This Annual Report on Form 10-K 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,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative versions of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these forward-looking statements. We believe that these factors include, but are not limited to, the risks described in Item 1A. Risk Factors of this Annual Report on Form 10-K. These factors are not exhaustive and should be read in conjunction with the other cautionary statements that are included in this Annual Report on Form 10-K. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.
Cohen & Steers, Inc. (CNS), a Delaware corporation formed in 2004, and its subsidiaries are collectively referred to as the Company, we, us or our.
Our primary investment strategies include U.S. real estate, preferred securities including low duration preferred securities, global/international real estate, securities, global listed infrastructure, midstream energy, commodities, real assets multi-strategy, preferred securitiesmidstream energy and MLPs, as well as global natural resource equities. Our strategies seek to achieve a variety of investment objectives for different risk profiles and are actively managed by specialist teams of investment professionals who employ fundamental-driven research and portfolio management processes. We offer our strategies through a variety of investment vehicles, including U.S. and non-U.S. registered funds and other commingled vehicles, as well as separate accounts includingand subadvised portfolios for financial institutions and individuals around the world.portfolios.
Our revenue is derived from fees received from our clients, including fees for managing advised or subadvisingsubadvised client accounts;accounts as well as investment advisory, administration, distribution and service fees received from Company-sponsored open-end and closed-end funds as well as fees for portfolio consulting and other services.funds. Our fees are paid in arrears, based on contractually specified rates applied to the value of the assets we manage and, toin certain cases, may include a lesser degree, investment performance.performance-based fee. Our revenue fluctuates with changes in the total value of our assets under management, which may occur as a result of market appreciation and depreciation, addition or termination of client accounts, contributions or withdrawals from clientinvestor accounts market conditions, foreign currency fluctuations, distributions as well as investor subscriptions or redemptions, and distributions. This revenue is recognized over the period that the assets are managed.
Assets Under Management
By Investment Vehicle
|
| | | | | | | | | | | |
| Year Ended December 31, |
| 2018 | | 2017 | | 2016 |
Institutional Accounts | | | | | |
Assets under management, beginning of period | $ | 29,396 |
| | $ | 28,659 |
| | $ | 26,105 |
|
Inflows | 2,814 |
| | 3,963 |
| | 6,374 |
|
Outflows | (3,558 | ) | | (3,267 | ) | | (2,414 | ) |
Net inflows (outflows) | (744 | ) | | 696 |
| | 3,960 |
|
Market appreciation (depreciation) | (1,010 | ) | | 2,867 |
| | 1,627 |
|
Distributions | (1,962 | ) | | (3,018 | ) | | (3,033 | ) |
Transfers | 32 |
| | 192 |
| | — |
|
Total increase (decrease) | (3,684 | ) | | 737 |
| | 2,554 |
|
Assets under management, end of period | $ | 25,712 |
| | $ | 29,396 |
| | $ | 28,659 |
|
Average assets under management | $ | 27,408 |
| | $ | 29,346 |
| | $ | 28,085 |
|
| | | | | |
Open-end Funds | | | | | |
Assets under management, beginning of period | $ | 23,304 |
| | $ | 19,576 |
| | $ | 17,460 |
|
Inflows | 8,963 |
| | 9,702 |
| | 9,630 |
|
Outflows | (9,411 | ) | | (6,541 | ) | | (6,831 | ) |
Net inflows (outflows) | (448 | ) | | 3,161 |
| | 2,799 |
|
Market appreciation (depreciation) | (1,014 | ) | | 1,947 |
| | 917 |
|
Distributions | (1,111 | ) | | (1,188 | ) | | (1,600 | ) |
Transfers | (32 | ) | | (192 | ) | | — |
|
Total increase (decrease) | (2,605 | ) | | 3,728 |
| | 2,116 |
|
Assets under management, end of period | $ | 20,699 |
| | $ | 23,304 |
| | $ | 19,576 |
|
Average assets under management | $ | 22,548 |
| | $ | 21,623 |
| | $ | 19,176 |
|
| | | | | |
Closed-end Funds | | | | | |
Assets under management, beginning of period | $ | 9,406 |
| | $ | 8,963 |
| | $ | 9,029 |
|
Inflows | 12 |
| | — |
| | — |
|
Outflows | — |
| | — |
| | (88 | ) |
Net inflows (outflows) | 12 |
| | — |
| | (88 | ) |
Market appreciation (depreciation) | (496 | ) | | 949 |
| | 554 |
|
Distributions | (512 | ) | | (506 | ) | | (532 | ) |
Total increase (decrease) | (996 | ) | | 443 |
| | (66 | ) |
Assets under management, end of period | $ | 8,410 |
| | $ | 9,406 |
| | $ | 8,963 |
|
Average assets under management | $ | 9,012 |
| | $ | 9,343 |
| | $ | 9,108 |
|
| | | | | |
Total | | | | | |
Assets under management, beginning of period | $ | 62,106 |
| | $ | 57,198 |
| | $ | 52,594 |
|
Inflows | 11,789 |
| | 13,665 |
| | 16,004 |
|
Outflows | (12,969 | ) | | (9,808 | ) | | (9,333 | ) |
Net inflows (outflows) | (1,180 | ) | | 3,857 |
| | 6,671 |
|
Market appreciation (depreciation) | (2,520 | ) | | 5,763 |
| | 3,098 |
|
Distributions | (3,585 | ) | | (4,712 | ) | | (5,165 | ) |
Total increase (decrease) | (7,285 | ) | | 4,908 |
| | 4,604 |
|
Assets under management, end of period | $ | 54,821 |
| | $ | 62,106 |
| | $ | 57,198 |
|
Average assets under management | $ | 58,968 |
| | $ | 60,312 |
| | $ | 56,369 |
|
(in millions) | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2021 | | 2020 | | 2019 |
Institutional Accounts | | | | | |
Assets under management, beginning of period | $ | 33,255 | | | $ | 31,813 | | | $ | 27,148 | |
Inflows | 6,152 | | | 7,192 | | | 3,993 | |
Outflows | (5,563) | | | (4,418) | | | (4,908) | |
Net inflows (outflows) | 589 | | | 2,774 | | | (915) | |
Market appreciation (depreciation) | 10,041 | | | 53 | | | 6,873 | |
Distributions | (1,184) | | | (1,385) | | | (1,306) | |
Transfers | 26 | | | — | | | 13 | |
Total increase (decrease) | 9,472 | | | 1,442 | | | 4,665 | |
Assets under management, end of period | $ | 42,727 | | | $ | 33,255 | | | $ | 31,813 | |
Percentage of total assets under management | 40.1 | % | | 41.6 | % | | 44.1 | % |
Average assets under management | $ | 38,906 | | | $ | 29,883 | | | $ | 30,301 | |
| | | | | |
Open-end Funds | | | | | |
Assets under management, beginning of period | $ | 35,160 | | | $ | 30,725 | | | $ | 22,295 | |
Inflows | 19,542 | | | 17,556 | | | 12,484 | |
Outflows | (10,765) | | | (12,135) | | | (7,745) | |
Net inflows (outflows) | 8,777 | | | 5,421 | | | 4,739 | |
Market appreciation (depreciation) | 8,936 | | | 405 | | | 5,881 | |
Distributions | (1,936) | | | (1,391) | | | (2,177) | |
Transfers | (26) | | | — | | | (13) | |
Total increase (decrease) | 15,751 | | | 4,435 | | | 8,430 | |
Assets under management, end of period | $ | 50,911 | | | $ | 35,160 | | | $ | 30,725 | |
Percentage of total assets under management | 47.7 | % | | 44.0 | % | | 42.6 | % |
Average assets under management | $ | 42,991 | | | $ | 30,152 | | | $ | 27,595 | |
| | | | | |
Closed-end Funds | | | | | |
Assets under management, beginning of period | $ | 11,493 | | | $ | 9,644 | | | $ | 8,410 | |
Inflows | 206 | | | 2,652 | | | 5 | |
Outflows | (119) | | | (89) | | | (80) | |
Net inflows (outflows) | 87 | | | 2,563 | | | (75) | |
Market appreciation (depreciation) | 2,033 | | | (197) | | | 1,823 | |
Distributions | (622) | | | (517) | | | (514) | |
Total increase (decrease) | 1,498 | | | 1,849 | | | 1,234 | |
Assets under management, end of period | $ | 12,991 | | | $ | 11,493 | | | $ | 9,644 | |
Percentage of total assets under management | 12.2 | % | | 14.4 | % | | 13.4 | % |
Average assets under management | $ | 12,317 | | | $ | 9,140 | | | $ | 9,381 | |
| | | | | |
Total | | | | | |
Assets under management, beginning of period | $ | 79,908 | | | $ | 72,182 | | | $ | 57,853 | |
Inflows | 25,900 | | | 27,400 | | | 16,482 | |
Outflows | (16,447) | | | (16,642) | | | (12,733) | |
Net inflows (outflows) | 9,453 | | | 10,758 | | | 3,749 | |
Market appreciation (depreciation) | 21,010 | | | 261 | | | 14,577 | |
Distributions | (3,742) | | | (3,293) | | | (3,997) | |
| | | | | |
Total increase (decrease) | 26,721 | | | 7,726 | | | 14,329 | |
Assets under management, end of period | $ | 106,629 | | | $ | 79,908 | | | $ | 72,182 | |
Average assets under management | $ | 94,214 | | | $ | 69,175 | | | $ | 67,277 | |
Assets Under Management - Institutional Accounts
By Institutional Account Type
(in millions) | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2021 | | 2020 | | 2019 |
Advisory | | | | | |
Assets under management, beginning of period | $ | 17,628 | | | $ | 15,669 | | | $ | 12,065 | |
Inflows | 4,891 | | | 4,324 | | | 1,918 | |
Outflows | (2,945) | | | (2,771) | | | (1,351) | |
Net inflows (outflows) | 1,946 | | | 1,553 | | | 567 | |
Market appreciation (depreciation) | 4,999 | | | 406 | | | 3,032 | |
Transfers | 26 | | | — | | | 5 | |
Total increase (decrease) | 6,971 | | | 1,959 | | | 3,604 | |
Assets under management, end of period | $ | 24,599 | | | $ | 17,628 | | | $ | 15,669 | |
Percentage of institutional assets under management | 57.6 | % | | 53.0 | % | | 49.3 | % |
Average assets under management | $ | 22,092 | | | $ | 15,650 | | | $ | 14,752 | |
| | | | | |
Japan Subadvisory | | | | | |
Assets under management, beginning of period | $ | 9,720 | | | $ | 10,323 | | | $ | 9,288 | |
Inflows | 305 | | | 1,601 | | | 942 | |
Outflows | (1,075) | | | (626) | | | (1,076) | |
Net inflows (outflows) | (770) | | | 975 | | | (134) | |
Market appreciation (depreciation) | 3,563 | | | (193) | | | 2,475 | |
Distributions | (1,184) | | | (1,385) | | | (1,306) | |
Total increase (decrease) | 1,609 | | | (603) | | | 1,035 | |
Assets under management, end of period | $ | 11,329 | | | $ | 9,720 | | | $ | 10,323 | |
Percentage of institutional assets under management | 26.5 | % | | 29.2 | % | | 32.4 | % |
Average assets under management | $ | 10,335 | | | $ | 9,014 | | | $ | 9,954 | |
| | | | | |
Subadvisory Excluding Japan | | | | | |
Assets under management, beginning of period | $ | 5,907 | | | $ | 5,821 | | | $ | 5,795 | |
Inflows | 956 | | | 1,267 | | | 1,133 | |
Outflows | (1,543) | | | (1,021) | | | (2,481) | |
Net inflows (outflows) | (587) | | | 246 | | | (1,348) | |
Market appreciation (depreciation) | 1,479 | | | (160) | | | 1,366 | |
Transfers | — | | | — | | | 8 | |
Total increase (decrease) | 892 | | | 86 | | | 26 | |
Assets under management, end of period | $ | 6,799 | | | $ | 5,907 | | | $ | 5,821 | |
Percentage of institutional assets under management | 15.9 | % | | 17.8 | % | | 18.3 | % |
Average assets under management | $ | 6,479 | | | $ | 5,219 | | | $ | 5,595 | |
| | | | | |
Total Institutional Accounts | | | | | |
Assets under management, beginning of period | $ | 33,255 | | | $ | 31,813 | | | $ | 27,148 | |
Inflows | 6,152 | | | 7,192 | | | 3,993 | |
Outflows | (5,563) | | | (4,418) | | | (4,908) | |
Net inflows (outflows) | 589 | | | 2,774 | | | (915) | |
Market appreciation (depreciation) | 10,041 | | | 53 | | | 6,873 | |
Distributions | (1,184) | | | (1,385) | | | (1,306) | |
Transfers | 26 | | | — | | | 13 | |
Total increase (decrease) | 9,472 | | | 1,442 | | | 4,665 | |
Assets under management, end of period | $ | 42,727 | | | $ | 33,255 | | | $ | 31,813 | |
Average assets under management | $ | 38,906 | | | $ | 29,883 | | | $ | 30,301 | |
|
| | | | | | | | | | | |
| Year Ended December 31, |
| 2018 | | 2017 | | 2016 |
Advisory | | | | | |
Assets under management, beginning of period | $ | 11,341 |
| | $ | 9,068 |
| | $ | 7,565 |
|
Inflows | 2,101 |
| | 1,822 |
| | 2,039 |
|
Outflows | (925 | ) | | (868 | ) | | (992 | ) |
Net inflows (outflows) | 1,176 |
| | 954 |
| | 1,047 |
|
Market appreciation (depreciation) | (484 | ) | | 1,127 |
| | 456 |
|
Transfers | 32 |
| | 192 |
| | — |
|
Total increase (decrease) | 724 |
| | 2,273 |
| | 1,503 |
|
Assets under management, end of period | $ | 12,065 |
| | $ | 11,341 |
| | $ | 9,068 |
|
Average assets under management | $ | 11,804 |
| | $ | 10,280 |
| | $ | 8,517 |
|
| | | | | |
Japan Subadvisory | | | | | |
Assets under management, beginning of period | $ | 11,458 |
| | $ | 13,699 |
| | $ | 13,112 |
|
Inflows | 144 |
| | 1,411 |
| | 3,305 |
|
Outflows | (1,250 | ) | | (1,545 | ) | | (503 | ) |
Net inflows (outflows) | (1,106 | ) | | (134 | ) | | 2,802 |
|
Market appreciation (depreciation) | (255 | ) | | 911 |
| | 818 |
|
Distributions | (1,962 | ) | | (3,018 | ) | | (3,033 | ) |
Total increase (decrease) | (3,323 | ) | | (2,241 | ) | | 587 |
|
Assets under management, end of period | $ | 8,135 |
| | $ | 11,458 |
| | $ | 13,699 |
|
Average assets under management | $ | 9,408 |
| | $ | 12,793 |
| | $ | 13,607 |
|
| | | | | |
Subadvisory Excluding Japan | | | | | |
Assets under management, beginning of period | $ | 6,597 |
| | $ | 5,892 |
| | $ | 5,428 |
|
Inflows | 569 |
| | 730 |
| | 1,030 |
|
Outflows | (1,383 | ) | | (854 | ) | | (919 | ) |
Net inflows (outflows) | (814 | ) | | (124 | ) | | 111 |
|
Market appreciation (depreciation) | (271 | ) | | 829 |
| | 353 |
|
Total increase (decrease) | (1,085 | ) | | 705 |
| | 464 |
|
Assets under management, end of period | $ | 5,512 |
| | $ | 6,597 |
| | $ | 5,892 |
|
Average assets under management | $ | 6,196 |
| | $ | 6,273 |
| | $ | 5,961 |
|
| | | | | |
Total Institutional Accounts | | | | | |
Assets under management, beginning of period | $ | 29,396 |
| | $ | 28,659 |
| | $ | 26,105 |
|
Inflows | 2,814 |
| | 3,963 |
| | 6,374 |
|
Outflows | (3,558 | ) | | (3,267 | ) | | (2,414 | ) |
Net inflows (outflows) | (744 | ) | | 696 |
| | 3,960 |
|
Market appreciation (depreciation) | (1,010 | ) | | 2,867 |
| | 1,627 |
|
Distributions | (1,962 | ) | | (3,018 | ) | | (3,033 | ) |
Transfers | 32 |
| | 192 |
| | — |
|
Total increase (decrease) | (3,684 | ) | | 737 |
| | 2,554 |
|
Assets under management, end of period | $ | 25,712 |
| | $ | 29,396 |
| | $ | 28,659 |
|
Average assets under management | $ | 27,408 |
| | $ | 29,346 |
| | $ | 28,085 |
|
Assets Under Management
By Investment Strategy
(in millions) | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2021 | | 2020 | | 2019 |
U.S. Real Estate | | | | | |
Assets under management, beginning of period | $ | 32,827 | | | $ | 31,024 | | | $ | 24,627 | |
Inflows | 11,538 | | | 11,114 | | | 7,298 | |
Outflows | (6,499) | | | (6,478) | | | (5,363) | |
Net inflows (outflows) | 5,039 | | | 4,636 | | | 1,935 | |
Market appreciation (depreciation) | 14,417 | | | (574) | | | 7,346 | |
Distributions | (2,294) | | | (2,282) | | | (2,886) | |
Transfers | (74) | | | 23 | | | 2 | |
Total increase (decrease) | 17,088 | | | 1,803 | | | 6,397 | |
Assets under management, end of period | $ | 49,915 | | | $ | 32,827 | | | $ | 31,024 | |
Percentage of total assets under management | 46.8 | % | | 41.1 | % | | 43.0 | % |
Average assets under management | $ | 41,315 | | | $ | 28,972 | | | $ | 29,117 | |
| | | | | |
Preferred Securities | | | | | |
Assets under management, beginning of period | $ | 23,185 | | | $ | 17,581 | | | $ | 13,068 | |
Inflows | 8,802 | | | 10,979 | | | 5,726 | |
Outflows | (5,053) | | | (5,828) | | | (3,041) | |
Net inflows (outflows) | 3,749 | | | 5,151 | | | 2,685 | |
Market appreciation (depreciation) | 964 | | | 1,172 | | | 2,406 | |
Distributions | (985) | | | (696) | | | (597) | |
Transfers | 74 | | | (23) | | | 19 | |
Total increase (decrease) | 3,802 | | | 5,604 | | | 4,513 | |
Assets under management, end of period | $ | 26,987 | | | $ | 23,185 | | | $ | 17,581 | |
Percentage of total assets under management | 25.3 | % | | 29.0 | % | | 24.4 | % |
Average assets under management | $ | 25,262 | | | $ | 18,278 | | | $ | 15,702 | |
| | | | | |
Global/International Real Estate | | | | | |
Assets under management, beginning of period | $ | 15,214 | | | $ | 13,509 | | | $ | 11,047 | |
Inflows | 3,263 | | | 4,122 | | | 2,541 | |
Outflows | (2,833) | | | (2,436) | | | (2,714) | |
Net inflows (outflows) | 430 | | | 1,686 | | | (173) | |
Market appreciation (depreciation) | 3,933 | | | 102 | | | 2,887 | |
Distributions | (197) | | | (83) | | | (252) | |
| | | | | |
Total increase (decrease) | 4,166 | | | 1,705 | | | 2,462 | |
Assets under management, end of period | $ | 19,380 | | | $ | 15,214 | | | $ | 13,509 | |
Percentage of total assets under management | 18.2 | % | | 19.0 | % | | 18.7 | % |
Average assets under management | $ | 17,688 | | | $ | 13,193 | | | $ | 12,718 | |
|
| | | | | | | | | | | |
| Year Ended December 31, |
| 2018 | | 2017 | | 2016 |
U.S. Real Estate | | | | | |
Assets under management, beginning of period | $ | 27,580 |
| | $ | 28,927 |
| | $ | 27,814 |
|
Inflows | 4,488 |
| | 5,703 |
| | 7,821 |
|
Outflows | (5,158 | ) | | (5,241 | ) | | (4,091 | ) |
Net inflows (outflows) | (670 | ) | | 462 |
| | 3,730 |
|
Market appreciation (depreciation) | (959 | ) | | 1,895 |
| | 1,674 |
|
Distributions | (2,561 | ) | | (3,694 | ) | | (4,164 | ) |
Transfers | (232 | ) | | (10 | ) | | (127 | ) |
Total increase (decrease) | (4,422 | ) | | (1,347 | ) | | 1,113 |
|
Assets under management, end of period | $ | 23,158 |
| | $ | 27,580 |
| | $ | 28,927 |
|
Average assets under management | $ | 25,052 |
| | $ | 28,622 |
| | $ | 29,224 |
|
| | | | | |
Preferred Securities | | | | | |
Assets under management, beginning of period | $ | 13,018 |
| | $ | 9,880 |
| | $ | 7,705 |
|
Inflows | 4,503 |
| | 5,168 |
| | 4,857 |
|
Outflows | (4,723 | ) | | (2,635 | ) | | (2,592 | ) |
Net inflows (outflows) | (220 | ) | | 2,533 |
| | 2,265 |
|
Market appreciation (depreciation) | (586 | ) | | 1,145 |
| | 365 |
|
Distributions | (560 | ) | | (540 | ) | | (455 | ) |
Transfers | 216 |
| | — |
| | — |
|
Total increase (decrease) | (1,150 | ) | | 3,138 |
| | 2,175 |
|
Assets under management, end of period | $ | 11,868 |
| | $ | 13,018 |
| | $ | 9,880 |
|
Average assets under management | $ | 12,939 |
| | $ | 11,644 |
| | $ | 9,145 |
|
| | | | | |
Global/International Real Estate | | | | | |
Assets under management, beginning of period | $ | 11,108 |
| | $ | 9,403 |
| | $ | 9,476 |
|
Inflows | 1,975 |
| | 1,520 |
| | 1,596 |
|
Outflows | (1,669 | ) | | (1,071 | ) | | (1,867 | ) |
Net inflows (outflows) | 306 |
| | 449 |
| | (271 | ) |
Market appreciation (depreciation) | (359 | ) | | 1,458 |
| | 336 |
|
Distributions | (199 | ) | | (212 | ) | | (265 | ) |
Transfers | — |
| | 10 |
| | 127 |
|
Total increase (decrease) | (252 | ) | | 1,705 |
| | (73 | ) |
Assets under management, end of period | $ | 10,856 |
| | $ | 11,108 |
| | $ | 9,403 |
|
Average assets under management | $ | 11,180 |
| | $ | 10,258 |
| | $ | 9,734 |
|
| | | | | |
Global Listed Infrastructure | | | | | |
Assets under management, beginning of period | $ | 6,932 |
| | $ | 5,697 |
| | $ | 5,147 |
|
Inflows | 601 |
| | 872 |
| | 732 |
|
Outflows | (448 | ) | | (376 | ) | | (402 | ) |
Net inflows (outflows) | 153 |
| | 496 |
| | 330 |
|
Market appreciation (depreciation) | (403 | ) | | 935 |
| | 428 |
|
Distributions | (199 | ) | | (196 | ) | | (208 | ) |
Total increase (decrease) | (449 | ) | | 1,235 |
| | 550 |
|
Assets under management, end of period | $ | 6,483 |
| | $ | 6,932 |
| | $ | 5,697 |
|
Average assets under management | $ | 6,882 |
| | $ | 6,473 |
| | $ | 5,488 |
|
Assets Under Management
By Investment Strategy - continued
(in millions) | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2021 | | 2020 | | 2019 |
Global Listed Infrastructure | | | | | |
Assets under management, beginning of period | $ | 6,729 | | | $ | 8,076 | | | $ | 6,517 | |
Inflows | 1,751 | | | 997 | | | 713 | |
Outflows | (765) | | | (1,722) | | | (699) | |
Net inflows (outflows) | 986 | | | (725) | | | 14 | |
Market appreciation (depreciation) | 1,256 | | | (423) | | | 1,520 | |
Distributions | (208) | | | (199) | | | (201) | |
Transfers | — | | | — | | | 226 | |
Total increase (decrease) | 2,034 | | | (1,347) | | | 1,559 | |
Assets under management, end of period | $ | 8,763 | | | $ | 6,729 | | | $ | 8,076 | |
Percentage of total assets under management | 8.2 | % | | 8.4 | % | | 11.2 | % |
Average assets under management | $ | 7,970 | | | $ | 6,972 | | | $ | 7,455 | |
| | | | | |
Other | | | | | |
Assets under management, beginning of period | $ | 1,953 | | | $ | 1,992 | | | $ | 2,594 | |
Inflows | 546 | | | 188 | | | 204 | |
Outflows | (1,297) | | | (178) | | | (916) | |
Net inflows (outflows) | (751) | | | 10 | | | (712) | |
Market appreciation (depreciation) | 440 | | | (16) | | | 418 | |
Distributions | (58) | | | (33) | | | (61) | |
Transfers | — | | | — | | | (247) | |
Total increase (decrease) | (369) | | | (39) | | | (602) | |
Assets under management, end of period | $ | 1,584 | | | $ | 1,953 | | | $ | 1,992 | |
Percentage of total assets under management | 1.5 | % | | 2.4 | % | | 2.8 | % |
Average assets under management | $ | 1,979 | | | $ | 1,760 | | | $ | 2,285 | |
| | | | | |
Total | | | | | |
Assets under management, beginning of period | $ | 79,908 | | | $ | 72,182 | | | $ | 57,853 | |
Inflows | 25,900 | | | 27,400 | | | 16,482 | |
Outflows | (16,447) | | | (16,642) | | | (12,733) | |
Net inflows (outflows) | 9,453 | | | 10,758 | | | 3,749 | |
Market appreciation (depreciation) | 21,010 | | | 261 | | | 14,577 | |
Distributions | (3,742) | | | (3,293) | | | (3,997) | |
| | | | | |
Total increase (decrease) | 26,721 | | | 7,726 | | | 14,329 | |
Assets under management, end of period | $ | 106,629 | | | $ | 79,908 | | | $ | 72,182 | |
Average assets under management | $ | 94,214 | | | $ | 69,175 | | | $ | 67,277 | |
|
| | | | | | | | | | | |
| Year Ended December 31, |
| 2018 | | 2017 | | 2016 |
Other | | | | | |
Assets under management, beginning of period | $ | 3,468 |
| | $ | 3,291 |
| | $ | 2,452 |
|
Inflows | 222 |
| | 402 |
| | 998 |
|
Outflows | (971 | ) | | (485 | ) | | (381 | ) |
Net inflows (outflows) | (749 | ) | | (83 | ) | | 617 |
|
Market appreciation (depreciation) | (213 | ) | | 330 |
| | 295 |
|
Distributions | (66 | ) | | (70 | ) | | (73 | ) |
Transfers | 16 |
| | — |
| | — |
|
Total increase (decrease) | (1,012 | ) | | 177 |
| | 839 |
|
Assets under management, end of period | $ | 2,456 |
| | $ | 3,468 |
| | $ | 3,291 |
|
Average assets under management | $ | 2,915 |
| | $ | 3,315 |
| | $ | 2,778 |
|
| | | | | |
Total | | | | | |
Assets under management, beginning of period | $ | 62,106 |
| | $ | 57,198 |
| | $ | 52,594 |
|
Inflows | 11,789 |
| | 13,665 |
| | 16,004 |
|
Outflows | (12,969 | ) | | (9,808 | ) | | (9,333 | ) |
Net inflows (outflows) | (1,180 | ) | | 3,857 |
| | 6,671 |
|
Market appreciation (depreciation) | (2,520 | ) | | 5,763 |
| | 3,098 |
|
Distributions | (3,585 | ) | | (4,712 | ) | | (5,165 | ) |
Total increase (decrease) | (7,285 | ) | | 4,908 |
| | 4,604 |
|
Assets under management, end of period | $ | 54,821 |
| | $ | 62,106 |
| | $ | 57,198 |
|
Average assets under management | $ | 58,968 |
| | $ | 60,312 |
| | $ | 56,369 |
|
Investment Performance as of December 31, 20182021
_________________________
| |
(1) | Past performance is no guarantee of future results. Outperformance is determined by annualized investment performance of all accounts in each investment strategy measured gross of fees and net of withholding taxes in comparison to the performance of each account's reference benchmark measured net of withholding taxes, where applicable. This is not investment advice and may not be construed as sales or marketing material for any financial product or service sponsored or provided by Cohen & Steers. |
| |
(2) | © 2019 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Morningstar calculates its ratings based on a risk-adjusted return measure that accounts for variation in a fund's monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive five stars, the next 22.5% receive four stars, the next 35% receive three stars, the next 22.5% receive two stars and the bottom 10% receive one star. Past performance is no guarantee of future results. Based on independent rating by Morningstar, Inc. of investment performance of each Cohen & Steers-sponsored open-end U.S.-registered mutual fund for all share classes for the overall period at December 31, 2018. Overall Morningstar rating is a weighted average based on the 3-year, 5-year and 10-year Morningstar rating. Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages. This is not investment advice and may not be construed as sales or marketing material for any financial product or service sponsored or provided by Cohen & Steers. |
Overview(1) Past performance is no guarantee of future results. Outperformance is determined by comparing the annualized investment performance of each investment strategy to the performance of specified reference benchmarks. Investment performance in excess of the performance of the benchmark is considered outperformance. The investment performance calculation of each investment strategy is based on all active accounts and investment models pursuing similar investment objectives. For accounts, actual investment performance is measured gross of fees and net of withholding taxes. For investment models, for which actual investment performance does not exist, the investment performance of a composite of accounts pursuing comparable investment objectives is used as a proxy for actual investment performance. The performance of the specified reference benchmark for each account and investment model is measured net of withholding taxes, where applicable. This is not investment advice and may not be construed as sales or marketing material for any financial product or service sponsored or provided by Cohen & Steers.
(2) © 2022 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Morningstar calculates its ratings based on a risk-adjusted return measure that accounts for variation in a fund's monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive five stars, the next 22.5% receive four stars, the next 35% receive three stars, the next 22.5% receive two stars and the bottom 10% receive one star. Past performance is no guarantee of future results. Based on independent rating by Morningstar, Inc. of investment performance of each Cohen & Steers-sponsored open-end U.S.-registered mutual fund for all share classes for the overall period at December 30, 2021. Overall Morningstar rating is a weighted average based on the 3-year, 5-year and 10-year Morningstar rating. Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages. This is not investment advice and may not be construed as sales or marketing material for any financial product or service sponsored or provided by Cohen & Steers.
Changes in Assets Under Management - 2021 Compared with 2020
Assets under management at December 31, 2018 decreased 11.7%2021 increased 33.4% to $54.8$106.6 billion from $62.1$79.9 billion at December 31, 2017 and decreased 4.2% from $57.2 billion at December 31, 2016.2020. The decrease during 2018increase was due to net outflowsinflows of $1.2 billion, market depreciation of $2.5$9.5 billion and market appreciation of $21.0 billion, partially offset by distributions of $3.6$3.7 billion. Net outflowsinflows included $670 million from$5.0 billion into U.S. real estate and $607 million from commodities (which is$3.7 billion into preferred securities. Market appreciation included in “Other” in the table on pages 19-20). Market depreciation included $959 million from U.S. real estate, $586 million from preferred securities and $403 million from global listed infrastructure. Distributions included $2.6$14.4 billion from U.S. real estate and $560 million from preferred securities.
At January 31, 2019, our assets under management increased 9.5% from December 31, 2018 to $60.0 billion as a result of net inflows of $427 million and market appreciation of $5.0 billion, partially offset by distributions of $200 million.
The increase in assets under management during 2017 was due to net inflows of $3.9 billion and market appreciation of $5.8 billion, partially offset by distributions of $4.7 billion. Net inflows included $2.5 billion into preferred securities, $496 million into global listed infrastructure and $462 million into U.S. real estate. Market appreciation included $1.9 billion from U.S. real estate, $1.5 billion from global/international real estate, $1.1 billion from preferred securities and $935 million from global listed infrastructure.estate. Distributions included $3.7$2.3 billion from U.S. real estate and $540$985 million from preferred securities. Our overall organic growth rate was 11.8% for the year ended December 31, 2021. The organic growth/decay rate represents the ratio of net flows for the year to the beginning assets under management.
Average assets under management for the year ended December 31, 2018 decreased 2.2%2021 increased 36.2% to $59.0$94.2 billion from $60.3$69.2 billion for the year ended December 31, 2017 and increased 4.6% from $56.4 billion for the year ended December 31, 2016.2020.
