NEW YORK, Feb. 12, 2015 /PRNewswire/ -- AllianceBernstein
L.P. ("AB") and AllianceBernstein Holding L.P. ("AB Holding")
(NYSE: AB) today reported financial and operating results for the
fourth quarter ended December 31,
2014.
"We made continued progress executing on our long-term strategy
to deliver for our clients with persistent investment performance,
a broader offering, innovative solutions and strong financials in
2014 and we're seeing the effects in every part of our business,"
said Peter S. Kraus, Chairman and
Chief Executive Officer. "Our equity and fixed income strategies
performed well in 2014 and we've had a positive response from
clients to the acquisitions we've made and the new services we've
introduced in areas like global core equities, direct middle-market
lending, target date funds and retail liquid alternatives. As a
result, our 2014 firmwide net flows were positive for the first
time since 2007 and asset retention levels across all three of our
client channels are at multi-year highs today."
Financial
Results
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4Q
2014
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3Q
2014
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4Q 2014
vs
3Q 2014
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4Q
2013
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4Q 2014 vs
4Q 2013
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(US $ Millions except
per Unit amounts)
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AB
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GAAP
basis:
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Net
Revenues
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$787
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$750
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5%
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$766
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3%
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Operating
Income
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$191
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$145
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32%
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$195
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(2%)
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Operating Margin,
excl. non-controlling interests
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23.8%
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19.9%
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25.0%
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Adjusted basis:
(1)
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Net Revenues
(2)
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$655
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$626
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5%
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$636
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3%
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Operating Income
(3)
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$183
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$149
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23%
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$185
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(1%)
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Operating
Margin
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27.9%
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23.8%
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29.1%
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AB
Holding
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GAAP Diluted Net
Income per Unit
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$0.59
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$0.45
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31%
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$0.62
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(5%)
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Adjusted Diluted Net
Income per Unit(1)
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$0.57
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$0.45
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27%
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$0.60
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(5%)
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Distribution per
Unit
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$0.57
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$0.45
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27%
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$0.60
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(5%)
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(1)See
pages 10-12 for reconciliations of GAAP Financial Results to
Adjusted Financial Results.
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(2)Adjusted net revenues exclude
investment gains and losses and dividends and interest on long-term
incentive compensation-related investments and 90% of the
investment gains and losses of our consolidated venture capital
fund attributable to non-controlling interests. In addition,
adjusted net revenues offset distribution-related payments to third
parties as well as amortization of deferred sales commissions
against distribution revenues. They also exclude certain revenues
that are reimbursements of pass-through expenses (primarily through
our transfer agency).
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(3)Adjusted operating income represents
operating income on a GAAP basis excluding (1) the impact on net
revenues and compensation expense of the gains and losses (as well
as the dividends and interest) associated with employee long-term
incentive compensation-related investments, (2) real estate
charges, (3) acquisition-related expenses, (4) adjustments to
contingent payment arrangements and (5) the net income or loss of
consolidated entities attributable to non-controlling
interests.
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Kraus continued: "We've worked hard to build the business of the
future and our investment is paying off. In Equities, investment
performance improved significantly in 2014 – 73% of our active
equity assets were in outperforming services for the 3-year period
through December 31 and 70%
outperformed for the one-year. We also continued to evolve our
Equities platform to provide strategies that meet client demand for
high conviction, high active share equity services – we
successfully closed our acquisition of Danish core equity manager
CPH and launched our first Global Core Luxembourg-registered fund
in 2014. In Fixed Income, we maintained our investment premiums,
with 88% of assets in outperforming services for the 3-year and 95%
for the 5-year. We also added direct middle-market lending to an
illiquid platform that includes opportunistic, real estate and
infrastructure lending as well. The new team has already attracted
hundreds of millions in assets to deploy. We had a milestone year
in Multi-Asset, launching the first ever multi-manager target date
fund series in partnership with Morningstar. In Alternatives, we
completed successful second fundraises for our real estate private
equity and commercial debt funds and launched four new retail
liquid alternatives strategies. Today, our suite of retail liquid
alternatives offerings represents about one-third of our total
alternatives AUM. In our Institutional channel, our $16 billion pipeline at year-end included a new
$10 billion Customized Retirement
Solutions (CRS) mandate with a prominent client – a significant
breakthrough for us in this scale business. In Retail, we passed
the critical 3-year mark for asset-raising across a series of
offerings this year, including Tax Aware Muni SMA, RMB Income Plus,
Short Duration High Yield, Limited Duration High Income, and
Emerging Markets Multi Asset (EMMA). All have performed well across
periods. In Private Wealth Management, our clients are benefiting
from both improved performance in our integrated offering and
access to a new range of targeted services that exploit return
opportunities in areas like US financials and Eurozone and frontier
markets. These services attracted more than $1.3 billion in new assets in 2014 from a broader
client base. On the sell side, we delivered our highest annual
revenues since 2008, with strong growth in every market. Finally,
our 2014 financial highlights include $5.1
billion in firmwide net inflows – our first net flow
positive year since the Global Financial Crisis – and growth in
adjusted net revenues and operating income."
