43 slides from Alliancebernstein Holding L.p's earnings presentation, Aug 3, 2012
Slide 1: Second Quarter 2012 Review
August 2, 2012 Second 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: Second Quarter
Firmwide Overview: Second Quarter 2 In US $ Billions $18 $18 $18 $14 20:12 10:12 20:12 20:11 20:12 10:12 20:12 20:11 =a — $(3) i $(3) $(12) $(20) $407 $419 $407 sist 20:12 10:12 20:12 20:11 $474 satt S417 41 Average AUM 20:12 10:12 20:12 20:11 alan asset dispositions by the AXA Group. “Total net out
Slide 5: Asset Flows by Distribution Channel: Quarterly Trend
Asset Flows by Distribution Channel: Quarterly Trend In US $ Billions 85 37 (10.5) (18.6) Inst. Ret. PC. 2011 Total Gross Sales $13.7 Gross Redemptions" $(33,2) Net Outflows $(19.5) = Gross Sales al - (14.3) (11.7) Inst. Rot. PC. 3Q11 $11.3 $(26.7) (15.4) = Gross Redemptions 6.4 (3.8) (7.9) wea 2) (
Slide 6: Institutional Highlights
Institutional Highlights Improved Flows in 1H12 Higher Pipeline** in 2Q12 3B 1HNI 4H12 $8.9 $9.4 ($27.8) ($5.2) ($26.0) ($36.7) Gross Sales Gross Redemptions =AXA* Net Flows Fixed Income a Major Contributor to Pipeline” $11.3B $6.6B End 1012 End 2012 ..With Diverse Additions Across Services $11.3B i
Slide 7: Continued Strong Performance in Fixed Income
Continued Strong Performance in Fixed Income Relative Performance Through 6/30/12 YTD 12 4 Year 3 Year 5 Year Us: US Strategic Core Plus 05 (0.6) 3.0 0.6 US High Yield Composite 1.0 (1.2) 23 06 US Core Fixed Income 04 (0.4) 2.0 0.2 Diversified Yield 3.3 2.3 7.0 14 Global: Global High Income (0.2) 06
Slide 8: Traditional Equities Outperformed in 1Q "Risk On" Environment
Traditional Equities Outperformed in 1Q “Risk On” Environment... Relative Returns — 1Q12 Stability Equities Traditional Equities 4.0% 9 3.5% 31% 3.6% 2.0% 2.4% 08% 1.2% 11% 0.1% hese! o i at Bois — a — (0.79% (1.1% (5.1)% (7.8)% US Market Global Global Select Select Growth US US US us US Int'l Globa
Slide 9: Stability Equities Outperformed in 2Q "Risk Off" Environment
.. Stability Equities Outperformed in 2Q “Risk Off” Environment Relative Returns — 2Q12 Stability Equities Traditional Equities 6.3% 1.5% 1.9% . | 06% 0.3% 0.6% a! = = = = (0.8)% (0.6)% (0.5)% a D | a | (2.9)% (3.0% (3.3)% (3.0% (4.8)% US Market Global Global Select Select Growth US US US US US Int'
Slide 10: Retail Highlights
Retail Highlights Positive Momentum Continues... ...With All Regions Contributing to YTD Gross Sales Growth $B $12.9 $11.9 see. 888 +92% Le +55% — 453% +49% (x) +33% ($9.0) ($8.4) [| i pid $105) (5447) 8109) ($106) | yori 2att3Qtt zat 10122012 Japan EMEA Asia ex- Lain Total smmrGross Sales mmm Gross
Slide 11: Private Client Highlights
Private Client Highlights Bernstein Fully Diversified Investment Solut n DAA: Mitigating Risk Without Sacrificing Return April 2010 — June 2012, Annualized 2012: Multi-style, all-cap > portfolio seeks reliable returns in different markets US Strategic Equities Volatility Reduction 2010: Adjusts equi
Slide 12: Bernstein Research Services Highlights
Bernstein Research Services Highlights Sequential Decrease in Revenues... .-In an Environment of Weak Volumes sm % Change in YTD Trading Activity* % Change 2012/2011: (5)% 2012/1012: (3)% = 108 106 103 0) ®) (12) (23) 2011 1012 2012 us Europe Japan Hong Kong Global Research Recognition Well Position
Slide 13: Progress on Our Strategy in 2012
Progress on Our Strategy in 2012 Firmwide Initiative Progress Diversify our business across channels, investment services and geographies ‘AllianceBernstein.com Global recognition for Fixed Income and Equities AB Fixed Income named Global Fixed Income Manager of the Year in 2012 Global Investor/ISF
Slide 14: John C. Weisenseel
John C. Weisenseel Chief Financial Officer
Slide 15: Financial Highlights: Second Quarter 2012
Financial Highlights: Second Quarter 2012 In US $ Millions $637 $546 $562 $546 Adjusted Revenues 20:12 10:12 2Q:12 20:14 $511 $461 $458 Adjusted Expenses 2Q:12 10:12 20:12 20:11 19.7% 16.1% ate 16.1% 20:12 10:12 2Q:12 20:11 35¢ 29¢ Adjusted 24¢ Bw 2ag 20:12 10:12 20:12 20:11 Please refer to pages 38
