AllianceBernstein
Third Quarter 2007 Review
Third 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.
October 24, 2007
AllianceBernstein
Third Quarter 2007 Review
In light of Regulation FD, management will be limited in responding to inquiries from investors or analysts in a non-public forum.
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 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 ar e 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 and in Part II, Item 1A of Form 10-Q for the quarter ended June 30, 2007. Any or all of the forward-looking statements
that we make in Form 10-K, Form 10-Q, 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” and those listed below 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 assumptions provided for full year
2007. The earnings guidance is based on a number of assumptions, including, but not limited to, the following: net asset inflows continuing after
September 30, 2007 at levels similar to the third quarter of 2007 (adjusted to exclude the above mentioned index terminations) and assumes equity
and fixed income market returns at annual rates of 8% and 5%, respectively, for the fourth quarter. 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. 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.
The forward-looking statements we make in this presentation also include our anticipation that the level of net asset flows into our institutional
channel will improve in 2008 due to our growing momentum in the defined contribution market, that robust growth will continue in our private client
channel, and that we are optimistic about the long-term outlook for our retail business. The market for defined contribution plan investment services
is highly competitive and we may not be successful in winning new mandates. Also, before they are funded, institutional mandates do not represent
legally binding commitments to fund and, accordingly, the possibility exists that not all mandates will be funded in the amounts and at the times we
currently anticipate. Growth in the private client and retail channels may be impaired by changes in competitive and securities market conditions a nd
relative performance. The actual performance of the capital markets and other factors beyond our control will affect our investment success for
clients and asset inflows.
Cautions regarding Forward-Looking Statements
Propriety - For AllianceBernstein L.P. use only
2
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
*12 months ending September 30, 2007.
Source: MSCI (Morgan Stanley Capital International).
Market Performance - U.S.
3
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
*12 months ending September 30, 2007.
Source: MSCI (Morgan Stanley Capital International).
Market Performance - Non-U.S.
4
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
<Growth services performed especially well
<Value services were weak
<Fixed Income services were slightly negative
<Hedge fund returns were disappointing, especially in diversified services
<Blend Strategies were respectable, with strength in U.S. and International
services and weakness in Emerging Markets
Relative Performance Summary
5
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
Three Months Ended September 30, 2007
$ Millions
Changes in Assets Under Management
By Channel
6
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
Twelve Months Ended September 30, 2007
$ Millions
Changes in Assets Under Management
By Channel
7
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
Three Months Ended September 30, 2007
$ Millions
Changes in Assets Under Management
By Investment Service
8
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
Twelve Months Ended September 30, 2007
$ Millions
Changes in Assets Under Management
By Investment Service
9
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
<Value and Blend services accounted for
80% of all new accounts
<Global and International services
accounted for approximately 86% of all
new accounts
<The pipeline of won but unfunded new
mandates remains substantial, but
declined somewhat in the quarter
<Defined Contribution gaining traction in
marketplace
(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: Third Quarter Highlights
10
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
<Substantial growth in U.S. Funds offset by:
ØNon-U.S. weakness
ØIncreased investment minimums on
certain SMA services
<“Investment Strategies for Life” growing
worldwide:
ØWealth Strategies services ~$14
billion in assets(2)
ØRetirement Strategies (over $1
billion in AUM) received stellar
results in PlanAdviser magazine
survey
ØCollegeBoundfund AUM at $8.5
billion; ranked #1 in the nation by
savingforcollege.com
(1) Transfers of certain client accounts were made among distribution channels resulting from changes in how these accounts are serviced by the firm.
(2) Wealth Strategies AUM reflects primarily Retail assets but includes some Private Client and Institutional Investments client assets
Retail: Third Quarter Highlights
11
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
Private Client: Third Quarter Highlights
<Record trailing twelve month
gross and net inflows of $18.3
billion and $9.5 billion,
respectively
<Financial Advisor headcount
increased to 341 - up 17% from
September 2006
12
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
<Revenue up 18% versus third quarter 2006; strongest quarter on record primarily
attributable to double-digit growth in Europe
<Initiated coverage of Southern European banking sector; robust global pipeline
for additional coverage
<Excellent results in Institutional Investor’s recently released U.S. poll:
ØRanked #7 overall; highest in the history of the firm
ØFourth consecutive year the firm has placed in Top Ten of Institutional
Investor’s league table
Ø95% of our analysts publishing at the start of this year were recognized
in the poll
ØSix analysts voted #1 in their sector
Institutional Research Services: Third Quarter Highlights
13
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
by Client Domicile
by Investment Service
$ Billions
Total AUM at
September 30,
2007 $813 Billion
Total AUM at
September 30,
2006 $659 Billion
Growth in Global Assets
14
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
Blend
Strategies
Index/Structured
$25
3%
Assets Under Management by
Investment Service
$813 Billion
Blend Strategies AUM
$173 Billion(1)
(+48% vs. 9/30/06)
(1) Includes approximately $6 billion of Blend Fixed Income AUM.
