GAMCO Investors Inc. Reports Third Quarter Results

GAMCO Investors, Inc. (GAMCO) (NYSE: GBL) today announced third quarter 2011 earnings of $7.7 million or $0.29 per fully diluted share versus $20.1 million or $0.73 per fully diluted share in the third quarter 2010.

Revenues increased $17.8 million or 28.4%, including $1.0 million in incentive fees, to $80.2 million in the third quarter of 2011 from $62.4 million in the prior year quarter which did not benefit from incentive fees. Operating income before management fee was $32.0 million, a 39.0% increase from $23.0 million in the prior year period. Operating margin, excluding management fee, increased to 40.0% in the 2011 quarter versus 36.9% in the 2010 quarter. Operating income was $30.7 million, a 57.4% increase from $19.5 million in the prior year period. Operating margin increased to 38.3% in the 2011 quarter versus 31.2% in the 2010 quarter.

For the nine months ended September 30, 2011, earnings were $46.0 million or $1.72 per fully diluted share versus $41.9 million or $1.53 per fully diluted share in 2010. The current year nine month results include $5.6 million, or $0.10 per diluted share, of one-time costs directly related to the launch of a new closed end fund.

Assets under Management (AUM) were $31.3 billion as of September 30, 2011, 6.2% higher than September 30, 2010 AUM of $29.5 billion but 13.3% below the June 30, 2011 AUM of $36.1 billion. During the third quarter 2011, we had net positive cash flows in AUM of approximately $899 million, including $347 million in open-end equity funds, $187 million in institutional and private wealth management, $94 million in closed-end funds and $252 million into our money-market fund.

Shareholders’ book value was $404.0 million or $15.09 per share at September 30, 2011. The Company ended the quarter with gross adjusted cash and investments of approximately $749 million, $262.0 million of debt (face value of $285.4 million), noncontrolling interests of $41.8 million and mandatorily redeemable interests of $1.5 million.

Assets under Management – Up 6.2% from September 30, 2010 and 13.3% below June 30, 2011

AUM were $31.3 billion as of September 30, 2011, an increase of 6.2% from AUM of $29.5 billion at September 30, 2010 and 13.3% below the June 30, 2011 AUM of $36.1 billion. Highlights are as follows:

• Our open-end equity funds’ AUM were $11.5 billion on September 30, 2011, 15.1% higher than the $10.0 billion on September 30, 2010 and 11.2% lower than the $12.9 billion on June 30, 2011.
• Our closed-end funds had AUM of $5.4 billion on September 30, 2011, up 6.4% from $5.0 billion on September 30, 2010 but down 14.4% from $6.3 billion on June 30, 2011.
• Our institutional and private wealth management business ended the quarter with $12.0 billion in AUM, declining 3.2% from the $12.4 billion on September 30, 2010 and 18.4% below the June 30, 2011 level of $14.7 billion.
• Our investment partnerships’ AUM were $627 million on September 30, 2011 versus $466 million on September 30, 2010 and $609 million on June 30, 2011.
• AUM in The Gabelli U.S. Treasury Money Market Fund, our 100% U.S. Treasury money market fund, which is ranked #1 by Lipper based on total return among 70 U.S. Treasury Money Market Funds for the twelve month period ended September 30, 2011, were $1.9 billion at September 30, 2011, increasing 15.3% from the $1.6 billion at both June 30, 2011 and September 30, 2010.

• In addition to management fees, we earn incentive fees for certain institutional client assets, assets attributable to preferred issues for our closed-end funds, our GDL Fund (NYSE: GDL) and investment partnership assets. As of September 30, 2011, assets with incentive based fees were $3.4 billion, unchanged from the $3.4 billion on September 30, 2010 and 10.5% below the $3.8 billion on June 30, 2011. The majority of these assets have calendar year-end measurement periods; therefore, our incentive fees are primarily recognized in the fourth quarter when the uncertainty is removed at the end of the annual measurement period.¹

¹ The Gabelli U.S. Treasury Money Market Fund (Fund) ranked #1 out of 70 funds for the one-year period ended September 30, 2011, #2 out of 60 funds for the five-year period and #2 out of 47 funds for the ten-year period. The rankings are based on total return over the length of the period. Past performance is not indicative of future results. Investment returns and yield will fluctuate. Income will be subject to federal income tax. An investment in the Fund is not guaranteed nor insured by the Federal Deposit Insurance Corporation or any government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. During the respective periods, the Adviser has waived certain fees and reimbursed expenses. Without such reimbursements or waivers, return and rankings would have been lower.

