NEW YORK, Feb. 10, 2012 /PRNewswire/ -- AllianceBernstein
L.P. ("AllianceBernstein") and AllianceBernstein Holding L.P.
("AllianceBernstein Holding") (NYSE: AB) today reported financial
and operating results for the quarter ended December 31, 2011.
"The fourth quarter proved to be a difficult finish to a
challenging 2011 for our firm," said Peter
S. Kraus, Chairman and Chief Executive Officer. "The
year was characterized by global market volatility, which caused
risk aversion on the part of equity investors. While markets
partially rebounded from prior lows in the fourth quarter, trading
activity declined sharply. With ongoing investment
underperformance in our largest equity services, we experienced
further client redemptions, and ended 2011 with lower assets and a
decline in revenues."
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Financial Results
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4Q
2011
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3Q
2011
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4Q 2011
vs
3Q 2011
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4Q
2010
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4Q 2011
vs
4Q 2010
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($ millions except per Unit
amounts)
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AllianceBernstein
L.P.
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GAAP basis:
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Net Revenues
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$625
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$642
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(3%)
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$778
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(20%)
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Operating (Loss)
Income
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($540)
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$78
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n/m
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$154
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n/m
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Operating Margin, excl.
non-controlling interests
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n/m
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15.0%
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18.8%
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Adjusted
basis: (1)
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Net Revenues (2)
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$528
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$602
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(12%)
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$652
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(19%)
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Operating Income (3)
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$37
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$107
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(65%)
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$139
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(74%)
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Operating Margin
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7.0%
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17.7%
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21.3%
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AllianceBernstein Holding
L.P.
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GAAP Diluted Net (Loss) Income
per Unit
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($1.97)
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$0.26
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n/m
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$0.42
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n/m
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Distribution per Unit
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$0.12
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$0.26
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(54%)
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$0.42
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(71%)
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Adjusted Diluted Net Income per
Unit (1)
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$0.07
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$0.30
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(77%)
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$0.40
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(83%)
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(1) See pages 8-11 for
reconciliations of GAAP Financial Results to Adjusted Financial
Results.
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(2) Adjusted net revenues
exclude investment gains and losses, and dividends and interest on
deferred compensation-related investments, and 90% of the
investment gains and losses of our consolidated venture capital
fund attributable to non-controlling interests. In addition,
adjusted net revenues offset distribution-related payments to third
parties as well as amortization of deferred sales commissions
against distribution revenues. They also exclude reimbursements of
pass-through expenses (primarily through our transfer agent) that
are recorded as fees in revenues.
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(3) Adjusted operating income
represents operating income on a GAAP basis excluding (1) the
impact on net revenues and compensation expense of the
mark-to-market gains and losses (as well as the dividends and
interest) associated with employee deferred compensation-related
investments, (2) deferred compensation charges, (3) real estate
charges, (4) insurance proceeds, and (5) the net loss or income of
consolidated entities attributable to non-controlling
interests.
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Kraus continued: "Despite the many challenges we faced, I'm
proud of the progress we made in our long-term strategy of
improving investment performance, innovating with new client
offerings, diversifying our business and addressing our cost
structure. In fixed income, we extended our outperformance – more
than 85% of our assets are in products that beat their benchmarks
on a three-year basis – and attracted billions in net new assets.
During the year we introduced a number of new products across our
channels. Several, including an emerging markets debt and equity
product and a Chinese currency-linked offering, have already earned
industry awards for innovation and performed well since inception.
We delivered on our goal to reduce volatility without sacrificing
returns in Private Client portfolios with our Dynamic Asset
Allocation strategy. We recently partnered with our first
client in Secure Retirement Strategies – a multi-insurer-backed
guaranteed income product we were the first to introduce in the
defined contribution industry. Our sell-side business grew and
gained share in both Asia and
Europe. And we have managed
deferred compensation, operations servicing and real estate
expenses in ways that position our firm for better financial
results over the long term. Our achievements in 2011 attest to the
strength and talent of our people and I appreciate the contribution
of each and every one of them in such trying times."
The firm's cash distribution per unit is payable on March 8, 2012, to holders of record of
AllianceBernstein Holding Units at the close of business on
February 21, 2012.
Market Performance
The global markets continued to be volatile during the fourth
quarter of 2011 amidst ongoing uncertainty in Europe. Ultimately, the S&P 500 returned
11.8% for the fourth quarter and 2.1% for the full year, and the
MSCI World's total return was 7.7% for the fourth quarter and
(5.0)% for the full year.
Assets Under Management ($ Billions)
Total assets under management as of December 31, 2011 were $405.9 billion, up 1.0% from September 30, 2011, and down $72.1 billion, or 15.1%, compared to December 31, 2010.
