NEW YORK, Oct. 26, 2011 /PRNewswire/ -- 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, 2011.
"The third quarter of 2011 was one of extreme volatility and
uncertainty in the global markets," said Peter S. Kraus, Chairman and Chief Executive
Officer. "The escalation of Europe's sovereign debt crisis, US debt
ceiling debate and resulting S&P downgrade of US Treasuries,
and further weakening in the US economy led to equity market
declines not seen since the financial crisis, and hit the corporate
and high yield fixed income markets hard as well. These
conditions sidelined many investors. During the quarter we
saw a decline in both gross sales and client redemptions."
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Financial Results
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3Q
2011
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2Q
2011
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3Q 2011
vs
2Q 2011
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3Q
2010
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3Q 2011
vs
3Q 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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$642
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$728
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(12%)
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$758
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(15%)
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Operating Income
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$78
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$116
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(33%)
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$58
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35%
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Operating Margin, excl.
non-controlling interests
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15.0%
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16.8%
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7.2%
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Adjusted
basis: (1)
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Net Revenues (2)
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$602
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$637
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(5%)
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$625
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(4%)
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Operating Income (3)
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$107
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$126
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(15%)
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$122
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(13%)
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Operating Margin
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17.7%
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19.7%
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19.5%
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AllianceBernstein Holding
L.P.
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GAAP Diluted Net Income per
Unit
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$0.26
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$0.34
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(24%)
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$0.12
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117%
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Distribution per Unit
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$0.26
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$0.34
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(24%)
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$0.12
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117%
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Adjusted Diluted Net Income per
Unit (1)
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$0.30
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$0.35
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(14%)
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$0.36
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(17%)
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(1) See pages 8-10 for
reconciliations of GAAP Financial Results to Adjusted Financial
Results.
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(2) Adjusted net revenues
exclude 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. They also exclude certain
revenues that are reimbursements of pass-through expenses
(primarily through our transfer agency).
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(3) Adjusted operating income
represents operating income on a GAAP basis excluding (1) 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) real estate changes, (3) insurance proceeds, and
(4) the net loss or income of consolidated entities attributable to
non-controlling interests.
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Kraus continued: "In this environment, equity portfolios
that are defensive and short-term in nature are performing well,
while high-conviction, long-duration core equity portfolios
continue to underperform. To best serve our clients, we're
sticking to our approach of maintaining the strict investment
discipline and core research beliefs that in the past have
delivered investment outperformance, while also offering them a
broader set of solutions-based strategies that meet their evolving
needs. During the third quarter, some of our newer product
offerings outperformed their peers, including equity-income, market
neutral, long-short equities and enhanced alpha fixed income.
And Dynamic Asset Allocation – a strategy we introduced last
year just for markets like the one we're in today – accomplished
exactly what it was designed to do, mitigating risk without
sacrificing returns. Looking forward, while our challenges
are likely to continue through the rest of this year, I am
confident that our diversified business model, strong client
relationships and financial viability will endure, and
AllianceBernstein will emerge a stronger, well-positioned firm as a
result."
The firm's cash distribution per unit is payable on November 23, 2011, to holders of record of
AllianceBernstein Holding Units at the close of business on
November 7, 2011.
Market Performance
The global markets were extremely volatile during the third
quarter of 2011, particularly in August and September. The
S&P 500 declined by 13.9% in the third quarter, and the MSCI
World by 16.6%, in each case the worst quarterly performance since
2008.
Assets Under Management ($ Billions)
Total assets under management as of September 30, 2011 were $402.0 billion, down 12.8% from June 30, 2011, and down $75.5 billion, or 15.8%, compared to September 30, 2010.
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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
9/30/11
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$224.1
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$109.8
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$68.1
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$402.0
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Net Flows for Three Months Ended
9/30/11
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($9.0)
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($4.4)
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($2.0)
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($15.4)
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Net outflows in the Institutions channel were $9.0 billion, compared to net outflows of
$14.9 billion in the second quarter
of 2011. Institutions gross sales declined 39% sequentially
from $3.7 billion to $2.3 billion during the third quarter of 2011.
