What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2022-02-11 compared with 2021-02-11 · 245 added, 285 removed, 633 unchanged (46% of the section changed)

2 unchanged sentences

General Economic Conditions

During the first quarter of 2020, COVID-19 significantly impacted the global economy.

The impact has been profound, has continued through the fourth quarter of 2020 and is likely to persist for months to come.

While many businesses have re-opened, vaccinations have begun and leading economic indicators are showing signs of improvement, the overall extent and duration of COVID-19's impact on businesses and economic activity generally remains unclear.

A recession in the near term remains possible.

Economic effects from COVID-19, which have impacted virtually all countries and industries, include:

• Many small and large businesses being forced to interrupt their operations and as a result, lay off employees or even close;

• The re-opening and subsequent shuttering again of certain businesses in various countries around the world;

• Temporary large-scale population lock-downs, domestic and international travel restrictions and social-distancing measures were implemented, driving sharp declines in consumer and business spending.

Further, while many businesses have re-opened, some are only allowing limited capacity, imposing social distancing restrictions and providing limited hours of operation, and while consumer spending has improved during the second half of 2020, uncertainty remains;

• Schools, many of which were shuttered during the first quarter, have allowed students to return to in-person instruction, but the constant concern and uncertainty of whether an outbreak may occur, have forced many schools to re-implement remote instruction, creating significant strain and uncertainty for working parents, which may slow or reverse the economic recovery;

• Significant declines and increased volatility impacted global financial markets during the first quarter, including 23.2% and 20.0% declines in the Dow Jones Industrial Average (“Dow”) and S&P 500 Index (“S&P”), respectively.

Although the financial markets recovered their first quarter losses to new highs in the months since, the prospect of continued volatility remains, especially given the uncertainty surrounding the continued economic effects of the virus (please see "Market Environment" below for additional details).

• The initial distribution of multiple COVID-19 vaccinations was initiated in the later part of the fourth quarter, but the speed, selective nature and logistical challenges of distribution, and the concerns in some communities around the safety and efficacy of the vaccine, have caused turmoil for many, further heightening the anxiety around the virus.

Governments around the world have responded to COVID-19 with economic stimulus measures, including a $2 trillion emergency relief bill passed in the U.S during the first quarter of 2020 and an additional $900 billion in aid passed during the fourth quarter of 2020.

Similar fiscal stimulus was passed by many governments around the world.

These measures and possible additional stimulus and aid measures are intended to steady businesses and consumers until economic activity meaningfully recovers.

The timing and magnitude of any such recovery, however, remains uncertain.

Various countries around the world have continued to experience surges in the rates of COVID-19 infections, which are likely the result of greatly increased social interactions, including at colleges and universities, after re-opening of economies, as well as more contagious strains of the virus.

As a result, several countries have paused the continued progression of their re-openings or re-imposed closing mandates on certain businesses, such as bars, restaurants and entertainment venues.

These circumstances may adversely affect consumer sentiment and the pace of business re-openings, and they also may delay any economic recovery.

At the initial onset of COVID-19 during the first quarter of 2020, we quickly responded in the various jurisdictions where we operate, including the U.S., the U.K., Hong Kong, Shanghai, Singapore and Taiwan.

We implemented business continuity measures, including travel restrictions and a work-from-home requirement for almost all personnel (other than a relatively small number of employees whose physical presence in our offices was considered critical), which has remained in place (except in our Asia offices, most of which have reopened) throughout the second, third and fourth quarters, to ensure operating continuity for all critical functions.

COVID-19 has significantly impacted the global economy since the first quarter of 2020, and its impact may persist for months to come.

While most businesses have re-opened, vaccinations are progressing in most portions of the world and leading economic indicators, other than heightened inflation, have improved significantly, the overall extent and duration of COVID-19's impact on businesses and economic activity generally remains unclear.

Various countries around the world, and most areas in the U.S., have continued to experience surges in the rates of COVID-19 infections and hospitalizations, which have resulted from the emergence and spread of virus variants (particularly the "delta variant" during the second half of 2021 and the "omicron variant" more recently), greatly increased social interactions, including at colleges and universities and social venues, after re-opening of economies, and decreased usage of mitigation techniques, such as mask-wearing and social distancing, in combination with large portions of the population remaining unvaccinated.

These ongoing circumstances surrounding the virus may adversely affect consumer sentiment and the durability of business re-openings, and they also may slow economic recovery and possibly cause market volatility and even a new downturn.

At the onset of COVID-19 during the first quarter of 2020, we quickly responded in the various jurisdictions where we operate, including the U.S., the U.K., Hong Kong, Shanghai, Singapore and Taiwan.

We implemented business continuity measures, including travel restrictions and a work-from-home requirement for almost all personnel (other than a relatively small number of employees whose physical presence in our offices was considered critical), which generally remained in place throughout 2020 and 2021 to ensure operating continuity for all critical functions.

We also instituted a notification process for any employee who tests positive for COVID-19 or has been exposed to someone else who has tested positive.

As the COVID-19 crisis has continued to evolve since the lockdown in the first quarter, certain key functions of the business, such as Risk Management, Business Continuity, Finance and Human Capital, have maintained constant communication and monitored the evolution of the pandemic to keep our employees safe and advise of key developments.

As the COVID-19 crisis has continued to evolve since the lockdown in the first quarter of 2020, certain key functions of the business, such as Risk Management, Business Continuity, Finance and Human Capital, have maintained constant communication and monitored the evolution of the pandemic to keep our employees safe and advise of key developments.

Additionally, we continue to monitor communications from the World Health Organization and the U.S.

Centers for Disease Control and Prevention to ensure we have current information.

We have continued to enhance our technology, which has increased the effectiveness of our remote work force.

We have also continued to enhance our virtual programs to support business functions, such as training on cybersecurity and enhancements to our existing technology platforms.

Centers for Disease Control and Prevention, and in the third quarter of 2021 engaged an epidemiologist on a consulting basis, to ensure we have current and accurate information.

Furthermore, we have continued to enhance our virtual programs to support business functions, such as training on cybersecurity and enhancements to our existing technology platforms, which has increased the effectiveness of our remote work force.

There has been a heightened focus on the emotional well-being of our employees, and we have provided regular touch points with employees through virtual town halls and management communications.

Additionally, we have maintained regular communications and updates on the virus and the Company's response, which are posted on the Company's internal website, to ensure transparent communication with our employees.

If any of our employees test positive for COVID-19 or interact with someone who has the virus, they are required to contact AB immediately for support and contact-tracing.

We continue to consider, and in some cases methodically implement, return to office programs for our U.S., European and Asia offices.

However, we continue to monitor the daily evolution of the crisis in order to ensure the health and safety of our employees remains our top priority.

We will modify our return to office plans, as needed, to ensure the safety of our employees and to ensure that the highest safety and cleanliness protocols are followed.

We believe that our business continuity plan and technology platform will continue to support the effectiveness of our employees working remotely.

Asset managers, such as AB, rely heavily on the performance of the financial markets largely to determine assets under management (“ AUM ”) and revenues.

Our results during the first quarter of 2020 were strong, which was primarily a reflection of financial market conditions during January and February, which were not adversely affected by COVID-19.

Market conditions deteriorated dramatically during March, which negatively impacted our performance in that month.

Financial markets, and hence our performance, rebounded during the ensuing months, primarily due to a U.S.

Federal Government stimulus package and U.S.

Treasury programs, which were instituted during March 2020 and throughout the second quarter.

These programs renewed confidence in the financial markets by introducing liquidity through government purchasing of financial instruments.

As various states and countries around the world eased restrictions on business and lockdown protocols during the second quarter and increasingly throughout the third and fourth quarters, increases in consumer spending, decreases in the unemployment rate and improvement in other leading economic indicators have stimulated domestic and global financial market performance.

As a result of these developments, our AUM has increased in the second, third and fourth quarters.

However, as U.S.

states and countries globally have continued to ease restrictions, there has been a resurgence in the spread of the virus, causing certain states and countries to, among other things, shutter some businesses again or impose new social distancing restrictions.

As a result, market volatility continues.

The economic impact of COVID-19 and any additional declines in the financial markets could have a significant adverse effect on our AUM and revenues, particularly if economic activity does not continue to recover.

Although countries throughout the world continue to grapple with re-opening their economies, this will continue to be a gradual process, and there is a significant risk that the opening process may be further interrupted if infection rates increase.

Also, although unemployment rates have declined, they are still considered high and any reluctance of consumers to resume spending will do long-term damage to the global economy, which would have an adverse effect on our business.

Additionally, as most of our workforce is working remotely, we are mindful of increased risk related to cybersecurity, which could significantly disrupt our business functions.

Further, we have benefited from certain of our adjusted operating expenses declining significantly as a result of the COVID-19 pandemic, such as costs for travel and entertainment and client meetings, particularly during 2020.

Although these costs increased in 2021, they have not yet returned to a normalized level.

These cost savings have benefited our margins.

If financial markets continue to normalize and economic activity increases, we do not anticipate continued cost savings related to COVID-19, and these savings are not indicative of our future performance.

Although countries throughout the world continue to grapple with re-opening their economies, there is a significant risk that the opening process may be interrupted or reversed if infection and hospitalization rates increase.

Also, any reluctance of consumers to resume spending could do long-term damage to the global economy, which would have an adverse effect on our business.

Additionally, as most of our workforce continues working remotely, at least part of the time, we are mindful of increased risk related to cybersecurity, which could significantly disrupt our business functions.

Ultimately, the return to normal business and economic activity will likely require the broad application of effective vaccines.

Although the distribution of multiple vaccines was initiated towards the end of the fourth quarter, the speed, selective nature of those who are eligible to receive the vaccination, as well as logistical challenges regarding availability and distribution of the vaccines, could mean many months until the general population has been vaccinated.

The distribution of multiple safe, effective vaccines was initiated towards the end of the fourth quarter of 2020, and the distribution of such vaccines generally increased globally throughout 2021.

However, the rate of new vaccinations in the U.S.

plateaued, and in some areas began to decline, by the end of the second quarter of 2021, and the rate at which vaccination "boosters" have been administered has lagged.

If global vaccination rates do not improve further, a significant risk will remain that COVID-19 and/or a variant thereof, could accelerate global health concerns and, in so doing, cause heightened market and economic turmoil in the future.

2021 Annual Report 33

Executive Overview (1)

Percentage change figures are calculated using assets under management rounded to the nearest million and financial statement amounts rounded to the nearest thousand.

