Attached files
Exhibit
99.1
Part I
FINANCIAL
INFORMATION
Item 1.
|
Financial
Statements
|
ALLIANCEBERNSTEIN
L.P.
AND
SUBSIDIARIES
Condensed
Consolidated Statements of Financial Condition
(in
thousands)
September 30,
2009
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December 31,
2008
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|||||||
(unaudited)
|
||||||||
ASSETS
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||||||||
Cash
and cash equivalents
|
$ | 570,987 | $ | 552,577 | ||||
Cash
and securities segregated, at market (cost: $1,273,963 and
$2,568,339)
|
1,274,266 | 2,572,569 | ||||||
Receivables,
net:
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||||||||
Brokers
and dealers
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282,461 | 251,644 | ||||||
Brokerage
clients
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585,619 | 398,979 | ||||||
Fees
|
334,244 | 377,167 | ||||||
Investments:
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||||||||
Deferred
compensation related
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497,253 | 305,809 | ||||||
Other
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307,783 | 272,034 | ||||||
Furniture,
equipment and leasehold improvements, net
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367,415 | 365,804 | ||||||
Goodwill,
net
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2,893,029 | 2,893,029 | ||||||
Intangible
assets, net
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229,676 | 243,493 | ||||||
Deferred
sales commissions, net
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97,027 | 113,541 | ||||||
Other
assets
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173,259 | 156,813 | ||||||
Total
assets
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$ | 7,613,019 | $ | 8,503,459 | ||||
LIABILITIES
AND CAPITAL
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||||||||
Liabilities:
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||||||||
Payables:
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||||||||
Brokers
and dealers
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$ | 299,982 | $ | 110,655 | ||||
Brokerage
clients
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1,617,861 | 2,755,104 | ||||||
AllianceBernstein
mutual funds
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88,805 | 195,617 | ||||||
Accounts
payable and accrued expenses
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279,959 | 310,392 | ||||||
Accrued
compensation and benefits
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580,562 | 360,086 | ||||||
Debt
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52,000 | 284,779 | ||||||
Total
liabilities
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2,919,169 | 4,016,633 | ||||||
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||||||||
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||||||||
Commitments
and contingencies (See
Note 7)
|
||||||||
Capital:
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||||||||
General
Partner
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46,443 | 45,010 | ||||||
Limited
partners: 266,146,832 and 263,717,610 units issued and
outstanding
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4,626,568 | 4,485,564 | ||||||
Capital
contributions receivable from General Partner
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(21,468 | ) | (23,168 | ) | ||||
Deferred
compensation expense
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(108,593 | ) | (117,600 | ) | ||||
Accumulated
other comprehensive loss
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(26,164 | ) | (72,147 | ) | ||||
Partners’
capital attributable to AllianceBernstein Unitholders
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4,516,786 | 4,317,659 | ||||||
Non-controlling
interests in consolidated entities
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177,064 | 169,167 | ||||||
Total
capital
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4,693,850 | 4,486,826 | ||||||
Total
liabilities and capital
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$ | 7,613,019 | $ | 8,503,459 |
See
Accompanying Notes to Condensed Consolidated Financial Statements.
1
ALLIANCEBERNSTEIN
L.P.
AND
SUBSIDIARIES
Condensed
Consolidated Statements of Income
(in
thousands, except per unit amounts)
(unaudited)
Three Months Ended
September 30,
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Nine Months Ended
September 30,
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|||||||||||||||
2009
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2008
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2009
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2008
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|||||||||||||
Revenues:
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||||||||||||||||
Investment
advisory and services fees
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$ | 484,098 | $ | 713,229 | $ | 1,377,170 | $ | 2,325,098 | ||||||||
Distribution
revenues
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73,779 | 96,711 | 196,437 | 313,948 | ||||||||||||
Institutional
research services
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109,321 | 124,854 | 325,830 | 353,594 | ||||||||||||
Dividend
and interest income
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4,966 | 18,937 | 19,344 | 71,251 | ||||||||||||
Investment
gains (losses)
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106,680 | (131,920 | ) | 130,727 | (187,094 | ) | ||||||||||
Other
revenues
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27,946 | 28,230 | 79,418 | 89,697 | ||||||||||||
Total
revenues
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806,790 | 850,041 | 2,128,926 | 2,966,494 | ||||||||||||
Less:
Interest expense
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776 | 9,050 | 3,908 | 32,857 | ||||||||||||
Net
revenues
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806,014 | 840,991 | 2,125,018 | 2,933,637 | ||||||||||||
Expenses:
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||||||||||||||||
Employee
compensation and benefits
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335,898 | 328,614 | 974,662 | 1,190,484 | ||||||||||||
Promotion
and servicing:
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||||||||||||||||
Distribution
plan payments
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55,155 | 69,994 | 146,382 | 227,885 | ||||||||||||
Amortization
of deferred sales commissions
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13,362 | 19,324 | 42,103 | 61,861 | ||||||||||||
Other
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42,059 | 50,013 | 125,417 | 164,653 | ||||||||||||
General
and administrative
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130,142 | 114,333 | 427,582 | 407,326 | ||||||||||||
Interest
on borrowings
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491 | 2,117 | 2,130 | 11,933 | ||||||||||||
Amortization
of intangible assets
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5,437 | 5,179 | 16,170 | 15,537 | ||||||||||||
Total
expenses
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582,544 | 589,574 | 1,734,446 | 2,079,679 | ||||||||||||
Operating
income
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223,470 | 251,417 | 390,572 | 853,958 | ||||||||||||
Non-operating
income
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16,869 | 4,921 | 29,105 | 13,264 | ||||||||||||
Income
before income taxes
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240,339 | 256,338 | 419,677 | 867,222 | ||||||||||||
Income
taxes
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13,844 | 27,258 | 32,076 | 88,294 | ||||||||||||
Net
income
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226,495 | 229,080 | 387,601 | 778,928 | ||||||||||||
Net
income in consolidated entities attributable to non-controlling
interests
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(27,154 | ) | (9,551 | ) | (23,114 | ) | (31,667 | ) | ||||||||
Net
income attributable to AllianceBernstein Unitholders
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$ | 199,341 | $ | 219,529 | $ | 364,487 | $ | 747,261 | ||||||||
Net
income per AllianceBernstein Unit:
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||||||||||||||||
Basic
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$ | 0.74 | $ | 0.83 | $ | 1.36 | $ | 2.84 | ||||||||
Diluted
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$ | 0.74 | $ | 0.83 | $ | 1.36 | $ | 2.83 |
See
Accompanying Notes to Condensed Consolidated Financial Statements.
2
ALLIANCEBERNSTEIN
L.P.
AND
SUBSIDIARIES
Condensed
Consolidated Statements of Cash Flows
(in
thousands)
(unaudited)
Nine Months Ended
September 30,
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||||||||
2009
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2008
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|||||||
Cash
flows from operating activities:
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Net
income
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$ | 387,601 | $ | 778,928 | ||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
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||||||||
Amortization
of deferred sales commissions
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42,103 | 61,861 | ||||||
Amortization
of non-cash deferred compensation
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51,838 | 47,265 | ||||||
Depreciation
and other amortization
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63,047 | 75,511 | ||||||
Unrealized
(gains) losses on deferred compensation related
investments
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(162,781 | ) | 194,296 | |||||
Other,
net
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(22,573 | ) | (5,783 | ) | ||||
Changes
in assets and liabilities:
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||||||||
Decrease
in segregated cash and securities
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1,298,303 | 79,923 | ||||||
(Increase)
decrease in receivables
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(42,660 | ) | 34,328 | |||||
(Increase)
in investments
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(28,672 | ) | (235,193 | ) | ||||
(Increase)
in deferred sales commissions
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(25,589 | ) | (20,193 | ) | ||||
(Increase)
in other assets
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(15,053 | ) | (44,628 | ) | ||||
(Decrease)
in payables
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(1,174,793 | ) | (299,001 | ) | ||||
(Decrease)
in accounts payable and accrued expenses
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(11,133 | ) | (29,798 | ) | ||||
Increase
in accrued compensation and benefits
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215,385 | 236,677 | ||||||
Net
cash provided by operating activities
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575,023 | 874,193 | ||||||
Cash
flows from investing activities:
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||||||||
Purchases
of investments
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(10,439 | ) | (22,213 | ) | ||||
Proceeds
from sales of investments
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4,380 | 32,778 | ||||||
Additions
to furniture, equipment and leasehold improvements
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(43,542 | ) | (61,241 | ) | ||||
Net
cash used in investing activities
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(49,601 | ) | (50,676 | ) | ||||
Cash
flows from financing activities:
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||||||||
Repayment
of commercial paper, net
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(258,718 | ) | (475,443 | ) | ||||
Proceeds
from bank loans, net
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25,000 | 693,000 | ||||||
(Decrease)
increase in overdrafts payable
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(26,424 | ) | 45,123 | |||||
Distributions
to General Partner and unitholders
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(265,699 | ) | (835,137 | ) | ||||
Distributions
to Joint Venture Partners
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— | (10,387 | ) | |||||
(Distributions
to) contributions from non-controlling interests to fund consolidated
venture capital fund activities
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(19,369 | ) | 25,311 | |||||
Capital
contributions from General Partner
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2,751 | 2,583 | ||||||
Additional
investment by Holding with proceeds from exercise of compensatory options
to buy Holding Units
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— | 13,353 | ||||||
Purchases
of Holding Units to fund deferred compensation plans, net of
issuances
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(232 | ) | (3,202 | ) | ||||
Other
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154 | — | ||||||
Net
cash used in financing activities
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(542,537 | ) | (544,799 | ) | ||||
Effect
of exchange rate changes on cash and cash equivalents
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35,525 | (30,147 | ) | |||||
Net
increase in cash and cash equivalents
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18,410 | 248,571 | ||||||
Cash
and cash equivalents as of beginning of period
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552,577 | 576,416 | ||||||
Cash
and cash equivalents as of end of period
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$ | 570,987 | $ | 824,987 |
See
Accompanying Notes to Condensed Consolidated Financial
Statements.
