NEW YORK, Aug. 2 /PRNewswire-FirstCall/ --
AllianceBernstein L.P. ("AllianceBernstein") and AllianceBernstein
Holding L.P. ("AllianceBernstein Holding") (NYSE: AB) today
reported financial and operating results for the quarter ended
June 30, 2010.
Beginning this quarter, AllianceBernstein is providing
additional disclosures which management believes are useful to
investors. As supplemental information, AllianceBernstein is
providing the performance measures "Adjusted Net Revenues",
"Adjusted Operating Income" and "Adjusted Operating Margin", which
are the principle metrics that management uses in evaluating and
comparing period-to-period operating performance. These
measures are not based on generally accepted accounting principles
("non-GAAP measures"). Please refer to the supplemental
information on pages eight through ten for a reconciliation of the
GAAP to the adjusted non-GAAP financial results.
Financial Results
(see pages 8-10 for
detail)
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2Q 2010
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2Q 2009
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2Q 2010 vs 2Q
2009
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1Q 2010
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2Q 2010 vs 1Q 2010
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($ millions except per Unit
amounts)
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AllianceBernstein
L.P.
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GAAP basis:
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Net Revenues
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$688
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$721
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(5%)
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$725
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(5%)
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Operating Income
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$108
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$133
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(19%)
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$140
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(23%)
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Operating Margin, incl.
non-controlling interests
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17.0%
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18.3%
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21.6%
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Adjusted basis:
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Net Revenues*
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$650
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$587
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11%
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$651
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-
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Operating Income**
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$135
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$77
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74%
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$158
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(15%)
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Operating Margin
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20.7%
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13.2%
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24.2%
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AllianceBernstein Holding
L.P.
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GAAP Diluted Net Income per
Unit
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$0.31
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$0.41
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(24%)
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$0.46
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(33%)
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Distribution per Unit
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$0.31
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$0.41
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(24%)
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$0.46
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(33%)
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Adjusted Diluted Net Income per
Unit
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$0.38
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$0.22
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73%
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$0.47
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(19%)
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*Adjusted net revenues excludes
investment gains and losses and dividends and interest on deferred
compensation-related investments, and 90% of the investment gains
and losses of our consolidated venture capital fund attributable to
non-controlling interests. In addition, adjusted net revenues
offsets distribution-related payments to third parties as well as
amortization of deferred sales commissions against distribution
revenues.
**Adjusted operating income
represents operating income on a GAAP basis (1) excluding the
impact on net revenues and compensation expense of the
mark-to-market gains and losses (as well as the dividends and
interest) associated with employee deferred compensation-related
investments, (2) excluding real estate sub-lease charges and (3)
including the net loss or income of consolidated entities
attributable to non-controlling interests.
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The distribution is payable on August 19,
2010 to holders of record of AllianceBernstein Holding Units
at the close of business on August 12,
2010.
Performance
Equity markets fell during most of the second quarter, as
investors feared that escalating fiscal troubles in Europe could curtail the world's economic
recovery. The increase in risk aversion caused by these fears
created a challenging environment for active investment strategies.
In this context, the performance of AllianceBernstein's Equities
services relative to benchmarks or peer averages did not meet
expectations; however, global Fixed Income services outperformed
their benchmarks and peer averages.
Assets Under Management ($
billions)
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Institutions
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Retail
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Private Client
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Total
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Ending Assets Under
Management
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$270.6
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$116.2
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$70.9
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$457.7
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Net Flows for Three Months Ended
6/30/10
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($3.7)
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($0.9)
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($0.1)
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($4.7)
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Total assets under management as of June
30, 2010 were $458 billion,
down $43 billion, or 9%, from
March 31, 2010, and up $11 billion, or 2%, compared to June 30, 2009. During the second quarter of
2010, assets under management decreased as a result of negative
investment performance as well as modest net outflows.
However, total net outflows of $4.7
billion in the second quarter of 2010 were 28% lower than in
the first quarter of 2010 and 81% lower than the second quarter of
2009.
Net outflows in the Institutions channel declined to
$3.7 billion, or 57% lower than in
the first quarter of 2010, due to increased sales. The
pipeline of awarded but unfunded institutional mandates decreased
slightly to $5.0 billion at
June 30, 2010. The Retail
channel experienced net outflows of $0.9
billion, compared to net inflows of $2.5 billion in the first quarter of 2010.
This change was primarily the result of the inclusion of two
large non-US mandate wins in the first quarter as well as increased
gross outflows in the second quarter, likely caused in part by the
European credit crisis. Net outflows in the Private Client
channel were $0.1 billion compared to
net outflows of $0.3 billion in the
first quarter of 2010.
