UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
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x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2018March 31, 2019
OR
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o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File No. 001-09818
ALLIANCEBERNSTEIN HOLDING L.P.
(Exact name of registrant as specified in its charter)
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Delaware | 13-3434400 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
1345 Avenue of the Americas, New York, NY 10105
(Address of principal executive offices)
(Zip Code)
(212) 969-1000
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer x | | Accelerated filer o |
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Non-accelerated filer o (Do not check if a smaller reporting company) | | Smaller reporting company o |
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| | Emerging growth company o |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
The number of units representing assignments of beneficial ownership of limited partnership interests outstanding as of June 30, 2018March 31, 2019 was 98,028,820.94,994,404.*
*includes 100,000 units of general partnership interest having economic interests equivalent to the economic interests of the units representing assignments of beneficial ownership of limited partnership interests.
ALLIANCEBERNSTEIN HOLDING L.P.
Index to Form 10-Q
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| Part I | |
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| FINANCIAL INFORMATION | |
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Item 1. | | |
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Item 2. | | |
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Item 3. | | |
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Item 4. | | |
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| Part II | |
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| OTHER INFORMATION | |
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Item 1. | | |
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Item 1A. | | |
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Item 2. | | |
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Item 3. | | |
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Item 4. | | |
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Item 5. | | |
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Item 6. | | |
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Part I
FINANCIAL INFORMATION
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Item 1. | Financial Statements |
ALLIANCEBERNSTEIN HOLDING L.P.
Condensed Statements of Financial Condition
(in thousands, except unit amounts)
(unaudited)
| | | June 30, 2018 | | December 31, 2017 | March 31, 2019 | | December 31, 2018 |
ASSETS | | | | | | |
Investment in AB | $ | 1,534,935 |
| | $ | 1,544,704 |
| $ | 1,428,703 |
| | $ | 1,490,701 |
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Other Assets | | 821 |
| | — |
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Total assets | $ | 1,534,935 |
| | $ | 1,544,704 |
| $ | 1,429,524 |
| | $ | 1,490,701 |
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LIABILITIES AND PARTNERS’ CAPITAL | | | | | | |
Liabilities: | | | | | | |
Other liabilities | $ | 629 |
| | $ | 1,154 |
| $ | 55 |
| | $ | 644 |
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Total liabilities | 629 |
| | 1,154 |
| 55 |
| | 644 |
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Commitments and contingencies (See Note 8) |
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Partners’ capital: | | | | | | |
General Partner: 100,000 general partnership units issued and outstanding | 1,386 |
| | 1,411 |
| 1,370 |
| | 1,385 |
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Limited partners: 97,928,820 and 96,361,989 limited partnership units issued and outstanding | 1,601,958 |
| | 1,590,776 |
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Limited partners: 94,894,404 and 96,558,278 limited partnership units issued and outstanding | | 1,490,581 |
| | 1,555,892 |
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AB Holding Units held by AB to fund long-term incentive compensation plans | (31,718 | ) | | (15,174 | ) | (24,464 | ) | | (27,759 | ) |
Accumulated other comprehensive loss | (37,320 | ) | | (33,463 | ) | (38,018 | ) | | (39,461 | ) |
Total partners’ capital | 1,534,306 |
| | 1,543,550 |
| 1,429,469 |
| | 1,490,057 |
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Total liabilities and partners’ capital | $ | 1,534,935 |
| | $ | 1,544,704 |
| $ | 1,429,524 |
| | $ | 1,490,701 |
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See Accompanying Notes to Condensed Financial Statements.
ALLIANCEBERNSTEIN HOLDING L.P.
Condensed Statements of Income
(in thousands, except per unit amounts)
(unaudited)
| | | | Three Months Ended June 30, | | Six Months Ended June 30, | | Three Months Ended March 31, |
| | 2018 | | 2017 | | 2018 | | 2017 | | 2019 | | 2018 |
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Equity in net income attributable to AB Unitholders | | $ | 65,388 |
| | $ | 47,947 |
| | $ | 131,086 |
| | $ | 97,613 |
| | $ | 52,638 |
| | $ | 65,698 |
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Income taxes | | 6,931 |
| | 6,206 |
| | 14,469 |
| | 11,962 |
| | 6,199 |
| | 7,538 |
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Net income | | $ | 58,457 |
| | $ | 41,741 |
| | $ | 116,617 |
| | $ | 85,651 |
| | $ | 46,439 |
| | $ | 58,160 |
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Net income per unit: | | | | | | | | | | | | |
Basic | | $ | 0.59 |
| | $ | 0.43 |
| | $ | 1.19 |
| | $ | 0.89 |
| | $ | 0.49 |
| | $ | 0.60 |
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Diluted | | $ | 0.59 |
| | $ | 0.43 |
| | $ | 1.19 |
| | $ | 0.89 |
| | $ | 0.49 |
| | $ | 0.60 |
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See Accompanying Notes to Condensed Financial Statements.
ALLIANCEBERNSTEIN HOLDING L.P.
Condensed Statements of Comprehensive Income
(in thousands)
(unaudited)
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| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2018 | | 2017 | | 2018 | | 2017 |
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Net income | $ | 58,457 |
| | $ | 41,741 |
| | $ | 116,617 |
| | $ | 85,651 |
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Other comprehensive income (loss): | | | | | | | |
Foreign currency translation adjustments, before reclassification and tax | (7,429 | ) | | 2,643 |
| | (3,981 | ) | | 5,842 |
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Less: reclassification adjustment for (losses) included in net income upon liquidation | (36 | ) | | — |
| | (36 | ) | | — |
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Foreign currency translation adjustments, before tax | (7,393 | ) | | 2,643 |
| | (3,945 | ) | | 5,842 |
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Income tax (expense) benefit | (5 | ) | | 97 |
| | (25 | ) | | 52 |
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Foreign currency translation adjustments, net of tax | (7,398 | ) | | 2,740 |
| | (3,970 | ) | | 5,894 |
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Unrealized gains on investments: | |
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Unrealized gains arising during period | — |
| | 9 |
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| | 4 |
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Less: reclassification adjustments for gains included in net income | — |
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Changes in unrealized gains on investments | — |
| | 9 |
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| | 4 |
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Income tax benefit | — |
| | 3 |
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| | 2 |
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Unrealized gains on investments, net of tax | — |
| | 12 |
| | — |
| | 6 |
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Changes in employee benefit related items: | |
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Amortization of prior service cost | 1 |
| | 8 |
| | 1 |
| | 10 |
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Recognized actuarial gain | 57 |
| | 421 |
| | 19 |
| | 533 |
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Changes in employee benefit related items | 58 |
| | 429 |
| | 20 |
| | 543 |
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Income tax benefit (expense) | 1 |
| | (4 | ) | | (40 | ) | | (31 | ) |
Employee benefit related items, net of tax | 59 |
| | 425 |
| | (20 | ) | | 512 |
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Other | 134 |
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| | 133 |
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Other comprehensive (loss) income | (7,205 | ) | | 3,177 |
| | (3,857 | ) | | 6,412 |
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Comprehensive income | $ | 51,252 |
| | $ | 44,918 |
| | $ | 112,760 |
| | $ | 92,063 |
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| Three Months Ended March 31, |
| 2019 | | 2018 |
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Net income | $ | 46,439 |
| | $ | 58,160 |
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Other comprehensive income: | | | |
Foreign currency translation adjustments, before tax | 1,152 |
| | 3,448 |
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Income tax expense | (2 | ) | | (20 | ) |
Foreign currency translation adjustments, net of tax | 1,150 |
| | 3,428 |
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Changes in employee benefit related items: | | | |
Amortization of prior service cost | 5 |
| | — |
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Recognized actuarial gain (loss) | 286 |
| | (38 | ) |
Changes in employee benefit related items | 291 |
| | (38 | ) |
Income tax benefit (expense) | 2 |
| | (41 | ) |
Employee benefit related items, net of tax | 293 |
| | (79 | ) |
Other | — |
| | (1 | ) |
Other comprehensive income | 1,443 |
| | 3,348 |
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Comprehensive income | $ | 47,882 |
| | $ | 61,508 |
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See Accompanying Notes to Condensed Financial Statements.
