FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1999 ------------------------------ 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 Identification No.) incorporation or organization) 1345 Avenue of the Americas, New York, NY 10105 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (212) 969-1000 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------- ------- The number of Units representing assignments of beneficial ownership of Limited Partnership Interests outstanding as of June 30, 1999 was 171,136,403 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 1 Condensed Consolidated Statements of Income 2 Condensed Consolidated Statements of Changes in Partners' Capital 3 Condensed Consolidated Statements of Cash Flows 4 Notes to Condensed Consolidated Financial Statements 5-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-16 Part II OTHER INFORMATION ----------------- Item 1. Legal Proceedings 17 Item 2. Changes in Securities 17 Item 3. Defaults Upon Senior Securities 17 Item 4. Submission of Matters to a Vote of Security Holders 17 Item 5. Other Information 17 Item 6. Exhibits and Reports on Form 8-K 17
Part I FINANCIAL INFORMATION Item 1. Financial Statements ALLIANCE CAPITAL MANAGEMENT L.P. Condensed Consolidated Statements of Financial Condition (in thousands) <TABLE> ASSETS 6/30/99 12/31/98 ------ ----------- -------- (unaudited) <S> <C> <C> Cash and cash equivalents.................................................... $ 88,301 $ 75,186 Receivable from brokers and dealers for sale of shares of Alliance mutual funds........................................ 182,885 159,095 Fees receivable: Alliance mutual funds..................................................... 98,687 80,167 Separately managed accounts: Affiliated clients...................................................... 9,372 6,682 Third party clients..................................................... 89,214 86,166 Investments, available-for-sale.............................................. 183,582 94,743 Furniture, equipment and leasehold improvements, net......................... 114,422 96,401 Intangible assets, net....................................................... 100,216 102,001 Deferred sales commissions, net.............................................. 514,020 375,293 Other assets................................................................. 76,018 56,858 --------- --------- Total assets.............................................................. $1,456,717 $1,132,592 ========= ========= LIABILITIES AND PARTNERS' CAPITAL --------------------------------- Liabilities: Payable to Alliance mutual funds for share purchases...................... $ 238,797 $ 199,316 Accounts payable and accrued expenses..................................... 187,343 202,980 Accrued compensation and benefits......................................... 205,008 106,929 Debt...................................................................... 356,311 190,210 Minority interests in consolidated subsidiaries .......................... 2,196 2,884 Total liabilities....................................................... 989,655 702,319 Partners' capital......................................................... 467,062 430,273 --------- --------- Total liabilities and partners' capital................................. $1,456,717 $1,132,592 ========= ========= </TABLE> See accompanying notes to condensed consolidated financial statements. 1
ALLIANCE CAPITAL MANAGEMENT L.P. Condensed Consolidated Statements of Income (unaudited) (in thousands, except per Unit amounts) <TABLE> Three Months Ended Six Months Ended -------------------- ------------------- 6/30/99 6/30/98 6/30/99 6/30/98 Revenues: ------- ------- ------- ------- <S> <C> <C> <C> <C> Investment advisory and services fees: Alliance mutual funds...................................... $185,928 $145,174 $380,827 $287,705 Separately managed accounts: Affiliated clients....................................... 14,171 16,780 26,894 30,186 Third party clients...................................... 91,176 75,845 188,972 155,369 Distribution revenues........................................ 105,218 76,108 198,830 142,289 Shareholder servicing fees................................... 15,500 11,093 28,797 19,581 Other revenues .............................................. 6,948 7,120 14,364 13,007 -------- -------- -------- -------- 418,941 332,120 838,684 648,137 -------- -------- -------- -------- Expenses: Employee compensation and benefits........................... 102,693 82,203 220,972 170,030 Promotion and servicing: Distribution plan payments to financial intermediaries: Affiliated............................................... 25,191 19,272 50,875 36,726 Third party.............................................. 57,728 46,664 109,869 86,128 Amortization of deferred sales commissions................. 40,017 25,649 74,698 48,496 Other...................................................... 28,093 23,555 54,896 44,869 General and administrative................................... 45,403 41,258 87,739 83,397 Interest..................................................... 4,479 2,187 7,980 4,154 Amortization of intangible assets............................ 964 1,039 1,927 1,920 -------- -------- -------- -------- 304,568 241,827 608,956 475,720 -------- -------- -------- -------- Income before income taxes...................................... 114,373 90,293 229,728 172,417 Income taxes................................................. 17,159 14,452 34,460 27,592 -------- -------- -------- -------- Net income...................................................... $ 97,214 $ 75,841 $ 195,268 $ 144,825 ======== ========= ======== ======== Net income per Unit: Basic...................................................... $ 0.56 $ 0.44 $ 1.13 $ 0.85 ======== ========= ======== ======== Diluted.................................................... $ 0.55 $ 0.43 $ 1.10 $ 0.82 ======== ========= ======== ======== </TABLE> See accompanying notes to condensed consolidated financial statements. 2
ALLIANCE CAPITAL MANAGEMENT L.P. Condensed Consolidated Statements of Changes in Partners' Capital and Comprehensive Income (unaudited) (in thousands) <TABLE> Three Months Ended Six Ended Ended ---------------------- --------------------- 6/30/99 6/30/98 6/30/99 6/30/98 ------- ------- ------- ------- <S> <C> <C> <C> <C> Partners' capital - beginning of period....................... $458,949 $403,202 $430,273 $398,051 Comprehensive income: Net income............................................. 97,214 75,841 195,268 144,825 Unrealized gain on investments, net.................... 327 21 1,151 885 Foreign currency translation adjustment, net........... - - 3 - ------- ------- ------- ------- Comprehensive income................................... 97,541 75,862 196,422 145,710 Capital contribution received from Alliance Capital Management Corporation................................... 90 860 1,066 1,720 Cash distributions to partners............................. (93,316) (65,095) (167,364) (135,173) Proceeds from Unit options exercised....................... 3,798 2,079 6,665 6,600 ------- ------- ------- ------- Partners' capital - end of period............................. $467,062 $416,908 $467,062 $416,908 ======= ======= ======= ======= </TABLE> See accompanying notes to condensed consolidated financial statements. 3