Financial Results: GAAP
Operating income for the second quarter of 2010 declined 19%, to
$108 million, and operating margin
decreased to 17.0% from 18.3%, compared to the second quarter of
2009. Sequentially, operating income declined by 23% from
$140 million and operating margin
declined from 21.6%.
Diluted net income per Unit and the cash distribution per Unit
for the publicly-traded partnership each declined 24% to
$0.31 from $0.41 compared to the second quarter of 2009 and
declined 33% from $0.46
sequentially.
Net revenues declined by 5% to $688
million compared to the second quarter of 2009 and by 5%
sequentially, in both cases due primarily to substantial losses on
deferred compensation-related investments in the second quarter of
2010. Base fee revenues increased by $63 million to $510 million, or 14% greater than
in the second quarter of 2009, and were flat sequentially.
Bernstein Research Services revenue increased 6% compared to
both the second quarter of 2009 and the first quarter of 2010.
Investment losses of $57 million in
the current quarter were primarily due to losses of $37 million on deferred compensation-related
investments and $10 million in the
consolidated AllianceBernstein Venture Capital Fund (90% of which
are offset in net loss (income) attributable to non-controlling
interests). This compares unfavorably to net investment gains
of $65 million in the second quarter
of 2009, due primarily to gains on deferred compensation-related
investments, and net investment losses of $8
million in the first quarter of 2010, as gains on deferred
compensation-related investments were more than offset by losses in
our Venture Capital Fund.
Operating expenses were $580
million, a decrease of 1% compared to the second quarter of
2009 and the first quarter of 2010. Compensation and benefits
decreased 4% compared to the second quarter of 2009 and 2%
sequentially, in both cases due to lower deferred compensation
expenses partially offset by higher severance and recruitment
costs. During the second quarter of 2010, severance totaled
$10 million and recruitment totaled
$7 million. By comparison,
severance and recruitment were $8
million and $2 million in the
second quarter of 2009 and $5 million
and $3 million in the first quarter
of 2010. Promotion and servicing expenses increased by
$18 million, or 15%, compared to the
second quarter of 2009 and by $11
million, or 9%, sequentially, due primarily to an increase
in distribution-related payments, commensurate with increased
distribution revenues and, to a lesser extent, higher expenses for
firm-sponsored conferences. G&A expenses declined by
$13 million, or 9%, compared to the
second quarter of 2009 due primarily to lower class action
settlement expenses and improved foreign exchange results in the
current quarter. Sequentially, G&A expenses decreased 7%
due to a $12 million real estate
sub-lease charge taken in the first quarter of 2010.
Unit Repurchase Program
In March 2010, AllianceBernstein
announced its intention to repurchase up to three million Holding
Units on the open-market to help fund anticipated restricted
Unit-based incentive compensation awards. As of June 30, 2010, three million Holding Units had
been purchased for $86.1 million.
During the second half of 2010 and in future periods,
AllianceBernstein intends to repurchase additional Holding Units,
from time to time, to help fund anticipated restricted Unit-based
incentive compensation awards.
Financial Results: As Adjusted
Adjusted net revenues increased by 11% to $650 million compared to the second quarter of
2009 and were flat sequentially. Compared to the second
quarter of 2009, Adjusted Operating Income increased by
$58 million, or 74%, to $135 million and Adjusted Operating Margin
increased to 20.7% from 13.2%, due principally to higher base fees.
Compared to the first quarter of 2010, Adjusted Operating
Income declined by 15% from $158
million and Adjusted Operating Margin declined from 24.2%,
due principally to the increase in certain compensation-related and
promotion and servicing costs described above.
Adjusted Diluted Net Income per Unit for the publicly-traded
partnership increased 73% to $0.38
from $0.22 in the second quarter of
2009 and decreased by 19% from $0.47
sequentially.
Management Commentary
"Overall, the second quarter of 2010 was not what we would have
liked. Increased volatility around the globe, caused in large
part by the European credit crisis, led many investors to seek safe
havens and sell riskier assets – much as we saw in 2008. This
dynamic had an adverse impact on our equity services, which
generally underperformed benchmarks. However, we feel our
equity portfolios are exposed to companies with very attractive
cash flows and growth characteristics which should capitalize on
global growth. Notably, the performance of our fixed income
services remained competitive, resulting in the fourth consecutive
quarter of net inflows.
