===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 30, 1999
ALLIANCE CAPITAL MANAGEMENT L.P.
----------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 1-9818 13-3434400
- ------------------------------ ------------------------ -------------------
(State or Other (Commission File Number) (IRS Employer
Jurisdiction of Incorporation Identification No.)
or Organization)
1345 Avenue of the Americas
New York, New York 10105
- ---------------------------------------- ------------
(Address of Principal Executive Offices) (Zip Code)
(212) 969-1000
--------------------------------------------------------------
(Registrant's telephone number, including area code)
None
--------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
===============================================================================
<PAGE>
ITEM 5. Other Events.
On August 3, 1999, Alliance Capital Management L.P. ("Alliance Holding")
filed with the Securities and Exchange Commission a Proxy Statement Prospectus
on Schedule 14A (the "Proxy Statement") in connection with the proposed
transfer of its business to a newly-formed private limited partnership,
Alliance Capital Management L.P. II ("Alliance Capital") in exchange for all
units of Alliance Capital. Upon consummation of the reorganization, Alliance
Capital will conduct unchanged the diversified investment management services
business presently conducted by Alliance Holding, and all employees of Alliance
Holding will become employees of Alliance Capital.
The Proxy Statement contains selected historical consolidated financial
data of Alliance Holding and selected unaudited pro forma financial data of
Alliance Capital and Alliance Holding, in each case for the three months ended
March 31, 1999, and the capitalization of Alliance Holding on a historical
basis and the capitalization of Alliance Capital and Alliance Holding on a pro
forma basis, in each case as of March 31, 1999. Attached hereto as Exhibits
99.1 and 99.2, respectively, are such selected historical financial data of
Alliance Holding and such selected pro forma financial data of Alliance Holding
and Alliance Capital, each for the six months ended June 30, 1999, and such
capitalization figures of Alliance Holding and Alliance Capital as of June 30,
1999.
The Proxy Statement also contains unaudited pro forma condensed financial
statements for the three months ended March 31, 1999 and 1998 for both Alliance
Holding and Alliance Capital. The pro forma financial statements contained
therein are derived from the historical consolidated financial statements of
Alliance Holding set forth in its Annual Report on Form 10-K for the year ended
December 31, 1998 and Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1999 and reflect the effects of the reorganization as if it
occurred on March 31, 1999 (for statement of financial condition purposes) and
January 1, 1998 (for income statement purposes). The pro forma financial
statements do not purport to represent what the financial position or results
of operations of Alliance Capital and Alliance Holding would actually have been
if the reorganization had occurred on these dates, or to be indicative of the
future financial position or results of operations of Alliance Capital and
Alliance Holding. These pro forma financial statements and the notes thereto
should be read in conjunction with Alliance Holding's consolidated financial
statements and notes.
Attached hereto as Exhibit 99.3 are unaudited pro forma condensed
financial statements for the six months ended June 30, 1999 and 1998 for both
Alliance Holding and Alliance Capital. The pro forma financial statements
contained therein are derived from the historical consolidated financial
statements of Alliance Holding set forth in its Annual Report on Form 10-K for
the year ended December 31, 1998 and and Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1999 and reflect the effects of the
reorganization as if it occurred on June 30, 1999 (for statement of financial
condition purposes) and January 1, 1998 (for income statement purposes). The
pro forma financial statements do not purport to
<PAGE>
represent what the financial position or results of operations of Alliance
Capital and Alliance Holding would actually have been if the reorganization had
occurred on these dates, or to be indicative of the future financial position
or results of operations of Alliance Capital and Alliance Holding. These pro
forma financial statements and the notes thereto should be read in conjunction
with Alliance Holding's consolidated financial statements and notes.
