PZENA INVESTMENT MANAGEMENT, INC. REPORTS RESULTS FOR THE FOURTH QUARTER AND FULL YEAR 2012

2013-02-12 22:03:05 -

* 2012 revenue was $19.3 million for the fourth quarter and $76.3 million for
the full year.
* 2012 operating income was $9.5 million for the fourth quarter and $37.2
million for the full year.
* 2012 GAAP diluted earnings per share was $0.08 for the fourth quarter and
$0.32 for the full year. For the same periods, non-GAAP diluted earnings
per share was $0.08 and $0.31, respectively.
* Declared a year-end dividend of $0.16 per share - in line with the targeted
cash dividend ratio of 70% to

80% of non-GAAP net income.

NEW YORK, NEW YORK, February 12, 2013 - Pzena Investment Management, Inc. (NYSE:
PZN) reported the following U.S. GAAP (U.S. Generally Accepted Accounting
Principles) and non-GAAP basic and diluted net income and earnings per share for
the three and twelve months ended December 31, 2012 and 2011 (in thousands,
except per-share amounts):

GAAP Basis Non-GAAP Basis

For the Three Months For the Three Months
Ended Ended

December 31, December 31,
------------------------- ------------------------
2012 2011 2012 2011
---------- -------------- ---------- -------------
(unaudited)

Basic Net Income $      956 $      369 $      891 $      854

Basic Earnings Per Share $     0.09 $     0.03 $     0.08 $     0.08

Diluted Net Income $    5,226 $      369 $    5,161 $    5,063

Diluted Earnings Per Share $     0.08 $     0.03 $     0.08 $     0.08

GAAP Basis Non-GAAP Basis

For the Twelve Months For the Twelve Months
Ended Ended

December 31, December 31,
------------------------- ------------------------
2012 2011 2012 2011
---------- -------------- ---------- -------------
(unaudited)

Basic Net Income $    3,840 $    3,382 $    3,419 $    3,611

Basic Earnings Per Share $     0.36 $     0.34 $     0.32 $     0.36

Diluted Net Income $ 20,821 $ 20,631 $ 20,399 $ 23,156

Diluted Earnings Per Share $     0.32 $     0.32 $     0.31 $     0.36

The results for the three and twelve months ended December 31, 2012 and 2011
include recurring adjustments related to the Company's tax receivable agreement
and the associated liability to its selling and converting shareholders, in
addition to the adjustments related to certain one-time charges recognized in
operating expense in the fourth quarter of 2011. Management believes that these
accounting adjustments add a measure of non-operational complexity which
obscures the underlying performance of the business. In evaluating the
financial condition and results of operations, management also reviews non-GAAP
measures of earnings, which exclude these items. Excluding these adjustments,
non-GAAP diluted net income and non-GAAP diluted earnings per share were
$5.2 million and $0.08, respectively, for the three months ended December
31, 2012, and $5.1 million and $0.08, respectively, for the three months ended
December 31, 2011. Non-GAAP diluted net income and non-GAAP diluted earnings
per share were $20.4 million and $0.31, respectively, for the twelve months
ended December 31, 2012 and $23.2 million and $0.36, respectively, for the
twelve months ended December 31, 2011. GAAP and non-GAAP net income for diluted
earnings per share generally assume all operating company membership units are
converted into Company stock at the beginning of the reporting period, and the
resulting change to Company GAAP and non-GAAP net income associated with its
increased interest in the operating company is taxed at the Company's effective
tax rate, exclusive of the adjustments noted above and other one-time
adjustments. 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.

Management uses the non-GAAP measures to assess the strength of the underlying
operations of the business. It believes the non-GAAP measures provide
information to better analyze the Company's operations between periods and over
time. Investors should consider the non-GAAP measures in addition to, and not
as a substitute for, financial measures prepared in accordance with GAAP.

