Eaton Vance Corp. Report for the Three and Nine Month Periods Ended July 31, 2014

Aug 20, 2014, 08:54 ET from Eaton Vance Corp.

BOSTON, Aug. 20, 2014 /PRNewswire/ -- Eaton Vance Corp. (NYSE: EV) today reported adjusted earnings per diluted share(1) of $0.63 for the third quarter of fiscal 2014, an increase of 21 percent over the $0.52 of adjusted earnings per diluted share in the third quarter of fiscal 2013 and an increase of 7 percent over the $0.59 of adjusted earnings per diluted share in the second quarter of fiscal 2014.  Net income and gains (losses) on seed capital investments contributed $0.01 in the third quarter of fiscal 2014, compared to -$0.02 and $0.01 in the third quarter of fiscal 2013 and second quarter of fiscal 2014, respectively.

As determined under generally accepted accounting principles in the United States of America ("GAAP"), the Company earned $0.63 in the third quarter of fiscal 2014, $0.18 in the third quarter of fiscal 2013 and $0.59 in the second quarter of fiscal 2014. In the third quarter of fiscal 2013, adjusted earnings differed from GAAP earnings 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 that quarter.

Adjusted earnings per diluted share were $1.80 in the nine months ended July 31, 2014 compared to $1.53 in the nine months ended July 31, 2013, an increase of 18 percent. The Company's GAAP earnings per diluted share were $1.78 and $1.07, respectively, for these periods.

Net outflows of $2.0 billion from long-term funds and separate accounts in the third quarter of fiscal 2014 compare to net inflows of $8.8 billion in the third quarter of fiscal 2013 and net outflows of $0.9 billion in the second quarter of fiscal 2014. 

"Eaton Vance again achieved record earnings in the third quarter of fiscal 2014," said Thomas Faust Jr., Chairman and Chief Executive Officer.  "Although flows remain disappointing, continued development of emerging franchises and strong investment performance support improved organic growth in the coming quarters."   

Consolidated assets under management were $288.2 billion on July 31, 2014, an increase of 7 percent from the $268.8 billion of managed assets on July 31, 2013 and an increase of 1 percent from the $285.9 billion of managed assets on April 30, 2014.  The increase in ending assets under management from July 31 of last year reflects market appreciation of $19.6 billion and net outflows of $0.2 billion. The sequential quarterly increase in ending assets under management reflects market price appreciation of $4.4 billion and net outflows of $2.0 billion.

Average consolidated assets under management were $289.3 billion in the third quarter of fiscal 2014, up 10 percent from $263.7 billion in the third quarter of fiscal 2013 and up 2 percent from $284.4 billion in the second quarter of fiscal 2014. 

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 $26.2 billion in the third quarter of fiscal 2014, down 7 percent from $28.0 billion in the third quarter of fiscal 2013 and up 15 percent from $22.8 billion in the second quarter of fiscal 2014. Gross redemptions and other outflows were $28.2 billion in the third quarter of fiscal 2014, up 47 percent from $19.2 billion in the third quarter of fiscal 2013 and up 19 percent from $23.7 billion in the second quarter of fiscal 2014. 

As of July 31, 2014, 49 percent-owned affiliate Hexavest, Inc. ("Hexavest") managed $17.0 billion of client assets, an increase of 8 percent from the $15.7 billion of managed assets on July 31, 2013 and substantially unchanged from the $17.1 billion of managed assets on April 30, 2014. Hexavest-managed funds and separate accounts had net outflows of $0.3 billion in the third quarter of fiscal 2014, net inflows of $0.5 billion in the third quarter of fiscal 2013 and net outflows of $0.1 billion in the second quarter of fiscal 2014.  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.

