32 unchanged sentences
The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
−Removed: Measurement of Equity in Net Income Attributable to AB Unitholders – Performance-Based Fees
−Removed: As described in Notes 1 and 2 to the financial statements, the Company’s principal source of income and cash flow is attributable to its investment in AllianceBernstein L.P.
−Removed: (AB) limited partnership interests.
−Removed: The equity in net income attributable to AB unitholders was $416.3 million for the year ended December 31, 2021.
−Removed: The Company records its investment in AB using the equity method of accounting.
−Removed: The Company’s investment is increased to reflect its proportionate share of income of AB, decreased to reflect its proportionate share of losses of AB and cash distributions made by AB to its unitholders and adjusted to reflect its proportionate share of certain capital transactions of AB.
−Removed: The Company’s proportionate share of income of AB includes performance-based fees recognized by AB.
−Removed: As disclosed by management, the transaction price for the asset management performance obligation for certain hedge fund and alternative investment advisory contracts, provide for a performance-based fee, in addition to the base advisory fee, which is calculated as either a percentage of absolute investment results or a percentage of investment results in excess of a stated benchmark over a specified period of time.
−Removed: The performance-based fees are forms of variable consideration and are therefore excluded from the transaction price until it becomes probable that there will not be significant reversal of the cumulative revenue recognized.
−Removed: Constraining factors impacting the amount of variable consideration included in the transaction price include the contractual claw-back provisions to which the variable consideration is subject, the length of time to which the uncertainty of the consideration is subject, the number and range of possible consideration amounts, the probability of significant fluctuations in the fund’s market value and the level at which the fund’s value exceeds the contractual threshold required to earn such a fee.
−Removed: With respect to the constraining factors related to the fund’s market value, management measures assets under management (AUM) using established market-based valuation methods and fair valuation (non-observable market) methods.
−Removed: Fair valuation methods, including discounted cash flow models and other 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.
−Removed: The principal considerations for our determination that performing procedures relating to the measurement of equity in net income attributable to AB unitholders - performance-based fees is a critical audit matter are the significant audit effort in performing procedures and evaluating evidence related to these fees, including evaluating evidence related to the constraining factors impacting the amount of variable consideration, and the audit effort also included the involvement of professionals with specialized skill and knowledge to assist in evaluating management’s estimate of the funds’ market value where fair valuation methods are used.
+Added: Acquisition of CarVal Investors L.P.
+Added: - Fair Value of Finite-Lived Intangible Assets and Contingent Consideration Payable
+Added: As described in Note 8 to the financial statements, on July 1, 2022, the Company acquired a 100% ownership interest in CarVal Investors L.P.
+Added: (CarVal) for total purchase consideration of $818.1 million, which resulted in management recording $303.0 million of finite-lived intangible assets primarily related to investment management contracts and investor relationships with useful lives ranging from 5 to 10 years and $228.9 million of contingent consideration payable.
+Added: Immediately following the acquisition of CarVal by the Company, the Company contributed 100% of its equity interests in CarVal to AllianceBernstein L.P.
+Added: (AB) in exchange for AB units.
+Added: Fair value of the acquired finite-lived intangible assets was based on a forecast of future cash flows attributable to the assets that are discounted to present value using a risk-adjusted discount rate.
+Added: Fair value of the contingent consideration payable was based on a forecast of future cash flows attributable to the performance objectives that are discounted to present value using a risk-adjusted discount rate.
+Added: The principal considerations for our determination that performing procedures relating to the fair value of the finite-lived intangible assets and contingent consideration payable recognized in the acquisition of CarVal is a critical audit matter are the significant judgment by management in developing the estimated fair value of the finite-lived intangible assets and the contingent consideration payable.
+Added: This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to the future cash flows and risk-adjusted discount rate assumptions utilized within the calculation of the present value of future cash flows.
+Added: In addition, the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements.
−Removed: These procedures included testing the effectiveness of controls relating to equity in net income attributable to AB Unitholders, including controls relating to AB’s revenue recognition process for performance-based fees, including controls over the assessment of constraining factors and the valuation of AUM.
−Removed: These procedures also included, among others, testing management’s process for determining performance-based fees, including evaluating the appropriateness of the methods used, testing the contractual claw-back provisions to which the variable consideration is subject and, on a sample basis, evaluating the reasonableness of management’s assumptions related to the length of time to which the uncertainty of the consideration is subject, the number and range of possible consideration amounts and the probability of significant fluctuations in the funds’ market value and, as applicable, the level at which a fund’s value exceeded the contractual threshold required to earn such fees.
−Removed: In evaluating management’s estimates of the funds’ market value, procedures included the involvement of professionals with specialized skill and knowledge to assist in developing an independent range of prices for a sample of securities used in determining the underlying funds’ market value where fair valuation methods are used, and comparison of management’s estimate of the securities’ fair value to the independently developed ranges.
−Removed: Developing the independent estimate of securities’ fair value involved testing the completeness and accuracy of data provided by management and independently developing the significant assumptions for the sampled securities.
+Added: These procedures included testing the effectiveness of controls relating to the determination of the fair value of finite-lived intangible assets and contingent consideration payable recognized in the acquisition of CarVal, including controls over the development of the future cash flows and risk-adjusted discount rate assumptions utilized within the calculation of the present value of future cash flows.
+Added: These procedures also included, among others, reading the purchase agreement and testing management’s process for estimating the fair value of the acquired finite-lived intangible assets and contingent consideration payable.
+Added: Testing management’s process included (i) evaluating the appropriateness of the method used to discount future cash flows to present value, (ii) testing the completeness and accuracy of underlying data used in the method used to discount future cash flows to present value, and (iii) evaluating management’s significant assumptions related to the future cash flows and risk-adjusted discount rate.
+Added: Evaluating the reasonableness of the assumption related to the future cash flows involved considering the historical performance of Carval, the consistency with external market and industry data, and the consistency with evidence obtained in other areas of the audit.
+Added: Professionals with specialized skill and knowledge were used to assist in the evaluation of the appropriateness of the method used to discount future cash flows to present value and the reasonableness of the risk-adjusted discount rate assumption.
/s/ PricewaterhouseCoopers LLP
9 unchanged sentences
Investment in AB $ 2,074,626 $ 1,623,764
−Removed: Other assets — 92
Total assets $ 2,074,626 $ 1,623,764
44 unchanged sentences
Changes in employee benefit related items 1,281 5,573 ( 1,549 )
−Removed: Income tax (expense) benefit ( 20 ) ( 67 ) 99
+Added: Income tax (expense) ( 28 ) ( 20 ) ( 67 )
Employee benefit related items, net of tax 1,253 5,553 ( 1,616 )
−Removed: Other comprehensive income (loss) 1,193 6,730 ( 1,167 )
+Added: Other comprehensive (loss) income ( 18,303 ) 1,193 6,730
Comprehensive income $ 255,862 $ 387,036 $ 286,110
17 unchanged sentences
Issuance of AB Holding Units to fund long-term incentive compensation plan awards 76,230 151,082 107,366
+Added: Issuance of AB Holding Units to fund CarVal acquisition 589,169 — —
Exercise of compensatory options to buy AB Holding Units 178 3,402 147
4 unchanged sentences
Balance, end of year ( 37,551 ) ( 43,309 ) ( 20,171 )
−Removed: Accumulated Other Comprehensive (Loss) Income
+Added: Accumulated Other Comprehensive (Loss)
Balance, beginning of year ( 32,705 ) ( 33,898 ) ( 40,628 )
17 unchanged sentences
Decrease (increase) in other assets — 92 ( 31 )
−Removed: Increase in other liabilities 264 150 1,082
+Added: (Decrease) increase in other liabilities ( 517 ) 264 150
Net cash provided by operating activities 362,614 355,109 270,014
Cash flows from investing activities:
−Removed: Investments in AB with proceeds from exercises of compensatory options to buy AB Holding Units ( 3,402 ) ( 147 ) ( 11,511 )
+Added: Acquisition of business, net cash acquired 40,777 — —
+Added: Contribution of CarVal to AB ( 40,777 ) — —
+Added: Capital contribution to AB ( 1,590 ) — —
+Added: Investments in AB with proceeds from exercise of compensatory options to buy AB Holding Units ( 178 ) ( 3,402 ) ( 147 )
Net cash used in investing activities ( 1,768 ) ( 3,402 ) ( 147 )
1 unchanged sentence
Cash distributions to Unitholders ( 361,024 ) ( 357,455 ) ( 270,881 )
−Removed: Capital contributions from (to) AB 2,346 867 ( 270 )
+Added: Capital contributions from AB — 2,346 867
Proceeds from exercise of compensatory options to buy AB Holding Units 178 3,402 147
5 unchanged sentences
Non-cash investing activities:
+Added: Fair value of assets acquired (less cash acquired of $ 40.8 million)
+Added: $ 1,087,218 $ — $ —
+Added: Fair value of liabilities assumed 296,750 — —
+Added: Fair value of non-redeemable non-controlling interest assumed 13,191 — —
+Added: Fair value of assets contributed to AB (less cash acquired of $ 40.8 million)
+Added: ( 1,087,218 ) — —
+Added: Fair value of liabilities contributed to AB ( 296,750 ) — —
+Added: Fair value of non-redeemable non-controlling interest contributed to AB ( 13,191 ) — —
Issuance of AB Holding Units to fund long-term incentive compensation plan awards 76,230 151,082 107,366
Retirement of AB Holding Units ( 114,794 ) ( 143,460 ) ( 78,388 )
−Removed: See Accompanying Notes to Financial Statements.
2022 Annual Report 67
+Added: Years Ended December 31
+Added: 2022 2021 2020
+Added: (in thousands)
+Added: Non-cash financing activities:
+Added: Payables recorded under contingent payment arrangements 228,885 — —
+Added: Equity consideration issued in connection with acquisition 589,169 — —
+Added: Payables contributed to and assumed by AB under contingent payment arrangements ( 228,885 ) — —
+Added: Equity consideration received from AB in connection with acquisition ( 589,169 ) — —
+Added: See Accompanying Notes to Financial Statements.
+Added: AllianceBernstein
AllianceBernstein Holding L.P.
16 unchanged sentences
AB also provides distribution, shareholder servicing, transfer agency services and administrative services to the mutual funds it sponsors.
−Removed: AB’s high-quality, in-depth research is the foundation of its business.
+Added: AB’s high-quality, in-depth research is the foundation of its asset management and private wealth management businesses.
AB’s research disciplines include economic, fundamental equity, fixed income and quantitative research.
1 unchanged sentence
AB provides a broad range of investment services with expertise in:
−Removed: • Actively-managed equity strategies, with global and regional portfolios across capitalization ranges, concentration ranges and investment strategies, including value, growth and core equities;
+Added: • Actively managed equity strategies across global and regional universes, as well as capitalization ranges, concentration ranges and investment strategies, including value, growth and core equities;
• Actively managed traditional and unconstrained fixed income strategies, including taxable and tax-exempt strategies;
−Removed: • Alternative investments, including hedge funds, fund of funds, direct lending, real estate and private equity;
−Removed: • Multi-asset solutions and services, including dynamic asset allocation, customized target-date funds and target-risk funds;
−Removed: • Some passive management, including index and enhanced index strategies.
+Added: • Actively managed alternative investments, including hedge funds, fund of funds and direct assets (e.g., direct lending, real estate and private equity);
+Added: • Portfolios with Purpose, including actively managed, impact-focused and Responsible+ (climate-conscious, ESG leaders, change catalysts) equity, fixed income and multi-asset strategies that address our clients evolving need to invest their capital with purpose while pursuing strong investment returns;
+Added: • Multi-asset services and solutions, including dynamic asset allocation, customized target-date funds and target-risk funds;
+Added: • Some passive management, including index, ESG index and enhanced index strategies.
+Added: 2022 Annual Report 69
As of December 31, 2022, EQH owns approximately 3.5 % of the issued and outstanding units representing assignments of beneficial ownership of limited partnership interests in AB Holding (“ AB Holding Units ”).
1 unchanged sentence
AllianceBernstein Corporation owns 100,000 general partnership units in AB Holding and a 1 % general partnership interest in AB.
−Removed: AllianceBernstein
As of December 31, 2022, the ownership structure of AB, expressed as a percentage of general and limited partnership interests, was as follows:
22 unchanged sentences
AB maintains several unfunded, non-qualified long-term incentive compensation plans, under which the company grants awards of restricted AB Holding Units to its employees and members of the Board of Directors, who are not employed by AB or by any of AB’s affiliates (“ Eligible Directors ”).
+Added: AllianceBernstein
AB funds its restricted AB Holding Unit awards either by purchasing AB Holding Units on the open market or purchasing newly-issued AB Holding Units from AB Holding, and then keeping these AB Holding Units in a consolidated rabbi trust until delivering them or retiring them.
1 unchanged sentence
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.
−Removed: 2021 Annual Report 69
Repurchases of AB Holding Units for the years ended December 31, 2022 and 2021 consisted of the following:
8 unchanged sentences
(1) Purchased on a trade-date basis.
−Removed: (2) The remainder related to purchases of AB Holding Units from employees to fulfill statutory tax withholding requirements at the time of delivery of long-term incentive compensation awards.
+Added: The difference between open-market purchases and units retained reflects the retention of AB Holding Units from employees to fulfill statutory tax withholding requirements at the time of delivery of long-term incentive compensation awards.
Each quarter, AB considers whether to implement a plan to repurchase AB Holding Units pursuant to Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended (“ Exchange Act ”).
8 unchanged sentences
AB used AB Holding Units repurchased during the periods and newly-issued AB Holding Units to fund these awards.
−Removed: During 2021 and 2020, AB Holding issued 0.1 million and 5,182 AB Holding Units, respectively, upon exercise of options to buy AB Holding Units.
+Added: During 2022 and 2021, AB Holding issued 5,774 and 0.1 million AB Holding Units, respectively, upon exercise of options to buy AB Holding Units.
AB Holding used the proceeds of $ 0.2 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.
Subsequent Events
−Removed: We have evaluated subsequent events through the date that these financial statements were filed with the Securities and Exchange Commission and did not identify any subsequent events that would have required disclosure in these financial statements.
−Removed: AllianceBernstein
+Added: 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 have required disclosure in these financial statements.
+Added: 2022 Annual Report 71
Net Income Per Unit
23 unchanged sentences
Additional investments with proceeds from exercises of compensatory options to buy AB Holding Units 178 3,402
+Added: Capital contributions to AB 1,590 —
Capital contributions from AB — ( 2,346 )
1 unchanged sentence
AB Holding Units issued to fund long-term incentive compensation plans 76,230 151,082
+Added: AB Holding Units issued to fund CarVal acquisition 589,169 —
Change in AB Holding Units held by AB for long-term incentive compensation plans 5,758 ( 23,138 )
Investment in AB as of December 31, $ 2,074,626 $ 1,623,764
−Removed: 2021 Annual Report 71
+Added: AllianceBernstein
Units Outstanding
3 unchanged sentences
Units issued (1)
+Added: 17,326,222 3,917,437
Units retired ( 2,802,626 ) ( 3,111,863 )
Outstanding as of December 31, 113,801,097 99,271,727
+Added: (1) Includes 15,321,535 Units issued as a result of the CarVal acquisition.
AB Holding is a publicly-traded partnership (" PTP ") for federal tax purposes and, accordingly, is not subject to federal or state corporate income taxes.
