What changed in this filing

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Item 1. Financial Statements

2023-04-26 compared with 2022-10-28 · 49 added, 117 removed, 210 unchanged (44% of the section changed)

3 unchanged sentences

(in thousands, except unit amounts)

September 30,

2023 December 31,

Investment in AB $ 2,052,965 $ 2,074,626

Due from AB 419,357 —

Other assets 6 —

Total assets $ 2,052,971 $ 2,074,626

LIABILITIES AND PARTNERS’ CAPITAL

Acquisition-related liabilities $ 419,357 $ —

Other liabilities 1,217 1,623

15 unchanged sentences

(in thousands, except per unit amounts)

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

2022 2021 2022 2021

Three Months Ended March 31,

Equity in net income attributable to AB Unitholders $ 76,382 $ 94,353

8 unchanged sentences

(in thousands)

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

2022 2021 2022 2021

Three Months Ended March 31,

Net income $ 67,437 $ 85,928

Other comprehensive (loss):

Other comprehensive income (loss):

Foreign currency translation adjustments, before tax 2,469 ( 4,317 )

3 unchanged sentences

Amortization of prior service cost 3 2

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

Recognized actuarial gain 143 84

Changes in employee benefit related items 146 86

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

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

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

Income tax (expense) ( 1 ) ( 3 )

Employee benefit related items, net of tax 145 83

Other comprehensive income (loss) 2,636 ( 4,204 )

Comprehensive income $ 70,073 $ 81,724

3 unchanged sentences

(in thousands)

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

2022 2021 2022 2021

Three Months Ended March 31,

General Partner’s Capital

9 unchanged sentences

Issuance of AB Holding Units to fund long-term incentive compensation plan awards 3,446 27,362

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

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

Balance, end of period 2,135,834 1,670,152

13 unchanged sentences

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

4 unchanged sentences

Changes in assets and liabilities:

Decrease in other assets — 92

(Increase) in other assets ( 6 ) —

(Decrease) in other liabilities ( 406 ) ( 1,146 )

Net cash provided by operating activities 77,986 127,143

Cash flows from investing activities:

Acquisition of business, net cash acquired 40,777 —

Contribution of CarVal to AB ( 40,777 ) —

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

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

Cash flows from financing activities:

1 unchanged sentence

Capital contributions from AB 1,324 529

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

Net cash used in financing activities ( 77,986 ) ( 127,143 )

2 unchanged sentences

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

Non-cash investing activities:

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

$ 1,052,062 $ —

Fair value of liabilities assumed 300,381 —

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

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

( 1,052,062 ) —

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

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

Non-cash financing activities:

Payables recorded under contingent payment arrangements 227,071 —

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

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

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

See Accompanying Notes to Condensed Financial Statements.

1 unchanged sentence

Notes to Condensed Financial Statements

September 30, 2022

March 31, 2023

The words “we” and “our” refer collectively to 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.

AB’s high-quality, in-depth research is the foundation of its business.

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.

3 unchanged sentences

• Actively-managed traditional and unconstrained fixed income strategies, including taxable and tax-exempt strategies;

• Alternative investments, including hedge funds, fund of funds, direct lending and private equity;

• Actively-managed alternative investments, including hedge funds, fund of funds and direct assets (e.g., direct lending, real estate and private equity);

• 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;

• Multi-asset solutions and services, including dynamic asset allocation, customized target-date funds and target-risk funds;

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

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

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

As of March 31, 2023, EQH owned approximately 3.5 % of the issued and outstanding units representing assignments of beneficial ownership of limited partnership interests in AB Holding (“AB Holding Units”).

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

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

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

As of March 31, 2023, the ownership structure of AB, expressed as a percentage of general and limited partnership interests, was as follows:

EQH and its subsidiaries 60.0 %

1 unchanged sentence

Unaffiliated holders 0.7

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

Including both the general partnership and limited partnership interests in AB Holding and AB, EQH and its subsidiaries had an approximate 61.4 % economic interest in AB as of March 31, 2023.

Basis of Presentation

14 unchanged sentences

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

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

On April 26, 2023, the General Partner declared a distribution of $ 0.66 per unit, representing a distribution of Available Cash Flow for the three months ended March 31, 2023.

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

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

The distribution is payable on May 25, 2023 to holders of record at the close of business on May 8, 2023.

Long-term Incentive Compensation Plans

3 unchanged sentences

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

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

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

2022 2021 2022 2021

Repurchases of AB Holding Units for the three months ended March 31, 2023 and 2022 consisted of the following:

Three Months Ended March 31,

(in millions)

Total amount of AB Holding Units Purchased/Retained (1)

— 1.0 2.6 2.9

Total Cash Paid for AB Holding Units Purchased/Retained (1)

1 unchanged sentence

Open Market Purchases of AB Holding Units Purchased (1)

— 0.9 2.3 2.3

Total Cash Paid for Open Market Purchases of AB Holding Units (1)

$ — $ 44.9 $ 92.7 $ 103.7

(1) Purchased on a trade date basis.

