Use these links to rapidly review the documentTABLE OF CONTENTS Item 8. Financial Statements and Supplementary Data.

Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K

(Mark One)ý

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended June 30, 2010ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the Transition Period
from                              to


Commission File Number 1-9728

LOGO

EPOCH HOLDING CORPORATION(Exact Name of Registrant as Specified in Its Charter)

Delaware(State or Other Jurisdiction of
Incorporation or Organization)

20-1938886(I.R.S. Employer
Identification No.)


640 Fifth Avenue, New York, NY 10019(Address of Principal Executive Offices), (Zip Code)

(212) 303-7200(Registrant's Telephone Number, Including Area Code)

Securities
registered pursuant to Section 12(b) of the Act:

Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $0.01 per share par value

NASDAQ Global Select Market


Securities
registered pursuant to Section 12(g) of the Act:None

Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes o    No ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes o    No ý

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter)
is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in rule 12b-2 of the Exchange Act. (Check one).

Large accelerated filer o

Accelerated filer ý

Non-accelerated filer o (Do not Check if a
Smaller Reporting Company)

Smaller reporting company o


Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the proceeding 12 months (or for such shorter period that the registrant was
required to submit and post such files). Yes o    No o

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

As of December 31, 2009, the last trading day of the registrant's most recently completed second fiscal quarter, the aggregate market value of common stock
held by nonaffiliates of the registrant was approximately $138.5 million, computed by reference to the closing price of $10.45 on the NASDAQ Global Select Market on that day.

As
of September 2, 2010, there were 22,768,522 shares of the registrant's common stock, $.01 par value per share, issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the following documents are incorporated herein by reference into the Form 10-K as indicated:

Document

Part of Form 10-K into Which IncorporatedCompany's Definitive Proxy Statement for the 2010
Annual Meeting of Shareholders

Part III




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Table of Contents

LOGO

EPOCH HOLDING CORPORATION AND SUBSIDIARIES
ANNUAL REPORT ON FORM 10-K

FOR THE FISCAL YEAR ENDED JUNE 30, 2010  TABLE OF CONTENTS



Form 10-K Item Number:

PagePART IItem.1.

Business

31A.

Risk Factors

151B.

Unresolved Staff Comments

212.

Properties

213.

Legal Proceedings

224.

Reserved

22PART II5.

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

236.

Selected Financial Data

257.

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

277A.

Quantitative and Qualitative Disclosures About Market Risk

488.

Financial Statements and Supplementary Data

519.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

829A.

Controls and Procedures

829B.

Other Information

82PART III10.

Directors, Executive Officers and Corporate Governance

8311.

Executive Compensation

8312.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

8313.

Certain Relationships and Related Transactions and Director Independence

8314.

Principal Accountant Fees and Services

83PART IV15.

Exhibits and Financial Statement Schedules

84Signatures

86


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PART I

Item 1.    Business.

Forward-Looking Statements

Certain information included, or incorporated by reference in this Annual Report on
Form 10-K and other materials filed or to be filed by Epoch Holding Corporation ("Epoch" or the "Company") with the United States Securities and Exchange Commission (the "SEC")
contain statements that may be considered forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify these statements by
forward-looking words such as "may," "might," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential" or "continue," and the negative of these terms and other
comparable terminology. These forward-looking statements, which are subject to known and unknown risks, uncertainties and assumptions about the Company, may include projections of the Company's future
financial performance based on the Company's anticipated growth strategies and trends in the Company's business. These statements are only predictions based on the Company's current expectations and
projections about future events. There are important factors that could cause the Company's actual results, level of activity, performance or achievements to differ materially from the results, level
of activity, performance or achievements expressed or implied by the forward-looking statements. In particular, you should consider the risks and uncertainties outlined in Item 1A. "Risk
Factors."

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

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

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



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The
Company uses a fiscal year, which ends on June 30. References to "FY 2010," "FY 2009," and "FY 2008" in this document refer to the fiscal years ended June 30, 2010,
June 30, 2009, and June 30, 2008, respectively. This Annual Report on Form 10-K may also include "forward-looking statements" which refer to fiscal years subsequent to
the historical financial positions and results of operations contained herein. References to future fiscal years also apply to the June 30 year-end. When we use the terms the
"Company," "management," "we," "us," and "our," we mean Epoch Holding Corporation, a Delaware Corporation, and its consolidated subsidiaries.

Overview

Epoch Holding Corporation is a holding company headquartered in New York, NY whose sole line of business is investment advisory and
investment management services. The operations of the Company are conducted through its wholly owned subsidiary, Epoch Investment Partners, Inc. ("EIP"). EIP is a registered investment adviser
under the Investment Advisers Act of 1940, as amended (the "Investment Advisers Act").

EIP
is a global asset management firm. The firm's professional investment staff averages over 20 years of industry experience per person.

History

EIP was established and co-founded by Mr. William W. Priest and three experienced investment industry professionals.
Mr. Priest has over 40 years of experience in the investment advisory business. He served as co-managing partner of Steinberg, Priest & Sloane Capital
Management, LLC ("SPSCM") for three years and, prior to that, as Chairman and CEO of Credit Suisse Asset Management ("CSAM") Americas, and as CEO of its predecessor firm BEA Associates, which
he co-founded in 1972. EIP's other co-founders include Timothy Taussig, former Managing Director, Member of the Global Executive Committee for CSAM and Co-Head of
Global Marketing for CSAM worldwide; J. Philip Clark, former Managing Director of Sanford C. Bernstein & Co.'s private client and
institutional asset management business; and David Pearl, former Managing Director and Senior Portfolio Manager at SPSCM.

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EIP
began operations in April 2004 with approximately $0.6 billion in AUM and has grown into a medium-sized asset management firm with $11.3 billion in AUM at
June 30, 2010. The chart below depicts the Company's annual AUM growth as well as AUM for the last four fiscal quarters:

GRAPHIC

The
Company's growth reflects long-term investment performance and quality client service, administered across a broad array of financial products, distribution channels, and
market exposures. The Company measures relative investment performance by comparing its investment returns to competing products, industry benchmarks and client investment objectives.

Recent Developments and FY 2010 Highlights*

---

The
following highlights mark corporate accomplishments and events which transpired during the year ended June 30, 2010:



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Investment Philosophy

The Company's investment philosophy is focused on achieving superior risk-adjusted returns by investing in companies that
generate free cash flow, have understandable business models, posess transparent financial statements, and are undervalued relative to the investment team's value determinations. Security selection
and portfolio construction processes are designed to reduce the likelihood of significant capital losses in declining markets while participating in returns from rising markets.

Investment Process

Our investment process incorporates the following concepts:



While
the security selection and research methodology is the same for all of the Company's equity strategies, the portfolio construction process is adaptable to the specific parameters
of each client's individual mandate.

Products

EIP earns revenues from managing client accounts under investment advisory and sub-advisory agreements. Such agreements
provide for fees to EIP as a percentage of AUM. Separate account fees are billed on a quarterly basis, in arrears, generally based on the account's asset value at the end of a quarter. Fees for
services performed for mutual funds under advisory and sub-advisory contracts are calculated based upon the daily net asset values of the respective fund, and are generally received in

6

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arrears.
Advance payments, if received, are deferred and recognized during the periods for which services are provided.

The
Company also has certain contracts which allow the Company to earn performance fees in the event that investment returns meet or exceed targeted amounts during a measurement period.

As
of June 30, 2010, EIP offered the following investment products to its clients:



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The
following chart displays the Company's products as a percentage of AUM as of June 30, 2010:

GRAPHIC

The
table below depicts Epoch's investment products' annual AUM for the past five years, as well as its respective compound annual growth rate for the one, three, and five years ended
June 30, 2010:

As of June 30

Compound Annual
Growth Rate(4)Product

2010

2009

2008

2007

2006

1 Year

3 Years

5 yearsU.S. Value

$
3,403

$
2,340

$
1,499

$
1,155

$
805


45.4
%

43.4
%

N/AU.S. All Cap Value/Balanced


2,646


2,016


1,601


1,395


787


31.3
%

23.8
%

38.5
%Global Equity Shareholder Yield


1,959


1,515


1,538


1,323


219


29.3
%

14.0
%

N/AGlobal Absolute Return/Choice(1)


1,462


375


402


259


111


289.9
%

78.1
%

N/AU.S. Smid Cap Value


902


749


409


13





20.4
%

310.9
%

N/AU.S. Small Cap Value


362


325


423
(3)

995


661


11.4
%

(28.6
)%

(8.0
)%International Small Cap/International


403


396


548


688


373


1.8
%

(16.3
)%

8.3
%Global Small Cap


207


175


214


173
(2)

297


18.3
%

6.2
%

26.9
%Total AUM

$
11,344

$
7,891

$
6,634

$
6,001

$
3,253


43.8
%

23.7
%

51.9
%


(1)Includes
U.S. Choice and Global Choice.(2)In
the year ended June 30, 2007, approximately $150 million of AUM transferred from the Global Small Cap product to the U.S. Small Cap Value
product.(3)In
the year ended June 30, 2008, approximately $360 million of AUM transferred from the U.S. Small Cap Value product to the U.S. Smid Cap
Value product.(4)The
compound annual growth rate is calculated by taking the nth root of the total percentage growth rate, where n equals the number of years in the period
being considered.


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Table of Contents

Product Development

We have developed several products since our inception. Continued product development has stemmed from our investment team's skill and
market knowledge, as well as our responsiveness to client and market demands. We will only launch a new product if we believe that it can add value to a client's investment portfolio, or may be
attractive to our clients in the future. In certain instances we may incubate a product using our own capital, in order to test and refine the investment strategy and process before introducing the
product to the marketplace.

Performance Highlights

The following table shows each product's composite returns, net of management fees, for the six months, one, three and five years ended
June 30, 2010 and from the product's inception date, compared to their applicable benchmarks:

Returns*(2)Product

Inception
Date(1)

6 months

1 Year

3 Years

5 Years

Since
InceptionU.S. All Cap Value

31-Jul-94


(7.2
)%

12.0
%

(8.4
)%

0.0
%

9.5
%Russell 3000




(6.1
)%

15.7
%

(9.5
)%

(0.5
)%

7.3
%Russell 3000 Value




(4.8
)%

17.6
%

(12.1
)%

(1.6
)%

7.9
%U.S. Value

31-Jul-01


(7.8
)%

9.8
%

(7.5
)%

1.1
%

3.3
%Russell 1000




(6.4
)%

15.2
%

(9.5
)%

(0.6
)%

0.6
%Russell 1000 Value




(5.1
)%

16.9
%

(12.3
)%

(1.6
)%

1.6
%U.S. Smid Cap Value

31-Aug-06


(4.2
)%

17.8
%

(8.1
)%

N/A


(1.9
)%Russell 2500




(1.7
)%

24.0
%

(8.0
)%

N/A


(1.8
)%Russell 2500 Value




(1.6
)%

26.5
%

(9.3
)%

N/A


(3.5
)%U.S. Small Cap Value

31-Dec-02


(4.0
)%

15.1
%

(8.8
)%

(0.4
)%

6.2
%Russell 2000




(2.0
)%

21.5
%

(8.6
)%

0.4
%

7.8
%Russell 2000 Value




(1.6
)%

25.1
%

(9.8
)%

(0.5
)%

7.8
%U.S. Choice

30-Apr-05


(6.2
)%

17.5
%

(8.5
)%

0.6
%

1.7
%Russell 3000




(6.1
)%

15.7
%

(9.5
)%

(0.5
)%

0.4
%International Small Cap

31-Jan-05


(7.2
)%

17.1
%

(11.1
)%

5.5
%

5.8
%MSCI World ex USA Small Cap (Net)




(6.3
)%

15.7
%

(12.4
)%

1.7
%

2.0
%Global Small Cap

31-Dec-02


(5.6
)%

14.5
%

(8.0
)%

3.4
%

9.6
%MSCI World Small Cap (Net)




(3.7
)%

21.0
%

(9.7
)%

1.7
%

10.8
%Global Choice

30-Sep-05


(10.1
)%

12.2
%

(7.0
)%

N/A


4.7
%MSCI World (Net)




(9.8
)%

10.2
%

(11.5
)%

N/A


(1.3
)%Global Absolute Return

31-Dec-01


(10.2
)%

9.9
%

(6.7
)%

2.5
%

8.1
%MSCI World (Net)




(9.8
)%

10.2
%

(11.5
)%

0.1
%

2.4
%Global Equity Shareholder Yield

31-Dec-05


(7.2
)%

12.1
%

(7.6
)%

N/A


1.6
%MSCI World (Net)




(9.8
)%

10.2
%

(11.5
)%

N/A


(2.1
)%


*Index
and product returns assume dividend reinvestment. Product returns are net of management fees.(1)Epoch
Investment Partners became a registered investment adviser under the Investment Advisers Act of 1940 in June 2004. Performance from April 2001 through
May 2004 is for Epoch's investment team and accounts while at Steinberg Priest & Sloane Capital Management, LLC. For


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the
period July 1994 through March 2001, Chief Investment Officer William W. Priest managed the accounts while at Credit Suisse Asset Management and was the only individual responsible for
selecting the securities to buy and sell. (2)Past
performance is not indicative of future results.


Distribution Channels

EIP provides investment advisory and investment management services to clients including corporations, mutual funds, endowments,
foundations and high net worth individuals. Our assets under management are distributed through multiple channels, including intermediaries such as investment consultants and sub-advisory
relationships.

Our
institutional sales efforts include further developing relationships with institutional consultants, and also establishing direct relationships with institutional clients.

We
manage sub-advisory mandates that provide access to market segments that we would not otherwise serve. For example, we currently serve as sub-advisor to mutual
funds offered by major financial institutions in retail channels. Such mandates are attractive to us as we have chosen not to build the large team of sales professionals typically required to service
those channels. We approach the servicing of those sub-advisory relationships in a manner similar to our approach with other large institutional account clients.

We
service the high net worth channel both directly and through third party intermediaries, such as wealth advisers who utilize our investment strategies in investment programs they
construct for their clients. During the current fiscal year, the Company raised the minimum separate account size substantially for this channel.

The
following table provides information regarding the composition of our AUM and respective compound annual growth rate by distribution channel for the past five years, as well as its
respective compound annual growth rate for the one, three, and five years ended June 30, 2010:

As of June 30

Compound Annual Growth RateDistribution Channel

2010

2009

2008

2007

2006

1 year

3 years

5 yearsSub-advisory

$
6,183
(1)
$
4,332

$
3,080

$
2,876

$
1,715


42.7
%

29.1
%

46.3
%Institutional


4,915
(1)

3,309


3,263
(2)

2,765


1,245


48.5
%

21.1
%

84.0
%High Net Worth


246


250


291
(2)

360


293


(1.6
)%

(11.9
)%

(0.1
)%Total AUM

$
11,344

$
7,891

$
6,634

$
6,001

$
3,253


43.8
%

23.7
%

51.9
%


(1)During
the three months ended December 31, 2009, approximately $820 million of AUM previously classified as Institutional was reclassified to
Sub-advisory in conjunction with the adoption of the Epoch Funds by New York Life Investment Management.(2)During
the fiscal year ended June 30, 2008, approximately $28 million of AUM in separate accounts within the high net worth distribution
channel transferred to the Epoch Global Absolute Return Fund, LLC, and approximately $8 million transferred to the Epoch U.S. All Cap Equity Fund, both of which are included within the
Institutional distribution channel above.


Strategic Relationship

On July 9, 2009, EIP entered into a strategic relationship with New York Life Investments, whereby the MainStay Group of Funds
adopted the Company's family of mutual funds (the "Epoch Funds"). The transaction was approved by the Board of Directors of the Epoch Funds and

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subsequently
approved by the shareholders of the Epoch Funds at a special meeting on October 30, 2009. The adoption of the Epoch Funds by New York Life Investments' MainStay Group of Funds was
completed in November 2009. EIP continues to be responsible for the day-to-day investment management of the funds through a sub-advisory relationship, while
MainStay Investments ("MainStay"), the retail distribution arm of New York Life Investments, is responsible for the distribution and administration of the funds. Each former Epoch Fund is now
co-branded as a "MainStay Epoch" Fund.

In
addition to an existing sub-advisory relationship between EIP and New York Life Investments for certain funds, and the adoption of the Epoch Funds indicated above, EIP and
New York Life Investments have entered into an arrangement wherein, among other things, EIP and an affiliate of New York Life Investments have established a distribution and administration
relationship with respect to certain separately managed account and unified managed account products, and for a period of three years New York Life Investments agrees to pay certain additional base
fees and meet minimum distribution targets. For the fiscal year ended June 30, 2010, New York Life Investment Management, through the MainStay Epoch Funds and other funds
sub-advised by EIP, accounted for approximately 16% of consolidated operating revenues. The Company's services and relationship with New York Life Investment Management is considered
important to the Company's ongoing growth strategy.

Competitive Strengths

We are a global asset management firm with accomplished and experienced professionals that combines in-house research and
insight in pursuing superior risk-adjusted performance returns for our clients. Our team of senior managers, including our investment professionals, marketing and sales directors, and client service
personnel, averages over 20 years of industry experience per person. All of our employees are shareholders; accordingly our employees' interests are aligned with those of our clients and shareholders.

Our
overall investment philosophy is focused on achieving superior risk-adjusted returns by investing in companies that generate free cash flow and are undervalued relative
to our investment team's value determinations. We have a track record of achieving superior risk-adjusted investment returns over the longer term across our key investment strategies. As
of the fiscal year ended June 30, 2010, most of our products have outperformed their respective benchmarks for the past three and five year periods, as well as since product inception.

We
foster an open, collaborative culture that encourages the sharing of ideas and insights. We believe that sharing ideas and analyses across investment teams allows us to leverage our
knowledge of markets and industries across the globe. Additionally, this collaboration enables us to readily implement ideas across our range of investment products.

We
are a global firm in both product set and in distribution. We offer a set of investment strategies that allow our clients to access investment opportunities worldwide. Our assets
under management are distributed through multiple channels, including intermediaries such as investment consultants and sub-advisory relationships. Our distribution model allows us to
achieve significant leverage from our focused sales force and client service infrastructure.

We
are committed to growing and reinvesting in our business. A strong capital base is essential to developing our business. Our balance sheet continues to reflect significant liquidity
sufficient to weather adverse market conditions and to enable us to take advantage of growth opportunities.

Competition

The investment advisory and investment management business is highly competitive. The Company continuously encounters competitors in
the marketplace who offer similar products and services. We

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compete
with a large number of global and U.S. investment advisors, commercial banks, broker/dealers, insurance companies and other financial institutions. According to Pensions & Investments, a
publication covering the money management industry, the Company ranked as the 202nd largest asset
management firm worldwide as of December 31, 2009, up from a ranking of 353rd at December 31, 2008.

The
Company competes primarily on the basis of investment philosophy, performance, product features, range of products, and client service. We believe that our investment style,
investment products, and distribution channels enable us to compete effectively in our industry. We also believe
that being an independent asset management firm is a competitive advantage, enabling our business model to avoid conflicts that are inherent within institutions that both distribute and manage
investment products. While the Company believes it will continue to be successful in growing its AUM, it may be necessary to expend additional resources to compete effectively.

Growth Strategy

As the Company enters its seventh full year of operations, it remains focused on generating superior risk-adjusted
performance returns, providing the highest level of client service, and continuing to generate operating margins consistent with leading firms within our industry. Its growth strategy includes the
development of distribution channels through which to offer its broad array of products. These efforts include further developing relationships with investment advisory consultants, establishing
direct relationships with institutional clients, initiating managed accounts with third party institutions, and maintaining strong advisory and sub-advisory relationships.

The
Company routinely evaluates its strategic position and maintains a disciplined acquisition and alliance effort that seeks complementary products or new products which could benefit
clients. While the Company continues to actively seek such opportunities, there can be no assurance that acquisitions will be identified and consummated on terms that are favorable to the Company, its
business and its stockholders. Management believes that opportunities are available, but will only act on opportunities that it believes are accretive to the Company's long-term business
strategy.

The
Company's ability to attract and retain key employees is paramount to the continued success of the business. The Company believes it offers competitive compensation to its employees,
including share-based compensation, which the Company believes promotes a common objective with shareholders.

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Key Performance Indicators

The charts that follow depict the Company's 5-year performance in certain key financial
measures:



---

GRAPHIC

GRAPHICGRAPHIC

GRAPHIC


Regulation

The Company's business, as well as the financial services industry, is subject to extensive regulation throughout the world. As a
matter of public policy, regulatory bodies are charged with safeguarding the integrity of the securities and other financial markets and with protecting the interests of customers participating in
those markets.

In
the U.S., the Securities and Exchange Commission (the "SEC") is the federal agency responsible for the administration of the federal securities laws. The Financial Industry Regulatory
Authority ("FINRA") and the National Futures Association are voluntary, self-regulatory bodies composed of members that have agreed to abide by the respective bodies' rules and
regulations. To the extent that an investment adviser is a "fiduciary" under the Employment Retirement Act of 1974 ("ERISA") with respect to benefit plan clients, it is subject to ERISA, and to
regulations promulgated

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thereunder.
ERISA and applicable provisions of the Internal Revenue Code impose certain duties on persons who are fiduciaries under ERISA and prohibit certain transactions involving ERISA plan
clients.

