Alliance Capital Management Holding L.P. Declares $0.59 Per Unit Cash Distribution
Positive Net New Business in All Distribution Channels
Click here to view this release in printable (PDF) format
NEW YORK, May 2, 2002 /PRNewswire-FirstCall via COMTEX/ -- Alliance Capital Management Holding L.P. (NYSE: AC) ("Alliance Holding"), the publicly traded partnership, and Alliance Capital Management L.P. ("Alliance Capital"), the operating partnership, today reported results for the quarter ended March 31, 2002 as compared to the quarter ended March 31, 2001.
Alliance Holding:
- Net operating earnings (net income excluding amortization of intangibles and goodwill) were $0.60 per Unit for the first quarter of 2002, a decrease of 13.0% from $0.69 per Unit.
- Distribution per Alliance Holding Unit is $0.59, compared to $0.68 per Unit.
Alliance Capital:
- Assets Under Management (AUM) at March 31, 2002 were $452 billion, up 5.4% from the prior year quarter.
- Average AUM were $448 billion, a decrease of 0.7% as compared to $451 billion.
- Net new business flows were $5.1 billion in the quarter and $29 billion for the twelve-month period -- positive across all distribution channels.
- Revenues were $721 million, a decline of 3.0% from $742 million.
- Operating expenses were flat at $539 million.
- Net operating earnings were $173 million for the first quarter of 2002, down 11.4% compared to $195 million.
"First quarter results were broadly consistent with our expectations, in the context of a flat equity market and a modest decline in key growth stock indices. But, the environment remains challenging. Our investment performance during the quarter was mixed as we remain focused on longer-term opportunities in a very risk adverse environment. Nevertheless, we continue to win net new business in each of our distribution channels, with particular strength outside the U.S.
"The combination with Bernstein has helped to provide stability during a very challenging period for growth investing. Bernstein and Alliance have come together exceptionally well. The combined firm is well positioned in terms of product quality and diversity, and we have leading positions in retail, institutional and private client distribution channels. Our institutional research business is performing very well. Overall, we remain confident about the future," said Bruce W. Calvert, Chairman and CEO.
SUMMARY FINANCIAL RESULTS OF ALLIANCE CAPITAL MANAGEMENT L.P.
THE OPERATING PARTNERSHIP
(millions)
Three Months Ended %
3/31/02 3/31/01 Change
Revenues $721 $742 -3.0
Expenses:
Operating Expenses 539 537 0.2
Amortization of Intangibles
& Goodwill 5 43 -88.0
Income Taxes 9 10 -9.1
553 590 -6.4
NET INCOME $168 $152 10.3
Net Income As Adjusted $168 $190(1) -11.7
Net Income $168 $152 10.3
Amortization of Intangibles
& Goodwill 5 43 -88.0
NET OPERATING EARNINGS(2) $173 $195 -11.4
Base Fee Earnings $169 $192 -12.0
Performance Fee Earnings 4 3 22.8
NET OPERATING EARNINGS(2) $173 $195 -11.4
(1) Net income as adjusted excludes the effect of amortization of
goodwill for the three months ended March 31, 2001.
(2) Net Operating Earnings: Net Income excluding amortization of
intangibles and goodwill.
* Total revenues for the first quarter decreased 3.0% to $721 million
from the first quarter of 2001. The year-over-year decline was
primarily the result of lower average AUM due to negative returns in
our growth portfolios and the modest mix shift, mainly in the retail
channel, toward lower fee products.
* Operating expenses for the first quarter were $539 million, an increase
of 0.2% from the quarter ended March 31, 2001.
* Net income increased 10.3% to $168 million as compared to the first
quarter of 2001. The increase was the result of the adoption of SFAS
142 on January 1, 2002, which eliminated the recurring $38 million
quarterly charge for goodwill amortization. Net income for the first
quarter of 2002, when compared to the first quarter of 2001 as adjusted
for this required accounting change, declined 11.7%.
* Net operating earnings (excluding amortization of intangible assets and
goodwill) were $173 million for the first quarter of 2002, as compared
to $195 million in the same period one year ago, a decrease of 11.4% as
revenues declined while expenses remained flat.
* Pre-tax operating margin of 30.8% decreased from 34.1% in the first
quarter of 2001, reflecting lower average AUM, the shift in retail AUM
to lower fee products, and moderately higher office space and
compensation expenses from agreements related to the October 2000
acquisition of the business of Sanford C. Bernstein.
