Eaton Vance Corp. Report for the Three Months and Fiscal Year Ended October 31, 2015

24 Nov, 2015, 08:45 ET from Eaton Vance Corp.

BOSTON, Nov. 24, 2015 /PRNewswire/ -- Eaton Vance Corp. (NYSE: EV) today reported adjusted earnings per diluted share(1) of $2.29 for the fiscal year ended October 31, 2015, a decrease of 8 percent from record-high adjusted earnings per diluted share of $2.48 for the fiscal year ended October 31, 2014.

As determined under U.S. generally accepted accounting principles ("GAAP"), the Company earned $1.92 and $2.44, respectively, in fiscal 2015 and fiscal 2014. Adjusted earnings differed from GAAP earnings for the fiscal year ended October 31, 2015 as a result of the payment of $73.0 million, or approximately $0.37 per diluted share, to terminate service and additional compensation arrangements in place with a major distribution partner for certain Eaton Vance closed-end funds. Adjusted earnings per diluted share differed from GAAP earnings per diluted share for the fiscal year ended October 31, 2014 due to an increase in the estimated redemption value of non-controlling interests in affiliates redeemable at other than fair value, which reduced GAAP earnings by $0.04 per diluted share. 

Adjusted earnings per diluted share were $0.53 in the fourth quarter of fiscal 2015, a decrease of 22 percent from $0.68 of adjusted earnings per diluted share in the fourth quarter of fiscal 2014 and a decrease of 7 percent from $0.57 of adjusted earnings per diluted share in the third quarter of fiscal 2015. The Company's GAAP earnings were $0.53 per diluted share in the fourth quarter of fiscal 2015, $0.66 per diluted share in the fourth quarter of fiscal 2014 and $0.57 per diluted share in the third quarter of fiscal 2015. Adjusted earnings per diluted share differed from GAAP earnings per diluted share in the fourth quarter of fiscal 2014 due to an increase in the estimated redemption value of non-controlling interests in affiliates redeemable at other than fair value, which reduced GAAP earnings per diluted share by $0.02 in that period.

Net income and gains (losses) on seed capital investments contributed $0.01 and $0.04 to earnings per diluted share for the fiscal years ended October 31, 2015 and October 31, 2014, respectively.  Net income and gains (losses) on seed capital investments reduced earnings per diluted share by $0.01 per diluted share in the fourth quarter of fiscal 2015, contributed $0.01 per diluted share in the fourth quarter of fiscal 2014 and were negligible in the third quarter of fiscal 2015.

Consolidated net inflows of $16.7 billion for the fiscal year ended October 31, 2015 represent an internal growth rate of 6 percent (consolidated net inflows divided by beginning of period consolidated assets under management).  For comparison, the Company had consolidated net inflows of $2.8 billion and 1 percent internal growth for the fiscal year ended October 31, 2014.  Consolidated net inflows of $4.6 billion in the fourth quarter of fiscal 2015 represent a 6 percent annualized internal growth rate. For comparison, the Company had consolidated net inflows of $6.8 billion in the fourth quarter of fiscal 2014 and consolidated net inflows of $3.9 billion in the third quarter of fiscal 2015.  

"The fourth quarter of fiscal 2015 proved to be a difficult earnings period for the Company due to product mix and market-driven declines in revenue," said Thomas E. Faust Jr., Chairman and Chief Executive Officer. "Continued improvement in core asset flows and advancement of new initiatives should position the Company for resumed growth as they occur."

Consolidated assets under management were $311.4 billion on October 31, 2015, an increase of 5 percent from $297.7 billion of consolidated managed assets on October 31, 2014, and substantially unchanged from $312.6 billion of consolidated managed assets on July 31, 2015. The year-over-year increase in consolidated assets under management reflects net inflows of $16.7 billion and market price declines of $3.1 billion. The sequential quarterly decrease in consolidated assets under management reflects net inflows of $4.6 billion and market price declines of $5.8 billion.

Average consolidated assets under management were $303.8 billion for the fiscal year ended October 31, 2015, up 5 percent from $288.2 billion for the fiscal year ended October 31, 2014.  Average consolidated assets under management were $306.4 billion in the fourth quarter of fiscal 2015, up 4 percent from $293.8 billion in the fourth quarter of fiscal 2014 and down 1 percent from $309.8 billion in the third quarter of fiscal 2015.

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 sales and other inflows were $124.8 billion in fiscal 2015, an increase of 17 percent from consolidated sales and other inflows of $106.8 billion in fiscal 2014.  Fourth quarter fiscal 2015 consolidated sales and other inflows were $30.9 billion, up 9 percent from $28.3 billion in the fourth quarter of fiscal 2014 and down 6 percent from $32.8 billion in the third quarter of fiscal 2015.

