NEW YORK, Feb. 13, 2019 /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, 2018.
"We continued to take steps to strengthen our strategic
position and maintained strong underlying momentum across our
business in 2018," said Seth P.
Bernstein, President and CEO of AllianceBernstein. "Our full
year results reflect our sustained investment in active equities,
which grew at an organic rate of nearly 8%, and the growth of our
equities and alternatives services drove an improvement of 1% in
our average fee rate. Through disciplined expense management, we
added 140 basis points to our adjusted operating margin of
29.1%."
(US $ Thousands
except per Unit amounts)
|
4Q 2018
|
|
4Q 2017
|
|
4Q 2018
vs 4Q
2017 %
Change
|
|
2018
|
|
2017
|
|
2018 vs
2017 %
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Financial Measures
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
$
|
804,660
|
|
|
$
|
919,141
|
|
|
(12.5)
|
%
|
|
$
|
3,367,361
|
|
|
$
|
3,298,521
|
|
|
2.1
|
%
|
Operating
income
|
$
|
199,359
|
|
|
$
|
283,035
|
|
|
(29.6)
|
%
|
|
$
|
825,314
|
|
|
$
|
773,910
|
|
|
6.6
|
%
|
Operating
margin
|
25.0
|
%
|
|
29.9
|
%
|
|
(490 bps)
|
|
23.9
|
%
|
|
21.7
|
%
|
|
220 bps
|
AB Holding Diluted
EPU
|
$
|
0.63
|
|
|
$
|
0.84
|
|
|
(25.0)
|
%
|
|
$
|
2.50
|
|
|
$
|
2.19
|
|
|
14.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Financial Measures
(1)
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
$
|
696,418
|
|
|
$
|
772,565
|
|
|
(9.9)
|
%
|
|
$
|
2,925,604
|
|
|
$
|
2,712,899
|
|
|
7.8
|
%
|
Operating
income
|
$
|
204,227
|
|
|
$
|
271,816
|
|
|
(24.9)
|
%
|
|
$
|
852,059
|
|
|
$
|
750,118
|
|
|
13.6
|
%
|
Operating
margin
|
29.3
|
%
|
|
35.2
|
%
|
|
(590 bps)
|
|
29.1
|
%
|
|
27.7
|
%
|
|
140 bps
|
AB Holding Diluted
EPU
|
$
|
0.64
|
|
|
$
|
0.84
|
|
|
(23.8)
|
%
|
|
$
|
2.67
|
|
|
$
|
2.30
|
|
|
16.1
|
%
|
AB Holding cash
distribution per Unit
|
$
|
0.64
|
|
|
$
|
0.84
|
|
|
(23.8)
|
%
|
|
$
|
2.68
|
|
|
$
|
2.30
|
|
|
16.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
(US $
Billions)
|
|
|
|
|
|
|
|
|
|
|
|
Assets Under Management
|
|
|
|
|
|
|
|
|
|
|
|
Ending AUM
|
$
|
516.4
|
|
|
$
|
554.5
|
|
|
(6.9)
|
%
|
|
$
|
516.4
|
|
|
$
|
554.5
|
|
|
(6.9%)
|
|
Average
AUM
|
$
|
532.5
|
|
|
$
|
545.3
|
|
|
(2.3)
|
%
|
|
$
|
544.2
|
|
|
$
|
518.0
|
|
|
5.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
(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: "By delivering differentiated return
streams to our clients, we've been able to scale our offering and
expand our presence in the most promising growth areas - even in
challenging markets. In Retail, full year gross sales of
$54.2 billion were our highest since
2012 and our most diverse in years: 25 AB funds across asset
classes had more than $100 million in
net flows in 2018. In Institutional, active equity gross sales of
$7.3 billion were our highest since
2008 and net inflows of $4.4 billion
translates to a 13% organic growth rate. And our $9.7 billion institutional pipeline at year-end
reflects strong demand for our active equity and alternative
services. In Private Wealth, full year net inflows were our
best in more than a decade and asset retention levels remain well
above the historical average. In our sell side business, we are
excited to expand our leading research footprint through our
impending acquisition of Autonomous Research."
Bernstein concluded: "We're proud of all we accomplished
in 2018 - and well aware of the challenges we face today given the
difficult markets at year end. Coming into 2019, our asset base is
lower and the revenue outlook is uncertain. At the same time, we
have the right strategy, diversified business, talent and global
footprint to continue delivering for our clients - our primary goal
in any market environment."
The firm's cash distribution per unit of $0.64 is payable on March
7, 2019, to holders of record of AB Holding Units at the
close of business on February 25,
2019.
Market Performance
US and global equity and fixed income markets were mixed
in the fourth quarter and for the full year. The S&P 500's
total return was (13.5)% in the fourth quarter and the MSCI EAFE
Index's total return was (12.5)%. For the full year, the S&P
500 returned (4.4)% and the MSCI EAFE returned (13.4)%. The
Bloomberg Barclays US Aggregate Index returned 1.6% during the
fourth quarter and the Bloomberg Barclays Global Aggregate ex US
Index's total return was 0.9%. For the full year, the Bloomberg
Barclays US Aggregate Index's total return was flat and the
Bloomberg Barclays US Aggregate ex US Index returned
(2.2)%.
