INVESTOR PRESENTATION - 7th Annual Liolios Gateway Conference - Cowen
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INVESTOR PRESENTATION 7th Annual Liolios Gateway Conference SEPTEMBER 5, 2018 Jeffrey M. Solomon, CEO Stephen A. Lasota, CFO
Cautionary notice regarding forward-looking statements
This presentation 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. The
Company's actual results could differ materially from those anticipated in forward-looking statements for many reasons, including the factors described in
the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K 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.
2
TABLE OF CONTENTS 1. INTRODUCTION 4
2. BUSINESS HIGHLIGHTS 12
3. FINANCIALS 20
4. APPENDIX 26
3
1. INTRODUCTION
INTRODUCTION
Cowen: advising and connecting providers and users of capital to
help them consistently OutperformTM
• In an investment world increasingly occupied by passive, beta centric investing, we are dedicated to enabling our clients
to outperform their peer groups
• We serve the needs of constituents who strive
to outperform the “market average”
Impactful Deep Domain
– Active portfolio managers, analysts and Strategic Knowledge
Advice
traders on the sell side
– Management teams, boards and companies High Quality
Proprietary
Financing
Transactions Content
– Institutional and private clients seeking non-
Scalable Independent
correlated returns from alternative Institutional Trade
Quality Execution
investments Platform
Innovative Value-added
Investment Tools and
Products Insights
5
INTRODUCTION
Cowen by the numbers
$1B+ 6
IN TOTAL DISTINCT
CAPITALIZATION ALTERNATIVE
INVESTMENT
STRATEGIES
900+ 121
SECURITIES UNDER BANKING
COVERAGE TRANSACTIONS IN
THE LAST 12 MONTHS
11B 8,000
SHARES TRADED BY CONFERENCE 1X1
THE EQUITIES DESK MEETINGS IN 2017
IN THE LAST 12
MONTHS
Note: Last 12 months, June 5, 2017 through June 5, 2018
6
INTRODUCTION
Cowen: the advantage is in our culture
WE INVEST IN OUR CLIENTS’ SUCCESS
TENACIOUS
VISION EMPATHY SUSTAINABILITY
TEAMWORK
• Focus on • Deep understanding • 100 year history • Leverage intellectual
outperformance in of clients’ needs capital across the
innovative ways • Solutions that pass platform
• Match the solution the test of time
with the circumstance • Aggressively pursue
world-class outcomes
7INTRODUCTION
Positioned for long-term success
Management has transformed the business to meet evolving client needs
MERGER REBUILD POSITION VALUE
CREATION
(2009) (2009 - 2013) (2014 - 2017) (2018 - )
• COWN and Ramius • Initiatives to rebuild the • Actions to position the • New management
combine, creating a platform around core platform for growth establishes long-term
diversified financial capabilities organically and via objectives
services company acquisition
• Economic income losses • Implements framework
focused on delivering
narrow • Generates positive philosophy for decisions
outperformance for
economic income aimed at driving
clients
shareholder returns
8INTRODUCTION
Furthering Cowen’s position
Execution of these objectives are aimed at driving sustainable ROE over the long term
OUTCOME FOR
OBJECTIVES SHAREHOLDER RETURNS
• Scale businesses that will drive margin
INCREASED
• Focus on opportunities with strong domain expertise EARNINGS POWER
(“Cowen DNA”)
• Improve revenue diversification
GREATER OPERATING
• Maintain and grow contribution from recurring revenue CONSISTENCY
businesses
• Harmonize balance sheet activities with our operating businesses
LOWER
• Implement philosophy that “balance sheets are meant to be seen, not VOLATILITY
heard”
• Simplify balance sheet by exiting non-core investments and non-core
strategies IMPROVED
TRANSPARENCY
• Improve capital allocation processes
9INTRODUCTION
Our strategy to achieve these objectives
“Simpler, Fewer, Deeper” is a framework philosophy underlying our long-term objectives
1 2 3
SIMPLER FEWER DEEPER
Simplify the business in a Eliminate or resize Go deep in our areas of
