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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 [FEE REQUIRED]
For the Fiscal Year Ended December 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 1-9818
________________________
ALLIANCE CAPITAL
MANAGEMENT L.P.
(Exact name of REGISTRANT AS SPECIFIED in its charter)
Delaware 13-3434400
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1345 Avenue of the Americas 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:
Name of each exchange on
Title of Class which registered
-------------- ------------------------
Units representing assignments of beneficial New York Stock Exchange
ownership of limited partnership interests
Securities registered pursuant to Section 12(g) of the Act:
None
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 [ ]
The aggregate market value of the Units representing assignments of
beneficial ownership of limited partnership interests held by non-affiliates of
the registrant as of March 14, 1994 (based on the price at which Units were sold
on the New York Stock Exchange) was approximately $1,762,168,000.
The number of Units representing assignments of beneficial ownership of
limited partnership interests outstanding as of March 14, 1994 was 72,909,560
Units.
DOCUMENTS INCORPORATED BY REFERENCE
Certain pages of the Alliance Capital Management L.P. 1993 Annual Report to
Unitholders are incorporated by reference in Part II of this Form 10-K.
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GLOSSARY OF CERTAIN DEFINED TERMS
"Partnership" refers to Alliance Capital Management L.P., a Delaware
limited partnership, and its subsidiaries and, where appropriate, to its
predecessor ACMC and its subsidiaries.
"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 its predecessor ACMC.
"AXA" refers to AXA, a societe anonyme organized under the laws of France.
"ECI" refers to The Equitable Companies Incorporated.
"Equitable" refers to The Equitable Life Assurance Society of the United
States, a wholly-owned subsidiary of ECI, and its subsidiaries other than the
Partnership and its subsidiaries.
"General Partner" refers to Alliance in its capacity as general partner of
the Partnership, and, where appropriate, to ACMC, its predecessor, in its
capacity as general partner of the Partnership.
"Units" refer to units representing assignments of beneficial ownership of
limited partnership interests in the Partnership.
PART I
ITEM 1. BUSINESS
General
The Partnership 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
the Partnership in exchange for a 1% general partnership interest in the
Partnership and 30,868,182 Units (adjusted to reflect the Partnership's two for
one Unit split effective February 22, 1993). In December 1991 ACMC transferred
its 1% general partnership interest in the Partnership to Alliance.
On February 10, 1993 the Partnership declared a two for one Unit split
payable to Unitholders of record on February 22, 1993. All Unit and per Unit
amounts in this Annual Report on Form 10-K have been adjusted where necessary to
reflect the Unit split.
In July 1992 AXA acquired 49% of the issued and outstanding shares of the
capital stock of ECI. ECI is a public company with shares traded on the New
York Stock Exchange, Inc. ("NYSE"). ECI owns all of the shares of Equitable.
AXA is a member of a group of companies ("AXA Group") that is the second
largest insurance group in France and one of the largest insurance groups in
Europe. Principally engaged in property and casualty insurance and life
insurance in Europe and elsewhere in the world, the AXA Group is also involved
in real estate operations and certain other financial services, including mutual
fund management, lease financing services and brokerage services. Based on
information provided by AXA, as of December 31, 1993, 42.7% of the voting shares
(representing 54.8% of the voting power) of AXA were owned by Midi
Participations, a French corporation that is a holding company. The voting
shares of Midi Participations are in turn owned 60% by Finaxa, a French
corporation that is a holding company, and 40% by subsidiaries of Assicurazioni
Generali S.p.A., an Italian corporation ("Generali") (one of which, Belgica
Insurance Holdings S.A., a Belgian corporation, owned 34.2%). As of December
31, 1993, 62.4% of the voting shares (representing 71.5% of the voting power) of
Finaxa were owned by five French mutual insurance companies ("Mutuelles AXA")
one of which, AXA Assurance I.A.R.D. Mutuelle, owned 31.6% of the voting shares
(representing 45.5% of the voting power), and 27.1% of the voting shares
(representing
2
19.7% of the voting power) of Finaxa were owned by Compagnie Financiere de
Paribas, a French financial institution engaged in banking and related
activities ("Paribas"). Including the shares owned by Midi Participations, as
of December 31, 1993, the Mutuelles AXA directly or indirectly owned 51.7% of
the voting shares (representing 64.2% of the voting power) of AXA. In addition,
certain subsidiaries of AXA own 0.3% of the shares of AXA which may not be
voted. Acting as a group, the Mutuelles AXA control AXA, Midi Participations
and Finaxa. The Mutuelles AXA have approximately 1.5 million policyholders.
On July 22, 1993 the business and substantially all of the assets of
Equitable Capital Management Corporation ("ECMC") were transferred to the
Partnership. The Partnership assumed substantially all of ECMC's liabilities
and issued 12,500,000 Units (consisting of 12,400,000 Units and a newly created
Class A Limited Partnership Interest convertible initially into 100,000 Units).
The Partnership issued 11,800,000 of the Units and the Class A Limited
Partnership Interest to ECMC. ECMC may receive additional Units valued at up to
$25 million under a formula based on contingent incentive fees received by the
Partnership prior to April 1, 1998. The remaining 600,000 Units were issued to
certain ECMC employees at a substantial discount from market value. In
addition, ACMC purchased 2,380,952 Units for $50 million in cash. ECMC and ACMC
are wholly-owned subsidiaries of Equitable. As a result of this transaction
Equitable's direct and indirect percentage ownership interest in the Units
increased to approximately 63%. The transaction was accounted for in a manner
similar to the pooling of interests method. Accordingly, all financial data for
all periods presented, except as specifically stated herein, has been restated
to include the results of operations of ECMC.
On March 7, 1994 the Partnership acquired the business of Shields Asset
Management, Incorporated ("Shields") and its wholly-owned subsidiary, Regent
Investor Services Incorporated ("Regent") for a purchase price of $70 million in
cash. Shields and Regent are investment managers with client assets under
management aggregating approximately $8 billion as of December 31, 1993.
Shields' clients consist primarily of collectively bargained multiemployer
retirement plan accounts. Regent's clients are primarily smaller retirement
plan accounts and "wrap-fee" accounts of individuals maintained with third-party
broker-dealers with whom Regent has entered into agreements under which Regent
is one of several investment managers who may be selected by the client. In
addition the Partnership issued 645,160 new Units to key employees of Shields
and Regent in connection with their entering into long term employment
agreements.
The Partnership, one of the nation's largest investment advisers, provides
diversified investment management services both to institutional clients and,
through various investment vehicles, to individual investors.
The Partnership's institutional account management business consists
primarily of the active management of equity and fixed income accounts. The
Partnership's institutional clients include corporate and public employee
pension funds, the general and separate accounts of Equitable and its insurance
company subsidiaries, endowment funds, and other domestic and foreign
institutions. The Partnership's individual investor 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.
3
The following tables provide a summary of assets under management and
associated revenues:
ASSETS UNDER MANAGEMENT
(in millions)
December 31,
--------------------------------------------------------------------
1989 1990 1991 1992 1993
Institutional Account
Management (1). . . . . . . . . . $ 66,242 $ 59,987 $ 70,308 $ 70,514 $ 77,912
Individual Investor Services:
Alliance Mutual Funds . . . . . . 6,755 10,310 16,143 15,588 22,045
The Hudson River Trust. . . . . . 2,975 3,198 4,824 5,484 7,171
Cash Management Services (2). . . 5,294 5,945 6,681 7,095 8,148
-------- -------- -------- -------- ---------
Total. . . . . . . . . . . . . . . . $ 81,266 $ 79,440 $ 97,956 $ 98,681 $ 115,276
-------- -------- -------- -------- ---------
-------- -------- -------- -------- ---------
REVENUES
(in thousands)
Years Ended December 31,
--------------------------------------------------------------------
1989 1990 1991 1992 1993
Institutional Account
Management (1). . . . . . . . . . $183,226 $164,734 $182,078 $178,289 $190,921
Individual Investor Services:
Alliance Mutual Funds . . . . . . 59,138 94,318 158,562 196,964 221,005
The Hudson River Trust (3). . . . 6,889 8,380 10,874 13,941 18,090
Cash Management Services (2). . . 39,481 43,996 54,856 58,379 64,464
Other. . . . . . . . . . . . . . . . 5,838 5,307 6,230 5,698 5,037
-------- -------- -------- -------- --------
Total. . . . . . . . . . . . . . . . $294,572 $316,735 $412,600 $453,271 $499,517
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
<FN>
(1) Includes the general and separate accounts of Equitable and its insurance
company subsidiaries.
(2) Includes money market deposit accounts brokered by the Partnership 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 is the funding vehicle.
4
Institutional Account Management
The Partnership provides investment management services to institutional
clients. As of December 31, 1991, 1992, and 1993 institutional accounts (other
than investment companies and deposit accounts) represented approximately 72%,
71%, and 68% respectively, of the total assets under management by the
Partnership. The fees earned from the management of those accounts represented
approximately 44%, 39% and 38% of the Partnership's revenues for 1991, 1992 and
1993, respectively.
INSTITUTIONAL ACCOUNT ASSETS UNDER MANAGEMENT
(in millions)
December 31,
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1989 1990 1991 1992 1993
Equity & Balanced
Domestic. . . . . . . . . . . . . . $ 21,739 $ 20,681 $ 27,826 $ 28,452 $ 30,961
International & Global. . . . . . . 1,705 1,949 2,315 2,313 2,913
Fixed Income
Domestic. . . . . . . . . . . . . . 33,696 28,822 27,806 26,419 28,596
International & Global . . . . . . 124 219 1,086 2,344 2,252
Passive
Domestic. . . . . . . . . . . . . . 7,880 7,545 9,735 9,688 11,240
International & Global. . . . . . . 752 611 1,376 1,116 1,760
Other . . . . . . . . . . . . . . . 346 160 164 182 190
-------- -------- -------- -------- --------
Total. . . . . . . . . . . . . . . . $ 66,242 $ 59,987 $ 70,308 $ 70,514 $ 77,912
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
REVENUES FROM INSTITUTIONAL ACCOUNT MANAGEMENT
(in thousands)
Years Ended December 31,
--------------------------------------------------------------------
1989 1990 1991 1992 1993
Investment Services:
Equity & Balanced
Domestic. . . . . . . . . . . . . . $ 67,538 $ 69,688 $ 77,215 $ 87,875 $ 94,976
International & Global. . . . . . . 5,065 5,484 6,571 6,945 7,166
Fixed Income
Domestic. . . . . . . . . . . . . . 96,971 72,478 81,600 64,277 66,131
International & Global. . . . . . . 161 541 1,688 3,902 4,895
Passive
Domestic. . . . . . . . . . . . . . 3,705 3,610 4,692 4,342 6,220
International & Global. . . . . . . 888 1,090 1,725 2,292 2,790
Other . . . . . . . . . . . . . . . 1,974 3,724 1,483 1,553 1,543
-------- -------- -------- -------- --------
176,302 156,615 174,974 171,186 183,721
Service and other fees . . . . . . . 6,924 8,119 7,104 7,103 7,200
-------- -------- -------- -------- --------
Total. . . . . . . . . . . . . . . . $183,226 $164,734 $182,078 $178,289 $190,921
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
5
Investment Management Services
The Partnership's institutional account management business consists
primarily of the active management of equity accounts, balanced (equity and
fixed income) accounts and fixed income accounts. The Partnership also provides
active management for venture capital portfolios, and international (non-U.S.)
and global (including U.S.) equity, balanced and fixed income portfolios. The
Partnership provides "passive" management services for equity, fixed income and
international accounts. As of December 31, 1993 the Partnership's accounts were
managed by 81 portfolio managers with an average of 16 years of experience in
the industry and 10 years of experience with the Partnership.
EQUITY AND BALANCED ACCOUNTS. The Partnership's equity and balanced
accounts contributed approximately 20%, 21% and 20% of the Partnership's total
revenues for 1991, 1992 and 1993, respectively. Assets under management
relating to active equity and balanced accounts grew from approximately $19.7
billion as of December 31, 1988 to approximately $33.9 billion as of
December 31, 1993.
The Partnership has had a distinct and consistent style of equity investing
that has remained essentially unchanged since its inception. The Partnership
does not emphasize market timing as an investment tool but instead emphasizes
long-term trends and objectives, generally remaining fully invested. The
Partnership's strategy is to invest in the securities of companies experiencing
growing earnings momentum. Consequently, the Partnership's client portfolios
tend to include growth stocks. The result of these investment characteristics
is that the Partnership'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.
The Partnership'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 the Partnership's portfolio
managers. The Partnership holds frequent investment strategy meetings in which
senior management, portfolio managers and analysts establish the Partnership's
firmwide investment strategy, including asset classes and mix, investment
themes, and industry concentrations. The Partnership's portfolio managers then
construct and maintain portfolios that adhere to each client's guidelines and
conform to the Partnership's current investment strategy.
The Partnership'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. The Partnership's fixed income accounts contributed
approximately 20%, 15% and 14% of the Partnership's total revenues for 1991,
1992 and 1993, respectively. Assets under management relating to active fixed
income accounts decreased from approximately $30.9 billion as of December 31,
1988 to approximately $30.8 billion as of December 31, 1993.
The Partnership'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. The fixed income services also include managing
portfolios investing in foreign government securities and other foreign debt
securities of high quality and short duration, utilizing currency cross hedging
to manage currency risk. Sector concentrations and other portfolio
characteristics are heavily committed to areas that the Partnership's portfolio
managers believe have the best investment values. The Partnership also manages
portfolios that are confined to investment in specialized areas of the fixed
income markets, such as mortgage-backed securities and high yield bonds.