Slide 16: Second Quarter 2012 GAAP to Adjusted Reconciliation
Second Quarter 2012 GAAP to Adjusted Reconci In. US dollar mitions Adjustments Distribution- Pass Deferred Venture Real Related Through Compensation Capital Estate Adjusted GAAP Payments _Expenses MIM Fund Charges (Non-GAAP) Net Revenues 642 (96) @) 7 1 0 546 Operating Expenses 563 (96) @) 6 0 ® 458
Slide 17: Second Quarter 2012 Adjusted Income Statement
Second Quarter 2012 Adjusted Income Statement ® Adjusted Operating Income down 13% sequentially and 30% from the prior year quarter lm Adjusted EPU of 24 cents for 2Q12; distribution of 21 cents 2Q 10 2a In US dollar millions (except EPU) 2012 2012 % A 2011 % A Adjusted Net Revenues $ 546 $ 562 (3%)
Slide 18: Second Quarter 2012 Adjusted Revenues
Second Quarter 2012 Adjusted Revenues ™ Base fee variances from both prior periods in line with changes in average AUM and asset mix shift from equities into other lower fee realization strategies ® Bernstein Research revenues down 3% sequentially and 5% versus the prior year quarter due primarily t
Slide 19: Second Quarter 2012 Adjusted Operating Expenses
Second Quarter 2012 Adjusted Operating Expenses Total Compensation & Benefits declined versus both prior periods due to lower severance, headcount and adjusted net revenues = Compensation ratio, accrued as a percent of adjusted net revenues, of 50% for 2Q12 and 1Q12, and 49% in 2Q11 = Incentive comp
Slide 20: Second Quarter 2012 Adjusted Operating Results
Second Quarter 2012 Adjusted Operating Results = Adjusted Operating Margin declined versus both prior periods as the decrease in Adjusted Revenues outpaced reductions in Adjusted Expenses 2Q 1Q 2Q In US dollar millions (except EPU) 2012 2012 %A 2011 % A Adjusted Operating Income $ 88 $ 101 (13%) | $
Slide 21: Real Estate Update: Actions Taken Since 2010
Real Estate Update: Actions Taken Since 2010 In 2010, we identified 380,000 square feet in NY Metro area to be vacated and sublet and took $102M in charges associated with the planned reduction in space Since then, we have regularly examined our global real estate footprint to ensure space is consis
Slide 22: Real Estate Update: Planned Actions Beginning in 3Q12
Real Estate Update: Planned Actions Beginning in 3Q12 m We recently completed a comprehensive review of our global real estate footprint and identified opportunities to further consolidate space by 490,000 square feet = Our plan is to consolidate staff on fewer floors by restacking office space with
Slide 23: AllianceBernstein.com
AllianceBernstein.com
Slide 24: AllianceBernstein.com
AllianceBernstein.com
Slide 25: Institutional Equity: Relative Performance
Institutional Equity: Relative Performance Institutional Equity Composites vs. Benchmarks Periods Ended June 30, 2012 2Q One — Three Five Ten Service 2012 Year _ Years _Years _Years Benchmark Value Global Value (3.5) (10.4) (5.9) (7.8) (2.1) MSCIWorld (Cap, UH, net) International Value (3.2) (64) (4
Slide 26: Institutional Fixed Income: Relative Performance
Institutional Fixed Income: Relative Performance Institutional Fixed Income Composites vs. Benchmarks* Periods Ended June 30, 2012 2Q One Three Five Ten Service 2012 Year Years Years Years Benchmark - 33% Barclays High Yield, 33% JPM EMBI Global High Income (0.1) 02 46 (0.2) 24 (bel and 33% JEM GRIE
Slide 27: Retail Equity: Relative Performance
Retail Equity: Relative Performance Retail Mutual Funds vs. Lipper Averages Periods Ended June 30, 2012 2Q One Three Five — Ten Service 2012 Year _Years Years _Years Lipper Average Value International Value (6) (64) (32) (1.8) (5.4) Intemational Large Cap Value Growth & income 06 33 10 (09) = (0.2)
Slide 28: Retail Fixed Income: Relative Performance
Retail Fixed Income: Relative Performance Retail Fixed Income Funds vs. Lipper Averages Periods Ended June 30, 2012 2a One Three Five —‘Ten Service 2012 Year _Years Years _Years Lipper Average Global High Yield Portfolio 20 5.0 44 18 25 Bond Global High Yield ‘American Income Portfolio. 07 09 46 17
Slide 29: Private Client: Absolute Performance
