UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC  20549
FORM10-Q
(Mark One)
x☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 201730,2020
OR
o☐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)
Delaware13-3434400
(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.
Yesx☒Noo☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).
Yesx☒Noo☐
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☐
Large accelerated filer x
Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)
Smaller reporting company o
Emerging growth company o
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. o☐





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
:
Yeso☐NoNo☒x





Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Units Rep. Assignments of Beneficial Ownership of LP Interests in AB Holding ("Units")ABNew York Stock Exchange
The number of units representing assignments of beneficial ownership of limited partnership interests outstanding as of September 30, 20172020 was 93,626,313.96,174,568.*
*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.
Condensed Statements of Financial Condition
1
Condensed Statements of Income
2
Condensed Statements of Comprehensive Income
3
Condensed Statements of Changes in Partners' Capital
4
Page
Part I
FINANCIAL INFORMATION
Item 1.
Financial Statements
Condensed Statements of Financial Condition
1
Condensed Statements of Income
2
Condensed Statements of Comprehensive Income
3
Condensed Statements of Cash Flows
45
Notes to Condensed Financial Statements
56
Item 2.
1112
Item 3.
1415
Item 4.
1415
Part II
OTHER INFORMATION
Item 1.
1516
Item 1A.
1516
Item 2.
1516
Item 3.
1617
Item 4.
17
Item 5.
17
Item 6.
1918
2019




Index

Part I


FINANCIAL INFORMATION


Item 1.Financial Statements

Item 1.    Financial Statements

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

September 30,
2020		December 31,
2019
ASSETS
Investment in AB$1,496,263 $1,554,203 
Other assets121 61 
Total assets$1,496,384 $1,554,264 
LIABILITIES AND PARTNERS’ CAPITAL
Liabilities:
Other liabilities$392 $1,726 
Total liabilities392 1,726 
Commitments and contingencies (See Note 8)
Partners’ capital:
General Partner: 100,000 general partnership units issued and outstanding1,384 1,402 
Limited partners: 96,074,568 and 98,092,098 limited partnership units issued and outstanding1,556,501 1,619,200 
AB Holding Units held by AB to fund long-term incentive compensation plans(22,691)(27,436)
Accumulated other comprehensive loss(39,202)(40,628)
Total partners’ capital1,495,992 1,552,538 
Total liabilities and partners’ capital$1,496,384 $1,554,264 
 September 30,
2017		 December 31,
2016
ASSETS   
Investment in AB$1,441,672
 $1,540,508
Total assets$1,441,672
 $1,540,508
    
LIABILITIES AND PARTNERS’ CAPITAL   
Liabilities:   
Other liabilities$224
 $619
Total liabilities224
 619
    
Commitments and contingencies (See Note 8)


 

    
Partners’ capital:   
General Partner: 100,000 general partnership units issued and outstanding1,379
 1,405
Limited partners: 93,526,313 and 96,552,190 limited partnership units issued and outstanding1,489,933
 1,592,240
AB Holding Units held by AB to fund long-term incentive compensation plans(17,011) (11,731)
Accumulated other comprehensive loss(32,853) (42,025)
Total partners’ capital1,441,448
 1,539,889
Total liabilities and partners’ capital$1,441,672
 $1,540,508


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 September 30,Nine Months Ended September 30,
2020201920202019
Equity in net income attributable to AB Unitholders$73,874 $66,722 $206,989 $178,383 
Income taxes6,875 6,894 20,805 19,842 
Net income$66,999 $59,828 $186,184 $158,541 
Net income per unit:
Basic$0.70 $0.62 $1.95 $1.65 
Diluted$0.70 $0.62 $1.95 $1.65 
  Three Months Ended September 30, Nine Months Ended
September 30,
  2017 2016 2017 2016
         
Equity in net income attributable to AB Unitholders $49,055
 $55,925
 $146,668
 $160,759
         
Income taxes 5,877
 5,667
 17,839
 16,837
         
Net income $43,178
 $50,258
 $128,829
 $143,922
         
Net income per unit:        
Basic $0.46
 $0.52
 $1.35
 $1.47
Diluted $0.46
 $0.52
 $1.35
 $1.47


See Accompanying Notes to Condensed Financial Statements.