Our total assets under management (" AUM ") as of December 31, 2021 were $778.6 billion, up $92.7 billion, or 13.5%, during 2021.

The increase was driven primarily by market appreciation of $65.4 billion, partially offset by net outflows of $2.6 billion (due to Private Wealth Management net outflows of $2.0 billion and Retail net outflows of $1.6 billion, offset by Institutional net inflows of $1.0 billion).

Excluding AXA's redemption of low-fee fixed income mandates of $11.8 billion, the firm generated net inflows of $9.2 billion in 2020.

Institutional AUM increased $32.9 billion, or 11.6%, to $315.6 billion during 2020, primarily due to market appreciation of $30.5 billion and net inflows of $1.0 billion.

The increase was driven primarily by market appreciation of $66.6 billion and net inflows of $26.1 billion (reflecting Retail net inflows of $20.8 billion, Private Wealth Management net inflows of $3.0 billion and Institutional net inflows of $2.3 billion).

As previously disclosed, we expect additional redemptions by AXA of low-fee retail AUM in the first half of 2022 of approximately $5 billion.

Institutional AUM increased $21.5 billion, or 6.8%, to $337.1 billion during 2021, primarily due to market appreciation of $19.4 billion and net inflows of $2.3 billion, primarily driven by growth in active equities.

Gross sales increased $0.8 billion, from $30.9 billion in 2020 to $31.7 billion in 2021.

Redemptions and terminations increased $0.1 billion, from $23.3 billion in 2020 to $23.4 billion in 2021.

Excluding AXA's redemption of low-fee fixed income mandates of $11.8 billion, institutional net inflows were $12.8 billion in 2020.

Retail AUM increased $26.1 billion, or 10.9%, to $265.3 billion during 2020, primarily due to market appreciation of $28.1 billion, partially offset by net outflows of $1.6 billion.

Gross sales increased $3.6 billion, from $75.3 billion in 2019 to $78.9

billion in 2020.

Redemptions and terminations increased $25.5 billion, from $44.0 billion in 2019 to $69.5 billion in 2020, due to record first quarter 2020 redemptions, reflecting the financial market sell-off in March amidst the onset of COVID-19.

Private Wealth Management AUM increased $4.0 billion, or 3.9%, to $105.0 billion during 2020, primarily due to market appreciation of $6.8 billion, partially offset by net outflows of $2.0 billion.

Institutional sales and redemptions in 2021 include $8.7 billion in sales and $10.0 billion in redemptions associated with the reinsurance agreement entered into by Equitable Financial Life Insurance Company (" Equitable Financial ") and a subsidiary of Venerable Holdings, Inc., pursuant to which Equitable Financial ceded to Venerable a portion of its legacy variable annuity business;

AB remained the preferred investment manager for the General Account assets transferred

Retail AUM increased $54.6 billion, or 20.6%, to $319.9 billion during 2021, primarily due to market appreciation of $33.6 billion and net inflows of $20.8 billion, primarily driven by growth in active equities.

Gross sales increased $21.1 billion, from $78.9 billion in 2020 to $100.0 billion in 2021.

Redemptions and terminations increased $4.1 billion, from $12.4 billion in 2019 to $16.5 billion in 2020.

Bernstein Research Services revenue increased $51.8 million, or 12.7%, in 2020.

The increase was due to higher market volatility, particularly between March and June 2020, primarily as a result of COVID-19, which led to higher customer activity and greater global trading volumes.

We expect customer activity and trading volumes to gradually decrease in 2021 and to normalize in 2022, as the volatility surrounding COVID-19 begins to decline.

Any decreases in customer activity and trading volumes will have a corresponding effect on Bernstein Research services revenue.

Furthermore, all of 2020 reflects the inclusion of revenues from our acquisition of Autonomous Research ( "Autonomous" ), which closed on April 1, 2019.

Our 2020 net revenues of $3.7 billion increased $190.1 million, or 5.4%, compared to the prior year's net revenues.

The most significant contributors to the increase were higher base advisory fees of $90.4 million, higher distribution revenues of $74.7 million, higher Bernstein Research Services revenue of $51.8 million and higher performance-based fees of $33.0 million, partially offset by higher investment losses of $55.1 million and lower net dividend and interest income of $11.9 million.

Our operating expenses of $2.8 billion increased $106.1 million, or 3.9%, compared to the prior year's expenses.

The increase primarily was due to higher promotion and servicing expenses of $63.6 million, higher employee compensation and benefits of $51.4 million and higher general and administrative expenses (including real estate charges) of $3.0 million, partially offset by lower amortization of intangible assets of $7.4 million and lower interest on borrowings of $6.9 million.

Our operating income increased $84.0 million, or 10.2%, to $907.4 million from $823.4 million in 2019 and our operating margin increased from 22.6% in 2019 to 24.6% in 2020.

Redemptions and terminations decreased $4.4 billion, from $69.5 billion in 2020 to $65.1 billion in 2021.

Private Wealth Management AUM increased $16.6 billion, or 15.8%, to $121.6 billion during 2021, due to market appreciation of $13.6 billion and net inflows of $3.0 billion, primarily driven by growth in alternatives and multi-asset solutions.

Gross sales increased $4.0 billion, from $14.3 billion in 2020 to $18.3 billion in 2021.

Redemptions and terminations decreased $1.2 billion, from $16.5 billion in 2020 to $15.3 billion in 2021.

Bernstein Research Services (" Bernstein ") revenue decreased $7.7 million, or 1.7%, in 2021.

The decrease was due to lower trading activity driven by lower global market volatility as compared to the COVID-related volatility in 2020.

This was partially offset by higher research payments across Bernstein and Autonomous Research (" Autonomous ") products.

Our 2021 net revenues of $4.4 billion increased $733.1 million, or 19.8%, compared to net revenues of $3.7 billion in the prior year.

The increase was primarily driven by higher base advisory fees of $486.6 million, higher distribution revenues of $122.5 million and higher performance-based fees of $112.5 million.

Our operating expenses of $3.2 billion increased $424.0 million, or 15.1%, compared to operating expenses of $2.8 billion in the prior year.

The increase was primarily due to higher employee compensation and benefits expenses of $221.8 million, higher promotion and servicing expenses of $153.5 million and higher general and administrative expenses of $64.5 million.

Our operating income increased $309.0 million, or 34.1%, to $1.2 billion from $907.4 million in 2020 and our operating margin increased to 27.3% in 2021 from 24.6% in 2020.

Market Environment

Despite 2020 being a year marked by a global pandemic, record-breaking recession and unemployment levels, and a contentious U.S.

presidential election, equity markets closed the year with solid gains.

The S&P 500, Dow Jones Industrial Average and Nasdaq each rallied for most of the fourth quarter, finishing the year in positive territory.

In the U.S., the presidential election passed with a market-friendly outcome, the distribution of multiple COVID-19 vaccines was initiated and the unemployment rate continued to decline.

Meanwhile, after months of deadlock, a COVID-19 relief package was passed in the fourth quarter, consisting of direct payments, unemployment benefits and small business aid.

However, even with the increasing likelihood of COVID-19 vaccines potentially boosting activity in 2021, significant slack in the economy and labor market by the end of this year are likely.

As a result, the U.S.

Federal Reserve will likely keep interest rates near zero as the economy improves.

In the U.K., COVID-19 and Brexit uncertainty resulted in the worst performing year for its equity market since the 2008 financial crisis.

However, with a Brexit deal reached in the final days of 2020 between the U.K.

and the distribution of a COVID-19 vaccine, the U.K.

economy may rebound in 2021.

The Bank of England is likely to keep rates on hold during the recovery phase.

In China, the economy has returned to almost pre-pandemic output levels.

Chinese efforts to re-center the economy on a consumer-led model are expected to continue and fiscal policy will likely remain supportive through 2021.

More stimulus may be announced in the first quarter of 2021 as the government continues to support consumption.

While the economic outlook for China in 2021 appears positive, one big unknown is the future of the relationship between China and the new U.S.

administration.

Despite a selloff in November resulting from fears surrounding inflation and the rising cases of the omicron variant, U.S.

equity markets finished higher in 2021.

The S&P 500, Dow Jones Industrial Average and Nasdaq each rallied to finish the year with solid gains.

With rising inflation remaining a key concern, the Federal Reserve signaled it would begin tapering its quantitative easing at a faster pace and will begin raising their target interest rate in the first half of 2022.

Meanwhile, U.S.

government negotiations surrounding the Build Back Better package and the Infrastructure and Investments Jobs Act continued, with concerns the fiscal stimulus could drive inflation even higher in 2022.

In the U.K., equities lagged the global gains in 2021 but rose in fourth quarter.

Brexit, however, has placed constraints on labor supply and, in turn, upward pressure on wages and inflation.

In response, the Bank of England raised interest rates, despite the spread of the omicron variant.

In China, equities significantly underperformed global equities.

The People’s Bank of China reduced the reserve requirement ratio, releasing inexpensive funds for banks to lend, and announced that this cut is not the beginning of an easing cycle, but rather a regular monetary policy action.

The risks in China, however, around the property market will likely remain a key watchpoint over the coming months.

1 Percentage change figures are calculated using assets under management rounded to the nearest million, while financial statement amounts are rounded to the nearest thousand.

AllianceBernstein

In Europe, MiFID II, which became effective on January 3, 2018, has made significant modifications to the manner in which European broker-dealers can be compensated for research.

5 unchanged sentences

The ultimate impact of MiFID II on payments for research globally remains uncertain.

Equitable Holdings IPO

During the second quarter of 2018, AXA S.A.

(" AXA") completed the sale of a minority stake in Equitable Holdings, Inc.

(“ EQH ”) through an initial public offering (" IPO ").

Since then, AXA has completed additional offerings and taken other steps, most recently during the fourth quarter of 2019.

As a result, AXA owned less than 10% of the outstanding common stock of EQH as of December 31, 2020.

While we cannot at this time predict the full impact on AB of this transaction, such impact has included a reduction in the support AXA provided to AB in the past with respect to AB's investment management business, resulting in a modest decrease in our revenues and ability to initiate new investment services.

Also, AB relies on AXA, including its subsidiary, AXA Business Services, for several significant services and AB has benefited from its affiliation with AXA in certain common vendor relationships.

Some of these arrangements have changed, and others are expected to change, with immaterial financial implications for AB.