Kraus concluded: "In so many ways, 2014 proved that AB is a new
firm today, better positioned than ever to bring our full-firm
resources to bear to anticipate and solve our clients' evolving
investment needs. Last month, we launched a new logo, brand design
and messaging – Ahead of Tomorrow – that captures how far we've
come and all we have to offer clients today. I'm proud of our
progress and our people, who work with relentless ingenuity to take
AB forward. And I look forward to another year of progress in
advancing client success."
The firm's cash distribution per unit of $0.57 is payable on March
12, 2015, to holders of record of AB Holding Units at the
close of business on February 23,
2015.
Market Performance
US equity and fixed income markets were strong in the fourth
quarter, while global equity and fixed income markets were weak.
The S&P 500 returned 4.9% for the fourth quarter and 13.7% for
the full year, while the MSCI EAFE Index's total return was (3.5)%
for the fourth quarter and (4.5)% for the full year. The Barclays
US Aggregate Index returned 1.8% during the fourth quarter and 6.0%
for the full year and the Barclays Global Aggregate ex US Index's
total return was (3.0)% for the quarter and (3.1)% for the full
year.
Assets Under Management ($ Billions)
Total assets under management as of December 31, 2014 were $474.0 billion, up $1.0
billion, or 0.2%, from September 30,
2014, and up $23.6 billion, or
5.2%, from December 31,
2013.
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Institutions
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Retail
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Private
Wealth
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Total
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Assets Under
Management 12/31/14
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$237.0
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$161.5
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$75.5
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$474.0
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Net Flows for Three
Months Ended 12/31/14
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($0.3)
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($1.2)
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($0.1)
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($1.6)
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Total net outflows of $1.6 billion
compared to the prior quarter's net inflows of $2.8 billion and the prior-year period's net
outflows of $10.3 billion, which
included $6.8 billion of AXA related
Institutional fixed income redemptions due to its sale of MONY Life
Insurance Company ("MONY") to an unaffiliated third party.
Net outflows from the Institutions channel were $0.3 billion, compared to net inflows of
$2.8 billion in the third quarter of
2014. Institutions gross sales of $4.7
billion decreased 19% sequentially from the prior quarter's
$5.8 billion. The pipeline of awarded
but unfunded Institutional mandates increased sequentially from
$6.6 billion to $16.0 billion at December
31, 2014, as a $10 billion
Customized Retirement Strategies ("CRS") mandate was added to the
pipeline during the quarter. Excluding CRS and passive, the active
pipeline finished the year higher.
The Retail channel experienced fourth quarter 2014 net outflows
of $1.2 billion, compared to the
prior quarter's net outflows of $0.1
billion. Retail gross sales of $9.2
billion decreased 21% sequentially from the third quarter's
$11.6 billion, with the greatest
decline in the Asia ex
Japan region.
In the Private Wealth Management channel, net outflows of
$0.1 billion compared to net inflows
of $0.1 billion in the previous
quarter. Private Wealth Management gross sales decreased 7%
sequentially to $1.3 billion from the
prior quarter's $1.4 billion.
Fourth Quarter Financial Results
Revenues:
Net revenues of $787 million were
up 3% compared to the fourth quarter of 2013. Higher base fees and
Bernstein Research Services revenues were partly offset by lower
performance-based fees and investment losses compared to investment
gains in the prior-year period. Sequentially, net revenues
increased 5%, as a result of higher performance-based fees and
Bernstein Research Services revenues and lower investment losses
versus the prior period, which were partly offset by lower
distribution revenues primarily from US retail products. Bernstein
Research Services revenues increased 13% from the fourth quarter of
2013 and 14% from the third quarter of 2014 due to increased
trading activity compared to both prior periods.
Adjusted net revenues of $655
million were up 3% compared to the fourth quarter of 2013,
driven by higher base fees and Bernstein Research Services
revenues, partly offset by lower performance-based fees, net
distribution expense, the result of current quarter distribution
payments and amortization of deferred sales commissions that
exceeded distribution revenues, and investment losses compared to
investment gains in the prior-year period. Sequentially, adjusted
net revenues were up 5%, driven by higher performance-based fees
and Bernstein Research Services revenues, partly offset by
investment losses.
Expenses:
Operating expenses were $596
million for the fourth quarter, up 5% year-over-year, as
higher employee compensation and benefits and promotion and
servicing expenses were partly offset by lower general and
administrative ("G&A") expense. Employee compensation and
benefits expense increased from the prior-year period due to higher
base and incentive compensation and higher commissions. Promotion
and servicing expense increased from the prior-year period due to
higher trade execution fees, distribution plan payments in non-US
retail markets, amortization of deferred sales commissions and
marketing expense. Within G&A, occupancy expense and
professional fees were lower compared to the prior-year period. The
Company recorded a $0.4 million
non-cash real estate credit during the fourth quarter of 2014 as
part of its ongoing global real estate consolidation plan compared
to a $1.7 million non-cash real
estate charge in the fourth quarter of 2013. In addition, in the
fourth quarter of 2014, the Company recorded a $4.4 million credit to operating expenses
compared to a $10.8 million credit in
the fourth quarter of 2013. These credits reflect changes in
estimates for the contingent consideration payable relating to the
acquisition of Sun America's
alternative investment group.
On a sequential basis, operating expenses were down 1% as lower
employee compensation and benefit and G&A expenses were partly
offset by higher promotion and servicing expense. Employee
compensation and benefits expense decreased due to lower
commissions and incentive compensation, partially offset by higher
fringes. Within G&A, the decline was driven by increased
corporate credit card rebates and lower foreign exchange expenses.