ALLIANCE CAPITAL MANAGEMENT L.P. Condensed Consolidated Statements of Cash Flows (unaudited) (in thousands) <TABLE> Six Months Ended ---------------------- 6/30/99 6/30/98 ------- ------- <S> <C> <C> Cash flows from operating activities: Net income............................................................ $ 195,268 $ 144,825 Adjustments to reconcile net income to net cash provided from operating activities: Amortization and depreciation....................................... 86,151 58,295 Other, net.......................................................... 9,339 5,945 Changes in assets and liabilities: (Increase) in receivable from brokers and dealers for sale of shares of Alliance mutual funds.............................. (23,790) (43,764) (Increase) in fees receivable from Alliance mutual funds, affiliated clients and third party clients...................... (24,258) (24,023) (Increase) in deferred sales commissions.......................... (213,425) (121,585) (Increase) in other assets........................................ (20,326) (19,987) Increase in payable to Alliance mutual funds for share purchases....................................................... 39,481 65,097 Increase (decrease) in accounts payable and accrued expenses...... (17,535) 47,155 Increase in accrued compensation and benefits, less deferred compensation.......................................... 95,607 79,599 -------- -------- Net cash provided from operating activities.................. 126,512 191,557 -------- -------- Cash flows from investing activities: Purchase of investments............................................... (514,538) (211,660) Proceeds from sale of investments..................................... 426,850 195,007 Additions to furniture, equipment and leasehold improvements, net................................................... (27,290) (16,653) Other ............................................................. (142) - -------- -------- Net cash used in investing activities........................ (115,120) (33,306) -------- -------- Cash flows from financing activities: Proceeds from borrowings.............................................. 905,231 434,605 Repayment of debt..................................................... (743,375) (363,375) Distributions to partners............................................. (167,364) (135,173) Capital contribution received from Alliance Capital Management Corporation......................................................... 566 220 Unit options exercised................................................ 6,665 6,600 -------- -------- Net cash provided from (used in) financing activities........ 1,723 (57,123) -------- -------- Effect of exchange rate changes on cash and cash equivalents ............ - - -------- -------- Net increase in cash and cash equivalents................................ 13,115 101,128 Cash and cash equivalents at beginning of period......................... 75,186 63,761 -------- -------- Cash and cash equivalents at end of period............................... $ 88,301 $ 164,889 ======== ======== </TABLE> See accompanying notes to condensed consolidated financial statements. 4
ALLIANCE CAPITAL MANAGEMENT L.P. Notes to Condensed Consolidated Financial Statements June 30, 1999 (unaudited) 1. Basis of Presentation The unaudited interim condensed consolidated financial statements of Alliance Capital Management L.P. (the "Partnership") included herein have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation of (a) financial position at June 30, 1999, (b) results of operations for the three months and six months ended June 30, 1999 and 1998 and (c) cash flows for the six months ended June 30, 1999 and 1998, have been made. 2. Reclassification Certain prior period amounts have been reclassified to conform with the current period presentation. 3. Proposed Reorganization The Partnership has announced a proposed reorganization of its business that will give Unitholders in the Partnership the choice between (1) continuing to hold liquid Units of the Partnership listed on the New York Stock Exchange that are subject to a federal tax on the Partnership's gross business income and (2) holding a highly illiquid interest in a new private limited partnership that is not subject to that tax. The proposed reorganization will require the approval of a majority of the Partnerships' unaffiliated public Unitholders and certain other contractual and regulatory approvals. The Partnership expects that the reorganization and exchange offer will be completed in the fourth quarter of 1999. 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 sold without a front-end sales charge are capitalized and amortized over periods not exceeding five and one-half years, the period of time estimated by management of the Partnership during which deferred sales commissions are expected to be recovered from distribution plan payments received from those funds and from contingent deferred sales charges received from shareholders of those funds upon the redemption of their shares. Contingent deferred sales charges reduce unamortized deferred sales commissions when received. 5. Commitments and Contingencies On July 25, 1995, a Consolidated and Supplemental Class Action Complaint ("Original 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. On September 26, 1996, the United States District Court for the Southern District of New York granted the defendants' motion to dismiss all counts of the Original Complaint. On October 29, 1997, the United States Court of Appeals for the Second Circuit affirmed that decision. On October 29, 1996, plaintiffs filed a motion for leave to file an amended complaint. The principal allegations of the proposed amended complaint are that (i) the Fund failed to hedge against currency risk despite representations that it would do so, (ii) the Fund did not properly disclose that it planned to invest 5
in mortgage-backed derivative securities, and (iii) two advertisements used by the Fund misrepresented the risks of investing in the Fund. On October 15, 1998, the United States Court of Appeals for the Second Circuit issued an order granting plaintiffs' motion to file an amended complaint alleging that the Fund misrepresented its ability to hedge against currency risk and denying plaintiffs' motion to file an amended complaint alleging that the Fund did not properly disclose that it planned to invest in mortgaged-backed derivative securities and that certain advertisements used by the Fund misrepresented the risks of investing in the Fund. The Partnership believes that the allegations in the proposed amended complaint are without merit and intends to vigorously defend against this action. While the ultimate outcome of this matter cannot be determined at this time, management of the Partnership does not expect that it will have a material adverse effect on the Partnership's results of operations or financial condition. 6. Income Taxes The Partnership is a publicly traded partnership for federal income tax purposes and, accordingly, is not subject to federal or state corporate income taxes. However, the Partnership is subject to the New York City unincorporated business tax and a 3.5% federal tax on partnership gross income from the active conduct of a trade or business. Domestic corporate subsidiaries of the Partnership, which are subject to federal, state and local income taxes, file a consolidated federal income tax return and separate state and local income tax returns. Foreign corporate subsidiaries are generally subject to taxes in the foreign jurisdictions where they are located. 