Delaware | 001-34516 | 27-0423711 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
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)) |
COWEN INC. | ||||
By: | /s/ Owen S. Littman | |||
Name: | Owen S. Littman | |||
Date: | February 15, 2018 | Title: | General Counsel | |
• | Investment banking revenue of $223.6 million on a GAAP and economic income basis in 2017, increased 68% year over year and was led by strong performance in equity financings. In addition, we made important strides towards improving revenue diversification in both product and sector. Advisory revenue of $41.8 million represented a 56% year over year increase. |
• | Annual brokerage revenue of $293.6 million and $312.8 million on a GAAP and economic income basis, respectively, represented a three-fold increase since 2012. |
• | In November 2017 the investment management division successfully launched a private healthcare strategy, an internally developed capability that leverages Cowen's longstanding strength in healthcare. |
• | As of January 1, 2018, assets under management were $11.0 billion. The $0.5 billion increase from January 1, 2017 was primarily due to subscriptions in private funds and real estate. |
• | On an economic income basis, the compensation to revenue ratio declined to 58% from 64% due to a shift in business mix as a result of the Convergex acquisition. |
• | Book value per share was $21.82 as of December 31, 2017, compared to $25.11 as of December 31, 2016. Tangible book value per share was $18.77 as of December 31, 2017 compared to $21.88 as of December 31, 2016. The per share decline is primarily due to a reduction in the value of our net deferred tax assets and shares issued in conjunction with the Convergex acquisition. |
• | In December 2017, the Company completed a full repurchase of its 8.25% senior notes due 2021 and repurchased a significant portion of its 3% convertible senior notes due 2019 and replaced them with 7.35% senior notes due 2027 and 3% convertible senior notes due 2022. |
• | On February 13th Cowen's Board of Directors approved a $23.6 million increase in the Company's share repurchase program. With this increase, the total amount available for repurchase under the program is $25.0 million. |
(Dollar amounts in millions, except per share information) | Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||
Dec. 31, | Sept. 30, | Dec. 31, | ||||||||||||||||||||||||||
2017 | 2016 | % | 2017 | % | 2017 | 2016 | % | |||||||||||||||||||||
GAAP: | ||||||||||||||||||||||||||||
Revenue | $ | 204.5 | $ | 122.3 | 67 | % | $ | 178.8 | 14 | % | $ | 658.8 | $ | 471.6 | 40 | % | ||||||||||||
Net income (loss) attributable to Cowen common stockholders | $ | (77.7 | ) | $ | (3.6 | ) | NM | $ | 3.0 | NM | $ | (67.7 | ) | $ | (26.1 | ) | NM | |||||||||||
Earnings (loss) per share (diluted) | $ | (2.51 | ) | $ | (0.13 | ) | NM | $ | 0.09 | NM | $ | (2.29 | ) | $ | (0.97 | ) | NM | |||||||||||
Economic Income (non-GAAP): | ||||||||||||||||||||||||||||
Economic income revenue | $ | 183.0 | $ | 128.1 | 43 | % | $ | 182.6 | — | % | $ | 666.2 | $ | 467.6 | 42 | % | ||||||||||||
Economic income (loss) attributable to Cowen | $ | (9.4 | ) | $ | (12.9 | ) | (27 | )% | $ | 8.3 | NM | $ | 15.8 | $ | (28.7 | ) | NM | |||||||||||
Economic income per share (diluted) | $ | (0.30 | ) | $ | (0.48 | ) | NM | $ | 0.26 | NM | $ | 0.54 | $ | (1.07 | ) | NM | ||||||||||||
Note: Amounts may not add due to rounding. NM indicates not meaningful. A reconciliation of economic income (loss) to net income appears under the section, "Summary Economic Income (Loss) to GAAP Reconciliation." |