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Institutions
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Retail
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Private
Client
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Total
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Assets Under Management
12/31/11
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$223.9
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$112.6
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$69.4
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$405.9
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Net Flows for Three Months Ended
12/31/11
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($7.9)
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($3.8)
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($1.5)
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($13.2)
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Net outflows in the Institutions channel were $7.9 billion, compared to net outflows of
$9.0 billion in the third quarter of
2011. Institutions gross sales increased 165% sequentially
from $2.3 billion to $6.1 billion during the fourth quarter of 2011.
The pipeline of awarded but unfunded institutional mandates
decreased from $7.0 billion to
$4.3 billion at December 31, 2011, the result of several large
Customized Retirement Strategies mandates funding during the
quarter. The Retail channel experienced net outflows of
$3.8 billion, compared to net
outflows of $4.4 billion in the third
quarter. Retail gross sales decreased 3% sequentially from
$7.3 billion to $7.1 billion during the fourth quarter. In
the Private Client channel, net outflows decreased 25% sequentially
to $1.5 billion from the prior
quarter's $2.0 billion. Private
Client gross sales were flat sequentially at $1.7 billion.
Fourth Quarter Financial Results: GAAP
Net revenues of $625 million
declined 20% compared to the fourth quarter of 2010. Lower
base fees were the largest factor in the decline, driven both by
lower overall assets and the fact that Private Client fees for the
fourth quarter were based on third-quarter-end assets, which
reflected significant market declines. Performance fees were lower
as well. The Company had current quarter losses compared to
prior-year quarter gains on seed money investments and lower gains
on deferred compensation investments. Bernstein Research Services
revenues were also down. Sequentially, firm net revenues
decreased 3% from the third quarter of 2011. The most
significant drivers of this decline were lower base advisory fees
and a decline in Bernstein Research Services revenues, partially
offset by current quarter gains on deferred compensation
investments compared to prior quarter losses and higher performance
fees. Bernstein Research Services revenues declined 14% from the
fourth quarter of 2010 and 22% from the third quarter of 2011, on
extremely low global transaction volumes.
During the quarter, the Company recorded a $587 million one-time, non-cash charge for all
unrecognized deferred incentive compensation on outstanding awards
from prior years. Operating expenses, including the charge, were
$1.2 billion for the fourth quarter,
a year-over-year increase of 87%. In addition, the Company
recorded 100% of the expense associated with its 2011 deferred
incentive compensation awards of $159.9
million. General and administrative costs also
increased year-over-year, driven by higher professional fees and
international transaction costs. These were partially offset by a
decrease in promotion and servicing expense. Operating expenses
increased by 107% sequentially, largely driven by the fourth
quarter's deferred incentive compensation non-cash charge.
Promotion and servicing expenses were down 3% sequentially, due to
lower distribution plan payments and lower trade execution and
clearance fees in a time of depressed transaction volumes. G&A
expenses excluding real estate charges increased 8% sequentially,
primarily due to the absence of a prior quarter insurance
settlement.
The Company reported an operating loss of $540 million for the fourth quarter of 2011
compared to operating income of $154
million and an operating margin of 18.8% for the fourth
quarter of 2010. Sequentially, the quarter's operating loss
compares to the third quarter's operating income of $78 million and operating margin of 15.0%. The
diluted net loss per Unit for the fourth quarter was $(1.97) compared to diluted net income per Unit
of $0.42 for the fourth quarter of
2010 and $0.26 for the third quarter
of 2011. The cash distribution per Unit for the publicly-traded
partnership was $0.12 for the fourth
quarter of 2011, and excludes the non-cash deferred incentive
compensation charge recorded during the quarter as part of GAAP
operating results.
Fourth Quarter Financial Results: As Adjusted
Adjusted net revenues of $528
million were down $124 million
compared to the fourth quarter of 2010 and down $74 million sequentially. The decrease from
the fourth quarter of 2010 was due to lower base advisory fees on a
lower asset base, as well as lower Bernstein Research Services
revenues. The sequential decrease was also driven by these
factors.
Adjusted operating income decreased $102
million, or 74%, from the fourth quarter of 2010, to
$37 million, and the adjusted
operating margin decreased to 7.0% from 21.3%. Compared to
the third quarter of 2011, adjusted operating income decreased 65%
from $107 million and the adjusted
operating margin decreased from 17.7%. For both periods, the
declines in operating income and margin were primarily due to lower
revenues and an increase in the ratio of compensation expenses to
revenues. Adjusted diluted net income per Unit for the
publicly-traded partnership decreased to $0.07 from $0.40 in
the fourth quarter of 2010 and decreased from $0.30 sequentially.
Unit Repurchases
AllianceBernstein engages in open-market purchases of Holding
Units to help fund anticipated obligations under its incentive
compensation award program and for other corporate purposes.