ALLIANCEBERNSTEIN HOLDING L.P.
Condensed Statements of Cash Flows
(in thousands)
(unaudited)
| | | Six Months Ended June 30, | Three Months Ended March 31, |
| 2018 | | 2017 | 2019 | | 2018 |
Cash flows from operating activities: | | | | | | |
Net income | $ | 116,617 |
| | $ | 85,651 |
| $ | 46,439 |
| | $ | 58,160 |
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Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | |
Equity in net income attributable to AB Unitholders | (131,086 | ) | | (97,613 | ) | (52,638 | ) | | (65,698 | ) |
Cash distributions received from AB | 167,861 |
| | 120,816 |
| 67,485 |
| | 88,671 |
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Changes in assets and liabilities: | | | | | | |
Increase in other assets | | (821 | ) | | — |
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Decrease in other liabilities | (525 | ) | | (72 | ) | (589 | ) | | (1,028 | ) |
Net cash provided by operating activities | 152,867 |
| | 108,782 |
| 59,876 |
| | 80,105 |
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Cash flows from investing activities: | | | | | | |
Investments in AB with proceeds from exercise of compensatory options to buy AB Holding Units | (8,314 | ) | | (9,246 | ) | (7,382 | ) | | (4,008 | ) |
Net cash used in investing activities | (8,314 | ) | | (9,246 | ) | (7,382 | ) | | (4,008 | ) |
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Cash flows from financing activities: | | | | | | |
Cash distributions to Unitholders | (154,064 | ) | | (109,371 | ) | (60,807 | ) | | (81,801 | ) |
Capital contributions from AB | 1,197 |
| | 589 |
| 931 |
| | 1,696 |
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Proceeds from exercise of compensatory options to buy AB Holding Units | 8,314 |
| | 9,246 |
| 7,382 |
| | 4,008 |
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Net cash used in financing activities | (144,553 | ) | | (99,536 | ) | (52,494 | ) | | (76,097 | ) |
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Change in cash and cash equivalents | — |
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| — |
| | — |
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Cash and cash equivalents as of beginning of period | — |
| | — |
| — |
| | — |
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Cash and cash equivalents as of end of period | $ | — |
| | $ | — |
| $ | — |
| | $ | — |
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See Accompanying Notes to Condensed Financial Statements.
ALLIANCEBERNSTEIN HOLDING L.P.
Notes to Condensed Financial Statements
June 30, 2018March 31, 2019
(unaudited)
The words “we” and “our” refer collectively to AllianceBernstein Holding L.P. (“AB Holding”) and AllianceBernstein L.P. and its subsidiaries (“AB”), or to their officers and employees. Similarly, the word “company” refers to both AB Holding and AB. Where the context requires distinguishing between AB Holding and AB, we identify which of them is being discussed.
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1. | Business Description, Organization and Basis of Presentation |
Business Description
AB Holding’s principal source of income and cash flow is attributable to its investment in AB limited partnership interests. The condensed financial statements and notes of AB Holding should be read in conjunction with the condensed consolidated financial statements and notes of AB included as an exhibit to this quarterly report on Form 10-Q and with AB Holding’s and AB’s audited financial statements included in AB Holding’s Form 10-K for the year ended December 31, 2017.2018.
AB provides research, diversified investment management and related services globally to a broad range of clients. Its principal services include:
Institutional Services – servicing its institutional clients, including private and public pension plans, foundations and endowments, insurance companies, central banks and governments worldwide, and affiliates such as AXA S.A. (“AXA”), AXA Equitable Holdings, Inc. ("EQH") and their respective subsidiaries, by means of separately-managed accounts, sub-advisory relationships, structured products, collective investment trusts, mutual funds, hedge funds and other investment vehicles.
Retail Services – servicing its retail clients, primarily by means of retail mutual funds sponsored by AB or an affiliated company, sub-advisory relationships with mutual funds sponsored by third parties, separately-managed account programs sponsored by financial intermediaries worldwide and other investment vehicles.
Private Wealth Management Services – servicing its private clients, including high-net-worth individuals and families, trusts and estates, charitable foundations, partnerships, private and family corporations, and other entities, by means of separately-managed accounts, hedge funds, mutual funds and other investment vehicles.
Bernstein Research Services – servicing institutional investors, such as pension fund, hedge fund and mutual fund managers, seeking high-quality fundamental research, quantitative services and brokerage-related services in equities and listed options.
AB also provides distribution, shareholder servicing, transfer agency services and administrative services to the mutual funds it sponsors.
AB’s high-quality, in-depth research is the foundation of its business. AB’s research disciplines include economic, fundamental equity, fixed income and quantitative research. In addition, AB has experts focused on multi-asset strategies, wealth management and alternative investments.
AB provides a broad range of investment services with expertise in:
Actively-managed equity strategies, with global and regional portfolios across capitalization ranges, concentration ranges and investment strategies, including value, growth and core equities;
Actively-managed traditional and unconstrained fixed income strategies, including taxable and tax-exempt strategies;
Passive management, including index and enhanced index strategies;
Alternative investments, including hedge funds, fund of funds and private equity (e.g., direct real estate investing and direct lending); and
Multi-asset solutions and services, including dynamic asset allocation, customized target-date funds and target-risk funds.
AB’s services span various investment disciplines, including market capitalization (e.g., large-, mid- and small-cap equities), term (e.g., long-, intermediate- and short-duration debt securities), and geographic location (e.g., U.S., international, global, emerging markets, regional and local), in major markets around the world.
Organization
During 2017, AXA a French holding company for the AXA Group, a worldwide leader in life, property and casualty and health insurance and asset management, announced its intention to pursue the sale of a minority stake in EQH the holding company for a diversified financial services organization, through an initial public offering ("IPO"). During the second quarter of 2018, EQHAXA completed the IPO, and asIPO. Since then, AXA has completed two additional offerings, most recently during the first quarter of 2019. As a result, AXA owns approximately 71.9%48.3% of the outstanding common stock of EQH as of June 30, 2018.March 31, 2019. AXA has announced its intention to sell its entire remaining interest in EQH over time, subject to market conditions and other factors. AXA is under no obligation to do so and retains the sole discretion to determine the timing of any future sales of shares of EQH common stock.
