Edgar Filing: GAMCO INVESTORS, INC. ET AL

form10q033112.htm

SECURITIES & EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2012

[ ]	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)

New York			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

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

Large accelerated filer ¨		Accelerated filer x

Non-accelerated filer o		Smaller reporting company o

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

Yes

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 April 30, 2012
Class A Common Stock, .001 par value		6,592,716
Class B Common Stock, .001 par value		20,040,746

INDEX

GAMCO INVESTORS, INC. AND SUBSIDIARIES


PART I.	FINANCIAL INFORMATION


Item 1.	Unaudited Condensed Consolidated Financial Statements

	Condensed Consolidated Statements of Income:
	- Three months ended March 31, 2012 and 2011

	Condensed Consolidated Statements of Comprehensive Income:
	- Three months ended March 31, 2012 and 2011

	Condensed Consolidated Statements of Financial Condition:
	- March 31, 2012
	- December 31, 2011
	- March 31, 2011

	Condensed Consolidated Statements of Equity:
	- Three months ended March 31, 2012 and 2011

	Condensed Consolidated Statements of Cash Flows:
	- Three months ended March 31, 2012 and 2011

	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
	March 31,
	2012			2011
Revenues
Investment advisory and incentive fees	$	67,783		$	62,911
Distribution fees and other income		11,623			10,345
Institutional research services		2,343			3,649
Total revenues		81,749			76,905
Expenses
Compensation		34,554			33,417
Management fee		4,184			3,113
Distribution costs		10,177			13,429
Other operating expenses		5,822			6,186
Total expenses		54,737			56,145		(a)

Operating income		27,012			20,760
Other income (expense)
Net gain from investments		13,878			8,740
Interest and dividend income		1,236			1,936
Interest expense		(4,404	)		(2,867	)
Total other income, net		10,710			7,809
Income before income taxes		37,722			28,569
Income tax provision		13,756			10,288
Net income		23,966			18,281
Net income attributable to noncontrolling interests		130			638
Net income attributable to GAMCO Investors, Inc.'s shareholders	$	23,836		$	17,643

Net income attributable to GAMCO Investors, Inc.'s shareholders
per share:
Basic	$	0.90		$	0.66

Diluted	$	0.90		$	0.65

Weighted average shares outstanding:
Basic		26,415			26,901

Diluted		26,533			27,008

Dividends declared:	$	0.04		$	0.03
(a) Includes $5.6 million in costs directly related to the launch of a new closed-end fund.

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
	March 31,
	2012			2011

Net income	$	23,966		$	18,281
Other comprehensive income, net of tax:
Foreign currency translation		(17	)		24
Net unrealized gains on securities available for sale		3,457			2,487
Other comprehensive income		3,440			2,511

Comprehensive income		27,406			20,792
Less: Comprehensive income attributable to noncontrolling interests		(130	)		(638	)

Comprehensive income attributable to GAMCO Investors, Inc.	$	27,276		$	20,154

See accompanying notes.

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

	March 31,			December 31,			March 31,
	2012			2011			2011
ASSETS
Cash and cash equivalents	$	324,630		$	276,340		$	164,671
Investments in securities		257,607			238,333			279,713
Investments in sponsored registered investment companies		62,305			59,214			65,903
Investments in partnerships		101,685			100,893			94,584
Receivable from brokers		29,298			20,913			43,308
Investment advisory fees receivable		27,193			32,156			24,992
Income tax receivable		39			39			302
Other assets		23,668			28,861			24,030
Total assets	$	826,425		$	756,749		$	697,503

LIABILITIES AND EQUITY
Payable to brokers	$	22,366		$	10,770		$	7,998
Income taxes payable and deferred tax liabilities		24,782			15,296			25,035
Capital lease obligation		5,043			5,072			5,151
Compensation payable		28,834			17,695			22,883
Securities sold, not yet purchased		9,657			5,488			15,550
Mandatorily redeemable noncontrolling interests		1,390			1,386			1,466
Accrued expenses and other liabilities		28,692			24,441			28,351
Sub-total		120,764			80,148			106,434

5.5% Senior notes (due May 15, 2013)		99,000			99,000			99,000
5.875% Senior notes (due June 1, 2021)		100,000			100,000			-
Zero coupon subordinated debentures, Face value: $86.3 million at March 31, 2012 and
December 31, 2011 and $86.4 million at March 31, 2011 (due December 31, 2015)		65,300			64,119			60,697
Total liabilities		385,064			343,267			266,131

