Document
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC  20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                         to
Commission File No.  001-09818
ALLIANCEBERNSTEIN HOLDING L.P.
(Exact name of registrant as specified in its charter)
Delaware
13-3434400
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
1345 Avenue of the Americas, New York, NY  10105
(Address of principal executive offices)
(Zip Code)
(212) 969-1000
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
 
 
No
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes
 
 
No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
Accelerated filer
 
 
 
 
Non-accelerated filer
Smaller reporting company
 
 
 
 
 
 
Emerging growth company
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.






Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
 
Trading Symbol
 
Name of Each Exchange on Which Registered
Units Rep. Assignments of Beneficial Ownership of LP Interests in AB Holding ("Units")
 
AB
 
New York Stock Exchange
The number of units representing assignments of beneficial ownership of limited partnership interests outstanding as of June 30, 2020 was 96,431,971.*
*includes 100,000 units of general partnership interest having economic interests equivalent to the economic interests of the units representing assignments of beneficial ownership of limited partnership interests.
 



ALLIANCEBERNSTEIN HOLDING L.P.

Index to Form 10-Q
 
 
Page
 
 
 
 
Part I
 
 
 
 
 
FINANCIAL INFORMATION
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
 
Part II
 
 
 
 
 
OTHER INFORMATION
 
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
Item 5.
 
 
 
Item 6.
 
 
 



Index

Part I

FINANCIAL INFORMATION

Item 1.
Financial Statements

ALLIANCEBERNSTEIN HOLDING L.P.
Condensed Statements of Financial Condition
(in thousands, except unit amounts)
(unaudited)

 
June 30,
2020
 
December 31,
2019
ASSETS
 
 
 
Investment in AB
$
1,486,617

 
$
1,554,203

Other assets
371

 
61

Total assets
$
1,486,988

 
$
1,554,264

 
 
 
 
LIABILITIES AND PARTNERS’ CAPITAL
 
 
 
Liabilities:
 
 
 
Other liabilities
$
266

 
$
1,726

Total liabilities
266

 
1,726

Commitments and contingencies (See Note 8)


 


Partners’ capital:
 
 
 
General Partner: 100,000 general partnership units issued and outstanding
1,374

 
1,402

Limited partners: 96,331,971 and 98,092,098 limited partnership units issued and outstanding
1,556,813

 
1,619,200

AB Holding Units held by AB to fund long-term incentive compensation plans
(26,202
)
 
(27,436
)
Accumulated other comprehensive loss
(45,263
)
 
(40,628
)
Total partners’ capital
1,486,722

 
1,552,538

Total liabilities and partners’ capital
$
1,486,988

 
$
1,554,264


See Accompanying Notes to Condensed Financial Statements.


1

Index

ALLIANCEBERNSTEIN HOLDING L.P.
Condensed Statements of Income
(in thousands, except per unit amounts)
(unaudited)
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
 
 
 
 
 
 
 
 
 
Equity in net income attributable to AB Unitholders
 
$
63,201

 
$
59,023

 
$
133,115

 
$
111,661

 
 
 
 
 
 
 
 
 
Income taxes
 
6,275

 
6,749

 
13,930

 
12,948

 
 
 
 
 
 
 
 
 
Net income
 
$
56,926

 
$
52,274

 
$
119,185

 
$
98,713

 
 
 
 
 
 
 
 
 
Net income per unit:
 
 
 
 
 
 
 
 
Basic
 
$
0.59

 
$
0.54

 
$
1.23

 
$
1.03

Diluted
 
$
0.59

 
$
0.54

 
$
1.23

 
$
1.03


See Accompanying Notes to Condensed Financial Statements.


2

Index

ALLIANCEBERNSTEIN HOLDING L.P.
Condensed Statements of Comprehensive Income
(in thousands)
(unaudited)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2020
 
2019
 
2020
 
2019
 
 
 
 
 
 
 
 
Net income
$
56,926

 
$
52,274

 
$
119,185

 
$
98,713

Other comprehensive income:
 
 
 
 
 
 
 
Foreign currency translation adjustments, before tax
2,473

 
(985
)
 
(5,154
)
 
167

Income tax benefit (expense)
72

 
(51
)
 
78

 
(53
)
Foreign currency translation adjustments, net of tax
2,545

 
(1,036
)
 
(5,076
)
 
114

Changes in employee benefit related items:
 

 
 

 
 
 
 
Amortization of prior service cost
4

 

 
7

 
5

Recognized actuarial gain (loss)
295

 
(86
)
 
464

 
200

Changes in employee benefit related items
299

 
(86
)
 
471

 
205

Income tax (expense) benefit
(2
)
 
10

 
(30
)
 
12

Employee benefit related items, net of tax
297

 
(76
)
 
441

 
217

Other comprehensive income (loss)
2,842

 
(1,112
)
 
(4,635
)
 
331

Comprehensive income
$
59,768

 
$
51,162

 
$
114,550

 
$
99,044


See Accompanying Notes to Condensed Financial Statements.

3

Index

ALLIANCEBERNSTEIN HOLDING L.P.
Condensed Statements of Changes in Partners’ Capital
(in thousands)
(unaudited)

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2020
 
2019
 
2020
 
2019
General Partner’s Capital
 
 
 
 
 
 
 
Balance, beginning of period
$
1,380

 
$
1,370

 
$
1,402

 
$
1,385

Net income
59

 
55

 
121

 
103

Cash distributions to Unitholders
(65
)
 
(50
)
 
(149
)
 
(113
)
Balance, end of period
1,374

 
1,375

 
1,374

 
1,375

Limited Partners’ Capital
 

 
 

 
 
 
 

Balance, beginning of period
1,592,161

 
1,490,581

 
1,619,200

 
1,555,892

Net income
56,867

 
52,219

 
119,064

 
98,610

Cash distributions to Unitholders
(61,760
)
 
(47,311
)
 
(145,381
)
 
(108,055
)
Retirement of AB Holding Units
(31,958
)
 
(3,730
)
 
(46,178
)
 
(73,383
)
Issuance of AB Holding Units to fund long-term incentive compensation plan awards
1,503