2
Index

ALLIANCEBERNSTEIN HOLDING L.P.
Condensed Statements of Comprehensive Income
(in thousands)
(unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Net income$66,999 $59,828 $186,184 $158,541 
Other comprehensive income:
Foreign currency translation adjustments, before tax5,872 (4,470)718 (4,303)
Income tax benefit38 77 116 24 
Foreign currency translation adjustments, net of tax5,910 (4,393)834 (4,279)
Changes in employee benefit related items:  
Amortization of prior service cost3 3 10 8 
Recognized actuarial gain149 174 613 374 
Changes in employee benefit related items152 177 623 382 
Income tax (expense) benefit(1)90 (31)102 
Employee benefit related items, net of tax151 267 592 484 
Other comprehensive income (loss)6,061 (4,126)1,426 (3,795)
Comprehensive income$73,060 $55,702 $187,610 $154,746 
  Three Months Ended September 30, Nine Months Ended
September 30,
  2017 2016 2017 2016
         
Net income $43,178
 $50,258
 $128,829
 $143,922
Other comprehensive income (loss):        
Foreign currency translation adjustments, before reclassification and tax 2,672
 320
 8,514
 715
Less: reclassification adjustment for (losses) included in net income upon liquidation —
 (2) —
 (2)
Foreign currency translation adjustments, before tax 2,672
 322
 8,514
 717
Income tax (expense) benefit (2) 29
 50
 86
Foreign currency translation adjustments, net of tax 2,670
 351
 8,564
 803
Unrealized (losses) gains on investments:        
Unrealized (losses) gains arising during period (2) 5
 2
 (2)
Less: reclassification adjustments for (losses) included in net income —
 (3) —
 (4)
Changes in unrealized (losses) gains on investments (2) 8
 2
 2
Income tax benefit (expense) 2
 (2) 4
 2
Unrealized gains on investments, net of tax —
 6
 6
 4
Changes in employee benefit related items:        
Amortization of prior service cost 2
 5
 12
 41
Recognized actuarial loss 88
 265
 621
 608
Changes in employee benefit related items 90
 270
 633
 649
Income tax benefit (expense) —
 7
 (31) (23)
Employee benefit related items, net of tax 90
 277
 602
 626
Other comprehensive income 2,760
 634
 9,172
 1,433
Comprehensive income $45,938
 $50,892
 $138,001
 $145,355


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 September 30,Nine Months Ended September 30,
2020201920202019
General Partner’s Capital
Balance, beginning of period$1,374 $1,375 $1,402 $1,385 
Net income71 63 192 166 
Cash distributions to Unitholders(61)(56)(210)(169)
Balance, end of period1,384 1,382 1,384 1,382 
Limited Partners’ Capital   
Balance, beginning of period1,556,813 1,542,918 1,619,200 1,555,892 
Net income66,928 59,765 185,992 158,375 
Cash distributions to Unitholders(58,877)(53,971)(204,258)(162,026)
Retirement of AB Holding Units(8,645)(19,029)(54,823)(92,412)
Issuance of AB Holding Units to fund long-term incentive compensation plan awards282 18 10,243 60,921 
Exercise of compensatory options to buy AB Holding Units0 691 147 9,642 
Balance, end of period1,556,501 1,530,392 1,556,501 1,530,392 
AB Holding Units held by AB to fund long-term incentive compensation plans  
Balance, beginning of period(26,202)(35,746)(27,436)(27,759)
Change in AB Holding Units held by AB to fund long-term incentive compensation plans3,511 1,830 4,745 (6,157)
Balance, end of period(22,691)(33,916)(22,691)(33,916)
Accumulated Other Comprehensive (Loss) Income    
Balance, beginning of period(45,263)(39,130)(40,628)(39,461)
Foreign currency translation adjustment, net of tax5,910 (4,393)834 (4,279)
Changes in employee benefit related items, net of tax151 267 592 484 
Balance, end of period(39,202)(43,256)(39,202)(43,256)
Total Partners’ Capital$1,495,992 $1,454,602 $1,495,992 $1,454,602 

See Accompanying Notes to Condensed Financial Statements.