• | For the year, revenue rose 39.7% to $658.8 million. For the quarter, revenue was $204.5 million compared to $122.3 million in the prior year period. |
• | Net loss attributable to common stockholders was $67.7 million, or $(2.29) per diluted common share in 2017, and compared to a net loss of $26.1 million, or $(0.97) per diluted common share, in 2016. For the quarter, we reported a net loss of $77.7 million or $(2.51) per diluted common share. |
• | Our GAAP results were adversely impacted by certain one-time charges in the fourth quarter: |
– | Reduction in the value of net deferred tax assets of $46.6 million, a non-cash charge, as a result of a re-measurement of our deferred tax asset resulting from the Tax Cuts and Jobs Act of 2017. |
– | Certain other amounts related to debt of $14.7 million are related to the redemption of our 8.25% senior notes due 2021 and partial redemption of 3% convertible notes due 2019 plus certain other costs related to our newly issued debt. |
– | Transaction-related and other costs of $16.0 million. |
• | In 2017 revenue was $666.2 million, a 42% increase from the prior year. For the quarter, revenue increased $54.9 million to $183.0 million compared to $128.1 million in the fourth quarter of 2016. |
• | Economic income of $15.8 million, or $0.54 per diluted share, was a $44.6 million improvement from 2016. For the quarter, we incurred a loss $9.4 million or $(0.30) per diluted share. |
• | Excluding additional one-time costs associated with severance and our CEO transition, economic income was $23.0 million or $0.78 per diluted share for the full year 2017 and a loss of $3.5 million or $(0.11) per diluted share in the fourth quarter 2017. |
(Dollar amounts in millions, except per share information) | Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||
Dec. 31, | Sept. 30, | Dec. 31, | ||||||||||||||||||||||||||
2017 | 2016 | % | 2017 | % | 2017 | 2016 | % | |||||||||||||||||||||
Revenue | $ | 204.5 | $ | 122.3 | 67 | % | $ | 178.8 | 14 | % | $ | 658.8 | $ | 471.6 | 40 | % | ||||||||||||
Net income (loss) attributable to Cowen | $ | (76.0 | ) | $ | (1.9 | ) | NM | $ | 4.7 | NM | $ | (60.9 | ) | $ | (19.3 | ) | NM | |||||||||||
Preferred stock dividends | $ | 1.7 | $ | 1.7 | — | % | $ | 1.7 | — | % | $ | 6.8 | $ | 6.8 | — | % | ||||||||||||
Net income (loss) attributable to Cowen common stockholders | $ | (77.7 | ) | $ | (3.6 | ) | NM | $ | 3.0 | NM | $ | (67.7 | ) | $ | (26.1 | ) | NM | |||||||||||
Earnings (loss) per share (diluted) | $(2.51) | $(0.13) | NM | $0.09 | NM | $ | (2.29 | ) | $ | (0.97 | ) | NM | ||||||||||||||||
Note: Amounts may not add due to rounding. NM indicates not meaningful. |
(Amounts in millions, except per share information) | Dec. 31, | Dec. 31, | |||
2017 | 2016 | ||||
Cowen Inc. stockholders' equity | $748.0 | $772.7 | |||
Common equity (CE) | $646.7 | $671.3 | |||
Tangible common equity (TCE) | $556.1 | $584.9 | |||
Book value per share (CE/CSO) | $21.82 | $25.11 | |||
Tangible book value per share (TCE/CSO) | $18.77 | $21.88 | |||
Common shares outstanding (CSO) | 29.6 | 26.7 | |||
Reconciliation of GAAP Cowen Inc. stockholders' equity to tangible common equity: | |||||
Cowen Inc. stockholders' equity | $748.0 | $772.7 | |||
Less: | |||||
Preferred stock | 101.3 | 101.3 | |||
Common equity (CE) | $646.7 | $671.3 | |||
Less: | |||||
Goodwill & intangibles | 90.6 | 86.4 | |||
Tangible common equity (TCE) | $556.1 | $584.9 | |||
