Thank you for standing by. And welcome to the AllianceBernstein Third Quarter 2013 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 questions 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, Tracy. Hello. And welcome to our third quarter 2013 earnings review. This conference call is being webcast and accompanied by a slide presentation that's posted to the Investor Relations section of our website. Our Chairman and CEO, Peter Kraus; our CFO, John Weisenseel; and our 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 third quarter 2013 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 are also live tweeting today's earnings call. You can follow us on twitter using our handle @alliancebern@cn. Now I'll turn the call over to Peter.

Thanks, Andrea. And thank you all for joining us for our third quarter 2013 earnings call. Really pleased to be here with you today to share our results and answer any questions you may have about them. So let's me get started. I will begin with a firm wide overview which is on slide three. It was a challenging quarter for us and for the industry. Amidst message from the fed about timing for a tapering of bond buybacks and the economic growth outlook the harrowing lead up to the government shutdown and potential debt ceiling debate and global concerns like unrest in Syria and slowing growth in emerging markets, made investors uneasy during the quarter. Market activity slowed, bond fund out was persistent and we felt the impact in our businesses. My third quarter gross sales declined 20% sequentially and 13% versus last year’s third quarter. While redemptions were essentially flat our dropping sales pushed net flows $4.8 billion into negative territory, our first net flow negative quarter since last year’s third quarter. With market appreciation more than $15 billion we ended third quarter with AUM of $445 billion, up nearly $11 billion from the second quarter. But our average AUM of nearly $440 billion was a little lower at quarter end. Let’s move on to slide four you can see the quarterly trend in asset flows across channels. Our institution channel demonstrated the greatest flow decline. Gross sales were down $3.2 billion and gross redemptions of $8 billion were up $5 billion from the prior quarter. This caused net flows to swing from positive $4.7 billion to negative $3.5 billion. This is as we know a lumpy business and we’ve had a couple of big redemptions during the quarter at passive equities and fixed income. Our third quarter…

Thank you, Peter. Our remarks today will focus primarily on our adjusted results. As always you can find our standard GAAP reporting in this presentation appendix, our press release and 10 Q. Let’s start with the highlights on slide 15. Third quarter adjusted revenues and expenses were both down sequentially. Versus the third quarter 2012 revenues were up 1%, our expenses decreased 2%. Our adjusted operating margin in the third quarter improved to 22.6% from 22.2% in the second quarter and 20.2% in the third quarter 2012. Adjusted earnings per unit were $ 0.40 for the quarter versus $0.41 in the second quarter and $0.36 in the prior year quarter. Now I’ll review the quarterly GAAP to adjusted operating metrics reconciliation on slide 16. This quarter there were two adjustments that account for the difference between GAAP and adjusted operating income. First, we excluded the 2 million of investment gains related to the 90% non-controlling interest in the venture capital fund from net revenues. Second, we adjusted for the $24 million in net non-cash real estate charges recorded in GAAP expenses in the third quarter. Of this total approximately $10 million was related to new write offs and 14 million was related to true-ups of real estate charges recorded in previous quarters. A majority of the 10 million new write-offs were from the further consolidation of our office space at our White Plains location which is in addition to the 510,000 feet of office space targeted in our global real estate consolidation program launched in the third quarter of last year. This action will result in incremental occupancy savings of approximately $1.5 million per year. We may record additional through-ups in the fourth quarter as we approach the end of marketing periods on force written off during 2012 and we…

(Operator Instructions). Your first question is from Michael Kim, Sandler O’Neill. Michael Kim - Sandler O’Neill : Good morning. First it seems like the backdrop of flows remains pretty black mostly across the industry, so fixed income strategies remained out of favor broadly speaking but at the same time we haven't necessarily seen any meaningful follow through on the equity side. So just curious assuming we remain in sort of this kind of the holding pattern where do you see the biggest growth opportunities in the near term just looking across your products and distributions channels?