Assets Under Management ($ Billions)
Total assets under management as of December 31, 2018 were $516.4 billion, down $34.0
billion, or 6.2%, from September 30,
2018, and down $38.1 billion,
or 6.9%, from December 31,
2017.
|
Institutional
|
|
Retail
|
|
Private
Wealth
Management
|
|
Total
|
Assets Under
Management 12/31/18
|
$246.3
|
|
$180.8
|
|
$89.3
|
|
$516.4
|
Net Flows for Three
Months Ended 12/31/18:
|
|
|
|
|
|
|
|
Active
|
$0.8
|
|
$(1.2)
|
|
$(0.8)
|
|
$(1.2)
|
Passive
|
0.2
|
|
1.9
|
|
(0.1)
|
|
2.0
|
Total
|
$1.0
|
|
$0.7
|
|
$(0.9)
|
|
$0.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Flows for Twelve
Months Ended 12/31/18:
|
|
|
|
|
|
|
|
Active
|
$(9.8)
|
|
$0.4
|
|
$1.5
|
|
$(7.9)
|
Passive
|
(0.2)
|
|
(0.4)
|
|
0.4
|
|
(0.2)
|
Total
|
$(10.0)
|
|
$0.0
|
|
$1.9
|
|
$(8.1)
|
|
|
|
|
|
|
|
|
Total net inflows were $0.8
billion in the fourth quarter, versus net inflows of
$1.3 billion in the third quarter,
and net inflows of $4.2 billion in
the prior year period. Total net outflows were $8.1 billion for the full year, versus net
inflows of $13.2 billion in the prior
year.
Institutional channel fourth quarter net inflows of
$1.0 billion compared to net outflows
of $0.2 billion in the third quarter.
Institutional gross sales of $3.6
billion decreased 3% sequentially from $3.7 billion. Full year net outflows of
$10.0 billion compared to net inflows
of $3.6 billion in the prior year.
Full year gross sales of $26.1
billion increased 95% from $13.4
billion in the prior year and included $10.1 billion of low-fee Customized Retirement
Strategies fundings. The pipeline of awarded but unfunded
Institutional mandates increased sequentially to $9.7 billion at December
31, 2018 from $7.9 billion at
September 30, 2018.
Retail channel fourth quarter net inflows of $0.7 billion compared to net inflows of
$1.2 billion in the third quarter.
Retail gross sales of $15.0 billion
increased 19% sequentially from $12.6
billion. Full year net flows were breakeven compared to net
inflows of $8.9 billion in the prior
year. Full year gross sales of $54.2
billion increased 1% from $53.8
billion in the prior year.
Private Wealth channel fourth quarter net outflows of
$0.9 billion compared to net inflows
of $0.3 billion in the third quarter.
Private Wealth gross sales of $2.6
billion decreased 13% sequentially from $3.0 billion. Full year net inflows of
$1.9 billion compared to net inflows
of $0.7 billion in the prior year.
Full year gross sales of $13.5
billion increased 17% from $11.5
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). Available Cash
Flow typically is 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 adjustments that are made for adjusted
net income should not be made with respect to the Available Cash
Flow calculation.
US GAAP Earnings
Revenues
Fourth quarter net revenues of $805
million decreased 13% from the fourth quarter of 2017. Lower
performance-based fees and investment advisory base fees,
investment losses compared to investment gains in the prior year
period, and lower distribution revenues, Bernstein Research
revenues and other revenues drove the decrease.
Full year 2018 net revenues of $3.4
billion increased 2% from $3.3
billion in 2017. Higher investment advisory base fees,
performance-based fees and distribution revenues were partially
offset by lower investment gains and Bernstein Research
revenues.
Fourth quarter Bernstein Research revenues decreased 3%
from the prior year period and full year Bernstein Research
revenues decreased 2% due to a volume mix shift to lower fee
electronic trading across all regions, partially offset by higher
research payments due to the unbundling of services.
Expenses
Fourth quarter operating expenses of $605 million decreased 5% from the fourth quarter
of 2017. Total employee compensation and benefits, general and
administrative ("G&A") and promotion and servicing expenses
were all lower. Employee compensation and benefit expense decreased
due to lower incentive compensation, partially offset by higher
base compensation, fringes, commissions and other employment costs.
Within G&A, more favorable foreign exchange translation and
lower errors, portfolio servicing fees and occupancy expense were
partially offset by higher professional fees and technology costs.
Additionally, the company recorded a non-cash real estate charge of
$0.7 million in the fourth quarter
versus a $2.7 million non-cash real
estate credit in the prior year period. Promotion and servicing
expense declined due to lower distribution related payments,
amortization of deferred sales commissions and trade execution
costs, partially offset by higher marketing expense.
Full year 2018 operating expenses of $2.5 billion increased 1% from $2.5 billion in 2017. Higher total employee
compensation and benefits and promotion and servicing expenses were
partially offset by lower G&A expense. Employee compensation
and benefits expense increased due to higher incentive
compensation, commissions, base compensation, fringes and other
employment costs. Promotion and servicing expense increased due to
higher distribution related payments, marketing expense, trade
execution costs and transfer fees, partially offset by lower
amortization of deferred sales commissions and travel and
entertainment expense. Within G&A, lower occupancy expense,
portfolio servicing fees and errors and more favorable foreign
exchange translation were partially offset by higher professional
fees and technology costs. The company recorded non-cash real
estate charges of $7.2 million in
2018 versus $36.7 million in 2017.
Additionally, 2017 included $15.0
million of net non-recurring charges related to a
$19.7 million future early
termination outsourcing agreement payment that was partially offset
by a $4.7 million value-added tax
(VAT) refund credit.