Institutional accounts
Assets under management in institutional accounts at December 31, 2018,2021, which represented 46.9%40.1% of total assets under management, were $25.7increased 28.5% to $42.7 billion compared with $29.4from $33.3 billion at December 31, 2017 and $28.7 billion at December 31, 2016.2020. The decrease during 2018increase was due to net outflows of $744 million, market depreciation of $1.0 billion and distributions of $2.0 billion. Net outflows included $944 million from U.S. real estate and $546 million from commodities (which is included in “Other” in the table on pages 19-20), partially offset by net inflows of $550$589 million into preferred securities and $202 million into global/international real estate. Market depreciation included $314 million from U.S. real estate, $270 million from global/international real estate and $188 million from global listed infrastructure. Distributions included $1.8 billion from U.S. real estate.
The increase in assets under management in institutional accounts during 2017 was due to market appreciation of $2.9$10.0 billion, and net inflows of $696 million, partially offset by distributions of $3.0$1.2 billion. Net inflows included $558$802 million into preferred securitiesU.S. real estate and $448$603 million into global listed infrastructure, partially offset by net outflows of $379 million$1.0 billion from U.S. real estate.assets multi-strategy (included in "Other" in the table on pages 22 and 23). Market appreciation included $1.2$5.6 billion from global/international real estate, $863 million from U.S. real estate and $467 million$3.5 billion from global listed infrastructure.global/international real estate. Distributions included $2.8$1.1 billion from U.S. real estate. Our organic growth rate for institutional accounts was 1.8% for the year ended December 31, 2021.
Average assets under management for institutional accounts for the year ended December 31, 2018 decreased 6.6%2021 increased 30.2% to $27.4$38.9 billion from $29.3$29.9 billion for the year ended December 31, 2017 and decreased 2.4% from $28.1 billion for the year ended December 31, 2016.2020.
Assets under management in institutional advisedadvisory accounts at December 31, 2018,2021, which represented 46.9%57.6% of institutional assets under management, were $12.1increased 39.5% to $24.6 billion compared with $11.3from $17.6 billion at December 31, 2017 and $9.1 billion at December 31, 2016.2020. The increase during 2018 was primarily due to net inflows of $1.2$1.9 billion partially offset by market depreciation of $484 million. Net inflows included $631 million into preferred securities and $209 million into global/international real estate. Market depreciation included $119 million from U.S. real estate, $104 million from global listed infrastructure and $89 million from real assets multi-strategy (which is included in “Other” in the table on pages 19-20).
The increase in assets under management in institutional advised accounts during 2017 was primarily due to market appreciation of $1.1 billion and net inflows of $1.0$5.0 billion. Net inflows included $565$1.5 billion into U.S. real estate, $746 million into global listed infrastructure and $559$599 million into preferred securities, partially offset by net outflows of $281$1.0 billion from real assets multi-strategy (included in "Other" in the table on pages 22 and 23). Market appreciation included $2.3 billion from U.S. real estate and $1.9 billion from global/international real estate. Our organic growth rate for advisory accounts was 11.0% for the year ended December 31, 2021.
Average assets under management for advisory accounts for the year ended December 31, 2021 increased 41.2% to $22.1 billion from $15.7 billion for the year ended December 31, 2020.
Assets under management in Japan subadvisory accounts at December 31, 2021, which represented 26.5% of institutional assets under management, increased 16.6% to $11.3 billion from $9.7 billion at December 31, 2020. The increase was due to market appreciation of $3.6 billion, partially offset by net outflows of $770 million and distributions of $1.2 billion. Net outflows included $554 million from U.S. real estate. Market appreciation included $485$2.9 billion from U.S. real estate and $636 million from global/international real estate, $241 million from global listed infrastructure and $204 millionestate. Distributions included $1.1 billion from U.S. real estate. Our organic decay rate for Japan subadvisory accounts was (7.9%) for the year ended December 31, 2021.
Average assets under management for institutional advisedJapan subadvisory accounts for the year ended December 31, 20182021 increased 14.8%14.7% to $11.8$10.3 billion from $10.3$9.0 billion for the year ended December 31, 20172020.
Assets under management in subadvisory accounts excluding Japan at December 31, 2021, which represented 15.9% of institutional assets under management, increased 15.1% to $6.8 billion from $5.9 billion at December 31, 2020. The increase was due to market appreciation of $1.5 billion, partially offset by net outflows of $587 million. Net outflows included $374 million from global/international real estate and increased 38.6%$137 million from $8.5 billionglobal listed infrastructure. Market appreciation included $938 million from global/international real estate and $342 million from U.S. real estate. Our organic decay rate for subadvisory accounts excluding Japan was (9.9%) for the year ended December 31, 2016.
Assets under management in Japan subadvised accounts at December 31, 2018, which represented 31.6% of institutional assets under management, were $8.1 billion, compared with $11.5 billion at December 31, 2017 and $13.7 billion at December 31, 2016. The decrease during 2018 was due to net outflows of $1.1 billion, market depreciation of $255 million and distributions of $2.0 billion. Net outflows included $966 million from U.S. real estate. Market depreciation included $166 million from U.S. real estate and $56 million from global/international real estate. Distributions included $1.8 billion from U.S. real estate.
The decrease in assets under management in Japan subadvised accounts during 2017 was due to net outflows of $134 million and distributions of $3.0 billion, partially offset by market appreciation of $911 million. Net outflows included $63 million from global/international real estate and $27 million from preferred securities. Market appreciation included $594
million from U.S. real estate and $254 million from global/international real estate. Distributions included $2.8 billion from U.S. real estate.2021.
Average assets under management for Japan subadvised accounts for the year ended December 31, 2018 decreased 26.5% to $9.4 billion from $12.8 billion and decreased 30.9% from $13.6 billion for the year ended December 31, 2016.
Assets under management in institutional subadvised accounts excluding Japan at December 31, 2018, which represented 21.4% of institutional assets under management, were $5.5 billion, compared with $6.6 billion at December 31, 2017 and $5.9 billion at December 31, 2016. The decrease during 2018 was due to net outflows of $814 million and market depreciation of $271 million. Net outflows included $546 million from commodities (which is included in “Other” in the table on pages 19-20) and $145 million from U.S. real estate. Market depreciation included $129 million from global/international real estate and $82 million from global listed infrastructure.
The increase in assets under management in institutional subadvised accounts excluding Japan during 2017 was due to market appreciation of $829 million, partially offset by net outflows of $124 million. Net outflows included $227 million from large cap value (which is included in “Other” in the table on pages 19-20), partially offset by net inflows of $178 million into global/international real estate. Market appreciation included $434 million from global/international real estate and $221 million from global listed infrastructure.
Average assets under management for institutional subadvisedsubadvisory accounts excluding Japan for the year ended December 31, 2018 decreased 1.2%2021 increased 24.1% to $6.2$6.5 billion from $6.3$5.2 billion for the year ended December 31, 2017 and increased 3.9% from $6.0 billion for the year ended December 31, 2016.2020.
Open-end funds
Assets under management in open-end funds at December 31, 2018,2021, which represented 37.8%47.7% of total assets under management, were $20.7increased 44.8% to $50.9 billion compared with $23.3from $35.2 billion at December 31, 2017 and $19.6 billion at December 31, 2016. The decrease during 2018 was primarily due to net outflows of $448 million, market depreciation of $1.0 billion and distributions of $1.1 billion. Net outflows included $771 million from preferred securities, partially offset by net inflows of $276 million into U.S. real estate and $118 million into global listed infrastructure. Market depreciation included $501 million from U.S. real estate and $368 million from preferred securities. Distributions included $566 million from U.S. real estate and $439 million from preferred securities.
2020. The increase in assets under management in open-end funds during 2017 was primarily due to net inflows of $3.2$8.8 billion and market appreciation of $1.9$8.9 billion, partially offset by distributions of $1.2$1.9 billion. Net inflows included $2.0$4.2 billion into U.S. real estate and $3.3 billion into preferred securities and $842 million into U.S. real estate.securities. Market appreciation included $816$7.8 million from U.S. real estate and $769 million from preferred securities.estate. Distributions included $679 million$1.0 billion from U.S. real estate ($935 million of which was reinvested and $416included in net inflows) and $762 million from preferred securities.securities ($575 million of which was reinvested and included in net inflows). Our organic growth rate for open-end funds was 25.0% for the year ended December 31, 2021.
Average assets under management for open-end funds for the year ended December 31, 20182021 increased 4.3%42.6% to $22.5$43.0 billion from $21.6$30.2 billion for the year ended December 31, 2017 and increased 17.6% from $19.2 billion for the year ended December 31, 2016.2020.
Closed-end funds
Assets under management in closed-end funds at December 31, 2018,2021, which represented 15.3%12.2% of total assets under management, were $8.4increased 13.0% to $13.0 billion compared with $9.4from $11.5 billion at December 31, 2017 and $9.0 billion at December 31, 2016.2020. The decrease during 2018 was primarily due to market depreciation of $496 million and distributions of $512 million.
The increase in assets under management in closed-end funds during 2017 was primarily due to market appreciation of $949 million,$2.0 billion, partially offset by distributions of $506$622 million. Our organic growth rate for closed-end funds was 0.8% for the year ended December 31, 2021.
Average assets under management for closed-end funds for the year ended December 31, 2018 decreased 3.5%2021 increased 34.8% to $9.0$12.3 billion from $9.3 billion for the year ended December 31, 2017 and decreased 1.1% from $9.1 billion for the year ended December 31, 2016.2020.
Results of Operations
|
| | | | | | | | | | | |
(in thousands, except per share data and percentages) | Year Ended December 31, |
| 2018 | | 2017 | | 2016 |
U.S. GAAP | | | | | |
Revenue (1) | $ | 381,111 |
| | $ | 378,696 |
| | $ | 351,497 |
|
Expenses (1) | $ | 234,073 |
| | $ | 223,950 |
| | $ | 215,986 |
|
Operating income (loss) | $ | 147,038 |
| | $ | 154,746 |
| | $ | 135,511 |
|
Non-operating income (loss) | $ | (3,259 | ) | | $ | 5,654 |
| | $ | 7,892 |
|
Net income attributable to common stockholders (2) | $ | 113,896 |
| | $ | 91,939 |
| | $ | 92,936 |
|
Diluted earnings per share | $ | 2.40 |
| | $ | 1.96 |
| | $ | 2.00 |
|
Operating margin (1) | 38.6 | % | | 40.9 | % | | 38.6 | % |
| | | | | |
As Adjusted (3) |
|
| |
|
| | |
Net income attributable to common stockholders (2) | $ | 113,849 |
| | $ | 97,037 |
| | $ | 86,109 |
|
Diluted earnings per share | $ | 2.40 |
| | $ | 2.07 |
| | $ | 1.85 |
|
Operating margin (1) | 39.1 | % | | 40.9 | % | | 39.2 | % |
_________________________
| |
(1) | The presentation for the years ended December 31, 2017 and 2016 has been recast to reflect the Company's adoption of the new revenue recognition accounting standard on January 1, 2018. |
| |
(2) | Net income for the year ended December 31, 2018 reflected the lower U.S. federal statutory tax rate of 21% due to the Tax Cuts and Jobs Act. |
| |
(3) | The “As Adjusted” amounts represent non-GAAP financial measures. Refer to pages 29-30 for reconciliations to the most directly comparable U.S. GAAP financial measures. |
U.S. GAAP
2018Changes in Assets Under Management - 2020 Compared with 20172019
Revenue
RevenueAssets under management at December 31, 2020 increased 10.7% to $79.9 billion from $72.2 billion at December 31, 2019. The increase was due to net inflows of $10.8 billion and market appreciation of $261 million, which recovered from $15.3 billion of market depreciation in the first quarter of 2020, partially offset by distributions of $3.3 billion. Net inflows included $5.2 billion into preferred securities and $4.6 billion into U.S. real estate. Market appreciation included $1.2 billion from preferred securities, partially offset by market depreciation of $574 million from U.S. real estate and $423 million from global listed infrastructure. Distributions included $2.3 billion from U.S. real estate and $696 million from preferred securities. Our overall organic growth rate was 14.9% for the year ended December 31, 2018 increased 0.6% to $381.1 million from $378.7 million2020.
Average assets under management for the year ended December 31, 2017. This increase was primarily attributable2020 increased 2.8% to higher investment advisory and administration fees of $4.5 million, primarily due to a favorable change in the fee mix.
For the year ended December 31, 2018:
Total investment advisory revenue$69.2 billion from institutional accounts increased 0.1% to $100.3 million from $100.2 million$67.3 billion for the year ended December 31, 2017. Total investment advisory revenue compared with average assets2019.
Institutional accounts
Assets under management in institutional accounts implied an annual effective feeat December 31, 2020, which represented 41.6% of total assets under management, increased 4.5% to $33.3 billion from $31.8 billion at December 31, 2019. The increase was due to net inflows of $2.8 billion and market appreciation of $53 million, partially offset by distributions of $1.4 billion. Net inflows included $1.9 billion into global/international real estate and $1.6 billion into U.S. real estate, partially offset by net outflows of $662 million from global listed infrastructure. Distributions included $1.4 billion from U.S. real estate. Our organic growth rate of 36.6 bps and 34.1 bpsfor institutional accounts was 8.7% for the year ended December 31, 2018 and 2017, respectively.2020.
Average assets under management for institutional accounts for the year ended December 31, 2020 decreased 1.4% to $29.9 billion from $30.3 billion for the year ended December 31, 2019.
Assets under management in advisory accounts at December 31, 2020, which represented 53.0% of institutional assets under management, increased 12.5% to $17.6 billion from $15.7 billion at December 31, 2019. The increase in the annual effective fee rate reflectedwas due to net inflows of $1.6 billion and market appreciation of $406 million. Net inflows included $1.3 billion into global/international real estate and $699 million into U.S. real estate, partially offset by net outflows of $565 million from lower fee paying accounts.global listed infrastructure. Market appreciation included $265 million from global/international real estate and $196 million from preferred securities. Our organic growth rate for advisory accounts was 9.9% for the year ended December 31, 2020.
Average assets under management for advisory accounts for the year ended December 31, 2020 increased 6.1% to $15.7 billion from $14.8 billion for the year ended December 31, 2019.
Assets under management in Japan subadvisory accounts at December 31, 2020, which represented 29.2% of institutional assets under management, decreased 5.8% to $9.7 billion from $10.3 billion at December 31, 2019. The decrease was due to market depreciation of $193 million and distributions of $1.4 billion, partially offset by net inflows of $975 million. Net inflows included $913 million into U.S. real estate. Market depreciation included $237 million from U.S. real estate, partially offset by market appreciation of $41 million from global/international real estate. Distributions included $1.4 billion from U.S. real estate. Our organic growth rate for Japan subadvisory accounts was 9.4% for the year ended December 31, 2020.
Average assets under management for Japan subadvisory accounts for the year ended December 31, 2020 decreased 9.4% to $9.0 billion from $10.0 billion for the year ended December 31, 2019.
Assets under management in subadvisory accounts excluding Japan at December 31, 2020, which represented 17.8% of institutional assets under management, increased 1.5% to $5.9 billion from $5.8 billion at December 31, 2019. The increase was due to net inflows of $246 million, partially offset by market depreciation of $160 million. Net inflows included $368 million into global/international real estate, partially offset by net outflows of $90 million from global listed infrastructure.
Market depreciation included $109 million from global/international real estate. Our organic growth rate for subadvisory accounts excluding Japan was 4.2% for the year ended December 31, 2020.
Average assets under management for subadvisory accounts excluding Japan for the year ended December 31, 2020 decreased 6.7% to $5.2 billion from $5.6 billion for the year ended December 31, 2019.
Open-end funds
Assets under management in open-end funds at December 31, 2020, which represented 44.0% of total assets under management, increased 14.4% to $35.2 billion from $30.7 billion at December 31, 2019. The increase was due to net inflows of $5.4 billion and market appreciation of $405 million, partially offset by distributions of $1.4 billion. Net inflows included $3.0 billion into preferred securities and $2.5 billion into U.S. real estate. Market appreciation included $851 million from preferred securities, partially offset by market depreciation of $260 million from U.S. real estate, $95 million from global/international real estate and $81 million from global listed infrastructure. Distributions included $742 million from U.S. real estate ($631 million of which was reinvested and included in net inflows) and $578 million from preferred securities ($402 million of which was reinvested and included in net inflows). Our organic growth rate for open-end funds was 17.6% for the year ended December 31, 2020.
Average assets under management for open-end funds for the year ended December 31, 2020 increased 9.3% to $30.2 billion from $27.6 billion for the year ended December 31, 2019.
Closed-end funds
Assets under management in closed-end funds at December 31, 2020, which represented 14.4% of total assets under management, increased 19.2% to $11.5 billion from $9.6 billion at December 31, 2019. The increase was due to net inflows of $2.6 billion, partially offset by market depreciation of $197 million and distributions of $517 million. Net inflows included $2.1 billion from the Company's initial public offering of the Cohen & Steers Tax-Advantaged Preferred Securities and Income Fund (PTA) and $526 million from the Cohen & Steers Quality Income Realty Fund, Inc. (RQI) rights offering. Our organic growth rate for closed-end funds was 26.6% for the year ended December 31, 2020.
Average assets under management for closed-end funds for the year ended December 31, 2020 decreased 2.6% to $9.1 billion from $9.4 billion for the year ended December 31, 2019.
Summary of Operating Information | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands, except percentages and per share data) | 2021 | | 2020 | | 2019 |
U.S. GAAP | | | | | |
Revenue | $ | 583,832 | | | $ | 427,536 | | | $ | 410,830 | |
Expenses (1) | $ | 323,460 | | | $ | 332,479 | | | $ | 250,696 | |
Operating income | $ | 260,372 | | | $ | 95,057 | | | $ | 160,134 | |
Non-operating income (loss) | $ | 21,572 | | | $ | (1,670) | | | $ | 27,415 | |
Net income attributable to common stockholders | $ | 211,396 | | | $ | 76,584 | | | $ | 134,621 | |
Diluted earnings per share | $ | 4.31 | | | $ | 1.57 | | | $ | 2.79 | |
Operating margin | 44.6 | % | | 22.2 | % | | 39.0 | % |
| | | | | |
As Adjusted (2) | | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
Net income attributable to common stockholders | $ | 197,947 | | | $ | 125,291 | | | $ | 124,360 | |
Diluted earnings per share | $ | 4.03 | | | $ | 2.57 | | | $ | 2.57 | |
Operating margin | 46.0 | % | | 39.6 | % | | 39.6 | % |
_________________________
(1) Included expenses of $60.6 million associated with the initial public offering of PTA for the year ended December 31, 2020.
(2) Please refer to pages 33-34 for reconciliations of U.S. GAAP to as adjusted results.
U.S. GAAP
2021 Compared with 2020
Revenue | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | | | |
(in thousands) | 2021 | | 2020 | | $ Change | | % Change |
Open-end funds | $ | 288,359 | | | $ | 201,135 | | | $ | 87,224 | | | 43.4 | % |
Institutional accounts | 146,345 | | | 115,876 | | | 30,469 | | | 26.3 | % |
Closed-end funds | 108,840 | | | 78,026 | | | 30,814 | | | 39.5 | % |
Investment advisory and administration fees | 543,544 | | | 395,037 | | | 148,507 | | | 37.6 | % |
Distribution and service fees | 37,630 | | | 30,134 | | | 7,496 | | | 24.9 | % |
Other | 2,658 | | | 2,365 | | | 293 | | | 12.4 | % |
Total revenue | $ | 583,832 | | | $ | 427,536 | | | $ | 156,296 | | | 36.6 | % |
Total investment advisory and administration revenue from open-end funds increased 3.7% to $163.6 million from $157.9 million for the year ended December 31, 2017.2021 increased primarily due to higher average assets under management. Total investment advisory and administration revenue compared with average assets under management in open-end funds implied an annual effective fee rate of 72.667.1 bps and 73.066.7 bps for the years ended December 31, 2021 and 2020, respectively.
Total investment advisory revenue from institutional accounts for the year ended December 31, 20182021 increased primarily due to higher average assets under management, partially offset by lower performance fees. Total investment advisory revenue compared with average assets under management implied an annual effective fee rate of 37.6 bps and 2017,38.8 bps for the years ended December 31, 2021 and 2020, respectively. The decrease in the implied annual effective fee rate was primarily due to lower performance fees for the year ended December 31, 2021. Excluding the performance fees of $5.6 million and $7.7 million, the implied annual effective fee rate would have been 36.2 bps for the years ended December 31, 2021 and 2020, respectively.
Total investment advisory and administration revenue from closed-end funds decreased 1.8% to $77.3 million from $78.7 million for the year ended December 31, 2017.2021 increased primarily due to higher average assets under management. Total investment advisory and administration revenue compared with average assets under management in closed-end funds implied an annual effective fee rate of 85.788.4 bps and 84.285.4 bps for the years ended December 31, 2021 and 2020, respectively. The increase in the implied annual effective fee rate was primarily due to the initial public offering of PTA in the fourth quarter of 2020.
Distribution and service fees for the year ended December 31, 2018 and 2017, respectively. The net increase2021 increased primarily due higher average assets under management in the annual effective fee rate reflected the full-year effect of the realignment of administration fee rates across our mutual fund complex, which was approved by the mutual fund Board of Directors in June 2017 and became effective on October 1, 2017.
U.S. open-end funds.
Expenses | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | | | |
(in thousands) | 2021 | | 2020 | | $ Change | | % Change |
Employee compensation and benefits | $ | 195,443 | | | $ | 156,457 | | | $ | 38,986 | | | 24.9 | % |
Distribution and service fees | 75,891 | | | 115,084 | | | (39,193) | | | (34.1) | % |
General and administrative | 48,034 | | | 56,286 | | | (8,252) | | | (14.7) | % |
Depreciation and amortization | 4,092 | | | 4,652 | | | (560) | | | (12.0) | % |
Total expenses | $ | 323,460 | | | $ | 332,479 | | | $ | (9,019) | | | (2.7) | % |
Expenses for the year ended December 31, 2018 increased 4.5% to $234.1 million from $224.0 million for the year ended December 31, 2017, primarily due to higher employee compensation and benefits of $7.2 million and general and administrative expenses of $6.0 million, partially offset by lower distribution and service fees expense of $3.3 million.
Employee compensation and benefits for the year ended December 31, 20182021 increased 5.8%primarily due to $131.3an increase in incentive compensation of $24.8 million from $124.1 millionand higher accelerated vesting of certain restricted stock units of $6.4 million.
Distribution and service fee expenses for the year ended December 31, 2017,2020 included expenses of $57.8 million associated with the initial public offering of PTA. Excluding these expenses, distribution and service fees for the year ended December 31, 2021 increased $18.6 million primarily due to higher average assets under management in U.S. open-end funds.
General and administrative expenses for the year ended December 31, 2020 included expenses of $11.9 million associated with the RQI rights offering. Excluding these expenses, general and administrative expenses for the year ended December 31, 2021 increased $3.6 million primarily due to higher recruitment fees of $1.7 million and higher information technology related expenses of $1.2 million.
Operating Margin
Operating margin for the year ended December 31, 2021 increased to 44.6% from 22.2% for the year ended December 31, 2020. The year ended December 31, 2020 included costs associated with the initial public offering of PTA and the RQI rights offering noted above. Operating margin represents the ratio of operating income to revenue.
Non-operating Income (Loss) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2021 | | 2020 |
(in thousands) | Seed Investments (1) | | Other | | Total | | Seed Investments (1) | | Other | | Total |
Interest and dividend income—net | $ | 2,818 | | | $ | 59 | | | $ | 2,877 | | | $ | 2,358 | | | $ | 1,004 | | | $ | 3,362 | |
Gain (loss) from investments—net | 18,710 | | | 74 | | | 18,784 | | | (4,116) | | | — | | | (4,116) | |
Foreign currency gain (loss)—net | 330 | | | (419) | | | (89) | | | (399) | | | (517) | | | (916) | |
Total non-operating income (loss) | $ | 21,858 | | | $ | (286) | | | $ | 21,572 | | | $ | (2,157) | | | $ | 487 | | | $ | (1,670) | |
_________________________
(1) Seed investments included net income of $14.8 million and net loss of $1.4 million attributable to third-party interests in consolidated Company-sponsored funds for the years ended December 31, 2021 and 2020, respectively.
Income Taxes | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | | | |
(in thousands, except percentages) | 2021 | | 2020 | | $ Change | | % Change |
Income tax expense | $ | 55,790 | | | $ | 18,222 | | | $ | 37,568 | | | 206.2 | % |
Effective tax rate | 20.9 | % | | 19.2 | % | | | | |
The effective tax rate for the year ended December 31, 2021 differed from the U.S. federal statutory rate of 21.0% primarily due to state, local and foreign income taxes as well as limitations on the deductibility of executive compensation. These were offset by certain discrete tax items, the most significant being the reversal of certain liabilities associated with unrecognized tax benefits and the appreciated value of the restricted stock units delivered in January 2021. The effective tax rate for the year ended December 31, 2020 differed from the U.S. federal statutory rate of 21.0% primarily due to state, local and foreign income taxes as well as limitations on the deductibility of executive compensation. These were more than offset by certain discrete tax items, the most significant being the appreciated value of the restricted stock units delivered in January 2020.
2020 Compared with 2019
Revenue | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | | | |
(in thousands) | 2020 | | 2019 | | $ Change | | % Change |
Open-end funds | $ | 201,135 | | | $ | 187,730 | | | $ | 13,405 | | | 7.1 | % |
Institutional accounts | 115,876 | | | 110,346 | | | 5,530 | | | 5.0 | % |
Closed-end funds | 78,026 | | | 80,502 | | | (2,476) | | | (3.1) | % |
Investment advisory and administration fees | 395,037 | | | 378,578 | | | 16,459 | | | 4.3 | % |
Distribution and service fees | 30,134 | | | 30,048 | | | 86 | | | 0.3 | % |
Other | 2,365 | | | 2,204 | | | 161 | | | 7.3 | % |
Total revenue | $ | 427,536 | | | $ | 410,830 | | | $ | 16,706 | | | 4.1 | % |
Total investment advisory and administration revenue from open-end funds for the year ended December 31, 2020 increased primarily due to higher average assets under management. Total investment advisory and administration revenue compared with average assets under management implied an annual effective fee rate of 66.7 bps and 68.0 bps for the years ended December 31, 2020 and 2019, respectively. The decrease in the implied annual effective fee rate is primarily due to the full year impact of a reduction of the investment advisory fee rate resulting from imposition of an expense cap effective July 1, 2019 by Cohen & Steers Realty Shares, Inc.
Total investment advisory revenue from institutional accounts for the year ended December 31, 2020 increased primarily due to higher performance fees from certain institutional accounts, partially offset by lower average assets under management. Total investment advisory revenue compared with average assets under management implied an annual effective fee rate of 38.8 bps and 36.4 bps for the years ended December 31, 2020 and 2019, respectively. The increase in the implied annual effective fee rate is primarily due to higher performance fees in 2020. Excluding the performance fees of $7.7 million and $1.0 million, the implied annual effective fee rate for the years ended December 31, 2020 and 2019, respectively, would have been 36.2 bps and 36.1bps.
Total investment advisory and administration revenue from closed-end funds for the year ended December 31, 2020 decreased primarily due to lower average assets under management. Total investment advisory and administration revenue compared with average assets under management implied an annual effective fee rate of 85.4 bps and 85.8 bps for the years ended December 31, 2020 and 2019, respectively.
Expenses | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | | | |
(in thousands) | 2020 | | 2019 | | $ Change | | % Change |
Employee compensation and benefits | $ | 156,457 | | | $ | 143,431 | | | $ | 13,026 | | | 9.1 | % |
Distribution and service fees | 115,084 | | | 55,237 | | | 59,847 | | | 108.3 | % |
General and administrative | 56,286 | | | 47,632 | | | 8,654 | | | 18.2 | % |
Depreciation and amortization | 4,652 | | | 4,396 | | | 256 | | | 5.8 | % |
Total expenses | $ | 332,479 | | | $ | 250,696 | | | $ | 81,783 | | | 32.6 | % |
Employee compensation and benefits for the year ended December 31, 2020 increased primarily due to higher salaries of $3.3$3.7 million, higher amortization of restricted stock units of $2.1 million andan increase in incentive compensation of $1.9$3.4 million, partially offset by lower production compensationan increase in severance expenses of $1.8 million, higher payroll taxes of $1.2 million and commissions of $1.1 million.
Distribution and service fees expense for the year ended December 31, 2018 decreased 6.2% to $50.0 million from $53.3 million for the year ended December 31, 2017,2020 increased primarily due to a continued shift incosts
associated with the compositioninitial public offering of
assets under management into lower cost share classes. PTA of $57.8 million.
General and administrative expenses for the year ended December 31, 20182020 increased 14.3% to $48.3 million from $42.2 million for the year ended December 31, 2017, primarily due to higher research and market data expenses of approximately $1.2 million, higher recruiting fees of approximately $791,000, expenses of approximately $511,000costs associated with the evaluationRQI rights offering of a potential business transaction that we did not pursue. In addition, the year ended December 31, 2017 included refunds$11.7 million, partially offset by lower travel and entertainment expenses of foreign withholding taxes related to prior years of approximately $1.3$3.3 million.
Operating Margin
Operating margin for the year ended December 31, 20182020 decreased to 38.6%22.2% from 40.9%39.0% for the year ended December 31, 2017.
Non-operating Income (Loss)
Non-operating loss2019. The decrease was primarily due to costs associated with the initial public offering of PTA and the RQI rights offering for the year ended December 31, 2018 was $3.3 million, which2020 noted above.
Non-operating Income (Loss) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2020 | | 2019 |
(in thousands) | Seed Investments (1) | | Other | | Total | | Seed Investments (1) | | Other | | Total |
Interest and dividend income—net | $ | 2,358 | | | $ | 1,004 | | | $ | 3,362 | | | $ | 3,052 | | | $ | 3,664 | | | $ | 6,716 | |
Gain (loss) from investments—net | (4,116) | | | — | | | (4,116) | | | 21,673 | | | — | | | 21,673 | |
Foreign currency gain (loss)—net | (399) | | | (517) | | | (916) | | | 381 | | | (1,355) | | | (974) | |
Total non-operating income (loss) | $ | (2,157) | | | $ | 487 | | | $ | (1,670) | | | $ | 25,106 | | | $ | 2,309 | | | $ | 27,415 | |
_________________________ (1) Seed investments included net loss of $1.4 million and net income of $12.4 million attributable to redeemable noncontrollingthird-party interests of $4.4 million, compared with non-operating income of $5.7 millionin consolidated Company-sponsored funds for the yearyears ended December 31, 2017, which included net income attributable to redeemable noncontrolling interests of $547,000. Non-operating income (loss) was comprised of the following:2020 and 2019, respectively.
Interest and dividend income of $10.4 million for the year ended December 31, 2018, which included interest on corporate cash of $3.7 million, interest and dividend income of $5.8 million attributable to consolidated funds and dividend income of $936,000 from other seed investments. Interest and dividend income of $4.3 million for the year ended December 31, 2017, which included $1.5 million of interest on corporate cash and interest and dividend income of $1.9 million from consolidated funds and dividend income of $1.0 million from other seed investments;
Net loss from investments of $14.3 million for the year ended December 31, 2018, which included net losses of $11.2 million attributable to consolidated funds, of which $1.6 million was realized, and net losses of $3.1 million from other seed investments, of which $328,000 was realized. Net gain from investments of $2.0 million for the year ended December 31, 2017, which included net realized and unrealized gains from consolidated funds of $1.9 million and net realized and unrealized gains of $105,000 from other seed investments; and
Foreign currency gains of $579,000 for the year ended December 31, 2018, which included net gains of $2.3 million attributable to U.S. dollar-denominated assets and liabilities held by certain foreign subsidiaries, partially offset by net losses of $1.7 million attributable to consolidated funds. Foreign currency losses of $699,000 for the year ended December 31, 2017, which included $515,000 of net losses attributable to consolidated funds.
Income Taxes
Income tax expense for the year ended December 31, 2018 was $34.3 million, compared with $67.9 million for the year ended December 31, 2017. The effective tax rate for the year ended December 31, 2018, which reflected the lower U.S. federal statutory rate of 21% due to the enactment of the Tax Cuts and Jobs Act, was 23.12%, compared with 42.50% for the year ended December 31, 2017.
| | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | | | |
(in thousands, except percentages) | 2020 | | 2019 | | $ Change | | % Change |
Income tax expense | $ | 18,222 | | | $ | 40,565 | | | $ | (22,343) | | | (55.1) | % |
Effective tax rate | 19.2 | % | | 23.2 | % | | | | |
The effective tax rate for the year ended December 31, 20182020 differed from the U.S. federal statutory rate of 21%21.0% primarily due to state, local and foreign income taxes as well as limitations on the deductibility of executive compensation. These were more than offset by certain discrete tax items, the most significant being the appreciated value of the restricted stock units delivered in January 2020. The effective tax rate for the year ended December 31, 2019 differed from the U.S. federal statutory rate of 21.0% primarily due to state, local and foreign income taxes. These were partially offset by certain discrete tax items, the most significant being the reversal of certain liabilities associated with unrecognized tax benefits and the tax effects related to the deliveryappreciated value of restricted stock units. The effective tax rate forunits delivered in January 2019, as well as the year ended December 31, 2017 differed from the U.S. federal statutory raterelease of 35% primarily due to tax charges of approximately $8.4 million, associated with the enactmenta portion of the Tax Cuts and Jobs Act on December 22, 2017 and remeasurement of deferred and other tax balances aggregating to $4.3 million, partially offset by the reversal of certain liabilitiesvaluation allowance associated with unrecognized tax benefits.
