Cowen Group, Inc. Announces 2013 First Quarter Financial Results

  Cowen Group,Inc. Announces 2013 First Quarter Financial Results

Business Wire

NEW YORK -- May 03, 2013

Cowen Group,Inc. (NASDAQ: COWN) (“Cowen” or “Company”) today announced its
operating results for the first quarter ended March31, 2013.

2013 First Quarter Highlights^(1)

  *First quarter 2013 revenue was $74.9 million, compared to $79.2 million in
    the prior year period.
  *The broker-dealer segment reported its highest quarterly revenue since the
    Cowen / Ramius business combination in 2009. First quarter revenue rose 7%
    year over year to $47.2 million^(2).
  *Brokerage revenue of $28.0 million was its highest revenue since the
    second quarter 2010. The 17% year over year increase was primarily
    attributable to improvements in the electronic trading and cash equities
    businesses.
  *Assets under management at April1, 2013 were $8.9 billion, an increase of
    $860 million since January 1, 2013.
  *On March 11, Cowen completed its previously announced acquisition of
    Dahlman Rose & Company, LLC, 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, "Our first quarter
operating results show that we have continued to make progress. At Cowen and
Company, our improvement is evidenced by continued increases in revenue
despite the difficult market in equity trading volumes. In addition, the
inclusion of costs associated with the Dahlman Rose acquisition impacted the
quarter but we are pleased with the positive effect that the Dahlman franchise
is beginning to have in our combined organization. At Ramius, we started to
see the fruits of the rebuilding of the business with new assets of $860
million raised during the quarter and good performance from our funds."

2013 First Quarter GAAP Financial Information and Select Balance Sheet Data

For the first quarter 2013, the Company reported a GAAP net loss of $2.6
million, or $(0.02) per share, as compared to a GAAP net income of $4.0
million, or $0.03 per share, in the first quarter 2012. The year-over-year
decrease was primarily due to an increase in interest and dividend expense as
well as general and administrative and other expense.

The following table summarizes the Company’s GAAP financial results for the
three months ended March31, 2013 and 2012, and December31, 2012.

Summary GAAP Financial Information

(Dollar
amounts in        Three Months Ended
millions,
except per
share                March 31,                Dec 31,
information)
                     2013        2012         %        2012        %
                                                                         
Revenues             $ 67.2        $ 57.5       17  %      $ 65.9        2   %
Expenses             (83.1   )     (76.7  )     8   %      (93.7   )     (11 )%
Other income         17.0          25.6         (34 )%     19.5          (13 )%
(loss)
Income tax
benefit              (0.2    )     (0.1   )     24  %      —            NM
(expense)
Net income
(loss) from          $ 0.9         $ 6.2        (85 )%     $ (8.2  )     NM
continuing
operations
                                                                         
Net income
(loss)
attributable
to
noncontrolling       3.5          2.2         56  %      1.2          191 %
interests
in
consolidated
subsidiaries
Net income
(loss)
attributable         $ (2.6  )     $ 4.0       NM         $ (9.3  )     (72 )%
to Cowen
Group, Inc.
                                                                         
Earnings
(loss) per
basic share:
Income (loss)
from                 $ (0.02 )     $ 0.03       NM         $ (0.08 )     NM
continuing
operations


Note: Amounts may not add due to rounding.

The Company’s stockholders’ equity as of March31, 2013, was $503.1 million,
or book value per share of $4.35, compared to stockholders’ equity of $495.1
million, or book value per share of $4.40, as of December31, 2012. At
March31, 2013, the Company’s tangible book value per share was $3.91 compared
to $4.04 as of December31, 2012.


Select Balance Sheet Data

(Dollar amounts in millions, except per share    March 31,   December 31,
information)
                                                    2013          2012
Stockholders' equity                                $  503.1      $    495.1
Tangible stockholders' equity                       $  452.0      $    453.6
Common shares outstanding                           115.7         112.4
                                                                  
Book value per share                                $  4.35       $    4.40
Tangible book value per share                       $  3.91       $    4.04


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, and (iii)excludes certain other
acquisition-related and/or reorganization expenses. 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 March31, 2013 and 2012, and December31, 2012.

