Cowen Group, Inc. Announces 2012 Fourth Quarter and Full Year Financial Results

  Cowen Group,Inc. Announces 2012 Fourth Quarter and Full Year Financial
  Results

Business Wire

NEW YORK -- February 28, 2013

Cowen Group,Inc. (NASDAQ: COWN) (“Cowen” or “the Company”) today announced
its operating results for the fourth quarter and full year ended December31,
2012.

2012 Fourth Quarter and Full Year Highlights^(1)

  *Total revenue for the fourth quarter and full year was the highest since
    the Cowen / Ramius business combination in 2009. For the fourth quarter,
    revenue was $77.2 million, compared to $70.9 million in the fourth quarter
    of 2011. For the full year, total revenue was $288.6 million and compared
    to $270.2 million in 2011.
  *The broker-dealer segment revenue rose 18% year over year in the fourth
    quarter of 2012 to $45.6 million^(2). For the full year 2012,
    broker-dealer segment revenue increased to $175.8 million^(2), up 11% from
    2011.

       *Investment banking revenue increased 90% in the fourth quarter to
         $21.2 million and 41% to $71.8 million for the full year. The
         increase in both periods was primarily attributable to our equity
         underwriting activity in the healthcare sector and debt capital
         markets transactions.
       *Brokerage revenue was $22.4 million in the fourth quarter, which
         represented a 3% increase year over year. For the full year,
         brokerage revenue was $93.9 million, down $5.7 million compared to
         2011.

  *Management fees at Ramius rose 7% sequentially to $14.3 million in the
    fourth quarter of 2012. After adjusting for cumulative retrospective
    management fees in our healthcare royalty funds recognized in 2011, fourth
    quarter 2012 management fees were unchanged from the prior year period and
    declined 1% to $56.4 million for the full year 2012.
  *Incentive income was $6.9 million in the fourth quarter, compared to $0.1
    million in the prior year period. Full year 2012 incentive income was
    $15.2 million, a 47% increase over 2011. The increase in both periods is
    primarily driven by an increase in performance fees from our fund
    products.
  *Assets under management at January1, 2013 were $8.1 billion, which
    remained relatively constant during the 2012 fourth quarter and decreased
    2% for the year after adjusting for the disposition of cash management
    assets under management which occurred during the fourth quarter of 2012.
  *For the full year 2012, total expenses declined by $29.7 million from
    2011, in line with our expense reduction targets for 2012.
  *In December 2012, Michael Singer joined Ramius as CEO, bringing a strong
    and diverse background in alternative asset management.
  *On February 1st, Cowen announced its entry into a definitive agreement to
    acquire Dahlman Rose & Co., a privately held investment bank specializing
    in the energy, metals and mining, transportation, chemicals and
    agriculture sectors.

____________________________________________________________________________________________________

^(1) All financial highlights are presented on an Economic Income basis.
^(2) Includes broker-dealer segment's allocation of Investment Income (Loss)
and Other Revenue.

Peter A. Cohen, Chairman and CEO of Cowen Group said, "In 2012, we continued
to make solid progress across our businesses, but we still have work to do. At
Cowen and Company, our banking and capital markets business reported a record
quarter and year since the Cowen / Ramius business combination. In addition to
strong organic growth from focused execution, we also expanded our brokerage
business to include electronic trading and securities lending through
acquisitions. With an increase in revenue, we reduced our expense structure by
approximately $30 million last year, which was in line with our previously
stated expense reduction target."

"We expect to close on the Dahlman Rose acquisition during the first quarter,
subject to regulatory approvals. This transaction will expand our reach into
important new verticals of energy, metals and mining, transportation,
chemicals and agriculture. In addition, this transaction will leverage our
existing fixed cost structure. We have been working diligently on our
integration plan such that we can hit the ground running immediately following
closing."

"At Ramius, we continued to have solid investment performance across our
various strategies in the fourth quarter and for all of 2012. The firm now
offers six distinctive investment capabilities that include real estate,
healthcare royalties, US small cap value creation, global long/short credit,
managed futures and a sophisticated alternative solutions capability covering
beta replication, hedging strategies, alternative risk premia and fund of
funds. We continue to incubate new teams and evaluate additional strategies
but our existing products are well poised to raise additional assets as we
enter 2013. Under the leadership of Michael Singer, who was appointed CEO in
December 2012, Ramius has a great opportunity to grow as more institutions and
individuals allocate capital to alternatives."

2012 Fourth Quarter and Full Year GAAP Financial Information and Select
Balance Sheet Data

For the fourth quarter 2012, the Company reported a GAAP net loss of $9.3
million, or $(0.08) per share, as compared to a GAAP net loss of $79.9
million, or $(0.70) per share, in the fourth quarter 2011. The fourth quarter
2011 loss included an $18.6 million net loss from discontinued operations
related to exiting the businesses operated by LaBranche subsidiaries. The
year-over-year decrease in GAAP net loss from continuing operations was
primarily due to an increase in revenues and a decrease in expenses.

For the full year 2012, the Company reported a GAAP net loss of $23.9 million,
or $(0.21) per share, compared to a GAAP net loss of $108.0 million, or
$(1.13) per share in the prior year. The full year 2011 loss included a $23.6
million net loss from discontinued operations related to exiting the
businesses operated by LaBranche subsidiaries. The decrease in GAAP net loss
was primarily due to lower expenses and an improvement in revenue.

The following table summarizes the Company’s GAAP financial results for the
three months ended December31, 2012 and 2011, and September30, 2012; and the
twelve months ended December31, 2012 and 2011.

