SECURITIES & EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2016
or
       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

Commission File No. 001-14761

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

Delaware
  
13-4007862
(State of other jurisdiction of incorporation or organization)
  
(I.R.S. Employer Identification No.)
     
One Corporate Center, Rye, NY
  
10580-1422
(Address of principle executive offices)
  
(Zip Code)

(914) 921-3700
Registrant's telephone number, including area code
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes   No 
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes  No

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

Large accelerated filer
 
Accelerated filer
     
Non-accelerated filer
 
Smaller reporting company
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes    No 
 
Indicate the number of shares outstanding of each of the Registrant's classes of Common Stock, as of the latest practical date.
Class
  
Outstanding at July 31, 2016
Class A Common Stock, .001 par value
  (Including 549,700 restricted stock awards)
-
Class B Common Stock, .001 par value
 
-

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 June 30, 2016 and 2015
 
- Six Months Ended June 30, 2016 and 2015
   
 
Condensed Consolidated Statements of Comprehensive Income:
 
- Three Months Ended June 30, 2016 and 2015
 
- Six Months Ended June 30, 2016 and 2015
   
 
Condensed Consolidated Statements of Financial Condition:
 
- June 30, 2016
 
- December 31, 2015
 
- June 30, 2015
   
 
Condensed Consolidated Statements of Equity:
 
- Six Months Ended June 30, 2016 and 2015
   
 
Condensed Consolidated Statements of Cash Flows:
 
- Six Months Ended June 30, 2016 and 2015
   
 
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
  

2
GAMCO INVESTORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
(Dollars in thousands, except per share data)

   
Three Months Ended
    
Six Months Ended
  
   
June 30,
    
June 30,
  
   
2016
    
2015
    
2016
    
2015
  
Revenues
                        
Investment advisory and incentive fees
  
$
72,794
    
$
85,301
    
$
143,642
    
$
171,369
  
Distribution fees and other income
    
11,150
      
13,392
      
21,687
      
27,130
  
Total revenues
    
83,944
      
98,693
      
165,329
      
198,499
  
Expenses
                                
Compensation
    
20,623
      
37,178
      
40,897
      
75,155
  
Management fee
    
1,133
      
4,194
      
2,213
      
8,329
  
Distribution costs
    
10,501
      
13,289
      
21,218
      
27,730
  
Other operating expenses
    
4,940
      
5,051
      
9,312
      
9,714
  
Total expenses
    
37,197
      
59,712
      
73,640
      
120,928
  
                                 
Operating income
    
46,747
      
38,981
      
91,689
      
77,571
  
Other income (expense)
                                
Net gain/(loss) from investments
    
240
      
135
      
463
      
148
  
Interest and dividend income
    
365
      
503
      
733
      
1,031
  
Interest expense
    
(3,168
)
    
(1,855
)
    
(6,574
)
    
(3,760
)
Total other income/(expense), net
    
(2,563
)
    
(1,217
)
    
(5,378
)
    
(2,581
)
Income before income taxes
    
44,184
      
37,764
      
86,311
      
74,990
  
Income tax provision
    
16,641
      
13,989
      
32,743
      
28,067
  
Income from continuing operations
    
27,543
      
23,775
      
53,568
      
46,923
  
Income from discontinued operations, net of taxes
    
-
      
326
      
-
      
1,954
  
Net income attributable to GAMCO Investors, Inc.'s shareholders
  
$
27,543
    
$
24,101
    
$
53,568
    
$
48,877
  
                                 
Net income attributable to GAMCO Investors, Inc.'s shareholders
                                
per share:
                                
Basic - Continuing operations
  
$
0.94
    
$
0.95
    
$
1.83
    
$
1.87
  
Basic - Discontinued operations
    
-
      
0.01
      
-
      
0.08
  
Basic - Total
  
$
0.94
    
$
0.96
    
$
1.83
    
$
1.95
  
                                 
Diluted - Continuing operations
  
$
0.93
    
$
0.94
    
$
1.82
    
$
1.85
  
Diluted - Discontinued operations
    
-
      
0.01
      
-
      
0.08
  
Diluted - Total
  
$
0.93
    
$
0.95
    
$
1.82
    
$
1.93
  
                                 
Weighted average shares outstanding:
                                
Basic
    
29,234
      
25,065
      
29,241
      
25,098
  
                                 
Diluted
    
29,522
      
25,358
      
29,510
      
25,386
  
                                 
Dividends declared:
  
$
0.02
    
$
0.07
    
$
0.04
    
$
0.14
  

See accompanying notes.

3
GAMCO INVESTORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
UNAUDITED
(Dollars in thousands, except per share data)

 
Three Months Ended
  
Six Months Ended
  
 
June 30,
  
June 30,
  
 
2016
  
2015
  
2016
  
2015
  
                 
Net income
  
$
27,543
    
$
24,101
    
$
53,568
    
$
48,877
  
Other comprehensive gain/(loss), net of tax:
                                
Foreign currency translation
    
(65
)
    
55
      
(93
)
    
13
  
Net unrealized losses on securities available for sale (a)
    
(2,766
)
    
(255
)
    
(183
)
    
(722
)
Other comprehensive income / (loss)
    
(2,831
)
    
(200
)
    
(276
)
    
(709
)
                                 
Comprehensive income attributable to GAMCO Investors, Inc.
  
$
24,712
    
$
23,901
    
$
53,292
    
$
48,168
  

(a) Net of income tax benefit of ($1,624), ($150),($107) and ($424),respectively.

See accompanying notes.

