NEW YORK, Oct. 27 /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
September 30, 2010.
"As investors continue to rebalance their portfolios away from
risk assets and into bond funds, we are benefitting in our U.S. and
global bond services, where our performance has been strong over
the last several years," said Peter S.
Kraus, Chairman and Chief Executive Officer. "Despite our
equity services' improved performance relative to the second
quarter, net flows in the third quarter proved to be more
challenging. The overall direction of our flows, however, remains
positive, with year-to-date 2010 net outflows clearly improved
relative to 2009. In addition, assets under management in our
defined contribution business topped $10
billion, we continue to add to our alternatives business
with the recent acquisition of the SunAmerica platform, and in our
sell-side business we are driving a significant expansion of our
research and trading capabilities in Asia."
Financial Results
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3Q
2010
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3Q
2009
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3Q
2010
vs
3Q 2009
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2Q
2010
|
3Q
2010
vs
2Q 2010
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($ 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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$758
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$806
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(6%)
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$688
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10%
|
|
Operating Income
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$58
|
$223
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(74%)
|
$108
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(47%)
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Operating Margin, incl.
non-controlling interests
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7.2%
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24.4%
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17.0%
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Adjusted basis: (1)
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Net Revenues (2)
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$634
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$631
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-
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$650
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(2%)
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Operating Income (3)
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$122
|
$142
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(14%)
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$135
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(9%)
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Operating Margin
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19.3%
|
22.5%
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20.7%
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AllianceBernstein Holding
L.P.
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GAAP Diluted Net Income per
Unit
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$0.12
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$0.67
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(82%)
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$0.31
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(61%)
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Distribution per Unit
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$0.12
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$0.67
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(82%)
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$0.31
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(61%)
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Adjusted Diluted Net Income per
Unit (1)
|
$0.36
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$0.48
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(25%)
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$0.37
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(3%)
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(1) See page 8-10 for
reconciliations of GAAP Financial Results to Adjusted Financial
Results
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(2) Adjusted net revenues
excludes investment gains and losses and dividends and interest on
deferred compensation-related investments, and 90% of the
investment gains and losses of our consolidated venture capital
fund attributable to non-controlling interests. In addition,
adjusted net revenues offset distribution-related payments to third
parties as well as amortization of deferred sales commissions
against distribution revenues.
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(3) Adjusted operating income
represents operating income on a GAAP basis (1) excluding the
impact on net revenues and compensation expense of the
mark-to-market gains and losses (as well as the dividends and
interest) associated with employee deferred compensation-related
investments, (2) excluding real estate charges, and (3) including
the net loss or income of consolidated entities attributable to
non-controlling interests.
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The distribution is payable on November
18, 2010, to holders of record of AllianceBernstein Holding
Units at the close of business on November
8, 2010.
Market Performance
After a very difficult second quarter for equities, the global
markets rallied in the third quarter, led by solid gains in
September. The S&P 500 gained 10.7% for the quarter and the
MSCI World gained 13.2%, which resulted in positive returns in both
U.S. and global stocks for the year-to-date period — but only
modestly because of the losses experienced to date in 2010.
Assets Under
Management ($ 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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Assets Under Management
9/30/10
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$283.0
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$125.6
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$75.7
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$484.3
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Net Flows for Three Months Ended
9/30/10
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($15.2)
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($3.2)
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($0.5)
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($18.9)
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Total assets under management as of September 30, 2010 were $484 billion, up $26
billion, or 6%, from June 30,
2010, and down $14 billion, or
3%, compared to September 30, 2009.
The increase versus the prior quarter is a result of positive
investment performance, partially offset by net outflows, mainly in
our Institutions channel.
