NEW YORK, Feb. 13, 2018 /PRNewswire/
-- AllianceBernstein L.P. ("AB") and AllianceBernstein Holding
L.P. ("AB Holding") (NYSE: AB) today reported financial and
operating results for the quarter ended December 31, 2017.
"Our outstanding momentum with clients culminated in impressive
operating results in 2017," said Seth P.
Bernstein, President and CEO of AllianceBernstein. "Not only
did we attract $19.1 billion in
active net inflows and increase our average fee rate by 2.7%; we
also grew both adjusted net revenues and operating income by
double-digits, and expanded our adjusted operating margin for the
sixth consecutive year, to 27.7%."
(US $ Thousands
except per Unit amounts)
|
4Q
2017
|
|
4Q
2016
|
|
4Q 2017 vs 4Q 2016
% Change
|
|
2017
|
|
2016
|
|
2017 vs 2016 %
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Financial
Measures
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
$
|
919,141
|
|
|
$
|
786,256
|
|
|
16.9
|
%
|
|
$
|
3,298,521
|
|
|
$
|
3,028,779
|
|
|
8.9
|
%
|
Operating
income
|
$
|
283,035
|
|
|
$
|
222,239
|
|
|
27.4
|
%
|
|
$
|
773,910
|
|
|
$
|
723,165
|
|
|
7.0
|
%
|
Operating
margin
|
29.9
|
%
|
|
27.4
|
%
|
|
250 bps
|
|
21.7
|
%
|
|
23.2
|
%
|
|
(150 bps)
|
AB Holding Diluted
EPU
|
$
|
0.84
|
|
|
$
|
0.77
|
|
|
9.1
|
%
|
|
$
|
2.19
|
|
|
$
|
2.23
|
|
|
(1.8%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Financial
Measures (1)
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
$
|
770,139
|
|
|
$
|
661,969
|
|
|
16.3
|
%
|
|
$
|
2,704,016
|
|
|
$
|
2,469,314
|
|
|
9.5
|
%
|
Operating
income
|
$
|
271,816
|
|
|
$
|
208,863
|
|
|
30.1
|
%
|
|
$
|
750,118
|
|
|
$
|
624,402
|
|
|
20.1
|
%
|
Operating
margin
|
35.3
|
%
|
|
31.6
|
%
|
|
370 bps
|
|
27.7
|
%
|
|
25.3
|
%
|
|
240 bps
|
AB Holding Diluted
EPU
|
$
|
0.84
|
|
|
$
|
0.67
|
|
|
25.4
|
%
|
|
$
|
2.30
|
|
|
$
|
1.89
|
|
|
21.7
|
%
|
AB Holding cash
distribution per Unit
|
$
|
0.84
|
|
|
$
|
0.67
|
|
|
25.4
|
%
|
|
$
|
2.30
|
|
|
$
|
1.92
|
|
|
19.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
(US $
Billions)
|
|
|
|
|
|
|
|
|
|
|
|
Assets Under
Management
|
|
|
|
|
|
|
|
|
|
|
|
Ending AUM
|
$
|
554.5
|
|
|
$
|
480.2
|
|
|
15.5
|
%
|
|
$
|
554.5
|
|
|
$
|
480.2
|
|
|
15.5
|
%
|
Average
AUM
|
$
|
545.3
|
|
|
$
|
482.9
|
|
|
12.9
|
%
|
|
$
|
518.0
|
|
|
$
|
480.0
|
|
|
7.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The adjusted
financial measures are all non-GAAP financial measures. See page 15
for reconciliations of GAAP Financial Results to Adjusted Financial
Results and pages 16-17 for notes describing the
adjustments.
|
|
|
|
|
|
|
|
|
|
|
|
|
Bernstein continued: "Due to the breadth and strength of our
product set, we were able to generate positive active net flows in
every client channel and asset class, and nearly every region in
2017. At year-end, 90% or more of our fixed income assets were in
outperforming strategies for the three- and five-year periods. In
equities, we were at 85% for the three-year and 91% for the
five-year. In addition, we celebrated performance and asset-raising
milestones for several of our multi-asset and alternative
offerings. In Institutional, the estimated fee base on our
$16.5 billion pipeline at year-end
was our highest since we began measuring it five years ago, thanks
to a range of high-fee additions in equity and alternatives - which
now together comprise nearly 90% of projected pipeline revenues. In
Retail, our gross sales of $53.8
billion and net flows of $8.9
billion were both the highest since our 2012 records - yet
much more diverse today. In Private Wealth, a 64% annual increase
brought our total deployed and committed targeted services assets
to $6.9 billion - which contributed
to new multi-year highs in gross sales, average advisor
productivity and net flows. And on the sell-side, despite fierce
operating and regulatory challenges in both the US and Europe, we maintained our status as the
industry leader in research and trading, and broadened our
international footprint."
Bernstein concluded: "Our robust growth across asset classes,
client channels and geographies and steadily improving financials
clearly demonstrate that AB's years of investing for a future of
growth are paying off today. I'm so proud of all the extraordinary
people at AB that have put us on this promising growth trajectory,
and thrilled to be a part of it."
The firm's cash distribution per unit of $0.84 is payable on March
8, 2018, to holders of record of AB Holding Units at the
close of business on February 23,
2018.
Market Performance
US and global equity and fixed income markets were higher in the
fourth quarter and for the full year. The S&P 500's total
return was 6.6% in the fourth quarter and the MSCI EAFE Index's
total return was 4.3%. For the full year, the S&P 500 returned
21.8% and the MSCI EAFE returned 25.6%. The Bloomberg Barclays US
Aggregate Index returned 0.4% during the fourth quarter and the
Bloomberg Barclays Global Aggregate ex US Index's total return was
1.6%. For the full year, the Bloomberg Barclays US Aggregate Index
returned 3.5% and the Bloomberg Barclays US Aggregate ex US Index
returned 10.5%.