manner that enables us to businesses as we focus our strength to enhance margin
select areas to press for efforts on businesses that opportunity around core
growth will drive margin industry strengths
Example: Example: Example:
Adjusting capital allocation Eliminated three capabilities Launched private healthcare
process such that our from investment strategy, which leverages
balance sheet activities are management platform in Cowen’s strength in healthcare
in harmony with our 2017 that were not salable research and banking
operating businesses and scalable
10INTRODUCTION
Cowen: investment highlights
WORLD CLASS, DATA DRIVEN
Serves as the backbone of our cutting edge content creation engine
INDEPENDENT RESEARCH
SCALED, MARKET-LEADING
Taking share from competitors
EQUITIES PLATFORM
INVESTMENT Provides opportunities for growth and margin expansion through
BANKING EXCELLENCE organic growth and acquisition
REPOSITIONING
Offers potential for operating improvement
INVESTMENT MANAGEMENT
IMPROVING
Management and new strategy focused on driving ROE for shareholders
FINANCIAL RESULTS
ATTRACTIVE VALUATION COWN trades at a significant discount to peers
112. BUSINESS HIGHLIGHTS
BUSINESS HIGHLIGHTS
Investment banking: leader in financings, growing advisory
Multi-year effort to diversify our mix towards higher margin activities while we press on our ECM strengths
GROWING EQUITY UNDERWRITING AND ADVISORY REVENUE
• Market leader in financing and advising
biopharmaceutical companies
– Management expects these areas to continue to grow $223M $224M
for the foreseeable future
$24 $42
$170M $174M
• Expanding footprint in merger advisory
– 2017 was a record year $29
– Growing organically and through acquisition $133M
$15
$27
• Key industry verticals experiencing growth, e.g.:
$192
– Consumer $181
– Healthcare $144
$133
– Industrials
$100
– Technology
2014 2015 2016 2017 1H'18
Equity Underwriting Advisory Debt Underwriting
13BUSINESS HIGHLIGHTS
Investment banking: expanded platform yielding positive results
2012 2017 1H2018
Favorable capital raising environment
ECM revenue $47 $181 $144 and a focus on healthcare has been
beneficial to our strong ECM franchise
Equity underwriting transaction 56 103 66
count
% of total IB revenue 66% 81% 83%
Advisory revenue $10 $42 $29 Growing contribution
Advisory transaction count 6 16 15
% of total IB revenue 14% 19% 17%
Healthcare $47 $162 $125 Driven by biotech ECM
% of total IB revenue 66% 73% 72%
Non-Healthcare $24 $61 $49 Growing on absolute dollar basis
% of total IB revenue 34% 27% 28%
Product: ECM, DCM, M&A
# Managing Directors (all IB/CM) 25 42 42 Industry: consumer, energy, healthcare,
industrials, info tech and technology
14BUSINESS HIGHLIGHTS
Research: deep commitment to being premier
3-8x readership of Cowen research vs. Street average(1)
• Research drives key investment themes across the platform
• One of the largest research franchises on the Street that has consistently invested in its platform
– This is in contrast to a 10% decline in investment dollars for sell-side equity research on the Street overall(1)
• Well positioned to take share post MiFID II implementation
• World class conferences and corporate access create important network effect
RESEARCH PLATFORM: RICH AND DEEP
• About two-thirds of our equity research is PUBLISHING ANALYSTS EQUITY COVERAGE
on stocks with a market capitalization Today 55 Basic Materials
2012 27 2%
< $10 billion
Capital
• Equity coverage augmented by coverage SECURITIES UNDER COVERAGE Goods
15% Healthcare
of ~170 securities by our credit & cross- Today 928 29%
Consumer
capital team 2012 424 13%
Energy
• Deepest Washington research bench on S&P 500® COVERED 14%
TMT
27%
the Street(2) Today 44%
2012 27%
(1) Per Financial Times, 2/8/17
(2) Cowen Washington Research Group produces commentaries on political, economic or market conditions and is not intended as a research report as defined by applicable regulation.
