3Q14 Earnings Release Exhibit



	GAAP Basis				Non-GAAP Basis
	For the Three Months Ended				For the Three Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
	(unaudited)

Basic Net Income	$	2,059	$	1,959	$	1,737	$	1,381
Basic Earnings Per Share	$	0.16	$	0.16	$	0.13	$	0.11

Diluted Net Income¹	$	9,503	$	7,866	$	1,737	$	7,291
Diluted Earnings Per Share¹	$	0.14	$	0.12	$	0.13	$	0.11

	GAAP Basis				Non-GAAP Basis
	For the Nine Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
	(unaudited)

Basic Net Income	$	5,631	$	4,391	$	4,890	$	3,589
Basic Earnings Per Share	$	0.45	$	0.37	$	0.39	$	0.30

Diluted Net Income	$	26,193	$	20,129	$	25,452	$	19,327
Diluted Earnings Per Share	$	0.39	$	0.30	$	0.37	$	0.29

1 During the three months ended September 30, 2014, the calculation of non-GAAP diluted earnings per
share resulted in an increase in earnings per share. Therefore, diluted net income and diluted earnings
per share are assumed to be equal to basic net income and basic earnings per share.

The results for the three and nine months ended September 30, 2014 and 2013 include recurring adjustments related to the Company's deferred tax asset generated by the Company’s initial public offering and subsequent unit conversions, tax receivable agreement and the associated liability to its selling and converting shareholders. 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 $1.7 million and $0.13, respectively, for the three months ended September 30, 2014, and $7.3 million and $0.11, respectively, for the three months ended September 30, 2013. Non-GAAP diluted net income and non-GAAP diluted earnings per share were $25.5 million and $0.37, respectively, for the nine months ended September 30, 2014, and $19.3 million and $0.29, respectively, for the nine months ended September 30, 2013. 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 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
	September 30,			June 30,			September 30,			September 30,			September 30,
	2014			2014			2013			2014			2013

Institutional Accounts
Assets
Beginning of Period	$	15.1		$	15.2		$	12.5		$	13.8		$	11.2
Inflows	0.4			0.4			0.8			2.0			1.3
Outflows	(0.8		)	(0.9		)	(0.5		)	(3.3		)	(2.1		)
Net Flows	(0.4		)	(0.5		)	0.3			(1.3		)	(0.8		)
Market Appreciation/(Depreciation)	(0.4		)	0.4			1.0			1.8			3.4
End of Period	$	14.3		$	15.1		$	13.8		$	14.3		$	13.8

Retail Accounts
Assets
Beginning of Period Assets	$	11.9		$	10.2		$	7.8		$	8.5		$	5.6
Inflows	0.8			1.4			0.7			3.4			2.2
Outflows	(0.5		)	(0.2		)	(0.3		)	(1.3		)	(1.1		)
Net Flows	0.3			1.2			0.4			2.1			1.1
Market Appreciation/(Depreciation)	(0.1		)	0.5			0.3			1.5			1.8
End of Period	$	12.1		$	11.9		$	8.5		$	12.1		$	8.5

Total
Assets
Beginning of Period	$	27.0		$	25.4		$	20.3		$	22.3		$	16.8
Inflows	1.2			1.8			1.5			5.4			3.5
Outflows	(1.3		)	(1.1		)	(0.8		)	(4.6		)	(3.2		)
Net Flows	(0.1		)	0.7			0.7			0.8			0.3
Market Appreciation/(Depreciation)	(0.5		)	0.9			1.3			3.3			5.2
End of Period	$	26.4		$	27.0		$	22.3		$	26.4		$	22.3



Revenue (unaudited)
($ thousands)
	Three Months Ended
	September 30,		June 30,		September 30,
	2014		2014		2013

Institutional Accounts	$	21,431	$	20,506	$	19,006
Retail Accounts	8,174		7,439		5,040
Total	$	29,605	$	27,945	$	24,046


			Nine Months Ended
			September 30,		September 30,
			2014		2013

Institutional Accounts			$	62,233	$	52,831
Retail Accounts			21,718		14,189
Total			$	83,951	$	67,020

Included in these amounts were performance fees recognized of $2.1 million for the third quarter of 2014, compared to $0.2 million for the second quarter of 2014, and $0.7 million for the third quarter of 2013. In general, performance fees are calculated on an annualized basis over the contract's measurement period, which, for the majority of our performance fee arrangements, extends to three years.