3
ALLIANCEBERNSTEIN
L.P.
AND
SUBSIDIARIES
Notes
to Condensed Consolidated Financial Statements
September
30, 2009
(unaudited)
The
words “we” and “our” refer collectively to AllianceBernstein Holding L.P.
(“Holding”) and AllianceBernstein L.P. and its subsidiaries
(“AllianceBernstein”), or to their officers and employees. Similarly, the word
“company” refers to both Holding and AllianceBernstein. Where the context
requires distinguishing between Holding and AllianceBernstein, we identify which
of them is being discussed. Cross-references are in italics.
These
statements should be read in conjunction with AllianceBernstein’s audited
consolidated financial statements included in AllianceBernstein’s Form 10-K
for the year ended December 31, 2008.
1.
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Business Description and
Organization
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AllianceBernstein
provides research, diversified investment management and related services
globally to a broad range of clients. Our principal services
include:
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•
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Institutional Investment Services
– servicing our institutional clients, including unaffiliated corporate
and public employee pension funds, endowment funds, domestic and foreign
institutions and governments, and affiliates such as AXA and certain of
its insurance company subsidiaries, by means of separately managed
accounts, sub-advisory relationships, structured products, collective
investment trusts, mutual funds, hedge funds and other investment
vehicles.
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•
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Retail Services – servicing our
individual clients, primarily by means of retail mutual funds sponsored by
AllianceBernstein or an affiliated company, sub-advisory relationships
with mutual funds sponsored by third parties, separately managed account
programs sponsored by financial intermediaries worldwide and other
investment vehicles.
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•
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Private Client Services –
servicing our private clients, including high-net-worth individuals,
trusts and estates, charitable foundations, partnerships, private and
family corporations, and other entities, by means of separately managed
accounts, hedge funds, mutual funds and other investment
vehicles.
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•
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Institutional Research Services –
servicing our institutional clients seeking independent research,
portfolio strategy and brokerage-related
services.
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We also
provide distribution, shareholder servicing and administrative services to the
mutual funds we sponsor.
We
provide a broad range of services with expertise in:
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•
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Value equities, generally
targeting stocks that are out of favor and that may trade at bargain
prices;
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•
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Growth equities, generally
targeting stocks with under-appreciated growth
potential;
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•
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Fixed income securities,
including both taxable and tax-exempt
securities;
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•
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Blend strategies, combining
style-pure investment components with systematic
rebalancing;
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•
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Passive
management, including both index and enhanced index
strategies;
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•
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Alternative
investments, such as hedge funds, currency management strategies and
venture capital; and
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•
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Asset
allocation, by which we offer specifically-tailored investment solutions
for our clients (e.g., customized target-date fund retirement services for
institutional defined contribution plan
clients).
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We manage
these services using various investment disciplines, including market
capitalization (e.g., large-, mid- and small-cap equities), term (e.g., long-,
intermediate- and short-duration debt securities), and geographic location
(e.g., U.S., international, global and emerging markets), as well as local and
regional disciplines in major markets around the world.
Recently,
we were selected by the U.S. Treasury Department as one of only three firms to
manage its portfolio of assets issued by banks and other institutions taking
part in the Capital Purchase Program of the Troubled Assets Relief Program. In
addition, we were selected by the U.S. Treasury Department as one of nine
pre-qualified fund managers under the Public-Private Investment
Program.
4
Our
independent research is the foundation of our business. Our research
disciplines include fundamental research, quantitative research, economic
research and currency forecasting capabilities. In addition, we
have created several specialized research units, including one unit that
examines global strategic changes that can affect multiple industries and
geographies, and another dedicated to identifying potentially successful
innovations within private early-stage growth companies.
As of
September 30, 2009, AXA, a société anonyme organized
under the laws of France and the holding company for an international group of
insurance and related financial services companies, through certain of its
subsidiaries (“AXA and its subsidiaries”) owned approximately 1.6% of the issued
and outstanding units representing assignments of beneficial ownership of
limited partnership interests in Holding (“Holding Units”).
As of
September 30, 2009, the ownership structure of AllianceBernstein, expressed as a
percentage of general and limited partnership interests, was as
follows:
AXA
and its subsidiaries
|
63.5
|
%
|
||
Holding
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34.5
|
|||
Unaffiliated
holders
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2.0
|
|||
100.0
|
%
|
AllianceBernstein
Corporation (an indirect wholly-owned subsidiary of AXA, “General Partner”) is
the general partner of both Holding and AllianceBernstein. AllianceBernstein
Corporation owns 100,000 general partnership units in Holding and a 1% general
partnership interest in AllianceBernstein. Including both the general
partnership and limited partnership interests in Holding and AllianceBernstein,
AXA and its subsidiaries had an approximate 64.1% economic interest in
AllianceBernstein as of September 30, 2009.
2.
|
Summary of Significant Accounting
Policies
|
Basis
of Presentation
The
interim condensed consolidated financial statements of AllianceBernstein
included herein have been prepared in accordance with the instructions to
Form 10-Q pursuant to the rules and regulations of the U.S. Securities
and Exchange Commission (“SEC”). In the opinion of management, all adjustments,
consisting only of normal recurring adjustments, necessary for a fair statement
of the interim results, have been made. The preparation of the condensed
consolidated financial statements requires management to make certain estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the condensed
consolidated financial statements and the reported amounts of revenues and
expenses during the interim reporting periods. Actual results could differ from
those estimates. The December 31, 2008 condensed consolidated statement of
financial condition was derived from audited financial statements but does not
include all disclosures required by accounting principles generally accepted in
the United States of America.
Principles
of Consolidation
The
condensed consolidated financial statements include AllianceBernstein and its
majority-owned and/or controlled subsidiaries. All significant inter-company
transactions and balances among the consolidated entities have been
eliminated.
Subsequent
Events
We
evaluated subsequent events through October 29, 2009, the date the financial
statements were issued.
FASB
Codification
For
annual and interim periods ending after September 15, 2009, the Financial
Accounting Standards Board (“FASB”) Accounting Standards Codification (the
“Codification”) became the single authoritative source of generally accepted
accounting principles (“GAAP”) in the United States.
Reclassifications
and Revisions
Effective
January 1, 2009, we adopted amended accounting principles related to
non-controlling interests in consolidated financial statements. The objective of
this amendment is to improve the relevance, comparability and transparency of
the financial information that a reporting entity provides in its consolidated
financial statements by establishing accounting and reporting standards for the
non-controlling interest in a subsidiary. The disclosure provisions of the
amendment require retrospective application for all periods presented. As a
result, certain prior period amounts have been reclassified to conform to the
current year presentation. These include: (i) net
(income) loss in consolidated entities attributable to non-controlling
interests, previously included within general and administrative expenses,
currently shown separately in the condensed consolidated statements of income,
(ii) non-controlling interests in consolidated entities previously included in
liabilities, currently shown as a component of total capital in the condensed
consolidated statements of financial condition, and (iii) change in
non-controlling interests in consolidated entities previously included within
cash provided by operating activities, currently included in net cash used in
financing activities in the condensed consolidated statements of cash
flows.
5
Cash
Distributions
AllianceBernstein
is required to distribute all of its Available Cash Flow, as defined in the
Amended and Restated Agreement of Limited Partnership of AllianceBernstein
(“AllianceBernstein Partnership Agreement”), to its unitholders and to the
General Partner. Available Cash Flow can be summarized as the cash flow received
by AllianceBernstein from operations minus such amounts as the General Partner
determines, in its sole discretion, should be retained by AllianceBernstein for
use in its business.
The
General Partner computes cash flow received from operations by determining the
sum of:
|
•
|
net cash provided by operating
activities of
AllianceBernstein,
|
|
•
|
proceeds from borrowings and from
sales or other dispositions of assets in the ordinary course of business,
and
|
|
•
|
income from investments in
marketable securities, liquid investments and other financial instruments
that are acquired for investment purposes and that have a value that may
be readily established,
|
and then
subtracting from this amount the sum of:
|
•
|
payments in respect of the
principal of borrowings, and
|
|
•
|
amounts expended for the purchase
of assets in the ordinary course of
business.
|
On
October 29, 2009, the General Partner declared a distribution of $198.9
million, or $0.74 per AllianceBernstein Unit, representing a distribution of
Available Cash Flow for the three months ended September 30, 2009. The General
Partner, as a result of its 1% general partnership interest, is entitled to
receive 1% of each distribution. The distribution is payable on November 19,
2009 to holders of record on November 9, 2009.
