Attached files
| file | filename |
|---|---|
| 8-K - ALLIANCEBERNSTEIN L.P. 8-K 8-2-2010 - ALLIANCEBERNSTEIN L.P. | form8-k.htm |
| EX-99.03 - EXHIBIT 99.03 - ALLIANCEBERNSTEIN L.P. | ex99_03.htm |
| EX-99.01 - EXHIBIT 99.01 - ALLIANCEBERNSTEIN L.P. | ex99_01.htm |
2Q10 Earnings Presentation
AllianceBernstein.com
Aug 2, 2010
Peter S. Kraus
Chairman & Chief Executive Officer
David A. Steyn
Chief Operating Officer
John B. Howard
Chief Financial Officer
Second Quarter 2010 Review
2Q10 Earnings Presentation
2
AllianceBernstein.com
Certain statements provided by management in this presentation are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of
1995. Such forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from future results
expressed or implied by such forward-looking statements. The most significant of these factors include, but are not limited to, the following: the performance of
financial markets, the investment performance of sponsored investment products and separately-managed accounts, general economic conditions, industry trends,
future acquisitions, competitive conditions, and current and proposed government regulations, including changes in tax regulations and rates and the manner in which
the earnings of publicly-traded partnerships are taxed. AllianceBernstein cautions readers to carefully consider such factors. Further, such forward-looking statements
speak only as of the date on which such statements are made; AllianceBernstein undertakes no obligation to update any forward-looking statements to reflect events
or circumstances after the date of such statements. For further information regarding these forward-looking statements and the factors that could cause actual results
to differ, see “Risk Factors” and “Cautions Regarding Forward-Looking Statements” in AllianceBernstein’s Form 10-K for the year ended December 31, 2009 and
subsequent Forms 10-Q. Any or all of the forward-looking statements made in this presentation, Form 10-K, Form 10-Q, other documents AllianceBernstein files with
or furnishes to the SEC, and any other public statements issued by AllianceBernstein, may turn out to be wrong. It is important to remember that other factors besides
those listed in “Risk Factors” and “Cautions Regarding Forward-Looking Statements”, and those listed below, could also adversely affect AllianceBernstein’s financial
condition, results of operations and business prospects.
1995. Such forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from future results
expressed or implied by such forward-looking statements. The most significant of these factors include, but are not limited to, the following: the performance of
financial markets, the investment performance of sponsored investment products and separately-managed accounts, general economic conditions, industry trends,
future acquisitions, competitive conditions, and current and proposed government regulations, including changes in tax regulations and rates and the manner in which
the earnings of publicly-traded partnerships are taxed. AllianceBernstein cautions readers to carefully consider such factors. Further, such forward-looking statements
speak only as of the date on which such statements are made; AllianceBernstein undertakes no obligation to update any forward-looking statements to reflect events
or circumstances after the date of such statements. For further information regarding these forward-looking statements and the factors that could cause actual results
to differ, see “Risk Factors” and “Cautions Regarding Forward-Looking Statements” in AllianceBernstein’s Form 10-K for the year ended December 31, 2009 and
subsequent Forms 10-Q. Any or all of the forward-looking statements made in this presentation, Form 10-K, Form 10-Q, other documents AllianceBernstein files with
or furnishes to the SEC, and any other public statements issued by AllianceBernstein, may turn out to be wrong. It is important to remember that other factors besides
those listed in “Risk Factors” and “Cautions Regarding Forward-Looking Statements”, and those listed below, could also adversely affect AllianceBernstein’s financial
condition, results of operations and business prospects.
The forward-looking statements referred to in the preceding paragraph include statements regarding:
<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.
and, accordingly, the possibility exists that not all mandates will be funded in the amounts and at the times currently anticipated.
< Our belief that our equity portfolios, which are exposed to companies with very attractive cash flows and growth characteristics, should capitalize on
global growth: We cannot predict the timing or degree of global market growth, nor our absolute or relative investment performance for our clients. The actual
performance of the capital markets and other factors beyond our control will affect our investment success for clients and asset flows.
global growth: We cannot predict the timing or degree of global market growth, nor our absolute or relative investment performance for our clients. The actual
performance of the capital markets and other factors beyond our control will affect our investment success for clients and asset flows.
<Our confidence that executing on our strategy of delivering long-term investment performance, developing innovative investment solutions, expanding
our client base and motivating our employees will ultimately lead to success for all AllianceBernstein stakeholders: Changes and volatility in political,
economic, capital market or industry conditions can result in changes in demand for our products and services or impact the value of our assets under management,
all of which may significantly hinder our ability to execute on our strategy.
our client base and motivating our employees will ultimately lead to success for all AllianceBernstein stakeholders: Changes and volatility in political,
economic, capital market or industry conditions can result in changes in demand for our products and services or impact the value of our assets under management,
all of which may significantly hinder our ability to execute on our strategy.
<Our intention to engage in additional open market purchases of Holding Units, from time to time, to help fund anticipated obligations under our incentive
compensation award program: The number of Holding Units needed in future periods to make incentive compensation awards is dependent upon various factors,
some of which are beyond our control, including the fluctuation in the price of a Holding Unit.
compensation award program: The number of Holding Units needed in future periods to make incentive compensation awards is dependent upon various factors,
some of which are beyond our control, including the fluctuation in the price of a Holding Unit.
<Our determination that, based on expected revenues for the year, employee compensation expense should range between 45% and 50% of our adjusted
revenues: The revenues we generate during 2010 are dependent upon the performance of the capital markets, our investment performance for our clients, general
economic and regulatory conditions, and other factors that may be beyond our control. Aggregate employee compensation reflects employee performance and
competitive compensation levels. Fluctuations in our revenues and/or changes in competitive compensation levels could result in employee compensation expense
being outside of this range.
revenues: The revenues we generate during 2010 are dependent upon the performance of the capital markets, our investment performance for our clients, general
economic and regulatory conditions, and other factors that may be beyond our control. Aggregate employee compensation reflects employee performance and
competitive compensation levels. Fluctuations in our revenues and/or changes in competitive compensation levels could result in employee compensation expense
being outside of this range.
<Our anticipation that the proposed 12b-1 fee-related rule changes will not have a material effect on us: The impact of this rule change is dependant upon the
final rules adopted by the SEC, any phase-in or grandfathering period, and any other changes made with respect to share class distribution arrangements.
final rules adopted by the SEC, any phase-in or grandfathering period, and any other changes made with respect to share class distribution arrangements.
Cautions Regarding Forward-Looking Statements
2Q10 Earnings Presentation
3
AllianceBernstein.com
Benchmark MSCI World (Cap, UH, net) MSCI EAFE (Cap, UH, net) Russell 1000 Value
Institutional Equity Composites vs. Benchmarks (Percent)
Performance is preliminary as of June 30, 2010.
