Thank you for standing by. And welcome to the AllianceBernstein Third Quarter 2014 Earnings Review. At this time, all participants are in a listen-only mode. After the remarks, there will be a question-and-answer session and I will give you instructions on how to ask a question at that time. As a reminder, this conference is being recorded, and will be available for replay 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, John. Hello, and welcome to our third quarter 2014 earnings review. This conference call is being webcast and accompanied by a slide presentation that’s posted in the Investor Relations section of our Web site. Our Chairman and CEO, Peter Kraus; CFO, John Weisenseel; and COO, Jim Gingrich will present our financial results and take questions after our prepared remarks. Some of the information we present today is forward-looking and subject to certain SEC rules and regulations regarding disclosure. So I’d like to point out the Safe Harbor language on Slide 1 of our presentation. You can also find our Safe Harbor language in the MD&A of our 2013 Form 10-K and in our third quarter 2014 Form 10-Q which we filed this morning. Under Regulation FD, management may only address questions of a material nature from the investment community in a public forum. So please ask all such questions during this call. We're also live tweeting today’s earnings call. You can follow us on Twitter using our handle @AllianceBernstn. Now I’ll turn the call over to Peter.

: Despite these challenges, we performed well in the third quarter with $2.8 billion in positive net flows, a $7.6 billion flow improvement over the same period last year. We finished the quarter with $473 billion in assets under management. Positive net flows partially offset a negative 8.9 billion market performance impact during the quarter. September’s tough fixed income in equity markets including a negative foreign exchange impact explains why we ended the quarter with higher average AUM. Now let’s turn to Slide 4, which tracks our quarterly flow trends across channels. Institutional growth sales of $5.8 billion declined from last quarter’s multi-year high, but was still up 29% from the same prior year quarter. Increases in Japan and Australia more than offset declines in the Americas, EMEA and Asia ex-Japan markets. At the same time institutional redemptions declined by 67% year-over-year and 23% sequentially, resulting in net inflows of 2.8 billion. In retail we maintained our high growth sales levels from the second quarter but redemptions increased, leading us in slight negative territory for the quarter. In Private Client, we had a small net inflow for the quarter. That’s a significant improvement over the same prior year quarter. Now let’s review results by channel beginning with institutions on Slide 5. Net flows were again positive for the quarter in our institutional channel, despite the steep sequential decline in fundings. You can see from the top left chart, both how high last quarter’s fundings were relative to prior periods and also how much better our institutional flow picture is today versus the same period a year ago. We’re getting to the table, winning more and clients are happier today with our performance and offerings. So they’re redeeming less. As you can see in the chart at the top right, our…

Thank you, Peter. As always, I’ll focus primarily on our adjusted results in my remarks today. Our standard GAAP reporting is included in this presentation’s appendix, our press release and our 10-Q. Let’s start with the highlights on Slide 15. Third quarter adjusted revenues declined sequentially, primarily due to an expected seasonal impact on our performance fees, but increased versus the third quarter of 2013. Our third quarter adjusted operating margin of 23.8% compares to 23.0% in the second quarter and 22.7% in the third quarter of 2013. Adjusted earnings per unit were $0.45, the same as the second quarter, and up from the $0.40 in the prior year quarter. Now I'll review the quarterly GAAP to adjusted operating metrics reconciliation on Slide 16. Third quarter adjusted operating income was $4 million higher than GAAP operating income, primarily due to the exclusion of $4 million of investment losses related to the 90% non-controlling interest in the Venture Capital Fund from net revenues. In addition, we excluded $1 million of credits, resulting from the true up of our real-estate sublease assumptions and $1 million of acquisition related expenses from operating expenses. Also, during the third quarter, we reclassified certain other promotion and servicing expenses as distribution related payments and identified additional pass through expenses that were excluded from adjusted net revenues in the current and prior periods presented. These amounts totaled approximately $3 million for the third quarter of 2014 and have no impact on operating income. Now I'll turn to the adjusted income statement on Slide 17. Third quarter adjusted net revenues of $626 million were down slightly for the second quarter but up 8% compared to the third quarter of 2013. As a result, adjusted operating income of $149 million for the quarter was up 3% sequentially and up…

[Operator Instructions]. Your first question comes from the line of Michael Kim from Sandler O'Neill. Your line is open.

