SECURITIES & EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~September 30, 2017~~March 31, 2018

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

For the transition period from ___ to ___

Commission File No. 001-14761

GAMCO INVESTORS, INC.

(Exact name of Registrant as specified in its charter)

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

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

(914) 921-3700

Registrant's telephone number, including area code

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

Yes  No 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No

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

Large accelerated filer ☐	Accelerated filer ☒

Non-accelerated filer ☐	Smaller reporting company o Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

Yes  No 

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

Class		Outstanding at ~~October 31, 2017~~April 30, 2018
Class A Common Stock, .001 par value	(Including ~~164,050~~270,500 restricted stock awards)	~~10,089,844~~10,053,569
Class B Common Stock, .001 par value		~~19,062,168~~19,024,404

INDEX

GAMCO INVESTORS, INC. AND SUBSIDIARIES

PART I.	FINANCIAL INFORMATION

Item 1.	Unaudited Condensed Consolidated Financial Statements

	Condensed Consolidated Statements of Income:
	- Three months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~
	~~- Nine months ended September 30, 2017 and 2016~~

	Condensed Consolidated Statements of Comprehensive Income:
	- Three months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~
	~~- Nine months ended September 30, 2017 and 2016~~

	Condensed Consolidated Statements of Financial Condition:
	- ~~September 30, 2017~~March 31, 2018
	- December 31, ~~2016~~2017
	- ~~September 30, 2016~~March 31, 2017

	Condensed Consolidated Statements of Equity:
	- ~~Nine~~Three months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~

	Condensed Consolidated Statements of Cash Flows:
	- ~~Nine~~Three months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~

	Notes to Unaudited Condensed Consolidated Financial Statements

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

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

Item 4.	Controls and Procedures

PART II.	OTHER INFORMATION

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

SIGNATURES

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

UNAUDITED

(Dollars in thousands, except per share data)

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
	2017			2016			2017			2016			2018			2017
Revenues
Investment advisory and incentive fees	$	77,328		$	75,952		$	228,942		$	219,594		$	77,348		$	74,989
Distribution fees and other income		11,013			11,769			32,916			33,456			10,149			10,928
Total revenues		88,341			87,721			261,858			253,050			87,497			85,917
Expenses
Compensation		42,919			21,233			97,634			62,130			25,950			25,278
Management fee		4,935			1,163			9,455			3,376			4,634			2,164
Distribution costs		11,665			11,568			33,373			32,786			10,204			10,913
Other operating expenses		5,429			5,681			15,900			14,993			5,453			5,119
Total expenses		64,948			39,645			156,362			113,285			46,241			43,474

Operating income		23,393			48,076			105,496			139,765			41,256			42,443
Other income (expense)
Net gain from investments		2,841			55			2,867			518
Net gain (loss) from investments														(5,347	)		40
Interest and dividend income		745			371			1,765			1,104			492			469
Interest expense		(2,688	)		(3,155	)		(8,269	)		(9,729	)		(1,200	)		(2,832	)
Shareholder-designated contribution		(3,857	)		-			(3,857	)		-
Total other expense, net		(2,959	)		(2,729	)		(7,494	)		(8,107	)		(6,055	)		(2,323	)
Income before income taxes		20,434			45,347			98,002			131,658			35,201			40,120
Income tax provision		3,834			14,486			33,688			47,229			7,940			15,300
Net income attributable to GAMCO Investors, Inc.'s shareholders	$	16,600		$	30,861		$	64,314		$	84,429		$	27,261		$	24,820

Net income attributable to GAMCO Investors, Inc.'s shareholders
per share:
Basic	$	0.57		$	1.06		$	2.22		$	2.89		$	0.94		$	0.86

Diluted	$	0.55		$	1.03		$	2.14		$	2.85		$	0.94		$	0.82

Weighted average shares outstanding:
Basic		28,926			29,185			28,930			29,222			28,916			28,970

Diluted		31,173			30,406			31,144			29,811			28,916			31,160

Dividends declared:	$	0.02		$	0.02		$	0.06		$	0.06		$	0.02		$	0.02

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

UNAUDITED

(Dollars in thousands, except per share data)

	Three Months Ended							Nine Months Ended							Three Months Ended
	September 30,							September 30,							March 31,
	2017			2016				2017			2016				2018				2017

Net income		$	16,600		$	30,861			$	64,314		$	84,429			$	27,261			$	24,820
Other comprehensive gain/(loss), net of tax:
Foreign currency translation			28			(28	)			75			(121	)			89				10
Net unrealized gains on securities available for sale (a)			2,321			506				1,019			323
Other comprehensive gain			2,349			478				1,094			202
Net unrealized loss on securities available for sale (a)																	-				(2,561	)
Other comprehensive gain/(loss)																	89				(2,551	)

Comprehensive income attributable to GAMCO Investors, Inc.		$	18,949		$	31,339			$	65,408		$	84,631			$	27,350	��		$	22,269

(a) Net of income tax ~~expense~~benefit of ~~$1,363, $297, $599~~$0 and ~~$190,~~$1,504, respectively.

Effective January 1, 2018, upon the adoption of ASU 2016-01, the Company no longer recognizes

unrealized gains or losses on equity securities through other comprehensive gain/(loss). See Note C.

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

UNAUDITED

(Dollars in thousands, except per share data)

	September 30,			December 31,			September 30,			March 31,			December 31,			March 31,
	2017			2016			2016			2018			2017			2017
ASSETS
Cash and cash equivalents, including restricted cash of $95, $0 and $0, respectively	$	61,097		$	39,812		$	33,852
Investments in securities, including restricted investments in securities
of $59,954, $0 and $0, respectively		101,425			37,285			32,889
Cash and cash equivalents										$	27,383		$	17,821		$	88,230
Investments in securities											31,407			36,790			33,190
Receivable from brokers		1,342			453			344			1,876			1,578			523
Investment advisory fees receivable		25,549			43,736			26,606			27,150			38,712			29,810
Receivable from affiliates		4,784			5,960			4,745			4,794			5,635			5,325
Income tax receivable and deferred tax asset		24,941			9,349			10,634			12,878			15,615			12,829
Other assets		11,888			12,634			12,198			11,505			12,135			12,615
Total assets	$	231,026		$	149,229		$	121,268		$	116,993		$	128,286		$	182,522

LIABILITIES AND EQUITY
Payable to brokers	$	13,311		$	66		$	10,203		$	164		$	14,926		$	10,022
Income taxes payable and deferred tax liabilities		3,215			3,815			164			7,491			3,128			19,787
Capital lease obligation		4,976			5,066			5,094			4,908			4,943			5,038
Compensation payable		82,896			42,384			31,469			84,333			82,907			42,295
Payable to affiliates		2,981			1,412			7,679			864			855			1,528
Accrued expenses and other liabilities		24,134			29,178			31,801			27,706			28,656			27,942
Sub-total		131,513			81,921			86,410			125,466			135,415			106,612

4.5% Convertible note (net of issuance costs of $138, $165 and $174, respectively)
(due August 15, 2021) (Note F)		109,862			109,835			109,826
AC 4% PIK Note (due November 30, 2020) (Note F)		70,000			100,000			100,000
5.875% Senior notes (net of issuance costs of $87, $105 and $110, respectively)
(due June 1, 2021) (Note F)		24,138			24,120			24,115
4.5% Convertible note (net of issuance costs of $0, $0 and $156, respectively)
(due August 15, 2021) (Note G)											-			-			109,844
AC 4% PIK Note (due November 30, 2020) (Note G)											40,000			50,000			90,000
AC 1.6% Note Payable (due February 28, 2018) (Note G)											-			15,000			-
5.875% Senior notes (net of issuance costs of $75, $81 and $99, respectively)
(due June 1, 2021) (Note G)											24,150			24,144			24,126
Total liabilities		335,513			315,876			320,351			189,616			224,559			330,582

Commitments and contingencies (Note I)		-			-			-
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;
15,473,725, 15,477,082 and 15,480,032 issued, respectively;10,075,944,
10,369,601 and 10,454,392 outstanding, respectively		14			14			14
15,541,489, 15,541,489 and 15,474,992 issued, respectively;9,830,148,
9,949,482 and 10,242,101 outstanding, respectively											14			14			14
Class B Common Stock, $0.001 par value; 100,000,000 shares authorized;
24,000,000 shares issued; 19,092,168, 19,093,311 and 19,093,311 shares
24,000,000 shares issued; 19,024,404, 19,024,404 and 19,092,201 shares
outstanding, respectively		19			19			19			19			19			19
Additional paid-in capital		11,084			3,903			3,135			12,759			12,572			4,602
Retained earnings		143,026			80,515			48,412			194,732			155,939			104,749
Accumulated other comprehensive income		12,365			11,271			9,317			(145	)		11,876			8,720
Treasury stock, at cost (5,397,781, 5,107,481 and 5,025,640 shares, respectively)		(270,995	)		(262,369	)		(259,980	)
Treasury stock, at cost (5,711,341, 5,592,007 and 5,232,891 shares, respectively)											(280,002	)		(276,693	)		(266,164	)
Total GAMCO Investors, Inc. stockholders' equity (deficit)		(104,487	)		(166,647	)		(199,083	)		(72,623	)		(96,273	)		(148,060	)

Total liabilities and equity	$	231,026		$	149,229		$	121,268		$	116,993		$	128,286		$	182,522

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

UNAUDITED

(In thousands)

For the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2018

GAMCO Investors, Inc. stockholders
Accumulated
Additional Other
Common Paid-in Retained Comprehensive Treasury
Stock Capital Earnings Income Stock Total
Balance at December 31, 2016 $ 33 $ 3,903 $ 80,515 $ 11,271 $ (262,369 ) $ (166,647 )
Net income - - 64,314 - - 64,314
Net unrealized gains on
securities available for sale,
net of income tax expense ($1,663) - - - 2,830 - 2,830
Amounts reclassified from
  accumulated other
  comprehensive income,
  net of income tax benefit ($1,064) - - - (1,811 ) - (1,811 )
Foreign currency translation - - - 75 - 75
Dividends declared ($0.06 per
share) - - (1,803 ) - - (1,803 )
Stock based compensation
expense - 7,181 - - - 7,181
Purchase of treasury stock - - - - (8,626 ) (8,626 )
Balance at September 30, 2017 $ 33 $ 11,084 $ 143,026 $ 12,365 $ (270,995 ) $ (104,487 )

	GAMCO Investors, Inc. stockholders
								Accumulated
			Additional					Other
	Common		Paid-in		Retained			Comprehensive			Treasury
	Stock		Capital		Earnings			Income			Stock			Total
Balance at December 31, 2017	$	33	$	12,572	$	155,939		$	11,876		$	(276,693	)	$	(96,273	)
Net income		-		-		27,261			-			-			27,261
Reclassification pursuant to
adoption of ASU 2016-01
, net of tax		-		-		12,110			(12,110	)		-			-
Foreign currency translation		-		-		-			89			-			89
Dividends declared ($0.02 per
share)		-		-		(578	)		-			-			(578	)
Stock based compensation
expense		-		187		-			-			-			187
Purchase of treasury stock		-		-		-			-			(3,309	)		(3,309	)
Balance at March 31, 2018	$	33	$	12,759	$	194,732		$	(145	)	$	(280,002	)	$	(72,623	)

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

UNAUDITED

(In thousands)

For the ~~Nine~~Three Months Ended ~~September 30, 2016~~March 31, 2017

GAMCO Investors, Inc. stockholders
Accumulated
Additional Retained Other
Common Paid-in Earnings Comprehensive Treasury
Stock Capital (Deficit) Income Stock Total
Balance at December 31, 2015 $ 33 $ 345 $ (34,224 ) $ 9,115 $ (251,596 ) $ (276,327 )
Net income - - 84,429 - - 84,429
Net unrealized gains on
securities available for sale,
net of income tax expense ($129) - - - 221 - 221
Amounts reclassified from
accumulated other
comprehensive income,
net of income tax expense ($61) - - - 102 - 102
Foreign currency translation - - - (121 ) - (121 )
Dividends declared ($0.06 per
share) - - (1,793 ) - - (1,793 )
Stock based compensation
expense - 3,258 - - - 3,258
Reduction of deferred tax asset
for excess of recorded RSA tax
benefit over actual tax benefit - (468 ) - - - (468 )
Purchase of treasury stock - - - - (8,384 ) (8,384 )
Balance at September 30, 2016 $ 33 $ 3,135 $ 48,412 $ 9,317 $ (259,980 ) $ (199,083 )

	GAMCO Investors, Inc. stockholders
								Accumulated
			Additional		Retained			Other
	Common		Paid-in		Earnings			Comprehensive			Treasury
	Stock		Capital		(Deficit)			Income			Stock			Total
Balance at December 31, 2016	$	33	$	3,903	$	80,515		$	11,271		$	(262,369	)	$	(166,647	)
Net income		-		-		24,820			-			-			24,820
Net unrealized losses on
securities available for sale,
net of income tax benefit ($1,504)		-		-		-			(2,561	)		-			(2,561	)
Foreign currency translation		-		-		-			10			-			10
Dividends declared ($0.02 per
share)		-		-		(586	)		-			-			(586	)
Stock based compensation
expense		-		699		-			-			-			699
Purchase of treasury stock		-		-		-			-			(3,795	)		(3,795	)
Balance at March 31, 2017	$	33	$	4,602	$	104,749		$	8,720		$	(266,164	)	$	(148,060	)

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

(In thousands)

	Nine Months Ended						Three Months Ended
	September 30,						March 31,
	2017			2016			2018			2017
Operating activities
Net income	$	64,314		$	84,429		$	27,261		$	24,820
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		439			470			146			151
Stock based compensation expense		7,181			3,258			187			699
Deferred income taxes		(9,229	)		(3,930	)		(1,409	)		(3,756	)
Foreign currency translation loss		75			(121	)		89			10
Cost basis of donated securities		1,051			68
Net gains on sales of available for sale securities		(20	)		(4	)
(Increase) decrease in assets:
Investments in trading securities		(59,943	)		223
Investments in securities (trading securities for 2017)								5,384			30
Receivable from affiliates		1,179			290			935			635
Receivable from brokers		(889	)		747			(298	)		(70	)
Investment advisory fees receivable		18,188			4,442			11,562			13,927
Income taxes receivable and deferred tax assets		(15,592	)		(3,847	)		2,738			(3,480	)
Other assets		325			534			490			(130	)
Increase (decrease) in liabilities:
Payable to affiliates		1,569			(8	)		9			116
Payable to brokers		13,245			10,190			(282	)		9,956
Income taxes payable and deferred tax liabilities		8,029			(1,384	)		5,772			21,232
Compensation payable		40,506			7,051			1,424			(90	)
Accrued expenses and other liabilities		(5,199	)		2,804			(988	)		(1,272	)
Total adjustments		915			20,783			25,759			37,958
Net cash provided by operating activities	$	65,229		$	105,212		$	53,020		$	62,778

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED (continued)

(In thousands)

	Nine Months Ended						Three Months Ended
	September 30,						March 31,
	2017			2016			2018			2017
Investing activities
Purchases of available for sale securities	$	(3,932	)	$	(223	)
Proceeds from sales of available for sale securities		321			408
Net cash (used in) provided by investing activities		(3,611	)		185

Financing activities
Issuance of 4.5% Convertible note		-			109,826
Dividends paid		(1,737	)		(1,752	)		(578	)		(578	)
Purchase of treasury stock		(8,626	)		(8,384	)		(3,309	)		(3,795	)
Repayment of AC 4% PIK Note		(30,000	)		(150,000	)		(10,000	)		(10,000	)
Repayment of loan from GGCP		-			(35,000	)
Repayment of AC 1.6% Note								(15,000	)		-
Margin loan borrowings								5,000			-
Margin loan payments								(19,479	)		-
Amortization of debt issuance costs		45			18			6			15
Net cash used in financing activities		(40,318	)		(85,292	)		(43,360	)		(14,358	)
Effect of exchange rates on cash and cash equivalents		(15	)		28			(98	)		(2	)
Net increase in cash and cash equivalents		21,285			20,133			9,562			48,418
Cash and cash equivalents at beginning of period		39,812			13,719			17,821			39,812
Cash and cash equivalents at end of period	$	61,097		$	33,852		$	27,383		$	88,230
Supplemental disclosures of cash flow information:
Cash paid for interest	$	6,621		$	4,561		$	384		$	2,797
Cash paid for taxes	$	52,628		$	55,216		$	960		$	782

Non-cash activity:

-	For the ~~nine~~three months ended ~~September 30,~~March 31, 2018 and March 31, 2017, ~~and September 30, 2016,~~ the Company accrued dividends on restricted stock awards of ~~$66~~$0 and ~~$41,~~$8, respectively.