SUMMARY OF PER UNIT FINANCIAL RESULTS OF ALLIANCE HOLDING
THE PUBLICLY TRADED PARTNERSHIP
Alliance Holding's principal sources of income and cash flow are attributable to
its ownership interest in Alliance Capital, the operating partnership. Alliance
Holding is required to distribute the cash distributions it receives from
Alliance Capital, less taxes and other amounts its general partner determines
should be retained.
Three Months Ended %
3/31/02 3/31/01 Change
DILUTED NET INCOME $0.58 $0.52 11.5
Amortization of Intangibles & Goodwill 0.02 0.17 -88.2
NET OPERATING EARNINGS(1) $0.60 $0.69 -13.0
Base Fee Earnings $0.59 $0.68 -13.2
Performance Fee Earnings 0.01 0.01 --
NET OPERATING EARNINGS(1) $0.60 $0.69 -13.0
DISTRIBUTIONS PER UNIT $0.59 $0.68 -13.2
(1) Net Operating Earnings per Unit: Diluted Net Income per Unit
excluding Alliance Holding's proportionate share of Alliance
Capital's amortization of intangibles and goodwill.
* Net operating earnings (net income excluding amortization of
intangibles and goodwill) were $0.60 per Unit for the first quarter of
2002, a decrease of 13.0% from the same period last year.
* Distribution per Alliance Holding Unit is $0.59 for the first quarter
of 2002, a decrease of 13.2% as compared to $0.68 for the quarter ended
March 31, 2001.
ALLIANCE CAPITAL DISTRIBUTION CHANNEL HIGHLIGHTS
Retail Channel: Luxembourg-Based Fund Net Sales Increased 20%
* $169 Billion of AUM, down 1.5% from 1Q01
* $372 Million of Revenue, down 10.8% from 1Q01
* Net new business of long-term funds: $2.2 Billion vs. $2.6 Billion in
1Q01
* Net cash management funds: $1.5 Billion of outflows vs. $5.0 Billion of
inflows in 1Q01
The year-over-year decline in Retail AUM resulted from negative returns in our growth portfolios, offset by net new business. Revenues declined in the period ended March 31, 2002 as compared to the same period in 2001, mainly due to lower average AUM and the shift to lower fee value equity and fixed income products. However, for the March 31, 2002 quarter, net new business was $683 million. Included in net new business are $2.4 billion of net inflows in value equity products and $804 million from three newly launched closed-end municipal funds, which were partially offset by net outflows in growth equity and cash management products.
"Non-U.S. sales picked up momentum as first quarter net sales of our Luxembourg-based funds increased 20% over the first quarter of 2001, offsetting difficult U.S. comparisons. We benefited from strength in several key markets including Asia and Germany and made progress in new markets including Scandinavia, Spain and France," said John D. Carifa, President and Chief Operating Officer.
"In the U.S., AUM in the CollegeBoundfund(SM) 529 savings program doubled in the past six months and now totals more than $2 billion. Our success can be attributed to a number of factors differentiating our program from competitors, including the large number of investment options offered, and the high maximum contribution limits," said Carifa.
Institutional Investment Management: 63 New Client Account Wins with AUM of $6.3 Billion Across a Broad Range of Investment Disciplines
Institutional investment management AUM for March 31, 2002 increased 9.6% from March 31, 2001, primarily as a result of net new business, which included a $12.5 billion Vanguard sub-advisory growth mandate. During the quarter ended March 31, 2002, institutional separate account wins totaled 63 across a broad range of investment disciplines, representing $6.3 billion of AUM.
Private Client: Strong Net New Business
Private Client AUM increased 12.9% to $41 billion from March 31, 2001 due to positive net flows and investment performance. Gross flows increased to $1.9 million for the first quarter of 2002 as compared to $1.1 for the same period a year ago. Net new business rose 34.8% to $949 million for the quarter ended March 31, 2002 as compared to the same period last year. Revenue increased by 22.4% to $103 million at March 31, 2002 from $84 million in the first quarter of 2001, which was mainly attributable to higher average AUM and an increase in transaction charges.