First maybe more of a bigger picture question, just to follow-up on some of your comments, Peter. Just wondering how your bond strategies might be positioned, assuming we do see some sort of dislocation in the credit markets. So just curious to get more color on your take on liquidity concerns across the industry and whether a potential downturn -- how that might impact your business.

So I think number one, we’ve been very cautious about making sure that the funds have enough liquidity in them as we know that the structure of the market has changed, coming out of 2008 and regulations have changed. And so we are quite mindful of the need for all the funds to have more on hand liquidity to service potential redemptions into our market volatility. In addition to that, that cash does provide some potential opportunistic benefits because in volatile markets and in obviously it has changes in pricing. You can take advantage of that with some greater liquidity in the funds. And we’ve seen some benefits of that in our funds in the last four weeks as we’ve watched this market go back and forth in terms of both rate exposure and credit exposure. One of the interesting things about this market turbulence will cause [ph] that in fixed income, this part of it, because we had it in ’12 and we had it again in ’13, is that the absolute rate levels are higher. So in the year ago and two years ago the absolute rate levels were lower and so you had rate levels that were 150 to 200 basis points lower than where they are today. And those absolute rates maybe causing a little less both sale and redemption volatility in the marketplace. And so I think that as rates have backed up and as spreads have backed up in particular in the higher income spaces, that’s perhaps causing a little less volatility in the actual fund behavior.

And then second question, I know it's still early but it does seem like you've had some success leveraging WP Stewart and CPH. So, just wondering how you're thinking about further M&A opportunities these days, just to continue to build out the franchise? And then any color on what you're seeing more broadly in terms of the competitive landscape and/or pricing trends.

Well we like a lot what we’ve done so far in both equity space and fixed income space, and just to reiterate so we can lay the ground work for the foundation; in the equity space, we’ve been able to broaden our franchise in places that we didn’t have research expertise and that was, Select Equity, CPH and WP Stewart. CPH the latest acquisition or latest group that we brought over. It really offers a factor neutral, style neutral global portfolio, core portfolio, and given investors’ interest in the style agnostic space, that’s obviously interesting to us. In the Private Credit space, there we have built and/or brought into the firm teams that are looking at that Private Credit space across the spectrum of mortgages into commercial lending. And that’s quite complementary to our high income space, which has been security based but also very credit intensive. So we continue to be opportunistic in the marketplace, looking at businesses and teams but we’ll continue to add to those businesses and equities and fixed income where we find people that are -- or teams that are in that sort of opportunistic we’re not in that space and it makes sense to us kind of an area. So I would just say Michael that I think we’ve done a lot. And therefore the pace I would expect would slow down. But I wouldn’t say gee, we’re not going to ever do anything again because I think that we continue to look at the evolving marketplace. And there are plenty of teams and businesses that are looking to get some capacity to grow their assets and are also looking to leverage their research basis and their research capability by coming to a firm that has a broad global platform.

Your next question comes from the line of Mike Carrier from Bank of America Merrill Lynch. Your line is open.

Peter, maybe as a follow-up on the last question; when I think about the product offering, whether it's through M&A or through the organic growth and your new products that you guys have launched, it looks like the product set is out there. So when you think about growth going forward over the next one to two years, how much do you need to do on the distribution side in order to make sure that those products are getting noticed in the channels?

