NEW YORK, July 28, 2016 /PRNewswire/
-- AllianceBernstein L.P. ("AB") and AllianceBernstein Holding
L.P. ("AB Holding") (NYSE: AB) today reported financial and
operating results for the quarter ended June
30, 2016.
"In another volatile quarter characterized by social and
political unrest, uncertainty about economic growth and interest
rates, and the steady march of assets from active to passive
strategies, we were pleased to attract $3.5
billion in net inflows - up 59% both sequentially and
year-on-year - with positive flows across all three of our client
channels," said Peter S. Kraus,
Chairman and Chief Executive Officer. "Year-to-date, our
inflows total $5.7 billion, with
contributions from every channel."
(US $ Thousands
except per Unit amounts)
|
2Q
2016
|
|
2Q
2015
|
|
2Q 2016 vs
2Q 2015 %
Change
|
|
1Q
2016
|
|
2Q 2016 vs
1Q 2016 %
Change
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Financial
Measures
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
$
|
725,806
|
|
|
$
|
792,737
|
|
|
(8.4)%
|
|
769,126
|
|
|
(5.6%)
|
Operating
income
|
$
|
142,575
|
|
|
$
|
164,922
|
|
|
(13.6)%
|
|
173,042
|
|
|
(17.6%)
|
Operating
margin
|
19.0
|
%
|
|
20.0
|
%
|
|
|
|
23.2
|
%
|
|
|
AB Holding Diluted
EPU
|
$
|
0.41
|
|
|
$
|
0.48
|
|
|
(14.6)%
|
|
$
|
0.56
|
|
|
(26.8%)
|
|
|
|
|
|
|
|
|
|
|
Adjusted Financial
Measures (1)
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
$
|
603,899
|
|
|
$
|
657,360
|
|
|
(8.1)%
|
|
590,066
|
|
|
2.3%
|
Operating
income
|
$
|
134,816
|
|
|
$
|
158,252
|
|
|
(14.8)%
|
|
132,066
|
|
|
2.1%
|
Operating
margin
|
22.3
|
%
|
|
24.1
|
%
|
|
|
|
22.4
|
%
|
|
|
AB Holding Diluted
EPU
|
$
|
0.40
|
|
|
$
|
0.48
|
|
|
(16.7)%
|
|
$
|
0.40
|
|
|
—%
|
AB Holding cash
distribution per Unit
|
$
|
0.40
|
|
|
$
|
0.48
|
|
|
(16.7)%
|
|
$
|
0.40
|
|
|
—%
|
|
|
|
|
|
|
|
|
|
|
(US $
Billions)
|
|
|
|
|
|
|
|
|
|
Assets Under
Management
|
|
|
|
|
|
|
|
|
|
Ending AUM
|
489.5
|
|
|
485.1
|
|
|
0.9%
|
|
479.0
|
|
|
2.2%
|
Average
AUM
|
484.5
|
|
|
492.6
|
|
|
(1.6%)
|
|
465.4
|
|
|
4.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The adjusted
financial measures are all non-GAAP financial measures. See page 11
for reconciliations of GAAP Financial Results to
Adjusted Financial Results and pages 12-13 for notes describing the
adjustments.
|
Kraus continued: "We're focused over the long-term on providing
our clients with a diverse set of relevant services designed to
deliver for them in any environment, and each quarter we make
further progress. In fixed income, 89% of our assets were in
outperforming services for the 3-year period through June, and in
equities, we were at 57%. The strong performance we're delivering
in the services where our clients want to be is resonating with
them. In Fixed Income, net flows to our high income services from
Asian and US retail investors rebounded in the quarter. In
Asia ex-Japan, combined sales of our flagship American
Income and Global High Yield portfolios of $3.6 billion increased 177% sequentially and
doubled year-on-year. In US retail, our High Income and Global Bond
funds ranked #2 in their respective Morningstar categories by net
flows for the quarter, and High Income Muni ranked #5. In Equities,
the seasoning of our newer offerings, investment teams and
strategic acquisitions is translating into greater client
engagement and increased sales momentum in a challenged environment
for active equities. Net flows are positive year-to-date across a
diverse array of services, including US Large Cap Growth, Strategic
Core Equities, Concentrated Growth and International SMID Growth
and Value. We're attracting net new assets from private clients as
well. Our $5.5 billion in
year-to-date Private Wealth gross sales represent our highest first
half since 2008, and outflows remain at historic lows. Clients are
not only confident in our wealth forecasting, asset allocation and
risk management tools, they continue to embrace our new targeted
service offerings as well. During the second quarter we introduced
Global Research Insights, a global version of our European
Opportunities concentrated equity portfolio, and take-up has been
strong so far at about $185 million
to-date. And our sell side business continues to take market share
in a difficult environment, delivering industry-leading research
and trading capabilities to institutional clients around the world.