7. Net Income Per Unit Basic 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 during each period. Diluted 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 total of the weighted average number of Units outstanding during each period and the dilutive Unit equivalents resulting from outstanding employee Unit options. <TABLE> Three Months Ended Six Months Ended ---------------------- ------------------- 6/30/99 6/30/98 6/30/99 6/30/98 ------- ------- ------- ------- (in thousands, except per Unit amounts) <S> <C> <C> <C> <C> Net income........................................ $ 97,214 $ 75,841 $195,268 $144,825 ======= ======= ======= ======= Weighted average Units outstanding- Basic net income per Unit....................... 171,043 169,914 170,804 169,609 Dilutive effect of employee Unit options.......... 5,325 5,444 5,164 5,340 ------- ------- ------- ------- Weighted average Units outstanding- Diluted net income per Unit..................... 176,368 175,358 175,968 174,949 ======= ======= ======= ======= Basic net income per Unit......................... $ 0.56 $ 0.44 $ 1.13 $ 0.85 ======= ======= ======= ======= Diluted net income per Unit....................... $ 0.55 $ 0.43 $ 1.10 $ 0.82 ======= ======= ======= ======= </TABLE> 6
8. Supplemental Cash Flow Information Cash payments for interest and income taxes were as follows (in thousands): <TABLE> Three Months Ended Six Months Ended ---------------------- ------------------- 6/30/99 6/30/98 6/30/99 6/30/98 ------- ------- ------- ------- <S> <C> <C> <C> <C> Interest.................. $ 1,747 $ 764 $ 4,108 $ 2,518 Income taxes.............. 56,875 6,246 64,274 10,181 </TABLE> 9. Accounting Pronouncement In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, ("SFAS 133")"Accounting for Derivative Instruments and Hedging Activities". Under this Statement, an entity is required to recognize derivative instruments as either assets or liabilities in the statement of financial condition and measure those instruments at fair value. In addition, any entity that elects to apply hedge accounting is required to establish at the inception of the hedge the method it will use for assessing effectiveness of the hedging derivative and the measurement approach for determining the ineffective aspect of the hedge. Management of the Partnership intends to adopt this Statement on January 1, 2001 and does not believe that the adoption of the Statement will have a material effect on its results of operations, liquidity, or capital resources. 10. Cash Distribution On July 29, 1999, the General Partner declared a distribution of $93,347,000 or $0.54 per Unit representing the Available Cash Flow (as defined in the Partnership Agreement) of the Partnership for the three months ended June 30, 1999. The distribution is payable on August 16, 1999 to holders of record on August 9, 1999. 11. Subsequent Event On July 21, 1999, the Partnership entered into a new $200 million three year revolving credit facility with a group of commercial banks that increased the Partnership's borrowing capacity to $625 million. The new revolving credit facility, the terms of which are generally similar to the existing $425 million credit facility, will be used to fund commission payments to financial intermediaries for the sale of back-end load shares under the Partnership's mutual fund distribution system and for general working capital purposes. The new facility contains covenants which require the Partnership to, among other things, meet certain financial ratios. 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations General Alliance Capital Management L.P. (the "Partnership") offers a broad range of investment management products and services to meet the varied needs and objectives of individual and institutional investors. The Partnership derives substantially all of its revenues and net income from fees received for providing: (a) investment advisory, distribution and related services to the Alliance mutual funds, (b) investment advisory services to affiliated clients including The Equitable Life Assurance Society of the United States ("ELAS"), a wholly-owned subsidiary of The Equitable Companies Incorporated ("Equitable"), and certain other Equitable affiliates and (c) investment advisory services to separately managed accounts for unaffiliated institutional investors and high-net-worth individuals ("third party clients"). The Alliance mutual funds consist primarily of a broad range of open-end load and closed-end mutual funds ("mutual funds"), variable life insurance and annuity products, including The Hudson River Trust, cash management products, principally money market funds, and certain structured products and hedge funds. The Partnership's revenues are largely dependent on the total value and composition of assets under its management. Assets under management grew to $321.0 billion as of June 30, 1999, an increase of 22.3% from June 30, 1998 primarily as a result of market appreciation, good investment performance, and strong net sales of Alliance mutual funds. Active equity and balanced account assets under management, which comprise approximately 57% of total assets under management, grew 32%. Active fixed income account assets under management, which comprise approximately 34% of total assets under management, increased by 9%. In the second quarter of 1999, sales of Alliance mutual fund shares, excluding cash management products, grew 30.2% to $13.8 billion compared to sales of $10.6 billion in the second quarter of 1998. The increase in mutual fund sales, principally domestic U.S. equity mutual funds, offset partially by an increase in mutual fund redemptions, resulted in net mutual fund sales of $7.1 billion, an increase of 6.0% from $6.7 billion in the second quarter of 1998. Assets Under Management (1): (Dollars in billions) 6/30/99 6/30/98 $ Change % Change - -------------------------------------------------------------------------------- Alliance mutual funds: Mutual funds $ 77.6 $ 53.5 $24.1 45.0% Variable products 36.0 28.9 7.1 24.6 Cash management products 27.3 24.7 2.6 10.5 - -------------------------------------------------------------------------------- 140.9 107.1 33.8 31.6 - -------------------------------------------------------------------------------- Separately managed accounts: Affiliated clients 29.7 29.6 0.1 0.3 Third party clients 150.4 125.8 24.6 19.6 - -------------------------------------------------------------------------------- 180.1 155.4 24.7 15.9 - -------------------------------------------------------------------------------- Total $321.0 $262.5 $58.5 22.3% - -------------------------------------------------------------------------------- Assets under management at June 30, 1999 were $321.0 billion, an increase of $58.5 billion or 22.3% from June 30, 1998. The Partnership's mutual fund assets under management at June 30, 1999 were $140.9 billion, an increase of $33.8 billion or 31.6% from June 30, 1998, due principally to net sales of mutual funds and variable products of $20.5 billion and market appreciation of $11.5 billion. Separately managed account assets under management at June 30, 1999 for third party clients and affiliated clients were $180.1 billion, an increase of $24.7 billion or 15.9% from June 30, 1998. The increase was primarily due to market appreciation of $25.0 billion. 8
