-----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, Pkn6/zdXuyUtYu10nXZxcCgONN5NYZx9AUiq9xtvyq8Op0tq1qCQP5c6os/DzCUi m6TMMrhsoz9zxqpFjJBcbA== 0000891554-96-000017.txt : 19960125 0000891554-96-000017.hdr.sgml : 19960125 ACCESSION NUMBER: 0000891554-96-000017 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 14 CONFORMED PERIOD OF REPORT: 19951031 FILED AS OF DATE: 19960124 SROS: NASD 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: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08100 FILM NUMBER: 96506459 BUSINESS ADDRESS: STREET 1: 24 FEDERAL ST CITY: BOSTON STATE: MA ZIP: 02110 BUSINESS PHONE: 6174828260 MAIL ADDRESS: STREET 1: 24 FEDERAL STREET CITY: BOSTON STATE: MA ZIP: 02110 10-K 1 ANNUAL REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended October 31, 1995 Commission File Number 1-8100 EATON VANCE CORP. (Exact name of registrant as specified in its charter) Maryland 04-2718215 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 24 Federal Street, Boston, Massachusetts 02110 (Address of principal executive (Zip Code) offices) (617) 482-8260 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Non-Voting Common Stock Boston Stock Exchange par value $0.0625 per share Securities registered pursuant to Section 12(g) of the Act: Title of Class Non-Voting Common Stock par value $0.0625 per share Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. YES X NO . ----- ----- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ] Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the close of the latest practicable date. Class Outstanding at December 31, 1995 Non-Voting Common Stock, $0.0625 par value 9,467,493 Common Stock, $0.0625 par value 19,360 Portions of registrant's Annual Report to Stockholders for the fiscal year ended October 31, 1995, (Exhibit 13.1 hereto) have been incorporated by reference into the following Parts of this report: Part I, Part II and Part IV. PART I ITEM 1. BUSINESS OVERVIEW The Company's principal business is creating, marketing and managing mutual funds and providing management and counseling services to institutions and individuals. The Company has been in the investment management business for over seventy years, tracing its history to two Boston-based investment managers: Eaton & Howard formed in 1924 and Vance, Sanders & Company organized in 1934. As of October 31, 1995, the Company managed $16.0 billion in portfolios with investment objectives ranging from high current income to maximum capital gain. On October 31, 1995, the Company and its wholly owned subsidiaries had 361 full-time employees. On October 31, 1994, the comparable figure was 385. INVESTMENT MANAGEMENT ACTIVITIES The Company conducts its investment management and counseling business through two wholly owned subsidiaries, Eaton Vance Management ("EVM") and Boston Management and Research ("BMR"), each of which is a Massachusetts business trust registered with the Securities and Exchange Commission ("the Commission") as an investment adviser under the Investment Advisers Act of 1940, as amended (the "Advisers Act"). Eaton Vance Distributors, Inc. ("EVD"), a wholly owned broker/dealer registered under the Exchange Act, markets and sells the Eaton Vance Funds. As of October 31, 1995, the Company provided investment advisory and administration services to 154 Funds ("Funds") and to over 953 separately managed accounts. At that date the Funds had aggregate net assets of $14.2 billion and the Company's separately managed accounts had aggregate net assets of $1.8 billion. The following table shows net assets in the Funds and the separately managed accounts for the dates indicated: ================================================================================ Fund and Separate Account Assets (in millions) At October 31, - -------------------------------------------------------------------------------- 1995 1994 1993 1992 1991 - -------------------------------------------------------------------------------- Funds: - -------------------------------------------------------------------------------- Money Market $ 200 $ 200 $ 200 $ 400 $ 400 - -------------------------------------------------------------------------------- Equities 2,400 2,300 2,200 1,600 1,600 - -------------------------------------------------------------------------------- Bank Loans 1,400 600 800 1,100 1,700 - -------------------------------------------------------------------------------- Taxable Fixed Income 1,300 1,300 1,100 1,500 1,200 - -------------------------------------------------------------------------------- Non-Taxable Fixed Income 8,900 9,000 8,900 4,600 2,500 - -------------------------------------------------------------------------------- Total 14,200 13,400 13,200 9,200 7,400 - -------------------------------------------------------------------------------- Separately Managed Accounts 1,800 1,600 2,200 2,100 2,000 - -------------------------------------------------------------------------------- Total $16,000 $15,000 $15,400 $11,300 $ 9,400 ================================================================================ 2 ITEM 1. BUSINESS (CONTINUED) INVESTMENT MANAGEMENT ACTIVITIES (CONTINUED) Investment decisions for all but ten of the 154 Funds are made by portfolio managers employed by the Company and are made in accordance with each Fund's investment objectives and policies. Investment decisions for the Company's ten international equity funds are made by Lloyd George Management, an independent investment management company based in Hong Kong. The Company's portfolio management staff consists of 39 portfolio managers and analysts who have, on average, more than 20 years of experience in the securities industry. The Company's investment advisory agreements with each of the Funds provide for fees ranging from 45 to 95 basis points of average net assets annually for management services provided. The investment advisory agreements must be approved annually by the trustees of the respective Funds, including a majority of the independent trustees, i.e., those unaffiliated with the management company. Amendments to the investment advisory agreements must be approved by Fund shareholders. These agreements are generally terminable upon 30 to 60 days notice without penalty. Investment decisions for the separately managed accounts are made by twenty investment counselors employed by the Company. The investment counselors are assisted by an additional eleven financial analysts and managers with part-time counseling responsibilities. The Company's investment counselors use the same sources of information as Fund portfolio managers but tailor investment decisions to the needs of individual clients. The Company's investment advisory fee agreements for the separately managed accounts provide for fees ranging from 30 to 80 basis points of average net assets on an annual basis. These agreements are generally terminable upon 30 to 60 days notice without penalty. The following table shows investment advisory and administration fees received for the past five years ended October 31, 1995: ================================================================================ Investment Advisory and Administration Fees* (in thousands) Year ended October 31, - -------------------------------------------------------------------------------- 1995 1994 1993 1992 1991 - -------------------------------------------------------------------------------- Investment Advisory Fees - Funds $69,094 $68,284 $59,322 $50,776 $44,550 - -------------------------------------------------------------------------------- Separately Managed Accounts 8,712 9,807 8,934 8,949 6,957 - -------------------------------------------------------------------------------- Administration Fees - Funds 4,631 4,257 3,295 4,685 5,388 - -------------------------------------------------------------------------------- Total $82,437 $82,348 $71,551 $64,410 $56,895 ================================================================================ * Excludes gold mining investment management fees and administration fees received from funds other than Eaton Vance Funds. The Company's growth has resulted from its ability to develop and offer successfully new funds and to increase the assets of existing Funds. The Company's strategy is to develop products with clearly understood and clearly presented investment characteristics coupled with distribution arrangements that are attractive to third-party distributors of the Funds. 3 ITEM 1. BUSINESS (CONTINUED) INVESTMENT MANAGEMENT ACTIVITIES (CONTINUED) In 1993, the Company introduced the Hub and Spoke(R) structure. Hub and Spoke(R) is a two-tiered arrangement in which mutual funds (Spokes) with substantially identical investment objectives pool their assets by investing in a common portfolio (Hub). Eaton Vance used Hub and Spoke(R) to introduce three distinct mutual fund families (Traditional, Marathon and Classic), with each family having its own prospectus, sales literature, product design and distribution structure (see Marketing and Distribution of Fund Shares below). The structure is intended to benefit fund shareholders through lower operating costs, while allowing the Company to offer cost-effective distribution alternatives to the broker/dealer community and its clients. The Company has converted most of its Funds to a Hub and Spoke(R) structure. In 1995, the Company converted Eaton Vance Prime Rate Reserves to the Hub and Spoke(R) structure and offered two sister spoke funds: EV Classic Senior Floating-Rate Fund, also an SEC registered closed-end fund, and EV Medallion Senior Floating-Rate Fund, a Cayman Island domiciled off-shore fund. The Company believes these were the first closed-end funds converted to the Hub and Spoke(R) structure. Sales of these funds represented the highest rate of sales by asset class in fiscal 1995. The Company also used the Hub and Spoke(R) structure for Capital Exchange Fund, Inc., an SEC registered investment company closed to new investors. If similar funds managed by EVM adopt the structure in 1996, the diversification of assets for each fund's shareholders should increase and the expense ratio of each fund should decline. In 1995, the Company increased its ownership interest in Lloyd George Management (BVI) Limited (LGM), an independent investment management company based in Hong Kong. The two firms became affiliated in 1992 with the introduction of the Eaton Vance Greater China Funds, which are advised by Lloyd George Management from its headquarters in Hong Kong. The investment management capabilities of LGM, with offices in Hong Kong, London and Bombay, coupled with the introduction of the EV Medallion family of offshore funds, allows Eaton Vance both to manage and to distribute mutual funds globally. The Company introduced two new groups of open-end funds in fiscal 1995. Eaton Vance High Yield Municipals Fund, introduced in the fourth quarter, invests primarily in below investment grade municipal obligations. The fund complements Eaton Vance's largest fund, Eaton Vance National Municipals Fund. The Eaton Vance Information Age Fund, also offered in the fourth quarter, is jointly managed by EVM and LGM and seeks long-term capital growth by investing in a global and diversified portfolio of securities of information age companies. 