15BUSINESS HIGHLIGHTS
Ahead of the Curve™: Cowen’s trademarked “white paper” series
• Thoughtful, groundbreaking Ahead of the CurveTM reports
are some of the most widely read collaborative research
products
• These reports focus on one of three scenarios:
– A non-consensus idea (“99% of investors think one way,
but we think differently”)
– An investment controversy (“investors are split on a
controversial topic – there is no consensus – and we wish
to take a stand”)
– When there is a topic investors need to focus on more
deeply (that they have not fully understood to date) that
will be a key driver of securities in a particular sector or of
the broader market
• Ahead of the Curve™ showcases Cowen’s unparalleled
research depth and industry knowledge
BIOTECH CLEANTECH CONSUMER CREDIT DIGITAL HEALTH E-COMMERCE ENERGY HEALTH CARE INDUSTRIALS TMT TRANSPORTATION WASHINGTON
16BUSINESS HIGHLIGHTS
Markets: diversified, scaled and differentiated
Leading independent, non-conflicted trade execution platform
• Top independent, non conflicted trade execution COWEN IS A TOP TRADER OUTSIDE OF THE BULGE BRACKET
and scaled research sales In million shares (1)
– Offers clients meaningful advantages vs. larger JEFFERIES 17,270
and smaller competitors RBC 10,755
– Positive impact on client portfolio decisions COWEN 10,664
• Platform emphasizes: BTIG 6,796
– Cutting edge research WELLS FARGO 6,430
– Exceptional algorithmic execution capability
RAYMOND JAMES 3,942
– Award winning prime services product
STIFEL 3,498
– Additional brokerage solutions
BAIRD 2,210
• Growing market share
CANTOR FITZGERALD 1,908
– General consolidation of commissions to top
OPPENHEIMER 1,739
brokers such as Cowen who provide value in
research and trading PIPER JAFFRAY 1,468
WILLIAM BLAIR 1,181
• Well positioned for MiFID II and reallocation of
CANACCORD 804
commission dollars
– Clients have showed willingness to pay for NEEDHAM 283
impactful research and liquidity
(1) Advertised Bloomberg volume as of July, 2018. Includes full service investment banks and non-research driven trading firms
17BUSINESS HIGHLIGHTS
Markets: expanded platform furthers our relevance with clients
Since 2012, we have completed six acquisitions which significantly increased our offerings and market share
• Increased margin potential through:
– Post-acquisition synergies
– Scaling securities lending and clearing
2012 2018
• Cash equities • Cash equities • Corporate securities
• Electronic trading • High yield & distressed bonds • Options
INSTITUTIONAL • Options • Electronic trading • Leveraged loans
BROKERAGE
• Convertible bonds • Special situations
• Program trading • Emerging markets
• None • Prime services • Plan sponsor
INSTITUTIONAL • Securities finance • Commission
SERVICES • Global clearing management
FY’12 $94 FY’17 $313 MILLION 1H’18 $227
revenue revenue (includes 7 months of revenue
MILLION MILLION
Convergex)
18BUSINESS HIGHLIGHTS
Investment management: business in transition
New product offerings to draw more closely upon the expertise and DNA of Cowen more broadly
• Refocusing business on differentiated products aligned with Cowen “DNA” relating to content and insight
• Eliminated non-core strategies that lack scale, exhibit higher volatility and have significant market directionality
• Identifying areas of distribution that are underserved by current market offerings
• Continuing to accelerate return of legacy assets under management while reducing cost base
PRIVATE
HEALTHCARE LONG/SHORT
CAPABILITY HEALTHCARE REAL ESTATE ACTIVISM MERGER
ROYALTIES EQUITY
INVESTMENTS
TEAM
PRIVATE EQUITY
HEDGE FUND
MANAGED
ACCOUNT
UCITS
Note: Please see important additional information about the investment management business in the Appendix (page 28) of this presentation.
