What changed in this filing

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Item 1. Financial Statements

2022-10-28 compared with 2022-07-29 · 93 added, 41 removed, 234 unchanged (36% of the section changed)

3 unchanged sentences

(in thousands, except unit amounts)

September 30,

2022 December 31,

Investment in AB $ 1,570,356 $ 1,623,764

Due from AB 419,357 —

Total assets $ 1,989,713 $ 1,623,764

LIABILITIES AND PARTNERS’ CAPITAL

Acquisition-related liabilities $ 419,357 $ —

Other liabilities 609 2,140

15 unchanged sentences

(in thousands, except per unit amounts)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

9 unchanged sentences

(in thousands)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Net income $ 56,316 $ 88,676 $ 210,385 $ 260,680

Other comprehensive (loss) income:

Other comprehensive (loss):

Foreign currency translation adjustments, before tax ( 11,574 ) ( 3,379 ) ( 27,875 ) ( 5,302 )

Income tax benefit (expense) 230 21 260 ( 9 )

Income tax benefit 284 99 544 90

Foreign currency translation adjustments, net of tax ( 11,290 ) ( 3,280 ) ( 27,331 ) ( 5,212 )

1 unchanged sentence

Amortization of prior service cost ( 4 ) 4 4 6

Recognized actuarial gain (loss) 357 212 441 ( 62 )

Recognized actuarial (loss) gain ( 204 ) 264 237 202

Changes in employee benefit related items ( 208 ) 268 241 208

Income tax (expense) benefit ( 4 ) ( 1 ) ( 7 ) 1

Employee benefit (expense) related items, net of tax 359 215 442 ( 59 )

Other comprehensive (loss) income ( 11,395 ) 1,045 ( 15,599 ) ( 1,991 )

Income tax benefit (expense) 3 ( 2 ) ( 4 ) ( 1 )

Employee (expense) benefit related items, net of tax ( 205 ) 266 237 207

Other comprehensive (loss) ( 11,495 ) ( 3,014 ) ( 27,094 ) ( 5,005 )

Comprehensive income $ 44,821 $ 85,662 $ 183,291 $ 255,675

3 unchanged sentences

(in thousands)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

10 unchanged sentences

Issuance of AB Holding Units to fund long-term incentive compensation plan awards 995 1,074 32,452 108,512

Issuance of AB Holding Units to fund CarVal acquisition 132,839 — 132,839 —

Exercise of compensatory options to buy AB Holding Units — — 178 3,402

14 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

8 unchanged sentences

Cash flows from investing activities:

Acquisition of business, net cash acquired 40,777 —

Contribution of CarVal to AB ( 40,777 ) —

Investments in AB with proceeds from exercise of compensatory options to buy AB Holding Units ( 178 ) ( 3,402 )

( 178 ) ( 3,402 )

Net cash used in investing activities ( 178 ) ( 3,402 )

1 unchanged sentence

Cash distributions to Unitholders ( 288,988 ) ( 269,876 )

Capital contributions (to) from AB ( 373 ) 408

Capital contributions from AB 312 1,914

Proceeds from exercise of compensatory options to buy AB Holding Units 178 3,402

3 unchanged sentences

Cash and cash equivalents as of end of period $ — $ —

Non-cash investing activities:

Fair value of assets acquired (less cash acquired of $ 40.8 million)

$ 1,052,062 $ —

Fair value of liabilities assumed 300,381 —

Fair value of redeemable non-controlling interest assumed 13,191 —

Fair value of assets contributed to AB (less cash acquired of $ 40.8 million)

( 1,052,062 ) —

Fair value of liabilities contributed to AB ( 300,381 ) —

Fair value of redeemable non-controlling interest contributed to AB ( 13,191 ) —

Non-cash financing activities:

Payables recorded under contingent payment arrangements 227,071 —

Equity consideration issued/to be issued in connection with acquisition 552,196 —

Payables contributed to AB under contingent payment arrangements ( 227,071 ) —

Equity consideration received/to be received from AB in connection with acquisition ( 552,196 ) —

See Accompanying Notes to Condensed Financial Statements.