Finally, we again exercised strict expense control across our
business during the quarter, reducing total adjusted expenses by
$30 million, or 6%,
year-on-year."
Kraus concluded: "These are uncertain times for everyone, but we
remain confident that our strategy of running our business in a
client-focused, efficient and forward-looking way is the right one.
Clients can be certain that we are relentlessly focused on
delivering better outcomes; and unitholders can be confident in our
commitment to improving our financial and competitive
position."
The firm's cash distribution per unit of $0.40 is payable on August
25, 2016, to holders of record of AB Holding Units at the
close of business on August 8,
2016.
Market Performance
US and global equity markets were mixed in the second quarter,
while US and global fixed income markets were higher. The S&P
500's total return was 2.5% in the second quarter, while the MSCI
EAFE Index's total return was (1.2)%. The Barclays US Aggregate
Index returned 2.2% during the second quarter and the Barclays
Global Aggregate ex US Index's total return was 3.4%.
Assets Under Management ($ Billions)
Total assets under management as of June
30, 2016 were $489.5 billion,
up $10.5 billion, or 2.2%, from
March 31, 2016, and up $4.4 billion, or 0.9%, from June 30, 2015.
|
Institutions
|
|
Retail
|
|
Private Wealth
Management
|
|
Total
|
Assets Under
Management 6/30/16
|
$248.8
|
|
$161.4
|
|
$79.3
|
|
$489.5
|
Net Flows for Three
Months Ended 6/30/16
|
$1.0
|
|
$2.3
|
|
$0.2
|
|
$3.5
|
Total net inflows were $3.5
billion, compared to net inflows of $2.2 billion for both comparable prior
periods.
Net inflows to the Institutions channel were $1.0 billion, compared to net inflows of
$1.8 billion in the first quarter of
2016. Institutions gross sales of $5.2
billion increased 16% from $4.5
billion in the prior quarter. The pipeline of awarded but
unfunded Institutional mandates was flat sequentially at
$6.1 billion as of June 30, 2016.
The Retail channel experienced second quarter 2016 net inflows
of $2.3 billion, compared to
$0.6 billion of net outflows in the
prior quarter. Retail gross sales of $10.8
billion increased 40% from the first quarter's $7.7 billion.
In the Private Wealth channel, net inflows of $0.2 billion compared to net inflows of
$1.0 billion in the prior quarter.
Private Wealth gross sales of $2.4
billion decreased 25% from the prior quarter's $3.2 billion.
Second Quarter Financial Results
We are presenting both earnings information derived in
accordance with accounting principles generally accepted in
the United States of America ("US
GAAP") and non-GAAP, adjusted earnings information in this release.
Management principally uses these non-GAAP financial measures in
evaluating performance because they present a clearer picture of
our operating performance, and allow management to see long-term
trends without the distortion caused by long-term incentive
compensation-related mark-to-market adjustments, real estate
consolidation charges/credits and other adjustment items.
Similarly, we believe that this non-GAAP earnings information helps
investors better understand the underlying trends in our results
and, accordingly, provides a valuable perspective for investors.
Please note, however, that these non-GAAP measures are provided in
addition to, and not as substitutes for, any measures derived in
accordance with US GAAP and they may not be comparable to non-GAAP
measures presented by other companies. Management uses both US GAAP
and non-GAAP measures in evaluating our financial performance. The
non-GAAP measures alone may pose limitations because they do not
include all of our revenues and expenses.
AB Holding is required to distribute all of its Available Cash
Flow, as defined in the AB Holding Partnership Agreement, to its
Unitholders (including the General Partner). Since the third
quarter of 2012, Available Cash Flow has been the adjusted diluted
net income per unit for the quarter multiplied by the number of
units outstanding at the end of the quarter. Management anticipates
that Available Cash Flow will continue to be based on adjusted
diluted net income per unit, unless management determines with
concurrence of the Board of Directors that one or more of the
non-GAAP adjustments that are made for adjusted net income should
not be made with respect to the Available Cash Flow
calculation.
US GAAP Earnings
Net revenues of $726 million
decreased 8% compared to the second quarter of 2015 largely due to
lower investment advisory fees, distribution revenues, investment
gains and Bernstein Research revenues. Sequentially, net revenues
decreased 6% due to lower investment gains and Bernstein Research
revenues, partly offset by higher investment advisory fees and
distribution revenues. Bernstein Research revenues declined 6%
year-over-year as a result of a slowdown in client activity and
lower market levels in Asia and
unfavorable foreign exchange translation effects in Europe and 9% sequentially as a result of a
slowdown in client activity in the US and Asia.