Our ending AUM at December 31, 2020 reflects $11.8 billion in 2020 outflows resulting from AXA's redemption of certain low-fee fixed income mandates.

We expect these redemptions to total approximately $14 billion, with the remaining redemptions expected to be completed during the first half of 2021.

The revenue we earn from the management of these assets is not significant.

Relationship with EQH and its Subsidiaries

EQH (our parent company) and its subsidiaries are our largest client.

EQH is collaborating with AB in order to improve the risk-adjusted yield for the General Accounts of EQH's insurance subsidiaries by investing additional assets at AB, including the utilization of AB's higher-fee, longer-duration alternative offerings.

Equitable Financial has agreed to provide $10 billion in permanent capital 2 over the next three years to build out AB’s private illiquid offerings, including private alternatives and private placements.

We expect this anticipated capital from Equitable Financial will accelerate both organic and inorganic growth in our private alternatives business, allowing us to continue to deliver for our clients, employees, unitholders and other stakeholders.

Relocation Strategy

On May 2, 2018, we announced that we would establish our corporate headquarters in, and relocate approximately 1,050 jobs located in the New York metro area to, Nashville, TN.

Subsequently, on January 14, 2020, we announced our plans to relocate an additional 200 jobs to Nashville thereby increasing the total relocated jobs to 1,250.

The decision to add the additional jobs was the result of the growth in our business, select investments we are making, and the in-sourcing of roles typically performed by consultants.

Our Nashville headquarters will house Finance, IT, Operations, Legal, Compliance, Internal Audit, Human Capital, and Sales and Marketing.

We have been actively relocating jobs and expect this transition to take several years.

We will continue to maintain a principal location in New York City, which will house our Portfolio Management, Sell-Side Research and Trading, and New York-based Private Wealth Management businesses.

We believe relocating our corporate headquarters to Nashville will afford us the opportunity to provide an improved quality of life alternative for our employees and enable us to attract and recruit new talented employees to a highly desirable location while improving the long-term cost structure of the firm.

During the transition period, which began in 2018 and is expected to continue through 2024, we currently estimate we will incur transition costs of approximately $145 million to $155 million, which is less than our previous estimate of $155 million to $165 million.

As previously announced, we have established our corporate headquarters in Nashville, TN, at 501 Commerce Street.

Our Nashville headquarters houses Finance, IT, Operations, Legal, Compliance, Internal Audit, Human Capital, and Sales and Marketing, and at year-end we had 974 employees in Nashville.

We expect to reach a total of 1,250 employees in Nashville by the end of 2024.

We have been actively relocating jobs and expect this transition to take several more years.

We will continue to maintain a principal location in New York City, which houses our Portfolio Management, Sell-Side Research and Trading, and New York-based Private Wealth Management businesses.

We believe relocating our corporate headquarters to Nashville affords us the opportunity to provide an improved quality of life alternative for our employees and enables us to attract and recruit new talented employees to a highly desirable location while improving the long-term cost structure of the firm.

During the transition period, which began in 2018 and is expected to continue through 2024, we currently estimate that we will incur transition costs of between $145 million to $155 million.

These costs include employee relocation, severance, recruitment, and overlapping compensation and occupancy costs.

Over this same period, we expect to realize total expense savings of approximately $205 million to $215 million, which is greater than our previous estimate of $185 million to $195 million, and is an amount greater than the total transition costs.

Over this same period, we expect to realize total expense savings of between $205 million to $215 million.

However, we did incur some transition costs before we began to realize expense savings.

For the period beginning in 2018 and ending in 2020, we incurred $70 million of cumulative transition costs compared to $46 million of cumulative savings.

In 2020, expense savings of $30 million were greater than transition costs of $26 million, resulting in a net increase of $0.01 in net income per unit ( “EPU” ).

We currently anticipate an EPU increase in 2021 of approximately $0.02 and expect to achieve increasing EPU accretion in each year thereafter.

Beginning in 2025, once the transition period has been completed, we estimate ongoing annual expense savings towards the upper end of the range of $75 million to $80 million, which will result from a combination of occupancy and compensation-related savings.

Our estimates for both the transition costs and the corresponding expense savings are based upon our current assumptions of employee relocation costs, severance, and overlapping compensation and occupancy costs.

For the period beginning in 2018 and ending in the fourth quarter of 2021, we incurred $97 million of cumulative transition costs compared to $89 million of cumulative savings.

In addition, we incurred $27 million of transition costs for the twelve months ended December 31, 2021, compared to $43 million of expense savings, resulting in an overall net savings of $16 million for the period.

In 2021, our net income per unit (" EPU ") increased $0.06 as a result of our relocation strategy, which compares to the $0.04 EPU increase that occurred in 2020.

We also expect to achieve EPU accretion in each year thereafter.

Beginning in 2025, once the transition period has been completed, we estimate ongoing annual expense savings of approximately $75 million to $80 million, which will result from a combination of occupancy and compensation-related savings.

Our estimates for both the transition costs and the corresponding expense savings are based on our current assumptions of employee relocation costs, severance, and overlapping compensation and occupancy costs.

In addition, our estimates for both the timing of when we incur transition costs and realize the related expense savings are based on our current relocation implementation plan and the timing for execution of each phase.

The actual total charges we eventually record, the related expense savings we realize, and timing of EPU impact may differ from our current estimates as we implement each phase of our headquarters relocation.

The actual total charges we eventually record, the related expense savings we realize, and the timing of EPU impact may differ from our current estimates as we implement each phase of our headquarters relocation.

2 Permanent capital means investment capital of indefinite duration, which may be withdrawn under certain conditions.

Although Equitable Financial has indicated its intention over time to provide this investment capital to AB, which is mutually beneficial to both firms, it has no binding commitment to do so.

2021 Annual Report 35

During October 2018, we signed a lease, which commenced in the fourth quarter of 2020, relating to 218,976 square feet of space at our new Nashville headquarters.

Our estimated total base rent obligation (excluding taxes, operating expenses and utilities) over the 15-year initial lease term is $134 million.

Although we have presented our transition costs and annual expense savings with numerical specificity, and we believe these targets to be reasonable as of the date of this report, the uncertainties surrounding the assumptions we discuss above create a significant risk that these targets may not be achieved.

AllianceBernstein

Although we have presented many of our transition costs and annual expense savings with numerical specificity, and we believe these targets to be reasonable as of the date of this report, the uncertainties surrounding the assumptions we discuss above create a significant risk that these targets may not be achieved.

Accordingly, the expenses we actually incur and the savings we actually realize may differ from our targets, particularly if actual events adversely differ from one or more of our key assumptions.

2 unchanged sentences

Except as may be required by applicable securities laws, we are not under any obligation, and we expressly disclaim any obligation, to update or alter any assumptions, estimates, financial goals, targets, projections or other related statements that we may make.

Adjusted Operating Margin Target

We previously adopted a goal of increasing our adjusted operating margin to a target of 30% by 2020 (the “2020 Margin Target” ), subject to the assumptions, factors and contingencies described as part of our initial disclosure of this target.

Our adjusted operating margin, which was 27.5% for 2019, increased to 30.1% for 2020, achieving our target.

We do not currently expect to set a new adjusted operating margin target going forward.

Our AUM and, therefore, our investment advisory revenues, including performance-based fee revenues, are heavily dependent on the level and volatility of the financial markets, which ended 2020 favorably.

Despite the challenges faced from the COVID-19 pandemic (please refer to “Impact of COVID-19” above and “Risk Factors” in Item 1A ), we benefited from certain of our adjusted operating expenses declining significantly, such as costs associated with travel and entertainment and client meetings during 2020.

We do not anticipate the COVID-19-related cost-savings or market tailwinds to be indicative of future performance.

We also expect continued investments in growth initiatives for our firm.

Considering these factors, our adjusted operating margin may be less favorable in future periods, although we will continue to strive for improvement over the long-term.

AB Holding’s principal source of income and cash flow is attributable to its investment in AB Units.

The AB Holding financial statements, notes to the financial statements and and management’s discussion and analysis of financial condition and results of operations (“ MD&A ”) should be read in conjunction with those of AB.

The AB Holding financial statements, notes to the financial statements and management’s discussion and analysis of financial condition and results of operations (“ MD&A ”) should be read in conjunction with those of AB.

Results of Operations

10 unchanged sentences

$ 3.90 $ 2.91 $ 2.53 34.0 15.0

________________________

(1) Distributions reflect the impact of AB’s non-GAAP adjustments.

AB Holding had net income of $385.8 million in 2021 compared to $279.4 million in 2020, reflecting higher net income attributable to AB Unitholders and higher weighted average equity ownership interest.

AB Holding had net income of $279.4 million in 2020 compared to $238.6 million in 2019, reflecting higher net income attributable to AB Unitholders.

AB Holding had net income of $238.6 million in 2019 compared to $242.4 million in 2018, reflecting lower net income attributable to AB Unitholders and lower weighted average equity ownership interest.

AB Holding's partnership gross income is derived from its interest in AB.

12 unchanged sentences

See “Management Operating Metrics” in this Item 7 .

2021 Annual Report 37

The impact of these adjustments on AB Holding’s net income and diluted net income per AB Holding Unit are as follows:

20 unchanged sentences

During the year ended December 31, 2020, net cash provided by operating activities was $270.0 million, compared to $222.8 million during the corresponding 2019 period.

The decrease primarily resulted from lower cash distributions received from AB of $58.6 million.

The increase primarily resulted from higher cash distributions received from AB of $49.5 million.

During the years ended December 31, 2021, 2020 and 2019, net cash used in investing activities was $3.4 million, $0.1 million and $11.5 million, respectively, reflecting investments in AB with proceeds from exercises of compensatory options to buy AB Holding Units.

During the year ended December 31, 2021, net cash used in financing activities was $351.7 million, compared to $269.9 million during the corresponding 2020 period.

The increase primarily was due to higher cash distributions to Unitholders of $48.4

million and lower proceeds from exercise of compensatory options to buy AB Holding Units of $11.4 million.

The increase primarily was due to higher cash distributions to Unitholders of $86.6 million, offset by higher proceeds from exercise of compensatory options to buy AB Holding Units of $3.3 million.

During the year ended December 31, 2020, net cash used in financing activities was $269.9 million, compared to $211.2 million during the corresponding 2019 period.

The decrease primarily was due to lower cash distributions to Unitholders of $58.2 million, partially offset by lower proceeds from exercise of compensatory options to buy AB Holding Units of $5.1 million.

