Thank you for standing by. And welcome to the AllianceBernstein Second Quarter 2013 Earnings Review. At this time all participants are in 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, Steve. Hello. And welcome to our second quarter 2013 earnings review. This conference call is being webcast and accompanied by a slide presentation that is posted in the Investor Relations section of our website. 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 disclosures. So I'd 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 10-K and in our second quarter 2013 Form 10-Q which we filed this morning. Under Regulation FD, management may only address questions of material nature from the investment community in the public forum. So please ask all such questions during this call. We are also live tweeting today's earnings call. You can follow us on twitter using our handle @alliancebern@cn. Now I'll turn it over to Peter.

Thanks very much, Andrea. And thank you all for joining us for our second quarter 2013 earnings calls. As usual, John, Jim and I are pleased to be here with you today to review our results and answer any questions you have about them. So let's get right to it with a firmwide overview on slide three. Second quarter gross sales dipped by about 2% sequentially, the impact of a tough June, which I will talk about in a minute. Compared to last year's second quarter, however sales were up 27%. Net flows of $0.2 billion stayed in positive territory, but were down $2.4 billion from the first quarter. They were up $3 billion however from last year's second quarter. Because the first two months of the quarter were much stronger than the third, we finished with lower period AUM but higher average AUM versus the first quarter. Year-over-over, both were up high single-digits in percentage terms. If you move to slide four, you can see the impact of the quarter's challenging market dynamics by channel. In institutions, we maintained our momentum from the first quarter. Clients seemed to take the backup in debt markets in stride and remained very interested in our U.S. global and emerging market debt strategies. Gross sales were up 5% sequentially and redemptions declined by 25%, resulting in our third straight quarter of net inflows. By contrast, investor anxiety in our retail channels spiked along with bond yields. While gross sales remained relatively stable gross redemption soared particularly in June. That caused a $3.4 billion decline in net flows for the quarter that broke our five quarter streak of retail net inflows. Private client activity declined as well. Gross redemptions were down 7%. The gross sales fell 33% which caused net outflows to pick up.…

Thank you, Peter. My remarks today will focus primarily on our adjusted results. As always you can find our standard GAAP reporting in this presentation’s appendix, our press release and 10-Q. Let’s start with the highlights on slide 16. Second quarter adjusted revenues and expenses were up both sequentially and versus the second quarter 2012. Our adjusted operating margin in the second quarter improved to 22.2% from 21.9% in the first quarter and 16.1% in the second quarter 2012. Adjusted earnings per unit were $0.41 for the quarter versus $0.38 in the first quarter and $0.24 in the prior year quarter. Now I'll review the quarterly GAAP to adjusted operating metrics reconciliation on slide 17. This quarter there were two minor adjustments that make up the difference between GAAP and adjusted operating income. First, we excluded the $6 million of investment gains related to the 90% non-controlling interest in the venture capital fund from net revenues. Second, we adjusted for the $2 million in net non-cash real estate charges recorded in GAAP expenses in the second quarter. These were related to true-ups of real estate charges recorded in previous quarters. There were no order real estate charges in the second quarter. We may record additional true-ups during the second half of the year as we approach the end of the [inaudible] marketing period on flows written-off during 2012 and we compare current sublease market conditions to those assumed in our initial write-offs and adjust accordingly. At this juncture we still anticipate cumulative write-offs in our previously announced range of $225 million to $250 million related to our global real estate consolidation program launched in the third quarter of 2012, which targets a sublease of approximately 510,000 square feet of office space. Of course additional charges maybe incurred if we were…

(Operator Instructions). Your first question comes from the line of Michael Kim with Sandler O’Neill. Your line is open. Michael Kim - Sandler O’Neill: Hey, guys. Good morning. First just from a strategic standpoint, you continue to build out your alternative product and sales capability as investors continue to ship bigger allocations to these types of strategies. So assuming the gains for alternatives are coming at least to some degree at the expense of more traditional equity and fixed income mandates, just wondering how your institutional business is positioned in terms of that potential trade off?

Well, Michael I think -- I don’t want to lead you to believe that we are decommissioning our institutional business in favor, our traditional institutional business in favor of alternatives. I think because if you look at the actual packs of the people on to ground and the number conversations of the progress are making, we’re making progress on both fronts. In fact, I think the institutional numbers this quarter show some significant progress instead of the more traditional areas in the institutional space. And as investment performance improves in equities we continue to see more and more dialogue with clients in areas that they have not engaged with us on historically. So I think it’s going to be a two pronged attack. We are adding personnel in the alternative space to help us better engage with clients. And we continue to be focused on the institutional business in the U.S. around the world in the more traditional spaces that we have dealt with. Some of those more traditional spaces include newer discussions, newer services like factor models that we talked about, factor approach as we talked about, stability equity activities that we have talked to clients about and you could call those alternatives although I think they look more traditional, they are not really hedge funds. So I think it would be wrong to say that we’re leading the field in institutions. That wouldn't be right and I don’t think either strategically we are trying to do that or even tactically. So I don’t know that you are going in that direction I didn’t want to likely go too far. Michael Kim - Sandler O’Neill: Understood and then second question, any shift in thinking as it relates to discretionary spending patterns more broadly and then may be advertising, just more specifically given that the recent step up in market volatility?