"While total AUM declined as capital markets retreated during
the second half of the quarter, net flows improved for the second
consecutive quarter. We have experienced four consecutive
quarters of improving gross sales, raising nearly $19 billion in gross new assets in the second
quarter. Bernstein Research's European research platform was again
ranked #1 on key metrics of research quality in a leading
independent survey of European institutional investors and we
continued to make strategic investments to grow our Asian research
and global trading capabilities. Our product development
efforts continued to produce results in the second quarter,
exemplified by Transamerica's adoption of our Dynamic Asset
Allocation toolset for its variable annuity platform and the launch
of our Multimanager Target-Date Solution for defined contribution
platforms. I am confident that executing on our strategy of
delivering strong long-term investment performance, developing
innovative investment solutions, expanding our client base and
motivating our employees will ultimately lead to success for all
AllianceBernstein stakeholders," said Peter
S. Kraus, Chairman and Chief Executive Officer.
Second Quarter 2010 Earnings Conference Call
Information
Management will review second quarter 2010 financial and
operating results during a conference call beginning at
8:30 a.m. (EDT). The conference call
will be hosted by Peter S. Kraus,
Chairman and Chief Executive Officer, David
A. Steyn, Chief Operating Officer, and John B. Howard, Chief Financial Officer. All
future AllianceBernstein quarterly earnings conference calls will
be held from 8:30 a.m. to 9:30 a.m. eastern
time, unless otherwise announced.
Parties may access the conference call by either webcast or
telephone:
- To listen by webcast, please visit AllianceBernstein's Investor
Relations website at
http://ir.alliancebernstein.com/investorrelations at least 15
minutes prior to the call to download and install any necessary
audio software.
- To listen by telephone, please dial (866) 556-2265 in the U.S.
or (973) 935-8521 outside the U.S., 10 minutes before the scheduled
start time. The conference ID# is 87314365.
The presentation that will be reviewed during the conference
call will be available on AllianceBernstein's Investor Relations
website soon after the release of Second Quarter 2010 financial and
operating results on August 2,
2010.
A replay of the webcast will be made available beginning
approximately one hour after the conclusion of the conference call
and will be available on AllianceBernstein's website for one week.
An audio replay of the conference call will also be available for
one week. To access the audio replay, please call (800) 642-1687
from the U.S., or outside the U.S. call (706) 645-9291, and provide
conference ID# 87314365.
Cautions Regarding Forward-Looking Statements
Certain statements provided by management in this news release
are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such 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 of sponsored investment products and
separately-managed accounts, general economic conditions, industry
trends, future acquisitions, competitive conditions, and current
and proposed government regulations, including changes in tax
regulations and rates and the manner in which the earnings of
publicly-traded partnerships are taxed. AllianceBernstein cautions
readers to carefully consider such factors. Further, such
forward-looking statements speak only as of the date on which such
statements are made; AllianceBernstein undertakes no obligation to
update any forward-looking statements to reflect events or
circumstances after the date of such statements. For further
information regarding these forward-looking statements and the
factors that could cause actual results to differ, see "Risk
Factors" and "Cautions Regarding Forward-Looking Statements" in
AllianceBernstein's Form 10-K for the year ended December 31, 2009 and subsequent Forms 10-Q. Any
or all of the forward-looking statements made in this news release,
Form 10-K, Form 10-Q, other documents AllianceBernstein files with
or furnishes to the SEC, and any other public statements issued by
AllianceBernstein, may turn out to be wrong. It is important to
remember that other factors besides those listed in "Risk Factors"
and "Cautions Regarding Forward-Looking Statements", and those
listed below, could also adversely affect AllianceBernstein's
financial condition, results of operations and business
prospects.
The forward-looking statements referred to in the preceding
paragraph include statements regarding:
- The pipeline of new institutional mandates not yet
funded: 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 currently anticipated.
- Our belief that our equity portfolios, which are exposed
to companies with very attractive cash flows and growth
characteristics, should capitalize on global growth: We
cannot predict the timing or degree of global market growth, nor
our absolute or relative investment performance for our clients.
The actual performance of the capital markets and other
factors beyond our control will affect our investment success for
clients and asset flows.
- Our confidence that executing on our strategy of
delivering long-term investment performance, developing innovative
investment solutions, expanding our client base and motivating our
employees will ultimately lead to success for all AllianceBernstein
stakeholders: Changes and volatility in political,
economic, capital market or industry conditions can result in
changes in demand for our products and services or impact the value
of our assets under management, all of which may significantly
hinder our ability to execute on our strategy.
- Our intention to engage in additional open market
purchases of Holding Units, from time to time, to help fund
anticipated obligations under our incentive compensation award
program: The number of Holding Units needed in future
periods to make incentive compensation awards is dependent upon
various factors, some of which are beyond our control, including
the fluctuation in the price of a Holding Unit.