4 ITEM 1. BUSINESS (CONTINUED) INVESTMENT ADVISORY AGREEMENTS AND DISTRIBUTION PLANS Each Eaton Vance Fund (excluding those managed by LGM) has entered into an investment advisory agreement with either EVM or BMR. Although the specific terms of each such agreement vary, the basic terms of the agreements are similar. Pursuant to the agreements, either EVM or BMR, as applicable, provides overall management services to each of the Funds, subject to the supervision of each Fund's Board of Trustees in accordance with each Fund's fundamental investment objectives and policies. The investment advisory agreements are approved by Fund shareholders and their continuance must be approved annually by the trustees of the respective Funds, including a majority of the Independent Trustees. Amendments to the investment advisory agreements must be approved by Fund shareholders. EVM also serves as administrator or manager under an Administration Agreement or Management Contract (each an "Agreement") to certain Funds (including those managed by LGM). Under such Agreement(s) EVM is responsible for managing the business affairs of these Funds, subject to the supervision of each Fund's Board of Trustees. EVM's services include recordkeeping, preparing and filing documents required to comply with federal and state securities laws, supervising the activities of the Funds' custodian and transfer agent, providing assistance in connection with the Funds' shareholders meetings and other administrative services, including furnishing office space and office facilities, equipment and personnel which may be necessary for managing and administering the business affairs of the Funds. EVM (or an affiliate) may or may not provide investment management or advisory services to these Funds. For the services provided under the Agreement(s), each Fund is required, in some cases, to pay EVM a monthly fee calculated at an annual rate not to exceed 0.25% of average daily net assets. Each Agreement remains in full force and effect indefinitely, but only to the extent that the continuance of such Agreement is specifically approved at least annually by the Fund's Board of Trustees. In addition, certain of the Funds have adopted distribution plans which, subject to applicable law, provide for the reimbursement to the Company for the payment of applicable sales commissions to the retail distribution firms through the payment of an ongoing distribution fee (i.e., a 12b-1 fee). These distribution plans are implemented through a distribution agreement between EVD and the Fund. Although the specific terms of each such agreement may vary, the basic terms of the agreements are similar. Pursuant to the agreements, EVD acts as underwriter for the Fund and distributes shares of the Fund through unaffiliated dealers. Pursuant to the terms of the distribution plans and agreements and the Investment Company Act, each distribution plan and agreement is initially approved and its subsequent continuance must be approved annually by the trustees of the respective Funds, including a majority of the Independent Trustees. Each Fund bears all expenses associated with its operation and the issuance and redemption or repurchase of its securities, except for the compensation of directors and officers of the fund who are employed by the Company. Under some circumstances, particularly in connection with new fund introductions and special promotions, EVM or BMR may waive a portion of its fee and pay for some expenses of the Fund. EVM has entered into investment advisory agreements which set forth investment objectives and fee schedules with respect to each separately managed account. Pursuant to the agreements, EVM invests the assets of the accounts in accordance with the stated investment objectives. The Company's investment counselors may assist clients in formulating investment strategy. 5 ITEM 1. BUSINESS (CONTINUED) MARKETING AND DISTRIBUTION OF FUND SHARES The Company markets and distributes the Funds through EVD. EVD sells the Funds through a retail network of national and regional dealers, including those affiliated with banks, insurance companies and financial planners. Although the firms in the Company's retail distribution network have entered into a selling agreement with the Company, such agreements (which generally are terminable by either party) do not legally obligate the firms to sell any specific amount of the Company's investment products. For the 1995 and 1994 calendar years, the five dealer firms responsible for the largest volume of fund sales accounted for approximately 42% and 56%, respectively, of the Company's fund sales volume. While a substantial majority of sales are made through national and large regional firms, in 1990 the Company embarked on a program to broaden its channels of distribution by establishing the Independent Financial Institutions sales force, a separate wholesaling force focusing on banks and financial planners. EVD currently maintains a sales force of more than 30 wholesalers and 30 sales assistants. Wholesalers and their assistants work closely with the retail distribution network to assist in selling Eaton Vance Funds. EVD currently sells the Funds under three separate commission structures: 1) front-end load commission (Traditional); 2) spread-load commission (Marathon); and 3) level-load commission (Classic). In the front-end load commission structure (Traditional), the shareholder pays the broker's commission and EVD receives an underwriting commission of up to 75 basis points of the dollar value of the Fund shares sold. The Fund pays a service fee to authorized firms of up to 25 basis points of average net assets. In the spread-load commission structure (Marathon), EVD pays a commission to the dealer at the time of sale and such payments are capitalized and amortized in the Company's financial statements over a four to six year period. The shareholder pays a contingent sales charge to EVD in the event shares are redeemed within a four, five or six year period from the date of purchase. EVD uses its own funds (which may be borrowed) to pay such commissions. EVD "recovers" the dealer commissions paid on behalf of the shareholder through distribution plan payments limited to an annual rate of 75 basis points of the average net assets of the Fund in accordance with a distribution plan adopted by the Fund pursuant to Rule 12b-1 under the Investment Company Act. Like the investment advisory agreement, the distribution plan and related payments must be approved annually by a vote of the trustees, including a majority of the independent trustees. The Commission has taken the position that Rule 12b-1 would not permit a Fund to continue making compensation payments to EVD after termination of the plan and that any continuance of such payments may subject the Fund to legal action. These distribution plans are terminable at any time without notice or penalty. In addition, the Fund pays a service fee to authorized firms of up to 25 basis points of average net assets. In the level-load commission structure (Classic), the shareholder pays no front-end commissions or contingent deferred sales charges after the first year. EVD pays a commission to the dealer at the time of sale. The Fund makes monthly distribution plan payments similar to the spread-load Funds, equal to 75 basis points of average net assets and service fees of up to 25 basis points of average net assets on an annual basis to EVD and authorized firms. The introduction of level-load shares is consistent with the efforts of many broker/dealers to rely less on transaction fees and more on continuing fees for servicing assets. Reference is made to Note 13 of the Notes to Consolidated Financial Statements contained in the Eaton Vance Corp. Annual Report to Shareholders for the fiscal year ended October 31, 1995 (which report is furnished as Exhibit 13.1 hereto) for a description of the major customer that provided over 10% of the total revenue of the Company. 6 ITEM 1. BUSINESS (CONTINUED) COMPETITIVE CONDITIONS The Company is subject to substantial competition in all aspects of its business. The Company's ability to market investment products is highly dependent on access to the retail distribution systems of national and regional securities dealer firms, which generally offer competing internally and externally managed investment products. Although the Company has historically been successful in gaining access to these channels, there can be no assurance that it will continue to do so. The inability to have such access could have a material adverse effect on the Company's business. There are few barriers to entry by new investment management firms. The Company's funds compete against an ever increasing number of investment products sold to the public by investment dealers, banks, insurance companies and others that sell tax-free investments, taxable income funds, equity funds and other investment products. Many institutions competing with the Company have greater resources than the Company. The Company competes with other providers of investment products on the basis of the range of products offered, the investment performance of such products, quality of service, fees charged, the level and type of sales representative compensation, the manner in which such products are marketed and distributed and the services provided to investors. REGULATION EVM and BMR are each registered with the Commission under the Advisers Act. The Advisers Act imposes numerous obligations on registered investment advisers including fiduciary duties, recordkeeping requirements, operational requirements and disclosure obligations. Each Eaton Vance Fund is registered with the Commission under the Investment Company Act and each nationally offered Fund is qualified for sale (or is exempt) in all states in the United States and District of Columbia; and each single-state Fund is qualified for sale (or is exempt) in the state for which it is named and other designated states. Virtually all aspects of the Company's investment management business are subject to various federal and state laws and regulations. These laws and regulations are primarily intended to benefit shareholders of the Funds and investment counseling clients and generally grant supervisory agencies and bodies broad administrative powers, including the power to limit or restrict the Company from carrying on its investment management business in the event that it fails to comply with such laws and regulations. In such event, the possible sanctions which may be imposed include the suspension of individual employees, limitations on EVM's or BMR's engaging in the investment management business for specified periods of time, the revocation of EVM's or BMR's registration as an investment adviser and other censures or fines. EVD is registered as a broker/dealer under the Securities Exchange Act of 1934 and is subject to regulation by the Commission, the National Association of Securities Dealers (NASD) and other federal and state agencies. EVD is subject to the Commission's net capital rule designed to enforce minimum standards regarding the general financial condition and liquidity of a broker/dealer. Under certain circumstances, this rule limits the ability of the Company to make withdrawals of capital and receive dividends from EVD. EVD's regulatory net capital has consistently exceeded such minimum net capital requirements. The securities industry is one of the most highly regulated in the United States, and failure to comply with related laws and regulations can result in the revocation of broker/dealer licenses, the imposition of censures or fines and the suspension or expulsion from the securities business of a firm, its officers or employees. The Company's officers, directors and employees may from time to time own securities which are held by one or more of the Funds. The Company's internal policies with respect to individual investments require prior clearance of certain types of transactions and reporting of all securities transactions, and restrict certain transactions so as to avoid the possibility of conflicts of interest. 