Eaton Vance Corp. Report for the Three and Nine Month Periods Ended July 31, 2013

21 Aug, 2013, 08:35 ET from Eaton Vance Corp.

BOSTON, Aug. 21, 2013 /PRNewswire/ -- Eaton Vance Corp. (NYSE: EV) today reported adjusted earnings per diluted share(1) of $0.52 for the third quarter of fiscal 2013, an increase of 21 percent over the $0.43 of adjusted earnings per diluted share in the third quarter of fiscal 2012 and flat versus the $0.52 of adjusted earnings per diluted share in the second quarter of fiscal 2013.

As determined under U.S. generally accepted accounting principles ("GAAP"), the Company earned $0.18 in the third quarter of fiscal 2013, $0.43 in the third quarter of fiscal 2012 and $0.50 in the second quarter of fiscal 2013. Adjusted earnings per diluted share differed from GAAP earnings per diluted share in the third quarter of fiscal 2013 to reflect $0.28 per diluted share of costs associated with retiring $250 million of the Company's 6.5 percent 2017 Senior Notes ("2017 Senior Notes"), $0.05 per diluted share of charges in connection with settling a state tax matter and $0.01 per diluted share of closed-end structuring fees incurred in connection with the $135 million initial public offering of Eaton Vance Floating-Rate Income Plus Fund in June.  In the second quarter of fiscal 2013, adjusted earnings per diluted share differed from GAAP earnings per diluted share to reflect $0.01 per diluted share of closed-end structuring fees paid in connection with the $205 million initial public offering of Eaton Vance Municipal Income Term Trust and $0.01 per diluted share related to the increase in the estimated redemption value of non-controlling interests in affiliates redeemable at other than fair value.

Both adjusted and GAAP earnings in the third quarter of fiscal 2013 were reduced by net investment losses of $0.02 per diluted share.  By comparison, net investment gains contributed $0.02 per diluted share in the second quarter of fiscal 2013 and were negligible in the third quarter of fiscal 2012.

Adjusted earnings per diluted share were $1.53 in the nine months ended July 31, 2013 compared to $1.35 in the nine months ended July 31, 2012. The Company's GAAP earnings per diluted share were $1.07 and $1.27, respectively, in the same periods.

Net inflows of $8.8 billion into long-term funds and separate accounts in the third quarter of fiscal 2013 compare to net outflows of $1.4 billion in the third quarter of fiscal 2012 and net inflows of $6.6 billion in the second quarter of fiscal 2013.  As shown in Attachment 5, the improvement in net flow results year-over-year reflects strong net inflows into floating-rate income and implementation services mandates and reduced outflows from equity strategies.  The Company's annualized internal growth rate (net inflows into long-term assets divided by beginning of period long-term assets managed) was 14 percent in both the third quarter of fiscal 2013 and the nine months ended July 31, 2013. 

"The $8.8 billion in net inflows in the third quarter of fiscal 2013 rank as the second highest quarterly total in Eaton Vance history" said Thomas E. Faust Jr., Chairman and Chief Executive Officer. "Our leading positions in floating-rate bank loans and implementation services propelled the Company to an outstanding growth quarter."

Consolidated assets under management were $268.8 billion on July 31, 2013.  This represents an increase of 39 percent over the $192.9 billion of managed assets on July 31, 2012 and an increase of 3 percent from the $260.3 billion of managed assets on April 30, 2013.  The year-over-year increase in ending assets under management reflects the $34.8 billion of managed assets gained in the December 2012 acquisition of the former Clifton Investment Management Company ("Clifton") by subsidiary Parametric Portfolio Associates LLC ("Parametric"), twelve-month net inflows of $23.0 billion and market price appreciation of $18.2 billion.  The sequential increase in ending assets under management reflects net inflows of $8.8 billion offset by market price declines of $0.4 billion.

Average consolidated assets under management were $263.7 billion in the third quarter of fiscal 2013, up 37 percent from $192.8 billion in the third quarter of fiscal 2012 and up 4 percent from $253.5 billion in the second quarter of fiscal 2013. 

Attachments 5 and 6 summarize the Company's consolidated assets under management and asset flows by investment mandate and investment vehicle. Attachment 7 summarizes the Company's consolidated assets under management by investment affiliate.

As shown in Attachment 6, consolidated gross sales and other inflows were $28.0 billion in the third quarter of fiscal 2013, up 157 percent from $10.9 billion in the third quarter of fiscal 2012 and up 14 percent from $24.7 billion in the second quarter of fiscal 2013. Gross redemptions and other outflows were $19.2 billion in the third quarter of fiscal 2013, up 55 percent from $12.4 billion in the third quarter of fiscal 2012 and up 7 percent from $18.0 billion in the second quarter of fiscal 2013.   

