GAMCO INVESTORS, INC. ET AL: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-K)

The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the consolidated financial
statements and the notes thereto included in Part II, Item 8 of this Form 10-K
"Financial Statements and Supplementary Data."  This discussion contains
forward-looking statements and involves numerous risks and uncertainties,
including, but not limited to those described in Part I, Item 1A of this Form
10-K "Risk Factors." Our actual results could differ materially from those
anticipated by such forward-looking statements due to factors discussed under
"Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements"
appearing elsewhere in this Form 10-K.

PREVIEW

GAMCO (New York Stock Exchange ("NYSE"): GBL), a company incorporated under the
laws of Delaware,  is a widely-recognized provider of investment advisory
services to 24 open-end funds, 14 closed-end funds, actively managed
semi-transparent ETFs, one société d'investissement à capital variable
("SICAV"), and approximately 1,400 institutional and private wealth management
("Institutional and PWM") investors principally in the United States ("U.S.").
We generally manage assets on a fully discretionary basis and invest in a
variety of U.S. and international securities. Our revenues are based primarily
on the Company's level of assets under management ("AUM") and fees associated
with our various investment products. GAMCO serves a broad client base,
including institutions, intermediaries, offshore investors, private wealth, and
direct retail investors. In recent years, GAMCO has successfully integrated new
teams of RIAs by providing attractive compensation arrangements and paying
finder's fees.

GAMCO offers a wide range of solutions for clients in the areas of value and growth equities, ESG, convertibles, actively managed semi-transparent ETFs, sector strategies such as gold and utilities, merger arbitrage and fixed income. In 1977, GAMCO launched its flagship All Cap Value strategy, Gabelli Value, and in 1986 entered the mutual fund industry.

As of December 31, 2021, we had $35.0 billion of AUM. We conduct our investment
advisory business principally through two subsidiaries, which are registered
investment advisors: Gabelli Funds, LLC (open-end and closed-end funds)
("Gabelli Funds") and GAMCO Asset Management Inc. (Institutional and PWM)
("GAMCO Asset"). G.distributors, LLC ("G.distributors"), our broker-dealer
subsidiary, acts as an underwriter and distributor of our open-end funds and
actively managed semi-transparent ETFs.

In December 2019, a novel strain of coronavirus ("COVID-19") surfaced in China
and has since spread globally. On March 11, 2020, COVID-19 was identified as a
global pandemic by the World Health Organization. In response to its spread,
governmental authorities have imposed restrictions on travel and congregation
and the temporary closure of many non-essential businesses in affected
jurisdictions, including, beginning in March 2020, in the U.S. As world leaders
focused on the unprecedented human and economic challenges of COVID-19, global
equity markets plunged as the coronavirus pandemic spread. In March 2020, the
unfolding events led to the worst month for stocks since 2008 and the worst
first quarter since 1937. In the remainder of 2020 and continuing through 2021,
as a result of unprecedented fiscal and monetary stimulus and the fast tracking
of COVID-19 vaccines, the markets have rebounded strongly. As a result of this
pandemic, the Company allowed most of our employees ("teammates") to work
remotely. This policy continued through the end of June 2021. Effective July
2021, the Company changed its policy and asked teammates to return to our
offices. As a result, the majority of our teammates are now back in our offices.
There continues to be no material impact of remote work arrangements on our
operations, including our financial reporting systems, internal control over
financial reporting, and disclosure controls and procedures, and there has been
no material challenge in implementing our business continuity plan.



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Organizational chart

Here is the current organization chart of the Company:

[[Image Removed: graphic]]

2021 Business and Investment Highlights

• At January 4GAMCO International SICAV has launched GAMCO Convertible

Securities. The fund, managed by our Dinsmore team, which marked the 50th

Bancroft Fund management anniversary in April, leverages

investment history in dedicated convertible securities portfolios. Several

share classes are suitable for global institutional investors as well as certain

no-we retail investors.

• We launched our first actively managed semi-transparent ETF, the Love our

ETF Planet & People (LOPP), on February 1st and our second, Gabelli

Growth Innovators (GGRW), on February 16.

• Our 31st Annual Pumps, Valves and Water Systems Symposium was held in February

25th. The meeting included presentations by senior management from several

leading industrial companies specializing in industrial and municipal water

the use and role of technology.

• At March 18we hosted our 7th Annual Waste and Environmental Services

  Symposium via webcast.  The timely conference featured presentations by leading
  companies.

• At April 15the Gabelli Utility Trust (NYSE:GUT) conducted a

oversubscribed rights offering raising approximately $43 million.