- Our determination that, based on expected revenues for
the year, employee compensation expense should range between 45%
and 50% of our adjusted revenues: The revenues we
generate during 2010 are dependent upon the performance of the
capital markets, our investment performance for our clients,
general economic and regulatory conditions, and other factors that
may be beyond our control. Aggregate employee compensation
reflects employee performance and competitive compensation levels.
Fluctuations in our revenues and/or changes in competitive
compensation levels could result in employee compensation expense
being outside of this range.
- Our anticipation that the proposed 12b-1 fee-related rule
changes will not have a material effect on us: The
impact of this rule change is dependant upon the final rules
adopted by the SEC, any phase-in or grandfathering period, and any
other changes made with respect to share class distribution
arrangements.
Qualified Tax Notice
This announcement is intended to be a qualified notice under
Treasury Regulation §1.1446-4(b). Please note that 100% of
AllianceBernstein Holding's distributions to foreign investors is
attributable to income that is effectively connected with a
United States trade or business.
Accordingly, AllianceBernstein Holding's distributions to foreign
investors are subject to federal income tax withholding at the
highest applicable tax rate, currently 35%.
About AllianceBernstein
AllianceBernstein is a leading global investment management firm
that offers high-quality research and diversified investment
services to institutional clients, individuals and private clients
in major markets around the world. AllianceBernstein employs more
than 500 investment professionals with expertise in growth
equities, value equities, fixed income securities, blend strategies
and alternative investments and, through its subsidiaries and joint
venture, operates in more than 20 countries. AllianceBernstein's
research disciplines include fundamental research, quantitative
research, economic research and currency forecasting capabilities.
Through its integrated global platform, AllianceBernstein is
well-positioned to tailor investment solutions for its clients.
AllianceBernstein also offers high-quality, in-depth research,
portfolio strategy and brokerage-related services to institutional
investors, and equity capital markets services to issuers of
publicly-traded securities.
At June 30, 2010,
AllianceBernstein Holding L.P. owned approximately 36.7% of the
issued and outstanding AllianceBernstein Units and AXA, one of the
largest global financial services organizations, owned an
approximate 62.5% economic interest in AllianceBernstein.
AllianceBernstein L.P. (The
Operating Partnership)
SUMMARY CONSOLIDATED STATEMENTS
OF INCOME | June 30,
2010
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Three Months
Ended
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$ thousands,
unaudited
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6/30/10
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6/30/09
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3/31/10
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Revenues:
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Base Fees
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$509,825
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$447,232
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$509,578
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Performance Fees
|
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2,963
|
|
878
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|
2,674
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|
Bernstein Research
Services
|
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117,158
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110,867
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110,752
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Distribution Revenues
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83,477
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64,582
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80,349
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Dividend and Interest
Income
|
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4,911
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|
6,577
|
|
3,911
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Investment Gains
(Losses)
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(56,532)
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65,284
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(8,020)
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Other Revenues
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27,735
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27,400
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26,562
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Total Revenues
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689,537
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722,820
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725,806
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Less: Interest
Expense
|
|
1,194
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|
1,380
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|
720
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Net Revenues
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688,343
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721,440
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725,086
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Expenses:
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Employee Compensation &
Benefits
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313,113
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324,961
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319,425
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Promotion &
Servicing
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Distribution-Related Payments
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71,015
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55,149
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66,749
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Amortization of
Deferred Sales Commissions
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12,147
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13,844
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12,121
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Other
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49,816
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46,329
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42,829
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General &
Administrative(1)
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128,795
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141,616
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138,048
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Interest on
Borrowings
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430
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675
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|
555
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Amortization of Intangible
Assets
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5,378
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5,554
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5,377
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Total Expenses
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580,694
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588,128
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585,104
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Operating Income
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107,649
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133,312
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139,982
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Non-Operating Income
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2,258
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5,951
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4,515
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Income Before Income
Taxes
|
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109,907
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139,263
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144,497
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Income Taxes
|
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13,127
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9,668
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|
13,004
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Net Income
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96,780
|
|
129,595
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|
131,493
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Net Loss (Income) of
Consolidated Entities Attributable to Non-Controlling
Interests
|
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9,339
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(1,300)
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16,773
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Net Income Attributable to
AllianceBernstein Unitholders
|
|
$106,119
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$128,295
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$148,266
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Operating
Margin(2)
|
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17.0%
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18.3%
|
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21.6%
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(1) General and
Administrative expenses for the three months ended 3/31/10 include
a $12 million real estate sub-lease charge.