The pipeline of awarded but unfunded institutional mandates
increased $0.8 billion to
$7.0 billion at September 30, 2011, the result of new mandates
won across diverse strategies during the quarter. The Retail
channel experienced net outflows of $4.4
billion, compared to net outflows of $2.0 billion in the second quarter. Retail
gross sales decreased 14% sequentially from $8.5 billion to $7.3
billion during the third quarter. In the Private
Client channel, net outflows moderated to $2.0 billion from the prior quarter's
$2.6 billion. Private Client gross
sales increased sequentially from $1.5
billion to $1.7 billion during
the third quarter.
Financial Results: GAAP
Net revenues of $642 million
declined 15% compared to the third quarter of 2010. The most
significant drivers of the decline were current quarter losses
compared to prior-year quarter gains on deferred compensation and
seed money investments, as well as lower base advisory and
performance fees, partially offset by higher Bernstein Research
Services and distribution revenues. Sequentially, net
revenues decreased 12% from the second quarter of 2011. The
most significant drivers of the decline were higher losses on
deferred compensation and seed money investments and lower base
advisory and performance fees, partially offset by higher Bernstein
Research Services revenues. Bernstein Research Services
revenues rose 23% from the third quarter of 2010 and 10% from the
second quarter of 2011, as transaction volumes spiked in mid-August
before returning to seasonal lows.
Operating expenses were $564
million for the quarter, a year-over-year decline of 19%.
In the prior-year quarter, the Company recorded an
$89 million real estate charge
associated with a reduction in occupancy, compared with a
$7 million charge in the current
quarter associated with consolidating our office space in
London. In addition,
deferred and other compensation expenses declined year-over-year.
Operating expenses decreased 8% sequentially, the result of
lower compensation expense, as well as lower promotion and
servicing and G&A expenses excluding the real estate charge.
Promotion and servicing expenses increased 5% compared to the
third quarter of 2010, due mainly to higher distribution plan
payments, commensurate with increased distribution revenues, and
higher trade execution and clearance expenses on higher client
activity. Sequentially, promotion and servicing expenses
declined 7%, resulting from lower travel and entertainment
expenses, as well as lower distribution plan payments.
G&A expenses, excluding the real estate charge, decreased
1% year-over-year and 2% sequentially.
Operating income for the third quarter of 2011 increased 35% to
$78 million compared to the third
quarter of 2010, and the operating margin more than doubled, to
15.0% from 7.2%, primarily due to the size of the prior-year
quarter real estate charge. Sequentially, operating income
declined 33% from $116 million and
the operating margin decreased from 16.8%, due largely to higher
losses on deferred compensation investments. Diluted net
income per Unit and the cash distribution per Unit for the
publicly-traded partnership each more than doubled compared to the
third quarter of 2010, to $0.26 from
$0.12, due to the size of the
prior-year quarter real estate charge, and declined 24%
sequentially.
Financial Results: As Adjusted
Adjusted net revenues of $602
million were down $23 million
compared to the third quarter of 2010 and down $35 million sequentially. The decrease from
the third quarter of 2010 was due to lower base advisory fees on a
lower asset base, as well as lower performance fees. The
sequential decrease was also driven by these factors.
Adjusted operating income decreased $15
million, or 13%, from the third quarter of 2010, to
$107 million, and the adjusted
operating margin decreased to 17.7% from 19.5%. Compared to
the second quarter of 2011, adjusted operating income decreased 15%
from $126 million and the adjusted
operating margin decreased from 19.7%. For both periods, the
declines in operating income and margin were primarily due to lower
revenues. Adjusted diluted net income per Unit for the
publicly-traded partnership decreased to $0.30 from $0.36 in
the third quarter of 2010 and decreased from $0.35 sequentially.
Unit Repurchases
We engage in open-market purchases of Holding Units to help fund
anticipated obligations under our incentive compensation award
program and purchase Holding Units from employees to allow them to
fulfill statutory tax withholding requirements at the time of
distribution of long-term incentive compensation awards.