In addition, AllianceBernstein purchases Holding Units from
employees to allow them to fulfill statutory tax requirements at
the time of distribution of long-term incentive compensation
awards. During the third and fourth quarters of 2011,
AllianceBernstein adopted a plan to repurchase Holding Units
pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934,
as amended. The amount of Holding Units AllianceBernstein buys each
quarter is subject to SEC regulations, the terms of the 10b5-1 plan
and the trading volume of Holding Units on the New York Stock
Exchange. During fourth quarter and full year 2011,
AllianceBernstein purchased 5.8 million Holding Units and 13.5
million Holding Units for $75.2
million and $220.8 million,
respectively. These amounts reflect open-market purchases of 3.5
million Holding Units and 11.1 million Holding Units for
$47.9 million and $192.1 million, respectively, with the remainder
primarily relating to employee tax withholding purchases, offset by
Holding Units purchased by employees as part of a distribution
reinvestment election.
Fourth Quarter 2011 Earnings Conference Call
Information
Management will review fourth quarter 2011 financial and
operating results during a conference call beginning at
8:00 a.m. (ET) on Friday,
February 10, 2012. The conference call will be hosted by
Peter S. Kraus, Chairman and Chief
Executive Officer and Edward J.
Farrell, Interim Chief Financial Officer and Controller.
Parties may access the conference call by either webcast or
telephone:
1. To listen by webcast, please visit AllianceBernstein's
Investor Relations website at
http://ir.alliancebernstein.com/investorrelations at least 15
minutes prior to the call to download and install any necessary
audio software.
2. To listen by telephone, please dial (866) 556-2265 in the
U.S. or (973) 935-8521 outside the U.S. 10 minutes before the
scheduled start time. The conference ID# is 42972366.
The presentation that will be reviewed during the conference
call will be available on AllianceBernstein's Investor Relations
website shortly after the release of fourth quarter 2011
financial and operating results on February 10, 2012.
A replay of the webcast will be made available beginning
approximately one hour after the conclusion of the conference call
and will be available on AllianceBernstein's website for one week.
An audio replay of the conference call will also be available
for one week. To access the audio replay, please call
(855) 859-2056 from the U.S., or outside the U.S. call
(404) 537-3406, and provide the conference ID #: 42972366.
Availability of 2011 Form 10-K
Unitholders may obtain a copy of our Form 10-K for the year
ended December 31, 2011 in either
electronic format or hard copy on www.alliancebernstein.com:
- Download Electronic Copy: Unitholders with internet access can
download an electronic version of the report by visiting
www.alliancebernstein.com and clicking on "AllianceBernstein 2011
Form 10-K". The report is also accessible in the
"Featured Documents" section of the "Investor & Media
Relations" page at
www.alliancebernstein.com/investorrelations.
- 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 800-227-4618.
Cautions Regarding Forward-Looking Statements
Certain statements provided by management in this news release
are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements are subject to risks, uncertainties, and other factors
that could cause actual results to differ materially from future
results expressed or implied by such forward-looking statements.
The most significant of these factors include, but are not
limited to, the following: the performance of financial markets,
the investment performance of sponsored investment products and
separately-managed accounts, general economic conditions, industry
trends, future acquisitions, competitive conditions, and current
and proposed government regulations, including changes in tax
regulations and rates and the manner in which the earnings of
publicly-traded partnerships are taxed. AllianceBernstein cautions
readers to carefully consider such factors. Further, such
forward-looking statements speak only as of the date on which such
statements are made; AllianceBernstein undertakes no obligation to
update any forward-looking statements to reflect events or
circumstances after the date of such statements. For further
information regarding these forward-looking statements and the
factors that could cause actual results to differ, see "Risk
Factors" and "Cautions Regarding Forward-Looking Statements" in
AllianceBernstein's Form 10-K for the year ended December 31, 2011. Any or all of the
forward-looking statements made in this news release, Form 10-K,
other documents AllianceBernstein files with or furnishes to the
SEC, and any other public statements issued by AllianceBernstein,
may turn out to be wrong. It is important to remember that
other factors besides those listed in "Risk Factors" and "Cautions
Regarding Forward-Looking Statements", and those listed below,
could also adversely affect AllianceBernstein's financial
condition, results of operations and business prospects.
The forward-looking statements referred to in the preceding
paragraph include statements regarding:
- Our confidence that, despite the many challenges our firm
experienced during 2011, the actions we are taking will position
our firm for improved financial results over the long term:
Changes and volatility in political, economic, capital market or
industry conditions can result in changes in demand for our
products and services or impact the value of our assets under
management, all of which may adversely affect our results of
operations. The actual performance of the capital markets and
other factors beyond our control will affect our investment success
for clients and asset flows. Furthermore, improved flows
depend on a number of factors, including our ability to deliver
consistent, competitive investment performance, which cannot be
assured, conditions of financial markets, consultant
recommendations, and changes in our clients' investment
preferences, risk tolerances and liquidity needs.
- The pipeline of new institutional mandates not yet
funded: Before they are funded, institutional
mandates do not represent legally binding commitments to fund and,
accordingly, the possibility exists that not all mandates will be
funded in the amounts and at the times currently anticipated.
- Our intention to continue to engage in open market
purchases of Holding Units to help fund anticipated obligations
under our incentive compensation award program: The
number of Holding Units needed in future periods to make incentive
compensation awards is dependent upon various factors, some of
which are beyond our control, including the fluctuation in the
price of a Holding Unit.