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(2) Operating Margin =
(Operating Income less Net Income/plus Net Loss of Consolidated
Entities Attributable to Non-Controlling
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Interests) / Net Revenues.
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AllianceBernstein Holding L.P.
(The Publicly-Traded Partnership)
SUMMARY STATEMENTS OF
INCOME
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Three Months
Ended
|
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|
$ thousands except per Unit
amounts, unaudited
|
|
6/30/10
|
|
6/30/09
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3/31/10
|
|
|
Equity in Net Income
Attributable to AllianceBernstein Unitholders
|
|
$38,925
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$44,092
|
|
$54,210
|
|
|
Income
Taxes
|
|
7,153
|
|
5,839
|
|
6,964
|
|
|
Net Income
|
|
31,772
|
|
38,253
|
|
47,246
|
|
|
|
|
|
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|
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|
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Additional Equity in Earnings of
Operating Partnership (1)
|
|
484
|
|
9
|
|
612
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|
|
Net Income - Diluted
|
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$32,256
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|
$38,262
|
|
$47,858
|
|
|
Diluted Net Income per
Unit(2)
|
|
$0.31
|
|
$0.41
|
|
$0.46
|
|
|
Distribution per
Unit(2)
|
|
$0.31
|
|
$0.41
|
|
$0.46
|
|
|
|
|
|
|
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|
(1) To reflect higher
ownership in the Operating Partnership resulting from application
of the treasury stock method to outstanding options.
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(2) Three months ended
3/31/2010 includes the impact of a real estate sub-lease charge of
$0.04 per Unit.
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AllianceBernstein L.P. and
AllianceBernstein Holding L.P.
UNITS OUTSTANDING AND WEIGHTED
AVERAGE UNITS OUTSTANDING
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Weighted Average
Units
|
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Period End
|
|
Three Months Ended
6/30/10
|
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Units
|
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Basic
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Diluted
|
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|
AllianceBernstein
L.P.
|
|
275,609,529
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|
275,498,210
|
|
277,523,755
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|
AllianceBernstein Holding
L.P.
|
|
102,215,686
|
|
101,442,457
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103,468,002
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AllianceBernstein
L.P.
ASSETS UNDER MANAGEMENT |
June 30, 2010
|
|
($ billions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending and
Average
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
|
6/30/10
|
|
6/30/09
|
|
3/31/10
|
|
|
Ending Assets Under
Management
|
|
|
|
|
$457.7
|
|
$447.0
|
|
$501.3
|
|
|
Average Assets Under
Management
|
|
|
|
|
$481.7
|
|
$437.5
|
|
$490.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Month Changes By
Distribution Channel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
Private Client
|
|
Total
|
|
|
Beginning of
Period
|
|
|
$297.0
|
|
$127.8
|
|
$76.5
|
|
$501.3
|
|
|
Sales/New accounts
|
|
|
8.1
|
|
8.6
|
|
2.1
|
|
18.8
|
|
|
Redemptions/Terminations
|
|
|
(7.3)
|
|
(6.4)
|
|
(1.5)
|
|
(15.2)
|
|
|
Net Cash Flows
|
|
|
(4.5)
|
|
(3.1)
|
|
(0.7)
|
|
(8.3)
|
|
|
Net Flows
|
|
|
(3.7)
|
|
(0.9)
|
|
(0.1)
|
|
(4.7)
|
|
|
Transfers
|
|
|
(0.2)
|
|
-
|
|
0.2
|
|
-
|
|
|
Investment
Performance
|
|
|
(22.5)
|
|
(10.7)
|
|
(5.7)
|
|
(38.9)
|
|
|
End of Period
|
|
|
$270.6
|
|
$116.2
|
|
$70.9
|
|
$457.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Month Changes By
Investment Service
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
|
|
Growth
|
|
Fixed Income
|
|
Other
|
(1)
|
Total
|
|
|
Beginning of
Period
|
$169.4
|
|
$91.2
|
|
$192.3
|
|
$48.4
|
|
$501.3
|
|
|
Sales/New accounts
|
4.5
|
|
1.3
|
|
12.0
|
|
1.0
|
|
18.8
|
|
|
Redemptions/Terminations
|
(5.8)
|
|
(4.1)
|
|
(5.0)
|
|
(0.3)
|
|
(15.2)
|
|
|
Net Cash Flows
|
(4.0)
|
|
(2.3)
|
|
(2.0)
|
|
-
|
|
(8.3)
|
|
|
Net Flows
|
(5.3)
|
|
(5.1)
|
|
5.0
|
|
0.7
|
|
(4.7)
|
|
|
Investment
Performance
|
(24.9)
|
|
(11.6)
|
|
1.2
|
|
(3.6)
|
|
(38.9)
|
|
|
End of
Period(2)
|
$139.2
|
|
$74.5
|
|
$198.5
|
|
$45.5
|
|
$457.7
|
|
(1) Includes index,
structured, asset allocation services and other non-actively
managed AUM.
