NEW YORK, Oct. 26, 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 September 30, 2016.
"Previously announced outflows totaling $14 billion related to the conclusion of our
Rhode Island CollegeBound 529
fund relationship and the termination of an institutional
alternative investment portfolio during the third quarter obscured
the positive momentum we're experiencing in many parts of our
business," said Peter S. Kraus,
Chairman and Chief Executive Officer. "Excluding the 529 outflows,
year-to-date Retail net inflows were $3
billion, a $5 billion
improvement from the same period last year, and Private Wealth net
inflows were $1.2 billion, compared
to slight net outflows last year."
(US $ Thousands
except per Unit amounts)
|
3Q
2016
|
|
3Q
2015
|
|
3Q 2016 vs 3Q 2015
Change
|
|
2Q
2016
|
|
3Q 2016 vs 2Q 2016
Change
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Financial
Measures
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
$
|
747,591
|
|
|
$
|
738,693
|
|
|
1.2
|
%
|
|
$
|
725,806
|
|
|
3.0
|
%
|
Operating
income
|
$
|
185,309
|
|
|
$
|
142,051
|
|
|
30.5
|
%
|
|
$
|
142,575
|
|
|
30.0
|
%
|
Operating
margin
|
22.7
|
%
|
|
19.6
|
%
|
|
310 bps
|
|
19.0
|
%
|
|
370 bps
|
AB Holding Diluted
EPU (1)
|
$
|
0.52
|
|
|
$
|
0.42
|
|
|
23.8
|
%
|
|
$
|
0.40
|
|
|
30.0
|
%
|
|
|
|
|
|
|
|
|
|
|
Adjusted Financial
Measures (2)
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
$
|
613,380
|
|
|
$
|
626,191
|
|
|
(2.0)%
|
|
|
$
|
603,899
|
|
|
1.6
|
%
|
Operating
income
|
$
|
148,656
|
|
|
$
|
147,030
|
|
|
1.1
|
%
|
|
$
|
134,816
|
|
|
10.3
|
%
|
Operating
margin
|
24.2
|
%
|
|
23.5
|
%
|
|
70 bps
|
|
22.3
|
%
|
|
190 bps
|
AB Holding Diluted
EPU (3)
|
$
|
0.45
|
|
|
$
|
0.43
|
|
|
4.7
|
%
|
|
$
|
0.39
|
|
|
15.4
|
%
|
AB Holding cash
distribution per Unit
|
$
|
0.45
|
|
|
$
|
0.43
|
|
|
4.7
|
%
|
|
$
|
0.40
|
|
|
12.5
|
%
|
|
|
|
|
|
|
|
|
|
|
(US $
Billions)
|
|
|
|
|
|
|
|
|
|
Assets Under
Management
|
|
|
|
|
|
|
|
|
|
Ending AUM
|
$
|
490.2
|
|
|
$
|
462.9
|
|
|
5.9
|
%
|
|
$
|
489.5
|
|
|
0.1
|
%
|
Average
AUM
|
$
|
492.0
|
|
|
$
|
476.2
|
|
|
3.3
|
%
|
|
$
|
484.5
|
|
|
1.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The GAAP AB Holding Diluted EPU has been revised for 3Q15
and 2Q16.
(2) The adjusted financial measures are all non-GAAP financial
measures. See page 13 for
reconciliations of GAAP Financial Results to Adjusted Financial
Results and pages 14-15 for notes
describing the adjustments.
(3) The Adjusted AB Holding Diluted EPU has been revised for
2Q16.
Kraus continued: "We're encouraged by the progress we continue
to make in executing on our strategy of delivering for our clients
around the world with the strength of our investment performance,
the breadth and relevance of our offering and the efficiency of our
operations. Our equity investment performance rebounded after a
difficult first half, improving the track records of many of our
services. For the period through September
30th, 43%, 63% and 64% of our active equity assets were in
services that beat their benchmarks for the 1-, 3- and 5-year
periods, respectively. In fixed income, we were at 83% for the
1-year and 90% for the 3- and 5-year periods. In each of our
channels, we're seeing strong interest in key focus areas where we
are performing and where clients want to be. In Institutional,
demand for our Managed Volatility Equities, Strategic Core Equity,
Small Cap Value, US Investment Grade Corporate and Global Credit
services led to notable new mandate wins during the quarter. In
Retail, yield-focused investors in Asia ex Japan
and the US drove positive momentum in our American Income, Global
High Yield and AB High Income funds, where combined sales totaled
more than $6 billion during the third
quarter. In Private Wealth, the structural superiority of our
integrated approach is more evident than ever to our clients during
these uncertain times. Year-to-date net inflows are up $900 million from 2015 and our redemption rate is
near an all-time low. Our differentiation continues to resonate on
the sell side as well: Every Bernstein fundamental research team
that has been publishing for at least one full year was top ranked
in the 2016 Institutional Investor All America Research Team Survey
- an outstanding testament to the quality of our research
franchise. Finally, in a low-growth environment where operational
efficiency is critical, our cost containment efforts continue to
pay off. We reduced our adjusted operating expenses by 3%
year-on-year in the third quarter and added 70 basis points to our
adjusted margin of 24.2%. We also completed our acquisition of
Ramius Alternative Solutions from Cowen & Co."
