Eaton Vance Corp. Report for the Three Months and Fiscal Year Ended October 31, 2013

Nov 26, 2013, 08:44 ET from Eaton Vance Corp.

BOSTON, Nov. 26, 2013 /PRNewswire/ -- Eaton Vance Corp. (NYSE: EV) today reported adjusted earnings per diluted share(1) of $0.55 for the fourth quarter of fiscal 2013, an increase of 4 percent over the $0.53 of adjusted earnings per diluted share in the fourth quarter of fiscal 2012 and an increase of 6 percent over the $0.52 of adjusted earnings per diluted share in the third quarter of fiscal 2013. Adjusted earnings per diluted share were $2.08 for the full fiscal year ended October 31, 2013, an increase of 10 percent over the $1.89 for the fiscal year ended October 31, 2012.

As determined under U.S. generally accepted accounting principles ("GAAP"), the Company earned $0.45 in the fourth quarter of fiscal 2013, $0.45 in the fourth quarter of fiscal 2012 and $0.18 in the third quarter of fiscal 2013. Adjusted earnings per diluted share differed from GAAP earnings per diluted share in the fourth quarter of fiscal 2013 and 2012 due to adjustments in connection with increases in the estimated redemption value of non-controlling interests in affiliates redeemable at other than fair value, which reduced GAAP earnings by $0.10 and $0.08 per diluted share, respectively. 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. The Company's GAAP earnings per diluted share were $1.53 for the fiscal year ended October 31, 2013 and $1.72 for the fiscal year ended October 31, 2012.

Net income and gains on seed capital investments were negligible in the fourth quarter of fiscal 2013 and contributed $0.02 per diluted share in the fourth quarter of fiscal 2012. Losses (net of interest and dividend income) on seed capital investments reduced diluted earnings by $0.02 per share in the third quarter of fiscal 2013.

Net inflows of $3.9 billion into long-term funds and separate accounts in the fourth quarter of fiscal 2013 were driven by strong flows into floating-rate income and implementation services, and represent a 6 percent annualized internal growth rate (net inflows into long-term assets divided by beginning of period long-term assets managed). For comparison, the Company had net inflows of $2.2 billion in the fourth quarter of fiscal 2012 and $8.8 billion in the third quarter of fiscal 2013. Net inflows of $24.7 billion for the fiscal year 2013 equate to 12 percent annual internal growth and compare to $0.2 billion of net inflows in fiscal 2012.

"Fiscal 2013 was a period of significant progress for Eaton Vance, as we achieved double-digit organic growth and expanded our capabilities through the successful acquisition of Clifton Group" said Thomas E. Faust Jr., Chairman and Chief Executive Officer. "I see the Company as well-positioned for how our industry is evolving and poised for continued success."

Consolidated assets under management were $280.7 billion on October 31, 2013. This is an increase of 41 percent from the $199.5 billion of managed assets on October 31, 2012 and an increase of 4 percent from the $268.8 billion of managed assets on July 31, 2013. The year-over-year increase in ending assets under management reflects the $34.8 billion of managed assets acquired in the December 2012 acquisition of the former Clifton Group Investment Management Company ("Clifton") by subsidiary Parametric Portfolio Associates LLC ("Parametric"), net inflows of $24.7 billion and market price appreciation of $21.7 billion. The sequential quarterly increase in ending assets under management reflects net inflows of $3.9 billion and market appreciation of $8.0 billion.

Average consolidated assets under management were $271.4 billion in the fourth quarter of fiscal 2013, up 38 percent from $196.6 billion in the fourth quarter of fiscal 2012 and up 3 percent from $263.7 billion in the third 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 $25.5 billion in the fourth quarter of fiscal 2013, up 77 percent from $14.4 billion in the fourth quarter of fiscal 2012 and down 9 percent from $28.0 billion in the third quarter of fiscal 2013. Gross redemptions and other outflows were $21.6 billion in the fourth quarter of fiscal 2013, up 76 percent from $12.3 billion in the fourth quarter of fiscal 2012 and up 13 percent from $19.2 billion in the third quarter of fiscal 2013. Consolidated gross sales and other inflows were $97.6 billion in fiscal 2013, up 95 percent from $50.1 billion in fiscal 2012. Gross redemptions and other outflows were $72.9 billion in fiscal 2013, up 46 percent from $49.9 billion in fiscal 2012.