                      Summary GAAP Financial Information

(Dollar
amounts in      Three Months Ended                                                 Twelve Months Ended                
millions,
except per
share            December 31,                         Sept 30,                 December 31,               
information)
                2012           2011        %            2012            %           2012       2011             %
                                                                                                                      
Revenues         $ 65.9         $ 50.4        31  %        $ 57.6          14 %      $ 240.5         $ 235.3          2   %
Expenses         (93.7   )      (131.2  )     (29 )%       (79.1   )       18 %      (326.9  )       (375.7   )       (13 )%
Other income     19.5           20.4          (5  )%       10.0            95 %      62.9            41.8             51  %
(loss)
Income tax
benefit          —             2.4          NM           (0.2    )       NM        (0.4    )       20.1            NM
(expense)
Net income
(loss) from      $ (8.2  )      $ (58.0 )     NM           $ (11.6 )       NM        $ (24.0 )       $ (78.5  )       NM
continuing
operations
                                                                                                                      
Net income
(loss) from
discontinued     —              (18.6   )     NM           —               NM        —               (23.6    )       NM
operations,
net of tax
Net income
(loss) loss
attributable
to               1.2           3.4          NM           (1.0    )       NM        (0.1    )       5.8             NM
noncontrolling
interests in
consolidated
subsidiaries
Net income
(loss)
attributable     $ (9.3  )      $ (79.9 )     NM           $ (10.6 )       NM        $ (23.9 )       $ (108.0 )       NM
to Cowen
Group, Inc.
                                                                                                                      
Earnings
(loss) per
basic share:
Income (loss)
from             $ (0.08 )      $ (0.53 )     NM           $ (0.09 )       NM        $ (0.21 )       $ (0.88  )       NM
continuing
operations
Income (loss)
from             $ 0.00         $ (0.16 )     NM           $ —             NM        $ 0.00          $ (0.25  )       NM
discontinued
operations
Note: Amounts
may not add
due to
rounding.
                                                                                                                      

The Company’s stockholders’ equity as of December31, 2012, was $495.1
million, or book value per share of $4.40, compared to stockholders’ equity of
$508.5 million, or book value per share of $4.46, as of December31, 2011. At
December31, 2012, the Company’s tangible book value per share was $4.04
compared to $4.23 at December31, 2011.

                          Select Balance Sheet Data

(Dollar amounts in
millions, except per    December 31,    September 30,    December 31,
share information)
                           2012               2012                2011
Stockholders' equity       $    495.1         $   504.0           $    508.5
Tangible                   $    453.6         $   466.1           $    482.7
stockholders' equity
Common shares              112.4              114.0               114.0
outstanding
                                                                  
Book value per share       $    4.40          $   4.42            $    4.46
Tangible book value        $    4.04          $   4.09            $    4.23
per share
                                                                       

Economic Income (Loss)

Throughout the remainder of this press release the Company presents Economic
Income financial measures that are not prepared in accordance with Generally
Accepted Accounting Principles (“GAAP”). In general, Economic Income (Loss) is
a pre-tax measure that (i)eliminates the impact of consolidation for
consolidated funds, (ii)excludes equity award expense related to the November
2009 Ramius/Cowen transaction, (iii)excludes certain other
acquisition-related and/or reorganization expenses (including the discontinued
operations of LaBranche), (iv) excludes goodwill impairment and (v)excludes
the bargain purchase gain which resulted from the LaBranche acquisition. In
addition, Economic Income (Loss) revenues include investment income that
represents the income the Company has earned in investing its own capital,
including realized and unrealized gains and losses, interest and dividends,
net of associated investment related expenses. For USGAAP purposes, these
items are included in each of their respective line items. Economic Income
(Loss) revenues also include management fees, incentive income and investment
income earned through the Company's investment as a general partner in certain
real estate entities and the Company's investment in the Value and Opportunity
business. For USGAAP purposes, all of these items are recorded in other
income (loss). In addition, Economic Income (Loss) expenses are reduced by
reimbursement from affiliates, which for USGAAP purposes is presented gross
as part of revenue.

For a more complete description of Economic Income (Loss) and a reconciliation
of GAAP net income (loss) to Economic Income (Loss) for the periods presented
and additional information regarding the reconciling adjustments, please see
the “Non-GAAP Financial Measures” section of this press release.

The table below summarizes the Company’s Economic Income financial results for
the three months ended December31, 2012 and 2011, and September30, 2012; and
the twelve months ended December31, 2012 and 2011.

             Summary Economic Income (Loss) Financial Information

(Dollar amounts  Three Months Ended                                                  Twelve Months Ended                
in millions,
except per        December 31,                           Sept 30,                December 31,                
share
information)      2012         2011            %            2012            %          2012         2011            %
                                                                                                                          
Revenues          $ 77.2          $ 70.9          9   %        $ 66.0          17 %       $ 288.6         $ 270.2         7  %
Expenses          (86.4   )       (105.8  )       (18 )%       (74.6   )       16 %       (306.0  )       (335.6  )       (9 )%
Net Economic
Income (Loss)
before            (9.2    )       (35.0   )       NM           (8.6    )       NM         (17.3   )       (65.4   )       NM
non-controlling
interests
Economic Income   $ (8.5  )       $ (38.3 )       NM           $ (8.9  )       NM         $ (17.6 )       $ (71.4 )       NM
(Loss)
                                                                                                                          
Economic Income
(Loss) per        $ (0.07 )       $ (0.33 )       NM           $ (0.08 )       NM         $ (0.15 )       $ (0.75 )       NM
share
                                                                                                                          
Economic Income
(Loss)
excluding         $ (2.3  )       $ (30.3 )       NM           $ (0.8  )       NM         $ 11.7         $ (44.0 )       NM
certain
non-cash items
Note: Amounts may not add due to rounding.
                                                                                                                          

2012 Fourth Quarter and Full-Year Economic Income Review

Total Economic Income Revenue

Total Economic Income Revenue for the fourth quarter 2012 was $77.2 million, a
9% increase compared to $70.9 million in the fourth quarter 2011. The increase
in Economic Income revenue was primarily the result of an increase in
investment banking revenue and incentive income, partially offset by a
decrease in management fees and investment income.

For the 2012 full year, total Economic Income Revenue increased by 7% to
$288.6 million from $270.2 million in 2011. The increase was primarily the
result of an increase in investment banking revenue, investment income and
incentive income, partially offset by a decrease in management fees and
brokerage revenue.