• At May, the 1st, Omaha’s 15th annual research trip was held virtually. Members of

our team participated in roundtables on investment styles and

strategies.

• At May 14we hosted our 36th GAMCO Investor Client Symposium with over 500

customers and prospects present on a virtual basis.

• At June 3more than a dozen media and entertainment companies participated

in our 13th Annual Entertainment and Broadcasting Symposium.

• At June 15the company paid a $2.00 dividend in the form of 2-Year

matured subordinated securities June 15, 2023 (“Subordinated Securities”) totaling $52.2

million to record holders on June 1, 2021.

• The Company opened a relationship center in Charleston, South Carolina.

• At July 20the Company held a special meeting during which the shareholders approved a

modification of the company’s amended and restated certificate of incorporation.

• At July 21the Gabelli Equity Trust (NYSE: GAB) completed an oversubscribed offering

issue of subscription rights for approximately $144 million.

• At July 21the Company has filed a pending listing statement to list

for $500 million securities, including common stock, preferred stock,

warrants, rights and convertible securities.

• On August 30th, the Gabelli Multimedia Trust Inc. (NYSE: GGT) completed an
  offering that  raised approximately $18 million.


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• At September 9we hosted our 27th annual aerospace and defense symposium in

New York City. The symposium featured leading aerospace companies and

Defense industries.

• At October 7the Gabelli Dividend & Income Trust (NYSE: GDV) realized

offering of $150 million Series K 4.25% Cumulative Preferred Shares.

• At October 15the Gabelli Healthcare & Wellness Trust (NYSE: GRX) has completed

a private placement of $40 million Series E 4% Cumulative Preferred Shares.

• At November, 1stthe Gabelli Global Small and Mid Cap Value Trust (NYSE: GGZ)

raised a similar $40 million via a private placement of 4% Cumulative Series B

Preferred shares.

• At November, 1st and second, we hosted our 45th Annual Automotive Symposium,

“Batteries included” in Vegas. The symposium included presentations from

senior management of major automotive and electric vehicle suppliers, with a

the focus on the battery ecosystem, technological innovation and industry

dynamic.

• At November 19, Gabelli Fund and the Colombia Business School hosted the 3rd

Annual Healthcare Symposium, which included presentations by healthcare leaders

professionals providing important information on the main trends in the clinic

innovation, health care delivery, access and economy.

• At December 17the Gabelli Equity Trust (NYSE: GAB) had an initial closing

of a private placement of $68 million 4.25% Cumulative Preferred Series M

  Shares.

Giving back to society – (Your) “S” in ESG

The Board of Directors approved in November 2021 a $0.50 per share shareholder
designated charitable contribution ("SDCC"), a 100% increase from the prior
year's $0.25 per share designation under the program. We estimate this will
total approximately $11.3 million. Since the inception of GAMCO's SDCC program
in 2013, and counting this current amount, shareholders will have designated
charitable gifts of $48 million to more than 350 501(c)(3) institutions.

When combined with our other charitable contributions, this boosts our total
contributions to approximately $74 million since our initial public offering
("IPO") in February 1999.

Remuneration and shareholder initiatives

During 2021, we returned $73.8 million of our earnings to shareholders through
dividends and stock repurchases, including a total of $0.10 per share in regular
quarterly cash dividends totaling $2.7 million and $2.00 per share in a special
dividend to shareholders of Class A Stock and Class B Stock payable in
Subordinated Notes totaling $54.5 million. During 2020, we returned $30.7
million of our earnings to shareholders through dividends and stock repurchases,
including a total of $0.08 per share in regular quarterly cash dividends and
$0.90 per share in a special dividend totaling $26.8 million.

Through our stock buyback program (the "Stock Repurchase Program"), including
routine open market purchases under Rules 10b5-1 and 10b-18 of the Securities
Exchange Act of 1934, as amended and opportunistic private transactions, we
repurchased 700,722 shares and 296,296 shares in 2021 and 2020, respectively,
for approximately $16.5 million and $3.9 million, respectively, or $23.54 per
share and $13.16 per share, respectively. At December 31, 2021, the total shares
available under the Stock Repurchase Program for Class A Stock to be repurchased
in the future were 2,173,937. The Stock Repurchase Program is not subject to an
expiration date.

Assets Under Management

AUM was $35.0 billion as of December 31, 2021, an increase of $2.4 billion, or
7.4%, from the December 31, 2020 AUM of $32.6 billion. The activity for 2021
consisted of $5.3 billion of market appreciation, net cash outflows of $2.3
billion and recurring distributions, net of reinvestments, from open-end and
closed-end funds (the "Funds") of $568 million. Average total AUM was $34.3
billion in 2021 versus $31.0 billion in 2020, an increase of 10.6%.

