8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) May 9, 2018

GAMCO INVESTORS, INC.

(Exact name of registrant as specified in its charter)

Delaware	1-14761	13-4007862
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)
One Corporate Center, Rye, NY		10580
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code     (914) 921-3700

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

[ ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (240.12b-2 of this chapter).

Emerging growth company 

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

Item 2.02 Results of Operations and Financial Condition.

The following information is furnished pursuant to Item 2.02, "Results of Operations and Financials Condition."

On May 9, 2018, GAMCO Investors, Inc. ("GAMCO") announced its results of operations for the quarter ended March 31, 2018.  A copy of the related press release is being filed as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference in its entirety.

The information furnished under Item 2.02, including the exhibit attached hereto, is not deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 and shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, except as otherwise expressly stated in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

99.1GAMCO's Press Release, dated May 9, 2018.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

GAMCO Investors, Inc.

By: /s/ Kieran Caterina

Kieran Caterina

Senior Vice President and Co-Principal Financial Officer

Date:May 9, 2018

Exhibit Index

Exhibit No.

99.1GAMCO's Press Release, dated May 9, 2018.

EX-99.1

Exhibit 99.1

For Immediate Release:	Contact:	Kieran Caterina or Diane M. LaPointe
		SVPs and Co-Chief Accounting Officers
		(914) 921-5149 or 7763
		For further information please visit
		www.gabelli.com

GAMCO Investors, Inc. Reports First Quarter 2018 Results

-  Average AUM for the first quarter 2018 was $42.5 billion vs. $40.9 billion in first quarter of 2017

-  Effective income tax rate was 22.6% in first quarter 2018 vs. 38.1% in 2017 first quarter

-  First quarter 2018 diluted EPS was $0.94 compared with $0.82 a year ago

Rye, New York, May 9, 2018 – GAMCO Investors, Inc. (“GAMCO”) (NYSE: GBL) today reported first quarter 2018 revenues of $87.5 million, net income of $27.3 million, and earnings of $0.94 per diluted share.  This compares to first quarter 2017 revenues of $85.9 million, net income of $24.8 million, and earnings of $0.82 per diluted share.

Average AUM was $42.5 billion for the first quarter of 2018 versus $40.9 billion for the first quarter of 2017 and $43.0 billion for the fourth quarter of 2017.

Our first quarter 2018 ending AUM was $40.9 billion as compared to $41.7 billion at March 31, 2017 and $43.1 billion at December 31, 2017.  Market depreciation was $1.0 billion, outflows were $1.1 billion and distributions, net of reinvestments, were $0.1 billion.

Revenues

- Total revenues for the first quarter of 2018 were $87.5 million compared with $85.9 million in the prior year.

- Investment advisory fees rose to $77.3 million in the first quarter of 2018 from $75.0 million in the first quarter of 2017.  Revenues from our open-end and closed-end funds were $50.1 million, an increase from $47.9 million in the year-ago quarter.  Institutional and Private Wealth Management generated $25.9 million of the revenues in 2018 compared to $26.2 million in 2017.  SICAV revenues grew to $1.3 million in the first quarter of 2018 from $0.9 million in the prior period.

- Distribution fees from our open-end equity funds and other income were $10.1 million for the first quarter of 2018 versus $10.9 million in the prior-year quarter.

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Financial Highlights
	First Quarter
($'s in 000's except AUM and per share data)	2018				2017
AUM - average (in millions)	$	42,499			$	40,926
AUM - end of period (in millions)		40,854				41,695
Revenues	$	87,497			$	85,917
Operating income		41,256				42,443
Income before income taxes		35,201				40,120
Effective tax rate			22.6	%			38.1	%
Net income		27,261				24,820
Net income per fully diluted share	$	0.94			$	0.82
Weighted average diluted shares outstanding		28,916				31,160
Shares outstanding at March 31		28,855				29,334

Operating Income

There were several crosscurrents that impacted results.  Operating income was $41.3 million in the first quarter of 2018 versus $42.4 million in the prior-year period.  Operating costs were impacted by an incremental noncash $5.2 million related to increased amortization of deferred compensation.  On the positive side, the previously announced waiver of compensation in the first quarter of 2018 boosted operating income before management fee by $4.9 million.  Excluding the effects of the deferral treatment under GAAP but reflecting the reduced compensation expense, adjusted operating income before management fee was $44.1 million in the first quarter of 2018 versus $37.6 million in the year-ago quarter.