7 ITEM 1. BUSINESS (CONTINUED) FIDUCIARY AND RELATED BANKING SERVICES Eaton & Howard, one of the Company's two predecessors, formed IB&T in 1969. IB&T was the first "non-bank bank" in the country to obtain FDIC insurance. While it has a charter with full banking powers from the Commonwealth of Massachusetts, IB&T elected not to make commercial loans. As a result of enactment of the Competitive Equality Banking Act of 1987 ("CEBA"), IB&T, as an FDIC-insured depository institution, became a "bank" for purposes of the Bank Holding Company Act of 1956 (the "BHC Act"). Pursuant to CEBA, the Company was permitted to retain its ownership of IB&T without being treated as a bank holding company for purposes of the BHC Act provided that, among other requirements IB&T limited the increase in its assets to no more than 7% during any 12-month period beginning after August 10, 1988 (this limitation does not apply to assets under custody). The Company is not considered to be a bank holding company under the BHC Act. On November 10, 1995, the Company completed the spin-off of Investors Financial Services Corp. (IFSC), the new parent company of IB&T, in a tax-free distribution to Eaton Vance Corp. shareholders. Each shareholder of the Company received 2.799 shares of Common Stock of IFSC and .538 shares of Class A Common Stock of IFSC for each ten shares of Eaton Vance Corp. stock held at the close of business on October 30, 1995, which was the record date of the distribution. As a result of the spin-off, IB&T was released from the Federal banking law restrictions which imposed constraints on its growth. ITEM 2. PROPERTIES (a) Northeast Properties, Inc., a wholly owned subsidiary of the Company, owns various investment properties including an office building located at 24 Federal Street in Boston in which the Company is the primary tenant. For information with respect to the properties, reference is made to Schedule III and Notes 5 and 7 of the Notes to Consolidated Financial Statements contained in the Eaton Vance Corp. 1995 Annual Report to Shareholders (Exhibit 13.1 hereto), which are incorporated herein by reference. (b) The Company presently owns 100% of the capital stock of Energex Energy Corporation, which owns interests in certain oil and gas properties. ITEM 3. LEGAL PROCEEDINGS The Company was informed on January 13, 1995, that a National Association of Securities Dealers (NASD) arbitration panel had awarded a former wholesaler for the firm $0.6 million in damages and an additional $1.2 million in punitive damages in response to his claim for wrongful termination of employment. Through October 31, 1995, the Company has accrued $2.2 million, including interest, for these damages. The Company has appealed the decision to the courts and intends to pursue all legal steps to overturn the decision. From time to time, the Company is a party to various employment-related claims, including claims of discrimination, before federal, state and local administrative agencies and courts. The Company vigorously defends itself against these claims. In the opinion of management, after consultation with counsel, it is unlikely that any adverse determination in one or more of such claims would have a material adverse effect on the Company's financial position or results of operations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. 8 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Company's Voting Common Stock, $0.0625 par value, is not traded and, as of October 31, 1995, was held by five Voting Trustees pursuant to the Voting Trust described in paragraph (a) of Item 12 hereof, which paragraph (a) is incorporated herein by reference. The Company's Non-Voting Common Stock, $0.0625 par value, is traded on the Boston Stock Exchange and in the Over-the-Counter market on the NASDAQ National Market System under the symbol EAVN. The approximate number of holders of record of the Company's Non-Voting Common Stock at October 31, 1995, was 1,056. The additional information required to be disclosed in Item 5 is found on page 4 of the Company's 1995 Annual Report to Shareholders (furnished as Exhibit 13.1 hereto), under the caption "Eaton Vance Corp.", and is incorporated herein by reference. ITEM 6. SELECTED FINANCIAL DATA ================================================================================ Eaton Vance Corp. Selected Financial Data (Unaudited) (in thousands, except per share figures) Year Ended October 31, - -------------------------------------------------------------------------------- 1995 1994 1993 1992 1991 - -------------------------------------------------------------------------------- Total revenue $167,922 $171,216 $152,276 $120,711 $92,562 - -------------------------------------------------------------------------------- Net income from continuing operations 26,968 25,810 25,517 18,087 12,108 - -------------------------------------------------------------------------------- Total assets 357,586 455,506 425,547 318,199 273,713 - -------------------------------------------------------------------------------- Long-term obligations 56,102 60,311 73,228 78,358 63,961 - -------------------------------------------------------------------------------- Net income from continuing operations per common share $2.90 $2.72 $2.88 $2.33 $1.66 - -------------------------------------------------------------------------------- Cash dividends declared per common share 0.65 0.60 0.49 0.36 0.29 ================================================================================ On November 10, 1995, the Company completed the spin-off of Investors Financial Services Corp. (IFSC), the new parent company of Investors Bank & Trust Company (IB&T), in a tax-free distribution to Eaton Vance Corp. shareholders. The banking business has been treated as a discontinued operation in the Selected Financial Data furnished above for fiscal 1995. Total revenue, net income from continuing operations and net income from continuing operations per common share for fiscal years 1994, 1993, 1992 and 1991 have been restated to reflect this accounting treatment. Net income from continuing operations and net income from continuing operations per common share for 1994 include a gain of $1.3 million, or $0.14 per share, resulting from the implemenation of Statement of Financial Accounting Standards (SFAS) No. 109. 9 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company's primary sources of revenue are investment adviser fees and distribution fees received from the Eaton Vance funds and separately managed accounts. Such fees are generally based on the net asset value of the investment portfolios managed by the Company and fluctuate with changes in the total value of the assets under management. The Company's major expenses, other than the amortization of deferred sales commissions, include employee compensation, occupancy costs, service fees and other marketing costs. RESULTS OF OPERATIONS YEAR ENDED OCTOBER 31, 1995 TO YEAR ENDED OCTOBER 31, 1994 Assets under management of $16.0 billion on October 31, 1995, were 7 percent higher than the $15.0 billion reported a year earlier. Market appreciation and reinvested dividends contributed to the increase in the Company's assets under management. Mutual fund sales for the year ended October 31, 1995 of $1.6 billion were 53 percent below the $3.4 billion reported in fiscal 1994. Redemptions of $2.1 billion in 1995 were 17 percent above the $1.8 billion in 1994. Net sales (gross sales minus redemptions), however, improved in every quarter in 1995. On November 10, 1995, the Company completed the spin-off of Investors Financial Services Corp. (IFSC), the new parent company of Investors Bank & Trust Company (IB&T), in a tax-free distribution to Eaton Vance Corp. shareholders. Under the plan of distribution, the Company transferred net banking assets totaling approximately $14.0 million, including $10.1 million in cash and cash equivalents, to the newly formed bank holding company. The banking business has been treated as a discontinued operation in the accompanying consolidated statements of income and cash flows, and fiscal years 1994 and 1993 have been restated to reflect this accounting treatment. Total revenue from continuing operations decreased $3.3 million to $167.9 million in 1995. Investment adviser and distribution fees decreased by $2.4 million in 1995 to $163.4 million from $165.8 million a year earlier. The decrease in investment adviser and distribution fees can be attributed primarily to lower average assets under management in comparison with the same period a year ago and to redemptions in excess of new mutual fund sales early in the year. The impact of the decrease in mutual fund sales on distribution fees was partially offset by an increase in contingent deferred sales charges received on early redemptions. Total operating expenses decreased $2.6 million to $120.7 million in fiscal 1995. Compensation expense of $38.9 million was little changed from the prior year's expense of $39.3 million. Other expenses for fiscal 1995 include a one-time charge of $2.2 million relating to the accrual of a National Association of Securities Dealers (NASD) arbitration panel award in the first quarter of 1995. The Company is vigorously pursuing all legal steps to overturn the arbitration panel's decision. Other expenses for the comparable period a year ago included $1.4 million in development costs associated with two fund products that were not launched in 1994. A decrease in the average dollar value of assets in spread commission funds due to redemptions in excess of mutual fund sales in fiscal 1995 resulted in a decrease in the amortization of deferred sales commissions of $2.6 million. 10 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) YEAR ENDED OCTOBER 31, 1995 TO YEAR ENDED OCTOBER 31, 1994 (CONTINUED) The Company's two gold mining partnerships contributed losses of $1.4 million and $0.3 million during 1995 and 1994, respectively. These losses resulted primarily from fluctuations in the portfolio valuations of the two partnerships. After accounting for management fees, operating expenses and income taxes, the Company's gold mining and energy operations had no impact on total fiscal year 1995 or 1994 earnings. The realization for tax purposes of gold mining losses in fiscal 1995 resulted in a decrease in the Company's effective tax rate on income from continuing operations from 40 percent in 1994 to 38 percent in 1995. Income from discontinued banking operations, net of taxes, increased by 26 percent from $2.7 million, or $0.28 per share, for the year ended October 31, 1994, to $3.4 million, or $0.37 per share, for the year ended October 31, 1995. Assets custodied and administered by IB&T totaled $91.1 billion at October 31, 1995, an increase of $18.7 billion over October 31, 1994. Net income from continuing operations of the Company amounted to $27.0 million for the year ended October 31, 1995, compared to $27.1 million for the year ended October 31, 1994. Earnings per share from continuing operations were $2.90 and $2.86 for 1995 and 1994, respectively. Net income and earnings per share from continuing operations for 1994 included a gain of $1.3 million, or $0.14 per share, resulting from the implementation of Statement of Financial Accounting Standards (SFAS) No. 109. Total assets, excluding discontinued banking operations, increased 5 percent to $343.6 million at October 31, 1995 from $327.9 million at October 31, 1994. Cash and cash equivalents and short-term investments increased by $54.4 million to $79.1 million at October 31, 1995. Investments in affiliates increased by $6.1 million, primarily due to an increase in the Company's investment in Lloyd George Management (BVI) Limited, an independent investment management company based in Hong Kong. Deferred sales commissions decreased $46.8 million to $209.5 million at October 31, 1995 primarily due to amortization and redemptions in excess of new sales in spread commission funds in fiscal 1995. In fiscal 1996 the Company will be required to adopt Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation." SFAS No. 123 establishes financial accounting and reporting standards for stock-based employee compensation plans and requires certain disclosures about employee stock options based on their fair value at the date of grant. Management does not believe the adoption of SFAS No. 123 will have a material impact on the consolidated financial statements. YEAR ENDED OCTOBER 31, 1994 TO YEAR ENDED OCTOBER 31, 1993 Total revenue from continuing operations rose $18.9 million to $171.2 million from $152.3 million in 1993. This gain was due primarily to increases in investment adviser fees and distribution income, which increased $10.6 million and $8.4 million, respectively, in 1994. Both investment adviser fees and distribution income are based on the average net asset values of portfolios managed by the Company, which rose to $15.5 billion for the year ended October 31, 1994 from $13.1 billion for the year ended October 31, 1993. Fund assets under management were increased by net sales of mutual funds of $2.0 billion in 1994 and reduced, primarily, by depreciation in the market value of managed assets of $1.8 billion. Separately managed accounts, in contrast, decreased to $1.6 billion in 1994 from $2.2 billion in 1993. Most of the decrease was the result of the withdrawal of one large public retirement fund client. 