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

Among the factors that could cause actual results to differ from those expressed or implied by a forward-looking statement are those described in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K, as filed with the SEC on March 12, 2010 and in the Company’s Quarterly Reports on Form 10-Q as filed with the SEC. Other unknown or unpredictable factors also could have material adverse effects on the Company's future results, performance, or achievements. In light of these risks, uncertainties, assumptions, and factors, actual results could differ materially from those expressed or implied in the forward-looking statements.

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this release.

The Company is not under any obligation and does not intend to make publicly available any update or other revisions to any forward-looking statements to reflect circumstances existing after the date of this release or to reflect the occurrence of future events even if experience or future events make it clear that any expected results expressed or implied by those forward-looking statements will not be realized.

PZENA INVESTMENT MANAGEMENT, INC.
 
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands)
 
    As of
June 30,   December 31,
2010 2009
(unaudited)

ASSETS

Cash and Cash Equivalents $ 23,596 $ 15,908
Restricted Cash 1,416 1,407
Advisory Fees Receivable 13,320 13,378
Investments in Equity Securities, at Fair Value 4,080 7,951
Prepaid Expenses and Other Assets 856 805

Deferred Tax Asset, Net of Valuation Allowance of $63.6 million and $60.3 million, respectively

5,933 6,754

Property and Equipment, Net of Accumulated Depreciation of $2,596 and $2,385, respectively

  2,110   2,315
TOTAL ASSETS $ 51,311 $ 48,518
 
LIABILITIES AND EQUITY
Liabilities:
Accounts Payable and Accrued Expenses $ 8,286 $ 3,644
Senior Subordinated Notes - 10,000
Liability to Selling and Converting Shareholders 5,883 5,642
Other Liabilities   1,207   1,874
TOTAL LIABILITIES 15,376 21,160
 
Equity:

Total Pzena Investment Management, Inc.'s Equity

9,941 8,270
Non-Controlling Interests   25,994   19,088
TOTAL EQUITY   35,935   27,358
TOTAL LIABILITIES AND EQUITY $ 51,311 $ 48,518

 
PZENA INVESTMENT MANAGEMENT, INC.
 
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per-share amounts)
 
  Three Months Ended       Six Months Ended
June 30, June 30,
2010   2009 2010   2009
 
REVENUE $ 19,388 $ 14,232  

 

$ 38,538   $ 27,904  
 
EXPENSES
Compensation and Benefits Expense 7,263 5,983 14,651 12,023
General and Administrative Expenses   2,169   1,973     4,090     4,426  
TOTAL OPERATING EXPENSES   9,432   7,956     18,741     16,449  
Operating Income   9,956   6,276     19,797     11,455  
 
Total Other Income/(Expense) 372 2,936

 

(293 ) 205
 
Income Before Taxes 10,328 9,212 19,504 11,660
 
Income Tax Provision/(Benefit)   2,547   (64 )   2,448     (338 )
Consolidated Net Income 7,781 9,276 17,056 11,998
 
Less: Net Income Attributable to Non-Controlling Interests   7,308   8,455     15,599     10,695  
 

 

Net Income Attributable to Pzena Investment Management, Inc.

$ 473 $ 821   $ 1,457   $ 1,303  
 
Earnings per Share - Basic and Diluted Attributable to
Pzena Investment Management, Inc. Common Stockholders:
 
Net Income for Basic Earnings per Share $ 473 $ 821 $ 1,457 $ 1,303
Basic Earnings per Share $ 0.05 $ 0.10 $ 0.16 $ 0.17
Basic Weighted Average Shares Outstanding 9,367,659 8,633,041 9,002,379 7,795,194
 
Net Income for Diluted Earnings per Share $ 473 $ 4,330 $ 10,464 $ 6,860
Diluted Earnings per Share $ 0.05 $ 0.07 $ 0.16 $ 0.11
Diluted Weighted Average Shares Outstanding 9,367,659 64,778,860 65,012,960 64,566,604

 
PZENA INVESTMENT MANAGEMENT, INC.
 
UNAUDITED NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per-share amounts)
 
  Non-GAAP Basis       Non-GAAP Basis
Three Months Ended Six Months Ended
June 30, June 30,
2010   2009 2010   2009
 
REVENUE $ 19,388   $ 14,232 $ 38,538   $ 27,904  
 
EXPENSES
Compensation and Benefits Expense 7,263 5,983 14,651 12,023
General and Administrative Expenses   2,169     1,973   4,090     4,426  

TOTAL OPERATING EXPENSES

  9,432     7,956   18,741     16,449  
Operating Income   9,956     6,276   19,797     11,455  
 
Total Other Income/(Expense), Net of Outside Interests (584 ) 1,202 (223 ) 399
 
Income Before Taxes and Operating Company Allocation   9,372     7,478

 

  19,574     11,854  
 
Unincorporated Business Tax Provision   622     406   1,237    

744

 
Allocable Income 8,750 7,072 18,337

11,110

 
Operating Company Allocation   7,470     6,119   15,761     9,685  
Income Before Corporate Income Taxes 1,280 953 2,576

1,425

 
Corporate Income Tax Provision   546     406   1,098    

608

 
Non-GAAP Net Income $ 734   $ 547 $ 1,478   $

817

 
 
Tax Receivable Agreement Income, Net of Taxes   (261 )   274

 

  (21 )  

486

 

GAAP Net Income $ 473   $ 821 $ 1,457   $ 1,303  
 
Earnings Per Share - Basic and Diluted Attributable to
Pzena Investment Management, Inc. Common Stockholders:
 

Net Income for Basic Earnings per Share

$ 734 $ 547 $ 1,478 $

817

Basic Earnings per Share $ 0.08 $ 0.06 $ 0.16 $

0.10

Basic Weighted Average Shares Outstanding 9,367,659 8,633,041 9,002,379 7,795,194
 
Net Income for Diluted Earnings per Share $ 5,003 $ 4,044 $ 10,485 $ 6,352
Diluted Earnings per Share $ 0.08 $ 0.06 $ 0.16 $ 0.10
Diluted Weighted Average Shares Outstanding 65,021,332 64,778,860 65,012,960 64,566,604

 

Assets Under Management (unaudited)

($ billions)

 
   

As of

June 30,   March 31,   December 31,   September 30,   June 30,
2010 2010 2009 2009 2009
 
U.S. Value Strategies $ 8.8 $ 10.5 $ 9.6 $ 9.9 $ 8.1
EAFE Value Strategies 1.7 2.0 1.9 1.6 0.7
Global Value Strategies   2.6   2.9   2.8   2.4   1.8
Total $ 13.1 $ 15.4 $ 14.3 $ 13.9 $ 10.6
 
 

As of

June 30, March 31, December 31, September 30, June 30,
2010 2010 2009 2009 2009
 
Institutional Accounts $ 10.0 $ 11.7 $ 10.7 $ 10.2 $ 7.5
Retail Accounts   3.1   3.7   3.6   3.7   3.1
Total $ 13.1 $ 15.4 $ 14.3 $ 13.9 $ 10.6
 

Revenue (unaudited)

($ millions)
 
    Three Months Ended
June 30,   March 31,   December 31,   September 30,   June 30,
2010 2010 2009 2009 2009
 
Institutional Accounts $ 16.1 $ 16.2 $ 15.2 $ 13.8 $ 11.5
Retail Accounts   3.3   3.0   3.1   3.0   2.7
Total $ 19.4 $ 19.2 $ 18.3 $ 16.8 $ 14.2




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