Edgar Filing: COHEN & STEERS INC

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CNS-10Q-6.30.14

________________________________________________________

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

________________

FORM 10-Q

________________

(Mark One)



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2014



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: 001-32236

________________

COHEN & STEERS, INC.

(Exact name of Registrant as specified in its charter)

________________



Delaware		14-1904657
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

280 Park Avenue New York, NY		10017
(Address of Principal Executive Offices)		(Zip Code)

(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 x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x 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” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

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

The number of shares of the registrant’s common stock, par value $0.01 per share, outstanding as of August 5, 2014 was 44,777,442.

________________________________________________________

COHEN & STEERS, INC. AND SUBSIDIARIES

Form 10-Q

Index



		Page
Part I.	Financial Information

Item 1.	Financial Statements	1

	Condensed Consolidated Statements of Financial Condition (Unaudited) as of June 30, 2014 and December 31, 2013	1

	Condensed Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended June 30, 2014 and 2013	2

	Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Six Months Ended June 30, 2014 and 2013	3

	Condensed Consolidated Statements of Changes in Stockholders’ Equity and Redeemable Noncontrolling Interest (Unaudited) for the Six Months Ended June 30, 2014 and 2013	4

	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2014 and 2013	5

	Notes to Condensed Consolidated Financial Statements (Unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32

Item 4.	Controls and Procedures	32

Part II.	Other Information *

Item 1.	Legal Proceedings	33

Item 1A.	Risk Factors	33

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33

Item 6.	Exhibits	34

Signatures		35

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

Forward-Looking Statements

This report and other documents filed by us contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which reflect management's current views with respect to, among other things, our operations and financial performance. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “may,” “should,” “seeks,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative versions of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these forward-looking statements. We believe that these factors include, but are not limited to, the risks described in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2013 (the "Form 10-K"), which is accessible on the Securities and Exchange Commission’s website at www.sec.gov and on our website at www.cohenandsteers.com. These factors are not exhaustive and should be read in conjunction with the other cautionary statements that are included in this report, the Form 10-K and other filings with the Securities and Exchange Commission. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

PART I—Financial Information

Item 1. Financial Statements

COHEN & STEERS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)

(in thousands, except share data)



	June 30, 2014			December 31, 2013
ASSETS
Cash and cash equivalents	$	112,328		$	128,277
Securities owned ($9,171 and $7,300) ⁽¹⁾	49,822			15,668
Equity method investments	26,634			24,724
Investments, available-for-sale	7,328			10,449
Accounts receivable	42,352			40,888
Due from broker	4,071			2,906
Property and equipment—net	9,674			9,824
Goodwill	20,591			20,672
Intangible assets—net	1,657			1,701
Deferred income tax asset—net	11,047			14,144
Other assets	7,626			5,673
Total assets	$	293,130		$	274,926

LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Accrued compensation	$	13,786		$	25,214
Deferred rent	5,830			4,344
Income tax payable	1,461			7,575
Other liabilities and accrued expenses	14,775			14,029
Total liabilities	35,852			51,162
Commitments and contingencies (See Note 11)
Redeemable noncontrolling interest	7,406			207
Stockholders’ equity:
Common stock, $0.01 par value; 500,000,000 shares authorized; 48,572,376 and 47,735,793 shares issued at June 30, 2014 and December 31, 2013, respectively	486			477
Additional paid-in capital	472,914			457,138
Accumulated deficit	(109,853		)	(131,366		)
Accumulated other comprehensive income, net of tax	3,593			2,989
Less: Treasury stock, at cost, 3,797,741 and 3,481,942 shares at June 30, 2014 and December 31, 2013, respectively	(117,268		)	(105,681		)
Total stockholders’ equity	249,872			223,557
Total liabilities and stockholders’ equity	$	293,130		$	274,926

_________________________

(1) Held as collateral attributable to the consolidated balances of Cohen & Steers Active Commodities Strategy Fund, Inc. and Cohen & Steers Active Commodities Fund, LP ("ACOM") as of June 30, 2014 and ACOM as of December 31, 2013.

See notes to condensed consolidated financial statements

COHEN & STEERS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(in thousands, except per share data)



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Revenue:
Investment advisory and administration fees	$	72,907		$	70,353		$	140,471		$	135,747
Distribution and service fees	3,744			3,741			7,214			7,175
Portfolio consulting and other	1,761			3,702			3,562			7,333
Total revenue	78,412			77,796			151,247			150,255
Expenses:
Employee compensation and benefits	25,876			24,895			49,911			48,272
Distribution and service fees	9,256			9,677			17,560			24,758
General and administrative	12,065			12,517			23,158			23,696
Depreciation and amortization	1,103			1,340			2,365			2,687
Amortization, deferred commissions	444			810			989			1,575
Total expenses	48,744			49,239			93,983			100,988
Operating income	29,668			28,557			57,264			49,267
Non-operating income:
Interest and dividend income—net	592			743			831			1,289
Gain (loss) from trading securities—net	2,762			(10,963		)	3,745			(9,339		)
Gain from available-for-sale securities—net	52			837			1,128			1,328
Equity in earnings (losses) of affiliates	1,429			(427		)	2,364			109
Other income (losses)	155			(368		)	103			(639		)
Total non-operating income (loss)	4,990			(10,178		)	8,171			(7,252		)
Income before provision for income taxes	34,658			18,379			65,435			42,015
Provision for income taxes	11,734			9,870			22,911			18,005
Net income	22,924			8,509			42,524			24,010
Less: Net (income) loss attributable to redeemable noncontrolling interest	(741		)	6,773			(896		)	6,413
Net income attributable to common stockholders	$	22,183		$	15,282		$	41,628		$	30,423

Earnings per share attributable to common stockholders:
Basic	$	0.49		$	0.34		$	0.93		$	0.69
Diluted	$	0.49		$	0.34		$	0.91		$	0.68
Dividends declared per share	$	0.22		$	0.20		$	0.44		$	0.40
Weighted average shares outstanding:
Basic	44,825			44,306			44,730			44,222
Diluted	45,530			45,002			45,507			44,942

See notes to condensed consolidated financial statements

COHEN & STEERS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(in thousands)



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Net income	$	22,924		$	8,509		$	42,524		$	24,010
Less: Net (income) loss attributable to redeemable noncontrolling interest	(741		)	6,773			(896		)	6,413
Net income attributable to common stockholders	22,183			15,282			41,628			30,423
Foreign currency translation gain (loss), net of tax of zero	74			319			151			(343		)
Net unrealized gain (loss) from available-for-sale securities, net of tax of zero	491			(863		)	1,581			933
Reclassification to statements of operations of gain from available-for-sale securities, net of tax of zero	(52		)	(837		)	(1,128		)	(1,328		)
Total comprehensive income attributable to common stockholders	$	22,696		$	13,901		$	42,232		$	29,685

See notes to condensed consolidated financial statements

COHEN & STEERS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY AND

REDEEMABLE NONCONTROLLING INTEREST (Unaudited)

Six Months Ended June 30, 2014 and 2013

(in thousands)



	Common Stock		Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss), Net of Tax			Treasury Stock			Total Stockholders’ Equity			Redeemable Noncontrolling Interest			Shares of Common Stock, Net
Beginning balance, January 1, 2013	$	470	$	429,377		$	(117,889	)	$	2,341		$	(97,719	)	$	216,580		$	53,188		43,763
Dividends	—		—			(18,204		)	—			—			(18,204		)	—			—
Issuance of common stock	7		286			—			—			—			293			—			715
Repurchase of common stock	—		—			—			—			(7,902		)	(7,902		)	—			(241	)
Tax benefits associated with restricted stock units—net	—		2,122			—			—			—			2,122			—			—
Issuance of restricted stock units	—		1,140			—			—			—			1,140			—			—
Amortization of restricted stock units—net	—		10,708			—			—			—			10,708			—			—
Forfeitures of vested restricted stock units	—		(10		)	—			—			—			(10		)	—			—
Net income (loss)	—		—			30,423			—			—			30,423			(6,413		)	—
Other comprehensive loss, net of tax	—		—			—			(738		)	—			(738		)	—			—
Contributions from redeemable noncontrolling interest	—		—			—			—			—			—			36,498			—
Redemptions of redeemable noncontrolling interest	—		—			—			—			—			—			(10,664		)	—
Ending balance, June 30, 2013	$	477	$	443,623		$	(105,670	)	$	1,603		$	(105,621	)	$	234,412		$	72,609		44,237

Beginning balance, January 1, 2014	$	477	$	457,138		$	(131,366	)	$	2,989		$	(105,681	)	$	223,557		$	207		44,254
Dividends	—		—			(20,115		)	—			—			(20,115		)	—			—
Issuance of common stock	9		338			—			—			—			347			—			837
Repurchase of common stock	—		—			—			—			(11,587		)	(11,587		)	—			(316	)
Tax benefits associated with restricted stock units—net	—		2,706			—			—			—			2,706			—			—
Issuance of restricted stock units	—		588			—			—			—			588			—			—
Amortization of restricted stock units—net	—		12,144			—			—			—			12,144			—			—
Net income	—		—			41,628			—			—			41,628			896			—
Other comprehensive income, net of tax	—		—			—			604			—			604			—			—
Contributions from redeemable noncontrolling interest	—		—			—			—			—			—			7,257			—
Redemptions of redeemable noncontrolling interest	—		—			—			—			—			—			(745		)	—
Transfer of redeemable noncontrolling interest in consolidated entity	—		—			—			—			—			—			(209		)	—
Ending balance, June 30, 2014	$	486	$	472,914		$	(109,853	)	$	3,593		$	(117,268	)	$	249,872		$	7,406		44,775

See notes to condensed consolidated financial statements

COHEN & STEERS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in thousands)



