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 Symbol Name of Exchange on Which Registered
Class A Common Stock, par value $0.01 per share   COWN The Nasdaq Global Market
7.35% Senior Notes due 2027 COWNZ The Nasdaq Global Market
7.75% Senior Notes due 2033 COWNL The 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, 2020 Title: General Counsel
 


 







COWENLOGO1A121.JPG


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 GAAP Economic Operating Income
Three Months Ended
September 30, 		Three Months Ended
September 30,
($ in millions, except per share information) 2020 2019 Δ % 2020 2019 Δ %
Revenue $ 387.7 $ 252.0 54  % $ 274.3  $ 216.5  27  %
Net income (loss) attributable to common stockholders $ 18.6 $ 2.1 786  % $ 37.4  $ 10.1  270  %
Earnings (loss) per common share (diluted) $ 0.62 $ 0.07 786  % $ 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, 2020 December 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) 26.6 28.6
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 Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
Revenue
Investment banking $ 194,341  $ 77,292  $ 503,351  $ 272,103 
Brokerage 138,483  93,995  425,069  302,840 
Management fees 11,954  7,300  35,211  21,480 
Incentive income 127  701  127  724 
Interest and dividends 37,552  60,707  127,547  129,846 
Reimbursement from affiliates 269  238  777  780 
Reinsurance premiums 2,505  8,146  18,943  29,068 
Other 1,369  1,237  4,709  3,228 
Consolidated Funds revenues 1,135  2,431  4,650  8,239 
Total revenue 387,735  252,047  1,120,384  768,308 
Interest and dividends expense 37,754  56,477  125,850  125,089 
Total net revenue 349,981  195,570  994,534  643,219 
Expenses
Employee compensation and benefits 153,427  120,320  583,137  388,611 
Reinsurance claims, commissions and amortization of deferred acquisition costs 4,852  8,195  21,716  25,139 
Operating, general, administrative and other expenses 84,784  83,851  264,950  250,915 
Depreciation and amortization expense 5,682  5,082  17,324  14,990 
Goodwill impairment —  —  —  4,100 
Consolidated Funds expenses 494  2,516  4,793  6,229 
Total expenses 249,239  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) gains 6,385  13,896  (29,410) 21,536 
Total other income (loss) (62,396) 32,342  54,328  82,976 
Income (loss) before income taxes 38,346  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 funds 9,232  2,770  (19,843) 7,188 
Net income (loss) attributable to Cowen Inc. 20,284  3,813  124,196  19,408 
Less: Preferred stock dividends 1,698  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:
Basic 27,663  29,529  28,078  29,687 
Diluted 29,970  31,264  29,646  31,381 

