Welcome to the AllianceBernstein Fourth Quarter 2012 Earnings Review. (Operator Instructions). As a reminder, this conference is being recorded and will be replayed for one week. I would now like to turn the conference over to the host for this call, the Director of Investor Relations for AllianceBernstein, Ms. Andrea Prochniak, please go ahead.

Thank you, Sarah. Hello and welcome to our fourth quarter 2012 earnings review. As a reminder, this conference call is being webcast and accompanied by a slide presentation that can be found in the Investor Relations section of our website. Our Chairman and CEO, Peter Kraus and our CFO, John Weisenseel will present our financial results today; our Chief Operating Officer, Jim Gingrich is with us as well, and will join in answering questions after our prepared remarks. Some of the information we present today is forward-looking and subject to certain SEC rules and regulations regarding disclosures. So I would like to point out the Safe Harbor language on slide one of our presentation. You can also find our Safe Harbor language in the MD&A of our 2012 form 10K which we filed this morning. I'd also like to remind you that under Regulation FD, management may only address questions of a material nature from the investment community in the public forum. So, please ask all such questions during the call. Now I'll turn it over to Peter.

Thanks Andrea and thank all of you for joining us for our fourth quarter 2012 earnings call. John, Jim and I are pleased to be here with you today. Like all of you we’re already well into tackling our 2013 initiatives but we’re proud of what we have accomplished in 2012 and we look forward to reviewing our results with you. So let’s start with an overview of our results which is on slide three. In our fifth consecutive quarter of sequential growth, total gross sales for the fourth quarter of 24 billion were up 13% for the third quarter and were our highest since the second quarter of 2008, a truly terrific result. Annual gross sales of 82 billion were up 46% from 2011 and our highest since 2007. Not only that our 5 billion in fourth quarter net flows were positive for the first time since the fourth quarter of 2007 and our annual net outflows declined by 77%. We achieved this shift in large part because of our clear momentum in retail throughout the year but our increasing stability in many other areas contributed as well. So did improving equity markets which translated to stronger fourth quarter investment performance. We finished the year with AUM of 430 billion up 11 billion for the third quarter; market performance contributed 6 billion to AUM on top of our 5 billion in net flows. Average AUM was up versus the third quarter but down 8% from last year. Moving to slide four, which shows the breakout of outflows by channel. Here is what you can see the tremendous run we had in retail which finished the year on a high; fourth quarter retail sales of 16.4 billion were up 8% sequentially and are highest since the first quarter of 2000…

Thank you Peter. As a reminder I will focus my remarks today primarily on our adjusted earnings. As always you can find our standard GAAP reporting in the appendix of this presentation of our press release and our 10K. Let’s start with our adjusted financials on slide 15. Fourth quarter adjusted revenues were up sequentially but down on an annual basis. Fourth quarter adjusted expenses were essentially flat sequentially but annual expenses were down. Our adjusted operating margin in the fourth quarter was 20.6% up from 20.2% in the third quarter. The full year adjusted operating margin was 18.8% up from 17.0% in 2011. Adjusted earnings per unit were $0.40 per the quarter versus $0.36 in the third quarter. For the full year adjusted earnings per unit were a $1.28 versus $1.14 in 2011. Now I will review the quarterly GAAP to adjusted operating metrics reconciliation on slide 16. Here you can see the adjustments we make to our gap revenues and expenses and the net impact on fourth quarter operating income. Two adjustments throughout the difference between gap and adjusted operating income in the quarter. First we adjusted for $39 million non-cash real estate charge we took in the fourth quarter which was included in GAAP expenses. I’ll discuss the detail for this charge in the coming slides. Second, we excluded from net revenues 2 million of investment losses related to the 90% non-controlling interest in the venture capital funds. Slide 17 provides the full year GAAP to adjusted reconciliation. Similar to the fourth quarter reconciliation the largest driver and the differences in GAAP and adjusted operating income was the 223 million in non-cash real estate charges, we recorded throughout the year related to our global real estate consolidation plan. Now I will turn to the adjusted income statement…

(Operator Instructions). Your first question comes from the line of Matt Kelley from Morgan Stanley. Your line is open.

Just wanted to get a sense on the Private Client business. Can you talk about the expectation of these investors? You laid out pretty well what the diversified stimulation is that you guys are running for them and then towards the back in the appendix you gave the performance versus broader market indices. So I’m just wondering how you know are you migrating customers towards thinking about that simulation that way or they already, is their mindset already there and are they happy with their performance? And what do they want from the performance?

