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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 March 31, 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
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ALLIANCE CAPITAL MANAGEMENT L.P.
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3434400
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1345 Avenue of the Americas, New York, NY 10105
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(Address of principal executive offices) (Zip Code)
(212) 969-1000
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(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 March 31, 1996 was
82,881,466 Units.
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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
Part I
FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
--------------------
ALLIANCE CAPITAL MANAGEMENT L.P.
Condensed Consolidated Statements of Financial Condition
(in thousands)
ASSETS 3/31/96 12/31/95
--------- --------
(unaudited)
Cash and cash equivalents....................... $ 89,927 $124,256
Fees receivable:
Alliance mutual funds......................... 40,692 36,840
Other affiliated clients...................... 3,215 2,006
Institutional clients......................... 54,844 46,766
Receivable from brokers and dealers for sale
of shares of Alliance mutual funds............ 36,664 26,651
Investments, available-for-sale................. 12,973 35,375
Furniture, equipment and leasehold
improvements, net............................. 44,739 44,208
Intangible assets, net.......................... 241,762 84,209
Deferred sales commissions, net................. 157,462 149,583
Other assets.................................... 23,085 25,164
--------- --------
Total assets.............................. $705,363 $575,058
========= ========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses........... $100,253 $ 74,054
Payable to Alliance mutual funds for share
purchases..................................... 57,776 45,217
Accrued expenses under employee benefit plans... 53,525 44,086
Debt............................................ 24,798 3,462
Minority interests in consolidated subsidiaries. 14,395 1,530
--------- --------
Total liabilities......................... 250,747 168,349
Partners' capital................................. 454,616 406,709
--------- --------
Total liabilities and partners' capital... $705,363 $575,058
========= ========
See accompanying notes to condensed consolidated financial statements.
ALLIANCE CAPITAL MANAGEMENT L.P.
Condensed Consolidated Statements of Income
(unaudited)
(in thousands, except per Unit amounts)
Three Months Ended
--------------------
3/31/96 3/31/95
--------- --------
Revenues:
Investment advisory and services fees:
Alliance mutual funds............................. $ 67,824 $ 51,646
Separately Managed Accounts:
Affiliated clients.............................. 10,098 11,611
Third party clients............................. 51,121 40,963
Distribution plan fees from Alliance mutual funds... 38,483 29,012
Shareholder servicing and administration fees....... 11,400 10,255
Other revenues...................................... 2,690 1,892
--------- --------
181,616 145,379
========= ========
Expenses:
Employee compensation and benefits.................. 49,376 39,823
Promotion and servicing:
Distribution plan payments to financial
intermediaries:
Affiliated...................................... 6,991 5,395
Unaffiliated.................................... 26,802 19,166
Amortization of deferred sales commissions........ 12,518 12,867
Other............................................. 11,127 10,117
General and administrative.......................... 23,441 19,048
Interest............................................ 242 408
Amortization of intangible assets................... 2,913 2,187
--------- --------
133,410 109,011
========= ========
Income before income taxes............................ 48,206 36,368
Income taxes........................................ 3,139 2,183
--------- --------
Net income............................................ $ 45,067 $ 34,185
========= ========
Net income per Unit................................... $ 0.54 $ 0.42
========= ========
Weighted average Units outstanding.................... 83,098 81,248
========= ========
See accompanying notes to condensed consolidated financial statements.
ALLIANCE CAPITAL MANAGEMENT L.P.
Condensed Consolidated Statements of
Changes in Partners' Capital
(unaudited)
(in thousands)
Three Months Ended
--------------------
3/31/96 3/31/95
--------- --------
Partners' capital - beginning of period............. $406,709 $381,329
Net income........................................ 45,067 34,185
Capital contribution received from Alliance
Capital Management Corporation.................. 893 916
Distributions to partners......................... (41,001) (33,383)
Units issued for acquisition of Cursitor.......... 42,394 -
Unit options exercised............................ 708 734
Unrealized gain on investments.................... 129 8
Foreign currency translation adjustment........... (283) 2
--------- --------
Partners' capital - end of period................... $454,616 $383,791
========= ========
See accompanying notes to condensed consolidated financial statements.
ALLIANCE CAPITAL MANAGEMENT L.P.
