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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 000-29961
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ALLIANCE CAPITAL
MANAGEMENT L.P.
(Exact name of Registrant as specified in its charter)
Delaware 13-4064930
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1345 Avenue of the Americas 10105
New York, N.Y. (Zip Code)
(Address of principal executive
offices)
Registrant's telephone number, including area code: (212) 969-1000
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Title of Class Name of each exchange on which registered
-------------- -----------------------------------------
Units of None
limited partnership interest
in Alliance Capital Management L.P.
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 ____
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
There is no established trading market for the units of limited
partnership interest in Alliance Capital Management L.P. and they are subject to
significant restrictions on transfer. Accordingly, it is not possible to state
the aggregate market value of the units held by non-affiliates of the
registrant.
172,243,906 units of limited partnership interest in Alliance Capital
Management L.P. were outstanding as of March 1, 2000.
DOCUMENTS INCORPORATED BY REFERENCE
Certain pages of the 1999 Annual Report are incorporated by reference
in Part II of this Form 10-K.
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GLOSSARY OF CERTAIN DEFINED TERMS
"ACMC" refers to ACMC, Inc., a wholly-owned subsidiary of Equitable.
"Alliance" refers to Alliance Capital Management Corporation, a
wholly-owned subsidiary of Equitable, and, where appropriate, to ACMC, its
predecessor.
"Alliance Capital" refers to Alliance Capital Management L.P., a
Delaware limited partnership, which is the operating partnership, and its
subsidiaries and, where appropriate, to its predecessors, Alliance Holding and
ACMC and their respective subsidiaries.
"Alliance Capital Units" refers to units of limited partnership
interest in Alliance Capital.
"Alliance Holding" refers to Alliance Capital Management Holding L.P.,
a Delaware limited partnership formerly known as Alliance Capital Management
L.P.
"Alliance Holding Units" refers to units representing assignments of
beneficial ownership of limited partnership interests in Alliance Holding and to
100,000 units of general partnership interest in Alliance Holding.
"AXA" refers to AXA, a company organized under the laws of France.
"AXA Financial" refers to AXA Financial, Inc., formerly The Equitable
Companies Incorporated.
"ECMC" refers to Equitable Capital Management Corporation, a
wholly-owned subsidiary of Equitable.
"Equitable" refers to The Equitable Life Assurance Society of the
United States, a wholly-owned subsidiary of AXA Financial, and its subsidiaries
other than Alliance Capital and its subsidiaries.
"General Partner" refers to Alliance in its capacity as general partner
of Alliance Capital and Alliance Holding, and, where appropriate, to ACMC, its
predecessor, in its capacity as general partner of Alliance Holding.
"Investment Advisers Act" refers to the Investment Advisers Act of
1940.
"Investment Company Act" refers to the Investment Company Act of 1940.
"1999 Annual Report" refers to the Alliance Capital Management L.P. and
Alliance Capital Management Holding L.P. 1999 Annual Report to Unitholders.
PART I
Item 1. Business
General
In October 1999 Alliance Holding reorganized by transferring its
business and assets to Alliance Capital, a newly formed private partnership, in
exchange for all of the Alliance Capital Units ("Reorganization"). Since the
Reorganization Alliance Capital has conducted the diversified investment
management services business conducted by Alliance Holding prior to the
Reorganization and Alliance Holding's business has consisted of holding Alliance
Capital Units and engaging in related activities. As part of the Reorganization
Alliance Holding offered each Alliance Holding Unitholder the opportunity to
exchange Alliance Holding Units for Alliance Capital Units on a one-for-one
basis. As of March 1, 2000 Alliance Holding held approximately 42% of the
outstanding Alliance Capital Units. The Alliance Holding Units trade publicly on
the New York
1
Stock Exchange, Inc. ("NYSE") while the Alliance Capital Units do not trade
publicly and are subject to significant restrictions on transfer. Alliance is
the General Partner of both Alliance Capital and Alliance Holding.
Alliance Holding was formed in 1987 to succeed to the business of ACMC
which began providing investment management services in 1971. On April 21, 1988
the business and substantially all of the operating assets of ACMC were conveyed
to Alliance Holding in exchange for a 1% general partnership interest in
Alliance Holding and approximately 55% of the outstanding Alliance Holding
Units. In December 1991 ACMC transferred its 1% general partnership interest in
Alliance Holding to Alliance.
On February 19, 1998 Alliance Holding declared a two for one Alliance
Holding Unit split payable to Alliance Holding Unitholders of record on March
11, 1998. No adjustments have been made to the number of Alliance Holding Units
outstanding or per Alliance Holding Unit amounts prior to March 11, 1998 except
in Item 5, Item 6, Item 7, Item 8 and Item 11.
As of March 1, 2000 AXA, AXA Financial, Equitable and certain
subsidiaries of Equitable were the beneficial owners of 95,855,945 Alliance
Capital Units or approximately 55.7% of the issued and outstanding Alliance
Capital Units and 1,544,356 Alliance Holding Units or approximately 2.1% of the
issued and outstanding Alliance Holding Units. As of March 1, 2000 Alliance
Holding was the owner of 71,855,296 Alliance Capital Units or approximately
41.7% of the issued and outstanding Alliance Capital Units.
As of March 1, 2000 AXA and its subsidiaries owned approximately 60.3%
of the issued and outstanding shares of the common stock of AXA Financial. AXA
Financial is a public company with shares traded on the NYSE. AXA Financial owns
all of the shares of Equitable. For insurance regulatory purposes all shares of
common stock of AXA Financial beneficially owned by AXA have been deposited into
a voting trust. See "Item 12. Security Ownership of Certain Beneficial Owners
and Management".
AXA, a French company, is the holding company for an international
group of insurance and related financial services companies. AXA's insurance
operations include activities in life insurance, property and casualty insurance
and reinsurance. The insurance operations are diverse geographically with
activities principally in Western Europe, North America, the Asia/Pacific area,
and, to a lesser extent, in Africa and South America. AXA is also engaged in
asset management, investment banking, securities trading, brokerage, real estate
and other financial services activities principally in the United States, as
well as in Western Europe and the Asia/Pacific area.
Alliance Capital, one of the nation's largest investment advisers,
provides diversified investment management services to institutional clients and
high net-worth individuals and, through various investment vehicles, to
individual investors.
Alliance Capital's separately managed accounts consist primarily of the
active management of equity and fixed income accounts for institutional
investors and high net-worth individuals. Alliance Capital's institutional
clients include corporate and public employee pension funds, the general and
separate accounts of Equitable and its insurance company subsidiary, endowments,
foundations, and other domestic and foreign institutions. Alliance Capital's
mutual funds management services, which developed as a diversification of its
institutional investment management business, consist of the management,
distribution and servicing of mutual funds and cash management products,
including money market funds and deposit accounts.
The following tables provide a summary of assets under management and
associated revenues of Alliance Capital:
2
Assets Under Management
(in millions)
December 31,
--------------------------------------------------------------
1995 1996 1997 1998 1999
Separately Managed Accounts (1)(4) $ 97,275 $ 119,507 $ 133,706 $ 168,121 $ 198,878
Mutual Funds Management (4):
Alliance Mutual Funds .......... 23,134 27,624 40,376 60,722 96,372
Variable Products .............. 12,292 17,070 23,830 31,364 40,906
Cash Management Services (2) ... 13,820 18,591 20,742 26,452 32,165
---------- ---------- ---------- ---------- ----------
Total ............................ $ 146,521 $ 182,792 $ 218,654 $ 286,659 $ 368,321
========== ========== ========== ========== ==========
Revenues
(in thousands)
Years Ended December 31,
--------------------------------------------------------------
1995 1996 1997 1998 1999
Separately Managed Accounts (1) .. $ 232,132 $ 280,909 $ 322,850 $ 373,018 $ 453,029
Mutual Funds Management :
Alliance Mutual Funds .......... 277,815 327,769 432,520 674,234 1,089,525
Variable Products (3) .......... 29,632 44,967 67,805 93,174 124,058
Cash Management Services (2) ... 91,135 127,265 146,152 174,829 187,635
Other ............................ 8,541 7,607 6,009 8,801 15,058
---------- ---------- ---------- ---------- ----------
Total ............................ $ 639,255 $ 788,517 $ 975,336 $1,324,056 $1,869,305
========== ========== ========== ========== ==========
(1) Includes the general and separate accounts of Equitable and its
insurance company subsidiary.
(2) Includes money market deposit accounts brokered by Alliance Capital for
which no investment management services are performed.
(3) Net of certain fees paid to Equitable for services rendered by
Equitable in marketing the variable annuity insurance and variable life
products for which The Hudson River Trust ("HRT") was the funding
vehicle. All of the portfolios of HRT were transferred to EQ Advisors
Trust ("EQAT") effective October 18, 1999 and such fees are no longer
payable to Equitable.
(4) Assets under management exclude certain non-discretionary advisory
relationships and reflect 100% of the assets managed by unconsolidated
affiliates.
SEPARATELY MANAGED ACCOUNTS
As of December 31, 1997, 1998 and 1999 separately managed accounts for
institutional investors and high net-worth individuals represented approximately
61%, 59% and 54%, respectively, of total assets under management by Alliance
Capital. The fees earned from the management of these accounts represented
approximately 33%, 28% and 24% of Alliance Capital's revenues for 1997, 1998 and
1999, respectively.
3
Separately Managed Accounts Assets Under Management (1)
(in millions)
December 31,
-----------------------------------------------------------------
1995 1996 1997 1998 1999
Equity & Balanced:
Domestic......................... $42,706 $51,292 $61,259 $87,032 $105,965
International & Global........... 3,854 10,903 7,883 7,370 11,591
Fixed Income:
Domestic......................... 32,553 36,042 39,079 41,911 43,299
International & Global........... 1,891 2,381 2,759 4,030 5,151
Passive:
Domestic......................... 12,787 15,478 19,860 23,050 26,472
International & Global........... 3,484 3,411 2,866 4,728 6,400
------- -------- -------- -------- --------
Total.............................. $97,275 $119,507 $133,706 $168,121 $198,878
======= ======== ======== ======== ========
(1) Includes 100% of the assets managed by unconsolidated affiliates of
$587 million at December 31, 1999, $432 million at December 31, 1998
and $203 million at December 31, 1997.
Revenues From Separately Managed Accounts Management
(in thousands)
Years Ended December 31,
-----------------------------------------------------------------
1995 1996 1997 1998 1999
Investment Services:
Equity & Balanced:
Domestic......................... $132,802 $157,511 $184,200 $238,063 $311,342
International & Global........... 10,373 32,453 30,192 16,371 27,370
Fixed Income:
Domestic......................... 67,102 65,449 80,600 89,286 82,417
International & Global........... 3,784 5,392 7,007 7,968 10,600
Passive:
Domestic......................... 5,919 8,015 9,187 9,911 8,827
International & Global........... 3,870 3,612 3,034 2,997 3,759
-------- -------- -------- -------- --------
223,850 272,432 314,220 364,596 444,315
Service and Other Fees............. 8,282 8,477 8,630 8,422 8,714
-------- -------- -------- -------- --------
Total.............................. $232,132 $280,909 $322,850 $373,018 $453,029
======== ======== ======== ======== ========
Investment Management Services
Alliance Capital's separately managed accounts consist primarily of the
active management of equity accounts, balanced (equity and fixed income)
accounts and fixed income accounts for institutional investors and high
net-worth individuals. Alliance Capital also provides active management for
international (non-U.S.) and global (including U.S.) equity, balanced and fixed
income portfolios, asset allocation portfolios, venture capital portfolios,
investment partnership portfolios known as hedge funds and portfolios that
invest in real estate investment trusts. Alliance Capital provides "passive"
management services for equity, fixed income and international accounts. As of
December 31, 1999 Alliance Capital's accounts were managed by 140 portfolio
managers with an average of 17 years of experience in the industry and 10 years
of experience with Alliance Capital.
4
Equity and Balanced Accounts. Alliance Capital's separately managed
equity and balanced accounts contributed approximately 22%, 19% and 18% of
Alliance Capital's total revenues for 1997, 1998 and 1999, respectively. Assets
under management relating to active equity and balanced accounts grew from
approximately $34.3 billion as of December 31, 1994 to approximately $117.6
billion as of December 31, 1999.
Alliance Capital has had a distinct and consistent style of equity
investing. Alliance Capital does not emphasize market timing as an investment
tool but instead emphasizes long-term trends and objectives, generally remaining
fully invested. Alliance Capital's equity strategy is to invest in the
securities of companies experiencing growing earnings momentum which are known
as growth stocks. The result of these investment characteristics is that
Alliance Capital's client portfolios tend to have, as compared to the average of
companies comprising the Standard & Poor's Index of 500 Stocks ("S&P 500"), a
greater market price volatility, a lower average yield and a higher average
price-earnings ratio.
Alliance Capital's principal method of securities evaluation is through
fundamental analysis undertaken by its internal staff of full-time research
analysts, supplemented by research undertaken by Alliance Capital's portfolio
managers. Alliance Capital holds frequent investment strategy meetings in which
senior management, portfolio managers and research analysts discuss investment
strategy. Alliance Capital's portfolio managers construct and maintain
portfolios that adhere to each client's guidelines and conform to Alliance
Capital's current investment strategy.
Alliance Capital's balanced accounts consist of an equity component and
a fixed income component. Typically, from 50% to 75% of a balanced account is
managed in the same manner as a separate equity account, while the remaining
fixed income component is oriented toward capital preservation and income
generation.
Fixed Income Accounts. Alliance Capital's separately managed fixed
income accounts contributed approximately 9%, 7% and 5% of Alliance Capital's
total revenues for 1997, 1998 and 1999, respectively. Assets under management
relating to active fixed income accounts increased from approximately $34.1
billion as of December 31, 1994 to approximately $48.5 billion as of December
31, 1999.
Alliance Capital's fixed income management services include
conventional actively managed bond portfolios in which portfolio maturity
structures, market sector concentrations and other characteristics are actively
shifted in anticipation of market changes. Fixed income management services also
include managing portfolios which invest in foreign government securities and
other foreign debt securities. Sector concentrations and other portfolio
characteristics are heavily committed to areas that Alliance Capital's portfolio
managers believe have the best investment values. Alliance Capital also manages
portfolios that are limited to specialized areas of the fixed income markets,
such as mortgage-backed securities and high-yield bonds.
Passive Management. Alliance Capital's strategy in passive portfolio
management is to provide customized portfolios to meet specialized client needs,
such as a portfolio designed to replicate a particular index. Alliance Capital
offers domestic and international indexation strategies, such as portfolios
designed to match the performance characteristics of the S&P 500 and the Morgan
Stanley Capital International Indices and enhanced indexation strategies
designed to add incremental returns to a benchmark. Alliance Capital also offers
a variety of structured fixed income portfolio applications, including
immunization (designed to produce a compound rate of return over a specified
time, irrespective of interest rate movements), dedication (designed to produce
specific cash flows at specific times to fund known liabilities) and indexation
(designed to replicate the return of a specified market index or benchmark). As
of December 31, 1999 Alliance Capital managed approximately $32.9 billion in
passive portfolios.
Private Investing Services. In 1996 Alliance Capital acquired a
minority interest in Albion Alliance LLC ("Albion Alliance") which is Alliance
Capital's primary vehicle for providing global investing services in respect of
private and illiquid securities to institutions and high net-worth individuals.
Alliance Corporate Finance Group Incorporated ("ACFG"), a wholly-owned
subsidiary of Alliance Capital, was formed in 1993 when the business of ECMC was
acquired to manage investments in private mezzanine financings and private
investment limited partnerships. Private mezzanine financings are investments in
the subordinated debt and/or preferred stock portions of leveraged transactions
(such as leveraged buy-outs and leveraged recapitalizations). Such investments
are usually coupled with a contingent interest component or investment in an
equity participation, which provide the potential for capital appreciation.
Because Albion Alliance is now Alliance Capital's primary vehicle for providing
these types of services, it is not expected that ACFG will manage any new
private investments other than for Equitable and its subsidiaries.
5
ACFG manages two private mezzanine investment funds designed for
institutional investors, with an aggregate of approximately $199.4 million under
management as of December 31, 1999. As of that date Equitable and its insurance
company subsidiary had investments of approximately $40.0 million in these
funds.
Structured Products. Alliance Capital manages 34 structured products
with an aggregate of $10.0 billion in assets as of December 31, 1999. $6.7
billion of these assets are included in mutual fund assets under management and
$3.3 billion are included in separately managed assets under management as of
December 31, 1999. Structured products consist of securities, typically multiple
classes of senior and subordinated debt obligations together with an equity
component, issued by a special purpose company. An actively or passively managed
portfolio of equity or fixed income securities or other financial products
generally backs such securities. A majority of Alliance Capital's structured
product assets are based on a short duration fixed income strategy, including
the seven "Pegasus" transactions which, as of December 31, 1999, had an
aggregate of $5.2 billion in assets under management. Alliance Capital also
manages two collateralized bond obligation funds whose pools of collateral debt
securities consist primarily of privately-placed, fixed rate corporate debt
securities acquired from Equitable and its affiliates. As of December 31, 1999
these funds had an aggregate of approximately $131.5 million in assets under
management. As of that date AXA Financial and its insurance company subsidiaries
had investments of approximately $86.4 million in these funds.
Hedge Funds. As of December 31, 1999, Alliance Capital managed hedge
funds which had approximately $1.9 billion in assets under management and
separately managed hedge accounts which had approximately $1.0 billion in assets
under management in four distinct strategies. Alliance Capital's hedge funds are
privately placed domestic and offshore investment vehicles. The portfolios of
the hedge funds consist of various types of securities, including equities,
domestic and foreign government and other debt securities, convertible
securities, warrants, options and futures. The hedge funds take short positions,
including the purchase of put options on securities, market indices or futures.