The information in this table is provided solely for use in connection with this presentation, and is not directed toward existing or potential investment advisory clients of AllianceBernstein.
Investment performance of composites is presented after investment management fees.
2Q10
2010 YTD
2Q10
2010 YTD
2Q10
2010 YTD
Institutional Fixed Income Composites vs. Benchmarks (Percent)
Benchmark Custom Index Barclays Global Aggregate JMP EMBI Global
Bond Index (Unhedged)
Strategic Core Plus
Global Plus
Emerging Market Debt
Relative Investment Performance
2Q10 Earnings Presentation
4
AllianceBernstein.com
(1) Approximately $70 billion of Blend Strategies AUM are reported in their respective services.
(2) Includes index, structured, asset allocation services and other non-actively managed AUM.
In US dollars billions
Total ($24.0) ($12.9) ($16.8) ($6.4) ($4.7)
(2)
Net Flows By Investment Service(1)
2Q10 Earnings Presentation
5
AllianceBernstein.com
In US dollars billions
Total: ($24.0) ($12.9) ($16.8) ($6.4) ($4.7)
($0.1)
Net Flows By Distribution Channel
2Q10 Earnings Presentation
6
AllianceBernstein.com
In US dollars billions
$7.2
$13.2
$18.8
$16.1
$14.6
Gross Sales
2Q10 Earnings Presentation
7
AllianceBernstein.com
In US dollars billions
Retail: Asset Flows for Trailing Five Quarters
2Q10 Earnings Presentation
8
AllianceBernstein.com
In US dollars billions
Private Client: Asset Flows for Trailing Five Quarters
2Q10 Earnings Presentation
9
AllianceBernstein.com
In US dollars billions
Institutions: Asset Flows for Trailing Five Quarters
2Q10 Earnings Presentation
10
AllianceBernstein.com
< Revenue up 6% compared to prior year quarter and 1Q10 as both US and European operations
grew revenue; market backdrop decelerated in June and into July
grew revenue; market backdrop decelerated in June and into July
< Continue to make strategic investments to grow SCB capabilities and reach:
= Asia:
<Six senior analysts now onboard
Bernstein Research Services
2Q10 Earnings Presentation
11
AllianceBernstein.com
In US dollars millions (excluding per-Unit amounts)
Please refer to pages 36-40 for additional information on the reconciliation of GAAP financial results to adjusted financial results
Percentages are calculated using expenses rounded to the nearest thousand.
(1) Final Federated trail payment
|
|
2Q
2010 |
2Q
2009 |
Percent
Change |
1Q
2010 |
Percent
Change |
|
Net Revenues
|
$688
|
$721
|
(5%)
|
$725
|
(5%)
|
|
Operating Expenses
|
580
|
588
|
(1%)
|
585
|
(1%)
|
|
Operating Income
|
108
|
133
|
(19%)
|
140
|
(23%)
|
|
Non-Operating Income(1)
|
2
|
6
|
(62%)
|
4
|
(50%)
|
|
Income Before Income Taxes
|
110
|
139
|
(21%)
|
144
|
(24%)
|
|
Income Taxes
|
13
|
10
|
36%
|
13
|
-
|
|
Net Income
|
97
|
129
|
(25%)
|
131
|
(26%)
|
|
Net Loss (Income) of Consolidated Entities
Attributable to Non-Controlling Interests |
9
|
(1)
|
n/m
|
17
|
(44%)
|
|
Net Income Attributable to AllianceBernstein Unitholders
|
$106
|
$128
|
(17%)
|
$148
|
(28%)
|
|
AllianceBernstein Holding Diluted Net Income per Unit
|
$0.31
|
$0.41
|
(24%)
|
$0.46
|
(33%)
|
|
AllianceBernstein Holding Adjusted Diluted Net Income Per Unit
|
$0.38
|
$0.22
|
73%
|
$0.47
|
(19%)
|
Second Quarter 2010 Income Statement
2Q10 Earnings Presentation
12
AllianceBernstein.com
In US dollars millions
|
Operating
Margin |
1Q
09 |
2Q
09 |
3Q
09 |
4Q
09 |
1Q
10 |
2Q
10 |
|
GAAP*
|
7%
|
18%
|
24%
|
26%
|
22%
|
17%
|
|
Adjusted
|
8%
|
13%
|
23%
|
28%
|
24%
|
21%
|
< Management believes that adjusted financial metrics
provide more clarity around operating performance and
uses these metrics to evaluate and compare period-to-
period operating performance
provide more clarity around operating performance and
uses these metrics to evaluate and compare period-to-
period operating performance
< Major adjustments to GAAP results:
= Revenues:
< Exclude investment gains (losses) and dividends
and interest related to deferred compensation
investments
and interest related to deferred compensation
investments
< Net non-controlling interest of the Venture Capital
Fund
Fund
< Net distribution-related expenses
= Operating Income:
< Net P&L impact of investment gains (losses) and
dividends and interest related to deferred
compensation investments
dividends and interest related to deferred
compensation investments
< Net non-controlling interest of the Venture Capital
Fund
Fund
< Exclude real estate sub-lease charges
Please refer to pages 36-40 for additional information on the reconciliation of GAAP financial results to adjusted financial results
*GAAP operating income, less non-controlling interests
GAAP vs. Adjusted: Six Quarter Trend
2Q10 Earnings Presentation
13
AllianceBernstein.com
Percentages are calculated using revenues and expenses rounded to the nearest thousand.
In US dollars millions
(1) Includes investment (gains) losses and dividends and interest on deferred compensation-related investments and 90% of the investment (gains) losses of our
consolidated venture capital fund attributable to non-controlling interests
Please refer to pages 36-40 for additional information on the reconciliation of GAAP financial results to adjusted financial results
|
Revenues |
2Q
2010 |
2Q
2009 |
Percent
Change |
1Q
2010 |
Percent
Change |
|
Base Fees
|
$510
|
$447
|
14%
|
$509
|
-
|
|
Performance Fees
|
3
|
1
|
237%
|
3
|
11%
|
|
Bernstein Research
|
117
|
111
|
6%
|
111
|
6%
|
|
Distribution
|
83
|
65
|
29%
|
80
|
4%
|
|
Investment Gains (Losses)
|
(57)
|
65
|
n/m
|
(8)
|
605%
|
|
Other Revenues
|
33
|
34
|
(4%)
|
31
|
7%
|
|
Total Revenues
|
689
|
723
|
(5%)
|
726
|
(5%)
|
|
Less: Interest Expense
|
1
|
2
|
(13%)
|
1
|
66%
|
|
Net Revenues
|
$688
|
$721
|
(5%)
|
$725
|
(5%)
|
|
Investment (Gains) Losses(1)
|
45
|
(65)
|
n/m
|
5
|
824%
|
|
Distribution and Servicing Costs
|
(83)
|
(69)
|
21%
|
(79)
|
5%
|
|
Adjusted Net Revenues
|
$650
|
$587
|
11%
|
$651
|
-
|
Second Quarter 2010 Revenues
2Q10 Earnings Presentation
14
AllianceBernstein.com
Percentages are calculated using expenses rounded to the nearest thousand.