Financial Highlights

Three Months Ended

(in thousands, except per share figures)

July 31,

April 30,

July 31,

2014

2014

2013

Revenue

$

367,590

$

354,061

$

350,361

Expenses

236,412

228,758

231,511

Operating income

131,178

125,303

118,850

    Operating margin

35.7%

35.4%

33.9%

Non-operating expense

(4,850)

(7,226)

(71,315)

Income taxes

(48,899)

(45,249)

(25,137)

Equity in net income of affiliates, net of tax

3,840

5,219

2,652

Net income

81,269

78,047

25,050

Net income attributable to non-controlling

 and other beneficial interests

(3,334)

(3,146)

(1,847)

Net income attributable to

Eaton Vance Corp. shareholders

$

77,935

$

74,901

$

23,203

Adjusted net income attributable to Eaton

Vance Corp. shareholders(1)

$

77,876

$

74,901

$

66,513

Earnings per diluted share

$

0.63

$

0.59

$

0.18

Adjusted earnings per diluted share(1)

$

0.63

$

0.59

$

0.52

Third Quarter Fiscal 2014 vs. Third Quarter Fiscal 2013

In the third quarter of fiscal 2014, revenue increased 5 percent to $367.6 million from revenue of $350.4 million in the third quarter of fiscal 2013.  Investment advisory and administrative fees were up 6 percent, reflecting a 10 percent increase in average consolidated assets under management and lower average effective fee rates. Performance fees contributed $0.9 million to investment advisory and administrative fees, unchanged from the third quarter of fiscal 2013. Distribution and service fee revenues were collectively down 3 percent, reflecting lower managed assets in fund share classes that are subject to distribution and service fees.

Operating expenses increased 2 percent to $236.4 million in the third quarter of fiscal 2014 from $231.5 million in the third quarter of fiscal 2013, reflecting increases in compensation, service fee expense, fund-related expenses and other operating expenses, offset by reduced amortization of deferred sales commissions. The increase in compensation expense reflects increases in stock-based compensation, higher employee headcount and increases in base salaries and benefits, offset by lower operating income-based bonus accruals and a decrease in sales-based incentives. The increase in service fee expense reflects an increase in average assets under management subject to service fee payments.  The increase in fund-related expenses primarily reflects an increase in sub-advisory expenses for Company-sponsored funds managed by unaffiliated sub-advisors. Other expenses increased 4 percent, reflecting increases in travel and information technology expenses.  The decrease in amortization of deferred sales commissions largely reflects decreases in Class B share and Class C share amortization.  Distribution expense was flat year-over-year, reflecting the non-recurrence of $1.7 million in closed-end fund-related structuring fees paid in the third quarter of fiscal 2013, offset by an increase in intermediary marketing support payments.

Operating income was up 10 percent to $131.2 million in the third quarter of fiscal 2014 from $118.9 million in the third quarter of fiscal 2013.  Operating margin improved to 35.7 percent in the third quarter of fiscal 2014 from 33.9 percent in the third quarter of fiscal 2013.

Non-operating expense totaled $4.9 million in the third quarter of fiscal 2014 compared to $71.3 million in the third quarter of fiscal 2013. The year-over-year change reflects $56.9 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 $7.9 million positive change in gains (losses) and other investment income related to the Company's investments in sponsored products, a decrease of $1.7 million in interest expense and a $0.9 million decline in income (expense) of the Company's consolidated collateralized loan obligation ("CLO") entities.

The Company's effective tax rate, calculated as a percentage of income before income taxes and equity in net income of affiliates, was 38.7 percent in the third quarter of fiscal 2014. Excluding the impact of consolidated CLO entities' income (expense) borne by other beneficial interest holders, the Company's effective tax rate was 38.5 percent for the quarter. During the third quarter of fiscal 2013, the Company settled a multi-year state tax audit, the net impact of which was an increase to income tax expense of $6.7 million

Equity in net income of affiliates increased to $3.8 million in the third quarter of fiscal 2014 from $2.7 million in the third quarter of fiscal 2013.  Equity in net income of affiliates in the third quarter of fiscal 2014 included $2.9 million of Company equity in the net income of Hexavest and $0.9 million of gains (losses) and other income on the Company's investments in sponsored funds.  Equity in net income of affiliates in the third quarter of fiscal 2013 included $2.5 million of Company equity in the net income of Hexavest and $0.1 million of net income in a private equity partnership. 

