Exhibit
99.1


Part I





FINANCIAL
INFORMATION


Item 1.
            Financial
      Statements





ALLIANCEBERNSTEIN
L.P.


AND
SUBSIDIARIES


Condensed
Consolidated Statements of Financial Condition


(in
thousands)





September 30,
              2009
            
            
            December 31,
              2008(unaudited)ASSETSCash
      and cash equivalents
            
            $
            570,987
            
            
            $
            552,577Cash
      and securities segregated, at market (cost: $1,273,963 and
      $2,568,339)
            
            
            1,274,266
            
            
            
            2,572,569Receivables,
      net:Brokers
      and dealers
            
            
            282,461
            
            
            
            251,644Brokerage
      clients
            
            
            585,619
            
            
            
            398,979Fees
            
            
            334,244
            
            
            
            377,167Investments:Deferred
      compensation related
            
            
            497,253
            
            
            
            305,809Other
            
            
            307,783
            
            
            
            272,034Furniture,
      equipment and leasehold improvements, net
            
            
            367,415
            
            
            
            365,804Goodwill,
      net
            
            
            2,893,029
            
            
            
            2,893,029Intangible
      assets, net
            
            
            229,676
            
            
            
            243,493Deferred
      sales commissions, net
            
            
            97,027
            
            
            
            113,541Other
      assets
            
            
            173,259
            
            
            
            156,813Total
      assets
            
            $
            7,613,019
            
            
            $
            8,503,459LIABILITIES
      AND CAPITALLiabilities:Payables:Brokers
      and dealers
            
            $
            299,982
            
            
            $
            110,655Brokerage
      clients
            
            
            1,617,861
            
            
            
            2,755,104AllianceBernstein
      mutual funds
            
            
            88,805
            
            
            
            195,617Accounts
      payable and accrued expenses
            
            
            279,959
            
            
            
            310,392Accrued
      compensation and benefits
            
            
            580,562
            
            
            
            360,086Debt
            
            
            52,000
            
            
            
            284,779Total
      liabilities
            
            
            2,919,169
            
            
            
            4,016,633Commitments
      and contingencies (See
      Note 7)Capital:General
      Partner
            
            
            46,443
            
            
            
            45,010Limited
      partners: 266,146,832 and 263,717,610 units issued and
      outstanding
            
            
            4,626,568
            
            
            
            4,485,564Capital
      contributions receivable from General Partner
            
            
            (21,468
            )
            
            
            (23,168
            )Deferred
      compensation expense
            
            
            (108,593
            )
            
            
            (117,600
            )Accumulated
      other comprehensive loss
            
            
            (26,164
            )
            
            
            (72,147
            )Partners’
      capital attributable to AllianceBernstein Unitholders
            
            
            4,516,786
            
            
            
            4,317,659Non-controlling
      interests in consolidated entities
            
            
            177,064
            
            
            
            169,167Total
      capital
            
            
            4,693,850
            
            
            
            4,486,826Total
      liabilities and capital
            
            $
            7,613,019
            
            
            $
            8,503,459




See
Accompanying Notes to Condensed Consolidated Financial Statements.


1


ALLIANCEBERNSTEIN
L.P.


AND
SUBSIDIARIES


Condensed
Consolidated Statements of Income


(in
thousands, except per unit amounts)


(unaudited)




Three Months Ended
              September30,
            
            
            NineMonths Ended
              September30,2009
            
            
            2008
            
            
            2009
            
            
            2008Revenues:Investment
      advisory and services fees
            
            $
            484,098
            
            
            $
            713,229
            
            
            $
            1,377,170
            
            
            $
            2,325,098Distribution
      revenues
            
            
            73,779
            
            
            
            96,711
            
            
            
            196,437
            
            
            
            313,948Institutional
      research services
            
            
            109,321
            
            
            
            124,854
            
            
            
            325,830
            
            
            
            353,594Dividend
      and interest income
            
            
            4,966
            
            
            
            18,937
            
            
            
            19,344
            
            
            
            71,251Investment
      gains (losses)
            
            
            106,680
            
            
            
            (131,920
            )
            
            
            130,727
            
            
            
            (187,094
            )Other
      revenues
            
            
            27,946
            
            
            
            28,230
            
            
            
            79,418
            
            
            
            89,697Total
      revenues
            
            
            806,790
            
            
            
            850,041
            
            
            
            2,128,926
            
            
            
            2,966,494Less:
      Interest expense
            
            
            776
            
            
            
            9,050
            
            
            
            3,908
            
            
            
            32,857Net
      revenues
            
            
            806,014
            
            
            
            840,991
            
            
            
            2,125,018
            
            
            
            2,933,637Expenses:Employee
      compensation and benefits
            
            
            335,898
            
            
            
            328,614
            
            
            
            974,662
            
            
            
            1,190,484Promotion
      and servicing:Distribution
      plan payments
            
            
            55,155
            
            
            
            69,994
            
            
            
            146,382
            
            
            
            227,885Amortization
      of deferred sales commissions
            
            
            13,362
            
            
            
            19,324
            
            
            
            42,103
            
            
            
            61,861Other
            
            
            42,059
            
            
            
            50,013
            
            
            
            125,417
            
            
            
            164,653General
      and administrative
            
            
            130,142
            
            
            
            114,333
            
            
            
            427,582
            
            
            
            407,326Interest
      on borrowings
            
            
            491
            
            
            
            2,117
            
            
            
            2,130
            
            
            
            11,933Amortization
      of intangible assets
            
            
            5,437
            
            
            
            5,179
            
            
            
            16,170
            
            
            
            15,537Total
      expenses
            
            
            582,544
            
            
            
            589,574
            
            
            
            1,734,446
            
            
            
            2,079,679Operating
      income
            
            
            223,470
            
            
            
            251,417
            
            
            
            390,572
            
            
            
            853,958Non-operating
      income
            
            
            16,869
            
            
            
            4,921
            
            
            
            29,105
            
            
            
            13,264Income
      before income taxes
            
            
            240,339
            
            
            
            256,338
            
            
            
            419,677
            
            
            
            867,222Income
      taxes
            
            
            13,844
            
            
            
            27,258
            
            
            
            32,076
            
            
            
            88,294Net
      income
            
            
            226,495
            
            
            
            229,080
            
            
            
            387,601
            
            
            
            778,928Net
      income in consolidated entities attributable to non-controlling
      interests
            
            
            (27,154
            )
            
            
            (9,551
            )
            
            
            (23,114
            )
            
            
            (31,667
            )Net
      income attributable to AllianceBernstein Unitholders
            
            $
            199,341
            
            
            $
            219,529
            
            
            $
            364,487
            
            
            $
            747,261Net
      income per AllianceBernstein Unit:Basic
            
            $
            0.74
            
            
            $
            0.83
            
            
            $
            1.36
            
            
            $
            2.84Diluted
            
            $
            0.74
            
            
            $
            0.83
            
            
            $
            1.36
            
            
            $
            2.83




See
Accompanying Notes to Condensed Consolidated Financial Statements.


2




ALLIANCEBERNSTEIN
L.P.


AND
SUBSIDIARIES


Condensed
Consolidated Statements of Cash Flows


(in
thousands)


(unaudited)




Nine Months Ended
              September 30,2009
            
            
            2008Cash
      flows from operating activities:Net
      income
            
            $
            387,601
            
            
            $
            778,928Adjustments
      to reconcile net income to net cash provided by operating
      activities:Amortization
      of deferred sales commissions
            
            
            42,103
            
            
            
            61,861Amortization
      of non-cash deferred compensation
            
            
            51,838
            
            
            
            47,265Depreciation
      and other amortization
            
            
            63,047
            
            
            
            75,511Unrealized
      (gains) losses on deferred compensation related
investments
            
            
            (162,781
            )
            
            
            194,296Other,
      net
            
            
            (22,573
            )
            
            
            (5,783
            )Changes
      in assets and liabilities:Decrease
      in segregated cash and securities
            
            
            1,298,303
            
            
            
            79,923(Increase)
      decrease in receivables
            
            
            (42,660
            )
            
            
            34,328(Increase)
      in investments
            
            
            (28,672
            )
            
            
            (235,193
            )(Increase)
      in deferred sales commissions
            
            
            (25,589
            )
            
            
            (20,193
            )(Increase)
      in other assets
            
            
            (15,053
            )
            
            
            (44,628
            )(Decrease)
      in payables
            
            
            (1,174,793
            )
            
            
            (299,001
            )(Decrease)
      in accounts payable and accrued expenses
            
            
            (11,133
            )
            
            
            (29,798
            )Increase
      in accrued compensation and benefits
            
            
            215,385
            
            
            
            236,677Net
      cash provided by operating activities
            
            
            575,023
            
            
            
            874,193Cash
      flows from investing activities:Purchases
      of investments
            
            
            (10,439
            )
            
            
            (22,213
            )Proceeds
      from sales of investments
            
            
            4,380
            
            
            
            32,778Additions
      to furniture, equipment and leasehold improvements
            
            
            (43,542
            )
            
            
            (61,241
            )Net
      cash used in investing activities
            
            
            (49,601
            )
            
            
            (50,676
            )Cash
      flows from financing activities:Repayment
      of commercial paper, net
            
            
            (258,718
            )
            
            
            (475,443
            )Proceeds
      from bank loans, net
            
            
            25,000
            
            
            
            693,000(Decrease)
      increase in overdrafts payable
            
            
            (26,424
            )
            
            
            45,123Distributions
      to General Partner and unitholders
            
            
            (265,699
            )
            
            
            (835,137
            )Distributions
      to Joint Venture Partners
            
            
            —
            
            
            
            (10,387
            )(Distributions
      to) contributions from non-controlling interests to fund consolidated
      venture capital fund activities
            
            
            (19,369
            )
            
            
            25,311Capital
      contributions from General Partner
            
            
            2,751
            
            
            
            2,583Additional
      investment by Holding with proceeds from exercise of compensatory options
      to buy Holding Units
            
            
            —
            
            
            
            13,353Purchases
      of Holding Units to fund deferred compensation plans, net of
      issuances
            
            
            (232
            )
            
            
            (3,202
            )Other
            
            
            154
            
            
            
            —Net
      cash used in financing activities
            
            
            (542,537
            )
            
            
            (544,799
            )Effect
      of exchange rate changes on cash and cash equivalents
            
            
            35,525
            
            
            
            (30,147
            )Net
      increase in cash and cash equivalents
            
            
            18,410
            
            
            
            248,571Cash
      and cash equivalents as of beginning of period
            
            
            552,577
            
            
            
            576,416Cash
      and cash equivalents as of end of period
            
            $
            570,987
            
            
            $
            824,987




See
Accompanying Notes to Condensed Consolidated Financial
Statements.


3


ALLIANCEBERNSTEIN
L.P.


AND
SUBSIDIARIES


Notes
to Condensed Consolidated Financial Statements


September
30, 2009


(unaudited)





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





These
statements should be read in conjunction with AllianceBernstein’s audited
consolidated financial statements included in AllianceBernstein’s Form 10-K
for the year ended December 31, 2008.





1.
            Business Description and
      Organization





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





•
            Institutional Investment Services
      – servicing our institutional clients, including unaffiliated corporate
      and public employee pension funds, endowment funds, domestic and foreign
      institutions and governments, and affiliates such as AXA and certain of
      its insurance company subsidiaries, by means of separately managed
      accounts, sub-advisory relationships, structured products, collective
      investment trusts, mutual funds, hedge funds and other investment
      vehicles.





•
            Retail Services – servicing our
      individual clients, primarily by means of retail mutual funds sponsored by
      AllianceBernstein or an affiliated company, sub-advisory relationships
      with mutual funds sponsored by third parties, separately managed account
      programs sponsored by financial intermediaries worldwide and other
      investment vehicles.





•
            Private Client Services –
      servicing our private clients, including high-net-worth individuals,
      trusts and estates, charitable foundations, partnerships, private and
      family corporations, and other entities, by means of separately managed
      accounts, hedge funds, mutual funds and other investment
      vehicles.





•
            Institutional Research Services –
      servicing our institutional clients seeking independent research,
      portfolio strategy and brokerage-related
  services.





We also
provide distribution, shareholder servicing and administrative services to the
mutual funds we sponsor.





We
provide a broad range of services with expertise in:





•
            Value equities, generally
      targeting stocks that are out of favor and that may trade at bargain
      prices;





•
            Growth equities, generally
      targeting stocks with under-appreciated growth
      potential;





•
            Fixed income securities,
      including both taxable and tax-exempt
  securities;





•
            Blend strategies, combining
      style-pure investment components with systematic
      rebalancing;





•
            Passive
      management, including both index and enhanced index
      strategies;





•
            Alternative
      investments, such as hedge funds, currency management strategies and
      venture capital; and





•
            Asset
      allocation, by which we offer specifically-tailored investment solutions
      for our clients (e.g., customized target-date fund retirement services for
      institutional defined contribution plan
  clients).





We manage
these services using various investment disciplines, including market
capitalization (e.g., large-, mid- and small-cap equities), term (e.g., long-,
intermediate- and short-duration debt securities), and geographic location
(e.g., U.S., international, global and emerging markets), as well as local and
regional disciplines in major markets around the world.




Recently,
we were selected by the U.S. Treasury Department as one of only three firms to
manage its portfolio of assets issued by banks and other institutions taking
part in the Capital Purchase Program of the Troubled Assets Relief Program. In
addition, we were selected by the U.S. Treasury Department as one of nine
pre-qualified fund managers under the Public-Private Investment
Program.


4


Our
independent research is the foundation of our business.  Our research
disciplines include fundamental research, quantitative research, economic
research and currency forecasting capabilities.  In addition, we
have created several specialized research units, including one unit that
examines global strategic changes that can affect multiple industries and
geographies, and another dedicated to identifying potentially successful
innovations within private early-stage growth companies.




As of
September 30, 2009, AXA, a société anonyme organized
under the laws of France and the holding company for an international group of
insurance and related financial services companies, through certain of its
subsidiaries (“AXA and its subsidiaries”) owned approximately 1.6% of the issued
and outstanding units representing assignments of beneficial ownership of
limited partnership interests in Holding (“Holding Units”).




As of
September 30, 2009, the ownership structure of AllianceBernstein, expressed as a
percentage of general and limited partnership interests, was as
follows:





AXA
      and its subsidiaries
            
            
            63.5
            %Holding
            
            
            34.5Unaffiliated
      holders
            
            
            2.0100.0
            %





AllianceBernstein
Corporation (an indirect wholly-owned subsidiary of AXA, “General Partner”) is
the general partner of both Holding and AllianceBernstein. AllianceBernstein
Corporation owns 100,000 general partnership units in Holding and a 1% general
partnership interest in AllianceBernstein. Including both the general
partnership and limited partnership interests in Holding and AllianceBernstein,
AXA and its subsidiaries had an approximate 64.1% economic interest in
AllianceBernstein as of September 30, 2009.




2.
            Summary of Significant Accounting
      Policies





Basis
of Presentation





The
interim condensed consolidated financial statements of AllianceBernstein
included herein have been prepared in accordance with the instructions to
Form 10-Q pursuant to the rules and regulations of the U.S. Securities
and Exchange Commission (“SEC”). In the opinion of management, all adjustments,
consisting only of normal recurring adjustments, necessary for a fair statement
of the interim results, have been made. The preparation of the condensed
consolidated financial statements requires management to make certain estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the condensed
consolidated financial statements and the reported amounts of revenues and
expenses during the interim reporting periods. Actual results could differ from
those estimates. The December 31, 2008 condensed consolidated statement of
financial condition was derived from audited financial statements but does not
include all disclosures required by accounting principles generally accepted in
the United States of America.





Principles
of Consolidation





The
condensed consolidated financial statements include AllianceBernstein and its
majority-owned and/or controlled subsidiaries. All significant inter-company
transactions and balances among the consolidated entities have been
eliminated.