Assets Under Management ($ Billions)
Total assets under management as of December 31, 2017 were $554.5 billion, up $19.6
billion, or 3.7%, from September 30,
2017, and up $74.3 billion, or
15.5%, from December 31, 2016.
|
Institutional
|
|
Retail
|
|
Private
Wealth
Management
|
|
Total
|
Assets Under
Management 12/31/17
|
$269.3
|
|
$192.9
|
|
$92.3
|
|
$554.5
|
Net Flows for Three
Months Ended 12/31/17:
|
|
|
|
|
|
|
|
Active
|
$3.7
|
|
$1.7
|
|
$0.1
|
|
$5.5
|
Passive
|
(0.7)
|
|
(0.7)
|
|
0.1
|
|
(1.3)
|
Total
|
$3.0
|
|
$1.0
|
|
$0.2
|
|
$4.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Flows for Twelve
Months Ended 12/31/17:
|
|
|
|
|
|
|
|
Active
|
$6.5
|
|
$11.7
|
|
$0.9
|
|
$19.1
|
Passive
|
(2.9)
|
|
(2.8)
|
|
(0.2)
|
|
(5.9)
|
Total
|
$3.6
|
|
$8.9
|
|
$0.7
|
|
$13.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net inflows were $4.2
billion in the fourth quarter, versus net inflows of
$4.5 billion in the previous quarter,
and net outflows of $0.1 billion in
the prior year period. Total net inflows were $13.2 billion for the full year, versus net
outflows of $9.8 billion in the prior
year.
Institutional channel fourth quarter net inflows of $3.0 billion compared $1.4
billion in the third quarter. Institutional gross sales of
$3.5 billion increased 6%
sequentially from $3.3 billion. Full
year net inflows of $3.6 billion
compared to net outflows of $5.4
billion in the prior year. Full year gross sales of
$13.4 billion declined 38% from
$21.6 billion in the prior year. The
pipeline of awarded but unfunded Institutional mandates increased
sequentially to $16.5 billion at
December 31, 2017 from $14.0 billion. The quarter-end pipeline includes
an $8.2 billion low-fee Customized
Retirement Strategies mandate, which funded in January 2018.
Retail channel fourth quarter net inflows of $1.0 billion compared to $3.0 billion in the third quarter. Retail gross
sales of $12.9 billion decreased 7%
sequentially from $13.9 billion. Full
year net inflows of $8.9 billion
compared to net outflows of $4.8
billion in the prior year. Full year gross sales of
$53.8 billion increased 31% from
$41.2 billion in the prior year.
Private Wealth channel fourth quarter net inflows of
$0.2 billion compared to $0.1 billion in the third quarter. Private Wealth
gross sales of $2.9 billion increased
4% sequentially from $2.8 billion.
Full year net inflows of $0.7 billion
compared to $0.4 billion in the prior
year. Full year gross sales of $11.5
billion increased 13% from $10.2
billion in the prior year.
Fourth Quarter and Full Year 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 we believe 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.
Tax Cuts and Jobs Act ("2017 Tax Act")
We determined reasonable estimates for certain effects of the
Tax Cuts and Jobs Act ("2017 Tax Act") enacted on December 22, 2017 and recorded those estimates as
provisional amounts in our 2017 financial statements. In accordance
with SEC Staff Accounting Bulletin No. 118 ("SAB 118"), the
adjustments to deferred tax assets and liabilities and the
liability related to the transition tax are provisional amounts
estimated based on information available as of December 31, 2017. These amounts are subject to
change as we obtain information necessary to complete the
calculations. We will recognize any changes to the provisional
amounts as we refine our estimates and as the tax authorities issue
further guidance and interpretations of the 2017 Tax Act.
The major provisions of the 2017 Tax Act that had, or could
have, a significant impact on our income tax balance sheet and
income statement accounts are as follows:
- We recorded an approximate $22.5
million charge to our 2017 income tax expense to account for
deemed repatriation of foreign earnings. The determination of the
transition tax requires further analysis regarding the amount and
composition of our historical foreign earnings.
- We recorded an approximate $3.3
million charge to our 2017 income tax expense to reduce our
deferred tax assets due to lower future corporate tax rates. We
will recognize any changes to the provisional amounts as we refine
our estimates of our cumulative temporary differences.
- We are currently analyzing the possible impact to us of the tax
on global intangible low-taxed income ("GILTI"), if any. The GILTI
tax is effective in 2018; as such, we have not recorded any amounts
in our 2017 financial statements for the GILTI provision.
US GAAP Earnings
Revenues
Fourth quarter net revenues of $919
million increased 17% from the fourth quarter of 2016.
Higher investment advisory base fees, performance-based fees,
investment gains and distribution revenues drove the increase,
partially offset by lower Bernstein Research revenues.
Full year 2017 net revenues of $3.3
billion increased 9% from $3.0
billion in 2016. Higher investment advisory base fees,
performance-based fees, net dividend and interest income and
distribution revenues were partially offset by lower Bernstein
Research revenues and investment gains. In 2016, our investment
gains included a realized gain of $75
million upon the close of the sale of our investment in
Jasper Technologies, Inc. to Cisco Systems, Inc.
Fourth quarter and full year 2017 revenues for Bernstein
Research both decreased 6% from the same prior year periods due to
a decline in US client trading activity and European clients' shift
to lower fee electronic trading, which was only partially offset by
increased client activity in Asia
and a weaker US dollar.
Expenses
Fourth quarter operating expenses of $636
million increased 13% from the fourth quarter of 2016.