We earn incentive fees for certain institutional client assets, assets
attributable to certain preferred issues for our closed-end Funds, our GDL Fund
(NYSE: GDL), the Gabelli Merger Plus+ Trust Plc (LSE: GMP), and the GAMCO Merger
Arbitrage Fund. As of December 31, 2021, assets with incentive based fees were
$1.3 billion, 18.2% above the $1.1 billion on December 31, 2020. 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.


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RESULTS OF OPERATIONS

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

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

We also receive incentive fees from certain Institutional and PWM clients, which
are based upon meeting or exceeding a specific benchmark index or indices. These
fees are recognized at the end of the stipulated contract period, which may be
quarterly or annually, for the respective account. Advisory fees on assets
attributable to certain of the closed-end preferred shares are earned at
year-end if the total return to common shareholders of the closed-end fund for
the calendar year exceeds the dividend rate of the preferred shares. These fees
are recognized at the end of the measurement period.

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

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

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

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The following table (in thousands, except per share data) and discussion of our
results of operations are based upon data derived from the consolidated
statements of income contained in our consolidated financial statements and
should be read in conjunction with those statements included in Part II, Item 8
of this Form 10-K.

                                                   Years Ended December 31,
                                                     2021              2020
Revenues
Investment advisory and incentive fees           $     274,531       $ 

233,628

Distribution fees and other income                      26,595          26,098
Total revenues                                         301,126         259,726
Expenses
    Compensation                                       118,186         102,347
    Management fee                                       5,552           5,376
Distribution costs                                      30,276          28,474
Other operating expenses                                29,692          23,920
Total expenses                                         183,706         160,117
Operating income                                       117,420          99,609
Non-operating income / (loss)
Gain/(loss) from investments, net                          269          (8,695 )
Interest and dividend income                               550             

826

Interest expense                                        (2,919 )        (2,620 )
Shareholder-designated charitable contribution         (11,279 )        (5,436 )
Total non-operating loss                               (13,379 )       (15,925 )
Income before income taxes                             104,041          83,684
Provision for income taxes                              30,842          24,991
Net income                                       $      73,199       $  58,693

Earnings per share:
Basic                                            $        2.79       $    2.21
Diluted                                          $        2.73       $    2.20

Year ended December 31, 2021 Compared to the year ended December 31, 2020

Overview

Net income for 2021 was $73.2 million, or $2.73 per fully diluted share, versus
$58.7 million, or $2.20 per fully diluted share, in 2020. The year-to-year
comparison was impacted by higher revenues and lower non-operating loss offset
partially by higher variable compensation.

Revenue

Total revenues were $301.1 million in 2021, $41.4 million or 15.9% higher than
the total revenues of $259.7 million in 2020. The change in total revenues by
component was as follows (dollars in millions):

                                        Years Ended December 31,             Increase (decrease)
                                         2021               2020             _$               _%
Investment advisory                  $      258.9       $      224.7     $     34.2             15.2
Incentive fees                               15.6                8.9            6.7             75.3
Distribution fees and other income           26.6               26.1            0.5              1.9
Total revenues                       $      301.1       $      259.7     $     41.4             15.9



Investment advisory fees excluding incentive fees, which comprised 86.0% of
total revenues in 2021, are directly influenced by the level and mix of average
AUM. Average total AUM increased 10.6% to $34.3 billion in 2021 as compared to
$31.0 billion in 2020. Average equity AUM increased 15.3% to $32.4 billion in
2021 from $28.1 billion in 2020, primarily from market appreciation partially
offset by net outflows. Incentive fees, which comprised 5.2% of total revenues
in 2021, result from our ability to either generate an absolute return in a
portfolio or meet or exceed a specific benchmark index or indices and can vary
significantly from one period to another. Incentive fees were higher in 2021 as
a larger number of portfolios exceeded their respective benchmarks as compared
to 2020.


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Fund revenues increased $29.0 million or 18.3%, to $187.3 million, driven by
higher average AUM. Revenue from open-end Funds increased $9.6 million, or
10.5%, to $100.8 million from the prior year as average AUM in 2021 increased
$0.9 billion, or 7.6%, to $12.7 billion from the $11.8 billion in 2020.
Closed-end fund revenues increased $19.4 million, or 28.9%, to $86.5 million
from the prior year and were comprised of an increase of $5.4 million in
incentive fees on certain closed-end fund AUM and an increase of $14.0 million
in investment advisory fees attributable to higher average AUM. Revenue from
Institutional and PWM accounts, which are generally billed on beginning quarter
AUM, increased $8.9 million, or 13.8%, principally due to higher billable AUM
levels throughout the course of 2021. In 2021, average AUM in our equity
Institutional and PWM business increased $1.8 billion, or 16.8%, for the year to
$12.5 billion. SICAV revenues were $14.1 million in 2021, including $7.3 million
of incentive fees, up from $11.0 million in 2020.