The increase was primarily due to higher cash distributions to Unitholders of $48.4 million, partially offset by lower proceeds from exercise of compensatory options to buy AB Holding Units of $11.4 million.

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.

4 unchanged sentences

See Note 2 to AB Holding’s financial statements in Item 8 for a description of Available Cash Flow.

AllianceBernstein

Commitments and Contingencies

20 unchanged sentences

Tax–exempt 57.1 50.3 47.1 13.6 6.7

313.5 305.4 261.4 2.6 16.9

Total 303.4 313.5 305.4 (3.2) 2.6

Passively Managed (1)

5 unchanged sentences

5.5 2.5 1.6 116.6 54.1

Total Other 81.6 70.9 59.2 15.1 19.7

Total Alternatives/Multi-Asset Solutions 102.8 81.6 70.9 25.9 15.1

Total $778.6 $685.9 $622.9 13.5 % 10.1 %

1 unchanged sentence

(2) Includes certain multi-asset solutions and services not included in equity or fixed income services.

Prior to December 31, 2020, this investment service line was disclosed as "Other." In order to reflect the increasing significance of our Alternatives and Multi-Asset Solutions services, we updated the investment service line to "Alternatives and Multi-Asset Solutions."

2021 Annual Report 39

Changes in assets under management during 2021 and 2020 are as follows:

8 unchanged sentences

Cash flow/unreinvested dividends (6.0) (14.1) — (20.1)

Net long-term inflows (outflows) (2)

Net long-term inflows (1)

2.3 20.8 3.0 26.1

Acquisitions — 0.2 — 0.2

Transfers (0.2) 0.2 — —

8 unchanged sentences

Net long-term inflows (outflows) (1)

Adjustments (1)

1.0 (1.6) (2.0) (2.6)

Acquisitions — 0.2 — 0.2

Transfers 1.4 (0.6) (0.8) —

2 unchanged sentences

Balance as of December 31, 2020 $315.6 $265.3 $105.0 $685.9

(1) Approximately $900 million of non-investment management fee earning taxable and tax-exempt money market assets

were removed from assets under management during the second quarter of 2019.

(2) Institutional net flows for 2020 include $11.8 billion of AXA redemptions of certain low-fee fixed income mandates.

(1) Institutional net flows include $1.3 billion and $11.8 billion of AXA redemptions of certain low-fee fixed income mandates for 2021 and 2020, respectively.

AllianceBernstein

Investment Service

Managed Equity

- Taxable Fixed

Alternatives/Multi-Asset Solutions (2)

Taxable Fixed Income

Alternatives/

Solutions (2)

(in billions)

6 unchanged sentences

21.9 (7.5) (9.9) 6.0 5.0 10.6 26.1

Acquisition — — — — — 0.2 0.2

Market appreciation 33.2 9.0 14.7 2.2 0.8 5.5 65.4

Market appreciation (depreciation) 47.9 14.6 (7.0) 0.8 (0.3) 10.6 66.6

Net change 69.8 7.1 (16.9) 6.8 4.7 21.2 92.7

6 unchanged sentences

Net long-term inflows (outflows) (3)

Adjustments (4)

7.4 (4.6) (9.8) 1.0 (1.6) 5.0 (2.6)

Market (depreciation) appreciation 37.0 14.0 20.3 2.9 0.8 7.2 82.2

Acquisitions — — — — — 0.2 0.2

Market appreciation 33.2 9.0 14.7 2.2 0.8 5.5 65.4

Net change 40.6 4.4 4.9 3.2 (0.8) 10.7 63.0

2 unchanged sentences

(2) Includes certain multi-asset solutions and services not included in equity or fixed income services.

(3) Fixed income – taxable investment service net flows for 2020 include $11.8 billion of AXA redemptions of certain low-fee fixed income mandates.

(4) Approximately $900 million of non-investment management fee earning taxable and tax-exempt money market assets

were removed from assets under management during the second quarter of 2019.

(3) Fixed income - taxable investment service net flows include $1.3 billion and $11.8 billion of AXA redemptions of certain low-fee fixed income mandates for 2021 and 2020, respectively.

2021 Annual Report 41

Net long-term inflows (outflows) for actively managed investment services as compared to passively managed investment services during 2021 and 2020 are as follows:

3 unchanged sentences

Equity $ 21.9 $ 7.4

Fixed Income (3.9) (8.8)

Alternatives/Multi- Asset Solutions 8.3 4.5

Total 26.3 3.1

Passively Managed

Equity (7.5) (4.6)

Fixed Income 5.0 (1.6)

Alternatives/Multi- Asset Solutions 2.3 0.5

Total net long-term (outflows) inflows $ (2.6) $ 25.2

Total (0.2) (5.7)

Total net long-term inflows (outflows) $ 26.1 $ (2.6)

Average assets under management by distribution channel and investment service are as follows:

20 unchanged sentences

(2) Includes certain multi-asset solutions and services not included in equity or fixed income services.

AllianceBernstein

During 2021, our Institutional channel average AUM of $325.7 billion increased $39.8 billion, or 13.9%, compared to 2020, primarily due to this AUM increasing $21.5 billion, or 6.8%, to $337.1 billion over the last twelve months.

1 unchanged sentence

During 2020, our Institutional channel average AUM of $285.9 billion increased $20.5 billion, or 7.7%, compared to 2019, primarily due to this AUM increasing $32.9 billion, or 11.6%, to $315.6 billion during 2020.

The $36.4 billion increase in AUM resulted from market appreciation of $34.0 billion and net inflows of $2.4 billion.

The $32.9 billion increase in AUM resulted primarily from market appreciation of $30.5 billion and net inflows of $1.0 billion.

During 2021, our Retail channel average AUM of $291.0 billion increased $54.5 billion, or 23.0%, compared to 2020, primarily due to this AUM increasing $54.6 billion, or 20.6%, to $319.9 billion over the last twelve months.

The $26.1 billion increase in AUM resulted primarily from market appreciation of $28.1 billion, partially offset by net outflows of $1.6 billion.

During 2019, our Retail channel average AUM of $212.3 billion increased $20.5 billion, or 10.7%, compared to 2018, primarily due to this AUM increasing $58.4 billion, or 32.3%, to $239.2 billion during 2019.

The $54.6 billion increase in AUM resulted primarily from market appreciation of $33.6 billion and net inflows of $20.8 billion.

During 2020, our Private Wealth Management channel average AUM of $97.1 billion increased $0.6 billion, or 0.7%, compared to 2019, primarily due to this AUM increasing $4.0 billion, or 3.9%, to $105.0 billion over the last twelve months.

During 2020, our Retail channel average AUM of $236.5 billion increased $24.2 billion, or 11.4%, compared to 2019, primarily due to this AUM increasing $26.1 billion, or 10.9%, to $265.3 billion during 2020.

The $26.1 billion increase in AUM resulted primarily from market appreciation of $28.1 billion, partially offset by net outflows of $1.6 billion.

During 2021, our Private Wealth Management channel average AUM of $114.1 billion increased $17.0 billion, or 17.5%, compared to 2020, primarily due to this AUM increasing $16.6 billion, or 15.8%, to $121.6 billion over the last twelve months.

The $16.6 billion increase in AUM resulted primarily from market appreciation of $13.6 billion and net inflows of $3.0 billion.

The $11.7 billion increase in AUM resulted from market appreciation of $13.7 billion, partially offset by net outflows of $1.0 billion and an adjustment of $0.9 billion in the second quarter of 2019 relating to the removal of non-investment management fee earning assets.

The $4.0 billion increase in AUM resulted primarily from market appreciation of $6.8 billion, partially offset by net outflows of $2.0 billion.

Absolute investment composite returns, gross of fees, and relative performance as of December 31, 2021 compared to benchmarks for certain representative Institutional equity and fixed income services are as follows:

1-Year 3-Year 5-Year

1-Year 3-Year (1)

Global High Income - Hedged (fixed income)

24 unchanged sentences

MSCI ACWI Index) 5.2 11.3 9.1

2021 Annual Report 43

1-Year 3-Year (1)

International Strategic Core Equity

10 unchanged sentences

Russell 1000 Value Index) 3.1 (1.2) (1.8)

1-Year 3-Year 5-Year

Small Cap Growth

33 unchanged sentences

S&P 500 Index) (9.3) (9.5) (6.0)

(1) Reflects annualized returns.

AllianceBernstein

Consolidated Results of Operations

7 unchanged sentences

Net income 1,153,734 861,783 781,683 33.9 10.2

Net (loss) income of consolidated entities attributable to non-controlling interests (4,169) 29,641 21,910 n/m 35.3

Net income (loss) of consolidated entities attributable to non-controlling interests 5,111 (4,169) 29,641 n/m n/m

Net income attributable to AB Unitholders $ 1,148,623 $ 865,952 $ 752,042 32.6 15.1

8 unchanged sentences

Higher distribution revenues 122.5

Higher Bernstein Research Services revenue 51.8

Higher net loss of consolidated entities attributable to non-controlling interest 33.8

Higher performance-based fees 112.5

Lower amortization of intangible assets 7.4

Lower interest on borrowings 6.9

Higher promotion and servicing expenses (63.6)

Higher investment losses (55.1)

Higher employee compensation and benefits (221.8)

Lower net dividend and interest income (11.9)

Higher general and administrative expenses (including real estate charges) (3.0)

Net income attributable to AB Unitholders for the year ended December 31, 2019 decreased $5.5 million from the year ended December 31, 2018.

The decrease primarily was due to (in millions):

Higher employee compensation and benefits $ (64.0)

Higher promotion and servicing expenses (153.5)

Higher general and administrative expenses (including real estate charges) (31.9)

Lower Bernstein Research Services revenue (31.5)

Lower performance-based fees (18.5)

Higher net income of consolidated entities attributable to non-controlling interest (7.7)

Higher general and administrative expenses (64.5)

Net income attributable to AB Unitholders for the year ended December 31, 2020 increased $113.9 million from the year ended December 31, 2019.

The increase primarily was due to (in millions):

Higher base advisory fees $ 90.4

Higher distribution revenues 74.7

Higher investment gains 36.0

Higher Bernstein Research Services revenue 51.8

Higher net income of consolidated entities attributable to non-controlling interest 33.8

Lower performance-based fees 33.0

Higher promotion and servicing expenses (63.6)

Higher investment losses (55.1)

Higher employee compensation and benefits (51.4)

2021 Annual Report 45

Units Outstanding

3 unchanged sentences

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 fourth quarter of 2020 expired at the close of business on February 10, 2021.