Higher employee compensation and benefits, promotion and servicing
and general and administrative ("G&A") expenses were the
drivers. We also recorded a $2.7
million non-cash real estate credit in the fourth quarter
versus a non-cash real estate credit of $6.9
million in the prior year period. Employee compensation and
benefits expense increased due to higher incentive compensation and
commissions. Promotion and servicing expense increased due to
higher distribution related payments and marketing expense,
partially offset by lower amortization of deferred sales
commissions. Within G&A, higher expenses related to our
consolidated company-sponsored investment funds, professional fees
and claims processing expenses drove the increase. In addition, the
fourth quarter of 2016 included a one-time $2.6 million benefit from the reduction of legal
reserves related to settled litigation.
Full year operating expenses of $2.5
billion increased 9% from $2.3
billion in 2016. Employee compensation and benefits, G&A
and promotion and servicing expenses were all higher. We recorded
non-cash real estate charges of $36.7
million in 2017 versus $17.7
million in 2016. Additionally, in 2016 we had a $20.2 million reversal of contingent payment
liabilities related to previous acquisitions. Employee compensation
and benefits expense increased due to higher incentive
compensation, base compensation, commissions and fringes. Within
G&A, $15 million in one-time
expenses on a net basis were recorded during the year, in addition
to higher expenses related to our consolidated company-sponsored
investment funds, professional fees, claims processing, technology
expenses and foreign exchange translation losses. Within promotion
and servicing, higher distribution related payments were partially
offset by lower amortization of deferred sales commissions, travel
and entertainment expense and transfer fees.
Operating Income and Net Income Per Unit
Fourth quarter operating income of $283
million increased 27% from $222
million in the fourth quarter of 2016 and the operating
margin of 29.9% increased 250 basis points from 27.4% in the fourth
quarter of 2016. Full year operating income of $774 million increased 7% from $723 million in 2016 and the operating margin of
21.7% declined 150 basis points from 23.2% in 2016.
Fourth quarter diluted net income per Unit of $0.84 compared to $0.77 in the fourth quarter of 2016. Full year
diluted net income per Unit of $2.19
compared to $2.23 in 2016.
Non-GAAP Earnings
This section discusses our fourth quarter and full year 2017
non-GAAP financial results, compared to the fourth quarter and full
year 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.
Revenues
Fourth quarter adjusted net revenues of $770 million were up 16% from the fourth quarter
of 2016. Higher investment advisory base fees and performance-based
fees drove the increase, partially offset by lower Bernstein
Research revenues and investment gains and higher net distribution
expense.
Full year adjusted net revenues of $2.7
billion increased 10% from $2.5
billion in 2016. Higher investment advisory base fees and
performance-based fees were partially offset by lower Bernstein
Research revenues and higher net distribution expense.
Expenses
Fourth quarter adjusted operating expenses of $498 million were up 10% from the fourth quarter
of 2016, driven by higher employee compensation and benefits,
G&A and promotion and servicing expenses. Employee compensation
and benefits expense increased due to higher incentive compensation
and commissions. Within G&A, professional fees and claims
processing and technology expenses increased. In addition, the
fourth quarter of 2016 included a one-time $2.6 million benefit from the reduction of legal
reserves related to settled litigation. Promotion and servicing
increased due to higher trade execution and marketing expenses.
Full year adjusted operating expenses of $2.0 billion increased 6% from $1.8 billion in 2016. Higher employee
compensation and benefits and G&A expenses were partially
offset by lower promotion and servicing expense. Employee
compensation and benefits expense increased due to higher incentive
compensation, base compensation, commissions and fringes. Within
G&A, $15 million in one-time
expenses on a net basis recorded during the year drove the
increase, in addition to higher professional fees, claims
processing, technology expenses and foreign exchange translation
losses. Promotion and servicing declined due to lower travel and
entertainment expense and transfer fees.
Operating Income, Margin and Net Income Per Unit
Fourth quarter adjusted operating income of $272 million increased 30% from $209 million in the fourth quarter of 2016, and
the adjusted operating margin of 35.3% increased 370 basis points
from 31.6%.
Full year adjusted operating income of $750 million increased 20% from $624 million in 2016, and the adjusted operating
margin of 27.7% increased 240 basis points from 25.3%.
Fourth quarter adjusted diluted net income per Unit of
$0.84 was up from $0.67 in the fourth quarter of 2016. Full year
adjusted diluted net income per Unit of $2.30 was up from $1.89 in 2016.
Headcount
As of December 31, 2017, we had
3,466 employees, compared to 3,438 employees as of December 31, 2016 and 3,458 as of September 30, 2017.
Unit Repurchases
During the fourth quarter and full year of 2017, we purchased
3.4 million and 9.3 million AB Holding Units for $85.6 million and $220.2
million, respectively (on a trade date basis). There were no
open market purchases in the fourth quarter and therefore these
amounts reflect open-market purchases of 5.2 million in 2017 for
$117.1 million, 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 Units purchased by employees as
part of a distribution reinvestment election.
Fourth Quarter 2017 Earnings Conference Call
Information
Management will review Fourth Quarter 2017 financial and
operating results during a conference call beginning at
8:00 a.m. (ET) on Tuesday,
February 13, 2018. The conference call will be hosted by
Seth P. Bernstein, President 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://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 8897166.
The presentation management will review during the conference
call will be available on AB's Investor Relations website shortly
after the release of Fourth Quarter 2017 financial and
operating results on February 13, 2018.
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 #: 8897166.
Availability of 2017 Form 10-K
Unitholders may obtain a copy of our Form 10-K for the year
ended December 31, 2017 in either
electronic format or hard copy on www.alliancebernstein.com:
- Download Electronic Copy: Unitholders can download an
electronic version of the report by visiting the "Investor &
Media Relations" page of our website at
www.alliancebernstein.com/investorrelations and clicking on the
"Reports & SEC Filings" section.
- Order Hard Copy Electronically or by Phone: Unitholders may
also order a hard copy of the report, which is expected to be
available for mailing in approximately eight weeks, free of charge.
