-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, I2RL9G9H8MvcbSnkDyur85C0kv73BLJo0frk1iqiM7DhEvUsjrMbbvfihZnSPrxa FgtgDEX+AOztAhO/sKBbuw== 0000912057-96-016665.txt : 20040503 0000912057-96-016665.hdr.sgml : 20040503 19960808152600 ACCESSION NUMBER: 0000912057-96-016665 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960808 DATE AS OF CHANGE: 20020328 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIANCE CAPITAL MANAGEMENT LP CENTRAL INDEX KEY: 0000825313 STANDARD INDUSTRIAL CLASSIFICATION: INVESTMENT ADVICE [6282] IRS NUMBER: 133434400 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09818 FILM NUMBER: 96605981 BUSINESS ADDRESS: STREET 1: 1345 AVE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10105 BUSINESS PHONE: 2129691000 MAIL ADDRESS: STREET 1: 1345 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10105 FORMER COMPANY: FORMER CONFORMED NAME: ALLIANCE CAPITAL MANAGEMENT LP DATE OF NAME CHANGE: 19961231 10-Q 1 FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 -------------------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------------------- --------------------- Commission File no. 1-9818 -------------------------------------------------------- ALLIANCE CAPITAL MANAGEMENT L.P. - --------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 13-3434400 - ------------------------------- -------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1345 Avenue of the Americas, New York, NY 10105 - --------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (212) 969-1000 - --------------------------------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ---------- ---------- The number of Units representing assignments of beneficial ownership of Limited Partnership Interests outstanding as of June 30, 1996 was 83,038,174 Units. ALLIANCE CAPITAL MANAGEMENT L.P. Index to Form 10-Q Part I FINANCIAL INFORMATION ---------------------- ITEM 1. FINANCIAL STATEMENTS PAGE -------------------- ---- Condensed Consolidated Statements of Financial Condition 2 Condensed Consolidated Statements of Income 3 Condensed Consolidated Statements of Changes in Partners' Capital 4 Condensed Consolidated Statements of Cash Flows 5 Notes to Condensed Consolidated Financial Statements 6-9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL ------------------------------------------------- CONDITION AND RESULTS OF OPERATIONS 10-14 ----------------------------------- PART II OTHER INFORMATION ----------------- ITEM 1. LEGAL PROCEEDINGS 15 ----------------- ITEM 2. CHANGES IN SECURITIES 15 --------------------- ITEM 3. DEFAULTS UPON SENIOR SECURITIES 15 ------------------------------- ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF 15 ---------------------------------- SECURITY HOLDERS ---------------- ITEM 5. OTHER INFORMATION 15 ----------------- ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 15 -------------------------------- 1 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS -------------------- ALLIANCE CAPITAL MANAGEMENT L.P. Condensed Consolidated Statements of Financial Condition (in thousands) ASSETS 6/30/96 12/31/95 ------ ------- -------- (unaudited) Cash and cash equivalents....................... $ 95,736 $124,256 Fees receivable: Alliance mutual funds......................... 41,239 36,840 Affiliated clients............................ 5,551 2,006 Third party clients........................... 53,269 46,766 Receivable from brokers and dealers for sale of shares of Alliance mutual funds............ 36,586 26,651 Investments, available-for-sale................. 8,645 35,375 Furniture, equipment and leasehold improvements, net............................. 45,134 44,208 Intangible assets, net.......................... 242,849 84,209 Deferred sales commissions, net................. 165,151 149,583 Other assets.................................... 22,860 25,164 -------- -------- Total assets.................................. $717,020 $575,058 -------- -------- -------- -------- LIABILITIES AND PARTNERS' CAPITAL --------------------------------- Liabilities: Accounts payable and accrued expenses........... $ 90,640 $ 74,054 Payable to Alliance mutual funds for share purchases..................................... 52,526 45,217 Accrued expenses under employee benefit plans... 74,121 44,086 Debt............................................ 24,783 3,462 Minority interests in consolidated subsidiaries. 14,350 1,530 -------- -------- Total liabilities............................ 256,420 168,349 Partners' capital................................. 460,600 406,709 -------- -------- Total liabilities and partners' capital... $717,020 $575,058 -------- -------- -------- -------- See accompanying notes to condensed consolidated financial statements. 2 ALLIANCE CAPITAL MANAGEMENT L.P. Condensed Consolidated Statements of Income (unaudited) (in thousands, except per Unit amounts)