11 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) YEAR ENDED OCTOBER 31, 1994 TO YEAR ENDED OCTOBER 31, 1993 (CONTINUED) Gross sales of mutual funds of $3.4 billion for 1994 were down 21 percent from 1993 when the Company achieved record sales of $4.3 billion. Redemptions in 1994 rose 38 percent to $1.8 billion from 1993's redemptions of $1.3 billion. The two major components of total expenses are compensation of officers and employees and amortization of deferred sales commissions. In 1994, total expenses increased $15.2 million to $123.4 million. Compensation expense was little changed from 1993. Larger average dollar value of assets in spread commission funds increased the amortization of deferred sales commissions by $11.9 million. Other expenses rose a total of $3.7 million to $31.3 million in 1994 from $27.6 million in 1993. This increase included $1.4 million in development costs associated with two fund products that were not launched in 1994. Additionally, higher marketing and administrative costs were incurred to increase the distribution of the Company's funds. Portfolio valuations of gold mining investment partnerships contributed net partnership losses of $0.3 million in 1994 in comparison with net partnership gains of $3.9 million in 1993. Income from discontinued banking operations, net of taxes, increased by 46 percent from $1.8 million, or $0.21 per share, for the year ended October 31, 1993, to $2.7 million, or $0.28 per share, for the year ended October 31, 1994. Net income from continuing operations of the Company amounted to $27.1 million for the year ended October 31, 1994, compared to $25.5 million for the year ended October 31, 1993. Earnings per share from continuing operations were $2.86 and $2.88 for the fiscal years ended October 31, 1994 and 1993, respectively. Net income and earnings per share from continuing operations for 1994 included a gain of $1.3 million, or $0.14 per share, associated with the implementation of Statement of Financial Accounting Standards (SFAS) No. 109. During 1994 the Company's total assets increased significantly. Deferred sales commissions increased to $256.3 million from $240.0 million in 1993 as a result of sales of shares of the Company's spread commission funds. Payment of sales commissions was funded primarily by cash flows from operating activities. The difference between the book and tax accounting treatment for these commissions caused deferred income taxes to increase by $13.7 million. The increase in deferred income taxes was partially offset by the cumulative effect of the change in accounting for income taxes of $1.3 million resulting from the Company's implementation of SFAS No. 109. LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents, excluding discontinued banking operations, increased by $43.0 million to $67.7 million at October 31, 1995. In addition, the Company had short-term investments of $11.5 million at October 31, 1995. 12 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) Cash provided by continuing operating activities in 1995 was $72.2 million, compared to $28.7 million in the previous year. The Company's primary sources of cash flows from continuing operating activities were net income from continuing operations of $27.0 million and capitalized sales charges received on early redemptions of spread commission funds of $36.2 million. The primary use of cash was for the payment of $39.8 million of sales commissions associated with the sale of spread commission mutual funds. Cash used for investing in continuing operations was $19.1 million in fiscal 1995. Major uses were the purchase of $11.0 million in short term investments and an increase in the Company's investment in Lloyd George Management (BVI) Limited, an independent investment management company based in Hong Kong. The Company paid $4.8 million in cash and issued non-voting common stock valued at $2.7 million for the additional interest in Lloyd George Management in fiscal 1995. Significant financing activities during the fiscal year were the repayment of a maturing mortgage note of $6.2 million and the payment of dividends to the Company's shareholders of $5.9 million. On November 17, 1995, a subsidiary of the Company entered into an agreement to retire an existing mortgage with a remaining unpaid balance of $4.0 million at October 31, 1995. Based on the terms of the agreement, the Company expects to realize an extraordinary gain of $1.6 million (net of income taxes of $1.1 million) in fiscal 1996. On November 10, 1995, the Company completed the spin-off of its interest in IFSC in a tax-free distribution to the Company's shareholders. The spin-off resulted in a reduction in shareholders' equity of $14.0 million, which approximated the carrying value of IFSC at the time of the spin-off. At October 31, 1995, the Company had no borrowings under its $75.0 million bank credit facility. EFFECTS OF INFLATION The major sources of revenue for the Company, i.e., adviser fees, administrative fees and distribution plan payments, are calculated as percentages of assets under management. If, as a result of inflation, expenses rise and assets under management decline, lower fee income and higher expenses will reduce or eliminate profits. If expenses rise and assets rise, bringing increased fees to offset the increased expenses, profits may not be affected by inflation. There is no predictable relationship between changes in financial assets under management and the rate of inflation. If inflation leads to increases in the price of gold or in the price of real estate, the value of the Company's investments in precious metal properties or real estate may be increased. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The Company's consolidated financial statements and related notes thereto and the independent auditors' report appearing on pages 20 through 42 of the Company's 1995 Annual Report to Shareholders, furnished as Exhibit 13.1 hereto, are incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. 13 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The names of all directors and executive officers of Eaton Vance Corp. as of October 31, 1995, as well as their ages, family relationships between them, and offices with the Company held by each of them, are as follows: Family Name Age Relationship Office Landon T. Clay (1)(2) 69 None Chairman of the Board of Directors M. Dozier Gardner (1)(2) 62 None President, Chief Executive Officer and Director James B. Hawkes (1)(2) 54 None Executive Vice President and Director H. Day Brigham, Jr. (1)(2) 68 None Vice President, Director and Chairman of Management Committee Benjamin A. Rowland, Jr. (1)(2) 60 None Vice President and Director John G. L. Cabot 61 None Director Ralph Z. Sorenson 62 None Director Thomas Otis 64 None Vice President and Secretary Laurie G. Russell 29 None Vice President and Internal Auditor John P. Rynne 53 None Vice President and Corporate Controller William M. Steul (1) 53 None Vice President and Chief Financial Officer (1) Member of Management Committee established by the Company's Board of Directors (2) Voting Trustee. See Item 12(a) hereof. 14 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (CONTINUED) Eaton Vance Corp. was formed as a holding company by its subsidiary, Eaton & Howard, Vance Sanders Inc., in February, 1981. Eaton & Howard, Vance Sanders Inc. (renamed Eaton Vance Management, Inc. in June, 1984 and reorganized as Eaton Vance Management in October, 1990) was formed at the acquisition of Eaton & Howard, Incorporated by Vance, Sanders & Company, Inc. on May 1, 1979. In this paragraph, the absence of a corporate name indicates that, depending on the dates involved, the executive held the indicated titles in a firm in the chain of Vance, Sanders & Company, Inc., Eaton & Howard, Vance Sanders Inc., or Eaton Vance Corp. Mr. Clay was a Vice President from November, 1968 until October, 1971 and Chief Executive Officer from October, 1971 until October 1990; he has been a Directorsince 1970 and Chairman of the Board since 1971.. Mr. Gardner was elected President in October, 1979; he has been a Director since July, 1970 and the Chief Executive Officer since October, 1990. Mr. Brigham has been a Director since April, 1979; from 1967 through 1973 he was Vice President and General Counsel of Eaton & Howard, Incorporated, and from 1973 until April, 1979, he was President of Eaton & Howard. Mr. Hawkes has been Executive Vice President since January, 1990, a Vice President since June, 1975, and a Director since January, 1982. Mr. Rowland has been a Vice President since April, 1969, and a Director since January, 1973. Mr. Cabot became a Director of Eaton Vance Corp. in March, 1989. Mr. Sorenson became a Director of Eaton Vance Corp. in March, 1989. Mr. Otis has been Secretary since October, 1969, a Vice President since April, 1973, and has been the Company's counsel since 1966. Ms. Russell joined Eaton Vance Corp. as a Vice President in August, 1994. Ms. Russell was most recently a Senior Accountant with Deloitte & Touche LLP. Mr. Rynne has been Corporate Controller of Eaton Vance Corp. since January, 1984. Mr. Steul joined the company in November, 1994, as Vice President and Chief Financial Officer. Mr. Steul most recently was Vice President, Finance and Chief Financial Officer of Digital Equipment Corporation. In general, the foregoing officers hold their positions for a period of one year or until their successors are duly chosen or elected. Mr. Clay is an officer, trustee, director or general partner of a number of investment companies of which Eaton Vance Management or Boston Management and Research acts as investment adviser. He is Vice President and a Director of Fulcrum Management, Inc., and MinVen, Inc., both wholly owned subsidiaries of Eaton Vance Corp. Mr. Clay is also a Director of ADE Corp. (a manufacturer of non-contact measuring devices). Mr. Gardner is an officer or trustee of a number of investment companies for which Eaton Vance Management or Boston Management and Research acts as investment adviser. Mr. Brigham is an officer or trustee of a number of investment companies for which Eaton Vance Management or Boston Management and Research acts as investment adviser, and Vice President, Secretary and Trustee of EquiFund-Wright National Fiduciary Equity Funds, The Wright Managed Equity Trust, The Wright Managed Income Trust and The Wright Managed Money Market Trust. He is also a Director of Northeast Properties, Inc. Mr. Hawkes is an officer, trustee or director of a number of investment companies for which Eaton Vance Management or Boston Management and Research acts as investment adviser. Mr. Rowland is a Director of Energex Energy Corporation, a wholly owned subsidiary of Eaton Vance Corp., and Northeast Properties, Inc. 15 ITEM 11. EXECUTIVE COMPENSATION (A) SUMMARY COMPENSATION TABLE
================================================================================================== Long Term Compensation --------------- Annual Compensation Awards -------------------------------------------------------------------- Other Annual Securities All Other Compen- Underlying Compen- Year Salary Bonus sation Options sation - -------------------------------------------------------------------------------------------------- Name and Principal Position ($) ($)* ($) (#) ($) - -------------------------------------------------------------------------------------------------- M. Dozier Gardner 1995 385,000 333,014 8,618 0 23,783 Chief Executive Officer -------------------------------------------------------------------- 1994 365,000 344,046 3,346 0 30,000 -------------------------------------------------------------------- 1993 350,000 302,179 13,326 20,000 30,000 - -------------------------------------------------------------------------------------------------- Landon T. Clay 1995 365,000 217,374 8,614 0 23,753 Chairman of the Board -------------------------------------------------------------------- 1994 350,000 273,648 15,291 0 30,000 -------------------------------------------------------------------- 1993 335,000 269,500 11,939 0 30,000 - -------------------------------------------------------------------------------------------------- James B. Hawkes 1995 350,000 391,460 4,488 0 23,783 Executive Vice President -------------------------------------------------------------------- 1994 330,000 550,413 723 0 30,000 -------------------------------------------------------------------- 1993 315,000 500,997 6,202 75,000 30,000 - -------------------------------------------------------------------------------------------------- Benjamin A. Rowland, Jr. 1995 255,000 181,460 0 5,000 23,255 Vice President -------------------------------------------------------------------- 1994 240,000 200,000 0 4,000 30,000 -------------------------------------------------------------------- 1993 229,000 180,000 0 5,000 30,000 - -------------------------------------------------------------------------------------------------- Wharton P. Whitaker 1995 220,000 277,409 8,618 0 23,871 President, EVD -------------------------------------------------------------------- 1994 198,000 411,245 3,346 0 30,000 -------------------------------------------------------------------- 1993 189,000 640,654 11,939 15,000 28,838 ==================================================================================================