As of October 31, 2013, 49 percent-owned affiliate Hexavest, Inc. ("Hexavest") managed $16.9 billion of client assets, an increase of 40 percent from the $12.1 billion of managed assets on October 31, 2012 and an increase of 8 percent from the $15.7 billion of managed assets on July 31, 2013. Net inflows into Hexavest-managed funds and separate accounts were $0.2 billion in the fourth quarter of fiscal 2013 compared to net inflows of $0.8 billion in the fourth quarter of fiscal 2012 and net inflows of $0.5 billion in the third quarter of fiscal 2013. Since Eaton Vance acquired its interest in Hexavest on August 6, 2012, Hexavest's net inflows have totaled $3.1 billion and assets under management have increased by $6.0 billion, or 54 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 October 31, 2013, the Clifton division of Parametric managed $45.6 billion of client assets, an increase of 12 percent from the $40.7 billion of managed assets on July 31, 2013. Net inflows into Clifton-managed funds and accounts were $3.9 billion in the fourth quarter of fiscal 2013 and $5.1 billion in the third quarter of fiscal 2013. Clifton net inflows since the December 31, 2012 acquisition have totaled $8.9 billion. Clifton-managed assets have increased by $10.8 billion, or 31 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)

October 31,

July 31,

October 31,

2013

2013

2012

Revenue

$

356,933

$

350,361

$

309,889

Expenses

231,526

231,511

203,544

Operating income

125,407

118,850

106,345

Operating margin

35%

34%

34%

Non-operating (expense) income

(14,252)

(71,315)

3,993

Income taxes

(44,626)

(25,137)

(37,655)

Equity in net income of affiliates, net of tax

5,600

2,652

1,758

Net income

72,129

25,050

74,441

Net income attributable to non-controlling

and other beneficial interests

(14,977)

(1,847)

(21,323)

Net income attributable to

Eaton Vance Corp. shareholders

$

57,152

$

23,203

$

53,118

Adjusted net income attributable to Eaton

Vance Corp. shareholders(1)

$

69,953

$

66,513

$

62,988

Earnings per diluted share

$

0.45

$

0.18

$

0.45

Adjusted earnings per diluted share(1)

$

0.55

$

0.52

$

0.53

 

Fourth Quarter Fiscal 2013 vs. Fourth Quarter Fiscal 2012

In the fourth quarter of fiscal 2013, revenue increased 15 percent to $356.9 million from revenue of $309.9 million in the fourth quarter of fiscal 2012. Investment advisory and administrative fees were up 18 percent, reflecting a 38 percent increase in average consolidated assets under management offset by lower average effective fee rates, primarily as a result of the Clifton acquisition. Performance fees contributed $3.4 million and $3.7 million to investment advisory and administrative fees in the fourth quarter of fiscal 2013 and 2012, respectively. Distribution and service fee revenues were flat in aggregate, reflecting consistent levels of 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 fourth quarter of fiscal 2013 from $203.5 million in the fourth quarter of fiscal 2012, reflecting increases in compensation, distribution fees, amortization of deferred sales commissions, fund-related expenses and other expenses. The increase in compensation expense reflects increases in sales- and operating income-based incentives, stock-based compensation, higher employee headcount and increases in base salaries and benefits, partially driven by the acquisition of Clifton in the first quarter of fiscal 2013. Gross sales and other inflows, which drive sales-based incentives, were up 77 percent year-over-year, while pre-bonus adjusted operating income, which drives operating-income based incentives, was up 18 percent over the same period. The increase in distribution expense reflects increases in intermediary marketing support payments and 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 sub-advisory expenses for Company sponsored funds managed by unaffiliated sub-advisors and increases in other fund expenses. Other expenses increased 15 percent, as increases in travel-related expenses, information technology and professional fees were partially offset by decreases in facilities-related expenses.

Operating income was up 18 percent to $125.4 million in the fourth quarter of fiscal 2013 from $106.3 million in the fourth quarter of fiscal 2012.