Note: Amounts may not add due to rounding. |
(Dollar amounts in millions, except per share information) | Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||
Dec. 31, | Sept. 30, | Dec. 31, | ||||||||||||||||||||||||||
2017 | 2016 | % | 2017 | % | 2017 | 2016 | % | |||||||||||||||||||||
Revenue | $ | 183.0 | $ | 128.1 | 43 | % | $ | 182.6 | — | % | $ | 666.2 | $ | 467.6 | 42 | % | ||||||||||||
Economic Income (Loss) | $ | (9.4 | ) | $ | (12.9 | ) | (27 | )% | $ | 8.3 | NM | $ | 15.8 | $ | (28.7 | ) | NM | |||||||||||
Economic Income (Loss) per share (diluted) | $ | (0.30 | ) | $ | (0.48 | ) | NM | $ | 0.26 | NM | $ | 0.54 | $ | (1.07 | ) | NM | ||||||||||||
Note: Amounts may not add due to rounding. NM indicates not meaningful. |
Three Months Ended | Twelve Months Ended | ||||||||||||||||||
Dec. 31, | Sept. 30, | Dec. 31, | |||||||||||||||||
(Per share information) | 2017 | 2016 | 2017 | 2017 | 2016 | ||||||||||||||
Economic Income (Loss) per share (diluted) | $ | (0.30 | ) | $ | (0.48 | ) | $ | 0.26 | $ | 0.54 | $ | (1.07 | ) | ||||||
Adjustments: | |||||||||||||||||||
Preferred dividends | (0.05 | ) | (0.06 | ) | (0.05 | ) | (0.23 | ) | (0.25 | ) | |||||||||
Taxes | (1.32 | ) | 0.47 | (0.07 | ) | (1.50 | ) | 0.71 | |||||||||||
Certain costs associated with debt | (0.48 | ) | — | — | (0.50 | ) | — | ||||||||||||
Restructuring | — | — | (0.01 | ) | (0.30 | ) | — | ||||||||||||
Bargain purchase gain | (0.03 | ) | — | — | 0.24 | — | |||||||||||||
Transaction-related and other costs | (0.33 | ) | (0.06 | ) | (0.03 | ) | (0.54 | ) | (0.36 | ) | |||||||||
GAAP earnings (loss) per share (diluted) | $ | (2.51 | ) | $ | (0.13 | ) | $ | 0.09 | $ | (2.29 | ) | $ | (0.97 | ) | |||||
Note: Amounts may not add due to rounding. |
Twelve Months Ended | ||||||||||
Dec. 31, | ||||||||||
(Dollar amounts in millions) | 2017 | 2016 | % | |||||||
Investment banking | $ | 223.6 | 133.3 | 68 | % | |||||
Brokerage | 312.8 | 207.0 | 51 | % | ||||||
Management fees | 55.4 | 67.2 | (18 | )% | ||||||
Incentive income | 26.0 | 26.3 | (1 | )% | ||||||
Investment income (loss) | 45.1 | 4.0 | NM | |||||||
Other revenues | 3.2 | 29.8 | (89 | )% | ||||||
Total Revenue | $ | 666.2 | $ | 467.6 | 42 | % | ||||
Note: Amounts may not add due to rounding. NM indicates not meaningful. |
• | Compensation and benefits expenses increased $87.5 million from the prior year to $388.0 million. The increase was due to higher revenue in 2017 which resulted in a higher compensation and benefits accrual and increased headcount from the Convergex acquisition. The compensation to revenue ratio was 58% for 2017 compared with 64% for 2016. The lower ratio was due to a shift in the Company's overall business mix as a result of the acquisition of Convergex in June 2017. |
• | Fixed non-compensation expenses were $122.1 million compared to $101.0 million in 2016, a 21% increase. The increase was attributable to the acquisition of Convergex in June 2017. |
• | Depreciation and amortization expense increased $0.5 million in the year to $11.6 million. The increase was primarily related to an increase in amortization of intangible assets related to recent acquisitions. |
• | Variable non-compensation expenses were $105.8 million compared with $61.2 million in the prior year. The increase was primarily related to higher floor brokerage and trade execution costs related to the acquisition of Convergex in June 2017 which included a mix of higher variable cost businesses (as a percentage of revenue). |
Three Months Ended | ||||||||||||||||||