* Bonuses include payments in lieu of option grants to Mr. Clay in 1995 of $35,520, in 1994 of $43,520 and in 1993 of $54,500. The amounts appearing under "Other Annual Compensation" represent the 10% discount on the purchase of the Company's stock under the Company's Employee Stock Purchase Plan and Incentive Plan - Stock Alternative. 16 ITEM 11. EXECUTIVE COMPENSATION (CONTINUED) (A) SUMMARY COMPENSATION TABLE (CONTINUED) The amounts appearing under "All Other Compensation" represent the Company's contribution to its Profit Sharing and 401(k) Plans. The Company's contribution to the Profit Sharing Plan is 15% of the base compensation of all eligible employees, is allocated based on the employee's salary and years of service, and is vested at the rate of 20% for each year of employment. The Company's contribution to the 401(k) plan, which is presently known as the Savings Plan and Trust, is a 100% matching of the first $20.00 of the participant's weekly contribution. Vesting in the Savings Plan and Trust is 100%. The overall contribution to the employee benefit plans may not exceed the statutory limitation of $30,000 per year. (B) OPTION GRANTS IN LAST FISCAL YEAR
==================================================================================================================================== Name Number of Securities Percentage of Exercise Expiration Potential Realizable Underlying Options Total Options Price Date Value at Assumed Annual Granted Granted to ($/Share) Rates of Stock Price Employees in Appreciation for Option Fiscal Year Term 5%($) 10%($) - ------------------------------------------------------------------------------------------------------------------------------------ M. Dozier Gardner None - ------------------------------------------------------------------------------------------------------------------------------------ Landon T. Clay None (Cash bonus in lieu of options) - ------------------------------------------------------------------------------------------------------------------------------------ James B. Hawkes None - ------------------------------------------------------------------------------------------------------------------------------------ Benjamin A. Rowland, Jr. 5,000 4% $30.525 12/16/99 $42,167 $93,179 - ------------------------------------------------------------------------------------------------------------------------------------ Wharton P. Whitaker None ====================================================================================================================================
(C) AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
==================================================================================================================================== Number of Securities Value of Unexercised Name Shares Value Underlying Unexercised In-the-Money Options Acquired on Realized Options at Fiscal at Fiscal Year End ($) Exercise Year End (#) ---------------------------------------------------------------- (#) ($) Exercisable Unexercisable Exercisable Unexercisable - ------------------------------------------------------------------------------------------------------------------------------------ M. Dozier Gardner 9,000 122,400 42,500 10,000 926,125 92,500 - ------------------------------------------------------------------------------------------------------------------------------------ Landon T. Clay 6,000 79,350 19,000 0 510,625 0 - ------------------------------------------------------------------------------------------------------------------------------------ James B. Hawkes 4,000 62,000 92,644 37,500 1,571,370 346,875 - ------------------------------------------------------------------------------------------------------------------------------------ Benjamin A. Rowland, Jr. 0 0 24,000 7,000 458,919 34,875 - ------------------------------------------------------------------------------------------------------------------------------------ Wharton P. Whitaker 6,000 79,500 22,500 7,500 415,625 69,375 ====================================================================================================================================
17 ITEM 11. EXECUTIVE COMPENSATION (CONTINUED) (D) COMPENSATION OF DIRECTORS Directors not otherwise employed by the Company receive a retainer of $4,000 per quarter and $750 per meeting. During the fiscal year ended October 31, 1995, John G.L. Cabot and Ralph Z. Sorenson each received $22,000; in addition, each was granted options for 900 shares. (E) COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION M. Dozier Gardner, President of the Company, is a member of the Compensation Committee of the Board of Directors of the Company. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (A) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS All outstanding shares of the Company's Common Stock, $0.0625 par value, (which is the only class of the Company's stock having voting rights) are deposited in a Voting Trust, of which the Voting Trustees were (as of December 19, 1995), Landon T. Clay (Chairman of the Board of Directors of the Company), M. Dozier Gardner (President and a Director of the Company), Benjamin A. Rowland, Jr. (a Vice President and a Director of the Company), H. Day Brigham, Jr. (a Vice President and a Director of the Company) and James B. Hawkes (Executive Vice President and a Director of the Company). The Voting Trust (a copy of which is incorporated by reference as Exhibit 9.1 hereto) expires December 31, 1996. The Voting Trustees have unrestricted voting rights for the election of the Company's directors. At December 19, 1995, the Company had outstanding 19,360 shares of Common Stock. Inasmuch as the five Voting Trustees of said Voting Trust have unrestricted voting rights with respect to said Common Stock (except that the Voting Trust Agreement provides that the Voting Trustees shall not vote such Stock in favor of the sale, mortgage or pledge of all or substantially all of the Company's assets or for any change in the capital structure or powers of the Company or in connection with a merger, consolidation, reorganization or dissolution of the Company without the written consent of the holders of Voting Trust Receipts representing at least a majority of such Stock subject at the time to the Voting Trust Agreement), they may be deemed to be the beneficial owners of all of the Company's outstanding Common Stock by virtue of Rule 13d-3(a)(1) under the Securities Exchange Act of 1934. The Voting Trust Agreement provides that the Voting Trustees shall act by a majority if there be three or more Voting Trustees; otherwise they shall act unanimously except as otherwise provided in the Voting Trust Agreement. The address of said Voting Trustees is 24 Federal Street, Boston, Massachusetts 02110. 18 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (CONTINUED) (A) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS (CONTINUED) The following table sets forth the beneficial owners at December 19, 1995, of the Voting Trust Receipts issued under said Voting Trust Agreement, which Receipts cover the aggregate of 19,360 shares of the Common Stock then outstanding: ================================================================================ Title of Class Name Number of Shares of % of Voting Common Stock Class Covered by Receipts - -------------------------------------------------------------------------------- Voting Common Stock Landon T. Clay 4,640 24% - -------------------------------------------------------------------------------- Voting Common Stock M. Dozier Gardner 4,640 24% - -------------------------------------------------------------------------------- Voting Common Stock James B. Hawkes 4,640 24% - -------------------------------------------------------------------------------- Voting Common Stock Benjamin A. Rowland, Jr. 2,920 15% - -------------------------------------------------------------------------------- Voting Common Stock H. Day Brigham, Jr. 2,520 13% ================================================================================ Messrs. Clay, Gardner, Hawkes, Rowland and Brigham are all officers and Directors of the Company and Voting Trustees of the Voting Trust. No transfer of any kind of the Voting Trust Receipts issued under the Voting Trust may be made at any time unless they have first been offered to the Company at book value. In the event of the death or termination of employment by the Company of a holder of the Voting Trust Receipts, they must be offered to the Company at book value. Similar restrictions exist with respect to the Common Stock, all shares of which are deposited and held of record in the Voting Trust. (B) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (1) The Articles of Incorporation of Eaton Vance Corp. ("EVC") provide that EVC's Non-Voting Common Stock, $0.0625 par value, shall have no voting rights under any circumstances whatsoever. As of December 19, 1995, the officers and directors of EVC, as a group, beneficially owned 2,971,999 shares of such Non-Voting Common Stock or 30.72% of the 9,675,971 shares then outstanding. (Such figures include 227,838 shares subject to options exercisable within 60 days and is based solely upon information furnished by the officers and directors.) 19 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (CONTINUED) (B) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (CONTINUED) The following table sets forth the beneficial ownership (i.e., investment power within the meaning of Rule 13d-3(a)(2) under the Securities Exchange Act of 1934) of EVC's Directors and named executive officers of such Non-Voting Common Stock as at December 19, 1995 (such investment power being sole unless otherwise indicated): ================================================================================ Title of Class Beneficial Owners Amount of % of Beneficial Class Ownership (a) (b) - -------------------------------------------------------------------------------- Non-Voting Common Stock Landon T. Clay 1,806,877 (c)(d)(g) 19.12 - -------------------------------------------------------------------------------- Non-Voting Common Stock M. Dozier Gardner 346,736 (c)(f) 3.66 - -------------------------------------------------------------------------------- Non-Voting Common Stock James B. Hawkes 304,596 (c)(d)(f) 3.18 - -------------------------------------------------------------------------------- Non-Voting Common Stock Benjamin A. Rowland Jr. 217,904 (c)(e) 2.30 - -------------------------------------------------------------------------------- Non-Voting Common Stock H. Day Brigham, Jr. 137,900 1.46 - -------------------------------------------------------------------------------- Non-Voting Common Stock William M. Steul 8,041 (c) 0.09 - -------------------------------------------------------------------------------- Non-Voting Common Stock Wharton P. Whitaker 70,206 (c) 0.74 - -------------------------------------------------------------------------------- Non-Voting Common Stock John G. L. Cabot 21,774 (c) 0.23 - -------------------------------------------------------------------------------- Non-Voting Common Stock Ralph Z. Sorenson 8,367 (c) 0.09 ================================================================================ (a) Based solely upon information furnished by the officers and directors. (b) Based