The Private Client is of course an individual or a set of individuals that have varied different investment objectives and we spent a lot of time with each of our clients trying to understand what their risk and return attributes look like as a family unit and sometimes as individuals. And so much of what we ultimately design for an individual family is based upon that conversation what their cash needs are and what those risk parameters are. But the ultimate engine of allocating capital and providing that solution that the client wants that meets their specific unique family situation is driven by the strategic equity process and the dynamic asset allocation, capital structure and the alternatives platforms that we have, not to mention the historical muni business that we run for a long period of time. So you know the building blocks of what a Private Client ultimately wants we have I think evolved into a more sophisticated, more sensitive set of investment services for clients but the actual construction of that and what we actually do for each client is unique and that is based upon the conversation we have with them. So to get to your question about client expectations I think those client expectations have changed over time as our advisors have worked with our clients and prospects on what it is that they want to accomplish in the more volatile markets that we have experienced and how would we array the investment services that we have created and evolved so that it would meet their needs.

And then my follow-up and then I’ll jump back in. On retail in January, I know you put out your January numbers this morning, just wonder if you can comment a little bit on the change in the trend from a strong fourth quarter to what seems like slight outflows in January. Anything notable to call out there or any other color you can give there will be helpful. Thanks guys.

We have been in Asia ex, where we are for a long time and I think that’s where we saw a tick up in redemptions, we are happy with our level of gross sales, we are happy with our performance but we did see a tick up in redemptions. We have seen this before, it's nothing that we are hugely concerned about either way and I think what we have seen is that there is a market where people chase yield and we have a situation I think where people are moving down the credit spectrum in January whether or not that continues going forward we will see, nothing that we’re particularly concerned about either way.

To Jim’s point you also noted that in January there was about a 20 basis point move in long term treasuries and we generally don’t get 20 basis point moves a month.

Your next question comes from the line of Cynthia Mayer from Bank of America. Your line is open.

Maybe just a question or follow-up on that when you said they were moving down the credit spectrum what were they moving to and if that would continue would you, is there any way for you to migrate them to one of your products. And then second of all just in terms of your pie-chart on what kind of fixed income you have, how should we think about the percentage of that that’s high yield. Thanks.

Well on the last piece first, I’m not sure I have that number in my mind but if you follow-up with Andrea she can give you that number. On the first question look we have been, American high income as a product is a core product in investment portfolio throughout Asia and in the United States, it's marketed that way, it's constructed that way, it's intended to be that. And so there are points in time when you know markets in fact when credit is effectively getting stronger where portfolios that have more exposure to credit will perform better in that environment. Now you know we advise our clients that you have an allocation to American income because you want a core allocation to a stable service and that remains the core selling point of that service. We have other services that actually do have more credit exposure and clients can migrate to that but in instances in which you see you know monthly moves in markets that are larger than normal either away from credit or towards credit and in this case credit was getting stronger, you can have that impact, it can have that impact on that core service. I don’t think that underscores, I don’t think that undermines the necessity of the core services and the attractiveness of the core service and as Jim said and I think as both I and John had said our gross sales for the services continue to remain quite strong and we don’t see any evidence of that meaning the gross sales been weaker.

Okay, if I can follow-up, in Private Client it looks like the flows are better but still outflows in January. So can you maybe update us a little bit on sort of numbers of FAs and whether there is any trend in terms of sort of stabilizing the number of FAs keeping them in place or numbers of accounts something other than AUM.

I would say that our Private Client business and I have spent a fair bit of time out with FAs and clients, it is experiencing some positive momentum. You could say that the number of FAs that have left voluntarily has declined but I’m a conservative fellow and I’m not want to projecting that in any direction. I think that is generally a function of the aggressiveness of other parties and what drives other parties to that level of aggression and you know in interest in compensating to buy people out is very hard to predict and I have learned over time that’s just not estimable. What I do think is important in terms of retention of top talent in the business is that people meaning FAs are excited about the platform, excited about the variety of investment services that we have created, the flexibility of the business and frankly their ability to service our clients in many different market situations with many different kinds of families and I think when you see that and you see the excitement in FAs and then recognize as I said the improving process of people staying or the higher retention of people staying I think you get a sense of the momentum has turned towards the positive. So I think we feel better about the Private Client business, it still has plenty of work to do both to grow into net positive flow goes into expand our business but it's very, very solid business, core business for the firm. I think we have invested a lot of effort in both the investment side and in the fundamental thinking of how to service big family and I think that’s going to pay dividends overtime.

Your next question comes from the line of Michael Kim from Sandler O'Neill. Your line is open.

First Peter I would just be curious to get your take on kind of recent step up in equity mutual fund flows that we have seen across the industry, you know how much of that do you think is kind of more tactical in nature versus maybe clients getting more comfortable moving up the risk curve and then assuming that investors do trend in that direction. How incremental do you see that being for your flows?