 
49,590

 
9,961

 
60,903

Exercise of compensatory options to buy AB Holding Units

 
1,569

 
147

 
8,951

Balance, end of period
1,556,813

 
1,542,918

 
1,556,813

 
1,542,918

AB Holding Units held by AB to fund long-term incentive compensation plans
 

 
 
 
 
 
 

Balance, beginning of period
(29,002
)
 
(24,464
)
 
(27,436
)
 
(27,759
)
Change in AB Holding Units held by AB to fund long-term incentive compensation plans
2,800

 
(11,282
)
 
1,234

 
(7,987
)
Balance, end of period
(26,202
)
 
(35,746
)
 
(26,202
)
 
(35,746
)
Accumulated Other Comprehensive (Loss) Income
 

 
 

 
 

 
 

Balance, beginning of period
(48,105
)
 
(38,018
)
 
(40,628
)
 
(39,461
)
Foreign currency translation adjustment, net of tax
2,545

 
(1,036
)
 
(5,076
)
 
114

Changes in employee benefit related items, net of tax
297

 
(76
)
 
441

 
217

Balance, end of period
(45,263
)
 
(39,130
)
 
(45,263
)
 
(39,130
)
Total Partners’ Capital
$
1,486,722

 
$
1,469,417

 
$
1,486,722

 
$
1,469,417


See Accompanying Notes to Condensed Financial Statements.


4

Index

ALLIANCEBERNSTEIN HOLDING L.P.
Condensed Statements of Cash Flows
(in thousands)
(unaudited)
 
Six Months Ended
June 30,
 
2020
 
2019
Cash flows from operating activities:
 
 
 
Net income
$
119,185

 
$
98,713

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Equity in net income attributable to AB Unitholders
(133,115
)
 
(111,661
)
Cash distributions received from AB
160,259

 
121,617

Changes in assets and liabilities:
 
 
 
(Increase) in other assets
(310
)
 

(Decrease) in other liabilities
(1,460
)
 
(7
)
Net cash provided by operating activities
144,559

 
108,662

 
 
 
 
Cash flows from investing activities:
 
 
 
Investments in AB with proceeds from exercise of compensatory options to buy AB Holding Units
(147
)
 
(8,951
)
Net cash used in investing activities
(147
)
 
(8,951
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Cash distributions to Unitholders
(145,530
)
 
(108,168
)
Capital contributions from (to) AB
971

 
(494
)
Proceeds from exercise of compensatory options to buy AB Holding Units
147

 
8,951

Net cash used in financing activities
(144,412
)
 
(99,711
)
 
 
 
 
Change in cash and cash equivalents

 

Cash and cash equivalents as of beginning of period

 

Cash and cash equivalents as of end of period
$

 
$


See Accompanying Notes to Condensed Financial Statements.


5

Index

ALLIANCEBERNSTEIN HOLDING L.P.
Notes to Condensed Financial Statements
June 30, 2020
(unaudited)

The words “we” and “our” refer collectively to AllianceBernstein Holding L.P. (“AB Holding”) and AllianceBernstein L.P.  and its subsidiaries (“AB”), or to their officers and employees. Similarly, the word “company” refers to both AB Holding and AB. Where the context requires distinguishing between AB Holding and AB, we identify which of them is being discussed.

1.
Business Description, Organization and Basis of Presentation

Business Description

AB Holding’s principal source of income and cash flow is attributable to its investment in AB limited partnership interests. The condensed financial statements and notes of AB Holding should be read in conjunction with the condensed consolidated financial statements and notes of AB included as an exhibit to this quarterly report on Form 10-Q and with AB Holding’s and AB’s audited financial statements included in AB Holding’s Form 10-K for the year ended December 31, 2019.

AB provides diversified investment management, research and related services globally to a broad range of clients. Its principal services include:

Institutional Services – servicing its institutional clients, including private and public pension plans, foundations and endowments, insurance companies, central banks and governments worldwide, and affiliates such as Equitable Holdings, Inc. ("EQH") and its subsidiaries, by means of separately-managed accounts, sub-advisory relationships, structured products, collective investment trusts, mutual funds, hedge funds and other investment vehicles.

Retail Services – servicing its retail clients, primarily by means of retail mutual funds sponsored by AB 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.

Private Wealth Management Services – servicing its private clients, including high-net-worth individuals and families, 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.

Bernstein Research Services – servicing institutional investors, such as pension fund, hedge fund and mutual fund managers, seeking high-quality fundamental research, quantitative services and brokerage-related services in equities and listed options.

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 research disciplines include economic, fundamental equity, fixed income and quantitative research. In addition, AB has experts focused on multi-asset strategies, wealth management and alternative investments.

AB provides a broad range of investment services with expertise in:

Actively-managed equity strategies, with global and regional portfolios across capitalization ranges, concentration ranges and investment strategies, including value, growth and core equities;

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

Passive management, including index and enhanced index strategies;

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

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


6

Index

AB’s services span 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, emerging markets, regional and local), in major markets around the world.

Organization

During the second quarter of 2018, AXA S.A. ("AXA") completed the sale of a minority stake in EQH through an initial public offering ("IPO"). Since then, AXA has completed additional offerings and taken other steps, most recently during the fourth quarter of 2019. As a result, AXA owned less than 10% of the outstanding common stock of EQH as of June 30, 2020.

As of June 30, 2020, EQH owned approximately 4.2% 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% general partnership interest in AB.

As of June 30, 2020, the ownership structure of AB, expressed as a percentage of general and limited partnership interests, was as follows:

EQH and its subsidiaries
63.7
%
AB Holding
35.5

Unaffiliated holders
0.8

 
100.0
%


Including both the general partnership and limited partnership interests in AB Holding and AB, EQH and its subsidiaries had an approximate 65.2% economic interest in AB as of June 30, 2020.

Basis of Presentation

The interim condensed financial statements 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 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 financial statements and the reported amounts of revenues and expenses during the interim reporting periods. Actual results could differ from those estimates. The condensed statement of financial condition as of December 31, 2019 was derived from audited financial statements, but it does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”).