Hi Michael. Thanks for the questions. Let me just drop back for a second and say something more inflows because I know it's on the front of your mind so we will try to give you a little bit more detail. So number one is in the institutional world we know flows are notoriously lumpy and it's very tough to predict when clients in the institutional world were actually going to mandate us something and/or terminate us. In this quarter we had a few large redemptions in the passive side and that had an effect on the redemption numbers in the quarter. One of the things we are trying to get focused on a little bit though is not just the AUM, that's important but also the profitability of the pipeline and the annualized fee rate on the new businesses we have been adding to the pipeline have been higher. As a result the estimated annual fee rate on the pipeline is probably double what it was a couple of years ago when the pipeline was reasonably at the same level. So that higher annualized fee rate is attractive relative to the historical institutional rate and even relative to our overall rate affirmed. In retail, we've been pretty clear with you that the record sales of Global High Yield and American Income were big drivers of retail in the last 12 months and we also know that those flows can be volatile and we certainly saw that in June. Redemptions are down a lot from the peak but gross sales were up as well which we think is an issue of investor asset side to the point that you just made. The bottom line is that I think the firm has done an awfully good job growing everywhere else in…

We have seen the seed capital come down a little this quarter, that reflects exactly what we said, the recirculation of that capital. I think we have been consistent on the issue of buying back units to continue to fund the compensation that we pay people and that isn’t going to change. We’ll be consistent on that. I don't think that I would say to you that we would think that seed capital is going to continue to decline. We have plenty of things on the drawing board that we think are important and I think that we will be aggressive at continuing to seed them and grow them. So I think that’s not, the seed capital business is not a huge source of additional liquidity. I think it’s more than likely going to be a continued need and I think there are going to be times when we are going to have more seed capital than we have got today, to fund some of the ideas that we have.

Michael, this is John. Just to add to Peter’s comment. The seed capital is very fluid. For example in the quarter we actually had nine redemptions, from the seed capital we had seven new investments. So there is always a lot of activity back and forth. It just so happens in recent quarters it’s been declining for us, obviously we expect it to increase as Peter mentioned going forward. Michael Kim - Sandler O’Neill : Okay, that’s helpful. Thanks for taking my questions.

Thanks, Michael.

Your next question is from Bill Katz with Citi.

Hi, this is Steve Fullerton filling in for Bill. My first question just in relation to slide eight with the strong equities performance, how has that altered your conversations with clients and would a return to equities for clients be more a function of macro factors or it is individual performance for companies like the strong funds you are seeing?

Well I think in the last 12 months we have evidence of what we have been saying for frankly last three years in both stock picking and in a resurgence of our style based strategies. The most obvious were the examples we gave you in value where the outperformance was in some cases a 1,000 basis points and in some cases 900s but emerging market growth, which I also mentioned has had 500 and 600 basis points of outperformance in the last 12 months as well. So stock picking has become more important as correlations severely declined over time and these more factor based or style based investing activities are more attractive as funds have flowed out of those areas for three or four years and the stocks that comprise that kind of investing have become less and less expensive and that’s the reason we talked about the history of value investing, so you could see how that you know trend works. So when we are talking to clients there is still a strong interest on the part of investors to own stocks that are stable and have stable earnings but there is an increasing interest on the part of clients who recognize that that’s crowded, that that’s been a long run, that is risk in holding that and that there is increase appetite of looking at other areas of the equity markets that have potentially much higher returns because they are undervalued. That’s again European Opportunity is a really good example of that. So is Global Value, so is U.S. Strategic Value so as Emerging Market Growth. These are all cases where we see significant value opportunity. Just emerging markets returns in general relative to developed markets have begun to look up from a multi-year low in the deference of returns in emerging markets versus developed markets and so there is another opportunity for people to invest in places that are somewhat less [potential].

Okay great and then one thing just to follow up on the AXA redemption. Which bucket is that coming out off?

That’s almost entirely fixed income.