As of June 30, 2018,March 31, 2019, EQH owns approximately 3.8%4.2% of the issued and outstanding units representing assignments of beneficial ownership of limited partnership interests in AB Holding (“AB Holding Units”). AllianceBernstein Corporation (an indirect wholly-owned subsidiary of EQH, “General Partner”) is the general partner of both AB Holding and AB. AllianceBernstein Corporation owns 100,000 general partnership units in AB Holding and a 1% general partnership interest in AB.
As of June 30, 2018,March 31, 2019, the ownership structure of AB, expressed as a percentage of general and limited partnership interests, is as follows:
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EQH and its subsidiaries | 63.364.0 | % |
AB Holding | 35.935.2 |
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Unaffiliated holders | 0.8 |
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| 100.0 | % |
Including both the general partnership and limited partnership interests in AB Holding and AB, EQH and its subsidiaries have an approximate 64.7%65.6% economic interest in AB as of June 30, 2018.March 31, 2019.
Basis of Presentation
The interim condensed financial statements have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the interim results, have been made. The preparation of the condensed financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the condensed financial statements and the reported amounts of revenues and expenses during the interim reporting periods. Actual results could differ from those estimates. The condensed statement of financial condition as of December 31, 20172018 was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”).
AB Holding records its investment in AB using the equity method of accounting. AB Holding’s investment is increased to reflect its proportionate share of income of AB and decreased to reflect its proportionate share of losses of AB and cash distributions made by AB to its Unitholders. In addition, AB Holding's investment is adjusted to reflect its proportionate share of certain capital transactions of AB.
AB's ASC 606 Implementation
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, which outlines a single comprehensive revenue recognition model for all contracts with customers and supersedes most of the existing revenue recognition requirements. This standard had no impact on AB Holding’s statement of income. AB adopted this new standard on January 1, 2018 on a modified retrospective basis for contracts that were not completed as of the date of adoption.
On January 1, 2018, AB recorded a cumulative effect adjustment, net of tax, of a $35.0 million increase to partners’ capital in its condensed consolidated statement of financial condition. Accordingly, AB Holding , as a result of its 35.5% ownership interest in AB as of January 1, 2018, recorded a cumulative effect adjustment, net of tax, of $12.5 million to partners’ capital in its condensed statement of financial condition.
AB Holding is required to distribute all of its Available Cash Flow, as defined in the Amended and Restated Agreement of Limited Partnership of AB Holding (“AB Holding Partnership Agreement”), to its Unitholders pro rata in accordance with their percentage interests in AB Holding. Available Cash Flow is defined as the cash distributions AB Holding receives from AB minus such amounts as the General Partner determines, in its sole discretion, should be retained by AB Holding for use in its business (such as the payment of taxes) or plus such amounts as the General Partner determines, in its sole discretion, should be released from previously retained cash flow.
On July 26, 2018,April 25, 2019, the General Partner declared a distribution of $0.62$0.49 per unit, representing a distribution of Available Cash Flow for the three months ended June 30, 2018.March 31, 2019. Each general partnership unit in AB Holding is entitled to receive distributions equal to those received by each AB Holding Unit. The distribution is payable on August 23, 2018May 16, 2019 to holders of record at the close of business on AugustMay 6, 2018.2019.
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3. | Long-term Incentive Compensation Plans |
AB maintains several unfunded, non-qualified long-term incentive compensation plans, under which the company grants awards of restricted AB Holding Units to its employees and members of the Board of Directors, who are not employed by AB or by any of AB’s affiliates (“Eligible Directors”).
AB funds its restricted AB Holding Unit awards either by purchasing AB Holding Units on the open market or purchasing newly-issued AB Holding Units from AB Holding, and then keeping all of these AB Holding Units in a consolidated rabbi trust until delivering them or retiring them. In accordance with the AB Holding Partnership Agreement, when AB purchases newly-issued AB Holding Units from AB Holding, AB Holding is required to use the proceeds it receives from AB to purchase the equivalent number of newly-issued AB Units, thus increasing its percentage ownership interest in AB. AB Holding Units held in the consolidated rabbi trust are corporate assets in the name of the trust and are available to the general creditors of AB.
During the three and six months ended June 30,March 31, 2019 and 2018, AB purchased approximately 1.22.0 million and 1.20.1 million AB Holding Units for $32.9$58.6 million and $35.2$2.3 million, respectively (on a trade date basis). TheseThe 2019 amounts reflect open-market purchases of 1.21.9 million AB Holding Units for $32.9$55.2 million, during the second quarter of 2018 with the remainder relating to purchases of AB Holding Unitsunits from employees to allow them to fulfill statutory tax withholding requirements at the time of delivery of long-term incentive compensation awards. During the three and six months ended June 30, 2017, AB purchased 4.3 million and 5.7 million AB Holding Units for $96.7 million and $127.8 million, respectively (on a trade date basis). These amounts reflectThere were no open-market purchases during the first quarter of 3.7 million and 4.9 million AB Holding Units for $82.4 million and $110.3 million, respectively, with the remainder relating to purchases of AB Holding Units from employees to allow them to fulfill statutory tax withholding requirements at the time of delivery of long-term incentive compensation awards.2018.
Each quarter, AB considers whether to implement a plan to repurchase AB Holding Units pursuant to Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended (“Exchange Act”). A plan of this type allows a company to repurchase its shares at times when it otherwise might be prevented from doing so because of self-imposed trading blackout periods or because it possesses material non-public information. Each broker selected by AB has the authority under the terms and limitations specified in the plan to repurchase AB Holding Units on AB’s behalf in accordance with the terms of the plan. Repurchases are subject to regulations promulgated by the SEC as well as certain price, market volume and timing constraints specified in the plan. The plan adopted during the secondfourth quarter of 2018 expired at the close of business on July 25, 2018.February 12, 2019. There was no plan adopted during the first quarter of 2019. AB may adopt additional plans in the future to engage in open-market purchases of AB Holding Units to help fund anticipated obligations under its incentive compensation award program and for other corporate purposes.
During the first sixthree months of 20182019 and 2017,2018, AB granted to employees and Eligible Directors 2.40.1 million and 2.00.7 million restricted AB Holding Unit awards, respectively. AB used AB Holding Units repurchased during the periods and newly-issued AB Holding Units to fund these restricted AB Holding Unit awards.
During each of the first sixthree months of 20182019 and 2017,2018, AB Holding issued 0.50.3 million and 0.2 million AB Holding Units, respectively, upon exercise of options to buy AB Holding Units. AB Holding used the proceeds of $8.3$7.4 million and $9.2$4.0 million, respectively, received from employees as payment in cash for the exercise price to purchase the equivalent number of newly-issued AB Units.
