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Pzena Investment Management, Inc. Reports Results For The Second Quarter Of 2010

Diluted net income generally assumes that all dilutive operating company membership units are converted into Company stock at the beginning of the reporting period and the resulting change to Company income associated with its increased interest in the operating company is taxed at the Company’s effective rate. When this conversion results in an increase in earnings per share or a decrease in loss per share, diluted net income and diluted earnings per share are assumed to be equal to basic net income and basic earnings per share for the reporting period.

Non-GAAP net income for the three and six months ended June 30, 2010 and 2009 excludes the net effect of the tax valuation allowance adjustments to the Company’s deferred tax asset and its liability to its selling and converting shareholders that had a proportionately greater effect on basic net income. The aggregate effect of such adjustments decreased GAAP net income by $0.3 million for the second quarter of 2010 and increased GAAP net income by $0.3 million for the second quarter of 2009. The aggregate effect of such adjustments had a negligible effect on GAAP net income for the six months ended June 30, 2010 and increased GAAP net income by $0.5 million for the six months ended June 30, 2009. All such adjustments have been recorded as if they had occurred at the beginning of each period presented. The non-GAAP earnings per share figures have been presented assuming that all stock and stock equivalents have been outstanding as of the beginning of each period presented. Management believes that these adjustments, and the non-GAAP measures derived from them, provide information to better analyze the Company’s operations between periods and over time. Investors should consider non-GAAP measures in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP. A reconciliation of the non-GAAP measures disclosed in this press release with the most comparable GAAP measures are included in the financial tables attached.

Assets Under Management (unaudited)

($ billions)

    Three Months Ended
June 30,   March 31,   June 30,
2010 2010 2009
 
Institutional Accounts
Beginning of Period Assets $ 11.7 $ 10.7 $ 6.0
Inflows 0.3 0.4 0.3
Outflows   (0.5 )   (0.3 )   (0.6 )
Net Flows (0.2 ) 0.1 (0.3 )
Market Appreciation/(Depreciation)   (1.5 )   0.9     1.8  
End of Period Assets $ 10.0 $ 11.7 $ 7.5
 
Retail Accounts
Beginning of Period Assets $ 3.7 $ 3.6 $ 2.6
Inflows 0.4 0.3 0.3
Outflows   (0.5 )   (0.5 )   (0.4 )
Net Flows (0.1 ) (0.2 ) (0.1 )
Market Appreciation/(Depreciation)   (0.5 )   0.3     0.6  
End of Period Assets $ 3.1 $ 3.7 $ 3.1
 
Total
Beginning of Period Assets $ 15.4 $ 14.3 $ 8.6
Inflows 0.7 0.7 0.6
Outflows   (1.0 )   (0.8 )   (1.0 )
Net Flows (0.3 ) (0.1 ) (0.4 )
Market Appreciation/(Depreciation)   (2.0 )   1.2     2.4  
End of Period Assets $ 13.1   $ 15.4   $ 10.6  
  In September 2009, the Company changed the classification of its assets under management to Institutional Accounts and Retail Accounts. Historical information has been reclassified for all periods presented.

Financial Discussion

 

Revenue (unaudited)

($ thousands)
  Three Months Ended
June 30,   March 31,   June 30,
2010 2010 2009
 
Institutional Accounts $ 16,133 $ 16,132 $ 11,548
Retail Accounts   3,255   3,018   2,684
Total $ 19,388 $ 19,150 $ 14,232
 
 
Six Months Ended
June 30, June 30,
2010 2009
 
Institutional Accounts $ 32,265 $ 22,628
Retail Accounts   6,273   5,276
Total $ 38,538 $ 27,904
 

Revenues were $19.4 million for the second quarter of 2010, an increase of 36.6%, from $14.2 million, for the second quarter of 2009, and an increase of 1.0%, from $19.2 million, for the first quarter of 2010. For the six months ended June 30, 2010, revenues were $38.5 million, an increase of 38.0%, from $27.9 million, for the six months ended June 30, 2009.

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