Michael it’s Jim. We obviously want to balance our investments with the backdrop that we can [process] a business. That said we’re very committed to continuing to invest behind our business and we are managing it for the long haul and I think you saw that in the investments that we made here in the second quarter and I would anticipate us continue to invest going forward. Michael Kim - Sandler O’Neill: Okay. Thanks for taking my questions.

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

All right thanks a lot. Actually a couple of questions may be on flows. Just I guess given your rate in Muni you talked a lot about what happened in June but you have a 12% rate in Munis in your fixed income. So what are you seeing in terms of this quarter so far in reaction by channel to that pressure in that asset class?

This is Jim. I would say in retail we continue we are not on mice the rest of the industry which I am sure you follow that data where flows industry wide have remained negative in the Muni space and the nice thing about our private client business is that as you know that’s a very sticky and stable business. And I think we’re seeing trends there much as you would anticipate.

Okay. And maybe could you tell us how DAA performed at June and on the low vol approach does that do you take a low vol approach to fixed income as or is that just really to manage the volatility in equity?

Well I will comment on DAA I think we put in the review DAA's performance inception to-date. And I don’t have at my finger tips the quarterly performance but I think it was consistent with the performance that we put in there. We continue to deliver either modest improvement in returns and significant reduction in volatility. And frankly our clients really like that. At the end of the day clients really want to know that when the market is volatile that we are reacting to that and attempting to reduce their risk to the downside. And that DAA has done that extraordinarily well without removing return and indeed as in most cases actually improving return marginally. So there is no free good or free lunch but so far we’ve been able to serve up pretty good meal. As it relates to the low volatility services I was referring to, sort of stability services they are predominantly in equities, U.S. international and global. They have outperformed handsomely for their two year time period. Both they have beat the (inaudible) index and they have recently been equal to or better in some cases of the underlying index itself. And that’s unusual since they carry a lower beta generally than the underlying index. So that’s the service that people are actually quite interested in. It’s not a service that we historically have had but it’s represents the true essence of the AB, meaning an infusion of both quantitative tools but fundamental analysis of stock-up, stock by stock construction of the portfolio and I think that makes us unique in that space.

Okay, thank you.

Your next question comes from the line of Matt Kelly from Morgan Stanley. Your line is open.

Good morning guys. I wanted to follow up on fixed income demand. We heard from some of your peers about kind of a rotation within fixed income versus between different strategies fixed income to equity. So I guess I’d just ask if you are seeing any increase in sort of global mandates or the unconstrained bond strategy, emerging markets that sort of thing in July after a lot of end of the second quarter movements from in?

So Matt it’s a good question. Number one is I did mentioned in response to Michael's commentary on institutions that we also have seen a consistent actually increase for us in demand for global credit in the institutional space but that has been consistently increasing demand from our institutional clients for that product and I think that does reflect a realization on the part of institutions that it really doesn’t make any sense to constrain your credit exposures if you are a U.S. entity to just U.S. credit. You know you are cutting off 40% or 50% of the world when you do that and it just can’t be that all the best credit available for any risk level, all over the United States or in dollar terms. So I think that that is a trend that has continued right through July and I don’t think was affected by the volatility of fixed income. I think what we did see as a result of volatility is clearly investors selling higher yield securities. That was the issue for June. As I mentioned in my comments we saw that in the global high income fund really turnaround and go positive in July. So it appears to us that investors are doing what they had been doing which is seeking yields at a very low interest rate environment. We did see some rotation in that investor environment to shorter duration yield funds and that continues to be an improvement for us as well in our short and intermediate duration securities, both muni and taxable bonds. Also your comment about unconstrained bond and [AMA]. Unconstrained bond funds and [AMA] which is combination of equity and bonds does continue to see inflows. I think that’s part of the multi strategy or multi asset strategy trend…

I would just add that our view of where the fixed income market is going to go in terms of unconstrained global like investing has been a long-term view. It maybe catalyzed by some of the changes that we are seeing in the marketplace today but as Peter walked through how we have tried to position that business we think we are very well positioned for the direction that the market is likely to move in.

Okay, that’s helpful. It makes sense. Just a quick follow-up. Jim you mentioned you continue to spend behind the business. Obviously the adjusted operating margin continue to go up. Just curious if there is some other volatility in rates rise and other rates rising environment if fixed income funds go down, pressuring some of the base fees and flow. Should we be thinking about the margin as consistently going higher. There could be some you know near term volatility in such a scenario where know there is so much you can hold back on certain expenses.

You know Matt I think that we have indicated there is operating leverage on the upside that means by definition there is going to be operating leverage on the downside. You know what we, as I indicated and I really don't know what else I could add because we are cognizant of the overall backup but at the same time these are all businesses that we want to invest behind and build for the long term. Peter talked a lot about for example what we have done with our sales side business where we continue to invest behind that business despite what’s been a very difficult volume backup for the industry for the last five years and we think that those investments have proven themselves and paid-off and we feel the same way about some of the other investments that we are making as well. So I wouldn’t anticipate us stepping back from managing the business for the long call.