Subsequent
Events




We
evaluated subsequent events through October 29, 2009, the date the financial
statements were issued.




FASB
Codification




For
annual and interim periods ending after September 15, 2009, the Financial
Accounting Standards Board (“FASB”) Accounting Standards Codification (the
“Codification”) became the single authoritative source of generally accepted
accounting principles (“GAAP”) in the United States.




Reclassifications
and Revisions





Effective
January 1, 2009, we adopted amended accounting principles related to
non-controlling interests in consolidated financial statements. The objective of
this amendment is to improve the relevance, comparability and transparency of
the financial information that a reporting entity provides in its consolidated
financial statements by establishing accounting and reporting standards for the
non-controlling interest in a subsidiary. The disclosure provisions of the
amendment require retrospective application for all periods presented. As a
result, certain prior period amounts have been reclassified to conform to the
current year presentation. These include:(i) net
(income) loss in consolidated entities attributable to non-controlling
interests, previously included within general and administrative expenses,
currently shown separately in the condensed consolidated statements of income,
(ii) non-controlling interests in consolidated entities previously included in
liabilities, currently shown as a component of total capital in the condensed
consolidated statements of financial condition, and (iii) change in
non-controlling interests in consolidated entities previously included within
cash provided by operating activities, currently included in net cash used in
financing activities in the condensed consolidated statements of cash
flows.


5


Cash
Distributions





AllianceBernstein
is required to distribute all of its Available Cash Flow, as defined in the
Amended and Restated Agreement of Limited Partnership of AllianceBernstein
(“AllianceBernstein Partnership Agreement”), to its unitholders and to the
General Partner. Available Cash Flow can be summarized as the cash flow received
by AllianceBernstein from operations minus such amounts as the General Partner
determines, in its sole discretion, should be retained by AllianceBernstein for
use in its business.




The
General Partner computes cash flow received from operations by determining the
sum of:





•
            net cash provided by operating
      activities of
AllianceBernstein,





•
            proceeds from borrowings and from
      sales or other dispositions of assets in the ordinary course of business,
      and





•
            income from investments in
      marketable securities, liquid investments and other financial instruments
      that are acquired for investment purposes and that have a value that may
      be readily established,





and then
subtracting from this amount the sum of:





•
            payments in respect of the
      principal of borrowings, and





•
            amounts expended for the purchase
      of assets in the ordinary course of
  business.





On
October 29, 2009, the General Partner declared a distribution of $198.9
million, or $0.74 per AllianceBernstein Unit, representing a distribution of
Available Cash Flow for the three months ended September 30, 2009. The General
Partner, as a result of its 1% general partnership interest, is entitled to
receive 1% of each distribution. The distribution is payable on November 19,
2009 to holders of record on November 9, 2009.




Cash
and Cash Equivalents




Cash and
cash equivalents include cash on hand, demand deposits, money market accounts,
overnight commercial paper and highly liquid investments with actual maturities
of three months or less. Due to the short-term nature of these instruments, the
recorded value has been determined to approximate fair value.




Fees
Receivable, Net





Fees
receivable are shown net of allowances. An allowance for doubtful accounts
related to investment advisory and services fees is determined through an
analysis of the aging of receivables, assessments of collectibility based on
historical trends and other qualitative and quantitative factors, including the
following: our relationship with the client, the financial health (or ability to
pay) of the client, current economic conditions and whether the account is
closed or active.





Investments





Investments
include United States Treasury Bills, unconsolidated mutual funds and limited
partnership hedge funds we sponsor and manage, various separately managed
portfolios, exchange-traded options and investments held by a consolidated
venture capital fund of which we are the general partner and in which we hold a
10% limited partnership interest.




Investments
in United States Treasury Bills, mutual funds, and other equity and fixed income
securities are classified as either trading or available-for-sale securities.
Trading investments are stated at fair value with unrealized gains and losses
reported in net income. Available-for-sale investments are stated at fair value
with unrealized gains and losses reported as a separate component of accumulated
other comprehensive income in partners’ capital. Realized gains and losses on
the sale of investments are included in net income in the current period.
Average cost is used to determine the realized gain or loss on investments
sold.




We use
the equity method of accounting for investments in limited partnership hedge
funds. The equity in earnings of our limited partnership hedge fund investments
is included in investment gains and losses on the condensed consolidated
statements of income.




The
investments held by our consolidated venture capital fund are generally illiquid
and are initially valued at cost. These investments are adjusted to fair value
to reflect the occurrence of “significant developments” (i.e., capital
transactions or business, economic or market events). Adjustments to fair value
are recorded as unrealized gains and losses in investment gains and losses on
the condensed consolidated statements of income. There is one private equity
investment which represents an approximate 12% ownership in a company that we
own directly, outside of our consolidated venture capital fund.  This
investment is accounted for using the cost method.




See Note 6for a description
of how we measure the fair value of our investments.


6




Goodwill,
Net





In 2000,
AllianceBernstein acquired the business and assets of SCB Inc., an investment
research and management company formerly known as Sanford C. Bernstein Inc.
(“Bernstein”), and assumed the liabilities of Bernstein (“Bernstein
Transaction”). The purchase price consisted of a cash payment of approximately
$1.5 billion and 40.8 million newly-issued AllianceBernstein Units. The
Bernstein Transaction was accounted for under the purchase method and the cost
of the acquisition was allocated on the basis of the estimated fair value of the
assets acquired and the liabilities assumed. The excess of the purchase price
over the fair value of identifiable assets acquired resulted in the recognition
of goodwill of approximately $3.0 billion.





We test
goodwill annually, as of September 30, for impairment. The carrying value of
goodwill is also reviewed if facts and circumstances, such as significant
declines in assets under management, revenues, earnings or our Holding Unit
price, occur, suggesting possible impairment. As of September 30, 2009, the
impairment test indicated that goodwill was not impaired.




To the
extent that securities valuations are depressed for prolonged periods of time,
our assets under management, revenues, profitability and unit price would likely
be adversely affected.  As a result, subsequent impairment tests may
be based upon different assumptions and future cash flow projections, which may
result in an impairment of this asset. Any impairment could reduce materially
the recorded amount of goodwill with a corresponding charge to our
earnings.




Intangible
Assets, Net




Intangible
assets consist primarily of costs assigned to acquired investment management
contracts of SCB Inc. based on their estimated fair value at the time of
acquisition, less accumulated amortization. Intangible assets are recognized at
fair value and are amortized on a straight-line basis over their estimated
useful life of approximately 20 years. The gross carrying amount and accumulated
amortization of intangible assets subject to amortization totaled $416.7 million
and $187.0 million, respectively, as of September 30, 2009 and $414.3 million
and $170.8 million, respectively, as of December  31, 2008.
Amortization expense was $5.4 million and $5.2 million for the three months
ended September 30, 2009 and 2008, respectively, and $16.2 million and
$15.5 million for the nine months ended September 30, 2009 and 2008,
respectively. Estimated annual amortization expense for each of the next five
years is approximately $22 million.




We
periodically review intangible assets for impairment as events or changes in
circumstances indicate that the carrying value may not be
recoverable.  If the carrying value exceeds fair value, additional
impairment tests are performed to measure the amount of the impairment loss, if
any.




Deferred
Sales Commissions, Net





We pay
commissions to financial intermediaries in connection with the sale of shares of
open-end company-sponsored mutual funds sold without a front-end sales charge
(“back-end load shares”). These commissions are capitalized as deferred sales
commissions and amortized over periods not exceeding five and one-half years for
U.S. fund shares and four years for non-U.S. fund shares, the periods of time
during which deferred sales commissions are generally recovered. We recover
these commissions from distribution services fees received from those funds and
from contingent deferred sales commissions (“CDSC”) received from shareholders
of those funds upon the redemption of their shares. CDSC cash recoveries are
recorded as reductions of unamortized deferred sales commissions when received.
Effective January 31, 2009, back-end load shares are no longer offered to new
investors by our U.S. funds. Management tests the deferred sales commission
asset for recoverability quarterly and determined that the balance as of
September 30, 2009 was not impaired.


7


Loss
Contingencies





With
respect to all significant litigation matters, we consider the likelihood of a
negative outcome.  If we determine the likelihood of a negative
outcome is probable, and the amount of the loss can be reasonably estimated, we
record an estimated loss for the expected outcome of the litigation. If the
likelihood of a negative outcome is reasonably possible and we are able to
determine an estimate of the possible loss or range of loss, we disclose that
fact together with the estimate of the possible loss or range of loss. However,
it may be difficult to predict the outcome or estimate a possible loss or range
of loss because litigation is subject to inherent uncertainties, particularly
when plaintiffs allege substantial or indeterminate damages, or when the
litigation is highly complex or broad in scope. In such cases, we disclose that
we are unable to predict the outcome or estimate a possible loss or range of
loss.





Revenue
Recognition




Investment
advisory and services fees, generally calculated as a percentage of assets under
management (“AUM”), are recorded as revenue as the related services are
performed. Certain investment advisory contracts, including those associated
with hedge funds, provide for a performance-based fee, in addition to or in lieu
of a base fee, which is calculated as either a percentage of absolute investment
results or a percentage of investment results in excess of a stated benchmark
over a specified period of time. Performance-based fees are recorded as a
component of revenue at the end of each contract’s measurement
period.




We
calculate AUM using established fair valuation methodologies, including
market-based valuation methods and fair valuation methods. Market-based
valuation methods include:  last sale/settle prices from an exchange
for actively-traded listed equities, options and futures; evaluated bid prices
from standard pricing vendors for fixed income, asset-backed or mortgage-backed
issues; mid prices from standard pricing vendors and brokers for credit default
swaps; and quoted bids or spreads from pricing vendors and brokers for other
derivative products.  Fair valuation methods include discounted cash
flow models, evaluation of assets versus liabilities or any other methodology
that is validated and approved by our Valuation Committee. Fair valuation
methods are used only where AUM cannot be valued using market-based valuation
methods, such as in the case of private equity or illiquid securities. Fair
valued investments typically make up less than 1% of our total
AUM.  Recent market volatility has not had a significant effect on our
ability to acquire market data and, accordingly, our ability to use market-based
valuation methods.




The
Valuation Committee, which is composed of senior officers and employees and is
chaired by our Chief Risk Officer, is responsible for overseeing the pricing and
valuation of all investments held in client portfolios.  The Valuation
Committee has adopted a Statement of Pricing Policies describing principles and
policies that apply to pricing and valuing investments held in client
portfolios.  We have also established a Pricing Group, which reports
to the Valuation Committee.  The Valuation Committee has delegated to
the Pricing Group responsibility for monitoring the pricing process for all
investments held in client portfolios.




Institutional
research services revenue consists primarily of brokerage transaction charges
received by Sanford C. Bernstein & Co., LLC (“SCB LLC”) and Sanford C.
Bernstein Limited (“SCBL”), each a wholly-owned subsidiary of AllianceBernstein,
for independent research and brokerage-related services provided to
institutional investors. Brokerage transaction charges earned and related
expenses are recorded on a trade-date basis.




Distribution
revenues, shareholder servicing fees, and dividend and interest income are
accrued as earned.





Deferred
Compensation Plans





We
maintain several unfunded, non-qualified deferred compensation plans under which
annual awards to employees are generally made in the fourth quarter.
Participants allocate their awards: (i) among notional investments in Holding
Units, certain of the investment services we provide to our clients, and a money
market fund, or (ii) in options to acquire Holding Units. We typically purchase
the investments that are notionally elected by the participants and maintain
them in a consolidated rabbi trust or separate custodial account. Awards
generally vest over four years but can vest as soon as immediately upon grant
depending on the terms of the individual award, the age of the participant, or
the terms of employment, separation or retirement agreements. Upon vesting,
awards are distributed to participants unless they have made a voluntary
long-term election to defer receipt. Quarterly cash distributions on unvested
Holding Units for which a long-term deferral election has not been made are paid
currently to participants. Quarterly cash distributions on notional investments
in Holding Units and income credited on notional investments in our investment
services or the money market fund for which a long-term deferral election has
been made are reinvested and distributed as elected by
participants.





Compensation
expense for awards under the plans, including changes in participant account
balances resulting from gains and losses on notional investments (other than in
Holding Units and options to acquire Holding Units), is recognized on a
straight-line basis over the applicable vesting periods. Mark-to-market gains or
losses on investments (other than in Holding Units and options to acquire
Holding Units) are recognized currently as investment gains (losses) in the
consolidated statements of income. In addition, our equity in the earnings of
investments in limited partnership hedge funds is recognized currently as
investment gains (losses) in the condensed consolidated statements of
income.


8


We expect
that for 2009 and future years, all deferred awards will be in the form of
restricted Holding Units. As a result, the amount of deferred
compensation-related investments on which we recognize mark-to-market gains and
losses will decline as awards previously made vest and are paid.




Compensatory
Unit Awards and Option Plans





We
recognize compensation expense related to grants of unit awards and options in
the financial statements. Under the fair value method, compensatory expense is
measured at the grant date based on the estimated fair value of the award and is
recognized over the vesting period. Fair value of unit awards is the grant date
unit price; fair value of options is determined using the Black-Scholes option
valuation model. New Holding Units are issued upon exercise of options to buy
Holding Units.





Variable
Interest Entities





Management
reviews quarterly its management agreements and its investments in, and other
financial arrangements with, certain entities that hold client assets under
management to determine the variable interest entities that the company is
required to consolidate. These entities include certain mutual fund products,
hedge funds, structured products, group trusts, collective investment trusts and
limited partnerships. We earn investment management fees on client assets under
management of these entities, but we derive no other benefit from these assets
and cannot use them in our operations.





As of
September 30, 2009, we have significant variable interests in certain structured
products and hedge funds with approximately $60.6 million in client assets under
management. However, these variable interest entities do not require
consolidation because management has determined that we are not the primary
beneficiary of the expected losses or expected residual returns of these
entities. Our maximum exposure to loss is limited to our investments of $0.1
million in these entities.





3.
            Cash and Securities Segregated
      Under Federal Regulations and Other
  Requirements





As of
September 30, 2009, $1.2 billion of United States Treasury Bills were segregated
in a special reserve bank custody account for the exclusive benefit of brokerage
customers of SCB LLC under Rule 15c3-3 of the Securities Exchange Act of
1934, as amended (“Exchange Act”).





AllianceBernstein
Investments, Inc. (“AllianceBernstein Investments”), a wholly-owned subsidiary
of AllianceBernstein and the distributor of company-sponsored mutual funds,
maintains several special bank accounts for the exclusive benefit of
customers.  As of September 30, 2009, $26.5 million of cash was
segregated in these bank accounts.


9


4.
            Net Income Per
      Unit





Basic net
income per unit is derived by reducing net income for the 1% general partnership
interest and dividing the remaining 99% by the basic weighted average number of
units outstanding for each period. Diluted net income per unit is derived by
reducing net income for the 1% general partnership interest and dividing the
remaining 99% by the total of the basic weighted average number of units
outstanding and the dilutive unit equivalents resulting from outstanding
compensatory options to buy Holding Units as follows:





Three Months Ended
              September30,
            
            
            NineMonths Ended
              September30,2009
            
            
            2008
            
            
            2009
            
            
            2008(in
      thousands, except per unit amounts)Net
      income attributable to AllianceBernstein Unitholders
            
            $
            199,341
            
            
            $
            219,529
            
            
            $
            364,487
            
            
            $
            747,261Weighted
      average units outstanding - basic
            
            
            266,051
            
            
            
            260,976
            
            
            
            265,540
            
            
            
            260,826Dilutive
      effect of compensatory options to buy Holding Units
            
            
            635
            
            
            
            515
            
            
            
            174
            
            
            
            909Weighted
      average units outstanding – diluted
            
            
            266,686
            
            
            
            261,491
            
            
            
            265,714
            
            
            
            261,735Basic
      net income per AllianceBernstein Unit
            
            $
            0.74
            
            
            $
            0.83
            
            
            $
            1.36
            
            
            $
            2.84Diluted
      net income per AllianceBernstein Unit
            
            $
            0.74
            
            
            $
            0.83
            
            
            $
            1.36
            
            
            $
            2.83




For the
three months and nine months ended September 30, 2009, we excluded 6,120,480
out-of-the-money options (i.e., options
with an exercise price greater than the weighted average closing price of a unit
for the relevant period) from the diluted net income per unit computation due to
their anti-dilutive effect. For the three months and nine months ended September
30, 2008, we excluded 5,073,605 and 3,664,405, respectively, out-of-the-money
options from the diluted net income per unit computation due to their
anti-dilutive effect.