Assets Under Management(1): (Dollars in billions) 6/30/99 6/30/98 % Change - -------------------------------------------------------------------------------- Active equity & balanced Domestic $161.5 $123.9 30.3% Global & international 20.1 13.4 50.0 Active fixed income Domestic 92.0 86.3 6.6 Global & international 15.6 12.0 30.0 Index Domestic 26.9 23.5 14.5 Global & international 4.9 3.4 44.1 - -------------------------------------------------------------------------------- Total $321.0 $262.5 22.3% - -------------------------------------------------------------------------------- Average Assets Under Management (1): <TABLE> Three months ended Six months ended ------------------------------- ------------------------------ (Dollars in billions) 6/30/99 6/30/98 % Change 6/30/99 6/30/98 % Change - --------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> <C> Alliance mutual funds $ 131.5 $ 101.6 29.4% $ 126.7 $ 95.7 32.4% Separately managed accounts: Affiliated clients 29.9 29.4 1.7 29.7 29.3 1.4 Third party clients 145.5 122.2 19.1 143.7 117.0 22.8 - --------------------------------------------------------------------------------------------------- Total $306.9 $253.2 21.2% $ 300.1 $242.0 24.0% - --------------------------------------------------------------------------------------------------- </TABLE> Changes in Asset Under Management(1): <TABLE> (Dollars in billions) 1999 1998 - --------------------------------------------------------------------------------------------- Separately Alliance Separately Alliance Managed Mutual Managed Mutual Accounts Funds Total Accounts Funds Total - --------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> <C> Balance at January 1, $168.1 $118.6 $286.7 $133.7 $85.0 $218.7 - --------------------------------------------------------------------------------------------- New business/sales 3.6 25.5 29.1 5.0 18.3 23.3 Terminations/redemptions (1.7) (12.1) (13.8) (3.0) (7.0) (10.0) Net cash management sales - 0.8 0.8 - 4.0 4.0 Cash flow (2.5) (0.6) (3.1) 1.7 (0.6) 1.1 Transfers (0.5) 0.5 - - - - Appreciation 13.1 8.2 21.3 18.0 7.4 25.4 - --------------------------------------------------------------------------------------------- Net change 12.0 22.3 34.3 21.7 22.1 43.8 - --------------------------------------------------------------------------------------------- Balance at June 30, $180.1 $140.9 $321.0 $155.4 $107.1 $262.5 - --------------------------------------------------------------------------------------------- </TABLE> (1) Includes 100% of assets under management by unconsolidated joint venture subsidiaries and affiliates. Includes $2.2 billion mutual fund assets and $0.5 billion separately managed account assets at June 30, 1999 and $0.9 billion mutual fund assets and $0.4 billion separately managed account assets at June 30, 1998. Assets under management at June 30, 1999 were $321.0 billion, an increase of $19.7 billion or 6.5% from March 31, 1999 and an increase of $34.3 billion or 12.0% from December 31, 1998. Alliance mutual fund assets under management at June 30, 1999 were $140.9 billion, an increase of $13.6 billion or 10.7% from March 31, 1999 and an increase of $22.3 billion or 18.8% from December 31, 1998. The increase from March 31, 1999 was principally due to net sales of mutual funds and cash management products of $6.6 billion and $0.7 billion, respectively, and market appreciation of $5.6 billion. The increase from December 31, 1998 was due principally to net sales of mutual funds and variable products of $12.4 billion and $1.1 billion, respectively, and market appreciation of $8.2 billion. 9
Separately managed account assets under management at June 30, 1999 for third party clients and affiliated clients were $180.1 billion, an increase of $6.0 billion or 3.4% from March 31, 1999 and an increase of $12.0 billion or 7.1% from December 31, 1998. The increase from March 31, 1999 was primarily due to market appreciation of $7.4 billion and new client accounts of $1.9 billion, reduced by net asset outflows from affiliated client accounts of $0.3 billion, net third party client account terminations and asset withdrawals of $2.5 billion and transfers out of affiliated client accounts of $0.5 billion into mutual funds. The increase from December 31, 1998 was primarily due to market appreciation of $13.1 billion and new client accounts of $3.6 billion, net asset additions to affiliated client accounts of $1.2 billion offset by net third party client account terminations and asset withdrawals of $5.4 billion and transfers out of affiliated client accounts of $0.5 billion into mutual funds. <TABLE> Consolidated Results of Operations Three months ended Six months ended (Dollars & Units in millions, -------------------------------- -------------------------------- except per Unit amounts) 6/30/99 6/30/98 % Change 6/30/99 6/30/98 % Change - ------------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> <C> Net income $97.2 $75.8 28.2% 195.3 $ 144.8 34.9% Net income per Unit(1): Basic $0.56 $0.44 27.3 $1.13 $ 0.85 32.9 Diluted $0.55 $0.43 27.9 $1.10 $ 0.82 34.1 Weighted average number of Units outstanding: Basic 171.0 169.9 0.6 170.8 169.6 0.7 Diluted 176.4 175.4 0.6 176.0 174.9 0.6 Pre-tax margin(2): 36.5% 35.3% - 35.9% 34.1% - - ------------------------------------------------------------------------------------------------------------------- (1) Unit and per Unit amounts for all periods prior to the two-for-one Unit split in 1998 have been restated. (2) Calculated after netting distribution revenues against total expenses. </TABLE> Net income for the three months ended June 30, 1999 increased $21.4 million or 28.2% to $97.2 million from $75.8 million for the three months ended June 30, 1998. The increase was principally due to an increase in investment advisory and services fees resulting primarily from higher average assets under management. Revenues <TABLE> Three months ended Six months ended -------------------------------- -------------------------------- (Dollars in millions) 6/30/99 6/30/98 % Change 6/30/99 6/30/98 % Change - ------------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> <C> Investment advisory and services fees: Alliance mutual funds $185.9 $145.2 28.0% $ 380.8 $287.7 32.4% Separately managed accounts: Affiliated clients 14.2 16.8 (15.5) 26.9 30.2 (10.9) Third party clients 91.2 75.8 20.3 189.0 155.4 21.6 Distribution revenues 105.2 76.1 38.2 198.8 142.3 39.7 Shareholder servicing fees 15.5 11.1 39.6 28.8 19.5 47.7 Other revenues 6.9 7.1 (2.8) 14.4 13.0 10.8 - ------------------------------------------------------------------------------------------------------------------- Total $418.9 $332.1 26.1% $838.7 $648.1 29.4% - ------------------------------------------------------------------------------------------------------------------- </TABLE> INVESTMENT ADVISORY AND SERVICES FEES Investment advisory and services fees, the largest component of the Partnership's revenues, are generally calculated as a small percentage of the value of assets under management and vary with the type of account managed. Fee income is therefore affected by changes in the amount of assets under management, including market appreciation or depreciation, the addition of new client accounts or client contributions of additional assets to existing accounts, withdrawals of assets from and termination of client accounts, purchases and redemptions of mutual fund shares, and shifts of assets between accounts or products with different fee structures. Certain investment advisory agreements provide for performance fees in addition to a base fee. Performance fees are earned when investment performance exceeds a contractually agreed upon benchmark, or calculated as a percentage of investment returns of a portfolio. Accordingly, these fees may increase the volatility of the Partnership's revenues and earnings and are more likely to be higher in favorable markets and lower in unfavorable markets. Performance fees increased to $50.6 million for the six months ended June 30, 1999 from $43.0 million for the six months ended June 30, 1998. Performance fees were $8.0 million for the three 10