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Third Quarter 2020 Economic Income Financial Review
Three Months Ended Nine Months Ended
September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019
(Dollar amounts in thousands) Op Co Asset Co Total Op Co Asset Co Total Op Co Asset Co Total Op Co Asset Co Total
Investment banking $ 185,151  $ —  $ 185,151  $ 69,433  $ —  $ 69,433  $ 474,778  $ —  $ 474,778  $ 254,374  $ —  $ 254,374 
Brokerage 167,084  —  167,084  110,178  —  110,178  466,823  —  466,823  346,095  —  346,095 
Management fees 14,374  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) 2  (794) (132) 6  (126) (298) 4  (294) 5,295  56  5,351 
Total revenue 272,828  1,459  274,287  215,964  552  216,516  1,056,422  (12,875) 1,043,547  683,605  7,895  691,500 
Interest Expense 6,026  1,109  7,135  5,758  1,389  7,147  18,471  4,014  22,485  16,371  4,046  20,417 
Total net revenues 266,802  350  267,152  210,206  (837) 209,369  1,037,951  (16,889) 1,021,062  667,234  3,849  671,083 
Compensation & Benefits 152,829  957  153,786  121,890  729  122,619  582,480  2,093  584,573  386,593  4,383  390,976 
Fixed non-compensation expense 34,257  127  34,384  36,458  625  37,083  106,350  378  106,728  107,889  2,485  110,374 
Variable non-compensation expense 37,736  6  37,742  37,216  40  37,256  121,846  18  121,864  113,728  127  113,855 
Depreciation & Amortization 5,670  5  5,675  5,073  9  5,082  16,756  17  16,773  14,957  30  14,987 
Non-Controlling Interest 2,105  —  2,105  661  —  661  5,584  —  5,584  2,944  —  2,944 
Total expenses 232,597  1,095  233,692  201,298  1,403  202,701  833,016  2,506  835,522  626,111  7,025  633,136 
Less: Preferred Dividend 1,415  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 Shareholders 32,790  (1,028) 31,762  7,567  (2,597) 4,970  200,775  (20,329) 180,446  37,065  (4,212) 32,853 
Add: Depreciation & Amortization 5,670  5  5,675  5,073  9  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 Ended Nine Months Ended
September 30, September 30,
(Dollar amounts in thousands)
2020 2019 2020 2019
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 debt 1,152  1,092  3,394  3,208 
Contingent liability adjustments 3,023  300  4,781  298 
Goodwill & intangible impairment —  —  544  4,100 
Transaction-related and other costs 308  176  378  1,366 
Economic Income (Loss) $ 31,762  $ 4,970  $ 180,446  $ 32,853 
Add back: Depreciation and amortization expense 5,675  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 Ended Nine Months Ended
September 30, September 30,
(Dollars per share) 2020 2019 2020 2019
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 debt 0.04  0.03  0.11  0.10 
Contingent liability adjustments 0.10  0.01  0.16  0.01 
Goodwill & intangible impairment —  —  0.02  0.13 
Transaction-related and other costs 0.01  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 expense 0.19  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 GAAP Reclassifications and Adjustments   Economic Income
(Dollars amounts in thousands) Net income (loss) Management Reclassifications Fund Consolidation Reclassifications (k) Income Statement Adjustments Total Economic Income/(Loss) Operating Company Asset Company
Revenues
Investment banking $ 194,341  $ (9,190) a, b $ —  $ —  $ 185,151  $ 185,151  $ — 
Brokerage 138,483  28,601  c, h —  —  $ 167,084  167,084  — 
Management fees 11,954  2,519  d, e 163  —  $ 14,636  14,374  262 
Incentive income (loss) 127  (1,462) e 33  —  $ (1,302) (2,621) 1,319 
Investment income (loss) —  (90,488) f —  —  $ (90,488) (90,364) (124)
Interest and dividends 37,552  (37,552) c —  —  —  —  — 
Reimbursement from affiliates 269  (269) b —  —  —  —  — 
Reinsurance premiums 2,505  (2,505) g —  —  —  —  — 
Other revenue 1,369  (2,160) g (3) —  (794) (796) 2 
Consolidated Funds revenues 1,135  —  (1,135) —  —  —  — 
Total revenues 387,735  (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) l 7,135  6,026  1,109 
Total net revenues 349,981  (83,039) (942) 1,152  267,152  266,802  350 
Expenses
Compensation & benefits 153,427  359  i —  —  153,786  152,829  957 
Fixed non-compensation expense —  37,708  e, j —  (3,324) m 34,384  34,257  127 
Variable non-compensation expense —  37,742  j —  —  37,742  37,736  6 
Other non-compensation expense 89,636  (89,636) a, b, d, g, i —  —  —  —  — 
Depreciation & amortization 5,682  —  —  (7) n 5,675  5,670  5 
Non-controlling interest —  2,105  j —  —  2,105  2,105  — 
Consolidated Funds expenses 494  —  (494) —  —  —  — 
Total expenses 249,239  (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 funds 9,232  (6,284) j (2,948) —  —  —  — 
Income (loss) attributable to Cowen Inc. 20,284  —  —  13,176  33,460  34,205  (745)
Less: Preferred stock dividends 1,698  —  —  —  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 expense 5,675  5,670  5 
Economic Operating Income (Loss) $ 37,437  $ 38,460  $ (1,023)




