42 slides from Alliancebernstein Holding L.p's earnings presentation, Oct 25, 2012
Slide 1: Third Quarter 2012 Review
October 24, 2012 Third Quarter 2012 Review Peter S. Kraus Chairman & Chief Executive Officer John C. Weisenseel Chief Financial Officer ALLIANCEBERNSTEIN
Slide 2: Cautions Regarding Forward-Looking Statements
Cautions Regarding Forward-Looking Statements Certain statements provided by management in this presentation are “forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. ‘Such forward-looking statements are subject to risks, uncertainties, and other fa
Slide 3: Peter S. Kraus
Peter S. Kraus Chairman & Chief Executive Officer
Slide 4: Firmwide Overview: Third Quarter 2012
Firmwide Overview: Third Quarter 2012 In US $ Billions $21 2 $18 st ! 30:12 20:12 30:12 30:11 3012 20:12 3012 3a:tt ET! = ‘$(4) $(3) $(4) ‘$(15) Sato $407 sa19 $402 3012 20:12 3012 sant $411 $411 $411 $438 3a12 2012 302 3a manostamiten. com
Slide 5: Asset Flows by Distribution Channel: Quarterly Trend
Asset Flows by Distribution Channel: Quarterly Trend In US $ Billions 73 4 (11.3) (14.7) Inst, Ret 3011 Total Gross Sales 13 Gross Redemptions* $(26.7) Net Outflows (15.4) Gross Sales Cena 17 17 igi @7) 73) @2) (10.9) (149) Pe. Inst Rot PC. 4ant s149 $(28.1) $(13.2) "Gross Redemptions 1012 $18.1 $(3
Slide 6: Institutional Highlights
Institutional Highlights Improved Flows YTD ‘12 Pipeline* Well Above Historical Average $B sna sae $B hs 12 = Gross Sales = = Gross ($7.0) Redemptions 9 Cue) ss AXAC/ PPIP 2 ee —_ — + Net Flows $6.48 Se) Average 50 3 ($39.1) ($48.1) ° yD IH: 1010 210 3a10 4Q10 1011 2a11 3a11 att 1012 2012 3012 Notab
Slide 7: Continued Strong Performance in Fixed Income
Continued Strong Performance in Fixed Income Relative Performance Through 9/30/12 3Q12 YTD 12 AYear 3 Year SYear us: Strategic Core Plus 08 13 14 19 09 High Yield 06 17 05 08 06 Core Fixed Income 07 1.2 1.0 14 05 Diversified Yield 28 62 73 53 1.9 Global: Global High Income 05 03 18 23 07 Global Fixe
Slide 8: Equities — Strength in Stability Equities, Improvement in Growth
‘quities — Strength in Stability Equities, Improvement in Growth Relative Performance Through 9/30/12 3012 YTD 12 1 Year 3 Year 5 Year Stability: US Market Neutral 06 22 37 25 N/A Global Market Neutral 15 43 39 NIA N/A Select US Equity 05 02 0.0 37 58 Growth & Income 04 15 19 25 1.0 US Active Low Vo
Slide 9: The Case for Deep Value Investing
The Case for Deep Value Investing Investors’ Flight to the “Safety” of High Dividend Yielding Stocks Has Skewed the Index and Increased Risk Percent of Total Market Cap of S&P 500, — High Dividend Yield 18 7 72 74 76 78 8 62 @ 86 8 90 92 94 9 98 00 2 O% O 8 10 12 With High Dividend Yielding Stocks a
Slide 10: Retail Highlights
Retail Highlights Positive Momentum Continues... ...With All Regions Contributing to YTD Gross Sales Growth SB $12.9 14 pe S71 $5.0 fal $2.9 3 [s3.)} ($9.0) ($8.4) ($9) ($105) (g417) (6109) ($108) ($10.2) fort 2011 3011 4at1 1012 2012 3012 seen Gross Sales mm Gross Redemptions —--Net Flows 491% — +9
Slide 11: Private Client Highlights
Private Client Highlights Bernstein Fully Diversified Investment Solution Enhancements to Private Client Portfolios 2012: Mult-style, all-cap US Strategic > portfolio seeks reliable Enuties returns in diferent markets, INon-US Stocks} 2010: Adjusts equity ‘exposure in changing Real As risk condition
