June 28, 2006
By facsimile to (202) 772-9208 and courier
John P. Nolan
Accounting Branch Chief
United States Securities and Exchange Commission
Division of Corporation Finance
Office of Financial Services
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: | AllianceBernstein Holding L.P. |
| | Form 10-K filed February 24, 2006 |
Dear Mr. Nolan:
We are responding to your comment letter dated June 8, 2006 concerning the Form 10-K filed February 24, 2006 by AllianceBernstein Holding L.P. (“Holding”), which includes the consolidated financial statements of AllianceBernstein L.P. (“AllianceBernstein”). The words “we” and “our” in our responses refer collectively to Holding and AllianceBernstein, or to their officers and employees. Where the context requires distinguishing between Holding and AllianceBernstein, we identify which of them is being discussed.
In order to expedite your review, we have repeated (in bold) your questions and set forth our responses directly below each question.
United States Securities and Exchange Commission
John P. Nolan
Page of 2 of 4
Form 10-K for the period ended December 31, 2005
Financial Statements of AllianceBernstein L.P. and Subsidiaries
Consolidated Statements of Income, page 72
| 1. | You do not report a cost of services in your income statement as required by Article 5 of Regulation S-X. Tell us: |
| · | How you determined that this is an appropriate presentation; and |
| · | How you gather costs to make management decisions. |
Response:
AllianceBernstein provides diversified investment management and related services globally to a broad range of clients. Substantially all of our expenses directly support our revenue-producing activities. Costs are gathered and analyzed consistent with the expense line items presented in the income statement for the purpose of making management decisions. Accordingly, our presentation, which we believe is appropriate, is analogous to a single-step income statement which does not distinguish between cost of services and overhead or non operating expenses, but rather separately identifies individually significant elements of revenues and costs and expenses. We have consistently presented our expenses in the income statement in this format.
| 2. | Please provide an analysis of “Other revenues, net” and “Other Expenses” and explain how each item is consistent with the guidance in FASB Concepts 6. As an example, we would question how gains on dispositions should be classified as revenues rather than other non operating income. |
Response:
See Attachment 1 for an analysis of “Other revenues, net” and “Other Expenses”. In our view, other revenues represent inflows from rendering services or other activities that are an integral part of AllianceBernstein’s ongoing major operations, not peripheral or incidental transactions as described in FASB Concept 6. Similarly, we view other expenses as outflows that result from the rendering of services which are an integral part of our ongoing major operations, not peripheral or incidental transactions.
United States Securities and Exchange Commission
John P. Nolan
Page of 3 of 4
In regard to your specific question about our classification of gains on dispositions as revenues rather than non operating income, based on our view of the nature of the gains (as described below), we believe our presentation is appropriate.
The terms of the disposition of our cash management services in June 2005 provide, among other things, for annual contingent payments to be made to us in the five years following the closing of the transaction, calculated as a percentage of net revenues directly attributable to the assets of our former cash management clients transferred to Federated Investors, Inc. (“Federated”). The contingent payments received from Federated are expected to largely offset the loss of operating profit that we would have earned from managing our former clients’ assets, based on the level of those assets at the time of the closing. In our 2005 Form 10-K, we estimated the total contingent payments to be received over the next five years to be $60 million. During 2005, we earned approximately $8 million of contingent payments. We view these annual contingent payments as an integral part of our revenue inflows and our pre-tax income from operations. Accordingly, we also classified the initial net gain on disposition of $11.4 million relating to this transaction as “Other revenues, net” in the income statement.
In 2005, we also completed two other dispositions. We transferred our rights to manage certain mutual funds in India and sold our interest in a South African investment management subsidiary. Because entering new markets and exiting markets no longer viewed as having long-term potential are normal, ongoing business activities, we view these dispositions as operating in nature. Accordingly, we reported the net gains on these dispositions, aggregating $18.7 million, in “Other revenues, net” in the income statement.
Please refer to Note 20 (Dispositions) of the 2005 consolidated financial statements of AllianceBernstein for a complete discussion of our 2005 dispositions, including a description of the transactions, the amounts recorded and the financial statement accounts affected.
* * *
In connection with responding to your comments, Holding and AllianceBernstein acknowledge that:
| · | Holding and AllianceBernstein are responsible for the adequacy and accuracy of the disclosure in their respective filings; |
United States Securities and Exchange Commission
John P. Nolan
Page of 4 of 4
| · | Staff comments or changes to disclosure in response to staff comments in our respective filings reviewed by the staff do not foreclose the Commission from taking any action with respect to the filings; and |
| · | Holding and AllianceBernstein may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. |
If you have any questions, please do not hesitate to contact me at (212) 969-2384.
Sincerely,
/s/ Robert H. Joseph, Jr.
Robert H. Joseph, Jr.
Senior Vice President and Chief Financial Officer
AllianceBernstein Holding L.P.
