014 
Cash flows provided by (used in): (in thousands)  (in thousands) 
Operating activities $134,015  $99,422  $200,176  $122,150 
Investing activities  (40,287)  1,725   (41,412)  2,593 
Financing activities  (19,687)  (4,097)  (31,403)  23,222 
Effect of exchange rates on cash and cash equivalents  (4)  (11)  8   5 
Net increase  74,037   97,039   127,369   147,970 
Cash and cash equivalents at beginning of period  298,224   210,451   298,224   210,451 
Increase in cash from consolidation  10   -   10   - 
Increase in cash from deconsolidation  13   -   13   - 
Cash and cash equivalents at end of period $372,284  $307,490  $425,616  $358,421 
                

Cash and liquidity requirements have historically been met through cash generated by operating income and our borrowing capacity.  We filed a registration statement with the SEC in 2015 which, among other things, provides us opportunistic flexibility to sell any combination of senior and subordinate debt securities, convertible debt securities, equity securities (including common and preferred stock), and other securities up to a total amount of $500 million.  The shelf is available through May 4, 2018, at which time it may be renewed.

At JuneSeptember 30, 2015, we had total cash and cash equivalents of $372.3$425.6 million, an increase of $74.1$127.4 million from December 31, 2014.  Cash and cash equivalents of $0.1 million and investments in securities of $9.5$8.5 million held by consolidated investment partnerships and offshore funds may not be readily available for the Company to access.  Total debt outstanding at JuneSeptember 30, 2015 was $106.6$106.8 million, consisting of $6.6$6.8 million in Debentures (face value of $6.9 million) and $100 million of 5.875% senior notes due 2021.
 
For the sixnine months ended JuneSeptember 30, 2015, cash provided by operating activities was $134.0$200.2 million, an increase of $34.6$78.0 million from cash provided in the prior year period of $99.4$122.2 million.  Cash was provided through a decrease of $22.6$19.8 million in other assets, a $11.7$18.5 million decrease in net contributions and distributions to/from partnerships, a $2.3$6.7 million increase to accrued expenses and other liabilities, a decrease of $4.8$51.5 million in trading securities, a $33.6$6.9 million increase in payables to brokers, a decrease in receivable from brokers of $5.7, and $2.7$1.0 from other sources.  Reducing cash was an increase in investment advisory fees receivables collected of $10.4$7.3 million, a decrease in compensation payable of $5.3$10.1 million, a decrease in net income of $8.5$14.6 million and an increasea decrease in receivable from brokersincome taxes payable and deferred tax liabilities of $18.9.$0.1 million.  Cash used in investing activities, related to purchases and proceeds from sales of available for sale securities, was $40.3$41.4 million in the first sixnine months of 2015.  Cash used in financing activities in the first sixnine months of 2015 was $19.7$31.4 million including $3.5$5.3 million paid in dividends, $11.0$21.5 million paid for the purchase of treasury stock and $6.2 million for the repurchase of zero coupon subordinated debentures partially offset by $1.2 million in proceeds from the exercise of stock options.

For the sixnine months ended JuneSeptember 30, 2014, cash provided by operating activities was $99.4$122.2 million.  Cash provided by investing activities, related to purchases and proceeds from sales of available for sale securities, was $1.7$2.6 million in the first sixnine months of 2014.  Cash used inprovided by financing activities in the first sixnine months of 2014 was $4.1$23.2 million.

Based upon our current level of operations and anticipated growth, we expect that our current cash balances plus cash flows from operating activities and our borrowing capacity will be sufficient to finance our working capital needs for the foreseeable future.  We have no material commitments for capital expenditures.
 
We have two broker-dealers, G.research and G.distributors, which are subject to certain net capital requirements.  Both broker-dealers compute their net capital under the alternative method permitted, which requires minimum net capital of the greater of $250,000 or 2% of the aggregate debit items in the reserve formula for those broker-dealers subject to Rule 15c3-3 promulgated under the Securities Exchange Act of 1934.  The requirement was $250,000 for each broker-dealer at JuneSeptember 30, 2015.  At JuneSeptember 30, 2015, G.research had net capital, as defined, of approximately $7.3$8.3 million, exceeding the regulatory requirement by approximately $7.1$8.1 million, and G.distributors had net capital, as defined, of approximately $4.1$5.5 million, exceeding the regulatory requirement by approximately $3.9$5.2 million.  Net capital requirements for our affiliated broker-dealers may increase in accordance with rules and regulations to the extent they engage in other business activities.