Dec. 31, | Sept. 30, | |||||||||||||||||
(Dollar amounts in millions) | 2017 | 2016 | % | 2017 | % | |||||||||||||
Investment banking | $ | 65.5 | $ | 35.1 | 87 | % | $ | 57.4 | 14 | % | ||||||||
Brokerage | 103.5 | 53.6 | 93 | % | 90.0 | 15 | % | |||||||||||
Management fees | 13.3 | 17.3 | (23 | )% | 13.8 | (4 | )% | |||||||||||
Incentive income | 7.4 | 7.1 | 4 | % | 4.6 | 61 | % | |||||||||||
Investment income (loss) | (6.6 | ) | 4.6 | NM | 15.9 | NM | ||||||||||||
Other revenues | (0.1 | ) | 10.3 | NM | 0.9 | NM | ||||||||||||
Total Revenue | $ | 183.0 | $ | 128.1 | 43 | % | $ | 182.6 | — | % | ||||||||
Note: Amounts may not add due to rounding. NM indicates not meaningful. |
• | Compensation and benefits expense was $111.1 million compared to $90.2 million in the fourth quarter 2016. The increase was due to higher revenue during the 2017 period as compared to 2016 which resulted in a higher compensation and benefits accrual and increased headcount from the Convergex acquisition. The compensation to revenue ratio was 61% compared to 70% for the prior year period. The lower compensation to Economic Income revenue ratio is due to a shift in the Company's overall business mix as a result of the acquisition of Convergex in June 2017. |
• | Fixed non-compensation expenses increased 33% year over year to $35.5 million from $26.8 million. The increase was attributable to the acquisition of Convergex in June 2017. |
• | Depreciation and amortization expense was $3.2 million compared to $2.6 million in the prior year period. The increase was primarily related to an increase in amortization of intangible assets related to recent acquisitions. |
• | Variable non-compensation expenses were $35.5 million compared to $16.4 million in the fourth quarter 2016. The increase was primarily related to higher floor brokerage and trade execution costs related to the acquisition of Convergex in June 2017 which included a mix of higher variable cost businesses (as a percentage of revenue). |
Twelve Months Ended | |||||
Dec. 31, | |||||
(Dollar amounts in millions) | 2017 | 2016 | |||
Equity Underwriting | $180.8 | $99.6 | |||
Debt Underwriting | 1.0 | 6.9 | |||
Advisory | 41.8 | 26.8 | |||
Total | $223.6 | $133.3 |
Twelve Months Ended | |||
Dec. 31, | |||
2017 | 2016 | ||
Equity Underwriting | 103 | 76 | |
Of which bookrun: | 66 | 42 | |
Debt Underwriting | 2 | 7 | |
Advisory | 16 | 15 | |
Total | 121 | 98 |
Three Months Ended | |||||
Dec. 31, | |||||
(Dollar amounts in millions) | 2017 | 2016 | |||
Equity Underwriting | $48.6 | $26.4 | |||
Debt Underwriting | 1.0 | 0.9 | |||
Advisory | 15.9 | 7.8 | |||
Total | $65.5 | $35.1 |
Three Months Ended | |||
Dec. 31, | |||
2017 | 2016 | ||
Equity Underwriting | 25 | 21 | |
Of which bookrun: | 18 | 10 | |
Debt Underwriting | 2 | 2 | |
Advisory | 5 | 6 | |
Total | 32 | 29 |
Cowen Inc. | |||||||||||||||
GAAP Preliminary Unaudited Condensed Consolidated Statements of Operations | |||||||||||||||
(Dollar amounts in thousands, except per share data) | |||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||
Dec. 31, | Dec. 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenue | |||||||||||||||
Investment banking | $ | 65,532 | $ | 35,123 | $ | 223,614 | $ | 133,279 | |||||||
Brokerage | 95,011 | 51,540 | 293,610 | 199,180 | |||||||||||
Management fees | 7,658 | 8,661 | 33,245 | 40,612 | |||||||||||
Incentive income | (834 | ) | 5,511 | 5,383 | 8,334 | ||||||||||
Interest and dividends | 22,116 | 3,068 | 49,440 | 14,732 | |||||||||||