Unitholders with internet access can follow the above instructions
to order a hard copy electronically. Unitholders without internet
access, or who would prefer to order by phone, can call
212-969-2416.
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, 2017. Any or all of the
forward-looking statements made in this news release, Form 10-K,
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 AB Holding Units to help fund anticipated obligations
under our incentive compensation award program: The number
of AB 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,
37% effective January 1, 2018.
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 wealth
clients in major world markets.
As of December 31, 2017, including
both the general partnership and limited partnership interests in
AB, AB Holding owned approximately 35.5% of AB and AXA, a worldwide
leader in financial protection, owned an approximate 64.7% economic
interest in AB.
Additional information about AB may be found on our website,
www.alliancebernstein.com.
AB (The Operating
Partnership)
|
|
|
|
|
|
|
US GAAP
Consolidated Statement of Income (Unaudited)
|
|
|
|
|
|
|
(US $
Thousands)
|
4Q
2017
|
|
4Q
2016
|
|
4Q 2017
vs.
4Q 2016 %
Change
|
|
|
|
|
|
|
|
|
GAAP
revenues:
|
|
|
|
|
|
|
Base fees
|
$
|
558,406
|
|
|
$
|
486,469
|
|
|
14.8
|
%
|
|
Performance
fees
|
69,433
|
|
|
29,147
|
|
|
138.2
|
%
|
|
Bernstein research
services
|
119,322
|
|
|
127,472
|
|
|
(6.4%)
|
|
|
Distribution
revenues
|
109,319
|
|
|
96,766
|
|
|
13.0
|
%
|
|
Dividends and
interest
|
20,139
|
|
|
16,812
|
|
|
19.8
|
%
|
|
Investments gains
(losses)
|
23,981
|
|
|
7,883
|
|
|
204.2
|
%
|
|
Other
revenues
|
26,508
|
|
|
24,815
|
|
|
6.8
|
%
|
|
Total
revenues
|
927,108
|
|
|
789,364
|
|
|
17.4
|
%
|
|
Less: interest
expense
|
7,967
|
|
|
3,108
|
|
|
156.3
|
%
|
|
Total net
revenues
|
919,141
|
|
|
786,256
|
|
|
16.9
|
%
|
|
|
|
|
|
|
|
|
GAAP operating
expenses:
|
|
|
|
|
|
|
Employee compensation
and benefits
|
334,082
|
|
|
301,723
|
|
|
10.7
|
%
|
|
Promotion and
servicing
|
|
|
|
|
|
|
Distribution-related payments
|
112,943
|
|
|
95,419
|
|
|
18.4
|
%
|
|
Amortization of
deferred sales commissions
|
6,871
|
|
|
9,460
|
|
|
(27.4%)
|
|
|
Trade execution,
marketing, T&E and other
|
54,855
|
|
|
51,776
|
|
|
5.9
|
%
|
|
General and
administrative
|
|
|
|
|
|
|
General
& administrative
|
121,094
|
|
|
103,964
|
|
|
16.5
|
%
|
|
Real
estate charges (credits)
|
(2,732)
|
|
|
(6,942)
|
|
|
(60.6%)
|
|
|
Contingent payment
arrangements
|
52
|
|
|
178
|
|
|
(70.8%)
|
|
|
Interest on
borrowings
|
1,966
|
|
|
1,472
|
|
|
33.6
|
%
|
|
Amortization of
intangible assets
|
6,975
|
|
|
6,967
|
|
|
0.1
|
%
|
|
Total operating
expenses
|
636,106
|
|
|
564,017
|
|
|
12.8
|
%
|
|
|
|
|
|
|
|
|
Operating
income
|
283,035
|
|
|
222,239
|
|
|
27.4
|
%
|
|
|
|
|
|
|
|
|
Income
taxes
|
28,241
|
|
|
(8,996)
|
|
|
n/m
|
|
|
|
|
|
|
|
|
|
Net income
|
254,794
|
|
|
231,235
|
|
|
10.2
|
%
|
|
|
|
|
|
|
|
|
Net income (loss) of
consolidated entities attributable to non-controlling
interests
|
8,384
|
|
|
6,697
|
|
|
25.2
|
%
|
|
|
|
|
|
|
|
|
Net income
attributable to AB Unitholders
|
$
|
246,410
|
|
|
$
|
224,538
|
|
|
9.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB Holding L.P.
(The Publicly-Traded Partnership)
|
|
|
|
|
|
|
SUMMARY STATEMENTS
OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(US $
Thousands)
|
4Q
2017
|
|
4Q
2016
|
|
4Q 2017
vs.
4Q 2016 %
Change
|
|
|
|
|
|
|
|
|
Equity in Net Income
Attributable to AB Unitholders
|
$
|
85,725
|
|
|
$
|
78,630
|
|
|
9.0
|
%
|
|
Income
Taxes
|
7,132
|
|
|
5,966
|
|
|
19.5
|
%
|
|
Net
Income
|
78,593
|
|
|
72,664
|
|
|
8.2
|
%
|
|
|
|
|
|
|
|
|
Additional Equity in
Earnings of Operating Partnership (1)
|
209
|
|
|
299
|
|
|
(30.1%)
|
|
|
Net Income -
Diluted
|
$
|
78,802
|
|
|
$
|
72,963
|
|
|
8.0
|
%
|
|
Diluted Net Income
per Unit
|
$
|
0.84
|
|
|
$
|
0.77
|
|
|
9.1
|
%
|
|
Distribution per
Unit
|
$
|
0.84
|
|
|
$
|
0.67
|
|
|
25.4
|
%
|
|
|
|
|
|
|
|
|
(1) To reflect higher
ownership in the Operating Partnership resulting from application
of the treasury stock method to outstanding options.
|
|
Units
Outstanding
|
4Q
2017
|
|
4Q
2016
|
|
4Q 2017
vs.