Qualified Tax Notice
This announcement is intended to be a qualified notice under
Treasury Regulation §1.1446-4(b). Please note that 100% of
AllianceBernstein Holding's distributions to foreign investors is
attributable to income that is effectively connected with a
United States trade or business.
Accordingly, AllianceBernstein Holding's distributions to
foreign investors are subject to federal income tax withholding at
the highest applicable tax rate, currently 35%.
About AllianceBernstein
AllianceBernstein is a leading global investment management firm
that offers high-quality research and diversified investment
services to institutional investors, individuals and private
clients in major world markets.
At December 31, 2011,
AllianceBernstein Holding L.P. owned approximately 37.9% of
the issued and outstanding AllianceBernstein Units and AXA, one of
the largest global financial services organizations, owned an
approximate 64.4% economic interest in AllianceBernstein.
Additional information about AllianceBernstein may be found on
our internet site, www.alliancebernstein.com.
AllianceBernstein L.P. (The
Operating Partnership)
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SUMMARY CONSOLIDATED STATEMENTS
OF INCOME | December 31,
2011
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Three Months
Ended
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Twelve
Months Ended
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$ thousands,
unaudited
|
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12/31/11
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12/31/10
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12/31/11
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12/31/10
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Revenues:
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|
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|
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|
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Base fees
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$415,907
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$514,163
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$1,899,863
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$2,031,162
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Performance fees
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7,069
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9,192
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16,556
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20,530
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Bernstein research
services
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92,047
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106,806
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437,414
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430,521
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Distribution revenues
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82,609
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89,393
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351,621
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338,597
|
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Dividend and interest
income
|
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6,523
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9,039
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21,499
|
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22,902
|
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Investment gains
(losses)
|
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|
(3,175)
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|
21,754
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(82,081)
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|
(1,410)
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Other revenues
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24,402
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28,047
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107,569
|
|
109,803
|
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Total
revenues
|
|
|
625,382
|
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778,394
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2,752,441
|
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2,952,105
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Less: Interest
expense
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|
404
|
|
833
|
|
2,550
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3,548
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Net revenues
|
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|
624,978
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777,561
|
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2,749,891
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2,948,557
|
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Expenses:
|
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|
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|
|
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Employee compensation &
benefits
|
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|
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|
|
|
|
|
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Employee
compensation & benefits
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|
|
298,398
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|
346,454
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1,248,497
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|
1,322,221
|
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|
|
Deferred
compensation charge
|
|
|
587,131
|
|
-
|
|
587,131
|
|
-
|
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Promotion &
servicing
|
|
|
|
|
|
|
|
|
|
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Distribution-related payments
|
|
|
73,048
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|
76,411
|
|
302,684
|
|
286,676
|
|
|
|
Amortization of
deferred sales commissions
|
|
|
8,292
|
|
11,349
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|
37,675
|
|
47,397
|
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|
|
Other
|
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|
52,621
|
|
53,023
|
|
217,598
|
|
192,096
|
|
|
|
General &
administrative
|
|
|
|
|
|
|
|
|
|
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General &
administrative
|
|
|
139,567
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|
130,604
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|
533,578
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|
516,185
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|
|
|
Real estate
charge
|
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|
294
|
|
116
|
|
7,235
|
|
101,698
|
|
|
|
Interest on
borrowings
|
|
|
630
|
|
623
|
|
2,545
|
|
2,078
|
|
|
|
Amortization of intangible
assets
|
|
|
5,243
|
|
5,230
|
|
21,417
|
|
21,344
|
|
|
|
Total expenses
|
|
|
1,165,224
|
|
623,810
|
|
2,958,360
|
|
2,489,695
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss)
income
|
|
|
(540,246)
|
|
153,751
|
|
(208,469)
|
|
458,862
|
|
|
Non-operating income
|
|
|
-
|
|
-
|
|
-
|
|
6,760
|
|
|
(Loss) Income before income
taxes
|
|
|
(540,246)
|
|
153,751
|
|
(208,469)
|
|
465,622
|
|
|
Income taxes
|
|
|
(20,334)
|
|
9,359
|
|
3,098
|
|
38,523
|
|
|
Net (loss) income
|
|
|
(519,912)
|
|
144,392
|
|
(211,567)
|
|
427,099
|
|
|
Net (loss) income of
consolidated entities attributable to non-controlling
interests
|
|
(3,552)
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|
7,873
|
|
(36,799)
|
|
(15,320)
|
|
|
Net (Loss) Income Attributable
to AllianceBernstein Unitholders
|
($516,360)
|
|
$136,519
|
|
($174,768)
|
|
$442,419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin(1)
|
|
|
n/m
|
|
18.8%
|
|
n/m
|
|
16.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Operating income excluding
net (loss) income attributable to non-controlling interests as a
percentage of net revenues.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AllianceBernstein Holding L.P.