There was no plan adopted during the fourth quarter of 2021.

We may adopt additional plans in the future to engage in open-market purchases of AB Holding Units to help fund anticipated obligations under our incentive compensation award program and for other corporate purposes.

11 unchanged sentences

The non-GAAP measures alone may pose limitations because they do not include all of our revenues and expenses.

AllianceBernstein

Years Ended December 31

10 unchanged sentences

Long-term incentive compensation-related investment gains and dividend and interest (6,694) (6,772) (8,939)

Write-down on investment 859 — 3,733

Impact of adoption of revenue recognition standard ASC 606 — — 77,844

Write-down of investment 1,880 859 —

Adjusted net revenues $ 3,609,536 $ 3,049,326 $ 2,916,615

2 unchanged sentences

Long-term incentive compensation-related items 687 (83) 1,217

CEO's EQH award compensation 802 1,125 —

EQH award compensation 940 802 1,125

Write-down of investment 1,880 859 —

1 unchanged sentence

Contingent payment arrangements (600) (1,366) (3,051)

Impact of adoption of revenue recognition standard ASC 606 — — 35,156

Sub-total of non-GAAP adjustments 2,959 6,393 8,648

Net (loss) income of consolidated entities attributable to non-controlling interests (4,169) 29,641 21,910

Net income (loss) of consolidated entities attributable to non-controlling interests 5,111 (4,169) 29,641

Adjusted operating income 1,214,310 917,998 802,444

4 unchanged sentences

Adjusted diluted net income per AB Unit $ 4.20 $ 3.21 $ 2.81

Operating margin, GAAP basis 27.3 % 24.6 % 22.6 %

Impact of non-GAAP adjustments 6.3 5.5 4.9

Adjusted operating margin 33.6 % 30.1 % 27.5 %

Adjusted operating income for the year ended December 31, 2020 increased $115.6 million, or 14.4%, from the year ended December 31, 2019, primarily due to higher investment advisory base fees of $74.1 million, higher Bernstein Research Services revenue of $51.8 million, lower promotion and servicing expenses of $33.4 million, higher performance-based fees of $33.2 million, lower amortization of intangibles of $7.4 million and lower interest on borrowings of $6.9 million, partially offset by higher employee compensation expenses (excluding the impact of long-term incentive compensation-related items) of $56.1 million, higher net investment losses of $22.8 million, lower net dividend and interest income of $8.5 million and higher general and administrative expenses of $8.2 million.

Adjusted operating income for the year ended December 31, 2019 decreased $49.6 million, or 5.8%, from the year ended December 31, 2018, primarily due to lower performance-based fees of $99.3 million, lower Bernstein Research Services revenue of $31.5 million, higher general and administrative expenses of $29.3 million and higher employee compensation expenses (excluding the impact of long-term incentive compensation-related items) of $8.3 million, offset by higher investment advisory base fees of $95.5 million and higher investments gains and losses revenue of $22.4 million.

On January 1, 2018, as a result of our adoption of ASC 606, we recorded a cumulative effect adjustment, net of tax, of $35.0 million to partners’ capital in the consolidated statement of financial condition.

This amount represented carried interest distributions of $77.9 million previously received, net of revenue sharing payments to investment team members, of $42.7 million, with respect to which it was probable that significant reversal would not occur.

These amounts were included in adjusted net revenues and adjusted operating income in the first quarter of 2018.

Adjusted operating income for the year ended December 31, 2021 increased $296.3 million, or 32.3%, from the year ended December 31, 2020, primarily due to higher investment advisory base fees of $460.9 million and higher performance-based fees of $91.7 million, partially offset by higher employee compensation and benefits expenses of $221.4 million and higher general and administrative expenses of $49.2 million.

Adjusted operating income for the year ended December 31, 2020 increased $115.6 million, or 14.4%, from the year ended December 31, 2019, primarily due to higher investment advisory base fees of $74.1 million, higher Bernstein Research Services revenue of $51.8 million, lower promotion and servicing expenses of $33.4 million and higher performance-based fees of $33.2 million, partially offset by higher employee compensation expenses (excluding the impact of long-term incentive compensation-related items) of $56.1 million and higher net investment losses of $22.8 million.

2021 Annual Report 47

Adjusted Net Revenues

10 unchanged sentences

Also, adjusted net revenues exclude investment gains and losses and dividends and interest on employee long-term incentive compensation-related investments.

During the first quarter of 2020, we wrote-off an investment that had been received in exchange for the sale of software technology, bringing the balance to zero.

Previously, we had been excluding the value of this investment from adjusted net revenues.

Lastly, adjusted net revenues include the impact of our adoption of revenue recognition standard ASC 606 during the first quarter of 2018, as discussed above .

During the fourth quarter of 2021, we wrote down an equity method investment;

this write down brought the investment balance to zero.

Additionally, during the first quarter of 2020, we wrote-down an investment that had been received in exchange for the sale of software technology;

the write-down brought the investment balance to zero.

Previously, we had been excluding the investment from adjusted net revenues.

Adjusted Operating Income

Adjusted operating income represents operating income on a US GAAP basis excluding (1) real estate charges (credits), (2) the impact on net revenues and compensation expense of the investment gains and losses (as well as the dividends and interest) associated with employee long-term incentive compensation-related investments, (3) our CEO's EQH award compensation, as discussed below , (4) the write-down of an investment ( discussed immediately above ), (5) acquisition-related expenses, (6) adjustments to contingent payment arrangements, and (7) the impact of consolidated company-sponsored investment funds;

provided, however, that adjusted operating income includes the revenues and expenses associated with our implementation of ASC 606 during the first quarter of 2018 discussed above .

Real estate charges (credits) have been excluded because they are not considered part of our core operating results when comparing financial results from period to period and to industry peers.

However, beginning in the fourth quarter of 2019, real estate charges (credits), while excluded in the period in which the charges (credits) are recorded, are included ratably over the remaining applicable lease term.

Adjusted operating income represents operating income on a US GAAP basis excluding (1) real estate charges (credits), (2) the impact on net revenues and compensation expense of the investment gains and losses (as well as the dividends and interest) associated with employee long-term incentive compensation-related investments, (3) our senior management's EQH award compensation, as discussed below , (4) the write-down of investments ( discussed immediately above ), (5) acquisition-related expenses, (6) adjustments to contingent payment arrangements, and (7) the impact of consolidated company-sponsored investment funds.

Real estate charges (credits) incurred during the fourth quarter of 2019 through the fourth quarter of 2020, while excluded in the period in which the charges (credits) were recorded, are included ratably over the remaining applicable lease term.

Prior to 2009, a significant portion of employee compensation was in the form of long-term incentive compensation awards that were notionally invested in AB investment services and generally vested over a period of four years.

5 unchanged sentences

The board of directors of EQH granted to Seth P.

Bernstein (“ CEO ”), our President and Chief Executive Officer, equity awards in connection with EQH's IPO and Mr.

Bernstein's membership on the EQH Management Committee.

Bernstein may receive additional equity or cash compensation from EQH in the future related to his service on the Management Committee.

Any awards granted to Mr.

Bernstein by EQH are recorded as compensation expense in AB’s consolidated statement of income.

Bernstein, our CEO, equity awards in connection with EQH's IPO.

Additionally, equity awards were granted to Mr.

Bernstein and other members of AB's senior management for their membership on the EQH Management Committee.

These individuals may receive additional equity or cash compensation from EQH in the future related to their service on the Management Committee.

Any awards granted to these individuals by EQH are recorded as compensation expense in AB’s consolidated statement of income.

The compensation expense associated with these awards has been excluded from our non-GAAP measures because they are non-cash and are based upon EQH's, and not AB's, financial performance.

The write-off of the investment discussed above in Adjusted Net Revenues has been excluded due to its non-recurring nature and because it is not part of our core operating results.

The write-down of investments discussed above in Adjusted Net Revenues have been excluded due to their non-recurring nature and because they are not part of our core operating results.

AllianceBernstein

Acquisition-related expenses have been excluded because they are not considered part of our core operating results when comparing financial results from period to period and to industry peers.

During 2020, these expenses included an intangible asset impairment charge of $1.5 million relating to our 2016 acquisition.

During 2021 and 2020, these expenses included an intangible asset impairment charge of $1.0 million and $1.5 million, respectively, relating to our 2016 acquisition.

The recording of changes in estimates of contingent consideration payable with respect to contingent payment arrangements associated with our acquisitions are not considered part of our core operating results and, accordingly, have been excluded.

Adjusted net revenues include the impact of our adoption of revenue recognition standard ASC 606 during the first quarter of 2018, as discussed above .

We adjusted for the operating income impact of consolidating certain company-sponsored investment funds by eliminating the consolidated company-sponsored funds' revenues and expenses and including AB's revenues and expenses that were eliminated in consolidation.

28 unchanged sentences

Dividend and interest income 38,734 50,923 104,421 (23.9) (51.2)

Investment (losses) gains (16,401) 38,659 2,653 n/m n/m

Investment (losses) gains (636) (16,401) 38,659 (96.1) n/m

Other revenues 108,409 104,703 97,559 3.5 7.3

2 unchanged sentences

Net revenues $ 4,441,602 $ 3,708,536 $ 3,518,432 19.8 5.4

2021 Annual Report 49

Investment Advisory and Services Fees

12 unchanged sentences

Fair valuation methods include:

discounted cash flow models or any other

methodology that is validated and approved by our Valuation Committee ( see paragraph immediately below for more information regarding our Valuation Committee).

discounted cash flow models or any other methodology that is validated and approved by our Valuation Committee ( see paragraph immediately below for more information regarding our Valuation Committee).

Fair valuation methods are used only where AUM cannot be valued using market-based valuation methods, such as in the case of private equity or illiquid securities.

8 unchanged sentences

Our investment advisory and services fees increased by $599.1 million, or 23.1%, in 2021, due to a $486.6 million, or 19.8%, increase in base fees and a $112.5 million increase in performance-based fees.

The increase in base fees is primarily due to an 7.9% increase in average AUM, partially offset by a lower portfolio fee rate.

Our investment advisory and services fees increased by $109.8 million, or 4.6%, in 2019, due to a $128.4 million, or 5.7%, increase in base fees, which primarily resulted from a 5.5% increase in average AUM and the impact of a slight shift in product mix from fixed income to equities, which generally have higher fees.

