cown-20210211
0001466538false00014665382021-02-112021-02-110001466538exch:XNMSus-gaap:CommonClassAMember2021-02-112021-02-110001466538exch:XNMScown:A2027NotesMember2021-02-112021-02-110001466538exch:XNMScown:A2033NotesMember2021-02-112021-02-11

 
 
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): February 11, 2021
  
 
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: (646) 562-1010 
 
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 February 11, 2021, Cowen Inc., a Delaware corporation (the “Company”) issued a press release announcing its financial results for the three and twelve months ended December 31, 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:February 11, 2021Title:General Counsel
 


 


Document







https://cdn.kscope.io/3b0db19db6c68882d4b8e8dc6416ea7e-cowenlogo1a121.jpg



COWEN ANNOUNCES RECORD FINANCIAL RESULTS FOR FULL YEAR 2020

Reports Record 4Q20 US GAAP Net Income of $90.5 million, or $2.98 per diluted share
Economic Operating Income in 4Q20 of $138.7 million, or $4.58 per diluted share (Non-GAAP)
Record FY20 US GAAP Net Income attributable to Cowen Inc. stockholders of $209.6 million and record FY20 Economic Operating income of $335.9 million (Non-GAAP)
Record quarter and year for Investment Banking and Brokerage
Maintained quarterly cash dividend of $0.08 per common share

NEW YORK - February 11, 2021 - Cowen Inc. (NASDAQ: COWN) (“Cowen” or “the Company”) today announced its operating results for the fourth quarter and full year ended December 31, 2020.

Jeffrey M. Solomon, Chair and Chief Executive Officer of Cowen, said, "I am proud of the dedication and hard work the Cowen team exhibited to achieve the strongest results in the firm's history. Because 2020 was a year of tremendous challenge, uncertainty and hardship for many, I am equally proud of our efforts to help our clients, our communities, and each other. We are grateful every day to be in a position to help our clients help others by solving their problems and enabling them to realize their visions. We are thankful that they put their trust in us. As we look ahead to 2021, we strive to live by our core values of vision, empathy, sustainability and tenacious teamwork."

Fourth Quarter 2020 Financial Summary
US GAAPEconomic Operating Income (Non-GAAP)
Three Months Ended
December 31,
Three Months Ended
December 31,
($ in millions, except per share information)20202019Δ %20202019Δ %
Revenue/Economic Proceeds (Non-GAAP)$502.9 $281.179 %$512.7 $248.3 106 %
Net income (loss) attributable to common stockholders/Economic Operating Income (Non-GAAP)$90.5 $3.52,486 %$138.7 $16.3 751 %
Earnings (loss) per common share (diluted)$2.98 $0.112,609 %$4.58 $0.53 764 %
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 Non-GAAP Measures."













1


Fourth Quarter and Full Year 2020 Operating Financial Highlights

Record Investment Banking performance:
Record quarter and year for overall revenues, capital markets issuance and advisory and M&A revenues
Broad strength across products. Biotech, tools & diagnostics and sustainability all key earnings drivers
Record M&A proceeds driven by several high-fee engagements. Deal pipeline now at record high level

Record Brokerage performance with continuing share gains:
Markets Economic Proceeds (Non-GAAP) of $657.3 million ($2.60 million/trading day) in FY20, with a 4Q20 record high of $188.3 million ($2.94 million/day) (Non-GAAP).1
Strong growth in electronic trading, non-US execution, prime services, outsourced trading, securities finance, and special situations

Strong momentum in investment management:
Management fees at highest annual level since 2016, four investment strategies grew AUM year-over-year

Invested capital:
Full-year 2020 investment income economic proceeds (Non-GAAP) of $29.2 million from gains in balance sheet investments including Cowen Healthcare Investments and the Merchant Banking portfolio, including the sale of the Company's common shares of Nikola Corporation.
As of December 31, 2020, the Company had invested capital in Op Co totaling $722.8 million, down from $784.2 million as of September 30, 2020.
As of December 31, 2020, the Company had invested capital in Asset Co totaling $131.0 million, an increase of $2.3 million from the invested capital invested as of September 30, 2020.
The largest Asset Co investments were the investment in Italian wireless broadband provider Linkem S.p.A ($82.7 million), private equity funds Formation8/Eclipse ($39.2 million) and other private investments ($9.1 million).
Assets under Management
As of December 31, 2020, the Company had assets under management of $12.5 billion, up $0.7 billion from September 30, 2020 and an increase of $1.1 billion from December 31, 2019, respectively.