                           Economic Income Revenue

                Three Months Ended                                                                   Twelve Months Ended                         
                     December 31,                                 Sept 30,                       December 31,                      
(Dollar
amounts in           2012          2011               %                2012               %                2012           2011                %
millions)
                                                                                                                                                        
Investment           $ 21.2             $ 11.1             90  %            $ 18.7             13  %            $ 71.8              $ 51.0              41  %
banking
Brokerage            22.4               21.7               3   %            22.7               (1  )%           93.9                99.6                (6  )%
Management           14.3               19.2               (25 )%           13.4               7   %            56.4                67.3                (16 )%
fees
Incentive            6.9                0.1                NM               1.7                306 %            15.2                10.4                47  %
income
Investment           11.8               18.5               (36 )%           9.2                28  %            50.1                41.3                21  %
income
Other                0.6               0.1               NM               0.4               NM               1.2                0.6                103 %
revenue
Total                $ 77.2            $ 70.9            9   %            $ 66.0            17  %            $ 288.6            $ 270.2            7   %
Revenues
Note: Amounts may not add due to rounding.
                                                                                                                                                            

Compensation and Benefits Expense

Fourth quarter 2012 compensation and benefits expense was $56.6 million, a 16%
decrease compared to $67.5 million in the fourth quarter 2011. This was
primarily attributable to lower variable compensation and reduced severance
expense. Total headcount at the end of the fourth quarter 2012 was 591, which
was approximately flat compared to the prior year period and the third quarter
of 2012.

The compensation to Economic Income revenue ratio decreased to 73% in the
current quarter from 95% in the prior year period. Compensation and benefits
expense for the fourth quarter 2012 and 2011 included $3.7 million and $5.7
million, respectively, in share-based compensation expense. Compensation and
benefits expense excludes equity award expense related to the 2009 Cowen /
Ramius business combination of $0.4 million and $2.5 million in the fourth
quarter 2012 and 2011, respectively.

Excluding $1.4 million of expenses associated with activities for which the
Company is reimbursed and $1.0 million of severance expense, compensation and
benefits expense was 70% of Economic Income revenue in the fourth quarter
2012. Excluding these same two items, compensation and benefits expense was
78% and 61% of Economic Income revenue in the prior year period and third
quarter 2012, respectively.

For the full year 2012, compensation and benefits expense decreased $4.4
million to $190.4 million in 2012 compared to $194.8 million in 2011. This was
primarily attributable to lower variable compensation and severance expense
partially offset by investments in new professionals.

The compensation to Economic Income revenue ratio improved to 66% in 2012 from
the 2011 compensation to Economic Income revenue ratio of 72%. Compensation
and benefits expense for the full year 2012 and 2011 included $19.9 million
and $18.6 million, respectively in share-based compensation expense.
Compensation and benefits expense excludes equity award expense related to the
2009 Cowen / Ramius business combination of $4.9 million and $9.7 million in
the 2012 and 2011 respective periods.

Excluding $5.5 million of expenses associated with activities for which the
Company is reimbursed and $6.9 million of severance expense, compensation and
benefits expense was 62% of revenue for 2012 as compared to 65% for 2011.

The equity award expense related to the 2009 Cowen / Ramius business
combination ended during the fourth quarter 2012.

Fixed Non-Compensation Expenses

Fixed non-compensation expenses in the current quarter decreased by 13% to
$25.7 million as compared to $29.5 million in the comparable prior year
quarter. For the 2012 full year, fixed non-compensation expenses decreased by
7% to $95.5 million from $103.2 million in 2011. The decrease in both the
quarter and year was in line with our stated targets and was primarily due to
service fees and occupancy and equipment expenses related to our expense
reduction efforts.

Variable Non-Compensation Expenses

Variable non-compensation expenses were $5.5 million in the fourth quarter
2012, down 45% compared to $10.1 million in the fourth quarter 2011. For the
2012 full year, variable non-compensation expenses decreased 39% to $25.3
million from $41.5 million in 2011. This decrease in both the quarter and year
are attributable to syndication costs related to capital raising events by an
alternative investment asset fund in 2011, professional fees that were
incurred in the prior year relating to the potential acquisitions of
Luxembourg reinsurance companies and lower conference related expenses.

Total non-compensation expense reductions for the year were in line with
Company's previously stated targets outlined in 2012.

Alternative Investment Segment (“Ramius”)

Assets Under Management

As of January1, 2013, the Company had assets under management of $8.1
billion, which remained relatively constant during the 2012 fourth quarter and
decreased 2% for the year after adjusting for cash management. As previously
announced, given the current focus of the Company's alternative investment
management business and the areas where the Company believes it can achieve
long term growth and profitability, as of November 1, 2012, the Company is no
longer offering cash management services and transferred the remaining assets
to another asset manager in the fourth quarter 2012.

Including cash management assets, assets decreased 22% compared to assets
under management of $10.4 billion as of October1, 2012. Assets under
management declined 21% during the year from $10.3 billion at January 1, 2011.

Management Fees

In the fourth quarter 2012, management fees rose 7% to $14.3 million from the
third quarter of 2012. After adjusting for cumulative retrospective management
fees which were recognized in 2011 in our healthcare royalty funds as a result
of an increase in committed capital during the year, fourth quarter 2012
management fees were unchanged from the prior year period and declined 1% to
$56.4 million for the full year.

Total fourth quarter 2012 management fees decreased 25% compared to the fourth
quarter 2011. For the full year 2012 and 2011, management fees were $56.4
million and $67.3 million, respectively. The decline in both 2012 periods is
primarily attributable to the reduction in one-time fees from our healthcare
royalty fund described above. This decrease was partially offset by an
increase in management fees relating to our other hedge fund products.

The average annualized management fee charged in the fourth quarter 2012 was
0.62%, as compared to 0.49% in the third quarter and 0.71% in the prior year
period. The average annualized management fee for the full year 2012 was 0.55%
versus 0.65% for 2011.