This increase was partially offset by an $18.5 million decrease in performance-based fees.

Institutional investment advisory and services fees increased $32.8 million, or 6.9%, in 2020, due to an increase in performance-based fees of $25.5 million and an increase in base fees of $7.3 million, or 1.6%.

The increase in base fees is primarily due to an 7.7% increase in average AUM, partially offset by a lower portfolio fee rate.

The increase in base fees is primarily due to an 18.0% increase in average AUM, as well as a slight increase in our portfolio fee rate.

Our investment advisory and services fees increased by $123.4 million, or 5.0%, in 2020, due to a $90.4 million, or 3.8%, increase in base fees and a $33.0 million increase in performance-based fees.

The increase in base fees is primarily due to a 7.9% increase in average AUM, partially offset by a lower portfolio fee rate.

Performance-based fees increased $112.5 million, or 84.8%, in 2021, primarily due to higher performance fees earned on Private Credit Services, U.S.

Real Estate Funds, Financial Services Opportunities and U.S.

Select Equity, partially offset by lower Arya Partners fees.

Performance-based fees increased $33.0 million, or 33.1%, in 2020, primarily due to higher performance-based fees earned on Arya Partners, partially offset by lower Private Credit Services fees.

Institutional investment advisory and services fees increased $74.3 million, or 14.5%, in 2021, due to an increase in base fees of $82.0 million, or 17.9%, partially offset by a decrease in performance-based fees of $7.8 million.

The increase in base fees was primarily due to a 2.8% increase in average AUM, partially offset by the impact of lower fee realization from active equities.

The increase in base fees is primarily due to a 13.9% increase in average AUM, an increase in the portfolio fee rate and a shift in product mix from fixed income to active equities and alternatives, which generally earn higher fees.

Institutional investment advisory and services fees increased $32.8 million, or 6.9%, in 2020, due to an increase in in performance-based fees of $25.5 million and an increase in base fees of $7.3 million, or 1.6%.

The increase in base fees was primarily due to a 7.7% increase in average AUM, partially offset by a lower portfolio fee rate.

AllianceBernstein

Retail investment advisory and services fees increased $281.9 million, or 23.3%, in 2021, due to an increase in base fees of $255.6 million, or 21.5%, and a $26.3 million increase in performance-based fees.

The increase in base fees is primarily due to a 11.4% increase in average AUM, partially offset by a lower portfolio fee rate.

Retail investment advisory and services fees increased $88.7 million, or 8.8%, in 2019, due to an increase in base fees of $84.5 million, or 8.5%, and a $4.2 million increase in base fees.

The increase in base fees was primarily due to a 10.7% increase in average AUM, partially offset by the impact of lower fee realization from active equities.

Private Wealth Management investment advisory and services fees decreased by $21.4 million, or 2.4%, in 2020, due to a decrease in base fees of $27.0 million, or 3.2%, partially offset by a $5.6 million increase in performance-based fees.

The decrease in base fees is primarily due to the impact of a lower portfolio fee rate, as well as a product mix shift with high fee value equity strategies now representing a lower percentage of our total AUM than in prior periods.

Private Wealth Management investment advisory and services fees increased $20.0 million, or 2.3%, in 2019, due to an increase in base fees of $37.7 million, or 4.7%, partially offset by a decrease in performance-based fees of $17.7 million.

The increase in base fees was primarily due to a 2.3% increase in average AUM and the impact of a shift in product mix to alternatives, which generally have higher fees.

The increase in base fees is primarily due to a 23.0% increase in average AUM.

Retail investment advisory and services fees increased $112.0 million, or 10.2%, in 2020, due to an increase in base fees of $110.1 million, or 10.2%, and a $1.9 million increase in performance-based fees.

The increase in performance-based fees was primarily due to a 11.4% increase in average AUM, partially offset by a lower portfolio fee rate.

Private Wealth Management investment advisory and services fees increased by $243.0 million, or 27.8%, in 2021, due to a increase in base fees of $148.9 million, or 18.2%, and a $94.0 million increase in performance-based fees.

The increase in base fees is primarily due to a 17.5% increase in average AUM.

Private Wealth Management investment advisory and services fees decreased $21.4 million, or 2.4%, in 2020, due to an decrease in base fees of $27.0 million, or 3.2%, partially offset by a increase in performance-based fees of $5.6 million.

The decrease in base fees was primarily due to the impact of a lower portfolio fee rate, as well as a product mix shift with high fee value equity strategies representing a lower percentage of our total AUM than in prior periods.

Bernstein Research Services

1 unchanged sentence

These clients compensate us principally by directing us to execute brokerage transactions on their behalf, for which we earn commissions, and to a lesser extent, but increasingly, by paying us directly for research through commission sharing agreements or cash payments.

Revenues from Bernstein Research Services decreased $7.7 million, or 1.7%, in 2021.

The decrease was due to lower trading activity driven by lower global market volatility as compared to the COVID-related volatility in 2020.

This was partially offset by higher research payments across Bernstein and Autonomous products.

Revenues from Bernstein Research Services increased $51.8 million, or 12.7%, in 2020.

The increase was due to higher market volatility in 2020, particularly between March and June 2020, primarily as a result of the COVID-19 pandemic, which led to

higher customer activity and greater global trading volumes.

We expect customer activity and trading volumes to gradually decrease in 2021 and to normalize in 2022, as the volatility surrounding COVID-19 begins to decline.

The increase was due to higher market volatility in 2020, particularly between March and June 2020, primarily as a result of the COVID-19 pandemic, which led to higher customer activity and greater global trading volumes.

Any decreases in customer activity and trading volumes will have a corresponding effect on Bernstein Research Services revenue.

Furthermore, all of 2020 reflects the inclusion of revenues from our acquisition of Autonomous (which closed on April 1, 2019).

Revenues from Bernstein Research Services decreased $31.5 million, or 7.2%, in 2019.

The decrease was due to lower global customer activity and trading commissions, partially offset by the inclusion of revenues from our acquisition of Autonomous (which closed on April 1, 2019).

Furthermore, all of 2020 included revenues from our acquisition of Autonomous (which closed on April 1, 2019).

Distribution Revenues

Two of our subsidiaries act as distributors and/or placement agents of company-sponsored mutual funds and receive distribution services fees from certain of those funds as partial reimbursement of the distribution expenses they incur.

Two of our subsidiaries act as distributors and/or placement agents of company-sponsored mutual funds and receive distribution services fees from certain of those funds as full or partial reimbursement of the distribution expenses they incur.

Period-over-period fluctuations of distribution revenues typically are in line with fluctuations of the corresponding average AUM of these mutual funds.

Distribution revenues increased $122.5 million, or 23.1%, in 2021, primarily due to the corresponding average AUM of these mutual funds increasing 17.2%.

Distribution revenues increased $36.5 million, or 8.7%, in 2019, primarily due to the corresponding average AUM of these mutual funds increasing 10.0%, offset by the impact of a shift in product mix from mutual funds that have higher distribution rates to mutual funds with lower distribution rates.

Distribution revenues increased $74.7 million, or 16.4%, in 2020, primarily due to the corresponding average AUM of these mutual funds increasing 13.2%.

Dividend and Interest Income and Interest Expense

2 unchanged sentences

Interest expense principally reflects interest accrued on cash balances in customers’ brokerage accounts.

Dividend and interest income decreased $12.2 million, or 23.9%, in 2021, primarily due to lower interest earned on U.S.

Treasury Bills as well as lower dividend and interest income in our consolidated company-sponsored investment funds.

Interest expense decreased $12.0 million, or 76.4%, in 2021, due to lower interest paid on cash balances in customers' brokerage accounts.

Dividend and interest income decreased $53.5 million, or 51.2%, in 2020, primarily due to lower interest earned on customer margin balances and U.S.

1 unchanged sentence

Interest expense decreased $41.6 million, or 72.6%, in 2020, due to lower interest paid on cash balances in customers' brokerage accounts.

Dividend and interest income increased $6.2 million, or 6.3%, in 2019, primarily due to higher interest earned on customer margin balances and U.S.

Treasury Bills, offset by lower dividend and interest income in our consolidated company-sponsored investment funds.

Interest expense increased $4.8 million, or 9.2%, in 2019, due to higher interest paid on cash balances in customers' brokerage accounts.

2021 Annual Report 51

Investment Gains (Losses)

9 unchanged sentences

Realized gains $ 2,213 $ 2,655 $ 1,672

Unrealized gains (losses) 2,914 5,859 (8,032)

Unrealized gains 2,446 2,914 5,859

Investments held by consolidated company-sponsored investment funds:

Realized gains (losses) 3,357 9,378 (1,134)

Realized (losses) gains (2,341) 3,357 9,378

Unrealized (losses) gains (1,882) (854) 36,150

12 unchanged sentences

Other revenues consist of fees earned for transfer agency services provided to company-sponsored mutual funds, fees earned for administration and recordkeeping services provided to company-sponsored mutual funds and the General Accounts of EQH and its subsidiaries, and other miscellaneous revenues.

Other revenues increased $3.7 million, or 3.5%, in 2021, primarily due to higher shareholder servicing fees, partially offset by lower brokerage income.

Other revenues increased $7.1 million, or 7.3%, in 2020, primarily due to higher shareholder servicing fees, higher brokerage income and higher mutual fund reimbursements, partially offset by lower investment income related to our consolidated company-sponsored investment funds.

Other revenues decreased $1.1 million, or 1.1%, in 2019, primarily due to lower brokerage income and lower investment income related to our consolidated company-sponsored investment funds, partially offset by higher shareholder servicing fees.

AllianceBernstein

The components of expenses are as follows:

21 unchanged sentences

The amounts of incentive compensation we award are designed to motivate, reward and retain top talent while aligning our executives' interests with the interests of our Unitholders.

Senior management, with the approval of the Compensation Committee of the Board of Directors of AllianceBernstein Corporation (“ Compensation Committee ”), periodically confirms that the appropriate metric to consider in determining the amount of incentive compensation is the ratio of adjusted employee compensation and benefits expense to adjusted net revenues.

Senior management, with the approval of the Compensation and Workplace Practices Committee of the Board of Directors of AllianceBernstein Corporation (“ Compensation Committee ”), periodically confirms that the appropriate metric to consider in determining the amount of incentive compensation is the ratio of adjusted employee compensation and benefits expense to adjusted net revenues.