Consolidated redemptions and other outflows were $108.1 billion in fiscal 2015, an increase of 4 percent from consolidated redemptions and other outflows of $104.0 billion in fiscal 2014.  Fourth quarter fiscal 2015 consolidated redemptions and other outflows were $26.3 billion, an increase of 22 percent from $21.5 billion in the fourth quarter of fiscal 2014 and down 9 percent from $28.9 billion in the third quarter of fiscal 2015.

As of October 31, 2015, 49 percent-owned affiliate Hexavest, Inc. ("Hexavest") managed $13.9 billion of client assets, a decrease of 16 percent from the $16.7 billion of managed assets on October 31, 2014 and a decrease of 6 percent from the $14.8 billion of managed assets on July 31, 2015. Hexavest-managed funds and separate accounts had net outflows of $2.7 billion in fiscal 2015, $1.1 billion in fiscal 2014, $0.5 billion in the fourth quarter of fiscal 2015, $0.3 billion in the fourth quarter of fiscal 2014 and $0.5 billion in the third quarter of fiscal 2015. Attachment 9 summarizes assets under management and asset flow information for Hexavest. Other than Eaton Vance-sponsored funds for which Hexavest is adviser or sub-adviser, 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)

October 31,

July 31,

October 31,

2015

2015

2014

Revenue 

$

341,458

$

355,511

$

368,382

Expenses 

230,525

238,778

229,206

Operating income 

110,933

116,733

139,176

    Operating margin 

32.5%

32.8%

37.8%

Non-operating expense 

(13,663)

(7,584)

(10,519)

Income taxes 

(39,113)

(43,435)

(47,920)

Equity in net income of affiliates, net of tax 

2,658

3,260

4,381

Net income 

60,815

68,974

85,118

Net (income) loss attributable to non-controlling 

 and other beneficial interests 

1,388

(265)

(4,996)

Net income attributable to 

Eaton Vance Corp. shareholders 

$

62,203

$

68,709

$

80,122

Adjusted net income attributable to Eaton  

Vance Corp. shareholders(1)

$

61,796

$

68,715

$

83,103

Earnings per diluted share 

$

0.53

$

0.57

$

0.66

Adjusted earnings per diluted share(1)

$

0.53

$

0.57

$

0.68

 

Full Year Fiscal 2015 vs. Full Year Fiscal 2014

The Company's revenue decreased 3 percent in fiscal 2015 to $1.40 billion from revenue of $1.45 billion in fiscal 2014. Investment advisory and administrative fees were down 3 percent, as the impact of lower average effective fee rates, driven by product mix, more than offset a 5 percent increase in average consolidated assets under management. Performance fees contributed $3.7 million in fiscal 2015 compared to $8.3 million in fiscal 2014. Distribution and service fee revenues collectively were down 7 percent, reflecting lower managed assets in fund share classes that are subject to these fees.

Operating expenses increased 8 percent to $1.00 billion in fiscal 2015 from $0.93 billion in fiscal 2014. Excluding the lump-sum payment of $73.0 million to end service and additional compensation arrangements in place with a major distribution partner for certain Eaton Vance closed-end funds incurred in the first quarter of fiscal 2015, annual expenses were substantially unchanged.  Increases in compensation, distribution, fund-related and other operating expenses were offset by lower service fee expenses and reduced amortization of deferred sales commissions. The increase in compensation expense reflects higher salaries and benefits attributable to an increase in headcount, higher stock-based compensation accruals and other compensation costs in connection with employee retirements, other terminations and additions to staff, and increased sales-based incentives, offset by reduced operating income-based bonus accruals.  The increase in distribution expenses reflects the $73.0 million payment to end closed-end fund service and additional compensation arrangements incurred in the first quarter as described above. The increase in fund-related expenses primarily reflects an increase in expenses borne by the Company on funds for which it earns an all-in fee, offset in part by decreases in sub-advisory expenses and fund subsidies. The 4 percent increase in other operating expenses reflects higher professional services, facilities-related and information technology expenses, offset in part by lower travel and other expenses. The decrease in service fee expense reflects lower average assets under management in funds subject to service fee payments.  The decrease in amortization of deferred sales commissions largely reflects decreases in Class B share and Class C share amortization, offset by an increase in private fund commission amortization.

Expenses in connection with the Company's NextShares initiative totaled approximately $7.4 million in fiscal 2015, an increase of 97 percent from $3.7 million in fiscal 2014.

Operating income was down 23 percent to $400.4 million in fiscal 2015 from $519.9 million in fiscal 2014. Operating margin declined to 28.5 percent in fiscal 2015 from 35.8 percent in fiscal 2014. Adjusting for the $73.0 million lump-sum payment described above, operating income was $473.4 million, down 9 percent from fiscal 2014, and fiscal 2015 operating margin was 33.7 percent.