The weighted average fee rate for institutional accounts was 0.582% for the third quarter of 2014, increasing from 0.542% for the second quarter of 2014, and from 0.577% for the third quarter of 2013. The increase from last quarter primarily reflects an increase in performance fees recognized during the third quarter of 2014. The increase from the third quarter of 2013 also reflects the increase in performance fees, which is partially offset by a shift in mix toward larger relationships and our expanded value strategies that generally carry lower fee rates.

The weighted average fee rate for retail accounts was 0.271% for the third quarter of 2014, increasing from 0.267% for the second quarter of 2014, and from 0.245% for the third quarter of 2013. The increase from the second quarter of 2014 and third quarter of 2013 primarily reflects the addition of assets in our non-U.S. strategies which generally carry higher fee rates.

Total operating expenses were $13.0 million in the third quarter of 2014, increasing from $12.4 million for the second quarter of 2014 and from $11.1 million for the third quarter of 2013. The fluctuation from the second quarter of 2014 primarily reflects an increase in the discretionary bonus accrual. The increase from third quarter of 2013 reflects an increase in salary, headcount, and the discretionary bonus accrual and an increase in costs associated with our mutual funds during 2014. Details of operating expenses are shown below:



Operating Expenses (unaudited)
($ thousands)
	Three Months Ended
	September 30,		June 30,		September 30,
	2014		2014		2013

Compensation and Benefits Expense	$	10,622	$	9,899	$	9,100
General and Administrative Expense	2,351		2,505		1,995
Operating Expenses	$	12,973	$	12,404	$	11,095

			Nine Months Ended
			September 30,		September 30,
			2014		2013

Compensation and Benefits Expense			$	30,571	$	27,622
General and Administrative Expense			7,176		5,747
Operating Expenses			$	37,747	$	33,369

Other expense was approximately $2.3 million for the third quarter of 2014, $1.4 million for the second quarter of 2014, and $2.7 million for the third quarter of 2013. Other expense includes the (losses)/ gains and other investment income 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 (losses)/ gains and other investment income associated with the investments of the Company's outside interests are offset in net income attributable to non-controlling interests. For the third quarter of 2014, other expense also includes an expense of $1.8 million reflecting an increase in the Company's liability to its selling and converting shareholders resulting from an increase in expected future tax benefits described in Income Tax (Benefit)/ Expense below. Changes in the liability to selling and converting shareholders associated with changes in the realizability of the deferred tax asset generated an expense of $2.0 million and $3.3 million in the second quarter of 2014 and the third quarter of 2013, respectively. Details of other expense, as well as a reconciliation of the related GAAP and non-GAAP measures, are shown below:



Other Expense (unaudited)
($ thousands)
	Three Months Ended
	September 30,			June 30,			September 30,
	2014			2014			2013

Net Interest and Dividend Income	$	88		$	115		$	82
(Losses)/ Gains and Other Investment Income	(434		)	410			498
Change in Liability to Selling and Converting Shareholders¹	(1,824		)	(1,996		)	(3,257		)
Other (Expense)/ Income	(179		)	63			(71		)
GAAP Other Expense	(2,349		)	(1,408		)	(2,748		)
Change in Liability to Selling and Converting Shareholders¹	1,824			1,996			3,257
Outside Interests of Investment Partnerships²	149			(57		)	(211		)
Non-GAAP Other (Expense)/ Income, Net of Outside Interests	$	(376	)	$	531		$	298

				Nine Months Ended
				September 30,			September 30,
				2014			2013

Net Interest and Dividend Income				$	268		$	252
Gains and Other Investment Income				80			1,763
Change in Liability to Selling and Converting Shareholders¹				(3,947		)	(4,525		)
Other Expense				(205		)	(159		)
GAAP Other Expense				(3,804		)	(2,669		)
Change in Liability to Selling and Converting Shareholders¹				3,947			4,525
Outside Interests of Investment Partnerships²				19			(930		)
Non-GAAP Other Income, Net of Outside Interests				$	162		$	926


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 non-controlling interest allocation of the loss/(income) of the Company's consolidated
investment partnerships to its external investors.