Other expense

Investment losses arising from mark to market pricing were $4.9 million in the first quarter of 2018 as compared to a gain of $0.5 million in the prior year quarter.  Interest expense decreased by $1.6 million year-over-year.

Income Taxes

The Company’s effective tax rate (“ETR”) for the quarter ended March 31, 2018 was 22.6% versus 38.1% for the quarter ended March 31, 2017.

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Balance Sheet

We ended the quarter with cash of $27.4 million, investments of $31.4 million, and gross debt of $64.2 million.

Debt does not include the deferred compensation payable at March 31, 2018 of $101.6 million, of which $62.5 million is included in the GAAP balance sheet.  The remaining $39.1 million from the three deferral agreements will be recorded in 2018 and 2019, ratably over the vesting periods, in accordance with GAAP.

Returns to Shareholder

During the quarter ended March 31, 2018, we purchased 119,334 shares at an average price of $27.71 per share for a total investment of $3.3 million.  We also distributed $0.6 million in dividends.  Since our IPO in February 1999, we have returned $1.9 billion in total to shareholders consisting of $1.0 billion of spin-offs, $491.6 million in the form of dividends, and $456.4 million through stock buybacks of approximately 10.5 million shares.

On May 8, 2018, GAMCO’s Board of Directors declared a regular quarterly dividend of $0.02 per share payable on July 2, 2018 to its Class A and Class B shareholders of record on June 18, 2018.  Additionally, the Board declared a $0.20 per share Designated Shareholder Charitable Contribution to shareholders of record as of June 30, 2018.

About GAMCO Investors, Inc.

GAMCO Investors, Inc., through its subsidiaries, manages open-end funds and closed-end funds (Gabelli Funds, LLC) and private advisory accounts (GAMCO Asset Management Inc.).

The Company reported Assets Under Management as follows (in millions):
	March 31,		March 31,
	2018		2017
Equities:
Open-end Funds	$	12,964	$	13,708
Closed-end Funds		7,768		7,315
Institutional & PWM - direct (a)		12,392		13,492
Institutional & PWM - sub-advisory		5,251		5,019
SICAV (b)		527		375
Total Equities		38,902		39,909
Fixed Income:
100% U.S. Treasury Fund		1,922		1,752
Institutional & PWM		30		34
Total Fixed Income		1,952		1,786
Total Assets Under Management	$	40,854	$	41,695
(a) Includes $212 million and $292 million of 100% U.S. Treasury Fund AUM at
March 31, 2018 and March 31, 2017, respectively.
(b) Adjusted to include Merger Arbitrage assets of $326 million at March 31, 2017.

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

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Table II
GAMCO INVESTORS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
	For the Quarter Ended
	March 31,
	2018			2017
Investment advisory and incentive fees	$	77,348		$	74,989
Distribution fees and other income		10,149			10,928
Total revenues		87,497			85,917
Compensation costs		25,950			25,278
Distribution costs		10,204			10,913
Other operating expenses		5,453			5,119
Total expenses		41,607			41,310
Operating income before management fee		45,890			44,607
Investment income		(4,855	)		509
Interest expense		(1,200	)		(2,832	)
Other expense, net		(6,055	)		(2,323	)
Income before management fee and income taxes		39,835			42,284
Management fee expense		4,634			2,164
Income before income taxes		35,201			40,120
Income tax expense		7,940			15,300
Net income attributable to GAMCO Investors, Inc.	$	27,261		$	24,820
Net income per share attributable to GAMCO Investors, Inc.:
Basic	$	0.94		$	0.86
Diluted	$	0.94		$	0.82
Weighted average shares outstanding:
Basic		28,916			28,970
Diluted		28,916			31,160
Actual shares outstanding (a)		28,855			29,334
Notes:
(a) Includes 0 and 420,240 of RSAs, respectively.
See GAAP to non-GAAP reconciliation on page 6.

