x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 13-3434400 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Yes | x | No | o |
Yes | x | No | o |
Large accelerated filer x | Accelerated filer o | |
Non-accelerated filer o | Smaller reporting company o | |
Emerging growth company o | ||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o |
Yes | o | No | x |
Page | ||
Part I | ||
FINANCIAL INFORMATION | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Part II | ||
OTHER INFORMATION | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
Item 1. | Financial Statements |
September 30, 2018 | December 31, 2017 | ||||||
ASSETS | |||||||
Investment in AB | $ | 1,489,182 | $ | 1,544,704 | |||
Total assets | $ | 1,489,182 | $ | 1,544,704 | |||
LIABILITIES AND PARTNERS’ CAPITAL | |||||||
Liabilities: | |||||||
Other liabilities | $ | 525 | $ | 1,154 | |||
Total liabilities | 525 | 1,154 | |||||
Commitments and contingencies (See Note 8) | |||||||
Partners’ capital: | |||||||
General Partner: 100,000 general partnership units issued and outstanding | 1,392 | 1,411 | |||||
Limited partners: 96,272,964 and 96,361,989 limited partnership units issued and outstanding | 1,556,446 | 1,590,776 | |||||
AB Holding Units held by AB to fund long-term incentive compensation plans | (30,893 | ) | (15,174 | ) | |||
Accumulated other comprehensive loss | (38,288 | ) | (33,463 | ) | |||
Total partners’ capital | 1,488,657 | 1,543,550 | |||||
Total liabilities and partners’ capital | $ | 1,489,182 | $ | 1,544,704 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Equity in net income attributable to AB Unitholders | $ | 72,802 | $ | 49,055 | $ | 203,888 | $ | 146,668 | ||||||||
Income taxes | 6,902 | 5,877 | 21,371 | 17,839 | ||||||||||||
Net income | $ | 65,900 | $ | 43,178 | $ | 182,517 | $ | 128,829 | ||||||||
Net income per unit: | ||||||||||||||||
Basic | $ | 0.68 | $ | 0.46 | $ | 1.87 | $ | 1.35 | ||||||||
Diluted | $ | 0.68 | $ | 0.46 | $ | 1.87 | $ | 1.35 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income | $ | 65,900 | $ | 43,178 | $ | 182,517 | $ | 128,829 | |||||||
Other comprehensive income (loss): | |||||||||||||||
Foreign currency translation adjustments, before reclassification and tax | (1,291 | ) | 2,672 | (5,272 | ) | 8,514 | |||||||||
Less: reclassification adjustment for (losses) included in net income upon liquidation | — | — | (36 | ) | — | ||||||||||
Foreign currency translation adjustments, before tax | (1,291 | ) | 2,672 | (5,236 | ) | 8,514 | |||||||||
Income tax benefit (expense) | 26 | (2 | ) | 1 | 50 | ||||||||||
Foreign currency translation adjustments, net of tax | (1,265 | ) | 2,670 | (5,235 | ) | 8,564 | |||||||||
Unrealized gains on investments: | |||||||||||||||
Unrealized (losses) gains arising during period | — | (2 | ) | — | 2 | ||||||||||
Less: reclassification adjustments for gains included in net income | — | — | — | — | |||||||||||
Changes in unrealized (losses) gains on investments | — | (2 | ) | — | 2 | ||||||||||
Income tax benefit | — | 2 | — | 4 | |||||||||||
Unrealized gains on investments, net of tax | — | — | — | 6 | |||||||||||
Changes in employee benefit related items: | |||||||||||||||
Amortization of prior service cost | 5 | 2 | 6 | 12 | |||||||||||
Recognized actuarial gain | 295 | 88 | 314 | 621 | |||||||||||
Changes in employee benefit related items | 300 | 90 | 320 | 633 | |||||||||||
Income tax expense | (3 | ) | — | (43 | ) | (31 | ) | ||||||||
Employee benefit related items, net of tax | 297 | 90 | 277 | 602 | |||||||||||
Other | — | — | 133 | — | |||||||||||
Other comprehensive (loss) income | (968 | ) | 2,760 | (4,825 | ) | 9,172 | |||||||||
Comprehensive income | $ | 64,932 | $ | 45,938 | $ | 177,692 | $ | 138,001 |
Nine Months Ended September 30, | |||||||
2018 | 2017 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 182,517 | $ | 128,829 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Equity in net income attributable to AB Unitholders | (203,888 | ) | (146,668 | ) | |||
Cash distributions received from AB | 235,307 | 173,025 | |||||
Changes in assets and liabilities: | |||||||
Decrease in other liabilities | (629 | ) | (395 | ) | |||
Net cash provided by operating activities | 213,307 | 154,791 | |||||
Cash flows from investing activities: | |||||||
Investments in AB with proceeds from exercise of compensatory options to buy AB Holding Units | (10,802 | ) | (17,672 | ) | |||
Net cash used in investing activities | (10,802 | ) | (17,672 | ) | |||
Cash flows from financing activities: | |||||||
Cash distributions to Unitholders | (214,670 | ) | (155,056 | ) | |||
Capital contributions from AB | 1,363 | 265 | |||||
Proceeds from exercise of compensatory options to buy AB Holding Units | 10,802 | 17,672 | |||||
Net cash used in financing activities | (202,505 | ) | (137,119 | ) | |||
Change in cash and cash equivalents | — | — | |||||
Cash and cash equivalents as of beginning of period | — | — | |||||
Cash and cash equivalents as of end of period | $ | — | $ | — |
1. | Business Description, Organization and Basis of Presentation |
• | Institutional Services – servicing its institutional clients, including private and public pension plans, foundations and endowments, insurance companies, central banks and governments worldwide, and affiliates such as AXA S.A. (“AXA”), AXA Equitable Holdings, Inc. ("EQH") and their respective subsidiaries, by means of separately-managed accounts, sub-advisory relationships, structured products, collective investment trusts, mutual funds, hedge funds and other investment vehicles. |
• | Retail Services – servicing its retail clients, primarily by means of retail mutual funds sponsored by AB or an affiliated company, sub-advisory relationships with mutual funds sponsored by third parties, separately-managed account programs sponsored by financial intermediaries worldwide and other investment vehicles. |
• | Private Wealth Management Services – servicing its private clients, including high-net-worth individuals and families, trusts and estates, charitable foundations, partnerships, private and family corporations, and other entities, by means of separately-managed accounts, hedge funds, mutual funds and other investment vehicles. |
• | Bernstein Research Services – servicing institutional investors, such as pension fund, hedge fund and mutual fund managers, seeking high-quality fundamental research, quantitative services and brokerage-related services in equities and listed options. |
• | Actively-managed equity strategies, with global and regional portfolios across capitalization ranges, concentration ranges and investment strategies, including value, growth and core equities; |
• | Actively-managed traditional and unconstrained fixed income strategies, including taxable and tax-exempt strategies; |
• | Passive management, including index and enhanced index strategies; |
• | Alternative investments, including hedge funds, fund of funds and private equity (e.g., direct real estate investing and direct lending); and |
• | Multi-asset solutions and services, including dynamic asset allocation, customized target-date funds and target-risk funds. |
EQH and its subsidiaries | 63.7 | % |
AB Holding | 35.5 | |
Unaffiliated holders | 0.8 | |
100.0 | % |
2. | Cash Distributions |
3. | Long-term Incentive Compensation Plans |
4. | Net Income per Unit |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands, except per unit amounts) | ||||||||||||||||
Net income – basic | $ | 65,900 | $ | 43,178 | $ | 182,517 | $ | 128,829 | ||||||||
Additional allocation of equity in net income attributable to AB resulting from assumed dilutive effect of compensatory options | 117 | 136 | 376 | 450 | ||||||||||||
Net income – diluted | $ | 66,017 | $ | 43,314 | $ | 182,893 | $ | 129,279 | ||||||||
Weighted average units outstanding – basic | 97,409 | 93,374 | 97,587 | 95,218 | ||||||||||||
Dilutive effect of compensatory options | 245 | 400 | 282 | 455 | ||||||||||||
Weighted average units outstanding – diluted | 97,654 | 93,774 | 97,869 | 95,673 | ||||||||||||
Basic net income per unit | $ | 0.68 | $ | 0.46 | $ | 1.87 | $ | 1.35 | ||||||||
Diluted net income per unit | $ | 0.68 | $ | 0.46 | $ | 1.87 | $ | 1.35 |
5. | Investment in AB |
Investment in AB as of December 31, 2017 | $ | 1,544,704 | |
Equity in net income attributable to AB Unitholders | 203,888 | ||
Changes in accumulated other comprehensive income (loss) | (4,825 | ) | |
Additional investments with proceeds from exercise of compensatory options to buy AB Holding Units | 10,802 | ||
Cash distributions received from AB | (235,307 | ) | |
Capital contributions from AB | (1,363 | ) | |
AB Holding Units retired | (100,330 | ) | |
AB Holding Units issued to fund long-term incentive compensation plans | 74,916 | ||
Change in AB Holding Units held by AB for long-term incentive compensation plans | (15,719 | ) | |
Impact of AB's adoption of revenue recognition standard ASC 606 | 12,549 | ||
Other | (133 | ) | |
Investment in AB as of September 30, 2018 | $ | 1,489,182 |
6. | Units Outstanding |
Outstanding as of December 31, 2017 | 96,461,989 | |
Options exercised | 629,493 | |
Units issued | 2,712,263 | |
Units retired | (3,430,781 | ) |
Outstanding as of September 30, 2018 | 96,372,964 |
7. | Income Taxes |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
2018 | 2017 | % Change | 2018 | 2017 | % Change | |||||||||||||||||
(in thousands) | ||||||||||||||||||||||
Net income attributable to AB Unitholders | $ | 203,674 | $ | 140,954 | 44.5 | % | $ | 569,535 | $ | 415,994 | 36.9 | % | ||||||||||
Multiplied by: weighted average equity ownership interest | 35.7 | % | 34.8 | % | 35.8 | % | 35.3 | % | ||||||||||||||
Equity in net income attributable to AB Unitholders | $ | 72,802 | $ | 49,055 | 48.4 | $ | 203,888 | $ | 146,668 | 39.0 | ||||||||||||
AB qualifying revenues | $ | 649,270 | $ | 581,410 | 11.7 | $ | 1,995,197 | $ | 1,714,065 | 16.4 | ||||||||||||
Multiplied by: weighted average equity ownership interest for calculating tax | 29.8 | % | 28.3 | % | 30.0 | % | 29.2 | % | ||||||||||||||
Multiplied by: federal tax | 3.5 | % | 3.5 | % | 3.5 | % | 3.5 | % | ||||||||||||||
Federal income taxes | 6,775 | 5,767 | 20,979 | 17,517 | ||||||||||||||||||
State income taxes | 127 | 110 | 392 | 322 | ||||||||||||||||||
Total income taxes | $ | 6,902 | $ | 5,877 | 17.4 | $ | 21,371 | $ | 17,839 | 19.8 | ||||||||||||
Effective tax rate | 9.5 | % | 12.0 | % | 10.5 | % | 12.2 | % |
8. | Commitments and Contingencies |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
2018 | 2017 | % Change | 2018 | 2017 | % Change | |||||||||||||||||
(in thousands, except per unit amounts) | ||||||||||||||||||||||
Net income attributable to AB Unitholders | $ | 203,674 | $ | 140,954 | 44.5 | % | $ | 569,535 | $ | 415,994 | 36.9 | % | ||||||||||
Weighted average equity ownership interest | 35.7 | % | 34.8 | % | 35.8 | % | 35.3 | % | ||||||||||||||
Equity in net income attributable to AB Unitholders | 72,802 | 49,055 | 48.4 | 203,888 | 146,668 | 39.0 | ||||||||||||||||
Income taxes | 6,902 | 5,877 | 17.4 | 21,371 | 17,839 | 19.8 | ||||||||||||||||
Net income of AB Holding | $ | 65,900 | $ | 43,178 | 52.6 | $ | 182,517 | $ | 128,829 | 41.7 | ||||||||||||
Diluted net income per AB Holding Unit | $ | 0.68 | $ | 0.46 | 47.8 | $ | 1.87 | $ | 1.35 | 38.5 | ||||||||||||
Distribution per AB Holding Unit(1) | $ | 0.69 | $ | 0.51 | 35.3 | $ | 2.04 | $ | 1.46 | 39.7 |
(1) | Distributions reflect the impact of AB’s non-GAAP adjustments. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands, except per Unit amounts) | ||||||||||||||||
AB non-GAAP adjustments, before taxes | $ | 2,665 | $ | 19,892 | $ | 45,515 | $ | 37,439 | ||||||||
AB income tax expense on non-GAAP adjustments | (95 | ) | (5,641 | ) | (1,164 | ) | (4,642 | ) | ||||||||
AB non-GAAP adjustments, after taxes | 2,570 | 14,251 | 44,351 | 32,797 | ||||||||||||
AB Holding’s weighted average equity ownership interest in AB | 35.7 | % | 34.8 | % | 35.8 | % | 35.3 | % | ||||||||
Impact on AB Holding’s net income of AB non-GAAP adjustments | $ | 919 | $ | 4,960 | $ | 15,877 | $ | 11,564 | ||||||||
Net income – diluted, GAAP basis | $ | 66,017 | $ | 43,314 | $ | 182,893 | $ | 129,279 | ||||||||
Impact on AB Holding’s net income of AB non-GAAP adjustments | 919 | 4,960 | 15,877 | 11,564 | ||||||||||||
Adjusted net income – diluted | $ | 66,936 | $ | 48,274 | $ | 198,770 | $ | 140,843 | ||||||||
Diluted net income per AB Holding Unit, GAAP basis | $ | 0.68 | $ | 0.46 | $ | 1.87 | $ | 1.35 | ||||||||
Impact of AB non-GAAP adjustments | 0.01 | 0.05 | 0.16 | 0.12 | ||||||||||||
Adjusted diluted net income per AB Holding Unit | $ | 0.69 | $ | 0.51 | $ | 2.03 | $ | 1.47 |
• | Our belief that the cash flow AB Holding realizes from its investment in AB will provide AB Holding with the resources it needs to meet its financial obligations: AB Holding’s cash flow is dependent on the quarterly cash distributions it receives from AB. Accordingly, AB Holding’s ability to meet its financial obligations is dependent on AB’s cash flow from its operations, which is subject to the performance of the capital markets and other factors beyond our control. |
