Fourth Quarter 2006 Review
Gerald M. Lieberman
President & Chief Operating Officer
Lewis A. Sanders
Chairman & Chief Executive Officer
Any forecasts in this material may not be realized. Information or opinions should not be construed as investment advice.
This revised presentation contains financial results that have been adjusted to conform to
the results reported in our Form 10-K for the year ended December 31, 2006.
| March 13, 2007 |
| Fourth-Quarter 2006 Review | AllianceBernstein |
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| Fourth-Quarter 2006 Review | Proprietary - For AllianceBernstein L.P. use only | AllianceBernstein |
Forward-Looking Statements
Certain statements in this presentation and the accompanying oral remarks are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. The most significant of these factors include, but are not limited to, the following: the performance of financial markets; the investment performance we achieve for our clients; general economic conditions; future acquisitions; competitive conditions; and government regulations, including changes in tax rates. We caution readers to carefully consider our forward-looking statements in light of these factors. Further, these forward-looking statements speak only as of the date on which such statements are made; we undertake no obligation to update any forward-looking statements to reflect subsequent events or circumstances. For further information regarding these forward-looking statements and the factors that could cause actual results to differ, see “Risk Factors” in Item 1A of Form 10-K for the year ended December 31, 2006. Any or all of the forward-looking statements that we make in Form 10-K, this presentation, or any other public statements we issue may turn out to be wrong. Of course, factors other than those listed in “Risk Factors” could also adversely affect our revenues, financial condition, results of operations, and business prospects.
The oral remarks accompanying this presentation include forward looking statements predicting increases in net asset inflows, describing the likelihood of improved performance by growth equities relative to value equities, expecting an increase in assets under management subject to performance fees and a related increase in seasonal volatility, and indicating anticipated expense levels. The actual performance of financial markets generally, how our performance measures against that of our competitors, and other factors we cannot control will affect our asset inflows and whether performance by growth equities relative to value equities improves. Performance-based fees are by nature seasonal and volatile and thus difficult to predict. Our expense levels in future periods depend in part on headcount and office space needed in response to the growth in volume, complexity and global nature of our firm. The forward-looking statements referred to in the preceding paragraph also include statements regarding our estimate of what it will cost us to reimburse certain of our clients for losses arising out of the error related to processing class action claims and our ability to recover most of this cost. Our estimate of the cost is based on our review to date; as we continue our review, our estimate and the ultimate cost we incur may change. Our ability to recover most of the cost of the error depends, in part, on the availability of funds from the related class-action settlement funds, the amount of which is not known, and the willingness of our insurers to reimburse us under existing policies.
In light of Regulation FD, management will be limited in responding to inquiries from investors or analysts in a non-public forum.
Introduction
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Capital markets strong
<
Relative performance somewhat mixed, but with substantial exceptions
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Strong market appreciation and net AUM inflows across all channels
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Summary of financial performance vs. 4Q05
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AllianceBernstein (Operating)
Ø
Net Revenues up 30.3%
Ø
Operating Income up 29.5%
Net Income up 26.6%
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AllianceBernstein Holding distribution of $1.48 per Unit up 45.1%
<
An administrative error resulted in an adjustment to fourth quarter earnings of $0.21 per Holding Unit; substantial recovery of this amount is anticipated
(adjusted)
AllianceBernstein – Fourth Quarter Highlights
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*12 months ending December 31, 2006.
Source: Frank Russell Company, Standard & Poor’s, and Lehman Brothers.
Market Performance - U.S.
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*12 months ending December 31, 2006.
Source: MSCI (Morgan Stanley Capital International).
Market Performance - Non-U.S.
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Value Equities performance was very strong
<
Fixed Income outperformed, in some cases substantially
<
Growth Equities performance generally weak, but turnaround expected
Relative Performance Summary
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Three Months Ended December 31, 2006
In $ Millions
Changes in Assets Under Management
By Channel
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Twelve Months Ended December 31, 2006
In $ Millions
Changes in Assets Under Management
By Channel
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Three Months Ended December 31, 2006
In $ Millions
Changes in Assets Under Management
By Investment Service
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Twelve Months Ended December 31, 2006
In $ Millions
Changes in Assets Under Management
By Investment Service
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(1) Transfers of certain client accounts were made among distribution channels resulting from changes in how these accounts are serviced by the firm.
<
Value Equity and Blend Strategies services accounted
for roughly 70% of all new
assets
assets
<
Global & International services
comprised approximately 75%
of all new assets
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Pipeline of won but unfunded
new mandates remains strong
Institutional Investments—
Fourth Quarter Highlights
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(1)Transfers of certain client accounts were made among distribution channels resulting from changes in how these accounts are serviced by the firm.
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Positive net inflows for sixth
consecutive quarter
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Significant increase in net asset inflows for full year in:
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U.S. Retail mutual funds
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Global & International and Multi-Strategy services
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Net positive flows in:
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U.S. and Luxembourg funds
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Equity and fixed income
Retail—
Fourth Quarter Highlights
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(1)Transfers of certain client accounts were made among distribution channels resulting from changes in how these accounts are serviced by the firm.