Net income attributable to non-controlling and other beneficial interests was $3.3 million in the third quarter of fiscal 2014 compared to $1.8 million in the third quarter of fiscal 2013. As shown in Attachment 3, net income attributable to non-controlling and other beneficial interests included non-controlling interest value adjustments relating to our majority-owned subsidiaries of -$0.1 million and $0.4 million in the third quarter of fiscal 2014 and 2013, respectively. The year-over-year change also reflects a decrease in the net income (loss) attributable to non-controlling interest holders of the Company's consolidated CLO entities.

Third Quarter Fiscal 2014 vs. Second Quarter Fiscal 2014

In the third quarter of fiscal 2014, revenue increased 4 percent to $367.6 million from revenue of $354.1 million in the second quarter of fiscal 2014.  Investment advisory and administrative fees were up 4 percent, reflecting a 2 percent increase in average consolidated assets under management and slightly higher average effective fee rates driven by an increase in the number of fee days in the quarter. Performance fees contributed $0.9 million and $1.0 million to investment advisory and administrative fees in the third and second quarters of fiscal 2014, respectively. Distribution and service fee revenues were up 3 percent in aggregate, reflecting an increase in managed assets in fund share classes that are subject to distribution and service fees.

Operating expenses increased 3 percent to $236.4 million in the third quarter of fiscal 2014 from $228.8 million in the second quarter of fiscal 2014, reflecting increases in compensation, distribution and service fee expenses, fund-related expenses and other operating expenses, offset by reduced amortization of deferred sales commissions. The increase in compensation expense reflects an increase in base salaries, driven by an increase in payroll days in the current quarter, and an increase in stock-based compensation, offset by lower operating income-based bonus accruals. The increase in distribution and service fee expense reflects increased average assets under management subject to those fees. The increase in fund-related expenses can be attributed to an increase in expenses borne by the Company on funds for which it receives an all-in fee, as well as other fund-related expenses. Other expenses increased 4 percent, reflecting an increase in information technology expenses offset by a decrease in professional expenses. The decrease in amortization of deferred sales commissions reflects a decrease in Class C share amortization.

Operating income was up 5 percent to $131.2 million in the third quarter of fiscal 2014 from $125.3 million in the second quarter of fiscal 2014.  Operating margin improved to 35.7 percent in the third quarter of fiscal 2014 from 35.4 percent in the second quarter of fiscal 2014.

Non-operating expense totaled $4.9 million in the third quarter of fiscal 2014 compared to $7.2 million in the second quarter of fiscal 2014, reflecting a $3.7 million positive change in gains (losses) and other investment income related to the Company's investments in sponsored products. 

Equity in net income of affiliates decreased to $3.8 million in the third quarter of fiscal 2014 from $5.2 million in the second quarter of fiscal 2014.  Equity in net income of affiliates included $2.9 million of Company equity in the net income of Hexavest and $0.9 million of gains (losses) and other income on the Company's investments in sponsored funds in the third quarter of fiscal 2014.  Equity in net income of affiliates included $2.6 million of Company equity in the net income of Hexavest, $2.2 million of gains (losses) and other income on the Company's investments in sponsored funds and $0.4 million of net income in a private equity partnership in the second quarter of fiscal 2014. 

Net income attributable to non-controlling and other beneficial interests was $3.3 million in the third quarter of fiscal 2014 and $3.1 million in the second quarter of fiscal 2014.

Weighted average diluted shares outstanding decreased 2.0 million shares, or 2 percent, in the third quarter of fiscal 2014 from the second quarter of fiscal 2014, primarily reflecting the impact of share repurchases.  During the third quarter of fiscal 2014 the Company issued 0.5 million shares of restricted and unrestricted Non-Voting Common Stock in connection with granting incentive equity awards and the exercise of employee stock options. Over the same period, the Company used $92.6 million to repurchase and retire 2.5 million shares of its Non-Voting Common Stock.

Balance Sheet Information

Cash and cash equivalents totaled $362.0 million on July 31, 2014, with no outstanding borrowings against the Company's $300 million credit facility.  Included within investments is $186.8 million of short-term debt securities with maturities between 90 days and one year.  During the first nine months of fiscal 2014, the Company used $227.9 million to repurchase and retire 6.0 million shares of its Non-Voting Common Stock under its repurchase authorizations.  Of the current 8.0 million share repurchase authorization, approximately 7.2 million shares remain available.