In US dollars millions
< Base Compensation increased versus 1Q10 as severance increased to $10M in 2Q10 from $5M in 1Q10
< Incentive Compensation decreased versus both prior periods due to lower amortization of mark-to-market of deferred compensation-
related investments
related investments
< Commissions, Fringes & Other for 2Q10 includes $7M of recruitment, compared to $2M in 2Q09 and $3M in 1Q10
< Promotion & Servicing increased versus both prior periods due primarily to higher distribution-related payments and client-related
conference and travel expenses
conference and travel expenses
< G&A decreased versus both prior periods due to a $12M real estate sub-lease charge taken in 1Q10 and higher class action claims
processing error-related expenses and greater foreign exchange losses in 2Q09
processing error-related expenses and greater foreign exchange losses in 2Q09
|
|
|
|
|
|
|
|
Operating Expenses
|
2Q
2010 |
2Q
2009 |
Percent
Change |
1Q
2010 |
Percent
Change |
|
Compensation & Benefits
|
|
|
|
|
|
|
Base Compensation
|
$110
|
$112
|
(2%)
|
$105
|
5%
|
|
Incentive Compensation
|
115
|
133
|
(13%)
|
126
|
(9%)
|
|
Commissions, Fringes & Other
|
88
|
80
|
10%
|
88
|
-
|
|
Total Compensation & Benefits
|
$313
|
$325
|
(4%)
|
$319
|
(2%)
|
|
Promotion & Servicing
|
133
|
115
|
15%
|
122
|
9%
|
|
General & Administrative
|
129
|
142
|
(9%)
|
138
|
(7%)
|
|
Other
|
5
|
6
|
(7%)
|
6
|
(2%)
|
|
Total Operating Expenses
|
$580
|
$588
|
(1%)
|
$585
|
(1%)
|
Second Quarter 2010 GAAP Operating Expenses
2Q10 Earnings Presentation
15
AllianceBernstein.com
In US dollars millions (excluding per-Unit amounts)
Please refer to pages 36-40 for additional information on the reconciliation of GAAP financial results to adjusted financial results
Percentages are calculated using revenues and expenses rounded to the nearest thousand.
(1) Net impact of investment (gains) losses and employee compensation related to the mark-to-market of deferred compensation balances
|
|
2Q
2010 |
2Q
2009 |
Percent
Change |
1Q
2010 |
Percent
Change |
|
AllianceBernstein L.P.
|
|
|
|
|
|
|
GAAP Operating Income
|
$108
|
$133
|
(19%)
|
$140
|
(23%)
|
|
Net P&L impact of mark-to-market of deferred
compensation(1) |
18
|
(55)
|
n/m
|
(11)
|
n/m
|
|
Real estate sub-lease charges
|
-
|
-
|
-
|
12
|
n/m
|
|
Net Loss (Income) of Consolidated Entities Attributable to
Non-Controlling Interests |
9
|
(1)
|
n/m
|
17
|
(44%)
|
|
Adjusted Operating Income
|
$135
|
$77
|
74%
|
$158
|
(15%)
|
|
|
|
|
|
|
|
|
Adjusted Net Revenues
|
$650
|
$587
|
11%
|
$651
|
-
|
|
GAAP Operating Margin, including non-controlling
interests |
17.0%
|
18.3%
|
|
21.6%
|
|
|
Adjusted Operating Margin
|
20.7%
|
13.2%
|
|
24.2%
|
|
|
|
|
|
|
|
|
|
AllianceBernstein Holding L.P.
|
|
|
|
|
|
|
Diluted Net Income per Unit, GAAP basis
|
$0.31
|
$0.41
|
(24%)
|
$0.46
|
(33%)
|
|
Adjusted Diluted Net Income per Unit
|
$0.38
|
$0.22
|
73%
|
$0.47
|
(19%)
|
Second Quarter 2010 GAAP to Adjusted Reconciliation
2Q10 Earnings Presentation
16
AllianceBernstein.com
Please refer to pages 36-40 for additional information on the reconciliation of GAAP financial results to adjusted financial results
$158
$135
($7)
($4)
($5)
($4)
($3)
In US dollars millions
($6)
$6
Adjusted Operating Income: 1Q10 versus 2Q10
2Q10 Earnings Presentation
17
AllianceBernstein.com
Q & A
AllianceBernstein Second Quarter 2010 Review
2Q10 Earnings Presentation
18
AllianceBernstein.com
Appendix
AllianceBernstein Second Quarter 2010 Review
2Q10 Earnings Presentation
19
AllianceBernstein.com
Performance is preliminary.
As of June 30, 2010
Investment performance of composites is presented after investment management fees. Periods of more than one year are annualized.
The information in this table is provided solely for use in connection with this presentation, and is not directed toward existing or potential investment advisory clients of AllianceBernstein.
Institutional Equity Composites vs. Benchmarks
|
|
|
Periods Ended June 30, 2010
|
|
|||
|
Service
|
2Q
2010 |
One
Year |
Three
Years |
Five
Years |
10
Years |
Benchmark
|
|
US Diversified Value
|
(2.2)
|
(2.4)
|
(3.1)
|
(2.2)
|
1.0
|
Russell 1000 Value
|
|
US Strategic Value
|
(2.9)
|
(0.5)
|
(6.7)
|
(3.7)
|
4.7
|
S&P 500
|
|
US Strategic Value
|
(3.1)
|
(3.0)
|
(4.2)
|
(2.9)
|
0.7
|
Russell 1000 Value
|
|
International Value
|
(3.7)
|
(3.3)
|
(5.8)
|
(2.5)
|
2.6
|
MSCI EAFE (Cap, UH)
|
|
International Strategic Value
|
(3.3)
|
(1.0)
|
(6.8)
|
(2.9)
|
N/A
|
MSCI EAFE (Cap, UH)
|
|
Global Value
|
(3.0)
|
(1.8)
|
(7.4)
|
(3.1)
|
4.3
|
MSCI World (Cap, UH)
|
|
Global Strategic Value
|
(2.8)
|
0.9
|
(9.3)
|
(4.0)
|
N/A
|
MSCI World (Cap, UH)
|
|
Emerging Markets Value
|
(4.1)
|
(0.4)
|
(2.7)
|
(2.3)
|
3.6
|
MSCI EM
|
Institutional Value Equity: Relative Performance
2Q10 Earnings Presentation
20
AllianceBernstein.com
Performance is preliminary.
As of June 30, 2010
Investment performance of composites is presented after investment management fees. Periods of more than one year are annualized.
The information in this table is provided solely for use in connection with this presentation, and is not directed toward existing or potential investment advisory clients of AllianceBernstein.