Kraus concluded: "Each new strategic step we take moves AB
closer to our goal of being the preeminent solutions provider for
our global clients in any market environment. Considering the
headwinds we face in our industry, I'm extremely proud of our
people for the progress they continue to make in keeping AB Ahead
of Tomorrow for our clients in so many ways."
The firm's cash distribution per unit of $0.45 is payable on November 17, 2016, to holders of record of AB
Holding Units at the close of business on November 7, 2016.
Market Performance
US and global equity and fixed income markets were higher in the
third quarter. The S&P 500's total return was 3.9% in the third
quarter, while the MSCI EAFE Index's total return was 6.5%. The
Bloomberg Barclays US Aggregate Index returned 0.5% during the
third quarter and the Bloomberg Barclays Global Aggregate ex US
Index's total return was 1.0%.
Assets Under Management ($ Billions)
Total assets under management as of September 30, 2016 were $490.2 billion, up $0.7
billion, or 0.1%, from June 30,
2016, and up $27.3 billion, or
5.9%, from September 30, 2015.
|
Institutions
|
|
Retail
|
|
Private Wealth
Management
|
|
Total
|
Assets Under
Management 9/30/16
|
$247.0
|
|
$162.2
|
|
$81.0
|
|
$490.2
|
Net Flows for Three
Months Ended 9/30/16
|
$(9.9)
|
|
$(5.0)
|
|
$(0.4)
|
|
$(15.3)
|
Total net outflows were $15.3
billion, compared to net inflows of $3.5 billion in the previous quarter and net
outflows of $2.4 billion in the prior
year period. Two previously announced redemptions occurred during
the third quarter - $6.7 billion in
outflows related to the conclusion of our Rhode Island CollegeBound 529 fund
relationship; and $7.6 billion in
outflows related to the termination of an institutional alternative
investment portfolio.
Net outflows from the Institutions channel were $9.9 billion, including the $7.6 billion of previously mentioned alternative
investment portfolio outflows, compared to net inflows of
$1.0 billion in the second quarter of
2016. Institutions gross sales of $5.2
billion were flat compared to the prior quarter. The
pipeline of awarded but unfunded Institutional mandates decreased
sequentially from $6.1 billion to $5.4
billion at September 30,
2016.
The Retail channel experienced third quarter 2016 net outflows
of $5.0 billion, which included
$6.3 billion of the Rhode Island CollegeBound 529-related
outflows, compared to $2.3 billion of
net inflows in the prior quarter. Retail gross sales of
$12.3 billion increased 14% from the
second quarter's $10.8 billion.
In the Private Wealth channel, net outflows of $0.4 billion, which included $0.4 billion of the Rhode
Island CollegeBound 529-related outflows, compared to
net inflows of $0.2 billion in the
prior quarter. Private Wealth gross sales of $2.4 billion were flat compared to the prior
quarter.
Third 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.
Revision
During the third quarter of 2016, management determined that the
frequency with which we settle our U.S. inter-company payable
balances with foreign subsidiaries over the past several years
created deemed dividends under Section 956 of the U.S. Internal
Revenue Code of 1986, as amended ("Section 956"). In the past, we
funded our foreign subsidiaries as they required cash for their
operations rather than pre-fund them each quarter, thereby reducing
the inter-company balance to zero on a quarterly basis, as required
by Section 956. As a result, we have been understating our income
tax provision and income tax liability since 2010. We evaluated the
aggregate effects of this error in our income tax provision and
income tax liability to our previously issued financial statements
in accordance with SEC Staff Accounting Bulletins No. 99 and No.
108 and, based upon quantitative and qualitative factors, have
determined that the error was not material to our previously issued
financial statements. However, the cumulative effect of this error
would be material to our third quarter 2016 financial results if
recorded as an out-of-period adjustment in the third quarter of
2016. Accordingly, we have revised our previously issued financial
statements that are included in our Third Quarter 2016 Form 10-Q
and this Earnings Release.