Non-operating expenses totaled $31.1 million in fiscal 2015 compared to $28.7 million in fiscal 2014. The year-over-year change primarily reflects a $1.2 million decline in gains (losses) and other investment income related to the Company's investments in sponsored products and a $1.7 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 38.8 percent in fiscal 2015. Excluding the impact of consolidated CLO entities income (expense) borne by other beneficial interest holders, the Company's effective tax rate was 38.2 percent for the fiscal year.

Equity in net income of affiliates decreased to $12.0 million in fiscal 2015 from $16.7 million in fiscal 2014. Equity in net income of affiliates in fiscal 2015 included $10.9 million of Company equity in the net income of Hexavest, $0.3 million of gains (losses) and other income on the Company's investments in sponsored funds and $0.8 million of net income in a private equity partnership. Equity in net income of affiliates in fiscal 2014 included $11.0 million of Company equity in the net income of Hexavest, $5.2 million of gains (losses) and other income on the Company's investments in sponsored funds and $0.5 million of net income in a private equity partnership.

As detailed in Attachment 3, net income attributable to non-controlling and other beneficial interests was $7.9 million in fiscal 2015 compared to net income attributable to non-controlling and other beneficial interests of $16.8 million in fiscal 2014.

Fourth Quarter Fiscal 2015 vs. Fourth Quarter Fiscal 2014

In the fourth quarter of fiscal 2015, revenue decreased 7 percent to $341.5 million from revenue of $368.4 million in the fourth quarter of fiscal 2014. Investment advisory and administrative fees were down 8 percent, as the impact of lower average effective fee rates, driven by product mix, more than offset a 4 percent increase in average consolidated assets under management. Performance fees contributed $2.0 million in the fourth quarter of fiscal 2015 compared to $6.3 million in the fourth quarter of fiscal 2014. Distribution and service fee revenues collectively were down 7 percent, reflecting lower managed assets in fund share classes that are subject to these fees.

Operating expenses increased 1 percent to $230.5 million in the fourth quarter of fiscal 2015 from $229.2 million in the fourth quarter of fiscal 2014. Increases in compensation and other operating expenses were mostly offset by lower distribution and service fee expenses, reduced amortization of deferred sales commissions and lower fund-related expenses. The increase in compensation expense reflects higher salaries and benefits attributable to an increase in headcount, higher stock-based compensation accruals and other compensation costs in connection with employee retirements, other terminations and additions to staff, and higher operating income-based bonus accruals.  The 5 percent increase in other operating expenses reflects higher professional services, facilities-related and information technology expenses, offset in part by lower travel and other expenses. The decrease in service fee expense reflects lower average managed assets subject to service fee payments. The decrease in distribution expense primarily reflects lower closed-end fund-related distribution expense following the fiscal 2015 first quarter termination of service and additional compensation arrangements in place with a major distribution partner. The decrease in amortization of deferred sales commissions largely reflects decreases in Class B share and Class C share amortization, offset by an increase in private fund commission amortization. The decrease in fund-related expenses primarily reflects lower sub-advisory expenses.

Expenses in connection with the Company's NextShares initiative totaled approximately $2.3 million in the fourth quarter of fiscal 2015, an increase of 110 percent from $1.1 million in the fourth quarter of fiscal 2014.

During the fourth quarter of fiscal 2015, the Company and its wholly owned subsidiary Navigate Fund Solutions LLC ("Navigate") continued to advance NextShares toward product launch.  In August, Envestnet, Inc. announced an initiative to make NextShares funds available to financial advisors through its wealth management platform.  In September, Folio Investing and Folio Institutional, online brokerage services for individual investors, financial advisors, institutions and their clients, announced plans to offer NextShares funds directly to individual investors, advisors and institutions.  To date, 12 fund advisers, including Eaton Vance, have indicated their intent to offer NextShares by entering into preliminary agreements with Navigate and filing request for exemptive relief with the SEC.  These 12 firms collectively manage approximately $640 billion in mutual fund assets and sponsor almost 260 funds currently rated four or five stars by Morningstar.  Subject to registration statement approval and operational readiness, Eaton Vance intends to begin the staged introduction of NextShares funds in the first quarter of calendar 2016. 

Operating income was down 20 percent to $110.9 million in the fourth quarter of fiscal 2015 from $139.2 million in the fourth quarter of fiscal 2014. Operating margin declined to 32.5 percent in the fourth quarter of fiscal 2015 from 37.8 percent in the fourth quarter of fiscal 2014.

Non-operating expenses totaled $13.7 million in the fourth quarter of fiscal 2015 compared to $10.5 million in the fourth quarter of fiscal 2014. The year-over-year change primarily reflects a $0.9 million decline in gains (losses) and other investment income related to the Company's investments in sponsored products and a $2.6 million decline in income (expense) of the Company's consolidated 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 40.2 percent in the fourth quarter of fiscal 2015. Excluding the impact of consolidated CLO entity income (expense) borne by other beneficial interest holders, the Company's effective tax rate was 38.6 percent for the quarter.