Operating Income and Net Income Per Unit
Fourth quarter operating income of $199 million decreased 30% from $283 million in the fourth quarter of 2017 and
the operating margin of 25.0% decreased 490 basis points from 29.9%
in the fourth quarter of 2017. Full year operating income of
$825 million increased 7% from
$774 million in 2017 and the
operating margin of 23.9% increased 220 basis points from 21.7% in
2017.
Fourth quarter diluted net income per Unit of $0.63 compared to $0.84 in the fourth quarter of 2017. Full year
diluted net income per Unit of $2.50
compared to $2.19 in 2017.
Non-GAAP Earnings
This section discusses our fourth quarter and full year
2018 non-GAAP financial results, compared to the fourth quarter and
full year 2017. 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 $696 million decreased 10% from the fourth
quarter of 2017. Lower performance-based fees and investment
advisory base fees, investment losses versus flat investment
performance in the prior year period, higher interest expense and
lower Bernstein Research revenues drove the decline.
Full year adjusted net revenues of $2.9 billion increased 8% from $2.7 billion in 2017. Higher investment advisory
base fees, performance-based fees and other revenues were partially
offset by higher interest expense, lower Bernstein Research
revenues and investment losses versus investment gains in the prior
year.
Expenses
Fourth quarter adjusted operating expenses of $492 million were down 2% from the fourth quarter
of 2017, driven by lower total employee compensation and benefits
and G&A expenses, partially offset by higher promotion and
servicing expense. Employee compensation and benefits expense
decreased due to lower incentive compensation, partially offset by
higher base compensation, fringes, commissions and other employment
costs. Within G&A, lower portfolio servicing fees and errors
and more favorable foreign exchange translation were partially
offset by higher professional fees and technology costs. Promotion
and servicing expense increased due to higher marketing
expense.
Full year adjusted operating expenses of $2.1 billion increased 6% from $2.0 billion in 2017. Higher employee
compensation and benefits and promotion and servicing expenses were
partially offset by lower G&A expense. Employee compensation
and benefits expense increased due to higher incentive
compensation, commissions, base compensation, fringes and other
employment costs. Promotion and servicing expense increased due to
higher trade execution costs, marketing expense and transfer fees,
partially offset by lower travel and entertainment expense. Within
G&A, the prior year included $15
million in one-time expenses on a net basis. Additionally,
lower occupancy expense, portfolio servicing fees and errors and
more favorable foreign exchange translation were partially offset
by higher professional fees and technology costs.
Operating Income, Margin and Net Income Per
Unit
Fourth quarter adjusted operating income of $204 million decreased 25% from $272 million in the fourth quarter of 2017, and
the adjusted operating margin of 29.3% decreased 590 basis points
from 35.2%.
Full year adjusted operating income of $852 million increased 14% from $750 million in 2017, and the adjusted operating
margin of 29.1% increased 140 basis points from 27.7%.
Fourth quarter adjusted diluted net income per Unit of
$0.64 was down from $0.84 in the fourth quarter of 2017. Full year
adjusted diluted net income per Unit of $2.67 was up from $2.30 in 2017.
Headcount
As of December 31, 2018, we
had 3,641 employees, compared to 3,466 employees as of December 31, 2017 and 3,583 as of September 30, 2018.
Unit Repurchases
During the fourth quarter and full year of 2018, we
purchased 6.4 million and 9.3 million AB Holding Units for
$184.8 million and $268.0 million, respectively (on a trade date
basis). These amounts reflect open-market purchases of 3.7 million
and 6.5 million AB Holding Units for $102.3
million and $183.2 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 Units purchased by employees as part of a distribution
reinvestment election.
Fourth Quarter 2018 Earnings Conference Call
Information
Management will review Fourth Quarter 2018 financial and
operating results during a conference call beginning at
8:00 a.m. (ET) on Wednesday,
February 13, 2019. 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 6369159.
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 2018
financial and operating results on February 13,
2019.
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 #: 6369159.
Availability of 2018 Form 10-K
Unitholders may obtain a copy of our Form 10-K for the
year ended December 31, 2018 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, 2018. 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, 2018,
including both the general partnership and limited partnership
interests in AllianceBernstein, AllianceBernstein Holding owned
approximately 35.6% of AllianceBernstein and AXA Equitable Holdings
("EQH"), directly and through various subsidiaries, owned an
approximate 65.2% economic interest in
AllianceBernstein.
Additional information about AllianceBernstein may be
found on our website,
www.alliancebernstein.com.
AB (The Operating Partnership)
|
|
|
|
|
|
|
US GAAP Consolidated Statement
of
Income (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(US $
Thousands)
|
4Q 2018
|
|
4Q 2017
|
|
4Q 2018 vs.