2017 Compared with 2016
Certain amounts for the years ended December 31, 2017 and 2016 have been recast to reflect the Company's adoption of the new revenue recognition accounting standard on January 1, 2018. See Notes 2 and 3 of the consolidated financial statements for further discussion of the Company's recently adopted accounting pronouncements and revenue, respectively.
Revenue
Revenue for the year ended December 31, 2017 increased 7.7% to $378.7 million from $351.5 million for the year ended December 31, 2016. This increase was primarily attributable to higher investment advisory and administration fees of $24.9 million due to higher average assets under management in all three investment vehicles.
For the year ended December 31, 2017:
Total investment advisory revenue from institutional accounts increased 8.7% to $100.2 million from $92.2 million for the year ended December 31, 2016. Total investment advisory revenue compared with average assets under management in institutional accounts implied an annual effective fee rate of 34.1 bps and 32.8 bps for the year ended December 31, 2017 and 2016, respectively.
Total investment advisory and administration revenue from open-end funds increased 10.0% to $157.9 million from $143.5 million for the year ended December 31, 2016. Total investment advisory and administration revenue compared with average assets under management in open-end funds implied an annual effective fee rate of 73.0 bps and 74.9 bps for the year ended December 31, 2017 and 2016, respectively.
Total investment advisory and administration revenue from closed-end funds increased 3.4% to $78.7 million from $76.1 million for the year ended December 31, 2016. Total investment advisory and administration revenue compared with average assets under management in closed-end funds implied an annual effective fee rate of 84.2 bps and 83.6 bps for the year ended December 31, 2017 and 2016, respectively.
Expenses
Expenses for the year ended December 31, 2017 increased 3.7% to $224.0 million from $216.0 million for the year ended December 31, 2016, primarily due to an increase of $8.5 million in employee compensation and benefits.
Employee compensation and benefits for the year ended December 31, 2017 increased 7.3% to $124.1 million from $115.6 million for the year ended December 31, 2016. This increase was primarily due to higher incentive compensation of approximately $4.7 million and salaries of approximately $3.2 million.
Operating Margin
Operating margin for the year ended December 31, 2017 increased to 40.9% from 38.6% for the year ended December 31, 2016.
Non-operating Income (Loss)
Non-operating income for the year ended December 31, 2017 was $5.7 million, compared with $7.9 million for the year ended December 31, 2016. The change was primarily due to lower net realized and unrealized gains on ourthe Company's seed investments of approximately $3.0 million and net losses associated with forward currency contracts used to hedge certain non-U.S. dollar investment advisory fees receivable of $973,000, partially offset by an increase in interest and dividend income from our seed investments and corporate cash of approximately $2.2 million. Non-operating income for the year ended December 31, 2017 included net income attributable to redeemable noncontrolling interests of $547,000, compared with net loss attributable to redeemable noncontrolling interests of $126,000 for the year ended December 31, 2016.
Income Taxes
On December 22, 2017, the Tax Cuts and Jobs Act (the Tax Act) was enacted. The Tax Act, among other things, imposed a one-time tax on deemed repatriated accumulated earnings and profits of our foreign subsidiaries, moved from the current system of worldwide taxation to a territorial system and reduced the statutory corporate tax rate to 21%. As a result of these changes, in the fourth quarter of 2017, the Company recorded a transition tax attributable to the shift in tax regimes and also remeasured its deferred and other tax balances using enacted tax rates that will be in effect when such items are expected to reverse.
Income tax expense was $67.9 million for the year ended December 31, 2017, compared with $50.6 million for the year ended December 31, 2016. The effective tax rate for the year ended December 31, 2017 was 42.5%, which differed from the U.S. federal statutory rate primarily due to tax charges of approximately $8.4 million related to a transition tax on the deemed repatriation of foreign earnings and profits and approximately $4.3 million related to the remeasurement of deferred and other tax balances, partially offset by the release of certain liabilities associated with unrecognized tax benefits and other tax-related items aggregating to approximately $4.6 million.investments.
As Adjusted
The term “As Adjusted” is used to identify non-GAAP financial information in the discussion below. ReferThis section discusses as adjusted results. Please refer to pages 29-3033-34 for reconciliations to the most directly comparableof U.S. GAAP financial measures.to as adjusted results.
20182021 Compared with 20172020
Revenue
Revenue, as adjusted, for the year ended December 31, 2018 increased 0.6% to $380.42021 was $584.2 million, from $378.3compared with $427.8 million as adjusted, for the year ended December 31, 2017. 2020.
Revenue, as adjusted, excluded investment advisory and administration fees attributable to the consolidation of certain of the Company'sour seed investments for both years presented.years.
Expenses
Expenses, as adjusted, for the year ended December 31, 2018 increased 3.6% to $231.82021 were $315.4 million, from $223.7compared with $258.4 million as adjusted, for the year ended December 31, 2017. 2020.
Expenses, as adjusted, excluded the following:
Amounts attributable to the•The consolidation of certain of the Company'sour seed investments for both years presented;years;
•Amounts related to the accelerated vesting of certain restricted stock units due to a retirementfor both years;
•Costs associated with the initial public offering of PTA for the year ended December 31, 2017;2020;
Expenses incurred•Costs associated with the evaluation of a potential business transaction that the Company did not pursueRQI rights offering for the year ended December 31, 2018;2020; and
Refunds of foreign withholding taxes recorded•Other non-recurring expenses for the year ended December 31, 2017.2020.
Operating Margin
Operating margin, as adjusted, for the year ended December 31, 20182021 was 39.1%46.0%, compared with 40.9% for the year ended December 31, 2017.
Non-operating Income
Non-operating income,39.6% as adjusted, for the year ended December 31, 20182020.
Non-operating Income (Loss)
Non-operating loss, as adjusted, for the year ended December 31, 2021 was $3.7 million,$761,000, compared with $1.2non-operating income, as adjusted, of $1.4 million for the year ended December 31, 2017. 2020.
Non-operating income (loss), as adjusted, excluded the following:
Amounts attributable to the consolidation of certain of the Company's seed investmentsfollowing for both years presented;years:
•Results from the Company'sour seed investments for both years presented;investments; and
•Net foreign currency exchange gains and losses associated with U.S. dollar-denominated assets and liabilities held by certain foreign subsidiaries for the year ended December 31, 2018.
subsidiaries.
Income Taxes
The effective tax rate, as adjusted, for the year ended December 31, 20182021 was 25.25%26.2%, compared with 37.75%26.7% as adjusted, for the year ended December 31, 2017. 2020.
The effective tax rate, as adjusted, excluded the following for both years presented:years:
•Tax effects related to the Tax Cuts and Jobs Act;
Reversal of certain liabilities associated with unrecognizeditems noted above; and
•Discrete tax benefits;items.
Tax effects related to the delivery of restricted stock units;
Tax effects of non-GAAP adjustments; and
Other tax-related items.
20172020 Compared with 20162019
Revenue
Revenue, as adjusted, for the year ended December 31, 2017 increased 7.7% to $378.32020 was $427.8 million, from $351.2compared with $410.4 million as adjusted, for the year ended December 31, 2016. 2019.
Revenue, as adjusted, excluded investment advisory and administration fees attributable to the consolidation of certain of the Company'sour seed investments for both years presented.years.
Expenses
Expenses, as adjusted, for the year ended December 31, 2017 increased 4.8% to $223.72020 were $258.4 million, from $213.4compared with $247.7 million as adjusted, for the year ended December 31, 2016. 2019.
Expenses, as adjusted, excluded general and administrative expenses attributable to the following:
•The consolidation of the Company'scertain of our seed investments employee compensation and benefitsfor both years;
•Amounts related to the accelerated vesting of certain restricted stock units due to retirements for both years presentedyears;
•Costs associated with the initial public offering of PTA for the year ended December 31, 2020;
•Costs associated with the RQI rights offering for both years; and refunds of foreign withholding taxes
•Other non-recurring expenses for prior years recorded in 2017.the year ended December 31, 2020.
Operating Margin
Operating margin, as adjusted, was 39.6% for both years ended December 31, 2020 and 2019.
Non-operating Income (Loss)
Non-operating income, as adjusted, for the year ended December 31, 20172020 was 40.9%,$1.4 million, compared with 39.2%$4.2 million as adjusted, for the year ended December 31, 2016.
Non-operating Income2019.
Non-operating income, as adjusted, excluded the following for both the years ended December 31, 2017years:
•Results from our seed investments; and 2016 was $1.2 million. Non-operating income (loss), as adjusted, excluded amounts attributable to the consolidation of the Company's seed investments
•Net foreign currency exchange gains and the results from the Company's equity method and available-for-sale seed investments.losses associated with U.S. dollar-denominated assets held by certain foreign subsidiaries.
Income Taxes
The effective tax rate, as adjusted, for the year ended December 31, 20172020 was 37.75%26.7%, compared with 38.00%25.5% as adjusted, for the year ended December 31, 2016. 2019.
The effective tax rate, as adjusted, excluded amounts attributable to the following for both years:
•Tax Act, the release of certain liabilitieseffects associated with unrecognizeditems noted above; and
•Discrete tax benefits, other tax-related items and the tax effects of non-GAAP adjustments.
items.
Non-GAAP Reconciliations of U.S. GAAP to As Adjusted Financial Results
Management believes that use of these non-GAAPthe following as adjusted (non-GAAP) financial measures enhances the evaluation of our results as they provideprovides greater transparency into ourthe Company’s operating performance. In addition, these non-GAAPas adjusted financial measuresresults are used to prepare ourthe Company's internal management reports andwhich are used by management in evaluating ourits business.
While we believe that this non-GAAPthese as adjusted financial information isresults are useful in evaluating our results and operating performance, this information should be considered as supplemental in nature and not as a substitute for the related financial information prepared in accordance with U.S. GAAP.
Reconciliation of U.S. GAAP to As Adjusted Financial Results
Net Income Attributable to Common Stockholders and U.S. GAAPDiluted Earnings per Share to Net Income Attributable to Common Stockholders, As Adjusted and Earnings per Share, As Adjusted |
| | | | | | | | | | | |
(in thousands, except per share data) | Year Ended December 31, |
| 2018 | | 2017 | | 2016 |
Net income attributable to common stockholders, U.S. GAAP | $ | 113,896 |
| | $ | 91,939 |
| | $ | 92,936 |
|
Deconsolidation (1) | 3,392 |
| | (2,350 | ) | | (654 | ) |
Results from seed investments (2) | 2,160 |
| | (1,124 | ) | | (5,934 | ) |
Accelerated vesting of restricted stock units (3) | — |
| | 522 |
| | 1,945 |
|
General and administrative (4) | 871 |
| | (1,018 | ) | | — |
|
Foreign currency exchange gain (5) | (2,270 | ) | | — |
| | — |
|
Tax adjustments (6) | (4,200 | ) | | 9,068 |
| | (2,184 | ) |
Net income attributable to common stockholders, as adjusted | $ | 113,849 |
| | $ | 97,037 |
| | $ | 86,109 |
|
| | | | | |
Diluted weighted average shares outstanding | 47,381 |
| | 46,979 |
| | 46,432 |
|
Diluted earnings per share, U.S. GAAP | $ | 2.40 |
| | $ | 1.96 |
| | $ | 2.00 |
|
Deconsolidation (1) | 0.07 |
| | (0.05 | ) | | (0.01 | ) |
Results from seed investments (2) | 0.05 |
| | (0.02 | ) | | (0.13 | ) |
Accelerated vesting of restricted stock units (3) | — |
| | 0.01 |
| | 0.04 |
|
General and administrative (4) | 0.02 |
| | (0.02 | ) | | — |
|
Foreign currency exchange gain (5) | (0.05 | ) | | — |
| | — |
|
Tax adjustments | (0.09 | ) | | 0.19 |
| | (0.05 | ) |
Diluted earnings per share, as adjusted | $ | 2.40 |
| | $ | 2.07 |
| | $ | 1.85 |
|
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands, except per share data) | 2021 | | 2020 | | 2019 |
Net income attributable to common stockholders, U.S. GAAP | $ | 211,396 | | | $ | 76,584 | | | $ | 134,621 | |
Seed investments (1) | (5,870) | | | 1,443 | | | (11,858) | |
Accelerated vesting of restricted stock units | 7,197 | | | 774 | | | 1,344 | |
Initial public offering costs (2) | — | | | 60,559 | | | — | |
Rights offering costs (3) | — | | | 11,859 | | | 346 | |
Other non-recurring expenses (4) | — | | | 500 | | | — | |
Foreign currency exchange (gains) losses—net (5) | (475) | | | 871 | | | 1,909 | |
Tax adjustments (6) | (14,301) | | | (27,299) | | | (2,002) | |
Net income attributable to common stockholders, as adjusted | $ | 197,947 | | | $ | 125,291 | | | $ | 124,360 | |
| | | | | |
Diluted weighted average shares outstanding | 49,090 | | | 48,676 | | | 48,297 | |
Diluted earnings per share, U.S. GAAP | $ | 4.31 | | | $ | 1.57 | | | $ | 2.79 | |
Seed investments | (0.12) | | | 0.03 | | | (0.25) | |
Accelerated vesting of restricted stock units | 0.15 | | | 0.02 | | | 0.02 | |
Initial public offering costs | — | | | 1.24 | | | — | |
Rights offering costs | — | | | 0.24 | | | 0.01 | |
Other non-recurring expenses | — | | | 0.01 | | | — | |
Foreign currency exchange (gains) losses—net | (0.01) | | | 0.02 | | | 0.04 | |
Tax adjustments | (0.30) | | | (0.56) | | | (0.04) | |
Diluted earnings per share, as adjusted | $ | 4.03 | | | $ | 2.57 | | | $ | 2.57 | |
_________________________
| |
(1) | Represents amounts related to the deconsolidation of seed investments in Company-sponsored funds. |
| |
(2) | Represents (i) interest and dividend income and realized and unrealized (gains) losses on seed investments in Company-sponsored funds, (ii) the Company's proportionate share of the results of operations of seed investments classified as equity method investments, including realized and unrealized (gains) losses, and (iii) realized and unrealized (gains) losses on unconsolidated seed investments. |
| |
(3) | Represents amounts related to the accelerated vesting of certain restricted stock units due to retirements. |
| |
(4) | Represents expenses associated with the evaluation of a potential business transaction that the Company did not pursue in 2018 and refunds of foreign withholding taxes in 2017. |
| |
(5) | Represents net foreign currency exchange gains associated with U.S. dollar-denominated assets and liabilities held by certain foreign subsidiaries. U.S. GAAP amounts for prior years have not been recast to conform with the current period presentation as the impact to results was not material. |
| |
(6) | Tax adjustments are summarized in the following table: |
(1) Represents amounts related to the deconsolidation of seed investments in Company-sponsored funds as well as non-operating (income) loss from seed investments that were not consolidated. |
| | | | | | | | | | | |
(in thousands) | Year Ended December 31, |
| 2018 | | 2017 | | 2016 |
Transition tax liability in connection with the Tax Cuts and Jobs Act | $ | (123 | ) | | $ | 8,432 |
| | $ | — |
|
Remeasurement of deferred and other tax balances | — |
| | 4,300 |
| | — |
|
Reversal of certain liabilities associated with unrecognized tax benefits | (2,758 | ) | | (3,772 | ) | | (675 | ) |
Delivery of restricted stock units | (947 | ) | | 49 |
| | — |
|
Tax-effect of non-GAAP adjustments | 217 |
| | 888 |
| | (962 | ) |
Other tax-related items | (589 | ) | | (829 | ) |
| (547 | ) |
Total tax adjustments | $ | (4,200 | ) | | $ | 9,068 |
| | $ | (2,184 | ) |
(2) Represents costs associated with the initial public offering of PTA. Costs are summarized in the following table: | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands) | 2021 | | 2020 | | 2019 |
Employee compensation and benefits | $ | — | | | $ | 1,317 | | | $ | — | |
Distribution and service fees | — | | | 57,818 | | | — | |
General and administrative | — | | | 1,424 | | | — | |
Initial public offering costs | $ | — | | | $ | 60,559 | | | $ | — | |
(3) Represents costs associated with the RQI rights offering, which were recorded in general and administrative expense.
(4) Represents non-recurring expenses, which were recorded in distribution and service fees.
(5) Represents net foreign currency exchange (gains) losses associated with U.S. dollar-denominated assets held by certain foreign subsidiaries.
(6) Tax adjustments are summarized in the following table: | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands) | 2021 | | 2020 | | 2019 |
Exclusion of tax effects associated with items noted above | $ | (2,262) | | | $ | (17,119) | | | $ | 38 | |
Exclusion of discrete tax items | (12,039) | | | (10,180) | | | (2,040) | |
Total tax adjustments | $ | (14,301) | | | $ | (27,299) | | | $ | (2,002) | |
Reconciliation of U.S. GAAP to As Adjusted Financial Results
Revenue, Expenses, Operating Income and U.S. GAAP Operating Margin to Operating Income, As Adjusted and Operating Margin, As Adjusted
|
| | | | | | | | | | | |
(in thousands, except percentages) | Year Ended December 31, |
| 2018 | | 2017 | | 2016 |
Revenue, U.S. GAAP (1) | $ | 381,111 |
| | $ | 378,696 |
| | $ | 351,497 |
|
Deconsolidation (2) | (694 | ) | | (403 | ) | | (342 | ) |
Revenue, as adjusted | $ | 380,417 |
| | $ | 378,293 |
| | $ | 351,155 |
|
| | | | | |
Expenses, U.S. GAAP (1) | $ | 234,073 |
| | $ | 223,950 |
| | $ | 215,986 |
|
Deconsolidation (2) | (1,408 | ) | | (789 | ) | | (595 | ) |
Accelerated vesting of restricted stock units (3) | — |
| | (522 | ) | | (1,945 | ) |
General and administrative (4) | (871 | ) | | 1,018 |
| | — |
|
Expenses, as adjusted | $ | 231,794 |
| | $ | 223,657 |
| | $ | 213,446 |
|
| | | | | |
Operating income, U.S. GAAP | $ | 147,038 |
| | $ | 154,746 |
| | $ | 135,511 |
|
Deconsolidation (2) | 714 |
| | 386 |
| | 253 |
|
Accelerated vesting of restricted stock units (3) | — |
| | 522 |
| | 1,945 |
|
General and administrative (4) | 871 |
| | (1,018 | ) | | — |
|
Operating income, as adjusted | $ | 148,623 |
| | $ | 154,636 |
| | $ | 137,709 |
|
| | | | | |
Operating margin, U.S. GAAP (1) | 38.6 | % | | 40.9 | % | | 38.6 | % |
Operating margin, as adjusted | 39.1 | % | | 40.9 | % | | 39.2 | % |
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands, except percentages) | 2021 | | 2020 | | 2019 |
Revenue, U.S. GAAP | $ | 583,832 | | | $ | 427,536 | | | $ | 410,830 | |
Seed investments (1) | 411 | | | 281 | | | (438) | |
Revenue, as adjusted | $ | 584,243 | | | $ | 427,817 | | | $ | 410,392 | |
| | | | | |
Expenses, U.S. GAAP | $ | 323,460 | | | $ | 332,479 | | | $ | 250,696 | |
Seed investments (1) | (819) | | | (424) | | | (1,323) | |
Accelerated vesting of restricted stock units | (7,197) | | | (774) | | | (1,344) | |
Initial public offering costs (2) | — | | | (60,559) | | | — | |
Rights offering costs (3) | — | | | (11,859) | | | (346) | |
Other non-recurring expenses (4) | — | | | (500) | | | — | |
Expenses, as adjusted | $ | 315,444 | | | $ | 258,363 | | | $ | 247,683 | |
| | | | | |
Operating income, U.S. GAAP | $ | 260,372 | | | $ | 95,057 | | | $ | 160,134 | |
Seed investments (1) | 1,230 | | | 705 | | | 885 | |
Accelerated vesting of restricted stock units | 7,197 | | | 774 | | | 1,344 | |
Initial public offering costs (2) | — | | | 60,559 | | | — | |
Rights offering costs (3) | — | | | 11,859 | | | 346 | |
Other non-recurring expenses (4) | — | | | 500 | | | — | |
Operating income, as adjusted | $ | 268,799 | | | $ | 169,454 | | | $ | 162,709 | |
| | | | | |
Operating margin, U.S. GAAP | 44.6 | % | | 22.2 | % | | 39.0 | % |
Operating margin, as adjusted | 46.0 | % | | 39.6 | % | | 39.6 | % |
_________________________
| |
(1) | The presentation for the years ended December 31, 2017 and 2016 has been recast to reflect the Company's adoption of the new revenue recognition accounting standard on January 1, 2018. |
| |
(2) | Represents amounts related to the deconsolidation of seed investments in Company-sponsored funds. |
| |
(3) | Represents amounts related to the accelerated vesting of certain restricted stock units due to retirements. |
| |
(4) | Represents expenses associated with the evaluation of a potential business transaction that the Company did not pursue in 2018 and refunds of foreign withholding taxes in 2017. |
(1) Represents amounts related to the deconsolidation of seed investments in Company-sponsored funds.
(2) Represents costs associated with the initial public offering of PTA. Costs are summarized in the following table: | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands) | 2021 | | 2020 | | 2019 |
Employee compensation and benefits | $ | — | | | $ | 1,317 | | | $ | — | |
Distribution and service fees | — | | | 57,818 | | | — | |
General and administrative | — | | | 1,424 | | | — | |
Initial public offering costs | $ | — | | | $ | 60,559 | | | $ | — | |
(3) Represents costs associated with the RQI rights offering, which were recorded in general and administrative expense.
(4) Represents non-recurring expenses, which were recorded in distribution and service fees.
Reconciliation of U.S. GAAP to As Adjusted Financial Results
Non-operating Income (Loss) to Non-operating Income (Loss), As Adjusted
|
| | | | | | | | | | | |
(in thousands) | Year Ended December 31, |
| 2018 | | 2017 | | 2016 |
Non-operating income (loss), U.S. GAAP | $ | (3,259 | ) | | $ | 5,654 |
| | $ | 7,892 |
|
Deconsolidation (1) | 7,052 |
| | (3,283 | ) | | (781 | ) |
Results from seed investments (2) | 2,160 |
| | (1,124 | ) | | (5,934 | ) |
Foreign currency exchange gain (3) | (2,270 | ) | | — |
| | — |
|
Non-operating income (loss), as adjusted | $ | 3,683 |
| | $ | 1,247 |
| | $ | 1,177 |
|
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands) | 2021 | | 2020 | | 2019 |
Non-operating income (loss), U.S. GAAP | $ | 21,572 | | | $ | (1,670) | | | $ | 27,415 | |
Seed investments (1) | (21,858) | | | 2,157 | | | (25,106) | |
Foreign currency exchange (gains) losses—net (2) | (475) | | | 871 | | | 1,909 | |
Non-operating income (loss), as adjusted | $ | (761) | | | $ | 1,358 | | | $ | 4,218 | |
_________________________
| |
(1) | Represents amounts related to the deconsolidation of seed investments in Company-sponsored funds. |
| |
(2) | Represents (i) interest and dividend income and realized and unrealized(1) Represents amounts related to the deconsolidation of seed investments in Company-sponsored funds as well as non-operating (income) loss from seed investments that were not consolidated. (2) Represents net foreign currency exchange (gains) losses on seed investments in Company-sponsored funds, (ii) the Company's proportionate share of the results of operations of seed investments classified as equity method investments, including realized and unrealized (gains) losses, and (iii) realized and unrealized (gains) losses on unconsolidated seed investments. |
| |
(3) | Represents net foreign currency exchange gains associated with U.S. dollar-denominated assets and liabilities held by certain foreign subsidiaries. U.S. GAAP amounts for prior years have not been recast to conform with the current period presentation as the impact to results was not material. |
Changes in Financial Condition, Liquidity and Capital Resources
Our principal objectives areWe seek to maintain a capital structure that supports our business strategies and to maintainmaintains the appropriate amount of liquidity at all times. Furthermore, we believe that ourcurrently expect cash flows generated from operations areto be more than adequate to fund our present and reasonably foreseeable future commitments for investing and financing activities.
Net Liquid Assets
Our current financial condition is highly liquid and is primarily comprisingcomprised of cash and cash equivalents, U.S. Treasury securities, if any, seed investments and other current assets. Liquid assets are reduced by current liabilities, which are generally defined as obligations due within one year (together, net liquid assets). The Company does not currently have any debt outstanding.outstanding debt.
The table below summarizes net liquid assets for the periods presented:
|
| | | | | | | |
(in thousands) | December 31, 2018 | | December 31, 2017 |
Cash and cash equivalents | $ | 92,733 |
| | $ | 193,452 |
|
U.S. Treasury securities | 49,748 |
| | — |
|
Seed investments | 70,757 |
| | 63,416 |
|
Current assets | 52,628 |
| | 55,054 |
|
Current liabilities | (78,461 | ) | | (69,086 | ) |
Net liquid assets | $ | 187,405 |
| | $ | 242,836 |
|
assets: | | | | | | | | | | | |
(in thousands) | December 31, 2021 | | December 31, 2020 |
Cash and cash equivalents | $ | 184,373 | | | $ | 41,232 | |
U.S. Treasury securities | — | | | 41,648 | |
Seed investments—net | 62,679 | | | 60,083 | |
Other current assets | 84,533 | | | 70,208 | |
Current liabilities | (118,888) | | | (93,870) | |
Net liquid assets | $ | 212,697 | | | $ | 119,301 | |
Cash and cash equivalents
Cash and cash equivalents are on deposit with majorseveral highly-rated financial institutions and consist ofinclude short-term, highly-liquidhighly liquid investments, which are readily convertible into cash and have original maturities of three months or less. Cash and cash equivalents reflected special cash dividends of $2.50 per share, or $117 million, and $1.00 per share, or $46 million, atThe year ended December 31, 20182020 included the payment of expenses associated with the initial public offering of PTA ($60.6 million) and 2017, respectively.the RQI rights offering ($12.0 million).
On February 15, 2022, we funded $18.0 million of our investment commitment in the Cohen & Steers Real Estate Opportunities Fund, L.P. (REOF). Refer to Investment Commitments, Contractual Obligations, Commitments and Contingencies for further discussion.
On February 24, 2022, we announced the initial public offering of the Cohen & Steers Real Estate Opportunities and Income Fund (the Fund). The Fund raised approximately $305.0 million in proceeds, excluding leverage. In addition, the underwriters have an option to purchase, within 45 days, up to an additional 2,287,500 common shares at the public offering price of $20.00 per share. We expect to incur costs of approximately $15.0 million in connection with the offering, excluding any additional costs that would be incurred should the underwriters exercise their option to purchase additional shares.
U.S. Treasury securities
U.S. Treasury securities are directly issued by the U.S. government and were classified as held to maturity, with original maturities ranging from 6 to 24 months.maturity.
Seed investmentsinvestments—net
Seed investments are primarily comprised of investments in Company-sponsored funds that we do not consolidate, our
pro-rata share of the net assets of the funds that we do consolidate and listed securities held directly for the purpose of establishing performance track records and Company-sponsored funds that are consolidated.records. Seed investments approximateare recorded at fair value, are generally traded withinin active markets on major exchanges and can typically be liquidated within a normal settlement cycle. Seed investments are presented net of redeemable noncontrolling interests.
CurrentOther current assets
CurrentOther current assets primarily represent investment advisory and administration fees receivable. At December 31, 2018,2021, institutional accounts comprised 50.9%49.1% of total accounts receivable, while open-end and closed-end funds, together, comprised 43.3%50.2% of total accounts receivable. We perform a review of our receivables on an ongoing basis in order to assess collectibility and, based on our analysis at December 31, 2018,2021, there werewas no past due items greater than 90 days related to institutional accounts.allowance for uncollectible accounts required.
Current liabilities
Current liabilities are generally defined as obligations due within one year, which includesincluded accrued compensation and benefits, distribution and service fees payable, operating lease obligations due within 12 months, certain income taxes payable and other liabilities and accrued expenses.
Cash flows
Our cash flows generally result from the operating activities of our business, with investment advisory and administration fees being the most significant contributor.
The table below summarizes cash flows for the periods presented (in thousands):
|
| | | | | | | | | | | |
| Year Ended December 31, |
| 2018 | | 2017 | | 2016 |
Cash Flow Data: | | | | | |
Net cash provided by (used in) operating activities | $ | 72,598 |
| | $ | 64,253 |
| | $ | 114,958 |
|
Net cash provided by (used in) investing activities | (53,194 | ) | | 5,709 |
| | 2,898 |
|
Net cash provided by (used in) financing activities | (118,110 | ) | | (60,423 | ) | | (74,542 | ) |
Net increase (decrease) in cash and cash equivalents | (98,706 | ) | | 9,539 |
| | 43,314 |
|
Effect of foreign exchange rate changes on cash and cash equivalents | (2,013 | ) | | 679 |
| | (2,808 | ) |
Cash and cash equivalents, beginning of the period | 193,452 |
| | 183,234 |
| | 142,728 |
|
Cash and cash equivalents, end of the period | $ | 92,733 |
| | $ | 193,452 |
| | $ | 183,234 |
|
flows: | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands) | 2021 | | 2020 | | 2019 |
Cash Flow Data: | | | | | |
Net cash provided by (used in) operating activities | $ | 242,901 | | | $ | 89,186 | | | $ | 141,445 | |
Net cash provided by (used in) investing activities | 47,648 | | | (1,770) | | | 35,949 | |
Net cash provided by (used in) financing activities | (145,426) | | | (148,895) | | | (170,130) | |
Net increase (decrease) in cash and cash equivalents | 145,123 | | | (61,479) | | | 7,264 | |
Effect of foreign exchange rate changes on cash and cash equivalents | (999) | | | 1,359 | | | 1,355 | |
Cash and cash equivalents, beginning of the period | 41,232 | | | 101,352 | | | 92,733 | |
Cash and cash equivalents, end of the period | $ | 185,356 | | | $ | 41,232 | | | $ | 101,352 | |
We expect that cash flows provided by operating activities will provide sufficient liquidity to meet our obligations and continue to serve as our principal source of working capital infor the nearforeseeable future.
In 2018,2021, cash and cash equivalents, decreased by $98.7 million, excluding the effect of foreign exchange rate changes.changes, increased by $145.1 million when compared with 2020. The year ended December 31, 2020 included costs associated with the initial public offering of PTA and the RQI rights offering. Net cash provided by operating activities was $72.6$242.9 million. Cash flows from operating activities primarily consisted of net income adjusted for certain non-cash items and changes in assets and liabilities. Net cash provided by investing activities was $47.6 million, which included $41.7 million of proceeds from the sales and maturities of U.S. Treasury securities held for corporate purposes and net proceeds of securities held directly for the purpose of establishing performance track records of $8.1 million. Net cash used in financing activities was $145.4 million, including dividends paid to stockholders of $147.6 million, which included a special dividend of $60.3 million paid on November 30, 2021, repurchases of common stock to satisfy employee withholding tax obligations on the vesting and delivery of restricted stock units of $22.6 million, partially offset by net contributions from redeemable noncontrolling interests of $23.7 million.
In 2020, cash and cash equivalents, excluding the effect of foreign exchange rate changes, decreased by $61.5 million when compared with 2019. The decrease in cash was primarily due to the payment of expenses of $60.6 million associated with the initial public offering of PTA and $12.0 million associated with the RQI rights offering for the year ended December 31, 2020. Net cash provided by operating activities was $89.2 million. Cash flows from operating activities primarily consisted of net income adjusted for certain non-cash items and changes in assets and liabilities. Net cash used in investing activities was $53.2$1.8 million, which included $63.6primarily attributable to net purchases of securities held directly for the purpose of establishing performance track records of $7.3 million and purchases of investment purchases, including the seedingproperty and equipment of five new track record accounts and investment of $49.5$2.5 million, into U.S. Treasury securities, partially offset by $13.8$8.4 million of proceeds from the salesales and maturities of investments.U.S. Treasury securities held for corporate purposes. Net cash used in financing activities was $118.1$148.9 million, including dividends paid to stockholders of $178.9$122.5 million, which included a special dividend of $116.9$47.8 million paid on December 3, 2018, repurchases of common stock to satisfy employee withholding tax obligations on the vesting and delivery of restricted stock units of $10.6 million, as well as distributions to redeemable noncontrolling interests of $10.9 million, partially offset by contributions from redeemable noncontrolling interests of $81.6 million.
