UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 1)
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 27, 2011
COWEN GROUP, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware |
|
001-34516 |
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27-0423711 |
(State or Other Jurisdiction |
|
(Commission File Number) |
|
(I.R.S. Employer |
599 Lexington Avenue
New York, NY 10022
(Address of Principal Executive Offices and Zip Code)
Registrants 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:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
EXPLANATORY NOTE
Item 2.01 Completion of Acquisition or Disposition of Assets.
This Current Report on Form 8-K/A amends Item 9.01 of the Initial Form 8-K to present certain financial statements of the Company and to present certain unaudited pro forma combined financial information, which financial statements and unaudited pro forma information are filed as exhibits hereto.
On June 29, 2011, Cowen Group, Inc. (the Company) filed with the Securities and Exchange Commission a Current Report on Form 8-K (the Initial Form 8-K) in connection with the consummation after the market close on June 28, 2011, of the transactions (the Transactions) contemplated by the Agreement and Plan of Merger (the Merger Agreement), dated as of February 16, 2011, by and among the Company, Louisiana Merger Sub, Inc. (Merger Sub), a subsidiary of the Company, and LaBranche & Co Inc. (n/k/a Cowen Structured Holdings LLC), including (1) the acquisition of Merger Sub with and into LaBranche & Co Inc., pursuant to which each outstanding share of common stock of LaBranche & Co Inc. was converted into 0.9980 shares of Class A common stock of the Company and (2) the acquisition of LaBranche & Co Inc. with and into Cowen Structured Holdings LLC (f/k/a Louisiana Merger Sub, LLC), a wholly owned subsidiary of the Company (Cowen Structured Holdings). As of the close of market on June 28, 2011, LaBranche stock was delisted and no longer trades on the New York Stock Exchange.
Under the terms of the Merger Agreement, each outstanding share of LaBranche was converted into 0.9980 shares of Cowen Class A common stock (the Exchange Ratio). The consideration received by LaBranches shareholders was valued at approximately $156 million in the aggregate, based on the closing price of Cowen Class A common stock on the NASDAQ Global Select Market of $3.82 on June 28, 2011. This is based on 40,931,997 shares of LaBranche stock that were outstanding on the date of the completion of the acquisition.
Item 9.01. Financial Statements and Exhibits
(a) Financial statements of business acquired.
The audited financial statements of LaBranche & Co Inc. (subsequently renamed to Cowen Structured Holdings) as of December 31, 2010 and 2009 and for the three years ended December 31, 2010, and the notes related thereto, are filed as Exhibit 99.2 to this Form 8-K/A and are incorporated herein by reference. The unaudited condensed consolidated statements of financial condition of LaBranche & Co Inc. as of March 31, 2011, the related condensed consolidated statement of operations for the three months ended March 31, 2011 and March 31, 2010, and the related condensed consolidated statements of cash flows for the three months ended March 31, 2011 and March 31, 2010, and the Notes to the Consolidated Financial Statements are filed as Exhibit 99.3 to this Current Report on Form 8-K/A and are incorporated by reference herein.
(b) Pro Forma Financial Information.
The unaudited pro forma condensed combined statements of operations for the three months ended March 31, 2011 and the fiscal year ended December 31, 2010 (giving effect to the acquisition as if the acquisition had occurred on January 1, 2010), and Notes to such unaudited pro forma condensed combined Financial Statements are filed as Exhibit 99.4 to this Form 8-K/A and are incorporated by reference herein. The unaudited pro forma condensed combined statement of financial condition is not required given that the transaction is reflected in the June 30, 2011 historical condensed consolidated statement of financial condition as filed with the SEC in the Companys quarterly report on Form 10-Q and is filed as Exhibit 99.5 to this Form 8-K/A.
