Pzena Investment Management, Inc. Reports Results for the Fourth Quarter and Full...

Pzena Investment Management, Inc. Reports Results for the Fourth Quarter and Full Year 2007

-- Pzena Class A Common Stock began trading on the New York Stock
Exchange on October 25, 2007, under the ticker symbol "PZN"

-- Revenues were $34.8 million for fourth quarter 2007 and $147.1
million for full year 2007

-- Pro forma net income was $1.1 million for fourth quarter 2007
and $4.9 million for full year 2007

-- Pro forma earnings per share were $0.18 for fourth quarter
2007 and $0.81 for full year 2007
NEW YORK--(Business Wire)--
Pzena Investment Management, Inc. (NYSE: PZN) reported fourth
quarter 2007 net income, generated through the company's 9.5% economic
interest in the results of its operating company, of $0.7 million, or
$0.12 per diluted share. Net income and earnings per diluted share for
the full year 2007 were the same as for the fourth quarter, as these
both represent results for the period subsequent to the company's
initial public offering.

On a pro forma basis, the company reported fourth quarter 2007 net
income of $1.1 million, or $0.18 per diluted share, compared with $1.2
million, or $0.20 per diluted share, for the fourth quarter of 2006,
and $1.4 million, or $0.23 per diluted share, for the third quarter of
2007. For the year ended December 31, 2007, pro forma net income and
earnings per diluted share were $4.9 million and $0.81, respectively,
compared with $3.7 million and $0.60, respectively, for 2006.

The pro forma adjustments give effect to: (i) the company's
initial public offering on October 30, 2007; (ii) the full year effect
of the three-year $60 million term loan agreement completed by Pzena's
operating company on July 23, 2007; (iii) the amendment of Pzena's
operating company's operating agreement on March 31, 2007 to remove
all mandatory unit redemption provisions; and (iv) the acceleration of
all outstanding unvested operating company units and options as of
March 31, 2007. All such adjustments have been recorded as if they had
occurred at the beginning of each period presented. All pro forma
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 to this press release.

Flows and Assets Under Management

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Assets Under Management
------------------------
($ billions)
Three Months Ended Year Ended
--------------------------- -----------------
December September December December December
31, 30, 31, 31, 31,
2007 2007 2006 2007 2006
-------- --------- -------- -------- --------

Separately-Managed
Accounts
Beginning of Period
Assets $16.0 $16.5 $13.4 $14.5 $10.4
Net Flows (0.1) 0.7 0.2 1.5 2.1
Appreciation (1.9) (1.2) 0.9 (2.0) 2.0
-------- --------- -------- -------- --------
End of Period Assets $14.0 $16.0 $14.5 $14.0 $14.5

Sub-Advised Accounts
Beginning of Period
Assets $12.9 $14.1 $11.5 $12.8 $6.4
Net Flows (1.7) (0.3) 0.7 (1.6) 4.7
Appreciation (1.6) (0.9) 0.6 (1.6) 1.7
-------- --------- -------- -------- --------
End of Period Assets $9.6 $12.9 $12.8 $9.6 $12.8

Total
Beginning of Period
Assets $28.9 $30.6 $24.9 $27.3 $16.8
Net Flows (1.8) 0.4 0.9 (0.1) 6.8
Appreciation (3.5) (2.1) 1.5 (3.6) 3.7
-------- --------- -------- -------- --------
End of Period Assets $23.6 $28.9 $27.3 $23.6 $27.3

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At December 31, 2007, the company managed $23.6 billion in total
assets, a decrease of 18.3% from $28.9 billion at September 30, 2007,
and a decrease of 13.6% from $27.3 billion at December 31, 2006.
During the fourth quarter of 2007, assets under management declined
due to $3.5 billion in market depreciation and $1.8 billion in net
outflows. The net outflows were nearly all in the sub-advised funds.
The decrease year-over-year in assets under management was due almost
entirely to $3.6 billion in market depreciation.