|
|
(2) Approximately $70
billion in Blend Strategies AUM are reported in their respective
services.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By Client
Domicile
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
Private Client
|
|
Total
|
|
|
U.S. Clients
|
|
|
$143.6
|
|
$ 77.1
|
|
$69.0
|
|
$289.7
|
|
|
Non-U.S. Clients
|
|
|
127.0
|
|
39.1
|
|
1.9
|
|
168.0
|
|
|
Total
|
|
|
$270.6
|
|
$116.2
|
|
$70.9
|
|
$457.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AllianceBernstein
L.P.
RECONCILIATION OF GAAP FINANCIAL
RESULTS TO ADJUSTED FINANCIAL RESULTS
|
|
|
|
|
Three Months
Ended
|
|
|
$ thousands,
unaudited
|
6/30/10
|
|
3/31/10
|
|
12/31/09
|
|
9/30/09
|
|
6/30/09
|
|
3/31/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues, GAAP
basis
|
$ 688,343
|
|
$ 725,086
|
|
$ 781,861
|
|
$ 806,014
|
|
$ 721,440
|
|
$ 597,564
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
compensation-related investment (gains) losses
|
36,797
|
|
(11,159)
|
|
(14,763)
|
|
(70,873)
|
|
(63,110)
|
|
28,245
|
|
|
|
Deferred
compensation-related dividends and interest
|
(920)
|
|
(800)
|
|
(4,084)
|
|
(1,381)
|
|
(1,591)
|
|
(1,470)
|
|
|
|
90% of consolidated
venture capital fund investment (gains) losses
|
9,304
|
|
16,849
|
|
1,627
|
|
(27,155)
|
|
(417)
|
|
5,314
|
|
|
|
Distribution-related
payments
|
(71,015)
|
|
(66,749)
|
|
(69,400)
|
|
(61,843)
|
|
(55,149)
|
|
(47,810)
|
|
|
|
Amortization of deferred
sales commissions
|
(12,147)
|
|
(12,122)
|
|
(12,819)
|
|
(13,362)
|
|
(13,844)
|
|
(14,898)
|
|
|
Adjusted Net
Revenues
|
$ 650,362
|
|
$ 651,105
|
|
$ 682,422
|
|
$ 631,400
|
|
$ 587,329
|
|
$ 566,945
|
|
|
Operating Income, GAAP
basis
|
$ 107,649
|
|
$ 139,982
|
|
$ 200,256
|
|
$ 223,470
|
|
$ 133,312
|
|
$ 33,790
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
compensation-related investment (gains) losses
|
36,797
|
|
(11,159)
|
|
(14,763)
|
|
(70,873)
|
|
(63,110)
|
|
28,245
|
|
|
Deferred
compensation-related dividends and interest
|
(920)
|
|
(800)
|
|
(4,084)
|
|
(1,381)
|
|
(1,591)
|
|
(1,470)
|
|
|
|
Deferred
compensation-related mark-to-market vesting (credit)
expense
|
(19,082)
|
|
357
|
|
1,556
|
|
16,722
|
|
8,590
|
|
(29,016)
|
|
|
|
Deferred
compensation-related dividends and interest expense
|
810
|
|
682
|
|
3,760
|
|
1,240
|
|
1,431
|
|
1,303
|
|
|
|
Net impact
of deferred compensation-related investments
|
17,605
|
|
(10,920)
|
|
(13,531)
|
|
(54,292)
|
|
(54,680)
|
|
(938)
|
|
|
|
Real estate sub-lease
charges
|
-
|
|
11,983
|
|
2,548
|
|
-
|
|
-
|
|
5,728
|
|
|
|
Total Exclusions:
|
17,605
|
|
1,063
|
|
(10,983)
|
|
(54,292)
|
|
(54,680)
|
|
4,790
|
|
|
|
Include:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss (income) of
consolidated entities attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
non-controlling
interests
|
9,339
|
|
16,773
|
|
733
|
|
(27,154)
|
|
(1,300)
|
|
5,340
|
|
|
Adjusted Operating
Income
|
$ 134,593
|
|
$ 157,818
|
|
$ 190,006
|
|
$ 142,024
|
|
$ 77,332
|
|
$ 43,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Margin, GAAP basis
incl. non-controlling interests
|
17.0%
|
|
21.6%
|
|
25.7%
|
|
24.4%
|
|
18.3%
|
|
6.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
Margin
|
20.7%
|
|
24.2%
|
|
27.8%
|
|
22.5%
|
|
13.2%
|
|
7.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AllianceBernstein Holding
L.P.