Investors should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. The prospectus, which contains more complete information about this and other matters, should be read carefully before investing. You can obtain a prospectus by calling G.distributors, LLC at 1-800-GABELLI (1-800-422-3554), or by visiting http://www.gabelli.com. Distributed by G.distributors, LLC One Corporate Center, Rye, NY 10580

Revenues

For the Quarter

Investment advisory and incentive fees for the third quarter 2011 were $65.2 million, an increase of 29.8% from the $50.2 million reported in the 2010 quarter:

• Open-end fund revenues for the third quarter 2011 were $30.4 million versus $23.9 million in third quarter 2010, an increase of 27.2%. Driving revenue growth was a 27.3% increase in average AUM to $14.0 billion in the 2011 quarter vs. $11.0 billion in the prior year period.

• Our closed-end fund revenues rose 29.0% to $12.0 million in the third quarter 2011 from $9.3 million in third quarter 2010. Average closed-end fund AUM, excluding certain closed-end fund preferred share assets that generate annual performance based fees, rose 28.8%. Asset growth was driven by market performance and benefited from the launch of our new fund, the Gabelli Natural Resources, Gold & Income Trust (NYSE: GNT), which added $392 million in AUM during the first quarter of 2011.

• Institutional and private wealth management account revenues, which are generally based upon beginning of quarter AUM, increased 33.7% to $21.8 million in third quarter 2011 from $16.3 million in third quarter 2010. The increase was primarily related to higher AUM due to market appreciation. During the third quarter of 2011, we earned $1.0 million in incentive fees from certain accounts that changed from an annual measurement period to a quarterly measurement period. There were no incentive fees recorded in the 2010 quarter.

• Investment partnership revenues for third quarter 2011 were $1.1 million, an increase of 57.1% from $0.7 million in third quarter 2010 as average assets managed in these funds rose 41.4% quarter over quarter.

Our institutional research services generated revenues of $3.4 million in the third quarter 2011, down 14.6% from $4.0 million in the third quarter 2010.

Revenues from the distribution of our open-end funds and other income was $11.5 million for the third quarter 2011, an increase of $3.3 million or 40.3% from the prior year quarter of $8.2 million and was largely driven by higher average AUM in open-end equity funds.

For the Nine Months

Investment advisory and incentive fees for the nine months ended September 30, 2011 were $197.4 million, an increase of 31.7% from the $149.9 million reported in the 2010 period:

• Open-end fund revenues for the nine months ended September 30, 2011 were $89.6 million versus $69.2 million for the nine months ended September 30, 2010, an increase of 29.5% resulting from a 28.4% increase in average AUM.

• Our closed-end fund revenues rose 34.8% to $36.4 million for the nine months ended September 30, 2011 from $27.0 million in 2010. Average AUM in our closed-end funds, excluding certain closed-end fund preferred share assets for which we earn our fees annually based upon performance, rose 33.4% and include $392 million in AUM from the launch of GNT during the first quarter of 2011.

• Institutional and private wealth management account revenues increased 32.9% to $68.3 million for the nine months ended September 30, 2011 from $51.4 million for the nine months ended September 30, 2010. The increase was primarily related to higher incentive fees and higher AUM resulting from market appreciation. For the first nine months of 2011, we earned $6.6 million in incentive fees as compared to $1.8 million in the first nine months of 2010, in part due to certain accounts changing from an annual measurement period to a quarterly measurement period.

• Investment partnership revenues for the nine months ended September 30, 2011 rose 31.8% to $2.9 million from $2.2 million in 2010, due primarily to an increase in AUM.

Our institutional research services generated revenues of $11.3 million for the nine months ended September 30, 2011, down 5.4% from the nine months ended September 30, 2010 amount of $12.0 million.

Revenues from the distribution of our open-end funds and other income was $33.4 million for the nine months ended September 30, 2011, an increase of $10.3 million or 44.5% from the prior year nine month period of $23.1 million. This increase resulted from the higher average AUM in open-end equity funds and an increased level of sales of load shares of mutual funds.

Operating Income and Margin

Operating income, which is net of management fee expense, rose $11.2 million, or 57.4%, to $30.7 million in the 2011 quarter versus $19.5 million in the prior year period. Operating margin was 38.3% in the 2011 quarter versus 31.2% in the prior year period. Operating income before management fee was $32.0 million in the third quarter 2011, versus $23.0 million in the third quarter 2010. For the third quarter 2011, the operating margin before management fee was 40.0% versus 36.9% in the third quarter of 2010. Management believes evaluating operating income before management fee is an important measure in analyzing the Company’s operating results. Further information regarding Non-GAAP measures is included in Notes on Non-GAAP Financial Measures and Table VII included elsewhere herein.

Operating income was $81.9 million for the nine months ended September 30, 2011, increasing 33.2% from the $61.5 million in the prior year nine month period. Operating margin was 33.8% for the nine months ended September 30, 2011, versus 33.2% in the prior year period. Operating income before management fee was $90.0 million for the nine months ended of 2011, versus $68.8 million in the prior year nine months ended. For both the nine months ended of 2011 and 2010 operating margin before management fee was 37.2%. Included in the nine month results of 2011 is $5.6 million in one-time pre-tax charges directly related to the launch of GNT in the first quarter of 2011.