Institutional Research Services: Launched Trading in London
Institutional research services revenues increased 11.5% to $72 million for the quarter ended March 31, 2002 from $64 million in the first quarter of 2001. The increase was due to a 0.15% increase in market share and a 5% increase in average daily NYSE volume as compared to the same period in 2001. During the quarter, a new trading operation was established in London to complement the European sales and research teams to provide a broad array of global research services to U.S. and non-U.S. clients.
ABOUT ALLIANCE CAPITAL
Alliance Capital is a leading global investment management firm providing investment management 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. As one of the world's leading global investment management organizations, Alliance Capital is able to compete for virtually any portfolio assignment in any developed capital market in the world.
Alliance Holding owns approximately 30% of the units of limited partnership interest in Alliance Capital. AXA Financial, Inc. owns approximately 2% of the outstanding Alliance Holding Units and approximately 52% of the outstanding Alliance Capital Units, representing an approximate 53% economic interest in Alliance Capital. AXA Financial, Inc. is a wholly-owned subsidiary of AXA, one of the largest global financial services organizations.
FORWARD-LOOKING STATEMENTS
Certain statements provided by Alliance Capital and Alliance Holding in this press 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.
CONFERENCE CALL INFORMATION RELATING TO FIRST QUARTER 2002 RESULTS
Alliance Capital's management team will review first quarter 2002 financial and operating results on Thursday, May 2, 2002, during a live conference call and webcast at 3:00 p.m. (Eastern Time). The call will be hosted by Chairman and Chief Executive Officer, Bruce W. Calvert; President and Chief Operating Officer, John D. Carifa; and Vice Chairman and Chief Investment Officer, Lewis A. Sanders.
Parties interested in listening to the conference call may access it either by telephone or webcast.
1. To listen by telephone, please dial 800-230-1059 in the U.S. or 612-288-0318 outside the U.S., ten minutes before the 3:00 p.m. (Eastern 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 expected to be available on the morning of May 2, 2002 on Alliance Capital's website, following the issuance of the earnings press release, at the above web address.
A replay of the conference call will be made available for one week beginning at 6:30 p.m. (Eastern Time) May 2, 2002. In the U.S., please call 800-475-6701, or outside the U.S., please dial 320-365-3844, and provide the access code 634492. The replay will also be available via webcast on Alliance Capital's website for one week.
ALLIANCE CAPITAL MANAGEMENT HOLDING L.P.
(THE PUBLICLY TRADED PARTNERSHIP)
SUMMARY STATEMENTS OF INCOME
(unaudited, in thousands except per Unit amounts)
Three Months Ended
3/31/02 3/31/01
Equity in Earnings of Operating Partnership $50,216 $44,863
Income Taxes 5,493 5,699
NET INCOME $44,723 $39,164
Additional Equity in Earnings of
Operating Partnership(1) 1,893 2,322
NET INCOME - Diluted(2) $46,616 $41,486
DILUTED NET INCOME PER UNIT $0.58 $0.52
Amortization of Intangibles & Goodwill per Unit 0.02 0.17
NET OPERATING EARNINGS PER UNIT(3) $0.60 $0.69
Base Fee Earnings per Unit $0.59 $0.68
Performance Fee Earnings per Unit 0.01 0.01
NET OPERATING EARNINGS PER UNIT(3) $0.60 $0.69
DISTRIBUTIONS PER UNIT $0.59 $0.68
(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.
(3) Net Operating Earnings per Unit: Diluted Net Income per Unit
excluding Alliance Holding's proportionate share of Alliance
Capital's amortization of intangibles and goodwill.
ALLIANCE CAPITAL MANAGEMENT L.P.
(THE OPERATING PARTNERSHIP)
SUMMARY CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands)
Three Months Ended
3/31/02 3/31/01
Revenues:
Investment Advisory & Services Fees $486,283 $497,807
Distribution Revenues 129,179 140,377
Institutional Research Services 71,810 64,406
Shareholder Servicing Fees 24,624 22,665
Other Revenues, Net 8,627 17,182
720,523 742,437
Expenses:
Employee Compensation & Benefits 236,112 220,133
Promotion & Servicing:
Distribution Plan Payments 118,715 124,083
Amortization of Deferred Sales Commissions 57,002 58,308
Other 37,809 46,727
General & Administrative 80,603 75,469
Interest 8,382 12,589
538,623 537,309
Operating Income 181,900 205,128
Amortization of Goodwill -- 37,959
Amortization of Intangible Assets 5,175 5,175
Income Before Income Taxes 176,725 161,994
Income Taxes 8,837 9,720
NET INCOME $167,888 $152,274
Base Fee Earnings 169,150 192,221
Performance Fee Earnings 3,913 3,187
NET OPERATING EARNINGS(1) $173,063 $195,408
(1) Net Operating Earnings: Net Income excluding amortization of
intangibles and goodwill.