Alliance Corporate Finance Group Incorporated ("ACFG"), a wholly-owned
subsidiary of the Partnership, manages investments in private mezzanine
financings and private investment limited partnerships. Private mezzanine
financings are investments in the subordinated debt and/or preferred stock
portion of leveraged transactions (such as leveraged buy-outs, leveraged
acquisitions and leveraged recapitalizations). Such investments may be coupled
with a contingent interest component or investment in an equity participation,
which provide the potential for capital appreciation.
6
ACFG uses a network of investment banks, commercial banks, other financial
institutions and issuers to generate investment opportunities in the private
placement market. This network permits ACFG to seek to manage risk through high
selectivity and diversification strategies. ACFG also seeks to mitigate risk
through an ongoing program of monitoring the performance of the companies in its
portfolios. In addition, ACFG maintains a separate Investment Recovery Group
responsible for maximizing the recovery of clients' investments in troubled
companies.
ACFG manages two private investment funds designed for institutional
investors, with an aggregate of approximately $986 million under management as
of December 31, 1993. As of that date, Equitable and its insurance company
subsidiaries had investments of approximately $329 million in these funds.
The Partnership manages two collateralized bond obligation funds whose pool
of collateral debt securities consist primarily of privately-placed, fixed rate
corporate debt securities acquired from Equitable and its affiliates. As of
December 31, 1993 these funds had approximately $768 million under management.
As of that date, Equitable and its insurance company subsidiaries had
investments of approximately $374 million in these funds.
ACFG also manages two limited partnerships regulated as business
development companies under the Investment Company Act of 1940 ("Investment
Company Act") which invest primarily in private mezzanine financings. As of
December 31, 1993 these funds had net assets of approximately $377 million.
OTHER SERVICES. The Partnership's strategy in passive portfolio management
is to provide customized portfolios to meet specialized client needs, such as a
portfolio fitted to an index of small-capitalization stocks. In addition, the
Partnership 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. The Partnership also offers a
variety of structured fixed income portfolio applications, including immuniza-
tion (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). A
subsidiary of the Partnership is the manager of four passive U.K. unit trusts
which invest in small capitalization common stocks on a global basis. As of
December 31, 1993, the Partnership managed approximately $13.0 billion in
passive portfolios.
Subsidiaries of the Partnership maintain offices in London, England and
Tokyo, Japan which provide international and global investment management and
advisory services to institutional and other clients, and in Melbourne,
Australia and Vancouver, Canada, Toronto, Canada and Singapore which market
investment management services.
Clients
The approximately 940 institutional accounts (other than investment
companies) for which the Partnership acts as investment manager include
corporate employee benefit plans, public employee retirement systems, the
general and separate accounts of Equitable and its insurance company
subsidiaries, endowment funds, foundations, foreign governments and financial
and other institutions. Generally, the minimum size for a new separately
managed account is $10 million.
The general and separate accounts of Equitable and its insurance company
subsidiaries are the Partnership's largest institutional clients. As of
December 31, 1993 these accounts, excluding investments made by these accounts
in The Hudson River Trust (See "Individual Investor Services - The Hudson River
Trust"), represented approximately 22.1% of total assets under management by the
Partnership and approximately 12.4% of the Partnership's annual revenues for
1993.
Prior to the acquisition of the business and substantially all of the
assets of ECMC during 1993, corporate employee benefit plans ("corporate plans")
constituted the largest segment of the Partnership's institutional clients. As
of December 31, 1993, corporate plan accounts represented approximately 17% of
total assets under management by the Partnership. Assets under management for
other tax-exempt accounts, including public employee benefit funds organized by
government agencies and municipalities, endowments, foundations and multi-em-
ployer employee benefit plans, represented approximately 28% of total assets
under management as of December 31, 1993.
7
The following table lists the Partnership's ten largest institutional
clients, ranked in order of size of total assets under management as of
December 31, 1993. Since the Partnership's fee schedules vary based on the type
of account, the table does not reflect the ten largest revenue generating
clients.
Client or Sponsoring Employer Type of Account
- ----------------------------- ---------------
Equitable and its insurance
company subsidiaries . . . . . . . . . . . . Equity, Fixed Income, Passive
A Foreign Government Central Bank. . . . . . . Equity, Global Equity, Fixed
Income, Global Fixed Income
North Carolina Retirement System . . . . . . . Passive Equity, Equity,
Global Equity
BellSouth Corporation. . . . . . . . . . . . . Passive Equity
State Board of Administration of Florida . . . Equity, Fixed Income
Ford Motor Company . . . . . . . . . . . . . . Equity, Venture Capital
Boeing Company . . . . . . . . . . . . . . . . Equity, Balanced
Ontario Municipal Employees
Retirement System . . . . . . . . . . . . . Passive Equity
National Westminster Bancorp, Inc. . . . . . . Equity, Fixed Income
Wyoming Retirement System. . . . . . . . . . . Balanced
As of December 31, 1993 these institutional clients accounted for
approximately 43.0% of the Partnership's total assets under management. No
single institutional client other than Equitable and its insurance company
subsidiaries accounted for more than approximately 1.1% of the Partnership's
total revenues for the year ended December 31, 1993.
Since its inception, the Partnership 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 the
Partnership's investment style or level of performance under prevailing market
conditions, changes in the investment patterns of clients that dictate 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
The Partnership's institutional accounts are managed pursuant to a written
investment management agreement between the client and the Partnership, which
usually is terminable at any time or upon relatively short notice by either
party. In general, the Partnership's contracts may not be assigned without the
consent of the client.
In providing investment management services to institutional clients, the
Partnership 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 net asset 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 0.75% (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. With respect to approximately 6.1%
of assets under management, including certain of the portfolios of the clients
listed in the table listing the Partnership's ten largest institutional clients,
the Partnership charges performance-based fees, which consist of a relatively
low base fee plus an additional fee based on a percentage of assets if invest-
ment 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 the
Partnership on a broader basis could create greater fluctuations in the
Partnership's revenues.
ACFG's fees for corporate finance activities generally involve the payment
of a base management fee ranging from 0.10% to 1.00% of assets under management
per annum. In some cases ACFG receives incentive fees generally equivalent
8
to 20% of any 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 subsidiaries the
Partnership provides ancillary accounting, valuation, reporting, treasury and
other services for regulatory purposes.
Marketing
The Partnership's institutional products are marketed by marketing
specialists assisted by portfolio managers. These marketing specialists solicit
business on a full-time basis for the entire range of the Partnership's
institutional account management services. Regional office personnel, including
investment managers, participate directly in attracting business for their
particular office and products. In addition, marketing specialists are
dedicated to public retirement systems.
Individual Investor Services
The Partnership (i) manages and sponsors a broad range of open-end and
closed-end mutual funds other than The Hudson River Trust ("Alliance Mutual
Funds"), (ii) manages The Hudson River Trust which is the funding vehicle for
the variable annuity insurance and variable life insurance products offered by
Equitable and its insurance company subsidiaries, and (iii) provides cash
management services (money market funds and federally insured deposit accounts)
that are marketed to individual investors through broker-dealers and other
financial intermediaries. The assets comprising all Alliance Mutual Funds, The
Hudson River Trust and deposit accounts on December 31, 1993 amounted to
approximately $37.4 billion held in more than 1,500,000 investor accounts. The
assets of the Alliance Mutual Funds and The Hudson River Trust are managed by
the same investment professionals who manage the Partnership's institutional
client accounts.
REVENUES FROM INDIVIDUAL INVESTOR SERVICES
(in thousands)
Years Ended December 31,
--------------------------------------------------------------------
1989 1990 1991 1992 1993
Alliance Mutual Funds:
Investment Services. . . . . . . . . $ 41,314 $ 56,995 $ 83,245 $100,057 $109,692
Distribution Plan Fees . . . . . . . 8,864 23,105 57,125 78,455 89,253
Service and Other Fees . . . . . . . 5,851 7,438 11,894 14,149 16,901
Underwriting
Commissions. . . . . . . . . . . . 3,109 6,780 6,298 4,303 5,159
-------- -------- -------- -------- --------
59,138 94,318 158,562 196,964 221,005
-------- -------- -------- -------- --------
The Hudson River Trust:
Investment Services (1). . . . . . . 6,811 8,229 10,714 13,814 17,148
Service and Other Fees . . . . . . . 78 151 160 127 942
-------- -------- -------- -------- --------
6,889 8,380 10,874 13,941 18,090
-------- -------- -------- -------- --------
Cash Management Services:
Investment Services (2). . . . . . . 27,822 30,942 35,112 36,788 40,202
Distribution Plan Fees . . . . . . . 5,432 7,382 12,888 14,530 16,007
Service and Other Fees . . . . . . . 3,735 4,467 5,932 6,721 7,890
Underwriting
Commissions. . . . . . . . . . . . 2,492 1,205 924 340 365
-------- -------- -------- -------- --------
39,481 43,996 54,856 58,379 64,464
-------- -------- -------- -------- --------
Total. . . . . . . . . . . . . . . . $105,508 $146,694 $224,292 $269,284 $303,559
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
<FN>
(1) 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 is the funding vehicle.
(2) Includes fees received by the Partnership in connection with its
distribution of money market deposit accounts for which no investment
management services are provided.
9
Alliance Mutual Funds
The Partnership has been managing mutual funds since 1971. Since then, the
Partnership has sponsored open-end load mutual funds, closed-end mutual funds
and offshore mutual funds. On December 31, 1993 the assets in the Alliance
Mutual Funds totalled approximately $22.0 billion. Additional funds are under
development.
Net Assets as of
Year First December 31, 1993
Managed (in millions)
---------- -----------------
Fixed Income--Taxable
Alliance Short-Term Multi-Market Trust . . . . . . . . . . . 1989 $2,508.7
Alliance Mortgage Securities Income Fund . . . . . . . . . . 1984 2,388.2
Alliance North American Government Income Trust. . . . . . . 1992 2,136.1
Alliance Bond Fund--U.S. Government Portfolio. . . . . . . . 1985 1,600.5
Alliance Multi-Market Strategy Trust . . . . . . . . . . . . 1991 486.2
Alliance Mortgage Strategy Trust . . . . . . . . . . . . . . 1992 481.3
Alliance Bond Fund--Corporate Bond Portfolio . . . . . . . . 1986 437.8
Alliance World Income Trust. . . . . . . . . . . . . . . . . 1990 137.2
Alliance Multi-Market Income and Growth Trust. . . . . . . . 1991 97.6
Alliance Multi-Market Income Trust . . . . . . . . . . . . . 1990 18.2
Alliance Short-Term U.S. Government Fund . . . . . . . . . . 1992 11.3
Fixed Income--Tax Exempt
Alliance Municipal Income Fund--
California. . . . . . . . . . . . . . . . . . . . . . . . . 1986 819.3
Alliance Municipal Income Fund--
National. . . . . . . . . . . . . . . . . . . . . . . . . . 1986 806.7
Alliance Municipal Income Fund--
New York. . . . . . . . . . . . . . . . . . . . . . . . . . 1986 326.8
Alliance Municipal Income Fund--
Insured National. . . . . . . . . . . . . . . . . . . . . . 1986 267.8
Alliance Municipal Income Fund--
Insured California. . . . . . . . . . . . . . . . . . . . . 1986 162.7
Alliance Municipal Income Fund II
Florida . . . . . . . . . . . . . . . . . . . . . . . . . . 1993 79.2
Alliance Municipal Income Fund II
New Jersey. . . . . . . . . . . . . . . . . . . . . . . . . 1993 60.4
Alliance Municipal Income Fund II
Pennsylvania. . . . . . . . . . . . . . . . . . . . . . . . 1993 44.1
Alliance Municipal Income Fund II
Ohio. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1993 42.9
Alliance Municipal Income Fund II
Minnesota . . . . . . . . . . . . . . . . . . . . . . . . . 1993 16.1
Equity and Balanced
The Alliance Fund. . . . . . . . . . . . . . . . . . . . . . 1984 848.2
Alliance Growth & Income Fund. . . . . . . . . . . . . . . . 1986 537.0
Alliance Growth Fund . . . . . . . . . . . . . . . . . . . . 1987 238.3
Alliance Quasar Fund . . . . . . . . . . . . . . . . . . . . 1971 216.2
Alliance International Fund. . . . . . . . . . . . . . . . . 1981 203.2
Alliance Premier Growth Fund . . . . . . . . . . . . . . . . 1992 201.6
10
Alliance Balanced Shares . . . . . . . . . . . . . . . . . . 1986 189.3
Alliance Technology Fund . . . . . . . . . . . . . . . . . . 1982 177.4
Fiduciary Management Associates. . . . . . . . . . . . . . . 1971 139.6
Alliance New Europe Fund . . . . . . . . . . . . . . . . . . 1990 104.1
Alliance Global Small Cap Fund . . . . . . . . . . . . . . . 1984 70.1
Alliance Counterpoint Fund . . . . . . . . . . . . . . . . . 1985 59.7
Alliance Balanced Fund . . . . . . . . . . . . . . . . . . . 1987 50.3
Alliance Conservative Investors. . . . . . . . . . . . . . . 1992 39.7
Alliance Growth Investors Fund . . . . . . . . . . . . . . . 1992 32.0
Alliance Global Fund-Canadian Portfolio. . . . . . . . . . . 1986 13.8
Alliance Utility Income Fund . . . . . . . . . . . . . . . . 1993 1.1
Offshore Funds
Alliance Global Investments-American Income Portfolio. . . . 1993 299.5
Alliance Australia Short Duration Mortgage Trust . . . . . . 1993 269.6
Alliance Short Duration Mortgage Fund. . . . . . . . . . . . 1992 138.4
India Liberalisation Fund. . . . . . . . . . . . . . . . . . 1993 133.6
Alliance Global Investments -
Developing Regional Markets Portfolio. . . . . . . . . . . 1992 120.7
Alliance International Health Care Fund. . . . . . . . . . . 1983 101.4
Alliance Global Investments -
Global Growth Trends Portfolio . . . . . . . . . . . . . . 1991 89.0
Alliance Worldwide Income Fund . . . . . . . . . . . . . . . 1990 57.0
Alliance New Zealand Short Duration Mortgage Trust . . . . . 1993 55.9
Alliance Global Income Fund . . . . . . . . . . . . . . . . 1991 48.1
Bancomer Alliance Mexican Peso Trust . . . . . . . . . . . . 1992 38.5
Alliance American Fund . . . . . . . . . . . . . . . . . . . 1992 31.2
The Spanish Smaller Companies Fund
(Closed-End) . . . . . . . . . . . . . . . . . . . . . . . 1991 14.5
Alliance International Technology Fund . . . . . . . . . . . 1984 12.4
Alliance Global Leisure Fund . . . . . . . . . . . . . . . . 1990 12.3
ML-Alliance Asset Allocation N.V.