As of July 31, 2013, 49 percent-owned affiliate Hexavest, Inc. ("Hexavest") managed $15.7 billion of client assets, an increase of 3 percent from the $15.3 billion of managed assets on April 30, 2013. Net inflows into Hexavest-managed funds and separate accounts were $0.5 billion in the third quarter of fiscal 2013 compared to net outflows of $0.3 billion in the second quarter of fiscal 2013.  Since Eaton Vance acquired its interest in Hexavest on August 6, 2012, Hexavest's net inflows have totaled $2.9 billion and assets under management have increased by $4.7 billion, or 43 percent, from $11.0 billion at the date of acquisition.  Attachment 9 summarizes assets under management and asset flow information for Hexavest. Other than Eaton Vance-sponsored funds for which Hexavest is advisor or sub-advisor, the managed assets and flows of Hexavest are not included in Eaton Vance consolidated totals.

As of July 31, 2013, the Clifton division of Parametric managed $40.7 billion of client assets, an increase of 13 percent from the $36.0 billion of managed assets on April 30, 2013.  Net inflows into Clifton-managed funds and accounts were $5.1 billion in the third quarter of fiscal 2013 and have totaled $5.0 billion since the Clifton acquisition closed on December 31, 2012.  Clifton-managed assets have increased by $5.9 billion, or 17 percent, from $34.8 billion at the date of acquisition.  The managed assets and flows of Clifton since the date of acquisition are included in Eaton Vance consolidated totals and reflected as assets and flows of Parametric.

Financial Highlights

Three Months Ended

(in thousands, except per share figures)

July 31,

April 30,

July 31,

2013

2013

2012

Revenue

$

350,361

$

331,692

$

298,771

Expenses

231,511

223,622

203,755

Operating income

118,850

108,070

95,016

Operating margin

34%

33%

32%

Non-operating (expense) income

(71,315)

(2,196)

1,875

Income taxes

(25,137)

(38,194)

(34,379)

Equity in net income of affiliates, net of tax

2,652

3,440

175

Net income

25,050

71,120

62,687

Net income attributable to non-controlling

 and other beneficial interests

(1,847)

(7,439)

(12,481)

Net income attributable to

Eaton Vance Corp. shareholders

$

23,203

$

63,681

$

50,206

Adjusted net income attributable to Eaton

Vance Corp. shareholders(1)

$

66,513

$

66,024

$

51,002

Earnings per diluted share

$

0.18

$

0.50

$

0.43

Adjusted earnings per diluted share(1)

$

0.52

$

0.52

$

0.43

Third Quarter Fiscal 2013 vs. Third Quarter Fiscal 2012

In the third quarter of fiscal 2013, revenue increased 17 percent to $350.4 million from revenue of $298.8 million in the third quarter of fiscal 2012.  Investment advisory and administrative fees were up 20 percent, reflecting a 37 percent increase in average consolidated assets under management and lower average effective fee rates, primarily as a result of the Clifton acquisition. Distribution and service fees were up 4 percent in aggregate, reflecting higher managed assets in fund share classes that are subject to distribution and service fees.

Operating expenses increased 14 percent to $231.5 million in the third quarter of fiscal 2013 from $203.8 million in the third quarter of fiscal 2012, reflecting increases in compensation, distribution and service fees, amortization of deferred sales commissions, fund-related expenses and other expenses. Excluding the $2.3 million of structuring fees, incentive compensation and other expenses incurred in connection with the closed-end fund offered in the third quarter fiscal 2013, operating expenses increased 12 percent from the third quarter of fiscal 2012. The increase in compensation expense reflects increases in sales- and operating income-based incentives, higher employee headcount and increases in base salaries and benefits. Gross sales and other inflows, which drive sales-based incentives, were up 157 percent year-over-year, while pre-bonus adjusted operating income, which drives operating-income based incentives, was up 23 percent over the same period. The increase in distribution expense reflects $1.7 million in closed-end fund-related structuring fees paid to distribution partners and an increase in intermediary marketing support payments, partially offset by a decrease in discretionary marketing expenses. The increase in amortization of deferred sales commissions largely reflects an increase in Class C share amortization.  The increase in fund-related expenses reflects an increase in subadvisory fees and $0.3 million of fund-related expenses incurred in conjunction with the closed-end fund offering mentioned above. Other expenses increased 6 percent, as increases in travel-related expenses, information technology and other corporate expenses were partially offset by decreases in professional fees and facilities-related expenses. 

Operating income was up 25 percent to $118.9 million in the third quarter of fiscal 2013 from $95.0 million in the third quarter of fiscal 2012.

Non-operating expense was $71.3 million in the third quarter of fiscal 2013 compared to non-operating income of $1.9 million in the third quarter of fiscal 2012. The swing to non-operating expense from non-operating income reflects $52.9 million in costs incurred on the retirement of $250 million of the Company's 2017 Senior Notes in the third quarter of fiscal 2013, a decline of $10.0 million in gains (losses) and other investment income, a $0.6 million increase in interest expense and a $9.7 million decline in income (expense) of the Company's consolidated collateralized obligation entity ("CLO").  The decline in gains (losses) and other investment income reflects a $3.1 million loss recognized in the third quarter of fiscal 2013 on a reverse treasury lock entered into in conjunction with the retirement of the 2017 Senior Notes and markdowns in fixed income positions in the Company's seed capital portfolio in the third quarter of fiscal 2013.  The increase in interest expense reflects approximately $0.9 million of additional interest expense recognized in the third quarter of fiscal 2013 related to the accelerated amortization of a treasury lock tied to the retired portion of the 2017 Senior Notes.   