Other Income / (Expense)

Other income/(expense), net, was a negative swing of $31.3 million ($0.62 per diluted share) resulting in an expense of $18.7 million in the third quarter of 2011 versus income of $12.6 million in the third quarter of 2010. Mark to market losses, largely unrealized, from investments in our mutual funds as well as proprietary capital in our alternative products were $14.3 million versus investment gains of $15.9 million in the 2010 quarter. Interest expense was $4.4 million in the 2011 quarter, $1.1 million higher than the prior year quarter due to an increase in total debt outstanding.

Other income/(expense), net, was an expense of $8.8 million in the nine months ended of 2011 versus income of $5.3 million during the nine months ended of 2010. Investment income was $13.4 million lower and interest expense was $0.7 million higher in the 2011 period versus the year earlier period.

Income Taxes

The effective tax rate for the third quarter 2011 was 39.8% compared to 36.4% in the third quarter of 2010. The third quarter 2011 rate increase results from the change in the mix of operating income and investment losses which raises our effective state tax rate in addition to losses from consolidated partnerships for which no tax benefits are recorded at the corporate level. The tax liability or benefit from these partnerships flow directly to its partners and to the extent they relate to interests not held by GAMCO are included in net income attributable to noncontrolling interests. For the nine months ended September 30, 2011 the effective tax rate was 36.9% compared to the prior year period’s effective rate of 36.5%.

Business and Investment Highlights

• G.distributors, LLC, our new broker-dealer formed to distribute the Gabelli, GAMCO and Teton families of mutual funds, commenced operation on August 1, 2011.
• GAMCO International SICAV has two active sub-funds, GAMCO Strategic Value and GAMCO Merger Arbitrage, which are marketed to our international clients. The GAMCO Strategic Value Fund invests in a broad range of readily marketable securities. The GAMCO Merger Arbitrage Fund invests in announced equity merger and acquisition transactions.
• In September, Gabelli & Company, Inc., our Institutional Research services subsidiary, held its 17^th Annual Aircraft Supplier Conference featuring management presentations from several leading aerospace and defense companies, with an emphasis on industry dynamics, new technologies, and company fundamentals.

Financial Highlights

Statement of Financial Condition – Liquidity and Flexibility

We ended the quarter with approximately $749 million in gross adjusted cash and investments versus $746 million at June 30, 2011 and $641 million at September 30, 2010. This included approximately $78.2 million invested in The Gabelli Dividend & Income Trust, The GDL Fund and Westwood Holdings Group, as well as other investments of $11.0 million, all classified as available for sale securities at September 30, 2011.

We had adjusted cash and investments in securities, net of debt, noncontrolling interests and mandatorily redeemable shares, of $16.58 per share on September 30, 2011 compared with $16.57 per share on June 30, 2011 and $16.93 per share on September 30, 2010. We caution that this non-GAAP metric, while correct from an accounting point of view, is not always the same as investors would view cash-on-hand.

Our liquid balance sheet provides access to financial markets and the flexibility to opportunistically add operating resources, repurchase stock and consider strategic initiatives, including acquisitions and lift-outs. We have a BBB rating from Standard & Poor’s and a Baa3 rating from Moody’s.

The Company continues to have the flexibility of issuing any combination of senior and subordinate debt securities, convertible debt securities and common and preferred securities under its shelf of up to a total amount of $300 million.

Shareholders’ book value was $404.0 million or $15.09 per share on September 30, 2011 compared to $405.1 million or $15.12 per share on June 30, 2011 and $441.1 million or $16.18 per share on September 30, 2010.

Shareholder Compensation

Dividends

On August 2, 2011, our Board of Directors approved a quarterly dividend to $0.04 per share payable on September 27, 2011 to its Class A and Class B shareholders of record on September 13, 2011. The Board of Directors had previously approved a 33% increase from $0.03 per share in our regular quarterly dividend on May 6, 2011.

GAMCO announced on November 7, 2011 that its Board of Directors approved a special dividend of $1.00 per share payable on November 22, 2011 to its Class A and Class B shareholders of record on November 17, 2011 as well as a quarterly dividend of $0.04 per share payable on December 27, 2011 to its Class A and Class B shareholders of record on December 13, 2011.

Share Repurchase and Stockholders’ Equity

Since our IPO of six million shares at a price of $17.50 per share in 1999, we have returned $614 million to our shareholders. We have repurchased 7.3 million shares at an average price of $40.62 per share for an investment of $298.0 million and paid cumulative dividends of $316.2 million or $12.38 per share. From July 1, 2011 to November 7, 2011, the Company repurchased 11,752 of the Company’s shares at an average investment of $42.07 per share. There currently remain 582,372 shares available to be repurchased under our existing buyback plan.