Non-operating expense was $14.3 million in the fourth quarter of fiscal 2013 compared to non-operating income of $4.0 million in the fourth quarter of fiscal 2012. The year-over-year change reflects a decline of $10.3 million in gains (losses) and other investment income, a $9.1 million decline in income (expense) of the Company's consolidated collateralized loan obligation entities ("CLO"), partially offset by a $1.2 million decrease in interest expense.

The Company's effective tax rate, calculated as a percentage of income before income taxes and equity in net income of affiliates, was 40.1 percent in the fourth quarter of fiscal 2013. Excluding the impact of CLO entities' income (expense) borne by other beneficial interest holders, the Company's effective tax rate was approximately 39.2 percent for the quarter.

Equity in net income of affiliates increased $3.8 million from the fourth quarter of fiscal 2012, reflecting an increase in gains (losses) and other income on the Company's investments in sponsored funds and an increase in the Company's equity in the net income of Hexavest. Equity in net income of affiliates for the fourth quarter of fiscal 2013 and 2012 includes $3.0 million and $1.9 million, respectively, of Company equity in the net income of Hexavest.

Net income attributable to non-controlling and other beneficial interests was $15.0 million in the fourth quarter of fiscal 2013 compared to $21.3 million in the fourth quarter of fiscal 2012. As shown in Attachment 3, net income attributable to non-controlling and other beneficial interests in the fourth quarter of fiscal 2013 and 2012 includes $12.6 million and $9.9 million, respectively, of non-controlling interest value adjustments relating to our subsidiary Atlanta Capital Management. The year-over-year change also reflects a decline in the net income (loss) attributable to non-controlling interest holders of the Company's consolidated CLO entities and a decline in net income attributable to non-controlling interest holders of the Company's consolidated funds, partially offset by an increase in the income attributable to non-controlling interest holders of majority-owned subsidiaries.

Weighted average diluted shares outstanding increased 7.9 million shares, or 7 percent, in the fourth quarter of fiscal 2013 from the fourth quarter of fiscal 2012. The change reflects an increase in the total number of shares outstanding due to the exercise of employee stock options and an increase in the dilutive effect of in-the-money options resulting from a 42 percent increase in the quarterly average share price of the Company's Non-Voting Common Stock.

Fourth Quarter Fiscal 2013 vs. Third Quarter Fiscal 2013

In the fourth quarter of fiscal 2013, revenue increased 2 percent to $356.9 million from revenue of $350.4 million in the third quarter of fiscal 2013. Investment advisory and administrative fees were up 3 percent in the fourth quarter of fiscal 2013 compared to the third quarter of fiscal 2013, reflecting a 3 percent increase in average consolidated assets under management. Performance fees contributed $3.4 million and $0.9 million to investment advisory and administrative fees in the fourth quarter of fiscal 2013 and the third quarter of fiscal 2013, respectively. Distribution and service fee revenue decreased 2 percent in aggregate, reflecting a decrease in average managed assets in fund share classes that are subject to such fees.

Operating expenses were flat at $231.5 million in the fourth quarter of fiscal 2013 as compared to the third quarter of fiscal 2013, reflecting decreases in compensation and distribution and service fees, offset by higher amortization of deferred sales commissions and increases in fund-related and other operating expenses. The decrease in compensation expense reflects decreases in operating income-based incentives and sales-based incentives, partially offset by an increase in stock-based compensation. Lower sales-based incentives reflect the 9 percent decrease in gross sales and other inflows. The decrease in operating income-based incentives reflects lower bonus accruals in the fourth quarter of fiscal 2013. The increase in stock-based compensation relates principally to affiliate equity plans. The decrease in distribution expense reflects the $1.7 million in closed-end fund-related structuring fees paid to distribution partners in the third quarter of fiscal 2013, partially offset by an increase in discretionary marketing expenses. The increase in amortization of deferred sales commissions largely reflects an increase in Class C share amortization. Fund-related expenses increased 28 percent due to increases in fund subsidies and other fund-related expense. Other expenses increased 2 percent, reflecting increases in travel-related expenses, information technology and professional services offset by decreases in facilities-related expenses and other corporate expenses.