Redeemable noncontrolling interests		16,828			6,071			28,884
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;
13,760,697, 13,627,397 and 13,256,203 issued, respectively; 6,592,716,
6,684,149 and 6,872,333 outstanding, respectively		13			13			13
Class B Common Stock, $0.001 par value; 100,000,000 shares authorized;
24,000,000 shares issued; 20,040,746, 20,070,746 and 20,190,140 shares
outstanding, respectively		20			20			20
Additional paid-in capital		265,280			264,409			262,686
Retained earnings		431,963			409,191			387,101
Accumulated other comprehensive income		25,960			22,520			27,900
Treasury stock, at cost (7,167,981, 6,943,248 and 6,653,870 shares, respectively)		(302,152	)		(292,181	)		(278,870	)
Total GAMCO Investors, Inc. stockholders' equity		421,084			403,972			398,850
Noncontrolling interests		3,449			3,439			3,638
Total equity		424,533			407,411			402,488

Total liabilities and equity	$	826,425		$	756,749		$	697,503

See accompanying notes.

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

For the three months ended March 31, 2012
			GAMCO Investors, Inc. stockholders
										Accumulated
					Additional					Other									Redeemable
	Noncontrolling		Common		Paid-in		Retained			Comprehensive			Treasury						Noncontrolling
	Interests		Stock		Capital		Earnings			Income			Stock			Total			Interests
Balance at December 31, 2011	$	3,439	$	33	$	264,409	$	409,191		$	22,520		$	(292,181	)	$	407,411		$	6,071
Redemptions of redeemable
noncontrolling interests		-		-		-		-			-			-			-			(3	)
Contributions from redeemable
noncontrolling interests		-		-		-		-			-			-			-			10,640
Net income (loss)		10		-		-		23,836			-			-			23,846			120
Net unrealized gains on
securities available for sale,
net of income tax ($2,031)		-		-		-		-			3,457			-			3,457			-
Foreign currency translation		-		-		-		-			(17	)		-			(17	)		-
Dividends declared ($0.04 per
share)		-		-		-		(1,064	)		-			-			(1,064	)		-
Stock based compensation
expense		-		-		871		-			-			-			871			-
Purchase of treasury stock		-		-		-		-			-			(9,971	)		(9,971	)		-
Balance at March 31, 2012	$	3,449	$	33	$	265,280	$	431,963		$	25,960		$	(302,152	)	$	424,533		$	16,828

See accompanying notes.

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

For the three months ended March 31, 2011
			GAMCO Investors, Inc. stockholders
										Accumulated
					Additional					Other								Redeemable
	Noncontrolling		Common		Paid-in		Retained			Comprehensive		Treasury						Noncontrolling
	Interests		Stock		Capital		Earnings			Income		Stock			Total			Interests
Balance at December 31, 2010	$	3,579	$	33	$	262,108	$	370,272		$	25,389	$	(271,773	)	$	389,608		$	26,984
Redemptions of redeemable
noncontrolling interests		-		-		-		-			-		-			-			(839	)
Contributions from redeemable
noncontrolling interests		-		-		-		-			-		-			-			6,263
Deconsolidation of
Partnership		-		-		-		-			-		-			-			(4,103	)
Net income		59		-		-		17,643			-		-			17,702			579
Net unrealized gains on
securities available for sale,
net of income tax ($1,460)		-		-		-		-			2,487		-			2,487			-
Foreign currency translation		-		-		-		-			24		-			24			-
Dividends declared
($0.03 per share)		-		-		-		(814	)		-		-			(814	)		-
Stock based compensation
expense		-		-		578		-			-		-			578			-
Purchase of treasury stock		-		-		-		-			-		(7,097	)		(7,097	)		-
Balance at March 31, 2011	$	3,638	$	33	$	262,686	$	387,101		$	27,900	$	(278,870	)	$	402,488		$	28,884

See accompanying notes.