Institutional Equity Composites vs. Benchmarks
|
|
|
Periods Ended June 30, 2010
|
|
|||
|
Service
|
2Q
2010 |
One
Year |
Three
Years |
Five
Years |
10
Years |
Benchmark
|
|
Global Research Growth
|
(1.3)
|
(2.7)
|
(5.4)
|
(3.9)
|
(1.1)
|
MSCI World (net)
|
|
US Large Cap Growth
|
(2.8)
|
(4.8)
|
(1.3)
|
(1.0)
|
0.1
|
Russell 1000 Growth
|
|
Int'l Research Growth All Country
|
(0.3)
|
(1.0)
|
(1.9)
|
(0.6)
|
N/A
|
MSCI ACWI ex US (net)
|
|
US Research Growth
|
(1.7)
|
(5.4)
|
(2.3)
|
(2.0)
|
(1.9)
|
S&P 500 Index
|
|
US Thematic Research
|
0.4
|
(0.9)
|
1.8
|
(0.4)
|
0.8
|
S&P 500 Index
|
|
US Small Cap Growth
|
(0.8)
|
2.1
|
0.0
|
0.5
|
1.6
|
Russell 2000 Growth
|
|
Global Large Cap Growth
|
(1.3)
|
(2.4)
|
(2.5)
|
(2.1)
|
(3.6)
|
MSCI World (net)
|
|
Int'l Large Cap Growth
|
(1.0)
|
(1.0)
|
(2.7)
|
(2.8)
|
|
MSCI EAFE (net)
|
|
Emerging Markets Growth
|
(0.9)
|
(0.1)
|
(3.3)
|
(2.8)
|
(1.1)
|
MSCI EM (net)
|
|
(2.2)
|
Institutional Growth Equity: Relative Performance
2Q10 Earnings Presentation
21
AllianceBernstein.com
Performance is preliminary.
As of June 30, 2010
Investment performance of composites is presented after investment management fees. Periods of more than one year are annualized.
The information in this table is provided solely for use in connection with this presentation, and is not directed toward existing or potential investment advisory clients of AllianceBernstein.
Institutional Blend Strategies Equity Composites vs. Benchmarks
|
|
|
Periods Ended June 30, 2010
|
|
|||
|
Service
|
2Q
2010 |
One
Year |
Three
Years |
Five
Years |
10
Years |
Benchmark
|
|
Global Blend Strategies
|
(2.1)
|
(1.8)
|
(6.4)
|
(3.4)
|
N/A
|
MSCI World
|
|
International Blend Strategies
|
(2.1)
|
(1.6)
|
(3.8)
|
(2.6)
|
N/A
|
MSCI EAFE
|
|
US Blend Strategies
|
(3.3)
|
(3.2)
|
(2.5)
|
(2.0)
|
N/A
|
S&P 500
|
|
Emerging Markets Blend Strategies
|
(2.5)
|
(0.5)
|
(3.0)
|
(2.8)
|
N/A
|
MSCI EM
|
Institutional Blend Strategies: Relative Performance
2Q10 Earnings Presentation
22
AllianceBernstein.com
Performance is preliminary.
As of June 30, 2010
Investment performance of composites is presented after investment management fees. Periods of more than one year are annualized.
*The benchmarks listed are the current benchmarks for the investments service—certain benchmarks have evolved over time and therefore are time blended.
The information in this table is provided solely for use in connection with this presentation, and is not directed toward existing or potential investment advisory clients of AllianceBernstein.
Institutional Fixed Income Composites vs. Benchmarks*
|
|
|
Periods Ended June 30, 2010
|
|
|||
|
Service
|
2Q
2010 |
One
Year |
Three
Years |
Five
Years |
10
Years |
Benchmark
|
|
Corporate Bonds
|
(0.2)
|
2.2
|
(0.2)
|
(0.1)
|
0.1
|
Custom Corporate Index
|
|
Strategic Core Plus
|
(0.3)
|
6.7
|
0.1
|
0.4
|
N/A
|
Custom Index
|
|
Global Plus
|
0.3
|
6.8
|
(0.9)
|
(0.2)
|
N/A
|
Barclays Global Aggregate
Bond Index (Unhedged) |
|
Global Fixed Income
|
1.2
|
4.3
|
1.2
|
1.0
|
0.6
|
CitiGroup WGBI - Unhedged
|
|
Emerging Market Debt
|
(0.3)
|
7.1
|
1.2
|
1.7
|
2.7
|
JPM EMBI Global
|
|
Low Duration
|
0.1
|
4.4
|
(2.2)
|
(1.3)
|
(0.5)
|
Merrill Lynch U.S. Treasury (1-3 Years)
|
Institutional Fixed Income: Relative Performance
2Q10 Earnings Presentation
23
AllianceBernstein.com
Performance is preliminary.
As of June 30, 2010
Investment performance of composites is presented after investment management fees. Periods of more than one year are annualized.
*The Fully Diversified 60% stocks/40% bonds (simulation) is meant to be illustrative of the value generated by the "total solution" approach AllianceBernstein encourages for most clients: a
diversified allocation across investment portfolios of varying types aimed at optimizing return and volatility over time. The Bernstein Fully Diversified Portfolio is composed of specific proportions of
each of the products that follow, which were included in the simulation as of the following dates: Strategic Value—January 1, 1983; Strategic Growth—January 1, 1983 (ACM Large Cap Growth
used as a proxy for Strategic Growth through January 1, 2001; Strategic Growth used thereafter); Intermediate Municipal Bond Composite—January 1, 1983; Bernstein Tax-Managed International
Fund—July 1, 1992; Emerging Markets Fund—January 1, 1996; AllianceBernstein Institutional REIT Fund—July 1, 2001. The AllianceBernstein Institutional REIT Fund was removed from the
simulation on December 31, 2008. The portfolio was rebalanced quarterly through December 31, 2005; monthly thereafter. Simulated performance results have certain inherent limitations. The
results may not reflect the impact that certain material economic and market factors might have had on actual decision making if they were reflective of a managed account. No representation is
being made that any account will, or is likely to, achieve profits or losses similar to those described herein.
diversified allocation across investment portfolios of varying types aimed at optimizing return and volatility over time. The Bernstein Fully Diversified Portfolio is composed of specific proportions of
each of the products that follow, which were included in the simulation as of the following dates: Strategic Value—January 1, 1983; Strategic Growth—January 1, 1983 (ACM Large Cap Growth
used as a proxy for Strategic Growth through January 1, 2001; Strategic Growth used thereafter); Intermediate Municipal Bond Composite—January 1, 1983; Bernstein Tax-Managed International
Fund—July 1, 1992; Emerging Markets Fund—January 1, 1996; AllianceBernstein Institutional REIT Fund—July 1, 2001. The AllianceBernstein Institutional REIT Fund was removed from the
simulation on December 31, 2008. The portfolio was rebalanced quarterly through December 31, 2005; monthly thereafter. Simulated performance results have certain inherent limitations. The
results may not reflect the impact that certain material economic and market factors might have had on actual decision making if they were reflective of a managed account. No representation is
being made that any account will, or is likely to, achieve profits or losses similar to those described herein.
