GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

UNAUDITED

(in thousands, except per share data)

	June 30,			December 31,			March 31,			December 31,
	2021			2020			2022			2021
ASSETS
Cash and cash equivalents (a)	$	118,194		$	33,325		$	144,369		$	142,027
Short-term investments in U.S. Treasury Bills		0			64,988
Investments in securities, at fair value		33,743			25,845
Receivable from brokers		5,615			5,833
Investments in equity securities, at fair value								37,982			32,344
Investment advisory fees receivable		24,439			28,796			21,211			30,977
Deferred tax asset and income tax receivable								7,456			6,707
Finance lease								3,831			4,055
Receivable from affiliates		3,678			4,882			3,554			3,440
Goodwill and identifiable intangible assets		3,176			3,176			3,176			3,176
Deferred tax asset and income tax receivable		8,616			9,462
Receivable from brokers								2,873			3,930
Other assets		9,667			9,095			5,730			5,016
Total assets	$	207,128		$	185,402		$	230,182		$	231,672

LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES AND STOCKHOLDERS' EQUITY
Compensation payable							$	20,139		$	21,049
Lease liability obligations								6,561			6,799
Income taxes payable	$	1,917		$	3,910			7,373			315
Lease liability obligations		7,008			5,208
Compensation payable		44,980			21,543
Securities sold, not yet purchased		0			799
Payable to affiliates		2,667			3,843			413			5,198
Payable for investments purchased								0			14,990
Accrued expenses and other liabilities		37,232			38,973			37,346			38,451
Sub-total		93,804			74,276			71,832			86,802
5.875% Senior Notes (net of issuance costs of $10) (due June 1, 2021) (Note 7)		0			24,215
Subordinated Notes (net of issuance costs of $100) (due June 15, 2023) (Note 7)		52,178			0
Subordinated Notes (net of issuance costs of $62 and $75, respectively) (due June 15, 2023) (Note 7)								50,935			50,990
Total liabilities		145,982			98,491			122,767			137,792

Commitments and contingencies (Note 10)		0			0			0			0

Stockholders’ Equity
Preferred stock, $0.001 par value; 10,000,000 shares authorized; NaN issued and outstanding		0			0
Class A Common Stock, $0.001 par value; 100,000,000 shares authorized; 16,577,126 and 16,621,426 shares issued, respectively; 8,179,432 and 8,478,694 shares outstanding, respectively		14			14
Class B Common Stock, $0.001 par value; 25,000,000 shares authorized; 24,000,000 shares issued; 19,024,117 outstanding		19			19
Stockholders' Equity
Preferred stock, $0.001 par value; 10,000,000 shares authorized; NaN issued and outstanding								0			0
Class A Common Stock, $0.001 par value; 100,000,000 shares authorized; 16,543,976 and 16,547,476 shares issued, respectively; 7,559,627 and 7,704,022 shares outstanding, respectively								14			14
Class B Common Stock, $0.001 par value; 25,000,000 shares authorized; 24,000,000 shares issued; 19,024,117 outstanding								19			19
Additional paid-in capital		23,331			21,219			29,092			28,753
Retained earnings		371,828			394,386			426,710			410,333
Accumulated other comprehensive loss		(150	)		(165	)		(208	)		(177	)
Treasury stock, at cost (8,397,694 and 8,142,732 shares, respectively)		(333,896	)		(328,562	)
Total stockholders’ equity		61,146			86,911
Total liabilities and stockholders’ equity	$	207,128		$	185,402
Treasury stock, at cost (8,984,349 and 8,843,454 shares, respectively)								(348,212	)		(345,062	)
Total stockholders' equity								107,415			93,880
Total liabilities and stockholders' equity							$	230,182		$	231,672

(a)	Includes U.S. Treasury Bills with maturities of three months or less when purchased of ~~$110.5~~$138 million and ~~$15.0~~$123 million at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

See notes to condensed consolidated financial statements.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

UNAUDITED

(in thousands, except per share data)

	Three Months Ended						Six Months Ended						Three Months Ended
	June 30,						June 30,						March 31,
	2021			2020			2021			2020			2022			2021
Revenues:
Revenues
Investment advisory and incentive fees	$	68,885		$	51,470		$	130,355		$	113,743		$	63,762		$	61,470
Distribution fees and other income		6,739			6,089			13,197			13,383			5,861			6,458
Total revenues		75,624			57,559			143,552			127,126			69,623			67,928
Expenses:
Expenses
Compensation		31,298			25,516			61,980			54,766			29,058			30,682
Management fee		3,035			2,060			5,552			3,725			1,312			2,517
Distribution costs		7,771			6,634			14,742			14,264			7,145			6,971
Other operating expenses		8,671			4,586			13,975			10,288			6,147			5,304
Total expenses		50,775			38,796			96,249			83,043			43,662			45,474

Operating income		24,849			18,763			47,303			44,083			25,961			22,454
Non-operating income / (loss)
Gain / (loss) from investments, net		2,986			309			3,666			(9,928	)		(2,822	)		680
Interest and dividend income		102			115			287			659			228			185
Interest expense		(625	)		(647	)		(1,287	)		(1,294	)		(816	)		(662	)
Total non-operating income / (loss)		2,463			(223	)		2,666			(10,563	)		(3,410	)		203
Income before income taxes		27,312			18,540			49,969			33,520			22,551			22,657
Provision for income taxes		10,211			7,250			16,918			10,985			5,097			6,707
Net income	$	17,101		$	11,290		$	33,051		$	22,535		$	17,454		$	15,950

Earnings per share:
Basic	$	0.65		$	0.42		$	1.25		$	0.85		$	0.67		$	0.60
Diluted	$	0.64		$	0.42		$	1.24		$	0.84		$	0.66		$	0.59

Weighted average shares outstanding:
Basic		26,316			26,629			26,354			26,658			26,237			26,393
Diluted		26,869			26,656			26,632			26,713			26,493			26,887

See notes to condensed consolidated financial statements.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

UNAUDITED

(in thousands)

	Three Months Ended
	March 31,
	2022			2021
Net income	$	17,454		$	15,950
Other comprehensive income / (loss):
Foreign currency translation gain / (loss)		(31	)		10
Total comprehensive income	$	17,423		$	15,960

See notes to condensed consolidated financial statements.

Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 2021 2020
Net income $ 17,101 $ 11,290 $ 33,051 $ 22,535
Other comprehensive income / (loss):
Foreign currency translation gain / (loss) 5 (4 ) 15 (65 )
Total comprehensive income $ 17,106 $ 11,286 $ 33,066 $ 22,470

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

UNAUDITED

(in thousands, except per share data)

								Accumulated
			Additional					Other
	Common		Paid-in		Retained			Comprehensive			Treasury
	Stock		Capital		Earnings			Loss			Stock			Total
Balance at December 31, 2021	$	33	$	28,753	$	410,333		$	(177	)	$	(345,062	)	$	93,880
Net income		0		0		17,454			0			0			17,454
Foreign currency translation		0		0		0			(31	)		0			(31	)
Dividends declared ($0.04 per share)		0		0		(1,077	)		0			0			(1,077	)
Stock based compensation expense		0		339		0			0			0			339
Purchase of treasury stock		0		0		0			0			(3,150	)		(3,150	)
Balance at March 31, 2022	$	33	$	29,092	$	426,710		$	(208	)	$	(348,212	)	$	107,415

								Accumulated
			Additional					Other
	Common		Paid-in		Retained			Comprehensive			Treasury
	Stock		Capital		Earnings			Loss			Stock			Total
Balance at December 31, 2020	$	33	$	21,219	$	394,386		$	(165	)	$	(328,562	)	$	86,911
Net income		0		0		15,950			0			0			15,950
Foreign currency translation		0		0		0			10			0			10
Dividends declared ($0.02 per share)		0		0		(548	)		0			0			(548	)
Stock based compensation expense		0		1,166		0			0			0			1,166
Purchase of treasury stock		0		0		0			0			(1,814	)		(1,814	)
Balance at March 31, 2021	$	33	$	22,385	$	409,788		$	(155	)	$	(330,376	)	$	101,675

See notes to condensed consolidated financial statements.

~~GAMCO INVESTORS, INC. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY~~

~~UNAUDITED~~

~~(in thousands, except per share data)~~

Accumulated
Additional Other
Common Paid-in Retained Comprehensive Treasury
Stock Capital Earnings Loss Stock Total
Balance at December 31, 2020 $ 33 $ 21,219 $ 394,386 $ (165 ) $ (328,562 ) $ 86,911
Net income 0 0 15,950 0 0 15,950
Foreign currency translation 0 0 0 10 0 10
Dividends declared ($0.02 per share)
0 0 (548 ) 0 0 (548 )
Stock based compensation expense 0 1,166 0 0 0 1,166
Purchase of treasury stock 0 0 0 0 (1,814 ) (1,814 )
Balance at March 31, 2021 $ 33 $ 22,385 $ 409,788 $ (155 ) $ (330,376 ) $ 101,675
Net income 0 0 17,101 0 0 17,101
Foreign currency translation 0 0 0 5 0 5
Dividends declared ($2.02 per share)
0 0 (55,061 ) 0 0 (55,061 )
Stock based compensation expense 0 946 0 0 0 946
Purchase of treasury stock 0 0 0 0 (3,520 ) (3,520 )
Balance at June 30, 2021 $ 33 $ 23,331 $ 371,828 $ (150 ) $ (333,896 ) $ 61,146