months ended June 30, 1999 compared to $8.7 million for the three months ended June 30, 1998. Investment advisory and services fees from Alliance mutual funds increased by $40.7 million or 28.0% for the three months ended June 30, 1999, primarily as a result of a 29.4% increase in average assets under management. Investment advisory and services fees from Alliance mutual funds increased by $93.1 million or 32.4% for the six months ended June 30, 1999, primarily as a result of a 32.4% increase in average assets under management and a $9.1 million increase in performance fees from certain hedge funds. Investment advisory and services fees from affiliated clients, primarily the General Accounts of ELAS, decreased by $2.6 million or 15.5% and $3.3 million or 10.9% for the three months and six months ended June 30, 1999, respectively, due to lower performance fees partially offset by increased base investment advisory and services fees. Investment advisory and services fees from third party clients increased by $15.4 million or 20.3% and $33.6 million or 21.6% for the three and six months ended June 30, 1999 principally due to an increase in average assets under management of 19.1% and 22.8%, respectively. The increase in third party client assets under management was primarily a result of market appreciation. DISTRIBUTION REVENUES The Partnership's subsidiary, Alliance Fund Distributors, Inc. ("AFD"), acts as distributor of the Alliance mutual funds and receives distribution plan fees from those funds in reimbursement of distribution expenses it incurs. Distribution revenues increased 38.2% for the three months and 39.7% for the six months ended June 30, 1999 principally due to higher average mutual fund assets under management resulting from strong sales of Back-End Load Shares under the Partnership's mutual fund distribution system (the "System") described under "Capital Resources and Liquidity" and market appreciation. SHAREHOLDER SERVICING FEES The Partnership's subsidiaries, Alliance Fund Services, Inc. and ACM Fund Services S.A., provide transfer agency services to the Alliance mutual funds. Shareholder servicing fees increased 39.6% for the three months and 47.7% for the six months ended June 30, 1999, the result of increases in the number of mutual fund shareholder accounts serviced and increases in fee rates. The number of shareholder accounts serviced increased to approximately 4.5 million as of June 30, 1999 compared to 3.5 million as of June 30, 1998. OTHER REVENUES Other revenues consist principally of administration and recordkeeping services provided to the Alliance mutual funds and the General Accounts of ELAS and its insurance subsidiary. Investment income and changes in value of other investments are also included in other revenues. Other revenues increased for the six months ended June 30, 1999, principally as a result of increased market values of the Partnership's hedge fund investments and interest and dividend income. Other revenues decreased for the three months ended June 30, 1999, principally as a result of a smaller increase in the market value of hedge fund investments offset by increased interest and dividend income. <TABLE> EXPENSES Three months ended Six months ended ----------------------------------- ------------------------------- (Dollars in millions) 6/30/99 6/30/98 % Change 6/30/99 6/30/98 % Change - --------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> <C> Employee compensation and benefits $102.7 $ 82.2 24.9% $221.0 $170.0 30.0% Promotion and servicing 151.0 115.1 31.2 290.4 216.2 34.3 General and administrative 45.4 41.3 9.9 87.7 83.4 5.2 Interest 4.5 2.2 104.5 8.0 4.2 90.5 Amortization of intangible assets 1.0 1.0 - 1.9 1.9 - - --------------------------------------------------------------------------------------------------------------- Total $304.6 $241.8 26.0% $609.0 $475.7 28.0% - --------------------------------------------------------------------------------------------------------------- </TABLE> EMPLOYEE COMPENSATION AND BENEFITS Employee compensation and benefits include salaries, commissions, fringe benefits and incentive compensation based on profitability. Provisions for future payments to be made under certain deferred compensation arrangements are also included in employee compensation and benefits expense. 11
Employee compensation and benefits increased 24.9% for the three months and 30.0% for the six months ended June 30, 1999 primarily as a result of higher incentive compensation due to increased operating earnings and increased base compensation and commissions. Base compensation increased principally due to an increase in the number of employees working in the Partnership's mutual fund and technology areas combined with salary increases. The Partnership had 2,288 employees at June 30, 1999 compared to 1,902 at June 30, 1998. Commissions increased primarily due to higher mutual fund sales. PROMOTION AND SERVICING Promotion and servicing expenses include distribution plan payments to financial intermediaries for distribution of the Partnership's sponsored mutual funds and cash management services' products and amortization of deferred sales commissions paid to financial intermediaries for the sale of Back-End Load Shares under the System. See "Capital Resources and Liquidity". Also included in this expense category are travel and entertainment, advertising, promotional materials, and investment meetings and seminars for financial intermediaries that distribute the Partnership's mutual fund products. Promotion and servicing expenses increased 31.2% for the three months and 34.3% for the six months ended June 30, 1999 primarily due to increased distribution plan payments resulting from higher average domestic, offshore and cash management mutual fund assets under management. An increase in amortization of deferred sales commissions as a result of higher sales of Back-End Load Shares (see "Capital Resources and Liquidity") also contributed to the increase in promotion and servicing expense. Other promotion and servicing expenses increased primarily as a result of higher travel and entertainment costs and higher promotional expenditures incurred in connection with mutual fund sales initiatives. GENERAL AND ADMINISTRATIVE General and administrative expenses include