Source: Standard and Poor’s, Morgan Stanley, Lipper and AllianceBernstein
|
|
|
|
|
Periods Ended June 30, 2010
|
|||
|
Service
|
2Q
2010 |
One
Year |
Three
Years |
Five
Years |
10
Years |
|
Fully Diversified Simulation*
|
(8.5)
|
9.0
|
(6.9)
|
0.3
|
2.5
|
|
S&P 500
|
(11.4)
|
14.4
|
(9.8)
|
(0.8)
|
(1.6)
|
|
|
|
|
|
|
|
|
MSCI World (net)
|
(12.7)
|
10.2
|
(11.5)
|
0.1
|
(1.0)
|
|
|
|
|
|
|
|
|
Lipper Short/Int Blended Muni Fund
Avg |
1.3
|
6.0
|
4.0
|
3.2
|
3.9
|
|
|
Private Client: Absolute Performance
2Q10 Earnings Presentation
24
AllianceBernstein.com
Retail Mutual Funds vs. Lipper Averages
NOTE: The information in this table is provided solely for use in connection with this presentation, and is not directed toward existing or potential investment advisory clients of AllianceBernstein.
Investment performance of mutual funds is presented after investment management fees.
(1) Performance figures other than 2Q2010 and One Year are positively affected by class action settlement proceeds.
Source: AllianceBernstein and Lipper. Mutual Fund and Lipper performance data through 6/30/10.
|
|
|
Periods Ended June 30, 2010
|
|
|||
|
Service
|
2Q
2010 |
One
Year |
Three
Years |
Five
Years |
10
Years |
Lipper Average
|
|
International Value
|
(3.5)
|
(1.0)
|
(6.0)
|
(2.9)
|
N/A
|
International Large Cap Value
|
|
Growth & Income(1)
|
0.2
|
(5.8)
|
(1.3)
|
(1.3)
|
(2.1)
|
Large Cap Value
|
|
U.S. Small/Mid Cap Value
|
(3.0)
|
4.2
|
2.8
|
2.0
|
N/A
|
Small Cap Value
|
|
U.S. Value
|
(1.8)
|
(0.5)
|
(4.8)
|
(3.2)
|
N/A
|
Large Cap Value
|
|
Global Value
|
|
1.8
|
(4.9)
|
(1.4)
|
N/A
|
Global Large Cap Value
|
|
(2.8)
|
Retail Value Equity: Relative Performance
2Q10 Earnings Presentation
25
AllianceBernstein.com
Retail Mutual Funds vs. Lipper Averages
NOTE: The information in this table is provided solely for use in connection with this presentation, and is not directed toward existing or potential investment advisory clients of AllianceBernstein.
Investment performance of mutual funds is presented after investment management fees.
Investment performance of mutual funds is presented after investment management fees.
(1) Performance figures other than 2Q2010 and One Year are positively affected by class action settlement proceeds.
Source: AllianceBernstein, Morningstar, and Lipper. Mutual Fund, Morningstar, and Lipper performance data through 6/30/10.
|
|
|
Periods Ended June 30, 2010
|
|
|||
|
Service
|
2Q
2010 |
One
Year |
Three
Years |
Five
Years |
10
Years |
Lipper Average
|
|
Global Growth
|
(1.9)
|
(1.5)
|
|
(4.6)
|
N/A
|
Global Large-Cap Growth
|
|
Global Thematic Growth
|
(1.2)
|
(3.0)
|
1.9
|
(0.8)
|
(4.1)
|
Global Multi-Cap Growth
|
|
International Growth
|
(1.1)
|
1.1
|
(1.8)
|
(1.0)
|
1.9
|
International Large-Cap Growth
|
|
U.S. Large Cap Growth(1)
|
(2.4)
|
2.2
|
4.7
|
2.3
|
(1.3)
|
Large-Cap Growth
|
|
Emerging Markets
|
(1.3)
|
0.9
|
(2.6)
|
(2.8)
|
(2.9)
|
Equity Emerging Mkts Global
|
|
U.S. Growth(1)
|
0.6
|
1.8
|
(1.6)
|
(2.2)
|
(0.7)
|
Large-Cap Growth
|
|
U.S. Small Cap Growth
|
1.7
|
3.1
|
0.3
|
(1.5)
|
0.3
|
Small Cap Growth
|
|
(6.1)
|
Retail Growth Equity: Relative Performance
2Q10 Earnings Presentation
26
AllianceBernstein.com
Retail Fixed Income Funds vs. Lipper Averages
NOTE: The information in this table is provided solely for use in connection with this presentation, and is not directed toward existing or potential investment advisory clients of AllianceBernstein.
Investment performance of mutual funds is presented after investment management fees.
Source: AllianceBernstein, Morningstar, and Lipper. Mutual Fund, Morningstar, and Lipper performance data through 6/30/10.
|
|
|
Periods Ended June 30, 2010
|
|
|||
|
Service
|
2Q
2010 |
One
Year |
Three
Years |
Five
Years |
10
Years |
Lipper Average
|
|
Global High Yield Portfolio
|
4.5
|
14.4
|
4.4
|
2.9
|
(0.1)
|
Bond Global High Yield
|
|
American Income Portfolio
|
(0.3)
|
8.9
|
0.8
|
1.7
|
2.0
|
Bond USD
|
|
Global Bond
|
1.7
|
6.8
|
2.1
|
3.0
|
2.2
|
Global Income
|
|
High Income
|
|
7.5
|
5.9
|
4.6
|
|
High Current Yield
|
|
0.0
|
|
7.5
|
Retail Fixed Income: Relative Performance
2Q10 Earnings Presentation
27
AllianceBernstein.com
Retail Mutual Funds vs. Lipper Averages
NOTE: The information in this table is provided solely for use in connection with this presentation, and is not directed toward existing or potential investment advisory clients of AllianceBernstein.
Investment performance of mutual funds is presented after investment management fees.