ALLIANCE CAPITAL MANAGEMENT L.P.
(THE OPERATING PARTNERSHIP)
ANALYSIS OF PRE-TAX OPERATING EARNINGS MARGIN (1)
($ thousands)
Three Months Ended
3/31/02 3/31/01
Total Revenues $720,523 $742,437
Less: Distribution Revenues (129,179) (140,377)
Net Revenues 591,344 602,060
Total Operating Expenses 538,623 537,309
Less: Distribution Revenues (129,179) (140,377)
Net Operating Expenses 409,444 396,932
Operating Income $181,900 $205,128
Pre-tax Operating Margin 30.8% 34.1%
(1) Income before income taxes (excluding amortization of intangible
assets and goodwill) as a percentage of revenues (excluding
distribution revenues).
ALLIANCE CAPITAL AND ALLIANCE HOLDING
UNITS OUTSTANDING AND WEIGHTED AVERAGE UNITS
MARCH 31, 2002
(in thousands)
Weighted Average
Three Months
Period End Basic Diluted
Alliance Capital 249,315 248,995 253,702
Alliance Holding 75,506 75,187 79,894
ALLIANCE CAPITAL MANAGEMENT L.P.
(THE OPERATING PARTNERSHIP)
ASSETS UNDER MANAGEMENT(1)
THREE MONTHS ENDED MARCH 31, 2002
($ millions)
Institutional
Investment Private
Retail Management Client Total
Beginning of Period $171,496 $241,491 $39,169 $452,156
Sales/new accounts 9,274 6,318 1,885 17,477
Redemptions/terminations (6,918) (3,231) (675) (10,824)
Net cash management sales (1,540) -- -- (1,540)
Cash flow 77 433 (222) 288
Unreinvested dividends (210) (1) (39) (250)
Net new business 683 3,519 949 5,151
Appreciation (depreciation) (2,724) (2,913) 526 (5,111)
Net change (2,041) 606 1,475 40
End of Period $169,455 $242,097 $40,644 $452,196
(1) AUM previously reported as of each date prior to March 31, 2002, have
been restated to conform to the March 31, 2002 presentation. AUM now
reflects the reclassification of institutional cash management and
sub-advised variable annuity accounts from Institutional Investment
Management to Retail and certain Private Client accounts to Retail
and Institutional Investment Management. AUM now also excludes AUM
from unconsolidated affiliates.
ALLIANCE CAPITAL MANAGEMENT L.P.
(THE OPERATING PARTNERSHIP)
ASSETS UNDER MANAGEMENT(1)
TWELVE MONTHS ENDED MARCH 31, 2002
($ millions)
Institutional
Investment Private
Retail Management Client Total
Beginning of Period $172,087 $220,892 $35,989 $428,968
Sales/new accounts 34,056 33,844 5,793 73,693
Redemptions/terminations (28,467) (13,057) (2,175) (43,699)
Net cash management sales (2,600) -- -- (2,600)
Cash flow 168 3,207 (632) 2,743
Unreinvested dividends (896) (12) (213) (1,121)
Net new business 2,261 23,982 2,773 29,016
Transfers 749 (749) -- --
Appreciation (depreciation) (5,642) (2,028) 1,882 (5,788)
Net change (2,632) 21,205 4,655 23,228
End of Period $169,455 $242,097 $40,644 $452,196
(1) AUM previously reported as of each date prior to March 31, 2002, have
been restated to conform to the March 31, 2002 presentation. AUM now
reflects the reclassification of institutional cash management and
sub-advised variable annuity accounts from Institutional Investment
Management to Retail and certain Private Client accounts to Retail
and Institutional Investment Management. AUM now also excludes AUM
from unconsolidated affiliates.
ALLIANCE CAPITAL MANAGEMENT L.P.