• | Our financial condition and ability to access the public and private capital markets providing adequate liquidity for our general business needs: Our financial condition is dependent on our cash flow from operations, which is subject to the performance of the capital markets, our ability to maintain and grow client assets under management and other factors beyond our control. Our ability to access public and private capital markets on reasonable terms may be limited by adverse market conditions, our firm’s credit ratings, our profitability and changes in government regulations, including tax rates and interest rates. |
• | The outcome of litigation: Litigation is inherently unpredictable, and excessive damage awards do occur. Though we have stated that we do not expect any pending legal proceedings to have a material adverse effect on our results of operations, financial condition or liquidity, any settlement or judgment with respect to a pending or future legal proceeding could be significant, and could have such an effect. |
• | The possibility that we 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 depends on various factors, some of which are beyond our control, including the fluctuation in the price of an AB Holding Unit (NYSE: AB) and the availability of cash to make these purchases. |
• | Our determination that adjusted employee compensation expense should not exceed 50% of our adjusted net revenues: Aggregate employee compensation reflects employee performance and competitive compensation levels. Fluctuations in our revenues and/or changes in competitive compensation levels could result in adjusted employee compensation expense exceeding 50% of our adjusted net revenues. |
• | Our Relocation Strategy: While the expenses, expense savings and EPU impact we expect will result from our Relocation Strategy are presented with numerical specificity, and we believe these figures to be reasonable as of the date of this report, the uncertainties surrounding the assumptions on which our estimates are based create a significant risk that our current estimates may not be realized. These assumptions include: |
• | the amount and timing of employee relocation costs, severance and overlapping compensation and occupancy costs we experience; and |
• | the timing for execution of each phase of our relocation implementation plan. |
• | Our 2020 Margin Target: While our 2020 Margin Target is presented with numerical specificity, and we believe the target to be reasonable as of the date of this report, the uncertainties surrounding the assumptions on which the 2020 Margin Target is based create a significant risk that these assumptions may not be realized. These assumptions include: |
• | the levels of positive net flows into our investment services; |
• | the level of growth (in terms of additional AUM) in our alternatives product business; |
• | the rate of increase in our fixed costs due to inflation and similar factors, the transitional costs related to our relocation strategy and the timing of such costs, the success we have in achieving planned new cost reductions (including those relating to our relocation strategy) and the timing of such cost reductions, and the investments we make in our business; and |
• | general conditions of the markets in which our business operates, including modest appreciation in both equity and fixed income total investment returns. |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Period | Total Number of AB Holding Units Purchased | Average Price Paid Per AB Holding Unit, net of Commissions | Total Number of AB Holding Units Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of AB Holding Units that May Yet Be Purchased Under the Plans or Programs | |||||||||
7/1/18 - 7/31/18(1)(2) | 242,062 | $ | 29.21 | — | — | ||||||||
8/1/18 - 8/31/18(2) | 913,873 | 29.68 | — | — | |||||||||
9/1/18 - 9/30/18(2) | 453,373 | 30.42 | — | — | |||||||||
Total | 1,609,308 | $ | 29.81 | — | — |
(1) | During the third quarter of 2018, AB purchased from employees 416 AB Holding Units to allow them to fulfill statutory withholding tax requirements at the time of distribution of long-term incentive compensation awards. |
(2) | During the third quarter of 2018, AB purchased 1,608,892 AB Holding Units on the open market pursuant to a Rule 10b5-1 plan to help fund anticipated obligations under our incentive compensation award program. |
Period | Total Number of AB Units Purchased | Average Price Paid Per AB Unit, net of Commissions | Total Number of AB Units Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of AB Units that May Yet Be Purchased Under the Plans or Programs | |||||||||
7/1/18 - 7/31/18 | — | $ | — | — | — | ||||||||
8/1/18 - 8/31/18 | — | — | — | — | |||||||||
9/1/18 - 9/30/18(1) | 796 | 30.21 | — | — | |||||||||
Total | 796 | $ | 30.21 | — | — |
Item 3. | Defaults Upon Senior Securities |
Item 4. | Mine Safety Disclosures |
Item 5. | Other Information |
Item 6. | Exhibits |
31.1 | |
31.2 | |
32.1 | |
32.2 | |
99.1 | |
101.INS | XBRL Instance Document. |
101.SCH | XBRL Taxonomy Extension Schema. |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase. |
101.LAB | XBRL Taxonomy Extension Label Linkbase. |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase. |
101.DEF | XBRL Taxonomy Extension Definition Linkbase. |
Date: October 24, 2018 | ALLIANCEBERNSTEIN HOLDING L.P. | ||
By: | /s/ John C. Weisenseel | ||
John C. Weisenseel | |||
Chief Financial Officer | |||
By: | /s/ William R. Siemers | ||
William R. Siemers | |||
Chief Accounting Officer |
1. | I have reviewed this quarterly report on Form 10-Q of AllianceBernstein Holding L.P.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: October 24, 2018 | /s/ Seth P. Bernstein | |
Seth P. Bernstein | ||
Chief Executive Officer | ||
AllianceBernstein Holding L.P. |
1. | I have reviewed this quarterly report on Form 10-Q of AllianceBernstein Holding L.P.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: October 24, 2018 | /s/ John C. Weisenseel | |
John C. Weisenseel | ||
Chief Financial Officer | ||
AllianceBernstein Holding L.P. |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Exchange Act; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: October 24, 2018 | /s/ Seth P. Bernstein | |
Seth P. Bernstein | ||
Chief Executive Officer | ||
AllianceBernstein Holding L.P. |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Exchange Act; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: October 24, 2018 | /s/ John C. Weisenseel | |
John C. Weisenseel | ||
Chief Financial Officer | ||
AllianceBernstein Holding L.P. |
September 30, 2018 | December 31, 2017 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 607,109 | $ | 671,930 | |||
Cash and securities segregated, at fair value (cost: $1,262,899 and $816,350) | 1,262,906 | 816,350 | |||||
Receivables, net: | |||||||
Brokers and dealers | 303,542 | 199,690 | |||||
Brokerage clients | 1,627,419 | 1,647,059 | |||||
AB funds fees | 209,677 | 212,115 | |||||
Other fees | 111,231 | 124,164 | |||||
Investments: | |||||||
Long-term incentive compensation-related | 58,414 | 66,034 | |||||
Other | 420,133 | 377,555 | |||||
Assets of consolidated company-sponsored investment funds: | |||||||
Cash and cash equivalents | 10,438 | 326,518 | |||||
Investments | 303,301 | 1,246,283 | |||||
Other assets | 9,095 | 35,397 | |||||
Furniture, equipment and leasehold improvements, net | 158,475 | 157,569 | |||||
Goodwill | 3,066,700 | 3,066,700 | |||||
Intangible assets, net | 85,463 | 105,784 | |||||
Deferred sales commissions, net | 16,738 | 30,126 | |||||
Other assets | 297,995 | 211,893 | |||||
Total assets | $ | 8,548,636 | $ | 9,295,167 | |||
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND CAPITAL | |||||||
Liabilities: | |||||||
Payables: | |||||||
Brokers and dealers | $ | 204,986 | $ | 237,861 | |||
Securities sold not yet purchased | 20,961 | 29,961 | |||||
Brokerage clients | 2,781,140 | 2,229,371 | |||||
AB mutual funds | 50,436 | 82,967 | |||||
Accounts payable and accrued expenses | 373,596 | 515,660 | |||||
Liabilities of consolidated company-sponsored investment funds | 8,579 | 698,101 | |||||
Accrued compensation and benefits | 664,947 | 270,610 | |||||
Debt | 398,242 | 565,745 | |||||
Total liabilities | 4,502,887 | 4,630,276 | |||||
September 30, 2018 | December 31, 2017 | ||||||
Commitments and contingencies (See Note 13) | |||||||
Redeemable non-controlling interest | 103,997 | 601,587 | |||||
Capital: | |||||||
General Partner | 40,553 | 41,221 | |||||
Limited partners: 268,565,762 and 268,659,333 units issued and outstanding | 4,105,882 | 4,168,841 | |||||
Receivables from affiliates | (11,630 | ) | (11,494 | ) | |||
AB Holding Units held for long-term incentive compensation plans | (86,961 | ) | (42,688 | ) | |||
Accumulated other comprehensive loss | (107,777 | ) | (94,140 | ) | |||
Partners’ capital attributable to AB Unitholders | 3,940,067 | 4,061,740 | |||||
Non-redeemable non-controlling interests in consolidated entities | 1,685 | 1,564 | |||||
Total capital | 3,941,752 | 4,063,304 | |||||
Total liabilities, redeemable non-controlling interest and capital | $ | 8,548,636 | $ | 9,295,167 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Revenues: | ||||||||||||||||
Investment advisory and services fees | $ | 610,063 | $ | 543,107 | $ | 1,782,287 | $ | 1,572,560 | ||||||||
Bernstein research services | 103,581 | 108,385 | 324,192 | 330,596 | ||||||||||||
Distribution revenues | 104,488 | 106,042 | 317,610 | 302,745 | ||||||||||||
Dividend and interest income | 21,942 | 17,619 | 71,351 | 51,023 | ||||||||||||
Investment gains (losses) | 565 | 18,808 | 26,860 | 68,122 | ||||||||||||
Other revenues | 24,012 | 24,902 | 76,548 | 71,532 | ||||||||||||
Total revenues | 864,651 | 818,863 | 2,598,848 | 2,396,578 | ||||||||||||
Less: Interest expense | 14,475 | 6,713 | 36,147 | 17,198 | ||||||||||||
Net revenues | 850,176 | 812,150 | 2,562,701 | 2,379,380 | ||||||||||||
Expenses: | ||||||||||||||||
Employee compensation and benefits | 357,442 | 329,777 | 1,059,515 | 979,387 | ||||||||||||
Promotion and servicing: | ||||||||||||||||
Distribution-related payments | 106,372 | 106,106 | 322,827 | 300,951 | ||||||||||||
Amortization of deferred sales commissions | 4,651 | 7,629 | 17,362 | 25,015 | ||||||||||||
Trade execution, marketing, T&E and other | 50,793 | 50,266 | 164,095 | 155,993 | ||||||||||||
General and administrative: | ||||||||||||||||
General and administrative | 107,526 | 128,712 | 337,596 | 360,395 | ||||||||||||
Real estate (credit) charges | (155 | ) | 18,655 | 6,490 | 39,400 | |||||||||||
Contingent payment arrangements | 52 | (140 | ) | 157 | 215 | |||||||||||
Interest on borrowings | 2,711 | 2,105 | 7,952 | 6,227 | ||||||||||||
Amortization of intangible assets | 6,965 | 7,013 | 20,753 | 20,921 | ||||||||||||
Total expenses | 636,357 | 650,123 | 1,936,747 | 1,888,504 | ||||||||||||
Operating income | 213,819 | 162,027 | 625,954 | 490,876 | ||||||||||||
Income taxes | 9,419 | 4,547 | 32,782 | 24,869 | ||||||||||||
Net income | 204,400 | 157,480 | 593,172 | 466,007 | ||||||||||||
Net income of consolidated entities attributable to non-controlling interests | 726 | 16,526 | 23,637 | 50,013 | ||||||||||||
Net income attributable to AB Unitholders | $ | 203,674 | $ | 140,954 | $ | 569,535 | $ | 415,994 | ||||||||
Net income per AB Unit: | ||||||||||||||||
Basic | $ | 0.75 | $ | 0.53 | $ | 2.09 | $ | 1.54 | ||||||||
Diluted | $ | 0.75 | $ | 0.52 | $ | 2.09 | $ | 1.54 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net income | $ | 204,400 | $ | 157,480 | $ | 593,172 | $ | 466,007 | ||||||||
Other comprehensive income (loss): | ||||||||||||||||
Foreign currency translation adjustment, before reclassification and tax | (4,154 | ) | 7,735 | (14,889 | ) | 24,091 | ||||||||||
Less: reclassification adjustment for losses included in net income upon liquidation | — | — | (100 | ) | — | |||||||||||
Foreign currency translation adjustments, before tax | (4,154 | ) | 7,735 | (14,789 | ) | 24,091 | ||||||||||
Income tax benefit | — | — | — | — | ||||||||||||
Foreign currency translation adjustments, net of tax | (4,154 | ) | 7,735 | (14,789 | ) | 24,091 | ||||||||||
Unrealized gains on investments: | ||||||||||||||||
Unrealized (losses) gains arising during period | — | (4 | ) | — | 6 | |||||||||||
Less: reclassification adjustment for gains included in net income | — | — | — | — | ||||||||||||
Change in unrealized (losses) gains on investments | — | (4 | ) | — | 6 | |||||||||||
Income tax benefit | — | 5 | — | 3 | ||||||||||||
Unrealized gains on investments, net of tax | — | 1 | — | 9 | ||||||||||||
Changes in employee benefit related items: | ||||||||||||||||
Amortization of prior service cost | 6 | 6 | 17 | 18 | ||||||||||||
Recognized actuarial gain | 285 | 295 | 853 | 818 | ||||||||||||
Changes in employee benefit related items | 291 | 301 | 870 | 836 | ||||||||||||
Income tax expense | (5 | ) | (2 | ) | (121 | ) | (81 | ) | ||||||||
Employee benefit related items, net of tax | 286 | 299 | 749 | 755 | ||||||||||||
Other | — | — | 374 | — | ||||||||||||
Other comprehensive (loss) income | (3,868 | ) | 8,035 | (13,666 | ) | 24,855 | ||||||||||