technology, professional fees, occupancy, communications, equipment and similar expenses. General and administrative expenses increased 9.9% and 5.2% for the three and six months ended June 30, 1999 due principally to higher expenses incurred in connection with the Year 2000 project and other technology initiatives and increased occupancy costs. A $10.0 million provision was recorded in March 1998 for the future acquisition of the minority interest in Cursitor Alliance. See "Capital Resources and Liquidity". INTEREST Interest expense is incurred on the Partnership's borrowings and on deferred compensation owed to employees. Interest expense increased primarily as a result of higher debt and an increase in deferred compensation liabilities. See "Capital Resources and Liquidity". TAXES ON INCOME The Partnership is a publicly traded partnership for federal income tax purposes and, accordingly, is not subject to federal or state corporate income taxes. However, the Partnership is subject to the New York City unincorporated business tax and a 3.5% federal tax on partnership gross income from the active conduct of a trade or business. 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. Income tax expense increased primarily as a result of higher pre-tax income. CAPITAL RESOURCES AND LIQUIDITY Partners' capital was $467.1 million at June 30, 1999, an increase of $36.8 million or 8.6% from $430.3 at December 31, 1998 and an increase of $8.2 million or 1.8% from $458.9 at March 31,1999. Cash flow from operations and proceeds from borrowings have been the Partnership's principal sources of working capital. The Partnership's cash and cash equivalents increased by $13.1 million for the six months ended June 30, 1999. Cash inflows for the first six months included $126.5 million from operations, proceeds from borrowings net of debt repayments of $161.9 million and $6.7 million of proceeds from 12
exercises of Unit options. Cash outflows included $167.4 million in distributions to Unitholders, $27.3 million in capital expenditures and net purchases of investments of $87.7 million. Under certain circumstances through February 28, 2006, the Partnership has an option to purchase the minority interest in Cursitor Alliance LLC ("Cursitor Alliance "), a subsidiary of the Partnership formed in connection with an acquisition in 1996, and the holders of the minority interest have an option to sell the minority interest to the Partnership for cash, Units, or a combination thereof with a value of not less than $10.0 million or more than $37.0 million ("Buyout Price"). The Buyout Price will be determined based on the amount of global asset allocation investment advisory revenues earned by Cursitor Alliance during a twelve-month period ending on the February 28th preceding the date either option is exercised. Due to the substantial decline in Cursitor Alliance revenues through March 1998, management of the Partnership estimated that the Buyout Price for the minority interest will be $10.0 million, which will be substantially higher than its estimated fair value. Accordingly, the Partnership recorded a $10.0 million provision for the Buyout Price in the first quarter of 1998. The Partnership's mutual fund distribution system (the "System") includes a multi-class share structure. The System permits the Partnership's open-end mutual funds to offer investors various options for the purchase of mutual fund shares, including the purchase of Front-End Load Shares and Back-End Load Shares. The Front-End Load Shares are subject to a conventional front-end sales charge paid by investors to AFD at the time of sale. AFD in turn compensates the financial intermediaries distributing the funds from the front-end sales charge paid by investors. For Back-End Load Shares, investors do not pay a front-end sales charge although, if there are redemptions before the expiration of the minimum holding period (which ranges from one year to four years), investors pay a contingent deferred sales charge ("CDSC") to AFD. While AFD is obligated to compensate the financial intermediaries at the time of the purchase of Back-End Load Shares, it receives higher ongoing distribution fees from the funds. Payments made to financial intermediaries in connection with the sale of Back-End Load Shares under the System, net of CDSC received, reduced cash flow from operations by approximately $213.4 million and $121.6 million for the six months ended June 30, 1999 and June 30, 1998, respectively. Management of the Partnership believes AFD will recover the payments made to financial intermediaries for the sale of Back-End Load Shares from the higher distribution fees and CDSC it receives over periods not exceeding 5 1/2 years. On July 21, 1999, the Partnership entered into a new $200 million three year revolving credit facility with a group of commercial banks that increased the Partnership's borrowing capacity under all facilities to $625 million. The new revolving credit facility, the terms of which are generally similar to the previously existing $425 million credit facility, will be used to fund commission payments to financial intermediaries for the sale of Back-End Load Shares under the Partnership's mutual fund distribution system and for general working capital purposes. Both facilities contain covenants which require the Partnership to, among other things, meet certain financial ratios. The Partnership has a $425 million revolving credit facility with a group of commercial banks and a $425 million commercial paper program. Borrowings under this facility and the Partnership's commercial paper program may not exceed $425 million in the aggregate. The $425 million revolving credit facility is used to provide backup liquidity for commercial paper issued under the Partnership's commercial paper program, to fund commission payments to financial intermediaries for the sale of Back-End Load Shares under the Partnership's mutual fund distribution system, and for general working capital purposes. As of June 30, 1999, the Partnership had $352 million principal amount of commercial paper outstanding, an increase of $172 million from December 31, 1998, to fund commission payments to financial intermediaries and for capital expenditures. There are no borrowings outstanding under either of the Partnership's revolving credit facilities. The Partnership's substantial equity base and access to public and private debt, at competitive interest rates and other terms, should provide adequate liquidity for its general business needs. 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 meet its capital requirements for mutual fund sales, capital expenditures and its other working capital requirements. 13