Excluding cash management, the average annualized management fee charged
increased in the fourth quarter 2012 to 0.70% from 0.66% in the third quarter
and compares to 0.93% in the prior year period. The average annualized
management fee for the full year 2012 was 0.69% versus 0.84% for 2011. As
described previously, the majority of the year over year decline was
attributable to the one time reduction in fees from the healthcare royalty
funds.

Incentive Income

Incentive income increased to $6.9 million in the fourth quarter 2012 from an
incentive fee of $0.1 million in the comparable prior year period. For the
2012 full year, incentive income rose to $15.2 million from $10.4 million in
the prior year. The increase in the fourth quarter and full year 2012 was
primarily related to an increase in performance fees from our hedge fund
products and was partially offset by a decrease in performance fees on our
real estate funds.

Investment Income

Investment income represents net revenues generated on our invested capital
and includes interest and dividend income received or accrued as well as
realized and unrealized gains/losses recognized during the period. In the
fourth quarter 2012, investment income decreased by $6.7 million to $11.8
million from $18.5 million in the prior year period. The year over year
decline was primarily related to a decrease in performance of the Company's
own invested capital driven by decreases in performance in certain investment
strategies including our activist, credit and event driven strategies.

For the year, investment income increased $8.8 million to $50.1 million,
compared with $41.3 million in 2011. The increase for the full year 2012 was
primarily related to an increase in performance of the Company's own invested
capital driven by increases in performance in certain investment strategies
including our activist, credit and event driven strategies. This was partially
offset by the recognition of deferred tax benefits in 2011.

Broker-Dealer Segment (“Cowen and Company”)

Brokerage

Brokerage revenue was $22.4 million in the fourth quarter 2012, an increase of
$0.7 million, or 3%, compared to the fourth quarter 2011. The increase in the
current quarter was due to an increase in fees earned related to the Company's
electronic trading business and Cowen Equity Finance Group ("CEFG", formerly
known as KDC Securities, which Cowen acquired in November 2012) partially
offset by a reduction in customer trading volumes and a lower per share
average commission.

For the 2012 full year, brokerage revenue was $93.9 million, representing a 6%
decrease compared to $99.6 million in 2011. The decline in the full year was
primarily attributable to lower commission revenues due to a reduction in
customer trading volumes and a lower per share average commission. This
decrease was partially offset by an increase in fees earned related to the
electronic trading business and CEFG.

Investment Banking

Investment banking revenue was $21.2 million in the fourth quarter 2012, an
increase of $10.1 million, or 90%, compared to $11.1 million in the fourth
quarter 2011. The increase was primarily due to an increase in equity
underwriting and debt capital markets activity.

  *Public equity underwriting revenue was $8.8 million from eleven
    transactions in the fourth quarter 2012, as compared to $7.6 million from
    four transactions in the comparable prior year period. Of these
    transactions, the Company completed seven lead managed assignments in the
    fourth quarter 2012, compared to two in the prior year period.

  *Debt capital markets revenue was $3.2 million from the completion of five
    transactions in the fourth quarter 2012. No transactions were closed in
    the prior year period.
  *Private placement and registered direct revenue was $3.6 million in the
    fourth quarter 2012, as compared to $1.3 million in the fourth quarter
    2011. The Company completed three private transactions in the fourth
    quarter 2012 as well as three in the prior year period.
  *Strategic advisory revenue was $5.6 million in the fourth quarter 2012, as
    compared to $2.1 million in the fourth quarter 2011. The Company completed
    three strategic advisory transactions in the fourth quarter 2012 as
    compared to one strategic advisory transaction in the prior year period.

For the full year 2012, investment banking revenue increased 41% to $71.8
million from $51.0 million in 2011. Transaction activity was up 54% with 74
transactions completed across all products in 2012, compared to 48 in 2011.
The increase in revenue was primarily due to an increase in equity
underwriting and debt capital markets activity.

  *Public equity underwriting revenue was $38.5 million from 48 transactions
    in 2012, as compared to $29.2 million from 29 transactions in 2011. The
    Company completed 21 lead managed equity underwriting assignments in 2012,
    compared to 10 in 2011.
  *Debt capital markets revenue was $14.5 million, from the completion of 12
    transactions in 2012, as compared to $1.8 million from the completion of 3
    transactions in the 2011.
  *Private placement and registered direct revenue was $8.7 million in 2012,
    as compared to $4.9 million in 2011. The Company completed 8 private
    transactions in both 2012 and 2011.
  *Strategic advisory revenue was $10.0 million in 2012, as compared to $15.0
    million in 2011. The Company completed 6 strategic advisory transactions
    in 2012 as compared to 8 strategic advisory transactions in 2011.

Earnings Conference Call with Management

The Company will host a conference call to discuss its 2012 fourth quarter
financial results on Thursday, February28, 2013, at 9:00 am EST. The call can
be accessed by dialing 1-866-356-4281 domestic or 1-617-597-5395
international. The passcode for the call is 87389279. A replay of the call
will be available beginning at 11:00 am EST February 28, 2013 through March 7,
2013. To listen to the replay of this call, please dial 1-888-286-8010
domestic or 1-617-801-6888 international and enter passcode 17313927. The call
can also be accessed through live audio webcast or by delayed replay on the
Company’s website at www.cowen.com.

About Cowen Group,Inc.

Cowen Group,Inc. is a diversified financial services firm and, together with
its consolidated subsidiaries, provides alternative investment, investment
banking, research, and sales and trading services through its two business
segments: Ramius and its affiliates make up the Company’s alternative
investment segment, while Cowen and Company is its broker-dealer segment. Its
alternative investment products, solutions and services include hedge funds,
replication products, managed futures funds, fund of funds, real estate and
health care royalty funds. Cowen and Company offers industry focused
investment banking for growth-oriented companies, domain knowledge-driven
research and a sales and trading platform for institutional investors. Founded
in 1918, the firm is headquartered in New York and has offices located in
major financial centers around the world.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements. Forward-looking
statements provide the Company’s current expectations or forecasts of future
events. Forward-looking statements include statements about the Company’s
expectations, beliefs, plans, objectives, intentions, assumptions and other
statements that are not historical facts. Forward-looking statements are
subject to known and unknown risks and uncertainties and are based on
potentially inaccurate assumptions that could cause actual results to differ
materially from those expected or implied by the forward-looking statements.
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
Form10-K and “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” in the Company’s Annual Report on Form10-K and
Quarterly Reports on Form10-Q, as filed with the Securities and Exchange
Commission. The Annual Report on Form10-K and Quarterly Reports on Form10-Q
are available at our website at www.cowen.com and at the Securities and
Exchange Commission website at www.sec.gov. Unless required by law, the
Company undertakes no obligation to publicly update or revise any
forward-looking statement to reflect circumstances or events after the date of
this press release.