The hedge funds employ the use of leverage through securities exposure and
borrowings.
Clients
The approximately 1,775 separately managed accounts for institutions
and high net-worth individuals (other than investment companies) for which
Alliance Capital acts as investment manager include corporate employee benefit
plans, public employee retirement systems, the general and separate accounts of
Equitable and its insurance company subsidiary, endowments, foundations, foreign
governments, multi-employer pension plans and financial and other institutions.
AXA and the general and separate accounts of Equitable and its
insurance company subsidiary, including investments made by these accounts in
HRT and EQAT (See "Individual Investor Services - Variable Products"),
represented approximately 20%, 22% and 26% of total assets under management by
Alliance Capital at December 31, 1999, 1998 and 1997, respectively, and
approximately 8%, 11% and 14% of Alliance Capital's total revenues for 1999,
1998 and 1997, respectively. Taken as a whole they comprise Alliance Capital's
largest institutional client.
As of December 31, 1999 corporate employee benefit plan accounts
represented approximately 11% of total assets under management by Alliance
Capital. Assets under management for other tax-exempt accounts, including public
employee benefit funds organized by government agencies and municipalities,
endowments, foundations and multi-employer employee benefit plans, represented
approximately 32% of total assets under management as of December 31, 1999.
The following table lists Alliance Capital's ten largest institutional
clients, ranked in order of size of total assets under management as of December
31, 1999. Since Alliance Capital's fee schedules vary based on the type of
account, the table does not reflect the ten largest revenue generating clients.
6
Client or Sponsoring Employer Type of Account
----------------------------- ---------------
AXA and its subsidiaries (including Equitable and Equity, Fixed Income, Passive, Global
its insurance company subsidiary)................. Equity, Global Fixed Income
North Carolina Retirement System.................. Passive Equity, U.S. Equity, Global Equity
Foreign Government Central Bank................... Equity, Global Equity, Fixed Income,
Global Fixed Income
State Board of Administration of Florida......... Equity, Fixed Income
New York State Common Retirement System .......... Equity
Frank Russell Trust............................... U.S. Equity, Global Equity
Sun America....................................... Equity
SEI Investment.................................... Equity
Foreign Government Central Bank................... U.S. Fixed Income, Global Fixed Income,
U.S. Equity, Global Equity, Asian Equity
L.A. Fire and Police Pension Fund................. Passive
These institutional clients accounted for approximately 22% of Alliance
Capital's total assets under management at December 31, 1999 and approximately
6% of Alliance Capital's total revenues for the year ended December 31, 1999
(32% and 11%, respectively, if the investments by the separate accounts of
Equitable in EQAT and HRT were included). No single institutional client other
than Equitable and its insurance company subsidiary accounted for more than
approximately 1% of Alliance Capital's total revenues for the year ended
December 31, 1999. AXA and the general and separate accounts of Equitable and
their subsidiaries accounted for approximately 10% of Alliance Capital's total
assets under management at December 31, 1999 and approximately 3% of Alliance
Capital's total revenues for the year ended December 31, 1999 (20% and 8%,
respectively, if the investments by the separate accounts of Equitable in EQAT
and HRT were included).
Since its inception, Alliance Capital has experienced periods when it
gained significant numbers of new accounts or amounts of assets under management
and periods when it lost significant accounts or assets under management. These
fluctuations result from, among other things, the relative attractiveness of
Alliance Capital's investment style or level of performance under prevailing
market conditions, changes in the investment patterns of clients that result in
a shift in assets under management and other circumstances such as changes in
the management or control of a client.
Investment Management Agreements and Fees
Alliance Capital's separately managed accounts are managed pursuant to
a written investment management agreement between the client and Alliance
Capital, which usually is terminable at any time or upon relatively short notice
by either party. In general, Alliance Capital's contracts may not be assigned
without the consent of the client.
In providing investment management services to institutional clients,
Alliance Capital is principally compensated on the basis of fees calculated as a
percentage of assets under management. Fees are generally billed quarterly and
are calculated on the value of an account at the beginning or end of a quarter
or on the average of such values during the quarter. As a result, fluctuations
in the amount or value of assets under management are reflected in revenues from
management fees within two calendar quarters.
Management fees paid on equity and balanced accounts are generally
charged in accordance with a fee schedule that ranges from 0.90% (for the first
$10 million in assets) to 0.25% (for assets over $60 million) per annum of
assets under management. Fees for the management of fixed income portfolios
generally are charged in accordance with lower fee schedules, while fees for
passive equity portfolios typically are even lower. Fees for the management of
hedge funds are higher than the fees charged for equity and balanced accounts
and also provide for the payment of performance fees or carried interests to
Alliance Capital. With respect to approximately 6% of assets under management,
Alliance Capital charges performance-based fees, which consist of a relatively
low base fee plus an additional fee if investment performance for the account
exceeds certain benchmarks. No assurance can be given that such fee arrangements
will not become more common in the investment management industry. Utilization
of such fee arrangements by Alliance Capital on a broader basis could create
greater fluctuations in Alliance Capital's revenues.
7
ACFG's fees for corporate finance activities generally involve the
payment of a base management fee ranging from 0.10% to .50% of assets under
management per annum. In some cases ACFG receives performance fees generally
equivalent to 20% of gains in excess of a specified hurdle rate.
In connection with the investment advisory services provided to the
general and separate accounts of Equitable and its insurance company subsidiary
Alliance Capital provides ancillary accounting, valuation, reporting, treasury
and other services. Equitable and its insurance company subsidiary compensate
Alliance Capital for such services. See "Item 13. Certain Relationships and
Related Transactions".
Marketing
Alliance Capital's institutional products are marketed by marketing
specialists who solicit business for the entire range of Alliance Capital's
institutional account management services. Marketing specialists are dedicated
to corporate and insurance plans as well as public retirement systems,
multi-employer pension plans and the hedge fund marketplace. Alliance Capital's
institutional marketing structure supports its commitment to provide
comprehensive and timely client service. A client service representative is
assigned to each institutional account. This individual is available to meet
with the client as often as necessary and attends client meetings with the
portfolio manager.
MUTUAL FUNDS MANAGEMENT
Alliance Capital (i) manages and sponsors a broad range of open-end and
closed-end mutual funds other than EQAT and markets wrap fee accounts ("Alliance
Mutual Funds"), (ii) is the sub-advisor of certain portfolios of EQAT which is
the funding vehicle for variable annuity insurance and variable life insurance
products offered by Equitable and its insurance company subsidiary, (iii)
manages other funds which serve as funding vehicles for variable annuity
insurance and variable life insurance products offered by other insurance
companies ("Variable Products"), (iv) provides cash management services (money
market funds and federally insured deposit accounts) that are marketed to
individual investors through broker-dealers, banks, insurance companies and
other financial intermediaries, (v) manages and sponsors certain structured
products, and (vi) manages and sponsors certain hedge funds. The net assets
comprising the Alliance Mutual Funds, Variable Products, money market funds and
deposit accounts, structured products and hedge funds on December 31, 1999
amounted to approximately $169.4 billion. The assets of the Alliance Mutual
Funds, Variable Products, money market funds, structured products and hedge
funds are managed by the same investment professionals who manage Alliance
Capital's accounts of institutional investors and high net-worth individuals.
8
Revenues From Mutual Funds Management
(in thousands)
Years Ended December 31,
---------------------------------------------------------------------
1995 1996 1997 1998 1999
Alliance Mutual Funds (1):
Investment Services ...... $ 147,036 $ 173,260 $ 235,613 $ 389,839 $ 648,719
Distribution Revenues .... 107,012 128,917 167,321 241,948 379,273
Shareholder Servicing Fees 16,558 19,156 22,957 36,230 54,562
Other Revenues ........... 7,209 6,436 6,629 6,217 6,971
---------- ---------- ---------- ---------- ----------
277,815 327,769 432,520 674,234 1,089,525
---------- ---------- ---------- ---------- ----------
Variable Products:
Investment Services (2) .. 29,051 43,901 66,376 91,506 121,959
Distribution Revenues .... 203 551 772 730 772
Shareholder Servicing Fees 12 15 16 18 18
Other Revenues ........... 366 500 641 920 1,309
---------- ---------- ---------- ---------- ----------
29,632 44,967 67,805 93,174 124,058
---------- ---------- ---------- ---------- ----------
Cash Management Services:
Investment Services (3) .. 56,642 74,441 82,770 107,051 116,765
Distribution Revenues .... 23,328 39,481 48,758 59,168 61,727
Shareholder Servicing Fees 9,951 12,085 13,354 7,227 7,752
Other Revenues ........... 1,214 1,258 1,270 1,383 1,391
---------- ---------- ---------- ---------- ----------
91,135 127,265 146,152 174,829 187,635
---------- ---------- ---------- ---------- ----------
Total ...................... $ 398,582 $ 500,001 $ 646,477 $ 942,237 $1,401,218
========== ========== ========== ========== ==========
(1) Includes fees received by Alliance Capital in connection with certain
structured products, hedge funds and wrap fee accounts.
(2) Net of certain fees paid to Equitable for services rendered by
Equitable in marketing the variable annuity insurance and variable life
products for which HRT was the funding vehicle. All of the portfolios
of HRT were transferred to EQAT effective October 18, 1999 and such
fees are no longer payable to Equitable.
(3) Includes fees received by Alliance Capital in connection with its
distribution of money market deposit accounts for which no investment
management services are provided.
9
Alliance Mutual Funds
Alliance Capital has been managing mutual funds since 1971. Since then,
Alliance Capital has sponsored open-end load mutual funds and closed-end mutual
funds (i) registered as investment companies under the Investment Company Act
("U.S. Funds") and (ii) which are not registered under the Investment Company
Act and which are not publicly offered to United States persons ("Offshore
Funds"). On December 31, 1999 net assets in the Alliance Mutual Funds totaled
approximately $96.4 billion.
Net Assets as
of December 31,
1999
-----------------
Type of Alliance Mutual Funds (in millions)
- -----------------------------
U.S. Funds - Open-End:
Equity and Balanced........................... $ 46,668.2
Taxable Fixed Income.......................... 6,973.9
Tax Exempt Fixed Income....................... 3,357.6
Offshore Funds (Open and Closed-End):
Taxable Fixed Income.......................... 14,847.2
Equity and Balanced........................... 8,336.3
Wrap Fee Programs............................... 10,472.6
U.S. Funds - Closed-End......................... 3,533.3
Unconsolidated Affiliates (1)................... 2,182.4
----------
Total........................................... $ 96,371.5
==========
(1) Assets under management exclude certain non-discretionary advisory
relationships and reflect 100% of the assets managed by unconsolidated
affiliates.
10
Variable Products
EQAT is the funding vehicle for the variable annuity and variable life
insurance products offered by Equitable and its insurance company subsidiary.
The Alliance Variable Products Series Fund is a funding vehicle for variable
annuity and variable life insurance products offered by other unaffiliated
insurance companies. On December 31, 1999 the net assets of the portfolios of
the Variable Products totaled approximately $40.9 billion:
Net Assets as
of December 31,
1999
---------------
(in millions)
EQAT:
Common Stock Portfolio ............. $ 16,593.5
Aggressive Stock Portfolio ......... 4,602.2
Growth Investors Portfolio ......... 2,698.4
Equity Index Portfolio ............. 2,639.5
Balanced Portfolio ................. 2,136.7
Global Portfolio ................... 1,990.6
Growth & Income Portfolio .......... 1,503.3
Money Market Portfolio ............. 1,443.6
High Yield Portfolio ............... 566.6
Conservative Investors Portfolio ... 476.0
EQ/Alliance Premier Growth Portfolio 474.3
Small Cap Growth Portfolio ......... 403.8
Quality Bond Portfolio ............. 330.9
International Portfolio ............ 288.5
Intermediate Government Portfolio... 202.9
-----------
Alliance Variable Products Series Fund .. 4,554.9
-----------
Total ................................... $ 40,905.7
===========
Distribution. The Alliance Mutual Funds are distributed to individual
investors through broker-dealers, insurance sales representatives, banks,
registered investment advisers, financial planners and other financial
intermediaries. Alliance Fund Distributors, Inc. ("AFD"), a registered
broker-dealer and a wholly-owned subsidiary of Alliance Capital, serves as the
principal underwriter and distributor of the U.S. Funds and serves as a placing
or distribution agent for most of the Offshore Funds. There are 215 sales
representatives who devote their time exclusively to promoting the sale of
shares of Alliance Mutual Funds by financial intermediaries.
Alliance Capital maintains a mutual fund distribution system (the
"System") which permits open-end Alliance 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
$393.4 million and $232.5 million during 1999 and 1998, respectively. Management
of Alliance Capital 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.
The rules of the National Association of Securities Dealers, Inc.
effectively limit the aggregate of all front-end, deferred and asset-based sales
charges paid to AFD with respect to any class of its shares by each open-end
U.S. Fund to 6.25% of cumulative gross sales of shares of that class, plus
interest at the prime rate plus 1% per annum.
11
The open-end U.S. Funds and Offshore Funds have entered into agreements
with AFD under which AFD is paid a distribution services fee. Alliance Capital
uses borrowings and its own resources to finance distribution of open-end
Alliance Mutual Fund shares.
The selling and distribution agreements between AFD and the financial
intermediaries that distribute Alliance Mutual Funds are terminable by either
party upon notice (generally of not more than sixty days) and do not obligate
the financial intermediary to sell any specific amount of fund shares. A small
amount of mutual fund sales is made directly by AFD, in which case AFD retains
the entire sales charge.
During 1999 the ten financial intermediaries responsible for the
largest volume of sales of open-end U.S. Funds and Variable Products were
responsible for 61% of such sales. AXA Advisors, LLC (formerly EQ Financial
Consultants, Inc.), ("AXA Advisors"), a wholly-owned subsidiary of Equitable
that utilizes members of Equitable's insurance agency sales force as its
registered representatives, has entered into a selected dealer agreement with
AFD and since 1986 has been responsible for a significant portion of total sales
of shares of open-end U.S. Funds and Offshore Funds (7%, 5% and 4% in 1997, 1998
and 1999, respectively). AXA Advisors is under no obligation to sell a specific
amount of fund shares and also sells shares of mutual funds sponsored by
organizations unaffiliated with Equitable.
Subsidiaries of Merrill Lynch & Co., Inc. (collectively "Merrill
Lynch") were responsible for approximately 24%, 26% and 26% of open-end Alliance
Mutual Fund sales in 1997, 1998 and 1999, respectively. Citigroup Inc.
("Citigroup"), parent company of Salomon Smith Barney, was responsible for
approximately 7% of open-end Alliance Mutual Fund sales in 1997, 6% in 1998 and
6% in 1999. Neither Merrill Lynch nor Citigroup is under any obligation to sell
a specific amount of Alliance Mutual Fund shares and each also sells shares of
mutual funds that it sponsors and which are sponsored by unaffiliated
organizations.
No dealer or agent other than AXA Advisors, Merrill Lynch and Citigroup
has in any year since 1993 accounted for more than 10% of the sales of open-end
Alliance Mutual Funds.
Many of the financial intermediaries that sell shares of Alliance
Mutual Funds also offer shares of funds not managed by Alliance Capital and
frequently offer shares of funds managed by their own affiliates.
Based on industry sales data reported by the Investment Company
Institute (January 2000), Alliance Capital's market share in the U.S. mutual
fund industry is 1.38% of total industry assets and Alliance Capital accounted
for 1.94% of total open-end industry sales in the U.S. during 1999. While the
performance of the Alliance Mutual Funds is a factor in the sale of their
shares, there are other factors contributing to success in the mutual fund
management business that are not as important in the institutional account
management business. These factors include the level and quality of shareholder
services (see "Shareholder and Administration Services" below) and the amounts
and types of distribution assistance and administrative services payments.
Alliance Capital believes that its compensation programs with financial
intermediaries are competitive with others in the industry.
Under current interpretations of the Glass-Steagall Act and other laws
and regulations governing depository institutions, banks and certain of their
affiliates generally are permitted to act as agent for their customers in
connection with the purchase of mutual fund shares and to receive as
compensation a portion of the sales charges paid with respect to such purchases.
During 1999 banks and their affiliates accounted for approximately 8% of the
sales of shares of open-end U.S. Funds and Variable Products.
Investment Management Agreements and Fees. Investment management fees
from the Alliance Mutual Funds, EQAT and the Variable Products vary between
.145% and 1.50% per annum of average net assets. As certain of the U.S. Funds
have grown, fee schedules have been revised to provide lower incremental fees
above certain levels. Fees paid by the U.S. Funds, EQAT and the Variable
Products are fixed annually by negotiation between Alliance Capital and the
board of directors or trustees of each U.S. Fund and EQAT, including a majority
of the disinterested directors or trustees. Changes in fees must be approved by
the shareholders of each U.S. Fund and EQAT. In general, the investment
management agreements with the U.S. Funds, EQAT and the Variable Products
provide for termination at any time upon 60 days' notice.
Under each investment management agreement with a U.S. Fund, Alliance
Capital provides the U.S. Fund with investment management services, office space
and order placement facilities and pays all compensation of directors or
trustees
12
and officers of the U.S. Fund who are affiliated persons of Alliance Capital.
Each U.S. Fund pays all of its other expenses. If the expenses of a U.S. Fund
exceed an expense limit established under the securities laws of any state in
which shares of that U.S. Fund are qualified for sale or as prescribed in the
U.S. Fund's investment management agreement, Alliance Capital absorbs such
excess through a reduction in the investment management fee. Currently, Alliance
Capital believes that California and South Dakota are the only states to impose
such a limit. The expense ratios for the U.S. Funds during their most recent
fiscal year ranged from .33% to 4.12%. In connection with newly organized U.S.
