-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, U7YZ/5qfPyvCdQpar02BODdfk6dnvlkoxpO2L7X8EVy4pDU6YehxkiigTfwgd/nl Q+1KzA+qn27UDCJsIgT9+w== 0000350797-05-000008.txt : 20050302 0000350797-05-000008.hdr.sgml : 20050302 20050302104931 ACCESSION NUMBER: 0000350797-05-000008 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20050302 ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050302 DATE AS OF CHANGE: 20050302 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EATON VANCE CORP CENTRAL INDEX KEY: 0000350797 STANDARD INDUSTRIAL CLASSIFICATION: INVESTMENT ADVICE [6282] IRS NUMBER: 042718215 STATE OF INCORPORATION: MD FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08100 FILM NUMBER: 05652681 BUSINESS ADDRESS: STREET 1: 255 STATE STREET CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6174828260 MAIL ADDRESS: STREET 1: 255 STATE STEET STREET 2: 11TH FLOOR CITY: BOSTON STATE: MA ZIP: 02109 8-K 1 evc8k.txt EVC 8-K DTD 3-2-05 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): March 2, 2005 ------------- EATON VANCE CORP. ----------------- (Exact name of registrant as specified in its charter) Maryland 1-8100 04-2718215 - ---------------------------- ------------------------ ------------------ (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) 255 State Street, Boston, Massachusetts 02109 ---------------------------------------- ----------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (617) 482-8260 -------------- Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Page 1 of 10 INFORMATION INCLUDED IN THE REPORT ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS - ---------- --------------------------------- Registrant has reported its results of operations for the three months ended January 31, 2005, as described in Registrant's news release dated March 2, 2005, a copy of which is filed herewith as Exhibit 99.1 and incorporated herein by reference. Exhibit No. Document ----------- -------- 99.1 Press release issued by the Registrant dated March 2, 2005. Page 2 of 10 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized. EATON VANCE CORP. (Registrant) Date: March 2, 2005 /s/ William M. Steul ------------------------------------------- William M. Steul, Chief Financial Officer Page 3 of 10 EXHIBIT INDEX Each exhibit is listed in this index according to the number assigned to it in the exhibit table set forth in Item 601 of Regulation S-K. The following exhibit is filed as part of this Report: Exhibit No. Description - ----------- ----------- 99.1 Copy of Registrant's news release dated March 2, 2005. Page 4 of 10 - -------------------------------------------------- NEWS RELEASE - -------------------------------------------------- Eaton Vance Corp. The Eaton Vance Building {LOGO} 255 State Street, Boston, MA 02109 (617) 482-8260 Contact: William M. Steul - -------------------------------------------------- March 2, 2005 FOR IMMEDIATE RELEASE EATON VANCE CORP. REPORT FOR THE THREE MONTHS ENDED JANUARY 31, 2005 BOSTON, MA--Eaton Vance Corp. reported diluted earnings per share of $0.27 in the first three months of fiscal 2005 compared to diluted earnings per share of $0.22 in the first three months of fiscal 2004, an increase of 23 percent. Assets under management of $98.0 billion at the end of the first quarter of fiscal 2005 were $14.4 billion or 17 percent greater than the $83.6 billion at the end of the first fiscal quarter last year. In the 12-month period ended January 31, 2005, the Company's assets under management were positively affected by long-term fund and separate account net inflows of $9.5 billion, market price appreciation of $3.1 billion and $1.9 billion of separate accounts acquired from Deutsche Bank in July 2004. Gross sales and inflows of long-term funds and separate accounts in the last 12 months were $23.2 billion, including four closed-end funds that raised a total of $3.1 billion, and the over-allotment and preferred shares related to a January 2004 fund offering that added $0.8 billion. Net fund and separate account inflows of $1.3 billion in the first quarter of fiscal 2005 compared to net inflows of $5.6 billion in the first fiscal quarter last year. This year's first quarter net inflows included $0.9 billion raised in one closed-end fund offering, the Eaton Vance Enhanced Equity Income Fund II offered in January and the over-allotment shares from the Eaton Vance Enhanced Equity Income Fund offered in October. Last year's first quarter benefited from closed-end fund inflows of $3.2 billion that included the successful offering of two closed-end funds, the Eaton Vance Senior Floating-Rate Trust and the Eaton Vance