In
addition to the extensive regulation of our asset management business in the U.S. we are also subject to regulation internationally in a number of jurisdictions.

Each
of these regulatory organizations may examine the activities of, and may expel, fine and otherwise discipline, member firms and their employees. The laws, rules and regulations
comprising this framework of regulation and the interpretation and enforcement of existing laws, rules and regulations are constantly changing. The effect of any such change cannot be predicted and
may impact the manner of operation and profitability of the Company.

EIP,
the Company's sole operating subsidiary, is registered as an investment adviser with the SEC. As a registered investment adviser, EIP is subject to the requirements of the
Investment Advisers Act and the SEC's regulations thereunder. Requirements relate to, among other things, principal transactions between an adviser and advisory clients, and include disclosure
obligations, record keeping and reporting obligations, and general anti-fraud prohibitions. The Company is also subject to the filing and reporting obligations of the Securities Act of
1933, as amended (the "Securities Act") and the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Regulators are empowered to conduct administrative proceedings that can result in
censure, fine, the issuance of cease-and-desist orders or the suspension or expulsion of an investment adviser or its directors, officers or employees.

The
preceding descriptions of the regulatory and statutory provisions applicable to the Company and EIP are not complete and are qualified in their entirety by reference to their
respective statutory or regulatory provisions. Any change in applicable laws or regulations may have a material effect on the Company's business, prospects and operations.

Geographic Information

We have clients in several countries outside the United States, including Canada, United Kingdom, Japan, and Australia. The Company has
expanded its international distribution network through both direct sales to clients and sales through intermediaries, such as investment consultants, private banks, asset managers, and third party
distributors. One of our key priorities is to continue to expand our global distribution network and partnerships.

The
following table displays the Company's operating revenues by geographic region for the fiscal years ended June 30, 2010, 2009, and 2008, respectively. These amounts are
aggregated based upon the domicile of the customer's corporate headquarters.

Revenues ($ in thousands)

June 30
2010

% of
Total

June 30
2009

% of
Total

June 30
2008

% of
TotalUnited States

$
37,771


71
%
$
24,349


78
%
$
27,203


80
%Canada


7,020


13
%

5,115


17
%

6,030


18
%Europe


4,709


9
%

1,304


4
%

571


2
%Asia/Australia


3,860


7
%

417


1
%

2


NMTotal revenues

$
53,360


100
%
$
31,185


100
%
$
33,806


100
%


NMnot
meaningful


Employees

As of June 30, 2010, the Company employed 52 full-time employees, including 20 investment management, research and
trading professionals, 11 marketing and client service professionals and 21 operations and business management professionals. None of our employees are subject to any collective bargaining
agreements.

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Available Information

Reports the Company files electronically with the SEC via the SEC's Electronic Data Gathering, Analysis and Retrieval system ("EDGAR")
may be accessed through the internet. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the
SEC, atwww.sec.gov.

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

Also
available free of charge on our website within the Investors Relations section, and the "Corporate Governance" tab therein, is our Code of Ethics and Business Conduct and charters
for the Audit,
Nominating/Corporate Governance, and the Compensation Committees of our Board of Directors.

Item 1A.    Risk Factors.

As an investment management firm, risk is an inherent part of our business. Capital markets, by their nature, are prone to uncertainty
and expose participants to a variety of risks. While we devote significant resources across all of our operations to identify, measure, monitor, manage and analyze market and operating risk, our
business, financial condition, operating results, or share price could be materially adversely affected by any of the following risks. Additionally, other risks and uncertainties that we do not
presently consider to be material or of which we are not presently aware may become important factors that affect us in the future. You should carefully consider the risks described below before
making an investment decision.

Risks Related to Our Business

Our results of operations and financial condition could be adversely affected by negative performance of the securities markets.

Our investment advisory and investment management business would be expected to generate lower revenues in a market or general economic
downturn. Under our asset management business arrangements, investment advisory fees we receive typically are based on the market value of AUM. Accordingly, a decline in the prices of securities would
be expected to cause our revenue and net income to decline by:



Because of market fluctuations, there may not be a consistent pattern in our financial results from period to period. This may make it difficult for us to achieve steady
earnings growth on a quarterly basis and may cause the price of our common stock to decline.

We may experience significant fluctuations in revenue and profits. Because our revenues are based on the value of AUM, a decline in the
value of AUM would adversely affect our revenues. Because of

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market
fluctuations, it may be difficult for us to achieve steady earnings growth on a quarterly basis, which could lead to large adverse movements in the price of our common stock or increased
volatility in our stock price.

Investment performance affects our AUM related to existing clients and is one of the most important factors in retaining clients and competing for new asset management
business. Poor investment performance could impair our revenue and growth because:



Our investment style in the asset management business may underperform other investment approaches, which may result in significant client or asset departures or a reduction
in AUM.

Even when securities prices are rising, performance can be affected by investment style. Many of the equity investment strategies in
our asset management business share a common investment orientation towards fundamental security selection. Our overall investment philosophy is focused on achieving a superior
risk-adjusted return by investing in companies that generate free cash flow. We believe this style tends to outperform the market in some market environments and underperform it in others.
In particular, a prolonged "growth" environment (i.e., a prolonged period whereby growth stocks outperform value stocks) may cause our investment strategy to go out of favor with some clients,
consultants or third-party intermediaries. In combination with poor performance relative to peers, any changes in personnel, extensive periods in particular market environments, or other difficulties,
may result in significant client or asset departures or a reduction in AUM.

The significant growth we have experienced since inception may not be indicative of future growth.

Our assets under management have increased from approximately $0.8 billion at June 30, 2004 to approximately
$11.3 billion at June 30, 2010, and represents a significant rate of growth that may be difficult to sustain. The growth of our business will depend on, among other things, our success
in producing attractive returns in our investment strategies, our ability to expand our distribution capabilities, overall performance of the equity markets, our ability to deal with changing market
conditions, our ability to maintain adequate financial and business controls, and our ability to comply with new legal and regulatory requirements.

Because our clients can remove the assets we manage on short notice, we may experience unexpected declines in revenue and profitability.

Our investment advisory and sub-advisory contracts are generally cancellable upon very short notice. Institutional and
individual clients, and firms with which we have strategic alliances, can terminate their relationship with use, reduce the aggregate amount of AUM or shift their funds to other types of accounts with
different rate structures for a number of reasonsincluding investment performance, changes in prevailing interest rates and
financial market performance. Poor performance relative to other investment management firms may result in decreased inflows into our investment products, increased withdrawals from our investment
products, and the loss of institutional or individual accounts or strategic alliances. In addition, the ability to terminate relationships may allow clients to renegotiate for lower fees paid for
asset management services.

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In
addition, in the U.S., as required by the Investment Advisers Act, each of our investment advisory contracts with the mutual funds we advise or sub-advise automatically
terminates upon its "assignment," or transfer of our responsibility for fund management. Each of our other investment advisory contracts subject to the provisions of the Investment Advisers Act, as
required by this act, provides that the contract may not be "assigned" without the consent of the customer. A sale of a sufficiently large block of shares of our voting securities or other
transactions could be deemed an "assignment" in certain circumstances. An assignment, actual or constructive, will trigger these termination provisions and could adversely affect our ability to
continue managing these client accounts.

To
the extent that a technical "assignment" of investment advisory contracts arises, we will take the necessary steps to provide clients an opportunity to consent to the continuation of
their advisory agreements. Such new agreements may need approval by the stockholders of the respective funds. In the event that any of these clients do not consent to a renewal of their agreement, we
could lose AUM, which would result in a loss of revenue.

Fluctuations in foreign currency exchange rates could lower our net income or negatively impact the portfolios of our clients and may affect the levels of our AUM.

Although most portfolios are in U.S. dollar base currency, certain client portfolios are invested in securities denominated in foreign
currencies. Foreign currency fluctuations can adversely impact investment performance for a client's portfolio. Accordingly, foreign currency fluctuations may affect the levels of our AUM. As our AUM
includes assets that are denominated in currencies other than U.S. dollars, an increase in the value of the U.S. dollar relative to those non-U.S. currencies may result in a decrease in
the dollar value of our AUM, which, in turn, would result in lower U.S. dollar denominated revenue in our business. Additionally, while this risk could be limited by foreign currency hedging, some
risks cannot be hedged and there is no guarantee that our hedging activity would be successful.

Access to clients through intermediaries is important to our asset management business, and reductions in referrals from such intermediaries or poor reviews of our products
or our organization by such intermediaries could materially reduce our revenue and impair our ability to attract new clients.

Our ability to market its services relies, in part, on receiving mandates from the client base of international and regional securities
firms, banks, insurance companies, defined contribution plan administrators, investment consultants and other intermediaries. To an increasing extent, our business uses referrals from accountants,
lawyers, financial planners and other professional advisers. The inability to have this access could materially adversely affect our business. In addition, these intermediaries review and evaluate our
products and our organization. Poor reviews or evaluations of either the particular products or of our Company may result in client withdrawals or an inability to attract new assets through such
intermediaries.

Some members of management are critical to our success, and the inability to attract and retain key employees could compromise our future success.

If key employees were to leave the firm, whether to join a competitor or otherwise, we may experience a decline in revenue or earnings,
which may have an adverse effect on our financial position. Loss of key employees may occur due to perceived opportunity for promotion, increased compensation, work environment or other individual
reasons, some of which may be beyond our control.

Except
for our CEO, there are no employment agreements with any other key employees. The loss of services of one or more key employees, or failure to attract, retain and motivate
qualified personnel

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could
negatively impact the business, financial condition, results of operations and future prospects. As with other asset management businesses, future performance depends to a significant degree
upon the continued contributions of certain officers, portfolio managers and other key marketing, client service and management personnel. There is substantial competition for these types of skilled
personnel. In order to attract or retain key personnel, we may be required to increase compensation. Compensation levels in the investment management industry are highly competitive and can fluctuate
significantly from year to year.

Our reputation is critical to our success.

As a financial services firm, we depend, to a large extent, on our relationships with our clients and our reputation for integrity and
high-caliber professional services. Any damage to our reputation could impede our ability to attract and retain clients and key personnel, and lead to a reduction in the amount of our
assets under management.

Additionally,
there have been a number of highly publicized cases involving fraud or other misconduct by employees in the financial services industry, and we run the risk that employee
misconduct could occur in our business, as well. For example, misconduct by employees could involve the improper use or disclosure of confidential information, which could result in regulatory
sanctions and serious reputational or financial harm. In our business, we have discretion to trade client assets on the client's behalf and must do so acting in the best interest of the client. As a
result, we are subject to a number of obligations and standards, and the violation of those obligations or standards may adversely affect the Company's clients and the Company. We have adopted and
implemented a number of insider trading, code of ethics, and other related policies and procedures to address such obligations and standards. It is not always possible to deter employee misconduct,
and the precautions we take to detect and prevent this activity may not be effective in all cases.

We derive more than 10% of its operating revenue from one client.

Pursuant to a strategic relationship with New York Life Investment Management, EIP is the sub-advisor of several mutual funds within
New York Life Investment Management's MainStay group of funds. As such, New York Life Investment Management accounted for approximately 16% of revenues for FY 2010. A loss of this client could
negatively impact our operating revenues.

Changes in fee levels or asset mix could reduce revenues and margins.

Our profit margins and net income are dependent, in significant part, on our ability to maintain current fee levels for the products
that we offer. There has been a trend towards lower fees in some segments of the asset management industry and no assurances can be given that we will be able to maintain our current fee structure.
Although our investment management fees vary from product to product, we compete primarily on the basis of our performance and not on the level of our investment management fees relative to those of
our competitors. In order to maintain our fee structure in a competitive environment, we must be able to continue to provide clients with investment returns and client service that incentivize our
clients to pay our fees. Additionally, a shift in the mix in our assets under management from higher revenue-generating assets to lower revenue-generating assets
may result in a decrease in revenues even if our aggregate level of assets under management remains unchanged or increases.

Other operational risks may disrupt our business, result in regulatory action against us, or limit our growth.

Our business is dependent on communications and information systems, including those of our vendors. Any failure or interruption of
these systems, whether caused by fire, other natural disaster, power or telecommunications failure, act of terrorism or war or otherwise, could materially adversely

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affect
our operating results. Although we have back-up systems in place, our back-up procedures and capabilities in the event of a failure or interruption may not be adequate.

We
rely heavily on our financial, accounting, trading, compliance and other data processing systems. If any of these systems do not operate properly or are disabled, we could suffer
financial loss, a disruption of our business, liability to its clients, regulatory intervention or reputational damage. The inability of our systems to accommodate an increasing volume of transactions
could also constrain our ability to expand our businesses. We expect that we will need to continue to upgrade and expand these capabilities in the future to avoid disruption of, or constraints on, our
operations.

We may be exposed to data security risks.

A failure to safeguard the integrity and confidentiality of client data from the infiltration by an unauthorized user that is either
stored on or transmitted between our information systems or to other third party service provider systems may lead to modifications or theft of critical and sensitive data pertaining to our clients.
The costs incurred to correct client data and prevent further unauthorized access could be extensive.

Sales of a substantial number of shares of our common stock may adversely affect the market price of our common stock.

Sales of a substantial number of shares of our common stock in the public market, or the perception that such sales could occur, could
adversely affect the market price of our common stock.

Various factors may prevent the declaration and payment of common stock dividends.

We began to pay a quarterly cash dividend, commencing in the quarter ended December 31, 2007. However, the payment of dividends
in the future is subject to the discretion of our Board of Directors, and various other factors may prevent us from paying dividends. Our Board of Directors will take into account such matters as
general business conditions, our financial results, and legal or regulatory restrictions.

We may pursue acquisitions or joint ventures that could present unforeseen integration obstacles or costs and could dilute the stock ownership of our stockholders.

We routinely assess our strategic position and may seek acquisitions or other transactions to further enhance our competitive position.
As part of our long-term business strategy, we may pursue joint ventures and other transactions aimed at expanding the geography and scope of our operations. We expect to explore
partnership opportunities that we believe to be attractive. If we are not correct when we assess the value, strengths and weaknesses, liabilities and potential profitability of acquisition candidates
or are not successful in integrating the operations of the acquired business, the success of the combined business could be compromised.

Acquisitions
and joint ventures involve a number of risks and present financial, managerial and operational challenges, including potential disruption of our ongoing business and
distraction of management, difficulty with integrating personnel and financial and other systems, hiring additional management and other critical personnel and increasing the scope, geographic
diversity and complexity of our operations. Our clients may react unfavorably to our acquisition and joint venture strategy, we may not realize any anticipated benefits from acquisitions, and may be
exposed to additional liabilities of any acquired business or joint venture, any of which could materially adversely affect our revenue and results of operations. In addition, future acquisitions or
joint ventures may involve the issuance of additional shares of our common stock, which would dilute our existing ownership.

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Certain changes in accounting and/or financial reporting standards issued by the Financial Accounting Standards Board ("FASB"), the SEC or other standard-setting bodies
could have a material impact on our financial position or results of operations.

We are subject to the application of U.S. generally accepted accounting principles ("GAAP"), which periodically are revised and/or
expanded. As such, we periodically are required to adopt new or revised accounting and/or financial reporting standards issued by recognized accounting standard setters or regulators, including the
FASB and the SEC. It is possible that future requirements, including the recently proposed implementation of International Financial Reporting Standards ("IFRS"), could change our current application
of GAAP, resulting in a material impact on our financial position or results of operations.

Risks Related to Our Industry

We face strong competition from financial services firms, many of whom have the ability to offer clients a wider range of products and services than we can offer, which
could lead to pricing pressures that could materially adversely affect our revenue and profitability.

The financial services industry is intensely competitive and we expect it to remain so. In addition to performance, we compete on the
basis of a number of factors including the quality of our employees, transaction execution, our products and services, innovation, reputation and
price. We believe that we may experience pricing pressures in the future as some of our competitors seek to obtain increased market share by reducing fees.

Any event that negatively affects the asset management industry could have a material adverse impact on us.

Any event affecting the asset management industry that results in a general decrease in AUM or a significant general decline in the
number of advisory clients or accounts could negatively impact revenues. Future growth and success depends, in part, upon favorable market conditions and the growth of the asset management industry.

Extensive regulation of our business limits our activities and results in ongoing exposure to the potential for significant penalties, including fines or limitations on our
ability to conduct its business.

The financial services industry is subject to extensive regulation. We are subject to regulation by governmental and
self-regulatory organizations in the jurisdictions in which we operate around the world. Many of these regulators, including U.S. and non-U.S. government agencies and
self-regulatory organizations, as well as state securities commissions in the U.S., are empowered to conduct administrative proceedings that can result in censure, fine, the issuance of
cease-and-desist orders or the suspension or expulsion of an investment adviser. The requirements imposed by our regulators are designed to ensure the integrity of the
financial markets and to protect customers and other third parties who deal with us and are not designed to protect our stockholders. Consequently, these regulations often serve to limit our
activities, including customer protection and market conduct requirements.

We
face the risk of significant intervention by regulatory authorities, including extended investigation and surveillance activity, adoption of costly or restrictive new regulations and
judicial or administrative proceedings that may result in substantial penalties. In addition, the regulatory environment in which we operate is subject to modifications and further regulation. New
laws, regulations, or changes in the enforcement of existing laws or regulations applicable to our Company and our clients may also adversely affect our business, and our ability to function in this
environment will depend on our ability to constantly monitor and react to these changes. In addition, the regulatory environment in which our clients operate may impact our business. For example,
changes in antitrust

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laws
or the enforcement of antitrust laws could affect the level of mergers and acquisitions activity and changes in state laws may limit investment activities of state pension plans.

Instances
of criminal activity and fraud by participants in the asset management industry, disclosures of trading and other abuses by participants in the financial services industry, and
the recent massive governmental intervention and investment in the financial markets and financial firms have lead the U.S. government and regulators to increase the rules and regulations governing,
and oversight of, the U.S. financial system. The cumulative effect of these actions may result in increased expenses, or lower management fees, and therefore, adversely affect the revenues or
profitability of our business.

In
addition, financial services firms are subject to numerous conflicts of interests or perceived conflicts, have adopted various policies, controls and procedures to address or limit
actual or perceived conflicts and regularly seeks to review and update our policies, controls and procedures. These policies and procedures may result in increased costs, additional operational
personnel, and increased regulatory risk. Failure to adhere to our policies and procedures could result in regulatory sanctions or client litigation.

Specific
regulatory changes may also have a direct impact on the revenue of our asset management business. In addition to regulatory scrutiny and potential fines and sanctions,
regulators continue to examine different aspects of the asset management industry. These regulatory changes and other proposed or potential changes may result in a reduction of revenue associated with
asset management.

The financial services industry faces substantial litigation and regulatory risks.

In recent years, the volume of claims and amount of damages claimed in litigation and regulatory proceedings against financial advisers
has been increasing. In our business, we make investment decisions on behalf of our clients which could result in substantial losses. This may subject us to the risk of legal liabilities or actions
alleging negligent misconduct, breach of fiduciary duty or breach of contract. These risks often may be difficult to assess or quantify and their existence and magnitude often remain unknown for
substantial periods of time. Our engagements typically include broad indemnities from our clients and provisions designed to limit our exposure to legal claims relating to our services, but these
provisions may not protect us or may not be adhered to in all cases. We may also be subject to claims arising from disputes with employees for alleged discrimination or harassment, among other things.
These risks often may be difficult to assess or quantify, and their existence and magnitude often remain unknown for substantial periods of time. As a result, we may incur significant legal expenses
in defending against litigation. Substantial legal liability or significant regulatory action against us could materially adversely affect our business, financial condition or results of operations or
cause significant reputational harm to us, which could seriously harm our business.

Due
to the extensive laws and regulations to which we are subject, management is required to devote substantial time and effort to legal and regulatory compliance issues. In addition,
the regulatory environment in which we operate is subject to change. We may be adversely affected as a result of new or revised legislation or regulations or by changes in the interpretation or
enforcement of existing laws and regulations.

Item 1B.    Unresolved Staff Comments.

None.

Item 2.    Properties.

The Company's headquarters and operations are located at 640 Fifth Avenue, New York, New York. Business is conducted at a location with
approximately 20,000 square feet under long-term leases that expire in September 2015.

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The
Company is also the primary party to another lease in New York City with approximately 8,500 square feet, which expires in November 2010. This property is subleased to an unrelated
third party, under a sublease which expired in August 2010.

Management
believes the office space utilized by the Company is adequate for its existing operating needs.

Item 3.    Legal Proceedings.

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

Item 4.    Reserved.

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Table of Contents

PART II

Item 5.    Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

The Company's common stock trades on the NASDAQ Global Select Market under the trading symbol "EPHC."