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  Three Months Ended September 30, 2019
  US GAAP Reclassifications and Adjustments Economic Income
(Dollars amounts in thousands) Net income (loss) Management Reclassifications Fund Consolidation Reclassifications (k) Income Statement Adjustments Total Economic Income/(Loss) Operating Company Asset Company
Revenues      
Investment banking $ 77,292  $ (7,859) a, b $ —  $ —  $ 69,433  $ 69,433  $ — 
Brokerage 93,995  16,183  c, h —  —  110,178  110,178  — 
Management fees 7,300  3,033  d, e 574  —  10,907  10,321  586 
Incentive income (loss) 701  13,675  e 13  —  14,389  15,251  (862)
Investment income (loss) —  11,735  f —  —  11,735  10,913  822 
Interest and dividends 60,707  (60,707) c —  —  —  —  — 
Reimbursement from affiliates 238  (265) b 27  —  —  —  — 
Reinsurance premiums 8,146  (8,146) g —  —  —  —  — 
Other revenue 1,237  (1,389) g 26  —  (126) (132) 6 
Consolidated Funds revenues 2,431  —  (2,431) —  —  —  — 
Total revenues 252,047  (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) l 7,147  5,758  1,389 
Total net revenues 195,570  14,498  (1,791) 1,092  209,369  210,206  (837)
Expenses  
Compensation & benefits 120,320  2,299  i —  —  122,619  121,890  729 
Fixed non-compensation expense —  37,559  e, j —  (476) m 37,083  36,458  625 
Variable non-compensation expense —  37,256  j —  —  37,256  37,216  40 
Other non-compensation expense 92,046  (92,046) a, b, d, g, i —  —  —  —  — 
Depreciation & amortization 5,082  —  —  —  5,082  5,073  9 
Non-controlling interest —  661  j —  —  661  661  — 
Consolidated Funds expenses 2,516  —  (2,516) —    —  —  — 
Total expenses 219,964  (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 funds 2,770  2,126  j (4,896)   —  —  — 
Income (loss) attributable to Cowen Inc. 3,813  —  —  2,855  6,668  8,908  (2,240)
Less: Preferred stock dividends 1,698  —  —  —  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 expense 5,082  5,073  9 
Economic Operating Income (Loss) $ 10,052  $ 12,640  $ (2,588)


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Nine Months Ended September 30, 2020
US GAAP Reclassifications and Adjustments Economic Income
(Dollars amounts in thousands) Net income (loss) Management Reclassifications Fund Consolidation Reclassifications (k) Income Statement Adjustments Total Economic Income/(Loss) Operating Company Asset Company
Revenues
Investment banking $ 503,351  $ (28,573) a, b $ —  $ —  $ 474,778  $ 474,778  $ — 
Brokerage 425,069  41,754  c, h —  —  466,823  466,823  — 
Management fees 35,211  5,672  d, e 1,475  —  42,358  41,724  634 
Incentive income (loss) 127  40,827  e 33  —  40,987  40,829  158 
Investment income (loss) —  18,895  f —  —  18,895  32,566  (13,671)
Interest and dividends 127,547  (127,547) c —  —  —  —  — 
Reimbursement from affiliates 777  (827) b 50  —  —  —  — 
Reinsurance premiums 18,943  (18,943) g —  —  —  —  — 
Other revenue 4,709  (4,982) g (21) —  (294) (298) 4 
Consolidated Funds revenues 4,650  —  (4,650) —  —  —  — 
Total revenues 1,120,384  (73,724) (3,113) —  1,043,547  1,056,422  (12,875)
Interest and dividend expense 125,850  (99,971) c —  (3,394) l 22,485  18,471  4,014 
Total net revenues 994,534  26,247  (3,113) 3,394  1,021,062  1,037,951  (16,889)
Expenses
Compensation & benefits 583,137  1,436  i —  —  584,573  582,480  2,093 
Fixed non-compensation expense —  111,880  e, j —  (5,152) m 106,728  106,350  378 
Variable non-compensation expense —  121,864  j —  —  121,864  121,846  18 
Other non-compensation expense 286,666  (286,666) a, b, d, g, i —  —  —  —  — 
Depreciation & amortization 17,324  —  —  (551) n 16,773  16,756  17 
Non-controlling interest —  5,584  j —  —  5,584  5,584  — 
Consolidated Funds expenses 4,793  —  (4,793) —  —  —  — 
Total expenses 891,920  (45,902) (4,793) (5,703) 835,522  833,016  2,506 
Other income (loss) 54,328  (82,006) e, f, h 27,678  —  —  —  — 
Income taxes expense / (benefit) 52,589  (342) —  (52,247) o —  —  — 
Income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment funds (19,843) (9,515)  j 29,358  —  —  —  — 
Income (loss) attributable to Cowen Inc. $ 124,196  —  —  61,344  185,540  204,935  (19,395)
Less: Preferred stock dividends 5,094  —  —  —  5,094  4,160  934 
Economic Income (Loss)/ Income (loss) attributable to Cowen Inc. common stockholders $ 119,102  $ —  $ —  $ 61,344  180,446  200,775  (20,329)
Add back: Depreciation and amortization expense 16,773  16,756  17 
Economic Operating Income (Loss) $ 197,219  $ 217,531  $ (20,312)