At December 31, 2007, the company managed $14.0 billion in
separate accounts and $9.6 billion in sub-advised funds, for a total
of $23.6 billion in assets. During the fourth quarter of 2007, assets
in separately-managed accounts decreased $2.0 billion, or 12.5%, from
$16.0 billion at September 30, 2007, due to $1.9 billion in market
depreciation and $0.1 billion in net outflows. During the same period,
sub-advised assets declined $3.3 billion, or 25.6%, from $12.9
billion, due to $1.7 billion in net outflows and $1.6 billion in
market depreciation.

For the year ended December 31, 2007, assets in separately-managed
accounts decreased $0.5 billion, or 3.4%, from $14.5 billion at
December 31, 2006, due to $2.0 billion in market depreciation, offset
by net inflows of $1.5 billion. During the same period, sub-advised
assets decreased $3.2 billion, or 25.0%, from $12.8 billion, due to
$1.6 billion in net outflows and $1.6 billion in market depreciation.

Commenting on the quarterly and full year results, Chief Executive
Officer Richard Pzena said, "In a very difficult environment for value
investors, our performance suffered during the fourth quarter. The
Russell 1000 Value Index was negative for the year, and our Large Cap
Value Service - what we would call a deep value portfolio - fell by
12.3%. That underperformance led to asset outflows, predominantly
among our sub-advised relationships. But minimal attrition among our
institutional clients is a reflection of their understanding of our
rigorous research and discipline. In fact, we have launched a new
financials-only service specifically to capitalize on the
extraordinary opportunity our research tells us can be found in the
financial sector."

Financial Discussion

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Revenue
------------------------
($ millions)
Three Months Ended Year Ended
--------------------------- -----------------
December September December December December
31, 30, 31, 31, 31,
2007 2007 2006 2007 2006
-------- --------- -------- -------- --------

Separately-Managed
Accounts $24.2 $26.6 $23.1 $99.8 $80.8
Sub-Advised Accounts 10.6 13.6 10.8 47.3 34.3
-------- --------- -------- -------- --------
Total $34.8 $40.2 $33.9 $147.1 $115.1

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Revenues were $34.8 million for the fourth quarter of 2007, an
increase of 2.7% from $33.9 million for the fourth quarter of 2006,
and a decrease of 13.4% from $40.2 million for the third quarter of
2007. For the year ended December 31, 2007, revenues were $147.1
million, an increase of 27.8% from $115.1 million the prior year.

Average assets under management for the fourth quarter of 2007
were $26.4 billion, an increase of 1.1% from $26.1 billion for the
fourth quarter of 2006, and a decrease of 10.2% from $29.4 billion for
the third quarter of 2007. For the full year 2007, average assets
under management were $28.3 billion, an increase of 28.1% from $22.1
billion for the full year 2006.

Weighted average fees increased to 53.0 basis points in the fourth
quarter of 2007, from an average of 51.5 basis points during the first
three quarters of the year, mainly due to the shift in asset mix to
separately-managed accounts, as well as an increase in
separately-managed account fees to an average of 64.9 basis points
during the fourth quarter from an average of 64.3 basis points during
the first three quarters of the year.

Total operating expenses declined by 94.5% in the fourth quarter
of 2007 compared to the fourth quarter of 2006, reflecting the
accounting implications of the amendment of the company's operating
agreement on March 31, 2007 to remove the mandatory redemption
provisions of its membership units. For the same reasons, total
operating expenses for the full year 2007 declined by 54.6% compared
to the full year 2006. Compared to the third quarter of 2007, fourth
quarter 2007 operating expenses increased approximately 18.5%,
primarily as a result of increased professional fees associated with
the company's initial public offering.

On a pro forma basis, total operating expenses in the fourth
quarter of 2007 increased 1.5% compared with the fourth quarter of
2006, and increased 2.6% compared with the third quarter of 2007. Pro
forma total operating expenses increased by 6.2% in 2007 compared with
2006, due to growth in employee headcount and expenses associated with
the initial public offering.