Operating income was up 6 percent to $125.4 million in the fourth quarter of fiscal 2013 from $118.9 million in the third quarter of fiscal 2013.

Non-operating expense was $14.3 million in the fourth quarter of fiscal 2013 compared to $71.3 million in the third quarter of fiscal 2013. The improvement 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 $3.3 million improvement in gains (losses) and other investment income, a $1.8 million decrease in interest expense offset by a $0.8 million decline in income (expense) of the Company's consolidated CLO entities. The improvement 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. The decrease 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 as well as a full quarter of reduced interest expense as a result of the debt restructuring.

Equity in net income of affiliates increased by $2.9 million in the fourth quarter of fiscal 2013 compared to the third quarter of fiscal 2013, primarily reflecting an increase in gains (losses) and other income on the Company's investments in sponsored products. Equity in net income of affiliates for the fourth quarter of fiscal 2013 and the third quarter of fiscal 2013 includes $3.0 million and $2.5 million, respectively, of Company equity in the net income of Hexavest.

Net income attributable to non-controlling and other beneficial interests was $15.0 million in the fourth quarter of fiscal 2013 compared to $1.8 million in the third quarter of fiscal 2013. As shown in Attachment 3, included in net income attributable to non-controlling and other beneficial interests in the fourth quarter of fiscal 2013 is $12.6 million of non-controlling interest value adjustments relating to our subsidiary Atlanta Capital Management. The sequential quarter change also reflects a $1.0 million increase in the income attributable to non-controlling interest holders of the Company's majority-owned subsidiaries.

Balance Sheet Information

Cash and cash equivalents totaled $461.9 million on October 31, 2013, with no outstanding borrowings against the Company's $300 million credit facility. During fiscal 2013, the Company used $73.9 million to repurchase and retire approximately 2.0 million shares of its Non-Voting Common Stock under its repurchase authorization. Approximately 1.9 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 EST today to discuss the financial results for the three months and fiscal year ended October 31, 2013. To participate in the conference call, please call 877-407-0709 (domestic) or 201-689-8566 (international) and refer to "Eaton Vance Corp. Fourth 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 13572801.

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

Fiscal Year Ended

%

%

Change

Change

Q4 2013

Q4 2013

October 31,

July 31,

October 31,

vs.

vs.

October 31,

October 31,

%

2013

2013

2012

Q3 2013

Q4 2012

2013

2012

Change

Revenue:

Investment advisory and administrative fees

$

301,536

$

293,589

$

255,063

3

%

18

%

$

1,135,327

$

988,058

15

%

Distribution and underwriter fees

21,637

22,681

22,278

(5)

(3)

89,234

89,410

-

Service fees

32,039

32,259

31,221

(1)

3

126,560

126,345

-

Other revenue

1,721

1,832

1,327

(6)

30

6,382

5,223

22

Total revenue

356,933

350,361

309,889

2

15

1,357,503

1,209,036

12

Expenses:

Compensation and related costs

112,914

115,379

96,446

(2)

17

447,134

385,395

16

Distribution expense

34,973

35,452

32,956

(1)

6

139,618

130,914

7

Service fee expense

28,661

29,013

28,559

(1)

-

115,149

113,485

1

Amortization of deferred sales commissions

5,063

4,983

4,495

2

13

19,581

20,441

(4)

Fund-related expenses

10,502

8,230

6,929

28

52

34,230

27,375

25

Other expenses

39,413

38,454

34,159

2

15

148,784

138,434

7

Total expenses

231,526

231,511

203,544

-

14

904,496

816,044

11

Operating income

125,407

118,850

106,345

6

18

453,007

392,992

15

Non-operating income (expense):

Gains (losses) and other investment income, net

(4,736)

(8,027)

5,517

(41)

NM

(2,513)

18,417

NM

Interest expense

(7,399)

(9,167)

(8,580)

(19)

(14)

(33,708)

(33,930)

(1)

Loss on extinguishment of debt

(110)

(52,886)

-

NM

NM

(52,996)

-

NM

Other income (expense) of consolidated CLO entities:

Gains (losses) and other investment

income, net

6,934

1,704

12,659

307

(45)

14,815

44,706

(67)

Interest expense

(8,941)

(2,939)

(5,603)