THREE MONTHS ENDED SIX MONTHS ENDED ----------------------- ----------------------- 6/30/96 6/30/95 6/30/96 6/30/95 -------- -------- -------- -------- Revenues: Investment advisory and services fees: Alliance mutual funds............................ $ 71,849 $ 55,503 $139,673 $107,149 Separately managed accounts: Affiliated clients............................. 11,768 12,230 21,866 23,841 Third party clients............................ 58,081 41,454 109,202 82,417 Distribution plan fees from Alliance mutual funds.. 40,582 30,636 79,065 59,648 Shareholder servicing and administration fees...... 11,623 11,035 23,023 21,290 Other revenues..................................... 2,246 2,567 4,936 4,459 -------- -------- -------- -------- 196,149 153,425 377,765 298,804 -------- -------- -------- -------- Expenses: Employee compensation and benefits................. 54,100 41,704 103,476 81,527 Promotion and servicing: Distribution plan payments to financial intermediaries: Affiliated..................................... 7,701 5,444 14,692 10,839 Unaffiliated................................... 27,644 20,807 54,446 39,973 Amortization of deferred sales commissions....... 12,848 12,660 25,366 25,527 Other............................................ 13,191 10,461 24,318 20,578 General and administrative......................... 25,515 20,465 48,956 39,513 Interest........................................... 472 231 714 639 Amortization of intangible assets.................. 4,181 2,187 7,094 4,374 -------- -------- -------- -------- 145,652 113,959 279,062 222,970 -------- -------- -------- -------- Income before income taxes........................... 50,497 39,466 98,703 75,834 Income taxes....................................... 3,467 2,367 6,606 4,550 -------- -------- -------- -------- Net income........................................... $ 47,030 $ 37,099 $ 92,097 $ 71,284 -------- -------- -------- -------- -------- -------- -------- -------- Net income per Unit.................................. $ 0.55 $ 0.45 $ 1.09 $ 0.87 -------- -------- -------- -------- -------- -------- -------- -------- Weighted average Units outstanding................... 84,702 81,514 83,905 81,383 -------- -------- -------- -------- -------- -------- -------- --------
See accompanying notes to condensed consolidated financial statements. 3 ALLIANCE CAPITAL MANAGEMENT L.P. Condensed Consolidated Statements of Changes in Partners' Capital (unaudited) (in thousands)
THREE MONTHS ENDED SIX MONTHS ENDED --------------------- ------------------ 6/30/96 6/30/95 6/30/96 6/30/95 -------- -------- -------- -------- Partners' capital - beginning of period....... $455,038 $383,791 $406,709 $381,329 Net income.................................. 47,030 37,099 92,097 71,284 Capital contribution received from Alliance Capital Management Corporation............ 898 902 1,791 1,818 Distributions to partners................... (43,243) (33,454) (84,245) (66,837) Units issued for acquisition of Cursitor.... - - 42,816 - Unit options exercised...................... 751 1,317 1,459 2,051 Issuance of Units to employees.............. - 1,920 - 1,920 Unrealized gain on investments.............. 126 265 255 273 Foreign currency translation adjustment..... - 14 (282) 16 -------- -------- -------- --------- Partners' capital - end of period............. $460,600 $391,854 $460,600 $391,854 --------- -------- -------- -------- --------- -------- -------- --------
See accompanying notes to condensed consolidated financial statements. 4 ALLIANCE CAPITAL MANAGEMENT L.P. Condensed Consolidated Statements of Cash Flows (unaudited) (in thousands)
