AllianceBernstein
Second Quarter 2007 Review
Second Quarter 2007 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.
July 25, 2007
AllianceBernstein
Second Quarter 2007 Review
Forward-Looking Statements
In light of Regulation FD, management will be limited in responding to inquiries from investors or analysts in a non-public forum.
Introduction
Certain statements in this presentation 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 regulations and rates and the manner in which the earnings of publicly traded partnerships are taxed. 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 forward-looking statements we make in this presentation include estimated earnings guidance and related assumptionsbprovided for full year 2007. The earnings guidance is based on a number of assumptions, including, but not limited to, the following: net inflows of client assets under management continuing at levels similar to recent rates, and equity and fixed income market returns at annual rates of 8% and 5%, respectively, for the balance of the year. Net inflows of client assets are subject to domestic and international securities market conditions, competitive factors, and relative performance, each of which may have a negative effect on net inflows; capital market performance is inherently unpredictable. Our expectation that the fourth quarter will account for a disproportionate share of total earnings is based on the relative amount of assets under management subject to performance fees that are calculated at the end of fourth quarter. In view of these factors, and particularly given the volatility of capital markets (and the effect of such volatility on performance fees and the value of investments in respect of incentive compensation) and the difficulty of predicting client asset inflows and outflows, our earnings estimates should not be relied on as predictions of actual performance, but only as estimates based on assumptions that may or may not be correct. There can be no assurance that we will be able to meet the investment and service goals and needs of our clients or that, even if we do, it will have a positive effect on the company’s financial performance.
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AllianceBernstein
Second Quarter 2007 Review
*12 months ending June 30, 2007.
Source: MSCI (Morgan Stanley Capital International).
Market Performance - U.S.
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AllianceBernstein
Second Quarter 2007 Review
*12 months ending June 30, 2007.
Source: MSCI (Morgan Stanley Capital International).
Market Performance - Non-U.S.
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AllianceBernstein
Second Quarter 2007 Review
< Value Equities generally outperformed, with noteworthy strength in non-U.S.
services
< Growth Equities mostly underperformed, but have achieved a strong start for
the current quarter
< Fixed Income generally outperformed, with exceptional strength in certain
Retail services
< Global and International Blend Strategies services were particularly strong
Relative Performance Summary
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AllianceBernstein
Second Quarter 2007 Review
Three Months Ended June 30, 2007
$ Millions
Changes in Assets Under Management
By Channel
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AllianceBernstein
Second Quarter 2007 Review
Twelve Months Ended June 30, 2007
$ Millions
Changes in Assets Under Management
By Channel
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AllianceBernstein
Second Quarter 2007 Review
Three Months Ended June 30, 2007
$ Millions
Changes in Assets Under Management
By Investment Service
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AllianceBernstein
Second Quarter 2007 Review
Twelve Months Ended June 30, 2007
$ Millions
Changes in Assets Under Management
By Investment Service
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AllianceBernstein
Second Quarter 2007 Review
< Fixed Income services accounted for
~40% of new assets
< Global & International services
comprised approximately 90% of all
new assets
< Pipeline of won but unfunded new
mandates remains substantial
(1) Transfers of certain client accounts were made among distribution channels resulting from changes in how these accounts are serviced by the firm.
Institutional Investments: Second Quarter Highlights
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AllianceBernstein
Second Quarter 2007 Review
< Accelerating organic growth
< Substantial growth in U.S. Funds
continues
< Significant increases in Luxembourg
Fund net inflows, driven primarily by
Fixed Income sales in Asia
< Wealth Strategies services nearly $13
billion in assets, up ~20% sequentially
Retail: Second Quarter Highlights
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AllianceBernstein
Second Quarter 2007 Review
(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: Second Quarter Highlights
< Record trailing twelve month
gross inflows of $16.6 billion
< Financial Advisor headcount
increased to 317 - up 13.2%
from June 2006
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AllianceBernstein
Second Quarter 2007 Review
< Revenue up 4% sequentially, led by double-digit growth in the European
business
< Received strong marks in two leading European research client surveys,
consistent with share gains in that market
< Launched coverage of three industries in the U.S.:
Ø Household/Personal Products
Ø Machinery/Capital Goods
Ø Internet
Institutional Research Services: Second Quarter Highlights
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AllianceBernstein
Second Quarter 2007 Review
by Client Domicile
by Investment Service
$ Billions
Non-U.S.
up 45%
Global &
Int’l
up 50%
Total AUM at
June 30, 2007
$793 Billion
Total AUM at
June 30, 2006
$625 Billion
Total AUM
up 27%
Growth in Global Assets
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AllianceBernstein
Second Quarter 2007 Review
Blend
Strategies
Index/Structured
$31
Assets Under Management by
Investment Service
$793 Billion
Blend Strategies AUM
$160 Billion(1)
(+50% vs. 06/30/06)
(1) Includes approximately $6 billion of Blend Fixed Income AUM.