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

	Three Months Ended
	March 31,
	2012			2011
Operating activities
Net income	$	23,966		$	18,281
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Equity in net gains from partnerships		(3,351	)		(2,977	)
Depreciation and amortization		180			274
Stock based compensation expense		871			578
Deferred income taxes		1,515			1,649
Foreign currency translation gain/(loss)		(17	)		24
Fair value of donated securities		83			-
Gains on sales of available for sale securities		(279	)		(101	)
Accretion of zero coupon debentures		1,180			1,117
Loss on extinguishment of debt		1			-
(Increase) decrease in assets:
Investments in trading securities		(13,604	)		(44,589	)
Investments in partnerships:
Contributions to partnerships		(23,293	)		(6,583	)
Distributions from partnerships		25,852			3,026
Receivable from brokers		(8,385	)		(2,373	)
Investment advisory fees receivable		4,963			19,798
Income tax receivable and deferred tax assets		-			23
Other assets		5,023			(1,129	)
Increase (decrease) in liabilities:
Payable to brokers		11,596			6,444
Income taxes payable and deferred tax liabilities		5,940			(1,035	)
Compensation payable		11,139			(891	)
Mandatorily redeemable noncontrolling interests		4			23
Accrued expenses and other liabilities		4,227			6,531
Total adjustments		23,645			(20,191	)
Net cash provided by (used in) operating activities	$	47,611		$	(1,910	)

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

	Three Months Ended
	March 31,
	2012			2011
Investing activities
Purchases of available for sale securities	$	(4	)	$	(4	)
Proceeds from sales of available for sale securities		525			101
Return of capital on available for sale securities		571			631
Net cash provided by investing activities		1,092			728

Financing activities
Contributions from redeemable noncontrolling interests		10,640			6,263
Redemptions of redeemable noncontrolling interests		(3	)		(839	)
Dividends paid		(1,070	)		(814	)
Purchase of treasury stock		(9,971	)		(7,097	)
Net cash used in financing activities		(404	)		(2,487	)
Effect of exchange rates on cash and cash equivalents		(9	)		(10	)
Net increase (decrease) in cash and cash equivalents		48,290			(3,679	)
Cash and cash equivalents at beginning of period		276,340			169,601
Decrease in cash from deconsolidation of partnership		-			(1,251	)
Cash and cash equivalents at end of period	$	324,630		$	164,671
Supplemental disclosures of cash flow information:
Cash paid for interest	$	322		$	271
Cash paid for taxes	$	6,038		$	9,167

Non-cash activity:
- On January 1, 2011, GAMCO Investors, Inc. was no longer deemed to have control over a certain partnership which
resulted in the deconsolidation of that partnership and decreases of approximately $1,251 of cash and cash
equivalents, $2,852 of net assets and $4,103 of noncontrolling interests.
- For the three months ended March 31, 2012 and March 31, 2011, the Company accrued restricted stock
award dividends of $13 and $7, respectively.
See accompanying notes.

GAMCO INVESTORS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(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 GAAP in the United States for complete financial statements. In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of financial position, results of operations and cash flows of GAMCO for the interim periods presented and are not necessarily indicative of a full year’s results.

The condensed consolidated financial statements include the accounts of GAMCO and its subsidiaries, including our new broker-dealer, G.distributors, LLC, a wholly-owned subsidiary of GAMCO, which became the distributor for the Gabelli/GAMCO family of funds on August 1, 2011. Intercompany accounts and transactions are eliminated.

These condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2011 from which the accompanying condensed consolidated financial statements were derived.

The Company has now separately disclosed the amount of investments in sponsored registered investment companies as a new line item in the condensed consolidated statements of financial condition. These amounts were previously included within investments in securities in the condensed consolidated statements of financial condition.

Use of Estimates

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

Recent Accounting Developments

In May 2011, the Financial Accounting Standards Board (“FASB”) issued guidance on fair value measurement which expands existing disclosure requirements for fair value measurements and makes other amendments. The guidance requires, for level 3 fair value measurements, (1) a quantitative disclosure of the unobservable inputs and assumptions used in the measurement, (2) a description of the valuation processes in place, and (3) a narrative description of the sensitivity of the fair value to changes in unobservable inputs and interrelationships between those inputs. Additionally, the guidance requires disclosure of the level in the fair value hierarchy of items that are not measured at fair value in the statement of financial condition but whose fair value must be disclosed and clarifies that the valuation premise and highest and best use concepts are not relevant to financial assets or liabilities. The guidance is effective for interim and annual periods beginning after December 15, 2011. The Company adopted this guidance on January 1, 2012 and has reflected the new disclosures in the condensed consolidated financial statements.

