Document

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 8-K
 
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

 Date of Report (Date of earliest event reported): October 27, 2020
  
 
COWEN INC.
(Exact Name of Registrant as Specified in Charter)
 

Delaware 001-34516 27-0423711
(State or Other Jurisdiction of Incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
 
599 Lexington Avenue
New York, NY 10022
(Address of Principal Executive Offices and Zip Code) 
Registrant’s telephone number, including area code: (212) 845-7900 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:  
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

☐ Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Securities registered pursuant to Section 12(b) of the Act:



Title of Each Class Trading SymbolName of Exchange on Which Registered
Class A Common Stock, par value $0.01 per share COWNThe Nasdaq Global Market
7.35% Senior Notes due 2027COWNZThe Nasdaq Global Market
7.75% Senior Notes due 2033COWNLThe Nasdaq Global Market



Item 2.02.     Results of Operations and Financial Condition.
 
On October 27, 2020, Cowen Inc., a Delaware corporation (the “Company”) issued a press release announcing its financial results for the three and nine months ended September 30, 2020, a copy of which is attached hereto as Exhibit 99.1. 

The information in Exhibit 99.1 is furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act.

Item 9.01. Financial Statements and Exhibits.
 
(d) Exhibit
 






SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 COWEN INC.
   
By:/s/ Owen S. Littman
 Name:Owen S. Littman
Date:October 27, 2020Title:General Counsel
 


 


Document





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COWEN ANNOUNCES FINANCIAL RESULTS FOR THIRD QUARTER 2020

Reports 3Q20 US GAAP Net Income of $18.6 million or $0.62 per share
Economic Operating Income of $37.4 million, or $1.25 per share, second highest on record
Second-strongest quarter for Investment Banking and Brokerage, Record M&A revenues
Solid results despite impact of mark-to-market on unrealized Nikola investment, which reduced Economic Operating Income by $48.3 million, or $1.62 per share
Book Value increased to $30.48 per share and Tangible Book Value increased to $24.32 per share
Doubled quarterly cash dividend, to $0.08 per common share

NEW YORK - October 27, 2020 - Cowen Inc. (NASDAQ: COWN) (“Cowen” or “the Company”) today announced its operating results for the third quarter ended September 30, 2020.

Jeffrey M. Solomon, Chair and Chief Executive Officer of Cowen, said, "Our results for the third quarter demonstrate the strength and sustainability of our operating business. It was the second-best quarter on record for markets and investment banking, we set a new record for M&A revenues and management fees are at multi-year highs. We also took advantage of the opportunity to repurchase shares at attractive valuations, with the largest quarterly buyback in five years. We continue to embrace our core values of vision, empathy, sustainability and tenacious teamwork as we help our clients, our colleagues and our communities to tackle their biggest challenges and navigate through these uncertain times."
Third Quarter 2020 Financial Summary
US GAAPEconomic Operating Income
Three Months Ended
September 30,
Three Months Ended
September 30,
($ in millions, except per share information)20202019Δ %20202019Δ %
Revenue$387.7$252.054 %$274.3 $216.5 27 %
Net income (loss) attributable to common stockholders$18.6$2.1786 %$37.4 $10.1 270 %
Earnings (loss) per common share (diluted)$0.62$0.07786 %$1.25 $0.32 291 %
Note: Throughout this press release the Company presents non-GAAP financial measures that are not prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). A reconciliation of these non-GAAP measures appears under the section, "Reconciliation of US GAAP (Unaudited) to Economic Operating Income (Loss)."

Third Quarter 2020 Operating Financial Highlights (US GAAP) (unaudited)

Third quarter 2020 US GAAP revenue was $387.7 million compared to $252.0 million in the third quarter of 2019.

Third quarter 2020 US GAAP employee compensation and benefits expenses was $153.4 million, an increase of $33.1 million from the prior-year period.

Third quarter 2020 US GAAP income tax expense was $8.8 million compared to $1.4 million in the prior-year quarter.

Third quarter 2020 US GAAP total expenses totaled $249.2 million, an increase of $29.3 million from the prior-year period.

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Third quarter 2020 US GAAP net income attributable to common stockholders was $18.6 million compared to net income attributable to common stockholders of $2.1 million in the third quarter of 2019.