SIX MONTHS ENDED -------------------- 6/30/96 6/30/95 -------- -------- Cash flows from operating activities: Net income .............................................. $92,097 $ 71,284 Adjustments to reconcile net income to net cash provided from operating activities: Amortization and depreciation.......................... 36,519 33,726 Other, net............................................. 4,161 2,902 Changes in assets and liabilities: (Increase) decrease in fees receivable from Alliance mutual funds, affiliated clients and third party clients.................................. (2,613) 2,426 (Increase) in receivables from brokers and dealers for sale of shares of Alliance mutual funds.. (9,935) (3,342) (Increase) in deferred sales commissions............... (40,934) (12,085) Decrease in other assets.............................. 5,904 2,791 Increase in accounts payable and accrued expenses..... 1,757 6,291 Increase in payable to Alliance mutual funds for share purchases.................................. 7,307 2,787 Increase in accrued expenses under employee benefit plans, less deferred compensation.................... 28,506 13,441 -------- --------- Net cash provided from operating activities........ 122,769 120,221 -------- --------- Cash flows from investing activities: Purchase of investments................................. (43,754) (5,510) Proceeds from sale of investments....................... 70,521 28,040 Acquisitions, net....................................... (90,576) - Additions to furniture, equipment and leasehold improvements, net........................... (4,682) (4,654) -------- --------- Net cash provided from (used in) investing activities (68,491) 17,876 -------- --------- Cash flows from financing activities: Proceeds from borrowings................................ - 87 Repayment of debt....................................... (30) (112) Distributions to partners............................... (84,245) (66,837) Capital contribution received from Alliance Capital Management Corporation................................. 291 318 Unit options exercised.................................. 1,459 2,051 -------- --------- Net cash (used in) financing activities............. (82,525) (64,493) -------- --------- Effect of exchange rate changes on cash and cash equivalents...................................... (273) 16 -------- --------- Net increase (decrease) in cash and cash equivalents...... (28,520) 73,620 Cash and cash equivalents at beginning of period.......... 124,256 52,199 -------- --------- Cash and cash equivalents at end of period................ $95,736 $125,819 -------- --------- -------- ---------
See accompanying notes to condensed consolidated financial statements. 5 ALLIANCE CAPITAL MANAGEMENT L.P. Notes to Condensed Consolidated Financial Statements June 30, 1996 (unaudited) 1. BASIS OF PRESENTATION --------------------- The unaudited interim condensed consolidated financial statements of Alliance Capital Management L.P. (The "Partnership") included herein have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of (a) financial position at June 30, 1996, (b) results of operations for the three and six months ended June 30, 1996 and 1995 and (c) cash flows for the six months ended June 30, 1996 and 1995, have been made. 2. ACQUISITION ----------- On February 29, 1996, the Partnership acquired substantially all of the assets and liabilities of Cursitor Holdings, L.P. ("CHLP") and all of the outstanding shares of Cursitor Alliance Holdings Limited, formerly, Cursitor Holdings Limited (collectively,"Cursitor") for approximately $159.0 million, including a purchase price adjustment of approximately $9.4 million. The purchase price consists of 1,764,115 units representing assignments of beneficial ownership of limited partnership interests in the Partnership ("Units") with an aggregate value of $43.2 million, $94.3 million in cash, and notes in the aggregate principal amount of $21.5 million ("Notes"). The Notes bear interest at 6% and are payable ratably over the next four years. Acquisition costs of $4.0 million were also incurred. The acquisition was accounted for under the purchase method with the results of Cursitor included in the Partnership's condensed consolidated financial statements from the acquisition date. The excess of the purchase price, including acquisition costs and minority interest, over the fair value of Cursitor's net assets acquired resulted in goodwill of approximately $161.0 million, which is being amortized over 20 years. The acquisition of Cursitor resulted in the formation of a new subsidiary of the Partnership, Cursitor Alliance LLC ("Cursitor Alliance"), which combined Cursitor's global asset allocation services and the Partnership's international and global equity management services. CHLP owns a 7% minority equity interest in Cursitor Alliance. Under certain