AB Holding records its investment in AB using the equity method of accounting. AB Holding’s investment is increased to reflect its proportionate share of income of AB and decreased to reflect its proportionate share of losses of AB and cash distributions made by AB to its Unitholders. In addition, AB Holding's investment is adjusted to reflect its proportionate share of certain capital transactions of AB.

2.
Cash Distributions

AB Holding is required to distribute all of its Available Cash Flow, as defined in the Amended and Restated Agreement of Limited Partnership of AB Holding (“AB Holding Partnership Agreement”), to its Unitholders pro rata in accordance with their percentage interests in AB Holding. Available Cash Flow is defined as the cash distributions AB Holding receives from AB minus such amounts as the General Partner determines, in its sole discretion, should be retained by AB Holding for use in its business (such as the payment of taxes) or plus such amounts as the General Partner determines, in its sole discretion, should be released from previously retained cash flow.

On July 23, 2020, the General Partner declared a distribution of $0.61 per unit, representing a distribution of Available Cash Flow for the three months ended June 30, 2020. Each general partnership unit in AB Holding is entitled to receive distributions equal to those received by each AB Holding Unit. The distribution is payable on August 20, 2020 to holders of record at the close of business on August 3, 2020.

7

Index

3.
Long-term Incentive Compensation Plans

AB maintains several unfunded, non-qualified long-term incentive compensation plans, under which the company grants awards of restricted AB Holding Units to its employees and members of the Board of Directors, who are not employed by AB or by any of AB’s affiliates (“Eligible Directors”).

AB funds its restricted AB Holding Unit awards either by purchasing AB Holding Units on the open market or purchasing newly-issued AB Holding Units from AB Holding, and then keeping these AB Holding Units in a consolidated rabbi trust until delivering them or retiring them. In accordance with the AB Holding Partnership Agreement, when AB purchases newly-issued AB Holding Units from AB Holding, AB Holding is required to use the proceeds it receives from AB to purchase the equivalent number of newly-issued AB Units, thus increasing its percentage ownership interest in AB. AB Holding Units held in the consolidated rabbi trust are corporate assets in the name of the trust and are available to the general creditors of AB.

Repurchases of AB Holding Units for the three and six months ended June 30, 2020 and 2019 consisted of the following:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
 
 
(in millions)
Total amount of AB Holding Units Purchased (1)
 
1.3

 

 
2.2

 
2.0

Total Cash Paid for AB Holding Units Purchased(1)
 
$
27.8

 
$

 
$
47.6

 
$
58.6

Open Market Purchases of AB Holding Units Purchased (2)
 
1.3

 

 
2.2

 
1.9

Total Cash Paid for Open Market Purchases of AB Holding Units (2)
 
$
27.8

 
$

 
$
45.1

 
$
55.2

(1) Purchased on a trade date basis. 
(2) The remainder related to purchases of AB Holding Units from employees to fulfill statutory tax withholding requirements at the time of delivery of long-term incentive compensation awards.  
Each quarter, AB considers whether to implement a plan to repurchase AB Holding Units pursuant to Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended (“Exchange Act”). A plan of this type allows a company to repurchase its shares at times when it otherwise might be prevented from doing so because of self-imposed trading blackout periods or because it possesses material non-public information. Each broker selected by AB has the authority under the terms and limitations specified in the plan to repurchase AB Holding Units on AB’s behalf in accordance with the terms and limitations specified in the plan. Repurchases are subject to regulations promulgated by the SEC as well as certain price, market volume and timing constraints specified in the plan. The plan adopted during the second quarter of 2020 expired at the close of business on July 22, 2020. AB may adopt additional plans in the future to engage in open-market purchases of AB Holding Units to help fund anticipated obligations under its incentive compensation award program and for other corporate purposes.

During the first six months of 2020 and 2019, AB granted to employees and Eligible Directors 0.2 million and 1.7 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 six months of 2020 and 2019, AB Holding issued 5,182 and 0.4 million AB Holding Units, respectively, upon exercise of options to buy AB Holding Units. AB Holding used the proceeds of $0.1 million and $9.0 million, respectively, received from award recipients as payment in cash for the exercise price to purchase the equivalent number of newly-issued AB Units.

8

Index

4.
Net Income per Unit

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

 
 
Three Months Ended June 30,
 
Six Months Ended
June 30,
 
 
2020
 
2019
 
2020
 
2019
 
 
(in thousands, except per unit amounts)
 
 
 
 
 
 
 
 
 
Net income – basic
 
$
56,926

 
$
52,274

 
$
119,185

 
$
98,713

Additional allocation of equity in net income attributable to AB resulting from assumed dilutive effect of compensatory options
 
3

 
19

 
18

 
45

Net income – diluted
 
$
56,929

 
$
52,293

 
$
119,203

 
$
98,758

 
 
 
 
 
 
 
 
 
Weighted average units outstanding – basic
 
96,892

 
96,283

 
96,526

 
95,717

Dilutive effect of compensatory options
 
10

 
48

 
22

 
60

Weighted average units outstanding – diluted
 
96,902

 
96,331

 
96,548

 
95,777

 
 
 
 
 
 
 
 
 
Basic net income per unit
 
$
0.59

 
$
0.54

 
$
1.23

 
$
1.03

Diluted net income per unit
 
$
0.59

 
$
0.54

 
$
1.23

 
$
1.03



 
 
Three Months Ended June 30,
 
Six Months Ended
June 30,
 
 
2020
 
2019
 
2020
 
2019
 
 
(amounts as shown)
Anti-dilutive options excluded from diluted net income
 
44,877

 
29,056

 
44,877

 
29,056



5.
Investment in AB

Changes in AB Holding’s investment in AB during the six-month period ended June 30, 2020 are as follows (in thousands):

Investment in AB as of December 31, 2019
$
1,554,203

Equity in net income attributable to AB Unitholders
133,115

Changes in accumulated other comprehensive (loss) income
(4,635
)
Cash distributions received from AB
(160,259
)
Additional investments with proceeds from exercise of compensatory options to buy AB Holding Units
147

Capital contributions (from) to AB
(971
)
AB Holding Units retired
(46,178
)
AB Holding Units issued to fund long-term incentive compensation plans
9,961

