48 slides from Alliancebernstein Holding L.p's earnings presentation, Feb 13, 2013
Slide 1: Fourth Quarter 2012 Review
February 12, 2013 Fourth 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, Chairman & Chief Executive Officer
Peter S. Kraus Chairman & Chief Executive Officer
Slide 4: Firmwide Overview: Fourth Quarter and Full Year
Firmwide Overview: Fourth Quarter and Full Year In US $ Billions 28 $82 $21 $56 40:12 3Q:12 2012 2011 $5 = | | (14) sa) $(63) 40:12 30:12 2012 2011 $430 $419 $430 $406 40:12 30:12 2012 2011 $424 $411 $416 $452 Average AUM 40:12 30:12 2012 2011
Slide 5: Asset Flows by Distribution Channel: Quarterly Trend
Asset Flows by Distribution Channel: Quarterly Trend In US $ Billions 61 7A : (7.9) (3.2) (10.9) (14.0) Inst. Rot. PC. 4att Total Gross Sales $14.9 Gross Redemptions" $(28.1) Net Flows $(13.2) = Gross Sales $18.1 $(30.2) $(12.1) 11.9 56 52 67 5.3 08 10 1.0 (3.4) (7.7) (27) (38) (4.2) "Gross Redempti
Slide 6: Institutional Highlights
Institutional Highlights 4Q12 First Net Flow Positive Quarter Since 1Q08 Pipeline* Strength Across Services and Regions $B ($140) : $129) ($16.7) 4011 1Q12 2Q12 3Q12 4Q12 lm Gross Sales m Gross Redemptions = AXA\) = PPIP® ¢ Net Flows Total Pipeline: $8.0B By Asset Class By Region Equity Asia North,
Slide 7: Continued Fixed Income Outperformance
Continued Fixed Income Outperformance Relative Performance Through 12/31/12 4Q12 1 Year 3 Year 5 Year US: Strategic Core Plus 0.5 1.9 1.5 1.2 High Yield 0.5 24 07 07 Core Fixed Income 0.4 1.6 1.41 0.8 Diversified Yield 2.0 8.4 5.3 2.6 Global: Global High Income 02 0.6 1.7 bi! Global Fixed Income 0.3
Slide 8: Fixed Income: Diverse Global Portfolios Are Key in Any Rate Environment
Fixed Income: Diverse Global Portfolios Are Key in Any Rate Environment Not All Bonds Are Created Equal AB Fixed Income Well Positioned for a Bond Investor Pivot Bond Index Betas vs. US Treasuries Weighted Index of all US Treasuries Jan 1994 - Dec 2012 0.80 0.73 057 0.44 0.00 (0. 25) Barclays US Bar
Slide 9: Equities: Strength in Stability Equities, Improvement in Core Growth and Value
Equities: Strength in Stability Equities, Improvement in Core Growth and Value Relative Performance Through 12/31/12 4Q12 4 Year 3 Year 5 Year Stability: Global Market Neutral 06 27 22. N/A Select US Equity 1.0 1.3 3.8 48 Growth & Income (0.4) 4.4 21 0.3 Global Active Low Vol 1.5 09 N/A N/A US Equit
Slide 10: Lower Correlations, Relevant Value Factors and Better 4Q Manager Returns
Lower Correlations, Relevant Value Factors and Better 4Q Manager Returns Correlations Came Down in 4Q12 08 ‘S&P 500 Stock Return Correlation* Average Correlation 2008 - 2011: 0.46 1978 - 2012 08 ‘Average Correlation 1978 - 2008: 0.27 | { 04 "Average Correlation 1012 - 3012: 0.47 4Q12: 0.37 02 0.0 78
Slide 11: Retail Highlights
Retail Highlights Positive Momentum Throughout the Year... ...With All Regions Contributing to Gross Sales Growth $16.4 FY12/ FY11 % Change 511.9 saa +162% $53 + +107% san 9% | | wm *82% +82% | 429% (810.9) (106) ($8.4) ($10.2) (gi4.1) Rist le 22 sale estes EMEA Asiaex- Japan —_Latin us Total sams G
Slide 12: Private Client Highlights
Private Client Highlights Evolution of Our Bernstein Fully Diversified Investment Solution: 2009 — 2012 2012: Mult-style, all-cap > portfolio seeks reliable returns in different markets 2010: Adjusts equity exposure in changing risk conditions 2011: For clients vulnerable to inflation spikes 5, 2012
Slide 13: Bernstein Research Services Highlights