Source: AllianceBernstein and Morningstar. Mutual fund and Morningstar performance data through 6/30/10.
|
|
|
Periods Ended June 30, 2010
|
|
|||
|
Service
|
2Q
2010 |
One
Year |
Three
Years |
Five
Years |
10
Years |
Lipper Average
|
|
Conservative Wealth
|
(0.8)
|
(0.9)
|
(1.0)
|
0.1
|
N/A
|
Mixed-Asset Target Alloc Consv
|
|
Balanced Wealth
|
(2.5)
|
1.9
|
(1.9)
|
0.0
|
N/A
|
Mixed-Asset Target Alloc Moderate
|
|
Wealth Appreciation
|
(2.4)
|
0.9
|
(2.2)
|
(1.4)
|
N/A
|
Global Multi-Cap Core
|
Wealth Strategies: Relative Performance
2Q10 Earnings Presentation
28
AllianceBernstein.com
In US dollars billions
(1) Transfers of certain client accounts were made among distribution channels resulting from changes in how these accounts are serviced by the firm.
|
|
Institutions
|
Retail
|
Private Client
|
Total
|
||||||||
|
Client Domicile:
|
US
|
Non-US
|
Total
|
US
|
Non-US
|
Total
|
US
|
Non-US
|
Total
|
US
|
Non-US
|
Total
|
|
Beginning of Period
|
$159.0
|
$138.0
|
$297.0
|
$86.7
|
$41.1
|
$127.8
|
$74.4
|
$2.1
|
$76.5
|
$320.1
|
$181.2
|
$501.3
|
|
Sales/New Accounts
|
1.7
|
6.4
|
8.1
|
3.1
|
5.5
|
8.6
|
2.0
|
0.1
|
2.1
|
6.8
|
12.0
|
18.8
|
|
Redemptions/Terminations
|
(3.7)
|
(3.6)
|
(7.3)
|
(3.2)
|
(3.2)
|
(6.4)
|
(1.5)
|
-
|
(1.5)
|
(8.4)
|
(6.8)
|
(15.2)
|
|
Net Cash Flows
|
(1.5)
|
(3.0)
|
(4.5)
|
(1.5)
|
(1.6)
|
(3.1)
|
(0.6)
|
(0.1)
|
(0.7)
|
(3.6)
|
(4.7)
|
(8.3)
|
|
Net Flows
|
(3.5)
|
(0.2)
|
(3.7)
|
(1.6)
|
0.7
|
(0.9)
|
(0.1)
|
(0.0)
|
(0.1)
|
(5.2)
|
0.5
|
(4.7)
|
|
Transfers(1)
|
(0.2)
|
-
|
(0.2)
|
-
|
-
|
-
|
0.2
|
-
|
0.2
|
-
|
-
|
-
|
|
Investment Performance
|
(11.7)
|
(10.8)
|
(22.5)
|
(8.0)
|
(2.7)
|
(10.7)
|
(5.5)
|
(0.2)
|
(5.7)
|
(25.2)
|
(13.7)
|
(38.9)
|
|
End of Period
|
$143.6
|
$127.0
|
$270.6
|
$77.1
|
$39.1
|
$116.2
|
$69.0
|
$1.9
|
$70.9
|
$289.7
|
$168.0
|
$457.7
|
Three-months ended 6/30/10 AUM Rollforward by Distribution Channel
2Q10 Earnings Presentation
29
AllianceBernstein.com
In US dollars billions
(1) Includes index, structured, asset allocation services and other non-actively managed AUM.
(2) Approximately $70 billion in Blend Strategies AUM are reported in their respective services.
|
|
Value Equity
|
Growth Equity
|
Fixed Income
|
Other(1)
|
Total
|
||||||||||
|
Client Domicile:
|
US
|
Non-US
|
Total
|
US
|
Non-US
|
Total
|
US
|
Non-US
|
Total
|
US
|
Non-US
|
Total
|
US
|
Non-US
|
Total
|
|
Beginning of Period
|
$105.6
|
$63.8
|
$169.4
|
$63.7
|
$27.5
|
$91.2
|
$113.9
|
$78.4
|
$192.3
|
$36.9
|
$11.5
|
$48.4
|
$320.1
|
$181.2
|
$501.3
|
|
Sales/New Accounts
|
2.9
|
1.6
|
4.5
|
1.0
|
0.3
|
1.3
|
2.5
|
9.5
|
12.0
|
0.4
|
0.6
|
1.0
|
6.8
|
12.0
|
18.8
|
|
Redemptions/Terminations
|
(4.0)
|
(1.8)
|
(5.8)
|
(2.3)
|
(1.8)
|
(4.1)
|
(2.0)
|
(3.0)
|
(5.0)
|
(0.1)
|
(0.2)
|
(0.3)
|
(8.4)
|
(6.8)
|
(15.2)
|
|
Net Cash Flows
|
(2.0)
|
(2.0)
|
(4.0)
|
(1.8)
|
(0.5)
|
(2.3)
|
(0.1)
|
(1.9)
|
(2.0)
|
0.3
|
(0.3)
|
-
|
(3.6)
|
(4.7)
|
(8.3)
|
|
Net Flows
|
(3.1)
|
(2.2)
|
(5.3)
|
(3.1)
|
(2.0)
|
(5.1)
|
0.4
|
4.6
|
5.0
|
0.6
|
0.1
|
0.7
|
(5.2)
|
0.5
|
(4.7)
|
|
Investment Performance
|
(15.3)
|
(9.6)
|
(24.9)
|
(8.2)
|
(3.4)
|
(11.6)
|
2.2
|
(1.0)
|
1.2
|
(3.9)
|
0.3
|
(3.6)
|
(25.2)
|
(13.7)
|
(38.9)
|
|
End of Period(2)
|
$87.2
|
$52.0
|
$139.2
|
$52.4
|
$22.1
|
$74.5
|
$116.5
|
$82.0
|
$198.5
|
$33.6
|
$11.9
|
$45.5
|
$289.7
|
$168.0
|
$457.7
|
Three-months ended 6/30/10 AUM Rollforward by Investment Service
2Q10 Earnings Presentation
30
AllianceBernstein.com
In US dollars billions
As of June 30, 2010
Retail
Institutions
Private Client
$270.6 $116.2 $70.9
AUM by Region
2Q10 Earnings Presentation
31
AllianceBernstein.com
Percentages are calculated using AUM rounded to the nearest million and revenues to the nearest thousand.