During the third quarter of fiscal 2013, the Company settled a multi-year state tax audit for a lump sum payment of $19.6 million. Taking into account prior accruals and the federal tax benefit, the effect on earnings was an increase to income tax expense of $6.7 million.  The Company's effective tax rate, calculated as a percentage of income before income taxes and equity in net income of affiliates, was 52.9 percent in the third quarter of fiscal 2013. Excluding the state tax settlement and the impact of CLO entity expense borne by other beneficial interest holders, the Company's effective tax rate was 37.1 percent. 

Equity in net income of affiliates increased $2.5 million from the third quarter of fiscal 2012, reflecting $2.5 million of Company equity in the net income of Hexavest.

Net income attributable to non-controlling and other beneficial interests was $1.8 million in the third quarter of fiscal 2013 compared to $12.5 million in the third quarter of fiscal 2012. As shown in Attachment 3, the change reflects a decline in the net income (loss) attributable to non-controlling interest holders of the Company's consolidated CLO entity and a decline in net income (loss) attributable to non-controlling interest holders of the Company's consolidated funds. 

Weighted average diluted shares outstanding increased 9.3 million shares, or 8 percent, in the third quarter of fiscal 2013 over the third quarter of fiscal 2012.  The change reflects an increase in the total number of shares outstanding due to exercise of employee stock options and an increase in the dilutive effect of in-the-money options resulting from a 58 percent increase in the quarterly average share price of the Company's Non-Voting Common Stock.

Third Quarter Fiscal 2013 vs. Second Quarter Fiscal 2013

In the third quarter of fiscal 2013, revenue increased 6 percent to $350.4 million from revenue of $331.7 million in the second quarter of fiscal 2013.  Investment advisory and administrative fees were up 6 percent in the third quarter of fiscal 2013 compared to the second quarter of fiscal 2013, reflecting a 4 percent increase in average consolidated assets under management and a modest increase in average effective fee rates. Performance fees contributed $0.9 million and $0.1 million to investment advisory and administrative fees in the third quarter of fiscal 2013 and the second quarter of fiscal 2013, respectively. Distribution and service fee revenue increased 3 percent in aggregate, reflecting an increase in average managed assets in fund share classes that are subject to such fees.

Operating expenses increased 4 percent to $231.5 million in the third quarter of fiscal 2013 from $223.6 million in the second quarter of fiscal 2013, reflecting increases in compensation, fund-related and other expenses and higher amortization of deferred sales commissions, partially offset by a decrease in service fee expense. The increase in compensation expense reflects increases in operating income-based incentives and increases in the number of payroll days in the quarter, offset by a decrease in sales-based incentives. Pre-bonus adjusted operating income, which drives operating-income based incentives, was up 9 percent over the second quarter of fiscal 2013. Lower sales-based incentives reflect a shift in sales mix from point-of-sale incentives to revenue-based incentives paid over time.  The increase in amortization of deferred sales commissions largely reflects an increase in Class C share amortization. Fund-related expenses increased 2 percent due to an increase in sub-advisory fees paid. Other expenses increased 6 percent, reflecting increases in travel-related expenses, facilities-related expenses, information technology, professional services and other corporate expenses.

Operating income was up 10 percent to $118.9 million in the third quarter of fiscal 2013 from $108.1 million in the second quarter of fiscal 2013.

Non-operating expense was $71.3 million in the third quarter of fiscal 2013 compared to $2.2 million in the second quarter of fiscal 2013.  The increase in non-operating expense reflects the $52.9 million in costs incurred on the retirement of $250 million of the Company's 2017 Senior Notes in the third quarter, a $13.1 million decline in gains (losses) and other investment income, a $0.6 million increase in interest expense and a $2.6 million decline in income (expense) of the Company's consolidated CLO entity.  The decline in gains (losses) and other investment income reflects the $3.1 million loss recognized in the third quarter on a reverse treasury lock entered into in conjunction with the retirement of the 2017 Senior Notes and markdowns in fixed income positions in the Company's seed capital portfolio in the third quarter.  The increase in interest expense reflects approximately $0.9 million of additional interest expense recognized in the third quarter related to the accelerated amortization of a treasury lock tied to the retired portion of the 2017 Senior Notes.

Equity in net income of affiliates decreased by $0.8 million in the third quarter of fiscal 2013 compared to the second quarter of fiscal 2013, primarily reflecting a decline in gains (losses) and other income on the Company's investments in sponsored products.  Equity in net income of affiliates for the third quarter of fiscal 2013 and the second quarter of fiscal 2013 includes $2.5 million and $2.1 million, respectively, of Company equity in net income of Hexavest. 