-	For the nine months ended September 30, 2016, the Company recorded $468 as a reduction to its deferred tax asset and additional paid-in capital for the excess of the recorded restricted stock award tax benefit over the actual tax benefit.

See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2017~~March 31, 2018

(Unaudited)

A. Significant Accounting Policies

Basis of Presentation

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

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

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

These interim condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017.

Use of Estimates

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

Recent Accounting Developments

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, "Revenue from Contracts with Customers," which supersedes the revenue recognition requirements in the Accounting Standards Codification ("Codification") Topic 605, Revenue Recognition, and most industry-specific guidance throughout the industry topics of the Codification. The core principle of the new ASU No. 2014-09 is for companies to recognize revenue from the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled to receive 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. In March 2016, the FASB issued revised guidance which clarifies the guidance related to (a) determining the appropriate unit of account under the revenue standard’s principal versus agent guidance and (b) applying the indicators of whether an entity is a principal or an agent in accordance with the revenue standard’s control principle. In April 2016, the FASB issued an amendment to provide more detailed guidance including additional implementation guidance and examples related to a)(a) identifying performance obligations and b)(b) licenses of intellectual property. In May 2016, the FASB amended the standard to clarify the guidance on (a) assessing collectability, (b) presenting sales taxes, (c) measuring noncash consideration, and (d) certain transition matters. ~~This new~~The Company adopted this guidance ~~will be effective for the Company's first quarter of~~on January 1, 2018 and ~~requires either a full retrospective or a~~adopted the modified retrospective ~~approach to adoption.~~approach. The Company’s implementation analysis ~~is nearing completion,~~has been completed, and we have identified similar performance obligations under this guidance as compared with deliverables and separate units of account previously identified under Topic 605. As a result, the ~~Company~~timing of the recognition of our revenue remains the same as under Topic 605, and therefore the adoption does not ~~expect the adoption of the guidance to~~ have ~~a significant~~any effect on the timing of the recognition of revenue. ~~The Company has also been reviewing and preparing~~See Note B. Revenue Recognition for the ~~enhanced disclosure requirements of the standard, which will have an effect on the~~ disclosures in the consolidated financial statements and accompanying notes. The overall effect upon adoption may change based on further analysis and implementation efforts. Finally, the Company has not yet determined which transition method it will use.required by ASU 2014-09.

In January 2016, the FASB issued ASU 2016-01, which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments. Although the ASU retains many current requirements, it significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. The ASU also amends certain disclosure requirements associated with the fair value of financial instruments. In addition, the FASB clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. To adopt the amendments, entities ~~will be~~are required to make a cumulative-effect adjustment to beginning retained earnings as of the beginning of the fiscal year in which the guidance is effective. ~~This new~~The Company adopted this guidance ~~will be effective for the Company’s first quarter~~on January 1, 2018 and reclassified $12.1 million out of ~~2018. Upon adoption of this guidance,~~Accumulated Other Comprehensive Income and into Retained Earnings. Effective January 1, 2018, changes in the fair value of the Company’s ~~available-for-sale~~ investments ~~will be~~in equity securities are reported through earnings in the net gain (loss) from investments line in the condensed consolidated statements of income rather than through other comprehensive income.

In February 2016, the FASB issued ASU 2016-02, which amends the guidance in U.S. GAAP for the accounting for leases. ASU 2016-02 requires a lessee to recognize assets and liabilities arising from most operating leases in the condensed consolidated statement of financial position. It requires these operating leases to be recorded on the balance sheet as right of use assets and offsetting lease liability obligations. This new guidance will be effective for the Company’s first quarter of 2019. The Company is currently evaluating this guidance and the impact it will have on its consolidated financial statements and related disclosures.

In March 2016, the FASB issued ASU 2016-09, which simplifies several aspects of the accounting for employee share-based payment transactions for both public and nonpublic entities, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. For public companies, the ASU is effective for annual reporting periods beginning after December 15, 2016, including interim periods within those annual reporting periods. The Company adopted this guidance on January 1, 2017 without a material impact to the consolidated financial statements. Please see Note D.

In August 2016, the FASB issued ASU 2016-15, which adds and clarifies guidance on the classification of certain cash receipts and payments in the consolidated statements of cash flows. This guidance is intended to unify the currently diverse presentations and classifications, which address eight classification issues related to the statement of cash flows, including debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions, and separately identifiable cash flows and application of the predominance principle. ~~This new guidance will be effective for the Company’s first quarter of 2018 and requires a retrospective approach to adoption.~~ The Company ~~is currently evaluating the potential effect of~~adopted this ~~new~~ guidance on ~~its condensed consolidated financial statements and the related disclosures.~~

In November 2016, the FASB issued ASU 2016-18, which amends ASC 230 to clarify guidance on the classification and presentation of restricted cash in the statement of cash flows. Key requirements are that an entity should include in its cash and cash equivalent balances in the statement of cash flow those amounts that are deemed to be restricted cash and restricted cash equivalents and thatJanuary 1, 2018 without a reconciliation between the statement of financial position and the statement of cash flows must be disclosed when the statement of financial position includes more than one line item for cash, cash equivalents, restricted cash, and restricted cash equivalents. The ASU also mandates that changes in restricted cash and restricted cash equivalents that result from transfers between cash, cash equivalents, restricted cash, and restricted cash equivalents should not be presented as cash flow activities in the statement of cash flows and that an entity with a material amount of restricted cash and restricted cash equivalents must disclose information about the nature of the restrictions. This new guidance was to be effective for the Company’s first quarter of 2018, but the Company has elected to early adopt in the third quarter of 2017. There was no material impact to the consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04 to simplify the process used to test for goodwill impairment. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This new guidance will be effective for the Company’s first quarter of 2020. The Company is currently evaluating the potential effect of this new guidance on its ~~condensed~~ consolidated financial statements and related disclosures.

On May 10, 2017, the FASB issued ASU 2017-09, which amends the scope of modification accounting for share-based payment arrangements. The ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under ASC 718. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. For all entities, the ASU is effective for annual reporting periods, including interim periods within those annual reporting periods, beginning after December 15, 2017. ~~Early adoption~~The Company adopted this guidance on January 1, 2018 without a material impact to the consolidated financial statements.

B. Revenue Recognition

The revenue streams in the discussion below and in the table on page 13 include those that are within the scope of ASU 2014-09. Those revenues deemed out of scope and excluded are: investment gains and losses generated from the Company’s proprietary trading activities, dividend income, and interest income. In all cases for all revenue streams discussed below, the revenue generated is ~~permitted, including adoption~~from a single transaction price, and there is no need to allocate the amounts across more than a single revenue stream. The customer for all revenues derived from open-end and closed-end funds described in ~~any interim period. This~~detail below has been determined to be the fund itself and not the ultimate underlying investor in the fund. The Company has identified similar performance obligations under ASU ~~which we did not early adopt, would not have impacted~~2014-09 as compared with ASC Topic 605. As a result, the ~~accounting~~timing of the recognition of our revenue remains the same under this new guidance as it was under ASC Topic 605.

Significant Judgments that affect the amounts and timing of revenue recognition:

The Company’s analysis of the timing of revenue recognition for each revenue stream is based upon an analysis of current contract terms. Performance obligations could, however, change from time to time if and when existing contracts are modified or new contracts are entered into. These changes could potentially affect the ~~acceleration~~timing of ~~vesting~~satisfaction of ~~restricted stock awards~~performance obligations, the determination of the transaction price, and the allocation of the price to performance obligations. In the case of the revenue streams discussed below, the performance obligation is satisfied at a point in time and in no instance is it satisfied over a period of time. In the case of performance correlated revenues, the point in time is the end of the measurement period as defined within the contract and subject to reduction to zero on the date where the measurement period ends even if the performance benchmarks were exceeded during the ~~nine months ended September 30, 2017.~~

intervening period. Thus, for performance correlated revenues, the performance obligation is satisfied at a single point in time. The judgments outlined below, where the determination as to these factors is discussed in detail, are continually reviewed and monitored by the Company when new contracts or contract modifications occur. Transaction price is in all instances formulaic and not subject to significant (or any) judgment at the current time. The allowance for doubtful accounts is subject to judgment. There were no impairment losses (allowance for doubtful accounts) on any receivables from any revenue stream at the end of the current period.

Advisory Fee Revenues

B.Advisory fees for open-end funds, closed-end funds, sub-advisory accounts and SICAVs are earned based on predetermined percentages of the average net assets of the individual funds and are recognized as revenues as the related services are performed. Fees for open-end funds, sub-advisory accounts and SICAVs are computed on a daily basis on average net assets under management ("AUM"), while fees for closed-end funds are computed on average weekly net AUM. These fees are received in cash after the end of each monthly period within 30 days. The revenue recognition occurs daily as the performance obligation (advising the fund) is met continuously. There is a risk of non-payment, and therefore an impairment loss on these receivables is possible at each reporting date. There were no such impairment losses for the current period.

Advisory fees for Institutional & Private Wealth Management accounts are earned based on predetermined percentages of the average AUM and are generally computed quarterly based on account values at the end of the preceding quarter. The revenue recognition occurs daily as the performance obligation (advising the client portfolio) is met continuously. These fees are received in cash, typically within 60 days of the client being billed. There is a risk of non-payment, and therefore an impairment loss on these receivables is possible at each reporting date. There were no such impairment losses for the current period.

Performance Correlated Revenues

Investment advisory fees earned on many of the closed-end funds' preferred shares are earned at year-end if the total return to common shareholders of the closed-end fund for the calendar year exceeds the dividend rate of the preferred shares. These fees are recognized at the end of the measurement period which coincides with the calendar year. The fee would also be earned and the contract period ended at any interim point in time that the preferred shares are redeemed. These fees are received in cash after the end of the measurement period within 30 days.

Certain closed-end funds have performance fees that are earned at the end of the fund fiscal year to the extent the total return of each fund exceeds a benchmark return. The fee would also be earned and the contract period ended at any interim point in time that the fund was to repurchase shares. These fees are received in cash after the end of the measurement period within 30 days.

We also receive incentive fees from certain institutional clients which are based upon exceeding a specific benchmark index or indices. These fees are recognized at the end of the stipulated contract period, which is generally annually, for the respective account. The fee would also be earned and the contract period ended at any interim point in time that the client terminated its relationship with us. These fees are received in cash after the end of the measurement period typically within 60 days.

Certain funds within the SICAV structure may charge a performance fee. These fees are recognized at the end of the measurement period which coincides with the calendar year or upon redemption. These fees are received in cash after the end of the measurement period within 30 days.

In all cases of the performance correlated revenue, revenue recognition is delayed until the performance obligation has been met (the measurement period has concluded and the hurdle has been exceeded). There is a risk of non-payment, and therefore an impairment loss on these receivables is possible at each reporting date. There were no such impairment losses for the current period.

Distribution Fees and Other Income

Distribution fees and other income primarily includes distribution fee revenue earned in accordance with Rule 12b-1 of the Company Act, as amended, along with sales charges and underwriting fees associated with the sale of the mutual funds. Distribution plan fees are computed based on average daily net assets of each fund and are accrued for during the period in which they are earned. These fees are received in cash after the end of each monthly period within 30 days. In evaluating the appropriate timing of the recognition of these fees, we applied the guidance on up-front fees to determine whether such fees are related to the transfer of a promised service (a distinct performance obligation). Our conclusion is that the service being provided by G.distributors to the customer in exchange for the fee is for the initial distribution of the funds and is completed at the time of the sale. As such, there is no portion of this revenue that needs to be deferred because the performance obligation is complete, and revenue recognition coincides with the completion. The Company reached the same conclusion with regard to sales charges and underwriting fees associated with the sale of the mutual funds - neither of which is material in the aggregate to the Company's revenue streams. There is a risk of non-payment, and therefore an impairment loss on these receivables is possible at each reporting date. There were no such impairment losses for the current period.

Revenue Disaggregated

The following table presents our revenue disaggregated by account type:

	Three Months Ended March 31,
	2018		2017
Advisory Fees:
Open-end Funds	$	31,834	$	32,194
Closed-end Funds		17,145		15,397
Sub-advisory accounts		1,092		320
Institutional & Private Wealth Management		25,965		26,167
SICAVs		1,289		911
Performance-based		23		-
Distribution and other income		10,149		10,928
Total revenues	$	87,497	$	85,917

C. Investment in Securities

Effective with the Company’s adoption of ASU 2016-01 on January 1, 2018, the Company carries all investments in equity securities at fair value through net income (“FVTNI”) which approximates market value. The Company has no securities that qualify for the equity method or for consolidation of the investee of for which the Company has elected the practicality exception to fair value measurement.

