-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QbE1r9e2ApvP37/qxUeUh/HgQCgxgnLoUFlhSMuD1DRndoHeqfUNTC3DvKYNE6jd uPMdfDNofKwntAfxFObAng== 0000950117-05-003291.txt : 20050815 0000950117-05-003291.hdr.sgml : 20050815 20050815162939 ACCESSION NUMBER: 0000950117-05-003291 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20050630 FILED AS OF DATE: 20050815 DATE AS OF CHANGE: 20050815 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COHEN & STEERS INC CENTRAL INDEX KEY: 0001284812 IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-32236 FILM NUMBER: 051027080 BUSINESS ADDRESS: STREET 1: 757 THIRD AVENUE 20TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 212 832 3232 10-Q 1 a40346.htm COHEN & STEERS, INC.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)
S	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2005

OR

£	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________ TO _________

Commission File Number: 001-32236

COHEN & STEERS, INC.
(Exact name of Registrant as specified in its charter)


	Delaware	14-1904657
	(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)


	757 Third Avenue New York, NY (Address of principal executive offices)	10017 (Zip Code)

(212) 832-3232
(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes S No £

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act.) Yes £ No S

The number of shares of the Registrant’s common stock, par value $0.01 per share, outstanding as of August 12, 2005 was 35,407,029.

COHEN & STEERS, INC. AND SUBSIDIARIES
Form 10-Q
Index

			Page
Part I.	Financial Information
Item 1.	Financial Statements
		Condensed Consolidated Statements of Financial Condition as of June 30, 2005 (Unaudited) and December 31, 2004	2
		Condensed Consolidated Statements of Income (Unaudited) For The Three and Six Months Ended June 30, 2005 and 2004	3
		Condensed Consolidated Statement of Changes in Stockholders’ Equity (Unaudited) For The Three Months Ended March 31, 2005 and June 30, 2005	4
		Condensed Consolidated Statements of Cash Flows (Unaudited) For The Six Months Ended June 30, 2005 and 2004	5
		Notes to Condensed Consolidated Financial Statements (Unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		28
Item 4.	Controls and Procedures		29
Part II.	Other Information
Item 6.	Exhibits		30
Signature			31

Forward-Looking Statements

This report and other documents filed by us contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which reflect our current views with respect to, among other things, our operations and financial performance. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative versions of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties.

Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. We believe that these factors include, but are not limited to, those described in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2004, which is accessible on the Securities and Exchange Commission’s website at http://www.sec.gov and on our website at cohenandsteers.com. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this report. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

Part I – Financial Information
Item 1. Financial Statements

COHEN & STEERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except share data)

	June 30, 2005			December 31, 2004

	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	26,649		$	30,164
Marketable securities available-for-sale		90,302			69,935
Accounts receivable:
Company-sponsored mutual funds		9,814			8,498
Other		4,661			4,654
Due from company-sponsored mutual funds		375			386
Income tax refunds receivable		200			380
Prepaid expenses and other current assets		1,146			2,119

Total current assets		133,147			116,136

Property and equipment-net		3,085			2,638

Intangible asset-net		11,472			13,693

Other assets:
Deferred commissions-net		5,019			5,716
Investments, company-sponsored mutual funds		—			100
Equity investment		4,321			3,961
Deferred income tax asset		19,933			18,003
Deposits		1,611			43

Total other assets		30,884			27,823

Total assets	$	178,588		$	160,290

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accrued expenses and compensation	$	16,650		$	7,328
Dividends payable		3,984			3,983
Current portion of long-term debt		129			115
Current portion of obligations under capital leases		56			20
Deferred income tax liability		855			1,301
Income taxes payable		321			—
Other current liabilities		92			254

Total current liabilities		22,087			13,001

Long-term liabilities:
Long-term debt		1,486			1,558
Deferred rent less current maturities		708			66
Obligations under capital leases less current maturities		85			30

Total long-term liabilities		2,279			1,654

Stockholders’ equity:
Common stock, $0.01 par value; 500,000,000 shares authorized; 35,407,029 shares issued and outstanding at June 30, 2005 and 35,388,736 shares issued and outstanding at December 31, 2004		354			354
Additional paid-in capital		179,756			178,594
Accumulated deficit		(13,956	)		(21,557	)
Unearned compensation		(13,126	)		(13,546	)
Accumulated other comprehensive income, net of tax		1,194			1,790

Total stockholders’ equity		154,222			145,635

Total liabilities and stockholders’ equity	$	178,588		$	160,290

See notes to condensed consolidated financial statements

COHEN & STEERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in thousands, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,

	2005			2004			2005			2004

Revenue:
Investment advisory and administration fees	$	29,010		$	22,174		$	56,330		$	41,903
Distribution and service fee revenue		2,950			2,284			5,819			4,692
Portfolio consulting and other		766			915			1,795			1,624
Investment banking fees		5,542			255			8,431			4,718

Total revenue		38,268			25,628			72,375			52,937

Expenses:
Employee compensation and benefits		9,150			6,843			17,809			15,823
Distribution and service fee expenses		7,363			4,935			14,023			9,130
General and administrative		5,802			3,370			11,205			6,127
Depreciation and amortization		1,389			284			2,764			565
Amortization of deferred commissions		810			1,233			1,799			2,290

Total expenses		24,514			16,665			47,600			33,935

Operating income		13,754			8,963			24,775			19,002

Non-operating income (expense):
Interest and dividend income		804			112			1,355			213
Gain from sale of marketable securities		642			—			1,149			—
Foreign currency transaction loss		(10	)		—			(31	)		—
Interest expense		(26	)		(39	)		(48	)		(81	)

Total non-operating income		1,410			73			2,425			132

Income before provision for income taxes and equity in earnings of affiliate		15,164			9,036			27,200			19,134
Provision for income taxes		6,901			436			12,024			1,203
Equity in earnings of affiliate		246			—			398			—

Net income	$	8,509		$	8,600		$	15,574		$	17,931

Earnings per share:
Basic	$	0.21		$	0.32		$	0.39		$	0.67

Diluted	$	0.21		$	0.32		$	0.39		$	0.67

Weighted average shares outstanding:
Basic		39,986			26,700			40,009			26,700

Diluted		40,293			26,700			40,301			26,700

See notes to condensed consolidated financial statements

COHEN & STEERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (Unaudited)
(in thousands)

	For The Three Months Ended March 31, 2005 and June 30, 2005

	Common Stock		Additional Paid-In Capital			Accumulated Deficit			Unearned Compensation			Accumulated Other Comprehensive Income, Net			Total

Beginning balance, January 1, 2005	$	354	$	178,594		$	(21,557	)	$	(13,546	)	$	1,790		$	145,635
Dividends		—		—			(3,990	)		—			—			(3,990	)
Issuance of restricted stock units		—		649			—			—			—			649
Amortization of unearned compensation		—		—			—			1,102			—			1,102
Forfeitures of restricted stock awards		—		(123	)		—			(53	)		—			(176	)
Net income		—		—			7,065			—			—			7,065
Other comprehensive loss, net of taxes		—		—			—			—			(782	)		(782	)

Ending balance, March 31, 2005		354		179,120			(18,482	)		(12,497	)		1,008			149,503
Dividends		—		—			(3,983	)		—			—			(3,983	)
Issuance of common stock		—		319			—			—			—			319
Issuance of restricted stock units		—		1,611			—			(2,150	)		—			(539	)
Amortization of unearned compensation		—		—			—			1,045			—			1,045
Forfeitures of restricted stock awards		—		(1,294	)		—			476			—			(818	)
Net income		—		—			8,509			—			—			8,509
Other comprehensive income, net of taxes		—		—			—			—			186			186