Stock Performance Graph

The graph and table that follow compare the performance of an investment in our Common Stock from June 30, 2005 through
June 30, 2010 with the Russell 2000 Index, the Dow Jones U.S. Asset Managers Total Stock Market Index*, a composite of publicly traded asset management companies, and an index comprised of
public companies with the Standard Industrial Classification ("SIC") Code 6282, Investment Advice. The graph assumes a $100 investment in our Common Stock on June 30, 2005, and an equal
investment in each of the selected indices, including reinvestment of dividends, if any. The performance shown in the graph represents past performance and should not be considered an indication of
future performance.

---

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN(1)Among Epoch Holding Corporation, the Russell 2000 Index,  the Dow Jones U.S. Asset Managers TSM Index and SIC Code 6282

GRAPHIC

---

06/30/05

06/30/06

06/30/07

06/30/08

06/30/09

06/30/10Epoch Holding Corporation

$
100.00

$
118.14

$
311.40

$
213.17

$
208.80

$
310.31Russell 2000 Index


100.00


114.58


133.41


111.80


83.84


101.85Dow Jones U.S. Asset Managers TSM Index


100.00


120.12


162.75


141.85


106.93


97.69SIC Code 6282


100.00


118.93


173.22


144.00


107.85


113.28


23

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Table of Contents

The foregoing graph shall not be deemed to be "soliciting material" or "filed" or incorporated by reference in any previous or future documents filed by the
Company with the SEC under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates the information by reference in any such
document.

The
following table sets forth for the periods indicated the high, low, and quarter-end closing reported sale prices, as well as dividends declared per share for our Common
Stock:

Common Stock PricesHigh ($)

Low ($)

Closing
Price ($)

Dividends
Declared ($)FY 2010Quarter EndedJune 30


13.28


10.71


12.27


0.05March 31


11.50


8.96


11.29


0.05December 31


10.86


8.87


10.45


0.33
(1)September 30


9.85


7.82


8.75


0.03Year ended June 30, 2010


13.28


7.82


12.27


0.46FY 2009Quarter EndedJune 30


8.64


6.10


8.64


0.03March 31


7.50


4.08


6.87


0.03December 31


10.46


6.42


7.59


0.15
(2)September 30


11.95


8.52


10.55


0.03Year ended June 30, 2009


11.95


4.08


8.64


0.24


(1)includes
special dividend of $0.30 per share(2)includes
special dividend of $0.12 per share


The
closing price for our common stock as reported on the NASDAQ Global Select Market on September 2, 2010 was $10.33.

As
of September 2, 2010 there were approximately 1,046 holders of record of the Company's common stock. Since many of the shares are held in street nominee name, management
believes the number of beneficial owners of our common stock is substantially higher.

Dividend Policy:

Regular Dividends on Common Stock

Regular quarterly dividends of $0.03 per share were paid in the first and second quarters of fiscal year 2010. Effective with the third
quarter of fiscal year 2010, the Company increased its quarterly dividend rate from $0.03 to $0.05 per share. Approximately $3.6 million of regular dividends were declared and paid during the
fiscal year ended June 30, 2010.

Effective
with the first quarter of fiscal year 2009, the Company increased its quarterly dividend rate from $0.025 to $0.03 per share. A total of $2.7 million of regular
dividends were declared and paid during the fiscal year ended June 30, 2009.

The
Company expects regular quarterly cash dividends going forward to be paid in February, May, August and November of each fiscal year. However, the actual declaration of future cash
dividends, and the establishment of record and payment dates, is subject to determination by the Board of Directors each quarter after its review of the Company's financial performance, as well as
general business conditions, capital requirements, and any legal or regulatory restrictions. The Company may change its dividend policy at any time.

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Special Cash Dividends

As a result of the Company's strong cash position and debt-free balance sheet, the Board of Directors declared a special
cash dividend on November 16, 2009 of $0.30 per share. The dividend was paid on December 15, 2009 to all shareholders of record at the close of business on November 30, 2009. The
aggregate dividend payment totaled approximately $6.7 million.

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

Rule 10b5-1 Plans

Our executive officers may purchase or sell shares of our common stock in the open market from time to time. The Company's management
encourages these officers to make these transactions through plans that comply with Exchange Act Rule 10b5-1(c). The Company does not receive any proceeds related to these
transactions.

Equity Compensation Plan Information

As of June 30, 2010, there were 3,618,188 shares issued under the Company's Amended and Restated 2004 Omnibus
Long-Term Incentive Compensation Plan (the "2004 Plan"). There were 1,881,812 shares available for issuance comprising the following:

Plan Category

Number of
securities to be
issued upon
exercise of
outstanding options
(A)

Weighted-average
exercise price of
outstanding options
(B)

Number of securities
remaining available
for future issuance
under equity
compensation plan
(excluding securities
reflected in column (A))
(C)Equity compensation plans approved by security holders


572,448
(1)
$
6.17


1,309,364
(2)


(1)Represents
stock options granted in January 2009 under Epoch's Amended and Restated 2004 Omnibus Long-Term Incentive Compensation Plan. See
Note 13 to the consolidated financial statements for further information regarding the plan.(2)The
1,309,364 shares may be issued under our Amended and Restated 2004 Omnibus Long-Term Incentive Compensation Plan as options, restricted
stock awards or any other form of equity compensation.


Recent Sales of Unregistered Securities

None.

Issuer Purchases of Equity Securities

During the three months ended June 30, 2010, the Company did not repurchase any of its equity securities that are registered
pursuant to Section 12 of the Exchange Act.

Item 6.    Selected Financial Data.

The table on the following page presents selected financial data of the Company. This data was derived from the Company's consolidated
financial statements and reflects the operations and financial position of the Company at the dates and periods indicated.

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The
following selected historical consolidated financial data should be read in conjunction with Part II, Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations," and Item 8, "Financial Statements and Supplementary Data," on this form 10-K.

Selected Financial Data  (in thousands, except per share, AUM, and employee data)

For the Years Ended June 30,2010

2009

2008

2007

2006Consolidated Statements of Operations Data(7):Operating revenues:Investment advisory and management fees

$
52,546

$
30,561

$
33,634

$
22,964

$
10,136Performance fees


814


624


172


971


95Total operating revenues


53,360


31,185


33,806


23,935


10,231Expenses:Employee related costs (excluding share-based compensation)


20,775


15,919


17,711


13,878


8,641Share-based compensation


5,137


4,496


4,176


6,267


4,670Other expenses(1)


9,292


7,322


8,065


6,307


3,975Total operating expenses


35,204


27,737


29,952


26,452


17,286Operating income/(loss)


18,156


3,448


3,854


(2,517
)

(7,055
)Other income(2)


970


5,110


6,049


10,509


1,106Provision for/(benefit from) income taxes(3)


7,481


2,698


867


99


(227
)Net income/(loss)


11,645


5,860


9,036


7,893


(5,722
)Cumulative preferred stock dividends








460


299


Non-cash charge attributable to beneficial conversion feature of preferred stock











700


Net income/(loss) available to common stockholders

$
11,645

$
5,860

$
8,576

$
6,894

$
(5,722
)Consolidated Balance Sheet Data(7):Cash and cash equivalents

$
36,447

$
37,055

$
37,436

$
3,097

$
2,234Short-term investments

$


$


$


$
21,850

$
5,400Accounts receivable

$
11,156

$
7,523

$
6,391

$
6,293

$
2,486Total assets

$
62,703

$
55,007

$
54,349

$
39,374

$
13,568Long term borrowings

$


$


$


$


$
Total liabilities

$
7,088

$
5,217

$
9,004

$
3,931

$
4,713Total stockholders' equity

$
55,615

$
49,790

$
45,345

$
35,443

$
8,855Common Share Data:Earnings/(loss) per share from continuing operations:Basic

$
0.52

$
0.26

$
0.42

$
0.35

$
(0.31
)Diluted

$
0.52

$
0.26

$
0.41

$
0.35

$
(0.31
)Cash dividends declared and paid per common share(4)

$
0.46

$
0.24

$
0.075

$


$
Weighted-average shares outstanding:Basic


22,397


22,133


20,181


19,726


18,724Diluted


22,545


22,133


21,911


20,807


18,724Other Supplemental Data:Operating margin


34
%

11
%

11
%

(11
)%

(69
)%Working capital

$
43,697

$
41,897

$
36,792

$
32,685

$
6,945Current ratio(5)


8.0


10.8


5.6


12.6


3.0Cash provided by/(used in) operations

$
14,211

$
855

$
11,349

$
2,389

$
(1,133
)AUM (in millions):End of fiscal year

$
11,344

$
7,891

$
6,634

$
6,001

$
3,253Average

$
10,792

$
5,864

$
6,372

$
4,554

$
2,304Net AUM flows

$
2,564

$
2,650

$
1,087

$
1,778

$
1,640AUM organic growth rate(6)


33
%

40
%

18
%

55
%

117
%Number of employees


52


46


46


43


38


(1)Other
expenses include occupancy and technology expenses, professional fees and services, general and administrative costs, and depreciation and
amortization.


26

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Table of Contents

(2)Other
income includes both cumulative dividends received and realized gains recognized from dispositions of certain of the Company's privately held
investments. See Note 15 to the consolidated financial statements.(3)Provision
for income taxes was reduced in the fiscal year ended June 30, 2008 by the release of a valuation allowance against certain deferred tax
assets, and in the fiscal year ended June 30, 2007 by the utilization of net operating loss carryforwards. See Note 16 to the consolidated financial statements.(4)The
Company commenced declaring and paying cash dividends in the second quarter of the fiscal year ended June 30, 2008.(5)Current
ratio is derived by dividing current assets by current liabilities.(6)Net
AUM inflows divided by beginning of period assets.(7)Certain
prior year amounts have been reclassified to conform to the 2010 presentation.


Item 7.   Management's Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion together with our historical financial statements and related notes
included elsewhere herein and the information set forth under Item 6, "Selected Financial Data." The discussion contains forward-looking statements that involve risks and uncertainties. For
additional information regarding some of the risks and uncertainties that affect our business and the industry in which we operate, please read "Item 1A.Risk Factors" included
elsewhere herein. Our actual results may differ materially from those estimated or projected in any of these forward-looking statements.

Overview

We are a medium-sized global asset management firm with accomplished and experienced professionals. Our professional investment staff
averages over 20 years of industry experience per person. The Company was formed by its founders with the specific goal of responding to paradigm shifts occurring within the sources of global
equity investment returns and within the structure of the investment management business as a whole.

Headquartered
in New York City, the Company had approximately $11.3 billion in assets under management ("AUM") as of June 30, 2010. We remain debt-free and have
substantial capital resources available to fund current operations and implement our long-term growth strategy.

Our
operating subsidiary, Epoch Investment Partners, Inc. ("EIP"), is a registered investment adviser under the Investment Advisers Act of 1940, as amended (the "Investment Advisers
Act"). Its sole line of business is to provide investment advisory and investment management services to clients including corporations, mutual funds, endowments, foundations, and high net worth
individuals. These services are provided through both separately managed accounts and commingled vehicles, such as private investment funds and mutual funds.

Revenues
are generally derived as a percentage of AUM. Therefore, among other factors, revenues are dependent upon:



Our
most significant operating expense is employee related costs, which represents fixed salaries, variable incentive compensation, and related employee benefits. Variable incentive
compensation is primarily based upon management fee revenue, relative risk-adjusted investment performance and profits.

27

---



Table of Contents

AUM Fair Value Measurement

AUM consists of actively traded securities. The fair value of these securities is determined by an independent pricing service, which
uses publicly available, unadjusted, quoted market prices for measurement. The Company substantiates the values obtained with another independent pricing service to confirm that all prices are valid.
There is no judgment involved in the calculation of AUM in a manner that would directly impact the Company's revenue recognition.

Key Priorities for Driving Growth

We are committed to the development and growth of our business. Our principal objective is to achieve superior long-term
investment performance for our clients, while further developing our distribution channels in both the U.S. and abroad. Key priorities for driving growth include the
following:



Financial Highlights

For the fiscal year ended June 30, 2010, the Company reached several operating milestones. AUM exceeded $10 billion,
annual operating revenues were in excess of $50 million, and operating margins became more in line with leading asset management firms.
Additional noteworthy accomplishments during the past year include the following:



28

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Table of Contents



Key Performance Indicators

The table below presents financial results from what management considers to be its key operating and financial drivers for the past
three fiscal years ended June 30:

'10 vs '09 Change

'09 vs '08 Change2010

2009

2008

Amt

%

Amt

%Operating Indicators ($ in millions):AUM at end of period

$
11,344

$
7,891

$
6,634

$
3,453


44
%
$
1,257


19
%Average AUM for the period

$
10,792

$
5,864

$
6,372

$
4,928


84
%
$
(508
)

(8
)%Net client flows

$
2,564

$
2,650

$
1,087

$
(86
)

(3
)%
$
1,563


144
%Financial Indicators ($ in thousands):Operating Revenue

$
53,360

$
31,185

$
33,806

$
22,175


71
%
$
(2,621
)

(8
)%Operating Income

$
18,156

$
3,448

$
3,854

$
14,708


427
%
$
(406
)

(11
)%Net Income

$
11,645

$
5,860

$
9,036

$
5,785


99
%
$
(3,176
)

(35
)%Earnings Per Share:Basic

$
0.52

$
0.26

$
0.42

$
0.26


100
%
$
(0.16
)

(38
)%Diluted

$
0.52

$
0.26

$
0.41

$
0.26


100
%
$
(0.15
)

(37
)%Operating Margin(1)


34
%

11
%

11
%

NM


NM


NM


NM


(1)Defined
as operating income divided by total operating revenues.NMNot
meaningful.


The
Company achieved an operating margin of 34% during the current fiscal year ended June 30, 2010, consistent with the larger, well-established competitors in the
asset management industry. Operating revenues increased by $22.2 million, or 71%, as a result of $2.6 billion of net inflows from both domestic and international clients. Operating
income rose $14.7 million, or 427%, as the company's operating leverage benefitted from the significant operating revenue growth.

Business Environment

As an investment management and advisory firm, our results of operations will be directly impacted by global market, political, and
economic trends. The Company's business environment and equity markets are influenced by several factors, including corporate profitability, investor confidence, unemployment, and financial market
transparency. These factors can directly affect the performance of the equity markets, which in turn can impact our investment advisory and management business.

29

---



Table of Contents

Broad Market Indices*

Fiscal Year Ended June 30,Three Months Ended
June 30, 2010Index

2010

2009

2008Dow Jones Industrial Average(1)


(9.4
)%

18.9
%

(23.0
)%

(13.3
)%NASDAQ Composite(2)


(11.8
)%

16.0
%

(19.2
)%

(11.2
)%S&P 500(3)


(11.4
)%

14.4
%

(26.2
)%

(13.1
)%


(1)Dow
Jones Industrial Average is a trademark of Dow Jones & Company, which is not affiliated with Epoch.(2)NASDAQ
is a trademark of the NASDAQ Stock Market, Inc., which is not affiliated with Epoch.(3)S&P
is a trademark of Standard & Poor's, a division of the McGraw-Hill Companies, Inc., which is not affiliated with Epoch.*assumes
dividend re-investment.


Selected Benchmark Indices*

Fiscal Year Ended June 30,Three Months Ended
June 30, 2010Index

2010

2009

2008Russell 1000(1)


(11.4
)%

15.2
%

(26.7
)%

(12.4
)%Russell 2000(1)


(9.9
)%

21.5
%

(25.0
)%

(16.2
)%Russell 3000(1)


(11.3
)%

15.7
%

(28.7
)%

(12.7
)%MSCI World (Net)(2)


(12.7
)%

10.2
%

(29.5
)%

(10.2
)%


(1)Russell
Indices are trademarks of Russell Investments, which is not affiliated with Epoch.(2)MSCI
World Index is a trademark of MSCI Inc., which is not affiliated with Epoch.*assumes
dividend re-investment.


The
past fiscal year ended June 30, 2010 was a challenging one in the equity markets. Following a dramatic turnaround that began in March 2009, stocks remained in full rally mode
for the first nine months of the Company's fiscal year before coming under significant pressure in the last quarter of the fiscal year. The tone of the global equity markets for the first nine months
was decidedly positive, with credit conditions improving and economic growth resuming as the effects from both monetary and fiscal policies from central banks and governments around the world took
hold. These combined effects, coupled with improving corporate profits, paved the way for a sustained rebound in the financial markets, despite the presence of high unemployment and weak consumer
spending.

For
much of the firm's fiscal year, emerging markets, particularly China, India, and Brazil, furthered a rebound in global GDP through rising exports, greater industrial production, and
increases in local consumer confidence. Despite improvement in GDP levels for nearly all economic regions, employment weakness persisted in the developed countries as consumer and government debt
continued to burden growth rates for those countries. Nevertheless, global equity markets around the world moved higher.

However,
in the third quarter of the fiscal year, a slow down in loan growth in China, coupled with uncertainty in Europe with respect to its currency regime and how strong and stable
the current economic rebound might prove to be, created concerns about the sustainability of the global recovery. Increased anxiety over the sovereign debt crisis in Greece and other
Euro-zone nations gave rise to broader global concerns of deflation.

30

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Table of Contents

As
a result, our business environment became more challenging in the fourth quarter of the fiscal year. In addition to the above concerns, signs of a weak U.S. economic recovery began to
negatively impact the market indices. Consumer confidence, already at low levels, further declined and employment levels in the U.S. continued to remain weak. Lackluster economic data, the "flash
crash" in U.S. stock prices on May 6th, and the damage caused by the oil spill in the Gulf of Mexico, all negatively impacted investor sentiment. Internationally, concerns
remained over Euro-zone nations, while China's economy continued to signal slower growth. As a result, global equity markets declined approximately 10 - 13% during the quarter.

Company Impact and Outlook

While our results were positively impacted by the overall increase in equity markets during the fiscal year, the past several months
have been characterized by economic uncertainty, high unemployment, and low consumer confidence levels. These factors unfavorably impact equity markets and result in increased volatility. While equity
markets and our short-term investment performance has been negatively impacted, we continue to outperform the equity markets and related benchmarks on a longer-term basis,
results that are consistent with our investment philosophy.

Despite
another challenging year in the markets, we have continued to grow as a Company in ways that matter. Our operating margins are now on par with leading asset management firms in
the business. We have received several investment performance awards over the past fiscal year despite the challenging equity markets. Our distribution channels have further expanded, as evidenced by
the New York Life Investment Management business relationship. Firm recognition overseas continues to strengthen. AUM from foreign-based clients continues to grow and now accounts for approximately
30% of revenue. Above all, our corporate liquidity is one of strength, with liquid assetsdefined as cash, cash equivalents, and accounts receivabletotaling
$47.6 million, or approximately 76% of total assets as of June 30, 2010. We continue to operate debt-free.

With
continued focus on generating superior risk-adjusted performance, providing a high level of client service, and further developing our distribution capabilities, we
believe we are well-positioned to develop the firm and achieve our corporate goals.

31

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Table of Contents

Assets Under Management ("AUM")

The Company's AUM has continued to increase, experiencing positive net inflows every quarter since inception. The graph below depicts
the quarterly AUM and revenue growth for the past two fiscal years.

GRAPHIC

AUM and Flows

AUM increased to $11.3 billion at June 30, 2010, from $7.9 billion at June 30, 2009. This increase was
primarily attributable to the ongoing expansion of the Company's client base and flows into existing accounts, coupled with market appreciation. The Company continued to expand its institutional and
sub-advisory businesses, both of which increased by more than 40% from the prior year. The Company experienced growth in AUM in all products, particularly in its U.S. Value, U.S. All Cap,
and Global Absolute Return/Choice products.

32

---



Table of Contents

The
following table sets forth the changes in our AUM for the past three fiscal years (dollars in millions):

Fiscal Year Ended
June 30,2010

2009

2008Beginning of period assets

$
7,891

$
6,634

$
6,001Client flows:Inflows/new accounts


3,750


3,569


1,924Outflows/closed accounts


(1,186
)

(919
)

(837
)Net inflows


2,564


2,650


1,087Market appreciation/(depreciation)


889


(1,393
)

(454
)Net change


3,453


1,257


633End of period assets

$
11,344

$
7,891

$
6,634Percent change in total AUM


43.8
%

18.9
%

10.5
%Organic growth percentage(1)


32.5
%

39.9
%

18.1
%


(1)Net
inflows divided by beginning of period assets.


For
the fiscal year ended June 30, 2010 and the fiscal years ended June 30, 2009, and 2008, approximately 46%, 55%, and 55%, respectively, of investment advisory and
management fees were earned from services to mutual funds under advisory and sub-advisory contracts whose fees are calculated based upon daily net asset values, and approximately 54%, 45%,
and 45%, respectively, of fees were earned from services provided for separate accounts whose fees are calculated based upon asset values at the end of the quarter.