Operating expenses were $583
million for the second quarter of 2016, down 7%
year-over-year, due to lower total compensation and benefits,
promotion and servicing and general and administrative ("G&A")
expenses. Within employee compensation and benefits expenses,
incentive compensation, commissions, fringes and base compensation
all decreased. Promotion and servicing expenses decreased from the
prior-year period due to lower distribution-related payments,
travel and entertainment, marketing expenses and amortization of
deferred sales commissions. Within G&A, the decrease was
primarily due to lower occupancy expense, partly offset by less
favorable foreign exchange. During the second quarter of 2016, we
recorded a $2.8 million non-cash real
estate credit as part of our ongoing global real estate
consolidation plan.
On a sequential basis, operating expenses were down 2% as a
result of lower G&A expenses, partly offset by higher promotion
and servicing and employee compensation and benefits expenses. The
decline in G&A was driven by lower occupancy and other
expenses, partly offset by higher professional fees. The increase
in promotion and servicing was primarily attributed to higher
distribution related payments and marketing expenses. Employee
compensation and benefits expenses increased due to higher
incentive compensation, partly offset by lower base compensation
and fringes. Our $2.8 million
non-cash real estate credit in the current quarter compares to a
$27.6 million non-cash real estate
charge we recorded in the first quarter of 2016.
Operating income of $143 million
for the second quarter of 2016 decreased 13% from $165 million for the second quarter of 2015 and
17% from $173 million in the first
quarter of 2016.
Diluted net income per Unit for the second quarter of 2016 was
$0.41 compared to $0.48 in the second quarter of 2015 and
$0.56 in the first quarter of
2016.
Non-GAAP Earnings
This section discusses our second quarter 2016 non-GAAP
financial results, as compared to the second quarter of 2015 and
the first quarter of 2016. The phrases "adjusted net revenues",
"adjusted operating expenses", "adjusted operating income",
"adjusted operating margin" and "adjusted diluted net income per
Unit" are used in the following earnings discussion to identify
non-GAAP information.
Adjusted net revenues of $604
million were down 8% compared to the second quarter of 2015,
due to lower investment advisory fees, Bernstein Research revenues,
investment losses in the current quarter compared to investment
gains in the prior year period and higher net distribution
expenses. Sequentially, adjusted net revenues were up 2%, driven by
higher base fees on higher average AUM, partly offset by lower
Bernstein Research revenues and the current quarter's investment
losses.
Adjusted operating expenses were $469
million for the second quarter, down 6% from the prior-year
period, with lower total employee compensation and benefits and
promotion and servicing expenses, partly offset by higher G&A
expenses. Within compensation and benefits, incentive compensation,
commissions, fringes and base compensation were all lower versus
the prior-year period. Within promotion and servicing expenses, the
decrease was due to lower travel and entertainment and marketing
expenses. Within G&A, the increase was primarily due to higher
portfolio servicing fees and less favorable foreign exchange
translation.
Sequentially, adjusted operating expenses were up 2%, driven by
higher total compensation and benefits, G&A and promotion and
servicing expenses. The sequential increase in total compensation
and benefits expenses was driven by higher incentive compensation,
partly offset by lower base compensation and fringes. Within
G&A, the increase was driven by higher professional fees and
less favorable foreign exchange translation. The sequential
increase in promotion and servicing expenses reflects higher
seasonal marketing costs related to client conferences.
Adjusted operating income of $135
million decreased 15% from $158
million for the second quarter of 2015, and the adjusted
operating margin decreased to 22.3% from 24.1%. On a sequential
basis, adjusted operating income increased 2% from $132 million, and the adjusted operating margin
decreased 10 basis points from 22.4%.
Adjusted diluted net income per Unit was $0.40 down from $0.48 in the second quarter of 2015 and flat with
the first quarter of 2016.
Headcount
As of June 30, 2016, we had 3,466
employees, compared to 3,565 employees as of June 30, 2015 and 3,450 employees as of
March 31, 2016.
Unit Repurchases
During the three and six months ended June 30, 2016, we purchased 1.9 million and 3.8
million AB Holding Units for $44.3
million and $84.0 million,
respectively (on a trade date basis). These amounts reflect
open-market purchases of 1.9 million and 3.7 million AB Holding
Units for $43.9 million and
$82.0 million, respectively, with the
remainder relating to purchases of AB Holding Units from employees
to allow them to fulfill statutory tax withholding requirements at
the time of delivery of long-term incentive compensation awards.
Purchases of AB Holding Units reflected on the consolidated
statements of cash flows are net of AB Holding Unit purchases by
employees as part of a distribution reinvestment election.
Second Quarter 2016 Earnings Conference Call
Information
Management will review second quarter 2016 financial and
operating results during a conference call beginning at
8:00 a.m. (ET) on Thursday, July
28, 2016. The conference call will be hosted by Peter S. Kraus, Chairman and Chief Executive
Officer, and John C. Weisenseel,
Chief Financial Officer.
Parties may access the conference call by either webcast or
telephone:
- To listen by webcast, please visit AB's Investor Relations
website at
http://abglobal.com/corporate/investor-relations/home.htm 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 46107406.