Net income attributable to non-controlling and other beneficial interests totaled $1.8 million in the third quarter of fiscal 2013 and $7.4 million in the second quarter of fiscal 2013. As shown in Attachment 3, the decrease can be primarily attributed to a decline in the net income (loss) attributable to non-controlling interest holders of the Company's consolidated CLO entity and a decline in net income (loss) attributable to non-controlling interest holders of the Company's consolidated funds.  Included in net income attributable to non-controlling and other beneficial interests in the second quarter of fiscal 2013 was a $0.7 million non-controlling interest value adjustment relating to subsidiary Parametric Risk Advisors LLC based on an April 30 enterprise value measurement.

Balance Sheet Information

Cash and cash equivalents totaled $379.4 million on July 31, 2013, with no outstanding borrowings against the Company's $300 million credit facility.  During the third quarter of fiscal 2013, the Company issued $325 million of new 3.625 percent 2023 Senior Notes and retired $250 million of its outstanding 2017 Senior Notes.  During the first nine months of fiscal 2013, the Company used $48.2 million to repurchase and retire approximately 1.3 million shares of its Non-Voting Common Stock under its repurchase authorization.  Approximately 2.6 million shares of the current 8.0 million share repurchase authorization remains unused.

Conference Call Information

Eaton Vance Corp. will host a conference call and webcast at 11:00 AM EDT today to discuss the financial results for the three and nine months ended July 31, 2013. To participate in the conference call, please call 877-407-0778 (domestic) or 201-689-8565 (international) and refer to "Eaton Vance Corp. Third Quarter Earnings." A webcast of the conference call can also be accessed via Eaton Vance's website, www.eatonvance.com

A replay of the call will be available for one week by calling 877-660-6853 (domestic) or 201-612-7415 (international) or by accessing Eaton Vance's website, www.eatonvance.com. Listeners to the telephone replay must enter the confirmation code 419235.

About Eaton Vance Corp.

Eaton Vance Corp. is one of the oldest investment management firms in the United States, with a history dating back to 1924. Eaton Vance and its affiliates offer individuals and institutions a broad array of investment strategies and wealth management solutions.  The Company's long record of providing exemplary service, timely innovation and attractive returns through a variety of market conditions has made Eaton Vance the investment manager of choice for many of today's most discerning investors.  For more information about Eaton Vance, visit www.eatonvance.com.

Forward-Looking Statements

This news release may contain statements that are not historical facts, referred to as "forward-looking statements."  The Company's actual future results may differ significantly from those stated in any forward-looking statements, depending on factors such as changes in securities or financial markets or general economic conditions, client sales and redemption activity, the continuation of investment advisory, administration, distribution and service contracts, and other risks discussed in the Company's filings with the Securities and Exchange Commission.

_________________________ (1) Although the Company reports its financial results in accordance with GAAP, management believes that certain non-GAAP financial measures, while not a substitute for GAAP financial measures, may be effective indicators of the Company's performance over time. Adjusted net income and adjusted earnings per diluted share reflect the add back of adjustments in connection with changes in the estimated redemption value of non-controlling interests in our affiliates redeemable at other than fair value ("non-controlling interest value adjustments"), closed-end fund structuring fees and other items management deems non-recurring or non-operating, such as special dividends, costs associated with retiring debt and tax settlements. See reconciliation provided in Attachment 2 for more information on adjusting items.

Attachment 1

Eaton Vance Corp.

Summary of Results of Operations

(in thousands, except per share figures)

Three Months Ended

Nine Months Ended

%

%

Change

Change

Q3 2013

Q3 2013

July 31,

April 30,

July 31,

vs.

vs.

July 31,

July 31,

%

2013

2013

2012

Q2 2013

Q3 2012

2013

2012

Change

Revenue:

Investment advisory and administrative fees

$

293,589

$

276,921

$

244,655

6

%

20

%

$

833,791

$

732,995

14

%

Distribution and underwriter fees

22,681

22,165

22,066

2

3

67,597

67,132

1

Service fees

32,259

31,132

30,760

4

5

94,521

95,124

(1)

Other revenue

1,832

1,474

1,290

24

42

4,661

3,896

20

Total revenue

350,361

331,692

298,771

6

17

1,000,570

899,147

11

Expenses:

Compensation and related costs

115,379

110,012

94,700

5

22

334,220

288,949

16

Distribution expense

35,452

35,304

32,670

-

9

104,645

97,958

7

Service fee expense

29,013

29,211

28,165

(1)

3

86,488

84,926

2

Amortization of deferred sales commissions

4,983

4,752

4,593

5

8

14,518

15,946

(9)

Fund-related expenses

8,230

8,074

7,205

2

14

23,728

20,446

16

Other expenses

38,454

36,269

36,422

6

6

109,371

104,275

5

Total expenses

231,511

223,622

203,755

4

14

672,970

612,500

10

Operating income

118,850

108,070

95,016

10

25

327,600

286,647

14

Non-operating income (expense):

(Losses) gains and other investment income, net

(8,027)

5,043

1,927

NM

NM

2,223

12,900

(83)