Fully diluted shares outstanding for the third quarter 2011 were 26.6 million, 6.3% lower than the third quarter 2010’s level of 28.4 million. Diluted shares outstanding were lower in the third quarter 2011 due to shares purchased under our Stock Repurchase Program and the repurchase of the Convertible notes during 2010. At September 30, 2011, the Company had 285,100 RSAs outstanding.

Fourth Quarter Commentary

While we generally do not provide projections as a matter of policy, we note that the fourth quarter of 2010 included $24.8 million of incentive fees ($0.30 per diluted share, net of related expenses and taxes) from our investment partnerships, closed-end fund preferred shares and institutional accounts and a charge of $5.8 million ($0.12 per diluted share, net of management fee and tax benefit) related to the acceleration of the vesting of restricted stock awards ("RSAs”). RSA expense in the fourth quarter of 2011 is expected to be less than $0.7 million and there can be no assurance that any incentive fees will be earned for this period. See notes D & E on page 8 in regard to the calculation of the per share impacts.

NOTES ON NON-GAAP FINANCIAL MEASURES
A. Adjusted cash and investments per share:
(in millions, except per share data)		9/30/2011			6/30/2011			12/31/2010			9/30/2010
Cash and cash equivalents		$	335.7		$	260.8		$	169.6		$	244.1
Investments (trading)			272.6			349.5			266.7			195.2
Total cash and investments (trading)			608.3			610.3			436.3			439.3
Net amounts receivable from/(payable to) brokers			51.5			33.0			45.1			58.1
Adjusted cash and investments (trading)			659.8			643.3			481.4			497.4
Investments (available for sale)			89.2			102.2			102.3			143.9
Gross adjusted cash and investments			749.0			745.5			583.7			641.3
Less: Debt, noncontrolling interests and mandatorily redeemable shares			305.2			301.5			190.6			179.7
Total adjusted cash and investments		$	443.8		$	444.0		$	393.1		$	461.6
Shares outstanding			26.8			26.8			27.1			27.3
Total adjusted cash and investments per share		$	16.58		$	16.57		$	14.53		$	16.93

We believe adjusted cash and investments is a useful measure of the company’s liquidity for analytical purposes.

Net amounts receivable from/(payable to) brokers reflect cash and cash equivalents held with brokers and cash payable for securities purchased and recorded on a trade date basis for which settlement occurs subsequent to period-end.

B. Stockholders’ book value per share:
(in millions, except per share data)		9/30/2011			6/30/2011			12/31/2010			9/30/2010
Stockholders' book value		$	404.0		$	405.1		$	386.0		$	441.1
Shares outstanding			26.8			26.8			27.1			27.3
Stockholders' book value per share		$	15.09		$	15.12		$	14.27		$	16.18

C.

Operating income before management fee expense is used by management for purposes of evaluating its business operations. We believe this measure is useful in illustrating the operating results of GAMCO Investors, Inc. (the "Company”) as management fee expense is based on pre-tax income before management fee expense, which includes non-operating items including investment gains and losses from the Company’s proprietary investment portfolio and interest expense. The reconciliation of operating income before management fee expense to operating income is provided in Table VII.

D. Incentive fees, net of related expenses and taxes, per diluted share:
		Fourth
(in thousands, except per share data)		Quarter 2010
Performance fee revenue		$	24,839
Related expenses and taxes			16,629
Net income		$	8,210
Incentive fees per share		$	0.30
Diluted weighted average shares outstanding			27,260

E. RSA expense, net of management fee and tax benefit, per diluted share:
		Fourth
(in thousands, except per share data)		Quarter 2010
Accelerated RSA expense		$	5,797
Related benefits and tax benefit			2,521
Net loss		$	3,276
Accelerated RSA expense per share		$	0.12
Diluted weighted average shares outstanding			27,260

F.

Operating income before management fee expense per share and other income, net per share is used by management for purposes of evaluating its business operations. We believe this measure is useful in comparing the operating and non-operating results of the Company for the purposes of understanding the composition of net income per fully diluted share. The negative swing of $31.3 million in other income is calculated by taking the expense of $18.7 million in the third quarter 2011 and subtracting the income of $12.6 million in the third quarter of 2010. The impact on fully diluted earnings per share of ($0.62) is derived by making certain necessary adjustments, as shown in the table below, to arrive at a net impact for each period and then calculating the difference. The reconciliation of operating income before management fee expense per share and other income, net per share to net income per fully diluted share is provided below.