(Closed-End) . . . . . . . . . . . . . . . . . . . . . . . 1989 4.3
Closed-End Funds
Alliance World Dollar Government Fund II . . . . . . . . . . 1993 1,093.6
ACM Government Securities Fund . . . . . . . . . . . . . . . 1988 829.8
ACM Government Income Fund . . . . . . . . . . . . . . . . . 1987 616.1
ACM Managed Dollar Income Fund . . . . . . . . . . . . . . . 1993 392.0
ACM Government Spectrum Fund . . . . . . . . . . . . . . . . 1988 345.4
ACM Managed Income Fund. . . . . . . . . . . . . . . . . . . 1988 283.0
ACM Municipal Securities Income Fund . . . . . . . . . . . . 1993 243.9
Alliance World Dollar Government Fund. . . . . . . . . . . . 1992 140.7
ACM Government Opportunity Fund. . . . . . . . . . . . . . . 1988 116.9
ACM Managed Multi-Market Trust . . . . . . . . . . . . . . . 1990 97.9
The Spain Fund . . . . . . . . . . . . . . . . . . . . . . . 1988 96.5
The Austria Fund . . . . . . . . . . . . . . . . . . . . . . 1989 84.1
Alliance Global Environment Fund . . . . . . . . . . . . . . 1990 78.3
The Korean Investment Fund . . . . . . . . . . . . . . . . . 1992 52.3
11
Variable Insurance Funds
Alliance Variable Products Series Fund,
Inc.--Short Term Multi-Market Portfolio. . . . . . . . . . 1990 23.6
Alliance Variable Products Series Fund,
Inc.--Growth and Income Portfolio. . . . . . . . . . . . . 1991 22.7
Alliance Variable Products Series Fund,
Inc.--Growth Portfolio . . . . . . . . . . . . . . . . . . 1992 13.6
Alliance Variable Products Series Fund,
Inc.--Global Bond Portfolio. . . . . . . . . . . . . . . . 1991 6.7
Alliance Variable Products Series Fund,
Inc.--U.S. Government/High Grade Securities Portfolios . . 1992 1.4
Alliance Variable Products Series Fund,
Inc.--International Portfolio. . . . . . . . . . . . . . . 1992 0.7
Alliance Variable Products Series Fund,
Inc.--Total Return Portfolio . . . . . . . . . . . . . . . 1992 0.4
Alliance Variable Products Series Fund,
Inc.--Money Market Portfolio . . . . . . . . . . . . . . . 1992 0.1
Wrap Fee Programs
Equico Classic Strategies . . . . . . . . . . . . . . . . . 1992 24.1
Smith Barney Suggest III . . . . . . . . . . . . . . . . . . 1992 4.3
---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . $22,045.2
---------
---------
The Hudson River Trust
The Hudson River Trust is the funding vehicle for the variable
annuity insurance and variable life insurance products offered by Equitable and
its insurance company subsidiaries. On December 31, 1993 the assets of the
various portfolios of The Hudson River Trust were as follows:
Net Assets as of
Year First December 31, 1993
Managed (in millions)
---------- -----------------
Common Stock Portfolio . . . . . . . . . . . . . . . . . . . 1983 $ 3,125.1
Aggressive Stock Portfolio . . . . . . . . . . . . . . . . . 1986 1,557.4
Balanced Portfolio . . . . . . . . . . . . . . . . . . . . . 1986 1,364.6
Growth Investors Portfolio . . . . . . . . . . . . . . . . . 1989 278.5
Money Market Portfolio . . . . . . . . . . . . . . . . . . . 1983 248.5
Intermediate Government Portfolio. . . . . . . . . . . . . . 1991 158.5
Global Portfolio . . . . . . . . . . . . . . . . . . . . . . 1987 141.3
Conservative Investors Portfolio . . . . . . . . . . . . . . 1989 114.4
Quality Bond Portfolio . . . . . . . . . . . . . . . . . . . 1993 104.8
High Yield Portfolio . . . . . . . . . . . . . . . . . . . . 1987 67.2
Short Term World Income Fund . . . . . . . . . . . . . . . . 1991 8.7
Growth & Income Portfolio. . . . . . . . . . . . . . . . . . 1993 1.5
--------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . $7,170.5
--------
--------
DISTRIBUTION. The Alliance Mutual Funds are distributed to individual
investors through national and regional broker-dealers, insurance sales
representatives, banks and other financial intermediaries. Alliance Fund
Distributors, Inc. ("AFD"), a registered broker-dealer and a wholly-owned
subsidiary of the Partnership, serves as the principal underwriter and
distributor of the Alliance Mutual Funds registered under the Investment Company
Act of 1940 as "open-end" investment companies ("U.S. Funds") and serves as the
placing or distribution agent of the Alliance Mutual Funds not registered under
the Investment Company Act ("Offshore Funds"). 63 sales representatives devote
their time exclusively to promoting the sale of Alliance Mutual Fund shares by
financial intermediaries.
12
Many of the financial intermediaries that sell shares of Alliance Mutual
Funds also offer shares of funds not managed by the Partnership and, in some
cases, offer shares managed by their own affiliates.
During 1993 the Partnership expanded its mutual fund distribution system
(the "System") to include a third distribution option. The System permits open-
end Alliance Mutual Funds to offer investors the option of purchasing shares (a)
subject to a conventional front-end sales charge ("Class A Shares"), (b) without
a front-end sales charge but subject to a contingent deferred sales charge
payable by shareholders ("CDSC") and higher distribution fees and transfer agent
costs payable by the Funds ("Class B Shares") or (c) without either a front-end
sales charge or the CDSC but with higher distribution fees payable by the funds
("Class C Shares"). If a shareholder purchases Class A Shares, AFD compensates
the financial intermediary distributing the Fund from a portion of the front-end
sales charge paid by the shareholder at the time of each sale. If a shareholder
purchases Class B Shares, AFD does not collect a front-end sales charge even
though AFD is obligated to compensate the financial intermediary at the time of
each sale. Payments made to financial intermediaries during 1993 in connection
with the System, net of CDSC received, totalled approximately $75.3 million.
Management of the Partnership believes AFD will recover the payments made to
financial intermediaries from the higher distribution fees and CDSC it receives
over periods not exceeding 5 1/2 years. If a shareholder purchases Class C
Shares, AFD does not collect a front-end sales charge or CDSC and does not
compensate the financial intermediary at the time of sales but the entire amount
of the distribution fees attributable to Class C Shares is paid to the financial
intermediary. 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
Alliance Mutual fund to 6.25% of cumulative gross sales of shares of that class,
plus interest at the prime rate plus 1% per annum.
The open-end U.S. Funds and Offshore Funds have entered into agreements
with AFD, under which AFD is paid a distribution services fee. The Partnership
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 paid.
During 1993 the ten largest dealers with which AFD had selling agreements
were responsible for 72% of the total sales of Alliance Mutual Funds. Equico
Securities, Inc. ("Equico"), 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 open-end mutual
fund sales (8% in 1993). Equico 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 26%, 21% and 35% of Alliance Mutual Fund
sales in 1991, 1992 and 1993, respectively. Merrill Lynch is not under any
obligation to sell a specific amount of Alliance Mutual Fund shares and also
sells shares of mutual funds which it sponsors and which are sponsored by
unaffiliated organizations.
No other dealer or agent has in any year since 1988 accounted for more than
10% of the sales of open-end Alliance Mutual Funds.
Based on market data reported by the Investment Company Institute (December
1993), the Partnership's market share in the U.S. mutual fund industry is 1.32%
of total industry assets and the Partnership accounted for 2.69% of total
open-end and closed-end fund sales force-derived industry sales in the U.S.
during 1993. 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 present 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. The Partnership believes that its compensation programs with dealers
and distributors 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 1993, banks and their affiliates accounted for approximately 19.7% of the
sales of shares of open-end Alliance Mutual Funds.
13
INVESTMENT MANAGEMENT AGREEMENTS AND FEES. Management fees from the
Alliance Mutual Funds and The Hudson River Trust vary between .35% and 1.20% 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 and The Hudson River Trust are fixed
annually by negotiation between the Partnership and the board of directors or
trustees of each U.S. Fund and The Hudson River Trust, including a majority of
the disinterested directors or trustees. Changes in the fees must be approved
by the shareholders of each U.S. Fund and The Hudson River Trust. In general,
the investment management agreements of the U.S. Funds and The Hudson River
Trust provide for termination at any time upon 60 days notice.
Investment management fees paid by Alliance Short-Term Multi-Market Trust
represented approximately 9%, 10% and 5% of the Partnership's aggregate
investment advisory fees in 1991, 1992 and 1993, respectively.
Under each investment management agreement with a U.S. Fund, the
Partnership provides the U.S. Fund with investment management services, office
space and order placement facilities and pays all compensation of directors or
trustees and officers of the U.S. Fund who are affiliated persons of the
Partnership. 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, the Partnership absorbs such
excess through a reduction in the advisory fee. Currently, the Partnership
believes that California is the only state to impose such a limit. The expense
ratios for the U.S. Funds during their most recent fiscal year ranged from 0.97%
to 2.69%. In connection with newly organized U.S. Funds, the Partnership may
also agree to reduce its fee or bear certain expenses to limit a fund's expenses
during an initial period of operations. The Partnership does not expect,
however, that state expense or voluntary limits, at current fee and expense
levels, will have a significant effect on the results of its operations.
Cash Management Services
The Partnership provides individual cash management services through a
product line comprising twelve money market fund portfolios and two types of
brokered money market deposit accounts. Assets in these products as of
December 31, 1993 totalled approximately $8.1 billion.
Net Assets as of
December 31, 1993
(in millions)
-----------------
Money Market Funds:
Alliance Capital Reserves (two portfolios). . . . . $ 3,917.1
Alliance Government Reserves (two portfolios) . . . 1,862.9
Alliance Municipal Trust (four portfolios). . . . . 1,428.9
ACM Institutional Reserves (four portfolios). . . . 203.3
Money Market Deposit Accounts (two products) . . . . . . 736.0
---------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,148.2
---------
---------
The Partnership also offers a managed assets program, which provides
customers of participating broker-dealers 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 broker-dealers 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, the
Partnership 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 Alliance
Capital Reserves, the fee is payable at lesser rates with respect to average net
assets in excess of $1.25 billion. For its distribution and account maintenance
services
14
rendered in connection with the sale of money market deposit accounts, the
Partnership 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 the
Partnership, the Partnership's costs of maintaining the account programs are
less, on a relative basis, than its costs of managing the funds.
More than 95% of the assets invested in the Partnership's cash management
programs are attributable to regional broker-dealers and other financial
intermediaries, with the remainder coming directly from the public. Through
active sales efforts, the Partnership has been able to increase the number of
financial intermediaries that feature the Alliance line. On December 31, 1993
more than 400 financial intermediaries offered Alliance cash management
services. The Partnership's money market fund market share (not including
deposit products), as computed based on market data reported by the Investment
Company Institute (November 1993), has increased from .82% of total money market
fund industry assets at the end of 1987 to 1.33% at November 30, 1993.
The Partnership makes payments to financial intermediaries for distribution
assistance and shareholder servicing and administration. The Alliance money
market funds pay fees to the Partnership at annual rates of up to 0.25% of
average daily net assets pursuant to "Rule 12b-1" distribution plans. Such
payments are supplemented by the Partnership in making payments to
intermediaries under the distribution assistance and shareholder servicing and
administration program. During 1993 such supplemental payments totalled $22.1
million ($19.6 million in 1992). Nine employees of the Partnership devote their
time exclusively to marketing the Partnership's cash management services.
A principal risk to the Partnership's cash management services business is
the acquisition of its participating intermediaries by companies that are
competitors or that plan to enter the cash management services business. As of
December 31, 1993 the five largest participating intermediaries were responsible
for assets aggregating approximately $4.2 billion, or 51% of the Alliance cash
management services total. Donaldson, Lufkin & Jenrette Securities Corporation
("DLJ Securities Corporation"), a subsidiary of Equitable, was one of these
intermediaries.