In connection with the reorganization, Alliance Holding is offering to its
unitholders the opportunity to exchange Alliance Holding units for Alliance
Capital units, on a one-for-one basis. The Equitable Life Assurance Society of
the United States ("Equitable Life") and its affiliates, which at June 30, 1999
collectively owned approximately 57% of the outstanding Alliance Holding units,
have agreed with Alliance Holding to exchange substantially all of their
Alliance Holding units on the same terms as the exchange offer. Accordingly,
the pro forma adjustments assume that Equitable Life and its affiliates will
exchange all of their Alliance Holding units for an equivalent number of
Alliance Capital units, except for an amount equal to an approximately 2%
economic interest in Alliance Holding. Alliance Holding is unable to predict
which unitholders, other than Equitable Life and its affiliates, will
participate in the exchange offer. However, for illustrative purposes, the pro
forma adjustments assume that no unitholder will participate in the exchange
offer, other than Equitable Life, its affiliates and other unitholders who,
were they to exchange all of their Alliance Holding units for Alliance Capital
units, would hold a sufficient number of Alliance Capital units to qualify for
certain block transfer safe harbors set forth in United States Treasury
regulations. Based on these assumptions, Alliance Holding would own an
approximately 38.15% limited partnership interest in Alliance Capital at June
30, 1999. Alliance Holding's interest in Alliance Capital will entitle it to a
share of cash distributions from, and in the allocation of profits and losses
of, Alliance Capital in proportion to Alliance Holding's percentage ownership.
If the reorganization is consummated, Equitable Life has agreed to pay $3
million to Alliance Capital for any internal personnel and overhead costs and
expenses of Alliance Holding, Alliance Capital or their common general partner
relating to the consideration and implementation of the reorganization and the
exchange offer and other expenses relating to the transaction. Equitable Life
has agreed to pay $1.5 million to Alliance Holding for such costs if the
reorganization is not consummated. Any such payment has not been reflected in
the unaudited pro forma condensed financial statements because of its
nonrecurring nature and because it is not material. Other expenses incurred in
connection with the reorganization and the exchange offer, estimated to be
approximately $8 million, will be borne by Equitable Life and have not been
reflected in the pro forma condensed financial statements.
In the future, Alliance Holding will incur various ongoing expenses, which
primarily will include professional, filing and registration fees. Alliance
Capital will reimburse Alliance Holding for all expenses that are necessary or
appropriate for the conduct of the business of Alliance Holding, other than the
3.5% federal tax on gross business income and other taxes.
2
<PAGE>
As these amounts are not expected to be material, they have not been reflected
in the pro forma condensed financial statements.
Alliance Holding's units are traded on the New York Stock Exchange
("NYSE"). The high and low sale prices on the NYSE during each quarter of the
1999 fiscal year were as follows:
1999 High Low
---- ------- ------
First Quarter 26 7/8 24 1/2
Second Quarter 32 5/16 24 1/8
3
<PAGE>
ITEM 7(c). Exhibits.
Exhibit 99.1 Selected Financial Data
Exhibit 99.2 Capitalization
Exhibit 99.3 Pro Forma Condensed Financial Statements (Unaudited)
4
<PAGE>
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 hereunto duly authorized.
ALLIANCE CAPITAL MANAGEMENT L.P.
ALLIANCE CAPITAL MANAGEMENT
CORPORATION, its General Partner
Dated: September 30, 1999 By: /s/ David R. Brewer, Jr.
-------------------------
Name: David R. Brewer, Jr.
Title: Senior Vice President and
General Counsel
EXHIBIT 99.1
SELECTED FINANCIAL DATA
Selected Historical Consolidated Financial Data
of Alliance Holding
We have set forth below selected summary consolidated
historical financial data of Alliance Holding for the six months ended June
30, 1999 and 1998 and for each of the years in the five-year period ended
December 31, 1998. This data should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations and
the consolidated financial statements of Alliance Holding set forth in its
Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999 and
in its Annual Report on Form 10-K for the year ended December 31, 1998. Unit
and per unit amounts for all periods prior to the two-for-one unit split in
1998 have been restated. Net income per unit amounts prior to 1997 have been
restated as required to comply with Statement of Financial Accounting
Standards No. 128, Earnings per Share.