Change in AB Holding Units held by AB for long-term incentive compensation plans
1,234

Investment in AB as of June 30, 2020
$
1,486,617



9

Index


6.
Units Outstanding

Changes in AB Holding Units outstanding during the six-month period ended June 30, 2020 are as follows:

Outstanding as of December 31, 2019
98,192,098

Options exercised
5,182

Units issued
408,059

Units retired
(2,173,368
)
Outstanding as of June 30, 2020
96,431,971



7.
Income Taxes

AB Holding is a “grandfathered” publicly-traded partnership (“PTP”) for federal tax purposes and, accordingly, is not subject to federal or state corporate income taxes. However, AB Holding is subject to the 4.0% New York City unincorporated business tax (“UBT”), net of credits for UBT paid by AB, and to a 3.5% federal tax on partnership gross income from the active conduct of a trade or business. AB Holding’s partnership gross income is derived from its interest in AB.

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

 
 
Three Months Ended June 30,
 
 
 
Six Months Ended
June 30,
 
 
 
 
2020
 
2019
 
% Change
 
2020
 
2019
 
% Change
 
 
 
 
 
 
 
 
(in thousands)
 
 
Net income attributable to AB Unitholders
 
$
177,321

 
$
166,252

 
6.7
 %
 
$
371,641

 
$
315,366

 
17.8
%
Multiplied by: weighted average equity ownership interest
 
35.6
%
 
35.5
%
 
 
 
35.8
%
 
35.4
%
 
 
Equity in net income attributable to AB Unitholders
 
$
63,201

 
$
59,023

 
7.1

 
$
133,115

 
$
111,661

 
19.2

 
 
 
 
 
 
 
 
 
 
 
 
 
AB qualifying revenues
 
$
586,609

 
$
643,019

 
(8.8
)
 
$
1,288,949

 
$
1,229,569

 
4.8

Multiplied by: weighted average equity ownership interest for calculating tax
 
29.9
%
 
29.4
%
 
 
 
30.4
%
 
29.5
%
 
 
Multiplied by: federal tax
 
3.5
%
 
3.5
%
 
 
 
3.5
%
 
3.5
%
 
 
Federal income taxes
 
6,179

 
6,619

 
 
 
13,694

 
12,700

 
 
State income taxes
 
96

 
130

 
 
 
236

 
248

 
 
Total income taxes
 
$
6,275

 
$
6,749

 
(7.0
)
 
$
13,930

 
$
12,948

 
7.6

 
 
 
 
 
 
 
 
 
 
 
 
 
Effective tax rate
 
9.9
%
 
11.4
%
 
 
 
10.5
%
 
11.6
%
 
 


In order to preserve AB Holding’s status as a “grandfathered” PTP for federal income tax purposes, management ensures that AB Holding does not directly or indirectly (through AB) engage in a substantial new line of business. If AB Holding were to lose its status as a “grandfathered” PTP, it would be subject to corporate income tax, which would reduce materially AB Holding’s net income and its quarterly distributions to AB Holding Unitholders.

10

Index

8.
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.

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. 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. Such is also the case when the litigation is in its early stages or when the litigation is highly complex or broad in scope. In these cases, we disclose that we are unable to predict the outcome or estimate a possible loss or range of loss.

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.

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; 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.


11

Index

Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

AB Holding’s principal source of income and cash flow is attributable to its investment in AB Units. AB Holding’s interim condensed financial statements and notes and management’s discussion and analysis of financial condition and results of operations (“MD&A”) should be read in conjunction with those of AB included as an exhibit to this Form 10-Q. They also should be read in conjunction with AB’s audited financial statements and notes and MD&A included in AB Holding’s Form 10-K for the year ended December 31, 2019.

Results of Operations

 
 
Three Months Ended June 30,
 
 
 
Six Months Ended June 30,
 
 
 
 
2020
 
2019
 
% Change
 
2020
 
2019
 
% Change
 
 
(in thousands, except per unit amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to AB Unitholders
 
$
177,321

 
$
166,252

 
6.7
 %
 
$
371,641

 
$
315,366

 
17.8
%
Weighted average equity ownership interest
 
35.6
%
 
35.5
%
 
 
 
35.8
%
 
35.4
%
 
 
Equity in net income attributable to AB Unitholders
 
63,201

 
59,023

 
7.1

 
133,115

 
111,661

 
19.2

Income taxes
 
6,275

 
6,749

 
(7.0
)
 
13,930

 
12,948

 
7.6

Net income of AB Holding
 
$
56,926

 
$
52,274

 
8.9

 
$
119,185

 
$
98,713

 
20.7

Diluted net income per AB Holding Unit
 
$
0.59

 
$
0.54

 
9.3

 
$
1.23

 
$
1.03

 
19.4

Distribution per AB Holding Unit(1)
 
$
0.61

 
$
0.56

 
8.9

 
$
1.25

 
$
1.05

 
19.0

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

AB Holding net income for the three and six months ended June 30, 2020 increased $4.7 million and $20.5 million, respectively, due to higher net income attributable to AB Unitholders and a slightly higher weighted average equity ownership interest.

AB Holding’s partnership gross income is derived from its interest in AB. AB Holding’s income taxes, which reflect a 3.5% federal tax on its partnership gross income from the active conduct of a trade or business, are 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. AB Holding’s effective tax rate was 9.9% during the three months ended June 30, 2020, compared to 11.4% during the three months ended June 30, 2019. AB Holding's effective tax rate during the six months ended June 30, 2020 was 10.5% compared to 11.6% during the six months ended June 30, 2019. See Note 7 to the condensed financial statements in Item 1 for the calculation of income tax expense.