(The Publicly-Traded Partnership)
|
|
|
|
|
|
|
|
|
|
SUMMARY STATEMENTS OF
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve
Months Ended
|
|
|
$ thousands except per Unit
amounts, unaudited
|
|
|
12/31/11
|
|
12/31/10
|
|
12/31/11
|
|
12/31/10
|
|
|
Equity in Net (Loss) Income
Attributable to AllianceBernstein Unitholders
|
($193,458)
|
|
$50,168
|
|
($65,581)
|
|
$162,217
|
|
|
Income Taxes
|
|
|
6,005
|
|
7,243
|
|
27,687
|
|
28,059
|
|
|
Net (Loss) Income
|
|
|
(199,463)
|
|
42,925
|
|
(93,268)
|
|
134,158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Equity in Earnings of
Operating Partnership (1)
|
|
-
|
|
364
|
|
-
|
|
1,640
|
|
|
Net (Loss) Income -
Diluted
|
|
|
($199,463)
|
|
$43,289
|
|
($93,268)
|
|
$135,798
|
|
|
Diluted Net (Loss) Income per
Unit
|
|
|
($1.97)
|
|
$0.42
|
|
($0.90)
|
|
$1.32
|
|
|
Distribution per
Unit
|
|
|
$0.12
|
|
$0.42
|
|
$1.14
|
|
$1.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) To reflect higher ownership
in the Operating Partnership resulting from application of the
treasury stock method to outstanding options.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AllianceBernstein L.P. and
AllianceBernstein Holding L.P.
|
|
|
|
|
|
|
|
|
|
UNITS OUTSTANDING AND WEIGHTED
AVERAGE UNITS OUTSTANDING
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
Average Units
|
|
Weighted
Average Units
|
|
|
|
|
Period
End
|
|
Three Months
Ended
12/31/11
|
|
Twelve
Months Ended
12/31/11
|
|
|
|
|
Units
|
|
Basic
|
|
Diluted
|
|
Basic
|
|
Diluted
|
|
|
AllianceBernstein
L.P.
|
277,847,588
|
|
277,969,900
|
|
277,969,900
|
|
278,018,193
|
|
278,018,204
|
|
|
AllianceBernstein Holding
L.P.
|
105,173,342
|
|
101,420,761
|
|
101,420,761
|
|
103,287,629
|
|
103,287,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AllianceBernstein
L.P.
|
|
|
|
|
|
|
|
|
|
|
ASSETS UNDER MANAGEMENT |
Dec 31, 2011
|
|
|
|
|
|
|
|
|
|
|
($ billions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending and
Average
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
|
|
12/31/11
|
|
12/31/10
|
|
|
Ending Assets Under
Management
|
|
|
|
|
|
|
$405.9
|
|
$478.0
|
|
|
Average Assets Under
Management
|
|
|
|
|
|
|
$410.9
|
|
$480.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Month Changes By
Distribution Channel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
Private
Client
|
|
Total
|
|
|
Beginning of
Period
|
|
|
$224.1
|
|
$109.8
|
|
$68.1
|
|
$402.0
|
|
|
Sales/New accounts
|
|
|
6.1
|
|
7.1
|
|
1.7
|
|
14.9
|
|
|
Redemptions/Terminations
|
|
|
(13.0)
|
|
(9.2)
|
|
(3.2)
|
|
(25.4)
|
|
|
Net Cash Flows
|
|
|
(1.0)
|
|
(1.7)
|
|
-
|
|
(2.7)
|
|
|
Net Flows
|
|
|
(7.9)
|
|
(3.8)
|
|
(1.5)
|
|
(13.2)
|
|
|
Acquisition(1)
|
|
|
-
|
|
0.2
|
|
-
|
|
0.2
|
|
|
Investment
Performance
|
|
|
7.7
|
|
6.4
|
|
2.8
|
|
16.9
|
|
|
End of Period
|
|
|
$223.9
|
|
$112.6
|
|
$69.4
|
|
$405.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Month Changes By
Investment Service
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
|
|
Growth
|
|
Fixed
Income
|
|
Other
|
(3)
|
Total
|
|
|
Beginning of
Period
|
$87.0
|
|
$44.8
|
|
$213.5
|
|
$56.7
|
|
$402.0
|
|
|
Sales/New accounts
|
1.5
|
|
1.4
|
|
7.8
|
|
4.2
|
|
14.9
|
|
|
Redemptions/Terminations
|
(11.1)
|
|
(4.8)
|
|
(9.1)
|
|
(0.4)
|
|
(25.4)
|
|
|
Net Cash Flows
|
(2.3)
|
|
(0.8)
|
|
2.0
|
|
(1.6)
|
|
(2.7)
|
|
|
Net Flows
|
(11.9)
|
|
(4.2)
|
|
0.7
|
|
2.2
|
|
(13.2)
|
|
|
Acquisition(1)
|
-
|
|
-
|
|
0.2
|
|
-
|
|
0.2
|
|
|
Investment
Performance
|
5.7
|
|
3.6
|
|
3.2
|
|
4.4
|
|
16.9
|
|
|
End of Period(2)
|
$80.8
|
|
$44.2
|
|
$217.6
|
|
$63.3
|
|
$405.9
|
|
|
(1) In the fourth quarter 2011,
AB acquired Taiwan International Investment Co.