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Market Risk
 
Our primary market risk exposure is to changes in equity prices and interest rates.  Since over 90% of our AUM are equities, our financial results are subject to equity-market risk as revenues from our investment management services are sensitive to stock market dynamics.  In addition, returns from our proprietary investment portfolio are exposed to interest rate and equity market risk.

The Company’sCompany's Chief Investment Officer oversees the proprietary investment portfolios and allocations of proprietary capital among the various strategies.  The Chief Investment Officer and the Board of Directors review the proprietary investment portfolios throughout the year.  Additionally, the Company monitors its proprietary investment portfolios to ensure that they are in compliance with the Company’sCompany's guidelines.

Equity Price Risk
 
The Company earns substantially all of its revenue as advisory and distribution fees from our affiliated open-end and closed-end funds, Institutional and Private Wealth Management assets, and Investment Partnership assets.  Such fees represent a percentage of AUM, and substantially all of these assets are in equity investments.  Accordingly, since revenues are proportionate to the value of those investments, a substantial increase or decrease in equity markets overall will have a corresponding effect on the Company's revenues.
 
With respect to our proprietary investment activities, included in investments in securities of $144.0$126.9 million and investments in sponsored registered investment companies of $126.3$115.0 million at JuneSeptember 30, 2015 were investments in United States Treasury Bills and Notes of $7.0 million, open-end funds and closed-end funds, largely invested in equity products, of $131.2$119.4 million, a selection of common and preferred stocks totaling $131.3$121.8 million, and other investments of approximately $0.8$0.7 million.  In addition, we may alter our investment holdings from time to time in response to changes in market risks and other factors considered appropriate by management.  Of the approximately $131.2$121.8 million invested in common and preferred stocks at JuneSeptember 30, 2015, $37.4$34.1 million represented our investment in Westwood Holdings Group Inc., and $68.4$71.7 million was invested by the Company in risk arbitrage opportunities in connection with mergers, consolidations, acquisitions, tender offers or other similar transactions.  Risk arbitrage generally involves announced deals with agreed upon terms and conditions, including pricing, which typically involve less market risk than common stocks held in a trading portfolio.  The principal risk associated with risk arbitrage transactions is the inability of the companies involved to complete the transaction.  Securities sold, not yet purchased are stated at fair value and are subject to market risks resulting from changes in price and volatility.  At JuneSeptember 30, 2015, the fair value of securities sold, not yet purchased was $9.8$5.6 million.  Investments in partnerships totaled $109.0$101.0 million at JuneSeptember 30, 2015, $63.1$62.8 million of which consisted of investment partnerships and offshore funds which invest in risk arbitrage opportunities.

The following table provides a sensitivity analysis for our investments in equity securities and partnerships and affiliates which invest primarily in equity securities, excluding arbitrage products for which the principal exposure is to deal closure and not overall market conditions, as of JuneSeptember 30, 2015 and December 31, 2014.  The sensitivity analysis assumes a 10% increase or decrease in the value of these investments (in thousands):


   Fair Value  Fair Value    Fair Value  Fair Value 
   assuming  assuming    assuming  assuming 
   10% decrease in  10% increase in    10% decrease in  10% increase in 
(unaudited) Fair Value  equity prices  equity prices  Fair Value  equity prices  equity prices 
At June 30, 2015:      
At September 30, 2015:      
Equity price sensitive investments, at fair value $248,116  $223,304  $272,928  $208,490  $187,641  $229,339 
At December 31, 2014:                        
Equity price sensitive investments, at fair value $243,720  $219,348  $268,092  $243,720  $219,348  $268,092 
                        
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Interest Rate Risk
 
Our exposure to interest rate risk results, principally, from our investment of excess cash in a sponsored money market fund that holds U.S. Government securities.  These investments are primarily short term in nature, and the carrying value of these investments generally approximates fair value.  Based on JuneSeptember 30, 2015, cash and cash equivalent balance of $372.3$425.6 million, a 1% increase in interest rates would increase our interest income by $3.7$4.3 million annually.  Given that our current return on these cash equivalent investments in this low interest rate environment is approximately 0.0% annually, an analysis of a 1% decrease is not meaningful.