1 unchanged sentence

Notes to Condensed Financial Statements

June 30, 2022

September 30, 2022

The words “we” and “our” refer collectively to AllianceBernstein Holding L.P.

25 unchanged sentences

• Some passive management, including index and enhanced index strategies.

As of June 30, 2022, EQH owned approximately 4.1 % of the issued and outstanding units representing assignments of beneficial ownership of limited partnership interests in AB Holding (“AB Holding Units”).

As of September 30, 2022, EQH owned approximately 4.0 % of the issued and outstanding units representing assignments of beneficial ownership of limited partnership interests in AB Holding (“AB Holding Units”).

AllianceBernstein Corporation (an indirect wholly-owned subsidiary of EQH, “General Partner”) is the general partner of both AB Holding and AB.

AllianceBernstein Corporation owns 100,000 general partnership units in AB Holding and a 1.0 % general partnership interest in AB.

As of June 30, 2022, the ownership structure of AB, expressed as a percentage of general and limited partnership interests, was as follows:

As of September 30, 2022, the ownership structure of AB, expressed as a percentage of general and limited partnership interests, was as follows:

EQH and its subsidiaries 62.8 %

1 unchanged sentence

Unaffiliated holders 0.7

Including both the general partnership and limited partnership interests in AB Holding and AB, EQH and its subsidiaries had an approximate 65.0 % economic interest in AB as of June 30, 2022.

Including both the general partnership and limited partnership interests in AB Holding and AB, EQH and its subsidiaries had an approximate 64.3 % economic interest in AB as of September 30, 2022.

Basis of Presentation

10 unchanged sentences

Subsequent Events

We have evaluated subsequent events through the date that these financial statements were filed with the SEC.

See Note 9 Subsequent Event for additional details related to the closing of our acquisition of CarVal Investors, L.P.

We previously announced our intention to acquire CarVal in our Form 10-Q for the quarter ended March 31, 2022.

We have evaluated subsequent events through the date that these financial statements were filed with the SEC and did not identify any subsequent events that would require disclosure in these financial statements.

Cash Distributions

1 unchanged sentence

Available Cash Flow is defined as the cash distributions AB Holding receives from AB minus such amounts as the General Partner determines, in its sole discretion, should be retained by AB Holding for use in its business (such as the payment of taxes) or plus such amounts as the General Partner determines, in its sole discretion, should be released from previously retained cash flow.

On July 29, 2022, the General Partner declared a distribution of $ 0.71 per unit, representing a distribution of Available Cash Flow for the three months ended June 30, 2022.

On October 28, 2022, the General Partner declared a distribution of $ 0.64 per unit, representing a distribution of Available Cash Flow for the three months ended September 30, 2022.

Each general partnership unit in AB Holding is entitled to receive distributions equal to those received by each AB Holding Unit.

The distribution is payable on August 18, 2022 to holders of record at the close of business on August 8, 2022.

The distribution is payable on November 23, 2022 to holders of record at the close of business on November 7, 2022.

Long-term Incentive Compensation Plans

3 unchanged sentences

AB Holding Units held in the consolidated rabbi trust are corporate assets in the name of the trust and are available to the general creditors of AB.

Repurchases of AB Holding Units for the three and six months ended June 30, 2022 and 2021 consisted of the following:

Three Months Ended June 30, Six Months Ended June 30,

Repurchases of AB Holding Units for the three and nine months ended September 30, 2022 and 2021 consisted of the following:

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

14 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 second quarter of 2022 expired at the close of business on July 26, 2022.

We did not adopt a plan during the third quarter of 2022.

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

During the first six months of 2022 and 2021, AB awarded to employees and Eligible Directors 0.8 million and 3.5 million restricted AB Holding Unit awards, respectively.