Accumulated
Additional Other
Common Paid-in Retained Comprehensive Treasury
Stock Capital Earnings Loss Stock Total
Balance at December 31, 2019 $ 33 $ 17,033 $ 362,515 $ (204 ) $ (324,660 ) $ 54,717
Net income 0 0 11,245 0 0 11,245
Foreign currency translation 0 0 0 (61 ) 0 (61 )
Dividends declared ($0.02 per share)
0 0 (552 ) 0 0 (552 )
Stock based compensation expense 0 941 0 0 0 941
Purchase of treasury stock 0 0 0 0 (946 ) (946 )
Balance at March 31, 2020 $ 33 $ 17,974 $ 373,208 $ (265 ) $ (325,606 ) $ 65,344
Net income 0 0 11,290 0 0 11,290
Foreign currency translation 0 0 0 (4 ) 0 (4 )
Dividends declared ($0.02 per share)
0 0 (551 ) 0 0 (551 )
Stock based compensation expense 0 1,137 0 0 0 1,137
Purchase of treasury stock 0 0 0 0 (772 ) (772 )
Balance at June 30, 2020 $ 33 $ 19,111 $ 383,947 $ (269 ) $ (326,378 ) $ 76,444

~~See notes to condensed consolidated financial statements.~~

GAMCO INVESTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

(in thousands)

	Six Months Ended						Three Months Ended
	June 30,						March 31,
	2021			2020			2022			2021
Cash flows from operating activities:
Net income	$	33,051		$	22,535		$	17,454		$	15,950
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		641			445			308			334
Accretion of discounts and amortization of premiums		(23	)		48			(42	)		(19	)
Stock based compensation expense		2,112			2,078			339			1,166
Deferred income taxes		708			8,103			(763	)		(138	)
Foreign currency translation gain / (loss)		15			(65	)
Cost basis of donated securities		0			0
Foreign currency translation income / (loss)								(31	)		10
Unrealized (gains) / losses on securities		(7,636	)		6,503			2,740			(2,244	)
Net realized losses on securities		3,243			1,097			50			2,163
Impairment charge on intangible asset		0			589
(Increase) decrease in assets:
Investments in securities		(1,132	)		2,095			(373	)		(1,579	)
Investment advisory fees receivable								9,766			5,762
Income taxes receivable								14			307
Receivable from affiliates								(124	)		1,059
Receivable from brokers		218			(3,687	)		1,057			1,489
Investment advisory fees receivable		4,357			17,855
Receivable from affiliates		1,206			699
Income taxes receivable		138			(747	)
Other assets		(1,199	)		642			(837	)		(2,056	)
Increase (decrease) in liabilities:
Payable to brokers		11			0
Compensation payable								(908	)		7,759
Income taxes payable		(1,994	)		3,986			7,060			7,472
Compensation payable		23,436			(33,328	)
Payable to affiliates		(1,176	)		(3,724	)		(4,784	)		(3,456	)
Payable for investments purchased								(14,990	)		132
Accrued expenses and other liabilities		(1,648	)		(4,170	)		(1,244	)		2,554
Total adjustments		21,277			(1,581	)		(2,762	)		20,715
Net cash provided by operating activities		54,328			20,954			14,692			36,665
Cash flows from investing activities:
Purchases of securities		(4,888	)		(50,108	)
Purchases of securities hled for investment								(8,014	)		(4,882	)
Proceeds from sales and maturities of securities		66,728			3,995			0			56,165
Return of capital on securities		0			12
Net cash provided by / (used in) investing activities		61,840			(46,101	)
Net cash provided by/ (used in) investing activities								(8,014	)		51,283
Cash flows from financing activities:
Maturity of 5.875% ten year notes due 6/1/21		(24,225	)		0
Dividends paid		(1,611	)		(1,065	)		(1,047	)		(528	)
Purchase of treasury stock		(5,334	)		(1,718	)		(3,150	)		(1,814	)
Repayment of principal portion of lease liability		(126	)		(104	)		(74	)		(61	)
Repurchase of 2-year puttable note due 6/15/23								(68	)		0
Net cash used in financing activities		(31,296	)		(2,887	)		(4,339	)		(2,403	)
Effect of exchange rates on cash and cash equivalents		(3	)		15			3			(2	)
Net increase / (decrease) in cash and cash equivalents		84,869			(28,019	)
Net increase in cash and cash equivalents								2,342			85,543
Cash and cash equivalents, beginning of period		33,325			86,136			142,027			33,325
Cash and cash equivalents, end of period	$	118,194		$	58,117		$	144,369		$	118,868
Supplemental disclosures of cash flow information:
Cash paid for interest	$	1,308		$	1,270		$	298		$	300
Cash paid for taxes	$	18,402		$	780		$	458		$	30

Supplemental disclosure of non-cash activity:

For the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company accrued dividends on restricted stock awards of ~~$1,898~~$30 and ~~$38,~~$20, respectively.

~~For the~~ ~~six months endedJune 30, 2021, the Company issued approximately $52.2~~ ~~million principal amount of Subordinated Notes due~~ ~~2023~~ ~~issued to shareholders in connection with the special dividend of $2.00~~ ~~per share.~~

See notes to condensed consolidated financial statements.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~June 30, 2021~~March 31, 2022

(Unaudited)

Organization and Description of Business

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

GAMCO (New York Stock Exchange (“NYSE”): GBL), a company incorporated under the laws of Delaware, is a widely-recognized provider of investment advisory services to 24 open-end funds, 1614 closed-end funds, 23 actively managed semi-transparent exchange traded funds (“ETFs”), 1 société d’investissement à capital variable (“SICAV”), and approximately 1,400 institutional and private wealth management (“Institutional and PWM”) investors principally in the United States (U.S.). The Company generally manages assets on a fully discretionary basis and invests in a variety of U.S. and international securities through various investment styles including value, growth, ~~gold,~~ non-market correlated, and convertible securities. The Company’s revenues are based primarily on the levels of assets under management (“AUM”) and fees associated with the various investment products. GAMCO serves a broad client base, including institutions, intermediaries, offshore investors, private wealth, and direct retail investors.

GAMCO offers a wide range of solutions for clients across Value and Growth Equity, ESG, Convertibles, actively managed semi-transparent ETFs, sector-focused strategies including Gold and Utilities, Merger Arbitrage, and Fixed Income. In 1977, GAMCO ~~started~~launched its well-known All Cap Value strategy, Gabelli Value, and in 1986 entered the mutual fund business.

The investment advisory business is conducted principally through the following subsidiaries: Gabelli Funds, LLC (open-end funds, closed-end funds, and actively managed semi-transparent ETFs) (“Gabelli Funds”) and GAMCO Asset Management Inc. (Institutional and PWM) (“GAMCO Asset”). The distribution of open-end funds and actively managed semi-transparent ETFs are conducted through G.distributors, LLC (“G.distributors”), the Company’s broker-dealer subsidiary.

1. Significant Accounting Policies

Basis of Presentation

The unaudited interim condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to the requirements for reporting on 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 for complete financial statements. ~~In the opinion of management, the~~The unaudited interim condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for the 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 the Company and its wholly-owned subsidiaries including: Gabelli Funds, GAMCO Asset, G.distributors, and GAMCO Asset Management (UK) Limited. Intercompany accounts and transactions have been eliminated. Subsidiaries are fully consolidated from the date of acquisition, being the date on which GBL obtains control, and continue to be consolidated until the date that such control ceases.

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, ~~2020.~~2021.

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 reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Recent Accounting Developments

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Accounting for Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”), which requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Currently, U.S. GAAP requires an “incurred loss” methodology that delays recognition until it is probable a loss has been incurred. Under ASU 2016-13, the allowance for credit losses must be deducted from the amortized cost of the financial asset to present the net amount expected to be collected. The consolidated statement of income will reflect the measurement of credit losses for newly recognized financial assets as well as the expected increases or decreases of expected credit losses that have taken place during the period. In November 2019, the FASB issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), Leases (Topic 842): Effective Dates (ASU 2019-10), which deferred the effective date of this guidance for smaller reporting companies for three years. This guidance is effective for the Company on January 1, 2023 and requires a modified retrospective transition method, which will result in a cumulative-effect adjustment in retained earnings upon adoption. Early adoption is permitted. The Company is currently assessing the potential impact of this new guidance on the Company’s consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment (“ASU 2017-04”), which simplifies the process used to test for goodwill impairment by eliminating the requirement to calculate the implied fair value of goodwill, and instead any goodwill impairment will be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. In November 2019, the FASB issued ASU 2019-10, which deferred the effective date of this guidance for smaller reporting companies for three years. This guidance will be effective for the Company on January 1, 2023 using a prospective transition method and early adoption is permitted. The Company is currently evaluating the potential effect of this new guidance on the Company’s consolidated financial statements.

7. Debt

~~Senior Notes~~

On May 31, 2011, the Company issued 10-year, $100 million senior notes (“Senior Notes”). The Senior Notes bore interest at 5.875% per annum, payable semi-annually on June 1 and December 1 of each year and commenced on December 1, 2011. On June 1, 2021, the Senior Notes matured and were fully repaid.

~~At December 31, 2020, the debt was recorded at its face value, net of issuance costs, of $24.2 million.~~

Subordinated Notes

On June 14, 2021, the Company entered into an indenture with Computershare Trust Company, N.A., as trustee, relating to GAMCO’s issuance of up to approximately $54.0 million of ~~2-year subordinated notes (“~~Subordinated ~~Notes”).~~Notes. The Subordinated Notes were issued to shareholders as a special dividend of $2.00 per share on GAMCO’s class A common stock (“Class A Stock”) and class B common stock (“Class B Stock”). The Company issued approximately $52.2 million of Subordinated Notes in connection with the special dividend, paid out $0.4 million of cash in lieu of fractional Subordinated Notes, and reserved approximately $1.9 million of Subordinated Notes to be issued upon vesting of restricted stock awards (“RSAs”). The Subordinated Notes bear interest at a rate of ~~4.0%~~4% per annum for the one-year period ending June 15, 2022 and ~~5.0%~~5% per annum for the one-year period ending June 15, 2023 and mature on June 15, 2023. The Subordinated Notes are transferable, callable at the option of GAMCO, in whole or in part, at any time or from time to time at a redemption price equal to 100% of the principal amount of the Subordinated Notes to be redeemed plus interest, and puttable, in whole or in part, at any time after September 15, 2021 at a redemption price equal to 100% of the principal amount of the Subordinated Notes to be redeemed upon notice of redemption of at least 60 days but not more than 90 days before the redemption date.