Michael that’s a good question but obviously a tough question, I think as we have said over the last 18 months we have been nervous as investors have been more and more of reliant on fixed income to get returns and as I have said that equities will provide returns in excess of fixed income as they have for 10s and 10s of years and we still believe that. Now that doesn’t mean that we believe investors are going to be sell fixed income wholesale and run to equities. In fact the monthly numbers in January as I’m sure you have noted suggest that there are some equity flows but December was a really bad month for equity flow. So it's very difficult to project off of January as an inflection point because you know in December you had the opposite behavior and the economy didn’t really change you can say the fiscal cliff you know discussions maybe got resolved, maybe didn’t get resolved. I think a better statement of the state of being is that investors are beginning to recognize that fixed income should play more traditional role in their portfolio and that the outside returns that they have gotten from fixed income are unlikely to continue and that some rotation therefore in their risk budgeting is necessary and I think we definitely see that going on at clients both institutional, retail and private clients and that rotation into other kinds of investments whether they be equities or alternatives is frankly something that we would celebrate and support because there are many fixed income services actually that we offer that have positive can actually give to them that investors will want in this market. There are equity services that we think like value and the longer term growth prospects that we also think investors returning to and we also think the alternative side in both hedged product and risk seeking product is also a place that we feel comfortable inviting clients. So frankly I think this is a little bit more of an evolution as an opposed to a revolution. I don’t think that we see investors heading for the doors of fixed income and celebrating the wonderful returns of equities. But I do think it's going to begin to go in that direction overtime just because you can’t expect to get the returns that you have received in last 10 years in long bonds in the future. And I think that’s actually what’s underneath this.

And then just second question thinking about all of the new strategies that you have come to market with over the last several years, are there any products that might be approaching kind of three year track records or any other milestones as you look across kind of the equity and fixed income strategies either here in the U.S. or in any international markets?

There are and I think for us as you know in the last three years we have tried to build as I mentioned in my comments a much broader set of options across both equities, fixed income and non-traditional investment services and we need to get to the point where they all have three year track records and we’re still in the process of doing that. But there are some products that we have hit three year track records, real assets is one example, in municipal area intermediate products and I think we’re getting to the high yield three year track record as well but I suspect that we’re still one year away from having the dominant or majority of those new assets, new services having their three year track record. So we still think that there is significant growth opportunities out of that portfolio of options that we have built as we get to the third year of returns and we have good returns and then we start to see much stronger flows into those services because their track records have become mature.

Your next question comes from the line of William Katz from Citi. Your line is open. William Katz – Citi: Can you talk a little bit about on margins I think the comp ratios is about 49%, if I read the numbers correctly. How much of that was just a through up so the full year versus a newer run-rate?

That was basically through up and we were going at the year 49.8 so basically, 50 percent in ’08 so basically after 50% we have talked about and I wouldn’t anticipate that our planning for 2013 is any different than the 50% run-rate we have talked about in the past. William Katz – Citi: Okay just a clarification, in your real estate discussion the savings so far are those annual numbers? Just talking about the incremental savings from here.

Those savings were what hit in the quarter so there was 2 million in Q3 another 7 million in Q4 so but that will be the annual, that’s part of the annual going forward so as we talked about the end goal here is 38 million to 43 million we have nine of that on an annual basis.

(Operator Instructions). Your next question comes from the line of Marc Irizarry from Goldman Sachs. Your line is open.

Peter can you talk a little bit about the diversification in some of the Asia ex-Japan region and the regions outside of the U.S. in terms of retail. How much concentration of those gross sales are there and products and is really the opportunity here sort of build out products, outside the U.S. sort of back filled what new strategies are coming in?

I spend a fair bit of time myself in Asia and not just Japan or Australia but Taiwan, Hong Kong, Singapore and Korea and the firm has built a terrific brand throughout Asia, Japan and non-Japan Asia and you could see it in the growth sales and it's not just in Taiwan where we have a very significant share and it's not just in Hong Kong where we have significant share and it's not just in Singapore where we are also building a big business, it is not just in Korea, we are actually well known. You know it's been all of those places and in a way they are all connected because I mean the distributors in those markets operate in many of the same markets, the global bank UBS, HSBC, Credit Suisse to name three are obviously distributing in many of those markets and the strong Chinese banks in Taiwan and in Hong Kong were also in many of those markets and those platforms are broad and diversified. So we have a strong brand, a strong set of products and a strong opportunity with partners who are growing rapidly throughout that region and that is a big opportunity for us and for our partners in offering their clients broaden investment services. We have noted for a long period of time that Asia is a market where investors are attracted to yield and a monthly cash flow and other diversifying kinds of investments less so in equities but we see more interest in equities over time, regional equities, Asia ex-Japan is a big product for us or service for us in that market place. We shouldn’t skip Australia which has been a tough market for us in the last four years because of our very large size there and the superannuation industries investment in equities but I think if that’s going to adjust too, I think that industry will come back into equities and that will be opportunity for us. So when I look across Asia for AllianceBernstein our track record, our brand, our footprint, our penetration in the many different distributors in that market. We have a terrific opportunity as markets recover and as investors take more risk and move out into different products and having it frankly had some of the more challenging experiences that Europeans and Americans have had with the traditional core services. So we think that there is big opportunity there and although we haven’t been banging the table that hard about our capabilities in Asia we probably should start but that’s a huge growth part of the world and a place where AllianceBernstein brand is frankly at the top.