Condensed Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
Three Months Ended
--------------------
3/31/96 3/31/95
--------- --------
Cash flows from operating activities:
Net income ............................................. $ 45,067 $ 34,185
Adjustments to reconcile net income to net cash
provided from operating activities:
Amortization and depreciation........................... 17,465 16,998
Other, net.............................................. 2,168 1,488
Changes in assets and liabilities:
(Increase) decrease in fees receivable from Alliance
mutual funds, other affiliated clients and
institutional clients.................................. (1,305) 4,569
(Increase) in receivables from brokers and
dealers for sale of shares of Alliance mutual funds.... (10,013) (11,066)
(Increase) in deferred sales commissions................ (20,397) (3,163)
Decrease in other assets................................ 5,668 863
Increase in accounts payable and accrued expenses....... 11,520 7,150
Increase in payable to Alliance
mutual funds for share purchases,,..................... 12,557 8,016
Increase in accrued expenses under employee benefit
plans, less deferred compensation...................... 8,672 1,513
-------- --------
Net cash provided from operating activities........ 71,402 60,553
-------- --------
Cash flows from investing activities:
Purchase of investments................................. (1,209) (410)
Proceeds from sale of investments....................... 23,522 12,040
Acquisition of Cursitor, net of cash acquired........... (85,330) --
Additions to furniture, equipment and
leasehold improvements, net........................... (2,275) (3,215)
-------- --------
Net cash provided from (used in) investing
activities....................................... (65,292) 8,415
-------- --------
Cash flows from financing activities:
Proceeds from borrowing................................. -- 87
Repayment of debt....................................... (15) (41)
Distributions to partners............................... (41,001) (33,383)
Proceeds from sale of Units.............................
Capital contribution received from Alliance Capital
Management Corporation................................ 143 166
Unit options exercised.................................. 708 734
-------- --------
Net cash (used in) financing activities............ (40,165) (32,437)
-------- --------
Effect of exchange rate changes on cash and
cash equivalents...................................... (274) 2
-------- --------
Net increase (decrease) in cash and cash equivalents.... (34,329) 36,533
Cash and cash equivalents at beginning of period........ 124,256 52,199
-------- --------
Cash and cash equivalents at end of period.............. $ 89,927 $ 88,732
======== ========
See accompanying notes to condensed consolidated financial statements.
ALLIANCE CAPITAL MANAGEMENT L.P.
Notes to Condensed Consolidated Financial Statements
March 31, 1996
(unaudited)
1. Basis of Presentation
---------------------
The unaudited interim condensed consolidated financial statements of
Alliance Capital Management L.P. ("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. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. In the opinion of management, all adjustments, consisting
only of normal recurring adjustments, necessary for a fair presentation of
(a) financial position at March 31, 1996, (b) results of operations for the
three months ended March 31, 1996 and 1995 and (c) cash flows for the three
months ended March 31, 1996 and 1995, have been made.
2. Reclassification
----------------
Certain prior period amounts have been reclassified to conform to the
current period presentation.
3. 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
$149.6 million. In addition, $4.0 million in acquisition costs were
incurred. 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, $84.9
million in cash, 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. In 1996, the Partnership is also obligated to pay in
cash a purchase price adjustment estimated at $9.4 million.
The acquisition has been 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 plus minority interest, over the fair
value of Cursitor's net assets acquired resulted in goodwill of
approximately $161.0 million, which will be 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 of 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 occurred 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 occurred had the
acquisition been in effect for the periods presented (in thousands, except
per Unit amounts).
Three Months Ended
-------------------
3/31/96 3/31/95
-------- --------
(unaudited)
Revenues $187,634 $151,695
Net income 46,392 35,038
Net income per Unit $0.54 $0.42
4. 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
("Alliance mutual funds") 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 certain Alliance mutual funds and
contingent deferred sales charges received from shareholders of those
Alliance mutual funds upon the redemption of their shares. Contingent
deferred sales charges reduce unamortized deferred sales commissions when
received.
5. Debt
----
In connection with the Cursitor acquisition, promissory notes were issued
to CHLP in the aggregate principal amount of $21.5 million on February 29,
1996. The notes bear interest at 6.0% and are payable ratably over the
next four years.