Cowen Group, Inc.
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,
                    2012           2011           2012           2011     
Revenues
Investment          $               $               $               $ 50,976
banking             21,212          11,135          71,762
Brokerage           19,885          21,743          91,167          99,611
Management fees     9,601           14,667          38,116          52,466
Incentive           2,724           32              5,411           3,265
income
Interest and        9,763           976             24,608          22,306
dividends
Reimbursement       1,443           1,354           5,239           4,322
from affiliates
Other               1,270           353             3,668           1,583
Consolidated
Funds
Interest and        21              126             136             569
dividends
Other               14             9              373            180      
Total revenues      65,933         50,395         240,480        235,278  
Expenses
Employee
compensation        56,932          71,454          194,034         203,767
and benefits
Floor brokerage
and trade           3,692           4,192           14,684          16,475
execution
Interest and        4,872           1,212           11,760          8,839
dividends
Professional,
advisory and        5,181           8,101           16,339          33,702
other fees
Service fees        3,083           4,573           11,281          16,365
Communications      3,929           5,478           15,704          16,350
Occupancy and       5,493           10,364          22,087          27,887
equipment
Depreciation
and                 2,492           8,982           9,437           15,472
amortization
Client services
and business        2,980           4,382           14,069          16,725
development
Goodwill            —               7,151           —               7,151
impairment
Other               4,691           5,133           15,829          10,140
Consolidated
Funds
Interest and        —               10              22              147
dividends
Professional,
advisory and        249             61              1,361           2,136
other fees
Floor brokerage
and trade           —               —               —               —
execution
Other               88             76             293            499      
Total expenses      93,682         131,169        326,900        375,655  
Other income
(loss)
Net (losses)
gains on
securities,         13,696          19,759          55,665          15,128
derivatives and
other
investments
Bargain             —               —               —               22,244.0
purchase gain
Consolidated
Funds net
(losses) gains:
Net realized
and unrealized
(losses) gains      5,559           792             6,376           4,925
on investments
and other
transactions
Net realized
and unrealized      251             (127    )       877             (583     )
(losses) gains
on derivatives
Net (losses)
gains on
foreign             (1      )       13             (7      )       53       
currency
transactions
Total other         19,505          20,437          62,911          41,767
income (loss)
                                                                 
Income (loss)
before income       (8,244  )       (60,337 )       (23,509 )       (98,610  )
taxes
Income tax
(benefit)           (48     )       (2,353  )       448            (20,073  )
expense
Net income
(loss) from         (8,196  )       (57,984 )       (23,957 )       (78,537  )
continuing
operations
Net income
(loss) from
discontinued        —              (18,559 )       —              (23,646  )
operations, net
of tax
Net income          (8,196  )       (76,543 )       (23,957 )       (102,183 )
(loss)
Net income
(loss)
attributable to
noncontrolling      1,153          3,354          (72     )       5,827    
interests in
consolidated
subsidiaries
Net income
(loss)
attributable to     $       )       $       )       $       )       $        )
Cowen Group,        (9,349          (79,897         (23,885         (108,010
Inc.
stockholders
                                                                    
Earnings (loss)
per share:
Basic
Income (loss)
from continuing     $ (0.08 )       $ (0.53 )       $ (0.21 )       $ (0.88  )
operations
Income (loss)
from                $ —             $ (0.16 )       $ —             $ (0.25  )
discontinued
operations
                                                                    
Diluted
Income (loss)
from continuing     $ (0.08 )       $ (0.53 )       $ (0.21 )       $ (0.88  )
operations
Income (loss)
from                $ —             $ (0.16 )       $ —             $ (0.25  )
discontinued
operations
                                                                    
Weighted
average shares
used in per
share data:
Basic               113,939         114,686         114,400         95,532
Diluted             113,939         114,686         114,400         95,532
                                                                             

                         Non-GAAP Financial Measures

In addition to the results presented above in accordance with generally
accepted accounting principles, or GAAP, the Company presents financial
measures that are non-GAAP measures, such as Economic Income (Loss) and
Economic Income (Loss) excluding certain non-cash items. The Company believes
that these non-GAAP measures, viewed in addition to, and not in lieu of, the
Company’s reported GAAP results, provide useful information to investors
regarding its performance and overall results of operations. These metrics are
an integral part of the Company’s internal reporting to measure the
performance of its businesses and the overall effectiveness of senior
management. Reconciliations to comparable GAAP measures are available in the
accompanying schedules. The non-GAAP measures presented herein may not be
comparable to similarly titled measures presented by other public companies,
and are not identical to corresponding measures used in our various agreements
or public filings.

Economic Income (Loss)

Economic Income (Loss) may not be comparable to similarly titled measures used
by other public companies. Cowen uses Economic Income (Loss) as a measure of
its operating performance, not as a measure of liquidity. Economic Income
(Loss) should not be considered in isolation or as a substitute for operating
income, net income, operating cash flows, investing and financing activities,
or other income or cash flow statement data prepared in accordance with GAAP.
As a result of the adjustments made to arrive at Economic Income (Loss)
described below, Economic Income (Loss) has limitations in that it does not
take into account certain items included or excluded under GAAP, including its
consolidated funds. Economic Income (Loss) is considered by management as a
supplemental measure to the GAAP results to provide a more complete
understanding of its performance as management measures it.