We feel pretty comfortable with our distribution footprint. As you know, we’re operating in three channels, Institutional, Retail and Private Client. Private Client is unique in as many -- in as much as very few independent asset managers actually have that capacity to tap into that pool of capital, which is quite large, and quite willing by the way to invest in innovative services and beyond the edge, which is attractive in both exploiting alpha opportunities and frankly building new services. I think in the retail space, we’ve continued to add, in Europe, although at a measured pace and in the United States in the RIA channel. So I would expect us to again at a methodical sort of disciplined speed build out those two areas in particular. We’ve also launched into the marketplace a number of, let’s call them, I don’t want to use the word alternative, but less conventional products for -- at least our industry. And that’s brought with it senior portfolio managers and investors who have more client facing responsibilities; and we continue to focus that effort because we think that’s important in bringing more sophisticated inputs and more specific investment oriented advice and thoughts that support the ultimate acceptance of those products and growth of those products in client’s portfolios. So I think you'll see us continue to lean on that investor insight and research capability and content to deliver those services to clients. We’re doing that globally around the world. In Asia, I’d say that our distribution footprint is probably most mature in the retail space. In the institutional space, outside of Japan, we can add to that. But that space is not growing as fast as the retail space is in that part of the world. And in Japan, we have a terrific team, long history, quite effective in almost all the channels in that space. So I would say to you that distribution is something that’s been our strength. And we’ve shown that in the last five years. Just look at the gross sales.

And then John, just maybe a quick one. The margin in the quarter, on the adjusted basis, you showed improvement. I just want to get some color. It seemed like there were some -- I don't know if I want to call them items but different things that were moving around, both on the revenues and the expenses. And so, when we think about the current level in going forward, anything that you would call more of a nuance, or that you would want to call out versus, you continue to gain scale, there is some margin opportunity?

It’s John. I would just we continue to be very focused on the expense side and I think we have done a very good job at controlling the expenses, particularly the promotion servicing and the G&A expense. And as we’ve said in the past, from this point going forward we do see the business as very scalable and we see operating margin leverage on the upside. So the AUM continue to increase and revenues continue to increase. We should see more and more of that drop through to the bottom line. So it’s still the same message there. I think to move the margins higher from here though we need help from the revenue side.

Your next question comes from the line of Bill Katz from Citi. Your line is open.

Just coming back to institutional pipeline, which showed a nice increase, even as volumes picked up as well, what's the success -- obviously I looked at the slides and see nice diversification. I guess the ultimate question is, how much of that is coming from existing clients versus expansion of the client base?

Bill, it's really both. A lot of it does come from existing clients where we’re broadening relationships and successfully cross-selling as we’ve just discussed a broader range of capabilities that exist at AB today than existed in the past and our ability to engage people and help them solve problems in ways that we couldn’t do in the past. Some of it frankly is from clients coming back to the firm that we’ve maintained relationships with but may actually have lost assets in the past and to your point some of it is also from new clients. So it’s actually --- we’re encouraged by the breadth that we’re engaging with clients today. You see that reflected in some of the things that Peter mentioned in terms of RFP trends and as we look in terms of the breadth geographically, we’re also encouraged. So by and large, it’s hard to complain about the trends that we’re seeing.

One things I would add to that Bill, away from Institutional. You asked about Institutional. So I think Jim’s answer for that is complete. But in the Private Client space the growth of these targeted services has really had a significant impact on business' success in attracting new clients to the firm. And in the Private Client space, just like the institutional space, once you attract a new client to the firm, and particularly through those targeted services, there are lots of other opportunities because their experience with us becomes positive and successful. Our track record in these targeted services has been actually exemplary, beyond exemplary, and probably not something that you can continue as you do that in the future. Every one of those services has had outstanding returns. I can’t believe that -- I can hope. I can't believe that everything we do will be that terrific, but I do think that that’s created a significant opportunity for the Private Client business and it’s a service that we think that we will continue in the future for a long time.

