COHEN & STEERS INC - 10-Q Quarterly Report

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

FORM 10-Q

(Mark One)

S		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004
		OR

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

Commission File Number: 001-32236

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

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

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

(212) 832-3232
(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 S No £

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

The number of shares of the Registrant's common stock, par value $0.01 per share, outstanding as of November 10, 2004 was 35,325,000.

COHEN & STEERS, INC. AND SUBSIDIARIES
(SUCCESSOR TO THE OPERATIONS OF
COHEN & STEERS CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES)
INDEX

		PAGE

PART I.	FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS		3

ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		16

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		32

ITEM 4.	CONTROLS AND PROCEDURES		33

PART II.	OTHER INFORMATION

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		33

ITEM 6.	EXHIBITS		34

SIGNATURE			35

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

COHEN & STEERS, INC. AND SUBSIDIARIES
(SUCCESSOR TO THE OPERATIONS OF
COHEN & STEERS CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES)
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
September 30, 2004 and December 31, 2003
($ in thousands)

	September 30, 2004			December 31, 2003
	(Unaudited)

ASSETS
Current assets:
Cash and cash equivalents	$	47,350		$	7,526
Accounts receivable:
Company-sponsored mutual funds		7,331			5,179
Other		3,500			3,669
Marketable securities available-for-sale		63,848			6,497
Due from affiliates		52			282
Income tax refunds receivable		395			441
Deferred initial public offering costs		—			139
Prepaid expenses and other current assets		2,254			864

Total current assets		124,730			24,597

Property and equipment-net		2,830			3,361
Intangible asset-net		14,815			—

Other assets:
Deferred commissions-net		5,885			6,523
Deferred income tax asset		17,073			—
Deposits		42			42

Total other assets		23,000			6,565

Total assets	$	165,375		$	34,523

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accrued expenses and compensation	$	19,021		$	6,626
Dividends payable		4,023			—
Current portion of long-term debt		109			120
Current portion of obligations under capital leases		13			16
Deferred income tax liability		876			126
Other current liabilities		178			129

Total current liabilities		24,220			7,017

Long-term liabilities:
Deferred income tax liability		—			240
Bank line of credit		—			4,713
Long-term debt		1,583			1,661
Obligations under capital leases and other long-term liabilities		90			118

Total long-term liabilities		1,673			6,732

Commitments and contingencies		—			—
Stockholders' equity:
Common stock		353			267
Additional paid-in capital		165,248			3,692
Retained earnings (deficit)		(27,530	)		15,195
Accumulated other comprehensive income		1,411			1,620

Total stockholders' equity		139,482			20,774

Total liabilities and stockholders' equity	$	165,375		$	34,523

See notes to consolidated financial statements

COHEN & STEERS, INC. AND SUBSIDIARIES
(SUCCESSOR TO THE OPERATIONS OF
COHEN & STEERS CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES)
CONSOLIDATED STATEMENTS OF INCOME
Three and Nine Months Ended September 30, 2004 and 2003
($ in thousands, except share and per share data)
(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2004			2003			2004			2003

Revenue:
Investment advisory and administration fees:
Closed-end mutual funds	$	12,584		$	5,784		$	32,954		$	11,602
Open-end mutual funds		8,529			6,473			24,585			16,823
Institutional separate accounts		3,061			2,269			8,538			6,340

Total investment advisory and admininstration fees		24,174			14,526			66,077			34,765
Distribution and service fee revenue		2,554			1,624			7,246			3,857
Portfolio consulting and other		512			591			2,136			1,162
Investment banking fees		1,881			621			6,599			6,156

Total revenue		29,121			17,362			82,058			45,940

Expenses:
Employee compensation and benefits		6,809			7,984			21,933			25,698
Stock based compensation		48,374			328			49,073			986
Distribution and service fee expenses		7,072			2,657			16,202			5,972
General and administrative		2,789			2,191			8,916			5,796
Amortization, deferred commissions		1,005			754			3,295			2,200
Amortization, intangible asset		585			—			585			—
Depreciation and amortization		304			233			869			700

Total expenses		66,938			14,147			100,873			41,352

Operating income (loss)		(37,817	)		3,215			(18,815	)		4,588

Non-operating income (expense):
Interest and dividend income		302			99			515			298
Interest expense		(30	)		(40	)		(111	)		(115	)

Total non-operating income		272			59			404			183

Income (loss) before income taxes		(37,545	)		3,274			(18,411	)		4,771

Income tax benefit		(16,956	)		(6	)		(15,753	)		(29	)

Net income (loss)	$	(20,589	)	$	3,280		$	(2,658	)	$	4,800

Earnings per share-basic and diluted	$	(0.60	)	$	0.12		$	(0.09	)	$	0.18
Weighted average shares outstanding-basic		34,067,882			26,700,000			29,155,961			26,700,000
Weighted average shares outstanding-diluted		34,138,124			26,700,000			29,226,203			26,700,000
Dividends declared per share	$	0.10		$	—		$	0.10		$	—

See notes to consolidated financial statements

COHEN & STEERS, INC. AND SUBSIDIARIES
(SUCCESSOR TO THE OPERATIONS OF
COHEN & STEERS CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Nine Months Ended September 30, 2004
($ and share amounts in thousands)
(Unaudited)

	Common Stock				Restricted Stock Units A-P-I-C				Common Stock– Voting				Common Stock– Non voting				A-P-I-C			Unearned Compensation– A-P-I-C		Retained Earnings (deficit)			Accumulated Other Comprehensive Income (loss)			Total Stockholders' Equity
	Shares		Amount		Units		Amount		Shares		Amount		Shares		Amount
Balance at December 31, 2003		—	$	—		—	$	—		14,568	$	146		12,132	$	121	$	3,692		$	—	$	15,195		$	1,620		$	20,774

Net loss		—		—		—		—		—		—		—		—		—			—		(2,658	)		—			(2,658	)

Other comprehensive loss, unrealized gain on securities available-for-sale, net of tax of $750		—		—		—		—		—		—		—		—		—			—		—			(209	)		(209	)

Total comprehensive loss		—		—		—		—		—		—		—		—		—			—		—			—			(2,867	)

Transfer of undistributed retained losses to additional paid-in-capital		—		—		—		—		—		—		—		—		(1,697	)		—		1,697			—			—

Distributions to S-corporation shareholders		—		—		—		—		—		—		—		—		—			—		(37,741	)		—			(37,741	)