Alliancebernstein Holding L.p. · NYSE:AB
Alliancebernstein Holding L.p — Alliance Capital Management — Q2 2003 Earnings Presentation
53 slides from Alliancebernstein Holding L.p's earnings presentation, Jul 29, 2003
Slide 1: Alliance Capital and Alliance Holding Second Quarter 2003 Review
Alliance Capital and Alliance Holding Second Quarter 2003 Review Bruce W. Calvert Lewis A. Sanders John D. Carifa Chairman Vice Chairman and CEO — President and COO duly 29, 2003
Slide 2: Introduction and Forward-Looking Statements
Introduction The SEC adopted Regulation FD in October 2000. In light of Regulation FD, Management will be limited in responding to inquiries from investors or analysts in a non-public forum ‘You are encouraged ta ask all questions of a material nature an this canference call Forward-Looking Statemen
Slide 3: Second Quarter Financial Overview
Second Quarter Financial Overview Alliance Capital 2Q03 vs. 1003 End of Period AUM Market Environment Annualized Fee Basel”) Average AUM Revenues Expenses Staffing Levels Net Income $426 bn vs. $386 bn, up 10.3% S&P 500 up 15.4% Russell 1000 Growth up 14.3% Russell 1000 Value up 17.3% MSCI EAFE up 1
Slide 4: Second Quarter Financial Overview
Second Quarter Financial Overview (8 milions, except AUM in bilions) 2003 2002 = Average AUM ($bn) = Revenues Base Fee & Other $446 $478 7 Transaction Charges a7 35 -22 Performance Fee 4 a +45 Distribution 103 125 -13 Institutional Research Svcs 69 78 -12 662 724 9 = Expenses Compensation 227 235 4
Slide 5: Second Quarter Revenues — by Distribution Channel
) Second Quarter Revenues — by Distribution Channel (in $ mitions) 2Q03 2002 % chg Comments = Retail $317 $365 43 = Base advisory fees and distribution revenues declined inline with average AUM « Institutional Inv. Mgmt 158 162 -3 = Decline in transaction volume and average AUM = Private Client 103
Slide 6: Expense Detail — 2Q03 vs. 2Q02
Expense Detail — 2Q03 vs. 2Q02 (in $ mitions) 2Q03 2Q02 % chg = Employee Comp. & Benefits Base Compensation” $74 $77 4 Incentive Compensation Cash® 56 57 2 Deferred 36 21 +67 Commissions 40 59 “32 Fringes & Other 21 21 4 = Total 227 235 4 (1) Lower headcount offset by severance payments (2) Lower op
Slide 7: Expense Detail — 2Q03 vs. 2Q02
Expense Detail — 2Q03 vs. 2Q02 (in $ millions) 2003 2002 %chg Comments Employee Comp. & Benefits $227 $235 -4 Promotion & Servicing Distribution Plan Pmts © 92 104 “tt Amort of Def Sales Comm 52 81 -14 TRE 13 15 -14 "+ ongoing reductions in Printing/Mailing 4 10 -59 J controllable expenses Other 26
Slide 8: Net Distribution Expense
Net Distribution Expense (in $ mitions) 2Q03 2Q02 % chg « Distribution Revenues $109 $125 43 «= Distribution Expenses Distribution Plan Payments 92 104 ff Amort of Def Sales Comm 52 61 -14 144 164 +12 = Net Distribution Expense $36 $39 9 = Lower distribution revenues and distribution plan payments f
Slide 9: Alliance Capital Pre-tax Margin
Alliance Capital Pre-tax Margin (in $ millions) 2Q03 = Base Fee Eamings, Net $176 = Distribution Expense, Net @ (28) = Performance Fee Earnings, Net _8 Pre-tax Margin (Non-GAAP) ® $156 Pre-tax Margin (GAAP) % of Revi") 31.8% 50 % of 2Q02__ Revit! $198 33.1% Qt) -5.4 —i _10. S174 29.0% 24.0% Lower co
Slide 10: Alliance Holding Financial Highlights
Alliance Holding Financial Highlights 2Q03 2002. % chg in $miltions) = Equity in Earnings $45 $50 0% = Income Taxes 5 6 -10 = Net Income $40 $44 0% (Per Unit amounts) = Base Fee Earnings() $0.48 $0.55 13% = Performance Fee Earnings” 0.03 0.02 +50 = Diluted Net Income $0.51 $0.57 “11% «= Distribution
Slide 11: Improving Market Environment
4 Improving Market Environment Annuaized_ Cumulative 2003 1¥r 3Yr S&P 500 15.4% 0.3% 11.2% 30.0% Russell 1000 Growth 14.3% 29% 215% 517% Russell 1000 Value 73% 10% 02% 06% NASDAQ Composite 21.0% 10.9% 25.8% 59.1% MSCI EAFE 19.3% 65% 13.5% 35.3% Lehman Aggregate Bond 25% 10.4% 10.1% 33.4% Fetus tough
Slide 12: Relative Performance — Institutional Growth Equity
Relative Performance “) — Institutional Growth Equity Institutional Equity Composites vs. Benchmarks Emerging LargeCap Disciplined Multi Cap Small Cap Intl Lg Cap Market Growth?) Growth?) Growth®) Growth!) Growth) Growth’) yD 23 25 425 AS +05 +04 we 58 A +01 20 424 433 yn 15 02 435 +34 +40 03 Sy +08