The presentation management will review during the conference
call will be available on AB's Investor Relations website shortly
after the release of second quarter 2016 financial and
operating results on July 28, 2016.
AB will be providing live updates via Twitter during the
conference call. To access the tweets, follow AB on Twitter:
@AB_insights. Also, in the future, AB may provide public
disclosures to investors via Twitter and other appropriate
internet-based social media.
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 AB'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 in the
US, or (404) 537-3406 outside the US, and provide the
conference ID #: 46107406.
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. AB cautions readers to
carefully consider such factors. Further, such forward-looking
statements speak only as of the date on which such statements are
made; AB 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 AB's Form 10-K for the year ended
December 31, 2015 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 AB files
with or furnishes to the SEC, and any other public statements
issued by AB, 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 AB'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 possibility that AB will engage in open market
purchases of Holding Units to help fund anticipated obligations
under our incentive compensation award program: The number
of Holding Units AB may decide to buy in future periods, if any, to
help fund 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 and the availability of
cash to make these purchases.
Qualified Tax Notice
This announcement is intended to be a qualified notice under
Treasury Regulation §1.1446-4(b). Please note that 100% of AB
Holding's distributions to foreign investors is attributable to
income that is effectively connected with a United States trade or business. Accordingly,
AB Holding's distributions to foreign investors are subject to
federal income tax withholding at the highest applicable tax rate,
currently 39.6%.
About AB
AB is a leading global investment management firm that offers
high-quality research and diversified investment services to
institutional investors, individuals and private wealth clients in
major world markets.
As of June 30, 2016, AB Holding
owned approximately 35.9% of the issued and outstanding AB Units
and AXA, one of the largest global financial services
organizations, owned an approximate 63.8% economic interest in
AB.
Additional information about AB may be found on our website,
www.abglobal.com.
AB (The Operating
Partnership)
|
|
|
|
|
US GAAP
Consolidated Statement of
Income (Unaudited)
|
|
|
|
|
|
(US $
Thousands)
|
2Q
2016
|
|
2Q
2015
|
|
2Q 2016
vs. 2Q
2015 %
Change
|
|
1Q
2016
|
|
2Q 2016
vs. 1Q
2016 %
Change
|
|
|
|
|
|
|
|
|
|
|
GAAP
revenues:
|
|
|
|
|
|
|
|
|
|
Base fees
|
$
|
476,306
|
|
|
$
|
501,667
|
|
|
(5.1%)
|
|
$
|
450,791
|
|
|
5.7%
|
Performance
fees
|
744
|
|
|
14,257
|
|
|
(94.8%)
|
|
622
|
|
|
19.6%
|
Bernstein research
services
|
115,053
|
|
|
121,910
|
|
|
(5.6%)
|
|
126,465
|
|
|
(9.0%)
|
Distribution
revenues
|
97,321
|
|
|
111,850
|
|
|
(13.0%)
|
|
92,692
|
|
|
5.0%
|
Dividends and
interest
|
7,697
|
|
|
5,667
|
|
|
35.8%
|
|
7,370
|
|
|
4.4%
|
Investments gains
(losses)
|
2,276
|
|
|
11,993
|
|
|
(81.0%)
|
|
65,650
|
|
|
(96.5%)
|
Other
revenues
|
28,283
|
|
|
26,023
|
|
|
8.7%
|
|
27,611
|
|
|
2.4%
|
Total
revenues
|
727,680
|
|
|
793,367
|
|
|
(8.3%)
|
|
771,201
|
|
|
(5.6%)
|
Less: interest
expense
|
1,874
|
|
|
630
|
|
|
197.5%
|
|
2,075
|
|
|
(9.7%)
|
Total net
revenues
|
725,806
|
|
|
792,737
|
|
|
(8.4%)
|
|
769,126
|
|
|
(5.6%)
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
expenses:
|
|
|
|
|
|
|
|
|
|
Employee compensation
and benefits
|
309,249
|
|
|
337,640
|
|
|
(8.4%)
|
|
302,011
|
|
|
2.4%
|
Promotion and
servicing
|
|
|
|
|
|
|
|
|
|
Distribution-related payments
|
93,217
|
|
|
102,578
|
|
|
(9.1%)
|
|
87,127
|
|
|
7.0%
|
Amortization of deferred sales
commissions
|
10,577
|
|
|
12,713
|
|
|
(16.8%)
|
|
11,242
|
|
|
(5.9%)
|
Other
|
55,357
|
|
|
59,182
|
|
|
(6.5%)
|
|
54,201
|
|
|
2.1%
|
General and
administrative
|
|
|
|
|
|
|
|
|
|
General
& administrative
|
109,757
|
|
|
108,092
|
|
|
1.5%
|
|
105,923
|
|
|
3.6%
|
Real
estate (credits) charges
|
(2,801)
|
|
|
(80)
|
|
|
n/m
|
|
27,586
|
|
|
n/m
|
Contingent payment
arrangements
|
353
|
|
|
442
|
|
|
(20.1%)
|
|
353
|
|
|
—%
|
Interest on
borrowings
|
1,052
|
|
|
736
|
|
|
42.9%
|
|
1,232
|
|
|
(14.6%)
|
Amortization of
intangible assets
|
6,470
|
|
|
6,512
|
|
|
(0.6%)
|
|
6,409
|
|
|
1.0%
|
Total operating
expenses
|
583,231
|
|
|
627,815
|
|
|
(7.1%)
|
|
596,084
|
|
|
(2.2%)
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
142,575
|
|
|
164,922
|
|
|
(13.6%)
|
|
173,042
|
|
|
(17.6%)
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
10,588
|
|
|
9,153
|
|
|
15.7%
|
|
9,864
|
|
|
7.3%
|
|
|
|
|
|
|
|
|
|
|
Net income
|
131,987
|
|
|
155,769
|
|
|
(15.3%)
|
|
163,178
|
|
|
(19.1%)
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) of
consolidated entities
attributable to non-controlling interests
|
4,843
|
|
|
6,675
|
|
|
(27.4%)
|
|
(5,748)
|
|
|
n/m
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to AB Unitholders
|
$
|
127,144
|
|
|
$
|
149,094
|
|
|
(14.7%)
|
|
$
|
168,926
|
|
|
(24.7%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB Holding L.P.