Private Client—
Fourth Quarter Highlights
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Net inflows increased from
the third quarter
<
Financial Advisor headcount
increased to 298 – up 14.2%
from December 2005,
including the opening of our
U.K. office
from December 2005,
including the opening of our
U.K. office
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Revenue growth of 1.9% from prior year quarter and 6.3% for the full year
<
Revenue, adjusted for advisory fee reclassification, up 6.1% from prior year
quarter and 16.2% for the full year
<
4Q06 revenue growth driven by London, with U.S. about flat
<
Client use of our algorithmic trading platform in the U.S. continues to grow;
on schedule for 1Q07 launch in Europe
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Outstanding results in Institutional Investor’s “Best U.S. Independents” survey:
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Ranked in 26 sectors, including first place finishes in 23 sectors
| Fourth-Quarter 2006 Review | Proprietary - For AllianceBernstein L.P. use only | AllianceBernstein |
Institutional Research Services—
Fourth Quarter Highlights
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By Client Domicile
By Investment
Service
In $ Billions
Non-U.S.
UP 44%
Global &
Int’l
UP 50%
$415
72%
$717 Billion +24%
at Dec 31, 2006
Equity
$579 Billion
at Dec 31, 2005
$164
28%
$540
75%
$177
25%
F/I
Equity
F/I
Growth in Global Assets
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Blend
Strategies
Index/Structured
Assets Under Management
by Investment Service
$717 Billion
Blend Strategies AUM
$134 Billion(1)
(+52% vs. 12/31/05)
(1) Includes approximately $4 billion of Blend Fixed Income AUM.
25%
38%
9%
9%
15%
$30
4%(1)
In $ Billions
Growth in Blend Strategies Assets
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(1)
Includes approximately $4 million reclassified from advisory fees.
(2)
Includes Shareholder Servicing, Investment Gains (Losses) and Other Revenues.
NOTE: Percentages are calculated using revenues and expenses rounded to the nearest thousand.
In $ Millions
AllianceBernstein Fourth Quarter Revenues
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NOTE: Percentages are calculated using revenues and expenses rounded to the nearest thousand.
AllianceBernstein Fourth Quarter Advisory Fees
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NOTE: Percentages are calculated using revenues and expenses rounded to the nearest thousand.
In $ Millions
(adjusted)
AllianceBernstein Fourth Quarter Operating Expenses
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NOTE: Percentages are calculated using revenues and expenses rounded to the nearest thousand.
In $ Millions
AllianceBernstein Fourth Quarter Compensation & Benefits
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NOTE: Percentages are calculated using revenues and expenses rounded to the nearest thousand.
In $ Millions
(adjusted)
AllianceBernstein Fourth Quarter Expenses
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(1) Includes $7 million gain on disposition of South Africa J.V.
(2) Includes $7 million gain on disposition of South Africa J.V. and $8 million gain on disposition of Indian mutual funds
(3) Operating Income as a percentage of net revenues.
NOTE: Percentages are calculated using revenues and expenses rounded to the nearest thousand.
In $ Millions
(adjusted)
AllianceBernstein Fourth Quarter Net Income
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NOTE: Percentages are calculated using revenues and expenses rounded to the nearest thousand.
In $ Millions (except per unit amounts)
(adjusted)
AllianceBernstein Holding Financial Results
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Q&A
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Appendix
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Market Environment
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Relative Performance: Institutional Growth Equity (After Fees)(1)
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Relative Performance: Institutional Value Equity (After Fees)(1)
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Relative Performance: Blend Strategies Services (After Fees)(1)
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Relative Performance: Institutional Fixed Income (After Fees)(1)
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Absolute Performance: Private Client (After Fees)(1)
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Relative Performance: Retail Growth Equity (After Fees)(1)
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Relative Performance: Retail Value Equity (After Fees)(1)
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Relative Performance: Retail Fixed Income (After Fees)(1)
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Relative Performance: Wealth Strategies (After Fees)(1)
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Bernstein Value Equities
Inception
Date
Inception–
Dec 2006
Alliance Growth Equities
Inception
Date
The performance figures in AllianceBernstein Fixed Income reflect corrections made to the original presentation.
AllianceBernstein. Past performance is no guarantee of future results. Source: Bloomberg, Citigroup, FTSE, JPMorgan Chase, Lehman Brothers, Merrill Lynch, MSCI,Nomura, Russell Investment Group, Scotia Capital, S&P, TOPIX, and AllianceBernstein.
AllianceBernstein Style Blend
AllianceBernstein Fixed Income
Net-of-Fee Annualized Relative Performance Premiums
Inception–
Dec 2006
Investment Performance: Delivering Results for Clients
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In $ Millions
AllianceBernstein Transaction Fees
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In $ Thousands, Unaudited
(adjusted)
AllianceBernstein Consolidated Balance Sheet
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In $ Thousands, Unaudited
(adjusted)
AllianceBernstein
Consolidated Statement of Cash Flows
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