5.
            Investments





Investments
      consist of:September 30, 2009
            
            
            December 31, 2008(in
      thousands)Available-for-sale
            
            $
            20,734
            
            
            $
            7,566Trading:Deferred
      compensation related
            
            
            421,473
            
            
            
            238,136United
      States Treasury Bills
            
            
            25,993
            
            
            
            52,694Other
            
            
            76,707
            
            
            
            31,717Investments
      in limited partnership hedge funds:Deferred
      compensation related
            
            
            75,780
            
            
            
            67,673Other
            
            
            2,890
            
            
            
            2,191Private
      equity investments
            
            
            179,976
            
            
            
            176,823Other
      investments
            
            
            1,483
            
            
            
            1,043Total
      investments
            
            $
            805,036
            
            
            $
            577,843




Total
investments related to deferred compensation obligations of $497.3 million and
$305.8 million as of September 30, 2009 and December 31, 2008, respectively,
consist of company-sponsored mutual funds and limited partnership hedge funds.
We typically purchase the investments that are notionally elected by deferred
compensation plan participants and maintain them in a consolidated rabbi trust
or separate custodial account. The rabbi trust and custodial account enable us
to hold such investments separate from our other assets for the purpose of
settling our obligations to participants. The investments held in the rabbi
trust and custodial account remain available to the general creditors of
AllianceBernstein.




The
underlying investments of the hedge funds in which we invest include long and
short positions in equity securities, fixed income securities (including various
agency and non-agency asset-based securities), currencies, commodities and
derivatives (including various swaps and forward contracts). Such investments
are valued at quoted market prices or, where quoted market prices are not
available, are fair valued based on the pricing policies and procedures of the
underlying funds.




United
States Treasury Bills are held by SCB LLC in their investment account and are
pledged as collateral with clearing organizations.


10




6.
            Fair
      Value




Fair
value is defined as the price that would be received to sell an asset or paid to
transfer a liability (i.e., the “exit price”) in an orderly transaction between
market participants at the measurement date. The three broad levels of fair
value hierarchy are as follows:





•
            Level
      1 – Quoted prices in active markets are available for identical assets or
      liabilities as of the reported
date.





•
            Level
      2 – Quoted prices in markets that are not active or other pricing inputs
      that are either directly or indirectly observable as of the reported
      date.





•
              Level
      3 – Prices
      or valuation techniques that are both significant to the fair value
      measurement and unobservable as of the reported date. These financial
      instruments do not have two-way markets and are measured using
      management’s best estimate of fair value, where the inputs into the
      determination of fair value require significant management judgment or
      estimation.




Assets
Measured at Fair Value on a Recurring Basis





The
following table summarizes the valuation of our financial instruments by pricing
observability levels as of September 30, 2009:





Level 1
            
            
            Level 2
            
            
            Level 3
            
            
            Total(in
      thousands)Cash
      equivalents
            
            $
            164,377
            
            
            $
            111,948
            
            
            $
            —
            
            
            $
            276,325Securities
      segregated
            
            
            —
            
            
            
            1,247,808
            
            
            
            
            
            
            
            1,247,808Receivables
      from brokers and dealers
            
            
            —
            
            
            
            854
            
            
            
            —
            
            
            
            854Investments
      – available-for-sale
            
            
            20,734
            
            
            
            —
            
            
            
            —
            
            
            
            20,734Investments
      – tradingMutual
      fund investments
            
            
            435,809
            
            
            
            —
            
            
            
            —
            
            
            
            435,809Equity
      and fixed income securities
            
            
            52,844
            
            
            
            8,582
            
            
            
            945
            
            
            
            62,371U.S.
      Treasury Bills
            
            
            —
            
            
            
            25,993
            
            
            
            —
            
            
            
            25,993Investments
      – private equity
            
            
            12,852
            
            
            
            54,956
            
            
            
            102,168
            
            
            
            169,976Total
      assets measured at fair value
            
            $
            686,616
            
            
            $
            1,450,141
            
            
            $
            103,113
            
            
            $
            2,239,870Payables
      to brokers and dealers
            
            $
            26,267
            
            
            $
            —
            
            
            $
            —
            
            
            $
            26,267Total
      liabilities measured at fair value
            
            $
            26,267
            
            
            $
            —
            
            
            $
            —
            
            
            $
            26,267


11


The
following table summarizes the valuation of our financial instruments pricing
observability levels as of December 31, 2008:





Level 1
            
            
            Level 2
            
            
            Level 3
            
            
            Total(in
      thousands)Cash
      equivalents
            
            $
            184,404
            
            
            $
            —
            
            
            $
            —
            
            
            $
            184,404Securities
      segregated
            
            
            —
            
            
            
            2,524,698
            
            
            
            —
            
            
            
            2,524,698Receivables
      from brokers and dealers
            
            
            (46
            )
            
            
            680
            
            
            
            —
            
            
            
            634Investments
      – available-for-sale
            
            
            7,566
            
            
            
            —
            
            
            
            —
            
            
            
            7,566Investments
      – tradingMutual
      fund investments
            
            
            237,529
            
            
            
            —
            
            
            
            —
            
            
            
            237,529Equity
      and fixed income securities
            
            
            25,027
            
            
            
            6,874
            
            
            
            423
            
            
            
            32,324U.S.
      Treasury Bills
            
            
            —
            
            
            
            52,694
            
            
            
            —
            
            
            
            52,694Investments
      – private equity
            
            
            4,694
            
            
            
            —
            
            
            
            162,129
            
            
            
            166,823Total
      assets measured at fair value
            
            $
            459,174
            
            
            $
            2,584,946
            
            
            $
            162,552
            
            
            $
            3,206,672Payables
      to brokers and dealers
            
            $
            167
            
            
            $
            —
            
            
            $
            —
            
            
            $
            167Total
      liabilities measured at fair value
            
            $
            167
            
            
            $
            —
            
            
            $
            —
            
            
            $
            167





Following
is a description of the fair value methodologies used for instruments measured
at fair value, as well as the general classification of such instruments
pursuant to the valuation hierarchy:





•
            Cash
      equivalents: We invest excess cash in various money market funds
      that are valued based on quoted prices in active markets; these are
      included in Level 1 of the valuation hierarchy. We also hold United
      Kingdom Treasury Bills, which are valued based on quoted yields in
      secondary markets and are included in Level 2 of the valuation
      hierarchy.





•
            Securities
      segregated: We hold United States Treasury Bills, which are
      segregated in a special reserve bank custody account as required by Rule
      15c3-3 of the Exchange Act. These securities are valued based on quoted
      yields in secondary markets and are included in Level 2 of the valuation
      hierarchy.





•
            Receivables from
      brokers and dealers: We hold several exchange-traded futures and
      currency forward contracts with counterparties that are included in Level
      1 and Level 2, respectively, of the valuation
  hierarchy.





•
            Investments –
      available-for-sale and trading: Our available-for-sale investments
      consist principally of company-sponsored mutual funds with exchange listed
      net asset values. Our trading investments mainly comprise
      company-sponsored mutual funds with exchange listed net asset values,
      United States Treasury Bills, exchange-traded options and various
      separately managed portfolios consisting primarily of equity securities
      with quoted prices in active markets. These investments are included in
      Level 1 or Level 2 of the valuation hierarchy. Trading investments also
      include a separately managed portfolio of fixed income securities that are
      included in Level 2 or Level 3 of the valuation
  hierarchy.





•
            Investments – private
      equity: The valuation of non-public private equity investments held
      by a consolidated venture capital fund requires significant management
      judgment due to the absence of quoted market prices, inherent lack of
      liquidity and the long-term nature of such investments. Private equity
      investments are valued initially at cost. The carrying values of private
      equity investments are adjusted either up or down from cost to reflect
      expected exit values as evidenced by financing and sale transactions with
      third parties, or when determination of a valuation adjustment is
      confirmed through ongoing review in accordance with our valuation policies
      and procedures. A variety of factors are reviewed and monitored to assess
      positive and negative changes in valuation including, but not limited to,
      current operating performance and future expectations of investee
      companies, industry valuations of comparable public companies, changes in
      market outlook and the third party financing environment over time. In
      determining valuation adjustments resulting from the investment review
      process, particular emphasis is placed on current company performance and
      market conditions. Non-public equity investments are included in Level 3
      of the valuation hierarchy because they trade infrequently and, therefore,
      the fair value is unobservable. If they contain trading restrictions,
      publicly-traded equity investments are included in Level 2 of the
      valuation hierarchy.





•
            Payables to brokers
      and dealers: Securities sold but not yet purchased and short
      positions in exchange-traded options are included in Level 1 of the
      valuation hierarchy.


12


The
following table summarizes the changes in carrying value associated with Level 3
financial instruments carried at fair value:





Three
      Months Ended
              September
      30,
            
            
            Nine
      Months Ended
              September
      30,2009
            
            
            2008
            
            
            2009
            
            
            2008(in
      thousands)Balance
      as of beginning of period
            
            $
            132,130
            
            
            $
            163,896
            
            
            $
            162,552
            
            
            $
            125,020Transfer
      (out) in, net
            
            
            (55,037
            )
            
            
            —
            
            
            
            (85,417
            )
            
            
            —Purchases
      (sales), net
            
            
            1,384
            
            
            
            15,984
            
            
            
            7,788
            
            
            
            30,253Realized
      gains (losses), net
            
            
            114
            
            
            
            9
            
            
            
            905
            
            
            
            9Unrealized
      gains (losses), net
            
            
            24,522
            
            
            
            7,942
            
            
            
            17,285
            
            
            
            32,549Balance
      as of end of period
            
            $
            103,113
            
            
            $
            187,831
            
            
            $
            103,113
            
            
            $
            187,831




Realized
and unrealized gains and losses on Level 3 financial instruments are recorded in
investment gains and losses on the condensed consolidated statements of income.
Substantially all of the Level 3 investments are private equity investments held
by a consolidated venture capital fund, of which we own 10% and non-controlling
interests own 90%.




Assets
Measured at Fair Value on a Nonrecurring Basis




We
adopted ASC 820-10-65-1 for nonfinancial assets and nonfinancial liabilities on
January 1, 2009. There were no impairments recognized for goodwill, intangible
assets or other long-lived assets for the nine months ended September 30,
2009.




7.
            Commitments and
      Contingencies





Deferred
Sales Commission Asset





Payments
of sales commissions made by AllianceBernstein Investments to financial
intermediaries in connection with the sale of back-end load shares under our
mutual fund distribution system (the “System”) are capitalized as deferred sales
commissions (“deferred sales commission asset”) and amortized over periods not
exceeding five and one-half years for U.S. mutual fund shares and four years for
non-U.S. mutual fund shares, the periods of time during which the deferred sales
commission asset is expected to be recovered. CDSC cash recoveries are recorded
as reductions of unamortized deferred sales commissions when received. The
amount recorded for the net deferred sales commission asset was $97.0 million as
of September 30, 2009. Payments of sales commissions made by AllianceBernstein
Investments to financial intermediaries in connection with the sale of back-end
load shares under the System, net of CDSC received of $11.2 million and $18.2
million, totaled approximately $25.6 million and $20.2 million during the nine
months ended September 30, 2009 and 2008, respectively. Effective January 31,
2009, back-end load shares are no longer offered to new investors in our U.S.
mutual funds.





Management
tests the deferred sales commission asset for impairment quarterly by comparing
undiscounted future cash flows to the recorded value, net of accumulated
amortization. Significant assumptions utilized to estimate the company’s future
average assets under management and undiscounted future cash flows from back-end
load shares are updated quarterly and include expected future market levels and
redemption rates. Market assumptions are selected using a long-term view of
expected average market returns based on historical returns of broad market
indices. As of September 30, 2009, management used average market return
assumptions of 5% for fixed income securities and 8% for equities to estimate
annual market returns. Higher actual average market returns would increase
undiscounted future cash flows, while lower actual average market returns would
decrease undiscounted future cash flows. Future redemption rate assumptions
range from 18% to 24% for U.S. fund shares and 28% to 36% for non-U.S. fund
shares. These assumptions are determined by reference to actual redemption
experience over the five-year, three-year, one-year and current periods ended
September 30, 2009, calculated as a percentage of our average assets under
management represented by back-end load shares. An increase in the actual rate
of redemptions would decrease undiscounted future cash flows, while a decrease
in the actual rate of redemptions would increase undiscounted future cash flows.
These assumptions are reviewed and updated quarterly. Estimates of undiscounted
future cash flows and the remaining life of the deferred sales commission asset
are made from these assumptions and the aggregate undiscounted future cash flows
are compared to the recorded value of the deferred sales commission asset. As of
September 30, 2009, management determined that the deferred sales commission
asset was not impaired. However, if management determines in the future that the
deferred sales commission asset is not recoverable, an impairment condition
would exist and a loss would be measured as the amount by which the recorded
amount of the asset exceeds its estimated fair value. Estimated fair value is
determined using management’s best estimate of future cash flows discounted to a
present value amount.


13


During
the three-month and nine-month periods ended September 30, 2009, U.S. equity
markets increased by approximately 15.6% and 19.3%, respectively, as measured by
the change in the Standard & Poor’s 500 Stock Index and U.S. fixed
income markets increased by approximately 3.7% and 5.7%, respectively, as
measured by the change in the Barclays Aggregate Bond Index. The redemption rate
for domestic back-end load shares was 18.9% and 20.6%, respectively, during the
three-month and nine-month periods ended September 30, 2009. Increases in
non-U.S. capital markets for the three-month and nine-month periods ended
September 30, 2009 ranged from 17.5% to 20.9% and from 24.9% to 64.5%,
respectively, as measured by the MSCI World, Emerging Market and EAFE Indices.
The redemption rate for non-U.S. back-end load shares was 28.8% and 23.1%,
respectively, during the three-month and nine-month periods ended September 30,
2009. Declines in financial markets or higher redemption levels, or both, as
compared to the assumptions used to estimate undiscounted future cash flows, as
described above, could result in the impairment of the deferred sales commission
asset. Due to the volatility of the capital markets and changes in redemption
rates, management is unable to predict whether or when a future impairment of
the deferred sales commission asset might occur. Any impairment would reduce
materially the recorded amount of the deferred sales commission asset with a
corresponding charge to earnings.





Legal
Proceedings





On
October 2, 2003, a purported class action complaint entitled Hindo, et al. v. AllianceBernstein
Growth & Income Fund, et al. (“Hindo Complaint”) was filed
against, among others, AllianceBernstein, Holding and the General Partner. The
Hindo Complaint alleges that certain defendants failed to disclose that they
improperly allowed certain hedge funds and other unidentified parties to engage
in “late trading” and “market timing” of certain of our U.S. mutual fund
securities, violating various securities laws.





Following
October 2, 2003, additional lawsuits making factual allegations generally
similar to those in the Hindo Complaint were filed in various federal and state
courts against AllianceBernstein and certain other defendants. On
September 29, 2004, plaintiffs filed consolidated amended complaints with
respect to four claim types: mutual fund shareholder claims; mutual fund
derivative claims; derivative claims brought on behalf of Holding; and claims
brought under the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”) by participants in the Profit Sharing Plan for Employees of
AllianceBernstein.