28 unchanged sentences
Total income taxes $ 31,339 $ 30,483 $ 29,024 2.8 5.0
−Removed: AllianceBernstein
+Added: 2022 Annual Report 73
In order to preserve AB Holding’s status as a PTP for federal income tax purposes, management ensures that AB Holding does not directly or indirectly (through AB) enter into a substantial new line of business.
14 unchanged sentences
In these cases, we disclose that we are unable to predict the outcome or estimate a possible loss or range of loss.
−Removed: AB may be involved in various matters, including regulatory inquiries, administrative proceedings and litigation, some of which may allege significant damages.
+Added: On December 14th, 2022, four individual participants in the Profit Sharing Plan for Employees of AllianceBernstein L.P., (the "Plan" ) filed a class action complaint (the “Complaint” ) in the U.S.
+Added: District Court for the Southern District of New York against AB, current and former members of the Compensation Committee of the Board of Directors, and the Investment and Administrative Committees under the Plan.
+Added: Plaintiffs, who seek to represent a class of all participants in the Plan from December 14, 2016 to the present, allege that defendants violated their fiduciary duties and engaged in prohibited transactions under the Employee Retirement Income Security Act of 1974, as amended (" ERISA ") by including proprietary collective investment trusts as investment options offered under the Plan.
+Added: The Complaint seeks unspecified damages, disgorgement and other equitable relief.
+Added: AB is prepared to defend itself vigorously against these claims.
+Added: While the ultimate outcome of this matter is currently not determinable given the matter remains in its early stages, we do not believe this litigation will have a material adverse effect on our results of operations, financial condition or liquidity.
+Added: AB may be involved in various other matters, including regulatory inquiries, administrative proceedings and litigation, some of which may allege significant damages.
It is reasonably possible that AB could incur losses pertaining to these matters, but management cannot currently estimate any such losses.
2 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.
+Added: On July 1, 2022, AB Holding acquired a 100 % ownership interest in CarVal Investors L.P.
+Added: (“ CarVa l”), 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.
+Added: Also on July 1, immediately following the acquisition of CarVal, AB Holding contributed 100 % of its equity interests in CarVal to AB in exchange for AB Units.
+Added: Post-acquisition, CarVal was rebranded AB CarVal Investors (“ AB CarVal ”).
+Added: On the acquisition date, AB Holding issued approximately 3.2 million AB Holding Units (with a fair value of $ 132.8 million), with the remaining 12.1 million Units (with a fair value of $ 456.4 million) issued on November 1, 2022.
+Added: The fair value of the units issued on November 1, 2022 reflects final adjustments to the estimated unit issuance recorded as of acquisition close on July 1, 2022 and as disclosed in the third quarter 2022 Form 10-Q.
+Added: AllianceBernstein
+Added: AB received 100 % equity interest in CarVal from AB Holding and issued approximately 15.3 million AB Units (with a fair value of $ 589.2 million).
+Added: AB also recorded a contingent consideration payable of $ 228.9 million (to be paid predominantly in AB Units) based on CarVal achieving certain performance objectives over a six-year period ending December 31, 2027.
+Added: The AB Units, as discussed above , were issued to AB Holding;
+Added: AB Holding then issued the equal amount of AB Holding Units to CarVal.
+Added: The excess of the purchase price over the current fair value of identifiable net liabilities acquired of $ 156.1 million (net of cash acquired of $ 40.8 million), resulted in the recognition of $ 671.2 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.
+Added: As a result of the transfer of equity to AB, AB recorded a net deferred tax asset of $ 5.1 million, resulting in the recognition of $ 666.1 million of goodwill.
+Added: The goodwill recorded is not deductible for tax purposes as the CarVal acquisition was an investment in a partnership.
+Added: The following table summarizes the amounts of identified assets acquired and liabilities assumed at the acquisition date (reflecting acquisition adjustments recorded in the fourth quarter of 2022), as well as the consideration transferred to acquire CarVal (in thousands):
+Added: Summary of purchase consideration:
+Added: Fair value of AB Holding units issued $ 589,169
+Added: Fair value of contingent consideration 228,885
+Added: Total purchase consideration 818,054
+Added: Purchase price allocation:
+Added: Assets acquired:
+Added: Cash and cash equivalents $ 40,777
+Added: Receivables, net 82,523
+Added: Investments - other 947
+Added: Furniture, equipment, and leasehold improvements, net 2,464
+Added: Right-of-use assets 16,482
+Added: Other assets 10,600
+Added: Intangible assets 303,000
+Added: Goodwill 671,203
+Added: Total assets acquired 1,127,996
+Added: Liabilities assumed:
+Added: Accounts payable and accrued expenses ( 17,793 )
+Added: Accrued compensation and benefits ( 219,726 )
+Added: Debt ( 42,661 )
+Added: Lease liabilities ( 16,571 )
+Added: Non-redeemable non-controlling interests in consolidated entities ( 13,191 )
+Added: Total liabilities assumed ( 309,942 )
+Added: Net assets acquired $ 818,054
+Added: The CarVal acquisition did not have a significant impact on our 2022 revenues and earnings.
+Added: As a result, we have not provided supplemental pro forma financial information.
2022 Annual Report 75
20 unchanged sentences
We believe that our audits provide a reasonable basis for our opinions.
+Added: As described in Management’s Report on Internal Control Over Financial Reporting, management has excluded CarVal Investors L.P.
+Added: (CarVal) from its assessment of internal control over financial reporting as of December 31, 2022 because it was acquired by the Company in a purchase business combination during 2022.
+Added: We have also excluded CarVal from our audit of internal control over financial reporting.
+Added: CarVal is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting each approximate 2% of the related consolidated financial statement amounts as of and for the year ended December 31, 2022.
Definition and Limitations of Internal Control over Financial Reporting
3 unchanged sentences
and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
+Added: AllianceBernstein
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
−Removed: AllianceBernstein
Critical Audit Matters
1 unchanged sentence
The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
−Removed: Performance-Based Fees
−Removed: As described in Notes 2 and 3 to the consolidated financial statements, performance-based fees earned were $245.1 million for the year ended December 31, 2021.
−Removed: The transaction price for the asset management performance obligation for certain hedge fund and alternative investment advisory contracts, provide for a performance-based fee, in addition to the base advisory fee, which is calculated as either a percentage of absolute investment results or a percentage of investment results in excess of a stated benchmark over a specified period of time.
−Removed: The performance-based fees are forms of variable consideration and are therefore excluded from the transaction price until it becomes probable that there will not be significant reversal of the cumulative revenue recognized.
−Removed: Constraining factors impacting the amount of variable consideration included in the transaction price include the contractual claw-back provisions to which the variable consideration is subject, the length of time to which the uncertainty of the consideration is subject, the number and range of possible consideration amounts, the probability of significant fluctuations in the fund’s market value and the level at which the fund’s value exceeds the contractual threshold required to earn such a fee.
−Removed: With respect to the constraining factors related to the fund’s market value, management measures assets under management (AUM) using established market-based valuation methods and fair valuation (non-observable market) methods.
−Removed: Fair valuation methods, including discounted cash flow models and other 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.
−Removed: The principal considerations for our determination that performing procedures relating to performance-based fees is a critical audit matter are the significant audit effort in performing procedures and evaluating evidence related to these fees, including evaluating evidence related to the constraining factors impacting the amount of variable consideration, and the audit effort also included the involvement of professionals with specialized skill and knowledge to assist in evaluating management's estimate of the funds' market value where fair valuation methods are used.
+Added: Acquisition of CarVal Investors L.P.
+Added: - Fair Value of Finite-Lived Intangible Assets and Contingent Consideration Payable
+Added: As described in Notes 2, 9 and 24 to the consolidated financial statements, on July 1, 2022, AllianceBernstein Holding L.P.
+Added: (AB Holding) acquired a 100% ownership interest in CarVal for total purchase consideration of $818.1 million, which resulted in management recording $303.0 million of finite-lived intangible assets primarily related to investment management contracts and investor relationships with useful lives ranging from 5 to 10 years and $228.9 million of contingent consideration payable.
+Added: Immediately following the acquisition of CarVal by AB Holding, AB Holding contributed 100% of its equity interests in CarVal to AllianceBernstein L.P.
+Added: (AB) in exchange for AB units.
+Added: Fair value of the acquired finite-lived intangible assets was based on a forecast of future cash flows attributable to the assets that are discounted to present value using a risk-adjusted discount rate.
+Added: Fair value of the contingent consideration payable was based on a forecast of future cash flows attributable to the performance objectives that are discounted to present value using a risk-adjusted discount rate.
+Added: The principal considerations for our determination that performing procedures relating to the fair value of the finite-lived intangible assets and contingent consideration payable recognized in the acquisition of CarVal is a critical audit matter are the significant judgment by management in developing the estimated fair value of the finite-lived intangible assets and the contingent consideration payable.
+Added: This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to the future cash flows and risk-adjusted discount rate assumptions utilized within the calculation of the present value of future cash flows.
+Added: In addition, the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.
−Removed: These procedures included testing the effectiveness of controls relating to the Company’s revenue recognition process for performance-based fees, including controls over the assessment of constraining factors and the valuation of AUM.
−Removed: These procedures also included, among others, testing management’s process for determining performance-based fees, including evaluating the appropriateness of the methods used, testing the contractual claw-back provisions to which the variable consideration is subject and, on a sample basis, evaluating the reasonableness of management’s assumptions related to the length of time to which the uncertainty of the consideration is subject, the number and range of possible consideration amounts and the probability of significant fluctuations in the funds’ market value and, as applicable, the level at which a fund’s value exceeded the contractual threshold required to earn such fees.
−Removed: In evaluating management’s estimates of the funds’ market value, procedures included the involvement of professionals with specialized skill and knowledge to assist in developing an independent range of prices for a sample of securities used in determining the underlying funds’ market value where fair valuation methods are used, and comparison of management’s estimate of the securities’ fair value to the independently developed ranges.
−Removed: Developing the independent estimate of securities’ fair value involved testing the completeness and accuracy of data provided by management and independently developing the significant assumptions for the sampled securities.
−Removed: /s/PricewaterhouseCooper LLP
+Added: These procedures included testing the effectiveness of controls relating to the determination of the fair value of finite-lived intangible assets and contingent consideration payable recognized in the acquisition of CarVal, including controls over the development of the future cash flows and risk-adjusted discount rate assumptions utilized within the calculation of the present value of future cash flows.
+Added: These procedures also included, among others, reading the purchase agreement and testing management’s process for estimating the fair value of the acquired finite-lived intangible assets and contingent consideration payable.
+Added: Testing management’s process included (i) evaluating the appropriateness of the method used to discount future cash flows to present value, (ii) testing the completeness and accuracy of underlying data used in the method used to discount future cash flows to present value, and (iii) evaluating management’s significant assumptions related to the future cash flows and risk-adjusted discount rate.
+Added: Evaluating the reasonableness of the assumption related to the future cash flows involved considering the historical performance of Carval, the consistency with external market and industry data, and the consistency with evidence obtained in other areas of the audit.
+Added: Professionals with specialized skill and knowledge were used to assist in the evaluation of the appropriateness of the method used to discount future cash flows to present value and the reasonableness of the risk-adjusted discount rate assumption.
+Added: /s/PricewaterhouseCoopers LLP
Nashville, Tennessee
26 unchanged sentences
Right-of-use assets 371,898 421,980
+Added: Assets held for sale 551,351 —
Other assets 179,568 262,303
9 unchanged sentences
AB mutual funds 162,291 94,962
+Added: Contingent consideration liability 247,309 38,260
Accounts payable and accrued expenses 173,466 219,047
3 unchanged sentences
Debt 990,000 755,000
+Added: Liabilities held for sale 107,952 —
Total liabilities 6,292,635 5,927,996
Commitments and contingencies (See Note 14)
−Removed: Redeemable non-controlling interest 421,169 102,359
+Added: Redeemable non-controlling interest of consolidated entities 368,656 421,169
General Partner 45,985 42,850
5 unchanged sentences
Partners’ capital attributable to AB Unitholders 4,465,033 4,160,923
−Removed: Total liabilities, redeemable non-controlling interest and capital $ 10,510,088 $ 9,697,840
+Added: Non-redeemable non-controlling interests in consolidated entities 12,607 —
+Added: Total capital 4,477,640 4,160,923
+Added: Total liabilities, non-controlling interest and capital $ 11,138,931 $ 10,510,088
See Accompanying Notes to Consolidated Financial Statements.