Currency Risk

We operate offices outside the United States in London, Shanghai and Tokyo from which we perform sales, marketing and research activities.  In connection with these offices, we transact business in multiple currencies, primarily British Pounds and Japanese Yen.  We are a net payer of foreign currencies and therefore benefit from a strengthening U.S. dollar and are adversely affected when the U.S. dollar weakens relative to the foreign currencies.  We project our future currency needs on a net basis and may from time to time purchase foreign currencies or enter into foreign exchange forward contracts as a way to minimize our foreign exchange risk.  Historically these amounts have not been material.  In addition, we may use foreign exchange forward contracts to offset the foreign exchange risk on investments held in foreign denominated funds, including the Gabelli Value Plus+ Trust Ltd. which is denominated in British Pounds.  In May 2015, we entered into a foreign exchange forward contract to hedge the full value of our Gabelli Value Plus+ Trust Ltd. investment.  Absent such hedging strategies, a hypothetical 10% change in the U.S dollar to British Pound exchange rate would have increased or decreased the value of the investment we had in this fund on JuneSeptember 30, 2015 by $4.3$3.8 million.  Because this investment is classified as an AFS security, the net unrealized change on this investment due to currency fluctuation prior to the inception of the hedge would be included in other comprehensive income and after the inception would be included in net gain/(loss) from investments on the condensed consolidated statements of income.  Changes in fair value of the related designated hedge are also included in net gain/(loss) from investments on the condensed consolidated statements of inomce.income.

Critical Accounting Policies and Estimates
 
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.  Actual results could differ significantly from those estimates.  See Note A and the Company’sCompany's Critical Accounting Policies in Management’sManagement's Discussion and Analysis of Financial Condition and Results of Operations in GAMCO’sGAMCO's 2014 Annual Report on Form 10-K filed with the SEC on March 6, 2015 for details on Critical Accounting Policies.
 
Item 3.  Quantitative and Qualitative Disclosures About Market Risk
 
In the normal course of its business, GAMCO is exposed to risk of loss due to fluctuations in the securities market and general economy. Management is responsible for identifying, assessing and managing market and other risks. 

Our exposure to pricing risk in equity securities is directly related to our role as financial intermediary and advisor for AUM in our affiliated open-end and closed-end funds, institutional and private wealth management accounts, and investment partnerships as well as our proprietary investment and trading activities.  At JuneSeptember 30, 2015, we had equity investments, including open-end funds largely invested in equity products, of $268.6$241.9 million.  Investments in open-end funds and closed-end funds, $131.2$119.4 million, usually generate lower market risk through the diversification of financial instruments within their portfolios.  In addition, we may alter our investment holdings from time to time in response to changes in market risks and other factors considered appropriate by management.  We also hold investments in partnerships which invest primarily in equity securities and which are subject to changes in equity prices.  Investments in partnerships totaled $109.0$101.0 million, of which $63.1$62.8 million were invested in partnerships which invest in risk arbitrage.  Risk arbitrage is primarily dependent upon deal closure rather than the overall market environment.  The equity investment portfolio is at fair value and will move in line with the equity markets.  The trading portfolio changes are recorded as net gain from investments in the condensed consolidated statements of income while the available for sale portfolio changes are recorded in accumulated other comprehensive income in the condensed consolidated statements of financial condition.

Item 4.  Controls and Procedures
 
We evaluated the effectiveness of our disclosure controls and procedures as of JuneSeptember 30, 2015.  Disclosure controls and procedures as defined under the Exchange Act Rule 13a-15(e), are designed to ensure that the information we are required to disclose in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time period specified in SEC rules and regulations.  Disclosure controls and procedures include, without limitation, controls and procedures accumulated and communicated to our management, including our Chief Executive Officer (“CEO”("CEO") and Co-Chief Accounting Officers (“CAOs”("CAOs"), to allow timely decisions regarding required disclosure.  Our CEO and CAOs participated in this evaluation and concluded that, as of the date of JuneSeptember 30, 2015, our disclosure controls and procedures were effective.
 