Many of the financial intermediaries whose customers utilize the
Partnership'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 DLJ Securities Corporation. Pursuant
to an agreement between Pershing and the Partnership, Pershing recommends to
certain of its correspondent firms the use of Alliance money market funds and
other cash management products. In return, Pershing is allocated a portion of
the revenues derived by the Partnership from sales through such Pershing
correspondents. During 1993 these payments to Pershing amounted to approxi-
mately $2.9 million. As of December 31, 1993 DLJ Securities Corporation and
these Pershing correspondents were responsible for approximately 38% of
Alliance's total cash management assets. Pershing may terminate its agreement
with the Partnership 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 cash management products and would be free to recommend or
assist in the sale of competitive products.
The Alliance 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 the
Partnership provide for an expense limitation of 1% per annum or less of average
daily net assets. See "Alliance Mutual Funds."
Shareholder and Administration Services
Alliance Fund Services, Inc. ("AFS"), a wholly-owned subsidiary of the
Partnership, 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, 1993 AFS employed approximately 257
people. AFS operates out of offices in Secaucus, New Jersey. 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.
Alliance International Fund Services S.A. ("AIFS"), a wholly-owned
subsidiary of the Partnership, is the registrar and transfer agent of
substantially all of the Offshore Funds. As of December 31, 1993 AIFS employed
approximately 4 people. AIFS operates out of its offices in Luxembourg. AIFS
receives a monthly fee for its registrar and transfer agency
15
services. Each agreement between AIFS and an Offshore Fund may be terminated by
either party upon 60 days' notice.
The Partnership 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.
In addition, under most U.S. Fund investment management agreements, the
U.S. Funds are authorized to utilize Partnership personnel to perform legal,
clerical and accounting services not required to be provided by the Partnership.
The payments therefore must be specifically approved in advance by the U.S.
Fund's board of directors or trustees. Currently, the Partnership and AFS are
accruing revenues for providing clerical and accounting services to such U.S.
Funds at the rate of approximately $7.0 million per year.
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. The Partnership 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 the Partnership. The Partnership 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 January 1, 1993, prior to the
acquisition of the business and assets of ECMC, the Partnership was ranked 10th
out of 851 managers based on tax-exempt assets under management, 6th out of the
25 largest managers of active U.S. assets invested abroad, 5th out of the 25
largest managers of international index assets, 6th out of the 25 largest
managers of domestic equity index funds and 10th out of the 25 largest managers
of mortgage-backed securities.
Many of the firms competing with the Partnership 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, the
quality in servicing customer accounts and the capacity to provide financial
incentives to intermediaries through distribution assistance and administrative
services payments funded by "Rule 12b-1" distribution plans and the manager's
own resources.
Custody and Brokerage
Neither the Partnership 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, The Hudson River Trust and money market funds is main-
tained by custodian banks and central securities depositories.
The Partnership generally has the discretion to select the brokers with
whom orders for the purchase or sale of securities for client accounts are
placed for execution. These brokers include those that have correspondent
clearing arrangements with Pershing. Broker-dealers affiliated with Equitable
are used to effect transactions for client accounts only if the use of the
broker-dealers has been specifically authorized or directed by the client.
Regulation
The Partnership, ACFG and Alliance are investment advisers registered under
the Investment Advisers Act of 1940. Each U.S. Fund is registered with the
Securities and Exchange Commission ("SEC") under the Investment Company Act and
the shares of most are qualified for sale in all states in the United States and
the District of Columbia, except for 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 ($4.6 million at December 31, 1993) imposed by the SEC on
registered broker-dealers and had aggregate regulatory net capital of $5.9
million at December 31, 1993.
The relationships of Equitable and its insurance company subsidiaries with
the Partnership 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 the insurance
company subsidiaries and the Partnership 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.
16
The Partnership's assets under management and its revenues derived from the
general accounts of Equitable and its insurance company subsidiaries 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) risk-based capital guidelines for life insurance
companies approved by the National Association of Insurance Commissioners for
implementation beginning with the 1993 statutory financial statements.
Equitable is generally following a strategy of directing new general account
investments into investment grade securities and reducing its portfolio of below
investment grade fixed maturities and currently has a policy of not investing
substantial new funds in equity interests. This has the effect of shifting
general account assets managed by the Partnership into categories having lower
management fees.
All aspects of the Partnership's business are subject to various federal
and state laws and regulations and to the laws in the foreign countries in which
the Partnership's subsidiaries conduct business. These laws and regulations are
primarily intended to benefit clients and 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, 1993 the Partnership and its subsidiaries employed 1,284
full-time employees, including 147 investment professionals, of whom 81 are
portfolio managers, 58 are securities analysts, and 8 are order placement
specialists. The average period of employment of these professionals with the
Partnership is approximately 8 years and their average investment experience is
approximately 14 years. The Partnership considers its employee relations to be
good.
Service Marks
The Partnership 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 and has a duration of 20 years from the
date of registration (which is automatically renewable) provided the mark
continues to be used during that time.
ITEM 2. PROPERTIES
The Partnership's principal executive offices at 1345 Avenue of the
Americas, New York, New York are occupied pursuant to a lease which extends
until 2009. The Partnership currently occupies approximately 186,000 square
feet at this location and will lease approximately 15,500 square feet of
additional space at this location during 1994. The Partnership also occupies
approximately 51,200 square feet at 1285 Avenue of the Americas, New York, New
York and approximately 80,000 square feet at 135 West 50th Street, New York, New
York under leases expiring in 2001 and 1998, respectively. The Partnership and
its subsidiaries, AFD and AFS, occupy approximately 67,000 square feet of space
in Secaucus, New Jersey pursuant to a lease which extends until 2003. The
Partnership leases substantially all of the furniture and office equipment at
the New York and New Jersey offices.
The Partnership also leases space in California, Minnesota and Ohio, and
its subsidiaries lease space in London, England, Tokyo, Japan, Melbourne,
Australia, Vancouver, Canada, Toronto, Canada, Luxembourg and Singapore.
ITEM 3. LEGAL PROCEEDINGS
On July 22, 1993 substantially all of the assets of ECMC were transferred
to the Partnership and certain of its wholly-owned subsidiaries pursuant to the
Amended and Restated Transfer Agreement dated as of February 23, 1993, as
amended and restated on May 28, 1993 ("Transfer Agreement"), among the
Partnership, ECMC and Equitable Investment Corporation ("EIC"), a wholly-owned
subsidiary of Equitable, in exchange for (i) 11,800,000 newly-issued Limited
Partnership Interests
17
which were immediately exchanged for 11,800,000 Units, (ii) a newly created
Class A Limited Partnership Interest convertible initially into 100,000 Units,
and (iii) the assumption by the Partnership and certain of its subsidiaries of
certain liabilities of ECMC. The number of Units into which the Class A Limited
Partnership Interest is convertible may increase based on the receipt of future
contingent incentive fee income. The transfer of such assets and assumption of
such liabilities are referred to herein as the "Transfer".
On or about June 8, 1993 a lawsuit was filed in the United States District
Court of the Southern District of New York by the owner of an annuity contract
issued by Equitable against ECMC, the Partnership, Equitable and The Hudson
River Trust (PAUL D. WEXLER V. EQUITABLE CAPITAL MANAGEMENT CORPORATION, ET
AL.). The Hudson River Trust is the funding vehicle for the variable annuity
insurance and variable life insurance products offered by Equitable and The
Equitable Variable Life Insurance Company. As of December 31, 1993 the
Partnership managed approximately $7.2 billion in net assets invested in The
Hudson River Trust. The lawsuit purports to be brought individually and
derivatively on behalf of The Hudson River Trust which is an investment company
with multiple portfolios registered under the Investment Company Act. The
complaint alleges that the transfer to the Partnership of the investment
advisory agreement for The Hudson River Trust imposes an unfair burden on The
Hudson River Trust under Section 15(f) of the Investment Company Act. The
complaint also appears to allege that the fees charged to The Hudson River Trust
under the investment advisory agreement constitute excessive compensation for
advisory services under Section 36(b) of the Investment Company Act. The
complaint seeks a judgment declaring the Transfer to be null and void and
terminating the investment advisory agreement between the Partnership and The
Hudson River Trust. The complaint also seeks (apparently in the alternative)
payment to The Hudson River Trust of certain amounts paid by the Partnership to
ECMC pursuant to the Transfer Agreement and payment to The Hudson River Trust of
the value of certain compensation arrangements entered into between the
Partnership and certain employees of ECMC. On April 23, 1993 the shareholders
of each of the portfolios constituting The Hudson River Trust voted to approve
the new investment advisory agreement relating to each of the portfolios between
the Partnership and The Hudson River Trust. The Partnership believes that the
lawsuit is without merit and will vigorously defend against it.
EIC has agreed to bear any legal and other costs of the Partnership
relating to the defense or settlement of the lawsuit. In addition, since the
investment advisory relationship with The Hudson River Trust was an important
factor in the Partnership's decision to enter into the Transfer Agreement, ECMC,
EIC and the Partnership have agreed in principle that ECMC or EIC will make a
cash contribution to the Partnership in order to reflect lost value to the
Partnership attributable to any loss in revenue resulting from a settlement of
the lawsuit or a final, non-appealable judgment in favor of the plaintiff. In
addition, if such a settlement or final, non-appealable judgment results in the
termination of the Partnership's relationship with The Hudson River Trust, ECMC
and EIC have agreed in principle that such cash contribution will also reflect
any costs incurred by the Partnership relating to the termination of such
relationship. Neither ECMC nor EIC will receive any Limited Partnership
Interest or Units in return for such cash contribution.
On February 18, 1994 the Court ordered the complaint dismissed. Plaintiff
has filed an appeal.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth
quarter of 1993.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Market for the Units
The Units are traded on the New York Stock Exchange ("NYSE"). The high and
low sales prices on the NYSE during each quarter of the Partnership's two most
recent fiscal years were as follows:
18
1992 High Low
---- ---- ---
First Quarter 19 9/16 15 13/16
Second Quarter 18 1/4 14 3/4
Third Quarter 19 1/16 14 7/16
Fourth Quarter 18 3/4 15 1/16
1993
----
First Quarter 23 1/4 16 3/4
Second Quarter 22 1/2 18 3/8
Third Quarter 25 7/8 20 1/4
Fourth Quarter 27 5/8 21 3/4
On February 10, 1993 the Partnership declared a two for one Unit split
payable to Unitholders of record on February 22, 1993. The high and low sales
prices above have been adjusted where necessary to reflect the Unit split.
On March 14, 1994 the closing price of the Units on the NYSE was $25.125.
As of March 14, 1994 there were approximately 1,461 Unitholders of record.
Cash Distributions
The Partnership distributes on a quarterly basis all of its Available Cash
Flow (as defined in the Partnership Agreement). During its two most recent
fiscal years the Partnership made the following distributions of Available Cash
Flow:
Quarter During 1992
With Respect to Which
a Cash Distribution Was Amount of Cash
Paid from Available Cash Distribution Payment
Flow for that Quarter Per Unit Date
- ------------------------ -------------- -------------
First Quarter $0.31 May 15, 1992
Second Quarter 0.32 August 14, 1992
Third Quarter 0.325 November 20, 1992
Fourth Quarter 0.33 February 26, 1993
------
$1.285
------
------
Quarter During 1993
With Respect to Which
a Cash Distribution Was Amount of Cash
Paid from Available Cash Distribution Payment
Flow for that Quarter Per Unit Date
- ------------------------ -------------- -------------
First Quarter $0.34 May 20, 1993
Second Quarter 0.35 August 5, 1993
Third Quarter 0.40 November 8, 1993
Fourth Quarter 0.41 February 14, 1994
------
$1.50
------
------
On February 10, 1993 the Partnership declared a two for one Unit split
payable to Unitholders of record on February 22, 1993. The cash distribution
per Unit amounts above have been adjusted where necessary to reflect the Unit
split.
19
ITEM 6. SELECTED FINANCIAL DATA
The Selected Financial Data which appears on page 43 of the Alliance
Capital Management L.P. 1993 Annual Report to Unitholders 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 44 through 52 of the Alliance Capital
Management L.P. 1993 Annual Report to Unitholders is 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 Peat Marwick which appear on
pages 53 through 69 of the Alliance Capital Management L.P. 1993 Annual Report
to Unitholders are incorporated by reference in this Annual Report on Form 10-K.
The financial statement schedule required by Regulation S-X is filed under Item
14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
General Partner
The Partnership's activities are managed and controlled by Alliance as
General Partner and Unitholders do not have any rights to manage or control the
Partnership. The General Partner has agreed that it will conduct no active
business other than managing the Partnership, although it may make certain
investments for its own account.
The General Partner does not receive any compensation from the Partnership
for services rendered to the Partnership as General Partner. The General
Partner holds a 1% general partnership interest in the Partnership. As of March
14, 1994 ACMC and ECMC, affiliates of the General Partner, held 45,371,500 Units
(including 100,000 Units issuable upon conversion of the Class A Limited
Partnership Interest).
The General Partner is reimbursed by the Partnership for all expenses
incurred by it in carrying out its activities as General Partner, including
compensation paid by the General Partner to its directors and officers (to the
extent such persons are not compensated directly as employees of the
Partnership) 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 1993 except for directors' fees.