10 unchanged sentences
Dividend and interest income 123,091 38,734 50,923
−Removed: Investment (losses) gains (636) (16,401) 38,659
+Added: Investment (losses) (102,413) (636) (16,401)
Other revenues 105,544 108,409 104,703
8 unchanged sentences
General and administrative 641,635 555,608 491,070
−Removed: General and administrative 555,608 485,544 484,750
−Removed: Real estate charges — 5,526 3,324
Contingent payment arrangements 6,563 2,710 1,855
5 unchanged sentences
Net income 775,457 1,153,734 861,783
−Removed: Net income (loss) of consolidated entities attributable to non-controlling interests 5,111 (4,169) 29,641
+Added: Net (loss) income of consolidated entities attributable to non-controlling interests (56,356) 5,111 (4,169)
Net income attributable to AB Unitholders $ 831,813 $ 1,148,623 $ 865,952
22 unchanged sentences
Changes in employee benefit related items 6,946 15,767 (4,256)
−Removed: Income tax (expense) benefit (59) (187) 274
+Added: Income tax (expense) (95) (59) (187)
Employee benefit related items, net of tax 6,851 15,708 (4,443)
−Removed: Other comprehensive gain (loss) 3,868 18,801 (1,990)
−Removed: Comprehensive income (loss) in consolidated entities attributable to non-controlling interests 5,111 (4,169) 29,788
+Added: Other comprehensive (loss) gain (39,142) 3,868 18,801
+Added: Comprehensive (loss) income in consolidated entities attributable to non-controlling interests (56,356) 5,111 (4,169)
Comprehensive income attributable to AB Unitholders $ 792,671 $ 1,152,491 $ 884,753
12 unchanged sentences
Long-term incentive compensation plans activity 25 117 (23)
−Removed: Issuance of AB Units, net 76 290 357
+Added: (Retirement) issuance of AB Units, net (385) 76 290
+Added: Issuance of AB Units for CarVal acquisition 5,892 — —
Balance, end of year 45,985 42,850 41,776
4 unchanged sentences
Long-term incentive compensation plans activity 2,521 11,586 (2,147)
−Removed: Issuance of AB Units, net 7,290 28,642 35,259
−Removed: Other — — 844
+Added: (Retirement) issuance of AB Units, net (38,286) 7,290 28,642
+Added: Issuance of AB Units for CarVal acquisition 583,277 — —
Balance, end of year 4,648,113 4,336,211 4,229,485
2 unchanged sentences
Long-term incentive compensation awards expense 607 941 802
−Removed: Capital contributions from AB Holding (958) (107) 1,294
+Added: Capital contributions from (to) AB Holding 3,456 (958) (107)
Balance, end of year (4,270) (8,333) (8,316)
2 unchanged sentences
Purchases of AB Holding Units to fund long-term compensation plans, net (210,568) (261,825) (148,624)
−Removed: (Issuance) of AB Units, net (7,348) (28,696) (35,736)
+Added: Retirement (issuance) of AB Units, net 40,346 (7,348) (28,696)
Long-term incentive compensation awards expense 198,783 215,484 194,840
2 unchanged sentences
Balance, end of year (95,318) (119,470) (57,219)
−Removed: Accumulated Other Comprehensive Income (Loss)
+Added: Accumulated Other Comprehensive (Loss)
Balance, beginning of year (90,335) (94,203) (113,004)
5 unchanged sentences
Balance, beginning of year — — —
−Removed: Net income — — 91
−Removed: Foreign currency translation adjustment — — 147
−Removed: Purchase of non-controlling interest — — (1,187)
+Added: CarVal acquisition 12,607 — —
Balance, end of year 12,607 — —
14 unchanged sentences
Depreciation and other amortization 66,617 44,985 61,028
−Removed: Unrealized losses (gains) on investments 4,454 10,405 (13,431)
+Added: Unrealized losses on investments 40,857 4,454 10,405
Unrealized losses (gains) on investments of consolidated company-sponsored investment funds 73,194 1,882 (854)
Non-cash lease expense 99,861 98,773 98,798
+Added: Loss on assets held for sale 7,400 — —
Other, net 14,604 22,580 (2,914)
Changes in assets and liabilities:
−Removed: Decrease (increase) in securities, segregated 249,521 (658,612) 74,688
−Removed: (Increase) decrease in receivables (360,789) (182,684) 223,137
+Added: (Increase) decrease in securities, segregated (18,474) 249,521 (658,612)
+Added: Decrease (increase) in receivables 35,410 (360,789) (182,684)
(Increase) decrease in investments (10,331) (27,000) 7,597
−Removed: (Increase) decrease in investments of consolidated company-sponsored investment funds (312,325) 279,276 (193,158)
+Added: Decrease (increase) in investments of consolidated company-sponsored investment funds 23,295 (312,325) 279,276
(Increase) in deferred sales commissions (12,113) (45,197) (55,125)
(Increase) decrease in other assets (5,487) (6,578) 69,160
−Removed: Decrease in other assets and liabilities of consolidated company-sponsored investment funds, net 38,161 7,169 11,437
−Removed: Increase (decrease) in payables 214,139 861,502 (641,369)
−Removed: Increase (decrease) in accounts payable and accrued expenses 35,877 10,666 (56,518)
−Removed: Increase (decrease) in accrued compensation and benefits 50,545 46,885 (7,486)
+Added: (Increase) decrease in other assets and liabilities of consolidated company-sponsored investment funds, net (45,432) 38,161 7,169
+Added: Increase in payables 110,112 214,139 861,502
+Added: (Decrease) increase in accounts payable and accrued expenses (8,424) 35,877 10,666
+Added: (Decrease) increase in accrued compensation and benefits (150,285) 50,545 46,885
Cash payments to relieve operating lease liabilities (109,182) (114,769) (115,656)
7 unchanged sentences
Proceeds from debt, net 235,000 80,000 115,000
−Removed: Increase (decrease) in overdrafts payable 16,192 (12,633) (59,924)
+Added: (Decrease) increase in overdrafts payable (25,411) 16,192 (12,633)
Distributions to General Partner and Unitholders (1,069,820) (1,059,892) (836,879)
Subscriptions (redemptions) of non-controlling interests of consolidated company-sponsored investment funds, net 3,843 313,699 (219,033)
−Removed: Capital contributions (to) from affiliates (2,346) (867) 269
+Added: Capital contributions from (to) affiliates 1,590 (2,346) (867)
Additional investments by AB Holding with proceeds from exercise of compensatory options to buy AB Holding Units 178 3,402 147
Purchases of AB Holding Units to fund long-term incentive compensation plan awards, net (210,568) (261,825) (148,624)
+Added: Payment of acquisition-related debt obligation (42,661) — —
Other, net (2,131) (2,186) 306
1 unchanged sentence
Effect of exchange rate changes on cash and cash equivalents (56,234) (17,982) 23,032
−Removed: Net increase in cash and cash equivalents 302,120 382,735 37,847
+Added: Net (decrease) increase in cash and cash equivalents (67,009) 302,120 382,735
Cash and cash equivalents as of beginning of the period 1,376,026 1,073,906 691,171
4 unchanged sentences
Fair value of assets acquired (excluding cash acquired of $40.8 million, $2.8 million and $0.6 million, for 2022, 2021 and 2020, respectively) 1,085,141 13,235 18,389
+Added: Fair value of deferred tax asset recorded 5,072 — —
Fair value of liabilities assumed 296,750 1,642 437
+Added: Fair value of non-redeemable non-controlling interest recorded 13,191 — —
Non-cash financing activities:
Payables recorded under contingent payment arrangements 231,385 7,800 4,400
+Added: Equity consideration issued in connection with acquisition 589,169 — —
See Accompanying Notes to Consolidated Financial Statements.
16 unchanged sentences
We also provide distribution, shareholder servicing, transfer agency services and administrative services to the mutual funds we sponsor.
−Removed: Our high-quality, in-depth research is the foundation of our business.
+Added: Our high-quality, in-depth research is the foundation of our asset management and private wealth management businesses.
Our research disciplines include economic, fundamental equity, fixed income and quantitative research.
1 unchanged sentence
We provide a broad range of investment services with expertise in:
−Removed: • Actively-managed equity strategies, with global and regional portfolios across capitalization ranges, concentration ranges and investment strategies, including value, growth and core equities;
+Added: • Actively managed equity strategies across global and regional universes, as well as capitalization ranges, concentration ranges and investment strategies, including value, growth and core equities;
• Actively managed traditional and unconstrained fixed income strategies, including taxable and tax-exempt strategies;
−Removed: • Alternative investments, including hedge funds, fund of funds, direct lending, real estate and private equity;
−Removed: • Multi-asset solutions and services, including dynamic asset allocation, customized target-date funds and target-risk funds;
−Removed: • Some passive management, including index and enhanced index strategies.
+Added: • Actively managed alternative investments, including hedge funds, fund of funds and direct assets (e.g., direct lending, real estate and private equity);
+Added: • Portfolios with Purpose, including actively managed, impact-focused and Responsible+ (climate-conscious, ESG leaders, change catalysts) equity, fixed income and multi-asset strategies that address our clients evolving need to invest their capital with purpose while pursuing strong investment returns;
+Added: • Multi-asset services and solutions, including dynamic asset allocation, customized target-date funds and target-risk funds;
+Added: • Some passive management, including index, ESG index and enhanced index strategies.
+Added: AllianceBernstein
As of December 31, 2022, EQH owned approximately 3.5% of the issued and outstanding units representing assignments of beneficial ownership of limited partnership interests in AllianceBernstein Holding L.P.
3 unchanged sentences
AllianceBernstein Corporation owns 100,000 general partnership units in AB Holding and a 1% general partnership interest in AB.
−Removed: AllianceBernstein
As of December 31, 2022, the ownership structure of AB, including limited partnership units outstanding as well as the general partner's 1% interest, was as follows:
12 unchanged sentences
All significant inter-company transactions and balances among the consolidated entities have been eliminated.
−Removed: Recently Adopted Accounting Pronouncements
−Removed: In August 2018, the Financial Accounting Standards Board (the " FASB ") issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Topic 715-20) .
−Removed: The amendment modifies the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans.
−Removed: We adopted this standard prospectively on January 1, 2021.
−Removed: The adoption of this standard did not have a material impact on our financial condition or results of operations.
−Removed: In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):
−Removed: Simplifying the Accounting for Income Taxes .
−Removed: The amendments simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740.
−Removed: The amendments also improve consistent application of and simplify US GAAP for other areas of Topic 740 by clarifying and amending the existing guidance.
−Removed: We adopted this standard prospectively on January 1, 2021.
−Removed: The adoption of this standard did not have a material impact on our financial condition or results of operations.
−Removed: Accounting Pronouncements Not Yet Adopted in 2021
+Added: Recently Adopted Accounting Pronouncements or Accounting Pronouncements
+Added: Not Yet Adopted
+Added: During 2022, there have been no recently adopted accounting pronouncements or pronouncements not yet adopted that have or are expected to have a material impact on our consolidated results of operations.
Revenue Recognition
4 unchanged sentences
Accordingly, we have determined that our investment and advisory services are performed over time and entitle us to variable consideration earned based on the value of the investors’ assets under management (“ AUM ”).
−Removed: 2021 Annual Report 83
We calculate AUM using established market-based valuation methods and fair valuation (non-observable market) methods.
5 unchanged sentences
Fair valuation methods include:
−Removed: discounted cash flow models or any other methodology that is validated and approved by our Valuation Committee ( see paragraph immediately below for additional information about our Valuation Committee).
+Added: discounted cash flow models or any other
+Added: 2022 Annual Report 85
+Added: methodology that is validated and approved by our Valuation Committee ( see paragraph immediately below for additional information about 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.
15 unchanged sentences
Research revenues are recognized when the transaction price is quantified, collectability is assured and significant reversal of such revenue is not probable.
+Added: In the fourth quarter of 2022, AB and Société Générale (EURONEXT:
+Added: SCGLY, “ SocGen ”), a leading European bank, announced plans to form a joint venture combining their respective cash equities and research businesses.
+Added: As a result, the Bernstein Research Services (" BRS ") business has been classified as held for sale.
+Added: For further discussion, see Note 24 Acquisitions and Divestitures.
Distribution Revenues
39 unchanged sentences
We are deemed to have a controlling financial interest in a VIE if we have (i) the power to direct the activities of the VIE that most significantly affect the VIE's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive income from the VIE that could potentially be significant to the VIE.
−Removed: For purposes of evaluating (ii) above, fees paid to us as a decision maker or service provider are excluded if the amount of fees is commensurate with the level of effort required to be performed and the arrangement includes only customary terms, conditions or amounts present in arrangements for similar services negotiated at arm’s length.
−Removed: The primary beneficiary evaluation generally is performed qualitatively based on all facts and circumstances, as well as quantitatively, as appropriate.
+Added: For purposes of evaluating (ii) above, fees paid to us as a decision maker or service provider are excluded if the amount of fees is commensurate with the level of effort required to be performed and the arrangement includes only customary terms, conditions or amounts present in
2022 Annual Report 87
+Added: arrangements for similar services negotiated at arm’s length.
+Added: The primary beneficiary evaluation generally is performed qualitatively based on all facts and circumstances, as well as quantitatively, as appropriate.
If we have a variable interest in an entity that is determined not to be a VIE, the entity is then evaluated for consolidation under the VOE model.
16 unchanged sentences
We have the ability by contract or custom to sell or re-pledge this collateral and have done so at various times.
−Removed: As of December 31, 2021 and 2020, we had $23.4 million and zero of re-pledged securities, respectively.
+Added: As of December 31, 2022 and 2021, we had $267.1 million and $23.4 million of re-pledged securities, respectively.
Principal securities transactions and related expenses are recorded on a trade date basis.
7 unchanged sentences
Income or expense is recognized over the life of the transaction.
−Removed: As of December 31, 2021 and 2020, we had $114.9 million and $130.0 million, respectively, of cash on deposit with clearing organizations for trade facilitation purposes, which are reported in other assets in our consolidated statements of financial condition.
+Added: Cash on deposit with clearing organizations for trade facilitation purposes is reported in assets held for sale as of December 31, 2022 and other assets as of December 31, 2021, in our consolidated statements of financial condition.
+Added: As of December 31, 2021, we had $114.9 million of cash on deposit with clearing organizations.
As of December 31, 2022 and 2021, we held no U.S.
4 unchanged sentences
The value of the securities owned by clients and held as collateral for these receivables is not reflected in the consolidated financial statements and the collateral was not repledged or sold as of December 31, 2022 and 2021.
−Removed: We consider these financing receivables to be of good credit quality due to the fact that these receivables are primarily collateralized by the related client investments.
+Added: We consider these financing receivables to be of good credit quality because these receivables are primarily collateralized by the related client investments.
To estimate expected credit losses on margin loans, we applied the collateral maintenance practical expedient by comparing the amortized cost basis of the margin loans with the fair value of the collateral at the reporting date.
Margin loans are limited to a percentage of the total value of the securities held in the client's account against those loans.
−Removed: AB requires, in the event of a decline in the market value of the securities in a margin account, the client to deposit additional securities or cash so that, at all times, the value of the securities in the account, at a minimum, cover the loan to the client.
+Added: AB requires, in the event of a decline in the market value of the securities in a margin account, the client to deposit additional securities or cash so that, at all
+Added: AllianceBernstein
+Added: times, the value of the securities in the account, at a minimum, cover the loan to the client.
As such, AB reasonably expects that the borrower will be able to continually replenish collateral securing the financial asset and does not expect the fair value of collateral to fall below the amortized cost basis of the margin loans and, as a result, we consider the credit risk associated with these receivables to be minimal.
In circumstances when a loan becomes undercollateralized and the client fails to deposit additional securities or cash, AB reserves the right to liquidate the account.
−Removed: AllianceBernstein
Current Expected Credit Losses - Receivables from Revenue Contracts with Customers
10 unchanged sentences
Leasehold improvements are amortized on a straight-line basis over the lesser of their estimated useful lives or the terms of the related leases.
−Removed: In 2000, AB acquired SCB Inc., an investment research and management company formerly known as Sanford C.
+Added: Our acquisitions are accounted for under the acquisition method of accounting, where the cost of the acquisition is allocated on the basis of the estimated fair value of the assets acquired and the liabilities assumed.
+Added: The excess of the purchase price over the fair value of identifiable assets acquired, net of liabilities assumed, results in the recognition of goodwill.
+Added: On July 1, 2022, AB Holding acquired a 100% ownership interest in CarVal Investors L.P.
+Added: (“ CarVal ”).
+Added: Immediately following its acquisition of CarVal (the " CarVal acquisition "), AB Holding contributed 100% of its equity interests in CarVal to AB in exchange for AB Units (see Note 24 Acquisitions and Divestitures ).
+Added: On November 22, 2022, AB and SocGen, a leading Eu ropean bank, announced plans to form a joint venture combining their respective cash equities and research businesses.
+Added: As a result, the BRS business has been classified as held for sale and $159.8 million of goodwill recorded on the consolidated statement of financial condition has been allocated to the held for sale disposal group.
+Added: As AB is a single reporting unit, we have allocated goodwill to the disposal group based on the relative fair values of (1) the disposal group and (2) the portion of the reporting unit that will be retained.
+Added: For further discussion, see Note 24 Acquisitions and Divestitures .
+Added: As of December 31, 2022, we had goodwill of $3.6 billion on the consolidated statement of financial condition which included $666.1 million as a result of the CarVal acquisition in the third quarter of 2022, $2.8 billion as a result of the Sanford C.
Bernstein Inc.
−Removed: (“ Bernstein ”).
−Removed: The Bernstein acquisition was accounted for under the purchase method, and the cost of the acquisition was allocated on the basis of the estimated fair value of the assets acquired and the liabilities assumed.
−Removed: The excess of the purchase price over the fair value of identifiable assets acquired, net of liabilities assumed, resulted in the recognition of goodwill of approximately $3.0 billion.
−Removed: As of December 31, 2021, goodwill of $3.1 billion on the consolidated statement of financial condition included $2.8 billion as a result of the Bernstein acquisition and $291 million in regard to various smaller acquisitions.
−Removed: We have determined that AB has only one reporting segment and reporting unit.
+Added: (“ Bernstein ”) acquisition in 2000 and $291.9 million in regard to various smaller acquisitions.
+Added: Approximately, $159.8 million of goodwill has been classified as assets held for sale on the consolidated statement of financial condition.
Goodwill is tested annually, as of September 30, for impairment utilizing the market approach where the fair value of the reporting unit is based on its unadjusted market valuation (AB Units outstanding multiplied by AB Holding's Unit price) and adjusted market valuations assuming a control premium (when applicable).
1 unchanged sentence
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.