	Six Months Ended June 30,
	2014			2013
Cash flows from operating activities:
Net income	$	42,524		$	24,010
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Stock compensation expense	12,195			10,752
Amortization, deferred commissions	989			1,575
Depreciation and amortization	2,365			2,687
Deferred rent	1,486			969
(Gain) loss from trading securities—net	(3,745		)	9,339
Equity in earnings of affiliates	(2,364		)	(109		)
Gain from available-for-sale securities—net	(1,128		)	(1,328		)
Deferred income taxes	2,939			1,092
Foreign currency (gain) loss	(298		)	930
Changes in operating assets and liabilities:
Accounts receivable	(1,166		)	(2,296		)
Due from broker	(1,165		)	(13,088		)
Deferred commissions	(921		)	(1,746		)
Securities owned	(30,409		)	(12,532		)
Other assets	(2,012		)	996
Accrued compensation	(11,399		)	(12,011		)
Securities sold but not yet purchased	—			(14,685		)
Income tax payable	(5,744		)	1,145
Other liabilities and accrued expenses	691			3,885
Net cash provided by (used in) operating activities	2,838			(415		)
Cash flows from investing activities:
Proceeds from redemptions of equity method investments—net	454			683
Purchases of investments, available-for-sale	(3,603		)	(5,464		)
Proceeds from sales of investments, available-for-sale	8,289			17,756
Purchases of property and equipment	(2,161		)	(2,826		)
Net cash provided by investing activities	2,979			10,149
Cash flows from financing activities:
Excess tax benefits associated with restricted stock units	2,498			1,981
Issuance of common stock	295			250
Repurchase of common stock	(11,587		)	(7,902		)
Dividends to stockholders	(19,704		)	(17,703		)
Redemptions of redeemable noncontrolling interest	(745		)	(10,664		)
Contributions from redeemable noncontrolling interest	7,257			36,498
Net cash (used in) provided by financing activities	(21,986		)	2,460
Net (decrease) increase in cash and cash equivalents	(16,169		)	12,194
Effect of foreign exchange rate changes on cash and cash equivalents	220			(141		)
Cash and cash equivalents, beginning of the period	128,277			95,412
Cash and cash equivalents, end of the period	$	112,328		$	107,465

See notes to condensed consolidated financial statements

COHEN & STEERS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS—(Continued)

(UNAUDITED)

Supplemental disclosures of cash flow information:

For the six months ended June 30, 2014 and 2013, the Company paid taxes, net of tax refunds, of approximately $24,328,000 and $13,784,000, respectively.

Supplemental disclosures of non-cash investing and financing activities:

In connection with its stock incentive plan, for the six months ended June 30, 2014 and 2013, the Company issued fully vested restricted stock units in the amount of $177,000 and $639,000, respectively. For the six months ended June 30, 2014 and 2013, the Company recorded restricted stock unit dividend equivalents, net of forfeitures, in the amount of $411,000 and $501,000, respectively.

COHEN & STEERS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Organization and Description of Business

Cohen & Steers, Inc. (“CNS”) was organized as a Delaware corporation on March 17, 2004. CNS was formed to be the holding company for Cohen & Steers Capital Management, Inc. (“CSCM”), a New York corporation, and to allow for the issuance of common stock to the public.

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The condensed consolidated financial statements set forth herein include the accounts of CNS and its direct and indirect subsidiaries. CNS’s wholly-owned subsidiaries are CSCM, Cohen & Steers Securities, LLC (“Securities”), Cohen & Steers Asia Limited and Cohen & Steers UK Limited; Cohen & Steers Europe SPRL is a wholly-owned subsidiary of Cohen & Steers UK Limited (collectively, the “Company”). Prior to a reorganization in February 2013, Cohen & Steers Europe SPRL was a wholly-owned subsidiary of CNS. Intercompany balances and transactions have been eliminated in consolidation.

Through CSCM, a registered investment adviser under the Investment Advisers Act of 1940 (the “Advisers Act”), the Company serves institutional and individual investors around the world. Founded in 1986, the Company is a leading global investment manager with a long history of innovation and a focus on real assets, including real estate, infrastructure and commodities. Its clients include Company-sponsored open-end and closed-end mutual funds, U.S. and non-U.S. pension plans, endowment funds, foundations and subadvised funds for other financial institutions. Through Securities, its registered broker/dealer, the Company provides distribution services for certain of its funds.

2. Basis of Presentation and Significant Accounting Policies

The condensed consolidated financial statements of the Company included herein are unaudited and have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the interim results have been made. The Company’s condensed consolidated financial statements and the related notes should be read together with the consolidated financial statements and the related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

Accounting Estimates—The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the dates of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Management believes the estimates used in preparing the condensed consolidated financial statements are reasonable and prudent. Actual results could differ from those estimates.

Reclassifications—Certain prior year amounts have been reclassified to conform to the current year presentation.

Consolidation—The Company consolidates operating entities deemed to be voting interest entities if the Company owns a majority of the voting interest. The equity method of accounting is used for investments in non-controlled affiliates in which the Company’s ownership ranges from 20 to 50 percent, or in instances in which the Company is able to exercise significant influence but not control. The Company also consolidates any variable interest entities (“VIEs”) in which the Company is the primary beneficiary. The Company records noncontrolling interests in consolidated subsidiaries for which the Company’s ownership is less than 100 percent.

A VIE is an entity in which either (a) the equity investment at risk is not sufficient to permit the entity to finance its own activities without additional financial support or (b) the group of holders of the equity investment at risk lack certain characteristics of a controlling financial interest. The primary beneficiary is the entity that has the obligation to absorb a majority of the expected losses or the right to receive the majority of the residual returns. Investments and redemptions or amendments to the governing documents of the respective entities could affect an entity's status as a VIE or the determination of the primary beneficiary. The Company assesses whether entities in which it has an interest are VIEs upon initial involvement and at each reporting date. The Company assesses whether it is the primary beneficiary of any VIEs identified

COHEN & STEERS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

by evaluating its economic interests in the entity held either directly by the Company and its affiliates or indirectly through employees. See Note 4 for further discussion about the Company’s investments.

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

Due from Broker—The Company conducts business with brokers for certain of its investment activities. The clearing and custody operations for these investment activities are performed pursuant to agreements with prime brokers. The due from broker balance represents cash and cash equivalents balances at brokers and net receivables and payables for unsettled security transactions related to the Company's consolidated seed investments.

Investments—Management of the Company determines the appropriate classification of its investments at the time of purchase and re-evaluates such determination at each statement of financial condition date.

Securities owned are classified as trading securities and represent securities held within the affiliated funds that the Company consolidates. These securities are measured at fair value based on quoted market prices, market prices obtained from independent pricing services engaged by management or as determined by the Company’s valuation committee. Unrealized gains and losses are recorded as gain (loss) from trading securities—net in the Company’s condensed consolidated statements of operations.

Investments classified as equity method investments are accounted for using the equity method, under which the Company recognizes its respective share of the investee’s net income or loss for the period. As of June 30, 2014, the Company's equity method investments consisted of interests in affiliated funds which measure their underlying investments at fair value and report a net asset value on a recurring basis. The carrying amounts of these investments approximate their fair value.

Investments classified as available-for-sale are comprised of equity securities, investment-grade preferred instruments and investments in Company-sponsored open-end and closed-end mutual funds. These investments are carried at fair value based on quoted market prices or market prices obtained from independent pricing services engaged by management, with unrealized gains and losses, net of tax, reported in accumulated other comprehensive income. The Company periodically reviews each individual security position that has an unrealized loss, or impairment, to determine if that impairment is other than temporary. If the Company believes an impairment of a security position is other than temporary, the loss will be recognized in the Company’s condensed consolidated statements of operations. An other than temporary impairment is presumed to have occurred if the available-for-sale investment has an unrealized loss continuously for 12 or more months.

From time to time, the affiliated funds consolidated by the Company enter into derivative contracts to gain exposure to the underlying commodities markets or to hedge market and credit risks of the underlying portfolios utilizing options, total return swaps, credit default swaps and futures contracts. These instruments are measured at fair value with gains and losses recorded as gain (loss) from trading securities—net in the Company's condensed consolidated statements of operations. The fair values of these instruments are recorded in other assets or other liabilities and accrued expenses in the Company's condensed consolidated statements of financial condition. As of June 30, 2014, none of the outstanding derivative contracts were subject to any master netting arrangement or other similar agreement.

Additionally, from time to time, the Company enters into foreign exchange contracts to hedge its currency exposure related to client receivables. These instruments are measured at fair value with gains and losses recorded in other non-operating income in the Company's condensed consolidated statements of operations. The fair values of these contracts are recorded in other assets or other liabilities and accrued expenses in the Company's condensed consolidated statements of financial condition.

Goodwill and Intangible Assets—Goodwill represents the excess of the cost of the Company’s investment in the net assets of an acquired company over the fair value of the underlying identifiable net assets at the date of acquisition. Goodwill and indefinite lived intangible assets are not amortized but are tested at least annually for impairment by comparing the fair value to their carrying amounts. Finite lived intangible assets are amortized over their useful lives and are tested for

COHEN & STEERS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. See Note 3 for further discussion about the Company’s goodwill and intangible assets.

Redeemable Noncontrolling Interest—Redeemable noncontrolling interest represents third-party interests in the Company's consolidated entities. This interest is redeemable at the option of the investors and therefore is not treated as permanent equity. Redeemable noncontrolling interest is remeasured at redemption value which approximates the fair value at each reporting period.

Investment Advisory and Administration Fees—The Company earns revenue by providing asset management services to institutional accounts and to Company-sponsored open-end and closed-end mutual funds. This revenue is earned pursuant to the terms of the underlying advisory contract, and is based on a contractual investment advisory fee applied to the assets in the client’s portfolio, net of applicable waivers, if any. The Company also earns revenue from administration fees paid by certain Company-sponsored open-end and closed-end mutual funds, based on the average assets under management of such funds. This revenue is recognized as such fees are earned.

Distribution and Service Fees—Distribution and service fee revenue is earned as the services are performed, based on predetermined percentages of the average assets under management of the Company-sponsored open-end load mutual funds. Distribution and service fee revenue is recorded gross of any third-party distribution and service fee expense arrangements. The expenses associated with these third-party distribution and service fee arrangements are recorded as incurred. During the first quarter of 2013, the Company made payments of approximately $7.2 million associated with an additional compensation agreement entered into in connection with the offering of Cohen & Steers MLP Income and Energy Opportunity Fund, Inc. ("MIE"), a closed-end mutual fund. These payments are included in distribution and service fees expense on the accompanying condensed consolidated statements of operations for the six months ended June 30, 2013.