4
GAMCO INVESTORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
UNAUDITED
(Dollars in thousands, except per share data)

   
June 30,
    
December 31,
    
June 30,
  
   
2016
    
2015
    
2015
  
ASSETS
                  
Cash and cash equivalents
  
$
24,224
    
$
13,719
    
$
11,202
  
Investments in securities
    
32,079
      
32,975
      
37,429
  
Receivable from brokers
    
230
      
1,091
      
1,490
  
Investment advisory fees receivable
    
31,811
      
31,048
      
31,171
  
Receivable from affiliates
    
-
      
5,041
      
28,219
  
Income tax receivable
    
11,905
      
6,787
      
2,303
  
Other assets
    
13,665
      
13,238
      
11,648
  
Assets of discontinued operations
    
-
      
-
      
741,946
  
Total assets
  
$
113,914
    
$
103,899
    
$
865,408
  
                         
LIABILITIES AND EQUITY
                        
Payable to brokers
  
$
45
    
$
12
    
$
1,257
  
Income taxes payable and deferred tax liabilities
    
822
      
4,823
      
11,033
  
Capital lease obligation
    
5,120
      
5,170
      
5,213
  
Compensation payable
    
25,592
      
24,426
      
62,811
  
Securities sold, not yet purchased
    
-
      
129
      
-
  
Payable to affiliates
    
1,226
      
7,687
      
204
  
Accrued expenses and other liabilities
    
30,483
      
28,882
      
29,263
  
Liabilities of discontinued operations
    
-
      
-
      
76,515
  
Sub-total
    
63,288
      
71,129
      
186,296
  
                         
AC 4% PIK Note (due November 30, 2020) (Note F)
    
250,000
      
250,000
      
-
  
Loan from GGCP (due December 28, 2016) (Note F)
    
-
      
35,000
      
-
  
5.875% Senior notes (due June 1, 2021)
    
24,109
      
24,097
      
99,422
  
Zero coupon subordinated debentures, Face value: $0.0 million at June 30, 2016,
                        
  $0.0 million at December 31, 2015 and $6.9 million at June 30, 2015,
                        
  respectively (due December 31, 2015)
    
-
      
-
      
6,628
  
Total liabilities
    
337,397
      
380,226
      
292,346
  
                         
Redeemable noncontrolling interests from discontinued operations
    
-
      
-
      
5,943
  
Commitments and contingencies (Note J)
    
-
      
-
      
-
  
Equity
                        
GAMCO Investors, Inc. stockholders' equity
                        
Preferred stock, $.001 par value;10,000,000 shares authorized; none issued and outstanding
    
-
      
-
      
-
  
Class A Common Stock, $0.001 par value; 100,000,000 shares authorized;
                        
  15,482,982, 15,422,901 and 15,381,179 issued, respectively;10,681,153,
                        
  10,664,107 and 6,506,477 outstanding, respectively
    
14
      
14
      
14
  
Class B Common Stock, $0.001 par value; 100,000,000 shares authorized;
                        
  24,000,000 shares issued; 19,093,311, 19,156,792 and 19,218,814 shares
                        
  outstanding, respectively
    
19
      
19
      
19
  
Additional paid-in capital
    
2,417
      
345
      
297,494
  
Retained earnings (deficit)
    
18,155
      
(34,224
)
    
648,231
  
Accumulated other comprehensive income
    
8,839
      
9,115
      
24,305
  
Treasury stock, at cost (4,801,829, 4,758,794 and 8,874,702 shares, respectively)
    
(252,927
)
    
(251,596
)
    
(405,633
)
Total GAMCO Investors, Inc. stockholders' equity (deficit)
    
(223,483
)
    
(276,327
)
    
564,430
  
Noncontrolling interests from discontinued operations
    
-
      
-
      
2,689
  
Total equity (deficit)
    
(223,483
)
    
(276,327
)
    
567,119
  
                         
Total liabilities and equity (deficit)
  
$
113,914
    
$
103,899
    
$
865,408
  

See accompanying notes.

5
GAMCO INVESTORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
UNAUDITED
(In thousands)

For the Six Months Ended June 30, 2015

         
GAMCO Investors, Inc. stockholders
        
                           
Accumulated
                    
               
Additional
          
Other
                
Redeemable
  
   
Noncontrolling
    
Common
    
Paid-in
    
Retained
    
Comprehensive
    
Treasury
          
Noncontrolling
  
   
Interests
    
Stock
    
Capital
    
Earnings
    
Income
    
Stock
    
Total
    
Interests
  
Balance at December 31, 2014
  
$
2,734
    
$
33
    
$
291,681
    
$
602,950
    
$
25,014
    
$
(394,617
)
  
$
527,795
    
$
68,334
  
Redemptions of redeemable
                                                                
noncontrolling interests
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
(441
)
Contributions from redeemable
                                                                
noncontrolling interest
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
336
  
Consolidation of a consolidated
                                                                
feeder fund
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
996
  
Deconsolidation of offshore
                                                                
  fund
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
(63,256
)
Net income (loss)
    
(45
)
    
-
      
-
      
48,877
      
-
      
-
      
48,832
      
(26
)
Net unrealized losses on
                                                                
securities available for sale,
                                                                
net of income tax benefit ($400)
    
-
      
-
      
-
      
-
      
(681
)
    
-
      
(681
)
    
-
  
Amount reclassed from
                                                                
accumulated other
                                                                
comprehensive income,
                                                                
net of income tax benefit ($24)
    
-
      
-
      
-
      
-
      
(41
)
    
-
      
(41
)
    
-
  
Foreign currency translation
    
-
      
-
      
-
      
-
      
13
      
-
      
13
      
-
  
Dividends declared
                                                                
($0.14 per share)
    
-
      
-
      
-
      
(3,596
)
    
-
      
-
      
(3,596
)
    
-
  
Stock based compensation
                                                                
expense
    
-
      
-
      
4,544
      
-
      
-
      
-
      
4,544
      
-
  
Exercise of stock options
                                                                
including tax benefit ($102)
    
-
      
-
      
1,269
      
-
      
-
      
-
      
1,269
      
-
  
Purchase of treasury stock
    
-
      
-
      
-
      
-
      
-
      
(11,016
)
    
(11,016
)
    
-
  
Balance at June 30, 2015
  
$
2,689
    
$
33
    
$
297,494
    
$
648,231
    
$
24,305
    
$
(405,633
)
  
$
567,119
    
$
5,943
  

See accompanying notes.