Distribution fees and other income increased $0.5 million, or 1.9%, to $26.6
million in 2021 from $26.1 million in 2020 primarily from higher average
open-end equity Fund AUM which increased 11.0%. Distribution fees were $23.7
million in 2021 versus $23.1 million in 2020 while other income was $2.9 million
in 2021 versus $3.0 million in 2020.

Expenses

Total compensation costs, which are largely variable in nature, increased $15.9
million, or 15.5%, to $118.2 million in 2021 from $102.3 million in 2020.
Variable compensation costs, which are tied to revenues and principally consist
of portfolio manager and relationship manager fees, increased $8.3 million to
$68.2 million in 2021 from $59.9 million in 2020 and decreased as a percent of
revenues to 22.7% in 2021 from 23.1% in 2020. The increase of waived
compensation by the CEO, in his capacity as a portfolio manager and a
relationship manager, to $17.1 million in 2021, as compared to $12.4 million in
2020, partially offset the large increase in variable compensation costs due to
higher average AUM. During 2021, the CEO elected to irrevocably waive all of his
compensation for a total of five months (July 1, 2021 to November 30, 2021) as
comparted to four months and ten days during 2020 (July 1, 2020 to November 10,
2020). Additionally, the accounting for the vesting of the deferred cash
compensation agreement ("DCCA") decreased 2020 compensation by $1.5 million.
Fixed compensation costs increased to $41.3 million in 2021 from $38.2 million
in 2020. Stock based compensation was $8.7 million in 2021, an increase of $4.5
million, as compared to $4.2 million in 2020. The increase primarily results
from the acceleration of all 2018 and 2019 restricted stock award grants during
2021 for an additional expense of $3.8 million that would have been recognized
in future years.

In 2021, management fee expense increased to $5.6 million versus $5.4 million in
2020. Management fee expense is incentive-based and entirely variable in the
amount of 10% of the aggregate pre-tax profits, which is paid to Mr. Gabelli (or
his designee) in accordance with his 2008 Employment Agreement. During 2021 and
2020, the CEO compensation waiver reduced management fee expense by $3.7 million
and $2.3 million.

Distribution costs, which include marketing, promotion, and distribution costs
increased $1.8 million, or 6.3%, to $30.3 million in 2021 from $28.5 million in
2020, driven by an increase in average open-end equity mutual funds AUM of
11.0%.

The other operating expenses were $29.7 million in 2021 compared to $24.0 million in 2020, an increase of $5.7 million or 23.8%, primarily due to increased sub-advisor fees for two funds totaling $4.1 million and the one-time costs of implementing the system of $1.5 million.

Operating result

Operating income increased $17.8 million, or 17.9%, to $117.4 million for 2021
versus $99.7 million in 2020. This increase in 2021 as compared to 2020
primarily resulted from higher revenues of $41.4 million and a higher CEO
compensation waiver of $4.7 million. Operating margin was 39.0% for the year
ended December 31, 2021, versus 38.4% in the prior year.

Operating income before management fee was $123.0 million for the year ended of
2021, versus $105.0 million in the prior year. Operating margin before
management fee was 40.8% in 2021 versus 40.4 % in 2020. The reconciliation of
operating income before management fee and operating margin before management
fee, both of which are non-GAAP measures, to their respective generally accepted
accounting principles ("GAAP") measures is provided at the end of this section.

Non-operating income/(loss)

Total non-operating loss was $13.4 million for the year ended December 31, 2021,
compared to a loss of $15.9 million in 2020. This was comprised of net gain from
investments of $0.3 million in 2021 as compared to a net loss from investments
of $8.7 million in 2020; interest and dividend income of $0.6 million in 2021
versus $0.8 million in 2020; interest expense of $2.9 million in 2021 as
compared to $2.6 million in 2020; and shareholder-designated charitable
contributions of $11.3 million in 2021 and $5.4 million in 2020.


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The effective tax rate was 29.6% for the year ended December 31, 2021 compared to 29.9% for the year ended December 31, 2020.

Non-GAAP Information and Reconciliation

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 the Company as management fee
expense is based on pre-tax income before management fee expense, which includes
non-operating items including gain/(loss) from investments, net from our
proprietary investment portfolio, interest and dividend income, interest
expense, and shareholder-designated charitable contribution. We believe that an
investor would find this useful in analyzing our business operations without the
impact of the non-operating items such as trading and investment portfolios,
interest and dividend income, interest expense, or shareholder-designated
charitable contribution.