4
Index
ALLIANCEBERNSTEIN HOLDING L.P.
Condensed Statements of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended
September 30,
20202019
Cash flows from operating activities:
Net income$186,184 $158,541 
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in net income attributable to AB Unitholders(206,989)(178,383)
Cash distributions received from AB225,802 182,475 
Changes in assets and liabilities:
(Increase) in other assets(60)(61)
(Decrease) increase in other liabilities(1,334)93 
Net cash provided by operating activities203,603 162,665 
Cash flows from investing activities:
Investments in AB with proceeds from exercise of compensatory options to buy AB Holding Units(147)(9,642)
Net cash used in investing activities(147)(9,642)
Cash flows from financing activities:
Cash distributions to Unitholders(204,468)(162,195)
Capital contributions from (to) AB865 (470)
Proceeds from exercise of compensatory options to buy AB Holding Units147 9,642 
Net cash used in financing activities(203,456)(153,023)
Change in cash and cash equivalents0 0 
Cash and cash equivalents as of beginning of period0 0 
Cash and cash equivalents as of end of period$0 $0 
 Nine Months Ended
September 30,
 2017 2016
Cash flows from operating activities:   
Net income$128,829
 $143,922
Adjustments to reconcile net income to net cash provided by operating activities:   
Equity in net income attributable to AB Unitholders(146,668) (160,759)
Cash distributions received from AB173,025
 143,982
Changes in assets and liabilities:   
(Increase) in other assets—
 (223)
(Decrease) increase in other liabilities(395) 81
Net cash provided by operating activities154,791
 127,003
    
Cash flows from investing activities:   
Investments in AB with proceeds from exercise of compensatory options to buy AB Holding Units(17,672) (2,371)
Net cash used in investing activities(17,672) (2,371)
    
Cash flows from financing activities:   
Cash distributions to Unitholders(155,056) (127,348)
Capital contributions from AB265
 345
Proceeds from exercise of compensatory options to buy AB Holding Units17,672
 2,371
Net cash used in financing activities(137,119) (124,632)
    
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
September 30, 20172020
(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

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, 2016.2019.


AB provides research, 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 AXA S.A. (“AXA”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 (e.g., direct real estate investingequity; and direct lending); and


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

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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 September 30, 2020.

As of September 30, 2017, AXA, a société anonyme organized under the laws of France and the holding company for the AXA Group, a worldwide leader in financial protection, through certain of its subsidiaries (“AXA and its subsidiaries”) owns2020, EQH owned approximately 2.7%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 AXA,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 September 30, 2017,2020, the ownership structure of AB, includingexpressed as a percentage of general and limited partnership units outstandinginterests, was as well as the general partner's 1% interest, is as follows:

AXAEQH and its subsidiaries64.063.8 %
AB Holding34.935.5 
Unaffiliated holders1.10.7 
100.0%


Including both the general partnership and limited partnership interests in AB Holding and AB, AXAEQH and its subsidiaries havehad an approximate 64.9%65.3% economic interest in AB as of September 30, 2017.2020.


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, 20162019 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.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

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.

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 the concurrence of the Board of Directors, that one or more adjustments that are made for adjusted net income should not be made with respect to the Available Cash Flow calculation.


On October 25, 2017,22, 2020, the General Partner declared a distribution of $0.51$0.69 per unit, representing a distribution of Available Cash Flow for the three months ended September 30, 2017.2020. Each general partnership unit in AB Holding is entitled to receive
7
Index

receive distributions equal to those received by each AB Holding Unit. The distribution is payable on November 16, 201712, 2020 to holders of record at the close of business on November 6, 2017.2, 2020.
3.Long-term Incentive Compensation Plans

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 and options to buy 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 all of 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.


DuringRepurchases of AB Holding Units for the three and nine months ended September 30, 2017, AB purchased 0.3 million2020 and 5.9 million AB Holding Units for $6.9 million and $134.6 million, respectively (on2019 consisted of the following:
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
(in millions)
Total amount of AB Holding Units Purchased (1)
0.3 0.9 2.5 2.9 
Total Cash Paid for AB Holding Units Purchased(1)
$6.8 $25.1 $54.4 $83.7 
Open Market Purchases of AB Holding Units Purchased (2)
0.2 0.6 2.4 2.5 
Total Cash Paid for Open Market Purchases of AB Holding Units (2)
$6.7 $15.3 $51.8 $70.6 
(1) Purchased on a trade date basis). These amounts reflect open-market purchases of 0.3 million and 5.2 million AB Holding Units for $6.8 million and $117.1 million, respectively, with thebasis.
(2) The remainder relatingrelated to purchases of AB Holding Units from employees to allow them to fulfill statutory tax withholding requirements at the time of delivery of long-term incentive compensation awards. During the three and nine months ended September 30, 2016, AB purchased 2.0 million and 5.8 million AB Holding Units for $45.2 million and $129.2 million, respectively (on a trade date basis). These amounts reflect open-market purchases of 2.0 million and 5.7 million AB Holding Units for $45.1 million and $127.1 million, respectively, with the remainder relating to purchases of AB Holding Units from employees to allow them 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 RuleRules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended (“Exchange Act”). A Rule 10b5-1 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 of the plan.behalf. 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 secondthird quarter of 20172020 expired at the close of business on July 26, 2017. AB did not adopt a plan during the third quarter of 2017.October 21, 2020. AB may adopt additional Rule 10b5-1 plans in the future to engage in open-market purchases of AB Holding Units to help fund anticipated obligations under its incentive compensation award program and for other corporate purposes.