Promotion and servicing expense increased sequentially as a result
of higher travel and entertainment and marketing expenses,
partially offset by lower distribution plan payments primarily in
non-US retail markets. The Company's $0.4
million non-cash real estate credit in the current quarter
compares to a $1.0 million non-cash
real estate credit in the third quarter of 2014. In addition, the
Company recorded a $4.4 million
credit to operating expenses in the fourth quarter of 2014 to
reflect changes in estimates for the contingent consideration
payable relating to the acquisition of Sun
America's alternative investment group.
Adjusted operating expenses were $472
million for the fourth quarter, up 5% compared to the
prior-year period, driven by higher total compensation and benefits
and promotion and servicing expenses, partly offset by lower
G&A expense. The year-over-year increase in total compensation
and benefits expense was a result of higher incentive and base
compensation and higher commissions. The increase in promotion and
servicing expense was due primarily to higher trade execution and
marketing expenses. Within G&A, the decrease was due to lower
occupancy expense.
Sequentially, adjusted operating expenses were down 1%, driven
by lower total compensation and benefits and G&A expenses,
partly offset by higher promotion and servicing expense. The
sequential decrease in total compensation and benefits expense was
driven by lower incentive compensation and commissions. The decline
in G&A expense was due to increased corporate credit card
rebates and lower foreign exchange expenses. The increase in
promotion and servicing was primarily due to seasonally higher
travel and entertainment.
Operating income and
margin:
Operating income of $191 million
for the fourth quarter of 2014 decreased 2% compared to
$195 million for the fourth quarter
of 2013 and increased 32% compared to $145
million in the third quarter of 2014.
Adjusted operating income of $183
million decreased 1% compared to the fourth quarter of 2013,
and the adjusted operating margin decreased to 27.9% from 29.1%. On
a sequential basis, adjusted operating income increased 23% from
$149 million, and the adjusted
operating margin increased from 23.8%.
Net income per Unit:
Diluted net income per Unit for the fourth quarter of 2014 was
$0.59 compared to $0.62 for the fourth quarter of 2013 and
$0.45 for the third quarter of
2014.
Adjusted diluted net income per Unit was $0.57 compared to $0.60 in the fourth quarter of 2013 and
$0.45 in the third quarter of
2014.
Unit Repurchases
AB engages in open-market purchases of Holding Units to help
fund anticipated obligations under its incentive compensation award
program and for other corporate purposes under a plan pursuant to
Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.
The amount of Holding Units AB buys each quarter is subject to SEC
regulations, the terms of the 10b5-1 plan and the trading volume of
Holding Units on the New York Stock Exchange. In addition, AB
purchases Holding Units from employees to allow them to fulfill
statutory tax requirements at the time of distribution of long-term
incentive compensation awards. During the fourth quarter and full
year 2014, AB purchased approximately 3.3 million Holding Units and
3.6 million Holding Units for $87.4
million and $92.8 million,
respectively. These amounts reflect AB's open-market purchases of
0.3 million Holding Units for $7.2
million in the fourth quarter as AB did not execute any open
market purchases of Holding Units under its 10b5-1 plans in
existence during the first nine months of 2014. AB purchased the
rest of these Holding Units from employees to allow them to fulfill
statutory tax withholding requirements at the time of distribution
of long-term incentive compensation awards.
Fourth Quarter 2014 Earnings Conference Call
Information
Management will review fourth quarter 2014 financial and
operating results during a conference call beginning at
8:00 a.m. (ET) on Thursday,
February 12, 2015. The conference call will be hosted by
Peter S. Kraus, Chairman and Chief
Executive Officer, and John C.
Weisenseel, Chief Financial Officer.
Parties may access the conference call by either webcast or
telephone:
1. To listen by webcast, please visit AB's Investor
Relations website at
http://abglobal.com/corporate/investor-relations/home.htm at least
15 minutes prior to the call to download and install any necessary
audio software.
2. To listen by telephone, please dial (866) 556-2265 in
the U.S. or (973) 935-8521 outside the U.S. 10 minutes before the
scheduled start time. The conference ID# is 69566937.
The presentation that will be reviewed during the conference
call will be available on AB's Investor Relations website shortly
after the release of fourth quarter 2014 financial and
operating results on February 12, 2015.
AB will be providing live updates via Twitter during the
conference call. To access the tweets, follow AB on Twitter:
@AB_insights. Also, in the future, AB may provide public
disclosures to investors via Twitter and other appropriate
internet-based social media.
A replay of the webcast will be made available beginning
approximately one hour after the conclusion of the conference call
and will be available on AB's website for one week. An audio
replay of the conference call will also be available for one week.
To access the audio replay, please call (855) 859-2056 in the
U.S., or (404) 537-3406 outside the U.S., and provide the
conference ID #: 69566937.
Availability of 2014 Form 10-K
Unitholders may obtain a copy of our Form 10-K for the year
ended December 31, 2014 in either
electronic format or hard copy on www.abglobal.com:
- Download Electronic Copy: Unitholders can download an
electronic version of the report by visiting the "Investor &
Media Relations" page of our website at
www.abglobal.com/investorrelations and clicking on the "Reports
& SEC Filings" section.