Reimbursement from affiliates | 229 | 2,236 | 2,860 | 10,504 | |||||||||||
Aircraft lease revenue | 715 | 1,090 | 3,751 | 4,161 | |||||||||||
Reinsurance premiums | 9,039 | 9,216 | 30,996 | 32,459 | |||||||||||
Other | 2,414 | 4,415 | 8,561 | 22,355 | |||||||||||
Consolidated Funds revenues | 2,570 | 1,408 | 7,321 | 5,949 | |||||||||||
Total revenue | 204,450 | 122,268 | 658,781 | 471,565 | |||||||||||
Expenses | |||||||||||||||
Employee compensation and benefits | 122,021 | 92,729 | 404,087 | 310,038 | |||||||||||
Interest and dividends | 22,753 | 7,442 | 60,949 | 29,308 | |||||||||||
Reinsurance claims, commissions and amortization of deferred acquisition costs | 9,876 | 8,980 | 30,486 | 29,904 | |||||||||||
Operating, general, administrative and other expenses | 71,650 | 40,348 | 227,709 | 156,091 | |||||||||||
Depreciation and amortization expense | 3,466 | 3,059 | 13,078 | 12,713 | |||||||||||
Restructuring costs | — | — | 8,763 | — | |||||||||||
Consolidated Funds expenses | 3,103 | 2,636 | 12,526 | 9,064 | |||||||||||
Total expenses | 232,869 | 155,194 | 757,598 | 547,118 | |||||||||||
Other income (loss) | |||||||||||||||
Net (losses) gains on securities, derivatives and other investments | 13,078 | 14,258 | 76,179 | 23,381 | |||||||||||
Bargain purchase gain | (1,032 | ) | — | 6,914 | — | ||||||||||
Gain/(loss) on debt extinguishment | (16,039 | ) | — | (16,039 | ) | — | |||||||||
Consolidated Funds net (losses) gains | (14,535 | ) | 13,631 | 38,725 | 20,685 | ||||||||||
Total other income (loss) | (18,528 | ) | 27,889 | 105,779 | 44,066 | ||||||||||
Income (loss) before income taxes | (46,947 | ) | (5,037 | ) | 6,962 | (31,487 | ) | ||||||||
Income tax expense/(benefit) | 40,646 | (12,539 | ) | 44,053 | (19,092 | ) | |||||||||
Net income (loss) | (87,593 | ) | 7,502 | (37,091 | ) | (12,395 | ) | ||||||||
Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and funds | (11,621 | ) | 9,406 | 23,791 | 6,882 | ||||||||||
Net income (loss) attributable to Cowen Inc. | (75,972 | ) | (1,904 | ) | (60,882 | ) | (19,277 | ) | |||||||
Preferred stock dividends | 1,698 | 1,698 | 6,792 | 6,792 | |||||||||||
Net income (loss) attributable to Cowen Inc. common stockholders | $ | (77,670 | ) | $ | (3,602 | ) | $ | (67,674 | ) | $ | (26,069 | ) | |||
Earnings (loss) per share: | |||||||||||||||
Basic | $ | (2.51 | ) | $ | (0.13 | ) | $ | (2.29 | ) | $ | (0.97 | ) | |||
Diluted | $ | (2.51 | ) | $ | (0.13 | ) | $ | (2.29 | ) | $ | (0.97 | ) | |||
Weighted average shares used in per share data: | |||||||||||||||
Basic | 30,934 | 26,973 | 29,492 | 26,857 | |||||||||||
Diluted | 30,934 | 26,973 | 29,492 | 26,857 |
Cowen Inc. | |||||||||||||||
Unaudited Reconciliation of GAAP and Economic Revenue for the Three Months Ended December 31, 2017 | |||||||||||||||
(Dollar amounts in thousands) | |||||||||||||||
Three Months Ended December 31, 2017 | |||||||||||||||
Adjustments | |||||||||||||||
Other | Funds | Economic | |||||||||||||
GAAP | Adjustments (1) | Consolidation (2) | Income | ||||||||||||
Revenue | |||||||||||||||
Investment banking | $ | 65,532 | $ | — | $ | — | $ | 65,532 | |||||||
Brokerage | 95,011 | 8,495 | (f) | — | 103,506 | ||||||||||
Management fees | 7,658 | 4,813 | (a) | 820 | 13,291 | ||||||||||
Incentive income | (834 | ) | 10,166 | (a) | (1,930 | ) | 7,402 | ||||||||
Investment income | — | (6,623 | ) | (b)(d) | — | (6,623 | ) | ||||||||
Interest and dividends | 22,116 | (22,116 | ) | (b) | — | — | |||||||||
Reimbursement from affiliates | 229 | (286 | ) | (c) | 57 | — | |||||||||