Funds, Alliance Capital may also agree to reduce its fee or bear certain
expenses to limit expenses during an initial period of operations.
Cash Management Services
Alliance Capital provides cash management services to individual
investors through a product line of money market fund portfolios and three types
of brokered money market deposit accounts. Net assets in these products as of
December 31, 1999 totaled approximately $32.1 billion.
Net Assets
as of
December 31,
1999
--------------
(in millions)
Money Market Funds:
Alliance Capital Reserves (two portfolios) ....... $ 13,507.1
Alliance Government Reserves (two portfolios) .... 7,336.9
ACM Institutional Reserves (five portfolios) ..... 5,447.2
Alliance Municipal Trust (eight portfolios) ...... 3,862.4
Alliance Money Market Fund (three portfolios) .... 1,274.5
ACM International Reserves (one portfolio) ....... 313.9
Money Market Deposit Accounts (three products) ....... 419.4
Unconsolidated Affiliates (1) ........................ 4.0
----------
Total................................................. $ 32,165.4
==========
(1) Assets under management exclude certain non-discretionary
advisory relationships and reflect 100% of the assets managed
by unconsolidated affiliates.
Alliance Capital also offers a managed assets program, which provides
customers of participating financial intermediaries with a Visa card, access to
automated teller machines and check writing privileges. The program is linked to
the customer's chosen Alliance money market fund. The program serves to enhance
relationships with financial intermediaries and to attract and retain
investments in the Alliance money market funds, as well as to generate fee
income.
Under its investment management agreement with each money market fund,
Alliance Capital is paid an investment management fee equal to 0.50% per annum
of the fund's average net assets except for ACM Institutional Reserves which
pays a fee between 0.20% and 0.45% of its average net assets. In the case of
certain money market funds, the fee is payable at lesser rates with respect to
average net assets in excess of $1.25 billion. For distribution and account
maintenance services rendered in connection with the sale of money market
deposit accounts, Alliance Capital receives fees from the participating banks
that are based on outstanding account balances. Because the money market deposit
account programs involve no investment management functions to be performed by
Alliance Capital, Alliance Capital's costs of maintaining the account programs
are less, on a relative basis, than its costs of managing the money market
funds.
On December 31, 1999 more than 99% of the assets invested in Alliance
Capital's cash management programs were attributable to regional broker-dealers
and other financial intermediaries, with the remainder coming directly from the
public. On December 31, 1999 more than 500 financial intermediaries offered
Alliance Capital's cash management services. Alliance Capital's money market
fund market share (not including deposit products), as computed based on market
data reported by the Investment Company Institute (December 1999), has increased
from 1.42% of total money market fund industry assets at the end of 1994 to
2.01% at December 31, 1999.
13
Alliance Capital makes payments to financial intermediaries for
distribution assistance and shareholder servicing and administration. Alliance
Capital's money market funds pay fees to Alliance Capital at annual rates of up
to 0.25% of average daily net assets pursuant to "Rule 12b-1" distribution plans
except for Alliance Money Market Fund which pays a fee of up to 0.45% of its
average daily net assets. Such payments are supplemented by Alliance Capital in
making payments to financial intermediaries under the distribution assistance
and shareholder servicing and administration program. During 1999 such
supplemental payments totaled approximately $66.6 million ($58.0 million in
1998). There are 7 employees of Alliance Capital who devote their time
exclusively to marketing Alliance Capital's cash management services.
A principal risk to Alliance Capital's cash management services
business is the acquisition of its participating financial intermediaries by
companies that are competitors or that plan to enter the cash management
services business. As of December 31, 1999 the five largest participating
financial intermediaries were responsible for assets aggregating approximately
$25.3 billion, or 79% of the cash management services total.
Many of the financial intermediaries whose customers utilize Alliance
Capital's cash management services are broker-dealers whose customer accounts
are carried, and whose securities transactions are cleared and settled, by the
Pershing Division ("Pershing") of Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ Securities Corporation"), a subsidiary of AXA Financial.
Pursuant to an agreement between Pershing and Alliance Capital, Pershing
recommends that certain of its correspondent firms use Alliance Capital's money
market funds and other cash management products. As of December 31, 1999 DLJ
Securities Corporation and these Pershing correspondents were responsible for
approximately $20.6 billion or 64% of Alliance Capital's total cash management
assets. Pershing may terminate its agreement with Alliance Capital on 180 days'
notice. If the agreement were terminated, Pershing would be under no obligation
to recommend or in any way assist in the sale of Alliance Capital's cash
management products and would be free to recommend or assist in the sale of
competitive products.
Alliance Capital's money market funds are investment companies
registered under the Investment Company Act and are managed under the
supervision of boards of directors or trustees, which include disinterested
directors or trustees who must approve investment management agreements and
certain other matters. The investment management agreements between the money
market funds and Alliance Capital provide for an expense limitation of 1% per
annum or less of average daily net assets. See "Mutual Funds Management -
Investment Management Agreements and Fees".
Shareholder and Administration Services
Alliance Fund Services, Inc. ("AFS"), a wholly-owned subsidiary of
Alliance Capital, provides registrar, dividend disbursing and transfer agency
related services for each U.S. Fund and provides servicing for each U.S. Fund's
shareholder accounts. As of December 31, 1999 AFS employed 482 people. AFS
operates out of offices in Secaucus, New Jersey, and San Antonio, Texas. Under
each servicing agreement AFS receives a monthly fee. Each servicing agreement
must be approved annually by the relevant U.S. Fund's board of directors or
trustees, including a majority of the disinterested directors or trustees, and
may be terminated by either party without penalty upon 60 days' notice.
Most U.S. Funds utilize Alliance Capital and AFS personnel to perform
legal, clerical and accounting services not required to be provided by Alliance
Capital. Payments by a U.S. Fund for these services must be specifically
approved in advance by the U.S. Fund's board of directors or trustees.
Currently, Alliance Capital and AFS are accruing revenues for providing clerical
and accounting services to the U.S. Funds and these closed-end funds at the rate
of approximately $8.6 million per year.
ACM Fund Services S.A. ("ACMFS"), a wholly-owned subsidiary of Alliance
Capital, is the registrar and transfer agent of substantially all of the
Offshore Funds. As of December 31, 1999 ACMFS employed 20 people. ACMFS operates
out of offices in Luxembourg and receives a monthly fee for its registrar and
transfer agency services. Each agreement between ACMFS and an Offshore Fund may
be terminated by either party upon 60 days' notice.
Alliance Capital expects to continue to devote substantial resources to
shareholder servicing because of its importance in competing for assets invested
in mutual funds and cash management services.
YEAR 2000
14
Alliance Capital's systems and facilities passed into the new millenium
successfully and are continuing to operate without disruption in 2000. Alliance
Capital incurred approximately $43 million in costs related to its Year 2000
initiatives.
COMPETITION
The financial services industry is highly competitive and new entrants
are continually attracted to it. No one or small number of competitors is
dominant in the industry. Alliance Capital is subject to substantial competition
in all aspects of its business. Pension fund, institutional and corporate assets
are managed by investment management firms, broker-dealers, banks and insurance
companies. Many of these financial institutions have substantially greater
resources than Alliance Capital. Alliance Capital competes with other providers
of institutional investment products and services primarily on the basis of the
range of investment products offered, the investment performance of such
products and the services provided to clients. Based on an annual survey
conducted by Pensions & Investments, as of December 31, 1998 Alliance Capital
was ranked 11th out of 754 managers based on U.S. tax-exempt assets under
management, 5th out of the 20 largest managers of international index assets,
7th out of the 25 largest managers of domestic equity index funds and 12th out
of the 25 largest domestic bond index managers.
Many of the firms competing with Alliance Capital for institutional
clients also offer mutual fund shares and cash management services to individual
investors. Competitiveness in this area is chiefly a function of the range of
mutual funds and cash management services offered, investment performance,
quality in servicing customer accounts and the capacity to provide financial
incentives to financial intermediaries through distribution assistance and
administrative services payments funded by "Rule 12b-1" distribution plans and
the investment adviser's own resources.
CUSTODY AND BROKERAGE
Neither Alliance Capital nor its subsidiaries maintains custody of
client funds or securities, which is maintained by client-designated banks,
trust companies, brokerage firms or other custodians. Custody of the assets of
Alliance Mutual Funds, EQAT and money market funds is maintained by custodian
banks and central securities depositories.
Alliance Capital generally has the discretion to select the brokers or
dealers to be utilized to execute transactions for client accounts.
Broker-dealers affiliated with AXA Financial and Equitable effect transactions
for client accounts only if the use of the broker-dealers has been specifically
authorized or directed by the client.
REGULATION
Alliance Capital, Alliance Holding, Albion Alliance, ACFG and Alliance
are investment advisers registered under the Investment Advisers Act. Each U.S.
Fund is registered with the Securities and Exchange Commission ("SEC") under the
Investment Company Act and the shares of most U.S. Funds are qualified for sale
in all states in the United States and the District of Columbia, except for U.S.
Funds offered only to residents of a particular state. AFS is registered with
the SEC as a transfer agent and AFD is registered with the SEC as a
broker-dealer. AFD is subject to minimum net capital requirements ($8.4 million
at December 31, 1999) imposed by the SEC on registered broker-dealers and had
aggregate regulatory net capital of $14.2 million at December 31, 1999.
The relationships of Equitable and its insurance company subsidiary
with Alliance Capital are subject to applicable provisions of the New York
Insurance Law and regulations. Certain of the investment advisory agreements and
ancillary administrative service agreements between Equitable and its insurance
company subsidiary and Alliance Capital are subject to disapproval by the New
York Superintendent of Insurance within a prescribed notice period. Under the
New York Insurance Law and regulations, the terms of these agreements are to be
fair and equitable, charges or fees for services performed are to be reasonable,
and certain other standards must be met. Fees must be determined either with
reference to fees charged to other clients for similar services or, in certain
cases, which include the ancillary service agreements, based on cost
reimbursement.
Alliance Capital's assets under management and revenues derived from
the general accounts of Equitable and its insurance company subsidiary are
directly affected by the investment policies for the general accounts. Among the
numerous factors influencing general account investment policies are regulatory
factors, such as (i) laws and regulations that require diversification of the
investment portfolios and limit the amount of investments in certain investment
categories such as below investment grade fixed maturities, equity real estate
and equity interests, (ii) statutory investment valuation reserves, and (iii)
15
risk-based capital guidelines for life insurance companies approved by the
National Association of Insurance Commissioners. These policies have recently
resulted in the shifting of general account assets managed by Alliance Capital
into categories with lower management fees.
All aspects of Alliance Capital's business are subject to various
federal and state laws and regulations and to the laws in the foreign countries
in which Alliance Capital's subsidiaries conduct business. These laws and
regulations are primarily intended to benefit clients and Alliance Mutual Fund
shareholders and generally grant supervisory agencies broad administrative
powers, including the power to limit or restrict the carrying on of business for
failure to comply with such laws and regulations. In such event, the possible
sanctions which may be imposed include the suspension of individual employees,
limitations on engaging in business for specific periods, the revocation of the
registration as an investment adviser, censures and fines.
EMPLOYEES
As of December 31, 1999 Alliance Capital and its subsidiaries employed
2,396 employees, including 277 investment professionals, of whom 140 are
portfolio managers, 122 are research analysts and 15 are order placement
specialists. The average period of employment of these professionals with
Alliance Capital is approximately 8 years and their average investment
experience is approximately 14 years. Alliance Capital considers its employee
relations to be good.
SERVICE MARKS
Alliance Capital has registered a number of service marks with the U.S.
Patent and Trademark Office, including an "A" design logo and the combination of
such logo and the words "Alliance" and "Alliance Capital". Each of these service
marks was registered in 1986.
Item 2. Properties
Alliance Capital's and Alliance Holding's principal executive offices
at 1345 Avenue of the Americas, New York, New York are occupied pursuant to a
lease which extends until 2016. Alliance Capital and Alliance Holding currently
occupy approximately 407,000 square feet at this location. Alliance Capital also
occupies approximately 114,097 square feet at 135 West 50th Street, New York,
New York under leases expiring in 2016. Alliance Capital also occupies
approximately 4,594 square feet at 709 Westchester Avenue and 21,057 square feet
at 925 Westchester Avenue, White Plains, New York under leases expiring in 2004.
Alliance Capital and its subsidiaries, AFD and AFS, occupy approximately 134,261
square feet of space in Secaucus, New Jersey pursuant to a lease which extends
until 2016, approximately 92,067 square feet of space in San Antonio, Texas
pursuant to a lease which extends until 2009, and approximately 59,033 square
feet at the Glenmaura Corporate Centre, Scranton, Pennsylvania, under a lease
expiring in 2004.
Alliance Capital also leases space in San Francisco, California;
Chicago, Illinois; Greenwich, Connecticut; Minneapolis, Minnesota; and
Beechwood, Ohio, and its subsidiaries and affiliates lease space in Windhoek,
Namibia; London, England; Paris, France; Tokyo, Japan; Sydney, Australia;
Toronto, Canada; Luxembourg; Singapore; Manama, Bahrain; Mumbai, New Delhi,
Bangalore, Pune, Calcutta and Chennai, India; Johannesburg, South Africa; and
Istanbul, Turkey. Subsidiaries and affiliates of Alliance Capital have offices
in Vienna, Austria; Svo Paolo, Brazil; Hong Kong, China; Seoul, Korea;
Warsaw, Poland; Moscow, Russia; Cairo, Egypt; Talinn, Estonia; Harare, Zimbabwe;
Prague, Czech Republic; and Bucharest, Romania.
16
Item 3. Legal Proceedings
On July 25, 1995, a Consolidated and Supplemental Class Action
Complaint ("Original Complaint") was filed against the Alliance North American
Government Income Trust, Inc. (the "Fund"), Alliance Holding and certain other
defendants affiliated with Alliance Holding 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 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 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 mortgage-backed derivative
securities and that certain advertisements used by the Fund misrepresented the
risks of investing in the Fund. On December 1, 1999 the United States District
Court for the Southern District of New York granted defendants' motion for
summary judgement on all claims against all defendants. On December 14 and 15,
1999 the plaintiffs filed motions for reconsideration of the Court's ruling.
These motions are currently pending with the Court.
On March 24, 2000 Alliance Capital announced that a memorandum of
understanding had been signed with the lawyers for the plaintiffs settling this
action. Under the settlement Alliance Capital will permit Fund shareholders to
invest up to $250 million in Alliance Mutual Funds free of initial sales
charges. Like all class action settlements, the settlement is subject to court
approval.
Alliance Capital assumed all of Alliance Holding's liabilities in
respect of this litigation in connection with the Reorganization. Alliance
Capital and Alliance Holding believe that the allegations in the amended
complaint are without merit and intend to vigorously defend against this action.
While the ultimate outcome of this matter cannot be determined at this time,
management of Alliance Capital and Alliance Holding does not expect that it will
have a material adverse effect on Alliance Capital's or Alliance Holding's
results of operations or financial condition.
Item 4. Submission of Matters to a Vote of Security Holders
Neither Alliance Capital nor Alliance Holding submitted a matter to a
vote of security holders during the fourth quarter of 1999.
17
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Market for the Alliance Capital Units and the Alliance Holding Units
There is no established public trading market for the Alliance Capital
Units. The Alliance Capital Units are subject to very significant liquidity
restrictions. In general, transfers of Alliance Capital Units will be allowed
only with the written consent of both Equitable and the General Partner. Either
Equitable or the General Partner may withhold its consent to a transfer in its
sole discretion, for any reason. Generally, neither Equitable nor the General
Partner will permit any transfer that it believes would create a risk that
Alliance Capital would be treated as a corporation for tax purposes.
On March 1, 2000 there were approximately 671 Alliance Capital
Unitholders of record.
The Alliance Holding Units are traded on the NYSE. The high and low
sale prices on the NYSE during each quarter of Alliance Holding's two most
recent fiscal years were as follows:
1999 High Low
---- ---- ---
First Quarter 26 7/8 24 1/2
Second Quarter 32 5/16 24 1/8
Third Quarter 33 7/16 25
Fourth Quarter 34 24 5/16
1998 High Low
---- ---- ---
First Quarter 27 7/8 18 13/16
Second Quarter 29 23 7/8
Third Quarter 28 19 5/8
Fourth Quarter 27 1/2 19 3/4
On February 19, 1998, Alliance Holding declared a two for one Alliance
Holding Unit split payable to Unitholders of record on March 11, 1998. The high
and low sale prices above have been adjusted to reflect the Alliance Holding
Unit split to the extent necessary.
On March 1, 2000 the closing price of the Alliance Holding Units on the
NYSE was $37.125 per Unit. As of March 1, 2000 there were approximately 1,659
Alliance Holding Unitholders of record.
18
Cash Distributions
Each of Alliance Capital and Alliance Holding distributes on a
quarterly basis all of its Available Cash Flow (as defined in its respective
Partnership Agreement). Prior to the Reorganization, Alliance Holding's
Available Cash Flow was derived from the operations now conducted by Alliance
Capital. Subsequent to the completion of the Reorganization in the fourth
quarter of 1999, when Alliance Capital commenced operations, Alliance Holding's
principal sources of income and cash flow are attributable to its ownership of
approximately 42% of the outstanding Alliance Capital Units.
On February 14, 2000 Alliance Capital paid a distribution of Available
Cash Flow in respect of the fourth quarter of 1999 and a Special Distribution in
the aggregate amount of $0.91 per Alliance Capital Unit.