(d) Exhibits. The following exhibits are filed herewith:
Exhibit |
|
Description |
|
|
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23.1 |
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Consent of Rothstein, Kass & Company, P.C. |
|
|
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99.2 |
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LaBranche & Co Inc. financial statements as of and for the year ended December 31, 2010 (with Independent Auditors Report thereon) (incorporated by reference to the LaBranche & Co Inc. Annual Report on Form 10-K, filed with the SEC on March 16, 2011). |
|
|
|
99.3 |
|
LaBranche & Co Inc. unaudited condensed consolidated statements of financial condition of as of March 31, 2011 and December 31, 2010, the related condensed consolidated statement of operations for the three months ended March 31, 2011 and March 31, 2010, and the related condensed consolidated statements of cash flows for the three months ended March 31, 2011 and March 31, 2010, and the Notes to the Condensed Consolidated Financial Statements (incorporated by reference to the LaBranche & Co Inc. Quarterly Report on Form 10-Q, filed with the SEC on May 10, 2011). |
|
|
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99.4 |
|
Unaudited pro forma condensed combined statements of operations for the three months ended March 31, 2011 and the fiscal year ended December 31, 2010 (giving effect to the acquisition as if the acquisition had occurred on January 1, 2010) and Notes to such unaudited pro forma condensed combined Financial Statements. |
|
|
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99.5 |
|
Cowen Group, Inc. financial statements as of and for the six months ended June 30, 2011 (incorporated by reference to the Cowen Group, Inc. Quarterly Report on Form 10-Q, filed with the SEC on August 9, 2011). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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COWEN GROUP, INC. | |
|
|
|
|
|
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Dated: September 12, 2011 |
By: |
/s/ Stephen Lasota |
|
Name: |
Stephen Lasota |
|
Title: |
Chief Financial Officer |
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference on Form 8-K/A (Amendment No. 1) of Cowen Group, Inc. of our report dated March 15, 2011, with respect to the audit of the consolidated statements of financial condition of LaBranche & Co Inc. as of December 31, 2010 and 2009, and the related consolidated statements of operations, changes in stockholders equity and comprehensive loss and cash flows for each of the years in the three year period ended December 31, 2010, which report appears in the Annual Report on Form 10-K of LaBranche & Co Inc. for the year ended December 31, 2010.
/s/ Rothstein, Kass & Company, P.C.
Roseland, New Jersey
September 12, 2011
Exhibit 99.4
Unaudited Pro forma Condensed Combined Financial Statements
The accompanying unaudited pro forma condensed combined statements of operations have been prepared by Cowen Group Inc. (the Company) to reflect its completed acquisition of LaBranche & Co Inc. (LaBranche), as described in Item 2.01 of the Current Report on Form 8-K filed on June 29, 2011.
The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2010, and the three months ended March 31, 2011, respectively, combine the historical consolidated statements of operations of the Company with the historical consolidated statements of operations of LaBranche, for the year ended December 31, 2010 and for the three months ended March 31, 2011, both as filed with the SEC in their respective annual reports on Form 10-K for the year ended December 31, 2010 and as filed with the SEC in their respective quarterly reports on Form 10-Q for the quarterly period ended March 31, 2011, giving effect to the acquisition as if the acquisition had occurred on January 1, 2010.
The unaudited pro forma condensed combined statements of operations have been prepared based on available information, using assumptions that the Companys management believes are reasonable. The unaudited pro forma condensed combined statements of operations are provided for illustrative purposes only and are not necessarily indicative of the results of operations that would have been achieved had the transaction been consummated as of January 1, 2010, nor are they necessarily indicative of future results. The unaudited pro forma condensed combined statements of operations do not reflect any operating efficiencies and associated cost savings that the Company may achieve with respect to the consolidated companies.
The assumptions used and adjustments made in preparing the unaudited pro forma condensed combined statements of operations are described in the notes herein, and should be read in conjunction with the historical consolidated financial statements and accompanying notes and Managements Discussion and Analysis of Financial Condition and Results of Operations included in the Companys and LaBranches respective annual reports on Form 10-K for the year ended December 31, 2010, and in their respective quarterly reports on Form 10-Q for the three months ended March 31, 2011 and March 31, 2010 and other information pertaining to the Company and LaBranche, contained in this Form 8-K/A.