Okay, thank you.

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

Morning, guys. Peter I wanted to ask you a little bit more about alternatives. I know you talked about that recently. But as I look at your kind of breakdown of retail and private client assets in the other bucket as you guys define it versus the institutional and also what’s in the U.S. versus non-U.S., just seems like, I’d be curious to get your thoughts on where the growth could come within the different channels is it going to be equal parts or is retail and private client a much bigger opportunity for you from here?

Good question, Matt. I think that more than likely at the outset the private client then retail are likely to be the first movers. Institutional activity will be driven more by longer term track records and experience that, that brings. Having said that we have been at the alternative business now for close to three plus years and we are coming up on those kinds of track records that will interest the institutional buyer and we have seen evidence of that. So I think that we are going to be lucky in the sense that we are going to be able to source assets from all three of the channels. Thus I'd be hard pressed to say to you that one versus the other is going to be more important. I think the European opportunity is an interesting example and that’s not just -- that’s really an alternative but it's a service where there's no track record, there is obviously a track record for the manager but this is completely new in terms of a specific service and private clients was definitely interested, but so was the retail side of business. And I think we’ll see institutional follow that and that’s sort of the trend that I would expect with these kinds of services.

Okay that’s helpful. And then just a follow up from me in terms of your Asia Retail Fund flows, I know that investors focus a lot on the two biggest funds and they are the American Income and Global High Yield, but the performance on the Global High Yield has obviously been strong and the flows more recently have been more resilient. So I’ll be curious to get your thoughts on bifurcating the two funds and what you are hearing from your distributors over for Asia retail channel sales?

Well I think the Asian market place is resting, this is the term I would call. I don’t think it's a market place that rests for that long but it's resting. I think and we said it's sort of the investor appetite is low right now frankly for making any particular move. We haven’t seen huge flows into equities in Asia, even in the industry. There is some interest in multi-asset activities and we actually are launching a multi-asset service in Asia. I think that come the beginning of year and some more clarity on tapering we’ll see investor appetite come back and I think that yield is always going to be attractive to them and Global High Yield is -- Global High Income is that product. American Income as a product is more stable. It does have a duration element to it and that duration element will likely be less attractive in rising rates. But on the other hand it's a stable investment and a core investment and I don’t expect it to be unattractive to investors but I am not sure it will have same level of attraction it did in last few years.

Okay. Thanks very much.

Your next question is from Cynthia Mayer, Bank of America-Merrill Lynch.

Hi, good morning, thanks. Thanks for the disclosure about the fee rated, the new business being higher in the past, just to clarify how is the annualized fee rate of the new businesses compared to the fee rate of the existing business? And how close you are to closing that gap?

Well I think we said that the pipeline fee rate exceeds the rate of the whole business.

Okay. I am sorry I missed that.

It’s okay.

Okay, great. And John any shift in looking forward in terms of the ratio of the comp to revenues that you guys have been targeting and also on the G&A you mentioned in real-estate other than that should we expect any shift in upcoming expenses worth calling out?

Sure. Cynthia, it’s John on the -- just first on the compensation, we have to pay folks to be competitive in the marketplace and based upon our current level of revenues we believe that the appropriate compensation ratio that's required to do that is 50%. So that’s -- we’ve been accrued of that now for the first three quarters of the year and that’s where we currently are at. As far as the G&A we’ve been at $104 million now for a couple of quarters. I’ll say that, that would be the low end of the range that I would expect going forward. The past couple of quarters G&A has many different components to it, different expense line items. And what we’ve seen in this quarter and the past couple of quarters is we’ll have a [pop] in a one line item but that will have some offsets at some other line items. Sometimes these offsets are non-recurring. So I think going forward, looking ahead it’s reasonable to expect that at some point we’ll have a [pop] on a line item and we’re not going to have an offset to it. So again I think going forward I would be looking at $104 as at the low end of the range.