|
|
RECONCILIATION OF GAAP EPU TO
ADJUSTED EPU
|
|
|
Three Months
Ended
|
|
|
$ thousands except
per
Unit amounts,
unaudited
|
6/30/10
|
|
3/31/10
|
|
12/31/09
|
|
9/30/09
|
|
6/30/09
|
|
3/31/09
|
|
|
Diluted Net Income, GAAP
basis
|
$ 32,256
|
|
$ 47,858
|
|
$ 60,402
|
|
$ 62,836
|
|
$ 38,262
|
|
$ 6,735
|
|
|
Impact of AllianceBernstein L.P.
non-GAAP adjustments
|
6,572
|
|
1,257
|
|
(2,923)
|
|
(18,003)
|
|
(18,298)
|
|
1,589
|
|
|
Adjusted Diluted Net
Income
|
$ 38,828
|
|
$ 49,115
|
|
$ 57,479
|
|
$ 44,833
|
|
$ 19,964
|
|
$ 8,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Net Income per Unit,
GAAP basis
|
$
0.31
|
|
$
0.46
|
|
$
0.62
|
|
$
0.67
|
|
$
0.41
|
|
$
0.07
|
|
|
Impact of AllianceBernstein L.P.
non-GAAP adjustments
|
0.07
|
|
0.01
|
|
(0.03)
|
|
(0.19)
|
|
(0.19)
|
|
0.02
|
|
|
Adjusted Diluted Net Income per
Unit
|
$
0.38
|
|
$
0.47
|
|
$
0.59
|
|
$
0.48
|
|
$
0.22
|
|
$
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AllianceBernstein
L.P.
RECONCILIATION OF GAAP FINANCIAL
RESULTS TO ADJUSTED FINANCIAL RESULTS
|
|
|
Six Months Ended
|
|
|
June 30,
|
|
$ thousands,
unaudited
|
2010
|
|
2009
|
|
Net Revenues, GAAP
basis
|
$ 1,413,429
|
|
$ 1,319,004
|
|
Exclude:
|
|
|
|
|
Deferred
compensation-related investment (gains) losses
|
25,638
|
|
(34,865)
|
|
Deferred
compensation-related dividends and interest
|
(1,720)
|
|
(3,061)
|
|
90% of consolidated
venture capital fund investment (gains) losses
|
26,153
|
|
4,898
|
|
Distribution-related
payments
|
(137,764)
|
|
(102,960)
|
|
Amortization of deferred
sales commissions
|
(24,268)
|
|
(28,741)
|
|
Adjusted Net
Revenues
|
$ 1,301,468
|
|
$ 1,154,275
|
|
|
|
|
|
|
Operating Income, GAAP
basis
|
$
247,631
|
|
$
167,102
|
|
Exclude:
|
|
|
|
|
Deferred
compensation-related investment (gains) losses
|
25,638
|
|
(34,865)
|
|
Deferred
compensation-related dividends and interest
|
(1,720)
|
|
(3,061)
|
|
Deferred
compensation-related mark-to-market vesting (credit)
expense
|
(18,725)
|
|
(20,426)
|
|
Deferred
compensation-related dividends and interest expense
|
1,492
|
|
2,734
|
|
Net impact
of deferred compensation-related investments
|
6,685
|
|
(55,618)
|
|
Real estate sub-lease
charges
|
11,983
|
|
5,728
|
|
Total
exclusions
|
18,668
|
|
(49,890)
|
|
Include:
|
|
|
|
|
Net loss (income) of
consolidated entities attributable to non-controlling
interests
|
26,112
|
|
4,040
|
|
Adjusted Operating
Income
|
$
292,411
|
|
$
121,252
|
|
Operating Margin, GAAP basis
incl. non-controlling interests
|
19.4%
|
|
13.0%
|
|
Adjusted Operating
Margin
|
22.5%
|
|
10.5%
|
|
|
|
|
|
|
AllianceBernstein Holding
L.P.
|
|
|
|
|
RECONCILIATION OF GAAP EPU TO
ADJUSTED EPU
|
|
|
|
|
|
Six Months Ended
|
|
|
June 30,
|
|
$ thousands except
per
Unit amounts,
unaudited
|
2010
|
|
2009
|
|
|
|
|
|
|
Net Income - Diluted, GAAP
basis
|
$
80,127
|
|
$
44,988
|
|
Impact of AllianceBernstein L.P.