During its two most recent fiscal years Alliance Holding made the
following distributions of Available Cash Flow:
Quarter During 1999 With
Respect to Which a Cash Amount of Cash
Distribution Was Paid from Distribution Per
Available Cash Flow Alliance Holding Unit Payment Date
---------------------------- -------------------- -------------
First Quarter $ 0.54 May 24, 1999
Second Quarter 0.54 August 16, 1999
Third Quarter 0.56 November 15, 1999
Fourth Quarter 0.85 February 14, 2000
------
$ 2.49
======
Quarter During 1998 With
Respect to Which a Cash Amount of Cash
Distribution Was Paid from Distribution Per
Available Cash Flow Alliance Holding Unit Payment Date
---------------------------- -------------------- -------------
First Quarter $ 0.38 May 18, 1998
Second Quarter 0.42 August 18, 1998
Third Quarter 0.39 November 23, 1998
Fourth Quarter 0.43 February 23, 1999
------
$ 1.62
======
On February 19, 1998 Alliance Holding declared a two for one Alliance
Holding Unit split payable to Unitholders of record on March 11, 1998. The cash
distribution per Alliance Holding Unit amounts above have been adjusted to
reflect the Unit split to the extent necessary.
Item 6. Selected Financial Data
The Selected Consolidated Financial Data of Alliance Capital Management
L.P. which appears on page 47 of the 1999 Annual Report is incorporated by
reference in this Annual Report on Form 10-K.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Management's Discussion and Analysis of Financial Condition and Results
of Operations which appears on pages 48 through 62 of the 1999 Annual Report is
incorporated by reference in this Annual Report on Form 10-K.
19
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
The quantitative and qualitative disclosures about market risk
contained in Management's Discussion and Analysis of Financial Condition and
Results of Operations on pages 61 through 62 of the 1999 Annual Report are
incorporated by reference in this Annual Report on Form 10-K.
Item 8. Financial Statements and Supplementary Data
The Consolidated Financial Statements of Alliance Capital Management
L.P. and subsidiaries and the report thereon by KPMG LLP which appear on pages
63 through 84 of the 1999 Annual Report are incorporated by reference in this
Annual Report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Neither Alliance Capital nor Alliance Holding had any changes in or
disagreements with accountants on accounting or financial disclosure.
PART III
Item 10. Directors and Executive Officers of the Registrant
General Partner
Alliance Capital's and Alliance Holding's activities are managed and
controlled by Alliance as General Partner and Alliance Capital and Alliance
Holding Unitholders do not have any rights to manage or control Alliance Capital
or Alliance Holding. The General Partner has agreed that it will conduct no
active business other than managing Alliance Capital and Alliance Holding,
although it may make certain investments for its own account.
The General Partner does not receive any compensation from Alliance
Capital or Alliance Holding for services rendered to Alliance Capital or
Alliance Holding as General Partner. The General Partner holds a 1% general
partnership interest in Alliance Capital and 100,000 units of general
partnership interest in Alliance Holding. As of March 1, 2000 Equitable, ACMC
and ECMC, affiliates of the General Partner, held 95,855,945 Alliance Capital
Units and 1,544,356 Alliance Holding Units.
The General Partner is reimbursed by Alliance Capital for all expenses
incurred by it in carrying out its activities as General Partner of Alliance
Capital and Alliance Holding, including compensation paid by the General Partner
to its directors and officers (to the extent such persons are not compensated
directly as employees of Alliance Capital) and the cost of directors and
officers liability insurance obtained by the General Partner. The General
Partner was not reimbursed for any such expenses in 1999 except for directors'
fees and directors and officers liability insurance.
20
Directors and Executive Officers of the General Partner
The directors and executive officers of the General Partner are as
follows:
Name Age Position
---- --- --------
Dave H. Williams.............. 67 Chairman of the Board and
Director
Luis Javier Bastida........... 54 Director
Donald H. Brydon.............. 54 Director
Bruce W. Calvert.............. 53 Director, Vice Chairman and
Chief Executive Officer
John D. Carifa................ 55 Director, President and Chief
Operating Officer
Henri de Castries............. 45 Director
Kevin C. Dolan................ 46 Director
Denis Duverne................. 47 Director
Alfred Harrison............... 62 Director and Vice Chairman
Herve Hatt.................... 35 Director
Michael Hegarty............... 55 Director
Benjamin D. Holloway.......... 75 Director
Edward D. Miller.............. 59 Director
Peter D. Noris................ 44 Director
Frank Savage.................. 61 Director
Stanley B. Tulin.............. 50 Director
Reba W. Williams.............. 63 Director
Robert B. Zoellick............ 46 Director
David R. Brewer, Jr........... 54 Senior Vice President and
General Counsel
Robert H. Joseph, Jr.......... 52 Senior Vice President and
Chief Financial Officer
Mr. Williams joined Alliance in 1977 and has been the Chairman of the
Board since that time. He was elected a Director of Equitable on March 21, 1991
and was elected to the AXA Financial Board of Directors in May of 1992. He
served as a Senior Executive Vice President of AXA from January 1997 through
January 2000. AXA, AXA Financial and Equitable are parents of Alliance Capital
and Alliance Holding. Mr. Williams is the husband of Mrs. Reba W. Williams, a
Director of Alliance.
Mr. Bastida was elected a Director of Alliance in February 1995. He is
Head of Global Asset Management and Private Banking and a member of the
Executive Committee of Banco Bilbao Vizcaya, Argentaria S.A. ("BBVA"). Mr.
Bastida has been with BBVA since 1976. Prior to that he worked for General
Electric. He is Chairman of Finanzia, the Specialized Finance subsidiary of BBVA
and of Canal International Holding, and a Director of Privanza, the Private Bank
of the same group.
Mr. Brydon was elected a Director of Alliance in May 1997. He is
Chairman and Chief Executive Officer of AXA Investment Managers S.A. Mr. Brydon
was formerly Barclays Group's Deputy Chief Executive of BZW, the investment
banking division of Barclays Plc., and was a member of the Executive Committee
of Barclays. Before joining BZW, Mr. Brydon was the Chief Executive and Chairman
of Barclays de Zoete Wedd Investment Management Ltd. (BZWIM) and had served in
various executive capacities within the Barclays organization including Barclays
Investment Management Ltd. and Barclays Bank. Mr. Brydon serves as director of
Allied Domecq Plc., Nycomed Amersham Plc., Edinburgh UK Index Trust Plc. and
Edinburgh Inca Trust. He also serves as a member of the Executive Committee of
the UK's Institutional Fund Managers Association. In addition, Mr. Brydon serves
as Advisor of British Aerospace Pension Fund Investment Management Ltd. AXA
Investment Managers S.A. is a subsidiary of AXA, a parent of Alliance Capital
and Alliance Holding.
Mr. Calvert joined Alliance in 1973 as an equity portfolio manager and
was elected Chief Executive Officer on January 6, 1999. He served as Chief
Investment Officer from May 3, 1993 until January 6, 1999. He was elected Vice
21
Chairman on May 3, 1993. From 1986 to 1993 he was an Executive Vice President
and from 1981 to 1986 he was a Senior Vice President. He was elected a Director
of Alliance in 1992.
Mr. Carifa joined Alliance in 1971 and was elected President and Chief
Operating Officer on May 3, 1993. He was the Chief Financial Officer from 1973
until 1994. He was an Executive Vice President from 1986 to 1993 and he was a
Senior Vice President from 1980 to 1986. He was elected a Director of Alliance
in 1992.
Mr. de Castries was elected a Director of Alliance in October 1993.
Since January 2000, he has been Vice Chairman of AXA's Management Board. Prior
thereto, he was Senior Executive Vice President Financial Services and Life
Insurance Activities of AXA in the United States, Germany, the United Kingdom
and Benelux from 1996 to 2000; Executive Vice President Financial Services and
Life Insurance Activities of AXA from 1993 to 1996; General Secretary of AXA
from 1991 to 1993; and Central Director of Finances of AXA from 1989 to 1991.
Mr. de Castries is also a Director or Officer of various subsidiaries and
affiliates of the AXA Group and a Director of AXA Financial, Equitable and
Donaldson Lufkin & Jenrette, Inc. ("DLJ"). Mr. de Castries was elected Vice
Chairman of AXA Financial on February 14, 1996 and was elected Chairman of AXA
Financial, effective April 1, 1998. AXA, AXA Financial and Equitable are parents
of Alliance Capital and Alliance Holding. DLJ and Equitable are subsidiaries of
AXA Financial.
Mr. Dolan was elected a Director of Alliance in May 1995. He was Chief
Executive Officer of AXA Investment Managers Paris, a subsidiary of AXA until
September 1999 and is now the Senior Executive Vice President for AXA Investment
Managers on a global basis. Mr. Dolan has been with AXA since 1993. From 1983 to
1993 Mr. Dolan was Deputy General Manager of BFCE and CEO of BFCE Investment
Corporation. AXA is a parent of Alliance Capital and Alliance Holding.
Mr. Duverne was elected a Director of Alliance in February 1996. Mr.
Duverne is Group Executive Vice President-Finance, Control and Strategy of AXA,
which he joined as Senior Vice President in 1995. Prior to that Mr. Duverne was
a member of the Executive Committee, Operations of Banque Colbert from 1992 to
1995. Mr. Duverne was Secretary General of Compagnie Financiere IBI from 1991 to
1992. Mr. Duverne worked for the French Ministry of Finance serving as Deputy
Assistant Secretary for Tax Policy from 1988 to 1991 and director of the
Corporate Taxes Department from 1986 to 1988. He is also a Director of various
subsidiaries and affiliates of the AXA Group. Mr. Duverne is also a Director of
DLJ and Equitable. AXA and Equitable are parents of Alliance Capital and
Alliance Holding. DLJ and Equitable are subsidiaries of AXA Financial.
Mr. Harrison joined Alliance in 1978 and was elected Vice Chairman on
May 3, 1993. Mr. Harrison is in charge of Alliance Capital's Minneapolis office
and is a senior portfolio manager. He was an Executive Vice President from 1986
to 1993 and a Senior Vice President from 1978 to 1986. He was elected a Director
of Alliance in 1992.
Mr. Hatt was elected a Director of Alliance in May 1998. He has been
Senior Vice President - Asset Management Activities and Group Strategic Planning
of AXA since March 1998. From 1992 to 1998 he was a senior engagement manager
with McKinsey & Company, the management consultants, in London and in Paris. AXA
is a parent of Alliance Capital and Alliance Holding.
Mr. Hegarty was elected a Director of Alliance in May 1998. He is
Senior Vice Chairman, Chief Operating Officer and a Director of AXA Financial.
Mr. Hegarty joined AXA Financial in 1998. He previously served as Vice Chairman
of the Chase Manhattan Corporation and the Chase Manhattan Bank. In addition to
serving as a Director of Alliance and AXA Financial, Mr. Hegarty is a Director
of DLJ. AXA Financial and Equitable are parents of Alliance Capital and Alliance
Holding. DLJ and Equitable are subsidiaries of AXA Financial.
Mr. Holloway was elected a Director of Alliance in November 1987. He is
a consultant to The Continental Companies. From September 1988 until his
retirement in March 1990, Mr. Holloway was a Vice Chairman of Equitable. He
served as an Executive Vice President of Equitable from 1979 until 1988. Prior
to his retirement he served as a Director and Officer of various Equitable
subsidiaries and was also a Director of DLJ until March 1990. Mr. Holloway was a
Director of Rockefeller Center Properties, Inc. and is a Director Emeritus of
The Duke University Management Corporation, Chairman of The Touro National
Heritage Trust, a Regent of the Cathedral of St. John the Divine and a Trustee
of Duke University (Emeritus) and the American Academy in Rome (Emeritus).
22
Mr. Miller was elected a Director of Alliance in July 1997. He has been
a Director, President and Chief Executive Officer of AXA Financial since August
1997. He was President of Equitable from August 1997 to January 1998 and has
been Chairman of Equitable since January 1998 and Chief Executive Officer and a
Director of Equitable since August 1997. He became a member of AXA's Management
Board in January 2000. He was Senior Executive Vice President of AXA until
becoming a member of AXA's Management Board. From 1996 to 1997, he was Senior
Vice Chairman of Chase Manhattan Corporation. Prior thereto, he was President of
Chemical Bank (which merged with Chase in 1996) from 1994 to 1996 and Vice
Chairman from 1991 to 1994. He is also a Director of DLJ, AXA Canada and KeySpan
Energy Corporation, formed as a result of the merger of Long Island Lighting
Company and Brooklyn Union Gas Co. AXA, AXA Financial and Equitable are parents
of Alliance Capital and Alliance Holding. DLJ and Equitable are subsidiaries of
AXA Financial.
Mr. Noris was elected a Director of Alliance in July 1995. Since 1995
Mr. Noris has been Executive Vice President and Chief Investment Officer of AXA
Financial. Since 1995 Mr. Noris has been the Executive Vice President and Chief
Investment Officer of Equitable. Prior to that he was Vice President -
Investment Strategy for Salomon Brothers from 1992 to 1995. From 1984 to 1992
Mr. Noris was a Principal in the Fixed Income and Equity Divisions of Morgan
Stanley Group Inc. AXA Financial and Equitable are parents of Alliance Capital
and Alliance Holding.
Mr. Savage was elected a Director of Alliance in May 1993. He has been
Chairman of Alliance Capital Management International, a division of Alliance
Capital, since May 1994. Mr. Savage is a Director of ACFG, a subsidiary of
Alliance Capital, and was Chairman of ACFG from July 1993 to August 1996. Prior
to that, he was with ECMC, serving as Vice Chairman from June 1986 to April
1992, and Chairman from April 1992 to July 1993. In addition, Mr. Savage is a
Director of Lockheed Martin Corporation, Qualcomm Inc., and Enron Corp.
Mr. Tulin was elected a Director of Alliance in July 1997. He is Vice
Chairman and Chief Financial Officer of AXA Financial and Director, Vice
Chairman and Chief Financial Officer of Equitable. Mr. Tulin was elected a
Director of DLJ in June 1997. Mr. Tulin was formerly Coopers & Lybrand's
Co-Chairman of the Insurance Industry Practice. Before joining Coopers &
Lybrand, Mr. Tulin was with Milliman and Robertson for 17 years. Mr. Tulin is a
Fellow of the Society of Actuaries, a Board member of the American Academy of
Actuaries and a frequent speaker at actuarial and insurance industry
conferences. He is a member of the Board of Directors and Treasurer of the
Jewish Theological Seminary; Treasurer of Brandeis University Graduate School of
International Economics and Finance; and a Board Member of the New York City
Opera. AXA Financial and Equitable are parents of Alliance Capital and Alliance
Holding. DLJ and Equitable are subsidiaries of AXA Financial.
Mrs. Williams was elected a Director of Alliance in October 1993. She
is currently the Director of Special Projects of Alliance Capital. She serves on
the Boards of Directors of the India Liberalisation Fund, The Spain Fund, The
Austria Fund and The Southern Africa Fund. Mrs. Williams, who has worked at
McKinsey & Company and as a securities analyst at Mitchell, Hutchins, Inc., has
a Masters in Business Administration and a Ph.D. in Art History. Mrs. Williams
is the wife of Mr. Dave H. Williams, Chairman of the Board and a Director of
Alliance.
Mr. Zoellick was elected a Director of Alliance in February 1997. He is
a Resident Fellow and member of the Board of The German Marshall Fund of the
United States (a non-profit foundation), a Research Scholar at the Belfer Center
at Harvard University, and a Senior International Advisor at Goldman, Sachs &
Co. In 1999, Mr. Zoellick was the President and CEO of the Center for Strategic
and International Studies, an independent non-profit policy institute. He served
as the John M. Olin Professor in National Security Affairs at the U.S. Naval
Academy in 1997-98. From 1993 through 1997, Mr. Zoellick was an Executive Vice
President at Fannie Mae, the largest investor in home mortgages in the U.S.
Before joining Fannie Mae, he was Deputy Chief of Staff of the White House and
Assistant to the President from 1992 to 1993. From 1989 to 1992, Mr. Zoellick
was the Counselor of the State Department and later also Under Secretary of
State for Economics. From 1985 to 1988, Mr. Zoellick served at the Department of
Treasury in a number of posts, including Counselor to Secretary James A. Baker
III. He serves on the boards of Jones Intercable and Said Holdings and the
Advisory Board of Enron Corp. Mr. Zoellick also serves on the boards of numerous
non-profit entities.
Mr. Brewer joined Alliance in 1987 and has been Senior Vice President
and General Counsel since 1991. From 1987 until 1990 Mr. Brewer was Vice
President and Assistant General Counsel of Alliance.
Mr. Joseph joined Alliance in 1984 and has been Senior Vice President
and Chief Financial Officer since December 1994. He was Senior Vice President
and Controller from 1989 until January 1994 and Senior Vice President-Finance
from
23
January 1994 until December 1994. From 1986 until 1989 Mr. Joseph was Vice
President and Controller of Alliance and from 1984 to 1986 Mr. Joseph was a Vice
President and the Controller of AFS, a subsidiary of Alliance Capital.
Certain executive officers of Alliance are also directors or trustees
and officers of various Alliance Mutual Funds and are directors and officers of
certain of Alliance Capital's subsidiaries and affiliates.
All directors of the General Partner hold office until the next annual
meeting of the stockholder of the General Partner and until their successors are
elected and qualified. All officers of the General Partner serve at the
discretion of the General Partner's Board of Directors.