Slide 13: Relative Performance — Institutional Value Equity
Relative Performance “) — Institutional Value Equity Institutional Equity Composites vs. Benchmarks ‘Small. Emerging Strategic Diversified Relative Mid Cap International Market Value?) Value) Value?) Value) Value) Value) YD +44 02 +40 29 433 +62 wr +08 10 +47 AB +56 +99 an +84 +78 0 Es +59 +85 oy +1
Slide 14: Relative Performance — Institutional Fixed Income
Relative Performance “) — Institutional Fixed Income Institutional Fixed Income Composites vs. Benchmarks Enhanced High Grade Sector Emerging Aggregate® — Insurance) ——Rotation® High Yield) Global) Market) yD 03 +02 +06 AB 44 +87 we 03 +03 +08 46 +04 +86 yn 0.4 +03 06 AT 04 +58 oy 03 +03 06 04 04 +4
Slide 15: Relative Performance — Retail Growth Equity
Relative Performance — Retail Growth Equity Retail Mutual Funds vs. Lipper Averages Global Premier Mid Cap Growth Growth") Growth? Growth) —_ Quasar) Tech'®) Trend) yD 29 10 134 06 84 12 we 48 44 +136 26 13.0 42.2 ay 40 424 +52 oo +34 +30 oy 32 ba 48 97 AA +62 yr att 24 4 26 +09 +70 (Qs large Cap Gr
Slide 16: Relative Performance — Retail Value Equity
Relative Performance — Retail Value Equity Retail Mutual Funds vs. Lipper Averages ‘Small AB Growth & Cap Intl Global Valuett! — Income® Value) Value(*) Value! Balanced vp 02 435 16 47 +40 +30 we 19 42.2 20 10.1 +47 +54 an 155 24 +69 14.0 +56 425 ay 10 ss ss 487 oy 427 - - - +35 10yr 42.0 - - - 5 i
Slide 17: Private Client Portfolio Performance
Private Client Portfolio Performance « Representative client account allocation: 40% fixed incame { 40% | Diversified Muni 34% Strategic Value 42% US. equities 8% Strategic Growth 60% equities 18% Non-U.S. equities (| 2%) Emerg Mits Valle 1009 15% Intl Value = Representative performance: yD 2003 21%
Slide 18: AUM by Investment Orientation
f AUM by Investment Orientation (in $ billons) Three Months Ended June 30, 2003 Growth Value Fixed Equity Equity Income Passive fil Total = Mar 31,2003 AUM $104 $97 $183 $22 $388 = Net Long-Term Flows (2) 5 1 () a = Cash Management, Net - = () iat @ = Net New Business/(Qutflows) (2) 5 a 0) 2 = Appre
Slide 19: AUM by Investment Orientation
f AUM by Investment Orientation ‘Twelve Months Ended June 30, 2003 (ing billions) Growth Value Fixed Equity Equity Income Passive fil Total = June 30, 2002 AUM $133 $104 $149 $26 $412 = Net Long-Term Flows (14) 1 "1 Q 6 = Cash Management, Net - = (3) iat (3) = Net New Business/(Qutflows) (14) "1 8 Q
Slide 20: AUM by Channel
7 AUM by Channel Three Months Ended June 30, 2003 (in $ billons) Institutional Private etal Inv Mgmt Client [i Total = Mar 31, 2003 AUM $194 $212 $40 $386 = Net Long-Term Flaws 2 “ 1 3 = Cash Management, Net a = - a = Net New Business 1 “ 1 2 = Transfers - 1 a) = = Appreciation 12 22 4 36 = June 30,
Slide 21: AUM by Channel
7 AUM by Channel ‘Twelve Months Ended June 30, 2003 (in $ bilions) Institutional Private etal Inv Mgmt Client [i Total = June 30, 2002 AUM $150 $222 $40 $412 = Net Long-Term Flaws (4) 6 4 6 = Cash Management, Net Q) = - @) = Net New Businessi(Outflows) (7) 6 4 3 = Transfers - 1 () = = Appreciation 4
Slide 22: Annualized Fee Base
Annualized Fee Base () By Channel and Investment Orientation 6/30/03 vs. 6/30/02 IMs. AFB. {in milions) ms ‘ $1,735 mm — $1,686 mm pC AUN SOCAF BS Retail 17% | -3.1% institutional 45.4% 45.0% Private Client +10.5% +13.8% gona 6002 we Reta 325 533 $558 Institutional 250251 Private Client 84.4 82.0 To
Slide 23: 2Q03 Highlights & Initiatives
2Q03 Highlights & Initiatives Investment Management = Smooth leadership transitions in two important investment disciplines: Large Cap Growth and Global Value = Innovation in investment research >» New research team formed to study strategic change » New research team formed to uncover early stage g
Slide 24: 2Q03 Highlights & Initiatives
2Q03 Highlights & I tives Institutional Investment Management = Global investment platforms fuel continued strength in new business averseas (44% af new new mandates) = Significant wins for Japan Value and Global Research Growth Private Client = Strong new business for the quarter, trend towards lar
Slide 25: Total Return — Alliance Holding Units
7 Total Return — Alliance Holding Units Total Annualized Return” 35% 30% cal 25% 20%] gsle wee 18% 10% 5% ge 0% Since Alliance IPO 488 5% “10% 15% sap 500] “asor42003. Ace Hong at Pre tas Ice easier cash tsrbufors and serch rsp ely 25