204

60

(19,152)

(18,447)

4

Total non-operating (expense) income

(14,252)

(71,315)

3,993

(80)

NM

(93,554)

10,746

NM

Income before income taxes and equity

in net income of affiliates

111,155

47,535

110,338

134

1

359,453

403,738

(11)

Income taxes

(44,626)

(25,137)

(37,655)

78

19

(143,896)

(142,385)

1

Equity in net income of affiliates, net of tax

5,600

2,652

1,758

111

219

14,869

3,415

335

Net income

72,129

25,050

74,441

188

(3)

230,426

264,768

(13)

Net income attributable to non-controlling

and other beneficial interests

(14,977)

(1,847)

(21,323)

711

(30)

(36,585)

(61,303)

(40)

Net income attributable to

Eaton Vance Corp. Shareholders

$

57,152

$

23,203

$

53,118

146

8

$

193,841

$

203,465

(5)

Earnings per share:

Basic

$

0.47

$

0.19

$

0.46

147

2

$

1.60

$

1.76

(9)

Diluted

$

0.45

$

0.18

$

0.45

150

-

$

1.53

$

1.72

(11)

Weighted average shares outstanding:

Basic

117,419

117,594

112,504

-

4

116,597

112,359

4

Diluted

123,431

123,872

115,524

-

7

122,444

115,126

6

Dividends declared per share

$

0.22

$

0.20

$

0.20

10

10

$

1.82

$

0.77

136

 

 

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

Fiscal Year Ended

% Change

% Change

October 31,

July 31,

October 31,

Q4 2013 vs.

Q4 2013 vs.

October 31,

October 31,

%

(in thousands, except per share figures)

2013

2013

2012

Q3 2013

Q4 2012

2013

2012

Change

Net income attributable to Eaton

Vance Corp. shareholders

$

57,152

$

23,203

$

53,118

146

%

8

%

$

193,841

$

203,465

(5)

%

Non-controlling interest value

adjustments

12,602

405

9,870

NM

28

24,320

19,866

22

Closed-end fund structuring fees,

net of tax

131

1,043

-

(87)

NM

2,851

-

NM

Loss on extinguishment of debt, net of tax *

68

35,171

-

NM

NM

35,239

-

NM

Settlement of state tax audit

-

6,691

-

NM

NM

6,691

-

NM

Adjusted net income attributable to

Eaton Vance Corp. shareholders

$

69,953

$

66,513

$

62,988

5

11

$

262,942

$

223,331

18

Earnings per diluted share

$

0.45

$

0.18

$

0.45

150

-

$

1.53

$

1.72

(11)

Non-controlling interest value

adjustments

0.10

-

0.08

NM

25

0.19

0.17

12

Closed-end fund structuring fees,

net of tax

-

0.01

-

NM

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

0.01

-

NM

Adjusted earnings per diluted share

$

0.55

$

0.52

$

0.53

6

4

$

2.08

$

1.89

10

* The loss on extinguishment of debt consists of a $53.0 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

Fiscal Year Ended

% Change

% Change

October 31,

July 31,

October 31,

Q4 2013

vs.

Q4 2013

vs.

October 31,

October 31,

%

(in thousands)

2013

2013

2012

Q3 2013

Q4 2012

2013

2012

Change

Consolidated funds

$

209

$

(206)

$

1,186

NM

%

(82)

%

$

4,095

$

4,353

(6)

%

Majority-owned subsidiaries

5,024

4,007

4,053

25

24

16,620

14,518

14

Non-controlling interest value

adjustments

12,602

405

9,870

NM

28

24,320

19,866

22

Consolidated CLO entity

(2,858)

(2,359)

6,214

21

NM

(8,450)

22,566

NM

Net income attributable to non-controlling

and other beneficial interests

$

14,977

$

1,847

$

21,323

711

(30)

$

36,585

$

61,303

(40)

 

Attachment 4

Eaton Vance Corp.