On
April 21, 2006, AllianceBernstein and attorneys for the plaintiffs in the
mutual fund shareholder claims, mutual fund derivative claims and ERISA claims
entered into a confidential memorandum of understanding containing their
agreement to settle these claims. The agreement will be documented by a
stipulation of settlement and will be submitted for court approval at a later
date. The settlement amount ($30 million), which we previously expensed and
disclosed, has been disbursed. The derivative claims brought on behalf of
Holding, in which plaintiffs seek an unspecified amount of damages, remain
pending.





We intend
to vigorously defend against the lawsuit involving derivative claims brought on
behalf of Holding. At the present time, we are unable to predict the outcome or
estimate a possible loss or range of loss in respect of this matter because of
the inherent uncertainty regarding the outcome of complex litigation, and the
fact that the plaintiffs did not specify an amount of damages sought in their
complaint.





We are
involved in various other matters, including regulatory inquiries,
administrative proceedings and litigation, some of which allege significant
damages. While any inquiry, proceeding or litigation has the element of
uncertainty, management believes that the outcome of any one of the other
regulatory inquiries, administrative proceedings, lawsuits or claims that is
pending or threatened, or all of them combined, will not have a material adverse
effect on our results of operations or financial condition.





Other





During
July 2009, we entered into a subscription agreement under which we committed to
invest up to $40 million in a venture capital fund over a six-year
period.




During
July 2009, we were selected by the U.S. Treasury Department as one of nine
pre-qualified investment managers under the Public-Private Investment Program.
As part of the program, each investment manager is required to invest a minimum
of $20 million in the Public-Private Investment Fund they manage.




8.
            Qualified Employee Benefit
      Plans





We
maintain a qualified profit sharing plan (the “Profit Sharing Plan”) covering
U.S. employees and certain foreign employees. Employer contributions are
discretionary and generally limited to the maximum amount deductible for federal
income tax purposes.





We
maintain several defined contribution plans for foreign employees in the United
Kingdom, Australia, New Zealand, Japan and our other foreign entities. Employer
contributions are generally consistent with regulatory requirements and tax
limits. Defined contribution expense for foreign entities was $2.1 million and
$2.9 million during the three months ended September 30, 2009 and 2008,
respectively, and $5.8 million and $9.1 million during the nine months ended
September 30, 2009 and 2008, respectively.


14


We
maintain a qualified, noncontributory, defined benefit retirement plan
(“Retirement Plan”) covering current and former employees who were employed by
AllianceBernstein in the United States prior to October 2, 2000. Benefits
are based on years of credited service, average final base salary (as defined),
and primary Social Security benefits. Service and compensation after December
31, 2008 are not taken into account in determining participants’ retirement
benefits.





Our
policy is to satisfy our funding obligation for each year in an amount not less
than the minimum required by ERISA and not greater than the maximum amount we
can deduct for federal income tax purposes. We contributed $12.8 million to the
Retirement Plan during 2009 and we do not plan to make additional contributions
this year. Contribution estimates, which are subject to change, are based on
regulatory requirements, future market conditions and assumptions used for
actuarial computations of the Retirement Plan’s obligations and assets.
Management, at the present time, is unable to determine the amount, if any, of
additional future contributions that may be required.





Net
expense under the Retirement Plan consisted of:





Three
      Months Ended
              September
    30,
            
            
            NineMonths Ended
              September
    30,2009
            
            
            2008
            
            
            2009
            
            
            2008(in
      thousands)Service
      cost
            
            $
            —
            
            
            $
            706
            
            
            $
            —
            
            
            $
            2,290Interest
      cost on projected benefit obligations
            
            
            1,112
            
            
            
            1,257
            
            
            
            3,308
            
            
            
            3,739Expected
      return on plan assets
            
            
            (786
            )
            
            
            (1,147
            )
            
            
            (2,324
            )
            
            
            (3,443
            )Recognized
      actuarial loss
            
            
            107
            
            
            
            —
            
            
            
            325
            
            
            
            —Amortization
      of prior service credit
            
            
            —
            
            
            
            (107
            )
            
            
            —
            
            
            
            (325
            )Amortization
      of transition asset
            
            
            (36
            )
            
            
            (36
            )
            
            
            (108
            )
            
            
            (108
            )Net
      pension charge
            
            $
            397
            
            
            $
            673
            
            
            $
            1,201
            
            
            $
            2,153





9.
            Units
      Outstanding





The
following table summarizes the activity in units during the first nine months of
2009:


Outstanding
      as of December 31, 2008
            
            
            263,717,610Options
      to buy Holding Units exercised
            
            
            —Holding
      Units issued
            
            
            2,430,742Holding
      Units forfeited
            
            
            (1,520
            )Outstanding
      as of September 30, 2009
            
            
            266,146,832





Holding
Units issued pertain to Holding Units newly issued under our Amended and
Restated 1997 Long Term Incentive Plan and include: (i) restricted Holding Unit
awards to independent members of the Board of Directors of the General Partner,
(ii) restricted Holding Unit awards to certain key employees, (iii) Holding Unit
issuances to fund deferred compensation investment elections by plan
participants, (iv) Century Club Plan Holding Unit awards to AllianceBernstein
employees whose primary responsibilities are to assist in the distribution of
company-sponsored mutual funds, and (v) Holding Unit issuances in connection
with certain employee separation agreements.




10.
            Income
    Taxes





AllianceBernstein
is a private partnership for federal income tax purposes and, accordingly, is
not subject to federal and state corporate income taxes. However,
AllianceBernstein is subject to a 4.0% New York City unincorporated business tax
(“UBT”). Domestic corporate subsidiaries of AllianceBernstein, which are subject
to federal, state and local income taxes, are generally included in the filing
of a consolidated federal income tax return with separate state and local income
tax returns being filed. Foreign corporate subsidiaries are generally subject to
taxes in the foreign jurisdictions where they are located.





In order
to preserve AllianceBernstein’s status as a private partnership for federal
income tax purposes, AllianceBernstein Units must not be considered publicly
traded. The AllianceBernstein Partnership Agreement provides that all transfers
of AllianceBernstein Units must be approved by AXA Equitable Life Insurance
Company (an indirect wholly-owned subsidiary of AXA, “AXA Equitable”) and the
General Partner; AXA Equitable and the General Partner approve only those
transfers permitted pursuant to one or more of the safe harbors contained in
relevant treasury regulations. If such units were considered readily tradable,
AllianceBernstein’s net income would be subject to federal and state corporate
income tax. Furthermore, should AllianceBernstein enter into a substantial new
line of business, Holding, by virtue of its ownership of AllianceBernstein,
would lose its status as a “grandfathered” publicly-traded partnership and would
become subject to corporate income tax which would reduce materially Holding’s
net income and its quarterly distributions to Holding unitholders.




Our
income tax provision for the first quarter of 2009 included a $3.4 million
expense relating to an under-accrual of estimated foreign taxes in the fourth
quarter of 2008.  This adjusting entry was not material to the income
tax provision or income tax liability in our condensed consolidated financial
statements or to the results of operations and financial condition in any prior
reporting period.


15




11.
            Debt





Total
credit available, debt outstanding and weighted average interest rates as of
September 30, 2009 and December 31, 2008 were as follows:




September 30, 2009
            
            
            December 31, 2008Credit
              Available
            
            
            Debt
              Outstanding
            
            
            Interest
              Rate
            
            
            Credit
              Available
            
            
            Debt
              Outstanding
            
            
            Interest
              Rate(in
      millions)Revolving
      credit facility(1)
            
            $
            973.0
            
            
            $
            —
            
            
            
            —
            %
            
            $
            $715.2
            
            
            $
            —
            
            
            
            —
            %Commercial
      paper(1)
            
            
            27.0
            
            
            
            27.0
            
            
            
            0.3
            
            
            
            284.8
            
            
            
            284.8
            
            
            
            1.8Total
      revolving credit facility – AllianceBernstein(1)
            
            
            1,000.0
            
            
            
            27.0
            
            
            
            0.3
            
            
            
            1,000.0
            
            
            
            284.8
            
            
            
            1.8Revolving
      credit facility – SCB LLC(1)
            
            
            950.0
            
            
            
            25.0
            
            
            
            0.3
            
            
            
            950.0
            
            
            
            —
            
            
            
            —Uncommitted
      lines of credit  – SCB LLC
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —Uncommitted
      bank facilities – SCB LLC
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —Total
            
            $
            1,950.0
            
            
            $
            52.0
            
            
            
            0.3
            
            
            $
            1,950.0
            
            
            $
            284.8
            
            
            
            1.8




(1)
            Commercial
      paper and amounts outstanding under the revolving credit facility are
      short-term in nature and, as such, recorded value is estimated to
      approximate fair value.





AllianceBernstein
has a $1.0 billion five-year revolving credit facility with a group of
commercial banks and other lenders which expires in 2011. The revolving credit
facility is intended to provide back-up liquidity for our $1.0 billion
commercial paper program, although we borrow directly under the facility from
time to time. Amounts borrowed under the commercial paper program reduce amounts
available for direct borrowing under the revolving credit facility on a
dollar-for-dollar basis. Our interest rate, at our option, is a floating rate
generally based upon a defined prime rate, a rate related to the London
Interbank Offered Rate (“LIBOR”) or the Federal Funds rate. The revolving credit
facility contains covenants which, among other things, require us to meet
certain financial ratios. We are in compliance with these
covenants.




SCB LLC
has a $950 million three-year revolving credit facility with a group of
commercial banks to fund its obligations resulting from engaging in certain
securities trading and custody activities for private clients. Under the
revolving credit facility, the interest rate, at the option of SCB LLC, is a
floating rate generally based upon a defined prime rate, a rate related to LIBOR
or the Federal Funds rate. This revolving credit facility contains covenants
which, among other things, require AllianceBernstein, as guarantor, to meet the
same financial ratios contained in its $1.0 billion revolving credit facility.
We are in compliance with these covenants.




AllianceBernstein
and AXA executed guarantees in regard to the $950 million SCB LLC facility. In
the event SCB LLC is unable to meet its obligations, AllianceBernstein or AXA
will pay the obligations when due or on demand. AllianceBernstein will reimburse
AXA to the extent AXA must pay on its guarantee. This agreement is continuous
and remains in effect until the later of payment in full of any such obligation
under the credit facility has been made or the maturity date.




SCB LLC
has four separate uncommitted credit facilities with various banks totaling $525
million, a decrease from five facilities totaling $775 million as of December
31, 2008.  In addition, SCB LLC has two lines of credit with a commercial
bank as of September 30, 2009 and December 31, 2008, one for $75
million secured by pledges of U.S. Treasury Bills and a second for $50
million secured by pledges of equity securities.


16


12.
            Comprehensive
      Income





Comprehensive
income consisted of:




Three
      Months Ended
              September
      30,
            
            
            Nine
      Months Ended
              September
      30,2009
            
            
            2008
            
            
            2009
            
            
            2008(in
      thousands)Net
      income
            
            $
            226,495
            
            
            $
            229,080
            
            
            $
            387,601
            
            
            $
            778,928Other
      comprehensive income (loss), net of tax:Unrealized
      gains (losses) on investments
            
            
            3,305
            
            
            
            (448
            )
            
            
            4,706
            
            
            
            (4,225
            )Foreign
      currency translation adjustment
            
            
            (3,181
            )
            
            
            (50,354
            )
            
            
            45,213
            
            
            
            (39,985
            )Changes
      in retirement plan related items
            
            
            70
            
            
            
            (101
            )
            
            
            216
            
            
            
            (434
            )Comprehensive
      income
            
            
            226,689
            
            
            
            178,177
            
            
            
            437,736
            
            
            
            734,284Comprehensive
      (income) loss in consolidated entities attributable to non-controlling
      interests
            
            
            (29,092
            )
            
            
            (7,165
            )
            
            
            (27,266
            )
            
            
            (29,571
            )Comprehensive
      income attributable to AllianceBernstein Unitholders
            
            $
            197,597
            
            
            $
            171,012
            
            
            $
            410,470
            
            
            $
            704,713




13.  Changes
in Capital




Changes
in capital consisted of:




Partners’
      Capital Attributable to AllianceBernstein Unitholders
            
            
            Non-Controlling
      Interests In Consolidated Entities
            
            
            Total
      Capital(in
      thousands)Balance
      as of  December 31, 2008
            
            $
            4,317,659
            
            
            $
            169,167
            
            
            $
            4,486,826Comprehensive
      income (loss):Net
      income (loss)
            
            
            364,487
            
            
            
            23,114
            
            
            
            387,601Other
      comprehensive income (loss), net of tax:Unrealized
      gains (losses) on investments
            
            
            4,430
            
            
            
            276
            
            
            
            4,706Foreign
      currency translation adjustment
            
            
            41,337
            
            
            
            3,876
            
            
            
            45,213Changes
      in retirement plan related items
            
            
            216
            
            
            
            —
            
            
            
            216Comprehensive
      income (loss)
            
            
            410,470
            
            
            
            27,266
            
            
            
            437,736Cash
      distributions
            
            
            (265,699
            )
            
            
            —
            
            
            
            (265,699
            )Capital
      contributions from (distributions to)
            
            
            2,751
            
            
            
            (19,369
            )
            
            
            (16,618
            )Compensation-related
      transactions
            
            
            51,605
            
            
            
            —
            
            
            
            51,605Balance
      as of September 30, 2009
            
            $
            4,516,786
            
            
            $
            177,064
            
            
            $
            4,693,850




14.
            Accounting
      Pronouncements




In
December 2008, the FASB issued ASC 715-20-65, which requires companies to
disclose information about fair value measurements of retirement plan assets.
The provisions of FASB ASC 715-20-65 are effective for fiscal years ending after
December 15, 2009 and are not expected to have a material impact on our
consolidated financial statements.




In June
2009, the FASB issued Statement of Financial Accounting Standards No. 167 (“SFAS
No. 167”), “Amendments to FASB
Interpretation No. 46(R)”. This standard changes how a company determines
when an entity that is insufficiently capitalized or is not controlled through
voting should be consolidated. The determination of whether a company is
required to consolidate an entity is based on, among other things, an entity’s
purpose and design and a company’s ability to direct the activities of the
entity that most significantly impact the entity’s economic performance. This
standard will require additional disclosures about involvement with variable
interest entities and any significant changes in risk exposure due to that
involvement, including how involvement with a variable interest entity affects
the financial statements. The provisions of this standard are effective January
1, 2010. Management is currently evaluating the impact that the adoption of this
standard will have on our consolidated financial statements. The adoption of
this standard may require that a significant amount of assets, liabilities,
revenues and expenses of certain variable interest entities in which we have a
minimal financial ownership interest be included in our consolidated financial
statements, with corresponding offsets to non-controlling
interests.


17


Report of Independent
Registered Public Accounting Firm





To the
General Partner and Unitholders


AllianceBernstein
L.P.





We have
reviewed the accompanying condensed consolidatedstatement of financial
conditionof
AllianceBernstein L.P. (“AllianceBernstein”) as of September 30, 2009, the
related condensed consolidated statements of income for the three-month and
nine-month periods ended September 30, 2009 and 2008, and the condensed
consolidated statements of cash flows for the nine-month periods ended September
30, 2009 and 2008. These interim financial statements are the responsibility of
the management of AllianceBernstein Corporation, the General
Partner.





We
conducted our review in accordance with the standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board (United States), the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole.  Accordingly, we do not express such an
opinion.





Based on
our review, we are not aware of any material modifications that should be made
to the accompanying condensed consolidatedinterim financial
statementsfor them
to be in conformity with accounting principles generally accepted in the United
States of America.





