41 slides from Alliancebernstein Holding L.p's earnings presentation, Aug 2, 2010
Slide 1: Second Quarter 2010 Review
2Q10 Earnings Presentation AllianceBernstein.com Second Quarter 2010 Review Aug 2, 2010 Peter S. Kraus Chairman & Chief Executive Officer David A. Steyn Chief Operating Officer John B. Howard Chief Financial Officer
Slide 2: Cautions Regarding Forward-Looking Statements
2Q10 Earnings Presentation 2 AllianceBernstein.com 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
Slide 3: Relative Investment Performance
2Q10 Earnings Presentation 3 AllianceBernstein.com Relative Investment Performance Benchmark MSCI World (Cap, UH, net) MSCI EAFE (Cap, UH, net) Russell 1000 Value Institutional Equity Composites vs. Benchmarks (Percent) Performance is preliminary as of June 30, 2010. The information in this table is
Slide 4: Net Flows By Investment Service
2Q10 Earnings Presentation 4 AllianceBernstein.com Net Flows By Investment Service (1) (1) Approximately $70 billion of Blend Strategies AUM are reported in their respective services. (2) Includes index, structured, asset allocation services and other non-actively managed AUM. In US dollars billions
Slide 5: Net Flows By Distribution Channel
2Q10 Earnings Presentation 5 AllianceBernstein.com Net Flows By Distribution Channel In US dollars billions Total: ($24.0) ($12.9) ($16.8) ($6.4) ($4.7) ($0.1)
Slide 6: Gross Sales
2Q10 Earnings Presentation 6 AllianceBernstein.com Gross Sales In US dollars billions $7.2 $13.2 $18.8 $16.1 $14.6
Slide 7: Retail: Asset Flows for Trailing Five Quarters
2Q10 Earnings Presentation 7 AllianceBernstein.com Retail: Asset Flows for Trailing Five Quarters In US dollars billions
Slide 8: Private Client: Asset Flows for Trailing Five Quarters
2Q10 Earnings Presentation 8 AllianceBernstein.com Private Client: Asset Flows for Trailing Five Quarters In US dollars billions
Slide 9: Institutions: Asset Flows for Trailing Five Quarters
2Q10 Earnings Presentation 9 AllianceBernstein.com Institutions: Asset Flows for Trailing Five Quarters In US dollars billions
Slide 10: Bernstein Research Services
2Q10 Earnings Presentation 10 AllianceBernstein.com Bernstein Research Services < Revenue up 6% compared to prior year quarter and 1Q10 as both US and European operations grew revenue; market backdrop decelerated in June and into July < Continue to make strategic investments to grow SCB capabilities
Slide 11: Second Quarter 2010 Income Statement
2Q10 Earnings Presentation 11 AllianceBernstein.com 2Q 2010 2Q 2009 Percent Change 1Q 2010 Percent Change Net Revenues $688 $721 (5%) $725 (5%) Operating Expenses 580 588 (1%) 585 (1%) Operating Income 108 133 (19%) 140 (23%) Non-Operating Income (1) 2 6 (62%) 4 (50%) Income Before Income Taxes 110
Slide 12: GAAP vs. Adjusted: Six Quarter Trend
2Q10 Earnings Presentation 12 AllianceBernstein.com Operating Margin 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 GAAP* 7% 18% 24% 26% 22% 17% Adjusted 8% 13% 23% 28% 24% 21% GAAP vs. Adjusted: Six Quarter Trend In US dollars millions < Management believes that adjusted financial metrics provide more clarity
Slide 13: Second Quarter 2010 Revenues
2Q10 Earnings Presentation 13 AllianceBernstein.com Revenues 2Q 2010 2Q 2009 Percent Change 1Q 2010 Percent Change Base Fees $510 $447 14% $509 - Performance Fees 3 1 237% 3 11% Bernstein Research 117 111 6% 111 6% Distribution 83 65 29% 80 4% Investment Gains (Losses) (57) 65 n/m (8) 605% Other Rev
Slide 14: Second Quarter 2010 GAAP Operating Expenses
2Q10 Earnings Presentation 14 AllianceBernstein.com Operating Expenses 2Q 2010 2Q 2009 Percent Change 1Q 2010 Percent Change Compensation & Benefits Base Compensation $110 $112 (2%) $105 5% Incentive Compensation 115 133 (13%) 126 (9%) Commissions, Fringes & Other 88 80 10% 88 - Total Compensation &
Slide 15: Second Quarter 2010 GAAP to Adjusted Reconciliation
2Q10 Earnings Presentation 15 AllianceBernstein.com 2Q 2010 2Q 2009 Percent Change 1Q 2010 Percent Change AllianceBernstein L.P. GAAP Operating Income $108 $133 (19%) $140 (23%) Net P&L impact of mark-to-market of deferred compensation (1) 18 (55) n/m (11) n/m Real estate sub-lease charges - - - 12