circumstances, through February 28, 2006, the Partnership has an option to purchase CHLP'S minority interest in Cursitor Alliance, and CHLP has an option to sell its minority interest to the Partnership for a price not less than $7.0 million or more than $52.0 million. The following unaudited consolidated pro forma information of the Partnership is presented as if the acquisition had occured at the beginning of each period presented. The pro forma information is included for informational purposes only and is not necessarily indicative of the results of operations that would have actually occured had the acquisition been in effect for the periods presented (in thousands, except per Unit amounts). 6 SIX MONTHS ENDED ------------------------ 6/30/96 6/30/95 -------- -------- (unaudited) Revenues $383,783 $313,299 Net income 93,422 73,429 Net income per Unit $1.09 $0.87 3. DEFERRED SALES COMMISSIONS -------------------------- Sales commissions paid to financial intermediaries in connection with the sale of shares of open-end mutual funds managed by the Partnership sold without a front-end sales charge are capitalized and amortized over periods not exceeding five and one half years, the periods of time estimated by management of the Partnership during which deferred sales commissions are expected to be recovered from distribution plan payments received from these funds and contingent deferred sales charges received from shareholders of these funds upon the redemption of their shares. Contingent deferred sales charges reduce unamortized deferred sales commissions when received. 4. DEBT ---- As discussed in Note 2, the Partnership issued promissory notes to CHLP in the aggregate principal amount of $21.5 million on February 29, 1996. During February 1996, the Partnership entered into a new $250 million five- year revolving credit facility with a group of banks which replaced its $100 million revolving credit facility and its $100 million commercial paper back-up revolving credit facility. Under the new revolving credit facility, the interest rate, at the option of the Partnership, 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. A facility fee is payable on the total facility. The revolving credit facility will be used to provide back-up liquidity for commercial paper to be issued under the Partnership's $100 million commercial paper program, to fund commission payments to financial intermediaries for the sale of Class B Shares under the Partnership's mutual fund distribution system ("System"), and for general working capital purposes. As of June 30, 1996, the Partnership had not issued any commercial paper under its $100 million commercial paper program and there were no borrowings outstanding under the Partnership's revolving credit facility. 5. CONTINGENCIES ------------- On July 25, 1995, a Consolidated and Supplemental Class Action Complaint ("Complaint") was filed against the Alliance North American Government Income Trust, Inc. (the "Fund"), the Partnership and certain other defendants affiliated with the Partnership alleging violations of federal securities laws, fraud and breach of fiduciary duty in connection with the Fund's investments in Mexican and Argentine securities. The Complaint seeks certification of a plaintiff class of persons who purchased or owned Class A, B or C shares of the Fund from March 27, 1992 through December 23, 1994. The Complaint seeks an unspecified amount of damages, costs, attorneys' fees and punitive damages. A similar complaint was filed on November 7, 1995 and was subsequently consolidated with the Complaint. The principal allegations of the Complaint are that the Fund purchased debt securities issued by the 7 Mexican and Argentine governments in amounts that were not permitted by the Fund's investment policies and objective, and that there was no shareholder vote to change the investment objective to permit purchases in such amounts. The Complaint further alleges that the decline in the value of the Mexican and Argentine securities held by the Fund caused the Fund's net asset value to decline to the detriment of the Fund's shareholders. On September 26, 1995, the defendants jointly filed a motion to dismiss the Complaint. A decision in respect to this motion is pending. The Partnership believes that the allegations in the Complaint are without merit and intends to vigorously defend against these claims. While the outcome of this action cannot be determined at this time, management of the Partnership does not expect that this action will have a material adverse effect on the Partnership's business. 