Slide 12: Bernstein Research Services Highlights
AllianceBernstein.com * Bernstein Research Services Highlights Revenues Have Declined… % Change 3Q12 / 3Q11: (14)% 3Q12 / 2Q12: (2)% YTD12 / YTD11: (10)% $M *US: NYSE and Nasdaq shares traded; Europe: Value traded (Source: FESE - Federation of European Stock Exchanges); Asia: Combined value traded f
Slide 13: Progress on Our Strategy in 3Q12
Progress on Our Strategy in 3Q12 Firmwide Initiative Progress Improve investment performance and deliver for clients Diversify our business across channels, investment services and geographies = Continued Fixed Income outperformance — 89% of assets in services outperforming for 3 yrs = Successful PP
Slide 14: John C. Weisenseel
John C. Weisenseel Chief Financial Officer
Slide 15: Financial Highlights: Third Quarter 2012
Financial Highlights: Third Quarter 2012 In US $ Millions S574 $546 ss74 =e 302 20:12 3012 3Q:1t $495 $458 $458 ‘$458 Adjusted Expenses 3012 20:12 302 3a 20.2% 202% 161% 177% 3012 20:12 3012 3a 266 36¢ 30¢ 24g Adjusted EPU a1 202 302 aan Please ref to pages 37-40 for adstional information onthe reco
Slide 16: Third Quarter 2012 GAAP to Adjusted Reconciliation
Third Quarter 2012 GAAP to Adjusted Reconciliation In. US dollar millions Adjustments Distribution- Pass Deferred Venture Real Related Through Compensation Capital Estate Adjusted GAAP Payments _Expenses MT™M. Fund Charges (Non-GAAP) Net Revenues 708 (105) (26) @ 4 0) 574 Operating Expenses 764 (105
Slide 17: Third Quarter 2012 Adjusted Income Statement
Third Quarter 2012 Adjusted Income Statement = Adjusted Operating Income improved 32% sequentially and 8% from the prior year quarter = Adjusted EPU and distribution of 36 cents for 3Q12 3Q 20 3Q In US dollar millions (except EPU) 2012 2012 % A 2011 %A Adjusted Net Revenues $ 574 $ 546 5% $ 602 (5%)
Slide 18: Third Quarter 2012 Adjusted Revenues
Third Quarter 2012 Adjusted Revenues = Base Fees sequential increase attributed to higher Retail AUM; the 9% decline versus the prior year period is primarily due to the decline in average AUM and continued shift from equity services into lower fee realization strategies = Performance Fees increase
Slide 19: Third Quarter 2012 Adjusted Operating Expenses
Third Quarter 2012 Adjusted Operating Expenses = Compensation Ratio, accrued as a percentage of adjusted net revenues, of approximately 50% for 3Q12 and 2Q12, and 49% in 3Q11 = Total Compensation & Benefits increased 5% sequentially due primarily to the 5% increase in adjusted net revenues, and decr
Slide 20: Third Quarter 2012 Adjusted Operating Results
Third Quarter 2012 Adjusted Operating Results = Adjusted Operating Margin improved versus both prior periods. Revenues improved sequentially, and versus the prior year quarter, expense reductions outpaced the decline in revenue. 3Q 2Q 3a In US dollar millions (except EPU) 2012 2012 % A 2011 %A Adjus
Slide 21: Real Estate Consolidation Strategy Update
Real Estate Consolidation Strategy Update = We continue to project total non-cash real estate charges of $225M to $250M to implement our entire office space consolidation plan, generating annual expense savings of $38M to $43M ® Estimates are based on current market conditions = Actual total charges