4Q 2016 %
Change
|
|
AB L.P.
|
|
|
|
|
|
|
Period-end
|
268,659,333
|
|
|
268,893,534
|
|
|
(0.1%)
|
|
|
Weighted average -
basic
|
265,486,340
|
|
|
266,665,011
|
|
|
(0.4%)
|
|
|
Weighted average -
diluted
|
265,837,495
|
|
|
267,221,192
|
|
|
(0.5%)
|
|
|
AB Holding
L.P.
|
|
|
|
|
|
|
Period-end
|
96,461,989
|
|
|
96,652,190
|
|
|
(0.2%)
|
|
|
Weighted average -
basic
|
93,288,657
|
|
|
94,423,093
|
|
|
(1.2%)
|
|
|
Weighted average -
diluted
|
93,639,812
|
|
|
94,979,274
|
|
|
(1.4%)
|
|
|
AB (The Operating
Partnership)
|
|
|
|
|
|
|
US GAAP
Consolidated Statement of Income (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(US $
Thousands)
|
|
2017
|
|
2016
|
|
2017 vs. 2016 %
Change
|
|
|
|
|
|
|
|
GAAP
revenues
|
|
|
|
|
|
|
Base fees
|
|
$
|
2,105,620
|
|
|
$
|
1,900,719
|
|
|
10.8
|
%
|
Performance
fees
|
|
94,780
|
|
|
32,752
|
|
|
189.4
|
%
|
Bernstein research
services
|
|
449,919
|
|
|
479,875
|
|
|
(6.2)
|
%
|
Distribution
revenues
|
|
412,063
|
|
|
384,405
|
|
|
7.2
|
%
|
Dividends and
interest
|
|
71,162
|
|
|
46,939
|
|
|
51.6
|
%
|
Investments gains
(losses)
|
|
92,102
|
|
|
93,353
|
|
|
(1.3)
|
%
|
Other
revenues
|
|
98,040
|
|
|
99,859
|
|
|
(1.8)
|
%
|
Total
revenues
|
|
3,323,686
|
|
|
3,037,902
|
|
|
9.4
|
%
|
Less: interest
expense
|
|
25,165
|
|
|
9,123
|
|
|
175.8
|
%
|
Total net
revenues
|
|
3,298,521
|
|
|
3,028,779
|
|
|
8.9
|
%
|
|
|
|
|
|
|
|
GAAP operating
expenses:
|
|
|
|
|
|
|
Employee compensation
and benefits
|
|
1,313,469
|
|
|
1,229,721
|
|
|
6.8
|
%
|
Promotion and
servicing
|
|
|
|
|
|
|
Distribution-related payments
|
|
420,350
|
|
|
371,607
|
|
|
13.1
|
%
|
Amortization of deferred sales commissions
|
|
31,886
|
|
|
41,066
|
|
|
(22.4)
|
%
|
Trade
execution, marketing, T&E and other
|
|
204,392
|
|
|
208,538
|
|
|
(2.0)
|
%
|
General and
administrative
|
|
|
|
|
|
|
General
& administrative
|
|
481,488
|
|
|
426,147
|
|
|
13.0
|
%
|
Real
estate charges (credits)
|
|
36,669
|
|
|
17,704
|
|
|
107.1
|
%
|
Contingent payment
arrangements
|
|
267
|
|
|
(20,245)
|
|
|
n/m
|
|
Interest on
borrowings
|
|
8,194
|
|
|
4,765
|
|
|
72.0
|
%
|
Amortization of
intangible assets
|
|
27,896
|
|
|
26,311
|
|
|
6.0
|
%
|
Total operating
expenses
|
|
2,524,611
|
|
|
2,305,614
|
|
|
9.5
|
%
|
|
|
|
|
|
|
|
Operating
income
|
|
773,910
|
|
|
723,165
|
|
|
7.0
|
%
|
|
|
|
|
|
|
|
Income
taxes
|
|
53,110
|
|
|
28,319
|
|
|
87.5
|
%
|
|
|
|
|
|
|
|
Net income
|
|
720,800
|
|
|
694,846
|
|
|
3.7
|
%
|
|
|
|
|
|
|
|
Net income (loss) of
consolidated entities attributable to non-controlling
interests
|
|
58,397
|
|
|
21,488
|
|
|
171.8
|
%
|
|
|
|
|
|
|
|
Net income
attributable to AB Unitholders
|
|
$
|
662,403
|
|
|
$
|
673,358
|
|
|
(1.6)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB Holding L.P.
(The Publicly-Traded Partnership)
|
|
|
|
|
|
|
SUMMARY STATEMENTS
OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
2017 vs. 2016 %
Change
|
Equity in Net Income
Attributable to AB Unitholders
|
|
$
|
232,393
|
|
|
$
|
239,389
|
|
|
(2.9)
|
%
|
Income
Taxes
|
|
24,971
|
|
|
22,803
|
|
|
9.5
|
%
|
Net Income
|
|
207,422
|
|
|
216,586
|
|
|
(4.2)
|
%
|
|
|
|
|
|
|
|
Additional Equity in
Earnings of Operating Partnership (1)
|
|
680
|
|
|
878
|
|
|
(22.6)
|
%
|
Net Income -
Diluted
|
|
$
|
208,102
|
|
|
$
|
217,464
|
|
|
(4.3)
|
%
|
Diluted Net Income
per Unit
|
|
$2.19
|
|
|
$2.23
|
|
|
(1.8)
|
%
|
Distribution per
Unit
|
|
$2.30
|
|
|
$1.92
|
|
|
19.8
|
%
|
(1) To reflect higher
ownership in the Operating Partnership resulting from application
of the treasury stock method to outstanding options.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units
Outstanding
|
|
2017
|
|
2016
|
|
2017 vs. 2016 %
Change
|
AB L.P.