Cash
and Cash Equivalents
Cash and
cash equivalents include cash on hand, demand deposits, money market accounts,
overnight commercial paper and highly liquid investments with actual 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.
Fees
Receivable, Net
Fees
receivable are shown net of allowances. An allowance for doubtful accounts
related to investment advisory and services fees is determined through an
analysis of the aging of receivables, assessments of collectibility based on
historical trends and other qualitative and quantitative factors, including the
following: our relationship with the client, the financial health (or ability to
pay) of the client, current economic conditions and whether the account is
closed or active.
Investments
Investments
include United States Treasury Bills, unconsolidated mutual funds and limited
partnership hedge funds we sponsor and manage, various separately managed
portfolios, exchange-traded options and investments held by a consolidated
venture capital fund of which we are the general partner and in which we hold a
10% limited partnership interest.
Investments
in United States Treasury Bills, mutual funds, and other equity and fixed income
securities are classified as either trading or available-for-sale securities.
Trading investments are stated at fair value with unrealized gains and losses
reported in net income. Available-for-sale investments are stated at fair value
with unrealized gains and losses reported as a separate component of accumulated
other comprehensive income in partners’ capital. Realized gains and losses on
the sale of investments are included in net income in the current period.
Average cost is used to determine the realized gain or loss on investments
sold.
We use
the equity method of accounting for investments in limited partnership hedge
funds. The equity in earnings of our limited partnership hedge fund investments
is included in investment gains and losses on the condensed consolidated
statements of income.
The
investments held by our consolidated venture capital fund are generally illiquid
and are initially valued at cost. These investments are adjusted to fair value
to reflect the occurrence of “significant developments” (i.e., capital
transactions or business, economic or market events). Adjustments to fair value
are recorded as unrealized gains and losses in investment gains and losses on
the condensed consolidated statements of income. There is one private equity
investment which represents an approximate 12% ownership in a company that we
own directly, outside of our consolidated venture capital fund. This
investment is accounted for using the cost method.
See Note 6 for a description
of how we measure the fair value of our investments.
6
Goodwill,
Net
In 2000,
AllianceBernstein acquired the business and assets of SCB Inc., an investment
research and management company formerly known as Sanford C. Bernstein Inc.
(“Bernstein”), and assumed the liabilities of Bernstein (“Bernstein
Transaction”). The purchase price consisted of a cash payment of approximately
$1.5 billion and 40.8 million newly-issued AllianceBernstein Units. The
Bernstein Transaction 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. The excess of the purchase price
over the fair value of identifiable assets acquired resulted in the recognition
of goodwill of approximately $3.0 billion.
We test
goodwill annually, as of September 30, for impairment. The carrying value of
goodwill is also reviewed if facts and circumstances, such as significant
declines in assets under management, revenues, earnings or our Holding Unit
price, occur, suggesting possible impairment. As of September 30, 2009, the
impairment test indicated that goodwill was not impaired.
To the
extent that securities valuations are depressed for prolonged periods of time,
our assets under management, revenues, profitability and unit price would likely
be adversely affected. As a result, subsequent impairment tests may
be based upon different assumptions and future cash flow projections, which may
result in an impairment of this asset. Any impairment could reduce materially
the recorded amount of goodwill with a corresponding charge to our
earnings.
Intangible
Assets, Net
Intangible
assets consist primarily of costs assigned to acquired investment management
contracts of SCB Inc. based on their estimated fair value at the time of
acquisition, less accumulated amortization. Intangible assets are recognized at
fair value and are amortized on a straight-line basis over their estimated
useful life of approximately 20 years. The gross carrying amount and accumulated
amortization of intangible assets subject to amortization totaled $416.7 million
and $187.0 million, respectively, as of September 30, 2009 and $414.3 million
and $170.8 million, respectively, as of December 31, 2008.
Amortization expense was $5.4 million and $5.2 million for the three months
ended September 30, 2009 and 2008, respectively, and $16.2 million and
$15.5 million for the nine months ended September 30, 2009 and 2008,
respectively. Estimated annual amortization expense for each of the next five
years is approximately $22 million.
We
periodically review 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, additional
impairment tests are performed to measure the amount of the impairment loss, if
any.
Deferred
Sales Commissions, Net
We pay
commissions to financial intermediaries in connection with the sale of shares of
open-end company-sponsored mutual funds sold without a front-end sales charge
(“back-end load shares”). These commissions are capitalized as deferred sales
commissions and amortized over periods not exceeding five and one-half years for
U.S. fund shares and four years for non-U.S. fund shares, the periods of time
during which deferred sales commissions are generally recovered. We recover
these commissions from distribution services fees received from those funds and
from contingent deferred sales commissions (“CDSC”) received from shareholders
of those funds upon the redemption of their shares. CDSC cash recoveries are
recorded as reductions of unamortized deferred sales commissions when received.
Effective January 31, 2009, back-end load shares are no longer offered to new
investors by our U.S. funds. Management tests the deferred sales commission
asset for recoverability quarterly and determined that the balance as of
September 30, 2009 was not impaired.
7
Loss
Contingencies
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 are able to
determine an estimate of the possible loss or range of loss, we disclose that
fact together with the estimate of the possible loss or range of loss. However,
it may be 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, or when the
litigation is highly complex or broad in scope. In such cases, we disclose that
we are unable to predict the outcome or estimate a possible loss or range of
loss.
Revenue
Recognition
Investment
advisory and services fees, generally calculated as a percentage of assets under
management (“AUM”), are recorded as revenue as the related services are
performed. Certain investment advisory contracts, including those associated
with hedge funds, provide for a performance-based fee, in addition to or in lieu
of a base 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. Performance-based fees are recorded as a
component of revenue at the end of each contract’s measurement
period.
We
calculate AUM using established fair valuation methodologies, including
market-based valuation methods and fair valuation methods. Market-based
valuation methods include: last sale/settle prices from an exchange
for actively-traded listed equities, options and futures; evaluated bid prices
from standard pricing vendors for fixed income, asset-backed or mortgage-backed
issues; mid prices from standard pricing vendors and brokers for credit default
swaps; and quoted bids or spreads from pricing vendors and brokers for other
derivative products. Fair valuation methods include discounted cash
flow models, evaluation of assets versus liabilities or any other methodology
that is validated and approved by 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. Fair
valued investments typically make up less than 1% of our total
AUM. Recent market volatility has not had a significant effect on our
ability to acquire market data and, accordingly, our ability to use market-based
valuation methods.
The
Valuation Committee, which is composed of senior officers and employees and is
chaired by our Chief Risk Officer, is responsible for overseeing the pricing and
valuation of all investments held in client portfolios. The Valuation
Committee has adopted a Statement of Pricing Policies describing principles and
policies that apply to pricing and valuing investments held in client
portfolios. We have also established a Pricing Group, which reports
to the Valuation Committee. The Valuation Committee has delegated to
the Pricing Group responsibility for monitoring the pricing process for all
investments held in client portfolios.
Institutional
research services revenue consists primarily of brokerage transaction charges
received by Sanford C. Bernstein & Co., LLC (“SCB LLC”) and Sanford C.
Bernstein Limited (“SCBL”), each a wholly-owned subsidiary of AllianceBernstein,
for independent research and brokerage-related services provided to
institutional investors. Brokerage transaction charges earned and related
expenses are recorded on a trade-date basis.
Distribution
revenues, shareholder servicing fees, and dividend and interest income are
accrued as earned.
Deferred
Compensation Plans
We
maintain several unfunded, non-qualified deferred compensation plans under which
annual awards to employees are generally made in the fourth quarter.
Participants allocate their awards: (i) among notional investments in Holding
Units, certain of the investment services we provide to our clients, and a money
market fund, or (ii) in options to acquire Holding Units. We typically purchase
the investments that are notionally elected by the participants and maintain
them in a consolidated rabbi trust or separate custodial account. Awards
generally vest over four years but can vest as soon as immediately upon grant
depending on the terms of the individual award, the age of the participant, or
the terms of employment, separation or retirement agreements. Upon vesting,
awards are distributed to participants unless they have made a voluntary
long-term election to defer receipt. Quarterly cash distributions on unvested
Holding Units for which a long-term deferral election has not been made are paid
currently to participants. Quarterly cash distributions on notional investments
in Holding Units and income credited on notional investments in our investment
services or the money market fund for which a long-term deferral election has
been made are reinvested and distributed as elected by
participants.
Compensation
expense for awards under the plans, including changes in participant account
balances resulting from gains and losses on notional investments (other than in
Holding Units and options to acquire Holding Units), is recognized on a
straight-line basis over the applicable vesting periods. Mark-to-market gains or
losses on investments (other than in Holding Units and options to acquire
Holding Units) are recognized currently as investment gains (losses) in the
consolidated statements of income. In addition, our equity in the earnings of
investments in limited partnership hedge funds is recognized currently as
investment gains (losses) in the condensed consolidated statements of
income.
8
We expect
that for 2009 and future years, all deferred awards will be in the form of
restricted Holding Units. As a result, the amount of deferred
compensation-related investments on which we recognize mark-to-market gains and
losses will decline as awards previously made vest and are paid.