4Q 2017 %
Change
|
|
|
|
|
|
|
|
|
GAAP revenues:
|
|
|
|
|
|
|
Base fees
|
$
|
544,484
|
|
|
$
|
559,311
|
|
|
(2.7)
|
%
|
|
Performance
fees
|
35,440
|
|
|
69,433
|
|
|
(49.0)
|
%
|
|
Bernstein research
services
|
115,240
|
|
|
119,322
|
|
|
(3.4)
|
%
|
|
Distribution
revenues
|
100,952
|
|
|
109,319
|
|
|
(7.7)
|
%
|
|
Dividends and
interest
|
26,875
|
|
|
20,139
|
|
|
33.4
|
%
|
|
Investments gains
(losses)
|
(24,207)
|
|
|
23,981
|
|
|
(200.9)
|
%
|
|
Other
revenues
|
22,128
|
|
|
25,603
|
|
|
(13.6)
|
%
|
|
Total
revenues
|
820,912
|
|
|
927,108
|
|
|
(11.5)
|
%
|
|
Less: interest
expense
|
16,252
|
|
|
7,967
|
|
|
104.0
|
%
|
|
Total net
revenues
|
804,660
|
|
|
919,141
|
|
|
(12.5)
|
%
|
|
|
|
|
|
|
|
|
GAAP operating expenses:
|
|
|
|
|
|
|
Employee compensation
and benefits
|
319,297
|
|
|
334,082
|
|
|
(4.4)
|
%
|
|
Promotion and
servicing
|
|
|
|
|
|
|
Distribution-related payments
|
104,359
|
|
|
110,517
|
|
|
(5.6)
|
%
|
|
Amortization of
deferred sales
commissions
|
3,981
|
|
|
6,871
|
|
|
(42.1)
|
%
|
|
Trade execution,
marketing, T&E and other
|
58,535
|
|
|
57,281
|
|
|
2.2
|
%
|
|
General and
administrative
|
|
|
|
|
|
|
General
& administrative
|
111,401
|
|
|
121,094
|
|
|
(8.0)
|
%
|
|
Real
estate charges (credits)
|
670
|
|
|
(2,732)
|
|
|
n/m
|
|
|
Contingent payment
arrangements
|
(2,376)
|
|
|
52
|
|
|
n/m
|
|
|
Interest on
borrowings
|
2,407
|
|
|
1,966
|
|
|
22.4
|
%
|
|
Amortization of
intangible assets
|
7,027
|
|
|
6,975
|
|
|
0.7
|
%
|
|
Total operating
expenses
|
605,301
|
|
|
636,106
|
|
|
(4.8)
|
%
|
|
|
|
|
|
|
|
|
Operating
income
|
199,359
|
|
|
283,035
|
|
|
(29.6)
|
%
|
|
|
|
|
|
|
|
|
Income
taxes
|
13,033
|
|
|
28,241
|
|
|
(53.9)
|
%
|
|
|
|
|
|
|
|
|
Net income
|
186,326
|
|
|
254,794
|
|
|
(26.9)
|
%
|
|
|
|
|
|
|
|
|
Net income (loss) of
consolidated entities
attributable to
non-controlling interests
|
(1,727)
|
|
|
8,384
|
|
|
(120.6)
|
%
|
|
|
|
|
|
|
|
|
Net income
attributable to AB Unitholders
|
$
|
188,053
|
|
|
$
|
246,410
|
|
|
(23.7)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB Holding L.P. (The
Publicly-Traded
Partnership)
|
|
|
|
|
|
|
SUMMARY STATEMENTS OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(US $
Thousands)
|
4Q 2018
|
|
4Q 2017
|
|
4Q 2018 vs.
4Q 2017 %
Change
|
|
|
|
|
|
|
|
|
Equity in Net Income
Attributable to AB
Unitholders
|
$
|
66,759
|
|
|
$
|
85,725
|
|
|
(22.1)
|
%
|
|
Income
Taxes
|
6,879
|
|
|
7,132
|
|
|
(3.5)
|
%
|
|
Net Income
|
59,879
|
|
|
78,593
|
|
|
(23.8)
|
%
|
|
|
|
|
|
|
|
|
Additional Equity in
Earnings of Operating
Partnership
(1)
|
71
|
|
|
209
|
|
|
(66.0)
|
%
|
|
Net Income -
Diluted
|
$
|
59,951
|
|
|
$
|
78,802
|
|
|
(23.9)
|
%
|
|
Diluted Net Income
per Unit
|
$
|
0.63
|
|
|
$
|
0.84
|
|
|
(25.0)
|
%
|
|
Distribution per
Unit
|
$
|
0.64
|
|
|
$
|
0.84
|
|
|
(23.8)
|
%
|
|
|
|
|
|
|
|
|
(1) To reflect higher
ownership in the Operating Partnership resulting from application
of the
treasury stock method
to outstanding options.
|
|
|
Units Outstanding
|
4Q 2018
|
|
4Q 2017
|
|
4Q 2018 vs.
4Q 2017 %
Change
|
|
AB L.P.
|
|
|
|
|
|
|
Period-end
|
268,850,276
|
|
|
268,659,333
|
|
|
0.1
|
%
|
|
Weighted average -
basic
|
267,611,568
|
|
|
265,486,340
|
|
|
0.8
|
%
|
|
Weighted average -
diluted
|
267,771,111
|
|
|
265,837,495
|
|
|
0.7
|
%
|
|
AB Holding L.P.