<TABLE>
For the Six Months Ended For the Year Ended
June 30, December 31,
----------------------- ----------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
-------- -------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
(unaudited) (in thousands, except for per unit data)
Income statement data:
Revenues......................... $838,684 $648,137 $1,324,056 $975,336 $788,517 $639,255 $600,952
Income before income taxes....... 229,728 172,417 348,712 147,762 207,590 167,011 141,806
Net income....................... 195,268 144,825 292,916 128,956 193,346 155,387 133,489
Net income before reduction in
recorded value of intangible
assets......................... 195,268 144,825 292,916 249,856 193,346 155,387 133,489
Net income per unit:
Basic net income per unit........ $1.13 $0.85 $1.71 $0.76 $1.15 $0.95 $0.86
Diluted net income per unit...... $1.10 $0.82 $1.66 $0.74 $1.13 $0.94 $0.85
Diluted net income per unit
before reduction in recorded
value of intangible assets..... $1.10 $0.82 $1.66 $1.44 $1.13 $0.94 $0.85
Basic weighted average units
outstanding.................... 170,804 169,609 169,933 168,448 166,382 161,538 153,381
Diluted weighted average units
outstanding.................... 175,968 174,949 175,143 171,876 168,968 163,116 155,882
Cash distributions per unit....... $ 1.08 $ 0.80 $ 1.62 $ 1.40 $ 1.095 $ 0.91 $ 0.82
December 31,
June 30, ----------------------------------------------------------------
1999 1998 1997 1996 1995 1994
---------- ---------- -------- -------- -------- --------
Balance sheet data:
Total assets..................... $1,456,717 $1,132,592 $784,460 $725,897 $575,058 $518,369
Debt and long-term obligations(1) 424,486 238,089 130,429 52,629 30,839 29,021
Partners' capital................ 467,062 430,273 398,051 476,020 406,709 381,329
Assets under management (in
millions)(2)..................... $ 321,006 $ 286,659 $218,654 $182,792 $146,521 $119,279
</TABLE>
- ---------------
(1) Includes accrued compensation and benefits due after one year and debt.
(2) Excludes certain non-discretionary advisory relationships and reflects
100% of the assets managed by unconsolidated joint venture subsidiaries and
affiliates.
<PAGE>
Selected Unaudited Pro Forma Financial Data
of Alliance Capital and Alliance Holding
We have set forth below selected unaudited pro forma financial
data of Alliance Capital and Alliance Holding for the six months ended June
30, 1999 and 1998 and for the year ended December 31, 1998. This pro forma
data has been derived from the unaudited pro forma condensed financial
statements of Alliance Capital and Alliance Holding and includes the
assumptions described under "Pro Forma Condensed Financial Statements
(Unaudited)". This pro forma data reflects the effects of the reorganization
and the exchange offer as if such transactions occurred on June 30, 1999 (for
balance sheet purposes) and January 1, 1998 (for income statement purposes).
This pro forma data does not purport to represent what the financial position
or results of operations of Alliance Capital and Alliance Holding would
actually have been if the reorganization and the exchange offer had occurred
on these dates, or to be indicative of the future financial position or
results of operations of Alliance Capital and Alliance Holding. You should
read this pro forma data in conjunction with the consolidated financial
statements of Alliance Holding set forth in its Quarterly Report on Form 10-Q
for the quarter ended June 30, 1999 and in its Annual Report on Form 10-K for
the year ended December 31, 1998 and with the information under Item 5 of this
Form 8-K and "Pro Forma Condensed Financial Statements (Unaudited)", which is
included as Exhibit 99.3 to this Form 8-K.
<TABLE>
Historical Alliance Holding
--------------------------------------------------------
For the Six Months For the Year
Ended June 30, Ended
------------------------------- December 31,
1999 1998 1998
---------- -------- --------------
<S> <C> <C> <C>
(in thousands, except for per unit data)
Income statement data:
Revenues......................................... $ 838,684 $648,137 $1,324,056
Income before income taxes....................... 229,728 172,417 348,712
Net income....................................... 195,268 144,825 292,916
Net income per unit:
Basic net income per unit........................ $ 1.13 $ 0.85 $ 1.71
Diluted net income per unit...................... $ 1.10 $ 0.82 $ 1.66
Basic weighted average units outstanding......... 170,804 169,009 169,933
Diluted weighted average units outstanding....... 175,968 174,949 175,143
Cash distributions per unit....................... $ 1.08 $ 0.80 $ 1.62
June 30,
1999
----------
Balance sheet data:
Total assets..................................... $1,456,717
Debt and long-term obligations................... 424,486
Partners' capital................................ 467,062
</TABLE>
2
<PAGE>
<TABLE>
Pro Forma Alliance Capital