Compensatory
Unit Awards and Option Plans
We
recognize compensation expense related to grants of unit awards and options in
the financial statements. 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 vesting period. Fair value of unit awards is the grant date
unit price; fair value of options is determined using the Black-Scholes option
valuation model. New Holding Units are issued upon exercise of options to buy
Holding Units.
Variable
Interest Entities
Management
reviews quarterly its management agreements and its investments in, and other
financial arrangements with, certain entities that hold client assets under
management to determine the variable interest entities that the company is
required to consolidate. These entities include certain mutual fund products,
hedge funds, structured products, group trusts, collective investment trusts and
limited partnerships. We earn investment management fees on client assets under
management of these entities, but we derive no other benefit from these assets
and cannot use them in our operations.
As of
September 30, 2009, we have significant variable interests in certain structured
products and hedge funds with approximately $60.6 million in client assets under
management. However, these variable interest entities do not require
consolidation because management has determined that we are not the primary
beneficiary of the expected losses or expected residual returns of these
entities. Our maximum exposure to loss is limited to our investments of $0.1
million in these entities.
3.
|
Cash and Securities Segregated
Under Federal Regulations and Other
Requirements
|
As of
September 30, 2009, $1.2 billion of United States Treasury Bills were segregated
in a special reserve bank custody account for the exclusive benefit of brokerage
customers of SCB LLC under Rule 15c3-3 of the Securities Exchange Act of
1934, as amended (“Exchange Act”).
AllianceBernstein
Investments, Inc. (“AllianceBernstein Investments”), a wholly-owned subsidiary
of AllianceBernstein and the distributor of company-sponsored mutual funds,
maintains several special bank accounts for the exclusive benefit of
customers. As of September 30, 2009, $26.5 million of cash was
segregated in these bank accounts.
9
4.
|
Net Income Per
Unit
|
Basic net
income per unit is derived by reducing net income for the 1% general partnership
interest and dividing the remaining 99% by the basic weighted average number of
units outstanding for each period. Diluted net income per unit is derived by
reducing net income for the 1% general partnership interest and dividing the
remaining 99% by the total of the basic weighted average number of units
outstanding and the dilutive unit equivalents resulting from outstanding
compensatory options to buy Holding Units as follows:
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(in
thousands, except per unit amounts)
|
||||||||||||||||
Net
income attributable to AllianceBernstein Unitholders
|
$ | 199,341 | $ | 219,529 | $ | 364,487 | $ | 747,261 | ||||||||
Weighted
average units outstanding - basic
|
266,051 | 260,976 | 265,540 | 260,826 | ||||||||||||
Dilutive
effect of compensatory options to buy Holding Units
|
635 | 515 | 174 | 909 | ||||||||||||
Weighted
average units outstanding – diluted
|
266,686 | 261,491 | 265,714 | 261,735 | ||||||||||||
Basic
net income per AllianceBernstein Unit
|
$ | 0.74 | $ | 0.83 | $ | 1.36 | $ | 2.84 | ||||||||
Diluted
net income per AllianceBernstein Unit
|
$ | 0.74 | $ | 0.83 | $ | 1.36 | $ | 2.83 |
For the
three months and nine months ended September 30, 2009, we excluded 6,120,480
out-of-the-money options (i.e., options
with an exercise price greater than the weighted average closing price of a unit
for the relevant period) from the diluted net income per unit computation due to
their anti-dilutive effect. For the three months and nine months ended September
30, 2008, we excluded 5,073,605 and 3,664,405, respectively, out-of-the-money
options from the diluted net income per unit computation due to their
anti-dilutive effect.
5.
|
Investments
|
Investments
consist of:
|
||||||||
September 30, 2009
|
December 31, 2008
|
|||||||
(in
thousands)
|
||||||||
Available-for-sale
|
$
|
20,734
|
$
|
7,566
|
||||
Trading:
|
||||||||
Deferred
compensation related
|
421,473
|
238,136
|
||||||
United
States Treasury Bills
|
25,993
|
52,694
|
||||||
Other
|
76,707
|
31,717
|
||||||
Investments
in limited partnership hedge funds:
|
||||||||
Deferred
compensation related
|
75,780
|
67,673
|
||||||
Other
|
2,890
|
2,191
|
||||||
Private
equity investments
|
179,976
|
176,823
|
||||||
Other
investments
|
1,483
|
1,043
|
||||||
Total
investments
|
$
|
805,036
|
$
|
577,843
|
Total
investments related to deferred compensation obligations of $497.3 million and
$305.8 million as of September 30, 2009 and December 31, 2008, respectively,
consist of company-sponsored mutual funds and limited partnership hedge funds.
We typically purchase the investments that are notionally elected by deferred
compensation plan participants and maintain them in a consolidated rabbi trust
or separate custodial account. The rabbi trust and custodial account enable us
to hold such investments separate from our other assets for the purpose of
settling our obligations to participants. The investments held in the rabbi
trust and custodial account remain available to the general creditors of
AllianceBernstein.
The
underlying investments of the hedge funds in which we invest include long and
short positions in equity securities, fixed income securities (including various
agency and non-agency asset-based securities), currencies, commodities and
derivatives (including various swaps and forward contracts). Such investments
are valued at quoted market prices or, where quoted market prices are not
available, are fair valued based on the pricing policies and procedures of the
underlying funds.
United
States Treasury Bills are held by SCB LLC in their investment account and are
pledged as collateral with clearing organizations.
10
6.
|
Fair
Value
|
Fair
value is defined as the price that would be received to sell an asset or paid to
transfer a liability (i.e., the “exit price”) in an orderly transaction between
market participants at the measurement date. The three broad levels of fair
value hierarchy are as follows:
|
•
|
Level
1 – Quoted prices in active markets are available for identical assets or
liabilities as of the reported
date.
|
|
•
|
Level
2 – Quoted prices in markets that are not active or other pricing inputs
that are either directly or indirectly observable as of the reported
date.
|
•
|
Level
3 – Prices
or valuation techniques that are both significant to the fair value
measurement and unobservable as of the reported date. These financial
instruments do not have two-way markets and are measured using
management’s best estimate of fair value, where the inputs into the
determination of fair value require significant management judgment or
estimation.
|
Assets
Measured at Fair Value on a Recurring Basis
The
following table summarizes the valuation of our financial instruments by pricing
observability levels as of September 30, 2009:
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Cash
equivalents
|
$
|
164,377
|
$
|
111,948
|
$
|
—
|
$
|
276,325
|
||||||||
Securities
segregated
|
—
|
1,247,808
|
1,247,808
|
|||||||||||||
Receivables
from brokers and dealers
|
—
|
854
|
—
|
854
|
||||||||||||
Investments
– available-for-sale
|
20,734
|
—
|
—
|
20,734
|
||||||||||||
Investments
– trading
|
||||||||||||||||
Mutual
fund investments
|
435,809
|
—
|
—
|
435,809
|
||||||||||||
Equity
and fixed income securities
|
52,844
|
8,582
|
945
|
62,371
|
||||||||||||
U.S.
Treasury Bills
|
—
|
25,993
|
—
|
25,993
|
||||||||||||
Investments
– private equity
|
12,852
|
54,956
|
102,168
|
169,976
|
||||||||||||
Total
assets measured at fair value
|
$
|
686,616
|
$
|
1,450,141
|
$
|
103,113
|
$
|
2,239,870
|
||||||||
Payables
to brokers and dealers
|
$
|
26,267
|
$
|
—
|
$
|
—
|
$
|
26,267
|
||||||||
Total
liabilities measured at fair value
|
$
|
26,267
|
$
|
—
|
$
|
—
|
$
|
26,267
|
11
The
following table summarizes the valuation of our financial instruments pricing
observability levels as of December 31, 2008:
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Cash
equivalents
|
$
|
184,404
|
$
|
—
|
$
|
—
|
$
|
184,404
|
||||||||
Securities
segregated
|
—
|
2,524,698
|
—
|
2,524,698
|
||||||||||||
Receivables
from brokers and dealers
|
(46
|
)
|
680
|
—
|
634
|
|||||||||||
Investments
– available-for-sale
|
7,566
|
—
|
—
|
7,566
|
||||||||||||
Investments
– trading
|
||||||||||||||||
Mutual
fund investments
|
237,529
|
—
|
—
|
237,529
|
||||||||||||
Equity
and fixed income securities
|
25,027
|
6,874
|
423
|
32,324
|
||||||||||||
U.S.