−Removed: 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;
+Added: Such changes in circumstances may include, but are not limited to, significant transactions including acquisitions or divestitures;
+Added: 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.
−Removed: As of September 30, 2021, the impairment test indicated that goodwill was not impaired.
−Removed: There were no facts or circumstances occurring in the fourth quarter of 2021 suggesting possible impairment.
+Added: 2022 Annual Report 89
+Added: of September 30, 2022, the impairment test indicated that goodwill was not impaired.
+Added: The announcement of the planned joint venture between AB and SocGen and classification of the BRS business as held for sale on the consolidated statement of financial condition during the fourth quarter of 2022 was a triggering event requiring an interim impairment test;
+Added: as such, we tested our goodwill as of December 31, 2022.
+Added: The impairment test indicated that goodwill was not impaired
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.
1 unchanged sentence
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.
+Added: Business Combinations
+Added: We account for business combinations using the acquisition method of accounting whereby the identifiable assets and liabilities of the acquired business, as well as any noncontrolling interest in the acquired business, are recorded at their estimated fair values as of the date that we obtain control of the acquired business.
+Added: Any purchase consideration in excess of the estimated fair values of the net assets acquired is recorded as goodwill.
+Added: Acquisition-related expenses are expensed as incurred.
+Added: Often, as part of the business combination, intangible assets are recorded based on their estimated fair value at the time of acquisition and primarily relate to acquired investment management contracts.
+Added: We periodically review indefinite-lived intangible assets for impairment as events or changes in circumstances indicate that the carrying value may not be recoverable.
+Added: If the carrying value exceeds fair value, we perform additional impairment tests to measure the amount of the impairment loss, if any.
+Added: During 2022 and 2021, these expenses included an intangible asset impairment charge of $5.6 million and $1.0 million, respectively, related to various historical acquisitions.
+Added: We periodically enter into contingent payment arrangements in connection with our business combinations.
+Added: In these arrangements, we agree to pay additional consideration to the sellers to the extent that certain performance targets are achieved.
+Added: We estimate the fair value of these potential future obligations at the time a business combination is consummated and record a liability on a discounted basis on our consolidated statement of financial condition.
+Added: We then accrete the obligation to its expected payment amount over the measurement period.
+Added: If our expected payment amount subsequently changes, the obligation is modified in the current period resulting in a gain or loss.
+Added: Both gains and losses resulting from changes to expected payments and the accretion of these obligations to their expected payment amounts are reflected within contingent payment arrangements in our consolidated statements of income.
+Added: The CarVal acquisition resulted in the recording of a contingent consideration payable of $228.9 million if certain performance targets are achieved over a six-year period (see Note 9 Fair Value and Note 24 Acquisitions and Divestitures ).
+Added: During 2022, there were no impairments of contingent consideration payable recorded in the consolidated statements of income.
+Added: During the fourth quarters of 2021 and 2020, we recorded an impairment of the contingent consideration payable of $0.6 million and $1.4 million, respectively.
+Added: These impairments were related to our 2016 acquisition of Ramius Alternative Solutions LLC.
+Added: Several valuation methods may be used to determine the fair value of assets acquired and liabilities assumed.
+Added: For intangible assets, we typically use a method that is a form of the income approach, whereby a forecast of future cash flows attributable to the asset are discounted to present value using a risk-adjusted discount rate.
+Added: Similarly for contingent liabilities, we develop a forecast of future cash flows attributable to the performance objectives that are then discounted to present value using a risk-adjusted discount rate.
+Added: Some of the more significant estimates and assumptions inherent in the income approach include the amount and timing of projected future cash flows and the discount rate selected to measure the risks inherent in the future cash flows.
+Added: See Note 24 Acquisitions and Divestitures .
Intangible Assets, Net
Intangible assets consist primarily of costs assigned to acquired investment management contracts based on their estimated fair value at the time of acquisition, less accumulated amortization.
−Removed: Intangible assets are recognized at fair value and generally are amortized on a straight-line basis over their estimated useful life ranging from seven to 20 years.
−Removed: 2021 Annual Report 87
+Added: Intangible assets are recognized at fair value and generally are amortized on a straight-line basis over their estimated useful life ranging from 5 to 20 years.
+Added: The CarVal acquisition resulted in 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 (see Note 24 Acquisitions and Divestitures ).
As of December 31, 2022, intangible assets, net of accumulated amortization, of $310.2 million on the consolidated statement of financial condition consists of $295.0 million of finite-lived intangible assets subject to amortization and $15.2 million of indefinite-lived intangible assets not subject to amortization.
As of December 31, 2021, intangible assets, net of accumulated amortization, of $41.5 million on the consolidated statement of financial condition consisted of $26.3 million of finite-lived intangible assets subject to amortization and $15.2 million of indefinite-lived intangible assets not subject to amortization in regard to other acquisitions.
+Added: AllianceBernstein
The gross carrying amount of finite-lived intangible assets totaled $327.9 million as of December 31, 2022 and $53.8 million as of December 31, 2021, and accumulated amortization was $32.9 million as of December 31, 2022 and $27.5 million as of December 31, 2021.
Amortization expense was $26.6 million for 2022, $5.7 million for 2021 and $21.4 million for 2020.
−Removed: Estimated annual amortization expense for 2022 is approximately $5 million, $5 million in years two and three, $4 million in year four and then approximately $2 million in year five.
+Added: Estimated annual amortization expense is approximately $47 million annually in years one through three, $46 million in year four and approximately $25 million in year five.
We periodically review indefinite-lived intangible assets for impairment as events or changes in circumstances indicate that the carrying value may not be recoverable.
If the carrying value exceeds fair value, we perform additional impairment tests to measure the amount of the impairment loss, if any.
−Removed: During the fourth quarter of 2021 and 2020, we recorded an impairment of $1.0 million and $1.5 million, respectively, relating to our 2016 acquisition of Ramius Alternative Solutions LLC.
−Removed: Due to the loss of acquired investment management contracts during 2021, the carrying value of the finite-lived intangible assets exceeded the fair value of the contracts.
+Added: During the fourth quarter of 2022 we performed an impairment assessment and recorded an impairment of $5.6 million related to our 2014 acquisition of CPH Capital.
+Added: During the fourth quarters of 2021 and 2020, we recorded impairments of $1.0 million and $1.5 million, respectively, related to our 2016 acquisition of Ramius Alternative Solutions LLC.
+Added: Due to the loss of acquired investment management contracts during each respective year, the carrying value of the finite-lived intangible assets exceeded the fair value of the contracts.
We determined the fair value of the contracts using a discounted cash flow model.
24 unchanged sentences
These arrangements will continue to follow the guidance of ASC 350, Intangibles - Goodwill and Other .
−Removed: AllianceBernstein
Loss Contingencies
3 unchanged sentences
However, it is often difficult to predict the outcome or estimate a possible loss or range of loss because litigation is subject to inherent uncertainties, particularly when plaintiffs allege substantial or indeterminate damages.
−Removed: Such is also the case when the litigation is in its early stages or when the litigation is highly complex or broad in scope.
+Added: Such is also the case when the litigation is in its early stages or when the litigation is
+Added: 2022 Annual Report 91
+Added: highly complex or broad in scope.
In these cases, we disclose that we are unable to predict the outcome or estimate a possible loss or range of loss.
−Removed: Contingent Payment Arrangements
−Removed: We periodically enter into contingent payment arrangements in connection with our business combinations.
−Removed: In these arrangements, we agree to pay additional consideration to the sellers to the extent that certain performance targets are achieved.
−Removed: We estimate the fair value of these potential future obligations at the time a business combination is consummated and record a liability on our consolidated statements of financial condition.
−Removed: We then accrete the obligation to its expected payment amount over the measurement period.
−Removed: If our expected payment amount subsequently changes, the obligation is modified in the current period resulting in a gain or loss.
−Removed: Both gains and losses resulting from changes to expected payments and the accretion of these obligations to their expected payment amounts are reflected within contingent payment arrangements in our consolidated statements of income.
−Removed: During the fourth quarters of 2021 and 2020, we recorded an impairment of the contingent consideration payable of $0.6 million and $1.4 million, respectively.
−Removed: This impairment was related to our 2016 acquisition of Ramius Alternative Solutions LLC.
+Added: Assets and Liabilities Held for Sale
+Added: The Company classifies assets and liabilities to be sold (disposal group) as held for sale in the period when all of the applicable criteria are met, including:
+Added: (i) management commits to a plan to sell, (ii) the disposal group is available to sell in its present condition, (iii) there is an active program to locate a buyer, (iv) the disposal group is being actively marketed at a reasonable price in relation to its fair value, (v) significant changes to the plan to sell are unlikely, and (vi) the sale of the disposal group is generally probable of being completed within one year.
+Added: Management performs an assessment of held for sale at least quarterly or when events or changes in business circumstances indicate that a change in classification may be necessary.
+Added: Assets and liabilities held for sale are presented separately within the consolidated statements of financial condition with any adjustments necessary to measure the disposal group at the lower of its carrying value or fair value less costs to sell.
+Added: Depreciation of property, plant and equipment and amortization of intangible and right-of-use assets are not recorded while these assets are classified as held for sale.
+Added: For each reporting period the disposal group remains classified as held for sale, the carrying value of the disposal group is adjusted for subsequent changes in fair value less costs to sell.
+Added: A loss is recognized for any subsequent decrease in fair value less costs to sell, while a gain is recognized in any subsequent period for any subsequent increase in fair value less cost to sell, but not in excess of the cumulative loss previously recognized.
+Added: If, in any period, the carrying value of the disposal group exceeds the estimated fair value less costs to sell, a loss is recognized on sale rather than an impairment loss.
+Added: Assets and liabilities classified as held for sale on the consolidated statement of financial condition as of December 31, 2022 were $551.4 million and $108.0 million, respectively.
+Added: The 2021 consolidated statement of financial condition was not recast for assets and liabilities classified as held for sale in 2022.
Mutual Fund Underwriting Activities
4 unchanged sentences
We maintain several unfunded, non-qualified long-term incentive compensation plans, under which we grant annual awards to employees, generally in the fourth quarter, and to members of the Board of Directors of the General Partner, who are not employed by our company or by any of our affiliates (" Eligible Directors ").
−Removed: Awards granted in December 2021, 2020 and 2019 allowed employee participants to allocate their awards between restricted AB Holding Units and deferred cash.
+Added: Awards granted in December 2022, 2021 and 2020 allowed employees to allocate their awards between restricted AB Holding Units and deferred cash.
Participants (except certain members of senior management) generally could allocate up to 50% of their awards to deferred cash, not to exceed a total of $250,000 per award.
−Removed: Each of our employees based outside of the United States (other than expatriates), who received an award of $100,000 or less, could have allocated 100% of his or her award to deferred cash.
−Removed: Participants allocated their awards prior to the date on which the Compensation and Workplace Practices Committee (the " Compensation Committee ") of the Board of Directors (the " Board ") approved awards in December 2021, 2020 and 2019.
−Removed: For these awards, the number of AB Holding Units awarded was based on the closing price of an AB Holding Unit on the grant date.
+Added: Each of our employees based outside of the United States (other than expatriates), who received an award of $100,000 or less, could have allocated 100% of their award to deferred cash.
+Added: For these awards, the number of AB Holding Units awarded was based on the closing price of an AB Holding Unit on the date as of which the awards were approved by the Compensation and Workplace Practices Committee (the " Compensation Committe e") of the Board of Directors (the " Board ").
For awards granted in 2022, 2021 and 2020:
• We engaged in open-market purchases of AB Holding Units or purchase newly issued AB Holding Units from AB Holding that are awarded to participants and keep them in a consolidated rabbi trust.
−Removed: • Quarterly distributions on vested and unvested AB Holding Units were paid currently to participants, regardless of whether or not a long-term deferral election has been made.
+Added: • Quarterly distributions on vested and unvested AB Holding Units were paid to participants, regardless of whether or not a long-term deferral election has been made.
• Interest on deferred cash was accrued monthly based on our monthly weighted average cost of funds.
−Removed: 2021 Annual Report 89
We recognize compensation expense related to equity compensation grants in the financial statements using the fair value method.
2 unchanged sentences
Under the fair value method, compensatory expense is measured at the grant date based on the estimated fair value of the award and is recognized over the required service period.
−Removed: For year-end long-term incentive compensation awards, employees who resign or are terminated without cause may retain their awards, subject to compliance with certain agreements and restrictive covenants set forth in the applicable award agreement, including restrictions on competition and employee and client solicitation, and a claw-back for failing to follow existing risk management policies.
+Added: For year-end long-term incentive compensation awards, employees who resign or are terminated without cause may retain their awards, subject to compliance with certain agreements and covenants set forth in the applicable award agreement, including the imposition of forfeiture as a result of post-employment competition, prohibitions on employee and client solicitation, and a potential claw-back for failing to follow existing risk management policies.
Because there is no service requirement, we fully expense these awards on the grant date.
Most equity replacement, sign-on or similar deferred compensation awards included in separate employment agreements or arrangements include a required service period.
−Removed: Regardless of whether or not the award agreement includes employee service requirements, AB Holding Units typically are delivered to employees ratably over three years to four years, unless the employee has made a long-term deferral election.
+Added: Regardless of whether the award
+Added: AllianceBernstein
+Added: agreement includes employee service requirements, AB Holding Units typically are delivered to employees ratably over three years to four years, unless the employee has made a long-term deferral election.
Grants of restricted AB Holding Units can be awarded to Eligible Directors.
−Removed: Generally, these restricted AB Holding Units vest ratably over four years.
+Added: Generally, these restricted AB Holding Units vest ratably over three years.
These restricted AB Holding Units are not forfeitable (except if the Eligible Director is terminated for “Cause,” as that term is defined in the applicable award agreement).
1 unchanged sentence
We fund our restricted AB Holding Unit awards either by purchasing AB Holding Units on the open market or purchasing newly-issued AB Holding Units from AB Holding, and then keeping these AB Holding Units in a consolidated rabbi trust until delivering them or retiring them.
−Removed: In accordance with the Amended and Restated Agreement of Limited Partnership of AB (“ AB Partnership Agreement ”), when AB purchases newly-issued AB Holding Units from AB Holding, AB Holding is required to use the proceeds it receives from AB to purchase the equivalent number of newly-issued AB Units, thus increasing its percentage ownership interest in AB.
+Added: In accordance with the Amended and Restated Agreement of Limited Partnership of AB (“ AB ”), when AB purchases newly-issued AB Holding Units from AB Holding, AB Holding is required to use the proceeds it receives from AB to purchase the equivalent number of newly issued AB Units, thus increasing its percentage ownership interest in AB.
AB Holding Units held in the consolidated rabbi trust are corporate assets in the name of the trust and are available to the general creditors of AB.
9 unchanged sentences
(1) Purchased on a trade date basis.
−Removed: (2) The remainder related to purchases of AB Holding Units from employees to fulfill statutory tax withholding requirements at the time of delivery of long-term incentive compensation awards.
+Added: The difference between open-market purchases and units retained reflects the retention of AB Holding Units from employees to fulfill statutory tax withholding requirements at the time of delivery of long-term incentive compensation awards.
Each quarter, we consider whether to implement a plan to repurchase AB Holding Units pursuant to Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended (“ Exchange Act ”).
7 unchanged sentences
We used AB Holding Units repurchased during the periods and newly-issued AB Holding Units to fund these awards.
−Removed: During 2021 and 2020, AB Holding issued 0.1 million and 5,182 AB Holding Units, respectively, upon exercise of options to buy AB Holding Units.