In regard to our revision to correct previously issued financial
statements, we recorded a cumulative adjustment to our January 1, 2012 partners' capital account and
revised our consolidated statements of financial condition and
consolidated statements of income from 2012 through the second
quarter of 2016. As a result, we have established an income tax
liability, including interest and potential penalties, of
$45.6 million as of
September 30, 2016. As of December 31, 2015, the
cumulative impact of the revision on partners' capital in the
condensed consolidated statement of financial condition was
$37.7 million. See page 11 for a
summary of the impact of the revisions to net income attributable
to AB Unitholders, diluted net income per Holding Unit (GAAP basis)
and adjusted diluted net income per Holding Unit.
US GAAP Earnings
Net revenues of $748 million
increased 1% compared to the third quarter of 2015 due to
investment gains in the current quarter compared to investment
losses in the prior year period and higher investment advisory
fees, partly offset by lower Bernstein Research revenues and
distribution revenues. Sequentially, net revenues increased 3% due
to higher investment gains and investment advisory fees, partly
offset by lower Bernstein Research revenues. Bernstein Research
revenues declined 13% year-over-year and 4% sequentially, in both
cases as a result of a slowdown in client activity across the US
and Europe.
Operating expenses were $562
million for the third quarter of 2016, down 6%
year-over-year, due to the reversal of contingent payment
liabilities related to previous acquisitions, lower promotion and
servicing, general and administrative ("G&A") and total
employee compensation and benefits expenses. Within promotion and
servicing, amortization of deferred sales commissions, transfer
fees, travel and entertainment expense and trade execution fees
were all lower compared to the prior year period. Within G&A,
lower occupancy expense and professional fees were partly offset by
higher other miscellaneous expenses. Total employee compensation
and benefits expenses declined as a result of lower recruitment and
base compensation expenses, partly offset by higher incentive
compensation. During the third quarter of 2016, we recorded a
$0.1 million non-cash real estate
credit as part of our ongoing global real estate consolidation plan
compared to a $1.7 million non-cash
real estate charge we recorded in the third quarter of 2015.
On a sequential basis, operating expenses were down 4% as a
result of the reversal of contingent payment liabilities related to
previous acquisitions, lower promotion and servicing and G&A
expenses, partly offset by higher total employee compensation and
benefits expenses. The decline in promotion and servicing was
driven by lower marketing, travel and entertainment, transfer fees
and trade execution fees, partly offset by higher distribution
related payments. Within G&A, lower professional fees and other
miscellaneous expenses were partly offset by higher occupancy
expense. Total employee compensation and benefits expenses
increased due to higher commissions and incentive and base
compensation. Our $0.1 million
non-cash real estate credit in the current quarter compares to a
$2.8 million non-cash real estate
credit we recorded in the second quarter of 2016.
Operating income of $185 million
for the third quarter of 2016 increased 31% from $142 million for the third quarter of 2015 and
30% from $143 million in the second
quarter of 2016.
Diluted net income per Unit for the third quarter of 2016 was
$0.52 compared to a revised
$0.42 in the third quarter of 2015
and a revised $0.40 in the second
quarter of 2016.
Non-GAAP Earnings
This section discusses our third quarter 2016 non-GAAP financial
results, as compared to the third quarter of 2015 and the second
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 $613
million were down 2% compared to the third quarter of 2015,
due to lower Bernstein Research revenues and higher net
distribution expenses, partly offset by higher investment advisory
fees and investments gains in the current quarter compared to
investment losses in the prior period quarter. Sequentially,
adjusted net revenues were up 2%, driven by higher investment
advisory fees and investment gains in the current period compared
to investment losses in the previous quarter, partly offset by
lower Bernstein Research revenues and higher net distribution
expenses.
Adjusted operating expenses were $464
million for the third quarter, down 3% from the prior-year
period due to lower total employee compensation and benefits,
promotion and servicing and G&A expenses. Total employee
compensation and benefits declined as the result of lower incentive
compensation, base compensation and recruitment expenses. The
decline in promotion and servicing was driven by lower travel and
entertainment and trade execution expenses. Within G&A, the
decrease was primarily due to lower professional fees and occupancy
expense, partly offset by higher portfolio servicing fees and other
miscellaneous expenses.
Sequentially, adjusted operating expenses were down 1%, driven
by lower promotion and servicing and G&A expenses, partly
offset by higher total employee compensation and benefits. The
sequential decrease in promotion and servicing was driven by lower
marketing and travel and entertainment expenses. Within G&A,
the decrease was driven by lower professional fees and other
miscellaneous expenses, partly offset by higher portfolio servicing
fees. The sequential increase in total employee compensation and
benefits was driven by higher commissions and base
compensation.