Treasury Bills
|
—
|
52,694
|
—
|
52,694
|
||||||||||||
Investments
– private equity
|
4,694
|
—
|
162,129
|
166,823
|
||||||||||||
Total
assets measured at fair value
|
$
|
459,174
|
$
|
2,584,946
|
$
|
162,552
|
$
|
3,206,672
|
||||||||
Payables
to brokers and dealers
|
$
|
167
|
$
|
—
|
$
|
—
|
$
|
167
|
||||||||
Total
liabilities measured at fair value
|
$
|
167
|
$
|
—
|
$
|
—
|
$
|
167
|
Following
is 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:
|
•
|
Cash
equivalents: We invest excess cash in various money market funds
that are valued based on quoted prices in active markets; these are
included in Level 1 of the valuation hierarchy. We also hold United
Kingdom Treasury Bills, which are valued based on quoted yields in
secondary markets and are included in Level 2 of the valuation
hierarchy.
|
|
•
|
Securities
segregated: We hold United States Treasury Bills, which are
segregated in a special reserve bank custody account as required by Rule
15c3-3 of the Exchange Act. These securities are valued based on quoted
yields in secondary markets and are included in Level 2 of the valuation
hierarchy.
|
|
•
|
Receivables from
brokers and dealers: We hold several exchange-traded futures and
currency forward contracts with counterparties that are included in Level
1 and Level 2, respectively, of the valuation
hierarchy.
|
|
•
|
Investments –
available-for-sale and trading: Our available-for-sale investments
consist principally of company-sponsored mutual funds with exchange listed
net asset values. Our trading investments mainly comprise
company-sponsored mutual funds with exchange listed net asset values,
United States Treasury Bills, exchange-traded options and various
separately managed portfolios consisting primarily of equity securities
with quoted prices in active markets. These investments are included in
Level 1 or Level 2 of the valuation hierarchy. Trading investments also
include a separately managed portfolio of fixed income securities that are
included in Level 2 or Level 3 of the valuation
hierarchy.
|
|
•
|
Investments – private
equity: The valuation of non-public private equity investments held
by a consolidated venture capital fund requires significant management
judgment due to the absence of quoted market prices, inherent lack of
liquidity and the long-term nature of such investments. Private equity
investments are valued initially at cost. The carrying values of private
equity investments are adjusted either up or down from cost to reflect
expected exit values as evidenced by financing and sale transactions with
third parties, or when determination of a valuation adjustment is
confirmed through ongoing review in accordance with our valuation policies
and procedures. A variety of factors are reviewed and monitored to assess
positive and negative changes in valuation including, but not limited to,
current operating performance and future expectations of investee
companies, industry valuations of comparable public companies, changes in
market outlook and the third party financing environment over time. In
determining valuation adjustments resulting from the investment review
process, particular emphasis is placed on current company performance and
market conditions. Non-public equity investments are included in Level 3
of the valuation hierarchy because they trade infrequently and, therefore,
the fair value is unobservable. If they contain trading restrictions,
publicly-traded equity investments are included in Level 2 of the
valuation hierarchy.
|
|
•
|
Payables to brokers
and dealers: Securities sold but not yet purchased and short
positions in exchange-traded options are included in Level 1 of the
valuation hierarchy.
|
12
The
following table summarizes the changes in carrying value associated with Level 3
financial instruments carried at fair value:
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Balance
as of beginning of period
|
$ | 132,130 | $ | 163,896 | $ | 162,552 | $ | 125,020 | ||||||||
Transfer
(out) in, net
|
(55,037 | ) | — | (85,417 | ) | — | ||||||||||
Purchases
(sales), net
|
1,384 | 15,984 | 7,788 | 30,253 | ||||||||||||
Realized
gains (losses), net
|
114 | 9 | 905 | 9 | ||||||||||||
Unrealized
gains (losses), net
|
24,522 | 7,942 | 17,285 | 32,549 | ||||||||||||
Balance
as of end of period
|
$ | 103,113 | $ | 187,831 | $ | 103,113 | $ | 187,831 |
Realized
and unrealized gains and losses on Level 3 financial instruments are recorded in
investment gains and losses on the condensed consolidated statements of income.
Substantially all of the Level 3 investments are private equity investments held
by a consolidated venture capital fund, of which we own 10% and non-controlling
interests own 90%.
Assets
Measured at Fair Value on a Nonrecurring Basis
We
adopted ASC 820-10-65-1 for nonfinancial assets and nonfinancial liabilities on
January 1, 2009. There were no impairments recognized for goodwill, intangible
assets or other long-lived assets for the nine months ended September 30,
2009.
7.
|
Commitments and
Contingencies
|
Deferred
Sales Commission Asset
Payments
of sales commissions made by AllianceBernstein Investments to financial
intermediaries in connection with the sale of back-end load shares under our
mutual fund distribution system (the “System”) are capitalized as deferred sales
commissions (“deferred sales commission asset”) and amortized over periods not
exceeding five and one-half years for U.S. mutual fund shares and four years for
non-U.S. mutual fund shares, the periods of time during which the deferred sales
commission asset is expected to be recovered. CDSC cash recoveries are recorded
as reductions of unamortized deferred sales commissions when received. The
amount recorded for the net deferred sales commission asset was $97.0 million as
of September 30, 2009. Payments of sales commissions made by AllianceBernstein
Investments to financial intermediaries in connection with the sale of back-end
load shares under the System, net of CDSC received of $11.2 million and $18.2
million, totaled approximately $25.6 million and $20.2 million during the nine
months ended September 30, 2009 and 2008, respectively. Effective January 31,
2009, back-end load shares are no longer offered to new investors in our U.S.
mutual funds.
Management
tests the deferred sales commission asset for impairment quarterly by comparing
undiscounted future cash flows to the recorded value, net of accumulated
amortization. Significant assumptions utilized to estimate the company’s future
average assets under management and undiscounted future cash flows from back-end
load shares are updated quarterly and include expected future market levels and
redemption rates. Market assumptions are selected using a long-term view of
expected average market returns based on historical returns of broad market
indices. As of September 30, 2009, management used average market return
assumptions of 5% for fixed income securities and 8% for equities to estimate
annual market returns. Higher actual average market returns would increase
undiscounted future cash flows, while lower actual average market returns would
decrease undiscounted future cash flows. Future redemption rate assumptions
range from 18% to 24% for U.S. fund shares and 28% to 36% for non-U.S. fund
shares. These assumptions are determined by reference to actual redemption
experience over the five-year, three-year, one-year and current periods ended
September 30, 2009, calculated as a percentage of our average assets under
management represented by back-end load shares. An increase in the actual rate
of redemptions would decrease undiscounted future cash flows, while a decrease
in the actual rate of redemptions would increase undiscounted future cash flows.
These assumptions are reviewed and updated quarterly. Estimates of undiscounted
future cash flows and the remaining life of the deferred sales commission asset
are made from these assumptions and the aggregate undiscounted future cash flows
are compared to the recorded value of the deferred sales commission asset. As of
September 30, 2009, management determined that the deferred sales commission
asset was not impaired. However, if management determines in the future that the
deferred sales commission asset is not recoverable, an impairment condition
would exist and a loss would be measured as the amount by which the recorded
amount of the asset exceeds its estimated fair value. Estimated fair value is
determined using management’s best estimate of future cash flows discounted to a
present value amount.
13
During
the three-month and nine-month periods ended September 30, 2009, U.S. equity
markets increased by approximately 15.6% and 19.3%, respectively, as measured by
the change in the Standard & Poor’s 500 Stock Index and U.S. fixed
income markets increased by approximately 3.7% and 5.7%, respectively, as
measured by the change in the Barclays Aggregate Bond Index. The redemption rate
for domestic back-end load shares was 18.9% and 20.6%, respectively, during the
three-month and nine-month periods ended September 30, 2009. Increases in
non-U.S. capital markets for the three-month and nine-month periods ended
September 30, 2009 ranged from 17.5% to 20.9% and from 24.9% to 64.5%,
respectively, as measured by the MSCI World, Emerging Market and EAFE Indices.
The redemption rate for non-U.S. back-end load shares was 28.8% and 23.1%,
respectively, during the three-month and nine-month periods ended September 30,
2009. Declines in financial markets or higher redemption levels, or both, as
compared to the assumptions used to estimate undiscounted future cash flows, as
described above, could result in the impairment of the deferred sales commission
asset. Due to the volatility of the capital markets and changes in redemption
rates, management is unable to predict whether or when a future impairment of
the deferred sales commission asset might occur. Any impairment would reduce
materially the recorded amount of the deferred sales commission asset with a
corresponding charge to earnings.
Legal
Proceedings
On
October 2, 2003, a purported class action complaint entitled Hindo, et al. v. AllianceBernstein
Growth & Income Fund, et al. (“Hindo Complaint”) was filed
against, among others, AllianceBernstein, Holding and the General Partner. The
Hindo Complaint alleges that certain defendants failed to disclose that they
improperly allowed certain hedge funds and other unidentified parties to engage
in “late trading” and “market timing” of certain of our U.S. mutual fund
securities, violating various securities laws.
Following
October 2, 2003, additional lawsuits making factual allegations generally
similar to those in the Hindo Complaint were filed in various federal and state
courts against AllianceBernstein and certain other defendants. On
September 29, 2004, plaintiffs filed consolidated amended complaints with
respect to four claim types: mutual fund shareholder claims; mutual fund
derivative claims; derivative claims brought on behalf of Holding; and claims
brought under the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”) by participants in the Profit Sharing Plan for Employees of
AllianceBernstein.
On
April 21, 2006, AllianceBernstein and attorneys for the plaintiffs in the
mutual fund shareholder claims, mutual fund derivative claims and ERISA claims
entered into a confidential memorandum of understanding containing their
agreement to settle these claims. The agreement will be documented by a
stipulation of settlement and will be submitted for court approval at a later
date. The settlement amount ($30 million), which we previously expensed and
disclosed, has been disbursed. The derivative claims brought on behalf of
Holding, in which plaintiffs seek an unspecified amount of damages, remain
pending.