+Added: During 2022 and 2021, AB Holding issued 5,774 and 0.1 million AB Holding Units, respectively, upon exercise of options to buy AB Holding Units.
AB Holding used the proceeds of $0.2 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.
−Removed: AllianceBernstein
Foreign Currency Translation and Transactions
2 unchanged sentences
Net foreign currency transaction losses were $10.2 million, $8.5 million and $3.3 million for 2022, 2021 and 2020, respectively, and are reported in general and administrative expenses on the consolidated statements of income.
+Added: 2022 Annual Report 93
Cash Distributions
12 unchanged sentences
Subsequent Events
−Removed: We have evaluated subsequent events through the date that these financial statements were filed with the Securities and Exchange Commission and did not identify any subsequent events that would have required disclosure in these financial statements.
−Removed: Reclassifications
−Removed: During 2021, amounts previously presented on the Statement of Cash Flows as (increase) decrease in right-of-use assets and increase (decrease) in lease liabilities are now presented net as "Cash payments to relieve operating lease liabilities".
−Removed: Non-cash lease expense under adjustments to reconcile net income to net cash provided by operating activities formerly classified as "Depreciation and other amortization" are now classified separately on the Statement of Cash Flows as "Non-cash lease expense." Prior period amounts previously presented as such have been reclassified to conform to the current period's presentation.
−Removed: 2021 Annual Report 91
+Added: 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 have required disclosure in these financial statements.
+Added: AllianceBernstein
Revenue Recognition
18 unchanged sentences
Dividend and interest income, net of interest expense 56,653 35,048 35,273
−Removed: Investment (losses) gains (636) (16,401) 38,659
+Added: Investment (losses) (102,413) (636) (16,401)
Other revenues 763 2,150 1,146
1 unchanged sentence
Total net revenues $ 4,054,290 $ 4,441,602 $ 3,708,536
+Added: 2022 Annual Report 95
Net Income Per Unit
12 unchanged sentences
2022 2021 2020
+Added: (in thousands)
Anti-dilutive options excluded from diluted net income — — 29,056
−Removed: AllianceBernstein
Cash and Securities Segregated Under Federal Regulations and Other Requirements
−Removed: As of December 31, 2021 and 2020, $1.5 billion and $1.8 billion, respectively, of U.S.
+Added: As of both December 31, 2022 and 2021, $1.5 billion of U.S.
Treasury Bills were segregated in a special reserve bank custody account for the exclusive benefit of our brokerage customers under Rule 15c3-3 of the Exchange Act.
5 unchanged sentences
Seed capital 138,012 133,992
−Removed: Other 18,243 55,439
Exchange-traded options (1)
5 unchanged sentences
Total investments $ 217,518 $ 273,418
+Added: (1) Amounts have been classified as held for sale on the consolidated statement of financial position as of December 31, 2022.
+Added: For further discussion, s ee Note 24 Acquisitions and Divestitures.
+Added: AllianceBernstein
Total investments related to long-term incentive compensation obligations of $47.9 million and $63.8 million as of December 31, 2022 and 2021, respectively, consist of company-sponsored mutual funds and hedge funds.
8 unchanged sentences
We also may allocate seed capital to investments in private equity funds.
−Removed: In regard to our seed capital investments, the amounts above reflect those funds in which we are not the primary beneficiary of a VIE or hold a controlling financial interest in a VOE.
+Added: Regarding our seed capital investments, the amounts above reflect those funds in which we are not the primary beneficiary of a VIE or hold a controlling financial interest in a VOE.
See Note 15, Consolidated Company-Sponsored Investment Funds , for a description of the seed capital investments that we consolidated.
2 unchanged sentences
In addition, we also have long positions in corporate equities and long exchange-traded options traded through our options desk.
−Removed: 2021 Annual Report 93
The portion of unrealized gains (losses) related to equity securities, as defined by ASC 321-10, held as of December 31, 2022 and 2021 were as follows:
1 unchanged sentence
(in thousands)
−Removed: Net gains recognized during the period $ 19,240 $ 17,927
+Added: Net (losses) gains recognized during the period $ (23,855) $ 19,240
net gains recognized during the period on equity securities sold during the period 17,960 23,697
6 unchanged sentences
We do not hold any derivatives designated in a formal hedge relationship under ASC 815-10, Derivatives and Hedging .
+Added: 2022 Annual Report 97
The notional value, fair value and gains and losses recognized in investment gains (losses) as of December 31, 2022 and 2021 for derivative instruments (excluding derivative instruments relating to our options desk trading activities discussed below ) not designated as hedging instruments were as follows:
26 unchanged sentences
This obligation to return cash is reported in payables to brokers and dealers in our consolidated statements of financial condition.
−Removed: AllianceBernstein
−Removed: Although notional amount is the most commonly used measure of volume in the derivatives market, it is not used as a measure of credit risk.
+Added: Although notional amount is the typical measure of volume in the derivatives market, it is not used as a measure of credit risk.
Generally, the current credit exposure of our derivative contracts is limited to the net positive estimated fair value of derivative contracts at the reporting date after taking into consideration the existence of netting agreements and any collateral received.
7 unchanged sentences
We report this cash collateral in cash and cash equivalents in our consolidated statements of financial condition.
−Removed: As of December 31, 2021 and 2020, we held $1.9 million and $7.5 million, respectively, of long exchange-traded equity options, which are included in other investments on our consolidated statements of financial condition.
−Removed: In addition, as of December 31, 2021 and 2020, we held $2.8 million and $12.5 million, respectively, of short exchange-traded equity options, which are included in securities sold not yet purchased on our consolidated statements of financial condition.
+Added: As of December 31, 2022 long and short exchange-traded equity options were classified as held for sale on our consolidated statement of financial position.
+Added: For further discussion, see Note 24 Acquisitions and Divestitures.
+Added: As of December 31, 2021, we held $1.9 million, respectively, of long exchange-traded equity options, which are included in other investments on our consolidated statements of financial condition.
+Added: In addition, as of December 31, 2021, we held $2.8 million, respectively, of
+Added: AllianceBernstein
+Added: short exchange-traded equity options, which are included in securities sold not yet purchased on our consolidated statements of financial condition.
Our options desk provides our clients with equity derivative strategies and execution for exchange-traded options on single stocks, exchange-traded funds and indices.
1 unchanged sentence
Our options desk hedges the risk associated with this activity by taking offsetting positions in equities.
−Removed: For the year ended December 31, 2021, we recognized zero gains or losses on equity options activity compared to $11.9 million of losses recognized on equity options activity for the year ended December 31, 2020.
+Added: For the year ended December 31, 2022 and 2021, we recognized $22.1 million of losses and zero gains or losses on equity options activity, respectively.
These losses are recognized in investment gains (losses) in the consolidated statements of income.
9 unchanged sentences
Securities borrowed (1)
+Added: $ 62,063 $ — $ 62,063 $ (62,058) $ — $ 5
Derivatives 24,712 — 24,712 — (8,361) 16,351
15 unchanged sentences
Securities loaned (1)
+Added: $ 272,580 $ — $ 272,580 $ (267,053) $ 5,527
Derivatives 13,712 — 13,712 — (4,158) 9,554
1 unchanged sentence
December 31, 2021
+Added: Securities loaned $ 23,911 $ — $ 23,911 $ (23,373) $ — $ 538
Derivatives 16,923 — 16,923 — (5,572) 11,351
Short exchange-traded options 2,774 — 2,774 — — 2,774
+Added: (1) Certain amounts have been classified as held for sale on the consolidated statement of financial position as of December 31, 2022.
+Added: For further discussion, s ee Note 24 Acquisitions and Divestitures .
Cash collateral, whether pledged or received on derivative instruments, is not considered material and, accordingly, is not disclosed by counterparty.
17 unchanged sentences
Equity securities 129,655 27,799 129 1,484 — 159,067
−Removed: Long exchange-traded options 1,893 — — — — 1,893
Limited partnership hedge funds (3)
5 unchanged sentences
Total assets measured at fair value $ 233,633 $ 1,572,448 $ 129 $ 1,484 $ 51,762 $ 1,859,456
−Removed: Securities sold not yet purchased:
−Removed: Short equities – corporate $ 1,054 $ — $ — $ — $ — $ 1,054
−Removed: Short exchange-traded options 2,774 — — — — 2,774
Derivatives 162 13,550 — — — 13,712
21 unchanged sentences
Total liabilities measured at fair value $ 5,014 $ 15,737 $ 38,260 $ — $ — $ 59,011
+Added: (1) Certain amounts have been classified as held for sale on the consolidated statement of financial position as of December 31, 2022.
+Added: For further discussion, s ee Note 24 Acquisitions and Divestitures .
(2) Investments measured at fair value using NAV (or its equivalent) as a practical expedient.
3 unchanged sentences
Other investments included in Level 1 of the fair value hierarchy include our investment in a mutual fund measured at fair value ($6.7 million and $9.1 million as of December 31, 2022 and 2021, respectively).
−Removed: Other investments not measured at fair value include (i) an investment in a software publishing company that does not have a readily available fair value (zero and $2.1 million as of December 31, 2021 and 2020, respectively), (ii) investments in start-up companies that do not have a readily available fair value (these investments were $0.3 million as of December 31, 2021 and 2020), (iii) investments in equity method investees that are not measured at fair value in accordance with GAAP ($2.9 million and $6.5 million as of December 31, 2021 and 2020, respectively), and (iv) broker dealer exchange memberships that are not measured at fair value in accordance with GAAP ($2.8 million and $3.3 million as of December 31, 2021 and 2020, respectively).
+Added: Other investments not measured at fair value include (i) investments in start-up companies that do not have a readily available fair value (these investments were $0.3 million as of December 31, 2022 and 2021), (ii) investments in equity method investees that are not measured at fair value in accordance with GAAP (during the third quarter of 2022, we sold this investment and the balance was reduced to zero, as compared to $2.9 million as of December 31, 2021), and (iii) broker-dealer exchange memberships that are not measured at fair value in accordance with GAAP ($1.2 million and $2.8 million as of December 31, 2022 and 2021, respectively).
We provide below a description of the fair value methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy:
14 unchanged sentences
Securities sold not yet purchased, primarily reflecting short positions in equities and exchange-traded options, are included in Level 1 of the valuation hierarchy.
+Added: As of December 31, 2022 these securities have been classified as held for sale on the consolidated statement of financial position.
• Contingent payment arrangements:
11 unchanged sentences
AllianceBernstein
−Removed: As part of acquisitions made by the Company, we may enter into contingent consideration arrangements as part of the purchase price.
+Added: Our acquisitions may include contingent consideration arrangements as part of the purchase price.
The change in carrying value associated with Level 3 financial instruments carried at fair value, classified as contingent payment arrangements, is as follows:
4 unchanged sentences
Changes in estimates — (600)
−Removed: Payments — (1,300)
+Added: Held for sale reclassification (28,899) —
Balance as of end of period $ 247,309 $ 38,260
−Removed: The liabilities were valued using expected revenue growth rates and discount rates.
−Removed: As of December 31, 2021, the expected revenue growth rates range from 2.0% to 83.9%, with a weighted average of 11.9%, calculated using cumulative revenues and range of revenue growth rates (excluding revenue growth from additional AUM contributed in year of acquisition).
+Added: In the third quarter of 2022, we acquired CarVal and recorded a contingent consideration liability of $228.9 million (see Note 24 Acquisitions and Divestitures ).
+Added: The liability, ranging from zero to $650.0 million, is based on CarVal achieving certain performance objectives over a six-year period ending December 31, 2027.
+Added: The liability was valued using a forecast of future cash flows attributable to the performance objectives that are discounted to present value using a risk-adjusted discount rate.
+Added: The expected revenue growth rates range from 3.9% to 31.5%, with a weighted average of 14.1%, calculated using cumulative revenues and range of revenue growth rates.
+Added: The discount rates range from 4.1% to 4.6%, with a weighted average of 4.2%, calculated using total contingent liabilities and range of discount rates.
+Added: As of December 31, 2022, including the CarVal acquisition, the expected revenue growth rates range from 2.0% to 83.9%, with a weighted average of 11.5%, calculated using cumulative revenues and range of revenue growth rates (excluding revenue growth from additional AUM contributed in year of acquisition).
The discount rates ranged from 1.9% to 10.4%, with a weighted average of 4.5%, calculated using total contingent liabilities and range of discount rates.
26 unchanged sentences
Total $ 52,250
−Removed: AB has an $800.0 million committed, unsecured senior revolving credit facility (the " Credit Facility ") with a group of commercial banks and other lenders, which had an original maturity date of September 27, 2023.
−Removed: The Credit Facility was amended and restated as of October 13, 2021, extending the maturity date to October 13, 2026.
−Removed: There were no other significant changes included in the amendment.
+Added: Credit Facility
+Added: AB has an $800.0 million committed, unsecured senior revolving credit facility (the " Credit Facility ") with a group of commercial banks and other lenders, which matures on October 13, 2026.
The Credit Facility provides for possible increases in the principal amount by up to an aggregate incremental amount of $200.0 million;
19 unchanged sentences
Borrowings under the EQH Facility generally bear interest at a rate per annum based on prevailing overnight commercial paper rates.
+Added: AllianceBernstein
The EQH Facility contains affirmative, negative and financial covenants which are substantially similar to those in AB’s committed bank facilities.
The EQH Facility also includes customary events of default substantially similar to those in AB’s committed bank facilities, including provisions under which, upon the occurrence of an event of default, all outstanding loans may be accelerated and/or the lender’s commitment may be terminated.
−Removed: AllianceBernstein
Amounts under the EQH Facility may be borrowed, repaid and re-borrowed by us from time to time until the maturity of the facility.
1 unchanged sentence
EQH also may terminate the facility immediately upon a change of control of our general partner.
−Removed: As of December 31, 2021 and 2020, AB had $755.0 million and $675.0 million outstanding under the EQH Facility with interest rates of approximately 0.2%.
+Added: As of December 31, 2022 and 2021, AB had $900.0 million and $755.0 million outstanding under the EQH Facility with interest rates of approximately 4.3% and 0.2%, respectively.
Average daily borrowings on the EQH Facility during 2022 and 2021 were $655.2 million and $404.6 million, respectively, with weighted average interest rates of approximately 1.7% and 0.2%, respectively.
−Removed: In addition to the EQH Facility, on September 1, 2020, AB established a $300.0 million uncommitted, unsecured senior credit facility (“ EQH Uncommitted Facility ”) with EQH.
+Added: EQH Uncommitted Facility
+Added: In addition to the EQH Facility, AB has a $300.0 million uncommitted, unsecured senior credit facility (“ EQH Uncommitted Facility ”) with EQH.
The EQH Uncommitted Facility matures on September 1, 2024 and is available for AB's general business purposes.
1 unchanged sentence
The EQH Uncommitted Facility contains affirmative, negative and financial covenants which are substantially similar to those in the EQH Facility.
−Removed: As of both December 31, 2021 and December 31, 2020, we had no amounts outstanding on the EQH Uncommitted Facility and have not drawn the facility since its inception.
+Added: As of December 31, 2022, we had $90.0 million outstanding under the EQH Uncommitted Facility with an interest rate of approximately 4.3%.
+Added: Average daily borrowings on the EQH Facility during 2022 were $0.7 million with a weighted average interest rate of approximately 4.3%.
+Added: During 2021, we did not draw on the facility.
+Added: Commercial Paper
As of both December 31, 2022 and 2021, we had no commercial paper outstanding.