Less: Comprehensive income in consolidated entities attributable to non-controlling interests | 721 | 16,554 | 23,608 | 50,990 | ||||||||||||
Comprehensive income attributable to AB Unitholders | $ | 199,811 | $ | 148,961 | $ | 555,898 | $ | 439,872 |
Nine Months Ended September 30, | |||||||
2018 | 2017 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 593,172 | $ | 466,007 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Amortization of deferred sales commissions | 17,362 | 25,015 | |||||
Non-cash long-term incentive compensation expense | 13,051 | 26,947 | |||||
Depreciation and other amortization | 52,599 | 49,995 | |||||
Unrealized (gains) losses on investments | (5,226 | ) | 3,323 | ||||
Unrealized gains on investments of consolidated company-sponsored investment funds | (23,755 | ) | (33,062 | ) | |||
Other, net | 585 | 10,195 | |||||
Changes in assets and liabilities: | |||||||
(Increase) decrease in segregated cash and securities | (446,556 | ) | 161,531 | ||||
(Increase) decrease in receivables | (179,020 | ) | 8,079 | ||||
Increase in investments | (30,130 | ) | (76,780 | ) | |||
Decrease (increase) in investments of consolidated company-sponsored investment funds | 966,737 | (180,966 | ) | ||||
(Increase) decrease in deferred sales commissions | (3,974 | ) | 1,871 | ||||
Increase in other assets | (134,259 | ) | (33,003 | ) | |||
(Decrease) increase in other assets and liabilities of consolidated company-sponsored investment funds, net | (663,220 | ) | 327,284 | ||||
Increase (decrease) in payables | 584,282 | (58,126 | ) | ||||
(Decrease) increase in accounts payable and accrued expenses | (22,908 | ) | 23,982 | ||||
Increase in accrued compensation and benefits | 395,643 | 358,586 | |||||
Net cash provided by operating activities | 1,114,383 | 1,080,878 | |||||
Cash flows from investing activities: | |||||||
Purchases of investments | — | (11 | ) | ||||
Proceeds from sales of investments | — | 10 | |||||
Purchases of furniture, equipment and leasehold improvements | (26,993 | ) | (24,952 | ) | |||
Proceeds from sales of furniture, equipment and leasehold improvements | — | 39 | |||||
Net cash used in investing activities | (26,993 | ) | (24,914 | ) | |||
Cash flows from financing activities: | |||||||
Repayment of commercial paper, net | (97,303 | ) | (220,363 | ) | |||
(Repayment) proceeds of bank loans | (75,000 | ) | — | ||||
(Decrease) increase in overdrafts payable | (39,025 | ) | 66,134 | ||||
Distributions to General Partner and Unitholders | (652,991 | ) | (489,049 | ) | |||
Redemptions of investments in consolidated company-sponsored investment funds, net | (518,601 | ) | (8,373 | ) | |||
Capital contributions to non-controlling interests in consolidated entities | — | (43,217 | ) | ||||
Purchase of non-controlling interest | — | (1,833 | ) | ||||
Capital contributions (to) from affiliates | (1,344 | ) | 79 | ||||
Payments of contingent payment arrangements | (1,146 | ) | (6,344 | ) | |||
Additional investments by AB Holding with proceeds from exercise of compensatory options to buy AB Holding Units | 10,802 | 17,672 | |||||
Purchases of AB Holding Units to fund long-term incentive compensation plan awards, net | (82,710 | ) | (134,186 | ) | |||
Purchases of AB Units | (129 | ) | (993 | ) |
Debt issuance costs | (1,705 | ) | — | ||||
Net cash used in financing activities | (1,459,152 | ) | (820,473 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (9,139 | ) | 17,458 | ||||
Net (decrease) increase in cash and cash equivalents | (380,901 | ) | 252,949 | ||||
Cash and cash equivalents as of beginning of the period | 998,448 | 994,510 | |||||
Cash and cash equivalents as of end of the period | $ | 617,547 | $ | 1,247,459 | |||
• | Institutional Services – servicing our institutional clients, including private and public pension plans, foundations and endowments, insurance companies, central banks and governments worldwide, and affiliates such as AXA S.A. ("AXA"), AXA Equitable Holdings, Inc. ("EQH") and their respective subsidiaries, by means of separately-managed accounts, sub-advisory relationships, structured products, collective investment trusts, mutual funds, hedge funds and other investment vehicles. |
• | Retail Services – servicing our retail clients, primarily by means of retail mutual funds sponsored by AB or an affiliated company, sub-advisory relationships with mutual funds sponsored by third parties, separately-managed account programs sponsored by financial intermediaries worldwide and other investment vehicles. |
• | Private Wealth Management Services – servicing our private clients, including high-net-worth individuals and families, trusts and estates, charitable foundations, partnerships, private and family corporations, and other entities, by means of separately-managed accounts, hedge funds, mutual funds and other investment vehicles. |
• | Bernstein Research Services – servicing institutional investors, such as pension fund, hedge fund and mutual fund managers, seeking high-quality fundamental research, quantitative services and brokerage-related services in equities and listed options. |
• | Actively-managed equity strategies, with global and regional portfolios across capitalization ranges, concentration ranges and investment strategies, including value, growth and core equities; |
• | Alternative investments, including hedge funds, fund of funds and private equity (e.g., direct real estate investing and direct lending); and |
EQH and its subsidiaries | 63.7 | % |
AB Holding | 35.5 | |
Unaffiliated holders | 0.8 | |
100.0 | % |
2. | Significant Accounting Policies |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands) | ||||||||||||||||
Subject to contracts with customers: | ||||||||||||||||
Investment advisory and services fees | ||||||||||||||||
Base fees | $ | 568,918 | $ | 538,552 | $ | 1,699,584 | $ | 1,547,213 | ||||||||
Performance-based fees | 41,145 | 4,555 | 82,703 | 25,347 | ||||||||||||
Bernstein research services | 103,581 | 108,385 | 324,192 | 330,596 | ||||||||||||
Distribution revenues | ||||||||||||||||
All-in-management fees | 62,807 | 64,495 | 193,884 | 177,637 | ||||||||||||
12b-1 fees | 22,136 | 23,199 | 66,746 | 71,677 | ||||||||||||
Other | 19,545 | 18,348 | 56,980 | 53,431 | ||||||||||||
Other revenues | ||||||||||||||||
Shareholder servicing fees | 19,017 | 19,106 | 57,533 | 55,618 | ||||||||||||
Other | 4,293 | 4,879 | 15,827 | 12,948 | ||||||||||||
841,442 | 781,519 | 2,497,449 | 2,274,467 | |||||||||||||
Not subject to contracts with customers: | ||||||||||||||||
Dividend and interest income, net of interest expense | 7,467 | 10,906 | 35,204 | 33,825 | ||||||||||||
Investment gains (losses) | 565 | 18,808 | 26,860 | 68,122 | ||||||||||||
Other revenues | 702 | 917 | 3,188 | 2,966 | ||||||||||||
8,734 | 30,631 | 65,252 | 104,913 | |||||||||||||
Total net revenues | $ | 850,176 | $ | 812,150 | $ | 2,562,701 | $ | 2,379,380 |
4. | Long-term Incentive Compensation Plans |
5. | Real Estate Charges |
Nine Months Ended September 30, 2018 | Twelve Months Ended December 31, 2017 | ||||||
(in thousands) | |||||||
Balance as of beginning of period | $ | 113,635 | $ | 112,932 | |||
Expense incurred | 6,490 | 28,507 | |||||
Deferred rent | — | 7,083 | |||||
Payments made | (32,868 | ) | (39,122 | ) | |||
Interest accretion | 3,284 | 4,235 | |||||
Balance as of end of period | $ | 90,541 | $ | 113,635 |
6. | Net Income per Unit |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands, except per unit amounts) | ||||||||||||||||
Net income attributable to AB Unitholders | $ | 203,674 | $ | 140,954 | $ | 569,535 | $ | 415,994 | ||||||||
Weighted average limited partnership units outstanding – basic | 269,603 | 265,585 | 269,783 | 267,448 | ||||||||||||
Dilutive effect of compensatory options to buy AB Holding Units | 245 | 400 | 282 | 455 | ||||||||||||
Weighted average limited partnership units outstanding – diluted | 269,848 | 265,985 | 270,065 | 267,903 | ||||||||||||
Basic net income per AB Unit | $ | 0.75 | $ | 0.53 | $ | 2.09 | $ | 1.54 | ||||||||
Diluted net income per AB Unit | $ | 0.75 | $ | 0.52 | $ | 2.09 | $ | 1.54 |
8. | Cash and Securities Segregated Under Federal Regulations and Other Requirements |
9. | Investments |
Investments consist of: | |||||||
September 30, 2018 | December 31, 2017 | ||||||
(in thousands) | |||||||
U.S. Treasury Bills | $ | 22,774 | $ | 52,609 | |||
Equity securities: | |||||||
Long-term incentive compensation-related | 43,647 | 51,758 | |||||
Seed capital | 118,158 | 160,672 | |||||
Other | 120,705 | 81,154 | |||||
Exchange-traded options | 1,100 | 4,981 | |||||
Investments in limited partnership hedge funds: | |||||||
Long-term incentive compensation-related | 14,767 | 14,276 | |||||
Seed capital | 101,732 | 22,923 | |||||
Private equity (seed capital) | 36,450 | 38,186 | |||||
Time deposits | 8,835 | 5,138 | |||||
Other | 10,379 | 11,892 | |||||
Total investments | $ | 478,547 | $ | 443,589 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands) | ||||||||||||||||
Net gains (losses) recognized during the period | $ | 3,429 | $ | (1,869 | ) | $ | (177 | ) | $ | 15,721 | ||||||
Less: net gains recognized during the period on equity securities sold during the period | 1,156 | 366 | 2,820 | 14,067 | ||||||||||||
Unrealized gains (losses) recognized during the period on equity securities held | $ | 2,273 | $ | (2,235 | ) | $ | (2,997 | ) | $ | 1,654 |
10. | Derivative Instruments |
Fair Value | |||||||||||
Notional Value | Asset Derivatives | Liability Derivatives | |||||||||
(in thousands) | |||||||||||
September 30, 2018: | |||||||||||
Exchange-traded futures | $ | 143,281 | $ | 915 | $ | 965 | |||||
Currency forwards | 88,091 | 7,888 | 7,622 | ||||||||
Interest rate swaps | 87,222 | 1,251 | 1,044 | ||||||||
Credit default swaps | 87,679 | 1,264 | 3,031 | ||||||||
Total return swaps | 120,455 | 79 | 1,275 | ||||||||
Total derivatives | $ | 526,728 | $ | 11,397 | $ | 13,937 | |||||
December 31, 2017: | |||||||||||
Exchange-traded futures | $ | 163,458 | $ | 948 | $ | 2,540 | |||||
Currency forwards | 126,503 | 8,306 | 8,058 | ||||||||
Interest rate swaps | 43,309 | 951 | 870 | ||||||||
Credit default swaps | 74,600 | 1,247 | 2,465 | ||||||||
Total return swaps | 68,106 | 167 | 390 | ||||||||
Total derivatives | $ | 475,976 | $ | 11,619 | $ | 14,323 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands) | ||||||||||||||||
Exchange-traded futures | $ | 157 | $ | (3,290 | ) | $ | 1,699 | $ | (12,123 | ) | ||||||
Currency forwards | 673 | (62 | ) | 947 | (992 | ) | ||||||||||
Interest rate swaps | 157 | 151 | 424 | (97 | ) | |||||||||||
Credit default swaps | (1,117 | ) | (273 | ) | (1,212 | ) | (1,182 | ) | ||||||||
Total return swaps | (5,625 | ) | (1,417 | ) | (5,665 | ) | (5,376 | ) | ||||||||
Net (losses) gains on derivative instruments | $ | (5,755 | ) | $ | (4,891 | ) | $ | (3,807 | ) | $ | (19,770 | ) |
11. | Offsetting Assets and Liabilities |
Gross Amounts of Recognized Assets | Gross Amounts Offset in the Statement of Financial Condition | Net Amounts of Assets Presented in the Statement of Financial Condition | Financial Instruments | Cash Collateral Received | Net Amount | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
September 30, 2018: | |||||||||||||||||||||||
Securities borrowed | $ | 46,175 | $ | — | $ | 46,175 | $ | (42,514 | ) | $ | — | $ | 3,661 | ||||||||||
Derivatives | $ | 11,397 | $ | — | $ | 11,397 | $ | — | $ | (530 | ) | $ | 10,867 | ||||||||||
Long exchange-traded options | $ | 1,100 | $ | — | $ | 1,100 | $ | — | $ | — | $ | 1,100 | |||||||||||
December 31, 2017: | |||||||||||||||||||||||
Securities borrowed | $ | 85,371 | $ | — | $ | 85,371 | $ | (82,353 | ) | $ | — | $ | 3,018 | ||||||||||
Derivatives | $ | 11,619 | $ | — | $ | 11,619 | $ | — | $ | (519 | ) | $ | 11,100 | ||||||||||
Long exchange-traded options | $ | 4,981 | $ | — | $ | 4,981 | $ | — | $ | — | $ | 4,981 |
Gross Amounts of Recognized Liabilities | Gross Amounts Offset in the Statement of Financial Condition | Net Amounts of Liabilities Presented in the Statement of Financial Condition | Financial Instruments | Cash Collateral Pledged | Net Amount | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
September 30, 2018: | |||||||||||||||||||||||
Securities loaned | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
Derivatives | $ | 13,937 | $ | — | $ | 13,937 | $ | — | $ | (5,279 | ) | $ | 8,658 | ||||||||||
Short exchange-traded options | $ | 10,799 | $ | — | $ | 10,799 | $ | — | $ | — | $ | 10,799 | |||||||||||
December 31, 2017: | |||||||||||||||||||||||
Securities loaned | $ | 37,960 | $ | — | $ | 37,960 | $ | (37,922 | ) | $ | — | $ | 38 | ||||||||||
Derivatives | $ | 14,323 | $ | — | $ | 14,323 | $ | — | $ | (8,794 | ) | $ | 5,529 | ||||||||||
Short exchange-traded options | $ | 13,585 | $ | — | $ | 13,585 | $ | — | $ | — | $ | 13,585 |
12. | Fair Value |
• | Level 2 – Quoted prices in markets that are not active or other pricing inputs that are either directly or indirectly observable as of the reported date. |
• | Level 3 – Prices or valuation techniques that are both significant to the fair value measurement and unobservable as of the reported date. These financial instruments do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation. |