Adjusted operating income of $149
million increased 1% from $147
million for the third quarter of 2015, and the adjusted
operating margin increased to 24.2% from 23.5%. On a sequential
basis, adjusted operating income increased 10% from $135 million, and the adjusted operating margin
increased 190 basis points from 22.3%.
Adjusted diluted net income per Unit was $0.45 up from $0.43
in the third quarter of 2015 and up from a revised $0.39 in the second quarter of 2016.
Headcount
As of September 30, 2016, we had
3,454 employees, compared to 3,599 employees as of September 30, 2015 and 3,466 employees as of
June 30, 2016.
Unit Repurchases
During the third quarter and first nine months of 2016, we
purchased 2.0 million and 5.8 million AB Holding Units for
$45.2 million and $129.2 million, respectively (on a trade date
basis). These amounts reflect open-market purchases of 2.0 million
and 5.7 million AB Holding Units for $45.1
million and $127.1 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.
Third Quarter 2016 Earnings Conference Call
Information
Management will review third quarter 2016 financial and
operating results during a conference call beginning at
8:00 a.m. (ET) on Wednesday,
October 26, 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:
1. 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.
2. 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 91881828.
The presentation management will review during the conference
call will be available on AB's Investor Relations website shortly
after the release of third quarter 2016 financial and
operating results on October 26, 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 #: 91881828.
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.
- Our expectation that, as a result of repatriating future
non-U.S. earnings, effective January 1,
2017, our effective tax rate will increase: Our
effective tax rate fluctuates based on the mix of our earnings
across our tax filing group, which includes our U.S. partnership,
our U.S. corporate subsidiaries and our corporate subsidiaries
operating in various non-U.S. jurisdictions, and the differences
between the tax rates in the U.S and the other jurisdictions where
we conduct business.
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 September 30, 2016, AB
Holding owned approximately 35.5% of the issued and outstanding AB
Units and AXA, a worldwide leader in financial protection, owned an
approximate 64.2% 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)
|
3Q
2016
|
|
3Q
2015
|
|
3Q 2016 vs. 3Q
2015 % Change
|
|
2Q
2016
|
|
3Q 2016 vs. 2Q
2016 % Change
|
|
|
|
|
|
|
|
|
|
|
GAAP
revenues:
|
|
|
|
|
|
|
|
|
|
Base fees
|
$
|
487,153
|
|
|
$
|
484,463
|
|
|
0.6
|
%
|
|
$
|
476,306
|
|
|
2.3
|
%
|
Performance
fees
|
2,240
|
|
|
1,823
|
|
|
22.9
|
%
|
|
744
|
|
|
201.1
|
%
|
Bernstein research
services
|
110,885
|
|
|
127,065
|
|
|
(12.7%)
|
|
|
115,053
|
|
|
(3.6%)
|
|
Distribution
revenues
|
97,625
|
|
|
105,365
|
|
|
(7.3%)
|
|
|
97,321
|
|
|
0.3
|
%
|
Dividends and
interest
|
7,876
|
|
|
5,459
|
|
|
44.3
|
%
|
|
7,697
|
|
|
2.3
|
%
|
Investments gains
(losses)
|
17,606
|
|
|
(10,326)
|
|
|
n/m
|
|
2,276
|
|
|
673.6
|
%
|
Other
revenues
|
26,272
|
|
|
25,647
|
|
|
2.4
|
%
|
|
28,283
|
|
|
(7.1%)
|
|
Total
revenues
|
749,657
|
|
|
739,496
|
|
|
1.4
|
%
|
|
727,680
|
|
|
3.0
|
%
|
Less: interest
expense
|
2,066
|
|
|
803
|
|
|
157.3
|
%
|
|
1,874
|
|
|
10.2
|
%
|
Total net
revenues
|
747,591
|
|
|
738,693
|
|
|
1.2
|
%
|
|
725,806
|
|
|
3.0