Aircraft lease revenue | 715 | (715 | ) | (d) | — | — | |||||||||
Reinsurance premiums | 9,039 | (9,039 | ) | (e) | — | — | |||||||||
Other revenues | 2,414 | (2,497 | ) | (e) | — | (83 | ) | ||||||||
Consolidated Funds | 2,570 | — | (2,570 | ) | — | ||||||||||
Total revenue | $ | 204,450 | $ | (17,802 | ) | $ | (3,623 | ) | $ | 183,025 | |||||
Note: The following is a summary of the adjustments made to US GAAP revenue to Economic Income revenue: | |||||||||||||||
(1) Other adjustments include reclassifications between other income (loss), redeemable non-controlling interests and interest and non-interest expenses based on the nature of the respective line item | |||||||||||||||
(2) Fund consolidation includes the impact of consolidation. The related elimination entries of the Consolidated Funds are not included in Economic Income. Adjustments include elimination of incentive income and management fees earned from the Consolidated Funds. | |||||||||||||||
Other Adjustments: | |||||||||||||||
(a) Economic Income (Loss) recognizes revenues (i) net of distribution fees paid to agents and (ii) our proportionate share of management and incentive fees of certain real estate operating entities, the healthcare royalty business and the activist business. | |||||||||||||||
(b) Economic Income (Loss) recognizes Company income from proprietary trading (including interest and dividends). | |||||||||||||||
(c) Reimbursement from affiliates is shown as a reduction of Economic Income expenses, but is included as a part of revenues under US GAAP. | |||||||||||||||
(d) Aircraft lease revenue is shown net of expenses in investment income for Economic Income (Loss). | |||||||||||||||
(e) Economic Income (Loss) recognizes underwriting income from the Company's insurance related activities, net of expenses, within other revenue. | |||||||||||||||
(f) Economic Income (Loss) brokerage revenues included net securities borrowed and securities loaned activities. |
Cowen Inc. | |||||||||||||||
Unaudited Reconciliation of GAAP and Economic Revenue for the Three Months Ended December 31, 2016 | |||||||||||||||
(Dollar amounts in thousands) | |||||||||||||||
Three Months Ended December 31, 2016 | |||||||||||||||
Adjustments | |||||||||||||||
Other | Funds | Economic | |||||||||||||
GAAP | Adjustments (1) | Consolidation (2) | Income | ||||||||||||
Revenue | |||||||||||||||
Investment banking | $ | 35,123 | $ | — | $ | — | $ | 35,123 | |||||||
Brokerage | 51,540 | 2,083 | (f) | — | 53,623 | ||||||||||
Management fees | 8,661 | 8,223 | (a) | 426 | 17,310 | ||||||||||
Incentive income | 5,511 | 1,444 | (a) | 145 | 7,100 | ||||||||||
Investment income | — | 4,615 | (b)(d) | — | 4,615 | ||||||||||
Interest and dividends | 3,068 | (3,068 | ) | (b) | — | — | |||||||||
Reimbursement from affiliates | 2,236 | (2,315 | ) | (c) | 79 | — | |||||||||
Aircraft lease revenue | 1,090 | (1,090 | ) | (d) | — | — | |||||||||
Reinsurance premiums | 9,216 | (9,216 | ) | (e) | — | — | |||||||||
Other revenues | 4,415 | 5,902 | (e) | — | 10,317 | ||||||||||
Consolidated Funds | 1,408 | — | (1,408 | ) | — | ||||||||||
Total revenue | $ | 122,268 | $ | 6,578 | $ | (758 | ) | $ | 128,088 | ||||||
Note: The following is a summary of the adjustments made to US GAAP revenue to Economic Income revenue: | |||||||||||||||
(1) Other adjustments include reclassifications between other income (loss), redeemable non-controlling interests and interest and non-interest expenses based on the nature of the respective line item | |||||||||||||||