During February 1996, the Partnership terminated its $100 million
revolving credit facility and its $100 million commercial paper back-up
revolving credit facility and replaced them with a new $250 million
five-year revolving credit facility with a group of banks. 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 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 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.
6. Contingencies
-------------
On July 25, 1995, a Consolidated and Supplemental Class Action Complaint
("Complaint") was filed against 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 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, management
of the Partnership does not expect that this action will have a material
adverse effect on the Partnership's business.
7. 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.
8. 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 and Unit equivalents and Units issuable upon conversion of the
Class A Limited Partnership Interest during each period.
9. Supplemental Cash Flow Information
----------------------------------
Cash payments for interest and income taxes were as follows
(in thousands):
Three Months Ended
------------------
3/31/96 3/31/95
------- -------
Interest....................... $ 167 $ 118
Income taxes................... 2,623 409
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 three months ended March 31,
1996 does not include the effects of these transactions since they did not
provide or use cash.
10. Subsequent Event
----------------
On May 6, 1996, the Finance Committee of the Board of Directors of the
General Partner declared a distribution of $43,224,000 or $0.52 per Unit
representing the Available Cash Flow (as defined in the Partnership
Agreement) of the Partnership for the three months ended March 31, 1996.
The distribution will be paid on May 28, 1996 to holders of record on May
20, 1996.
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 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 (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
except per Unit amounts) -----------------------------
3/31/96 3/31/95 % Change
------- ------- ---------
Net income $45.1 $34.2 31.9%
Net income per Unit $0.54 $0.42 28.6
Weighted average number of Units
and Unit equivalents outstanding 83.1 81.2 2.3
Operating margin 26.5% 25.0%
Increases in net income and operating margins are primarily attributable to
the increase in investment advisory and services fees due to higher average
assets under management.
ASSETS UNDER MANAGEMENT
(Dollars in billions) 3/31/96 3/31/95 $ Change % Change
------- ------- -------- --------
Alliance mutual funds:
Mutual funds $ 23.8 $ 19.9 $ 3.9 19.6%
Cash management products 15.7 10.2 5.5 53.9
Variable products 13.6 9.2 4.4 47.8
------- ------- -------- --------
53.1 39.3 13.8 35.1
======= ======= ======== ========
Separately Managed Accounts:
Active equity & balanced 48.6 38.3 10.3 26.9
Active fixed 34.1 32.7 1.4 4.3
Index 16.9 13.5 3.4 25.2
Asset allocation 10.3 0.5 9.8 1,960.0
------- ------- -------- --------
109.9 85.0 24.9 29.3
------- ------- -------- --------
Total $163.0 $124.3 $38.7 31.1%
======= ======= ======== ========
AVERAGE ASSETS UNDER MANAGEMENT
Three months ended
----------------------------
(Dollars in billions) 3/31/96 3/31/95 % Change
------- ------- --------
Alliance mutual funds $ 51.4 $ 38.8 32.5%
Separately Managed Accounts:
Affiliated clients 23.2 21.1 10.0
Third party clients 80.6 61.4 31.3
------- ------- --------
Total $155.2 $121.3 27.9%
======= ======= ========
The Partnership's assets under management were $163.0 billion at March 31,
1996, increases of $38.7 billion and $16.5 billion from March 31, 1995 and
December 31, 1995, respectively.
Alliance mutual fund assets under management at March 31, 1996 were $53.1
billion, an increase of $13.8 billion or 35.1% from March 31, 1995, due
principally to market appreciation of $6.9 billion and net sales of cash
management and variable product mutual funds of $5.5 billion and $1.5 billion,
respectively. The increase in Separately Managed Accounts is primarily due to
market appreciation of $14.2 billion and $9.8 billion in assets under
management for Cursitor clients.
REVENUES
Three months ended
--------------------------
(Dollars in millions) 3/31/96 3/31/95 % Change
------- ------- --------
Investment advisory and services fees:
Alliance mutual funds $ 67.8 $ 51.6 31.4%
Separately Managed Accounts:
Affiliated clients 10.1 11.6 (12.9)
Third party clients 51.1 41.0 24.6
Distribution plan fees from Alliance mutual funds 38.5 29.0 32.8
Shareholder servicing and administration fees 11.4 10.3 10.7
Other revenues 2.7 1.9 42.1
------- ------- --------
Total Revenues $181.6 $145.4 24.9%
======= ======= ========
Investment advisory and services fees increased $24.8 million or 23.8% due
primarily to higher average assets under management resulting principally
from market appreciation. 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 primarily due
to higher average assets under management of 32.5%.