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

For the Six Months Ended June 30, 2016

   
GAMCO Investors, Inc. stockholders
  
                     
Accumulated
              
         
Additional
    
Retained
    
Other
              
   
Common
    
Paid-in
    
Earnings
    
Comprehensive
    
Treasury
        
   
Stock
    
Capital
    
(Deficit)
    
Income
    
Stock
    
Total
  
Balance at December 31, 2015
  
$
33
    
$
345
    
$
(34,224
)
  
$
9,115
    
$
(251,596
)
  
$
(276,327
)
Net income
    
-
      
-
      
53,568
      
-
      
-
      
53,568
  
Net unrealized losses on
                                                
securities available for sale,
                                                
net of income tax benefit $(49)
    
-
      
-
      
-
      
(85
)
    
-
      
(85
)
Amounts reclassified from
                                                
accumulated other
                                                
comprehensive income,
                                                
net of income tax expense ($58)
    
-
      
-
      
-
      
(98
)
    
-
      
(98
)
Foreign currency translation
    
-
      
-
      
-
      
(93
)
    
-
      
(93
)
Dividends declared
                                                
($0.04 per share)
    
-
      
-
      
(1,189
)
    
-
      
-
      
(1,189
)
Stock based compensation
                                                
expense
    
-
      
2,072
      
-
      
-
      
-
      
2,072
  
Purchase of treasury stock
    
-
      
-
      
-
      
-
      
(1,331
)
    
(1,331
)
Balance at June 30, 2016
  
$
33
    
$
2,417
    
$
18,155
    
$
8,839
    
$
(252,927
)
  
$
(223,483
)

See accompanying notes.


7
GAMCO INVESTORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
(In thousands)

   
Six Months Ended
  
   
June 30,
  
   
2016
    
2015
  
Operating activities
            
Net income
  
$
53,568
    
$
48,877
  
Less: Income from discontinued operations, net of taxes
    
-
      
(1,954
)
Income from continuing operations
    
53,568
      
46,923
  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation and amortization
    
313
      
311
  
Stock based compensation expense
    
2,072
      
3,279
  
Deferred income taxes
    
(2,016
)
    
(1,902
)
Tax benefit from exercise of stock options
    
-
      
102
  
Foreign currency translation gain/(loss)
    
(93
)
    
13
  
Other-than-temporary loss on available for sale securities
                
Cost basis of donated securities
    
65
      
14
  
Net gains on sales of available for sale securities
    
(4
)
    
(5
)
Accretion of zero coupon debentures
    
-
      
376
  
Loss on extinguishment of zero coupon debentures
    
-
      
310
  
(Increase) decrease in assets:
                
Investments in trading securities
    
223
      
-
  
Receivable from affiliates
    
5,036
      
(1,769
)
Receivable from brokers
    
861
      
193
  
Investment advisory fees receivable
    
(762
)
    
6,556
  
Income tax receivable and deferred tax assets
    
(5,118
)
    
130
  
Other assets
    
(769
)
    
910
  
Increase (decrease) in liabilities:
                
Payable to affiliates
    
(6,461
)
    
(150
)
Payable to brokers
    
32
      
1,245
  
Income taxes payable and deferred tax liabilities
    
(1,875
)
    
(4,508
)
Compensation payable
    
1,172
      
32,006
  
Accrued expenses and other liabilities
    
1,533
      
1,331
  
Total adjustments
    
(5,791
)
    
38,442
  
Net cash provided by operating activities from continuing operations
  
$
47,777
    
$
85,365
  

8
GAMCO INVESTORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED (continued)
(In thousands)

   
Six Months Ended
  
   
June 30,
  
   
2016
    
2015
  
Investing activities
            
Purchases of available for sale securities
  
$
(213
)
  
$
-
  
Proceeds from sales of available for sale securities
    
408
      
51
  
Net cash provided by investing activities from continuing operations
    
195
      
51
  
                 
Financing activities
                
Net cash transferred from AC
    
-
      
75,529
  
Proceeds from exercise of stock options
    
-
      
1,167
  
Dividends paid
    
(1,170
)
    
(3,510
)
Repurchase of Zero coupon subordinated debentures
    
-
      
(6,221
)
Purchase of treasury stock
    
(1,331
)
    
(11,016
)
Repayment of loan from GGCP
    
(35,000
)
    
-
  
Amortization of debt issuance costs
    
12
      
49
  
Net cash (used in) provided by financing activities from continuing operations
    
(37,489
)
    
55,998
  
Cash flows of discontinued operations
                
Net cash provided by operating activities
    
-
      
48,650
  
Net cash used in investing activities
    
-
      
(40,338
)
Net cash used in financing activities
    
-
      
(151,214
)
Net cash used in discontinued operations
    
-
      
(142,902
)
Effect of exchange rates on cash and cash equivalents
    
22
      
(4
)
Net increase/(decrease) in cash and cash equivalents
    
10,505
      
(1,492
)
Cash and cash equivalents at beginning of period
    
13,719
      
12,694
  
Cash and cash equivalents at end of period
  
$
24,224
    
$
11,202
  
Supplemental disclosures of cash flow information:
                
Cash paid for interest
  
$
1,089
    
$
3,334
  
Cash paid for taxes
  
$
39,354
    
$
34,833
  

Non-cash activity:
- For the six months ended June 30, 2016 and June 30, 2015, the Company accrued dividends on restricted stock awards of $19 and $86, respectively.

See accompanying notes.

9
GAMCO INVESTORS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2016
(Unaudited)

A.  Significant Accounting Policies

Basis of Presentation

Unless we have indicated otherwise, or the context otherwise requires, references in this report to “GAMCO Investors, Inc.,” “GAMCO,” “the Company,” “GBL,” “we,” “us” and “our” or similar terms are to GAMCO Investors, Inc., its predecessors and its subsidiaries.
 
The unaudited interim condensed consolidated financial statements of GAMCO included herein have been prepared in conformity with generally accepted accounting principles (“GAAP”) in the United States for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. GAAP in the United States for complete financial statements.  In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of financial position, results of operations and cash flows of GAMCO for the interim periods presented and are not necessarily indicative of a full year’s results.
 