Equity in net income of affiliates decreased to $2.7 million in the fourth quarter of fiscal 2015 from $4.4 million in the fourth quarter of fiscal 2014. Equity in net income of affiliates in the fourth quarter of fiscal 2015 included $2.4 million of Company equity in the net income of Hexavest and $0.2 million of gains (losses) and other income on the Company's investments in sponsored funds. Equity in net income of affiliates in the fourth quarter of fiscal 2014 included $2.7 million of Company equity in the net income of Hexavest, $1.5 million of gains (losses) and other income on the Company's investments in sponsored funds and $0.2 million of net income in a private equity partnership.

As detailed in Attachment 3, net loss attributable to non-controlling and other beneficial interests was $1.4 million in the fourth quarter of fiscal 2015 compared to net income attributable to non-controlling and other beneficial interests of $5.0 million in the fourth quarter of fiscal 2014.

Fourth Quarter Fiscal 2015 vs. Third Quarter Fiscal 2015

In the fourth quarter of fiscal 2015, revenue decreased 4 percent to $341.5 million from revenue of $355.5 million in the third quarter of fiscal 2015. Investment advisory and administrative fees were down 4 percent, reflecting a 1 percent decrease in average consolidated assets under management and lower average effective fee rates. Performance fees contributed $2.0 million in the fourth quarter of fiscal 2015 and $1.7 million in the third quarter of fiscal 2015. Distribution and service fee revenues collectively decreased 2 percent, reflecting lower managed assets in fund share classes that are subject to these fees.

Operating expenses decreased 3 percent to $230.5 million in the fourth quarter of fiscal 2015 from $238.8 million in the third quarter of fiscal 2015, reflecting lower compensation, distribution, service fee and fund-related expenses. The decrease in compensation expense reflects lower stock-based compensation accruals and other compensation costs in connection with employee retirements and other terminations and decreases in operating income-based bonus accruals. The decrease in distribution expense reflects lower marketing expenses and reduced distribution fee expenses. The decrease in service fee expense reflects lower average managed assets subject to service fee payments. The decrease in fund-related expenses is attributable to a decrease in fund expenses borne by the Company on funds for which it earns an all-in fee as well as decreases in sub-advisory expenses.

NextShares-related expenses grew from $2.0 million in the third quarter of fiscal 2015 to $2.3 million in the fourth quarter of fiscal 2015, an increase of 12 percent.

Operating income was down 5 percent to $110.9 million in the fourth quarter of fiscal 2015 from $116.7 million in the third quarter of fiscal 2015. Operating margin decreased to 32.5 percent in the fourth quarter of fiscal 2015 from 32.8 percent in the third quarter of fiscal 2015, reflecting revenue declines in excess of expense declines.

Non-operating expenses totaled $13.7 million in the fourth quarter of fiscal 2015 compared to $7.6 million in the third quarter of fiscal 2015, reflecting a $1.5 million decline in gains (losses) and other investment income related to the Company's investments in sponsored products and a $4.6 million decline in income (expense) of the Company's consolidated CLO entities.

Equity in net income of affiliates decreased to $2.7 million in the fourth quarter of fiscal 2015 from $3.3 million in the third quarter of fiscal 2015. In the fourth quarter of fiscal 2015, equity in net income of affiliates included $2.4 million of Company equity in the net income of Hexavest and $0.2 million of gains (losses) and other income on the Company's investments in sponsored funds. In the third quarter of fiscal 2015, equity in net income of affiliates included $2.9 million of Company equity in the net income of Hexavest and $0.4 million of net income in a private equity partnership.

As detailed in Attachment 3, net loss attributable to non-controlling and other beneficial interests was $1.4 million in the fourth quarter of fiscal 2015 compared to net income attributable to non-controlling and other beneficial interests of $0.3 million in the third quarter of fiscal 2015.

Balance Sheet Information

Cash and cash equivalents totaled $465.6 million on October 31, 2015, with no outstanding borrowings against the Company's $300 million credit facility. Included within investments is $77.4 million of holdings of short-term debt securities with maturities between 90 days and one year. During fiscal 2015, the Company used $283.4 million to repurchase and retire approximately 7.4 million shares of its Non-Voting Common Stock under its repurchase authorizations. Of the current 8.0 million share repurchase authorization, approximately 3.2 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 months and fiscal year ended October 31, 2015. To participate in the conference call, please call 877-201-0168 (domestic) or 647-788-4901 (international) and refer to "Eaton Vance Corp. Fourth Quarter Earnings – Conference ID 69380557." 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 69380557.

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, payments to end closed-end fund service and additional compensation arrangements, 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 2015

Q4 2015

October 31,

July 31,

October 31,

vs.

vs.