Basic net income per unit is derived by dividing net income by the basic weighted average number of units outstanding for each period. Diluted net income per unit is derived by adjusting net income for the assumed dilutive effect of compensatory options (“Net income – diluted”) and dividing by the diluted weighted average number of units outstanding for each period.
| | | | Three Months Ended June 30, | | Six Months Ended June 30, | | Three Months Ended March 31, |
| | 2018 | | 2017 | | 2018 | | 2017 | | 2019 | | 2018 |
| | (in thousands, except per unit amounts) | (in thousands, except per unit amounts) |
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Net income – basic | | $ | 58,457 |
| | $ | 41,741 |
| | $ | 116,617 |
| | $ | 85,651 |
| | $ | 46,439 |
| | $ | 58,160 |
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Additional allocation of equity in net income attributable to AB resulting from assumed dilutive effect of compensatory options | | 115 |
| | 137 |
| | 259 |
| | 313 |
| | 26 |
| | 145 |
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Net income – diluted | | $ | 58,572 |
| | $ | 41,878 |
| | $ | 116,876 |
| | $ | 85,964 |
| | $ | 46,465 |
| | $ | 58,305 |
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Weighted average units outstanding – basic | | 98,368 |
| | 96,061 |
| | 97,673 |
| | 96,150 |
| | 95,144 |
| | 96,987 |
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Dilutive effect of compensatory options | | 272 |
| | 430 |
| | 303 |
| | 482 |
| | 72 |
| | 336 |
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Weighted average units outstanding – diluted | | 98,640 |
| | 96,491 |
| | 97,976 |
| | 96,632 |
| | 95,216 |
| | 97,323 |
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Basic net income per unit | | $ | 0.59 |
| | $ | 0.43 |
| | $ | 1.19 |
| | $ | 0.89 |
| | $ | 0.49 |
| | $ | 0.60 |
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Diluted net income per unit | | $ | 0.59 |
| | $ | 0.43 |
| | $ | 1.19 |
| | $ | 0.89 |
| | $ | 0.49 |
| | $ | 0.60 |
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For the three and six months ended June 30,March 31, 2019 and 2018, we excluded 850,15529,056 options and 1,211,906 options, respectively, from the diluted net income computation due to their anti-dilutive effect. For the three and six months ended June 30, 2017, we excluded 2,507,179 options and 2,452,6331,225,731 options, respectively, from the diluted net income computation due to their anti-dilutive effect.
Changes in AB Holding’s investment in AB during the six-monththree-month period ended June 30, 2018March 31, 2019 are as follows (in thousands):
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Investment in AB as of December 31, 2017 | $ | 1,544,704 |
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Equity in net income attributable to AB Unitholders | 131,086 |
|
Changes in accumulated other comprehensive income (loss) | (3,857 | ) |
Additional investments with proceeds from exercise of compensatory options to buy AB Holding Units | 8,314 |
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Cash distributions received from AB | (167,861 | ) |
Capital contributions from AB | (1,197 | ) |
AB Holding Units retired | (39,704 | ) |
AB Holding Units issued to fund long-term incentive compensation plans | 67,579 |
|
Change in AB Holding Units held by AB for long-term incentive compensation plans | (16,545 | ) |
Impact of ABLP's adoption of revenue recognition standard ASC 606 | 12,549 |
|
Other | (133 | ) |
Investment in AB as of June 30, 2018 | $ | 1,534,935 |
|
|
| | | |
Investment in AB as of December 31, 2018 | $ | 1,490,701 |
|
Equity in net income attributable to AB Unitholders | 52,638 |
|
Changes in accumulated other comprehensive income (loss) | 1,443 |
|
Additional investments with proceeds from exercise of compensatory options to buy AB Holding Units | 7,382 |
|
Cash distributions received from AB | (67,485 | ) |
Capital contributions from AB | (931 | ) |
AB Holding Units retired | (69,653 | ) |
AB Holding Units issued to fund long-term incentive compensation plans | 11,313 |
|
Change in AB Holding Units held by AB for long-term incentive compensation plans | 3,295 |
|
Investment in AB as of March 31, 2019 | $ | 1,428,703 |
|
Changes in AB Holding Units outstanding during the six-monththree-month period ended June 30, 2018March 31, 2019 are as follows:
|
| | |
Outstanding as of December 31, 20172018 | 96,461,98996,658,278 |
|
Options exercised | 488,513334,616 |
|
Units issued | 2,471,307381,305 |
|
Units retired | (1,392,9892,379,795 | ) |
Outstanding as of June 30, 2018March 31, 2019 | 98,028,82094,994,404 |
|
AB Holding is a “grandfathered” publicly-traded partnership (“PTP”) for federal tax purposes and, accordingly, is not subject to federal or state corporate income taxes. However, AB Holding is subject to the 4.0% New York City unincorporated business tax (“UBT”), net of credits for UBT paid by AB, and to a 3.5% federal tax on partnership gross income from the active conduct of a trade or business. AB Holding’s partnership gross income is derived from its interest in AB.
AB Holding’s federal income tax is computed by multiplying certain AB qualifying revenues (primarily U.S. investment advisory fees and brokerage commissions) by AB Holding’s ownership interest in AB, multiplied by the 3.5% tax rate. AB Holding Units in AB’s consolidated rabbi trust are not considered outstanding for purposes of calculating AB Holding’s ownership interest in AB.
| | | | Three Months Ended June 30, | | | | Six Months Ended June 30, | | | | Three Months Ended March 31, | | |
| | 2018 | | 2017 | | % Change | | 2018 | | 2017 | | % Change | | 2019 | | 2018 | | % Change |
| | (in thousands) | | (in thousands) |
Net income attributable to AB Unitholders | | $ | 181,665 |
| | $ | 135,103 |
| | 34.5 | % | | $ | 365,861 |
| | $ | 275,040 |
| | 33.0 | % | | $ | 149,114 |
| | $ | 184,196 |
| | (19.0 | )% |
Multiplied by: weighted average equity ownership interest | | 36.0 | % | | 35.5 | % | | | | 35.8 | % | | 35.5 | % | | | | 35.3 | % | | 35.7 | % | | |
Equity in net income attributable to AB Unitholders | | $ | 65,388 |
| | $ | 47,947 |
| | 36.4 |
| | $ | 131,086 |
| | $ | 97,613 |
| | 34.3 |
| | $ | 52,638 |
| | $ | 65,698 |
| | (19.9 | ) |
| | | | | | | | | | | | | | | | | | |
AB qualifying revenues | | $ | 643,009 |
| | $ | 586,478 |
| | 9.6 |
| | $ | 1,345,927 |
| | $ | 1,132,655 |
| | 18.8 |
| | $ | 586,550 |
| | $ | 702,919 |
| | (16.6 | ) |
Multiplied by: weighted average equity ownership interest for calculating tax | | 30.2 | % | | 29.7 | % | | | | 30.2 | % | | 29.6 | % | | | | 29.6 | % | | 30.1 | % | | |
Multiplied by: federal tax | | 3.5 | % | | 3.5 | % | | | | 3.5 | % | | 3.5 | % | | | | 3.5 | % | | 3.5 | % | | |
Federal income taxes | | 6,794 |
| | 6,099 |
| | | | 14,204 |
| | 11,750 |
| | | | 6,081 |
| | 7,410 |
| | |
State income taxes | | 137 |
| | 107 |
| | | | 265 |
| | 212 |
| | | | 118 |
| | 128 |
| | |
Total income taxes | | $ | 6,931 |
| | $ | 6,206 |
| | 11.7 |
| | $ | 14,469 |
| | $ | 11,962 |
| | 21.0 |
| | $ | 6,199 |
| | $ | 7,538 |
| | (17.8 | ) |
| | | | | | | | | | | | | | | | | | |
Effective tax rate | | 10.6 | % | | 12.9 | % | | | | 11.0 | % | | 12.3 | % | | | | 11.8 | % | | 11.5 | % | | |
In order to preserve AB Holding’s status as a “grandfathered” PTP for federal income tax purposes, management ensures that AB Holding does not directly or indirectly (through AB) enter into a substantial new line of business. If AB Holding were to lose its status as a “grandfathered” PTP, it would be subject to corporate income tax, which would reduce materially AB Holding’s net income and its quarterly distributions to AB Holding Unitholders.
| |
8. | Commitments and Contingencies |
Legal and regulatory matters described below pertain to AB and are included here due to their potential significance to AB Holding's investment in AB.