Balance Sheet

(in thousands, except per share figures)

October 31,

October 31,

2013

2012

Assets

Cash and cash equivalents

$

461,906

$

462,076

Investment advisory fees and other receivables

170,220

133,589

Investments

536,323

486,933

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

Cash and cash equivalents

36,641

36,758

Bank loans and other investments

685,681

430,583

Other assets

5,814

1,107

Deferred sales commissions

17,923

19,336

Deferred income taxes

61,139

51,234

Equipment and leasehold improvements, net

48,746

54,889

Intangible assets, net

74,534

59,228

Goodwill

228,876

154,636

Other assets

79,446

89,122

Total assets

$

2,407,249

$

1,979,491

Liabilities, Temporary Equity and Permanent Equity

Liabilities:

Accrued compensation

$

169,953

$

145,338

Accounts payable and accrued expenses

58,529

59,397

Dividend payable

26,740

23,250

Debt

573,499

500,000

Liabilities of consolidated CLO entities:

Senior and subordinated note obligations and line of credit

586,916

446,605

Other liabilities

129,257

766

Other liabilities

115,960

91,785

Total liabilities

1,660,854

1,267,141

Commitments and contingencies

Temporary Equity:

Redeemable non-controlling interests

74,856

98,765

Total temporary equity

74,856

98,765

Permanent Equity:

Voting Common Stock, par value $0.00390625 per share:

Authorized, 1,280,000 shares

Issued and outstanding, 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 and outstanding, 121,232,506 and 115,878,384 shares, respectively

474

453

Additional paid-in capital

124,837

26,730

Notes receivable from stock option exercises

(7,122)

(4,155)

Accumulated other comprehensive (loss) income

(177)

3,923

Appropriated retained earnings

10,249

18,699

Retained earnings

541,521

566,420

Total Eaton Vance Corp. shareholders' equity

669,784

612,072

Non-redeemable non-controlling interests

1,755

1,513

Total permanent equity

671,539

613,585

Total liabilities, temporary equity and permanent equity

$

2,407,249

$

1,979,491

 

 

Attachment 5

Eaton Vance Corp.

Consolidated Net Flows by Investment Mandate(1)

(in millions)

Three Months Ended

Fiscal Year Ended

October 31,

July 31,

October 31,

October 31,

October 31,

2013

2013

2012

2013

2012

Equity assets - beginning of period(2)

$

90,774

$

89,534

$

80,260

$

80,782

$

84,281

Sales and other inflows

3,167

4,056

3,828

16,989

16,572

Redemptions/outflows

(5,324)

(4,185)

(5,902)

(19,459)

(26,033)

Net flows

(2,157)

(129)

(2,074)

(2,470)

(9,461)

Assets acquired(3)

-

-

-

1,572

-

Exchanges

166

46

48

328

15

Market value change

4,802

1,323

2,548

13,373

5,947

Equity assets - end of period

$

93,585

$

90,774

$

80,782

$

93,585

$

80,782

Fixed income assets - beginning of period

45,821

49,949

48,198

49,003

43,708

Sales and other inflows

2,149

2,065

3,140

10,881

12,278

Redemptions/outflows

(3,697)

(3,595)

(2,752)

(14,015)

(9,455)

Net flows

(1,548)

(1,530)

388

(3,134)

2,823

Assets acquired(3)

-

-

-

472

-

Exchanges

(151)

(277)

13

(510)

84

Market value change

89

(2,321)

404

(1,620)

2,388

Fixed income assets - end of period

$

44,211

$

45,821

$

49,003

$

44,211

$

49,003

Floating-rate income assets -

beginning of period

38,170

33,679

25,245

26,388

24,322

Sales and other inflows

5,742

6,636

2,188

21,729

7,401

Redemptions/outflows

(2,207)

(2,152)

(1,387)

(6,871)

(5,662)

Net flows

3,535

4,484

801

14,858

1,739

Exchanges

145

169

21

397

45

Market value change

(29)

(162)

321

178

282

Floating-rate income assets - end

of period

$

41,821

$

38,170

$

26,388

$

41,821

$

26,388

Alternative assets - beginning of period

16,098

16,022

10,612

12,864

10,650

Sales and other inflows

1,271

2,348

3,167

8,195

6,736

Redemptions/outflows

(1,903)

(1,770)

(909)

(5,688)

(4,348)

Net flows

(632)

578

2,258

2,507

2,388

Assets acquired(3)