24%
39%
10%
9%
14%
4%
(1)
$ Billions
Growth in Blend Strategies Assets
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AllianceBernstein
Second Quarter 2007 Review
Assets Under Management
$ Billions
+35%
+18%
+50%
+45%
Growth in Hedge Fund Assets
The information in this display is provided solely for use in connection with this presentation and is not directed towards existing or potential hedge fund investors or investment advisory clients of AllianceBernstein.
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AllianceBernstein
Second Quarter 2007 Review
(1) Includes Shareholder Servicing, Investment Gains (Losses) and Other Revenues.
NOTE: Percentages are calculated using revenues and expenses rounded to the nearest thousand.
$ Millions
AllianceBernstein Second Quarter Revenues
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AllianceBernstein
Second Quarter 2007 Review
NOTE: Percentages are calculated using revenues and expenses rounded to the nearest thousand.
AllianceBernstein Second Quarter Advisory Fees
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AllianceBernstein
Second Quarter 2007 Review
NOTE: Percentages are calculated using revenues and expenses rounded to the nearest thousand.
$ Millions
AllianceBernstein Second Quarter Operating Expenses
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AllianceBernstein
Second Quarter 2007 Review
NOTE: Percentages are calculated using revenues and expenses rounded to the nearest thousand.
$ Millions
AllianceBernstein Second Quarter Compensation & Benefits
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AllianceBernstein
Second Quarter 2007 Review
(1) Operating Income as a percentage of net revenues.
NOTE: Percentages are calculated using revenues and expenses rounded to the nearest thousand.
$ Millions
AllianceBernstein Second Quarter Net Income
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AllianceBernstein
Second Quarter 2007 Review
NOTE: Percentages are calculated using revenues and expenses rounded to the nearest thousand.
$ Millions (except per-Unit amounts)
AllianceBernstein Holding Financial Results
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AllianceBernstein
Second Quarter 2007 Review
< Strong quarter for our Value Equity and Fixed Income services
< Continued organic growth in all channels
< AUM growth once again driven by Global and International services and non-U.S.
clients
< Strong second quarter financial results
< Updated full year 2007 earnings guidance estimate of approximately $4.90 - $5.25 per
Unit at the holding company level
= Guidance assumes:
Ø Asset inflows continue at levels similar to recent levels
Ø Equity and fixed income market returns at annual rates of 8% and 5%,
respectively, for the balance of the year
= Continue to anticipate that the fourth quarter will account for a disproportionate
share of full year earnings
AllianceBernstein - 2Q07 Earnings Highlights
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Q&A
Appendix
AllianceBernstein
Second Quarter 2007 Review
Market Environment
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AllianceBernstein
Second Quarter 2007 Review
Relative Performance: Institutional Growth Equity (After Fees)
(1)
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AllianceBernstein
Second Quarter 2007 Review
Relative Performance: Institutional Value Equity (After Fees)
(1)
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AllianceBernstein
Second Quarter 2007 Review
Relative Performance: Blend Strategies Services (After Fees)
(1)
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AllianceBernstein
Second Quarter 2007 Review
Relative Performance: Institutional Fixed Income (After Fees)
(1)
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AllianceBernstein
Second Quarter 2007 Review
Absolute Performance: Private Client (After Fees)
(1)
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AllianceBernstein
Second Quarter 2007 Review
Relative Performance: Retail Growth Equity (After Fees)
(1)
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AllianceBernstein
Second Quarter 2007 Review
Relative Performance: Retail Value Equity (After Fees)
(1)
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AllianceBernstein
Second Quarter 2007 Review
Relative Performance: Retail Fixed Income (After Fees)
(1)
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AllianceBernstein
Second Quarter 2007 Review
Relative Performance: Wealth Strategies (After Fees)
(1)
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AllianceBernstein
Second Quarter 2007 Review
Bernstein Value Equities
Inception
Date
Inception-
Jun 2007
Alliance Growth Equities
Inception
Date
AllianceBernstein Style Blend
AllianceBernstein Fixed Income
Net-of-Fee Annualized Relative Performance Premiums
Inception-
Jun 2007
Investment Performance: Delivering Results for Clients
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.
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AllianceBernstein
Second Quarter 2007 Review
In $ Thousands, Unaudited
AllianceBernstein Consolidated Balance Sheet
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AllianceBernstein
Second Quarter 2007 Review
In $ Thousands, Unaudited
AllianceBernstein Consolidated Statement of Cash Flows
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AllianceBernstein
Second Quarter 2007 Review
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