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Table III
GAMCO INVESTORS, INC.
UNAUDITED QUARTERLY CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
	2018			2017
	1st			1st			2nd			3rd			4th
	Quarter			Quarter			Quarter			Quarter			Quarter			Full Year
Income Statement Data:
Revenues	$	87,497		$	85,917		$	87,600		$	88,341		$	98,666		$	360,524
Expenses		41,607			41,310			45,584			60,013			54,931			201,838
Operating income before
management fee		45,890			44,607			42,016			28,328			43,735			158,686
Investment income		(4,855	)		509			537			(271	)		(2,747	)		(1,972	)
Interest expense		(1,200	)		(2,832	)		(2,749	)		(2,688	)		(1,891	)		(10,160	)
Other expense, net		(6,055	)		(2,323	)		(2,212	)		(2,959	)		(4,638	)		(12,132	)
Income before management
fee and income taxes		39,835			42,284			39,804			25,369			39,097			146,554
Management fee expense		4,634			2,164			2,356			4,935			4,211			13,666
Income before income taxes		35,201			40,120			37,448			20,434			34,886			132,888
Income tax expense		7,940			15,300			14,554			3,834			21,391			55,079
Net income attributable to
GAMCO Investors, Inc.	$	27,261		$	24,820		$	22,894		$	16,600		$	13,495		$	77,809
Net income per share
attributable to GAMCO
Investors, Inc.:
Basic	$	0.94		$	0.86		$	0.79		$	0.57		$	0.46		$	2.68
Diluted	$	0.94		$	0.82		$	0.76		$	0.55		$	0.46		$	2.60
Weighted average shares outstanding:
Basic		28,916			28,970			28,896			28,926			29,103			28,980
Diluted		28,916			31,160			31,100			31,173			30,336			30,947
Reconciliation of non-GAAP
financial measures to GAAP:
Operating income before
management fee		45,890			44,607			42,016			28,328			43,735			158,686
Deduct: management fee expense		4,634			2,164			2,356			4,935			4,211			13,666
Operating income	$	41,256		$	42,443		$	39,660		$	23,393		$	39,524		$	145,020
Operating margin before
management fee		52.4	%		51.9	%		48.0	%		32.1	%		44.3	%		44.0	%
Operating margin after
management fee		47.2	%		49.4	%		45.3	%		26.5	%		40.1	%		40.2	%
Notes on Non-GAAP Financial Measures:
Operating income before management fee is used by management to evaluate 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.

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Table IV
GAMCO INVESTORS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
	March 31,			December 31,			March 31,
	2018			2017			2017
ASSETS
Cash and cash equivalents	$	27,383		$	17,821		$	88,230
Investments		31,407			36,790			33,190
Receivable from brokers		1,876			1,578			523
Other receivables		33,014			45,621			36,554
Income tax receivable and deferred tax asset		12,878			15,615			12,829
Other assets		10,435			10,861			11,196
Total assets	$	116,993		$	128,286		$	182,522
LIABILITIES AND EQUITY
Payable to brokers	$	164		$	14,926		$	10,022
Income taxes payable and deferred tax liabilities		7,491			3,128			19,787
Compensation payable (a)		84,333			82,907			42,295
Accrued expenses and other liabilities		33,477			34,454			34,508
Sub-total		125,465			135,415			106,612
5.875% Senior notes (due June 1, 2021)		24,150			24,144			24,126
4.5% Convertible note (due August 15, 2021)		-			-			109,844
4% PIK note (due November 30, 2020)		40,000			50,000			90,000
1.6% AC Note (due February 28, 2018)		-			15,000			-
Total debt		64,150			89,144			223,970
Total liabilities		189,615			224,559			330,582
GAMCO Investors, Inc.'s stockholders' deficit		(72,622	)		(96,273	)		(148,060	)
Total liabilities and equity	$	116,993		$	128,286		$	182,522
(a) Excludes $39.1 million, $59.0 million and $59.4 million of DCCA expense that is not yet recorded under GAAP as of
March 31, 2018, December 31, 2017 and March 31, 2017, respectively.

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Non-GAAP information and reconciliation:

GAMCO’s non-GAAP measures include adjusted operating income, adjusted income before taxes, adjusted effective tax rate, adjusted net income and adjusted net income per fully diluted share.  GAMCO’s calculation of these non-GAAP measures may not be comparable to similarly titled measures of other companies due to potential differences between companies in  the method of calculation.  As a result, the use of these non-GAAP measures has limitations and should not be considered superior to, in isolation from, or a substitute for, related U.S. GAAP measures.

These non-GAAP measures allow management and investors to view operating trends, perform analytical comparisons and benchmark performance between periods to understand operating performance without regard to items that we do not consider to be a component of our core operating performance.  Management uses these measures in its financial, investment and operational decision-making processes, for internal reporting and as part of its forecasting and budgeting processes.  For these reasons we believe these non-GAAP measures are useful for our investors.