Management anticipates 2008 total operating expenses to be
slightly higher than those of 2007, due to additional costs of
operating as a public company (e.g., accounting and legal
requirements, Sarbanes-Oxley compliance, etc.), and the full year
effect of the personnel added during 2007. As of December 31, 2007,
employee headcount was 79, up from 65 at December 31, 2006. This
change arose as a result of staffing increases in nearly all of the
company's functional areas, commensurate with its growth.

Operating margin was 59.9% for the fourth quarter of 2007,
compared with a negative 643.1% for the fourth quarter of 2006, and
70.7% for the third quarter of 2007. For the full year 2007, operating
margin was 3.0%, compared with a negative 172.8% for 2006.

Pro forma operating margin was 65.3% for the fourth quarter of
2007, compared with 64.9% for the fourth quarter of 2006, and 70.7%
for the third quarter of 2007. For the full year 2007, the pro forma
operating margin increased to 68.8% from 62.5% for 2006.

Other income decreased by $5.3 million for the fourth quarter of
2007 compared with the fourth quarter of 2006 and decreased $0.9
million from the third quarter of 2007. This was primarily the result
of the performance of company investments, as well as the effect of
the $60 million term loan entered into on July 23, 2007. The full year
decline of $8.3 million for 2007 compared to 2006 was attributable to
the same factors.

On a pro forma basis, other income declined $4.3 million for the
fourth quarter of 2007 compared with the fourth quarter of 2006, and
decreased $0.6 million from the third quarter of 2007. In both
comparative periods, the decrease was primarily the result of the
performance of company investments. The full year decline of $6.6
million for 2007 compared to 2006 was attributable to the same
factors.

Capital and Liquidity

Today, the company amended its Credit Agreement with its bank to,
among other things, modify the covenants and reduce the size of the
revolving credit facility. A complete description of the amendment has
been filed in an 8-K dated February 11, 2008.

Fourth Quarter 2007 Earnings Call Information

Pzena Investment Management will host a conference call to discuss
the company's financial results on Tuesday, February 12, at 10:00 a.m.
EST. The call will be open to the public.

Webcast Instructions: To gain access to the webcast, which will be
"listen-only," go to www.mshow.com to register. The show number is
340929. Select the streaming audio option when you join the conference
call. (Please note that your computer must be equipped with speakers
and the appropriate software to use this option.)

Teleconference Instructions: To gain access to the conference call
via telephone, U.S. and Canada callers should dial (877) 820-5027;
international callers should dial (706) 679-9396. The conference code
is 30723032.

Replay: The conference call will be available for replay at the
above access points through February 19, 2008.

About Pzena Investment Management

Pzena Investment Management, LLC, the operating company of Pzena
Investment Management, Inc., is a premier value-oriented investment
management company with a record of investment excellence and
exceptional client service. Founded in late 1995, Pzena Investment
Management has built a diverse, global client base. PZN stock began
trading on the New York Stock Exchange on October 25, 2007. More
company and stock information is posted on the company's website,
www.pzena.com.

Forward Looking Statements

From time to time, information or statements provided by us,
including those within this news release, may contain certain
forward-looking statements relating to future events, future financial
performance, strategies, expectations, competitive environment and
regulations. Forward-looking statements are based on information
available at the time those statements are made and/or management's
good faith belief as of that time with respect to future events, and
are subject to risks and uncertainties that could cause actual
performance or results to differ materially from those expressed in or
suggested by the forward-looking statements. Such risks and
uncertainties include, but are not limited to: loss of revenues due to
contract terminations and redemptions, our ownership structure,
catastrophic or unpredictable events, unavailability of third-party
retail distribution channels, damage to our reputation, our
interpretation of and positioning relative to the market, fluctuations
in the financial markets and the competitive conditions in the mutual
fund, asset management and broader financial services sectors. For a
discussion concerning some of these and other risks, uncertainties and
other important factors that could affect future results, see
"Forward-Looking Statements" and, where applicable, "Risk Factors" in
the company's Prospectus dated October 24, 2007 and quarterly reports
filed with the U.S. Securities and Exchange Commission.