The primary differences between GAAP net income (loss) and Economic Income
(Loss) are that in reporting Economic Income (Loss), the Company:
(i)eliminates the impact of consolidation for consolidated funds,
(ii)excludes equity award expense related to the November 2009 Ramius/Cowen
transaction, (iii)excludes certain other acquisition-related and/or
reorganization expenses (including the discontinued operations of LaBranche),
(iv) excludes goodwill impairment and (v)excludes the bargain purchase gain
which resulted from the LaBranche acquisition. In addition, Economic Income
(Loss) revenues include investment income that represents the income the
Company has earned in investing its own capital, including realized and
unrealized gains and losses, interest and dividends, net of associated
investment related expenses. For USGAAP purposes, these items are included in
each of their respective line items. Economic Income (Loss) revenues also
include management fees, incentive income and investment income earned through
the Company's investment as a general partner in certain real estate entities
and the Company's investment in the Value and Opportunity business. For
USGAAP purposes, all of these items are recorded in other income (loss). In
addition, Economic Income (Loss) expenses are reduced by reimbursement from
affiliates, which for USGAAP purposes is presented gross as part of revenue.

Additionally, we have reported in this press release our Economic Income
(Loss) excluding certain non-cash expenses. For this measure, we have adjusted
Economic Income (Loss) by the following non-cash expense items:

  *Depreciation and amortization, and
  *Share-based compensation expense.

Management believes that the non-GAAP calculation of Economic Income (Loss)
excluding certain non-cash items will allow for a better understanding of the
Company’s operating results.



Cowen Group, Inc.
Unaudited Economic Income (Loss)
(Dollar amounts in thousands)
                                                           
                    Three Months Ended             Twelve Months Ended
                    December 31,                   December 31,
                    2012           2011            2012            2011
Revenues
Investment          $ 21,212       $ 11,135        $ 71,762        $ 50,976
banking
Brokerage           22,424         21,743          93,903          99,611
Management fees     14,349         19,247          56,381          67,309
Incentive income    6,902          149             15,205          10,366
Investment income   11,770         18,466          50,116          41,347
Other revenue       554           129            1,248          615       
Total revenues      77,211         70,869          288,615         270,224
Expenses
Employee
compensation and    56,602         67,506          190,405         194,808
benefits
Interest and        61             118             339             735
dividends
Fixed
non-compensation    25,714         29,506          95,462          103,181
expenses
Variable
non-compensation    5,542          10,118          25,275          41,497
expenses
Reimbursement       (1,509   )     (1,416    )     (5,527    )     (4,602    )
from affiliates
Total expenses      86,410        105,832        305,954        335,619   
Net Economic
Income (Loss)
before              (9,199   )     (34,963   )     (17,339   )     (65,395   )
non-controlling
Interests
Non-controlling     670           (3,292    )     (230      )     (6,042    )
interests
Economic Income     $ (8,529 )     $ (38,255 )     $ (17,569 )     $ (71,437 )
(Loss)
                                                                   
Economic Income
(Loss) Excluding                                             
Certain Non-cash
Items
                                                                   
Economic Income     $ (8,529 )     $ (38,255 )     $ (17,569 )     $ (71,437 )
(Loss)
Exclusion of
depreciation and    2,486          2,250           9,422           8,740
amortization
expense
Exclusion of
share-based         3,739         5,657          19,853         18,650    
compensation
expense
Economic Income
(Loss) Excluding    $ (2,304 )     $ (30,348 )     $ 11,706       $ (44,048 )
Certain Non-cash
Items
                                                                             


Cowen Group, Inc.
Unaudited Reconciliation of Economic Income and GAAP Income for the Three
Months Ended December 31, 2012
(Dollar amounts in thousands)
                                                                 
                  Three Months Ended December 31, 2012
                                 Adjustments
                                 Other              Funds           Economic
                  GAAP           Adjustments        Consolidation   Income
Revenues
Investment        $  21,212      $    —             $    —          $ 21,212
banking
Brokerage         19,885         2,539       (e)    —               22,424
Management fees   9,601          4,424       (a)    324             14,349
Incentive income  2,724          4,178       (a)    —               6,902
Investment income —              11,770      (c)    —               11,770
Interest and      9,763          (9,763    ) (c)    —               —
dividends
Reimbursement     1,443          (1,509    ) (b)    66              —
from affiliates
Other revenue     1,270          (716      ) (c)    —               554
Consolidated      35            —                 (35       )     —        
Funds
Total revenues    65,933         10,923             355             77,211
                                                                    
Expenses
Compensation &    56,932         (330      )        —               56,602
Benefits
Interest and      4,872          (4,811    ) (c)    —               61
dividends
Non-compensation  —              25,714      (c)(d) —               25,714
expenses - Fixed
Non-compensation
expenses -        —              5,542       (c)(d) —               5,542
Variable
Non-compensation  31,541         (31,541   ) (c)(d) —               —
expenses
Reimbursement     —              (1,509    ) (b)    —               (1,509   )
from affiliates
Consolidated      337           —                 (337      )     —        
Funds
Total expenses    93,682         (6,935    )        (337      )     86,410
                  —              —
Other income
(loss)
Net gains
(losses) on
securities,       13,696         (13,696   ) (c)    —               —
derivatives and
other investments
Consolidated
Funds net gains   5,809         (3,372    )        (2,437    )     —        
(losses)
Total other       19,505         (17,068   )        (2,437    )     —
income (loss)
                  —             —                                
Income (loss)
before income
taxes and         (8,244     )   790                (1,745    )     (9,199   )
non-controlling
interests
                  —              —
Income taxes      (48        )   48         (b)    —              —        
(Benefit)
Economic Income
(Loss) / Net
income (loss)     (8,196     )   742                (1,745    )     (9,199   )
before
non-controlling
interests
                  —              —
(Income) loss
attributable to
non-controlling   (1,153     )   78                1,745          670      
interests in
consolidated
subsidiaries
Economic Income
(Loss) / Net
income (loss)     $  (9,349  )   $    820          $    —         $ (8,529 )
available to
Cowen Group, Inc.
Stockholders
                                                                    