In US dollars
|
|
2Q
2010 |
2Q
2009 |
Percent
Change |
1Q
2010 |
Percent
Change |
|
Ending AUM ($ Billions)
|
$458
|
$447
|
2%
|
$501
|
(9%)
|
|
Average AUM ($ Billions)
|
$482
|
$437
|
10%
|
$490
|
(2%)
|
|
|
|
|
|
|
|
|
By Fee Type ($ Millions):
|
|
|
|
|
|
|
Base Fees
|
$510
|
$447
|
14%
|
$509
|
-
|
|
Performance Fees
|
3
|
1
|
237%
|
3
|
11%
|
|
Total
|
$513
|
$448
|
14%
|
$512
|
-
|
|
|
|
|
|
|
|
|
Base Fees By Channel ($ Millions):
|
|
|
|
|
|
|
Institutions
|
$186
|
$193
|
(4%)
|
$196
|
(6%)
|
|
Retail
|
158
|
122
|
29%
|
152
|
4%
|
|
Private Client
|
166
|
132
|
26%
|
161
|
3%
|
|
Total
|
$510
|
$447
|
14%
|
$509
|
-
|
Second Quarter 2010 Advisory Fees
2Q10 Earnings Presentation
32
AllianceBernstein.com
In US dollars millions
|
|
1Q
2009 |
2Q
2009 |
3Q
2009 |
4Q
2009 |
1Q
2010 |
2Q
2010 |
|
Revenues
|
|
|
|
|
|
|
|
Investment Gains (Losses)
|
($28)
|
$63
|
$71
|
$15
|
$11
|
($37)
|
|
Dividends
|
1
|
2
|
1
|
4
|
1
|
-
|
|
Total Revenues
|
($27)
|
$65
|
$72
|
$19
|
$12
|
($37)
|
|
Expenses
|
|
|
|
|
|
|
|
Amortization of Original Awards
|
$45
|
$39
|
$40
|
$36
|
$31
|
$31
|
|
Amortization of MTM - Prior Periods
|
(17)
|
(16)
|
(11)
|
(6)
|
(4)
|
(3)
|
|
Amortization of MTM - Current Quarter
|
(12)
|
25
|
28
|
8
|
4
|
(16)
|
|
% of Investment Gains (Losses)
|
43%
|
40%
|
39%
|
53%
|
36%
|
43%
|
|
Dividends
|
1
|
1
|
1
|
4
|
1
|
-
|
|
Sub-Total of Mutual Fund Expenses
|
17
|
49
|
58
|
42
|
32
|
12
|
|
Amortization of AB Units
|
11
|
10
|
11
|
19
|
23
|
24
|
|
Other
|
5
|
4
|
4
|
1
|
3
|
3
|
|
Total Expenses
|
$33
|
$63
|
$73
|
$62
|
$58
|
$39
|
|
Net P&L impact of Mutual Fund Grants
|
($44)
|
$16
|
$14
|
($23)
|
($20)
|
($49)
|
Six-Quarter Deferred Compensation Net P&L Trend
2Q10 Earnings Presentation
33
AllianceBernstein.com
In US dollars millions
|
Assets
|
June 30, 2010
|
Dec 31, 2009
|
|
Cash and cash equivalents
|
$670
|
$614
|
|
Cash and securities, segregated
|
945
|
985
|
|
Receivables, net
|
1,172
|
1,099
|
|
Investments:
|
|
|
|
Deferred compensation - related
|
331
|
401
|
|
Other
|
412
|
374
|
|
Goodwill
|
2,893
|
2,893
|
|
Intangible assets, net
|
213
|
224
|
|
Deferred sales commissions, net
|
83
|
90
|
|
Other (incl. furniture & equipment, net)
|
494
|
535
|
|
Total Assets
|
$7,213
|
$7,215
|
|
|
|
|
|
Liabilities and Capital
|
|
|
|
Liabilities:
|
|
|
|
Payables
|
$1,852
|
$1,670
|
|
Accounts payable and accrued expenses
|
310
|
278
|
|
Accrued compensation and benefits
|
438
|
316
|
|
Debt
|
79
|
249
|
|
Total Liabilities
|
2,679
|
2,513
|
|
|
|
|
|
Partners' capital attributable to AllianceBernstein
Unitholders |
4,390
|
4,530
|
|
Non-controlling interests in consolidated entities
|
144
|
172
|
|
Total Capital
|
4,534
|
4,702
|
|
Total Liabilities and Capital
|
$7,213
|
$7,215
|
Consolidated Balance Sheet
2Q10 Earnings Presentation
35
AllianceBernstein.com
Percentages are calculated using income, earnings and expenses rounded to the nearest thousand.
In US dollars millions (except per Unit amounts)
Please refer to pages 36-40 for additional information on the reconciliation of GAAP financial results to adjusted financial results
|
|
2Q
2010 |
2Q
2009 |
Percent
Change |
1Q
2010 |
Percent
Change |
|
AllianceBernstein
|
|
|
|
|
|
|
Net Income Attributable to AllianceBernstein
|
$106
|
$128
|
(17%)
|
$148
|
(28%)
|
|
Weighted Average Equity Ownership Interest
|
36.7%
|
34.4%
|
|
36.6%
|
|
|
AllianceBernstein Holding
|
|
|
|
|
|
|
Equity in Net Income
Attributable to AllianceBernstein |
$39
|
$44
|
(12%)
|
$54
|
(28%)
|
|
Income Taxes
|
7
|
6
|
23%
|
7
|
-
|
|
Net Income
|
$32
|
$38
|
(17%)
|
$47
|
(33%)
|
|
Diluted Net Income Per Unit, GAAP basis
|
$0.31
|
$0.41
|
(24%)
|
$0.46
|
(33%)
|
|
Distributions Per Unit
|
$0.31
|
$0.41
|
(24%)
|
$0.46
|
(33%)
|
|
Adjusted Diluted Net Income Per Unit
|
$0.38
|
$0.22
|
73%
|
$0.47
|
(19%)
|
AllianceBernstein Holding Financial Results
2Q10 Earnings Presentation
37
AllianceBernstein.com
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
||
|
$ thousands except per unit amounts, unaudited
|
6/30/10
|
|
3/31/10
|
|
12/31/09
|
|
9/30/09
|
|
6/30/09
|
|
3/31/09
|
|
Diluted Net Income, GAAP basis
|
$ 32,256
|
|
$ 47,858
|
|
$ 60,402
|
|
$ 62,836
|
|
$ 38,262
|
|
$ 6,735
|
|
Impact on net income of AllianceBernstein L.P. non-GAAP adjustments
|
6,572
|
|
1,257
|
|
(2,923)
|
|
(18,003)
|
|
(18,298)
|
|
1,589
|
|
Adjusted Diluted Net Income
|
$ 38,828
|
|
$ 49,115
|
|
$ 57,479
|
|
$ 44,833
|
|
$ 19,964
|
|
$ 8,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Net Income per Unit, GAAP basis
|
$ 0.31
|
|
$ 0.46
|
|
$ 0.62
|
|
$ 0.67
|
|
$ 0.41
|
|
$ 0.07
|
|
Impact of AllianceBernstein L.P. non-GAAP adjustments
|
0.07
|
|
0.01
|
|
(0.03)
|
|
(0.19)
|
|
(0.19)
|
|
0.02
|
|
Adjusted Diluted Net Income per Unit
|
$ 0.38
|
|
$ 0.47
|
|
$ 0.59
|
|
$ 0.48
|
|
$ 0.22
|
|
$ 0.09
|
AllianceBernstein Holding Adjusted Earnings Reconciliation
2Q10 Earnings Presentation
39
AllianceBernstein.com
|
|
Six Months Ended
|
||
|
$ thousands except per unit amounts, unaudited
|
6/30/10
|
|
6/30/09
|
|
Diluted Net Income, GAAP basis
|
$ 80,127
|
|
$ 44,988
|
|
Impact on net income of AllianceBernstein L.P. non-GAAP adjustments
|
7,486
|
|
(16,737)
|
|
Adjusted Diluted Net Income
|
$ 87,613
|
|
$ 28,251
|
|
|
|
|
|
|
Diluted Net Income per Unit, GAAP basis
|
$ 0.78
|
|
$ 0.49
|
|
Impact of AllianceBernstein L.P. non-GAAP adjustments
|
0.07
|
|
(0.18)
|
|
Adjusted Diluted Net Income per Unit
|
$ 0.85
|
|
$ 0.31
|
|
|
|
|
|
AllianceBernstein Holding Adjusted Earnings Reconciliation
2Q10 Earnings Presentation
40
AllianceBernstein.com
AllianceBernstein L.P.