Ending balance, June 30, 2005	$	354	$	179,756		$	(13,956	)	$	(13,126	)	$	1,194		$	154,222

See notes to condensed consolidated financial statements

COHEN & STEERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in thousands)

	Six Months Ended June 30,

	2005			2004

Cash flows from operating activities:
Net income	$	15,574		$	17,931
Adjustments to reconcile net income to net cash provided by operating activities:
Stock compensation expense		2,748			—
Amortization, deferred commissions		1,799			2,291
Depreciation and amortization		2,764			565
Amortization, bond discount - net		(88	)		—
Deferred rent		647			(15	)
Gain on sale of marketable securities		(1,149	)		—
Equity in earnings of affiliate		(360	)		—
Deferred income taxes		(1,930	)		(111	)
Foreign currency transaction loss		31			—
Changes in operating assets and liabilities:
Accounts receivable, company-sponsored mutual funds		(1,316	)		(1,659	)
Accounts receivable, others		(38	)		37
Due (from) to company-sponsored mutual funds		(155	)		200
Income tax refunds receivable		180			43
Prepaid expenses and other current assets		117			138
Deferred commissions - net		(1,067	)		(1,858	)
Deposits		(1,568	)		—
Accrued expenses and compensation		7,630			8,311
Income taxes payable		1,142			(589	)

Net cash provided by operating activities		24,961			25,284

Cash flows from investing activities:
Purchases of marketable securities available-for-sale		(38,675	)		(1,277	)
Proceeds from maturities of marketable securities available-for-sale		15,470			—
Proceeds from sale of marketable securities available-for-sale		3,173			—
Purchases of property and equipment		(598	)		(252	)

Net cash used in investing activities		(20,630	)		(1,529	)

Cash flows from financing activities:
Distributions to S-corporation shareholders		—			(17,000	)
Dividends to stockholders		(7,973	)		—
Repayment of bank line of credit		—			(441	)
Payment of capital lease obligations		(19	)		(9	)
Principal payments on long-term debt		(58	)		(23	)
Offering costs		—			(1,984	)
Issuance of common stock		243			—

Cash used in financing activities		(7,807	)		(19,457	)

Net increase (decrease) in cash and cash equivalents		(3,476	)		4,298
Effect of foreign currency translation		(39	)		—

Cash and cash equivalents, beginning of period		30,164			7,526

Cash and cash equivalents, end of period	$	26,649		$	11,824

Supplementary disclosure of cash flow information:
Cash paid for interest	$	55		$	86

Cash paid for taxes, net	$	12,808		$	1,903


Non-cash transactions:
Acquisition of property and equipment under capital leases	$	110		$	—

See notes to condensed consolidated financial statements

COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. Organization and Description of Business

Cohen & Steers, Inc. (“CNS”) completed the initial public offering of its common stock on August 18, 2004. On August 17, 2004, prior to the completion of the initial public offering and pursuant to a reorganization into a holding company structure, CNS became the parent holding company of Cohen & Steers Capital Management, Inc. (“CSCM”). CNS, together with its direct and indirect subsidiaries, succeeded to the business conducted by CSCM and its subsidiaries. The reorganization is described in greater detail in the Registration Statement on Form S-1 (File No. 333-114027) (the “Registration Statement”) filed with the Securities and Exchange Commission (the “SEC”) in connection with the initial public offering. On August 16, 2004, the Company terminated its status as an S-corporation under Subchapter S of the Internal Revenue Code and converted to a C-corporation. The three and six months ended June 30, 2004 represent operations as a private company and include results that are not necessarily comparable with the results of operations as a public company in the three and six months ended June 30, 2005.

The unaudited condensed consolidated financial statements include the accounts of CNS and its direct and indirect subsidiaries, which include CSCM, Cohen & Steers Securities, LLC (“Securities, LLC”), Cohen & Steers Capital Advisors, LLC (“Advisors, LLC”) and Cohen & Steers Holdings, LLC (collectively, the “Company”). Material intercompany transactions and balances have been eliminated in consolidation.

The Company is a registered investment advisor providing investment management services to individual and institutional investors through a wide range of open-end mutual funds, closed-end mutual funds and institutional separate accounts. As a registered investment advisor, the Company manages high-income equity portfolios, specializing in real estate investment trusts, global real estate securities, preferred securities, utilities, value equity securities and other high-dividend paying common stocks. Through its registered broker-dealers, Securities, LLC and Advisors, LLC, the Company provides distribution services for certain of its funds as well as investment banking services to companies in real estate and real estate intensive businesses. On January 27, 2005, the National Association of Securities Dealers (“NASD”) approved the expansion of Advisors, LLC’s underwriting business to include firm commitment underwriting.

2. Basis of Presentation and Significant Accounting Policies

The unaudited condensed consolidated financial statements of the Company included herein have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the interim results have been made. The preparation of the unaudited condensed consolidated financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

The Company’s unaudited condensed consolidated financial statements and the related notes should be read together with the consolidated financial statements and the related notes

included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2004 and the unaudited condensed consolidated financial statements and the related notes included in the Company’s Form 10-Q for the period ended March 31, 2005. Certain prior period amounts have been reclassified to conform to the three and six months ended June 30, 2005 presentation.

Cash Equivalents—Cash equivalents consist of short-term, highly liquid investments, which are readily convertible into cash and have original maturities of three months or less.

Investments—The management of the Company determines the appropriate classification of its investments at the time of purchase and re-evaluates such determination at each statement of financial condition date. Marketable securities classified as available-for-sale consist of investments in Company-sponsored open-end and closed-end mutual funds as well as highly rated debt and preferred instruments. These investments are carried at fair value based on quoted market prices, with unrealized gains and losses, net of tax, reported in accumulated other comprehensive income.

Deferred Commissions—Deferred commissions consist of commissions paid in advance to broker-dealers in connection with the sale of certain shares of Company-sponsored open-end load mutual funds and are capitalized and amortized over a period not to exceed six years.

Investment Advisory and Administration Fees—The Company earns the majority of its revenue by providing asset management services to Company-sponsored open-end and closed-end mutual funds and to institutional separate accounts. This revenue is earned pursuant to the terms of the underlying advisory contract, and is based on a contractual investment advisory fee applied to the assets in the respective portfolios. The Company also earns revenue from administration fees paid by certain Company-sponsored open-end and closed-end mutual funds, based on the average daily net assets of such funds. This revenue is recognized as such fees are earned.

Distribution and Service Fee Revenue—Distribution and service fee revenue is recognized as the services are performed, generally based on contractually-predetermined percentages of the average daily net assets of the open-end load funds. Distribution and service fee revenue is recorded gross of any third-party distribution and service arrangements; the expenses associated with these third-party distribution and service arrangements are recorded in distribution and service fee expenses.

Portfolio Consulting Fees—The Company earns revenue for various portfolio consulting services provided to clients, as well as for providing a license to use its name. This revenue is recognized pursuant to the terms of individual agreements and is based on the net assets of the clients’ funds.

New Accounting Pronouncements—In March 2005, a Financial Accounting Standards Board (“FASB”) Staff Position was issued addressing the application of Emerging Issues Task Force (“EITF”) Issue No. 85-24 (“FSP EITF 85-24-1”), “Distribution Fees by Distributors of Mutual Funds That Do Not Have a Front-End Sales Charge,” when cash for the right to future distribution fees for shares previously sold is received from third parties. FSP EITF 85-24-1 did not materially impact the Company’s unaudited condensed consolidated financial position or results of operations.