Conference Call Information

Eaton Vance Corp. will host a conference call and webcast at 11:00 AM eastern time today to discuss the financial results for the three and nine months ended July 31, 2014. To participate in the conference call, please call 877-201-0168 (domestic) or 647-788-4901 (international) and refer to "Eaton Vance Corp. Third Fiscal Quarter Earnings." Listeners to the conference call must enter the confirmation code 87504388.  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 855-859-2056 (domestic) or 404-537-3406 (international) or by accessing Eaton Vance's website, www.eatonvance.com. Listeners to the telephone replay must enter the confirmation code 87504388.

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.

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 2014

Q3 2014

July 31,

April 30,

July 31,

vs.

vs.

July 31,

July 31,

%

2014

2014

2013

Q2 2014

Q3 2013

2014

2013

Change

Revenue:

Investment advisory and administrative fees

$

311,756

$

300,136

$

293,589

4

%

6

%

$

916,605

$

833,791

10

%

Distribution and underwriter fees

21,548

21,212

22,681

2

(5)

64,381

67,597

(5)

Service fees

31,977

30,829

32,259

4

(1)

95,097

94,521

1

Other revenue

2,309

1,884

1,832

23

26

5,829

4,661

25

Total revenue

367,590

354,061

350,361

4

5

1,081,912

1,000,570

8

Expenses:

Compensation and related costs

117,632

114,656

115,379

3

2

351,110

334,220

5

Distribution expense

35,591

34,785

35,452

2

-

105,924

104,645

1

Service fee expense

29,780

28,281

29,013

5

3

87,266

86,488

1

Amortization of deferred sales commissions

4,084

4,354

4,983

(6)

(18)

13,408

14,518

(8)

Fund-related expenses

9,380

8,455

8,230

11

14

26,288

23,728

11

Other expenses

39,945

38,227

38,454

4

4

117,235

109,371

7

Total expenses

236,412

228,758

231,511

3

2

701,231

672,970

4

Operating income

131,178

125,303

118,850

5

10

380,681

327,600

16

Non-operating income (expense):

Gains (losses) and other investment

income, net

2,917

(738)

(8,027)

NM

NM

2,592

2,223

17

Interest expense

(7,443)

(7,404)

(9,167)

1

(19)

(22,247)

(26,309)

(15)

Loss on extinguishment of debt

-

-

(52,886)

-

NM

-

(52,886)

NM

Other income (expense) of consolidated

CLO entities:

     Gains and other investment income, net

1,434

5,104

1,704

(72)

(16)

15,247

7,881

93

     Interest and other expense

(1,758)

(4,188)

(2,939)

(58)

(40)

(13,781)

(10,211)

35

Total non-operating expense

(4,850)

(7,226)

(71,315)

(33)

(93)

(18,189)

(79,302)

(77)

Income before income taxes and equity

   in net income of affiliates

126,328

118,077

47,535

7

166

362,492

248,298

46

Income taxes

(48,899)

(45,249)

(25,137)

8

95

(138,790)

(99,270)

40

Equity in net income of affiliates, net of tax

3,840

5,219

2,652

(26)

45

12,344

9,269

33

Net income

81,269

78,047

25,050

4

224

236,046

158,297

49

Net income attributable to non-controlling

   and other beneficial interests

(3,334)

(3,146)

(1,847)

6

81

(11,852)

(21,608)

(45)

Net income attributable to

   Eaton Vance Corp. Shareholders

$

77,935

$

74,901

$

23,203

4

236

$

224,194

$

136,689

64

Earnings per share:

Basic

$

0.66

$

0.62

$

0.19

6

247

$

1.86

$

1.12

66

Diluted

$

0.63

$

0.59

$

0.18

7

250

$

1.78

$

1.07

66

Weighted average shares outstanding:

Basic

116,145

118,103

117,594

(2)

(1)

117,248

116,399

1

Diluted

121,013

123,021

123,872

(2)

(2)

122,550

122,155

-

Dividends declared per share:

Regular

$

0.22

$

0.22

$

0.20

-

10

$

0.66

$

0.60

10

Special

$

-

$

-

$

-

-

-

$

-

$

1.00

NM

 

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 2014 vs.