In 2017, cash and cash equivalents increased by $9.5 million, excluding the effect of foreign exchange rate changes. Net cash provided by investing activities was comprised of proceeds from sales of available-for-sale investments of $25.8 million, partially offset by purchases of available-for-sale investments of $16.9 million, including a seed investment of $10.0 million in a track record account for a new real assets multi-strategy portfolio and purchases of property and equipment of $3.2 million. Net cash used in financing activities was primarily for dividends paid to stockholders of $98.3 million, which included a special dividend of $46.3 million paid on December 13, 20171, 2020 and repurchases of common stock to satisfy employee withholding tax obligations on the vesting and delivery of restricted stock units of $9.1 million, partially offset by contributions from redeemable noncontrolling interest of $46.7$25.9 million.
In 2016,2019, cash and cash equivalents, increased by $43.3 million, excluding the effect of foreign exchange rate changes.changes, increased by $7.3 million when compared with 2018. Net cash provided by operating activities was $141.4 million. Cash flows from operating activities primarily consisted of net income adjusted for certain non-cash items and changes in assets and liabilities. Net cash provided by investing activities was comprised of$35.9 million, primarily attributable to net proceeds from the sales of available-for-sale investmentssecurities held directly for the purpose of $20.8 million, partially offset by purchasesestablishing performance track records of property and equipment of $10.2 million and purchases of available-for-sale investments of $8.1$33.7 million. Net cash used in financing activities was primarily for$170.1 million, including dividends paid to stockholders of $70.8$162.7 million, which included a special dividend of approximately $22.9$94.5 million paid on December 14, 2016,3, 2019 and repurchases of common stock to satisfy employee withholding tax obligations on the vesting and delivery of restricted stock units of $8.0 million, partially offset by contributions from redeemable noncontrolling interests$10.4 million.
Contractual Obligations, Commitments and Contingencies
The following table summarizes our contractual obligations at December 31, 2021: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(in thousands) | 2022 | | 2023 | | 2024 | | 2025 | | | | | | Total |
Operating leases | $ | 12,354 | | | $ | 11,912 | | | $ | 1,131 | | | $ | — | | | | | | | $ | 25,397 | |
Purchase obligations (1) | 4,047 | | | 2,825 | | | 1,092 | | | 378 | | | | | | | 8,342 | |
Other liability (2) | 665 | | | 1,246 | | | 1,662 | | | 2,077 | | | | | | | 5,650 | |
Total | $ | 17,066 | | | $ | 15,983 | | | $ | 3,885 | | | $ | 2,455 | | | | | | | $ | 39,389 | |
_________________________
(1) Represents contracts which are either noncancellable or cancellable with a penalty. The Company’s obligations primarily reflected standard service contracts for market data.
(2) Consists of $4.0 million.
Net Capital Requirements
We continually monitorthe transition tax liability based on the cumulative undistributed earnings and evaluate the adequacyprofits of our capital. We have consistently maintained net capitalforeign subsidiaries in excessconnection with the enactment of the regulatory requirements for our broker-dealer, as prescribed byTax Cuts and Jobs Act in 2017. See Note 14, Income Taxes, in the Securities and Exchange Commission (SEC). At December 31, 2018, we exceeded our minimum regulatory capital requirements by approximately $3.0 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 noticenotes to the SEC for certain withdrawalsconsolidated financial statements included in Part IV, Item 15 of capital.
CSAL is subject to regulation by the Hong Kong Securities and Futures Commission. At December 31, 2018, CSAL exceeded its minimum regulatory capital requirements by approximately $25.7 million. In August 2018, CSAL paid a dividend in the amount of $32.0 million to its parent, Cohen & Steers Capital Management, Inc. In January 2019, CSAL paid an additional dividend in the amount of $15.0 million to the parent.
CSUK is subject to regulation by the United Kingdom Financial Conduct Authority. At December 31, 2018, CSUK exceeded their aggregate minimum regulatory capital requirements by approximately $28.2 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.this filing.
Dividends
Subject to the approval of our Board of Directors, we anticipate paying dividends. When determining whether to pay a dividend, we take into account general economic and business conditions, our strategic plans, our results of operations and financial condition, contractual, legal and regulatory restrictions on the payment of dividends, if any, by us and our subsidiaries and such other factors deemed relevant.
On February 21, 2019, the Company24, 2022, we declared a quarterly dividend on itsour common stock in the amount of $0.36$0.55 per share. This dividend will be payable on March 14, 201917, 2022 to stockholders of record at the close of business on March 4, 2019.7, 2022.
Investment Commitments
We have committed to co-investinvest up to $5.1$50.0 million alongside Cohen & Steers Global Realty Partners III-TE, L.P. (GRP-TE). Atin REOF. As of December 31, 2018,2021, we havehad funded approximately $3.8$3.1 million of this commitment. Our co-investment alongside GRP-TE is illiquid and is anticipated to be invested for the life of the fund. The timing of the funding of the unfunded portion of our commitment is currently unknown, as the drawdown of our commitment is contingent on the timing of drawdowns by the underlying funds in which GRP-TE invests. The unfunded portionOn February 15, 2022, we funded an additional $18.0 million of this commitment was not recorded on our consolidated statements of financial condition at December 31, 2018.
Contractual Obligations and Contingencies
The following table summarizes our contractual obligations at December 31, 2018 (in thousands):
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2019 | | 2020 | | 2021 | | 2022 | | 2023 | | 2024 and after | | Total |
Operating leases | $ | 15,112 |
| | $ | 13,570 |
| | $ | 11,397 |
| | $ | 10,882 |
| | $ | 10,842 |
| | $ | 960 |
| | $ | 62,763 |
|
Other liability | 192 |
| | 665 |
| | 665 |
| | 1,246 |
| | 1,662 |
| | 2,077 |
| | 6,507 |
|
Total | $ | 15,304 |
| | $ | 14,235 |
| | $ | 12,062 |
| | $ | 12,128 |
| | $ | 12,504 |
| | $ | 3,037 |
| | $ | 69,270 |
|
Operating Leases
Operating leases consist of noncancelable long-term leases for office space, information technology applications, market data and certain office equipment. In July 2018, the Company renewed its lease agreement for office space in Japan. The lease expires July 31, 2021.
Other Liability
Other liability consists of the remaining transition tax liability based on the cumulative undistributed earnings and profits of our foreign subsidiaries at December 31, 2017 in connection with the enactment of the Tax Cuts and Jobs Act. This tax liability, which is payable over eight years on an interest-free basis, was included as part of income tax payable on our consolidated statement of financial condition at December 31, 2018. During the year ended December 31, 2018, in connection with the filing of the Company's 2017 Federal tax return, overpayments of approximately $680,000 were used to reduce the transition tax liability.commitment.
Contingencies
Due to the uncertainty with respect the timing of future cash flows associated with unrecognized tax benefits at December 31, 2018,2021, the Company is unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authorities. Therefore, $12.0$10.4 million of gross unrecognized tax benefits have been excluded thefrom the contractual obligations table above. See Note 14, Income Taxes, in the notes to the consolidated financial statements for additional disclosures relatedincluded in Part IV, Item 15 of this filing.
Net Capital Requirements
Several of our subsidiaries are subject to income taxes.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements that have, orminimum net capital requirements by the local laws and regulations to which they are reasonably likelysubject. As of December 31, 2021, each of our subsidiaries subject to have, a material current or future effect on ourminimum net capital requirement satisfied the applicable requirement. See Note 12, Regulatory Requirements, in the notes to the consolidated financial condition, results of operations, liquidity or capital resources.statements included in Part IV, Item 15.
Critical Accounting Policies and Estimates
A thorough understanding of our accounting policies is essential when reviewing our reported results of operations and our financial condition. The preparation of our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Management believes the estimates used in preparing the consolidated financial statements are reasonable and prudent. Actual results could differ from those estimates.
Our significant accounting policies are disclosed in Note 2, Summary of Significant Accounting Policies, in the notes to the consolidated financial statements included in Part IV, Item 15 of this filing and should be read in conjunction with the summarized information below. Management considers the following accounting policiesestimates critical to an informed review of our consolidated financial statements as they require management to make certain judgments about matters that may be uncertain at the time the policiesestimates were applied or the estimates determined.
Consolidation of Company-sponsored Funds
The Company evaluates its investments in Company-sponsored funds at inception and thereafter, if there is a reconsideration event, in order to determine whether to apply the variable interest entity (VIE) model or the voting interest entity (VOE) model. This evaluation involves the use of judgment and analysis on an entity by entity basis. In performing this analysis, we consider the legal structure of the entity, management fees earned by the Company and the nature of the ownership interest and rights of interest holders in the entity, including the Company. If we determine that the entity is a VIE, we must then assess whether the Company absorbs a majority of the VIEs expected variability in which case it is deemed to be the primary beneficiary of the VIE. The Company consolidates VIEs for which it is deemed to be the primary beneficiary. We consolidate VOEs if we own a majority of the voting interest in the entity or when the Company is the general partner of the fund and the limited partners do not have substantive kick-out or participating rights. Amounts attributable to third parties in the funds that we consolidate are recorded in redeemable noncontrolling interests on the consolidated statements of financial condition and net (income) loss attributable to redeemable noncontrolling interests on the consolidated statements of operations.
Investments
Our investments are classified as equity investments at fair value, trading investments, held-to-maturity investments or equity method investments at the time of purchase and re-evaluated on an ongoing basis and at the date of each consolidated statement of financial condition. Investments classified as equity investments at fair value include securities held within the affiliated funds that the Company consolidates, individual securities held directly for the purpose of establishing performance track records and seed investments in Company-sponsored open-end funds where the Company has neither control nor the ability to exercise significant influence. Investments classified as trading investments represent securities held within the Company-sponsored funds that we consolidate and individual debt securities held directly for the purpose of establishing performance track records. Held-to-maturity investments represent fixed income securities recorded at amortized cost. Equity method investments represent investments in Company-sponsored funds in which the Company’s ownership is between 20-50% of the outstanding voting interests of the entity or when the Company is able to exercise significant influence but not control over the investments.
Fair Value
The majority of our investments are carried at fair value or amounts that approximate fair value on our consolidated statement of financial condition with the periodic mark-to-market included directly in earnings. Fair value is the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities reported at fair value are classified and disclosed in a fair value hierarchy based on whether the inputs to the valuation techniques are observable or unobservable. The classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement:
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. If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability.
Level 3 - Valuations derived from valuation techniques in which significant inputs or significant value drivers are unobservable.
Income Taxes
We operate in numerous states and countriesglobally through our subsidiaries and therefore must allocate our income, expenses, and earnings to these taxing jurisdictions taking into account the various laws and regulations in each jurisdiction.regulations. Our tax provision represents an estimate of the total liability that we have incurred in these jurisdictions as a result of our global operations. Each year we file tax returns in each jurisdiction and settle our tax liabilities which may be subject to audit by the taxing authorities. The determination of our annual provision is subject to judgments and estimates and the actual results included in our annual tax returns may vary from the amounts reported in our consolidated financial statements. Accordingly, we recognize additions to, or reductions of,from, income tax expense during reporting periods that may pertain to prior period provisions as our estimated liabilities are revised and actual tax returns and audits, if any, are settled. Such adjustments are recognized in the discrete quarterly period in which they are determined.
In addition, we record current and deferred tax consequences of all transactions that have been recognized in the 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 at tax rates that are expected to apply in those years. Deferred tax liabilities are recognized for temporary differences that will result in taxable income in future years at tax rates that are expected to apply in those years. We record a valuation allowance, when necessary, to reduce deferred tax assets to an amount that more likely than not will be realized.
The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in several jurisdictions across our global operations. In accordance with Accounting Standards Codification Topic 740, Income Taxes (ASC 740), a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits.
We record unrecognized tax benefits as liabilities in accordance with ASC 740 and adjust these liabilities when our judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially differentdiffer from our current estimate of the unrecognized tax benefit liabilities. These differences are reflected as increases or decreases in income tax expense in the period in which new information becomes available.
Recently Issued Accounting Pronouncements
See discussion of Recently Issued Accounting Pronouncements in Note 2 of the consolidated financial statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
In the normal course of our business, we are exposed to risk as a result of changes in interest and currency rates, and
securities marketmarkets and general economic fluctuations,conditions, which may have an adverse impact on the value of our investments. Please refer to Part I - Item 1A Risk Factors for additional information regarding the effect on our business COVID-19 has had and may continue to have.
At December 31, 2018, we had approximately $108.4 millionSeed investments—net
Our seed investments are primarily comprised of trading investments $66.8 million of equity investments at fair value, $49.7 million of held-to-maturity investments and $26,000 of equity method investments. Trading investments included debt securities held within the affiliatedin Company-sponsored funds that we do not consolidate, our pro-rata share of the Company consolidatesnet assets of approximately $94.4 million and individual debt securities held directly for the purposes of establishing performance track records of approximately $14.0 million. Equity investments at fair value includedsecurities held within the affiliated funds that the Company consolidates of approximately $47.0 million as well as individualwe do consolidate and listed securities held directly for the purpose of establishing performance track recordsrecords. Seed investments are recorded at fair value, are generally traded in active markets on major exchanges and can typically be liquidated within a normal settlement cycle.
Our seed investments in Company-sponsored open-end funds where the Company has neither control nor the abilityare subject to exercise significant influenceprice risk. We may mitigate this by entering into derivative contracts to economically hedge a portion of approximately $19.8 million. Held-to-maturity investments included fixed income securities recorded at amortized cost of approximately $49.7 million. At December 31, 2018, the Company consolidated the Cohen & Steers Co-Investment Partnership, L.P., the Cohen & Steers SICAV Diversified Real Assets Fund, the Cohen & Steers SICAV Global Listed Infrastructure Fund, the Cohen & Steers SICAV Global Preferred Securities Fund and the Cohen & Steers Funds ICAV.
our risk. The following table summarizes the effect ofthat a ten percent increase or decrease in equity prices would have on the carrying value of our seed investments, subject to equity price fluctuationwhich is presented net of redeemable noncontrolling interests, as of December 31, 2018:
|
| | | | | | | | | | | |
| Carrying Value | | Carrying Value Assuming a 10% Increase | | Carrying Value Assuming a 10% Decrease |
Trading | $ | 108,363 |
| | $ | 119,199 |
| | $ | 97,527 |
|
Equity investments at fair value | 66,795 |
| | 73,475 |
| | 60,116 |
|
Held-to-maturity | 49,748 |
| | 54,723 |
| | 44,773 |
|
As of December 31,
2018, the Company had outstanding foreign currency forward contracts to hedge its currency exposure related to certain client receivables with an aggregate notional value of $11.0 million. The Company estimates that a ten percent adverse change in market prices would result in a decrease of approximately $20,500 in the fair value of open foreign currency forward contracts at December 31, 2018.2021 (in thousands): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Carrying Value | | Notional Value - Hedges | | Net Carrying Value | | Net Carrying Value Assuming a 10% increase | | Net Carrying Value Assuming a 10% decrease |
Seed investments—net | | $ | 62,679 | | | $ | (26,709) | | | $ | 35,970 | | | $ | 39,567 | | | $ | 32,373 | |
A majority of our revenue—89.5%93.1%, 88.9%92.4% and 88.7%92.1% for the years ended December 31, 2018, 20172021, 2020 and 2016, respectively—2019, respectively, was derived from investment advisory and administration agreements with our clients. Under these agreements, the investment advisory and administration fee we receive is based on the market value of the assets we manage. Accordingly, a decline in the prices of securities generally, and real estate and preferred securities in particular, attributable to market conditions including inflation, interest rate changes andor a general economic downturn, may cause our revenue and income to decline by causing the value of the assets we manage to decrease, which would result in lower investment advisory and administration fees; or by causing our clients to withdraw funds in favor of investments that they perceive as offering greater opportunity or lower risk or cost, which would also result in lower investment advisory and administration fees.
The economic environment may also preclude us from increasing the assets we manage in closed-end funds. The market conditions for these offerings may not be as favorable in the future, which could adversely impact our ability to grow the assets we manage and realize higher fee revenue associated with such growth. Depending on market conditions, the closed-end funds we manage may increase or decrease their leverage in order to maintain the funds’ target leverage ratios, thereby increasing or decreasing the assets we manage.
As of December 31, 2018, 62.0% and 21.6% of the assets we managed were concentrated in real estate and preferred securities, respectively. A change in interest rates or prolonged economic downturn could have a negative impact on the valuation of real estate and preferred securities in our clients’ portfolios, reduce our revenue, and impact our ability to increase assets in our open-end funds or offer new funds.
Item 8. Financial Statements and Supplementary Data
The report of our independent registered public accounting firm and financial statements listed in the accompanying index are included in Item 15 of this Annual Report on Form 10-K. See the Index to Financial Statements on page F-1.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
There have been no disagreements on accounting and financial disclosure matters.
Item 9A. 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 Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our ChiefInternal Control over 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.Reporting
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 December 31, 2018. 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 December 31, 2018 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 December 31, 20182021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Management’s report on internal control over financial reporting is located on page F-2 of this Annual Report on Form 10-K and Deloitte & Touche LLP’s report on the effectiveness of our internal control over financial reporting is located on page F-3.
Disclosure Controls and Procedures Under the direction of our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective.
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information regarding directors and executive officers set forth under the headings “Nominee Information” and “Other Executive Officers” of the Proxy Statement is incorporated by reference herein.
The information regarding compliance with Section 16(a) of the Exchange Act set forth under the heading “Section 16(a) Beneficial Ownership Reporting Compliance” in the Proxy Statement is incorporated by reference herein.
The information regarding our Code of Business Conduct and Ethics and committees of our Board of Directors under the headings “Corporate Governance” and “Board Meetings and Committees” in the Proxy Statement is incorporated by reference herein.
The information regarding compliance with Section 16(a) of the Exchange Act set forth under the heading “Delinquent Section 16(a) Reports” in the Proxy Statement is incorporated by reference herein. Item 11. Executive Compensation
The information contained under the headings “Executive Compensation”, “Board Meetings and Committees” and “Report of the Compensation Committee” of the Proxy Statement is incorporated by reference herein.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information under the headings “Ownership of Cohen & Steers Common Stock” and “Equity Compensation Plan Information” of the Proxy Statement is incorporated by reference herein.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information under the headings “Certain Relationships and Related Transactions” and “Corporate Governance” of the Proxy Statement is incorporated by reference herein.
Item 14. Principal Accountant Fees and Services
The information regarding our independent registered public accounting firm fees and services set forth under the heading “Ratification of the Appointment of Independent Registered Public Accounting Firm” of the Proxy Statement is incorporated by reference herein.
PART IV
Item 15. Exhibits and Financial Statement Schedules
|
| | | | | | | |
(a) | 1 | Financial Statements Included herein at pages F-1 through F-34. F-31. |
| 2 | Financial Data Schedules All schedules have been omitted because they are not applicable, not required, or the information required is included in the financial statements or notes thereto.
|
| 3 | Exhibits |
The agreements and 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 you should not rely on them for that purpose. In particular, any representations and warranties made by us 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 Number
| | Description |
3.1 | — | |
3.2 | — | |
4.1 | — | |
4.2 | — | |
10.14.3 | — | |
10.1 | — | |
10.2 | — | |
10.3 | — | |
10.4 | — | |
10.5 | — | |
10.6 | — | |
10.7 | — | |
21.110.8 | — | Letter Agreement between the Company and Robert H. Steers* (filed herewith) |
21.1 | — | |
23.1 | — | |
24.131.1 | — | |
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 Company’s Annual Report on Form 10-K for the year ended December 31, 20182021 formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Consolidated Statements of Financial Condition, as of December 31, 2018 and December 31, 2017, (ii) the Consolidated Statements of Operations, for the years ended December 31, 2018, 2017 and 2016, (iii) the Consolidated Statements of Comprehensive Income, for the years ended December 31, 2018, 2017 and 2016, (iv) the Consolidated Statements of Changes in Stockholders’ Equity and Redeemable Noncontrolling Interests, for the years ended December 31, 2018, 2017 and 2016, (v) the Consolidated Statements of Cash Flows, for the years ended December 31, 2018, 2017 and 2016, and (vi) the Notes to the Consolidated Financial Statements. |
104 | — | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
_________________________
| |
(1) | Incorporated by reference to the Company’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 Company’s Quarterly Report on Form 10-Q (Commission File No. 001-32236), for the quarter ended June 30, 2008. |
| |
(3) | Incorporated by reference to the Company’s Current Report on Form 8-K (Commission File No. 001-32236), filed on May 13, 2013. |
| |
(4) | Incorporated by reference to the Company’s Quarterly Report on Form 10-Q (Commission File No. 001-32236), for the quarter ended March 31, 2015. |
| |
(5) | Incorporated by reference to the Company’s Annual Report on Form 10-K (Commission File No. 001-32236), for the year ended December 31, 2007. |
| |
(6) | Incorporated by reference to the Company’s Quarterly Report on Form 10-Q (Commission File No. 001-32236) for the quarter ended June 30, 2015. |
| |
(7) | Incorporated by reference to the Company’s Current Report on Form 8-K (Commission File No. 001-32236), for the May 10, 2017. |
| |
(8) | Incorporated by reference to the Company’s Current Report on Form 10-K (Commission File No. 001-32236), for the year ended December 31, 2017. |
(1)Incorporated by reference to the Company’s Registration Statement on Form S-1, as amended, originally filed with the Securities and Exchange Commission on March 30, 2004.
(2)Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008.
(3)Incorporated by reference to the Company’s Current Report on Form 8-K filed on May 13, 2013.
(4)Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015.
(5)Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.
(6)Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015.
(7)Incorporated by reference to the Company’s Current Report on Form 8-K filed on May 10, 2017.
(8)Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.
(9)Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 2019.
* Denotes compensatory plan.
Item 16. Form 10-K Summary
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
| | | | | | | | | | | | | |
| | COHEN & STEERS, INC. |
| | | |
| | By: | /S/ ROBERT H. STEERS | |
| | | s/ Robert H. Steers
|
| | | Robert H. Steers Chief Executive Officer and Director |
March 1, 2019 February 25, 2022
Each of the officers and directors of Cohen & Steers, Inc. whose signature appears below, in so signing, also makes, constitutes and appoints Robert H. Steers, acting alone, his or her true and lawful attorney-in-fact, with full power and substitution, for him or her in any and all capacities, to execute and cause to be filed with the Securities and Exchange Commission any and all amendments to the Annual Report on Form 10-K, with exhibits thereto and other documents connected therewith and to perform any acts necessary to be done in order to file such documents, and hereby ratifies and confirms all that said attorney-in-fact or his substitute or substitutes may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.
| | | | | | | | | | | |
Signature | | Title | Date |
| | | |
Signature/s/ Martin Cohen | | Title | Date |
| | | |
/S/ MARTIN COHEN
| | | |
Martin Cohen | | Chairman and Director | March 1, 2019February 25, 2022 |
| | | |
/S/ ROBERT H. STEERS | | | |
s/ Robert H. Steers | | | |
Robert H. Steers | | Chief Executive Officer and Director (Principal Executive Officer) | March 1, 2019February 25, 2022 |
| | | |
/S/ PETER L. RHEIN s/ Joseph M. Harvey | | | |
Joseph M. Harvey | | President and Director | February 25, 2022 |
| | | |
/s/ Peter L. Rhein | | Director | March 1, 2019 |
Peter L. Rhein | | Director | February 25, 2022 |
/S/ RICHARD P. SIMON
| | | |
/s/ Richard P. Simon | | Director | March 1, 2019 |
Richard P. Simon | | Director | February 25, 2022 |
/S/ EDMOND D. VILLANI
| | | |
/s/ Edmond D. Villani | | Director | March 1, 2019 |
Edmond D. Villani | | Director | February 25, 2022 |
/s/ FRANK CONNOR
| | | |
/s/ Frank T. Connor | | Director | March 1, 2019 |
Frank T. Connor | | Director | February 25, 2022 |
/s/ REENA AGGARWAL
| | | |
/s/ Reena Aggarwal | | Director | March 1, 2019 |
Reena Aggarwal | | Director | February 25, 2022 |
/S/ MATTHEW S. STADLER
| | | |
/s/ Dasha Smith | | | |
Dasha Smith | | Director | February 25, 2022 |
| | | |
/s/ Matthew S. Stadler | | | |
Matthew S. Stadler | | Chief Financial Officer (Principal Financial Officer) | March 1, 2019February 25, 2022 |
| | | |
/S/ ELENA DULIK s/ Elena Dulik | | | |
Elena Dulik | | Chief Accounting Officer (Principal Accounting Officer) | March 1, 2019February 25, 2022 |
| | | |
TABLE OF CONTENTS
FINANCIAL STATEMENTS
COHEN & STEERS, INC.
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The management of Cohen & Steers, Inc. (the Company) is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control system is designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the reliability of financial reporting and the preparation of published financial statements in accordance with accounting principles generally accepted in the United States of America. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
The Company’s internal control over financial reporting (1) includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; (2) provides reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and (3) and provides reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the Company’s financial statements.
The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2018.2021. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013). Based on its assessment, our management believes that, as of December 31, 2018,2021, the Company’s internal control over financial reporting is effective based on those criteria.
The Company’s independent registered public accounting firm that audited the accompanying Consolidated Financial Statements has issued an attestation report on the effectiveness of the Company’s internal control over financial reporting. Their report appears on the following page.
March 1, 2019February 25, 2022
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of Cohen & Steers, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated statements of financial condition of Cohen & Steers, Inc. and subsidiaries (the "Company") as of December 31, 20182021 and 2017, and2020, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity and redeemable noncontrolling interests, and cash flows for each of the three years in the period ended December 31, 20182021 and the related notes (collectively referred to as the “financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2018,2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 20182021 and 2017,2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018,2021, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018,2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.
Basis for Opinions
The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCOAB.PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Income Taxes - Refer to Note 14 to the consolidated financial statements
Unrecognized Tax Benefits
Critical Audit Matter Description
As discussed in Note 14 to the consolidated financial statements, as of December 31, 2021, the Company had $10.4 million of gross unrecognized tax benefits.
The Company records unrecognized tax benefits as liabilities in accordance with Accounting Standards Codification Topic 740, Income Taxes (ASC 740) and adjusts these liabilities when its judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may differ from the Company's current estimates of the unrecognized tax benefit liabilities. These differences are reflected as increases or decreases in income tax expense in the period in which new information becomes available.
We identified the evaluation of the Company’s unrecognized tax benefits as a critical audit matter because the calculation of these tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across the Company’s global operations. Tax laws and regulations are subject to change in jurisdictions where the Company operates, coupled with uncertainty associated with interpretations of applicable tax law provisions.
In accordance with ASC 740, a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits. Auditing management’s analysis of its uncertain tax positions and resulting unrecognized income tax benefits required a high degree of auditor judgment due to limited publicly available information regarding resolution of litigation appeals in different jurisdictions and absence of clarifying guidance from government agencies, resulting in an increased extent of effort to evaluate management’s analysis, including the need to involve our income tax specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the evaluation of unrecognized income tax benefits included the following, among others:
•We tested the effectiveness of controls that address the risks of material misstatement relating to uncertain tax positions.
•We, with the support of our income tax specialists, evaluated the recognition, measurement and accuracy of unrecognized income tax benefits. Our procedures included but were not limited to:
–On a sample basis, inspected the Company’s analysis of uncertain income tax positions and examined the reasonableness of the assumptions and calculations the Company used to develop the related unrecognized income tax benefit amounts by position and jurisdiction.
–On a sample basis, tested the roll forward of unrecognized tax benefits from the prior year.
–For sampled positions, obtained the Company's supporting documentation to assess the technical tax merit, the more-likely-than-not recognition, and measurement thresholds, and examined interpretation and application of relevant tax laws in the Company's recognition determination.
–Evaluated the Company’s income tax disclosures concerning these matters included in Note 14 to the consolidated financial statements.
–Tested whether selected unrecognized tax benefits were consistent with evidence obtained in other areas of the audit.
–Based on Company specific activities, performed completeness test of uncertain tax positions identified.
–For those uncertain tax positions which have not been effectively settled, we inspected whether management had appropriately considered new information that could significantly change the recognition, measurement, or disclosure of the uncertain tax positions.
/s/ DELOITTE & TOUCHE LLP
New York, New York
March 1, 2019
February 25, 2022
We have served as the Company’s auditor since 2003.
COHEN & STEERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except share data)
|
| | | | | | | |
| December 31, 2018 | | December 31, 2017 |
ASSETS | | | |
Cash and cash equivalents | $ | 92,733 |
| | $ | 193,452 |
|
Investments ($136,113 and $68,101) (1) | 224,932 |
| | 108,106 |
|
Accounts receivable | 50,381 |
| | 53,854 |
|
Due from brokers ($11,187 and $5,410) (1) | 14,240 |
| | 6,429 |
|
Property and equipment—net | 14,106 |
| | 15,040 |
|
Goodwill and intangible assets—net | 19,751 |
| | 20,379 |
|
Deferred income tax asset—net | 7,200 |
| | 5,812 |
|
Other assets ($2,604 and $931) (1) | 9,208 |
| | 7,053 |
|
Total assets | $ | 432,551 |
| | $ | 410,125 |
|
| | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | |
Liabilities: | | | |
Accrued compensation | $ | 43,685 |
| | $ | 41,370 |
|
Distribution and service fees payable | 8,493 |
| | 6,231 |
|
Income tax payable | 18,663 |
| | 19,892 |
|
Due to brokers ($4,422 and $3,203) (1) | 5,121 |
| | 3,282 |
|
Deferred rent | 5,816 |
| | 5,994 |
|
Other liabilities and accrued expenses ($440 and $291) (1) | 13,935 |
| | 10,025 |
|
Total liabilities | 95,713 |
| | 86,794 |
|
Commitments and contingencies (see Note 13) |
| |
|
Redeemable noncontrolling interests | 114,192 |
| | 47,795 |
|
Stockholders’ equity: | | | |
Common stock, $0.01 par value; 500,000,000 shares authorized; 51,818,186 and 51,104,593 shares issued at December 31, 2018 and 2017, respectively | 518 |
| | 511 |
|
Additional paid-in capital | 602,272 |
| | 570,486 |
|
Accumulated deficit | (208,404 | ) | | (137,972 | ) |
Accumulated other comprehensive income (loss), net of tax | (7,323 | ) | | (3,671 | ) |
Less: Treasury stock, at cost, 5,050,285 and 4,789,608 shares at December 31, 2018 and 2017, respectively | (164,417 | ) | | (153,818 | ) |
Total stockholders’ equity | 222,646 |
| | 275,536 |
|
Total liabilities and stockholders’ equity | $ | 432,551 |
| | $ | 410,125 |
|
| | | | | | | | | | | |
| December 31, 2021 | | December 31, 2020 |
Assets: | | | |
Cash and cash equivalents | $ | 184,373 | | | $ | 41,232 | |
Investments ($127,912 and $80,743) (1) | 154,654 | | | 154,978 | |
Accounts receivable | 84,090 | | | 69,680 | |
Due from brokers ($1,340 and $223) (1) | 3,567 | | | 5,125 | |
| | | |
Property and equipment—net | 8,938 | | | 10,341 | |
Operating lease right-of-use assets—net | 22,009 | | | 31,203 | |
Goodwill and intangible assets—net | 19,696 | | | 20,495 | |
| | | |
Other assets ($1,589 and $637) (1) | 15,360 | | | 15,399 | |
Total assets | $ | 492,687 | | | $ | 348,453 | |
| | | |
Liabilities: | | | |
Accrued compensation and benefits | $ | 79,167 | | | $ | 56,384 | |
Distribution and service fees payable | 10,183 | | | 7,748 | |
Operating lease liabilities | 24,525 | | | 34,926 | |
Income tax payable | 22,611 | | | 12,672 | |
Due to brokers ($926 and $128) (1) | 927 | | | 501 | |
Other liabilities and accrued expenses ($689 and $326) (1) | 10,948 | | | 11,318 | |
Total liabilities | 148,361 | | | 123,549 | |
Commitments and contingencies (See Note 13) | 0 | | 0 |
Redeemable noncontrolling interests | 89,143 | | | 50,665 | |
Stockholders’ equity: | | | |
Common stock, $0.01 par value; 500,000,000 shares authorized; 54,267,309 and 53,462,621 shares issued at December 31, 2021 and 2020, respectively | 543 | | | 535 | |
Additional paid-in capital | 715,847 | | | 670,142 | |
Accumulated deficit | (231,967) | | | (291,542) | |
Accumulated other comprehensive loss | (5,886) | | | (4,134) | |
Treasury stock, at cost, 5,997,239 and 5,674,510 shares at December 31, 2021 and 2020, respectively | (223,354) | | | (200,762) | |
Total stockholders’ equity | 255,183 | | | 174,239 | |
Total liabilities, redeemable noncontrolling interests and stockholders’ equity | $ | 492,687 | | | $ | 348,453 | |
_________________________
| |
(1) | Asset and liability amounts in parentheses represent the aggregated balances at December 31, 2018 and 2017 attributable to variable interest entities consolidated by the Company. Refer to Note 4 for further discussion. |
(1) Asset and liability amounts in parentheses represent the aggregated balances at December 31, 2021 and 2020 attributable to variable interest entities consolidated by the Company. Refer to Note 4, Investments for further discussion.