193. FINANCIALS
FINANCIALS
Key statistics
$15.25 $23.37 $452M
NASDAQ GS: COWN Book Value Per Share Market Cap
as of August 28, 2018 as of June 30, 2018 as of August 28, 2018
$56.9M $1.45
$841.5M
Economic Operating Economic Income Per
Revenue (TTM) Share (TTM)
as of June 30, 2018 Income (TTM)* as of June 30, 2018
as of June 30, 2018
*Economic Operating Income is Economic Income before depreciation and amortization
21FINANCIALS
Revenue growth across business lines
Actions taken to rebuild and position the platform for long-term value creation
ECONOMIC INCOME REVENUE : +16% CAGR SINCE 2011(1)
“Position Period” “Value Creation Period”
700.0 $666
600.0
$530
$498
500.0 $468 $476
“Rebuild Period”
Other
400.0 $344 Investment Income
$288 Incentive Income
$270
300.0 Management Fees
Markets
200.0 Investment Banking
100.0
-
2011 2012 2013 2014 2015 2016 2017 1H'18
Added options and Added electronic Added sector Added prime Added credit Added macro Expanded depth in Drive long-term value
event capabilities trading capabilities expertise across service capabilities research & special research global execution and creation
(ATM) banking, markets (Concept Capital, situations trading (Washington new capabilities in
Established and research Conifer Securities) (CRT) Research Group) clearing and
merger arbitrage (Dahlman Rose) securities finance
fund Launched global Added banking (Convergex)
macro strategy team from Morgan
Joseph Eliminated three
investment
Launched two strategies
long/short
(1) January 1, 2011 through June 30, 2018
strategies
22FINANCIALS
Improving financial performance
Positive returns on prior operating investments in both markets and banking
• Strong 2Q execution builds on record 1Q results to represent the Cowen’s best 1H’18 since inception
• Business highlights:
– Record investment banking revenue, led by strong performance in equity financings and advisory
– Research and markets franchises achieved positive market share gains
– Shift in overall business mix and compensation and non compensation expense to revenue ratios vs. year ago period
due to acquisition of Convergex in June 2017
• As of June 30, 2018, book value per share was $23.37 vs. $21.82 at December 31, 2017
FINANCIAL SUMMARY*
($ millions) 1H'18 1H'17
GAAP
Revenue $486.0 $275.5
Net income attributable to common stockholders $18.9 $7.0
Per share (diluted) $0.62 $0.24
Economic Income
Economic income revenue $475.8 $300.5 +$29 million improvement in
Economic operating income $51.7 $22.3 Economic Operating Income on a
Economic income $45.8 $17.0 revenue increase of $175 million
Per share (diluted) $1.50 $0.59
*Economic Operating Income is Economic Income before depreciation and amortization
23FINANCIALS
Well-capitalized balance sheet
Recent financings extended debt maturities by several years
AS OF
JUNE 30, 2018
Total Assets $3.4 billion
Total Stockholders’ Equity $793.2 million
Total Debt(1) $422.1 million
Total Capitalization $1.2 billion
Equity / Total Assets 23%
Total Debt / Capital 35%
(1) Comprised of $21 million of 3% convertible senior notes due 2019, $135 million of 3% convertible senior notes due 2022, $138 million of 7.35% senior notes due 2024 and a $28.2 million term loan
24FINANCIALS
Valuation and Trading
Revenue Mix Retail Price Diluted EV / Revenue P/E Price /
Company % Advisory % Cap Mkts % Brokerage Y/N 08/27/18 Mkt Cap CY2018 CY2019 CY2018 CY2019 BV TBV
Jefferies Financial Group Inc.(a) 26% 34% 42% N $23.88 $7,960.3 2.0x 2.7x 6.6x 13.5x 0.8x 0.9x
JMP Group LLC 23 50 16 N 5.44 116.7 2.8 2.8 13.0 10.8 1.3 1.3
Oppenheimer Holdings Inc. 4 8 35 Y 33.45 472.4 NA NA NA NA 0.8 1.2
Piper Jaffray Companies 49 24 17 N 78.15 1,185.4 1.8 1.6 13.1 11.0 1.5 1.8
Raymond James Financial, Inc. 4 2 60 Y 92.91 13,230.9 1.7 1.5 13.5 11.8 2.2 2.5
Stifel Financial Corp. 13 11 33 Y 55.25 3,934.2 1.6 1.5 10.6 9.8 1.4 2.3
Mean 2.0x 2.0x 11.4x 11.4x 1.3x 1.7x
Median 1.8 1.6 13.0 11.0 1.4 1.5
Cowen Inc. 7% 28% 50% N $15.65 $463.7 1.2x 1.2x 5.3x 4.8x 0.7x 0.8x
Source: Capital IQ as of August 27, 2018.
(a) Revenue mix only includes Jefferies reporting segment. All other metrics reflect consolidated company.