|
|
|
(2) Approximately $44 billion in
Blend Strategies AUM are reported in their respective
services.
|
|
|
(3) Includes index, structured,
asset allocation services and certain other alternative
investments.
|
|
|
|
By Client
Domicile
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
Private
Client
|
|
Total
|
|
|
U.S. Clients
|
|
|
$129.6
|
|
$ 71.5
|
|
$67.8
|
|
$268.9
|
|
|
Non-U.S. Clients
|
|
|
94.3
|
|
41.1
|
|
1.6
|
|
137.0
|
|
|
Total
|
|
|
$223.9
|
|
$112.6
|
|
$69.4
|
|
$405.9
|
|
|
|
|
|
|
|
|
|
|
|
|
AllianceBernstein
L.P.
|
|
RECONCILIATION OF GAAP FINANCIAL
RESULTS TO ADJUSTED FINANCIAL RESULTS
|
|
|
|
Three Months
Ended
|
|
|
$ thousands,
unaudited
|
12/31/11
|
|
9/30/11
|
|
6/30/11
|
|
3/31/11
|
|
12/31/10
|
|
9/30/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues, GAAP
basis
|
|
$
624,978
|
|
$
641,529
|
|
$
727,994
|
|
$
755,390
|
|
$
777,561
|
|
$
757,567
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
compensation-related investment (gains) losses
|
(9,386)
|
|
37,840
|
|
1,588
|
|
(9,740)
|
|
(16,677)
|
|
(36,013)
|
|
|
|
Deferred
compensation-related dividends and interest
|
(2,226)
|
|
(982)
|
|
(524)
|
|
(632)
|
|
(3,963)
|
|
(830)
|
|
|
|
90% of consolidated
venture capital fund investment losses (gains)
|
3,116
|
|
18,306
|
|
6,302
|
|
8,054
|
|
(7,570)
|
|
(2,056)
|
|
|
|
Distribution-related
payments
|
|
(73,048)
|
|
(76,323)
|
|
(78,557)
|
|
(74,756)
|
|
(76,411)
|
|
(72,501)
|
|
|
|
Amortization of deferred
sales commissions
|
|
(8,292)
|
|
(9,186)
|
|
(9,871)
|
|
(10,326)
|
|
(11,349)
|
|
(11,780)
|
|
|
|
Pass-through fees &
expenses
|
|
(7,598)
|
|
(8,894)
|
|
(9,987)
|
|
(8,624)
|
|
(9,762)
|
|
(8,933)
|
|
|
Adjusted Net
Revenues
|
$
527,544
|
|
$
602,290
|
|
$
636,945
|
|
$
659,366
|
|
$
651,829
|
|
$
625,454
|
|
|
Operating (Loss) Income, GAAP
basis
|
|
$
(540,246)
|
|
$
77,716
|
|
$
115,626
|
|
$
138,435
|
|
$
153,751
|
|
$
57,480
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
compensation-related investment (gains) losses
|
(9,386)
|
|
37,840
|
|
1,588
|
|
(9,740)
|
|
(16,677)
|
|
(36,013)
|
|
|
Deferred
compensation-related dividends and interest
|
(2,226)
|
|
(982)
|
|
(524)
|
|
(632)
|
|
(3,963)
|
|
(830)
|
|
|
|
Deferred
compensation-related mark-to-market vesting (credit)
expense
|
(2,925)
|
|
(24,302)
|
|
908
|
|
6,894
|
|
7,358
|
|
14,158
|
|
|
|
Deferred
compensation-related dividends and interest expense
|
806
|
|
1,572
|
|
1,196
|
|
1,480
|
|
6,317
|
|
731
|
|
|
|
Deferred compensation
charge
|
|
587,131
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
Net impact
of deferred compensation-related items
|
573,400
|
|
14,128
|
|
3,168
|
|
(1,998)
|
|
(6,965)
|
|
(21,954)
|
|
|
|
Real estate
charge
|
|
294
|
|
6,905
|
|
18
|
|
18
|
|
116
|
|
89,598
|
|
|
|
Insurance
proceeds
|
|
-
|
|
(10,691)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
Non-GAAP
adjustments - subtotal
|
573,694
|
|
10,342
|
|
3,186
|
|
(1,980)
|
|
(6,849)
|
|
67,644
|
|
|
|
Net (loss) income of
consolidated entities attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
non-controlling
interests
|
(3,552)
|
|
(18,445)
|
|
(6,756)
|
|
(8,046)
|
|
7,873
|
|
2,919
|
|
|
Adjusted Operating
Income
|
|
$
37,000
|
|
$
106,503
|
|
$
125,568
|
|
$
144,501
|
|
$
139,029
|
|
$
122,205
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Margin, GAAP basis
excl. non-controlling interests
|
n/m
|
|
15.0%
|
|
16.8%
|
|
19.4%
|
|
18.8%
|
|
7.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
Margin
|
|
7.0%
|
|
17.7%
|
|
19.7%
|
|
21.9%
|
|
21.3%
|
|
19.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AllianceBernstein Holding
L.P.