- Order Hard Copy Electronically or by Phone: Unitholders
may also order a hard copy of the report, which is expected to be
available for mailing in approximately eight weeks, free of charge.
Unitholders with internet access can follow the above instructions
to order a hard copy electronically. Unitholders without
internet access, or who would prefer to order by phone, can call
800-227-4618.
Cautions Regarding Forward-Looking Statements
Certain statements provided by management in this news release
are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements are subject to risks, uncertainties, and other factors
that could cause actual results to differ materially from future
results expressed or implied by such forward-looking
statements. The most significant of these factors include,
but are not limited to, the following: the performance of financial
markets, the investment performance of sponsored investment
products and separately-managed accounts, general economic
conditions, industry trends, future acquisitions, competitive
conditions, and current and proposed government regulations,
including changes in tax regulations and rates and the manner in
which the earnings of publicly-traded partnerships are taxed. AB
cautions readers to carefully consider such factors. Further,
such forward-looking statements speak only as of the date on which
such statements are made; AB undertakes no obligation to update any
forward-looking statements to reflect events or circumstances after
the date of such statements. For further information
regarding these forward-looking statements and the factors that
could cause actual results to differ, see "Risk Factors" and
"Cautions Regarding Forward-Looking Statements" in AB's Form 10-K
for the year ended December 31, 2014.
Any or all of the forward-looking statements made in this news
release, Form 10-K, Form 10-Q, other documents AB files with or
furnishes to the SEC, and any other public statements issued by AB,
may turn out to be wrong. It is important to remember that
other factors besides those listed in "Risk Factors" and "Cautions
Regarding Forward-Looking Statements", and those listed below,
could also adversely affect AB's financial condition, results of
operations and business prospects.
The forward-looking statements referred to in the preceding
paragraph include statements regarding:
- The possibility that AB will engage in open market
purchases of Holding Units to help fund anticipated obligations
under our incentive compensation award program: The
number of Holding Units AB may decide to buy in future periods, if
any, to help fund incentive compensation awards is dependent upon
various factors, some of which are beyond our control, including
the fluctuation in the price of a Holding Unit and the availability
of cash to make these purchases.
- The pipeline of new institutional mandates not yet
funded: Before they are funded, institutional mandates do
not represent legally binding commitments to fund and, accordingly,
the possibility exists that not all mandates will be funded in the
amounts and at the times currently anticipated.
Qualified Tax Notice
This announcement is intended to be a qualified notice under
Treasury Regulation §1.1446-4(b). Please note that 100% of AB
Holding's distributions to foreign investors is attributable to
income that is effectively connected with a United States trade or business. Accordingly,
AB Holding's distributions to foreign investors are subject to
federal income tax withholding at the highest applicable tax rate,
currently 39.6%.
About AB
AB is a leading global investment management firm that offers
high-quality research and diversified investment services to
institutional investors, individuals and private wealth clients in
major world markets.
As of December 31, 2014, AB
Holding owned approximately 36.9% of the issued and outstanding AB
Units and AXA, one of the largest global financial services
organizations, owned an approximate 62.7% economic interest in
AB.
Additional information about AB may be found on our internet
site, www.abglobal.com.
AB (The Operating
Partnership)
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SUMMARY
CONSOLIDATED STATEMENTS OF INCOME | December 31,
2014
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Three Months
Ended
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Twelve Months
Ended
|
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US $ Thousands,
unaudited
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12/31/14
|
|
9/30/14
|
|
12/31/13
|
|
12/31/14
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|
12/31/13
|
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Revenues:
|
|
|
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|
|
|
|
|
|
|
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Base fees
|
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$486,481
|
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$493,651
|
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$452,601
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$1,905,014
|
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$1,795,529
|
|
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Performance
fees
|
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28,034
|
|
2,852
|
|
44,353
|
|
53,236
|
|
53,576
|
|
|
Bernstein research
services
|
|
128,409
|
|
112,147
|
|
113,272
|
|
482,538
|
|
445,083
|
|
|
Distribution
revenues
|
|
112,929
|
|
115,513
|
|
111,936
|
|
444,970
|
|
465,424
|
|
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Dividend and interest
income
|
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8,799
|
|
4,744
|
|
6,563
|
|
22,322
|
|
19,962
|
|
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Investment gains
(losses)
|
|
(4,185)
|
|
(6,278)