24%
39%
10%
10%
14%
(1)
$ Billions
Growth in Blend Strategies Assets
15
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
investment advisory clients of AllianceBernstein.
Assets Under Management
$ Billions
+35%
+18%
+50%
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
+23%
-5%
+18%
Growth in Hedge Fund Assets
16
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
(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 Third Quarter Revenues
17
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
NOTE: Percentages are calculated using revenues and expenses rounded to the nearest thousand.
AllianceBernstein Third Quarter Advisory Fees
18
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
NOTE: Percentages are calculated using revenues and expenses rounded to the nearest thousand.
$ Millions
AllianceBernstein Third Quarter Operating Expenses
19
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
NOTE: Percentages are calculated using revenues and expenses rounded to the nearest thousand.
$ Millions
AllianceBernstein Third Quarter Compensation & Benefits
20
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
(1) Operating Income as a percentage of net revenues.
NOTE: Percentages are calculated using revenues and expenses rounded to the nearest thousand.
$ Millions
AllianceBernstein Third Quarter Net Income
21
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
NOTE: Percentages are calculated using revenues and expenses rounded to the nearest thousand.
$ Millions (except per-Unit amounts)
AllianceBernstein Holding Financial Results
22
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
<Growth services performed exceptionally well; Value services were weak
<Diversified Hedge Fund services were disappointing
<Strong organic growth in Private Client offset by Institutional Investments outflows
<AUM growth once again driven by Global and International services and non-U.S. clients
<Very strong financial results with Net Income up 38% and Operating Margins expanding
by 400 basis points to 32.9%
<Updated full year 2007 earnings guidance estimate of approximately $4.50 - $4.80 per
Unit at the holding company level
=Guidance assumes:
ØLower than previously forecasted hedge fund performance fees
ØNet asset inflows continuing at levels similar to 3Q07 (adjusted to
exclude $6 billion of index terminations)
ØEquity and fixed income market returns at annual rates of 8% and 5%,
respectively, for the fourth quarter
AllianceBernstein - 3Q07 Earnings Highlights
23
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
Q&A
24
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
Appendix
25
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
Market Environment
26
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
Relative Performance: Institutional Growth Equity (After Fees)(1)
27
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
Relative Performance: Institutional Value Equity (After Fees)(1)
28
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
Relative Performance: Blend Strategies Services (After Fees)(1)
29
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
Relative Performance: Institutional Fixed Income (After Fees)(1)
30
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
Absolute Performance: Private Client (After Fees)(1)
31
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
Relative Performance: Retail Growth Equity (After Fees)(1)
32
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
Relative Performance: Retail Value Equity (After Fees)(1)
33
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
Relative Performance: Retail Fixed Income (After Fees)(1)
34
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
Relative Performance: Wealth Strategies (After Fees)(1)
35
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
Nomura, Russell Investment Group, Scotia Capital, S&P, TOPIX, and AllianceBernstein.
Bernstein Value Equities
Inception
Date
Inception-
Sep 2007
Alliance Growth Equities
Inception
Date
AllianceBernstein. Past performance is no guarantee of future results. Source: Bloomberg, Citigroup, FTSE, JPMorgan Chase, Lehman Brothers, Merrill Lynch, MSCI,
AllianceBernstein Style Blend
AllianceBernstein Fixed Income
Net-of-Fee Annualized Relative Performance Premiums
Inception-
Sep 2007
Investment Performance: Delivering Results for Clients
36
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
In $ Thousands, Unaudited
AllianceBernstein Consolidated Balance Sheet
37
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
In $ Thousands, Unaudited
AllianceBernstein Consolidated Statement of Cash Flows
38
AllianceBernstein
Third Quarter 2007 Review
Propriety - For AllianceBernstein L.P. use only
AllianceBernstein® and the AB AllianceBernstein Logo are trademarks and service marks owned by AllianceBernstein L.P.
39