on 9,448,133 outstanding shares plus options exercisable within 60 days of 27,990 for Mr. Gardner, 123,843 for Mr. Hawkes, 22,352 for Mr. Rowland, 6,041 for Mr. Steul, 27,184 for Mr. Whitaker, 3,358 for Mr. Cabot and 3,358 for Mr. Sorenson. (c) Includes shares subject to options exercisable within 60 days granted to, but not exercised by, each officer and director as listed in Note (b) above. (d) Includes 4,800 shares held by Mr. Hawkes as custodian for a minor child, 635 shares held by Mr. Hawkes' daughter and 2,500 shares held by Mr. Clay's children. (e) Includes 1,200 shares owned by Mr. Rowland's spouse as to which Mr. Rowland disclaims beneficial ownership. (f) Includes 37,609 shares owned by Mr. Gardner's spouse, and 10,300 shares owned by Mr. Hawkes' spouse. (g) Includes 1,045 shares held in the trust of Profit Sharing Retirement Plan for employees of Flowers Antigua, of which the sole beneficiary is the spouse of Mr. Clay. Also includes 6,355 shares held in trust of Profit Sharing Retirement Plan for employees of LTC Corp., wholly owned by Mr. Clay. 20 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (CONTINUED) (B) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (CONTINUED) (2) As of October 31, 1995, certain directors and officers of EVC held various partnership interests in VenturesTrident, L.P., VenturesTrident II, L.P., Fulcrum Management Partners, L.P. and Fulcrum Management Partners II, L.P. (limited partnerships described in Item 13(a) below), each of which may be deemed to be an "affiliate" of MinVen, Inc. (see Item 13 below) and EVC as that term is defined in Rule 12b-2 under the Securities Exchange Act of 1934. These partnership interests are described in Item 13(a) below, which description is incorporated in this Item by reference. (3) Landon T. Clay (a director and officer of EVC) owned 15 shares of common stock of Investors Bank & Trust Company (a 77.3% owned subsidiary spun off by the Company on November 10, 1995) as at October 31, 1995. As at such date Messrs. Brigham, Hawkes, and Rowland (directors and officers of EVC) each owned qualifying shares (10 shares) of common stock of Investors Bank & Trust Company. All officers and directors of the Company, as a group, beneficially owned in the aggregate 45 shares of such common stock prior to the spin-off (or 0.45% of the outstanding common stock of Investors Bank & Trust Company). After the spin-off and accompanying public offering and sale of shares of Investors Financial Services Corp. ("IFSC"), the newly formed holding company for IB&T, Mr. Clay owned shares of IFSC representing 12.81% of the voting power. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS (A) TRANSACTIONS WITH MANAGEMENT AND OTHERS On February 28, 1985, the Company became a limited partner in VenturesTrident, L.P. ("VenturesTrident"), a Delaware Limited Partnership formed to invest in equity securities of public and private mining ventures, principally in precious metals. As a limited partner, the Company has invested an aggregate of $5,000,000 in cash in VenturesTrident. The investment by the Company was made entirely from internally generated funds. The general partner of VenturesTrident is Fulcrum Management Partners, L.P. ("Fulcrum Partners"), a Delaware Limited Partnership of which Landon T. Clay (the Company's Chairman of the Board and principal stockholder) and MinVen Inc. ("MinVen") are the general partners. MinVen owns a 79.24% interest in Fulcrum Partners, and Mr. Clay owns a 16.09% interest therein. The Company, by reason of MinVen's 79.24% interest in Fulcrum Partners, indirectly owns an additional 15.85% interest in VenturesTrident. Mr. Clay and entities controlled by Mr. Clay, other than the Company, have acquired limited partnership interests in VenturesTrident for cash investments aggregating $5,550,000. Mr. Clay and such entities, solely through their ownership of such limited partnership interests, in the aggregate currently own a 13.48% interest in VenturesTrident; Mr. Clay, by reason of his 16.093% interest in Fulcrum Partners, indirectly owns an additional 3.219% interest in VenturesTrident. Mr. Clay's wife, Lavinia D. Clay, acquired a limited partnership interest in VenturesTrident for an investment of $100,000; she currently owns a 0.24% interest in VenturesTrident. Certain institutions and other investors have also acquired limited partnership interests in VenturesTrident. 21 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS (CONTINUED) (A) TRANSACTIONS WITH MANAGEMENT AND OTHERS (CONTINUED) Two other directors of the Company, M. Dozier Gardner and Benjamin A. Rowland, Jr., have acquired limited partnership interests in VenturesTrident; each of such investments amounts to $50,000, and each such director owns a 0.12% interest in VenturesTrident. Mr. Clay and the other directors of the Company, by reason of their positions with and ownership of stock of the Company, have an indirect interest in the aggregate 27.988% interest in VenturesTrident directly and indirectly owned by the Company. All net operating income and losses and all net realized capital gains and losses of VenturesTrident with respect to each of its fiscal years will generally be allocated 80% to the limited partners (which include the Company, Mr. and Mrs. Clay and the other two directors of the Company who own limited partnership interests) of VenturesTrident and 20% to Fulcrum Partners (of which Mr. Clay owns a 16.093% interest and the Company owns through MinVen a 79.24% interest). Mr. Clay is an officer and director of MinVen and Fulcrum Management. In accordance with the VenturesTrident Limited Partnership Agreement, as amended, the Fulcrum Partners terminated the Partnership effective December 31, 1995. The Partnership Agreement makes provision for Fulcrum Partners to act as liquidator to wind up the affairs of the Partnership in an orderly manner. The termination and liquidation of VenturesTrident are discussed in VentureTrident's letter of December 15, 1995 to its limited partners attached hereto as Exhibit 99.1 and incorporated herein by reference. VenturesTrident, after paying or providing for its liabilities and obligations, will allocate and distribute its remaining assets among its partners, to the best extent feasible, in cash in proportion to the capital accounts of its partners (and, if a distribution in kind is necessary, after allocating any gain or loss deemed to have been realized in connection with such a distribution in the manner provided in the Limited Partnership Agreement). The Company as limited partner, Mr. and Mrs. Clay and the other two directors of the Company who own limited partnership interests, and Fulcrum Partners as general partner, will receive their pro rata portion of the remaining assets of VenturesTrident in accordance with the provisions of the Limited Partnership Agreement. On November 4, 1987, the Company became a limited partner in VenturesTrident II, L.P. ("VenturesTrident II"), a Delaware Limited Partnership formed to invest in equity securities of public and private mining ventures, principally in precious metals. As a limited partner, the Company has invested $3,000,000 in cash in VenturesTrident II. The investment by the Company was made entirely from internally generated funds. The Company, through its ownership of such limited partnership interest, currently owns a 3.042% interest in VenturesTrident II. In addition to the above, MinVen, a wholly owned subsidiary of the Company, has acquired a general partnership interest in the general partner of VenturesTrident II. This acquisition required MinVen to pay $748,235 to such general partner. The general partner of VenturesTrident II is Fulcrum Management Partners II, L.P. ("Fulcrum Partners II"), a Delaware Limited Partnership of which Landon T. Clay (the Company's Chairman of the Board and principal stockholder) and MinVen are the general partners. MinVen owns a 82.13% interest in Fulcrum Partners II, and Mr. Clay owns a 3.87% interest therein. The Company, by reason of MinVen's 82.13% interest in Fulcrum Partners II, indirectly owns an additional 16.43% interest in VenturesTrident II. VenturesTrident II has entered into a service agreement with Fulcrum Management, Inc. ("Fulcrum Management"), a wholly-owned subsidiary of the Company, whereby Fulcrum Management will provide management and administration services to VenturesTrident II for a quarterly fee equal to .675% of VenturesTrident II's aggregate committed capital. Fulcrum Management has entered into a separate agreement with Castle Group, Inc., a Colorado corporation, pursuant to which Castle will provide such services to VenturesTrident II. 22 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS (CONTINUED) (A) TRANSACTIONS WITH MANAGEMENT AND OTHERS (CONTINUED) Mr. Clay and entities controlled by Mr. Clay, other than the Company, acquired limited partnership interests in VenturesTrident II for cash investments aggregating $2,650,000. Mr. Clay and such entities, solely through their ownership of such limited partnership interests, in the aggregate currently own a 2.69% interest in VenturesTrident II; Mr. Clay, by reason of his 3.87% interest in Fulcrum Partners II, indirectly owns an additional .77% interest in VenturesTrident II. Investors Bank & Trust Company, as custodian for the benefit of Thomas M. Clay and Richard T. Clay (both of whom are minor children of Landon T. Clay), acquired limited partnership interests in VenturesTrident II for investments of $100,000 for each such child; each such child currently owns a .10% interest in VenturesTrident II. Certain institutions and other investors have also acquired limited partnership interests in VenturesTrident II. Two other directors of the Company, M. Dozier Gardner and Benjamin A. Rowland, Jr., have acquired limited partnership interests in VenturesTrident II; each of such investments amounts to $50,000, and each such director currently owns a .05% interest in VenturesTrident II. Mr. Clay and the other directors of the Company, by reason of their positions with and ownership of stock of the Company, have an indirect interest in the aggregate 19.47% interest in VenturesTrident II directly and indirectly owned by the Company. All net operating income and losses and all net realized capital gains and losses of VenturesTrident II with respect to each of its fiscal years will generally be allocated 80% to the limited partners (which include the Company, Mr. Clay, Mr. Clay's minor children and the other two directors of the Company who own limited partnership interests) of VenturesTrident II and 20% to Fulcrum Partners II (of which Mr. Clay owns a 3.87% interest and the Company owns through MinVen a 82.13% interest). Mr. Clay is an officer and director of MinVen and Fulcrum Management. (B) CERTAIN BUSINESS RELATIONSHIPS Landon T. Clay, M. Dozier Gardner, James B. Hawkes and H. Day Brigham, Jr., each of whom is a director and executive officer of the Company, are officers and directors, trustees or general partners of various investment companies for which the Company's wholly owned subsidiary, Eaton Vance Management or Boston Management and Research, serves as investment adviser, for which Eaton Vance Distributors, Inc. (a wholly-owned subsidiary of Eaton Vance Management) acts as principal underwriter, and for which Investors Bank & Trust Company (a 77.3% owned subsidiary spun off by the Company on November 10, 1995) serves as custodian; such investment companies make substantial payments to Eaton Vance Management or Boston Management and Research for advisory and management services, substantial payments to Eaton Vance Distributors, Inc. under their distribution plans, and substantial payments to Investors Bank & Trust Company for custodial services. (C) INDEBTEDNESS OF MANAGEMENT In 1995, the Company increased to $10,000,000 the amount of money in the Executive Loan Program which is available for loans to certain key employees for the purpose of financing the exercise of stock options for shares of the Company's Non-Voting Common Stock. Such loans are written for a seven-year period, at varying fixed interest rates, and notes evidencing them require repayment in annual installments commencing with the third year in which the loan is outstanding. Loans outstanding under this program amounted to $3,313,000 at October 31, 1995. 