Capital Optimization Update
As of December 31, 2020, Cowen had book value of $32.34 per common share and tangible book value per common share of $25.95, up from book value of $30.48 and tangible book value of $24.32 at September 30, 2020, and up from book value of $24.77 and tangible book value of $18.72 at December 31, 2019.
In the fourth quarter of 2020, the Company repurchased $3.9 million of its common stock, or 165,040 shares, at an average price of $23.46 under the Company's existing share repurchase program. Outside the share repurchase program, in the fourth quarter of 2020 the Company acquired approximately $8.9 million of stock as a result of net share settlements relating to the vesting of equity awards, or 361,082 shares, at an average price of $24.51.
For full-year 2020, the Company repurchased 3,139,751 shares for $47.3 million, or an average price of $15.07 under the Company's existing share repurchase program. Outside the share repurchase program, in 2020 the Company acquired approximately $15.1 million of shares as a result of net share settlements relating to the vesting of equity awards, or 866,784 shares at an average price of $17.48.
Maintained Quarterly Cash Dividend
The Company maintained its quarterly cash dividend payable on its common stock. On February 10, 2021, the Board of Directors declared a cash dividend of $0.08 per common share. The dividend will be payable on March 15, 2021, to stockholders of record on March 1, 2021.
1 Markets Economic Proceeds is comprised of Brokerage Economic Proceeds (Non-GAAP) of $652.6 million as well as $3.1 million of management fees for Prime Services and $1.7 million of miscellaneous fees presented in Management Fees Economic Proceeds (Non-GAAP) and Other Economic Proceeds (Non-GAAP) respectively.
2


Select Balance Sheet Data
(Amounts in millions, except per share information)
December 31, 2020December 31, 2019
Cowen Inc. stockholders' equity$969.5$809.9
Common equity (CE)$868.2$708.5
Tangible common equity (TCE)$696.7$535.6
Book value per share (CE/CSO)$32.34$24.77
Tangible book value per share (TCE/CSO)$25.95$18.72
Common shares outstanding (CSO)26.828.6
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.

3


Cowen Inc.
US GAAP Preliminary Unaudited Condensed Consolidated Statements of Operations
(Dollar and share amounts in thousands, except per share data)
Three Months EndedTwelve Months Ended
December 31December 31
2020201920202019
Revenue
Investment banking$266,135 $102,922 $769,486 $375,025 
Brokerage147,479 99,907 572,548 402,747 
Management fees12,304 11,128 47,515 32,608 
Incentive income465 823 592 1,547 
Interest and dividends59,912 45,067 187,459 174,913 
Reimbursement from affiliates271 246 1,048 1,026 
Reinsurance premiums11,204 17,267 30,147 46,335 
Other3,912 2,205 8,621 5,433 
Consolidated Funds revenues1,238 1,570 5,888 9,809 
Total revenue502,920 281,135 1,623,304 1,049,443 
Interest and dividends expense61,875 43,539 187,725 168,628 
Total net revenue441,045 237,596 1,435,579 880,815 
Expenses
Employee compensation and benefits277,394 147,161 860,531 535,772 
Reinsurance claims, commissions and amortization of deferred acquisition costs12,189 18,931 33,905 44,070 
Operating, general, administrative and other expenses104,890 84,584 369,840 335,499 
Depreciation and amortization expense5,353 5,470 22,677 20,460 
Goodwill impairment— — — 4,100 
Consolidated Funds expenses616 2,734 5,409 8,963 
Total expenses400,442 258,880 1,292,362 948,864 
Other income (loss)
Net (losses) gains on securities, derivatives and other investments92,139 18,969 175,877 80,409 
  Gain/(loss) on debt extinguishment2,719 — 2,719 — 
Consolidated Funds net (losses) gains5,034 36,827 (24,376)58,363 
Total other income (loss)99,892 55,796 154,220 138,772 
Income (loss) before income taxes140,495 34,512 297,437 70,723 
Income tax expense/(benefit)37,784 5,238 90,373 14,853 
Net income (loss)102,711 29,274 207,064 55,870 
Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and funds10,544 24,051 (9,299)31,239 
Net income (loss) attributable to Cowen Inc.92,167 5,223 216,363 24,631 
Less: Preferred stock dividends1,698 1,698 6,792 6,792 
Net income (loss) attributable to Cowen Inc. common stockholders$90,469 $3,525 $209,571 $17,839 
Earnings (loss) per share:
Basic$3.36 $0.12 $7.54 $0.60 
Diluted$2.98 $0.11 $7.10 $0.57 
Weighted average shares used in per share data:
Basic26,934 29,046 27,790 29,525 
Diluted30,316 30,722 29,519 31,286 
4


U.S. GAAP Financial Measures

Fourth quarter 2020 revenue was $502.9 million versus $281.1 million in the fourth quarter of 2019. Full year 2020 revenue was $1.6 billion compared to $1.0 billion in the prior year. The year-over-year increase was due primarily to increased investment banking and brokerage activity.

Fourth quarter 2020 investment banking revenues increased $163.2 million to $266.1 million. Full year 2020 investment banking revenue increased $394.5 million to $769.5 million. During full-year 2020 the Company completed 165 underwriting transactions, 74 strategic advisory transactions and 12 debt capital markets transactions.