The interim condensed consolidated financial statements include the accounts of GAMCO and its subsidiaries.  Intercompany accounts and transactions are eliminated.
 
These interim condensed consolidated financial statements are consistent with and 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, 2015.

Reclassifications

Certain amounts reported for the prior period in the accompanying condensed consolidated financial statements have been reclassified in order to conform to the current period’s presentation.  Assets and liabilities related to the spin-off (“Spin-off”) of Associated Capital Group, Inc. (“AC”) on November 30, 2015 on the Company’s condensed consolidated statement of financial condition as of June 30, 2015 have been reclassified as assets and liabilities of discontinued operations (See Note J. Discontinued Operations for further details).  All assets and liabilities related to discontinued operations are excluded from the footnotes for all periods presented unless otherwise noted.  In addition, the historical results of AC and certain investment partnerships and offshore funds have been reflected in the accompanying consolidated statements of income for the quarter and six months ended June 30, 2015 as discontinued operations and financial information related to discontinued operations has been excluded from the notes to these interim condensed consolidated financial statements for all periods presented.

Use of Estimates

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

Recent Accounting Developments

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, "Revenue from Contracts with Customers," which supersedes the revenue recognition requirements in the Accounting Standards Codification ("Codification") Topic 605, Revenue Recognition, and most industry-specific guidance throughout the industry topics of the Codification.  The core principle of the new ASU No. 2014-09 is for companies to recognize revenue from the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services.  The new standard provides a five-step approach to be applied to all contracts with customers and also requires expanded disclosures about revenue recognition.  The ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods and is to be retrospectively applied.  Early adoption is not permitted.  The Company is currently evaluating this guidance and the impact it will have on its consolidated financial statements.
10
In April 2015, the FASB issued ASU 2015-03, which amends the presentation of debt issuance costs in financial statements.  This amended guidance requires entities to present the cost of debt issuances as a reduction of the related debt rather than as an asset.  This guidance is effective for the Company beginning January 1, 2016.  Entities should apply the guidance retrospectively to all prior periods.  The Company adopted this guidance on January 1, 2016 without a material impact to the consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments. Although the ASU retains many current requirements, it significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. The ASU also amends certain disclosure requirements associated with the fair value of financial instruments. For public companies, the new standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2017. To adopt the amendments, entities will be required to make a cumulative-effect adjustment to beginning retained earnings as of the beginning of the fiscal year in which the guidance is effective. The Company is currently evaluating this guidance and the impact it will have on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, which amends the guidance in U.S. GAAP for the accounting for leases.  ASU 2016-02 requires a lessee to recognize assets and liabilities arising from most operating leases in the condensed consolidated statement of financial position.  ASU 2016-02 is effective beginning January 1, 2019. The Company is currently evaluating this guidance and the impact it will have on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, which simplifies several aspects of the accounting for employee share-based payment transactions for both public and nonpublic entities, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. For public companies, the ASU is effective for annual reporting periods beginning after December 15, 2016, including interim periods within those annual reporting periods.  Early adoption is permitted. The Company is currently evaluating this guidance and the impact it will have on its consolidated financial statements.

B.  Investment in Securities

Investments in securities at June 30, 2016, December 31, 2015 and June 30, 2015 consisted of the following:

   
June 30, 2016
    
December 31, 2015
    
June 30, 2015
  
   
Cost
    
Fair Value
    
Cost
    
Fair Value
    
Cost
    
Fair Value
  
   
(In thousands)
  
Trading securities:
                                    
Common stocks
  
$
16
    
$
17
    
$
385
    
$
368
    
$
-
    
$
-
  
Total trading securities
    
16
      
17
      
385
      
368
      
-
      
-
  
                                                 
Available for sale securities:
                                                
Common stocks
    
17,642
      
32,062
      
17,898
      
32,607
      
13,578
      
37,429
  
Total available for sale securities
    
17,642
      
32,062
      
17,898
      
32,607
      
13,578
      
37,429
  
                                                 
Total investments in securities
  
$
17,658
    
$
32,079
    
$
18,283
    
$
32,975
    
$
13,578
    
$
37,429
  

Securities sold, not yet purchased at June 30, 2016, December 31, 2015 and June 30, 2015 consisted of the following:

 
June 30, 2016
  
December 31, 2015
  
June 30, 2015
  
 
Proceeds
  
Fair Value
  
Proceeds
  
Fair Value
  
Proceeds
  
Fair Value
  
Trading securities:
(In thousands)
  
Common stocks
  
$
-
    
$
-
    
$
123
    
$
129
    
$
-
    
$
-
  
Total securities sold, not yet purchased
  
$
-
    
$
-
    
$
123
    
$
129
    
$
-
    
$
-
  

Management determines the appropriate classification of debt and equity securities at the time of purchase and reevaluates such designation as of the date of each condensed consolidated statement of financial condition.  Investments in United States Treasury Bills and Notes with maturities of greater than three months at the time of purchase are classified as investments in securities, and those with maturities of three months or less at the time of purchase are classified as cash equivalents.  The portion of investments in securities held for resale in anticipation of short-term market movements are classified as trading securities.  Trading securities are stated at fair value, with any unrealized gains or losses reported in current period earnings.  Available for sale (“AFS”) investments are stated at fair value, with any unrealized gains or losses, net of taxes, reported as a component of equity except for losses deemed to be other than temporary (“OTT”) which are recorded as realized losses in the condensed consolidated statements of income.
11

The following table identifies all reclassifications out of accumulated other comprehensive income ("AOCI") into income for the three and six months ended June 30, 2016 and 2015 (in thousands):
 
Amount
  
Affected Line Items
Reason for
Reclassified
  
in the Statements
Reclassification
from AOCI
  
Of Income
from AOCI
Three Months Ended June 30,
       
2016
  
2015
       
 
$
2
    
$
2
  
Net gain from investments
Realized gain on sale of AFS securities
   
152
      
35
  
Other operating expenses/net gain from investments
Realized gain on donation of AFS securities
   
154
      
37
  
Income before income taxes
  
   
(57
)
    