The General Partner has an Audit Committee composed of its independent
directors Mr. Holloway and Mr. Zoellick. The Audit Committee reports to the
Board of Directors with respect to the selection and terms of engagement of the
independent auditors of Alliance Capital and Alliance Holding, with respect to
the Year 2000 initiative and certain other matters. The Audit Committee also
reviews various matters relating to the accounting and auditing policies and
procedures of Alliance Capital and Alliance Holding. The Audit Committee held 4
meetings in 1999.
The General Partner has a Board Compensation Committee composed of
Messrs. Williams, Holloway and Miller. The Board Compensation Committee is
responsible for compensation and compensation related matters, including, but
not limited to, responsibility and authority for determining bonuses,
contributions and awards under most employee incentive plans or arrangements,
amending or terminating such plans or arrangements or any welfare benefit plan
or arrangement or adopting any new incentive, fringe benefit or welfare benefit
plan or arrangement. The Option Committee, consisting of Mr. Holloway and Mr.
Zoellick, is responsible for granting options under Alliance Capital's 1993 Unit
Option Plan. The 1997 Option Committee, consisting of Messrs. Williams,
Holloway, Miller and Zoellick, is responsible for granting options under
Alliance Capital's 1997 Long Term Incentive Plan. The Unit Option and Unit Bonus
Committee, consisting of Messrs. Holloway and Miller, is responsible for
granting awards under Alliance Capital's Unit Bonus Plan. The Board Compensation
Committee, Option Committee, Unit Option and Unit Bonus Committee and 1997
Option Committee consult with a Management Compensation Committee consisting of
Messrs. Williams, Calvert, Carifa and Harrison with respect to matters within
their authority. The Century Club Plan Committee, consisting of Messrs. Carifa
and Michael J. Laughlin, Executive Vice President of the General Partner and
Chairman of the Board of AFD, is responsible for granting awards under Alliance
Capital's Century Club Plan.
The General Partner pays directors who are not employees of Alliance
Capital, Alliance Holding, AXA Financial or any affiliate of AXA Financial an
annual retainer of $18,000 plus $1,000 per meeting attended of the Board of
Directors and $500 per meeting of a committee of the Board of Directors not held
in conjunction with a Board of Directors meeting. Alliance Capital reimburses
Messrs. Bastida, Brydon, de Castries, Dolan, Duverne, Hatt, Holloway and
Zoellick for certain expenses incurred in attending Board of Directors'
meetings. Other directors are not entitled to any additional compensation from
the General Partner for their services as directors. The Board of Directors
meets quarterly.
Section 16 (a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
General Partner's directors and executive officers, and persons who own more
than 10% of the Alliance Holding Units to file with the SEC initial reports of
ownership and reports of changes in ownership of Alliance Holding Units. To the
best of Alliance Holding's knowledge, during the year ended December 31, 1999
all Section 16(a) filing requirements applicable to its executive officers,
directors and 10% beneficial owners were complied with except that a Statement
of Changes in Beneficial Ownership on Form 4 was filed late on behalf of Mr.
Michael Hegarty, a Director of Alliance, in respect of his purchase of Alliance
Holding Units.
24
Item 11. Executive Compensation
The following Summary Compensation Table sets forth all plan and
non-plan compensation awarded to, earned by or paid to the Chairman of the Board
and each of the four most highly compensated executive officers of the General
Partner at the end of 1999 ("Named Executive Officers"):
Long Term Compensation
-------------------- ---------
Annual Compensation Awards Payouts
----------------------------------- -------------------- --------- ----------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other
Annual Restricted All
Compen- Stock LTIP other
sation Award(s) Options/ Payouts Compensation
Name and Principal Position Year Salary ($) Bonus ($) ($) (1) ($) (#Units) ($) (1) ($) (2)
- --------------------------- ---- ---------- --------- ------- --- -------- ------- -------
Dave H. Williams 1999 274,996 $5,500,000 --------- 0 0 $ 0 419,581
Chairman of the Board 1998 274,976 4,500,000 ---------
1997 274,976 3,000,000 --------- 0 0 835,027
0
John D. Carifa 1999 269,232 7,200,000 6,601,411 0 0 0 1,506,082
President & Chief Operating 1998 250,000 5,000,000 --------- 0 500,000 0 1,209,640
Officer 1997 250,000 4,000,000 --------- 0 0 0 686,979
Bruce W. Calvert 1999 269,232 6,200,000 --------- 0 0 0 1,506,856
Vice Chairman & 1998 250,000 4,500,000 264,273 0 500,000 0 1,208,311
Chief Executive Officer 1997 250,000 4,000,000 --------- 0 0 0 687,532
Robert H. Joseph, Jr. 1999 172,692 738,000 610,429 0 15,000 0 283,348
Senior Vice President & 1998 163,846 591,500 257,798 0 20,000 0 187,737
Chief Financial Officer 1997 160,000 494,000 --------- 0 20,000 0 110,335
David R. Brewer, Jr. 1999 172,692 741,500 879,670 0 15,000 0 283,348
Senior Vice President 1998 163,846 595,000 199,448 0 20,000 0 187,737
& General Counsel 1997 157,692 495,500 104,646 0 20,000 0 110,037
(1) Perquisites and personal benefits are not included in column (e) if the
aggregate amount did not exceed the lesser of either $50,000 or 10% of
the total annual salary and bonus reported in columns (c) and (d).
Column (e) for 1999 includes for Mr. Carifa, among other perquisites
and personal benefits, $6,525,000 representing the dollar value of the
difference between the exercise price and fair market value of Alliance
Holding Units acquired as a result of the exercise of options and
$42,000 for personal tax services.
Column (e) for 1999 includes for Mr. Joseph, among other perquisites
and personal benefits, $588,246 representing the dollar value of the
difference between the exercise price and fair market value of Alliance
Holding Units acquired as a result of the exercise of options and
$9,000 for personal tax services.
Column (e) for 1999 includes for Mr. Brewer, among other perquisites
and personal benefits, $860,222 representing the dollar value of the
difference between the exercise price and fair market value of Alliance
Holding Units acquired as a result of the exercise of options and
$6,000 for personal tax services.
25
Column (e) for 1998 includes for Mr. Calvert, among other perquisites
and personal benefits, $247,323 for costs, including housing,
cost-of-living adjustment, tax equalization and car allowance, for a
temporary assignment in London and $16,950 for personal tax services.
Column (e) for 1998 includes for Mr. Joseph, among other perquisites
and personal benefits, $240,000 representing the dollar value of the
difference between the exercise price and fair market value of Alliance
Holding Units acquired as a result of the exercise of options and
$9,000 for personal tax services.
Column (e) for 1998 and 1997 includes for Mr. Brewer, among other
perquisites and personal benefits, $187,000 and $98,000 respectively,
representing the dollar value of the difference between the exercise
price and the fair market value of Alliance Holding Units acquired as a
result of the exercise of options and, for 1998, $5,700 for personal
tax services.
(2) Column (i) includes award amounts vested and earnings credited in 1997,
1998 and 1999 in respect of the Alliance Partners Compensation Plan.
Column (i) does not include any amounts in respect of awards made in
1999 in respect of the Alliance Partners Compensation Plan since none
of these awards have vested and no earnings have been credited in
respect of the 1999 awards.
Column (i) includes the following amounts for 1999:
Earnings Vesting of Awards
Accrued Vesting of Awards and Accrued Earnings Profit
On Partners and Accrued Earnings Under Alliance Sharing Term Life
Plan Under Capital Partners Plan Insurance
Balances Accumulation Plan Compensation Plan Contribution Premiums Total
-------- ----------------- ----------------- ------------ -------- -----
Dave H. Williams $ 14,669 $ 83,581 $ 281,141 $ 23,000 $ 17,190 $ 419,581
John D. Carifa 5,735 33,442 1,438,366 23,000 5,539 1,506,082
Bruce W. Calvert 5,060 34,891 1,438,366 23,000 5,539 1,506,856
Robert H. Joseph, Jr. 0 0 256,862 23,000 3,486 283,348
David R. Brewer, Jr. 0 0 256,862 23,000 3,486 283,348
26
Option Grants in 1999
The table below shows information regarding grants of options made to
the Named Executive Officers under the 1993 Unit Option Plan and the 1997 Long
Term Incentive Plan ("Alliance Capital Option Plans") during 1999. The amounts
shown for each of the Named Executive Officers as potential realizable values
are based on assumed annualized rates of appreciation of five percent and ten
percent over the full ten-year term of the options, which would result in
Alliance Holding Unit prices of approximately $48.77 and $77.65, respectively.
The amounts shown as potential realizable values for all Alliance Holding
Unitholders represent the corresponding increases in the market value of
72,259,583 outstanding Alliance Holding Units held by all Alliance Holding
Unitholders as of December 31, 1999, which would total approximately $1.4
billion and $3.4 billion, respectively. No gain to the optionees is possible
without an increase in Alliance Holding Unit price which will benefit all
Alliance Holding Unitholders proportionately. These potential realizable values
are based solely on assumed rates of appreciation required by applicable SEC
regulations. Actual gains, if any, on option exercises and Alliance Holding
Unitholdings are dependent on the future performance of the Alliance Holding
Units. There can be no assurance that the potential realizable values shown in
this table will be achieved.
Option Grants In 1999
Potential Realizable Value at
Assumed
Individual Grants (1) Annual Rates of Unit Price
Appreciation for Option Term
---------------------------------------------------------------------------------------------------
% of total
Number of Options
Securities Granted to
Underlying Employees in Exercise
Options Granted Fiscal Year Price Expiration 5% 10%
Name (#) (2) ($/Unit) Date ($) ($)
- -----------------------------------------------------------------------------------------------------------------------------
Dave H. Williams 0 N/A N/A N/A N/A N/A
John D. Carifa 0 N/A N/A N/A N/A N/A
Bruce W. Calvert 0 N/A N/A N/A N/A N/A
Robert H. Joseph, Jr. 15,000 .8 30.25 12/06/09 277,800 711,000
David R. Brewer, Jr. 15,000 .8 30.25 12/06/09 277,800 711,000
(1) Options on Alliance Holding Units are awarded at the fair market value of
Alliance Holding Units at the date of award and become exercisable in 20%
increments commencing one year from such date if the optionee has not died
or terminated employment. Such options lapse at the earliest of ten years
after award, three months after the optionee's normal termination of
employment or disability, six months after the optionee's death, or at the
time of the optionee's termination of employment otherwise than normally.
(2) Options in respect of 2,000,000 Alliance Holding Units were granted in 1999.
27
Aggregated Option Exercises in 1999 and 1999 Year-End Option Values
The following table summarizes for each of the Named Executive Officers
the number of options exercised during 1999, the aggregate dollar value realized
upon exercise, the total number of Alliance Holding Units subject to unexercised
options held at December 31, 1999, and the aggregate dollar value of
in-the-money, unexercised options held at December 31, 1999. Value realized upon
exercise is the difference between the fair market value of the underlying
Alliance Holding Units on the exercise date and the exercise price of the
option. Value of unexercised, in-the-money options at fiscal year-end is the
difference between its exercise price and the fair market value of the
underlying Alliance Holding Units on December 31, 1999, which was $29.9375 per
Alliance Holding Unit. These values have not been, and may never be, realized.
The underlying options have not been, and may never be, exercised, and actual
gains, if any, on exercise will depend on the value of Alliance Holding Units on
the date of exercise. There can be no assurance that these values will be
realized.
Aggregated Option Exercises In 1999
And December 31, 1999 Option Values
Number of Alliance Value of Unexercised
Holding Units In-the-Money Options
Underlying Unexpired at December 31, 1999 ($) (1)
Options Value Options at December 31, 1999
Exercised Realized ----------------------------------- ------------------------------------
Name (# Units) ($) Exercisable Unexercisable Exercisable Unexercisable
- -------------------------- ------------ ---------------- ----------------- ----------------- ------------------ -----------------
Dave H. Williams 0 N/A 0 0 0 0
John D. Carifa 400,000 6,525,000 380,000 470,000 6,065,000 2,875,625
Bruce W. Calvert 0 N/A 740,000 460,000 13,255,000 2,673,125
Robert H. Joseph, Jr. 30,620 588,246 120,500 63,000 2,295,070 571,875
David R. Brewer, Jr. 34,058 860,222 148,750 59,000 3,046,711 490,875
- -------------------------- ------------ ---------------- ----------------- ----------------- ------------------ -----------------
(1) In-the-Money Options are those where the fair market value of the
underlying Alliance Holding Units exceeds the exercise price of the option.
The Named Executive Officers hold no other options in respect of the
Alliance Holding Units or the Alliance Capital Units.
Options to acquire Alliance Holding Units are granted by Alliance
Capital to its employees. Upon exercise of options, Alliance Holding exchanges
the proceeds from exercise for a number of Alliance Capital Units equal to the
number of Alliance Holding Units acquired pursuant to the option exercises, thus
increasing Alliance Holding's investment in Alliance Capital.
Compensation Agreements with Certain Executive Officers
In connection with Equitable's 1985 acquisition of DLJ, the parent of
ACMC in 1985, ACMC entered into employment agreements with Messrs. Williams,
Carifa and Calvert. Each agreement provided for deferred compensation payable in
stated monthly amounts for ten years commencing at age 65, or earlier in a
reduced amount in the event of disability or death, if the individual involved
so elects. The right to receive such deferred compensation is vested. Assuming
payments commence at age 65, the annual amount of deferred compensation payable
for ten years to Messrs. Williams, Carifa and Calvert is $425,731, $522,036, and
$434,612, respectively. While Alliance Capital assumed responsibility for
payment of these deferred compensation obligations, ACMC and Alliance are
required, subject to certain limitations, to make capital contributions to
Alliance Capital in an amount equal to the payments, and ACMC is also obligated
to the employees for the payments. ACMC's obligations to make capital
contributions to Alliance Capital are guaranteed, subject to certain
limitations, by Equitable Investment Corporation ("EIC"), a wholly-owned
subsidiary of Equitable, the parent of Alliance.
Certain Employee Benefit Plans
Retirement Plan. Alliance Capital maintains a qualified,
non-contributory, defined benefit retirement plan covering most employees of
Alliance Capital who have completed one year of service and attained age 21.
Employer contributions are determined by application of actuarial methods and
assumptions to reflect the cost of benefits under the plan. Each participant's
benefits are determined under a formula which takes into account years of
credited service, the participant's
28
average compensation over prescribed periods and Social Security covered
compensation. The maximum annual benefit payable under the plan may not exceed
the lesser of $100,000 or 100% of a participant's average aggregate compensation
for the three consecutive years in which he received the highest aggregate
compensation from Alliance Capital or such lower limit as may be imposed by the
Internal Revenue Code on certain participants by reason of their coverage under
another qualified plan maintained by Alliance Capital. A participant is fully
vested after the completion of five years of service. The plan generally
provides for payments to or on behalf of each vested employee upon such
employee's retirement at the normal retirement age provided under the plan or
later, although provision is made for payment of early retirement benefits on an
actuarially reduced basis. Normal retirement age under the plan is 65. Death
benefits are payable to the surviving spouse of an employee who dies with a
vested benefit under the plan.
The table below sets forth with respect to the retirement plan the
estimated annual straight life annuity benefits payable upon retirement at
normal retirement age for employees with the remuneration and years of service
indicated.
Estimated Annual Benefits
-------------------------------------------------------------------------------------
Average Final Years of Service at Retirement
Compensation -------------------------------------------------------------------------------------
15 20 25 30 35 40 45
$100,000 $19,078 $25,437 $31,796 $38,156 $44,515 $49,515 $54,515
150,000 30,328 40,437 50,546 60,656 70,765 78,265 85,765
200,000 41,578 55,437 69,296 83,156 97,015 100,000 100,000
250,000 52,828 70,437 88,046 100,000 100,000 100,000 100,000
300,000 64,078 85,437 100,000 100,000 100,000 100,000 100,000
Assuming they are employed by Alliance Capital until age 65, the
credited years of service under the plan for Messrs. Williams, Carifa, Calvert,
Joseph and Brewer would be 20, 40, 38, 28 and 22, respectively. Compensation on
which plan benefits are based includes only base compensation and not bonuses,
incentive compensation, profit-sharing plan contributions or deferred
compensation. The compensation for calculation of plan benefits for each of
these five individuals for 1999 is $160,000, $160,000, $160,000, $160,000 and
$160,000, respectively.
DLJ Executive Supplemental Retirement Program. In 1983 DLJ adopted an
Executive Supplemental Retirement Program under which certain employees of
Alliance Capital deferred a portion of their 1983 compensation in return for
which DLJ agreed to pay each of them a specified annual retirement benefit for
15 years beginning at age 65. Benefits are based upon the participant's age and
the amount deferred and are calculated to yield an approximate 12.5% annual
compound return. In the event of the participant's disability or death, an equal
or lesser amount is to be paid to the participant or his beneficiary. After age
55, participants the sum of whose age and years of service equals 80 may elect
to have their benefits begin in an actuarially reduced amount before age 65. DLJ
has funded its obligation under the Program through the purchase of life
insurance policies.
The following table shows as to the Named Executive Officers who are
participants in the Plan the estimated annual retirement benefit payable at age
65. Each of these individuals is fully vested in the applicable benefit.
Estimated Annual
Name Retirement Benefit
---- ------------------
Dave H. Williams $ 55,838.28
John D. Carifa 124,495.56
Bruce W. Calvert 154,501.80
29
Item 12. Security Ownership of Certain Beneficial Owners and Management
Principal Security Holders
Alliance Holding has no information that any person beneficially owns
more than 5% of the Alliance Holding Units.