Adjusted net revenues used in the adjusted compensation ratio are the same as the adjusted net revenues presented as a non-GAAP measure ( discussed earlier in this Item 7 ).

Adjusted employee compensation and benefits expense is total employee compensation and benefits expense minus other employment costs such as recruitment, training, temporary help and meals (which were 0.9%, 1.2% and 1.1% of adjusted net revenues for 2020, 2019 and 2018, respectively), and excludes the impact of mark-to-market vesting expense, as well as dividends and interest expense, associated with employee long-term incentive compensation-related investments and the amortization expense associated with the awards issued by EQH to our firm's CEO relating to his role as a member of the EQH Management Committee.

Adjusted employee compensation and benefits expense is total employee compensation and benefits expense minus other employment costs such as recruitment, training, temporary help and meals (which were 0.9%, 0.9% and 1.2% of adjusted net revenues for 2021, 2020 and 2019, respectively), and excludes the impact of mark-to-market vesting expense, as well as dividends and interest expense, associated with employee long-term incentive compensation-related investments and the amortization expense associated with the awards issued by EQH to some of our firm's senior management relating to their roles as members of the EQH Management Committee.

Senior management, with the approval of the Compensation Committee, has established as an objective that adjusted employee compensation and benefits expense generally should not exceed 50% of our adjusted net revenues, except in unexpected or unusual circumstances.

Our ratios of adjusted compensation expense as a percentage of adjusted net revenues were 46.5%, 47.9% and 47.9%, respectively, for the years ended December 31, 2021, 2020 and 2019.

In 2021, employee compensation and benefits expense increased $221.8 million, or 14.8%, primarily due to higher incentive compensation of $124.6 million, higher base compensation of $48.9 million (primarily higher base salaries), higher commissions of $25.0 million, higher fringes of $20.1 million and higher other employment costs of $3.3 million.

In 2020, employee compensation and benefits expense increased $51.4 million, or 3.6%, primarily due to higher incentive compensation of $58.8 million and higher base compensation of $13.5 million (primarily higher base salaries), offset by lower fringes of $8.5 million, lower commissions of $6.2 million and lower other employment costs of $6.2 million.

In 2019, employee compensation and benefits expense increased $64.0 million, or 4.6%, primarily due to higher base compensation of $34.1 million (primarily higher salaries), higher incentive compensation of $17.4 million and higher fringes of $15.6 million, partially offset by lower commissions of $3.2 million.

2021 Annual Report 53

Promotion and Servicing

Promotion and servicing expenses include distribution-related payments to financial intermediaries for distribution of AB mutual funds and amortization of deferred sales commissions paid to financial intermediaries for the sale of back-end load shares of AB mutual funds.

Also included in this expense category are costs related to travel and entertainment, advertising and promotional materials.

Also included in this expense category are costs related to trade execution and clearance, travel and entertainment, advertising and promotional materials.

Promotion and servicing expenses increased $153.5 million, or 19.5%, in 2021.

The increase primarily was due to higher distribution-related payments of $81.3 million, higher amortization of deferred sales commissions of $12.3 million, higher trade execution and clearance expenses of $7.9 million and higher transfer fees of $4.8 million, offset by lower travel and entertainment expenses of $34.3 million and lower marketing expenses of $8.4 million.

The decrease in travel and entertainment and marketing expense is primarily a result of cost savings associated with the COVID-19 pandemic and we expect these costs to increase in 2021 and further normalize in 2022, as the pandemic recedes.

The increase was primarily due to higher distribution-related payments of $138.8 million, higher transfer fees of $10.1 million, higher amortization of deferred sales commissions of $7.0 million and higher marketing expenses of $4.9 million, partially offset by lower trade execution and clearance expenses of $7.4 million.

Promotion and servicing expenses increased $63.6 million, or 8.8%, in 2020.

The increase primarily was due to higher distribution-related payments of $60.8 million and higher travel and entertainment expenses of $3.2 million, offset by lower amortization of deferred sales commissions of $6.3 million, lower trade execution and clearance expenses of $3.7 million and lower marketing expenses of $2.5 million.

The decrease in travel and entertainment and marketing expense was primarily as a result of cost savings associated with the COVID-19 pandemic.

General and Administrative

General and administrative expenses include portfolio services expenses, technology expenses, professional fees and office-related expenses (occupancy, communications and similar expenses).

General and administrative expenses as a percentage of net revenues were 13.2% (13.1% excluding real estate charges), 13.9% (13.8% excluding real estate charges) and 13.5% (13.3% excluding real estate charges) for the years ended December 31, 2020, 2019 and 2018, respectively.

General and administrative expenses include portfolio services fees, technology fees, professional fees and office-related expenses (occupancy, communications and similar expenses).

General and administrative expenses as a percentage of net revenues were 12.5%, 13.2% and 13.9% for the years ended December 31, 2021, 2020 and 2019, respectively.

General and administrative expenses increased $64.5 million, or 13.1%, in 2021.

The increase was primarily due to higher portfolio services fees of $34.0 million, higher technology fees of $14.3 million, higher office-related expenses of $7.6 million, higher professional fees of $6.6 million and an unfavorable foreign exchange translation impact of $5.2 million, partially offset by lower charitable contributions of $4.9 million.

General and administrative expenses increased $3.0 million, or 0.6%, during 2020, primarily due to higher technology fees of $4.7 million, higher charitable contributions of $3.9 million, higher portfolio service fees of $3.6 million, higher real estate charges of $2.2 million and higher other taxes of $1.6 million, partially offset by lower professional fees of $9.1 million and lower office-related expenses of $3.5 million.

General and administrative expenses increased $31.9 million, or 7.0%, during 2019, primarily due to higher portfolio service fees of $11.2 million, higher technology fees of $11.0 million and higher professional fees of $7.0 million.

Contingent Payment Arrangements

1 unchanged sentence

The expense of $2.7 million for 2021 reflects accretion expense of $3.3 million, offset by the change in estimate of the contingent consideration payable relating to our 2016 acquisition of $0.6 million.

The credit of $0.5 million for 2019 reflects the change in estimate of the contingent consideration payable relating to our 2016 acquisition of $3.1 million, offset by accretion expenses of $2.6 million.

The credit of $2.2 million for 2018 reflects the change in estimate of the contingent consideration payable relating to our 2016 acquisition of $2.4 million, offset by accretion expenses of $0.2 million.

The expense of $1.9 million for 2020 reflects accretion expense of $3.3 million, offset by the change in estimate of the contingent consideration payable relating to our 2016 acquisition of $1.4 million.

Interest on Borrowings

Interest expense decreased $1.0 million, or 16.7%, in 2021, reflecting lower interest rates partially offset by higher weighted average borrowings.

Average daily borrowings for both the EQH facility and commercial paper were $561.6 million at a weighted average interest rate of 0.2% during 2021 compared to $554.0 million and 0.5% during 2020.

Interest expense decreased 52.6% in 2020, reflecting lower interest rates partially offset by higher weighted average borrowings.

Average daily borrowings for both the EQH facility and commercial paper were $554.0 million at a weighted average interest rate of 0.5% during 2020 compared to $436.9 million and 2.5% during 2019.

Interest expense increased 25.8% in 2019, reflecting both higher weighted average borrowings and interest rates.

Average daily borrowings for both the EQH facility and commercial paper were $436.9 million at a weighted average interest rate of 2.5% during 2019 compared to $350.3 million and 2.0% for commercial paper during 2018.

Amortization of Intangible Assets

Amortization of intangible assets reflects our amortization of costs assigned to acquired investment management contracts with a finite life.

These assets are recognized at fair value and generally are amortized on a straight-line basis over their estimated useful life.

Amortization of intangible assets decreased $15.7 million, or 73.3%, and $7.4 million, or 25.7%, in 2021 and 2020, respectively.

The decrease in both periods was primarily due to the full amortization of intangible assets related to the Bernstein acquisition as of September 30, 2020.

As a result, $5.2 million of quarterly amortization expense ceased after the third quarter of 2020.

AllianceBernstein

AB, a private limited partnership, is not subject to federal or state corporate income taxes.

4 unchanged sentences

Income tax expense increased $17.1 million, or 37.4%, in 2021 compared to 2020.

This increase is due to higher pre-tax book income which resulted in a higher effective tax rate in 2021 of 5.2% compared to 5.0% in 2020.

Income tax expense increased $3.9 million, or 9.3%, in 2020 compared to 2019.

This increase is due to higher pre-tax book income, offset by a slightly lower effective tax rate in 2020 of 5.0% compared to 5.1% in 2019.

The decrease in our effective tax rate was driven by a reduction of one-time discrete items.

Income tax expense decreased $4.1 million, or 8.9%, in 2019 compared to 2018.

This decrease is due to a lower effective tax rate in 2019 of 5.1% compared to 5.6% in 2018.

The decrease in our effective tax rate was driven by a more favorable mix of earnings across the AB tax filing groups and a reduction of one-time discrete items.

Net Income (Loss) of Consolidated Entities Attributable to Non-Controlling Interests

Net income (loss) of consolidated entities attributable to non-controlling interests primarily consists of limited partner interests owned by other investors in our consolidated company-sponsored investment funds.

In 2021, we had $5.1 million of net income of consolidated entities attributable to non-controlling interests, primarily due to gains on investments held by our consolidated company-sponsored investment funds.

In 2020, we had $4.2 million of net losses of consolidated entities attributable to non-controlling interests, primarily due to losses on investments held by our consolidated company-sponsored investment funds.

In 2019 and 2018, we had $29.6 million and $21.9 million, respectively, of net gains of consolidated entities attributable to non-controlling interests, primarily due to gains on investments held by our consolidated company-sponsored investment funds.

Fluctuations period-to-period result primarily from the number of consolidated company-sponsored investment funds and their respective market performance.

In 2019 we had $29.6 million of net gains of consolidated entities attributable to non-controlling interests, primarily due to gains on investments held by our consolidated company-sponsored investment funds.

Capital Resources and Liquidity

5 unchanged sentences

We are required to distribute all of our Available Cash Flow to our Unitholders and the General Partner.

During 2021, net cash provided by operating activities was $1.3 billion, compared to $1.5 billion during 2020.

The change primarily was due to net activity of our consolidated company-sponsored investment funds of $560.6 million, an increase in other assets of $75.7 million and higher net purchases of broker-dealer investments of $33.3 million, partially offset by higher earnings of $346.2 million, an increase in broker-dealer related payables (net of receivable and segregated U.S.