Q3 2014 vs.

July 31,

July 31,

%

(in thousands, except per share figures)

2014

2014

2013

Q2 2014

Q3 2013

2014

2013

Change

Net income attributable to Eaton

Vance Corp. shareholders

$

77,935

$

74,901

$

23,203

4

%

236

%

$

224,194

$

136,689

64

%

Non-controlling interest value

adjustments

(59)

-

405

NM

NM

2,330

11,718

(80)

Closed-end fund structuring fees,

net of tax

-

-

1,043

-

NM

-

2,720

NM

Loss on extinguishment of debt, net of tax*

-

-

35,171

-

NM

-

35,171

NM

Settlement of state tax audit

-

-

6,691

-

NM

-

6,691

NM

Adjusted net income attributable to

Eaton Vance Corp. shareholders

$

77,876

$

74,901

$

66,513

4

17

$

226,524

$

192,989

17

Earnings per diluted share

$

0.63

$

0.59

$

0.18

7

250

$

1.78

$

1.07

66

Non-controlling interest value

adjustments

-

-

-

-

-

0.02

0.09

(78)

Closed-end fund structuring fees,

net of tax

-

-

0.01

-

NM

-

0.02

NM

Loss on extinguishment of debt, net of tax

-

-

0.28

-

NM

-

0.28

NM

Settlement of state tax audit

-

-

0.05

-

NM

-

0.05

NM

Special dividend adjustment

-

-

-

-

-

-

0.02

NM

Adjusted earnings per diluted share

$

0.63

$

0.59

$

0.52

7

21

$

1.80

$

1.53

18

* 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 2014 vs.

Q3 2014 vs.

July 31,

July 31,

%

(in thousands)

2014

2014

2013

Q2 2014

Q3 2013

2014

2013

Change

Consolidated funds

$

42

$

413

$

(206)

(90)

%

NM

%

$

259

$

3,886

(93)

%

Majority-owned subsidiaries

4,261

3,524

4,007

21

6

11,268

11,596

(3)

Non-controlling interest value

adjustments

(59)

-

405

NM

NM

2,330

11,718

(80)

Consolidated CLO entities

(910)

(791)

(2,359)

15

(61)

(2,005)

(5,592)

(64)

Net income attributable to non-controlling

and other beneficial interests

$

3,334

$

3,146

$

1,847

6

81

$

11,852

$

21,608

(45)

 

Attachment 4

Eaton Vance Corp.

Balance Sheet

(in thousands, except per share figures)

July 31,

October 31,

2014

2013

Assets

Cash and cash equivalents

$

362,017

$

461,906

Investment advisory fees and other receivables

171,403

170,220

Investments

642,475

536,323

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

          Cash and cash equivalents

21,074

36,641

          Bank loans and other investments

166,025

685,681

          Other assets

2,179

5,814

Deferred sales commissions

16,966

17,923

Deferred income taxes

53,014

61,139

Equipment and leasehold improvements, net

46,247

48,746

Intangible assets, net

67,457

74,534

Goodwill

228,876

228,876

Other assets

58,355

79,446

   Total assets

$

1,836,088

$

2,407,249

Liabilities, Temporary Equity and Permanent Equity

Liabilities:

Accrued compensation

$

142,147

$

169,953

Accounts payable and accrued expenses

69,022

58,529

Dividend payable

26,547

26,740

Debt

573,616

573,499

Liabilities of consolidated CLO entities:

          Senior and subordinated note obligations

182,725

279,127

          Line of credit

-

247,789

          Redeemable preferred shares

-

64,952

          Other liabilities

389

124,305

Other liabilities

72,437

115,960

   Total liabilities

1,066,883

1,660,854

Commitments and contingencies

Temporary Equity:

Redeemable non-controlling interests

99,966

74,856

   Total temporary equity

99,966

74,856

Permanent Equity:

Voting Common Stock, par value $0.00390625 per share:

   Authorized, 1,280,000 shares

   Issued and outstanding, 415,078 and 399,240 shares, respectively

2

2

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

   Authorized, 190,720,000 shares

   Issued and outstanding, 118,320,698 and 121,232,506 shares, respectively

462

474

Additional paid-in capital

-

124,837

Notes receivable from stock option exercises

(7,569)

(7,122)

Accumulated other comprehensive loss

(4,508)

(177)

Appropriated retained earnings

4,557

10,249

Retained earnings

674,492

541,521

   Total Eaton Vance Corp. shareholders' equity

667,436

669,784

Non-redeemable non-controlling interests

1,803

1,755

   Total permanent equity

669,239

671,539

Total liabilities, temporary equity and permanent equity

$

1,836,088

$

2,407,249

 

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,

2014

2014

2013

2014

2013

 Equity assets - beginning of period(2)

$

93,733

$

90,765

$

89,534

$

93,585

$

80,782

Sales and other inflows

3,465

3,669

4,056

10,920

13,823

Redemptions/outflows

(4,129)

(5,015)

(4,185)

(14,766)

(14,135)

  Net flows

(664)

(1,346)

(129)

(3,846)

(312)

Assets acquired(3)

-

-

-

-

1,572

Exchanges

468

20

46

1,000

162

Market value change

2,517

4,294

1,323

5,315

8,570

 Equity assets - end of period

$

96,054

$

93,733

$

90,774

$

96,054

$

90,774

 Fixed income assets - beginning of period(4)

43,917

43,339

49,949

44,211

49,003

Sales and other inflows

3,344

2,626

2,065

8,420

8,732

Redemptions/outflows

(3,299)

(2,756)

(3,595)

(9,336)

(10,318)

  Net flows

45

(130)

(1,530)

(916)

(1,586)

Assets acquired(3)

-

-

-

-

472

Exchanges

59

62

(277)

23

(358)

Market value change

266

646

(2,321)

969

(1,710)

 Fixed income assets - end of period

$

44,287

$

43,917

$

45,821

$

44,287

$

45,821

 Floating-rate income assets - beginning of period

45,115

44,073

33,679

41,821

26,388

Sales and other inflows

4,139

4,170

6,636

13,094

15,987

Redemptions/outflows

(5,491)

(2,842)

(2,152)

(11,037)

(4,664)

  Net flows

(1,352)

1,328

4,484

2,057

11,323

Exchanges

(62)

(49)

169

(57)

251

Market value change

51

(237)

(162)

(69)

208

 Floating-rate income assets - end of period

$

43,752

$

45,115

$

38,170

$

43,752

$

38,170

 Alternative assets -  beginning of period

12,112

13,171

16,022

15,212

12,864

Sales and other inflows

774

767

2,348

2,630

6,925

Redemptions/outflows

(1,208)

(1,967)

(1,770)

(6,164)

(3,785)

  Net flows

(434)

(1,200)

578

(3,534)

3,140

Assets acquired(3)

-

-

-

-

650

Exchanges

(15)

(20)

(22)

(84)

(138)

Market value change

28

161

(480)

97

(418)

 Alternative assets - end of period

$

11,691

$

12,112

$

16,098

$

11,691

$

16,098

 Implementation services assets - beginning of period

90,815

87,010

70,966

85,637

30,302

Sales and other inflows

14,429

11,549

12,933

43,399

26,663

Redemptions/outflows

(14,053)

(11,105)

(7,504)

(41,168)

(18,396)

  Net flows

376

444

5,429

2,231

8,267

Assets acquired(3)

-

-

-

-

32,064

Exchanges

(456)

(5)

-

(913)

(14)

Market value change

1,488

3,366

1,278

5,268

7,054

 Implementation services assets - end of period

$

92,223

$

90,815

$

77,673

$

92,223

$

77,673

 Total long-term fund and separate account

assets - beginning of period

285,692

278,358

260,150

280,466

199,339

Sales and other inflows

26,151

22,781

28,038

78,463

72,130

Redemptions/outflows

(28,180)

(23,685)

(19,206)

(82,471)