During the first nine months of 2022 and 2021, AB awarded to employees and Eligible Directors 0.8 million and 3.6 million restricted AB Holding Unit awards, respectively.

AB used AB Holding Units repurchased during the applicable period and newly-issued AB Holding Units to fund these restricted AB Holding Unit awards.

During the first six months of 2022 and 2021, AB Holding issued 5,774 and 0.1 million AB Holding Units, respectively.

During the first nine months of 2022 and 2021, AB Holding issued 5,774 and 143,211 AB Holding Units, respectively.

AB Holding used the proceeds of $ 0.1 million and $ 3.4 million, respectively, received from award recipients as payment in cash for the exercise price to purchase the equivalent number of newly-issued AB Units.

2 unchanged sentences

Diluted net income per unit is derived by adjusting net income for the assumed dilutive effect of compensatory options (“Net income – diluted”) and dividing by the diluted weighted average number of units outstanding for each period.

Three Months Ended June 30, Six Months Ended

Three Months Ended September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

8 unchanged sentences

Diluted net income per unit $ 0.56 $ 0.89 $ 2.11 $ 2.61

There were no anti-dilutive options excluded from diluted net income in the three and six moths ended June 30, 2022 or 2021.

There were no anti-dilutive options excluded from diluted net income in the three and nine months ended September 30, 2022 or 2021.

Investment in AB

Changes in AB Holding’s investment in AB during the six-month period ended June 30, 2022 are as follows (in thousands):

Changes in AB Holding’s investment in AB during the nine-month period ended September 30, 2022 are as follows (in thousands):

Investment in AB as of December 31, 2021 $ 1,623,764

3 unchanged sentences

Additional investments with proceeds from exercise of compensatory options to buy AB Holding Units 178

Capital contributions to AB 373

Capital contributions (from) AB ( 312 )

AB Holding Units retired ( 114,794 )

AB Holding Units issued to fund long-term incentive compensation plans 32,452

AB Holding Units issued to fund CarVal acquisition 132,839

Change in AB Holding Units held by AB for long-term incentive compensation plans 3,145

Investment in AB as of June 30, 2022 $ 1,462,265

Investment in AB as of September 30, 2022 $ 1,570,356

Units Outstanding

Changes in AB Holding Units outstanding during the six-month period ended June 30, 2022 are as follows:

Changes in AB Holding Units outstanding during the nine-month period ended September 30, 2022 are as follows:

Outstanding as of December 31, 2021 99,271,727

2 unchanged sentences

Units retired ( 2,802,626 )

Outstanding as of June 30, 2022 97,266,839

Outstanding as of September 30, 2022 100,401,044

AB Holding is a publicly-traded partnership (“PTP”) for federal tax purposes and, accordingly, is not subject to federal or state corporate income taxes.

4 unchanged sentences

AB Holding Units in AB’s consolidated rabbi trust are not considered outstanding for purposes of calculating AB Holding’s ownership interest in AB.

Three Months Ended June 30, Six Months Ended

Three Months Ended September 30, Nine Months Ended

September 30,

2022 2021 % Change 2022 2021 % Change

29 unchanged sentences

management cannot determine whether further developments relating to any individual matter that is pending or threatened, or all of them combined, will have a material adverse effect on our results of operations, financial condition or liquidity in any future reporting period.

Subsequent Event

On July 1, 2022, AB Holding acquired 100 % of the equity interests of CarVal in exchange for (i) AB Holding Units to be delivered in 2022, some of which were delivered on July 1 and the rest of which will be delivered during the fourth quarter (“Upfront Payment”), and (ii) the issuance of additional AB Holding Units in future years that are contingent upon achievement of performance hurdles by CarVal during the six-year period that began on January 1, 2022 and ends on December 31, 2027.

The Upfront Payment was approximately $ 750 million and consisted of the AB Holding Units discussed above as well as cash to fund certain CarVal business expenses and other obligations.