|
|
|
|
|
|
|
Period-end
|
96,658,278
|
|
|
96,461,989
|
|
|
0.2
|
%
|
|
Weighted average -
basic
|
95,418,778
|
|
|
93,288,657
|
|
|
2.3
|
%
|
|
Weighted average -
diluted
|
95,578,321
|
|
|
93,639,812
|
|
|
2.1
|
%
|
|
AB (The Operating Partnership)
|
|
|
|
|
|
|
US GAAP Consolidated Statement of
Income
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(US $
Thousands)
|
|
2018
|
|
2017
|
|
2018 vs. 2017 %
Change
|
|
|
|
|
|
|
|
GAAP revenues
|
|
|
|
|
|
|
Base fees
|
|
$
|
2,244,068
|
|
|
$
|
2,106,525
|
|
|
6.5
|
%
|
Performance
fees
|
|
118,143
|
|
|
94,780
|
|
|
24.6
|
%
|
Bernstein research
services
|
|
439,432
|
|
|
449,919
|
|
|
(2.3)
|
%
|
Distribution
revenues
|
|
418,562
|
|
|
412,063
|
|
|
1.6
|
%
|
Dividends and
interest
|
|
98,226
|
|
|
71,162
|
|
|
38.0
|
%
|
Investments gains
(losses)
|
|
2,653
|
|
|
92,102
|
|
|
(97.1)
|
%
|
Other
revenues
|
|
98,676
|
|
|
97,135
|
|
|
1.6
|
%
|
Total
revenues
|
|
3,419,760
|
|
|
3,323,686
|
|
|
2.9
|
%
|
Less: interest
expense
|
|
52,399
|
|
|
25,165
|
|
|
108.2
|
%
|
Total net
revenues
|
|
3,367,361
|
|
|
3,298,521
|
|
|
2.1
|
%
|
|
|
|
|
|
|
|
GAAP operating expenses:
|
|
|
|
|
|
|
Employee compensation
and benefits
|
|
1,378,811
|
|
|
1,313,469
|
|
|
5.0
|
%
|
Promotion and
servicing
|
|
|
|
|
|
|
Distribution-related payments
|
|
427,186
|
|
|
411,467
|
|
|
3.8
|
%
|
Amortization of deferred sales commissions
|
|
21,343
|
|
|
31,886
|
|
|
(33.1)
|
%
|
Trade
execution, marketing, T&E and other
|
|
222,630
|
|
|
213,275
|
|
|
4.4
|
%
|
General and
administrative
|
|
|
|
|
|
|
General
& administrative
|
|
448,996
|
|
|
481,488
|
|
|
(6.7)
|
%
|
Real
estate charges
|
|
7,160
|
|
|
36,669
|
|
|
(80.5)
|
%
|
Contingent payment
arrangements
|
|
(2,219)
|
|
|
267
|
|
|
n/m
|
|
Interest on
borrowings
|
|
10,359
|
|
|
8,194
|
|
|
26.4
|
%
|
Amortization of
intangible assets
|
|
27,781
|
|
|
27,896
|
|
|
(0.4)
|
%
|
Total operating
expenses
|
|
2,542,047
|
|
|
2,524,611
|
|
|
0.7
|
%
|
|
|
|
|
|
|
|
Operating
income
|
|
825,314
|
|
|
773,910
|
|
|
6.6
|
%
|
|
|
|
|
|
|
|
Income
taxes
|
|
45,816
|
|
|
53,110
|
|
|
(13.7)
|
%
|
|
|
|
|
|
|
|
Net income
|
|
779,498
|
|
|
720,800
|
|
|
8.1
|
%
|
|
|
|
|
|
|
|
Net income of
consolidated entities attributable to
non-controlling
interests
|
|
21,910
|
|
|
58,397
|
|
|
(62.5)
|
%
|
|
|
|
|
|
|
|
Net income
attributable to AB Unitholders
|
|
$
|
757,588
|
|
|
$
|
662,403
|
|
|
14.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB Holding L.P. (The
Publicly-Traded
Partnership)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUMMARY STATEMENTS OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
2018 vs. 2017 %
Change
|
Equity in Net Income
Attributable to AB Unitholders
|
|
$
|
270,647
|
|
|
$
|
232,393
|
|
|
16.5
|
%
|
Income
Taxes
|
|
28,250
|
|
|
24,971
|
|
|
13.1
|
%
|
Net Income
|
|
242,397
|
|
|
207,422
|
|
|
16.9
|
%
|
|
|
|
|
|
|
|
Additional Equity in
Earnings of Operating Partnership (1)
|
|
447
|
|
|
680
|
|
|
(34.3)
|
%
|
Net Income -
Diluted
|
|
$
|
242,844
|
|
|
$
|
208,102
|
|
|
16.7
|
%
|
Diluted Net Income
per Unit
|
|
$2.50
|
|
|
$2.19
|
|
|
14.2
|
%
|
Distribution per
Unit
|
|
$2.68
|
|
|
$2.30
|
|
|
16.5
|
%
|
(1) To reflect higher
ownership in the Operating
Partnership resulting
from application of the
treasury stock method
to outstanding options.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units Outstanding
|
|
2018
|
|
2017
|
|
2018 vs. 2017 %
Change
|
AB L.P.
|
|
|
|
|
|
|
Period-end
|
|
268,850,276
|
|
|
268,659,333
|
|
|
0.1
|
%
|
Weighted average -
basic
|
|
269,235,699
|
|
|
266,955,340
|
|
|
0.9
|
%
|
Weighted average -
diluted
|
|
269,486,879
|
|
|
267,384,983
|
|
|
0.8
|
%
|
AB Holding L.P.
|
|
|
|
|
|
|
Period-end
|
|
96,658,278
|
|
|
96,461,989
|
|
|
0.2
|
%
|
Weighted average -
basic
|
|
97,040,797
|
|
|
94,733,041
|
|
|
2.4
|
%
|
Weighted average -
diluted
|
|
97,291,977
|
|
|
95,162,684
|
|
|
2.2
|
%
|
AllianceBernstein L.P.