During the third quarter of 2011, we purchased on the open
market approximately 3 million Holding Units for $45.2 million. We intend to continue to
engage in open-market purchases of Holding Units to help fund
anticipated obligations under our incentive compensation award
program.
Third Quarter 2011 Earnings Conference Call
Information
Management will review third quarter 2011 financial and
operating results during a conference call beginning at
8:00 a.m. (ET) on Wednesday,
October 26, 2011. The conference call will be hosted by
Peter S. Kraus, Chairman and Chief
Executive Officer, David A. Steyn,
Chief Operating Officer, and Edward J.
Farrell, Interim Chief Financial Officer and Controller.
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 14802216.
The presentation that will be reviewed during the conference
call will be available on AllianceBernstein's Investor Relations
website shortly after the release of third quarter 2011
financial and operating results on October 26, 2011.
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
(855) 859-2056 from the U.S., or outside the U.S. call
(404) 537-3406, and provide the conference ID #: 14802216.
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, 2010 and subsequent Forms 10-Q.
Any or all of the forward-looking statements made in this
news release, Form 10-K, Forms 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:
- Our confidence that, while our challenges are likely to
continue for the remainder of 2011, our diversified business model,
our strong client relationships and our financial viability will
endure, and that we will emerge a stronger, well-positioned firm as
a result: 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 adversely affect
our results of operations. The actual performance of the
capital markets and other factors beyond our control will affect
our investment success for clients and asset flows.
Furthermore, improved flows depend on a number of factors,
including our ability to deliver consistent, competitive investment
performance, which cannot be assured, conditions of financial
markets, consultant recommendations, and changes in our clients'
investment preferences, risk tolerances and liquidity needs.
- 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 intention to continue to engage in open market
purchases of Holding Units 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.
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 investors, individuals and private
clients in major world markets.
At September 30, 2011,
AllianceBernstein Holding L.P. owned approximately 37.8% of
the issued and outstanding AllianceBernstein Units and AXA, one of
the largest global financial services organizations, owned an
approximate 63.1% 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,
2011
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Three Months
Ended
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$ thousands,
unaudited
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9/30/11
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6/30/11
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9/30/10
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Revenues:
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Base fees
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$469,517
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$504,566
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$497,595
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Performance fees
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611
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3,757
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5,702
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Bernstein research
services
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118,134
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107,609
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95,806
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Distribution revenues
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87,913
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92,272
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85,378
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Dividend and interest
income
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4,958
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4,926
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5,040
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Investment gains
(losses)
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(66,286)
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(13,596)
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41,388
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Other revenues
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27,204
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29,108
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27,459
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Total revenues
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642,051
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728,642
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758,368
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Less: Interest
expense
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522
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648
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801
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Net revenues
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641,529
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727,994
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757,567
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Expenses:
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Employee compensation &
benefits
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283,731
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326,867
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343,530
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Promotion &
servicing
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Distribution-related payments
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76,323
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78,557
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72,501
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Amortization of
deferred sales commissions
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9,186
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9,871
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11,780
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Other
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52,316
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59,319
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46,427
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General &
administrative
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General &
administrative
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129,299
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131,821
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130,422
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Real estate
charge
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6,905
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18
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89,598
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Interest on
borrowings
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610
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619
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469
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Amortization of intangible
assets
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5,443
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|
5,296
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5,360
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Total expenses
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563,813
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612,368
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700,087
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Operating income
|
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77,716
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115,626
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57,480
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Non-operating
(expense)
|
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-
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-
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(13)
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Income before income
taxes
|
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|
77,716
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|
115,626
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|
57,467
|
|
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Income taxes
|
|
|
5,180
|
|
8,243
|
|
3,033
|
|
|
Net income
|
|
|
72,536
|
|
107,383
|
|
54,434
|
|
|
Net loss (income) of
consolidated entities attributable to non-controlling
interests
|
|
18,445
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|
6,756
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|
(2,919)
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Net Income Attributable to
AllianceBernstein Unitholders
|
|
$90,981
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|
$114,139
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|
$51,515
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|
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Operating
margin(1)
|
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15.0%
|
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16.8%
|
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7.2%
|
|
|
|
|
|
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|
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(1) Operating income excluding
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
|
|
|
$ thousands except per Unit
amounts, unaudited
|
|
|
9/30/11
|
|
6/30/11
|
|
9/30/10
|
|
|
Equity in Net Income
Attributable to AllianceBernstein Unitholders
|
|
$34,074
|
|
$42,745
|
|
$18,914
|
|
|
Income Taxes
|
|
|
7,071
|
|
7,233
|
|
6,699
|
|
|
Net Income
|
|
|
27,003
|
|
35,512
|
|
12,215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Equity in Earnings of
Operating Partnership (1)
|
|
-
|
|
141
|
|
169
|
|
|
Net Income - Diluted
|
|
|
$27,003
|
|
$35,653
|
|
$12,384
|
|
|
Diluted Net Income per
Unit
|
|
|
$0.26
|
|
$0.34
|
|
$0.12
|
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|
Distribution per
Unit
|
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$0.26
|
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$0.34
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|
$0.12
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|
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(1) To reflect higher ownership
in the Operating Partnership resulting from application of the
treasury stock method to outstanding options.