During the first nine months of 20172020 and 2016,2019, AB granted to employees and Eligible Directors 2.20.5 million and 0.71.9 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 thethese restricted AB Holding Unit awards.


During the first nine months of 20172020 and 2016,2019, AB Holding issued 1.0 million5,182 and 0.10.4 million AB Holding Units, respectively, upon exercise of options to buy AB Holding Units. AB Holding used the proceeds of $17.7$0.1 million and $2.4$9.6 million, respectively, received from award recipients as payment in cash for the exercise price to purchase the equivalent number of newly-issued AB Units.
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Index

4.    Net Income per Unit

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 September 30,Nine Months Ended
September 30,
 2020201920202019
 (in thousands, except per unit amounts)
Net income – basic$66,999 $59,828 $186,184 $158,541 
Additional allocation of equity in net income attributable to AB resulting from assumed dilutive effect of compensatory options14 17 32 62 
Net income – diluted$67,013 $59,845 $186,216 $158,603 
Weighted average units outstanding – basic96,350 96,376 95,415 95,939 
Dilutive effect of compensatory options27 36 23 52 
Weighted average units outstanding – diluted96,377 96,412 95,438 95,991 
Basic net income per unit$0.70 $0.62 $1.95 $1.65 
Diluted net income per unit$0.70 $0.62 $1.95 $1.65 
Three Months Ended September 30,Nine Months Ended
September 30,
2020201920202019
(amounts as shown)
Anti-dilutive options excluded from diluted net income29,056 29,056 29,056 29,056 

  Three Months Ended September 30, Nine Months Ended
September 30,
  2017 2016 2017 2016
 (in thousands, except per unit amounts)
         
Net income – basic $43,178
 $50,258
 $128,829
 $143,922
Additional allocation of equity in net income attributable to AB resulting from assumed dilutive effect of compensatory options 136
 221
 450
 581
Net income – diluted $43,314
 $50,479
 $129,279
 $144,503
         
Weighted average units outstanding – basic 93,374
 95,890
 95,218
 97,643
Dilutive effect of compensatory options 400
 590
 455
 554
Weighted average units outstanding – diluted 93,774
 96,480
 95,673
 98,197
         
Basic net income per unit $0.46
 $0.52
 $1.35
 $1.47
Diluted net income per unit $0.46
 $0.52
 $1.35
 $1.47
5.    Investment in AB

For the three and nine months ended September 30, 2017, we excluded 2,427,527 options from the diluted net income computation due to their anti-dilutive effect. For the three and nine months ended September 30, 2016, we excluded 2,873,106 options from the diluted net income computation due to their anti-dilutive effect.
5.Investment in AB


Changes in AB Holding’s investment in AB during the nine-month period ended September 30, 20172020 are as follows (in thousands):

Investment in AB as of December 31, 2016$1,540,508
Equity in net income attributable to AB Unitholders146,668
Changes in accumulated other comprehensive income (loss)9,172
Additional investments with proceeds from exercise of compensatory options to buy AB Holding Units17,672
Cash distributions received from AB(173,025)
Capital contributions from AB(265)
AB Holding Units retired(138,954)
AB Holding Units issued to fund long-term incentive compensation plans45,176
Change in AB Holding Units held by AB for long-term incentive compensation plans(5,280)
Investment in AB as of September 30, 2017$1,441,672
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Investment in AB as of December 31, 2019$1,554,203 
Equity in net income attributable to AB Unitholders206,989 
Changes in accumulated other comprehensive income1,426 
Cash distributions received from AB(225,802)
Additional investments with proceeds from exercise of compensatory options to buy AB Holding Units147 
Capital contributions (from) AB(865)
AB Holding Units retired(54,823)
AB Holding Units issued to fund long-term incentive compensation plans10,243 
Change in AB Holding Units held by AB for long-term incentive compensation plans4,745 
6.Units Outstanding
Investment in AB as of September 30, 2020$1,496,263

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6.    Units Outstanding

Changes in AB Holding Units outstanding during the nine-month period ended September 30, 20172020 are as follows:

Outstanding as of December 31, 2016201996,652,19098,192,098 
Options exercised1,039,6325,182 
Units issued1,944,310422,703 
Units retired(6,009,819(2,445,415))
Outstanding as of September 30, 2017202093,626,31396,174,568


7.Income Taxes

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 (containing undistributed restricted unit awards allocated to employees) are not considered outstanding for purposes of calculating AB Holding’s ownership interest in AB.