Summary Economic Income (Loss) Financial Information

(Dollar amounts    Three Months Ended
in millions,
except per            March 31,                Dec 31,
share
information)          2013        2012         %        2012        %
                                                                          
Revenues              $ 74.9        $ 79.2       (5  )%     $ 77.2        (3  )%
Expenses              (74.4   )     (73.0  )     2   %      (86.4   )     (14 )%
Net Economic
Income (Loss)
before                0.5          6.2         NM         (9.2    )     NM
non-controlling
interests
Economic Income       $ (1.3  )     $ 5.9       NM         $ (8.5  )     NM
(Loss)
                                                                          
Economic Income
(Loss) per            $ (0.01 )     $ 0.05      NM         $ (0.07 )     NM
share
                                                                          
Economic Income
(Loss)
excluding             $ 6.0        $ 12.6      (52 )%     $ (2.3  )     NM
certain
non-cash items


Note: Amounts may not add due to rounding.

2013 First Quarter Economic Income Review

Total Economic Income Revenue

Total economic income revenue for the first quarter 2013 was $74.9 million, a
5% decrease compared to $79.2 million in the first quarter 2012. The decrease
in economic income revenue was primarily the result of a decrease in
investment income, partially offset by an increase in investment banking,
brokerage and incentive income.


Economic Income Revenue

                   Three Months Ended
                      March 31,               Dec 31,
(Dollar amounts       2013       2012         %        2012       %
in millions)
                                                                        
Investment            $ 17.2       $ 15.6       10  %      $ 21.2       (19 )%
banking
Brokerage             28.0         24.0         17  %      22.4         25  %
Management fees       14.1         14.0         1   %      14.3         (1  )%
Incentive             5.1          4.0          27  %      6.9          (26 )%
income
Investment            10.9         21.1         (48 )%     11.8         (8  )%
income
Other revenue         (0.4   )     0.4         NM         (0.6   )     NM
Total Revenues        $ 74.9      $ 79.2      (5  )%     $ 77.2      (3  )%


Note: Amounts may not add due to rounding.

Compensation and Benefits Expense

First quarter 2013 compensation and benefits expense was $44.5 million, a 3%
decrease compared to $45.9 million in the first quarter 2012. The quarterly
compensation and benefits accrual was higher as a percent of revenue as
compared to the prior year's quarter, but a lower revenue total resulted in an
expense decrease. Total headcount at the end of the first quarter 2013 was
641, a 12% increase compared to the prior year period and up 9% compared to
the fourth quarter of 2012.

The compensation to economic income revenue ratio was 59% in the current
quarter compared to 58% in the prior year period. Compensation and benefits
expense for the first quarter 2013 and 2012 included $4.8 million and $4.5
million, respectively, in share-based compensation expense. There was no
equity award expense related to the 2009 Cowen / Ramius business combination
in the first quarter of 2013. However, in the first quarter 2012, compensation
and benefits excluded $1.4 million related to this equity award expense.

Excluding $1.4 million of expenses associated with activities for which the
Company is reimbursed and $2.3 million of severance expense, compensation and
benefits expense was 55% of Economic Income revenue in the first quarter 2013.
Excluding these same two items, compensation and benefits expense was 56% and
70% of Economic Income revenue in the prior year period and fourth quarter
2012, respectively.

Fixed Non-Compensation Expenses

Fixed non-compensation expenses in the current quarter increased by 12% to
$23.9 million as compared to $21.3 million in the comparable prior year
quarter. This was primarily due to increased communications and market data
services from the two acquisitions completed during second and fourth quarter
of 2012 and one completed during this quarter.

Variable Non-Compensation Expenses

Variable non-compensation expenses were $7.4 million in the first quarter
2013, up 7% compared to $6.9 million in the first quarter 2012. The increase
in floor brokerage and trade execution costs correspond to an increase in
revenue which generated increased trading costs.