		3rd Quarter								YTD September
		2011				2010				2011				2010
Operating income before management fee		$	32,048			$	23,049			$	90,044			$	68,827
Management fee expense			(3,262	)			(2,277	)			(9,007	)			(6,841	)
Tax expense			(11,465	)			(7,552	)			(29,904	)			(22,647	)
Noncontrolling interest (expense)/income			125				114				577				156
Operating income (after management fee and taxes)			17,446				13,334				51,710				39,495
per fully diluted share		$	0.65			$	0.47			$	1.93			$	1.42
Other income, net		$	(18,747	)		$	12,633			$	(8,811	)		$	5,274
Management fee expense			1,875				(1,263	)			881				(527	)
Tax expense			6,720				(4,134	)			2,926				(1,734	)
Noncontrolling interest expense			405				(464	)			(717	)			(627	)
Other income, net (after management fee and taxes)		$	(9,747	)		$	6,772			$	(5,721	)		$	2,386
Add back interest on convertible notes		$	-			$	1,275			$	-			$	1,400
Management fee expense			-				(128	)			-				(140	)
Tax expense			-				(427	)			-				(469	)
Net income attributable to interest add back			-				720				-				791
per fully diluted share		$	(0.36	)		$	0.26			$	(0.21	)		$	0.11
Net income per fully diluted share		$	0.29			$	0.73			$	1.72			$	1.53
Diluted weighted average shares outstanding			26,576				28,364				26,772				27,818

SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION

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

The Company reported Assets Under Management as follows (in millions):
Table I: Fund Flows - 3rd Quarter 2011
													Closed-end Fund
					Market								distributions,
		June 30,			appreciation/				Net cash				net of				September 30,
		2011			(depreciation)				flows				reinvestments				2011
Equities:
Open-end Funds		$	12,912		$	(1,790	)		$	347			$	-			$	11,469
Closed-end Funds			6,259			(894	)			94				(104	)			5,355
Institutional & PWM - direct			11,735			(2,358	)			267				-				9,644
Institutional & PWM - sub-advisory			2,953			(547	)			(80	)			-				2,326
Investment Partnerships			609			(1	)			19				-				627
Total Equities			34,468			(5,590	)			647				(104	)			29,421
Fixed Income:
Money-Market Fund			1,643			-				252				-				1,895
Institutional & PWM			26			-				-				-				26
Total Fixed Income			1,669			-				252				-				1,921
Total Assets Under Management		$	36,137		$	(5,590	)		$	899			$	(104	)		$	31,342

Table II: Fund Flows - Nine months ended September 30, 2011
												Closed-end Fund
					Market							distributions,
		December 31,			appreciation/				Net cash			net of				September 30,
		2010			(depreciation)				flows			reinvestments				2011
Equities:
Open-end Funds		$	11,252		$	(1,228	)		$	1,445		$	-			$	11,469
Closed-end Funds			5,471			(556	)			725	(a)		(285	)			5,355
Institutional & PWM - direct			11,005			(1,523	)			162			-				9,644
Institutional & PWM - sub-advisory			2,637			(375	)			64			-				2,326
Investment Partnerships			515			8				104			-				627
Total Equities			30,880			(3,674	)			2,500			(285	)			29,421
Fixed Income:
Money-Market Fund			1,616			-				279			-				1,895
Institutional & PWM			26			-				-			-				26
Total Fixed Income			1,642			-				279			-				1,921
Total Assets Under Management		$	32,522		$	(3,674	)		$	2,779		$	(285	)		$	31,342
(a) Includes $392 million from the launch of a new closed-end fund.

Table III: Assets Under Management
		September 30,			September 30,			%
		2010			2011			Inc.(Dec.)
Equities:
Open-end Funds		$	9,962		$	11,469		15.1	%
Closed-end Funds			5,033			5,355		6.4
Institutional & PWM - direct			10,172			9,644		(5.2	)
Institutional & PWM - sub-advisory			2,218			2,326		4.9
Investment Partnerships			466			627		34.5
Total Equities			27,851			29,421		5.6
Fixed Income:
Money-Market Fund			1,644			1,895		15.3
Institutional & PWM			26			26		-
Total Fixed Income			1,670			1,921		15.0
Total Assets Under Management		$	29,521		$	31,342		6.2	%

Table IV: Assets Under Management by Quarter
																	% Increase/
																	(decrease) from
		9/10			12/10			3/11			6/11			9/11			9/10			6/11
Equities:
Open-end Funds		$	9,962		$	11,252		$	12,348		$	12,912		$	11,469		15.1	%		(11.2	%)
Closed-end Funds			5,033			5,471			6,170			6,259			5,355		6.4			(14.4	)
Institutional & PWM - direct			10,172			11,005			11,780			11,735			9,644		(5.2	)		(17.8	)
Institutional & PWM - sub-advisory			2,218			2,637			2,937			2,953			2,326		4.9			(21.2	)
Investment Partnerships			466			515			547			609			627		34.5			3.0
Total Equities			27,851			30,880			33,782			34,468			29,421		5.6			(14.6	)
Fixed Income:
Money-Market Fund			1,644			1,616			1,583			1,643			1,895		15.3			15.3
Institutional & PWM			26			26			26			26			26		-			-
Total Fixed Income			1,670			1,642			1,609			1,669			1,921		15.0			15.1
Total Assets Under Management		$	29,521		$	32,522		$	35,391		$	36,137		$	31,342		6.2	%		(13.3	%)