|
|
|
ASSETS UNDER MANAGEMENT | December 31,
2018
|
|
|
($
billions)
|
|
|
Ending and Average
|
Three Months Ended
|
|
|
12/31/18
|
9/30/18
|
|
Ending Assets Under
Management
|
$516.4
|
$550.4
|
|
Average Assets Under
Management
|
$532.5
|
$546.9
|
Three-Month Changes By Distribution
Channel
|
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
Private Wealth
Management
|
|
Total
|
|
Beginning of Period
|
$
|
257.0
|
|
|
$
|
196.3
|
|
|
$
|
97.1
|
|
|
$
|
550.4
|
|
|
Sales/New
accounts
|
3.6
|
|
|
15.0
|
|
|
2.6
|
|
|
21.2
|
|
|
Redemption/Terminations
|
(4.1)
|
|
|
(12.2)
|
|
|
(3.4)
|
|
|
(19.7)
|
|
|
Net Cash
Flows
|
1.5
|
|
|
(2.1)
|
|
|
(0.1)
|
|
|
(0.7)
|
|
|
Net Flows
|
1.0
|
|
|
0.7
|
|
|
(0.9)
|
|
|
0.8
|
|
|
Transfers
|
(0.1)
|
|
|
0.2
|
|
|
(0.1)
|
|
|
—
|
|
|
Investment
Performance
|
(11.6)
|
|
|
(16.4)
|
|
|
(6.8)
|
|
|
(34.8)
|
|
|
End of Period
|
$
|
246.3
|
|
|
$
|
180.8
|
|
|
$
|
89.3
|
|
|
$
|
516.4
|
|
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
|
$
|
155.9
|
|
|
$
|
56.0
|
|
|
$
|
224.8
|
|
|
$
|
42.0
|
|
|
$
|
9.9
|
|
|
$
|
61.8
|
|
|
$
|
550.4
|
|
|
Sales/New
accounts
|
8.4
|
|
|
3.0
|
|
|
6.6
|
|
|
1.7
|
|
|
0.1
|
|
|
1.4
|
|
|
21.2
|
|
|
Redemption/Terminations
|
(5.8)
|
|
|
(0.2)
|
|
|
(10.5)
|
|
|
(2.2)
|
|
|
(0.3)
|
|
|
(0.7)
|
|
|
(19.7)
|
|
|
Net Cash
Flows
|
(1.0)
|
|
|
(0.5)
|
|
|
0.5
|
|
|
(0.3)
|
|
|
(0.2)
|
|
|
0.8
|
|
|
(0.7)
|
|
|
Net Flows
|
1.6
|
|
|
2.3
|
|
|
(3.4)
|
|
|
(0.8)
|
|
|
(0.4)
|
|
|
1.5
|
|
|
0.8
|
|
|
Investment
Performance
|
(21.3)
|
|
|
(8.1)
|
|
|
(1.7)
|
|
|
0.5
|
|
|
(0.1)
|
|
|
(4.1)
|
|
|
(34.8)
|
|
|
End of Period
|
$
|
136.2
|
|
|
$
|
50.2
|
|
|
$
|
219.7
|
|
|
$
|
41.7
|
|
|
$
|
9.4
|
|
|
$
|
59.2
|
|
|
$
|
516.4
|
|
Three-Month Net Flows By Investment Service (Active
versus Passive)
|
|
|
|
Actively
Managed
|
|
Passively
Managed (1)
|
|
Total
|
|
|
Equity
|
$
|
1.6
|
|
|
$
|
2.3
|
|
|
$
|
3.9
|
|
|
|
Fixed
Income
|
(4.2)
|
|
|
(0.4)
|
|
|
(4.6)
|
|
|
|
Other
(2)
|
1.4
|
|
|
0.1
|
|
|
1.5
|
|
|
|
Total
|
$
|
(1.2)
|
|
|
$
|
2.0
|
|
|
$
|
0.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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,
2018
|
|
|
($
billions)
|
|
|
Ending and Average
|
Twelve Months Ended
|
|
|
12/31/18
|
12/31/17
|
|
Ending Assets Under
Management
|
$516.4
|
$554.5
|
|
Average Assets Under
Management
|
$544.2
|
$518.0
|
Twelve-Month Changes By Distribution
Channel
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
Private Wealth
Management
|
|
Total
|
|
Beginning of Period
|
$
|
269.3
|
|
|
$
|
192.9
|
|
|
$
|
92.3
|
|
|
$
|
554.5
|
|
|
Sales/New
accounts
|
26.1
|
|
|
54.2
|
|
|
13.5
|
|
|
93.8
|
|
|
Redemption/Terminations
|
(30.1)
|
|
|
(46.5)
|
|
|
(11.0)
|
|
|
(87.6)
|
|
|
Net Cash
Flows
|
(6.0)
|
|
|
(7.7)
|
|
|
(0.6)
|
|
|
(14.3)
|
|
|
Net Flows
|
(10.0)
|
|
|
—
|
|
|
1.9
|
|
|
(8.1)
|
|
|
Transfers
|
0.2
|
|
|
0.2
|
|
|
(0.4)
|
|
|
—
|
|
|
Investment
Performance
|
(13.2)
|
|
|
(12.3)
|
|
|
(4.5)
|
|
|
(30.0)
|
|
|
End of Period
|
$
|
246.3
|
|
|
$
|
180.8
|
|
|
$
|
89.3
|
|
|
$
|
516.4
|
|
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
|
$
|
139.4
|
|
|
$
|
54.3
|
|
|
$
|
247.9
|
|
|
$
|
40.4
|
|
|
$
|
9.9
|
|
|
$
|
62.6
|
|
|
$
|
554.5
|
|
|
Sales/New
accounts
|
36.7
|
|
|
4.0
|
|
|
27.6
|
|
|
7.9
|
|
|
0.1
|
|
|
17.5
|
|
|
93.8
|
|
|
Redemption/Terminations
|
(22.2)
|
|
|
(0.6)
|
|
|
(40.8)
|
|
|
(6.7)
|
|
|
(0.6)
|
|
|
(16.7)
|
|
|
(87.6)
|
|
|
Net Cash
Flows
|
(3.7)
|
|
|
(3.6)
|
|
|
(6.2)
|
|
|
(0.4)
|
|
|
0.2
|
|
|
(0.6)
|
|
|
(14.3)
|
|
|
Net Flows
|
10.8
|
|
|
(0.2)
|
|
|
(19.4)
|
|
|
0.8
|
|
|
(0.3)
|
|
|
0.2
|
|
|
(8.1)
|
|
|
Investment
Performance
|
(14.0)
|
|
|
(3.9)
|
|
|
(8.8)
|
|
|
0.5
|
|
|
(0.2)
|
|
|
(3.6)
|
|
|
(30.0)
|
|
|
End of Period
|
$
|
136.2
|
|
|
$
|
50.2
|
|
|
$
|
219.7
|
|
|
$
|
41.7
|
|
|
$
|
9.4
|
|
|
$
|
59.2
|
|
|
$
|
516.4
|
|
Twelve-Month Net Flows By Investment Service (Active