With respect to all significant litigation matters, we consider the likelihood of a negative outcome. If we determine the likelihood of a negative outcome is probable and the amount of the loss can be reasonably estimated, we record an estimated loss for the expected outcome of the litigation. If the likelihood of a negative outcome is reasonably possible and we are able to determine an estimate of the possible loss or range of loss in excess of amounts already accrued, if any, we disclose that fact together with the estimate of the possible loss or range of loss. However, it is often difficult to predict the outcome or estimate a possible loss or range of loss because litigation is subject to inherent uncertainties, particularly when plaintiffs allege substantial or indeterminate damages. Such is also the case when the litigation is in its early stages or when the litigation is highly complex or broad in scope. In these cases, we disclose that we are unable to predict the outcome or estimate a possible loss or range of loss.
AB may be involved in various matters, including regulatory inquiries, administrative proceedings and litigation, some of which may allege significant damages. It is reasonably possible that AB could incur losses pertaining to these matters, but management cannot currently estimate any such losses.
Management, after consultation with legal counsel, currently believes that the outcome of any individual matter that is pending or threatened, or all of them combined, will not have a material adverse effect on our results of operations, financial condition or liquidity. However, any inquiry, proceeding or litigation has an element of uncertainty; management cannot determine whether further developments relating to any individual matter that is pending or threatened, or all of them combined, will have a material adverse effect on our results of operations, financial condition or liquidity in any future reporting period.
| |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
AB Holding’s principal source of income and cash flow is attributable to its investment in AB Units. AB Holding’s interim condensed financial statements and notes and management’s discussion and analysis of financial condition and results of operations (“MD&A”) should be read in conjunction with those of AB included as an exhibit to this Form 10-Q. They also should be read in conjunction with AB’s audited financial statements and notes and MD&A included in AB Holding’s Form 10-K for the year ended December 31, 2017.2018.
Results of Operations
| | | | Three Months Ended June 30, | | | | Six Months Ended June 30, | | | Three Months Ended March 31, | | |
| | 2018 | | 2017 | | % Change | | 2018 | | 2017 | | % Change | 2019 | | 2018 | | % Change |
| | (in thousands, except per unit amounts) | (in thousands, except per unit amounts) |
| | | | | | | | | | | | | | | | | |
Net income attributable to AB Unitholders | | $ | 181,665 |
| | $ | 135,103 |
| | 34.5 | % | | $ | 365,861 |
| | $ | 275,040 |
| | 33.0 | % | $ | 149,114 |
| | $ | 184,196 |
| | (19.0 | )% |
Weighted average equity ownership interest | | 36.0 | % | | 35.5 | % | | | | 35.8 | % | | 35.5 | % | | | 35.3 | % | | 35.7 | % | | |
Equity in net income attributable to AB Unitholders | | 65,388 |
| | 47,947 |
| | 36.4 |
| | 131,086 |
| | 97,613 |
| | 34.3 |
| 52,638 |
| | 65,698 |
| | (19.9 | ) |
Income taxes | | 6,931 |
| | 6,206 |
| | 11.7 |
| | 14,469 |
| | 11,962 |
| | 21.0 |
| 6,199 |
| | 7,538 |
| | (17.8 | ) |
Net income of AB Holding | | $ | 58,457 |
| | $ | 41,741 |
| | 40.0 |
| | $ | 116,617 |
| | $ | 85,651 |
| | 36.2 |
| $ | 46,439 |
| | $ | 58,160 |
| | (20.2 | ) |
Diluted net income per AB Holding Unit | | $ | 0.59 |
| | $ | 0.43 |
| | 37.2 |
| | $ | 1.19 |
| | $ | 0.89 |
| | 33.7 |
| $ | 0.49 |
| | $ | 0.60 |
| | (18.3 | ) |
Distribution per AB Holding Unit(1) | | $ | 0.62 |
| | $ | 0.49 |
| | 26.5 |
| | $ | 1.35 |
| | $ | 0.95 |
| | 42.1 |
| $ | 0.49 |
| | $ | 0.73 |
| | (32.9 | ) |
________________________
| |
(1) | Distributions reflect the impact of AB’s non-GAAP adjustments. |
Net income for the three and six months ended June 30, 2018 increased $16.7March 31, 2019 decreased $11.7 million, and $31.0 million, respectively, due to higherlower net income attributable to AB Unitholders and highera slightly lower weighted average equity ownership interest.
AB Holding’s partnership gross income is derived from its interest in AB. AB Holding’s income taxes, which reflect a 3.5% federal tax on its partnership gross income from the active conduct of a trade or business, are computed by multiplying certain AB qualifying revenues (primarily U.S. investment advisory fees and brokerage commissions) by AB Holding’s ownership interest in AB, multiplied by the 3.5% tax rate. AB Holding’s effective tax rate was 10.6%11.8% in the secondfirst quarter of 20182019 compared to 12.9%11.5% during the secondfirst quarter of 2017. AB Holding's effective tax rate during the six months ended June 30, 2018 was 11.0%compared to 12.3%during the six months ended June 30, 2017.2018. See Note 7 to the condensed financial statements contained in Item 1 for the calculation of income tax expense.
Management Operating Metrics
As supplemental information, AB provides the performance measures “adjusted net revenues”,revenues,” “adjusted operating income” and “adjusted operating margin”,margin,” which are the principal metrics management uses in evaluating and comparing the period-to-period operating performance of AB. Management principally uses these metrics in evaluating performance because they present a clearer picture of AB's operating performance and allow management to see long-term trends without the distortion primarily caused by long-term incentive compensation-related mark-to-market adjustments, real estate consolidation charges and other adjustment items. Similarly, management believes that these management operating metrics help investors better understand the underlying trends in AB's results and, accordingly, provide a valuable perspective for investors. Such measures are not based on generally accepted accounting principles (“non-GAAP measures”). These non-GAAP measures are provided in addition to, and not as substitutes for, net revenues, operating income and operating margin, and they may not be comparable to non-GAAP measures presented by other companies. Management uses both GAAP and non-GAAP measures in evaluating the company’s financial performance. The non-GAAP measures alone may pose limitations because they do not include all of AB’s revenues and expenses. Further, adjusted diluted net income per AB Holding Unit is not a liquidity measure and should not be used in place of cash flow measures. See AB’s MD&A contained in Exhibit 99.1.