In December 2004, the FASB issued the revised Statement of Financial Accounting Standards No. 123, (“SFAS No. 123 (R)”), which requires public companies to recognize the

cost resulting from all share-based transactions in their financial statements. SFAS No. 123 (R) eliminates the ability to account for share-based compensation using the intrinsic value method under Accounting Principles Board Opinion (“APB”) 25. The adoption of SFAS No. 123 (R) did not materially impact the Company’s unaudited condensed consolidated financial position or results of operations.

In September 2004, EITF reached a consensus on Issue 04-10, “Determining Whether to Aggregate Operating Segments That Do Not Meet the Quantitative Thresholds.” This EITF requires that individual operating segments that do not meet the quantitative thresholds set forth in SFAS No. 131, “Disclosure about Segments of an Enterprise and Related Information,” for separate reporting may be aggregated only if the segments meet certain requirements. These requirements are applicable for fiscal years ending after September 15, 2005. The adoption of EITF 04-10 will not materially impact the Company’s identified segments.

3. Intangible Asset

The intangible asset, which expires in January 2008, reflects the independently determined value of the non-competition agreements that the Company received from certain employees who received fully vested restricted stock units (“RSUs”) at the time of CNS’s initial public offering in exchange for terminated stock appreciation rights granted to such holders prior to CNS’s initial public offering. The intangible asset, with an original value of $15,400,000, is being amortized on a straight-line basis over the life of these agreements. The following table details the gross carrying amounts and accumulated amortization for the intangible asset at June 30, 2005 and December 31, 2004 (in thousands):

	June 30, 2005			December 31, 2004

Gross carrying amount	$	15,400		$	15,400
Accumulated amortization		(3,928	)		(1,707	)

Intangible asset, net	$	11,472		$	13,693

Amortization expense of the intangible asset was approximately $1,110,000 and $2,221,000 in the three and six months ended June 30, 2005, respectively. Estimated amortization expense from July 1, 2005 through January 31, 2008, the date of expiration, is as follows (in thousands):

Years Ended December 31,	Estimated Amortization Expense

2005	$	2,220
2006		4,441
2007		4,441
2008		370

4. Investments

Marketable Securities

The following is a summary of the cost and fair value of investments in marketable securities at June 30, 2005 and December 31, 2004 (in thousands):

	June 30, 2005 Gross Unrealized									December 31, 2004 Gross Unrealized

	Cost		Gains		Losses			Market Value		Cost		Gains		Losses			Market Value

Debt securities (1):
Maturity Less than 1 year	$	29,928	$	—	$	(152	)	$	29,776	$	27,451	$	—	$	(65	)	$	27,386
Maturity Between 1yr - 5 yrs		25,922		—		(97	)		25,825		19,990		—		(150	)		19,840
Preferred securities		19,997		—		(104	)		19,893		13,000		72		—			13,072
Company-sponsored mutual funds		12,365		2,443		—			14,808		6,403		3,235		(1	)		9,637

Total investments, available for sale	$	88,212	$	2,443	$	(353	)	$	90,302	$	66,844	$	3,307	$	(216	)	$	69,935

(1) Debt securities consist of U.S. Treasury and U.S. Government agency securities.

In the three months ended June 30, 2005, sales proceeds and gross realized gains from Company-sponsored mutual funds were approximately $1,651,000 and $642,000, respectively. In the six months ended June 30, 2005, sales proceeds and gross realized gains from Company-sponsored mutual funds were approximately $3,173,000 and $1,149,000, respectively. There was no sales activity in the three and six months ended June 30, 2004. Dividend income from Company-sponsored mutual funds was approximately $159,000 and $77,000, in the three months ended June 30, 2005 and 2004, respectively and approximately $203,000 and $177,000 in the six months ended June 30, 2005 and 2004, respectively.

Equity Investment

At June 30, 2005, the Company had a non-controlling 50% investment of approximately $4,321,000 in Houlihan Rovers, S.A. (“Houlihan Rovers”), the Company’s Brussels-based investment advisor affiliate. The Company accounts for its investment in Houlihan Rovers using the equity method of accounting. Under such accounting method, the investor recognizes its respective share of the investee’s net income for the period. In the three and six months ended June 30, 2005, the Company recognized approximately $246,000 and $398,000, respectively, of income from Houlihan Rovers.

5. Earnings Per Share

Basic earnings per share are calculated by dividing net income by the weighted average shares outstanding. Diluted earnings per share are calculated by dividing net income by the total weighted average shares of common stock outstanding and common stock equivalents. Common stock equivalents are comprised of dilutive potential shares from restricted stock unit awards. Common stock equivalents are excluded from the computation if their effect is anti-dilutive. Diluted earnings per share are computed using the treasury stock method.

The following is a reconciliation of the income and share data used in the basic and diluted earnings per share computations in the three and six months ended June 30, 2005 and 2004 (in thousands, except per share data):

	Three Months Ended June 30,				Six Months Ended June 30,

	2005		2004		2005		2004


Net income	$	8,509	$	8,600	$	15,574	$	17,931

Basic weighted average shares outstanding		39,986		26,700		40,009		26,700
Dilutive potential shares from restricted stock awards		307		—		292		—

Dilutive weighted average shares outstanding		40,293		26,700		40,301		26,700

Basic earnings per share	$	0.21	$	0.32	$	0.39	$	0.67

Diluted earnings per share	$	0.21	$	0.32	$	0.39	$	0.67

6. Income Taxes

On August 16, 2004, the Company terminated its status as an S-corporation and converted to a C-corporation. For all periods prior to such date, the Company operated as an S-corporation and was not subject to U.S. Federal and certain state income taxes. The Company’s historical income tax expense consisted of New York State and New York City income taxes. As a C-corporation, the Company is liable for U.S. Federal and certain state and local income taxes to which it had not been previously subject.

The Company accounts for taxes in accordance with the guidance set forth in Statement of Financial Accounting Standards (“SFAS”) No. 109, “Accounting For Income Taxes.” In accordance with SFAS No. 109, recognition of tax benefits or expenses is required for temporary differences between the book and tax bases of assets and liabilities.

Deferred income taxes represent the tax effects of the temporary differences between book and tax bases and are measured using the tax rates expected during the periods in which the differences are expected to reverse. The provision for income taxes for the three and six months ended June 30, 2005, includes U.S. Federal, state and local taxes at a 44.8% and 43.6% effective tax rate, respectively. Included in the tax provision is an adjustment to the net deferred tax asset resulting from a recent change in the New York State tax law. The deferred tax asset is attributable to a benefit derived from vested restricted stock units granted at the time of the Company's initial public offering. Before adjusting for the deferred tax rate change and including the effect of a higher percentage of investment income, the effective tax rate was 41% for the three and six months ended June 30, 2005.

7. Comprehensive Income

Total comprehensive income includes net income and other comprehensive income, net of tax. The components of comprehensive income in the three months and six months ended June 30, 2005 and 2004 are as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,

	2005			2004			2005			2004


Net income	$	8,509		$	8,600		$	15,574		$	17,931
Foreign currency translation adjustment		—			—			(39	)		—
Net unrealized gain (loss) on available-for-sale securities, net of tax		(198	)		(476	)		(1,235	)		103
Reclassification of realized gain on available-for-sale securities, net of tax		384			—			678			—

Total comprehensive income	$	8,695		$	8,124		$	14,978		$	18,034

8. Regulatory Requirements

Securities, LLC and Advisors, LLC, as registered broker-dealers and member firms of the NASD, are subject to the SEC’s Uniform Net Capital Rule 15c3-1 (the “Net Capital Rule”), which requires that broker-dealers maintain a minimum level of net capital, as defined. At June 30, 2005, Securities, LLC and Advisors, LLC had net capital of approximately $2,100,000 and $7,200,000, respectively, which exceeded their requirements by approximately $1,900,000 and $6,900,000 respectively.

The Net Capital Rule also provides that equity capital may not be withdrawn or cash dividends paid if the resulting net capital of a broker-dealer is less than the amount required under the Net Capital Rule.

Securities, LLC and Advisors, LLC do not carry customer accounts and are exempt from the SEC’s Rule 15c3-3 pursuant to provisions (k)(2)(i) and (k)(2)(ii) of such rule.

9. Related Party Transactions

The Company is an investment advisor to, and has administrative agreements with, affiliated open-end and closed-end mutual funds for which certain employees are officers and/or directors. In the three months ended June 30, 2005 and 2004, the Company earned advisory and administrative fee revenue of approximately $25,179,000 and $19,313,000, respectively, from these affiliated funds. In the six months ended June 30, 2005 and 2004, the Company earned advisory and administrative fee revenue of approximately $48,979,000 and $36,413,000, respectively, from these affiliated funds. In the three months ended June 30, 2005 and 2004, distribution and service fee revenue from such funds aggregated approximately $2,950,000 and $2,285,000, respectively. In the six months ended June 30, 2005 and 2004, distribution and service fee revenue from such funds aggregated approximately $5,850,000 and $4,685,000, respectively.

The Company has investment advisory agreements with certain affiliated closed-end mutual funds which contractually require the waiver of a portion of the advisory fees it is otherwise entitled to receive. These fee waivers, which can last for up to ten years from the respective funds’ inception date, are scheduled to decrease for certain funds beginning in 2006. In the three months ended June 30, 2005 and 2004, the Company waived advisory fees of approximately $4,241,000 and $3,418,000, respectively. In the six months ended June 30, 2005 and 2004, approximately $8,441,000 and $6,018,000 of advisory fees were waived by the Company, respectively.

The Company incurs expenses associated with the launch of its open and closed-end mutual funds. These organizational costs, which are included in general and administrative expenses,

totaled approximately $369,000 and $500,000 in the three months ended June 30, 2005 and 2004 and $2,169,000 and $500,000 in the six months ended June 30, 2005 and 2004, respectively.

The Company has an agreement with an affiliated open-end mutual fund, which contractually requires the Company to pay expenses of the fund so that its total annual operating expenses do not exceed 0.75% of average daily net assets. This commitment will remain in place for the fund’s life. In the three months ended June 30, 2005 and 2004, expenses of approximately $200,000 and $100,000, respectively, were incurred by the Company pursuant to this agreement and are included in general and administrative expenses. In the six months ended June 30, 2005 and 2004, expenses of approximately $500,000 and $400,000, respectively, were incurred.

The Company has agreements with four other affiliated open-end mutual funds to waive and/or reimburse certain fund expenses. These commitments will remain in place through December 31, 2005. In the three months ended June 30, 2005 and 2004, expenses of approximately $300,000 and $100,000, respectively, were incurred by the Company pursuant to these agreements are included in general and administrative expenses. In the six months ended June 30, 2005 and 2004, expenses of approximately $400,000 and $100,000, respectively, were incurred.

General and administrative expenses include $117,000 of sub-advisory fees paid to Houlihan Rovers in the three and six months ended June 30, 2005.

See Note 4 relating to additional investments in Company-sponsored mutual funds.

10. Segment Reporting

Statement of Financial Accounting Standards (“SFAS”) No. 131, Disclosures about Segments of an Enterprise and Related Information, establishes disclosure requirements relating to operating segments in financial statements. The Company operates in two business segments: Asset Management and Investment Banking. The Company’s reporting segments are strategic divisions that offer different services and are managed separately, as each division requires different resources and marketing strategies.

The Company does not record revenue between segments (referred to as inter-segment revenue).

The Company evaluates performance of its segments based on profit or loss from operations before taxes. Information on the unaudited condensed consolidated statement of financial condition data by segment is not disclosed because it is not used in evaluating segment performance and deciding how to allocate resources to segments.

Summarized financial information for the Company’s reportable segments is presented in the following tables (in thousands):

Statement of Income Segment Data

	Three Months Ended

	June 30, 2005			June 30, 2004

Asset Management
Total revenue	$	32,726		$	25,373
Total expenses		(21,434	)		(15,920	)
Net non-operating income, including equity in earnings of affiliate		1,599			64

Income before provision for income taxes	$	12,891		$	9,517

Investment Banking
Total revenue	$	5,542		$	255
Total expenses		(3,080	)		(745	)
Net non-operating income		57			9

Income (loss) before provision for income taxes	$	2,519		$	(481	)

Total
Total revenue	$	38,268		$	25,628
Total expenses		(24,514	)		(16,665	)
Net non-operating income, including equity in earnings of affiliate		1,656			73

Income before provision for income taxes	$	15,410		$	9,036

	Six Months Ended

	June 30, 2005			June 30, 2004

Asset Management
Total revenue	$	63,944		$	48,219
Total expenses		(42,289	)		(30,198	)
Net non-operating income, including equity in earnings of affiliate		2,742			117

Income before provision for income taxes	$	24,397		$	18,138

Investment Banking
Total revenue	$	8,431		$	4,718
Total expenses		(5,311	)		(3,737	)
Net non-operating income		81			15

Income before provision for income taxes	$	3,201		$	996

Total
Total revenue	$	72,375		$	52,937
Total expenses		(47,600	)		(33,935	)
Net non-operating income, including equity in earnings of affiliate		2,823			132

Income before provision for income taxes	$	27,598		$	19,134

11. Subsequent Events

On July 18, 2005, the Company paid a cash dividend of $0.10 per share to the Company’s stockholders of record at the close of business on June 29, 2005.

On August 10, 2005, the Company’s Board of Directors declared a cash dividend of $0.11 per share to the Company’s stockholders, increasing the dividend by $0.01 per share, or 10%, from the prior quarter's dividend of $0.10 per share. The dividend will be payable on October 18, 2005 to stockholders of record at the close of business on September 29, 2005.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Set forth on the following pages is management’s discussion and analysis of our financial condition and results of operations for the three and six months ended June 30, 2005 and June 30, 2004. Such information should be read in conjunction with our Unaudited Condensed Consolidated Financial Statements together with the Notes to the Unaudited Condensed Consolidated Financial Statements. When we use the terms “Cohen & Steers,” the “Company,” “we,” “us,” and “our,” we mean Cohen & Steers, Inc., a Delaware corporation, and its consolidated subsidiaries.

Overview

Cohen & Steers, Inc. is a manager of high-income equity portfolios, specializing in U.S. REITs, global real estate securities, preferred securities, utilities, value equity securities and other high-dividend paying common stocks. We serve individual and institutional investors through a wide range of open-end mutual funds, closed-end mutual funds and institutional separate accounts. As a complement to our asset management business, we also provide investment banking services to companies in real estate and real estate intensive businesses.

Assets Under Management

We manage three types of accounts: closed-end mutual funds, open-end load and no-load mutual funds and institutional separate accounts.

The following table sets forth information regarding the net flows and appreciation/(depreciation) of assets under management for the periods presented.

Changes in Assets Under Management
(in millions)

	Three Months Ended						Six Months Ended

	June 30, 2005			June 30, 2004			June 30, 2005			June 30, 2004

Closed-End Mutual Funds
Assets under management, beginning of period	$	9,126		$	7,664		$	8,984		$	4,790

Inflows		150			459			755			2,931
Market appreciation (depreciation)		731			(453	)		268			(51	)

Total increase		881			6			1,023			2,880

Assets under management, end of period	$	10,007		$	7,670		$	10,007		$	7,670


Open-End Mutual Funds
Assets under management, beginning of period	$	4,824		$	4,514		$	5,199		$	3,897

Net outflows		(101	)		(232	)		(106	)		(65	)
Market appreciation (depreciation)		705			(253	)		335			197

Total increase (decrease)		604			(485	)		229			132

Assets under management, end of period (1)	$	5,428		$	4,029		$	5,428		$	4,029


Institutional Separate Accounts
Assets under management, beginning of period	$	3,828		$	3,361		$	4,118		$	2,993

Net inflows		30			79			4			79
Market appreciation (depreciation)		570			(159	)		306			209

Total increase (decrease)		600			(80	)		310			288

Assets under management, end of period	$	4,428		$	3,281		$	4,428		$	3,281


Total
Assets under management, beginning of period	$	17,778		$	15,539		$	18,301		$	11,680

Net inflows		79			306			653			2,945
Market appreciation (depreciation)		2,006			(865	)		909			355

Total increase (decrease)		2,085			(559	)		1,562			3,300

Assets under management, end of period (1)	$	19,863		$	14,980		$	19,863		$	14,980

(1) As of June 30, 2005 assets under management included $330 million of assets sub-advised by Houlihan Rovers.

Assets under management were $19.9 billion at June 30, 2005, a 33% increase from $15.0 billion at June 30, 2004.

Closed-end mutual funds

Closed-end mutual fund assets under management increased 30% to $10.0 billion at June 30, 2005, compared with $7.7 billion at June 30, 2004. The increase in assets under management was attributable to offerings of both common stock for new funds and preferred stock for new and existing funds as well as market appreciation.

Closed-end mutual fund net inflows were $150 million in the three months ended June 30, 2005, compared with $459 million in the three months ended June 30, 2004. Inflows in the second quarter of 2005 were generated through an offering of variable rate preferred shares issued for the purpose of establishing leverage in one of our funds, launched in March 2005. The assets raised in the second quarter of 2004 were the result of establishing leverage for a closed-end mutual fund launched in March 2004.

Market appreciation was $731 million in the three months ended June 30, 2005, compared with market depreciation of $453 million in the three months ended June 30, 2004.

Closed-end mutual fund inflows were $755 million in the six months ended June 30, 2005, compared with $2.9 billion in the six months ended June 30, 2004. In January 2005, we launched Cohen & Steers Dividend Majors Fund, our first diversified portfolio of high dividend-paying common stocks. This fund raised $244 million, net of underwriting fees. In March 2005, we raised $287 million, net of underwriting fees, from the launch of Cohen & Steers Worldwide Realty Income Fund. In the first half of 2005, we also raised $224 million in variable rate preferred shares for new and existing funds. The assets raised in the first half of 2004 were the result of two new closed-end funds and the associated variable rate preferred shares with both of these funds.

Market appreciation was $268 million in the six months ended June 30, 2005, compared with market depreciation of $51 million in the six months ended June 30, 2004.

Open-end mutual funds

Open-end mutual fund assets under management increased 35% to $5.4 billion at June 30, 2005 from $4.0 billion at June 30, 2004. The increase was primarily attributable to market appreciation.

Net outflows for open-end mutual funds were $101 million in the three months ended June 30, 2005, compared with net outflows of $232 million in the three months ended June 30, 2004. Gross inflows increased to $421 million in the three months ended June 30, 2005 from $267 million in the three months ended June 30, 2004. Gross outflows totaled $522 million in the three months ended June 30, 2005, a slight increase from $499 million in the three months ended June 30, 2004. Included in our open-end mutual fund gross outflows was a client transfer of $100 million into our institutional separate accounts.

Market appreciation across all of our open-end mutual funds was $705 million in the three months ended June 30, 2005, compared with market depreciation of $253 million in the three months ended June 30, 2004.

Net outflows for open-end mutual funds were $106 million in the six months ended June 30, 2005, compared with net outflows of $65 million in the six months ended June 30, 2004. Gross inflows increased to $839 million in the six months ended June 30, 2005 from $683 million in the six months ended June 30, 2004. However, gross outflows totaled $945 million in the six months ended June 30, 2005, compared with $748 million in the six months ended June 30, 2004. Included in our open-end mutual fund gross outflows was a client transfer of $100 million into our institutional separate accounts.

Market appreciation across all of our open-end mutual funds was $335 million in the six months ended June 30, 2005, compared with market appreciation of $197 million in the six months ended June 30, 2004.

Institutional separate accounts

Institutional separate account assets under management increased 35% to $4.4 billion at June 30, 2005 from $3.3 billion at June 30, 2004. The majority of the increase in assets under management during this period was due to market appreciation.

Institutional separate accounts had net inflows of $30 million in the three months ended June 30, 2005, compared with net inflows of $79 million in the three months ended June 30, 2004. Gross inflows were $186 million in the three months ended June 30, 2005, compared with $174 million in the three months ended June 30, 2004. Included in our institutional separate account gross inflows was a client transfer in the amount of $100 million from one of our open-end mutual funds. Gross outflows were $156 million in the three months ended June 30, 2005, compared with $95 million in the three months ended June 30, 2004.

Market appreciation was $570 million in the three months ended June 30, 2005, compared with market depreciation of $159 million in the three months ended June 30, 2004.

Institutional separate accounts had net inflows of $4 million in the six months ended June 30, 2005, compared with net inflows of $79 million in the six months ended June 30, 2004. Gross inflows were $272 million in the six months ended June 30, 2005, compared with $284 million in the six months ended June 30, 2004. Included in our institutional separate account inflows was a client transfer in the amount of $100 million from one of our open-end mutual funds. Gross outflows were $268 million in the six months ended June 30, 2005, compared with $205 million in the six months ended June 30, 2004.

Market appreciation was $306 million in the six months ended June 30, 2005, compared with market appreciation of $209 million in the six months ended June 30, 2004.

Results of Operations

Three Months Ended June 30, 2005 compared with Three Months Ended June 30, 2004

The following table of selected financial data presents our business segments in a manner consistent with the way that we manage our businesses (in thousands):

	Three Months Ended

	June 30, 2005			June 30, 2004

Asset Management
Total revenue	$	32,726		$	25,373
Total expenses		(21,434	)		(15,920	)
Net non-operating income, including equity in earnings of affiliate		1,599			64

Income before provision for income taxes	$	12,891		$	9,517


Investment Banking
Total revenue	$	5,542		$	255
Total expenses		(3,080	)		(745	)
Net non-operating income		57			9

Income (loss) before provision for income taxes	$	2,519		$	(481	)


Total
Total revenue	$	38,268		$	25,628
Total expenses		(24,514	)		(16,665	)
Net non-operating income, including equity in earnings of affiliate		1,656			73

Income before provision for income taxes	$	15,410		$	9,036

Revenue

Total revenue increased 49% to $38.3 million in the three months ended June 30, 2005 from $25.6 million in the three months ended June 30, 2004. This increase was primarily due to an increase in investment advisory and administration fees attributable to higher asset levels and an increase in investment banking fees.

Asset Management

Revenue increased 29% to $32.7 million in the three months ended June 30, 2005 from $25.4 million in the three months ended June 30, 2004. Investment advisory and administration fees increased 31% to $29.0 million in the three months ended June 30, 2005, compared with $22.2 million in the three months ended June 30, 2004.

In the three months ended June 30, 2005, total investment advisory and administration revenue from closed-end mutual funds increased 30% to $15.1 million from $11.6 million in the three months ended June 30, 2004. The second quarter of 2005 included a full quarter of revenue from the completion of two new fund offerings during the first quarter of 2005. The remaining increase in closed-end mutual fund revenue was due to higher levels of average daily net assets resulting from market appreciation and additional auction market preferred share offerings for certain funds during the fourth quarter of 2004 and the first half of 2005.

In the three months ended June 30, 2005, total investment advisory and administration revenue from open-end mutual funds increased 29% to $10.1 million from $7.8 million in the

three months ended June 30, 2004. The increase was attributable to increased assets under management across all of our new and existing open-end mutual funds. Distribution and service fee revenue increased 30% to $3.0 million in the three months ended June 30, 2005 from $2.3 million in the three months ended June 30, 2004. This increase in distribution and service fee revenue was primarily due to increased assets in two open-end mutual funds.

Investment Banking

Revenue increased to $5.5 million in the three months ended June 30, 2005 from $0.3 million in the three months ended June 30, 2004. Revenue was primarily attributable to success fees generated in connection with a merger advisory assignment and a restructuring assignment and a placement fee generated in connection with a public offering. In addition, we served as co-manager in two underwritten public offerings, representing our first firm commitment underwriting transactions.

Expenses

Total operating expenses increased 47% to $24.5 million in the three months ended June 30, 2005 from $16.7 million in the three months ended June 30, 2004, primarily due to increases in employee compensation and benefits, distribution and service fee expenses, general and administrative and depreciation and amortization.

Employee compensation and benefits expense increased 34% to $9.2 million in the three months ended June 30, 2005, from $6.8 million in the three months ended June 30, 2004. This was primarily due to an increase in incentive compensation, which included proportionately higher compensation expense resulting from the increase in Investment Banking fees and amortization of unearned compensation related to restricted stock unit awards and deferred compensation plans.

Distribution and service fee expenses increased 49% to $7.4 million in the three months ended June 30, 2005 from $4.9 million in the three months ended June 30, 2004. This increase was primarily due to higher levels of average daily net assets resulting from market appreciation as well as up front distribution costs associated with the launch of one of our closed-end mutual funds.

General and administrative expenses increased 72% to $5.8 million in the three months ended June 30, 2005 from $3.4 million in the three months ended June 30, 2004. The majority of the increase was attributable to higher professional fees resulting from costs related to implementing Sarbanes Oxley, higher accounting, tax and auditing fees associated with the requirements of being a public company, the recognition of sub-placement and other fees related to investment banking transactions consummated during the quarter, and additional organization costs incurred as part of the launch of four new mutual funds during the first quarter of 2005. Occupancy costs were higher due to the recognition of a full quarter’s rent expense for our new corporate headquarters.

Depreciation and amortization increased to $1.4 million in the three months ended June 30, 2005 from $0.3 million in the three months ended June 30, 2004. Included in depreciation and amortization expense in the second quarter of 2005 was a non-cash expense of $1.1 million relating to amortization of the intangible asset recorded in connection with the grant of fully vested RSUs at our initial public offering. The intangible asset, which expires in 2008, reflects the independently determined value of the non-competition agreements we have received from each of the employees that received fully vested RSUs at our initial public offering and is allocated to our two business segments.

Non-operating Income

Non-operating income, including our share of the net income of Houlihan Rovers, was $1.7 million in the three months ended June 30, 2005, compared with $0.1 million in the three months ended June 30, 2004. The increase in non-operating income primarily reflects $0.8 million of interest and dividend income and $0.6 million of realized gains earned on marketable securities.

Income Taxes

Historical income tax expense consisted solely of New York state and local income taxes; prior to our initial public offering, we were exempt from federal income taxes due to our status as an S-corporation. However, upon our conversion from an S-corporation to C-corporation status on August 16, 2004, we became subject to U.S. Federal and certain state and local income taxes. We recorded an income tax expense of $6.9 million in the three months ended June 30, 2005, compared with an income tax expense of $0.4 million in the three months ended June 30, 2004. The provision for income taxes for the three months ended June 30, 2005, includes federal, state and local taxes at a 44.8% effective tax rate. Included in the second quarter tax provision is an adjustment to our net deferred tax asset resulting from a recent change in the New York State tax law. Our deferred tax asset is attributable to a benefit derived from vested restricted stock units granted at the time of our initial public offering. Before adjusting for the deferred tax rate change and including the effect of a higher percentage of investment income, our effective tax rate was 41% for the three months ended June 30, 2005.

Six Months Ended June 30, 2005 compared with Six Months Ended June 30, 2004

The following table of selected financial data presents our business segments in a manner consistent with the way that we manage our businesses (in thousands):


	Six Months Ended

	June 30, 2005			June 30, 2004

Asset Management
Total revenue	$	63,944		$	48,219
Total expenses		(42,289	)		(30,198	)
Net non-operating income, including equity in earnings of affiliate		2,742			117

Income before provision for income taxes		24,397			18,138


Investment Banking
Total revenue	$	8,431		$	4,718
Total expenses		(5,311	)		(3,737	)
Net non-operating income		81			15

Income before provision for income taxes		3,201			996


Total
Total revenue	$	72,375		$	52,937
Total expenses		(47,600	)		(33,935	)
Net non-operating income, including equity in earnings of affiliate		2,823			132
Income before provision for income taxes		27,598			19,134

Revenue

Total revenue increased 37% to $72.4 million in the six months ended June 30, 2005, from $52.9 million in the six months ended June 30, 2004. This increase was primarily the result of an increase in investment advisory and administration fees attributable to higher asset levels and an increase in investment banking fees.

Asset Management

Revenue increased 33% to $63.9 million in the six months ended June 30, 2005, from $48.2 million in the six months ended June 30, 2004. Investment advisory and administration fees increased 34% to $56.3 million in the six months ended June 30, 2005, compared with $41.9 million in the six months ended June 30, 2004.

In the six months ended June 30, 2005, total investment advisory and administration revenue from closed-end mutual funds increased 43% to $29.2 million from $20.4 million in the six months ended June 30, 2004. The six months ended June 30, 2005 included revenue from the completion of two new closed-end fund offerings during the first half of 2005. The remaining increase in closed-end mutual fund revenue was due to higher levels of average daily net assets from market appreciation and additional auction market preferred share offerings for certain funds during the fourth quarter of 2004 and the first half of 2005.

In the six months ended June 30, 2005, total investment advisory and administration revenue from open-end mutual funds increased 23% to $19.8 million from $16.1 million in the six months ended June 30, 2004. The increase was attributable to increased assets under management across all of our new and existing open-end mutual funds. Distribution and service fee revenue increased 24% to $5.8 million in the six months ended June 30, 2005 from $4.7 million in the six months ended June 30, 2004. This increase in distribution and service fee

revenue was primarily due to increased assets in two open-end mutual funds.

Investment Banking

Revenue increased 79% to $8.4 million in the six months ended June 30, 2005 from $4.7 million in the six months ended June 30, 2004. Revenue was primarily attributable to a mix of merger advisory, restructuring and capital raising assignments.

Expenses

Total operating expenses increased 40% to $47.6 million in the six months ended June 30, 2005 from $33.9 million in the six months ended June 30, 2004, primarily due to increases in employee compensation and benefits, distribution and service fee expenses, general and administrative expenses and depreciation and amortization.

Employee compensation and benefits expense increased 13% to $17.8 million in the six months ended June 30, 2005 from $15.8 million in the six months ended June 30, 2004. This was primarily due to an increase in incentive compensation, which included proportionately higher compensation expense resulting from the increase in Investment Banking fees and amortization of unearned compensation related to restricted stock unit awards and deferred compensation plans.

Distribution and service fee expenses increased 54% to $14.0 million in the six months ended June 30, 2005 from $9.1 million in the six months ended June 30, 2004. This increase was primarily due to higher levels of average daily net assets resulting from market appreciation as well as up front distribution costs associated with the launch of one of our closed-end mutual funds.

General and administrative expenses increased 83% to $11.2 million in the six months ended June 30, 2005, from $6.1 million in the six months ended June 30, 2004. The majority of the increase was attributable to higher professional fees resulting from costs related to implementing Sarbanes Oxley, higher accounting, tax and auditing fees associated with the requirements of being a public company, the recognition of sub-placement and other fees related to investment banking transactions consummated during the first half of 2005, and additional organization costs incurred as part of the launch of four new mutual funds during the first half of 2005. Occupancy costs were higher due to the recognition of a full quarter’s rent expense for our new corporate headquarters.

Depreciation and amortization increased to $2.8 million in the six months ended June 30, 2005 from $0.6 million in the six months ended June 30, 2004. Included in depreciation and amortization expense in the first half of 2005 was a non-cash expense of $2.2 million relating to amortization of an intangible asset recorded in connection with the grant of fully vested RSUs at our initial public offering. The intangible asset, which expires in 2008, reflects the independently

determined value of the non-competition agreements we have received from each of the employees that received fully vested RSUs at our initial public offering and is allocated to our two business segments.

Non-operating Income

Non-operating income, including our share of the net income of Houlihan Rovers, was $2.8 million in the six months ended June 30, 2005, compared with $0.1 million in the six months ended June 30, 2004. The increase in non-operating income primarily reflects $1.4 million of interest and dividend income and $1.1 million of realized gains earned on marketable securities.

Income Taxes

Historical income tax expense consisted solely of New York state and local income taxes; prior to our initial public offering, we were exempt from federal income taxes due to our status as an S-corporation. However, upon our conversion from an S-corporation to C-corporation status on August 16, 2004, we became subject to U.S. Federal and certain state and local income taxes. We recorded an income tax expense of $12.0 million in the six months ended June 30, 2005, compared with an income tax expense of $1.2 million in the six months ended June 30, 2004. The provision for income taxes for the six months ended June 30, 2005, includes federal, state and local taxes at a 43.6% effective tax rate. Included in the tax provision for the first half of the year is an adjustment to our net deferred tax asset resulting from a recent change in the New York State tax law. Our deferred tax asset is attributable to a benefit derived from vested restricted stock units granted at the time of our initial public offering. Before adjusting for the deferred tax rate change and including the effect of a higher percentage of investment income, our effective tax rate was 41% for the six months ended June 30, 2005.

Liquidity and Capital Resources

Our investment advisory business does not require us to maintain significant capital balances. Our current financial condition is highly liquid, with the majority of our assets comprised of cash and cash equivalents and marketable securities. Our cash flows are generally created as a result of the operating activities of our business segments, with investment advisory and administrative fees a significant contributor.

Cash, cash equivalents, accounts receivable and marketable securities were 74% and 71% of total assets as of June 30, 2005 and December 31, 2004, respectively. Working capital was $111.1 million at June 30, 2005, compared with $103.1 million at December 31, 2004.

Net cash from operating activities was $25.0 million in the six months ended June 30, 2005. Cash of $20.6 million was used in investing activities, primarily for the purchase of $38.7 million of marketable securities, partially offset by proceeds from sales and maturities of marketable securities in the amount of $18.6 million. Cash of $7.8 million was used in financing activities, primarily for dividends paid to stockholders.

Net cash from operating activities was $25.3 million in the six months ended June 30, 2004. Cash of $1.5 million was used in investing activities, primarily for the purchase of marketable securities. Cash of $19.5 million was used in financing activities, primarily related to S-corporation cash distributions made to shareholders and offering costs paid pursuant to our initial public offering.

It is our policy to continuously monitor and evaluate the adequacy of our capital. We have consistently maintained net capital in excess of the regulatory requirements for our broker-dealers, as prescribed by the Securities and Exchange Commission (“SEC”). At June 30, 2005, our regulatory net capital exceeded the minimum requirement by $8.8 million. The SEC’s Uniform Net Capital Rule 15c3-1 imposes certain requirements that may have the effect of prohibiting a broker-dealer from distributing or withdrawing capital and requiring prior notice to the SEC for certain withdrawals of capital. We believe that our cash flows from operations will be more than adequate to meet our anticipated capital requirements and debt and other obligations as they become due.

Contractual Obligations

We have contractual obligations to make future payments in connection with our non-cancelable operating lease agreements for office space, long-term debt on aircraft, and capital leases for office equipment. The following summarizes our contractual obligations as of June 30, 2005 (in thousands):

	2005		2006		2007		2008		2009		2010 and after		Total
	Contractual Obligations


Operating leases	$	884	$	3,515	$	3,515	$	2,167	$	2,071	$	9,164	$	21,316
Long-term debt		52		1,079		484		—		—		—		1,615
Capital lease obligations, net		27		57		46		10		—		—		140

Total contractual obligations	$	963	$	4,651	$	4,045	$	2,177	$	2,071	$	9,164	$	23,071

Off-Balance Sheet Arrangements

We do not invest in any off-balance sheet vehicles that provide liquidity, capital resources, market or credit risk support, or engage in any leasing activities that expose us to any liability that is not reflected in our consolidated financial statements.

Critical Accounting Policies and Estimates

The preparation of our unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosures of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under current circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily available from other sources. We evaluate our estimates on an ongoing basis. Actual results may differ from these estimates under different assumptions or conditions.

A thorough understanding of our accounting policies is essential when reviewing our reported results of operations and our financial position. Our management considers the following accounting policies critical to an informed review of our consolidated financial statements. For a summary of these and additional accounting policies, see the notes to the annual audited consolidated financial statements on our Annual Report on Form 10-K for the year ended December 31, 2004.

Investments

Management determines the appropriate classification of its investments at the time of purchase and re-evaluates such determination at each statement of financial condition date. Marketable securities classified as available-for-sale consist of investments in our open and closed-end mutual funds as well as highly rated debt and preferred instruments. These investments are carried at fair value based on quoted market

prices, with unrealized gains and losses, net of tax, reported in accumulated other comprehensive income.

Deferred Commissions

Deferred commissions consist of commissions paid in advance to broker-dealers in connection with the sale of certain shares of open-end load mutual funds sponsored by us and are capitalized and amortized over a period not to exceed six years.

Investment Advisory and Administration Fees

We earn revenue by providing from asset management services to our sponsored open-end and closed-end mutual funds and to institutional separate accounts. This revenue is earned pursuant to the terms of the underlying advisory contract and is based on a contractual investment advisory fee applied to the assets in the portfolio. We also earn revenue from administration fees paid by certain sponsored open-end and closed-end mutual funds, based on the average daily net assets of such funds. We recognize this revenue as we earn such fees.

Distribution and Service Fee Revenue

Distribution and service fee revenue is recognized as the services are performed, generally based on contractually-predetermined percentages of the average daily net assets of the open-end load funds. Distribution and service fee revenue is recorded gross of any third-party distribution and service arrangements; the expenses associated with these third-party distribution and service arrangements are recorded in distribution and service fee expenses.

Portfolio Consulting Fees

We earn revenue for various portfolio consulting services provided to clients, as well as for providing a license to use our name. This revenue is recognized pursuant to the terms of individual agreements and is based on the net assets of the clients’ funds.

New Accounting Pronouncements

In March 2005, a Financial Accounting Standards Board (“FASB”) Staff Position was issued addressing the application of Emerging Issue Task Force (“EITF”) Issue No. 85-24 (“FSP EITF 85-24-1”), “Distribution Fees by Distributors of Mutual Funds That Do Not Have a Front-End Sales Charge,” when cash for the right to future distribution fees for shares previously sold is received from third parties. FSP EITF 85-24-1 did not materially impact our unaudited condensed consolidated financial position or results of operations.

In December 2004, the FASB issued a revised Statement of Financial Accounting Standards No. 123 (“SFAS No. 123 (R)”), which requires public companies to recognize the cost resulting from all share-based transactions in their financial statements. SFAS No. 123 (R) eliminates the ability to account for share-based compensation using the intrinsic value method under Accounting Principles Board Opinion (“APB”) 25. The adoption of SFAS No. 123 (R) did not materially impact our unaudited condensed consolidated statement of financial position or results of operations.

the quantitative thresholds set forth in SFAS No. 131, “Disclosure about Segments of an Enterprise and Related Information,” for separate reporting may be aggregated only if the segments meet certain requirements. These requirements are applicable for fiscal years ending after September 15, 2005. The adoption of EITF 04-10 will not materially impact our identified segments.

Forward-Looking Statements

Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. We believe that these factors include, but are not limited to, those described in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2004, which is accessible on the Securities and Exchange Commission’s website at http://www.sec.gov and on Cohen & Steers’ website at cohenandsteers.com. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this report. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

In the normal course of our business, we are exposed to the risk of interest rate, securities market and general economic fluctuations which may have an adverse impact on the value of our marketable securities. As of June 30, 2005, our marketable securities totalled $90.3 million and consisted of investments in our sponsored open and closed-end mutual funds as well as highly rated debt and preferred instruments. In addition, a significant majority of our revenue—approximately 76% and 87% in the three months ended June 30, 2005 and 2004, respectively—is derived from investment advisory and administrative agreements with our clients. Under these agreements, the investment advisory and administration fees we receive are typically based on the market value of the assets we manage. Accordingly, a decline in the prices of securities generally, and real estate securities in particular, may cause our revenue and income to decline by:

	Ÿ	causing the value of the assets we manage to decrease, which would result in lower investment advisory and administration fees; or

	Ÿ	causing our clients to withdraw funds in favor of investments that they perceive as offering greater opportunity or lower risk, which would also result in lower investment advisory and administration fees.

In addition, market conditions may preclude us from increasing the assets we manage in closed-end mutual funds. A significant portion of our recent growth in the assets we manage has resulted from public offerings of the shares of closed-end mutual funds. The market conditions for these offerings may not be as favorable in the future, which could adversely impact our ability to grow the assets we manage and realize higher fee revenue associated with such growth.

The returns for REIT common stocks have demonstrated little correlation with interest rates over longer periods of time. However, an increase in interest rates could have a negative impact on the valuation of REITs and other securities in our clients’ portfolios, which could reduce our revenue. In addition, an increase in interest rates could negatively impact our ability to increase open-end mutual fund assets and to offer new mutual funds.

ITEM 4. Controls and Procedures

Based on their evaluation as of a date as of the end of the period covered by this Quarterly Report on Form 10-Q, our co-chief executive officers and chief financial officer have concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

There has been no change in our internal control over financial reporting that occurred during the six months ended June 30, 2005 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Part II – Other Information
Item 6. Exhibits

Exhibit No.	Description

3.1	Form of Amended and Restated Certificate of Incorporation of the Registrant (1)
3.2	Form of Amended and Restated Bylaws of the Registrant (1)
4.1	Specimen Common Stock Certificate (1)
4.2	Form of Registration Rights Agreement among the Registrant, Martin Cohen, Robert H. Steers, The Martin Cohen 1998 Family Trust and Robert H. Steers Family Trust (1)
31.1	Certification of the co-Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.2	Certification of the co-Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.3	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.1	Certification of the co-Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
32.2	Certification of the co-Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
32.3	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

	(1)	Incorporated by Reference to the Registrant’s Registration Statement on Form S-1 (Registration No. 333-114027), as amended, originally filed with the Securities and Exchange Commission on March 30, 2004.

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 thereunto duly authorized.

Date: August 15, 2005		Cohen & Steers, Inc.
		/s/ Matthew S. Stadler
		Name: Matthew S. Stadler Title: Executive Vice President & Chief Financial Officer

EX-31 2 ex31-1.htm EXHIBIT 31.1

Exhibit 31.1

CO-CHIEF EXECUTIVE OFFICER CERTIFICATION

I, Martin Cohen, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2005 of Cohen & Steers, Inc. (the “Registrant”);

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the period presented in this report;

4.	The Registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the periods covered by this quarterly report based on such evaluation; and

Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5.	The Registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal controls over financial reporting.

Dated: August 15, 2005


			/s/ Martin Cohen

			Martin Cohen Co-Chief Executive Officer

EX-31 3 ex31-2.htm EXHIBIT 31.2

Exhibit 31.2

CO-CHIEF EXECUTIVE OFFICER CERTIFICATION

I, Robert H. Steers, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2005 of Cohen & Steers, Inc. (the “Registrant”);

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the period presented in this report;

4.	The Registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have:

5.	The Registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal controls over financial reporting.

Dated: August 15, 2005
			/s/ Robert H. Steers

			Robert H. Steers Co-Chief Executive Officer

EX-31 4 ex31-3.htm EXHIBIT 31.3

Exhibit 31.3

CHIEF FINANCIAL OFFICER CERTIFICATION

I, Matthew S. Stadler, Chief Financial Officer of Cohen & Steers, Inc. (the “Registrant”), certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2005 of the Registrant;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the period presented in this report;

4.	The Registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have:

Disclosed in this quarterly report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

5.	The Registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or persons performing the equivalent functions):

Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal controls over financial reporting.

Dated: August 15, 2005
			/s/ Matthew S. Stadler

			Matthew S. Stadler Executive Vice President & Chief Financial Officer

EX-32 5 ex32-1.htm EXHIBIT 32.1

Exhibit 32.1

Certification of the Co-Chief Executive Officer

Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Cohen & Steers, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Martin Cohen, Co-Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 15, 2005

			/s/ Martin Cohen

			Martin Cohen Co-Chief Executive Officer

EX-32 6 ex32-2.htm EXHIBIT 32.2

Exhibit 32.2

Certification of the Co-Chief Executive Officer

Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Cohen & Steers, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert H. Steers, Co-Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 15, 2005

			/s/ Robert H. Steers

			Robert H. Steers Co-Chief Executive Officer

EX-32 7 ex32-3.htm EXHIBIT 32.3

Exhibit 32.3

Certification of the Chief Financial Officer

Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Cohen & Steers, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Matthew S. Stadler, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 15, 2005


			/s/ Matthew S. Stadler

			Matthew S. Stadler Executive Vice President & Chief Financial Officer

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