Strategic Relationship

On July 9, 2009, EIP entered into a strategic relationship with New York Life Investments, whereby the MainStay Group of Funds
adopted the Company's family of mutual funds (the "Epoch Funds"). The transaction was approved by the Board of Directors of the Epoch Funds and subsequently approved by the shareholders of the Epoch
Funds at a special meeting on October 30, 2009. The adoption of the Epoch Funds by New York Life Investments' MainStay Group of Funds was completed in November 2009. EIP continues to be
responsible for the day-to-day investment management of the funds through a sub-advisory relationship, while MainStay Investments ("MainStay"), the retail
distribution arm of New York Life Investments, is responsible for the distribution and administration of the funds. Each former Epoch Fund is now co-branded as a "MainStay Epoch" Fund.

In
addition to an existing sub-advisory relationship between EIP and New York Life Investments for certain funds, and the adoption of the Epoch Funds indicated above, EIP and
New York Life Investments have entered into an arrangement wherein, among other things, EIP and an affiliate of New York Life Investments have established a distribution and administration
relationship with respect to certain separately managed account and unified managed account products, and for a period of three years New York Life Investments agrees to pay certain additional base
fees and meet minimum distribution targets. For the fiscal year ended June 30, 2010, New York Life Investment Management, through the MainStay Epoch Funds and other funds
sub-advised by EIP, accounted for approximately 16% of consolidated operating revenues. The Company's services and relationship with New York Life Investment Management is considered
important to the Company's ongoing growth strategy.

33

---



Table of Contents

Distribution Channels

The following charts show the Company's AUM by distribution channel and annual changes, as well as their percentage of AUM as of the
end of the last three fiscal years (dollars in millions):

As of June 30, 2010

1-Year
ChangeDistribution Channel

AUM

Amt

%Sub-advisory

$
6,183

$
1,851


42.7
%Institutional(1)


4,915


1,606


48.5
%High net worth


246


(4
)

(1.6
)%Total AUM

$
11,344

$
3,453


43.8
%


GRAPHIC




As of June 30, 2009

1-Year
ChangeDistribution Channel

AUM

Amt

%Sub-advisory

$
4,332

$
1,252


40.6
%Institutional


3,309


46


1.4
%High net worth


250


(41
)

(14.1
)%Total AUM

$
7,891

$
1,257


18.9
%


GRAPHIC




As of June 30, 2008

1-Year
ChangeDistribution Channel

AUM

Amt

%Sub-advisory

$
3,080

$
204


7.1
%Institutional


3,263


498


18.0
%High net worth(2)


291


(69
)

(19.2
)%Total AUM

$
6,634

$
633


10.5
%


GRAPHIC




---

34

---



Table of Contents

Products

The following charts show the Company's AUM by product and annual changes, as well as their percentage of AUM as of the end of the last
three fiscal years (dollars in millions):

As of June 30, 2010

1-Year ChangeProduct

AUM

Amt

%U.S. Value

$
3,403

$
1,063


45.4
%U.S. All Cap Value/Balanced


2,646


630


31.3
%Global Equity Shareholder Yield


1,959


444


29.3
%Global Absolute Return/Choice


1,462


1,087


289.9
%U.S. Smid Cap Value


902


153


20.4
%Int'l/Int'l Small Cap


403


7


1.8
%U.S. Small Cap Value


362


37


11.4
%Global Small Cap


207


32


18.3
%Total AUM

$
11,344

$
3,453


43.8
%


GRAPHIC




As of June 30, 2009

1-Year ChangeProduct

AUM

Amt

%U.S. Value

$
2,340

$
841


56.1
%U.S. All Cap Value/Balanced


2,016


415


25.9
%Global Equity Shareholder Yield


1,515


(23
)

(1.5
)%U.S. Smid Cap Value


749


340


83
%Int'l/Int'l Small Cap


396


(152
)

(27.7
)%Global Absolute Return/Choice


375


(27
)

(6.7
)%U.S. Small Cap Value


325


(98
)

(23.2
)%Global Small Cap


175


(39
)

(18.2
)%Total AUM

$
7,891

$
1,257


18.9
%


GRAPHIC




As of June 30, 2008

1-Year ChangeProduct

AUM

Amt

%U.S. All Cap Value/Balanced

$
1,601

$
206


14.8
%Global Equity Shareholder Yield


1,538


215


16.3
%U.S. Value


1,499


344


29.8
%Int'l/Int'l Small Cap


548


(140
)

(20.3
)%U.S. Small Cap Value


423


(571
)(1)

(57.4
)%U.S. Smid Cap Value


409


396
(1)

3046.2
%Global Absolute Return/Choice


402


142


54.6
%Global Small Cap


214


41


23.7
%Total AUM

$
6,634

$
633


10.5
%


GRAPHIC




---

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Table of Contents

Results of Operations

For the fiscal years ended June 30, 2010, 2009, and 2008

'10 vs '09
Change

'09 vs '08
Change(Dollars in thousands)

2010

2009

2008

$

%

$

%Investment advisory and management fees

$
52,546

$
30,561

$
33,634

$
21,985


72
%
$
(3,073
)

(9
)%


The
increase in investment advisory and management fees during the fiscal year ended June 30, 2010 was attributable to the increase in AUM as a result of net inflows from new and
existing clients, as well as market appreciation. The Company experienced significant growth in its products from both domestic and international clients. Net inflows for the fiscal year were
approximately $2.6 billion, of which new clients accounted for $1.9 billion.

Average
AUM for the year ended June 30, 2010 was approximately $10.8 billion compared with $5.9 billion for the prior year, an increase of approximately 84%. U.S.
equity markets, as measured by
the S&P 500, increased by approximately 55% from the lows of March 2009 through June 2010. Global equity markets, as measured by the MSCI World Index, performed similarly over that period.

During
the fiscal year ended June 30, 2009, investment advisory and management fees decreased when compared with the previous year. The decrease was attributable to lower levels
of AUM when compared with fiscal year ended June 30, 2008. Average AUM for the fiscal year ended June 30, 2009 decreased approximately 8% from the fiscal year ended June 30, 2008
as a result of the significant decline in global equity markets, which declined approximately 25-30% during that period. This decline was partly offset by net AUM inflows of nearly
$2.7 billion from new and existing clients.

For
the fiscal year ended June 30, 2010, New York Life Investment Management, through the MainStay Epoch Funds and other funds sub-advised by EIP, accounted for
approximately 16% of revenue and CI Investments Inc. ("CI"), a Canadian-owned investment management company, accounted for approximately 9% of revenue.

During
the year ended June 30, 2009, CI accounted for 13% of revenue, while Genworth Financial Asset Management, Inc. ("Genworth"), an investment adviser, through its
investments in the Epoch Funds and separate account mandates, also accounted for approximately 13% of revenue. For the fiscal year ended June 30, 2008, CI accounted for 16% of revenue while
Genworth accounted for 25%.

'10 vs '09
Change

'09 vs '08
Change(Dollars in thousands)

2010

2009

2008

$

%

$

%Performance fees

$
814

$
624

$
172

$
190


30
%
$
452


263
%


The
Company has certain contracts that allow the Company to earn performance fees in the event that investment returns meet or exceed certain pre-established benchmarks
specified in the contracts. Revenues for these incentives are recognized only when such performance targets are met or exceeded at the end of the measurement period.

36

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Table of Contents

Increases
in these fees during the current fiscal year stemmed from the relative performance on new performance based contracts. Increases in the year ended June 30, 2009 over the
previous year were also the result of relative performance on new performance based contracts.

'10 vs '09
Change

'09 vs '08
Change(Dollars in thousands)

2010

2009

2008

$

%

$

%Employee related costs (excluding share-based compensation)

$
20,775

$
15,919

$
17,711

$
4,856


31
%
$
(1,792
)

(10
)%As of percent of total revenue


39
%

51
%

52
%


Expenses
in this category include salaries, benefits, severance, incentive compensation, signing bonuses and commissions.

These
expenses increased in the current year when compared with the prior year, primarily as a result of increased incentive compensation based on our operating results, particularly our
growth in AUM, net inflows, relative risk-adjusted investment performance, as well as increased revenue, operating income and margins.

The
Company places a high emphasis on pay for performance. As such, changes in the Company's performance as well as changes in the underlying performance of our investment products have
an impact on compensation and benefits.

Expenses
in this category are expected to increase during the next fiscal year, as the Company has added to its professional staff during fiscal 2010.

Employee
related costs decreased for the year ended June 30, 2009 from the previous year, primarily due to a reduction in incentive compensation, stemming from the reduction in
AUM levels and operating revenues during that fiscal year, particularly the first nine months. Employee staffing levels for the year ended June 30, 2009 were virtually unchanged from the year
ended June 30, 2008.

'10 vs '09
Change

'09 vs '08
Change(Dollars in thousands)

2010

2009

2008

$

%

$

%Share-based compensation

$
5,137

$
4,496

$
4,176

$
641


14
%
$
320


8
%As of percent of total revenue


10
%

14
%

12
%


The
Company believes that share-based compensation promotes unity in the workplace and a common objective with shareholders. The Company traditionally has issued share awards to certain
senior executives shortly following the fiscal year and to other employees shortly following the calendar year. Effective in the fiscal year ended June 30, 2009, the Company began issuing share
awards to all employees shortly following the calendar year.

The
Company granted $6.9 million and $4.7 million in restricted stock awards during the fiscal years ended June 30, 2010 and 2009, respectively. During the fiscal
year ended June 30, 2008, the Company granted $5.6 million in restricted stock awards. For the fiscal years ended June 30, 2010 and 2009, respectively, a total of 673,484 and
575,066 shares were granted at weighted-average prices of $10.20 and $8.17, respectively. During the fiscal year ended June 30, 2008 a total of 491,528 shares at a weighted-average price of
$11.47 were granted.

Share-based
awards increased during the fiscal year ended June 30, 2010 when compared with the previous year as a result of higher AUM, revenue and operating income levels.

During
the year ended June 30, 2009, share-based awards increased when compared with the year ended June 30, 2008 as the year ended June 30, 2009 incorporated a
six-month stub period for certain

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Table of Contents

senior
executives whose award issuance dates were revised to conform with the remainder of the Company's employees.

During
the fiscal year ended June 30, 2009, the Company issued options to purchase 630,060 shares of common stock to employees of the Company. These stock options vest annually
over three years. The related expense is recognized ratably over three years from the grant date and the stock options have a term of seven years. The options have an exercise price of $6.17. However,
upon vesting, the options are exercisable only if the volume weighted-average price of the Company's common stock equals or exceeds $9.25 for a period of at least 20 trading days. Issuance of these
awards will result in total stock compensation expense of $1.1 million over the requisite service period. No options were issued during the other years presented in the consolidated financial
statements.

The
Company granted $0.4 million in restricted stock awards to non-employee directors during both the fiscal years ended June 30, 2010 and 2009. For the fiscal
years ended June 30, 2010 and 2009, a total of 43,459 shares and 38,620 shares were granted at weighted-average prices of $8.91 and $9.10, respectively. The Company granted $0.5 million
in restricted stock awards to non-employee directors during fiscal year ended June 30, 2008. A total of 35,604 shares were granted at a weighted-average price of $13.39.

'10 vs '09
Change

'09 vs '08
Change(Dollars in thousands)

2010

2009

2008

$

%

$

%Occupancy and technology

$
3,723

$
3,024

$
3,130

$
699


23
%
$
(106
)

(3
)%As of percent of total revenue


7
%

10
%

9
%


Occupancy
and technology expenses consist primarily of office space rentals, market data services, and information technology costs.

As
a result of the Company's business expansion, an additional 10,000 square feet of office space was acquired in September 2009 under a sublease agreement. The costs associated with
this new space, including a separate sublease termination fee recognized in the quarter ended September 30, 2009, were the primary reasons for the increase in these expenses.

Expense
from office rentals is expected to decrease by approximately $0.4 million during the next fiscal year as the Company's lease for space at another location, subleased to an
unrelated third party, expires in November 2010.

During
the fiscal year ended June 30, 2009, these costs decreased when compared with the previous year, primarily as a result of lower technology and market data costs, which were
focal points of the Company's expense management and control efforts during that period.

'10 vs '09
Change

'09 vs '08
Change(Dollars in thousands)

2010

2009

2008

$

%

$

%Professional fees and services

$
2,839

$
2,211

$
2,481

$
628


28
%
$
(270
)

(11
)%As of percent of total revenue


5
%

7
%

7
%


Professional
fees and services include outside legal fees for general corporate legal matters, independent accountants' fees, consulting fees, employee placement fees and other
professional services.

Increased
legal fees in connection with the New York Life/MainStay strategic relationship were a primary reason for the increase during the year ended June 30, 2010. Consulting
fees incurred to enhance existing systems were also a contributing factor.

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During
the fiscal year ended June 30, 2009, professional service fees declined from the comparable previous year period due to decreased employment placement fees. A decline in
legal fees also led to this expense decrease as the June 30, 2008 period included certain legal expenses incurred in the origination of new investment vehicles.

'10 vs '09
Change

'09 vs '08
Change(Dollars in thousands)

2010

2009

2008

$

%

$

%General and administrative

$
2,079

$
1,653

$
2,034

$
426


26
%
$
(381
)

(19
)%As of percent of total revenue


4
%

5
%

6
%


General
and administrative expenses consist primarily of expenses for travel and entertainment, advertising, marketing, and other office related expenses.

An
increase in travel related expenses to support new client mandates and the expansion of the Company's distribution channels, as well as an increase in product distribution costs, were
the main reasons for the increase in general and administrative expenses during the current fiscal year.

During
the fiscal year ended June 30, 2009, general and administrative expenses decreased when compared with the previous year. Lower travel related costs, another focus of the
Company's cost control efforts at that time, was a primary reason for this decline.

'10 vs '09
Change

'09 vs '08
Change(Dollars in thousands)

2010

2009

2008

$

%

$

%Depreciation and amortization

$
651

$
434

$
420

$
217


50
%
$
14


3
%As of percent of total revenue


1
%

1
%

1
%


Depreciation
and amortization increased during the current fiscal year compared to the prior comparable year. The increase is primarily the result of amortization on leasehold
improvement expenditures related to the newly subleased office space commencing in September 2009.

Depreciation
and amortization for the prior fiscal year ended June 30, 2009 was virtually unchanged from that of the previous fiscal year.

'10 vs '09
Change

'09 vs '08
Change(Dollars in thousands)

2010

2009

2008

$

%

$

%Other income

$
970

$
5,110

$
6,049

$
(4,140
)

(81
)%
$
(939
)

(16
)%As of percent of income before income taxes


5
%

60
%

61
%


Other
income primarily includes realized gains and losses on sales of investments, interest income, and rental income from subleased office space.

The
prior fiscal year ended June 30, 2009 includes realized gains of $4.7 million from the Strategic Data Corporation transaction (seeSignificant
Prior Year Transactiondiscussion), losses on investments of $0.6 million, and approximately $0.5 million in interest income. Additionally, lower interest rates
during the fiscal year ended June 30, 2010 caused interest income to significantly decline when compared with the previous year.

Other
income for the year ended June 30, 2008 included realized gains of $3.7 million from the sales of marketable securities, realized gains of $0.3 million from
the Strategic Data transaction, approximately $1.3 million of interest income, and $0.6 million of sublease income. Lower short-term interest rates during the year ended
June 30, 2009 when compared with the previous fiscal year caused interest income to decline.

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Sublease income will decline during the next fiscal year by $0.5 million, as the Company's sublease of space at another location to an unrelated third
party expired in August 2010.

'10 vs '09
Change

'09 vs '08
Change(Dollars in thousands)

2010

2009

2008

$

%

$

%Provision for income taxes

$
7,481

$
2,698

$
867

$
4,783


177
%
$
1,831


211
%Effective income tax rate


39.1
%

31.5
%

8.8
%


The
provision for income taxes for the year ended June 30, 2010 is significantly higher than that of the previous year and is a function of the Company's operating results.

The
provision for income taxes, as well as the effective income tax rate, significantly increased for the fiscal year ended June 30, 2009 when compared with the previous year
ended June 30, 2008. During the year ended June 30, 2008, the Company released a valuation allowance of approximately $3.1 million against certain deferred tax assets, primarily
deferred stock compensation expense and compensation accruals.

Liquidity and Capital Resources

The Company's operating cash flows are primarily influenced by the timing and receipt of investment management fees, and the payment of
operating expenses, including cash incentive compensation to employees. Investment management fees are generally collected within 90 days of billing. The Company traditionally had paid cash
incentive compensation to certain senior executives shortly after the fiscal year and to all other employees shortly after the calendar year. Commencing in the fiscal quarter ending March 31,
2009, the Company began to pay cash incentive compensation to all employees following the calendar year. To implement such a shift, the Company utilized a six-month stub period at that
time for those senior executives.

Investing
cash flows are principally influenced by activities to acquire property and equipment, reinvestment of income from investments in Company-sponsored products, and investments in
held-to-maturity securities.

Financing
cash flows are predominately influenced by the payment of common stock dividends and the repurchase of the Company's common stock. The Company has been making quarterly
dividend payments on its common stock since the quarter ended December 31, 2007 and has paid two special dividends.

The
Company has no debt and management does not foresee any reason to incur debt unless a significant business opportunity warrants such action. The Company routinely evaluates its
strategic position and maintains a disciplined acquisition and alliance effort which seeks complementary products or new products which could benefit clients. While the Company plans to actively seek
such opportunities, there can be no assurance that acquisitions can be identified or consummated on terms that are attractive to the Company. Management believes that opportunities are available, but
will only act on opportunities that it believes are accretive to the Company's long-term business strategy.

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Table of Contents

The
charts that follow depict the Company's five-year performance in what it considers key liquidity indicators:

GRAPHIC

GRAPHIC


Sources of Liquidity

Sources of funds for the Company's operations are derived from investment advisory and investment management fees, interest on the
Company's cash, cash equivalents, held-to-maturity securities, and sublease income. The Company's balance sheet continues to reflect significant liquidity. As of
June 30, 2010, the Company had $47.6 million of liquid assets, consisting of cash and cash equivalents of $36.4 million and accounts receivable of $11.2 million, to fund
its business growth strategy. Given the availability of these funds, the Company does not maintain or anticipate a need for an external source of liquidity.

The
Company also realized excess income tax benefits of $0.4 million during the fiscal year ended June 30, 2010. Excess income tax benefits reduce the amount of income
taxes to be paid. Excess income tax benefits arise in connection with the Company's share-based compensation. When a restricted stock award vests, the market price on the date the stock vests to the
employee may be higher than the original grant-date fair market value of the award. If so, the difference between the cumulative amount that has been recognized through the Statement of
Operations and the vesting amount results in an excess income tax benefit. Excess income tax benefits reduce income taxes payable and increase additional paid-in capital in the period they
are recognized.

Management
believes that the sources of liquidity described above will be sufficient to meet the Company's operating needs for the foreseeable future and will enable it to continue
implementing its growth strategy.

Uses of Liquidity

The Company remains committed to growing its business in this challenging market environment and expects that its main uses of cash
will be to pay corporate
operating expenses, enhance technology infrastructure, pay quarterly dividends, and re-acquire shares of its common stock when appropriate.

Our
philosophy regarding the maintenance of a balance sheet with a large component of cash and cash equivalents reflects our views on potential future capital requirements relating to
enhancement of our investment capabilities, creation and expansion of distribution channels, potential strategic acquisitions or transactions, and possible challenges to our business. We regularly
assess our approach in view of our current and potential future needs.

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Table of Contents

Cash Flows

A summary of cash flow data for the fiscal years ended June 30 is as follows (dollars in
thousands):

2010

2009

2008Cash flows provided by/(used in):Operating activities

$
14,211

$
855

$
11,349Investing activities


(3,778
)

4,596


23,570Financing activities


(11,041
)

(5,832
)

(580
)Net (decrease)/increase in cash and cash equivalents


(608
)

(381
)

34,339Cash and cash equivalents at beginning of period


37,055


37,436


3,097Cash and cash equivalents at end of period

$
36,447

$
37,055

$
37,436Percent of total assets


58
%

67
%

69
%


Cash Flows from Operating Activities

For the fiscal year ended June 30, 2010, net cash provided by operating activities totaled $14.2 million. The significant
increase from the prior fiscal year reflects the increase in revenues and related operating income of the Company.

Increased
accounts receivable is reflective of higher management fees during the fourth quarter ended June 30, 2010 as a result of the increased levels of AUM and revenue compared
with the same period a year ago. Accrued compensation and benefits, which increased by $1.5 million from the comparable period a year ago, primarily represents accruals for incentive
compensation. This liability is generally paid shortly after the calendar year.

For
the fiscal year ended June 30, 2009, net cash provided by operating activities was $0.9 million. The decline from the prior fiscal year reflected the payment of income
taxes and the timing of payments of incentive compensation to certain senior executives during the fiscal year ended June 30, 2009.

Cash Flows from Investing Activities

Cash flows used in investing activities for the fiscal year ended June 30, 2010 totaled $3.8 million. During the current
year the Company purchased, net of redemptions, $2.0 million of long-term debt securities yielding higher interest rates than money market instruments. These securities are
classified as held-to-maturity securities on the Consolidated Balance Sheet as it is management's intention to hold these securities until they mature. Capital expenditures of
approximately $1.6 million on leasehold improvements and office equipment for the newly subleased office space also contributed to the use of funds.