|
%
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
expenses:
|
|
|
|
|
|
|
|
|
|
Employee compensation
and benefits
|
316,737
|
|
|
317,560
|
|
|
(0.3%)
|
|
|
309,249
|
|
|
2.4
|
%
|
Promotion and
servicing
|
|
|
|
|
|
|
|
|
|
Distribution-related payments
|
95,844
|
|
|
96,690
|
|
|
(0.9%)
|
|
|
93,217
|
|
|
2.8
|
%
|
Amortization of
deferred sales commissions
|
9,787
|
|
|
12,359
|
|
|
(20.8%)
|
|
|
10,577
|
|
|
(7.5%)
|
|
Other
|
47,205
|
|
|
52,789
|
|
|
(10.6%)
|
|
|
55,357
|
|
|
(14.7%)
|
|
General and
administrative
|
|
|
|
|
|
|
|
|
|
General
& administrative
|
106,504
|
|
|
107,996
|
|
|
(1.4%)
|
|
|
109,757
|
|
|
(3.0%)
|
|
Real
estate (credits) charges
|
(140)
|
|
|
1,682
|
|
|
n/m
|
|
(2,801)
|
|
|
(95.0%)
|
|
Contingent payment
arrangements
|
(21,129)
|
|
|
443
|
|
|
n/m
|
|
353
|
|
|
n/m
|
Interest on
borrowings
|
1,009
|
|
|
712
|
|
|
41.7
|
%
|
|
1,052
|
|
|
(4.1%)
|
|
Amortization of
intangible assets
|
6,465
|
|
|
6,411
|
|
|
0.8
|
%
|
|
6,470
|
|
|
(0.1%)
|
|
Total operating
expenses
|
562,282
|
|
|
596,642
|
|
|
(5.8%)
|
|
|
583,231
|
|
|
(3.6%)
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
185,309
|
|
|
142,051
|
|
|
30.5
|
%
|
|
142,575
|
|
|
30.0
|
%
|
|
|
|
|
|
|
|
|
|
|
Income taxes
(1)
|
11,578
|
|
|
11,814
|
|
|
(2.0%)
|
|
|
13,231
|
|
|
(12.5%)
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(1)
|
173,731
|
|
|
130,237
|
|
|
33.4
|
%
|
|
129,344
|
|
|
34.3
|
%
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) of
consolidated entities attributable to non-controlling
interests
|
15,696
|
|
|
(3,071)
|
|
|
n/m
|
|
4,843
|
|
|
224.1
|
%
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to AB Unitholders (1)
|
$
|
158,035
|
|
|
$
|
133,308
|
|
|
18.5
|
%
|
|
$
|
124,501
|
|
|
26.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The
income taxes, net income and net income attributable to AB
Unitholders have been revised for 3Q15 and 2Q16.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB Holding L.P.
(The Publicly-Traded Partnership)
|
|
|
|
|
|
|
|
|
|
SUMMARY STATEMENTS
OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(US $
Thousands)
|
3Q
2016
|
|
Revised
3Q 2015
|
|
3Q 2016 vs. 3Q
2015 % Change
|
|
Revised
2Q 2016
|
|
3Q 2016 vs. 2Q
2016 % Change
|
|
|
|
|
|
|
|
|
|
|
Equity in Net Income
Attributable to AB Unitholders (2)
|
$
|
55,925
|
|
|
$
|
48,387
|
|
|
15.6
|
%
|
|
$
|
44,657
|
|
|
25.2
|
%
|
Income
Taxes
|
5,667
|
|
|
6,301
|
|
|
(10.1%)
|
|
|
5,585
|
|
|
1.5
|
%
|
Net Income
(2)
|
50,258
|
|
|
42,086
|
|
|
19.4
|
%
|
|
39,072
|
|
|
28.6
|
%
|
|
|
|
|
|
|
|
|
|
|
Additional Equity in
Earnings of Operating Partnership (1) (2)
|
221
|
|
|
297
|
|
|
(25.6%)
|
|
|
189
|
|
|
16.9
|
%
|
Net Income - Diluted
(2)
|
$
|
50,479
|
|
|
$
|
42,383
|
|
|
19.1
|
%
|
|
$
|
39,261
|
|
|
28.6
|
%
|
Diluted Net Income
per Unit (2)
|
$
|
0.52
|
|
|
$
|
0.42
|
|
|
23.8
|
%
|
|
$
|
0.40
|
|
|
30.0
|
%
|
Distribution per
Unit
|
$
|
0.45
|
|
|
$
|
0.43
|
|
|
4.7
|
%
|
|
$
|
0.40
|
|
|
12.5
|
%
|
|
|
|
|
|
|
|
|
|
|
(1) To reflect higher
ownership in the Operating Partnership resulting from application
of the treasury stock method to outstanding options.
|
|
|
(2) The equity in net
income attributable to AB Unitholders, net income, additional
equity in earnings of operating partnership, net income-diluted and
diluted net income per unit have been revised for 3Q15 and
2Q16.
|
|
Units
Outstanding
|
3Q
2016
|
|
3Q
2015
|
|
3Q 2016 vs. 3Q
2015 % Change
|
|
2Q
2016
|
|
3Q 2016 vs. 2Q
2016 % Change
|
AB L.P.