October 31,

October 31,

%

2015

2015

2014

Q3 2015

Q4 2014

2015

2014

Change

Revenue:

Investment advisory and administrative fees

$

290,804

$

303,625

$

314,583

(4)

%

(8)

%

$

1,196,866

$

1,231,188

(3)

%

Distribution and underwriter fees

19,446

20,285

21,133

(4)

(8)

80,815

85,514

(5)

Service fees

28,875

29,265

30,616

(1)

(6)

116,448

125,713

(7)

Other revenue

2,333

2,336

2,050

-

14

9,434

7,879

20

Total revenue

341,458

355,511

368,382

(4)

(7)

1,403,563

1,450,294

(3)

Expenses:

Compensation and related costs

119,160

124,400

110,328

(4)

8

483,827

461,438

5

Distribution expense

30,506

31,300

35,620

(3)

(14)

198,155

141,544

40

Service fee expense

25,547

26,978

29,354

(5)

(13)

106,663

116,620

(9)

Amortization of deferred sales commissions

3,785

3,767

4,182

-

(9)

14,972

17,590

(15)

Fund-related expenses

8,802

9,446

9,127

(7)

(4)

35,886

35,415

1

Other expenses

42,725

42,887

40,595

-

5

163,613

157,830

4

Total expenses

230,525

238,778

229,206

(3)

1

1,003,116

930,437

8

Operating income

110,933

116,733

139,176

(5)

(20)

400,447

519,857

(23)

Non-operating income (expense):

Gains (losses) and other investment

income, net

(2,330)

(850)

(1,453)

174

60

(31)

1,139

NM

Interest expense

(7,340)

(7,344)

(7,645)

-

(4)

(29,357)

(29,892)

(2)

Other income (expense) of consolidated

collateralized loan obligation

("CLO") entities:

     Gains (losses) and other investment

          income, net

(192)

1,771

(355)

NM

(46)

5,092

14,892

(66)

     Interest and other expense

(3,801)

(1,161)

(1,066)

227

257

(6,767)

(14,847)

(54)

Total non-operating expense

(13,663)

(7,584)

(10,519)

80

30

(31,063)

(28,708)

8

Income before income taxes and equity

   in net income of affiliates

97,270

109,149

128,657

(11)

(24)

369,384

491,149

(25)

Income taxes

(39,113)

(43,435)

(47,920)

(10)

(18)

(143,214)

(186,710)

(23)

Equity in net income of affiliates, net of tax

2,658

3,260

4,381

(18)

(39)

12,021

16,725

(28)

Net income

60,815

68,974

85,118

(12)

(29)

238,191

321,164

(26)

Net (income) loss attributable to non-controlling

   and other beneficial interests

1,388

(265)

(4,996)

NM

NM

(7,892)

(16,848)

(53)

Net income attributable to

   Eaton Vance Corp. Shareholders

$

62,203

$

68,709

$

80,122

(9)

(22)

$

230,299

$

304,316

(24)

Earnings per share:

Basic

$

0.55

$

0.60

$

0.68

(8)

(19)

$

2.00

$

2.55

(22)

Diluted

$

0.53

$

0.57

$

0.66

(7)

(20)

$

1.92

$

2.44

(21)

Weighted average shares outstanding:

Basic

112,040

113,406

114,656

(1)

(2)

113,318

116,440

(3)

Diluted

115,949

118,281

119,391

(2)

(3)

118,155

121,595

(3)

Dividends declared per share

$

0.265

$

0.250

$

0.250

6

6

$

1.015

$

0.910

12

 

 

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 2015 vs.

Q4 2015 vs.

October 31,

October 31,

%

(in thousands, except per share figures)

2015

2015

2014

Q3 2015

Q4 2014

2015

2014

Change

Net income attributable to Eaton

Vance Corp. shareholders

$

62,203

$

68,709

$

80,122

(9)

%

(22)

%

$

230,299

$

304,316

(24)

%

Non-controlling interest value adjustments

(407)

6

2,981

NM

NM

(204)

5,311

NM

Payments to end certain closed-end fund

service and additional compensation

arrangements, net of tax

-

-

-

-

-

44,895

-

NM

Adjusted net income attributable

to Eaton Vance Corp. shareholders

$

61,796

$

68,715

$

83,103

(10)

(26)

$

274,990

$

309,627

(11)

Earnings per diluted share

$

0.53

$

0.57

$

0.66

(7)

(20)

$

1.92

$

2.44

(21)

Non-controlling interest value adjustments

-

-

0.02

NM

NM

-

0.04

NM

Payments to end certain closed-end fund

service and additional compensation

arrangements, net of tax

-

-

-

-

-

0.37

-

NM

Adjusted earnings per diluted share

$

0.53

$

0.57

$

0.68

(7)

(22)

$

2.29

$

2.48

(8)

 

 

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 2015 vs.