23 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS (CONTINUED) (C) INDEBTEDNESS OF MANAGEMENT (CONTINUED) The following table sets forth the executive officers and Directors of the Company who were indebted to the Company under the foregoing loan programs at any time since November 1, 1994, in an aggregate amount in excess of $60,000: ================================================================================ Largest Amount of Loans Rate of Interest Loans Outstanding Outstanding Charged on Loans Since 11/1/94 as of as of 12/31/95 12/31/95 - -------------------------------------------------------------------------------- Landon T. Clay $176,940 $154,805 8.06%-8.58% (1) - -------------------------------------------------------------------------------- M. Dozier Gardner 634,682 575,809 6.22%-8.06% (2) - -------------------------------------------------------------------------------- James B. Hawkes 525,149 490,982 5.31%-8.58% (3) - -------------------------------------------------------------------------------- H. Day Brigham, Jr. 364,295 332,300 5.31%-8.06% (4) - -------------------------------------------------------------------------------- Wharton P. Whitaker 127,749 43,749 6.57% (5) - -------------------------------------------------------------------------------- Benjamin A. Rowland, Jr. 92,500 42,500 5.31% (6) - -------------------------------------------------------------------------------- John P. Rynne 83,250 83,250 5.74%-8.28% (7) ================================================================================ (1) 8.06% interest payable on $87,965 principal amount of loan, and 8.58% interest payable on $66,840 principal amount. (2) 6.22% interest payable on $99,000 principal amount of loan, 7.55% interest payable on $138,600 principal amount, 8.06% interest payable on $87,965 principal amount, and 6.36% interest payable on $250,244 principal amount. (3) 5.31% interest payable on $156,888 principal amount, 5.74% interest payable on $63,102 principal amount, 6.11% interest payable on $110,000 principal amount, 7.61% interest payable on $38,500 principal amount, 8.06% interest payable on $79,968 principal amount and 8.58% interest payable on $42,525 principal amount. (4) 5.31% interest payable on $177,100 principal amount of loan, 6.11% interest payable on $88,000 principal amount, and 8.06% interest payable on $67,200 principal amount. (5) 6.57% interest payable on $43,749 principal amount. (6) 5.31% interest payable on $42,500 principal amount of loan. (7) 5.74% interest payable on $15,000 principal amount of loan, 7.32% interest payable on $42,000 principal amount of loan and 8.28% interest payable on $26,250 principal amount of loan. (D) TRANSACTIONS WITH PROMOTERS Not applicable. 24 PART IV ITEM 14. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (A) (1) The following financial statements of Eaton Vance Corp. and the independent auditors' report relating thereto, are incorporated herein by reference into Item 8 hereto: Separate Document Eaton Vance Corp. 1995 Annual Report to Shareholders Page Number Independent Auditors' Report 42 Consolidated Balance Sheets as of October 31, 1995 and 1994 20-21 Consolidated Statements of Income for each of the three years in the period ended October 31, 1995 22 Consolidated Statements of Cash Flows for each of the three years in the period ended October 31, 1995 23 Consolidated Statements of Shareholders' Equity for each of the three years in the period ended October 31, 1995 24-25 Notes to Consolidated Financial Statements 26-41 The following auditors' report relating to the consolidated financial statement schedules of Eaton Vance Corp. is filed herewith and included in Item 14(a)(1): Independent Auditors' Report 26 (A)(2) The following financial statement schedules are included herein: Schedule Number Description Page Number II Valuation and Qualifying Accounts 27 III Real Estate and Accumulated Depreciation 28-30 IV Mortgage Notes Receivable on Real Estate 31-32 All Schedules not listed above are omitted because they are not applicable, or the required information is shown in the financial statements or in the notes thereto, or there have been no changes in the information required to be filed from that last previously reported. (b) The list of exhibits required by Item 601 of Regulation S-K is set forth in the Exhibit Index and is incorporated herein by reference. 25 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Shareholders of Eaton Vance Corp.: We have audited the consolidated financial statements of Eaton Vance Corp. and its subsidiaries as of October 31, 1995 and 1994, and for each of the three years in the period ended October 31, 1995, and have issued our report thereon dated November 21, 1995; such consolidated financial statements and report are included in your 1995 Annual Report to Shareholders and are incorporated herein by reference. Our audits also included the consolidated financial statement schedules of Eaton Vance Corp. and its subsidiaries, listed in Item 14. These consolidated financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such consolidated financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein. DELOITTE & TOUCHE LLP Boston, Massachusetts November 21, 1995 26 EATON VANCE CORP. VALUATION AND QUALIFYING ACCOUNTS Schedule II Years ended October 31, 1995, 1994 and 1993
======================================================================================================= Additions Balance at Charged to Beginning Costs and Balance at Description of Year Expenses Deductions End of Year - ------------------------------------------------------------------------------------------------------- Valuation accounts deducted from assets to which they apply: Allowance for doubtful accounts on notes receivable and receivables from affiliates: - ------------------------------------------------------------------------------------------------------- Year ended October 31: - ------------------------------------------------------------------------------------------------------- 1995 $800,000 $400,000 -- $1,200,000 - ------------------------------------------------------------------------------------------------------- 1994 $800,000 -- -- $ 800,000 - ------------------------------------------------------------------------------------------------------- 1993 -- $800,000 -- $ 800,000 =======================================================================================================
27 EATON VANCE CORP. REAL ESTATE AND ACCUMULATED DEPRECIATION Schedule III October 31, 1995
==================================================================================================================================== Costs Capitalized Initial Cost Subsequent to Acquisition - ------------------------------------------------------------------------------------------------------------------------------------ Carrying Description Encumbrances Land Buildings Improvements Costs - ------------------------------------------------------------------------------------------------------------------------------------ Income producing: - ------------------------------------------------------------------------------------------------------------------------------------ Shopping center- Goffstown, NH $ -- $ 244,532 $ 1,373,276 $ 5,732,015 $ -- - ------------------------------------------------------------------------------------------------------------------------------------ Shopping mall and office building- Troy, NY 2,704,890 834,100 4,033,921 1,796,161 -- - ------------------------------------------------------------------------------------------------------------------------------------ Office Buildings: Boston, MA 3,961,484 495,000 4,447,898 564,500 -- Boston, MA -- 280,800 4,009,836 1,509,438 -- - ------------------------------------------------------------------------------------------------------------------------------------ Warehouses: Colonie, NY 2,229,801 137,966 1,596,385 606,947 -- Springfield, MA 1,394,648 145,833 1,967,684 193,338 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 10,290,823 2,138,231 17,429,000 10,402,399 -- - ------------------------------------------------------------------------------------------------------------------------------------ Commercial land: Bedford, NH -- 137,773 -- -- 74,423 Boston, MA -- 78,203 -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Residential land- Canton, OH -- 28,004 -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Total -- 243,980 -- -- 74,423 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL $10,290,823 $2,382,211 $17,429,000 $10,402,399 $74,423 ====================================================================================================================================
28 EATON VANCE CORP. REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued) Schedule III October 31, 1995
==================================================================================================================================== Gross Carrying Amount October 31, 1995 (1) - ------------------------------------------------------------------------------------------------------------------------------------ Accumulated Date of Date Depreciable Description Land Buildings Depreciation Construction Acquired Life - ------------------------------------------------------------------------------------------------------------------------------------ Income producing: - ------------------------------------------------------------------------------------------------------------------------------------ Shopping center- Goffstown, NH $ 244,532 $ 7,105,291 $1,780,089 1973 10/17/83 30 yrs. - ------------------------------------------------------------------------------------------------------------------------------------ Shopping mall and office building- Troy, NY 834,100 5,830,082 1,393,350 1978 05/01/87 31.5 yrs. - ------------------------------------------------------------------------------------------------------------------------------------ Office buildings: Boston, MA 495,000 5,012,398 1,641,445 1888 08/15/85 30 yrs. Boston, MA 280,800 5,519,274 2,202,457 1920 10/31/90 20 yrs. - ------------------------------------------------------------------------------------------------------------------------------------ Warehouses: Colonie, NY 137,966 2,203,332 658,930 1964 11/13/84 30 yrs. Springfield, MA 145,833 2,161,022 748,218 1974 11/02/84 30 yrs. - ------------------------------------------------------------------------------------------------------------------------------------ Total 2,138,231 27,831,399 8,424,489 - ------------------------------------------------------------------------------------------------------------------------------------ Commercial land: Bedford, NH 212,196 -- -- N/A 05/13/85 N/A Boston, MA 78,203 -- -- N/A 01/08/88 N/A - ------------------------------------------------------------------------------------------------------------------------------------ Residential land- Canton, OH 28,004 -- -- N/A 10/17/83 N/A - ------------------------------------------------------------------------------------------------------------------------------------ Total 318,403 -- -- - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL $2,456,634 $27,831,399 $8,424,489 ====================================================================================================================================
(1) The aggregate cost of real estate for federal income tax purposes is approximately the same as the gross carrying amount recorded for book purposes. 29 EATON VANCE CORP. REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued) Schedule III ================================================================================ October 31, -------------------------------------------- 1995 1994 1993 - -------------------------------------------------------------------------------- LAND AND BUILDINGS - -------------------------------------------------------------------------------- Gross carrying amount: - -------------------------------------------------------------------------------- Balance, beginning of year $29,812,704 $29,447,609 $28,949,047 - -------------------------------------------------------------------------------- Additions - improvements, etc. 475,329 365,095 528,562 - -------------------------------------------------------------------------------- Balance, end of year $30,288,033 $29,812,704 $29,477,609 - -------------------------------------------------------------------------------- Accumulated depreciation: - -------------------------------------------------------------------------------- Balance, beginning of year $ 7,510,277 $ 6,594,381 $ 5,691,142 - -------------------------------------------------------------------------------- Additions - depreciation 914,212 915,896 903,239 - -------------------------------------------------------------------------------- Balance, end of year $ 8,424,489 $ 7,510,277 $ 6,594,381 ================================================================================ 30 EATON VANCE CORP. MORTGAGE NOTES RECEIVABLE ON REAL ESTATE Schedule IV October 31, 1995