--------------------------------------------------------
For the Six Months For the
Ended June 30, Year Ended
---------------------------- December 31,
1999 1998 1998
---------- -------- ------------
<S> <C> <C> <C>
(in thousands, except for per unit data)
Income statement data:
Revenues......................................... $838,684 $648,137 $1,324,056
Income before income taxes....................... 229,728 172,417 348,712
Net income....................................... 214,872 160,825 323,516
Net income per unit:
Basic net income per unit........................ $ 1.25 $ 0.94 $ 1.88
Diluted net income per unit...................... $ 1.21 $ 0.91 $ 1.83
Basic weighted average units outstanding......... 170,804 169,609 169,933
Diluted weighted average units outstanding....... 175,968 174,949 175,143
Cash distributions per unit....................... $ 1.19 $ 0.89 $ 1.80
June 30,
1999
----------
Balance sheet data:
Total assets..................................... $1,437,113
Debt and long-term obligations................... 424,486
Partners' capital................................ 467,062
</TABLE>
<TABLE>
Pro Forma Alliance Holding
--------------------------------------------------------
For the Six Months For the
Ended June 30, Year Ended
---------------------------- December 31,
1999 1998 1998
---------- -------- ------------
<S> <C> <C> <C>
(in thousands, except for per unit data)
Income statement data:
Equity in earnings of Alliance Capital........... $80,835 $60,088 $120,970
Revenues......................................... 80,835 60,088 120,970
Income before income taxes....................... 80,835 60,088 120,970
Net income....................................... 73,460 54,110 109,528
Net income per unit:
Basic net income per unit........................ $ 1.13 $ 0.85 $ 1.71
Diluted net income per unit...................... $ 1.10 $ 0.82 $ 1.66
Basic weighted average units outstanding......... 64,910 64,005 64,183
Diluted weighted average units outstanding....... 70,074 69,345 69,393
Cash distributions per unit....................... $ 1.08 $ 0.80 $ 1.62
</TABLE>
June 30,
1999
--------
Balance sheet data:
Investment in Alliance Capital................... $176,402
Total assets..................................... 196,006
Debt and long-term obligations................... --
Partners' capital................................ 176,402
3
EXHIBIT 99.2
CAPITALIZATION
The following table sets forth the capitalization of Alliance Holding on a
historical basis, and the capitalization of Alliance Capital and Alliance
Holding on a pro forma basis, in each case as of June 30, 1999. The pro forma
presentations reflect the effects of the reorganization and the exchange offer
as if both were completed on June 30, 1999. The pro forma adjustments and
related assumptions are described under Item 5 of this Form 8-K and "Pro Forma
Condensed Financial Statements (Unaudited)", which is included as Exhibit 99.3
to this Form 8-K.
<TABLE>
Historical Pro Forma Pro Forma
Alliance Holding Alliance Capital Alliance Holding
---------------- ---------------- ----------------
<S> <C> <C> <C>
(in thousands)
Noncurrent liabilities:
Noncurrent portion of employee compensation and
benefits........................................... $ 68,175 $ 68,175 $ --
Noncurrent portion of debt........................... -- -- --
-------- -------- --------
Total noncurrent liabilities......................... 68,175 68,175 --
Partners' capital..................................... 467,602 467,602 176,402
-------- -------- --------
Total capitalization................................. $535,777 $535,777 $176,402
======== ======== ========
</TABLE>
EXHIBIT 99.3
<TABLE>
PRO FORMA CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
Alliance Holding
Unaudited Pro Forma Condensed Statement of Financial Condition
June 30, 1999
(in thousands, except per unit amounts)
Transfer Exchange of
of Business to Partnership
Historical Alliance Capital Interests Pro Forma
Alliance Holding (Note 2) (Note 3) Alliance Holding
---------------- ----------------- ------------ ----------------
<S> <C> <C> <C> <C>
Assets:
Cash and cash equivalents............. $ 88,301 $ (68,697) $ 19,604
Receivable from brokers and
dealers for sale of shares of
Alliance mutual funds.............. 182,885 182,885
Fees receivable....................... 197,273 (197,273)
Investments, available-for-sale....... 183,582 (183,582)
Investment in Alliance Capital........ 467,062 $(290,660) 176,402
Furniture, equipment and leasehold
improvements, net.................. 114,422 (114,422)
Intangible assets, net................ 100,216 (100,216)
Deferred sales commissions, net....... 514,020 (514,020)
Other assets.......................... 76,018 (76,018)
---------- ---------- --------- --------
Total assets....................... $1,456,717 $ (970,051) $(290,660) $196,006
========== ========== ========= ========
Liabilities:
Payable to Alliance mutual funds
for share purchases................ $ 238,797 $ (238,797)
Accounts payable and accrued
expenses........................... 187,343 (167,739) $ 19,604
Accrued compensation and benefits..... 205,008 (205,008)
Debt.................................. 356,311 (356,311)
Minority interests in consolidated
subsidiaries....................... 2,196 (2,196)
---------- ---------- --------- --------
Total liabilities.................. 989,655 (970,051) $ 0 $ 19,604
---------- ---------- --------- --------
Partners' capital..................... 467,062 0 (290,660) 176,402
---------- ---------- --------- --------
Total liabilities and partners'
capital............................. $1,456,717 $ (970,051) $(290,660) $196,006
========== ========== ========= ========
Book value per unit outstanding....... $ 2.70 $ 2.72 $ 2.70
========== ========= ========
Units outstanding..................... 171,136 (105,849) 65,287
========== ========= ========
See Notes to Unaudited Pro Forma Condensed Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Alliance Holding
Unaudited Pro Forma Condensed Statement of Income
For the Six Months Ended June 30, 1999
(in thousands, except per unit amounts)
Transfer
of Business to Pro Forma
Historical Alliance Capital Adjustments Pro Forma
Alliance Holding (Note 2) (Note 5) Alliance Holding
---------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C>
Revenues:
Investment advisory and
services fees................... $596,693 $(596,693)
Distribution revenues............. 198,830 (198,830)
Shareholder servicing fees........ 28,797 (28,797)
Equity in earnings of Alliance
Capital......................... $80,835(a) $80,835
Other revenues.................... 14,364 (14,364)
-------- --------- ------- -------
838,684 (838,684) 80,835 80,835
-------- --------- ------- -------
Expenses:
Employee compensation and
benefits........................ 220,972 (220,972)
Promotion and servicing:
Distribution plan payments
to financial intermediaries... 160,744 (160,744)
Amortization of deferred
sales commissions............. 74,698 (74,698)
Other........................... 54,896 (54,896)
General and administrative........ 87,739 (87,739)
Amortization of intangible assets. 7,980 (7,980)
Interest.......................... 1,927 (1,927)
-------- --------- ------- -------
608,956 (608,956) 0 0
-------- --------- ------- -------
Income before income taxes......... 229,728 (229,728) 80,835 80,835
State, local and foreign income
taxes........................... 12,894 (12,894)
Federal income taxes.............. 21,566 (21,566) 7,375(b) 7,375
-------- --------- ------- -------
34,460 (34,460) 7,375 7,375
-------- --------- ------- -------
Net income......................... $195,268 $(195,268) $73,460 $73,460
======== ========= ======= =======
Basic net income per unit.......... $ 1.13 $ 1.13
======== =======
Diluted net income per unit........ $ 1.10 $ 1.10
======== =======
Basic weighted average units
outstanding..................... 170,804 64,910
======== =======
Diluted weighted average units
outstanding..................... 175,968 70,074
======== =======
Distributions...................... $186,696 $70,489
======== =======
Distributions per unit............. $ 1.08 $ 1.08
======== =======
See Notes to Unaudited Pro Forma Condensed Financial Statements
</TABLE>
2
<PAGE>
<TABLE>
Alliance Holding
Unaudited Pro Forma Condensed Statement of Income
For the Six Months Ended June 30, 1998
(in thousands, except per unit amounts)
Transfer
of Business to Pro Forma
Historical Alliance Capital Adjustments Pro Forma
Alliance Holding (Note 2) (Note 5) Alliance Holding
---------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C>
Revenues:
Investment advisory and
services fees................... $473,260 $(473,260)
Distribution revenues............. 142,289 (142,289)
Shareholder servicing fees........ 19,581 (19,581)
Equity in earnings of Alliance
Capital......................... $ 60,088(a) $ 60,088
Other revenues.................... 13,007 (13,007)
-------- --------- --------- ----------
648,137 (648,137) 60,088 60,088
-------- --------- --------- ----------
Expenses:
Employee compensation and
benefits........................ 170,030 (170,030)
Promotion and servicing:
Distribution plan payments
to financial intermediaries... 122,854 (122,854)
Amortization of deferred
sales commissions............. 48,496 (48,496)
Other........................... 44,869 (44,869)
General and administrative........ 83,397 (83,397)
Amortization of intangible assets. 4,154 (4,154)
Interest.......................... 1,920 (1,920)
-------- --------- --------- ----------
475,720 (475,720) 0 0
-------- --------- --------- ----------
Income before income taxes......... 172,417 (172,417) 60,088 60,088
State, local and foreign income
taxes........................... 9,837 (9,837)
Federal income taxes.............. 17,755 (17,755) 5,978(b) 5,978