Matt, this is John. Just to add to Jim’s comments regarding the base fees on the portfolio. I mean entire portfolio it’s been actually remarkably fairly steady if you go back and look at the past several quarters. I think for the second quarter it’s about 40.7 basis points so it’s been consistently just above the 40 basis points in line and to add to Jim’s comment as well. I think as far as the margin expansion to the upside it's really dependent upon the revenue side and how fast and how much revenue moves. Jim mentioned lot of operating leverage to the upside.

Great, thanks for taking the question guys.

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

I this is Steve [inaudible] filling in for Bill. Just looking at slide eight where you breakout the percent of credit that is insurance clients, should we assume the rest is retail or private client and what’s kind of the mix of that and can you quantify that at all?

Well you should assume that the balance is exactly that. I don't think we breakout those differences. But is there something that you are looking for behind your question, is there something I can help you with there?

Let’s say you talked about July stabilizing so was that stabilizing in terms of flows, performance and was it stabilizing in that bucket I was talking about?

So look, volatility in June was primarily focused on the retail aspect of fixed income and what we wanted to make clear to you is the significant change that occurred in July where those retail fixed income funds, in one case the global high income funds was positive in flows that is significant turn out, negative deposit and a significant reduction in net out flows in the American income fund. I wanted to make sure that you understood that, that stability was actually being reflected in the flows.

Okay, great. And then just one more on research services, strong growth there, particularly in Asia. Should we think that this is a standard level and for this quarter and just any color you have on kind of strengthen in Asia with the new rollouts there?

What we have been doing in Asia again quite consistently we are little bit like the army just one step at a time. We have continued to launch new analysts. We said this quarter we launched our 11th analyst. It’s obvious that we are gaining market share in Asia. As Asia grows in trading volumes we will continue to at least have our share or get better. We are consistently growing our share and we would expect that to continue for a while as we establish ourselves in that marketplace. We believe we have a differentiated investment product in that marketplace. So far the results seem to indicate that pretty clearly. And we went to Asia because we believe cyclically that was greater growth in Asia end markets than there would be in the traditional developed space U.S. and in Europe. And so I think that thesis has been proved to be correct for us. And we would expect that to continue the rate at which it continues is clearly going to be driven by the rate of volume in all the markets including Asia. And that of course could decline and that of course could grow. In the last quarter it was actually pretty robust.

I would agree with everything Peter just said I would just take note of some of the data that we provided you because clearly that market benefited in the quarter from some of the increased volumes, particularly in Japan because of some of the economic changes that've taken place there.

Okay. Great. Thanks a lot.

(Operator Instructions). And your next question comes from Greggory Warren from Morningstar. Your line is open. Mr. Warren from Morningstar we cannot hear you.

Sorry about that? I just had a couple of questions here on the flows. I am looking at the flows by channel and then also I am looking at it by asset class. The influence here is that the retail outflows were primarily in the equity channel. And that the institutions were primarily propping up the fixed income. I may be reading this wrong based on some of the comments you guys you have and what’s going on in the fixed income market in Asia which I assume is more in the retail side. But can you clear that up a little bit there and then also since Asia is an important driver going forward what’s the market environment like there. Was it an emerging markets scare that really drilled down the flows during the quarter, because I can’t really see it being a fixed income the U.S. rates rising issue.

So on the June issue in redemptions was not entirely but largely focused on global fixed income. If you look on page 31 you will see at $11.8 billion redemption in global non-U.S. fixed income. And that’s in the appendix and you may want to take a look at that. So I don’t want to lead you to believe that we did have redemptions in other parts of the businesses because of course we did. But the major change in the trend was in the global fixed income market which was predominantly not entirely but predominantly Asian retail. And again that’s why we want to make sure you understood that happened in July.

Okay. And then to walk back from that you had 11.8 billion in out flows and fixed income so I am assuming you have to have yield more than that and inflows and where was that coming from was it institutional mandate or is that retail to sort of offset so you end up the quarter with 2.3 in positive flows?

Well of course there are three channels that are affecting fixed income’s total number of 2.3. It is that retail and institutional and of course some private clients’ money flows in there as well. So it's all those channels Greg and just to give you some characterization of that we talked about global bonds, global credit that has been an increase in the institutional space. Of course we continue to have sales in Asia and in the United States and in Europe for global bonds in the retail side and American high income. And I’ve mentioned that we had some rotation because I think Matt asked this question what was going like inside of fixed income we had some rotation in the shorter duration taxable bonds and we saw some inflows in there as well, as well as the multi asset in unconstrained bond area. So I think that the outlier if you look at the trends was what happened in June in Asian retail fund.

Okay. Because I was just trying to get the sort of that notion that even though you got hit with significant outflows in one piece of the business on the fixed income side you offset it with flows back in and other pieces, which speaks to the improvement strength of the business. That's what I was trying to get.

Thank you.

Okay, thanks guys.

I am showing there are no further questions at this time. I will turn it back for any closing comments.

Thanks everyone for participating in our conference call this morning. You can feel free to contact investor relations with any follow-up questions you may have. Thanks and have a great day.