 | Valerie Haertel, Investor Relations 212.969.6414 ir@alliancebernstein.com | John Meyers, Media 212.969.2301 pr@alliancebernstein.com |
News Release
AllianceBernstein Holding L.P. Announces Second Quarter Diluted Net Income of $0.89 per Unit and Declares a $0.89 per Unit Cash Distribution
New York, NY, July 26, 2006 - AllianceBernstein Holding L.P. (“AllianceBernstein Holding”) (NYSE: AB) and AllianceBernstein L.P. (“AllianceBernstein”) today reported financial and operating results for the quarter ended June 30, 2006.
AllianceBernstein Holding (The Publicly Traded Partnership):
| · | Diluted net income per unit for the quarter ended June 30, 2006 was $0.89, an increase of 30.9% as compared to $0.68 for the same period in 2005. |
| · | Distribution per unit for the second quarter of 2006 is $0.89, an increase of 30.9% as compared to $0.68 for the same period in 2005. The distribution is payable on August 17, 2006 to holders of AllianceBernstein Holding Units at the close of business on August 7, 2006. |
AllianceBernstein (The Operating Partnership):
| · | Assets Under Management (AUM) at June 30, 2006 were $625 billion, a 21.2% increase over a year ago (or 21.4%, excluding acquisition & dispositions), due to equity market appreciation and net inflows across all distribution channels. |
| · | Average AUM were $625 billion for the quarter ended June 30, 2006, an increase of 19.7% over the same quarter a year ago (or 23.1%, excluding acquisition & dispositions). |
| · | Net inflows(1) Excludes acquisition, dispositions and transfers.1) for the three months ended June 30, 2006 were $16.9 billion, consisting of Institutional Investments net inflows of $9.7 billion, Retail net inflows of $4.7 billion and Private Client net inflows of $2.5 billion. |
| · | Net inflows(1) for the twelve months ended June 30, 2006 were $51.7 billion, consisting of Institutional Investments net inflows of $31.4 billion, Retail net inflows of $12.2 billion and Private Client net inflows of $8.1 billion. |
(1) Excludes acquisition, dispositions and transfers.
“On the most important metric, investment returns for clients, second quarter results were disappointing. Although relative returns were generally satisfactory in value equities and fixed income, absolute returns were minimal. Growth and emerging market equity services produced negative results, as the market turbulence that developed in the second quarter was focused primarily in these areas of the capital markets. These conditions have, in our view, created noteworthy investment opportunity, especially in growth stocks. Portfolio strategy has been shaped to take advantage of this potential,” said Lewis A. Sanders, Chairman and CEO.
“The firm’s financial performance in the second quarter was quite strong. Net earnings rose by 32% on a 23% revenue gain. Pre-tax margin expanded by 1.3 percentage points to 29.3%. The second quarter benefited from rapid growth in assets under management during the last 12 months and incentive fees from strong investment performance in earlier periods. Reported earnings also benefited by about $0.02 per unit from a gain on the disposition of our cash management services. Although this transaction occurred in 2005, the gain resulted from the expiration of a claw back provision during the quarter. In addition, a downward revision in our estimated full year tax rate added about $0.01 per unit to second quarter earnings.
“Organic growth for the quarter, as measured by net inflows of assets under management, accelerated with annualized double digit rates achieved in all three of our primary distribution channels. Global, international and style blend services experienced the strongest inflows, a trend underway for some time. Global and international services now account for 49% of total AUM. Our non-US client base also continued to expand rapidly, driving AUM for such clients to approximately one third of the firm’s total.
“Institutional research services grew strongly in the second quarter with revenue gains of 27.5% from last year’s comparable period. Market share rose sharply in the US, a function of our strong research franchise as well as increasing client acceptance of our algorithmic trading services. Revenue growth remained strong in our London-based operations as well.
“Although we believe the firm is well positioned overall, slower growth in asset inflows is anticipated in the period ahead. Difficult capital market conditions are likely to weigh on retail flows and the backlog of new but unfunded institutional mandates, while still substantial, has declined from the record high levels reached earlier this year.
“Continued growth in assets under management and research services revenue as well as improvement in profitability depend in the long term on helping our clients meet their investment objectives, the achievement of which remains our primary focus,” concluded Mr. Sanders.