Alternative Investment Segment (“Ramius”)

Assets Under Management

As of April1, 2013, the Company had assets under management of $8.9 billion,
which increased by $860 million or 11% during the 2013 first quarter compared
to assets under management of $8.1 billion as of January1, 2013. The key
drivers of this growth have been from our capabilities in alternative
solutions, activism and real estate.

Management Fees

In the first quarter 2013, management fees were $14.1 million compared to
$14.0 million in the prior year quarter. Overall fees remained generally
constant from the prior year.

The average annualized management fee charged in the first quarter 2013 was
0.67%, as compared to 0.68% in the fourth quarter and 0.70% in the prior year
period. 2012 figures exclude fees related to cash management assets.

Incentive Income

Incentive income increased to $5.1 million in the first quarter 2013 from an
incentive fee of $4.0 million in the prior year period. This increase was
primarily related to an increase in performance fees from our credit strategy.

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
first quarter 2013, investment income decreased by $10.2 million to $10.9
million from $21.1 million in the prior year period. The decrease primarily
relates to a decrease in the Company's own invested capital driven by
decreases in performance in certain investment strategies including our
credit, pipes and equities strategies.

Broker-Dealer Segment (“Cowen and Company”)

Brokerage

Brokerage revenue was $28.0 million in the first quarter 2013, an increase of
$4.0 million, or 17%, compared to the first quarter 2012. The increase in the
current quarter was primarily due to an increase in fees earned related to the
Company's electronic trading and cash equities business.

Investment Banking

Investment banking revenue was $17.2 million in the first quarter 2013, an
increase of $1.5 million, or 10%, compared to $15.6 million in the first
quarter 2012. The increase was primarily due to an increase in equity
underwriting and debt capital markets activity.

  *Public equity underwriting revenue was $9.6 million from ten transactions
    in the first quarter 2013, as compared to $11.9 million from sixteen
    transactions in the comparable prior year period. Of these transactions,
    the Company completed four lead managed assignments in the first quarter
    2013, compared to six in the prior year period.

  *Debt capital markets revenue was $3.7 million from the completion of two
    transactions in the first quarter 2013. Two transactions were completed in
    the prior year period totaling $1.3 million.
  *Private placement and registered direct revenue was $1.1 million in the
    first quarter 2013, as compared to $0.9 million in the first quarter 2012.
    The Company completed two private transactions in the first quarter 2013
    and one in the prior year period.
  *Strategic advisory revenue was $2.7 million in the first quarter 2013, as
    compared to $1.5 million in the first quarter 2012. The Company completed
    two strategic advisory transactions in the first quarter 2013 as compared
    to one strategic advisory transaction in the prior year period.

Earnings Conference Call with Management

The Company will host a conference call to discuss its 2013 first quarter
financial results on Friday, May3, 2013, at 9:00 am EST. The call can be
accessed by dialing 1-800-295-4740 domestic or 1-617-614-3925 international.
The passcode for the call is 15961309. A replay of the call will be available
beginning at 11:00 am EST May 3, 2013 through May 10, 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 93934002. 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 asset management,
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 Companyand its affiliates make up the
Company'sbroker-dealer segment. Ramius provides alternative asset management
solutions to a global client base and manages a significant portion of Cowen's
proprietary capital. Cowen and Companyand its affiliatesoffer 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
                                                     March 31,
                                                     2013           2012
Revenues
Investment banking                                   $ 17,166       $ 15,630
Brokerage                                            26,600         24,013
Management fees                                      9,493          9,717
Incentive income                                     2,611          691
Interest and dividends                               9,321          5,372
Reimbursement from affiliates                        1,485          1,045
Other                                                478            867
Consolidated Funds
Interest and dividends                               12             61
Other                                                75            84       
Total revenues                                       67,241        57,480   
Expenses
Employee compensation and benefits                   44,223         46,683
Floor brokerage and trade execution                  4,478          3,752
Interest and dividends                               6,418          1,724
Professional, advisory and other fees                3,853          3,925
Service fees                                         2,577          2,237
Communications                                       4,774          3,401
Occupancy and equipment                              5,719          5,242
Depreciation and amortization                        2,553          2,155
Client services and business development             4,099          3,826
Other                                                3,984          3,419
Consolidated Funds
Interest and dividends                               —              16
Professional, advisory and other fees                396            288
Floor brokerage and trade execution                  —              —
Other                                                38            71       
Total expenses                                       83,112        76,739   
Other income (loss)
Net (losses) gains on securities, derivatives        11,807         19,671
and other investments
Consolidated Funds net (losses) gains:
Net realized and unrealized (losses) gains on        5,070          5,964
investments and other transactions
Net realized and unrealized (losses) gains on        304            40
derivatives
Net (losses) gains on foreign currency               (215     )     (38      )
transactions
Total other income (loss)                            16,966         25,637
                                                                   