Proposed Reorganization The Partnership announced a proposed reorganization of its business that will give Unitholders in the Partnership the choice between (1) continuing to hold liquid Units of the Partnership listed on the New York Stock Exchange that are subject to a federal tax on the Partnership's gross business income and (2) holding a highly illiquid interest in a new private limited partnership that is not subject to that tax. The proposed reorganization will require the approval of a majority of the Partnerships' unaffiliated public Unitholders and certain other contractual and regulatory approvals. The Partnership expects that the reorganization and exchange offer will be completed in the fourth quarter of 1999. Year 2000 Many computer systems and applications that process transactions use two digit date fields for the year of a transaction, rather than the full four digits. If these systems are not modified and replaced, transactions occurring after 1999 may be processed as year "1900", which could result in processing inaccuracies and inoperability at or after the Year 2000. The Partnership utilizes a number of computer systems and applications that it either has developed internally or licensed from third-party suppliers. In addition, the Partnership is dependent on third-party suppliers for certain systems applications and for the electronic receipt of information critical to its business. The Year 2000 issue is a high priority for the Partnership. During 1997, the Partnership began a formal Year 2000 initiative, which established a structured and coordinated process to deal with the Year 2000 issue. As part of its initiative, the Partnership established a Year 2000 project office to manage the Year 2000 initiative focusing on both information technology and non-information technology systems. The Year 2000 project office meets periodically with the Audit Committee of the Board of Directors and executive management to review the status of the Year 2000 efforts. The Partnership has also retained the services of a number of consulting firms which have expertise in advising and assisting with regard to Year 2000 issues. By June 30, 1998, the Partnership had completed its inventory and assessment of its domestic and international computer systems and applications, identified mission critical systems (those systems where loss of their function would result in an immediate stoppage or significant impairment to core business units) and nonmission critical systems and determined which of these systems is not Year 2000 compliant. All third-party suppliers of mission critical computer systems and applications and nonmission critical systems were contacted to verify whether their systems and applications will be Year 2000 compliant and their responses are being evaluated. Substantially all of those contacted have responded and approximately 90% have informed the Partnership that their systems and applications are or will be Year 2000 compliant. All mission critical and nonmission critical systems supplied by third parties have been tested with the exception of those third parties not able to comply with the Partnership's testing schedule. The Partnership expects that all testing will be completed before the end of 1999. The Partnership has remediated, replaced or retired all of its noncompliant mission critical systems and applications with the exception of one portfolio management system, which will be replaced by a Year 2000 compliant system by August 31, 1999. All nonmission critical systems have been remediated. After each system has been remediated, it is tested with 19XX dates to determine if it still performs its intended business function correctly. Next, each system undergoes a simulation test using dates occurring after December 31, 1999. Inclusive of the replacement and retirement of some of its systems, the Partnership has completed these testing phases for 98% of mission critical systems and 100% of nonmission critical systems. Integrated systems tests were conducted to verify that the systems would continue to work together. Full integration testing of all mission critical and nonmission critical systems is complete. Testing of interfaces with third-party suppliers has begun and will continue throughout 1999. The Partnership has completed an inventory of its facilities and related technology applications and has begun 14
to evaluate and test these systems. The Partnership anticipates these systems will be fully operable in the Year 2000. The Partnership has deferred certain other planned information technology projects until after the Year 2000 initiative is completed. Such delay is not expected to have a material adverse effect on the Partnership's financial condition or results of operations. The Partnership, with the assistance of a consulting firm, has developed Year 2000 specific contingency plans with emphasis on mission critical functions. These plans seek to provide alternative methods of processing in the event of a failure that is outside the Partnership's control. The current cost estimate of the Year 2000 initiative ranges from approximately $40 million to $45 million. These costs consist principally of modification and testing and costs to develop formal Year 2000 specific contingency plans. These costs, which will generally be expensed as incurred, will be funded from the Partnership's operations and the issuance of debt. Through June 30, 1999, the Partnership had incurred approximately $36.0 million of costs related to the Year 2000 initiative. At this time, management of the Partnership believes that the costs associated with resolving the Year 2000 issue will not have a material adverse effect on the Partnership's results of operations, liquidity or capital resources. There are many risks associated with Year 2000 issues, including the risk that the Partnership's computer systems and applications will not operate as intended and that the systems and applications of third parties will not be Year 2000 compliant. Likewise, there can be no assurance the compliance schedules outlined above will be met or that the actual costs incurred will not exceed the current cost estimate. Should the Partnership's significant computer systems and applications or the systems of its important third-party suppliers be unable to process date sensitive information accurately after 1999, the Partnership may be unable to conduct its normal business operations and to provide its clients with the required services. In addition, the Partnership may incur unanticipated expenses, regulatory actions, and legal liabilities. The Partnership cannot determine which risks, if any, are most reasonably likely to occur or the effects of any particular failure to be Year 2000 compliant. Readers are cautioned that forward-looking statements contained in "Year 2000" should be read in conjunction with the disclosure set forth under "Forward-Looking Statements". To the fullest extent permitted by law, the foregoing Year 2000 discussion is a "Year 2000 Readiness Disclosure" within the meaning of The Year 2000 Information and Readiness Disclosure Act, 15 U.S.C. Sec. 1 (1998). COMMITMENTS AND CONTINGENCIES The Partnership's capital commitments, which consist primarily of operating leases for office space, are generally funded from future operating cash flows. On July 25, 1995, a Consolidated and Supplemental Class Action Complaint ("Original 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. On September 26, 1996, the United States District Court for the Southern District of New York granted the defendants' motion to dismiss all counts of the Original Complaint. On October 29, 1997, the United States Court of Appeals for the Second Circuit affirmed that decision. On October 29, 1996, plaintiffs filed a motion for leave to file an amended complaint. The principal allegations of the proposed amended complaint are that (i) the Fund failed to hedge against currency risk despite representations that it would do so, (ii) the Fund did not properly disclose that it planned to invest in mortgage-backed derivative securities, and (iii) two advertisements used by the Fund misrepresented the risks of investing in the Fund. On October 15, 1998, the United States Court of Appeals for the Second Circuit issued an order granting plaintiffs' motion to file an amended complaint alleging that the Fund 15