Management Operating Metrics

As supplemental information, AB provides the performance measures “adjusted net revenues,” “adjusted operating income” and “adjusted operating margin,” which are the principal metrics management uses in evaluating and comparing the period-to-period operating performance of AB. Management principally uses these metrics in evaluating performance because they present a clearer picture of AB's operating performance and allow management to see long-term trends without the distortion primarily caused by long-term incentive compensation-related mark-to-market adjustments, real estate charges and other adjustment items. Similarly, management believes that these management operating metrics help investors better understand the underlying trends in AB's results and, accordingly, provide a valuable perspective for investors. Such measures are not based on generally accepted accounting principles (“non-GAAP measures”). These non-GAAP measures are provided in addition to, and not as substitutes for, net revenues, operating income and operating margin, and they may not be comparable to non-GAAP measures presented by other companies. Management uses both GAAP and non-GAAP measures in evaluating the company’s financial performance. The non-GAAP measures alone may pose limitations because they do not include all of AB’s revenues and expenses. Further, adjusted diluted net income per AB Holding Unit is not a liquidity measure and should not be used in place of cash flow measures. See AB’s MD&A contained in Exhibit 99.1.


12

Index

The impact of these adjustments on AB Holding’s net income and diluted net income per AB Holding Unit is as follows:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
 
 
(in thousands, except per Unit amounts)
 
 
 
 
 
 
 
 
 
AB non-GAAP adjustments, before taxes
 
$
6,306

 
$
3,222

 
$
8,102

 
$
4,044

AB income tax benefit (expense) on non-GAAP adjustments
 
797

 
257

 
(692
)
 
749

AB non-GAAP adjustments, after taxes
 
7,103

 
3,479

 
7,410

 
4,793

AB Holding’s weighted average equity ownership interest in AB
 
35.6
%
 
35.5
%
 
35.8
%
 
35.4
%
Impact on AB Holding’s net income of AB non-GAAP adjustments
 
$
2,533

 
$
1,234

 
$
2,655

 
$
1,697

 
 
 
 
 
 
 
 
 
Net income – diluted, GAAP basis
 
$
56,929

 
$
52,293

 
$
119,203

 
$
98,758

Impact on AB Holding’s net income of AB non-GAAP adjustments
 
2,533

 
1,234

 
2,655

 
1,697

Adjusted net income – diluted
 
$
59,462

 
$
53,527

 
$
121,858

 
$
100,455

 
 
 
 
 
 
 
 
 
Diluted net income per AB Holding Unit, GAAP basis
 
$
0.59

 
$
0.54

 
$
1.23

 
$
1.03

Impact of AB non-GAAP adjustments
 
0.02

 
0.02

 
0.03

 
0.02

Adjusted diluted net income per AB Holding Unit
 
$
0.61

 
$
0.56

 
$
1.26

 
$
1.05


The degree to which AB's non-GAAP adjustments impact AB Holding's net income fluctuates based on AB Holding's ownership percentage in AB.

Cash Distributions

AB Holding is required to distribute all of its Available Cash Flow, as defined in the AB Holding Partnership Agreement, to its Unitholders (including the General Partner). Available Cash Flow typically is the adjusted diluted net income per unit for the quarter multiplied by the number of units outstanding at the end of the quarter. Management anticipates that Available Cash Flow will continue to be based on adjusted diluted net income per unit, unless management determines, with concurrence of the Board of Directors, that one or more adjustments made to adjusted net income should not be made with respect to the Available Cash Flow calculation. See Note 2 to the condensed financial statements in Item 1 for a description of Available Cash Flow.

Capital Resources and Liquidity

During the six months ended June 30, 2020, net cash provided by operating activities was $144.6 million, compared to $108.7 million during the corresponding 2019 period. The increase primarily resulted from higher cash distributions received from AB of $38.6 million.

During the six months ended June 30, 2020, net cash used in investing activities was $0.1 million, compared to $9.0 million during the corresponding 2019 period. The activity in both periods reflects the investments in AB with proceeds from exercises of compensatory options to buy AB Holding Units.

During the six months ended June 30, 2020, net cash used in financing activities was $144.4 million, compared to $99.7 million during the corresponding 2019 period. The increase primarily was due to higher cash distributions to Unitholders of $37.4 million.

Management believes that AB Holding will have the resources it needs to meet its financial obligations as a result of the cash flow AB Holding realizes from its investment in AB.

Commitments and Contingencies

See Note 8 to the condensed financial statements in Item 1.


13

Index

CAUTIONS REGARDING FORWARD-LOOKING STATEMENTS

Certain statements provided by management in this report and in the portion of AB’s Form 10-Q attached hereto as Exhibit 99.1 are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. The most significant of these factors include, but are not limited to, the following: the performance of financial markets, the investment performance of sponsored investment products and separately-managed accounts, general economic conditions, industry trends, future acquisitions, integration of acquired companies, competitive conditions and government regulations, including changes in tax regulations and rates and the manner in which the earnings of publicly-traded partnerships are taxed. We caution readers to carefully consider such factors. Further, these forward-looking statements speak only as of the date on which such statements are made; we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. For further information regarding these forward-looking statements and the factors that could cause actual results to differ, see “Risk Factors” in Part I, Item 1A of our Form 10-K for the year ended December 31, 2019 and Part II, Item 1A in this Form 10-Q. Any or all of the forward-looking statements that we make in our Form 10-K, this Form 10-Q, other documents we file with or furnish to the SEC, and any other public statements we issue, may turn out to be wrong. It is important to remember that other factors besides those listed in “Risk Factors” and those listed below could also adversely impact our revenues, financial condition, results of operations and business prospects.

The forward-looking statements referred to in the preceding paragraph, most of which directly affect AB but also affect AB Holding because AB Holding’s principal source of income and cash flow is attributable to its investment in AB, include statements regarding:

Our belief that the cash flow AB Holding realizes from its investment in AB will provide AB Holding with the resources it needs to meet its financial obligations: AB Holding’s cash flow is dependent on the quarterly cash distributions it receives from AB. Accordingly, AB Holding’s ability to meet its financial obligations is dependent on AB’s cash flow from its operations, which is subject to the performance of the capital markets and other factors beyond our control.

Our financial condition and ability to access the public and private capital markets providing adequate liquidity for our general business needs: Our financial condition is dependent on our cash flow from operations, which is subject to the performance of the capital markets, our ability to maintain and grow client assets under management and other factors beyond our control. Our ability to access public and private capital markets on reasonable terms may be limited by adverse market conditions, our firm’s credit ratings, our profitability and changes in government regulations, including tax rates and interest rates.