We
previously audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated statement of
financial condition as of December 31, 2008, and the related consolidated
statements of income, of changes in partners’ capital and comprehensive income,
and of cash flows for the year then ended (not presented herein), and in our
report dated February 20, 2009, we expressed an unqualified opinion on those
consolidated financial statements. As discussed in Note 2 to the accompanying
condensed consolidated financial statements, AllianceBernstein changed its
method of accounting for non-controlling interests in consolidated entities. The
accompanying condensed consolidated statement of financial condition as of
December 31, 2008 reflects this change.








/s/PricewaterhouseCoopers
      LLPNew
      York, New YorkOctober
      29, 2009





18


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





Executive
Overview





Global
capital markets continued to improve in the third quarter of 2009, with strong
absolute returns in both equity and credit, and a majority of our investment
services outperformed their benchmarks and/or peer averages.  Our
fixed income services were markedly strong, with many of our retail services now
outperforming peer averages for 2009 as well as in one-, three-, five- and
ten-year comparisons.  In addition, many of our institutional services
outperformed their benchmarks.  Value equity services continued to
outperform, and a strong 2009 has signigicantly improved one-year performance
comparisons.  Notably, our “Strategic Value” services, which emphasize
our best research ideas, have materially outperformed their
benchmarks.  Although a number of our institutional growth equity
services underperformed for the quarter, U.S. Large-Cap Growth continued to
outperform and most retail growth services outperformed their peer
averages.


Our
client assets under management (“AUM”) declined $91.8 billion, or 15.6%, to
$497.8 billion during the 12 months ended September 30, 2009 due to equity
market depreciation and substantial net outflows.  However, AUM
increased $50.8 billion, or 11.4%, during the third quarter of 2009, as positive
investment returns of $63.7 billion were only partially offset by lower net
outflows. Total net outflows for the quarter were $12.9 billion, down from $24.0
billion in the second quarter of 2009, with more than one-half occurring during
the month of July.  Outflows slowed in all three distribution
channels, most notably in the Institutional channel.





Institutional
Investment Services AUM increased $29.7 billion, or 10.7%, to $307.5 billion
during the quarter, due to strong investment returns and a 46.5% sequential
decline in net asset outflows to $10.0 billion from $18.7 billion in the second
quarter of 2009. Importantly, gross sales improved significantly to $5.3 billion
in the quarter compared to $1.3 billion in the second quarter of 2009. Our
strong relative performance year-to-date led to some significant new account
wins in the third quarter of 2009, most notably in fixed income and regional
value services. Additionally, we secured more than $500 million in
Public-Private Investment Program commitments from a diverse group of current
and prospective clients across the globe. Our pipeline of won but unfunded
mandates increased 20.4% compared to the second quarter of 2009 to $3.4
billion.





Retail
Services AUM increased $14.1 billion, or 13.8%, to $116.7 billion during the
quarter. Gross sales increased $1.4 billion, or 32.0%, to $5.9 billion and
redemptions, which remained at long-term averages, were also $5.9 billion. Net
inflows from fixed income services were $2.2 billion, up from $0.8 billion in
the second quarter of 2009. Our mutual fund performance remains strong as 69% of
our mutual funds are in the top 50% of our peer groups.





Private
Client Services AUM increased during the quarter by $7.0 billion, or 10.5%, to
$73.6 billion. Net outflows of $1.0 billion represent a 44.3% decline compared
to the second quarter of 2009, as gross sales improved and account closings and
withdrawals continued to moderate.  Interactions with current and
prospective clients continue to indicate a shift from extreme risk aversion to
future wealth creation through diversified stock and bond portfolios. Although
our financial advisor headcount remained flat compared to the second quarter of
2009, we anticipate adding new financial advisors in the first quarter of
2010.





While
Institutional Research Services revenues declined $15.6 million, or 12.4%,
compared to the prior year’s record quarter, they were flat compared to the
second quarter of 2009.  Recent data from independent surveys indicate
year-over-year market share gains in the first half of 2009 across geographies,
especially in Europe. We have continued to invest in our trading platform, and
recent investments in both European electronic and U.S. equity derivatives
trading made meaningful contributions to third quarter revenues.





Net
revenues decreased $35.0 million, or 4.2%, compared to the third quarter of
2008. Advisory fees revenues declined compared to the third quarter of 2008 by
$229.1 million, or 32.1%, reflecting the impact of lower AUM. Conversely,
investment gains (losses) had a favorable variance of $238.6 million, the result
of current quarter gains of  $106.7 million, primarily from gains on
investments related to employee deferred compensation awards and our venture
capital fund, as compared to $131.9 million of losses in the prior-year
quarter.





Although
over the past twelve months we have undertaken initiatives resulting in
significant reductions in operating expenses and capital expenditures (as we
describe in detail below inExpense Reduction), the impact of marking-to-market employee deferred
compensation investments and a significant insurance reimbursement we received
in the prior-year quarter have resulted in a decline in operating expenses of
only $7.1 million, or 1.2%, compared to the third quarter of 2008. Employee
compensation and benefits increased $7.3 million, or 2.2%, as lower salaries,
commissions and other compensation expenses were more than offset by a $67.7
million increase in deferred compensation expense due to higher related
investment values. Promotion and servicing expenses declined by $28.8 million,
or 20.6%, compared to the third quarter of 2008, due primarily to lower
distribution plan expenses. General and administrative expenses increased $15.8
million, or 13.8%, compared to the third quarter of 2008, as net foreign
exchange gains and lower technology and occupancy costs were more than offset by
the impact of a $35.3 million insurance reimbursement recieved in the prior-year
quarter.


19


Operating
income declined 11.1% from the third quarter of 2008 to $223.5 million, while
net income attributable to AllianceBernstein Unitholders fell by only 9.2% due
to the recognition of a $10.0 million contingent payment related to the 2005
sale of our cash management business and lower income
taxes.  Operating margin fell to 24.4% from 28.8% in the third quarter
of 2008 but increased by 6.1% compared to the second quarter of 2009. Diluted
net income per AllianceBernstein Unit declined 10.8% to $0.74 year-over-year,
but distributions per AllianceBernstein Unit increased 5.7%, as the insurance
reimbursement received in the third quarter of 2008 was not included in that
quarter’s cash distribution.




We
believe that the rise in the global capital markets reflects a rational
adjustment to accumulating evidence that global economies have stabilized, and
we anticipate that the global economy will grow modestly in 2010. Nonetheless,
risks remain, such as tight credit and depressed consumer spending. Risk
aversion is declining, but still high, among investors.




For
AllianceBernstein, the third quarter of 2009 showed the beneficial impact of
strong investment performance as net outflows fell by 46.3% compared to the
second quarter of 2009. A continuation of strong investment performance is
paramount in order for AllianceBernstein to resume organic growth in
AUM.




Expense
Reduction





The
substantial decrease in AUM and the resulting decrease in fee revenues from
levels during the first nine months of 2008 haveled us to undertake
initiatives resulting in significant reductions in operating expenses and
capital expenditures.




We
reduced our headcount by 453 during the first nine months of 2009 to 4,544,
which, along with the reduction in force that occurred during the fourth quarter
of 2008, represents a reduction of nearly 1,100 staff members, a 20% decline
from our headcount peak during the third quarter of 2008. These actions reduced
our fixed compensation costs (salaries and fringe benefits) by approximately
$110 million on an annualized basis. In taking these measures, we have retained
the intellectual capital required to service our clients and grow our
business.




We have
also reduced other controllable operating expenses, including print, mail,
travel and entertainment, recruitment, seminars, market data services,
communications, temporary help and technology consulting, at an annualized rate
of approximately $85 million. In addition, we have eliminated or deferred nearly
$150 million of planned capital expenditures since the beginning of
2008.




Recent
financial results have begun to demonstrate the leverage inherent in our
business model, which will increase should our AUM and revenues continue to
grow and our lower expense base remains stable.


20


Assets
Under Management





Assets
under management by distribution channel were as follows:





As of September 30,2009
            
            
            2008
            
            
            $ Change
            
            
            % Change(in
      billions)Institutional
      Investments
            
            $
            307.5
            
            
            $
            378.6
            
            
            $
            (71.1
            )
            
            
            (18.8
            )%Retail
            
            
            116.7
            
            
            
            125.8
            
            
            
            (9.1
            )
            
            
            (7.2
            )Private
      Client
            
            
            73.6
            
            
            
            85.2
            
            
            
            (11.6
            )
            
            
            (13.6
            )Total
            
            $
            497.8
            
            
            $
            589.6
            
            
            $
            (91.8
            )
            
            
            (15.6
            )





Assets
under management by investment service were as follows:




As ofSeptember30,2009
            
            
            2008
            
            
            $ Change
            
            
            % Change(in
      billions)EquityValue:U.S.
            
            $
            45.3
            
            
            $
            72.2
            
            
            $
            (26.9
            )
            
            
            (37.2
            )%Global &
      international
            
            
            130.4
            
            
            
            179.9
            
            
            
            (49.5
            )
            
            
            (27.6
            )175.7
            
            
            
            252.1
            
            
            
            (76.4
            )
            
            
            (30.3
            )Growth:U.S.
            
            
            36.3
            
            
            
            49.7
            
            
            
            (13.4
            )
            
            
            (26.9
            )Global &
      international
            
            
            57.0
            
            
            
            81.9
            
            
            
            (24.9
            )
            
            
            (30.4
            )93.3
            
            
            
            131.6
            
            
            
            (38.3
            )
            
            
            (29.1
            )Total
      Equity
            
            
            269.0
            
            
            
            383.7
            
            
            
            (114.7
            )
            
            
            (29.9
            )Fixed
      Income:U.S.
            
            
            111.8
            
            
            
            106.8
            
            
            
            5.0
            
            
            
            4.7Global &
      international
            
            
            84.1
            
            
            
            80.3
            
            
            
            3.8
            
            
            
            4.7195.9
            
            
            
            187.1
            
            
            
            8.8
            
            
            
            4.7Other
      (1):U.S.
            
            
            22.7
            
            
            
            11.9
            
            
            
            10.8
            
            
            
            90.7Global &
      international
            
            
            10.2
            
            
            
            6.9
            
            
            
            3.3
            
            
            
            49.632.9
            
            
            
            18.8
            
            
            
            14.1
            
            
            
            75.6Total:U.S.
            
            
            216.1
            
            
            
            240.6
            
            
            
            (24.5
            )
            
            
            (10.2
            )Global &
      international
            
            
            281.7
            
            
            
            349.0
            
            
            
            (67.3
            )
            
            
            (19.3
            )Total
            
            $
            497.8
            
            
            $
            589.6
            
            
            $
            (91.8
            )
            
            
            (15.6
            )




(1)Includes index, structured and asset allocation
services.


21


Changes
in assets under management for the three-month period ended September 30, 2009
were as follows:





Distribution Channel
            
            
            Investment ServiceInstitutional
              Investments
            
            
            Retail
            
            
            Private
              Client
            
            
            Total
            
            
            Value
              Equity
            
            
            Growth
              Equity
            
            
            Fixed
              Income
            
            
            Other(1)
            
            
            Total(in
      billions)Balance
      as of June 30, 2009
            
            $
            277.8
            
            
            $
            102.6
            
            
            $
            66.6
            
            
            $
            447.0
            
            
            $
            155.8
            
            
            $
            84.2
            
            
            $
            178.0
            
            
            $
            29.0
            
            
            $
            447.0Long-term
      flows:Sales/new
      accounts
            
            
            5.3
            
            
            
            5.9
            
            
            
            2.0
            
            
            
            13.2
            
            
            
            2.6
            
            
            
            1.4
            
            
            
            8.9
            
            
            
            0.3
            
            
            
            13.2Redemptions/terminations
            
            
            (12.5
            )
            
            
            (5.9
            )
            
            
            (1.5
            )
            
            
            (19.9
            )
            
            
            (10.4
            )
            
            
            (4.4
            )
            
            
            (4.6
            )
            
            
            (0.5
            )
            
            
            (19.9
            )Cash
      flow/unreinvested dividends
            
            
            (2.8
            )
            
            
            (1.9
            )
            
            
            (1.5
            )
            
            
            (6.2
            )
            
            
            (3.6
            )
            
            
            (1.9
            )
            
            
            (0.2
            )
            
            
            (0.5
            )
            
            
            (6.2
            )Net
      long-term (outflows) inflows
            
            
            (10.0
            )
            
            
            (1.9
            )
            
            
            (1.0
            )
            
            
            (12.9
            )
            
            
            (11.4
            )
            
            
            (4.9
            )
            
            
            4.1
            
            
            
            (0.7
            )
            
            
            (12.9
            )Market  appreciation
            
            
            39.7
            
            
            
            16.0
            
            
            
            8.0
            
            
            
            63.7
            
            
            
            31.3
            
            
            
            14.0
            
            
            
            13.8
            
            
            
            4.6
            
            
            
            63.7Net
      change
            
            
            29.7
            
            
            
            14.1
            
            
            
            7.0
            
            
            
            50.8
            
            
            
            19.9
            
            
            
            9.1
            
            
            
            17.9
            
            
            
            3.9
            
            
            
            50.8Balance
      as of
              September
      30, 2009
            
            $
            307.5
            
            
            $
            116.7
            
            
            $
            73.6
            
            
            $
            497.8
            
            
            $
            175.7
            
            
            $
            93.3
            
            
            $
            195.9
            
            
            $
            32.9
            
            
            $
            497.8




(1)
            Includes
      index, structured and asset allocation
services.





Changes
in assets under management for the nine-month period ended September 30, 2009
were as follows:




Distribution Channel
            
            
            Investment ServiceInstitutional
              Investments
            
            
            Retail
            
            
            Private
              Client
            
            
            Total
            
            
            Value
              Equity
            
            
            Growth
              Equity
            
            
            Fixed
              Income
            
            
            Other(1)
            
            
            Total(in
      billions)Balance
      as of
              December 31,
      2008
            
            $
            291.4
            
            
            $
            101.6
            
            
            $
            69.0
            
            
            $
            462.0
            
            
            $
            172.4
            
            
            $
            88.3
            
            
            $
            177.1
            
            
            $
            24.2
            
            
            $
            462.0Long-term
      flows:Sales/new
      accounts
            
            
            11.9
            
            
            
            15.2
            
            
            
            5.1
            
            
            
            32.2
            
            
            
            6.1
            
            
            
            4.7
            
            
            
            17.5
            
            
            
            3.9
            
            
            
            32.2Redemptions/terminations
            
            
            (43.7
            )
            
            
            (19.8
            )
            
            
            (6.3
            )
            
            
            (69.8
            )
            
            
            (35.8
            )
            
            
            (17.0
            )
            
            
            (15.5
            )
            
            
            (1.5
            )
            
            
            (69.8
            )Cash
      flow/unreinvested dividends
            
            
            (10.3
            )
            
            
            (4.2
            )
            
            
            (5.0
            )
            
            
            (19.5
            )
            
            
            (8.9
            )
            
            
            (4.7
            )
            
            
            (5.8
            )
            
            
            (0.1
            )
            
            
            (19.5
            )Net
      long-term (outflows) inflows
            
            
            (42.1
            )
            
            
            (8.8
            )
            
            
            (6.2
            )
            
            
            (57.1
            )
            
            
            (38.6
            )
            
            
            (17.0
            )
            
            
            (3.8
            )
            
            
            2.3
            
            
            
            (57.1
            )Transfers
            
            
            0.2
            
            
            
            —
            
            
            
            (0.2
            )
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —Market  appreciation
            
            
            58.0
            
            
            
            23.9
            
            
            
            11.0
            
            
            
            92.9
            
            
            
            41.9
            
            
            
            22.0
            
            
            
            22.6
            
            
            
            6.4
            
            
            
            92.9Net
      change
            
            
            16.1
            
            
            
            15.1
            
            
            
            4.6
            
            
            
            35.8
            
            
            
            3.3
            
            
            
            5.0
            
            
            
            18.8
            
            
            
            8.7
            
            
            
            35.8Balance
      as of  September 30, 2009
            
            $
            307.5
            
            
            $
            116.7
            
            
            $
            73.6
            
            
            $
            497.8
            
            
            $
            175.7
            
            
            $
            93.3
            
            
            $
            195.9
            
            
            $
            32.9
            
            
            $
            497.8




(1)
            Includes index, structured and
      asset allocation services.