See notes to consolidated financial statements
COHEN & STEERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2021 | | 2020 | | 2019 |
Revenue: | | | | | |
Investment advisory and administration fees | $ | 543,544 | | | $ | 395,037 | | | $ | 378,578 | |
Distribution and service fees | 37,630 | | | 30,134 | | | 30,048 | |
Other | 2,658 | | | 2,365 | | | 2,204 | |
Total revenue | 583,832 | | | 427,536 | | | 410,830 | |
Expenses: | | | | | |
Employee compensation and benefits | 195,443 | | | 156,457 | | | 143,431 | |
Distribution and service fees | 75,891 | | | 115,084 | | | 55,237 | |
General and administrative | 48,034 | | | 56,286 | | | 47,632 | |
Depreciation and amortization | 4,092 | | | 4,652 | | | 4,396 | |
Total expenses | 323,460 | | | 332,479 | | | 250,696 | |
Operating income (loss) | 260,372 | | | 95,057 | | | 160,134 | |
Non-operating income (loss): | | | | | |
Interest and dividend income—net | 2,877 | | | 3,362 | | | 6,716 | |
Gain (loss) from investments—net | 18,784 | | | (4,116) | | | 21,673 | |
Foreign currency gain (loss)—net | (89) | | | (916) | | | (974) | |
Total non-operating income (loss) | 21,572 | | | (1,670) | | | 27,415 | |
Income before provision for income taxes | 281,944 | | | 93,387 | | | 187,549 | |
Provision for income taxes | 55,790 | | | 18,222 | | | 40,565 | |
Net income | 226,154 | | | 75,165 | | | 146,984 | |
Net (income) loss attributable to redeemable noncontrolling interests | (14,758) | | | 1,419 | | | (12,363) | |
Net income attributable to common stockholders | $ | 211,396 | | | $ | 76,584 | | | $ | 134,621 | |
| | | | | |
Earnings per share attributable to common stockholders: | | | | | |
Basic | $ | 4.38 | | | $ | 1.60 | | | $ | 2.85 | |
Diluted | $ | 4.31 | | | $ | 1.57 | | | $ | 2.79 | |
Weighted average shares outstanding: | | | | | |
Basic | 48,316 | | | 47,800 | | | 47,273 | |
Diluted | 49,090 | | | 48,676 | | | 48,297 | |
|
| | | | | | | | | | | |
| Year Ended December 31, |
| 2018 | | 2017 (1) | | 2016 (1) |
Revenue: | | | | | |
Investment advisory and administration fees | $ | 341,226 |
| | $ | 336,743 |
| | $ | 311,859 |
|
Distribution and service fees | 29,090 |
| | 30,747 |
| | 28,825 |
|
Portfolio consulting and other | 10,795 |
| | 11,206 |
| | 10,813 |
|
Total revenue | 381,111 |
| | 378,696 |
| | 351,497 |
|
Expenses: | | | | | |
Employee compensation and benefits | 131,292 |
| | 124,076 |
| | 115,607 |
|
Distribution and service fees | 50,043 |
| | 53,338 |
| | 53,144 |
|
General and administrative | 48,265 |
| | 42,219 |
| | 42,989 |
|
Depreciation and amortization | 4,473 |
| | 4,317 |
| | 4,246 |
|
Total expenses | 234,073 |
| | 223,950 |
| | 215,986 |
|
Operating income (loss) | 147,038 |
| | 154,746 |
| | 135,511 |
|
Non-operating income (loss): | | | | | |
Interest and dividend income—net | 10,426 |
| | 4,333 |
| | 2,119 |
|
Gain (loss) from investments—net | (14,264 | ) | | 2,020 |
| | 4,993 |
|
Foreign currency gains (losses)—net | 579 |
| | (699 | ) | | 780 |
|
Total non-operating income (loss) | (3,259 | ) | | 5,654 |
| | 7,892 |
|
Income before provision for income taxes | 143,779 |
| | 160,400 |
| | 143,403 |
|
Provision for income taxes | 34,257 |
| | 67,914 |
| | 50,593 |
|
Net income | 109,522 |
| | 92,486 |
| | 92,810 |
|
Less: Net (income) loss attributable to redeemable noncontrolling interests | 4,374 |
| | (547 | ) | | 126 |
|
Net income attributable to common stockholders | $ | 113,896 |
| | $ | 91,939 |
| | $ | 92,936 |
|
| | | | | |
Earnings per share attributable to common stockholders: | | | | | |
Basic | $ | 2.43 |
| | $ | 1.98 |
| | $ | 2.02 |
|
Diluted | $ | 2.40 |
| | $ | 1.96 |
| | $ | 2.00 |
|
Weighted average shares outstanding: | | | | | |
Basic | 46,794 |
| | 46,353 |
| | 45,951 |
|
Diluted | 47,381 |
| | 46,979 |
| | 46,432 |
|
_________________________
| |
(1) | Certain amounts have been recast to reflect the Company's adoption of the new revenue recognition accounting standard on January 1, 2018. See Notes 2 and 3 for further discussion of the Company's recently adopted accounting pronouncements and revenue, respectively. |
See notes to consolidated financial statements
COHEN & STEERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2021 | | 2020 | | 2019 |
Net income | $ | 226,154 | | | $ | 75,165 | | | $ | 146,984 | |
Net (income) loss attributable to redeemable noncontrolling interests | (14,758) | | | 1,419 | | | (12,363) | |
Net income attributable to common stockholders | 211,396 | | | 76,584 | | | 134,621 | |
Other comprehensive income (loss): | | | | | |
Foreign currency translation gain (loss) | (1,752) | | | 2,192 | | | 997 | |
Total comprehensive income attributable to common stockholders | $ | 209,644 | | | $ | 78,776 | | | $ | 135,618 | |
|
| | | | | | | | | | | |
| Year Ended December 31, |
| 2018 | | 2017 | | 2016 |
Net income | $ | 109,522 |
| | $ | 92,486 |
| | $ | 92,810 |
|
Less: Net (income) loss attributable to redeemable noncontrolling interests | 4,374 |
| | (547 | ) | | 126 |
|
Net income attributable to common stockholders | 113,896 |
| | 91,939 |
| | 92,936 |
|
Other comprehensive income (loss), net of tax: | | | | | |
Foreign currency translation gain (loss) | (2,557 | ) | | 2,064 |
| | (2,937 | ) |
Net unrealized gain (loss) from available-for-sale investments (1) | — |
| | 497 |
| | 2,346 |
|
Reclassification to statements of operations of (gain) loss from available-for-sale investments | — |
| | (347 | ) | | (1,451 | ) |
Other comprehensive income (loss) | (2,557 | ) | | 2,214 |
| | (2,042 | ) |
Total comprehensive income attributable to common stockholders | $ | 111,339 |
| | $ | 94,153 |
| | $ | 90,894 |
|
_________________________
| |
(1) | Due to the adoption and application of the amendments to the financial instruments accounting standard on January 1, 2018, realized and unrealized gains (losses) from equity investments at fair value are recognized through earnings rather than through other comprehensive income. See Notes 2 and 4 for further discussion of the Company's recently adopted accounting pronouncements and investments, respectively. |
See notes to consolidated financial statements
COHEN & STEERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY AND
REDEEMABLE NONCONTROLLING INTERESTS
(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 Interests | | Shares of Common Stock, Net |
January 1, 2016 | | $ | 497 |
| | $ | 519,855 |
| | $ | (148,096 | ) | | $ | (3,843 | ) | | $ | (136,637 | ) | | $ | 231,776 |
| | $ | 11,334 |
| | 45,440 |
|
Dividends ($1.54 per share) | | — |
| | — |
| | (72,797 | ) | | — |
| | — |
| | (72,797 | ) | | — |
| | — |
|
Issuance of common stock | | 7 |
| | 749 |
| | — |
| | — |
| | — |
| | 756 |
| | — |
| | 724 |
|
Repurchase of common stock | | — |
| | — |
| | — |
| | — |
| | (8,040 | ) | | (8,040 | ) | | — |
| | (274 | ) |
Tax benefits associated with restricted stock units—net | | — |
| | (758 | ) | | — |
| | — |
| | — |
| | (758 | ) | | — |
| | — |
|
Issuance of restricted stock units | | — |
| | 2,457 |
| | — |
| | — |
| | — |
| | 2,457 |
| | — |
| | — |
|
Amortization of restricted stock units | | — |
| | 21,555 |
| | — |
| | — |
| | — |
| | 21,555 |
| | — |
| | — |
|
Forfeitures of restricted stock units | | — |
| | (29 | ) | | — |
| | — |
| | — |
| | (29 | ) | | — |
| | — |
|
Net income (loss) | | — |
| | — |
| | 92,936 |
| | — |
| | — |
| | 92,936 |
| | (126 | ) | | — |
|
Other comprehensive income (loss), net of tax | | — |
| | — |
| | — |
| | (2,042 | ) | | — |
| | (2,042 | ) | | — |
| | — |
|
Contributions from redeemable noncontrolling interests | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 4,023 |
| | — |
|
Distributions to redeemable noncontrolling interests | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (342 | ) | | — |
|
Transfer of redeemable noncontrolling interests in consolidated entity | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (14,036 | ) | | — |
|
December 31, 2016 | | $ | 504 |
| | $ | 543,829 |
| | $ | (127,957 | ) | | $ | (5,885 | ) | | $ | (144,677 | ) | | $ | 265,814 |
| | $ | 853 |
| | 45,890 |
|
Dividends ($2.12 per share) | | — |
| | — |
| | (101,669 | ) | | — |
| | — |
| | (101,669 | ) | | — |
| | — |
|
Issuance of common stock | | 7 |
| | 741 |
| | — |
| | — |
| | — |
| | 748 |
| | — |
| | 690 |
|
Repurchase of common stock | | — |
| | — |
| | — |
| | — |
| | (9,141 | ) | | (9,141 | ) | | — |
| | (265 | ) |
Issuance of restricted stock units | | — |
| | 3,974 |
| | — |
| | — |
| | — |
| | 3,974 |
| | — |
| | — |
|
Amortization of restricted stock units | | — |
| | 22,042 |
| | (285 | ) | | — |
| | — |
| | 21,757 |
| | — |
| | — |
|
Forfeitures of restricted stock units | | — |
| | (100 | ) | | — |
| | — |
| | — |
| | (100 | ) | | — |
| | — |
|
Net income (loss) | | — |
| | — |
| | 91,939 |
| | — |
| | — |
| | 91,939 |
| | 547 |
| | — |
|
Other comprehensive income (loss), net of tax | | — |
| | — |
| | — |
| | 2,214 |
| | — |
| | 2,214 |
| | — |
| | — |
|
Contributions from redeemable noncontrolling interests | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 46,658 |
| | — |
|
Distributions to redeemable noncontrolling interests | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (263 | ) | | — |
|
December 31, 2017 | | $ | 511 |
| | $ | 570,486 |
| | $ | (137,972 | ) | | $ | (3,671 | ) | | $ | (153,818 | ) | | $ | 275,536 |
| | $ | 47,795 |
| | 46,315 |
|
Cumulative-effect adjustment, net of tax, due to the adoption of the new financial instruments accounting standard | | — |
| | — |
| | 1,095 |
| | (1,095 | ) | | — |
| | — |
| | — |
| | — |
|
Dividends ($3.82 per share) | | — |
| | — |
| | (185,423 | ) | | — |
| | — |
| | (185,423 | ) | | — |
| | — |
|
Issuance of common stock | | 7 |
| | 696 |
| | — |
| | — |
| | — |
| | 703 |
| | — |
| | 714 |
|
Repurchase of common stock | | — |
| | — |
| | — |
| | — |
| | (10,599 | ) | | (10,599 | ) | | — |
| | (261 | ) |
Issuance of restricted stock units | | — |
| | 7,170 |
| | — |
| | — |
| | — |
| | 7,170 |
| | — |
| | — |
|
Amortization of restricted stock units | | — |
| | 23,984 |
| | — |
| | — |
| | — |
| | 23,984 |
| | — |
| | — |
|
Forfeitures of restricted stock units | | — |
| | (64 | ) | | — |
| | — |
| | — |
| | (64 | ) | | — |
| | — |
|
Net income (loss) | | — |
| | — |
| | 113,896 |
| | — |
| | — |
| | 113,896 |
| | (4,374 | ) | | — |
|
Other comprehensive income (loss), net of tax | | — |
| | — |
| | — |
| | (2,557 | ) | | — |
| | (2,557 | ) | | — |
| | — |
|
Contributions from redeemable noncontrolling interests | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 81,633 |
| | — |
|
Distributions to redeemable noncontrolling interests | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (10,862 | ) | | — |
|
December 31, 2018 | | $ | 518 |
| | $ | 602,272 |
| | $ | (208,404 | ) | | $ | (7,323 | ) | | $ | (164,417 | ) | | $ | 222,646 |
| | $ | 114,192 |
| | 46,768 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Common Stock | | Additional Paid-In Capital | | Accumulated Deficit | | Accumulated Other Comprehensive Income (Loss) | | Treasury Stock | | Total Stockholders’ Equity | | Redeemable Noncontrolling Interests | | Shares of Common Stock, Net |
January 1, 2019 | | $ | 518 | | | $ | 602,272 | | | $ | (208,404) | | | $ | (7,323) | | | $ | (164,417) | | | $ | 222,646 | | | $ | 114,192 | | | 46,768 | |
Dividends ($3.44 per share) | | — | | | — | | | (168,678) | | | — | | | — | | | (168,678) | | | — | | | — | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Issuance of common stock | | 9 | | | 861 | | | — | | | — | | | — | | | 870 | | | — | | | 762 | |
Repurchase of common stock | | — | | | — | | | — | | | — | | | (10,408) | | | (10,408) | | | — | | | (280) | |
Issuance of restricted stock units—net | | — | | | 7,039 | | | — | | | — | | | — | | | 7,039 | | | — | | | — | |
Amortization of restricted stock units | | — | | | 26,883 | | | — | | | — | | | — | | | 26,883 | | | — | | | — | |
Forfeitures of restricted stock units | | — | | | (267) | | | — | | | — | | | — | | | (267) | | | — | | | — | |
Net income (loss) | | — | | | — | | | 134,621 | | | — | | | — | | | 134,621 | | | 12,363 | | | — | |
Other comprehensive income (loss) | | — | | | — | | | — | | | 997 | | | — | | | 997 | | | — | | | — | |
Net contributions (distributions) attributable to redeemable noncontrolling interests | | — | | | — | | | — | | | — | | | — | | | — | | | 2,242 | | | — | |
Net consolidation (deconsolidation) of Company-sponsored funds | | — | | | — | | | — | | | — | | | — | | | — | | | (75,385) | | | — | |
December 31, 2019 | | $ | 527 | | | $ | 636,788 | | | $ | (242,461) | | | $ | (6,326) | | | $ | (174,825) | | | $ | 213,703 | | | $ | 53,412 | | | 47,250 | |
| | | | | | | | | | | | | | | | |
Dividends ($2.56 per share) | | — | | | — | | | (125,665) | | | — | | | — | | | (125,665) | | | — | | | — | |
Issuance of common stock | | 8 | | | 1,002 | | | — | | | — | | | — | | | 1,010 | | | — | | | 883 | |
Repurchase of common stock | | — | | | — | | | — | | | — | | | (25,937) | | | (25,937) | | | — | | | (345) | |
Issuance of restricted stock units—net | | — | | | 3,865 | | | — | | | — | | | — | | | 3,865 | | | — | | | — | |
Amortization of restricted stock units | | — | | | 28,740 | | | — | | | — | | | — | | | 28,740 | | | — | | | — | |
Forfeitures of restricted stock units | | — | | | (253) | | | — | | | — | | | — | | | (253) | | | — | | | — | |
Net income (loss) | | — | | | — | | | 76,584 | | | — | | | — | | | 76,584 | | | (1,419) | | | — | |
Other comprehensive income (loss) | | — | | | — | | | — | | | 2,192 | | | — | | | 2,192 | | | — | | | — | |
| | | | | | | | | | | | | | | | |
Net consolidation (deconsolidation) of Company-sponsored funds | | — | | | — | | | — | | | — | | | — | | | — | | | (1,328) | | | — | |
December 31, 2020 | | $ | 535 | | | $ | 670,142 | | | $ | (291,542) | | | $ | (4,134) | | | $ | (200,762) | | | $ | 174,239 | | | $ | 50,665 | | | 47,788 | |
Dividends ($3.05 per share) | | — | | | — | | | (151,821) | | | — | | | — | | | (151,821) | | | — | | | — | |
Issuance of common stock | | 8 | | | 1,170 | | | — | | | — | | | — | | | 1,178 | | | — | | | 805 | |
Repurchase of common stock | | — | | | — | | | — | | | — | | | (22,592) | | | (22,592) | | | — | | | (323) | |
| | | | | | | | | | | | | | | | |
Issuance of restricted stock units—net | | — | | | 6,389 | | | — | | | — | | | — | | | 6,389 | | | — | | | — | |
Amortization of restricted stock units | | — | | | 40,766 | | | — | | | — | | | — | | | 40,766 | | | — | | | — | |
Forfeitures of restricted stock units | | — | | | (2,620) | | | — | | | — | | | — | | | (2,620) | | | — | | | — | |
Net income (loss) | | — | | | — | | | 211,396 | | | — | | | — | | | 211,396 | | | 14,758 | | | — | |
Other comprehensive income (loss) | | — | | | — | | | — | | | (1,752) | | | — | | | (1,752) | | | — | | | — | |
Net contributions (distributions) attributable to redeemable noncontrolling interests | | — | | | — | | | — | | | — | | | — | | | — | | | 23,720 | | | — | |
| | | | | | | | | | | | | | | | |
December 31, 2021 | | $ | 543 | | | $ | 715,847 | | | $ | (231,967) | | | $ | (5,886) | | | $ | (223,354) | | | $ | 255,183 | | | $ | 89,143 | | | 48,270 | |
See notes to consolidated financial statements
COHEN & STEERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2021 | | 2020 | | 2019 |
Cash flows from operating activities: | | | | | |
Net income | $ | 226,154 | | | $ | 75,165 | | | $ | 146,984 | |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
Stock-based compensation expense—net | 40,464 | | | 29,337 | | | 27,811 | |
| | | | | |
Depreciation and amortization | 5,690 | | | 6,145 | | | 4,982 | |
Amortization of right-of-use assets | 10,343 | | | 10,128 | | | 10,048 | |
| | | | | |
(Gain) loss from investments—net | (18,784) | | | 4,116 | | | (21,673) | |
Deferred income taxes | 104 | | | 107 | | | 96 | |
Foreign currency (gain) loss | 1,974 | | | (1,269) | | | 9 | |
Changes in operating assets and liabilities: | | | | | |
Accounts receivable | (16,384) | | | (9,310) | | | (8,729) | |
Due from brokers | 1,539 | | | (3,382) | | | 989 | |
Deferred commissions | (1,440) | | | (1,474) | | | (1,628) | |
Investments within consolidated Company-sponsored funds | (27,525) | | | (3,605) | | | (13,997) | |
| | | | | |
Other assets | 4,334 | | | (771) | | | (120) | |
Accrued compensation and benefits | 22,783 | | | 4,622 | | | 4,988 | |
Distribution and service fees payable | 2,435 | | | 430 | | | (1,175) | |
Operating lease liabilities | (11,550) | | | (11,314) | | | (10,955) | |
Due to brokers | 450 | | | 135 | | | 45 | |
| | | | | |
Income tax payable | 9,991 | | | (9,640) | | | 3,531 | |
Other liabilities and accrued expenses | (7,677) | | | (234) | | | 239 | |
Net cash provided by (used in) operating activities | 242,901 | | | 89,186 | | | 141,445 | |
Cash flows from investing activities: | | | | | |
| | | | | |
Purchases of investments | (54,043) | | | (70,963) | | | (50,943) | |
Proceeds from sales and maturities of investments | 104,386 | | | 71,695 | | | 89,644 | |
Purchases of property and equipment | (2,695) | | | (2,502) | | | (2,752) | |
Net cash provided by (used in) investing activities | 47,648 | | | (1,770) | | | 35,949 | |
Cash flows from financing activities: | | | | | |
Issuance of common stock—net | 1,001 | | | 859 | | | 741 | |
Repurchase of common stock | (22,592) | | | (25,937) | | | (10,408) | |
Dividends to stockholders | (147,555) | | | (122,489) | | | (162,705) | |
| | | | | |
Net contributions (distributions) from redeemable noncontrolling interests | 23,720 | | | (1,328) | | | 2,242 | |
Net cash provided by (used in) financing activities | (145,426) | | | (148,895) | | | (170,130) | |
Net increase (decrease) in cash and cash equivalents | 145,123 | | | (61,479) | | | 7,264 | |
Effect of foreign exchange rate changes on cash and cash equivalents | (999) | | | 1,359 | | | 1,355 | |
Cash and cash equivalents, beginning of the year | 41,232 | | | 101,352 | | | 92,733 | |
Cash and cash equivalents, end of the year | $ | 185,356 | | | $ | 41,232 | | | $ | 101,352 | |
|
| | | | | | | | | | | |
| Year Ended December 31, |
| 2018 | | 2017 | | 2016 |
Cash flows from operating activities: | | | | | |
Net income | $ | 109,522 |
| | $ | 92,486 |
| | $ | 92,810 |
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | | | | | |
Stock compensation expense | 24,626 |
| | 22,360 |
| | 22,108 |
|
Amortization of deferred commissions | 1,559 |
| | 2,800 |
| | 3,364 |
|
Depreciation and amortization | 4,473 |
| | 4,317 |
| | 4,246 |
|
Deferred rent | (178 | ) | | (235 | ) | | (139 | ) |
Amortization (accretion) of premium (discount) on held-to-maturity investments | (246 | ) | | — |
| | — |
|
(Gain) loss from investments—net | 14,264 |
| | (2,020 | ) | | (4,993 | ) |
Deferred income taxes | (1,373 | ) | | (314 | ) | | (900 | ) |
Foreign currency (gain) loss | 211 |
| | 47 |
| | 1,684 |
|
Changes in operating assets and liabilities: | | | | | |
Accounts receivable | 3,262 |
| | (7,613 | ) | | (3,413 | ) |
Due from brokers | (7,811 | ) | | (4,850 | ) | | (1,261 | ) |
Deferred commissions | (982 | ) | | (1,894 | ) | | (3,909 | ) |
Investments within consolidated funds | (81,182 | ) | | (60,252 | ) | | (3,956 | ) |
Other assets | (2,689 | ) | | (576 | ) | | (1,442 | ) |
Accrued compensation | 2,341 |
| | 6,064 |
| | 4,855 |
|
Distribution and service fees payable | 2,262 |
| | (221 | ) | | 260 |
|
Due to brokers | 1,839 |
| | 3,282 |
| | 1,771 |
|
Income tax payable | (1,229 | ) | | 10,517 |
| | 2,110 |
|
Other liabilities and accrued expenses | 3,929 |
| | 355 |
| | 1,763 |
|
Net cash provided by (used in) operating activities | 72,598 |
| | 64,253 |
| | 114,958 |
|
Cash flows from investing activities: | | | | | |
Proceeds from redemptions of equity method investments | 37 |
| | 41 |
| | 363 |
|
Purchases of investments | (63,557 | ) | | (16,901 | ) | | (8,096 | ) |
Proceeds from sales of investments | 13,796 |
| | 25,811 |
| | 20,814 |
|
Purchases of property and equipment | (3,470 | ) | | (3,242 | ) | | (10,183 | ) |
Net cash provided by (used in) investing activities | (53,194 | ) | | 5,709 |
| | 2,898 |
|
Cash flows from financing activities: | | | | | |
Issuance of common stock | 597 |
| | 636 |
| | 642 |
|
Repurchase of common stock | (10,599 | ) | | (9,141 | ) | | (8,040 | ) |
Dividends to stockholders | (178,879 | ) | | (98,313 | ) | | (70,825 | ) |
Distributions to redeemable noncontrolling interests | (10,862 | ) | | (263 | ) | | (342 | ) |
Contributions from redeemable noncontrolling interests | 81,633 |
| | 46,658 |
| | 4,023 |
|
Net cash provided by (used in) financing activities | (118,110 | ) | | (60,423 | ) | | (74,542 | ) |
Net increase (decrease) in cash and cash equivalents | (98,706 | ) | | 9,539 |
| | 43,314 |
|
Effect of foreign exchange rate changes on cash and cash equivalents | (2,013 | ) | | 679 |
| | (2,808 | ) |
Cash and cash equivalents, beginning of the year | 193,452 |
| | 183,234 |
| | 142,728 |
|
Cash and cash equivalents, end of the year | $ | 92,733 |
| | $ | 193,452 |
| | $ | 183,234 |
|
See notes to consolidated financial statements
COHEN & STEERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS—(Continued)
Supplemental disclosures of cash flow information:
The following table provides a reconciliation of cash and cash equivalents reported within the consolidated statements of financial condition to the cash and cash equivalents reported within the consolidated statements of cash flows above:
| | | | | | | | | | | | | | | | | |
| Years ended December 31, |
(in thousands) | 2021 | | 2020 | | 2019 |
Cash and cash equivalents | $ | 184,373 | | | $ | 41,232 | | | $ | 101,352 | |
Cash included in investments (1) | 983 | | | — | | | — | |
Total cash and cash equivalents within consolidated statements of cash flows | $ | 185,356 | | | $ | 41,232 | | | $ | 101,352 | |
________________________
(1) Cash included in investments represents operating cash held in a consolidated Company-sponsored fund.
For the yearsyear ended December 31, 2018, 20172021, 2020 and 2016,2019, the Company paid taxes, net of tax refunds, of approximately $36,795,000, $57,726,000$45.7 million, $27.7 million and $49,331,000,$37.0 million, respectively.
Supplemental disclosures of non-cash investing and financing activities:
In connection with its stock incentive plan, the Company recorded restricted stock unit dividend equivalents, net of forfeitures, in the amount of $6,544,000, $3,356,000$4.3 million, $3.2 million and $1,972,000$6.0 million for the years ended December 31, 2018, 20172021, 2020 and 2016,2019, respectively. These amounts are included in the issuance of restricted stock units and in dividends in the consolidated statements of changes in stockholders' equity.
For the year ended December 31, 2018,Effective September 1, 2019, the Company's proportionate ownership interest in the Cohen & Steers Funds ICAV (ICAV), an Irish alternative investment fund,Preferred Securities and Income SMA Shares, Inc. (PISH) decreased and the Company deconsolidated the assets and liabilities of PISH resulting in a non-cash reduction of $7.2 million from both investments and redeemable noncontrolling interests in order to remove amounts attributable to third-party investors in PISH. The Company redeemed its remaining interest in PISH in December 2019.
Effective January 1, 2019, the Company's proportionate ownership interest in the Cohen & Steers SICAV Global Preferred Securities Fund (SICAV Preferred) decreased and the Company deconsolidated the assets and liabilities of SICAV Preferred resulting in a non-cash reduction of $114.2 million from both investments and redeemable noncontrolling interests.
For the year ended December 31, 2019, the Company's proportionate ownership interest in the Cohen & Steers SICAV Global Real Estate Fund (SICAV GRE) increased and as a result, the Company consolidated the assets and liabilities and the results of operations of ICAV.
Effective March 1, 2016, the Company’s proportionate ownership interest in Cohen & Steers Low Duration Preferred and Income Fund, Inc. (LPX) decreased and the Company deconsolidated the assets and liabilities of LPXSICAV GRE, resulting in a non-cash reductionincrease of approximately $14,036,000 from$46.0 million to both investments and redeemable noncontrolling interest and a non-cash increase of $14,550,000 to equity method investments. Effective October 1, 2016, the Company’s proportionate ownership interest in LPX decreased and the Company recorded a non-cash reclassification of $15,045,000, from equity method investments into available-for-sale investments.
Effective June 1, 2016, the Company’s proportionate ownership interest in Cohen & Steers MLP & Energy Opportunity Fund, Inc. (MLO) decreased and the Company recorded a non-cash reclassification of $12,995,000, from equity method investments into available-for-sale investments.
interests.
F-10
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
Cohen & Steers, Inc. (CNS) was organized as a Delaware corporation on March 17, 2004. CNS is the holding company for its direct and indirect subsidiaries, including Cohen & Steers Capital Management, Inc. (CSCM), Cohen & Steers Securities, LLC (CSS), Cohen & Steers AsiaUK Limited (CSAL)(CSUK), Cohen & Steers UKIreland Limited (CSUK)(CSIL), Cohen & Steers Asia Limited (CSAL) and Cohen & Steers Japan LLCLimited (CSJL) (collectively, the Company).
The Company is a global investment manager specializing in liquid real assets and alternative income, including real estate, preferred securities, listed infrastructure, commodities and natural resource equities, commodities, as well as preferred securities and other incomemulti-strategy solutions. Founded in 1986, the Company is headquartered in New York City, with offices in London, Dublin, Hong Kong and Tokyo.
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The consolidated financial statements set forth herein include the accounts of CNS and its direct and indirect subsidiaries. Intercompany balances and transactions have been eliminated in consolidation.
2. Summary of Significant Accounting Policies
Recently Adopted Accounting Pronouncements—In May 2017,December 2019, the Financial Accounting Standards Board (FASB)
issued new guidanceAccounting Standards Update 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for modification accounting related to share-based payment transactions in order to provide clarity and to reduce current diversity in practice. This new guidance does not fundamentally change the notion of a modification. Instead, the amendments clarify which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting.Income Taxes. The amendments became effective on January 1, 2018 and required prospective application. The Company's adoption of the new guidance did not have a material effect on its consolidated financial statements and related disclosures.
In August 2016, the FASB amended the current guidance on the classification of certain cash receipts and payments in the statement of cash flows. This guidancestandard is intended to unifysimplify various aspects related to income taxes and removes certain exceptions to the currently diverse presentations and classifications, including, among other items, distributions received from equity method investees.general
principles in Topic 740. This amendednew guidance became effective on January 1, 2018 and was adopted retrospectively. The Company made an accounting policy election to use the Cumulative Earnings Approach when determining whether distributions received from equity method investments should be classified as either operating or investing activities within its consolidated statements of cash flows.2021. The Company's adoption and application of the new guidance
standard did not have a material effect on its consolidated financial statements and related disclosures.
In January 2016, the FASB issued new guidance amending the accounting for, among other items, equity investments as well as the presentation and disclosure requirements for financial instruments. This new guidance became effective on January 1, 2018 and required the Company to recognize a cumulative-effect adjustment to the beginning retained earnings of approximately $1,095,000, net of tax. Furthermore, changes in the fair value of the Company’s equity investments carried at fair value are now reported through earnings rather than through other comprehensive income. Additionally, due to the required cumulative-effect method of adoption applied, certain disclosures for prior periods have not been recast to conform with the current period presentation. Lastly, upon adoption of the new guidance, the Company reclassified certain investments previously classified as available-for-sale to trading investments or equity investments at fair value. See Notes 4 and 5 for further discussion about the Company's investments.
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 became effective on January 1, 2018 and the Company elected to adopt the standard using the retrospective method, which required the recasting of prior period amounts. The adoption of the new standard did not have a material impact on the timing of recognition for the Company's revenue but did affect the presentation of certain revenue and expenses on either a gross or net basis.