(2) Fund consolidation includes the impact of consolidation. The related elimination entries of the Consolidated Funds are not included in Economic Income. Adjustments include elimination of incentive income and management fees earned from the Consolidated Funds. | |||||||||||||||
Other Adjustments: | |||||||||||||||
(a) Economic Income (Loss) recognizes revenues (i) net of distribution fees paid to agents and (ii) our proportionate share of management and incentive fees of certain real estate operating entities, the healthcare royalty business and the activist business. | |||||||||||||||
(b) Economic Income (Loss) recognizes Company income from proprietary trading (including interest and dividends). | |||||||||||||||
(c) Reimbursement from affiliates is shown as a reduction of Economic Income expenses, but is included as a part of revenues under US GAAP. | |||||||||||||||
(d) Aircraft lease revenue is shown net of expenses in investment income for Economic Income (Loss). | |||||||||||||||
(e) Economic Income (Loss) recognizes underwriting income from the Company's insurance related activities, net of expenses, within other revenue. | |||||||||||||||
(f) Economic Income (Loss) brokerage revenues included net securities borrowed and securities loaned activities. |
Cowen Inc. | |||||||||||||||
Unaudited Reconciliation of GAAP and Economic Revenue for the Twelve Months Ended December 31, 2017 | |||||||||||||||
(Dollar amounts in thousands) | |||||||||||||||
Twelve Months Ended December 31, 2017 | |||||||||||||||
Adjustments | |||||||||||||||
Other | Funds | Economic | |||||||||||||
GAAP | Adjustments (1) | Consolidation (2) | Income | ||||||||||||
Revenue | |||||||||||||||
Investment banking | $ | 223,614 | $ | — | $ | — | $ | 223,614 | |||||||
Brokerage | 293,610 | 19,170 | (f) | — | 312,780 | ||||||||||
Management fees | 33,245 | 19,549 | (a) | 2,593 | 55,387 | ||||||||||
Incentive income | 5,383 | 18,906 | (a) | 1,739 | 26,028 | ||||||||||
Investment income | — | 45,142 | (b)(d) | — | 45,142 | ||||||||||
Interest and dividends | 49,440 | (49,440 | ) | (b) | — | — | |||||||||
Reimbursement from affiliates | 2,860 | (3,157 | ) | (c) | 297 | — | |||||||||
Aircraft lease revenue | 3,751 | (3,751 | ) | (d) | — | — | |||||||||
Reinsurance premiums | 30,996 | (30,996 | ) | (e) | — | — | |||||||||
Other revenues | 8,561 | (5,330 | ) | (e) | — | 3,231 | |||||||||
Consolidated Funds | 7,321 | — | (7,321 | ) | — | ||||||||||
Total revenue | $ | 658,781 | $ | 10,093 | $ | (2,692 | ) | $ | 666,182 | ||||||
Note: The following is a summary of the adjustments made to US GAAP revenue to Economic Income revenue: | |||||||||||||||
(1) Other adjustments include reclassifications between other income (loss), redeemable non-controlling interests and interest and non-interest expenses based on the nature of the respective line item | |||||||||||||||
(2) Fund consolidation includes the impact of consolidation. The related elimination entries of the Consolidated Funds are not included in Economic Income. Adjustments include elimination of incentive income and management fees earned from the Consolidated Funds. | |||||||||||||||
Other Adjustments: | |||||||||||||||
(a) Economic Income (Loss) recognizes revenues (i) net of distribution fees paid to agents and (ii) our proportionate share of management and incentive fees of certain real estate operating entities, the healthcare royalty business and the activist business. | |||||||||||||||