The commercial paper is short term in nature, and as such, recorded value is estimated to approximate fair value (and considered a Level 2 security in the fair value hierarchy).
−Removed: Average daily borrowings of commercial paper for 2021 were $157.0 million with a weighted average interest rate of 0.2%.
−Removed: Average daily borrowings of commercial paper for 2020 were $83.2 million with a weighted average interest rate of approximately 0.4%.
+Added: Average daily borrowings of commercial paper during 2022 and 2021 were $189.9 million and $157.0 million, respectively, with weighted average interest rates of approximately 1.5% and 0.2%, respectively.
+Added: Revolving Credit Facility
AB had a $200.0 million committed, unsecured senior revolving credit facility (the " Revolver ") with a leading international bank, which matured on November 16, 2021.
−Removed: The Revolver was available for AB's and SCB LLC's business purposes, including the provision of additional liquidity to meet funding requirements primarily related to SCB LLC's operations.
−Removed: Both AB and SCB LLC were able to draw directly under the Revolver and did so from time to time.
−Removed: AB agreed to guarantee the obligations of SCB LLC under the Revolver.
−Removed: The Revolver contained affirmative, negative and financial covenants that were identical to those of the Credit Facility.
−Removed: Borrowings under the Revolver bear interest at a rate per annum, which could be, at our option, a rate equal to an applicable margin, which was subject to adjustment based on the credit ratings of AB, plus one of the following indices:
−Removed: London Interbank Offered Rate;
−Removed: a floating base rate;
−Removed: or the Federal Funds rate.
−Removed: As of both December 31, 2021 and 2020 we had no amounts outstanding under the Revolver.
−Removed: Average daily borrowings for 2021 and 2020 were $13.3 million and $16.5 million, respectively, with weighted average interest rates of 1.1% and 1.6%, respectively.
−Removed: On September 28, 2021, AB established a $100.0 million uncommitted line of credit with a financial institution.
−Removed: On October 11, 2021, AB established a $50.0 million uncommitted line of credit with a financial institution.
−Removed: Both uncommitted lines of credit are available for AB's and SCB LLC's business purposes.
−Removed: Both AB and SCB LLC can draw directly under these lines.
−Removed: AB has agreed to guarantee the obligations of SCB LLC under these lines of credit.
−Removed: As of December 31, 2021 we had no amounts outstanding under these lines of credit and have not drawn on them since their inception.
−Removed: In addition, SCB LLC currently has three uncommitted lines of credit with three financial institutions.
−Removed: Two of these lines of credit permit us to borrow up to an aggregate of approximately $165.0 million, with AB named as an additional borrower, while the other line has no stated limit.
+Added: Average daily borrowings under the Revolver for 2021 were $13.3 million with a weighted average interest rate of approximately 1.1%.
+Added: SCB Lines of Credit
+Added: SCB LLC currently has five uncommitted lines of credit with five financial institutions.
+Added: Four of these lines of credit permit us to borrow up to an aggregate of approximately $315.0 million, with AB named as an additional borrower, while the other line has no stated limit.
+Added: AB has agreed to guarantee the obligations on SCB LLC under these lines of credit.
As of December 31, 2022 and 2021, SCB LLC had no outstanding balance on these lines of credit.
−Removed: Average daily borrowings on the lines of credit during 2021 and 2020 were $47 thousand and $0.9 million, respectively, with weighted average interest rates of approximately 0.9% and 1.6%, respectively.
+Added: Average daily borrowings on the lines of credit during 2022 and 2021 were $1.4 million and $47 thousand, respectively, with weighted average interest rates of approximately 3.7% and 0.9%, respectively.
We lease office space, office equipment and technology under various operating and financing leases.
59 unchanged sentences
Finance leases 7,791 7,782
−Removed: (1) Represents supplemental non-cash information on lease liabilities arising from obtaining right-of-use assets.
+Added: (1) Represents non-cash activity and, accordingly, is not reflected in the consolidated statements of cash flows.
Commitments and Contingencies
9 unchanged sentences
2028 and thereafter 487.7 — 487.7
−Removed: 528.3 — 528.3
Total future minimum payments $ 869.5 $ (62.8) $ 806.7
1 unchanged sentence
Legal Proceedings
−Removed: AB may be involved in various matters, including regulatory inquires, administrative proceedings and litigation, some of which may allege significant damages.
−Removed: It is reasonably possible that we could incur losses pertaining to these matters, but we cannot currently estimate any such losses.
+Added: On December 14, 2022, four individual participants in the Profit Sharing Plan for Employees of AllianceBernstein L.P., (the " Plan ") filed a class action complaint (the “ Complaint ”) in the U.S.
+Added: District Court for the Southern District of New York against AB, current and former members of the Compensation Committee, and the Investment and Administrative Committees under the Plan.
+Added: Plaintiffs, who seek to represent a class of all participants in the Plan from December 14, 2016 to the present, allege that defendants violated their fiduciary duties and engaged in prohibited transactions under the Employee Retirement Income Security Act of 1974, as amended (" ERISA "), by including proprietary collective investment trusts as investment options offered under the Plan.
+Added: The Complaint seeks unspecified damages, disgorgement and other equitable relief.
+Added: AB is prepared to defend itself vigorously against these claims.
+Added: While the ultimate outcome of this matter is currently not determinable given the matter remains in its early stages, we do not believe this litigation will have a material adverse effect on our results of operations, financial condition or liquidity.
2022 Annual Report 107
−Removed: Management, after consultation with legal counsel, currently believes that the outcome of any individual matter that is pending or threatened, or all of them combined, will not have a material adverse effect on our results of operations, financial condition or liquidity.
+Added: AB may be involved in various other matters, including regulatory inquires, administrative proceedings and litigation, some of which may allege significant damages.
+Added: It is reasonably possible that we could incur losses pertaining to these other matters, but we cannot currently estimate any such losses.
+Added: Management, after consultation with legal counsel, currently believes that the outcome of any other individual matter that is pending or threatened, or all of them combined, will not have a material adverse effect on our results of operations, financial condition or liquidity.
However, any inquiry, proceeding or litigation has an element of uncertainty;
−Removed: 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 operation, financial condition or liquidity in any future reporting period.
+Added: management cannot determine whether further developments relating to any other individual matter that is pending or threatened, or all of them combined, will have a material adverse effect on our results of operation, financial condition or liquidity in any future reporting period.
During 2010, as general partner of AllianceBernstein U.S.
10 unchanged sentences
Due to the similarity of risks related to our involvement with each company-sponsored investment fund, disclosures required under the VIE model are aggregated, such as disclosures regarding the carrying amount and classification of assets.
+Added: AllianceBernstein
We are not required to provide financial support to company-sponsored investment funds and only the assets of such funds are available to settle each fund's own liabilities.
−Removed: Our exposure to loss in regard to consolidated company-sponsored investment funds is limited to our investment in, and our management fee earned from, such funds.
+Added: Our exposure to loss regarding consolidated company-sponsored investment funds is limited to our investment in, and our management fee earned from, such funds.
Equity and debt holders of such funds have no recourse to AB’s assets or to the general credit of AB.
−Removed: The balances of consolidated VIEs and VOEs included in our consolidated statements of financial condition were as follows:
+Added: The balances of consolidated VIEs included in our consolidated statements of financial condition were as follows:
December 31, 2022 December 31, 2021
(in thousands)
−Removed: VIEs VOEs Total VIEs VOEs Total
Cash and cash equivalents $ 19,751 $ 90,326
6 unchanged sentences
Total liabilities, redeemable non-controlling interest and partners' capital $ 580,711 $ 733,812
−Removed: During 2021, we deconsolidated four funds in which we had seed investments totaling approximately $93.9 million as of December 31, 2020 due to no longer having a controlling financial interest.
+Added: During 2022, we deconsolidated five funds in which we had seed investments totaling approximately $61.8 million as of December 31, 2021 due to no longer having a controlling financial interest.
Cash and cash equivalents include cash on hand, demand deposits, overnight commercial paper and highly liquid investments with original maturities of three months or less.
Due to the short-term nature of these instruments, the recorded value has been determined to approximate fair value.
−Removed: AllianceBernstein
Valuation of consolidated company-sponsored investment funds' financial instruments by pricing observability levels as of December 31, 2022 and 2021 was as follows (in thousands):
1 unchanged sentence
December 31, 2022:
−Removed: Investments - VIEs $ 165,415 $ 444,253 $ 3,357 $ 613,025
−Removed: Investments - VOEs — — — —
−Removed: Derivatives - VIEs 622 5,265 — 5,887
−Removed: Derivatives - VOEs — — — —
+Added: Investments $ 129,706 $ 386,830 $ — $ 516,536
+Added: Derivatives 1,529 6,023 — 7,552
Total assets measured at fair value $ 131,235 $ 392,853 $ — $ 524,088
−Removed: Derivatives - VIEs $ 16,291 $ 2,051 $ — $ 18,342
−Removed: Derivatives - VOEs — — — —
+Added: Derivatives $ 14,932 $ 6,608 $ — $ 21,540
Total liabilities measured at fair value $ 14,932 $ 6,608 $ — $ 21,540
December 31, 2021:
−Removed: Investments - VIEs $ 73,909 $ 168,114 $ 518 $ 242,541
−Removed: Investments - VOEs — 59,940 101 60,041
−Removed: Derivatives - VIEs 442 2,782 — 3,224
−Removed: Derivatives - VOEs — 464 — 464
+Added: Investments $ 165,415 $ 444,253 $ 3,357 $ 613,025
+Added: Derivatives 622 5,265 — 5,887
Total assets measured at fair value $ 166,037 $ 449,518 $ 3,357 $ 618,912
−Removed: Derivatives - VIEs $ 1,649 $ 5,244 $ — $ 6,893
−Removed: Derivatives - VOEs — 664 — 664
+Added: Derivatives $ 16,291 $ 2,051 $ — $ 18,342
Total liabilities measured at fair value $ 16,291 $ 2,051 $ — $ 18,342
See Note 9 for a description of the fair value methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy.
+Added: 2022 Annual Report 109
The change in carrying value associated with Level 3 financial instruments carried at fair value within consolidated company-sponsored investment funds was as follows:
2 unchanged sentences
Deconsolidated funds (3,351) (717)
−Removed: Transfers (out) in (205) 552
+Added: Transfers (out) (6) (205)
Purchases 248 3,675
Sales (248) (7)
−Removed: Realized gains (losses), net 3 (99)
+Added: Realized gains, net — 3
Unrealized (losses), net — (11)
−Removed: Accrued discounts — 1
Balance as of end of period $ — $ 3,357
2 unchanged sentences
Realized and unrealized gains and losses on Level 3 financial instruments are recorded in investment gains and losses in the consolidated statements of income.
−Removed: 2021 Annual Report 105
Derivative Instruments
6 unchanged sentences
The VIEs report this cash collateral in the consolidated company-sponsored investment funds cash and cash equivalents in our consolidated statements of financial condition.
−Removed: As of December 31, 2021 and 2020, the VOEs held zero and $0.2 million (net), respectively, of futures, forwards, options and swaps within their portfolios.
−Removed: For the years ended December 31, 2021 and 2020, we recognized zero and $0.2 million of gains, respectively, on these derivatives.
−Removed: These gains and losses are recognized in the investment gains (losses) in the consolidated statements of income.
−Removed: As of December 31, 2021 and 2020, the VOEs held no cash collateral payable to trade counterparties.
−Removed: This obligation to return cash is reported in the liabilities of consolidated company-sponsored investment funds in our consolidated statements of financial condition.
−Removed: As of December 31, 2021 and 2020, the VOEs delivered zero and $0.1 million, respectively, of cash collateral into brokerage accounts.
−Removed: The VOEs report this cash collateral in the consolidated company-sponsored investment funds cash and cash equivalents in our consolidated statements of financial condition.
Offsetting Assets and Liabilities
4 unchanged sentences
December 31, 2022:
−Removed: Derivatives - VIEs $ 5,887 $ — $ 5,887 $ — $ (904) $ 4,983
−Removed: Derivatives - VOEs $ — $ — $ — $ — $ — $ —
+Added: Derivatives $ 7,552 $ — $ 7,552 $ — $ (2,731) $ 4,821
December 31, 2021:
−Removed: Derivatives - VIEs $ 3,224 $ — $ 3,224 $ — $ (513) $ 2,711
−Removed: Derivatives - VOEs $ 464 $ — $ 464 $ — $ — $ 464
+Added: Derivatives $ 5,887 $ — $ 5,887 $ — $ (904) $ 4,983
AllianceBernstein
5 unchanged sentences
December 31, 2022:
−Removed: Derivatives - VIEs $ 18,342 $ — $ 18,342 $ — $ (1,824) $ 16,518
−Removed: Derivatives - VOEs $ — $ — $ — $ — $ — $ —
+Added: Derivatives $ 21,540 $ — $ 21,540 $ — $ (5,444) $ 16,096
December 31, 2021:
−Removed: Derivatives - VIEs $ 6,893 $ — $ 6,893 $ — $ (4,201) $ 2,692
−Removed: Derivatives - VOEs $ 664 $ — $ 664 $ — $ (138) $ 526
+Added: Derivatives $ 18,342 $ — $ 18,342 $ — $ (1,824) $ 16,518
Cash collateral, whether pledged or received on derivative instruments, is not considered material and, accordingly, is not disclosed by counterparty.
11 unchanged sentences
As of December 31, 2022, it was subject to financial resources requirements of $45.4 million imposed by the Financial Conduct Authority of the United Kingdom and had aggregate regulatory financial resources of $51.0 million, an excess of $5.6 million over the required level.
−Removed: AllianceBernstein Investments, Inc., another one of our subsidiaries and the distributor and/or underwriter for certain company-sponsored mutual funds, is registered as a broker-dealer under the Exchange Act and is subject to the minimum net capital requirements imposed by the SEC.
−Removed: As of December 31, 2021, it had net capital of $26.5 million, which was $26.2 million in excess of its required net capital of $0.3 million.
+Added: AllianceBernstein Investments, Inc.
+Added: ("ABI"), another one of our subsidiaries and the distributor and/or underwriter for certain company-sponsored mutual funds, is registered as a broker-dealer under the Exchange Act and is subject to the minimum net capital requirements imposed by the SEC.
+Added: As of December 31, 2022, ABI had net capital of $53.5 million, which was $53.2 million in excess of its required net capital of $0.3 million.
Many of our subsidiaries around the world are subject to minimum net capital requirements by the local laws and regulations to which they are subject.
3 unchanged sentences
In the normal course of business, brokerage activities involve the execution, settlement and financing of various customer securities trades, which may expose our broker-dealer operations to off-balance sheet risk by requiring us to purchase or sell securities at prevailing market prices in the event the customer is unable to fulfill its contractual obligations.
−Removed: 2021 Annual Report 107
Our customer securities activities are transacted on either a cash or margin basis.
2 unchanged sentences
In connection with these activities, we may execute and clear customer transactions involving the sale of securities not yet purchased.
−Removed: We seek to control the risks associated with margin transactions by requiring customers to maintain collateral in compliance with the aforementioned regulatory and internal guidelines.
+Added: We seek to control the risks associated with margin transactions by requiring
+Added: 2022 Annual Report 111
+Added: customers to maintain collateral in compliance with the aforementioned regulatory and internal guidelines.
We monitor required margin levels daily and, pursuant to such guidelines, require customers to deposit additional collateral, or reduce positions, when necessary.
5 unchanged sentences
Other Counterparties
−Removed: We are engaged in various brokerage activities on behalf of clients, in which counterparties primarily include broker-dealers, banks and other financial institutions.