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The adoption of the new revenue recognition standard resulted in the following changes to the Company's previously reported results for the periods presented (in thousands):
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended December 31, 2017 | | Year Ended December 31, 2016 |
| Previously Reported | | Net Adjustments Due to New Revenue Standard | | Recast | | Previously Reported | | Net Adjustments Due to New Revenue Standard | | Recast |
Revenue: | | | | | | | | | | | |
Investment advisory and administration fees | $ | 346,832 |
| | $ | (10,089 | ) | | $ | 336,743 |
| | $ | 319,667 |
| | $ | (7,808 | ) | | $ | 311,859 |
|
Distribution and service fees | $ | 20,156 |
| | $ | 10,591 |
| | $ | 30,747 |
| | $ | 19,396 |
| | $ | 9,429 |
| | $ | 28,825 |
|
| | | | | | | | | | | |
Expenses: | | | | | | | | | | | |
Distribution and service fees (1) | $ | 39,632 |
| | $ | 10,906 |
| | $ | 50,538 |
| | $ | 39,590 |
| | $ | 10,190 |
| | $ | 49,780 |
|
General and administrative | $ | 52,623 |
| | $ | (10,404 | ) | | $ | 42,219 |
| | $ | 51,558 |
| | $ | (8,569 | ) | | $ | 42,989 |
|
________________________
| |
(1) | The amount presented in the consolidated statements of operations differs from the amount presented within this table due to the reclassification of the amortization of deferred sales commissions previously reported as depreciation and amortization. |
Accounting Estimates—The preparation of the 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 consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Management believes the estimates used in preparing the consolidated financial statements are reasonable and prudent. Actual results could differ from those estimates.
Reclassifications—The Company reclassified certain prior period amounts in the consolidated financial statements to conform with the current period presentation.presentation, primarily related to accrued employee benefits which were reclassified from other liabilities and accrued expenses to accrued compensation and benefits on the Company's consolidated statements of financial condition and cash flows.
Consolidation of Company-sponsored Funds—Investments in Company-sponsored funds and management fees are evaluated at inception and thereafter, if there is a reconsideration event, in order to determine whether to apply the Variable Interest Entity (VIE) model or the Voting Interest Entity (VOE) model. In performing this analysis, all of the Company’s management fees are presumed to be commensurate and at market and are therefore not considered variable interests.
A VIE is an entity in which either (i) the equity investment at risk is not sufficient to permit the entity to finance its own activities without additional financial support or (ii) 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 (i) the power to direct the activities of the VIE that most significantly affect its performance, and (ii) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. InvestmentsSubscriptions 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. Limited partnerships and similar entities are determined to be a VIE when the Company is the general partner and the limited partners do not hold substantive kick-out or participation rights. The Company assesses whether it is the primary beneficiary of any VIEs identified by evaluating its economic interests in the entity held either directly by the Company and its affiliates or indirectly through employees. VIEs for which the Company is deemed to be the primary beneficiary are consolidated.
Investments in Company-sponsored funds that are determined to be VOEs are consolidated when the Company’s ownership interest is greater than 50% of the outstanding voting interests of the fund or when the Company is the general partner of the fund and the limited partners do not have substantive kick-out or participating rights in the fund.
The Company records noncontrolling interests in consolidated funds for which the Company’s ownership is less than 100%.
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The Company records noncontrolling interests in consolidated Company-sponsored funds for which the Company’s ownership is less than 100%.
Cash and Cash Equivalents—Cash and cash equivalents are on deposit with majorseveral highly rated financial institutions and consist ofinclude short-term, highly liquid investments, which are readily convertible into cash and have original maturities of three months or less.
Due from/to Brokers—Accounts formed forThe Company, including the purpose of establishing performance track records andconsolidated Company-sponsored funds, that are consolidatedmay transact with brokers for certain investment activities. The clearing and custody operations for these investment activities are performed pursuant to contractual agreements. The due from/to brokers balance representsbalances represent cash andand/or cash equivalentscollateral balances at brokers/custodians and/or receivables and payables for unsettled securities transactions.transactions with brokers.
Investments—Management of the Company determines the appropriate classification of its investments at the time of purchase and re-evaluates such determination no less than on a quarterly basis. At December 31, 2018, theThe Company's investments were comprised of the following:are categorized as follows:
•Equity investments at fair value, which includesgenerally represent listed equity securities held within the affiliatedconsolidated Company-sponsored funds, that the Company consolidates, individuallisted equity securities held directly for the purposespurpose of establishing performance track records and seed investments in Company-sponsored open-end funds where the Company has neither control nor the ability to exercise significant influence.
•Trading investments, which generally represent debt securities held within the affiliatedconsolidated Company-sponsored funds that the Company consolidates and individuallisted debt securities held directly for the purposespurpose of establishing performance track records.
•Held-to-maturity investments whichgenerally represent fixed incomecorporate investments in U.S. Treasury securities recorded at amortized cost. Under the current expected credit loss model, any expected credit losses are recognized as an allowance, which represents an adjustment to the amortized costs basis. The Company periodically reviewsdid not hold any held-to-maturity investments for other-than-temporary impairments (OTTI). If the Company believes an OTTI exists, an impairment charge will be recognized in the Company’s consolidated statements of operations.at December 31, 2021.
•Equity method investments, which generally represent seed investments in Company-sponsored funds in which the Company owns between 20-50% of the outstanding voting interests in the affiliated fund or when it is determined that the Company is able to exercise significant influence but not control over the investments. When using the equity method, the Company recognizes its respective share of the affiliated investee fund net income or loss for the period which is recorded asin gain (loss) from investments—net in the Company's consolidated statements of operations.
Realized and unrealized gains and losses on equity investments at fair value, trading investments and equity method investments are recorded in gain (loss) from investments—net in the Company's consolidated statements of operations.
From time to time, the Company, including the consolidated Company-sponsored funds, that are consolidated by the Company, entersmay enter into derivative contracts, including options, futures and swaps contracts, to gain exposure to the underlying commodities markets or to economically hedge market and credit risksrisk of the underlying portfolios utilizing options, futures and swaps contracts. Options and futures contracts are measured at fair value based on their settlement price at the close of trading on the associated exchange or board of trade and swaps are measured at fair value based on the underlying futures contracts. Gainportfolios. Gains and losses on derivative contracts are recorded asin gain (loss) from investments—net in the Company's consolidated statements of operations. The fair values of these instruments are recorded in other assets or other liabilities and accrued expenses on the Company's consolidated statements of financial condition. At December 31, 2018, none of the outstanding derivative contracts were subject to a master netting agreement or other similar arrangement.
Additionally, from time to time, the Company, including the affiliatedconsolidated Company-sponsored funds, consolidated by the Company, entersmay enter into forward foreign exchange contracts to economically hedge its currency exposure related to certain client receivables.exposure. These instruments are measured at fair value based on the prevailing forward exchange rate with gains and losses recorded in foreign currency gains (losses)gain (loss)—net in the Company’s consolidated statements of operations. The fair values of these contracts are recorded in other assets or other liabilities and accrued expenses on the Company’s consolidated statements of financial condition.
GoodwillLeases—The Company determines if an arrangement is a lease at inception. The Company has operating leases for corporate offices and Intangible Assets—Goodwill represents the excess of the cost ofcertain information technology equipment which are included in operating lease right-of-use (ROU) assets and operating lease liabilities on the Company’s investment in the net assetsconsolidated statements of an acquired company over the fair value of the underlying identifiable net assets at the date of acquisition. Goodwill
financial condition.
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent obligations to make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized at commencement date based on the net present value of lease payments over the life of the lease. The majority of the Company’s lease agreements do not provide an implicit rate. As a result, the Company used its estimated incremental borrowing rate based on the information available as of lease commencement dates in determining the present value of lease payments. The operating lease ROU assets reflect any upfront lease payments made as well as lease incentives received. The lease terms may include options to extend or terminate the lease and these are factored into the determination of the ROU asset and lease liability at lease inception when and if it is reasonably certain that the Company will exercise that option. Lease expense for fixed lease payments is recognized on a straight-line basis over the lease term.
The Company has certain lease agreements with non-lease components such as maintenance and indefinite-lived intangibleexecutory costs, which are accounted for separately and not included in ROU assets.
ROU 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 impairment whenever events or changes in facts or circumstances indicate that the carrying amount of an asset may not be recoverable. Modification of a lease term would result in remeasurement of the lease liability and a corresponding adjustment to the ROU assets.
Redeemable Noncontrolling Interests—Redeemable noncontrolling interests represent third-party interests in the affiliated funds that the Company consolidates. This interest isconsolidated Company-sponsored funds. These interests are redeemable at the option of the investors and therefore isare not treated as permanent equity. Redeemable noncontrolling interest is remeasuredinterests are recorded at redemptionfair value which approximates the fairredemption 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 funds.funds as well as model-based portfolios. Investment advisory fees are earned pursuant to the terms of investment management agreements and are generally based on a contractual fee rate applied to the average assets in the portfolio.under management. The Company also earns administration fees from certain Company-sponsored open-end and closed-end funds pursuant to the terms of underlying administration contracts. Administration fees are based on the average daily assets under management of such funds. Investment advisory and administration fee revenue is recognized when earned and is recorded net of any fund reimbursements. The investment advisory and administration contracts each include a single performance obligation as the services provided are not separately identifiable and are accounted for as a series satisfied over time using a time-based method (days elapsed). Additionally, investment advisory and administration fees represent variable consideration, as fees are based on average assets under management which fluctuate daily.
In certain instances, the Company may earn performance fees when specified performance hurdles are met during the performance period. Performance fees are forms of variable consideration and are not recognized until it becomes probable that there will not be a significant reversal of the cumulative revenue recognized.
Distribution and Service Fee Revenue—Distribution and service fee revenue is based on the average daily net assets of certain share classes of the Company’sCompany's sponsored open-end funds distributed by CSS. Distribution and service fee revenue is
earned daily and is generally recorded gross of any third-party distribution and service fee expense for applicable share
classes.
Distribution fee agreements include a single performance obligation that is satisfied at a point in time when an investor purchases shares in a Company-sponsored open-end fund. Distribution fees represent variable consideration, as fees are based on average assets under management which fluctuate daily. For the years ended December 31, 2018, 2017 and 2016,all periods presented, a portion of the distribution fee revenue recognized in the period may relate to performance obligations satisfied (or partially satisfied) in prior periods. Service fee agreements include a single performance obligation as the services provided are not separately identifiable and are accounted for as a series satisfied over time using a time-based method (days elapsed). ServiceAdditionally, distribution and service fees represent variable consideration, as fees are based on average assets under management which fluctuate daily.
Portfolio Consulting and Other—The Company earns portfolio consulting and other fees by (i) providing portfolio consulting services in connection with model-based strategy accounts, (ii) earning a licensing fee for the use of the Company's proprietary indexes and (iii) providing portfolio monitoring services related to a number of unit investment trusts. Revenue is earned pursuant to the terms of the underlying contracts and the fee schedules for these relationships vary based on the type of services the Company provides for each relationship. The majority of the Company's revenue from portfolio consulting and other is recognized over time and represents variable consideration, as fees are based on average assets under advisement which fluctuate daily.
Distribution and Service Fee Expense—Distribution and service fee expense includes distribution fees, shareholder servicing fees and intermediary assistance payments. Distribution and service fee expense is recorded on an accrual basis.
Distribution fee expense representsfees represent payments made to qualified intermediaries for (i) assistance in connection with the distribution of the Company’sCompany's sponsored open-end funds’funds' shares and (ii) for other expenses such as advertising, costs and printing and
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
distribution of prospectuses to investors. Such amounts may also be used to pay financial intermediaries for services as specified in the terms of written agreements complying with Rule 12b-1 of the Investment Company Act of 1940 (Rule 12b-1). The Company pays distribution fee expense1940. Distribution fees are based on the average daily net assets under management of certain share classes of certain of the funds.
Shareholder servicing fee expense representsfees represent payments made to qualified intermediaries for shareholder account service and maintenance. These services are provided pursuant to written agreements with such qualified institutions. The Company pays shareholderShareholder servicing fee expensefees are generally based on the average daily net assets under management or the number of accounts being serviced.
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
management.
Intermediary assistance payments represent payments to qualified intermediaries for activities related to distribution, shareholder servicing andas well as marketing and support of the Company’sCompany's sponsored open-end funds and are incremental to those described above. Intermediary assistance payments are generally based on the average daily net assets under management or the number of accounts being serviced.management.
Stock-based Compensation—The Company recognizes compensation expense for the grant-date fair value of restricted stock unit awards of equity instruments to certain employees. This expense is recognized over the period during which employees are required to provide service. Forfeitures are recorded as incurred. Any change to the key terms of an employee’s award subsequent to the grant date is evaluated and, if necessary, accounted for as a modification. If the modification results in the remeasurement of the fair value of the award, the remeasured compensation cost is recognized over the remaining service period.
Income Taxes—The Company records the current and deferred tax consequences of all transactions that have been recognized in the 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 at tax rates that are expected to apply in those years. Deferred tax liabilities are recognized for temporary differences that will result in taxable income in future years at tax rates that are expected to apply in those 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 calculation of tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across the Company’sCompany's global operations. A tax benefit from an uncertain tax position may beis recognized when it is more likely than not that the position will be sustained upon examination, including resolution of any related appeals or litigation processes, on the basis of the technical merits. The Company records potential interest and penalties related to uncertain tax positions in the provision for income taxes in the consolidated statements of operations.
Currency Translation and Transactions—Assets and liabilities of subsidiaries having non-U.S. dollar functional currencies are translated at exchange rates at the applicable consolidated statement of financial condition date. Revenue and expenses of such subsidiaries 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’sCompany's consolidated statements of comprehensive income. The cumulative translation adjustment was $(7,323,000), $(4,781,000)$(5.9) million, $(4.1) million and $(6,845,000)$(6.3) million as of December 31, 2018, 20172021, 2020 and 2016, respectively.2019, respectively, and was reported within accumulated other comprehensive income (loss) on the consolidated statements of financial condition. Gains or losses resulting from transactions denominated in currencies other than the U.S. dollar held bywithin certain foreign subsidiaries are included in non-operating income (loss) in the consolidated statements of operations. Gainsand gains and losses arising on revaluation of U.S. dollar-denominated assets and liabilities held by certain foreign subsidiaries are also included in non-operating incomeforeign currency gain (loss)-net in the Company’s consolidated statements of operations.
Comprehensive Income—The Company reports all changes in comprehensive income in the consolidated statements of comprehensive income. Comprehensive income generally includes net income or loss attributable to common stockholders and amounts attributable to foreign currency translation gain (loss), net of tax.
Recently Issued Accounting Pronouncements—In February 2018, the FASB issued new guidance allowing entities to reclassify certain tax effects related to the enactment of the Tax Cuts and Jobs Act (the Tax Act) from accumulated other comprehensive income (AOCI) to retained earnings. Prior to the issuance of the new guidance, a portion of the previously recognized deferred tax effects recorded in AOCI was "left stranded" in AOCI as the effect of remeasuring the deferred taxes using the reduced federal corporate income tax rate was required to be recorded through income. The new guidance allows these stranded tax effects to be reclassified from AOCI to retained earnings. The new guidance will be effective on January 1, 2019, with early adoption permitted and is to be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Act is recognized. The adoption of the new guidance on a prospective basis is not expected to have a material effect on the Company's consolidated financial statements and related disclosures.
In August 2017, the FASB issued new guidance amending the accounting for hedging activities. The new guidance (i) expands hedge accounting for nonfinancial and financial risk components and amends measurement methodologies to more closely align hedge accounting with an entity's risk management activities, (ii) decreases the complexity of preparing and understanding hedge results through eliminating the separate measurement and reporting of hedge ineffectiveness, (iii) enhances transparency, comparability and understandability of hedge results through enhanced disclosures and changing the
.
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
presentation of hedge results to align the effects of the hedging instrument and the hedged item and (iv) reduces the cost and complexity of applying hedge accounting by simplifying the manner in which assessments of hedge effectiveness may be performed. The new guidance will be effective on January 1, 2019, with early adoption permitted. The adoption of the new guidance is not expected to have a material effect on the Company's consolidated financial statements and related disclosures.
In January 2017, the FASB issued guidance to simplify the goodwill impairment test by removing the requirement to perform a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This new guidance will be effective on January 1, 2020. The Company does not expect the adoption of the new guidance to have a material effect on its consolidated financial statements and related disclosures.
In February 2016, the FASB issued guidance introducing a new lease model which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. The new guidance establishes a right-of-use model (ROU) that requires a lessee to recognize an ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating which will affect expense recognition in the income statement. The guidance also requires disclosures by lessees and lessors to enable users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. In July and December 2018, the FASB issued amendments to the guidance intended to provide supplemental narrow-scope improvements and clarifications. The new guidance, along with the amendments, is effective on January 1, 2019, with early adoption permitted. The Company expects to adopt the new standard along with certain allowable practical expedients using the modified retrospective transition approach, which requires the recasting of prior period amounts. Upon adoption of the new standard, at January 1, 2019, the Company will record an ROU asset of $48.5 million, net of deferred rent of $5.8 million, and a lease liability of $54.3 million primarily related to real estate operating leases. The adoption of the new standard is not expected to affect the Company's consolidated statements of operations and cash flows.
3. Revenue
The following tables summarize revenue recognized from contracts with customers by client domicile and revenue by vehicle forinvestment vehicle: | | | | | | | | | | | | | | | | | |
| Years ended December 31, |
(in thousands) | 2021 | | 2020 | | 2019 |
Client domicile: | | | | | |
North America | $ | 506,364 | | | $ | 363,834 | | | $ | 352,629 | |
Japan | 38,039 | | | 32,517 | | | 33,967 | |
Europe, Middle East and Africa | 26,330 | | | 19,869 | | | 11,087 | |
Asia Pacific excluding Japan | 13,099 | | | 11,316 | | | 13,147 | |
Total | $ | 583,832 | | | $ | 427,536 | | | $ | 410,830 | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | | | | | | | | | | | | | |
| Years ended December 31, |
(in thousands) | 2021 | | 2020 | | 2019 |
Investment vehicle: | | | | | |
Open-end funds (1) | $ | 328,647 | | | $ | 233,634 | | | $ | 219,982 | |
Institutional accounts | 146,345 | | | 115,876 | | | 110,346 | |
Closed-end funds | 108,840 | | | 78,026 | | | 80,502 | |
| | | | | |
Total | $ | 583,832 | | | $ | 427,536 | | | $ | 410,830 | |
________________________
(1) Included distribution and service fees and other revenue.
4. Investments
The following table summarizes the periods presented (in thousands)Company’s investments: | | | | | | | | | | | |
(in thousands) | December 31, 2021 | | December 31, 2020 |
Equity investments at fair value | $ | 130,930 | | | $ | 94,089 | |
Trading | 23,711 | | | 18,700 | |
Held-to-maturity carried at amortized cost (1) | — | | | 41,648 | |
Equity method | 13 | | | 541 | |
Total investments | $ | 154,654 | | | $ | 154,978 | |
_________________________
(1) At December 31, 2020, held-to-maturity investments comprised of U.S. Treasury securities had a fair value of $41.7 million. These securities would have been classified as level 2 within the fair value hierarchy if carried at fair value.
The following table summarizes gain (loss) from investments—net, including derivative financial instruments, the majority of which are used to economically hedge certain exposures (see Note 6, Derivatives): | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands) | 2021 | | 2020 | | 2019 |
Net realized gains (losses) during the period | $ | 8,402 | | | $ | (5,395) | | | $ | 12,227 | |
Net unrealized gains (losses) during the period on investments still held at the end of the period | 10,382 | | | 1,279 | | | 9,446 | |
Gain (loss) from investments—net (1) | $ | 18,784 | | | $ | (4,116) | | | $ | 21,673 | |
_________________________
(1) Included gain (loss) attributable to redeemable noncontrolling interests.
|
| | | | | | | | | | | |
| Year ended December 31, |
| 2018 | | 2017 | | 2016 |
Client domicile: | | | | | |
North America | $ | 322,964 |
| | $ | 314,021 |
| | $ | 286,957 |
|
Japan | 35,283 |
| | 42,303 |
| | 43,458 |
|
Asia excluding Japan | 12,493 |
| | 11,496 |
| | 9,852 |
|
Europe | 10,371 |
| | 10,876 |
| | 11,230 |
|
Total | $ | 381,111 |
| | $ | 378,696 |
| | $ | 351,497 |
|
|
| | | | | | | | | | | |
| Year ended December 31, |
| 2018 | | 2017 | | 2016 |
Vehicle: | | | | | |
Open-end funds | $ | 192,735 |
| | $ | 188,613 |
| | $ | 172,371 |
|
Closed-end funds | 77,270 |
| | 78,670 |
| | 76,108 |
|
Institutional accounts | 100,311 |
| | 100,207 |
| | 92,205 |
|
Portfolio consulting and other | 10,795 |
| | 11,206 |
| | 10,813 |
|
Total | $ | 381,111 |
| | $ | 378,696 |
| | $ | 351,497 |
|
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
4. Investments
The following tables summarize the Company’s investments as of At December 31, 20182021, the Company's consolidated VIEs included the Cohen & Steers SICAV Global Listed Infrastructure Fund (GLI SICAV), SICAV GRE, the Cohen & Steers SICAV Diversified Real Assets Fund (SICAV RAP), the Cohen & Steers Co-Investment Partnership, L.P. (GRP-CIP) and 2017 (in thousands):
|
| | | |
| December 31, 2018 |
Equity investments at fair value | $ | 66,795 |
|
Trading | 108,363 |
|
Held-to-maturity (1) | 49,748 |
|
Equity method | 26 |
|
Total investments | $ | 224,932 |
|
_________________________
| |
(1) | At December 31, 2018, held-to-maturity investments had an amortized cost of approximately $49.7 million and a fair value of approximately $49.8 million, with original maturities ranging from 6 to 24 months. |
|
| | | |
| December 31, 2017 |
Trading | $ | 74,856 |
|
Equity method | 6,176 |
|
Available-for-sale | 27,074 |
|
Total investments | $ | 108,106 |
|
The Company seeded one new fund for the year endedCohen & Steers Real Estate Opportunities Fund, L.P. (REOF). At December 31, 20182020, the Company's consolidated VIEs included GLI SICAV, SICAV GRE, SICAV RAP and two new funds for the year ended December 31, 2017.GRP-CIP.
The following tables summarize gain (loss) from investments for the years ended December 31, 2018, 2017 and 2016 (in thousands):
|
| | | |
| December 31, 2018 |
Net realized gains (losses) during the period | $ | (1,486 | ) |
Net unrealized gains (losses) during the period on investments still held at the end of the period | (12,778 | ) |
Gain (loss) from investments—net (1) | $ | (14,264 | ) |
_________________________
| |
(1) | Included net income (loss) attributable to redeemable noncontrolling interests. |
|
| | | | | | | |
| Year Ended December 31, |
| 2017 | | 2016 |
Gain (loss) from trading investments—net (1) | $ | 1,915 |
| | $ | 218 |
|
Equity in earnings (losses) of affiliates—net | (242 | ) | | 3,324 |
|
Gain (loss) from available-for-sale investments—net | 347 |
| | 1,451 |
|
Gain (loss) from investments—net | $ | 2,020 |
| | $ | 4,993 |
|
_________________________
(1) Included net income (loss) attributable to redeemable noncontrolling interests.
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following tables summarize the consolidated statements of financial condition attributable to the Company's consolidated VIEs, which included the Cohen & Steers SICAV Global Listed Infrastructure Fund (GLI SICAV), the Cohen & Steers Co-Investment Partnership, L.P. (GRP-CIP), the Cohen & Steers SICAV Global Preferred Securities Fund (SICAV Preferred)VIEs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2021 |
(in thousands) | GLI SICAV | | SICAV GRE | | SICAV RAP | | GRP-CIP | | REOF | | Total |
Assets (1) | | | | | | | | | | | |
Investments | $ | 8,266 | | | $ | 57,354 | | | $ | 59,493 | | | $ | 150 | | | $ | 2,649 | | | $ | 127,912 | |
Due from brokers | — | | | 1,107 | | | 86 | | | 147 | | | — | | | 1,340 | |
Other assets | 42 | | | 214 | | | 740 | | | — | | | 593 | | | 1,589 | |
Total assets | $ | 8,308 | | | $ | 58,675 | | | $ | 60,319 | | | $ | 297 | | | $ | 3,242 | | | $ | 130,841 | |
| | | | | | | | | | | |
Liabilities (1) | | | | | | | | | | | |
Due to brokers | $ | — | | | $ | 347 | | | $ | 579 | | | $ | — | | | $ | — | | | 926 | |
Other liabilities and accrued expenses | 35 | | | 126 | | | 108 | | | 5 | | | 415 | | | 689 | |
Total liabilities | $ | 35 | | | $ | 473 | | | $ | 687 | | | $ | 5 | | | $ | 415 | | | $ | 1,615 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2020 |
(in thousands) | GLI SICAV | | SICAV GRE | | SICAV RAP | | GRP-CIP | | Total |
Assets (1) | | | | | | | | | |
Investments | $ | 7,140 | | | $ | 39,672 | | | $ | 33,654 | | | $ | 277 | | | $ | 80,743 | |
Due from brokers | 69 | | | 45 | | | 52 | | | 57 | | | 223 | |
Other assets | 44 | | | 359 | | | 234 | | | — | | | 637 | |
Total assets | $ | 7,253 | | | $ | 40,076 | | | $ | 33,940 | | | $ | 334 | | | $ | 81,603 | |
| | | | | | | | | |
Liabilities (1) | | | | | | | | | |
Due to brokers | $ | 27 | | | $ | 40 | | | $ | 61 | | | $ | — | | | $ | 128 | |
Other liabilities and accrued expenses | 29 | | | 211 | | | 81 | | | 5 | | | 326 | |
Total liabilities | $ | 56 | | | $ | 251 | | | $ | 142 | | | $ | 5 | | | $ | 454 | |
_________________________
(1) The assets may only be used to settle obligations of each VIE and the Cohen & Steers SICAV Diversified Real Assets Fund (SICAV RAP)liabilities are the sole obligation of each VIE, for which creditors do not have recourse to the years ended December 31, 2018 and 2017 (in thousands):general credit of the Company.
|
| | | | | | | | | | | | | | | | | | | |
| December 31, 2018 |
| GLI SICAV | | GRP-CIP | | SICAV Preferred | | SICAV RAP | | Total |
Assets (1) | | | | | | | | | |
Investments | $ | 5,704 |
| | $ | 550 |
| | $ | 120,930 |
| | $ | 8,929 |
| | $ | 136,113 |
|
Due from brokers | 49 |
| | 103 |
| | 10,868 |
| | 167 |
| | 11,187 |
|
Other assets | 171 |
| | — |
| | 2,136 |
| | 297 |
| | 2,604 |
|
Total assets | $ | 5,924 |
| | $ | 653 |
| | $ | 133,934 |
| | $ | 9,393 |
| | $ | 149,904 |
|
| | | | | | | | | |
Liabilities (1) | | | | | | | | | |
Due to brokers | $ | — |
| | $ | — |
| | $ | 4,398 |
| | $ | 24 |
| | $ | 4,422 |
|
Other liabilities and accrued expenses | 74 |
| | 5 |
| | 212 |
| | 149 |
| | 440 |
|
Total liabilities | $ | 74 |
| | $ | 5 |
| | $ | 4,610 |
| | $ | 173 |
| | $ | 4,862 |
|
|
| | | | | | | | | | | | | | | |
| December 31, 2017 |
| GLI SICAV | | GRP-CIP | | SICAV Preferred | | Total |
Assets (1) | | | | | | | |
Investments | $ | 5,961 |
| | $ | 1,330 |
| | $ | 60,810 |
| | $ | 68,101 |
|
Due from brokers | 285 |
| | 202 |
| | 4,923 |
| | 5,410 |
|
Other assets | 32 |
| | — |
| | 899 |
| | 931 |
|
Total assets | $ | 6,278 |
| | $ | 1,532 |
| | $ | 66,632 |
| | $ | 74,442 |
|
| | | | | | | |
Liabilities (1) | | | | | | | |
Due to brokers | $ | 35 |
| | $ | — |
| | $ | 3,168 |
| | $ | 3,203 |
|
Other liabilities and accrued expenses | 87 |
| | 5 |
| | 199 |
| | 291 |
|
Total liabilities | $ | 122 |
| | $ | 5 |
| | $ | 3,367 |
| | $ | 3,494 |
|
_________________________
| |
(1) | The assets may only be used to settle obligations of each VIE and the liabilities are the sole obligation of each VIE, for which creditors do not have recourse to the general credit of the Company. |
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following tables summarize the cost, gross unrealized gains, gross unrealized losses and fair value of available-for-sale investments for the year ended December 31, 2017 (in thousands):
|
| | | | | | | | | | | | | | | |
| Cost | | Gross Unrealized Gains | | Gross Unrealized Losses (1) | | Fair Value |
Common stocks | $ | 6,782 |
| | $ | 639 |
| | $ | (183 | ) | �� | $ | 7,238 |
|
Company-sponsored funds | 13,376 |
| | 1,269 |
| | (13 | ) | | 14,632 |
|
Fixed income securities | 3,966 |
| | 15 |
| | (20 | ) | | 3,961 |
|
Preferred securities | 1,100 |
| | 29 |
| | (5 | ) | | 1,124 |
|
Other | 100 |
| | 19 |
| | — |
| | 119 |
|
Total available-for-sale investments | $ | 25,324 |
| | $ | 1,971 |
| | $ | (221 | ) | | $ | 27,074 |
|
_________________________
(1) At December 31, 2017, there were no securities with material unrealized losses continuously for a period of more than 12 months.
Available-for-sale investments with a fair value of approximately $6,086,000 at December 31, 2017 were in an unrealized loss position.
At December 31, 2017, unrealized losses on available-for-sale investments were generally caused by changes in market conditions. When evaluating whether an unrealized loss on an available-for-sale investment is other than temporary, the Company reviews such factors as the extent and duration of the loss as well as qualitative and quantitative information about the financial condition and near-term prospects of the issuers. Furthermore, the Company determined that it had the ability and intent to hold the remaining available-for-sale investments for which no other-than-temporary impairment has occurred until a recovery of fair value. Accordingly, impairment of these investments, if any, was considered temporary.
The following table summarizes sales proceeds, gross realized gains and losses from available-for-sale investments for the years ended December 31, 2017 and 2016 (in thousands):
|
| | | | | | | |
| Year Ended December 31, |
| 2017 | | 2016 |
Proceeds from sales | $ | 25,812 |
| | $ | 20,823 |
|
Gross realized gains | 714 |
| | 1,879 |
|
Gross realized losses | (367 | ) | | (428 | ) |
5. Fair Value
Accounting Standards 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. If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability.
•Level 3—Valuations derived from valuation techniques in which significant inputs or significant value drivers are unobservable.
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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.
The following table presentstables present fair value measurementsmeasurements: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2021 |
(in thousands) | Level 1 | | Level 2 | | Level 3 | | Investments Measured at NAV (1) | | Total |
Cash equivalents | $ | 104,591 | | | $ | — | | | $ | — | | | $ | — | | | $ | 104,591 | |
Equity investments at fair value: | | | | | | | | | |
Common stocks | $ | 126,301 | | | $ | 116 | | | $ | — | | | $ | — | | | $ | 126,417 | |
Company-sponsored funds | 103 | | | — | | | — | | | — | | | 103 | |
Limited partnership interests | 986 | | | — | | | — | | | 1,816 | | | 2,802 | |
Preferred securities | 1,465 | | | — | | | — | | | — | | | 1,465 | |
Other | — | | | — | | | — | | | 143 | | | 143 | |
Total | $ | 128,855 | | | $ | 116 | | | $ | — | | | $ | 1,959 | | | $ | 130,930 | |
Trading investments: | | | | | | | | | |
Fixed income | $ | — | | | $ | 23,711 | | | $ | — | | | $ | — | | | $ | 23,711 | |
| | | | | | | | | |
Equity method investments | $ | — | | | $ | — | | | $ | — | | | $ | 13 | | | $ | 13 | |
| | | | | | | | | |
Total investments | $ | 128,855 | | | $ | 23,827 | | | $ | — | | | $ | 1,972 | | | $ | 154,654 | |
| | | | | | | | | |
Derivatives - assets: | | | | | | | | | |
Total return swaps - commodities (2) | $ | — | | | $ | 481 | | | $ | — | | | $ | — | | | $ | 481 | |
Forward contracts - foreign exchange | — | | | 209 | | | — | | | — | | | 209 | |
Total | $ | — | | | $ | 690 | | | $ | — | | | $ | — | | | $ | 690 | |
Derivatives - liabilities: | | | | | | | | | |
Total return swaps - commodities | $ | — | | | $ | 17 | | | $ | — | | | $ | — | | | $ | 17 | |
Total return swaps - equities | — | | | 867 | | | — | | | — | | | 867 | |
Forward contracts - foreign exchange | — | | | 3 | | | — | | | — | | | 3 | |
Total | $ | — | | | $ | 887 | | | $ | — | | | $ | — | | | $ | 887 | |
________________________
(1) Comprised of certain investments measured at fair value using net asset value (NAV) as of December 31, 2018 (in thousands):a practical expedient.