Level 1 | Level 2 | Level 3 | NAV Expedient(1) | Other | Total | ||||||||||||||||||
September 30, 2018: | |||||||||||||||||||||||
Money markets | $ | 110,654 | $ | — | $ | — | $ | — | $ | — | $ | 110,654 | |||||||||||
Securities segregated (U.S. Treasury Bills) | — | 1,262,906 | — | — | — | 1,262,906 | |||||||||||||||||
Derivatives | 915 | 10,482 | — | — | — | 11,397 | |||||||||||||||||
Investments | |||||||||||||||||||||||
U.S. Treasury Bills | — | 22,774 | — | — | — | 22,774 | |||||||||||||||||
Equity securities | 272,053 | 10,028 | 117 | 312 | — | 282,510 | |||||||||||||||||
Long exchange-traded options | 1,100 | — | — | — | — | 1,100 | |||||||||||||||||
Limited partnership hedge funds(2) | — | — | — | — | 116,499 | 116,499 | |||||||||||||||||
Private equity | — | — | — | 36,450 | — | 36,450 | |||||||||||||||||
Time deposits(3) | — | — | — | — | 8,835 | 8,835 | |||||||||||||||||
Other investments | — | — | — | — | 10,379 | 10,379 | |||||||||||||||||
Total investments | 273,153 | 32,802 | 117 | 36,762 | 135,713 | 478,547 | |||||||||||||||||
Total assets measured at fair value | $ | 384,722 | $ | 1,306,190 | $ | 117 | $ | 36,762 | $ | 135,713 | $ | 1,863,504 | |||||||||||
Securities sold not yet purchased | |||||||||||||||||||||||
Short equities – corporate | $ | 10,162 | $ | — | $ | — | $ | — | $ | — | $ | 10,162 | |||||||||||
Short exchange-traded options | 10,799 | — | — | — | — | 10,799 | |||||||||||||||||
Derivatives | 965 | 12,972 | — | — | — | 13,937 | |||||||||||||||||
Contingent payment arrangements | — | — | 11,013 | — | — | 11,013 | |||||||||||||||||
Total liabilities measured at fair value | $ | 21,926 | $ | 12,972 | $ | 11,013 | $ | — | $ | — | $ | 45,911 | |||||||||||
Level 1 | Level 2 | Level 3 | NAV Expedient(1) | Other | Total | ||||||||||||||||||
December 31, 2017: | |||||||||||||||||||||||
Money markets | $ | 62,071 | $ | — | $ | — | $ | — | $ | — | $ | 62,071 | |||||||||||
Securities segregated (U.S. Treasury Bills) | — | 816,350 | — | — | — | 816,350 | |||||||||||||||||
Derivatives | 948 | 10,671 | — | — | — | 11,619 | |||||||||||||||||
Investments | |||||||||||||||||||||||
U.S. Treasury Bills | — | 52,609 | — | — | — | 52,609 | |||||||||||||||||
Equity securities | 276,755 | 16,618 | 117 | 94 | — | 293,584 | |||||||||||||||||
Long exchange-traded options | 4,981 | — | — | — | — | 4,981 | |||||||||||||||||
Limited partnership hedge funds(2) | — | — | — | — | 37,199 | 37,199 | |||||||||||||||||
Private equity | — | — | 954 | 37,232 | — | 38,186 | |||||||||||||||||
Time deposits(3) | — | — | — | — | 5,138 | 5,138 | |||||||||||||||||
Other investments | — | — | — | — | 11,892 | 11,892 | |||||||||||||||||
Total investments | 281,736 | 69,227 | 1,071 | 37,326 | 54,229 | 443,589 | |||||||||||||||||
Total assets measured at fair value | $ | 344,755 | $ | 896,248 | $ | 1,071 | $ | 37,326 | $ | 54,229 | $ | 1,333,629 | |||||||||||
Securities sold not yet purchased | |||||||||||||||||||||||
Short equities – corporate | $ | 16,376 | $ | — | $ | — | $ | — | $ | — | $ | 16,376 | |||||||||||
Short exchange-traded options | 13,585 | — | — | — | — | 13,585 | |||||||||||||||||
Derivatives | 2,540 | 11,783 | — | — | — | 14,323 | |||||||||||||||||
Contingent payment arrangements | — | — | 10,855 | — | — | 10,855 | |||||||||||||||||
Total liabilities measured at fair value | $ | 32,501 | $ | 11,783 | $ | 10,855 | $ | — | $ | — | $ | 55,139 |
• | Money markets: We invest excess cash in various money market funds that are valued based on quoted prices in active markets; these are included in Level 1 of the valuation hierarchy. |
• | Treasury Bills: We hold U.S. Treasury Bills, which are primarily segregated in a special reserve bank custody account as required by Rule 15c3-3 of the Exchange Act. These securities are valued based on quoted yields in secondary markets and are included in Level 2 of the valuation hierarchy. |
• | Equity securities: Our equity securities consist principally of company-sponsored mutual funds with NAVs and various separately-managed portfolios consisting primarily of equity and fixed income mutual funds with quoted prices in active markets, which are included in Level 1 of the valuation hierarchy. In addition, some securities are valued based on observable inputs from recognized pricing vendors, which are included in Level 2 of the valuation hierarchy. |
• | Derivatives: We hold exchange-traded futures with counterparties that are included in Level 1 of the valuation hierarchy. In addition, we also hold currency forward contracts, interest rate swaps, credit default swaps, option swaps and total return swaps with counterparties that are valued based on observable inputs from recognized pricing vendors, which are included in Level 2 of the valuation hierarchy. |
• | Private equity: Generally, the valuation of private equity investments requires significant management judgment due to the absence of quoted market prices, inherent lack of liquidity and the long-term nature of such investments. Private equity investments are valued initially at cost. The carrying values of private equity investments are adjusted either up or down from cost to reflect expected exit values as evidenced by financing and sale transactions with third parties, or when determination of a valuation adjustment is confirmed through ongoing review in accordance with our valuation policies and procedures. A variety of factors are reviewed and monitored to assess positive and negative changes in valuation, including current operating performance and future expectations of investee companies, industry valuations of comparable public companies, changes in market outlooks, and the third party financing environment over time. In determining valuation adjustments resulting from the investment review process, particular emphasis is placed on current company performance and market conditions. For these reasons, which make the fair value of private equity investments unobservable, equity investments are included in Level 3 of the valuation hierarchy. If private equity investments become publicly traded, they are included in Level 1 of the valuation hierarchy; provided, however, if they contain trading restrictions, publicly-traded equity investments are included in Level 2 of the valuation hierarchy until the trading restrictions expire. |
• | Securities sold not yet purchased: Securities sold not yet purchased, primarily reflecting short positions in equities and exchange-traded options, are included in Level 1 of the valuation hierarchy. |
• | Contingent payment arrangements: Contingent payment arrangements relate to contingent payment liabilities associated with various acquisitions. At each reporting date, we estimate the fair values of the contingent consideration expected to be paid based upon probability-weighted AUM and revenue projections, using unobservable market data inputs, which are included in Level 3 of the valuation hierarchy. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands) | ||||||||||||||||
Balance as of beginning of period | $ | 117 | $ | 5,028 | $ | 1,071 | $ | 5,023 | ||||||||
Purchases | — | — | — | — | ||||||||||||
Sales | — | — | — | — | ||||||||||||
Realized gains (losses), net | — | — | — | — | ||||||||||||
Unrealized gains (losses), net | — | (3,958 | ) | (954 | ) | (3,953 | ) | |||||||||
Balance as of end of period | $ | 117 | $ | 1,070 | $ | 117 | $ | 1,070 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands) | ||||||||||||||||
Balance as of beginning of period | $ | 10,960 | $ | 16,777 | $ | 10,855 | $ | 17,589 | ||||||||
Accretion | 53 | 53 | 158 | 408 | ||||||||||||
Change in estimates | — | (193 | ) | — | (193 | ) | ||||||||||
Payments | — | (4,534 | ) | — | (5,701 | ) | ||||||||||
Balance as of end of period | $ | 11,013 | $ | 12,103 | $ | 11,013 | $ | 12,103 |
13. | Commitments and Contingencies |
September 30, 2018 | December 31, 2017 | |||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
VIEs | VOEs | Total | VIEs | VOEs | Total | |||||||||||||||||||
Cash and cash equivalents | $ | 9,736 | $ | 702 | $ | 10,438 | $ | 326,158 | $ | 360 | $ | 326,518 | ||||||||||||
Investments | 186,386 | 116,915 | 303,301 | 1,189,835 | 56,448 | 1,246,283 | ||||||||||||||||||
Other assets | 5,544 | 3,551 | 9,095 | 33,931 | 1,466 | 35,397 | ||||||||||||||||||
Total assets | $ | 201,666 | $ | 121,168 | $ | 322,834 | $ | 1,549,924 | $ | 58,274 | $ | 1,608,198 | ||||||||||||
Liabilities | $ | 6,077 | $ | 2,502 | $ | 8,579 | $ | 695,997 | $ | 2,104 | $ | 698,101 | ||||||||||||
Redeemable non-controlling interest | 80,436 | 20,673 | 101,109 | 596,241 | (18 | ) | 596,223 | |||||||||||||||||
Partners' capital attributable to AB Unitholders | 114,495 | 97,993 | 212,488 | 256,929 | 56,188 | 313,117 | ||||||||||||||||||
Non-redeemable non-controlling interests in consolidated entities | 658 | — | 658 | 757 | — | 757 | ||||||||||||||||||
Total liabilities, redeemable non-controlling interest and partners' capital | $ | 201,666 | $ | 121,168 | $ | 322,834 | $ | 1,549,924 | $ | 58,274 | $ | 1,608,198 | ||||||||||||
Level 1 | Level 2 | Level 3 | NAV Expedient | Total | |||||||||||||||
September 30, 2018: | |||||||||||||||||||
Investments - VIEs | $ | 19,818 | $ | 160,266 | $ | 6,302 | $ | — | $ | 186,386 | |||||||||
Investments - VOEs | 66,384 | 50,339 | 192 | — | 116,915 | ||||||||||||||
Derivatives - VIEs | 108 | 2,519 | — | — | 2,627 | ||||||||||||||
Derivatives - VOEs | 102 | 1,003 | — | — | 1,105 | ||||||||||||||
Total assets measured at fair value | $ | 86,412 | $ | 214,127 | $ | 6,494 | $ | — | $ | 307,033 | |||||||||
Derivatives - VIEs | 519 | 2,994 | — | — | 3,513 | ||||||||||||||
Derivatives - VOEs | 60 | 455 | — | — | 515 | ||||||||||||||
Total liabilities measured at fair value | $ | 579 | $ | 3,449 | $ | — | $ | — | $ | 4,028 | |||||||||
December 31, 2017: | |||||||||||||||||||
Investments - VIEs | $ | 1,053,824 | $ | 133,796 | $ | 2,205 | $ | 10 | $ | 1,189,835 | |||||||||
Investments - VOEs | 5,491 | 50,898 | 59 | — | 56,448 | ||||||||||||||
Derivatives - VIEs | 252 | 30,384 | — | — | 30,636 | ||||||||||||||
Derivatives - VOEs | 49 | 251 | — | — | 300 | ||||||||||||||
Total assets measured at fair value | $ | 1,059,616 | $ | 215,329 | $ | 2,264 | $ | 10 | $ | 1,277,219 | |||||||||
Short equities - VIEs | $ | 669,258 | $ | — | $ | — | $ | — | $ | 669,258 | |||||||||
Derivatives - VIEs | 421 | 21,820 | — | — | 22,241 | ||||||||||||||
Derivatives - VOEs | 12 | 619 | — | — | 631 | ||||||||||||||
Total liabilities measured at fair value | $ | 669,691 | $ | 22,439 | $ | — | $ | — | $ | 692,130 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands) | ||||||||||||||||
Balance as of beginning of period | $ | 5,871 | $ | 2,797 | $ | 2,264 | $ | 5,741 | ||||||||
Deconsolidated funds | — | — | — | (6,697 | ) | |||||||||||
Transfers (out) in | (406 | ) | (35 | ) | (82 | ) | 378 | |||||||||
Purchases | 1,247 | 346 | 7,381 | 5,358 | ||||||||||||
Sales | (197 | ) | (1,148 | ) | (2,820 | ) | (3,045 | ) | ||||||||
Realized gains (losses), net | 2 | 5 | (97 | ) | 1 | |||||||||||
Unrealized (losses) gains, net | (25 | ) | 52 | (158 | ) | 269 | ||||||||||
Accrued discounts | 2 | 1 | 6 | 13 | ||||||||||||
Balance as of end of period | $ | 6,494 | $ | 2,018 | $ | 6,494 | $ | 2,018 |
Gross Amounts of Recognized Assets | Gross Amounts Offset in the Statement of Financial Condition | Net Amounts of Assets Presented in the Statement of Financial Condition | Financial Instruments | Cash Collateral Received | Net Amount | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
September 30, 2018: | |||||||||||||||||||||||
Derivatives - VIEs | $ | 2,627 | $ | — | $ | 2,627 | $ | — | $ | (691 | ) | $ | 1,936 | ||||||||||
Derivatives - VOEs | $ | 1,105 | $ | — | $ | 1,105 | $ | — | $ | (115 | ) | $ | 990 | ||||||||||
December 31, 2017: | |||||||||||||||||||||||
Derivatives - VIEs | $ | 30,636 | $ | — | $ | 30,636 | $ | — | $ | (194 | ) | $ | 30,442 | ||||||||||
Derivatives - VOEs | $ | 300 | $ | — | $ | 300 | $ | — | $ | (37 | ) | $ | 263 |
Gross Amounts of Recognized Liabilities | Gross Amounts Offset in the Statement of Financial Condition | Net Amounts of Liabilities Presented in the Statement of Financial Condition | Financial Instruments | Cash Collateral Pledged | Net Amount | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
September 30, 2018: | |||||||||||||||||||||||
Derivatives - VIEs | $ | 3,513 | $ | — | $ | 3,513 | $ | — | $ | (1,948 | ) | $ | 1,565 | ||||||||||
Derivatives - VOEs | $ | 515 | $ | — | $ | 515 | $ | — | $ | (405 | ) | $ | 110 | ||||||||||
December 31, 2017: | |||||||||||||||||||||||
Derivatives - VIEs | $ | 22,241 | $ | — | $ | 22,241 | $ | — | $ | (2,884 | ) | $ | 19,357 | ||||||||||
Derivatives - VOEs | $ | 631 | $ | — | $ | 631 | $ | — | $ | (228 | ) | $ | 403 |
15. | Units Outstanding |
Outstanding as of December 31, 2017 | 268,659,333 | |
Options exercised | 629,493 | |
Units issued | 2,712,263 | |
Units retired (1) | (3,435,327 | ) |
Balance as of September 30, 2018 | 268,565,762 |
16. | Debt |
17. | Changes in Capital |
Partners’ Capital Attributable to AB Unitholders | Non-Redeemable Non-Controlling Interests In Consolidated Entities | Total Capital | |||||||||