|
|
|
|
|
|
|
|
|
|
Period-end
|
267,058,919
|
|
|
270,030,040
|
|
|
(1.1%)
|
|
|
268,777,653
|
|
|
(0.6%)
|
|
Weighted average -
basic
|
268,133,568
|
|
|
271,910,618
|
|
|
(1.4%)
|
|
|
269,720,065
|
|
|
(0.6%)
|
|
Weighted average -
diluted
|
268,723,330
|
|
|
272,881,116
|
|
|
(1.5%)
|
|
|
270,370,130
|
|
|
(0.6%)
|
|
AB Holding
L.P.
|
|
|
|
|
|
|
|
|
|
Period-end
|
94,816,915
|
|
|
97,772,578
|
|
|
(3.0%)
|
|
|
96,534,649
|
|
|
(1.8%)
|
|
Weighted average -
basic
|
95,890,662
|
|
|
99,650,516
|
|
|
(3.8%)
|
|
|
97,463,205
|
|
|
(1.6%)
|
|
Weighted average -
diluted
|
96,480,424
|
|
|
100,621,014
|
|
|
(4.1%)
|
|
|
98,113,270
|
|
|
(1.7%)
|
|
Revisions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2Q16
|
|
1Q16
|
|
4Q15
|
|
3Q15
|
|
2Q15
|
|
1Q15
|
AB (The Operating
Partnership)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to AB Unitholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Previously
reported
|
|
$
|
127,144
|
|
|
$
|
168,926
|
|
|
$
|
161,063
|
|
|
$
|
134,976
|
|
|
$
|
149,094
|
|
|
$
|
141,469
|
|
|
Adjustment
|
|
(2,643)
|
|
|
(2,642)
|
|
|
(1,669)
|
|
|
(1,668)
|
|
|
(1,669)
|
|
|
(1,669)
|
|
|
Revised
|
|
$
|
124,501
|
|
|
$
|
166,284
|
|
|
$
|
159,394
|
|
|
$
|
133,308
|
|
|
$
|
147,425
|
|
|
$
|
139,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB Holding L.P.
(The Publicly-Traded Partnership)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income
per Holding Unit, GAAP basis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Previously
reported
|
|
$
|
0.41
|
|
|
$
|
0.56
|
|
|
$
|
0.53
|
|
|
$
|
0.43
|
|
|
$
|
0.48
|
|
|
$
|
0.45
|
|
|
Adjustment
|
|
(0.01)
|
|
|
(0.01)
|
|
|
(0.01)
|
|
|
(0.01)
|
|
|
(0.01)
|
|
|
—
|
|
|
Revised
|
|
$
|
0.40
|
|
|
$
|
0.55
|
|
|
$
|
0.52
|
|
|
$
|
0.42
|
|
|
$
|
0.47
|
|
|
$
|
0.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted diluted net
income per Holding Unit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Previously
reported
|
|
$
|
0.40
|
|
|
$
|
0.40
|
|
|
$
|
0.50
|
|
|
$
|
0.43
|
|
|
$
|
0.48
|
|
|
$
|
0.45
|
|
|
Adjustment
|
|
(0.01)
|
|
|
(0.01)
|
|
|
—
|
|
|
—
|
|
|
(0.01)
|
|
|
(0.01)
|
|
|
Revised
|
|
$
|
0.39
|
|
|
$
|
0.39
|
|
|
$
|
0.50
|
|
|
$
|
0.43
|
|
|
$
|
0.47
|
|
|
$
|
0.44
|
|
AllianceBernstein
L.P.