Q4 2015 vs.

October 31,

October 31,

%

(in thousands)

2015

2015

2014

Q3 2015

Q4 2014

2015

2014

Change

Consolidated funds

$

(526)

$

(1,027)

$

(577)

(49)

%

(9)

%

$

(1,752)

$

(318)

NM

%

Majority-owned subsidiaries

3,931

4,066

4,681

(3)

(16)

15,673

15,949

(2)

Non-controlling interest value adjustments

(407)

6

2,981

NM

NM

(204)

5,311

NM

Consolidated CLO entities

(4,386)

(2,780)

(2,089)

58

110

(5,825)

(4,094)

42

Net income (loss) attributable to non-

controlling and other beneficial interests

$

(1,388)

$

265

$

4,996

NM

NM

$

7,892

$

16,848

(53)

 

 

 Attachment 4

Eaton Vance Corp.

Balance Sheet

(in thousands, except per share figures)

October 31,

October 31,

2015

2014

Assets

Cash and cash equivalents

$

465,558

$

385,215

Investment advisory fees and other receivables

187,753

186,344

Investments

507,020

624,605

Assets of consolidated CLO entity:

          Cash and cash equivalents

162,704

8,963

          Bank loans and other investments

304,250

147,116

          Other assets

128

371

Deferred sales commissions

25,161

17,841

Deferred income taxes

42,164

46,099

Equipment and leasehold improvements, net

44,943

45,651

Intangible assets, net

55,433

65,126

Goodwill

237,961

228,876

Other assets

83,396

103,879

   Total assets

$

2,116,471

$

1,860,086

Liabilities, Temporary Equity and Permanent Equity

Liabilities:

Accrued compensation

$

178,875

$

181,064

Accounts payable and accrued expenses

65,249

64,598

Dividend payable

32,923

30,057

Debt

573,811

573,655

Liabilities of consolidated CLO entity:

          Senior and subordinated note obligations

397,039

151,982

          Other liabilities

70,814

298

Other liabilities

86,891

93,485

   Total liabilities

1,405,602

1,095,139

Commitments and contingencies

Temporary Equity:

Redeemable non-controlling interests

88,913

107,466

   Total temporary equity

88,913

107,466

Permanent Equity:

Voting Common Stock, par value $0.00390625 per share:

   Authorized, 1,280,000 shares

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

2

2

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

   Authorized, 190,720,000 shares

   Issued and outstanding, 115,470,485 and 117,846,273 shares, respectively

451

460

Additional paid-in capital

-

-

Notes receivable from stock option exercises

(11,143)

(8,818)

Accumulated other comprehensive loss

(48,586)

(17,996)

Appropriated (deficit) retained earnings

(5,338)

2,467

Retained earnings

684,845

679,061

   Total Eaton Vance Corp. shareholders' equity

620,231

655,176

Non-redeemable non-controlling interests

1,725

2,305

   Total permanent equity

621,956

657,481

Total liabilities, temporary equity and permanent equity

$

2,116,471

$

1,860,086

 

 

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, 

2015

2015

2014

2015

2014

Equity assets - beginning of period(2)

$

93,366

$

97,167

$

95,668

$

96,379

$

93,585

Sales and other inflows 

4,412

5,191

3,568

18,082

14,473

Redemptions/outflows 

(5,117)

(8,371)

(4,411)

(22,993)

(19,099)

  Net flows 

(705)

(3,180)

(843)

(4,911)

(4,626)

Exchanges 

10

(19)

20

50

567

Market value change 

(2,658)

(602)

1,534

(1,505)

6,853

 Equity assets - end of period 

$

90,013

$

93,366

$

96,379

$

90,013

$

96,379

 Fixed income assets - beginning of period(3)

51,266

49,690

44,474

46,062

44,414

Sales and other inflows 

4,519

5,370

3,604

18,516

12,024

Redemptions/outflows 

(3,167)

(3,212)

(2,532)

(11,325)

(11,867)

  Net flows 

1,352

2,158

1,072

7,191

157

Exchanges 

-

(27)

74

52

96

Market value change 

(245)

(555)

442

(932)

1,395

 Fixed income assets - end of period 

$

52,373

$

51,266

$

46,062

$

52,373

$

46,062

 Floating-rate income assets -  beginning of period 

37,220

38,269

43,752

42,009

41,821

Sales and other inflows 

2,615

2,032

2,575

9,336

15,669

Redemptions/outflows 

(3,434)

(2,554)

(3,705)

(14,376)

(14,742)

  Net flows 

(819)

(522)

(1,130)

(5,040)

927

Exchanges 

(12)

2

(89)

(136)

(145)

Market value change 

(770)

(529)

(524)

(1,214)

(594)