Changes
in assets under management for the twelve-month period ended September 30, 2009
were as follows:




Distribution Channel
            
            
            Investment ServiceInstitutional
              Investments
            
            
            Retail
            
            
            Private
              Client
            
            
            Total
            
            
            Value
              Equity
            
            
            Growth
              Equity
            
            
            Fixed
              Income
            
            
            Other(1)
            
            
            Total(in
      billions)Balance
      as of
              September 30,
      2008
            
            $
            378.6
            
            
            $
            125.8
            
            
            $
            85.2
            
            
            $
            589.6
            
            
            $
            252.1
            
            
            $
            131.6
            
            
            $
            187.1
            
            
            $
            18.8
            
            
            $
            589.6Long-term
      flows:Sales/new
      accounts
            
            
            17.8
            
            
            
            18.8
            
            
            
            6.9
            
            
            
            43.5
            
            
            
            10.6
            
            
            
            6.5
            
            
            
            21.8
            
            
            
            4.6
            
            
            
            43.5Redemptions/terminations
            
            
            (56.2
            )
            
            
            (30.0
            )
            
            
            (9.5
            )
            
            
            (95.7
            )
            
            
            (48.1
            )
            
            
            (24.3
            )
            
            
            (21.8
            )
            
            
            (1.5
            )
            
            
            (95.7
            )Cash
      flow/unreinvested dividends
            
            
            (14.0
            )
            
            
            (6.6
            )
            
            
            (7.5
            )
            
            
            (28.1
            )
            
            
            (16.3
            )
            
            
            (10.8
            )
            
            
            (10.4
            )
            
            
            9.4
            
            
            
            (28.1
            )Net
      long-term (outflows) inflows
            
            
            (52.4
            )
            
            
            (17.8
            )
            
            
            (10.1
            )
            
            
            (80.3
            )
            
            
            (53.8
            )
            
            
            (28.6
            )
            
            
            (10.4
            )
            
            
            12.5
            
            
            
            (80.3
            )Transfers
            
            
            (10.1
            )
            
            
            10.3
            
            
            
            (0.2
            )
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —Market  (depreciation)
      appreciation
            
            
            (8.6
            )
            
            
            (1.6
            )
            
            
            (1.3
            )
            
            
            (11.5
            )
            
            
            (22.6
            )
            
            
            (9.7
            )
            
            
            19.2
            
            
            
            1.6
            
            
            
            (11.5
            )Net
      change
            
            
            (71.1
            )
            
            
            (9.1
            )
            
            
            (11.6
            )
            
            
            (91.8
            )
            
            
            (76.4
            )
            
            
            (38.3
            )
            
            
            8.8
            
            
            
            14.1
            
            
            
            (91.8
            )Balance
      as of  September 30, 2009
            
            $
            307.5
            
            
            $
            116.7
            
            
            $
            73.6
            
            
            $
            497.8
            
            
            $
            175.7
            
            
            $
            93.3
            
            
            $
            195.9
            
            
            $
            32.9
            
            
            $
            497.8




(1)
            Includes index, structured and
      asset allocation
services.


22




Average
assets under management by distribution channel and investment service were as
follows:





Three Months Ended
            
            
            
            
            
            
            
            
            NineMonths
      Ended9/30/09
            
            
            9/30/08
            
            
            $ Change
            
            
            % Change
            
            
            9/30/09
            
            
            9/30/08
            
            
            $ Change
            
            
            % Change(in
      billions)Distribution
      Channel:Institutional
      Investments
            
            $
            293.4
            
            
            $
            430.3
            
            
            $
            (136.9
            )
            
            
            (31.8
            )%
            
            $
            279.8
            
            
            $
            464.6
            
            
            $
            (184.8
            )
            
            
            (39.8
            )%Retail
            
            
            110.1
            
            
            
            145.0
            
            
            
            (34.9
            )
            
            
            (24.1
            )
            
            
            101.4
            
            
            
            160.2
            
            
            
            (58.8
            )
            
            
            (36.7
            )Private
      Client
            
            
            70.4
            
            
            
            93.9
            
            
            
            (23.5
            )
            
            
            (25.0
            )
            
            
            67.1
            
            
            
            100.1
            
            
            
            (33.0
            )
            
            
            (33.0
            )Total
            
            $
            473.9
            
            
            $
            669.2
            
            
            $
            (195.3
            )
            
            
            (29.2
            )
            
            $
            448.3
            
            
            $
            724.9
            
            
            $
            (276.6
            )
            
            
            (38.2
            )Investment
      Service:Value
      Equity
            
            $
            167.0
            
            
            $
            297.5
            
            
            $
            (130.5
            )
            
            
            (43.9
            )%
            
            $
            157.6
            
            
            $
            333.9
            
            
            $
            (176.3
            )
            
            
            (52.8
            )%Growth
      Equity
            
            
            89.2
            
            
            
            155.2
            
            
            
            (66.0
            )
            
            
            (42.5
            )
            
            
            84.0
            
            
            
            170.5
            
            
            
            (86.5
            )
            
            
            (50.7
            )Fixed
      Income
            
            
            186.6
            
            
            
            195.7
            
            
            
            (9.1
            )
            
            
            (4.7
            )
            
            
            179.5
            
            
            
            199.0
            
            
            
            (19.5
            )
            
            
            (9.8
            )Other
      (1)
            
            
            31.1
            
            
            
            20.8
            
            
            
            10.3
            
            
            
            49.9
            
            
            
            27.2
            
            
            
            21.5
            
            
            
            5.7
            
            
            
            26.4Total
            
            $
            473.9
            
            
            $
            669.2
            
            
            $
            (195.3
            )
            
            
            (29.2
            )
            
            $
            448.3
            
            
            $
            724.9
            
            
            $
            (276.6
            )
            
            
            (38.2
            )


____________________


(1)
            Includes index, structured and
      asset allocation services.




Consolidated
Results of Operations




Three
      Months Ended
            
            
            
            
            
            
            
            
            Nine
      Months Ended9/30/09
            
            
            9/30/08
            
            
            $
      Change
            
            
            %
      Change
            
            
            9/30/09
            
            
            9/30/08
            
            
            $
      Change
            
            
            %
      Change(in
      millions, except per unit amounts)Net
      revenues
            
            $
            806.0
            
            
            $
            841.0
            
            
            $
            (35.0
            )
            
            
            (4.2
            )%
            
            $
            2,125.0
            
            
            $
            2,933.6
            
            
            $
            (808.6
            )
            
            
            (27.6
            )%Expenses
            
            
            582.5
            
            
            
            589.6
            
            
            
            (7.1
            )
            
            
            (1.2
            )
            
            
            1,734.4
            
            
            
            2,079.7
            
            
            
            (345.3
            )
            
            
            (16.6
            )Operating
      income
            
            
            223.5
            
            
            
            251.4
            
            
            
            (27.9
            )
            
            
            (11.1
            )
            
            
            390.6
            
            
            
            853.9
            
            
            
            (463.3
            )
            
            
            (54.3
            )Non-operating
      income
            
            
            16.8
            
            
            
            4.9
            
            
            
            11.9
            
            
            
            242.8
            
            
            
            29.1
            
            
            
            13.3
            
            
            
            15.8
            
            
            
            119.4Income
      before income taxes
            
            
            240.3
            
            
            
            256.3
            
            
            
            (16.0
            )
            
            
            (6.2
            )
            
            
            419.7
            
            
            
            867.2
            
            
            
            (447.5
            )
            
            
            (51.6
            )Income
      taxes
            
            
            13.8
            
            
            
            27.3
            
            
            
            (13.5
            )
            
            
            (49.2
            )
            
            
            32.1
            
            
            
            88.3
            
            
            
            (56.2
            )
            
            
            (63.7
            )Net
      income
            
            
            226.5
            
            
            
            229.0
            
            
            
            (2.5
            )
            
            
            (1.1
            )
            
            
            387.6
            
            
            
            778.9
            
            
            
            (391.3
            )
            
            
            (50.2
            )Net
      income in consolidated entities attributable to non-controlling
      interests
            
            
            (27.2
            )
            
            
            (9.5
            )
            
            
            (17.7
            )
            
            
            184.3
            
            
            
            (23.1
            )
            
            
            (31.6
            )
            
            
            8.5
            
            
            
            (27.0
            )Net
      income attributable to AllianceBernstein Unitholders
            
            $
            199.3
            
            
            $
            219.5
            
            
            $
            (20.2
            )
            
            
            (9.2
            )
            
            $
            364.5
            
            
            $
            747.3
            
            
            $
            (382.8
            )
            
            
            (51.2
            )Diluted
      net income per AllianceBernstein Unit
            
            $
            0.74
            
            
            $
            0.83
            
            
            $
            (0.09
            )
            
            
            (10.8
            )
            
            $
            1.36
            
            
            $
            2.83
            
            
            $
            (1.47
            )
            
            
            (51.9
            )Distributions
      per AllianceBernstein Unit (1)
            
            $
            0.74
            
            
            $
            0.70
            
            
            $
            0.04
            
            
            
            5.7
            
            
            $
            1.36
            
            
            $
            2.70
            
            
            $
            (1.34
            )
            
            
            (49.6
            )Operating
      margin (2)
            
            
            24.4
            %
            
            
            28.8
            %
            
            
            
            
            
            
            
            
            
            
            17.3
            %
            
            
            28.0
            %


________________


(1)
            Third quarter 2008 distribution
      excludes a $35.3 million insurance reimbursement received in that quarter.


(2)
            Operating income including net
      income attributable to non-controlling interests as a percentage of net
      revenues.





Net
income attributable to AllianceBernstein Unitholders for the three months and
nine months ended September 30, 2009 decreased $20.2 million, or 9.2%, and
$382.8 million, or 51.2%, respectively, from the corresponding periods in 2008.
This decrease was primarily due to lower investment advisory fees and
distribution revenues, partially offset by higher investment gains, lower
promotion and servicing expenses, and for the nine-month period, lower employee
compensation and benefits expenses.


23


Net
Revenues





The
following table summarizes the components of total net revenues:





Three
      Months Ended
            
            
            
            
            
            
            
            
            Nine
      Months Ended9/30/09
            
            
            9/30/08
            
            
            $
      Change
            
            
            %
      Change
            
            
            9/30/09
            
            
            9/30/08
            
            
            $
      Change
            
            
            %
      Change(in
      millions)Investment
      advisory and services fees:Institutional
      Investments:Base
      fees
            
            $
            202.9
            
            
            $
            307.6
            
            
            $
            (104.7
            )
            
            
            (34.0
            )%
            
            $
            580.1
            
            
            $
            1,009.5
            
            
            $
            (429.4
            )
            
            
            (42.5
            )%Performance-based
      fees
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            12.5
            
            
            
            10.4
            
            
            
            2.1
            
            
            
            19.9202.9
            
            
            
            307.6
            
            
            
            (104.7
            )
            
            
            (34.0
            )
            
            
            592.6
            
            
            
            1,019.9
            
            
            
            (427.3
            )
            
            
            (41.9
            )Retail:Base
      fees
            
            
            135.9
            
            
            
            192.2
            
            
            
            (56.3
            )
            
            
            (29.3
            )
            
            
            369.4
            
            
            
            627.6
            
            
            
            (258.2
            )
            
            
            (41.1
            )Performance-based
      fees
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —135.9
            
            
            
            192.2
            
            
            
            (56.3
            )
            
            
            (29.3
            )
            
            
            369.4
            
            
            
            627.6
            
            
            
            (258.2
            )
            
            
            (41.1
            )Private
      Client:Base
      fees
            
            
            145.1
            
            
            
            213.1
            
            
            
            (68.0
            )
            
            
            (31.9
            )
            
            
            414.3
            
            
            
            676.0
            
            
            
            (261.7
            )
            
            
            (38.7
            )Performance-based
      fees
            
            
            0.2
            
            
            
            0.3
            
            
            
            (0.1
            )
            
            
            (43.7
            )
            
            
            0.9
            
            
            
            1.6
            
            
            
            (0.7
            )
            
            
            (41.8
            )145.3
            
            
            
            213.4
            
            
            
            (68.1
            )
            
            
            (31.9
            )
            
            
            415.2
            
            
            
            677.6
            
            
            
            (262.4
            )
            
            
            (38.7
            )Total:Base
      fees
            
            
            483.9
            
            
            
            712.9
            
            
            
            (229.0
            )
            
            
            (32.1
            )
            
            
            1,363.8
            
            
            
            2,313.1
            
            
            
            (949.3
            )
            
            
            (41.0
            )Performance-based
      fees
            
            
            0.2
            
            
            
            0.3
            
            
            
            (0.1
            )
            
            
            (40.7
            )
            
            
            13.4
            
            
            
            12.0
            
            
            
            1.4
            
            
            
            11.6484.1
            
            
            
            713.2
            
            
            
            (229.1
            )
            
            
            (32.1
            )
            
            
            1,377.2
            
            
            
            2,325.1
            
            
            
            (947.9
            )
            
            
            (40.8
            )Distribution
      revenues
            
            
            73.8
            
            
            
            96.7
            
            
            
            (22.9
            )
            
            
            (23.7
            )
            
            
            196.4
            
            
            
            313.9
            
            
            
            (117.5
            )
            
            
            (37.4
            )Institutional
      research services
            
            
            109.3
            
            
            
            124.9
            
            
            
            (15.6
            )
            
            
            (12.4
            )
            
            
            325.8
            
            
            
            353.6
            
            
            
            (27.8
            )
            
            
            (7.9
            )Dividend
      and interest income
            
            
            5.0
            
            
            
            19.0
            
            
            
            (14.0
            )
            
            
            (73.8
            )
            
            
            19.4
            
            
            
            71.3
            
            
            
            (51.9
            )
            
            
            (72.9
            )Investment
      gains (losses)
            
            
            106.7
            
            
            
            (131.9
            )
            
            
            238.6
            
            
            
            n/m
            
            
            
            130.7
            
            
            
            (187.1
            )
            
            
            317.8
            
            
            
            n/mOther
      revenues
            
            
            27.9
            
            
            
            28.2
            
            
            
            (0.3
            )
            
            
            (1.0
            )
            
            
            79.4
            
            
            
            89.7
            
            
            
            (10.3
            )
            
            
            (11.5
            )Total
      revenues
            
            
            806.8
            
            
            
            850.1
            
            
            
            (43.3
            )
            
            
            (5.1
            )
            
            
            2,128.9
            
            
            
            2,966.5
            
            
            
            (837.6
            )
            
            
            (28.2
            )Less:
      interest expense
            
            
            0.8
            
            
            
            9.1
            
            
            
            (8.3
            )
            
            
            (91.4
            )
            
            
            3.9
            
            
            
            32.9
            
            
            
            (29.0
            )
            
            
            (88.1
            )Net
      revenues
            
            $
            806.0
            
            
            $
            841.0
            
            
            $
            (35.0
            )
            
            
            (4.2
            )
            
            $
            2,125.0
            
            
            $
            2,933.6
            
            
            $
            (808.6
            )
            
            
            (27.6
            )





Investment Advisory and
Services Fees





Investment
advisory and services fees are the largest component of our revenues. These fees
are generally calculated as a percentage of the value of assets under management
as of a specified date, or as a percentage of the value of average assets under
management for the applicable billing period, and vary with the type of
investment service, the size of account and the total amount of assets we manage
for a particular client. Accordingly, fee income generally increases or
decreases as average assets under management increase or decrease and is
therefore affected by market appreciation or depreciation, the addition of new
client accounts or client contributions of additional assets to existing
accounts, withdrawals of assets from and termination of client accounts,
purchases and redemptions of mutual fund shares, and shifts of assets between
accounts or products with different fee structures.