Treasury Bills activity) of $72.9 million and an increase in accounts payable and accrued expenses of $25.2 million.

During 2020, net cash provided by operating activities was $1.5 billion, compared to $827.5 million during 2019.

1 unchanged sentence

Treasury Bills activity) of $368.0 million, a decrease in other assets of $92.3 million, an increase in accounts payable and accrued expenses of $67.2 million and an increase in accrued compensation of $54.4 million, partially offset by higher net purchases of broker-dealer investments of $454.1 million.

During 2019, net cash provided by operating activities was $827.5 million, compared to $1.3 billion during 2018.

The change primarily was due to a decrease in broker-dealer related payables (net of receivable and segregated U.S.

Treasury Bills activity) of $754.8 million and net activity of our consolidated company-sponsored investment funds of $427.6 million, offset by lower net purchases of broker-dealer investments of $754.7 million.

During 2021, net cash used in investing activities was $65.7 million, compared to $59.1 million during 2020.

The change is primarily due to $13.6 millions paid for acquisitions, net of cash acquired, $4.1 million paid for equity method investments and higher purchases of furniture, equipment and leasehold improvements of $13.2 million.

The change is primarily due to higher purchases of furniture, equipment and leasehold improvements of $20.4 million, partially offset by lower cash paid for acquisitions, net of cash acquired, of $9.8 million and lower purchases of equity method investments of $4.1 million.

During 2020, net cash used in investing activities was $59.1 million, compared to $23.0 million during 2019.

The change is primarily due to the acquisition of Autonomous, net of cash acquired, of $5.3 million.

The change is primarily due to $13.6 million paid for acquisitions, net of cash acquired, $4.1 million paid for equity method investments and higher purchases of furniture, equipment and leasehold improvements of $13.2 million.

During 2021, net cash used in financing activities was $0.9 billion, compared to $1.1 billion during 2020.

The change reflects the net purchases of non-controlling interests of consolidated company-sponsored investment funds in 2021 as compared to net redemptions in 2020 (impact of $532.7 million), partially offset by higher distributions to the General Partner and Unitholders of $223.0 million as a result of higher earnings (distributions on earnings are paid one quarter in arrears) and an increase in the net purchases of AB Holding Units to fund long-term incentive compensation plans of $113.2 million.

During 2020, net cash used in financing activities was $1.1 billion, compared to $775.0 million during 2019.

The change reflects higher redemptions of non-controlling interests of consolidated company-sponsored investment funds of $369.1 million and higher distributions to the General Partner and Unitholders of $133.4 million, partially offset by higher net proceeds of debt of $112.9 million and an increase in overdrafts payable of $47.3 million.

During 2019, net cash used in financing activities was $775.0 million, compared to $1.6 billion during 2018.

The change reflects the net purchases of non-controlling interests of consolidated company-sponsored investment funds in 2019 as compared to net redemptions of non-controlling interests of consolidated company-sponsored investment funds in 2018 (impact of $622.2 million), lower distributions to the General Partner and Unitholders of $154.7 million and lower net purchases of AB Holding Units to fund long-term incentive compensation plan awards of $95.5 million.

2021 Annual Report 55

As of December 31, 2021, AB had $1.3 billion of cash and cash equivalents (excluding cash and cash equivalents of consolidated company-sponsored investment funds), all of which is available for liquidity but consist primarily of cash on deposit for our broker-dealers related to various customer clearing activities, and cash held by foreign subsidiaries of $675.3 million.

6 unchanged sentences

Under various circumstances, AB guarantees the obligations of its consolidated subsidiaries.

AB maintains guarantees in connection with the Credit Facility (the " Credit Facility ") and Revolver (the "Revolver" ).

AB maintains a guarantee in connection with an $800 million committed, unsecured senior revolving credit facility (the " Credit Facility ").

If SCB LLC is unable to meet its obligations, AB will pay the obligations when due or on demand.

In addition, AB maintains guarantees totaling $365.0 million for SCB LLC’s three uncommitted lines of credit.

In addition, during 2021 AB established two additional uncommitted lines of credit for $100.0 million and $50.0 million, respectively, which are available for both AB's and SCB LLC's business.

AB has guaranteed the obligations of SCB LLC under these lines of credit.

AB maintains guarantees totaling $415.0 million for SCB LLC’s five uncommitted lines of credit.

AB maintains a guarantee with a commercial bank, under which we guarantee the obligations in the ordinary course of business of each of SCB LLC, our U.K.-based broker-dealer and our Cayman subsidiary.

4 unchanged sentences

Aggregate Contractual Obligations

Our contractual obligations as of December 31, 2020 are as follows:

Payments Due by Period

Total Less than 1 Year 1-3 Years 3-5 Years More than 5 Years

(in millions)

EQH credit facility $ 675.0 $ 675.0 $ — $ — $ —

Leases, net of sublease commitments 851.4 79.9 137.2 107.7 526.6

Funding commitments 9.1 9.1 — — —

Accrued compensation and benefits 309.3 221.7 63.9 10.4 13.3

FIN 48 reserve 2.8 — — 2.8 —

Federal transition tax 14.9 1.6 4.6 8.7 —

Total $ 1,862.5 $ 987.3 $ 205.7 $ 129.6 $ 539.9

During 2010, as general partner of AllianceBernstein U.S.

6 unchanged sentences

As of December 31, 2021, we had funded $21.1 million of this commitment.

Accrued compensation and benefits amounts in the table above exclude our accrued pension obligation.

We have various compensation and benefit obligations, including accrued salaries and fringes, commissions, payroll taxes, incentive payments and deferred compensation arrangements.

The majority of our compensation and benefits obligations are paid out in less than one year, while the deferred compensation obligations are payable over various periods, with the majority payable over periods of up to three years.

Accrued compensation and benefits at December 31, 2021 totaled $353.6 million.

This amount excludes our accrued pension obligation.

Offsetting our accrued compensation obligations are long-term incentive compensation-related investments and money market investments we funded totaling $65.7 million, which are included in our consolidated statement of financial condition.

Any amounts reflected on the

consolidated statement of financial condition as payables (to broker-dealers, brokerage clients and company-sponsored mutual funds) and accounts payable and accrued expenses (excluding the tax obligations above) are excluded from the table above.

Any amounts reflected on the consolidated statement of financial condition as payables (to broker-dealers, brokerage clients and company-sponsored mutual funds) and accounts payable and accrued expenses are excluded from the aforementioned accrued compensation and benefits obligation amount.

We expect to make contributions to our qualified profit sharing plan of approximately $16.5 million in each of the next four years.

We do not currently anticipate that we will contribute to the Retirement Plan during 2022.

AllianceBernstein

The 2017 Tax Act (enacted in the U.S.

1 unchanged sentence

Management elected to pay the transition tax in installments over an eight-year period from 2018 to 2025.

The federal transition tax obligation is recorded to income tax payable on our consolidated statement of financial condition.

The federal transition tax obligation at December 31, 2021 totaled $13.3 million and is recorded to income tax payable on our consolidated statement of financial condition.

See Note 20 to our consolidated financial statements in Item 8 for further discussion of our taxes.

During October 2018, we signed a lease, which commenced in the fourth quarter of 2020, relating to 218,976 square feet of space at our newly constructed Nashville headquarters.

Our estimated total base rent obligation (excluding taxes, operating expenses and utilities) over the 15-year initial lease term is $134.0 million.

During April 2019, we signed a lease, which commences in 2024, relating to approximately 190,000 square feet of newly constructed space in New York City.

Our estimated total base rent obligation (excluding taxes, operating expenses and utilities) over the 20-year lease term is approximately $448.0 million.

During the fourth quarter of 2020, we exercised an option to return a half floor of this space, which reduced our square footage from approximately 190,000 to 166,000 square feet and our base rent obligation from $448.0 million to $393.0 million.

See Note 13 to our consolidated financial statements in Item 8 for discussion of our leases.

14 unchanged sentences

Throughout the year, the carrying value of goodwill is also reviewed for impairment if certain events or changes in circumstances occur and trigger whether an interim impairment test may be required.

Such changes in circumstances may include, but are not limited to, a sustained decrease in the price of an AB Unit or declines in AB’s market capitalization that would suggest that the fair value of the reporting unit is less than the carrying amount;

Such changes in circumstances may include, but are not limited to, a sustained decrease in the price of an AB Holding Unit or declines in AB’s market capitalization that would suggest that the fair value of the reporting unit is less than the carrying amount;

significant and unanticipated declines in AB’s assets under management or revenues;

3 unchanged sentences

A holistic evaluation of all events since the most recent quantitative impairment test must be done to determine whether it is more likely than not that the reporting unit is impaired.

As of January 1, 2020, we adopted ASU 2017-04, Simplifying the Test for Goodwill Impairment .

The guidance removed Step 2 of the goodwill impairment test, which had required a hypothetical purchase price allocation.

As a result of the revised guidance, a goodwill impairment will be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.

Under ASU 2017-04, Simplifying the Test for Goodwill Impairment, a goodwill impairment will be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.

Under this guidance, the goodwill impairment test no longer includes a determination by management of whether a decline in fair value is temporary;

however, it is important to consider the impact of changing market conditions, including the severity and anticipated duration, is reflected in management's determination of fair value.

however, it is important that management's determination of fair value reflect the impact of changing market conditions, including the severity and anticipated duration of any such changes.

Loss Contingencies

2 unchanged sentences

See Note 14 to our consolidated financial statements in Item 8 .

2021 Annual Report 57

Accounting Pronouncements

28 unchanged sentences

• 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.

While many of 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:

3 unchanged sentences

The severity of the expected adverse impact on our AUM and revenues of the economic downturn caused by the COVID-19 pandemic will depend on the depth and length of the downturn and its impact on the companies in which we invest.

Our conclusions about the possible continuing significant adverse impact on us is based on our assumptions that the recovery will be gradual and that there will be lasting high unemployment and economic damage.

We believe that these assumptions are reasonable, but they may not be correct and economic conditions likely will differ from our assumptions.

Our conclusions about the possible continuing significant adverse impact on us is based on our assumptions that the recovery will be gradual and that there may be lasting unemployment and economic damage.

AllianceBernstein

believe that these assumptions are reasonable, but they may not be correct and economic conditions likely will differ from our assumptions.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis