UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.20549 

FORM 10-Q

(Mark One)

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

For the quarterly period ended December 31, 2008

OR

o 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: 1-9728

EPOCH HOLDING CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	20-1938886
(State or other jurisdiction	(I.R.S. employer
of incorporation or organization)	identification no.)

640 Fifth Avenue, New York, NY 10019

(Address of principal executive offices)

212-303-7200

(Registrant's telephone number, including area code)

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer o Accelerated Filer þ Non-Accelerated Filer o (Do not check if Smaller Reporting Company) Smaller Reporting Company o

 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  o  No  þ  

 As of February 5, 2009, there were 22,308,474 shares of the Company's common stock, $.01 par value per share, outstanding. 

EPOCH HOLDING CORPORATION AND SUBSIDIARIES

FORM 10-Q FOR THE FISCAL QUARTER ENDED DECEMBER 31, 2008 

TABLE OF CONTENTS 

		Page No.
Part I.	Financial Information
Item 1.	Financial Statements.	2
	Condensed Consolidated Balance Sheets – December 31, 2008 (Unaudited) and	2
	June 30, 2008
	Condensed Consolidated Statements of Operations (Unaudited) – Three and Six	3
	Months Ended December 31, 2008 and 2007
	Condensed Consolidated Statements of Changes in Stockholders' Equity – For the	4
	Year Ended June 30, 2008 and Six Months Ended December 31, 2008 (Unaudited)
	Condensed Consolidated Statements of Cash Flows (Unaudited) – Six Months Ended	5
	December 31, 2008 and 2007
	Notes to Condensed Consolidated Financial Statements (Unaudited)	6-14
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of	15-32
	Operations.
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	33
Item 4.	Controls and Procedures.	34
Part II.	Other Information
Item 1.	Legal Proceedings.	35
Item 1a.	Risk Factors.	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	35
Item 4.	Submission of Matters to a Vote of Security Holders.	36
Item 6.	Exhibits.	37
Signature		38

Items other than those listed above have been omitted because they are not applicable.

1

PART I. FINANCIAL INFORMATION

 Item 1. Financial Statements.

EPOCH HOLDING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

	December 31,			June 30,
	2008			2008
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	41,479		$	37,436
Accounts receivable		5,266			6,391
Prepaid and other current assets		1,347			926
Total current assets		48,092			44,753
Property and equipment (net of accumulated depreciation of $1,580 and $1,369, respectively)		1,494			1,689
Security deposits		1,116			1,104
Deferred income taxes		2,528			2,844
Other investments (cost of $3,521 and $4,187, respectively) - (Note 5)		2,747			3,959
Total assets	$	55,977		$	54,349
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	638		$	884
Accrued compensation and benefits		5,100			5,630
Dividends payable - (Note 13)		2,641			-
Income taxes payable		-			1,447
Total current liabilities		8,379			7,961
Deferred rent		771			813
Subtenant security deposit		232			230
Total liabilities		9,382			9,004
Commitments and contingencies - (Note 6)
Stockholders' equity:
Preferred stock - (Note 7)		-			10
Common stock		222			203
Additional paid-in capital		54,078			50,047
Retained earnings		286			698
Unearned share-based compensation		(5,661	)		(5,302	)
Accumulated other comprehensive loss		(774	)		(228	)
Treasury stock, at cost - (Note 6)		(1,556	)		(83	)
Total stockholders' equity		46,595			45,345
Total liabilities and stockholders' equity	$	55,977		$	54,349

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

EPOCH HOLDING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share data)

	Three Months Ended					Six Months Ended
	December 31,					December 31,
	2008		2007			2008		2007
Revenues:
Investment advisory and management fees	$	6,768	$	8,551		$	15,246	$	16,428
Performance fees		-		172			-		172
Total revenue		6,768		8,723			15,246		16,600
Operating expenses:
Employee related costs (excluding share-based compensation)		3,887		4,563			8,004		8,812
Share-based compensation		791		1,029			2,121		2,104
General, administrative and occupancy		1,195		1,342			2,547		2,726
Professional fees and services		458		582			1,177		1,339
Depreciation and amortization		105		107			211		211
Total operating expenses		6,436		7,623			14,060		15,192
Operating income		332		1,100			1,186		1,408
Other income (loss): - (Note 9)
Realized gains on investments		4,424		2,551			4,168		3,417
Interest and other income		251		545			542		1,062
Total other income		4,675		3,096			4,710		4,479
Income before income taxes		5,007		4,196			5,896		5,887
Provision for income taxes - (Note 10)		2,034		1,649			2,340		1,243
Net income		2,973		2,547			3,556		4,644
Preferred stock dividends - (Note 11)		-		(115	)		-		(230	)
Net income available to common
stockholders for basic earnings per share	$	2,973	$	2,432		$	3,556	$	4,414
Earnings per share: - (Note 11)
Basic	$	0.13	$	0.12		$	0.16	$	0.22
Diluted	$	0.13	$	0.12		$	0.16	$	0.21
Weighted Average Shares Outstanding:
Basic		22,066		20,141			22,072		20,096
Diluted		22,066		21,849			22,074		21,849
Cash dividends declared per common share	$	0.15	$	0.025		$	0.18	$	0.025

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

EPOCH HOLDING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE YEAR ENDED JUNE 30, 2008 AND SIX MONTHS ENDED DECEMBER 31, 2008

(Dollars and shares in thousands, except per share data)

	Preferred Stock														Retained						Accumulated
	Series A											Additional			Earnings			Unearned			Other								Total
	Convertible						Common Stock					Paid-in			(Accumulated			Share-Based			Comprehensive			Treasury Stock					Stockholders'
	Shares			Amount			Shares			Amount		Capital			Deficit)			Compensation			Income (Loss)			Shares		Amount			Equity
Balances at June 30, 2007		10		$	10			19,935		$	199	$	43,852		$	(6,357	)	$	(4,763	)	$	2,502			-	$	-		$	35,443
Net income																9,036														9,036
Net unrealized gains on marketable securities																						864								864
Reclassification for gains included in net income																						(3,594	)							(3,594	)
Comprehensive income																														6,306
Issuance and forfeitures of restricted common stock								364			4		4,711			-			(4,380	)					-		-			335
Amortization of unearned share-based compensation								-			-		-			-			3,841						-		-			3,841
Preferred stock dividends																(460	)													(460	)
Common stock dividends ($0.075 per share)																(1,521	)													(1,521	)
Income tax benefit from dividends paid on unvested shares													43																	43
Net loss on sales of shares for employee withholding													(133	)																(133	)
Common shares repurchased								(9	)																9		(83	)		(83	)
Excess income tax benefit from vesting of restricted shares													1,574																	1,574
Balances at June 30, 2008		10			10			20,290			203		50,047			698			(5,302	)		(228	)		9		(83	)		45,345
Net income																3,556														3,556
Net unrealized losses on other investments																						(1,100	)							(1,100	)
Reclassification for losses included in net income																						554								554
Comprehensive income - (Note 12)																														3,010
Issuance and forfeitures of restricted common stock								221			2		2,478			-			(2,379	)					-		-			101
Amortization of unearned share-based compensation								-			-		-			-			2,020						-		-			2,020
Conversion of preferred stock - (Note 7)		(10	)		(10	)		1,667			17		(7	)																-
Common stock dividends ($0.18 per share)																(3,968	)													(3,968	)
Income tax benefit from dividends paid on unvested shares													82																	82
Net loss on sales of shares for employee withholding													(218	)																(218	)
Common shares repurchased								(183	)																183		(1,473	)		(1,473	)
Excess income tax benefit from vesting of restricted shares													1,696																	1,696
Balances at December 31, 2008 (unaudited)		-		$	-			21,995		$	222	$	54,078		$	286		$	(5,661	)	$	(774	)		192	$	(1,556	)	$	46,595

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

EPOCH HOLDING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

	Six Months Ended
	December 31,
	2008			2007
Cash flows from operating activities:
Net income	$	3,556		$	4,644
Adjustments to reconcile net income to net cash
provided by operating activities:
Deferred income taxes		316			(181	)
Share-based compensation		2,121			2,104
Depreciation and amortization		211			211
Realized gains on investments		(4,168	)		(3,417	)
Loss from equity method investment		126			-
Income tax benefit from payment of dividends on
unvested shares		(82	)		(13	)
Excess income tax benefit from vesting of
restricted shares		(1,696	)		(353	)
Decrease/ (increase) in operating assets:
Accounts receivable		1,125			(203	)
Prepaid and other current assets		(621	)		167
(Decrease)/ increase in operating liabilities:
Accounts payable and accrued liabilities		(246	)		11
Accrued compensation and benefits		(530	)		3,561
Income taxes payable		331			1,324
Deferred rent		(42	)		(43	)
Net cash provided by operating activities		401			7,812
Cash flows from investing activities:
Proceeds from other transactions - (Note 9b)		4,938			-
Capital expenditures		(16	)		(56	)
Investments in Epoch managed funds and
other investments, net		(30	)		(3,506	)
Security deposits, net		(10	)		(13	)
Purchases and sales of short-term investments, net		-			21,850
Proceeds from sale of marketable securities		-			4,113
Net cash provided by investing activities		4,882			22,388
Cash flows from financing activities:
Common stock dividends paid		(1,327	)		(504	)
Income tax benefit from payment of dividends on
unvested shares		82			13
Income tax benefit from the vesting of
restricted shares		1,696			353
Repurchase of common stock		(1,473	)		-
Net loss on sale of shares for employee withholding		(218	)		-
Preferred stock dividends		-			(230	)
Net cash used in financing activities		(1,240	)		(368	)
Net increase in cash and cash
equivalents during period		4,043			29,832
Cash and cash equivalents at beginning of period		37,436			3,097
Cash and cash equivalents at end of period	$	41,479		$	32,929
Supplemental Cash Flow Information:
Cash paid for income taxes	$	2,230		$	192

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

EPOCH HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2008 AND 2007

(Unaudited)

Note 1 - Organization

Business

Epoch Holding Corporation ("Epoch" or the "Company"), a Delaware corporation, is a holding company whose sole line of business is investment advisory and investment management services. The operations of the Company are conducted through its wholly-owned subsidiary, Epoch Investment Partners, Inc. ("EIP"). EIP is a registered investment adviser under the Investment Advisers Act of 1940, as amended (the "Investment Advisers Act"). EIP provides investment advisory and investment management services to retirement plans, mutual funds, endowments, foundations and high net worth individuals. Headquartered in New York, NY, the Company’s current product offerings include U.S. All Cap Value, U.S. Value, U.S. Smid (small/mid) Cap Value, U.S. Small Cap Value, U.S. Choice, Global Small Cap Value, Global Absolute Return, Global Choice, Global All Cap, International Small Cap, Balanced, and Global Equity Shareholder Yield.

Business segments

The Company's sole line of business is the investment advisory and investment management business. There are no other operating or reportable segments.

Note 2 – Summary of Significant Accounting Policies

Basis of presentation

The unaudited condensed consolidated financial statements of the Company included herein have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the financial condition and interim results of operations have been made. The results for the interim periods are not necessarily indicative of the results to be obtained for a full fiscal year.

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 fiscal year ended June 30, 2008.

Certain reclassifications have been made to prior period financial statements to conform to the current period presentation.

Principles of consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation.

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions. These estimates and assumptions impact the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the dates of these condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates.

Financial instruments with concentration of credit risk

The financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents and other investments. Epoch invests its cash and cash equivalents with high-credit quality financial institutions in amounts which, at times, may be in excess of the FDIC insurance limits.

Cash equivalents

Cash equivalents are highly liquid investments in money market funds consisting of short-term securities of the U.S. government and its agencies.

6

Property and equipment

The costs of leasehold improvements are capitalized and such costs are amortized on a straight-line basis over the shorter of their estimated useful lives or lease term, as applicable. All other capital assets are recorded at cost and such costs are depreciated on a straight-line basis over their estimated useful lives. Generally, the useful lives are approximately 3 to 7 years for equipment, 1 to 3 years for purchased software, and 3 to 10 years for leasehold improvements and exclude option periods, if any. Repairs and maintenance costs are charged to expense as incurred. Upon sale or disposition of property and equipment, the cost and related accumulated depreciation amounts are removed from the accounts and any resulting gain or loss is recognized in operations.

Other investments 

The Company holds investments in three Company-sponsored mutual funds—the Epoch Global Equity Shareholder Yield Fund (“EPSYX”), the Epoch U.S. All Cap Equity Fund (“EPACX”), and the Epoch International Small Cap Fund (“EPIEX”). The Company also holds investments in the Epoch Global Absolute Return Fund, LLC and in a separate account of Epoch’s Global All Cap product. The Company intends to hold these investments for a period in excess of one year.

The investments in the Company-sponsored mutual funds and the separate account of Epoch's Global All Cap product are accounted for as available-for-sale securities. Any resulting change in market value is recorded as unrealized gain or loss in Accumulated other comprehensive income (loss), a separate component of stockholders’ equity.

EIP is also the managing member of the Epoch Global Absolute Return Fund, LLC whose underlying assets consist of marketable securities. The Company's investment in this entity is accounted for using the equity method, under which EIP's share of the net earnings or losses from the limited liability company is reflected in Other income, as earned, and any distributions are reflected as reductions from the investment.

The Company periodically reviews the carrying value of these investments for impairment by evaluating the nature, duration and extent of any decline in fair value.  If the decline in value is determined to be other-than-temporary, the carrying value of the investment is written down to fair value through earnings. No impairment charges have been recognized during the periods presented.

Treasury stock

Treasury stock is accounted for under the cost method.

Revenue recognition

Investment advisory and management fees are recognized as services are provided, pursuant to specific terms contained in advisory or sub-advisory contracts between EIP and its clients. Such contracts generally call for revenue to be determined as a percentage of assets under management (“AUM”). Separate account fees are billed on a quarterly basis, in arrears, generally based on the account's asset value at the end of the quarter. Fees for services performed for mutual funds under advisory and sub-advisory contracts are calculated based upon the daily net asset values of the respective fund, and are generally received in arrears. Advance payments, if received, are deferred and recognized during the periods for which services are provided.

The Company also has certain contracts which contain “incentive clauses” that allow the Company to earn performance fees in the event that investment returns meet or exceed targeted amounts specified in the contracts. Revenues for these incentives are recognized only when such performance targets are met or exceeded at the end of the contract's year, typically at the end of each calendar year - the Company’s second fiscal quarter. Due to the inability to forecast financial markets, no revenues are recognized until the contract year ends, even when investment returns exceed the contractual targets within the contract year. 

Share-based compensation

Employee and qualifying director share-based payments are accounted for in accordance with Statement of Financial Accounting Standards No. 123 (Revised 2004), Share-Based Compensation (“SFAS 123R”), using the fair value method. The fair value of the Company's restricted stock awards is based on the closing price of the Company's common stock at the grant date. Share-based compensation costs related to equity instruments are charged against income ratably over the fixed vesting period for the related equity instruments, with the initial charge generally recorded in the first full month following the grant.

All outstanding stock options were fully vested prior to the adoption of SFAS 123R, accordingly there were no additional compensation costs related to any non-vested stock options required to be recorded at that time. There were no stock options issued for the periods presented.

Income taxes

The Company accounts for income taxes in accordance with Statement of Financial Accounting Standard No. 109, Accounting for Income Taxes (“SFAS 109”). SFAS 109 requires that deferred tax assets and liabilities arising from temporary differences between book and tax basis be recognized using the enacted statutory tax rates and laws that will be in effect when such differences are expected to reverse. Deferred tax assets are recognized for temporary differences that will result in deductible amounts in future years. Deferred tax liabilities are recognized for temporary differences that will result in taxable income in future years. In the case of deferred tax assets, SFAS 109 requires a reduction in deferred tax assets if it is more likely than not that some portion or all of the deferred tax asset will not be realized.

7

Any potential interest and penalty associated with a tax contingency, should one arise, would be included as a component of income tax expense in the period in which the assessment arises.

Earnings per common share

Basic earnings per share (“EPS”) is calculated by dividing net earnings applicable to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS includes the determinants of basic EPS and, in addition, reflects the dilutive effect, if any, of the common stock deliverable pursuant to stock options or, for the prior year’s fiscal periods presented, the common stock issuable upon the conversion of the convertible preferred stock.

Comprehensive income

Total comprehensive income is reported on the Condensed Consolidated Statement of Changes in Stockholders’ Equity and includes net income and, for investment securities available-for-sale, the change in unrealized gains (losses) and the reclassification of realized gains (losses) to net income.

Recently issued accounting standards

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value Measurements (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measurements required under other accounting pronouncements, but does not change existing guidance as to whether or not an instrument is carried at fair value. SFAS 157 was effective for the Company beginning July 1, 2008. SFAS 157 establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and to minimize the use of unobservable inputs when measuring fair value. The adoption of SFAS 157 did not have a material effect on the Company’s consolidated financial position, results of operations, or cash flows.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (“SFAS 159”). SFAS 159 permits certain financial assets and financial liabilities to be measured at fair value, using an instrument-by-instrument election. The initial effect of adopting SFAS 159 must be accounted for as a cumulative effect adjustment to opening retained earnings for the fiscal year of adoption. Retrospective application to fiscal years preceding the effective date is not permitted. SFAS 159 was effective for the Company beginning July 1, 2008. The adoption of SFAS 159 did not have a material effect on the Company’s consolidated financial position, results of operations, or cash flows.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133 (“SFAS 161”), which requires enhanced disclosures about an entity’s derivative and hedging activities. SFAS 161 is effective for the Company beginning July 1, 2009. The Company does not currently engage in hedging or derivative transactions and, accordingly, does not expect the adoption of this pronouncement to have a material effect on the Company’s consolidated financial position, results of operations, or cash flows.

In June 2008, the FASB issued FASB Staff Position (“FSP”) EITF No. 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities. FSP EITF No. 03-6-1 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and therefore need to be included in the earnings allocation in calculating earnings per share under the two-class method described in SFAS No. 128, Earnings per Share. FSP EITF No. 03-6-1 requires companies to treat unvested share-based payment awards that have non-forfeitable rights to dividends or dividend equivalents as a separate class of securities in calculating earnings per share. FSP EITF No. 03-6-1 is effective for the Company beginning July 1, 2009; earlier application is not permitted. The Company does not expect the adoption of FSP EITF No. 03-6-1 to have a material effect on its consolidated financial position, results of operations or earnings per share.

In October 2008, the FASB issued FSP 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active. FSP 157-3 does not reinterpret or change SFAS 157’s existing principles but rather is intended to enhance comparability and consistency in fair value measurements of financial assets that trade in markets that are inactive. FSP 157-3 primarily re-asserts that when the market is inactive, management is not required to use thinly traded quotes or quotes reflecting distressed prices. Rather, management should look to other means to estimate fair value, such as the “income approach,” which discounts the estimated cash flows and results in a Level 3 (see Note 3) classification because the inputs are not observable. Revisions resulting from a change in the valuation technique or its application shall be accounted for as a change in accounting estimate. FSP 157-3 was effective immediately upon issuance. The Company does not currently own such investment instruments and, as such, the adoption of this pronouncement had no effect on its consolidated financial position, results of operations, or cash flows.

8

Note 3 – Fair Value Measurements

As discussed in Note 2, the Company adopted SFAS No. 157 at the beginning of its fiscal year commencing July 1, 2008. SFAS No. 157 establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:

· Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

· Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

· Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement.

An asset or liability’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).

SFAS No. 157 allows three types of valuation approaches: a market approach, which uses observable prices and other relevant information that is generated by market transactions involving identical or comparable assets or liabilities; an income approach, which uses valuation techniques to convert future amounts to a single, discounted present value amount; and a cost approach, which is based on the amount that currently would be required to replace the service capacity of an asset.

The following is a description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such assets and liabilities pursuant to the valuation hierarchy.

Cash and cash equivalents

Cash and cash equivalents include cash in checking and money market accounts, as well as highly liquid investments in money market funds consisting of short-term securities of the U.S. government and its agencies. Cash and cash equivalents totaled $41.5 million at December 31, 2008. Investments in money market funds are valued under the market approach through the use of quoted market prices in an active market, which is the net asset value of the shares held in the underlying funds.

Security deposits

Security deposits are funds held in certificates of deposit as required by the lessors of the Company’s leased office premises. These instruments totaled $1.1 million at December 31, 2008. These investments mature, and are renewed, in one year intervals, and accordingly are valued at cost plus accrued interest, which approximates fair value.

Other investments

Other investments consist of investments in Company-sponsored investment vehicles, including mutual funds, an investment product separate account, and a limited liability company.

The first two investments mentioned above are accounted for as available-for-sale investments and valued under the market approach through the use of unadjusted quoted market prices available in an active market and are classified within Level 1 of the valuation hierarchy. The fair market value of these two investments at December 31, 2008 totals $2.4 million.

The remaining investment, an investment in the Epoch Global Absolute Return Fund, LLC is accounted for under the equity method, whereby the Company records its percentage share of realized and unrealized earnings or losses. Accordingly, SFAS 157 does not apply to this investment.

9

The following table presents, for each of the hierarchy levels previously described, the Company’s assets that are measured at fair value as of December 31, 2008 (in thousands):

			Quoted Prices in
			Active Markets for		Significant Other		Significant
			Identical Assets		Observable Inputs		Unobservable Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Current assets:
Cash and cash equivalents	$	41,479	$	41,479	$	-	$	-
Non-current assets:
Security deposits		1,116		1,116		-		-
Other investments:
Available-for-sale		2,396		2,396		-		-
Total assets at fair value	$	44,991	$	44,991	$	-	$	-

At December 31, 2008, the Company did not hold any financial liabilities measured at fair value.

Note 4 - Accounts Receivable

The Company's accounts receivable balances do not include an allowance for doubtful accounts for the periods presented and there have been no bad debt expenses recognized during the three and six months ended December 31, 2008 and 2007, respectively. Management believes these receivables are fully collectible.

Significant customers and contracts

For the three months ended December 31, 2008, CI Investments Inc. (“CI”), a Canadian-owned investment management company, accounted for approximately 13% of consolidated revenues, while Genworth Financial Asset Management, Inc. (“Genworth”), an investment adviser, through its investments in the Epoch International Small Cap Fund (“EPIEX”) and the Epoch Global Equity Shareholder Yield Fund (“EPSYX”), as well as separate account mandates, accounted for approximately 14%. The Company's services and relationships with these clients are important to the Company's ongoing growth strategy, and retention of these clients is significant to the ongoing results of operations of the Company.  For the six months ended December 31, 2008, CI accounted for approximately 14% of consolidated revenues, while Genworth accounted for approximately 17% of consolidated revenues.

For the three months ended December 31, 2007, CI accounted for approximately 16% of consolidated revenues, while Genworth accounted for approximately 26%. For the six months ended December 31, 2007, CI accounted for approximately 17% of consolidated revenues, while Genworth accounted for approximately 27%.

Note 5 – Other Investments

The Company’s Other investments at December 31, 2008 and June 30, 2008 are summarized as follows (in thousands)

	December 31, 2008									June 30, 2008
			Gross		Gross			Estimated				Gross		Gross			Estimated
	Cost		Unrealized		Unrealized			Fair		Cost		Unrealized		Unrealized			Fair
	Basis		Gains		Losses			Value		Basis		Gains		Losses			Value
Available-for-sale securities:
Other Investments:
Company-sponsored mutual funds	$	846	$	-	$	(359	)	$	487	$	830	$	-	$	(97	)	$	733
Epoch Global All Cap separate account		2,324		32		(447	)		1,909		2,879		156		(287	)		2,748
Total available-for-sale securities		3,170		32		(806	)		2,396		3,709		156		(384	)		3,481
Equity method investment:
Epoch Global Absolute Return Fund, LLC		351		-		-			351		478		-		-			478
	$	3,521	$	32	$	(806	)	$	2,747	$	4,187	$	156	$	(384	)	$	3,959

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Note 6 - Commitments and Contingencies

Employment agreements

The Company entered into a three-year employment agreement with its Chief Executive Officer in November 2007, effective January 1, 2008. The agreement calls for a base annual salary of $350 thousand and bonus compensation in accordance with the Company’s bonus and incentive compensation plans then in effect. The agreement also calls for certain payments in the event of termination. The payments could vary depending on the cause of termination and whether or not the Board of Directors elects to enforce a non-compete agreement. The agreement was reviewed and approved by the Company's Compensation Committee and the Board of Directors.

There are no employment contracts with any other employees or officers of the Company. There are written agreements with certain employees, which provide for sales commissions or bonuses, subject to the attainment of certain performance criteria or continuation of employment. Such commitments under the various agreements total approximately $1.2 million at December 31, 2008. Of this amount, approximately $0.7 million is included in accrued compensation and benefits in the Condensed Consolidated Balance Sheet at December 31, 2008. An additional $0.1 million will be accrued during the remainder of the fiscal year ending June 30, 2009 and shortly thereafter. Approximately $0.4 million represents restricted stock awards to be issued during the remainder of the fiscal year ending June 30, 2009 and shortly thereafter. 

Legal matters

From time to time, the Company or its subsidiaries may become parties to claims, legal actions and complaints arising in the ordinary course of business. Management is not aware of any matters which would have a material adverse effect on its consolidated financial statements.

Common Stock Repurchase Plan

On June 24, 2008, the Board of Directors approved the repurchase of up to a maximum of 250,000 shares, or just over 1%, of the Company’s fully diluted outstanding Common Stock. The repurchase plan calls for the repurchases to be made in the open market and/or in privately negotiated transactions from time to time in compliance with applicable laws, rules and regulations, including Rule 10b-18 under the Securities Exchange Act of 1934, as amended, subject to prevailing market and business conditions. The plan does not obligate the Company to purchase any particular number of shares, and may be suspended or discontinued at any time. The repurchase plan will expire on June 30, 2009.

For the three months ended December 31, 2008, the Company repurchased 117,401 shares at a weighted average price of $7.48. For the six months ended December 31, 2008, the Company repurchased 181,301 shares at a weighted average price of $8.01. All shares repurchased are shown as Treasury stock at cost, in the Shareholders’ equity section of the Condensed Consolidated Balance Sheet.

Employee Tax Withholding

To satisfy statutory employee tax withholding requirements related to the vesting of common shares, the Company purchases from employees, and then resells in the open market, shares utilized by employees to cover and pay for employee tax withholdings. At December 31, 2008, there were 2,259 shares held to be resold by the Company in the open market. These shares are shown as Treasury stock at cost in the Shareholders’ equity section of the Condensed Consolidated Balance Sheet. Any resulting gain or loss on resale is accounted for as an adjustment to Additional paid-in capital.

Note 7 – Conversion of Preferred Stock

On July 1, 2008, the holder of the 10,000 shares of Series A Convertible Preferred Stock (“the Preferred Stock”) outstanding, with a face value of $10,000,000, converted the Preferred Stock to 1,666,667 shares of Common Stock. Accordingly, the Series A Convertible Preferred Stock has been cancelled and the conversion eliminated the holder’s rights to receive the semi-annual dividends on the Preferred Stock.

Note 8 – Share-Based Compensation

The Company granted $0.4 million and $0.3 million in share-based compensation awards during the three months ended December 31, 2008 and 2007, respectively. For the three months ended December 31, 2008, a total of 40,370 shares were granted at a weighted average price of $9.26. For the three months ended December 31, 2007, a total of 18,761 shares were granted at a weighted average price of $13.91.

The Company granted $3.0 million and $2.5 million in share-based compensation awards during the six months ended December 31, 2008 and 2007, respectively. For the six months ended December 31, 2008, a total of 276,933 shares were granted at a weighted average price of $10.79. For the six months ended December 31, 2007, a total of 207,038 shares were granted at a weighted average price of $12.08.

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Employee share awards are recognized over a three-year period, while director awards are recognized over a one-year period, both in conjunction with their respective vesting periods. Neither employee nor director share awards are subject to performance-based accelerated vesting.

Note 9 - Other Income

a) eStara transaction

During the fiscal year ended June 30, 2000, J Net Enterprises, Inc. (“J Net”), the predecessor company to Epoch, made an investment in eStara, Inc. ("eStara"), a technology-related company that provided conversion and tracking solutions to enhance on-line sales. During the fiscal year ended June 30, 2003, J Net’s management concluded its ability to recover its investment was remote and wrote down the remaining carrying value to zero. On October 2, 2006, eStara’s stockholders approved the acquisition of its stock by Art Technology Group, Inc. (NASDAQ ticker symbol “ARTG”). Under the terms of the agreement, ARTG acquired all of the outstanding common stock, preferred stock, and vested and unvested stock options of eStara.

In exchange for the eStara preferred shares held, the Company received 2,431,577 common shares of ARTG and $267 thousand in cash. The common shares received from ARTG were subject to a lock-up agreement pursuant to which the shares were released to the Company in equal monthly installments over a period of 12 months, which commenced January 2007.

During the three and six months ended December 31, 2007, the Company sold approximately 0.8 and 1.2  million shares of ARTG, respectively, and recorded realized gains of approximately $2.1 and $3.0 million, respectively. Upon sale, these gains were reclassified, in accordance with the provisions of SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, from Accumulated other comprehensive income (loss), a separate component of stockholders’ equity, to Realized gains on investments on the Condensed Consolidated Statement of Operations. All of the remaining shares of ARTG were sold before the end of fiscal year ended June 30, 2008.

b) Strategic Data Corporation transaction

During the fiscal year ended June 30, 2000, J Net, the predecessor company to Epoch, made an investment in Strategic Data Corp. ("SDC"), a technology-related company that specialized in advertising optimization technology. During the fiscal year ended June 30, 2001, the carrying value of this investment was deemed to be impaired by J Net’s management and written down to zero.

On February 20, 2007, SDC’s stockholders approved the acquisition of its stock by Fox Interactive Media, Inc. (“FIM”). Under the terms of the agreement, FIM acquired all of the outstanding common stock, preferred stock, and vested and unvested stock options of SDC. As a result of the merger, the Company, as a holder of preferred stock of SDC, received an initial cash payment of approximately $2.2 million on March 22, 2007.

The SDC merger also called for contingent payments, upon the achievement of certain targets and milestones, payable over a period of approximately 3.5 years from the closing, as well as the release of an escrow fund. The Company’s share of additional contingent payments and escrow funds stemming from the acquisition, based upon the merger agreement, ranged from zero to approximately $15.4 million.

The first target measurement date was November 2007 and the Company accrued $344 thousand at that time. The Company received those proceeds during the quarter ended March 31, 2008. The second target measurement date was June 2008 and the Company accrued an additional $200 thousand at that time, the proceeds of which were received during the quarter ended September 30, 2008.

The merger agreement was subsequently amended during the quarter ended December 31, 2008 to provide for a final settlement of all contingent payments by December 31, 2008.  As such, additional payments totaling $4.7 million were received in December 2008. These payments represent the final contingent payments and are included in Realized gains on investments on the condensed consolidated statements of operations for the three and six months ended December 31, 2008. No further payments are expected.

Note 10 - Provision For Income Taxes

In calculating the provision for income taxes, the Company uses an estimate of the annual effective tax rate based upon the facts and circumstances known at each interim period. On a quarterly basis, the actual effective tax rate is adjusted, as appropriate, based upon current facts and circumstances, if any, as compared to those forecasted at the beginning of the fiscal year and each interim period thereafter.

Valuation allowance release

The Company maintains valuation allowances against certain deferred tax assets, the benefit of which may not be utilized. The Company reviews its deferred tax asset valuation allowances on a quarterly basis, or whenever events or changes in circumstances indicate that a review is required. In determining the requirement for a valuation allowance, the historical and projected financial results of the Company is considered, along with any other positive or negative evidence. Since future financial results may differ from previous estimates, periodic adjustments to the Company’s valuation allowances may be necessary.

In the quarter ended September 30, 2007, based on the Company’s annual operating projections and the significant gains realized on sales of marketable securities, the Company concluded that it was more likely than not that the tax benefits from its tax basis on a previously impaired investment would be utilized in the future. As such, in the quarter ended September 30, 2007, the Company released the entire valuation allowance of approximately $1.1 million attributable to this fully valued deferred tax asset, the tax effect of which was a credit to income tax expense. The effect of this valuation allowance release, together with the use of a projected annual effective tax rate, resulted in a net benefit from income taxes of approximately $0.4 million for the six months ended December 31, 2007.   

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Note 11 – Earnings Per Share

Basic earnings per share is computed by dividing net earnings by the weighted average number of common shares outstanding during the period.

Diluted earnings per share is computed by dividing net earnings, adjusted for the effect of dilutive securities, by the weighted average number of common and common equivalent shares outstanding during the period. The Company had 1,035,000 issued and outstanding stock options at December 31, 2008 and 2007, respectively. The calculation of earnings per share excluded 1,035,000 and 960,000 issued and outstanding stock options for the three and six months ended December 31, 2008, respectively, as the exercise price of these options was higher than the average market price of the common stock for the respective period. The conversion of those particular options, whose exercise price was higher than the average market price of the common stock during the respective period, would have an anti-dilutive effect.

For the three months ended December 31, 2007, the calculation of earnings per share excluded 500,000 issued and outstanding stock options as the exercise price of these options was higher than the average market price of the common stock for the period.

For the three and six months ended December 31, 2007, the 1,666,667 shares of common stock issuable upon conversion of the preferred stock had no effect on basic earnings per share, but was included in the calculation of diluted earnings per share. The preferred stock was converted into 1,666,667 common shares on July 1, 2008 which were, accordingly, included in the basic earnings per share calculation for the three and six months ended December 31, 2008.

The following table presents the computation of basic and diluted earnings per share for the three and six months ended December 31, 2008 and 2007, respectively (in thousands, except per share data):

	Three Months Ended December 31,					Six Months Ended December 31,
	2008		2007			2008		2007
Numerator:
Net income available to common stockholders:
Net income	$	2,973	$	2,547		$	3,556	$	4,644
Preferred stock dividends		-		(115	)		-		(230	)
Net income available to common stockholders
for basic earnings per share		2,973		2,432			3,556		4,414
Preferred stock dividends		-		115			-		230
Net income available to common stockholders
after assumed conversions, for diluted earnings per share	$	2,973	$	2,547		$	3,556	$	4,644
Denominator:
Average common shares outstanding		22,066		20,141			22,072		20,096
Common stock equivalents upon conversion of preferred stock		-		1,667			-		1,667
Net common stock equivalents assuming the exercise of
in-the-money stock options		-		41			2		86
Average common and common equivalent shares outstanding -
assuming dilution		22,066		21,849			22,074		21,849
Basic earnings per share	$	0.13	$	0.12		$	0.16	$	0.22
Diluted earnings per share	$	0.13	$	0.12		$	0.16	$	0.21

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Note 12 – Comprehensive Income

A summary of comprehensive income is as follows (in thousands):

	Three Months Ended						Six Months Ended
	2008			2007			2008			2007
Net income	$	2,973		$	2,547		$	3,556		$	4,644
Other comprehensive income:
Change in unrealized (losses) gains on available-for-sale securities		(528	)		831			(1,100	)		1,346
Reclassification of realized losses (gains) to net income		297			(2,207	)		554			(3,073	)
Comprehensive income	$	2,742		$	1,171		$	3,010		$	2,917

Note 13 – Special Cash Dividend

On December 19, 2008, the Board of Directors declared a special cash dividend of $0.12 per share on the Company’s common stock. The dividend was payable on January 15, 2009 to all shareholders of record at the close of business on December 31, 2008.  The aggregate dividend payment totaled approximately $2.6 million.

Note 14 - Subsequent Events

Common dividends

On January 15, 2009, the Board of Directors declared a quarterly cash dividend on the Company's Common Stock of $0.03 per share payable on February 20, 2009 to all shareholders of record at the close of business on February 5, 2009.

The Company expects regular quarterly cash dividends to be paid in February, May, August and November of each fiscal year, and anticipates a total annual dividend of $0.12 per common share. However, the actual declaration of future cash dividends, and the establishment of record and payment dates, will be subject to final determination by the Board of Directors each quarter after its review of the Company's financial performance.

Share repurchases

Subsequent to December 31, 2008, the Company repurchased an additional 6,600 shares at a weighted average price of $7.56 pursuant to the share buy-back program.

Share- based compensation

On January 30, 2009 the Company issued 336,753 restricted stock awards to employees of the Company, pursuant to the Company’s 2004 Omnibus Long-Term Incentive Compensation Plan. Recipients of the restricted awards were immediately vested in 12.5% of the total shares received. The remaining 87.5% of unvested shares will vest over the next three years, subject to the recipients remaining as employees of the Company. Issuance of these awards will result in total stock compensation expense of $2.1 million over the vesting period, assuming no forfeitures.

Additionally, the Company issued 630,060 stock options to employees of the Company, pursuant to the Company’s 2004 Omnibus Long-Term Incentive Compensation Plan. These stock options vest ratably over three years and have a term of seven years. The options have an exercise price of $6.17. However, upon vesting, the options are exercisable only if the volume weighted average price of the Company’s common stock equals or exceeds $9.25 for a period of at least 20 trading days. Issuance of these awards will result in total stock compensation expense of approximately $1.2 million over the vesting period, assuming no forfeitures.

*****

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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 December 31, 2008 and 2007. 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 the “Company,” “management,” “we,” “us,” and “our,” we mean Epoch Holding Corporation, a Delaware corporation, and its consolidated subsidiaries.

Forward-Looking Statements

Certain information included, or incorporated by reference in this Quarterly Report on Form 10-Q and other materials filed or to be filed by Epoch Holding Corporation (“Epoch" or the “Company") with the Securities and Exchange Commission (“SEC") contain statements that may be considered forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify these statements by forward-looking words such as “may," “might," “will," “should," “expect," “plan," “anticipate," “believe," “estimate," “predict," “potential" or “continue," and the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to known and unknown risks, uncertainties and assumptions about the Company, may include projections of the Company's future financial performance based on the Company's anticipated growth strategies and trends in the Company's business. These statements are only predictions based on the Company's current expectations and projections about future events. There are important factors that could cause the Company's actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. In particular, you should consider the risks and uncertainties outlined in “Factors Which May Affect Future Results.”

These risks and uncertainties are not exhaustive. Other sections of this Quarterly Report on Form 10-Q may include additional factors which could adversely impact the Company's business and financial performance. Moreover, the Company operates in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for the Company's management to predict all risks and uncertainties, nor can the Company assess the impact of all factors on the Company's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Although the Company believes the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, level of activity, performance or achievements. Moreover, neither the Company nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. The Company is under no duty to update any of these forward-looking statements after the date of this Quarterly Report on Form 10-Q, nor to conform the Company's prior statements to actual results or revised expectations, and the Company does not intend to do so.

Forward-looking statements include, but are not limited to, statements about the Company’s:

· business strategies and investment policies,

· possible or assumed future results of operations and operating cash flows,

· competitive position,

· potential growth opportunities,

· recruitment and retention of the Company's key employees,

· expectations with respect to the economy, securities markets, the market for mergers and acquisitions activity, the market for asset management activity and other industry trends,

· potential operating performance, achievements, productivity improvements, efficiency and cost reduction efforts,

· expected tax rate, and

· effect from the impact of future legislation and regulation on the Company.

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Available Information

Reports the Company files electronically with the SEC via the SEC’s Electronic Data Gathering, Analysis and Retrieval system (“EDGAR”) may be accessed through the internet. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, at www.sec.gov.

The Company maintains a website which contains current information on operations and other matters. The website address is www.eipny.com. Through the Investor Relations section of our website, and “Link to SEC Website” therein, we make available, free of charge, our Proxy Statement, Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

Also available free of charge on our website within the Investors Relations section is our Code of Ethics and Business Conduct and charters for the Audit, Nominating/Corporate Governance, and the Compensation committees of our board of directors.

Factors Which May Affect Future Results

There are numerous risks which may affect the results of operations of the Company. Factors which could affect the Company's success include, but are not limited to, the ability to attract and retain clients, performance of the financial markets and invested assets managed by the Company, retention of key employees, misappropriation of assets and information by employees, system failures, significant changes in regulations, the costs of compliance associated with existing regulations and the penalties associated with non-compliance, and the risks associated with the loss of key members of the management team.

In addition, the Company's ability to expand or alter its product offerings, whether through acquisitions or internal development is critical to its long-term success and has inherent risks. This success is dependent on the ability to identify and fund those products or acquisitions on terms which are favorable to the Company. There can be no assurance that any of these operating factors or acquisitions can be achieved or, if undertaken, they will be successful.

These and other risks related to our Company are discussed in greater detail under Part I, Item 1A. “Risk Factors” in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2008.

Critical Accounting Estimates and Policies

Our significant accounting policies are described in Note 2 of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2008. The Company's Critical Accounting Estimates and Policies have not changed from those reported in Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's Form 10-K for the fiscal year ended June 30, 2008.  

Overview

The Company, through its operating subsidiary Epoch Investment Partners, Inc. (“EIP”), provides investment advisory and investment management services to its clients primarily through separately managed accounts and commingled vehicles, such as mutual funds and private investment funds. The overall investment philosophy is focused on achieving a superior risk-adjusted return by investing in companies that generate free cash flow and are undervalued relative to the investment team’s fair value determinations. Security selection and portfolio construction are designed to protect capital in declining markets while participating in rising markets.

EIP is a registered investment adviser under the Investment Advisers Act of 1940, as amended (the “Investment Advisors Act”). It has one line of business, and that is to manage investment assets for retirement plans, mutual funds, endowments, foundations, and high net worth individuals. Revenues are generally derived as a percentage of assets under management (“AUM”). Therefore, among other factors, revenues are dependent on (i) performance of financial markets, (ii) the ability to maintain existing clients, and (iii) changes in the composition of AUM. The management team is led by William W. Priest. Mr. Priest has over 40 years of experience in the investment advisory business.

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Financial and Business Highlights

While the recent quarter ended December 31, 2008 was extremely challening to investors and one of the most volatile in market history, the Company achieved several noteworthy accomplishments.

Financial and business highlights for the quarter ended December 31, 2008 are as follows:

Ø The Company experienced net AUM inflows of approximately $450 million, despite a difficult market environment. Management believes this positive result is reflective of the confidence our new and existing clients have in the integrity of our investment process, the product performance, and experience of our professionals.

Ø Upon its three year anniversary, the Epoch Global Equity Shareholder Yield Fund  (“EPSYX”) received an initial Morningstar rating of 5 stars.  In addition, the Epoch U.S. All Cap Equity Fund (“EPACX”) and the Epoch International Small Cap Fund (“EPIEX”) each have Morningstar ratings of 4 stars.

Ø The Company launched the Epoch U.S. Large Cap Equity Fund in December 2008.

Ø Although operating leverage weakened as a result of significant weakness in global financial markets, the Company continued to achieve positive operating results. Given the recent market environment, the Company continues to monitor and assess its operating costs and their alignment with business strategy.

Ø Earnings per share for the quarter ended December 31, 2008 were $0.13, up 8% from the same period a year ago, as pre-tax income increased by approximately 19%. This was primarily the result of a final contingent payment of $4.7 million from the Strategic Data Corporation transaction.

Ø Corporate liquidity continued to strengthen. Cash balances increased to $41.5 million, or 74% of total assets, as of December 31, 2008. Working capital increased to $39.7 million. The Company’s current ratio of 5.7 as of December 31, 2008 is well above industry average.

Ø In addition to paying a quarterly cash dividend of $0.03 per share, the Board of Directors declared a special cash dividend of $0.12 per share during the quarter.

Ø Pursuant to its Common Stock Repurchase Plan, the Company repurchased approximately 117 thousand shares during the three months ended December 31, 2008.  As of December 31, 2008 the Company has repurchased approximately 190 thousand shares in total.

	Three Months Ended
	December 31,						Change
(Dollars in thousands)	2008			2007			$			%
Operating income	$	332		$	1,100		$	(768	)	(70	)%
Operating margin		5	%		13	%

Operating margins weakened compared with the same period a year ago. The main driver of this was the decrease in revenue, stemming from a lower level of AUM throughout the quarter. The Company finished the quarter ended December 31, 2008 with AUM of $5.3 billion, a 20% decrease from AUM of $6.7 billion at December 31, 2007.  The primary cause for this decrease was a significant decline in global equity markets from the prior year, primarily in the quarter ending December 31, 2008.  Global equity markets declined approximately 35-40% during the calendar year ended December 31, 2008, and more than 20% in the quarter ended December 31, 2008.

The Company’s AUM decrease during the quarter ended December 31, 2008 was only 12% compared with the previous quarter ended September 30, 2008 as a result of net AUM inflows from new accounts and continuing net cash flows into existing accounts, which offset some of the market decline.  New business mandates included the Company’s first institutional clients in Japan, Australia and France; the launch of a new U.S. Large Cap mutual fund, seeded by one of the largest financial institutions in the U.S.; and our first Taft-Hartley account.

17

The Company implemented several steps for cost control and cost reductions during the quarter ended December 31, 2008. Operating expenses declined by approximately $1.2 million, or 16%, in the current quarter compared with the same quarter a year ago.

	Three Months Ended
	December 31,				Change
(Dollars in thousands)	2008		2007		$		%
Net income	$	2,973	$	2,547	$	426	17	%

Although operating income decreased by $0.8 million from the same quarter a year ago, the Company recorded an increase in net income of $0.4 million. The primary reason for this increase was gains realized from the final contingent payment from the Strategic Data transaction. This was partly offset by realized losses on investments due to the global equity market decline, as well as lower interest income as interest rates continued to fall during the current period.

Business Environment

As an investment management and advisory firm, our results of operations can be directly impacted by global market, political, and economic trends. The business environment is influenced by several factors, including business profitability, investor confidence, unemployment, and financial market transparency. These factors can directly affect capital appreciation or depreciation, which in turn, impacts our investment advisory and management business.

Overall economic activity continued to weaken across the country and throughout the world during the quarter ended December 31, 2008. Retail sales were generally weak throughout the quarter, particularly during the holiday season. Lending activity continued to decline or remain weak, as credit conditions remained tight or tightened further. The rate of unemployment continued to increase, reaching 7.2% by the end of the quarter, the highest level in 16 years. Oil and commodity prices declined and capacity utilization decreased. The Federal Reserve and foreign central banks and governments around the world continued to provide additional liquidity and stability to the financial markets to try to mitigate the negative economic impact related to the credit markets.

In addition to considerably worsened economic conditions,  the landscape of the U.S. financial services industry changed dramatically during the period. There were several bank failures. The Federal Reserve announced enhancements to its programs to provide additional liquidity to the asset-backed commercial paper and money markets, and indicated that it plans to purchase from primary dealers short-term debt obligations issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks. The U.S. Treasury proposed a plan to buy mortgage-related, illiquid and other troubled assets from U.S. financial institutions and the Emergency Economic Stabilization Act of 2008 was enacted. The Federal Reserve, while working in unison with several foreign central banks, lowered both the benchmark interest rate and the discount rate to nearly 0% during the month of December, and it continues to consult frequently with its global central bank counterparts.

During the quarter, stocks around the globe endured a period of remarkable volatility and posted one of their biggest down quarters on record. In all, U.S. and global markets declined by approximately 20% during the quarter ended December 31, 2008. In particular, the Dow Jones Industrial Average(1), NASDAQ Composite Index (2) and the S&P 500 (3)decreased during the quarter ended December 31, 2008, assuming dividend reinvestment, by 19%, 22% and 24%, respectively. On a broad basis, developed global markets, as represented by the MSCI World index(4), decreased by 21.6%.

(1)           Dow Jones Industrial Average is a trademark of Dow Jones & Company, which is not affiliated with Epoch..

(2)           NASDAQ Composite Index is a trademark of the NASDAQ Stock Market, Inc., which is not affiliated with Epoch..

(3)           S&P 500 is a trademark of Standard & Poor’s, a division of the McGraw-Hill Companies, Inc., which is not affiliated with Epoch.

(4)           MSCI World Index is a trademark of MSCI Inc., which is not affiliated with Epoch.

Company impact and outlook

While the sharp sell-off in the equity markets impacted overall assets under management by nearly $1.2 billion during the quarter, the Company continued to achieve positive net inflows of approximately $450 million, a significant achievement in this turbulent market. While the quarter was challenging to all investors, the Company believes that its investment strategies, which emphasize a free cash flow analytical approach to the evaluation of equities, should continue to produce superior returns at a lower risk for our clients. The Company believes that free cash flow will be the analytical tool of choice because share price performance will depend on which companies show operational efficiencies, have capital expense under control and can properly manage their cash flow at a time when lending to fund growth or operations has tightened. The emphasis on cash flow analysis has become increasingly relevant, as the use of accounting measures alone has proven to inadequately capture issues surrounding the financial condition of many companies, particularly in the financial sector.

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The continued erosion of market conditions and impact on AUM may put pressure on the Company’s operating margin. The Company continues to monitor and assess its operating costs and their alignment with business strategy.

Assets Under Management and Flows (“AUM”)

The following table sets forth the changes in our AUM for the periods presented (dollars in millions): 

	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2008			2007			2008			2007
Beginning of period assets	$	6,085		$	6,426		$	6,634		$	6,001
Net inflows		444			329			654			600
Market (depreciation)/ appreciation		(1,181	)		(73	)		(1,940	)		81
End of period assets	$	5,348		$	6,682		$	5,348		$	6,682

For both the three months ended December 31, 2008 and 2007, approximately 55%, of investment advisory and management fees were earned from services to mutual funds under advisory and sub-advisory contracts whose fees are calculated based upon daily net asset values, and approximately 45%, of fees were earned from services provided for separate accounts whose fees are calculated based upon asset values at the end of the quarter.

No material impact to revenues or operating results arose during the periods presented as a result of differences between the average daily AUM for the funds where our fees are calculated based upon daily net asset values and the quarter-ending AUM for those funds.

The charts on the following page show the Company's products as a percentage of AUM as of December 31, 2008 and 2007, respectively:

19

20

The table and charts that follow set forth the amount of AUM by distribution channel:

Assets Under Management By Distribution Channel
(dollars in millions)
	As of December 31,				Change
Distribution Channel:	2008		2007		$			%
Institutional	$	2,770	$	3,285	$	(515	)	(15.7	)%
Sub-advised		2,350		3,081		(731	)	(23.7	)%
High net worth		228		316		(88	)	(27.8	)%
Total AUM	$	5,348	$	6,682	$	(1,334	)	(19.9	)%

21

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Results of operations - three months ended December 31, 2008 and 2007

For the three months ended December 31, 2008, the Company recorded net income of $3.0 million, an increase of $0.4 million from the same period a year ago. Basic earnings per share were $0.13 per share for the three months ended December 31, 2008, compared to $0.12 per share for the same period a year ago.

The primary factors were as follows:

Ø Total operating expenses decreased by $1.2 million, or 16%, during the three months ended December 31, 2008 compared with the same period a year ago. While all expenses declined during the current period, the decline in employee related costs, particularly incentive compensation, was the primary reason for this overall change.

Ø Other income increased by $1.6 million in the current quarter compared with the same period a year ago. The gain from the final contingent payment of the Strategic Data Corporation transaction was the main contributor of this increase.

Ø Offsetting these increases in net income was a $2.0 million decline in operating revenues. This decrease was driven by the significant decline in the global equity markets, and its related impact on AUM, partially offset by net inflows from new and existing clients.

	Three Months Ended
	December 31,				Change
(Dollars in thousands)	2008		2007		$			%
Revenues
Investment advisory and management fees	$	6,768	$	8,551	$	(1,783	)	(21	)%
Performance fees		-		172		(172	)	(100	)%
Total operating revenues	$	6,768	$	8,723	$	(1,955	)	(22	)%

The decrease in revenues was attributable to the decrease in AUM compared with the same period a year ago. This was primarily the result of the significant global equity market decline of approximately 35 – 40% from a year ago, partly offset by net AUM inflows from new and existing clients of $0.4 billion during the three months ended December 31, 2008 and over $1.1 billion since December 31, 2007.

For the three months ended December 31, 2008, CI Investments Inc. (“CI”), a Canadian-owned investment management company, accounted for approximately 13% of revenues, while Genworth Financial Asset Management, Inc. (“Genworth”), an investment adviser, through its investments in the Epoch International Small Cap Fund (“EPIEX”) and the Epoch Global Equity Shareholder Yield Fund (“EPSYX”), as well as separate account mandates, accounted for approximately 14% of revenues.

For the three months ended December 31, 2007, CI accounted for approximately 16% of revenues, while Genworth accounted for approximately 26% of revenues.

	Three Months Ended
	December 31,						Change
(Dollars in thousands)	2008			2007			$			%
Employee related costs (excluding share-
based compensation)	$	3,887		$	4,563		$	(676	)	(15	)%
As a percent of total revenue		57	%		52	%

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Expenses in this category include salaries, benefits, severance, incentive compensation, signing bonuses and commission expenses. These expenses declined from the same period a year ago, primarily as a result of a reduction in incentive compensation.

	Three Months Ended
	December 31,						Change
(Dollars in thousands)	2008			2007			$			%
Share-based compensation	$	791		$	1,029		$	(238	)	(23	)%
As a percent of total revenue		12	%		12	%

The Company believes that share-based compensation promotes unity in the workplace and a common objective with shareholders. Employee share-based compensation expense is recognized as follows: 12.5% immediately, and the remaining 87.5% ratably over the three-year vesting period of those awards.

The decrease in share-based compensation was primarily the result of share forfeitures during the three months ended December 31, 2008. Shared-based compensation expense is expected to increase during the next quarterly period.

In the three months ended December 31, 2008 and 2007, a total of 40,370 and 18,761 shares of restricted stock, respectively, were issued to employees. A total of 5,047 and 2,345 shares of the awards issued in the three months ended December 31, 2008 and 2007, respectively, or approximately 12.5%, were immediately vested. The remaining 87.5% of the shares vest ratably over the subsequent three years. During the three months ended December 31, 2008 and 2007, a total of 57,168 and 0 shares, respectively, were forfeited by terminated employees.

During the three months ended December 31, 2008 and December 31, 2007,no shares were granted to directors of the Company. Share grants to directors generally transpire in the quarter ended September 30. All director stock awards vest over one year. Director share-based compensation expense is recognized ratably over the respective vesting period, in accordance with the underlying vesting provisions. 

	Three Months Ended
	December 31,						Change
(Dollars in thousands)	2008			2007			$			%
General, administrative and occupancy	$	1,195		$	1,342		$	(147	)	(11	)%
As a percent of total revenue		18	%		15	%

These expenses consist primarily of office rents, as well as expenses for travel and entertainment, advertising and marketing, information technology, utilities, and other office related expenses. Decreases in travel-related expenses as a result of the Company’s cost control efforts were the main reason for the decrease in general, administrative and occupancy costs.

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	Three Months Ended
	December 31,						Change
(Dollars in thousands)	2008			2007			$			%
Professional fees and services	$	458		$	582		$	(124	)	(21	)%
As a percent of total revenue		7	%		7	%

These expenses consist primarily of outside legal fees for general corporate legal affairs, independent accountants' fees, consulting fees, and other professional services. A decrease in legal costs was the primary cause of the decline in professional fees and services. The prior period included certain legal expenses incurred in the origination of new investment vehicles. A decrease in professional tax related services and a decrease in employee placement fees also contributed to the decline in professional fees from the same period a year ago.

	Three Months Ended
	December 31,				Change
(Dollars in thousands)	2008		2007		$		%
Other income	$	4,675	$	3,096	$	1,579	51	%

Other income includes interest income, dividend income, realized gains and losses on investments, and rental income from subleased office space in New York. The prior year period included realized gains of $2.1 million from the sales of marketable securities, realized gains of $0.3 million from the Strategic Data Corporation transaction, and approximately $0.4 million of interest income. The current period includes realized gains of $4.7 million from the Strategic Data Corporation transaction, losses on investments of approximately $0.3 million, and approximately $0.2 million of interest income. Lower interest rates during the current quarter caused interest income to decline when compared to amounts for the same period a year ago. 

	Three Months Ended
	December 31,						Change
(Dollars in thousands)	2008			2007			$		%
Provision for income taxes	$	2,034		$	1,649		$	385	23	%
Effective income tax rate		40.6	%		39.3	%

In calculating the provision for income taxes, the Company uses an estimate of the annual effective tax rate based upon the facts and circumstances known at each interim period. On a quarterly basis, the effective tax rate is adjusted, as appropriate, based upon current facts and circumstances, if any, as compared to those forecasted at the beginning of the fiscal year and each interim period thereafter.

Results of operations - six months ended December 31, 2008 and 2007

For the six months ended December 31, 2008, the Company recorded net income of $3.6 million, a decrease of $1.1 million from the same period a year ago. Basic earnings per share were $0.16 per share for the six months ended December 31, 2008, compared with $0.22 per share for the same period a year ago.

The primary factors were as follows:

Ø Operating revenues declined by $1.4 million. This decrease was driven by the significant decline in the global equity markets and a corresponding decrease in AUM, partially offset by net inflows of nearly $0.7 billion during the six months ended December 31, 2008.

Ø Provision for income taxes increased by $1.1 million. The comparable period a year ago included the release of a $1.1 million tax valuation allowance, the tax benefit of which was $0.4 million.

Ø Offsetting these decreases to net income was a decline in total operating expenses by $1.1 million, or 7%, during the six months ended December 31, 2008. While virtually all expenses declined during the current period, it was the decline in employee incentive compensation that was the primary reason for this overall change.

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	Six Months Ended
	December 31,						Change
(Dollars in thousands)	2008			2007			$			%
Operating income	$	1,186		$	1,408		$	(222	)	(16	)%
Operating margin		8	%		8	%

While operating income decreased by $0.2 million, operating margins remained virtually unchanged during the six months ended December 31, 2008 compared with the same period a year ago. Decreases in operating revenue as a result of the weakness in financial markets previously discussed in the three month analysis, were offset by decreases in operating expenses, most notably in employee compensation, as reductions in incentive compensation caused employee compensation expenses to decrease by 9%.

	Six Months Ended
	December 31,				Change
(Dollars in thousands)	2008		2007		$			%
Net income	$	3,556	$	4,644	$	(1,088	)	(23	)%

Although income before income taxes was virtually unchanged for the six months ended December 31, 2008 when compared with the same period a year ago, net income declined. The reason for the decline is a direct result of an increase in the provision for income taxes by approximately $1.1 million. A release of a valuation allowance against a deferred tax asset contributed in the prior year, the tax effect of which was $0.4 million, was the main reason for the increase.

	Six Months Ended
	December 31,				Change
(Dollars in thousands)	2008		2007		$			%
Revenues
Investment advisory and management fees	$	15,246	$	16,428	$	(1,182	)	(7	)%
Performance fees		-		172		(172	)	(100	)%
Total operating revenues	$	15,246	$	16,600	$	(1,354	)	(8	)%

The decrease in revenues was attributable to lower levels in AUM during the six months ended December 31, 2008 compared with the same period a year ago. This was primarily the result of the significant global equity market decline of approximately 35-40% from a year ago, partially offset by net AUM inflows from new and existing clients of nearly $0.7 billion during the six months ended December 31, 2008 and over $1.1 billion since December 31, 2007.

For the six months ended December 31, 2008, CI accounted for approximately 14% of revenues, while Genworth, accounted for approximately 17% of revenues.

For the six months ended December 31, 2007, CI accounted for approximately 17% of revenues, while Genworth accounted for approximately 27% of revenues.

	Six Months Ended
	December 31,						Change
(Dollars in thousands)	2008			2007			$			%
Employee related costs (excluding share-
based compensation)	$	8,004		$	8,812		$	(808	)	(9	)%
As a percent of total revenue		52	%		53	%

These expenses declined from the same period a year ago, primarily as a result of a reduction in incentive compensation.

	Six Months Ended
	December 31,						Change
(Dollars in thousands)	2008			2007			$		%
Share-based compensation	$	2,121		$	2,104		$	17	1	%
As a percent of total revenue		14	%		13	%

Share-based compensation expense for the six months ended December 31, 2008 was virtually unchanged from the same period a year ago.

In the six months ended December 31, 2008 and 2007, a total of 238,313 and 171,434 shares of restricted stock, respectively, were issued to employees. A total of 29,789 and 21,430 shares of the awards issued in the six months ended December 31, 2008 and 2007, respectively, or approximately 12.5%, were immediately vested. The remaining 87.5% of the shares vest ratably over the subsequent three years. During the six months ended December 31, 2008 and 2007, a total of 57,168 and 1,449 shares, respectively, were forfeited by terminated employees.

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During the six months ended December 31, 2008 and December 31, 2007,38,620 and 35,604 shares of restricted stock, respectively, were granted to directors of the Company. All director stock awards vest over one year. Director share-based compensation expense is recognized ratably over the respective vesting period, in accordance with the underlying vesting provisions. 

	Six Months Ended
	December 31,						Change
(Dollars in thousands)	2008			2007			$			%
General, administrative and occupancy	$	2,547		$	2,726		$	(179	)	(7	)%
As a percent of total revenue		17	%		16	%

Decreases in travel related expenses, as a result of cost control efforts, were the main reason for the decrease in general, administrative and occupancy costs.

	Six Months Ended
	December 31,						Change
(Dollars in thousands)	2008			2007			$			%
Professional fees and services	$	1,177		$	1,339		$	(162	)	(12	)%
As a percent of total revenue		8	%		8	%

A decrease in legal costs was the primary cause of the decline in professional fees and services. The prior period includes certain legal expenses incurred in the origination of new investment vehicles. A decrease in employee placement fees also contributed to the overall decline from the same period a year ago.

	Six Months Ended
	December 31,				Change
(Dollars in thousands)	2008		2007		$		%
Other income	$	4,710	$	4,479	$	231	5	%

The prior year period included realized gains of $3.0 million from the sales of marketable securities, realized gains of $0.3 million from the Strategic Data Corporation transaction, and approximately $0.8 million of interest income. The current period includes realized gains of $4.7 million from the Strategic Data Corporation transaction, losses on investments of $0.6 million, and approximately $0.4 million of interest income. Lower interest rates during the six months ended December 31, 2008 caused interest income to decline compared to amounts for the same period a year ago. 

	Six Months Ended
	December 31,						Change
(Dollars in thousands)	2008			2007			$		%
Provision for income taxes	$	2,340		$	1,243		$	1,097	88	%
Effective income tax rate		39.7	%		21.1	%

In calculating the provision for income taxes, the Company uses an estimate of the annual effective tax rate based upon the facts and circumstances known at each interim period. On a quarterly basis, the effective tax rate is adjusted, as appropriate, based upon current facts and circumstances, if any, as compared to those forecasted at the beginning of the fiscal year and each interim period thereafter.

The comparable period a year ago included the release of a tax valuation allowance, the tax benefit of which was $0.4 million.

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Liquidity and Capital Resources

The Company’s operating cash flows are primarily influenced by the timing and receipt of investment management fees, and the payment of operating expenses, including incentive compensation to employees. Investment management fees are generally collected within 90 days of billing. The Company traditionally has paid cash incentive compensation during the first three months following the fiscal year to certain senior executives, and to other employees during the first three months following the calendar year. Prospectively, the Company will pay incentive compensation to all employees during the first three months following the calendar year, beginning with the next fiscal quarter ending March 31, 2009, incorporating a six month stub period for the senior executives.

Investing cash flows are principally influenced by activities to acquire property and equipment and re-investment of earnings from investments in Company-sponsored products.

Financing activities are predominately influenced by the payment of common stock dividends and repurchase of the Company’s common stock.  The Company generally makes dividend payments on its common stock on a quarterly basis.

Sources of Liquidity

Sources of funds for the Company's operations are derived from investment advisory and investment management fees, interest on the Company's cash and cash equivalents, and sublease income. As of December 31, 2008, the Company had $46.7 million of liquid assets, or approximately 84% of total assets which consist of cash and cash equivalents and accounts receivable to fund its business growth strategy. Given the availability of these funds, the Company does not maintain or anticipate a need for an external source of liquidity.

At December 31, 2008, accounts payable and accrued liabilities, which consist of accrued professional fees, trade payables and other liabilities, were $0.6 million. Accrued compensation and benefits, which consist primarily of accrued incentive compensation, were $5.1 million. The decrease in accrued incentive compensation stems from the reduction in AUM caused by the global equity market decline.

There was no debt and management does not foresee any reason to incur debt unless a significant business opportunity warrants such action. The Company's business does not require it to maintain significant capital balances. Management believes that the sources of liquidity described above will be sufficient to meet the Company’s operating needs for the foreseeable future and will enable it to continue to implement its growth objectives.

A summary of cash flow data for the six months ended December 31, 2008 and 2007, respectively, is as follows (in thousands):

	Six Months Ended
	December 31,
	2008			2007
Cash flows provided by (used in) :
Operating activities	$	401		$	7,812
Investing activities		4,882			22,388
Financing activities		(1,240	)		(368	)
Net increase in cash and cash equivalents		4,043			29,832
Cash and cash equivalents at beginning of year		37,436			3,097
Cash and cash equivalents at end of the period	$	41,479		$	32,929
Percent of total assets		74	%		68	%

Cash Flows from Operating Activities

Cash flows from operating activities decreased $7.4 million in the six months ended December 31, 2008 when compared with the same period a year ago. This decrease was due to the timing differences in the cash settlement of assets and liabilities, particularly the payment of accrued compensation and income taxes.

Cash Flows from Investing Activities

Cash flows from investing activities decreased by $17.5 million in the six months ended December 31, 2008 when compared with the same period a year ago. Prior year investing activities included $21.9 million of proceeds from the sale of short-term investments as well as $4.1 million of proceeds from the sale of shares of marketable securities. During August and September 2007, in response to increasing credit quality concerns present in the fixed income securities market, the Company liquidated all of its short-term investments. Proceeds from these liquidations were then invested in cash and cash equivalents. No gains or losses were realized from these liquidations.

During the six months ended December 31, 2008, the Company received $4.9 million representing the final installment payments under the Strategic Data Transaction.

Cash Flows from Financing Activities

Cash flows from financing activities decreased by $0.9 million in the six months ended December 31, 2008 compared with the same period a year ago. Included in this change was the payment of common stock dividends, as well as share buy-backs during the six months ended December 31, 2008, offset by the recognition of excess tax benefits on share-based compensation. The Company initiated the payment of common stock dividends in the quarter ended December 31, 2007 and the share buy-back program in June 2008.

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When a restricted stock award vests, the market price on the date the stock vests to the employee may be higher than the original grant-date fair market value of the award. If so, the difference between the cumulative amount that has been recognized through the Condensed Consolidated Statements of Operations and the vesting amount results in an excess tax benefit. Excess tax benefits reduce income taxes payable and increase additional paid-in capital in the period they are recognized, and are reflected as a financing activity on the Statements of Cash Flows. Excess tax benefits recognized during the six months ended December 31, 2008 and 2007 were approximately $1.7 million and $0.4 million, respectively.

Working Capital

The Company's working capital and current ratio (current assets divided by current liabilities) for the six months ended December 31, 2008 and recent fiscal year ended June 30, 2008 is set forth in the table below (in thousands ):

	December 31,		June 30,		Increase/		Percent
	2008		2008		(Decrease)		Change
Current Assets	$	48,092	$	44,753	$	3,339		7	%
Current Liabilities		8,379		7,961		418		5	%
Working Capital	$	39,713	$	36,792	$	2,921		8	%
Current Ratio		5.7		5.6		0.1		2	%

Preferred Stock Dividends

As a result of the November 7, 2006 preferred stock issuance, the Company began paying semi-annual dividends on newly issued Series A Convertible Preferred Stock (“the Preferred Stock”), payable December 31 and June 30 of each year. The semi-annual dividend payments were approximately $230 thousand, each June and December.

On July 1, 2008, the holder of the 10,000 shares of the Preferred Stock outstanding, with a face value of $10,000,000, converted the Preferred Stock to 1,666,667 shares of Common Stock. Accordingly, the Series A Convertible Preferred Stock has been cancelled and the conversion eliminates the holder’s rights to receive the semi-annual dividends on the Preferred Stock.

Quarterly Common Stock Dividends

The Company commenced declaring and paying a quarterly cash dividend on its common stock in the quarter ended December 31, 2007.

On July 9, 2008, the Board of Directors declared a 20% increase in the quarterly per share dividend rate on the Company’s Common Stock, from $0.025 per share to $0.03 per share.

Quarterly dividends were paid in August and November 2008.

On January 15, 2009, the Board of Directors declared a quarterly cash dividend payable on February 20, 2009 to all shareholders of record at the close of business on February 5, 2009.

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The Company expects regular quarterly cash dividends going forward to be paid in February, May, August and November of each fiscal year, and anticipates a total annual dividend of $0.12 per common share. However, the actual declaration of future cash dividends, and the establishment of record and payment dates, will be subject to final determination by the Board of Directors each quarter after its review of the Company's financial performance, as well as general business conditions, capital requirements, and any contractual, legal and regulatory restrictions.

Special Common Stock Dividend

As a result of the Company’s strong cash position and debt free balance sheet, the Board of Directors declared a special cash dividend on December 19, 2008 of $0.12 per share. The dividend was paid on January 15, 2009 to all shareholders of record at the close of business on December 31, 2008. The aggregate dividend payment totaled approximately $2.6 million.

This dividend represents a small portion of the Company’s cash balances, the remainder of which will be maintained to achieve key business objectives in growing our business, and provide a reserve for any unstable economic conditions.

Common Stock Repurchase Plan

On June 24, 2008, the Board of Directors approved the repurchase of up to a maximum of 250,000 shares, or just over 1%, of the Company’s fully diluted outstanding Common Stock. The repurchase plan calls for the repurchases to be made in the open market and/or in privately negotiated transactions from time to time in compliance with applicable laws, rules and regulations, including Rule 10b-18 under the Securities Exchange Act of 1934, as amended, subject to prevailing market and business conditions. The plan does not obligate the Company to purchase any particular number of shares, and may be suspended or discontinued at any time. The repurchase plan will expire on June 30, 2009.

During the three months ended December 31, 2008, the Company repurchased 117,401 shares at a weighted average price of $7.48. For the six months ended December 31, 2008, the Company repurchased 181,301 shares at a weighted average price of $8.01.

Contractual Obligations

The Company's primary headquarters and operations are located in New York, New York. Business is conducted at a location with approximately 13,000 square feet under a long-term lease that expires in September 2015.

The Company is also the primary party to another lease in New York, New York with approximately 8,500 square feet, which expires in November 2010. In January 2002, a sublease agreement was executed with an unrelated third party for this property. While the Company remains responsible under terms of the original lease, the subtenant has assumed those responsibilities and is performing its obligations under the sublease agreement. Proceeds from the sublease, net of profit sharing with the landlord, more than offset the Company’s obligations under this lease.

The subtenant has performed its obligations under the sublease agreement and the Company is not aware of any credit issues with the subtenant. As of December 31, 2008, the remaining future minimum payments under this lease total $0.9 million. Future minimum receipts from the subtenant, net of profit sharing with the landlord, slightly exceed $1.0 million as of December 31, 2008.

During December 2008, in an effort to consolidate marketing efforts and reduce costs, the Company closed its 2-employee marketing office in Sherman Oaks, California. The office lease at the California location expired in January 2009.

The Company entered into a three-year employment agreement with its Chief Executive Officer in November 2007, effective January 1, 2008. The agreement calls for a base annual salary of $350 thousand and bonus compensation in accordance with the Company’s bonus and incentive compensation plans then in effect. The agreement also calls for certain payments in the event of termination. The payments could vary depending on the cause of termination and whether or not the Board of Directors elects to enforce a non-compete agreement. The agreement was reviewed and approved by the Company's Compensation Committee and the Board of Directors.

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Summary of Contractual Obligations

The following table summarizes all contractual obligations, including the aforementioned office leases (in thousands):

				Payments Due in
				Fiscal Years Ended June 30,
	Remaining
	Payments in								2014 and
	2009				2010-2011			2012-2013	thereafter		Total
Primary New York operations	$	488		$	1,680		$	1,434	$	1,613	$	5,215
Subleased New York lease		240			681			-		-		921
Other operating leases		28			54			10		-		92
Total obligations		756			2,415			1,444		1,613		6,228
Sublease income		(287	)		(669	)		-		-		(956	)
Net obligations	$	469		$	1,746		$	1,444	$	1,613	$	5,272

Off-Balance Sheet Arrangements

As of December 31, 2008 the Company had no off-balance sheet arrangements. 

Significant Transactions

 eStara transaction

The Company previously held an investment in eStara, Inc. (“eStara”). In October 2006, eStara’s stockholders approved the acquisition of its stock by Art Technology Group, Inc. (NASDAQ ticker symbol “ARTG”). Under the terms of the agreement, ARTG acquired all of the outstanding securities of eStara., in exchange for shares in ARTG.

During the three and six months ended December 31, 2007, the Company sold shares of ARTG, and recorded realized gains of approximately $2.1 and $3.0 million, respectively. Upon sale, these gains were reclassified, in accordance with the provisions of SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, from Accumulated other comprehensive income (loss), a separate component of stockholders’ equity, to Realized gains on investments on the Condensed Consolidated Statement of Operations. All of the remaining shares of ARTG were sold before the end of fiscal year ended June 30, 2008.

See Note 9a of the condensed consolidated financial statements for further details of the eStara transaction.

Strategic Data Corporation transaction

The Company previously held an investment Strategic Data Corporation (“SDC”).  In February 2007, SDC’s stockholders approved the acquisition of its stock by Fox Interactive Media, Inc. (“FIM”). Under the terms of the agreement, FIM acquired all of the outstanding securities of SDC.

The SDC merger called for contingent payments, upon the achievement of certain targets and milestones. The first target measurement date was November 2007 and the Company accrued approximately $344 thousand at that time. The second target measurement date was June 2008 and the Company accrued an additional $200 thousand, the proceeds of which were received during the quarter ended September 30, 2008.

The merger agreement was subsequently amended during the quarter ended December 31, 2008 to provide for a final settlement of all contingent payments.  As such, additional payments totaling $4.7 million were received in December 2008. These payments represent the final contingent payments and are included in Realized gains on investments on the Condensed Consolidated Statements of Operations for the three and six months ended December 31, 2008. No further payments are expected.

See Note 9b of the condensed consolidated financial statements for further details of the Strategic Data Corporation transaction.

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New Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value Measurements (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measurements required under other accounting pronouncements, but does not change existing guidance as to whether or not an instrument is carried at fair value. SFAS 157 was effective for the Company beginning July 1, 2008. SFAS 157 establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and to minimize the use of unobservable inputs when measuring fair value. The adoption of SFAS 157 did not have a material effect on the Company’s consolidated financial position, results of operations, or cash flows.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (“SFAS 159”). SFAS 159 permits certain financial assets and financial liabilities to be measured at fair value, using an instrument-by-instrument election. The initial effect of adopting SFAS 159 must be accounted for as a cumulative effect adjustment to opening retained earnings for the fiscal year of adoption. Retrospective application to fiscal years preceding the effective date is not permitted. SFAS 159 was effective for the Company beginning July 1, 2008. The adoption of SFAS 159 did not have a material effect on the Company’s consolidated financial position, results of operations, or cash flows.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133 (“SFAS 161”), which requires enhanced disclosures about an entity’s derivative and hedging activities. SFAS 161 is effective for the Company beginning July 1, 2009. The Company does not currently engage in hedging or derivative transactions and, accordingly, does not expect the adoption of this pronouncement to have a material effect on the Company’s consolidated financial position, results of operations, or cash flows.

In June 2008, the FASB issued FASB Staff Position (“FSP”) EITF No. 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities. FSP EITF No. 03-6-1 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and therefore need to be included in the earnings allocation in calculating earnings per share under the two-class method described in SFAS No. 128, Earnings per Share. FSP EITF No. 03-6-1 requires companies to treat unvested share-based payment awards that have non-forfeitable rights to dividends or dividend equivalents as a separate class of securities in calculating earnings per share. FSP EITF No. 03-6-1 is effective for the Company beginning July 1, 2009; earlier application is not permitted. The Company does not expect the adoption of FSP EITF No. 03-6-1 to have a material effect on its consolidated financial position, results of operations or earnings per share.

In October 2008, the FASB issued FSP 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active.

FSP 157-3 does not reinterpret or change SFAS 157’s existing principles but rather is intended to enhance comparability and consistency in fair value measurements of financial assets that trade in markets that are inactive. FSP 157-3 primarily re-asserts that when the market is inactive, management is not required to use thinly traded quotes or quotes reflecting distressed prices. Rather, management should look to other means to estimate fair value, such as the “income approach,” which discounts the estimated cash flows and results in a Level 3 classification because the inputs are not observable. Revisions resulting from a change in the valuation technique or its application shall be accounted for as a change in accounting estimate. FSP 157-3 was effective immediately upon issuance. The Company does not currently have such investment instruments and, as such, the adoption of this pronouncement had no effect on its consolidated financial position, results of operations, or cash flows.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk. 

Market Risk

The Company’s predominant exposure to market risk is directly related to its role as an investment adviser for the mutual funds and separate accounts the Company manages. Changes in value of assets managed will impact the level of management and performance fee revenues. Approximately 55% of the Company’s revenue is derived from daily net asset values, while the remaining 45% of revenue is derived from market values of AUM at the end of the quarter. Declines in equity security market prices could cause revenues to decline because of lower investment management fees by causing:

• the value of AUM to decrease.

• the returns realized on AUM to decrease (impacting performance fees).

• clients to withdraw funds in favor of investments in markets that they perceive to offer greater opportunity.

Underperformance of client accounts relative to competing products could exacerbate these factors.

The management of market risk on behalf of our clients, and the impact on fees to the Company, is a significant focus for us and we use a variety of risk measurement techniques to identify and manage market risk.

Other investments

The Company is exposed to fluctuations in the market price of Other investments presented on its Condensed Consolidated Balance Sheets. The total fair value of Other investments as of December 31, 2008 and June 30, 2008 was $2.7 million and $3.9 million, respectively. The Company does not hedge its market risk related to these securities and does not intend to do so in the future.

At December 31, 2008, the Company performed sensitivity analysis to assess the potential loss in the fair value of these market-risk sensitive securities. The following table represents the estimated impact on the Company’s financial position assuming a hypothetical 10% decline in associated market indices (dollars in thousands):

						Estimated Fair
						Value After
			Hypothetical			Hypothetical		Decrease in
	Fair Value at		Percentage			Percentage		Stockholders'
	December 31, 2008		Decline			Change		Equity (1)
Other investments	$	2,747		10	%	$	2,518	$	229

1)   Investments in the Epoch mutual funds and the separate account of Epoch's Global All-Cap Product are classified as available-for-sale securities. Unrealized gains or losses on available-for-sale securities are excluded from earnings and recorded in other comprehensive income (loss) as a separate component of stockholders’ equity until realized. The investment in the Epoch Global Absolute Return Fund, LLC is accounted for using the equity method, under which the Company's share of net realized and unrealized earnings or losses from the limited liability company is reflected in income.

Cash and cash equivalents

Cash and cash equivalents are exposed to market risk due to changes in interest rates, which impacts interest income. The Company consistently monitors the quality of the institution where its cash is deposited, the balance of which, at times, may be in excess of the FDIC insurance limits. Presently, the Company neither participates in hedging activities nor does it have any derivative financial instruments.

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Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures. 

The Company has established and maintains disclosure controls and other procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), that are designed to provide reasonable assurance that material information relating to Epoch Holding Corporation and its subsidiaries on a consolidated basis is recorded, processed, accumulated, summarized and communicated accurately to management, including its principal executive officer and principal financial and accounting officer, as appropriate to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can only provide reasonable, not absolute assurance that the objectives of the disclosure controls and procedures are met.

For the quarter ended December 31, 2008, management, with the participation of the Company's principal executive officer and principal financial and accounting officer, has evaluated the effectiveness of the design and operation of its disclosure controls and procedures. Based on such evaluation, the Company's principal executive officer and principal financial and accounting officer have concluded that the Company's disclosure controls and procedures were effective during the period covered by this Quarterly Report on Form 10-Q.

The Company has also established and maintains internal control over financial reporting as a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of condensed consolidated financial statements for external purposes in accordance with accounting principles generally accepted in the United States. In the ordinary course of business, the Company routinely enhances its internal controls and procedures for financial reporting by either upgrading its current systems or implementing new systems. During the quarter ended December 31, 2008, there was no change in the Company’s internal controls over financial reporting reporting (as defined in Rule 13a-5(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, the Company or its subsidiaries may become parties to claims, legal actions and complaints arising in the ordinary course of business. Management is not aware of any claims which would have a material adverse effect on its consolidated financial position, liquidity, or results of operations.

Item 1a. Risk Factors.

See Part I. Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Business Environment” in this report for a discussion of the conditions in the financial markets and economic conditions affecting our business. This discussion updates, and should be read together with the risk factor entitled “Negative performance of the securities markets could reduce our revenues” in our annual report on Form 10-K for the year ended June 30, 2008.

In addition, for further discussion of our potential risks and uncertainties, see information under the heading “Risk Factors” in our annual report on Form 10-K for the year ended June 30, 2008.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(c) Purchases of Equity Securities by the Issuer.

On June 24, 2008, the Company’s Board of Directors approved the repurchase of up to a maximum of 250,000 shares, or just over 1%, of the Company’s fully diluted outstanding Common Stock. The repurchase plan calls for the repurchases to be made in the open market and/or in privately negotiated transactions from time to time in compliance with applicable laws, rules and regulations, including Rule 10b-18 under the Securities Exchange Act of 1934, as amended, subject to prevailing market and business conditions. The plan does not obligate the Company to purchase any particular number of shares, and may be suspended or discontinued at any time. The repurchase plan will expire on June 30, 2009.

The table below displays information with respect to the treasury shares the Company purchased under the repurchase plan discussed above during the three months ended December 31, 2008.

					Total Number of		Maximum Number
			Average		Shares Purchased		of Shares that May
	Total Number		Price		as Part of Publicly		Yet Be Purchased
	of Shares		Paid Per		Announced Plans		Under Outstanding
Period	Purchased		Share		or Programs		Plans or Programs (1)
October 1, 2008 - October 31, 2008		64,400	$	7.64		64,400		112,800
November 1, 2008 - November 30, 2008		18,201	$	6.74		18,201		94,599
December 1, 2008 - December 31, 2008		34,800	$	7.57		34,800		59,799
		117,401				117,401

(1) Subsequent to December 31, 2008, the Company repurchased an additional 6,600 shares at a weighted average price of $7.56. As of February 5, 2009, there were 53,199 shares available to be repurchased under our share repurchase program.

To satisfy statutory employee tax withholding requirements related to the vesting of common shares from employee stock awards, the Company purchases, and then resells in the open market, shares to cover and pay for employee tax withholdings. At December 31, 2008, there were 2,259 shares held in treasury to be resold by the Company in the open market.

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Item 4. Submission of Matters to a Vote of Security Holders.

The Annual Meeting of Stockholders of Epoch Holding Corporation was held in New York, New York on December 4, 2008. At that meeting, the stockholders considered and acted upon the following proposals:

Proposal 1. Election of Directors

By the vote reflected below, the stockholders elected the following individuals as directors for a one-year term:

Director	For		Withheld
Allan R. Tessler		18,683,400		1,275,558
William W. Priest		19,906,795		52,163
Eugene M. Freedman		19,829,742		129,216
Enrique R. Arzac		19,821,200		137,758
Jeffrey L. Berenson		19,802,556		156,402
Peter A. Flaherty		19,777,035		181,923

Proposal 2. Amendment to the 2004 Omnibus Long-Term Incentive Compensation Plan

By the vote reflected below, the stockholders voted to approve an amendment to the 2004 Omnibus Long-Term Incentive Compensation Plan (the “Omnibus Plan” or the “Plan”) to increase the number of shares of Common Stock available for issuance under the Omnibus Plan by 2,500,000 shares (the “Omnibus Plan Amendment”). Voting was as follows:

						Did not
For		Against		Abstain		Vote
	14,529,108		2,548,512		304,881		2,576,457

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Item 6. Exhibits.

2.1	Agreement and Plan of Reorganization dated June 2, 2004. (A)
3.1	Certificate of Incorporation of the Registrant, as amended. (B)
3.2	Amended and Restated By-Laws of Epoch Holding Corporation (as adopted April 2, 2008). (C)
4.1	Stockholder Rights Agreement dated as of July 11, 1994 between the Registrant and Continental Stock Transfer & Trust Company, as Rights Agent. (D)
10.1	Employment Agreement by and between Epoch Holding Corporation and William W. Priest, dated as of  November 28, 2007 and effective as of January 1, 2008. (E)
10.2	1992 Incentive and Non-qualified Stock Option Plan. (F)
10.40	Indemnification Agreement. (G)
10.40	Stockholders Agreement dated as of June 2, 2004 among J Net Enterprises, Inc. and certain of its stockholders. (A)
10.41	Registration Rights Agreement dated as of June 2, 2004 among J Net Enterprises, Inc. and certain of its stockholders. (A)
10.44	Amendment to 2004 Omnibus Long-Term Incentive Compensation Plan. (H)
10.45	Office lease between Vornado 640 Fifth Avenue LLC (Landlord) and Epoch Investment Partners, Inc. (Tenant). (I)
10.46	Form of Restricted Stock Award. (J)
10.47	Office lease between 680 Fifth Avenue Associates, L.P. (Landlord) and JNet Enterprises (Tenant). (J)
10.48	Office sublease between J Net Enterprises, Inc. (Tenant) and The Game Show Network (subtenant). (J)
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002. (K)
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002. (K)
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (K)

(A)	Incorporated by reference to Registrant's Form 8-K dated June 3, 2004.
(B)	Incorporated by reference to Registrant's Form 8-K dated December 7, 2004.
(C)	Incorporated by reference to Registrant's Form 8-K dated April 2, 2008.
(D)	Incorporated by reference to Registrant's Form 8-K dated July 12, 1994.
(E)	Incorporated by reference to Registrant's Form 8-K dated November 28, 2007.
(F)	Incorporated by reference to Registrant's 1992 Proxy Statement.
(G)	Incorporated by reference to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2003.
(H)	Incorporated by reference to Registrant's Form 8-K dated November 19, 2004.
(I)	Incorporated by reference to Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 2005.
(J)	Incorporated by reference to Registrant's Annual Report on Form 10-K/A for the fiscal year ended June 30, 2007.
(K)	Filed herewith.

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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. 

	EPOCH HOLDING CORPORATION
	(Registrant)
	By:	/s/ Adam Borak
		Chief Financial Officer
Date: February 9, 2009		(Principal Financial and Accounting Officer)

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