|
|
|
|
|
|
|
Period-end
|
|
268,659,333
|
|
|
268,893,534
|
|
|
(0.1)
|
%
|
Weighted average -
basic
|
|
266,955,340
|
|
|
269,083,717
|
|
|
(0.8)
|
%
|
Weighted average -
diluted
|
|
267,384,983
|
|
|
269,638,155
|
|
|
(0.8)
|
%
|
AB Holding
L.P.
|
|
|
|
|
|
|
Period-end
|
|
96,461,989
|
|
|
96,652,190
|
|
|
(0.2)
|
%
|
Weighted average -
basic
|
|
94,733,041
|
|
|
96,834,006
|
|
|
(2.2)
|
%
|
Weighted average -
diluted
|
|
95,162,684
|
|
|
97,388,444
|
|
|
(2.3)
|
%
|
AllianceBernstein
L.P.
|
|
|
ASSETS UNDER
MANAGEMENT | December 31, 2017
|
|
|
($
billions)
|
|
|
Ending and
Average
|
Three Months
Ended
|
|
|
12/31/17
|
9/30/17
|
|
Ending Assets Under
Management
|
$554.5
|
$534.9
|
|
Average Assets Under
Management
|
$545.3
|
$526.6
|
|
|
|
|
|
|
Three-Month
Changes By Distribution Channel
|
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
Private Wealth
Management
|
|
Total
|
|
Beginning of
Period
|
$
|
260.0
|
|
|
$
|
185.7
|
|
|
$
|
89.2
|
|
|
$
|
534.9
|
|
|
Sales/New
accounts
|
3.5
|
|
|
12.9
|
|
|
2.9
|
|
|
19.3
|
|
|
Redemption/Terminations
|
(1.1)
|
|
|
(10.2)
|
|
|
(2.7)
|
|
|
(14.0)
|
|
|
Net Cash
Flows
|
0.6
|
|
|
(1.7)
|
|
|
—
|
|
|
(1.1)
|
|
|
Net
Flows
|
3.0
|
|
|
1.0
|
|
|
0.2
|
|
|
4.2
|
|
|
Investment
Performance
|
6.3
|
|
|
6.2
|
|
|
2.9
|
|
|
15.4
|
|
|
End of
Period
|
$
|
269.3
|
|
|
$
|
192.9
|
|
|
$
|
92.3
|
|
|
$
|
554.5
|
|
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
|
$
|
131.7
|
|
|
$
|
52.3
|
|
|
$
|
243.0
|
|
|
$
|
39.4
|
|
|
$
|
9.9
|
|
|
$
|
58.6
|
|
|
$
|
534.9
|
|
|
Sales/New
accounts
|
6.0
|
|
|
—
|
|
|
8.9
|
|
|
2.2
|
|
|
—
|
|
|
2.2
|
|
|
19.3
|
|
|
Redemption/Terminations
|
(5.2)
|
|
|
(0.1)
|
|
|
(7.0)
|
|
|
(1.2)
|
|
|
(0.1)
|
|
|
(0.4)
|
|
|
(14.0)
|
|
|
Net Cash
Flows
|
(0.8)
|
|
|
(1.3)
|
|
|
1.0
|
|
|
(0.1)
|
|
|
0.1
|
|
|
—
|
|
|
(1.1)
|
|
|
Net
Flows
|
—
|
|
|
(1.4)
|
|
|
2.9
|
|
|
0.9
|
|
|
—
|
|
|
1.8
|
|
|
4.2
|
|
|
Investment
Performance
|
7.7
|
|
|
3.4
|
|
|
2.0
|
|
|
0.1
|
|
|
—
|
|
|
2.2
|
|
|
15.4
|
|
|
End of
Period
|
$
|
139.4
|
|
|
$
|
54.3
|
|
|
$
|
247.9
|
|
|
$
|
40.4
|
|
|
$
|
9.9
|
|
|
$
|
62.6
|
|
|
$
|
554.5
|
|
Three-Month Net
Flows By Investment Service (Active versus Passive)
|
|
|
Actively
Managed
|
|
Passively
Managed
(1)
|
|
Total
|
|
|
Equity
|
$
|
—
|
|
|
$
|
(1.4)
|
|
|
$
|
(1.4)
|
|
|
|
Fixed
Income
|
3.8
|
|
|
—
|
|
|
3.8
|
|
|
|
Other
(2)
|
1.7
|
|
|
0.1
|
|
|
1.8
|
|
|
|
Total
|
$
|
5.5
|
|
|
$
|
(1.3)
|
|
|
$
|
4.2
|
|
|
|
|
|
|
(1)
Includes index and enhanced index services.
|
|
|
(2)
Includes certain multi-asset solutions and services and certain
alternative investments.
|
|
AllianceBernstein
L.P.