-------- --------- --------- ----------
27,592 (27,592) 5,978 5,978
-------- --------- --------- ----------
Net income......................... $144,825 $(144,825) $ 54,110 $ 54,110
======== ========= ========= ==========
Basic net income per unit.......... $ 0.85 $ 0.85
======== ==========
Diluted net income per unit........ $ 0.82 $ 0.82
======== ==========
Basic weighted average units
outstanding..................... 169,609 64,005
======== ==========
Diluted weighted average units
outstanding..................... 174,949 69,345
======== ==========
Distributions...................... $137,294 $ 51,430
======== ==========
Distributions per unit............. $ 0.80 $ 0.80
======== ==========
See Notes to Unaudited Pro Forma Condensed Financial Statements
</TABLE>
3
<PAGE>
<TABLE>
Alliance Holding
Unaudited Pro Forma Condensed Statement of Income
For the Year Ended December 31, 1998
(in thousands, except per unit amounts)
Transfer
of Business to Pro Forma
Historical Alliance Capital Adjustments Pro Forma
Alliance Holding (Note 2) (Note 5) Alliance Holding
---------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C>
Revenues:
Investment advisory and
services fees................... $952,992 $(952,992)
Distribution revenues............. 301,846 (301,846)
Shareholder servicing fees........ 43,475 (43,475)
Equity in earnings of Alliance
Capital......................... $ 120,970(a) $ 120,970
Other revenues.................... 25,743 (25,743)
-------- --------- --------- ----------
1,324,056 (1,324,056) 120,970 120,970
-------- --------- --------- ----------
Expenses:
Employee compensation and
benefits........................ 340,923 (340,923)
Promotion and servicing:
Distribution plan payments
to financial intermediaries... 261,087 (261,087)
Amortization of deferred
sales commissions............. 108,853 (108,853)
Other........................... 90,400 (90,400)
General and administrative........ 162,323 (162,323)
Amortization of intangible assets. 7,586 (7,586)
Interest.......................... 4,172 (4,172)
-------- --------- --------- ----------
975,344 (975,344) 0 0
-------- --------- --------- ----------
Income before income taxes......... 348,712 (348,712) 120,970 1 20,970
State, local and foreign income
taxes........................... 21,341 (21,341)
Federal income taxes.............. 34,455 (34,455) 11,442(b) 11,442
-------- --------- --------- ----------
55,796 (55,796) 11,442 11,442
-------- --------- --------- ----------
Net income......................... $292,916 $(292,916) $ 109,528 $ 109,528
======== ========= ========= ==========
Basic net income per unit.......... $ 1.71 $ 1.71
======== ==========
Diluted net income per unit........ $ 1.66 $ 1.66
======== ==========
Basic weighted average units
outstanding..................... 169,933 64,183
======== ==========
Diluted weighted average units
outstanding..................... 175,143 69,393
======== ==========
Distributions...................... $278,414 $ 104,264
======== ==========
Distributions per unit............. $ 1.62 $ 1.62
======== ==========
See Notes to Unaudited Pro Forma Condensed Financial Statements
</TABLE>
4
<PAGE>
<TABLE>
Alliance Capital
Unaudited Pro Forma Condensed Consolidated Statement of
Financial Condition
June 30, 1999
(in thousands, except per unit amounts)
Transfer of
Historical Business to Pro Forma
Alliance Capital Alliance Capital Alliance Capital
(Note 1) (Note 2) (Notes 1, 2)
---------------- ---------------- -----------------
<S> <C> <C> <C>
Assets:
Cash and cash equivalents................... $68,697 $ 68,697
Receivable from brokers and dealers
for sale of shares of Alliance mutual
funds..................................... 182,885 182,885
Fees receivable............................. 197,273 197,273
Investments, available-for-sale............. 183,582 183,582
Furniture, equipment and leasehold
improvements, net......................... 114,422 114,422
Intangible assets, net...................... 100,216 100,216
Deferred sales commissions, net............. 514,020 514,020
Other assets................................ 76,018 76,018
------- ---------- ----------
Total assets.............................. $ 0 $1,437,113 $1,437,113
======= ========== ==========
Liabilities:
Payable to Alliance mutual funds for
share purchases........................... $238,797 $ 238,797
Accounts payable and accrued expenses....... 167,739 167,739
Accrued compensation and benefits........... 205,008 205,008
Debt........................................ 356,311 356,311
Minority interests in consolidated
subsidiaries.............................. 2,196 2,196
------- ---------- ----------
Total liabilities......................... 0 970,051 970,051
------- ---------- ----------
Partners' capital........................... 0 467,062 467,062
------- ---------- ----------
Total liabilities and partners' capital...... $ 0 $1,437,113 $1,437,113
======= ========== ==========
