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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/