Cowen Group, Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations
Twelve Months Ended December 31, 2010
|
|
Historical |
|
Pro Forma |
|
Combined |
| ||||||
|
|
Cowen |
|
LaBranche |
|
Adjustments |
|
Company |
| ||||
|
|
(in thousands, except per share data) |
| ||||||||||
Revenues |
|
|
|
|
|
|
|
|
| ||||
Management fees |
|
$ |
38,847 |
|
$ |
|
|
$ |
|
|
$ |
38,847 |
|
Incentive income |
|
11,363 |
|
|
|
|
|
11,363 |
| ||||
Interest and dividends |
|
11,547 |
|
1,970 |
|
(1 |
)(a) |
13,516 |
| ||||
Reimbursement from affiliates |
|
6,816 |
|
|
|
|
|
6,816 |
| ||||
Investment banking |
|
38,965 |
|
|
|
|
|
38,965 |
| ||||
Brokerage |
|
112,217 |
|
43,372 |
|
(12,101 |
)(a) |
143,488 |
| ||||
Other |
|
1,936 |
|
950 |
|
(752 |
)(a) |
2,134 |
| ||||
Consolidated Funds |
|
12,119 |
|
|
|
|
|
12,119 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total revenues |
|
233,810 |
|
46,292 |
|
(12,854 |
) |
235,977 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating expenses |
|
|
|
|
|
|
|
|
| ||||
Employee compensation and benefits |
|
194,919 |
|
27,117 |
|
(9,342 |
)(a) |
212,694 |
| ||||
Interest and dividends |
|
8,971 |
|
16,341 |
|
|
|
25,312 |
| ||||
Professional, advisory and other fees |
|
14,547 |
|
3,964 |
|
(95 |
)(g) |
18,416 |
| ||||
Communications |
|
13,972 |
|
9,165 |
|
(2,788 |
)(a) |
20,349 |
| ||||
Occupancy and equipment |
|
18,119 |
|
3,614 |
|
(598 |
)(b) |
21,135 |
| ||||
Floor brokerage and trade execution |
|
17,143 |
|
14,789 |
|
(2,458 |
)(a) |
29,474 |
| ||||
Service fees |
|
15,814 |
|
|
|
|
|
15,814 |
| ||||
Depreciation and amortization |
|
11,543 |
|
1,925 |
|
1,991 |
(a),(c) |
15,459 |
| ||||
Client services, marketing and business development |
|
14,470 |
|
|
|
|
|
14,470 |
| ||||
Other |
|
22,323 |
|
13,222 |
|
(4,022 |
)(a) |
31,523 |
| ||||
Consolidated Funds |
|
8,121 |
|
|
|
|
|
8,121 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total expenses |
|
339,942 |
|
90,137 |
|
(17,312 |
) |
412,767 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Other income (loss) |
|
|
|
|
|
|
|
|
| ||||
Net gains on securities, derivatives and other investments |
|
21,980 |
|
(1,502 |
) |
251 |
(a) |
20,729 |
| ||||
Consolidated Ramius Funds net realized and unrealized losses |
|
31,062 |
|
|
|
|
|
31,062 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total other income (loss) |
|
53,042 |
|
(1,502 |
) |
251 |
|
51,791 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income(loss) before taxes |
|
(53,090 |
) |
(45,347 |
) |
4,709 |
|
(124,999 |
) | ||||
Income tax (benefit) expense |
|
(21,400 |
) |
20,677 |
|
|
(a) |
(723 |
) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income(loss) |
|
(31,690 |
) |
(66,024 |
) |
4,709 |
|
(124,276 |
) | ||||
Income (loss) attributable to redeemable noncontrolling interests in consolidating subsidiaries |
|
13,727 |
|
|
|
|
|
13,727 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income(loss) attributable to stockholders |
|
$ |
(45,417 |
) |
$ |
(66,024 |
) |
$ |
4,709 |
|
$ |
(138,003 |
) |
|
|
|
|
|
|
|
|
|
| ||||
Pro forma Net Income (Loss) Per Share |
|
|
|
|
|
|
|
|
| ||||
Basic |
|
$ |
(0.62 |
) |
$ |
(1.52 |
) |
|
|
$ |
(1.21 |
)(e) | |
Diluted |
|
$ |
(0.62 |
) |
$ |
(1.52 |
) |
|
|
$ |
(1.21 |
)(e) | |
Pro forma Weighted Average Common Shares |
|
|
|
|
|
|
|
|
| ||||
Basic |
|
73,149 |
|
43,541 |
|
(2,691 |
)(d) |
113,999 |
(f) | ||||
Diluted |
|
73,149 |
|
43,541 |
|
(2,691 |
)(d) |
113,999 |
(f) |
See accompanying notes to unaudited pro forma condensed combined financial statements.