Table V
GAMCO INVESTORS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
		For the Three Months Ended September 30,
										% Inc.
		2011				2010				(Dec.)
Investment advisory and incentive fees		$	65,244			$	50,249			29.8	%
Institutional research services			3,421				4,005			(14.6	)
Distribution fees and other income			11,486				8,189			40.3
Total revenues			80,151				62,443			28.4
Compensation costs			32,010				26,661			20.1
Distribution costs			11,091				7,710			43.9
Other operating expenses			5,002				5,023			(0.4	)
Total expenses			48,103				39,394			22.1
Operating income before management fee			32,048				23,049			39.0
Investment income/(loss)			(14,329	)			15,928			n/m
Interest expense			(4,418	)			(3,295	)		34.1
Other income/(expense), net			(18,747	)			12,633			n/m
Income before management fee and income taxes			13,301				35,682			(62.7	)
Management fee expense			1,387				3,540			(60.8	)
Income before income taxes			11,914				32,142			(62.9	)
Income tax expense			4,745				11,686			(59.4	)
Net income			7,169				20,456			(65.0	)
Net income/(loss) attributable to noncontrolling interests			(530	)			350			n/m
Net income attributable to GAMCO Investors, Inc.		$	7,699			$	20,106			(61.7	)
Net income attributable to GAMCO Investors, Inc. per share:
Basic		$	0.29			$	0.75			(61.3	)
Diluted		$	0.29			$	0.73			(60.3	)
Weighted average shares outstanding:
Basic			26,496		(a)		26,828			(1.2	)
Diluted			26,576				28,364			(6.3	%)
Notes:
(a) Shares outstanding at September 30, 2011 were 26,773,400, including 285,100 RSAs.
See GAAP to non-GAAP reconciliation on page 14.

Table VI
GAMCO INVESTORS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
		For the Nine Months Ended September 30,
										% Inc.
		2011				2010				(Dec.)
Investment advisory and incentive fees		$	197,407			$	149,862			31.7	%
Institutional research services			11,311				11,953			(5.4	)
Distribution fees and other income			33,419				23,125			44.5
Total revenues			242,137				184,940			30.9
Compensation costs			99,792				78,745			26.7
Distribution costs			34,108				21,840			56.2
Other operating expenses			18,193				15,528			17.2
Total expenses			152,093		(a)		116,113			31.0
Operating income before management fee			90,044				68,827			30.8
Investment income/(loss)			1,877				15,267			(87.7	)
Interest expense			(10,688	)			(9,993	)		7.0
Other income/(expense), net			(8,811	)			5,274			n/m
Income before management fee and income taxes			81,233				74,101			9.6
Management fee expense			8,126				7,368			10.3
Income before income taxes			73,107				66,733			9.6
Income tax expense			26,978				24,381			10.7
Net income			46,129				42,352			8.9
Net income attributable to noncontrolling interests			140				471			(70.3	)
Net income attributable to GAMCO Investors, Inc.		$	45,989			$	41,881			9.8
Net income attributable to GAMCO Investors, Inc. per share:
Basic		$	1.72			$	1.55			11.0
Diluted		$	1.72			$	1.53			12.4
Weighted average shares outstanding:
Basic			26,686		(b)		26,996			(1.1	)
Diluted			26,772				27,818			(3.8	%)
Notes:
(a) Includes $0.4 million in compensation, $4.7 million in distribution costs and $0.5 million in other operating expenses directly related to the launch of a new closed-end fund.
(b) Shares outstanding at September 30, 2011 were 26,773,400, including 285,100 RSAs.
See GAAP to non-GAAP reconciliation on page 14.