-

-

-

650

-

Exchanges

(47)

(22)

(19)

(184)

(94)

Market value change

(207)

(480)

13

(625)

(80)

Alternative assets - end of period

$

15,212

$

16,098

$

12,864

$

15,212

$

12,864

Implementation services assets -

beginning of period(4)

77,673

70,966

28,323

30,302

24,574

Sales and other inflows

13,177

12,933

2,115

39,841

7,096

Redemptions/outflows

(8,490)

(7,504)

(1,320)

(26,887)

(4,411)

Net flows

4,687

5,429

795

12,954

2,685

Assets acquired(3)

-

-

-

32,064

-

Exchanges

(104)

-

-

(118)

(1)

Market value change

3,381

1,278

1,184

10,435

3,044

Implementation services assets -

end of period

$

85,637

$

77,673

$

30,302

$

85,637

$

30,302

Long-term assets - beginning of period

268,536

260,150

192,638

199,339

187,535

Sales and other inflows

25,506

28,038

14,438

97,635

50,083

Redemptions/outflows

(21,621)

(19,206)

(12,270)

(72,920)

(49,909)

Net flows

3,885

8,832

2,168

24,715

174

Assets acquired(3)

-

-

-

34,758

-

Exchanges

9

(84)

63

(87)

49

Market value change

8,036

(362)

4,470

21,741

11,581

Total long-term assets - end of period

$

280,466

$

268,536

$

199,339

$

280,466

$

199,339

Cash management fund assets -

end of period

203

219

169

203

169

Total assets under management -

end of period

$

280,669

$

268,755

$

199,508

$

280,669

$

199,508

(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

Fiscal Year Ended

October 31,

July 31,

October 31,

October 31,

October 31,

2013

2013

2012

2013

2012

Long-term fund assets - beginning of period

$

129,042

$

127,014

$

110,257

$

113,249

$

111,705

Sales and other inflows

10,299

11,597

7,261

43,606

27,080

Redemptions/outflows

(8,653)

(7,932)

(6,410)

(29,970)

(30,895)

Net flows

1,646

3,665

851

13,636

(3,815)

Assets acquired(2)

-

-

-

638

-

Exchanges

(17)

(241)

-

(279)

(13)

Market value change

2,527

(1,396)

2,141

5,954

5,372

Long-term fund assets - end of period

$

133,198

$

129,042

$

113,249

$

133,198

$

113,249

Institutional separate account assets -

beginning of period

89,473

84,724

40,285

43,338

38,003

Sales and other inflows

12,742

13,480

5,149

41,108

12,496

Redemptions/outflows

(9,756)

(8,901)

(3,535)

(31,548)

(10,514)

Net flows

2,986

4,579

1,614

9,560

1,982

Assets acquired(2)

-

-

-

34,120

-

Exchanges

26

152

27

183

38

Market value change

3,239

18

1,412

8,523

3,315

Institutional separate account assets -

end of period

$

95,724

$

89,473

$

43,338

$

95,724

$

43,338

High-net-worth separate account assets -

beginning of period

19,071

18,027

14,682

15,036

13,256

Sales and other inflows

832

1,055

498

4,763

3,609

Redemptions/outflows

(1,313)

(614)

(657)

(3,699)

(2,283)

Net flows

(481)

441

(159)

1,064

1,326

Exchanges

(1)

(9)

9

(16)

(990)

Market value change

1,110

612

504

3,615

1,444

High-net-worth separate account

    assets - end of period

$

19,699

$

19,071

$

15,036

$

19,699

$

15,036

Retail managed account assets -

beginning of period

30,950

30,385

27,414

27,716

24,571

Sales and other inflows

1,633

1,906

1,530

8,158

6,898

Redemptions/outflows

(1,899)

(1,759)

(1,668)

(7,703)

(6,217)

Net flows

(266)

147

(138)

455

681

Exchanges

1

14

27

25

1,014

Market value change

1,160

404

413

3,649

1,450

Retail managed account assets -

end of period

$

31,845

$

30,950

$

27,716

$

31,845

$

27,716

Total long-term assets - beginning

of period

268,536

260,150

192,638

199,339

187,535

Sales and other inflows

25,506

28,038

14,438

97,635

50,083

Redemptions/outflows

(21,621)