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 61 Chairman of the Board, Chief Executive
Officer and Director
James M. Benson 47 Director
Bruce W. Calvert 47 Director, Vice Chairman and Chief
Investment Officer
John D. Carifa 49 Director, President, Chief Operating
Officer and Chief Financial Officer
Henri de Castries 39 Director
Christophe Dupont-Madinier 42 Director
Alfred Harrison 56 Director and Vice Chairman
Jean-Pierre Hellebuyck 46 Director
Benjamin D. Holloway 69 Director
Henri Hottinguer 59 Director
Richard H. Jenrette 64 Director
Joseph J. Melone 63 Director
Brian S. O'Neil 41 Director
Frank Savage 55 Director
Peter G. Smith 52 Director
Madelon DeVoe Talley 62 Director
Reba W. Williams 57 Director
David R. Brewer, Jr. 48 Senior Vice President
and General Counsel
Robert H. Joseph, Jr. 46 Senior Vice President-Finance and
Chief Accounting Officer
Mr. Williams joined Alliance in 1977 and has been the Chairman of the Board
and Chief Executive Officer since that time. He was elected a director of
Equitable on March 21, 1991 and was elected to the ECI Board of Directors in
July of 1992. ECI is a parent of the Partnership. Mr. Williams is the husband
of Reba W. Williams.
Mr. Benson was elected a Director of Alliance in October 1993. He has been
Senior Executive Vice President of ECI and President and Chief Operating Officer
of Equitable since March 1994. He was a Senior Vice President of Equitable from
March 1993 until March 1994. From January 1984 to March of 1993 he was
President of Management Compensation Group. Mr. Benson is also a Director of
Equitable, The Association for Advanced Underwriting, Health Plans, Inc., the
California Special Olympics, The Joffrey Ballet and The African Wildlife
Foundation. Equitable is a parent of the Partnership.
Mr. Calvert joined Alliance in 1973 as an equity portfolio manager and was
elected Vice Chairman and Chief Investment Officer 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 has been the Chief Financial Officer since
1973. 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. He has
been Executive Vice President of AXA since 1993, previously serving as General
Secretary of AXA from 1991 to 1993 and Central Director of Finances from 1989 to
1991. Mr. de Castries is Chairman of Compagnie Financiere de Paris, AXA Banque,
Banque d'Orsay, Cecico Financement and Maeschaert Rouusselle. He also is a
Director of Ateliers de Construction du Nord de la France, Cecico Location,
Orsay Arbitrage, Financiere 78, France Telecom, La Paternelle Monegasque
(Monaco), Equitable, Donaldson Lufkin & Jenrette, Inc. ("DLJ") and Equitable
Real Estate Investment Management, Inc. Additionally, Mr. de Castries serves as
a Representative of Compagnie Financiere de Paris on the Boards of Banque
Eurofin and AXA Credit; AXA on the Boards of Investissement Finance et
Developpement - I.F.D. and AXA Asset Management; and AXA Assurances Iard on the
Board of Colisee Development. AXA and Equitable are parents of the Partnership.
21
Mr. DuPont-Madinier was elected a Director of Alliance in October 1992. He
has been the Manager of AXA, International Division, since 1988. Mr. Dupont-
Madinier is also director of Anglo Canada General Insurance Company, AXA
Insurance Canada, AXA Assurances Canada, AXA Equity & Law UK, DLJ, Equitable
Real Estate Investment Management and the chairman and director of AXA Insurance
U.K. AXA is a parent of the Partnership.
Mr. Harrison joined Alliance in 1978 and was elected Vice Chairman on May
3, 1993. Mr. Harrison is in charge of the Partnership'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 a director from 1978
to 1987 and from February 23, 1988 until July 27, 1988. He was elected a
director of Alliance in 1992.
Mr. Hellebuyck was elected a director of Alliance in October 1992. He has
been the Chief Investment Officer of AXA since 1986. Mr. Hellebuyck is also a
director of AXA Reassurance France, AXA Reinsurance UK Plc, AXA Reinsurance
Company, Equity & Law Plc, Equity & Law Investment Managers Ltd., Equity & Law
Fondsmanagement GmbH, Europhenix Management Company and Societe Des Bourses
Francaises. AXA is a parent of the Partnership.
Mr. Holloway was elected a director of Alliance in November 1987. He is a
consultant to Tishman/Speyer, Edward J. Debartolo and 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 Mr. Holloway was also a director
of DLJ until March 1990. Mr. Holloway is a director of Rockefeller Center
Properties, Inc, Chairman of Duke University Management Corporation, the
Cathedral of St. John the Divine Building and Conservation Fund and Touro
National Heritage Trust and a Trustee of the Cathedral of St. John the Divine,
Duke University and the American Academy in Rome (Emeritus).
Mr. Hottinguer was elected a director of Alliance in October 1992. He has
been a partner of Hottinguer & Company since 1968. Mr. Hottinguer is also a
President/General Director of Banque Hottinguer and Societe Financiere Pour Le
Financement De Bureaux Et D'usines - Sofibus, a Vice President, General Director
and Administrator of Financiere Hottinguer, a Vice President/Administrator of
AXA International, an Administrator of Investissement Hottinguer S.A., AXA, AXA
Assurances IARD, UNI Europe Assurances, ALPHA Assurances VIE and FINAXA, and the
Controller of Didot Bottin, Caisee d'Escompte Du Midi and Financiere Provence de
Participations - F.P.P. He serves as a General Director of Intercom and
Sofides, he is a Permanent Representative of La Banque Hottinguer aupres de
I.F.D., La Banque Hottinguer aupres de AXIVA, AXA aupres d'AXA Millesimes and
Cie Financiere SGTE au sein de la Societe Schneider S.A., is the Associate
Gerant of Hottinguer & Cie, and is a Vice President of Gaspee. In addition, he
is the Chairman of the Board of Hottinguer Brothers and Co., Inc., a Director of
the Helvetia Fund Inc. and DLJ, the President/Counsel of AXA Belgium and AXA
Industry S.A., the Administrator of Hestia Fund, ECU Invest, and Hottinguer
Gestion and is a Member of Council of Surveillance d'EMBA N.V. AXA is a parent
of the Partnership.
Mr. Jenrette was a director of Alliance from 1971 to 1985 and was reelected
a director in November 1987. He is Chairman of the Board of Directors and Chief
Executive Officer of ECI and Chairman of the Executive Committee of the Board of
Directors of Equitable. He was Chairman of the Board of Directors of Equitable
from July 1987 until March 1994 and has been a Director of Equitable since 1985
and Chairman, President and Chief Executive Officer of EIC since September 1988.
He was Chief Investment Officer of Equitable from July 1986 until March 1991.
Mr. Jenrette is also a director of Advanced Micro Devices and the New York
Historical Society, Chairman of Historic Hudson Valley and Federal Hall Memorial
Associates, a Trustee of Rockefeller Foundation and the University of North
Carolina and a member of the Visiting Committee of the American Wing,
Metropolitan Museum of Art and the Governor's Council on Hudson River Greenway.
ECI and Equitable are parents of the Partnership.
Mr. Melone was elected a director of Alliance in January 1991. He is
President and Chief Operating Officer of ECI and has been Chairman and Chief
Executive Officer of Equitable since March 1994. He was President and Chief
Executive Officer of Equitable from 1991 until March 1994. From 1984 to 1990,
he was President of The Prudential Insurance Company of America. ECI and
Equitable are parents of the Partnership.
Mr. O'Neil was elected a Director of Alliance in October 1993. He joined
Equitable in 1988, serving as a Senior Vice President from February 1989 to
April 1992 and was elected Executive Vice President and Chief Investment Officer
in April 1992. In addition, Mr. O'Neil is President and Director of FHJV
Holdings, Inc., Vice President and Director of The Equitable Variable Life
Insurance Company, and Director of Equitable Real Estate Investment Management
as well as The Equitable Foundation. Equitable is a parent of the Partnership.
22
Mr. Savage was elected a Director of Alliance in May 1993. He has been
Chairman of ACFG, a subsidiary of the Partnership, since July 1993. Prior to
this, he was with ECMC, serving as Vice Chairman from June 1989 to April 1992,
and Chairman from April 1992 to July 1993. In addition, Mr. Savage is a
Director of Lockheed Corporation and ARCO Chemical Corporation.
Mr. Smith was elected a Director of Alliance in July 1993. He has been a
Managing Director of AXA Equity and Law, a subsidiary of AXA, since January
1991. Mr. Smith was also an Investment Manager with Equity and Law Life
Assurance Society plc. from 1983 to 1991. AXA is a parent of the Partnership.
Ms. Talley was elected a Director of Alliance in October 1993. She was with
Melhado Flynn from January 1987 to December 1989. Ms. Talley is a Governor of
the National Association of Securities Dealers, Vice Chairman of the Board of
W.P. Carey & Co. as well as a trustee of Smith Barney-Shearson's TRAK, Advisor
Fund and Equity & Income Funds. In addition she serves as Director of Corporate
Property Associates, Series 10-1 W.P. Carey Real Estate Limited Partnerships,
Biocraft Labs, Schroeders Asian Growth Fund, the New York State Industrial
Development Board, the New York State Common Retirement Fund and Global Asset
Management Funds, Inc.
Ms. Williams was elected a Director of Alliance in October 1993. She is
currently the Director of Special Projects of the Partnership. She serves on
the boards of the India Liberalisation Fund, The Spain Fund, The Austria Fund,
The Visiting Committee for Prints and Illustrated Books, The Board of The
Spanish Institute (and its Art Advisory Committee), The Wolfsonian Foundation
and The Exhibition Committee of The Equitable Gallery. Ms. Williams is the wife
of Dave H. Williams.
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-
Finance and Chief Accounting Officer since January 1994. He was Senior Vice
President and Controller from 1989 until January 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 the
Partnership.
Certain executive officers of Alliance are also directors or trustees and
officers of various Alliance Mutual Funds and The Hudson River Trust and are
directors and officers of certain of the Partnership's subsidiaries.
Under the terms of the Standstill Agreement dated as of July 18, 1991, as
amended ("Standstill Agreement"), among ECI, Equitable and AXA, AXA or the
Voting Trustees are entitled to nominate 49% of the members of the Board of
Directors of the General Partner. See "Item 12. Security Ownership of Certain
Beneficial Owners and Management - Principal Security Holders".
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 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 Ms. Talley. The Audit Committee reports to the Board
of Directors with respect to the selection and terms of engagement of the
Partnership's independent auditors and reviews various matters relating to the
Partnership's accounting and auditing policies and procedures. The Audit
Committee held four meetings in 1993.
The General Partner has a Board Compensation Committee composed of Messrs.
Williams, Holloway and Jenrette. The Board Compensation Committee is
responsible for compensation and compensation related matters, including, but
not limited to, exclusive 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 Board Compensation Committee consults with a
Management Compensation Committee consisting of Messrs. Williams, Calvert,
Carifa and Harrison with respect to matters within its authority.
The General Partner pays directors who are not employees of the
Partnership, Equitable or any affiliate of Equitable an annual retainer of
$18,000 plus $1,000 per meeting attended of the Board of Directors and $500 per
meeting of a committee of the Board of Directors not held in conjunction with a
Board of Directors meeting. Other directors are not entitled to any additional
compensation from the General Partner for their services as directors. The
Board of Directors meets quarterly.
23
Section 16(a) of the Securities Exchange Act of 1934 requires the General
Partner's directors and executive officers, and persons who own more than 10% of
the Units, to file with the SEC and NYSE initial reports of ownership and
reports of changes in ownership of Units. To the best of the Partnership's
knowledge, during the year ended December 31, 1993 all Section 16(a) filing
requirements applicable to its executive officers, directors and 10% beneficial
owners were complied with, except that initial reports of beneficial ownership
on Form 3 were not filed on a timely basis on behalf of Mr. de Castries, Mr.
Smith and Ms. Talley, directors of the General Partner, following their
elections in 1993. None of them owned any Units then and none has acquired any
Units.
ITEM 11. EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth all plan and non-plan
compensation awarded to, earned by or paid to the Chairman of the Board and each
of the four most highly compensated executive officers of the General Partner at
the end of 1993:
Long Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other
Name Annual Restricted All Other
and Compen- Stock LTIP Compen-
Principal sation Award(s) Options/ Payouts sation
Position Year Salary ($) Bonus ($) ($) (1) (2) ($) SARs (#) ($) (3) ($) (2) (4)
---- ---------- --------- ----------- --- -------- ------- -----------
Dave H. Williams 1993 $225,000 $1,600,000 $143,698 $0 $ 0 $130,660 $8,038,154
Chairman & Chief Executive Officer 1992 233,654 1,370,000 111,818 0 0 615,684 6,641,215
1991 225,000 1,000,000 ---- 0 0 898,781 ----
John D. Carifa 1993 200,000 1,600,000 ---- 0 0 325,457 3,789,774
President, Chief Operating Officer 1992 207,692 1,370,000 ---- 0 0 522,586 3,147,668
& Chief Financial Officer 1991 200,000 1,200,000 ---- 0 0 609,993 ----
Alfred Harrison 1993 200,000 1,600,000 ---- 0 0 130,660 8,030,333
Vice Chairman 1992 207,692 1,370,000 ---- 0 0 615,684 6,632,340
1991 200,000 900,000 ---- 0 0 898,781 ----
Bruce W. Calvert 1993 200,000 1,600,000 ---- 0 0 325,026 3,785,251
Vice Chairman & 1992 207,692 1,370,000 ---- 0 0 521,895 3,146,831
Chief Investment Officer 1991 200,000 1,000,000 ---- 0 0 609,186 ----
Robert H. Joseph, Jr. 1993 129,673 243,000 ---- 0 0 0 21,016
Senior Vice President-Finance 1992 129,808 176,500 ---- 0 10,000 2,213 136,609
& Chief Accounting Officer 1991 120,000 157,500 ---- 0 15,000 9,301 ----
<FN>
(1) Column (e) includes for Mr. Williams, among other perquisites and personal benefits, $110,170 representing an interest rate
subsidy equal to 3% per annum of the outstanding balances of personal loans obtained by Mr. Williams from a commercial bank the
proceeds of which were used to pay withholding tax liabilities related to the vesting of Restricted Units acquired in 1988 (See
"Employee Benefit Plans - Unit Acquisitions"). Perquisites and personal benefits received during 1993 by the other Named Executive
Officers during 1993 are not included because the aggregate amount did not exceed the lesser of $50,000 or 10% of total annual
salary and bonus reported in columns (c) and (d).