Third Quarter 2020 Operating Financial Highlights (Non-GAAP)

Strong Investment Banking performance:
Second-strongest quarter on record driven by capital markets activity in biotech and healthcare tools & diagnostics
Record M&A revenues driven by several high-fee engagements. Deal pipeline now at record high level
Markets revenues near record levels, continuing share gains:
Markets revenue, which includes brokerage, financing and other revenue, was $167.4 million ($2.62 million/day), just below the record highs of 2Q'20
Posted strong performances in prime services, outsourced trading, securities finance, special situations and non-US execution
Strong momentum in investment management:
Management fee run-rate at highest annual level since 2016, AUM increased year-over-year
Invested capital: Nikola position creates quarterly volatility
Mark-to-market unrealized loss of $96.6 million on Nikola investment partially offset by gains in balance sheet investments including Cowen Healthcare Investments and SPAC trading

Capital Optimization Update
As of September 30, 2020, Cowen had book value of $30.48 per common share and tangible book value per common share of $24.32, up from book value of $28.96 and tangible book value of $22.94 at June 30, 2020, and up from book value of $24.77 and tangible book value of $18.72 at December 31, 2019.
In the third quarter of 2020, the Company repurchased $18.9 million of its common stock, or 1,144,254 shares, at an average price of $16.49 under the Company's existing share repurchase program, representing the largest quarterly share repurchase since the third quarter of 2015.
Outside the share repurchase program, in the third quarter of 2020 the Company acquired approximately $267 thousand of shares as a result of net share settlements relating to the vesting of equity awards, or 14,985 shares, at an average price of $17.80.
For the first nine months of 2020, the Company repurchased 2,974,711 shares for $43.4 million, or an average price of $14.60 under the Company's existing share repurchase program. Outside the share repurchase program, in the first nine months of 2020 the Company acquired approximately $6.3 million of shares as a result of net share settlements relating to the vesting of equity awards, or 505,702 shares at an average price of $12.45.
Increased Quarterly Cash Dividend
The Company increased its quarterly cash dividend payable on its common stock from $0.04 to $0.08 per common share. On October 21, 2020, the Board of Directors declared a cash dividend of $0.08 per common share. The dividend will be payable on December 15, 2020, to stockholders of record on December 1, 2020.
Select Balance Sheet Data
(Amounts in millions, except per share information)
September 30, 2020December 31, 2019
Cowen Inc. stockholders' equity$911.2$809.9
Common equity (CE)$809.9$708.5
Tangible common equity (TCE)$646.1$535.6
Book value per share (CE/CSO)$30.48$24.77
Tangible book value per share (TCE/CSO)$24.32$18.72
Common shares outstanding (CSO)26.628.6
Note: Common Equity (CE) is calculated as Cowen Inc, stockholders’ equity less our preferred stock issuance.
Tangible common equity (TCE) is calculated as common equity (CE) less goodwill and net intangible assets.

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Cowen Inc.
US GAAP Preliminary Unaudited Condensed Consolidated Statements of Operations
(Dollar and share amounts in thousands, except per share data)
Three Months EndedNine Months Ended
September 30,September 30,
2020201920202019
Revenue
Investment banking$194,341 $77,292 $503,351 $272,103 
Brokerage138,483 93,995 425,069 302,840 
Management fees11,954 7,300 35,211 21,480 
Incentive income127 701 127 724 
Interest and dividends37,552 60,707 127,547 129,846 
Reimbursement from affiliates269 238 777 780 
Reinsurance premiums2,505 8,146 18,943 29,068 
Other1,369 1,237 4,709 3,228 
Consolidated Funds revenues1,135 2,431 4,650 8,239 
Total revenue387,735 252,047 1,120,384 768,308 
Interest and dividends expense37,754 56,477 125,850 125,089 
Total net revenue349,981 195,570 994,534 643,219 
Expenses
Employee compensation and benefits153,427 120,320 583,137 388,611 
Reinsurance claims, commissions and amortization of deferred acquisition costs4,852 8,195 21,716 25,139 
Operating, general, administrative and other expenses84,784 83,851 264,950 250,915 
Depreciation and amortization expense5,682 5,082 17,324 14,990 
Goodwill impairment— — — 4,100 
Consolidated Funds expenses494 2,516 4,793 6,229 
Total expenses249,239 219,964 891,920 689,984 
Other income (loss)
Net (losses) gains on securities, derivatives and other investments(68,781)18,446 83,738 61,440 
Consolidated Funds net (losses) gains6,385 13,896 (29,410)21,536 
Total other income (loss)(62,396)32,342 54,328 82,976 
Income (loss) before income taxes38,346 7,948 156,942 36,211 
Income tax expense/(benefit)8,830 1,365 52,589 9,615 
Net income (loss)29,516 6,583 104,353 26,596 
Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and funds9,232 2,770 (19,843)7,188 
Net income (loss) attributable to Cowen Inc.20,284 3,813 124,196 19,408 
Less: Preferred stock dividends1,698 1,698 5,094 5,094 
Net income (loss) attributable to Cowen Inc. common stockholders$18,586 $2,115 $119,102 $14,314 
Earnings (loss) per share:
Basic$0.67 $0.07 $4.24 $0.48 
Diluted$0.62 $0.07 $4.02 $0.46 
Weighted average shares used in per share data:
Basic27,663 29,529 28,078 29,687 
Diluted29,970 31,264 29,646 31,381 