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Nine Months Ended September 30, 2019
US GAAP Reclassifications and Adjustments Economic Income
(Dollars amounts in thousands) Net income (loss) Management Reclassifications Fund Consolidation Reclassifications (k) Income Statement Adjustments Total Economic Income/(Loss) Operating Company Asset Company
Revenues
Investment banking $ 272,103  $ (17,729) a, b $ —  $ —  $ 254,374  $ 254,374  $ — 
Brokerage 302,840  43,255  c, h —  —  346,095  346,095  — 
Management fees 21,480  8,684  d, e 1,640  —  31,804  30,016  1,788 
Incentive income (loss) 724  33,479  e 557  —  34,760  33,998  762 
Investment income (loss) —  19,116  f —  —  19,116  13,827  5,289 
Interest and dividends 129,846  (129,846) c —  —  —  —  — 
Reimbursement from affiliates 780  (874) b 94  —  —  —  — 
Reinsurance premiums 29,068  (29,068) g —  —  —  —  — 
Other revenue 3,228  2,109  g 14  —  5,351  5,295  56 
Consolidated Funds revenues 8,239  —  (8,239) —  —  —  — 
Total revenues 768,308  (70,874) (5,934) —  691,500  683,605  7,895 
Interest expense (Economic Income/(Loss)) / Interest and dividend expense (US GAAP) 125,089  (101,464) c —  (3,208) l 20,417  16,371  4,046 
Total net revenues 643,219  30,590  (5,934) 3,208  671,083  667,234  3,849 
Expenses
Compensation & benefits 388,611  2,365  i —  —  390,976  386,593  4,383 
Fixed non-compensation expense —  112,038  e, j —  (1,664) m 110,374  107,889  2,485 
Variable non-compensation expense —  113,855  j —  —  113,855  113,728  127 
Other non-compensation expense 276,054  (276,054) a, b, d, g, i —  —  —  —  — 
Depreciation & amortization 14,990  (3) —  —  14,987  14,957  30 
Non-controlling interest —  2,944  j —  —  2,944  2,944  — 
Goodwill impairment 4,100  —  —  (4,100) n —  —  — 
Consolidated Funds expenses 6,229  —  (6,229) —  —  —  — 
Total expenses 689,984  (44,855) (6,229) (5,764) 633,136  626,111  7,025 
Other income (loss) 82,976  (73,907) e, f, h (9,069) —  —  —  — 
Income taxes expense / (benefit) 9,615  (48) —  (9,567) o —  —  — 
Income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment funds 7,188  1,586  j (8,774) —    —  —  — 
Income (loss) attributable to Cowen Inc. 19,408  —  —  18,539  37,947  41,123  (3,176)
Less: Preferred stock dividends 5,094  —  —  —  5,094  4,058  1,036 
Economic Income (Loss)/ Income (loss) attributable to Cowen Inc. common stockholders $ 14,314  $ —  $ —  $ 18,539  32,853  37,065  (4,212)
Add back: Depreciation and amortization expense 14,987  14,957  30 
Economic Operating Income (Loss) $ 47,840  $ 52,022  $ (4,182)


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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.
a Economic Income (Loss) presents underwriting expenses net of investment banking revenues.
b 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.
c 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.
d Economic Income (Loss) presents revenues net of fund start-up costs and distribution fees paid to agents.
e Economic Income (Loss) recognizes the Company's proportionate share of management and incentive fees and associated share of expenses on a gross basis for certain real estate operating entities, the healthcare royalty business and the activist business. Additionally, carried interest, which the Company applies an equity ownership model to, is recorded in other income (loss) for US GAAP and is shown as incentive income for Economic Income (Loss).
f 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.
g 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.
h 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.
i Economic Income (Loss) presents certain payments to associated banking partners as compensation rather than non-compensation expenses.
j Economic Income (Loss) presents US GAAP expenses as either Fixed non-compensation or Variable non-compensation expenses. The Company also presents US GAAP Income (loss) attributable to non-controlling interests within total other expenses for Economic Income (Loss).
Fund Consolidation Reclassifications
k The 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
l Economic Income (Loss) excludes the amortization of discount on convertible debt.
m Economic Income (Loss) excludes acquisition related adjustments as management does not consider these items when evaluating the performance of the Company.
n Economic Income (Loss) excludes goodwill and intangible impairment.
o Economic Income (Loss) excludes income taxes.

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