(14
)
Income tax provision
  
 
$
97
    
$
23
  
Net income
  

Amount
  
Affected Line Items
Reason for
Reclassified
  
in the Statements
Reclassification
from AOCI
  
Of Income
from AOCI
Six Months Ended June 30,
       
2016
  
2015
       
 
$
4
    
$
5
  
Net gain from investments
Realized gain on sale of AFS securities
   
152
      
35
  
Other operating expenses/net gain from investments
Realized gain on donation of AFS securities
   
156
      
40
  
Income before income taxes
  
   
(58
)
    
(15
)
Income tax provision
  
 
$
98
    
$
25
  
Net income
  

The following is a summary of the cost, gross unrealized gains, gross unrealized losses and fair value of available for sale investments as of June 30, 2016, December 31, 2015 and June 30, 2015:

 
June 30, 2016
  
     
Gross
  
Gross
      
     
Unrealized
  
Unrealized
      
 
Cost
  
Gains
  
Losses
  
Fair Value
  
 
(In thousands)
  
Common stocks
  
$
17,642
    
$
14,420
    
$
-
    
$
32,062
  
Total available for sale securities
  
$
17,642
    
$
14,420
    
$
-
    
$
32,062
  

 
December 31, 2015
  
     
Gross
  
Gross
      
     
Unrealized
  
Unrealized
      
 
Cost
  
Gains
  
Losses
  
Fair Value
  
 
(In thousands)
  
Common stocks
  
$
17,898
    
$
14,709
    
$
-
    
$
32,607
  
Total available for sale securities
  
$
17,898
    
$
14,709
    
$
-
    
$
32,607
  

 
June 30, 2015
  
     
Gross
  
Gross
      
     
Unrealized
  
Unrealized
      
 
Cost
  
Gains
  
Losses
  
Fair Value
  
 
(In thousands)
  
Common stocks
  
$
13,578
    
$
23,851
    
$
-
    
$
37,429
  
Total available for sale securities
  
$
13,578
    
$
23,851
    
$
-
    
$
37,429
  

12
Changes in net unrealized loss, net of taxes, for the three months ended June 30, 2016 and June 30, 2015 of $2.8 million  and $0.3 million, respectively, have been included in other comprehensive income, a component of equity, at June 30, 2016 and June 30, 2015.  During the three months ended June 30, 2016 and June 30, 2015, proceeds from the sales of investments available for sale were approximately $100,000 and $19,000, respectively.  For the three months ended June 30, 2016 and June 30, 2015, gross gains on the sale of investments available for sale amounted to $2,000 and $2,000, respectively, and were reclassified from other comprehensive income into net gain from investments in the condensed consolidated statements of income.  There were no realized losses on the sale of investments available for sale for the three months ended June 30, 2016 or June 30, 2015.  Changes in net unrealized loss, net of taxes, for the six months ended June 30, 2016 and June 30, 2015 of $0.2 million and $0.7 million, respectively, have been included in other comprehensive income, a component of equity, at June 30, 2016 and June 30, 2015.  During the six months ended June 30, 2016 and June 30, 2015, proceeds from the sales of investments available for sale were approximately $408,000 and $51,000, respectively.  For the six months ended June 30, 2016 and June 30, 2015, gross gains on the sale of investments available for sale amounted to $4,000 and $5,000, respectively, and were reclassified from other comprehensive income into net gain from investments in the condensed consolidated statements of income.  There were no realized losses on the sale of investments available for sale for the six months ended June 30, 2016 or June 30, 2015.  The basis on which the cost of a security sold is determined using specific identification.  Accumulated other comprehensive income on the consolidated statements of equity is primarily comprised of unrealized gains/losses, net of taxes, for AFS securities.

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

There were no investments classified as available for sale that were in an unrealized loss position at June 30, 2016, December 31, 2015 or June 30, 2015.

For the three and six months ended June 30, 2016 and 2015 there were no losses on available for sale securities that were deemed to be other than temporary.

C. Fair Value

The following tables present information about the Company's assets and liabilities by major categories measured at fair value on a recurring basis as of June 30, 2016, December 31, 2015 and June 30, 2015 and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value:

Assets and Liabilities Measured at Fair Value on a Recurring Basis as of June 30, 2016 (in thousands)

   
Quoted Prices in Active
    
Significant Other
    
Significant
    
Balance as of
  
   
Markets for Identical
    
Observable
    
Unobservable
    
June 30,
  
Assets
  
Assets (Level 1)
    
Inputs (Level 2)
    
Inputs (Level 3)
    
2016
  
Cash equivalents
  
$
23,988
    
$
-
    
$
-
    
$
23,988
  
Investments in securities:
                                
AFS - Common stocks
    
32,062
      
-
      
-
      
32,062
  
Trading - Common stocks
    
17
      
-
      
-
      
17
  
Total investments in securities
    
32,079
      
-
      
-
      
32,079
  
Total assets at fair value
  
$
56,067
    
$
-
    
$
-
    
$
56,067
  
Liabilities
                                
Securities sold, not yet purchased:
                                
Trading - Common stocks
  
$
-
    
$
-
    
$
-
    
$
-
  
Total securities sold, not yet purchased
  
$
-
    
$
-
    
$
-
    
$
-
  

 
13
Assets and Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2015 (in thousands)

   
Quoted Prices in Active
    
Significant Other
    
Significant
    
Balance as of
  
   
Markets for Identical
    
Observable
    
Unobservable
    
December 31,
  
Assets
  
Assets (Level 1)
    
Inputs (Level 2)
    
Inputs (Level 3)
    
2015
  
Cash equivalents
  
$
13,538
    
$
-
    
$
-
    
$
13,538
  
Investments in securities:
                                
AFS - Common stocks
    
32,607
      
-
      
-
      
32,607
  
Trading - Common stocks
    
368
      
-
      
-
      
368
  
Total investments in securities
    
32,975
      
-
      
-
      
32,975
  
Total assets at fair value
  
$
46,513
    
$
-
    
$
-
    
$
46,513
  
Liabilities
                                
Securities sold, not yet purchased:
                                