Slide 22: AllianceBernstein.com
AllianceBernstein.com
Slide 23: AllianceBernstein.com
AllianceBernstein.com
Slide 24: Institutional Equity: Relative Performance
Institutional Equity: Relative Performance Institutional Equity Composites vs. Benchmarks Periods Ended September 30, 2012 3Q One ‘Three —-Fiive Ten Service 2012 Year __—Years__—Years__—‘Years Benchmark Value Global Value (1.9) (72) (74) (75) (2.1) MSCIWorld (Cap, UH, net) Intemational Value (22) 63
Slide 25: Institutional Fixed Income: Relative Performance
Institutional Fixed Income: Relative Performance Institutional Fixed Income Composites vs. Benchmarks* Periods Ended September 30, 2012 3a One Three —Five Ten Service 2012 Year _—‘Years _—‘Years__‘Years Benchmark 33% Barclays High Yield, 33% JPM EMBI Global High Income 04 13 19 0.4 22 Gisbaland $6%d
Slide 26: Retail Equity: Relative Performance
Retail Equity: Relative Performance Retail Mutual Funds vs. Lipper Averages Periods Ended September 30, 2012 3Q One Three Five Ten Service 2012 Year Years Years Years Lipper Average Value Intemational Value (2.0) (45) (3.9) (6.5) (1.4) Intemational Large Cap Value Growth & Income 12 64 29 (0.5) (0.6
Slide 27: Retail Fixed Income: Relative Performance
Retail Fixed Income: Relative Performance Retail Fixed Income Funds vs. Lipper Averages Periods Ended September 30, 2012 3Q One Three Five ‘Ten Service 2012 Year ‘Years Years __Years Lipper Average Global High Yield Portfolio. 0.4 22 29 24 25 Bond Global High Yield ‘American Income Portfolio 18 56 3
Slide 28: Private Client: Absolute Performance
Private Client: Absolute Performance Periods Ended September 30, 2012 3Q One Three Five Ten Service 2012 Year Years Years Years Fully Diversified Simulation” 33 10.9 46 (1.5) 56 ‘S&P 500 64 30.2 13.2 14 8.0 MSCI World index - Net 67 216 75 (2.1) 8.0 Lipper Short/int Blended Muni Fund Avg 14 49 38 40
Slide 29: Assets Under Management
Assets Under Management $ Billions ‘At September 30, 2012 AtJune 30 At September 30 2012 2011 Private Institutions __Retail Total Total Total Equity Value $ 2 $ 6 S$ 7 $ es 6 S$ 87 Growth 7 19 14 40 39 45 Total Equity 35 35 34 401 408 132 Fixed Income 144 m4 33 245 230 243 Other"? 39 30 4 73 69 87 T
Slide 30: AUM Roll-Forward by Distribution Channel
Three Months Ended 9/30/12: AUM Roll-Forward by Distribution Channel In US $ Billions Institutions Retail Private Client Total Investment Service: US Global Total US __Global_‘Total US __Global_Total__ US __Global_Total Beginning of Period $109.8 $105.1 $2149 | $47.0 $77.8 $124.8 | $49.0 $18.6 $67.6
Slide 31: AUM Roll-Forward by Investment Service
Three Months Ended 9/30/12: AUM Roll-Forward by Investment Service In US $ Billions Value Equity Growth Equity Fixed Income Other Total Investment Service: US Global Total US__Giobal_Total_ US Global__—‘Total_ ~— US Global__‘Total__~—-US__—Gobal_—‘Total Beginning of Period $237 $459 $696 | $206 tea
Slide 32: AUM by Region
AUM by Region As of September 30, 2012 Institutions Other 11% Eur. ex-UK 5% Australia 3% UK 5% NA. ex- US 5% US 59% Japan 12% US $ Billions $214.4 Retail Europe 8% other 3% Asia Pac 32% US 57% $136.4 M