(The Publicly-Traded
Partnership)
|
|
|
|
|
|
|
|
|
|
SUMMARY STATEMENTS
OF INCOME
|
|
|
|
|
|
|
|
|
|
(US $
Thousands)
|
2Q
2016
|
|
2Q
2015
|
|
2Q 2016
vs. 2Q
2015 %
Change
|
|
1Q
2016
|
|
2Q 2016
vs. 1Q
2016 %
Change
|
|
|
|
|
|
|
|
|
|
|
Equity in Net Income
Attributable to AB Unitholders
|
$
|
45,489
|
|
|
$
|
54,409
|
|
|
(16.4%)
|
|
|
$
|
61,132
|
|
|
(25.6%)
|
Income
Taxes
|
5,585
|
|
|
6,185
|
|
|
(9.7%)
|
|
|
5,585
|
|
|
—%
|
Net
Income
|
39,904
|
|
|
48,224
|
|
|
(17.3%)
|
|
|
55,547
|
|
|
(28.2%)
|
|
|
|
|
|
|
|
|
|
|
Additional Equity in
Earnings of Operating
Partnership (1)
|
193
|
|
|
426
|
|
|
(54.7%)
|
|
|
155
|
|
|
24.5%
|
Net Income -
Diluted
|
$
|
40,097
|
|
|
$
|
48,650
|
|
|
(17.6%)
|
|
|
$
|
55,702
|
|
|
(28.0%)
|
Diluted Net Income
per Unit
|
$
|
0.41
|
|
|
$
|
0.48
|
|
|
(14.6%)
|
|
|
$
|
0.56
|
|
|
(26.8%)
|
Distribution per
Unit
|
$
|
0.40
|
|
|
$
|
0.48
|
|
|
(16.7%)
|
|
|
$
|
0.40
|
|
|
—%
|
|
|
|
|
|
|
|
|
|
|
(1) To reflect higher
ownership in the Operating Partnership resulting from application
of the treasury stock method to outstanding options.
|
|
|
|
|
|
|
|
|
|
|
|
|
Units
Outstanding
|
2Q
2016
|
|
2Q
2015
|
|
2Q 2016
vs. 2Q
2015 %
Change
|
|
1Q
2016
|
|
2Q 2016
vs. 1Q
2016 %
Change
|
AB L.P.
|
|
|
|
|
|
|
|
|
|
Period-end
|
268,777,653
|
|
|
272,972,925
|
|
|
(1.5%)
|
|
|
270,638,334
|
|
|
(0.7%)
|
Weighted average -
basic
|
269,720,065
|
|
|
272,857,719
|
|
|
(1.1%)
|
|
|
271,853,243
|
|
|
(0.8%)
|
Weighted average -
diluted
|
270,370,130
|
|
|
274,110,553
|
|
|
(1.4%)
|
|
|
272,253,490
|
|
|
(0.7%)
|
AB Holding
L.P.
|
|
|
|
|
|
|
|
|
|
Period-end
|
96,534,649
|
|
|
100,712,572
|
|
|
(4.1%)
|
|
|
98,381,192
|
|
|
(1.9%)
|
Weighted average -
basic
|
97,463,205
|
|
|
100,577,659
|
|
|
(3.1%)
|
|
|
99,595,925
|
|
|
(2.1%)
|
Weighted average -
diluted
|
98,113,270
|
|
|
101,830,493
|
|
|
(3.7%)
|
|
|
99,996,172
|
|
|
(1.9%)
|
AllianceBernstein
L.P.