|
|
|
ASSETS UNDER
MANAGEMENT | September 30, 2016
|
|
|
($
billions)
|
|
|
Ending and
Average
|
Three Months
Ended
|
|
|
9/30/16
|
9/30/15
|
|
Ending Assets Under
Management
|
$490.2
|
$462.9
|
|
Average Assets Under
Management
|
$492.0
|
$476.2
|
Three-Month
Changes By Distribution Channel
|
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
Private Wealth
Management
|
|
Total
|
|
Beginning of
Period
|
$
|
248.8
|
|
|
$
|
161.4
|
|
|
$
|
79.3
|
|
|
$
|
489.5
|
|
|
Sales/New
accounts
|
5.2
|
|
|
12.3
|
|
|
2.4
|
|
|
19.9
|
|
|
Redemption/Terminations
|
(10.7)
|
|
|
(15.7)
|
|
|
(2.7)
|
|
|
(29.1)
|
|
|
Net Cash
Flows
|
(4.4)
|
|
|
(1.6)
|
|
|
(0.1)
|
|
|
(6.1)
|
|
|
Net
Flows
|
(9.9)
|
|
|
(5.0)
|
|
|
(0.4)
|
|
|
(15.3)
|
|
|
Acquisition
|
2.5
|
|
|
—
|
|
|
—
|
|
|
2.5
|
|
|
Transfers
|
—
|
|
|
0.1
|
|
|
(0.1)
|
|
|
—
|
|
|
Investment
Performance
|
5.6
|
|
|
5.7
|
|
|
2.2
|
|
|
13.5
|
|
|
End of
Period
|
$
|
247.0
|
|
|
$
|
162.2
|
|
|
$
|
81.0
|
|
|
$
|
490.2
|
|
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
|
$
|
109.2
|
|
|
$
|
46.3
|
|
|
$
|
229.4
|
|
|
$
|
37.1
|
|
|
$
|
11.9
|
|
|
$
|
55.6
|
|
|
$
|
489.5
|
|
|
Sales/New
accounts
|
3.4
|
|
|
0.1
|
|
|
13.5
|
|
|
2.2
|
|
|
—
|
|
|
0.7
|
|
|
19.9
|
|
|
Redemption/Terminations
|
(7.2)
|
|
|
(0.1)
|
|
|
(13.5)
|
|
|
(1.0)
|
|
|
(0.2)
|
|
|
(7.1)
|
|
|
(29.1)
|
|
|
Net Cash
Flows
|
(1.0)
|
|
|
0.2
|
|
|
(2.9)
|
|
|
(0.1)
|
|
|
(0.4)
|
|
|
(1.9)
|
|
|
(6.1)
|
|
|
Net
Flows
|
(4.8)
|
|
|
0.2
|
|
|
(2.9)
|
|
|
1.1
|
|
|
(0.6)
|
|
|
(8.3)
|
|
|
(15.3)
|
|
|
Acquisition
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.5
|
|
|
2.5
|
|
|
Investment
Performance
|
6.7
|
|
|
2.0
|
|
|
3.4
|
|
|
—
|
|
|
0.3
|
|
|
1.1
|
|
|
13.5
|
|
|
End of
Period
|
$
|
111.1
|
|
|
$
|
48.5
|
|
|
$
|
229.9
|
|
|
$
|
38.2
|
|
|
$
|
11.6
|
|
|
$
|
50.9
|
|
|
$
|
490.2
|
|
(1) Includes index and enhanced index services.
(2) Includes certain multi-asset solutions and
services and certain alternative investments.
By Client
Domicile
|
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
Private
Wealth
|
|
Total
|
|
U.S.
Clients
|
$
|
142.4
|
|
|
$
|
95.9
|
|
|
$
|
79.1
|
|
|
$
|
317.4
|
|
|
Non-U.S.
Clients
|
104.6
|
|
|
66.3
|
|
|
1.9
|
|
|
172.8
|
|
|
Total
|
$
|
247.0
|
|
|
$
|
162.2
|
|
|
$
|
81.0
|
|
|
$
|
490.2
|
|
AB
L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP FINANCIAL RESULTS TO ADJUSTED FINANCIAL RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
US $ Thousands,
unaudited
|
|
9/30/2016
|
|
6/30/2016
|
|
3/31/2016
|
|
12/31/2015
|
|
9/30/2015
|
|
6/30/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues, GAAP
basis
|
|
$
|
747,591
|
|
|
$
|
725,806
|
|
|
$
|
769,126
|
|
|
$
|
726,726
|
|
|
$
|
738,693
|
|
|
$
|
792,737
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term incentive compensation-related investment (gains)
losses
|
(2,556)
|
|
|
(791)
|
|
|
1,326
|
|
|
(583)
|
|
|
5,273
|
|
|
(362)
|
|
|
|
Long-term incentive compensation-related dividends and
interest
|
(142)
|
|
|
(142)
|
|
|
(151)
|
|
|
(1,521)
|
|
|
(130)
|
|
|
(135)
|
|
|
|
90% of
consolidated venture capital fund investment (gains)
losses
|
(12,635)
|
|
|
—
|
|
|
—
|
|
|
(1,560)
|
|
|
2,829
|
|
|
(7,014)
|
|
|
|
Distribution-related payments
|
(95,844)
|
|
|
(93,217)
|
|
|
(87,127)
|
|
|
(93,379)
|
|
|
(96,690)
|
|
|
(102,578)
|
|
|
|
Amortization of deferred sales commissions
|
(9,787)
|
|
|
(10,577)
|
|
|
(11,242)
|
|
|
(11,673)
|
|
|
(12,359)
|
|
|
(12,713)
|
|
|
|
Pass-through fees & expenses
|
(9,768)
|
|
|
(11,708)
|
|
|