Investments in securities at ~~September 30, 2017,~~March 31, 2018, December 31, ~~2016~~2017 and ~~September 30, 2016~~March 31, 2017 consisted of the following:

	September 30, 2017				December 31, 2016				September 30, 2016					March 31, 2018				December 31, 2017				March 31, 2017
	Cost		Fair Value		Cost		Fair Value		Cost		Fair Value					Estimated				Estimated				Estimated
	(In thousands)													Cost		Market Value		Cost		Market Value		Cost		Market Value
Trading securities:
US Government Obligations	$	59,905	$	59,954	$	-	$	-	$	-	$	-
														(In thousands)
Securities carried at FVTNI (trading securities for comparative periods):													Securities carried at FVTNI (trading securities for comparative periods):
Common stocks		24		31		51		54		16		16		$	17,467	$	31,291	$	26	$	34	$	20	$	24
Mutual Funds		11		11		-		-		-		-			12		11		11		11		-		-
Total trading securities		59,940		59,996		51		54		16		16
Closed-end funds															99		105		-		-		-		-
Total securities carried at FVTNI															17,578		31,407		37		45		20		24

Available for sale securities:
Common stocks		21,319		41,315		18,739		37,131		17,649		32,873			-		-		17,441		36,637		18,739		33,058
Closed-end funds		99		114		99		100		-		-			-		-		99		108		99		108
Total available for sale securities		21,418		41,429		18,838		37,231		17,649		32,873			-		-		17,540		36,745		18,838		33,166

Total investments in securities	$	81,358	$	101,425	$	18,889	$	37,285	$	17,665	$	32,889		$	17,578	$	31,407	$	17,577	$	36,790	$	18,858	$	33,190

There were no securities sold, not yet purchased at ~~September 30, 2017,~~March 31, 2018, December 31, ~~2016~~2017 and ~~September 30, 2016.~~March 31, 2017.

~~$59.9 million of U.S. Government Obligations are held in an escrow account for the benefit of the Convertible Note holder.~~

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 condensed 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~~were classified as trading ~~securities. Trading~~ securities for the periods ended December 31, 2017 and March 31, 2017. Securities carried at FVTNI for the March 31, 2018 period-end and trading securities in the periods ending December 31, 2017 and March 31, 2017 are stated at fair value, with any unrealized gains or losses reported in current period earnings. Available for sale (“AFS”) investments for the periods ended December 31, 2017 and March 31, 2017 are stated at fair value, with any unrealized gains or losses, net of taxes, reported as a component of equity except for losses deemed to be other than temporary (“OTT”) which ~~are~~were recorded as realized losses in the condensed consolidated statements of income.

Effective January 1, 2018, the Company adopted ASU 2016-01, which eliminated available for sale accounting and resulted in the reclassification of $12.1 million, net of tax, out of accumulated comprehensive income and into retained earnings in the condensed consolidated statement of financial condition. As a result, for the three months ended March 31, 2018, changes in the fair value of the Company’s entire investment portfolio are now recorded in the net gain (loss) from investments line in the condensed consolidated statements of income rather than through other comprehensive income.

The following table identifies all reclassifications out of accumulated other comprehensive income ~~(“AOCI”~~("AOCI") into income for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2017 ~~and 2016~~ (in thousands):. (No disclosure is needed for the three months ended March 31, 2018 due to the adoption of ASU 2016-01.)

Amount Affected Line Items Reason for
Reclassified in the Statements Reclassification
from AOCI Of Income from AOCI
Three Months Ended September 30,
2017 2016
$ 20 $ - Net gain from investments Realized gain on sale of AFS securities
2,821 7 Other operating expenses/net gains from investments Realized gain on donations of AFS securities
2,841 7 Income before income taxes
(1,051 ) (3 ) Income tax provision
$ 1,790 $ 4 Net income

Amount			Affected Line Items	Reason for
Reclassified			in the Statements	Reclassification
from AOCI			Of Income	from AOCI
Three months ended
March 31, 2017

	$	-	Net gain from investments	Realized gain on sale of AFS securities
		-	Other operating expenses/net gain from investments	Realized gain on donation of AFS securities
		-	Income before income taxes
		-	Income tax provision
	$	-	Net income

Amount Affected Line Items Reason for
Reclassified in the Statements Reclassification
from AOCI Of Income from AOCI
Nine Months Ended September 30,
2017 2016
$ 20 $ 4 Net gain from investments Realized gain on sale of AFS securities
2,855 159 Other operating expenses/net gains from investments Realized gain on donations of AFS securities
2,875 163 Income before income taxes
(1,064 ) (61 ) Income tax provision
$ 1,811 $ 102 Net income

The following is a summary of the cost, gross unrealized gains, gross unrealized losses and fair value of available for sale investments as of ~~September 30, 2017,~~ December 31, ~~2016~~2017 and ~~September 30, 2016:~~March 31, 2017. (No disclosures are required as of March 31, 2018 due to the adoption of ASU 2016-01.)

September 30, 2017
Gross Gross
Unrealized Unrealized
Cost Gains Losses Fair Value
(In thousands)
Common stocks $ 21,319 $ 19,996 $ - $ 41,315
Closed-end funds 99 15 - 114
Total available for sale securities $ 21,418 $ 20,011 $ - $ 41,429

December 31, 2016
Gross Gross
Unrealized Unrealized
Cost Gains Losses Fair Value
(In thousands)
Common stocks $ 18,739 $ 18,392 $ - $ 37,131
Closed-end funds 99 1 - 100
Total available for sale securities $ 18,838 $ 18,393 $ - $ 37,231

	September 30, 2016												December 31, 2017
				Gross			Gross									Gross			Gross			Estimated
				Unrealized			Unrealized									Unrealized			Unrealized			Market
	Cost			Gains			Losses			Fair Value			Cost			Gains			Losses			Value
	(In thousands)												(In thousands)
Common stocks		$	17,649		$	15,224		$	-		$	32,873		$	17,441		$	19,196		$	-		$	36,637
Closed-end funds															99			9			-			108
Total available for sale securities		$	17,649		$	15,224		$	-		$	32,873		$	17,540		$	19,205		$	-		$	36,745

													March 31, 2017
																Gross			Gross			Estimated
																Unrealized			Unrealized			Market
													Cost			Gains			Losses			Value
													(In thousands)
Common stocks														$	18,739		$	14,319		$	-		$	33,058
Closed-end funds															99			9			-			108
Total available for sale securities														$	18,838		$	14,328		$	-		$	33,166

A net unrealized ~~gain,~~loss, net of taxes, for the three months ended ~~September 30,~~March 31, 2017 ~~and 2016~~ of ~~$2.3~~$2.6 million ~~and $0.5 million, respectively,~~ has been included in other comprehensive income, a component of equity, at September 30, 2017 and 2016. During the three months ended September 30, 2017, proceeds from the sales of investments available for sale were approximately $321,000 and gross gains on the sale of investments available for sale amounted to $20,000 and were reclassified from other comprehensive income into net gain from investments in the condensed consolidated statements of income.March 31, 2017. There were no sales of investments available for sale for the three months ended ~~September 30, 2016.~~March 31, 2017. There were no realized losses on the sale of investments available for sale for the three months ended September 30, 2017 or September 30, 2016. A net unrealized gain, net of taxes, for the nine months ended September 30, 2017 and 2016 of $1.0 million and $0.3 million, respectively, has been included in other comprehensive income, a component of equity, at September 30, 2017 and 2016, respectively. During the nine months ended September 30, 2017 and 2016, proceeds from the sales of investments available for sale were approximately $321,000 and $408,000, respectively, and gross gains on the sale of investments available for sale amounted to $20,000 and $4,000, respectively, and were reclassified from other comprehensive income into net gain from investments in the condensed consolidated statements of income. There were no realized losses on the sale of investments available for sale for the nine months ended September 30, 2017 or September 30, 2016.March 31, 2017. The basis on which the cost of a security sold is determined using specific identification. Accumulated other comprehensive income onin the condensed consolidated statements of equity is primarily comprised of unrealized gains/losses, net of taxes, for AFS securities.

The Company has an established accounting policy and methodology to determine other-than-temporary impairment on available for sale securities. Under this policy, available for sale securities are evaluated for other than temporary impairments and any impairment charges are recorded in net gain/(loss) from investments on the condensed consolidated statements of income. Management reviews all available for sale securities whose cost exceeds their market value to determine if the impairment is other than temporary. Management uses qualitative factors such as diversification of the investment, the amount of time that the investment has been impaired, the intent to sell and the severity of the decline in determining whether the impairment is other than temporary.

There were no investments classified as available for sale that were in an unrealized loss position at ~~September 30, 2017,~~ December 31, ~~2016~~2017 or ~~September 30, 2016.~~March 31, 2017.

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2017, ~~and 2016,~~ there were no losses on available for sale securities that were deemed to be other than temporary.

1314

C.D. Fair Value

The following tables present information about the Company’s assets and liabilities by major categories measured at fair value on a recurring basis as of ~~September 30, 2017,~~March 31, 2018, December 31, ~~2016~~2017 and ~~September 30, 2016~~March 31, 2017 and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value:

Assets and Liabilities Measured at Fair Value on a Recurring Basis as of ~~September 30, 2017~~March 31, 2018 (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		September 30,		Markets for Identical		Observable		Unobservable		March 31,
Assets	Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		2017		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		2018
Cash equivalents	$	60,702	$	-	$	-	$	60,702	$	27,034	$	-	$	-	$	27,034
Investments in securities:
AFS - Common stocks		41,315		-		-		41,315
AFS - Closed-end Funds		114		-		-		114
US Government Obligations		59,954		-		-		59,954
Trading - Common stocks		31		-		-		31
Trading - Mutual Funds		11		-		-		11
Common stocks										31,291		-		-		31,291
Mutual Funds										11		-		-		11
Closed-end Funds										105		-		-		105
Total investments in securities		101,425		-		-		101,425		31,407		-		-		31,407
Total assets at fair value	$	162,127	$	-	$	-	$	162,127	$	58,441	$	-	$	-	$	58,441

Assets and Liabilities Measured at Fair Value on a Recurring Basis as of December 31, ~~2016~~2017 (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		December 31,		Markets for Identical		Observable		Unobservable		December 31,
Assets	Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		2016		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		2017
Cash equivalents	$	39,638	$	-	$	-	$	39,638	$	17,475	$	-	$	-	$	17,475
Investments in securities:
AFS - Common stocks		37,131		-		-		37,131		36,637		-		-		36,637
AFS - Closed-end Funds		100		-		-		100		108		-		-		108
Trading - Common stocks		54		-		-		54		34		-		-		34
Trading - Mutual funds										11		-		-		11
Total investments in securities		37,285		-		-		37,285		36,790		-		-		36,790
Total assets at fair value	$	76,923	$	-	$	-	$	76,923	$	54,265	$	-	$	-	$	54,265

Assets and Liabilities Measured at Fair Value on a Recurring Basis as of ~~September 30, 2016~~March 31, 2017 (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		September 30,		Markets for Identical		Observable		Unobservable		March 31,
Assets	Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		2016		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		2017
Cash equivalents	$	33,576	$	-	$	-	$	33,576	$	88,082	$	-	$	-	$	88,082
Investments in securities:
AFS - Common stocks		32,873		-		-		32,873		33,058		-		-		33,058
AFS - Closed-end Funds										108		-		-		108
Trading - Common stocks		16		-		-		16		24		-		-		24
Total investments in securities		32,889		-		-		32,889		33,190		-		-		33,190
Total assets at fair value	$	66,465	$	-	$	-	$	66,465	$	121,272	$	-	$	-	$	121,272

During the quarters ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ there were no transfers between any Level 1 and Level 2 holdings, or between Level 1 and Level 3 holdings.

D.E. Income Taxes

The effective tax rate ~~(“ETR”~~("ETR") for the three months ended ~~September 30,~~March 31, 2018 and March 31, 2017 was 22.6% and ~~September 30, 2016 was 18.8% and 31.9%~~38.1%, ~~respectively.~~ respectively.

The decline in the ETR for the nine months ended September 30, 2017 and September 30, 2016 was 34.4% and 35.9%, respectively. The current year quarter’s ETR benefited from the reversal of certain tax accruals totaling $3.6 million due to a change in accounting estimate as well as a $1.0 million tax benefit related to the charitable contribution while the prior year quarter benefited from a reversal of $2.6 million in tax accrualsis almost exclusively due to the ~~conclusion of a state audit.~~

lower Federal tax rate under the Tax Cuts and Jobs Act which lowered our Federal tax rate from 35% to 21%, effective January 1, 2018.

1415

E.F. Earnings Per Share

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

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
(in thousands, except per share amounts)	2017		2016		2017		2016
(In thousands, except per share amounts)									2018		2017
Basic:
Net income attributable to GAMCO Investors, Inc.'s
shareholders	$	16,600	$	30,861	$	64,314	$	84,429
Net income attributable to GAMCO Investors, Inc.'s shareholders									$	27,261	$	24,820
Weighted average shares outstanding		28,926		29,185		28,930		29,222		28,916		28,970

Basic net income per share attributable to GAMCO
Investors, Inc.'s shareholders	$	0.57	$	1.06	$	2.22	$	2.89	$	0.94	$	0.86

Diluted:
Net income attributable to GAMCO Investors, Inc.'s shareholders	$	16,600	$	30,861	$	64,314	$	84,429	$	27,261	$	24,820
Add interest on convertible note, net of management fee and taxes		696		387		2,192		387
Add interest on convertible notes, net of management fee and taxes										-		748
Total income attributable to GAMCO Investors, Inc.'s shareholders	$	17,296	$	31,248	$	66,506	$	84,816	$	27,261	$	25,568

Weighted average share outstanding		28,926		29,185		28,930		29,222		28,916		28,970
Restricted stock awards		247		221		214		253		-		190
Assumed conversion of convertible note		2,000		1,000		2,000		336
Assumed conversion of convertible notes										-		2,000
Total		31,173		30,406		31,144		29,811		28,916		31,160

Diluted net income per share attributable to GAMCO
Investors, Inc.'s shareholders	$	0.55	$	1.03	$	2.14	$	2.85	$	0.94	$	0.82

F.G. Debt

Debt consists of the following:

	September 30, 2017						December 31, 2016						September 30, 2016						March 31, 2018						December 31, 2017						March 31, 2017
	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)
4.5 % Convertible note		$	109,862			111,574		$	109,835		$	111,525		$	109,826		$	112,172		$	-			-		$	-		$	-		$	109,844		$	111,634
AC 4% PIK Note			70,000			71,755			100,000			100,930			100,000			101,347			40,000			39,860			50,000			50,572			90,000			90,932
AC 1.6% Note																					-			-			15,000			14,972			-			-
5.875% Senior notes			24,138			24,748			24,120			24,558			24,115			25,073			24,150			23,742			24,144			24,543			24,126			24,558
Total		$	204,000		$	208,077		$	233,955		$	237,013		$	233,941		$	238,592		$	64,150		$	63,602		$	89,144		$	90,087		$	223,970		$	227,124

4.5% Convertible Note

On August 15, 2016, the Company issued and sold a 5-year, $110 million convertible note (“Convertible Note”). The note ~~bears~~bore interest at a rate of 4.5% per annum and iswas convertible into shares of the Company’s Class A Common stock (“Class A Stock”) at an initial conversion price of $55.00 per share. The Convertible Note iswas initially convertible into two million shares of the Company’s Class A Stock, subject to adjustment pursuant to the terms of the Convertible Note. The Company iswas required to repurchase the Convertible Note at the request of the holder on specified dates or after certain circumstances involving a Fundamental Change (as defined in the Convertible Note). The Company recorded $174,000 of costs in connection with the issuance of the Convertible Note. On November 20, 2017, the Company and the Convertible Note holder agreed to amend the Convertible Note to allow for an early redemption if the Company paid the Convertible Note holder 103% of the unpaid principal plus all accrued but unpaid interest on the redemption date. On November 21, 2017, the Company redeemed the Convertible Note for $114.6 million. The payment was equal to 103% of the unpaid principal amount of the note plus accrued interest. As a result, the Company recorded a loss on extinguishment of debt of $3.3 million and expensed the remaining $135,000 of issuance costs.