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AllianceBernstein L.P. and
AllianceBernstein Holding L.P.
|
|
|
|
|
|
UNITS OUTSTANDING AND WEIGHTED
AVERAGE UNITS OUTSTANDING
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
Average Units
|
|
|
|
|
Period
End
|
|
Three Months
Ended 9/30/11
|
|
|
|
|
Units
|
|
Basic
|
|
Diluted
|
|
|
AllianceBernstein
L.P.
|
277,995,650
|
|
278,010,441
|
|
278,010,441
|
|
|
AllianceBernstein Holding
L.P.
|
105,173,342
|
|
103,156,232
|
|
103,156,232
|
|
|
|
|
|
|
|
|
|
AllianceBernstein
L.P.
|
|
|
|
|
|
|
|
|
|
|
ASSETS UNDER MANAGEMENT |
Sept 30, 2011
|
|
|
|
|
|
|
|
|
|
|
($ billions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending and
Average
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
|
|
|
9/30/2011
|
|
9/30/2010
|
|
|
Ending Assets Under
Management
|
|
|
|
|
|
|
$402.0
|
|
$477.5
|
|
|
Average Assets Under
Management
|
|
|
|
|
|
|
$437.9
|
|
$463.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Month Changes By
Distribution Channel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
Private
Client
|
|
Total
|
|
|
Beginning of
Period
|
|
|
$254.5
|
|
$129.4
|
|
$77.1
|
|
$461.0
|
|
|
Sales/New accounts
|
|
|
2.3
|
|
7.3
|
|
1.7
|
|
11.3
|
|
|
Redemptions/Terminations
|
|
|
(10.5)
|
|
(9.4)
|
|
(3.1)
|
|
(23.0)
|
|
|
Net Cash Flows
|
|
|
(0.8)
|
|
(2.3)
|
|
(0.6)
|
|
(3.7)
|
|
|
Net Flows
|
|
|
(9.0)
|
|
(4.4)
|
|
(2.0)
|
|
(15.4)
|
|
|
Transfers
|
|
|
0.1
|
|
-
|
|
(0.1)
|
|
-
|
|
|
Investment
Performance
|
|
|
(21.5)
|
|
(15.2)
|
|
(6.9)
|
|
(43.6)
|
|
|
End of Period
|
|
|
$224.1
|
|
$109.8
|
|
$68.1
|
|
$402.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Month Changes By
Investment Service
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
|
|
Growth
|
|
Fixed
Income
|
|
Other (2)
|
|
Total
|
|
|
Beginning of
Period
|
$121.4
|
|
$62.6
|
|
$215.8
|
|
$61.2
|
|
$461.0
|
|
|
Sales/New accounts
|
1.3
|
|
1.0
|
|
6.8
|
|
2.2
|
|
11.3
|
|
|
Redemptions/Terminations
|
(9.2)
|
|
(5.8)
|
|
(7.6)
|
|
(0.4)
|
|
(23.0)
|
|
|
Net Cash Flows
|
(2.6)
|
|
(1.8)
|
|
0.2
|
|
0.5
|
|
(3.7)
|
|
|
Net Flows
|
(10.5)
|
|
(6.6)
|
|
(0.6)
|
|
2.3
|
|
(15.4)
|
|
|
Investment
Performance
|
(23.9)
|
|
(11.2)
|
|
(1.7)
|
|
(6.8)
|
|
(43.6)
|
|
|
End of Period(1)
|
$87.0
|
|
$44.8
|
|
$213.5
|
|
$56.7
|
|
$402.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Approximately $46 billion in
Blend Strategies AUM are reported in their respective
services.