Assets Under Management (unaudited)

($ billions)

Three Months Ended Twelve Months Ended
--------------------------------- --------------------
December September December December December
31, 30, 31, 31, 31,

2012 2012 2011 2012 2011
---------- ----------- ---------- ---------- ---------

Institutional
Accounts

Assets

     $ 11.2 $ 10.9 $ 10.0 $ 11.3 $ 12.5
Beginning of
Period

          0.1 0.3 0.7 0.7
2.1
Inflows

          (0.6) (0.7) (0.5) (2.8)
(2.2)
Outflows
---------- ----------- ---------- ---------- ---------
          Net (0.5) (0.4) 0.2 (2.1)
(0.1)
Flows

          Market 0.5 0.7 1.1 2.0
(1.1)
Appreciation/(Depreciation)
---------- ----------- ---------- ---------- ---------
     End of $ 11.2 $ 11.2 $ 11.3 $ 11.2 $ 11.3
Period
---------- ----------- ---------- ---------- ---------

Retail
Accounts

Assets

     $ 5.6 $ 2.2 $ 2.2 $ 2.2 $ 3.1
Beginning of
Period Assets

          0.4 3.3 0.2 4.0
0.9
Inflows

          (0.3) (0.3) (0.5) (1.0)
(1.6)
Outflows
---------- ----------- ---------- ---------- ---------
          Net 0.1 3.0 (0.3) 3.0
(0.7)
Flows

          Market 0.2 0.4 0.3 0.7
(0.2)
Appreciation/(Depreciation)
---------- ----------- ---------- ---------- ---------
     End of $ 5.9 $ 5.6 $ 2.2 $ 5.9 $ 2.2
Period
---------- ----------- ---------- ---------- ---------

Total

Assets

     $ 16.8 $ 13.1 $ 12.2 $ 13.5 $ 15.6
Beginning of
Period

          0.5 3.6 0.9 4.7
3.0
Inflows

          (0.9) (1.0) (1.0) (3.8)
(3.8)
Outflows
---------- ----------- ---------- ---------- ---------
          Net (0.4) 2.6 (0.1) 0.9
(0.8)
Flows

          Market 0.7 1.1 1.4 2.7
(1.3)
Appreciation/(Depreciation)
---------- ----------- ---------- ---------- ---------
     End of $ 17.1 $ 16.8 $ 13.5 $ 17.1 $ 13.5
Period
---------- ----------- ---------- ---------- ---------

Financial Discussion

Revenue
(unaudited)

($ thousands)

Three Months Ended
-----------------------------------------------------------------------
December 31, September 30, December 31,

2012 2012 2011
---------------------- ---------------------- ---------------------

Institutional $              15,809 $              15,741
$              16,596
Accounts

Retail                3,503
               3,120                2,340
Accounts
---------------------- ---------------------- ---------------------
    Total $              19,312 $
             18,861 $              18,936
---------------------- ---------------------- ---------------------

Twelve Months Ended
----------------------------------------------
December 31, December 31,

2012 2011
---------------------- ---------------------

Institutional $              64,919 $
             72,002
Accounts

Retail              11,361
             11,043
Accounts
---------------------- ---------------------
    Total $              76,280 $
             83,045
---------------------- ---------------------

Revenue was $19.3 million for the fourth quarter of 2012, an increase of 2.0%
from $18.9 million for the fourth quarter of 2011, and an increase of 2.4% from
$18.9 million for the third quarter of 2012. For the twelve months ended
December 31, 2012, revenues were $76.3 million, a decrease of 8.1%, from $83.0
million, for the twelve months ended December 31, 2011.

Average assets under management for the fourth quarter of 2012 was $16.8
billion, an increase of 27.3% from $13.2 billion for the fourth quarter of
2011, and an increase of 13.5% from $14.8 billion for the third quarter of
2012. The increase from the fourth quarter of 2011 and from the third quarter
of 2012 was primarily due to the full quarter impact of the large inflow
associated with the Company's assignment to manage 28% of the Vanguard Windsor
Fund as of the beginning of August 2012.