(2) In accordance with the transitional provisions of the SEC's amended rules on disclosure of executive compensation, amounts of
Other Annual Compensation and All Other Compensation have not been included for 1991.
25
<FN>
(3) Column (h) includes cash distributions paid from Available Cash Flow of the Partnership on unvested Restricted Units acquired
in 1988 (See "Employee Benefit Plans - Unit Acquisitions") and payment in cash of all or a portion of account balances under the
Partners Plan, as provided by the terms of that plan (See "Employee Benefit Plans - Partners Plan"), including 1992 earnings
included in column (i).
(4) Column (i) includes the following compensation amounts for 1993 (See "Employee Benefit Plans - Partners Plan, Capital
Accumulation Plan, Profit Sharing Plan and Unit Acquisitions."):
Vesting of Awards Compensation
Earnings Accrued and Accrued Earnings Profit Sharing Term Life Related to
On Partners Plan Under Capital Plan Insurance Vesting of
Balances Accumulation Plan Contribution Premiums Restricted Units Total
------------------ -------------------- ------------ -------- ----------------- -------------
Dave H. Williams $7,323 $30,011 $26,250 $6,318 $7,968,252 $8,038,154
John D. Carifa 2,863 17,658 25,000 1,566 3,742,687 3,789,774
Alfred Harrison 3,115 29,916 25,000 4,050 7,968,252 8,030,333
Bruce W. Calvert 2,526 18,423 25,000 1,566 3,737,251 3,785,251
Robert H. Joseph, Jr. 0 0 19,450 1,566 0 21,016
On February 10, 1993 the Partnership declared a two-for-one Unit Split
payable to Unitholders of record on February 22, 1993. All Unit amounts in Item
11 have been adjusted to reflect the Unit Split.
Compensation Agreements with Certain Executive Officers
In connection with the transfer of ACMC's business to the Partnership on
April 21, 1988 Messrs. Williams, Harrison, Carifa and Calvert entered into
employment agreements with the Partnership. Each of these agreements provides
for a base salary and bonus eligibility. The agreements with Messrs. Williams,
Harrison, Carifa and Calvert expire on April 21, 1994, 1994, 1996 and 1996,
respectively. The base salaries of Messrs. Williams, Harrison, Carifa, Calvert
and Joseph are currently $225,000, $200,000, $200,000, $200,000 and $140,000
respectively. Each of these agreements provides that the employee will not
engage in competitive practices with the Partnership, Alliance or its affiliates
for the term of the agreement unless his employment is terminated by the
Partnership other than for cause (as defined below), in which case the nature of
the non-compete obligation is significantly relaxed and the term is shortened to
the lesser of six months or the remaining employment term. Each of the
agreements also restricts the disclosure of confidential information and extends
broad indemnification rights, including all of the rights of an "indemnified
person" under the Partnership Agreement.
The employment agreements provide that the Partnership may terminate
employment for any reason, provided that if employment is terminated by the
Partnership without cause (as defined), the employee will be entitled to receive
his base salary under the agreement for the remaining term thereof and the
benefits otherwise provided under the employee benefit plans in which he
participates. If employment is terminated by the Partnership for cause or by
reason of an employee's death or disability (based on a finding by the Board of
Directors of the General Partner that the employee is physically or mentally
incapacitated and has been unable for a period of six months to perform his
duties by reason of that incapacity), the employee will not be entitled to
receive any further salary beyond that payable for services to the date of
termination. Cause is defined to include an employee's continuing willful
failure to perform his duties, his gross negligence or malfeasance in the
performance of his duties, his breach of a confidentiality or non-compete
obligation, his commission of a felony, and various acts on the employee's part
by reason of which the Board of Directors of the General Partner determines that
the employee's continued employment would be seriously detrimental to the
Partnership. Messrs. Williams, Harrison, Carifa and Calvert may terminate their
respective employment agreements if their duties, status or title are changed to
a lesser level or rank than that in effect on December 31, 1987. In such event,
the terminating employee is treated as if the Partnership had terminated his
employment other than for cause.
The employment agreements provide for discretionary bonus eligibility.
Bonus amounts are fixed by the Board Compensation Committee after receiving
recommendations from the Management Compensation Committee. The aggregate
amount
26
available for bonuses and contributions and awards under various employee plans
to all employees is based on the annual adjusted consolidated net operating
earnings of the Partnership.
In connection with Equitable's 1985 acquisition of DLJ, the former parent
of ACMC, ACMC entered into employment agreements with Messrs. Williams,
Harrison, 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, Harrison, Carifa and Calvert is
$378,900, $328,332, $522,036 and $434,612, respectively. While the Partnership
assumed responsibility for payment of these deferred compensation obligations,
ACMC and Alliance are required, subject to certain limitations, to make capital
contributions to the Partnership 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 the Partnership are guaranteed, subject to certain
limitations, by EIC, the parent of Alliance.
Employee Benefit Plans
UNIT ACQUISITIONS. In 1988 the executive officers named in the Summary
Compensation Table ("Named Executive Officers") acquired from ACMC, pursuant to
Restricted Limited Partnership Units Acquisition Agreements ("Restricted Units
Agreements"), an aggregate of 5,048,172 Restricted Units. Messrs. Williams,
Harrison, Carifa, Calvert and Joseph acquired 1,583,756, 1,583,756, 929,868,
928,638 and 22,154 Restricted Units, respectively. The cost of the Restricted
Units was either $0.50 or $1.00 per Restricted Unit. The price for the
Restricted Units was paid either by a reduction of the Named Executive Officer's
unvested account balance under the Partners Plan, in cash, or a combination
thereof.
Each Named Executive Officer has the right to vote his Restricted Units and
to receive Partnership distributions made on the Restricted Units. All
Restricted Units become nonforfeitable, i.e., vest, over periods of employment
ending April 21, 1994 and in certain other situations as described below.
1,170,963, 1,170,963, 1,170,962 and 1,163,570 of the Restricted Units issued to
the Named Executive Officers vested on April 21, 1990, April 21, 1991, April 21,
1992 and April 21, 1993, respectively. The remaining 371,714 unvested Restricted
Units will vest on April 21, 1994. Unvested Restricted Units are not
transferable. Cessation of employment with the Partnership during the vesting
period will result in the automatic and immediate forfeiture to ACMC (or its
designated affiliate) of unvested Restricted Units unless employment ceases as a
result of the Named Executive Officer's disability (as defined), death or
termination by the Partnership without cause (as defined). Under the definition
of cause a resignation caused by reason of the Partnership's changing his
duties, status or title to a lesser level or rank than that in effect on
December 31, 1987, will result in the full vesting of the Restricted Units
issued to Messrs. Williams, Harrison, Carifa and Calvert. Disability and cause
for this purpose are defined in the same manner as in the employment agreements
discussed above. See "Compensation Agreements with Named Executive Officers."
395,936, 395,936, 185,972, and 185,726 of the Restricted Units acquired
by Messrs. Williams, Harrison, Carifa and Calvert, respectively, vested on
April 21, 1993. The fair market value of these Restricted Units on the date of
vesting is included in column (i) of the Summary Compensation Table.
UNIT OPTION PLAN. Pursuant to the Partnership's Unit Option Plan key
employees of the Partnership and its subsidiaries, other than Messrs. Williams,
Harrison, Carifa and Calvert, may be granted options to purchase up to 4,923,076
Units. Options may be granted only to employees who the Board Compensation
Committee of the General Partner, which administers the Plan, after obtaining
recommendations from the Management Compensation Committee, determines
materially contribute, or are expected to materially contribute, to the growth
and profitability of the Partnership's business. The number of options to be
granted to any employee is to be determined in the discretion of the Board
Compensation Committee. Options may be granted with terms of up to ten years,
and an employee's right to exercise each option will vest at a rate no faster
than 20% per year commencing on the first anniversary of the date of grant.
Each option will have an exercise price no less than the fair market value of
the Units subject to option at the time the option is granted, payable in cash.
Generally, options may only be exercisable while the optionee is employed by the
Partnership. Options may not be granted under the Unit Option Plan after ten
years from its adoption.
During 1993 none of the Named Executive Officers were granted or awarded
options under the Unit Option Plan by the Partnership or exercised any options
granted under the Unit Option Plan. As of December 31, 1993 Mr. Joseph held
options to purchase 70,000 Units. Options to purchase 38,000 of the Units are
currently exercisable. As of December 31, 1993 the aggregate dollar value of
Mr. Joseph's exercisable and unexercisable in-the-money options were $732,000
and $528,313, respectively.
1993 UNIT OPTION PLAN. Pursuant to the Partnership's 1993 Unit Option Plan
key employees of the Partnership and its
27
subsidiaries may be granted options to purchase Units. The aggregate number of
Units that may be the subject of options granted or awarded under the 1993 Unit
Option Plan, the Unit Bonus Plan and the Century Club Plan may not exceed
3,200,000 Units ("Overall Limitation"). In addition the maximum aggregate
number of Units that may be the subject of options granted or awarded under the
1993 Unit Option Plan, the Unit Bonus Plan and the Century Club Plan in any of
the years ended July 22, 1994, 1995, 1996 and 1997 may not exceed 800,000 Units
("Annual Limitation"). The maximum number of Units that may otherwise be the
subject of options granted under the 1993 Unit Option Plan may be increased by
the number of Units tendered to the Partnership by employees in payment of
either the exercise price or withholding tax liabilities. Options may be
granted only to employees who a committee of the General Partner consisting of
Messrs. Jenrette and Holloway, which administers the Plan, after obtaining
recommendations from the Management Compensation Committee, determines
materially contribute, or are expected to materially contribute, to the growth
and profitability of the Partnership's business. The number of options to be
granted to any employee is to be determined in the discretion of the Board
Compensation Committee. Options may be granted with terms of up to ten years,
and an employee's right to exercise each option will vest at a rate no faster
than 20% per year commencing on the first anniversary of the date of grant.
Each option will have an exercise price no less than the fair market value of
the Units subject to the option at the time the option is granted, payable in
cash. Generally, options may only be exercisable while the optionee is employed
by the Partnership or one of its subsidiaries. Options may not be granted under
the 1993 Unit Option Plan after ten years from its adoption.
None of the Named Executive Officers has been granted or awarded
options under the 1993 Unit Option Plan.
PROFIT SHARING PLAN. The Partnership maintains a qualified defined
contribution profit sharing plan covering most employees of the Partnership who
have attained age 21 and completed one year of service. Annual contributions
are determined by the Board of Directors in its sole discretion and are
allocated among participants who are employed by a participating employer on the
last business day of the calendar year involved by crediting each participant
with the same proportion of the contribution as the participant's base
compensation bears to the total base compensation of all participants. The plan
provides for a 401(k) salary reduction election under which the Partnership may
match a participant's election to reduce up to 5% of base salary. A partici-
pant's interest in the plan is 100% vested after the participant has completed
three years of service although account balances deriving from salary reductions
are 100% vested at all times. The Partnership's contributions under the plan
for a given year may not exceed 15% of the aggregate compensation paid to all
participants for that year. Contributions to a participant's plan account
(including contributions made by a participant) for a particular year may not
exceed 25% of the participant's compensation for that year or $30,000, whichever
is less. The amount of the benefits ultimately distributed to an employee is
dependent on the investment performance of the employee's account under the
plan. Distribution of vested account balances under the plan is made upon
termination of employment either in a lump sum or in installments for a specific
period of years. If a participant dies prior to termination of his employment,
the entire value of his account is paid to the participant's beneficiary. For
1993, vested contributions to the plan for the accounts of Messrs. Williams,
Harrison, Carifa, Calvert and Joseph were $26,250, $25,000, $25,000, $25,000 and
$19,450, respectively. These amounts are included in column (i) of the Summary
Compensation Table.
PROFIT SHARING PLAN FOR FORMER ECMC EMPLOYEES. The Partnership maintains a
qualified defined contribution profit sharing plan covering most former ECMC
employees with vesting and benefit contribution allocation methods substantially
equivalent to the profit sharing plan maintained by ECMC prior to the
acquisition. The plan provides for a 401(k) salary reduction election under
which a participant may reduce up to 12% of compensation and the Partnership
must match the first 2 1/2% of compensation so reduced in 1993 and 1994. A
participant's entire interest in the plan is 100% vested at all times. The
Partnership's contributions under the plan for a given year may not exceed 15%
of the aggregate compensation paid to all participants for that year.
Contributions to a participant's plan account (including contributions made by a
participant) for a particular year may not exceed 25% of the participant's base
compensation for that year or $30,000, whichever is less. The amount of the
benefits ultimately distributed to an employee is dependent on the investment
performance of the employee's account under the plan. Distribution of vested
account balances under the plan is made upon termination of employment either in
a lump sum or in installments for a specific period of years. If a participant
dies prior to termination of his employment, the entire value of his account is
paid to the participant's beneficiary.
None of the Named Executive Officers is a participant in this plan.
RETIREMENT PLAN. The Partnership maintains a qualified, non-contributory,
defined benefit retirement plan covering most employees of the Partnership 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 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 the Partnership 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 the Partnership. 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.