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Contact: Wayne Palladino, (212) 583-0179 or palladino@pzena.com
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PZENA INVESTMENT MANAGEMENT, INC.
(Prior to October 30, 2007 - Pzena Investment Management, LLC)

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands)

As of
December 31, December 31,
2007 2006
------------ ------------
(unaudited)
ASSETS
Cash and Cash Equivalents $ 26,547 $ 30,920
Advisory Fees Receivable 26,061 25,216
Investments in Marketable Securities 27,465 23,247
Other Assets 5,474 6,750
Investments in Affiliates - 3,613
Deferred Tax Assets 68,387 -
------------ ------------
TOTAL ASSETS $ 153,934 $ 89,746
============ ============

LIABILITIES AND EQUITY
Liabilities:
Accounts Payable and Accrued Expenses $ 8,696 $ 4,082
Securities Sold Short 1,028 876
Compensatory Units Subject - 263,980
Long Term Debt 60,000 -
Liability to Selling Shareholders 58,391 -
Other Liabilities 11,385 3,822
------------ ------------
Subtotal 139,500 272,760
Capital Units Subject - 533,553
------------ ------------
TOTAL LIABILITIES 139,500 806,313

Commitments and Contingencies - -
Minority and Non-Controlling Interests 16,355 13,399
Excess of Liabilities over Assets - (729,966)

TOTAL EQUITY (1,921) -
------------ ------------
TOTAL LIABILITIES AND EQUITY $ 153,934 $ 89,746
============ ============

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PZENA INVESTMENT MANAGEMENT, INC.
(Prior to October 30, 2007 - Pzena Investment Management, LLC)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per-share amounts)

For the Quarter Ended For the Year Ended
December 31, December 31, December 31, December 31,
2007 2006 2007 2006
------------ ------------ ------------ ------------
(unaudited) (unaudited) (unaudited)
REVENUE $ 34,794 $ 33,889 $ 147,149 $ 115,087
------------ ------------ ------------ ------------

EXPENSES
Compensation and
Benefits Expense 8,488 248,764 129,701 305,632
General and
Administrative
Expenses 5,451 3,089 13,038 8,380
------------ ------------ ------------ ------------
TOTAL OPERATING
EXPENSES 13,939 251,853 142,739 314,012
------------ ------------ ------------ ------------
Operating
Income/(Loss) 20,855 (217,964) 4,410 (198,925)
------------ ------------ ------------ ------------

Total Other
Income/(Expense) (2,476) 2,822 (2,136) 6,114

Income/(Loss)
Before Income
Taxes and
Minority and Non-
Controlling
Interests 18,379 (215,142) 2,274 (192,811)

Provision for
Income Taxes 1,734 869 5,610 3,941
Minority and Non-
Controlling
Interests 15,912 674 (20,644) 1,997
------------ ------------ ------------ ------------
Income/(Loss)
Before Interest
on
Mandatorily
Redeemable Units 733 (216,685) 17,308 (198,749)

Interest on
Mandatorily
Redeemable Units - 469,957 16,575 516,708

Net Income/(Loss) $ 733 $ (686,642) $ 733 $ (715,457)
============ ============ ============ ============

Basic Earnings per
Share $ 0.12 $ 0.12
Basic Weighted
Average Shares
Outstanding 6,111,118 6,111,118

Diluted Earnings
per Share $ 0.12 $ 0.12
Diluted Weighted
Average Shares
Outstanding 6,118,868 6,118,868

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PZENA INVESTMENT MANAGEMENT, INC.
(Prior to October 30, 2007 - Pzena Investment Management, LLC)

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per-share amounts)

Pro Forma Pro Forma
For the Quarter Ended For the Year Ended
December 31, December 31, December 31, December 31,
2007 2006 2007 2006
------------ ------------- ------------ -------------
REVENUE $ 34,794 $ 33,889 $ 147,149 $ 115,087
------------ ------------- ------------ -------------

