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New York, NY - The Equitable Companies Incorporated (NYSE-EQ) achieved record operating results for
the fourth quarter and full-year ended December 31, 1997, Edward D. Miller, President and Chief
Executive Officer, announced today. For the quarter, after-tax operating earnings rose 23% to
$170.4 million, or 73 cents per diluted share, compared with after-tax operating earnings of $138.2
million, or 64 cents per diluted share, reported for the 1996 final period. Revenue for the
quarter rose to $2.3 billion, and total assets under management at quarter's end were a
record $274.1 billion.
"The on-going growth of our insurance and annuity businesses, together with strong performances from
Donaldson, Lufkin & Jenrette (DLJ) and Alliance Capital Management, were the keys to
The Equitable's record fourth quarter operating results," said Mr. Miller. "During 1997,
we took steps to strengthen the competitive positions of all our franchises, with particular emphasis
on value-added planning services and product design. In addition, management is near the completion
of an extensive review of all our life and annuity operations to identify new initiatives designed
to enhance both our short-term and long-term profitability as well as to sharpen The Equitable's
strategic focus."
After-tax operating earnings for the 1997 quarter exclude after-tax investment losses, mostly associated
with our previously announced accelerated real estate sales program, of $197.7 million (net of deferred
acquisition cost -- DAC -- amortization and related costs), a benefit of $97.5 million from the
release of tax reserves, and results from discontinued operations. Operating results for the 1996
period exclude after-tax investment gains of $6.6 million (net of DAC and related costs),
after-tax restructuring charges of $13.4 million, after-tax reserve strengthening of $255.5 million,
and results from discontinued operations. When these items are included, the Company reported
a net loss of $14.1 million, or 9 cents per diluted share, for the 1997 fourth quarter, versus a net
loss of $207.9 million, or $1.16 per diluted share, for the year ago period.
After-tax operating earnings for the full-year 1997 rose 37% to a record $660.6 million, or $2.92
per diluted share, versus after-tax operating earnings of $483.8 million, or $2.26 per diluted
share, for 1996.
Operating results for 1997 exclude after-tax investment losses of $22.8 million (net of DAC and
related costs), after-tax restructuring charges of $27.6 million, a benefit of $97.5 million from
the release of tax reserves, an after-tax charge of $59.5 million related to a writedown
of intangible assets at Alliance Capital in the second quarter, and results from discontinued
operations. Operating results for 1996 exclude after-tax investment losses of $7.2 million
(net of DAC and related costs), after-tax reserve strengthening of $255.5 million, after-tax restructuring
charges of $15.1 million, an after-tax charge of $23.1 million from the adoption of a new accounting
standard, and results from discontinued operations. When these items are included, the Company
had after-tax net income for 1997 of $561.0 million, or $2.47 per diluted share, compared with after-tax
net income of $99.1 million, or 37 cents per diluted share, for 1996.
Strong Performance From Insurance Operations
The after-tax earnings contribution from The Equitable's insurance operations for the 1997 fourth
quarter rose 35% to $96.0 million, compared with after-tax earnings of $71.2 million for the final
period of 1996. For the full-year 1997, after-tax operating earnings increased 36% to $375.9 million,
versus after-tax operating earnings of $277.3 million for the full-year 1996.
"During 1997, the Company's life and annuity businesses continued to benefit from robust asset
growth, favorable mortality experience, strong investment performance particularly from our equity funds and
higher investment spreads," said Michael Hegarty, President and Chief Operating Officer of The Equitable
Life Assurance Society. "In addition, the Separate Account assets backing our variable product lines increased
38% to $24.5 billion, up from $17.7 billion at the end of 1996, with associated
fee income rising to nearly $1 billion for the year."
"Product sales continued to show substantial growth in 1997, with strong performances from our
career retail sales force as well as from our growing wholesale channel," said Mr. Hegarty.
"Total individual premiums and deposits rose 32% to $2.0 billion for the fourth quarter,
and increased 21% to $7.4 billion for the year. New annuity sales grew 78% for the quarter to
$1.0 billion, and rose 54% to $3.3 billion for the year."
"Coinciding with this sales growth was an attendant expansion in operating margins, as reflected
by Equitable Life's expense-to-premium ratio," Mr. Hegarty continued. "This ratio improved to
10.7% for the 1997 fourth quarter, compared with 15.4% for the similar period of 1996. One
of our priorities in 1998 will be to continue our margin expansion."
"We enter 1998 with strong operating fundamentals, growing sales and expanding distribution
channels," said Mr. Hegarty. " In addition, our recently announced program of reshaping Equitable
Life's investment portfolio through accelerated real estate sales, should further enhance earnings
and provide more flexibility in managing our capital structure. All of these factors make us
optimistic about our prospects for the new year."
Continued Success at DLJ and Alliance
DLJ and Alliance Capital continued to report strong results in 1997, as the combined after-tax operating
earnings contribution from investment operations rose to a record $362.4 million, up 27% above the
$284.6 million of after-tax operating earnings for 1996.
"At DLJ, after-tax operating earnings -- before minority interest and other expenses -- grew to a
record $408.3 million for 1997, up 40% above the level reported for the prior year," said Mr.
Miller. "Higher underwriting revenues, increased mergers and acquisitions fees, growth in trading
and merchant banking gains, and increased commission revenues were the factors underlying this excellent
performance. While the volatility in capital markets has shown somewhat of an increase lately, we feel
that DLJ is strongly position for growth and another strong year in 1998."
"Results at Alliance Capital also reached a new high for the year, with after-tax operating
earnings -- before minority interests, the second quarter intangible asset writedown and other
expenses -- reaching a record $249.9 million, or 29% above last year," Mr. Miller continued. "A
key to this success has been on-going growth in third-party assets under management, which reached an
all-time high of $194 billion at year-end 1997, an increase of about $34 billion over year-end 1996.
This growth includes Alliance's institutional money management operations, as well as its retail mutual
fund business, which alone generated $14.5 billion in new sales during the year."
The Equitable Companies Incorporated is one of the world's premier financial services organizations
through its primary businesses The Equitable Life Assurance Society of the U.S., Alliance Capital
Management and Donaldson, Lufkin & Jenrette. The Equitable is a member of the global
AXA group, one of the world's largest insurer/asset managers with approximately $500 billion in assets
under management.
Condensed Consolidated Statement of Earnings
After-tax Operating Earnings
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