non-GAAP adjustments
|
7,486
|
|
(16,737)
|
|
Net Income - Diluted, as
adjusted
|
$
87,613
|
|
$
28,251
|
|
|
|
|
|
|
Diluted Net Income per Unit,
GAAP basis
|
$
0.78
|
|
$
0.49
|
|
Impact of AllianceBernstein L.P.
non-GAAP adjustments
|
0.07
|
|
(0.18)
|
|
Diluted Net Income per Unit, as
adjusted
|
$
0.85
|
|
$
0.31
|
|
|
|
|
|
AllianceBernstein L.P.
Notes to Condensed Consolidated Statements of Income and
Supplemental Information
(Unaudited)
Adjusted Net Revenues
Adjusted net revenues excludes investment gains and losses and
dividends and interest on deferred compensation-related
investments, and 90% of the investment gains and losses of our
consolidated venture capital fund attributable to non-controlling
interests. In addition, adjusted net revenues offsets
distribution-related payments to third parties as well as
amortization of deferred sales commissions against distribution
revenues. We believe the offset of distribution-related payments
from net revenues is useful for our investors and other users of
our financial statements because such presentation appropriately
reflects the nature of these costs as pass-through payments to
third parties who perform functions on behalf of our sponsored
mutual funds and/or shareholders of these funds. Amortization of
deferred sales commissions is offset against net revenues because
such costs, over time, offset distribution revenues earned by the
company.
Adjusted Operating Income
Adjusted operating income represents operating income on a GAAP
basis (1) excluding the impact on net revenues and compensation
expense of the mark-to-market gains and losses (as well as the
dividends and interest) associated with employee deferred
compensation-related investments, (2) excluding real estate
sub-lease charges and (3) including the net loss or income of
consolidated entities attributable to non-controlling
interests.
(1) Prior to 2009, a large proportion of employee compensation
was in the form of deferred awards that were notionally invested in
AllianceBernstein investment services and generally vested over a
period of four years. AllianceBernstein has hedged the exposure to
market movements by purchasing and holding these investments on its
balance sheet. The full value of the investments' appreciation
(depreciation) is recorded within investment gains and losses on
the income statement in the current period. U.S. GAAP requires the
appreciation (depreciation) in the compensation liability to be
expensed over the award vesting period in proportion to the vested
amount of the award as part of compensation expense. This creates a
timing difference between the recognition of the compensation
expense and the investment gain or loss impacting operating income
which will reverse over the life of the award and net to zero at
the end of the multi-year vesting period. Although, during periods
of high market volatility these timing differences have an impact
on operating income and operating margin, over the life of the
award any impact is ultimately offset. Because these plans are
economically hedged, management believes it is useful to reflect
the offset ultimately achieved from hedging the investments' market
exposure in the calculation of adjusted operating income, adjusted
operating margin and adjusted diluted net income per Holding Unit,
which will produce core operating results from period to period.
The non-GAAP measures exclude gains and losses and dividends and
interest on deferred compensation-related investments included in
revenues and compensation expense, and thus eliminating the timing
differences created by different treatment under U.S. GAAP of the
market movement on the expense and the investments.
(2) Real estate sub-lease charges have been excluded because,
often, they are relatively large in nature and are not considered
part of our core operating results when comparing financial results
from period to period and to industry peers.
(3) Most of the net income or loss of consolidated entities
attributable to non-controlling interests relates to the 90%
limited partner interests held by third parties in our consolidated
venture capital fund. We own a 10% limited partnership interest in
the fund. Because we are the general partner of the venture capital
fund and are deemed to have a controlling interest, U.S. GAAP
requires us to consolidate the financial results of the fund.
However, recognizing 100% of the gains or losses in operating
income while only retaining 10% is not reflective of our underlying
financial results at the operating income level. As a result, we
are excluding the 90% limited partnership interests we do not own
from our adjusted operating income. Similarly, net income of joint
ventures attributable to non-controlling interests, although not
significant, is excluded because it does not reflect the economic
interest attributable to AllianceBernstein.
Adjusted Operating Margin
Adjusted operating margin allows us to monitor our financial
performance and efficiency from period to period and to compare our
performance to industry peers without the volatility noted above in
our discussion of adjusted operating income. Adjusted operating
margin is derived by dividing adjusted operating income by adjusted
net revenues.
SOURCE AllianceBernstein L.P.
Copyright g. 2 PR Newswire