Net outflows in the Institutions channel were $15.2 billion, compared to net outflows of
$3.7 billion in the second quarter of
2010. Gross sales fell sequentially from $8.1 billion to $4.2 billion during the third
quarter of 2010. The pipeline of awarded but unfunded institutional
mandates increased $1.2 billion to $6.2
billion at September 30, 2010,
in large part due to the defined contribution pipeline, which had
several Customized Retirement Strategies wins. The Retail
channel experienced net outflows of $3.2
billion, compared to net outflows of $0.9 billion in the second quarter of 2010. Gross
sales declined sequentially from $8.6
billion to $7.3 billion during the third quarter of 2010.
Net outflows in the Private Client channel were $0.5 billion compared to net outflows of
$0.1 billion in the second quarter of
2010, as gross sales declined sequentially from $2.1 billion to $1.6 billion during the third
quarter of 2010.
Financial Results: GAAP
Operating income for the third quarter of 2010 declined 74% to
$58 million, and operating margin
decreased to 7.2% from 24.4%, compared to the third quarter of
2009. Sequentially, operating income declined by 47% from
$108 million and operating margin
declined from 17.0%. The declines in operating income and operating
margin from both prior periods are primarily due to a $90 million real estate charge in the current
quarter. Diluted net income per Unit and the cash distribution per
Unit for the publicly-traded partnership each declined 82% to
$0.12, from $0.67, compared to the third quarter of 2009 and
declined 61%, from $0.31,
sequentially.
As previously disclosed, we recently performed a comprehensive
review of our real estate requirements in New York in connection with our workforce
reductions commencing in 2008. As a result, we intend to
sub-lease over 300,000 square feet of office space in New York and largely consolidate our employees
into two office locations from three. We therefore recorded a
non-cash pre-tax real estate charge of $90
million in the current quarter that reflects the net present
value of the difference between the amount of our on-going
contractual operating lease obligations for the space and our
estimate of current market rental rates, as well as the write-off
of leasehold improvements, furniture and equipment related to this
space. Based on our current assumptions of when we can sub-lease
the space and current market rental rates, we estimate that this
charge will lower our occupancy costs on existing real estate by
approximately $21 million in 2011 and
$23 million in 2012 and subsequent
years.
Net revenues decreased by 6% to $758
million compared to the third quarter of 2009 mainly due to
lower gains on deferred compensation-related investments and lower
investment gains in our consolidated AB Venture Capital Fund (90%
of which are offset in net income attributable to non-controlling
interests), partially offset by higher investment advisory fees.
Sequentially, net revenues increased $70
million, or 10%, mainly the result of higher gains on
deferred compensation-related investments, AB Venture Capital Fund
investments and seed money investments, partially offset by lower
Bernstein Research Services revenue and lower investment advisory
fees. Deferred compensation-related investments generated
$36 million of gains in the current
quarter as compared to $71 million of
gains in the third quarter of 2009 and $37
million of losses in the second quarter of 2010. Our AB
Venture Capital Fund had $2 million
of investment gains in the current quarter as compared to
$30 million of gains in the third
quarter of 2009 and $10 million of
losses in the second quarter of 2010. Bernstein Research Services
revenue declined 18% versus the second quarter of 2010 as a result
of lower equity market transaction volumes in both the U.S. and
Europe. Investment advisory fees
increased $20 million, or 4%, as
compared to the third quarter of 2009 and decreased $9 million, or 2%, as compared to the second
quarter of 2010.
Operating expenses were $700
million for the quarter, reflecting increases of 20% and 21%
compared to the third quarter of 2009 and the second quarter of
2010, respectively. Operating expenses increased from both
prior periods primarily due to the $90
million real estate charge. Excluding the real estate
charge, operating expenses would have increased 5% compared to both
comparable periods. Compensation and benefits expenses increased 2%
compared to the third quarter of 2009 primarily due to higher
incentive compensation and other employee-related costs.
Compensation and benefits expenses increased 10% sequentially due
to higher deferred compensation mark-to-market expenses, partially
offset by lower severance and recruitment costs. Promotion and
servicing expenses increased $13
million, or 11%, compared to the third quarter of 2009
mainly due to higher distribution plan payments commensurate with
increased distribution revenues. Sequentially, promotion and
servicing expenses decreased 2% mainly due to lower travel and
entertainment expenses, partially offset by higher distribution
plan payments. G&A expenses increased 6% and 1% compared to the
third quarter of 2009 and the second quarter of 2010,
respectively.