The weighted average fee rate was 0.461% for the fourth quarter of 2012,
decreasing from 0.573% for the fourth quarter of 2011, and from 0.508% for the
third quarter of 2012. The decrease from the fourth quarter of 2011 was
primarily due to performance fees recognized during the fourth quarter of 2011
combined with a higher mix of assets in the Company's retail Large Cap Expanded
Value strategy (formerly known as Large Cap Diversified Value) driven by the
Vanguard assignment, which carries a lower fee. The full quarter impact of the
higher mix of assets in the Company's retail Large Cap Expanded Value strategy
also drove the variance from the third quarter of 2012.

The weighted average fee rate for institutional accounts was 0.569% for the
fourth quarter of 2012, decreasing from 0.608% for the fourth quarter of 2011,
and decreasing from 0.575% for the third quarter of 2012. The net decrease from
the fourth quarter of 2011 was primarily due to performance fees recognized in
the fourth quarter of 2011, partially offset by a higher mix of assets in the
Company's Global strategy, which generally carries higher fee rates. The
decrease from the third quarter of 2012 was due to the timing of asset flows in
our institutional accounts.

The weighted average fee rate for retail accounts was 0.248% for the fourth
quarter of 2012, decreasing from 0.407% for the fourth quarter of 2011, and from
0.321% for the third quarter of 2012. The decrease from the fourth quarter of
2011 and from the third quarter of 2012 was primarily due to the full quarter
impact of the Vanguard assignment.

Total operating expenses were $9.8 million in the fourth quarter of 2012,
decreasing from $14.8 million in the fourth quarter of 2011 and increasing from
$9.5 million for the third quarter of 2012. The increase from the third quarter
of 2012 was a result of fluctuations in various expense categories and a slight
increase in compensation cost. The decrease in quarterly operating expenses
year-over-year was primarily due to one-time charges associated with the
sublease of excess real estate and a charge related to certain employee
departures during the fourth quarter of 2011. A reconciliation of GAAP to non-
GAAP operating expenses is shown below:

Operating
Expenses
(unaudited)

($
thousands)

Three Months Ended
-----------------------------------------------------------------------
December 31, September 30, December 31,

2012 2012 2011
------------------------ ------------------------ ---------------------

Compensation $               7,881 $               7,689
$             10,190
and Benefits
Expense

General and               1,963               1,764
              4,654
Administrative
Expense
------------------------ ------------------------ ---------------------
    GAAP               9,844
              9,453             14,844
Operating
Expenses

One-time                      -
                     -              (4,798)
Charges
------------------------ ------------------------ ---------------------
    Non-GAAP $               9,844 $               9,453
$              10,046
Operating
Expenses
------------------------ ------------------------ ---------------------

Twelve Months Ended
----------------------------------------------
December 31, December 31,

2012 2011
------------------------ ---------------------

Compensation $             31,755 $
            34,565
and Benefits
Expense

General and               7,346
            10,626
Administrative
Expense
------------------------ ---------------------
    GAAP             39,101
            45,191
Operating
Expenses

One-time                      -
             (4,798)
Charges
------------------------ ---------------------
    Non-GAAP $             39,101 $
            40,393
Operating
Expenses
------------------------ ---------------------

As of December 31, 2012, employee headcount was 70, up from 67 at December
31, 2011 and from 68 at September 30, 2012.

The operating margin was 49.0% on a GAAP basis for the fourth quarter of 2012,
compared to 21.6% for the fourth quarter of 2011, and 49.9% for the third
quarter of 2012. The operating margin was 46.9% on a non-GAAP basis for the
fourth quarter of 2011.