(51,298)

  Net flows

(2,029)

(904)

8,832

(4,008)

20,832

Assets acquired(3)

-

-

-

-

34,758

Exchanges

(6)

8

(84)

(31)

(97)

Market value change

4,350

8,230

(362)

11,580

13,704

 Total long-term fund and separate account

assets - end of period

$

288,007

$

285,692

$

268,536

$

288,007

$

268,536

 Cash management fund assets - end of period

187

177

219

187

219

 Total assets under management - end of period

$

288,194

$

285,869

$

268,755

$

288,194

$

268,755

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

(2)  Includes assets in balanced accounts holding income securities.

(3)  Represents assets gained in the acquisition of The Clifton Group Investment Management Company on December 31, 2012.

(4)  Includes assets in institutional cash management separate accounts.

 

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,

2014

2014

2013

2014

2013

 Long-term fund assets - beginning of period

$

134,942

$

131,984

$

127,014

$

133,198

$

113,249

Sales and other inflows

8,634

8,684

11,597

27,551

33,307

Redemptions/outflows

(10,272)

(8,751)

(7,932)

(29,284)

(21,316)

  Net flows

(1,638)

(67)

3,665

(1,733)

11,991

Assets acquired(2)

-

-

-

-

638

Exchanges

(6)

81

(241)

41

(262)

Market value change

1,671

2,944

(1,396)

3,463

3,426

 Long-term fund assets - end of period

$

134,969

$

134,942

$

129,042

$

134,969

$

129,042

 Institutional separate account assets -

beginning of period(3)

96,564

94,869

84,724

95,724

43,338

Sales and other inflows

14,717

11,101

13,480

42,620

28,366

Redemptions/outflows

(14,912)

(12,249)

(8,901)

(44,632)

(21,792)

  Net flows

(195)

(1,148)

4,579

(2,012)

6,574

Assets acquired(2)

-

-

-

-

34,120

Exchanges

377

(96)

152

280

157

Market value change

1,647

2,939

18

4,401

5,284

 Institutional separate account assets -

end of period

$

98,393

$

96,564

$

89,473

$

98,393

$

89,473

 High-net-worth separate account assets -

beginning of period

20,968

19,374

18,027

19,699

15,036

Sales and other inflows

794

968

1,055

2,476

3,931

Redemptions/outflows

(953)

(988)

(614)

(3,045)

(2,385)

  Net flows

(159)

(20)

441

(569)

1,546

Exchanges

(433)

402

(9)

(30)

(16)

Market value change

475

1,212

612

1,751

2,505

 High-net-worth separate account assets -

end of period

$

20,851

$

20,968

$

19,071

$

20,851

$

19,071

 Retail managed account assets -

beginning of period

33,218

32,131

30,385

31,845

27,716

Sales and other inflows

2,006

2,028

1,906

5,816

6,526

Redemptions/outflows

(2,043)

(1,697)

(1,759)

(5,510)

(5,805)

  Net flows

(37)

331

147

306

721

Exchanges

56

(379)

14

(322)

24

Market value change

557

1,135

404

1,965

2,489

 Retail managed account assets -

end of period

$

33,794

$

33,218

$

30,950

$

33,794

$

30,950

 Total long-term fund and separate account

assets - beginning of period

285,692

278,358

260,150

280,466

199,339

Sales and other inflows

26,151

22,781

28,038

78,463

72,130

Redemptions/outflows

(28,180)

(23,685)

(19,206)

(82,471)

(51,298)

  Net flows

(2,029)

(904)

8,832

(4,008)

20,832

Assets acquired(2)

-

-

-

-

34,758

Exchanges

(6)

8

(84)

(31)

(97)

Market value change

4,350

8,230

(362)

11,580

13,704

 Total long-term fund and separate account

assets - end of period

$

288,007

$

285,692

$

268,536

$

288,007

$

268,536

 Cash management fund assets -

end of period

187

177

219

187

219

 Total assets under management -

end of period

$

288,194

$

285,869

$

268,755

$

288,194

$

268,755

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

(2)   Represents assets gained in the acquisition of The Clifton Group Investment Management Company on December 31, 2012.