(THE OPERATING PARTNERSHIP)
ASSETS UNDER MANAGEMENT(1)
($ millions)
Three Months Ended
3/31/02 3/31/01
Average Assets Under Management $447,999 $451,056
Ending Assets Under Management $452,196 $428,968
(1) AUM previously reported as of each date prior to March 31, 2002, have
been restated to conform to the March 31, 2002 presentation. AUM now
reflects the reclassification of institutional cash management and
sub-advised variable annuity accounts from Institutional Investment
Management to Retail and certain Private Client accounts to Retail
and Institutional Investment Management. AUM now also excludes AUM
from unconsolidated affiliates.
ALLIANCE CAPITAL MANAGEMENT L.P.
(THE OPERATING PARTNERSHIP)
ASSETS UNDER MANAGEMENT (1)
BY INVESTMENT ORIENTATION
AT MARCH 31, 2002
($ millions)
Institutional
Investment Private
Retail Management Client Total
Equity
Growth
U.S. Growth $55,408 $78,461 $2,409 $136,278
Global & International Growth 15,510 13,535 335 29,380
70,918 91,996 2,744 165,658
Value
U.S. Value 21,005 40,631 22,217 83,853
Global & International Value 3,059 15,337 5,958 24,354
24,064 55,968 28,175 108,207
Total Equity 94,982 147,964 30,919 273,865
Fixed Income
U.S. 57,933 47,893 9,647 115,473
Global & International 12,991 18,359 66 31,416
70,924 66,252 9,713 146,889
Passive
U.S. 3,540 21,397 12 24,949
Global & International 9 6,484 -- 6,493
3,549 27,881 12 31,442
Total
U.S. 137,886 188,382 34,285 360,553
Global & International 31,569 53,715 6,359 91,643
$169,455 $242,097 $40,644 $452,196
(1) AUM previously reported as of each date prior to March 31, 2002, have
been restated to conform to the March 31, 2002 presentation. AUM now
reflects the reclassification of institutional cash management and
sub-advised variable annuity accounts from Institutional Investment
Management to Retail and certain Private Client accounts to Retail
and Institutional Investment Management. AUM now also excludes AUM
from unconsolidated affiliates.
ALLIANCE CAPITAL MANAGEMENT L.P.
(THE OPERATING PARTNERSHIP)
ASSETS UNDER MANAGEMENT (1)
BY INVESTMENT VEHICLE
AT MARCH 31, 2002
($ millions)
Institutional
Investment Private
Retail Management Client Total
Separately Managed Accounts
Parent $ -- $33,744 $ -- $ 33,744
Other(2) 10,344 203,878 29,168 243,390
10,344 237,622 29,168 277,134
Mutual Funds
Parent(3) 27,160 29 -- 27,189
Other 131,951 4,446 11,476 147,873
159,111 4,475 11,476 175,062
Total $169,455 $242,097 $40,644 $452,196
(1) AUM previously reported as of each date prior to March 31, 2002, have
been restated to conform to the March 31, 2002 presentation. AUM now
reflects the reclassification of institutional cash management and
sub-advised variable annuity accounts from Institutional Investment
Management to Retail and certain Private Client accounts to Retail
and Institutional Investment Management. AUM now also excludes AUM
from unconsolidated affiliates.
(2) Retail separately managed accounts represent assets managed in
managed account products.
(3) Parent includes certain mutual funds sponsored by Alliance Capital's
parent which are sub-advised by Alliance Capital.
ALLIANCE CAPITAL MANAGEMENT L.P.
(THE OPERATING PARTNERSHIP)
ASSETS UNDER MANAGEMENT(1)
BY LOCATION(2)
AT MARCH 31, 2002
($ millions)
Institutional
Investment Private
Retail Management Client Total
U.S. $149,313 $201,074 $39,301 $389,688
Non-U.S. 20,142 41,023 1,343 62,508
$169,455 $242,097 $40,644 $452,196
(1) AUM previously reported as of each date prior to March 31, 2002, have
been restated to conform to the March 31, 2002 presentation. AUM now
reflects the reclassification of institutional cash management and
sub-advised variable annuity accounts from Institutional Investment
Management to Retail and certain Private Client accounts to Retail
and Institutional Investment Management. AUM now also excludes AUM
from unconsolidated affiliates.
(2) Categorized by country domicile of client.
SOURCE Alliance Capital
CONTACT: Investor Relations - Valerie Haertel, +1-212-969-6414, investor_relations@acml.com, or Media - John Meyers, +1-212-969-2301, john_meyers@acml.com, both of Alliance Capital