Table VII
GAMCO INVESTORS, INC.
UNAUDITED QUARTERLY CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
		2011																2010
		1st				2nd				3rd				YTD				1st				2nd				3rd				YTD				4th
		Quarter				Quarter				Quarter					2011			Quarter				Quarter				Quarter				2010				Quarter				Full-Year
Income Statement Data:
Revenues		$	76,905			$	85,081			$	80,151			$	242,137			$	59,998			$	62,499			$	62,443			$	184,940			$	95,440			$	280,380
Expenses			53,032		(a)		50,958				48,103				152,093				38,180				38,539				39,394				116,113				61,225				177,338
Operating income before management fee			23,873				34,123				32,048				90,044				21,818				23,960				23,049				68,827				34,215				103,042
Investment income/(loss)			10,676				5,530				(14,329	)			1,877				6,047				(6,708	)			15,928				15,267				15,029				30,296
Interest expense			(2,867	)			(3,403	)			(4,418	)			(10,688	)			(3,292	)			(3,406	)			(3,295	)			(9,993	)			(1,991	)			(11,984	)
Other income/(expense), net			7,809				2,127				(18,747	)			(8,811	)			2,755				(10,114	)			12,633				5,274				13,038				18,312
Income before management fee and income taxes			31,682				36,250				13,301				81,233				24,573				13,846				35,682				74,101				47,253				121,354
Management fee expense			3,113				3,626				1,387				8,126				2,448				1,380				3,540				7,368				4,645				12,013
Income before income taxes			28,569				32,624				11,914				73,107				22,125				12,466				32,142				66,733				42,608				109,341
Income tax expense			10,288				11,945				4,745				26,978				8,294				4,401				11,686				24,381				14,945				39,326
Net income			18,281				20,679				7,169				46,129				13,831				8,065				20,456				42,352				27,663				70,015
Net income/(loss) attributable to noncontrolling interests			638				32				(530	)			140				105				16				350				471				752				1,223
Net income attributable to GAMCO Investors, Inc.		$	17,643			$	20,647			$	7,699			$	45,989			$	13,726			$	8,049			$	20,106			$	41,881			$	26,911			$	68,792
Net income attributable to GAMCO Investors, Inc. per share:
Basic		$	0.66			$	0.77			$	0.29			$	1.72			$	0.50			$	0.30			$	0.75			$	1.55			$	1.00			$	2.55
Diluted		$	0.65			$	0.77			$	0.29			$	1.72			$	0.50			$	0.30			$	0.73			$	1.53			$	0.99			$	2.52
Weighted average shares outstanding:
Basic			26,901				26,665				26,496				26,686				27,184				26,979				26,828				26,996				26,851				26,959
Diluted			27,008				26,733				26,576				26,772				28,148				27,219				28,364				27,818				27,260				28,348
Reconciliation of non-GAAP financial measures to GAAP:
Operating income before management fee		$	23,873			$	34,123			$	32,048			$	90,044			$	21,818			$	23,960			$	23,049			$	68,827			$	34,215			$	103,042
Deduct: management fee expense			3,113				3,626				1,387				8,126				2,448				1,380				3,540				7,368				4,645				12,013
Operating income		$	20,760			$	30,497			$	30,661			$	81,918			$	19,370			$	22,580			$	19,509			$	61,459			$	29,570			$	91,029
Operating margin before management fee			31.0	%			40.1	%			40.0	%			37.2	%			36.4	%			38.3	%			36.9	%			37.2	%			35.8	%			36.8	%
Operating margin after management fee			27.0	%			35.8	%			38.3	%			33.8	%			32.3	%			36.1	%			31.2	%			33.2	%			31.0	%			32.5	%
(a) Includes $5.6 million in expenses directly related to the launch of a new closed-end fund.

Table VIII
GAMCO INVESTORS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
		September 30,			December 31,			September 30,
		2011			2010			2010
ASSETS
Cash and cash equivalents (a)		$	335,656		$	169,601		$	294,271
Investments			368,609			388,357			307,454
Receivable from brokers			67,064			46,621			62,209
Other receivables			31,831			51,744			22,861
Income tax receivable and deferred tax assets			227			325			-
Other assets			17,503			16,088			15,424
Total assets		$	820,890		$	672,736		$	702,219
LIABILITIES AND EQUITY
Payable to brokers		$	15,590		$	1,554		$	4,151
Income taxes payable			21,235			23,225			4,533
Compensation payable			31,559			23,771			23,575
Securities sold short, not yet purchased			6,743			19,299			18,446
Accrued expenses and other liabilities			38,040			29,715			32,000
Sub-total			113,167			97,564			82,705
5.5% Senior notes (due May 15, 2013)			99,000			99,000			99,000
5.875% Senior notes (due June 1, 2021)			100,000			-			-
Zero coupon subordinated debentures (due December 31, 2015) (b)			62,973			59,580			-
6.5% Convertible note (due October 2, 2018; repaid October 13, 2010)			-			-			60,000
Total debt			261,973			158,580			159,000
Total liabilities			375,140			256,144			241,705
Redeemable noncontrolling interests			38,050			26,984			15,994
GAMCO Investors, Inc.'s stockholders' equity			404,000			386,029			441,140
Noncontrolling interests			3,700			3,579			3,380
Total equity			407,700			389,608			444,520
Total liabilities and equity		$	820,890		$	672,736		$	702,219
(a) At September 30, 2010, $62.3 million was held in escrow for the 6.5% Convertible note and classified as cash and cash equivalents.
(b) The zero coupon subordinated debentures due December 31, 2015 have a face value of $86.4 million.