(3)   Includes assets in institutional cash management separate accounts.

 

Attachment 7

 Eaton Vance Corp.

 Consolidated Assets under Management by Investment Affiliate (1)

 (in millions)

July 31,

April 30,

%

July 31,

%

2014

2014

Change

2013

Change

 Eaton Vance Management(2)

$

143,337

$

144,892

-1%

$

143,229

0%

 Parametric

126,777

122,562

3%

107,192

18%

 Atlanta Capital

18,080

18,415

-2%

18,334

-1%

 Total

$

288,194

$

285,869

1%

$

268,755

7%

(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,

%

2014

2014

Change

2013

Change

 Equity(2)

$

96,054

$

93,733

2%

$

90,774

6%

 Fixed income(3)

44,287

43,917

1%

45,821

-3%

 Floating-rate income

43,752

45,115

-3%

38,170

15%

 Alternative

11,691

12,112

-3%

16,098

-27%

 Implementation services

92,223

90,815

2%

77,673

19%

 Cash management funds

187

177

6%

219

-15%

 Total

$

288,194

$

285,869

1%

$

268,755

7%

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

(2)   Includes assets in balanced accounts holding income securities.

(3)   Includes assets in institutional cash management separate accounts.

 

 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,

July 31,

July 31,

2014

2014

2013

2014

2013

 Eaton Vance distributed:

 Eaton Vance sponsored funds - beginning of period(1)

$

221

$

212

$

161

$

211

$

37

Sales and other inflows

6

12

19

49

130

Redemptions/outflows

(10)

(17)

(6)

(53)

(12)

  Net flows

(4)

(5)

13

(4)

118

Market value change

4

14

(1)

14

18

 Eaton Vance sponsored funds - end of period

$

221

$

221

$

173

$

221

$

173

 Eaton Vance distributed separate accounts -

beginning of period(2)

$

2,354

$

1,383

$

1,283

$

1,574

$

-

Sales and other inflows

136

307

227

519

1,378

Redemptions/outflows

(122)

(74)

(1)

(201)

(1)

  Net flows

14

233

226

318

1,377

Exchanges

-

624

-

389

-

Market value change

29

114

6

116

138

 Eaton Vance distributed separate accounts -

end of period

$

2,397

$

2,354

$

1,515

$

2,397

$

1,515

 Total Eaton Vance distributed - beginning of period

$

2,575

$

1,595

$

1,444

$

1,785

$

37

Sales and other inflows

142

319

246

568

1,508

Redemptions/outflows

(132)

(91)

(7)

(254)

(13)

  Net flows

10

228

239

314

1,495

Exchanges

-

624

-

389

-

Market value change

33

128

5

130

156

 Total Eaton Vance distributed - end of period

$

2,618

$

2,575

$

1,688

$

2,618

$

1,688

 Hexavest directly distributed - beginning of period(3)

$

14,477

$

14,543

$

13,831

$

15,136

$

12,073

Sales and other inflows

597

355

785

1,392

2,003

Redemptions/outflows

(904)

(681)

(530)

(2,546)

(1,363)

  Net flows

(307)

(326)

255

(1,154)

640

Exchanges

-

(624)

-

(389)

-

Market value change

253

884

(40)

830

1,333

 Hexavest directly distributed - end of period

$

14,423

$

14,477

$

14,046

$

14,423

$

14,046

 Total Hexavest assets - beginning of period

$

17,052

$

16,138

$

15,275

$

16,921

$

12,110

Sales and other inflows

739

674

1,031

1,960

3,511

Redemptions/outflows

(1,036)

(772)

(537)

(2,800)

(1,376)

  Net flows

(297)

(98)

494

(840)

2,135

Market value change

286

1,012

(35)

960

1,489

 Total Hexavest assets - end of period

$

17,041

$

17,052

$

15,734

$

17,041

$

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 revenue, but not investment advisory fees, 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 investment advisory or distribution revenue on these assets, which are not included in the Eaton Vance consolidated results in Attachments 5, 6, 7 and 8.

 

(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.

 

SOURCE Eaton Vance Corp.



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