14During the three months ended March 31, 2022, the Company redeemed $68 thousand of Subordinated Notes during the first quarter of 2022 relating to put notices received at least 60 days prior to the end of the quarter. As of March 31, 2022, there are $50.9 million of Subordinated Notes outstanding.

8. Stockholders’ Equity

Shares outstanding were ~~27.2~~26.6 million and ~~27.5~~26.7 million on ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

Voting Rights

The holders of Class A Stock and Class B Stock have identical rights except that (i) holders of Class A Stock are entitled to 1 vote per share, while holders of Class B Stock are entitled to 10 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.

~~Authorized shares~~

On June 5, 2020, shareholders approved the amendment to the Company’s Amended and Restated Certificate of Incorporation to decrease the total number of authorized shares of Class B Stock from 100,000,000 shares to 25,000,000 shares.

Stock Award and Incentive Plan

The Company maintains a stock award and incentive plan approved by the shareholders (the “Plan”), which 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. A maximum of 7.5 million shares of Class A Stock have been reserved for issuance under the Plan by a committee of GBL’s board of directors (the “Board of Directors”) responsible for administering the Plan (“Compensation Committee”). Benefits under the Plan may be granted in any one or a combination of stock options, stock appreciation rights, restricted stock, restricted stock units, stock awards, phantom stock awards, dividend equivalents, and other stock or cash based awards. Under the Plan, the Compensation Committee may grant RSAs, each of which entitles the grantee to 1 share of Class A Stock subject to restrictions, phantom RSAs, each of which entitles the grantee to the cash value of 1 share of Class A Stock subject to restrictions, 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 Compensation Committee may determine, which were recommended by the Company’s Chairman who did not receive any awards.

~~On March 5, 2020,~~ ~~392,700~~ ~~RSAs were issued at a grant price of~~ ~~$14.31~~ ~~per RSA.~~ On June 15, 2021, 396,800 phantom RSAs were issued at a grant price of $25.02 per phantom RSA and have similar vesting terms to the RSAs. The phantom RSAs, which will be settled in cash based on the fair value of the shares on the vesting date, were determined to be liability awards and ~~will be~~are adjusted for changes in the Company’s stock price at each reporting ~~period.~~date.

As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021, there were ~~967,370~~407,700 and ~~1,079,650~~411,200, respectively, RSAs outstanding with weighted average grant prices per RSA of $~~19.07~~14.81 and $~~19.45~~14.93, respectively, and 10,000 stock options outstanding with an exercise price of $25.55. As of ~~June 30,~~March 31, 2022 and December 31, 2021, there were ~~396,800~~377,300 and 380,300, respectively, phantom RSAs outstanding with weighted average grant prices per phantom RSA of ~~$25.02.~~$25.02 and $25.02, respectively.

For the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company recognized stock-based non-cash RSA compensation expense of ~~$1.1~~$0.3 million ~~in each period.~~and $1.2 million, respectively. For the ~~six~~three months ended ~~June 30, 2021 and 2020,~~March 31, 2022, the Company recognized stock-based ~~non-cash~~phantom RSA compensation expense of ~~$2.3~~$0.3 million. As of March 31, 2022 and December 31, 2021, the accrued phantom RSA compensation payable was $1.5 million and ~~$2.1~~$1.2 million, ~~respectively.~~respectively,and was included within compensation payable in the Condensed Consolidated Statements of Financial Condition.

The total compensation costs related to non-vested RSA and phantom RSA awards to teammates, excluding the CEO who received none, not yet recognized was approximately ~~$17.5~~$3.2 million and $6.1 million, respectively, as of ~~June 30, 2021.~~

On January 2, 2020, the Deferred Cash Compensation Agreement (“DCCA”) with the CEO covering compensation from 2016 vested in accordance with the terms of the agreement and a cash payment in the amount of $43.7 million was made to the CEO. This payment was reduced by $32.3 million resulting from the DCCA being indexed to the GBL stock price and utilizing the lesser of the VWAP on the vesting date ($18.8812) versus the VWAP over 2016 ($32.8187).March 31, 2022.

Stock Repurchase Program

In March 1999, the Board of Directors established a stock repurchase program (the “Stock Repurchase Program”) to grant management the authority to repurchase shares of Class A Stock. ~~On March 18, 2020, the Board of Directors authorized an increase to purchase $~~30 ~~million of its outstanding Class A Stock, which resulted in a modification in the form of the authorization from previously being stated in shares to being stated in dollars.~~ ~~On August 4, 2020, the Board of Directors authorized a share repurchase of 3,000,000 shares of its outstanding Class A Stock, which replaced any outstanding share repurchase authorizations.~~

For the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company repurchased ~~157,884~~140,895 and ~~65,704~~97,078 shares, respectively, at an average price per share of ~~$22.29~~$22.34 and ~~$11.74,~~$18.68, respectively. ~~For the~~ ~~six months endedJune 30, 2021~~ ~~and~~ ~~2020, the Company repurchased~~ ~~254,962~~ ~~and~~ ~~120,797~~ ~~shares, respectively, at an average price per share of $20.91~~ ~~and $14.21, respectively.~~ At ~~June 30, 2021,~~March 31, 2022, the total shares available under the Stock Repurchase Program to be repurchased in the future were ~~2,619,697.~~2,033,042. The Stock Repurchase Program is not subject to an expiration date.

On March 11, 2020, GAMCO commenced an offer to purchase up to $30 million in aggregate purchase price of its Class A Stock, pursuant to which holders of shares were invited to tender some or all of their shares at a price within the range of $15.00 to $17.00 per share, which would have enabled GAMCO to purchase for cash up to 2,000,000 shares of its Class A common stock (such offer, the “Offer”). The Offer which was due to expire on April 8, 2020, was terminated on March 18, 2020 as a result of the suspension of trading and market index conditions of the Offer not having been satisfied. As a result of this termination, no shares were purchased in the Offer and all shares previously tendered and not withdrawn were promptly returned to tendering holders.

Dividends

During the three months ended ~~June 30, 2021~~March 31, 2022 and ~~2020~~2021, the Company declared cash dividends of $0.04 and $0.02, respectively, per share to shareholders of Class A Stock and Class B Stock. ~~During the~~ ~~six months endedJune 30, 2021~~ ~~and~~ ~~2020, the Company declared cash dividends of $0.04~~ ~~per share to shareholders of Class A Stock and Class B Stock.~~ ~~During the three and six months ended June 30, 2021, the Company declared a special dividend of $2.00 per share to shareholders of Class A Stock and Class B Stock payable in Subordinated Notes.~~

Shelf Registration

In ~~April 2018,~~July 2021, the SEC declared effective the Company’s “shelf” registration statement on Form S-3 giving the Company the flexibility to sell any combination of senior and subordinated debt securities, convertible debt securities, and equity securities (including common and preferred ~~securities)~~stock) and other securities up to a total amount of $500 million. The shelf ~~expired~~expires in ~~April 2021.~~July 2024.

9. Goodwill and Identifiable Intangible Assets

Goodwill is initially measured as the excess of the cost of the acquired business over the sum of the amounts assigned to assets acquired less the liabilities assumed. At ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021, there was goodwill of $0.2 million maintained on the Condensed Consolidated Statements of Financial Condition related to G.distributors.

As a result of becoming the advisor to the Gabelli Enterprise Mergers and Acquisitions Fund (the “Enterprise Fund”) and the associated consideration paid, the Company maintains an identifiable intangible asset of $1.3 million at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021. The investment advisory agreement for the Enterprise Fund is next up for renewal in February ~~2022.~~2023. As a result of becoming the advisor to the Bancroft Fund Ltd. (the “Bancroft Fund”) and the Ellsworth Growth and Income Fund Ltd. (the “Ellsworth Fund”) and the associated consideration paid, the Company maintains an identifiable intangible asset of $1.6 million at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021. The investment advisory agreements for the Bancroft Fund and the Ellsworth Fund are next up for renewal in August ~~2021.~~2022. Each of these investment advisory agreements are subject to annual renewal by the respective 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 Company assesses the recoverability of goodwill and intangible assets at least annually, or more often should events warrant. In December 2019, a novel strain of coronavirus (“COVID-19”) surfaced in China and has since spread quickly to numerous countries, including the United States. On March 11, 2020, COVID-19 was identified as a global pandemic by the World Health Organization. In response to its spread, governmental authorities have imposed restrictions on travel and congregation and the temporary closure of many non-essential businesses in affected jurisdictions, including, beginning in March 2020, in the United States. The pandemic and resulting economic dislocations have had adverse consequences for the portfolios of the Funds, including the Enterprise Fund, Bancroft Fund, and Ellsworth Fund. For the three and six months ended June 30, 2020, as a result of the dislocations in the financial markets resulting from COVID-19, impairment analyses were performed which resulted in $161 thousand and $589 thousand impairment charges, respectively, to the identifiable intangible asset related to the Enterprise Fund included within other operating expenses on the Condensed Consolidated Statements of Income. There were no indicators of impairment for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and March 31, 2021 and, as such, there was 0no impairment analysis performed or charge recorded for such period. ~~There was 0 impairment charge recorded to the identifiable intangible asset related to the Bancroft Fund or Ellsworth Fund.~~

10. Commitments and Contingencies

From time to time, the Company may be named in legal actions and proceedings in the normal course of business. 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.~~investigations, which could result in adverse judgments, settlements, fines, injunctions, 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, if material, makes the necessary disclosures. Liabilities for loss contingencies arising from claims, assessments, litigation,fines, and penalties, and other sources are recorded when it is probable that a liability has been incurred and the amount of loss or range of loss can be reasonably estimated. ~~There~~Except as disclosed in Note 13, Subsequent Events, there are currently no such matters pending that the Company believes could have a material adverse effect on its consolidated financial condition, operations, or cash flows at ~~June 30, 2021~~.March 31, 2022.