Alliance Capital has no information that any person beneficially owns
more than 5% of the outstanding Alliance Capital Units except Equitable, ACMC
and ECMC, wholly-owned subsidiaries of AXA Financial as reported on Amendment
No. 7 to Schedule 13D dated November 3, 1999, filed with the SEC by AXA and
certain of its affiliates pursuant to the Securities Exchange Act of 1934. The
following table and notes have been prepared in reliance upon such filing for
the nature of ownership and an explanation of overlapping ownership.
Amount and Nature of
Name and Address of Beneficial Percent
Beneficial Owner Ownership of Class
---------------- --------- --------
AXA (1)(2)(3)(4) 95,855,945 55.7%
25, avenue Matignon
75008 Paris
France
AXA Financial (4) 95,855,945 55.7%
1290 Avenue of the Americas
New York, NY 10019
(1) Based on information provided by AXA Financial, at March 1, 2000,
AXA and certain of its subsidiaries beneficially owned approximately
60.3% of AXA Financial's outstanding common stock. For insurance
regulatory purposes the shares of capital stock of AXA Financial
beneficially owned by AXA and its subsidiaries have been deposited
into a voting trust ("Voting Trust") which has an initial term of 10
years commencing May 12, 1992. The trustees of the Voting Trust (the
"Voting Trustees") are Claude Bebear, Patrice Garnier and Henri de
Clermont-Tonnerre, each of whom serves on either the Management
Board (in the case of Mr. Bebear) or Supervisory Board (in the case
of Messrs. Garnier and de Clermont-Tonnerre) of AXA. The Voting
Trustees have agreed to exercise their voting rights to protect the
legitimate economic interests of AXA, but with a view to ensuring
that certain minority shareholders of AXA do not exercise control
over AXA Financial or certain of its insurance subsidiaries.
(2) Based on information provided by AXA, on March 1, 2000,
approximately 20.3% of the issued ordinary shares (representing
31.9% of the voting power) of AXA were owned directly and indirectly
by Finaxa, a French holding company. As of March 1, 2000, 60.7% of
the shares (representing 70.7% of the voting power) of Finaxa were
owned by four French mutual insurance companies (the "Mutuelles
AXA") (one of which, AXA Assurances I.A.R.D. Mutuelle, owned 34.8%
of the shares, representing 40.4% of the voting power), and 22.3% of
the shares of Finaxa (representing 13.3% of the voting power) were
owned by Paribas, a French bank. Including the ordinary shares owned
by Finaxa, on March 1, 2000, the Mutuelles AXA directly or
indirectly owned approximately 23.3% of the issued ordinary shares
(representing 36.7% of the voting power) of AXA.
(3) The Voting Trustees may be deemed to be beneficial owners of all
Alliance Capital Units beneficially owned by AXA and its
subsidiaries. In addition, the Mutuelles AXA, as a group, and Finaxa
may be deemed to be beneficial owners of all Alliance Capital Units
beneficially owned by AXA and its subsidiaries. By virtue of the
provisions of the Voting Trust Agreement, AXA may be deemed to have
shared voting power with respect to the Alliance Capital Units. AXA
and its subsidiaries have the power to dispose or direct the
disposition of
30
all shares of the capital stock of AXA Financial deposited in the
Voting Trust. The Mutuelles AXA, as a group, and Finaxa may be
deemed to share the power to vote or to direct the vote and to
dispose or to direct the disposition of all the Alliance Capital
Units beneficially owned by AXA and its subsidiaries. The address of
each of AXA and the Voting Trustees is 25, avenue Matignon, 75008,
Paris, France. The address of Finaxa is 23 avenue Matignon, 75008
Paris, France. The addresses of the Mutuelles AXA are as follows:
The address of each of AXA Conseil Vie Assurance Mutuelle, AXA
Assurances Vie Mutuelle and AXA Assurances I.A.R.D. Mutuelle is 370,
rue Saint Honore, 75001 Paris, France; and the address of AXA
Courtage Assurance Mutuelle is 26, rue Louis le Grand, 75002 Paris,
France. The address of Paribas is 3, rue d'Antin, Paris, France.
(4) By reason of their relationship, AXA, the Voting Trustees, the
Mutuelles AXA, Finaxa, AXA Financial, Equitable, Equitable Holdings,
LLC, EIC, ACMC and ECMC may be deemed to share the power to vote or
to direct the vote and to dispose or direct the disposition of all
or a portion of the 95,855,945 Alliance Capital Units.
Alliance Holding, 1345 Avenue of the Americas, New York, NY 10105, owns
71,855,296 or 41.7% of the outstanding Alliance Capital Units.
31
Management
The following table sets forth, as of March 1, 2000, the beneficial
ownership of Alliance Capital Units by each director and each Named Executive
Officer of the General Partner and by all directors and executive officers of
the General Partner as a group:
Number of Alliance Capital
Name of Units and Nature of Percent of
Beneficial Owner Beneficial Ownership Class
- ---------------- ------------------- -----
Dave H. Williams (1) 759,036 *
Luis Javier Bastida 0 *
Donald H. Brydon (1) 0 *
Bruce W. Calvert (1) 500,000 *
John D. Carifa (1) 1,020,000 *
Henri de Castries (1) 0 *
Kevin C. Dolan (1) 0 *
Denis Duverne (1) 0 *
Alfred Harrison (1) 365,410 *
Herve Hatt (1) 0 *
Michael Hegarty (1) 18,000 *
Benjamin D. Holloway 0 *
Edward D. Miller (1) 0 *
Peter D. Noris (1) 0 *
Frank Savage (1) 10,000 *
Stanley B. Tulin (1) 0 *
Reba W. Williams (1)(2) 759,036 *
Robert B. Zoellick 0 *
David R. Brewer, Jr. (1) 0 *
Robert H. Joseph, Jr. (1) 0 *
All Directors and executive officers
of the General Partner as a Group (20 persons) 2,672,446 1.6%
* Number of Alliance Capital Units listed represents less than 1% of the Units
outstanding.
(1) Excludes Alliance Capital Units beneficially owned by AXA, AXA Financial
and/or Equitable. Messrs. Williams, Brydon, de Castries, Dolan, Duverne,
Hatt, Hegarty, Miller, Noris and Tulin are directors and/or officers of AXA,
AXA Financial and/or Equitable. Messrs. Williams, Calvert, Carifa, Harrison,
Savage, Brewer, Joseph and Mrs. Reba W. Williams are directors and/or
officers of Alliance.
(2) Includes 759,036 Alliance Capital Units owned by Mr. Dave H. Williams.
32
Management
The following table sets forth, as of March 1, 2000, the beneficial
ownership of Alliance Holding Units by each director and each Named Executive
Officer of the General Partner and by all directors and executive officers of
the General Partner as a group:
Number of Alliance Holding
Name of Units and Nature of Percent of
Beneficial Owner Beneficial Ownership Class
- ---------------- -------------------- -----
Dave H. Williams (1)(2) 1,009,876 1.4%
Luis Javier Bastida 0 *
Donald H. Brydon (1) 0 *
Bruce W. Calvert (1)(3) 1,290,000 1.8%
John D. Carifa (1)(4) 1,435,336 2.0%
Henri de Castries (1) 2,000 *
Kevin C. Dolan (1) 0 *
Denis Duverne (1) 2,000 *
Alfred Harrison (1) 342,940 *
Herve Hatt (1) 0 *
Michael Hegarty (1) 0 *
Benjamin D. Holloway 11,600 *
Edward D. Miller (1) 0 *
Peter D. Noris (1) 2,000 *
Frank Savage (1) 81,000 *
Stanley B. Tulin (1) 4,000 *
Reba W. Williams (1)(5) 1,009,876 1.4%
Robert B. Zoellick 600 *
David R. Brewer, Jr. (1)(6) 254,750 *
Robert H. Joseph, Jr. (1)(7) 148,500 *
All Directors and executive officers
of the General Partner as a Group (20 persons)(8) 4,584,602 6.4%
* Number of Alliance Holding Units listed represents less than 1% of
the Units outstanding.
(1) Excludes Alliance Holding Units beneficially owned by AXA, AXA Financial
and/or Equitable. Messrs. Williams, Brydon, de Castries, Dolan, Duverne,
Hatt, Hegarty, Miller, Noris and Tulin are directors and/or officers of AXA,
AXA Financial and/or Equitable. Messrs. Williams, Calvert, Carifa, Harrison,
Savage, Brewer, Joseph and Mrs. Reba W. Williams are directors and/or
officers of Alliance.
(2) Includes 160,000 Alliance Holding Units owned by Mrs. Reba W. Williams.
(3) Includes 790,000 Alliance Holding Units which may be acquired within 60 days
under Alliance Capital Option Plans.
(4) Includes 440,000 Alliance Holding Units which may be acquired within 60 days
under Alliance Capital Option Plans.
(5) Includes 849,876 Alliance Holding Units beneficially owned by Mr. Dave H.
Williams.
(6) Includes 152,750 Alliance Holding Units which may be acquired within 60 days
under Alliance Capital Option Plans and 1,000 Alliance Holding Units owned
by Mr. Brewer's wife.
(7) Includes 128,500 Alliance Holding Units which may be acquired within 60 days
under Alliance Capital Option Plans.
(8) Includes 1,511,250 Alliance Holding Units which may be acquired within 60
days under Alliance Capital Option Plans.
33
The following tables set forth, as of March 1, 2000, the beneficial
ownership of the common stock of AXA Financial, AXA and Finaxa by each director
and each Named Executive Officer of the General Partner and by all directors and
executive officers of the General Partner as a group:
AXA Financial Common Stock
Name of Number of Shares and Nature of Percent of
Beneficial Owner Beneficial Ownership Class
- ---------------- -------------------- -----
Dave H. Williams (1) 200,000 *
Luis Javier Bastida 0 *
Donald H. Brydon (2) 0 *
Bruce W. Calvert (3) 100,000 *
John D. Carifa (4) 100,000 *
Henri de Castries (2)(5) 86,665 *
Kevin C. Dolan (2) 0 *
Denis Duverne (2)(6) 53,999 *
Alfred Harrison 0 *
Herve Hatt (2) 0 *
Michael Hegarty (2)(7) 296,794 *
Benjamin D. Holloway 108 *
Edward D. Miller (2)(8) 732,711 *
Peter D. Noris (9) 216,333 *
Frank Savage 136 *
Stanley B. Tulin (10) 278,753 *
Reba W. Williams (11) 200,000 *
Robert B. Zoellick 0 *
David R. Brewer, Jr. 0 *
Robert H. Joseph, Jr. 0 *
All Directors and executive officers of the General 2,065,499
Partner as a Group (20 Persons) (12) *
* Number of shares listed represents less than one percent (1%) of the number
of shares of AXA Financial common stock outstanding.
(1) Represents 200,000 shares subject to options held by Mr. Williams, which
options Mr. Williams has the right to exercise within 60 days.
(2) Excludes shares beneficially owned by AXA. Messrs. Brydon, de Castries,
Dolan, Duverne, Hatt, and Miller are officers of AXA.
(3) Represents 100,000 shares subject to options held by Mr. Calvert, which
options Mr. Calvert has the right to exercise within 60 days.
(4) Represents 100,000 shares subject to options held by Mr. Carifa, which
options Mr. Carifa has the right to exercise within 60 days.
(5) Represents 86,665 shares subject to options held by Mr. de Castries, which
options Mr. de Castries has the right to exercise within 60 days.
(6) Includes 49,999 shares subject to options held by Mr. Duverne, which options
Mr. Duverne has the right to exercise within 60 days and 4,000 shares owned
jointly by Mr. Duverne and his spouse, Sylvie Duverne.
(7) Includes 295,956 shares subject to options held by Mr. Hegarty, which
options Mr. Hegarty has the right to exercise within 60 days.
(8) Includes 732,511 shares subject to options held by Mr. Miller, which options
Mr. Miller has the right to exercise within 60 days.
(9) Represents 216,633 shares subject to options held by Mr. Noris, which
options Mr. Noris has the right to exercise within 60 days.
(10) Includes 253,280 shares subject to options held by Mr. Tulin, which options
Mr. Tulin has the right to exercise within 60 days and 8,000 shares owned
jointly by Mr. Tulin and his spouse, Riki P. Tulin.
34
(11) Represents 200,000 shares subject to options held by Mr. Williams, which
options Mr. Williams has the right to exercise within 60 days.
(12) Includes 2,035,044 shares subject to options, which options may be
exercised within 60 days.
AXA Common Stock
Name of Number of Shares and Nature of Percent of
Beneficial Owner Beneficial Ownership Class
- ---------------- -------------------- -----
Dave H. Williams (1) 10,000 *
Luis Javier Bastida 0 *
Donald H. Brydon (2) 6,250 *
Bruce W. Calvert (3) 2,500 *
John D. Carifa (4) 3,000 *
Henri de Castries (5) 122,750 *
Kevin C. Dolan (6) 29,350 *
Denis Duverne (7) 26,042 *
Alfred Harrison 0 *
Herve Hatt (8) 2,500 *
Michael Hegarty (9) 3,750 *
Benjamin D. Holloway 0 *
Edward D. Miller (10) 12,500 *
Peter D. Noris (11) 4,250 *
Frank Savage 0 *
Stanley B. Tulin (12) 8,500 *
Reba W. Williams (13) 10,000 *
Robert B. Zoellick 300 *
David R. Brewer, Jr. 0 *
Robert H. Joseph, Jr. 0 *
All Directors and executive officers of the General
Partner as a Group (20 persons) (14) 231,692 *
* Number of shares listed represents less than one percent (1%) of the AXA
common stock outstanding. Holdings of AXA American Depositary Shares are
expressed as their equivalent in AXA common stock. Each AXA American
Depositary Share is equivalent to one-half of a share of AXA common stock.
(1) Represents 10,000 shares subject to options held by Mr. Williams, which
options Mr. Williams has the right to exercise within 60 days.
(2) Represents 6,250 shares subject to options held by Mr. Brydon, which
options Mr. Brydon has the right to exercise within 60 days.
(3) Represents 2,500 shares subject to options held by Mr. Calvert, which
options Mr. Calvert has the right to exercise within 60 days.
(4) Includes 2,500 shares subject to options held by Mr. Carifa, which options
Mr. Carifa has the right to exercise within 60 days.
(5) Includes 59,125 shares subject to options held by Mr. de Castries, which
options Mr. de Castries has the right to exercise within 60 days and 7,500
shares owned by Mr. de Castries' three minor children.
(6) Represents 29,350 shares subject to options held by Mr. Dolan, which
options Mr. Dolan has the right to exercise within 60 days.
(7) Includes 16,000 shares held jointly with Mr. Duverne's wife, 42 shares
owned by Mr. Duverne's children and 10,000 shares subject to options held
by Mr. Duverne, which options Mr. Duverne has the right to exercise within
60 days.
(8) Represents 2,500 shares subject to options held by Mr. Hatt, which options
Mr. Hatt has the right to exercise within 60 days.
(9) Represents 3,750 shares subject to options held by Mr. Hegarty, which
options Mr. Hegarty has the right to exercise within 60 days.
(10) Represents 12,500 shares subject to options held by Mr. Miller, which
options Mr. Miller has the right to exercise within 60 days.
35
(11) Represents 4,250 shares subject to options held by Mr. Noris, which options
Mr. Noris has the right to exercise within 60 days.
(12) Includes 7,500 shares subject to options held by Mr. Tulin, which options
Mr. Tulin has the right to exercise within 60 days.
(13) Represents 10,000 shares subject to options held by Mr. Williams, which
options Mr. Williams has the right to exercise within 60 days.
(14) Includes 150,225 shares subject to options, which options may be exercised
within 60 days.
Finaxa Common Stock
-------------------
Name of Number of Shares and Nature of Percent of
Beneficial Owner Beneficial Ownership Class
- ---------------- -------------------- -----
Dave H. Williams 0 *
Luis Javier Bastida 0 *
Donald H. Brydon 0 *
Bruce W. Calvert 0 *
John D. Carifa 0 *
Henri de Castries 71,001 *
Kevin C. Dolan 0 *
Denis Duverne 0 *
Alfred Harrison 0 *
Herve Hatt 0 *
Michael Hegarty 0 *
Benjamin D. Holloway 0 *
Edward D. Miller 0 *
Peter D. Noris 0 *
Frank Savage 0 *
Stanley B. Tulin 0 *
Reba W. Williams 0 *
Robert B. Zoellick 0 *
David R. Brewer, Jr. 0 *
Robert H. Joseph, Jr. 0 *
All Directors and executive officers
of the General Partner as a Group (20 persons) 71,001 *
* Number of shares listed represents less than one percent (1%) of the Finaxa
common stock outstanding.
36
The General Partner makes all decisions relating to the management of
Alliance Capital and Alliance Holding. The General Partner has agreed that it
will conduct no business other than managing Alliance Capital and Alliance
Holding, although it may make certain investments for its own account. Conflicts
of interest, however, could arise between Alliance Capital and Alliance Holding,
the General Partner and the Unitholders of both Alliance Capital and Alliance
Holding.