−Removed: In the event these counterparties do not fulfill their obligations, we may be exposed to loss.
−Removed: The risk of default depends on the creditworthiness of the counterparty or issuer of the instrument.
+Added: We are engaged in various brokerage, futures, forwards, options and swap activities on behalf of clients, in which counterparties primarily include broker-dealers, banks and other financial institutions.
+Added: In the event these counterparties do not fulfill their obligations, our clients and we may be exposed to loss.
+Added: The risk of default depends on the creditworthiness of the counterparty.
It is our policy to review, as necessary, each counterparty’s creditworthiness.
18 unchanged sentences
Service and compensation after December 31, 2008 are not taken into account in determining participants’ retirement benefits.
−Removed: Our policy is to satisfy our funding obligation for each year in an amount not less than the minimum required by the Employee Retirement Income Security Act of 1974, as amended, and not greater than the maximum amount we can deduct for federal income tax purposes.
+Added: Our policy is to satisfy our funding obligation for each year in an amount not less than the minimum required by ERISA and not greater than the maximum amount we can deduct for federal income tax purposes.
We did not make a contribution to the Retirement Plan during 2022.
10 unchanged sentences
Plan settlements (4,524) (5,803)
−Removed: Actuarial (gain) loss (4,447) 16,131
+Added: Actuarial (gain) (37,839) (4,447)
Benefits paid (2,977) (2,806)
16 unchanged sentences
6,543 15,882 (4,065)
−Removed: Income tax (expense) benefit (87) (216) 312
+Added: Income tax (expense) (33) (87) (216)
Other comprehensive income (loss) $ 6,510 $ 15,795 $ (4,281)
+Added: The gain of $6.5 million recognized in 2022 was primarily due to changes in the discount rate and lump sum interest rates of ($38.7 million) , settlement loss recognized of ($1.7 million) and the recognized actuarial loss of ($1.0 million), offset by actual earnings less than expected earnings on plan assets ($34.0 million), changes in the census data ($0.5 million) and changes in adjustments for participants who received their pension as a lump sum ($0.4 million).
The gain of $15.8 million recognized in 2021 was primarily due to actual earnings exceeding expected earnings on plan assets ($8.2 million), changes in the discount rate and lump sum interest rates of ($5.6 million), settlement loss recognized of ($2.0 million) and the recognized actuarial loss of ($1.5 million), offset by changes in the census data ($1.0 million) and changes in the mortality assumption ($0.2 million).
−Removed: The loss of $4.3 million recognized in 2020 was primarily due to changes in the discount rate and lump sum interest rates ($16.7 million), offset by actual earnings exceeding expected earnings on plan assets ($10.4 million), changes in the mortality assumption ($1.0 million), the recognized actuarial loss ($1.4 million) and changes in the census data ($0.4 million).
−Removed: The loss of $7.6 million recognized in 2019 was primarily was due to changes in the discount rate and lump sum interest rates ($21.7 million), offset by actual earnings exceeding expected earnings on plan assets ($11.3 million), changes in the mortality assumption ($1.2 million), the recognized actuarial loss ($1.1 million) and changes in census data ($0.1 million).
+Added: The loss of $4.3 million recognized in 2020 primarily was due to changes in the discount rate and lump sum interest rates ($16.7 million), offset by actual earnings exceeding expected earnings on plan assets ($10.4 million), changes in the mortality assumption ($1.0 million), the recognized actuarial loss ($1.4 million) and changes in census data ($0.4 million).
2022 Annual Report 113
2 unchanged sentences
The reconciliation of the 2022 amounts recognized in other comprehensive income for the Retirement Plan as compared to the consolidated statement of comprehensive income ( " OCI Statement " ) is as follows:
−Removed: Retirement Plan Retired Individual Plan Foreign Retirement Plans OCI
+Added: Plan Retired Individual Plan Foreign Retirement Plans OCI
(in thousands)
−Removed: Recognized actuarial gain (loss) $ 15,858 $ 16 $ (131) $ 15,743
+Added: Recognized actuarial gain $ 6,519 $ 107 $ 296 $ 6,922
Amortization of prior service cost 24 — — 24
Changes in employee benefit related items 6,543 107 296 6,946
−Removed: Income tax (expense) benefit (87) (1) 29 (59)
+Added: Income tax (expense) (33) — (62) (95)
Employee benefit related items, net of tax $ 6,510 $ 107 $ 234 $ 6,851
−Removed: The amounts included in accumulated other comprehensive income (loss) for the Retirement Plan as of December 31, 2021 and 2020 were as follows:
+Added: The amounts included in accumulated other comprehensive loss for the Retirement Plan as of December 31, 2022 and 2021 were as follows:
(in thousands)
10 unchanged sentences
2023 $ 10,121
+Added: 2028 - 2032 38,404
AllianceBernstein
16 unchanged sentences
The expected long-term rate of return on assets is based on weighted average expected returns for each asset class.
−Removed: As of December 31, 2021, the mortality projection assumption has been updated to use the generational MP-2021 improvement scale.
−Removed: Previously, mortality was projected generationally using the MP-2020 improvements scale.
+Added: As of December 31, 2022, the mortality projection assumption used the generational MP-2021 improvement scale, which is consistent with the improvement scale used in 2021.
+Added: Prior to 2021, mortality was projected generationally using the MP-2020 improvements scale.
The base mortality assumption used is the Society of Actuaries Pri-2012 base mortality table for private sector plans, with a white-collar adjustment, using the contingent annuitant table for beneficiaries of deceased participants.
6 unchanged sentences
Debt securities 42 38
+Added: Total 100 % 100 %
The guidelines regarding allocation of assets are formalized in the Investment Policy Statement adopted by the Investment Committee for the Retirement Plan.
−Removed: The objective of the investment program is to enhance the portfolio of the Retirement Plan through total return (capital appreciation and income), thereby promoting the ongoing ability of the plan to meet future liabilities and obligations, while minimizing the need for additional contributions.
+Added: The objective of the investment program is to enhance the portfolio of the Retirement Plan through total return (capital appreciation and income), thereby promoting the ongoing ability of the Retirement plan to meet future liabilities and obligations, while minimizing the need for additional contributions.
The guidelines specify an allocation weighting of 10% to 35% for liability hedging investments (target of 24%), 15% to 40% for return seeking investments (target of 27%), 5% to 35% for risk mitigating investments (target of 10%), 10% to 35% for diversifying investments (target of 21%) and 5% to 35% for dynamic asset allocation (target of 18%).
−Removed: Investments in mutual funds, hedge funds (and other alternative investments), and other commingled investment vehicles are permitted under the guidelines.
+Added: Investments in mutual funds, hedge funds (and other alternative investments), and other commingled investment vehicles are permitted Investment Policy Statement.
Investments are permitted in overlay portfolios (regulated mutual funds), which are designed to manage short-term portfolio risk and mitigate the effect of extreme outcomes by varying the asset allocation of a portfolio.
7 unchanged sentences
Fixed income mutual funds 2,149 — — 2,149
+Added: Fixed income securities — 22,478 — 22,478
Equity mutual funds 26,074 — — 26,074
15 unchanged sentences
Treasury strips, (zero-coupon bonds);
−Removed: • two fixed income mutual funds, which seek to generate income consistent with preservation of capital.
−Removed: One fund invests in a portfolio of investment-grade securities primarily in the U.S.
−Removed: with additional non-U.S.
−Removed: The second fund invests in inflation-indexed fixed-income securities and similar bonds issued by non-U.S.
−Removed: governments and various commodities;
−Removed: • six equity mutual funds in 2021 as compared to seven equity mutual funds in 2020;
−Removed: four of which focus on U.S.-based equity securities of various capitalization sizes ranging from small to large capitalizations and diversified portfolios within those capitalization ranges;
−Removed: and in 2021 two funds as compared to three funds in 2020, that focus on non-U.S.
−Removed: based equity securities of various capitalization sizes ranging from small to large capitalizations and diversified portfolios therein across non-U.S.
−Removed: • one separate equity income mutual fund, which seeks to moderate the volatility of equity oriented asset allocation over the long term, as part of the overall asset allocation managed by the Plan to deliver a long-term premium to the S&P 500 with greater consistency across a range of market environments.
−Removed: • a multi-style, multi-cap integrated portfolio adding U.S.
−Removed: equity diversification to its value and growth equity selections, designed to deliver a long-term premium to the S&P 500 with greater consistency across a range of market environments;
−Removed: • investments measured at net asset value, including three hedge funds that seek to provide attractive risk-adjusted returns over full market cycles with less volatility than the broad equity markets by allocating all or substantially all of their assets among portfolio managers through portfolio funds that employ a broad range of investment strategies;
−Removed: one private investment trust that invests primarily in equity securities of non-U.S.
−Removed: companies located in emerging market countries;
−Removed: and one collective investment trust that invests in U.S.
−Removed: equities of various capitalization sizes.
+Added: • one fixed income mutual fund in 2022, as compared to two fixed income mutual funds in 2021.
+Added: The fund included in both 2022 and 2021 pursues an aggressive investment strategy involving a variety of asset classes.
+Added: This fund seeks inflation protection from investments around the globe, both in developed and emerging market countries.
+Added: The additional fund included in 2021 sought to generate income consistent with preservation of capital;
+Added: • six equity mutual funds in both 2022 and 2021, which focus on both U.S.-based and non-U.S.-based equity securities of various capitalization sizes ranging from small to large capitalization and diversified portfolios within those capitalization ranges;
+Added: • one asset allocation mutual fund, which seeks to moderate overall volatility and limit extreme outcomes in times of market stress, without sacrificing long-term growth potential.
+Added: This fund continuously adjusts the mix of global equities, bonds and related “opportunistic” assets based on our view of prospective market conditions;
+Added: • one separately managed account, managed against the Bloomberg Long U.S.
+Added: Corporate index.
+Added: This portfolio invests in U.S.
+Added: dollar denominated investment grade fixed income securities with at least 10 years to maturity;
+Added: one alternative investment, securitized assets hedge fund with a focus on mortgage credit, principally through investment in Credit Risk Transfer Securities, residential mortgage-backed securities, commercial mortgage-backed securities and other asset-backed securities;
+Added: • investments measured at net asset value, including two hedge funds in both 2022 and 2021;
+Added: one fund is a long/short equity-focused multi-manager hedge fund investing across industries and geographies.
+Added: The second fund seeks to provide attractive risk-adjusted returns over full market cycles with less volatility than that of broad equity markets by allocating all or substantially all of their assets among portfolio managers through portfolio funds that employ a broad range of investment strategies.
+Added: AllianceBernstein
Long-term Incentive Compensation Plans
1 unchanged sentence
See Note 2, "Summary of Significant Accounting Policies – Long-Term Incentive Compensation Plans" for a discussion of the award provisions.
−Removed: AllianceBernstein
Under the Incentive Compensation Program, we made awards in 2022, 2021 and 2020 aggregating $164.3 million, $184.1 million and $177.4 million, respectively.
−Removed: The amounts charged to employee compensation and benefits for the years ended December 31, 2021, 2020 and 2019 were $173.4 million, $176.8 million and $177.2 million, respectively.
+Added: The amounts charged to employee compensation and benefits expense for the years ended December 31, 2022, 2021 and 2020 were $160.1 million, $173.4 million and $176.8 million, respectively.
Effective as of September 30, 2017, we established the AB 2017 Long Term Incentive Plan (“ 2017 Plan ”), which was adopted at a special meeting of AB Holding Unitholders held on September 29, 2017.
−Removed: The following forms of awards may be granted to employees and Eligible Directors under the 2017 Plan:
+Added: The following forms of awards may be granted to employees and Eligible Directors (directors who satisfy applicable independence standards) under the 2017 Plan:
(i) restricted AB Holding Units or phantom restricted AB Holding Units (a “phantom” award is a contractual right to receive AB Holding Units at a later date or upon a specified event);
5 unchanged sentences
Under the 2017 Plan, the aggregate number of AB Holding Units with respect to which awards may be granted is 60 million, including no more than 30 million newly-issued AB Holding Units.
−Removed: As of December 31, 2021, no options to buy AB Holding Units had been granted and 28,109,084 AB Holding Units, net of withholding tax requirements, were subject to other AB Holding Unit awards made under the 2017 Plan or the AllianceBernstein 2010 Long Term Incentive Plan, as amended, an equity compensation plan with similar terms that was canceled on September 30, 2017.
+Added: As of December 31, 2022, no options to buy AB Holding Units were outstanding and 29,795,964 AB Holding Units, net of withholding tax requirements, were subject to other AB Holding Unit awards made under the 2017 Plan or the AllianceBernstein 2010 Long Term Incentive Plan, as amended, an equity compensation plan with similar terms that was canceled on September 30, 2017.
AB Holding Unit-based awards (including options) in respect of 30,204,036 AB Holding Units were available for grant under the 2017 Plan as of December 31, 2022.
5 unchanged sentences
options granted to Eligible Directors generally were exercisable at a rate of 33.3% of the AB Holding Units subject to such options on each of the first three anniversary dates of the date of grant.
+Added: 2022 Annual Report 117
The option-related activity in our equity compensation plans during 2022 is as follows:
10 unchanged sentences
Vested or expected to vest as of December 31, 2022 — $ — — $ —
−Removed: The total intrinsic value of options exercised during 2021, 2020 and 2019 was $2.2 million, $32,368 and $3.7 million, respectively.
+Added: The total intrinsic value of options exercised during 2022, 2021 or 2020 was $0.2 million, $2.2 million and $32,368, respectively.
Under the fair value method, compensation expense is measured at the grant date based on the estimated fair value of the options awarded (determined using the Black-Scholes option valuation model) and is recognized over the requisite service period.
−Removed: We recorded no compensation expense related to option grants in 2021, 2020 or 2019 as no options were granted.
+Added: As we did not grant any option awards in 2022, 2021 or 2020, no compensation expense was recorded.
As of December 31, 2022, there was no compensation expense related to unvested option grants not yet recognized in the consolidated statement of income.
−Removed: 2021 Annual Report 113
Restricted AB Holding Unit Awards
1 unchanged sentence
These AB Holding Units give the Eligible Directors, in most instances, all the rights of other AB Holding Unitholders, subject to such restrictions on transfer as the Board may impose.
−Removed: We award restricted AB Holding Units that vest ratably over three or four years.
+Added: We award restricted AB Holding Units to Eligible Directors that vest ratably over three years (four years for awards granted in 2021 and previous years).
We fully expensed these awards on each grant date, as there is no service requirement.
4 unchanged sentences
Compensation Expense (in millions) $ 1.2 $ 1.6 $ 1.2
−Removed: On April 28, 2017, Seth P.
−Removed: Bernstein was appointed President and Chief Executive Officer (" CEO") pursuant to an employment agreement, effective May 1, 2017.
+Added: On April 28, 2017, Seth Bernstein was appointed President and Chief Executive Officer .
In connection with the commencement of his employment, Mr.
−Removed: Bernstein was granted restricted AB Holding Units with a grant date fair value of $3.5 million (164,706 AB Holding Units based on the $21.25 grant date AB Holding Unit price on May 16, 2017) and a four-year service requirement.
−Removed: Bernstein's restricted AB Holding Units vested ratably on each of the first four anniversaries of his commencement date and were delivered to Mr.
−Removed: Bernstein on or about May 1, 2021.
−Removed: These AB Holding Units were subject to accelerated vesting clauses in his employment agreement.
+Added: Bernstein was granted restricted AB Holding Units;
+Added: these Units were fully amortized as of December 31, 2021.
