Alliance Capital Announces Third Quarter 2004 Results Alliance
Capital Management Holding L.P. Announces Diluted Net Income of
$0.52 per Unit and Declares a $0.52 per Unit Cash Distribution NEW
YORK, Oct. 28 /PRNewswire-FirstCall/ -- Alliance Capital Management
Holding L.P. ("Alliance Holding") (NYSE:AC), and Alliance Capital
Management L.P. ("Alliance Capital"), today reported results for
the third quarter of 2004. Alliance Holding (The Publicly Traded
Partnership): * Diluted net income per Unit for the quarter ended
September 30, 2004 was $0.52. As previously reported, Alliance
Holding took a third quarter 2003 charge to income regarding the
SEC/NYAG settlement for mutual fund matters and legal proceedings,
which resulted in no net income per Unit for that period. *
Distribution per Unit for the third quarter of 2004 is $0.52, a
decline of 8.8% from $0.57 for the third quarter of 2003. The
distribution is payable on November 18, 2004 to holders of Alliance
Holding Units at the close of business on November 8, 2004.
Alliance Capital (The Operating Partnership): * Assets Under
Management (AUM) at September 30, 2004 were $487 billion, an 11.2%
increase from a year ago, due primarily to equity market
appreciation. * Average AUM was $480 billion for the quarter ended
September 30, 2004, an increase of 11.3% from the same quarter a
year ago. * Long-term net asset inflows for the three months ended
September 30, 2004 were $4.7 billion. Institutional Investment
Management and Private Client inflows were $5.5 billion and $1.2
billion, respectively, while Retail experienced net asset outflows
of $2.0 billion. Cash Management outflows were $0.6 billion. *
Long-term net asset inflows for the twelve months ended September
30, 2004 were $3.3 billion. Private Client and Institutional
Investment Management experienced net asset inflows of $4.9 billion
and $3.0 billion, respectively, which were partially offset by
Retail net asset outflows of $4.6 billion. Cash Management outflows
were $2.8 billion. "On the most important metric, investment
returns for our clients, our third quarter results were mixed.
Returns were very strong in our global and international equity
services and in our fixed income services throughout the world.
Returns were weak, however, in most large capitalization U.S.
equity services," said Lewis Sanders, Chief Executive Officer. "Net
flows of assets under management improved as compared to this
year's first and second quarters benefiting from additional
business with AXA insurance affiliates and continued very strong
growth in our value equity services, style blend services, private
client service suite and in Regent, our managed account offering in
the retail channel. Our overall retail market share remained
depressed, however, and U.S. growth services continued to
experience attrition. Profit margins were pressured in the third
quarter by a high level of general and administrative expenses, in
part a function of one-time items. We anticipate that G&A
expenses will remain high in the fourth quarter before declining
somewhat in 2005. Profit margins were also negatively affected by
fee reductions in mutual funds and by a decline in transaction
revenues and performance fees, both of which manifest high
short-term volatility," Mr. Sanders added. Alliance Capital and
Alliance Holding have also announced, in a separate news release,
that Alliance Capital has entered into an agreement to sell its
cash management business to Federated Investors, Inc. ("Federated")
(NYSE: FII). "The sale of our cash management business is
consistent with Alliance's commitment to focus its resources on
those services -- value equity, growth equity and fixed income --
that provide our clients with long-term solutions to their
investment objectives, and take advantage of our core competencies
and leadership in innovative, in-depth research," said Mr. Sanders.
Alliance estimates that the sale will result in a capital gain of
approximately $0.03-0.06 per Alliance Holding Unit upon the closing
of the transaction in 2005. Estimated contingent payments received
from Federated in the five years following the closing are expected
to be similar to the business's anticipated profit contribution
over that period. The overall effect on earnings is, therefore,
expected to be immaterial. "Ultimately, success in our business
rests on delivering superior investment performance to our clients.
With global investment platforms in growth equities, value equities
and fixed income, enhanced by continuing innovations in research,
we are confident that we can deliver on this imperative," Mr.