Section 17-403(b) of the Delaware Revised Uniform Limited Partnership
Act (the "Delaware Act") states that, except as provided in the Delaware Act or
the partnership agreement, a general partner of a limited partnership has the
same liabilities to the partnership and to the limited partners as a general
partner in a partnership without limited partners. While, under Delaware law, a
general partner of a limited partnership is liable as a fiduciary to the other
partners, the Amended and Restated Agreement of Limited Partnership of Alliance
Capital Management L.P. ("Alliance Capital Partnership Agreement") and the
Amended and Restated Agreement of Limited Partnership of Alliance Capital
Management Holding L.P. ("Alliance Holding Partnership Agreement") set forth a
more limited standard of liability for the General Partner. The Alliance Capital
Partnership Agreement and the Alliance Holding Partnership Agreement provide
that the General Partner is not liable for monetary damages for errors in
judgment or for breach of fiduciary duty (including breach of any duty of care
or loyalty), unless it is established that the General Partner's action or
failure to act involved an act or omission undertaken with deliberate intent to
cause injury, with reckless disregard for the best interests of Alliance Capital
or Alliance Holding or with actual bad faith on the part of the General Partner,
or constituted actual fraud. Whenever the Alliance Capital Partnership Agreement
and the Alliance Holding Partnership Agreement provide that the General Partner
is permitted or required to make a decision (i) in its "discretion," the General
Partner is entitled to consider only such interests and factors as it desires
and has no duty or obligation to consider any interest of or other factors
affecting Alliance Capital or Alliance Holding or any Unitholder of Alliance
Capital or Alliance Holding or (ii) in its "good faith" or under another express
standard, the General Partner will act under that express standard and will not
be subject to any other or different standard imposed by the Alliance Capital
Partnership Agreement and the Alliance Holding Partnership Agreement or
applicable law.
In addition, the Alliance Capital Partnership Agreement and the
Alliance Holding Partnership Agreement grant broad rights of indemnification to
the General Partner and its directors and affiliates and authorize Alliance
Capital and Alliance Holding to enter into indemnification agreements with the
directors, officers, partners, employees and agents of Alliance Capital and its
affiliates and Alliance Holding and its affiliates. Alliance Capital and
Alliance Holding have granted broad rights of indemnification to officers of the
General Partner and employees of Alliance Capital and Alliance Holding. The
foregoing indemnification provisions are not exclusive, and Alliance Capital and
Alliance Holding are authorized to enter into additional indemnification
arrangements. Alliance Capital and Alliance Holding have obtained directors and
officers liability insurance.
The Alliance Capital Partnership Agreement and the Alliance Holding
Partnership Agreement also allow transactions between Alliance Capital and
Alliance Holding and the General Partner or its affiliates if the transactions
are on terms determined by the General Partner to be comparable to (or more
favorable to Alliance Capital or Alliance Holding than) those that would prevail
with any unaffiliated party. The Alliance Capital Partnership Agreement and the
Alliance Holding Partnership Agreement provide that those transactions are
deemed to meet that standard if such transactions are approved by a majority of
those directors of the General Partner who are not directors, officers or
employees of any affiliate of the General Partner (other than Alliance Capital,
and its subsidiaries or Alliance Holding) or, if in the reasonable and good
faith judgment of the General Partner, the transactions are on terms
substantially comparable to (or more favorable to Alliance Capital or Alliance
Holding than) those that would prevail in a transaction with an unaffiliated
party.
The Alliance Capital Partnership Agreement and the Alliance Holding
Partnership Agreement expressly permit all affiliates of the General Partner
(including Equitable and its other subsidiaries) to compete, directly or
indirectly, with Alliance Capital and Alliance Holding, to engage in any
business or other activity and to exploit any opportunity, including those that
may be available to Alliance Capital and Alliance Holding. AXA, AXA Financial,
Equitable and certain of their subsidiaries currently compete with Alliance
Capital. See "Item 13. Certain Relationships and Related
Transactions-Competition." The Alliance Capital Partnership Agreement and the
Alliance Holding Partnership Agreement further provide that, except to the
extent that a decision or action by the General Partner is taken with the
specific intent of providing a benefit to an affiliate of the General Partner to
the detriment of Alliance Capital or Alliance Holding, there is no liability or
obligation with respect to, and no challenge of, decisions or actions of the
General Partner that would otherwise be subject to claims or other challenges as
improperly benefiting affiliates of the General Partner to the detriment of
Alliance Capital or Alliance Holding or otherwise involving any conflict of
interest or breach of a duty of loyalty or similar fiduciary obligation.
37
The fiduciary obligations of general partners is a developing area of
the law and it is not clear to what extent the foregoing provisions of the
Alliance Capital Partnership Agreement and the Alliance Holding Partnership
Agreement are enforceable under Delaware or federal law.
Item 13. Certain Relationships and Related Transactions
Competition
AXA, AXA Financial, Equitable and certain of their direct and indirect
subsidiaries provide financial services, some of which are competitive with
those offered by Alliance Capital. The Alliance Capital Partnership Agreement
specifically allows Equitable and its subsidiaries (other than the General
Partner) to compete with Alliance Capital and to exploit opportunities that may
be available to Alliance Capital. AXA, AXA Financial, Equitable and certain of
their subsidiaries have substantially greater financial resources than Alliance
Capital or the General Partner.
Financial Services
The Alliance Capital Partnership Agreement and the Alliance Holding
Partnership Agreement permit Equitable and its affiliates to provide services to
Alliance Capital and Alliance Holding on terms comparable to (or more favorable
to Alliance Capital than) those that would prevail in a transaction with an
unaffiliated third party. The General Partner believes that its arrangements
with Equitable and its affiliates are at least as favorable to Alliance Capital
and Alliance Holding as could be obtained from an unaffiliated third party,
based on its knowledge of and inquiry with respect to comparable arrangements
with or between unaffiliated third parties.
Alliance Capital acts as the investment manager for the general and
separate accounts of Equitable and its insurance company subsidiary pursuant to
investment advisory agreements. During 1999 Alliance Capital received
approximately $54.1 million in fees pursuant to these agreements. In connection
with the services provided under these agreements Alliance Capital provides
ancillary accounting, valuation, reporting, treasury and other services under
service agreements. During 1999 Alliance Capital received approximately $8.9
million in fees pursuant to these agreements. Equitable provides certain legal
and other services to Alliance Capital relating to certain insurance and other
regulatory aspects of the general and separate accounts of Equitable and its
insurance company subsidiary. During 1999 Alliance Capital paid approximately
$1.2 million to Equitable for these services.
During 1999 Alliance Capital paid Equitable approximately $39.7 million
for certain services provided by Equitable with respect to the marketing of the
variable annuity insurance and variable life insurance products for which HRT
was the funding vehicle until October 18, 1999 when all of the portfolios of HRT
were transferred to EQAT and such payments terminated.
Equitable has issued life insurance policies to ACMC on certain
employees of Alliance Capital, the costs of which are borne by ACMC without
reimbursement by Alliance Capital. During 1999 ACMC paid approximately $5.2
million in insurance premiums on these policies.
Alliance Capital and its employees are covered under various insurance
policies maintained by Equitable and its subsidiaries. The amount of premiums
for these group policies paid by Alliance Capital to Equitable was approximately
$218,000 for 1999.
Alliance Capital provides investment management services to certain
employee benefit plans of Equitable and DLJ. Advisory fees from these accounts
totaled approximately $5.0 million for 1999 including $3.6 million from the
separate accounts of Equitable.
In April 1996 Alliance Capital acquired the United States investing
activities and business of National Mutual Funds Management ("NMFM"), a
subsidiary of AXA. In connection therewith Alliance Capital entered into
investment management agreements with AXA Asia Pacific Holdings Limited
(formerly National Mutual Holdings Limited), the parent of NMFM and a subsidiary
of AXA, and various of its subsidiaries (collectively, the "AXA Asia Pacific
Group"). The AXA Asia Pacific Group paid approximately $3.2 million in advisory
fees to Alliance Capital in 1999. Alliance Capital earned an additional $32,500
in advisory fees from the AXA Asia Pacific Group in 1999, which fees were paid
in full in 2000.
38
AXA Advisors was Alliance Capital's third largest distributor of U.S.
Funds in 1999 for which AXA Advisors received sales concessions from Alliance
Capital on sales of $1,065 million. In 1999 AXA Advisors also distributed
certain of Alliance Capital's cash management products. AXA Advisors received
distribution payments totaling $9.8 million in 1999 for these services.
DLJ Securities Corporation and Pershing distribute certain Alliance
Mutual Funds and cash management products and receive sales concessions and
distribution payments. In addition, Alliance Capital and Pershing have an
agreement pursuant to which Pershing recommends to certain of its correspondent
firms the use of Alliance Capital's cash management products for which Pershing
is allocated a portion of the revenues derived by Alliance Capital from sales
through the Pershing correspondents. Amounts paid by Alliance Capital to DLJ
Securities Corporation, Pershing and Wood Struthers & Winthrop Management Corp.,
a subsidiary of DLJ, in connection with the above distribution services were
$96.3 million in 1999. DLJ and its subsidiaries also provide Alliance Capital
with brokerage and various other services, including clearing, investment
banking, research, data processing and administrative services. Brokerage, the
expense of which is borne by Alliance Capital's clients, aggregated
approximately $1.9 million for 1999. During 1999 Alliance Capital paid $600,000
to DLJ and its subsidiaries for all other services.
During 1999 Alliance Capital reimbursed Equitable in the amount of
$700,000 for rent and the use of certain services and facilities.
Alliance Capital and its subsidiaries provide investment management
services to AXA Reinsurance Company, a subsidiary of AXA, and its affiliates,
pursuant to discretionary investment advisory agreements. AXA Reinsurance
Company and its affiliates paid Alliance Capital approximately $1.1 million
during 1999 for such services. Alliance Capital earned an additional $99,000 in
management fees from AXA Reinsurance Company and its affiliates during 1999,
which fees were paid in full in 2000.
Alliance Capital and its subsidiaries also provide investment
management services to AXA World Funds, a Luxembourg fund, pursuant to a
sub-advisory agreement between Alliance Capital and AXA Funds Management SA, a
subsidiary of AXA. Alliance Capital earned approximately $189,000 in management
fees during 1999, which fees were paid in full in 2000.
Other Transactions
During 1999 Alliance Capital paid certain legal and other expenses
incurred by Equitable and its insurance company subsidiary relating to the
general and separate accounts of Equitable and such subsidiary for which it has
been or will be fully reimbursed by Equitable. The largest amount of such
indebtedness outstanding during 1999 was approximately $73,000 which represents
the amount outstanding on September 30, 1999.
In connection with the Reorganization, Alliance Capital agreed to
reimburse Alliance Holding for all costs and expenses incurred by Alliance
Holding other than the payment of taxes.
Equitable and its affiliates are not obligated to provide funds to
Alliance Capital, except for ACMC's and the General Partner's obligation to fund
certain of Alliance Capital's deferred compensation and employee benefit plan
obligations referred to under "Item 11. Executive Compensation - Compensation
Agreements with Named Executive Officers".
In 1999 GIE Informatique AXA, an affiliate of AXA, entered into a
technology cost contribution agreement with various AXA subsidiaries, including
Alliance Capital, to enable the participants to share the costs and benefits of
cooperative technology development through GIE Informatique AXA. All
participants are joint owners of the technology and processes developed under
this agreement. In 1999 Alliance Capital's share of such costs was approximately
$1,142,000. Alliance Capital anticipates continuing to pay its share of such
costs under this agreement in 2000.
During 1999 four money market mutual funds sponsored by Alliance
Capital ("Money Market Funds") owned an aggregate of $570 million of funding
agreements issued by General American Life Insurance Company ("General
American"). The funding agreements had a maturity date of July 10, 2000 but
permitted the holder to redeem the principal amount thereof on seven days
written notice. The Money Market Funds gave written redemption notices on August
2, 1999. On August 10,
39
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. Equitable obtained letters of credit in favor of the Money Market Funds
under which the Money Market Funds were entitled to 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. Alliance Capital entered into a
reimbursement agreement with Equitable under which it agreed to reimburse
Equitable for all amounts drawn down by the Money Market Funds under the letters
of credit and pay certain fees and expenses to Equitable. The letters of credit
were terminated on October 4, 1999 when Metropolitan Life Insurance Company
assumed General American's liabilities under the funding agreements and agreed
to honor the redemption requests. Alliance Capital paid $1,066,362 to or on
behalf of Equitable under the reimbursement agreement in 1999 and is obligated
to pay an additional $70,744.
Mrs. Reba W. Williams, the wife of Dave H. Williams, was employed by
Alliance Capital during 1999 and received compensation in the amount of
$100,000.
Certain of the hedge funds managed by Alliance Capital pay a portion of
the carried interests or performance fees to certain portfolio managers,
research analysts and other investment professionals who are associated with the
management of the hedge funds. Alliance Capital provides investment management
services to the hedge funds and is entitled to receive between 75% and 100% of
the aggregate carried interests or performance fees paid by such funds. Alliance
Capital received approximately $47 million from the hedge funds in 1999
primarily in respect of the performance by the hedge funds in 1998. Mr. Alfred
Harrison, a Director and Vice Chairman of the General Partner, received
$4,618,064 in 1999 in respect of his association with the hedge funds.
ACMC and the General Partner are obligated, subject to certain
limitations, to make capital contributions to Alliance Capital in an amount
equal to the payments Alliance Capital is required to make as deferred
compensation under the employment agreements entered into in connection with
Equitable's 1985 acquisition of DLJ, as well as obligations of Alliance Capital
to various employees and their beneficiaries under Alliance Capital's Capital
Accumulation Plan. In 1999 ACMC made capital contributions to Alliance Capital
in the amount of $1,092,000 in respect of these obligations. ACMC's obligations
to make these contributions are guaranteed by EIC subject to certain
limitations. All tax deductions with respect to these obligations, to the extent
funded by ACMC, Alliance or EIC, will be allocated to ACMC or Alliance.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) The following is a list of the documents filed as a part of this Annual
Report on Form 10-K:
Reference Pages
Alliance Capital Financial Statements in 1999 Annual Report
------------------------------------- ---------------------
Consolidated Statements of Financial Condition
December 31, 1999 and 1998........................ 63
Consolidated Statements of Income
Years ended December 31, 1999, 1998 and 1997...... 64
Consolidated Statements of Changes in Partners' Capital
and Comprehensive Income
Years ended December 31 1999, 1998 and 1997....... 65
Consolidated Statements of Cash Flows
Years ended December 31, 1999, 1998, and 1997..... 66
Notes to Consolidated Financial Statements................. 67 - 83
Independent Auditors' Report............................... 84
Schedules are omitted because they are not applicable, or the
required information is set forth in the financial statements or notes
thereto.
(b) Reports on Form 8-K.
40
Neither Alliance Capital nor Alliance Holding filed a report
on Form 8-K during the last quarter of 1999.
(c) Exhibits.
The following exhibits required to be filed by Item 601 of
Regulation S-K are filed herewith or, in the case of Exhibit 13.1,
incorporated by reference herein:
Exhibit Description
------- -----------
2.1 Agreement and Plan of Reorganization dated August 20,
1999 among Alliance Capital Management Holding L.P.
(formerly Alliance Capital Management L.P.), Alliance
Capital Management L.P. (formerly Alliance Capital
Management L.P. II), Alliance Capital Management
Corporation and the Equitable Life Assurance Society
of the United States (incorporated by reference to
Exhibit (a)(1) to the Form 10-Q for the quarterly
period ended September 30, 1999 of Alliance Capital
Management Holding L.P. (formerly Alliance Capital
Management L.P.) filed on November 15, 1999).
3.1 Amended and Restated Certificate of Limited
Partnership dated October 29, 1999 of Alliance
Capital Management L.P. (formerly Alliance Capital
Management L.P. II) (incorporated by reference to
Exhibit 2.1 to the Registration Statement of Form 8-A
of Alliance Capital Management L.P. (formerly
Alliance Capital Management L.P. II) filed on March
15, 2000).
3.2 Amended and Restated Agreement of Limited Partnership
dated October 29, 1999 of Alliance Capital Management
Holding L.P. (formerly Alliance Capital Management
L.P.) (incorporated by reference to Exhibit (a)(2) to
the Form 10-Q for the quarterly period ended
September 30, 1999 of Alliance Capital Management
Holding L.P. (formerly Alliance Capital Management
L.P.) filed on November 15, 1999).
3.3 Amended and Restated Agreement of Limited Partnership
dated October 29, 1999 of Alliance Capital Management
L.P. (formerly Alliance Capital Management L.P. II)
(incorporated by reference to Exhibit (a)(3) to the
Form 10-Q for the quarterly period ended September
30, 1999 of Alliance Capital Management Holding L.P.
(formerly Alliance Capital Management L.P.) filed on
November 15, 1999).
10.1 Unit Option Plan Agreement dated December 6, 1999
with Robert H. Joseph, Jr.
10.2 Unit Option Plan Agreement dated December 6, 1999
with David R. Brewer, Jr.
10.3 Amended and Restated Alliance Partners Compensation
Plan dated December 6, 1999.
10.4 Restricted Unit Award Agreement dated December 31,
1999 with Bruce W. Calvert.
10.5 Restricted Unit Award Agreement dated December 31,
1999 with John D. Carifa.
10.6 Restricted Unit Award Agreement dated December 31,
1999 with Alfred Harrison.
10.7 Restricted Unit Award Agreement dated December 31,
1999 with Robert H. Joseph, Jr.
10.8 Restricted Unit Award Agreement dated December 31,
1999 with David R. Brewer, Jr.
10.9 Commercial Paper Dealer Agreement, dated as of
December 14, 1999.
10.10 Extendible Commercial Notes Dealer Agreement, dated
as of December 14, 1999.
10.11 Amended and Restated Investment Advisory and
Management Agreement dated October 29, 1999 among
Alliance Capital Management Holding L.P. (formerly
Alliance Capital Management L.P.), Alliance Corporate
Finance Group Incorporated and The Equitable Life
Assurance Society of the United States (incorporated
by reference to Exhibit (a)(6) to the Form 10-Q for
the quarterly period ended September 30, 1999 of
Alliance Capital Management Holding L.P. (formerly
Alliance Capital Management L.P.) filed on November
15, 1999).