During
the fiscal year ended June 30, 2009, the Company's investing activities provided $4.6 million. These activities included receipts of $4.9 million representing
the final installment payments from the Strategic Data transaction. The Company also invested approximately $0.3 million into a Company-sponsored fund in January 2009. Fiscal year ended
June 30, 2008 investing activities included investments of approximately $3.6 million into several Company-sponsored products, as well as $21.9 million of proceeds from the sale
of short-term investments and $5.1 million of proceeds from the sales of shares of marketable securities. In the fiscal year ended June 30, 2008, in
response to increasing credit quality concerns present in the fixed income securities market, the Company liquidated all of its short-term investments. Proceeds from these liquidations
were then invested in cash and cash equivalents. No gains or losses were realized from these liquidations.

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Table of Contents

Cash Flows from Financing Activities

Cash flows from financing activities primarily reflect the payment of common stock dividends, share buy-backs and the
recognition of excess income tax benefits on share-based compensation. Cash used for financing activities totaled $11.0 million and $5.8 million for the fiscal years ended
June 30, 2010 and June 30, 2009, respectively.

Dividends
paid during the fiscal year ended June 30, 2010 were approximately $10.2 million, including a special dividend of $6.7 million. During the same period, the
Company repurchased 209,601 shares of common stock under our authorized repurchase program for approximately $1.9 million. Partially offsetting these financing outflows was the recognition of
$0.4 million in excess income tax benefits related to the vesting of restricted stock.

During
the fiscal year ended June 30, 2009, approximately $5.3 million of dividends were paid during the year, including a special dividend of $2.6 million. In
addition, the Company repurchased 263,900 shares of common stock under the authorized repurchase program for approximately $1.9 million, and an additional $0.2 million from employees to
facilitate tax withholding upon the vesting of restricted stock. Partially offsetting these cash outflows was the recognition of $1.7 million in excess income tax benefits related to the
vesting of restricted stock.

Cash
used in financing activities for the fiscal year ended June 30, 2008 was $0.6 million and primarily related to $2.0 million in payments of common and preferred
stock dividends offset by excess income tax benefits of $1.6 million.

Working Capital

The Company's working capital and current ratio for the past two years is set fourth in the table below
(dollars in thousands):

June 30,

Change2010

2009

$

%Current Assets

$
49,937

$
46,152

$
3,785


8
%Current Liabilities


6,240


4,255


1,985


47
%Working Capital

$
43,697

$
41,897

$
1,800


4
%Current Ratio(1)


8.0


10.8


(2.8
)

(26
)%


(1)current
assets divided by current liabilities


The
Company's working capital has increased every fiscal year since June 2006. Management expects its working capital to increase over the next fiscal year as a result of its increase in
operating margin due to higher AUM and revenue levels.

Capital Expenditures

In September 2009, the Company entered into a sublease agreement for an additional 10,000 square feet of office space. Leasehold
improvements and purchases of additional office equipment resulted in nearly $1.6 million of capital expenditures for the current fiscal year.

Regular Dividends on Common Stock

Regular quarterly dividends of $0.03 per share were paid in the first and second quarters of fiscal year 2010. Effective with the third
quarter of fiscal year 2010, the Company increased its quarterly dividend rate from $0.03 to $0.05 per share. Approximately $3.6 million of regular dividends were declared and paid during the
fiscal year ended June 30, 2010.

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Table of Contents

Effective
with the first quarter of fiscal year 2009, the Company increased its quarterly dividend rate from $0.025 to $0.03 per share. A total of $2.7 million of regular
dividends were declared and paid during the fiscal year ended June 30, 2009.

The
Company expects regular quarterly cash dividends going forward to be paid in February, May, August and November of each fiscal year. However, the actual declaration of future cash
dividends, and the establishment of record and payment dates, is subject to determination by the Board of Directors each quarter after its review of the Company's financial performance, as well as
general business conditions, capital requirements, and any legal or regulatory restrictions. The Company may change its dividend policy at any time.

Special Cash Dividends

As a result of the Company's strong cash position and debt-free balance sheet, the Board of Directors declared a special
cash dividend on November 16, 2009 of $0.30 per share. The dividend was paid on December 15, 2009 to all shareholders of record at the close of business on November 30, 2009. The
aggregate dividend payment totaled approximately $6.7 million.

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

Common Stock Repurchase Plan

On June 24, 2008, the Company's Board of Directors approved the repurchase of up to a maximum of 250,000 shares. The repurchase
plan called for the repurchases to be made in the open market and/or in privately negotiated transactions from time to time in compliance with applicable laws, rules and regulations, including
Rule 10b-18 under the Securities Exchange Act of 1934, as amended, subject to prevailing market and business conditions. The plan did not obligate the Company to purchase any
particular number of shares, and could be suspended or discontinued at any time. The Company completed this repurchase in February 2009.

In
March 2009, the Company's Board of Directors authorized the Company to repurchase up to an additional 250,000 shares, pursuant to the same conditions, except the repurchase plan does
not contain an expiration date. In December 2009 the Company's Board of Directors approved the repurchase of an additional 300,000 shares.

As
of June 30, 2010, the Company has repurchased a cumulative total of 482,401 shares and has 317,599 shares remaining for repurchase under the existing repurchase plan. The table
below presents annual shares repurchased and the average price per share:

For the Years Ended June 30,2010

2009

2008Shares
Repurchased

Weighted-
Average
Price per
Share

Shares
Repurchased

Weighted-
Average
Price per
Share

Shares
Repurchased

Weighted-
Average
Price per
Share209,601

$
9.21


263,900

$
7.36


8,900

$
9.25


Contractual Obligations

Office Space

The Company's headquarters and operations are located at 640 Fifth Avenue, New York, New York. Business is conducted at a location with
approximately 20,000 square feet under long-term leases that expire in September 2015.

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Table of Contents

The Company is also the primary party to another lease in New York City, with approximately 8,500 square feet, which expires in November 2010. In January 2002, a
sublease agreement was executed with an unrelated third party for this property. While the Company remains responsible under terms of the original lease, the subtenant has assumed those
responsibilities and is performing its obligations under the sublease agreement. This sublease expired in August 2010.

Employment Agreement

The Company entered into a three-year employment agreement with its Chief Executive Officer in November 2007, effective
January 1, 2008. The agreement calls for a base annual salary of $350 thousand and bonus compensation in accordance with the Company's bonus and incentive compensation plans then in
effect. The agreement also calls for certain payments in the event of termination. The payments could vary depending on the cause of termination and whether or not the Board of Directors elects to
enforce the non-compete agreement. The agreement was reviewed and approved by the Company's Compensation Committee and the Board of Directors. There are no employment contracts with any
other officers or employees of the Company.

Summary of Contractual Obligations

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

Payments Due in Fiscal Years Ended June 30,2011

2012 - 2013

2014 - 2015

2016 and
Thereafter

TotalPrimary New York operations(1)

$
1,414

$
2,854

$
2,854

$
357

$
7,479Subleased New York lease


200











200Other operating leases


20


20








40Total obligations


1,634


2,874


2,854


357


7,719Sublease income, net(2)


(96
)










(96
)Net obligations

$
1,538

$
2,874

$
2,854

$
357

$
7,623


(1)In
September 2009, the Company terminated a sublease agreement, which was to expire in June 2010, and entered into a new sublease agreement.(2)Amounts
are net of landlord profit sharing.


Off-Balance Sheet Arrangements

As of June 30, 2010, the Company had no off-balance sheet arrangements.

Significant Prior Year Transactions

Strategic Data Corporation Transaction

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

On
February 20, 2007, SDC's stockholders approved the acquisition of its stock by Fox Interactive Media, Inc. ("FIM"). Under the terms of the agreement, FIM acquired all of
the outstanding common

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Table of Contents

stock,
preferred stock, and vested and unvested stock options of SDC. The SDC merger also called for contingent payments, upon the achievement of certain targets and milestones, payable over a period
of approximately 3.5 years from the closing date.

The
merger agreement was subsequently amended during the quarter ended December 31, 2008 to provide for a final settlement of all contingent payments by December 31, 2008.
As such, additional payments totaling $4.7 million were received in December 2008. These payments represented the final contingent payments and are included in Net realized gains on investments
in the Consolidated Statements of Operations for the fiscal year ended June 30, 2009.

eStara Transaction

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

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

During
the fiscal year ended June 30, 2008, the Company sold the remaining 1.4 million shares of ARTG and recognized realized gains of approximately $3.7 million.
Upon sale, these gains were reclassified from Accumulated other comprehensive income (loss) a separate component of stockholders' equity, to Net realized gains on investments in the Consolidated
Statements of Operations.

Fair Value Measurements

The Company's Other investments, which includes available-for-sale securities, are measured at fair value. Fair
values for these investments are determined based upon unadjusted quoted market prices. These investments trade on financial exchanges, with active daily prices.

The
gross unrealized losses from available-for-sale securities were primarily caused by overall weakness in the financial markets and world economy. The
securities are expected to recover their value over time. Management has the intent, and ability to hold these investments until such recovery occurs.

The
Company does not hold any derivative instruments or financial liabilities. See Note 8 to the consolidated financial statements for a further discussion on Fair Value Measurements.

Critical Accounting Estimates

The Company's consolidated financial statements are prepared in accordance with Generally Accepted Accounting Principles ("GAAP"). In
connection with the preparation of the Company's financial statements, management is required to make assumptions and estimates about future events, and apply judgments that affect the reported
amounts of assets, liabilities, revenue, expenses and disclosure of contingent assets and liabilities. Management bases their assumptions, estimates and judgments on historical experience, current
trends and other factors that it feels to be relevant at the time the Company's consolidated financial statements are prepared. On a regular basis, management reviews the accounting policies,
assumptions, estimates and judgments to ensure that the Company's

46

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financial
statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from the
Company's assumptions and estimates, and such differences could be material.

The
Company's significant accounting policies and estimates are discussed in Note 2, Summary of Significant Accounting Policies, of
the Notes to the consolidated financial statements, included in Item 8,Financial Statements and Supplementary Dataof this Annual Report on
Form 10-K. Management believes that the following accounting estimates are the most subjective, resulting from the need to make estimates about the effect of matters that are
inherently uncertain. Management has reviewed these critical accounting estimates and related disclosures with the Audit Committee of the Company's Board of Directors.

Provision for Income Taxes

Management's judgment is required in developing the Company's provision for income taxes, including the determination of deferred tax
assets and liabilities and any valuation allowances that might be required against deferred tax assets. The Company has annual limitations on certain acquired net operating losses ("NOLs"). As such,
their utilization prior to their expiration cannot be reasonably assured.

Share-Based Compensation:

The Company issued employee stock options to purchase shares of common stock during the fiscal year ended June 30, 2009. The
Company values stock options based upon the Black-Scholes option-pricing model and recognizes this value as an expense over the requisite service period. Implementation of the Black-Scholes
option-pricing model requires the Company to make certain assumptions, including expected volatility, risk-free interest rate, expected dividend yield and expected life of the options. The
Company utilized assumptions that it believed to be most appropriate at the time of the valuation.

Management
makes certain assumptions when recognizing share-based compensation, net of forfeitures. If actual events were to differ from management's assumptions, differences could
potentially be material.

Recently Issued Accounting Standards

New Consolidation Guidance for Variable Interest Entities

In June 2009, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU")
No. 2009-17. ASU No. 2009-17 amends the guidance on the determination of the primary beneficiary of a Variable Interest Entity ("VIE") from a quantitative model
to a qualitative model and requires additional disclosures about an enterprise's involvement in VIEs. Under the new qualitative model, the primary beneficiary must have the power to direct the
activities of the VIE and the obligation to absorb losses or the right to receive gains that could be potentially significant to the VIE.

The
Company adopted ASU No. 2009-17 effective January 1, 2010. The adoption of this standard did not have a material effect on its consolidated financial
position, results of operations or earnings per share.

Fair Value

In January 2010, the FASB issued ASU 2010-06,Improving Disclosures about Fair Value
Measurement. ASU 2010-06 adds disclosure requirements about transfers in and out of Levels 1 and 2 and separate disclosures about activity relating to
Level 3 measurements and clarifies existing disclosure

47

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Table of Contents

requirements
related to the level of disaggregation and input and valuation techniques. As the update affected disclosures only, the adoption of the update did not have an impact on the Company's
consolidated financial statements.

Subsequent Events

In February 2010, the FASB issued an update to address certain implementation issues related to an entity's requirement to perform and
disclose subsequent-events procedures. Effective upon its issuance, the update exempts SEC filers from disclosing the date through which subsequent events have been evaluated. As the update affected
disclosures only, the adoption of the update did not have an impact on the Company's consolidated financial statements.

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk.

In the normal course of business, the Company's financial position is subject to different types of risk, including market risk. Market
risk is the risk that the Company will incur losses primarily due to adverse changes in equity prices. Management is responsible for identifying, assessing and managing market and other risks. The
following information, together with information included in other parts of Item 7,Management's Discussion and Analysis of Financial Condition and Results of
Operations, illustrate the significant characteristics of certain items that have market risk to the Company.

AUM Market Risk

The Company's predominant exposure to market risk is directly related to its role as an investment adviser for the mutual funds and
separate accounts the Company manages. Changes in value of assets managed will impact the level of management and performance fee revenues. Approximately 46% of the Company's revenue is derived from
daily net asset values, while the remaining 54% of revenue is derived from market values of AUM at the end of the quarter. Declines in equity security market prices could cause revenues to decline
because of lower investment management fees by causing:



Underperformance
of client accounts relative to competing products could exacerbate these factors. The management of market risk on behalf of our clients, and the impact on fees to the
Company, is a significant focus for us and we use a variety of risk measurement techniques to identify and manage market risk.

Other Investments Market Risk

The Company is exposed to fluctuations in the market price of its Other investments. Other investments consist of investments in
Company-sponsored investment vehicles, including mutual funds, an investment product separate account, and a limited liability company. The Company does not hedge its market risk related to these
securities and does not intend to do so in the future.

At
June 30, 2010 and June 30, 2009, respectively, the Company performed a sensitivity analysis to assess the potential loss in the fair value of these
market-risk sensitive securities. The following table

48

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Table of Contents

represents
the estimated impact on the Company's financial position assuming a hypothetical 10% decline in associated market indices (dollars in thousands):

Fair Value

Fair Value
Assuming 10%
Decline(1)

Decrease in
Stockholders'
Equity(2)At June 30, 2010:Available-for-sale securities:Epoch Global All Cap separate account

$
2,377

$
2,154

$
128Company-sponsored mutual funds


895


810


49Equity method:Epoch Global Absolute Return Fund, LLC


426


398


16Total Other investments

$
3,698

$
3,362

$
193At June 30, 2009:Available-for-sale securities:Epoch Global All Cap separate account

$
2,058

$
1,890

$
168Company-sponsored mutual funds


806


737


69Equity method:Epoch Global Absolute Return Fund, LLC


388


357


31Total Other investments

$
3,252

$
2,984

$
268


(1)The
example shown is hypothetical and actual declines in associated market indices may be greater than or less than the 10% shown.(2)Investments
in the Company-sponsored mutual funds and the Epoch Global All-Cap separate account are classified as
available-for-sale securities. Unrealized gains or losses on available-for-sale securities are excluded from earnings and recorded in other
comprehensive income (loss), net of tax, as a separate component of stockholders' equity until realized. The investment in the Epoch Global Absolute Return Fund, LLC is accounted for using the
equity method, under which the Company's share of net realized and unrealized earnings or losses from the limited liability company is reflected in net income. The impact on stockholders' equity at
June 30, 2009 incorporates the effect of valuation allowances for income taxes.


Interest Rate Risk

The Company's AUM is subject to interest rate risk. Changes in both domestic and global interest rates may impact the valuation of
equities, and thus the Company's AUM and operating revenues.

The
Company's investment income is sensitive to fluctuation in interest rates. Investment income consists primarily of interest income and realized gains and losses on its investments.
During the fiscal year ended June 30, 2010, the Company purchased long-term debt securities. Since it is management's intent to hold these investments until they mature, these
investments have been accounted for as held-to-maturity securities. The Company does not hedge its market risk related to these securities and does not intend to do so in the
future. The Company believes that a hypothetical change in interest rates of 100 basis points would not have a material impact on its condensed consolidated results of operations, financial condition
or cash flows.

49

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Table of Contents

The
table that follows provides information about the Company's investment securities held-to-maturity, including expected principal flows for the fiscal years
June 30, 2011 through June 30, 2016 and thereafter (dollars in thousands):

Payments Due in Fiscal Years Ended June 30,2011

2012

2013

2014

2015

2016 and
Thereafter

Total
Principal
Cash Flows

Fair Market
Value at
June 30,
2010Long-term debt securities

$


$
350

$
1,050

$
500

$


$


$
1,900

$
2,046Weighted-average interest rate





1.67
%

2.14
%

2.66
%







2.19
%


Cash and Cash Equivalents

Cash consists of amounts held in checking and money market accounts. Cash equivalents includes highly liquid investments in money
market funds consisting of short-term securities of the U.S. government and its agencies with maturities of three months or less when acquired. Cash and cash equivalents are exposed to
market risk due to changes in interest rates, which impacts interest income. Cash equivalents are stated at cost, which approximates fair value due to their short maturity.

The
Company monitors the quality of the institution where its cash is deposited, the balance of which, at times, may be in excess of the Federal Deposit Insurance Corporation insurance
limits. Presently, the Company neither participates in hedging activities nor does it have any derivative financial instruments.

50

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Table of Contents

Item 8.    Financial Statements and Supplementary Data.

The financial statements and supplementary financial information required by this Item are listed in the Index to Financial Statements
below:

EPOCH HOLDING CORPORATION AND SUBSIDIARIES  INDEX TO FINANCIAL STATEMENTS, SUPPLEMENTARY DATA  AND FINANCIAL STATEMENT SCHEDULES



(1) Financial Statements:Report of Management on Internal Control over Financial
Reporting


52Report of Independent Registered Public Accounting Firm


53Consolidated Balance Sheets at June 30, 2010 and 2009


54Consolidated Statements of Operations for the Years Ended June 30, 2010, 2009 and 2008


55Consolidated Statements of Changes in Stockholders' Equity for the Years Ended June 30, 2010, 2009 and
2008


56Consolidated Statements of Cash Flows for the Years Ended June 30, 2010, 2009 and 2008


57Notes to Consolidated Financial Statements


58(2) Supplementary Data:Quarterly Financial Information (Unaudited) for the years ended June 30, 2010 and 2009


80


Certain
financial statement schedules are omitted because the required information is provided in the consolidated financial statements or the notes thereto.

All
other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are
inapplicable and therefore have been omitted.

51

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Table of Contents

REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of the Company is responsible for establishing and maintaining adequate internal control over the Company's financial
reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended. A company's internal control over financial
reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the
company's Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in conformity with accounting principles generally accepted in the United States of America and include those policies and procedures that:



There
are inherent limitations in the effectiveness of internal control over financial reporting, including the possibility that misstatements may not be prevented or detected.
Accordingly, even effective internal controls over financial reporting, no matter how well designed and operated, can provide only reasonable, not absolute, assurance with respect to financial
statement preparation. Furthermore, the effectiveness of internal controls can change with circumstances.

Management
has assessed the effectiveness of the Company's internal control over financial reporting as of June 30, 2010 based on the framework set forth by the Committee of
Sponsoring Organizations of the Treadway Commission ("COSO") inInternal ControlIntegrated Framework. Based on that assessment, management
has concluded that, as of June 30, 2010, the Company's internal control over financial reporting is effective.

CF & Co., L.L.P.,
an independent registered public accounting firm, has issued an attestation report on the effective operation of Epoch Holding Corporation and
Subsidiaries' internal control over financial reporting as of June 30, 2010. As stated in their report appearing herein, CF & Co., L.L.P. has expressed an unqualified
opinion on the effective operation of internal control over financial reporting as of June 30, 2010.

September 8,
2010

52

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Table of Contents

LOGO

Report of Independent Registered Public Accounting Firm

To
the Board of Directors and Stockholders of
Epoch Holding Corporation and Subsidiaries:

We
have audited the accompanying consolidated balance sheets of Epoch Holding Corporation and Subsidiaries as of June 30, 2010 and 2009, and the related consolidated statements of
operations, changes in stockholders' equity, and cash flows for each of the years in the three-year period ended
June 30, 2010. We also have audited Epoch Holding Corporation and Subsidiaries' internal control over financial reporting as of June 30, 2010, based on criteria established in Internal ControlIntegrated
Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Epoch Holding
Corporation and Subsidiaries' 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 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
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material
respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall financial statement presentation. 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.

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 controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Epoch Holding Corporation and Subsidiaries as
of June 30, 2010 and 2009, and the results of their operations and their cash flows for each of the years in the three-year period ended June 30, 2010, in conformity with
accounting principles generally accepted in the United States of America. Also in our opinion, Epoch Holding Corporation and Subsidiaries maintained, in all material respects, effective internal
control over financial reporting as of June 30, 2010, based on criteria established inInternal ControlIntegrated Frameworkissued
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

GRAPHICCF & Co., L.L.P.