GGCP, Inc. (“GGCP”), which owns approximately ~~63 %~~63% of the equity interest of the Company, ~~has~~initially deposited cash equal to the principal amount of the Note and six months interest (“Initial Deposit”) into an escrow account established pursuant to an escrow agreement by and among GGCP, the Company, the Convertible Note holder and the escrow ~~agent.~~agent (the “Escrow Agreement”). In connection with the Initial Deposit made by GGCP, the Company ~~has~~had agreed that GGCP ~~has~~had a right to demand payment in an amount equal to any funds withdrawn from the escrow account by the Convertible Note holder.

A portion of the proceeds from the sale of the Convertible Note are now held in an escrow account established pursuant to an escrow agreement dated August 15, 2016 by and among the Company, GGCP and its related parties, Cascade and JP Morgan Chase Bank, National Association, as escrow agent (the “Escrow Agreement”). On September 30, 2017, in connection with an amendment to the Escrow Agreement and in exchange for approximately 53% of the assets in the escrow account, the Company paid GGCP $60 million. ~~The $60~~On November 21, 2017, the Company paid GGCP $53 million ~~is disclosed as restricted cash and restricted investment in securities of $0.1 million and $59.9 million, respectively, on the statement of financial condition. The Escrow Agreement provides~~ for the ~~release to the Company of a pro rata portion~~remaining 47% of the ~~escrowed funds upon repayment of~~assets in the ~~Convertible Note or conversion of the Convertible Note, based upon the principal amount of the Convertible Note~~escrow account that is converted into Class A Stock. Under the Convertible Note, Cascade has the right to claim the escrowed funds upon a payment default by the Company. It is the Company’s current plan to redeem the Convertible Note no later than February 15, 2019.it did not previously own.

AC 4% PIK Note

In connection with the ~~spin-off~~Spin-off of AC on November 30, 2015, the Company issued a $250 million promissory note (the “AC 4% PIK Note”) payable to AC. The AC 4% PIK Note bears interest at 4.0% per annum. The original principal amount has a maturity date of November 30, 2020. Interest on the AC 4% PIK Note will accrue from the date of the last interest payment, or if no interest has been paid, from the effective date of the AC 4% PIK Note. At the election of the Company, payment of interest on the AC 4% PIK Note may be paid in kind (in whole or in part) on the then-outstanding principal amount (a “PIK Amount”) in lieu of cash. All PIK Amounts added to the outstanding principal amount of the AC 4% PIK Note will mature on the fifth anniversary from the date the PIK Amount was added to the outstanding principal of the AC 4% PIK Note. In no event may any interest be paid in kind subsequent to November 30, 2019. The Company may prepay the AC 4% PIK Note (in whole or in part) prior to maturity without penalty.

During the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2018, the Company prepaid $10 million ~~and $30 million, respectively,~~ of principal of the AC 4% PIK Note against the principal amount due on November 30, ~~2018. Of the $70 million principal amount outstanding after this payment, $20 million is due on November 30, 2019, and $50 million is due on November 30,~~ 2020. During the three ~~and nine~~ months ended ~~September 30, 2016,~~March 31, 2017, the Company prepaid ~~$150~~$10 million of principal of the AC 4% PIK Note.

Subsequent to ~~quarter end,~~March 31, 2018, the Company paid an additional ~~$20~~$10 million of principal, thereby reducing the amount outstanding to ~~$50~~$30 million, all of which is due on November 30, 2020.

AC 1.6% Note

On December 26, 2017, to finance tax payments and for working capital purposes, the Company borrowed $15 million from AC in exchange for a note that bore interest at 1.6% per annum. On February 28, 2018, the date of maturity, the Company repaid the entire principal and accrued interest.

5.875% Senior ~~Notes~~notes

On May 31, 2011, the Company issued 10-year, $100 million senior notes (“("Senior ~~Notes”~~Notes"). The Senior 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 Senior Notes at 101% of their principal amount.

At ~~September 30, 2017,~~March 31, 2018, December 31, ~~2016~~2017 and ~~September 30, 2016,~~March 31, 2017, the debt was recorded at its face value, net of issuance costs, of ~~$24.1~~$24.2 million, $24.1 million and $24.1 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. The Company has not elected the fair value option for its debt, and, therefore, the provisions of ASU 2016-01 (adopted by the Company on January 1, 2018) related to instrument-specific credit risk are not applicable.

G.H. Stockholders’ Equity

Shares outstanding were ~~29.2~~28.9 million, ~~29.5~~29.0 million and ~~29.5~~29.3 million on ~~September 30, 2017,~~March 31, 2018, December 31, ~~2016~~2017 and ~~September 30, 2016,~~March 31, 2017, respectively.

Dividends

	Record	Payment
	Date	Date	Amount

Three months ended March 31, 2018	March 13, 2018	March 27, 2018		$	0.02
Three months ended March 31, 2017	March 14, 2017	March 28, 2017		$	0.02

1617

~~Dividends~~

Record Payment
Date Date Amount

Three months ended March 31, 2017 March 14, 2017 March 28, 2017 $ 0.02
Three months ended June 30, 2017 June 27, 2017 July 11, 2017 0.02
Three months ended September 30, 2017 September 12, 2017 September 26, 2017 0.02
Nine months ended September 30, 2017 $ 0.06

Record Payment
Date Date Amount

Three months ended March 31, 2016 March 15, 2016 March 29, 2016 $ 0.02
Three months ended June 30, 2016 June 14, 2016 June 28, 2016 0.02
Three months ended September 30, 2016 September 13, 2016 September 27, 2016 0.02
Nine months ended September 30, 2016 $ 0.06

Voting Rights

The holders of Class A Stock and Class B Common stock (“Class B 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~~one Plan approved by the shareholders, which ~~are~~is 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 7.5 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”). 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.

As of ~~September 30, 2017,~~ December 31, ~~2016~~2017 and ~~September 30, 2016,~~March 31, 2017, there were ~~164,050 RSA shares, 424,340~~19,400 RSA shares and ~~427,290~~420,240 RSA shares outstanding, respectively, that were previously issued at an average weighted grant price of ~~$66.84, $65.74~~$65.67 and ~~$65.72,~~$65.59, respectively. These RSA grants occurred prior to the spin-off of Associated Capital (“AC”). There were no RSAs outstanding as of March 31, 2018. On November 30, 2015, pursuant to the spin-off, all RSA grant holders received shares of AC’s Class A common stock as a result of their ownership of their GAMCO unvested RSAs (one share of AC for each share of GBL). 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 (deficit) on the declaration date.

On June 1, 2017, the Compensation Committee of AC accelerated the vesting of all 420,240 AC RSAs outstanding effective June 15, 2017. As a result, GBL recorded an incremental $3.7 million of stock-based compensation expense for the nine months ended September 30, 2017. This amount related to GBL teammates who held AC RSAs. There will be no further expense related to these AC RSAs recorded by GBL after the second quarter ended June 30, 2017.

~~On August 7, 2017,~~January 5, 2018, the Compensation Committee of GBL accelerated the vesting relating to ~~201,120 of GBL~~the remaining 19,400 RSAs ~~outstanding effective August 31, 2017.~~outstanding. As a result, GBL recorded an incremental ~~$1.8~~$0.2 million of stock-based compensation expense ~~for~~during the ~~three and nine months ended September 30, 2017. There continue to be 164,050 GBL RSAs outstanding that were not vested as part~~first quarter of ~~this acceleration which will result in recognition of expense as these RSAs continue to vest. See table below for impact by quarter.~~2018.

ASU 2016-09, which was issued in March 2016 and became effective for interim and annual reporting periods beginning after December 15, 2016, simplifies several aspects of accounting for employee share-based payment transactions. Upon adoption of ASU 2016-09 on January 1, 2017, the Company elected not to change its accounting policy on forfeitures and continue to estimate forfeitures rather than accounting for forfeitures as they occur, an alternative allowed under ASU 2016-09. The Company’s accounting treatment for excess tax benefits or tax deficiencies also changed with the adoption of ASU 2016-09 on January 1, 2017. Excess tax benefits or tax deficiencies are now required to be recorded within the income tax expense line in the consolidated statement of income rather than to additional paid-in capital within the condensed consolidated statement of financial condition. During the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2018, the Company reduced previously recorded tax benefits relating to RSA expense by ~~$0.7~~$0.1 million ~~and $1.0 million, respectively,~~ on RSAs that vested. There were no RSA vestings for the three months ended March 31, 2017.

For the three months ended ~~September 30,~~March 31, 2018 and March 31, 2017, ~~and September 30, 2016,~~ we recognized stock-based compensation expense of ~~$2.1~~$0.2 million and ~~$1.2 million, respectively. For the nine months ended September 30, 2017 and September 30, 2016, we recognized stock-based compensation expense of $7.2 million and $3.3~~$0.7 million, respectively. The three month amount for ~~2017 includes the $1.8 million~~2018 is entirely related to the GBL RSA accelerated vesting mentioned above. The nine month amount for 2017 includes the $1.8 million related to the GBL RSAs’ accelerated vesting and the $3.7 million related to the AC RSAs’ accelerated vesting both mentioned above. All stock-based compensation expense in future periods for grants currently outstanding will relate to GBL RSAs only.

~~Actual~~As of March 31, 2018, there are no RSAs outstanding, and ~~projected stock-based~~therefore there is no unrecognized stock compensation expense ~~for RSA shares for the years ended December 31, 2016 through December 31, 2024 is as follows (in thousands):~~

2016 2017 2018 2019 2020 2021 2022 2023 2024
Q1 $ 1,037 $ 699 $ 144 $ 113 $ 72 $ 49 $ 32 $ 17 $ 4
Q2 1,036 4,381 141 113 68 49 32 17 4
Q3 1,186 2,103 126 101 57 39 24 10 2
Q4 691 157 113 90 49 32 17 4 -
Full Year $ 3,950 $ 7,340 $ 524 $ 417 $ 246 $ 169 $ 105 $ 48 $ 10

~~The total compensation cost~~ related to non-vested ~~RSAs not yet recognized is approximately $1.7 million as of September 30, 2017.~~RSAs.

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 May 3, 2017, our Board of Directors authorized an incremental 500,000 shares to be added to the current buyback authorization. On August 3, 2017, our Board of Directors authorized an incremental 425,352 shares to be added to the current buy back authorization. For the three months ended ~~September 30, 2017 and September 30, 2016,~~March 31, 2018, the Company repurchased ~~131,480~~119,334 shares ~~and 223,811 shares, respectively,~~ at an average price per share of $29.42 and $31.50, respectively. For the nine months ended September 30, 2017 and September 30, 2016, the Company repurchased 290,300 shares and 266,846 shares, respectively, at an average price per share of $29.71 and $31.41, respectively.$27.71. From the inception of the program through ~~September 30, 2017, 10,191,640~~March 31, 2018, 10,505,200 shares have been repurchased at an average price of ~~$43.90~~$43.45 per share. At ~~September 30, 2017,~~March 31, 2018, the total shares available under the program to be repurchased in the future were ~~868,520.~~554,960.

Shelf Registration

On May 4, 2015, the Securities and Exchange Commission (“SEC”) declared effective the “shelf” registration statement filed by the Company. The “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 early May ~~2015.~~2018. As of ~~September 30, 2017,~~March 31, 2018, $500 million is available on the shelf.

~~H. Related Party Transactions~~

~~In connection~~ The Company filed a new shelf registration statement with the ~~issuance of the Convertible Note~~SEC in August 2016, GGCP deposited cash of approximately $112.5 million, equal to the principal amount of the Convertible Note and six months interest, into an escrow account established pursuant to an escrow agreement by and among GGCP, the Company, the Convertible Note holder and the escrow agent. The Company paid the annual costs of setting up the escrow account in the amount of $55,000 and will continue to pay them as long as the escrow account is open. The Company did not pay any fees to GGCP in connection with the funding of the escrow account. On September 30, 2017, in connection with an amendment to the Escrow Agreement and in exchange for approximately 53% of the assets in the escrow account, the Company paid GGCP $60 million. See Note F. Debt for additional details.April 2018.

I. Identifiable Intangible Assets

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 onin the condensed consolidated statements of financial condition at ~~September 30, 2017,~~March 31, 2018, December 31, ~~2016~~2017 and ~~September 30, 2016.~~March 31, 2017. 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 ~~2018. On November 1, 2015, as~~2019. As a result of becoming the advisor to the Bancroft Fund Ltd. and the Ellsworth Growth and Income Fund Ltd. and the associated consideration paid, the Company maintains an identifiable intangible asset of $1.6 million within other assets onin the condensed consolidated statement of financial condition at ~~September 30, 2017,~~March 31, 2018, December 31, ~~2016~~2017 and ~~September 30, 2016.~~March 31, 2017. The advisory contracts for the Bancroft Fund Ltd. and the Ellsworth Growth and Income Fund Ltd. are both next up for renewal in August 2018. 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 ~~September 30,~~March 31, 2018 or March 31, 2017, ~~or September 30, 2016,~~ and as such there was no impairment analysis performed or charge recorded.

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’s financial condition, operations or cash flows at ~~September 30, 2017.~~March 31, 2018.