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

                                           2021          2020
Revenues, U.S. GAAP basis                $ 301,126     $ 259,726

Operating result, we GAAP basis 117,420 99,609 Add: management fees

             5,552         5,376

Operating profit before management fees $122,972 $104,985

Operating margin                              39.0 %        38.4 %

Operating margin before management fees 40.8% 40.4%

DEFERRED COMPENSATION

The Company deferred, through a DCCA, the cash compensation of the CEO relating
to all of 2016 ("2016 DCCA") to provide the Company with flexibility to pay down
debt and enhance our ability to execute lift-outs, make acquisitions, and seed
new products.

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

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

                                           Vesting                                       Impact of                       Vesting
             Number of      Original        Date      Vesting     Deferred Cash       Indexing to GBL                   Date Cash
               RSUs           VWAP          VWAP        Date     

Waiver payment during compensation actions 2016 DCCA 2,314,695 $32.8187 $18,8812 02/01/2020 $76.0 $

           (32.3 )   $     -     $      43.7



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

Thus, the evolution of the GBL share price of December 31, 2019 for January 2, 2020led to a $1.4 million decrease in compensation expense in 2020.

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The following tables present the impact of amortization and earnings per share (“EPS”), including indexation on the GBL share price, of the DCCA by quarter (in thousands, except per share data):

Amortization by quarter (increase / (decrease)):       EPS impact by quarter:
                           2020                                          2020
_Q1            $                     (1,409)           _Q1           $        0.04
_Q2                                        -           _Q2                       -
_Q3                                        -           _Q3                       -
_Q4                                        -           _Q4                       -
Year           $                     (1,409)           Year          $        0.04



The following tables (in thousands, except per share data) show a reconciliation
of our results for the years ended December 31, 2021 and 2020 between the U.S.
GAAP basis and a non-GAAP adjusted basis ("as adjusted") as if all of the 2016
DCCA was recognized in 2016 without regard to the vesting schedule. We believe
the non-GAAP financial measures below provide relevant and meaningful
information to investors about our core operating results. These measures have
been established in order to increase transparency for the purpose of evaluating
our core business, for comparing results with prior period results, and to
enable more appropriate comparisons with industry peers. However, non-GAAP
financial measures should not be considered a substitute for financial measures
calculated in accordance with U.S. GAAP and may be calculated differently by
other companies.


                                                Years Ended December 31,
                                                 2021               2020
Net income, U.S. GAAP basis                  $     73,199       $     58,693
Impact of 2016 DCCA on expenses and taxes:
Compensation costs                                      -             (1,409 )
Management fee expense                                  -                  -
Provision for income taxes                              -                338
Total impact of 2016 DCCA                               -             (1,071 )
Net income, as adjusted                      $     73,199       $     57,622

Per share (basic):
Net income, U.S. GAAP basis                  $       2.79       $       2.21
Impact of DCCAs                                         -              (0.04 )
Net income, as adjusted                      $       2.79       $       2.17
Per fully diluted share:
Net income, U.S. GAAP basis                  $       2.73       $       2.20
Impact of DCCAs                                         -              (0.04 )
Net income, as adjusted                      $       2.73       $       2.16

CASH AND CAPITAL RESOURCES

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


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Summary cash flow data for the years ended December 31, 2021 and 2020 was as
follows (in thousands):

                                             Years Ended December 31,
                                               2021              2020
Cash flows provided by (used in):
Operating activities                       $      96,131       $  40,734
Investing activities                              59,515         (63,511 )
Financing activities                             (46,946 )       (30,026 )
Increase (decrease) in cash and cash
equivalents                                      108,700         (52,803 )
Effect of exchange rates on cash and
cash equivalents                                       2              (8 )
Net increase (decrease) in cash and cash
equivalents                                      108,702         (52,811 )
Cash and cash equivalents at beginning
of year                                           33,325          86,136

Cash and cash equivalents at the end of the year $142,027 $33,325

Short-term investments in U.S. Treasury
Bills                                      $           -       $  64,988
Cash, cash equivalents, short-term
investments in U.S Treasury Bills,
 and investments in fixed maturity
securities                                 $     142,027       $  98,313



Cash and liquidity requirements have historically been met through cash
generated by operating income and our borrowing capacity. We filed a "shelf"
registration statement with the Securities and Exchange Commission ("SEC") that
was declared effective in April 2018. The shelf provides us opportunistic
flexibility to sell any combination of senior and subordinate debt securities,
convertible debt securities, equity securities (including common and preferred
stock), and other securities up to a total amount of $500 million. The shelf was
available through April 2021. On July 21, 2021, the Company filed a new "shelf"
registration statement on Form S-3 on similar terms, which was declared
effective on July 27, 2021.