Slide 16: Adjusted Operating Income: 1Q10 versus 2Q10
2Q10 Earnings Presentation 16 AllianceBernstein.com Adjusted Operating Income: 1Q10 versus 2Q10 Please refer to pages 36-40 for additional information on the reconciliation of GAAP financial results to adjusted financial results $158 $135 ($7) ($4) ($5) ($4) ($3) In US dollars millions ($6) $6
Slide 17: Q & A
2Q10 Earnings Presentation 17 AllianceBernstein.com AllianceBernstein Second Quarter 2010 Review Q & A
Slide 18: Appendix
2Q10 Earnings Presentation 18 AllianceBernstein.com AllianceBernstein Second Quarter 2010 Review Appendix
Slide 19: Institutional Value Equity: Relative Performance
2Q10 Earnings Presentation 19 AllianceBernstein.com Periods Ended June 30, 2010 Service 2Q 2010 One Year Three Years Five Years 10 Years Benchmark US Diversified Value (2.2) (2.4) (3.1) (2.2) 1.0 Russell 1000 Value US Strategic Value (2.9) (0.5) (6.7) (3.7) 4.7 S&P 500 US Strategic Value (3.1) (3.0)
Slide 20: Institutional Growth Equity: Relative Performance
2Q10 Earnings Presentation 20 AllianceBernstein.com Periods Ended June 30, 2010 Service 2Q 2010 One Year Three Years Five Years 10 Years Benchmark Global Research Growth (1.3) (2.7) (5.4) (3.9) (1.1) MSCI World (net) US Large Cap Growth (2.8) (4.8) (1.3) (1.0) 0.1 Russell 1000 Growth Int'l Research
Slide 21: Institutional Blend Strategies: Relative Performance
2Q10 Earnings Presentation 21 AllianceBernstein.com Periods Ended June 30, 2010 Service 2Q 2010 One Year Three Years Five Years 10 Years Benchmark Global Blend Strategies (2.1) (1.8) (6.4) (3.4) N/A MSCI World International Blend Strategies (2.1) (1.6) (3.8) (2.6) N/A MSCI EAFE US Blend Strategies (
Slide 22: Institutional Fixed Income: Relative Performance
2Q10 Earnings Presentation 22 AllianceBernstein.com Periods Ended June 30, 2010 Service 2Q 2010 One Year Three Years Five Years 10 Years Benchmark Corporate Bonds (0.2) 2.2 (0.2) (0.1) 0.1 Custom Corporate Index Strategic Core Plus (0.3) 6.7 0.1 0.4 N/A Custom Index Global Plus 0.3 6.8 (0.9) (0.2) N
Slide 23: Private Client: Absolute Performance
2Q10 Earnings Presentation 23 AllianceBernstein.com Periods Ended June 30, 2010 Service 2Q 2010 One Year Three Years Five Years 10 Years Fully Diversified Simulation* (8.5) 9.0 (6.9) 0.3 2.5 S&P 500 (11.4) 14.4 (9.8) (0.8) (1.6) MSCI World (net) (12.7) 10.2 (11.5) 0.1 (1.0) Lipper Short/Int Blended
Slide 24: Retail Value Equity: Relative Performance
2Q10 Earnings Presentation 24 AllianceBernstein.com Periods Ended June 30, 2010 Service 2Q 2010 One Year Three Years Five Years 10 Years Lipper Average International Value (3.5) (1.0) (6.0) (2.9) N/A International Large Cap Value Growth & Income (1) 0.2 (5.8) (1.3) (1.3) (2.1) Large Cap Value U.S. S
Slide 25: Retail Growth Equity: Relative Performance
2Q10 Earnings Presentation 25 AllianceBernstein.com Periods Ended June 30, 2010 Service 2Q 2010 One Year Three Years Five Years 10 Years Lipper Average Global Growth (1.9) (1.5) (4.6) N/A Global Large-Cap Growth Global Thematic Growth (1.2) (3.0) 1.9 (0.8) (4.1) Global Multi-Cap Growth International
Slide 26: Retail Fixed Income: Relative Performance
2Q10 Earnings Presentation 26 AllianceBernstein.com Periods Ended June 30, 2010 Service 2Q 2010 One Year Three Years Five Years 10 Years Lipper Average Global High Yield Portfolio 4.5 14.4 4.4 2.9 (0.1) Bond Global High Yield American Income Portfolio (0.3) 8.9 0.8 1.7 2.0 Bond USD Global Bond 1.7 6
Slide 27: Wealth Strategies: Relative Performance
2Q10 Earnings Presentation 27 AllianceBernstein.com Periods Ended June 30, 2010 Service 2Q 2010 One Year Three Years Five Years 10 Years Lipper Average Conservative Wealth (0.8) (0.9) (1.0) 0.1 N/A Mixed-Asset Target Alloc Consv Balanced Wealth (2.5) 1.9 (1.9) 0.0 N/A Mixed-Asset Target Alloc Modera
Slide 28: AUM Rollforward by Distribution Channel
2Q10 Earnings Presentation 28 AllianceBernstein.com Institutions Retail Private Client Total Client Domicile: US Non-US Total US Non-US Total US Non-US Total US Non-US Total Beginning of Period $159.0 $138.0 $297.0 $86.7 $41.1 $127.8 $74.4 $2.1 $76.5 $320.1 $181.2 $501.3 Sales/New Accounts 1.7 6.4 8