Three Months Ended September 30,Nine Months Ended
September 30,
20202019% Change20202019% Change
(in thousands)
Net income attributable to AB Unitholders$207,976 $187,811 10.7 %$579,617 $503,177 15.2 %
Multiplied by: weighted average equity ownership interest35.5 %35.5 %35.7 %35.5 %
Equity in net income attributable to AB Unitholders$73,874 $66,722 10.7 $206,989 $178,383 16.0 
AB qualifying revenues$642,303 $656,173 (2.1)$1,931,252 $1,886,176 2.4 
Multiplied by: weighted average equity ownership interest for calculating tax30.0 %29.4 %30.2 %29.5 %
Multiplied by: federal tax3.5 %3.5 %3.5 %3.5 %
Federal income taxes6,738 6,759 20,432 19,459 
State income taxes137 135 373 383 
Total income taxes$6,875 $6,894 (0.3)$20,805 $19,842 4.9 
Effective tax rate9.3 %10.3 %10.1 %11.1 %

  Three Months Ended September 30,   Nine Months Ended
September 30,		  
  2017 2016 % Change 2017 2016 % Change
  (in thousands)   (in thousands)  
Net income attributable to AB Unitholders $140,954
 $158,035
 (10.8)% $415,994
 $448,820
 (7.3)%
Multiplied by: weighted average equity ownership interest 34.8% 35.4%   35.3% 35.8%  
Equity in net income attributable to AB Unitholders $49,055
 $55,925
 (12.3) $146,668
 $160,759
 (8.8)
             
AB qualifying revenues $581,410
 $531,856
 9.3
 $1,714,065
 $1,565,294
 9.5
Multiplied by: weighted average equity ownership interest for calculating tax 28.3% 29.8%   29.2% 30.1%  
Multiplied by: federal tax 3.5% 3.5%   3.5% 3.5%  
Federal income taxes 5,767
 5,549
   17,517
 16,494
  
State income taxes 110
 118
   322
 343
  
Total income taxes $5,877
 $5,667
 3.7
 $17,839
 $16,837
 6.0
             
Effective tax rate 12.0% 10.1%   12.2% 10.5%  

ToIn order to preserve AB Holding’s status as a “grandfathered” PTP for federal income tax purposes, management seeks to ensureensures that AB Holding does not directly or indirectly (through AB) enter intoengage 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.
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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.
8.Commitments and 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 tocan 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 currently 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 anthe 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.


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

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, 2016.2019.


Results of Operations

Three Months Ended September 30,Nine Months Ended September 30,
20202019% Change20202019% Change
(in thousands, except per unit amounts)
Net income attributable to AB Unitholders$207,976 $187,811 10.7 %$579,617 $503,177 15.2 %
Weighted average equity ownership interest35.5 %35.5 %35.7 %35.5 %
Equity in net income attributable to AB Unitholders73,874 66,722 10.7 206,989 178,383 16.0 
Income taxes6,875 6,894 (0.3)20,805 19,842 4.9 
Net income of AB Holding$66,999 $59,828 12.0 $186,184 $158,541 17.4 
Diluted net income per AB Holding Unit$0.70 $0.62 12.9 $1.95 $1.65 18.2 
Distribution per AB Holding Unit(1)
$0.69 $0.63 9.5 $1.94 $1.68 15.5 
________________________
  Three Months Ended September 30,   Nine Months Ended September 30,  
  2017 2016 % Change 2017 2016 % Change
  (in thousands, except per unit amounts)   (in thousands, except per unit amounts)  
             
Net income attributable to AB Unitholders $140,954
 $158,035
 (10.8)% $415,994
 $448,820
 (7.3)%
Weighted average equity ownership interest 34.8% 35.4%   35.3% 35.8%  
Equity in net income attributable to AB Unitholders 49,055
 55,925
 (12.3) 146,668
 160,759
 (8.8)
Income taxes 5,877
 5,667
 3.7
 17,839
 16,837
 6.0
Net income of AB Holding $43,178
 $50,258
 (14.1) $128,829
 $143,922
 (10.5)
Diluted net income per AB Holding Unit $0.46
 $0.52
 (11.5) $1.35
 $1.47
 (8.2)
Distribution per AB Holding Unit $0.51
 $0.45
 13.3
 $1.46
 $1.25
 16.8
(1)Distributions reflect the impact of AB’s non-GAAP adjustments.