Leases

On December 5, 1997, the Company entered into a fifteen-year lease, expiring on April 30, 2013, of office space from an entity controlled by members of the Chairman’s family. On June 11, 2013, the Company modified and extended its lease with M4E, LLC, the Company’s landlord at One Corporate Center, Rye, NY. The lease term was extended to December 31, 2028 and the base rental remained at $18 per square foot, or $1.1 million, for 2014. For each subsequent year through December 31, 2028, the base rental is determined by the change in the consumer price index for the New York Metropolitan Area for November of the immediate prior year with the base period as November 2008 for the New York Metropolitan Area.

This lease has been accounted for as a finance lease under FASB ASC Topic 842 (and prior to 2019, as a capital lease under FASB ASC Topic 840, Leases) as it transfers substantially all the benefits and risks of ownership to the Company. The Company has recorded the leased property as an asset and a lease obligation for the present value of the obligation of the leased property. The leased property is amortized on a straight-line basis from the date of the most recent extension to the end of the lease. The lease obligation is amortized over the same term using the interest method of accounting. Finance lease improvements are amortized from the date of expenditure through the end of the lease term or the useful life, whichever is shorter, on a straight-line basis. The lease provides that all operating expenses relating to the property (such as property taxes, utilities, and maintenance) are to be paid by the lessee, GAMCO. These are recognized as expenses in the periods in which they are incurred. Accumulated amortization on the leased property at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 was approximately ~~$5.6~~$5.8 million and ~~$5.5~~$5.7 million, respectively.

The Company also rents office space under operating leases, which expire at various dates through December 31, 2030.

The following table summarizes the Company’s leases for the periods presented (in thousands, except lease term and discount rate):

Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 2021 2020
Finance lease cost - interest expense $ 260 $ 267 $ 523 $ 536
Finance lease cost - amortization of right-of-use asset 67 67 134 134
Operating lease cost 163 105 346 180
Sublease income (46 ) (46 ) (92 ) (92 )
Total lease cost $ 444 $ 393 $ 911 $ 758

Other information:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance lease $ 0 $ 0 $ 0 $ 0
Operating cash flows from operating leases 105 88 218 153
Financing cash flows from finance lease 64 53 125 104
Total cash paid for amounts included in the measurement of lease liabilities $ 169 $ 141 $ 343 $ 257
Right-of-use assets obtained in exchange for new operating lease liabilities $ 0 $ 324 $ 2,143 $ 324
Weighted average remaining lease term—finance lease (years) 7.5 8.5 7.5 8.5
Weighted average remaining lease term—operating leases (years) 3.2 2.4 3.2 2.4
Weighted average discount rate—finance lease 19.1 % 19.1 % 19.1 % 19.1 %
Weighted average discount rate—operating leases 5.0 % 5.0 % 5.0 % 5.0 %

	Three Months Ended
	March 31,
	2022			2021
Finance lease cost - interest expense	$	267		$	263
Finance lease cost - amortization of right-of-use asset		67			67
Operating lease cost		147			183
Sublease income		(32	)		(15	)
Total lease cost	$	449		$	498

Other information:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance lease	$	0		$	0
Operating cash flows from operating leases		152			113
Financing cash flows from finance lease		74			61
Total cash paid for amounts included in the measurement of lease liabilities	$	226		$	174
Right-of-use assets obtained in exchange for new operating lease liabilities	$	0		$	0
Weighted average remaining lease term—finance lease (years)		6.8			7.8
Weighted average remaining lease term—operating leases (years)		3.2			3.2
Weighted average discount rate—finance lease		19.1	%		19.1	%
Weighted average discount rate—operating leases		5.0	%		5.0	%

The finance lease right-of-use asset, net of amortization, at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 was ~~$1.6~~$1.4 million and ~~$1.7~~$1.5 million, respectively, and the operating right-of-use assets, net of amortization, were ~~$2.7~~$2.4 million and ~~$0.8~~$2.6 million, respectively, and these right-of-use assets were included within other assets in the Condensed Consolidated Statements of Financial Condition.

The following table summarizes the maturities of lease liabilities at ~~June 30, 2021~~March 31, 2022 (in thousands):

Year ending December 31,	Finance Leases			Operating Leases			Total Leases			Finance Leases			Operating Leases			Total Leases
2021 (excluding the six months ended June 30, 2021)	$	647		$	420		$	1,067
2022		1,080			657			1,737
2022 (excluding the three months ended March 31, 2022)										$	1,019		$	610		$	1,629
2023		1,080			517			1,597			1,080			571			1,651
2024		1,080			393			1,473			1,080			424			1,504
2025		1,080			332			1,412			1,080			363			1,443
2026											1,080			363			1,443
Thereafter		3,240			1,660			4,900			2,160			1,278			3,438
Total lease payments	$	8,207		$	3,979		$	12,186		$	7,499		$	3,609		$	11,108
Less imputed interest		(3,937	)		(1,106	)		(5,043	)		(3,442	)		(952	)		(4,394	)
Total lease liabilities	$	4,270		$	2,873		$	7,143		$	4,057		$	2,657		$	6,714

The finance lease contains an escalation clause tied to the change in the New York Metropolitan Area Consumer Price Index, which may cause the future minimum payments to exceed the amounts shown above. Future minimum lease payments have not been reduced by related minimum future sublease rentals of approximately ~~$1.2~~$1.1 million due over the next eight years, which are due from affiliated entities.

11. Related Party Transactions

On ~~June 8, 2021,~~February 15, 2022, the Chief Executive Officer (“CEO”) of the Company elected to irrevocably waive all of his compensation that he would otherwise have been entitled to for the period from ~~July~~March 1, ~~2021~~2022 to ~~November 30, 2021. On June 30, 2020,~~May 31, 2022. For the ~~CEO of~~three months ended March 31, 2022, the ~~Company elected to irrevocably waive all of his~~waiver reduced compensation ~~that he would otherwise have been entitled to for the period from July 1, 2020 to November 10, 2020.~~

expense by $3.4 million and management fee expense by $0.7 million.

~~(a) Includes~~ 20~~$154 million and $252 million~~ ~~of 100% U.S. Treasury Fund AUM at~~ ~~June 30, 2021~~ ~~and~~ ~~2020, respectively.~~

Roll-forward of AUM (in millions) (continued)

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Fixed Income:
100% U.S. Treasury fund
Beginning of period assets $ 1,725 $ 2,938 $ 2,370 $ 2,810
Market appreciation (depreciation) - 4 - 14
Net flows (92 ) (21 ) (737 ) 97
End of period assets $ 1,633 $ 2,921 $ 1,633 $ 2,921

Institutional & PWM
Beginning of period assets $ 32 $ 20 $ 32 $ 20
Market appreciation (depreciation) - - - -
Net flows - (1 ) - (1 )
End of period assets $ 32 $ 19 $ 32 $ 19

Total Fixed Income
Beginning of period assets $ 1,757 $ 2,958 $ 2,402 $ 2,830
Market appreciation (depreciation) - 4 - 14
Net flows (92 ) (22 ) (737 ) 96
End of period assets $ 1,665 $ 2,940 $ 1,665 $ 2,940

Total AUM
Beginning of period assets $ 33,409 $ 27,505 $ 32,561 $ 36,475
Market appreciation (depreciation) 1,708 3,735 4,189 (4,140 )
Net flows (366 ) (1,743 ) (1,875 ) (2,696 )
Fund distributions, net of reinvestment (126 ) (141 ) (250 ) (283 )
End of period assets $ 34,625 $ 29,356 $ 34,625 $ 29,356

	Three Months Ended March 31,
	2022			2021
Total Equities
Beginning of period assets	$	33,233		$	30,159
Inflows		685			602
Outflows		(1,161	)		(1,466	)
Net inflows (outflows)		(476	)		(864	)
Market appreciation (depreciation)		(1,140	)		2,481
Fund distributions, net of reinvestment		(143	)		(124	)
Total increase (decrease)		(1,759	)		1,493
End of period assets	$	31,474		$	31,652
Percentage of total assets under management		94.3	%		94.7	%
Average assets under management	$	31,572		$	31,009

Fixed Income:
100% U.S. Treasury fund
Beginning of period assets	$	1,717		$	2,370
Inflows		967			664
Outflows		(812	)		(1,309	)
Net inflows (outflows)		155			(645	)
Market appreciation (depreciation)		-			-
Total increase (decrease)		155			(645	)
End of period assets	$	1,872		$	1,725
Percentage of total assets under management		5.6	%		5.2	%
Average assets under management	$	1,682		$	2,339

Institutional & PWM
Beginning of period assets	$	32		$	32
Inflows		-			-
Outflows		-			-
Net inflows (outflows)		-			-
Market appreciation (depreciation)		-			-
Total increase (decrease)		-			-
End of period assets	$	32		$	32
Percentage of total assets under management		0.1	%		0.1	%
Average assets under management	$	32		$	32

Total Fixed Income
Beginning of period assets	$	1,749		$	2,402
Inflows		967			664
Outflows		(812	)		(1,309	)
Net inflows (outflows)		155			(645	)
Market appreciation (depreciation)		-			-
Total increase (decrease)		155			(645	)
End of period assets	$	1,904		$	1,757
Percentage of total assets under management		5.7	%		5.3	%
Average assets under management	$	1,714		$	2,371