On January 2, 2020, the 2016 DCCA vested in accordance with the terms of the
agreement and a cash payment in the amount of $43.7 million was made to the CEO.
On July 1, 2020, the Company announced that the CEO elected to irrevocably waive
all of his compensation that he would otherwise have been entitled to for the
period from July 1, 2020 to November 10, 2020. On June 30, 2021, the Company
announced that the CEO elected to irrevocably waive all of his compensation that
he would otherwise have been entitled to for the period from July 1, 2021 to
November 30, 2021. As a result of these waivers, there was $20.8 million and
$14.7 million of compensation and management fee waived by the CEO for the years
ended December 31, 2021 and 2020, respectively.

As of December 31, 2021, we had cash, cash equivalents, short-term investments
in U.S. Treasury Bills, and investments in fixed maturity securities of $142.0
million, an increase of $43.7 million from the prior year-end balance of $98.3
million primarily due to the Company's operating and investing activities,
partially offset by the Company's financing activities, described below. Total
debt outstanding at December 31, 2021 was $51.0 million, which consisted of the
Subordinated Notes. Total debt outstanding at December 31, 2020 was $24.2
million, which consisted of 5.875% senior notes due June 1, 2021.

Net cash provided by operating activities was $96.1 million in 2021, compared to $40.7 million from operating activities in 2020. Cash flow from operating activities consisted mainly of net income adjusted for certain non-cash items and changes in assets and liabilities.

Net cash provided by investing activities in 2021 was $59.5 million relating to
net maturities of U.S. Treasuries held for investment purposes, as compared to
$63.5 million used in 2020 relating to net purchases of U.S. Treasuries held for
investment purposes. As of December 31, 2021, we had total investments of $32.3
million, a decrease in total investments of $58.5 million from the prior
year-end balance of $90.8 million.

Net cash used in financing activities in 2021 was $46.9 million, including $24.2
million paid for the repurchase of 5.875% senior notes due June 1, 2021, $16.5
million paid for the purchase of treasury stock, $4.3 million paid in dividends,
$1.6 million paid for the repurchase of Subordinated Notes that were put back to
the Company, and $0.3 million paid on the principal portion of lease
liabilities, as compared to $30.0 million used in 2020.

The Company's principal contractual commitments include repayments of the
Subordinated Notes and payments of lease obligations. At December 31, 2021, we
had $51.0 million of Subordinated Notes due June 2023, which we expect to
satisfy with cash and cash equivalents. Under the terms of the lease of our Rye,
New York office, we are obligated to make minimum total payments of $7.8 million
through December 2028. We are obligated to make future payments under various
contracts such as debt agreements and finance and operating lease agreements of
$7.8 million and $3.8 million, respectively. We also had a net liability for
unrecognized tax benefits related to uncertain tax positions of $20.2 million,
including penalties and interest related to tax uncertainties in income taxes of
approximately $9.5 million, some or all of which could result in future cash
payments to various taxing authorities. At this time, we are unable to estimate
the timing and amount of any future cash outflows related to these uncertain tax
positions. As such amounts above, both individually and in the aggregate, can be
satisfied with cash on hand and investments, we do not believe they represent a
material liquidity risk to the company. We do not invest in any other
off-balance sheet vehicles that provide financing, liquidity, market, or credit
risk support or engage in any leasing activities that expose us to any liability
that is not reflected on the consolidated financial statements.


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We have one broker-dealer subsidiary, G.distributors, which is subject to
certain net capital requirements. G.distributors computes its net capital under
the alternative method permitted, which requires minimum net capital of the
greater of $250,000 or 2% of the aggregate debit items in the reserve formula
for those broker-dealers subject to Rule 15c3-3 promulgated under the Securities
Exchange Act of 1934, as amended. The requirement was $250,000 for the
broker-dealer at December 31, 2021 and 2020. At December 31, 2021 and 2020,
G.distributors had net capital, as defined in the Rule, of approximately $1.9
million and $1.4 million, respectively, exceeding the regulatory requirement by
approximately $1.6 million and $1.1 million, respectively. Net capital
requirements for our affiliated broker-dealer may increase in accordance with
the rules and regulations applicable to broker-dealers to the extent
G.distributors engages in other business activities.