Income taxes decreased 78% and 77% compared to the third quarter
of 2009 and the second quarter of 2010, respectively, as a result
of lower earnings and a lower effective tax rate.
Financial Results: As Adjusted
Adjusted Net Revenues increased $3
million to $634 million compared to the third quarter of
2009 and decreased $16 million
sequentially. The increase compared to the third quarter of 2009 is
due primarily to higher investment advisory fees, partially offset
by lower Bernstein Research Services revenues. The sequential
decrease primarily is due to lower Bernstein Research Services
revenues and lower investment advisory fees, partially offset by
higher investment gains on seed money investments. Compared to the
third quarter of 2009, Adjusted Operating Income decreased by
$20 million, or 14%, to $122 million and Adjusted Operating Margin
decreased to 19.3% from 22.5%. Compared to the second quarter of
2010, Adjusted Operating Income declined 9% from $135 million and Adjusted Operating Margin
declined from 20.7%.
Adjusted Diluted Net Income per Unit for the publicly-traded
partnership decreased to $0.36 from
$0.48 in the third quarter of 2009
and decreased from $0.37
sequentially.
Unit Repurchase Program
During the third quarter, AllianceBernstein purchased
approximately two million Holding Units on the open-market to help
fund anticipated restricted Holding Unit-based incentive
compensation awards. On a year-to-date basis, AllianceBernstein has
purchased approximately five million Holding Units for $135 million. AllianceBernstein intends to
continue to engage in open market purchases of Holding Units, from
time to time, to help fund anticipated obligations under its
incentive compensation award program.
Third Quarter 2010 Earnings Conference Call
Information
Management will review third quarter 2010 financial and
operating results during a conference call beginning at
9:00 a.m. (EDT) on Thursday, October 28. 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.
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 16075215.
The presentation that will be reviewed during the conference
call will be available on AllianceBernstein's Investor Relations
website at approximately 8:00 a.m.
(EDT) on October 28, 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# 16075215.
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.
- The degree to which the $90
million real estate charge will reduce occupancy costs on
existing real estate in 2011 and subsequent years: The
charge we recorded this quarter and our estimates of reduced
occupancy costs in future years are based on our current
assumptions of when we can sub-lease our space and current market
rental rates, both of which are factors largely beyond our control.
If our assumptions prove to be incorrect, we may be forced to take
an additional charge and/or our estimated occupancy cost reductions
may be less than we currently anticipate.
- Our intention to continue to engage in 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
fluctuation in the price of a Holding Unit.
- Our initiatives continuing to progress:
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
continue forward with our initiatives.
Qualified Tax Notice
This announcement is intended to be a qualified notice under
Treasury Regulation Section 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 investors, individuals and private
clients in major world markets.
At September 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 63.0% economic interest in AllianceBernstein.
Additional information about AllianceBernstein may be found on
our internet site, www.alliancebernstein.com.