Fourth quarter 2020 brokerage revenues increased $47.6 million to $147.5 million. Full year 2020 brokerage revenues increased $169.8 million to $572.5 million. The revenue growth was attributable to an increase in institutional brokerage, including special situations trading and electronic trading commissions, as well as an increase in institutional services, primarily prime brokerage.

Fourth quarter 2020 employee compensation and benefits expenses was $277.4 million, an increase of $130.2 million from the prior-year period. Full year 2020 employee compensation and benefits expenses was $860.5 million compared to $535.8 million in the prior year. The year-over-year increase was due primarily to higher total revenues resulting in a higher compensation and benefits accrual.

Fourth quarter 2020 income tax expense was $37.8 million compared to $5.2 million in the prior-year quarter. Full year 2020 income tax expense was $90.4 million compared to $14.9 million in the prior year. The year-over-year change was primarily attributable to the increase in the Company's income before income taxes.

Fourth quarter 2020 total expenses totaled $400.4 million, an increase of $141.6 million from the prior-year period. Full year 2020 total expenses totaled $1.3 billion, compared to $948.9 million in the prior year. The year-over-year increase was due to higher compensation expenses and higher non-compensation expenses associated with increased investment banking and brokerage activity, partially offset by a reduction in marketing and business development expenses.

Fourth quarter 2020 net income attributable to common stockholders was $90.5 million compared to $3.5 million in the fourth quarter of 2019. Full-year 2020 net income attributable to common stockholders was $209.6 million compared to net income of $17.8 million in the prior year.


5


Non-GAAP Financial Measures 
Throughout this press release, the Company presents supplemental financial measures that are not prepared in accordance with U.S. GAAP. These non-GAAP financial measures include (i) Economic Income (Loss), (ii) Economic Operating Income (Loss), (iii) Economic Proceeds and related components, (iv) Net Economic Proceeds and related components (v) Economic Expenses and related components and (vi) related per share measures. The Company believes that these non-GAAP financial 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 Non-GAAP financial measures 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. The Company believes that presenting these non-GAAP measures may provide expanded transparency into the Company’s business operations, growth opportunities and expense allocation decisions.
The Company’s primary non-GAAP financial measures of profit or loss are Economic Income (Loss) and Economic Operating Income (Loss). 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. The Company believes that these non-GAAP financial measures provide analysts and investors transparency into the measures of profit and loss management uses to evaluate the financial performance of and make operating decisions for the segments including determining appropriate compensation levels. Additionally, the measures provide investors and analysts with additional insight into the activities of the Company’s core businesses, taking into account, among other things, the impact of minority investment stakes, securities borrowing and lending activities and expenses from investment banking activities on US GAAP reported results.
In addition to Economic Income (Loss) and Economic Operating Income (Loss), the Company also presents Economic Proceeds, Net Economic Proceeds, Economic Expenses, as well as their related components. These measures include management reclassifications and the elimination of the impact of the consolidation for Consolidated funds as described for Economic Income (Loss) and Economic Operating Income (Loss) described above. These adjustments are meant to provide comparability to our peers as well as to provide investors and analysts with transparency into how the Company manages its operating businesses and how analysts and investors review and analyze the Company’s and its peers’ similar lines of businesses. For example, among others, within the Company’s Op Co business segment, investors and analysts typically review and analyze the performance of investment banking revenues net of underwriting expenses and excluding the impact of reimbursable expenses. Additionally, the performance of the Company’s Markets business is typically analyzed as a unit incorporating commissions, interest from securities financing transactions and gains and losses from proprietary and facilitation trading. The Company’s investment management business performance is analyzed and reviewed by investors and analysts through investment income, incentive income and management fees. The presentation of Economic Proceeds, Net Economic Proceeds, Economic Expenses as well as their related components align with these and other examples of how the Company’s business activities and performance are reviewed by analysts and investors in addition to providing simplification related to legacy businesses and investments for which the Company maintains long-term monetization strategies . Additionally, the Company manages its operating businesses to an Economic Compensation-to-Proceeds ratio. Presentation of Economic Compensation Expense and Economic Proceeds provides transparency in addition to the Company’s US GAAP Compensation Expense.
Reconciliations to comparable US GAAP measures are presented along with the Company’s Non-GAAP financial measures. 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.
These Non-GAAP measures should not be considered in isolation or as a substitute for revenue, expenses, 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.
6