Our subsidiary, GAMCO Asset Management (UK) Limited, is authorized and regulated
by the Financial Conduct Authority ("FCA"). At December 31, 2021 and 2020, GAMCO
Asset Management (UK) Limited held total capital of £746 thousand and £708
thousand ($1.0 million and $961 thousand), respectively, and had a Financial
Resources Requirement of £310 thousand and £195 thousand ($419 thousand and $265
thousand), respectively. We have consistently met or exceeded these minimum
requirements.

CRITICAL ACCOUNTING METHODS

The preparation of the consolidated financial statements in conformity with U.S.
GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent assets
and liabilities at the dates of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting periods
presented. We base our estimates on historical experience, when available, and
on other various assumptions that are believed to be reasonable under the
circumstances. Actual results could differ significantly from those estimates.

Critical accounting policies should be read in conjunction with our “Risk Factors” in Part I, Section 1A of this Form 10-K.

Main revenue-generating services and revenue recognition

The Company’s revenues are primarily derived from investment advisory fees and incentive and distribution fees.

Investment advisory and incentive fees are directly influenced by the level and
mix of AUM, as fees are derived from a contractually-determined percentage of
AUM for each account as well as incentive fees earned on certain accounts.
Advisory fees from the Funds and sub-advisory accounts are computed daily or
weekly based on average net assets and amounts receivable are included in
investment advisory fees receivable on the consolidated statements of financial
condition. Advisory fees from Institutional and PWM accounts are generally
computed quarterly based on account values as of the end of the preceding
quarter, and amounts receivable are included in investment advisory fees
receivable on the consolidated statements of financial condition. The Company
derived approximately 90% of its total revenues from advisory fees, including
incentive fees, for the years ended December 31, 2021 and 2020. These revenues
vary depending upon the level of sales compared with redemptions, financial
market conditions, performance, and the fee structure for AUM. Revenues derived
from the equity-oriented portfolios generally have higher advisory fee rates
than fixed income portfolios.

For The GDL Fund, there is an incentive fee earned as of the end of the calendar
year which varies to the extent the total return of the fund is in excess of the
ICE Bank of America Merrill Lynch 3 Month U.S. Treasury Bill Index total return.
This fee is recognized at the end of the measurement period, which is annually
on a calendar year basis. Receivables due on incentive fees relating to The GDL
Fund are included in investment advisory fees receivable on the consolidated
statements of financial condition and were $1.1 million and $0.1 million as of
December 31, 2021 and 2020, respectively.

For the Gabelli Merger Plus+ Trust Plc, there is an incentive fee which is
earned and recognized at the end of the measurement period, June 30th and varies
to the extent the total return of the fund is in excess of twice the rate of
return of the 13 week Treasury Bills over the performance period. There were no
incentive fees receivable as of December 31, 2021 or 2020.

Advisory fees on certain of the closed-end preferred shares are earned at
year-end if the total return to common shareholders of the closed-end fund for
the calendar year exceeds the dividend rate of the preferred shares. These fees
are recognized at the end of the measurement period, which is annually, or
earlier if there is a redemption. Receivables due for advisory fees on
closed-end preferred shares are included in investment advisory fees receivable
on the consolidated statements of financial condition. There were $1.5 million
and $2.5 million in advisory fees receivable on the closed-end preferred shares
as of December 31, 2021 and 2020, respectively.

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For the GAMCO Merger Arbitrage SICAV, there is an incentive fee earned as of the
end of the calendar year when the total return of a share class exceeds the
hurdle rate (return on the 13-week UST) and the NAV exceeds the high water mark,
at the rate of fifteen percent of the total return of share classes not
denominated in the base currency and at the rate of twenty percent of the total
return of share classes denominated in the base currency. This fee is recognized
at the end of the measurement period, which is annually on a calendar year
basis, or earlier if there is a redemption. Receivables due on incentive fees
relating to the GAMCO Merger Arbitrage SICAV are included in investment advisory
fees receivable on the consolidated statements of financial condition and were
$6.4 million and $5.6 million as of December 31, 2021 and 2020, respectively.

Distribution fees revenues are derived primarily from the distribution of
Gabelli and GAMCO open-end Funds as well as the affiliated TETON Westwood and
Keeley open-end funds advised by either a subsidiary of GBL (Gabelli Funds), a
subsidiary of GGCP, Inc. (Teton), or a subsidiary of Teton (Keeley-Teton
Advisors, Inc.). G.distributors distributes the open-end Funds pursuant to
distribution agreements with each Fund. Under each distribution agreement with
an open-end Fund, G.distributors offers and sells such open-end Fund shares on a
continuous basis and pays all of the costs of marketing and selling the shares,
including printing and mailing prospectuses and sales literature, advertising
and maintaining sales and customer service teammates and sales and services
fulfillment systems, and payments to the sponsors of third party distribution
programs, financial intermediaries, and G.distributors' sales teammates.
G.distributors receives fees for such services pursuant to distribution plans
adopted under provisions of Rule 12b-1 of the Company Act. G.distributors is the
principal underwriter for funds distributed in multiple classes of shares which
carry front-end or back-end sales charge or no-load to certain investors.