(11,651)
|
|
|
(11,639)
|
|
|
(11,425)
|
|
|
(12,575)
|
|
|
|
Gain on
sale of investment carried at cost
|
—
|
|
|
—
|
|
|
(75,273)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Impact
of consolidated VIEs
|
(3,479)
|
|
|
(5,472)
|
|
|
5,058
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Adjusted Net
Revenues
|
|
$
|
613,380
|
|
|
$
|
603,899
|
|
|
$
|
590,066
|
|
|
$
|
606,371
|
|
|
$
|
626,191
|
|
|
$
|
657,360
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income,
GAAP basis
|
|
$
|
185,309
|
|
|
$
|
142,575
|
|
|
$
|
173,042
|
|
|
$
|
170,913
|
|
|
$
|
142,051
|
|
|
$
|
164,922
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term incentive compensation-related items
|
363
|
|
|
(354)
|
|
|
963
|
|
|
(238)
|
|
|
226
|
|
|
85
|
|
|
|
Gain on
sale of investment carried at cost
|
—
|
|
|
—
|
|
|
(75,273)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Real
estate (credits) charges
|
(140)
|
|
|
(2,801)
|
|
|
27,586
|
|
|
(221)
|
|
|
1,682
|
|
|
(80)
|
|
|
|
Acquisition-related expenses
|
303
|
|
|
239
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Contingent payment arrangements
|
(21,483)
|
|
|
—
|
|
|
—
|
|
|
(7,212)
|
|
|
—
|
|
|
—
|
|
|
|
Sub-total of non-GAAP
adjustments
|
(20,957)
|
|
|
(2,916)
|
|
|
(46,724)
|
|
|
(7,671)
|
|
|
1,908
|
|
|
5
|
|
|
|
Less:
Net (loss) income of consolidated entities attributable to
non-controlling interests
|
15,696
|
|
|
4,843
|
|
|
(5,748)
|
|
|
1,496
|
|
|
(3,071)
|
|
|
6,675
|
|
|
Adjusted Operating
Income
|
|
$
|
148,656
|
|
|
$
|
134,816
|
|
|
$
|
132,066
|
|
|
$
|
161,746
|
|
|
$
|
147,030
|
|
|
$
|
158,252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Margin,
GAAP basis excl. non-controlling interests
|
22.7
|
%
|
|
19.0
|
%
|
|
23.2
|
%
|
|
23.3
|
%
|
|
19.6
|
%
|
|
20.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
Margin
|
24.2
|
%
|
|
22.3
|
%
|
|
22.4
|
%
|
|
26.7
|
%
|
|
23.5
|
%
|
|
24.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB Holding
L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP EPU TO ADJUSTED EPU
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
Revised
|
|
Revised
|
|
Revised
|
|
Revised
|
|
Revised
|
|
$ Thousands except
per Unit amounts, unaudited
|
9/30/2016
|
|
6/30/2016
|
|
3/31/2016
|
|
12/31/2015
|
|
9/30/2015
|
|
6/30/2015
|
|
Net Income -
Diluted, GAAP basis
|
$
|
50,479
|
|
|
$
|
39,261
|
|
|
$
|
54,745
|
|
|
$
|
51,393
|
|
|
$
|
42,383
|
|
|
$
|
48,036
|
|
|
Impact on net income
of AB non-GAAP adjustments
|
(6,953)
|
|
|
(949)
|
|
|
(15,686)
|
|
|
(2,577)
|
|
|
635
|
|
|
2
|
|
|
Adjusted Net
Income - Diluted
|
$
|
43,526
|
|
|
$
|
38,312
|
|
|
$
|
39,059
|
|
|
$
|
48,816
|
|
|
$
|
43,018
|
|
|
$
|
48,038
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Net Income
per Holding Unit, GAAP basis
|
$
|
0.52
|
|
|
$
|
0.40
|
|
|
$
|
0.55
|
|
|
$
|
0.52
|
|
|
$
|
0.42
|
|
|
$
|
0.47
|
|
|
Impact of AB non-GAAP
adjustments
|
(0.07)
|
|
|
(0.01)
|
|
|
(0.16)
|
|
|
(0.02)
|
|
|
0.01
|
|
|
—
|
|
|
Adjusted Diluted
Net Income per Holding Unit
|
$
|
0.45
|
|
|
$
|
0.39
|
|
|
$
|
0.39
|
|
|
$
|
0.50
|
|
|
$
|
0.43
|
|
|
$
|
0.47
|
|
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) the net income or
loss of consolidated entities attributable to non-controlling
interests in 2015, (6) adjustments to contingent payment
arrangements, 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 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 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-third-quarter-results-300351511.html
SOURCE AB