254. APPENDIX
APPENDIX
Management committee to drive change holistically
Shared responsibility for delivering value to shareholders
TENURE
Jeffrey M. Solomon CEO Cowen Inc. 24
Daniel Charney Co-President Cowen and Company 6
Robert Fagin Director of Research Cowen and Company 6
Fred S. Fraenkel Vice Chairman Cowen Inc. 2
Jane Gerhard Head of Human Resources Cowen Inc. 14
John Holmes COO Cowen Inc. 12
Stephen A. Lasota CFO Cowen Inc. 14
Owen Littman General Counsel Cowen Inc. 13
Thomas W. Strauss Vice Chairman Cowen Inc. 21
Larry Wieseneck Co-President Cowen and CompanyAPPENDIX
Investment strategies: differentiated and proprietary
INVESTMENT
CAPABILITY STRATEGY FOUNDED HIGHLIGHTS
• Activism 2002 • Focused and fundamental approach to investing in publicly traded
U.S. companies
• Merger arbitrage 2011 • Focused merger arb strategy with prudent use of leverage
Hedge funds
($6.6 billion)
• Long/short equity 2016 • Fundamental, research driven long/short equity strategy
• Direct lending funds 1999 • Extensive experience and operating capability of all property types
Real estate
($2.0 billion) • Equity funds • New York real estate insiders
• Purchase of royalty streams 2007 • One of the longest standing healthcare royalty investors in the space
Healthcare royalties
of healthcare companies • Targets uncorrelated return stream with quarterly cash flow
($1.8 billion)
distributions
• Private healthcare equity 2012 • Mid-to-late stage investments into innovative private companies
Private healthcare
• Targets venture capital-like returns with reduced risk and shorter
($282 million)
duration
Note: AUM of $10.9 billion as of June 30, 2018. The AUM figures provided for the firm and/or each strategy group are unaudited and net of applicable fees and expenses. The aggregate AUM of each individual strategy
group does not equal the firm’s AUM due to cross investments among strategies and the exclusion of certain legacy funds. The AUM for private equity style investment products includes unfunded capital commitments,
where applicable. The AUM for the hedge funds may also include committed funding that may not be under the adviser’s control but forms part of the trading level given to the adviser by its respective managed account
clients. Please note Starboard Value LP is not a “related person” of Cowen for purposes of Form ADV.
28APPENDIX
Invested capital detail
Equity investments are concentrated in liquid trading strategies
AS OF %
($ millions)
6/30/18 TOTAL
Liquid Trading Strategies
Event Driven 34.2 5%
Securities Finance 25.0 3%
Cowen Healthcare Investments - Public 24.5 3%
Long - Short 20.0 3%
SPAC Trading 18.0 3%
Activist 16.6 2%
Portfolio Hedge 12.5 2%
Other 5.1 1%
Subtotal 155.9 22%
Privates
Private Investments 104.8 15%
Real Estate 28.4 4%
Cowen Healthcare Investments - Private 22.5 3%
Cowen BD Merchant Banking 12.6 2%
Other 8.6 1%
Trade Claims 5.6 1%
Healthcare Royalty Partners 5.6 1%
Subtotal 188.2 26%
Operating Cash 118.9 17% Non-Core Investments:
TOTAL INVESTED CAPITAL 462.9 65% Privates
Non-core Investments:
Regulatory Capital Linkem 56.4
Broker Dealer Capital 253.2 35% Formation 8 33.3
Subtotal 253.2 35% Other Privates 15.0
INVESTED + REGULATORY CAPITAL 716.1 100%
Real Estate
Minus Non-Core Investments (118.9) Surfside 14.2
INVESTED + REGULATORY CAPITAL (NET OF NON-CORE) 597.2 Total 118.9
Note: Percentage allocations of equity are subject to change. (1) Fund investment. (2) Top 3 Privates: Linkem - Italian wireless broadband telecommunications company; Formation 8 - venture capital firm focused on smart
enterprise and energy technology companies; Surfside - A residential real estate development project in Surfside, FL
29APPENDIX
Balance sheet (June 30, 2018)
(Amounts in thousands) 30-Jun-18 31-Dec-17 Change
Assets
Cash and cash equivalents 207,708 130,052 77,656
Cash collateral pledged 15,513 17,888 -2,375
Segregated cash 95,309 116,268 -20,959
Securities owned, at fair value 519,688 673,221 -153,533
Receivable on derivative contracts, at fair value 25,196 69,177 -43,981
