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 14, 2019 | Title: | General Counsel | |
• | Full year 2018 revenue rose 47% to $966.9 million. Fourth quarter 2018 revenue was $259.9 million |
• | Net income attributable to common stockholders was $36.0 million, or $1.17 per diluted common share for the full year 2018. Fourth quarter 2018 net income was $3.4 million or $0.11 per diluted common share |
• | Full year 2018 revenue increased 37% to $909.5 million from $666.2 million. For the fourth quarter 2018, revenue was $207.4 million |
• | Economic income attributable to Cowen Inc. was $76.1 million for the full year 2018. For the fourth quarter 2018, economic income was $7.7 million |
• | Economic income (loss) attributable to common stockholders was $69.3 million or $2.26 per common diluted share for the full year 2018. Fourth quarter 2018, economic income (loss) attributable to common stockholders was $6.0 million or $0.19 per diluted common share compared to an economic loss of $11.1 million or $(0.36) per diluted common share. |
Three Months Ended | Twelve Months Ended | ||||||||||||||||||||
December 31 | December 31 | ||||||||||||||||||||
(Dollar amounts in millions, except per share information) | 2018 | 2017 | % | 2018 | 2017 | % | |||||||||||||||
GAAP: | |||||||||||||||||||||
Revenue | $ | 259.9 | $ | 204.5 | 27 | % | $ | 966.9 | $ | 658.8 | 47 | % | |||||||||
Net income (loss) attributable to Cowen Inc. | $ | 5.1 | $ | (76.0 | ) | (107 | )% | $ | 42.8 | $ | (60.9 | ) | NM | ||||||||
Less: Preferred stock dividends | $ | (1.7 | ) | $ | (1.7 | ) | — | % | $ | (6.8 | ) | $ | (6.8 | ) | — | % | |||||
Net income (loss) attributable to common stockholders | $ | 3.4 | $ | (77.7 | ) | NM | $ | 36.0 | $ | (67.7 | ) | NM | |||||||||
ECONOMIC INCOME (NON-GAAP): | |||||||||||||||||||||
Economic income revenue | $ | 207.4 | $ | 183.0 | 13 | % | $ | 909.5 | $ | 666.2 | 37 | % | |||||||||
Economic income (loss) attributable to Cowen Inc. | $ | 7.7 | $ | (9.4 | ) | NM | $ | 76.1 | $ | 15.8 | 381 | % | |||||||||
Less: Preferred stock dividends | $ | (1.7 | ) | $ | (1.7 | ) | — | % | $ | (6.8 | ) | $ | (6.8 | ) | — | % | |||||
Economic income (loss) attributable to common stockholders | $ | 6.0 | $ | (11.1 | ) | NM | $ | 69.3 | $ | 9.0 | 667 | % | |||||||||
Add: Depreciation and amortization | $ | 2.7 | $ | 3.2 | (15 | )% | $ | 11.6 | $ | 11.6 | — | % | |||||||||
Economic operating income attributable to common stockholders | $ | 8.7 | $ | (7.9 | ) | NM | $ | 80.9 | $ | 20.6 | 293 | % | |||||||||
PER COMMON SHARE (DILUTED) | |||||||||||||||||||||
GAAP: | |||||||||||||||||||||
Earnings (loss) per common share | $ | 0.11 | $ | (2.51 | ) | NM | $ | 1.17 | $ | (2.29 | ) | NM | |||||||||
Economic income (non-GAAP): | |||||||||||||||||||||
Economic income (loss) per common share | $ | 0.19 | $ | (0.36 | ) | NM | $ | 2.26 | $ | 0.31 | 636 | % | |||||||||
Economic operating income (loss) per common share | $ | 0.28 | $ | (0.26 | ) | NM | $ | 2.63 | $ | 0.70 | 277 | % | |||||||||
Note: Amounts may not add up due to rounding. A reconciliation of economic income (loss) to GAAP net income appears under the section, "Summary Economic Income (Loss) to GAAP Reconciliation." |
• | Achieved 12.1% Return on Common Equity (ROCE) on an economic operating income basis in 2018 compared to 3.1% in 2017 |
• | Scaled businesses that will drive margin: |
– | Advisory revenue increased 95.4% organically in 2018 to $81.7 million |
– | Announced the acquisition of Quarton International, a leading middle-market financial advisory firm, expanding the Company's advisory business and creating a global, cross-border investment banking platform with significant scale. The acquisition of Quarton International closed on January 3, 2019 |
• | Improved revenue diversification: |
– | Non-healthcare revenue as a percentage of investment banking revenue increased to 38% in 2018 from 28% in 2017 |