Compensation expense related to Mr.
−Removed: Bernstein's restricted AB Holding Unit grant was $0.3 million for the year ended December 31, 2021 and $0.9 million for each of the years ended December 31, 2020 and 2019, respectively.
−Removed: Bernstein's award granted in connection with his appointment as CEO was fully amortized as of December 31, 2021.
+Added: Bernstein's restricted AB Holding Unit grant was $0.3 million and $0.9 million for the years ended December 31, 2021, and 2020, respectively.
Under the Incentive Compensation Program, we awarded 4.2 million restricted AB Holding Units in 2022 (which included 3.8 million restricted AB Holding Units in December for the 2022 year-end awards as well as 0.4 million additional restricted AB Holding Units granted earlier during the year relating to the 2021 year-end awards), with grant date fair values per restricted AB Holding Unit ranging between $38.84 to $50.94.
We awarded 3.5 million restricted AB Holding Units in 2021 (which included 3.3 million restricted AB Holding Units in December for the 2021 year-end awards as well as 0.2 million additional restricted AB Holding Units granted earlier during the year relating to the 2020 year-end awards), with grant date fair values per restricted AB Holding Unit ranging between $32.10 to $50.94.
+Added: AllianceBernstein
We awarded 5.3 million restricted AB Holding Units in 2020 (which included 5.0 million restricted AB Holding Units in December for the 2020 year-end awards as well as 0.3 million additional restricted AB Holding Units granted earlier during the year related to the 2019 year-end awards), with grant date fair values per restricted AB Holding Unit ranging between $28.75 to $32.10.
Restricted AB Holding Units awarded under the Incentive Compensation Program in 2020 and years prior generally vested in 25% increments on December 1 st of each of the four years immediately following the year in which the award was granted.
−Removed: Awards granted in 2021 and subsequent years generally will vest in 33.3% increments on December 1st of each of the three years immediately following the year in which the award is granted.
−Removed: We also award restricted AB Holding Units in connection with certain employment and separation agreements, as well as relocation-related performance awards, with vesting schedules ranging between two and five years.
+Added: Awards granted in 2021 and subsequent years generally vest in 33.3% increments on December 1 st of each of the three years immediately following the year in which the award is granted.
+Added: We also award restricted AB Holding Units in connection with certain employment and separation agreements, as well as relocation-related performance awards, with vesting schedules generally ranging between two and ten years.
Grant details related to these awards is as follows:
3 unchanged sentences
Grant Date Fair Value Range $34.86 - $49.90
+Added: $29.06 - $53.86 $18.80 - $35.42
Compensation Expense $ 35.0 $ 40.9 $ 32.1
−Removed: AllianceBernstein
The fair value of the restricted AB Holding Units is amortized over the requisite service period as compensation expense.
17 unchanged sentences
Units issued (1)
+Added: 17,326,222 3,917,437
Units retired (2)
1 unchanged sentence
Outstanding as of December 31, 285,979,913 271,453,043
+Added: (1) Includes 15,321,535 Units issued as a result of the CarVal acquisition.
(2) During 2022 and 2021, we purchased 2,500 and 5,400 AB Units, respectively, in private transactions and retired them.
+Added: 2022 Annual Report 119
AB is a private partnership for federal income tax purposes and, accordingly, is not subject to federal or state corporate income taxes.
7 unchanged sentences
Furthermore, should AB enter into a substantial new line of business, AB Holding, by virtue of its ownership of AB, would lose its status as a publicly traded partnership and would become subject to corporate income tax, which would reduce materially AB Holding’s net income and its quarterly distributions to AB Holding Unitholders.
−Removed: 2021 Annual Report 115
Earnings before income taxes and income tax expense consist of:
15 unchanged sentences
Income tax expense $ 39,639 $ 62,728 $ 45,653
+Added: AllianceBernstein
The principal reasons for the difference between the effective tax rates and the UBT statutory tax rate of 4.0% are as follows:
11 unchanged sentences
Effect of ASC 740 adjustments, miscellaneous taxes, and other 5,366 0.7 1,799 0.1 2,654 0.3
+Added: Tax Credits (5,275) (0.6) — — — —
Income not taxable resulting from use of UBT business apportionment factors and effect of compensation charge (26,636) (3.3) (34,589) (2.8) (26,309) (2.9)
2 unchanged sentences
In making this assessment, we assume that the taxing authority will examine the tax position and have full knowledge of all relevant information.
−Removed: AllianceBernstein
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
11 unchanged sentences
Interest and penalties, if any, relating to tax positions are recorded in income tax expense on the consolidated statements of income.
−Removed: There was no interest expense recorded in 2021.
−Removed: The total amount of interest expense recorded in income tax expense (credit) during 2020 and 2019 was, $(0.4) million and $0.7 million, respectively.
+Added: There was no interest expense recorded in 2022 or 2021.
+Added: The total amount of interest expense recorded in income tax expense (credit) during 2020 was $(0.4) million.
As of December 31, 2022 and 2021, there is no accrued interest recorded on the consolidated statements of financial condition.
−Removed: The total amount of accrued interest recorded as of December 31, 2019 was $1.1 million.
There were no penalties as of December 31, 2022, 2021 and 2020.
−Removed: There were $0.2 million of penalties accrued as of December 31, 2019.
Generally, the company is no longer subject to U.S.
−Removed: federal, state or local income tax examinations by tax authorities for any year prior to 2017.
+Added: federal, state or local income tax examinations by tax authorities for any year prior to 2018, except as set forth below.
During the fourth quarter of 2020, the City of New York notified us of an examination of AB's UBT returns for the years 2017 through 2019.
The examination is ongoing and no provision with respect to this examination has been recorded.
+Added: 2022 Annual Report 121
Currently, there are no income tax examinations at our significant non-U.S.
1 unchanged sentence
Years that remain open and may be subject to examination vary under local law and range from one to seven years.
−Removed: At December 31, 2021, it is not reasonably possible that any of our unrecognized tax benefits will change within the next 12 months due to completion of tax authority exams.
−Removed: 2021 Annual Report 117
+Added: As of December 31, 2022, it is reasonably possible that $2.8 million of our unrecognized tax benefits will change within the next 12 months due to the expiration of the statute of limitations.
Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
9 unchanged sentences
Lease liability 4,911 5,327
+Added: Investment in foreign subsidiaries 26,479 —
+Added: Tax credit carryforward 6,171 —
Other, primarily accrued expenses deductible when paid 6,860 4,917
10 unchanged sentences
Net deferred tax asset $ 24,921 $ 29,911
−Removed: Valuation allowances of $3.8 million and $3.0 million were established as of December 31, 2021 and 2020, respectively, primarily due to significant negative evidence that net operating loss ( "NOL" ) carryforwards will not be utilized, given the future losses expected to be incurred by the applicable subsidiaries.
−Removed: We had NOL carryforwards at December 31, 2021 and 2020 of approximately $55.1 million and $51.0 million, respectively, in certain foreign locations with an indefinite expiration period.
+Added: The valuation allowance of $38.1 million was established as of December 31, 2022 primarily due to significant negative evidence that capital losses anticipated in the held for sale foreign subsidiaries will not be utilized, given the nature of income expected to be incurred by the applicable subsidiaries.
+Added: The valuation allowance of $3.8 million was established as of December 31, 2021 primarily due to significant negative evidence that net operating loss ( "NOL" ) carryforwards will not be utilized, given the future losses expected to be incurred by the applicable subsidiaries.
+Added: We had NOL carryforwards at December 31, 2022 and 2021 of approximately $30.3 million and $55.1 million, respectively, in certain foreign locations with a five-year expiration period.
The deferred tax asset is included in other assets in our consolidated statement of financial condition.
30 unchanged sentences
International 1,672,332 1,883,010 1,601,900
−Removed: Total $ 4,441,602 $ 3,708,536 $ 3,518,432
+Added: $ 4,054,290 $ 4,441,602 $ 3,708,536
Long-lived assets:
2 unchanged sentences
Total $ 4,140,457 $ 3,377,368
+Added: (1) We have recast prior period presentation of geographic revenues to align with current period presentation by legal entity domicile as compared to historical presentation method by client domicile.
Major Customers
−Removed: Company-sponsored mutual funds are distributed to individual investors through broker-dealers, insurance sales representatives, banks, registered investment advisers, financial planners and other financial intermediaries.
−Removed: HSBC (not affiliated with AB) was responsible for approximately 4%, 6% and 14% of our open-end mutual fund sales in 2021, 2020 and 2019, respectively.
−Removed: HSBC is not under any obligation to sell a specific amount of AB Fund shares.
−Removed: EQH and the general and separate accounts of Equitable Financial Life Insurance Company (" Equitable Financial ") (including investments by the separate accounts of Equitable Financial in the funding vehicle EQ Advisors Trust) accounted for approximately 3% of our total revenues for each of the years ended December 31, 2021, 2020 and 2019.
−Removed: No single institutional client other than EQH and its subsidiaries accounted for more than 2% of our total revenues for the years ended December 31, 2021, 2020 and 2019.
+Added: No single customer or individual client accounted for more than 10% of our total revenues for the years ended December 31, 2022, 2021 and 2020.
2022 Annual Report 123
38 unchanged sentences
The net receivable balance included in the consolidated statements of financial condition as of December 31, 2022 and 2021 was $7.7 million and $11.2 million, respectively.
−Removed: Non-controlling Interests
−Removed: Non-controlling interest in net income for the years ended December 31, 2021, 2020 and 2019 consisted of the following:
−Removed: 2021 2020 2019
−Removed: (in thousands)
−Removed: Non-redeemable non-controlling interest $ 100 $ — $ 92
−Removed: Redeemable non-controlling interests:
−Removed: Consolidated company-sponsored investment funds 5,011 (4,169) 29,549
−Removed: Total non-controlling interest in net income (loss) $ 5,111 $ (4,169) $ 29,641
−Removed: Redeemable non-controlling interest as of December 31, 2021 and 2020 consisted of the following:
−Removed: (in thousands)
−Removed: Consolidated company-sponsored investment funds $ 421,169 $ 102,359
−Removed: Total redeemable non-controlling interest $ 421,169 $ 102,359
+Added: Acquisitions and Divestitures
+Added: On July 1, 2022, AB Holding acquired a 100% ownership interest in 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.
+Added: Also, on July 1, 2022, immediately following the acquisition of CarVal, AB Holding contributed 100% of its equity interests in CarVal to AB in exchange for AB Units.
+Added: Post-acquisition, CarVal was rebranded AB CarVal Investors (“ AB CarVal ”).
+Added: On the acquisition date, AB Holding issued approximately 3.2 million AB Holding Units (with a fair value of $132.8 million) with the remaining 12.1 million Units (with a fair value of $456.4 million) issued on November 1, 2022.
+Added: The fair value of the units issued on November 1, 2022 reflect final adjustments to the estimated unit issuance recorded as of acquisition close on July 1, 2022 and as disclosed in the third quarter 2022 Form 10-Q.
+Added: AB received a 100% equity interest in CarVal from AB Holding and issued approximately 15.3 million AB Units (with a fair value of $589.2 million).
+Added: AB also recorded a contingent consideration payable of $228.9 million (to be paid predominantly in AB Units) based on AB CarVal achieving certain performance objectives over a six-year period ending December 31, 2027.
+Added: The AB Units, as discussed above , were issued to AB Holding;
+Added: AB Holding then issued the equal amount of AB Holding Units to CarVal.
+Added: The excess of the purchase price over the current fair value of identifiable net liabilities acquired of $156.1 million (net of cash acquired of $40.8 million), and the recording of a net deferred tax asset of $5.1 million resulted in the recognition of $666.1 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.
+Added: The goodwill recorded is not deductible for tax purposes as the CarVal acquisition was an investment in a partnership.
+Added: 2022 Annual Report 125
+Added: The following table summarizes the amounts of identified assets acquired and liabilities assumed at the acquisition date (reflecting acquisition adjustments recorded in the fourth quarter of 2022), as well as the consideration transferred to acquire CarVal (in thousands):
+Added: Summary of purchase consideration:
+Added: Fair value of AB Holding units issued $ 589,169
+Added: Fair value of contingent consideration 228,885
+Added: Total purchase consideration $ 818,054
+Added: Purchase price allocation:
+Added: Assets acquired:
+Added: Cash and cash equivalents $ 40,777
+Added: Receivables, net 82,523
+Added: Investments - other 947
+Added: Furniture, equipment, and leasehold improvements, net 2,464
+Added: Right-of-use assets 16,482
+Added: Other assets 10,600
+Added: Deferred tax asset 5,073
+Added: Intangible assets 303,000
+Added: Goodwill 666,130
+Added: Total assets acquired 1,127,996
+Added: Liabilities assumed:
+Added: Accounts payable and accrued expenses (17,793)
+Added: Accrued compensation and benefits (219,726)
+Added: Debt (42,661)
+Added: Lease liabilities (16,571)
+Added: Non-redeemable non-controlling interests in consolidated entities (13,191)
+Added: Total liabilities assumed (309,942)
+Added: Net assets acquired $ 818,054
+Added: The CarVal acquisition did not have a significant impact on our 2022 revenues and earnings.
+Added: As a result, we have not provided supplemental pro forma financial information.
+Added: On November 22, 2022, AB and SocGen, a leading European bank, announced plans to form a joint venture combining their respective cash equities and research businesses.
+Added: The consummation of the joint venture is subject to customary closing conditions, including regulatory clearances.
+Added: The closing is expected to occur before the end of 2023.
+Added: Upon closing, AB will own a 49% interest in the joint venture and SocGen will own a 51% interest in the joint venture, with an option to reach 100% ownership after five years.
+Added: The assets and liabilities of AB's research services business (“ the disposal group ”) have been classified as held for sale on the consolidated statement of financial condition and recorded at fair value, less cost to sell.
+Added: As a result of classifying these assets as held for sale, we recognized a non-cash valuation adjustment of $7.4 million on the consolidated statement of income , to recognize the net carrying value at lower of cost or fair value, less estimated costs to sell.
+Added: AllianceBernstein
+Added: The following table summarizes the assets and liabilities of the disposal group classified as held for sale on the consolidated statement of financial condition as of December 31, 2022:
+Added: Cash and cash equivalents $ 159,123
+Added: Receivables, net:
+Added: Brokers and dealers 44,717
+Added: Brokerage clients 29,243
+Added: Other fees 22,988
+Added: Investments 24,507
+Added: Furniture and equipment, net 4,128
+Added: Other assets 107,764
+Added: Right-of-use assets 1,552
+Added: Intangible assets 4,903
+Added: Goodwill 159,826
+Added: Valuation adjustment (allowance) on disposal group (7,400)
+Added: Total assets held for sale $ 551,351
+Added: Brokers and dealers $ 32,983
+Added: Brokerage clients 10,232
+Added: Other liabilities 50,884
+Added: Accrued compensation and benefits 13,853
+Added: Total liabilities held for sale $ 107,952
+Added: As of December 31, 2022, cash and cash equivalents classified as held for sale included in the consolidated statement of cash flows was $159.1 million.
+Added: We have determined that the exit from the sell-side research business does not represent a strategic shift that had a major effect on our consolidated results of operations.
+Added: Accordingly, we have not classified the disposal group as discontinued operations.
+Added: The results of operations of the disposal group up to the respective dates of sale will be included in our consolidated results of operations for all periods presented.
+Added: The lower of amortized cost or fair value adjustment upon transferring these assets to held for sale was not material.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
1 unchanged sentence
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.