|
|
|
ASSETS UNDER
MANAGEMENT | June 30, 2016
|
|
|
($
billions)
|
|
|
Ending and
Average
|
Three Months
Ended
|
|
|
6/30/16
|
6/30/15
|
|
Ending Assets Under
Management
|
$489.5
|
$485.1
|
|
Average Assets Under
Management
|
$484.5
|
$492.6
|
Three-Month
Changes By Distribution Channel
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
Private Wealth
Management
|
|
Total
|
|
Beginning of
Period
|
$
|
244.8
|
|
|
$
|
155.9
|
|
|
$
|
78.3
|
|
|
$
|
479.0
|
|
|
Sales/New
accounts
|
5.2
|
|
|
10.8
|
|
|
2.4
|
|
|
18.4
|
|
|
Redemption/Terminations
|
(2.4)
|
|
|
(7.5)
|
|
|
(2.1)
|
|
|
(12.0)
|
|
|
Net Cash
Flows
|
(1.8)
|
|
|
(1.0)
|
|
|
(0.1)
|
|
|
(2.9)
|
|
|
Net
Flows
|
1.0
|
|
|
2.3
|
|
|
0.2
|
|
|
3.5
|
|
|
AUM Adjustments
(3)
|
(3.0)
|
|
|
—
|
|
|
—
|
|
|
(3.0)
|
|
|
Investment
Performance
|
6.0
|
|
|
3.2
|
|
|
0.8
|
|
|
10.0
|
|
|
End of
Period
|
$
|
248.8
|
|
|
$
|
161.4
|
|
|
$
|
79.3
|
|
|
$
|
489.5
|
|
Three-Month
Changes By Investment Service
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
Active
|
|
Equity
Passive (1)
|
|
Fixed
Income
Taxable
|
|
Fixed
Income
Tax-
Exempt
|
|
Fixed
Income
Passive (1)
|
|
Other
(2)
|
|
Total
|
|
Beginning of
Period
|
$
|
110.1
|
|
|
$
|
45.5
|
|
|
$
|
219.1
|
|
|
$
|
35.0
|
|
|
$
|
10.3
|
|
|
$
|
59.0
|
|
|
$
|
479.0
|
|
|
Sales/New
accounts
|
3.1
|
|
|
0.2
|
|
|
12.0
|
|
|
2.4
|
|
|
0.1
|
|
|
0.6
|
|
|
18.4
|
|
|
Redemption/Terminations
|
(3.9)
|
|
|
—
|
|
|
(6.3)
|
|
|
(1.1)
|
|
|
(0.1)
|
|
|
(0.6)
|
|
|
(12.0)
|
|
|
Net Cash
Flows
|
(0.7)
|
|
|
(0.2)
|
|
|
(2.4)
|
|
|
0.1
|
|
|
1.5
|
|
|
(1.2)
|
|
|
(2.9)
|
|
|
Net
Flows
|
(1.5)
|
|
|
—
|
|
|
3.3
|
|
|
1.4
|
|
|
1.5
|
|
|
(1.2)
|
|
|
3.5
|
|
|
AUM Adjustments
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.0)
|
|
|
(3.0)
|
|
|
Investment
Performance
|
0.6
|
|
|
0.8
|
|
|
7.0
|
|
|
0.7
|
|
|
0.1
|
|
|
0.8
|
|
|
10.0
|
|
|
End of
Period
|
$
|
109.2
|
|
|
$
|
46.3
|
|
|
$
|
229.4
|
|
|
$
|
37.1
|
|
|
$
|
11.9
|
|
|
$
|
55.6
|
|
|
$
|
489.5
|
|
|
(1)
Includes index and enhanced index services.
|
(2)
Includes certain multi-asset solutions and services and certain
alternative investments.
|
(3) During
the second quarter of 2016, we removed $3.0 billion of Customized
Retirement Strategies assets from AUM as our asset management
services transitioned to consulting services.
|
By Client
Domicile
|
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
Private
Wealth
|
|
Total
|
|
U.S.
Clients
|
$
|
148.2
|
|
|
$
|
99.2
|
|
|
$
|
77.5
|
|
|
$
|
324.9
|
|
|
Non-U.S.