6. INCOME TAXES ------------ The Partnership is a publicly traded partnership for Federal income tax purposes and, accordingly, is not currently subject to Federal and state corporate income taxes but is subject to the New York City unincorporated business tax. Current law generally provides that certain publicly traded partnerships, including the Partnership, will be taxable as a corporation beginning in 1998. Domestic corporate subsidiaries of the Partnership, which are subject to Federal, state and local income taxes, file a consolidated Federal income tax return and separate state and local income tax returns. Foreign corporate subsidiaries are generally subject to taxes in the foreign jurisdictions where they are located. 7. NET INCOME PER UNIT ------------------- Net income per Unit is derived by reducing net income for each period by 1% for the general partnership interest held by the General Partner and dividing the remaining 99% by the weighted average number of Units outstanding, Unit equivalents and Units issuable upon conversion of the Class A Limited Partnership Interest during each period. 8. SUPPLEMENTAL CASH FLOW INFORMATION ---------------------------------- Cash payments for interest and income taxes were as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, ------------------- ----------------- 1996 1995 1996 1995 ------ ------ ------ ------ Interest................... $ 85 $ 222 $ 251 $ 340 Income taxes............... 3,636 4,508 6,259 4,917 A portion of the Cursitor purchase price consisted of the issuance of 1,764,115 Units with an aggregate value of $43.2 million and promissory notes in the aggregate principal amount of $21.5 million. The condensed consolidated statement of cash flows for the six months ended June 30, 1996 does not include the effects of these transactions since they did not provide or use cash. 8 9. SUBSEQUENT EVENT ---------------- On August 1, 1996, the Board of Directors of the General Partner declared a distribution of $44,694,000 or $0.53 per Unit representing the Available Cash Flow (as defined in the Partnership Agreement) of the Partnership for the three months ended June 30, 1996. The distribution will be paid on August 22, 1996 to holders of record on August 15, 1996. 9 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL Alliance Capital Management L.P. (The "Partnership") derives substantially all of its revenues and net income from fees for investment advisory, distribution and other services provided to the Alliance mutual funds and from fees for investment advisory services provided to separately managed accounts of institutional investors, including third party clients and affiliates, principally The Equitable Life Assurance Society of the United States ("ELAS"), a wholly-owned subsidiary of The Equitable Companies Incorporated ("Equitable") ("Separately Managed Accounts"). The Alliance mutual funds consist of a broad range of open-end load and closed-end mutual funds, variable insurance and annuity products ("variable products"), primarily The Hudson River Trust ("HRT"), and cash management products including money market funds and deposit accounts. The Partnership offers a diversified range of investment management products and services to meet the varied needs and objectives of individual and institutional investors. On February 29, 1996, the Partnership acquired substantially all of the assets and liabilities of Cursitor Holdings, L.P. ("CHLP") and all of the outstanding shares of Cursitor Alliance Holdings Limited, formerly, Cursitor Holdings Limited (collectively, "Cursitor"), an investment manager specializing in global asset allocation with operations in London, Paris and Boston. The acquisition of Cursitor increased the Partnership's assets under management by $10.1 billion. The acquisition was accounted for under the purchase method with the results of Cursitor included in the Partnership's condensed consolidated financial statements from the acquisition date. MATERIAL CHANGES IN RESULTS OF OPERATIONS RESULTS OF OPERATIONS