EXPENSES
Compensation and
Benefits
Expense 7,686 8,810 33,925 34,830
General and
Administrative
Expenses 4,388 3,089 11,975 8,380
------------ ------------- ------------ -------------
TOTAL
OPERATING
EXPENSES 12,074 11,899 45,900 43,210
------------ ------------- ------------ -------------
Operating
Income/(Loss) 22,720 21,990 101,249 71,877
------------ ------------- ------------ -------------

Total Other
Income /
(Expense) (2,476) 1,855 (4,309) 2,250

Income/(Loss)
Before Income
Taxes and
Minority and
Non-
Controlling
Interests 20,244 23,845 96,940 74,127

Provision for
Income Taxes 2,026 1,764 9,029 6,625
Minority and
Non-Controlling
Interests 17,111 20,882 82,976 63,848
------------ ------------- ------------ -------------
Income/(Loss)
Before Interest
on
Mandatorily
Redeemable
Units 1,107 1,199 4,935 3,654

Interest on
Mandatorily
Redeemable
Units - - - -

Net
Income/(Loss) $ 1,107 $ 1,199 $ 4,935 $ 3,654
============ ============= ============ =============

Basic Earnings
per Share $ 0.18 $ 0.20 $ 0.81 $ 0.60
Basic Weighted
Average Shares
Outstanding 6,111,118 6,111,118 6,111,118 6,111,118

Diluted Earnings
per Share $ 0.18 $ 0.20 $ 0.81 $ 0.60
Diluted Weighted
Average Shares
Outstanding 6,118,868 6,118,868 6,118,868 6,118,868

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PZENA INVESTMENT MANAGEMENT, INC.
(Prior to October 30, 2007 - Pzena Investment Management, LLC)

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per-share amounts)

Pro Forma
Quarter Ended Quarter Ended
December 31, Pro Forma December 31,
2007 Adjustments 2007
------------- ----------- -------------
REVENUE $ 34,794 $ - $ 34,794
------------- ----------- -------------

EXPENSES
Compensation and Benefits
Expense 8,488 (802)D 7,686
General and Administrative
Expenses 5,451 (1,063)A 4,388
------------- ----------- -------------
TOTAL OPERATING EXPENSES 13,939 (1,865) 12,074
------------- ----------- -------------
Operating Income/(Loss) 20,855 1,865 22,720
------------- ----------- -------------

Total Other Income/(Expense) (2,476) - (2,476)

Income/(Loss) Before Income
Taxes and
Minority and Non-Controlling
Interests 18,379 1,865 20,244

Provision for Income Taxes 1,734 292 B 2,026
Minority and Non-Controlling
Interests 15,912 1,199 C 17,111
------------- ----------- -------------
Income/(Loss) Before Interest
on
Mandatorily Redeemable Units 733 374 1,107

Interest on Mandatorily
Redeemable Units - - -

Net Income/(Loss) $ 733 $ 374 $ 1,107
============= =========== =============

Basic Earnings per Share $ 0.18
Basic Weighted Average Shares
Outstanding 6,111,118

Diluted Earnings per Share $ 0.18
Diluted Weighted Average
Shares Outstanding 6,118,868

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PZENA INVESTMENT MANAGEMENT, INC.
(Prior to October 30, 2007 - Pzena Investment Management, LLC)

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per-share amounts)

Pro Forma
Quarter Ended Quarter Ended
September 30, Pro Forma September 30,
2007 Adjustments 2007
------------- ----------- -------------
REVENUE $ 40,217 $ - $ 40,217
------------- ----------- -------------

EXPENSES
Compensation and Benefits
Expense 8,807 - 8,807
General and Administrative
Expenses 2,958 - 2,958
------------- ----------- -------------
TOTAL OPERATING EXPENSES 11,765 - 11,765
------------- ----------- -------------
Operating Income/(Loss) 28,452 - 28,452
------------- ----------- -------------

Total Other
Income/(Expense) (1,621) (243)E (1,864)