Bernstein Research Services Highlights Revenues Have Been Stable... ..In an Environment of Declining Global Trading Volumes* sM % Change % Change 4012/4011: 13% 4012/3012: 3% 8 2012/2011: (5)% 101 104 © a | ® (16) (16) «7 (16) (25) us Europe Asia 4a 3Q12 4Q12 m4Q12/4011 — 4Q12/3Q12 2012/2011 7 Growi
Slide 14: Progress on Our Strategy in 2012
Progress on Our Strategy in 2012 Firmwide Initiative Progress Diversify our business across channels, investment services and geographies. Astellar year for Fixed Income — ongoing investment outperformance and global recognition 89% of assets in services outperforming for 3-yr period through Decembe
Slide 15: John C. Weisenseel, Chief Financial Officer
John C. Weisenseel Chief Financial Officer B 4
Slide 16: Financial Highlights: Fourth Quarter and Full Year 2012
Financial Highlights: Fourth Quarter and Full Year 2012 In US $ Millions Adjusted Revenues $458 Adjusted Expenses 4Q:12 3Q:12 20.6% 20.2% 18.8% 17.0% 40:12 30:12 2012 2011 40¢ wt oi28 31.14 “eon || o | 40:12 30:12 2012 2011 Please refer pages 42-46 for additional information on the recor jon of GAAP
Slide 17: Fourth Quarter GAAP to Adjusted Reconciliation
Fourth Quarter GAAP to Adjusted Reconciliation In US dollar milions Adjustments Distribution. Pass Long-termincentive Venture Real Related Through compensation Capital Estate Adjusted GAAP Payments _Expenses MT™ Fund Charges (Non-GAAP) Net Revenues 705 (117) (8) (4) 2 0 578 Operating Expenses 627 (1
Slide 18: Full Year 2012 GAAP to Adjusted Reconciliation
Full Year 2012 GAAP to Adjusted Reconci INUS dolar millions ‘Adjustments Distribution- Pass Long-termincentive Venture Real Non Related Through compensation Capital Estate Controlling Adjusted GAAP. Payments _ Expenses MT™ Fund Charges __ Interests (Non-GAAP) Net Revenues 2,737 (407) (49) (19) (1) 0
Slide 19: Fourth Quarter and Full Year 2012 Adjusted Income Statement
Fourth Quarter and Full Year 2012 Adjusted Income Statement ® Adjusted Operating Income increased 3% sequentially and 2% for the full year period ® Adjusted EPU and distribution of 40 cents for 4Q12 m FY12 Adjusted EPU of $1.28 and distribution of $1.23 4Q 3a In US dollar milions (except EPU) 2012 2
Slide 20: Fourth Quarter and Full Year 2012 Adjusted Revenues
Fourth Quarter and Full Year 2012 Adjusted Revenues = Sequential increase in Base Fees due to higher Retail AUM; year-over-year 10% decline primarily due to lower Institutional and Private Client average AUM and the continued shift from equities into lower fee realization strategies ® Performance fe
Slide 21: Fourth Quarter 2012 and Full Year Adjusted Operating Expenses
Fourth Quarter 2012 and Full Year Adjusted Operating Expenses m= Compensation Ratio was 49% for 4Q12 versus ~50% for 3Q12, and 49.8% for the full year versus 50.3% in 2011 ® Total Compensation & Benefits declined 2% sequentially due primarily to the lower fourth quarter compensation ratio, and decre
Slide 22: Fourth Quarter and Full Year 2012 Adjusted Operating Results
Fourth Quarter and Full Year 2012 Adjusted Operating Results = Adjusted Operating Margin improved sequentially on higher adjusted revenues and was up on an annual basis as well, as expense reductions outpaced the revenue decline 4Q 3Q In US dollar millions (except EPU) 2012 2012 %A FY 2012 FY 2011 %
Slide 23: 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 24: AllianceBernstein.com
AllianceBernstein.com
Slide 25: AllianceBernstein.com
AllianceBernstein.com
Slide 26: Institutional Equity: Relative Performance