|
|
|
ASSETS UNDER
MANAGEMENT | December 31, 2017
|
|
|
($
billions)
|
|
|
Ending and
Average
|
Twelve Months
Ended
|
|
|
12/31/17
|
12/31/16
|
|
Ending Assets Under
Management
|
$554.5
|
$480.2
|
|
Average Assets Under
Management
|
$518.0
|
$480.0
|
|
|
|
|
|
|
Twelve-Month
Changes By Distribution Channel
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
Private Wealth
Management
|
|
Total
|
|
Beginning of
Period
|
$
|
239.3
|
|
|
$
|
160.2
|
|
|
$
|
80.7
|
|
|
$
|
480.2
|
|
|
Sales/New
accounts
|
13.4
|
|
|
53.8
|
|
|
11.5
|
|
|
78.7
|
|
|
Redemption/Terminations
|
(11.5)
|
|
|
(38.6)
|
|
|
(10.6)
|
|
|
(60.7)
|
|
|
Net Cash
Flows
|
1.7
|
|
|
(6.3)
|
|
|
(0.2)
|
|
|
(4.8)
|
|
|
Net
Flows
|
3.6
|
|
|
8.9
|
|
|
0.7
|
|
|
13.2
|
|
|
Investment
Performance
|
26.4
|
|
|
23.8
|
|
|
10.9
|
|
|
61.1
|
|
|
End of
Period
|
$
|
269.3
|
|
|
$
|
192.9
|
|
|
$
|
92.3
|
|
|
$
|
554.5
|
|
Twelve-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
|
$
|
111.9
|
|
|
$
|
48.1
|
|
|
$
|
220.9
|
|
|
$
|
36.9
|
|
|
$
|
11.1
|
|
|
$
|
51.3
|
|
|
$
|
480.2
|
|
|
Sales/New
accounts
|
21.9
|
|
|
1.1
|
|
|
41.1
|
|
|
7.9
|
|
|
0.1
|
|
|
6.6
|
|
|
78.7
|
|
|
Redemption/Terminations
|
(19.0)
|
|
|
(1.4)
|
|
|
(29.8)
|
|
|
(5.9)
|
|
|
(1.8)
|
|
|
(2.8)
|
|
|
(60.7)
|
|
|
Net Cash
Flows
|
(2.1)
|
|
|
(4.0)
|
|
|
1.5
|
|
|
(0.1)
|
|
|
—
|
|
|
(0.1)
|
|
|
(4.8)
|
|
|
Net
Flows
|
0.8
|
|
|
(4.3)
|
|
|
12.8
|
|
|
1.9
|
|
|
(1.7)
|
|
|
3.7
|
|
|
13.2
|
|
|
Investment
Performance
|
26.7
|
|
|
10.5
|
|
|
14.2
|
|
|
1.6
|
|
|
0.5
|
|
|
7.6
|
|
|
61.1
|
|
|
End of
Period
|
$
|
139.4
|
|
|
$
|
54.3
|
|
|
$
|
247.9
|
|
|
$
|
40.4
|
|
|
$
|
9.9
|
|
|
$
|
62.6
|
|
|
$
|
554.5
|
|
Twelve-Month Net
Flows By Investment Service (Active versus Passive)
|
|
|
Actively
Managed
|
|
Passively Managed
(1)
|
|
Total
|
|
|
Equity
|
$
|
0.8
|
|
|
$
|
(4.3)
|
|
|
$
|
(3.5)
|
|
|
|
Fixed
Income
|
14.7
|
|
|
(1.7)
|
|
|
13.0
|
|
|
|
Other
(2)
|
3.6
|
|
|
0.1
|
|
|
3.7
|
|
|
|
Total
|
$
|
19.1
|
|
|
$
|
(5.9)
|
|
|
$
|
13.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
|
$
|
155.7
|
|
|
$
|
108.4
|
|
|
$
|
90.4
|
|
|
$
|
354.5
|
|
|
Non-U.S.
Clients
|
113.6
|
|
|
84.5
|
|
|
1.9
|
|
|
200.0
|
|
|
Total
|
$
|
269.3
|
|
|
$
|
192.9
|
|
|
$
|
92.3
|
|
|
$
|
554.5
|
|
AB
L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP
FINANCIAL RESULTS TO
ADJUSTED FINANCIAL RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
Twelve Months
Ended
|
|
US $ Thousands,
unaudited
|
|
12/31/2017
|
|
9/30/2017
|
|
6/30/2017
|
|
3/31/2017
|
|
12/31/2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues, GAAP
basis
|
|
$
|
919,141
|
|
|
$
|
812,150
|
|
|
$
|
802,313
|
|
|
$
|
764,917
|
|
|
$
|
786,256
|
|
|
$
|
3,298,521
|
|
|
$
|
3,028,779
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term incentive compensation-related investment (gains)
losses
|
(977)
|
|
|
(2,055)
|
|
|
(1,926)
|
|
|
(2,979)
|
|
|
846
|
|
|
(7,937)
|
|
|
(1,175)
|
|
|
|
Long-term incentive compensation-related dividends and
interest
|
(1,515)
|
|
|
(130)
|
|
|
(150)
|
|
|
(158)
|
|
|
(1,212)
|
|
|
(1,954)
|
|
|
(1,647)
|
|
|
|
Distribution-related payments
|
(112,943)
|
|
|
(108,284)
|
|
|
(102,756)
|
|
|
(96,367)
|
|
|
(95,419)
|
|
|
(420,350)
|
|
|
(371,607)
|
|
|
|
Amortization of deferred sales commissions
|
(6,871)
|
|
|
(7,629)
|
|
|
(8,307)
|
|
|
(9,079)
|
|
|
(9,460)
|
|
|
(31,886)
|
|
|
(41,066)
|
|
|
|
Pass-through fees & expenses
|
(10,664)
|
|
|
(9,759)
|
|
|
(9,701)
|
|
|
(10,407)
|
|
|
(10,682)
|
|
|
(40,531)
|
|
|
(43,808)
|
|
|
|
Gain on
sale of investment carried at cost
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(75,273)
|
|
|
|
Gain on
sale of software technology
|
—
|
|
|
(361)
|
|
|
(4,231)
|
|
|
—
|
|
|
—
|
|
|
(4,592)
|
|
|
—
|
|
|
|
Impact
of consolidated company-sponsored investment funds
|
(16,032)
|
|
|
(23,368)
|
|
|
(25,701)
|
|
|
(22,155)
|
|
|
(8,360)
|
|
|
(87,255)
|
|
|
(24,889)
|
|
|
Adjusted Net
Revenues
|
|
$
|
770,139
|
|
|
$
|
660,564
|
|
|
$
|
649,541
|
|
|
$
|
623,772
|
|
|
$
|
661,969
|
|
|
$
|
2,704,016
|
|
|
$
|
2,469,314
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income,
GAAP basis
|
|
$
|
283,035
|
|
|
$
|
162,027
|
|
|
$
|
162,537
|
|
|
$
|
166,312
|
|
|
$
|
222,239
|
|
|
$
|
773,910
|
|
|
$
|
723,165
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term incentive compensation-related items
|
(103)
|
|
|
329
|
|
|
417
|
|
|
68
|
|
|
(252)
|
|
|
709
|
|
|
720
|
|
|
|
Gain on
sale of investment carried at cost
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(75,273)