 Floating-rate income assets - end of period 

$

35,619

$

37,220

$

42,009

$

35,619

$

42,009

 Alternative assets -  beginning of period 

10,333

10,582

11,691

11,241

15,212

Sales and other inflows 

868

721

709

3,219

3,339

Redemptions/outflows 

(816)

(869)

(1,073)

(3,892)

(7,237)

  Net flows 

52

(148)

(364)

(673)

(3,898)

Exchanges 

(2)

45

(6)

24

(89)

Market value change 

(210)

(146)

(80)

(419)

16

 Alternative assets - end of period 

$

10,173

$

10,333

$

11,241

$

10,173

$

11,241

 Portfolio implementation assets - beginning of period 

59,234

52,879

46,954

48,008

42,992

Sales and other inflows 

3,541

8,395

2,010

18,034

8,331

Redemptions/outflows 

(1,866)

(1,988)

(1,929)

(7,217)

(7,449)

  Net flows 

1,675

6,407

81

10,817

882

Exchanges 

-

-

-

-

(461)

Market value change 

(1,422)

(52)

973

662

4,595

 Portfolio implementation assets - end of period 

$

59,487

$

59,234

$

48,008

$

59,487

$

48,008

 Exposure management assets - beginning of period(4)

61,137

62,459

45,655

54,036

42,645

Sales and other inflows 

14,918

11,113

15,821

57,586

52,914

Redemptions/outflows 

(11,895)

(11,909)

(7,879)

(48,286)

(43,604)

  Net flows 

3,023

(796)

7,942

9,300

9,310

Market value change 

(471)

(526)

439

353

2,081

 Exposure management assets - end of period 

$

63,689

$

61,137

$

54,036

$

63,689

$

54,036

 Total fund and separate account 

assets - beginning of period 

312,556

311,046

288,194

297,735

280,669

Sales and other inflows 

30,873

32,822

28,287

124,773

106,750

Redemptions/outflows 

(26,295)

(28,903)

(21,529)

(108,089)

(103,998)

  Net flows 

4,578

3,919

6,758

16,684

2,752

Exchanges 

(4)

1

(1)

(10)

(32)

Market value change 

(5,776)

(2,410)

2,784

(3,055)

14,346

 Total assets under management - end of period 

$

311,354

$

312,556

$

297,735

$

311,354

$

297,735

(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)  Includes assets in cash management accounts. 

(4)  Category includes amounts reclassified from portfolio implementation and equity categories for all periods presented. 

 

 

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, 

2015

2015

2014

2015

2014

 Fund assets - beginning of period(2)

$

130,211

$

132,161

$

135,156

$

134,564

$

133,401

Sales and other inflows 

8,644

7,016

7,857

32,029

35,408

Redemptions/outflows 

(9,632)

(7,570)

(8,795)

(36,330)

(38,077)

  Net flows 

(988)

(554)

(938)

(4,301)

(2,669)

Exchanges 

(4)

1

(73)

181

(32)

Market value change 

(3,285)

(1,397)

419

(4,510)

3,864

 Fund assets - end of period 

$

125,934

$

130,211

$

134,564

$

125,934

$

134,564

 Institutional separate account assets -  

beginning of period(3)

118,086

115,942

98,393

106,443

95,724

Sales and other inflows 

17,889

21,764

17,318

75,568

59,938

Redemptions/outflows 

(14,247)

(18,424)

(10,325)

(61,569)

(54,957)

  Net flows 

3,642

3,340

6,993

13,999

4,981

Exchanges 

-

(34)

(65)

(208)

216

Market value change 

(1,741)

(1,162)

1,122

(247)

5,522

 Institutional separate account assets -  

end of period 

$

119,987

$

118,086

$

106,443

$

119,987

$

106,443

 High-net-worth separate account assets -  

beginning of period 

24,492

24,226

20,851

22,235

19,699

Sales and other inflows 

1,013

1,177

1,056

4,816

3,532

Redemptions/outflows 

(641)

(877)

(575)

(2,933)

(3,620)

  Net flows 

372

300

481

1,883

(88)

Exchanges 

(5)

-

317

(99)

286

Market value change 

(343)

(34)

586

497

2,338

 High-net-worth separate account assets -

end of period 

$

24,516

$

24,492

$

22,235

$

24,516

$

22,235

 Retail managed account assets - beginning of period

39,767

38,717

33,794

34,493

31,845

Sales and other inflows 

3,327

2,865

2,056

12,360

7,872

Redemptions/outflows 

(1,775)

(2,032)

(1,834)

(7,257)

(7,344)

  Net flows 

1,552

833

222

5,103

528

Exchanges 

5

34

(180)

116

(502)

Market value change 

(407)

183

657

1,205

2,622

 Retail managed account assets - end of period

$

40,917

$

39,767

$

34,493

$

40,917

$

34,493

 Fund and separate account assets - beginning of period

312,556

311,046

288,194

297,735

280,669

Sales and other inflows 

30,873

32,822

28,287

124,773

106,750

Redemptions/outflows 

(26,295)

(28,903)

(21,529)

(108,089)

(103,998)

  Net flows 

4,578

3,919

6,758

16,684

2,752

Exchanges 

(4)

1

(1)

(10)

(32)

Market value change 

(5,776)

(2,410)

2,784

(3,055)

14,346

 Total assets under management - end of period 

$

311,354

$

312,556

$

297,735

$

311,354

$

297,735

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

(2)   Includes assets in cash management funds. 