(Dollars & Units in millions, Three months ended Six months ended except per Unit amounts) 6/30/96 6/30/95 % Change 6/30/96 6/30/95 % Change - --------------------------------------------------------------------------------------------------- Net income $47.0 $37.1 26.7% $92.1 $71.3 29.2% Net income per Unit $0.55 $0.45 22.2 $1.09 $0.87 25.3 Weighted average number of Units and Unit equivalents outstanding 84.7 81.5 3.9 83.9 81.4 3.1 Operating margin 25.7% 25.7% 26.1% 25.4% - ---------------------------------------------------------------------------------------------------- ASSETS UNDER MANAGEMENT (Dollars in billions) 6/30/96 6/30/95 $ Change % Change - ----------------------------------------------------------------------------------------------------- Alliance mutual funds: Mutual Funds $ 24.9 $ 21.3 $3.6 16.9% Cash management products 16.1 11.6 4.5 38.8 Variable products 14.8 10.3 4.5 43.7 - ----------------------------------------------------------------------------------------------------- 55.8 43.2 12.6 29.2 - ----------------------------------------------------------------------------------------------------- Separately Managed Accounts: Active equity & balanced 49.3 41.8 7.5 17.9 Active fixed 35.7 33.4 2.3 6.9 Index 17.1 14.3 2.8 19.6 Asset allocation 10.3 0.5 9.8 1960.0 - ----------------------------------------------------------------------------------------------------- 112.4 90.0 22.4 24.9 - ----------------------------------------------------------------------------------------------------- Total $168.2 $133.2 $35.0 26.3% - -----------------------------------------------------------------------------------------------------
10
AVERAGE ASSETS UNDER MANAGEMENT Three months ended Six months ended (Dollars in billions) 6/30/96 6/30/95 % Change 6/30/96 6/30/95 % Change - ----------------------------------------------------------------------------------------------------- Alliance mutual funds $ 54.7 $ 41.2 32.8% $ 53.1 $ 40.1 32.4% Separately Managed accounts: Affiliated clients 24.5 21.6 13.4 24.1 21.3 13.1 Third party clients 87.5 64.6 35.4 83.5 62.9 32.8 - ----------------------------------------------------------------------------------------------------- Total $166.7 $127.4 30.8% $160.7 $124.3 29.3% - -----------------------------------------------------------------------------------------------------
The Partnership's assets under management were $168.2 billion at June 30, 1996, representing increases of $5.2 billion and $35.0 billion from March 31, 1996 and June 30, 1995, respectively. Alliance mutual fund assets under management at June 30, 1996 were $55.8 billion, an increase of $12.6 billion or 29.2% from June 30, 1995, due principally to market appreciation of $5.4 billion and net sales of cash management and variable product mutual funds of $4.5 billion and $1.9 billion, respectively. The increase in Separately Managed Accounts assets under management is primarily due to market appreciation of $11.4 billion and an increase of $9.8 billion attributable to the Cursitor acquisition.
REVENUES Three months ended Six months ended (Dollars in millions) 6/30/96 6/30/95 % Change 6/30/96 6/30/95 % Change - ----------------------------------------------------------------------------------------------------- Investment advisory and services fees: Alliance mutual funds $ 71.8 $ 55.5 29.4% $139.7 $107.2 30.3% Separately Managed accounts: Affiliated clients 11.8 12.2 (3.3) 21.9 23.8 (8.0) Third party clients 58.1 41.5 40.0 109.2 82.4 32.5 Distribution plan fees from Alliance mutual funds 40.6 30.6 32.7 79.1 59.6 32.7 Shareholder servicing and administration fees 11.6 11.0 5.5 23.0 21.3 8.0 Other revenues 2.2 2.6 (15.4) 4.9 4.5 8.9 - ----------------------------------------------------------------------------------------------------- Total revenues $196.1 $153.4 27.8% $377.8 $298.8 26.4% - -----------------------------------------------------------------------------------------------------
Investment advisory and services fees increased $32.5 million or 29.8% for the three months and $57.4 million or 26.9% for the six months. In general, the Partnership's investment advisory and services fees are based on the market value of assets under management and vary with the type of account managed. Investment advisory agreements for certain accounts provide for performance fees in addition to a base fee. Performance fees are earned when investment performance exceeds a contractually agreed upon benchmark and, accordingly, may increase the volatility of both the Partnership's revenues and earnings. Investment advisory fees from Alliance mutual funds increased for the three and the six months primarily due to higher average assets under management of 32.8% and 32.4%, respectively. 