The Company recognized income tax benefits of $0.2 million for the third quarter of 2014, $0.3 million for the second quarter of 2014, and $2.1 million for the third quarter of 2013. Third quarter of 2014 income taxes included a $2.4 million income tax benefit associated with a decrease to the valuation allowance recorded against the Company's deferred tax asset related to the basis step ups created by operating company unit exchanges. This adjustment generated $2.4 million and $3.8 million in income tax benefits in the second quarter of 2014 and third quarter of 2013, respectively. Third quarter of 2014 income tax expense also included a $0.3 million adjustment to the deferred tax asset and valuation allowance. This adjustment was driven by a reduction in expected future tax benefits associated with a change in the Company's effective tax rate. Details of the income tax (benefit)/ expense, 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
	September 30,			June 30,			September 30,
	2014			2014			2013

Corporate Income Tax Expense	$	1,225		$	1,244		$	985
Unincorporated Business Tax Expense	701			835			763
Non-GAAP Income Tax Expense	1,926			2,079			1,748
Change in Valuation Allowance²	(2,439		)	(2,353		)	(3,832		)
Net Adjustment to Deferred Tax Asset³	293			—			—
GAAP Income Tax (Benefit)	$	(220	)	$	(274	)	$	(2,084	)


				Nine Months Ended
				September 30,			September 30,
				2014			2013

Corporate Income Tax Expense				$	3,559		$	2,552
Unincorporated Business Tax Expense¹				2,318			1,487
Non-GAAP Income Tax Expense				5,877			4,039
Change in Valuation Allowance²				(5,583		)	(5,613		)
Net Adjustment to Deferred Tax Asset³				895			286
GAAP Income Tax Expense/ (Benefit)				$	1,189		$	(1,288	)




1 Includes a $0.6 million tax benefit recognized in the first quarter of 2013 associated with the
amendment of prior year tax returns to change the methodology for state and local receipts.

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.

3 Reflects the net impact of the change in the Company's deferred tax asset and valuation allowance
assessed against the deferred tax asset associated with the decrease in expected future tax benefits
and the prior year's final tax return.



Non-Controlling Interests (unaudited)
($ thousands)

	Three Months Ended
	September 30,			June 30,			September 30,
	2014			2014			2013

Operating Company Allocation	$	12,593		$	12,226		$	10,120
Outside Interests of Investment Partnerships¹	(149		)	57			211
GAAP Net Income Attributable to Non-Controlling Interests	$	12,444		$	12,283		$	10,331

				Nine Months Ended
				September 30,			September 30,
				2014			2013

Operating Company Allocation				$	35,599		$	26,949
Outside Interests of Investment Partnerships¹				(19		)	930
GAAP Net Income Attributable to Non-Controlling Interests				$	35,580		$	27,879


1 Represents the non-controlling interest allocation of the (loss)/ income of the Company's consolidated
investment partnerships to its external investors.

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 12, 2014 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.

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
		September 30,		December 31,
		2014		2013
		(unaudited)
ASSETS
	Cash and Cash Equivalents	$	37,233	$	33,878
	Restricted Cash	2,715		316
	Due from Broker	374		58
	Advisory Fees Receivable	24,588		23,947
	Investments	14,989		7,621
	Prepaid Expenses and Other Assets	1,233		1,246
	Deferred Tax Asset, Net of Valuation Allowance
	of $44,806 and $53,973, respectively	14,694		12,312
	Property and Equipment, Net of Accumulated
	Depreciation of $3,014 and $2,850, respectively	1,027		835
	TOTAL ASSETS	$	96,853	$	80,213

LIABILITIES AND EQUITY
	Liabilities:
	Accounts Payable and Accrued Expenses	$	16,688	$	5,570
	Due to Broker	259		5
	Securities Sold Short, at Fair Value	1,462		—
	Liability to Selling and Converting Shareholders	15,860		12,777
	Lease Liability	460		778
	Deferred Compensation Liability	1,637		2,339
	Other Liabilities	274		195
	TOTAL LIABILITIES	36,640		21,664

	Equity:
	Total Pzena Investment Management, Inc.'s Equity	18,403		16,362
	Non-Controlling Interests	41,810		42,187
	TOTAL EQUITY	60,213		58,549
	TOTAL LIABILITIES AND EQUITY	$	96,853	$	80,213



PZENA INVESTMENT MANAGEMENT, INC.