Note: The following is a summary of the adjustments made to US GAAP net income
(loss) to arrive at Economic Income:
                                                                    
Funds Consolidation: The impacts of consolidation and 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 and addition of fund expenses excluding management
fees paid, fund revenues and investment income (loss).
                                                                    
Other
Adjustments:
(a) Economic Income 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 activist business.
(b) Economic Income excludes income taxes as management does not consider this
item when evaluating the performance of the segment. Also, reimbursement from
affiliates is shown as a reduction of Economic Income expenses, but is
included as a part of revenues under US GAAP.
(c) Economic Income recognizes Company income from proprietary trading net of
related expenses.
(d) Economic Income recognizes Companies proportionate share of expenses for
certain real estate and other operating entities for which the investments are
recorded under the equity method of accounting for investments.
(e) Economic Income (Loss) recognizes stock borrow/loan activity and other
brokerage dividends as brokerage revenue.



Cowen Group, Inc.
Unaudited Reconciliation of Economic Income and GAAP Income for the Three
Months Ended December 31, 2011
(Dollar amounts in thousands)
                                                                
                   Three Months Ended December 31, 2011
                                 Adjustments
                                 Other              Funds           Economic
                   GAAP          Adjustments        Consolidation   Income
Revenues
Investment         $ 11,135      $  —               $    —          $ 11,135
banking
Brokerage          21,743        —                  —               21,743
Management fees    14,667        4,178       (a)    402             19,247
Incentive income   32            117         (a)    —               149
Investment         —             18,466      (c)    —               18,466
income
Interest and       976           (976      ) (c)    —               —
dividends
Reimbursement      1,354         (1,417    ) (b)    63              —
from affiliates
Other revenue      353           (224      ) (c)    —               129
Consolidated       135          —                 (135      )     —         
Funds
Total revenues     50,395        20,144             330             70,869
                                                                    
Expenses
Compensation &     71,454        (3,948    )        —               67,506
Benefits
Interest and       1,212         (1,094    ) (c)    —               118
dividends
Non-compensation   —             29,506      (c)(d) —               29,506
expenses - Fixed
Non-compensation
expenses -         —             10,118      (c)(d) —               10,118
Variable
Non-compensation   51,205        (51,205   ) (c)(d) —               —
expenses
Goodwill           7,151         (7,151    )        —               —
impairment
Reimbursement      —             (1,416    ) (b)    —               (1,416    )
from affiliates
Consolidated       147          —                 (147      )     —         
Funds
Total expenses     131,169       (25,190   )        (147      )     105,832
                                                                    
Other income
(loss)
Net gains
(losses) on
securities,        19,759        (19,759   ) (c)    —               —
derivatives and
other
investments
Bargain purchase   —             —           (e)    —               —
gain
Consolidated
Funds net gains    678          (762      )        84             —         
(losses)
Total other        20,437        (20,521   )        84              —
income (loss)
                                                                 
Income (loss)
before income
taxes and          (60,337   )   24,813             561             (34,963   )
non-controlling
interests
                                                                    
Income taxes       (2,353    )   2,353      (b)    —              —         
(Benefit)
Economic Income
(Loss) / Net
income (loss)      (57,984   )   22,460             561             (34,963   )
before
non-controlling
interests
                                                                    
Net income
(loss) from
discontinued       (18,559   )   18,559      (f)    —               —
operations, net
of tax
(Income) loss
attributable to
non-controlling    (3,354    )   623               (561      )     (3,292    )
interests in
consolidated
subsidiaries
Economic Income
(Loss) / Net
income (loss)
available to       $ (79,897 )   $  41,642         $    —         $ (38,255 )
Cowen Group,
Inc.
Stockholders
                                                                    
Note: The following is a summary of the adjustments made to US GAAP net income
(loss) to arrive at Economic Income:
                                                                    
Funds Consolidation: The impacts of consolidation and 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 and addition of fund expenses excluding management
fees paid, fund revenues and investment income (loss).
Other
Adjustments:
(a) Economic Income 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.
(b) Economic Income excludes goodwill impairment and income taxes as management
does not consider this item when evaluating the performance of the segment.
Also, reimbursement from affiliates is shown as a reduction of Economic Income
expenses, but is included as a part of revenues under US GAAP.
(c) Economic Income recognizes Company income from proprietary trading net of
related expenses.
(d) Economic Income recognizes Companies proportionate share of expenses for
certain real estate and other operating entities for which the investments are
recorded under the equity method of accounting for investments.
(e) Economic Income excludes the bargain purchase gain which resulted from the
LaBranche acquisition.
(f) Economic Income excludes discontinued operations.



Cowen Group, Inc.
Unaudited Reconciliation of Economic Income and GAAP Income for the Twelve
Months Ended December 31, 2012
(Dollar amounts in thousands)
                                                                
                   Twelve Months Ended December 31, 2012
                                 Adjustments
                                 Other              Funds           Economic
                   GAAP          Adjustments        Consolidation   Income
Revenues
Investment         $ 71,762      $   —              $     —         $ 71,762
banking
Brokerage          91,167        2,736       (e)    —               93,903
Management fees    38,116        16,791      (a)    1,474           56,381
Incentive income   5,411         9,794       (a)    —               15,205
Investment         —             50,116      (c)    —               50,116
income
Interest and       24,608        (24,608   ) (c)    —               —
dividends
Reimbursement      5,239         (5,527    ) (b)    288             —
from affiliates
Other revenue      3,668         (2,420    ) (c)    —               1,248
Consolidated       509          —                 (509      )     —         
Funds
Total revenues     240,480       46,882             1,253           288,615
                                                                    