Clients
|
100.6
|
|
|
62.2
|
|
|
1.8
|
|
|
164.6
|
|
|
Total
|
$
|
248.8
|
|
|
$
|
161.4
|
|
|
$
|
79.3
|
|
|
$
|
489.5
|
|
AB
L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP FINANCIAL RESULTS TO
ADJUSTED FINANCIAL RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
US $ Thousands,
unaudited
|
|
6/30/2016
|
|
3/31/2016
|
|
12/31/2015
|
|
9/30/2015
|
|
6/30/2015
|
|
3/31/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues, GAAP
basis
|
|
$
|
725,806
|
|
|
$
|
769,126
|
|
|
$
|
726,726
|
|
|
$
|
738,693
|
|
|
$
|
792,737
|
|
|
$
|
762,571
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term incentive compensation-related
investment (gains) losses
|
(791)
|
|
|
1,326
|
|
|
(583)
|
|
|
5,273
|
|
|
(362)
|
|
|
(2,426)
|
|
|
|
Long-term incentive compensation-related
dividends and interest
|
(142)
|
|
|
(151)
|
|
|
(1,521)
|
|
|
(130)
|
|
|
(135)
|
|
|
(151)
|
|
|
|
90% of
consolidated venture capital fund
investment (gains) losses
|
—
|
|
|
—
|
|
|
(1,560)
|
|
|
2,829
|
|
|
(7,014)
|
|
|
(1,373)
|
|
|
|
Distribution-related payments
|
(93,217)
|
|
|
(87,127)
|
|
|
(93,379)
|
|
|
(96,690)
|
|
|
(102,578)
|
|
|
(100,386)
|
|
|
|
Amortization of deferred sales commissions
|
(10,577)
|
|
|
(11,242)
|
|
|
(11,673)
|
|
|
(12,359)
|
|
|
(12,713)
|
|
|
(12,399)
|
|
|
|
Pass-through fees & expenses
|
(11,708)
|
|
|
(11,651)
|
|
|
(11,639)
|
|
|
(11,425)
|
|
|
(12,575)
|
|
|
(11,841)
|
|
|
|
Gain on
sale of investment carried at cost
|
—
|
|
|
(75,273)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Impact
of consolidated VIEs
|
(5,472)
|
|
|
5,058
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Adjusted Net
Revenues
|
|
$
|
603,899
|
|
|
$
|
590,066
|
|
|
$
|
606,371
|
|
|
$
|
626,191
|
|
|
$
|
657,360
|
|
|
$
|
633,995
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income,
GAAP basis
|
|
$
|
142,575
|
|
|
$
|
173,042
|
|
|
$
|
170,913
|
|
|
$
|
142,051
|
|
|
$
|
164,922
|
|
|
$
|
153,214
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term incentive compensation-related items
|
(354)
|
|
|
963
|
|
|
(238)
|
|
|
226
|
|
|
85
|
|
|
57
|
|
|
|
Gain on
sale of investment carried at cost
|
—
|
|
|
(75,273)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Real
estate (credits) charges
|
(2,801)
|
|
|
27,586
|
|
|
(221)
|
|
|
1,682
|
|
|
(80)
|
|
|
(383)
|
|
|
|
Acquisition-related expenses
|
239
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Contingent payment arrangements
|
—
|
|
|
—
|
|
|
(7,212)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Sub-total of non-GAAP
adjustments
|
(2,916)
|
|
|
(46,724)
|
|
|
(7,671)
|
|
|
1,908
|
|
|
5
|
|
|
(326)
|
|
|
|
Less:
Net (loss) income of consolidated entities
attributable to non-controlling interests
|
4,843
|
|
|
(5,748)
|
|
|
1,496
|
|
|
(3,071)
|
|
|
6,675
|
|
|
1,275
|
|
|
Adjusted Operating
Income
|
|
$
|
134,816
|
|
|
$
|
132,066
|
|
|
$
|
161,746
|
|
|
$
|
147,030
|
|
|
$
|
158,252
|
|
|
$
|
151,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Margin,
GAAP basis excl. non-
controlling interests
|
19.0
|
%
|
|
23.2
|
%
|
|
23.3
|
%
|
|
19.6
|
%
|
|
20.0
|
%
|
|
19.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
Margin
|
22.3
|
%
|
|
22.4
|
%
|
|
26.7
|
%
|
|
23.5
|
%
|
|
24.1
|
%
|
|
23.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB Holding
L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP EPU TO ADJUSTED EPU
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
$ Thousands except
per Unit amounts, unaudited
|
6/30/2016
|
|
3/31/2016
|
|
12/31/2015
|
|
9/30/2015
|
|
6/30/2015
|
|
3/31/2015
|
|
Net Income -
Diluted, GAAP basis
|
$
|
40,097
|
|
|
$
|
55,702
|
|
|
$
|
51,992
|
|
|
$
|
42,988
|
|
|
$
|
48,650
|
|
|
$
|
45,940
|
|
|
Impact on net income
of AB non-GAAP adjustments
|
(966)
|
|
|
(15,945)
|
|
|
(2,604)
|
|
|
643
|
|
|
2
|
|
|
(111)
|
|
|
Adjusted Net
Income - Diluted
|
$
|
39,131
|
|
|
$
|
39,757
|
|
|
$
|
49,388
|
|
|
$
|
43,631
|
|
|
$
|
48,652
|
|
|
$
|
45,829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Net Income
per Holding Unit, GAAP basis
|
$
|
0.41
|
|
|
$
|
0.56
|
|
|
$
|
0.53
|
|
|
$
|
0.43
|
|
|
$
|
0.48
|
|
|
$
|
0.45
|
|
|
Impact of AB non-GAAP
adjustments
|
(0.01)
|
|
|
(0.16)
|
|
|
(0.03)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Adjusted Diluted
Net Income per Holding Unit
|
$
|
0.40
|
|
|
$
|
0.40
|
|
|
$
|
0.50
|
|
|
$
|
0.43
|
|
|
$
|
0.48
|
|
|
$
|
0.45
|
|
AB
Notes to Consolidated
Statements of Income and Supplemental Information
(Unaudited)
Adjusted Net Revenues
Adjusted net revenues exclude investment gains and losses and
dividends and interest on employee long-term incentive
compensation-related investments. 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 offsetting net revenues by
distribution-related payments 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. We
offset amortization of deferred sales commissions against net
revenues because such costs, over time, essentially offset our
distribution revenues. 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 do not
affect operating income, but they do affect our operating margin.