Trading - Common stocks
  
$
129
    
$
-
    
$
-
    
$
129
  
Total securities sold, not yet purchased
  
$
129
    
$
-
    
$
-
    
$
129
  


Assets and Liabilities Measured at Fair Value on a Recurring Basis as of June 30, 2015 (in thousands)

   
Quoted Prices in Active
    
Significant Other
    
Significant
    
Balance as of
  
   
Markets for Identical
    
Observable
    
Unobservable
    
June 30,
  
Assets
  
Assets (Level 1)
    
Inputs (Level 2)
    
Inputs (Level 3)
    
2015
  
Cash equivalents
  
$
11,043
    
$
-
    
$
-
    
$
11,043
  
Investments in securities:
                                
AFS - Common stocks
    
37,429
      
-
      
-
      
37,429
  
Trading - Common stocks
    
-
      
-
      
-
      
-
  
Total investments in securities
    
37,429
      
-
      
-
      
37,429
  
Total assets at fair value
  
$
48,472
    
$
-
    
$
-
    
$
48,472
  
Liabilities
                                
Securities sold, not yet purchased:
                                
Trading - Common stocks
  
$
-
    
$
-
    
$
-
    
$
-
  
Total securities sold, not yet purchased
  
$
-
    
$
-
    
$
-
    
$
-
  


During the quarters ended June 30, 2016 and 2015, there were no transfers between any Level 1 and Level 2 holdings, or between Level 1 and Level 3 holdings.

Other than certain securities which were part of the Spin-off, the Company did not hold any Level 2 or 3 securities at either June 30, 2016, December 31, 2015 or June 30, 2015.

D. Income Taxes

The effective tax rate ("ETR) for the three months ended June 30, 2016 and June 30, 2015 was 37.7% and 37.0%, respectively.  The ETR for the six months ended June 30, 2016 and June 30, 2015 was 37.9% and 37.4%, respectively.
14
E. Earnings Per Share

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

   
Three Months Ended June 30,
    
Six Months Ended June 30,
  
(in thousands, except per share amounts)
  
2016
    
2015
    
2016
    
2015
  
Basic:
                        
Income from continuing operations
  
$
27,543
    
$
23,775
    
$
53,568
    
$
46,923
  
Income from discontinued operations, net of taxes 
    
-
      
326
      
-
      
1,954
  
Net income attributable to GAMCO Investors, Inc.'s shareholders
  
$
27,543
    
$
24,101
    
$
53,568
    
$
48,877
  
                                 
Weighted average shares outstanding
    
29,234
      
25,065
      
29,241
      
25,098
  
                                 
Basic net income per share attributable to GAMCO
                                
Investors, Inc.'s shareholders:
                                
Continuing operations
  
$
0.94
    
$
0.95
    
$
1.83
    
$
1.87
  
Discontinued operations
    
-
      
0.01
      
-
      
0.08
  
Total
  
$
0.94
    
$
0.96
    
$
1.83
    
$
1.95
  
                                 
Diluted:
                                
Income from continuing operations
  
$
27,543
    
$
23,775
    
$
53,568
    
$
46,923
  
Income from discontinued operations, net of taxes
    
-
      
326
      
-
      
1,954
  
Net income attributable to GAMCO Investors, Inc.'s shareholders
  
$
27,543
    
$
24,101
    
$
53,568
    
$
48,877
  
                                 
Weighted average share outstanding
    
29,234
      
25,065
      
29,241
      
25,098
  
Dilutive stock options and restricted stock awards
    
288
      
293
      
269
      
288
  
Total
    
29,522
      
25,358
      
29,510
      
25,386
  
                                 
Diluted net income per share attributable to GAMCO
                                
Investors, Inc.'s shareholders:
                                
Continuing operations
  
$
0.93
    
$
0.94
    
$
1.82
    
$
1.85
  
Discontinued operations
    
-
      
0.01
      
-
      
0.08
  
Total
  
$
0.93
    
$
0.95
    
$
1.82
    
$
1.93
  
                                 

F. Debt

Debt consists of the following:

 
June 30, 2016
  
December 31, 2015
  
June 30, 2015
  
 
Carrying
  
Fair Value
  
Carrying
  
Fair Value
  
Carrying
  
Fair Value
  
 
Value
  
Level 2
  
Value
  
Level 2
  
Value
  
Level 2
  
(In thousands)
                        
AC 4% PIK Note
  
$
250,000
    
$
251,909
    
$
250,000
    
$
250,000
    
$
-
    
$
-
  
Loan from GGCP
    
-
      
-
      
35,000
      
35,000
      
-
      
-
  
5.875% Senior notes
    
24,109
      
24,483
      
24,097
      
24,437
      
99,422
      
107,361
  
0% Subordinated debentures
    
-
      
-
      
-
      
-
      
6,628
      
6,835
  
Total
  
$
274,109
    
$
276,392
    
$
309,097
    
$
309,437
    
$
106,050
    
$
114,196
  

AC 4% PIK Note

In connection with the spin-off of AC on November 30, 2015, the Company issued a $250 million promissory note (the “AC 4% PIK Note”) payable to AC.  The AC 4% PIK Note bears interest at 4.0% per annum.  The original principal amount has a maturity date of November 30, 2020.  Interest on the AC 4% PIK Note will accrue from the date of the last interest payment, or if no interest has been paid, from the effective date of the AC 4% PIK Note.  At the election of the Company, payment of interest on the AC 4% PIK Note may be paid in kind (in whole or in part) on the then-outstanding principal amount (a “PIK Amount”) in lieu of cash. The Company will repay the original principal amount of the AC 4% PIK Note to AC in five equal annual installments of $50 million on each interest payment date up to and including the maturity date.  All PIK Amounts added to the outstanding principal amount of the AC 4% PIK Note will mature on the fifth anniversary from the date the PIK Amount was added to the outstanding principal of the AC 4% PIK Note.  In no event may any interest be paid in kind subsequent to November 30, 2019.  The Company may prepay the AC 4% PIK Note (in whole or in part) prior to maturity without penalty.
15
 
5.875% Senior notes

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

On November 18, 2015, the Company commenced a tender offer (the “Offer”) to purchase for cash up to $100 million aggregate principal amount of the Senior Notes at a price of 101% of the principal amount.  $75.8 million of face value Senior Notes were tendered upon the expiration of the Offer.  At June 30, 2016, December 31, 2015 and June 30, 2015, the debt was recorded at its face value, net of issuance costs, of $24.1 million, $24.1 million and $99.4 million, respectively.