We intend
to vigorously defend against the lawsuit involving derivative claims brought on
behalf of Holding. At the present time, we are unable to predict the outcome or
estimate a possible loss or range of loss in respect of this matter because of
the inherent uncertainty regarding the outcome of complex litigation, and the
fact that the plaintiffs did not specify an amount of damages sought in their
complaint.
We are
involved in various other matters, including regulatory inquiries,
administrative proceedings and litigation, some of which allege significant
damages. While any inquiry, proceeding or litigation has the element of
uncertainty, management believes that the outcome of any one of the other
regulatory inquiries, administrative proceedings, lawsuits or claims that is
pending or threatened, or all of them combined, will not have a material adverse
effect on our results of operations or financial condition.
Other
During
July 2009, we entered into a subscription agreement under which we committed to
invest up to $40 million in a venture capital fund over a six-year
period.
During
July 2009, we were selected by the U.S. Treasury Department as one of nine
pre-qualified investment managers under the Public-Private Investment Program.
As part of the program, each investment manager is required to invest a minimum
of $20 million in the Public-Private Investment Fund they manage.
8.
|
Qualified Employee Benefit
Plans
|
We
maintain a qualified profit sharing plan (the “Profit Sharing Plan”) covering
U.S. employees and certain foreign employees. Employer contributions are
discretionary and generally limited to the maximum amount deductible for federal
income tax purposes.
We
maintain several defined contribution plans for foreign employees in the United
Kingdom, Australia, New Zealand, Japan and our other foreign entities. Employer
contributions are generally consistent with regulatory requirements and tax
limits. Defined contribution expense for foreign entities was $2.1 million and
$2.9 million during the three months ended September 30, 2009 and 2008,
respectively, and $5.8 million and $9.1 million during the nine months ended
September 30, 2009 and 2008, respectively.
14
We
maintain a qualified, noncontributory, defined benefit retirement plan
(“Retirement Plan”) covering current and former employees who were employed by
AllianceBernstein in the United States prior to October 2, 2000. Benefits
are based on years of credited service, average final base salary (as defined),
and primary Social Security benefits. Service and compensation after December
31, 2008 are not taken into account in determining participants’ retirement
benefits.
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 contributed $12.8 million to the
Retirement Plan during 2009 and we do not plan to make additional contributions
this year. Contribution estimates, which are subject to change, are based on
regulatory requirements, future market conditions and assumptions used for
actuarial computations of the Retirement Plan’s obligations and assets.
Management, at the present time, is unable to determine the amount, if any, of
additional future contributions that may be required.
Net
expense under the Retirement Plan consisted of:
Three
Months Ended
September
30,
|
Nine Months Ended
September
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Service
cost
|
$ | — | $ | 706 | $ | — | $ | 2,290 | ||||||||
Interest
cost on projected benefit obligations
|
1,112 | 1,257 | 3,308 | 3,739 | ||||||||||||
Expected
return on plan assets
|
(786 | ) | (1,147 | ) | (2,324 | ) | (3,443 | ) | ||||||||
Recognized
actuarial loss
|
107 | — | 325 | — | ||||||||||||
Amortization
of prior service credit
|
— | (107 | ) | — | (325 | ) | ||||||||||
Amortization
of transition asset
|
(36 | ) | (36 | ) | (108 | ) | (108 | ) | ||||||||
Net
pension charge
|
$ | 397 | $ | 673 | $ | 1,201 | $ | 2,153 |
9.
|
Units
Outstanding
|
The
following table summarizes the activity in units during the first nine months of
2009:
Outstanding
as of December 31, 2008
|
263,717,610
|
|||
Options
to buy Holding Units exercised
|
—
|
|||
Holding
Units issued
|
2,430,742
|
|||
Holding
Units forfeited
|
(1,520
|
)
|
||
Outstanding
as of September 30, 2009
|
266,146,832
|
Holding
Units issued pertain to Holding Units newly issued under our Amended and
Restated 1997 Long Term Incentive Plan and include: (i) restricted Holding Unit
awards to independent members of the Board of Directors of the General Partner,
(ii) restricted Holding Unit awards to certain key employees, (iii) Holding Unit
issuances to fund deferred compensation investment elections by plan
participants, (iv) Century Club Plan Holding Unit awards to AllianceBernstein
employees whose primary responsibilities are to assist in the distribution of
company-sponsored mutual funds, and (v) Holding Unit issuances in connection
with certain employee separation agreements.
10.
|
Income
Taxes
|
AllianceBernstein
is a private partnership for federal income tax purposes and, accordingly, is
not subject to federal and state corporate income taxes. However,
AllianceBernstein is subject to a 4.0% New York City unincorporated business tax
(“UBT”). Domestic corporate subsidiaries of AllianceBernstein, which are subject
to federal, state and local income taxes, are generally included in the filing
of a consolidated federal income tax return with separate state and local income
tax returns being filed. Foreign corporate subsidiaries are generally subject to
taxes in the foreign jurisdictions where they are located.
In order
to preserve AllianceBernstein’s status as a private partnership for federal
income tax purposes, AllianceBernstein Units must not be considered publicly
traded. The AllianceBernstein Partnership Agreement provides that all transfers
of AllianceBernstein Units must be approved by AXA Equitable Life Insurance
Company (an indirect wholly-owned subsidiary of AXA, “AXA Equitable”) and the
General Partner; AXA Equitable and the General Partner approve only those
transfers permitted pursuant to one or more of the safe harbors contained in
relevant treasury regulations. If such units were considered readily tradable,
AllianceBernstein’s net income would be subject to federal and state corporate
income tax. Furthermore, should AllianceBernstein enter into a substantial new
line of business, Holding, by virtue of its ownership of AllianceBernstein,
would lose its status as a “grandfathered” publicly-traded partnership and would
become subject to corporate income tax which would reduce materially Holding’s
net income and its quarterly distributions to Holding unitholders.
Our
income tax provision for the first quarter of 2009 included a $3.4 million
expense relating to an under-accrual of estimated foreign taxes in the fourth
quarter of 2008. This adjusting entry was not material to the income
tax provision or income tax liability in our condensed consolidated financial
statements or to the results of operations and financial condition in any prior
reporting period.
15
11.
|
Debt
|
Total
credit available, debt outstanding and weighted average interest rates as of
September 30, 2009 and December 31, 2008 were as follows:
September 30, 2009
|
December 31, 2008
|
|||||||||||||||||||||||
Credit
Available
|
Debt
Outstanding
|
Interest
Rate
|
Credit
Available
|
Debt
Outstanding
|
Interest
Rate
|
|||||||||||||||||||
|
(in millions) | |||||||||||||||||||||||
Revolving
credit facility(1)
|
$ | 973.0 | $ | — | — | % | $ | $715.2 | $ | — | — | % | ||||||||||||
Commercial
paper(1)
|
27.0 | 27.0 | 0.3 | 284.8 | 284.8 | 1.8 | ||||||||||||||||||
Total
revolving credit facility – AllianceBernstein(1)
|
1,000.0 | 27.0 | 0.3 | 1,000.0 | 284.8 | 1.8 | ||||||||||||||||||
Revolving
credit facility – SCB LLC(1)
|
950.0 | 25.0 | 0.3 | 950.0 | — | — | ||||||||||||||||||
Uncommitted
lines of credit – SCB LLC
|
— | — | — | — | — | — | ||||||||||||||||||
Uncommitted
bank facilities – SCB LLC
|
— | — | — | — | — | — | ||||||||||||||||||
Total
|
$ | 1,950.0 | $ | 52.0 | 0.3 | $ | 1,950.0 | $ | 284.8 | 1.8 |
___________________
|
(1)
|
Commercial
paper and amounts outstanding under the revolving credit facility are
short-term in nature and, as such, recorded value is estimated to
approximate fair value.
|
AllianceBernstein
has a $1.0 billion five-year revolving credit facility with a group of
commercial banks and other lenders which expires in 2011. The revolving credit
facility is intended to provide back-up liquidity for our $1.0 billion
commercial paper program, although we borrow directly under the facility from
time to time. Amounts borrowed under the commercial paper program reduce amounts
available for direct borrowing under the revolving credit facility on a
dollar-for-dollar basis. Our interest rate, at our option, is a floating rate
generally based upon a defined prime rate, a rate related to the London
Interbank Offered Rate (“LIBOR”) or the Federal Funds rate. The revolving credit
facility contains covenants which, among other things, require us to meet
certain financial ratios. We are in compliance with these
covenants.
SCB LLC
has a $950 million three-year revolving credit facility with a group of
commercial banks to fund its obligations resulting from engaging in certain
securities trading and custody activities for private clients. Under the
revolving credit facility, the interest rate, at the option of SCB LLC, is a
floating rate generally based upon a defined prime rate, a rate related to LIBOR
or the Federal Funds rate. This revolving credit facility contains covenants
which, among other things, require AllianceBernstein, as guarantor, to meet the
same financial ratios contained in its $1.0 billion revolving credit facility.
We are in compliance with these covenants.
AllianceBernstein
and AXA executed guarantees in regard to the $950 million SCB LLC facility. In
the event SCB LLC is unable to meet its obligations, AllianceBernstein or AXA
will pay the obligations when due or on demand. AllianceBernstein will reimburse
AXA to the extent AXA must pay on its guarantee. This agreement is continuous
and remains in effect until the later of payment in full of any such obligation
under the credit facility has been made or the maturity date.