Page 2 of 10
Conference Call Information Relating To Second Quarter 2006 Results
AllianceBernstein’s management will review second quarter 2006 financial and operating results on Wednesday, July 26, 2006, during a conference call at 5:30 p.m. (New York Time), following the release of its financial results after the close of the New York Stock Exchange. The conference call will be hosted by Chairman and Chief Executive Officer, Lewis A. Sanders and President and Chief Operating Officer, Gerald M. Lieberman.
Parties interested in listening to the conference call may access it by either telephone or webcast.
| 1) | To listen by telephone, please dial 866-556-2265 in the U.S. or 973-935-8521 outside the U.S., ten minutes before the 5:30 p.m. (New York Time) scheduled start time. The conference ID# is 7611243. |
| 2) | To listen by webcast, please visit AllianceBernstein’s Investor Relations website at http://ir.alliancebernstein.com at least fifteen minutes prior to the call to download and install any necessary audio software. |
The presentation slides that will be reviewed during the conference call will be available on AllianceBernstein’s website at the above web address after the release of its results.
An audio replay of the conference call will be made available for one week beginning at 7:30 p.m. (New York Time) on July 27, 2006. In the U.S., please call 877-519-4471 or, outside the U.S., call 973-341-3080, and provide the conference ID# 7611243. The audio replay will also be available via webcast on AllianceBernstein’s website for one week.
About AllianceBernstein
AllianceBernstein is a leading global investment management firm providing investment management services for many of the largest U.S. public and private employee benefit plans, foundations, public employee retirement funds, pension funds, endowments, banks, insurance companies and high-net-worth individuals worldwide. AllianceBernstein is also one of the largest mutual fund sponsors, with a diverse family of globally distributed mutual fund portfolios. Through its subsidiary, Sanford C. Bernstein & Co., LLC, AllianceBernstein provides in-depth research, portfolio strategy and trade execution to the institutional investment community.
At June 30, 2006, AllianceBernstein Holding L.P. (“Holding”) owned approximately 32.7% of the issued and outstanding AllianceBernstein Units. AXA Financial was the beneficial owner of approximately 60.2% of the AllianceBernstein Units at June 30, 2006 (including those held indirectly through its ownership of approximately 1.7% of the issued and outstanding Holding Units) which, including the general partnership interests in AllianceBernstein and Holding, represent an approximate 60.6% economic interest in AllianceBernstein. AXA Financial is a wholly-owned subsidiary of AXA, one of the largest global financial services organizations.
Page 3 of 10
Forward-Looking Statements
Certain statements in this news release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These 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 we achieve for our clients, general economic conditions, future acquisitions, competitive conditions, and government regulations, including changes in tax rates. We caution readers to carefully consider our forward-looking statements in light of these 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 subsequent events or circumstances. For further information regarding these forward-looking statements and the factors that could cause actual results to differ, see “Risk Factors” in Item 1A of Form 10-K for the year ended December 31, 2005. Any or all of the forward-looking statements that we make in Form 10-K, this news release, or any other public statements we issue may turn out to be wrong. Please remember that factors other than those listed in “Risk Factors” could also adversely affect our business, operating results, or financial condition.
The forward-looking statements referred to in the preceding paragraph include statements regarding noteworthy investment opportunity, especially in growth stocks, resulting from second quarter market turbulence, and slower growth in asset inflows in our institutional and retail distribution channels resulting from a decline from the record high levels reached earlier this year in unfunded institutional mandates and difficult capital market conditions, respectively. The actual performance of the capital markets and other factors beyond our control will affect our investment success and asset inflows.
Page 4 of 10
ALLIANCEBERNSTEIN L.P.