Tax-Advantaged Global Dividend Income Fund, that raised $2.4 billion of new assets as well as the over-allotment common and preferred shares related to the Eaton Vance Tax-Advantaged Dividend Income Fund, offered in September 2003, that added $0.8 billion. Excluding closed-end funds, net flows for Eaton Vance funds were substantially lower in the first quarter of fiscal 2005 compared to the same period last year. Gross fund flows were $3.1 billion in the first quarter of fiscal 2005 and $3.0 billion in the first quarter of fiscal 2004. However, fund outflows increased 40 percent or $0.7 billion from $1.6 billion to $2.3 billion because of higher bank loan and equity fund redemptions. The Page 5 of 10 Company also experienced increased institutional and high-net-worth separate account withdrawals in the first quarter, primarily due to management turnover at a subsidiary and year-end portfolio rebalancing by certain clients. Retail managed account net flows, however, increased by 30 percent compared to the same period last year. Tables 1, 2 and 3 (attached) summarize assets under management and asset flows by investment objective. As a result of higher average assets under management, revenue in the first quarter of fiscal 2005 increased by $24.8 million or 16 percent to $181.8 million compared to revenue in the first quarter of fiscal 2004 of $157.0 million. Investment adviser and administration fees increased 27 percent to $118.9 million, compared to the 23 percent increase in average assets under management. Distribution and underwriter fees decreased 12 percent, reflecting the continuing shift in sales and assets from Class B mutual fund shares to other fund share classes and other managed assets with low or no distribution fees. Service fee revenue increased 16 percent due to the increase in average fund assets that pay these fees. Other revenue increased 62 percent primarily as a result of investment income earned by two consolidated investment companies. Operating expense in the first quarter of fiscal 2005 increased 11 percent to $118.9 million compared to operating expense of $106.9 million in fiscal first quarter 2004, primarily because of higher compensation, service fee, distribution and other expense. Compensation expense increased 13 percent because of increases in employee headcount, base salaries, separately managed account sales incentives and higher operating income-based bonus accruals, partly offset by decreases in marketing and sales incentives associated with lower long-term fund sales. Amortization of deferred sales commissions declined 13 percent in the first quarter of fiscal 2005 compared to the first quarter of fiscal 2004 primarily because of the continuing decline in Class B share sales and assets under management. Service fee expense increased 14 percent, in line with the increase in service fee revenue. Eaton Vance collects asset-based service fees from many of its funds and pays them to the appropriate broker/dealers after one year. Distribution expense increased 22 percent as a result of increases in sales support expenses, Class C share fund distribution fees and closed-end fund fees. Other expense increased 30 percent primarily because of higher fund expenses, facilities, information technology, legal, compliance and other miscellaneous expenses. Operating income and net income in the first quarter of fiscal 2005 increased 25 percent to $62.9 million and $38.4 million, respectively, compared to $50.1 million and $30.8 million, respectively, in the first quarter of fiscal 2004. Interest expense decreased 78 percent reflecting a $51.7 million reduction in long-term debt. The Company's provision for income taxes was 37 percent in the first quarter of fiscal 2005 and 36 percent in the first quarter of fiscal 2004. The $0.6 million loss in the net income of an affiliate resulted from the payment of calendar 2004 year-end performance bonuses that were not previously accrued by 20 percent owned Lloyd George Management. The Company's after-tax net income in this affiliate actually increased 133 percent to $0.7 million in calendar year 2004 from $0.3 million in calendar year 2003. The Company adopted Emerging Issues Task Force Issue No. 04-8, "The Effect of Contingently Convertible Instruments on Diluted Earnings/Share," in the first quarter of fiscal 2005, as required. The change of accounting had an immaterial effect (less than $0.01) on diluted earnings per share for the first quarters of fiscal 2005 and fiscal 2004. Page 6 of 10 Cash, cash equivalents and short-term investments were $326.8 million ($292.7 million excluding minority interest in a consolidated