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Third Quarter 2020 Economic Income Financial Review
Three Months EndedNine Months Ended
September 30, 2020September 30, 2019September 30, 2020September 30, 2019
(Dollar amounts in thousands)Op CoAsset CoTotalOp CoAsset CoTotalOp CoAsset CoTotalOp CoAsset CoTotal
Investment banking$185,151 $— $185,151 $69,433 $— $69,433 $474,778 $— $474,778 $254,374 $— $254,374 
Brokerage167,084 — 167,084 110,178 — 110,178 466,823 — 466,823 346,095 — 346,095 
Management fees14,374 262 14,636 10,321 586 10,907 41,724 634 42,358 30,016 1,788 31,804 
Incentive income(2,621)1,319 (1,302)15,251 (862)14,389 40,829 158 40,987 33,998 762 34,760 
Investment income (loss)(90,364)(124)(90,488)10,913 822 11,735 32,566 (13,671)18,895 13,827 5,289 19,116 
Other revenue(796)(794)(132)(126)(298)(294)5,295 56 5,351 
Total revenue272,828 1,459 274,287 215,964 552 216,516 1,056,422 (12,875)1,043,547 683,605 7,895 691,500 
Interest Expense6,026 1,109 7,135 5,758 1,389 7,147 18,471 4,014 22,485 16,371 4,046 20,417 
Total net revenues266,802 350 267,152 210,206 (837)209,369 1,037,951 (16,889)1,021,062 667,234 3,849 671,083 
Compensation & Benefits152,829 957 153,786 121,890 729 122,619 582,480 2,093 584,573 386,593 4,383 390,976 
Fixed non-compensation expense34,257 127 34,384 36,458 625 37,083 106,350 378 106,728 107,889 2,485 110,374 
Variable non-compensation expense37,736 37,742 37,216 40 37,256 121,846 18 121,864 113,728 127 113,855 
Depreciation & Amortization5,670 5,675 5,073 5,082 16,756 17 16,773 14,957 30 14,987 
Non-Controlling Interest2,105 — 2,105 661 — 661 5,584 — 5,584 2,944 — 2,944 
Total expenses232,597 1,095 233,692 201,298 1,403 202,701 833,016 2,506 835,522 626,111 7,025 633,136 
Less: Preferred Dividend1,415 283 1,698 1,341 357 1,698 4,160 934 5,094 4,058 1,036 5,094 
Economic Income (Loss) attributable to Common Shareholders32,790 (1,028)31,762 7,567 (2,597)4,970 200,775 (20,329)180,446 37,065 (4,212)32,853 
Add: Depreciation & Amortization5,670 5,675 5,073 5,082 16,756 17 16,773 14,957 30 14,987 
Economic Operating Income (Loss) attributable to Common Shareholders$38,460 $(1,023)$37,437 $12,640 $(2,588)$10,052 $217,531 $(20,312)$197,219 $52,022 $(4,182)$47,840 
Economic Income per common share$1.09 $(0.03)$1.06 $0.24 $(0.08)$0.16 $6.77 $(0.69)$6.08 $1.17 $(0.13)$1.04 
Economic Operating Income per common share$1.28 $(0.03)$1.25 $0.40 $(0.08)$0.32 $7.34 $(0.69)$6.65 $1.66 $(0.13)$1.53 

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Economic Income total revenues were $274.3 million versus $216.5 million in the third quarter of 2019, an increase of 27%. Op Co revenue included in economic income was $272.8 million while Asset Co revenue included in economic income was $1.5 million.