GABELLI/GAMCO FUNDS

Gabelli/GAMCO Funds Lipper Rankings as of September 30, 2011

1 Yr - 9/30/10-9/30/11

3 Yrs - 9/30/08-9/30/11

5 Yrs - 9/30/06-9/30/11

10 Yrs - 9/30/01-9/30/11

Percentile

Rank /

Percentile

Rank /

Percentile

Rank /

Percentile

Rank /

Fund Name

Lipper Category

Rank

Total Funds

Rank

Total Funds

Rank

Total Funds

Rank

Total Funds

Gabelli Asset; AAA

Multi-Cap Core Funds

32

247/794

13

83/690

7

36/580

10

29/296

Gabelli Value Fund; A

Multi-Cap Growth Funds

50

247/500

22

88/413

45

147/333

37

83/228

Gabelli SRI; AAA

Mid-Cap Growth Funds

56

224/401

6

18/355

-

-

-

-

Gabelli Eq:Eq Inc; AAA

Equity Income Funds

47

133/288

26

64/251

25

49/202

9

10/103

GAMCO Growth; AAA

Large-Cap Growth Funds

88

683/777

85

573/676

83

483/587

84

310/371

Gabelli Eq:SC Gro; AAA

Small-Cap Core Funds

48

347/730

20

132/659

10

49/531

9

28/315

Gabelli Eq:Wd SCV; AAA

Small-Cap Core Funds

92

667/730

84

554/659

43

226/531

-

-

GAMCO Gl:Oppty; AAA

Global Large-Cap Growth

48

53/111

10

10/100

36

27/74

10

4/39

GAMCO Gl:Growth; AAA

Global Large-Cap Growth

59

65/111

44

44/100

40

30/74

53

21/39

GAMCO Gold; AAA

Precious Metal Funds

52

38/73

50

29/58

47

21/44

36

12/33

GAMCO Intl Gro; AAA

International Large-Cap Growth

4

8/247

2

3/219

19

33/180

32

37/116

Gabelli Bl Chp Val; AAA

Large-Cap Core Funds

87

960/1,107

58

569/990

54

449/835

42

212/510

Gabelli Inv:ABC; AAA

Specialty Diversified Equity Funds

22

9/40

49

15/30

30

8/26

10

1/9

GAMCO Mathers; AAA

Specialty Diversified Equity Funds

57

23/40

75

23/30

63

17/26

50

5/9

Comstock Cap Val; A

Specialty Diversified Equity Funds

71

29/40

88

27/30

86

23/26

70

7/9

GAMCO Gl:Telecom; AAA

Telecommunications Funds

75

29/38

75

24/31

36

9/24

20

4/20

GAMCO Gl:Vertumnus; AAA

Convertible Securities Funds

73

49/67

92

46/49

95

38/39

83

28/33

Gabelli Utilities; AAA

Utility Funds

69

50/72

39

26/66

27

16/59

40

16/40

787:Gabelli Merg&Acq A

Mid-Cap Core Funds

16

48/311

41

110/273

37

82/226

89

125/141

Gabelli Capital Asset Fund

Distributed through Insurance Channel

25

77/311

10

30/293

21

51/242

16

23/144

% of funds in top half

45.0%

65.0%

73.7%

72.2%

Data presented reflects past performance, which is no guarantee of future results. Strong rankings are not indicative of positive fund performance. Absolute performance for some funds was negative for certain periods. Other share classes are available which may have different performance characteristics.
Lipper, a wholly-owned subsidiary of Reuters, provides independent insight on global collective investments including mutual funds, retirement funds, hedge funds, fund fees and expenses to the asset management and media communities. Lipper ranks the performance of mutual funds within a classification of funds that have similar investment objectives. Rankings are historical with capital gains and dividends reinvested and do not include the effect of loads. If an expense waiver was in effect, it may have had a material effect on the total return or yield for the period.
Relative long-term investment performance remained strong with approximately 45%, 65%, 74% and 72% of firmwide mutual funds in the top half of their Lipper categories on a one-, three-, five-, and ten-year total-return basis, respectively, as of September 30, 2011.
Investors should carefully consider the investment objective, risks, charges, and expenses of each fund before investing. Each fund's prospectus contains information about these and other matters and should be read carefully before investing. Each fund’s share price will fluctuate with changes in the market value of the fund’s portfolio securities. Stocks are subject to market, economic and business risks that cause their prices to fluctuate. When you sell fund shares, they may be worth less than what you paid for them. Consequently, you can lose money by investing in the fund. You can obtain a prospectus by calling 800-GABELLI (422-3554), online at www.gabelli.com, or from your financial advisor. Distributed by G.distributors, LLC., One Corporate Center, Rye New York, 10580. Other share classes are available that have different performance characteristics.
The inception date for the Gabelli SRI Green Fund was June 1, 2007. The inception date for the Gabelli Woodland Small Cap Value Fund was December 31, 2002.