|
|
RECONCILIATION OF GAAP EPU TO
ADJUSTED EPU
|
|
|
Three Months
Ended
|
|
|
$ thousands except per Unit
amounts, unaudited
|
12/31/11
|
|
9/30/11
|
|
6/30/11
|
|
3/31/11
|
|
12/31/10
|
|
9/30/10
|
|
|
Diluted Net (Loss) Income, GAAP
basis
|
|
$
(199,463)
|
|
$
27,003
|
|
$
35,653
|
|
$
43,923
|
|
$
43,289
|
|
$
12,384
|
|
|
Impact of AllianceBernstein L.P.
non-GAAP adjustments
|
206,341
|
|
3,773
|
|
1,162
|
|
(722)
|
|
(2,451)
|
|
24,190
|
|
|
Adjusted Diluted Net
Income
|
|
$
6,878
|
|
$
30,776
|
|
$
36,815
|
|
$
43,201
|
|
$
40,838
|
|
$
36,574
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Net (Loss) Income per
Unit, GAAP basis
|
$
(1.97)
|
|
$
0.26
|
|
$
0.34
|
|
$
0.42
|
|
$
0.42
|
|
$
0.12
|
|
|
Impact of AllianceBernstein L.P.
non-GAAP adjustments
|
2.04
|
|
0.04
|
|
0.01
|
|
(0.01)
|
|
(0.02)
|
|
0.24
|
|
|
Adjusted Diluted Net Income per
Unit
|
|
$
0.07
|
|
$
0.30
|
|
$
0.35
|
|
$
0.41
|
|
$
0.40
|
|
$
0.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AllianceBernstein
L.P.
|
|
|
|
|
RECONCILIATION OF GAAP FINANCIAL
RESULTS TO ADJUSTED FINANCIAL RESULTS
|
|
|
|
|
|
Twelve
Months Ended
|
|
|
December
31,
|
|
$ thousands,
unaudited
|
2011
|
|
2010
|
|
Net Revenues, GAAP
basis
|
$ 2,749,891
|
|
$ 2,948,557
|
|
Exclude:
|
|
|
|
|
Deferred
compensation-related investment losses (gains)
|
20,302
|
|
(27,053)
|
|
Deferred
compensation-related dividends and interest
|
(4,364)
|
|
(6,513)
|
|
90% of consolidated
venture capital fund investment losses
|
35,778
|
|
16,527
|
|
Distribution-related
payments
|
(302,684)
|
|
(286,676)
|
|
Amortization of deferred
sales commissions
|
(37,675)
|
|
(47,397)
|
|
Pass-through fees &
expenses
|
(35,103)
|
|
(32,684)
|
|
Adjusted Net
Revenues
|
$ 2,426,145
|
|
$ 2,564,761
|
|
|
|
|
|
|
Operating (Loss) Income, GAAP
basis
|
$ (208,469)
|
|
$
458,862
|
|
Exclude:
|
|
|
|
|
Deferred
compensation-related investment losses (gains)
|
20,302
|
|
(27,053)
|
|
Deferred
compensation-related dividends and interest
|
(4,364)
|
|
(6,513)
|
|
Deferred
compensation-related mark-to-market vesting (credit)
|
(19,425)
|
|
2,791
|
|
Deferred
compensation-related dividends and interest expense
|
5,054
|
|
8,540
|
|
Deferred compensation
charge
|
587,131
|
|
-
|
|
Net impact
of deferred compensation-related items
|
588,698
|
|
(22,235)
|
|
Real estate
charges
|
7,235
|
|
101,698
|
|
Insurance
proceeds
|
(10,691)
|
|
-
|
|
Non-GAAP
adjustments - subtotal
|
585,242
|
|
79,463
|
|
Include:
|
|
|
|
|
Net (loss) of
consolidated entities attributable to non-controlling
interests
|
(36,799)
|
|
(15,320)
|
|
Adjusted Operating
Income
|
$
413,572
|
|
$
553,645
|
|
Operating Margin, GAAP basis
incl. non-controlling interests
|
n/m
|
|
16.1%
|
|
Adjusted Operating
Margin
|
17.0%
|
|
21.6%
|
|
|
|
|
|
|
AllianceBernstein Holding
L.P.
|
|
|
|
|
RECONCILIATION OF GAAP EPU TO
ADJUSTED EPU
|
|
|
|
|
|
Twelve
Months Ended
|
|
|
December
31,
|
|
$ thousands except per Unit
amounts, unaudited
|
2011
|
|
2010
|
|
|
|
|
|
|
Net (Loss) Income - Diluted,
GAAP basis
|
$
(93,268)
|
|
$
135,798
|
|
Impact of AllianceBernstein L.P.