Portfolio Consulting and Other—The Company earns portfolio consulting and other fees by: i) providing portfolio consulting services in connection with model-based strategies accounts; ii) earning a licensing fee for the use of the Company's proprietary indices; and iii) providing portfolio monitoring services related to a number of unit investment trusts. This revenue is earned pursuant to the terms of the underlying contract, and the fee schedules for these relationships vary based on the type of services the Company provides for each relationship. This revenue is recognized as such fees are earned.

Stock-based Compensation—The Company recognizes compensation expense for the grant-date fair value of awards of equity instruments granted to employees. This expense is recognized over the period during which employees are required to provide service. The Company also estimates forfeitures.

Income Taxes—The Company records the current and deferred tax consequences of all transactions that have been recognized in the condensed consolidated financial statements in accordance with the provisions of the enacted tax laws. 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. The Company records a valuation allowance, when necessary, to reduce deferred tax assets to an amount that more likely than not will be realized. The effective tax rate for interim periods represents the Company’s best estimate of the effective tax rate expected to be applied to the full fiscal year.

Currency Translation and Transactions—Assets and liabilities of subsidiaries having non-U.S. dollar functional currencies are translated at exchange rates at the applicable condensed consolidated statement of financial condition date. Revenue and expenses are translated at average exchange rates during the period. The gains or losses resulting from translating non-U.S. dollar functional currency into U.S. dollars are included in the Company's condensed consolidated statements of comprehensive income. Gains or losses resulting from non-U.S. dollar currency transactions are included in other non-operating income in the condensed consolidated statements of operations. The cumulative translation adjustment was $2,415,000 and $2,264,000 as of June 30, 2014 and December 31, 2013, respectively.

Comprehensive Income—The Company reports all changes in comprehensive income in the condensed consolidated statements of comprehensive income. Comprehensive income includes net income or loss attributable to common stockholders, foreign currency translation gain and loss (net of tax), unrealized gain and loss from available-for-sale

COHEN & STEERS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

securities (net of tax) and reclassification to statements of operations of gain and loss from available-for-sale securities (net of tax).

Recently Issued Accounting Pronouncements—In June 2014, the Financial Accounting Standards Board (“FASB”) issued new guidance regarding stock based compensation which requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. This new guidance will be effective for the Company’s first quarter of 2016. The Company does not anticipate that the adoption of this new guidance will have a material impact on the Company's condensed consolidated financial statements.

In May 2014, the FASB issued new guidance which outlined a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This new guidance will be effective for the Company's first quarter of 2017 and requires either a retrospective or a modified retrospective approach to adoption. The Company is currently evaluating the potential impact on its condensed consolidated financial statements and related disclosures, as well as the available transition methods. Early application is prohibited.

In April 2014, the FASB issued new guidance which changed the requirements for reporting discontinued operations. A disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity's operations and financial results. This new guidance will be effective for the Company's first quarter of 2015. The Company does not anticipate that the adoption of this new guidance will have a material impact on the Company's condensed consolidated financial statements.

In March 2014, the FASB issued new guidance to make certain technical corrections to the FASB Accounting Standards Codification ("Codification") Master Glossary. The amendments affect various Codification topics and include deletion of Master Glossary terms, additions to the Master Glossary links, elimination of duplicate Master Glossary terms, and other technical corrections related to Master Glossary terms. The amendments in this new guidance do not have transition guidance and were effective upon issuance. The adoption of this new guidance did not have a material impact on the Company's condensed consolidated financial statements.

In December 2013, the FASB issued new guidance to provide a single definition of public business entity for use in future financial accounting and reporting guidance. The guidance specifies that an entity that is required by the SEC to file or furnish financial statements with the SEC, or does file or furnish financial statements with the SEC, is considered a public business entity. Additionally, a consolidated subsidiary of a public company is not considered a public business entity for purposes of its standalone financial statements other than those included in an SEC filing by its parent or by other registrants or those that are issuers and are required to file or furnish financial statements with the SEC. This new guidance was effective for all future accounting updates starting from 2014. The adoption of this new guidance did not have a material impact on the Company's condensed consolidated financial statements.

In July 2013, the FASB issued new guidance on the presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. An entity is required to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward unless a net operating loss carryforward, a similar tax loss or a tax credit carryforward is not available as of the reporting date or the entity does not intend to use the deferred tax asset for this purpose (provided that the tax law permits a choice). This new guidance was effective for the Company's first quarter of 2014. The adoption of this new guidance did not have a material impact on the Company's condensed consolidated financial statements.

COHEN & STEERS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

In June 2013, the FASB issued new guidance which clarifies the characteristics of an investment company and provides guidance for assessing whether an entity is an investment company. From time to time the Company consolidates certain of its affiliated funds which are considered investment companies. The Company retains the specialized investment company accounting for such funds in consolidation. This new guidance was effective for the Company’s first quarter of 2014. The adoption of this new guidance did not have a material impact on the Company’s condensed consolidated financial statements.

3. Goodwill and Intangible Assets

Goodwill

Goodwill represents the excess of purchase price over the net tangible assets and identifiable intangible assets of an acquired business. At June 30, 2014 and December 31, 2013, goodwill was approximately $20,591,000 and $20,672,000, respectively. The Company’s goodwill decreased by $81,000 for the six months ended June 30, 2014 as a result of foreign currency revaluation.

Intangible Assets

The following table details the gross carrying amounts and accumulated amortization for the intangible assets at June 30, 2014 and December 31, 2013 (in thousands):



	Remaining Amortization Period (in months)	Gross Carrying Amount		Accumulated Amortization			Intangible Assets, Net
June 30, 2014:
Amortized intangible assets:
Client relationships	54	$	1,543	$	(1,136	)	$	407
Non-amortized intangible assets:
Mutual fund management contracts	—	1,250		—			1,250
Total		$	2,793	$	(1,136	)	$	1,657
December 31, 2013:
Amortized intangible assets:
Client relationships	60	$	1,543	$	(1,092	)	$	451
Non-amortized intangible assets:
Mutual fund management contracts	—	1,250		—			1,250
Total		$	2,793	$	(1,092	)	$	1,701

COHEN & STEERS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

Amortization expense related to the intangible assets was approximately $22,000 for both the three months ended June 30, 2014 and 2013, respectively, and approximately $44,000 for both the six months ended June 30, 2014 and 2013, respectively. Estimated future amortization expense is as follows (in thousands):



Periods Ending December 31,	Estimated Amortization Expense
2014	$	45
2015	89
2016	89
2017	89
2018	95
Thereafter	—
Total	$	407

4. Investments

The following is a summary of the Company's investments as of June 30, 2014 and December 31, 2013 (in thousands):



	June 30, 2014		December 31, 2013
Securities owned	$	49,822	$	15,668
Equity method investments	26,634		24,724
Investments, available-for-sale	7,328		10,449

Trading and equity method investments

The Cohen & Steers Active Commodities Strategy Fund, Inc. (“CDF”), which was launched by the Company in May 2014, is an open-end mutual fund for which the Company is the investment adviser. As of June 30, 2014, the Company owned all of the outstanding voting interest in CDF. Accordingly, the underlying assets and liabilities and results of operations of CDF have been included in the Company's condensed consolidated financial statements.

The Cohen & Steers MLP & Energy Opportunity Fund, Inc. (“MLO”), which was launched by the Company in December 2013, is an open-end mutual fund for which the Company is the investment adviser. As of June 30, 2014, the Company owned the majority of the outstanding voting interest in MLO. Accordingly, the underlying assets and liabilities and results of operations of MLO have been included in the Company's condensed consolidated financial statements with the third party interests classified as redeemable noncontrolling interest.

The Cohen & Steers Active Commodities Fund, LP (“ACOM”), launched by the Company in April 2013, is structured as a partnership. The Company is the investment adviser of ACOM for which it is entitled to receive a management fee. As of June 30, 2014, the Company owned all of the voting interest in ACOM. Accordingly, the underlying assets and liabilities and results of operations of ACOM have been included in the Company's condensed consolidated financial statements.

Cohen & Steers Global Realty Partners III-TE, L.P. ("GRP-TE"), which had its closing in October 2011, is structured as a partnership. The Company is the general partner and investment adviser of GRP-TE, for which it receives a management fee and is entitled to receive an incentive distribution, if earned. GRP-TE is a VIE and the Company is not the primary beneficiary. As the general partner, the Company has significant influence over the financial decisions of GRP-TE and therefore records its investment using the equity method of accounting. The Company's equity interest in GRP-TE represents a seed investment to launch the fund which was made during the first quarter of 2012, adjusted for the Company’s proportionate share of the fund’s earnings. As of June 30, 2014, the fair value of the Company's equity interest in GRP-TE was approximately $105,000. The Company's risk with respect to its investment in GRP-TE is limited to its equity ownership

COHEN & STEERS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

and any uncollected management fees. In conjunction with the launch of GRP-TE, the Company established Cohen & Steers Co-Investment Partnership, L.P. (“GRP-CIP”), which is used by the Company to fulfill its contractual commitment to co-invest with GRP-TE. See Note 11 for further discussion regarding the Company's co-investment commitment. As of June 30, 2014, the Company owned all of the voting interest in GRP-CIP. Accordingly, the underlying assets and liabilities and results of operations of GRP-CIP have been included in the Company's condensed consolidated financial statements.

Prior to its liquidation in April 2014, the Company owned the majority of the voting interests in the Cohen & Steers Global Real Estate Long-Short Fund, L.P. (the “Onshore Fund”). Accordingly, the underlying assets and liabilities and results of operations of the Onshore Fund had been included in the Company's condensed consolidated financial statements. The Onshore Fund was structured as a partnership and the Company was the general partner and investment adviser of the fund.