(THE OPERATING PARTNERSHIP)
SUMMARY CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands)
JUNE 30, 2006
Three Months Ended | |||||||
6/30/06 | 6/30/05 | ||||||
Revenues: | |||||||
Investment Advisory & Services Fees | $ | 690,213 | $ | 528,727 | |||
Distribution Revenues | 104,456 | 97,727 | |||||
Institutional Research Services | 102,631 | 80,504 | |||||
Dividend and Interest Income | 61,462 | 30,644 | |||||
Investment Gains (Losses) | (15,537 | ) | 6,779 | ||||
Other Revenues | 35,966 | 31,973 | |||||
Total Revenues | 979,191 | 776,354 | |||||
Less:Interest Expense | 45,861 | 20,096 | |||||
Net Revenues | 933,330 | 756,258 | |||||
Expenses: | |||||||
Employee Compensation & Benefits | 373,780 | 308,699 | |||||
Promotion & Servicing: | |||||||
Distribution Plan Payments | 72,795 | 71,322 | |||||
Amortization of Deferred Sales Commissions | 23,589 | 34,439 | |||||
Other | 59,949 | �� | 49,576 | ||||
General & Administrative | 127,673 | 81,293 | |||||
Interest | 6,852 | 6,306 | |||||
Amortization of Intangible Assets | 5,175 | 5,175 | |||||
| 669,813 | 556,810 | ||||||
Operating income | 263,517 | 199,448 | |||||
Non-operating income | 9,730 | 12,312 | |||||
Income Before Income Taxes | 273,247 | 211,760 | |||||
Income Taxes | 12,145 | 13,763 | |||||
NET INCOME | $ | 261,102 | $ | 197,997 | |||
Pre-tax Margin | 29.3 | % | 28.0 | % | |||
Page 5 of 10
ALLIANCEBERNSTEIN HOLDING L.P.
(THE PUBLICLY TRADED PARTNERSHIP)
SUMMARY STATEMENTS OF INCOME
Three Months Ended | |||||||
6/30/06 | 6/30/05 | ||||||
Equity in Earnings of Operating Partnership | $ | 84,514 | $ | 62,654 | |||
Income Taxes | 8,509 | 6,530 | |||||
NET INCOME | 76,005 | 56,124 | |||||
Additional Equity in Earnings of Operating Partnership (1) | 1,350 | 767 | |||||
NET INCOME - Diluted (2) | $ | 77,355 | $ | 56,891 | |||
DILUTED NET INCOME PER UNIT | $ | 0.89 | $ | 0.68 | |||
DISTRIBUTION PER UNIT | $ | 0.89 | $ | 0.68 | |||
| (1) | To reflect higher ownership in the Operating Partnership resulting from application of the treasury stock method to outstanding options. |
| (2) | For calculation of Diluted Net Income per Unit. |
ALLIANCEBERNSTEIN AND ALLIANCEBERNSTEIN HOLDING
UNITS OUTSTANDING AND WEIGHTED AVERAGE UNITS OUTSTANDING
JUNE 30, 2006
Weighted Average Units | ||||||||||
Three Months Ended | ||||||||||
Period End Units | Basic | Diluted | ||||||||
AllianceBernstein | 257,667,584 | 257,623,562 | 259,865,829 | |||||||
AllianceBernstein Holding | 84,273,741 | 84,229,719 | 86,471,986 | |||||||
Page 6 of 10
ALLIANCEBERNSTEIN L.P.
ASSETS UNDER MANAGEMENT
THREE MONTHS ENDED JUNE 30, 2006
($ millions)
Institutional Investments | Retail | Private Client | Total | ||||||||||
Beginning of Period | $ | 389,917 | $ | 145,919 | $ | 81,739 | $ | 617,575 | |||||
Sales/New accounts | 15,510 | 13,321 | 4,031 | 32,862 | |||||||||
Redemptions/Terminations | (3,322 | ) | (7,932 | ) | (670 | ) | (11,924 | ) | |||||
Cash flow | (2,575 | ) | (440 | ) | (754 | ) | (3,769 | ) | |||||
Unreinvested dividends | - | (224 | ) | (88 | ) | (312 | ) | ||||||
Net inflows | 9,613 | 4,725 | 2,519 | 16,857 | |||||||||
Acquisition(1) | 321 | 92 | _ | 413 | |||||||||
Market depreciation | (3,878 | ) | (4,345 | ) | (1,464 | ) | (9,687 | ) | |||||
End of Period | $ | 395,973 | $ | 146,391 | $ | 82,794 | $ | 625,158 | |||||
(1) Hong Kong joint venture interest.
Page 7 of 10
ALLIANCEBERNSTEIN L.P.