Other income/(expense) were income of $0.2 million and $1.5 million for the
fourth quarters of 2012 and 2011, respectively, and an expense of $1.2 million
for the third quarter of 2012. Other income/(expense) includes the net realized
and unrealized gain/(loss) recognized by the Company on its direct investments,
as well as those recognized by the Company's external investors on their
investments in investment partnerships that the Company is required to
consolidate. A portion of realized and unrealized gain/(loss) associated with
the investments of the Company's outside interests are offset in net income
attributable to non-controlling interests. Fourth quarter 2012 other
income/(expense) also included an expense of $0.3 million associated with an
increase in the Company's liability to its selling and converting shareholders
resulting from changes in the realizability of its related deferred tax asset.
Such adjustments generated income of $0.7 million in the fourth quarter of
2011 and an expense of $1.7 million in the third quarter of 2012. Details of
other income/(expense), as well as a reconciliation of the related GAAP and non-
GAAP measures, are shown below:

Other
Income/(Expense)
(unaudited)

($ thousands)

Three Months Ended
-------------------------------------------------------------------
December 31, September 30, December 31,

2012 2012 2011
--------------------- --------------------- -------------------

Net Interest and $                  97 $
                 94 $                161
Dividend Income

Net Realized and                459                395
               354
Unrealized Gain from
Investments

Change in Liability              (305)           (1,684)
               726
to Selling and
Converting
Shareholders¹

Other Income/                (43)
(44)                297
(Expense)
--------------------- --------------------- -------------------
    GAAP Other                208           (1,239)
            1,538
Income/
(Expense)
--------------------- --------------------- -------------------
Change in Liability                305             1,684
             (726)
to Selling and
Converting
Shareholders¹

Outside              (291)              (210)
             (336)
Interests of
Investment
Partnerships²
--------------------- --------------------- -------------------
    Non-GAAP $                222 $
               235 $                476
Other Income,
Net of Outside
Interests
--------------------- --------------------- -------------------

Twelve Months Ended
-------------------------------------------
December 31, December 31,

2012 2011
--------------------- -------------------

Net Interest and $                318 $
               405
Dividend Income

Net Realized and Unrealized Gain/(Loss)             1,520
             (355)
from Investments

Change in Liability to Selling and           (2,647)
           (1,581)
Converting Shareholders¹

Other Income/                (54)
(Expense) 65
--------------------- -------------------
    GAAP Other              (863)
           (1,466)
Income/
(Expense)
--------------------- -------------------
Change in Liability to Selling and             2,647
            1,581
Converting Shareholders¹

Outside              (854)
               327
Interests of
Investment
Partnerships²
--------------------- -------------------
    Non-GAAP Other Income, Net of $                930 $
               442
Outside Interests
--------------------- -------------------

1. Reflects the change in liability to the Company's selling and converting
shareholders associated with the deferred tax asset generated by the
Company's initial public offering and subsequent unit conversions.
2. Represents the non-controlling interest allocation of the (income)/loss of
the Company's consolidated investment partnerships to its external
investors.

The Company recognized $1.0 million and $1.6 million in income tax expense for
the fourth quarters of 2012 and 2011, respectively, and a $0.8 million income
tax benefit for the third quarter of 2012. Fourth quarter 2012 income taxes
included $0.4 million in income associated with a decrease to the valuation
allowance recorded against the Company's deferred tax asset related to the basis
step ups associated with operating company unit exchanges. Such adjustments
generated $0.8 million in income tax expense in the fourth quarter of 2011 and
$2.1 million in income tax benefit in the third quarter of 2012. Details of the
income tax expense/ (benefit), as well as a reconciliation of the related GAAP
and non-GAAP measures, are shown below:

Income Tax
(Benefit)/Expense
(unaudited)

($ thousands)

Three Months Ended

------------------------------------------------------------------------------
December 31, September 30,
December 31,

2012 2012
2011
------------------------ ------------------------
------------------------

GAAP Corporate $                  686 $
                 654 $                  255
Income Tax
Expense

Add Back: Effects                      -
                     -                  333
of One-Time
Adjustments(1)
------------------------ ------------------------
------------------------
     Non-GAAP                  686
                 654                  588
Corporate Income
Tax Expense
------------------------ ------------------------
------------------------
GAAP                  642
                 594                  555
Unincorporated
Business Tax
Expense