– | Advisory revenue as a percentage of investment banking revenue grew to 25% in 2018 from 19% in 2017 |
– | Formed strategic alliance with Intrepid Partners to provide capital markets advisory services to the North American energy sector, leveraging Cowen’s capital markets expertise and growing non-healthcare business |
• | Maintained and grew contribution from recurring revenue businesses: |
– | Markets revenue, which includes brokerage, financing and other revenue, increased to $476.7 million in 2018 from $323.9 million in 2017 |
– | Normalizing for the acquisition of Convergex in 2017, Markets revenue increased $81.8 million or 20.7% year over year |
• | Leveraged Cowen's domain expertise ("Cowen DNA") with the operating businesses |
– | Positioned the investment management platform towards strategies that are salable, scalable and reflect Cowen DNA, such as the private healthcare investment management strategy |
• | Simplified balance sheet by exiting non-core strategies: |
– | Exited certain non-core investment strategies, including seed strategies and aircraft finance |
• | Book value per share increased to $24.37 as of December 31, 2018, compared to $21.82 as of December 31, 2017 |
• | During the quarter, the Company repurchased 1,003,878 shares for $15.0 million, at an average price of $14.94, under the Company's existing share repurchase program |
• | For the full year, the Company repurchased 2,164,186 shares for $31.8 million, at an average price of $14.68 |
(Amounts in millions, except per share information) | December 31 | December 31 | |||
2018 | 2017 | ||||
Cowen Inc. stockholders' equity | $794.4 | $748.0 | |||
Common equity (CE) | $693.1 | $646.7 | |||
Book value per share (CE/CSO) | $24.37 | $21.82 | |||
Common shares outstanding (CSO) | 28.4 | 29.6 | |||
Summary Stockholders' Equity Information | |||||
Cowen Inc. stockholders' equity | $794.4 | $748.0 | |||
Less: | |||||
Preferred stock | 101.3 | 101.3 | |||
Common equity (CE) | $693.1 | $646.7 | |||
Note: Amounts may not add up due to rounding. |
Three Months Ended | Twelve Months Ended | ||||||||||||||||||
December 31 | Sept. 30 | December 31 | |||||||||||||||||
(Per share information) | 2018 | 2017 | 2018 | 2018 | 2017 | ||||||||||||||
Economic income (loss) per common share (diluted) | $ | 0.19 | $ | (0.36 | ) | $ | 0.68 | $ | 2.26 | $ | 0.31 | ||||||||
Adjustments: | |||||||||||||||||||
Income taxes | 0.01 | (1.32 | ) | (0.17 | ) | (0.51 | ) | (1.50 | ) | ||||||||||
Uncrystallized incentive fees | 0.08 | — | (0.03 | ) | (0.01 | ) | — | ||||||||||||
Amortization of discount on convertible debt | (0.03 | ) | — | (0.04 | ) | (0.13 | ) | — | |||||||||||
Exited business costs | (0.08 | ) | — | — | (0.08 | ) | — | ||||||||||||
Debt extinguishment costs | — | — | (0.02 | ) | — | ||||||||||||||
Unrealized gain (loss) on conversion option (a) | — | — | 0.01 | (0.24 | ) | — | |||||||||||||
Restructuring | — | — | — | — | (0.30 | ) | |||||||||||||
Bargain purchase gain | — | (0.03 | ) | — | — | 0.24 | |||||||||||||
Transaction-related and other costs | (0.07 | ) | (0.03 | ) | (0.01 | ) | (0.09 | ) | (0.23 | ) | |||||||||
GAAP earnings (loss) per share (diluted) | $ | 0.11 | $ | (2.51 | ) | $ | 0.45 | $ | 1.17 | $ | (2.29 | ) | |||||||
Note: Amounts may not add due to rounding. |
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||
December 31 | Sept. 30 | December 31 | ||||||||||||||||||||||||||
(Dollar amounts in millions) | 2018 | 2017 | % | 2018 | % | 2018 | 2017 | % | ||||||||||||||||||||
Investment banking | $ | 77.6 | $ | 65.5 | 18 | % | $ | 77.5 | — | % | $ | 329.1 | $ | 223.6 | 47 | % | ||||||||||||
Brokerage | 123.4 | 103.5 | 19 | % | 101.7 | 21 | % | 452.3 | 312.8 | 45 | % | |||||||||||||||||
Management fees | 11.2 | 13.3 | (16 | )% | 12.4 | (10 | )% | 49.2 | 55.4 | (11 | )% | |||||||||||||||||