Dallas,
Texas
September 8, 2010

53

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Table of Contents



EPOCH HOLDING CORPORATION AND SUBSIDIARIES        CONSOLIDATED BALANCE SHEETS        (in thousands, except share data)

June 30,2010

2009ASSETSCurrent assets:Cash and cash equivalents

$
36,447

$
37,055Accounts receivable


11,156


7,523Deferred income taxes, net(Note 16)


861


528Security deposits


462


Prepaid and other current assets


1,011


1,046Total current assets


49,937


46,152Property and equipment, net of accumulated depreciation of $2,454 and $1,803, respectively(Note 5)


2,187


1,275Security deposits


770


1,119Deferred income taxes, net(Note 16)


4,110


3,209Held-to-maturity securities, at amortized cost (fair value of $2,046)(Note 6)


2,001


Other investments, at fair value (cost of $3,856 and $3,559, respectively)(Note 7)


3,698


3,252Total assets

$
62,703

$
55,007LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable and accrued liabilities(Note 9)

$
929

$
636Accrued compensation and benefits


5,041


3,573Subtenant security deposit


238


Income taxes payable


32


46Total current liabilities


6,240


4,255Deferred rent


848


728Subtenant security deposit





234Total liabilities


7,088


5,217Commitments and contingencies(Note 10)Stockholders' equity:Common stock, $0.01 par value per share, 60,000,000 shares authorized; 23,269,262 issued and 22,786,861 outstanding at June 30, 2010 and 22,502,992
issued and 22,198,811 outstanding at June 30, 2009, respectively


233


225Additional paid-in capital


56,893


50,848Retained earnings


2,668


1,256Accumulated other comprehensive loss, net of tax


(223
)

(307
)Treasury stock, at cost, 482,401 and 304,181 shares, respectively(Note 11)


(3,956
)

(2,232
)Total stockholders' equity


55,615


49,790Total liabilities and stockholders' equity

$
62,703

$
55,007


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

54

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Table of Contents



EPOCH HOLDING CORPORATION AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF OPERATIONS        (in thousands, except per share data)

For the Years Ended June 30,2010

2009

2008Operating Revenues:Investment advisory and management fees

$
52,546

$
30,561

$
33,634Performance fees


814


624


172Total operating revenues


53,360


31,185


33,806Operating Expenses:Employee related costs (excluding share-based compensation)


20,775


15,919


17,711Share-based compensation


5,137


4,496


4,176Occupancy and technology


3,723


3,024


3,130Professional fees and services


2,839


2,211


2,481General and administrative


2,079


1,653


2,034Depreciation and amortization


651


434


420Total operating expenses


35,204


27,737


29,952Operating Income


18,156


3,448


3,854Other Income:Net realized gains on investments(Note 15)


187


4,084


4,169Interest and other income


783


1,026


1,880Total other income


970


5,110


6,049Income Before Income Taxes


19,126


8,558


9,903Provision for income taxes(Note 16)


7,481


2,698


867Net Income


11,645


5,860


9,036Preferred stock dividends








460Net income available to common stockholders for basic earnings per share

$
11,645

$
5,860

$
8,576Earnings Per Share:(Note 17)Basic

$
0.52

$
0.26

$
0.42Diluted

$
0.52

$
0.26

$
0.41Weighted-Average Shares Outstanding:Basic


22,397


22,133


20,181Diluted


22,545


22,133


21,911Cash dividends declared and paid per share

$
0.46

$
0.24

$
0.075


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

55

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Table of Contents

EPOCH HOLDING CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE YEARS ENDED JUNE 30, 2010, 2009 AND 2008

(dollars and shares in thousands)

Preferred Stock
Series A
ConvertibleCommon Stock



Retained
Earnings/
(Accumulated
Deficit)

Accumulated
Other
Comprehensive
Income/(Loss)

Treasury StockAdditional
Paid-in
Capital

Total
Stockholders'
EquityShares

Amount

Shares

Amount

Shares

AmountBalances at June 30, 2007


10

$
10


19,935

$
199

$
39,089

$
(6,357
)
$
2,502




$


$
35,443Net income

















9,036











9,036Net unrealized gains on available-for-sale securities, net of tax




















864








864Reclassification of realized gains included in net income, net of tax




















(3,594
)







(3,594
)Comprehensive income





























6,306Issuance and forfeitures of restricted share awards








364


4


331














335Amortization of share-based compensation














3,841














3,841Preferred stock dividends

















(460
)










(460
)Common stock dividends, $0.075 per share

















(1,521
)










(1,521
)Income tax benefit from dividends paid on unvested shares














43














43Net sales/purchases of shares for employee withholding














(133
)













(133
)Repurchase of common shares








(9
)













9


(83
)

(83
)Excess income tax benefit from vesting of restricted shares














1,574














1,574Balances at June 30, 2008


10


10


20,290


203


44,745


698


(228
)

9


(83
)

45,345Net income

















5,860











5,860Net unrealized losses on available-for-sale securities, net of tax




















(915
)







(915
)Reclassification of realized losses included in net income, net of tax




















836








836Comprehensive income





























5,781Issuance and forfeitures of restricted share awards








536


5


295














300Amortization of share-based compensation














4,196














4,196Conversion of preferred stock(Note 12)


(10
)

(10
)

1,667


17


(7
)













Common stock dividends, $0.24 per share(Note 19)

















(5,302
)










(5,302
)Income tax benefit from dividends paid on unvested shares














112














112Net sales/purchases of shares for employee withholding








(31
)




(203
)







31


(207
)

(410
)Repurchase of common shares








(264
)













264


(1,942
)

(1,942
)Excess income tax benefit from vesting of restricted shares














1,710














1,710Balances at June 30, 2009








22,198


225


50,848


1,256


(307
)

304


(2,232
)

49,790Net income

















11,645











11,645Net unrealized gains on available-for-sale securities, net of tax




















199








199Reclassification of realized gains included in net income, net of tax




















(115
)







(115
)Comprehensive income





























11,729Issuance and forfeitures of restricted share awards








702


7


821














828Amortization of share-based compensation














4,309














4,309Common stock dividends, $0.46 per share(Note 19)

















(10,233
)










(10,233
)Income tax benefit from dividends paid on unvested shares














174














174Exercise of stock options








65


1


277














278Net sales/purchases of shares for employee withholding








31





25








(31
)

207


232Repurchase of common shares








(209
)













209


(1,931
)

(1,931
)Excess income tax benefit from vesting of restricted shares














439














439Balances at June 30, 2010




$



22,787

$
233

$
56,893

$
2,668

$
(223
)

482

$
(3,956
)
$
55,615


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

56

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Table of Contents



EPOCH HOLDING CORPORATION AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF CASH FLOWS        (in thousands)

For the Years Ended June 30,2010

2009

2008Cash flows from operating activities:Net income

$
11,645

$
5,860

$
9,036Adjustments to reconcile net income to net cash provided by operating activities:Benefit from deferred income taxes


(1,300
)

(622
)

(3,115
)Share-based compensation


5,137


4,496


4,176Depreciation and amortization


651


434


420Net realized gains on investments


(187
)

(3,889
)

(4,169
)Equity in net (income)/loss from limited liability company


(38
)

90


22Amortization of bond premiums


34





Excess income tax benefit from vesting of restricted shares


(439
)

(1,710
)

(1,574
)Income tax benefit from payment of dividends on unvested shares


(174
)

(112
)

(43
)(Increase)/decrease in operating assets:Accounts receivable


(3,633
)

(1,132
)

(98
)Prepaid and other current assets


35


(591
)

11Increase/(decrease) in operating liabilities:Accounts payable and accrued liabilities


293


(248
)

(17
)Accrued compensation and benefits


1,468


(2,057
)

3,820Income taxes payable


599


421


2,965Deferred rent


120


(85
)

(85
)Net cash provided by operating activities


14,211


855


11,349Cash flows from investing activities:Purchases of held-to-maturity securities


(2,434
)




Proceeds from redemption of held-to-maturity securities


400





Capital expenditures


(1,563
)

(20
)

(96
)Investments in Company-sponsored products and other investments, net


(78
)

(311
)

(3,616
)Security deposits, net


(109
)

(11
)

(25
)Proceeds from other transactions


6


4,938


375Purchases and sales of short-term investments, net








21,850Proceeds from sales of marketable securities








5,082Net cash (used in)/provided by investing activities


(3,778
)

4,596


23,570Cash flows from financing activities:Common stock dividends


(10,233
)

(5,302
)

(1,521
)Repurchase of common shares, net


(1,724
)

(2,149
)

(83
)Excess income tax benefit from vesting of restricted shares


439


1,710


1,574Income tax benefit from payment of dividends on unvested shares


174


112


43Proceeds from stock option exercises


278





Net gain/(loss) on sale of shares for employee withholding


25


(203
)

(133
)Preferred stock dividends








(460
)Net cash used in financing activities


(11,041
)

(5,832
)

(580
)Net (decrease)/increase in cash and cash equivalents during year


(608
)

(381
)

34,339Cash and cash equivalents at beginning of year


37,055


37,436


3,097Cash and cash equivalents at end of year

$
36,447

$
37,055

$
37,436Supplemental disclosure of cash flow information:Cash paid for income taxes

$
7,827

$
3,361

$
1,016Supplemental disclosures of non-cash investing activities:Net change in unrealized gains/(losses) on available-for-sale securities, net of tax

$
84

$
(79
)
$
(2,730
)


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

57

---



Table of Contents



EPOCH HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1Organization

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

Unless
specifically stated otherwise, references to FY 2010, FY 2009 and FY 2008 refer to the fiscal years ended June 30, 2010, June 30, 2009, and June 30, 2008,
respectively.

Note 2Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation:

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in
the United States ("GAAP") and include the accounts of the Company and its subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates:

The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions. These
estimates and assumptions impact the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities
as of the dates of these consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates.

Property and Equipment:

The costs of leasehold improvements are capitalized and such costs are amortized on a straight-line basis over the shorter
of their estimated useful lives or lease terms, excluding option periods if any, as applicable. All other capital assets are recorded at cost and such costs are depreciated on a
straight-line basis over their estimated useful lives.

Repairs
and maintenance costs are charged to expense as incurred. Upon sale or disposition of property and equipment, the cost and related accumulated depreciation amounts are removed
from the accounts and any resulting gain or loss is recognized.

Other Investments and Held-to-Maturity Securities:



The Company holds investments in four Company co-branded mutual fundsthe MainStay Epoch Global Equity Yield
Fund ("EPSYX"), the MainStay Epoch Global Choice Fund ("EPACX"), the MainStay Epoch International Small Cap Fund ("EPIEX"), and the MainStay Epoch U.S. Equity Fund

58

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Table of Contents

EPOCH HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2Summary of Significant Accounting Policies (Continued)

("EPLCX").
The Company also holds investments in the Epoch Global Absolute Return Fund, LLC and in a separate account of Epoch's Global All Cap product. The Company intends to hold these
investments for a period in excess of one year.

The
investments in the Company's co-branded mutual funds and the separate account of Epoch's Global All Cap product are accounted for as
available-for-sale securities. Any resulting change in market value is recorded as unrealized gain or loss, net of tax, in Accumulated other comprehensive income/(loss), a
separate component of stockholders' equity. Realized gains and losses from the available-for-sale securities are included in Other income in the Consolidated Statements of
Operations using the specific identification method.

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



During the fiscal year ended June 30, 2010, the Company purchased long-term debt securities yielding higher interest
rates than money market instruments. Since management has the intent and ability to hold these securities until they mature, these investments have been accounted for as
held-to-maturity investments. The investments are carried at amortized cost. Premiums and discounts on investments in debt securities are amortized over the contractual lives
of these securities. The method of amortization results in a constant effective yield on these securities. Interest on debt securities is recognized in Other income in the Consolidated Statement of
Operations as earned.



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

Financial Instruments that Approximate Fair Value:



Cash consists of amounts held in checking and money market accounts. Cash equivalents include highly liquid investments in money market
funds consisting of short-term securities of the U.S. government and its agencies with maturities of three months or less when acquired. Cash equivalents are stated at cost, which
approximates fair value due to their short maturity.



Security deposits are funds held in certificates of deposit as required by the lessors of the Company's leased and subleased office
premises. These investments mature, and are renewed, in one-year intervals, and accordingly are valued at cost plus accrued interest, which approximates fair value.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2Summary of Significant Accounting Policies (Continued)

Treasury Stock:

Treasury stock is accounted for under the cost method and is included as a deduction from equity in the Stockholders' Equity section of
the Consolidated Balance Sheets. Upon any subsequent resale, the treasury stock account is reduced by the cost of such stock using the specific identification method.

Revenue Recognition:



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



The Company also has certain contracts which allow the Company to earn performance fees in the event that investment returns meet or
exceed targeted amounts specified in the contracts. Revenues for these incentives are recognized only when such performance targets are met or exceeded at the end of the measurement period. Due to the
inability to forecast financial markets, no revenues are recognized until the measurement period ends, even when investment returns are exceeding the contractual targets within the measurement period.

Share-Based Compensation:

Share-based compensation costs are charged against income ratably over the requisite service period for the related equity award, with
the initial charge generally recorded in the first full month following the grant.

The
Company has issued restricted stock to both employees and directors of the Company, and issued options to purchase shares of stock to employees of the Company, in accordance with the
Amended and Restated 2004 Omnibus Long-Term Incentive Compensation Plan. Share-based payments are accounted for using the fair value method. The fair value of the Company's restricted
stock awards is based on the closing price of the Company's common stock at the grant date.

The
Company values stock options based upon the Black-Scholes option-pricing model. Implementation of the Black-Scholes option-pricing model requires the Company to make certain
assumptions, including expected volatility, risk-free interest rate, expected dividend yield and expected life of the options. The Company utilized assumptions that it believed to be most
appropriate at the time of the valuation. The Company has historically issued new shares to satisfy the option rights upon exercise.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2Summary of Significant Accounting Policies (Continued)

Leases:

Rentals under operating leases, where the lessor retains substantially all the risks and benefits of ownership of the asset, are
charged evenly to expense over the lease term. Benefits received and receivable, as an incentive to enter an operating lease, are also spread evenly over the lease term.

Income Taxes:

Deferred tax assets and liabilities arising from temporary differences between book and tax basis are recognized using the enacted
statutory tax rates and laws that will be in effect when such differences are expected to reverse. Deferred tax assets are recognized for temporary differences that will result in deductible amounts
in future years. Deferred tax liabilities are recognized for temporary differences that will result in taxable income in future years. The Company records a reduction in deferred tax assets if it is
more likely than not that some portion or all of the deferred tax asset will not be realized.

Deferred
tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized. The future realization of
the Company's deferred tax assets depends upon the availability of sufficient future taxable income. In making this determination, the Company considers all available positive and negative evidence.
The Company considers, among other things, the overall business environment, the Company's historical earnings, and industry outlook.

The
Company accounts for any uncertain tax position, should one arise, by reporting a liability for an unrecognized tax benefit resulting from an uncertain tax position taken or expected
to be taken in a tax return. Any potential interest and penalty associated with a tax contingency, should one arise, would be included as a component of income tax expense in the period in which the
assessment arises. The Company did not have any uncertain tax positions for any of the years presented.

Excess
income tax benefits and shortfalls related to share-based compensation are recognized as additional paid-in capital. If the Company does not have additional
paid-in capital credits (cumulative tax benefits recorded to additional paid-in capital), the Company will record an expense for any deficit between recorded tax benefits and
tax return benefit. At June 30, 2010, the Company had sufficient excess additional paid-in capital credits to absorb potential deficits between recorded tax benefits and tax return
benefits (see Note 16).

Earnings Per Common Share:

Basic earnings per share ("EPS") is calculated by dividing net earnings applicable to common shareholders by the weighted-average
number of common shares outstanding during the period. Diluted EPS includes the determinants of basic EPS and, in addition, reflects the dilutive effect, if any, of the common stock deliverable
pursuant to stock options or, for the fiscal year ended June 30, 2008, the common stock then issuable upon the conversion of the convertible preferred stock.

Comprehensive Income:

Total comprehensive income is reported in the Consolidated Statement of Changes in Stockholders' Equity and includes net income and,
for investment securities available-for-sale, the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2Summary of Significant Accounting Policies (Continued)

change
in unrealized gains/ (losses), net of tax, and the reclassification of realized gains/ (losses), net of tax, to net income.

Dividends to Shareholders:

Dividends to shareholders are recognized on the declaration date. Dividends are declared and paid on a quarterly basis. The Company has
also, from time to time, declared a special dividend during the year. The Company may change its dividend policy at any time.

Reclassifications:

Certain items previously reported have been reclassified to conform to the current year presentation.

Recently Issued Accounting Standards:



In June 2009, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU")
No. 2009-17. FASB ASU No. 2009-17 amends the guidance on the determination of the primary beneficiary of a Variable Interest Entity ("VIE") from a quantitative
model to a qualitative model and requires additional disclosures about an enterprise's involvement in VIEs. Under the new qualitative model, the primary beneficiary must have the power to direct the
activities of the VIE and the obligation to absorb losses or the right to receive gains that could be potentially significant to the VIE.

The
Company adopted FASB ASU No. 2009-17 effective January 1, 2010. The adoption of this standard did not have a material effect on its consolidated financial
position, results of operations or earnings per share.



In January 2010, the FASB issued FASB ASU 2010-06,Improving Disclosures about Fair Value
Measurement. FASB ASU 2010-06 adds disclosure requirements about transfers in and out of Levels 1 and 2 and separate disclosures about activity relating to
Level 3 measurements and clarifies existing disclosure requirements related to the level of disaggregation and input and valuation techniques. As the update affected disclosures only, the
adoption of the update did not have an impact on the Company's consolidated financial statements.



In February 2010, the FASB issued an update to address certain implementation issues related to an entity's requirement to perform and
disclose subsequent-events procedures. Effective upon its issuance, the update exempts SEC filers from disclosing the date through which subsequent events have been evaluated. As the update affected
disclosures only, the adoption of the update did not have an impact on the Company's consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 3Financial Instruments with Concentration of Credit Risk

The financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, held-to-maturity
investments and other investments. Epoch invests its cash and cash equivalents with high-credit quality financial institutions in amounts, which, at times, may be in excess of the Federal
Deposit Insurance Corporation insurance limits. Due to the high quality of the Company's cash equivalents, held-to-maturity investments and other investments, the Company has
not experienced any losses related to these to date. The Company has not had any off-balance sheet arrangements for any of the years presented.

Note 4Accounts Receivable

The Company's accounts receivable balances do not include an allowance for doubtful accounts for the periods presented and there have been no bad debt expenses recognized during the
fiscal years ended June 30, 2010, 2009 and 2008, respectively. Management believes these receivables are fully collectible.



The Company's client base consists of a large number of geographically diverse clients across many industries. At June 30, 2010,
New York Life Investment Management, through the MainStay Epoch Funds and other funds sub-advised by EIP (See Note 10,Strategic
Relationship), comprised 12% of our accounts receivable balance at June 30, 2010, while CI Investments Inc. ("CI"), a Canadian-owned investment management
company, accounted for 11%. All of these balances were collected subsequent to year-end.

For
the fiscal year ended June 30, 2010, New York Life Investment Management accounted for approximately 16% of consolidated operating revenues, while CI accounted for
approximately 9%. During the year ended June 30, 2009, CI and Genworth Financial Asset Management, Inc. ("Genworth"), an investment adviser, through its investments in the Epoch Funds
and separate account mandates, each accounted for approximately 13% of consolidated operating revenues.

During
fiscal year ended June 30, 2008, CI accounted for approximately 16% of consolidated operating revenues while Genworth accounted for approximately 25%.

Note 5Property and Equipment

Property and equipment is reported at cost, net of accumulated depreciation and amortization. The following table reflects the gross and net components of property and equipment as of
June 30, 2010 and 2009 (in thousands):

June 30, 2010

June 30, 2009Estimated useful
lifein yearsCost

Net

Cost

NetLeasehold improvements

3 - 10

$
3,035

$
1,771

$
1,869

$
982Equipment and office furniture

3 - 7


1,169


322


883


274Purchased software

1 - 3


437


94


326


19Total property and equipment



$
4,641

$
2,187

$
3,078

$
1,275


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EPOCH HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 6Held-to-Maturity Securities

The Company's investment securities classified as held-to-maturity consist of long-term debt securities. These investments are carried at amortized
cost. Gross unrealized gains and losses, and fair value of these securities at June 30, 2010 are as follows (in thousands):

Gross
UnrealizedAmortized
Cost

Fair
ValueGains

LossesHeld-to-maturity securities

$
2,001

$
45

$


$
2,046


The
fair value of investments in held-to-maturity securities is valued under the market approach through the use of quoted prices for similar investments in
active markets.