(in thousands) | |||||||||||
Balance as of December 31, 2017 | $ | 4,061,740 | $ | 1,564 | $ | 4,063,304 | |||||
Comprehensive income: | |||||||||||
Net income | 569,535 | 150 | 569,685 | ||||||||
Other comprehensive income, net of tax: | |||||||||||
Foreign currency translation adjustments | (14,760 | ) | (29 | ) | (14,789 | ) | |||||
Changes in employee benefit related items | 749 | — | 749 | ||||||||
Other | 374 | — | 374 | ||||||||
Comprehensive income | 555,898 | 121 | 556,019 | ||||||||
Distributions to General Partner and unitholders | (652,991 | ) | — | (652,991 | ) | ||||||
Compensation-related transactions | (58,857 | ) | — | (58,857 | ) | ||||||
Capital contributions to affiliates | (1,344 | ) | — | (1,344 | ) | ||||||
Impact of adoption of revenue recognition standard ASC 606 and ASU 2016-01 | 34,577 | — | 34,577 | ||||||||
Other | 1,044 | — | 1,044 | ||||||||
Balance as of September 30, 2018 | $ | 3,940,067 | $ | 1,685 | $ | 3,941,752 |
Partners’ Capital Attributable to AB Unitholders | Non-redeemable Non-Controlling Interests In Consolidated Entities | Total Capital | |||||||||
(in thousands) | |||||||||||
Balance as of December 31, 2016 | $ | 4,032,017 | $ | 36,172 | $ | 4,068,189 | |||||
Comprehensive income: | |||||||||||
Net income | 415,994 | 9,680 | 425,674 | ||||||||
Other comprehensive income, net of tax: | |||||||||||
Unrealized gains on investments | 9 | — | 9 | ||||||||
Foreign currency translation adjustments | 23,114 | 977 | 24,091 | ||||||||
Changes in employee benefit related items | 755 | — | 755 | ||||||||
Comprehensive income | 439,872 | 10,657 | 450,529 | ||||||||
Distributions to General Partner and unitholders | (489,049 | ) | — | (489,049 | ) | ||||||
Compensation-related transactions | (89,567 | ) | — | (89,567 | ) | ||||||
Capital contributions from affiliates | 79 | — | 79 | ||||||||
Purchase of non-controlling interest | 172 | (2,005 | ) | (1,833 | ) | ||||||
Distributions to non-controlling interests of our consolidated venture capital fund | — | (43,217 | ) | (43,217 | ) | ||||||
Other | 1,257 | — | 1,257 | ||||||||
Balance as of September 30, 2017 | $ | 3,894,781 | $ | 1,607 | $ | 3,896,388 |
18. | Non-controlling Interests |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands) | ||||||||||||||||
Non-redeemable non-controlling interests: | ||||||||||||||||
Consolidated company-sponsored investment funds | $ | (46 | ) | $ | 21 | $ | (99 | ) | $ | 9,436 | ||||||
Other | 78 | 50 | 249 | 245 | ||||||||||||
Total non-redeemable non-controlling interests | 32 | 71 | 150 | 9,681 | ||||||||||||
Redeemable non-controlling interests: | ||||||||||||||||
Consolidated company-sponsored investment funds | 694 | 16,455 | 23,487 | 40,332 | ||||||||||||
Total non-controlling interest in net income | $ | 726 | $ | 16,526 | $ | 23,637 | $ | 50,013 |
September 30, 2018 | December 31, 2017 | ||||||
(in thousands) | |||||||
Consolidated company-sponsored investment funds | $ | 658 | $ | 757 | |||
CPH Capital Fondsmaeglerselskab A/S | 1,027 | 807 | |||||
Total non-redeemable non-controlling interest | $ | 1,685 | $ | 1,564 |
September 30, 2018 | December 31, 2017 | ||||||
(in thousands) | |||||||
Consolidated company-sponsored investment funds | $ | 101,109 | $ | 596,223 | |||
CPH Capital Fondsmaeglerselskab A/S acquisition | 2,888 | 5,364 | |||||
Total redeemable non-controlling interest | $ | 103,997 | $ | 601,587 |
• | the levels of positive net flows into our investment services; |
• | the level of growth (in terms of additional AUM) in our alternative products business; |
• | the rate of increase in our fixed costs due to inflation and similar factors, the transitional costs related to our relocation strategy and the timing of such costs, the success we have in achieving planned new cost reductions (including those relating to our relocation strategy) and the timing of such cost reductions, and the investments we make in our business; and |
• | general conditions of the markets in which our business operates, including modest appreciation in both equity and fixed income total investment returns. |
As of September 30, | ||||||||||||||
2018 | 2017 | $ Change | % Change | |||||||||||
(in billions) | ||||||||||||||
Institutions | $ | 257.0 | $ | 260.0 | $ | (3.0 | ) | (1.2 | )% | |||||
Retail | 196.3 | 185.7 | 10.6 | 5.7 | ||||||||||
Private Wealth Management | 97.1 | 89.2 | 7.9 | 8.8 | ||||||||||
Total | $ | 550.4 | $ | 534.9 | $ | 15.5 | 2.9 |
As of September 30, | ||||||||||||||
2018 | 2017 | $ Change | % Change | |||||||||||
(in billions) | ||||||||||||||
Equity | ||||||||||||||
Actively Managed | $ | 155.9 | $ | 131.7 | $ | 24.2 | 18.4 | % | ||||||
Passively Managed(1) | 56.0 | 52.3 | 3.7 | 7.0 | ||||||||||
Total Equity | 211.9 | 184.0 | 27.9 | 15.1 | ||||||||||
Fixed Income | ||||||||||||||
Actively Managed | ||||||||||||||
Taxable | 224.8 | 243.0 | (18.2 | ) | (7.5 | ) | ||||||||
Tax–exempt | 42.0 | 39.4 | 2.6 | 6.4 | ||||||||||
266.8 | 282.4 | (15.6 | ) | (5.5 | ) | |||||||||
Passively Managed(1) | 9.9 | 9.9 | — | — | ||||||||||
Total Fixed Income | 276.7 | 292.3 | (15.6 | ) | (5.3 | ) | ||||||||
Other(2) | ||||||||||||||
Actively Managed | 61.0 | 58.0 | 3.0 | 5.0 | ||||||||||
Passively Managed(1) | 0.8 | 0.6 | 0.2 | 52.6 | ||||||||||
Total Other | 61.8 | 58.6 | 3.2 | 5.5 | ||||||||||
Total | $ | 550.4 | $ | 534.9 | $ | 15.5 | 2.9 |
Distribution Channel | |||||||||||||||
Institutions | Retail | Private Wealth Management | Total | ||||||||||||
(in billions) | |||||||||||||||
Balance as of June 30, 2018 | $ | 254.4 | $ | 190.3 | $ | 95.1 | $ | 539.8 | |||||||
Long-term flows: | |||||||||||||||
Sales/new accounts | 3.7 | 12.6 | 3.0 | 19.3 | |||||||||||
Redemptions/terminations | (1.5 | ) | (9.5 | ) | (2.3 | ) | (13.3 | ) | |||||||
Cash flow/unreinvested dividends | (2.4 | ) | (1.9 | ) | (0.4 | ) | (4.7 | ) | |||||||
Net long-term (outflows) inflows | (0.2 | ) | 1.2 | 0.3 | 1.3 | ||||||||||
Transfers | 0.3 | — | (0.3 | ) | — | ||||||||||
Market appreciation | 2.5 | 4.8 | 2.0 | 9.3 | |||||||||||
Net change | 2.6 | 6.0 | 2.0 | 10.6 | |||||||||||
Balance as of September 30, 2018 | $ | 257.0 | $ | 196.3 | $ | 97.1 | $ | 550.4 | |||||||
Balance as of December 31, 2017 | $ | 269.3 | $ | 192.9 | $ | 92.3 | $ | 554.5 | |||||||
Long-term flows: | |||||||||||||||
Sales/new accounts | 22.5 | 39.1 | 11.0 | 72.6 | |||||||||||
Redemptions/terminations | (26.0 | ) | (34.2 | ) | (7.7 | ) | (67.9 | ) | |||||||
Cash flow/unreinvested dividends | (7.5 | ) | (5.6 | ) | (0.4 | ) | (13.5 | ) | |||||||
Net long-term (outflows) inflows | (11.0 | ) | (0.7 | ) | 2.9 | (8.8 | ) | ||||||||
Transfers | 0.3 | — | (0.3 | ) | — | ||||||||||
Market (depreciation) appreciation | (1.6 | ) | 4.1 | 2.2 | 4.7 | ||||||||||
Net change | (12.3 | ) | 3.4 | 4.8 | (4.1 | ) | |||||||||
Balance as of September 30, 2018 | $ | 257.0 | $ | 196.3 | $ | 97.1 | $ | 550.4 | |||||||
Balance as of September 30, 2017 | $ | 260.0 | $ | 185.7 | $ | 89.2 | $ | 534.9 | |||||||
Long-term flows: | |||||||||||||||
Sales/new accounts | 26.0 | 52.0 | 13.8 | 91.8 | |||||||||||
Redemptions/terminations | (27.0 | ) | (44.4 | ) | (10.4 | ) | (81.8 | ) | |||||||
Cash flow/unreinvested dividends | (7.0 | ) | (7.3 | ) | (0.4 | ) | (14.7 | ) | |||||||
Net long-term (outflows) inflows | (8.0 | ) | 0.3 | 3.0 | (4.7 | ) | |||||||||
Transfers | 0.3 | — | (0.3 | ) | — | ||||||||||
Market appreciation | 4.7 | 10.3 | 5.2 | 20.2 | |||||||||||
Net change | (3.0 | ) | 10.6 | 7.9 | 15.5 | ||||||||||
Balance as of September 30, 2018 | $ | 257.0 | $ | 196.3 | $ | 97.1 | $ | 550.4 | |||||||
Investment Service | |||||||||||||||||||||||||||
Equity Actively Managed | Equity Passively Managed(1) | Fixed Income Actively Managed - Taxable | Fixed Income Actively Managed - Tax- Exempt | Fixed Income Passively Managed(1) | Other(2) | Total | |||||||||||||||||||||
(in billions) | |||||||||||||||||||||||||||
Balance as of June 30, 2018 | $ | 147.2 | $ | 53.8 | $ | 225.9 | $ | 41.6 | $ | 10.1 | $ | 61.2 | $ | 539.8 | |||||||||||||
Long-term flows: | |||||||||||||||||||||||||||
Sales/new accounts | 8.7 | (0.1 | ) | 7.3 | 2.0 | — | 1.4 | 19.3 | |||||||||||||||||||
Redemptions/terminations | (4.7 | ) | — | (6.3 | ) | (1.4 | ) | (0.1 | ) | (0.8 | ) | (13.3 | ) | ||||||||||||||
Cash flow/unreinvested dividends | (1.1 | ) | (1.1 | ) | (1.5 | ) | (0.2 | ) | — | (0.8 | ) | (4.7 | ) | ||||||||||||||
Net long-term inflows (outflows) | 2.9 | (1.2 | ) | (0.5 | ) | 0.4 | (0.1 | ) | (0.2 | ) | 1.3 | ||||||||||||||||
Market appreciation (depreciation) | 5.8 | 3.4 | (0.6 | ) | — | (0.1 | ) | 0.8 | 9.3 | ||||||||||||||||||
Net change | 8.7 | 2.2 | (1.1 | ) | 0.4 | (0.2 | ) | 0.6 | 10.6 | ||||||||||||||||||
Balance as of September 30, 2018 | $ | 155.9 | $ | 56.0 | $ | 224.8 | $ | 42.0 | $ | 9.9 | $ | 61.8 | $ | 550.4 | |||||||||||||
Balance as of December 31, 2017 | $ | 139.4 | $ | 54.3 | $ | 247.9 | $ | 40.4 | $ | 9.9 | $ | 62.6 | $ | 554.5 | |||||||||||||
Long-term flows: | |||||||||||||||||||||||||||
Sales/new accounts | 28.2 | 1.0 | 21.0 | 6.2 | 0.1 | 16.1 | 72.6 | ||||||||||||||||||||
Redemptions/terminations | (16.4 | ) | (0.5 | ) | (30.4 | ) | (4.4 | ) | (0.3 | ) | (15.9 | ) | (67.9 | ) | |||||||||||||
Cash flow/unreinvested dividends | (2.6 | ) | (3.0 | ) | (6.7 | ) | (0.2 | ) | 0.4 | (1.4 | ) | (13.5 | ) | ||||||||||||||
Net long-term inflows (outflows) | 9.2 | (2.5 | ) | (16.1 | ) | 1.6 | 0.2 | (1.2 | ) | (8.8 | ) | ||||||||||||||||
Market appreciation (depreciation) | 7.3 | 4.2 | (7.0 | ) | — | (0.2 | ) | 0.4 | 4.7 | ||||||||||||||||||
Net change | 16.5 | 1.7 | (23.1 | ) | 1.6 | — | (0.8 | ) | (4.1 | ) | |||||||||||||||||
Balance as of September 30, 2018 | $ | 155.9 | $ | 56.0 | $ | 224.8 | $ | 42.0 | $ | 9.9 | $ | 61.8 | $ | 550.4 | |||||||||||||
Investment Service | |||||||||||||||||||||||||||
Equity Actively Managed | Equity Passively Managed(1) | Fixed Income Actively Managed - Taxable | Fixed Income Actively Managed - Tax- Exempt | Fixed Income Passively Managed(1) | Other(2) | Total | |||||||||||||||||||||
(in billions) | |||||||||||||||||||||||||||
Balance as of September 30, 2017 | $ | 131.7 | $ | 52.3 | $ | 243.0 | $ | 39.4 | $ | 9.9 | $ | 58.6 | $ | 534.9 | |||||||||||||
Long-term flows: | |||||||||||||||||||||||||||
Sales/new accounts | 34.2 | 1.0 | 30.0 | 8.4 | 0.1 | 18.1 | 91.8 | ||||||||||||||||||||
Redemptions/terminations | (21.6 | ) | (0.5 | ) | (37.4 | ) | (5.6 | ) | (0.4 | ) | (16.3 | ) | (81.8 | ) | |||||||||||||
Cash flow/unreinvested dividends | (3.4 | ) | (4.4 | ) | (5.7 | ) | (0.2 | ) | 0.4 | (1.4 | ) | (14.7 | ) | ||||||||||||||
Net long-term inflows (outflows) | 9.2 | (3.9 | ) | (13.1 | ) | 2.6 | 0.1 | 0.4 | (4.7 | ) | |||||||||||||||||
Market appreciation (depreciation) | 15.0 | 7.6 | (5.1 | ) | — | (0.1 | ) | 2.8 | 20.2 | ||||||||||||||||||
Net change | 24.2 | 3.7 | (18.2 | ) | 2.6 | — | 3.2 | 15.5 | |||||||||||||||||||
Balance as of September 30, 2018 | $ | 155.9 | $ | 56.0 | $ | 224.8 | $ | 42.0 | $ | 9.9 | $ | 61.8 | $ | 550.4 |
Periods Ended September 30, 2018 | |||||||||||
Three-months | Nine-months | Twelve-months | |||||||||
(in billions) | |||||||||||
Actively Managed | |||||||||||
Equity | $ | 2.9 | $ | 9.2 | $ | 9.2 | |||||
Fixed Income | (0.1 | ) | (14.5 | ) | (10.5 | ) | |||||
Other | (0.3 | ) | (1.4 | ) | 0.2 | ||||||
2.5 | (6.7 | ) | (1.1 | ) | |||||||
Passively Managed | |||||||||||
Equity | (1.2 | ) | (2.5 | ) | (3.9 | ) | |||||
Fixed Income | (0.1 | ) | 0.2 | 0.1 | |||||||
Other | 0.1 | 0.2 | 0.2 | ||||||||
(1.2 | ) | (2.1 | ) | (3.6 | ) | ||||||
Total net long-term (outflows) | $ | 1.3 | $ | (8.8 | ) | $ | (4.7 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
2018 | 2017 | $ Change | % Change | 2018 | 2017 | $ Change | % Change | ||||||||||||||||||||||
(in billions) | (in billions) | ||||||||||||||||||||||||||||
Distribution Channel: | |||||||||||||||||||||||||||||
Institutions | $ | 256.6 | $ | 257.1 | $ | (0.5 | ) | (0.2 | )% | $ | 261.1 | $ | 250.1 | $ | 11.0 | 4.4 | % | ||||||||||||
Retail | 194.0 | 181.7 | 12.3 | 6.7 | 193.4 | 173.4 | 20.0 | 11.6 | |||||||||||||||||||||
Private Wealth Management | 96.3 | 87.8 | 8.5 | 9.7 | 95.0 | 85.3 | 9.7 | 11.4 | |||||||||||||||||||||
Total | $ | 546.9 | $ | 526.6 | $ | 20.3 | 3.8 | $ | 549.5 | $ | 508.8 | $ | 40.7 | 8.0 | |||||||||||||||
Investment Service: | |||||||||||||||||||||||||||||
Equity Actively Managed | $ | 152.4 | $ | 128.0 | $ | 24.4 | 19.0 | % | $ | 147.3 | $ | 121.9 | $ | 25.4 | 20.8 | % | |||||||||||||
Equity Passively Managed(1) | 55.3 | 51.1 | 4.2 | 8.4 | 54.3 | 49.9 | 4.4 | 9.0 | |||||||||||||||||||||
Fixed Income Actively Managed – Taxable | 225.5 | 240.7 | (15.2 | ) | (6.3 | ) | 233.4 | 233.4 | — | — | |||||||||||||||||||
Fixed Income Actively Managed – Tax-exempt | 41.9 | 39.6 | 2.3 | 5.7 | 41.2 | 38.5 | 2.7 | 7.1 | |||||||||||||||||||||
Fixed Income Passively Managed(1) | 10.0 | 9.9 | 0.1 | 0.5 | 10.0 | 10.4 | (0.4 | ) | (4.1 | ) | |||||||||||||||||||
Other (2) | 61.8 | 57.3 | 4.5 | 7.8 | 63.3 | 54.7 | 8.6 | 15.6 | |||||||||||||||||||||
Total | $ | 546.9 | $ | 526.6 | $ | 20.3 | 3.8 | $ | 549.5 | $ | 508.8 | $ | 40.7 | 8.0 |
1-Year | 3-Year | 5-Year | ||||||
Global High Income - Hedged (fixed income) | ||||||||
Absolute return | 1.0 | % | 7.9 | % | 5.7 | % | ||