(3)   Includes assets in cash management separate accounts. 

 

 

Attachment 7 

 Eaton Vance Corp. 

 Consolidated Assets under Management by Investment Affiliate (1)

 (in millions) 

October 31,

July 31,

%

October 31,

%

2015

2015

Change

2014

Change 

 Eaton Vance Management(2)

$

141,415

$

142,987

-1%

$

143,100

-1%

 Parametric  

152,506

150,983

1%

136,176

12%

 Atlanta Capital 

17,433

18,586

-6%

18,459

-6%

 Total  

$

311,354

$

312,556

0%

$

297,735

5%

(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, as well as certain Eaton Vance-sponsored funds and accounts managed by   

      Hexavest and unaffiliated third-party advisers 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,

%

2015

2015

Change

2014

Change 

 Equity(2)

$

90,013

$

93,366

-4%

$

96,379

-7%

 Fixed income(3)

52,373

51,266

2%

46,062

14%

 Floating-rate income 

35,619

37,220

-4%

42,009

-15%

 Alternative 

10,173

10,333

-2%

11,241

-10%

 Portfolio implementation 

59,487

59,234

0%

48,008

24%

 Exposure management 

63,689

61,137

4%

54,036

18%

 Total  

$

311,354

$

312,556

0%

$

297,735

5%

(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 cash management accounts.

 

 

 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, 

2015

2015

2014

2015

2014

Eaton Vance distributed: 

Eaton Vance sponsored funds - beginning of period(1)

$

239

$

247

$

221

$

227

$

211

        Sales and other inflows 

1

2

9

22

58

        Redemptions/outflows 

(5)

(6)

(4)

(21)

(57)

          Net flows 

(4)

(4)

5

1

1

        Market value change 

(6)

(4)

1

1

15

Eaton Vance sponsored funds - end of period 

$

229

$

239

$

227

$

229

$

227

        Eaton Vance distributed separate accounts - 

         beginning of period(2)

$

2,362

$

2,401

$

2,397

$

2,367

$

1,574

        Sales and other inflows 

140

11

12

535

531

        Redemptions/outflows 

(14)

(39)

(59)

(488)

(260)

          Net flows 

126

(28)

(47)

47

271

        Exchanges 

-

-

-

-

389

        Market value change 

(48)

(11)

17

26

133

 Eaton Vance distributed separate accounts -  

        end of period 

$

2,440

$

2,362

$

2,367

$

2,440

$

2,367

 Total Eaton Vance distributed - beginning of period 

$

2,601

$

2,648

$

2,618

$

2,594

$

1,785

        Sales and other inflows 

141

13

21

557

589

        Redemptions/outflows 

(19)

(45)

(63)

(509)

(317)

          Net flows 

122

(32)

(42)

48

272

        Exchanges 

-

-

-

-

389

        Market value change 

(54)

(15)

18

27

148

 Total Eaton Vance distributed - end of period 

$

2,669

$

2,601

$

2,594

$

2,669

$

2,594

 Hexavest directly distributed - beginning of period(3)

$

12,208

$

12,999

$

14,423

$

14,101

$

15,136

        Sales and other inflows 

75

286

245

786

1,637

        Redemptions/outflows 

(699)

(780)

(501)

(3,503)

(3,046)

          Net flows 

(624)

(494)

(256)

(2,717)

(1,409)

       Exchanges 

-

-

-

-

(389)

       Market value change 

(305)

(297)

(66)

(105)

763

 Hexavest directly distributed - end of period 

$

11,279

$

12,208

$

14,101

$

11,279

$

14,101

 Total Hexavest assets - beginning of period 

$

14,809

$

15,647

$

17,041

$

16,695

$

16,921

       Sales and other inflows 

216

299

266

1,343

2,226

       Redemptions/outflows 

(718)

(825)

(564)

(4,012)

(3,363)

         Net flows 

(502)

(526)

(298)

(2,669)

(1,137)

       Exchanges 

-

-

-

-

-

       Market value change 

(359)

(312)

(48)

(78)

911

Total Hexavest assets - end of period 

$

13,948

$

14,809

$

16,695

$

13,948

$

16,695

(1)

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

 

SOURCE Eaton Vance Corp.



RELATED LINKS

http://www.eatonvance.com