Incentive income | 2.3 | 7.4 | (69 | )% | 6.9 | (67 | )% | 23.7 | 26.0 | (9 | )% | |||||||||||||||||
Investment income (loss) | (5.6 | ) | (6.6 | ) | (16 | )% | 27.7 | NM | 56.3 | 45.1 | 25 | % | ||||||||||||||||
Other revenues | (1.4 | ) | (0.1 | ) | NM | 0.1 | NM | (1.2 | ) | 3.2 | NM | |||||||||||||||||
Total Revenue | $ | 207.4 | $ | 183.0 | 13 | % | $ | 226.2 | (8 | )% | $ | 909.5 | $ | 666.2 | 37 | % |
• | Compensation and benefits expense was $114.1 million compared to $111.1 million in the fourth quarter 2017. The increase was due to higher revenue during the 2018 period as compared to 2017, which resulted in a higher compensation and benefits accrual. The compensation to revenue ratio was 55.0% compared to 60.7% in the prior year period. |
• | Fixed non-compensation expenses increased $1.7 million year over year to $37.2 million. The increase was mostly attributable to increased occupancy costs and costs related to equity method investments. |
• | Variable non-compensation expenses were $37.7 million compared to $35.5 million in the fourth quarter 2017. The increase is due to increased marketing and business development costs. |
• | Net income (loss) attributable to non-controlling interests decreased by $0.4 million to $1.5 million for the three months ended December 31, 2018 compared with $1.9 million in the prior year period. Non-controlling interest represents the portion of net income or loss attributable to certain non-wholly owned subsidiaries that is allocated to the Company's partners in those subsidiaries. |
• | Compensation and benefits expense was $506.3 million compared to $388.0 million in 2017. The increase was due to higher revenue during the 2018 period as compared to 2017, which resulted in a higher compensation and benefits accrual. The compensation to revenue ratio was 55.7%, down from 58.2% in the prior year. |
• | Fixed non-compensation expenses increased $19.7 million year over year to $141.8 million. The increase was primarily attributable to the acquisition of Convergex in June 2017. |
• | Variable non-compensation expenses were $143.6 million compared to $105.8 million in 2017. |
• | Reimbursements from affiliates, which relate to the investment management segment, decreased $0.7 million to $1.3 million for the year ended December 31, 2018, compared to $2.0 million in the prior year. |
• | Net income attributable to redeemable non-controlling interests increased by $2.2 million to $8.3 million for the year ended December 31, 2018 compared with $6.1 million in the prior year. Non-controlling interest represents the portion of net income or loss attributable to certain non-wholly owned subsidiaries that is allocated to the Company's partners in those subsidiaries. |
Three Months Ended | |||||
December 31 | |||||
(Dollar amounts in millions) | 2018 | 2017 | |||
Capital Markets | $47.0 | $49.6 | |||
Advisory | 30.7 | 15.9 | |||
Total | $77.6 | $65.5 |
Three Months Ended | |||
December 31 | |||
2018 | 2017 | ||
Capital Markets | 22 | 27 | |
Of which bookrun: | 13 | 18 | |
Advisory | 9 | 5 | |
Total | 31 | 32 |
Twelve Months Ended | |||||
December 31 | |||||
(Dollar amounts in millions) | 2018 | 2017 | |||
Capital Markets | $247.3 | $181.8 | |||
Advisory | 81.7 | 41.8 | |||
Total | $329.1 | $223.6 |
Twelve Months Ended | |||
December 31 | |||
2018 | 2017 | ||
Capital Markets | 121 | 105 | |
Of which bookrun: | 82 | 66 | |
Advisory | 30 | 16 | |
Total | 151 | 121 |
Cowen Inc. | |||||||||||||||
US GAAP Preliminary Unaudited Condensed Consolidated Statements of Operations | |||||||||||||||
(Dollar amounts in thousands, except per share data) | |||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||
December 31 | December 31 | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenue | |||||||||||||||
Investment banking | $ | 92,485 | $ | 65,532 | $ | 357,222 | $ | 223,614 | |||||||