The Cohen & Steers Global Real Estate Long-Short Offshore Fund, L.P. (the “Offshore Fund”), which was liquidated in April 2014, was structured as a partnership. The Company was the general partner and investment adviser of the Offshore Fund for which it received a management fee and was entitled to receive a performance fee, if earned. The Company determined that the Offshore Fund was not a VIE. The limited partners, unaffiliated with the Company, had the ability to dissolve the fund with a majority vote. As a result, the Company did not have financial control and the Offshore Fund was not consolidated into the Company's condensed consolidated financial statements. As the general partner, the Company had significant influence over the financial decisions of the Offshore Fund and therefore recorded its investment in this fund using the equity method of accounting. The Company’s equity interest in the Offshore Fund represented a seed investment to launch the fund, adjusted for the Company’s proportionate share of the fund’s earnings.

Cohen & Steers Real Assets Fund, Inc. ("RAP"), which was launched by the Company in January 2012, is an open-end mutual fund for which the Company is the investment adviser. The Company had a controlling financial interest in RAP through July 31, 2013 and therefore, the underlying assets and liabilities and results of operations of RAP had been included in the Company's condensed consolidated financial statements with the third party interests classified as redeemable noncontrolling interest. As a result of additional third party subscriptions into the fund, effective August 1, 2013, the Company no longer held a controlling financial interest in RAP, however it was determined that the Company had significant influence over RAP. Accordingly, effective August 1, 2013, the Company records its investment in RAP using the equity method of accounting.

The following is a summary of the fair value of securities owned and equity method investments as of June 30, 2014 and December 31, 2013 (in thousands):



	June 30, 2014				December 31, 2013
	Securities Owned		Equity Method Investments		Securities Owned		Equity Method Investments
ACOM	$	8,600	$	—	$	7,300	$	—
CDF	8,400		—		—		—
GRP-CIP	2,378		—		2,740		—
GRP-TE	—		105		—		116
MLO	30,444		—		5,125		—
Offshore Fund	—		—		—		412
Onshore Fund	—		—		503		—
RAP	—		26,529		—		24,196
Total	$	49,822	$	26,634	$	15,668	$	24,724

COHEN & STEERS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

Gain (loss) from trading securities—net for the three and six months ended June 30, 2014 and 2013, which represent realized and unrealized gains and losses recorded by the funds the Company consolidates, are summarized below (in thousands):



	Three Months Ended June 30,					Six Months Ended June 30,
	2014		2013			2014		2013
ACOM	$	279	$	(626	)	$	816	$	(626	)
CDF	46		—			46		—
GRP-CIP	153		(23		)	163		(23		)
MLO	2,284		—			2,696		—
Onshore Fund	—		(1,100		)	24		521
RAP	—		(9,214		)	—		(9,211		)
Total gain (loss) from trading securities—net	$	2,762	$	(10,963	)	$	3,745	$	(9,339	)

Equity in earnings (losses) of affiliates for the three and six months ended June 30, 2014 and 2013 are summarized below (in thousands):



	Three Months Ended June 30,					Six Months Ended June 30,
	2014		2013			2014		2013
GRP-TE	$	—	$	—		$	20	$	—
Offshore Fund	—		(427		)	11		109
RAP	1,429		—			2,333		—
Total equity in earnings (losses) of affiliates	$	1,429	$	(427	)	$	2,364	$	109

COHEN & STEERS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

Available-for-sale

The following is a summary of the cost, gross unrealized gains, gross unrealized losses and fair value of investments, available-for-sale as of June 30, 2014 and December 31, 2013 (in thousands):



	June 30, 2014
	Cost		Gross Unrealized Gains		Gross Unrealized Losses ⁽¹⁾			Fair Value
Preferred securities	$	1,013	$	55	$	(2	)	$	1,066
Common stocks	5,151		1,149		(39		)	6,261
Company-sponsored mutual funds	1		—		—			1
Total investments, available-for-sale	$	6,165	$	1,204	$	(41	)	$	7,328

_________________________

(1) At June 30, 2014, there were no securities with unrealized losses continuously for a period of more than 12 months.



	December 31, 2013
	Cost		Gross Unrealized Gains		Gross Unrealized Losses ⁽¹⁾			Fair Value
Preferred securities	$	4,142	$	183	$	(40	)	$	4,285
Common stocks	5,400		698		(132		)	5,966
Company-sponsored mutual funds	197		1		—			198
Total investments, available-for-sale	$	9,739	$	882	$	(172	)	$	10,449

_________________________

(1) At December 31, 2013, there were no securities with unrealized losses continuously for a period of more than 12 months.

The aggregate fair value of available-for-sale securities in an unrealized loss position was approximately $942,000 and $1,785,000 at June 30, 2014 and December 31, 2013, respectively.

Unrealized losses on investments, available-for-sale as of June 30, 2014 were generally caused by market conditions. When evaluating whether an unrealized loss on an investment, available-for-sale is other than temporary, the Company reviews such factors as extent and duration of the loss, deterioration in the issuer’s credit quality, reduction or cessation of dividend payments and overall financial strength of the issuer. As of June 30, 2014, the Company determined that it had the ability and intent to hold the remaining investments for which no other-than-temporary impairment has occurred until a recovery of fair value. Accordingly, impairment of these investments is considered temporary.

Sales proceeds, gross realized gains and losses from investments, available-for-sale for the three and six months ended June 30, 2014 and 2013 are summarized below (in thousands):



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Proceeds from sales	$	1,548		$	13,984		$	8,298		$	17,756
Gross realized gains	143			1,024			1,249			1,563
Gross realized losses	(91		)	(187		)	(121		)	(235		)

COHEN & STEERS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

5. Fair Value

Codification Topic 820, Fair Value Measurement (“ASC 820”) specifies a hierarchy of valuation classifications based on whether the inputs to the valuation techniques used in each valuation classification are observable or unobservable. These classifications are summarized in the three broad levels listed below:


•	Level 1—Unadjusted quoted prices for identical instruments in active markets.


•	Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable.


•	Level 3—Valuations derived from valuation techniques in which significant inputs or significant value drivers are unobservable.

Inputs used to measure fair value might fall in different levels of the fair value hierarchy, in which case the Company defaults to the lowest level input that is significant to the fair value measurement in its entirety. These levels are not necessarily an indication of the risk or liquidity associated with the investments. In determining the appropriate levels, the Company performed a detailed analysis of the assets and liabilities that are subject to ASC 820. Transfers among levels, if any, are recorded at the beginning of the reporting period. There were no transfers between level 1 and level 2 during the six months ended June 30, 2014.

The following table presents fair value measurements as of June 30, 2014 (in thousands):



	Level 1		Level 2		Level 3		Total
Cash equivalents ⁽¹⁾	$	55,358	$	—	$	—	$	55,358
Securities owned
Common stocks	$	30,444	$	—	$	—	$	30,444
Fixed income securities	—		17,000		—		17,000
Limited partnership interests	—		—		2,378		2,378
Total securities owned	$	30,444	$	17,000	$	2,378	$	49,822
Equity method investments	$	26,529	$	—	$	105	$	26,634
Investments, available-for-sale
Preferred securities	$	1,066	$	—	$	—	$	1,066
Common stocks	6,261		—		—		6,261
Company-sponsored mutual funds	1		—		—		1
Total investments, available-for-sale	$	7,328	$	—	$	—	$	7,328
Derivatives - assets
Commodity contracts	$	1,184	$	—	$	—	$	1,184
Total derivatives - assets	$	1,184	$	—	$	—	$	1,184
Derivatives - liabilities
Foreign exchange contracts	$	—	$	110	$	—	$	110
Commodity contracts	563		—		—		563
Total derivatives - liabilities	$	563	$	110	$	—	$	673

_________________________

(1) Comprised of investments in money market funds.

Securities owned classified as level 2 in the above table were primarily comprised of investments in United States Treasury Bills carried at amortized cost, which approximates fair value.

Securities owned classified as level 3 in the above table were comprised of limited partnership interests which represent the Company's co-investments through GRP-CIP, which along with the Company's interest in GRP-TE, represent the

COHEN & STEERS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

Company's collective ownership interests in limited partnership vehicles that invest in private real estate funds which are valued based on the net asset values of the underlying funds and direct investments in real estate which are generally valued using a discounted cash flow model.

Equity method investments classified as level 3 in the above table represent the carrying amount of the Company's partnership interest in GRP-TE, which approximates its fair value based on the fund's net asset value. GRP-TE invests in non-registered real estate funds and in private equity vehicles that invest directly in real estate. As of June 30, 2014, the Company did not have the ability to redeem its investment in GRP-TE.

The following table presents fair value measurements as of December 31, 2013 (in thousands):



	Level 1		Level 2		Level 3		Total
Cash equivalents ⁽¹⁾	$	61,551	$	—	$	—	$	61,551
Securities owned
Common stocks	$	5,125	$	—	$	503	$	5,628
Fixed income securities	—		7,300		—		7,300
Limited partnership interests	—		—		2,740		2,740
Total securities owned	$	5,125	$	7,300	$	3,243	$	15,668
Equity method investments	$	24,196	$	—	$	528	$	24,724
Investments, available-for-sale
Preferred securities	$	960	$	—	$	3,325	$	4,285
Common stocks	5,966		—		—		5,966
Company-sponsored mutual funds	198		—		—		198
Total investments, available-for-sale	$	7,124	$	—	$	3,325	$	10,449
Derivatives - assets
Foreign exchange contracts	$	—	$	398	$	—	$	398
Commodity contracts	305		—		—		305
Total derivatives - assets	$	305	$	398	$	—	$	703
Derivatives - liabilities
Commodity contracts	$	275	$	—	$	—	$	275
Total derivatives - liabilities	$	275	$	—	$	—	$	275

_________________________

(1) Comprised of investments in money market funds.

Securities owned classified as level 2 in the above table were primarily comprised of investments in United States Treasury Bills carried at amortized cost, which approximates fair value.

Securities owned classified as level 3 in the above table were comprised of investments in the common stock of a privately held bank holding company and limited partnership interests. The investments in the common stock of a privately held bank holding company were valued by the Company's valuation committee using a market approach which utilized market multiples derived from a set of comparable public companies. The limited partnership interests represent the Company's co-investments through GRP-CIP, which along with the Company's interest in GRP-TE, represent the Company's collective ownership interests in limited partnership vehicles that invest in private real estate funds which are valued based on the net asset values of the underlying funds and direct investments in real estate which are generally valued using a discounted cash flow model. The methodology used to value the investments held by GRP-CIP was changed during the year ended December 31, 2013 as the transaction cost was no longer a reasonable approximation of value due to the passage of time.