Book value per unit outstanding.............. $ 0.00 $2.70 $ 2.70
======= ========== ==========
Units outstanding............................ 0 171,136 171,136
======= ========== ==========
See Notes to Unaudited Pro Forma Condensed Financial Statements
</TABLE>
5
<PAGE>
<TABLE>
Alliance Capital
Unaudited Pro Forma Condensed Consolidated Statement of Income
For the Six Months Ended June 30, 1999
(in thousands, except per unit amounts)
Pro Forma
Historical Adjustments Pro Forma
Alliance Holding (Note 4) Alliance Capital
---------------- ----------- ----------------
<S> <C> <C> <C>
Revenues:
Investment advisory and services fees...................... $596,693 $596,693
Distribution revenues...................................... 196,830 198,830
Shareholder servicing fees................................. 28,797 28,797
Other revenues............................................. 14,364 14,364
-------- ------- --------
838,684 $ 0 838,684
-------- ------- --------
Expenses:
Employee compensation and benefits......................... 220,972 220,972
Promotion and servicing:
Distribution plan payments to financial intermediaries... 160,744 160,744
Amortization of deferred sales commissions............... 74,698 74,698
Other.................................................... 54,896 54,896
General and administrative................................. 87,739 87,739
Amortization of intangible assets.......................... 7,980 7,980
Interest................................................... 1,927 1,927
-------- ------- --------
608,956 0 608,956
-------- ------- --------
Income before income taxes.................................. 229,728 0 229,728
State, local and foreign income taxes...................... 12,894 12,894
Federal income taxes....................................... 21,566 (19,604) 1,962
-------- ------- --------
34,460 (19,604) 14,856
-------- ------- --------
Net income.................................................. $195,268 $19,604 $214,872
======== ======= ========
Basic net income per unit................................... $ 1.13 $ 1.25
======== ========
Diluted net income per unit................................. $ 1.10 $ 1.21
======== ========
Basic weighted average units outstanding.................... 170,804 170,804
======== ========
Diluted weighted average units outstanding.................. 175,968 175,968
======== ========
Distributions............................................... $186,696 $206,300
======== ========
Distributions per unit...................................... $ 1.08 $ 1.19
======== ========
See Notes to Unaudited Pro Forma Condensed Financial Statements
</TABLE>
6
<PAGE>
<TABLE>
Alliance Capital
Unaudited Pro Forma Condensed Consolidated Statement of Income
For the Six Months Ended June 30, 1998
(in thousands, except per unit amounts)
Pro Forma
Historical Adjustments Pro Forma
Alliance Holding (Note 4) Alliance Capital
---------------- ----------- ----------------
<S> <C> <C> <C>
Revenues:
Investment advisory and services fees...................... $473,260 $473,260
Distribution revenues...................................... 142,289 142,289
Shareholder servicing fees................................. 19,581 19,581
Other revenues............................................. 13,007 13,007
-------- -------- --------
648,137 $ 0 648,137
-------- -------- --------
Expenses:
Employee compensation and benefits......................... 170,030 170,030
Promotion and servicing:
Distribution plan payments to financial intermediaries... 122,854 122,854
Amortization of deferred sales commissions............... 48,496 48,496
Other.................................................... 44,869 44,869
General and administrative................................. 83,397 83,397
Amortization of intangible assets.......................... 4,154 4,154
Interest................................................... 1,920 1,920
-------- -------- --------
475,720 0 475,720
-------- -------- --------
Income before income taxes.................................. 172,417 0 172,417
State, local and foreign income taxes...................... 9,837 9,837
Federal income taxes....................................... 17,755 (16,000) 1,755
-------- -------- --------
27,592 (16,000) 11,592
-------- -------- --------
Net income.................................................. $144,825 $ 16,000 $160,825
======== ======== ========
Basic net income per unit................................... $ 0.85 $ 0.94
======== ========
Diluted net income per unit................................. $ 0.82 $ 0.91
======== ========
Basic weighted average units outstanding.................... 169,609 169,609
======== ========
Diluted weighted average units outstanding.................. 174,949 174,949
======== ========
Distributions............................................... $137,294 $152,738
======== ========
Distributions per unit...................................... $ 0.80 $ 0.89