SCB LLC
has four separate uncommitted credit facilities with various banks totaling $525
million, a decrease from five facilities totaling $775 million as of December
31, 2008. In addition, SCB LLC has two lines of credit with a commercial
bank as of September 30, 2009 and December 31, 2008, one for $75
million secured by pledges of U.S. Treasury Bills and a second for $50
million secured by pledges of equity securities.
16
12.
|
Comprehensive
Income
|
Comprehensive
income consisted of:
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Net
income
|
$ | 226,495 | $ | 229,080 | $ | 387,601 | $ | 778,928 | ||||||||
Other
comprehensive income (loss), net of tax:
|
||||||||||||||||
Unrealized
gains (losses) on investments
|
3,305 | (448 | ) | 4,706 | (4,225 | ) | ||||||||||
Foreign
currency translation adjustment
|
(3,181 | ) | (50,354 | ) | 45,213 | (39,985 | ) | |||||||||
Changes
in retirement plan related items
|
70 | (101 | ) | 216 | (434 | ) | ||||||||||
Comprehensive
income
|
226,689 | 178,177 | 437,736 | 734,284 | ||||||||||||
Comprehensive
(income) loss in consolidated entities attributable to non-controlling
interests
|
(29,092 | ) | (7,165 | ) | (27,266 | ) | (29,571 | ) | ||||||||
Comprehensive
income attributable to AllianceBernstein Unitholders
|
$ | 197,597 | $ | 171,012 | $ | 410,470 | $ | 704,713 |
13. Changes
in Capital
Changes
in capital consisted of:
Partners’
Capital Attributable to AllianceBernstein Unitholders
|
Non-Controlling
Interests In Consolidated Entities
|
Total
Capital
|
||||||||||
(in
thousands)
|
||||||||||||
Balance
as of December 31, 2008
|
$ | 4,317,659 | $ | 169,167 | $ | 4,486,826 | ||||||
Comprehensive
income (loss):
|
||||||||||||
Net
income (loss)
|
364,487 | 23,114 | 387,601 | |||||||||
Other
comprehensive income (loss), net of tax:
|
||||||||||||
Unrealized
gains (losses) on investments
|
4,430 | 276 | 4,706 | |||||||||
Foreign
currency translation adjustment
|
41,337 | 3,876 | 45,213 | |||||||||
Changes
in retirement plan related items
|
216 | — | 216 | |||||||||
Comprehensive
income (loss)
|
410,470 | 27,266 | 437,736 | |||||||||
Cash
distributions
|
(265,699 | ) | — | (265,699 | ) | |||||||
Capital
contributions from (distributions to)
|
2,751 | (19,369 | ) | (16,618 | ) | |||||||
Compensation-related
transactions
|
51,605 | — | 51,605 | |||||||||
Balance
as of September 30, 2009
|
$ | 4,516,786 | $ | 177,064 | $ | 4,693,850 |
14.
|
Accounting
Pronouncements
|
In
December 2008, the FASB issued ASC 715-20-65, which requires companies to
disclose information about fair value measurements of retirement plan assets.
The provisions of FASB ASC 715-20-65 are effective for fiscal years ending after
December 15, 2009 and are not expected to have a material impact on our
consolidated financial statements.
In June
2009, the FASB issued Statement of Financial Accounting Standards No. 167 (“SFAS
No. 167”), “Amendments to FASB
Interpretation No. 46(R)”. This standard changes how a company determines
when an entity that is insufficiently capitalized or is not controlled through
voting should be consolidated. The determination of whether a company is
required to consolidate an entity is based on, among other things, an entity’s
purpose and design and a company’s ability to direct the activities of the
entity that most significantly impact the entity’s economic performance. This
standard will require additional disclosures about involvement with variable
interest entities and any significant changes in risk exposure due to that
involvement, including how involvement with a variable interest entity affects
the financial statements. The provisions of this standard are effective January
1, 2010. Management is currently evaluating the impact that the adoption of this
standard will have on our consolidated financial statements. The adoption of
this standard may require that a significant amount of assets, liabilities,
revenues and expenses of certain variable interest entities in which we have a
minimal financial ownership interest be included in our consolidated financial
statements, with corresponding offsets to non-controlling
interests.
17
Report of Independent
Registered Public Accounting Firm
To the
General Partner and Unitholders
AllianceBernstein
L.P.
We have
reviewed the accompanying condensed consolidated statement of financial
condition of
AllianceBernstein L.P. (“AllianceBernstein”) as of September 30, 2009, the
related condensed consolidated statements of income for the three-month and
nine-month periods ended September 30, 2009 and 2008, and the condensed
consolidated statements of cash flows for the nine-month periods ended September
30, 2009 and 2008. These interim financial statements are the responsibility of
the management of AllianceBernstein Corporation, the General
Partner.
We
conducted our review in accordance with the standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board (United States), the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on
our review, we are not aware of any material modifications that should be made
to the accompanying condensed consolidated interim financial
statements for them
to be in conformity with accounting principles generally accepted in the United
States of America.
We
previously audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated statement of
financial condition as of December 31, 2008, and the related consolidated
statements of income, of changes in partners’ capital and comprehensive income,
and of cash flows for the year then ended (not presented herein), and in our
report dated February 20, 2009, we expressed an unqualified opinion on those
consolidated financial statements. As discussed in Note 2 to the accompanying
condensed consolidated financial statements, AllianceBernstein changed its
method of accounting for non-controlling interests in consolidated entities. The
accompanying condensed consolidated statement of financial condition as of
December 31, 2008 reflects this change.
/s/PricewaterhouseCoopers
LLP
|
||
New
York, New York
|
||
October
29, 2009
|
18
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
Executive
Overview
Global
capital markets continued to improve in the third quarter of 2009, with strong
absolute returns in both equity and credit, and a majority of our investment
services outperformed their benchmarks and/or peer averages. Our
fixed income services were markedly strong, with many of our retail services now
outperforming peer averages for 2009 as well as in one-, three-, five- and
ten-year comparisons. In addition, many of our institutional services
outperformed their benchmarks. Value equity services continued to
outperform, and a strong 2009 has signigicantly improved one-year performance
comparisons. Notably, our “Strategic Value” services, which emphasize
our best research ideas, have materially outperformed their
benchmarks. Although a number of our institutional growth equity
services underperformed for the quarter, U.S. Large-Cap Growth continued to
outperform and most retail growth services outperformed their peer
averages.
Our
client assets under management (“AUM”) declined $91.8 billion, or 15.6%, to
$497.8 billion during the 12 months ended September 30, 2009 due to equity
market depreciation and substantial net outflows. However, AUM
increased $50.8 billion, or 11.4%, during the third quarter of 2009, as positive
investment returns of $63.7 billion were only partially offset by lower net
outflows. Total net outflows for the quarter were $12.9 billion, down from $24.0
billion in the second quarter of 2009, with more than one-half occurring during
the month of July. Outflows slowed in all three distribution
channels, most notably in the Institutional channel.
Institutional
Investment Services AUM increased $29.7 billion, or 10.7%, to $307.5 billion
during the quarter, due to strong investment returns and a 46.5% sequential
decline in net asset outflows to $10.0 billion from $18.7 billion in the second
quarter of 2009. Importantly, gross sales improved significantly to $5.3 billion
in the quarter compared to $1.3 billion in the second quarter of 2009. Our
strong relative performance year-to-date led to some significant new account
wins in the third quarter of 2009, most notably in fixed income and regional
value services. Additionally, we secured more than $500 million in
Public-Private Investment Program commitments from a diverse group of current
and prospective clients across the globe. Our pipeline of won but unfunded
mandates increased 20.4% compared to the second quarter of 2009 to $3.4
billion.
Retail
Services AUM increased $14.1 billion, or 13.8%, to $116.7 billion during the
quarter. Gross sales increased $1.4 billion, or 32.0%, to $5.9 billion and
redemptions, which remained at long-term averages, were also $5.9 billion. Net
inflows from fixed income services were $2.2 billion, up from $0.8 billion in
the second quarter of 2009. Our mutual fund performance remains strong as 69% of
our mutual funds are in the top 50% of our peer groups.
Private
Client Services AUM increased during the quarter by $7.0 billion, or 10.5%, to
$73.6 billion. Net outflows of $1.0 billion represent a 44.3% decline compared
to the second quarter of 2009, as gross sales improved and account closings and
withdrawals continued to moderate. Interactions with current and
prospective clients continue to indicate a shift from extreme risk aversion to
future wealth creation through diversified stock and bond portfolios. Although
our financial advisor headcount remained flat compared to the second quarter of
2009, we anticipate adding new financial advisors in the first quarter of
2010.
While
Institutional Research Services revenues declined $15.6 million, or 12.4%,
compared to the prior year’s record quarter, they were flat compared to the
second quarter of 2009. Recent data from independent surveys indicate
year-over-year market share gains in the first half of 2009 across geographies,
especially in Europe. We have continued to invest in our trading platform, and
recent investments in both European electronic and U.S. equity derivatives
trading made meaningful contributions to third quarter revenues.