Brokerage | 112,529 | 95,011 | 413,582 | 293,610 | |||||||||||
Management fees | 7,322 | 7,658 | 29,658 | 33,245 | |||||||||||
Incentive income | 3,020 | (834 | ) | 3,117 | 5,383 | ||||||||||
Interest and dividends | 30,498 | 22,116 | 108,009 | 49,440 | |||||||||||
Reimbursement from affiliates | (28 | ) | 229 | 1,038 | 2,860 | ||||||||||
Aircraft lease revenue | 343 | 715 | 1,852 | 3,751 | |||||||||||
Reinsurance premiums | 11,845 | 9,039 | 38,096 | 30,996 | |||||||||||
Other | 658 | 2,414 | 4,504 | 8,561 | |||||||||||
Consolidated Funds revenues | 1,259 | 2,570 | 9,838 | 7,321 | |||||||||||
Total revenue | 259,931 | 204,450 | 966,916 | 658,781 | |||||||||||
Interest and dividends expense | 29,270 | 23,676 | 104,116 | 60,949 | |||||||||||
Total net revenue | 230,661 | 180,774 | 862,800 | 597,832 | |||||||||||
Expenses | |||||||||||||||
Employee compensation and benefits | 115,001 | 122,021 | 509,289 | 404,087 | |||||||||||
Reinsurance claims, commissions and amortization of deferred acquisition costs | 13,658 | 9,876 | 41,086 | 30,486 | |||||||||||
Operating, general, administrative and other expenses | 94,410 | 70,727 | 316,180 | 227,709 | |||||||||||
Depreciation and amortization expense | 2,878 | 3,466 | 12,436 | 13,078 | |||||||||||
Restructuring costs | — | — | — | 8,763 | |||||||||||
Consolidated Funds expenses | 1,348 | 3,103 | 8,615 | 12,526 | |||||||||||
Total expenses | 227,295 | 209,193 | 887,606 | 696,649 | |||||||||||
Other income (loss) | |||||||||||||||
Net (losses) gains on securities, derivatives and other investments | 3,315 | 13,078 | 68,043 | 76,179 | |||||||||||
Bargain purchase gain | — | (1,032 | ) | — | 6,914 | ||||||||||
Gain/(loss) on debt extinguishment | — | (16,039 | ) | (556 | ) | (16,039 | ) | ||||||||
Consolidated Funds net (losses) gains | (2,537 | ) | (14,535 | ) | 56,255 | 38,725 | |||||||||
Total other income (loss) | 778 | (18,528 | ) | 123,742 | 105,779 | ||||||||||
Income (loss) before income taxes | 4,144 | (46,947 | ) | 98,936 | 6,962 | ||||||||||
Income tax expense/(benefit) | (280 | ) | 40,646 | 15,719 | 44,053 | ||||||||||
Net income (loss) | 4,424 | (87,593 | ) | 83,217 | (37,091 | ) | |||||||||
Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries and funds | (655 | ) | (11,621 | ) | 40,398 | 23,791 | |||||||||
Net income (loss) attributable to Cowen Inc. | 5,079 | (75,972 | ) | 42,819 | (60,882 | ) | |||||||||
Less: Preferred stock dividends | 1,698 | 1,698 | 6,792 | 6,792 | |||||||||||
Net income (loss) attributable to Cowen Inc. common stockholders | $ | 3,381 | $ | (77,670 | ) | $ | 36,027 | $ | (67,674 | ) | |||||
Earnings (loss) per share: | |||||||||||||||
Basic | $ | 0.12 | $ | (2.51 | ) | $ | 1.22 | $ | (2.29 | ) | |||||
Diluted | $ | 0.11 | $ | (2.51 | ) | $ | 1.17 | $ | (2.29 | ) | |||||
Weighted average shares used in per share data: | |||||||||||||||
Basic | 29,194 | 30,934 | 29,545 | 29,492 | |||||||||||
Diluted | 30,955 | 30,934 | 30,735 | 29,492 |
Cowen Inc. | |||||||||||||||
Unaudited Reconciliation of US GAAP and Economic Revenue for the Three Months Ended December 31, 2018 | |||||||||||||||
(Dollar amounts in thousands) | |||||||||||||||
Adjustments | |||||||||||||||
Other | Funds | Economic | |||||||||||||
US GAAP | Adjustments (1) | Consolidation (2) | Income | ||||||||||||
Revenue | |||||||||||||||
Investment banking | $ | 92,485 | $ | (14,899 | ) | (a) | $ | — | $ | 77,586 | |||||
Brokerage | 112,529 | 10,842 | (b) | — | 123,371 | ||||||||||
Management fees | 7,322 | 3,540 | (c) | 316 | 11,178 | ||||||||||
Incentive income | 3,020 | (758 | ) | (c)(a) | 15 | 2,277 | |||||||||
Investment income | — | (5,582 | ) | (d)(e) | — | (5,582 | ) | ||||||||
Interest and dividends | 30,498 | (30,498 | ) | (d) | — | — | |||||||||
Reimbursement from affiliates | (28 | ) | (43 | ) | (f) | 71 | — | ||||||||
Aircraft lease revenue | 343 | (343 | ) | (e) | — | — | |||||||||