Total AUM
Beginning of period assets	$	34,982		$	32,561
Inflows		1,652			1,266
Outflows		(1,973	)		(2,775	)
Net inflows (outflows)		(321	)		(1,509	)
Market appreciation (depreciation)		(1,140	)		2,481
Fund distributions, net of reinvestment		(143	)		(124	)
Total increase (decrease)		(1,604	)		848
End of period assets	$	33,378		$	33,409
Average assets under management	$	33,286		$	33,380

Our AUM by style at ~~June 30, 2021~~March 31, 2022 (in millions) was comprised of the following:

	Funds		Institutional & PWM		SICAV		Total		Funds		Institutional & PWM		SICAV		Total
Value	$	5,212	$	8,211	$	17	$	13,440	$	10,338	$	12,012	$	16	$	22,366
Utilities		2,569		-		-		2,569		2,662		-		-		2,662
Growth										1,251		356		-		1,607
Sector-focused										730		-		-		730
100% U.S. Treasury Fund		1,632		-		-		1,632		1,872		-		-		1,872
Growth		1,080		471		-		1,551
Gold and Natural Resources										1,337		73		-		1,410
Event-driven										1,082		194		855		2,131
Convertibles		669		79		8		756		520		72		8		600
Gold		396		-		-		396
Other		8,780		4,861		640		14,281
Total	$	20,338	$	13,622	$	665	$	34,625	$	19,792	$	12,707	$	879	$	33,378

RESULTS OF OPERATIONS

Investment advisory and incentive fees, which are based on the amount and composition of AUM in our Funds and Institutional and PWM accounts, and distribution fees represent our largest source of revenues. In addition to the general level and trends of the stock market, growth in revenues depends on good investment performance, which influences the value of existing AUM as well as contributes to higher investment and lower redemption rates and facilitates the ability to attract additional investors while maintaining current fee levels. Growth in AUM is also dependent on being able to access various distribution channels, which is usually based on several factors, including performance and service. A majority of our cash inflows to mutual fund products have come through third party distribution programs, including no-transaction fee programs. We have also been engaged to act as a sub-advisor for other much larger financial services companies with much larger sales distribution organizations. These sub-advisory clients are subject to business combinations that may result in the termination of the relationship. The loss of a sub-advisory relationship could have a significant impact on our financial results in the future.

Advisory fees from the Funds and sub-advisory accounts are computed daily or weekly based on average net assets. Advisory fees from Institutional and PWM clients are generally computed quarterly based on account values as of the end of the preceding quarter. These revenues are based on AUM, which is highly correlated to the stock market and can vary in direct proportion to movements in the stock market and the level of sales compared with redemptions, financial market conditions, and the fee structure for AUM. Revenues derived from the equity-oriented portfolios generally have higher advisory fee rates than fixed income portfolios.

We also may receive incentive fees from Institutional and PWM clients, which are based upon meeting or exceeding a specific benchmark index or indices. These fees are recognized at the end of the stipulated contract period, which may be quarterly or annually, for the respective account.

Advisory fees on assets attributable to certain of the closed-end 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.

Distribution fees and other income primarily include distribution fee revenue earned in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, along with sales charges and underwriting fees associated with the sale of the mutual funds plus other revenues. Distribution fees fluctuate based on the level of AUM and the amount and type of mutual funds sold directly by G.distributors or through various distribution channels.

Compensation costs include variable and fixed compensation and related expenses paid to officers, portfolio managers, sales, trading, research, and all other teammates. Variable compensation paid to sales teammates and portfolio management generally represents 40% of revenues and is the largest component of total compensation costs. Distribution costs include marketing, product distribution, and promotion costs. The management fee is incentive-based and entirely variable compensation in the amount of 10% of the aggregate pre-tax profits, which is paid to Mr. Mario J. Gabelli ~~(“Mr. Gabelli”)~~ or his designee for acting as ~~CEO~~Chief Executive Officer (“CEO”) pursuant to his 2008 Employment Agreement so long as he is an executive of GBL and devotes the substantial majority of his working time to the business. Other operating expenses include general and administrative operating costs.

Non-operating income / (loss) includes gains / (losses) from investments, net (which includes both realized and unrealized gains and losses from securities), interest and dividend income, interest expense, and ~~interest expense.~~shareholder-designated contribution. The gain / (loss) from investments, net is derived from our proprietary investment portfolio consisting of various public investments.

The following table (in thousands, except per share data) and discussion of our results of operations are based upon data derived from the Condensed Consolidated Statements of Income contained in our condensed consolidated financial statements and should be read in conjunction with those statements included in Part I, Item 1 of this Form ~~10-Q~~.10-Q.

	Three Months Ended						Six Months Ended
	June 30,						June 30,							Three Months Ended March 31,
	2021			2020			2021				2020			2022			2021
Revenues
Investment advisory and incentive fees	$	68,885		$	51,470		$	130,355			$	113,743		$	63,762		$	61,470
Distribution fees and other income		6,739			6,089			13,197				13,383			5,861			6,458
Total revenues		75,624			57,559			143,552		��		127,126			69,623			67,928
Expenses
Compensation		31,298			25,516			61,980				54,766			29,058			30,682
Management fee		3,035			2,060			5,552				3,725			1,312			2,517
Distribution costs		7,771			6,634			14,742				14,264			7,145			6,971
Other operating expenses		8,671			4,586			13,975				10,288			6,147			5,304
Total expenses		50,775			38,796			96,249				83,043			43,662			45,474
Operating income		24,849			18,763			47,303				44,083			25,961			22,454
Non-operating income / (loss)
Gain / (loss) from investments, net		2,986			309			3,666				(9,928	)		(2,822	)		680
Interest and dividend income		102			115			287				659			228			185
Interest expense		(625	)		(647	)		(1,287	)			(1,294	)		(816	)		(662	)
Total non-operating income / (loss)		2,463			(223	)		2,666				(10,563	)		(3,410	)		203
Income before income taxes		27,312			18,540			49,969				33,520			22,551			22,657
Provision for income taxes		10,211			7,250			16,918				10,985			5,097			6,707
Net income	$	17,101		$	11,290		$	33,051			$	22,535		$	17,454		$	15,950

Earnings per share:
Basic	$	0.65		$	0.42		$	1.25			$	0.85		$	0.67		$	0.60
Diluted	$	0.64		$	0.42		$	1.24			$	0.84		$	0.66		$	0.59

Three Months Ended ~~June 30, 2021~~March 31, 2022 Compared To Three Months Ended ~~June 30, 2020~~March 31, 2021

Overview

Net income for the ~~second~~first quarter of ~~2021~~2022 was ~~$17.1~~$17.5 million, or ~~$0.64~~$0.66 per fully diluted share, versus ~~$11.3~~$16.0 million, or ~~$0.42~~$0.59 per fully diluted share, in the ~~second~~first quarter of ~~2020.~~2021. The quarter-to-quarter comparison was primarily impacted by higher revenues and ~~non-operating~~lower compensation costs, income taxes, and management fee expense, partially offset by ~~higher compensation and other operating expenses.~~a net loss from investments.

Revenues

Investment advisory and incentive fees for the ~~second~~first quarter of ~~2021~~2022 were ~~$68.9~~$63.8 million, ~~33.8%~~3.7% higher than the ~~2020~~2021 comparative figure of ~~$51.5~~$61.5 million due to higher average AUM. ~~Mutual~~Open-end Fund revenues for the ~~second~~first quarter of ~~2021 increased~~2022 decreased by ~~21.5%~~0.8% to ~~$25.4~~$23.9 million from ~~$20.9~~$24.1 million in the ~~second~~first quarter of ~~2020.~~2021. Our closed-end Fund revenues increased ~~35.6%~~5.5% to ~~$19.8~~$19.1 million in the ~~second~~first quarter ~~2021~~2022 from ~~$14.6~~$18.1 million in the ~~second~~first quarter of ~~2020.~~2021. Institutional and PWM account revenues, which are generally based on beginning of quarter AUM, increased by ~~28.3%~~5.7% to $18.6 million in the ~~second~~first quarter of ~~2021~~2022 from ~~$14.5~~$17.6 million in the ~~second~~first quarter of ~~2020.~~2021. Revenues relating to the SICAV increased ~~$0.4~~$0.5 million to ~~$1.6~~$2.2 million in the ~~second~~first quarter of ~~2021,~~2022, from ~~$1.2~~$1.7 million in the ~~second~~first quarter of ~~2020. There were incentive fees of $3.5 million for three months ending June 30, 2021 versus $0.2 million for the three months ended June 30, 2020.~~

2021.

Mutual Fund distribution fees and other income were ~~$6.7~~$5.9 million for the ~~second~~first quarter of 2022, a decrease of $0.5 million or 7.8% from $6.4 million in the first quarter of 2021 ~~an increase of $0.6 million or 9.8% from $6.1 million in the second quarter of 2020~~ primarily due to ~~higher~~lower average AUM in equity mutual Funds that generate distribution fees.

Expenses

Compensation costs, which are largely variable, were ~~$31.3~~$29.1 million in the ~~second~~first quarter of ~~2021,~~2022, or ~~22.7% higher~~5.2% lower than prior year comparative compensation costs of ~~$25.5~~$30.7 million. The quarter over quarter ~~increase~~decrease was comprised of the CEO’s waiver of his compensation of $3.4 million in the first quarter of 2022 partially offset by a ~~$4.5~~$1.2 million increase in variable compensation expense and a ~~$1.3~~$0.6 million increase in fixed compensation.

Management fee expense, which is wholly variable and based on pretax income, ~~increased~~decreased to ~~$3.0~~$1.3 million in the ~~second~~first quarter of ~~2021~~2022 from ~~$2.1~~$2.5 million in the ~~second~~first quarter of ~~2020.~~2021. For the first quarter of 2022, management fee expense was reduced by $0.7 million as part of the CEO waiver.