Net
revenues decreased $35.0 million, or 4.2%, compared to the third quarter of
2008. Advisory fees revenues declined compared to the third quarter of 2008 by
$229.1 million, or 32.1%, reflecting the impact of lower AUM. Conversely,
investment gains (losses) had a favorable variance of $238.6 million, the result
of current quarter gains of $106.7 million, primarily from gains on
investments related to employee deferred compensation awards and our venture
capital fund, as compared to $131.9 million of losses in the prior-year
quarter.
Although
over the past twelve months we have undertaken initiatives resulting in
significant reductions in operating expenses and capital expenditures (as we
describe in detail below in
Expense Reduction), the impact of marking-to-market employee deferred
compensation investments and a significant insurance reimbursement we received
in the prior-year quarter have resulted in a decline in operating expenses of
only $7.1 million, or 1.2%, compared to the third quarter of 2008. Employee
compensation and benefits increased $7.3 million, or 2.2%, as lower salaries,
commissions and other compensation expenses were more than offset by a $67.7
million increase in deferred compensation expense due to higher related
investment values. Promotion and servicing expenses declined by $28.8 million,
or 20.6%, compared to the third quarter of 2008, due primarily to lower
distribution plan expenses. General and administrative expenses increased $15.8
million, or 13.8%, compared to the third quarter of 2008, as net foreign
exchange gains and lower technology and occupancy costs were more than offset by
the impact of a $35.3 million insurance reimbursement recieved in the prior-year
quarter.
19
Operating
income declined 11.1% from the third quarter of 2008 to $223.5 million, while
net income attributable to AllianceBernstein Unitholders fell by only 9.2% due
to the recognition of a $10.0 million contingent payment related to the 2005
sale of our cash management business and lower income
taxes. Operating margin fell to 24.4% from 28.8% in the third quarter
of 2008 but increased by 6.1% compared to the second quarter of 2009. Diluted
net income per AllianceBernstein Unit declined 10.8% to $0.74 year-over-year,
but distributions per AllianceBernstein Unit increased 5.7%, as the insurance
reimbursement received in the third quarter of 2008 was not included in that
quarter’s cash distribution.
We
believe that the rise in the global capital markets reflects a rational
adjustment to accumulating evidence that global economies have stabilized, and
we anticipate that the global economy will grow modestly in 2010. Nonetheless,
risks remain, such as tight credit and depressed consumer spending. Risk
aversion is declining, but still high, among investors.
For
AllianceBernstein, the third quarter of 2009 showed the beneficial impact of
strong investment performance as net outflows fell by 46.3% compared to the
second quarter of 2009. A continuation of strong investment performance is
paramount in order for AllianceBernstein to resume organic growth in
AUM.
Expense
Reduction
The
substantial decrease in AUM and the resulting decrease in fee revenues from
levels during the first nine months of 2008 have led us to undertake
initiatives resulting in significant reductions in operating expenses and
capital expenditures.
We
reduced our headcount by 453 during the first nine months of 2009 to 4,544,
which, along with the reduction in force that occurred during the fourth quarter
of 2008, represents a reduction of nearly 1,100 staff members, a 20% decline
from our headcount peak during the third quarter of 2008. These actions reduced
our fixed compensation costs (salaries and fringe benefits) by approximately
$110 million on an annualized basis. In taking these measures, we have retained
the intellectual capital required to service our clients and grow our
business.
We have
also reduced other controllable operating expenses, including print, mail,
travel and entertainment, recruitment, seminars, market data services,
communications, temporary help and technology consulting, at an annualized rate
of approximately $85 million. In addition, we have eliminated or deferred nearly
$150 million of planned capital expenditures since the beginning of
2008.
Recent
financial results have begun to demonstrate the leverage inherent in our
business model, which will increase should our AUM and revenues continue to
grow and our lower expense base remains stable.
20
Assets
Under Management
Assets
under management by distribution channel were as follows:
As of September 30,
|
||||||||||||||||
2009
|
2008
|
$ Change
|
% Change
|
|||||||||||||
(in
billions)
|
||||||||||||||||
Institutional
Investments
|
$
|
307.5
|
$
|
378.6
|
$
|
(71.1
|
)
|
(18.8
|
)%
|
|||||||
Retail
|
116.7
|
125.8
|
(9.1
|
)
|
(7.2
|
)
|
||||||||||
Private
Client
|
73.6
|
85.2
|
(11.6
|
)
|
(13.6
|
)
|
||||||||||
Total
|
$
|
497.8
|
$
|
589.6
|
$
|
(91.8
|
)
|
(15.6
|
)
|
Assets
under management by investment service were as follows:
As of September 30,
|
||||||||||||||||
2009
|
2008
|
$ Change
|
% Change
|
|||||||||||||
(in
billions)
|
||||||||||||||||
Equity
|
||||||||||||||||
Value:
|
||||||||||||||||
U.S.
|
$
|
45.3
|
$
|
72.2
|
$
|
(26.9
|
)
|
(37.2
|
)%
|
|||||||
Global &
international
|
130.4
|
179.9
|
(49.5
|
)
|
(27.6
|
)
|
||||||||||
175.7
|
252.1
|
(76.4
|
)
|
(30.3
|
)
|
|||||||||||
Growth:
|
||||||||||||||||
U.S.
|
36.3
|
49.7
|
(13.4
|
)
|
(26.9
|
)
|
||||||||||
Global &
international
|
57.0
|
81.9
|
(24.9
|
)
|
(30.4
|
)
|
||||||||||
93.3
|
131.6
|
(38.3
|
)
|
(29.1
|
)
|
|||||||||||
Total
Equity
|
269.0
|
383.7
|
(114.7
|
)
|
(29.9
|
)
|
||||||||||
Fixed
Income:
|
||||||||||||||||
U.S.
|
111.8
|
106.8
|
5.0
|
4.7
|
||||||||||||
Global &
international
|
84.1
|
80.3
|
3.8
|
4.7
|
||||||||||||
195.9
|
187.1
|
8.8
|
4.7
|
|||||||||||||
Other
(1):
|
||||||||||||||||
U.S.
|
22.7
|
11.9
|
10.8
|
90.7
|
||||||||||||
Global &
international
|
10.2
|
6.9
|
3.3
|
49.6
|
||||||||||||
32.9
|
18.8
|
14.1
|
75.6
|
|||||||||||||
Total:
|
||||||||||||||||
U.S.
|
216.1
|
240.6
|
(24.5
|
)
|
(10.2
|
)
|
||||||||||
Global &
international
|
281.7
|
349.0
|
(67.3
|
)
|
(19.3
|
)
|
||||||||||
Total
|
$
|
497.8
|
$
|
589.6
|
$
|
(91.8
|
)
|
(15.6
|
)
|
______________
(1)
Includes index, structured and asset allocation
services.
21
Changes
in assets under management for the three-month period ended September 30, 2009
were as follows:
Distribution Channel
|
Investment Service
|
|||||||||||||||||||||||||||||||||||
Institutional
Investments
|
Retail
|
Private
Client
|
Total
|
Value
Equity
|
Growth
Equity
|
Fixed
Income
|
Other(1)
|
Total | ||||||||||||||||||||||||||||
(in
billions)
|
||||||||||||||||||||||||||||||||||||
Balance
as of June 30, 2009
|
$ | 277.8 | $ | 102.6 | $ | 66.6 | $ | 447.0 | $ | 155.8 | $ | 84.2 | $ | 178.0 | $ | 29.0 | $ | 447.0 | ||||||||||||||||||
Long-term
flows:
|
||||||||||||||||||||||||||||||||||||
Sales/new
accounts
|
5.3 | 5.9 | 2.0 | 13.2 | 2.6 | 1.4 | 8.9 | 0.3 | 13.2 | |||||||||||||||||||||||||||
Redemptions/terminations
|
(12.5 | ) | (5.9 | ) | (1.5 | ) | (19.9 | ) | (10.4 | ) | (4.4 | ) | (4.6 | ) | (0.5 | ) | (19.9 | ) | ||||||||||||||||||
Cash
flow/unreinvested dividends
|
(2.8 | ) | (1.9 | ) | (1.5 | ) | (6.2 | ) | (3.6 | ) | (1.9 | ) | (0.2 | ) | (0.5 | ) | (6.2 | ) | ||||||||||||||||||
Net
long-term (outflows) inflows
|
(10.0 | ) | (1.9 | ) | (1.0 | ) | (12.9 | ) | (11.4 | ) | (4.9 | ) | 4.1 | (0.7 | ) | (12.9 | ) | |||||||||||||||||||
Market appreciation
|
39.7 | 16.0 | 8.0 | 63.7 | 31.3 | 14.0 | 13.8 | 4.6 | 63.7 | |||||||||||||||||||||||||||
Net
change
|
29.7 | 14.1 | 7.0 | 50.8 | 19.9 | 9.1 | 17.9 | 3.9 | 50.8 | |||||||||||||||||||||||||||
Balance
as of
September
30, 2009
|
$ | 307.5 | $ | 116.7 | $ | 73.6 | $ | 497.8 | $ | 175.7 | $ | 93.3 | $ | 195.9 | $ | 32.9 | $ | 497.8 |
________________
(1)
|
Includes
index, structured and asset allocation
services.
|
Changes
in assets under management for the nine-month period ended September 30, 2009
were as follows:
Distribution Channel
|
Investment Service
|
|||||||||||||||||||||||||||||||||||
Institutional
Investments
|
Retail
|
Private
Client
|
Total
|
Value
Equity
|