Loan from GGCP

In connection with the Offer, the Company borrowed $35.0 million from GGCP. The loan has a term of one year and bears interest at 90-day LIBOR plus 3.25%, reset and payable quarterly.  On March 18, 2016, the Company paid back $15.0 million of the loan.  During the second quarter of 2016 the Company paid back the remaining $20.0 million of the loan.  At December 31, 2015, the debt was recorded at its face value of $35.0 million.

Zero coupon Subordinated debentures due December 31, 2015

On December 31, 2010, the Company issued $86.4 million in par value of five year zero coupon subordinated debentures due December 31, 2015 ("Debentures") to its shareholders of record on December 15, 2010 through the declaration of a special dividend of $3.20 per share. The Debentures have a par value of $100 and are callable at the option of the Company, in whole or in part, at any time or from time to time, at a redemption price equal to 100% of the principal amount of the Debentures to be redeemed. During the three and six month periods ended June 30, 2015 the Company repurchased 36,269 Debentures and 62,226 Debentures, respectively, having a face value of $3.6 million and $6.2 million, respectively.  The redemptions were accounted for as extinguishments of debt and resulted in losses of $154,000 and $310,000, respectively, which was included in net gain from investments on the condensed consolidated statements of income.  The debt was being accreted to its face value using the effective rate on the date of issuance of 7.45%.  At June 30, 2015, the debt was recorded at its accreted value of  $6.6 million. The debt matured on December 31, 2015 and was fully paid at that time.

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

On May 4, 2015, the Securities and Exchange Commission (“SEC”) declared effective the “shelf” registration statement filed by the Company. The "shelf" provides the Company with the flexibility of issuing any combination of senior and subordinated debt securities, convertible securities and common and preferred securities up to a total amount of $500 million and replaced the existing shelf registration which expired in May 2015. As of June 30, 2016, $500 million is available on the shelf.

G. Stockholders' Equity
 
Shares outstanding were 29.8 million, 29.8 million and 25.7 million on June 30, 2016, December 31, 2015 and June 30, 2015, respectively.
16

Dividends


 
 Payment  
Record
      
 
 Date   
Date
  
Amount
  
             
Three months ended March 31, 2016
March 29, 2016
  
March 15, 2016
  
$
0.02
  
Three months ended June 30, 2016
June 28, 2016
  
June 14, 2016
    
0.02
  
Three months ended September 30, 2016
              
Six months ended June 30, 2016
         
$
0.04
  
               
Three months ended March 31, 2015
March 31, 2015
  
March 17, 2015
  
$
0.07
  
Three months ended June 30, 2015
June 30, 2015
  
June 16, 2015
    
0.07
  
Three months ended September 30, 2015
              
Six months ended June 30, 2015
         
$
0.14
  

Voting Rights

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

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

As of June 30, 2016, December 31, 2015 and June 30, 2015, there were 549,700 RSA shares, 553,100 RSA shares and 704,050 RSA shares outstanding, respectively, that were previously issued at an average weighted grant price of $63.99, $64.02 and $67.39, respectively.  These RSA grants occurred prior to the spin-off of Associated Capital.  On November 30, 2015, pursuant to the spin-off, all RSA grant holders received shares of Associated Capital’s Class A common stock as a result of their ownership of their GAMCO unvested RSAs (one share of Associated Capital for each share of GBL).  All grants of the RSA shares were recommended by the Company's Chairman, who did not receive a RSA, and approved by the Compensation Committee. This expense, net of estimated forfeitures, is recognized over the vesting period for these awards which is either (1) 30% over three years from the date of grant and 70% over five years from the date of grant or (2) 30% over three years from the date of grant and 10% each year over years four through ten from the date of grant.  During the vesting period, dividends to RSA holders are held for them until the RSA vesting dates and are forfeited if the grantee is no longer employed by the Company on the vesting dates.  Dividends declared on these RSAs, less estimated forfeitures, are charged to retained earnings (deficit) on the declaration date.

For the three months ended June 30, 2016 and June 30, 2015, we recognized stock-based compensation expense of $1.0 million and $1.6 million, respectively.  For the six months ended June 30, 2016 and June 30, 2015, we recognized stock-based compensation expense of $2.1 million and $3.3 million, respectively.  Actual and projected stock-based compensation expense for RSA shares for the years ended December 31, 2015 through December 31, 2024 (based on awards currently issued or granted) is as follows (in thousands):

     
2015
    
2016
    
2017
    
2018
    
2019
    
2020
    
2021
    
2022
    
2023
    
2024
  
 
Q1
    
$
1,639
    
$
1,037
    
$
685
    
$
464
    
$
365
     $
219
     $ 
145
     $ 
93
     $ 
48
     $ 
7
  
 
Q2
      
1,640
      
1,036
      
685
      
453
      
365
      
204
      
145
      
93
      
48
      
7
  
 
Q3
      
1,644
      
806
      
602
      
402
      
323
      
169
      
114
      
66
      
24
      
5
  
 
Q4
      
4,945
      
691
      
520
      
366
      
295
      
145
      
93
      
48
      
7
      
-
  
Full Year
    
$
9,868
    
$
3,570
    
$
2,492
    
$
1,685
    
$
1,348
     $ 
737
     $ 
497
     $ 
300
     $ 
127
     $ 
19
  
 
17
The total compensation cost related to non-vested RSAs not yet recognized is approximately $8.7 million as of June 30, 2016.  There were no options exercised for the three or six months ended June 30, 2016.  For both the three and six months ended June 30, 2015 proceeds from the exercise of 26,000 stock options were $1.2 million resulting in a tax benefit to GAMCO of $102,000.