Interest expense

(9,167)

(8,572)

(8,525)

7

8

(26,309)

(25,350)

4

Loss on extinguishment of debt

(52,886)

-

-

NM

NM

(52,886)

-

NM

Other income (expense) of consolidated CLO entity:

     Gains and other investment income, net

1,704

4,384

12,872

(61)

(87)

7,881

32,047

(75)

     Interest expense

(2,939)

(3,051)

(4,399)

(4)

(33)

(10,211)

(12,844)

(20)

Total non-operating (expense) income

(71,315)

(2,196)

1,875

NM

NM

(79,302)

6,753

NM

Income before income taxes and equity

   in net income of affiliates

47,535

105,874

96,891

(55)

(51)

248,298

293,400

(15)

Income taxes

(25,137)

(38,194)

(34,379)

(34)

(27)

(99,270)

(104,730)

(5)

Equity in net income of affiliates, net of tax

2,652

3,440

175

(23)

NM

9,269

1,657

459

Net income

25,050

71,120

62,687

(65)

(60)

158,297

190,327

(17)

Net income attributable to non-controlling

   and other beneficial interests

(1,847)

(7,439)

(12,481)

(75)

(85)

(21,608)

(39,980)

(46)

Net income attributable to

   Eaton Vance Corp. Shareholders

$

23,203

$

63,681

$

50,206

(64)

(54)

$

136,689

$

150,347

(9)

Earnings per share:

Basic

$

0.19

$

0.53

$

0.44

(64)

(57)

$

1.12

$

1.30

(14)

Diluted

$

0.18

$

0.50

$

0.43

(64)

(58)

$

1.07

$

1.27

(16)

Weighted average shares outstanding:

Basic

117,594

117,102

112,110

-

5

116,399

112,354

4

Diluted

123,872

123,330

114,591

-

8

122,155

115,031

6

Dividends declared per share

$

0.20

$

0.20

$

0.19

-

5

$

1.60

$

0.57

181

 

Attachment 2

Eaton Vance Corp.

Reconciliation of net income attributable to Eaton Vance Corp.

shareholders to adjusted net income attributable to Eaton Vance

Corp. shareholders and earnings per diluted share to adjusted earnings per diluted share

Three Months Ended

Nine Months Ended

% Change

% Change

July 31,

April 30,

July 31,

Q3 2013 vs.

Q3 2013 vs.

July 31,

July 31,

%

(in thousands, except per share figures)

2013

2013

2012

Q2 2013

Q3 2012

2013

2012

Change

Net income attributable to Eaton

Vance Corp. shareholders

$

23,203

$

63,681

$

50,206

(64)

%

(54)

%

$

136,689

$

150,347

(9)

%

Non-controlling interest value

adjustments

405

666

796

(39)

(49)

11,718

9,996

17

Closed-end fund structuring fees,

net of tax

1,043

1,677

-

(38)

NM

2,720

-

NM

Loss on extinguishment of debt, net of tax *

35,171

-

-

NM

NM

35,171

-

NM

Settlement of state tax audit

6,691

-

-

NM

NM

6,691

-

NM

Adjusted net income attributable to

Eaton Vance Corp. shareholders

$

66,513

$

66,024

$

51,002

1

30

$

192,989

$

160,343

20

Earnings per diluted share

$

0.18

$

0.50

$

0.43

(64)

(58)

$

1.07

$

1.27

(16)

Non-controlling interest value

adjustments

-

0.01

-

NM

NM

0.09

0.08

13

Closed-end fund structuring fees,

net of tax

0.01

0.01

-

-

NM

0.02

-

NM

Loss on extinguishment of debt, net of tax

0.28

-

-

NM

NM

0.28

-

NM

Settlement of state tax audit

0.05

-

-

NM

NM

0.05

-

NM

Special dividend adjustment

-

-

-

NM

NM

0.02

-

NM

Adjusted earnings per diluted share

$

0.52

$

0.52

$

0.43

-

21

$

1.53

$

1.35

13

* The loss on extinguishment of debt is comprised of a $52.9 million loss on extinguishment of debt, a $3.1 million loss on a reverse treasury lock entered into in

   conjunction with the retirement of debt and $0.9 million of additional interest related to the accelerated amortization of a treasury lock tied to the retired portion of the debt.

Attachment 3

Eaton Vance Corp.

Components of net income attributable

to non-controlling and other beneficial interests

Three Months Ended

Nine Months Ended

% Change

% Change

July 31,

April 30,

July 31,

Q3 2013 vs.

Q3 2013 vs.

July 31,

July 31,

%

(in thousands)

2013

2013

2012

Q2 2013

Q3 2012

2013

2012

Change

Consolidated funds

$

(206)

$

2,986

$

839

NM

%

NM

%

$

3,886

$

3,167

23

%

Majority-owned subsidiaries

4,007

3,690

3,354

9

19

11,596

10,465

11

Non-controlling interest value

adjustments

405

666

796

(39)

(49)

11,718

9,996

17

Consolidated CLO entity

(2,359)

97

7,492

NM

NM

(5,592)

16,352

NM

Net income attributable to non-controlling

and other beneficial interests

$

1,847

$

7,439

$

12,481

(75)

(85)

$

21,608

$

39,980

(46)

 

Attachment 4

Eaton Vance Corp.