Investment Banking revenues were $185.2 million, up 167% versus the prior-year period, driven by stronger equity capital markets activity as well as higher-fee M&A transactions.

Brokerage revenues of $167.1 million were up 52% versus the prior-year period, driven by strength in non-US trading, electronic trading, prime services and securities finance.

Management Fees rose 34% year-over-year to $14.6 million in the third quarter, driven by higher AUM in the sustainability strategy, private healthcare strategy and the healthcare royalties strategy. Management fees in Asset Co. were $0.3 million.

Incentive Income posted a loss of $1.3 million in the third quarter of 2020, down from income of $14.4 million in the prior-year period. Third quarter 2020 incentive income reflects the impact of mark-to-market declines in the value of positions in the private healthcare strategy, partially offset by a gain of $1.3 million in Asset Co.

Investment Income posted a loss of $90.5 million, versus income of $11.7 million in the prior-year period. The third quarter 2020 revenues include a $96.6 million unrealized loss on the investment in Nikola partially offset by positive performance in the event driven strategy, the healthcare strategy and the activist strategy. Investment income includes markdowns in Asset Co investments of $0.1 million.

Compensation and benefits expense was $153.8 million compared to $122.6 million in the third quarter of 2019. The increase was due to higher revenues offset only partially by a lower compensation to revenue ratio, as well as a $48.3 million reversal of a compensation accrual that was booked through 2Q 2020 related to previous gains on the Nikola investment. The third quarter 2020 compensation-to-revenue ratio was 56.1%, up from 54.6% in 2Q20 and down from 56.6% in 3Q19.

Fixed non-compensation expenses decreased $2.7 million from the prior-year period to $34.4 million. The decrease was due in part to lower service fees and reduced office service expenses.

Variable non-compensation expenses were $37.7 million, up from $37.3 million in the third quarter of 2019. The increase is related in part to higher brokerage and trade execution costs due to increased volumes, partially offset by lower travel, entertainment and business development expenses.

Economic Operating Income, which represents Economic Income attributable to common stockholders before depreciation and amortization, was $37.4 million for the third quarter of 2020, up from $10.1 million in the prior-year period. Third quarter 2020 Economic Operating Income for Op Co was $38.5 million, while Asset Co Economic Operating loss was $1.0 million.

Assets Under Management As of September 30, 2020, the Company had assets under management of $11.8 billion, an increase of $0.3 billion from June 30, 2020 and an increase of $1.0 billion from September 30, 2019, respectively.

Invested Capital As of September 30, 2020, the Company had invested capital in Op Co totaling $784.2 million, up from $711.8 million as of June 30, 2020, as an increase in invested broker dealer capital more than offset the impact of the mark-to-market on the Nikola investment.

As of Sept 30, 2020, the Company had invested capital in Asset Co totaling $127.7 million, an increase of $3.3 million from the invested capital invested as of June 30, 2020.

The largest Asset Co investments were the stake in Italian wireless broadband provider Linkem ($77.4 million), private equity funds Formation8/Eclipse ($39.1 million) and other private investments ($9.3 million).

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Earnings Conference Call
 
Management will hold a conference call today, October 27, 2020 at 9:00 am ET to discuss these results and provide an update on business conditions.

Chair and Chief Executive Officer Jeffrey M. Solomon and Chief Financial Officer Stephen A. Lasota will host the presentation, followed by a question and answer period.

U.S. dial in: (855) 760-0961
International dial-in: (631) 485-4850
Passcode: 8591505

Please call the conference telephone number at least 15 minutes prior to the start time.