investment company) on January 31, 2005, and $262.6 million on January 31, 2004. The Company's strong operating cash flow in the last 12 months allowed it to reduce its long-term debt by $51.7 million to $74.6 million and to pay $55.8 million in income taxes, $58.8 million in sales commissions, $93.6 million to repurchase 4.5 million shares of its non-voting common stock and $37.0 million in dividends to shareholders. On December 21, 2004, the Company executed a five-year $180.0 million revolving credit facility with several banks, replacing a three-year $170.0 million credit facility that expired on that date. The primary purpose of the credit facility is to provide the Company with additional working capital availability. There are currently no outstanding borrowings against the new facility. During the first three months of fiscal 2005, the Company repurchased and retired 1,247,686 shares of its non-voting common stock at an average price of $24.70 per share under its repurchase authorization. Approximately 2.0 million shares remain of the current 8.0 million share authorization. Eaton Vance Corp., a Boston-based investment management firm, is traded on the New York Stock Exchange under the symbol EV. This news release contains 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, the volume of sales and repurchases of fund shares, the continuation of investment advisory, administration, distribution and service contracts, and other risks discussed from time to time in the Company's filings with the Securities and Exchange Commission. Page 7 of 10 Eaton Vance Corp. Summary of Results of Operations (in thousands, except per share amounts) Three Months Ended ----------------------------------------- January 31, January 31, % 2005 2004 Change ----------- ----------- ------ Revenue: Investment adviser and administration fees $ 118,918 $ 93,750 27% Distribution and underwriter fees 35,060 39,876 (12) Service fees 25,477 21,909 16 Other revenue 2,326 1,438 62 ------------ ----------- -------- Total revenue 181,781 156,973 16 ------------ ----------- -------- Expenses: Compensation of officers and employees 42,204 37,499 13 Amortization of deferred sales commissions 18,040 20,763 (13) Service fee expense 21,172 18,632 14 Distribution expense 22,919 18,779 22 Other expenses 14,587 11,197 30 ------------ ----------- -------- Total expenses 118,922 106,870 11 ------------ ----------- -------- Operating Income 62,859 50,103 25 Other Income/(Expense): Interest income 709 788 (10) Interest expense (361) (1,651) (78) Gain on investments 10 5 100 Foreign currency gain (loss) 22 (18) n/a ------------ ----------- -------- Income Before Income Taxes, Equity in Net Income (Loss) of Affiliates and Minority Interest 63,239 49,227 28 Income Taxes 23,368 17,721 32 Equity in Net Income (Loss) of Affiliates, Net of Tax (577) 9 n/a Minority Interest, Net of Tax 885 702 26 Net Income $ 38,409 $ 30,813 25 ============ =========== ======== Earnings Per Share: Basic $ 0.29 $ 0.23 26 ============ =========== ======== Diluted $ 0.27 $ 0.22 23 ============ =========== ======== Dividends Declared, Per Share $ 0.08 $ 0.06 33 ============ =========== ======== Weighted Average Shares Outstanding: Basic 133,522 136,392 (2) ============ =========== ======== Diluted 143,711 145,840 (1) ============ =========== ========
Page 8 of 10 Eaton Vance Corp. Balance Sheet (in thousands, except per share figures) January 31, October 31, January 31, 2005 2004 2004 ----------- ----------- ----------- ASSETS Current Assets: Cash and cash equivalents $ 147,872 $ 147,137 $ 132,105 Short-term investments 178,884 210,429 130,527 Investment adviser fees and other receivables 34,246 32,249 30,116 Other current assets 4,744 4,861 23,744 ------------ ------------ ------------ Total current assets 365,746 394,676 316,492 ------------ ------------ ------------ Other Assets: Deferred sales commissions 151,961 162,259 191,228 Goodwill 89,281 89,281 88,979 Other intangible assets, net 43,181 43,965 45,680 Long-term investments 42,944 36,895 37,891 Equipment and leasehold improvements, net 12,051 12,413 11,925 Other assets 4,410 4,077 3,010 ------------ ------------ ------------ Total other assets 343,828 348,890 378,713 ------------ ------------ ------------ Total assets $ 709,574 $ 743,566 $ 695,205 ============ ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accrued compensation $ 20,029 $ 52,299 $ 15,892 Accounts payable and accrued expenses 26,164 23,789 20,717 Dividend payable 10,638 10,660 8,157 Current portion of long-term debt - - 7,143 Other current liabilities 24,587 7,451 6,860 ------------ ------------ ------------ Total current liabilities 81,418 94,199 58,769 ------------ ------------ ------------ Long-Term Liabilities: Long-term debt 74,625 74,347 119,180 Deferred income taxes 55,528 57,644 67,401 Total long-term liabilities 130,153 131,991 186,581 Total liabilities 211,571 226,190 245,350 Minority interest 38,506 67,870 26,165 Commitments and contingencies - - - Shareholders' Equity: Common stock, par value $0.00390625 per share: Authorized, 1,280,000 shares Issued, 309,760 shares 1 1 1 Non-voting common stock, par value $0.00390625 per share: Authorized, 190,720,000 shares Issued, 132,872,824, 133,271,560 and 135,986,894 shares, respectively 519 521 531 Notes receivable from stock option exercises (2,693) (2,718) (3,034) Deferred compensation (3,200) (2,400) (3,600) Accumulated other comprehensive income 2,272 1,854 1,813 Retained earnings 462,598 452,248 427,979 ------------ ------------ ------------ Total shareholders' equity 459,497 449,506 423,690 ------------ ------------ ------------ Total liabilities and shareholders' equity $ 709,574 $ 743,566 $ 695,205 ============ ============ ============ Page 9 of 10
Table 1 Asset Flows (in millions) Twelve Months Ended January 31, 2005 Assets 1/31/2004 - Beginning of Period $ 83,644 Long-term fund sales and inflows 17,586 Long-term fund redemptions and outflows (9,289) Long-term fund net exchanges (20) Long-term fund mkt. value change 1,674 Institutional and HNW account inflows 3,298 Institutional and HNW account outflows (3,106) Institutional and HNW assets acquired1 1,943 Retail managed account inflows 2,321 Retail managed account outflows (1,289) Separate account mkt. value change 1,391 Change in money market funds (144) ----------- Net change 14,365 ----------- Assets 1/31/2005 - End of Period $ 98,009 =========== Table 2 Assets Under Management By Investment Objective (in millions) ------------------------------------------------------------- January October 31 % January 3 % 2005 2004 Change 2004 Change ------------------------------------------------------------- Equity Funds $ 39,329 $ 36,895 6.6% $ 33,211 8.4% Fixed Income Funds 17,710 17,553 0.9% 18,252 -3.0% Bank Loan Funds 15,558 15,034 3.5% 11,180 39.2% Money Market Funds 325 389 -16.5% 469 -30.7% Separate Accounts 25,087 24,475 2.5% 20,528 22.2% ------------------------------------------------------------- Total $ 98,009 $ 94,346 3.9% $ 83,641 7.2% =============================================================
Table 3 Asset Flows by Investment Objective (in millions) Three Months Ended -------------------------- January 31, January 31, 2005 2004 -------------------------- Equity Fund Assets - Beginning of Period $ 36,895 $ 28,854 Sales/Inflows 2,057 3,445 Redemptions/Outflows (993) (700) Exchanges 19 51 Market Value Change 1,351 1,565 -------------------------- Net Change 2,434 4,361 -------------------------- Equity Fund Assets - End of Period $ 39,329 $ 33,215 -------------------------- Fixed Income Fund Assets - Beginning of Period 17,553 17,801 Sales/Inflows 679 728 Redemptions/Outflows (584) (553) Exchanges (11) (89) Market Value Change 73 365 -------------------------- Net Change 157 451 -------------------------- Fixed Income Fund Assets - End of Period $ 17,710 $ 18,252 -------------------------- Bank Loan Fund Assets - Beginning of Period 15,034 9,547 Sales/Inflows 1,183 1,983 Redemptions/Outflows (715) (378) Exchanges (8) 32 Market Value Change 64 (4) -------------------------- Net Change 524 1,633 -------------------------- Bank Loan Fund Assets - End of Period $ 15,558 $ 11,180 -------------------------- Long-Term Fund Assets - Beginning of Period 69,482 56,202 Sales/Inflows 3,919 6,156 Redemptions/Outflows (2,292) (1,631) Exchanges - (6) Market Value Change 1,488 1,926 -------------------------- Net Change 3,115 6,445 -------------------------- Total Long-Term Fund Assets - End of Period $ 72,597 $ 62,647 -------------------------- Separate Accounts - Beginning of Period 24,475 18,397 Institutional/HNW Account Inflows 712 1,097 Institutional/HNW Account Outflows (1,438) (332) Retail Managed Account Inflows 827 504 Retail Managed Account Outflows (446) (210) Separate accounts market value change 957 1,072 -------------------------- Net Change 612 2,131 -------------------------- Separate accounts - End of Period $ 25,087 $ 20,528 -------------------------- Money market fund assets - End of Period 325 469 -------------------------- Total Assets Under Management - End of Period $ 98,009 $ 83,644 ========================== 1 Deutsche Bank's Scudder Private Investment Counsel assets acquired by Eaton Vance in July 2004 Page 10 of 10 -----END PRIVACY-ENHANCED MESSAGE-----