Please refer to Note 3 for pro forma adjustments.
Cowen Group, Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations
Three Months Ended March 31, 2011
|
|
Historical |
|
Pro Forma |
|
Combined |
| ||||||
|
|
Cowen |
|
LaBranche |
|
Adjustments |
|
Company |
| ||||
|
|
(in thousands, except per share data) |
| ||||||||||
Revenues |
|
|
|
|
|
|
|
|
| ||||
Management fees |
|
$ |
11,164 |
|
$ |
|
|
$ |
|
|
$ |
11,164 |
|
Incentive fees |
|
4,381 |
|
|
|
|
|
4,381 |
| ||||
Interest and dividends |
|
4,559 |
|
142 |
|
|
|
4,701 |
| ||||
Reimbursement from affiliates |
|
1,009 |
|
|
|
|
|
1,009 |
| ||||
Investment banking |
|
14,682 |
|
|
|
|
|
14,682 |
| ||||
Brokerage |
|
27,591 |
|
7,638 |
|
|
|
35,229 |
| ||||
Other |
|
690 |
|
175 |
|
|
|
865 |
| ||||
Consolidated Funds |
|
169 |
|
|
|
|
|
169 |
| ||||
Total revenues |
|
64,245 |
|
7,955 |
|
|
|
72,200 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating expenses |
|
|
|
|
|
|
|
|
| ||||
Employee compensation and benefits |
|
45,087 |
|
3,632 |
|
|
|
48,719 |
| ||||
Interest and dividends |
|
2,609 |
|
645 |
|
|
|
3,254 |
| ||||
Professional, advisory and other fees |
|
7,140 |
|
1,742 |
|
(2,858 |
)(g) |
6,024 |
| ||||
Communications |
|
2,893 |
|
1,170 |
|
|
|
4,063 |
| ||||
Occupancy and equipment |
|
5,122 |
|
724 |
|
(149 |
)(b) |
5,697 |
| ||||
Floor brokerage and trade execution |
|
4,110 |
|
1,372 |
|
|
|
5,482 |
| ||||
Service fees |
|
3,612 |
|
|
|
|
|
3,612 |
| ||||
Depreciation and amortization |
|
2,058 |
|
608 |
|
444 |
(c) |
3,110 |
| ||||
Client services, marketing and business development |
|
4,677 |
|
|
|
|
|
4,677 |
| ||||
Other |
|
4,295 |
|
596 |
|
(250 |
)(g) |
4,641 |
| ||||
Consolidated Funds |
|
628 |
|
|
|
|
|
628 |
| ||||
Total expenses |
|
82,231 |
|
10,489 |
|
(2,813 |
) |
89,907 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Other income (loss) |
|
|
|
|
|
|
|
|
| ||||
Net gain on securities, derivatives and other investments |
|
17,283 |
|
(306 |
) |
|
|
16,977 |
| ||||
Consolidated Funds net realized and unrealized gains |
|
1,746 |
|
|
|
|
|
1,746 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total other income (loss) |
|
19,029 |
|
(306 |
) |
|
|
18,723 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income(loss) before taxes |
|
1,043 |
|
(2,840 |
) |
2,813 |
|
1,016 |
| ||||
Income tax (benefit) provision |
|
163 |
|
(620 |
) |
|
|
(457 |
) | ||||
Net income(loss) |
|
880 |
|
(2,220 |
) |
2,813 |
|
1,473 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income (loss) attributable to redeemable noncontrolling interests in consolidating subsidiaries |
|
798 |
|
|
|
|
|
798 |
| ||||
Net income(loss) attributable to stockholders |
|
$ |
82 |
|
$ |
(2,220 |
) |
$ |
2,813 |
|
$ |
675 |
|
|
|
|
|
|
|
|
|
|
| ||||
Pro forma Net Income (Loss) Per Share |
|
|
|
|
|
|
|
|
| ||||
Basic |
|
$ |
0.00 |
|
$ |
(0.05 |
) |
|
|
$ |
0.01 |
(e) | |
Diluted |
|
$ |
0.00 |
|
$ |
(0.05 |
) |
|
|
$ |
0.01 |
(e) | |
|
|
|
|
|
|
|
|
|
| ||||
Pro forma Weighted Average Common Shares |
|
|
|
|
|
|
|
|
| ||||
Basic |
|
74,160 |
|
40,932 |
|
(82 |
)(d) |
115,010 |
(f) | ||||
Diluted |
|
76,083 |
|
40,932 |
|
(82 |
)(d) |
116,933 |
(f) |
See accompanying notes to unaudited pro forma condensed combined financial statements.