K. Related Party Transactions

On February 23, 2018, the Chief Executive Officer of the Company elected to waive all of his compensation that he would have otherwise been entitled to for the period of March 1, 2018 through December 31, 2018. For the three months ended March 31, 2018, the waiver reduced compensation by $4.9 million and management fee by $1.7 million. No projection can be reasonably provided as to the amount of compensation foregone by the waiver for April 1, 2018 through December 31, 2018 as the entirety of the CEO’s compensation is variably based.

L. Subsequent Events

On September 30, 2017, GAMCO entered into a third deferred compensation agreement with Mr. Gabelli for the period of October 1, 2017 to December 31, 2017. Mr. Gabelli’s variable cash compensation for that period will vest on April ~~1, 2019. For GAAP accounting purposes, the compensation earned from October 1, 2017 to December 31, 2017 will be expensed ratably from October 1, 2017 to March 31, 2019.~~

~~On October 3, 2017,~~4, 2018, the Company ~~paid an additional $20~~prepaid $10 million of principal ~~relating to~~of the AC 4% PIK Note, ~~thereby reducing~~against the principal amount ~~outstanding to $50 million, all of which is~~ due on November 30, ~~2020.~~2020 reducing the principal outstanding to $30 million.

On ~~November 7, 2017,~~April 4, 2018, the Compensation Committee of the Board of Directors authorized the granting of 270,500 RSAs. The RSAs will vest 30% after the third anniversary date and 70% after the fifth anniversary date.

On April 23, 2018, the Securities and Exchange Commission declared the Company’s shelf registration statement on Form S-3 effective. The shelf registration statement, which replaces the shelf registration statement from 2015, provides the Company with the ability to issue $500 million of debt or equity securities and expires in three years.

On May 8, 2018, the Board of Directors declared its regular quarterly dividend of $0.02 per share to all of its shareholders, payable on ~~January 10,~~July 2, 2018 to shareholders of record on ~~December 27, 2017.~~June 18, 2018.

On May 8, 2018, the Board of Directors authorized an additional $0.20 per share charitable contribution under our existing Shareholder Designated Charitable Contribution program. Registered holders of record as of June 30, 2018 will be eligible to participate. Since the inception of the program, GAMCO has donated $17 million to over 150 different charities on behalf of its shareholders.

From ~~October~~April 1, ~~2017~~2018 to ~~November 7, 2017,~~May 9, 2018, the Company repurchased ~~31,100~~68,010 shares at ~~$29.11~~$25.39 per share.

1920

ITEM 2: MANAGEMENT’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 Catalyst^TM investment approach,is a widely-recognized provider of investment advisory services to open-end funds, closed-end funds, Exchange Traded Managed Funds (“ETMFs”), and institutional and private wealth management investors principally in the United States. Through G.distributors, LLC (“G.distributors”), we provide open-end fund and ETMF 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.~~styles including value, growth, non-market correlated, and convertible securities. Our revenues are based primarily on the Company’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~~an 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) and Gabelli Funds, LLC (Funds). The distribution of our open-end funds and ETMFs is conducted through G.distributors, our broker-dealer subsidiary.

Assets under management (“AUM”) were ~~$43.1~~$40.9 billion as of ~~September 30, 2017, an increase~~March 31, 2018, a slippage of ~~$1.8~~$0.8 billion, or ~~4.3%~~2.0% from the March 31, 2017 AUM of $41.7 billion and a decrease of $2.2 billion, or 5.1%, from ~~June 30,~~December 31, 2017 of ~~$41.3 billion and an increase of $3.5 billion, or 8.9% from the September 30, 2016 AUM of $39.6~~$43.1 billion. The ~~third~~first quarter ~~2017~~2018 activity consisted of net cash outflows of ~~$213~~$1.1 billion, $951 million ~~$1.8 billion~~ of market ~~appreciation~~depreciation and recurring distributions, net of reinvestments, from open-end and closed-end funds of ~~$140~~$121 million. Average total AUM was ~~$42.3~~$42.5 billion in the ~~2017~~2018 quarter versus ~~$39.9~~$40.9 billion in the prior year period, an increase of ~~6.0%~~3.9%.

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, and ~~our GDL Fund (NYSE: GDL).~~two closed-end funds. As of ~~September 30, 2017,~~March 31, 2018, assets under management with incentive based fees were ~~$3.0~~$2.7 billion, $0.2 billion ~~higher~~less than the ~~$2.8~~$2.9 billion on ~~June 30, 2017 and $0.6 billion higher than the $2.4 billion on September 30, 2016.~~March 31, 2017.

2021

The Company reported Assets Under Management as follows (in millions):

Table I: Fund Flows - ~~3rd~~1st Quarter ~~2017~~2018

Fund
Market distributions,
June 30, appreciation/ Net cash net of September 30,
2017 (depreciation) flows reinvestments 2017
Equities:
Open-end Funds $ 13,574 $ 517 $ (305 ) $ (24 ) $ 13,762
Closed-end Funds 7,359 249 176 (116 ) 7,668
Institutional & PWM - direct 13,437 613 (157 ) - 13,893
Institutional & PWM - sub-advisory 5,048 368 (70 ) - 5,346
SICAV (a) 421 10 73 - 504
Total Equities 39,839 1,757 (283 ) (140 ) 41,173
Fixed Income:
Money-Market Fund 1,813 4 73 - 1,890
Institutional & PWM 29 - (3 ) - 26
Total Fixed Income 1,842 4 70 - 1,916
Total Assets Under Management $ 41,681 $ 1,761 $ (213 ) $ (140 ) $ 43,089

~~(a) Adjusted to include Merger Arbitrage of $371 million at June 30, 2017.~~

									Fund
			Market						distributions,
	December 31,		appreciation/			Net cash			net of			March 31,
	2017		(depreciation)			flows			reinvestments			2018
Equities:
Open-end Funds	$	13,747	$	(308	)	$	(466	)	$	(9	)	$	12,964
Closed-end Funds		8,053		(184	)		11			(112	)		7,768
Institutional & PWM - direct		13,420		(304	)		(724	)		-			12,392
Institutional & PWM - sub-advisory		5,432		(158	)		(23	)		-			5,251
SICAV		510		(4	)		21			-			527
Total Equities		41,162		(958	)		(1,181	)		(121	)		38,902
Fixed Income:
100% U.S. Treasury Fund		1,870		7			45			-			1,922
Institutional & PWM		31		-			(1	)		-			30
Total Fixed Income		1,901		7			44			-			1,952
Total Assets Under Management	$	43,063	$	(951	)	$	(1,137	)	$	(121	)	$	40,854

Table II: ~~Fund Flows - Year to date September 2017~~

Fund
Market distributions,
December 31, appreciation/ Net cash net of September 30,
2016 (depreciation) flows reinvestments 2017
Equities:
Open-end Funds $ 13,462 $ 1,354 $ (1,009 ) $ (45 ) $ 13,762
Closed-end Funds 7,150 712 162 (356 ) 7,668
Institutional & PWM - direct 13,441 1,523 (1,071 ) - 13,893
Institutional & PWM - sub-advisory 3,783 522 1,041 (b) - 5,346
SICAV (a) 320 29 155 - 504
Total Equities 38,156 4,140 (722 ) (401 ) 41,173
Fixed Income:
Money-Market Fund 1,767 9 114 - 1,890
Institutional & PWM 31 - (5 ) - 26
Total Fixed Income 1,798 9 109 - 1,916
Total Assets Under Management $ 39,954 $ 4,149 $ (613 ) $ (401 ) $ 43,089

~~(a) Adjusted to include Merger Arbitrage of $270 million at December 31, 2016.~~

~~(b) Includes $1.2 billion from being approved as the sub-advisor on two sub-advisory entities as of February 27, 2017.~~

~~Table III:~~ Assets Under Management by Quarter

							% Change From												% Change From
	September 30,		June 30,		September 30,		June 30,			September 30,			March 31,		December 31,		March 31,		December 31,			March 31,
	2017		2017		2016		2017			2016			2018		2017		2017		2017			2017
Equities:
Open-end Funds	$	13,762	$	13,574	$	13,799		1.4	%		(0.3	%)	$	12,964	$	13,747	$	13,708		(5.7	%)		(5.4	%)
Closed-end Funds		7,669		7,359		7,178		4.2			6.8			7,768		8,053		7,315		(3.5	)		6.2
Institutional & PWM - direct		13,893		13,437		13,245		3.4			4.9			12,392		13,420		13,492		(7.7	)		(8.2	)
Institutional & PWM - sub-advisory		5,346		5,048		3,542		5.9			50.9			5,251		5,432		5,019		(3.3	)		4.6
SICAV (a)		504		50		42		908.0			1,100.0			527		510		375		3.3			40.5
Total Equities		41,174		39,468		37,806		4.3			8.9			38,902		41,162		39,909		(5.5	)		(2.5	)
Fixed Income:
Money-Market Fund		1,890		1,813		1,738		4.2			8.7
100% U.S. Treasury Fund														1,922		1,870		1,752		2.8			9.7
Institutional & PWM		26		29		37		(10.3	)		(29.7	)		30		31		34		(3.2	)		(11.8	)
Total Fixed Income		1,916		1,842		1,775		4.0			7.9			1,952		1,901		1,786		2.7			9.3
Total Assets Under Management	$	43,090	$	41,310	$	39,581		4.3	%		8.9	%	$	40,854	$	43,063	$	41,695		(5.1	)		(2.0	)

Institutional & PWM - direct includes ~~$280~~$212 million, ~~$300~~$261 million and ~~$286~~$292 million of Money Market Fund AUM at ~~September 30, 2017, June 30,~~March 31, 2018, December 31, 2017 and ~~September 30, 2016,~~March 31, 2017, respectively.

(a) Adjusted to include Merger Arbitrage assets of ~~$371 million and $225~~$326 million at ~~June 30, 2017 and September 30, 2016, respectively.~~

March 31, 2017.

DEFERRED COMPENSATION

As previously disclosed, the Company has deferred the cash compensation of the Chief Executive Officer relating to all of 2016 (“2016 DCCA”) ~~and~~, the first half of 2017 (“First Half 2017 DCCA”), and the fourth quarter of 2017 (“Fourth Quarter 2017 DCCA”) to provide the Company with flexibility to pay down debt. We have made substantial progress toward this objective, having reduced our debt since the November 2015 spin-off of AC, resulting in Standard & Poor’s recent revision of its outlook to stable from negative and reaffirmation of our debt rating of BBB-. In furtherance of this strategic objective, we entered into a third DCCA agreement (“Fourth Quarter 2017 DCCA”) with our Chief Executive Officer on September 30, 2017 deferring his cash compensation for the fourth quarter of 2017 until April 2019 under terms that are similar to the prior two DCCAs. This new Fourth Quarter 2017 DCCA had no effect on the third quarter results but will impact our results in future quarters as his fourth quarter 2017’s compensation expense is amortized over the DCCA vesting period.

Notwithstanding its ability to settle these agreements in stock, GAMCO currently intends to make cash payments to Mr. Gabelli on the respective vesting dates. While the agreements did not change Mr. Gabelli’s compensation, GAAP reporting for his compensation did change due to the ratable vesting.

The DCCAs defer the Chief Executive Officer’s compensation expense by amortizing it over each DCCA’s respective vesting period. The Chief Executive Officer is not entitled to receive the compensation until the end of the vesting period, so generally accepted accounting principles (“GAAP”) specify this treatment of the expense. The 2016 DCCA is expensed ratably over 4 years, the First Half 2017 DCCA is expensed ratably over 18 months, and the Fourth Quarter DCCA will be expensed ratably over 18 ~~months beginning October 1, 2017.~~months.

Because the GAAP reporting of the DCCAs granted to the CEO tracks vesting, compensation expense and management fee expense in the year of grant is lower than compensation expense and management fee expense in future periods to the extent that future periods contain the vesting of the prior year’s DCCA compensation on top of the normal compensation for the current year period which has not been deferred. In 2016, the full amount of the compensation was deferred, and expense was recorded for the 25% vesting in that year. In the first six months of 2017, the ratable vesting continued for the 2016 compensation, and the new First Half 2017 DCCA grant resulted in compensation for the first six months of 2017 being deferred and expense being recorded for 33% vesting in that period. The ~~CEO's~~CEO’s third quarter compensation was not deferred so 100% of the CEO’s compensation for that period was recorded together with the ratable portions of the vestings of the 2016 DCCA and the First Half 2017 DCCA. So there is a compounding effect in future periods when there are both current period compensation that has not been deferred and prior period compensation that is being ratably vested.

Accordingly, this vesting schedule resulted in a ~~$19.1 million and a $26.8~~$5.2 million increase in compensation expense in the ~~third~~first quarter ~~2017 and first nine months of 2017, respectively,~~2018 versus the comparable ~~2016 periods’~~2017 period’s amounts as well as a ~~$4.0 million and $6.4~~$3.9 million increase in management fee expense in the ~~third~~first quarter ~~2017 and first nine months 2017, respectively,~~2018 as compared to the ~~2016 periods’~~2017 period’s amounts.

The following tables show the non-cash amortization and EPS impact of the DCCAs by quarter. The amortization amount of future periods assumes that the stock price of GBL is unchanged from March 31, 2018.

Non-cash amortization by quarter:											EPS impact by quarter:
	2017				2018		2019		2020			2017				2018			2019			2020
	(amounts in thousands)
Q1		$	(8,126	)	$	979	$	5,788	$	-	Q1		$	0.16		$	(0.03	)	$	(0.14	)	$	-
Q2			(7,389	)		10,936		3,592		-	Q2			0.15			(0.28	)		(0.08	)		-
Q3			9,805			5,788		3,592		-	Q3			(0.20	)		(0.15	)		(0.08	)		-
Q4			(1,857	)		5,788		3,592		-	Q4			0.04			(0.15	)		(0.08	)		-
Year		$	(7,567	)	$	23,491	$	16,564	$	-	Year		$	0.15		$	(0.61	)	$	(0.38	)	$	-

The GAAP based balance sheets are also impacted; the compensation payable at ~~September 30, 2017~~March 31, 2018 only includes the vested portion of the compensation subject to the DCCAs. At ~~September 30, 2017,~~March 31, 2018, the amount of unrecognized compensation was ~~$57.2~~$39.1 million.

The following tables show a reconciliation of our results for the ~~third~~first quarters of 2018 and ~~first nine months of~~ 2017, ~~and 2016,~~ and our balance sheet at ~~September 30, 2017~~March 31, 2018 between the GAAP basis and a non-GAAP adjusted basis as if all of the 2016 DCCA, ~~and~~ the First Half 2017 DCCA, and the Fourth Quarter 2017 DCCA expense were recognized in 2016, 2017 and ~~2017,~~2018, respectively, without regard to the vesting schedule. We believe the non-GAAP financial measures below provide relevant and meaningful information to investors about our core operating results. These measures have been established in order to increase transparency for the purpose of evaluating our core business, for comparing results with prior period results, and to enable more appropriate comparisons with industry peers. However, non-GAAP financial measures should not be considered a substitute for financial measures calculated in accordance with U.S. GAAP and may be calculated differently by other companies. The following schedules reconcile U.S. GAAP financial measures to non-GAAP measures for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ as well as at ~~September 30, 2017.~~March 31, 2018.