Stock borrow 553,562 443,148 110,414
Other investments 281,908 253,447 28,461
Clearing deposits 94,656 93,996 660
Receivable from brokers 665,930 508,178 157,752
Receivable from customers 55,212 49,891 5,321
Fees receivable 139,032 114,630 24,402
Due from related parties 32,870 36,016 -3,146
Fixed assets 38,020 40,496 -2,476
Goodwill 60,678 60,678 —
Intangible assets 27,253 29,955 -2,702
Deferred tax asset 109,942 116,323 -6,381
Other assets 72,405 88,262 -15,857
Total Assets 2,994,882 2,841,626 153,256
Liabilities and Redeemable Group Equity
Securities sold, not yet purchased, at fair value 210,431 342,527 -132,096
Payable for derivative contracts, at fair value 23,874 42,750 -18,876
Stock loan 441,091 456,831 -15,740
Payable to brokers 240,643 252,153 -11,510
Payable to customers 520,566 352,467 168,099
Compensation payable 129,938 150,206 -20,268
Note payable and short-term borrowings 269,468 173,458 96,010
Convertible debt 131,683 141,502 -9,819
Soft dollar payable 92,172 70,451 21,721
Fees payable 23,609 8,047 15,562
Due to related parties 574 570 4
Accounts payable, accrued expenses and other liabilities 105,287 96,533 8,754
Total Liabilities 2,189,336 2,087,495 101,841
Redeemable non-controlling interests 8,773 6,113 2,660
Stockholders' equity $796,773 $748,018 $48,755
Total Liabilities and Stockholders' Equity $2,994,882 $2,841,626 $153,256
Note: Balance sheet has been adjusted to eliminate consolidated funds. Balance sheet has not been prepared in accordance with Generally Accepted Accounting Principles (GAAP).
30APPENDIX
Reconciliation to GAAP balance sheet (as of June 30, 2018)
Adj. to Elim. Adj. to Elim.
GAAP Adj. Consol. Funds GAAP Adj. Consol. Funds
($mm) Liabilities and Redeemable Group Equity
Assets
Securities sold, not yet purchased, at fair value 210,431 - 210,431
Cash and cash equivalents 207,708 - 207,708
Securities sold under agreement to repurchase - - -
Cash collateral pledged 15,513 - 15,513
Segregated Cash 95,309 - 95,309 Payable for derivative contracts, at fair value 23,874 - 23,874
Securities owned, at fair value 519,688 - 519,688 Stock Loan 441,091 - 441,091
Receivable on derivative contracts, at fair value 25,196 - 25,196 Payable to brokers 240,643 - 240,643
Stock Borrow 553,562 - 553,562 Payable to customers 520,566 - 520,566
Other investments 169,897 112,011 281,908 Compensation payable 129,938 - 129,938
Clearing Deposits 94,656 - 94,656 Other debt (Bbonds, plane, cap leases, Natixis) 269,468 - 269,468
Receivable from brokers 665,930 - 665,930 Convertible debt (march 2015) 131,683 - 131,683
Receivable from customers 55,212 - 55,212
Soft Dollar payable 92,172 - 92,172
Fees receivable 138,462 570 139,032
Due from related parties 32,826 44 32,870
Fees payable 23,609 - 23,609
Fixed assets, net of accumulated dep and amort 38,020 - 38,020 Due to related parties 574 - 574
Goodwill 60,678 - 60,678 Accounts payable, accrued expenses and other liabilities 105,280 7 105,287
Intangible assets, net of accumulated amortization 27,253 - 27,253 Payable to brokers 1,992 (1,992) 0
DTA 109,942 - 109,942 Due to related parties 141 (141) 0
Other assets 72,408 (3) 72,405 Capital withdrawls 3,557 (3,557) (0)
Cash and cash equivalents 13,027 (13,027) 0 Payable for derivative contracts, at fair value 1,045 (1,045) (0)
Securities owned, at fair value 109,088 (109,088) (0) Accounts payable, accrued expenses and other liabilities 138 (138) (0)
Receivable on derivative contracts, at fair value 1,638 (1,638) (0)
Total Liabilities 2,196,202 (6,867) 2,189,335
Other investments, at fair value 389,798 (389,798) 0
Receivable from brokers 8,938 (8,938) (0) Redeemable Non-controlling interests in consolidated subsidiaries 412,067 (403,294) 8,773
Other assets 293 (293) 0 Stockholders' equity 796,773 - 796,773
Total Assets 3,405,042 (410,161) 2,994,881 Total Liabilities and Redeemable Group Equity 3,405,042 (410,161) 2,994,881
Note: Balance sheet has been adjusted to eliminate consolidated funds. Balance sheet has not been prepared in accordance with Generally Accepted Accounting Principles (GAAP).