Fourth Quarter and Full Year Non-GAAP Financial Review

Economic Proceeds

Three Months EndedTwelve Months Ended
December 31, 2020December 31, 2019December 31, 2020December 31, 2019
(Dollar amounts in thousands)Op CoAsset CoTotalOp CoAsset CoTotalOp CoAsset CoTotalOp CoAsset CoTotal
Economic Proceeds
Investment banking$254,402 $— $254,402 $96,711 $— $96,711 $729,180 $— $729,180 $351,085 $— $351,085 
Brokerage185,824 — 185,824 113,047 — 113,047 652,647 — 652,647 459,143 — 459,143 
Management fees16,430 312 16,742 10,305 187 10,492 58,154 946 59,100 40,321 1,976 42,297 
Incentive income42,606 1,769 44,375 10,603 370 10,973 83,435 1,927 85,362 44,600 1,132 45,732 
Investment income (loss)5,220 5,108 10,328 18,788 (2,178)16,610 37,786 (8,564)29,222 32,614 3,111 35,725 
Other economic proceeds1,073 1,074 490 491 775 780 5,785 58 5,843 
Total: Economic Proceeds505,555 7,190 512,745 249,944 (1,620)248,324 1,561,977 (5,686)1,556,291 933,548 6,277 939,825 
Economic Interest Expense6,048 1,109 7,157 6,205 1,402 7,607 24,519 5,123 29,642 22,576 5,449 28,025 
Net Economic Proceeds$499,507 $6,081 $505,588 $243,739 $(3,022)$240,717 $1,537,458 $(10,809)$1,526,649 $910,972 $828 $911,800 

Economic Proceeds were $512.7 million versus $248.3 million in the fourth quarter of 2019, an increase of 106%. Full-year 2020 economic proceeds rose 67%.

Investment Banking Economic Proceeds were $254.4 million, up 163% versus the prior-year period, driven by stronger equity capital markets activity as well as higher-fee M&A transactions. Full-year 2020 banking proceeds rose 108%.

Brokerage Economic Proceeds of $185.8 million were up 64% versus the prior-year period, driven by strength in non-US trading, electronic trading, prime services and securities finance. Full-year 2020 brokerage proceeds rose 42%.

Management Fees Economic Proceeds rose 60% year-over-year to $16.7 million in the fourth quarter, driven by higher AUM in the sustainability strategy, private healthcare strategy and the healthcare royalties strategy. Full-year 2020 management fees rose 40%.

Incentive Income Economic Proceeds were $44.4 million in the fourth quarter of 2020, up from income of $11.0 million in the prior-year period. Fourth quarter 2020 incentive income reflects higher performance fees in the private healthcare strategy and the activist strategy. Full-year 2020 incentive income rose 87%.

Investment Income Economic Proceeds posted income of $10.3 million, versus income of $16.6 million in the prior-year period. Fourth quarter 2020 proceeds include increases in the value of investments in the private healthcare strategy, activist strategy and merchant banking portfolio, partially offset by a negative-mark-to market adjustment on Cowen's Nikola holdings, which were substantially reduced during the quarter. Full-year 2020 investment income economic proceeds declined 18%.







7



Fourth Quarter and Full Year Non-GAAP Financial Review (continued)
Economic Expenses

Three Months EndedTwelve Months Ended
December 31, 2020December 31, 2019December 31, 2020December 31, 2019
(Dollar amounts in thousands)Op CoAsset CoTotalOp CoAsset CoTotalOp CoAsset CoTotalOp CoAsset CoTotal
Economic Expenses
Compensation & Benefits$278,273 $1,674 $279,947 $145,875 $687 $146,562 $860,753 $3,767 $864,520 $532,468 $5,070 $537,538 
Non-Compensation Expenses83,976 (46)83,930 72,997 1,311 74,308 312,173 350 312,523 294,614 3,924 298,538 
Depreciation & Amortization5,900 5,905 5,447 5,453 22,655 22 22,677 20,403 36 20,439 
Non-Controlling Interest1,308 — 1,308 1,852 — 1,852 6,892 — 6,892 4,796 — 4,796 
Total: Economic Expenses$369,457 $1,633 $371,090 $226,171 $2,004 $228,175 $1,202,473 $4,139 $1,206,612 $852,281 $9,030 $861,311 

Economic Compensation Expenses expense was $279.9 million compared to $146.6 million in the fourth quarter of 2019. The increase was due to higher revenues offset only partially by a lower economic compensation-to-proceeds ratio. The fourth quarter 2020 economic compensation-to-proceeds ratio was 54.6%, down from 56.1% in 3Q20 and down from 59.0% in 4Q19. Full-year 2020 compensation-to-proceeds ratio was 55.6%, down from 57.2% in full-year 2019.

Economic Non-compensation Expenses Fourth quarter 2020 fixed non-compensation expenses increased $3.5 million from the prior-year period to $39.8 million. The increase was due in part to higher service fees offset only partially by reduced office service expenses. Variable non-compensation expenses were $44.1 million, up from $38.0 million in the fourth 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. Full-year 2020 non-compensation-to-proceeds ratio was 20.1%, down from 31.8% in full-year 2019.