NetAB Holding's net income for the three and nine months ended September 30, 2017 decreased $7.12020 increased $7.2 million and $15.1$27.6 million, respectively, primarily due to lowerhigher net income attributable to AB Unitholders and lower weighted average equity ownership interest.Unitholders.


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 12.0% in9.3% during the third quarter of 2017three months ended September 30, 2020, compared to 10.1%10.3% during the third quarter of 2016.three months ended September 30, 2019. AB Holding's effective tax rate during the nine months ended September 30, 20172020 was 12.2%10.1% compared to 10.5%11.1% during the nine months ended September 30, 2016. 2019. See Note 7to the condensed financial statements contained in Item 1 for the calculation of income tax expense.


Management Operating Metrics


As supplemental information, AB provides the performance measures “adjusted net revenues”,revenues,” “adjusted operating income” and “adjusted operating margin”,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 consolidation 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 the 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.


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The impact of these adjustments on AB Holding’s net income and diluted net income per AB Holding Unit areis as follows:
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
(in thousands, except per Unit amounts)
AB non-GAAP adjustments, before taxes$(840)$1,290 $7,262 $5,334 
AB income tax benefit (expense) on non-GAAP adjustments29 151 (584)882 
AB non-GAAP adjustments, after taxes(811)1,441 6,678 6,216 
AB Holding’s weighted average equity ownership interest in AB35.5 %35.5 %35.7 %35.5 %
Impact on AB Holding’s net income of AB non-GAAP adjustments$(289)$512 $2,385 $2,204 
Net income – diluted, GAAP basis$67,013 $59,845 $186,216 $158,603 
Impact on AB Holding’s net income of AB non-GAAP adjustments(289)512 2,385 2,204 
Adjusted net income – diluted$66,724 $60,357 $188,601 $160,807 
Diluted net income per AB Holding Unit, GAAP basis$0.70 $0.62 $1.95 $1.65 
Impact of AB non-GAAP adjustments(0.01)0.01 0.03 0.03 
Adjusted diluted net income per AB Holding Unit$0.69 $0.63 $1.98 $1.68 
  Three Months Ended September 30, Nine Months Ended September 30,
  2017 2016 2017 2016
 (in thousands, except per Unit amounts)
         
AB non-GAAP adjustments, before taxes $19,892
 $(20,957) $37,439
 $(70,597)
Income tax (expense) benefit on non-GAAP adjustments (5,641) 1,310
 (4,642) 5,189
AB non-GAAP adjustments, after taxes 14,251
 (19,647) 32,797
 (65,408)
AB Holding’s weighted average equity ownership interest in AB 34.8% 35.4% 35.3% 35.8%
Impact on AB Holding’s net income of AB non-GAAP adjustments $4,960
 $(6,953) $11,564
 $(23,428)
         
Net income – diluted, GAAP basis $43,314
 $50,479
 $129,279
 $144,503
Impact on AB Holding’s net income of AB non-GAAP adjustments 4,960
 (6,953) 11,564
 (23,428)
Adjusted net income – diluted $48,274
 $43,526
 $140,843
 $121,075
         
Diluted net income per AB Holding Unit, GAAP basis $0.46
 $0.52
 $1.35
 $1.47
Impact of AB non-GAAP adjustments 0.05
 (0.07) 0.12
 (0.24)
Adjusted diluted net income per AB Holding Unit $0.51
 $0.45
 $1.47
 $1.23


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 the concurrence of the Board of Directors, that one or more adjustments that are made forto adjusted net income should not be made with respect to the Available Cash Flow calculation. See Note 2 to the condensed financial statements contained in Item 1 for a description of Available Cash Flow.


Capital Resources and Liquidity


During the nine months ended September 30, 2017,2020, net cash provided by operating activities was $154.8$203.6 million, compared to $127.0$162.7 million during the corresponding 20162019 period. The increase primarily resulted from higher cash distributions received from AB of $29.0$43.3 million.


During the nine months ended September 30, 2017,2020, net cash used in investing activities was $17.7$0.1 million, compared to $2.4$9.6 million during the corresponding 20162019 period. The increaseactivity in both periods reflects higherthe investments in AB with proceeds from exercises of compensatory options to buy AB Holding Units.