28
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
----------------------------------------------------------------
Years of Service at Retirement
Average Final -----------------------------------------------------------------
Compensation 15 20 25 30 35 40 45
$100,000 $20,130 $26,839 $ 33,549 $ 40,259 $ 46,969 $ 51,969 $ 56,969
150,000 31,380 41,839 52,299 62,759 73,219 80,719 88,219
200,000 42,630 56,839 71,049 85,259 99,469 100,000 100,000
250,000 53,880 71,839 89,799 100,000 100,000 100,000 100,000
300,000 65,130 86,839 100,000 100,000 100,000 100,000 100,000
Assuming they are employed by the Partnership until age 65, the credited
years of service under the plan for Messrs. Williams, Harrison, Carifa, Calvert
and Joseph would be 20, 24, 40, 38 and 28, 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 these five
individuals for 1993 is $225,000, $200,000, $200,000, $200,000 and $129,673,
respectively.
UNIT BONUS PLAN. Pursuant to the Partnership's Unit Bonus Plan the Board
Compensation Committee may award Units to key employees of the Partnership and
its subsidiaries in lieu of all or a portion of the cash bonus that they would
otherwise receive. The aggregate number of Units that may be the subject of
awards or grants under the Unit Bonus Plan, the 1993 Unit Option Plan and the
Century Club Plan may not exceed the Overall Limitations and the maximum
aggregate number of Units that may be the subject of awards or grants under the
Unit Bonus Plan, the 1993 Unit Option Plan and the Century Club Plan in any of
the years ended July 22, 1994, 1995, 1996 and 1997 may not exceed the Annual
Limitation. Units that may otherwise be awarded under the Unit Bonus Plan may
be increased by the number of Units tendered to the Partnership in payment of
withholding tax liabilities in respect of Unit Bonus Plan awards. Units awarded
under the Unit Bonus Plan may be vested or unvested (i.e., subject to
forfeiture) at the time of award. Unvested Units will vest or become
nonforfeitable in accordance with the conditions specified by the Board
Compensation Committee at the time of award.
None of the Named Executive Officers has been awarded Units under the
Unit Bonus Plan.
CENTURY CLUB PLAN. Pursuant to the Partnership's Century Club Plan up to
200,000 Units may be awarded to employees of AFD or another subsidiary of the
Partnership who attain certain sales targets or sales criteria determined by the
Century Club Committee which consists of Messrs. John D. Carifa and Michael
Laughlin, President and Executive Vice President of the General Partner,
respectively. The maximum aggregate number of Units that may be awarded under
the Century Club Plan, the 1993 Unit Option Plan and the Unit Bonus Plan may not
exceed the Overall Limitation and the maximum aggregate number of Units that may
be awarded under the Century Club Plan, the 1993 Unit Option Plan and the Unit
Bonus Plan in any of the years ended July 22, 1994, 1995, 1996 and 1997 may not
exceed that Annual Limitation. Units awarded under the Century Club Plan may be
vested or unvested (i.e., subject to the forfeiture) at the time of award.
Unvested Units will vest or become nonforfeitable in accordance with the
conditions specified by the Century Club Committee at the time of award.
None of the Named Executive Officers has been awarded Units under the
Century Club Plan.
PARTNERS PLAN. Since 1983 a nonqualified, unfunded deferred compensation
program known as the Partners Plan has been maintained under which certain key
employees received incentive awards pursuant to a formula set each year by the
Management Compensation Committee. No awards have been or will be made under
the Partners Plan for any year after 1987. All awards are fully vested. Unless
accelerated, award account balances generally are distributed upon resignation,
retirement, disability or death. The Board of Directors of the General Partner
has the right to accelerate vesting and make distributions of up to 90% of a
participant's account balance if the key employee agrees to extend the term of
his employment for a period of at least one year. Until distributed, the awards
are credited with interest based on prevailing market rates plus, for the years
prior to 1989, a premium if the Partnership's earnings growth rate exceeded
certain levels. Interest credited during 1993 for the accounts of Messrs.
Williams, Harrison, Carifa and Calvert was $7,323, $3,115, $2,863, and $2,526
respectively. These amounts are included in column (i) of the Summary
Compensation Table. This amount is included in column (h) of the Summary
Compensation Table.
29
CAPITAL ACCUMULATION PLAN. Since 1985 a nonqualified, unfunded deferred
compensation program known as the Capital Accumulation Plan has been maintained
to provide retirement benefits for key employees and their beneficiaries which
supplement their benefits under the Retirement Plan described above. Under this
plan, at the end of 1985, 1986 and 1987, awards were made for each participant,
selected on the basis of performance by the Management Compensation Committee,
equal to a percentage of the participant's base salary and the participant's
discretionary bonus for the year. The amount awarded was credited to the
participant's account on the Partnership's books to which interest is thereafter
credited, until distributed or forfeited, based on prevailing market rates. A
participant's account balance vests based on the participant's years in the plan
with no vesting for zero to four years of participation, 30% vesting after five
to seven years with gradually increased vesting thereafter ranging to 87% after
35 years of participation and 100% vesting at age 65 or death. Upon termination
of employment other than by reason of permanent disability or death, the
participant's vested account balance is to be paid out in ten equal annual
installments. In the event of permanent disability, the participant is to
receive the higher of the vested balance at the time of disability or 50% of the
total balance at the time of disability, in either case payable in ten equal
annual installments. In the event of death, the participant's beneficiary is to
receive the higher of (i) the participant's account balance paid in ten equal
annual installments together with interest or (ii) annually 50% of the
participant's total cash compensation for the year prior to the year of the
participant's death payable until the participant would have attained age 65,
but in no event for less than ten years.
While the Partnership is responsible for the payment of all obligations
under the plan, ACMC and Alliance are required, subject to certain limitations,
to make capital contributions to the Partnership in an amount equal to the
payments. ACMC's obligations are guaranteed, subject to certain limitations, by
EIC. No additional awards will be made under this plan, but employees will
continue to vest in their existing account balances and to be credited with
interest at prevailing market rates on these balances. A participant's total
cash compensation for 1987 increased by 5% per year, compounded annually, will
be considered his total cash compensation for purposes of determining the amount
of any death benefits payable in respect of the participant. The Board of
Directors of the General Partner intends to cancel this plan if tax legislation
is enacted which adversely affects certain benefits derived by ACMC from
insurance on the lives of certain of the Partnership's employees purchased in
connection with the plan. If the plan is cancelled, the Board of Directors of
the General Partner may, at its option, either pay each participant his then
vested account balance or continue to maintain the account balances for vesting
and distribution as described above as if the plan had not terminated, provided
that in such event no death benefit based on a participant's total cash
compensation will be paid. The plan account balances which became vested during
1993 for the accounts of Messrs. Williams, Harrison, Carifa and Calvert were
$30,011, $29,916, $17,658 and $18,423, respectively. These amounts are included
in column (i) of the Summary Compensation Table.
DEFERRAL PLAN. Under this plan, certain employees of the Partnership may
elect to defer for at least one year the receipt of base or bonus compensation
otherwise payable in a given year to January 31 of the year selected. Interest
is credited at prevailing market rates on the amounts deferred under this plan
until paid. In certain cases, 10% of a deferred amount is subject to forfeiture
if the employee's employment terminates prior to the January 31 payment date for
any reason other than death or disability. There was no compensation deferred
from 1993 to a subsequent year for the Named Executive Officers. During 1993
there were no payments of previously deferred compensation to or interest
credited on amounts deferred by any of the Named Executive Officers.
DLJ PLANS. Prior to Equitable's 1985 acquisition of DLJ, certain employees
of the Partnership participated in various DLJ employee benefit plans and
arrangements. Since the acquisition, no employer contributions or awards have
been made, nor in the future are any employer contributions or awards to be
made, under these plans or arrangements for any employee of the Partnership. No
deferral of compensation earned by any such employee for services rendered since
the acquisition has been permitted under any such plan or arrangement. The
Partnership has no liability for and will not bear the cost of any benefits
under these plans and arrangements.
In 1983, DLJ adopted an Executive Supplemental Retirement Program under
which certain employees of the Partnership 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.
30
Estimated Annual
Name Retirement Benefit
---- ------------------
Dave H. Williams $ 41,825
Alfred Harrison 50,246
John D. Carifa 114,597
Bruce W. Calvert 145,036
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Principal Security Holders
The Partnership has no information that any person beneficially owns more
than 5% of the outstanding Units except (i) ACMC and ECMC wholly-owned
subsidiaries of ECI, and (ii) as reported on Schedule 13D, 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.
Name and Address of Amount and Nature of Beneficial Ownership
Beneficial Owner Reported on Schedule Percent of Class
------------------ ----------------------------------------- ----------------
AXA (1)(2)(3) 45,371,500(4) 62.23%
23 Avenue Matignon,
75008 Paris,
France
ECI (3) 45,371,500(4) 62.23%
787 Seventh Avenue
New York, New York 10019
(1) For insurance regulatory purposes the shares of capital stock of ECI
beneficially owned by AXA have been deposited into a voting trust which has an
initial term of 10 years ("Voting Trust"). The Voting Trustees, who must be
members of AXA's Conseil d'Administration (the body analogous to a U.S.
corporation's board of directors), are Claude Bebear, Patrice Garnier and Henri
de Clermont-Tonnerre. 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 of the indirect minority shareholders of ECI do not
exercise control over ECI or certain of its insurance subsidiaries. See "Item
1. Business-General".
(2) The Voting Trustees may be deemed to be beneficial owners of all Units
beneficially owned by AXA. In addition, the Mutuelles AXA, as a group, and each
of Finaxa and Midi Participations may be deemed to be beneficial owners of all
Units beneficially owned by AXA. By reason of the fact that the Voting Trustees
are members of AXA's Conseil d'Administration and by virtue of the provisions of
the Voting Trust Agreement, AXA may be deemed to have shared voting power with
respect to the Units. Subject to the restrictions on the disposition of shares
of the capital stock of ECI in the Standstill Agreement, AXA has the power to
dispose or direct the disposition of all shares of the capital stock of ECI
deposited in the Voting Trust. By reason of their relationship with AXA, the
Mutuelles AXA, as a group, and each of Finaxa and Midi Participations 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 Units beneficially owned by AXA. The address
of each of AXA, Midi Participations, Finaxa and the Voting Trustees is 23 Avenue
Matignon, Paris, France. The addresses of the Mutuelles AXA are as follows:
The address of each of AXA Assurances I.A.R.D. Mutuelle and AXA Assurances Vie
Mutuelle is La Grande Arche, Paroi Nord, Paris La Defense, France; the address
of each of Alpha Assurances Vie Mutuelle and Alpha Assurances I.A.R.D. Mutuelle
is 100-101 Terrasse Boieldieu, Paris La Defense, France; and the address of Uni
Europe Assurance Mutuelle is 24 Rue Drouot, Paris, France. See "Item 1.
Business-General".
31
(3) By reason of their relationship, AXA, the Voting Trustees, ECI, Equitable,
ACMC, ECMC, the Mutuelles AXA, Finaxa and Midi Participations may be deemed to
share the power to vote or to direct the vote or to dispose or direct the
disposition of the 45,371,500 Units.
(4) Includes 100,000 Units which are issuable upon conversion of the Class A
Limited Partnership Interest.
Management
The following table shows, as of March 14, 1994, the beneficial ownership
of Units by each director and each Named Executive Officer of the General
Partner who owns more than 1% of the outstanding Units and by all directors and
executive officers of the General Partner as a group:
Name of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Class
---------------- -------------------- ----------
Dave H. Williams (1) 1,355,456 1.86%
John D. Carifa 808,068 1.11%
All Directors and Executive Officers
of the General Partner as a Group 3,772,718 (2) 5.17%
<FN>
(1) Includes 80,000 Units owned by Reba W. Williams.
(2) Includes 70,000 Units which may be acquired within 60 days under the
Partnership's Unit Option Plan.
The Partnership has no information that any director of the General
Partner, any Named Executive Officer or the directors and executive officers of
the General Partner as a group beneficially own any class of equity securities
of any of the Partnership's parents or subsidiaries other than directors'
qualifying shares except that (i) Mr. Williams has been granted options to
purchase 100,000 shares of the common stock of ECI, (ii) Mr. Benson has been
granted options to purchase 250,000 shares of the common stock of ECI, (iii)
Mr. Calvert has been granted options to purchase 50,000 shares of the common
stock of ECI, (iv) Mr. Carifa has been granted options to purchase 50,000
shares of the common stock of ECI, (v) Mr. de Castries has been granted options
to purchase 15,000 shares of AXA, (vi) Mr. Dupont-Madinier has been granted
options to purchase 7,938 AXA shares, (vii) Mr. Hellebuyck owns 1,125 shares of
AXA and has been granted options to purchase 1,500 shares of AXA, (viii) Mr.
Hottinguer owns 1,621 shares of AXA and 1,840 shares of Finaxa, (ix) Mr.
Jenrette owns 85 shares of the common stock of ECI and has been granted options
to purchase 600,000 shares of the common stock of ECI, (x) Mr. Melone owns 182
shares of the common stock of ECI and has been granted options to purchase
400,000 shares of the common stock of ECI, (xi) Mr. O'Neil owns 27 shares of
the common stock of ECI and has been granted options to purchase 100,000 shares
of the common stock of ECI, (xii) Mr. Savage owns 136 shares of the common
stock of ECI, and (xiii) Mr. Smith has been granted options to purchase 1,000
shares of AXA.
The General Partner makes all decisions relating to the management of the
Partnership. The General Partner has agreed that it will conduct no business
other than managing the Partnership, although it may make certain investments
for its own account. Conflicts of interest, however, could arise between the
General Partner and the Unitholders.