AllianceBernstein L.P. (The
Operating Partnership)
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SUMMARY CONSOLIDATED STATEMENTS
OF INCOME | September 30,
2010
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Three Months
Ended
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$ thousands,
unaudited
|
9/30/10
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9/30/09
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6/30/10
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Revenues:
|
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|
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Base fees
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$497,595
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$483,939
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$509,825
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Performance fees
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5,702
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|
159
|
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2,963
|
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Bernstein research
services
|
95,806
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|
109,321
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|
117,158
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Distribution revenues
|
85,378
|
|
73,779
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|
83,477
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Dividend and interest
income
|
5,040
|
|
4,966
|
|
4,911
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Investment gains
(losses)
|
41,388
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|
106,680
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(56,532)
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Other revenues
|
27,459
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|
27,946
|
|
27,735
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Total revenues
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758,368
|
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806,790
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|
689,537
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Less: Interest
expense
|
801
|
|
776
|
|
1,194
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Net revenues
|
757,567
|
|
806,014
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|
688,343
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Expenses:
|
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|
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Employee compensation &
benefits
|
343,530
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|
335,898
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|
313,113
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Promotion &
servicing
|
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Distribution-related payments
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72,501
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61,842
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|
71,015
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Amortization of
deferred sales commissions
|
11,780
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|
13,363
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|
12,147
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Other
|
46,427
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|
42,615
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|
49,816
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General &
administrative
|
130,422
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|
122,898
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|
128,795
|
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Real estate charge
|
89,598
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|
-
|
|
-
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Interest on
borrowings
|
469
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|
491
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|
430
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Amortization of intangible
assets
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5,360
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|
5,437
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|
5,378
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Total expenses
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700,087
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|
582,544
|
|
580,694
|
|
|
|
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Operating income
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57,480
|
|
223,470
|
|
107,649
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Non-operating (expense)
income
|
(13)
|
|
16,869
|
|
2,258
|
|
Income before income
taxes
|
57,467
|
|
240,339
|
|
109,907
|
|
Income taxes
|
3,033
|
|
13,844
|
|
13,127
|
|
Net income
|
54,434
|
|
226,495
|
|
96,780
|
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Net (income) loss of
consolidated entities attributable to non-controlling
interests
|
(2,919)
|
|
(27,154)
|
|
9,339
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Net Income Attributable to
AllianceBernstein Unitholders
|
$51,515
|
|
$199,341
|
|
$106,119
|
|
|
|
|
|
|
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Operating
margin(1)
|
7.2%
|
|
24.4%
|
|
17.0%
|
|
|
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|
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(1) Operating income
including net loss (income) attributable
to non-controlling interests as a percentage of net
revenues.
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AllianceBernstein Holding L.P.
(The Publicly-Traded Partnership)
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SUMMARY STATEMENTS OF
INCOME
|
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Three Months
Ended
|
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$ thousands except per Unit
amounts, unaudited
|
9/30/10
|
|
9/30/09
|
|
6/30/10
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Equity in Net Income
Attributable to AllianceBernstein Unitholders
|
$18,914
|
|
$68,723
|
|
$38,925
|
|
Income Taxes
|
6,699
|
|
6,193
|
|
7,153
|
|
Net Income
|
12,215
|
|
62,530
|
|
31,772
|
|
|
|
|
|
|
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|
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Additional Equity in Earnings of
Operating Partnership (1)
|
169
|
|
306
|
|
484
|
|
Net Income - Diluted
|
$12,384
|
|
$62,836
|
|
$32,256
|
|
Diluted Net Income per
Unit
|
$0.12
|
|
$0.67
|
|
$0.31
|
|
Distribution per
Unit
|
$0.12
|
|
$0.67
|
|
$0.31
|
|
|
|
|
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(1) To reflect higher ownership
in the Operating Partnership resulting from application of the
treasury stock method to outstanding options.
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AllianceBernstein L.P. and
AllianceBernstein Holding L.P.
|
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UNITS OUTSTANDING AND WEIGHTED
AVERAGE UNITS OUTSTANDING
|
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Weighted
Average Units
|
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Period
End
|
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Three Months
Ended 9/30/10
|
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Units
|
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Basic
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Diluted
|
|
AllianceBernstein
L.P.
|
275,609,529
|
|
275,609,529
|
|
277,053,971
|
|
AllianceBernstein Holding
L.P.
|
102,215,686
|
|
100,892,337
|
|
102,336,779
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AllianceBernstein
L.P.