31APPENDIX
Reconciliation of economic income revenue to GAAP revenue
Three Months Ended June 30, 2018
Adjustments
Other Funds Economic
GAAP Adjustments (1) Consolidation (2) Income
Revenue
Investment banking $ 84,826 $ (4,784) (g) $— $ 80,042
Brokerage 103,285 9,901 (b) — 113,186
Management fees 7,373 4,500 (a) 613 12,486
Incentive income 48 9,306 (a)(g) 8 9,363
Investment income — 19,954 (c)(f) — 19,954
Interest and dividends 25,109 (25,109) (c) — —
Reimbursement from affiliates 336 (401) (e) 65 —
Aircraft lease revenue 419 (419) (f) — —
Reinsurance premiums 9,226 (9,226) (d) — —
Other revenues 876 (1,596) (d) — (721)
Consolidated Funds 3,075 — (3,075) —
Total revenue 234,573 2,126 (2,389) 234,310
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) brokerage revenues included net securities borrowed and securities loaned activities.
(c) Economic Income (Loss) recognizes Company income from proprietary trading (including interest and dividends).
(d) Economic Income (Loss) recognizes underwriting income from the Company's insurance related activities, net of expenses, within other revenue.
(e) Reimbursement from affiliates is shown as a reduction of Economic Income expenses, but is included as a part of revenues under US GAAP.
(f) Aircraft lease revenue is shown net of expenses in other revenue for Economic Income (Loss).
(g) Economic Income (Loss) presents underwriting expenses net of investment banking revenues and records income from uncrystallized incentive fees.
32APPENDIX
Reconciliation of economic income revenue to GAAP revenue
Three Months Ended June 30, 2017
Adjustments
Other Funds Economic
GAAP Adjustments (1) Consolidation (2) Income
Revenue
Investment banking $ 64,146 $— $— $ 64,146
Brokerage 63,845 3,148 (b) — 66,993
Management fees 8,656 5,094 (a) 605 14,355
Incentive income 3,726 4,464 (a) 2,779 10,969
Investment income — 14,192 (c)(f) — 14,192
Interest and dividends 7,917 (7,917) (c) —
Reimbursement from affiliates 495 (570) (e) 75 —
Aircraft lease revenue 1,043 (1,043) (f) — —
Reinsurance premiums 7,682 (7,682) (d) — —
Other revenues 1,345 (72) (d) — 1,273
Consolidated Funds 1,675 (1,675) —
Total revenue 160,530 9,614 1,784 171,928
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) brokerage revenues included net securities borrowed and securities loaned activities.
(c) Economic Income (Loss) recognizes Company income from proprietary trading (including interest and dividends).
(d) Economic Income (Loss) recognizes underwriting income from the Company's insurance related activities, net of expenses, within other revenue.
(e) Reimbursement from affiliates is shown as a reduction of Economic Income expenses, but is included as a part of revenues under US GAAP.
(f) Aircraft lease revenue is shown net of expenses in other revenue for Economic Income (Loss).
33APPENDIX
Contact us
INVESTOR CONTACTS
Cowen
Stephen Lasota, CFO
212 845 7919
Liolios Group, Inc.
Matt Glover | Cody Slach | Najim Mostamand, CFA
949 574 3860
COWN@liolios.com
CORPORATE HEADQUARTERS
599 Lexington Avenue
New York, NY 10022
646 562 1010
cowen.com
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