Okay, great. And may be since my first question was a dud, I can slip in the third which is just on W.P. Stewart which sort of channel and type of client are you intending that for? I wasn’t really clear because they do both did both high net worth and had some funds, is that a private client product you expect to rollout or you are going to rollout funds, is that a U.S only type of product or you expect to sell it overseas? Thanks.

Cynthia, I think we actually see W.P. Stewart having appeal across a range of channels and a range, and appeal in a broad range of geographies, they have a [40 F] Fund in the U.S. strategy they have a usage product as well that would allow us to sell that overseas. As you mentioned they have a very strong business in the private client world but the idea of a concentrated high output strategy that offers very good downside protection also has a lot of appeal in the institutional world as well. So where in fact it’s a process that has proven itself to be robust over a number of decades now and we think it’s got the folks here quite excited about its potential. So we are optimistic about the type of take up we could see across all three businesses around the world.

Great, thank you.

(Operator Instructions). Your next question comes from Marc Irizarry with Goldman Sachs.

Hello, great thanks. Peter can you talk a little bit about your strategy in terms of inorganic growth, acquisitions maybe you could just put the W.P. Stewart transaction into context in terms of how you maybe want to grow your equity business over time or just may be some areas where you see more sort of inorganic opportunities?

Sure, thanks Marc. So I think we’ve said many times that it would be not impossible but unlikely that we do some large acquisition because you end up with overlaps and lots of duplication and people issues and change and just hard to mange that effectively. What was very appealing in the W.P. Stewart acquisition is as Jim mentioned a process over decades that has produced sustainable alpha, actually attractive alpha with a concentrated portfolio consistently applied and a team that done that for over twelve years. That a service that we don’t have. We don’t have a concentrated service of that type anywhere in the firm. And it seems that also fits comfortably into our culture, thinks about research the way we think about research, thinks about stocks the way we think about stocks and therefore it's not just consistent with the investment process and the investment team but also is consistent with how we talk to our clients. So a firm like that where they have a lot of room to grow where capacity they are not up against the capacity limits, that fits in the culture that is not an overlap, that is focused on a long term part of the market that we think is sustainable, i.e. concentrated investing that’s a very attractive inorganic opportunity. And if we can acquire businesses like that, that have that kind of fit we will continue to do so. It leverages our relationships with our clients, it leverages our research, it leverages our ability to describe our investment processes to our clients and it leverages our client group's distribution capability around the world, that is a win-win for us. Now they are not easy to find. We’ve done three when we closed W.P. Stewart, the current [Forman’s] business and the SunAmerican fund to funds business and now WPS, that’s not a lot in the last five years. But I think there are all reasonably consistent kinds of activity.

Okay that' helpful. And obviously you guys have been able to, tighten the range if you will on some of the controllable expenses. And but I am just curious like where do you think the operating leverage from here on in comes from, is it from leveraging some of the distribution and regional growth that you have or is it in finding may be a few really highly scalable products and watching them scale up or where do you think the go forward operating leverage really lies right now?

Well Marc I think we’ve said that we are pretty happy with where our cost structure is now. So the operating leverage will come from growth. I think that, that is going to be a combination of growth across the various strategies that we have been, are putting in place within that fixed income, or that’s in alternatives, equities and multi-asset. The great thing about where we are now positioned as a firm is that we do have that type of balance in terms of the asset class we are participating and the type of outsources that we are able to produce for our clients and the distribution footprint as you mentioned that we have a place that really is really is global in scope. So we are seeing that already this year. We’ve had very strong growth sales increases in the U.S., in Europe and Latin American and Japan. And so we are encouraged about what the future can be because we do have so many levers that we can pull going forward.

That frankly has taken three an half years to build, it doesn’t happened over night.

Okay, great thanks.

(Operator Instructions).

So it sounds like we have no further questions in the queue. I am around all day for any follow-up you may have with investor relations. Thank you for joining the call this morning.