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11,577
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(9,076)
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33,339
|
|
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Other
revenues
|
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27,426
|
|
27,589
|
|
26,031
|
|
108,788
|
|
105,058
|
|
|
Total
revenues
|
|
787,893
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|
750,218
|
|
766,333
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3,007,792
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2,917,971
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|
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Less: Interest
expense
|
|
541
|
|
470
|
|
761
|
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2,426
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|
2,924
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|
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Net
revenues
|
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787,352
|
|
749,748
|
|
765,572
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3,005,366
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2,915,047
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Expenses:
|
|
|
|
|
|
|
|
|
|
|
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Employee compensation
& benefits
|
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313,900
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317,259
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301,762
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1,265,664
|
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1,212,011
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|
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Promotion &
servicing
|
|
|
|
|
|
|
|
|
|
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Distribution-related payments
|
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104,585
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107,859
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101,475
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413,054
|
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426,824
|
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Amortization of deferred sales commissions
|
|
11,991
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|
11,234
|
|
9,516
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41,508
|
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41,279
|
|
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Other
|
|
57,941
|
|
54,054
|
|
52,419
|
|
224,576
|
|
204,568
|
|
|
General &
administrative
|
|
|
|
|
|
|
|
|
|
|
|
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General & administrative
|
|
105,593
|
|
107,967
|
|
109,036
|
|
426,960
|
|
423,043
|
|
|
Real estate charge
|
|
(405)
|
|
(980)
|
|
1,726
|
|
52
|
|
28,424
|
|
|
Contingent payment
arrangements
|
|
(3,899)
|
|
476
|
|
(10,686)
|
|
(2,782)
|
|
(10,174)
|
|
|
Interest on
borrowings
|
|
628
|
|
620
|
|
574
|
|
2,797
|
|
2,962
|
|
|
Amortization of
intangible assets
|
|
6,448
|
|
6,551
|
|
4,969
|
|
24,916
|
|
21,859
|
|
|
Total
expenses
|
|
596,782
|
|
605,040
|
|
570,791
|
|
2,396,745
|
|
2,350,796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
190,570
|
|
144,708
|
|
194,781
|
|
608,621
|
|
564,251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
9,999
|
|
9,410
|
|
8,841
|
|
37,782
|
|
36,829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
180,571
|
|
135,298
|
|
185,940
|
|
570,839
|
|
527,422
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) of
consolidated entities attributable to non-controlling
interests
|
|
3,146
|
|
(4,500)
|
|
3,442
|
|
456
|
|
9,746
|
|
Net Income
Attributable to AB Unitholders
|
|
$177,425
|
|
$139,798
|
|
$182,498
|
|
$570,383
|
|
$517,676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin(1)
|
|
23.8%
|
|
19.9%
|
|
25.0%
|
|
20.2%
|
|
19.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Operating income excluding net income
(loss) attributable to non-controlling interests as a percentage of
net revenues.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB Holding L.P.
(The Publicly-Traded Partnership)
|
SUMMARY STATEMENTS
OF INCOME
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
$ Thousands except
per Unit amounts, unaudited
|
|
12/31/14
|
|
9/30/14
|
|
12/31/13
|
|
12/31/14
|
|
12/31/13
|
|
Equity in Net Income
Attributable to AB Unitholders
|
|
$63,563
|
|
$49,876
|
|
$62,971
|
|
$203,277
|
|
$185,912
|
|
Income
Taxes
|
|
5,896
|
|
5,742
|
|
5,499
|
|
22,463
|
|
20,410
|
|
Net
Income
|
|
57,667
|
|
44,134
|
|
57,472
|
|
180,814
|
|
165,502
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Equity in
Earnings of Operating Partnership (1)
|
|
440
|
|
409
|
|
381
|
|
1,536
|
|
1,166
|
|
Net Income -
Diluted
|
|
$58,107
|
|
$44,543
|
|
$57,853
|
|
$182,350
|
|
$166,668
|
|
Diluted Net Income
per Unit
|
|
$0.59
|
|
$0.45
|
|
$0.62
|
|
$1.86
|
|
$1.71
|
|
Distribution per
Unit
|
|
$0.57
|
|
$0.45
|
|
$0.60
|
|
$1.86
|
|
$1.79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)To
reflect higher ownership in the Operating Partnership resulting
from application of the treasury stock method to outstanding
options.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB L.P. and AB
Holding L.P.
|
UNITS OUTSTANDING
AND WEIGHTED AVERAGE UNITS OUTSTANDING
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Units
|
|
|
|
Weighted Average
Units
|
|
|
|
|
Period
End
|
|
Three Months Ended
12/31/14
|
|
|
|
Twelve Months
Ended 12/31/14
|
|
|
|
|
Units
|
|
Basic
|
|
Diluted
|
|
|
|
Basic
|
|
Diluted
|
|
AB L.P.
|
|
273,040,452
|
|
269,844,617
|
|
270,907,271
|
|
|
|
269,118,683
|
|
270,266,389
|
|
AB Holding
L.P.
|
|
100,756,999
|
|
97,555,991
|
|
98,618,645
|
|
|
|
96,802,380
|
|
97,950,086
|
AB
L.P.