Sanders concluded. SUMMARY FINANCIAL RESULTS OF ALLIANCE CAPITAL
MANAGEMENT L.P. (THE OPERATING PARTNERSHIP) ($ millions) Three
Months Ended % 9/30/04 9/30/03 Change Revenues $719 $699 2.8%
Expenses: Operating Expenses 557 484 15.2 Charge for Mutual Fund
Matters & Legal Proceedings - 190 (1) -100.0 ----------
---------- 557 674 -17.3 ---------- ---------- Income Before Taxes
162 25 n/m Income Taxes 9 6 50.1 ---------- ---------- Net Income
$153 $19 (1) n/m ========== ========== Pre-tax Margin (2) 22.5%
3.6% (1) The charge, net of taxes and other offsets, reduced net
income by $146 million. (2) Pre-tax income as a percentage of
revenues. Note: Percentages are calculated using revenues and
expenses rounded to the nearest thousand. * Revenues and Expenses
for the third quarter of 2004 were each increased by approximately
$8 million from the effects of FIN 46 consolidations. * Revenues
increased 2.8% to $719 million primarily as a result of higher
investment advisory fees reflecting higher average AUM, partially
offset by retail long-term open-end mutual fund fee reductions,
lower transaction revenues and lower performance fees. * Operating
Expenses increased 15.2% mainly as a result of higher incentive
compensation from higher earnings, and higher general and
administrative expenses from higher occupancy and legal costs, the
closing of a mutual fund operations facility, the write down of
NYSE memberships to reflect current value and the cost of complying
with Sarbanes-Oxley. CONFERENCE CALL INFORMATION RELATING TO THIRD
QUARTER 2004 RESULTS Alliance Capital's management will review
third quarter 2004 financial and operating results on Thursday,
October 28, 2004, during a conference call at 5:00 p.m. (New York
Time). The call will be hosted by Chief Executive Officer, Lewis A.
Sanders, and Chief Operating Officer, Gerald M. Lieberman. Parties
interested in listening to the conference call may access it by
either telephone or webcast. 1. To listen by telephone, please dial
888-428-4480 in the U.S. or 612-332-0107 outside the U.S., ten
minutes before the 5:00 p.m. (New York Time) scheduled start time.
Please indicate access code "Alliance" when dialing in. 2. To
listen by webcast, please visit Alliance Capital's Investor
Relations website at http://ir.alliancecapital.com/ at least
fifteen minutes prior to the call to download and install any
necessary audio software. The presentation slides that will be
reviewed during the conference call are available on Alliance
Capital's website at the above web address. A replay of the
conference call will be made available for one week beginning at
8:00 p.m. (New York Time) October 28, 2004. In the U.S. please call
800-475-6701 or for callers outside the U.S. 320-365-3844, and
provide the access code 750117. The replay will also be available
via webcast on Alliance Capital's website for one week. ABOUT
ALLIANCE CAPITAL Alliance Capital is a leading global investment
management firm providing services for many of the largest U.S.
public and private employee benefit plans, foundations, public
employee retirement funds, pension funds, endowments, banks,
insurance companies and high-net-worth individuals worldwide.
Alliance Capital is also one of the largest mutual fund sponsors,
with a diverse family of globally distributed mutual fund
portfolios. Through its Sanford C. Bernstein & Co., LLC
subsidiary, Alliance provides in-depth research, portfolio strategy
and trade execution to the institutional investment community. At
September 30, 2004, Alliance Holding owned approximately 31.6% of
the issued and outstanding Alliance Capital Units. AXA Financial
was the beneficial owner of approximately 57.8% of the issued and
outstanding Alliance Capital Units at September 30, 2004 (including
those held indirectly through its ownership of approximately 1.8%
of the issued and outstanding Alliance Holding Units), which,
including the general partnership interests in Alliance Capital and
Alliance Holding, represent an approximate 58.3% economic interest
in Alliance Capital. AXA Financial, Inc. is a wholly-owned
subsidiary of AXA, one of the largest global financial services
organizations. Additional information may be found at
http://www.alliancecapital.com/. Forward-Looking Statements Certain
statements provided by Alliance Capital and Alliance Holding in
this news release 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 Alliance Capital's
sponsored investment products and separately managed accounts,
general economic conditions, future acquisitions, competitive
conditions, and government regulations, including changes in tax
rates. Alliance Capital and Alliance Holding caution readers to
carefully consider such factors. Further, such forward-looking
statements speak only as of the date on which such statements are
made; Alliance Capital and Alliance Holding undertake no obligation
to update any forward-looking statements to reflect events or
circumstances after the date of such statements. For further
information regarding these forward- looking statements and the
factors that could cause actual results to differ, please refer to
the Risk Factors section in Part I of Form 10-K for the year ended
December 31, 2003. Any or all of the forward-looking statements
that we make in Form 10-K, this news release, or any other public
statements we issue may turn out to be wrong. It is important to
remember that other factors besides those listed in the Risk
Factors section of Form 10-K could also adversely affect our
business, operating results or financial condition. The
forward-looking statements referred to in the preceding paragraph
include statements regarding expected levels of general and
administrative expenses and the overall effect on earnings of the
sale of Alliance Capital's cash management business to Federated.