Reinsurance premiums | 11,845 | (11,845 | ) | (g) | — | — | |||||||||
Other revenues | 658 | (2,076 | ) | (g) | — | (1,418 | ) | ||||||||
Consolidated Funds | 1,259 | — | (1,259 | ) | — | ||||||||||
Total revenue | $ | 259,931 | $ | (51,662 | ) | $ | (857 | ) | $ | 207,412 | |||||
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) presents underwriting expenses net of investment banking revenues, expenses reimbursed from clients within their respective expense category and records income from uncrystallized incentive fees. | |||||||||||||||
(b) Economic Income (Loss) brokerage revenues included net securities borrowed and securities loaned activities. | |||||||||||||||
(c) 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. | |||||||||||||||
(d) Economic Income (Loss) recognizes Company income from proprietary trading (including interest and dividends). | |||||||||||||||
(e) Aircraft lease revenue is shown net of expenses in investment income for Economic Income (Loss). | |||||||||||||||
(f) Reimbursement from affiliates is shown as a reduction of Economic Income expenses, but is included as a part of revenues under US GAAP. | |||||||||||||||
(g) Economic Income (Loss) recognizes underwriting income from the Company's insurance related activities, net of expenses, within other revenue. |
Cowen Inc. | |||||||||||||||
Unaudited Reconciliation of US GAAP and Economic Revenue for the Three Months Ended December 31, 2017 | |||||||||||||||
(Dollar amounts in thousands) | |||||||||||||||
Adjustments | |||||||||||||||
Other | Funds | Economic | |||||||||||||
US GAAP | Adjustments (1) | Consolidation (2) | Income | ||||||||||||
Revenue | |||||||||||||||
Investment banking | $ | 65,532 | $ | — | (a) | $ | — | $ | 65,532 | ||||||
Brokerage | 95,011 | 8,495 | (b) | — | 103,506 | ||||||||||
Management fees | 7,658 | 4,813 | (c) | 820 | 13,291 | ||||||||||
Incentive income | (834 | ) | 10,166 | (c)(a) | (1,930 | ) | 7,402 | ||||||||
Investment income | — | (6,623 | ) | (d)(e) | — | (6,623 | ) | ||||||||
Interest and dividends | 22,116 | (22,116 | ) | (d) | — | — | |||||||||
Reimbursement from affiliates | 229 | (286 | ) | (f) | 57 | — | |||||||||
Aircraft lease revenue | 715 | (715 | ) | (e) | — | — | |||||||||
Reinsurance premiums | 9,039 | (9,039 | ) | (g) | — | — | |||||||||
Other revenues | 2,414 | (2,497 | ) | (g) | — | (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) presents underwriting expenses net of investment banking revenues, expenses reimbursed from clients within their respective expense category and records income from uncrystallized incentive fees. | |||||||||||||||
(b) Economic Income (Loss) brokerage revenues included net securities borrowed and securities loaned activities. | |||||||||||||||
(c) 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. | |||||||||||||||
(d) Economic Income (Loss) recognizes Company income from proprietary trading (including interest and dividends). | |||||||||||||||
(e) Aircraft lease revenue is shown net of expenses in investment income for Economic Income (Loss). | |||||||||||||||
(f) Reimbursement from affiliates is shown as a reduction of Economic Income expenses, but is included as a part of revenues under US GAAP. | |||||||||||||||
(g) Economic Income (Loss) recognizes underwriting income from the Company's insurance related activities, net of expenses, within other revenue. |
Cowen Inc. | |||||||||||||||
Unaudited Reconciliation of US GAAP and Economic Revenue for the Twelve Months Ended December 31, 2018 | |||||||||||||||
(Dollar amounts in thousands) | |||||||||||||||
Adjustments | |||||||||||||||
Other | Funds | Economic | |||||||||||||
US GAAP | Adjustments (1) | Consolidation (2) | Income | ||||||||||||
Revenue | |||||||||||||||
Investment banking | $ | 357,222 | $ | (28,161 | ) | (a) | $ | — | $ | 329,061 | |||||
Brokerage | 413,582 | 38,717 | (b) | — | 452,299 | ||||||||||