We
calculate AUM using established fair valuation methodologies, including
market-based valuation methods and fair valuation methods. Market-based
valuation methods include:  last sale/settle prices from an exchange
for actively-traded listed equities, options and futures; evaluated bid prices
from standard pricing vendors for fixed income, asset-backed or mortgage-backed
issues; mid prices from standard pricing vendors and brokers for credit default
swaps; and quoted bids or spreads from pricing vendors and brokers for other
derivative products.  Fair valuation methods include discounted cash
flow models, evaluation of assets versus liabilities or any other methodology
that is validated and approved by our Valuation Committee. Fair valuation
methods are used only where AUM cannot be valued using market-based valuation
methods, such as in the case of private equity or illiquid securities. Fair
valued investments typically make up less than 1% of our total
AUM.  Recent market volatility has not had a significant effect on our
ability to acquire market data and, accordingly, our ability to use market-based
valuation methods.




The
Valuation Committee, which is composed of senior officers and employees and is
chaired by our Chief Risk Officer, is responsible for overseeing the pricing and
valuation of all investments held in client portfolios. The Valuation
Committee has adopted a Statement of Pricing Policies describing principles and
policies that apply to pricing and valuing investments held in client
portfolios. We have also established a Pricing Group, which reports to the
Valuation Committee.  The Valuation Committee has delegated to the
Pricing Group responsibility for monitoring the pricing process for
all investments held in client portfolios.


24


We
sometimes charge our clients performance-based fees. In these situations, we
charge a base advisory fee and are eligible to earn an additional
performance-based fee or incentive allocation that is calculated as either a
percentage of absolute investment results or a percentage of investment results
in excess of a stated benchmark over a specified period of time. If the
percentage of our AUM subject to performance-based fees grows, seasonality and
volatility of revenue and earnings are likely to become more significant. Some
performance-based fees include a high-watermark provision, which generally
provides that if a client account underperforms relative to its performance
target (whether absolute or relative to a specified benchmark), it must gain
back such underperformance before we can collect future performance-based fees.
Therefore, if we fail to meet our performance target for a particular period, we
will not earn a performance-based fee for that period and, for accounts with a
high-watermark provision, our ability to earn future performance-based fees will
be impaired.




For the
three months and nine months ended September 30, 2009, our investment advisory
and services fees decreased 32.1% and 40.8%, respectively, from the
corresponding periods in 2008, primarily due to a decrease of 29.2% and 38.2%,
respectively, in average assets under management and the impact of a shift in
product mix toward fixed income and domestic equity services, which generally
have lower fee rates. For the three months and nine months ended September 30,
2009, performance-based fees aggregated $0.2 million and $13.4 million,
respectively, including $12.1 million earned in the first quarter of 2009 from
the liquidation of the All Asset Deep Value Fund. This compares to $0.3 million
and $12.0 million earned, respectively, in the three months and nine months
ended September 30, 2008, from long-only client accounts.




Our
institutional investment advisory and services base fees for the three months
and nine months ended September 30, 2009 decreased $104.7 million, or 34.0%, and
$429.4 million, or 42.5%, respectively, from the corresponding periods ended
September 30, 2008, primarily as a result of a decrease of 31.8% and 39.8%,
respectively, in average assets under management and the impact of the shift in
product mix.




Retail
investment advisory and services base fees for the three months and nine months
ended September 30, 2009 decreased by $56.3 million, or 29.3%, and $258.2
million, or 41.1%, respectively, from the corresponding periods in 2008, as
average assets under management decreased by 24.1% and 36.7%, respectively, and
fee realization rates declined due to product mix changes.




Private
client investment advisory and services base fees for the three months and nine
months ended September 30, 2009 decreased by $68.0 million, or 31.9%, and $261.7
million, or 38.7%, respectively, from the corresponding periods in 2008,
primarily as a result of lower base fees reflecting decreases in billable assets
under management of 27.6% and 33.2%, respectively, and the impact of product mix
changes.




Distribution
Revenues




AllianceBernstein
Investments and AllianceBernstein (Luxembourg) S.A. (each a wholly-owned
subsidiary of AllianceBernstein) act as distributor and/or placing agent of
company-sponsored mutual funds and receive distribution services fees from
certain of those funds as partial reimbursement of the distribution expenses
they incur.




Distribution
revenues for the three months and nine months ended September 30, 2009 decreased
$22.9 million, or 23.7%, and $117.5 million, or 37.4%, respectively, compared to
the corresponding periods in 2008, principally due to lower average mutual fund
assets under management.




Institutional Research
Services




Institutional
Research Services revenue consists principally of brokerage transaction charges
received for providing equity research and brokerage-related services to
institutional investors.




Revenues
from Institutional Research Services for the three months and nine months ended
September 30, 2009 reflect a decrease of $15.6 million, or 12.4%, and $27.8
million, or 7.9%, respectively, from the corresponding periods in 2008. The
decreases reflect lower levels of client trading activity and lower security
valuations in European markets, partially offset by market share
gains.




Dividend and Interest Income
and Interest Expense




Dividend
and interest income consists primarily of investment income and interest earned
on United States Treasury Bills. Interest expense principally
reflects interest accrued on cash balances in customers’ brokerage
accounts.




Dividend and interest income,
net of interest expense, for the three months and nine months ended September
30, 2009 decreased $5.7 million and $22.9 million, respectively, from the
corresponding periods in 2008. The decrease was due primarily to lower interest
earned on U.S. Treasury Bill balances and other investments, reflecting lower
interest rates, partially offset by lower interest expense reflecting lower
balances in customers' brokerage accounts and lower interest
rates.


25


Investment Gains
(Losses)





Investment
gains (losses) consists primarily of realized and unrealized investment gains or
losses on trading investments and investments made in our consolidated venture
capital fund, realized gains or losses on the sale of our available-for-sale
investments, and equity in earnings of investments in limited partnership hedge
funds that we sponsor and manage.




For the
three months and nine months ended September 30, 2009, investment gains (losses)
increased $238.6 million and $317.8 million, respectively, in comparison with
the corresponding periods in 2008. The increases were due primarily to gains on
investments related to deferred compensation plan obligations of $70.9 million
and $105.7 million, respectively, in the three months and nine months ended
September 30, 2009 compared to losses of $122.7 million and $193.0
million, respectively, in the three months and nine months ended September 30,
2008. In addition, we had higher gains on our seed money trading investments of
$18.3 million and $26.8 million, respectively, in the three months and nine
months ended September 30, 2009 compared to the comparable prior
periods. Also, our venture capital fund had higher gains of $22.6 million in the
third quarter of 2009 compared to the third quarter of 2008.




We expect
that for 2009 and future years, all deferred awards will be in the form of
restricted Holding Units. As a result, the amount of deferred
compensation-related investments on which we recognize mark-to-market gains and
losses will decline as the corresponding awards previously made vest and are
paid.




Other Revenues,
Net




Other
revenues consist of fees earned for transfer agency services provided to
company-sponsored mutual funds, fees earned for administration and recordkeeping
services provided to company-sponsored mutual funds and the general accounts of
AXA and its subsidiaries, and other miscellaneous revenues.




Other
revenues for the three months and nine months ended September 30, 2009 decreased
$0.3 million and $10.3 million, respectively, from the corresponding periods in
2008. The decrease was primarily due to lower shareholder servicing fees as a
result of fewer accounts.




Expenses





The
following table summarizes the components of expenses:




Three
      Months Ended
            
            
            
            
            
            
            
            
            Nine
      Months Ended9/30/09
            
            
            9/30/08
            
            
            $
      Change
            
            
            %
      Change
            
            
            9/30/09
            
            
            9/30/08
            
            
            $
      Change
            
            
            %
      Change(in
      millions)Employee
      compensation and benefits
            
            $
            335.9
            
            
            $
            328.6
            
            
            $
            7.3
            
            
            
            2.2
            %
            
            $
            974.7
            
            
            $
            1,190.5
            
            
            $
            (215.8
            )
            
            
            (18.1
            )%Promotion
      and servicing
            
            
            110.6
            
            
            
            139.4
            
            
            
            (28.8
            )
            
            
            (20.6
            )
            
            
            313.9
            
            
            
            454.4
            
            
            
            (140.5
            )
            
            
            (30.9
            )General
      and administrative
            
            
            130.1
            
            
            
            114.3
            
            
            
            15.8
            
            
            
            13.8
            
            
            
            427.5
            
            
            
            407.3
            
            
            
            20.2
            
            
            
            5.0Interest
            
            
            0.5
            
            
            
            2.2
            
            
            
            (1.7
            )
            
            
            (76.8
            )
            
            
            2.1
            
            
            
            12.0
            
            
            
            (9.9
            )
            
            
            (82.2
            )Amortization
      of intangible assets
            
            
            5.4
            
            
            
            5.1
            
            
            
            0.3
            
            
            
            5.0
            
            
            
            16.2
            
            
            
            15.5
            
            
            
            0.7
            
            
            
            4.1Total
            
            $
            582.5
            
            
            $
            589.6
            
            
            $
            (7.1
            )
            
            
            (1.2
            )
            
            $
            1,734.4
            
            
            $
            2,079.7
            
            
            $
            (345.3
            )
            
            
            (16.6
            )





Employee Compensation and
Benefits





We had
4,544 full-time employees as of September 30, 2009, as compared to 4,997 as of
December 31, 2008 and 5,663 as of September 30, 2008. Employee compensation and
benefits, which represented approximately 58% and 56% of total expenses in the
third quarter of 2009 and 2008, respectively, consist of salaries (including
severance), estimates of year-end cash incentive awards, vesting of prior period
deferred incentive compensation awards, commissions, fringe benefits and other
employment costs (including recruitment, training, temporary help and
meals).




Base
compensation, fringe benefits and other employment costs for the three months
and nine months ended September 30, 2009 decreased $30.0 million, or 17.5%, and
$84.4 million, or 16.1%, respectively, from the corresponding periods in 2008.
The decreases resulted primarily from workforce reductions and lower
recruitment, partially offset by higher severance costs. Incentive compensation
for the three months and nine months ended September 30, 2009 increased $62.3
million, or 93.3%, and decreased $30.7 million, or 8.4%, respectively, from the
corresponding periods in 2008. The increase for the three months ended September
30, 2009 was primarily due to higher deferred compensation expense, reflecting
$16.7 million of additional expense in the current quarter due to higher related
investment values compared to an expense reduction of $51.0 million in the
prior-year quarter due to lower related investment values. The decrease for the
nine months ended September 30, 2009 was primarily due to lower estimated
year-end cash incentive payments, partially offset by higher deferred
compensation expense. Commission expense for the three months and nine months
ended September 30, 2009 was lower by $25.0 million, or 27.6%, and by $100.7
million, or 33.4%, respectively, reflecting lower sales volume and revenues
across all distribution channels.


26


Promotion and
Servicing





Promotion
and servicing expenses, which represented approximately 19% of total expenses in
the third quarter of 2009 and approximately 24% of total expenses in the third
quarter of 2008, include distribution plan payments to financial intermediaries
for distribution of company-sponsored mutual funds and amortization of deferred
sales commissions paid to financial intermediaries for the sale of back-end load
shares of our mutual funds. See “Capital Resources and
Liquidity” in this Item 2 and Note 7 to AllianceBernstein’s condensed
consolidated financial statements contained in Item 1 for further
discussion of deferred sales commissions. Also included in this expense category
are costs related to travel and entertainment, advertising, promotional
materials, and investment meetings and seminars for financial intermediaries
that distribute our mutual fund products.





Promotion
and servicing expenses for the three months and nine months ended September 30,
2009 decreased $28.8 million, or 20.6%, and $140.5 million, or 30.9%,
respectively, from the corresponding periods in 2008, primarily due to lower
distribution plan payments (resulting from lower average Retail Services assets
under management), lower amortization of deferred sales commissions, and lower
travel and entertainment expenses.





General and
Administrative





General
and administrative expenses, which represented approximately 22% and 19% of
total expenses in the third quarter of 2009 and 2008, respectively, are costs
related to operations, including technology, professional fees, occupancy,
communications and similar expenses. General and administrative expenses for the
three months and nine months ended September 30, 2009 increased $15.8 million,
or 13.8%, and $20.2 million, or 5.0%, respectively, from the corresponding
periods in 2008. The increase for the three months ended September 30, 2009 was
due to an insurance reimbursement of $35.3 million received in the prior-year
quarter, partially offset by incremental foreign exchange gains and lower
technology and office-related expenses in the current quarter. For the nine
months ended September 30, 2009, the increase was due to the third quarter 2008
insurance reimbursement, partially offset by lower legal costs and lower
office-related expenses.





Interest on
Borrowings





Interest
on our borrowings for the three months and nine months ended September 30, 2009
decreased $1.7 million, or 76.8%, and $9.9 million, or 82.2%, respectively, from
the corresponding periods in 2008, primarily as a result of significantly lower
interest rates and lower borrowing levels.




Non-Operating
Income





Non-operating
income consists of contingent purchase price payments earned from the
disposition in 2005 of our cash management services. Non-operating income for
the three months and nine months ended September 30, 2009 increased $11.9
million and $15.8 million, respectively, due to a one-time $10 million
contingent payment we earned during the third quarter of 2009. We will continue
to receive annual contingent payments through March 2010.




Income
Taxes





AllianceBernstein,
a private limited partnership, is not subject to federal or state corporate
income taxes. However, we are subject to the New York City unincorporated
business tax. Our domestic corporate subsidiaries are subject to federal, state
and local income taxes, and are generally included in the filing of a
consolidated federal income tax return. Separate state and local income tax
returns are filed. Foreign corporate subsidiaries are generally subject to taxes
in the foreign jurisdictions where they are located.





Income
tax expense for the three months and nine months ended September 30, 2009
decreased $13.5 million, or 49.2%, and $56.2 million, or 63.7%, respectively,
from the corresponding periods in 2008, primarily as a result of lower earnings
and a lower effective tax rate, reflecting lower earnings of our foreign
subsidiaries where tax rates are generally higher. The nine-month provision was
impacted by a first quarter 2009 expense for an under-accrual of foreign taxes
in the fourth quarter of 2008.  See Note 10 to AllianceBernstein’s
condensed consolidated financial statements contained in Item
1.




Net
Income in Consolidated Entities Attributable to Non-Controlling
Interests




Our
non-controlling interests in consolidated entities consist of 90% limited
partner interests in our consolidated venture capital fund (of which 10% is
owned by AXA and its subsidiaries and 80% is owned by an unaffiliated client)
and 50% interests in consolidated joint ventures in Australia and New Zealand
(of which 50% is owned by AXA and its subsidiaries).




Net
income attributable to non-controlling interests in earnings of consolidated
entities for the three months ended September 30, 2009 increased $17.7 million
from the corresponding period in 2008, primarily as a result of higher gains on
investments owned by our consolidated venture capital fund. For the nine months
ended September 30, 2009, our net income attributable to non-controlling
interests decreased $8.5 million due to lower joint venture earnings and lower
gains on investments owned by our consolidated venture capital
fund.


27


Impairment
Analysis




As of
September 30, 2009, management determined that goodwill, intangible assets and
the deferred sales commission asset were not impaired. See “Critical Accounting Estimates”
in this Item 2for a discussion of our impairment testing
methodology.