======== ========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Financial Statements
7
<PAGE>
Alliance Capital
Unaudited Pro Forma Condensed Consolidated Statement of Income
For the Year Ended December 31, 1998
(in thousands, except per unit amounts)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
Alliance Holding (Note 4) Alliance Capital
---------------- ----------- ----------------
<S> <C> <C> <C>
Revenues:
Investment advisory and services fees...................... $ 952,992 $ 952,992
Distribution revenues...................................... 301,846 301,846
Shareholder servicing fees................................. 43,475 43,475
Other revenues............................................. 25,743 25,743
---------- -------- ----------
1,324,056 0 1,324,056
---------- -------- ----------
Expenses:
Employee compensation and benefits......................... 340,923 340,923
Promotion and servicing:
Distribution plan payments to financial intermediaries... 261,087 261,087
Amortization of deferred sales commissions............... 108,853 108,853
Other.................................................... 90,400 90,400
General and administrative................................. 162,323 162,323
Amortization of intangible assets.......................... 7,586 7,586
Interest................................................... 4,172 4,172
---------- -------- ----------
975,344 0 975,344
---------- -------- ----------
Income before income taxes.................................. 348,712 348,712
State, local and foreign income taxes...................... 21,341 21,341
Federal income taxes....................................... 34,455 $(30,600) 3,855
---------- -------- ----------
55,796 (30,600) 25,196
---------- -------- ----------
Net income.................................................. $292,916 $ 30,600 $ 323,516
========== ======== ==========
Basic net income per unit................................... $ 1.71 $ 1.88
========== ==========
Diluted net income per unit................................. $ 1.66 $ 1.83
========== ==========
Basic weighted average units outstanding.................... 169,933 169,933
========== ==========
Diluted weighted average units outstanding.................. 175,143 175,143
========== ==========
Distributions............................................... $ 278,414 $ 309,014
========== ==========
Distributions per unit...................................... $ 1.62 $ 1.80
========== ==========
See Notes to Unaudited Pro Forma Condensed Financial Statements
</TABLE>
8
<PAGE>
Notes to Unaudited Pro Forma Condensed Financial Statements
(1) To record the initial capital contribution by Alliance
Holding, as limited partner, and Alliance Capital Management
Corporation, as general partner. Each partner contributed $50 in
exchange for a 50% interest in Alliance Capital.
(2) To reflect the transfer of the business of Alliance Holding
to Alliance Capital in exchange for all of the units and the general
partnership interest in Alliance Capital. Alliance Capital will record
the transferred assets and liabilities at the amounts reflected in
Alliance Holding's books and records on the date of transfer. Excluded
from the transfer from Alliance Holding to Alliance Capital is the
liability for the 3.5% federal tax on Alliance Holding's gross business
income.
(3) To reflect the one-for-one exchange of Alliance Holding
units for Alliance Capital units. This pro forma adjustment assumes
that for the exchange offer (A) Equitable Life and its affiliates will
exchange all of their Alliance Holding units, except for the amount of
units necessary for approximately 2% of the outstanding Alliance Holding
units, for an equivalent number of Alliance Capital units and (B) other
unitholders, excluding employees, who qualify for the block transfer
regulations will exchange their Alliance Holding units for an equivalent
number of Alliance Capital units. Based on these assumptions, Alliance
Holding would own, on June 30, 1999, approximately 38.15% of the
outstanding Alliance Capital units, representing $176,402,000 in
partner's capital.
(4) To eliminate the 3.5% federal tax on gross business income
since Alliance Capital, as a private partnership, would not be subject
to such a tax.
(5) Pro forma adjustments to the Alliance Holding statement of
income consist of the following:
(a) To record Alliance Holding's share in the net income of Alliance
Capital accounted for under the equity method. Alliance Holding's
equity in earnings of Alliance Capital equates to the pro forma net
income of Alliance Capital less the general partner's 1% interest
multiplied by Alliance Holding's ownership share of 38.00%, 37.74%
and 37.77% for the six months ended June 30, 1999 and 1998 and for
the year ended December 31, 1998, respectively.
(b) To record the 3.5% federal tax on Alliance Holding's pro rata share
of Alliance Capital's gross business income.
9