|
|
|
|
Gain on
sale of software technology
|
—
|
|
|
(361)
|
|
|
(4,231)
|
|
|
—
|
|
|
—
|
|
|
(4,592)
|
|
|
—
|
|
|
|
Real
estate (credits) charges
|
(2,732)
|
|
|
18,655
|
|
|
20,747
|
|
|
(2)
|
|
|
(6,941)
|
|
|
36,669
|
|
|
17,704
|
|
|
|
Acquisition-related expenses
|
—
|
|
|
1,462
|
|
|
25
|
|
|
524
|
|
|
514
|
|
|
2,012
|
|
|
1,057
|
|
|
|
Contingent payment arrangements
|
—
|
|
|
(193)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(193)
|
|
|
(21,483)
|
|
|
|
Sub-total of non-GAAP
adjustments
|
(2,835)
|
|
|
19,892
|
|
|
16,958
|
|
|
590
|
|
|
(6,679)
|
|
|
34,605
|
|
|
(77,275)
|
|
|
|
Less:
Net (loss) income of consolidated entities attributable to
non-controlling interests
|
8,384
|
|
|
16,526
|
|
|
17,169
|
|
|
16,318
|
|
|
6,697
|
|
|
58,397
|
|
|
21,488
|
|
|
Adjusted Operating
Income
|
|
$
|
271,816
|
|
|
$
|
165,393
|
|
|
$
|
162,326
|
|
|
$
|
150,584
|
|
|
$
|
208,863
|
|
|
$
|
750,118
|
|
|
$
|
624,402
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Margin,
GAAP basis excl. non-controlling interests
|
29.9
|
%
|
|
17.9
|
%
|
|
18.1
|
%
|
|
19.6
|
%
|
|
27.4
|
%
|
|
21.7
|
%
|
|
23.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
Margin
|
35.3
|
%
|
|
25.0
|
%
|
|
25.0
|
%
|
|
24.1
|
%
|
|
31.6
|
%
|
|
27.7
|
%
|
|
25.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB Holding
L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP
EPU TO ADJUSTED EPU
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
Twelve Months
Ended
|
|
$ Thousands except
per Unit amounts, unaudited
|
12/31/2017
|
|
9/30/2017
|
|
6/30/2017
|
|
3/31/2017
|
|
12/31/2016
|
|
2017
|
|
2016
|
|
Net Income -
Diluted, GAAP basis
|
$
|
78,802
|
|
|
$
|
43,314
|
|
|
$
|
41,878
|
|
|
$
|
44,086
|
|
|
$
|
72,963
|
|
|
$
|
208,102
|
|
|
$
|
217,464
|
|
|
Impact on net income
of AB non-GAAP adjustments
|
(599)
|
|
|
4,960
|
|
|
5,637
|
|
|
197
|
|
|
(9,761)
|
|
|
10,877
|
|
|
(33,246)
|
|
|
Adjusted Net
Income - Diluted
|
$
|
78,203
|
|
|
$
|
48,274
|
|
|
$
|
47,515
|
|
|
$
|
44,283
|
|
|
$
|
63,202
|
|
|
$
|
218,979
|
|
|
$
|
184,218
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Net Income
per Holding Unit, GAAP basis
|
$
|
0.84
|
|
|
$
|
0.46
|
|
|
$
|
0.43
|
|
|
$
|
0.46
|
|
|
$
|
0.77
|
|
|
$
|
2.19
|
|
|
$
|
2.23
|
|
|
Impact of AB non-GAAP
adjustments
|
—
|
|
|
0.05
|
|
|
0.06
|
|
|
—
|
|
|
(0.10)
|
|
|
0.11
|
|
|
(0.34)
|
|
|
Adjusted Diluted
Net Income per Holding Unit
|
$
|
0.84
|
|
|
$
|
0.51
|
|
|
$
|
0.49
|
|
|
$
|
0.46
|
|
|
$
|
0.67
|
|
|
$
|
2.30
|
|
|
$
|
1.89
|
|
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.
We adjust for the revenue impact of consolidating
company-sponsored investment funds by eliminating the consolidated
company-sponsored investment funds' revenues and including AB's
fees from such consolidated company-sponsored investment funds and
AB's investment gains and losses on its investments in such
consolidated company-sponsored investment funds that were
eliminated in consolidation. Lastly, in 2017 we excluded a
cumulative realized gain of $4.6
million on the exchange of software technology for an
ownership stake in a third party provider of financial market data
and trading tools and in 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
these transactions are 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 in 2016, (3) the gain on the sale
of software technology during 2017, (4) real estate charges, (5)
acquisition-related expenses, (6) adjustments to contingent payment
arrangements, and (7) the impact of consolidated company-sponsored
investment funds.
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 delivered
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 the liquidation of our Jasper investment
during 2016 has been excluded due to its non-recurring nature and
because it is not part of our core operating results.
A realized gain on the exchange of software technology for an
ownership stake in a third party company during 2017 has been
excluded due to its non-recurring nature and because it is not part
of our core operating results.
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.
Acquisition-related expenses 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.
We adjusted for the operating income impact of consolidating
certain company-sponsored investment funds by eliminating the
consolidated company-sponsored funds' 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.
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SOURCE AllianceBernstein L.P.