(19,206)

(12,270)

(72,920)

(49,909)

Net flows

3,885

8,832

2,168

24,715

174

Assets acquired(2)

-

-

-

34,758

-

Exchanges

9

(84)

63

(87)

49

Market value change

8,036

(362)

4,470

21,741

11,581

Total long-term assets - end of period

$

280,466

$

268,536

$

199,339

$

280,466

$

199,339

Cash management fund assets -

end of period

203

219

169

203

169

Total assets under management -

end of period

$

280,669

$

268,755

$

199,508

$

280,669

$

199,508

(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)

October 31,

July 31,

%

October 31,

%

2013

2013

Change

2012

Change

Eaton Vance Management(2)

$

144,693

$

143,229

1%

$

131,004

10%

Parametric

117,044

107,192

9%

53,332

119%

Atlanta Capital

18,932

18,334

3%

15,172

25%

Total

$

280,669

$

268,755

4%

$

199,508

41%

(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 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)

October 31,

July 31,

%

October 31,

%

2013

2013

Change

2012

Change

Equity(2)

$

93,585

$

90,774

3%

$

80,782

16%

Fixed income

44,211

45,821

-4%

49,003

-10%

Floating-rate income

41,821

38,170

10%

26,388

58%

Alternative

15,212

16,098

-6%

12,864

18%

Implementation services

85,637

77,673

10%

30,302

183%

Cash management

203

219

-7%

169

20%

Total

$

280,669

$

268,755

4%

$

199,508

41%

(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

Fiscal Year Ended

October 31,

July 31,

October 31,

October 31,

October 31,

2013

2013

2012 (2)

2013

2012 (2)

Eaton Vance distributed:

Eaton Vance sponsored funds - beginning

of period(1)

$

173

$

161

$

-

$

37

$

-

Sales and other inflows

30

19

36

162

36

Redemptions/outflows

(3)

(6)

-

(15)

-

Net flows

27

13

36

147

36

Market value change

11

(1)

1

27

1

Eaton Vance sponsored funds - end

of period

$

211

$

173

$

37

$

211

$

37

Eaton Vance distributed separate accounts -

beginning of period(3)

$

1,515

$

1,283

$

-

$

-

$

-

Sales and other inflows

4

227

-

1,381

-

Redemptions/outflows

(32)

(1)

-

(33)

-

Net flows

(28)

226

-

1,348

-

Market value change

87

6

-

226

-

Eaton Vance distributed separate accounts -

end of period

$

1,574

$

1,515

$

-

$

1,574

$

-

Total Eaton Vance distributed - beginning

of period

$

1,688

$

1,444

$

-

$

37

$

-

Sales and other inflows

34

246

36

1,543

36

Redemptions/outflows

(35)

(7)

-

(48)

-

Net flows

(1)

239

36

1,495

36

Market value change

98

5

1

253

1

Total Eaton Vance distributed - end

of period

$

1,785

$

1,688

$

37

$

1,785

$

37

Hexavest directly distributed - beginning

of period(4)

$

14,046

$

13,831

$

10,956

$

12,073

$

10,956

Sales and other inflows

699

785

1,047

2,703

1,047

Redemptions/outflows

(488)

(530)

(318)

(1,853)

(318)

Net flows

211

255

729

850

729

Market value change

879

(40)

388

2,213

388

Hexavest directly distributed - end

of period

$

15,136

$

14,046

$

12,073

$

15,136

$

12,073

Total Hexavest assets - beginning of period

$

15,734

$

15,275

$

10,956

$

12,110

$

10,956

Sales and other inflows

733

1,031

1,083

4,246

1,083

Redemptions/outflows

(523)

(537)

(318)

(1,901)

(318)

Net flows

210

494

765

2,345

765

Market value change

977

(35)

389

2,466

389

Total Hexavest managed assets - end of period

$

16,921

$

15,734

$

12,110

$

16,921

$

12,110

(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)

Reflects activity from August 6, 2012, the date Eaton Vance acquired its 49 percent equity interest in Hexavest through October 31, 2012.

(3)

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.

(4)

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.



RELATED LINKS

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