versus Passive)
|
|
|
|
Actively
Managed
|
|
Passively
Managed (1)
|
|
Total
|
|
|
Equity
|
$
|
10.8
|
|
|
$
|
(0.2)
|
|
|
$
|
10.6
|
|
|
|
Fixed
Income
|
(18.6)
|
|
|
(0.3)
|
|
|
$
|
(18.9)
|
|
|
|
Other
(2)
|
(0.1)
|
|
|
0.3
|
|
|
$
|
0.2
|
|
|
|
Total
|
$
|
(7.9)
|
|
|
$
|
(0.2)
|
|
|
$
|
(8.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
|
$
|
149.1
|
|
|
$
|
102.7
|
|
|
$
|
87.5
|
|
|
$
|
339.3
|
|
|
Non-U.S.
Clients
|
97.2
|
|
|
78.1
|
|
|
1.8
|
|
|
177.1
|
|
|
Total
|
$
|
246.3
|
|
|
$
|
180.8
|
|
|
$
|
89.3
|
|
|
$
|
516.4
|
|
AB L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP
FINANCIAL RESULTS TO
ADJUSTED FINANCIAL RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
Twelve Months Ended
|
|
US $
Thousands,
unaudited
|
|
12/31/2018
|
|
9/30/2018
|
|
6/30/2018
|
|
3/31/2018
|
|
12/31/2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues,
GAAP basis
|
|
$
|
804,660
|
|
|
$
|
850,176
|
|
|
$
|
844,738
|
|
|
$
|
867,787
|
|
|
$
|
919,141
|
|
|
$
|
3,367,361
|
|
|
$
|
3,298,521
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of adoption of
revenue
recognition standard
ASC 606
|
—
|
|
|
—
|
|
|
—
|
|
|
77,844
|
|
|
—
|
|
|
77,844
|
|
|
—
|
|
|
|
Distribution-related
payments
|
(104,359)
|
|
|
(106,372)
|
|
|
(106,301)
|
|
|
(110,154)
|
|
|
(110,517)
|
|
|
(427,186)
|
|
|
(411,467)
|
|
|
|
Amortization of
deferred sales
commissions
|
(3,981)
|
|
|
(4,651)
|
|
|
(6,113)
|
|
|
(6,598)
|
|
|
(6,871)
|
|
|
(21,343)
|
|
|
(31,886)
|
|
|
|
Pass-through fees
& expenses
|
(9,039)
|
|
|
(10,084)
|
|
|
(10,487)
|
|
|
(10,609)
|
|
|
(10,664)
|
|
|
(40,219)
|
|
|
(40,531)
|
|
|
|
Impact of
consolidated
company-sponsored
investment
funds
|
931
|
|
|
(1,543)
|
|
|
(1,494)
|
|
|
(36,037)
|
|
|
(16,032)
|
|
|
(38,142)
|
|
|
(87,255)
|
|
|
|
Long-term
incentive
compensation-related
investment losses
(gains)
|
7,104
|
|
|
(1,253)
|
|
|
(542)
|
|
|
209
|
|
|
(977)
|
|
|
5,520
|
|
|
(7,937)
|
|
|
|
Long-term
incentive
compensation-related
dividends and
interest
|
(1,631)
|
|
|
(130)
|
|
|
(156)
|
|
|
(93)
|
|
|
(1,515)
|
|
|
(2,011)
|
|
|
(1,954)
|
|
|
|
Loss (gain) on sale
of software
technology
|
2,733
|
|
|
1,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,733
|
|
|
(4,592)
|
|
|
|
Other
|
—
|
|
|
—
|
|
|
47
|
|
|
—
|
|
|
—
|
|
|
47
|
|
|
—
|
|
|
Adjusted Net
Revenues
|
|
$
|
696,418
|
|
|
$
|
727,143
|
|
|
$
|
719,692
|
|
|
$
|
782,349
|
|
|
$
|
772,565
|
|
|
$
|
2,925,604
|
|
|
$
|
2,712,899
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income,
GAAP basis
|
|
$
|
199,359
|
|
|
$
|
213,819
|
|
|
$
|
189,464
|
|
|
$
|
222,671
|
|
|
$
|
283,035
|
|
|
$
|
825,314
|
|
|
$
|
773,910
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of adoption of
revenue
recognition standard
ASC 606
|
—
|
|
|
—
|
|
|
—
|
|
|
35,156
|
|
|
—
|
|
|
35,156
|
|
|
—
|
|
|
|
Real estate charges
(credits)
|
670
|
|
|
(155)
|
|
|
6,909
|
|
|
(264)
|
|
|
(2,732)
|
|
|
7,160
|
|
|
36,669
|
|
|
|
Long-term
incentive
compensation-related
items
|
243
|
|
|
1,820
|
|
|
585
|
|
|
417
|
|
|
(103)
|
|
|
3,064
|
|
|
709
|
|
|
|
Loss (gain) on sale
of software
technology
|
2,733
|
|
|
1,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,733
|
|
|
(4,592)
|
|
|
|
Acquisition-related
expenses
|
1,924
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,924
|
|
|
2,012
|
|
|
|
Contingent
payment
arrangements
|
(2,429)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,429)
|
|
|
(193)
|
|
|
|
Other
|
—
|
|
|
—
|
|
|
47
|
|
|
—
|
|
|
—
|
|
|
47
|
|
|
—
|
|
|
|
Sub-total of
non-GAAP
adjustments
|
3,141
|
|
|
2,665
|
|
|
7,541
|
|
|
35,309
|
|
|
(2,835)
|
|
|
48,655
|
|
|
34,605
|
|
|
|
Less: Net (loss)
income of
consolidated entities
attributable
to non-controlling
interests
|
(1,727)
|
|
|
726
|
|
|
261
|
|
|
22,650
|
|
|
8,384
|
|
|
21,910
|
|
|
58,397
|
|
|
Adjusted Operating
Income
|
|
$
|
204,227
|
|
|
$
|
215,758
|
|
|
$
|