The call can also be accessed through live audio webcast via this direct link:
https://edge.media-server.com/mmc/p/nazu2fc3

A replay of the call will be available for one week beginning at 12:00 pm ET on October 27, 2020 on the Company’s website at investor.cowen.com/events/ or via the following numbers:

U.S. replay dial-in: (855) 859-2056
International replay dial-in: (404) 537-3406
Replay ID: 8591505

About Cowen Inc.
Cowen Inc. (“Cowen” or the “Company”) is a diversified financial services firm offering investment banking services, research, sales and trading, prime brokerage, global clearing, commission management services and investment management. Cowen focuses on delivering value-added capabilities to our clients in order to help them outperform. Founded in 1918, the Company is headquartered in New York and has offices worldwide. Learn more at Cowen.com    

Investor Relations Contact:
JT Farley
(646) 562-1056
james.farley@cowen.com
Source: Cowen Inc.

























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Cautionary Note Regarding Forward-Looking Statements
 
This press release contains forward-looking statements. Forward-looking statements provide the Company’s current expectations or forecasts of future events. Forward-looking statements include statements about the Company’s expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. As a result of the spread of COVID-19, economic uncertainties have arisen that have the potential in future periods to negatively impact the Company’s business, financial condition, results of operation, cash flows, strategies and prospects. The extent of the impact of COVID-19 on the Company’s operational and financial performance will depend on certain developments, including the duration and spread of the outbreak and impact on our clients, employees, vendors and the markets in which we operate our businesses, all of which are uncertain and cannot be reasonably estimated at this time. The Company’s actual results could differ materially from those anticipated in forward-looking statements for many reasons, including the factors described in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission. The Annual Report on Form 10-K and Quarterly Reports on Form 10-Q are available at our website at www.cowen.com and at the Securities and Exchange Commission website at www.sec.gov. Unless required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statement to reflect circumstances or events after the date of this press release.


 Non-GAAP Financial Measures
 
In addition to the results presented above in accordance with US GAAP, the Company presents supplemental financial measures that are non-GAAP measures. The Company believes that these non-GAAP measures, viewed in addition to, and not in lieu of, the Company’s reported US GAAP results, provide useful information to investors and analysts regarding its performance and overall results of operations as it presents investors and analysts with a supplemental operating view of the Company’s financials to help better inform their analysis of the Company’s performance.  These metrics are an integral part of the Company’s internal reporting to measure the performance of its business segments, allocate capital and other strategic decisions as well as assess the overall effectiveness of senior management. Reconciliations to comparable US GAAP measures are available in the accompanying schedules. The non-GAAP measures presented herein may not be comparable to similarly titled measures presented by other public companies, and are not identical to corresponding measures used in our various agreements or public filings.
 
Economic Income (Loss) may not be comparable to similarly titled measures used by other public companies. Economic Income (Loss) should not be considered in isolation or as a substitute for net income, operating cash flows, investing and financing activities, or other income or cash flow statement data prepared in accordance with US GAAP. As a result of the adjustments made to arrive at Economic Income (Loss) described below, Economic Income (Loss) has limitations in that it does not take into account certain items included or excluded under US GAAP, including its consolidated funds.
 
In general, Economic Income (Loss) is a pre-tax measure that (i) includes management reclassifications which the Company believes provides additional insight on the performance of the Company’s core businesses and divisions (ii) eliminates the impact of consolidation for Consolidated Funds and excludes (iii) goodwill and intangible impairment (iv) certain other transaction-related adjustments and/or reorganization expenses and (v) certain costs associated with debt. Economic Operating Income (Loss) is a similar measure but before depreciation and amortization expenses.











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Reconciliation of Net Income Attributable to Cowen Inc. Common Stockholders to Economic Income and Economic Operating Income

Three Months EndedNine Months Ended
September 30,September 30,
(Dollar amounts in thousands)
2020201920202019
US GAAP Net income (loss) attributable to Cowen Inc. common stockholders$18,586 $2,115 $119,102 $14,314 
Adjustments:
Income tax expense (benefit)8,693 1,287 52,247 9,567 
Amortization of discount on convertible debt1,152 1,092 3,394 3,208 
Contingent liability adjustments3,023 300 4,781 298 
Goodwill & intangible impairment— — 544 4,100 
Transaction-related and other costs308 176 378 1,366 
Economic Income (Loss)$31,762 $4,970 $180,446 $32,853 
Add back: Depreciation and amortization expense5,675 5,082 16,773 14,987 
Economic Operating Income (Loss)$37,437 $10,052 $197,219 $47,840 
Earnings Per Common Share (Diluted) to Economic Income Per Common Share (Diluted) and Economic Operating Income Per Common Share (Diluted)