Add Back: Effects                      -
                     -                       5
of One-Time
Adjustments(1)
------------------------ ------------------------
------------------------
     Non-GAAP                  642
                 594                  560
Unincorporated
Business Tax
Expense
------------------------ ------------------------
------------------------
     Non-GAAP               1,328
              1,248               1,148
Income Tax Expense

         Change in                 (370)
            (2,075)                  768
Valuation
Allowance(2)

         Less:                      -
                     -                 (338)
Effects of One-
Time
Adjustments(1)
------------------------ ------------------------
------------------------
GAAP Income Tax $                  958 $
                (827) $               1,578
Expense/(Benefit)
------------------------ ------------------------
------------------------

Twelve Months Ended

---------------------------------------------------
December 31,
December 31,

2012
2011
------------------------
------------------------

GAAP Corporate $               2,559
$               2,323
Income Tax
Expense

Add Back: Effects
                     -                  333
of One-Time
Adjustments(1)
------------------------
------------------------
     Non-GAAP               2,559
              2,656
Corporate Income
Tax Expense
------------------------
------------------------
GAAP               2,420
              2,617
Unincorporated
Business Tax
Expense

Add Back: Effects
                     -                     5
of One-Time
Adjustments(1)
------------------------
------------------------
     Non-GAAP               2,420
              2,622
Unincorporated
Business Tax
Expense
------------------------
------------------------
     Non-GAAP                4,979
               5,278
Income Tax Expense

         Change in
             (3,068)              (1,795)
Valuation
Allowance(2)

         Less:
                     -                  (338)
Effects of One-
Time
Adjustments(1)
------------------------
------------------------
GAAP Income Tax $              1,911
$               3,145
Expense/(Benefit)
------------------------
------------------------

1. Reflects the effects of certain one-time charges on income tax
expense/(benefit).
2. Reflects the change in the valuation allowance assessed against the deferred
tax asset established as part of the Company's initial public offering and
subsequent unit conversions.

Details of the non-controlling interests in the operations of the Company's
operating company and consolidated subsidiaries, as well as a reconciliation of
the related GAAP and non-GAAP measures, are shown below:

Non-Controlling
Interests
(unaudited)

($ thousands)

Three Months Ended

-------------------------------------------------------------------------------
December 31, September 30,
December 31,

2012 2012
2011
------------------------- -------------------------
-----------------------

GAAP Operating $                7,471 $
               7,523 $                3,347
Company
Allocation¹

Add Back:                       -
                      -                4,017
Effects of One-
Time
Adjustments(2)
------------------------- -------------------------
-----------------------
     Non-GAAP                 7,471
               7,523                7,364
Operating
Company
Allocation

Outside                    291
                  210                   336
Interests of
Investment
Partnerships(3)
------------------------- -------------------------
-----------------------
     Non-GAAP                7,762
               7,733                7,700
Net Income
Attributable to
Non-Controlling
Interests

         Less:
                      -               (4,017)
Effects of One- -
Time
Adjustments(2)
------------------------- -------------------------
-----------------------
GAAP Net $                7,762 $
               7,733 $                3,683
Income
Attributable to
Non-Controlling
Interests
------------------------- -------------------------
-----------------------

Twelve Months Ended

---------------------------------------------------
December 31,
December 31,

2012
2011
-------------------------
-----------------------

GAAP Operating $              29,711
$              30,188
Company
Allocation¹

Add Back:
                      -                4,017
Effects of One-
Time
Adjustments(2)
-------------------------
-----------------------
     Non-GAAP              29,711
              34,205
Operating
Company
Allocation

Outside                   854
                 (327)
Interests of
Investment
Partnerships(3)
-------------------------
-----------------------
     Non-GAAP              30,565
              33,878
Net Income
Attributable to
Non-Controlling
Interests

         Less:
                      -                (4,017)
Effects of One-
Time
Adjustments(2)
-------------------------
-----------------------
GAAP Net $              30,565
$              29,861
Income
Attributable to
Non-Controlling
Interests
-------------------------
-----------------------

1. Reflects the change in the liability to the Company's selling and converting
shareholders associated with the deferred tax asset generated by the
Company's initial public offering and subsequent unit conversions.
2. Represents the effects of certain one-time charges on non-controlling
interests.
3. Represents the non-controlling interest allocation of (income)/loss of the
Company's consolidated investment partnerships to its external investors.