11 Investment advisory fees from affiliated clients decreased for the three and six months since significant performance fees were recorded in the first six months of 1995 due to capital gains realized in leveraged buy-out portfolios managed by the Partnership. This decrease was offset partially by higher fees earned on fixed income products. Investment advisory and services fees from third party clients increased for the three and six months principally due to an increase in average assets under management of 35.4% and 32.8%, respectively. The increase in third party clients assets is primarily a result of market appreciation and the acquisition of Cursitor in February 1996. Distribution plan fees increased for the three and six months due principally to higher average equity mutual fund and cash management assets under management. The increase in distribution plan fees for equity mutual funds is principally due to market appreciation and net sales of Class B shares of these funds under the Partnership's mutual fund distribution system described under "Capital Resources and Liquidity". The increase in shareholder servicing and administration fees was primarily due to an increase in the number of mutual fund shareholder accounts serviced by the Partnership's subsidiaries from June 30, 1995. At June 30, 1996 the Partnership's subsidiaries serviced approximately 2.2 million shareholder accounts. EXPENSES
Three months ended Six months ended (Dollars in millions) 6/30/96 6/30/95 % Change 6/30/96 6/30/95 % Change - ----------------------------------------------------------------------------------------------------- Employee compensation and benefits $ 54.1 $ 41.7 29.7% $103.5 $ 81.5 27.0% Promotion and servicing 61.3 49.4 24.1 118.8 97.0 22.5 General and administrative 25.6 20.5 24.9 49.0 39.5 24.1 Interest 0.5 0.2 150.0 0.7 0.6 16.7 Amortization of intangible assets 4.2 2.2 90.9 7.1 4.4 61.4 - ----------------------------------------------------------------------------------------------------- Total expenses $145.7 $114.0 27.8% $279.1 $223.0 25.2% - -----------------------------------------------------------------------------------------------------
Employee compensation and benefits increased for the three and six months primarily as a result of higher incentive compensation attributable to increased operating earnings and higher commission expense as a result of higher mutual fund sales and higher cash management assets under management. Promotion and servicing expenses include distribution plan payments to financial intermediaries for distribution of the Partnership's mutual fund and cash management services products, amortization of deferred sales commissions paid to brokers for the sale of Class B Shares, travel and entertainment, advertising and promotional materials. Promotion and servicing expenses increased for the three and six months primarily as a result of an increase in distribution plan payments due principally to higher average cash management and equity mutual fund assets under management. 12 Increases in general and administrative expenses for the three and six months were due principally to litigation, higher systems consulting expenses associated with technology initiatives, higher occupancy costs incurred in connection with the expansion of the Partnership's New York headquarters and expenses incurred in connection with prospective joint ventures. Amortization of intangibles increased for the three and six months due to the amortization of goodwill associated with the February 1996 Cursitor acquisition. The provision for income taxes increased for the three and six months primarily as a result of the increase in pre-tax income for the Partnership and certain of its corporate subsidiaries. CAPITAL RESOURCES AND LIQUIDITY The Partnership's cash and cash equivalents decreased by $28.5 million for the six months ended June 30, 1996. Cash outflows included $90.6 million used for acquisitions, distributions to Unitholders of $84.2 million and capital expenditures of $4.7 million. Cash inflows included $122.8 million from operations, $26.8 million of proceeds from net sales of investments in Alliance mutual funds and $1.5 million in proceeds from options exercised under the Partnership's Unit Option Plans. The Partnership acquired Cursitor on February 29, 1996 for approximately $159.0 million, including a purchase price adjustment of approximately $9.4 million. The purchase price consisted of cash payments of $94.3 