Slide 33: Third Quarter 2012 Adjusted Advisory Fees
Third Quarter 2012 Adjusted Advisory Fees In US Dollars 3a 2a 3a 2012 2012 %A 2011 % A Ending AUM ($ Billions) $419 $407 3% $402 4% Average AUM (S Billions) $414 $414 (0%) $438 (6%) By Fee Type ($ Millions): Adjusted Base Fees $426 $420 1% $468 (0%) Performance Fees 22 4 450% 1 im Total $448 $424 6%
Slide 34: Consolidated Balance Sheet
Consolidated Balance Sheet In US § Millions Assets Sept. 30, 2012 Dec. 31, 2011 Gasivand cash equnalents gi as 639 Cash and securities, segregated 948 1,280 Receivables, net 1413 1,399 Investments: Deferred compensation - related 182 Other 575 Goodwill 2,984 Intangible assets, net 174 Deferred sales
Slide 35: Third Quarter 2012 GAAP Income Statement
Third Quarter 2012 GAAP Income Statement 3a 2a 3Q In US dollar millions (except EPU) 2012 2012 kOe 2011 tA Net Revenues $708 $ 642 10% $ 642 10% Operating Expenses 764 563 36% 564 35% Operating (Loss) Income (66) 79 nim 78 nim Net (Loss) Income Attributable to AB Unitholders (44) 74 nim 91 nim AB Ho
Slide 36: Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows In US $ Millions line Months Ended c Sept, Net income $ 77s Non‘cash items: “Amortization of deferred sales commissions 29 ‘Amortization of non-cash deferred compensation 2 Depreciation and other amortization 60 Unrealized (gains) losses on defered compensation s
Slide 37: AllianceBernstein Holding Financial Results
AllianceBernstein Holding Financial Results In US § Millions (excluding per unit amounts) 3a 2a 3Q 2012 2012 hs 2011 %A AllianceBernstein Net (Loss) Income Attributable to AllianceBerstein (944) $74 nim $91 nim Weighted Average Equity Ownership interest 375% 37.5% 37.5% AllianceBernstein Holding Ati
Slide 38: Third Quarter 2012 GAAP to Adjusted Reconciliation
Third Quarter 2012 GAAP to Adjusted Reconciliation ' bowsands except per Unit amounts, uraudited ‘Adjustments Distibution- Pass Deferred Venture Real Won Related Through Compensation Capital stato Controlling _Adjustod GAAP__Payments_ Expenses MTM. Fund _Charges__Interests (Non-GAAP) a) e © o © © ‘r
Slide 39: AllianceBernstein Adjusted Earnings Reconciliation
AllianceBernstein Adjusted Earnings Reconciliation ‘Three Months Ended thousands, unaudited ‘Ranson areas anor aor Net Revenues, GAAP basis $ 709,158 $ 642,163 $ 681,909 $ 624978 § 641,529 $ 727,904 Exclude: Deterted compensation elated investment (gains) losses (6374) 7819 (15570) (93386) 378401588
Slide 40: AllianceBernstein Holding Adjusted Earnings Reconciliation
AllianceBernstein Holding Adjusted Earnings Reconciliation Three Months Ended $ thousands except per Unit amounts, unaudited e30n2 6302 SSIN2 12311 S804 «ISON Net (Loss) Income - Diluted, GAAP basis, '$ (23,142) $21,339 $ 26,699 $(199,463) $ 27,003 $ 35,653 Impact on net income of AllianceBemstein
Slide 41: AllianceBernstein Adjusted Financial Results Reconciliation
AllianceBernstein Adjusted Financial Results Reconciliation AllianceBernstein L.P. Notes to Condensed Consolidated Statements of Income and Supplemental Information (Unaudited) ‘Adjusted Net Revenues. ‘Adjusted net revenues exclude investment gains and losses and dividends and interest on deferred c
Slide 42: AllianceBernstein.com
AllianceBernstein.com