The outcome of litigation: Litigation is inherently unpredictable, and excessive damage awards do occur. Though we have stated that we do not expect any pending legal proceedings to have a material adverse effect on our results of operations, financial condition or liquidity, any settlement or judgment with respect to a legal proceeding could be significant and could have such an effect.

The possibility that we will engage in open market purchases of AB Holding Units to help fund anticipated obligations under our incentive compensation award program: The number of AB Holding Units AB may decide to buy in future periods, if any, to help fund incentive compensation awards depends on various factors, some of which are beyond our control, including the fluctuation in the price of an AB Holding Unit (NYSE: AB) and the availability of cash to make these purchases.

Our determination that adjusted employee compensation expense should not exceed 50% of our adjusted net revenues:  Aggregate employee compensation reflects employee performance and competitive compensation levels.  Fluctuations in our revenues and/or changes in competitive compensation levels could result in adjusted employee compensation expense exceeding 50% of our adjusted net revenues.
Our Relocation Strategy: While the expenses, expense savings and EPU impact we expect will result from our Relocation Strategy are presented with numerical specificity, and we believe these figures to be reasonable as of the date of this report, the uncertainties surrounding the assumptions on which our estimates are based create a significant risk that our current estimates may not be realized. These assumptions include:

the amount and timing of employee relocation costs, severance and overlapping compensation and occupancy costs we experience; and
the timing for execution of each phase of our relocation implementation plan.

14

Index

Our 2020 Margin Target: We previously adopted a goal of increasing our adjusted operating margin to a target of 30% by 2020, subject to the assumptions, factors and contingencies described as part of the initial disclosure of this target. Our adjusted operating margin, which was 27.5% during 2019, increased to 27.8% during the first six months of 2020.
Our AUM and, therefore, our investment advisory revenues, including performance-based fee revenues, are heavily dependent on the level and volatility of the financial markets. Based upon our current revenue and expense projections, we do not believe that achieving the 2020 Margin Target is likely. However, we are taking additional actions to better align our expenses with our expected revenues. We remain committed to achieving an adjusted operating margin of 30% in years subsequent to 2020 and will take continued actions in this regard, subject to prevailing market conditions and the evolution of our business mix. Furthermore, our revenues may continue to be adversely affected by the severe economic impact of the novel coronavirus global pandemic ("COVID-19"). Please refer to “Risk Factors” below for additional information regarding the effect on our business COVID-19 has had and may continue to have.
The Adverse Impact of COVID-19: The severity of the expected adverse impact on our AUM and revenues of the economic downturn caused by the COVID-19 pandemic will depend on the depth and length of the downturn and its impact on the companies in which we invest. Our conclusions about the possible continuing significant adverse impact on us is based on our assumptions that the recovery will be gradual and that there will be lasting high unemployment and economic damage. We believe that these assumptions are reasonable, but they may not be correct and economic conditions likely will differ from our assumptions.
Our fixed income investment performance: Our fixed income performance rebounded in the second quarter following poor relative performance of many of our funds during the first quarter of 2020. Still, we recognize that the impact on the one-, three- and five-year track records of some funds may cause heightened redemptions in some of our fixed income strategies. An increase in redemptions, absent an offsetting increase in sales, would adversely affect our AUM, revenues and net income.
Item 3.    Quantitative and Qualitative Disclosures About Market Risk

With the exception of the updates regarding Market Risk discussed under Risk Factors in Part II, Item 1A, there have been no material changes in AB Holding’s market risk from the information provided under “Quantitative and Qualitative Disclosures About Market Risk” in Part II, Item 7A of AB Holding's Form 10-K for the year ended December 31, 2019.

Item 4.
Controls and Procedures

Disclosure Controls and Procedures

Each of AB Holding and AB maintains a system of disclosure controls and procedures that is designed to ensure that information required to be disclosed in our reports under the Exchange Act is (i) recorded, processed, summarized and reported in a timely manner, and (ii) accumulated and communicated to management, including the Chief Executive Officer ("CEO") and the Chief Financial Officer ("CFO"), to permit timely decisions regarding our disclosure.

As of the end of the period covered by this report, management carried out an evaluation, under the supervision and with the participation of the CEO and the CFO, of the effectiveness of the design and operation of the disclosure controls and procedures. Based on this evaluation, the CEO and the CFO concluded that the disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting occurred during the second quarter of 2020 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


15

Index

Part II

OTHER INFORMATION

Item 1.
Legal Proceedings

See Note 8 to the condensed financial statements contained in Part I, Item 1.

Item 1A.
Risk Factors

We are including the below risk factor language regarding the market volatility that has resulted from COVID-19. Except for the update set forth below, there have been no material changes to the risk factors from those appearing in AB Holding's Annual Report on Form 10-K ("AB 10-K") for the fiscal year ended December 31, 2019.

Market Risk

We indicated in the AB 10-K and Form 10-Q for the quarter ended March 31, 2020 that our revenues and results of operations depend on the market value and composition of our AUM, which can fluctuate significantly based on various factors, many of which are beyond our control. The dramatic securities market declines experienced during March 2020, which resulted from the global effects of COVID-19, caused a significant reduction in our AUM. Markets and AUM levels have since recovered, though we recognize that markets remain volatile and the risk remains of a significant reduction in our revenues and net income in 2020.
Global economies and financial markets are increasingly interconnected, which increases the probability that conditions in one country or region might adversely impact issuers in a different country or region. Conditions affecting the general economy, including political, social or economic instability at the local, regional or global level, such as the civil unrest centered around racial equality experienced across the U.S. in the second quarter, may also affect the market value of our AUM. Health crises, such as the COVID-19 pandemic, as well as other incidents that interrupt the expected course of events, such as natural disasters, war or civil disturbance, acts of terrorism, power outages and other unforeseeable and external events, and the public response to or fear of such diseases or events, have and may in the future have a significant adverse effect on financial markets and our AUM, revenues and net income. Furthermore, the preventative and protective health-related actions, such as business activity suspensions and population lock-downs, that governments have taken, and will continue to take, in response to COVID-19 have resulted, and may continue to result, in periods of business interruption, inability to obtain raw materials, supplies and component parts, and reduced or disrupted operations. These circumstances have caused, and may continue to cause, significant economic disruption and very high levels of unemployment, which will adversely affect the financial condition and results of operations of many of the companies in which we invest, and likely reduce the market value of their securities and thus our AUM and revenues. Furthermore, the significant market volatility and uncertainty, and reductions in the availability of margin financing, we experienced during the first quarter of 2020 severely limited the liquidity of certain asset backed and other securities, making it at times impossible to sell these securities at prices reflecting their true economic value. While liquidity conditions improved considerably in the second quarter following the stimulus programs announced by the U.S. Federal Reserve and U.S. Treasury, we recognize the possibility that conditions could deteriorate in the future. Lack of liquidity makes it more difficult for our funds to meet redemption requests. If liquidity were to worsen, this may have a significant adverse effect on our AUM, revenues and net income in 2020.
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds

There were no AB Holding Units sold by AB Holding in the period covered by this report that were not registered under the Securities Act.

Each quarter, since the third quarter of 2011, AB has implemented plans to repurchase AB Holding Units pursuant to Rules 10b5-1 and 10b-18 under the Exchange Act. The plan adopted during the second quarter of 2020 expired at the close of business on July 22, 2020. AB may adopt additional plans in the future to engage in open-market purchases of AB Holding Units to help fund anticipated obligations under the firm's incentive compensation award program and for other corporate purposes. See Note 3 to the condensed financial statements contained in Part 1, Item 1.


16

Index

AB Holding Units bought by us or one of our affiliates during the second quarter of 2020 are as follows:

ISSUER PURCHASES OF EQUITY SECURITIES
 
Period
 
Total Number
of AB Holding Units
Purchased
 
Average Price
Paid Per
AB Holding Unit, net of
Commissions
 
Total Number of
AB Holding Units Purchased as
Part of Publicly
Announced Plans
or Programs
 
Maximum Number
(or Approximate
Dollar Value) of
AB Holding Units that May Yet
Be Purchased Under
the Plans or
Programs
4/1/20 - 4/30/20(1)(2)
 
898,263

 
$
19.89

 

 

5/1/20 - 5/31/20(1)(2)
 
318,539

 
22.97

 

 

6/1/20 - 6/30/20(2)
 
101,706

 
25.32

 

 

Total
 
1,318,508

 
$
21.05

 

 


(1) 
During the second quarter of 2020, AB purchased from employees 588 AB Holding Units to allow them to fulfill statutory withholding tax requirements at the time of distribution of long-term incentive compensation awards.
(2) 
During the second quarter of 2020, AB purchased 1,317,920 AB Holding Units on the open market pursuant to a Rule 10b5-1 plan to help fund anticipated obligations under our incentive compensation award program.

Item 3.
Defaults Upon Senior Securities

None.

Item 4.
Mine Safety Disclosures

None.

Item 5.
Other Information

None.

17

Index

Item 6.
Exhibits  

31.1
 
 
31.2
 
 
32.1
 
 
32.2
 
 
99.1
 
 
101.INS
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
 
 
101.SCH
XBRL Taxonomy Extension Schema.
 
 
101.CAL
XBRL Taxonomy Extension Calculation Linkbase.
 
 
101.LAB
XBRL Taxonomy Extension Label Linkbase.
 
 
101.PRE
XBRL Taxonomy Extension Presentation Linkbase.
 
 
101.DEF
XBRL Taxonomy Extension Definition Linkbase.
 
 
104
The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, formatted in Inline XBRL (included in Exhibit 101).



18

Index

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: July 23, 2020
ALLIANCEBERNSTEIN HOLDING L.P.
 
 
 
 
 
By:
/s/ John C. Weisenseel
 
 
 
John C. Weisenseel
 
 
 
Chief Financial Officer
 
 
 
 
By:
/s/ William R. Siemers
 
 
 
William R. Siemers
 
 
 
Chief Accounting Officer

19
Exhibit


Exhibit 31.1

I, Seth P. Bernstein, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of AllianceBernstein Holding L.P.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 23, 2020
/s/ Seth P. Bernstein
 
 
Seth P. Bernstein
 
 
Chief Executive Officer
 
AllianceBernstein Holding L.P.



Exhibit


Exhibit 31.2

I, John C. Weisenseel, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of AllianceBernstein Holding L.P.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial  reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 23, 2020
/s/ John C. Weisenseel
 
 
John C. Weisenseel
 
 
Chief Financial Officer
 
 
AllianceBernstein Holding L.P.
 



Exhibit


Exhibit 32.1
 
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of AllianceBernstein Holding L.P. (the “Company”) on Form 10-Q for the period ending June 30, 2020 to be filed with the Securities and Exchange Commission on or about July 23, 2020 (the “Report”), I, Seth P. Bernstein, Chief Executive Officer of the Company, certify, for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Exchange Act; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 23, 2020
/s/ Seth P. Bernstein
 
 
Seth P. Bernstein
 
 
Chief Executive Officer
 
 
AllianceBernstein Holding L.P.
 

 




Exhibit


Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of AllianceBernstein Holding L.P. (the “Company”) on Form 10-Q for the period ending June 30, 2020 to be filed with the Securities and Exchange Commission on or about July 23, 2020 (the “Report”), I, John C. Weisenseel, Chief Financial Officer of the Company, certify, for the purpose of complying with Rule 13a-14(b) or 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Exchange Act; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 23, 2020
/s/ John C. Weisenseel
 
 
John C. Weisenseel
 
 
Chief Financial Officer
 
 
AllianceBernstein Holding L.P.
 