To the
extent that securities valuations remain depressed for prolonged periods of time
and market conditions stagnate or worsen, our assets under management, revenues,
profitability and unit price may be adversely affected. As a result, subsequent
impairment tests may be based upon different assumptions and future cash flow
projections which may result in an impairment of goodwill, intangible assets and
the deferred sales commission asset. In the current environment, we anticipate
continuing to review these assets for impairment more frequently.




CAPITAL
RESOURCES AND LIQUIDITY





The
following table identifies selected items relating to capital resources and
liquidity:





Nine
      Months Ended September 30,2009
            
            
            2008
            
            
            % Change(in millions)Total
      capital, as of September 30
            
            $
            4,693.9
            
            
            $
            4,662.9
            
            
            
            0.7
            %Cash
      flow from operations
            
            
            575.0
            
            
            
            874.2
            
            
            
            (34.2
            )Proceeds
      from sales (purchases) of investments, net
            
            
            (6.1
            )
            
            
            10.6
            
            
            
            n/mCapital
      expenditures
            
            
            (43.5
            )
            
            
            (61.2
            )
            
            
            (28.9
            )Distributions
      paid to General Partner and unitholders
            
            
            (265.7
            )
            
            
            (835.1
            )
            
            
            (68.2
            )Purchases
      of Holding Units to fund deferred compensation plans, net
            
            
            (0.2
            )
            
            
            (3.2
            )
            
            
            (92.8
            )Additional
      investments by Holding with proceeds from exercise of compensatory options
      to buy Holding Units
            
            
            —
            
            
            
            13.4
            
            
            
            (100.0
            )Repayment
      of commercial paper, net
            
            
            (258.7
            )
            
            
            (475.4
            )
            
            
            (45.6
            )Proceeds
      from bank loans, net
            
            
            25.0
            
            
            
            693.0
            
            
            
            (96.4
            )Available
      Cash Flow
            
            
            365.5
            
            
            
            711.6
            
            
            
            (48.6
            )





Cash and
cash equivalents of $571.0 million as of September 30, 2009 increased $18.4
million from $552.6 million as of December 31, 2008. Cash inflows are
primarily provided by operations, issuance of commercial paper and proceeds from
sales of investments. Significant cash outflows include cash distributions paid
to the General Partner and unitholders, capital expenditures, purchases of
investments, repayment of commercial paper and purchases of Holding Units to
fund deferred compensation plans.





Deferred
Sales Commission Asset





See Note 7 to
AllianceBernstein’s condensed consolidated financial statements contained in
Item 1.


28


Debt
and Credit Facilities





Total
credit available, debt outstanding and weighted average interest rates as of
September 30, 2009 and December 31, 2008 were as follows:





September 30, 2009
            
            
            December 31, 2008Credit
              Available
            
            
            Debt
              Outstanding
            
            
            Interest
              Rate
            
            
            Credit
              Available
            
            
            Debt
              Outstanding
            
            
            Interest
              Rate(in
      millions)Revolving
      credit facility(1)
            
            $
            973.0
            
            
            $
            —
            
            
            
            —
            %
            
            $
            715.2
            
            
            $
            —
            
            
            
            —
            %Commercial
      paper(1)
            
            
            27.0
            
            
            
            27.0
            
            
            
            0.3
            
            
            
            284.8
            
            
            
            284.8
            
            
            
            1.8Total
      revolving credit facility– AllianceBernstein (1)
            
            
            1,000.0
            
            
            
            27.0
            
            
            
            0.3
            
            
            
            1,000.0
            
            
            
            284.8
            
            
            
            1.8Revolving
      credit facility – SCB LLC (1)
            
            
            950.0
            
            
            
            25.0
            
            
            
            0.3
            
            
            
            950.0
            
            
            
            —
            
            
            
            —Uncommitted
      lines of credit – SCB LLC
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —Uncommitted
      bank facilities – SCB LLC
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —Total
            
            $
            1,950.0
            
            
            $
            52.0
            
            
            
            0.3
            
            
            $
            1,950.0
            
            
            $
            284.8
            
            
            
            1.8


__________________


(1)
            Commercial paper and amounts
      outstanding under the revolving credit facility are short-term in nature,
      and as such, recorded value is estimated to approximate fair
      value.





AllianceBernstein
has a $1.0 billion five-year revolving credit facility with a group of
commercial banks and other lenders which expires in 2011. The revolving credit
facility is intended to provide back-up liquidity for our $1.0 billion
commercial paper program, although we borrow directly under the facility from
time to time. Amounts borrowed under the commercial paper program reduce amounts
available for direct borrowing under the revolving credit facility on a
dollar-for-dollar basis. Our interest rate, at our option, is a floating rate
generally based upon a defined prime rate, a rate related to the London
Interbank Offered Rate (“LIBOR”) or the Federal Funds rate. The revolving credit
facility contains covenants which, among other things, require us to meet
certain financial ratios. We are in compliance with these
covenants.




SCB LLC
has a $950 million three-year revolving credit facility with a group of
commercial banks to fund its obligations resulting from engaging in certain
securities trading and custody activities for private clients. Under the
revolving credit facility, the interest rate, at the option of SCB LLC, is a
floating rate generally based upon a defined prime rate, a rate related to LIBOR
or the Federal Funds rate. This revolving credit facility contains covenants
which, among other things, require AllianceBernstein, as guarantor, to meet the
same financial ratios contained in its $1.0 billion revolving credit facility.
We are in compliance with these covenants.





SCB LLC
has four separate uncommitted credit facilities with various banks totaling $525
million, a decrease from five facilities totaling $775 million as of December
31, 2008.  In addition, SCB LLC has two lines of credit with a commercial
bank as of September 30, 2009 and December 31, 2008, one for $75
million secured by pledges of U.S. Treasury Bills and a second for $50
million secured by pledges of equity securities.





Our
financial condition and access to public and private debt markets should provide
adequate liquidity for our general business needs. Management believes that cash
flow from operations and the issuance of debt and AllianceBernstein Units or
Holding Units will provide us with the resources necessary to meet our financial
obligations. See “Cautions
Regarding Forward-Looking Statements”.





COMMITMENTS
AND CONTINGENCIES





AllianceBernstein’s
capital commitments, which consist primarily of operating leases for office
space, are generally funded from operating cash flows.




See Note 7 to AllianceBernstein’s
condensed consolidated financial statements contained in Item 1 for a
discussion of our mutual fund distribution system and related deferred sales
commission asset and of certain legal proceedings to which we are a
party.





CRITICAL
ACCOUNTING ESTIMATES





The
preparation of the condensed consolidated financial statements and notes to
condensed consolidated financial statements requires management to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses.





Management
believes that the critical accounting policies and estimates discussed below
involve significant management judgment due to the sensitivity of the methods
and assumptions used.


29


Deferred
Sales Commission Asset





Management
tests the deferred sales commission asset for impairment quarterly by comparing
undiscounted future cash flows to the recorded value, net of accumulated
amortization. Significant assumptions utilized to estimate the company’s future
average assets under management and undiscounted future cash flows from back-end
load shares are updated quarterly and include expected future market levels and
redemption rates. Market assumptions are selected using a long-term view of
expected average market returns based on historical returns of broad market
indices. As of September 30, 2009, management used average market return
assumptions of 5% for fixed income securities and 8% for equities to estimate
annual market returns. Higher actual average market returns would increase
undiscounted future cash flows, while lower actual average market returns would
decrease undiscounted future cash flows. Future redemption rate assumptions,
determined by reference to actual redemption experience over the five-year,
three-year, one-year and current periods ended September 30, 2009, and
calculated as a percentage of the company’s average assets under management
represented by back-end load shares, ranged from 18% to 24% for U.S. fund shares
and 28% to 36% for non-U.S. fund shares. Effective January 31, 2009, back-end
load shares are no longer offered by our U.S. funds. An increase in the actual
rate of redemptions would decrease undiscounted future cash flows, while a
decrease in the actual rate of redemptions would increase undiscounted future
cash flows. Estimates of undiscounted future cash flows and the remaining life
of the deferred sales commission asset are made from these assumptions and the
aggregate undiscounted future cash flows are compared to the recorded value of
the deferred sales commission asset. As of September 30, 2009, management
determined that the deferred sales commission asset was not impaired. However,
if higher redemption rates continue in 2009, this asset may become impaired. If
management determines in the future that the deferred sales commission asset is
not recoverable, an impairment condition would exist and a loss would be
measured as the amount by which the recorded amount of the asset exceeds its
estimated fair value. Estimated fair value is determined using management’s best
estimate of future cash flows discounted to a present value amount. Any
impairment could reduce materially the recorded amount of the deferred sales
commission asset with a corresponding charge to our earnings.





Goodwill





We test
goodwill annually, as of September 30, for impairment. The carrying value
of goodwill is also reviewed if facts and circumstances, such as significant
declines in assets under management, revenues, earnings or our Holding Unit
price, occur, suggesting possible impairment. As of September 30, 2009 the
impairment test indicated that goodwill was not impaired.




The
impairment analysis is a two-step process. The first step involves determining
whether the estimated fair value of AllianceBernstein, the reporting unit,
exceeds its book value. If the fair value of the company exceeds its book value,
goodwill is not impaired.  However, if the book value exceeds the fair
value of the company, goodwill may be impaired and additional analysis is
required.  The second step compares the fair value of the company to
the aggregated fair values of its individual assets and liabilities to calculate
the amount of impairment, if any.




In the
first step of the process, there are several methods of estimating
AllianceBernstein’s fair value, which include valuation techniques such as
discounted expected cash flows and market valuation (private partnership units
outstanding multiplied by Holding Unit price). Developing estimated fair value
using a discounted cash flow valuation technique consists of applying business
growth rate assumptions over the estimated life of the goodwill asset and then
discounting the resulting expected cash flows to arrive at a present value
amount that approximates fair value. In our tests, our discounted expected cash
flow model uses management’s current business plan, which factors in current
market conditions and all material events that have impacted, or that we believe
at the time could potentially impact, future expected cash flows for the first
four years and a compounded annual growth rate thereafter.




To the
extent that securities valuations are depressed for prolonged periods of time,
our assets under management, revenues, profitability and unit price would likely
be adversely affected. As a result, subsequent impairment tests may be based
upon different assumptions and future cash flow projections, which may result in
an impairment of this asset. Any impairment could reduce materially the recorded
amount of goodwill with a corresponding charge to our earnings.




Retirement
Plan





We
maintain a qualified, noncontributory, defined benefit retirement plan covering
current and former employees who were employed by the company in the United
States prior to October 2, 2000. The amounts recognized in the consolidated
financial statements related to the retirement plan are determined from
actuarial valuations. Inherent in these valuations are assumptions including
expected return on plan assets, discount rates at which liabilities could be
settled, rates of annual salary increases and mortality rates. The assumptions
are reviewed annually and may be updated to reflect the current environment. A
summary of the key economic assumptions are described in Note 14 to
AllianceBernstein’s consolidated financial statements in our Form 10-K for the
year ended December 31, 2008. In accordance with U.S. generally accepted
accounting principles, actual results that differ from those assumed are
accumulated and amortized over future periods and, therefore, affect expense
recognized and liabilities recorded in future periods.





As of
December 31, 2008, the Retirement Plan was changed to provide that the
participants will not accrue any additional benefits (i.e., service and
compensation after December 31, 2008 will not be taken into account in
determining participants’ retirement benefits).


30


Loss
Contingencies





Management
continuously reviews with legal counsel the status of regulatory matters and
pending or threatened litigation. We evaluate the likelihood that a loss
contingency exists and record a loss contingency if it is probable and
reasonably estimable as of the date of the financial statements. See Note 7 to AllianceBernstein’s
condensed consolidated financial statements contained in Item
1.





ACCOUNTING
PRONOUNCEMENTS




See Note 14 to AllianceBernstein’s
condensed consolidated financial statements contained in Item 1of this
Form 10-Q.




CAUTIONS
REGARDING FORWARD-LOOKING STATEMENTS





Certain
statements provided by management in this report 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, 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, such
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, 2008
(“Form 10-K”) and Part II, Item 1A in  this
Form 10-Q. Any or all of the forward-looking statements that we make
in the 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 affect our revenues, financial
condition, results of operations and business prospects.




The
forward-looking statements referred to in the preceding paragraph include
statements regarding:




•
            Our backlog of new
      institutional client mandates not yet funded: Before they are
      funded, institutional mandates do not represent legally binding
      commitments to fund and, accordingly, the possibility exists that not all
      mandates will be funded in the amounts and at the times we currently
      anticipate.




•
            The possibility that
      prolonged weakness in the value of client assets under management may
      result in impairment of goodwill, intangible assets and the deferred sales
      commission asset: To the extent that securities valuations are
      depressed for prolonged periods of time, client assets under management
      and our revenues, profitability and unit price may be adversely affected.
      As a result, subsequent impairment tests may be based upon different
      assumptions and future cash flow projections, which may result in an
      impairment of goodwill, intangible assets and the deferred sales
      commission asset.




•
            The cash flow Holding
      realizes from its investment in AllianceBernstein providing Holding with
      the resources necessary to meet its financial obligations:
      Holding’s cash flow is dependent on the quarterly cash distributions it
      receives from AllianceBernstein. Accordingly, Holding’s ability to meet
      its financial obligations is dependent on AllianceBernstein’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 access to public and private debt 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
      access to public and private debt, as well as the market for debt or
      equity we may choose to issue on reasonable terms, may be limited by
      adverse market conditions, 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
      certain legal proceedings to have a material adverse effect on our results
      of operations or financial condition, any settlement or judgment with
      respect to a legal proceeding could be significant, and could have such an
      effect.




•
            Our expectation that
      the global economy will grow modestly in 2010: The extent to which
      global economies may have recently stabilized is not necessarily
      indicative of future results. Global economies face significant obstacles
      to sustained future growth. The actual performance of the capital markets
      and other factors beyond our control will affect our investment success
      for clients and asset flows.




•
              The leverage inherent
      in our business model increasing should our AUM and revenues continue
      to grow and our expense base remains stable: Unanticipated events
      and factors, including strategic initiatives, may cause us to expand our
      expense base, thus limiting the extent to which we benefit from any
      positive leverage in future periods. Growth in our revenues will depend on
      the level of our assets under management, which in turn depends on factors
      such as the actual performance of the capital markets, the performance of
      our investment products and other factors beyond our
    control.


31





OTHER
INFORMATION





With
respect to the unaudited condensed consolidated interim financial
information of AllianceBernstein for the three months and nine months ended
September 30, 2009 included in this quarterly report on Form 10-Q,
PricewaterhouseCoopers LLP reported that they have applied limited procedures in
accordance with professional standards for a review of such information.
However, their separate report dated October 29, 2009 appearing herein states
that they did not audit and they do not express an opinion on the unaudited
condensed consolidated interim financial information. Accordingly, the degree of
reliance on their report on such information should be restricted in light of
the limited nature of the review procedures applied. PricewaterhouseCoopers LLP
is not subject to the liability provisions of Section 11 of the Securities
Act of 1933, as amended (“Securities Act”) for their report on the unaudited
condensed consolidated interim financial information because that report is
not a “report” or a “part” of registration statements prepared or certified by
PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the
Securities Act.





Item
      3.
            Quantitative and
      Qualitative Disclosures About Market
Risk





There
have been no material changes to AllianceBernstein’s market risk for the
three-month period ended September 30, 2009.





Item 4.
            Controls
      and Procedures





Disclosure
Controls and Procedures





AllianceBernstein
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 of 1934, as amended, is (i) recorded, processed, summarized and
reported in a timely manner, and (ii) accumulated and communicated to
management, including the Chief Executive Officer and the Chief Financial
Officer, 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 Chief Executive Officer
and the Chief Financial Officer, of the effectiveness of the design and
operation of the disclosure controls and procedures. Based on this evaluation,
the Chief Executive Officer and the Chief Financial Officer 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 2009 that materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.







32