The second question is, just in terms of all the dislocation that's happening at PIMCO, just looking at your relative performance and your breadth of your product mix, it seems like it might be a great opportunity to pick up some share. What, if any strategy are you doing to try and maybe pick up some volumes? One of your peers, BlackRock, which reported earlier, mentioned they see tens of billions of opportunities for them. I was just wondering what -- any early signs of leverage for your platform, given some of those dynamics?

Bill I did make a comment in my prepared remarks about the persistency of our advice over 25 years of being diversity and global. And we think that is the theme here that is relevant and we continue to be quite focused on that. So if we looked at the opportunities set in the fixed income market today, which is quite large, broad, diverse and changing, that focus on global diversity; diversity in sectors, diversity in liquidity, diversity in interest rate, yield curves and our credit capabilities, that is the bridge on which we stand, and that allows us be effective in core space, in emerging space, in global space all over the world. And we believe that’s going to accelerate our growth.

[Operator Instructions]. Your next question comes from the line of Greggory Warren from Morningstar. Your line is open.

Just trying to get a general feel from what you are seeing out there now. We're a couple of weeks into October here. The markets have been a lot more volatile all the way around the last month or so. But it looks like the shift off of risk assets increased bond flows. How do you see things kind of panning out as we move forward? Are you getting any hint from your investors? On the institutional side, is anybody hitting the pause button here with allocations as they think about where the market's heading over the near to medium term?

I don’t think that anybody is hitting the pause button. I think the market volatility in October was elevated for sure. We saw volatility levels double and then actually recede, not quite back to their original position but pretty close in a short period of time. But I don’t think that -- in the broader scope of things I don’t think that’s changing the dialog or changing the questions in investor’s minds. Investors are still concerned about equity levels; levels of the market. Investors are still concerned about rising rates, when they’re going to occur. Investors are still concerned about growth. And is United States the only growing country or is Europe going to start to grow and what happened in China. Investors are still concerned about oil prices and the effect on oil companies, the effect on the high yield market, the effect on the stability of companies in that space. Those concerns I think remain. But those are -- in a sense Gregg -- those are in a tense traditional normal investor concerns. Investors always are looking at things going on in the marketplace and how it affects their relative positioning. So from our perspective, again with a diverse platform, a global platform, again if you are research based and you’re focused on what you think is going to succeed and where you think risks are in that world, there's lot’s for us to talk about. And that’s really evidenced by the increase in the activity across the firm that we’ve been talking about. So I don’t see a pause button. I see sort of a persistent set of investor concerns and questions that investors are getting used to looking at. And although volatility spiked, as I said, it came down recently rapidly. And if you look at -- longer term from 2008 on, volatility levels have continued to decline and continued to telescope into tighter ranges, if you will, and that’s caused investors to be more confident about buying stocks, buying bonds and taking risk. There is always a risk-on risk-off within any period of volatility. But over the five-seven years that we’ve been looking at the world since the advent of the crisis, investors are probably taking more risk.

Okay. Definitely good points there. And just a quick follow-up. Your flows are much better than I was anticipating for the September quarter, and congratulations on that. That was positive. But that meant that market losses were a bit higher. It sounds like performance-wise you are still in a good spot. How should we really think about say performance fees in the near term?

Well, there is two questions there. Performance fees are driven by both beta and performance, obviously. So beta is negative and performance is pretty descent, actually excellent. So I think that’s going to be a little bit of a challenge to figure that out and we ourselves, we don’t actually book performance revenues until they’re crystallized. They’re not crystallized until, or those that are still remained until the end of the year. And we can’t predict what markets are going to look like in November and December.

I guess I would also add that we trying to be pretty transparent in terms of funds that may have been wound down. For example in the current quarter or in the second quarter, John mentioned that we had a fund wind down and similarly last year in the fourth quarter we had the same thing happen. So, I would just take that into your thinking as well.

There are no further audio questions at this time. I turn the call back over to the presenters.

Thank you everyone for participating in our conference call this morning. You can feel free to contact Investor Relations at any point during the day if you have any follow up. Thank you.