Balance Sheet

(in thousands, except per share figures)

July 31,

October 31,

2013

2012

Assets

Cash and cash equivalents

$

379,414

$

462,076

Investment advisory fees and other receivables

161,237

133,589

Investments

545,474

486,933

Assets of consolidated collateralized loan obligation ("CLO") entity:

          Cash and cash equivalents

58,300

36,758

          Bank loans and other investments

245,991

430,583

          Other assets

2,237

1,107

Deferred sales commissions

18,859

19,336

Deferred income taxes

57,422

51,234

Equipment and leasehold improvements, net

49,713

54,889

Intangible assets, net

76,892

59,228

Goodwill

228,876

154,636

Other assets

85,942

89,122

   Total assets

$

1,910,357

$

1,979,491

Liabilities, Temporary Equity and Permanent Equity

Liabilities:

Accrued compensation

$

133,686

$

145,338

Accounts payable and accrued expenses

58,645

59,397

Dividend payable

24,273

23,250

Debt

573,460

500,000

Liabilities of consolidated CLO entity:

          Senior and subordinated note obligations

291,175

446,605

          Other liabilities

421

766

Other liabilities

77,411

91,785

   Total liabilities

1,159,071

1,267,141

Commitments and contingencies

Temporary Equity:

Redeemable non-controlling interests

97,051

98,765

          Total temporary equity

97,051

98,765

Permanent Equity:

Voting Common Stock, par value $0.00390625 per share:

   Authorized, 1,280,000 shares

   Issued, 399,240 and 413,167 shares, respectively

2

2

Non-Voting Common Stock, par value $0.00390625 per share:

   Authorized, 190,720,000 shares

   Issued, 120,938,397 and 115,878,384 shares, respectively

472

453

Additional paid-in capital

134,464

26,730

Notes receivable from stock option exercises

(6,861)

(4,155)

Accumulated other comprehensive income

686

3,923

Appropriated retained earnings

13,107

18,699

Retained earnings

511,034

566,420

   Total Eaton Vance Corp. shareholders' equity

652,904

612,072

Non-redeemable non-controlling interests

1,331

1,513

   Total permanent equity

654,235

613,585

Total liabilities, temporary equity and permanent equity

$

1,910,357

$

1,979,491

 

Attachment 5

Eaton Vance Corp.

Consolidated Net Flows by Investment Mandate(1)

(in millions)

Three Months Ended

Nine Months Ended

July 31,

April 30,

July 31,

July 31,

July 31,

2013

2013

2012

2013

2012

Equity assets - beginning of period(2)

$

89,534

$

86,518

$

86,040

$

80,782

$

84,281

Sales and other inflows

4,056

5,270

3,551

13,823

12,743

Redemptions/outflows

(4,185)

(4,990)

(6,660)

(14,135)

(20,132)

Net flows

(129)

280

(3,109)

(312)

(7,389)

Assets acquired(3)

-

-

-

1,572

-

Exchanges

46

124

(19)

162

(32)

Market value change

1,323

2,612

(2,652)

8,570

3,400

Equity assets - end of period

$

90,774

$

89,534

$

80,260

$

90,774

$

80,260

Fixed income assets - beginning of period

49,949

49,679

46,891

49,003

43,708

Sales and other inflows

2,065

3,289

2,886

8,732

9,139

Redemptions/outflows

(3,595)

(3,348)

(1,973)

(10,318)

(6,702)

Net flows

(1,530)

(59)

913

(1,586)

2,437

Assets acquired(3)

-

-

-

472

-

Exchanges

(277)

(59)

30

(358)

70

Market value change

(2,321)

388

364

(1,710)

1,983

Fixed income assets - end of period

$

45,821

$

49,949

$

48,198

$

45,821

$

48,198

Floating-rate income assets - 

beginning of period

33,679

28,656

24,847

26,388

24,322

Sales and other inflows

6,636

6,092

2,091

15,987

5,212

Redemptions/outflows

(2,152)

(1,153)

(1,535)

(4,664)

(4,274)

Net flows

4,484

4,939

556

11,323

938

Exchanges

169

50

5

251

24

Market value change

(162)

34

(163)

208

(39)

Floating-rate income assets - end

of period

$

38,170

$

33,679

$

25,245

$

38,170

$

25,245

Alternative assets -  beginning of period

16,022

14,345

10,517

12,864

10,650

Sales and other inflows

2,348

2,767

1,343

6,925

3,570

Redemptions/outflows

(1,770)

(960)

(1,201)

(3,785)

(3,440)

Net flows

578

1,807

142

3,140

130

Assets acquired(3)

-

-

-

650

-

Exchanges

(22)

(103)

(13)

(138)

(74)

Market value change

(480)