The impact of these adjustments on AB Holding’s net income and diluted net income per AB Holding Unit is as follows:
| | | | Three Months Ended June 30, | | Six Months Ended June 30, | | Three Months Ended March 31, |
| | 2018 | | 2017 | | 2018 | | 2017 | | 2019 | | 2018 |
| | (in thousands, except per Unit amounts) | | (in thousands, except per Unit amounts) |
| | | | | | | | | | | | |
AB non-GAAP adjustments, before taxes | | $ | 7,541 |
| | $ | 16,958 |
| | $ | 42,850 |
| | $ | 17,548 |
| | $ | 822 |
| | $ | 35,309 |
|
AB income tax expense on non-GAAP adjustments | | (292 | ) | | (1,077 | ) | | (1,135 | ) | | (1,088 | ) | |
AB income tax benefit (expense) on non-GAAP adjustments | | | 486 |
| | (907 | ) |
AB non-GAAP adjustments, after taxes | | 7,249 |
| | 15,881 |
| | 41,715 |
| | 16,460 |
| | 1,308 |
| | 34,402 |
|
AB Holding’s weighted average equity ownership interest in AB | | 36.0 | % | | 35.5 | % | | 35.8 | % | | 35.5 | % | | 35.3 | % | | 35.7 | % |
Impact on AB Holding’s net income of AB non-GAAP adjustments | | $ | 2,609 |
| | $ | 5,637 |
| | $ | 14,946 |
| | $ | 5,842 |
| | $ | 462 |
| | $ | 12,271 |
|
| | | | | | | | | | | | |
Net income – diluted, GAAP basis | | $ | 58,572 |
| | $ | 41,878 |
| | $ | 116,876 |
| | $ | 85,964 |
| | $ | 46,465 |
| | $ | 58,305 |
|
Impact on AB Holding’s net income of AB non-GAAP adjustments | | 2,609 |
| | 5,637 |
| | 14,946 |
| | 5,842 |
| | 462 |
| | 12,271 |
|
Adjusted net income – diluted | | $ | 61,181 |
| | $ | 47,515 |
| | $ | 131,822 |
| | $ | 91,806 |
| | $ | 46,927 |
| | $ | 70,576 |
|
| | | | | | | | | | | | |
Diluted net income per AB Holding Unit, GAAP basis | | $ | 0.59 |
| | $ | 0.43 |
| | $ | 1.19 |
| | $ | 0.89 |
| | $ | 0.49 |
| | $ | 0.60 |
|
Impact of AB non-GAAP adjustments | | 0.03 |
| | 0.06 |
| | 0.16 |
| | 0.06 |
| | — |
| | 0.13 |
|
Adjusted diluted net income per AB Holding Unit | | $ | 0.62 |
| | $ | 0.49 |
| | $ | 1.35 |
| | $ | 0.95 |
| | $ | 0.49 |
| | $ | 0.73 |
|
The degree to which AB's non-GAAP adjustments impact AB Holding's net income fluctuates based on AB Holding's ownership percentage in AB. The impact of AB non-GAAP adjustments in the first quarter of 2018 of $0.13 was primarily driven by the impact of AB's adoption of revenue recognition standard ASC 606.
Cash Distributions
AB Holding is required to distribute all of its Available Cash Flow, as defined in the AB Holding Partnership Agreement, to its Unitholders (including the General Partner). Available Cash Flow typically is the adjusted diluted net income per unit for the quarter multiplied by the number of units outstanding at the end of the quarter. Management anticipates that Available Cash Flow will continue to be based on adjusted diluted net income per unit, unless management determines, with the concurrence of the Board of Directors, that one or more adjustments that are made for adjusted net income should not be made with respect to the Available Cash Flow calculation. See Note 2 to the condensed financial statements contained in Item 1 for a description of Available Cash Flow.
Capital Resources and Liquidity
During the sixthree months ended June 30, 2018,March 31, 2019, net cash provided by operating activities was $152.9$59.9 million, compared to $108.8$80.1 million during the corresponding 20172018 period. The increasedecrease primarily resulted from higherlower cash distributions received from AB of $47.0$21.2 million.
During the sixthree months ended June 30, 2018,March 31, 2019, net cash used in investing activities was $8.3$7.4 million, compared to $9.2$4.0 million during the corresponding 20172018 period. The activity in both periods reflects the investments in AB with proceeds from exercises of compensatory options to buy AB Holding Units.
During the sixthree months ended June 30, 2018,March 31, 2019, net cash used in financing activities was $144.6$52.5 million, compared to $99.5$76.1 million during the corresponding 20172018 period. The increasedecrease primarily was due to higherlower cash distributions to Unitholders of $44.7 $21.0 million and higher proceeds from exercise of compensatory options to buy AB Holding units of $3.4million.
Management believes that AB Holding will have the resources it needs to meet its financial obligations as a result of the cash flow AB Holding realizes from its investment in AB.
Commitments and Contingencies
See Note 8 to the condensed financial statements contained in Item 1.
CAUTIONS REGARDING FORWARD-LOOKING STATEMENTS
Certain statements provided by management in this report and in the portion of AB’s Form 10-Q attached hereto as Exhibit 99.1 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, integration of acquired companies, competitive conditions and government regulations, including changes in tax regulations and rates and the manner in which the earnings of publicly-traded partnerships are taxed. We caution readers to carefully consider such factors. Further, these forward-looking statements speak only as of the date on which such statements are made; we undertake 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” in Part I, Item 1A of our Form 10-K for the year ended December 31, 20172018 and Part II, Item 1A in this Form 10-Q. Any or all of the forward-looking statements that we make in our Form 10-K, this Form 10-Q, other documents we file with or furnish to the SEC, and any other public statements we issue, may turn out to be wrong. It is important to remember that other factors besides those listed in “Risk Factors” and those listed below could also adversely impact our revenues, financial condition, results of operations and business prospects.
The forward-looking statements referred to in the preceding paragraph, most of which directly affect AB but also affect AB Holding because AB Holding’s principal source of income and cash flow is attributable to its investment in AB, include statements regarding:
Our belief that the cash flow AB Holding realizes from its investment in AB will provide AB Holding with the resources it needs to meet its financial obligations: AB Holding’s cash flow is dependent on the quarterly cash distributions it receives from AB. Accordingly, AB Holding’s ability to meet its financial obligations is dependent on AB’s cash flow from its operations, which is subject to the performance of the capital markets and other factors beyond our control.
Our financial condition and ability to access the public and private capital markets providing adequate liquidity for our general business needs: Our financial condition is dependent on our cash flow from operations, which is subject to the performance of the capital markets, our ability to maintain and grow client assets under management and other factors beyond our control. Our ability to access public and private capital markets on reasonable terms may be limited by adverse market conditions, our firm’s credit ratings, our profitability and changes in government regulations, including tax rates and interest rates.
The outcome of litigation: Litigation is inherently unpredictable, and excessive damage awards do occur. Though we have stated that we do not expect any pending legal proceedings to have a material adverse effect on our results of operations, financial condition or liquidity, any settlement or judgment with respect to a pending or future legal proceeding could be significant, and could have such an effect.
The possibility that we will engage in open market purchases of AB Holding Units to help fund anticipated obligations under our incentive compensation award program: The number of AB Holding Units AB may decide to buy in future periods, if any, to help fund incentive compensation awards depends on various factors, some of which are beyond our control, including the fluctuation in the price of an AB Holding Unit (NYSE: AB) and the availability of cash to make these purchases.