(2) Included total return swaps - commodities held by consolidated Company-sponsored funds.
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
| | | | | | | | | | | | | | | | December 31, 2020 |
| Level 1 | | Level 2 | | Level 3 | | Investments Measured at NAV | | Investments Carried at Amortized Cost | | Total | |
(in thousands) | | (in thousands) | Level 1 | | Level 2 | | Level 3 | | Investments Measured at NAV (1) | | Investments Carried at Amortized Cost | | Total |
Cash equivalents | $ | 78,147 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 78,147 |
| Cash equivalents | $ | 23,372 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 23,372 | |
Equity investments at fair value | | | | | | | | | | | | |
Equity investments at fair value: | | Equity investments at fair value: | | | | | | | | | | | |
Common stocks | $ | 21,982 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 21,982 |
| Common stocks | $ | 91,614 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 91,614 | |
Company-sponsored funds | 9,456 |
| | — |
| | — |
| | — |
| | — |
| | 9,456 |
| Company-sponsored funds | 246 | | | — | | | — | | | — | | | — | | | 246 | |
Limited partnership interests | 1,056 |
| | — |
| | — |
| | 550 |
| | — |
| | 1,606 |
| Limited partnership interests | 831 | | | — | | | — | | | 277 | | | — | | | 1,108 | |
Preferred securities | 30,448 |
| | 3,193 |
| | — |
| | — |
| | — |
| | 33,641 |
| Preferred securities | 983 | | | 12 | | | — | | | — | | | — | | | 995 | |
Other | — |
| | — |
| | — |
| | 110 |
| | — |
| | 110 |
| Other | — | | | — | | | — | | | 126 | | | — | | | 126 | |
Total | $ | 62,942 |
| | $ | 3,193 |
| | $ | — |
| | $ | 660 |
| | $ | — |
| | $ | 66,795 |
| Total | $ | 93,674 | | | $ | 12 | | | $ | — | | | $ | 403 | | | $ | — | | | $ | 94,089 | |
Trading investments | | | | | | | | | | | | |
Trading investments: | | Trading investments: | | | | | | | | | | | |
Fixed income | $ | — |
| | $ | 108,363 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 108,363 |
| Fixed income | $ | — | | | $ | 18,700 | | | $ | — | | | $ | — | | | $ | — | | | $ | 18,700 | |
Total | $ | — |
| | $ | 108,363 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 108,363 |
| |
Held-to-maturity investments | | | | | | | | | | | | Held-to-maturity investments | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 41,648 | | | $ | 41,648 | |
Fixed income | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 49,748 |
| | $ | 49,748 |
| |
Total | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 49,748 |
| | $ | 49,748 |
| |
Equity method investments | $ | — |
| | $ | — |
| | $ | — |
| | $ | 26 |
| | $ | — |
| | $ | 26 |
| Equity method investments | $ | — | | | $ | — | | | $ | — | | | $ | 541 | | | $ | — | | | $ | 541 | |
| | | | | | | | | | | | | | | | | | | | | | | |
Total investments | $ | 62,942 |
| | $ | 111,556 |
| | $ | — |
| | $ | 686 |
| | $ | 49,748 |
| | $ | 224,932 |
| Total investments | $ | 93,674 | | | $ | 18,712 | | | $ | — | | | $ | 944 | | | $ | 41,648 | | | $ | 154,978 | |
Derivatives - assets | | | | | | | | | | | | |
Commodity contracts | $ | 486 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 486 |
| |
Commodity swap contracts | — |
| | 739 |
| | — |
| | — |
| | — |
| | 739 |
| |
| Derivatives - assets: | | Derivatives - assets: | |
Futures - commodities | | Futures - commodities | $ | 1,012 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 1,012 | |
| Derivatives - liabilities: | | Derivatives - liabilities: | | | | | | | | | | | |
Futures - commodities | | Futures - commodities | $ | 416 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 416 | |
Total return swaps - commodities | | Total return swaps - commodities | — | | | 136 | | | — | | | — | | | — | | | 136 | |
Total return swaps - equities | | Total return swaps - equities | — | | | 1,562 | | | — | | | — | | | — | | | 1,562 | |
Forward contracts - foreign exchange | | Forward contracts - foreign exchange | — | | | 345 | | | — | | | — | | | — | | | 345 | |
Total | $ | 486 |
| | $ | 739 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 1,225 |
| Total | $ | 416 | | | $ | 2,043 | | | $ | — | | | $ | — | | | $ | — | | | $ | 2,459 | |
Derivatives - liabilities | | | | | | | | | | | | |
Commodity contracts | $ | 2,181 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 2,181 |
| |
Foreign exchange contracts | — |
| | 205 |
| | — |
| | — |
| | — |
| | 205 |
| |
Total | $ | 2,181 |
| | $ | 205 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 2,386 |
| |
________________________
(1) Comprised of certain investments measured at fair value using NAV as a practical expedient.
Cash equivalents were comprised of investments in actively traded U.S. Treasury money market funds measured at NAV.
Equity investments at fair value classified as level 2 were comprised of certaincommon stocks and preferred securities with predominately equity-like characteristics whose fairfor which quoted prices in active markets are not available. Fair values arefor the common stocks classified as level 2 were generally based on quoted prices for similar instruments in active markets. Fair values for the preferred securities classified as level 2 were generally determined using third-party pricing services. The pricing services may utilize pricing models, and inputs into those models may include reported trades, executable bid and ask prices, broker-dealer quotations, prices or yields of similar securities, benchmark curves and other market information. The pricing services may use a matrix approach, which considers information regarding securities with similar characteristics to determine the valuation for a security.
Trading investments classified as level 2 were comprised of U.S. Treasury securities held within consolidated funds carried at amortized cost, which approximates fair value,and corporate debt securities, as well as certain preferred securities with
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
predominately debt-like characteristics. The fair value amounts were generally determined using third-party pricing services. The pricing services may utilize evaluated pricing models that vary by asset class and incorporate available trade, bid and other market information. Since these securities do not trade on a daily basis, the pricing services evaluate pricing applications and apply available information through processes such as yield curves, benchmarking of like securities, sector groupings, and matrix pricing, to prepare evaluations.
Investments measured at NAV were comprised of certain investments measured at fair value using NAV (or its equivalent) as a practical expedient. These investments were comprised of:
Equity investments at fair value - limited partner interests in limited partnership vehicles that invest in non-registered real estate funds and the Company's co-investment in a Cayman trust invested in global listed infrastructure securities, both of which are valued based on the NAVs of the underlying investments. At December 31, 2018, the Company did not have the ability to redeem the interests in the limited partnership vehicles; there were no contractual restrictions on the Company's ability to redeem its interest in the Cayman trust.
Equity method investments - the Company's partnership interest in a Company-sponsored limited partnership that invests in non-registered real estate funds, which approximated its fair value based on the fund's NAV. At December 31, 2018, the Company's ownership in this limited partnership was approximately 0.2%. The Company's risk with respect to this investment is limited to its equity ownership and any uncollected management fees. At December 31, 2018, the Company did not have the ability to redeem this investment.
Held-to-maturity investments were comprised of U.S. Treasury securities, which were directly issued by the U.S. government, with original maturities of 6 to 24 months. These securities were purchased with the intent to hold to maturity and are recorded at amortized cost.
Investments measured at NAV and held-to-maturity investments have not been classified in the fair value hierarchy. The amounts presented in the above table are intended to permit reconciliation of the fair value hierarchy to the amounts presented on the consolidated statement of financial position.
Commodity swap contracts classified as level 2 were valued based on the underlying futures contracts.
Foreign currency exchange contracts classified as level 2 were valued based on the prevailing forward exchange rate.
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents fair value measurements as of December 31, 2017 (in thousands):
|
| | | | | | | | | | | | | | | | | | | |
| Level 1 | | Level 2 | | Level 3 | | Investments Measured at NAV | | Total |
Cash equivalents | $ | 173,270 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 173,270 |
|
Trading investments | | | | | | | | | |
Common stocks | $ | 5,961 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 5,961 |
|
Fixed income | — |
| | 6,755 |
| | — |
| | — |
| | 6,755 |
|
Limited partnership interests | — |
| | — |
| | 605 |
| | 725 |
| | 1,330 |
|
Preferred securities | 7,658 |
| | 53,152 |
| | — |
| | — |
| | 60,810 |
|
Total | $ | 13,619 |
| | $ | 59,907 |
| | $ | 605 |
| | $ | 725 |
| | $ | 74,856 |
|
Equity method investments | $ | — |
| | $ | — |
| | $ | — |
| | $ | 6,176 |
| | $ | 6,176 |
|
Available-for-sale investments | | | | | | | | | |
Common stocks | $ | 7,238 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 7,238 |
|
Company-sponsored funds | 14,632 |
| | — |
| | — |
| | — |
| | 14,632 |
|
Fixed income | — |
| | 3,961 |
| | — |
| | — |
| | 3,961 |
|
Preferred securities | 999 |
| | 125 |
| | — |
| | — |
| | 1,124 |
|
Other | — |
| | — |
| | — |
| | 119 |
| | 119 |
|
Total | $ | 22,869 |
| | $ | 4,086 |
| | $ | — |
| | $ | 119 |
| | $ | 27,074 |
|
| | | | | | | | | |
Total investments | $ | 36,488 |
| | $ | 63,993 |
| | $ | 605 |
| | $ | 7,020 |
| | $ | 108,106 |
|
Derivatives - assets | | | | | | | | | |
Commodity contracts | $ | 487 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 487 |
|
Total | $ | 487 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 487 |
|
Derivatives - liabilities | | | | | | | | | |
Commodity contracts | $ | 286 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 286 |
|
Foreign exchange contracts | — |
| | 64 |
| | — |
| | — |
| | 64 |
|
Total | $ | 286 |
| | $ | 64 |
| | $ | — |
| | $ | — |
| | $ | 350 |
|
Cash equivalents were comprised of investments in actively traded U.S. Treasury money market funds measured at NAV.
Trading investments in fixed income securities classified as level 2 in the above table were comprised of U.S. Treasury securities carried at amortized cost, which approximates fair value. Trading investments in preferred securities classified as level 2 were comprised of corporate debt and certain preferred securities. The fair value amounts were generally determined using third-party pricing services. The pricing services may utilize evaluated pricing models that vary by asset class and incorporate available trade, bid and other market information. Since these securities do not trade on a daily basis, the pricing services evaluate pricing applications and apply available information through processes such as yield curves, benchmarking of like securities, sector groupings, and matrix pricing, to prepare evaluations.
Trading investments classified as level 3 in the above table were comprised of a limited partner interest in a limited partnership vehicle that invested in a private equity vehicle that invested directly in real estate which was valued using a contractual selling price.
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Available-for-sale investments classified as level 2 in the above table were primarily comprised of corporate bonds and certain preferred securities whose fair values are generally determined using third-party pricing services. The pricing services may utilize pricing models, and inputs into those models may include reported trades, executable bid and ask prices, broker-dealer quotations, prices or yields of similar securities, benchmark curves and other market information. The pricing services may use a matrix approach, which considers information regarding securities with similar characteristics to determine the valuation for a security.
Investments measured at NAV were comprised of certain investments measured at fair value using NAV (or its equivalent) as a practical expedient.expedient as follows:
•Equity investments at fair value included:
◦interests in private real estate funds held by the Company's consolidated funds; and
◦the Company's co-investment in a Cayman trust invested in global listed infrastructure securities (which is included in "Other" in the leveling table).
At December 31, 2021 and 2020, the Company did not have the ability to redeem the interests in private real estate funds held by the Company's consolidated funds. There were no contractual restrictions on the Company's ability to redeem its interest in the Cayman trust.
•Equity method investments included the Company's partnership interest in the Cohen & Steers Global Realty Partners III-TE, L.P. (GRP-TE) which invests in non-registered real estate funds. The Company's ownership interest was approximately 0.2% and the Company did not have the ability to redeem the investment at either December 31, 2021 or 2020. In addition, at December 31, 2020, the Cohen & Steers Global Realty Focus Fund (GRF), a series of Cohen & Steers Series LP was included. During the first quarter of 2021, GRF was redeemed.
Held-to-maturity investments at December 31, 2020 were comprised of U.S. Treasury securities directly issued by the U.S. government. These securities were purchased with the intent to hold to maturity and were recorded at amortized cost.
Investments measured at NAV as a practical expedient and investments carried at amortized cost have not been classified in the fair value hierarchy. The fair value amounts presented in the above tabletables are intended to permit reconciliation of the fair value hierarchy to the amounts presented on the consolidated statementstatements of financial position. These investmentscondition.
Swap contracts classified as level 2 were comprised of:
Trading investments - limited partner interests in limited partnership vehicles that invest in non-registered real estate funds, which are valued based on the NAVs of the underlying funds. At December 31, 2017, the Company did not have the ability to redeem these interests.
Equity method investments - the Company's partnership interests in Company-sponsored limited partnerships. One such partnership invests in private equity vehicles that invest directly in real estate and non-registered real estate funds and the Company did not have the ability to redeem this investment. The other partnership invests indirectly in exchange-traded commodity futures contracts and other commodity-related derivatives and the Company had the ability to redeem this investment monthly at NAV with prior written notice of 5 days.
Available-for-sale investments - the Company's co-investment in a Cayman trust invested in global listed infrastructure securities. There were no contractual restrictions on the Company's ability to redeem this investment.or equity indices.
Foreign currency exchange contracts classified as level 2 were valued based on the prevailing forward exchange rate.
The following table summarizes the changesrate, which is an input that is observable in level 3 investments measured at fair value on a recurring basis for the years ended December 31, 2018 and 2017 (in thousands):
|
| | | | | | | |
| Trading Investments |
| Limited Partnership Interests |
| 2018 | | 2017 |
Balance at beginning of year | $ | 605 |
| | $ | 1,196 |
|
Purchases / contributions | — |
| | 419 |
|
Sales / distributions | (598 | ) | | (1,291 | ) |
Realized gains (losses) | (68 | ) | | 162 |
|
Unrealized gains (losses) (1) | 61 |
| | 119 |
|
Transfers into (out of) level 3 | — |
| | — |
|
Balance at end of year | $ | — |
| | $ | 605 |
|
_________________________
| |
(1) | Pertains to unrealized gains (losses) from securities still held at December 31, 2017. |
Realized and unrealized gains (losses) in the above table were recorded as gain (loss) from investments—net in the Company's consolidated statements of operations.active markets.
Valuation Techniques
In certain instances, debt, equity and preferred securities are valued on the basis of prices from an orderly transaction between market participants provided by reputable broker-dealers or independent pricing services. In determining the value of a particular investment, independent 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
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
investments. As part of its independent price verification process, the Company generally performs reviews of valuations provided by broker-dealers or independent pricing services. Investments in Company-sponsored funds are valued at their closing price or NAV (or its equivalent) as a practical expedient.
Foreign exchange contracts are valued based on the prevailing forward exchange rate, 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 involvesinvolve a significant degree of judgment, taking into consideration a combination of internal and external factors. Such investments are valued no less than 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 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.
At December 31, 2017, the valuation technique used in the fair value measurement of the Company’s level 3 investment, limited partnership interests - direct investment in real estate, of approximately $605,000 was based on a contractual selling price.
6. Derivatives
The following tables summarize the notional and fair value of the derivative financial instruments. The notional amount represents the absolute value amount of all outstanding derivative contracts at December 31, 2018 and 2017 (in thousands):
|
| | | | | | | | | | | | | | | |
| December 31, 2018 |
| Assets | | Liabilities |
| Notional | | Fair Value | | Notional | | Fair Value |
Commodity contracts | $ | 19,361 |
| | $ | 486 |
| | $ | 3,434 |
| | $ | 2,181 |
|
Commodity swap contracts | 8,761 |
| | 739 |
| | — |
| | — |
|
Foreign exchange contracts | — |
| | — |
| | 10,996 |
| | 205 |
|
Total | $ | 28,122 |
| | $ | 1,225 |
| | $ | 14,430 |
| | $ | 2,386 |
|
|
| | | | | | | | | | | | | | | |
| December 31, 2017 |
| Assets | | Liabilities |
| Notional | | Fair Value | | Notional | | Fair Value |
Commodity contracts | $ | 8,939 |
| | $ | 487 |
| | $ | 6,876 |
| | $ | 286 |
|
Foreign exchange contracts | — |
| | — |
| | 12,279 |
| | 64 |
|
Total | $ | 8,939 |
| | $ | 487 |
| | $ | 19,155 |
| | $ | 350 |
|
Cash included in due from broker on the consolidated statement of financial condition of approximately $2,002,000 at December 31, 2018 was held as collateral for futures contracts. Investments on the consolidated statement of financial condition of approximately $1,807,000 and $414,000 as of December 31, 2018 and 2017, respectively, were held as collateral for futures contracts.
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
6. Derivatives
The following tables summarize the notional amount and fair value of the outstanding derivative financial instruments none of which were designated in a formal hedging relationship. | | | | | | | | | | | | | | | | | | | | | | | |
| As of December 31, 2021 |
| Notional Amount | | Fair Value (1) |
(in thousands) | Long | | Short | | Assets | | Liabilities |
Corporate derivatives: | | | | | | | |
| | | | | | | |
Total return swaps - commodities | $ | 2,549 | | | $ | 3,810 | | | $ | 94 | | | $ | 17 | |
Total return swaps - equities | — | | | 22,899 | | | — | | | 867 | |
Forward contracts - foreign exchange | — | | | 11,969 | | | 209 | | | 3 | |
Total corporate derivatives | $ | 2,549 | | | $ | 38,678 | | | $ | 303 | | | $ | 887 | |
Derivatives held by consolidated Company-sponsored funds: | | | | | | | |
Total return swaps - commodities | 10,931 | | | — | | | 387 | | | — | |
| | | | | | | |
Total | $ | 13,480 | | | $ | 38,678 | | | $ | 690 | | | $ | 887 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| As of December 31, 2020 |
| Notional Amount | | Fair Value (1) |
(in thousands) | Long | | Short | | Assets | | Liabilities |
Corporate derivatives: | | | | | | | |
Futures - commodities | $ | 13,624 | | | $ | 4,257 | | | $ | 1,012 | | | $ | 416 | |
Total return swaps - commodities | — | | | 9,598 | | | — | | | 136 | |
Total return swaps - equities | — | | | 17,688 | | | — | | | 1,562 | |
Forward contracts - foreign exchange | — | | | 14,061 | | | — | | | 345 | |
Total | $ | 13,624 | | | $ | 45,604 | | | $ | 1,012 | | | $ | 2,459 | |
________________________
(1) The fair value of derivative financial instruments is recorded in other assets and other liabilities and accrued expenses on the
Company's consolidated statements of financial condition.
The Company's corporate derivatives include:
•Total return equity and commodity swap contracts which are utilized to economically hedge a portion of the market risk of certain seed investments and to gain exposure in the commodities market for the purpose of establishing a performance track record; and
•Forward foreign exchange contracts which are utilized to economically hedge currency exposure arising from certain non-U.S. dollar investment advisory fees.
Non-corporate derivatives are comprised of commodity swap contracts that are utilized by certain of the consolidated Company-sponsored funds to gain exposure in the commodities market as part of the funds' investment strategies.
For corporate derivatives, cash included in due from brokers on the consolidated statements of financial condition of $2.2 million and $4.9 million and U.S. Treasury securities included in investments of $0.2 million and $1.5 million at December 31, 2021 and 2020, respectively, were held as collateral for forward and swap contracts. At December 31, 2020, due to brokers included $0.4 million of cash collateral payable.
For non-corporate derivatives, due to brokers included $0.5 million of cash collateral payable to trade counterparties at December 31, 2021.
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table summarizes net gains (losses) from derivative financial instruments forinstruments: | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands) | 2021 | | 2020 | | 2019 |
Corporate derivatives: | | | | | |
Futures - commodities (1) | $ | 3,391 | | | $ | (105) | | | $ | 881 | |
Total return swaps - commodities | (3,082) | | | (266) | | | (485) | |
Total return swaps - equities | (4,530) | | | (1,562) | | | — | |
Forward contracts - foreign exchange | 550 | | | (375) | | | 235 | |
Total corporate derivatives | $ | (3,671) | | | $ | (2,308) | | | $ | 631 | |
Derivatives held by consolidated Company-sponsored funds: | | | | | |
Total return swaps - commodities | 1,526 | | | — | | | — | |
| | | | | |
Total (2) | $ | (2,145) | | | $ | (2,308) | | | $ | 631 | |
________________________
(1) The Company liquidated its commodity future contracts during 2021.
(2) Gains and losses on futures and total return swap contracts are included in gain (loss) from investments—net in the
years ended December 31, 2018, 2017Company's consolidated statements of operations. Gains and
2016 (in thousands):losses on forward foreign exchange contracts are included in foreign currency gain (loss)—net in the Company's consolidated statements of operations. |
| | | | | | | | | | | |
| Year Ended December 31, |
| 2018 | | 2017 | | 2016 |
Commodity contracts | $ | (2,093 | ) | | $ | (438 | ) | | $ | 835 |
|
Commodity swap contracts | 739 |
| | — |
| | — |
|
Foreign exchange contracts | (141 | ) | | (1,481 | ) | | 1,626 |
|
Total | $ | (1,495 | ) | | $ | (1,919 | ) | | $ | 2,461 |
|
7. Property and Equipment
The following table summarizes the Company’s property and equipment at December 31, 2018 and 2017 (in thousands):equipment: | | | | | | | | | | | |
| December 31, |
(in thousands) | 2021 | | 2020 |
Equipment | $ | 7,274 | | | $ | 6,725 | |
Furniture and fixtures | 3,683 | | | 3,685 | |
Software | 23,556 | | | 21,789 | |
Leasehold improvements | 15,518 | | | 16,085 | |
Subtotal | 50,031 | | | 48,284 | |
Less: Accumulated depreciation and amortization | (41,093) | | | (37,943) | |
Property and equipment, net | $ | 8,938 | | | $ | 10,341 | |
|
| | | | | | | |
| December 31, |
| 2018 | | 2017 |
Equipment | $ | 5,590 |
| | $ | 7,503 |
|
Furniture and fixtures | 3,644 |
| | 3,598 |
|
Software | 17,591 |
| | 21,173 |
|
Leasehold improvements | 16,028 |
| | 16,017 |
|
Subtotal | 42,853 |
| | 48,291 |
|
Less: Accumulated depreciation and amortization | (28,747 | ) | | (33,251 | ) |
Property and equipment, net | $ | 14,106 |
| | $ | 15,040 |
|
Depreciation and amortization expense related to property and equipment was $4,378,000, $4,229,000$4.1 million, $4.7 million and $4,155,000$4.4 million for the years ended December 31, 2018, 20172021, 2020 and 2016,2019, respectively.
Depreciation and amortization expense related to property and equipment is recorded using the straight-line method over the estimated useful lives of the related assets which range from 3-7 years. Leasehold improvements are amortized using the straight-line method over the lease term.
8. Earnings Per Share
Basic earnings per share is calculated by dividing net income attributable to common stockholders by the weighted average shares outstanding. Diluted earnings per share is calculated using the treasury stock method by dividing net income attributable to common stockholders by the total weighted average shares of common stock outstanding and common stock equivalents.equivalents determined using the treasury stock method. Common stock equivalents are comprised of dilutive potential shares from restricted stock unit awards and are excluded from the computation if their effect is anti-dilutive.
There were no anti-dilutive common stock equivalents for the years ended December 31, 2018 and 2017. Anti-dilutive common stock equivalents of approximately 14,000 shares were excluded from the computation for the year ended December 31, 2016.
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table is a reconciliation of thereconciles income and share data used in the basic and diluted earnings per share computations for the years ended December 31, 2018, 2017 and 2016 (in thousands, except per share data):computations: | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands, except per share data) | 2021 | | 2020 | | 2019 |
Net income | $ | 226,154 | | | $ | 75,165 | | | $ | 146,984 | |
Net (income) loss attributable to redeemable noncontrolling interests | (14,758) | | | 1,419 | | | (12,363) | |
Net income attributable to common stockholders | $ | 211,396 | | | $ | 76,584 | | | $ | 134,621 | |
Basic weighted average shares outstanding | 48,316 | | | 47,800 | | | 47,273 | |
Dilutive potential shares from restricted stock units | 774 | | | 876 | | | 1,024 | |
Diluted weighted average shares outstanding | 49,090 | | | 48,676 | | | 48,297 | |
| | | | | |
Basic earnings per share attributable to common stockholders | $ | 4.38 | | | $ | 1.60 | | | $ | 2.85 | |
Diluted earnings per share attributable to common stockholders | $ | 4.31 | | | $ | 1.57 | | | $ | 2.79 | |
| | | | | |
Anti-dilutive common stock equivalents excluded from the calculation | — | | | — | | | — | |
|
| | | | | | | | | | | |
| Year Ended December 31, |
| 2018 | | 2017 | | 2016 |
Net income | $ | 109,522 |
| | $ | 92,486 |
| | $ | 92,810 |
|
Less: Net (income) loss attributable to redeemable noncontrolling interests | 4,374 |
| | (547 | ) | | 126 |
|
Net income attributable to common stockholders | $ | 113,896 |
| | $ | 91,939 |
| | $ | 92,936 |
|
Basic weighted average shares outstanding | 46,794 |
| | 46,353 |
| | 45,951 |
|
Dilutive potential shares from restricted stock units | 587 |
| | 626 |
| | 481 |
|
Diluted weighted average shares outstanding | 47,381 |
| | 46,979 |
| | 46,432 |
|
| | | | | |
Basic earnings per share attributable to common stockholders | $ | 2.43 |
| | $ | 1.98 |
| | $ | 2.02 |
|
Diluted earnings per share attributable to common stockholders | $ | 2.40 |
| | $ | 1.96 |
| | $ | 2.00 |
|
9. Stock-Based Compensation
Amended and Restated Stock Incentive Plan
The Amended and Restated Cohen & Steers, Inc. Stock Incentive Plan (the SIP) provides for the issuance of Restricted Stock Units (RSUs), stock options and other stock-based awards to eligible employees and directors. A total of 20.0 million shares of common stock may be granted under the SIP. The board of directors is authorized to increase the number of shares available for issuance under the SIP, subject to shareholder approval. At December 31, 2018,2021, 18.0 million RSUs, with respect to approximately 15.8 million sharesrepresenting the same amount of common stock, had been issued under the SIP. TotalAs of December 31, 2021, there was $65.2 million of compensation cost related to unvestedunamortized RSUs that had not yet been recognized was approximately $40,868,000 at December 31, 2018 and is expectedin the consolidated statement of operations. The Company expects to be recognizedrecognize this expense over approximately the next three years. In January 2019,2022, the Company granted approximately 0.8 million634,000 RSUs under the SIP with a grant date fair value of approximately $29,248,000$52.3 million, which generally vest over a four-year period.
Restricted Stock Units
Vested Restricted Stock Unit Grants
The Company grants awards of vested RSUs to the non-management directors and certain employees of the Company pursuant to the SIP. The directors are entitled to receive delivery of the underlying common stock on the third anniversary of the date of grant. Dividends declared during the periodon these awards are paid to the directors in cash. In connection with the grant of these vested RSUs, the Company recorded non-cash stock-based compensation expense of approximately $626,000, $618,000$2.1 million, $0.7 million and $486,000$0.6 million for the years ended December 31, 2018, 20172021, 2020 and 2016,2019, respectively.
Unvested Restricted Stock Unit Grants
From time to time, the Company grants awards of unvested RSUs to certain employees pursuant to the SIP. The fair value at the date of grant is expensed on a straight-line basis over the applicable service periods,period, which is generally four years. Dividends declared by the Company are paid in additional RSUs andwhich are forfeitablesubject to forfeiture until they are delivered. The dividend equivalent RSUs will generally vest and be delivered on the fourth anniversary of the original grant date. The Company recorded stock-based compensation expense, net of forfeitures, of approximately $4,216,000, $3,957,000$8.5 million, $4.6 million and $4,685,000$4.4 million for the years ended December 31, 2018, 20172021, 2020 and 2016,2019, respectively.
Incentive Bonus Plans for Employees of the Company
The Company has implemented a program for employees which, based upon compensation levels, automatically allocates a portion of their year-end bonuses in the form of unvested RSUs (Mandatory Program). The fair value at the date of grant of the RSUs under the Mandatory Program is expensed on a straight-line basis over the vesting period, which is generally four years. Dividends declared by the Company are paid in additional RSUs andwhich are forfeitablesubject to forfeiture until they are delivered. The RSUs under the Mandatory Program will generally vest and be delivered ratably over four years and the dividend equivalentsequivalent RSUs will generally vest and be delivered on the fourth anniversary of the original grant date. The fair value atCompany recorded stock-based compensation expense under the dateMandatory Program, net of grant of the RSUs under the
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Mandatory Program is expensed on a straight-line basis over the vesting period. The Company recorded stock-based compensation under the Mandatory Program, net of forfeitures, of approximately $19,710,000, $17,175,000$29.9 million, $23.9 million and $16,847,000$22.6 million for the years ended December 31, 2018, 20172021, 2020 and 2016,2019, respectively.
During the year ended December 31, 2021, RSU awards representing approximately 169,000 shares of common stock were modified resulting in $5.6 million of incremental compensation expense that will be recognized over the requisite service period, of which $1.3 million was recorded in 2021.
The following table sets forth activity relating to the Company’s RSUs under the SIP (share data in thousands): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Vested Restricted Stock Unit Grants | | Unvested Restricted Stock Unit Grants | | Incentive Bonus Plans Restricted Stock Unit Grants |
(in thousands, except per share data) | Number of Shares | | Weighted Average Grant Date Fair Value | | Number of Shares | | Weighted Average Grant Date Fair Value | | Number of Shares | | Weighted Average Grant Date Fair Value |
Balance at January 1, 2019 | 45 | | | $ | 37.93 | | | 306 | | | $ | 35.80 | | | 1,745 | | | $ | 36.55 | |
Granted | 22 | | | 50.29 | | | 132 | | | 40.97 | | | 763 | | | 39.92 | |
Delivered | (13) | | | 37.61 | | | (131) | | | 35.46 | | | (601) | | | 36.30 | |
Forfeited | — | | | — | | | (5) | | | 38.15 | | | (33) | | | 38.31 | |
Balance at December 31, 2019 | 54 | | | 44.06 | | | 302 | | | 38.78 | | | 1,874 | | | 38.38 | |
Granted | 12 | | | 55.71 | | | 189 | | | 63.17 | | | 437 | | | 73.29 | |
Delivered | (16) | | | 38.22 | | | (143) | | | 36.96 | | | (705) | | | 36.30 | |
Forfeited | — | | | — | | | (7) | | | 50.60 | | | (78) | | | 49.73 | |
Balance at December 31, 2020 | 50 | | | 48.80 | | | 341 | | | 52.80 | | | 1,528 | | | 48.76 | |
Granted | 26 | | | 81.05 | | | 285 | | | 71.74 | | | 672 | | | 72.81 | |
Delivered | (18) | | | 46.34 | | | (139) | | | 46.80 | | | (632) | | | 44.15 | |
Forfeited | — | | | — | | | (31) | | | 59.35 | | | (186) | | | 57.61 | |
Balance at December 31, 2021 | 58 | | | 64.07 | | | 456 | | | 66.02 | | | 1,382 | | | 61.37 | |
|
| | | | | | | | | | | | | | | | | | | | |
| Vested Restricted Stock Unit Grants | | Unvested Restricted Stock Unit Grants | | Incentive Bonus Plans Restricted Stock Unit Grants |
| Number of Shares | | Weighted Average Grant Date Fair Value | | Number of Shares | | Weighted Average Grant Date Fair Value | | Number of Shares | | Weighted Average Grant Date Fair Value |
Balance at January 1, 2016 | 30 |
| | $ | 36.17 |
| | 296 |
| | $ | 36.36 |
| | 1,282 |
| | $ | 37.33 |
|
Granted | 13 |
| | 37.17 |
| | 159 |
| | 30.31 |
| | 722 |
| | 30.02 |
|
Delivered | (9 | ) | | 34.02 |
| | (147 | ) | | 35.52 |
| | (548 | ) | | 35.86 |
|
Forfeited | — |
| | — |
| | (1 | ) | | 42.09 |
| | (57 | ) | | 35.14 |
|
Balance at December 31, 2016 | 34 |
| | 37.15 |
| | 307 |
| | 33.62 |
| | 1,399 |
| | 34.22 |
|
Granted | 16 |
| | 38.14 |
| | 151 |
| | 35.45 |
| | 714 |
| | 35.36 |
|
Delivered | (8 | ) | | 40.03 |
| | (140 | ) | | 34.41 |
| | (523 | ) | | 34.80 |
|
Forfeited | — |
| | — |
| | — |
| | — |
| | (40 | ) | | 33.87 |
|
Balance at December 31, 2017 | 42 |
| | 36.98 |
| | 318 |
| | 34.14 |
| | 1,550 |
| | 34.60 |
|
Granted | 15 |
| | 38.29 |
| | 134 |
| | 39.02 |
| | 757 |
| | 39.42 |
|
Delivered | (12 | ) | | 34.95 |
| | (146 | ) | | 35.13 |
| | (539 | ) | | 34.94 |
|
Forfeited | — |
| | — |
| | — |
| | — |
| | (23 | ) | | 37.16 |
|
Balance at December 31, 2018 | 45 |
| | 37.93 |
| | 306 |
| | 35.80 |
| | 1,745 |
| | 36.55 |
|
Employee Stock Purchase Plan
Pursuant to the Amended and Restated Employee Stock Purchase Plan (ESPP), the Company allows eligible employees, as defined in the ESPP, to purchase common stock at a 15% discount from fair market value up to a maximum of $25,000$25,000 in annual aggregate purchases by any one individual. The number of shares of common stock authorized for purchase by eligible employees is 600,000. As of600,000. Through December 31, 2018,2021, the Company had issued approximately 413,000464,000 shares of common stock under the ESPP. For the years ended December 31, 2018, 20172021, 2020 and 2016,2019, approximately 15,000, 18,000, 18,000 and 19,000 shares,18,000, respectively, werewas purchased by eligible employees through the ESPP. For the years ended December 31, 2018, 20172021, 2020 and 2016,2019, the Company recorded a non-cash stock-based compensation expense of approximately $105,000, $112,000$177,000, $152,000 and $114,000,$131,000, respectively, which represents the discount on the shares issued pursuant to this plan. The ESPP will terminate upon the earliest to occur of (1) termination of the ESPP by the board of directors or (2) issuance of all of the shares reserved for issuance under the ESPP. The board of directors is authorized to increase the number of shares available for issuance under the ESPP, subject to shareholder approval.