During
the fiscal year ended June 30, 2010, a $0.4 million security was called by the issuer, at cost. As such, no gain or loss was recognized.

The
contractual maturities of the investment securities classified as held-to-maturity at June 30, 2010 are as follows (in
thousands):

Contractual
Maturities

Amortized
Cost

Fair
Value> 1 - 3 years

$
1,476

$
1,504> 3 - 5 years


525


542Total

$
2,001

$
2,046


Note 7Other Investments

The Company's Other investments at June 30, 2010 and 2009 are summarized as follows (in thousands):

June 30, 2010

June 30, 2009Gross
Unrealized





Gross
UnrealizedFair
Value



Fair
ValueCost

Gains

Losses

Cost

Gains

LossesAvailable-for-sale securities:Epoch Global All Cap separate account

$
2,297

$
185

$
(105
)
$
2,377

$
2,072

$
128

$
(142
)
$
2,058Company-sponsored mutual funds


1,133


34


(272
)

895


1,099


34


(327
)

806Total available-for-sale securities


3,430


219


(377
)

3,272


3,171


162


(469
)

2,864Equity method investment:Epoch Global Absolute Return Fund, LLC


426








426


388








388Total Other investments

$
3,856

$
219

$
(377
)
$
3,698

$
3,559

$
162

$
(469
)
$
3,252


The
unrealized losses for each fiscal year presented have been unrealized for twelve months or more. Management has reviewed its investment securities for
other-than-temporary impairment in accordance with its accounting policy outlined in Note 2. Based on management's assessment, the Company does not believe that the
declines are other-than-temporary for all fiscal years presented. The

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 7Other Investments (Continued)

gross
unrealized losses from available-for-sale securities were primarily caused by overall weakness in the financial markets and world economy. The securities are expected to
recover their value over time and management has the intent and ability to hold these investments until such recovery occurs. Unrealized gains or losses from available-for-sale
securities are recorded in Other comprehensive income/ (loss), net of tax, as a separate component of stockholders' equity, until realized.

Proceeds
as well as realized gains and losses from investments classified as available-for-sale are as follows (in
thousands):

June 30, 2010

June 30, 2009

June 30, 2008Gross
Realized



Gross
Realized



Gross
RealizedProceeds

Gains

Losses

Proceeds

Gains

Losses

Proceeds

Gains

LossesAvailable-for-sale securities:Epoch Global All Cap separate account

$
3,130

$
357

$
(176
)
$
2,577

$
2

$
(850
)
$
956

$
27

$
(186
)Company-sponsored mutual funds


22


22





12


12





64


64


Marketable securities(1)




















5,014


3,689


Total available-for-sale securities

$
3,152

$
379

$
(176
)
$
2,589

$
14

$
(850
)
$
6,034

$
3,780

$
(186
)


(1)See
Note 15 for further details.


Realized
gains and losses from available-for-sale securities are included in Other income in the Consolidated Statements of Operations using the specific
identification method.

Note 8Fair Value Measurements

The Company has established a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation
of an asset or liability as of the reported date. The three levels are defined as follows:



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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 8Fair Value Measurements (Continued)



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

The
investments in the mutual funds and in the separate account are accounted for as available-for-sale investments and valued under the market approach through
the use of unadjusted quoted market prices available in an active market and are classified within Level 1 of the valuation hierarchy. The fair market value of these investments at
June 30, 2010 was $3.3 million.

The
following table presents, for each of the hierarchy levels previously described, the Company's assets that are measured at fair value as of June 30, 2010 and 2009,
respectively (in thousands):

June 30, 2010

June 30, 2009Fair Value
Measurements

Level 1

Level 2

Level 3

Fair Value
Measurements

Level 1

Level 2

Level 3Other investments:Available-for-sale

$
3,272

$
3,272

$


$


$
2,864

$
2,864

$


$



There
were no transfers into or out of the Level 1, 2 and 3 categories in the fair value measurement hierarchy for the fiscal years ended June 30, 2010 and 2009,
respectively.

The
investment in the Epoch Global Absolute Return Fund, LLC is accounted for under the equity method, whereby the Company records its percentage share of realized and unrealized
earnings or losses in the Consolidated Statement of Operations. Consequently, this investment is not recorded at fair value. The carrying value of this investment was $0.4 million at both
June 30, 2010 and June 30, 2009.

The
Company did not hold any financial liabilities measured at fair value at June 30, 2010 or June 30, 2009.

Note 9Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consisted of the following (in thousands):

June 30,2010

2009Trade accounts payable

$
215

$
158Accrued professional fees


142


115Accrued expenses and other


572


363Total accounts payable and accrued liabilities

$
929

$
636


Note 10Commitments and Contingencies

Employment Agreements:

Besides the employment contract with the Company's Chief Executive Officer dated November 28, 2007, there are no employment
contracts with any other officer or employee of the Company. There

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 10Commitments and Contingencies (Continued)

are
written agreements with certain employees, which provide for sales commissions or bonuses, subject to the attainment of certain performance criteria or continuation of employment. Such commitments
under the various agreements total approximately $1.6 million at June 30, 2010. Of this amount, approximately $0.6 million is included in accrued compensation and benefits in the
Consolidated Balance Sheet at June 30, 2010. An additional $0.4 million will be accrued during the fiscal year ending June 30, 2011. Approximately $0.6 million represents
restricted stock awards to be issued during the fiscal year ending June 30, 2011.

Strategic Relationship:

On July 9, 2009, EIP entered into a strategic relationship with New York Life Investments, whereby the MainStay Group of Funds
adopted the Company's family of mutual funds (the "Epoch Funds"). The transaction was approved by the Board of Directors of the Epoch Funds and subsequently approved by the shareholders of the Epoch
Funds at a special meeting on October 30, 2009. The adoption of the Epoch Funds by New York Life Investments' MainStay Group of Funds was completed in November 2009. EIP continues to be
responsible for the day-to-day investment management of the funds through a sub-advisory relationship, while MainStay Investments ("MainStay"), the retail
distribution arm of New York Life Investments, is responsible for the distribution and administration of the funds. Each former Epoch Fund is now co-branded as a "MainStay Epoch" Fund.

In
addition to an existing sub-advisory relationship between EIP and New York Life Investments for certain funds, and the adoption of the Epoch Funds indicated above, EIP and
New York Life Investments have entered into an arrangement wherein, among other things, EIP and an affiliate of New York Life Investments have established a distribution and administration
relationship with respect to certain separately managed account and unified managed account products, and for a period of three years New York Life Investments agrees to pay certain additional base
fees and meet minimum distribution targets.

Legal Matters:

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

Investment Management Contracts:

Most of the Company's revenues are derived pursuant to written investment advisory and management agreements. These agreements may be
terminated by either party with notice or terminated in the event of an "assignment" (as defined in the Investment Company Act of 1940, as amended (the "1940 Act")). Generally, any change in control
of the Company would constitute an "assignment" under the 1940 Act. Additionally, mutual fund agreements generally must be approved and renewed annually.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 10Commitments and Contingencies (Continued)

Leases:

The Company's headquarters and operations are located at 640 Fifth Avenue, New York, New York. Business is conducted at a location with
approximately 20,000 square feet under long-term leases that expire in September 2015.

The
Company is also the primary party to another lease in New York City, with approximately 8,500 square feet, which expires in November 2010. In January 2002, a sublease agreement was
executed with an unrelated third party for this property. While the Company remains responsible under terms of the original lease, the subtenant has assumed those responsibilities and is performing
its obligations under the sublease agreement. This sublease expired in August 2010.

Rental
expenses incurred by the Company were $1.8 million for the fiscal year ended June 30, 2010, while rental expenses for each of the fiscal years ended June 30,
2009 and 2008 were $1.4 million. Rental income under the sublease, net of profit sharing expenses with the primary landlord, was $0.5 million for each of the fiscal years ended
June 30, 2010, 2009, and 2008, respectively.

The
following table outlines the minimum annual office lease obligations of the Company and related sublease receipts (in thousands):

For the Years Ending June 30,

Gross

Sublease
Receipts

Net
Commitments2011

$
1,614

$
(96
)
$
1,5182012


1,427





1,4272013


1,427





1,4272014


1,427





1,4272015


1,427





1,4272016 and thereafter


357





357Total minimum lease payments (receipts)

$
7,679

$
(96
)
$
7,583


Note 11Treasury Stock

Share Repurchase Plan:

On June 24, 2008, the Company's Board of Directors approved the repurchase of up to a maximum of 250,000 shares. The repurchase
plan called for the repurchases to be made in the open market and/or in privately negotiated transactions from time to time in compliance with applicable laws, rules and regulations, including
Rule 10b-18 under the Securities Exchange Act of 1934, as amended, subject to prevailing market and business conditions. The plan did not obligate the Company to purchase any
particular number of shares, and could be suspended or discontinued at any time. The Company completed this repurchase in February 2009.

In
March 2009, the Company's Board of Directors authorized the Company to repurchase up to an additional 250,000 shares, pursuant to the same conditions, except the repurchase plan does
not contain an expiration date. In December 2009 the Company's Board of Directors approved the repurchase of an additional 300,000 shares.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 11Treasury Stock (Continued)

As
of June 30, 2010, the Company has repurchased a cumulative total of 482,401 shares and has 317,599 shares remaining for repurchase under the existing repurchase plan. The table
below presents annual shares repurchased and the average price per share:

For the Years Ended June 30,2010

2009

2008Shares
Repurchased

Weighted-
Average
Price per
Share

Shares
Repurchased

Weighted-
Average
Price per
Share

Shares
Repurchased

Weighted-
Average
Price per
Share209,601

$
9.21


263,900

$
7.36


8,900

$
9.25


All
shares repurchased are shown as Treasury stock at cost, in the Stockholders' equity section of the Consolidated Balance Sheets.

Employee Tax Withholding:

To satisfy statutory employee tax withholding requirements related to the vesting of common shares, the Company purchases from
employees shares relinquished by employees to satisfy employee tax withholding obligations. The Company may subsequently resell these acquired
shares in the open market or include them as part of the shares repurchased under the stock repurchase plan. At June 30, 2010, there were no shares held by the Company for resale in the open
market related to employee tax withholdings. Any resulting gain or loss on resale is accounted for as an adjustment to Additional paid-in capital.

Note 12Preferred Stock

On November 6, 2006, the Company entered into a Securities Purchase Agreement with General American Investors Company, Inc. ("GAM" or the "Purchaser"), whereby GAM invested
$10 million in Epoch and Epoch issued GAM 10,000 shares of Series A Convertible Preferred Stock (the "Preferred Stock").

The
Preferred Stock had an annual cumulative cash dividend of 4.60%, payable semi-annually on June 30 and December 31, commencing December 31, 2006.
These securities were convertible, in whole or in part at any time, into shares of the Company's common stock at a fixed conversion price of $6.00 per share, or 1,666,667 common shares in total.

The
holder of the Preferred Stock had voting rights equivalent to the holders of the Company's common stock, and was entitled to vote on an as-converted basis (1,666,667
shares) with the holders of the common stock together as a single class. The Preferred Stock also provided for customary preference upon liquidation, as defined in the Certificate of Designation.

On
July 1, 2008, GAM converted the Preferred Stock to 1,666,667 shares of Common Stock. Accordingly, the Preferred Stock has been cancelled and the conversion eliminated GAM's
rights to receive the semi-annual dividends on the Preferred Stock.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 13Long-Term Incentive Compensation

The Company has one share-based compensation plan, the Amended and Restated 2004 Omnibus Long-Term Incentive Compensation Plan (the "2004 Plan"), under which awards can be
currently issued, and two expired share-based compensation plans with stock options, all of which were exercised or expired by June 30, 2010.

Share-based
compensation costs for such plans were $5.1 million, $4.5 million, and $4.2 million for the fiscal years ended June 30, 2010, 2009, and 2008,
respectively. The total income tax benefit recognized in the Consolidated Statements of Operations for share-based compensation arrangements was $1.9 million, $1.9 million, and
$1.8 million for the fiscal years ended June 30, 2010, 2009, and 2008, respectively.

2004 Omnibus Long-Term Incentive Compensation Plan:

At the annual meeting of shareholders on November 18, 2004, stockholders approved the 2004 Plan which allowed the Company to
issue 3,000,000 shares of common stock subject to stock options, restricted stock awards or other share-based compensation. At the annual meeting of shareholders on December 4, 2008,
stockholders approved an amendment to the 2004 Plan to increase the number of shares of Common Stock available for issuance under the 2004 Plan by 2,500,000 shares. The 2004 Plan terminates at the
earliest of (a) the time no shares remain available for issuance under the 2004 Plan, (b) the 2004 Plan is terminated by the Board, or (c) the tenth anniversary
of the Effective Date. Awards outstanding upon expiration of the 2004 Plan remain in effect until they have been exercised or terminated, or have expired.

Restricted
stock awards issued to employees under the 2004 Plan vest at the rate of 12.5% immediately and remaining amounts vest at the rate of 12.5%, 25%, and 50% upon the completion of
the first, second, and third years of service, respectively. Restricted stock awards issued to non-employee directors under the 2004 Plan vest fully in one year. Stock options issued to
employees under the 2004 Plan vest ratably over the three years from the grant date and have a 7-year contractual term. Neither employee nor director share awards are subject to
performance-based accelerated vesting.

As
of June 30, 2010 there were 3,618,188 shares issued under the 2004 Plan. There were 572,448 stock options outstanding and an additional 1,309,364 shares remain available for
issuance under the 2004 Plan.



The Company granted 673,484 shares of restricted stock awards to employees during the fiscal year ended June 30, 2010 under the
Company's 2004 Plan at a weighted-average price of $10.20. During fiscal years ended June 30, 2009 and 2008, a total of 575,066 and 491,528 shares, respectively, were granted at
weighted-average prices of $8.17 and $11.47 per share, respectively.

Non-employee
directors received $60,000 for their services for the fiscal year ended June 30, 2010, and $80,000 for each of the fiscal years ended June 30,
2009, and 2008. Non-employee director compensation was paid with a minimum of $40,000 in stock for the fiscal year ended June 30, 2010 and a minimum of $60,000 in stock for each of
the fiscal years ended June 30, 2009 and 2008, at the election of the director. Total shares granted to non-employee directors for fiscal year ended June 30, 2010 were 43,459
shares at a weighted-average price of $8.91. Total shares granted to non-employee

70

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Table of Contents

EPOCH HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 13Long-Term Incentive Compensation (Continued)

directors
for fiscal years ended June 30, 2009 and 2008 were 38,620 shares and 35,604 shares, respectively, at weighted-average prices of $9.10 and $13.39, respectively.

A
summary of the Company's nonvested shares under the 2004 Plan as of June 30, 2010, 2009, and 2008 respectively, as well as changes during those years is presented below (shares in thousands):

For the Years Ended June 30,2010

2009

2008Shares

Weighted-
Average
Grant-Date
Fair Value

Shares

Weighted-
Average
Grant-Date
Fair Value

Shares

Weighted-
Average
Grant-Date
Fair ValueNonvested at beginning of the year


1,111

$
8.42


1,228

$
7.34


1,456

$
5.20Granted under the 2004 Plan


717


10.13


613


8.23


527


11.60Shares vested


(580
)

7.79


(653
)

6.13


(592
)

5.55Forfeited


(15
)

8.39


(77
)

9.10


(163
)

8.57Nonvested at end of the year


1,233

$
9.71


1,111

$
8.42


1,228

$
7.34


As
of June 30, 2010, there was $7.7 million of unrecognized compensation costs related to nonvested restricted stock awards granted under the 2004 Plan, which is expected
to be recognized over a weighted-average period of 2.2 years. The total fair value of restricted stock awards vested during the years ended June 30, 2010, 2009 and 2008 was
$5.3 million, $6.3 million and $5.9 million, respectively. The aggregate intrinsic value of nonvested shares at June 30, 2010 was $15.1 million.



During the fiscal year ended June 30, 2009, the Company issued nonqualified options to purchase 630,060 shares of common stock
to employees of the Company under the 2004 Plan. These stock options vest and are recognized ratably over three years from the grant date and have a term of seven years. The options have an exercise
price of $6.17. However, upon vesting, the options are exercisable only if the volume weighted-average price of the Company's common stock equals or exceeds $9.25 for a period of at least 20 trading
days. Issuance of these awards results in total stock compensation expense of approximately $1.1 million over the requisite service period. The fair value of the option grant was estimated on
the date of grant using the Black-Scholes option-pricing model using the following assumptions:

Expected term (years)


4.0Expected volatility


50
%Expected dividend yield


1.94
%Risk-free interest rate


1.59
%Estimated discount due to restriction on exercise


15
%Forfeiture rate


7.5
%


The
expected life and forfeiture rate assumptions are based on the vesting period for each option grant and expected exercise behavior. The assumptions for expected volatility and
dividend yield are based on historical experience. Risk-free interest rates are set using grant-date U.S. Treasury yield curves for the same periods as the expected term.

71

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Table of Contents

EPOCH HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 13Long-Term Incentive Compensation (Continued)

No
stock options were issued during the fiscal years ended June 30, 2010 and 2008.

A
total of 44,725 employee stock options were exercised during the fiscal year ended June 30, 2010. No employee stock options were exercised during the fiscal years ended
June 30, 2009 and 2008.

A
summary of the Company's stock options outstanding under the 2004 Plan as of June 30, 2010 and 2009, respectively, as well as changes during those fiscal years is presented
below (shares in thousands):

For the Years Ended June 30,2010

2009Stock
Options

Weighted-
Average
Exercise
Price

Stock
Options

Weighted-
Average
Exercise
PriceFixed options:Outstanding at beginning of period


630

$
6.17




$
Granted








630


6.17Exercised


(45
)

6.17





Forfeited


(13
)

6.17





Outstanding at end of year


572

$
6.17


630

$
6.17Options exercisable at end of year


152

$
6.17




$



The
weighted-average fair value of stock options granted during the fiscal year ended June 30, 2009 was $1.82. As of June 30, 2010, there was $0.6 million of
unrecognized compensation costs related to the stock options granted under the 2004 Plan, and is expected to be recognized over a weighted-average period of 1.6 years.

The
intrinsic value of the above stock options exercised during the fiscal year ended June 30, 2010 was approximately $0.2 million.

The
following table summarizes information about the 2004 Plan stock options outstanding and exercisable at June 30, 2010 (shares in thousands and
intrinsic value in millions):

Options Outstanding

Options ExercisableExercise
Prices

Number
Outstanding

Contractual
Life

Intrinsic
Value

Number Exercisable

Contractual
Life

Intrinsic
Value$6.17


572

5.85 years

$
2.9


152

5.85 years

$
0.8


Total
unrecognized compensation costs at June 30, 2010 for awards issued under the 2004 Plan, and weighted-average recognition period at June 30, 2010 are as follows
(dollars in thousands):

Award

Unrecognized
Compensation
Cost

Weighted-Average
Recognition
PeriodUnvested restricted stock

$
7,651

2.2 yearsUnvested stock options


559

1.6 yearsTotal unrecognized compensation costs

$
8,210


72

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Table of Contents

EPOCH HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 13Long-Term Incentive Compensation (Continued)

Expired Stock Option Plan:

On January 12, 1993, the stockholders of J Net Enterprises, Inc. ("J Net"), the predecessor company to Epoch, approved
the 1992 Incentive and Non-qualified Stock Option Plan (the "1992 Plan"). The 1992 Plan terminated in accordance with its terms on September 30, 2002. Although the 1992 Plan
terminated, the issued and outstanding options remained in force until they were exercised, cancelled or expired. There were 460,000 outstanding options as of June 30, 2009. During the fiscal
year end June 30, 2010, all remaining outstanding options were exercised through a cashless method for 19,997 shares of common stock.

A
summary of options outstanding under the 1992 Plan as of June 30, 2010, 2009, and 2008, respectively, as well as changes during those fiscal years is presented below
(shares in thousands):

For the Years Ended June 30,2010

2009

2008Stock
Options

Weighted-
Average
Exercise
Price

Stock
Options

Weighted-
Average
Exercise
Price

Stock
Options

Weighted-
Average
Exercise
PriceFixed options:Outstanding and exercisable at beginning of year


460

$
10.18


460

$
10.18


460

$
10.18Exercised


(460
)
$
10.18











Outstanding and exercisable at end of year




$



460

$
10.18


460

$
10.18


The
intrinsic value of the above stock options exercised during fiscal year ended June 30, 2010 was approximately $0.2 million.

Other Nonqualified Stock Options:

On September 14, 1999, nonqualified stock options to purchase an aggregate of 140,000 shares of common stock were granted to the
J Net Board of Directors and a non-employee then serving as the Secretary. On June 21, 2000, nonqualified stock options to purchase an aggregate of 500,000 shares of common stock
were granted to the former President and Chief Operating Officer and the former Executive Vice President and Chief Financial Officer. On June 21, 2003, the former President and Chief Operating
Officer and the former Executive Vice President and Chief Financial Officer's employment contracts expired and were not renewed. The expiration of those contracts did not affect the expiration of the
options, which expired during the fiscal year ending June 30, 2010.