Economic Income and Economic Operating Income

Three Months EndedTwelve Months Ended
December 31, 2020December 31, 2019December 31, 2020December 31, 2019
(Dollar amounts in thousands)Op CoAsset CoTotalOp CoAsset CoTotalOp CoAsset CoTotalOp CoAsset CoTotal
Economic Income (loss) *$128,607 $4,193 $132,800 $16,193 $(5,349)$10,844 $329,381 $(16,136)$313,245 $53,257 $(9,560)$43,697 
Add: Depreciation & amortization5,900 5,905 5,447 5,453 22,655 22 22,677 20,403 36 20,439 
Economic Operating Income (Loss)$134,507 $4,198 $138,705 $21,640 $(5,343)$16,297 $352,036 $(16,114)$335,922 $73,660 $(9,524)$64,136 
Economic Income per common share$4.24 $0.14 $4.38 $0.53 $(0.17)$0.35 $11.16 $(0.55)$10.60 $1.69 $(0.31)$1.40 
Economic Operating Income per common share$4.44 $0.14 $4.58 $0.70 $(0.17)$0.53 $11.93 $(0.55)$11.38 $2.35 $(0.30)$2.06 

* Economic Income (loss) is net of preferred dividends



8

Reconciliation of US GAAP (Unaudited) to Non-GAAP Measures

The following tables reconciles total US GAAP Revenues and Other Income (Loss) to total Economic Proceeds for the three and twelve months ended December 31, 2020 and 2019:
For the three months ended December 31, 2020
(Dollar amounts in thousands)
Investment BankingBrokerageManagement FeesIncentive IncomeInvestment IncomeInterest and DividendsReimbursement from AffiliatesReinsurance premiumsOther revenuesConsolidated Funds RevenuesOther Income (Loss)Total
Total US GAAP Revenues and Other Income (Loss) $266,135 $147,479 $12,304 $465 $— $59,912 $271 $11,204 $3,912 $1,238 $99,892 $602,812 
Management Presentation Reclassifications:
Underwriting expensesa(6,041)— — — — — — — — — — (6,041)
Reimbursable client expensesb(5,692)— — — — — (271)— — — — (5,963)
Securities financing interest expensec— 958 — — — (46,911)— — — — — (45,953)
Fund start-up costs and distribution feesd— (293)(540)(467)— — — — (1,773)— — (3,073)
Certain equity method investmentse— — 3,439 6,879 — — — — — — (7,362)2,956 
Carried interestf— — — 37,498 — — — — — — (37,498)— 
Proprietary trading gains and lossesg— — — — 29,944 (4,786)— — (64)— (39,125)(14,031)
Insurance related activities expensesh— — — — — — — (11,204)(987)— — (12,191)
Facilitation trading gains and lossesi— 37,680 — — (19,616)(8,215)— — — — (11,809)(1,960)
Total Management Presentation Reclassifications:(11,733)38,345 2,899 43,910 10,328 (59,912)(271)(11,204)(2,824)— (95,794)(86,256)
Fund Consolidated Reclassificationsl— — 1,539 — — — — — (14)(1,238)(1,379)(1,092)
Income Statement Adjustments
Debt extinguishmentq— — — — — — — — — — (2,719)(2,719)
Total Economic Proceeds$254,402 $185,824 $16,742 $44,375 $10,328 $— $— $— $1,074 $— $— $512,745 

For the three months ended December 31, 2019
(Dollar amounts in thousands)
Investment BankingBrokerageManagement FeesIncentive IncomeInvestment IncomeInterest and DividendsReimbursement from AffiliatesReinsurance premiumsOther revenuesConsolidated Funds RevenuesOther Income (Loss)Total
Total US GAAP Revenues and Other Income (Loss)$102,922 $99,907 $11,128 $823 $— $45,067 $246 $17,267 $2,205 $1,570 $55,796 $336,931 
Management Presentation Reclassifications:
Underwriting expensesa(2,684)— — — — — — — — — — (2,684)
Reimbursable client expensesb(10,139)— — — — — (274)— — — — (10,413)
Securities financing interest expensec— 6,791 — — — (34,984)— — — — — (28,193)
Fund start-up costs and distribution feesd— — (4,314)— — — — — (1,120)— — (5,434)
Certain equity method investmentse— — 3,049 4,240 — — — — — — (5,169)2,120 
Carried interestf— — — 5,867 — — — — — — (5,867)— 
Proprietary trading gains and lossesg— — — — 20,934 (4,667)— — (728)— (12,076)3,463 
Insurance related activities expensesh— — — — — — — (17,267)134 — — (17,133)
Facilitation trading gains and lossesi6,612 6,349 — — (4,324)(5,416)— — — — (5,090)(1,869)
Total Management Presentation Reclassifications:(6,211)13,140 (1,265)10,107 16,610 (45,067)(274)(17,267)(1,714)— (28,202)(60,143)
Fund Consolidated Reclassificationsl— — 629 43 — — 28 — — (1,570)(27,594)(28,464)
Total Economic Proceeds$96,711 $113,047 $10,492 $10,973 $16,610 $— $— $— $491 $— $— $248,324 
9

Reconciliation of US GAAP (Unaudited) to Non-GAAP Measures (continued)