Okay and then just quickly on the institutional flows which are up pretty nicely sequentially, is there any more AXA related outflows that we should be aware of?

Well AXA from time to time will buy things and sell things and when it does you know it will impact on us. As you know their revenues are I think less than 5% around that of our….

4% of our total revenues and 25% total AUM.

So the AUM is big, the revenues are low and I think that you know the changes in AXA are not strategic to us, you know they will have modest positives and modest negatives on the revenues over time. I think that so I don’t think the AXA thing is much of an impact, what was the other point you raised?

That was the question, any (inaudible) if you can give us? That was all set.

More impact on institutional yes, just a comment on institutions, we had positive numbers for January in institution. I think what that really is getting at and we have said this a number of times is deeper conversations with consultants around the world, more RFPs, better performance in equities, strong and consistent performance in fixed income, longer track records and alternatives. It's you’re beginning to see a penetration of that and we have always told you that we have got very strong and deep relationships with the institutional community and with investors even through the period of tough performance and I think that if you keep at it and you keep servicing your clients and being in front of them with good ideas and explaining even in periods of underperformance why you believe in a stocks that you believe or why you own the securities that you know. You earn that respect and when things do change and they do people will notice and I think that you’re beginning to see.

And your next question comes from the line of Matthew Kelley from Morgan Stanley. Your line is open.

I just wanted to quickly follow-up on the institutional flows for January. In terms of kind of by product where you’re seeing versus the pipeline, is the pipeline a pretty good representation of the January inflows or was there anything else that kind of came in and worked its way through? Thanks.

I think that it's relatively consistent. We said in the call that our fixed income penetration in the U.S. is up handsomely from historical levels. Again reflecting the strength of fixed income and the volatility of fixed income. We have noted in the pipeline that they were equity services that were also being won by us and that will continue. Those services have strong track records and significant interest both in the United States and overseas. So you know I think the institutional picture is developing nicely although it's lumpy, you will have good months and bad months that’s just the way the institution works but I think you see all the things we have been talking about and I mentioned in the previous answer to Mark’s question are beginning to take some shape.

And your next question comes from the line of William Katz from Citi Group. Your line is open. William Katz – Citi: When you think about the incremental drivers to the margin, soon recognize the real estate opportunity in front of you and I recognize the competition at the Private Client side. What takes the margins up from the year, is it more of a top line driven opportunity set or are there more things you can do on expenses?

I think that what we have tried to build going forward is some dynamism in both ends of the equation meaning that we do think that there is some more for us to get in expense mostly we have more opportunity in real estate but we’re going to continue to be vigilant about driving expense down where we can throughout the organization but I would say to you that revenues will play the larger part in the expansion of the margin going forward. We can’t cut our way to you know huge margins we have always said that was not our plan but we also said to you and I would repeat that we’re never going to be done where they spent us, we can always be more efficient and we will attempt to figure out how to do that and I think that you will see that overtime. But we have to grow the business too and I think we have been satisfied, we’re not happy but satisfied that we’ve seen some growth this year and we’ve seen turnaround in our core services and we think that will lead to revenue growth and there is significant operating leverage in that revenue growth.

And your next question comes from the line of Cynthia Mayer from Bank of America Merrill Lynch. Your line is open.

Just maybe a follow-up to that, you outsourced to State Street and I’m wondering what impact that could have on expenses because I think correct me if I’m wrong that’s more variable based on how you see, so would that have a positive or negative impact or no impact at all if AUM rose from here. Thanks.

The decision to outsource to State Street was really not a cost driven situation, it was more of a core competence in terms of the services that are being provided. They have a better core competence to provide those services than we do. The migration is actually happening over a period of a couple of years, currently we had transfer some of our headcount over to them and again charged on a per FTE basis. Once we convert over to those systems which right now is scheduled for some time in 2014 towards the later part we will switch over to a variable base pricing which will be a function of AUM and the number of transactions that are done.

With no further questions in queue. I’ll turn the call back over to Ms. Prochniak for any closing remarks.

Thank you everyone for participating in our conference call today. Feel free to contact me in the investor relations with any further questions you might have. Thanks and have a great day.