Distribution costs were ~~$7.8~~$7.1 millionin the first quarter of 2022, an increase of $0.1 million, or 1.4%, from $7.0 million in the ~~second~~first quarter of ~~2021, an increase of $1.2 million, or 18.2%, from $6.6 million in the second quarter of 2020.~~2021.

Other operating expenses were ~~$8.7~~$6.1 million in the ~~second~~first quarter of ~~2021,~~2022, an increase of ~~$4.1~~$0.8 million, or ~~89.1%~~15.1%, from ~~$4.6~~$5.3 million in the ~~second~~first quarter of ~~2020. Sub-advisory fees were $2.3 million in the second quarter of 2021 as compared to $0.2 million in the second quarter of 2020 as sub-advisory revenues increased to $3.0 million from $0.5 million.~~2021.

Operating income for the ~~second~~first quarter of ~~2021~~2022 was ~~$24.8~~$26.0 million, an increase of ~~$6.0~~$3.5 million, or ~~31.9%~~15.6%, from the ~~$18.8~~$22.5 million in the ~~second~~first quarter of ~~2020.~~2021. Operating income, as a percentage of revenues, was ~~32.9%~~37.3% in the ~~second~~first quarter of ~~2021~~2022 as compared to ~~32.6%~~33.1% in the ~~second~~first quarter of ~~2020.~~2021.

Non-operating income / (loss)

Total non-operating ~~income~~loss was ~~$2.5~~$3.4 million for the ~~second~~first quarter of ~~2021~~2022 versus ~~a loss~~income of $0.2 million in the ~~second~~first quarter of ~~2020.~~2021. Investment ~~gains~~losses were ~~$3.0~~$2.8 million in the ~~second~~first quarter of ~~2021~~2022 versus gains of ~~$0.3~~$0.7 million in the ~~second~~first quarter of ~~2020.~~2021. Interest and dividend income remained the same at ~~$0.1~~$0.2 million in the ~~second~~first quarter of ~~2021~~2022 and ~~2020.~~2021. Interest expense was ~~$0.6~~$0.8 million and ~~$0.6~~$0.7 million in the ~~second~~first quarter of 2022 and 2021, ~~and 2020,~~ respectively.

The effective tax rates (“ETR”) for the three months ended ~~June 30, 2021~~March 31, 2022 and ~~2020 were 37.4% and 39.1%, respectively.~~

~~Six Months Ended June 30, 2021 Compared To Six Months Ended June 30, 2020~~

~~Overview~~

Net income for the first six months of 2021 was $33.1 million, or $1.24 per fully diluted share, versus $22.5 million, or $0.84 per fully diluted share, in the first six months of 2020. The period-to-period comparison was impacted by higher revenues and higher non-operating gains, partially offset by higher variable compensation.

~~Revenues~~

~~Investment advisory and incentive fees for the first six months of~~ 2021 were $130.4 million, 14.7% higher than the 2020 comparative figure of $113.7 million due to higher average AUM. Mutual fund revenues for the first six months of 2021 increased by 9.5% to $49.5 million from $45.2 million22.6% and 29.6%, respectively. The decrease in the first six months of 2020. Our closed-end Fund revenues increased 22.3% to $37.9 million in the first six months of 2021 from $31.0 million in the first six months of 2020. Institutional and PWM account revenues which are generally based on beginning of quarter AUM, increased by 4.9% to $36.2 million in the first six months of 2021 from $34.5 million in the first six months of 2020. Revenues relating to the SICAV were higher at $2.9 million for first six months of 2021 as compared to $2.7 million for the six months ended June 30, 2020. There were incentive fees of $3.9 million for six months ending June 30, 2021 versus $0.3 million for the six months ended June 30, 2020.

Mutual fund distribution fees and other income were $13.2 million for the first six months of 2021, a decrease of $0.2 million or 1.5% from $13.4 million in the first six months of 2020 primarily due to lower average AUM in equity mutual funds that generate distribution fees.

~~Expenses~~

Compensation costs, which are largely variable, were $62.0 million in the first half of 2021, or 13.1% higher than prior year comparative compensation costs of $54.8 million. The year over year change was comprised of a $5.1 million increase in variable compensation expense, a $0.2 million increase in stock compensation expense, and a $1.9 million increase in fixed compensation.

~~Management fee expense, which is wholly variable and based on pretax income, increased to $5.6 million in first six months of 2021 from $3.7 million in the first six months of 2020.~~

~~Distribution costs were $14.7 million in the first six months of 2021, an increase of $0.4 million, or 2.8%, from $14.3 million in the first six months of 2020.~~

Other operating expenses were $14.0 million in the first six months of 2021, an increase of $3.7 million, or 35.9%, from $10.3 million in the first six months of 2020. Sub-advisory fees were $2.7 million in the first half of 2021 as compared to $0.3 million in the first half of 2020 as sub-advisory revenues increased to $3.2 million from $0.7 million. For the six months ended June 30, 2020, as a result of the dislocations in the financial markets resulting from COVID-19, impairment analyses were performed which resulted in a $589 thousand impairment charge to the identifiable intangible asset related to the Gabelli Enterprise Mergers and Acquisitions Fund.

Operating income for the first six months of 2021 was $47.3 million, an increase of $3.2 million, or 7.3%, from the $44.1 million in the first six months of 2020. Operating income, as a percentage of revenues, was 33.0% in first six months of 2021 as compared to 34.7% in the first six months of 2020.

~~Non-operating income / (loss)~~

Total non-operating income was $2.7 million for the first six months of 2021 versus loss of $10.6 million in the first six months of 2020. Investment gains were $3.7 million in the first six months of 2021 versus losses of $9.9 million in the first six months of 2020. Interest and dividend income decreased to $0.3 million in the first six months of 2021 from $0.7 million in the first six months of 2020. Interest expense was $1.3 million in the first six months of 2021 versus $1.3 million in the first six months of 2020.

~~The~~ ETR for the first ~~six months ended June 30, 2021 and 2020 were 33.9% and 32.8%, respectively.~~

~~Non-GAAP information and reconciliation~~

~~Operating income before management fee is used by management for purposes~~quarter of ~~evaluating its business operations. We believe this measure is useful in illustrating~~2022 was due to less non-deductible compensation as compared to the ~~operating results~~first quarter of the Company as management fee is based on pre-tax income before management fee, which includes non-operating items including gains / (losses) from investments, net from our proprietary investment portfolio, interest and dividend income, interest expense, and shareholder-designated contribution. We believe that an investor would find this useful in analyzing our business operations without the impact of the non-operating items such as trading and investment portfolios, interest and dividend income, interest expense, or shareholder-designated contribution.2021.

Reconciliation of GAAP financial measures to non-GAAP (in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,						Three Months Ended March 31,
	2021			2020			2021			2020			2022			2021
Revenues, U.S. GAAP basis	$	75,624		$	57,559		$	143,552		$	127,126		$	69,623		$	67,928
Operating income, U.S. GAAP basis		24,849			18,763			47,303			44,083			25,961			22,454
Add back: management fee expense		3,035			2,060			5,552			3,725			1,312			2,517
Operating income before management fee	$	27,884		$	20,823		$	52,855		$	47,808		$	27,273		$	24,971

Operating margin		32.9	%		32.6	%		33.0	%		34.7	%		37.3	%		33.1	%
Operating margin before management fee		36.9	%		36.2	%		36.8	%		37.6	%		39.2	%		36.8	%

~~DEFERRED COMPENSATION~~

The Company deferred, through a DCCA, the cash compensation of the CEO relating to all of 2016 (“2016 DCCA”) to provide the Company with flexibility to pay down debt and enhance our ability to execute lift-outs, make acquisitions, and seed new products. We have made substantial progress toward this objective, having reduced our debt since the November 2015 spin-off of Associated Capital Group, Inc.

The DCCA deferred the CEO’s compensation expense by amortizing it over the DCCA’s respective vesting period. The CEO was not entitled to receive the compensation until the end of the vesting period, so U.S. GAAP specifies that the expense be amortized over the vesting period. The 2016 DCCA was expensed ratably over 4 years. In addition to the ratable vesting, the expense was marked to market at each reporting period as the DCCA expense was indexed to GBL’s stock price.

Notwithstanding its ability to settle this agreement in stock, GAMCO made a cash payment to the CEO on the vesting date. While the agreement did not change the original calculation of the CEO’s compensation, our reporting under U.S. GAAP for his compensation did change due to the ratable vesting and the indexing to the GBL stock price. The original value of the DCCA was based on the compensation earned in the period divided by the volume weighted average price (“VWAP”) of the GBL stock price for the period (“Original VWAP”) to calculate the number of restricted stock units (“RSUs”) granted. Upon vesting, the DCCA was paid out based on the lesser of the VWAP of GBL’s stock price on the vesting date (“Vesting Date VWAP”) and the Original VWAP multiplied by the number of RSUs. The table below shows a summary of the DCCA (in millions, except RSUs and VWAPs):

Number of
RSUs

Original
VWAP

Vesting
Date
VWAP

Vesting
Date

Deferred Cash
Compensation

Impact of
Indexing to GBL
Stock Price

Vesting
Date Cash
Payment

2016 DCCA 2,314,695 $ 32.8187 $ 18.8812 1/2/2020 $ 76.0 $ (32.3 ) $ 43.7

On January 2, 2020, the 2016 DCCA vested in accordance with the terms of the agreement and a cash payment of $43.7 million was made to the CEO. This payment was reduced by $32.3 million resulting from the DCCA RSUs being indexed to GBL’s stock price and utilizing the lesser of the Vesting Date VWAP ($18.8812) versus the Original VWAP over 2016 ($32.8187).