|
ASSETS UNDER
MANAGEMENT | December 31, 2014
|
(US $
Billions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending and
Average
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/14
|
|
12/31/13
|
|
|
|
|
|
Ending Assets Under
Management
|
|
|
|
|
|
|
$474.0
|
|
$450.4
|
|
|
|
|
|
Average Assets Under
Management
|
|
|
|
|
|
|
$476.0
|
|
$447.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Month
Changes By Distribution Channel
|
|
|
|
|
|
|
Private Wealth
Management
|
|
|
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
|
Total
|
|
|
|
|
|
Beginning of
Period
|
|
|
$236.8
|
|
$162.0
|
|
$74.2
|
|
$473.0
|
|
|
|
|
|
Sales/New
accounts
|
|
|
4.7
|
|
9.2
|
|
1.3
|
|
15.2
|
|
|
|
|
|
Redemptions/Terminations
|
|
|
(2.2)
|
|
(8.4)
|
|
(1.0)
|
|
(11.6)
|
|
|
|
|
|
Net Cash
Flows
|
|
|
(2.8)
|
|
(2.0)
|
|
(0.4)
|
|
(5.2)
|
|
|
|
|
|
Net
Flows
|
|
|
(0.3)
|
|
(1.2)
|
|
(0.1)
|
|
(1.6)
|
|
|
|
|
|
AUM
Adjustment(3)
|
|
|
-
|
|
(0.5)
|
|
-
|
|
(0.5)
|
|
|
|
|
|
Transfers
|
|
|
0.1
|
|
(0.3)
|
|
0.2
|
|
-
|
|
|
|
|
|
Investment
Performance
|
|
|
0.4
|
|
1.5
|
|
1.2
|
|
3.1
|
|
|
|
|
|
End of
Period
|
|
|
$237.0
|
|
$161.5
|
|
$75.5
|
|
$474.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Month
Changes By Investment Service
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
Active
|
|
Equity Passive
(1)
|
|
Fixed Income
Taxable
|
|
Fixed Income
Tax-Exempt
|
|
Fixed
Income
Passive (1)
|
|
Other
(2)
|
|
Total
|
|
Beginning of
Period
|
$112.3
|
|
$49.6
|
|
$220.8
|
|
$31.1
|
|
$10.0
|
|
$49.2
|
|
$473.0
|
|
Sales/New
accounts
|
3.3
|
|
0.2
|
|
9.1
|
|
1.1
|
|
0.1
|
|
1.4
|
|
15.2
|
|
Redemptions/Terminations
|
(4.3)
|
|
(0.1)
|
|
(5.4)
|
|
(0.7)
|
|
(0.2)
|
|
(0.9)
|
|
(11.6)
|
|
Net Cash
Flows
|
(1.5)
|
|
(0.8)
|
|
(3.1)
|
|
(0.1)
|
|
0.2
|
|
0.1
|
|
(5.2)
|
|
Net
Flows
|
(2.5)
|
|
(0.7)
|
|
0.6
|
|
0.3
|
|
0.1
|
|
0.6
|
|
(1.6)
|
|
AUM
Adjustment(3)
|
(0.1)
|
|
-
|
|
(0.3)
|
|
-
|
|
-
|
|
(0.1)
|
|
(0.5)
|
|
Investment
Performance
|
2.8
|
|
1.5
|
|
(1.7)
|
|
0.2
|
|
-
|
|
0.3
|
|
3.1
|
|
End of
Period
|
$112.5
|
|
$50.4
|
|
$219.4
|
|
$31.6
|
|
$10.1
|
|
$50.0
|
|
$474.0
|
|
(1)
Includes index and enhanced index services.
|
|
|
|
|
|
|
|
|
|
(2)Includes multi-asset solutions and
services and certain alternative investments.
|
|
|
|
|
|
|
|
(3)Excludes seed capital invested in
Retail funds for which we do not charge an investment management
fee from AUM.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By Client
Domicile
|
|
|
|
|
|
|
Private Wealth
Management
|
|
|
|
|
|
|
|
|
|
|
|
Institutions
|
|
Retail
|
|
|
Total
|
|
|
|
|
|
U.S.
Clients
|
|
|
$136.3
|
|
$ 98.5
|
|
$73.5
|
|
$308.3
|
|
|
|
|
|
Non-U.S.
Clients
|
|
|
100.7
|
|
63.0
|
|
2.0
|
|
165.7
|
|
|
|
|
|
Total
|
|
|
$237.0
|
|
$161.5
|
|
$75.5
|
|
$474.0
|
|
|
|
|
AB
L.P.
|
RECONCILIATION OF
GAAP FINANCIAL RESULTS TO ADJUSTED FINANCIAL RESULTS
|
|
|
|
|
|
Three Months
Ended
|
|
|
US $ Thousands,
unaudited
|
12/31/14
|
|
9/30/14
|
|
6/30/14
|
|
3/31/14
|
|
12/31/13
|
|
9/30/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues, GAAP
basis
|
$ 787,352
|
|
$ 749,748
|
|
$ 753,648
|
|
$ 714,618
|
|
$ 765,572
|
|
$ 706,078
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term incentive compensation-related investment (gains)
losses
|
882
|
|
1,646
|
|
(3,415)
|
|
(1,297)
|
|
(4,711)
|
|
(5,284)
|
|
|
|
Long-term incentive compensation-related dividends and
interest
|
(2,605)
|
|
(145)
|
|
(154)
|
|
(179)
|
|
(1,882)
|
|
(210)
|
|
|
|
90% of
consolidated venture capital fund investment (gains)
losses
|
(3,398)
|
|
4,374
|
|
(136)
|
|
(2,005)
|
|
(3,640)
|
|
(1,588)
|
|
|
|
Distribution-related payments
|
(104,585)
|
|
(107,859)
|
|
(101,968)
|
|
(98,642)
|
|
(101,475)
|
|
(102,426)
|
|
|
|
Amortization of deferred sales commissions
|
(11,991)
|
|
(11,234)
|