Income/(Loss) Before Income
Taxes and
Minority and Non-Controlling
Interests 26,831 (243) 26,588

Provision for Income Taxes 1,269 1,078 2,347
Minority and Non-Controlling
Interests (711) 23,555 22,844
------------- ----------- -------------
Income/(Loss) Before Interest
on
Mandatorily Redeemable Units 26,273 (24,876) 1,397

Interest on Mandatorily
Redeemable Units - - -

Net Income/(Loss) $ 26,273 $ (24,876) $ 1,397
============= =========== =============

Basic Earnings per Share $ 0.23
Basic Weighted Average Shares
Outstanding 6,111,118

Diluted Earnings per Share $ 0.23
Diluted Weighted Average
Shares Outstanding 6,118,868

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PZENA INVESTMENT MANAGEMENT, INC.
(Prior to October 30, 2007 - Pzena Investment Management, LLC)

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per-share amounts)

Pro Forma
Quarter Ended Quarter Ended
December 31, Pro Forma December 31,
2006 Adjustments 2006
------------- ----------- -------------
REVENUE $ 33,889 $ - $ 33,889
------------- ----------- -------------

EXPENSES
Compensation and Benefits
Expense 248,764 (239,954)D 8,810
General and Administrative
Expenses 3,089 - 3,089
------------- ----------- -------------
TOTAL OPERATING EXPENSES 251,853 (239,954) 11,899
------------- ----------- -------------
Operating Income/(Loss) (217,964) 239,954 21,990
------------- ----------- -------------

Total Other Income/(Expense) 2,822 (967)E 1,855

Income/(Loss) Before Income
Taxes and
Minority and Non-Controlling
Interests (215,142) 238,987 23,845

Provision for Income Taxes 869 895 B 1,764
Minority and Non-Controlling
Interests 674 20,208 C 20,882
------------- ----------- -------------
Income/(Loss) Before Interest
on
Mandatorily Redeemable Units (216,685) 217,884 1,199

Interest on Mandatorily
Redeemable Units 469,957 (469,957)F -

Net Income/(Loss) $ (686,642) $ 687,841 $ 1,199
============= =========== =============

Basic Earnings per Share $ 0.20
Basic Weighted Average Shares
Outstanding 6,111,118

Diluted Earnings per Share $ 0.20
Diluted Weighted Average
Shares Outstanding 6,118,868

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PZENA INVESTMENT MANAGEMENT, INC.
(Prior to October 30, 2007 - Pzena Investment Management, LLC)

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per-share amounts)

Pro Forma
Year Ended Year Ended
December 31, Pro Forma December 31,
2007 Adjustments 2007
------------ ----------- ------------
REVENUE $ 147,149 $ - $ 147,149
------------ ----------- ------------

EXPENSES
Compensation and Benefits
Expense 129,701 (95,776)D 33,925
General and Administrative
Expenses 13,038 (1,063)A 11,975
------------ ----------- ------------
TOTAL OPERATING EXPENSES 142,739 (96,839) 45,900
------------ ----------- ------------
Operating Income/(Loss) 4,410 96,839 101,249
------------ ----------- ------------

Total Other Income/(Expense) (2,136) (2,173)E (4,309)

Income/(Loss) Before Income
Taxes and
Minority and Non-Controlling
Interests 2,274 94,666 96,940

Provision for Income Taxes 5,610 3,419 B 9,029
Minority and Non-Controlling
Interests (20,644) 103,620 C 82,976
------------ ----------- ------------
Income/(Loss) Before Interest
on
Mandatorily Redeemable Units 17,308 (12,373) 4,935

Interest on Mandatorily
Redeemable Units 16,575 (16,575)F -

Net Income/(Loss) $ 733 $ 4,202 $ 4,935
============ =========== ============

Basic Earnings per Share $ 0.81
Basic Weighted Average Shares
Outstanding 6,111,118

Diluted Earnings per Share $ 0.81
Diluted Weighted Average Shares
Outstanding 6,118,868