million, 1,764,115 Units with an aggregate value of $43.2 million, and notes in the aggregate principal amount of $21.5 million ("Notes"). The Notes bear interest at 6% and are payable ratably over the next four years. Acquisition costs of $4.0 million were also incurred. The acquisition of Cursitor resulted in the formation of a new subsidiary of the Partnership, Cursitor Alliance LLC ("Cursitor Alliance"), which combined Cursitor's global asset allocation services and the Partnership's international and global equity management services. CHLP owns a 7% minority equity interest in Cursitor Alliance. Under certain circumstances, through February 28, 2006, the Partnership has an option to purchase CHLP's minority interest in Cursitor Alliance, and CHLP has an option to sell its minority interest to the Partnership for a price of not less than $7.0 million or more than $52.0 million. The Partnership's mutual fund distribution system (the "System") includes three distribution options. The System permits the Partnership's open-end mutual funds to offer investors the option of purchasing shares (a) subject to a conventional front-end sales charge ("Class A Shares"), (b) without a front-end sales charge but subject to a contingent deferred sales charge payable by shareholders ("CDSC") and higher distribution fees payable by the funds ("Class B Shares"), or (c) without either a front-end sales charge or the CDSC but with higher distribution fees payable by the funds ("Class C Shares"). During the six months ended June 30, 1996, payments made to financial intermediaries in connection with the sale of Class B Shares under the System, net of CDSC received, totaled $40.9 million. 13 During February 1996, the Partnership entered into a new $250 million five-year revolving credit facility with a group of banks which replaced its $100 million revolving credit facility and its $100 million commercial paper back-up revolving credit facility, as more fully described in Note 4. As of June 30, 1996, the Partnership had not issued any commercial paper under its $100 million commercial paper program and there were no borrowings outstanding under the Partnership's revolving credit facility. The revolving credit facility contains covenants which require the Partnership, among other things, to meet certain financial ratios. Management of the Partnership believes that cash flow from operations and the issuance of debt and Units will provide the Partnership with the financial resources to take advantage of strategic growth opportunities, to finance capital requirements for mutual fund sales and to meet the Partnership's other capital requirements. CASH DISTRIBUTIONS The Partnership is required to distribute all of its Available Cash Flow, as defined in the Partnership Agreement, to the General Partner and Unitholders (including the holder of the Class A Limited Partnership Interest based on Units issuable upon conversion of the Class A Limited Partnership Interest). The Partnership's Available Cash Flow was as follows (in thousands, except per Unit information): Three months ended Six months ended 6/30/96 6/30/95 6/30/96 6/30/95 - -------------------------------------------------------------------------------- Available Cash Flow $44,694 $35,150 $87,937 $68,604 Available Cash Flow per Unit $0.53 $0.43 $1.05 $0.84 - -------------------------------------------------------------------------------- 14 PART II OTHER INFORMATION ----------------- Item 1. LEGAL PROCEEDINGS There have been no material developments in the legal proceeding reported in the Alliance Capital Management L.P. Form 10-K for the year ended December 31, 1995. Item 2. CHANGES IN SECURITIES None. Item 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. Item 5. OTHER INFORMATION None. Item 6. EXHIBITS AND REPORTS ON FORM 8-K (A) Exhibits None. (B) Reports on Form 8-K None 15 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ALLIANCE CAPITAL MANAGEMENT L.P. Dated: August 8, 1996 By: Alliance Capital Management Corporation, its General Partner By: /s/ Robert H. Joseph, Jr. ----------------------------------- Robert H. Joseph, Jr. Senior Vice President & Chief Financial Officer 16 EX-27 2 EXHIBIT 27 FDS
5 1,000 3-MOS DEC-31-1996 APR-01-1996 JUN-30-1996 95,736 8,645 136,645 0 0 241,026 45,134 0 717,020 231,637 0 0 0 0 460,600 717,020 196,149 196,149 0 140,999 4,181 0 472 50,497 3,467 47,030 0 0 0 47,030 .55 .55
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