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ASSETS UNDER MANAGEMENT |
September 30, 2010
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($ billions)
|
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|
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|
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|
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Ending and
Average
|
|
|
|
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Three Months
Ended
|
|
|
|
|
|
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|
9/30/10
|
|
9/30/09
|
|
6/30/10
|
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|
Ending Assets Under
Management
|
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|
|
|
$484.3
|
|
$497.8
|
|
$457.7
|
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Average Assets Under
Management
|
|
|
|
|
$472.7
|
|
$473.9
|
|
$481.7
|
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|
|
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|
|
|
|
|
|
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|
|
|
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|
|
|
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Three-Month Changes By
Distribution Channel
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
Private
Client
|
|
Total
|
|
|
Beginning of
Period
|
|
|
$270.6
|
|
$116.2
|
|
$70.9
|
|
$457.7
|
|
|
Sales/New accounts
|
|
|
4.2
|
|
7.3
|
|
1.6
|
|
13.1
|
|
|
Redemptions/Terminations
|
|
|
(14.1)
|
|
(8.9)
|
|
(1.3)
|
|
(24.3)
|
|
|
Net Cash Flows
|
|
|
(5.3)
|
|
(1.6)
|
|
(0.8)
|
|
(7.7)
|
|
|
Net Flows
|
|
|
(15.2)
|
|
(3.2)
|
|
(0.5)
|
|
(18.9)
|
|
|
Investment
Performance
|
|
|
27.6
|
|
12.6
|
|
5.3
|
|
45.5
|
|
|
End of Period
|
|
|
$283.0
|
|
$125.6
|
|
$75.7
|
|
$484.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Month Changes By
Investment Service
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
|
|
Growth
|
|
Fixed
Income
|
|
Other
|
(1)
|
Total
|
|
|
Beginning of
Period
|
$139.2
|
|
$74.5
|
|
$198.5
|
|
$45.5
|
|
$457.7
|
|
|
Sales/New accounts
|
2.8
|
|
0.8
|
|
9.0
|
|
0.5
|
|
13.1
|
|
|
Redemptions/Terminations
|
(8.1)
|
|
(6.9)
|
|
(8.0)
|
|
(1.3)
|
|
(24.3)
|
|
|
Net Cash Flows
|
(2.1)
|
|
(1.5)
|
|
(0.9)
|
|
(3.2)
|
|
(7.7)
|
|
|
Net Flows
|
(7.4)
|
|
(7.6)
|
|
0.1
|
|
(4.0)
|
|
(18.9)
|
|
|
Investment
Performance
|
19.7
|
|
10.3
|
|
10.8
|
|
4.7
|
|
45.5
|
|
|
End of Period(2)
|
$151.5
|
|
$77.2
|
|
$209.4
|
|
$46.2
|
|
$484.3
|
|
(1) Includes index,
structured, asset allocation services and other non-actively
managed AUM.
|
|
(2) Approximately $74
billion in Blend Strategies AUM are reported in their respective
services.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By Client
Domicile
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
Private
Client
|
|
Total
|
|
|
U.S. Clients
|
|
|
$149.8
|
|
$ 82.0
|
|
$73.8
|
|
$305.6
|
|
|
Non-U.S. Clients
|
|
|
133.2
|
|
43.6
|
|
1.9
|
|
178.7
|
|
|
Total
|
|
|
$283.0
|
|
$125.6
|
|
$75.7
|
|
$484.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AllianceBernstein
L.P.