General and administrative expenses, including occupancy costs,
legal fees, compliance with the Sarbanes-Oxley Act of 2002,
insurance recoveries and various other expenses, fluctuate from
period to period due to changes in business needs and other
factors. The effect of the sale on earnings resulting from
contingent payments in future periods will depend on the amount of
net revenue earned by Federated, which in turn will depend on the
levels of assets under management generated in Federated's products
by Alliance Capital's former cash management clients. The amount of
capital gain realized upon closing the transaction depends on an
initial payment by Federated, some of which, in certain
circumstances, would need to be returned to Federated. ALLIANCE
CAPITAL MANAGEMENT L.P. (THE OPERATING PARTNERSHIP) SUMMARY
CONSOLIDATED STATEMENTS OF INCOME (unaudited, in thousands) Three
Months Ended ------------------------ 9/30/04 9/30/03 ----------
---------- Revenues: Investment Advisory & Services Fees
$498,676 $479,589 Distribution Revenues 108,673 112,627
Institutional Research Services 74,223 72,407 Shareholder Servicing
Fees 20,867 23,945 Other Revenues, Net 16,775 10,829 ----------
---------- 719,214 699,397 ---------- ---------- Expenses: Employee
Compensation & Benefits 261,133 200,058 Promotion &
Servicing: Distribution Plan Payments 90,415 94,642 Amortization of
Deferred Sales Commissions 43,262 52,460 Other 44,168 41,101
General & Administrative 107,172 84,555 Interest 6,339 6,302
Amortization of Intangible Assets 5,175 5,175 Charge for Mutual
Fund Matters and Legal Proceedings --- 190,000 ----------
---------- 557,664 674,293 ---------- ---------- Income Before
Income Taxes 161,550 25,104 Income Taxes 8,882 5,916 ----------
---------- NET INCOME $152,668 $19,188 ========== ==========
ALLIANCE CAPITAL MANAGEMENT HOLDING L.P. (THE PUBLICLY TRADED
PARTNERSHIP) SUMMARY STATEMENTS OF INCOME (unaudited, in thousands
except per Unit amounts) Three Months Ended
------------------------ 9/30/04 9/30/03 ---------- ----------
Equity in Earnings of Operating Partnership $47,701 $5,849 Income
Taxes 5,943 5,577 ---------- ---------- NET INCOME 41,758 272
Additional Equity in Earnings of Operating Partnership (1) 470 8
---------- ---------- NET INCOME - Diluted (2) $42,228 $280
========== ========== DILUTED NET INCOME PER UNIT $0.52 $0.00
========== ========== DISTRIBUTIONS PER UNIT $0.52 $0.57 ==========
========== (1) To reflect higher ownership in the Operating
Partnership resulting from application of the treasury stock method
to outstanding options. (2) For calculation of Diluted Net Income
per Unit. ALLIANCE CAPITAL AND ALLIANCE HOLDING UNITS AND WEIGHTED
AVERAGE UNITS OUTSTANDING SEPTEMBER 30, 2004 Weighted Average Units
Three Months Ended Period Ending Units Outstanding Basic Diluted
---------------- ------------ ----------- Alliance Capital
253,439,599 253,350,149 254,674,342 Alliance Holding 80,045,756
79,956,307 81,280,500 ALLIANCE CAPITAL MANAGEMENT L.P. (THE
OPERATING PARTNERSHIP) ASSETS UNDER MANAGEMENT THREE MONTHS ENDED
SEPTEMBER 30, 2004 ($ millions) Institutional Investment Private
Management Retail Client Total ----------- -------- --------
-------- Beginning of Period $271,790 $153,723 $55,098 $480,611
Long-Term Flows Sales/New accounts 6,973 4,688 1,850 13,511
Redemptions/Terminations (5,974) (5,648) (383) (12,005) Cash flow
4,477 (824) (88) 3,565 Unreinvested dividends (1) (204) (131) (336)
------------ -------- -------- -------- Net new long-term
inflows(outflows) 5,475 (1,988) 1,248 4,735 Cash Management, net -
(614) - (614) Market appreciation 1,788 128 329 2,245 -----------
-------- -------- -------- End of Period $279,053 $151,249 $56,675
$486,977 =========== ======== ======== ======== ALLIANCE CAPITAL
MANAGEMENT L.P. (THE OPERATING PARTNERSHIP) ASSETS UNDER MANAGEMENT
TWELVE MONTHS ENDED SEPTEMBER 30, 2004 ($ millions) Institutional
Investment Private Management Retail Client Total ------------
-------- ------- -------- Beginning of Period $245,376 $145,580
$46,808 $437,764 Long-Term Flows Sales/New accounts 31,373 23,413
8,160 62,946 Redemptions/Terminations (26,438) (26,627) (2,282)
(55,347) Cash flow (1,925) (602) (750) (3,277) Unreinvested
dividends (1) (802) (209) (1,012) ------------ -------- -------
-------- Net new long-term inflows(outflows) 3,009 (4,618) 4,919
3,310 Cash Management, net - (2,795) - (2,795) Market appreciation
30,668 13,082 4,948 48,698 ------------ -------- ------- --------
End of Period $279,053 $151,249 $56,675 $486,977 ============
======== ======= ======== ALLIANCE CAPITAL MANAGEMENT L.P. (THE
OPERATING PARTNERSHIP) ASSETS UNDER MANAGEMENT ($ millions) Three
Month Period ------------------------ 9/30/04 9/30/03 -----------
----------- Average Assets Under Management $479,946 $431,282
=========== =========== Ending Assets Under Management $486,977
$437,764 =========== =========== ALLIANCE CAPITAL MANAGEMENT L.P.