|
(9,326)
|
|
(8,957)
|
|
(9,516)
|
|
(10,363)
|
|
|
|
Pass-through fees & expenses
|
(10,723)
|
|
(10,168)
|
|
(9,516)
|
|
(8,445)
|
|
(8,029)
|
|
(8,411)
|
|
|
Adjusted Net
Revenues
|
$ 654,932
|
|
$ 626,362
|
|
$ 629,133
|
|
$ 595,093
|
|
$ 636,319
|
|
$ 577,796
|
|
|
Operating Income,
GAAP basis
|
$ 190,570
|
|
$ 144,708
|
|
$ 143,440
|
|
$ 129,903
|
|
$ 194,781
|
|
$ 108,618
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term incentive compensation-related items
|
(528)
|
|
555
|
|
94
|
|
89
|
|
(664)
|
|
(92)
|
|
|
|
Real
estate (credits) charges
|
(405)
|
|
(980)
|
|
(505)
|
|
1,942
|
|
1,726
|
|
24,125
|
|
|
|
Acquisition-related expenses
|
766
|
|
366
|
|
1,457
|
|
859
|
|
3,373
|
|
-
|
|
|
|
Contingent payment arrangements
|
(4,375)
|
|
-
|
|
-
|
|
-
|
|
(10,840)
|
|
-
|
|
|
|
Sub-total of non-GAAP
adjustments
|
(4,542)
|
|
(59)
|
|
1,046
|
|
2,890
|
|
(6,405)
|
|
24,033
|
|
|
|
Less:
Net (loss) income of consolidated entities attributable to
non-controlling interests
|
3,146
|
|
(4,500)
|
|
(3)
|
|
1,813
|
|
3,442
|
|
1,413
|
|
|
Adjusted Operating
Income
|
$ 182,882
|
|
$ 149,149
|
|
$ 144,489
|
|
$ 130,980
|
|
$ 184,934
|
|
$ 131,238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Margin,
GAAP basis excl. non-controlling interests
|
23.8%
|
|
19.9%
|
|
19.0%
|
|
17.9%
|
|
25.0%
|
|
15.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
Margin
|
27.9%
|
|
23.8%
|
|
23.0%
|
|
22.0%
|
|
29.1%
|
|
22.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB Holding
L.P.
|
RECONCILIATION OF
GAAP EPU TO ADJUSTED EPU
|
|
|
|
|
|
Three Months
Ended
|
|
|
$ Thousands except
per Unit amounts, unaudited
|
12/31/14
|
|
9/30/14
|
|
6/30/14
|
|
3/31/14
|
|
12/31/13
|
|
9/30/13
|
|
|
Net Income -
Diluted, GAAP basis
|
$ 58,107
|
|
$ 44,543
|
|
$ 43,230
|
|
$ 36,455
|
|
$ 57,853
|
|
$ 29,706
|
|
|
Impact on net income
of AB non-GAAP adjustments
|
(1,564)
|
|
106
|
|
415
|
|
1,008
|
|
(2,312)
|
|
7,919
|
|
|
Adjusted Net
Income - Diluted
|
$ 56,543
|
|
$ 44,649
|
|
$ 43,645
|
|
$ 37,463
|
|
$ 55,541
|
|
$ 37,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Net Income
per Holding Unit, GAAP basis
|
$
0.59
|
|
$
0.45
|
|
$
0.44
|
|
$
0.38
|
|
$
0.62
|
|
$
0.32
|
|
|
Impact of AB non-GAAP
adjustments
|
(0.02)
|
|
-
|
|
0.01
|
|
0.01
|
|
(0.02)
|
|
0.08
|
|
|
Adjusted Diluted
Net Income per Holding Unit
|
$
0.57
|
|
$
0.45
|
|
$
0.45
|
|
$
0.39
|
|
$
0.60
|
|
$
0.40
|
|
AB
L.P.
|
RECONCILIATION OF
GAAP FINANCIAL RESULTS TO ADJUSTED FINANCIAL RESULTS
|
|
Twelve Months
Ended
|
|
December
31,
|
US $ Thousands,
unaudited
|
2014
|
|
2013
|
Net Revenues, GAAP
basis
|
$ 3,005,366
|
|
$ 2,915,047
|
Exclude:
|
|
|
|
Long-term incentive
compensation-related investment (gains)
|
(2,184)
|
|
(16,842)
|
Long-term incentive
compensation-related dividends and interest
|
(3,083)
|
|
(2,557)
|
90% of consolidated venture
capital fund investment (gains)
|
(1,165)
|
|
(10,609)
|
Distribution-related
payments
|
(413,054)
|
|
(426,824)
|
Amortization of deferred
sales commissions
|
(41,508)
|
|
(41,279)
|
Pass-through fees &
expenses
|
(38,852)
|
|
(32,879)
|
Adjusted Net
Revenues
|
$ 2,505,520
|
|
$ 2,384,057
|
|
|
|
|
Operating Income,
GAAP basis
|
$
608,621
|
|
$
564,251
|
Exclude:
|
|
|
|
Long-term incentive
compensation-related items
|
210
|
|
(405)
|
Real estate
charges
|
52
|
|
28,424
|
Acquisition-related
expenses
|
3,448
|
|
3,373
|
Contingent payment
arrangements
|
(4,375)
|
|
(10,840)
|
Sub-total of non-GAAP adjustments
|
(665)
|
|
20,552
|
Less: Net income
(loss) of consolidated entities attributable to non-controlling
interests
|
456
|
|
9,746
|
Adjusted Operating
Income
|
$
607,500
|
|
$
575,057
|
Operating Margin, GAAP basis excl. non-controlling
interests
|
20.2%
|
|
19.0%
|
Adjusted Operating Margin
|
24.2%
|
|
24.1%
|
AB Holding
L.P.