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PZENA INVESTMENT MANAGEMENT, INC.
(Prior to October 30, 2007 - Pzena Investment Management, LLC)

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per-share amounts)

Pro Forma
Year Ended Year Ended
December 31, Pro Forma December 31,
2006 Adjustments 2006
------------ ----------- -------------
REVENUE $ 115,087 $ - $ 115,087
------------ ----------- -------------

EXPENSES
Compensation and Benefits
Expense 305,632 (270,802)D 34,830
General and Administrative
Expenses 8,380 - 8,380
------------ ----------- -------------
TOTAL OPERATING EXPENSES 314,012 (270,802) 43,210
------------ ----------- -------------
Operating Income/(Loss) (198,925) 270,802 71,877
------------ ----------- -------------

Total Other Income/(Expense) 6,114 (3,864)E 2,250

Income/(Loss) Before Income
Taxes and
Minority and Non-Controlling
Interests (192,811) 266,938 74,127

Provision for Income Taxes 3,941 2,684 B 6,625
Minority and Non-Controlling
Interests 1,997 61,851 C 63,848
------------ ----------- -------------
Income/(Loss) Before Interest
on
Mandatorily Redeemable Units (198,749) 202,403 3,654

Interest on Mandatorily
Redeemable Units 516,708 (516,708)F -

Net Income/(Loss) $ (715,457) $ 719,111 $ 3,654
============ =========== =============

Basic Earnings per Share $ 0.60
Basic Weighted Average Shares
Outstanding 6,111,118

Diluted Earnings per Share $ 0.60
Diluted Weighted Average
Shares Outstanding 6,118,868

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NOTES TO THE PRO FORMA ADJUSTMENTS:

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(A) Represents an adjustment to remove one-time costs associated with
the direct additional legal and accounting fees incurred by Pzena
Investment Management, LLC as a result of the initial public
offering of Pzena Investment Management, Inc. on October 30,
2007.

(B) Reflects the pro forma impact of federal, state and local taxes on
the income allocated from Pzena Investment Management, LLC.
Historically, the operating company was subject solely to the New
York City Unincorporated Business Tax (UBT).

For periods prior to July 23, 2007, taxes have been adjusted to
reflect the full-period UBT deductibility of the interest expense
associated with the three-year, $60 million term loan agreement
completed by the operating company on July 23, 2007.

(C) Represents the non-controlling interest allocation of
approximately 90.5% of the income of Pzena Investment Management,
Inc. to Pzena Investment Management, LLC.

(D) Reflects an adjustment to remove unit-based compensation charges
and one-time merit compensation associated with the initial
public offering. Effective March 31, 2007, the obligation of the
operating company to mandatorily redeem its membership units was
eliminated. Also on this date, vesting on all outstanding
unvested operating company units and options was accelerated. As
a result of these changes, there will be no further unit-based
compensation expense as of and from this date.

(E) Represents the full-period effect of interest expense and loan
origination fees amortization associated with the three-year, $60
million term loan agreement completed by the operating company on
July 23, 2007.

(F) Reflects an adjustment to remove unit-based interest expense.
Effective March 31, 2007, the obligation of the operating company
to mandatorily redeem its membership units was eliminated.
Accordingly, there will be no unit-based interest expense as of
and from this date.

*T

-0-
*T

Assets Under Management by Strategy
-------------------------------------------
($ billions)

December 31, September 30, December 31,
2007 2007 2006
------------ ------------- ------------

Large Cap Value $13.6 $17.3 $18.1
Value Service 5.0 5.8 5.7
Global Value 2.6 2.9 0.9
Small Cap Value 0.9 1.1 1.1
Mid Cap Value 0.4 0.6 0.6
International Value 0.5 0.6 0.4
All Cap Value 0.4 0.4 0.5
Other 0.2 0.2 -
------------ ------------- ------------
Total $23.6 $28.9 $27.3
*T

Pzena Investment Management, Inc.
Wayne Palladino, 212-583-0179
palladino@pzena.com

Copyright Business Wire 2008