Slide 29: AUM Rollforward by Investment Service
2Q10 Earnings Presentation 29 AllianceBernstein.com Value Equity Growth Equity Fixed Income Other (1) Total Client Domicile: US Non-US Total US Non-US Total US Non-US Total US Non-US Total US Non-US Total Beginning of Period $105.6 $63.8 $169.4 $63.7 $27.5 $91.2 $113.9 $78.4 $192.3 $36.9 $11.5 $48.4
Slide 30: AUM by Region
2Q10 Earnings Presentation 30 AllianceBernstein.com AUM by Region In US dollars billions As of June 30, 2010 Retail Institutions Private Client $270.6 $116.2 $70.9
Slide 31: Second Quarter 2010 Advisory Fees
2Q10 Earnings Presentation 31 AllianceBernstein.com 2Q 2010 2Q 2009 Percent Change 1Q 2010 Percent Change Ending AUM ($ Billions) $458 $447 2% $501 (9%) Average AUM ($ Billions) $482 $437 10% $490 (2%) By Fee Type ($ Millions): Base Fees $510 $447 14% $509 - Performance Fees 3 1 237% 3 11% Total $51
Slide 32: Six-Quarter Deferred Compensation Net P&L Trend
2Q10 Earnings Presentation 32 AllianceBernstein.com 1Q 2009 2Q 2009 3Q 2009 4Q 2009 1Q 2010 2Q 2010 Revenues Investment Gains (Losses) ($28) $63 $71 $15 $11 ($37) Dividends 1 2 1 4 1 - Total Revenues ($27) $65 $72 $19 $12 ($37) Expenses Amortization of Original Awards $45 $39 $40 $36 $31 $31 Amortiz
Slide 33: Consolidated Balance Sheet
2Q10 Earnings Presentation 33 AllianceBernstein.com Assets June 30, 2010 Dec 31, 2009 Cash and cash equivalents $670 $614 Cash and securities, segregated 945 985 Receivables, net 1,172 1,099 Investments: Deferred compensation - related 331 401 Other 412 374 Goodwill 2,893 2,893 Intangible assets, ne
Slide 34: Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows Months Ended In US dollars millions June 30, 2010 ‘June 30, 2009 Cash Flows From Operating Activities: Net Income $228 161 Non-cash items: ‘Amortization of deferred sales commissions 24 29 ‘Amortization of non-cash deferred compensation 53 36 Depreciation and oth
Slide 35: AllianceBernstein Holding Financial Results
2Q10 Earnings Presentation 35 AllianceBernstein.com 2Q 2010 2Q 2009 Percent Change 1Q 2010 Percent Change AllianceBernstein Net Income Attributable to AllianceBernstein $106 $128 (17%) $148 (28%) Weighted Average Equity Ownership Interest 36.7% 34.4% 36.6% AllianceBernstein Holding Equity in Net Inc
Slide 36: Adjusted Earnings Reconciliation
AllianceBernstein Adjusted Earnings Reconciliation ‘Three Months Ended Sthousands, unaudited 6/30/10 331/10 1231109 ‘9/30/09 6/30/09, 3131109 Net Revenues, GAAP basis $688,343 $725,086 $781,861 $806,014 $721,440 $597,564 Exclude: Deferred compensation-related investment (gains) losses 36,797 (11,159
Slide 37: AllianceBernstein Holding Adjusted Earnings Reconciliation
2Q10 Earnings Presentation 37 AllianceBernstein.com Three Months Ended $ thousands except per unit amounts, unaudited 6/30/10 3/31/10 12/31/09 9/30/09 6/30/09 3/31/09 Diluted Net Income, GAAP basis $ 32,256 $ 47,858 $ 60,402 $ 62,836 $ 38,262 $ 6,735 Impact on net income of AllianceBernstein L.P. no
Slide 38: Adjusted Earnings Reconciliation: Six Months
AllianceBernstein Adjusted Earnings Reconciliation Six Months Ended June 30, Sthousands, unaudited 2010 2003, Net Revenues, GAAP basis $1,413,429 $1,319,004 Exclude Deferred compensation-related investment (gains) losses 25,638 (34,865) Deferred compensation-related dividends and interest (1,720) 3.
Slide 39: AllianceBernstein Holding Adjusted Earnings Reconciliation: Six Months
2Q10 Earnings Presentation 39 AllianceBernstein.com Six Months Ended $ thousands except per unit amounts, unaudited 6/30/10 6/30/09 Diluted Net Income, GAAP basis $ 80,127 $ 44,988 Impact on net income of AllianceBernstein L.P. non-GAAP adjustments 7,486 (16,737) Adjusted Diluted Net Income $ 87,613
Slide 40: Adjusted Financial Results Reconciliation
2Q10 Earnings Presentation 40 AllianceBernstein.com 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 excludes investment gains a
Slide 41: AllianceBernstein
7B ALLIANCEBERNSTEIN