|
|
|
(2) Includes index, structured,
asset allocation services and certain other alternative
investments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By Client
Domicile
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
Private
Client
|
|
Total
|
|
|
U.S. Clients
|
|
|
$123.6
|
|
$ 70.0
|
|
$66.6
|
|
$260.2
|
|
|
Non-U.S. Clients
|
|
|
100.5
|
|
39.8
|
|
1.5
|
|
141.8
|
|
|
Total
|
|
|
$224.1
|
|
$109.8
|
|
$68.1
|
|
$402.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AllianceBernstein
L.P.
|
|
RECONCILIATION OF GAAP FINANCIAL
RESULTS TO ADJUSTED FINANCIAL RESULTS
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
$ thousands,
unaudited
|
|
|
9/30/11
|
|
6/30/11
|
|
3/31/11
|
|
12/31/10
|
|
9/30/10
|
|
6/30/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues, GAAP
basis
|
|
|
$ 641,529
|
|
$ 727,994
|
|
$ 755,390
|
|
$ 777,561
|
|
$ 757,567
|
|
$ 688,343
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
compensation-related investment losses (gains)
|
|
37,840
|
|
1,588
|
|
(9,740)
|
|
(16,677)
|
|
(36,013)
|
|
36,797
|
|
|
|
Deferred
compensation-related dividends and interest
|
|
(982)
|
|
(524)
|
|
(632)
|
|
(3,963)
|
|
(830)
|
|
(920)
|
|
|
|
90% of consolidated
venture capital fund investment losses (gains)
|
18,306
|
|
6,302
|
|
8,054
|
|
(7,570)
|
|
(2,056)
|
|
9,304
|
|
|
|
Distribution-related
payments
|
|
|
(76,323)
|
|
(78,557)
|
|
(74,756)
|
|
(76,411)
|
|
(72,501)
|
|
(71,015)
|
|
|
|
Amortization of deferred
sales commissions
|
|
|
(9,186)
|
|
(9,871)
|
|
(10,326)
|
|
(11,349)
|
|
(11,780)
|
|
(12,147)
|
|
|
|
Pass-through fees &
expenses
|
|
|
(8,894)
|
|
(9,987)
|
|
(8,624)
|
|
(9,762)
|
|
(8,933)
|
|
(7,274)
|
|
|
Adjusted Net
Revenues
|
$ 602,290
|
|
$ 636,945
|
|
$ 659,366
|
|
$ 651,829
|
|
$ 625,454
|
|
$ 643,088
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income, GAAP
basis
|
|
|
$ 77,716
|
|
$ 115,626
|
|
$ 138,435
|
|
$ 153,751
|
|
$ 57,480
|
|
$ 107,649
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
compensation-related investment losses (gains)
|
|
37,840
|
|
1,588
|
|
(9,740)
|
|
(16,677)
|
|
(36,013)
|
|
36,797
|
|
|
Deferred
compensation-related dividends and interest
|
|
(982)
|
|
(524)
|
|
(632)
|
|
(3,963)
|
|
(830)
|
|
(920)
|
|
|
|
Deferred
compensation-related mark-to-market vesting (credit)
expense
|
(24,302)
|
|
908
|
|
6,894
|
|
7,358
|
|
14,158
|
|
(19,082)
|
|
|
|
Deferred
compensation-related dividends and interest expense
|
|
1,572
|
|
1,196
|
|
1,480
|
|
6,317
|
|
731
|
|
810
|
|
|
|
Net impact
of deferred compensation-related investments
|
|
14,128
|
|
3,168
|
|
(1,998)
|
|
(6,965)
|
|
(21,954)
|
|
17,605
|
|
|
|
Real estate
charges
|
|
|
6,905
|
|
18
|
|
18
|
|
116
|
|
89,598
|
|
-
|
|
|
|
Insurance
proceeds
|
|
|
(10,691)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
Non-GAAP
adjustments - subtotal
|
|
10,342
|
|
3,186
|
|
(1,980)
|
|
(6,849)
|
|
67,644
|
|
17,605
|
|
|
|
Net loss (income) of