10.12 Amended and Restated Accounting, Valuation, Reporting
and Treasury Services Agreement dated October 29,
1999 between Alliance Capital Management Holding L.P.
(formerly Alliance Capital Management L.P.), Alliance
Corporate Finance Group Incorporated and The
Equitable Life Assurance Society of the United States
(incorporated by reference to Exhibit (a)(7) to the
41
Form 10-Q for the quarterly period ended September
30, 1999 of Alliance Capital Management Holding L.P.
(formerly Alliance Capital Management L.P.) filed on
November 15, 1999).
10.13 Global Assignment and Assumption Agreement dated
October 29, 1999 between Alliance Capital Management
Holding L.P. (formerly Alliance Capital Management
L.P.) and Alliance Capital Management L.P. (formerly
Alliance Capital Management L.P. II) (incorporated by
reference to Exhibit (a)(8) to the Form 10-Q for the
quarterly period ended September 30, 1999 of Alliance
Capital Management Holding L.P. (formerly Alliance
Capital Management L.P.) filed on November 15, 1999).
10.14 Pass-Through Agreement dated October 29, 1999 between
Alliance Capital Management Holding L.P. (formerly
Alliance Capital Management L.P.) and Alliance
Capital Management L.P. (formerly Alliance Capital
Management L.P. II) (incorporated by reference to
Exhibit (a)(9) to the Form 10-Q for the quarterly
period ended September 30, 1999 of Alliance Capital
Management Holding L.P. (formerly Alliance Capital
Management L.P.) filed on November 15, 1999).
10.15 Reimbursement Agreement dated August 16, 1999 between
Alliance Capital Management Holding L.P. (formerly
Alliance Capital Management L.P.) and The Equitable
Life Assurance Society of the United States
(incorporated by reference to Exhibit (a)(1) to the
Form 10-Q for the quarterly period ended June 30,
1999 of Alliance Capital Management Holding L.P.
(formerly Alliance Capital Management L.P.) filed on
August 16, 1999).
10.16 Revolving Credit Agreement dated as of July 21, 1999
among Alliance Capital Management L.P. (formerly
Alliance Capital Management L.P. II), 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
(incorporated by reference to Exhibit (a)(2) to the
Form 10-Q for the quarterly period ended June 30,
1999 of Alliance Capital Management Holding L.P.
(formerly Alliance Capital Management L.P.) filed on
August 16, 1999).
10.17 Exchange Agreement dated April 8, 1999 among Alliance
Capital Management Holding L.P. (formerly Alliance
Capital Management L.P.), Alliance Capital Management
L.P. (formerly Alliance Capital Management L.P. II)
and The Equitable Life Assurance Society of the
United States (incorporated by reference to Exhibit
10.2 to the Registration Statement on Form S-4 of
Alliance Capital Management L.P. (formerly Alliance
Capital Management L.P. II)).
10.18 Indemnification and Reimbursement Agreement dated
April 8, 1999 among Alliance Capital Management
Holding L.P. (formerly Alliance Capital Management
L.P.), Alliance Capital Management L.P. (formerly
Alliance Capital Management L.P. II) and The
Equitable Life Assurance Society of the United States
(incorporated by reference to Exhibit 10.2 to the
Registration Statement on Form S-4 of Alliance
Capital Management L.P. (formerly Alliance Capital
Management L.P. II)).
10.19 Unit Option Plan Agreement dated December 10, 1998
with Bruce W. Calvert (incorporated by reference to
Exhibit 10.102 to the Form 10-K for the fiscal year
ended December 31, 1998 of Alliance Capital
Management Holding L.P. (formerly Alliance Capital
Management L.P.) filed March 30, 1999).
10.20 Unit Option Plan Agreement dated December 10, 1998
with John D. Carifa (incorporated by reference to
Exhibit 10.103 to the Form 10-K for the fiscal year
ended December 31, 1998 of Alliance Capital
Management Holding L.P. (formerly Alliance Capital
Management L.P.) filed March 30, 1999).
10.21 Unit Option Plan Agreement dated December 10, 1998
with David R. Brewer, Jr. (incorporated by reference
to Exhibit 10.105 to the Form 10-K for the fiscal
year ended December 31, 1998 of Alliance Capital
Management Holding L.P. (formerly Alliance Capital
Management L.P.) filed March 30, 1999).
10.22 Unit Option Plan Agreement dated December 10, 1998
with Robert H. Joseph, Jr. (incorporated by reference
to Exhibit 10.107 to the Form 10-K for the fiscal
year ended December 31, 1998 of Alliance Capital
Management Holding L.P. (formerly Alliance Capital
Management L.P.) filed March 30, 1999).
10.23 Revolving Credit Agreement dated as of July 20, 1998
among Alliance Capital Management L.P., as Borrower,
and the lending institutions listed on Schedule 1
thereto, collectively as Banks, and
42
Nations Bank, N.A., The Chase Manhattan Bank and the
Bank of New York, individually as Co-Agents, Nations
Bank N.A., as Administrative Agent, The Chase
Manhattan Bank, as Syndication Agent, and the Bank of
New York, as Documentation Agent (incorporated by
reference to Exhibit 10.106 to the Form 10-K for the
fiscal year ended December 31, 1998).
10.24 Unit Option Plan Agreement dated December 16, 1997
with David R. Brewer, Jr. (incorporated by reference
to Exhibit 10.98 to the Form 10-K for the fiscal year
ended December 31, 1997 of Alliance Capital
Management Holding L.P. (formerly Alliance Capital
Management L.P.) filed March 30, 1998).
10.25 Unit Option Plan Agreement dated December 16, 1997
with Robert H. Joseph, Jr. (incorporated by reference
to Exhibit 10.97 to the Form 10-K for the fiscal year
ended December 31, 1997 of Alliance Capital
Management Holding L.P. (formerly Alliance Capital
Management L.P.) filed March 30, 1998).
10.26 1997 Long Term Incentive Plan (incorporated by
reference to Annex I to the Proxy Statement on
Schedule 14A of Alliance Capital Management Holding
L.P. (formerly Alliance Capital Management L.P.)
filed December 4, 1997).
10.27 Unit Option Plan Agreement dated December 16, 1996
with David R. Brewer, Jr. (incorporated by reference
to Exhibit 10.93 to the Form 10-K for the fiscal year
ended December 31, 1996 of Alliance Capital
Management Holding L.P. (formerly Alliance Capital
Management L.P.) filed March 27, 1997).
10.28 Unit Option Plan Agreement dated December 16, 1996
with Robert H. Joseph, Jr. (incorporated by reference
to Exhibit 10.92 to the Form 10-K for the fiscal year
ended December 31, 1996 of Alliance Capital
Management Holding L.P. (formerly Alliance Capital
Management L.P.) filed March 27, 1997).
10.29 Unit Option Plan Agreement dated December 5, 1995
with David R. Brewer, Jr. (incorporated by reference
to Exhibit 10.82 to the Form 10-K for the fiscal year
ended December 31, 1995 of Alliance Capital
Management Holding L.P. (formerly Alliance Capital
Management L.P.) filed April 1, 1996).
10.30 Unit Option Plan Agreement dated July 24, 1995 with
Bruce W. Calvert (incorporated by reference to
Exhibit 10.78 to the Form 10-K for the fiscal year
ended December 31, 1995 of Alliance Capital
Management Holding L.P. (formerly Alliance Capital
Management L.P.) filed April 1, 1996).
10.31 Unit Option Plan Agreement dated July 24, 1995 with
John D. Carifa (incorporated by reference to Exhibit
10.80 to the Form 10-K for the fiscal year ended
December 31, 1995 of Alliance Capital Management
Holding L.P. (formerly Alliance Capital Management
L.P.) filed April 1, 1996).
10.32 Unit Option Plan Agreement dated April 25, 1995 with
Bruce W. Calvert (incorporated by reference to
Exhibit 10.77 to the Form 10-K for the fiscal year
ended December 31, 1995 of Alliance Capital
Management Holding L.P. (formerly Alliance Capital
Management L.P.) filed April 1, 1996).
10.33 Unit Option Plan Agreement dated April 25, 1995 with
John D. Carifa (incorporated by reference to Exhibit
10.79 to the Form 10-K for the fiscal year ended
December 31, 1995 of Alliance Capital Management
Holding L.P. (formerly Alliance Capital Management
L.P.) filed April 1, 1996).
10.34 Unit Option Plan Agreement dated April 25, 1995 with
David R. Brewer, Jr. (incorporated by reference to
Exhibit 10.81 to the Form 10-K for the fiscal year
ended December 31, 1995 of Alliance Capital
Management Holding L.P. (formerly Alliance Capital
Management L.P.) filed April 1, 1996).
10.35 Unit Option Plan Agreement dated April 25, 1995 with
Robert H. Joseph, Jr. (incorporated by reference to
Exhibit 10.83 to the Form 10-K for the fiscal year
ended December 31, 1995 of Alliance Capital
Management Holding L.P. (formerly Alliance Capital
Management L.P.) filed April 1, 1997).
10.36 Unit Option Plan Agreement dated December 5, 1995
with Robert H. Joseph, Jr. (incorporated by reference
to Exhibit 10.84 to the Form 10-K for the fiscal year
ended December 31, 1995 of Alliance Capital
Management Holding L.P. (formerly Alliance Capital
Management L.P.) filed April 1, 1997).
43
10.37 Unit Option Plan Agreement dated May 10, 1994 with
Bruce W. Calvert (incorporated by reference to
Exhibit 10.59 to the Form 10-K for the fiscal year
ended December 31, 1994 of Alliance Capital
Management Holding L.P. (formerly Alliance Capital
Management L.P.) filed March 30, 1995).
10.38 Unit Option Plan Agreement dated May 10, 1994 with
John D. Carifa (incorporated by reference to Exhibit
10.60 to the Form 10-K for the fiscal year ended
December 31, 1994 of Alliance Capital Management
Holding L.P. (formerly Alliance Capital Management
L.P.) filed March 30, 1995).
10.39 Unit Option Plan Agreement dated May 10, 1994 with
David R. Brewer, Jr. (incorporated by reference to
Exhibit 10.61 to the Form 10-K for the fiscal year
ended December 31, 1994 of Alliance Capital
Management Holding L.P. (formerly Alliance Capital
Management L.P.) filed March 30, 1995).
10.40 Unit Option Plan Agreement dated May 10, 1994 with
Robert H. Joseph, Jr. (incorporated by reference to
Exhibit 10.62 to the Form 10-K for the fiscal year
ended December 31, 1994 of Alliance Capital
Management Holding L.P. (formerly Alliance Capital
Management L.P.) filed March 30, 1995).
10.41 Convertible Note Purchase Agreement dated as of
August 11, 1994 between Alliance Capital Management
L.P. (formerly Alliance Capital Management L.P. II)
and Banco Bilbao Vizcaya, S.A. (incorporated by
reference to Exhibit 10.67 to the Form 8-K to
Alliance Capital Management L.P. (formerly Alliance
Capital Management L.P.) filed on August 12, 1994).
10.42 Alliance Capital Management Holding L.P. (formerly
Alliance Capital Management L.P.) 1993 Unit Option
Plan (incorporated by reference to Exhibit 4.1 to the
Form S-8 of Alliance Capital Management Holding L.P.
(formerly Alliance Capital Management L.P.) filed
July 12, 1993).
10.43 Alliance Capital Management L.P. Unit Bonus Plan
(incorporated by reference to Exhibit 4.2 to the Form
S-8 of Alliance Capital Management L.P. (formerly
Alliance Capital Management L.P.) filed July 12,
1993).
10.44 Alliance Capital Management L.P. Century Club Plan
(incorporated by reference to Exhibit 4.3 to the Form
S-8 of Alliance Capital Management L.P. (formerly
Alliance Capital Management L.P.) filed July 12,
1993).
10.45 Unit Option Plan Agreement dated October 10, 1992
with David R. Brewer, Jr. (incorporated by reference
to Exhibit 10.49 to the Form 10-K for the fiscal year
ended December 31, 1992 of Alliance Capital
Management Holding L.P. (formerly Alliance Capital
Management L.P.) filed March 25, 1993).
10.46 Unit Option Plan Agreement dated October 10, 1992
with Robert H. Joseph, Jr. (incorporated by reference
to Exhibit 10.48 to the Form 10-K for the fiscal year
ended December 31, 1992 of Alliance Capital
Management Holding L.P. (formerly Alliance Capital
Management L.P.) filed March 25, 1993).
10.47 Alliance Capital Accumulation Plan (incorporated by
reference to Exhibit 10.51 to the Form 10-K for the
fiscal year ended December 31, 1992 of Alliance
Capital Management Holding L.P. (formerly Alliance
Capital Management L.P.) filed March 25, 1993).
10.48 Transfer Agreement dated December 12, 1991 between
Alliance Capital Management Corporation and Alliance
GP Incorporated (incorporated by reference to Exhibit
10.46 to the Form 10-K of Alliance Capital Management
Holding L.P. (formerly Alliance Capital Management
L.P.) filed March 27, 1992).
10.49 Unit Option Plan Agreement dated August 8, 1991 with
David R. Brewer, Jr. (incorporated by reference to
Exhibit 10.42 to the Form 10-K for the fiscal year
ended December 31, 1991 of Alliance Capital
Management Holding L.P. (formerly Alliance Capital
Management L.P.) filed March 27, 1992).
10.50 Unit Option Plan Agreement dated August 8, 1991 with
Robert H. Joseph, Jr. (incorporated by reference to
Exhibit 10.41 to the Form 10-K for the fiscal year
ended December 31, 1991 of Alliance Capital
Management Holding L.P. (formerly Alliance Capital
Management L.P.) filed March 27, 1992).
10.51 Unit Option Plan Agreement dated May 16, 1990 with
David R. Brewer, Jr. (incorporated by reference to
Exhibit 10.33 to the Form 10-K for the fiscal year
ended December 31, 1990 of Alliance Capital
Management Holding L.P. (formerly Alliance Capital
Management L.P.) filed
44
March 28, 1991).
10.52 Unit Option Plan Agreement dated May 16, 1990 with
Robert H. Joseph, Jr. (incorporated by reference to
Exhibit 10.32 to the Form 10-K for the fiscal year
ended December 31, 1990 of Alliance Capital
Management Holding L.P. (formerly Alliance Capital
Management L.P.) filed March 28, 1991).
10.53 Alliance Capital Accumulation Plan (incorporated by
reference to Exhibit 10.11 to the Form 10-K for the
fiscal year ended December 31, 1988 of Alliance
Capital Management Holding L.P. (formerly Alliance
Capital Management L.P.) filed March 31, 1989).
10.54 Alliance Partners Plan (incorporated by reference to
Exhibit 10.12 to the Form 10-K for the fiscal year
ended December 31, 1988 of Alliance Capital
Management Holding L.P. (formerly Alliance Capital
Management L.P.) filed March 31, 1989).
11.1 Computation of Pro Forma Earnings per Unit for the
years ended December 31, 1999, 1998 and 1997.
13.1 Pages 47 through 84 of the 1999 Annual Report.
21.1 Subsidiaries of the Registrant
23.1 Consent of KPMG LLP
24.1 Power of Attorney by Luis Javier Bastida
24.2 Power of Attorney by Donald H. Brydon
24.3 Power of Attorney by Henri de Castries
24.4 Power of Attorney by Kevin C. Dolan
24.5 Power of Attorney by Denis Duverne
24.6 Power of Attorney by Alfred Harrison
24.7 Power of Attorney by Herve Hatt
24.8 Power of Attorney by Michael Hegarty
24.9 Power of Attorney by Benjamin D. Holloway
24.10 Power of Attorney by Edward D. Miller
24.11 Power of Attorney by Peter D. Noris
24.12 Power of Attorney by Stanley B. Tulin
24.13 Power of Attorney by Robert B. Zoellick
27.1 Financial Data Schedule
45
Signatures
Pursuant to the requirements of Section 13 or 15(d) 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.
By: Alliance Capital Management
Corporation, General Partner
Date: March 28, 2000 By: /s/ Bruce W. Calvert
---------------------------------
Bruce W. Calvert
Vice Chairman and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.
Date: March 28, 2000 /s/ John D. Carifa
--------------------------------------
John D. Carifa
President and Chief Operating Officer
Date: March 28, 2000 /s/ Robert H. Joseph, Jr.
--------------------------------------
Robert H. Joseph, Jr.
Senior Vice President, Chief
Financial Officer and Principal
Accounting Officer
46
Directors
/s/ Dave H. Williams *
- --------------------------------- ----------------------------------
Dave H. Williams Michael Hegarty
Chairman and Director Director
* *
- --------------------------------- ----------------------------------
Luis Javier Bastida Benjamin D. Holloway
Director Director
* *
- --------------------------------- ----------------------------------
Donald H. Brydon Edward D. Miller
Director Director
/s/ Bruce W. Calvert *
- --------------------------------- ----------------------------------
Bruce W. Calvert Peter D. Noris
Director Director
/s/ John D. Carifa /s/ Frank Savage
- --------------------------------- ----------------------------------
John D. Carifa Frank Savage
Director Director
* *
- --------------------------------- ----------------------------------
Henri de Castries Stanley B. Tulin
Director Director
* /s/ Reba W. Williams
- --------------------------------- ----------------------------------
Kevin C. Dolan Reba W. Williams
Director Director
* *
- --------------------------------- ----------------------------------
Denis Duverne Robert B. Zoellick
Director Director
* /s/ David R. Brewer, Jr.
- --------------------------------- ----------------------------------
Alfred Harrison David R. Brewer, Jr.
Director (Attorney-in-Fact)
*
- ---------------------------------
Herve Hatt
Director
47