Management fees | 29,658 | 17,004 | (c) | 2,513 | 49,175 | ||||||||||
Incentive income | 3,117 | 20,578 | (c)(a) | 52 | 23,747 | ||||||||||
Investment income | — | 56,346 | (d)(e) | — | 56,346 | ||||||||||
Interest and dividends | 108,009 | (108,009 | ) | (d) | — | — | |||||||||
Reimbursement from affiliates | 1,038 | (1,307 | ) | (f) | 269 | — | |||||||||
Aircraft lease revenue | 1,852 | (1,852 | ) | (e) | — | — | |||||||||
Reinsurance premiums | 38,096 | (38,096 | ) | (g) | — | — | |||||||||
Other revenues | 4,504 | (5,672 | ) | (g) | — | (1,168 | ) | ||||||||
Consolidated Funds | 9,838 | — | (9,838 | ) | — | ||||||||||
Total revenue | $ | 966,916 | $ | (50,452 | ) | $ | (7,004 | ) | $ | 909,460 | |||||
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) presents underwriting expenses net of investment banking revenues, expenses reimbursed from clients within their respective expense category and records income from uncrystallized incentive fees. | |||||||||||||||
(b) Economic Income (Loss) brokerage revenues included net securities borrowed and securities loaned activities. | |||||||||||||||
(c) 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. | |||||||||||||||
(d) Economic Income (Loss) recognizes Company income from proprietary trading (including interest and dividends). | |||||||||||||||
(e) Aircraft lease revenue is shown net of expenses in investment income for Economic Income (Loss). | |||||||||||||||
(f) Reimbursement from affiliates is shown as a reduction of Economic Income expenses, but is included as a part of revenues under US GAAP. | |||||||||||||||
(g) Economic Income (Loss) recognizes underwriting income from the Company's insurance related activities, net of expenses, within other revenue. |
Cowen Inc. | |||||||||||||||
Unaudited Reconciliation of US GAAP and Economic Revenue for the Twelve Months Ended December 31, 2017 | |||||||||||||||
(Dollar amounts in thousands) | |||||||||||||||
Adjustments | |||||||||||||||
Other | Funds | Economic | |||||||||||||
US GAAP | Adjustments (1) | Consolidation (2) | Income | ||||||||||||
Revenue | |||||||||||||||
Investment banking | $ | 223,614 | $ | — | (a) | $ | — | $ | 223,614 | ||||||
Brokerage | 293,610 | 19,170 | (b) | — | 312,780 | ||||||||||
Management fees | 33,245 | 19,549 | (c) | 2,593 | 55,387 | ||||||||||
Incentive income | 5,383 | 18,906 | (c)(a) | 1,739 | 26,028 | ||||||||||
Investment income | — | 45,142 | (d)(e) | — | 45,142 | ||||||||||
Interest and dividends | 49,440 | (49,440 | ) | (d) | — | — | |||||||||
Reimbursement from affiliates | 2,860 | (3,157 | ) | (f) | 297 | — | |||||||||
Aircraft lease revenue | 3,751 | (3,751 | ) | (e) | — | — | |||||||||
Reinsurance premiums | 30,996 | (30,996 | ) | (g) | — | — | |||||||||
Other revenues | 8,561 | (5,330 | ) | (g) | — | 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) presents underwriting expenses net of investment banking revenues, expenses reimbursed from clients within their respective expense category and records income from uncrystallized incentive fees. | |||||||||||||||
(b) Economic Income (Loss) brokerage revenues included net securities borrowed and securities loaned activities. | |||||||||||||||
(c) 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. | |||||||||||||||
(d) Economic Income (Loss) recognizes Company income from proprietary trading (including interest and dividends). | |||||||||||||||
(e) Aircraft lease revenue is shown net of expenses in investment income for Economic Income (Loss). | |||||||||||||||
(f) Reimbursement from affiliates is shown as a reduction of Economic Income expenses, but is included as a part of revenues under US GAAP. | |||||||||||||||
(g) Economic Income (Loss) recognizes underwriting income from the Company's insurance related activities, net of expenses, within other revenue. |
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