Income (loss) before income taxes                    1,095         6,378    
Income tax (benefit) expense                         176           142      
Net income (loss) from continuing operations         919           6,236    
Net income (loss)                                    919           6,236    
Net income (loss) attributable to
noncontrolling interests in consolidated             3,495         2,241    
subsidiaries
Net income (loss) attributable to Cowen Group,       $ (2,576 )     $ 3,995  
Inc. stockholders
                                                                    
Earnings (loss) per share:
Basic
Income (loss) from continuing operations             $ (0.02  )     $ 0.03
                                                                    
Diluted
Income (loss) from continuing operations             $ (0.02  )     $ 0.03
                                                                    
Weighted average shares used in per share
data:
Basic                                                113,798        114,281
Diluted                                              113,798        115,663


                         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, and (iii)excludes certain other acquisition-related and/or
reorganization expenses. 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
                                                     March 31,
                                                     2013           2012
Revenues
Investment banking                                   $ 17,166       $ 15,630
Brokerage                                            28,017         24,013
Management fees                                      14,144         14,020
Incentive income                                     5,126          4,022
Investment income                                    10,872         21,105
Other revenue                                        (440     )     384      
Total revenues                                       74,885         79,174
Expenses
Employee compensation and benefits                   44,521         45,909
Interest and dividends                               124            88
Fixed non-compensation expenses                      23,778         21,243
Variable non-compensation expenses                   7,351          6,875
Reimbursement from affiliates                        (1,420   )     (1,116   )
Total expenses                                       74,354        72,999   

Net Economic Income (Loss) before                    531            6,175
non-controlling Interests
Non-controlling interests                            (1,800   )     (300     )
Economic Income (Loss)                               $ (1,269 )     $ 5,875  
                                                                    
Economic Income (Loss) Excluding Certain                      
Non-cash Items


Economic Income (Loss)                               $ (1,269 )     $ 5,875
Exclusion of depreciation and amortization           2,541          2,154
expense
Exclusion of share-based compensation expense        4,752         4,548    
Economic Income (Loss) Excluding Certain             $ 6,024       $ 12,576 
Non-cash Items



Cowen Group, Inc.
Unaudited Reconciliation of Economic Income and GAAP Income for the Three Months
Ended March 31, 2013
(Dollar amounts in thousands)
                                                                 
                       Three Months Ended March 31, 2013
                                    Adjustments
                                    Other              Funds           Economic
                       GAAP         Adjustments        Consolidation   Income
Revenues
Investment             $ 17,166     $ —                $  —            $ 17,166
banking
Brokerage                26,600       1,417     (e)       —              28,017
Management fees          9,493        4,340     (a)       311            14,144
Incentive income         2,611        2,515     (a)       —              5,126
Investment               —            10,872    (c)       —              10,872
income
Interest and             9,321        (9,321  ) (c)       —              —
dividends
Reimbursement            1,485        (1,420  ) (b)       (65     )      —
from affiliates
Other revenue            478          (918    ) (c)       —              (440   )
Consolidated            87         —                 (87     )     —      
Funds
Total revenues           67,241       7,485               159            74,885
                                                                       