Three Months Ended September 30, 2017
Impact of
Reported First Half Impact of
GAAP 2017 DCCA 2016 DCCA Non-GAAP
Revenues
Investment advisory and incentive fees $ 77,328 $ - $ - $ 77,328
Distribution fees and other income 11,013 - - 11,013
Total revenues 88,341 - - 88,341
Expenses
Compensation 42,919 (4,816 ) (3,415 ) 34,688
Management fee 4,935 (886 ) (688 ) 3,361
Distribution costs 11,665 - - 11,665
Other operating expenses 5,429 - - 5,429
Total expenses 64,948 (5,702 ) (4,103 ) 55,143

Operating income 23,393 5,702 4,103 33,198
Other income (expense)
Net gain (loss) from investments 2,841 - - 2,841
Interest and dividend income 745 - - 745
Interest expense (2,688 ) - - (2,688 )
Shareholder-designated contribution (3,857 ) - - (3,857 )
Total other expense, net (2,959 ) - - (2,959 )
Income before income taxes 20,434 5,702 4,103 30,239
Income tax provision 3,834 2,167 1,559 7,560
Net income attributable to GAMCO Investors, Inc.'s shareholders $ 16,600 $ 3,535 $ 2,544 $ 22,679

Net income attributable to GAMCO Investors, Inc.'s shareholders
per share:
Basic $ 0.57 $ 0.12 $ 0.09 $ 0.78
Diluted $ 0.55 $ 0.11 $ 0.08 $ 0.75

	Nine Months Ended September 30, 2017												Three Months Ended March 31, 2018
				Impact of												Impact of			Impact of
	Reported			First Half			Impact of						Reported			Fourth Quarter			First Half			Impact of
	GAAP			2017 DCCA			2016 DCCA			Non-GAAP			GAAP			2017 DCCA			2017 DCCA			2016 DCCA			Non-GAAP
Revenues
Investment advisory and incentive fees	$	228,942		$	-		$	-		$	228,942		$	77,348		$	-		$	-		$	-		$	77,348
Distribution fees and other income		32,916			-			-			32,916			10,149			-			-			-			10,149
Total revenues		261,858			-			-			261,858			87,497			-			-			-			87,497
Expenses
Compensation		97,634			14,390			(9,174	)		102,850			25,950			(1,391	)		213			3,016			27,788
Management fee		9,455			2,666			(2,172	)		9,949			4,634			(419	)		(1,368	)		(1,030	)		1,817
Distribution costs		33,373			-			-			33,373			10,204			-			-			-			10,204
Other operating expenses		15,900			-			-			15,900			5,453			-			-			-			5,453
Total expenses		156,362			17,056			(11,346	)		162,072			46,241			(1,810	)		(1,155	)		1,986			45,262

Operating income		105,496			(17,056	)		11,346			99,786			41,256			1,810			1,155			(1,986	)		42,235
Other income (expense)
Net gain (loss) from investments		2,867			-			-			2,867			(5,347	)		-			-			-			(5,347	)
Interest and dividend income		1,765			-			-			1,765			492			-			-			-			492
Interest expense		(8,269	)		-			-			(8,269	)		(1,200	)		-			-			-			(1,200	)
Shareholder-designated contribution		(3,857	)		-			-			(3,857	)
Total other expense, net		(7,494	)		-			-			(7,494	)		(6,055	)		-			-			-			(6,055	)
Income before income taxes		98,002			(17,056	)		11,346			92,292			35,201			1,810			1,155			(1,986	)		36,180
Income tax provision		33,688			(6,594	)		4,350			31,444			7,940			453			289			(497	)		8,185
Net income attributable to GAMCO Investors, Inc.'s shareholders	$	64,314		$	(10,462	)	$	6,996		$	60,848		$	27,261		$	1,357		$	866		$	(1,489	)	$	27,995

Net income attributable to GAMCO Investors, Inc.'s shareholders
per share:
Basic	$	2.22		$	(0.36	)	$	0.24		$	2.10		$	0.94		$	0.05		$	0.03		$	(0.05	)	$	0.97
Diluted	$	2.14		$	(0.34	)	$	0.22		$	2.02		$	0.94		$	0.05		$	0.03		$	(0.05	)	$	0.97

	Three Months Ended March 31, 2017
				Impact of
	Reported			First Half			Impact of
	GAAP			2017 DCCA			2016 DCCA			Non-GAAP
Revenues
Investment advisory and incentive fees	$	74,989		$	-		$	-		$	74,989
Distribution fees and other income		10,928			-			-			10,928
Total revenues		85,917			-			-			85,917
Expenses
Compensation		25,278			9,540			(2,499	)		32,319
Management fee		2,164			1,865			(780	)		3,249
Distribution costs		10,913			-			-			10,913
Other operating expenses		5,119			-			-			5,119
Total expenses		43,474			11,405			(3,279	)		51,600

Operating income		42,443			(11,405	)		3,279			34,317
Other income (expense)
Net gain from investments		40			-			-			40
Interest and dividend income		469			-			-			469
Interest expense		(2,832	)		-			-			(2,832	)
Total other expense, net		(2,323	)		-			-			(2,323	)
Income before income taxes		40,120			(11,405	)		3,279			31,994
Income tax provision		15,300			(4,349	)		1,250			12,201
Net income attributable to GAMCO Investors, Inc.'s shareholders	$	24,820		$	(7,056	)	$	2,029		$	19,793

Net income attributable to GAMCO Investors, Inc.'s shareholders
per share:
Basic	$	0.86		$	(0.24	)	$	0.07		$	0.68
Diluted	$	0.82		$	(0.23	)	$	0.07		$	0.66

Three Months Ended September 30, 2016

Reported Impact of
GAAP 2016 DCCA Non-GAAP
Revenues
  Investment advisory and incentive fees $ 75,952 $ - $ 75,952
  Distribution fees and other income 11,769 - 11,769
Total revenues 87,721 - 87,721
Expenses
  Compensation 21,233 10,885 32,118
  Management fee 1,163 2,400 3,563
  Distribution costs 11,568 - 11,568
  Other operating expenses 5,681 - 5,681
Total expenses 39,645 13,285 52,930

Operating income 48,076 (13,285 ) 34,791
Other income (expense)
  Net gain from investments 55 - 55
  Interest and dividend income 371 - 371
  Interest expense (3,155 ) - (3,155 )
Total other expense, net (2,729 ) - (2,729 )
Income before income taxes 45,347 (13,285 ) 32,062
Income tax provision 14,486 (5,075 ) 9,411
Net income attributable to GAMCO Investors, Inc.'s shareholders $ 30,861 $ (8,210 ) $ 22,651

Net income attributable to GAMCO Investors, Inc.'s shareholders
  per share:
Basic $ 1.06 $ (0.28 ) $ 0.78 ��
Diluted $ 1.03 $ (0.27 ) $ 0.76

Nine Months Ended September 30, 2016

Reported Impact of
GAAP 2016 DCCA Non-GAAP
Revenues
  Investment advisory and incentive fees $ 219,594 $ - $ 219,594
  Distribution fees and other income 33,456 - 33,456
Total revenues 253,050 - 253,050
Expenses
  Compensation 62,130 32,016 94,146
  Management fee 3,376 6,926 10,302
  Distribution costs 32,786 - 32,786
  Other operating expenses 14,993 - 14,993
Total expenses 113,285 38,942 152,227

Operating income 139,765 (38,942 ) 100,823
Other income (expense)
  Net gain from investments 518 - 518
  Interest and dividend income 1,104 - 1,104
  Interest expense (9,729 ) - (9,729 )
Total other expense, net (8,107 ) - (8,107 )
Income before income taxes 131,658 (38,942 ) 92,716
Income tax provision 47,229 (14,811 ) 32,418
Net income attributable to GAMCO Investors, Inc.'s shareholders $ 84,429 $ (24,131 ) $ 60,298

Net income attributable to GAMCO Investors, Inc.'s shareholders
  per share:
Basic $ 2.89 $ (0.83 ) $ 2.06
Diluted $ 2.85 $ (0.81 ) $ 2.04

	March 31, 2018
				Impact of			Impact of
	Reported			Fourth Quarter			First Half			Impact of
	GAAP			2017 DCCA			2017 DCCA			2016 DCCA			Non-GAAP
ASSETS
Cash and cash equivalents	$	27,383		$	-		$	-		$	-		$	27,383
Investments in securities		31,407			-			-			-			31,407
Receivable from brokers		1,876			-			-			-			1,876
Investment advisory fees receivable		27,150			-			-			-			27,150
Receivable from affiliates		4,794			-			-			-			4,794
Income tax receivable		12,878			2,196			1,287			6,286			22,647
Other assets		11,505			-			-			-			11,505
Total assets	$	116,993		$	2,196		$	1,287		$	6,286		$	126,762

LIABILITIES AND EQUITY
Payable to brokers		164			-			-			-			164
Income taxes payable and deferred tax liabilities		7,491			-			-			-			7,491
Capital lease obligation		4,908			-			-			-			4,908
Compensation payable		84,333			8,784			5,148			25,145			123,410
Payable to affiliates		864			-			-			-			864
Accrued expenses and other liabilities		27,706			-			-			-			27,706
Sub-total		125,466			8,784			5,148			25,145			164,543

AC 4% PIK Note (due November 30, 2020)		40,000			-			-			-			40,000
5.875% Senior notes (due June 1, 2021)		24,150			-			-			-			24,150
Total liabilities		189,616			8,784			5,148			25,145			228,693

Equity
GAMCO Investors, Inc. stockholders' equity
Class A Common Stock		14			-			-			-			14
Class B Common Stock		19			-			-			-			19
Additional paid-in capital		12,759			-			-			-			12,759
Retained earnings (deficit)		194,732			(6,588	)		(3,861	)		(18,859	)		165,424
Accumulated other comprehensive income		(145	)		-			-			-			(145	)
Treasury stock, at cost		(280,002	)		-			-			-			(280,002	)
Total GAMCO Investors, Inc. stockholders' equity (deficit)		(72,623	)		(6,588	)		(3,861	)		(18,859	)		(101,931	)
Total liabilities and equity	$	116,993		$	2,196		$	1,287		$	6,286		$	126,762

September 30, 2017
Impact of
Reported Impact of First Half
GAAP 2016 DCCA 2017 DCCA Non-GAAP
ASSETS
Cash and cash equivalents $ 61,097 $ - $ - $ 61,097
Investments in securities 101,425 - - 101,425
Receivable from brokers 1,342 - - 1,342
Investment advisory fees receivable 25,549 - - 25,549
Receivable from affiliates 4,784 - - 4,784
Income tax receivable 24,941 14,724 7,017 46,682
Other assets 11,888 - - 11,888
Total assets $ 231,026 $ 14,724 $ 7,017 $ 252,767

LIABILITIES AND EQUITY
Payable to brokers 13,311 - - 13,311
Income taxes payable and deferred tax liabilities 3,215 - - 3,215
Capital lease obligation 4,976 - - 4,976
Compensation payable 82,896 38,748 18,467 140,111
Payable to affiliates 2,981 - - 2,981
Accrued expenses and other liabilities 24,134 - - 24,134
Sub-total 131,513 38,748 18,467 188,728

4.5% Convertible note (due August 15, 2021) 109,862 - - 109,862
AC 4% PIK Note (due November 30, 2020) 70,000 - - 70,000
5.875% Senior notes (due June 1, 2021) 24,138 - - 24,138
Total liabilities 335,513 38,748 18,467 392,728

Equity
GAMCO Investors, Inc. stockholders' equity
Class A Common Stock 14 - - 14
Class B Common Stock 19 - - 19
Additional paid-in capital 11,084 - - 11,084
Retained earnings (deficit) 143,026 (24,024 ) (11,450 ) 107,552
Accumulated other comprehensive income 12,365 - - 12,365
Treasury stock, at cost (270,995 ) - - (270,995 )
Total GAMCO Investors, Inc. stockholders' equity (deficit) (104,487 ) (24,024 ) (11,450 ) (139,961 )
Total liabilities and equity (deficit) $ 231,026 $ 14,724 $ 7,017 $ 252,767

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 ~~September 30, 2017~~March 31, 2018 Compared To Three Months Ended ~~September 30, 2016~~March 31, 2017

(Unaudited; in thousands, except per share data)
	2017			2016			2018			2017
Revenues
Investment advisory and incentive fees	$	77,328		$	75,952		$	77,348		$	74,989
Distribution fees and other income		11,013			11,769			10,149			10,928
Total revenues		88,341			87,721			87,497			85,917
Expenses
Compensation		42,919			21,233			25,950			25,278
Management fee		4,935			1,163			4,634			2,164
Distribution costs		11,665			11,568			10,204			10,913
Other operating expenses		5,429			5,681			5,453			5,119
Total expenses		64,948			39,645			46,241			43,474
Operating income		23,393			48,076			41,256			42,443
Other income (expense)
Net gain from trading securities		2,841			55
Net gain (loss) from investments								(5,347	)		40
Interest and dividend income		745			371			492			469
Interest expense		(2,688	)		(3,155	)		(1,200	)		(2,832	)
Shareholder-designated contribution		(3,857	)		-
Total other expense, net		(2,959	)		(2,729	)		(6,055	)		(2,323	)
Income before income taxes		20,434			45,347			35,201			40,120
Income tax provision		3,834			14,486			7,940			15,300
Net income attributable to GAMCO Investors, Inc.'s shareholders	$	16,600		$	30,861		$	27,261		$	24,820

Net income attributable to GAMCO Investors, Inc.'s shareholders per share:
Basic	$	0.57		$	1.06		$	0.94		$	0.86

Diluted	$	0.55		$	1.03		$	0.94		$	0.82

Overview

Net income for the quarter was ~~$16.6~~$27.3 million, or ~~$0.55~~$0.94 per fully diluted share, versus ~~$30.9~~$24.8 million, or ~~$1.03~~$0.82 per fully diluted share, in the prior year’s quarter. ~~There were several distinct items in both quarters that~~The quarter to quarter comparison was impacted ~~results. During the third quarter of 2017, we recorded an additional $1.7 million of stock~~by higher revenues partially offset by higher variable compensation and higher other expense, net of tax, $0.6 million of launch costs, net of tax, for a closed-end fund, $2.2 million of charitable contributions, net of tax, and an additional $6.1 million of expense, net of tax, for the 2016 DCCA and the First Half 2017 DCCA. The 2017 quarter also included the recognition of $2.6 million in gains on securities donated, net of tax, and a $3.4 million income tax accrual reversal. The 2016 third quarter included $8.2 million less in expense, net of tax, relating to the 2016 DCCA, an income tax reversal of $2.6 million and $0.3 million of expense, net of tax, from the launch of a closed-end fund. Absent these distinct items, net income for 2017 was $21.2 million versus $20.4 million in 2016.net.