~~The following tables show the mark to market and earnings per share (“EPS”) impact of the DCCA by quarter (in thousands, except per share data):~~

Mark to market by quarter (increase/(decrease)): EPS impact by quarter:
2020 2020
Q1 $ (1,409 ) Q1 $ 0.04
Q2 - Q2 -
Q3 - Q3 -
Q4 - Q4 -
Year $ (1,409 ) Year $ 0.04

The following table (in thousands, except per share data) shows a reconciliation of our results for the six months ended June 30, 2021 and 2020 between the U.S. GAAP basis and a non-GAAP adjusted basis (“as adjusted”) as if all of the 2016 DCCA was recognized in 2016 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.

Six Months Ended
June 30,
2021 2020
Net income, U.S. GAAP basis $ 33,051 $ 22,535
Impact of 2016 DCCA on expenses and taxes:
Compensation costs - (1,409 )
Provision for income taxes - 338
Total impact of 2016 DCCA - (1,071 )
Net income, as adjusted $ 33,051 $ 21,464

Per share (basic):
Net income, U.S. GAAP basis $ 1.25 $ 0.85
Impact of DCCAs - (0.04 )
Net income, as adjusted $ 1.25 $ 0.81
Per fully diluted share:
Net income, U.S. GAAP basis $ 1.24 $ 0.84
Impact of DCCAs - (0.04 )
Net income, as adjusted $ 1.24 $ 0.80

LIQUIDITY AND CAPITAL RESOURCES

Our principal assets are highly liquid in nature and consist of cash and cash equivalents, U.S. Treasury Bills, short-term investments, and securities held for investment purposes. Cash and cash equivalents are comprised primarily of U.S. Treasury ~~Bills.~~Bills with maturities of three months or less at the time of purchase and a 100% U.S. Treasury money market fund managed by GAMCO (The Gabelli U.S. Treasury Money Market Fund).

Summary cash flow data for the first ~~six~~three months of ~~2021~~2022 and ~~2020~~2021 was as follows (in thousands):

	Six months ended
	June 30,						Three months ended March 31,
	2021			2020			2022			2021
Cash flows provided by/(used in) activities :
Operating activities	$	54,327		$	20,954		$	14,692		$	36,665
Investing activities		61,840			(46,101	)		(8,014	)		51,283
Financing activities		(31,296	)		(2,887	)		(4,339	)		(2,403	)
Net increase / (decrease) in cash and cash equivalents from activities		84,871			(28,034	)
Net increase in cash and cash equivalents from activities								2,339			85,545
Effect of exchange rates on cash and cash equivalents		(3	)		15			3			(2	)
Net increase / (decrease) in cash and cash equivalents		84,868			(28,019	)
Net increase in cash and cash equivalents								2,342			85,543
Cash and cash equivalents, beginning of period		33,325			86,136			142,027			33,325
Cash and cash equivalents, end of period	$	118,193		$	58,117		$	144,369		$	118,868

Short-term investments in U.S. Treasury Bills		-			49,963			-			9,999
Investments in fixed maturity securities		-			2,971
Cash, cash equivalents, short-term investments in U.S. Treasury Bills, and investments in fixed maturity securities	$	118,193		$	111,051
Cash, cash equivalents, short-term investments in U.S Treasury Bills, and investments in fixed maturity securities							$	144,369		$	128,867

Cash and liquidity requirements have historically been met through cash generated by operating income and our borrowing capacity. We filed a “shelf” registration statement with the Securities and Exchange Commission (“SEC”) that was declared effective in ~~April 2018~~July 2021 and ~~provided~~provides us flexibility to sell any combination of senior and subordinated 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 ~~was~~is available through ~~April 2021. On~~ July ~~21, 2021, the Company filed a new “shelf” registration statement on Form S-3 on similar terms, which was declared effective on July 27, 2021.~~2024.

On ~~January 2, 2020, the 2016 DCCA vested in accordance with the terms of the agreement and a cash payment in the amount of $43.7 million was made to the CEO. On July 1, 2020,~~February 15, 2022, the Company announced that the CEO elected to irrevocably waive all of his compensation that he would otherwise have been entitled to for the period from ~~July~~March 1, ~~2020~~2022 to ~~November 10, 2020. On June 30, 2021, the Company announced that~~May 31, 2022. As a result of this waiver, there was $4.1 million of compensation and management fee waived by the CEO ~~elected to irrevocably waive all of his compensation that he would otherwise have been entitled to~~ for the ~~period from July 1, 2021 to November 30, 2021.~~three months ended March 31, 2022.

As of ~~June 30, 2021,~~March 31, 2022, we had cash, cash equivalents, and short-term investments in U.S. Treasury Bills of ~~$118.2~~$144.4 million, an increase of ~~$19.9~~$2.3 million from December 31, ~~2020,~~2021, primarily due to the Company’s operating activities, partially offset by the Company’s investing and ~~operating~~financing activities, described below. Total debt outstanding at ~~June 30, 2021~~March 31, 2022 was ~~$52.2~~$50.9 million, which consisted of subordinated notes due June 15, ~~2023.~~2023 (“Subordinated Notes”).

Net cash provided by operating activities was ~~$54.3~~$14.7 million for the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, as compared to ~~$21.0~~$36.7 million provided by operating activities in the prior year’s comparative period. Cash flows from operating activities primarily consisted of net income adjusted for certain non-cash items and changes in assets and liabilities, primarily ~~compensation~~ payable for investments purchased which ~~increased~~decreased by ~~$23.4~~$15.0 million for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 and ~~decreased~~increased by ~~$33.3~~$0.1 million for the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021.

Net cash ~~provided by~~used in investing activities in the first ~~six~~three months of ~~2021~~2022 was ~~$61.8~~$8.0 million, relating to purchases of securities, as compared to $51.3 million provided by net maturities of U.S. Treasuries ~~under “Short-term investments in U.S. Treasury Bills” on the Condensed Consolidated Statements of Financial Condition, as compared to $46.1 million used~~ in the prior year’s comparative period. As of ~~June 30, 2021,~~March 31, 2022, we had total investments of ~~$33.7~~$38.0 million, ~~a decrease~~an increase in total investments of ~~$57.1~~$5.7 million from the prior year-end balance of ~~$90.8~~$32.3 million.

Net cash used in financing activities in the first ~~six~~three months of ~~2021~~2022 was ~~$31.3~~$4.3 million, including ~~$24.2 million paid for the repurchase of the 5.875% ten year notes, $5.3~~$3.2 million paid for the purchase of treasury stock, ~~$1.6~~$1.0 million paid in dividends, ~~and~~ $0.1 million paid on the principal portion of lease liabilities, and $0.1 million paid to repurchase Subordinated Notes, as compared to ~~$2.9~~$2.4 million used in the prior year’s comparative period.

On March 28, 2022, the Company commenced a tender offer (the “Offer”) to purchase for cash up to $10 million aggregate principal amount of the Subordinated Notes at a price equal to $1,014 per $1,000 principal amount of validly tendered and not properly withdrawn Subordinated Notes. Subsequent to March 31, 2022, the Offer expired on April 25, 2022 with $4.0 million of Subordinated Notes validly tendered and not properly withdrawn. Since such aggregate principal amount of tendered Subordinated Notes was less than $10 million, all Subordinated Notes tendered were accepted and funded with cash on hand.

Based upon our current level of operations and anticipated growth, we expect that our current cash balances plus anticipated cash flows from operating activities and our borrowing capacity will be sufficient to finance our working capital needs for the foreseeable future. We believe we have no immediate material commitments for capital expenditures.

Under the terms of the lease of our Rye, New York office, we are obligated to make minimum total payments of ~~$8.2~~$7.5 million through December 2028.

We have one broker-dealer subsidiary, G.distributors, which is subject to certain net capital requirements. G.distributors computes its 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, as amended. The requirement was $250,000 for the broker-dealer at ~~June 30, 2021.~~March 31, 2022. At ~~June 30, 2021,~~March 31, 2022, G.distributors had net capital, as defined, of approximately ~~$1.9~~$2.1 million, exceeding the regulatory requirement by approximately ~~$1.7~~$1.9 million. Net capital requirements for our affiliated broker-dealer may increase in accordance with the rules and regulations applicable to broker-dealers to the extent G.distributors engages in other business activities.

Critical Accounting Policies and Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods presented. Actual results could differ significantly from those estimates. See Note 1 in Part II, Item 8, Financial Statements and Supplementary Data, and the Company’s Critical Accounting Policies in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in GAMCO’s ~~2020~~2021 annual report on Form 10-K filed with the SEC on March ~~4, 2021~~9, 2022 for details on Critical Accounting Policies.

On May 2, 2022, the Company received correspondence from a regulatory agency outlining the agency’s findings and a request for a response to those findings. The Company has not accrued any amount related to this matter given the preliminary nature of the agency’s findings and analysis, and the uncertainty of the outcome. However, it is reasonably possible that upon conclusion of this matter the Company may incur a charge to the Company’s financial results. An estimate of a range of any potential charge cannot be made at this time.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the normal course of its business, GAMCO is exposed to the 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 a financial intermediary and advisor for AUM in our affiliated Funds and Institutional and PWM accounts, as well as our proprietary investment and trading activities. At ~~June 30, 2021,~~March 31, 2022, we had investments in securities of ~~$33.7~~$38.0 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 investment in securities is at fair value and may move in line with the equity markets. The investments in securities portfolio changes are recorded as gain / (loss) from investments, net in the Condensed Consolidated Statements of Income included in Part I, Item 1 of this Form 10-Q.

Market Risk

Our primary market risk exposure is to changes in equity prices and interest rates. Since approximately ~~90%~~95% of our AUM is 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 portfolios 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 Company’s 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 incentive fees and distribution fees from affiliated Funds and Institutional and PWM 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 may have a corresponding effect on the Company’s revenues.