Institutional Equity: Relative Performance Institutional Equity Composites vs. Benchmarks Periods Ended December 31, 2012 4Q One — Three Five Ten Service 2012 Year _Years ‘Years _Years Benchmark Value Emerging Markets Value 08 (35) (4.2) (1.9) 03 MSCIEM (Cap, UH, net) Global Value 33 (1.9) (62) (62)
Slide 27: Institutional Fixed Income: Relative Performance
Institutional Fixed Income: Relative Performance Institutional Fixed Income Composites vs. Benchmarks* Periods Ended December 31, 2012 4Q One Three _—Five Ten Service 2012 Year _‘Years ‘Years _Years Benchmark 33% Barclays High Yield, 33% JPM EMBI Global High Income 02 03 13 06 19 Ghbalchd oss IPE CH
Slide 28: Retail Equity: Relative Performance
Retail Equity: Relative Performance Retail Mutual Funds vs. Lipper Averages Periods Ended December 31, 2012 4Q One Three Five —‘ Ten Service 2012 Year _Years Years _Years Lipper Average Value Intemational Value 19 (16) (35) 47) (1.8) Intemational Large Cap Value Growth & Income (0.7) 24 27 (09) = (0
Slide 29: Retail Fixed Income: Relative Performance
Retail Fixed Income: Relative Performance Retail Fixed Income Funds vs. Lipper Averages Periods Ended December 31, 2012 4Q One Three Five Ten Service 2012 Year __Years Years _Years Lipper Average Global High Yield Portfolio (13) 6) 19 20 24 Bond Global High Yield American Income Portfolio 09 42 34 2
Slide 30: Private Client: Absolute Performance
Private Client: Absolute Performance Periods Ended December 31, 2012 4Q One Three Five Ten Service 2012 Year Years Years Years Fully Diversified Simulation* 15 76 41 (0.9) 5.3 S&P 500 (0.4) 16.0 10.9 17 7A MSCI World Index - Net 25 15.8 69 (1.2) 75 Lipper Short/int Blended Muni Fund Avg 03 37 4.0 38
Slide 31: Assets Under Management
Assets Under Management At December 31, 2012 AtSeptember 30, At December 31, 2012 2011 Private Institutions Retail Client Total Total Total Equity Value $ 25 $ 16 $ 6 $ 87 $ 6 $ 81 Growth Zz 18 414 39 40 44 Total Equity 32 34 30 96 101 125 Fixed Income 146 78 32 256 245 218 Other 42 32 4 78 73 63 To
Slide 32: Three Months Ended 12/31/12: AUM Roll-Forward by Distribution Channel
Three Months Ended 12/31/12: 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 $ 108.2 $ 1062 $ 2144/$ 504 $ 860 $ 1364/$ 493 $ 188 $ 68.1
Slide 33: Three Months Ended 12/31/12: AUM Roll-Forward by Investment Service
Three Months Ended 12/31/12: AUM Roll-Forward by Investment Service In US $ Billions Value Equity Growth Equity Fixed Income Other!” Total Investment Service: US Global Total US __Global_Total_ US Global_‘Total__ = US Global_Total_ ~_—US_—Global_Total Beginning of Period $ 202 $ 412 $ 614/$ 220 $ 17
Slide 34: Twelve Months Ended 12/31 AUM Roll-Forward by Distribution Channel
Twelve Months Ended 12/31 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 $ 110.7 $ 1132 $ 223.9/$ 432 $ 69.4 $ 1126/$ 501 $ 193 $ 69.4/$ 2040 $
Slide 35: Twelve Months Ended 12/31/12: AUM Roll-Forward by Investment Service
Twelve Months Ended 12/31/12: AUM Roll-Forward by Investment Service In US $ Billions Value Equity Growth Equity Fixed income Other!” Total Investment Service: Us Global__Total_ US Global_Total___-US__—_Global_Total__—US_—Global_Total_ US Global_Total Beginning of Period S$ 252 $ 556 $ 808|$ 218 $ 2
Slide 36: AUM by Region
AUM by Region As of December 31, 2012 Retail Other 3% Other 12% Europe 10% Eur. ex-UK 6% Australia 2% Asia Pac 32% UK 4% N.A. ex- US 4% US 59% US 55% Japan 13% US $ Billions $219.8 $144.4 By client domicile
Slide 37: Fourth Quarter and Full Year 2012 Adjusted Advisory Fees