Our determination that adjusted employee compensation expense should not exceed 50% of our adjusted net revenues: Aggregate employee compensation reflects employee performance and competitive compensation levels. Fluctuations in our revenues and/or changes in competitive compensation levels could result in adjusted employee compensation expense exceeding 50% of our adjusted net revenues.
Our Relocation Strategy: While the expenses, expense savings and EPU impact we expect will result from our Relocation Strategy are presented with numerical specificity, and we believe these figures to be reasonable as of the date of this report, the uncertainties surrounding the assumptions on which our estimates are based create a significant risk that our current estimates may not be realized. These assumptions include:
the amount and timing of employee relocation costs, severance and overlapping compensation and occupancy costs we experience; and
the timing for execution of each phase of our relocation implementation plan.
Our 2020 Margin Target:Target While: We previously adopted a goal of increasing our adjusted operating margin to a target of 30% by 2020, subject to the assumptions, factors and contingencies described as part of the initial disclosure of this target. Our adjusted operating margin, which was 29.1% during 2018, declined to 24.1% during the first quarter of 2019.
Our AUM and, therefore, our investment advisory revenues, including performance-based fee revenues, are heavily dependent upon the level and volatility of the financial markets. Based upon our current outlook for the financial markets, which has changed since we initially forecast when establishing the 2020 Margin Target, is presented with numerical specificity, andpresently we do not believe the target to be reasonable as of the date of this report, the uncertainties surrounding the assumptions on whichthat achieving the 2020 Margin Target is based create a significant risk that these assumptions may not be realized. These assumptions include:
the levelslikely. However, we are taking additional actions to better align our expenses with our lower expected AUM and revenue amounts. We remain committed to achieving an adjusted operating margin of positive net flows into our investment services;
the level of growth (in terms of additional AUM)30% in our alternatives product business;
the rate of increaseyears subsequent to 2020 and will take continued actions in our fixed costs duethis regard, subject to inflation and similar factors, the transitional costs related to our relocation strategyprevailing market conditions and the timingevolution of such costs, the success we have in achieving planned new cost reductions (including those relating to our relocation strategy) and the timing of such cost reductions, and the investments we make in our business; and
general conditions of the markets in which our business operates, including modest appreciation in both equity and fixed income total investment returns.mix.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in AB Holding’s market risk from the information provided under “Quantitative and Qualitative Disclosures About Market Risk” in Part II, Item 7A of AB Holding's Form 10-K for the year ended December 31, 2017.2018.
| |
Item 4. | Controls and Procedures |
Disclosure Controls and Procedures
Each of AB Holding and AB maintains a system of disclosure controls and procedures that is designed to ensure that information required to be disclosed in our reports under the Exchange Act is (i) recorded, processed, summarized and reported in a timely manner, and (ii) accumulated and communicated to management, including the Chief Executive Officer ("CEO") and the Chief Financial Officer ("CFO"), to permit timely decisions regarding our disclosure.
As of the end of the period covered by this report, management carried out an evaluation, under the supervision and with the participation of the CEO and the CFO, of the effectiveness of the design and operation of the disclosure controls and procedures. Based on this evaluation, the CEO and the CFO concluded that the disclosure controls and procedures are effective.
Changes in Internal Control over Financial Reporting
No change in our internal control over financial reporting occurred during the secondfirst quarter of 20182019 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Part II
OTHER INFORMATION
See Note 8 to the condensed financial statements contained in Part I, Item 1.
In AB Holding’s 10-K for the year ended December 31, 2017, we indicated that AB’s revenues and results of operations depend on the market value and composition of AB’s AUM, which can fluctuate significantly based on various factors. We then described these factors, one of which, market factors, evolved significantly during the quarter ended June 30, 2018.
Market volatility accelerated during the second quarter of 2018, resulting from increasing concerns about global trade wars, the slowing pace of global growth, inflation and more aggressive monetary policy in the U.S. These factors may adversely impact the global economy and the capital markets, as a result of which AB’s AUM and revenues would be expected to decline.
Otherwise, thereThere have been no material changes in our risk factors from those disclosed in AB Holding’s Form 10-K for the year ended December 31, 2017.2018.
| |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
There were no AB Holding Units sold by AB Holding in the period covered by this report that were not registered under the Securities Act.
Each quarter, since the third quarter of 2011, AB has implemented plans to repurchase AB Holding Units pursuant to Rules 10b5-1 and 10b-18 under the Exchange Act. The plan adopted during the secondfourth quarter of 2018 expired at the close of business on July 25, 2018.February 12, 2019. There was no plan adopted during the first quarter of 2019. AB may adopt additional plans in the future to engage in open-market purchases of AB Holding Units to help fund anticipated obligations under the firm's incentive compensation award program and for other corporate purposes. See Note 3 to the condensed financial statements contained in Part 1, Item 1.
AB Holding Units bought by us or one of our affiliates during the secondfirst quarter of 20182019 are as follows:
ISSUER PURCHASES OF EQUITY SECURITIES
|
| | | | | | | | | | | | | |
Period | | Total Number of AB Holding Units Purchased | | Average Price Paid Per AB Holding Unit, net of Commissions | | Total Number of AB Holding Units Purchased as Part of Publicly Announced Plans or Programs | | Maximum Number (or Approximate Dollar Value) of AB Holding Units that May Yet Be Purchased Under the Plans or Programs |
4/1/18 - 4/30/18(1) | | 510 |
| | $ | 25.75 |
| | — |
| | — |
|
5/1/18 - 5/31/18(2) | | 617,800 |
| | 27.93 |
| | — |
| | — |
|
6/1/18 - 6/30/18(2) | | 540,146 |
| | 28.95 |
| | — |
| | — |
|
Total | | 1,158,456 |
| | $ | 28.40 |
| | — |
| | — |
|
|
| | | | | | | | | | | | | |
Period | | Total Number of AB Holding Units Purchased | | Average Price Paid Per AB Holding Unit, net of Commissions | | Total Number of AB Holding Units Purchased as Part of Publicly Announced Plans or Programs | | Maximum Number (or Approximate Dollar Value) of AB Holding Units that May Yet Be Purchased Under the Plans or Programs |
1/1/19 - 1/31/19 (1)(2) | | 1,756,557 |
| | $ | 28.74 |
| | — |
| | — |
|
2/1/19 - 2/28/19 (1)(2) | | 266,027 |
| | 30.36 |
| | — |
| | — |
|
3/1/19 - 3/31/19 | | — |
| | — |
| | — |
| | — |
|
Total | | 2,022,584 |
| | $ | 28.95 |
| | — |
| | — |
|
| |
(1) | During the secondfirst quarter of 2018,2019, AB purchased from employees 510109,687 AB Holding Units to allow them to fulfill statutory withholding tax requirements at the time of distribution of long-term incentive compensation awards. |
| |
(2) | During the secondfirst quarter of 2018,2019, AB purchased 1,157,9461,912,897 AB Holding Units on the open market pursuant to a Rule 10b5-1 plan to help fund anticipated obligations under our incentive compensation award program. |
AB Units bought by us or one of our affiliates during the secondfirst quarter of 20182019 are as follows:
ISSUER PURCHASES OF EQUITY SECURITIES
|
| | | | | | | | | | | | | |
Period | | Total Number of AB Units Purchased | | Average Price Paid Per AB Unit, net of Commissions | | Total Number of AB Units Purchased as Part of Publicly Announced Plans or Programs | | Maximum Number (or Approximate Dollar Value) of AB Units that May Yet Be Purchased Under the Plans or Programs |
4/1/18 - 4/30/18 | | — |
| | $ | — |
| | — |
| | — |
|
5/1/18 - 5/31/18 | | — |
| | — |
| | — |
| | — |
|
6/1/18 - 6/30/18(1) | | 2,600 |
| | 28.66 |
| | — |
| | — |
|
Total | | 2,600 |
| | $ | 28.66 |
| | — |
| | — |
|
|
| | | | | | | | | | | | | |
Period | | Total Number of AB Units Purchased | | Average Price Paid Per AB Unit, net of Commissions | | Total Number of AB Units Purchased as Part of Publicly Announced Plans or Programs | | Maximum Number (or Approximate Dollar Value) of AB Units that May Yet Be Purchased Under the Plans or Programs |
1/1/19 - 1/31/19 | | — |
| | $ | — |
| | — |
| | — |
|
2/1/19 - 2/28/19 | | — |
| | — |
| | — |
| | — |
|
3/1/19 - 3/31/19 (1) | | 300 |
| | 29.33 |
| | — |
| | — |
|
Total | | 300 |
| | $ | 29.33 |
| | — |
| | — |
|
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(1)(1) During the March 2019, AB purchased 300 AB Units in private transactions.