In June 2011, the FASB issued guidance which revises the manner in which entities present comprehensive income in their financial statements. The new guidance requires entities to report comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. Under the two-statement approach, the first statement would include components of net income, which is consistent with the income statement format used currently, and the second statement would include components of other comprehensive income (“OCI”). The guidance does not change the items that must be reported in OCI. In December 2011, the FASB indefinitely deferred a portion of the guidance that would have required entities to present reclassification adjustments out of accumulated other comprehensive income by component in both the statement in which the net income is presented and the statement in which other comprehensive income is presented. The guidance is effective for fiscal years beginning after December 15, 2011, and for interim periods within those fiscal years. The Company adopted the guidance on January 1, 2012 and opted for the two separate but consecutive statements approach. Accordingly, the Company now presents the condensed consolidated statements of comprehensive income immediately following the condensed consolidated statements of income.

In December 2011, the FASB issued guidance which creates new disclosure requirements about the nature of an entity’s right of offset and related arrangements associated with its financial instruments and derivative instruments. The disclosure requirements are effective for annual reporting periods beginning on or after January 1, 2013, and interim periods therein, with retrospective application required. The new disclosures are designed to make financial statements that are prepared under U.S. GAAP more comparable to those prepared under International Financial Reporting Standards. The Company is currently evaluating the impact that the application of this guidance will have on its disclosures.

B. Investment in Securities

Investments in securities at March 31, 2012, December 31, 2011 and March 31, 2011 consisted of the following:

	March 31, 2012				December 31, 2011				March 31, 2011
	Cost		Fair Value		Cost		Fair Value		Cost		Fair Value
	(In thousands)
Trading securities:
Government obligations	$	48,624	$	48,630	$	42,124	$	42,126	$	12,069	$	12,076
Common stocks		156,206		170,224		153,294		159,314		210,956		225,589
Mutual funds		1,086		1,495		1,084		1,307		1,190		1,629
Convertible bonds		-		-		-		-		163		175
Preferred stocks		-		-		-		-		-		-
Other investments		601		571		466		399		465		476
Total trading securities		206,517		220,920		196,968		203,146		224,843		239,945

Available for sale securities:
Common stocks		16,158		34,578		16,487		33,282		16,835		37,408
Mutual funds		1,362		2,109		1,362		1,905		1,503		2,360
Total available for sale securities		17,520		36,687		17,849		35,187		18,338		39,768

Total investments in securities	$	224,037	$	257,607	$	214,817	$	238,333	$	243,181	$	279,713

Securities sold, not yet purchased at March 31, 2012, December 31, 2011 and March 31, 2011 consisted of the following:

	March 31, 2012				December 31, 2011				March 31, 2011
	Cost		Fair Value		Cost		Fair Value		Cost		Fair Value
Trading securities:	(In thousands)
Common stocks	$	9,016	$	9,553	$	5,271	$	5,415	$	14,044	$	15,550
Other		21		104		49		73		-		-
Total securities sold, not yet purchased	$	9,037	$	9,657	$	5,320	$	5,488	$	14,044	$	15,550

Investments in sponsored registered investment companies at March 31, 2012, December 31, 2011 and March 31, 2011 consisted of the following:

	March 31, 2012				December 31, 2011				March 31, 2011
	Cost		Fair Value		Cost		Fair Value		Cost		Fair Value
	(In thousands)
Trading securities:
Mutual funds	$	15	$	17	$	15	$	18	$	15	$	25
Total trading securities		15		17		15		18		15		25

Available for sale securities:
Closed-end funds		36,546		58,721		37,104		55,855		39,232		61,734
Mutual funds		2,204		3,567		2,213		3,341		2,345		4,144
Total available for sale securities		38,750		62,288		39,317		59,196		41,577		65,878

Total investments in sponsored
registered investment companies	$	38,765	$	62,305	$	39,332	$	59,214	$	41,592	$	65,903

Management determines the appropriate classification of debt and equity securities at the time of purchase and reevaluates such designation as of each balance sheet date. 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 time of purchase are classified as cash equivalents. A substantial portion of investments in securities are held for resale in anticipation of short-term market movements and therefore are classified as trading securities. Trading securities are stated at fair value, with any unrealized gains or losses, reported in current period earnings. Available for sale (“AFS”) investments are stated at fair value, with any unrealized gains or losses, net of taxes, reported as a component of equity except for losses deemed to be other than temporary which are recorded as unrealized losses in the condensed consolidated statements of income.