Expenses
Compensation &           44,223       298                 —              44,521
Benefits
Interest and             6,418        (6,294  ) (c)       —              124
dividends
Non-compensation         —            23,778    (c)(d)    —              23,778
expenses - Fixed
Non-compensation
expenses -               —            7,351     (c)(d)    —              7,351
Variable
Non-compensation         32,037       (32,037 ) (c)(d)    —              —
expenses
Reimbursement            —            (1,420  ) (b)       —              (1,420 )
from affiliates
Consolidated            434        —                 (434    )     —      
Funds
Total expenses           83,112       (8,324  )           (434    )      74,354
                         —            —
Other income
(loss)
Net gains
(losses) on
securities,              11,807       (11,807 ) (c)       —              —
derivatives and
other
investments
Consolidated
Funds net gains         5,159      (2,866  )          (2,293  )     —      
(losses)
Total other              16,966       (14,673 )           (2,293  )      —
income (loss)
                        —          —                              
Income (loss)
before income
taxes and                1,095        1,136               (1,700  )      531
non-controlling
interests
                         —            —
Income taxes            176        (176    ) (b)      —            —      
(Benefit)
Economic Income
(Loss) / Net
income (loss)            919          1,312               (1,700  )      531
before
non-controlling
interests
                         —            —
(Income) loss
attributable to
non-controlling         (3,495 )    (5      )          1,700        (1,800 )
interests in
consolidated
subsidiaries
Economic Income
(Loss) / Net
income (loss)
available to           $ (2,576 )   $ 1,307           $  —           $ (1,269 )
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 March 31, 2012
(Dollar amounts in thousands)
                                                                 
                       Three Months Ended March 31, 2012
                                    Adjustments
                                    Other              Funds           Economic
                       GAAP         Adjustments        Consolidation   Income
Revenues
Investment             $ 15,630     $ —                $  —            $ 15,630
banking
Brokerage                24,013       —                   —              24,013
Management fees          9,717        3,910     (a)       393            14,020
Incentive income         691          3,331     (a)       —              4,022
Investment               —            21,105    (c)       —              21,105
income
Interest and             5,372        (5,372  ) (c)       —              —
dividends
Reimbursement            1,045        (1,116  ) (b)       71             —
from affiliates
Other revenue            867          (483    ) (c)       —              384
Consolidated            145        —                 (145    )     —      
Funds
Total revenues           57,480       21,375              319            79,174
                                                                       
Expenses
Compensation &           46,683       (774    )           —              45,909
Benefits
Interest and             1,724        (1,636  ) (c)       —              88
dividends
Non-compensation         —            21,243    (c)(d)    —              21,243
expenses - Fixed
Non-compensation
expenses -               —            6,875     (c)(d)    —              6,875
Variable
Non-compensation         27,957       (27,957 ) (c)(d)    —              —
expenses
Goodwill                 —            —                   —              —
impairment
Reimbursement            —            (1,116  ) (b)       —              (1,116 )
from affiliates
Consolidated            375        —                 (375    )     —      
Funds
Total expenses           76,739       (3,365  )           (375    )      72,999
                                                                       
Other income
(loss)
Net gains
(losses) on
securities,              19,671       (19,671 ) (c)       —              —
derivatives and
other
investments
Consolidated
Funds net gains         5,966      (3,325  )          (2,641  )     —      
(losses)
Total other              25,637       (22,996 )           (2,641  )      —
income (loss)
                                                                    
Income (loss)
before income
taxes and                6,378        1,744               (1,947  )      6,175
non-controlling
interests
                                                                       
Income taxes            142        (142    ) (b)      —            —      
(Benefit)
Economic Income
(Loss) / Net
income (loss)            6,236        1,886               (1,947  )      6,175
before
non-controlling
interests
                                                                       
(Income) loss
attributable to
non-controlling         (2,241 )    (6      )          1,947        (300   )
interests in
consolidated
subsidiaries
Economic Income
(Loss) / Net
income (loss)
available to           $ 3,995     $ 1,880           $  —           $ 5,875  
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.


Contact:

Cowen Group,Inc.
Stephen Lasota, 212-845-7919
Chief Financial Officer