Adjusted operating income, adjusted income before taxes, adjusted effective tax rate, adjusted net income and adjusted net income per fully diluted share can be used by investors to review our results on a consistent basis.  Examples of adjustments to these measures include the GAAP impact of the 2016 Deferred Cash Compensation Agreement (“DCCA”), First Half 2017 DCCA, and the Fourth Quarter 2017 DCCA that were put in place to enable the Company to more quickly pay down its debt.

The following tables reconcile adjusted income before taxes, adjusted effective tax rate, adjusted net income and adjusted net income per share to their closest GAAP equivalent:

	For the three months ended March 31, 2018
				Impact of			Impact of
	Reported			Fourth Quarter			First Half			Impact of
	GAAP			2017 DCCA			2017 DCCA			2016 DCCA			Adjusted
Total revenues	$	87,497		$	-		$	-		$	-		$	87,497
Compensation costs		25,950			(1,391	)		213			3,016			27,788
Distribution costs		10,204			-			-			-			10,204
Other operating expenses		5,453			-			-			-			5,453
Total expenses		41,607			(1,391	)		213			3,016			43,445
Operating income before management fee		45,890			1,391			(213	)		(3,016	)		44,052
Other expense, net		(6,055	)		-			-			-			(6,055	)
Income before management fee and income taxes		39,835			1,391			(213	)		(3,016	)		37,997
Management fee expense		4,634			(419	)		(1,368	)		(1,030	)		1,817
Income before income taxes		35,201			1,810			1,155			(1,986	)		36,180
Income tax expense		7,940			409			261			(449	)		8,161
Net income attributable to GAMCO Investors, Inc.	$	27,261		$	1,401		$	894		$	(1,537	)	$	28,019
Net income per share attributable to GAMCO Investors, Inc.:
Basic	$	0.94		$	0.05		$	0.03		$	(0.05	)	$	0.97
Diluted	$	0.94		$	0.05		$	0.03		$	(0.05	)	$	0.97

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	For the three months ended March 31, 2017
				Impact of			Impact of
				2017 RSU			2016 RSU
	Reported			Deferred			Deferred
	GAAP			Compensation			Compensation			Non-GAAP
Total revenues	$	85,917		$	-		$	-		$	85,917
Compensation costs		25,278			9,540			(2,499	)		32,319
Distribution costs		10,913			-			-			10,913
Other operating expenses		5,119			-			-			5,119
Total expenses		41,310			9,540			(2,499	)		48,351
Operating income before management fee		44,607			(9,540	)		2,499			37,566
Other expense, net		(2,323	)		-			-			(2,323	)
Income before management fee and income taxes		42,284			(9,540	)		2,499			35,243
Management fee expense		2,164			1,865			(780	)		3,249
Income before income taxes		40,120			(11,405	)		3,279			31,994
Income tax expense		15,300			(4,349	)		1,250			12,201
Net income attributable to GAMCO Investors, Inc.	$	24,820		$	(7,056	)	$	2,029		$	19,793
Net income per share attributable to GAMCO Investors, Inc.:
Basic	$	0.86		$	(0.24	)	$	0.07		$	0.68
Diluted	$	0.82		$	(0.23	)	$	0.07		$	0.66

SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION

The financial results set forth in this press release are preliminary. Our disclosure and analysis in this press release, which do not present historical information, contain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.  Forward-looking statements convey 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, the economy, the effects of the Tax Cuts and Jobs Act, and other conditions, there can be no assurance that our actual results will not differ materially from what we expect or believe.  Therefore, you should proceed with caution in relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance.

Forward-looking statements involve a number of known and unknown risks, uncertainties and other important factors, some of which are listed below, that are difficult to predict and could cause actual results and outcomes to differ materially from any future results or outcomes expressed or implied by such forward-looking statements.  Some of the factors that could cause our actual results to differ from our expectations or beliefs include a decline in the securities markets that adversely affect our assets under management, negative performance of our products, the failure to perform as required under our investment management agreements, a general downturn in the economy that negatively impacts our operations, and the ongoing impacts of the Tax Cuts and Jobs Act with respect to tax rates and the non-deductibility of certain portions of NEO compensation. We also direct your attention to the more specific discussions of these and other risks, uncertainties and other important factors  contained in our Form 10-K and other public filings.  Other factors that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We do not undertake to update publicly any forward-looking statements if we subsequently learn that we are unlikely to achieve our expectations whether as a result of new information, future developments or otherwise, except as may be required by law.

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