The Company recognizes all derivatives as either assets or liabilities measured at fair value and includes them in either investments in securities or securities sold, not yet purchased on the condensed consolidated statements of financial condition. From time to time, the Company and/or the partnerships and offshore funds that the Company consolidates will enter into hedging transactions to manage their exposure to foreign currencies and equity prices related to their proprietary investments. For the three months ended March 31, 2012, the Company had derivative transactions in equity derivatives which resulted in net losses of $29,000. At March 31, 2011, the Company did not hold any derivatives. At March 31, 3012 and December 31, 2011, we held derivative contracts on 1 million equity shares and 142,000 equity shares, respectively, and the fair value was $105,000 and $24,000, respectively; these are included in investments in securities in the condensed consolidated statements of financial condition. These transactions are not designated as hedges for accounting purposes, and therefore changes in fair values of these derivatives are included in net gain from investments in the condensed consolidated statements of 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 March 31, 2012, December 31, 2011 and March 31, 2011:

	March 31, 2012
			Gross		Gross
			Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(In thousands)
Common stocks	$	16,158	$	18,420	$	-		$	34,578
Closed-end Funds		36,546		22,189		(14	)		58,721
Mutual funds		3,566		2,110		-			5,676
Total available for sale securities	$	56,270	$	42,719	$	(14	)	$	98,975

	December 31, 2011
			Gross		Gross
			Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(In thousands)
Common stocks	$	16,487	$	16,795	$	-		$	33,282
Closed-end Funds		37,104		18,779		(28	)		55,855
Mutual funds		3,575		1,671		-			5,246
Total available for sale securities	$	57,166	$	37,245	$	(28	)	$	94,383

	March 31, 2011
			Gross		Gross
			Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(In thousands)
Common stocks	$	16,835	$	20,573	$	-		$	37,408
Closed-end Funds		39,232		22,502					61,734
Mutual funds		3,848		2,656		-			6,504
Total available for sale securities	$	59,915	$	45,731	$	-		$	105,646

Unrealized changes to fair value, net of taxes, for the three months ended March 31, 2012 and March 31, 2011 of $3.5 million and $2.5 million in gains, respectively, have been included in other comprehensive income, a component of equity, at March 31, 2012 and March 31, 2011. Return of capital on available for sale securities were $0.6 million for both the three months ended March 31, 2012 and March 31, 2011. Proceeds from sales of investments available for sale were approximately $0.5 million and $0.1 million for the three month periods ended March 31, 2012 and March 31, 2011, respectively. For the three months ended March 31, 2012 and March 31, 2011, gross gains on the sale of investments available for sale amounted to $0.3 million and $0.1 million, respectively, and were reclassed from other comprehensive income into the condensed consolidated statements of income. There were no losses on the sale of investments available for sale for the three months ended March 31, 2012 or March 31, 2011. The basis on which the cost of a security sold is determined is specific identification.

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

	March 31, 2012							December 31, 2011							March 31, 2011
			Unrealized							Unrealized							Unrealized
	Cost		Losses			Fair Value		Cost		Losses			Fair Value		Cost		Losses		Fair Value
(in thousands)
Mutual Funds	$	97	$	(14	)	$	83	$	101	$	(28	)	$	73	$	-	$	-	$	-

At March 31, 2012 and December 31, 2011, there was one holding in a loss position which was not deemed to be other-than-temporarily impaired due to the length of time that it had been in a loss position and because it passed scrutiny in our evaluation of issuer-specific and industry-specific considerations. In this specific instance, the investment at March 31, 2012 and December 31, 2011 was a closed-end fund with diversified holdings across multiple companies and across multiple industries. The one holding was impaired for ten and seven consecutive months, respectively. The value of this holding at March 31, 2012 and December 31, 2011 was $0.1 million for both periods.

At March 31, 2011, there were no available for sale holdings in loss positions.

For the three months ended March 31, 2012 and 2011, there were no losses on available for sale securities deemed to be other than temporary.