Equity method investments classified as level 3 in the above table represent the carrying amount of partnership interests in the Offshore Fund and GRP-TE, which approximate their fair value based on each fund's net asset value. The Offshore

COHEN & STEERS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

Fund made long and short investments in listed real estate equity securities to maximize absolute and risk-adjusted returns with modest volatility. GRP-TE invests in non-registered real estate funds and in private equity vehicles that invest directly in real estate. As of December 31, 2013, the Company did not have the ability to redeem its investment in either fund.

Investments, available-for-sale classified as level 3 in the above table were comprised of an auction rate preferred security of a closed-end fund which was measured at fair value using a a third party pricing service which utilized a combination of a market approach based on the quoted prices for identical or similar instruments in markets that are not active and an income approach in which the expected cash flows of the securities were discounted back to the measurement date. The Company reviewed the fair value provided by the pricing service and confirmed its understanding of the methodology utilized.

The following table summarizes the changes in level 3 investments measured at fair value on a recurring basis for the three and six months ended June 30, 2014 (in thousands):



	Three Months Ended June 30, 2014										Six Months Ended June 30, 2014
	Securities Owned					Equity Method Investments			Investments, available-for-sale		Securities Owned						Equity Method Investments			Investments, available-for-sale
	Common Stocks		Limited Partnership Interests			GRP-TE/Offshore Fund			Preferred Securities		Common Stocks			Limited Partnership Interests			GRP-TE/Offshore Fund			Preferred Securities
Balance at beginning of period	$	—	$	2,251		$	537		$	—	$	503		$	2,740		$	528		$	3,325
Purchases / contributions	—		24			2			—		—			305			9			—
Sales / distributions	—		—			(434		)	—		(527		)	(721		)	(463		)	(4,000		)
Realized (losses) gains	—		(145		)	—			—		24			64			—			675
Unrealized gains ⁽¹⁾	—		248			—			—		—			(10		)	31			—
Transfers into (out of) level 3	—		—			—			—		—			—			—			—
Balance at end of period	$	—	$	2,378		$	105		$	—	$	—		$	2,378		$	105		$	—

_________________________

(1) Pertains to unrealized gains (losses) from securities held at June 30, 2014.

The following table summarizes the changes in level 3 investments measured at fair value on a recurring basis for the three and six months ended June 30, 2013 (in thousands):



	Three Months Ended June 30, 2013										Six Months Ended June 30, 2013
	Securities Owned						Equity Method Investments		Investments, available-for-sale		Securities Owned						Equity Method Investments		Investments, available-for-sale
	Common Stocks			Limited Partnership Interests			GRP-TE		Preferred Securities		Common Stocks			Limited Partnership Interests			GRP-TE		Preferred Securities
Balance at beginning of period	$	1,075		$	2,292		$	95	$	3,079	$	1,168		$	2,142		$	89	$	3,080
Purchases / contributions	—			53			1		—		—			203			7		—
Sales / distributions	(419		)	(113		)	—		—		(419		)	(113		)	—		—
Realized losses	(211		)	—			—		—		(211		)	—			—		—
Unrealized (losses) gains ⁽¹⁾	(32		)	(22		)	—		13		(125		)	(22		)	—		12
Transfers into (out of) level 3	—			—			—		—		—			—			—		—
Balance at end of period	$	413		$	2,210		$	96	$	3,092	$	413		$	2,210		$	96	$	3,092

_________________________

(1) Pertains to unrealized gains (losses) from securities held at June 30, 2013.

COHEN & STEERS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

Realized gains (losses) from investments classified as securities owned, equity method investments and investments, available-for-sale in the above tables were recorded as gain (loss) from trading securities, equity in earnings (losses) of affiliates and gain (loss) from available-for-sale securities, respectively, in the Company's condensed consolidated statements of operations. Unrealized gains (losses) from investments classified as securities owned and equity method investments in the above tables were recorded as gain (loss) from trading securities and equity in earnings (losses) of affiliates, respectively, in the Company's condensed consolidated statements of operations. Unrealized gains (losses) from investments, available-for-sale in the above tables were recorded as unrealized gain (loss) from available-for-sale securities in the Company's condensed consolidated statements of comprehensive income.

Valuation Techniques

In certain instances, debt and equity securities are valued on the basis of prices from an orderly transaction between market participants provided by reputable brokers/dealers or pricing services. In determining the value of a particular investment, pricing services may use information with respect to transactions in such investments, broker quotes, pricing matrices, market transactions in comparable investments and various relationships between investments. As part of its independent price verification process, the Company selectively performs detailed reviews of valuations provided by broker/dealers or pricing services.

Foreign exchange contracts are valued by interpolating a value using the spot foreign exchange rate and forward points (based on the spot rate and currency interest rate differentials), which are all inputs that are observable in active markets (level 2).

In the absence of observable market prices, the Company values its investments using valuation methodologies applied on a consistent basis. For some investments, little market activity may exist; management's determination of fair value is then based on the best information available in the circumstances, and may incorporate management's own assumptions and involves a significant degree of judgment, taking into consideration a combination of internal and external factors. Such investments are valued on a quarterly basis, taking into consideration any changes in key inputs and changes in economic and other relevant conditions, and valuation models are updated accordingly. The valuation process also includes a review by the Company's valuation committee which is primarily comprised of senior members from various departments within the Company, including investment management. The valuation committee provides independent oversight of the valuation policies and procedures.

The valuation techniques and significant unobservable inputs used in the fair value measurement of the following level 3 investments as of June 30, 2014 were:



	Fair Value		Fair Value	Significant
	(in thousands)		Methodology	Unobservable Inputs	Range
Limited partnership interests - direct investments in real estate	$	1,454	Discounted cash flows	Discount rate Exit capitalization rates Market rental rates	9% - 15% 8% - 8.5% $15.00 - 18.50 psf

The valuation techniques and significant unobservable inputs used in the fair value measurement of the following level 3 investments as of December 31, 2013 were:



	Fair Value		Fair Value	Significant	Input /
	(in thousands)		Methodology	Unobservable Inputs	Range
Common shares of privately-held company	$	503	Market comparable companies	Price / tangible book ratio Liquidity discount	1.48x 33%
Limited partnership interests - direct investments in real estate	$	2,101	Discounted cash flows	Discount rate Exit capitalization rates Market rental rates	9% - 15% 8.5% - 9% $15.00 - 16.25 psf

COHEN & STEERS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

Changes in the significant unobservable inputs in the tables above may result in a materially higher or lower fair value measurement. The disclosure in the above tables excludes the Company's ownership interests in limited partnership vehicles which are valued based on the net asset values of the underlying funds. The disclosure in the above table as of December 31, 2013 also excludes auction rate preferred securities for which fair value is based on unobservable but non-quantitative inputs. Such items include financial instruments for which the determination of fair value is based on unadjusted quotations provided by a third party pricing service.

6. Derivatives

The following is a summary of the notional and fair value of the derivative financial instruments. The notional amount represents the absolute value amount of all outstanding derivative contracts at June 30, 2014 (in thousands):



	June 30, 2014
	Assets				Liabilities
	Notional		Fair Value		Notional		Fair Value
Total foreign exchange contracts	$	—	$	—	$	11,733	$	110
Total commodity contracts	29,596		1,184		13,354		563
Total derivatives	$	29,596	$	1,184	$	25,087	$	673



	December 31, 2013
	Assets				Liabilities
	Notional		Fair Value		Notional		Fair Value
Total foreign exchange contracts	$	10,853	$	398	$	—	$	—
Total commodity contracts	8,115		305		5,738		275
Total derivatives	$	18,968	$	703	$	5,738	$	275

Cash included in due from broker in the condensed consolidated statement of financial condition of approximately $1,359,000 and $2,110,000 as of June 30, 2014 and December 31, 2013, respectively, was held as collateral for futures contracts. Securities included in securities owned in the condensed consolidated statement of financial condition of approximately $9,171,000 and $7,300,000 as of June 30, 2014 and December 31, 2013, respectively, were held as collateral for futures contracts.

Gains and losses from derivative financial instruments for the three and six months ended June 30, 2014 and 2013 are summarized below (in thousands):



	Three Months Ended June 30,						Six Months Ended June 30, 2014
	2014			2013			2014			2013
Equity contracts	$	—		$	(184	)	$	—		$	(584	)
Foreign exchange contracts	(340		)	27			(508		)	1,329
Commodity contracts	(198		)	(3,747		)	350			(3,840		)
Credit contracts	—			(10		)	—			(21		)
Total derivatives	$	(538	)	$	(3,914	)	$	(158	)	$	(3,116	)

COHEN & STEERS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

7. Earnings Per Share

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

No anti-dilutive common stock equivalents were excluded from the computation for the three and six months ended June 30, 2014 and 2013.

The following is a reconciliation of the income and share data used in the basic and diluted earnings per share computations for the three and six months ended June 30, 2014 and 2013 (in thousands, except per share data):



	Three Months Ended June 30,					Six Months Ended June 30,
	2014			2013		2014			2013
Net income	$	22,924		$	8,509	$	42,524		$	24,010
Less: Net (income) loss attributable to redeemable noncontrolling interest	(741		)	6,773		(896		)	6,413
Net income attributable to common stockholders	$	22,183		$	15,282	$	41,628		$	30,423
Basic weighted average shares outstanding	44,825			44,306		44,730			44,222
Dilutive potential shares from restricted stock units	705			696		777			720
Diluted weighted average shares outstanding	45,530			45,002		45,507			44,942
Basic earnings per share attributable to common stockholders	$	0.49		$	0.34	$	0.93		$	0.69
Diluted earnings per share attributable to common stockholders	$	0.49		$	0.34	$	0.91		$	0.68

8. Income Taxes

The provision for income taxes for the six months ended June 30, 2014 includes U.S. federal, state, local and foreign taxes at an approximate effective tax rate of 35.5%. The effective tax rate for the three months ended June 30, 2014 was approximately 34.6%, which reflects the cumulative effect to adjust the estimated tax rate to 35.5% for the full year 2014. The effective tax rate for the six months ended June 30, 2013 was approximately 37%, which included discrete items, the most significant of which was attributable to the launch costs of MIE. Excluding the discrete items, the effective tax rate for the six months ended June 30, 2013 was approximately 38%. The effective tax rate for the three months ended June 30, 2013 was approximately 39%. The Company expects the tax rate for the full year 2014 to approximate 35.5%, excluding discrete items.