Relative return (vs. Bloomberg Barclays Global High Yield Index - Hedged) | (0.1 | ) | — | (0.1 | ) | |||
U.S. High Yield (fixed income) | ||||||||
Absolute return | 3.4 | 7.8 | 5.6 | |||||
Relative return (vs. Bloomberg Barclays U.S. Corp. High Yield Index) | 0.4 | (0.4 | ) | 0.1 | ||||
Global Plus - Hedged (fixed income) | ||||||||
Absolute return | 0.4 | 3.1 | 3.8 | |||||
Relative return (vs. Bloomberg Barclays Global Aggregate Index - Hedged) | (0.4 | ) | 0.8 | 0.6 | ||||
Intermediate Municipal Bonds (fixed income) | ||||||||
Absolute return | 0.1 | 1.7 | 2.3 | |||||
Relative return (vs. Lipper Short/Int. Blended Muni Fund Avg) | — | 0.4 | 0.6 | |||||
U.S. Strategic Core Plus (fixed income) | ||||||||
Absolute return | (0.6 | ) | 2.5 | 3.2 | ||||
Relative return (vs. Bloomberg Barclays U.S. Aggregate Index) | 0.7 | 1.2 | 1.1 | |||||
Emerging Market Debt (fixed income) | ||||||||
Absolute return | (4.9 | ) | 6.9 | 4.6 | ||||
Relative return (vs. JPM EMBI Global/JPM EMBI) | (2.0 | ) | 1.2 | — | ||||
Emerging Markets Value | ||||||||
Absolute return | (4.1 | ) | 10.8 | 3.3 | ||||
Relative return (vs. MSCI EM Index) | (3.3 | ) | (1.6 | ) | (0.3 | ) | ||
Global Strategic Value | ||||||||
Absolute return | 2.3 | 10.6 | 8.4 | |||||
Relative return (vs. MSCI ACWI Index) | (7.4 | ) | (2.8 | ) | (0.3 | ) | ||
U.S. Small & Mid Cap Value | ||||||||
Absolute return | 11.2 | 15.3 | 11.5 | |||||
Relative return (vs. Russell 2500 Value Index) | 1.0 | 0.8 | 1.5 | |||||
U.S. Strategic Value | ||||||||
Absolute return | 7.5 | 10.0 | 8.7 | |||||
Relative return (vs. Russell 1000 Value Index) | (1.9 | ) | (3.6 | ) | (2.0 | ) | ||
U.S. Small Cap Growth | ||||||||
Absolute return | 38.8 | 25.8 | 15.4 | |||||
Relative return (vs. Russell 2000 Growth Index) | 17.7 | 7.8 | 3.2 | |||||
U.S. Large Cap Growth | ||||||||
Absolute return | 24.9 | 20.1 | 18.3 | |||||
Relative return (vs. Russell 1000 Growth Index) | (1.4 | ) | (0.4 | ) | 1.7 | |||
U.S. Small & Mid Cap Growth | ||||||||
Absolute return | 35.6 | 22.2 | 14.2 | |||||
Relative return (vs. Russell 2500 Growth Index) | 12.5 | 4.3 | 1.3 | |||||
Concentrated U.S. Growth | ||||||||
Absolute return | 21.5 | 17.3 | 15.2 | |||||
Relative return (vs. S&P 500 Index) | 3.6 | — | 1.3 | |||||
Select U.S. Equity | ||||||||
Absolute return | 19.8 | 17.1 | 14.1 | |||||
Relative return (vs. S&P 500 Index) | 1.9 | (0.3 | ) | 0.2 | ||||
Strategic Equities | ||||||||
Absolute return | 17.4 | 15.4 | 13.3 | |||||
Relative return (vs. Russell 3000 Index) | (0.2 | ) | (1.7 | ) | (0.1 | ) | ||
Global Core Equity | ||||||||
Absolute return | 13.3 | 15.4 | 9.7 | |||||
Relative return (vs. MSCI ACWI Index) | 3.6 | 2.0 | 1.0 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||
2018 | 2017 | $ Change | % Change | 2018 | 2017 | $ Change | % Change | |||||||||||||||||||||||
(in thousands, except per unit amounts) | ||||||||||||||||||||||||||||||
Net revenues | $ | 850,176 | $ | 812,150 | $ | 38,026 | 4.7 | % | $ | 2,562,701 | $ | 2,379,380 | $ | 183,321 | 7.7 | % | ||||||||||||||
Expenses | 636,357 | 650,123 | (13,766 | ) | (2.1 | ) | 1,936,747 | 1,888,504 | 48,243 | 2.6 | ||||||||||||||||||||
Operating income | 213,819 | 162,027 | 51,792 | 32.0 | 625,954 | 490,876 | 135,078 | 27.5 | ||||||||||||||||||||||
Income taxes | 9,419 | 4,547 | 4,872 | 107.1 | 32,782 | 24,869 | 7,913 | 31.8 | ||||||||||||||||||||||
Net income | 204,400 | 157,480 | 46,920 | 29.8 | 593,172 | 466,007 | 127,165 | 27.3 | ||||||||||||||||||||||
Net income of consolidated entities attributable to non-controlling interests | 726 | 16,526 | (15,800 | ) | (95.6 | ) | 23,637 | 50,013 | (26,376 | ) | (52.7 | ) | ||||||||||||||||||
Net income attributable to AB Unitholders | $ | 203,674 | $ | 140,954 | $ | 62,720 | 44.5 | $ | 569,535 | $ | 415,994 | $ | 153,541 | 36.9 | ||||||||||||||||
Diluted net income per AB Unit | $ | 0.75 | $ | 0.52 | $ | 0.23 | 44.2 | $ | 2.09 | $ | 1.54 | $ | 0.55 | 35.7 | ||||||||||||||||
Distributions per AB Unit | $ | 0.76 | $ | 0.58 | $ | 0.18 | 31.0 | $ | 2.25 | $ | 1.66 | $ | 0.59 | 35.5 | ||||||||||||||||
Operating margin (1) | 25.1 | % | 17.9 | % | 23.5 | % | 18.5 | % |
Lower general and administrative expenses (including real estate charges) | $ | 40.0 | |
Higher performance-based fees | 36.6 | ||
Higher base advisory fees | 30.4 | ||
Lower net income of consolidated entities attributable to non-controlling interests | 15.8 | ||
Higher employee compensation and benefits | (27.7 | ) | |
Lower investment gains | (18.2 | ) | |
Lower Bernstein Research Services revenue | (4.8 | ) | |
Higher income tax expense | (4.9 | ) | |
Lower dividend and interest income, net of interest expense | (3.4 | ) | |
Other | (1.1 | ) | |
$ | 62.7 |
Higher base advisory fees | $ | 152.4 | |
Higher performance-based fees | 57.4 | ||
Lower general and administrative expenses (including real estate charges) | 55.7 | ||
Lower net income of consolidated entities attributable to non-controlling interests | 26.4 | ||
Higher other revenues | 5.0 | ||
Higher employee compensation and benefits | (80.1 | ) | |
Lower investment gains | (41.3 | ) | |
Higher trade execution, marketing, T&E and other expenses | (8.1 | ) | |
Higher income tax expense | (7.9 | ) | |
Lower Bernstein Research Services revenues | (6.4 | ) | |
Other | 0.4 | ||
$ | 153.5 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands, except per unit amounts) | ||||||||||||||||
Net revenues, US GAAP basis | $ | 850,176 | $ | 812,150 | $ | 2,562,701 | $ | 2,379,380 | ||||||||
Adjustments: | ||||||||||||||||
Impact of adoption of revenue recognition standard ASC 606 | — | — | 77,844 | — | ||||||||||||
Distribution-related payments | (106,372 | ) | (106,106 | ) | (322,827 | ) | (300,951 | ) | ||||||||
Amortization of deferred sales commissions | (4,651 | ) | (7,629 | ) | (17,362 | ) | (25,015 | ) | ||||||||
Pass-through fees and expenses | (10,084 | ) | (9,759 | ) | (31,180 | ) | (29,868 | ) | ||||||||
Impact of consolidated company-sponsored funds | (1,543 | ) | (23,368 | ) | (39,073 | ) | (71,222 | ) | ||||||||
Loss (gain) on sale of software technology investment | 1,000 | (361 | ) | 1,000 | (4,593 | ) | ||||||||||
Long-term incentive compensation-related investment gains and dividend and interest | (1,383 | ) | (2,185 | ) | (1,965 | ) | (7,398 | ) | ||||||||
Other | — | — | 47 | — | ||||||||||||
Adjusted net revenues(1) | $ | 727,143 | $ | 662,742 | $ | 2,229,185 | $ | 1,940,333 | ||||||||
Operating income, US GAAP basis | $ | 213,819 | $ | 162,027 | $ | 625,954 | $ | 490,876 | ||||||||
Adjustments: | ||||||||||||||||
Impact of adoption of revenue recognition standard ASC 606 | — | — | 35,156 | — | ||||||||||||
Real estate (credits) charges | (155 | ) | 18,655 | 6,490 | 39,400 | |||||||||||
Acquisition-related expenses | — | 1,462 | — | 2,012 | ||||||||||||
Loss (gain) on software technology investment | 1,000 | (361 | ) | 1,000 | (4,593 | ) | ||||||||||
Long-term incentive compensation-related items | 1,820 | 329 | 2,822 | 813 | ||||||||||||
Other | — | (193 | ) | 47 | (193 | ) | ||||||||||
Sub-total of non-GAAP adjustments | 2,665 | 19,892 | 45,515 | 37,439 | ||||||||||||
Less: Net income of consolidated entities attributable to non-controlling interests | 726 | 16,526 | 23,637 | 50,013 | ||||||||||||
Adjusted operating income | 215,758 | 165,393 | 647,832 | 478,302 | ||||||||||||
Adjusted income taxes | 9,515 | 10,188 | 33,946 | 29,511 | ||||||||||||
Adjusted net income | 206,243 | 155,205 | 613,886 | 448,791 | ||||||||||||
Diluted net income per AB Unit, GAAP basis | $ | 0.75 | $ | 0.52 | $ | 2.09 | $ | 1.54 | ||||||||
Impact of non-GAAP adjustments | 0.01 | 0.06 | 0.16 | 0.12 | ||||||||||||
Adjusted diluted net income per AB Unit | $ | 0.76 | $ | 0.58 | $ | 2.25 | $ | 1.66 | ||||||||
Adjusted operating margin(1) | 29.7 | % | 25.0 | % | 29.1 | % | 24.7 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||
2018 | 2017 | $ Change | % Change | 2018 | 2017 | $ Change | % Change | |||||||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||||||||
Investment advisory and services fees: | ||||||||||||||||||||||||||||||
Institutions: | ||||||||||||||||||||||||||||||
Base fees | $ | 110,501 | $ | 108,849 | $ | 1,652 | 1.5 | % | $ | 338,372 | $ | 318,347 | $ | 20,025 | 6.3 | % | ||||||||||||||
Performance-based fees | 9,973 | 1,140 | 8,833 | 774.8 | 14,737 | 7,818 | 6,919 | 88.5 | ||||||||||||||||||||||
120,474 | 109,989 | 10,485 | 9.5 | 353,109 | 326,165 | 26,944 | 8.3 | |||||||||||||||||||||||
Retail: | ||||||||||||||||||||||||||||||
Base fees | 252,884 | 240,006 | 12,878 | 5.4 | 750,860 | 673,286 | 77,574 | 11.5 | ||||||||||||||||||||||
Performance-based fees | 1,371 | 229 | 1,142 | 498.7 | 16,406 | 13,652 | 2,754 | 20.2 | ||||||||||||||||||||||
254,255 | 240,235 | 14,020 | 5.8 | 767,266 | 686,938 | 80,328 | 11.7 | |||||||||||||||||||||||
Private Wealth Management: | ||||||||||||||||||||||||||||||
Base fees | 205,533 | 189,697 | 15,836 | 8.3 | 610,352 | 555,580 | 54,772 | 9.9 | ||||||||||||||||||||||
Performance-based fees | 29,801 | 3,186 | 26,615 | 835.4 | 51,560 | 3,877 | 47,683 | 1,229.9 | ||||||||||||||||||||||
235,334 | 192,883 | 42,451 | 22.0 | 661,912 | 559,457 | 102,455 | 18.3 | |||||||||||||||||||||||
Total: | ||||||||||||||||||||||||||||||
Base fees | 568,918 | 538,552 | 30,366 | 5.6 | 1,699,584 | 1,547,213 | 152,371 | 9.8 | ||||||||||||||||||||||
Performance-based fees | 41,145 | 4,555 | 36,590 | 803.3 | 82,703 | 25,347 | 57,356 | 226.3 | ||||||||||||||||||||||
610,063 | 543,107 | 66,956 | 12.3 | 1,782,287 | 1,572,560 | 209,727 | 13.3 | |||||||||||||||||||||||
Bernstein Research Services | 103,581 | 108,385 | (4,804 | ) | (4.4 | ) | 324,192 | 330,596 | (6,404 | ) | (1.9 | ) | ||||||||||||||||||
Distribution revenues | 104,488 | 106,042 | (1,554 | ) | (1.5 | ) | 317,610 | 302,745 | 14,865 | 4.9 | ||||||||||||||||||||
Dividend and interest income | 21,942 | 17,619 | 4,323 | 24.5 | 71,351 | 51,023 | 20,328 | 39.8 | ||||||||||||||||||||||
Investment gains (losses) | 565 | 18,808 | (18,243 | ) | (97.0 | ) | 26,860 | 68,122 | (41,262 | ) | (60.6 | ) | ||||||||||||||||||
Other revenues | 24,012 | 24,902 | (890 | ) | (3.6 | ) | 76,548 | 71,532 | 5,016 | 7.0 | ||||||||||||||||||||
Total revenues | 864,651 | 818,863 | 45,788 | 5.6 | 2,598,848 | 2,396,578 | 202,270 | 8.4 | ||||||||||||||||||||||
Less: Interest expense | 14,475 | 6,713 | 7,762 | 115.6 | 36,147 | 17,198 | 18,949 | 110.2 | ||||||||||||||||||||||
Net revenues | $ | 850,176 | $ | 812,150 | $ | 38,026 | 4.7 | $ | 2,562,701 | $ | 2,379,380 | $ | 183,321 | 7.7 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands) | ||||||||||||||||
Long-term incentive compensation-related investments | ||||||||||||||||
Realized gains (losses) | $ | 50 | $ | 105 | $ | 2,222 | $ | 1,878 | ||||||||
Unrealized gains (losses) | 1,202 | 1,950 | (637 | ) | 5,082 | |||||||||||
Investments held by consolidated company-sponsored funds | ||||||||||||||||
Realized gains (losses) | (1,458 | ) | 9,788 | 1,375 | 38,169 | |||||||||||
Unrealized gains (losses) | 3,292 | 14,512 | 23,755 | 33,062 | ||||||||||||
Seed capital investments | ||||||||||||||||
Realized gains (losses) | ||||||||||||||||
Seed capital | 3,608 | 976 | (885 | ) | 21,871 | |||||||||||
Derivatives | (3,541 | ) | (4,797 | ) | (4,244 | ) | (20,251 | ) | ||||||||
Unrealized gains (losses) | ||||||||||||||||
Seed capital | 225 | (3,245 | ) | 5,597 | (9,205 | ) | ||||||||||
Derivatives | (2,200 | ) | (83 | ) | 479 | 488 | ||||||||||
Brokerage-related investments | ||||||||||||||||
Realized gains (losses) | (1,236 | ) | (447 | ) | (957 | ) | (2,895 | ) | ||||||||
Unrealized gains (losses) | 623 | 49 | 155 | (77 | ) | |||||||||||
$ | 565 | $ | 18,808 | $ | 26,860 | $ | 68,122 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||
2018 | 2017 | $ Change | % Change | 2018 | 2017 | $ Change | % Change | |||||||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||||||||
Employee compensation and benefits | $ | 357,442 | $ | 329,777 | $ | 27,665 | 8.4 | % | $ | 1,059,515 | $ | 979,387 | $ | 80,128 | 8.2 | % | ||||||||||||||
Promotion and servicing: | ||||||||||||||||||||||||||||||
Distribution-related payments | 106,372 | 106,106 | 266 | 0.3 | 322,827 | 300,951 | 21,876 | 7.3 | ||||||||||||||||||||||
Amortization of deferred sales commissions | 4,651 | 7,629 | (2,978 | ) | (39.0 | ) | 17,362 | 25,015 | (7,653 | ) | (30.6 | ) | ||||||||||||||||||
Trade execution, marketing, T&E and other | 50,793 | 50,266 | 527 | 1.0 | 164,095 | 155,993 | 8,102 | 5.2 | ||||||||||||||||||||||
161,816 | 164,001 | (2,185 | ) | (1.3 | ) | 504,284 | 481,959 | 22,325 | 4.6 | |||||||||||||||||||||
General and administrative: | ||||||||||||||||||||||||||||||
General and administrative | 107,526 | 128,712 | (21,186 | ) | (16.5 | ) | 337,596 | 360,395 | (22,799 | ) | (6.3 | ) | ||||||||||||||||||
Real estate (credit) charges | (155 | ) | 18,655 | (18,810 | ) | (100.8 | ) | 6,490 | 39,400 | (32,910 | ) | (83.5 | ) | |||||||||||||||||
107,371 | 147,367 | (39,996 | ) | (27.1 | ) | 344,086 | 399,795 | (55,709 | ) | (13.9 | ) | |||||||||||||||||||
Contingent payment arrangements | 52 | (140 | ) | 192 | (137.1 | ) | 157 | 215 | (58 | ) | (27.0 | ) | ||||||||||||||||||
Interest | 2,711 | 2,105 | 606 | 28.8 | 7,952 | 6,227 | 1,725 | 27.7 | ||||||||||||||||||||||