196,744
|
|
|
$
|
235,330
|
|
|
$
|
271,816
|
|
|
$
|
852,059
|
|
|
$
|
750,118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Margin, GAAP basis
excl. non-controlling interests
|
25.0
|
%
|
|
25.1
|
%
|
|
22.4
|
%
|
|
23.0
|
%
|
|
29.9
|
%
|
|
23.9
|
%
|
|
21.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating Margin
|
29.3
|
%
|
|
29.7
|
%
|
|
27.3
|
%
|
|
30.1
|
%
|
|
35.2
|
%
|
|
29.1
|
%
|
|
27.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB Holding L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP EPU
TO ADJUSTED EPU
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
Twelve Months Ended
|
|
$ Thousands except
per Unit
amounts,
unaudited
|
12/31/2018
|
|
9/30/2018
|
|
6/30/2018
|
|
3/31/2018
|
|
12/31/2017
|
|
2018
|
|
2017
|
|
Net Income - Diluted, GAAP
basis
|
$
|
59,951
|
|
|
$
|
66,017
|
|
|
$
|
58,572
|
|
|
$
|
58,305
|
|
|
$
|
78,802
|
|
|
$
|
242,844
|
|
|
$
|
208,102
|
|
|
Impact on net income
of AB non-
GAAP
adjustments
|
1,000
|
|
|
919
|
|
|
2,609
|
|
|
12,271
|
|
|
(599)
|
|
|
16,856
|
|
|
10,877
|
|
|
Adjusted Net Income - Diluted
|
$
|
60,951
|
|
|
$
|
66,936
|
|
|
$
|
61,181
|
|
|
$
|
70,576
|
|
|
$
|
78,203
|
|
|
$
|
259,700
|
|
|
$
|
218,979
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Net Income per Holding
Unit, GAAP basis
|
$
|
0.63
|
|
|
$
|
0.68
|
|
|
$
|
0.59
|
|
|
$
|
0.60
|
|
|
$
|
0.84
|
|
|
$
|
2.50
|
|
|
$
|
2.19
|
|
|
Impact of AB
non-GAAP
adjustments
|
0.01
|
|
|
0.01
|
|
|
0.03
|
|
|
0.13
|
|
|
—
|
|
|
0.17
|
|
|
0.11
|
|
|
Adjusted Diluted Net Income per
Holding Unit
|
$
|
0.64
|
|
|
$
|
0.69
|
|
|
$
|
0.62
|
|
|
$
|
0.73
|
|
|
$
|
0.84
|
|
|
$
|
2.67
|
|
|
$
|
2.30
|
|
AB
Notes to
Consolidated Statements of Income and Supplemental
Information
(Unaudited)
Adjusted Net Revenues
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.
Adjusted net revenues exclude investment gains and losses
and dividends and interest on employee long-term
incentive compensation-related investments.
On January 1, 2018, we
recorded a cumulative effect adjustment, net of tax, of
$35.0 million to partners' capital in
the consolidated statement of financial condition. This amount
represents carried interest distributions of $77.9 million previously received, net of revenue
sharing payments to investment team members of $42.7 million, with respect to which it is
probable that significant reversal will not occur. These amounts
were included in adjusted net revenues and adjusted operating
income in the first quarter of 2018.
Lastly, during 2017 we excluded a 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. During 2018,
we decreased our valuation of this investment by $3.7 million.
Adjusted Operating Income
Adjusted operating income represents operating income on a
US GAAP basis excluding (1) real estate charges (credits), (2)
acquisition-related expenses, (3) 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, (4) the impact of
consolidated company-sponsored investment funds, (5) the loss
(gain) on software technology investment, (6) adjustments to
contingent payment arrangements, and (7) the revenues and expenses
associated with the implementation of ASC 606 discussed
above.
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 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.
Prior to 2009, a significant portion of employee
compensation was in the form of 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 longterm incentive
compensation-related investments included in revenues and
compensation expense.
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.
Gains and losses on the software technology investment
have been excluded due to its non-recurring nature and because it
is not part of our core operating results.
The recording of changes in estimates of 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.
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