misrepresented its ability to hedge against currency risk and denying plaintiffs' motion to file an amended complaint alleging that the Fund did not properly disclose that it planned to invest in mortgaged-backed derivative securities and that certain advertisements used by the Fund misrepresented the risks of investing in the Fund. The Partnership believes that the allegations in the proposed amended complaint are without merit and intends to vigorously defend against this action. While the ultimate outcome of this matter cannot be determined at this time, management of the Partnership does not expect that it will have a material adverse effect on the Partnership's results of operations or financial condition. Four money market mutual funds sponsored by the Partnership (the "Money Market Funds") own an aggregate of $570 million of funding agreements issued by General American Life Insurance Company ("General American"). The funding agreements mature on July 10, 2000 but permit the holder to redeem the principal amount thereof on seven days written notice. The funding agreements comprise less than 3.83% of the net assets of any of the four Money Market Funds. The Money Market Funds gave written notices on August 2, 1999. On August 10, 1999 General American announced that in light of the redemption notices issued by owners of a substantial portion of the funding agreements, including the Money Market Funds, it was unable to honor the redemption notices in a timely fashion. General American stated that it has adequate assets to fulfill the redemption requests but that it has inadequate cash to meet the redemption requests at this time. ELAS has obtained letters of credit in favor of the Money Market Funds under which the Money Market Funds may first draw on July 10, 2000, the maturity date of the funding agreements, to pay principal in an amount up to the face amount of the funding agreements if General American continues not to honor the redemption requests. These letters of credit are intended to prevent the net asset value in any Fund from dropping below $1.00 per share in the event General American continues not to honor the redemption requests. The Partnership has entered into a reimbursement agreement with ELAS under which it is obligated to reimburse ELAS for all amounts drawn down by the Money Market Funds under the letters of credit and to pay certain fees and expenses to ELAS. The Partnership may satisfy its financial obligations to ELAS in cash or Units valued in accordance with the Partnership Agreement. The reimbursement agreement is set forth in its entirety as an exhibit hereto. The Partnership is unable to determine at this time whether or to what extent the Money Market Funds will draw down funds under the letters of credit. While the ultimate outcome of this matter cannot be determined at this time, management of the Partnership does not expect that it will have a material adverse effect on the Partnership's consolidated financial condition. CHANGES IN ACCOUNTING PRINCIPLES In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 133, ("SFAS 133") "Accounting for Derivative Instruments and Hedging Activities". Under this Statement, an entity is required to recognize derivative instruments as either assets or liabilities in the statement of financial position and measure those instruments at fair value. In addition, any entity that elects to apply hedge accounting is required to establish at the inception of the hedge, the method it will use for assessing effectiveness of the hedging derivative and the measurement approach for determining the ineffective aspect of the hedge. Management of the Partnership intends to adopt this Statement on January 1, 2001 and does not believe that the adoption of the Statement will have a material effect on its results of operations, liquidity, or capital resources. 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. The Partnership's Available Cash Flow and Distributions per Unit for the three and six months ended June 30, 1999 and 1998 were as follows: <TABLE> Three months ended Six months ended ------------------- ------------------- 6/30/99 6/30/98 6/30/99 6/30/98 - --------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> Available Cash Flow (in thousands) $93,347 $72,200 $186,663 $137,294 Distributions Per Unit $ 0.54 $ 0.42 $ 1.08 $ 0.80 - --------------------------------------------------------------------------------------- </TABLE> FORWARD-LOOKING STATEMENTS Certain statements provided by the Partnership in this report are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. The most significant of such factors include, but are not limited to, the following: the performance of financial markets, the investment performance of the Partnership's sponsored investment products and separately managed accounts, general economic conditions, future acquisitions, competitive conditions, government regulations, including changes in tax rates, and the risks associated with Year 2000 issues. The Year 2000 issues include uncertainties regarding among other things, the inability to locate, correct and successfully test all relevant computer code, the continued availability of certain resources including personnel and timely and accurate responses and corrections by third parties. These uncertainties may result in unanticipated costs associated with Year 2000 issues and failure to meet schedules for Year 2000 compliance. The Partnership cautions readers to carefully consider such factors. Further, such forward-looking statements speak only as of the date on which such statements are made; the Partnership undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. 16
Part II OTHER INFORMATION ----------------- Item 1. Legal Proceedings There have been no material developments in the legal proceeding reported in the Alliance Capital Management L.P. Form 10-K for the year ended December 31, 1998. 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 1. Reimbursement Agreement dated as of August 16, 1999 between Alliance Capital Management L.P. and The Equitable Life Assurance Society of the United States. 2. The Revolving Credit Agreement dated as of July 21, 1999 among Alliance Capital Management L.P., as Borrower, and the lending institutions listed on Schedule 1 thereto, collectively as Banks, and Fleet National Bank, as Administrative Agent, The First National Bank of Chicago, as Syndication Agent, and Banque Nationale de Paris, as Documentation Agent is filed as Exhibit 10.43 to the Registration Statement on Form S-4 filed with the Securities and Exchange Commission on August 3, 1999 by Alliance Capital Management L.P. II. (b) Reports on Form 8-K None. 17
SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ALLIANCE CAPITAL MANAGEMENT L.P. Dated: August 16, 1999 By: Alliance Capital Management Corporation, its General Partner By: /s/ Robert H. Joseph, Jr. ------------------------------------- Robert H. Joseph, Jr. Senior Vice President & Chief Financial Officer 18