Three Months EndedNine Months Ended
September 30,September 30,
(Dollars per share)2020201920202019
Earnings (loss) per common share (diluted):$0.62 $0.07 $4.02 $0.46 
Adjustments:
Income tax expense (benefit)0.29 0.04 1.76 0.30 
Amortization of discount on convertible debt0.04 0.03 0.11 0.10 
Contingent liability adjustments0.10 0.01 0.16 0.01 
Goodwill & intangible impairment— — 0.02 0.13 
Transaction-related and other costs0.01 0.01 0.01 0.04 
Economic income (Loss) per common share (diluted) $1.06 $0.16 $6.08 $1.04 
Add back: Depreciation and amortization expense0.19 0.16 0.57 0.49 
Economic Operating Income (Loss) per common share (diluted)$1.25 $0.32 $6.65 $1.53 

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 Three Months Ended September 30, 2020
 US GAAPReclassifications and Adjustments Economic Income
(Dollars amounts in thousands)Net income (loss)Management ReclassificationsFund Consolidation Reclassifications (k)Income Statement AdjustmentsTotal Economic Income/(Loss)Operating CompanyAsset Company
Revenues
Investment banking$194,341 $(9,190)a, b$— $— $185,151 $185,151 $— 
Brokerage138,483 28,601 c, h— — $167,084 167,084 — 
Management fees11,954 2,519 d, e163 — $14,636 14,374 262 
Incentive income (loss)127 (1,462)e33 — $(1,302)(2,621)1,319 
Investment income (loss) (90,488)f— — $(90,488)(90,364)(124)
Interest and dividends37,552 (37,552)c— — — — — 
Reimbursement from affiliates269 (269)b— — — — — 
Reinsurance premiums2,505 (2,505)g— — — — — 
Other revenue1,369 (2,160)g(3)— (794)(796)
Consolidated Funds revenues1,135 — (1,135)— — — — 
Total revenues387,735 (112,506)(942)— 274,287 272,828 1,459 
Interest expense (Economic Income/(Loss)) / Interest and dividend expense (US GAAP)37,754 (29,467)c— (1,152)l7,135 6,026 1,109 
Total net revenues349,981 (83,039)(942)1,152 267,152 266,802 350 
Expenses
Compensation & benefits153,427 359 i— — 153,786 152,829 957 
Fixed non-compensation expense 37,708 e, j— (3,324)m34,384 34,257 127 
Variable non-compensation expense 37,742 j— — 37,742 37,736 
Other non-compensation expense89,636 (89,636)a, b, d, g, i— —  — — 
Depreciation & amortization5,682 — — (7)n5,675 5,670 
Non-controlling interest 2,105 j— — 2,105 2,105 — 
Consolidated Funds expenses494 — (494)—  — — 
Total expenses249,239 (11,722)(494)(3,331)233,692 232,597 1,095 
Other income (loss)(62,396)64,896 e, f, h(2,500)—  — — 
Income taxes expense / (benefit)8,830 (137)— (8,693)o — — 
Income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment funds9,232 (6,284)j(2,948)—  — — 
Income (loss) attributable to Cowen Inc.20,284 — — 13,176 33,460 34,205 (745)
Less: Preferred stock dividends1,698 — — — 1,698 1,415 283 
Economic Income (Loss)/ Income (loss) attributable to Cowen Inc. common stockholders$18,586 $— $— $13,176 31,762 32,790 (1,028)
Add back: Depreciation and amortization expense5,675 5,670 
Economic Operating Income (Loss)$37,437 $38,460 $(1,023)