Stock Repurchase Program
 
In March 1999, GAMCO's Board of Directors established the Stock Repurchase Program to grant management the authority to repurchase shares of our Class A Common Stock.  On August 4, 2015, our Board of Directors authorized an incremental 500,000 shares to be added to the current buyback authorization.  For the three months ended June 30, 2016 and June 30, 2015, the Company repurchased 12,532 shares and 108,088 shares, respectively, at an average price per share of $34.61 and $72.34, respectively.  For the six months ended June 30, 2016 and June 30, 2015, the Company repurchased 43,035 shares and 149,481 shares, respectively, at an average price per share of $30.93 and $73.68, respectively.  From the inception of the program through June 30, 2016, 9,595,688 shares have been repurchased at an average price of $44.75 per share.  At June 30, 2016, the total shares available under the program to be repurchased in the future were 539,120.

H. Identifiable Intangible Assets

As a result of becoming the advisor to the Gabelli Enterprise Mergers and Acquisitions Fund and the associated consideration paid, the Company maintains an identifiable intangible asset of $1.9 million within other assets on the condensed consolidated statements of financial condition at June 30, 2016, December 31, 2015 and June 30, 2015. The investment advisory agreement is subject to annual renewal by the fund's Board of Directors, which the Company expects to be renewed, and the Company does not expect to incur additional expense as a result, which is consistent with other investment advisory agreements entered into by the Company.  The advisory contract is next up for renewal in February 2017. On November 1, 2015, as a result of becoming the advisor to the Bancroft Fund Ltd. and the Ellsworth Growth and Income Fund Ltd. and the associated consideration paid, the Company maintains an identifiable intangible asset of $1.6 million within other assets on the condensed consolidated statement of financial condition at June 30, 2016 and December 31, 2015.  The advisory contracts for the Bancroft Fund Ltd. and the Ellsworth Growth and Income Fund Ltd. are both next up for renewal in November 2017. The Company assesses the recoverability of this intangible asset at least annually, or more often should events warrant. There were no indicators of impairment for the three months ended June 30, 2016 or June 30, 2015, and as such there was no impairment analysis performed or charge recorded.

I. Commitments and Contingencies

From time to time, the Company may be named in legal actions and proceedings. These actions may seek substantial or indeterminate compensatory as well as punitive damages or injunctive relief. The Company is also subject to governmental or regulatory examinations or investigations. The examinations or investigations could result in adverse judgments, settlements, fines, injunctions, restitutions or other relief. For any such matters, the condensed consolidated financial statements include the necessary provisions for losses that the Company believes are probable and estimable. Furthermore, the Company evaluates whether there exist losses which may be reasonably possible and will, if material, make the necessary disclosures.  However, management believes such amounts, both those that are probable and those that are reasonably possible, are not material to the Company's financial condition, operations or cash flows at June 30, 2016.
18
J.  Discontinued Operations

As a result of the Spin-off, the results of AC’s operations through the Spin-off Date, as well as transaction costs related to the Spin-off, have been classified in the condensed consolidated statements of income as discontinued operations.  There was no gain or loss on the Spin-off for the Company, and it was a tax-free spin-off to GAMCO’s shareholders.

The three and six months ended June 30, 2015 results include $0.6 million and $1.5 million, respectively, in costs incurred with respect to the Spin-off and are included in Other operating expenses below.  Operating results for the period from January 1, 2015 through June 30, 2015 is summarized below:

   
Three Months ended
    
Six Months ended
  
 
  
June 30, 2015
    
June 30, 2015
  
Revenues
            
Investment advisory and incentive fees
  
$
2,275
    
$
4,394
  
Distribution fees and other income
    
101
      
235
  
Institutional research services
    
2,385
      
4,832
  
Total revenues
    
4,761
      
9,461
  
Expenses
                
Compensation
    
5,597
      
11,476
  
Stock based compensation
    
627
      
1,265
  
Management fee
    
47
      
349
  
Distribution costs
    
(34
)
    
(63
)
Other operating expenses
    
2,556
      
5,111
  
Total expenses
    
8,793
      
18,138
  
Operating loss
    
(4,032
)
    
(8,677
)
Other income (expense)
                
Net gain from investments
    
3,760
      
10,705
  
Interest and dividend income
    
1,006
      
1,752
  
Interest expense
    
(328
)
    
(662
)
Total other income (expense), net
    
4,438
      
11,795
  
Income from discontinued operations before income taxes
    
406
      
3,118
  
Income tax provision
    
134
      
1,235
  
Income from discontinued operations, net of taxes
    
272
      
1,883
  
Net loss attributable to noncontrolling interests
    
(54
)
    
(71
)
Net income attributable to GAMCO Investors, Inc.'s discontinued operations, net of taxes
  
$
326
    
$
1,954
  

19

The assets and liabilities of AC have been classified in the consolidated statement of financial condition as of June 30, 2015 as assets and liabilities of discontinued operations and consist of the following:

 
  
June 30, 2015
  
Cash and cash equivalents
  
$
361,082
  
Investments in securities
    
106,579
  
Investments in sponsored registered investment companies
    
126,305
  
Investments in partnerships
    
108,950
  
Receivable from brokers
    
55,089
  
Investment advisory fees receivable
    
1,595
  
Receivable from affiliates
    
(28,219
)
Income tax receivable
    
-
  
Other assets
    
10,565
  
Total assets of discontinued operations
    
741,946
  
         
Payable to brokers
    
47,601
  
Income taxes payable and deferred tax liabilities
    
10,233
  
Compensation payable
    
6,078
  
Securities sold, not yet purchased
    
9,825
  
Payable to affiliates
    
(204
)
Mandatorily redeemable noncontrolling interests
    
1,281
  
Accrued expenses and other liabilities
    
1,701
  
Total liabilities of discontinued operations
    
76,515
  
 
        
Redeemable noncontrolling interests from discontinued
        
operations
    
5,943
  
 
        
Noncontrolling interests from discontinued operations
    
2,689
  
 
        
Net assets of discontinued operations
  
$
656,799