Investment advisory fees from affiliated clients decreased since significant
performance fees were recorded in the first quarter of 1995 due to capital
gains realized in leveraged buy=out portfolios managed by the Partnership.
This decrease was partially offset by higher fees earned on high yield fixed
income accounts.
Investment advisory and services fees from third party clients increased due
principally to an increase in average assets under management of 31.3%
primarily as a result of market appreciation and the acquisition of Cursitor.
Distribution plan fees increased due principally to higher average cash
management and equity mutual fund assets under management.
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 March 31, 1995. At March 31,
1996, the Partnership's subsidiaries serviced approximately 2.1 million
shareholder accounts.
Other revenues increased primarily due to an increase in interest earned on
short=term investments and higher commissions on sales of Class A shares under
the Partnership's mutual fund distribution system described under "Capital
Resources and Liquidity".
EXPENSES
Three months ended
---------------------------
(Dollars in millions) 3/31/96 3/31/95 % Change
------- ------- ---------
Employee compensation and benefits $ 49.4 $ 39.8 24.1%
Promotion and servicing 57.4 47.6 20.6
General and administrative 23.4 19.0 23.2
Interest 0.3 0.4 (25.0)
Amortization of intangible assets 2.9 2.2 31.8
------- ------- --------
Total expenses $133.4 $109.0 22.4%
======= ======= ========
Employee compensation and benefits increased 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 primarily as a result of an increase in distribution plan payments
due principally to higher average cash management assets and equity mutual
fund assets under management. Higher cash management promotion and servicing
costs and increased mutual fund advertising also contributed to the increase
in promotion and servicing.
The increase in general and administrative expenses was due principally to
litigation, higher systems consulting expenses associated with technology
initiatives and higher occupancy costs incurred in connection with the
expansion of the Partnership's New York headquarters.
Amortization of intangibles increased due to the amortization of goodwill
associated with the February 1996 Cursitor acquisition.
Capital Resources and Liquidity
The Partnership's cash and cash equivalents decreased by $34.3 million for the
three months ended March 31, 1996. Cash outflows included $85.3 million used
for the Cursitor acquisition, distributions to Unitholders of $41.0 million
and capital expenditures of $2.3 million. Cash inflows included $71.4 million
from operations, $22.3 million of proceeds from net sales of investments in
Alliance mutual funds and $0.7 million in proceeds from options exercised
under the Partnership's Unit Option Plans.
The Partnership acquired Cursitor on February 29, 1996 for approximately
$149.6 million. The purchase price consisted of a cash payment of $84.9
million, 1,764,115 Units with an aggregate value of $43.2 million, 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. In 1996, the
Partnership is also obligated to pay in cash a purchase price adjustment
estimated at $9.4 million.
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 Alliance 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 three months ended March 31, 1996, payments made to financial
intermediaries in connection with the sale of Class B shares under the System,
net of CDSC received, totaled $20.4 million.
During February 1996, the Partnership terminated its $100 million revolving
credit facility and its $100 million commercial paper back=up revolving credit
facility and replaced them with a new $250 million five=year revolving credit
facility with a group of banks, as more fully described in Note 5. As of
March 31, 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:
Three Months Ended
------------------
3/31/96 3/31/95
-------- --------
Available Cash Flow (in thousands) $43,224 $33,454
Available Cash Flow Per Unit $ 0.52 $ 0.41
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. ("Partnership")
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
27 Financial Data Schedule
(b) Reports on Form 8-K
The Partnership filed a report on Form 8-K dated March 6,
1996 with respect to the Partnership's acquisition of the
business of Cursitor-Eaton Asset Management Company and
Cursitor Holdings Limited.
The Partnership filed a report on Form 8-K/A dated May 6,
1996 which amends Item 7 of the Partnership's Form 8-K dated
March 6, 1996 to include certain financial information.
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: May 15, 1996 By: Alliance Capital Management
Corporation, its General Partner
/s/ Robert H. Joseph, Jr.
By: --------------------------------
Robert H. Joseph, Jr.
Senior Vice President &
Chief Financial Officer
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