(b) Economic Income (Loss) recognizes Company income from proprietary trading (including interest and dividends). | |||||||||||||||
(c) Reimbursement from affiliates is shown as a reduction of Economic Income expenses, but is included as a part of revenues under US GAAP. | |||||||||||||||
(d) Aircraft lease revenue is shown net of expenses in investment income for Economic Income (Loss). | |||||||||||||||
(e) Economic Income (Loss) recognizes underwriting income from the Company's insurance related activities, net of expenses, within other revenue. | |||||||||||||||
(f) Economic Income (Loss) brokerage revenues included net securities borrowed and securities loaned activities. |
Cowen Inc. | |||||||||||||||
Unaudited Reconciliation of GAAP and Economic Revenue for the Twelve Months Ended December 31, 2016 | |||||||||||||||
(Dollar amounts in thousands) | |||||||||||||||
Twelve Months Ended December 31, 2016 | |||||||||||||||
Adjustments | |||||||||||||||
Other | Funds | Economic | |||||||||||||
GAAP | Adjustments (1) | Consolidation (2) | Income | ||||||||||||
Revenue | |||||||||||||||
Investment banking | $ | 133,279 | $ | — | $ | — | $ | 133,279 | |||||||
Brokerage | 199,180 | 7,860 | (f) | — | 207,040 | ||||||||||
Management fees | 40,612 | 24,971 | (a) | 1,665 | 67,248 | ||||||||||
Incentive income | 8,334 | 17,226 | (a) | 714 | 26,274 | ||||||||||
Investment income | — | 4,023 | (b)(d) | — | 4,023 | ||||||||||
Interest and dividends | 14,732 | (14,732 | ) | (b) | — | — | |||||||||
Reimbursement from affiliates | 10,504 | (10,807 | ) | (c) | 303 | — | |||||||||
Aircraft lease revenue | 4,161 | (4,161 | ) | (d) | — | — | |||||||||
Reinsurance premiums | 32,459 | (32,459 | ) | (e) | — | — | |||||||||
Other revenues | 22,355 | 7,412 | (e) | — | 29,767 | ||||||||||
Consolidated Funds | 5,949 | — | (5,949 | ) | — | ||||||||||
Total revenue | $ | 471,565 | $ | (667 | ) | $ | (3,267 | ) | $ | 467,631 | |||||
Note: The following is a summary of the adjustments made to US GAAP revenue to Economic Income revenue: | |||||||||||||||
(1) Other adjustments include reclassifications between other income (loss), redeemable non-controlling interests and interest and non-interest expenses based on the nature of the respective line item | |||||||||||||||
(2) Fund consolidation includes the impact of consolidation. The related elimination entries of the Consolidated Funds are not included in Economic Income. Adjustments include elimination of incentive income and management fees earned from the Consolidated Funds. | |||||||||||||||
Other Adjustments: | |||||||||||||||
(a) Economic Income (Loss) recognizes revenues (i) net of distribution fees paid to agents and (ii) our proportionate share of management and incentive fees of certain real estate operating entities and the activist business. | |||||||||||||||
(b) Economic Income (Loss) recognizes Company income from proprietary trading (including interest and dividends). | |||||||||||||||
(c) Reimbursement from affiliates is shown as a reduction of Economic Income expenses, but is included as a part of revenues under US GAAP. | |||||||||||||||
(d) Aircraft lease revenue is shown net of expenses in investment income for Economic Income (Loss). | |||||||||||||||
(e) Economic Income (Loss) recognizes underwriting income from the Company's insurance related activities, net of expenses, within other revenue. | |||||||||||||||
(f) Economic Income (Loss) brokerage revenues included net securities borrowed and securities loaned activities. |
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