ASSETS UNDER MANAGEMENT
TWELVE MONTHS ENDED JUNE 30, 2006
($ millions)
Institutional Investments | Retail | Private Client | Total | ||||||||||
Beginning of Period | $ | 316,659 | $ | 132,030 | $ | 67,264 | $ | 515,953 | |||||
Sales/New accounts | 49,710 | 41,661 | �� | 13,332 | 104,703 | ||||||||
Redemptions/Terminations | (12,158 | ) | (28,260 | ) | (2,755 | ) | (43,173 | ) | |||||
Cash flow | (6,139 | ) | (291 | ) | (2,112 | ) | (8,542 | ) | |||||
Unreinvested dividends | - | (952 | ) | (369 | ) | (1,321 | ) | ||||||
Net inflows | 31,413 | 12,158 | 8,096 | 51,667 | |||||||||
Acquisition/(Dispositions) (1), net | (1,054 | ) | (236 | ) | _ | (1,290 | ) | ||||||
Transfers (2) | 8,488 | (9,155 | ) | 667 | . | ||||||||
Market appreciation | 40,467 | 11,594 | 6,767 | 58,828 | |||||||||
End of Period | $ | 395,973 | $ | 146,391 | $ | 82,794 | $ | 625,158 | |||||
| (1) | Acquisition of Hong Kong joint venture interest; disposition of South African joint venture interest and Indian mutual funds. |
| (2) | Transfers of certain client accounts were made among distribution channels resulting from changes in how these accounts are serviced by the firm. AUM at June 30, 2006 reflect these transfers. |
ALLIANCEBERNSTEIN L.P.
ASSETS UNDER MANAGEMENT
($ millions)
Three Month Period | Twelve Month Period | ||||||||||||
06/30/06 | 06/30/05 | 06/30/06 | 06/30/05 | ||||||||||
Ending Assets Under Management | $ | 625,158 | $ | 515,953 | $ | 625,158 | $ | 515,953 | |||||
Average Assets Under Management | $ | 625,351 | $ | 522,403 | $ | 581,591 | $ | 511,169 | |||||
Page 8 of 10
ALLIANCEBERNSTEIN L.P.
ASSETS UNDER MANAGEMENT
BY INVESTMENT SERVICE
AT JUNE 30, 2006
($ Millions)
Institutional Investments | Retail | Private Client | Total | ||||||||||
Equity: | |||||||||||||
Growth | |||||||||||||
U.S. | $ | 36,087 | $ | 29,924 | $ | 11,672 | $ | 77,683 | |||||
Global & International | 53,144 | 18,345 | 7,843 | 79,332 | |||||||||
| 89,231 | 48,269 | 19,515 | 157,015 | ||||||||||
Value | |||||||||||||
U.S. | 50,839 | 32,317 | 24,550 | 107,706 | |||||||||
Global & International | 124,245 | 24,961 | 15,419 | 164,625 | |||||||||
| 175,084 | 57,278 | 39,969 | 272,331 | ||||||||||
Total Equity | 264,315 | 105,547 | 59,484 | 429,346 | |||||||||
Fixed Income: | |||||||||||||
U.S. | 71,406 | 11,474 | 22,964 | 105,844 | |||||||||
Global & International | 35,804 | 23,926 | 266 | 59,996 | |||||||||
| 107,210 | 35,400 | 23,230 | 165,840 | ||||||||||
Index/Structured: | |||||||||||||
U.S. | 20,200 | 4,384 | 80 | 24,664 | |||||||||
Global & International | 4,248 | 1,060 | - | 5,308 | |||||||||
| 24,448 | 5,444 | 80 | 29,972 | ||||||||||
Total: | |||||||||||||
U.S. | 178,532 | 78,099 | 59,266 | 315,897 | |||||||||
Global & International | 217,441 | 68,292 | 23,528 | 309,261 | |||||||||
$ | 395,973 | $ | 146,391 | $ | 82,794 | $ | 625,158 | ||||||
Page 9 of 10
ALLIANCEBERNSTEIN L.P.
ASSETS UNDER MANAGEMENT
BY CLIENT DOMICILE
AT JUNE 30, 2006
($ millions)
Institutional Investments | Retail | Private Client | Total | ||||||||||
U. S. Clients | $ | 224,624 | $ | 112,043 | $ | 80,638 | $ | 417,305 | |||||
Non-U.S. Clients | 171,349 | 34,348 | 2,156 | 207,853 | |||||||||
$ | 395,973 | $ | 146,391 | $ | 82,794 | $ | 625,158 | ||||||
Page 10 of 10