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP EPU TO ADJUSTED EPU
|
|
|
|
|
Twelve Months
Ended
|
|
December
31,
|
$ Thousands except
per Unit amounts, unaudited
|
2014
|
|
2013
|
|
|
|
|
Net Income -
Diluted, GAAP basis
|
$
182,350
|
|
$
166,668
|
Impact on net income
of AB non-GAAP adjustments
|
(20)
|
|
6,837
|
Adjusted Net
Income - Diluted
|
$
182,330
|
|
$
173,505
|
|
|
|
|
Diluted Net Income
per Holding Unit, GAAP basis
|
$
1.86
|
|
$
1.71
|
Impact of AB non-GAAP
adjustments
|
-
|
|
0.07
|
Adjusted Diluted
Net Income per Holding Unit
|
$
1.86
|
|
$
1.78
|
AB
Notes to Condensed Consolidated
Statements of Income and Supplemental Information
(Unaudited)
Adjusted Net Revenues
Adjusted net revenues exclude
investment gains and losses and dividends and interest on employee
long-term incentive compensation-related investments, and 90% of
the investment gains and losses of our consolidated venture capital
fund attributable to non-controlling interests. In addition,
adjusted net revenues offset distribution-related payments to third
parties as well as amortization of deferred sales commissions
against distribution revenues. We believe offsetting net revenues
by distribution-related payments is useful for our investors and
other users of our financial statements because such presentation
appropriately reflects the nature of these costs as pass-through
payments to third parties who perform functions on behalf of our
sponsored mutual funds and/or shareholders of these funds. We
offset amortization of deferred sales commissions against net
revenues because such costs, over time, essentially offset our
distribution revenues. We also exclude pass-through expenses we
incur (primarily through our transfer agency) that are reimbursed
and recorded as fees in revenues. During the third quarter of 2014,
we reclassified certain other promotion and servicing expenses into
distribution-related payments and identified additional
pass-through expenses that were excluded from adjusted net
revenues. As a result, we revised prior period's adjusted net
revenues to conform to the current period's presentation. These
fees have no impact on operating income, but they do have an impact
on our operating margin. As such, we exclude these fees from
adjusted net revenues.
Adjusted Operating Income
Adjusted operating income
represents operating income on a US GAAP basis excluding (1) the
impact on net revenues and compensation expense of the investment
gains and losses (as well as the dividends and interest) associated
with employee long-term incentive compensation-related investments,
(2) real estate charges, (3) acquisition-related expenses, (4)
adjustments to contingent payment arrangements and (5) the net
income or loss of consolidated entities attributable to
non-controlling interests.
Prior to 2009, a significant portion of employee compensation
was in the form of employee long-term incentive compensation awards
that were notionally invested in AB investment services and
generally vested over a period of four years. AB economically
hedged the exposure to market movements by purchasing and holding
these investments on its balance sheet. All such investments had
vested by year-end 2012 and the investments have been distributed
to the participants, except for those investments with respect to
which the participant elected a long-term deferral. Fluctuation in
the value of these investments is recorded within investment gains
and losses on the income statement and also impacts compensation
expense. Management believes it is useful to reflect the offset
achieved from economically hedging the investments' market exposure
in the calculation of adjusted operating income and adjusted
operating margin. The non-GAAP measures exclude gains and losses
and dividends and interest on employee long-term incentive
compensation-related investments included in revenues and
compensation expense.
Real estate charges have been excluded because they are not
considered part of our core operating results when comparing
financial results from period to period and to industry peers.
Acquisition-related expenses, primarily severance and
professional fees incurred as a result of acquisitions in the
fourth quarter of 2013 and the second quarter of 2014, have been
excluded because they are not considered part of our core operating
results when comparing results from period to period and to
industry peers.
The recording of a change in estimate of the contingent
consideration payable relating to contingent payment arrangements
associated with a 2010 acquisition is not considered part of our
core operating results and, accordingly, has been excluded.
Most of the net income or loss of consolidated entities
attributable to non-controlling interests relates to the 90%
limited partner interests held by third parties in our consolidated
venture capital fund. We own a 10% limited partner interest in the
fund. Because we are the general partner of the venture capital
fund and are deemed to have a controlling interest, US GAAP
requires us to consolidate the financial results of the fund.
However, recognizing 100% of the gains or losses in operating
income while only retaining 10% is not reflective of our underlying
financial results at the operating income level. As a result, we
are excluding the 90% limited partner interests we do not own from
our adjusted operating income. Similarly, net income of joint
ventures attributable to non-controlling interests, although not
significant, is excluded because it does not reflect the economic
interest attributable to AB.
Adjusted Operating Margin
Adjusted operating margin
allows us to monitor our financial performance and efficiency from
period to period without the volatility noted above in our
discussion of adjusted operating income and to compare our
performance to industry peers on a basis that better reflects our
performance in our core business. Adjusted operating margin is
derived by dividing adjusted operating income by adjusted net
revenues.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/alliancebernstein-holding-lp-announces-fourth-quarter-results-300035158.html
SOURCE AB