consolidated entities attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
non-controlling
interests
|
18,445
|
|
6,756
|
|
8,046
|
|
(7,873)
|
|
(2,919)
|
|
9,339
|
|
|
Adjusted Operating
Income
|
|
|
$ 106,503
|
|
$ 125,568
|
|
$ 144,501
|
|
$ 139,029
|
|
$ 122,205
|
|
$ 134,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Margin, GAAP basis
excl. non-controlling interests
|
|
15.0%
|
|
16.8%
|
|
19.4%
|
|
18.8%
|
|
7.2%
|
|
17.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
Margin
|
|
|
17.7%
|
|
19.7%
|
|
21.9%
|
|
21.3%
|
|
19.5%
|
|
20.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AllianceBernstein Holding
L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP EPU TO
ADJUSTED EPU
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
$ thousands except per Unit
amounts, unaudited
|
|
|
9/30/11
|
|
6/30/11
|
|
3/31/11
|
|
12/31/10
|
|
9/30/10
|
|
6/30/10
|
|
|
Diluted Net Income, GAAP
basis
|
|
|
$ 27,003
|
|
$ 35,653
|
|
$ 43,923
|
|
$ 43,289
|
|
$ 12,384
|
|
$ 32,256
|
|
|
Impact of AllianceBernstein L.P.
non-GAAP adjustments
|
|
3,773
|
|
1,162
|
|
(722)
|
|
(2,451)
|
|
24,190
|
|
6,290
|
|
|
Adjusted Diluted Net
Income
|
|
|
$ 30,776
|
|
$ 36,815
|
|
$ 43,201
|
|
$ 40,838
|
|
$ 36,574
|
|
$ 38,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Net Income per Unit,
GAAP basis
|
|
|
$
0.26
|
|
$
0.34
|
|
$
0.42
|
|
$
0.42
|
|
$
0.12
|
|
$
0.31
|
|
|
Impact of AllianceBernstein L.P.
non-GAAP adjustments
|
|
0.04
|
|
0.01
|
|
(0.01)
|
|
(0.02)
|
|
0.24
|
|
0.06
|
|
|
Adjusted Diluted Net Income per
Unit
|
|
|
$
0.30
|
|
$
0.35
|
|
$
0.41
|
|
$
0.40
|
|
$
0.36
|
|
$
0.37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AllianceBernstein L.P.
Notes to Condensed Consolidated Statements of Income and
Supplemental Information
(Unaudited)
Adjusted Net Revenues
Adjusted net revenues exclude 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, essentially offset
distribution revenues earned by the company. Beginning in the
first quarter of 2011, we also exclude additional pass-through
expenses we incur (primarily through our transfer agency) that are
reimbursed and recorded as fees in revenues. These fees have
no impact on operating income but they do have an impact on our
operating margin. As such, we exclude these fees from
adjusted net revenues.
Adjusted Operating Income
Adjusted operating income represents operating income on a GAAP
basis excluding (1) 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) real estate charges, (3)
insurance proceeds, and (4) 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 they are not
considered part of our core operating results when comparing
financial results from period to period and to industry peers.
(3) In the third quarter of 2011, we received significant
insurance proceeds from the settlement of a derivative claim that
are not considered part of our core operating results.
(4) 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 Holding L.P.