(27)

(34)

(418)

(94)

Alternative assets - end of period

$

16,098

$

16,022

$

10,612

$

16,098

$

10,612

Implementation services assets -

beginning of period(4)

70,966

68,420

28,852

30,302

24,574

Sales and other inflows

12,933

7,252

1,052

26,663

4,980

Redemptions/outflows

(7,504)

(7,576)

(996)

(18,396)

(3,090)

Net flows

5,429

(324)

56

8,267

1,890

Assets acquired(3)

-

-

-

32,064

-

Exchanges

-

(15)

-

(14)

(1)

Market value change

1,278

2,885

(585)

7,054

1,860

Implementation services assets -

end of period

$

77,673

$

70,966

$

28,323

$

77,673

$

28,323

Long-term assets - beginning of period

260,150

247,618

197,147

199,339

187,535

Sales and other inflows

28,038

24,670

10,923

72,130

35,644

Redemptions/outflows

(19,206)

(18,027)

(12,365)

(51,298)

(37,638)

Net flows

8,832

6,643

(1,442)

20,832

(1,994)

Assets acquired(3)

-

-

-

34,758

-

Exchanges

(84)

(3)

3

(97)

(13)

Market value change

(362)

5,892

(3,070)

13,704

7,110

Total long-term assets - end of period

$

268,536

$

260,150

$

192,638

$

268,536

$

192,638

Cash management fund assets -

end of period

219

127

220

219

220

Total assets under management -

end of period

$

268,755

$

260,277

$

192,858

$

268,755

$

192,858

(1)  Consolidated Eaton Vance Corp.  See Attachment 9 for managed assets and flows of 49 percent-owned Hexavest Inc.

(2)  Balances include assets in balanced accounts holding income securities.

(3)  Balances represent Clifton assets acquired on December 31, 2012.

(4)  Balances represent amounts reclassified from equity for fiscal 2012 periods.

 

Attachment 6

Eaton Vance Corp.

Consolidated Net Flows by Investment Vehicle(1)

(in millions)

Three Months Ended

Nine Months Ended

July 31,

April 30,

July 31,

July 31,

July 31,

2013

2013

2012

2013

2012

Long-term fund assets - beginning of period

$

127,014

$

119,162

$

114,029

$

113,249

$

111,705

Sales and other inflows

11,597

12,629

6,266

33,307

19,819

Redemptions/outflows

(7,932)

(6,506)

(8,554)

(21,316)

(24,483)

Net flows

3,665

6,123

(2,288)

11,991

(4,664)

Assets acquired(2)

-

-

-

638

-

Exchanges

(241)

(3)

3

(262)

(13)

Market value change

(1,396)

1,732

(1,487)

3,426

3,229

Long-term fund assets - end of period

$

129,042

$

127,014

$

110,257

$

129,042

$

110,257

Institutional separate account assets -

beginning of period

84,724

83,350

40,883

43,338

38,003

Sales and other inflows

13,480

8,102

2,262

28,366

7,347

Redemptions/outflows

(8,901)

(9,071)

(1,970)

(21,792)

(6,979)

Net flows

4,579

(969)

292

6,574

368

Assets acquired(2)

-

-

-

34,120

-

Exchanges

152

-

-

157

11

Market value change

18

2,343

(890)

5,284

1,903

Institutional separate account assets -

end of period

$

89,473

$

84,724

$

40,285

$

89,473

$

40,285

High-net-worth separate account assets -

beginning of period

18,027

16,245

14,704

15,036

13,256

Sales and other inflows

1,055

1,497

752

3,931

3,110

Redemptions/outflows

(614)

(573)

(540)

(2,385)

(1,626)

Net flows

441

924

212

1,546

1,484

Exchanges

(9)

9

-

(16)

(999)

Market value change

612

849

(234)

2,505

941

High-net-worth separate account

   assets - end of period

$

19,071

$

18,027

$

14,682

$

19,071

$

14,682

Retail managed account assets -

beginning of period

30,385

28,861

27,531

27,716

24,571

Sales and other inflows

1,906

2,442

1,643

6,526

5,368

Redemptions/outflows

(1,759)

(1,877)

(1,301)

(5,805)

(4,550)

Net flows

147

565

342

721

818

Exchanges

14

(9)

-

24

988

Market value change

404

968

(459)

2,489

1,037

Retail managed account assets -

end of period

$

30,950

$

30,385

$

27,414

$

30,950

$

27,414

Total long-term assets - beginning

of period

260,150

247,618

197,147

199,339

187,535

Sales and other inflows

28,038

24,670

10,923

72,130

35,644

Redemptions/outflows

(19,206)

(18,027)

(12,365)

(51,298)

(37,638)

Net flows

8,832

6,643

(1,442)

20,832

(1,994)

Assets acquired(2)

-

-

-

34,758

-

Exchanges

(84)

(3)

3

(97)

(13)

Market value change

(362)

5,892

(3,070)

13,704

7,110

Total long-term assets - end of period

$

268,536

$

260,150

$

192,638

$

268,536

$

192,638

Cash management fund assets -

end of period

219

127

220

219

220

Total assets under management -

end of period

$

268,755

$

260,277

$

192,858

$

268,755

$

192,858

(1)   Consolidated Eaton Vance Corp.  See Attachment 9 for managed assets and flows of 49 percent-owned Hexavest Inc.