During the nine months ended September 30, 2017,2020, net cash used in financing activities was $137.1$203.5 million, compared to $124.6$153.0 million during the corresponding 20162019 period. The increase primarily was due to higher cash distributions to Unitholders of $27.7 million, offset by higher proceeds from exercise of compensatory options to buy AB Holding Units of $15.3$42.3 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.
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Commitments and Contingencies


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

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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, 2016 2019 and Part II, Item 1Ain 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 could affect 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 pending or future 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
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• the timing for execution of each phase of our relocation implementation plan.

•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 28.4% during the first nine 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 continued to rebound in the third quarter following poor relative performance of many of our funds during the first quarter of 2020. Further, while we have not generally experienced redemptions in our fixed income strategies during the second or third quarters of 2020, we recognize that the impact on the one-, three- and five-year track records of some funds may contribute to increased redemptions in some of our fixed income strategies in future periods. Any 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


ThereWith 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, 2016.2019.


Item 4.Controls and Procedures

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 third quarter of 20172020 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


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Part II


OTHER INFORMATION


Item 1.Legal Proceedings

Item 1.    Legal Proceedings

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


Item 1A.Risk Factors

Item 1A.    Risk Factors
There
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 in ourto the risk factors from those disclosedappearing in AB Holding's Annual Report on Form 10-K ("AB 10-K") for the fiscal year ended December 31, 2016.2019.


Market Risk

We indicated in the AB 10-K and Forms 10-Q for the quarters ended March 31, 2020 and June 30, 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. during the second and third quarters of 2020, 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 had 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 may 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 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 have improved considerably since the first 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

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 considered whether to implement a planimplemented plans to repurchase AB Holding Units pursuant to RuleRules 10b5-1 and 10b-18 under the Exchange Act. The plan adopted during the secondthird quarter of 20172020 expired at the close of business on July 26, 2017. AB did not adopt a plan during the third quarter of 2017.October 21, 2020. AB may adopt additional Rule 10b5-1 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.


The following table provides information relating to any
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AB Holding Units bought by AB inus or one of our affiliates during the third quarter covered by this report:of 2020 are as follows:


ISSUER PURCHASES OF EQUITY SECURITIES
 
PeriodTotal 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
7/1/20 - 7/31/20(1)
1,520 $27.43 — — 
8/1/20 - 8/31/20(2)
9,052 27.90 — — 
9/1/20 - 9/30/20(1)(2)
239,704 27.17 — — 
Total250,276 $27.20 — — 
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
7/1/17 - 7/31/17(1)(2)
 286,024
 $24.01
 —
 —
8/1/17 - 8/31/17 —
 —
 —
 —
9/1/17 - 9/30/17 —
 —
 —
 —
Total 286,024
 $24.01
 —
 —


(1)
During the third quarter of 2017, AB purchased from employees 2,864 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 third quarter of 2017, AB purchased 283,160 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.
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(1)During the third quarter of 2020, AB purchased from employees 1,922 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 third quarter of 2020, AB purchased 248,354 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.


The following table provides information relating to any AB Units bought by AB inus or one of our affiliates during the third quarter covered by this report:of 2020 are as follows:


ISSUER PURCHASES OF EQUITY SECURITIES
 
PeriodTotal Number
of AB Units
Purchased
Average Price
Paid Per
AB Unit, net of
Commissions
Total Number of
AB Units Purchased as
Part of Publicly
Announced Plans
or Programs		Maximum Number
(or Approximate
Dollar Value) of
AB Units that May Yet
Be Purchased Under
the Plans or
Programs
7/1/20 - 7/31/20— $— — — 
8/1/20 - 8/31/20— — — — 
9/1/20 - 9/30/20(1)
700 28.26 — — 
Total700 $28.26 — — 

(1)During September 2020, AB purchased 700 AB Units in private transactions.

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
7/1/17 - 7/31/17 —
 $—
 —
 —
8/1/17 - 8/31/17 —
 —
 —
 —
9/1/17 - 9/30/17(1)
 13,200
 23.41
 —
 —
Total 13,200
 $23.41
 —
 —

(1)
During September 2017, AB purchased 13,200 AB Units in private transactions.

Item 3.Defaults Upon Senior Securities

Item 3.    Defaults Upon Senior Securities

None.
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Item 4.Mine Safety Disclosures

Item 4.    Mine Safety Disclosures

None.