Please refer to Note 3 for pro forma adjustments.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The unaudited pro forma combined financial information included herein gives effect Cowen Group Inc.s (the Company) acquisition of LaBranche & Co Inc. (LaBranche).
The unaudited pro forma combined statements of operations for the year ended December 31, 2010, and the three months ended March 31, 2011, respectively, combine the historical consolidated statements of operations of the Company with the historical consolidated statements of operations of LaBranche excluding the results from discontinued operations, for the year ended December 31, 2010 and for the three months ended March 31, 2011, both as filed with the SEC in their respective annual reports on Form 10-K for the year ended December 31, 2010 and as filed with the SEC in their respective quarterly reports on Form 10-Q for the quarterly period ended March 31, 2011, giving effect to the acquisition as if the acquisition had occurred on January 1, 2010.
The unaudited pro forma condensed combined financial data is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the acquisition had been completed during the period or as of the dates for which the unaudited pro forma data is presented, nor is it necessarily indicative of the future operating results or financial position of Cowen.
Cowens estimated purchase price for LaBranche has been allocated to the assets acquired and the liabilities assumed based upon managements preliminary estimate of their respective fair values as of the date of acquisition. The purchase price allocation unaudited pro forma adjustments are preliminary, have been made solely for the purpose of providing unaudited pro forma condensed combined financial data and are subject to revision upon finalization of the acquisition accounting.
The accompanying unaudited pro forma condensed combined statement of operations does not include the impact of the following non-recurring items directly related to the acquisition:
· transaction costs in connection with the acquisition which were expensed as incurred;
· the non-cash bargain purchase gain created from the acquisition.
Certain reclassifications have been made to the LaBranche historical balances in the unaudited pro forma condensed combined financial statements to conform to Cowens presentation.
LaBranche entered into change in control agreements with certain employees which require LaBranche to make payments and provide benefits to these employees in connection with a change in control of LaBranche and a subsequent qualifying termination, with a total estimated amount of $1.1 million. The completion of the acquisition will constitute a change in control for purposes of these change in control agreements. The agreements will end upon the expiration of a 12-month period following the occurrence of a change in control. However, these employees continue to be employed by the Company subsequent to the acquisition. As a result, no adjustment has been recorded in the unaudited pro forma condensed combined financial statements. See section titled Interest of LaBranche Directors and Executive Officers in the AcquisitionChange in Control Agreements beginning on page 74 of the Companys Form S-4 as filed with the SEC on March 31, 2011 for further details on the terms of these agreements
All significant intercompany accounts and transactions have been eliminated.