Revenues

Investment advisory and incentive fees for the ~~third~~first quarter ~~2017~~2018 were $77.3 million, ~~1.7%~~3.1% higher than the ~~2016~~2017 comparative figure of ~~$76.0~~$75.0 million. Open-end fund revenues increased by ~~0.6%~~1.2% to ~~$33.8~~$32.9 million from ~~$33.6~~$32.5 million in the ~~third~~first quarter of ~~2016.~~2017. Our closed-end fund revenues increased ~~5.2%~~11.0% to ~~$16.2~~$17.1 million in the ~~third~~first quarter ~~2017~~2018 from $15.4 million in ~~2016 due to a 5.3% increase in non-performance fee based average AUM.~~2017. Institutional and private wealth management account revenues, excluding incentive fees, which are generally based on beginning of quarter AUM, ~~fell~~declined $0.2 million to $26.0 million from $26.2 million in the ~~third~~first quarter of ~~2016.~~2017. There were no incentive fees earned during the ~~third~~first quarters of ~~2017~~2018 or ~~2016.~~2017. We recognize incentive fees only when the earning period for them is complete. Revenues relating to the SICAV were $1.3 million in the ~~third~~first quarter of ~~2017~~2018 versus ~~$0.8~~$0.9 million in the ~~third~~first quarter of ~~2016.~~2017.

Open-end fund distribution fees and other income were ~~$11.0~~$10.1 million for the ~~third~~first quarter ~~2017,~~2018, a decrease of $0.8 million or ~~6.8%~~7.3% from ~~$11.8~~$10.9 million in the prior year period, primarily due to lower average AUM in open-end equity funds that generate distribution fees.

Expenses

Compensation costs, which are largely variable, were ~~$42.9~~$26.0 million or ~~102.4%~~2.8% higher than prior year compensation costs of ~~$21.2~~$25.3 million. ~~This is primarily due to the accounting for the vesting of the DCCAs.~~

~~Because the GAAP reporting~~The amortization of the DCCAs granted to the CEO tracks vesting, compensation expense in the year of grant is lower than compensation expense in future periods to the extent that future periods contain the vesting of the prior year’s DCCA compensation on top of the normal compensation for the current year period which has not been deferred. In 2016, the full amount of the compensation was deferred, and expense was recorded for the 25% vesting in that year. In the first half of 2017, the ratable vesting continued for the 2016 compensation, and the new First Half 2017 DCCA grant resulted in compensation for the first six months of 2017 being deferred and expense being recorded for 33% vesting in that period. In the third quarter 2017, there was no DCCA so 100% of the CEO’s compensation for that period was recorded together with the ratable portions of the vestings of the 2016 DCCA and the First Half 2017 DCCA. So there is a compounding effect in future periods when there are both current period compensation that has not been deferred and prior period compensation that is being ratably vested. Accordingly, this vesting schedule resulted in a ~~$19.1~~$5.2 million increase inyear over year, mostly offset by the CEO waiver which reduced first quarter of 2018 compensation ~~in third quarter 2017 versus third quarter 2016.~~expense by $4.9 million.

The remainder of the quarter over quarter increase was comprised of a ~~$1.1~~$0.1 million increase in variable compensation related to the increased levels of AUM, a ~~$0.6~~$0.8 million increase in fixed compensation, and a ~~$0.9~~$0.5 million ~~net increase~~decrease in stock compensation ~~expense, inclusive of the $1.8 million incurred in the third quarter of 2017 for the acceleration of the GBL RSAs.~~expense.

Management fee expense, which is wholly variable and based on pretax income, increased to ~~$4.9~~$4.6 million in the ~~third~~first quarter of ~~2017~~2018 from ~~$1.2~~$2.2 million in the ~~2016~~2017 period. Once again, this increase is primarily due to the accounting for the vesting of the DCCAs. The DCCAs affected management fee expense, which is part of the CEO’s DCCAs, in a similar fashion to the compensation expense with the vesting schedule resulting in a ~~$4.0~~$3.9 million increase in management fee expense in the ~~third~~first quarter ~~2017~~2018 as compared with the ~~third~~first quarter ~~2016.~~2017. The CEO waiver reduced management fee expense by $1.7 million in the first quarter of 2018, while the remaining ~~$0.3 decline~~$0.2 increase in the year-over-year comparison is due to the ~~decline~~increase in pre-tax income on which the management fee is based.

Distribution costs were ~~$11.7~~$10.2 million, ~~an increase~~a decrease of ~~$0.1~~$0.7 million or ~~0.9%~~6.4% from ~~$11.6~~$10.9 million in the prior year’s period.

Other operating expenses were ~~$5.4~~$5.5 million in the ~~third~~first quarter of ~~2017, a decrease~~2018, an increase of ~~$0.3~~$0.4 million, or ~~5.3%~~7.8%, from ~~$5.7~~$5.1 million in the ~~third~~first quarter of 2016. The research fee paid to G.research increased to $0.8 million in the third quarter of 2017 from $0.4 million in the prior year quarter. Legal expense was lower by $0.7 million in the 2017 period.2017.

Operating income for the ~~third~~first quarter of ~~2017~~2018 was ~~$23.4~~$41.3 million, a decrease of ~~$24.7~~$1.1 million, or ~~51.4%~~2.6%, from the ~~$48.1~~$42.4 million in the ~~third~~first quarter of ~~2016.~~2017. Operating income, as a percentage of revenues, was ~~26.5%~~47.2% in the ~~2017~~2018 quarter as compared to ~~54.8%~~49.4% in the ~~2016~~2017 quarter.

Other expense

Total other expense, net was an expense of ~~$3.0~~$6.1 million for the ~~third~~first quarter ~~2017~~2018 versus an expense of ~~$2.7~~$2.3 million in the prior year’s quarter. Net losses from investments were $5.3 million in the first quarter of 2018 versus gains ~~from trading~~of $40,000 in the first quarter of 2017. The losses in the first quarter of 2018 include $5.4 million for securities which were carried as AFS securities (with gains and losses through other comprehensive income) prior to the adoption of ASU 2016-01 on January 1, 2018. Interest and dividend income was $0.5 million in both the first quarter 2018 and 2017. Interest expense was $1.2 million in the first quarter of 2018 versus $2.8 million in the ~~third~~first quarter of 2017 versus gains of $55,000 in the third quarter of 2016. Interest and dividend income increased to $0.7 million in the third quarter 2017 from $0.4 million in the third quarter 2016. Interest expense decreased $0.5 million to $2.7 million in the third quarter of 2017 from $3.2 million in the third quarter of 2016 as gross debt at September 30, 2017 was $29.9 million lower as debt fell from $233.9 million at September 30, 2016 to $204.0 million at September 30, 2017.

The effective tax rates (“ETR”) for the three months ended ~~September 30,~~March 31, 2018 and March 31, 2017 were 22.6% and ~~September 30, 2016 were 18.8% and 31.9%~~38.1%, respectively. The decline in the ETR for the three months ended September 30, 2017 was higher by 3.6% than it would have otherwise been as a result of a reduction to previously recorded stock compensation tax benefits. The current year quarter’s ETR benefited from the reversal of certain tax accruals totaling $3.4 million as well as a $1.0 million tax benefit related to charitable contributions while the prior year quarter benefited from a reversal of $2.6 million in tax accrualsis almost exclusively due to the ~~conclusion of a state audit.~~lower Federal tax rate under the Tax Cuts and Jobs Act which lowered our Federal tax rate from 35% to 21%, effective January 1, 2018.

~~Nine Months Ended September 30, 2017 Compared To Nine Months Ended September 30, 2016~~

(Unaudited; in thousands, except per share data)
2017 2016
Revenues
Investment advisory and incentive fees $ 228,942 $ 219,594
Distribution fees and other income 32,916 33,456
Total revenues 261,858 253,050
Expenses
Compensation 97,634 62,130
Management fee 9,455 3,376
Distribution costs 33,373 32,786
Other operating expenses 15,900 14,993
Total expenses 156,362 113,285
Operating income 105,496 139,765
Other income (expense)
Net gain from trading securities 2,867 518
Interest and dividend income 1,765 1,104
Interest expense (8,269 ) (9,729 )
Shareholder-designated contribution (3,857 ) -
Total other expense, net (7,494 ) (8,107 )
Income before income taxes 98,002 131,658
Income tax provision 33,688 47,229
Net income attributable to GAMCO Investors, Inc.'s shareholders $ 64,314 $ 84,429

Net income attributable to GAMCO Investors, Inc.'s shareholders per share:
Basic $ 2.22 $ 2.89

Diluted $ 2.14 $ 2.85

~~Overview~~

Net income for the first nine months was $64.3 million, or $2.14 per fully diluted share, versus $84.4 million, or $2.85 per fully diluted share, in the prior year’s first nine months. There were several distinct items in both periods that impacted results. During 2017, we recorded an additional $4.0 million of stock compensation expense, net of tax, $0.6 million of launch costs, net of tax, for a closed-end fund, and $2.2 million of charitable contributions, net of tax. The 2017 quarter also included a $3.4 million reduction of expense, net of tax, for the 2016 DCCA and the First Half 2017 DCCA, the recognition of $2.6 million in gains on securities donated, net of tax, and a $3.4 million income tax accrual reversal. The 2016 third quarter included $24.1 million less in expense, net of tax benefit, relating to the 2016 DCCA, a tax reversal of $2.6 million and $0.3 million of expense, net of tax benefit, from the launch of a closed-end fund. Absent these distinct items, net income for 2017 was $61.7 million versus $58.0 million in 2016.

~~Revenues~~

Investment advisory and incentive fees for the nine months ended September 2017 were $228.9 million, 4.2% higher than the 2016 comparative figure of $219.6 million. Open-end fund revenues increased by 2.2% to $99.7 million from $97.6 million in the first nine months of 2017. Our closed-end fund revenues increased 11.0% to $47.4 million in the nine months ended September 2017 from $42.7 million in 2016 due to a 7.4% increase 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, rose $1.3 million to $78.6 million from $77.3 million in the first nine months of 2016. There were no incentive fees earned during the first nine months of 2017 or 2016. We recognize incentive fees only when the earning period for them is complete. Revenues relating to the SICAV were $3.2 million in the nine months ended September 2017 versus $1.9 million in the nine months ended September 2016.

Open-end fund distribution fees and other income were $32.9 million for the first nine months of 2017, a decrease of $0.6 million or 1.8% from $33.5 million in the prior year period, primarily due to lower average AUM in open-end equity funds that generate distribution fees.

~~Expenses~~

Compensation costs, which are largely variable, were $97.6 million or 57.2% higher than prior year compensation costs of $62.1 million. This is primarily due to the accounting for the vesting of the DCCAs.

Because the GAAP reporting of the DCCAs granted to the CEO tracks vesting, compensation expense in the year of grant is lower than compensation expense in future periods to the extent that future periods contain the vesting of the prior year’s DCCA compensation on top of the normal compensation for the current year period which has not been deferred. In 2016, the full amount of the compensation was deferred, and expense was recorded for the 25% vesting in that year. In the first six months of 2017, the ratable vesting continued for the 2016 compensation, and the new First Half 2017 DCCA grant resulted in compensation for the first six months of 2017 being deferred and expense being recorded for 33% vesting in that period. In the third quarter 2017, there was no DCCA, so 100% of the CEO’s compensation for that period was recorded together with the ratable portions of the vestings of the 2016 DCCA and the First Half 2017 DCCA. So there is a compounding effect in future periods when there are both current period compensation that has not been deferred and prior period compensation that is being ratably vested. Accordingly, this vesting schedule resulted in a $26.8 million increase in compensation expense in the first nine months of 2017 versus the comparable 2016 period.

The remainder of the period over period increase was comprised of a $4.2 million increase in variable compensation related to the increased levels of AUM, a $0.6 million increase in fixed compensation, and a $3.9 million net increase in stock compensation expense, inclusive of the $5.5 million incurred in 2017 for the acceleration of the GBL and AC RSAs.

Management fee expense, which is wholly variable and based on pretax income, increased to $9.5 million in the nine months ended September 30, 2017 from $3.4 million in the 2016 period. Once again, this increase is primarily due to the accounting for the vesting of the DCCAs. The DCCAs affected management fee expense, which is part of the CEO’s DCCAs, in a similar fashion to the compensation expense with the vesting schedule resulting in a $6.4 million increase in management fee expense in the first nine months of 2017 as compared with the comparable period in 2016. The remaining $0.3 decline in the year-over-year comparison is due to the decline in pre-tax income on which the management fee is based.

~~Distribution costs were $33.4 million, an increase of $0.6 million or 1.8% from $32.8 million in the prior year’s period.~~

Other operating expenses were $15.9 million in the first nine months of 2017, an increase of $0.9 million, or 6%, from $15.0 million in the first nine months of 2016. The research fee paid to G.research increased to $2.3 million in the nine months ending September 30, 2017 from $1.1 million in the prior year period.

Operating income for the first nine months of 2017 was $105.5 million, a decrease of $34.3 million, or 24.5%, from the $139.8 million in the first nine months of 2016. Operating income, as a percentage of revenues, was 40.3% in the 2017 period as compared to 55.2% in the 2016 period.

~~Other expense~~

Total other expense, net was an expense of $7.5 million for the nine months ended September 30, 2017 versus an expense of $8.1 million in the prior year’s period. Net gains from trading securities increased to $2.9 million in the first nine months of 2017 from $0.5 million in the prior year period. Interest and dividend income increased to $1.8 million in the first nine months of 2017 from $1.1 million in the first nine months of 2016. Interest expense decreased $1.4 million to $8.3 million in the first nine months of 2017 from $9.7 million in the first nine months of 2016 as gross debt at September 30, 2017 was $204.0 million down from the $233.9 million at September 30, 2016.

The ETR for the nine months ended September 30, 2017 and September 30, 2016 were 34.4% and 35.9%, respectively. The ETR for the nine months ended September 30, 2017 was higher by 1.0% than it would have otherwise been as a result of a reduction to previously recorded stock compensation tax benefits. The current year quarter’s ETR benefited from the reversal of certain tax accruals totaling $3.6 million as well as a $1.0 million tax benefit related to charitable contributions while the prior year quarter benefited from a reversal of $2.6 million in tax accruals due to the conclusion of a state audit.