| During June 2018, AB purchased 2,600 AB Units in private transactions. |
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Item 3. | Defaults Upon Senior Securities |
None.
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Item 4. | Mine Safety Disclosures |
None.
Iran Threat Reduction and Syria Human Rights Act
AB, AB Holding and their global subsidiaries had no transactions or activities requiring disclosure under the Iran Threat Reduction and Syria Human Rights Act, (“Iran Act”), nor were they involved in the AXA Group matters described immediately below.below.
The non-U.S. based subsidiaries of AXA operate in compliance with applicable laws and regulations of the various jurisdictions in which they operate, including applicable international (United Nations and European Union) laws and regulations. While AXA Group companies based and operating outside the United States generally are not subject to U.S. law, as an international group, AXA has in place policies and standards (including the AXA Group International Sanctions Policy) that apply to all AXA Group companies worldwide and often impose requirements that go well beyond local law. For additional information regarding AXA, see Note 1 to the condensed financial statements in Part 1, Item 1.1 of this Form 10-Q.
AXA has informed us that AXA Konzern AG, an AXA insurance subsidiary organized under the laws of Germany, provides car, accident and health insurance to diplomats based at the Iranian embassyEmbassy in Berlin, Germany. The total annual premium of these policies is approximately $139,700 and the annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $24,600. These policies were underwritten by a broker who specializes in providing insurance coverage for diplomats.$24,272.
AXA also has informed us that AXA Belgium, an AXA insurance subsidiary organized under the laws of Belgium, insurers three carshas two policies providing for car insurance for Global Trading NV, who werewhich was designated on May 17, 2018 under (E.O.) 13224.13224 and subsequently changed its name to Energy Engineers & Construction on August 20, 2018. The total annual premium of these policies is approximately $15,553$6,559 before tax and the annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $1,866.$983.
In addition, AXA has informed us that AXA Insurance Ireland, an AXA insurance subsidiary, provides statutorily required car insurance under four separate policies to the Iranian Embassy in Dublin, Ireland. AXA has informed us that compliance with the Declined Cases Agreement of the Irish Government prohibits the cancellation of these policies unless another insurer is willing to assume the coverage. The total annual premium for these policies is approximately $7,115 and the annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $853.
Also, AXA has informed us that AXA Sigorta, a subsidiary of AXA organized under the laws of the Republic of Turkey, provides car insurance coverage for vehicle pools of the Iranian General Consulate and the Iranian Embassy in Istanbul, Turkey. Motor third party liability insurance coverage is compulsory in Turkey and cannot be canceled unilaterally. The total annual premium in respect of these policies is approximately $3,150 and the annual net profit, which is difficult to calculate with precision, is estimated to be $473.
Additionally, AXA has informed us that AXA Winterthur, an AXA insurance subsidiary organized under the laws of Switzerland, provides Naftiran Intertrade, a wholly-owned subsidiary of the Iranian state-owned National Iranian Oil Company, with life, disability and accident coverage for its employees. In addition, AXA Winterthur also provides car and property insurance coverage for the Iranian Embassy in Bern. The provision of these forms of coverage is mandatory for employees in Switzerland. The total annual premium of these policies is approximately $373,668$396,597 and the annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $56,000.$59,489.
Lastly,Also, AXA has informed us that AXA Egypt, an AXA insurance subsidiary organized under the laws of Egypt, provides the Iranian state-owned Iran Development Bank, two life insurance contracts, covering individuals who have loans with the bank. The total annual premium of these policies is approximately $19,839 and annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $2,000.
Lastly, AXA has informed us that AXA XL, which AXA acquired during the third quarter of 2018, through various non-U.S. subsidiaries, provides insurance to marine policyholders located outside of the U.S. or reinsurance coverage to non-U.S. insurers of marine risks as well as mutual associations of ship owners that provide their members with protection and liability coverage. The provision of these coverages may involve entities or activities related to Iran, including transporting crude oil, petrochemicals and refined petroleum products. AXA XL’s non-U.S. subsidiaries insure or reinsure multiple voyages and fleets containing multiple ships, so they are unable to attribute gross revenues and net profits from such marine policies to activities with Iran. As the activities of these insureds and re-insureds are permitted under applicable laws and regulations, AXA XL intends for its non-U.S. subsidiaries to continue providing such coverage to its insureds and re-insureds to the extent permitted by applicable law.
The aggregate annual premium for the above-referenced insurance policies is approximately $559,025,$572,960, representing approximately 0.0006%0.0007% of AXA’s 20172018 consolidated revenues, which exceed $100 billion. The related net profit, which is difficult to calculate with precision, is estimated to be $85,792,$88,070, representing approximately 0.001%0.002% of AXA’s 20172018 aggregate net profit.
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31.1 | |
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31.2 | |
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32.1 | |
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32.2 | |
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99.1 | |
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101.INS | XBRL Instance Document. |
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101.SCH | XBRL Taxonomy Extension Schema. |
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101.CAL | XBRL Taxonomy Extension Calculation Linkbase. |
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101.LAB | XBRL Taxonomy Extension Label Linkbase. |
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101.PRE | XBRL Taxonomy Extension Presentation Linkbase. |
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101.DEF | XBRL Taxonomy Extension Definition Linkbase. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Date: July 26, 2018April 25, 2019 | ALLIANCEBERNSTEIN HOLDING L.P. |
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| By: | /s/ John C. Weisenseel | |
| | John C. Weisenseel | |
| | Chief Financial Officer |
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| By: | /s/ William R. Siemers | |
| | William R. Siemers | |
| | Chief Accounting Officer |