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 Agreement of Limited Partnership of Alliance Capital Management L.P. (As
Amended and Restated)("Partnership Agreement") sets forth a more limited
standard of liability for the General Partner. The Partnership Agreement
provides that the General Partner is not liable for monetary damages to the
Partnership 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 to the Partnership, with
reckless disregard for the best interests of the Partnership or with actual bad
faith on the part of the General Partner, or constituted actual fraud. Whenever
the Partnership Agreement provides 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 the
Partnership or any Unitholder 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
Partnership Agreement or applicable law.
32
In addition, the Partnership Agreement grants broad rights of
indemnification to the General Partner and its directors and affiliates and
authorizes the Partnership to enter into indemnification agreements with the
directors, officers, partners, employees and agents of the Partnership and its
affiliates. The Partnership has granted broad rights of indemnification to
officers of the General Partner and employees of the Partnership. In addition,
the Partnership assumed indemnification obligations previously extended by
Alliance to its directors, officers and employees. The foregoing
indemnification provisions are not exclusive, and the Partnership is authorized
to enter into additional indemnification arrangements. The Partnership has
obtained directors and officers liability insurance.
The Partnership Agreement also allows transactions between the Partnership
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 the
Partnership than) those that would prevail with any unaffiliated party. The
Partnership Agreement provides 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 the Partnership and its subsidiar-
ies) 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
the Partnership than) those that would prevail in a transaction with an
unaffiliated party.
The Partnership Agreement expressly permits all affiliates of the General
Partner (including Equitable and its other subsidiaries) to compete, directly or
indirectly, with the Partnership, to engage in any business or other activity
and to exploit any opportunity, including those that may be available to the
Partnership. Equitable and some of its subsidiaries currently compete with the
Partnership. See "Item 13. Certain Relationships and Related
Transactions-Competition." The Partnership Agreement further provides 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 the Partnership, 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 the
Partnership or otherwise involving any conflict of interest or breach of a duty
of loyalty or similar fiduciary obligation.
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
Partnership Agreement are enforceable under Delaware or federal law.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Competition
AXA, Equitable and certain of their direct and indirect subsidiaries
provide financial services, some of which are competitive with those offered by
the Partnership. The Partnership Agreement specifically allows Equitable and
its subsidiaries (other than the General Partner) to compete with the
Partnership and to exploit opportunities that may be available to the
Partnership. Equitable and certain of its subsidiaries have substantially
greater financial resources than the Partnership or the General Partner.
Financial Services
The Partnership Agreement permits Equitable and its affiliates to provide
services to the Partnership on terms comparable to (or more favorable to the
Partnership than) those that would prevail in a transaction with an unaffiliated
third party. The Partnership believes that its arrangements with Equitable and
its affiliates are at least as favorable to the Partnership 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.
The Partnership acts as the investment manager for the general and separate
accounts of Equitable and its insurance company subsidiaries pursuant to
investment advisory agreements. During 1993 the Partnership received
approximately $55.4 million in fees pursuant to these agreements. In connection
with the services provided under these agreements the Partnership provides
ancillary accounting, valuation, reporting, treasury and other services for
regulatory purposes under service agreements. During 1993 the Partnership
received approximately $6.8 million in fees pursuant to these agreements.
Equitable provides certain legal and other services to the Partnership relating
to certain insurance and other regulatory aspects of the general and separate
accounts of Equitable and its insurance company subsidiaries. During 1993 the
Partnership paid approximately $1.4 million to Equitable for these services.
33
During 1993 the Partnership paid Equitable approximately $8.3 million for
certain services provided with respect to the marketing of the variable annuity
insurance and variable life insurance products for which The Hudson River Trust
is the funding vehicle.
A life insurance subsidiary of Equitable has issued to ACMC life insurance
policies on certain employees of the Partnership, the costs of which are to be
borne by ACMC without reimbursement by the Partnership. During 1993 ACMC paid
approximately $5.7 million in insurance premiums on these policies.
The Partnership and its employees are covered by various policies
maintained by Equitable and its other subsidiaries. The amount of premiums for
these group policies paid by the Partnership to Equitable was approximately $.2
million for 1993.
The Partnership provides investment management services to certain employee
benefit plans of Equitable and DLJ. Advisory fees from these accounts totalled
approximately $2.9 million for 1993 including $1.8 million from the separate
accounts of Equitable.
Equico was the Partnership's second largest distributor of load mutual
funds in 1993 for which it received sales concessions from the Partnership on
sales of $475 million. In 1993 Equico also distributed certain of the
Partnership's cash management products. Equico received distribution payments
totalling $3.0 million in 1993 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, the Partnership and Pershing have an
agreement pursuant to which Pershing recommends to certain of its correspondent
firms the use of Alliance cash management products for which Pershing is allo-
cated a portion of the revenues derived by the Partnership from sales through
the Pershing correspondents. Amounts paid by the Partnership to DLJ Securities
Corporation, Pershing and Wood Struthers & Winthrop Management Corp., a
subsidiary of DLJ, in connection with the above distribution services were $10.7
million in 1993. DLJ and its subsidiaries also provide the Partnership with
brokerage and various other services, including clearing, investment banking,
research, data processing and administrative services. Brokerage, the expense
of which is borne by the Partnership's clients, aggregated approximately $0.1
million for 1993. During 1993, the Partnership paid $.2 million to DLJ and its
subsidiaries for all such other services.
Prior to the Partnership's acquisition of ECMC, during 1993 ECMC reimbursed
Equitable in the amount of $9.9 million for rent and the use of certain services
and facilities. ECMC also paid Equitable $1.9 million pursuant to a tax sharing
arrangement. Subsequent to the Partnership's acquisition of ECMC during 1993
the Partnership reimbursed Equitable in the amount of $1.6 million for rent and
the use of certain services and facilities.
Other Transactions
During 1993 the Partnership paid certain legal and other expenses incurred
by Equitable and its insurance company subsidiaries relating to the general and
separate accounts of Equitable and such subsidiaries for which it has been or
will be fully reimbursed by Equitable. The largest amount of such indebtedness
outstanding during 1993 was $1.2 million which represents the amount outstanding
on December 31, 1993.
Equitable and its affiliates are not obligated to provide funds to the
Partnership, except for ACMC's and the General Partner's obligation to fund
certain of the Partnership's deferred compensation and employee benefit plan
obligations referred to under "Compensation Agreements with Named Executive
Officers" and "Capital Accumulation Plan". The Partnership Agreement permits
Equitable and its affiliates to lend funds to the Partnership at the lender's
cost of funds.
ACMC and the General Partner are obligated, subject to certain limitations,
to make capital contributions to the Partnership in an amount equal to the
payments the Partnership 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 the Partnership to various
employees and their beneficiaries under the Partnership's Capital Accumulation
Plan. In 1993, ACMC made capital contributions to the Partnership of $.7
million. 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.
Reba W. Williams, the wife of Dave H. Williams, was employed by the
Partnership during 1993 and received compensation in the amount of $102,000.
34
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, 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:
(1) Financial Statements
Reference Pages
in Annual Report
----------------
Consolidated Statements of Financial Condition, December 31, 1993 and 1992. 53
Consolidated Statements of Income, Years ended December 31, 1993, 1992
and 1991. 54
Consolidated Statements of Changes in Partners' Capital, Years ended
December 31 1993, 1992 and 1991 55
Consolidated Statements of Cash Flows, Years ended December 31, 1993,
1992, and 1991 56
Notes to Consolidated Financial Statements 57-68
Independent Auditors' Report 69
(2) Financial Statement Schedules
Reference Pages
in Form 10-K Report
-------------------
Schedule I, Marketable Securities as of December 31, 1993 37
Other 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.
A report on Form 8-K dated November 17, 1993 was filed during the last
quarter of 1993 reporting that the Partnership had entered into an Asset
Purchase Agreement dated November 16, 1993 with Shields Asset Management,
Incorporated ("Shields"), Regent Investor Services Incorporated ("Regent"),
Furman Selz Holding Corporation and Xerox Financial Services, Inc. to acquire
the business and substantially all of the assets of Shields and Regent.
(c) Exhibits.
The following exhibits required to be filed by Item 601 of Regulation
S-K are filed herewith or, in the case of Exhibits 10.54, 10.55,
10.56, 10.57, 10.58 and 13.5, incorporated by reference herein:
EXHIBIT DESCRIPTION
10.54 Amended and Restated Transfer Agreement
among Alliance Capital Management L.P., Equitable
Capital Management Corporation and Equitable
Investment Corporation dated as of February
23, 1993 as amended and restated on May 28, 1993 (1)
10.55 Asset Purchase Agreement among Alliance Capital
Management L.P., Shields Asset Management,
Incorporated, Regent Investor Services Incorporated,
Furman Selz Holding Corporation and Xerox Financial
Services, Inc. dated November 16, 1993 (2)
10.56 Alliance Capital Management L.P. 1993 Unit Option Plan (3)
10.57 Alliance Capital Management L.P. Unit Bonus Plan (3)
10.58 Alliance Capital Management L.P. Century Club Plan (3)
13.5 Alliance Capital Management L.P. 1993 Annual Report
to Unitholders (pages 43 through 69)
21.1 Subsidiaries of the Registrant
23.1 Consent of KPMG Peat Marwick
24.32 Power of Attorney by James M. Benson
24.33 Power of Attorney by Henri de Castries
24.34 Power of Attorney by Christophe Dupont-Madinier
24.35 Power of Attorney by Jean-Pierre Hellebuyck
24.36 Power of Attorney by Benjamin D. Holloway
24.37 Power of Attorney by Henri Hottinguer
35
24.38 Power of Attorney by Richard H. Jenrette
24.39 Power of Attorney by Joseph J. Melone
24.40 Power of Attorney by Brian S. O'Neil
24.41 Power of Attorney by Peter G. Smith
24.42 Power of Attorney by Madelon DeVoe Talley
(1) Filed as an Exhibit to the Registrant's Form 8-K dated August 10, 1993.
(2) Filed as an Exhibit to the Registrant's Form 8-K dated November 17, 1993.
(3) Filed as an Exhibit to the Registrant's Registration Statement on Form S-8
(File No. 33-65932) filed with the Securities and Exchange Commission on
July 12, 1993.
36
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, 1994 By: /s/Dave H. Williams
----------------------------
Dave H. Williams
Chairman
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, 1994 /s/John D. Carifa
----------------------------
John D. Carifa
President, Chief Operating Officer
and Chief Financial Officer
Date: March 28, 1994 /s/Robert H. Joseph, Jr.
----------------------------
Robert H. Joseph, Jr.
Senior Vice President and Chief
Accounting Officer
Directors
/s/Dave H. Williams *
- ---------------------------- ----------------------------
Dave H. Williams Benjamin D. Holloway
Chairman and Director Director
* *
- ---------------------------- ----------------------------
James M. Benson Henri Hottinguer
Director Director
/s/Bruce W. Calvert *
- ---------------------------- ----------------------------
Bruce W. Calvert Richard H. Jenrette
Director Director
/s/John D. Carifa *
- ---------------------------- ----------------------------
John D. Carifa Joseph J. Melone
Director Director
* *
- ---------------------------- ----------------------------
Henri de Castries Brian S. O'Neil
Director Director
* /s/Frank Savage
- ---------------------------- ----------------------------
Christophe Dupont-Madinier Frank Savage
Director Director
/s/Alfred Harrison *
- ---------------------------- ----------------------------
Alfred Harrison Peter Smith
Director Director
* *
- ---------------------------- ----------------------------
Jean-Pierre Hellebuyck Madelon DeVoe Talley
Director Director
*By/s/David R. Brewer, Jr. /s/Reba W. Williams
- ---------------------------- -----------------------------
David R. Brewer, Jr. Reba W. Williams
(Attorney-in-Fact) Director
37
Alliance Capital Management L.P.
Schedule I - Marketable Securities
December 31, 1993
(in thousands)
Number of Shares ----------------------------
or Market Carrying
Principal Amount Cost Value Value
---------------- ---- ----- --------
Money Market Funds,
Deposit Accounts and
Mutual Funds*:
ACM Institutional
Reserves-Prime
Portfolio 13,457,173 shares $13,457 $13,457 $13,457
Alliance Capital
Reserves 17,664,779 shares 17,665 17,665 17,665
Other Money Market
Funds and Deposit
Accounts 20,899 20,919 20,899
Open-End Mutual Funds 3,081 3,238 3,081
Closed-End Mutual Funds 1,450 1,543 1,450
------
Total Marketable Securities $56,552
-------
-------
<FN>
* Represents investments in registered investment companies
managed by the Partnership.
38
Independent Auditors' Report
The General Partner and Unitholders
Alliance Capital Management L.P.
Under date of January 27, 1994, except as to Note 12, which is as of March 7,
1994, we reported on the consolidated statements of financial condition of
Alliance Capital Management L.P. and subsidiaries as of December 31, 1993 and
1992, and the related consolidated statements of income, changes in partners'
capital, and cash flows for the years ended December 31, 1993, 1992 and 1991, as
contained in the 1993 Annual Report to Unitholders. These consolidated finan-
cial statements and our report thereon are incorporated by reference in the
annual report on Form 10-K for the year 1993. In connection with our audits of
the aforementioned consolidated financial statements, we also have audited the
related financial statement schedule as listed in the accompanying index
(page 34). This financial statement schedule is the responsibility of Alliance
Capital Management Corporation, General Partner. Our responsibility is to
express an opinion on this financial statement schedule based on our 1993 audit.
In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.
KPMG PEAT MARWICK
New York, New York
January 27, 1994, except as to Note 12,
which is as of March 7, 1994