C. Investments in Partnerships, Offshore Funds and Variable Interest Entities

The Company is general partner or co-general partner of various sponsored limited partnerships and the investment manager of various sponsored offshore funds, and have investments totaling $86.9 million, $86.9 million and $74.4 million at March 31, 2012, December 31, 2011 and March 31, 2011, respectively, whose underlying assets consist primarily of marketable securities (the “affiliated entities”). We also have investments in unaffiliated partnerships, offshore funds and other entities of $14.8 million, $14.0 million and $20.2 million at March 31, 2012, December 31, 2011 and March 31, 2011, respectively (the “unaffiliated entities”). We evaluate each entity for the appropriate accounting treatment and disclosure. Certain of the affiliated entities are consolidated. In addition, our statement of financial condition caption “Investments in partnerships” includes those investments, in both affiliated and unaffiliated entities, which the Company accounts for under the equity method of accounting, as well as certain investments that the feeder funds hold that are carried at fair value, as described in Note D. The Company reflects the equity in earnings of these equity method investees and the change in fair value of the consolidated feeder funds under the caption “Net gain from investments” on the condensed consolidated statements of income.

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

Entities consolidated
	CFFs				Partnerships					Offshore Funds					Total
	VIEs		VOEs		VIEs		VOEs			VIEs			VOEs		VIEs			VOEs
Entities consolidated at December 31, 2010		1		2		-		2			1			-		2			4
Additional consolidated entities		-		-		-		-			-			1		-			1
Deconsolidated entities		-		-		-		(1	)		-			-		-			(1	)
Entities consolidated at March 31, 2011		1		2		-		1			1			1		2			4
Additional consolidated entities		-		-		-		-			-			-		-			-
Deconsolidated entities		-		-		-		-			(1	)		-		(1	)		-
Entities consolidated at December 31, 2011		1		2		-		1			-			1		1			4
Additional consolidated entities		-		-		-		-			-			-		-			-
Deconsolidated entities		-		-		-		-			-			-		-			-
Entities consolidated at March 31, 2012		1		2		-		1			-			1		1			4

On January 1, 2011, upon analysis of several factors, including the additional contribution of capital from unrelated third parties into a partnership that we consolidated for the year ended and as of December 31, 2010, we determined that the Company was no longer deemed to control the partnership, resulting in the deconsolidation of this partnership, effective January 1, 2011. The deconsolidation did not result in the recognition of any gain or loss. The Company continues to serve as the general partner and earn fees for this role, and it also maintains an investment in the deconsolidated partnership which is included in investments in partnerships on the condensed consolidated statements of financial condition and is accounted for under the equity method (which approximates fair value).

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

	March 31, 2012
	Prior to
	Consolidation		CFFs			Partnerships			Offshore Funds		As Reported
Assets
Cash and cash equivalents	$	322,523	$	-		$	2,107		$	-	$	324,630
Investments in securities		236,387		-			6,503			14,717		257,607
Investments in sponsored investment companies		62,289		-			16			-		62,305
Investments in partnerships		109,136		990			(8,441	)		-		101,685
Receivable from brokers		18,400		-			121			10,777		29,298
Investment advisory fees receivable		27,189		5			(1	)		-		27,193
Other assets		23,691		16			-			-		23,707
Total assets	$	799,615	$	1,011		$	305		$	25,494	$	826,425
Liabilities and equity
Securities sold, not yet purchased	$	9,633	$	-		$	-		$	24	$	9,657
Accrued expenses and other liabilities		101,149		59			38			9,861		111,107
Total debt		264,300		-			-			-		264,300
Redeemable noncontrolling interests		-		952			267			15,609		16,828
Total equity		424,533		-			-			-		424,533
Total liabilities and equity	$	799,615	$	1,011		$	305		$	25,494	$	826,425

	December 31, 2011
	Prior to
	Consolidation		CFFs			Partnerships			Offshore Funds		As Reported
Assets
Cash and cash equivalents	$	259,531	$	15,000		$	1,809		$	-	$	276,340
Investments in securities		225,599		-			6,211			6,523		238,333
Investments in sponsored investment companies		59,197		-			17			-		59,214
Investments in partnerships		107,981		933			(8,021	)		-		100,893
Receivable from brokers		17,593		-			270			3,050		20,913
Investment advisory fees receivable		32,157		1			(2	)		-		32,156
Other assets		43,889		(14,989	)		-			-		28,900
Total assets	$	745,947	$	945		$	284		$	9,573	$	756,749
Liabilities and equity
Securities sold, not yet purchased	$	5,488	$	-		$	-		$	-	$	5,488
Accrued expenses and other liabilities		69,929		51			28			4,652		74,660
Total debt		263,119		-			-			-		263,119
Redeemable noncontrolling interests		-		894			256			4,921		6,071