For the twelve months ended December 31, 2020
(Dollar amounts in thousands)
Investment BankingBrokerageManagement FeesIncentive IncomeInvestment Income Interest and DividendsReimbursement from AffiliatesReinsurance premiums Other revenuesConsolidated Funds RevenuesOther Income (Loss)Total
Total US GAAP Revenues and Other Income (Loss)$769,486 $572,548 $47,515 $592 $— $187,459 $1,048 $30,147 $8,621 $5,888 $154,220 $1,777,524 
Management Presentation Reclassifications:
Underwriting expensesa(22,565)— — — — — — — — — — (22,565)
Reimbursable client expensesb(17,741)— — — — — (1,098)— — — — (18,839)
Securities financing interest expensec— 14,499 — — — (142,998)— — — — — (128,499)
Fund start-up costs and distribution feesd— (293)(3,970)(719)— — — — (2,529)— — (7,511)
Certain equity method investmentse— — 12,540 24,121 — — — — — — (28,346)8,315 
Carried interestf— — — 61,335 — — — — — — (61,335)— 
Proprietary trading gains and lossesg— — — — 42,564 (17,442)— — (1,518)— (56,351)(32,747)
Insurance related activities expensesh— — — — — — — (30,147)(3,759)— — (33,906)
Facilitation trading gains and lossesi— 65,893 — — (13,342)(27,019)— — — — (31,768)(6,236)
Total Management Presentation Reclassifications:(40,306)80,099 8,570 84,737 29,222 (187,459)(1,098)(30,147)(7,806)— (177,800)(241,988)
Fund Consolidated Reclassificationsl— — 3,015 33 — — 50 — (35)(5,888)26,299 23,474 
Income Statement Adjustments
Debt extinguishmentq— — — — — — — — — — (2,719)(2,719)
Total Economic Proceeds$729,180 $652,647 $59,100 $85,362 $29,222 $— $— $— $780 $— $— $1,556,291 

For the twelve months ended December 31, 2019
(Dollar amounts in thousands)
Investment BankingBrokerageManagement FeesIncentive IncomeInvestment Income Interest and DividendsReimbursement from AffiliatesReinsurance premiums Other revenuesConsolidated Funds RevenuesOther Income (Loss)Total
Total US GAAP Revenues and Other Income (Loss)$375,025 $402,747 $32,608 $1,547 $— $174,913 $1,026 $46,335 $5,433 $9,809 $138,772 $1,188,215 
Management Presentation Reclassifications:
Underwriting expensesa(15,067)— — — — — — — — — — (15,067)
Reimbursable client expensesb(15,485)— — — — — (1,148)— — — — (16,633)
Securities financing interest expensec— 22,198 — — — (132,000)— — — — — (109,802)
Fund start-up costs and distribution feesd— — (5,500)— — — — — (1,123)— — (6,623)
Certain equity method investmentse— — 12,919 19,975 — — — — — — (25,204)7,690 
Carried interestf— — — 23,610 — — — — — — (23,610)— 
Proprietary trading gains and lossesg— — — — 54,455 (24,067)— — (725)— (44,631)(14,968)
Insurance related activities expensesh— — — — — — — (46,335)2,243 — — (44,092)
Facilitation trading gains and lossesi6,612 34,198 — — (18,730)(18,846)— — — — (8,662)(5,428)
Total Management Presentation Reclassifications:(23,940)56,396 7,419 43,585 35,725 (174,913)(1,148)(46,335)395 — (102,107)(204,923)
Fund Consolidated Reclassificationsl— — 2,270 600 — — 122 — 15 (9,809)(36,665)(43,467)
Total Economic Proceeds$351,085 $459,143 $42,297 $45,732 $35,725 $— $— $— $5,843 $— $— $939,825 

10

Reconciliation of US GAAP (Unaudited) to Non-GAAP Measures (continued)