As such, we exclude these fees from adjusted net revenues.
Lastly, in 2015 we excluded 90% of the investment gains and
losses of our consolidated venture capital fund attributable to
non-controlling interests. Effective January
1, 2016, as a result of adopting a new accounting standard
(see Note 2 to our condensed consolidated financial statements
in our 2016 2Q 10-Q), we account for our consolidated venture
capital fund in the same manner as our other consolidated VIEs. We
adjust for the revenue impact of consolidating VIEs by eliminating
the consolidated VIEs' revenues and including AB's fees from such
VIEs and AB's investment gains and losses on its investments in
such VIEs that were eliminated in consolidation. In addition, in
the first quarter of 2016 we excluded a realized gain of
$75.3 million resulting from the
liquidation of an investment in Jasper Wireless Technologies, Inc.
("Jasper"), which was acquired by Cisco Systems, Inc., because it
was not part of our core operating results.
Adjusted Operating Income
Adjusted operating income represents operating income on a US
GAAP basis excluding (1) the impact on net revenues and
compensation expense of the investment gains and losses (as well as
the dividends and interest) associated with employee long-term
incentive compensation-related investments, (2) the gain on the
sale of our investment in Jasper, (3) real estate charges
(credits), (4) acquisition-related expenses, (5) adjustments to
contingent payment arrangements, (6) the net income or loss of
consolidated entities attributable to non-controlling interests in
2015, and (7) the impact of consolidated VIEs in 2016.
Prior to 2009, a significant portion of employee compensation
was in the form of employee long-term incentive compensation awards
that were notionally invested in AB investment services and
generally vested over a period of four years. AB economically
hedged the exposure to market movements by purchasing and holding
these investments on its balance sheet. All such investments had
vested as of year-end 2012 and the investments have been
distributed to the participants, except for those investments with
respect to which the participant elected a long-term deferral.
Fluctuation in the value of these investments is recorded within
investment gains and losses on the income statement and also
impacts compensation expense. Management believes it is useful to
reflect the offset achieved from economically hedging the market
exposure of these investments in the calculation of adjusted
operating income and adjusted operating margin. The non-GAAP
measures exclude gains and losses and dividends and interest on
employee long-term incentive compensation-related investments
included in revenues and compensation expense.
A realized gain on an investment carried at cost has been
excluded due to its non-recurring nature and because it is not part
of our core operating results.
Real estate charges (credits) 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.
Acquisition-related expenses incurred as a result of our
acquisitions in the fourth quarter for 2013 and the second quarter
of 2014, 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.
The recording of changes in estimates of the contingent
consideration payable with respect to contingent payment
arrangements associated with our 2014 and 2010 acquisitions are not
considered part of our core operating results and, accordingly,
have been excluded.
In regard to 2015 adjusted operating income, 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. US GAAP
requires us to consolidate the financial results of the fund
because we are the general partner and are deemed to have a
controlling interest. 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 exclude the 90% limited partner
interests we do not own from our adjusted operating income.
Effective January 1, 2016, our
consolidated venture capital fund is included with other
consolidated VIEs. 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 AB.
Relating to 2016 adjusted operating income, we adjusted for the
operating income impact of consolidating certain VIEs (as a result
of the adoption of a new accounting standard; see Note 2 to our
condensed consolidated financial statements) by eliminating the
consolidated VIEs' revenues and expenses and including AB's
revenues and expenses that were eliminated in consolidation. We
also excluded the limited partner interests we do not own.
Adjusted Operating Margin
Adjusted operating margin allows us to monitor our financial
performance and efficiency from period to period without the
volatility noted above in our discussion of adjusted operating
income and to compare our performance to industry peers on a
basis that better reflects our performance in our core business.
Adjusted operating margin is derived by dividing adjusted operating
income by adjusted net revenues.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/alliancebernstein-holding-lp-announces-second-quarter-results-300305448.html
SOURCE AllianceBernstein Holding L.P.