Related to our proprietary investment activities, we had investments in equity securities and Funds of ~~$33.7~~$38.0 million at ~~June 30, 2021,~~March 31, 2022, which included investments in common stocks of ~~$21.7~~$15.3 million, investments in actively managed semi-transparent ETFs of $16.5 million, investments in open-end funds of ~~$6.2 million, investments in ETFs of $5.3~~$5.7 million, and investments in closed-end Funds of $0.5 million, and at December 31, ~~2020,~~2021, we had investments in equity securities and Funds of ~~$25.8~~$32.3 million, which included investments in common stocks of ~~$19.1~~$16.2 million, investments in actively managed semi-transparent ETFs of $9.6 million, investments in open-end funds of ~~$6.1~~$6.0 million, and investments in closed-end Funds of ~~$0.6~~$0.5 million. Of the ~~$21.7~~$15.3 million and ~~$19.1~~$16.2 million invested in common stocks at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, ~~$10.3~~$6.9 million and ~~$8.1~~$7.6 million, respectively, was related to our investment in Westwood Holdings Group Inc. (NYSE: WHG).

The following table provides a sensitivity analysis for our investments in equity securities and Funds as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 (in thousands). The sensitivity analysis assumes a 10% increase or decrease in the value of these investments:

(unaudited)	Fair Value		Fair Value assuming 10% decrease in equity prices		Fair Value assuming 10% increase in equity prices		Fair Value		Fair Value assuming 10% decrease in equity prices		Fair Value assuming 10% increase in equity prices
At June 30, 2021:
At March 31, 2022:
Equity price sensitive investments, at fair value	$	33,743	$	30,369	$	37,117	$	37,982	$	34,184	$	41,780
At December 31, 2020:
At December 31, 2021:
Equity price sensitive investments, at fair value	$	25,845	$	23,261	$	28,430	$	32,344	$	29,110	$	35,578

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 the ~~June 30, 2021~~March 31, 2022 cash and cash equivalents balance of ~~$118.2~~$144.4 million, a 1% increase in interest rates would increase our interest income by ~~$1.2~~$1.4 million annually. Given the current low interest rate environment, an analysis of a 1% decrease is not meaningful.

ITEM 4. CONTROLS AND PROCEDURES

We evaluated the effectiveness of our disclosure controls and procedures as of ~~June 30, 2021.~~March 31, 2022. 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 Principal Financial Officer (“PFO”), to allow timely decisions regarding required disclosure. Our CEO and PFO participated in this evaluation and concluded that, as of the date of ~~June 30, 2021,~~March 31, 2022, 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.


GAMCO INVESTORS, INC. (Exact name of Registrant as specified in its charter)

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

191 Mason Street, Greenwich, CT 06830 One Corporate Center, Rye, NY 10580		(203) 629-2726
(Address of principle executive offices)(Zip Code)		Registrant’s telephone number, including area code

Large accelerated filer☐	Accelerated filer ☒
Non-accelerated filer ☐	Smaller reporting company ☒	Emerging growth company ☐

INDEX


PART I.	FINANCIAL INFORMATION	Page

Item 1.	Unaudited Condensed Consolidated Financial Statements

	Condensed Consolidated Statements of Financial Condition as of ~~June 30, 2021~~March 31, 2022 (unaudited) and December 31, ~~2020~~2021	3

	Condensed Consolidated Statements of Income for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ (unaudited)	4

	Condensed Consolidated Statements of Comprehensive Income for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ (unaudited)	5

	Condensed Consolidated Statements of Stockholders’ Equity for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ (unaudited)	6

	Condensed Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ (unaudited)	7

	Notes to Condensed Consolidated Financial Statements (unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1918

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2926

Item 4.	Controls and Procedures	3027

PART II.	OTHER INFORMATION *

Item 1.	Legal Proceedings	3127

Item 1A.	Risk Factors	3127

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3128

Item 6.	Exhibits	3228

	Signature	3228

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Investment advisory and incentive fees:
Mutual Funds	$	24,709	$	20,365	$	48,181	$	43,921
Closed-end Funds		19,805		14,594		37,887		31,014
Sub-advisory accounts		650		517		1,266		1,249
Institutional & PWM		18,592		14,543		36,191		34,548
SICAV		1,622		1,203		2,938		2,668
Performance-based		3,507		248		3,892		343
Distribution fees and other income		6,739		6,089		13,197		13,383
Total revenues	$	75,624	$	57,559	$	143,552	$	127,126

	Three Months Ended March 31,
	2022		2021
Investment advisory and incentive fees:
Open-end Funds	$	23,352	$	23,472
Closed-end Funds		19,075		18,082
Sub-advisory accounts		551		616
Institutional & Private Wealth Management		18,622		17,599
SICAVs		2,138		1,316
Performance-based		24		385
Total investment advisory and incentive fees		63,762		61,470
Distribution fees and other income		5,861		6,458
Total revenues	$	69,623	$	67,928

Title of each class		Trading Symbol		Name of each exchange on which registered
Class A Common Stock, $0.001 par value		GBL		New York Stock Exchange

Class		Outstanding at ~~July 31, 2021~~April 30, 2022
Class A Common Stock, $0.001 par value	(Including ~~958,470~~406,200 restricted stock awards)	~~8,165,225~~7,478,221
Class B Common Stock, $0.001 par value		19,024,117
In addition, there are ~~394,800 Phantom Restricted Stock Awards~~375,800 phantom restricted stock awards outstanding as of ~~July 31, 2021.~~April 30, 2022.

	June 30, 2021				December 31, 2020				March 31, 2022				December 31, 2021
	Cost		Estimated Fair Value		Cost		Estimated Fair Value		Cost		Estimated Fair Value		Cost		Estimated Fair Value
Investments in equity securities and funds:
Investments in equity securities:
Common stocks	$	37,437	$	21,647	$	41,341	$	19,099	$	33,912	$	15,261	$	33,575	$	16,210
Actively managed semi-transparent ETFs										17,000		16,539		9,000		9,599
Open-end funds		5,632		6,235		5,757		6,128		5,722		5,664		5,722		5,995
Actively managed semi-transparent ETFs		5,000		5,326		0		0
Closed-end Funds		516		528		628		618
Closed-end funds										530		514		530		534
Other		6		7		0		0		6		4		6		6
Total investments in equity securities and funds	$	48,591	$	33,743	$	47,726	$	25,845
Total investments in equity securities									$	57,170	$	37,982	$	48,833	$	32,344

	December 31, 2020
	Amortized Cost		Gross Unrecognized Holding Gains		Gross Unrecognized Holding Losses		Estimated Fair Value
Short-term investments in U.S. Treasury Bills:
U.S. Treasury Bills	$	64,988	$	6	$	0	$	64,994
Total short-term investments in U.S. Treasury Bills	$	64,988	$	6	$	0	$	64,994

-	Level 1 - the valuation methodology utilizes quoted prices (unadjusted) in active markets for identical assets or liabilities at the reporting date. Level 1 assets include cash equivalents, government obligations, mutual funds, closed-end funds, and listed equities.
-	Level 2 - the valuation methodology utilizes inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities that are not active, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly-quoted intervals.
-	Level 3 - the valuation methodology utilizes unobservable inputs for the asset or liability, and includes situations where there is little, if any, market activity for the asset or liability.

Assets	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of June 30, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of March 31, 2022
Cash equivalents	$	117,723	$	0	$	0	$	117,723	$	143,983	$	0	$	0	$	143,983
Investments in securities:
Common stocks		21,647		0		0		21,647		15,261		0		0		15,261
Open-end Funds		6,235		0		0		6,235
Actively managed semi-transparent ETFs		5,326		0		0		5,326		16,539		0		0		16,539
Closed-end Funds		528		0		0		528
Open-end funds										5,664		0		0		5,664
Closed-end funds										514		0		0		514
Other		7		0		0		7		4		0		0		4
Total investments in securities		33,743		0		0		33,743		37,982		0		0		37,982
Total assets at fair value	$	151,466	$	0	$	0	$	151,466	$	181,965	$	0	$	0	$	181,965

	June 30, 2021				December 31, 2020
	Carrying Value		Fair Value Level 1		Carrying Value		Fair Value Level 1
U.S. Treasury Bills	$	0	$	0	$	64,988	$	64,994
Total	$	0	$	0	$	64,988	$	64,994

		Number of RSUs				Original VWAP				Vesting Date VWAP			Vesting Date		Deferred Cash Compensation				Impact of Indexing to GBL Stock Price				Vesting Date Cash Payment
2016 DCCA			2,314,695			$	32.8187			$	18.8812		1/2/2020		$	76.0			$	(32.3	)		$	43.7

Mark to market by quarter (increase/(decrease)):					EPS impact by quarter:
		2020					2020
	Q1	$	(1,409	)		Q1	$	0.04
	Q2		-			Q2		-
	Q3		-			Q3		-
	Q4		-			Q4		-
Year		$	(1,409	)	Year		$	0.04

Period	Total Number of Shares Purchased ⁽¹⁾		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽¹⁾		Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs
4/01/21 - 4/30/21		62,065	$	19.00		62,065		2,715,516
5/01/21 - 5/31/21		12,800		24.43		12,800		2,702,716
6/01/21 - 6/30/21		83,019		24.42		83,019		2,619,697
Totals		157,884	$	22.29		157,884

					Total Number of		Maximum
	Total				Shares Purchased as		Number of Shares
	Number of		Average		Part of Publicly		That May Yet Be
	Shares		Price Paid Per		Announced Plans		Purchased Under
Period	Purchased ⁽¹⁾		Share		or Programs ⁽¹⁾		the Plans or Programs
1/01/22 - 1/31/22		46,136	$	23.72		46,136		2,127,801
2/01/22 - 2/28/22		63,575		21.87		63,575		2,064,226
3/01/22 - 3/31/22		31,184		21.27		31,184		2,033,042
Totals		140,895	$	22.34		140,895


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

101.INS		Inline XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema Document.

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

By: /s/ Kieran Caterina
	Name: Kieran Caterina
	Title: Principal Financial Officer

	Date: ~~August 3, 2021~~May 6, 2022