9







 Three Months Ended September 30, 2019
 US GAAPReclassifications and AdjustmentsEconomic Income
(Dollars amounts in thousands)Net income (loss)Management ReclassificationsFund Consolidation Reclassifications (k)Income Statement AdjustmentsTotal Economic Income/(Loss)Operating CompanyAsset Company
Revenues   
Investment banking$77,292 $(7,859)a, b$— $— $69,433 $69,433 $— 
Brokerage93,995 16,183 c, h— — 110,178 110,178 — 
Management fees7,300 3,033 d, e574 — 10,907 10,321 586 
Incentive income (loss)701 13,675 e13 — 14,389 15,251 (862)
Investment income (loss) 11,735 f— — 11,735 10,913 822 
Interest and dividends60,707 (60,707)c— —  — — 
Reimbursement from affiliates238 (265)b27 —  — — 
Reinsurance premiums8,146 (8,146)g— —  — — 
Other revenue1,237 (1,389)g26 — (126)(132)
Consolidated Funds revenues2,431 — (2,431)—  — — 
Total revenues252,047 (33,740)(1,791)— 216,516 215,964 552 
Interest expense (Economic Income/(Loss)) / Interest and dividend expense (US GAAP)56,477 (48,238)c— (1,092)l7,147 5,758 1,389 
Total net revenues195,570 14,498 (1,791)1,092 209,369 210,206 (837)
Expenses 
Compensation & benefits120,320 2,299 i— — 122,619 121,890 729 
Fixed non-compensation expense 37,559 e, j— (476)m37,083 36,458 625 
Variable non-compensation expense 37,256 j— — 37,256 37,216 40 
Other non-compensation expense92,046 (92,046)a, b, d, g, i— —  — — 
Depreciation & amortization5,082 — — — 5,082 5,073 
Non-controlling interest 661 j— — 661 661 — 
Consolidated Funds expenses2,516 — (2,516)—   — — 
Total expenses219,964 (14,271)(2,516)(476) 202,701 201,298 1,403 
Other income (loss)32,342 (26,721)e, f, h(5,621)—  — — 
Income taxes expense / (benefit)1,365 (78)— (1,287)o — — 
Income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment funds2,770 2,126 j(4,896)  — — 
Income (loss) attributable to Cowen Inc.3,813 — — 2,855 6,668 8,908 (2,240)
Less: Preferred stock dividends1,698 — — — 1,698 1,341 357 
Economic Income (Loss)/ Income (loss) attributable to Cowen Inc. common stockholders$2,115 $— $— $2,855 4,970 7,567 (2,597)
Add back: Depreciation and amortization expense5,082 5,073 
Economic Operating Income (Loss)$10,052 $12,640 $(2,588)


10






Nine Months Ended September 30, 2020
US GAAPReclassifications and AdjustmentsEconomic Income
(Dollars amounts in thousands)Net income (loss)Management ReclassificationsFund Consolidation Reclassifications (k)Income Statement AdjustmentsTotal Economic Income/(Loss)Operating CompanyAsset Company
Revenues
Investment banking$503,351 $(28,573)a, b$— $— $474,778 $474,778 $— 
Brokerage425,069 41,754 c, h— — 466,823 466,823 — 
Management fees35,211 5,672 d, e1,475 — 42,358 41,724 634 
Incentive income (loss)127 40,827 e33 — 40,987 40,829 158 
Investment income (loss) 18,895 f— — 18,895 32,566 (13,671)
Interest and dividends127,547 (127,547)c— —  — — 
Reimbursement from affiliates777 (827)b50 —  — — 
Reinsurance premiums18,943 (18,943)g— —  — — 
Other revenue4,709 (4,982)g(21)— (294)(298)
Consolidated Funds revenues4,650 — (4,650)—  — — 
Total revenues1,120,384 (73,724)(3,113)— 1,043,547 1,056,422 (12,875)
Interest and dividend expense 125,850 (99,971)c— (3,394)l22,485 18,471 4,014 
Total net revenues994,534 26,247 (3,113)3,394 1,021,062 1,037,951 (16,889)
Expenses
Compensation & benefits583,137 1,436 i— — 584,573 582,480 2,093 
Fixed non-compensation expense 111,880 e, j— (5,152)m106,728 106,350 378 
Variable non-compensation expense 121,864 j— — 121,864 121,846 18 
Other non-compensation expense286,666 (286,666)a, b, d, g, i— —  — — 
Depreciation & amortization17,324 — — (551)n16,773 16,756 17 
Non-controlling interest 5,584 j— — 5,584 5,584 — 
Consolidated Funds expenses4,793 — (4,793)—  — — 
Total expenses891,920 (45,902)(4,793)(5,703)835,522 833,016 2,506 
Other income (loss)54,328 (82,006)e, f, h27,678 —  — — 
Income taxes expense / (benefit)52,589 (342)— (52,247)o