Under the distribution plans, the Class AAA shares of the open-end Funds (except
The Gabelli U.S. Treasury Money Market Fund, Gabelli Capital Asset Fund, and The
Gabelli ABC Fund) and the Class A and ADV shares of certain Funds pay
G.distributors a distribution fee of 0.25% per year on the average daily net
assets of the Fund. Class C shares have a 12b-1 distribution plan with a
distribution fee totaling 1.00%.

Distribution fees for open-ended funds are calculated daily on the basis of average net assets. Amounts receivable for distribution commissions are included in accounts receivable from affiliates in the consolidated statements of financial position.

Note 2 to the consolidated financial statements includes additional information on the Company’s revenue recognition policy.

Investments in securities

Equity securities held are recognized at fair value on the statements of financial position, with any unrealized gain or loss recognized in profit for the current period in gain/(loss) on investments, net in the statements. consolidated results, in accordance with we GAAP.

Management determines the appropriate classification of debt securities at the
time of purchase. Government debt with maturities of greater than three months
at the time of purchase are considered investments in debt securities.
Investments in debt securities are accounted for as either trading, available
for sale ("AFS"), or held-to-maturity. The Company does not hold any investments
in debt securities accounted for as trading or AFS. The Company's investments in
debt securities are classified as held-to-maturity, as the Company has the
intent and ability to hold these securities until maturity, and represent fixed
income securities recorded at amortized cost. Discounts from and premiums to par
value on held-to-maturity investments are accreted/amortized into interest
income over the life of the respective security using the effective interest
method. The amortized cost of debt investments represents the original cost
adjusted for the accretion of discounts and amortization of premiums, if any.
Held-to-maturity securities are evaluated for other than temporary impairment
each reporting period and any impairment charges are recorded in gain/(loss)
from investments, net on the consolidated statements of income. As of December
31, 2021 and 2020, there were no impairments on the Company's investments in
debt securities classified as held-to-maturity.

Securities transactions and any related gains and losses are recorded on a trade
date basis. Realized gains and losses from equity and debt securities
transactions are recorded on the specific identified cost basis and are included
in gain/(loss) from investments, net on the consolidated statements of income.

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Income taxes

We operate in numerous states and countries through our subsidiaries and
therefore must allocate our income, expenses, and earnings to these taxing
jurisdictions taking into account the various laws and regulations in each
jurisdiction. Each year, we file tax returns in each jurisdiction and settle our
tax liabilities, which may be subject to audit by the taxing authorities.
Deferred tax assets and liabilities are recorded for temporary differences
between the tax basis of assets and liabilities and the reported amounts on the
consolidated financial statements using the statutory tax rates in effect for
the year when the reported amount of the asset or liability is recovered or
settled, respectively. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in the results of operations in the period
that includes the enactment date. A valuation allowance is recorded to reduce
the carrying values of deferred tax assets to the amount that is more likely
than not to be realized. The calculation of our tax liabilities involves dealing
with uncertainties in the application of complex tax laws and regulations in
several jurisdictions. In accordance with Accounting Standards Codification
("ASC") Topic 740, Income Taxes ("ASC 740"), a tax benefit from an uncertain tax
position may be recognized when it is more likely than not that the position
will be sustained upon examination, including resolutions of any related appeals
or litigation processes, on the basis of the technical merits. We record a
liability for unrecognized tax benefits in accordance with ASC 740 and adjust
these liabilities when our judgment changes as a result of the evaluation of new
information not previously available. Because of the complexity of some of these
uncertainties, the ultimate resolution may differ from our current estimate of
the liabilities for unrecognized tax benefits. These differences are reflected
as increases or decreases in income tax expense in the period in which new
information becomes available. The Company recognizes the accrual of interest on
uncertain tax positions and penalties in income tax provision on the
consolidated statements of income.

Seasonality and inflation

We do not believe our operations are subject to significant seasonal
fluctuations. We do not believe inflation will significantly affect our
compensation costs, as they are substantially variable in nature. However, the
rate of inflation may affect our expenses, such as information technology and
occupancy costs. To the extent inflation results in rising interest rates and
has other effects upon the securities markets, it may adversely affect our
financial condition and results of operations by reducing our AUM, revenues, or
otherwise.

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