|
|
RECONCILIATION OF GAAP FINANCIAL
RESULTS TO ADJUSTED FINANCIAL RESULTS
|
|
|
|
|
Three Months
Ended
|
|
|
$ thousands,
unaudited
|
9/30/10
|
|
6/30/10
|
|
3/31/10
|
|
12/31/09
|
|
9/30/09
|
|
6/30/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues, GAAP
basis
|
$ 757,567
|
|
$ 688,343
|
|
$ 725,086
|
|
$ 781,861
|
|
$ 806,014
|
|
$ 721,440
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
compensation-related investment (gains) losses
|
(36,013)
|
|
36,797
|
|
(11,159)
|
|
(14,763)
|
|
(70,873)
|
|
(63,110)
|
|
|
|
Deferred
compensation-related dividends and interest
|
(830)
|
|
(920)
|
|
(800)
|
|
(4,084)
|
|
(1,381)
|
|
(1,591)
|
|
|
|
90% of consolidated
venture capital fund investment (gains) losses
|
(2,056)
|
|
9,304
|
|
16,849
|
|
1,627
|
|
(27,155)
|
|
(417)
|
|
|
|
Distribution-related
payments
|
(72,501)
|
|
(71,015)
|
|
(66,750)
|
|
(69,400)
|
|
(61,842)
|
|
(55,149)
|
|
|
|
Amortization of deferred
sales commissions
|
(11,780)
|
|
(12,147)
|
|
(12,121)
|
|
(12,819)
|
|
(13,363)
|
|
(13,844)
|
|
|
Adjusted Net
Revenues
|
$ 634,387
|
|
$ 650,362
|
|
$ 651,105
|
|
$ 682,422
|
|
$ 631,400
|
|
$ 587,329
|
|
|
Operating Income, GAAP
basis
|
$ 57,480
|
|
$ 107,649
|
|
$ 139,982
|
|
$ 200,256
|
|
$ 223,470
|
|
$ 133,312
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
compensation-related investment (gains) losses
|
(36,013)
|
|
36,797
|
|
(11,159)
|
|
(14,763)
|
|
(70,873)
|
|
(63,110)
|
|
|
Deferred
compensation-related dividends and interest
|
(830)
|
|
(920)
|
|
(800)
|
|
(4,084)
|
|
(1,381)
|
|
(1,591)
|
|
|
|
Deferred
compensation-related mark-to-market vesting expense
(credit)
|
14,158
|
|
(19,082)
|
|
357
|
|
1,556
|
|
16,722
|
|
8,590
|
|
|
|
Deferred
compensation-related dividends and interest expense
|
731
|
|
810
|
|
682
|
|
3,760
|
|
1,240
|
|
1,431
|
|
|
|
Net impact of deferred
compensation-related investments
|
(21,954)
|
|
17,605
|
|
(10,920)
|
|
(13,531)
|
|
(54,292)
|
|
(54,680)
|
|
|
|
Real estate
charges
|
89,598
|
|
-
|
|
11,983
|
|
2,548
|
|
-
|
|
-
|
|
|
|
Total Exclusions:
|
67,644
|
|
17,605
|
|
1,063
|
|
(10,983)
|
|
(54,292)
|
|
(54,680)
|
|
|
|
Include:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (income) loss of
consolidated entities attributable to non-controlling
interests
|
(2,919)
|
|
9,339
|
|
16,773
|
|
733
|
|
(27,154)
|
|
(1,300)
|
|
|
Adjusted Operating
Income
|
$ 122,205
|
|
$ 134,593
|
|
$ 157,818
|
|
$ 190,006
|
|
$ 142,024
|
|
$ 77,332
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Margin, GAAP basis
incl. non-controlling interests
|
7.2%
|
|
17.0%
|
|
21.6%
|
|
25.7%
|
|
24.4%
|
|
18.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
Margin
|
19.3%
|
|
20.7%
|
|
24.2%
|
|
27.8%
|
|
22.5%
|
|
13.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AllianceBernstein Holding
L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP EPU TO
ADJUSTED EPU
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
$ thousands except per Unit
amounts, unaudited
|
9/30/10
|
|
6/30/10
|
|
3/31/10
|
|
12/31/09
|
|
9/30/09
|
|
6/30/09
|
|
|
Diluted Net Income, GAAP
basis
|
$ 12,384
|
|
$ 32,256
|
|
$ 47,858
|
|
$ 60,402
|
|
$ 62,836
|
|
$ 38,262
|
|
|
Impact of AllianceBernstein L.P.
non-GAAP adjustments
|
24,190
|
|
6,290
|
|
378
|
|
(3,746)
|
|
(18,230)
|
|
(18,304)
|
|
|
Adjusted Diluted Net
Income
|
$ 36,574
|
|
$ 38,546
|
|
$ 48,236
|
|
$ 56,656
|
|
$ 44,606
|
|
$ 19,958
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Net Income per Unit,
GAAP basis
|
$
0.12
|
|
$
0.31
|
|
$
0.46
|
|
$
0.62
|
|
$
0.67
|
|
$
0.41
|
|
|
Impact of AllianceBernstein L.P.