F-27
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
10. 401(k) and Profit-Sharing Plan
The Company sponsors a profit-sharing plan (the Plan) covering all U.S. employees who meet certain age and service requirements. Subject to limitations, the Plan permits participants to defer up to 100% of their eligible compensation pursuant to Section 401(k) of the Internal Revenue Code. Employee contributions are matched by the Company at $0.50$0.50 per $1.00$1.00 deferred. The Plan also allows the Company to make discretionary contributions, which are integrated with the taxable wage base under the Social Security Act. No discretionary contributions were made for the years ended December 31, 2018, 20172021, 2020 and 2016.2019.
Forfeitures occur when participants terminate employment before becoming entitled to their full benefits under the Plan. In accordance with the Plan document, forfeited amounts are used to reduce the Company’s contributions to the Plan or to pay Plan expenses. Forfeitures for the years ended December 31, 2018, 20172021, 2020 and 20162019 totaled approximately $101,000, $128,000$248,000, $147,000 and $126,000,$131,000, respectively.
Matching contributions, net of forfeitures, to the Plan for the years ended December 31, 2018, 20172021, 2020 and 20162019 totaled approximately $1,770,000, $1,715,000$2.3 million, $2.5 million and $1,464,000,$2.1 million, respectively.
11. Related Party Transactions
The Company is an investment adviser to, and has administration agreements with, affiliatedCompany-sponsored funds for which certain employees are officers and/or directors.
The following table summarizes the amount of revenue the Company earned from these affiliated fundsfunds: | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands) | 2021 | | 2020 | | 2019 |
Investment advisory and administration fees (1) | $ | 389,648 | | | $ | 274,566 | | | $ | 264,116 | |
Distribution and service fees | 37,630 | | | 30,134 | | | 30,048 | |
Total | $ | 427,278 | | | $ | 304,700 | | | $ | 294,164 | |
_________________________
(1) Investment advisory and administration fees are reflected net of fund reimbursements of $16.6 million, $13.6 million and $11.1 million for
and the
years ended December 31, 2018, 20172021, 2020 and 2016 (in thousands): |
| | | | | | | | | | | |
| Year Ended December 31, |
| 2018 | | 2017 | | 2016 |
Investment advisory and administration fees (1) | $ | 241,255 |
| | $ | 236,832 |
| | $ | 220,364 |
|
Distribution and service fees | 29,090 |
| | 30,747 |
| | 28,825 |
|
Total | $ | 270,345 |
| | $ | 267,579 |
| | $ | 249,189 |
|
_________________________ | |
(1) | Investment advisory and administration fees are reflected net of fund reimbursements of approximately $8.6 million, $8.7 million and $7.6 million for and the years ended December 31, 2018, 2017 and 2016,2019, respectively. Amounts for the years ended December 31, 2017 and 2016 have been recast to reflect the Company's adoption of the new revenue recognition accounting standard on January 1, 2018. See Notes 2 and 3 for further discussion of the Company's recently adopted accounting pronouncements and revenue, respectively. |
The following table summarizes sales proceeds, gross realized gains, gross realized losses and dividend income from investments in Company-sponsored funds for the years ended December 31, 2018, 2017 and 2016 (in thousands): |
| | | | | | | | | | | |
| Year Ended December 31, |
| 2018 | | 2017 | | 2016 |
Proceeds from sales | $ | 10,872 |
| | $ | 15,105 |
| | $ | 13,251 |
|
Gross realized gains | 28 |
| | 80 |
| | 1,159 |
|
Gross realized losses | (4,448 | ) | | — |
| | — |
|
Dividend income | 481 |
| | 675 |
| | 787 |
|
Included in accounts receivable at December 31, 20182021 and 20172020 are receivables due from Company-sponsored funds of approximately $21,855,000$40.8 million and $23,666,000,$30.2 million, respectively.
Included in accounts payable at December 31, 2021 and 2020 are payables due to Company-sponsored funds of $1.1 million and $0.6 million, respectively.
F-28
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
12. Regulatory Requirements
CSS, 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 prescribed by the Rule. At December 31, 2018,2021, CSS had net capital of approximately $3.2$3.9 million, which exceeded its requirementsrequirement by approximately $3.0$3.6 million. 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. CSS does not carry customer accounts and is exempt from SEChas no possession or control obligations under SEA Rule 15c3-3 pursuant15c3-3(b) or reserve deposit obligations under SEA Rule 15c3-3(e). During 2021, CSCM, its parent, made a capital contribution of $3.0 million to provisions (k)(1) and (k)(2)(i) of such rule.CSS.
CSAL is subject to regulation by the Hong Kong Securities and Futures Commission. At December 31, 2018,2021, CSAL had regulatory capital of approximately $26.0$7.9 million, which exceeded its minimum regulatory capital requirementsrequirement by approximately $25.7$7.6 million. In August, 2018,During 2021, CSAL paid a dividenddividends in the amount of $32.0$3.9 million to its parent, Cohen & Steers Capital Management, Inc. In January 2019, CSAL paid an additional dividend in the amount of $15.0 million to its parent.CSCM.
CSUK is subject to regulation by the United Kingdom Financial Conduct Authority. At December 31, 2018,2021, CSUK had regulatory capital of approximately $33.0$32.7 million, which exceeded its minimum regulatory capital requirementsrequirement by approximately $28.2$26.1 million.
CSIL is subject to regulation by the Central Bank of Ireland. At December 31, 2021, CSIL had regulatory capital of $2.8 million, which exceeded its minimum regulatory capital requirement by $2.5 million. CSJL is registered with the Financial Services Agency of Japan and the Kanto Local Finance Bureau and is subject to the Financial Instruments and Exchange Act. In accordance with its license, CSJL is required to maintain regulatory capital, as defined, of $0.6 million. At December 31, 2021, CSJL had stated capital in excess of this requirement.
13. Commitments and Contingencies
The Company leases office space under noncancelable operating leases expiring at various dates through March 2024. The Company also leases certain information technology applications, market data and office equipment under noncancelable operating leases expiring at various dates through March 2024. The aggregate minimum future payments under the leases are as follows (in thousands):
|
| | | |
Year Ending December 31, | Operating Leases |
2019 | $ | 15,112 |
|
2020 | 13,570 |
|
2021 | 11,397 |
|
2022 | 10,882 |
|
2023 | 10,842 |
|
Thereafter | 960 |
|
| $ | 62,763 |
|
Rent expense charged to operations, including escalation charges for real estate taxes and other expenses, totaled approximately $11.9 million, $11.8 million and $11.5 million for the years ended December 31, 2018, 2017 and 2016, respectively.
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 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-investinvest up to $5.1$50.0 million alongside Cohen & Steers Global Realty Partners III-TE, L.P. (GRP-TE), a portionin REOF. As of which is made through GRP-TE and the remainder of which is made through Cohen & Steers Co-Investment Partnership, L.P. (GRP-CIP) for up to 12 years through the life of GRP-TE. At December 31, 2018,2021, the Company hashad funded approximately $3.8$3.1 million with respect toof this commitment. The actual timing for fundingOn February 15, 2022, the unfunded portionCompany funded an additional $18.0 million of this commitment is currently unknown, as the drawdown of the Company’s unfunded commitment is contingent on the timing of drawdowns by the underlying funds in which GRP-TE and GRP-CIP invest. At December 31, 2018, the unfunded commitment was not recorded on the Company’s consolidated statements of financial condition.
commitment.
F-29
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
14. Income Taxes
The income before provision for income taxes and provision for income taxes for the years ended December 31, 2018, 2017 and 2016are as follows (in thousands):follows: | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands) | 2021 | | 2020 | | 2019 |
Income before provision for income taxes - U.S. (1) | $ | 262,102 | | | $ | 83,617 | | | $ | 171,497 | |
Income before provision for income taxes - Non-U.S. | 19,842 | | | 9,770 | | | 16,052 | |
Total income before provision for income taxes | $ | 281,944 | | | $ | 93,387 | | | $ | 187,549 | |
_________________________ (1)Included income of $14.8 million, loss of $1.4 million and income of $12.4 million attributable to third-party interests for the years ended December 31, 2021, 2020 and 2019, respectively. |
| | | | | |
| Years Ended December 31, |
(in thousands) | 2021 | | 2020 | | 2019 |
Current tax expense: | | | | | |
U.S. federal | $ | 41,658 | | | $ | 12,859 | | | $ | 30,818 | |
State and local | 12,068 | | | 3,291 | | | 7,627 | |
Non-U.S. | 1,960 | | | 1,965 | | | 2,024 | |
| 55,686 | | | 18,115 | | | 40,469 | |
Deferred tax (benefit) expense: | | | | | |
U.S. federal | (739) | | | (67) | | | (133) | |
State and local | (149) | | | (32) | | | (74) | |
Non-U.S. | 992 | | | 206 | | | 303 | |
| 104 | | | 107 | | | 96 | |
Provision for income taxes | $ | 55,790 | | | $ | 18,222 | | | $ | 40,565 | |
|
| | | | | | | | | | | |
| Year Ended December 31, |
| 2018 | | 2017 | | 2016 |
Income before provision for income taxes - U.S. | $ | 132,838 |
| | $ | 149,338 |
| | $ | 132,882 |
|
Income before provision for income taxes - Non-U.S. | 10,941 |
| | 11,062 |
| | 10,521 |
|
Total income before provision for income taxes | $ | 143,779 |
| | $ | 160,400 |
| | $ | 143,403 |
|
| | | | | |
Current taxes: | |
| | |
| | |
|
U.S. federal | $ | 26,223 |
| | $ | 58,082 |
| | $ | 42,056 |
|
State and local | 7,378 |
| | 8,155 |
| | 7,423 |
|
Non-U.S. | 2,029 |
| | 1,991 |
| | 2,014 |
|
| 35,630 |
| | 68,228 |
| | 51,493 |
|
Deferred taxes: | |
| | |
| | |
|
U.S. federal | (748 | ) | | (428 | ) | | (743 | ) |
State and local | (281 | ) | | (412 | ) | | (86 | ) |
Non-U.S. | (344 | ) | | 526 |
| | (71 | ) |
| (1,373 | ) | | (314 | ) | | (900 | ) |
Provision for income taxes | $ | 34,257 |
| | $ | 67,914 |
| | $ | 50,593 |
|
In connection with the enactment of the Tax Cuts and Jobs Act (the Tax Act), the Company recorded a provisional transition tax of $8.4 million at December 31, 2017, which reflected a one-time tax on deemed repatriated accumulated earnings and profitsA reconciliation of the Company’s foreign subsidiaries. The transition tax, which is payable over eight years on an interest-free basis, was included as part ofstatutory federal income tax payable onrate and the Company's consolidated statements of financial condition at December 31, 2018 and December 31, 2017. Based on refinement of the calculation, the Company adjusted its transitioneffective tax liability from $8.4 million at December 31, 2017 to $8.3 million during the second quarter of 2018.
The transition tax liability at December 31, 2018rate is as follows (in thousands):follows: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands) | 2021 | | 2020 | | 2019 |
U.S. statutory tax rate | $ | 56,110 | | 21.0 | % | | $ | 19,908 | | 21.0 | % | | $ | 36,789 | | 21.0 | % |
State and local income taxes, net of federal benefit | 10,190 | | 3.8 | % | | 3,867 | | 4.1 | % | | 5,972 | | 3.4 | % |
Unrecognized tax benefit adjustments | (8,515) | | (3.2) | % | | 323 | | 0.4 | % | | (650) | | (0.3) | % |
Non-deductible executive compensation | 6,037 | | 2.3 | % | | 2,468 | | 2.6 | % | | 695 | | 0.4 | % |
Excess tax benefits related to the vesting of share-based compensation | (5,762) | | (2.2) | % | | (8,494) | | (9.0) | % | | (368) | | (0.2) | % |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Foreign tax rate differential | (661) | | (0.2) | % | | 120 | | 0.1 | % | | (866) | | (0.5) | % |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Other | (1,609) | | (0.6) | % | | 30 | | — | % | | (1,007) | | (0.6) | % |
Income tax expense and effective income tax rate | $ | 55,790 | | 20.9 | % | | $ | 18,222 | | 19.2 | % | | $ | 40,565 | | 23.2 | % |
|
| | | |
Year Ending December 31, | Transition Tax Liability |
2019 | $ | 192 |
|
2020 | 665 |
|
2021 | 665 |
|
2022 | 1,246 |
|
2023 | 1,662 |
|
2024 | 2,077 |
|
| $ | 6,507 |
|
In addition to the transition tax, the Tax Act requires certain income earned by foreign subsidiaries, referred to under the Tax Act as global intangible low-taxed income (GILTI), be included in the U.S. taxable income of the parent company. GILTI requires an accounting policy election to either (1) treat taxes due on future U.S. inclusions in taxable income related to GILTI as a current period expense when incurred or (2) factor such amounts into the measurement of deferred taxes. The Company has made an accounting policy election to account for any additional tax resulting from the GILTI provisions in the year in which it is incurred. Based upon its calculation, the Company was not required to record any additional income tax expense attributable to the GILTI provisions for the year ended December 31, 2018.
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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 records a valuation allowance, when necessary, to reduce deferred tax assets to an amount that more likely than not will be realized. The Company's net deferred tax asset is included in other assets on the consolidated statements of financial condition.
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Significant components of the Company’s net deferred income tax asset at December 31, 2018 and 2017 consist of the following (in thousands):following: | | | | | | | | | | | |
| At December 31, |
(in thousands) | 2021 | | 2020 |
Deferred income tax assets (liabilities): | | | |
Stock-based compensation | $ | 6,951 | | | $ | 7,064 | |
Realized losses on investments | 2,374 | | | 3,567 | |
| | | |
Net unrealized (gains) losses on investments | (2,861) | | | (1,364) | |
Property and equipment depreciation | 937 | | | (337) | |
Deferred rent | 608 | | | 904 | |
Other | 14 | | | (141) | |
Subtotal | 8,023 | | | 9,693 | |
Less: valuation allowance | (1,132) | | | (2,698) | |
Deferred income tax asset—net | $ | 6,891 | | | $ | 6,995 | |
|
| | | | | | | |
| At December 31, |
| 2018 | | 2017 |
Deferred income tax assets (liabilities): | | | |
Stock-based compensation | $ | 4,915 |
| | $ | 5,437 |
|
Non-deductible realized losses on investments | 1,539 |
| | 1,030 |
|
Dividend equivalents on unvested restricted stock units | 1,734 |
| | 1,715 |
|
Net unrealized losses on investments | 2,512 |
| | 2,359 |
|
Deferred compensation | 78 |
| | (1,325 | ) |
Deferred rent | 1,452 |
| | 1,488 |
|
Other | (760 | ) | | (996 | ) |
Subtotal | 11,470 |
| | 9,708 |
|
Less: valuation allowance | (4,270 | ) | | (3,896 | ) |
Deferred income tax asset—net | $ | 7,200 |
| | $ | 5,812 |
|
The Company had capital loss carryforwards of approximately $6,181,000$9.5 million and $4,181,000$14.3 million for the years ended December 31, 20182021 and 20172020, respectively, which, if unused, will expire in years 20192022 to 2023.2026. The valuation allowance on the net deferred income tax asset increased approximately $374,000decreased by $1.6 million during the year ended December 31, 2018.2021.
At December 31, 2018,2021, the Company had approximately $12,037,000$10.4 million of total gross unrecognized tax benefits. Of this total, approximately $9,235,000$7.9 million (net of the federal benefit on state issues) represents the amount of unrecognized tax benefits that, if recognized, would favorably affect the Company’s effective tax rate in future periods. The Company believes it is reasonably possible that it will reduce its net unrecognized tax benefits by $5,121,000$2.8 million to $3.3 million within the next twelve months due to the expected conclusion of jurisdictional reviews and the lapse of the statute of limitations on certain positions.
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in thousands):
|
| | | |
| Liability for Unrecognized Tax Benefits |
Gross unrecognized tax benefits balance at January 1, 2016 | $ | 7,259 |
|
Addition for tax positions of current year | 1,437 |
|
Addition for tax positions of prior years | 163 |
|
Reduction of tax positions from prior years | (1,007 | ) |
Gross unrecognized tax benefits balance at December 31, 2016 | $ | 7,852 |
|
Addition for tax positions of current year | 1,724 |
|
Addition for tax positions of prior years | 6,624 |
|
Reduction of tax positions from prior years | (3,794 | ) |
Gross unrecognized tax benefits balance at December 31, 2017 | $ | 12,406 |
|
Addition for tax positions of current year | 2,233 |
|
Reduction of tax positions from prior years | (2,602 | ) |
Gross unrecognized tax benefits balance at December 31, 2018 | $ | 12,037 |
|
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
follows: | | | | | |
(in thousands) | Liability for Unrecognized Tax Benefits |
Gross unrecognized tax benefits balance at January 1, 2019 | $ | 12,037 | |
Addition for tax positions of current year | 2,430 | |
Addition for tax positions of prior years | 133 | |
Reduction of tax positions from prior years | (1,720) | |
Gross unrecognized tax benefits balance at December 31, 2019 | $ | 12,880 | |
Addition for tax positions of current year | 1,697 | |
Addition for tax positions of prior years | 3,599 | |
Reduction of tax positions from prior years | (4,560) | |
Gross unrecognized tax benefits balance at December 31, 2020 | $ | 13,616 | |
Addition for tax positions of current year | 4,092 | |
| |
Reduction of tax positions from prior years | (7,322) | |
Gross unrecognized tax benefits balance at December 31, 2021 | $ | 10,386 | |
The Company records potential interest and penalties related to uncertain tax positions in the provision for income taxes. At December 31, 20182021 and 2017,2020, the Company had approximately $2,519,000$3.5 million and $1,933,000,$6.8 million, respectively, in potential interest and penalties associated with uncertain tax positions.
The tax years 20122015 through 20182020 remain open to examination by various taxing jurisdictions.
A reconciliation of the Company’s statutory federal income tax rate and the effective tax rate for the years ended December 31, 2018, 2017 and 2016 is as follows:
|
| | | | | | | | |
| Year Ended December 31, |
| 2018 | | 2017 | | 2016 |
U.S. statutory tax rate | 21.0 | % | | 35.0 | % | | 35.0 | % |
State and local income taxes, net of federal income taxes | 3.8 | % | | 3.1 | % | | 3.5 | % |
Unrecognized tax benefit adjustments | (1.0 | )% | | (1.9 | )% | | (0.2 | )% |
Foreign operations tax differential | 0.3 | % | | (1.4 | )% | | (1.1 | )% |
Non-deductible losses on investments | 0.2 | % | | 0.2 | % | | 1.3 | % |
Non-taxable gains on investments | 0.1 | % | | (0.2 | )% | | (3.0 | )% |
Tax Act | (0.1 | )% | | 8.0 | % | | — | % |
Other | (1.2 | )% | | (0.3 | )% | | (0.2 | )% |
Effective income tax rate | 23.1 | % | | 42.5 | % | | 35.3 | % |
15. Goodwill and Intangible Assets
The following table summarizes the changes in the Company’s goodwill and intangible assets during the years ended December 31, 2018 and 2017 (in thousands):
|
| | | | | | | | | | | |
| Goodwill | | Finite-Lived Intangible Assets | | Indefinite-Lived Intangible Assets |
Balance at January 1, 2017 | $ | 17,684 |
| | $ | 184 |
| | $ | 1,250 |
|
Currency revaluation | 1,350 |
| | — |
| | — |
|
Amortization | N/A |
| | (89 | ) | | N/A |
|
Balance at December 31, 2017 | $ | 19,034 |
| | $ | 95 |
| | $ | 1,250 |
|
Currency revaluation | (533 | ) | | — |
| | — |
|
Amortization | N/A |
| | (95 | ) | | N/A |
|
Balance at December 31, 2018 | $ | 18,501 |
| | $ | — |
| | $ | 1,250 |
|
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
In connection with the enactment of the Tax Cuts and Jobs Act (the Tax Act) in 2017, the Company recorded a provisional transition tax liability of $8.3 million. This tax liability, paid over eight years on an interest-free basis, was included as part of income tax payable on the Company's consolidated statements of financial condition at December 31, 2021 and 2020.
The following table summarizes the Company’s intangible assetsremaining transition tax liability at December 31, 2018 and 20172021 (in thousands): | | | | | |
| |
| |
2022 | $ | 665 | |
2023 | 1,246 | |
2024 | 1,662 | |
2025 | 2,077 | |
| $ | 5,650 | |
15. Goodwill and Intangible Assets
The following table summarizes the changes in the Company’s goodwill and non-amortized intangible assets: | | | | | | | | | | | | | |
(in thousands) | Goodwill | | | | Indefinite-Lived Intangible Assets |
Balance at January 1, 2020 | $ | 18,310 | | | | | $ | 1,250 | |
Currency revaluation | 935 | | | | | — | |
| | | | | |
Balance at December 31, 2020 | $ | 19,245 | | | | | $ | 1,250 | |
Currency revaluation | (799) | | | | | — | |
| | | | | |
Balance at December 31, 2021 | $ | 18,446 | | | | | $ | 1,250 | |
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. The Company's evaluation indicated that no impairment existed at December 31, 2021.
16. Leases
|
| | | | | | | | | | | | | |
| Remaining Amortization Period (in months) | | Gross Carrying Amount | | Accumulated Amortization | | Intangible Assets, Net |
2018 | | | | | | | |
Amortized intangible assets: | | | | | | | |
Client relationships | — | | $ | 1,543 |
| | $ | (1,543 | ) | | $ | — |
|
Non-amortized intangible assets: | | | | | | | |
Mutual fund management contracts | — | | 1,250 |
| | — |
| | 1,250 |
|
Total | | | $ | 2,793 |
| | $ | (1,543 | ) | | $ | 1,250 |
|
2017 | | | | | | | |
Amortized intangible assets: | | | | | | | |
Client relationships | 12 | | $ | 1,543 |
| | $ | (1,448 | ) | | $ | 95 |
|
Non-amortized intangible assets: | | | | | | | |
Mutual fund management contracts | — | | 1,250 |
| | — |
| | 1,250 |
|
Total | | | $ | 2,793 |
| | $ | (1,448 | ) | | $ | 1,345 |
|
The Company has operating leases for corporate offices and certain information technology equipment.The following table summarizes the Company's lease cost included in general and administrative expense in the consolidated statements of operations: | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands) | 2021 | | 2020 | | 2019 |
Operating lease cost | $ | 11,097 | | | $ | 11,247 | | | $ | 11,495 | |
Amortization expenseSupplemental information related to operating leases is summarized below: | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands) | 2021 | | 2020 | | 2019 |
Supplemental cash flow information: | | | | | |
Cash paid for amounts included in the measurement of lease liabilities | $ | 12,303 | | | $ | 12,408 | | | $ | 12,365 | |
Supplemental non-cash information: | | | | | |
Right-of-use assets obtained in exchange for new lease liabilities | 1,149 | | | 3,026 | | | — | |
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Other information related to operating leases is summarized below: | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2021 | | 2020 | | 2019 |
Weighted-average remaining lease term (years) | 2 | | 3 | | 4 |
Weighted-average discount rate | 2.7 | % | | 2.8 | % | | 2.8 | % |
The following table summarizes the intangible assets was approximately $95,000, $89,000 and $89,000 for the years endedmaturities of lease liabilities at December 31, 2018, 2017 and 2016, respectively.2021 (in thousands): | | | | | |
Year Ending December 31, | Operating Leases |
2022 | $ | 12,281 | |
2023 | 11,836 | |
2024 | 1,131 | |
| |
Total remaining undiscounted lease payments | 25,248 | |
Less: imputed interest | 723 | |
Total remaining discounted lease payments | $ | 24,525 | |
16. Concentration of Credit Risk17. Concentrations
The Company’s cash and cash equivalents are principally on deposit with major financial institutions. The Company is subject to credit risk should these financial institutions be unable to fulfill their obligations.
The following affiliated funds and third-party institutional separate account subadvisory relationship, which is comprised of multiple accounts, provided 10% or more of the total revenue of the Company (in thousands):Company: | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands, except percentages) | 2021 | | 2020 | | 2019 |
Cohen & Steers Preferred Securities and Income Fund, Inc. (CPX): | | | | | |
Investment advisory and administration fees | $ | 88,705 | | | $ | 69,197 | | | $ | 56,638 | |
Distribution and service fees | 15,279 | | | 13,499 | | | 12,753 | |
Total | $ | 103,984 | | | $ | 82,696 | | | $ | 69,391 | |
Percent of total revenue | 17.8 | % | | 19.3 | % | | 16.9 | % |
| | | | | |
Cohen & Steers Real Estate Securities Fund, Inc. (CSI): | | | | | |
Investment advisory and administration fees | $ | 53,250 | | | $ | 38,961 | | | $ | 41,971 | |
Distribution and service fees | 8,658 | | | 6,943 | | | 8,128 | |
Total | $ | 61,908 | | | $ | 45,904 | | | $ | 50,099 | |
Percent of total revenue | 10.6 | % | | 10.7 | % | | 12.2 | % |
| | | | | |
Cohen & Steers Realty Shares, Inc. (CSR): | | | | | |
Investment advisory and administration fees | $ | 55,402 | | | $ | 34,190 | | | $ | 32,884 | |
Distribution and service fees | 7,279 | | | 4,711 | | | 4,079 | |
Total | $ | 62,681 | | | $ | 38,901 | | | $ | 36,963 | |
Percent of total revenue | 10.7 | % | | 9.1 | % | | 9.0 | % |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
|
| | | | | | | | | | | |
| Year Ended December 31, |
| 2018 | | 2017 | | 2016 |
Cohen & Steers Realty Shares, Inc. (CSR): | | | | | |
Investment advisory and administration fees | $ | 33,827 |
| | $ | 38,392 |
| | $ | 45,047 |
|
Percent of total revenue | 9 | % | | 10 | % | | 13 | % |
| | | | | |
Cohen & Steers Preferred Securities and Income Fund, Inc. (CPX): | | | | | |
Investment advisory and administration fees | $ | 53,059 |
| | $ | 53,594 |
| | $ | 42,420 |
|
Percent of total revenue | 14 | % | | 14 | % | | 12 | % |
| | | | | |
Daiwa Asset Management: | | | | | |
Investment advisory fees | $ | 30,265 |
| | $ | 37,756 |
| | $ | 39,377 |
|
Portfolio consulting and other | 3,189 |
| | 3,035 |
| | 2,930 |
|
Total | $ | 33,454 |
| | $ | 40,791 |
| | $ | 42,307 |
|
Percent of total revenue | 9 | % | | 11 | % | | 12 | % |
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
17. Selected Quarterly Financial Data (unaudited)
The table below presents selected quarterly financial data for 2018 and 2017 (in thousands, except per share data):
|
| | | | | | | | | | | | | | | |
| Quarter |
| 1st | 2nd | 3rd | 4th | Total |
2018 | | | | | |
Revenue | $ | 94,464 |
| $ | 94,410 |
| $ | 98,331 |
| $ | 93,906 |
| $ | 381,111 |
|
Operating income | 37,219 |
| 36,287 |
| 39,223 |
| 34,309 |
| 147,038 |
|
Net income attributable to common stockholders (1) | 27,586 |
| 29,959 |
| 30,790 |
| 25,561 |
| 113,896 |
|
Earnings per share attributable to common stockholders: | |
| |
| |
| |
| |
|
Basic | 0.59 |
| 0.64 |
| 0.66 |
| 0.55 |
| 2.43 |
|
Diluted | 0.59 |
| 0.63 |
| 0.65 |
| 0.54 |
| 2.40 |
|
Weighted-average shares outstanding: | |
| |
| |
| |
| |
|
Basic | 46,683 |
| 46,819 |
| 46,830 |
| 46,842 |
| 46,794 |
|
Diluted | 47,152 |
| 47,311 |
| 47,524 |
| 47,562 |
| 47,381 |
|
| | | | | |
2017 | |
| |
| |
| |
| |
|
Revenue (2) | $ | 89,741 |
| $ | 92,714 |
| $ | 96,787 |
| $ | 99,454 |
| $ | 378,696 |
|
Operating income | 35,528 |
| 37,357 |
| 40,973 |
| 40,888 |
| 154,746 |
|
Net income attributable to common stockholders | 22,985 |
| 23,474 |
| 25,082 |
| 20,398 |
| 91,939 |
|
Earnings per share attributable to common stockholders: | |
| |
| |
| |
| |
|
Basic | 0.50 |
| 0.51 |
| 0.54 |
| 0.44 |
| 1.98 |
|
Diluted | 0.49 |
| 0.50 |
| 0.53 |
| 0.43 |
| 1.96 |
|
Weighted-average shares outstanding: | |
| |
| |
| |
| |
|
Basic | 46,243 |
| 46,373 |
| 46,386 |
| 46,407 |
| 46,353 |
|
Diluted | 46,603 |
| 46,902 |
| 47,047 |
| 47,300 |
| 46,979 |
|
_________________________
(1) Net income for all four quarters of 2018 reflected the lower U.S. federal statutory tax rate of 21% due to the Tax Cuts and Jobs Act.
(2) Amounts have been recast to reflect the Company’s adoption of the new revenue recognition accounting standard on January 1, 2018. See Notes 2 and 3 for further discussion of the Company's recently adopted accounting pronouncements and revenue, respectively.
18. Subsequent Events
The Company has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date the consolidated financial statements were issued. Other than the items described below or elsewhere in the footnotes, the Company determined that there were no additional subsequent events that require disclosure and/or adjustment.
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
On February 21, 2019, CNS24, 2022, the Company announced the initial public offering of the Cohen & Steers Real Estate Opportunities and Income Fund (the Fund). The Fund raised approximately $305.0 million in proceeds, excluding leverage. In addition, the underwriters have an option to purchase, within 45 days, up to an additional 2,287,500 common shares at the public offering price of $20.00 per share. The Company expects to incur costs of approximately $15.0 million in connection with the offering, excluding any additional costs that would be incurred should the underwriters exercise their option to purchase additional shares.
On February 24, 2022, the Company declared a quarterly dividend on its common stock in the amount of $0.36$0.55 per share. This dividend will be payable on March 14, 201917, 2022 to stockholders of record at the close of business on March 4, 2019.
7, 2022.