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


		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2014			2013			2014			2013

REVENUE		$	29,605		$	24,046		$	83,951		$	67,020

EXPENSES
Compensation and Benefits Expense		10,622			9,100			30,571			27,622
General and Administrative Expense		2,351			1,995			7,176			5,747
	TOTAL OPERATING EXPENSES	12,973			11,095			37,747			33,369
Operating Income		16,632			12,951			46,204			33,651

Other (Expense)/ Income		(2,349		)	(2,748		)	(3,804		)	(2,669		)

Income Before Taxes		14,283			10,203			42,400			30,982

Income Tax (Benefit)/ Expense		(220		)	(2,084		)	1,189			(1,288		)
Consolidated Net Income		14,503			12,287			41,211			32,270

Less: Net Income Attributable to Non-Controlling Interests		12,444			10,331			35,580			27,879

Net Income Attributable to Pzena Investment Management, Inc.		$	2,059		$	1,956		$	5,631		$	4,391


Earnings per Share - Basic and Diluted Attributable to
Pzena Investment Management, Inc. Common Stockholders:

Net Income for Basic Earnings per Share		$	2,059		$	1,956		$	5,631		$	4,391
Basic Earnings per Share		$	0.16		$	0.16		$	0.45		$	0.37
Basic Weighted Average Shares Outstanding		12,965,606			12,209,978			12,443,687			11,934,142

Net Income for Diluted Earnings per Share		$	9,503		$	7,866		$	26,193		$	20,129
Diluted Earnings per Share		$	0.14		$	0.12		$	0.39		$	0.30
Diluted Weighted Average Shares Outstanding		67,632,072			66,714,033			67,879,923			66,610,381



	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					Nine Months Ended
		September 30,					September 30,
		2014			2013		2014		2013

REVENUE		$	29,605		$	24,046	$	83,951	$	67,020

EXPENSES
Compensation and Benefits Expense		10,622			9,100		30,571		27,622
General and Administrative Expense		2,351			1,995		7,176		5,747
	TOTAL OPERATING EXPENSES	12,973			11,095		37,747		33,369
Operating Income		16,632			12,951		46,204		33,651

Other (Expense)/ Income, Net of Outside Interests		(376		)	298		162		926

Income Before Taxes and Operating Company Allocation		16,256			13,249		46,366		34,577

Unincorporated Business Tax Expense		701			763		2,318		1,487
Allocable Income		15,555			12,486		44,048		33,090

Operating Company Allocation		12,593			10,120		35,599		26,949
Income Before Corporate Income Taxes		2,962			2,366		8,449		6,141

Corporate Income Tax Expense		1,225			985		3,559		2,552
Non-GAAP Net Income		$	1,737		$	1,381	$	4,890	$	3,589
Tax Receivable Agreement Income, Net of Taxes		322			575		741		802
GAAP Net Income		$	2,059		$	1,956	$	5,631	$	4,391

Earnings Per Share - Basic and Diluted Attributable to
Pzena Investment Management, Inc. Common Stockholders:

	Net Income for Basic Earnings per Share	$	1,737		$	1,381	$	4,890	$	3,589
	Basic Earnings per Share	$	0.13		$	0.11	$	0.39	$	0.30
	Basic Weighted Average Shares Outstanding	12,965,606			12,209,978		12,443,687		11,934,142

	Net Income for Diluted Earnings per Share	$	1,737		$	7,291	$	25,452	$	19,327
	Diluted Earnings per Share	$	0.13		$	0.11	$	0.37	$	0.29
	Diluted Weighted Average Shares Outstanding	12,965,606			66,714,033		67,879,923		66,610,381


•	Revenue was $29.6 million and operating income was $16.6 million for the third quarter


•	Diluted earnings per share for the third quarter was $0.14 on a GAAP basis and $0.13 on a non-GAAP basis


•	Declared a quarterly dividend of $0.03 per share