Item 5.    Other Information

None.
17
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Item 6.    Exhibits
Item 5.Other Information

Submission of Matters to a Vote of Security Holders

A special meeting (“Special Meeting”) of Unitholders of AB Holding was held at 9:30 a.m. (NY time) on September 29, 2017 pursuant to due notice. At the Special Meeting, AB Holding Unitholders voted to adopt the AB 2017 Long Term Incentive Plan, which was the sole proposal considered at the Special Meeting. The final voting results from the Special Meeting are as follows:
ForAgainst/WithheldAbstainBroker Non-Votes
41,451,54315,286,131997,1000

Iran Threat Reduction and Syria Human Rights Act

AB Holding, AB and their global subsidiaries had no transactions or activities requiring disclosure under the Iran Threat Reduction and Syria Human Rights Act, nor were they involved in the AXA Group matters described immediately below.

The non-U.S.-based subsidiaries of AXA operate in compliance with applicable laws and regulations of the various jurisdictions in which they operate, including applicable international (United Nations and European Union) laws and regulations. While AXA Group companies based and operating outside the United States generally are not subject to U.S. law, as an international group, AXA has in place policies and standards (including the AXA Group International Sanctions Policy) that apply to all AXA Group companies worldwide and often impose requirements that go well beyond local law. For additional information regarding AXA, see Note 1 to the condensed financial statements in Part 1, Item 1.

AXA has informed us that AXA Konzern AG, an AXA insurance subsidiary organized under the laws of Germany, provides car, accident and health insurance to diplomats based at the Iranian Embassy in Berlin, Germany. The total annual premium of these policies is approximately $176,000 before tax and the annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $26,400. These policies were underwritten by a broker who specializes in providing insurance coverage for diplomats. Provision of motor vehicle insurance is mandatory in Germany and cannot be cancelled until the policy expires.

In addition, AXA has informed us that AXA Insurance Ireland, an AXA insurance subsidiary, provides statutorily required car insurance under four separate policies to the Iranian Embassy in Dublin, Ireland. AXA has informed us that compliance with the Declined Cases Agreement of the Irish Government prohibits the cancellation of these policies unless another insurer is willing to assume the coverage. The total annual premium for these policies is approximately $6,094 and the annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $914.

Also, AXA has informed us that AXA Sigorta, a subsidiary of AXA organized under the laws of Turkey, provides car insurance coverage for vehicle pools of the Iranian General Consulate and the Iranian Embassy in Istanbul, Turkey. Motor liability insurance coverage is mandatory in Turkey and cannot be cancelled unilaterally. The total annual premium in respect of these policies is approximately $3,150 and the annual net profit, which is difficult to calculate with precision, is estimated to be $473.

Additionally, AXA has informed us that AXA Ukraine, an AXA insurance subsidiary, provides car insurance for the Attaché of the Iranian Embassy in Ukraine. Motor liability insurance coverage cannot be cancelled under Ukrainian law. The total annual premium in respect of this policy is approximately $1,000 and the annual net profit, which is difficult to calculate with precision, is estimated to be $150.

Lastly, AXA has informed us that AXA Winterthur, an AXA insurance subsidiary organized under the laws of Switzerland, provides Naftiran Intertrade, a wholly-owned subsidiary of the Iranian state-owned National Iranian Oil Company, with life, disability and accident coverage for its employees. The provision of these forms of coverage is mandatory for employees in Switzerland. The total annual premium of these policies is approximately $373,668 and the annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $56,000.

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The aggregate annual premium for the above-referenced insurance policies is approximately $559,912, representing approximately 0.0004% of AXA’s 2016 consolidated revenues, which exceed $100 billion. The related net profit, which is difficult to calculate with precision, is estimated to be $83,937, representing approximately 0.0008% of AXA’s 2016 aggregate net profit.
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Item 6.31.1
Exhibits

31.1
Certification of Mr. Bernstein furnished pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification of Mr. Weisenseel furnished pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Certification of Mr. Bernstein furnished for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
Certification of Mr. Weisenseel furnished for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1
101.INSXBRL Instance Document.Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHXBRL Taxonomy Extension Schema.
101.CALXBRL Taxonomy Extension Calculation Linkbase.
101.LABXBRL Taxonomy Extension Label Linkbase.
101.PREXBRL Taxonomy Extension Presentation Linkbase.
101.DEFXBRL Taxonomy Extension Definition Linkbase.
104The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, formatted in Inline XBRL (included in Exhibit 101).




18
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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: October 22, 2020ALLIANCEBERNSTEIN HOLDING L.P.
Date: October 25, 2017ALLIANCEBERNSTEIN HOLDING L.P.
By:
By:/s/ John C. Weisenseel
John C. Weisenseel
Chief Financial Officer
By:/s/ Edward J. FarrellWilliam R. Siemers
Edward J. FarrellWilliam R. Siemers
Chief Accounting Officer

2019