4 unchanged sentences

Repurchases are subject to regulations promulgated by the SEC as well as certain price, market volume and timing constraints specified in the plan.

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

We did not adopt a plan during the first quarter of 2023.

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

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

During the first three months of 2023 and 2022, AB awarded to employees and Eligible Directors 0.3 million and 0.7 million restricted AB Holding Unit awards, respectively.

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

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

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

Net Income per Unit

1 unchanged sentence

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

Three Months Ended September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Three Months Ended

(in thousands, except per unit amounts)

7 unchanged sentences

Diluted net income per unit $ 0.59 $ 0.87

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

There were no anti-dilutive options excluded from diluted net income in the three months ended March 31, 2023 or 2022.

Investment in AB

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

Changes in AB Holding’s investment in AB during the three-month period ended March 31, 2023 are as follows (in thousands):

Investment in AB as of December 31, 2022 $ 2,074,626

Equity in net income attributable to AB Unitholders 76,382

Changes in accumulated other comprehensive (loss) ( 27,094 )

Changes in accumulated other comprehensive income 2,636

Cash distributions received from AB ( 87,343 )

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

Capital contributions (from) AB ( 1,324 )

1 unchanged sentence

AB Holding Units issued to fund long-term incentive compensation plans 3,446

AB Holding Units issued to fund CarVal acquisition 132,839

Change in AB Holding Units held by AB for long-term incentive compensation plans 498

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

Investment in AB as of March 31, 2023 $ 2,052,965

Units Outstanding

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

Changes in AB Holding Units outstanding during the three-month period ended March 31, 2023 are as follows:

Outstanding as of December 31, 2022 113,801,097

Options exercised 5,774

Units issued 94,258

Units retired ( 419,136 )

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

Outstanding as of March 31, 2023 113,476,219

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

2 unchanged sentences

AB Holding’s federal income tax is computed by multiplying certain AB qualifying revenues (primarily U.S.

investment advisory fees, research payments and brokerage commissions) by AB Holding’s ownership interest in AB, multiplied by the 3.5 % tax rate.

investment advisory fees, research payments and brokerage commissions) by AB Holding’s ownership interest in AB, multiplied by

the 3.5 % tax rate.

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

Three Months Ended September 30, Nine Months Ended

September 30,

2022 2021 % Change 2022 2021 % Change

Three Months Ended

2023 2022 % Change

(in thousands)

16 unchanged sentences

Commitments and Contingencies

Legal and regulatory matters described below pertain to AB and are included here due to their potential significance to AB Holding's investment in AB.

Legal and regulatory matters described below pertain to AB and are included here due to their potential significance to AB

Holding’s investment in AB.

With respect to all significant litigation matters, we consider the likelihood of a negative outcome.

If we determine the likelihood of a negative outcome is probable and the amount of the loss can be reasonably estimated, we record an estimated loss for the expected outcome of the litigation.

If the likelihood of a negative outcome is reasonably possible and we can determine an estimate of the possible loss or range of loss in excess of amounts already accrued, if any, we disclose that fact together with the estimate of the possible loss or range of loss.

If the likelihood of a negative outcome is reasonably possible and we are able to determine an estimate of the possible loss or range of loss in excess of amounts already accrued, if any, we disclose that fact together with the estimate of the possible loss or range of loss.

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.

1 unchanged sentence

In these cases, we disclose that we are unable to predict the outcome or estimate a possible loss or range of loss.

AB may be involved in various 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.

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.

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.

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.

The Complaint seeks unspecified damages, disgorgement and other equitable relief.

AB is prepared to defend itself vigorously against these claims.

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.

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 other matters, but management cannot currently estimate any such losses.

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.

However, any inquiry, proceeding or litigation has the element of uncertainty;

However, any inquiry,

proceeding or litigation has the element of uncertainty;

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.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Summary of purchase consideration:

Fair value of AB Holding units issued $ 552,196

Fair value of contingent consideration 227,071

Total purchase consideration 779,267

Purchase price allocation:

Assets acquired:

Cash and cash equivalents $ 40,777

Receivables, net 82,523

Investments - other 947

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

Right-of-use assets 16,482

Other assets 14,230

Intangible assets 303,000

Goodwill 632,416

Total assets acquired 1,092,839

Liabilities assumed:

Accounts payable and accrued expenses ( 33,134 )

Accrued compensation and benefits ( 208,015 )

Debt ( 42,661 )

Lease liabilities ( 16,571 )

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

Total liabilities assumed ( 313,572 )

Net assets acquired $ 779,267

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

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

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

What changed 10-Q

Item 1. Financial Statements