Immediately following the acquisition of CarVal by AB Holding, AB Holding contributed all of the equity interests of CarVal to AB in exchange for AB Units.

The acquisition will be accounted for as a business combination, and accordingly, the total purchase price will be allocated to the tangible and intangible assets acquired and the liabilities assumed based on their respective fair market values on the acquisition date.

The preliminary purchase price allocation is expected to be completed in the third quarter of 2022.

We have evaluated subsequent events and determined no events have occurred, other than the CarVal-related information disclosed herein , which would require an adjustment to or additional disclosure in the consolidated financial statements.

On July 1, 2022, AB Holding acquired a 100 % ownership interest in CarVal Investors L.P.

(“CarVal”), a global private alternatives investment manager primarily focused on opportunistic and distressed credit, renewable energy infrastructure, specialty finance and transportation investments that, as of the acquisition date, constituted approximately $ 12.2 billion in AUM.

Immediately following the acquisition of CarVal by AB Holding, AB Holding contributed 100 % of its equity interests in CarVal to AB in exchange for AB Units and a receivable for future consideration to be paid.

Post-acquisition, CarVal was rebranded AB CarVal Investors (“AB CarVal”).

On the acquisition date, AB Holding issued approximately 3.2 million AB Holding Units (with a fair value of $ 132.8 million) and recorded a $ 419.4 million receivable for the issuance of additional AB Holding Units in exchange for AB Units on November 1, 2022 and associated liability to CarVal for $ 419.4 million.

AB Holding immediately contributed 100 % of its equity interests in CarVal to AB.

AB received 100 % equity interest in CarVal from AB Holding and issued approximately 3.2 million AB Units (with a fair value of $ 132.8 million) and recorded a $ 419.4 million liability payable to AB Holding for the issuance of additional AB Units on November 1, 2022.

AB also recorded a contingent consideration payable of $ 227.1 million (to be paid predominantly in AB Units) based on CarVal achieving certain performance objectives over a six-year period ending December 31, 2027.

The AB Units, as discussed above , were issued, or will be issued, to AB Holding;

AB Holding then issued, or will issue, the equal amount of AB Holding Units to CarVal.

The excess of the purchase price over the current fair value of identifiable net liabilities acquired of $ 156.1 million, net cash acquired of $ 40.8 million, resulted in the recognition of $ 632.4 million of goodwill and the recording of $ 303.0 million of finite-lived intangible assets primarily relating to investment management contracts and investor relationships with useful lives ranging from 5 to 10 years.

As a result of the transfer of equity to AB, AB recorded a net deferred tax asset of $ 4.8 million, resulting in the recognition of $ 627.6 million of goodwill.

The goodwill recorded is not deductible for tax purposes as the CarVal acquisition was an investment in a partnership.

The following table summarizes the amounts of identified assets acquired and liabilities assumed at the acquisition date, as well as the consideration transferred to acquire CarVal (in thousands):

Summary of purchase consideration:

Fair value of AB Holding units issued $ 552,196

Fair value of contingent consideration 227,071

Total purchase consideration 779,267

Purchase price allocation:

Assets acquired:

Cash and cash equivalents $ 40,777

Receivables, net 82,523

Investments - other 947

Furniture, equipment, and leasehold improvements, net 2,464

Right-of-use assets 16,482

Other assets 14,230

Intangible assets 303,000

Goodwill 632,416

Total assets acquired 1,092,839

Liabilities assumed:

Accounts payable and accrued expenses ( 33,134 )

Accrued compensation and benefits ( 208,015 )

Debt ( 42,661 )

Lease liabilities ( 16,571 )

Non-redeemable non-controlling interests in consolidated entities ( 13,191 )

Total liabilities assumed ( 313,572 )

Net assets acquired $ 779,267

The CarVal acquisition has not had a significant impact on our 2022 revenues and earnings.

As a result, we have not provided supplemental pro forma financial information.

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-Q

Item 1. Financial Statements