Deferred income taxes represent the tax effects of the temporary differences between book and tax bases and are measured using enacted tax rates that will be in effect when such items are expected to reverse. The Company's net deferred tax asset is primarily comprised of future income tax deductions attributable to the delivery of unvested restricted stock units. The Company records a valuation allowance, when necessary, to reduce deferred tax assets to an amount that more likely than not will be realized.

COHEN & STEERS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

9. Regulatory Requirements

Securities, a registered broker/dealer in the U.S., is subject to the SEC’s Uniform Net Capital Rule 15c3-1 (the “Rule”), which requires that broker/dealers maintain a minimum level of net capital, as defined. As of June 30, 2014, Securities had net capital of approximately $1,723,000, which exceeded its requirements by approximately $1,541,000. The Rule also provides that equity capital may not be withdrawn or cash dividends paid if the resulting net capital of a broker/dealer is less than the amount required under the Rule and requires prior notice to the SEC for certain withdrawals of capital.

Securities does not carry customer accounts and is exempt from the SEC’s Rule 15c3-3 pursuant to provisions (k)(1) and (k)(2)(i) of such rule.

Certain of the non-U.S. subsidiaries of the Company (collectively, the “Foreign Regulated Entities”) are regulated outside the U.S. by the Hong Kong Securities and Futures Commission and the United Kingdom Financial Conduct Authority. As of June 30, 2014, the Foreign Regulated Entities had aggregate regulatory capital of approximately $51,157,000, which exceeded requirements by approximately $49,376,000.

10. Related Party Transactions

The Company is an investment adviser to, and has administrative agreements with, affiliated funds for which certain employees are officers and/or directors. The following table sets forth the amount of revenue the Company earned from these affiliated funds for the three and six months ended June 30, 2014 and 2013 (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Investment advisory and administration fees	$	52,275	$	49,054	$	100,412	$	93,121
Distribution and service fees	3,744		3,741		7,214		7,175
	$	56,019	$	52,795	$	107,626	$	100,296

Sales proceeds, gross realized gains, gross realized losses and dividend income from investments, available-for-sale in Company-sponsored mutual funds for the three and six months ended June 30, 2014 and 2013 are summarized below (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014			2013
Proceeds from sales	$	—	$	10,613	$	192		$	10,613
Gross realized gains	—		613		—			613
Gross realized losses	—		—		(3		)	—
Dividend income	—		—		—			—

The Company has agreements with certain affiliated open-end and closed-end mutual funds to reimburse certain fund expenses. For the three months ended June 30, 2014 and 2013, expenses of approximately $2,423,000 and $2,663,000, respectively, were incurred by the Company pursuant to these agreements and are included in general and administrative expenses. For the six months ended June 30, 2014 and 2013, expenses of approximately $4,539,000 and $4,724,000, respectively, were incurred.

Included in accounts receivable at June 30, 2014 and December 31, 2013 are receivables due from Company-sponsored mutual funds of approximately $19,017,000 and $18,026,000, respectively.

COHEN & STEERS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

11. Commitments and Contingencies

From time to time, the Company is involved in legal matters relating to claims arising in the ordinary course of business. There are currently no such matters pending that the Company believes could have a material adverse effect on its condensed consolidated results of operations, cash flows or financial position.

The Company periodically commits to fund a portion of the equity in certain of its sponsored investment products. The Company has committed to co-invest up to $5.1 million alongside GRP-TE, a portion of which is made through GRP-TE and the remainder of which is made through GRP-CIP for up to 12 years through the life of GRP-TE. As of June 30, 2014, the Company has funded approximately $2.9 million with respect to this commitment. The actual timing of the funding of this commitment is currently unknown, as the drawdown of the Company's commitment is contingent on the timing of drawdowns by the underlying funds and co-investments in which GRP-TE invests. This unfunded commitment was not recorded on the Company's condensed consolidated statements of financial condition as of June 30, 2014.

12. Concentration of Credit Risk

The Company's cash and cash equivalents are principally on deposit with three major financial institutions. The Company is subject to credit risk should these financial institutions be unable to fulfill their obligations.

13. Subsequent Events

The Company has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date the condensed consolidated financial statements were issued. Other than the items described below, the Company determined that there were no additional subsequent events that require disclosure and/or adjustment.

On August 7, 2014, CNS declared a quarterly dividend on its common stock in the amount of $0.22 per share. The dividend will be payable on September 26, 2014 to stockholders of record at the close of business on September 5, 2014.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Set forth on the following pages is management’s discussion and analysis of our financial condition and results of operations for the three and six months ended June 30, 2014 and June 30, 2013. Such information should be read in conjunction with our condensed consolidated financial statements along with the notes to the condensed consolidated financial statements included herein. The condensed consolidated financial statements of the Company, included herein, are unaudited. When we use the terms “Cohen & Steers,” the “Company,” “we,” “us,” and “our,” we mean Cohen & Steers, Inc., a Delaware corporation, and its consolidated subsidiaries.

Overview

Founded in 1986, we are a leading global investment manager with a long history of innovation and a focus on real assets, including real estate, infrastructure and commodities. We serve institutional and individual investors around the world.

Assets Under Management

We manage three types of accounts: institutional accounts, open-end mutual funds and closed-end mutual funds.

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



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Institutional Accounts
Assets under management, beginning of period	$	24,479		$	26,081		$	22,926		$	24,850
Inflows	375			277			807			523
Outflows	(896		)	(1,366		)	(1,548		)	(1,956		)
Net outflows	(521		)	(1,089		)	(741		)	(1,433		)
Market appreciation (depreciation)	1,770			(454		)	3,543			1,121
Total increase (decrease)	1,249			(1,543		)	2,802			(312		)
Assets under management, end of period	$	25,728		$	24,538		$	25,728		$	24,538
Average assets under management for period	$	25,010		$	26,082		$	24,437		$	25,727

Open-end Mutual Funds
Assets under management, beginning of period	$	15,148		$	14,447		$	14,016		$	12,962
Inflows	1,464			1,789			2,987			3,297
Outflows	(949		)	(1,430		)	(2,368		)	(2,279		)
Net inflows	515			359			619			1,018
Market appreciation (depreciation)	966			(364		)	1,994			462
Total increase (decrease)	1,481			(5		)	2,613			1,480
Assets under management, end of period	$	16,629		$	14,442		$	16,629		$	14,442
Average assets under management for period	$	15,992		$	15,019		$	15,303		$	14,404

Closed-end Mutual Funds
Assets under management, beginning of period	$	9,404		$	8,793		$	8,965		$	7,985
Inflows	—			281			—			739
Outflows	—			—			—			—
Net inflows	—			281			—			739
Market appreciation (depreciation)	524			(231		)	963			119
Total increase	524			50			963			858
Assets under management, end of period	$	9,928		$	8,843		$	9,928		$	8,843
Average assets under management for period	$	9,719		$	9,053		$	9,482		$	8,652

Total
Assets under management, beginning of period	$	49,031		$	49,321		$	45,907		$	45,797
Inflows	1,839			2,347			3,794			4,559
Outflows	(1,845		)	(2,796		)	(3,916		)	(4,235		)
Net (outflows) inflows	(6		)	(449		)	(122		)	324
Market appreciation (depreciation)	3,260			(1,049		)	6,500			1,702
Total increase (decrease)	3,254			(1,498		)	6,378			2,026
Assets under management, end of period	$	52,285		$	47,823		$	52,285		$	47,823
Average assets under management for period	$	50,721		$	50,154		$	49,222		$	48,783

Assets under management were $52.3 billion at June 30, 2014, an increase of 9% from $47.8 billion at June 30, 2013. The increase was due to market appreciation of $6.9 billion, including $3.3 billion from U.S. real estate, $1.5 billion from global/international real estate and $1.0 billion from global listed infrastructure, partially offset by net outflows of $2.4 billion, including net outflows of $1.8 billion from large cap value and $1.3 billion from global/international real estate for the twelve months ended June 30, 2014.

Average assets under management was $50.7 billion for the three months ended June 30, 2014, an increase of 1% from $50.2 billion for the three months ended June 30, 2013. Average assets under management was $49.2 billion for the six months ended June 30, 2014, an increase of 1% from $48.8 billion for the six months ended June 30, 2013.

Institutional accounts

Institutional accounts assets under management were $25.7 billion at June 30, 2014, an increase of 5% from $24.5 billion at June 30, 2013. The increase in assets under management was due to market appreciation of $3.9 billion, including $1.8 billion from U.S. real estate, $1.1 billion from global/international real estate and $556 million from large cap value, partially offset by net outflows of $2.7 billion, including $1.8 billion from large cap value and $1.1 billion from global/international real estate for the twelve months ended June 30, 2014.

Average assets under management for institutional accounts was $25.0 billion for the three months ended June 30, 2014, a decrease of 4% from $26.1 billion for the three months ended June 30, 2013. Average assets under management was $24.4 billion for the six months ended June 30, 2014, a decrease of 5% from $25.7 billion for the six months ended June 30, 2013.

Net outflows from institutional accounts were $521 million for the three months ended June 30, 2014, compared with $1.1 billion for the three months ended June 30, 2013. Gross inflows were $375 million for the three months ended June 30, 2014, compared with $277 million for the three months ended June 30, 2013. Gross outflows totaled $896 million for the three months ended June 30, 2014, compared with $1.4 billion for the three months ended June 30, 2013. Market appreciation was $1.8 billion for the three months ended June 30, 2014, compared with market depreciation of $454 million for the three months ended June 30, 2013.