non-GAAP adjustments
|
0.24
|
|
0.06
|
|
0.01
|
|
(0.03)
|
|
(0.19)
|
|
(0.19)
|
|
|
Adjusted Diluted Net Income per
Unit
|
$
0.36
|
|
$
0.37
|
|
$
0.47
|
|
$
0.59
|
|
$
0.48
|
|
$
0.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AllianceBernstein
L.P.
|
|
|
|
|
RECONCILIATION OF GAAP FINANCIAL
RESULTS TO ADJUSTED FINANCIAL RESULTS
|
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
$ thousands,
unaudited
|
2010
|
|
2009
|
|
Net Revenues, GAAP
basis
|
$ 2,170,996
|
|
$ 2,125,018
|
|
Exclude:
|
|
|
|
|
Deferred
compensation-related investment (gains) losses
|
(10,375)
|
|
(105,738)
|
|
Deferred
compensation-related dividends and interest
|
(2,550)
|
|
(4,442)
|
|
90% of consolidated
venture capital fund investment losses (gains)
|
24,097
|
|
(22,257)
|
|
Distribution-related
payments
|
(210,265)
|
|
(164,802)
|
|
Amortization of deferred
sales commissions
|
(36,048)
|
|
(42,104)
|
|
Adjusted Net
Revenues
|
$ 1,935,855
|
|
$ 1,785,675
|
|
|
|
|
|
|
Operating Income, GAAP
basis
|
$
305,111
|
|
$
390,572
|
|
Exclude:
|
|
|
|
|
Deferred
compensation-related investment (gains) losses
|
(10,375)
|
|
(105,738)
|
|
Deferred
compensation-related dividends and interest
|
(2,550)
|
|
(4,442)
|
|
Deferred
compensation-related mark-to-market vesting (credit)
expense
|
(4,568)
|
|
(3,704)
|
|
Deferred
compensation-related dividends and interest expense
|
2,223
|
|
3,974
|
|
Net impact
of deferred compensation-related investments
|
(15,270)
|
|
(109,910)
|
|
Real estate
charges
|
101,582
|
|
5,728
|
|
Total
exclusions
|
86,312
|
|
(104,182)
|
|
Include:
|
|
|
|
|
Net loss (income) of
consolidated entities attributable to non-controlling
interests
|
23,193
|
|
(23,114)
|
|
Adjusted Operating
Income
|
$
414,616
|
|
$
263,276
|
|
Operating Margin, GAAP basis
incl. non-controlling interests
|
15.1%
|
|
17.3%
|
|
Adjusted Operating
Margin
|
21.4%
|
|
14.7%
|
|
|
|
|
|
|
|
|
|
|
AllianceBernstein Holding
L.P.
|
|
|
|
|
RECONCILIATION OF GAAP EPU TO
ADJUSTED EPU
|
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
$ thousands except per Unit
amounts, unaudited
|
2010
|
|
2009
|
|
|
|
|
|
|
Net Income - Diluted, GAAP
basis
|
$
92,461
|
|
$
107,672
|
|
Impact of AllianceBernstein L.P.
non-GAAP adjustments
|
30,793
|
|
(34,919)
|
|
Net Income - Diluted, as
adjusted
|
$
123,254
|
|
$
72,753
|
|
|
|
|
|
|
Diluted Net Income per Unit,
GAAP basis
|
$
0.90
|
|
$
1.17
|
|
Impact of AllianceBernstein L.P.
non-GAAP adjustments
|
0.30
|
|
(0.38)
|
|
Diluted Net Income per Unit, as
adjusted
|
$
1.20
|
|
$
0.79
|
|
|
|
|
|
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 offset
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
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 economically 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 fluctuate 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, 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 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 partner 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 partner 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 . 27 PR Newswire