non-GAAP adjustments
|
210,891
|
|
28,378
|
|
Net Income - Diluted, as
adjusted
|
$
117,623
|
|
$
164,176
|
|
|
|
|
|
|
Diluted Net (Loss) Income per
Unit, GAAP basis
|
$
(0.90)
|
|
$
1.32
|
|
Impact of AllianceBernstein L.P.
non-GAAP adjustments
|
2.04
|
|
0.28
|
|
Diluted Net Income per Unit, as
adjusted
|
$
1.14
|
|
$
1.60
|
|
|
|
|
|
AllianceBernstein L.P.
Notes to Condensed Consolidated Statements of Income and
Supplemental Information
(Unaudited)
Adjusted Net Revenues
Adjusted net revenues exclude investment gains and losses and
dividends and interest on deferred compensation-related
investments, and 90% of the investment gains and losses of our
consolidated venture capital fund attributable to non-controlling
interests. In addition, adjusted net revenues offset
distribution-related payments to third parties as well as
amortization of deferred sales commissions against distribution
revenues. We believe the offset of distribution-related
payments from net revenues is useful for our investors and other
users of our financial statements because such presentation
appropriately reflects the nature of these costs as pass-through
payments to third parties who perform functions on behalf of our
sponsored mutual funds and/or shareholders of these funds.
Amortization of deferred sales commissions is offset against net
revenues because such costs, over time, essentially offset
distribution revenues earned by the company. Beginning in the
first quarter of 2011, we also excluded additional pass-through
expenses we incur (primarily through our transfer agent) that are
reimbursed and recorded as fees in revenues. These fees have
no impact on operating income but they do have an impact on our
operating margin. As such, we exclude these fees from
adjusted net revenues.
Adjusted Operating Income
Adjusted operating income represents operating income on a GAAP
basis excluding (1) the impact on net revenues and compensation
expense of the mark-to-market gains and losses (as well as the
dividends and interest) associated with employee deferred
compensation-related investments, (2) deferred compensation
charges, (3) real estate charges, (4) insurance proceeds, and (5)
the net (loss) or income of consolidated entities attributable to
non-controlling interests.
Prior to 2009, a large proportion of employee compensation was
in the form of deferred awards that were notionally invested in
AllianceBernstein investment services and generally vested over a
period of four years. AllianceBernstein has economically hedged the
exposure to market movements by purchasing and holding these
investments on its balance sheet. The full value of the
investments' appreciation (depreciation) is recorded within
investment gains and losses on the income statement in the current
period. U.S. GAAP requires the appreciation (depreciation) in
the compensation liability to be expensed over the award vesting
period in proportion to the vested amount of the award as part of
compensation expense. This creates a timing difference
between the recognition of the compensation expense and the
investment gain or loss impacting operating income, which will
fluctuate over the life of the award and net to zero at the end of
the multi-year vesting period. Although during periods of
high market volatility these timing differences have an impact on
operating income and operating margin, over the life of the award
any impact is ultimately offset. Because these plans are
economically hedged, management believes it is useful to reflect
the offset ultimately achieved from hedging the investments' market
exposure in the calculation of adjusted operating income, adjusted
operating margin and adjusted diluted net income per Holding Unit,
which will produce core operating results from period to period.
The non-GAAP measures exclude gains and losses and dividends
and interest on deferred compensation-related investments included
in revenues and compensation expense, thus eliminating the timing
differences created by different treatment under U.S. GAAP of the
market movement on the expense and the investments. In the fourth
quarter of 2011, we implemented changes to our employee long-term
incentive compensation award program. This resulted in a one-time,
non-cash charge that is not considered 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.
In the third quarter of 2011, we received significant insurance
proceeds from the settlement of a claim that are not considered
part of our core operating results.
Most of the net income or loss of consolidated entities
attributable to non-controlling interests relates to the 90%
limited partner interests held by third parties in our consolidated
venture capital fund. We own a 10% limited partner interest
in the fund. Because we are the general partner of the
venture capital fund and are deemed to have a controlling interest,
U.S. GAAP requires us to consolidate the financial results of the
fund. However, recognizing 100% of the gains or losses in
operating income while only retaining 10% is not reflective of our
underlying financial results at the operating income level.
As a result, we are excluding the 90% limited partner
interests we do not own from our adjusted operating income.
Similarly, net income of joint ventures attributable to
non-controlling interests, although not significant, is excluded
because it does not reflect the economic interest attributable to
AllianceBernstein.
Adjusted Operating Margin
Adjusted operating margin allows us to monitor our financial
performance and efficiency from period to period and to compare our
performance to industry peers without the volatility noted above in
our discussion of adjusted operating income. Adjusted
operating margin is derived by dividing adjusted operating income
by adjusted net revenues.
SOURCE AllianceBernstein L.P.