On February 5, 2013, the Company's Board of Directors approved a quarterly
dividend of $0.16 per share of its Class A common stock to be declared on
February 12, 2013. The following dates apply to the dividend:

Record Date: February 22, 2013

Payment Date: March 7, 2013

During the last twelve months, inclusive of the dividend noted above, the
Company declared total dividends of $0.25 per share of its Class A common stock.

Fourth quarter 2012 Earnings Call Information

Pzena Investment Management, Inc. (NYSE: PZN) will hold a conference call to
discuss the Company's financial results and outlook at 10:00 a.m. ET, Wednesday,
February 13, 2013. The call will be open to the public.

Webcast Instructions: To gain access to the webcast, which will be "listen-
only," go to the Events page in the Investor Relations area of the Company's
website, www.pzena.com.

Teleconference Instructions: To gain access to the conference call via
telephone, U.S./Canada callers should dial 866-700-6067; international callers
should dial 617-213-8834. The conference ID number is 70941776.

Replay: The conference call will be available for replay through February
28, 2013, on the web using the information given above.

About Pzena Investment Management

Pzena Investment Management, LLC, the firm's operating company, is a value-
oriented investment management firm. Founded in 1995, Pzena Investment
Management has built a diverse, global client base. More firm and stock
information is posted at www.pzena.com.

Forward-Looking Statements

This press release may contain, in addition to historical information, forward-
looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are based on the Company's
current assumptions, expectations and projections about future events. Words
like "believe," "anticipate," "intend," "estimate,"
"expect," "project," and
similar expressions are used to identify forward-looking statements, although
not all forward-looking statements contain these words. These forward-looking
statements are necessarily estimates reflecting the best judgment of the
Company's management and involve a number of risks, uncertainties and
assumptions that could cause actual results to differ materially from those
expressed or implied by the forward-looking statements.

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 14, 2012 and in the Company's Quarterly
Reports on Form 10-Q as filed with the SEC. 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.

Contact: Gary Bachman, 212-355-1600 or bachman@pzena.com

PZENA INVESTMENT MANAGEMENT, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(in thousands)

As of
-----------------------------------------------------------------
December 31, December 31,

2012 2011
-------------------------------- ------------------------------
(unaudited)

ASSETS

Cash and Cash $                     32,645 $
                    35,083
Equivalents

Restricted                       1,030
                      1,030
Cash

Due from                           22
                         457
Broker

Advisory Fees                     14,626
                    14,717
Receivable

Investments,                       5,170
                      4,919
at Fair Value

Prepaid                          719
                         808
Expenses and
Other Assets

Deferred Tax
Asset, Net of
Valuation
Allowance

of $59,917                       9,688
                      8,835
and $61,050,
respectively

Property and
Equipment, Net

of
Accumulated
Depreciation
of

$2,695 and                           779
                          829
$2,516,
respectively
-------------------------------- ------------------------------
      TOTAL $                      64,679 $
                     66,678
ASSETS
-------------------------------- ------------------------------

LIABILITIES AND
EQUITY

Liabilities:

Accounts $                        4,305 $
                       6,062
Payable and
Accrued
Expenses

Due to                             23
Broker -

Liability to                        9,656
                     11,218
Selling and
Converting
Shareholders

Lease                        1,203
                       1,795
Liability

Deferred                        1,327
                       1,173
Compensation
Liability

Other                           199
                          206
Liabilities
-------------------------------- ------------------------------
      TOTAL                      16,713
                     20,454
LIABILITIES

Equity:

Total Pzena                      14,569
                     13,937
Investment
Management,
Inc.'s
Equity

Non-                      33,397
                     32,287
Controlling
Interests
-------------------------------- ------------------------------
      TOTAL                      47,966
                     46,224
EQUITY
-------------------------------- ------------------------------
      TOTAL $                      64,679 $
                     66,678
LIABILITIES
AND EQUITY
-------------------------------- ------------------------------