Net outflows from institutional accounts were $741 million for the six months ended June 30, 2014, compared with $1.4 billion for the six months ended June 30, 2013. Gross inflows were $807 million for the six months ended June 30, 2014, compared with $523 million for the six months ended June 30, 2013. Gross outflows totaled $1.5 billion for the six months ended June 30, 2014, compared with $2.0 billion for the six months ended June 30, 2013. Market appreciation was $3.5 billion for the six months ended June 30, 2014, compared with $1.1 billion for the six months ended June 30, 2013.

Open-end mutual funds

Open-end mutual funds assets under management were $16.6 billion at June 30, 2014, an increase of 15% from $14.4 billion at June 30, 2013. The increase in assets under management was due to market appreciation of $1.9 billion, including $1.2 billion from U.S. real estate and $357 million from global/international real estate, and net inflows of $303 million, including $280 million into preferred securities, $84 million into U.S. real estate and $81 million into global listed infrastructure for the twelve months ended June 30, 2014.

Average assets under management for open-end mutual funds was $16.0 billion for the three months ended June 30, 2014, an increase of 6% from $15.0 billion for the three months ended June 30, 2013. Average assets under management was $15.3 billion for the six months ended June 30, 2014, an increase of 6% from $14.4 billion for the six months ended June 30, 2013.

Net inflows for open-end mutual funds were $515 million for the three months ended June 30, 2014, compared with $359 million for the three months ended June 30, 2013. Gross inflows were $1.5 billion for the three months ended June 30, 2014, compared with $1.8 billion for the three months ended June 30, 2013. Gross outflows totaled $949 million for the three months ended June 30, 2014, compared with $1.4 billion for the three months ended June 30, 2013. Market appreciation was $1.0 billion for the three months ended June 30, 2014, compared with market depreciation of $364 million for the three months ended June 30, 2013.

Net inflows for open-end mutual funds were $619 million for the six months ended June 30, 2014, compared with $1.0 billion for the six months ended June 30, 2013. Gross inflows were $3.0 billion for the six months ended June 30, 2014, compared with $3.3 billion for the six months ended June 30, 2013. Gross outflows totaled $2.4 billion for the six months

ended June 30, 2014, compared with $2.3 billion for the six months ended June 30, 2013. Market appreciation was $2.0 billion for the six months ended June 30, 2014, compared with $462 million for the six months ended June 30, 2013.

Closed-end mutual funds

Closed-end mutual funds assets under management were $9.9 billion at June 30, 2014, an increase of 12% from $8.8 billion at June 30, 2013. The increase in assets under management was primarily due to market appreciation of $1.1 billion for the twelve months ended June 30, 2014.

Average assets under management for closed-end mutual funds was $9.7 billion for the three months ended June 30, 2014, an increase of 7% from $9.1 billion for the three months ended June 30, 2013. Average assets under management was $9.5 billion for the six months ended June 30, 2014, an increase of 10% from $8.7 billion for the six months ended June 30, 2013, primarily due to the launch of Cohen & Steers MLP Income and Energy Opportunity Fund, Inc. ("MIE") during the first quarter of 2013.

Market appreciation was $524 million for the three months ended June 30, 2014, compared with market depreciation of $231 million for the three months ended June 30, 2013.

Market appreciation was $963 million for the six months ended June 30, 2014, compared with $119 million for the six months ended June 30, 2013.

Results of Operations

Three Months Ended June 30, 2014 Compared with Three Months Ended June 30, 2013



	Three Months Ended June 30,
(in thousands)	2014			2013
Results of operations
Total revenue	$	78,412		$	77,796
Total expenses	(48,744		)	(49,239		)
Total non-operating income (loss) ⁽¹⁾	4,990			(10,178		)
Income before provision for income taxes ⁽¹⁾	$	34,658		$	18,379

(1) Includes net income of $741 and net loss of $6,773 attributable to redeemable noncontrolling interest for the three months ended June 30, 2014 and 2013, respectively.

Revenue

Total revenue increased 1% to $78.4 million for the three months ended June 30, 2014 from $77.8 million for the three months ended June 30, 2013. This increase was primarily attributable to higher investment advisory and administration fees of approximately $2.6 million, resulting from higher average assets under management, partially offset by lower portfolio consulting and other revenue of approximately $1.9 million, attributable to lower average assets under advisement from model-based strategies.

For the three months ended June 30, 2014, total investment advisory and administration revenue from institutional accounts decreased 3% to $20.7 million from $21.3 million for the three months ended June 30, 2013, primarily due to lower average assets under management.

For the three months ended June 30, 2014, total investment advisory and administration revenue from open-end mutual funds increased 6% to $31.5 million from $29.8 million for the three months ended June 30, 2013, primarily attributable to higher average assets under management.

For the three months ended June 30, 2014, total investment advisory and administration revenue from closed-end mutual funds increased 8% to $20.6 million from $19.2 million for the three months ended June 30, 2013, primarily due to higher average assets under management.

For the three months ended June 30, 2014, total portfolio consulting and other revenue decreased 52% to $1.8 million from $3.7 million for the three months ended June 30, 2013, primarily attributable to lower average assets under advisement from model-based strategies.

Expenses

Total operating expenses decreased 1% to $48.7 million for the three months ended June 30, 2014 from $49.2 million for the three months ended June 30, 2013, due to decreases of $452,000 in general and administrative expenses, $421,000 in distribution and service fees and $237,000 in depreciation and amortization, partially offset by an increase of $981,000 in employee compensation and benefits.

General and administrative expenses decreased 4% to $12.1 million for the three months ended June 30, 2014 from $12.5 million for the three months ended June 30, 2013. The decrease was primarily due to lower professional fees of approximately $472,000 and lower information technology costs of approximately $297,000, partially offset by higher travel and entertainment and marketing expenses of approximately $315,000.

Distribution and service fee expenses decreased 4% to $9.3 million for the three months ended June 30, 2014 from $9.7 million for the three months ended June 30, 2013. The change, after excluding additional expenses recorded in the second quarter of 2013 related to the exercise of the underwriters' over-allotment option for MIE, was primarily due to an increase in average assets under management in open-end mutual funds.

Employee compensation and benefits increased 4% to $25.9 million for the three months ended June 30, 2014 from $24.9 million for the three months ended June 30, 2013, primarily due to higher incentive compensation of approximately $1.4 million, higher amortization of restricted stock units of approximately $855,000 and higher salaries of approximately $418,000, partially offset by lower severance of approximately $1.6 million and a decrease in commission-based compensation of approximately $310,000.

Non-operating Income

Non-operating income, excluding net income attributable to redeemable noncontrolling interest of $741,000, was $4.2 million for the three months ended June 30, 2014, compared with non-operating loss, excluding net loss attributable to redeemable noncontrolling interest of $6.8 million, of $3.4 million for the three months ended June 30, 2013. The increase in non-operating income net of amounts attributable to redeemable noncontrolling interest was primarily due to higher earnings from our seed investments.

Income Taxes

Income tax expense was $11.7 million for the three months ended June 30, 2014, compared with $9.9 million for the three months ended June 30, 2013. The provision for income taxes for the three months ended June 30, 2014 included U.S. federal, state, local and foreign taxes at an approximate effective tax rate of 34.6%, which included the cumulative effect to adjust our estimated tax rate to 35.5% for the full year 2014. The effective tax rate for the three months ended June 30, 2013 was approximately 39%, which included the cumulative effect to adjust our estimated tax rate for the full year 2013. We expect our tax rate for the full year 2014 to approximate 35.5%, excluding discrete items.

Six Months Ended June 30, 2014 Compared with Six Months Ended June 30, 2013



	Six Months Ended June 30,
(in thousands)	2014			2013
Results of operations
Total revenue	$	151,247		$	150,255
Total expenses	(93,983		)	(100,988		)
Total non-operating income (loss) ⁽¹⁾	8,171			(7,252		)
Income before provision for income taxes ⁽¹⁾	$	65,435		$	42,015

(1) Includes net income of $896 and net loss of $6,413 attributable to redeemable noncontrolling interest for the six months ended June 30, 2014 and 2013, respectively.

Revenue

Total revenue increased 1% to $151.2 million for the six months ended June 30, 2014 from $150.3 million for the six months ended June 30, 2013. This increase was primarily attributable to higher investment advisory and administration fees of approximately $4.7 million, resulting from higher average assets under management, partially offset by lower portfolio consulting and other revenue of approximately $3.8 million, attributable to lower average assets under advisement from model-based strategies.

For the six months ended June 30, 2014, total investment advisory and administration revenue from institutional accounts decreased 6% to $40.3 million from $42.6 million for the six months ended June 30, 2013, primarily due to lower average assets under management.

For the six months ended June 30, 2014, total investment advisory and administration revenue from open-end mutual funds increased 6% to $60.2 million from $56.9 million for the six months ended June 30, 2013, primarily attributable to higher average assets under management.

For the six months ended June 30, 2014, total investment advisory and administration revenue from closed-end mutual funds increased 11% to $40.1 million from $36.2 million for the six months ended June 30, 2013, primarily due to higher average assets under management.

For the six months ended June 30, 2014, total portfolio consulting and other revenue decreased 51% to $3.6 million from $7.3 million for the six months ended June 30, 2013, primarily attributable to lower average assets under advisement from model-based strategies.

Expenses

Total operating expenses decreased 7% to $94.0 million for the six months ended June 30, 2014 from $101.0 million for the six months ended June 30, 2013, primarily due to decreases of $7.2 million in distribution and service fees and $538,000 in general and administrative expenses, partially offset by an increase of $1.6 million in employee compensation and benefits.

Distribution and service fee expenses decreased 29% to $17.6 million for the six months ended June 30, 2014 from $24.8 million for the six months ended June 30, 2013. The change, after excluding additional expenses of $7.2 million associated with the launch of MIE, was primarily due to an increase in average assets under management in open-end mutual funds.

General and administrative expenses decreased 2% to $23.2 million for the six months ended June 30, 2014 from $23.7 million for the six months ended June 30, 2013. The decrease was primarily due to lower information technology costs of approximately $438,000.

