============================================================================== 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 ----------------------------------------------------- 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 March 31, 1996 was 82,881,466 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 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