PZENA INVESTMENT MANAGEMENT, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per-share amounts)

Three Months Ended
Twelve Months Ended

December 31,
December 31,

2012 2011
2012 2011

REVENUE $            19,312 $            18,936
$            76,280 $            83,045

EXPENSES

Compensation and              7,881            10,190
           31,755            34,565
Benefits Expense

General and              1,963
             4,654              7,346
           10,626
Administrative
Expense

TOTAL              9,844            14,844
           39,101            45,191
OPERATING
EXPENSES

Operating              9,468
             4,092            37,179
           37,854
Income

Other                 208
             1,538                (863)
           (1,466)
Income/(Expense)

Income Before              9,676
             5,630            36,316
           36,388
Taxes

Income Tax                 958
             1,578              1,911
             3,145
Expense

Consolidated Net              8,718
             4,052            34,405
           33,243
Income

Less: Net Income              7,762              3,683
           30,565            29,861
Attributable to Non-
Controlling
Interests

Net Income
Attributable to
Pzena

Investment $                 956 $
                369 $              3,840 $
             3,382
Management,
Inc.

Earnings per Share - Basic and Diluted
Attributable to

Pzena Investment Management, Inc. Common Stockholders:

Net Income for $                 956 $
                369 $              3,840 $
             3,382
Basic Earnings
per Share

Basic Earnings $                0.09 $
               0.03 $                0.36 $
               0.34
per Share

Basic Weighted      11,224,339      10,575,089
10,787,540        9,972,978
Average Shares
Outstanding

Net Income for $              5,226 $
                369 $            20,821 $
           20,631
Diluted Earnings
per Share

Diluted Earnings $                0.08 $
               0.03 $                0.32 $
               0.32
per Share

Diluted Weighted      65,529,624      10,575,089
65,491,273      65,095,797
Average Shares
Outstanding

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
Twelve Months Ended

December 31,
December 31,

2012 2011
2012 2011

REVENUE $             19,312 $
            18,936 $             76,280 $
            83,045

EXPENSES

Compensation               7,881
              8,007             31,755
            32,382
and Benefits
Expense

General and              1,963
              2,039               7,346
              8,011
Administrative
Expense

TOTAL               9,844
            10,046             39,101
            40,393
OPERATING
EXPENSES

Operating               9,468
              8,890             37,179
            42,652
Income

Other Income,                 222
                476                 930
                442
Net of Outside
Interests

Income Before               9,690
              9,366             38,109
            43,094
Taxes and
Operating Company
Allocation

Unincorporated                 642
                560              2,420
             2,622
Business Tax
Expense

Allocable               9,048
              8,806             35,689
            40,472
Income

Operating              7,471              7,364
           29,711            34,205
Company
Allocation

Income Before               1,577
              1,442               5,978
              6,267
Corporate Income
Taxes

Corporate                 686
                588              2,559
             2,656
Income Tax
Expense

Non-GAAP Net $                  891 $
                 854 $               3,419 $
              3,611
Income

Effect of                     -
               (443)                     -
               (443)
One-time
Adjustments

Tax Receivable                    65
                  (42)                  421
                 214
Agreement Income,
Net of Taxes

GAAP Net $                  956 $
                 369 $               3,840 $
              3,382
Income

Earnings Per Share - Basic and Diluted
Attributable to

Pzena Investment Management, Inc. Common Stockholders:

Net Income $                  891 $
                 854 $               3,419 $
              3,611
for Basic
Earnings per
Share

Basic $                 0.08 $
                0.08 $                 0.32 $
                0.36
Earnings per
Share

Basic Weighted       11,224,339       10,575,089
      10,787,540         9,972,978
Average Shares
Outstanding

Net Income $               5,161 $
              5,063 $             20,399 $
            23,156
for Diluted
Earnings per
Share

Diluted $                 0.08 $
                0.08 