Employee compensation and benefits increased 3% to $49.9 million for the six months ended June 30, 2014 from $48.3 million for the six months ended June 30, 2013, primarily due to higher amortization of restricted stock units of approximately $1.9 million, higher incentive compensation of approximately $854,000 and higher salaries of approximately $765,000, partially offset by lower severance of approximately $1.5 million and a decrease in commission-based compensation of approximately $837,000.

Non-operating Income

Non-operating income, excluding net income attributable to redeemable noncontrolling interest of $896,000, was $7.3 million for the six months ended June 30, 2014, compared with non-operating loss, excluding net loss attributable to redeemable noncontrolling interest of $6.4 million, of $839,000 for the six months ended June 30, 2013. The increase in non-operating income net of amounts attributable to redeemable noncontrolling interest was primarily due to higher earnings from our seed investments.

Income Taxes

Income tax expense was $22.9 million for the six months ended June 30, 2014, compared with $18.0 million for the six months ended June 30, 2013. The provision for income taxes for the six months ended June 30, 2014 included U.S. federal, state, local and foreign taxes at an approximate effective tax rate of 35.5%. The effective tax rate for the six months ended

June 30, 2013 was approximately 37%, which included discrete items, the most significant of which was attributable to the launch costs of MIE. Excluding the discrete items, the effective tax rate for the six months ended June 30, 2013 was approximately 38%. We expect our tax rate for the full year 2014 to approximate 35.5%, excluding discrete items.

Changes in Financial Condition, Liquidity and Capital Resources

Our investment advisory business does not require us to maintain significant capital balances. Our current financial condition is highly liquid, with a significant amount of our assets comprised of cash and cash equivalents, securities owned, equity method investments, investments, available-for-sale and accounts receivable. Our cash flows generally result from the operating activities of our business, with investment advisory and administrative fees being the most significant contributor. Cash and cash equivalents, equity method investments, investments, available-for-sale and accounts receivable, excluding investments classified as level 3 in accordance with Accounting Standards Codification (the “Codification”) Topic 820, Fair Value Measurement (“ASC 820”), were 64% and 73% of total assets as of June 30, 2014 and December 31, 2013, respectively.

Cash and cash equivalents decreased by $16.2 million, excluding the effect of foreign exchange rate changes, for the six months ended June 30, 2014. Net cash provided by operating activities was $2.8 million for the six months ended June 30, 2014. Net cash provided by investing activities was $3.0 million, which included proceeds from sales of investments, available-for-sale in the amount of $8.3 million, partially offset by purchases of investments, available-for-sale in the amount of $3.6 million and purchases of property and equipment in the amount of $2.2 million. Net cash of $22.0 million was used in financing activities, primarily for dividends to stockholders of $19.7 million and repurchases of common stock to satisfy employee withholding tax obligations on the delivery of restricted stock units of $11.6 million, partially offset by contributions from redeemable noncontrolling interest of $7.3 million and excess tax benefits associated with the delivery of restricted stock units of $2.5 million.

Cash and cash equivalents increased by $12.2 million, excluding the effect of foreign exchange rate changes, for the six months ended June 30, 2013. Net cash used in operating activities was $415,000 for the six months ended June 30, 2013. Net cash provided by investing activities was $10.1 million, which included proceeds from sales of investments, available-for-sale in the amount of $17.8 million and proceeds from redemption of equity method investments of $683,000, partially offset by purchases of investments, available-for-sale in the amount of $5.5 million and purchases of property and equipment in the amount of $2.8 million. Net cash of $2.5 million was provided by financing activities, primarily from contributions from redeemable noncontrolling interest of $36.5 million and excess tax benefits associated with the delivery of restricted stock units of $2.0 million, partially offset by dividends to stockholders of $17.7 million, redemptions of redeemable noncontrolling interest of $10.7 million and repurchases of common stock to satisfy employee withholding tax obligations on the delivery of restricted stock units of $7.9 million.

It is our policy to continuously monitor and evaluate the adequacy of our capital. We have consistently maintained net capital in excess of the regulatory requirements for our broker/dealer, as prescribed by the Securities and Exchange Commission (“SEC”). At June 30, 2014, we exceeded our minimum regulatory capital requirements by approximately $1.5 million. The SEC’s Uniform Net Capital Rule 15c3-1 imposes certain requirements that may have the effect of prohibiting a broker/dealer from distributing or withdrawing capital and requiring prior notice to the SEC for certain withdrawals of capital. Certain of our non-U.S. subsidiaries are regulated outside the U.S. by the Hong Kong Securities and Future Commission and the United Kingdom Financial Conduct Authority. At June 30, 2014, our regulated non-U.S. subsidiaries exceeded their aggregate minimum regulatory requirements by approximately $49.4 million. We believe that our cash and cash equivalents and cash flows from operations will be more than adequate to meet our anticipated capital requirements and other obligations as they become due.

Included in cash and cash equivalents was approximately $75.7 million held by our foreign subsidiaries as of June 30, 2014. It is our current intention to permanently reinvest funds held by our foreign subsidiaries outside of the U.S. We believe that our cash and cash equivalents and short term investments held in the U.S. are more than sufficient to cover our working capital needs in the U.S.

We periodically commit to fund a portion of the equity in certain of our sponsored investment products. We have committed to co-invest up to $5.1 million alongside Cohen & Steers Global Realty Partners III-TE, L.P. ("GRP-TE"). As of June 30, 2014, we have funded approximately $2.9 million with respect to this commitment. Our co-investment alongside GRP-TE is illiquid and will be invested for up to 12 years through the life of the fund. The actual timing of the funding of this commitment is currently unknown, as the drawdown of our commitment is contingent on the timing of drawdowns by the underlying funds and co-investments in which GRP-TE invests. The unfunded portion of this commitment was not recorded on our condensed consolidated statements of financial condition as of June 30, 2014.

Contractual Obligations and Contingencies

We have contractual obligations to make future payments in connection with our non-cancelable operating lease agreements for office space. There were no material capital lease obligations as of June 30, 2014. The following summarizes our contractual obligations as of June 30, 2014 (in thousands):



	2014		2015		2016		2017		2018		2019 and after		Total
Operating leases	$	4,795	$	9,541	$	9,287	$	8,732	$	8,447	$	47,320	$	88,122

Off-Balance Sheet Arrangements

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

Critical Accounting Policies and Estimates

A complete discussion of critical accounting policies is included in Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2013. There were no significant changes in our critical accounting policies during the three months ended June 30, 2014.

Recently Issued Accounting Pronouncements

See discussion of Recently Issued Accounting Pronouncements in Note 2 of the Notes to Condensed Consolidated Financial Statements contained in Part I, Item 1 of this filing.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in our Quantitative and Qualitative Disclosures About Market Risk from those previously reported in our Annual Report on Form 10-K for the year ended December 31, 2013.

Item 4. Controls and Procedures

We maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Our management, including our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of June 30, 2014. Based on that evaluation and subject to the foregoing, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures as of June 30, 2014 were effective to accomplish their objectives at a reasonable assurance level.

There has been no change in our internal control over financial reporting that occurred during the three months ended June 30, 2014 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II—Other Information

Item 1. Legal Proceedings

From time to time, we may become involved in legal matters relating to claims arising in the ordinary course of our business. There are currently no such matters pending that we believe could have a material effect on our condensed consolidated results of operations, cash flows or financial condition. From time to time, we receive subpoenas or other requests for information from various U.S. federal and state governmental authorities, domestic and international regulatory authorities and third parties in connection with certain industry-wide or other investigations or proceedings. It is our policy to cooperate fully with such inquiries.

Item 1A. Risk Factors

For a discussion of the potential risks and uncertainties associated with our business, please see Part 1, Item 1A of our 2013 Annual Report on Form 10-K filed with the SEC on March 14, 2014. There have been no material changes to the risk factors disclosed in Part 1, Item 1A of our 2013 Annual Report on Form 10-K.

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

During the three months ended June 30, 2014, we made the following purchases of our equity securities that are registered pursuant to Section 12(b) of the Securities Exchange Act of 1934.



Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs
April 1 through April 30, 2014	24,030	⁽¹⁾	$	40.18	—	—
May 1 through May 31, 2014	—		$	—	—	—
June 1 through June 30, 2014	651	⁽¹⁾	$	42.67	—	—
Total	24,681		$	40.25	—	—

_________________________


(1)	Purchases made to satisfy the income tax withholding obligations of certain employees upon the vesting and delivery of restricted stock units issued under the stock incentive plan.

Item 6. Exhibits

Any agreements or other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and should not be relied upon for that purpose. In particular, any representations and warranties made by the Company in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.



Exhibit No.		Description

3.1	—	Form of Amended and Restated Certificate of Incorporation of the Registrant(1)

3.2	—	Form of Amended and Restated Bylaws of the Registrant(2)

4.1	—	Specimen Common Stock Certificate(1)

4.2	—	Form of Registration Rights Agreement among the Registrant, Martin Cohen, Robert H. Steers, The Martin Cohen 1998 Family Trust and Robert H. Steers Family Trust(1)

31.1	—	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)

31.2	—	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)

32.1	—	Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)

32.2	—	Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)

101	—	The following financial statements from the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Financial Condition (unaudited) as of June 30, 2014 and December 31, 2013, (ii) the Condensed Consolidated Statements of Operations (unaudited) for the three and six months ended June 30, 2014 and 2013, (iii) the Condensed Consolidated Statements of Comprehensive Income (unaudited) for the three and six months ended June 30, 2014 and 2013, (iv) the Condensed Consolidated Statements of Changes in Stockholders' Equity and Redeemable Noncontrolling Interest (unaudited) for the six months ended June 30, 2014 and 2013, (v) the Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2014 and 2013, and (vi) the Notes to the Condensed Consolidated Financial Statements.

_________________________


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


(2)	Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q (Commission File No. 001-32236) for the quarter ended June 30, 2008.

SIGNATURES

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



Date:	August 8, 2014	Cohen & Steers, Inc.

		/s/ Matthew S. Stadler
		Name: Matthew S. Stadler
		Title: Executive Vice President & Chief Financial Officer



Date:	August 8, 2014	Cohen & Steers, Inc.

		/s/ Elena Dulik
		Name: Elena Dulik
		Title: Senior Vice President & Chief Accounting Officer