(THE OPERATING PARTNERSHIP) ASSETS UNDER MANAGEMENT BY INVESTMENT
ORIENTATION AT SEPTEMBER 30, 2004 ($ millions) Institutional
Investment Private Management Retail Client Total ---------
-------- -------- -------- Equity: Growth U.S. $44,154 $32,801
$6,701 $83,656 Global & International 22,554 10,102 3,431
36,087 --------- -------- -------- -------- 66,708 42,903 10,132
119,743 Value --------- -------- -------- -------- U.S. 54,642
28,227 27,805 110,674 Global & International 46,946 8,554 6,262
61,762 --------- -------- -------- -------- 101,588 36,781 34,067
172,436 --------- -------- -------- -------- Total Equity 168,296
79,684 44,199 292,179 --------- -------- -------- -------- Fixed
Income: U.S. 52,071 47,269 12,284 111,624 Global &
International 36,561 19,612 125 56,298 --------- -------- -------
-------- 88,632 66,881 12,409 167,922 --------- -------- -------
-------- Passive: U.S. 17,248 4,480 67 21,795 Global &
International 4,877 204 - 5,081 --------- -------- ------- --------
22,125 4,684 67 26,876 --------- -------- ------- -------- Total:
U.S. 168,115 112,777 46,857 327,749 Global & International
110,938 38,472 9,818 159,228 --------- -------- ------- --------
$279,053 $151,249 $56,675 $486,977 ========= ======== =======
======== ALLIANCE CAPITAL MANAGEMENT L.P. (THE OPERATING
PARTNERSHIP) ASSETS UNDER MANAGEMENT BY INVESTMENT VEHICLE AT
SEPTEMBER 30, 2004 ($ millions) Institutional Investment Private
Management Retail Client Total ------------ -------- --------
-------- Separately Managed Accounts Parent $54,469 $ - $ - $54,469
Other (1) 222,505 8,527 39,054 270,086 ------------ -------
-------- -------- 276,974 8,527 39,054 324,555 ------------ -------
-------- -------- Mutual Funds Parent (2) 47 36,893 - 36,940 Other
2,032 105,829 17,621 125,482 ------------ ------- -------- --------
2,079 142,722 17,621 162,422 ------------ -------- --------
-------- Total $279,053 $151,249 $56,675 $486,977 ============
======== ======== ======== (1) Retail separately managed accounts
represent assets in managed account products. (2) Parent includes
certain mutual funds sponsored by Alliance Capital's parent and
sub-advised by Alliance Capital. ALLIANCE CAPITAL MANAGEMENT L.P.
(THE OPERATING PARTNERSHIP) ASSETS UNDER MANAGEMENT BY LOCATION (1)
AT SEPTEMBER 30, 2004 ($ millions) Institutional Investment Private
Management Retail Client Total ----------- --------- --------
-------- U.S. Clients $185,839 $134,122 $55,259 $375,220 Non-U.S.
Clients 93,214 17,127 1,416 111,757 ----------- --------- --------
-------- $279,053 $151,249 $56,675 $486,977 =========== =========
======== ======== (1) Categorized by country domicile of client.
DATASOURCE: Alliance Capital CONTACT: Investor Relations - Valerie
Haertel, +1-212-969-6414, , Media - John Meyers, +1-212-969-2301, ,
both of Alliance Capital Web site: http://www.alliancecapital.com/
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