The following table reconciles total US GAAP interest and dividends expense to total Economic Interest Expense for the three and twelve months ended December 31, 2020 and 2019:
Three Months Ended December 31,Twelve Months Ended December 31,
(Dollar amounts in thousands)
2020201920202019
Total US GAAP Interest & Dividend Expense$61,875 $43,539 $187,725 $168,628 
Management Presentation Reclassifications:
Securities financing interest expensec(45,953)(28,193)(128,499)(109,802)
Proprietary trading gains and lossesg(5,700)(4,781)(18,849)(21,076)
Facilitation trading gains and lossesi(1,960)(1,869)(6,236)(5,428)
Total Management Presentation Reclassifications:(53,613)(34,843)(153,584)(136,306)
Income Statement Adjustments:
Amortization of discount/(premium) on debtm(1,105)(1,089)(4,499)(4,297)
Total Economic Interest Expense$7,157 $7,607 $29,642 $28,025 
The following tables reconcile total US GAAP Expenses and non-controlling interests to total Economic Expenses for the three and twelve months ended December 31, 2020 and 2019:
Three Months Ended December 31, 2020Three Months Ended December 31, 2019
(Dollar amounts in thousands)
 Employee Compensation and BenefitsNon-compensation US GAAP Expenses (including Depreciation and Amortization)Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment fundsTotalEmployee Compensation and BenefitsNon-compensation US GAAP Expenses (including Depreciation and Amortization)Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment fundsTotal
Total US GAAP$277,394 $123,048 $10,544 $410,986 $147,161 $111,719 $24,051 $282,931 
Management Presentation Reclassifications:— 
Underwriting expensesa— (6,041)— (6,041)— (2,684)— (2,684)
Reimbursable client expensesb— (5,963)— (5,963)— (10,413)— (10,413)
Fund start-up costs and distribution feesd— (3,073)— (3,073)— (5,434)— (5,434)
Certain equity method investmentse— 2,956 — 2,956 — 2,120 — 2,120 
Proprietary trading gains and lossesg— 1,737 (10,068)(8,331)— 6,565 1,679 8,244 
Insurance related activities expensesh— (12,191)— (12,191)— (17,133)— (17,133)
Associated partner/banker compensationj2,908 (2,908)— — 1,054 (1,054)— — 
Management company non-Controlling interestk(355)(953)1,308 — (1,653)(199)1,852 — 
Total Management Presentation Reclassifications:2,553 (26,436)(8,760)(32,643)(599)(28,232)3,531 (25,300)
Fund Consolidated Reclassificationsl— (616)(476)(1,092)— (2,734)(25,730)(28,464)
Income Statement Adjustments:
Acquisition adjustmentsn— (4,282)— (4,282)— (992)— (992)
Goodwill and/or other impairmento— (1,879)— (1,879)— — — — 
Total Income Statement Adjustments:— (6,161)— (6,161)— (992)— (992)
Total Economic Expenses$279,947 $89,835 $1,308 $371,090 $146,562 $79,761 $1,852 $228,175 
11

Reconciliation of US GAAP (Unaudited) to Non-GAAP Measures (continued)

Twelve Months Ended December 31, 2020Twelve Months Ended December 31, 2019
(Dollar amounts in thousands)
Employee Compensation and BenefitsNon-compensation US GAAP Expenses (including Depreciation and Amortization)Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment fundsTotalEmployee Compensation and BenefitsNon-compensation US GAAP Expenses (including Depreciation and Amortization)Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment fundsTotal
Total US GAAP$860,531 $431,831 $(9,299)$1,283,063 $535,772 $413,092 $31,239 $980,103 
Management Presentation Reclassifications:
Underwriting expensesa— (22,565)— (22,565)— (15,067)— (15,067)
Reimbursable client expensesb— (18,839)— (18,839)— (16,633)— (16,633)
Fund start-up costs and distribution feesd— (7,511)— (7,511)— (6,623)— (6,623)
Certain equity method investmentse— 8,315 — 8,315 — 7,690 — 7,690 
Proprietary trading gains and lossesg— 5,686 (19,584)(13,898)— 2,843 3,265 6,108 
Insurance related activities expensesh— (33,906)— (33,906)— (44,092)— (44,092)
Associated partner/banker compensationj5,377 (5,377)— — 3,419 (3,419)— — 
Management company non-Controlling interestk(1,388)(5,504)6,892 — (1,653)(3,143)4,796 — 
Total Management Presentation Reclassifications:3,989 (79,701)(12,692)(88,404)1,766 (78,444)8,061 (68,617)
Fund Consolidated Reclassificationsl— (5,409)28,883 23,474 — (8,963)(34,504)(43,467)
Income Statement Adjustments:
Acquisition adjustmentsn— (9,098)— (9,098)— (2,608)— (2,608)
Goodwill and/or other impairmento— (2,423)— (2,423)— (4,100)— (4,100)
Total Income Statement Adjustments:— (11,521)— (11,521)— (6,708)— (6,708)
Total Economic Expenses$864,520 $335,200 $6,892 $1,206,612 $537,538 $318,977 $4,796 $861,311 











12

Reconciliation of US GAAP (Unaudited) to Non-GAAP Measures (continued)

The following table reconciles US GAAP Net Income (loss) Attributable to Cowen Inc. Common Stockholders to Economic Income (loss) and Economic Operating Income (loss):
Three Months EndedTwelve Months Ended
December 31December 31
(Dollar amounts in thousands)
2020201920202019
US GAAP Net income (loss) attributable to Cowen Inc. common stockholders$90,469 $3,525 $209,571 $17,839 
Income Statement Adjustments:
Income tax expense (benefit)p37,784 5,238 90,373 14,853 
Amortization of discount (premium) on debtm1,105 1,089 4,499 4,297 
Debt extinguishmentq(2,719)— (2,719)— 
Goodwill and other impairmento1,879 — 2,423 4,100 
Transaction-related and other costsn4,282 992 9,098 2,608 
Economic Income (Loss)$132,800 $10,844 $313,245 $43,697 
Add back: Depreciation and amortization expense5,905 5,453 22,677 20,439 
Economic Operating Income (Loss)$138,705 $16,297 $335,922 $64,136 