Amortization of intangible assets | 6,965 | 7,013 | (48 | ) | (0.7 | ) | 20,753 | 20,921 | (168 | ) | (0.8 | ) | ||||||||||||||||||
Total | $ | 636,357 | $ | 650,123 | $ | (13,766 | ) | (2.1 | ) | $ | 1,936,747 | $ | 1,888,504 | $ | 48,243 | 2.6 |
• | Our belief that the cash flow AB Holding realizes from its investment in AB will provide AB Holding with the resources it needs to meet its financial obligations: AB Holding’s cash flow is dependent on the quarterly cash distributions it receives from AB. Accordingly, AB Holding’s ability to meet its financial obligations is dependent on AB’s cash flow from its operations, which is subject to the performance of the capital markets and other factors beyond our control. |
• | Our financial condition and ability to access the public and private capital markets providing adequate liquidity for our general business needs: Our financial condition is dependent on our cash flow from operations, which is subject to the performance of the capital markets, our ability to maintain and grow client assets under management and other factors beyond our control. Our ability to access public and private capital markets on reasonable terms may be limited by adverse market conditions, our firm’s credit ratings, our profitability and changes in government regulations, including tax rates and interest rates. |
• | The outcome of litigation: Litigation is inherently unpredictable, and excessive damage awards do occur. Though we have stated that we do not expect any pending legal proceedings to have a material adverse effect on our results of operations, financial condition or liquidity, any settlement or judgment with respect to a pending or future legal proceeding could be significant, and could have such an effect. |
• | The possibility that we 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 depends on various factors, some of which are beyond our control, including the fluctuation in the price of an AB Holding Unit (NYSE: AB) and the availability of cash to make these purchases. |
• | Our determination that adjusted employee compensation expense should not exceed 50% of our adjusted net revenues: Aggregate employee compensation reflects employee performance and competitive compensation levels. Fluctuations in our revenues and/or changes in competitive compensation levels could result in adjusted employee compensation expense exceeding 50% of our adjusted net revenues. |
• | Our Relocation Strategy: While the expenses, expense savings and EPU impact we expect will result from our Relocation Strategy are presented with numerical specificity, and we believe these figures to be reasonable as of the date of this report, the uncertainties surrounding the assumptions on which our estimates are based create a significant risk that our current estimates may not be realized. These assumptions include: |
• | the amount and timing of employee relocation costs, severance and overlapping compensation and occupancy costs we experience; and |
• | the timing for execution of each phase of our relocation implementation plan. |
• | Our 2020 Margin Target: While our 2020 Margin Target is presented with numerical specificity, and we believe the target to be reasonable as of the date of this report, the uncertainties surrounding the assumptions on which the 2020 Margin Target is based create a significant risk that these assumptions may not be realized. These assumptions include: |
• | the levels of positive net flows into our investment services; |
• | the level of growth (in terms of additional AUM) in our alternatives product business; |
• | the rate of increase in our fixed costs due to inflation and similar factors, the transitional costs related to our relocation strategy and the timing of such costs, the success we have in achieving planned new cost reductions (including those relating to our relocation strategy) and the timing of such cost reductions, and the investments we make in our business; and |
• | general conditions of the markets in which our business operates, including modest appreciation in both equity and fixed income total investment returns. |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Item 4. | Controls and Procedures |
Document and Entity Information |
9 Months Ended |
---|---|
Sep. 30, 2018
shares
| |
Document and Entity Information [Abstract] | |
Entity Registrant Name | ALLIANCEBERNSTEIN HOLDING L.P. |
Entity Central Index Key | 0000825313 |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 96,372,964 |
Document Fiscal Year Focus | 2018 |
Document Fiscal Period Focus | Q3 |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | Sep. 30, 2018 |
Entity Emerging Growth Company | false |
Entity Small Business | false |
Condensed Statements of Financial Condition - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
ASSETS | ||
Investment in AB | $ 1,489,182 | $ 1,544,704 |
Total assets | 1,489,182 | 1,544,704 |
Liabilities: | ||
Other liabilities | 525 | 1,154 |
Total liabilities | 525 | 1,154 |
Commitments and contingencies (See Note 8) | ||
Partners’ capital: | ||
General Partner: 100,000 general partnership units issued and outstanding | 1,392 | 1,411 |
Limited partners: 96,272,964 and 96,361,989 limited partnership units issued and outstanding | 1,556,446 | 1,590,776 |
AB Holding Units held by AB to fund long-term incentive compensation plans | (30,893) | (15,174) |
Accumulated other comprehensive loss | (38,288) | (33,463) |
Total partners’ capital | 1,488,657 | 1,543,550 |
Total liabilities and partners’ capital | $ 1,489,182 | $ 1,544,704 |
Condensed Statements of Financial Condition (Parenthetical) - shares |
Sep. 30, 2018 |
Dec. 31, 2017 |
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Statement of Financial Position [Abstract] | ||
General Partner: units issued (in units) | 100,000 | 100,000 |
General Partner: units outstanding (in units) | 100,000 | 100,000 |
Limited partners: units issued (in units) | 96,272,964 | 96,361,989 |
Limited partners: units outstanding (in units) | 96,272,964 | 96,361,989 |
Condensed Statements of Income - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
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Income Statement [Abstract] | ||||
Equity in net income attributable to AB Unitholders | $ 72,802 | $ 49,055 | $ 203,888 | $ 146,668 |
Income taxes | 6,902 | 5,877 | 21,371 | 17,839 |
Net income | $ 65,900 | $ 43,178 | $ 182,517 | $ 128,829 |
Net income per unit: | ||||
Basic (in dollars per unit) | $ 0.68 | $ 0.46 | $ 1.87 | $ 1.35 |
Diluted (in dollars per unit) | $ 0.68 | $ 0.46 | $ 1.87 | $ 1.35 |
Business Description, Organization and Basis of Presentation |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Description, Organization and Basis of Presentation | Business Description, Organization and Basis of Presentation Business Description AB Holding’s principal source of income and cash flow is attributable to its investment in AB limited partnership interests. The condensed financial statements and notes of AB Holding should be read in conjunction with the condensed consolidated financial statements and notes of AB included as an exhibit to this quarterly report on Form 10-Q and with AB Holding’s and AB’s audited financial statements included in AB Holding’s Form 10-K for the year ended December 31, 2017. AB provides research, diversified investment management and related services globally to a broad range of clients. Its principal services include:
AB also provides distribution, shareholder servicing, transfer agency services and administrative services to the mutual funds it sponsors. AB’s high-quality, in-depth research is the foundation of its business. AB’s research disciplines include economic, fundamental equity, fixed income and quantitative research. In addition, AB has experts focused on multi-asset strategies, wealth management and alternative investments. AB provides a broad range of investment services with expertise in:
AB’s services span various investment disciplines, including market capitalization (e.g., large-, mid- and small-cap equities), term (e.g., long-, intermediate- and short-duration debt securities), and geographic location (e.g., U.S., international, global, emerging markets, regional and local), in major markets around the world. Organization During the second quarter of 2018, AXA Equitable Holdings, Inc. ("EQH"), the holding company for a diversified financial services organization, conducted an initial public offering; AXA, a French holding company for AXA Group, a worldwide leader in life, property and casualty and health insurance and asset management owns approximately 72% of the outstanding common stock of EQH as of September 30, 2018. AXA has announced its intention to sell its entire interest in EQH over time, subject to market conditions and other factors. AXA is under no obligation to do so and retains the sole discretion to determine the timing of any future sales of shares of EQH common stock. As of September 30, 2018, EQH owns approximately 3.9% of the issued and outstanding units representing assignments of beneficial ownership of limited partnership interests in AB Holding (“AB Holding Units”). AllianceBernstein Corporation (an indirect wholly-owned subsidiary of EQH, “General Partner”) is the general partner of both AB Holding and AB. AllianceBernstein Corporation owns 100,000 general partnership units in AB Holding and a 1% general partnership interest in AB. As of September 30, 2018, the ownership structure of AB, expressed as a percentage of general and limited partnership interests, is as follows:
Including both the general partnership and limited partnership interests in AB Holding and AB, EQH and its subsidiaries have an approximate 65.1% economic interest in AB as of September 30, 2018. Basis of Presentation The interim condensed financial statements have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the interim results, have been made. The preparation of the condensed financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the condensed financial statements and the reported amounts of revenues and expenses during the interim reporting periods. Actual results could differ from those estimates. The condensed statement of financial condition as of December 31, 2017 was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). AB Holding records its investment in AB using the equity method of accounting. AB Holding’s investment is increased to reflect its proportionate share of income of AB and decreased to reflect its proportionate share of losses of AB and cash distributions made by AB to its Unitholders. In addition, AB Holding's investment is adjusted to reflect its proportionate share of certain capital transactions of AB. AB's ASC 606 Implementation In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, which outlines a single comprehensive revenue recognition model for all contracts with customers and supersedes most of the existing revenue recognition requirements. This standard had no impact on AB Holding’s statement of income. AB adopted this new standard on January 1, 2018 on a modified retrospective basis for contracts that were not completed as of the date of adoption. On January 1, 2018, AB recorded a cumulative effect adjustment, net of tax, of a $35.0 million increase to partners’ capital in its condensed consolidated statement of financial condition. Accordingly, AB Holding, as a result of its 35.5% ownership interest in AB as of January 1, 2018, recorded a cumulative effect adjustment, net of tax, of $12.5 million to partners’ capital in its condensed statement of financial condition. |
Cash Distributions |
9 Months Ended |
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Sep. 30, 2018 | |
Equity [Abstract] | |
Cash Distributions | Cash Distributions AB Holding is required to distribute all of its Available Cash Flow, as defined in the Amended and Restated Agreement of Limited Partnership of AB Holding (“AB Holding Partnership Agreement”), to its Unitholders pro rata in accordance with their percentage interests in AB Holding. Available Cash Flow is defined as the cash distributions AB Holding receives from AB minus such amounts as the General Partner determines, in its sole discretion, should be retained by AB Holding for use in its business (such as the payment of taxes) or plus such amounts as the General Partner determines, in its sole discretion, should be released from previously retained cash flow. On October 24, 2018, the General Partner declared a distribution of $0.69 per unit, representing a distribution of Available Cash Flow for the three months ended September 30, 2018. Each general partnership unit in AB Holding is entitled to receive distributions equal to those received by each AB Holding Unit. The distribution is payable on November 15, 2018 to holders of record at the close of business on November 5, 2018. |
Long-term Incentive Compensation Plans |
9 Months Ended |