LIQUIDITY AND CAPITAL RESOURCES

Our principal assets are highly liquid in nature and consist of cash and cash equivalents, short-term investments and securities held for investment purposes. Cash and cash equivalents are comprised primarily of 100% U.S. Treasury money market funds managed by GAMCO.

Summary cash flow data is as follows:

	Nine months ended						Three months ended
	September 30,						March 31,
	2017			2016			2018			2017
Cash flows provided by / (used in) operations :	(in thousands)
Cash flows provided by/(used in) continuing operations :							(in thousands)
Operating activities	$	65,229		$	105,212		$	53,020		$	62,778
Investing activities		(3,611	)		185
Financing activities		(40,318	)		(85,292	)		(43,360	)		(14,358	)
Increase in cash and cash equivalents from operations		21,300			20,105
Increase in cash and cash equivalents from continuing operations								9,660			48,420
Effect of exchange rates on cash and cash equivalents		(15	)		28			(98	)		(2	)
Net increase		21,285			20,133			9,562			48,418
Cash and cash equivalents at beginning of period		39,812			13,719			17,821			39,812
Cash and cash equivalents at end of period	$	61,097		$	33,852		$	27,383		$	88,230

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 that was declared effective in ~~2015 which, among other things,~~April 2018, replacing the shelf that was set to expire in May 2018. The shelf 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 April ~~2018,~~2021, at which time it may be renewed.

On February 23, 2018, the Company announced that its CEO elected to waive all of his compensation that he would otherwise have been entitled to for the period from March 1, 2018 through December 31, 2018. As a result of this waiver, there was $6.6 million of compensation waived by the CEO for the first quarter of 2018.

At ~~September 30, 2017,~~March 31, 2018, we had total unrestricted cash and cash equivalents of ~~$61.0~~$27.4 million, an increase of ~~$21.2~~$9.6 million from December 31, ~~2016~~2017 primarily due to the Company’s operating activities described below. ~~We also held $0.1 million of cash equivalents and $59.9 million of investments in securities in an escrow account for the benefit of the Convertible Note holder.~~ Total debt outstanding at ~~September 30, 2017~~March 31, 2018 was ~~$204~~$64.2 million, consisting of ~~$70~~$40 million of a 4% PIK Note due November 30, 2020, ~~$110 million of a 4.5% convertible note due August 15, 2021,~~ and $24.2 million of 5.875% senior notes due 2021. It is anticipated that the majority of our free cash flow will go towards servicing our debt and deferred compensation payable ~~for~~in the ~~next few years.~~near future.

For the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2018, cash provided by operating activities was ~~$65.2~~$53.0 million, a decrease of ~~$40.0~~$9.8 million from cash provided in the prior year period of ~~$105.2~~$62.8 million. Cash was provided through a decrease in investments in securities of $5.4 million, a decrease in deferred income taxes of $2.3 million, a decrease in income tax receivable and deferred tax assets of $6.2 million, an increase in net income of $2.4 million, an increase in compensation payable of ~~$33.5~~$1.5 million, and $1.0 million from other sources. Reducing cash was a decrease ~~in investment advisory fees receivable of $13.7 million, an increase~~ in income taxes payable and deferred tax liabilities of ~~$9.4~~$15.5 million, a decrease in payable to brokers of $10.2 million, an increase in investment advisory fees receivable of ~~$3.9~~$2.4 million, and a decrease of $0.5 million in stock based compensation ~~expense, an increase~~expense. Cash used in ~~payable to brokers~~financing activities in the first three months of ~~$3.1~~2018 was $43.4 million, ~~an increase~~including $3.3 million paid for the purchase of treasury stock, and $0.6 million paid in ~~payable to affiliates~~dividends, $15.0 million for the repayment of ~~$1.6~~the 1.6% AC Note, $10.0 million for the partial repurchase of the 4% PIK Note, $5 million for margin loan borrowings and ~~$1.7~~$19.5 million ~~from other sources. Reducing~~for margin loan payments. There was no cash was an increase in investments in trade securities of $60.2 million, a decrease in net income of $20.1 million, an increase in income tax receivable and deferred tax assets of $11.7 million, an increase in deferred income taxes of $5.3 million, a decrease to accrued expenses and other liabilities of $8.0 million and an increase in receivable from brokers of $1.6 million. Cashprovided by or used in investing activities for the first three months of 2018.

For the three months ended March 31, 2017, cash provided by operating activities was ~~$3.6~~$62.8 million. Cash used in financing activities in the first ~~nine~~three months of 2017 was ~~$40.3 million, including $8.6 million paid for the purchase of treasury stock, and $1.7 million paid in dividends and $30.0 million for the partial repayment for the 4% PIK Note.~~

~~For the nine months ended September 30, 2016,~~$14.4 million. There was no cash provided by ~~operating activities was $105.2 million. Cash provided by~~or used in investing activities ~~related to proceeds from sales of available~~ for ~~sale securities was $0.2 million in~~ the first ~~nine~~three months of ~~2016. Cash used in financing activities in the first nine months of 2016 was $85.3 million.~~2017.

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 one broker-dealer, G.distributors, which is subject to certain net capital requirements. G.distributors computes it 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 the broker-dealer at ~~September 30, 2017.~~March 31, 2018. At ~~September 30, 2017,~~March 31, 2018, G.distributors had net capital, as defined, of approximately ~~$3.8~~$2.6 million, exceeding the regulatory requirement by approximately ~~$3.5~~$2.4 million. Net capital requirements for our affiliated broker-dealer may increase in accordance with rules and regulations to the extent they engage in other business activities.

Market Risk

Our primary market risk exposure is to changes in equity prices and interest rates. Since approximately ~~96%~~95% 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’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’s guidelines.

Equity Price Risk

The Company earns substantially all of its revenue as advisory and distribution fees from affiliated open-end and closed-end funds and Institutional and Private Wealth Management assets. Such fees represent a percentage of AUM, and the majority 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, investments in securities of ~~$101.4~~$31.4 million, ~~$37.3~~$36.8 million and ~~$32.9~~$33.2 million at ~~September 30, 2017,~~March 31, 2018, December 31, ~~2016~~2017 and ~~September 30, 2016,~~March 31, 2017, respectively, included investments in common stocks of ~~$41.3~~$31.3 million, ~~$37.2~~$36.7 million and ~~$32.9~~$33.1 million, respectively, and investments in closed-end funds of $0.1 million, $0.1 million and ~~$0,~~$0.1 million, respectively. Of the ~~$41.3~~$31.3 million, ~~$37.2~~$36.7 million and ~~$32.9~~$33.1 million, invested in common stocks at ~~September 30, 2017,~~March 31, 2018, December 31, ~~2016~~2017 and ~~September 30, 2016,~~March 31, 2017, respectively, ~~$41.3~~$31.3 million, ~~$37.1~~$36.6 million and ~~$32.9~~$33.1 million, respectively, was related to our investment in Westwood Holdings Group Inc. Securities sold, not yet purchased are financial instruments purchased under agreements to resell and financial instruments sold under agreement to repurchase. These financial instruments are stated at fair value and are subject to market risks resulting from changes in price and volatility. At ~~September 30, 2017,~~March 31, 2018, December 31, ~~2016~~2017 and ~~September 30, 2016,~~March 31, 2017, there were no securities sold, not yet purchased.

The following table provides a sensitivity analysis for our investments in equity securities as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016.~~2017. 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 September 30, 2017:
At March 31, 2018
Equity price sensitive investments, at fair value		$	101,425		$	91,282		$	111,567		$	31,407		$	28,266		$	34,548
At December 31, 2016:
At December 31, 2017
Equity price sensitive investments, at fair value		$	37,285		$	33,557		$	41,014		$	36,790		$	33,111		$	40,470

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 ~~September 30, 2017,~~March 31, 2018, cash and cash equivalent balance of ~~$61.1~~$27.4 million, a 1% increase in interest rates would increase our interest income by ~~$0.6~~$0.3 million ~~annually. Given that our current return on these cash equivalent investments in this low interest rate environment is approximately 0.98%~~ annually ~~an analysis of~~while a 1% decrease ~~is not meaningful.~~would reduce our interest income by $0.3 million annually

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’s Critical Accounting Policies in Management’s Discussion and Analysis of Financial Condition and Results of Operations in GAMCO’s ~~2016~~2017 Annual Report on Form 10-K filed with the SEC on March ~~7, 2017~~8, 2018 for details on Critical Accounting Policies.

3229

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 ~~September 30, 2017,~~March 31, 2018, we had equity investments of ~~$101.4~~$31.4 million. We may alter our investment holdings from time to time in response to changes in market risks and other factors considered appropriate by management. The equity securities investment portfolio is at fair value and will move in line with the equity markets. The ~~trading~~equity securities investment portfolio changes are recorded as net gain (loss) 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.~~income.

Item 4. Controls and Procedures

We evaluated the effectiveness of our disclosure controls and procedures as of ~~September 30, 2017.~~March 31, 2018. 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”) and Co-Chief Accounting Officers (“CAOs”), to allow timely decisions regarding required disclosure. Our CEO and CAOs participated in this evaluation and concluded that, as of the date of ~~September 30, 2017,~~March 31, 2018, our disclosure controls and procedures were effective.

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,” 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

3330

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 ~~September 30, 2017:~~March 31, 2018:

(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
7/01/17 - 7/31/17 - $ - - 574,648
8/01/17 - 8/31/17 113,121 29.53 113,121 886,879
9/01/17 - 9/30/17 18,359 28.74 18,359 868,520
Totals 131,480 $ 29.42 131,480

						(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
1/01/18 - 1/31/18		51,111		$	29.74		51,111		623,183
2/01/18 - 2/28/18		-			-		-		623,183
3/01/18 - 3/31/18		68,223			26.19		68,223		554,960
Totals		119,334		$	27.71		119,334

~~In August 2017, the Board of Directors increased the buyback authorization by 425,352 shares of GBL Class A stock. Our stock repurchase program is not subject to an expiration date.~~

Item 6.(a) Exhibits

~~10.20~~

~~Restricted Stock Unit Agreement, dated September 30, 2017, by and between GAMCO Investors, Inc. and Mario J. Gabelli.~~ ~~(Incorporated by reference to Exhibit 99.1 to the Company’s Report on Form 8-K dated September 30, 2017 filed with the Securities and Exchange Commission on October 5, 2017).~~

31.1

~~31.1~~

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

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

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

32.1

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

32.2

Certification of ~~co-CAOs~~co-PFOs pursuant 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

3431

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 Caterina		Name: Diane M. LaPointe
Title: ~~Co-Chief Accounting~~Co-Principal Financial Officer		Title: ~~Co-Chief Accounting~~Co-Principal Financial Officer

Date: ~~November 7, 2017~~May 9, 2018		Date: ~~November 7, 2017~~May 9, 2018

3532

	Three Months Ended September 30, 2017
				Impact of
	Reported			First Half			Impact of
	GAAP			2017 DCCA			2016 DCCA			Non-GAAP
Revenues
Investment advisory and incentive fees	$	77,328		$	-		$	-		$	77,328
Distribution fees and other income		11,013			-			-			11,013
Total revenues		88,341			-			-			88,341
Expenses
Compensation		42,919			(4,816	)		(3,415	)		34,688
Management fee		4,935			(886	)		(688	)		3,361
Distribution costs		11,665			-			-			11,665
Other operating expenses		5,429			-			-			5,429
Total expenses		64,948			(5,702	)		(4,103	)		55,143

Operating income		23,393			5,702			4,103			33,198
Other income (expense)
Net gain (loss) from investments		2,841			-			-			2,841
Interest and dividend income		745			-			-			745
Interest expense		(2,688	)		-			-			(2,688	)
Shareholder-designated contribution		(3,857	)		-			-			(3,857	)
Total other expense, net		(2,959	)		-			-			(2,959	)
Income before income taxes		20,434			5,702			4,103			30,239
Income tax provision		3,834			2,167			1,559			7,560
Net income attributable to GAMCO Investors, Inc.'s shareholders	$	16,600		$	3,535		$	2,544		$	22,679

Net income attributable to GAMCO Investors, Inc.'s shareholders
per share:
Basic	$	0.57		$	0.12		$	0.09		$	0.78
Diluted	$	0.55		$	0.11		$	0.08		$	0.75

	Three Months Ended September 30, 2016

	Reported			Impact of
	GAAP			2016 DCCA			Non-GAAP
Revenues
Investment advisory and incentive fees	$	75,952		$	-		$	75,952
Distribution fees and other income		11,769			-			11,769
Total revenues		87,721			-			87,721
Expenses
Compensation		21,233			10,885			32,118
Management fee		1,163			2,400			3,563
Distribution costs		11,568			-			11,568
Other operating expenses		5,681			-			5,681
Total expenses		39,645			13,285			52,930

Operating income		48,076			(13,285	)		34,791
Other income (expense)
Net gain from investments		55			-			55
Interest and dividend income		371			-			371
Interest expense		(3,155	)		-			(3,155	)
Total other expense, net		(2,729	)		-			(2,729	)
Income before income taxes		45,347			(13,285	)		32,062
Income tax provision		14,486			(5,075	)		9,411
Net income attributable to GAMCO Investors, Inc.'s shareholders	$	30,861		$	(8,210	)	$	22,651

Net income attributable to GAMCO Investors, Inc.'s shareholders
per share:
Basic	$	1.06		$	(0.28	)	$	0.78	��
Diluted	$	1.03		$	(0.27	)	$	0.76

	Nine Months Ended September 30, 2016

	Reported			Impact of
	GAAP			2016 DCCA			Non-GAAP
Revenues
Investment advisory and incentive fees	$	219,594		$	-		$	219,594
Distribution fees and other income		33,456			-			33,456
Total revenues		253,050			-			253,050
Expenses
Compensation		62,130			32,016			94,146
Management fee		3,376			6,926			10,302
Distribution costs		32,786			-			32,786
Other operating expenses		14,993			-			14,993
Total expenses		113,285			38,942			152,227

Operating income		139,765			(38,942	)		100,823
Other income (expense)
Net gain from investments		518			-			518
Interest and dividend income		1,104			-			1,104
Interest expense		(9,729	)		-			(9,729	)
Total other expense, net		(8,107	)		-			(8,107	)
Income before income taxes		131,658			(38,942	)		92,716
Income tax provision		47,229			(14,811	)		32,418
Net income attributable to GAMCO Investors, Inc.'s shareholders	$	84,429		$	(24,131	)	$	60,298

Net income attributable to GAMCO Investors, Inc.'s shareholders
per share:
Basic	$	2.89		$	(0.83	)	$	2.06
Diluted	$	2.85		$	(0.81	)	$	2.04