Slide 26: Worldwide research and investment capabilities
= Worldwide research and investment capabilities = Unique with strengths in both growth and value equity investing = Broad array of fixed income services = Generally competitive long-term investment results = Highly regarded marketing and client service teams = Wel-positioned in retail, institutiona
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Slide 28: Analysis of Pre-Tax Margin
Analysis of Pre-Tax Margin thousands) Three Months Ended Pre-Tax Margin (GAAP) ") Total Revenues Pretax Income Pre-tax Margin (GAAP) Pre-Tax Margin (Non-GAAP) ) Total Revenues 9851 745 $724,103 Less: Distribution Revenues (108,651) (125,370) Net Revenues 563,084 598,733, Total Expenses 505 484 560,3
Slide 29: Diverse Group of Clients
Diverse Group of Clients As of June 30, 2003 Wholesale Direct Sales « Instintional snstintional Investment Mgmt Private Client Research Services ABAuianceBeenstein FY EBER Sanford C. Bernstein a ee eh meee +73 million accounts + 2,100+ client + 20,400+ client + 1,000 client ©52US mutual funds —__‘ls
Slide 30: Changes in AUM by Investment Orientation
Changes in AUM by Investment Orientation Three Months Ended June 30, 2003. (in $ mitions) Beginning of Period SalesNewaccourts Retlemptions/Terminations Net cash management sales Cash flow Unveinvested dividends Het new businessi(Outflows) Transters Market appreciation End Of Period Growth value Fix
Slide 31: Changes in AUM by Investment Orientation
Changes in AUM by Investment Orientation ‘Twelve Months Ended June 30, 2003 (in $ mitions) Beginning of Period SalesNewaccounts Redemptions/Terminations Net cash management sales Cash tow Unreinvested dividends Het new business(Outflows) Transfers Market appreciation depreciation) End Of Period Grow
Slide 32: Changes in Retail AUM by Investment Orientation
Changes in Retail AUM by Investment Orientation ‘Twelve Months Ended June 30, 2003 (in $ mitions) Growth vaue Fixed Cash Equity Equity Income Mgnt Total Beginning Of Period $56,357 sama SGI $37,407 $149,655 Sales arT4 5,690 11,818 ¥ 26,282 Redemptions 13.702) (6.000) (9,055) : O77?) Net cash rranage
Slide 33: Changes in Retail AUM by Product
Changes in Retail AUM by Product ‘Twelve Months Ended June 30, 2003 (in $ mitions) Beginning Of Period Sales Redemptions Net cash management sales Cash flow Unreinvested dividends Net new businessi(Outflows) Transfers Market appreciation’ (depreciation) End Of Period us. Non-US. Variable = Managed F
Slide 34: Changes in Institutional Investment Management AUM
Changes in Institutional Investment Management AUM by Investment Orientation ‘Twelve Months Ended June 30, 2003 (in $ bilions) Growth vaue Fixed Equity Equity Income _Passive Tota Beginning Of Period $76,811 $52,651 $70,253 $22,759 $202,474 SalegNew accounts 4.130 a7 10,030 164 23,095 Redemptions‘Te
Slide 35: Alliance Capital (the Operating Partnership) Consolidated Balance Sheet
| i Alliance Capital (the Operating Partnership) Consolidated Balance Sheet (in $ thousands. Unauetited) esos s2rme Asst Cash and investments $800,203 $8 arer8 Cash and seourties, segregated 11308.259 yarase3 Receivables 1.768.560 1460,328 Goodwill net 2376087 2B76 057 Intangible asset, net 307.075
Slide 36: Alliance Capital (The Operating Partnership) Consolidated Cash Flow
si" Alliance Capital (The Operating Partnership) Consolidated Cash Flow (in $ thousands. Unauetited) Cash Flows From Operating Activities Net Income Non-oash tems: ‘Amertization and deprecation "Amertization of deferred sales commissions ‘Amortization of deferred compensation Other depredation and a
Slide 37: Performance Disclosure
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Slide 38: Performance Disclosure
Slide 39: Performance Disclosure
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Searchable text section of graphics shown above [GRAPHIC] Alliance Capital and Alliance Holding Second Quarter 2003 Review Bruce W. Calvert Lewis A. Sanders John D. Carifa Chairman Vice Chairman and CEO President and COO July 29, 2003 [GRAPHIC] Introduction The SEC adopted Regulation FD in October 2
Alliance Capital Management — Q2 2003 Earnings Presentation on 6ix