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Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Long-term Incentive Compensation Plans | Long-term Incentive Compensation Plans AB maintains several unfunded, non-qualified long-term incentive compensation plans, under which the company grants awards of restricted AB Holding Units to its employees and members of the Board of Directors, who are not employed by AB or by any of AB’s affiliates (“Eligible Directors”). AB funds its restricted AB Holding Unit awards either by purchasing AB Holding Units on the open market or purchasing newly-issued AB Holding Units from AB Holding, and then keeping all of these AB Holding Units in a consolidated rabbi trust until delivering them or retiring them. In accordance with the AB Holding Partnership Agreement, when AB purchases newly-issued AB Holding Units from AB Holding, AB Holding is required to use the proceeds it receives from AB to purchase the equivalent number of newly-issued AB Units, thus increasing its percentage ownership interest in AB. AB Holding Units held in the consolidated rabbi trust are corporate assets in the name of the trust and are available to the general creditors of AB. During the three and nine months ended September 30, 2018, AB purchased 1.6 million and 2.9 million AB Holding Units for $48.0 million and $83.2 million, respectively (on a trade date basis). These amounts reflect open-market purchases of 1.6 million and 2.8 million AB Holding Units for $48.0 million and $80.9 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. During the three and nine months ended September 30, 2017, AB purchased 0.3 million and 5.9 million AB Holding Units for $6.9 million and $134.6 million, respectively (on a trade date basis). These amounts reflect open-market purchases of 0.3 million and 5.2 million AB Holding Units for $6.8 million and $117.1 million, respectively, with the remainder relating to purchases of AB Holding Units from employees to allow them to fulfill statutory tax withholding requirements at the time of delivery of long-term incentive compensation awards. Each quarter, AB considers whether to implement a plan to repurchase AB Holding Units pursuant to Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended (“Exchange Act”). A plan of this type allows a company to repurchase its shares at times when it otherwise might be prevented from doing so because of self-imposed trading blackout periods or because it possesses material non-public information. Each broker selected by AB has the authority under the terms and limitations specified in the plan to repurchase AB Holding Units on AB’s behalf in accordance with the terms of the plan. Repurchases are subject to regulations promulgated by the SEC as well as certain price, market volume and timing constraints specified in the plan. The plan adopted during the third quarter of 2018 expired at the close of business on October 22, 2018. AB may adopt additional plans in the future to engage in open-market purchases of AB Holding Units to help fund anticipated obligations under its incentive compensation award program and for other corporate purposes. During the first nine months of 2018 and 2017, AB granted to employees and Eligible Directors 2.5 million and 2.1 million restricted AB Holding Unit awards, respectively. AB used AB Holding Units repurchased during the periods and newly-issued AB Holding Units to fund these restricted AB Holding Unit awards. During the first nine months of 2018 and 2017, AB Holding issued 0.6 million and 1.0 million AB Holding Units, respectively, upon exercise of options to buy AB Holding Units. AB Holding used the proceeds of $10.8 million and $17.7 million, respectively, received as payment in cash for the exercise price to purchase the equivalent number of newly-issued AB Units. |
Net Income per Unit |
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Earnings Per Unit [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income per Unit | Net Income per Unit Basic net income per unit is derived by dividing net income by the basic weighted average number of units outstanding for each period. Diluted net income per unit is derived by adjusting net income for the assumed dilutive effect of compensatory options (“Net income – diluted”) and dividing by the diluted weighted average number of units outstanding for each period.
For the three and nine months ended September 30, 2018, we excluded 824,245 options and 844,973 options, respectively, from the diluted net income computation due to their anti-dilutive effect. For the three and nine months ended September 30, 2017, we excluded 2,427,527 options from the diluted net income computation due to their anti-dilutive effect. |
Investment in AB |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in AB | Investment in AB Changes in AB Holding’s investment in AB during the nine-month period ended September 30, 2018 are as follows (in thousands):
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Units Outstanding |
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Equity [Abstract] | ||||||||||||||||||||||
Units Outstanding | Units Outstanding Changes in AB Holding Units outstanding during the nine-month period ended September 30, 2018 are as follows:
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Income Taxes |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes AB Holding is a “grandfathered” publicly-traded partnership (“PTP”) for federal tax purposes and, accordingly, is not subject to federal or state corporate income taxes. However, AB Holding is subject to the 4.0% New York City unincorporated business tax (“UBT”), net of credits for UBT paid by AB, and to a 3.5% federal tax on partnership gross income from the active conduct of a trade or business. AB Holding’s partnership gross income is derived from its interest in AB. AB Holding’s federal income tax is computed by multiplying certain AB qualifying revenues (primarily U.S. investment advisory fees and brokerage commissions) by AB Holding’s ownership interest in AB, multiplied by the 3.5% tax rate. AB Holding Units in AB’s consolidated rabbi trust are not considered outstanding for purposes of calculating AB Holding’s ownership interest in AB.
In order to preserve AB Holding’s status as a “grandfathered” PTP for federal income tax purposes, management ensures that AB Holding does not directly or indirectly (through AB) enter into a substantial new line of business. If AB Holding were to lose its status as a “grandfathered” PTP, it would be subject to corporate income tax, which would reduce materially AB Holding’s net income and its quarterly distributions to AB Holding Unitholders. |
Commitments and Contingencies |
9 Months Ended |
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Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal and regulatory matters described below pertain to AB and are included here due to their potential significance to AB Holding's investment in AB. With respect to all significant litigation matters, we consider the likelihood of a negative outcome. If we determine the likelihood of a negative outcome is probable and the amount of the loss can be reasonably estimated, we record an estimated loss for the expected outcome of the litigation. If the likelihood of a negative outcome is reasonably possible and we are able to determine an estimate of the possible loss or range of loss in excess of amounts already accrued, if any, we disclose that fact together with the estimate of the possible loss or range of loss. However, it is often difficult to predict the outcome or estimate a possible loss or range of loss because litigation is subject to inherent uncertainties, particularly when plaintiffs allege substantial or indeterminate damages. Such is also the case when the litigation is in its early stages or when the litigation is highly complex or broad in scope. In these cases, we disclose that we are unable to predict the outcome or estimate a possible loss or range of loss. AB may be involved in various matters, including regulatory inquiries, administrative proceedings and litigation, some of which may allege significant damages. It is reasonably possible that AB could incur losses pertaining to these matters, but management cannot currently estimate any such losses. Management, after consultation with legal counsel, currently believes that the outcome of any individual matter that is pending or threatened, or all of them combined, will not have a material adverse effect on our results of operations, financial condition or liquidity. However, any inquiry, proceeding or litigation has an element of uncertainty; management cannot determine whether further developments relating to any individual matter that is pending or threatened, or all of them combined, will have a material adverse effect on our results of operations, financial condition or liquidity in any future reporting period. |
Business Description, Organization and Basis of Presentation (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||
Summary of Ownership Structure of AllianceBernstein | As of September 30, 2018, the ownership structure of AB, expressed as a percentage of general and limited partnership interests, is as follows:
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Net Income per Unit (Tables) |
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Earnings Per Unit [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Unit, Basic and Diluted | Basic net income per unit is derived by dividing net income by the basic weighted average number of units outstanding for each period. Diluted net income per unit is derived by adjusting net income for the assumed dilutive effect of compensatory options (“Net income – diluted”) and dividing by the diluted weighted average number of units outstanding for each period.
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Investment in AB (Tables) |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Changes in Investment in AB | Changes in AB Holding’s investment in AB during the nine-month period ended September 30, 2018 are as follows (in thousands):
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Units Outstanding (Tables) |
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Equity [Abstract] | ||||||||||||||||||||||
Changes in Holding Units Outstanding | Changes in AB Holding Units outstanding during the nine-month period ended September 30, 2018 are as follows:
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Income Taxes (Tables) |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Effective Income Tax Rate and Changes in Components of Income Tax |
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Cash Distributions (Details) - Cash Distribution - $ / shares |
9 Months Ended | |
---|---|---|
Oct. 24, 2018 |
Sep. 30, 2018 |
|
Distribution Made to Limited Partner [Line Items] | ||
Declaration date | Oct. 24, 2018 | |
Distribution date | Nov. 15, 2018 | |
Record date | Nov. 05, 2018 | |
Subsequent Event | ||
Distribution Made to Limited Partner [Line Items] | ||
Cash distribution declared (in dollars per unit) | $ 0.69 |
Long-term Incentive Compensation Plans (Details) - USD ($) $ in Thousands, shares in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Holding units purchased in period (in units) | 1.6 | 0.3 | 2.9 | 5.9 |
Dollar amount paid for holding units acquired | $ 48,000 | $ 6,900 | $ 83,200 | $ 134,600 |
Open-market purchases of holding units (in units) | 1.6 | 0.3 | 2.8 | 5.2 |
Dollar amount paid for open-market purchases of holding units | $ 48,000 | $ 6,800 | $ 80,900 | $ 117,100 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Units issued upon options exercised (in units) | 0.6 | 1.0 | ||
Proceeds from stock options exercised | $ 10,802 | $ 17,672 | ||
Employees and Eligible Directors | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Restricted AB Holding Unit awards granted to employees and Eligible Directors | 2.5 | 2.1 |
Net Income per Unit (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Earnings Per Unit [Abstract] | ||||
Net income – basic | $ 65,900 | $ 43,178 | $ 182,517 | $ 128,829 |
Additional allocation of equity in net income attributable to AB resulting from assumed dilutive effect of compensatory options | 117 | 136 | 376 | 450 |
Net income – diluted | $ 66,017 | $ 43,314 | $ 182,893 | $ 129,279 |
Weighted average units outstanding – basic (in units) | 97,409,000 | 93,374,000 | 97,587,000 | 95,218,000 |
Dilutive effect of compensatory options (in units) | 245,000 | 400,000 | 282,000 | 455,000 |
Weighted average units outstanding – diluted (in units) | 97,654,000 | 93,774,000 | 97,869,000 | 95,673,000 |
Basic net income per unit (in dollars per unit) | $ 0.68 | $ 0.46 | $ 1.87 | $ 1.35 |
Diluted net income per unit (in dollars per unit) | $ 0.68 | $ 0.46 | $ 1.87 | $ 1.35 |
Anti-dilutive units excluded from diluted net income computation (in units) | 824,245 | 2,427,527 | 844,973 | 2,427,527 |
Units Outstanding (Details) |
9 Months Ended |
---|---|
Sep. 30, 2018
shares
| |
Units Outstanding | |
Outstanding as of December 31, 2017 (in units) | 96,461,989 |
Options exercised (in units) | 629,493 |
Units issued (in units) | 2,712,263 |
Units retired (in units) | (3,430,781) |
Outstanding as of September 30, 2018 (in units) | 96,372,964 |
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