Private Client: Absolute Performance Periods Ended June 30, 2012 2Q One Five Ten Service 2012 Year _Three Years _Years Years Fully Diversified Simulation* (4.8) (3.0) 77 (1.6) 42 S&P 500 (28) 54 16.4 02 53 MSCI World Index - Net 1) (6.0) 11.0 (3.0) 52 Lipper Shori/int Blended Muni Fund Avg 14 53 47
Slide 30: Assets Under Management
Assets Under Management $ Billions At June 30, 2012 At March 31 2012 Private Institutions Retail Client Total Total Equity Value $ 360 16 = $ 7 $ 69 $ 82 Growth 8 18 13 39 44 Total Equity 44 34 30 108 126 Fixed Income 134 63 33 230 224 Other 37 28 4 69 69 Total $ 215 $ 125 $ 7 $407 $ 419 At March 31
Slide 31: AUM Roll-Forward by Distribution Channel
Three Months Ended 6/30/12: 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 $1141 $114.2 $222.3 | $47.9 $76.3 $124.2 | $520 $206
Slide 32: AUM Roll-Forward by Investment Service
Three Months Ended 6/30/12: AUM Roll-Forward by Investment Service In US $ Billions Value Equity Growth Equity Fixed Income Other” Total Investment Service: Us Global Total US Global_Total_ US Global_—‘Total__ “= US Global_‘Total US Global_Total Beginning of Period $263 $554 © $017 | $228 s2i1 $439
Slide 33: AUM by Region
AUM by Region As of June 30, 2012 Institutions Retail Other 3% Other 11% Europe 7% Eur. ex-UK 4% Australia 3% UK 4% Pow] N.A. ex- US 5% Us 60% Japan 13% US § Billions $214.9 $124.8 ‘AllianceBernstein.com 32
Slide 34: Second Quarter 2012 Adjusted Advisory Fees
Second Quarter 2012 Adjusted Advisory Fees In US Dollars 2a 1a 2a 2012 2012 %A 2011 %A Ending AUM ($ Billions) $407 $419 (3%) $461 (12%) Average AUM ($ Billions) $411 $417 (2%) $474 (13%) By Fee Type ($ Millions): Adjusted Base Fees $420 $422 (0%) $503 (17%) Performance Fees 4 4 0% 4 0% Total $424 $
Slide 35: Consolidated Balance Sheet
Consolidated Balance Sheet In US $ Millions Assets Jun. 30, 2012 Dec. 31, 2011 Castrand cash equivalents s 4S 639 Cash and securities, segregated 1,155 1,280 Receivables, net 1,446 1,339 Investments: Deferred compensation - related 150 176 Other 619 619 Goodwill 2,954 2,954 Intangible assets, net 18
Slide 36: Second Quarter 2012 GAAP Income Statement
Second Quarter 2012 GAAP Income Statement 2Q 1Q 2Q In US dollar millions (except EPU) 2012 2012 % A 2011 % A Net Revenues $ 642 $ 682 (6%) = $ 728 (12%) Operating Expenses 563 581 (3%) 612 (8%) Operating Income 79 101 (22%) 116 (32%) Net Income Attributable to AB Unitholders 74 87 (15%) 114 (35%) AB
Slide 37: Consolidated Statement of Cash Flows
AllianceBernstein.com * Consolidated Statement of Cash Flows In US $ Millions
Slide 38: AllianceBernstein Holding Financial Results
AllianceBernstein Holding Financial Results In US § Millions (excluding per unit amounts) 2a 1a 2a 2012 2012 hA 2011 %A AllianceBernstein Net Income (Loss) Attributable to AlianceBemstein $74 $87 (15%) $114 (35%) Weighted Average Equity Ownership Interest 375% 375% 37.4% AllianceBernstein Holding Ai
Slide 39: GAAP to Adjusted Income Statement Reconciliation
'$ thousands except per Unt amounts, unaudited ‘Adjustments, Distribution. Pass Deferred Venture Real Non Rotated Compensation Capital Estate Controlling Adjusted __GAAP__Paymonts_ M___Fund Charges _Interests _ (Non-GAAP) @ © ©) © © Investment advisory and services fees $ 425243, 8424447 Bernstein r
Slide 40: AllianceBernstein Adjusted Earnings Reconciliation
AllianceBernstein Adjusted Earnings Reconciliation “Three Months Ended $ thousands, unaudited Sone seine asin sot eso «van Net Revenues, GAAP basis $642,163 $ 681,809 $ 624,978 $ 641,529 $ 727,994 $ 755,390 Exclude: Deferred compensation related investment (gains) losses 7619 (15,570) (9,386) 37,840
Slide 41: AllianceBernstein Holding Adjusted Earnings Reconciliation
AllianceBernstein Holding Adjusted Earnings Reconciliation ‘Three Months Ended $ thousands except per Unit amounts, unaudited e30n2 342 1234119801131 BIS /11 Net Income (Loss) - Diluted, GAAP basis $ 24,339 § 26,699 § (199,463) § 27,003 $ 35,653 $ 43,923 Impact on net income of AlianceBernstein non-
Slide 42: 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 comp
Slide 43: AllianceBernstein.com
AllianceBernstein.com