(2)   Balances represent Clifton assets acquired on December 31, 2012.

 

Attachment 7

Eaton Vance Corp.

Consolidated Assets under Management by Investment Affiliate (1)

(in millions)

July 31,

April 30,

%

July 31,

%

2013

2013

Change

2012

Change

Eaton Vance Management(2)

$

143,229

$

142,211

1%

$

128,953

11%

Parametric

107,192

100,760

6%

49,023

119%

Atlanta Capital

18,334

17,306

6%

14,882

23%

Total

$

268,755

$

260,277

3%

$

192,858

39%

(1)   Consolidated Eaton Vance Corp. See Attachment 9 for managed assets and flows of 49 percent-owned Hexavest.

(2)   Includes managed assets of wholly owned subsidiaries Eaton Vance Investment Counsel and Fox Asset Management

      LLC, as well as certain Eaton Vance-sponsored funds and accounts managed by Hexavest and unaffiliated third-party

      advisors under Eaton Vance supervision.

Attachment 8

Eaton Vance Corp.

Consolidated Assets under Management by Investment Mandate (1)

(in millions)

July 31,

April 30,

%

July 31,

%

2013

2013

Change

2012

Change

Equity(2)

$

90,774

$

89,534

1%

$

80,260

13%

Fixed income

45,821

49,949

-8%

48,198

-5%

Floating-rate income

38,170

33,679

13%

25,245

51%

Alternative

16,098

16,022

0%

10,612

52%

Implementation services

77,673

70,966

9%

28,323

174%

Cash management

219

127

72%

220

0%

Total

$

268,755

$

260,277

3%

$

192,858

39%

(1)   Consolidated Eaton Vance Corp. See Attachment 9 for managed assets and flows of 49 percent-owned Hexavest.

(2)   Balances include assets in balanced accounts holding income securities.

 

Attachment 9

Eaton Vance Corp.

Hexavest Inc. Assets under Management and Net Flows

(in millions)

Three Months Ended

Nine Months Ended

July 31,

April 30,

July 31,

2013

2013

2013

Eaton Vance distributed:

Eaton Vance sponsored funds - beginning

   of period(1)

$

161

$

135

$

37

Sales and other inflows

19

17

130

Redemptions/outflows

(6)

(1)

(12)

Net flows

13

16

118

Market value change

(1)

10

18

Eaton Vance sponsored funds - end

   of period

$

173

$

161

$

173

Eaton Vance distributed separate accounts -

   beginning of period(2)

$

1,283

$

1,185

$

-

Sales and other inflows

227

3

1,378

Redemptions/outflows

(1)

-

(1)

Net flows

226

3

1,377

Market value change

6

95

138

Eaton Vance distributed separate accounts -

   end of period

$

1,515

$

1,283

$

1,515

Total Eaton Vance distributed - beginning

   of period

$

1,444

$

1,320

$

37

Sales and other inflows

246

20

1,508

Redemptions/outflows

(7)

(1)

(13)

Net flows

239

19

1,495

Market value change

5

105

156

Total Eaton Vance distributed - end

   of period

$

1,688

$

1,444

$

1,688

Hexavest directly distributed - beginning

   of period(3)

$

13,831

$

13,224

$

12,073

Sales and other inflows

785

298

2,003

Redemptions/outflows

(530)

(570)

(1,363)

Net flows

255

(272)

640

Market value change

(40)

879

1,333

Hexavest directly distributed - end

   of period

$

14,046

$

13,831

$

14,046

Total Hexavest assets - beginning of period

$

15,275

$

14,544

$

12,110

Sales and other inflows

1,031

318

3,511

Redemptions/outflows

(537)

(571)

(1,376)

Net flows

494

(253)

2,135

Market value change

(35)

984

1,489

Total Hexavest assets - end of period

$

15,734

$

15,275

$

15,734

(1)

Managed assets and flows of Eaton Vance-sponsored pooled investment vehicles for which Hexavest is advisor or sub-advisor.

Eaton Vance receives management and/or distribution revenue on these assets, which are included in the Eaton

Vance consolidated results in Attachments 5, 6, 7 and 8.

(2)

Managed assets and flows of Eaton Vance-distributed separate accounts managed by Hexavest.  Eaton Vance receives

distribution, but not management, revenue on these assets, which are not included in the Eaton Vance consolidated

results in Attachments 5, 6, 7 and 8.

(3)

Managed assets and flows of pre-transaction Hexavest clients and post-transaction Hexavest clients in Canada. Eaton

Vance receives no management or distribution revenue on these assets, which are not included in the Eaton Vance

consolidated results in Attachments 5, 6, 7 and 8.

 

 

SOURCE Eaton Vance Corp.



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