Exhibit
Index

Exhibit 99.1
Part I
FINANCIAL INFORMATION
Item 1. Financial Statements
ALLIANCEBERNSTEIN L.P.
AND SUBSIDIARIES
Condensed Consolidated Statements of Financial Condition
(in thousands, except unit amounts)
(unaudited)
 
June 30,
2020
 
December 31,
2019
ASSETS
Cash and cash equivalents
$
824,837

 
$
679,738

Cash and securities segregated, at fair value (cost: $1,877,798 and $1,090,443)
1,882,188

 
1,094,866

Receivables, net:
 

 
 

Brokers and dealers
165,776

 
97,966

Brokerage clients
1,563,333

 
1,536,674

AB funds fees
200,233

 
261,588

Other fees
134,645

 
148,744

Investments:
 

 
 

Long-term incentive compensation-related
53,611

 
50,902

Other
241,055

 
215,892

Assets of consolidated company-sponsored investment funds:
 
 
 
   Cash and cash equivalents
33,076

 
11,433

   Investments
234,096

 
581,004

   Other assets
7,897

 
19,810

Furniture, equipment and leasehold improvements, net
131,633

 
145,251

Goodwill
3,082,778

 
3,076,926

Intangible assets, net
54,489

 
55,366

Deferred sales commissions, net
58,583

 
36,296

Right-of-use assets
317,723

 
362,693

Other assets
341,821

 
330,943

Total assets
$
9,327,774

 
$
8,706,092

 
 
 
 
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND CAPITAL
Liabilities:
 

 
 

Payables:
 

 
 

Brokers and dealers
$
280,019

 
$
201,778

Securities sold not yet purchased
15,920

 
30,157

Brokerage clients
3,203,222

 
2,531,946

AB mutual funds
65,879

 
71,142

Accounts payable and accrued expenses
209,431

 
192,110

Lease liabilities
416,477

 
468,451

Liabilities of consolidated company-sponsored investment funds
26,422

 
31,017

Accrued compensation and benefits
479,717

 
276,829

Debt
685,000

 
560,000

Total liabilities
5,382,087

 
4,363,430

 
 
 
 

1

Index

 
June 30,
2020
 
December 31,
2019
Commitments and contingencies (See Note 12)
 
 
 
Redeemable non-controlling interest
51,081

 
325,561

Capital:
 

 
 

General Partner
38,647

 
41,225

Limited partners: 268,620,187 and 270,380,314 units issued and outstanding
4,066,211

 
4,174,201

Receivables from affiliates
(9,167
)
 
(9,011
)
AB Holding Units held for long-term incentive compensation plans
(73,726
)
 
(76,310
)
Accumulated other comprehensive loss
(127,359
)
 
(113,004
)
Partners’ capital attributable to AB Unitholders
3,894,606

 
4,017,101

Total liabilities, redeemable non-controlling interest and capital
$
9,327,774

 
$
8,706,092

 

See Accompanying Notes to Condensed Consolidated Financial Statements.

2

Index

ALLIANCEBERNSTEIN L.P.
AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(in thousands, except per unit amounts)
(unaudited)
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Revenues:
 
 
 
 
 
 
 
 
Investment advisory and services fees
 
$
578,203

 
$
596,364

 
$
1,199,928

 
$
1,152,958

Bernstein research services
 
113,609

 
105,991

 
242,832

 
196,226

Distribution revenues
 
120,099

 
108,347

 
250,956

 
208,856

Dividend and interest income
 
12,692

 
27,654

 
33,157

 
55,000

Investment gains (losses)
 
24,189

 
10,949

 
(20,117
)
 
26,684

Other revenues
 
26,092

 
24,796

 
51,603

 
47,002

Total revenues
 
874,884

 
874,101

 
1,758,359

 
1,686,726

Less: Interest expense
 
3,435

 
16,302

 
12,754

 
33,465

Net revenues
 
871,449

 
857,799

 
1,745,605

 
1,653,261

 
 
 
 
 
 
 
 
 
Expenses:
 
 

 
 

 
 

 
 

Employee compensation and benefits
 
349,638

 
363,702

 
711,910

 
703,011

Promotion and servicing:
 
 
 
 
 
 

 
 

Distribution-related payments
 
125,678

 
116,254

 
265,823

 
222,247

Amortization of deferred sales commissions
 
6,622

 
3,241

 
12,148

 
6,743

Trade execution, marketing, T&E and other
 
44,288

 
57,550

 
99,898

 
107,198

General and administrative:
 
 
 
 
 
 

 
 

General and administrative
 
121,424

 
120,180

 
243,691

 
238,028

Real estate charges
 
5,526

 
548

 
5,526

 
548

Contingent payment arrangements
 
807

 
829

 
1,600

 
883

Interest on borrowings
 
1,096

 
3,990

 
3,930

 
7,973

Amortization of intangible assets
 
6,723

 
7,285

 
13,209

 
14,259

Total expenses
 
661,802

 
673,579

 
1,357,735

 
1,300,890

 
 
 
 
 
 
 
 
 
Operating income
 
209,647

 
184,220

 
387,870

 
352,371

 
 
 
 
 
 
 
 
 
Income taxes
 
11,386

 
10,211

 
20,860

 
19,132

 
 
 
 
 
 
 
 
 
Net income
 
198,261

 
174,009

 
367,010

 
333,239

 
 
 
 
 
 
 
 
 
Net income (loss) of consolidated entities attributable to non-controlling interests
 
20,940

 
7,757

 
(4,631
)
 
17,873

 
 
 
 
 
 
 
 
 
Net income attributable to AB Unitholders
 
$
177,321

 
$
166,252

 
$
371,641

 
$
315,366

 
 
 
 
 
 
 
 
 
Net income per AB Unit:
 
 

 
 

 
 

 
 

Basic
 
$
0.65

 
$
0.61

 
$
1.36

 
$
1.17

Diluted
 
$
0.65

 
$
0.61

 
$
1.36

 
$
1.17


See Accompanying Notes to Condensed Consolidated Financial Statements.

3

Index

ALLIANCEBERNSTEIN L.P.
AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income
(in thousands)
(unaudited)
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
 
 
 
 
 
 
 
 
 
Net income
 
$
198,261

 
$
174,009

 
$
367,010

 
$
333,239

Other comprehensive income (loss):
 
 

 
 

 
 
 
 
Foreign currency translation adjustments, before tax
 
6,317

 
(2,178
)
 
(15,079
)
 
452

Income tax benefit (expense)
 
67

 
(73
)
 
140