jarter and Full Year 2012 Adjusted Advisory Fees In US Dollars 4Q 3Q 2012 2012 % A FY2012 FY2014 % A Ending AUM (§ Billions) $430 $419 3% $430 $406 6% Average AUM ($ Billions) $424 $414 3% $416 $452 (8%) By Fee Type ($ Millions): Adjusted Base Fees $434 $426 2% $1,702 $1,894 (10%) Adjusted Performan
Slide 38: Fourth Quarter and Full Year 2012 Adjusted Income Statement
Fourth Quarter and Full Year 2012 Adjusted Income Statement 4Q 3Q In US dollar millions (except EPU) 2012 2012 % A FY 2012 FY 2011 % A Adjusted Net Revenues $ 578 $ 574 1% $ 2260 $ 2,426 (7%) Adjusted Operating Expenses 459 458 0% 1,836 2,012 (9%) ‘Adjusted Operating Income 119 116 3% 424 414 2% Adj
Slide 39: Fourth Quarter and Full Year 2012 GAAP Income Statement
Fourth Quarter and Full Year 2012 GAAP Income Statement 4Q 3Q In US dollar millions (except EPU) 2012 2012 %A FY 2012 FY 2011 % A Net Revenues $705 $ 708 (0%) $2,737 $ 2,750 (0%) Operating Expenses 627 764 (18%) 2,535 2,958 (14%) Operating Income (Loss) 78 (66) vm 202 (208) vm Net Income (Loss) Attr
Slide 40: Consolidated Balance Sheet
Consolidated Balance Sheet In US $ Millions Assets Dec. 31, 2012 Dec. 31, 2011 Casirand cash equivalents $ ors 639 Cash and securities, segregated 4,551 41,280 Receivables, net 1,616 1,339 Investments: Long-term incentive compensation - related 123 176 Other 610 619 Goodwill 2,954 2,954 Intangible a
Slide 41: Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows In US $ Millions Twelve Months Ended Dec. 31, 2012 Dec. 31, 2017 Net income 3 oS Gia) Non-cash items: Amortization of deferred sales commissions 40 38 ‘Amortization of non-cash deferred compensation 2 414 Depreciation and other amortization 76 83 Unrealized (gain
Slide 42: AllianceBernstein Holding Financial Results
AllianceBernstein Holding Financial Results In US § Millions (excluding per unit amounts) 4Q 3Q 2012 2012 %A _FY2012__FY2011 %A AllianceBernstein Net Income (Loss) Attributable to AllianceBemstein $72 (644) nm $189 ($175) nm Weighted Average Equity Ownership Interest 37.5% 375% 375% 375% AllianceBer
Slide 43: AllianceBernstein Adjusted Earnings Reconciliation
AllianceBernstein Adjusted Earnings Reconciliation ‘Three Months Ended $ thousands, unaudited Rane wore enone sate 2s 9ROt Net Revenues, GAAP basis $ 704,607 $ 708,158 $ 642,163 $ 681,809 $ 624,978 $ 641,529 Exclude’ ‘Long-term incentive compensation-related investment (gains) losses. (2385) (6.374)
Slide 44: AllianceBernstein Adjusted Earnings Reconciliation
AllianceBernstein Adjusted Earnings Reconciliation ‘Twelve Months Ended Dec. 31, $ thousands, unaudited 2012 2011 Net Revenues, GAAP basis $ 2,736,737 $ 2,749,891 Exclude: Long-term incentive compensation-related investment (gains) losses (16,711) 20,302 Long-term incentive compensation-related divi
Slide 45: AllianceBernstein Holding Adjusted Earnings Reconciliation
AllianceBernstein Holding Adjusted Earnings Reconciliation Three Months Ended $ thousands except per Unit amounts, unaudited qasin2 —9a0n2 ——esor2 —3at2 12811 Sra Net income (Loss) - Diluted, GAAP basis 3 26,192 (23,142) $24,339 § 26,699 $ (199,463) § 27,003 Impact on net income of AlianceBemstein n
Slide 46: AllianceBernstein Holding Adjusted Earnings Reconciliation
AllianceBernstein Holding Adjusted Earnings Reconciliation Twelve Months Ended Dec. 31, $ thousands except per Unit amounts, unaudited 2012 2011 Net Income (Loss) - Diluted, GAAP basis $ 51,085 $ (93,268) Impact on net income of AllianceBerstein non-GAAP adjustments 78,693 210,891 Adjusted Net Incom
Slide 47: 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 long-term c
Slide 48: ALLIANCEBERNSTEIN
/B ALLIANCEBERNSTEIN