2. ACQUISITION OF BUSINESS
The acquisition of LaBranche by the Company was consummated pursuant to the terms of the Agreement and Plan of Merger (Merger Agreement), dated as of February 16, 2011, after the market close on June 28, 2011. LaBranche Capital, LLC (LCAP), which was renamed Cowen Capital LLC following consummation of the acquisition, was a wholly owned subsidiary of LaBranche and is now a wholly-owned subsidiary of the Company, is a registered broker-dealer and Financial Industry Regulatory Authority (FINRA) member firm that operates as a market-maker in Exchange Traded Funds (ETFs), engages in hedging activities in options, ETFs, structured notes, foreign currency securities and futures related to its market-making operations and also conducts principal trading activities in these securities. Prior to the acquisition, LaBranche discontinued certain operations in its market-making segment, including upstairs options market-making on various exchanges and electronic market-making in the International Securities Exchange. As of the close of market on June 28, 2011, LaBranche stock was delisted and no longer trades on the New York Stock Exchange.
The acquisition was accounted for under the acquisition method of accounting in accordance with accounting principles generally accepted in the United States of America (US GAAP). In this case, the acquisition was accounted for as an acquisition by Cowen of LaBranche. The assets acquired and liabilities assumed were recorded at their estimated fair values.
3. PRO FORMA FINANCIAL STATEMENT ADJUSTMENTS
The following is a summary of pro forma adjustments reflected in the unaudited pro forma condensed combined financial statements:
Unaudited Pro Forma Condensed Combined Adjustments
(a) Reflects the elimination of amounts associated with LaBranches institutional brokerage business. In January 2011, LaBranche announced that it committed to a plan to wind down the activities of its institutional brokerage business. LaBranche has undertaken a process to terminate its institutional execution group sales trading business and its professional trading group. As this business was terminated prior to the acquisition, the following revenue and operating expense items are removed from the pro forma condensed combined statement of operations during the year ended December 31, 2010:
|
|
(in thousands) |
| |
Revenues |
|
|
| |
Interest and dividends |
|
$ |
1 |
|
Brokerage |
|
12,101 |
| |
Other |
|
752 |
| |
Total revenues |
|
12,854 |
| |
Operating expenses |
|
|
| |
Employee compensation and benefits |
|
9,342 |
| |
Communications |
|
2,788 |
| |
Floor brokerage and trade execution |
|
2,458 |
| |
Depreciation and amortization |
|
2 |
| |
Other |
|
4,022 |
| |
Total expenses |
|
18,612 |
| |
Other income (loss) |
|
|
| |
|
|
|
| |
Net (loss) on securities, derivatives and other investments |
|
(251 |
) | |
|
|
|
| |
Income(loss) before taxes |
|
(6,009 |
) | |
Income tax (benefit) provision |
|
|
| |
Net income(loss) |
|
$ |
(6,009 |
) |
(b) Reflects amortization, over the remaining lease terms, of the unfavorable lease obligation related to certain of LaBranches real estate leases that were at higher than market rates at the closing date.
(c) Reflects amortization expense related to the estimated intangible assets recognized in connection with the acquisition.
(d) Reflects the adjustment necessary to arrive at the shares outstanding assuming the acquisition closed at the beginning of the periods presented. Primarily represents 0.0020 (one minus the exchange ratio) multiplied by the amount of LaBranche shares assumed to be outstanding at time of acquisition. See (f) below for further explanation.
(e) Reflects the unaudited pro forma net income/(loss) for the combined company divided by the unaudited pro forma weighted average shares outstanding for the combined company.
(f) Reflects the sum of the Cowen weighted average common shares (i) outstanding prior to the acquisition and (ii) to be issued to LaBranche shareholders in connection with the acquisition. As the unaudited pro forma condensed combined statements of operations assume that the acquisition occurred as of the beginning of the period presented, all 40,850,133 shares of Cowen Class A common stock that are estimated to be issued to LaBranche shareholders are assumed to be outstanding for the entire period for the unaudited pro forma net loss per share calculation of the combined company. No adjustments have been made for the dilutive effects for December as the effects of outstanding restricted stock and stock options would be anti-dilutive.
(g) Represents Cowens and LaBranches estimated total transaction costs related to professional, investment banking services and other expenses of nil and $0.1 million for the year ended December 31, 2010, respectively; and $1.7 million and $1.4 million as of March 31, 2011, respectively.