Notes to Condensed Consolidated Statements of Income and Supplemental Information
(Unaudited)
Adjusted Net Revenues
Adjusted net revenues excludes investment gains and losses and dividends and interest on deferred compensation-related investments, and 90% of the investment gains and losses of our
consolidated venture capital fund attributable to non-controlling interests. In addition, adjusted net revenues offsets distribution-related payments to third parties as well as amortization of
deferred sales commissions against distribution revenues. We believe the offset of distribution-related payments from net revenues is useful for our investors and other users of our financial
statements because such presentation appropriately reflects the nature of these costs as pass-through payments to third parties who perform functions on behalf of our sponsored mutual
funds and/or shareholders of these funds. Amortization of deferred sales commissions is offset against net revenues because such costs, over time, offset distribution revenues earned by the
company.
consolidated venture capital fund attributable to non-controlling interests. In addition, adjusted net revenues offsets distribution-related payments to third parties as well as amortization of
deferred sales commissions against distribution revenues. We believe the offset of distribution-related payments from net revenues is useful for our investors and other users of our financial
statements because such presentation appropriately reflects the nature of these costs as pass-through payments to third parties who perform functions on behalf of our sponsored mutual
funds and/or shareholders of these funds. Amortization of deferred sales commissions is offset against net revenues because such costs, over time, offset distribution revenues earned by the
company.
Adjusted Operating Income
Adjusted operating income represents operating income on a GAAP basis (1) excluding the impact on net revenues and compensation expense of the mark-to-market gains and losses (as
well as the dividends and interest) associated with employee deferred compensation-related investments, (2) excluding real estate sub-lease charges and (3) including the net loss or income
of consolidated entities attributable to non-controlling interests.
well as the dividends and interest) associated with employee deferred compensation-related investments, (2) excluding real estate sub-lease charges and (3) including the net loss or income
of consolidated entities attributable to non-controlling interests.
(1) Prior to 2009, a large proportion of employee compensation was in the form of deferred awards that were notionally invested in AllianceBernstein investment services and generally vested
over a period of four years. AllianceBernstein has hedged the exposure to market movements by purchasing and holding these investments on its balance sheet. The full value of the
investments’ appreciation (depreciation) is recorded within investment gains and losses on the income statement in the current period. U.S. GAAP requires the appreciation (depreciation) in
the compensation liability to be expensed over the award vesting period in proportion to the vested amount of the award as part of compensation expense. This creates a timing difference
between the recognition of the compensation expense and the investment gain or loss impacting operating income which will reverse over the life of the award and net to zero at the end of the
multi-year vesting period. Although, during periods of high market volatility these timing differences have an impact on operating income and operating margin, over the life of the award any
impact is ultimately offset. Because these plans are economically hedged, management believes it is useful to reflect the offset ultimately achieved from hedging the investments’ market
exposure in the calculation of adjusted operating income, adjusted operating margin and adjusted diluted net income per Holding Unit, which will produce core operating results from period to
period. The non-GAAP measures exclude gains and losses and dividends and interest on deferred compensation-related investments included in revenues and compensation expense, and
thus eliminating the timing differences created by different treatment under U.S. GAAP of the market movement on the expense and the investments.
over a period of four years. AllianceBernstein has hedged the exposure to market movements by purchasing and holding these investments on its balance sheet. The full value of the
investments’ appreciation (depreciation) is recorded within investment gains and losses on the income statement in the current period. U.S. GAAP requires the appreciation (depreciation) in
the compensation liability to be expensed over the award vesting period in proportion to the vested amount of the award as part of compensation expense. This creates a timing difference
between the recognition of the compensation expense and the investment gain or loss impacting operating income which will reverse over the life of the award and net to zero at the end of the
multi-year vesting period. Although, during periods of high market volatility these timing differences have an impact on operating income and operating margin, over the life of the award any
impact is ultimately offset. Because these plans are economically hedged, management believes it is useful to reflect the offset ultimately achieved from hedging the investments’ market
exposure in the calculation of adjusted operating income, adjusted operating margin and adjusted diluted net income per Holding Unit, which will produce core operating results from period to
period. The non-GAAP measures exclude gains and losses and dividends and interest on deferred compensation-related investments included in revenues and compensation expense, and
thus eliminating the timing differences created by different treatment under U.S. GAAP of the market movement on the expense and the investments.
(2) Real estate sub-lease charges have been excluded because, often, they are relatively large in nature and are not considered part of our core operating results when comparing financial
results from period to period and to industry peers.
results from period to period and to industry peers.
(3) 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 partnership interest in the fund. Because we are the general partner of the venture capital fund and are deemed to have a controlling interest, U.S. GAAP
requires us to consolidate the financial results of the fund. However, recognizing 100% of the gains or losses in operating income while only retaining 10% is not reflective of our underlying
financial results at the operating income level. As a result, we are excluding the 90% limited partnership interests we do not own from our adjusted operating income. Similarly, net income of
joint ventures attributable to non-controlling interests, although not significant, is excluded because it does not reflect the economic interest attributable to AllianceBernstein.
capital fund. We own a 10% limited partnership interest in the fund. Because we are the general partner of the venture capital fund and are deemed to have a controlling interest, U.S. GAAP
requires us to consolidate the financial results of the fund. However, recognizing 100% of the gains or losses in operating income while only retaining 10% is not reflective of our underlying
financial results at the operating income level. As a result, we are excluding the 90% limited partnership interests we do not own from our adjusted operating income. Similarly, net income of
joint ventures attributable to non-controlling interests, although not significant, is excluded because it does not reflect the economic interest attributable to AllianceBernstein.
Adjusted Operating Margin
Adjusted operating margin allows us to monitor our financial performance and efficiency from period to period and to compare our performance to industry peers without the volatility noted
above in our discussion of adjusted operating income. Adjusted operating margin is derived by dividing adjusted operating income by adjusted net revenues.
above in our discussion of adjusted operating income. Adjusted operating margin is derived by dividing adjusted operating income by adjusted net revenues.
AllianceBernstein Adjusted Financial Results Reconciliation