The following table reconciles US GAAP Net Income (loss) Attributable to Cowen Inc. Common Stockholders Earnings Per Common Share (Diluted) to Economic Income (loss) Per Common Share (Diluted) and Economic Operating Income (loss) Per Common Share (Diluted):

Three Months EndedTwelve Months Ended
December 31December 31
(Dollars per share)2020201920202019
US GAAP Net income (loss) attributable to Cowen Inc. common stockholders$2.98 $0.11 $7.10 $0.57 
Income Statement Adjustments:
Income tax expense (benefit)p1.25 0.17 3.06 0.47 
Amortization of discount (premium) on debtm0.04 0.04 0.15 0.14 
Debt extinguishmentq(0.09)— (0.09)— 
Goodwill and other impairmento0.06 — 0.08 0.13 
Transaction-related and other costsn0.15 0.03 0.30 0.08 
Economic income (Loss) per common share (diluted) $4.39 $0.35 $10.60 $1.39 
Add back: Depreciation and amortization expense0.19 0.18 0.77 0.66 
Economic Operating Income (Loss) per common share (diluted)$4.58 $0.53 $11.37 $2.05 



13

Reconciliation of US GAAP (Unaudited) to Non-GAAP Measures (continued)



Adjustments made to US GAAP Net Income (Loss) to arrive at Economic Operating Income (Loss)
Management Reclassifications
Management reclassification adjustments and fund consolidation reclassification adjustments have no effect on economic income. These adjustments are reclassifications to change the location of certain line items.
aUnderwriting expenses: Economic Income (Loss) presents investment banking revenues net of underwriting expenses.
bReimbursable client expenses: Economic Income (Loss) presents expenses reimbursed from clients and affiliates within their respective expense category but is included as a part of revenues under US GAAP.
cSecurities financing interest expense: Economic Income (Loss) brokerage revenues included net securities borrowed and securities loaned activities which are shown gross in interest income and interest expense for US GAAP.
dFund start-up costs and distribution fees: Economic Income (Loss) presents revenues net of fund start-up costs and distribution fees paid to agents.
eCertain equity method investments: Economic Income (Loss) recognizes the Company's proportionate share of management and incentive fees and associated share of expenses on a gross basis for equity method investments within the activist business, real estate operating entities and the healthcare royalty business. The Company applies the equity method of accounting to these entities and accordingly the results from these businesses are recorded within Other Income (Loss) for US GAAP.
fCarried interest: The Company applies an equity ownership model to carried interest which is recorded in Other Income (Loss) for US GAAP. The Company presents carried interest as incentive income for Economic Income (Loss).
gProprietary trading gains and losses: Economic Income (Loss) recognizes Company income from proprietary trading (including interest and dividends) for which the majority of this activity is shown in other income (loss) for US GAAP reporting.
hInsurance related activities expenses: Economic Income (Loss) recognizes underwriting income from the Company's insurance related activities, net of expenses, within other revenue. The costs are recorded within expenses for US GAAP reporting.
iFacilitation trading gains and losses: Economic Income (Loss) recognizes gains and losses on investments held as part of the Company's facilitation and trading business within brokerage revenues as these investments are directly related to the markets business activities.
jAssociated partner/banker compensation reclassification: Economic Income (Loss) presents certain payments to associated banking partners as compensation rather than non-compensation expenses.
kManagement company non-controlling interest: Economic income (Loss) non-controlling interest represents only operating entities that are not wholly owned by the Company. The Company also presents non-controlling interests within total expenses for Economic Income (Loss).
Fund Consolidation Reclassifications
lThe impacts of consolidation and the related elimination entries of the Consolidated Funds are not included in Economic Income (Loss). Adjustments to reconcile to US GAAP Net Income (Loss) included elimination of incentive income and management fees earned from the Consolidated Funds and addition of investment fund expenses excluding management fees paid, investment fund revenues and investment income (loss).
Income Statement Adjustments
mEconomic Income (Loss) excludes the amortization of discount (premium) on debt.
nEconomic Income (Loss) excludes acquisition related adjustments.
oEconomic Income (Loss) excludes goodwill and other impairments.
pEconomic Income (Loss) excludes income taxes.
qEconomic Income (Loss) excludes gain/(loss) on debt extinguishment.


14


Earnings Conference Call
 
Management will hold a conference call today, February 11, 2021 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: 9894979

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/qyu9qc6t

A replay of the call will be available for one week beginning at 12:00 pm ET on February 11, 2021 on the Company’s website at investor.cowen.com/investor-calls or via the following numbers:

U.S. replay dial-in: (855) 859-2056
International replay dial-in: (404) 537-3406
Replay ID: 9894979

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.
15


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.


16