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Table of Contents

EPOCH HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 13Long-Term Incentive Compensation (Continued)

A
summary of outstanding nonqualified stock options as of June 30, 2010, 2009, and 2008, respectively, as well as changes during those fiscal years is presented below
(shares in thousands):

For the Years Ended June 30,2010

2009

2008Stock
Options

Weighted-
Average
Exercise
Price

Stock
Options

Weighted-
Average
Exercise
Price

Stock
Options

Weighted-
Average
Exercise
PriceFixed options:Outstanding and exercisable at beginning of year


575

$
12.59


575

$
12.59


575

$
12.59Exercised

















Expired


(575
)

12.59











Outstanding and exercisable at end of year




$



575

$
12.59


575

$
12.59


Note 14Defined Contribution Plan

The Company sponsors a defined contribution plan (the "Plan") for all of its employees. The Plan qualifies as a deferred salary arrangement under Section 401(k) of the Internal
Revenue Code. Under the Plan, participating employees may defer up to 60% of their pre-tax gross wages, subject to annual Internal Revenue Code contribution limits. Employees vest
immediately in their contributions. The Plan allows the Company to make discretionary contributions. The Company made contributions of approximately $132 thousand to the Plan during fiscal year
ended June 30, 2010 and $123 thousand in each of the fiscal years ended June 30, 2009 and 2008. These annual Company contributions vest immediately. The Company intends to
contribute to the Plan on an annual basis.

Note 15Other Income

Strategic Data Corporation Transaction:

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

On
February 20, 2007, SDC's stockholders approved the acquisition of its stock by Fox Interactive Media, Inc. ("FIM"). Under the terms of the agreement, FIM acquired all of
the outstanding common stock, preferred stock, and vested and unvested stock options of SDC. The SDC merger also called for contingent payments, upon the achievement of certain targets and milestones,
payable over a period of approximately 3.5 years from the closing date.

The
merger agreement was subsequently amended during the quarter ended December 31, 2008 to provide for a final settlement of all contingent payments by December 31, 2008.
As such, additional payments totaling $4.7 million were received in December 2008. These payments represented the final contingent payments and are included in Net realized gains on investments
in the Consolidated Statements of Operations for the fiscal year ended June 30, 2009.

74

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Table of Contents

EPOCH HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 15Other Income (Continued)

eStara Transaction:

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

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

During
the fiscal year ended June 30, 2008, the Company sold the remaining 1.4 million shares of ARTG and recognized realized gains of approximately $3.7 million.
Upon sale, these gains were reclassified from Accumulated other comprehensive income (loss) a separate component of stockholders' equity, to Net realized gains on investments in the Consolidated
Statements of Operations.

Note 16Provision for Income Taxes

The components of the provision for income taxes are as follows (in thousands):

For the Years Ended June 30,2010

2009

2008Current income tax expense:Federal

$
6,102

$
2,951

$
2,971State and local


2,679


369


1,011Total current income tax expense


8,781


3,320


3,982Deferred income tax benefit:Federal


(809
)

(504
)

(2,521
)State and local


(491
)

(118
)

(594
)Total deferred income tax benefit:


(1,300
)

(622
)

(3,115
)Total provision for income taxes

$
7,481

$
2,698

$
867


The
Company utilized $0.6 million in net operating loss deductions to reduce current taxable income during each of the fiscal years ended June 30, 2010, 2009, and 2008,
respectively, the tax effect of which was $0.2 million each year.

75

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Table of Contents

EPOCH HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 16Provision for Income Taxes (Continued)

The
Company's effective income tax rate for the years ended June 30, 2010, 2009 and 2008 differs from the amount computed using income before income taxes and applying the U.S.
federal statutory income tax rate to such amounts because of the effect of the following items:

For the Years Ended
June 30,2010

2009

2008U.S. federal statutory income tax rate


35.0
%

34.0
%

34.0
%Increase (decrease) in tax resulting from:State and local taxes, net of federal income tax benefit


7.5


1.5


6.7Interest on installment gain deferral








2.6Valuation allowance


(2.8
)

(4.7
)

(35.0
)Dividend received deduction





(0.1
)

(0.1
)Other, net


(0.6
)

0.8


0.6Effective income tax rate


39.1
%

31.5
%

8.8
%


The
prior year decrease in the state and local effective tax rate was primarily due to changes in the apportionment factor driven by the composition of investment income as well as the
single sales factor for New York State. For the fiscal year ended June 30, 2010, the net change in the valuation allowance was related to Section 382 losses anticipated to be utilized in
the coming year. The fiscal year ended June 30, 2009 net change in the valuation allowance was a decrease of approximately $0.6 million, primarily related to the utilization of
Section 382 losses against income. The Company also released valuation allowances previously established against depreciation and impairments of leasehold improvements.

The
Company released a valuation allowance for the fiscal year ended June 30, 2008 against certain deferred tax assets, primarily deferred stock compensation expense and
compensation accruals, as Management believes that these benefits can, more likely than not, be utilized in the future.

Deferred
income taxes are provided for the effects of temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial
statements. These temporary differences will result in future income or deductions for income tax purposes and are measured using the federal enacted rate together with the state and local enacted tax
rates, net of federal benefit, that will be in effect when such items are expected to reverse. The Company has recorded a valuation allowance for certain deferred tax assets, as, based upon currently
available evidence, it is more likely than not that these tax benefits may not be realized.

76

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Table of Contents

EPOCH HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 16Provision for Income Taxes (Continued)

Significant
components of the Company's deferred income tax assets and liabilities are as follows (in thousands):

For the Years Ended
June 30,2010

2009Deferred tax assets:Net operating loss carryforwardsIRC Section 382

$
4,057

$
4,224Share-based compensation


2,680


2,178Alternative minimum tax creditsIRC Section 383


1,171


1,171Employee compensation


1,989


1,315Depreciation and amortization on property and equipment


180


158Net unrealized losses on available-for-sale securities


69


129Leasehold improvement impairments


30


86Equity method losses and impairments


82


42Gross deferred tax assets


10,258


9,303Less: valuation allowance


(5,007
)

(5,566
)Deferred tax assets, net of valuation allowance


5,251


3,737Deferred tax liabilities:Prepaid expenses


(280
)

Gross deferred tax liabilities


(280
)

Total net deferred tax assets

$
4,971

$
3,737


The
components of the net deferred tax asset were as follows (in thousands):

For the Years Ended
June 30,2010

2009Deferred tax assets:Current

$
1,141

$
528Non-current


4,110


3,209Deferred tax liabilities:Current


(280
)

Non-current





Net deferred tax assets

$
4,971

$
3,737


The
June 30, 2010 valuation allowance balance primarily relates to the Company's accumulated net operating losses and alternative minimum tax credits. Due to the Company's limited
operating history and Internal Revenue Code carryback ineligibility for these deferred tax assets, Management has placed a partial valuation allowance against them.

The
Company has $9.5 million of acquired net operating losses ("NOLs"), the tax effect of which is $4.0 million, which expire between 2022 and 2026. The Company also has
$1.2 million of acquired

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Table of Contents

EPOCH HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 16Provision for Income Taxes (Continued)

alternative
minimum tax credits from the merger. The ability to utilize these NOLs and tax credits are limited for federal, state and local purposes. These limitations are covered by
Sections 382 and 383, respectively, of the Internal Revenue Code ("IRC"). Such NOLs can be utilized by the Company against taxable income only at a rate of approximately $600 thousand
per year due to these limitations.

The
Company realized excess income tax benefits of $0.4 million, $1.7 million and $1.6 million during the fiscal years ended June 30, 2010, 2009, and 2008,
respectively. Excess income tax benefits reduce the amounts of income taxes to be paid. Excess income tax benefits arise in connection with the Company's stock compensation. When a restricted stock
award vests, the market price on the date the stock vests to the employee may be higher than the original grant-date fair market value of the award. If so, the difference between the
cumulative amount that has been recognized through the Statement of Operations and the vesting amount results in an excess income tax benefit. Excess income tax benefits reduce income taxes payable
and increase additional paid-in capital in the period they are recognized.

The
Company files income tax returns in the U.S. federal jurisdiction and in various state and local jurisdictions. The Company's federal income tax returns generally remain subject to
examination by the Internal Revenue Service for three years from the date of filing. The Company's state and local income tax returns are subject to examination by the respective state and local
authorities over various statutes of limitations, most ranging from three to five years from the date of filing.

Note 17Earnings Per Share

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

Diluted
EPS is computed by dividing net earnings, adjusted for the effect of dilutive securities, by the weighted-average number of common and common equivalent shares outstanding during
the period. The Company uses the treasury stock method to reflect the dilutive effect of unexercised stock options.

The
Company had 572,448 issued and outstanding stock options at June 30, 2010. At June 30, 2009 and 2008, the Company had 1,665,060 and 1,035,000 issued and outstanding
stock options, respectively.

The
calculation of diluted EPS included all of the outstanding stock options for fiscal year ended June 30, 2010. The calculation of diluted EPS for fiscal years ended
June 30, 2009 and 2008 excluded 1,665,060 and 510,000 issued and outstanding stock options, respectively, as the exercise price of those options was higher than the average market price of the
common stock for the respective periods. The conversion of those particular options, whose exercise price was higher than the average market price of the common stock during the respective periods,
would have an anti-dilutive effect.

The
preferred stock was converted into 1,666,667 common shares on July 1, 2008 which were, accordingly, included in the basic EPS calculation for fiscal year ended June 30,
2009. For the fiscal year ended June 30, 2008, the 1,666,667 shares of common stock issuable upon conversion of the preferred stock had no effect on basic EPS, but were included in the
calculation of diluted EPS.

78

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Table of Contents

EPOCH HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 17Earnings Per Share (Continued)

The
table that follows presents the computation of basic and diluted EPS for the years ended June 30, 2010, 2009, and 2008, respectively (in thousands,
except per share data):

For the Years Ended June 30,2010

2009

2008Numerator:Net income available to common stockholders:Net income

$
11,645

$
5,860

$
9,036Preferred stock dividends








(460
)Net income available to common stockholders for basic EPS


11,645


5,860


8,576Preferred stock dividends








460Net income available to common stockholders after assumed conversions for diluted EPS

$
11,645

$
5,860

$
9,036Denominator:Weighted-average common shares outstanding


22,397


22,133


20,181Common stock issuable upon conversion of preferred stock








1,667Net common stock equivalents assuming the exercise of in-the-money stock options


148





63Weighted-average common and common equivalent shares outstanding, assuming dilution


22,545


22,133


21,911Earnings Per Share:Basic

$
0.52

$
0.26

$
0.42Diluted

$
0.52

$
0.26

$
0.41


Note 18Geographic Information

The Company operates under one business segment, investment management. Geographical
information pertaining to the Company's operating revenues is presented below. The amounts are aggregated by the client's domicile (in thousands):

For the Fiscal Year Ended June 30,2010

2009

2008United States

$
37,771

$
24,349

$
27,203Canada


7,020


5,115


6,030Europe


4,709


1,304


571Asia/Australia


3,860


417


2Total operating revenues

$
53,360

$
31,185

$
33,806


79

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Table of Contents

EPOCH HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 19Special Cash Dividends

On November 16, 2009, the Board of Directors declared a special cash dividend of $0.30 per share on the Company's common stock. The dividend was paid on December 15, 2009
to all shareholders of record at the close of business on November 30, 2009. The aggregate dividend payment totaled approximately $6.7 million.

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

Note 20Quarterly Financial Data (Unaudited)

The tables below present selected quarterly financial data for fiscal years ended June 30, 2010 and 2009, respectively. The data presented should be read in conjunction with the
consolidated financial statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included herein (in thousands, except per share
and AUM data):

Fiscal Year 2010

Sept. 30

Dec. 31

Mar. 31

Jun. 30

TotalOperating Revenues

$
11,417

$
13,109

$
14,706

$
14,128

$
53,360Operating Expenses

$
7,855

$
8,771

$
9,623

$
8,955

$
35,204Operating Income

$
3,562

$
4,338

$
5,083

$
5,173

$
18,156Other income

$
308

$
329

$
191

$
142

$
970Income before income taxes

$
3,870

$
4,667

$
5,274

$
5,315

$
19,126Net income

$
2,297

$
2,728

$
3,303

$
3,317

$
11,645Earnings per share(3):Basic

$
0.10

$
0.12

$
0.15

$
0.15

$
0.52Diluted

$
0.10

$
0.12

$
0.15

$
0.14

$
0.52Weighted-average shares outstanding:Basic


22,196


22,165


22,448


22,784


22,397Diluted


22,319


22,311


22,601


22,965


22,545Cash dividends declared and paid per share(1)(2)

$
0.03

$
0.33

$
0.05

$
0.05

$
0.46Assets under management (in millions):End of period

$
9,796

$
11,354

$
12,616

$
11,344

$
11,344Average

$
8,818

$
10,411

$
11,868

$
12,184

$
10,792


(1)Includes
a $0.30 per share special dividend declared during the quarter ended December 31, 2009.(2)On
January 8, 2010, the Company's Board of Directors increased the quarterly dividend rate from $0.03 to $0.05 per share.(3)Basic
and diluted EPS are computed independently for each of the periods presented. Accordingly, the sum of the quarterly EPS amounts may not agree to the
total for the year.


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Table of Contents

EPOCH HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 20Quarterly Financial Data (Unaudited) (Continued)




Fiscal Year 2009

Sept. 30

Dec. 31

Mar. 31

Jun. 30

TotalOperating revenues

$
8,478

$
6,768

$
6,843

$
9,096

$
31,185Operating expenses

$
7,624

$
6,436

$
6,548

$
7,129

$
27,737Operating income

$
854

$
332

$
295

$
1,967

$
3,448Other income(4)

$
34

$
4,675

$
218

$
183

$
5,110Income before income taxes

$
888

$
5,007

$
513

$
2,150

$
8,558Net income

$
582

$
2,973

$
274

$
2,031

$
5,860Earnings per share:Basic

$
0.03

$
0.13

$
0.01

$
0.09

$
0.26Diluted

$
0.03

$
0.13

$
0.01

$
0.09

$
0.26Weighted-average shares outstanding:Basic


22,077


22,066


22,171


22,198


22,133Diluted


22,104


22,066


22,171


22,198


22,133Cash dividends declared and paid per share(5)

$
0.03

$
0.15

$
0.03

$
0.03

$
0.24Assets under management (in millions):End of period

$
6,085

$
5,348

$
5,669

$
7,891

$
7,891Average

$
6,564

$
4,998

$
5,189

$
6,595

$
5,864


(4)Other
income includes approximately $4.7 million in realized gains from the final installment in the SDC transaction during the quarter ended
December 31, 2008.(5)Includes
a $0.12 per share special dividend declared during the quarter ended December 31, 2008.


*******

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Table of Contents

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A.    Controls and Procedures.

Disclosure Controls and Procedures

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

For
the fiscal year ended June 30, 2010, management, with the participation of the Company's principal executive officer and principal financial and accounting officer, has
evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on such evaluation of these disclosure controls and procedures, the Company's
principal executive officer and principal financial and accounting officer have concluded that the Company's disclosure controls and procedures were effective during the period covered by this Annual
Report on Form 10-K.

The
Company has also established and maintains internal control over financial reporting as a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of consolidated financial statements for external purposes in accordance with accounting principles generally accepted in the United States. In the ordinary course of
business, the Company routinely enhances its internal controls and procedures for financial reporting by either upgrading its current systems or implementing new systems. Changes have been made to the
Company's internal controls and procedures for financial reporting as a result of these efforts. During the fiscal quarter ended June 30, 2010, there was no change in the Company's internal
controls over financial reporting (as defined in Rule 13a-5(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.

Management's Report on Internal Control Over Financial Reporting

The Report of Management on Internal Control over Financial Reporting and the Report of Independent Registered Public Accounting Firm
are set forth in the financial
statements beginning on page 51 hereof and are incorporated herein by reference.

Item 9B.    Other Information.

None.

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Table of Contents

PART III

Item 10.    Directors, Executive Officers and Corporate Governance.

Item 11.    Executive Compensation.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Item 13.    Certain Relationships and Related Transactions, and Director Independence.

Item 14.    Principal Accountant Fees and Services.

The information required by items 10, 11, 12, 13 and 14 are incorporated by reference from the definitive proxy statement for
our 2010 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission pursuant to Regulation 14A under the Exchange Act.

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Table of Contents

PART IV

Item 15.    Exhibits and Financial Statement Schedules.

(a) (1) and (2) Consolidated Financial Statements and Schedules.

For
a list of the consolidated financial statements and consolidated financial statement schedules filed as a part of this Annual Report on Form 10-K, see "Index to
Financial Statements, Supplementary Data and Financial Statement Schedules" on page 51.

(a)
(3) The exhibits filed and incorporated by reference are listed in the Index of Exhibits required by Item 601 of Regulation S-K at Item b below.

(b)
Exhibits

Exhibit
No.

Description3.1

Certificate of Incorporation of the Registrant, as amended.(A)3.2

Amended and Restated By-Laws of Epoch Holding Corporation (as adopted April 2, 2008).(B)4.1

Amended and Restated 2004 Omnibus Long-Term Incentive Compensation Plan.(C)4.2

Certificate of Designation, Preferences and Rights of Series A Convertible Preferred Stock.(D)4.3

Registration Rights Agreement dated November 7, 2006 by and between Epoch Holding Corporation and between General American Investors Company, Inc.(D)4.4

Stockholders Agreement dated as of June 2, 2004 among J Net Enterprises, Inc. and certain of its stockholders.(E)4.5

Registration Rights Agreement dated as of June 2, 2004 among J Net Enterprises, Inc. and certain of its stockholders.(E)10.1

Employment Agreement by and between Epoch Holding Corporation and William W. Priest, dated as of November 28, 2007 and effective as of January 1, 2008.(F)10.2

1992 Incentive and Non-qualified Stock Option Plan.(G)10.40

Form of Indemnification Agreement between the Registrant and each director and officer of the Registrant.(H)10.45

Office lease between Vornado 640 Fifth Avenue LLC (Landlord) and Epoch Investment Partners, Inc. (Tenant).(I)10.46

Form of Restricted Stock Award.(J)10.47

Office lease between 680 Fifth Avenue Associates, L.P. (Landlord) and J Net Enterprises, Inc. (Tenant).(J)10.48

Office sublease between J Net Enterprises, Inc. (Sublandlord) and Game Show Network LLC (Subtenant).(J)10.49

Office sublease between Centerview Partners Holdings LLC (Sublessor) and Epoch Investment Partners, Inc. (Sublessee).(K)10.50

Securities Purchase Agreement dated November 6, 2006 by and between Epoch Holding Corporation and General American Investors Company, Inc.(D)21.1

List of Registrant's significant subsidiaries.(L)23.1

Consent of CF & Co., L.L.P.(M)


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Table of Contents

Exhibit
No.

Description31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.(M)31.2

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.(M)32.1

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.(M)


(A)Incorporated
by reference to Registrant's Form 8-K dated December 7, 2004.(B)Incorporated
by reference to Registrant's Form 8-K dated April 2, 2008.(C)Incorporated
by reference to Registrant's Form S-8 dated December 29, 2008.(D)Incorporated
by reference to Registrant's Form 8-K dated November 9, 2006.(E)Incorporated
by reference to Registrant's Form 8-K dated June 3, 2004.(F)Incorporated
by reference to Registrant's Form 8-K dated December 3, 2007.(G)Incorporated
by reference to Registrant's 1992 Proxy Statement.(H)Incorporated
by reference to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2009.(I)Incorporated
by reference to Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 2005.(J)Incorporated
by reference to Registrant's Annual Report on Form 10-K/A for the fiscal year ended June 30, 2006.(K)Incorporated
by reference to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2009.(L)Incorporated
by reference to Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 2005.(M)Filed
herewith.


Our
SEC file number reference for documents filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended, is 1-09728.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.

EPOCH HOLDING CORPORATION(Registrant)Dated: September 8, 2010

By:

/s/ WILLIAM W. PRIEST William W. Priest Chief Executive Officer


Pursuant
to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and
on the dates indicated.

Signature

Title

Date/s/ ALLAN R. TESSLER Allan R. Tessler

Chairman of the Board

September 8, 2010/s/ WILLIAM W. PRIEST William W. Priest

Chief Executive Officer
(Principal Executive Officer)

September 8, 2010/s/ ADAM BORAK Adam Borak

Chief Financial Officer (Principal
Financial and Accounting Officer)

September 8, 2010/s/ ENRIQUE R. ARZAC Enrique R. Arzac

Director

September 8, 2010/s/ JEFFREY L. BERENSON Jeffrey L. Berenson

Director

September 8, 2010/s/ JOHN L. CECIL John L. Cecil

Director

September 8, 2010/s/ PETER A. FLAHERTY Peter A. Flaherty

Director

September 8, 2010/s/ TIMOTHY T. TAUSSIG Timothy T. Taussig

Director

September 8, 2010


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