Expenses
Compensation &     194,034       (3,629    )        —               190,405
Benefits
Interest and       11,760        (11,421   ) (c)    —               339
dividends
Non-compensation   —             95,462      (c)(d) —               95,462
expenses - Fixed
Non-compensation
expenses -         —             25,275      (c)(d) —               25,275
Variable
Non-compensation   119,430       (119,430  ) (c)(d) —               —
expenses
Reimbursement      —             (5,527    ) (b)    —               (5,527    )
from affiliates
Consolidated       1,676        —                 (1,676    )     —         
Funds
Total expenses     326,900       (19,270   )        (1,676    )     305,954
                   —             —
Other income
(loss)
Net gains
(losses) on
securities,        55,665        (55,665   ) (c)    —               —
derivatives and
other
investments
Consolidated
Funds net gains    7,246        (4,690    )        (2,556    )     —         
(losses)
Total other        62,911        (60,355   )        (2,556    )     —
income (loss)
                   —            —                                
Income (loss)
before income
taxes and          (23,509   )   5,797              373             (17,339   )
non-controlling
interests
                   —             —
Income taxes       448          (448      ) (b)    —              —         
(Benefit)
Economic Income
(Loss) / Net
income (loss)      (23,957   )   6,245              373             (17,339   )
before
non-controlling
interests
                   —             —
(Income) loss
attributable to
non-controlling    72           71                (373      )     (230      )
interests in
consolidated
subsidiaries
Economic Income
(Loss) / Net
income (loss)
available to       $ (23,885 )   $   6,316         $     —        $ (17,569 )
Cowen Group,
Inc.
Stockholders
                                                                    
Note: The following is a summary of the adjustments made to US GAAP net income
(loss) to arrive at Economic Income:
                                                                    
Funds Consolidation: The impacts of consolidation and 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 and addition of fund expenses excluding management
fees paid, fund revenues and investment income (loss).
                                                                    
Other
Adjustments:
(a) Economic Income 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 activist business.
(b) Economic Income excludes income taxes as management does not consider this
item when evaluating the performance of the segment. Also, reimbursement from
affiliates is shown as a reduction of Economic Income expenses, but is included
as a part of revenues under US GAAP.
(c) Economic Income recognizes Company income from proprietary trading net of
related expenses.
(d) Economic Income recognizes Companies proportionate share of expenses for
certain real estate and other operating entities for which the investments are
recorded under the equity method of accounting for investments.
(e) Economic Income (Loss) recognizes stock borrow/loan activity and other
brokerage dividends as brokerage revenue.



Cowen Group, Inc.
Unaudited Reconciliation of Economic Income and GAAP Income for the Twelve
Months Ended December 31, 2011
(Dollar amounts in thousands)
                                                                 
                   Twelve Months Ended December 31, 2011
                                  Adjustments
                                  Other              Funds           Economic
                   GAAP           Adjustments        Consolidation   Income
Revenues
Investment         $ 50,976       $  —               $     —         $ 50,976
banking
Brokerage          99,611         —                  —               99,611
Management fees    52,466         13,034      (a)    1,809           67,309
Incentive income   3,265          7,101       (a)    —               10,366
Investment         —              41,347      (c)    —               41,347
income
Interest and       22,306         (22,306   ) (c)    —               —
dividends
Reimbursement      4,322          (4,602    ) (b)    280             —
from affiliates
Other revenue      1,583          (968      ) (c)    —               615
Consolidated       749           —                 (749      )     —         
Funds
Total revenues     235,278        33,606             1,340           270,224
                                                                     
Expenses
Compensation &     203,767        (8,959    )        —               194,808
Benefits
Interest and       8,839          (8,104    ) (c)    —               735
dividends
Non-compensation   —              103,181     (c)(d) —               103,181
expenses - Fixed
Non-compensation
expenses -         —              41,497      (c)(d) —               41,497
Variable
Non-compensation   153,116        (153,116  ) (c)(d) —               —
expenses
Goodwill           7,151          (7,151    )        —               —
impairment
Reimbursement      —              (4,602    ) (b)    —               (4,602    )
from affiliates
Consolidated       2,782         —                 (2,782    )     —         
Funds
Total expenses     375,655        (37,254   )        (2,782    )     335,619
                                                                     
Other income
(loss)
Net gains
(losses) on
securities,        15,128         (15,128   ) (c)    —               —
derivatives and
other
investments
Bargain purchase   22,244         (22,244   ) (e)    —               —
gain
Consolidated
Funds net gains    4,395         (1,448    )        (2,947    )     —         
(losses)
Total other        41,767         (38,820   )        (2,947    )     —
income (loss)
                                                                  
Income (loss)
before income
taxes and          (98,610    )   32,040             1,175           (65,395   )
non-controlling
interests
                                                                     
Income taxes       (20,073    )   20,073     (b)    —              —         
(Benefit)
Economic Income
(Loss) / Net
income (loss)      (78,537    )   11,967             1,175           (65,395   )
before
non-controlling
interests
                                                                     
Net income
(loss) from
discontinued       (23,646    )   23,646      (f)    —               —
operations, net
of tax
(Income) loss
attributable to
non-controlling    (5,827     )   960               (1,175    )     (6,042    )
interests in
consolidated
subsidiaries
Economic Income
(Loss) / Net
income (loss)
available to       $ (108,010 )   $  36,573         $     —        $ (71,437 )
Cowen Group,
Inc.
Stockholders
                                                                     
Note: The following is a summary of the adjustments made to US GAAP net income
(loss) to arrive at Economic Income:
Funds Consolidation: The impacts of consolidation and 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 and addition of fund expenses excluding management
fees paid, fund revenues and investment income (loss).
Other
Adjustments:
(a) Economic Income 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.
(b) Economic Income excludes goodwill impairment and income taxes as management
does not consider this item when evaluating the performance of the segment.
Also, reimbursement from affiliates is shown as a reduction of Economic Income
expenses, but is included as a part of revenues under US GAAP.
(c) Economic Income recognizes Company income from proprietary trading net of
related expenses.
(d) Economic Income recognizes Companies proportionate share of expenses for
certain real estate and other operating entities for which the investments are
recorded under the equity method of accounting for investments.
(e) Economic Income excludes the bargain purchase gain which resulted from the
LaBranche acquisition.

Contact:

Cowen Group,Inc.
Stephen Lasota, 212-845-7919
 
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