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There have been no changes in our internal control over financial reporting as defined by Rule 13a-15(f) that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Forward-Looking Information
 
Our disclosure and analysis in this report contain some forward-looking statements.  Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements because they do not relate strictly to historical or current facts. They use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,”"anticipate," "estimate," "expect," "project," "intend," "plan," "believe," and other words and terms of similar meaning. They also appear in any discussion of future operating or financial performance. In particular, these include statements relating to future actions, future performance of our products, expenses, the outcome of any legal proceedings, and financial results.  Although we believe that we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know about our business and operations, there can be no assurance that our actual results will not differ materially from what we expect or believe. Some of the factors that could cause our actual results to differ from our expectations or beliefs include, without limitation: the adverse effect from a decline in the securities markets; a decline in the performance of our products; a general downturn in the economy; changes in government policy or regulation; changes in our ability to attract or retain key employees; and unforeseen costs and other effects related to legal proceedings or investigations of governmental and self-regulatory organizations. We also direct your attention to any more specific discussions of risk contained in our Form 10-Q and other public filings.  We are providing these statements as permitted by the Private Litigation Reform Act of 1995. We do not undertake to update publicly any forward-looking statements if we subsequently learn that we are unlikely to achieve our expectations or if we receive any additional information relating to the subject matters of our forward-looking statements.

Part II:  Other Information

Item 1.Legal Proceedings

From time to time, the Company may be named in legal actions and proceedings.  These actions may seek substantial or indeterminate compensatory as well as punitive damages or injunctive relief.  The Company is also subject to governmental or regulatory examinations or investigations.  The examinations or investigations could result in adverse judgments, settlements, fines, injunctions, restitutions or other relief.  For any such matters, the condensed consolidated financial statements include the necessary provisions for losses that the Company believes are probable and estimable.  Furthermore, the Company evaluates whether there exist losses which may be reasonably possible and will, if material, make the necessary disclosures.  However, management believes such amounts, both those that are probable and those that are reasonably possible, are not material to the Company’sCompany's financial condition, operations or cash flows at JuneSeptember 30, 2015.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information with respect to the repurchase of Class A Common Stock of GAMCO during the three months ended JuneSeptember 30, 2015:

      (c) Total Number of  (d) Maximum 
  (a) Total  (b) Average  Shares Repurchased as  Number of Shares 
  Number of  Price Paid Per  Part of Publicly  That May Yet Be 
  Shares  Share, net of  Announced Plans  Purchased Under 
Period Repurchased  Commissions  or Programs  the Plans or Programs 
4/01/15 - 4/30/15  24,000  $82.16   24,000   443,390 
5/01/15 - 5/31/15  21,369   70.33   21,369   422,021 
6/01/15 - 6/30/15  62,719   69.27   62,719   359,302 
Totals  108,088  $72.34   108,088     
                 
      (c) Total Number of  (d) Maximum 
  (a) Total  (b) Average  Shares Repurchased as  Number of Shares 
  Number of  Price Paid Per  Part of Publicly  That May Yet Be 
  Shares  Share, net of  Announced Plans  Purchased Under 
Period Repurchased  Commissions  or Programs  the Plans or Programs 
7/01/15 - 7/31/15  39,400  $68.59   39,400   319,902 
8/01/15 - 8/31/15  63,348   62.64   63,348   756,554 
9/01/15 - 9/30/15  69,259   55.46   69,259   687,295 
Totals  172,007  $61.11   172,007     
                 

In August 2015, the Board of Directors increased the buyback authorization by 500,000 shares of GBL Class A stock.  Our stock repurchase program is not subject to an expiration date.
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Item 6.(a) Exhibits

 31.1Certification of CEO pursuant to Rule 13a-14(a).

 31.2Certification of co-CAO pursuant to Rule 13a-14(a).
   
 31.3Certification of co-CAO pursuant to Rule 13a-14(a).

 32.1Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 32.2Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.

 101.INS XBRL Instance Document
   
101.SCH XBRL Taxonomy Extension Schema Document
   
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
   
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
   
101.LAB XBRL Taxonomy Extension Label Linkbase Document
   
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

GAMCO INVESTORS, INC.
(Registrant)

By: /s/ Kieran Caterina By: /s/ Diane M. LaPointe 
Name: Kieran CaterinaName: Diane M. LaPointe
Title:   Co-Chief Accounting OfficerTitle:   Co-Chief Accounting Officer
  
Date: August 5,Novermber 4, 2015Date: August 5,November 4, 2015
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