==================================================================================================================================== Principal Amount of Loans Original Carrying Subject to Number Final Periodic Face Amount of Delinquent of Interest Maturity Payment Prior Amount of Mortgages Principal Description Notes Rate Dates Terms Liens Mortgages (B) (C) or Interest - ------------------------------------------------------------------------------------------------------------------------------------ FIRST MORTGAGE NOTES: - ------------------------------------------------------------------------------------------------------------------------------------ Residential permanent notes: - ------------------------------------------------------------------------------------------------------------------------------------ FHA - Original note amounts 8 5.25% 2000 (A) None $133,500 $ 31,226 $ -- under $30,000 - ------------------------------------------------------------------------------------------------------------------------------------ Conventional - Original note amounts under 2 8-9.75% 1997-2005 (A) None 259,600 246,704 $225,000 -- - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL 10 $393,100 $277,930 $ -- ====================================================================================================================================
NOTES: (A) Periodic payment terms - FHA Notes - Interest and principal payments are made at variable amounts over life to maturity, no prepayment penalty. Conventional Notes - $225,000 note with interest payable at level amounts over life to maturity. Balloon payment of $224,000 due in 1997, no prepayment penalty. $34,600 note with interest and principal payments made at level amounts, no prepayment penalty. 31 EATON VANCE CORP. MORTGAGE NOTES RECEIVABLE ON REAL ESTATE (Continued) Schedule IV October 31, 1995 (B) Reconciliation of the Carrying Amount of Mortgage Loans - ================================================================================ 1995 1994 1993 - -------------------------------------------------------------------------------- Balance, beginning of year $301,411 $330,654 $360,906 - -------------------------------------------------------------------------------- Collections of principal (23,481) (29,243) (30,252) - -------------------------------------------------------------------------------- Balance, end of year $277,930 $301,411 $330,654 ================================================================================ (C) The aggregate cost for federal income tax purposes is equal to the carrying amount of the mortgages. 32 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Eaton Vance Corp. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. EATON VANCE CORP. By ____________________________ M. Dozier Gardner President, Director and Principal Executive Officer Date __________________________ Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Eaton Vance Corp. and in the capacities and on the dates indicated:
Signature Title Date --------- ----- ---- /s/ Landon T. Clay Chairman and Director January 26, 1996 Landon T. Clay /s/ M. Dozier Gardner President, Director and January 26, 1996 M. Dozier Gardner Principal Executive Officer /s/ William M. Steul Chief Financial Officer January 26, 1996 William M. Steul /s/ John P. Rynne Corporate Controller January 26, 1996 John P. Rynne /s/ James B. Hawkes Director January 26, 1996 James B. Hawkes /s/ H. Day Brigham, Jr. Director January 26, 1996 H. Day Brigham, Jr. /s/ Benjamin A. Rowland, Jr. Director January 26, 1996 Benjamin A. Rowland, Jr. /s/ John G.L. Cabot Director January 26, 1996 John G.L. Cabot /s/ Ralph Z. Sorenson Director January 26, 1996 Ralph Z. Sorenson
33 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 Exhibits are filed as a part of this Report or incorporated herein by reference pursuant to Rule 12b-32 under the Securities Exchange Act of 1934: Exhibit No. Description 3.1 The Company's Amended Articles of Incorporation are filed as Exhibit 3.1 to the Company's registration statement on Form 8-B dated February 4, 1981, filed pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934 (S.E.C. File No. 1-8100) and are incorporated herein by reference. 3.2 The Company's By-Laws are filed as Exhibit 3.2 to the Company's registration statement of Form 8-B dated February 4, 1981, filed pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934 (S.E.C. File No. 1-8100) and are incorporated herein by reference. 3.3 Copy of the Company's Articles of Amendment effective at the close of business on November 22, 1983, has been filed as Exhibit 3.3 to the Annual Report on Form 10-K of the Company for the fiscal year ended October 31, 1983, (S.E.C. File No. 1-8100) and is incorporated herein by reference. 3.4 Copy of the Company's Articles of Amendment effective at the close of business on February 25, 1986 has been filed as Exhibit 3.4 to the Annual Report on Form 10-K of the Company for the fiscal year ended October 31, 1986, (S.E.C. File No. 1-8100) and is incorporated herein by reference. 4.1 The rights of the holders of the Company's Common Stock, par value $.0625 per share, and Non-Voting Common Stock, par value $.0625 per share, are described in the Company's Amended Articles of Incorporation (particularly Articles Sixth, Seventh and Ninth thereof) and the Company's By-Laws (particularly Article II thereof)--See Exhibits 3.1, 3.2 and 3.3 above as incorporated herein by reference. 34 EXHIBIT INDEX (CONTINUED) Exhibit No. Description 9.1 Copy of the Voting Trust Agreement made as of December 22, 1993 is filed as Exhibit 9.1 to the Annual Report on Form 10-K of the Company for the fiscal year ended October 31, 1993, (SEC File No. 1-8100) and is incorporated herein by reference. 10.1 Description of Performance Bonus Arrangement for Members of Investment Division of Eaton Vance Management is filed herewith. 10.2 Description of Incentive Bonus Arrangement for Marketing Personnel of Eaton Vance Distributors, Inc. is filed herewith. 10.3 Copy of 1984 Executive Loan Program relating to financing or refinancing the exercise of options, the purchase of stock, the tax obligations associated with such exercise or purchase and similar undertakings by key directors, officers, and employees adopted by the Company's Directors on October 19, 1984, has been filed as Exhibit 10.8 to the Annual Report on Form 10-K of the Company for the fiscal year ended October 31, 1984, (S.E.C. File No. 1-8100) and is incorporated herein by reference. 10.4 Copy of 1988 Profit Improvement Bonus Plan of Eaton Vance Management, Inc. has been filed as Exhibit 10.9 of the Annual Report on Form 10-K of the Company for the fiscal year ended October 31, 1987 (S.E.C. File No 1-8100) and is incorporated herein by reference. 35 EXHIBIT INDEX (CONTINUED) Exhibit No. Description 10.5 Description of 1990 Performance and Retention of Officers Pool (bonus plan to reward key officers of Eaton Vance Management and Eaton Vance Distributors, Inc.) of Eaton Vance Corp. has been filed herewith. 10.6 Copy of 1992 Stock Option Plan as adopted by the Eaton Vance Corp. Board of Directors on April 8, 1992 has been filed as Exhibit 10.12 to the Annual Report on Form 10-K of the Company for the fiscal year ended October 31, 1992 S.E.C. File No. 1-8100), and is incorporated herein by reference. 10.7 Copy of 1986 Employee Stock Purchase Plan as amended and restated by the Eaton Vance Corp. Board of Directors on April 8, 1992 has been filed as Exhibit 10.13 to the Annual Report on Form 10-K of the Company for the fiscal year ended October 31, 1992 (S.E.C. File No. 1-8100), and is incorporated herein by reference. 10.8 Copy of 1992 Incentive Plan - Stock Alternative as adopted by the Eaton Vance Corp. Board of Directors on July 17, 1992 has been filed as Exhibit 10.14 to the Annual Report on Form 10-K of the Company for the fiscal year ended October 31, 1992 (S.E.C. File No. 1-8100), and is incorporated herein by reference. 10.9 Copy of 1995 Stock Option Plan as adopted by the Eaton Vance Corp. Board of Directors on October 12, 1995, is filed herewith. 10.10 Copy of 1986 Employee Stock Purchase Plan as amended and restated by the Eaton Vance Corp. Board of Directors on October 12, 1995, is filed herewith. 10.11 Copy of 1995 Executive Loan Program relating to financing or refinancing the exercise of options by key directors, officers, and employees adopted by the Company's Directors on October 12, 1995, is filed herewith. 36 EXHIBIT INDEX (CONTINUED) Exhibit No. Description Page Number 11.1 Statement of Computation of average number of Shares outstanding (filed herewith). 13.1 Copy of the Company's Annual Report to Shareholders for the fiscal year ended October 31, 1995 (furnished herewith--such Annual Report, except for those portions thereof which are expressly incorporated by reference in this report on Form 10-K, is furnished solely for the information of the Securities and Exchange Commission and is not to be deemed "filed" as a part of this report on Form 10-K). 21.1 List of the Company's Subsidiaries as of October 31, 1995 (filed herewith). 23.1 Independent Auditors' Consent (filed herewith) 27.1 Financial Data Schedule as of October 31, 1995 (filed herewith - electronic filing only). 99.1 VenturesTrident letter of December 15, 1995 to its limited partners is filed herewith. 99.2 List of Eaton Vance Corp. Open Registration Statements (filed herewith). 37 EX-10.1 2 PERFORMANCE BONUS ARRANGEMENT EXHIBIT 10.1 DESCRIPTION OF PERFORMANCE BONUS ARRANGEMENT FOR MEMBERS OF INVESTMENT DIVISION OF EATON VANCE MANAGEMENT Registrant's advisory subsidiary, Eaton Vance Management, currently has a performance bonus arrangement for employees who are members of its Investment Division. In addition to base salary compensation, such members are eligible for a fiscal year-end cash performance bonus. Bonuses are determined by a systematic analysis of the investment recommendations of security analysts and the investment performance of portfolio managers. Bonuses, when earned, may be up to 100% of base compensation. An individual receiving such a bonus may be a director or executive officer of the registrant. 38 EX-10.2 3 INCENTIVE BONUS ARRANGEMENT EXHIBIT 10.2 DESCRIPTION OF INCENTIVE BONUS ARRANGEMENT FOR MARKETING PERSONNEL OF EATON VANCE DISTRIBUTORS, INC. Registrant's distributor subsidiary, Eaton Vance Distributors, Inc., has a sales incentive arrangement for employees who are involved in marketing the shares of continuously-offered investment companies distributed by Eaton Vance Distributors, Inc. through broker-dealers. Employees in the field, known as "wholesale representatives", and telemarketing representatives in the office receive, in addition to base compensation, monthly cash incentive compensation payments based on their territorial sales volume. Members of the management group for marketing, in addition to base compensation, receive monthly cash incentive payments based on the aggregate sales volume of the distributor. 39 EX-10.5 4 PERFORMANCE AND RETENTION OF OFFICERS POOL EXHIBIT 10.5 DESCRIPTION OF PERFORMANCE AND RETENTION OF OFFICERS POOL EATON VANCE CORP. The Performance and Retention of Officers Pool (PROP) is designed to reward outstanding performances of key officers and to provide personal incomes which will assure a high level of retention of these officers. The amount accrued in this pool is determined by the Management Compensation Committee early in each fiscal year, but may be adjusted during the year if conditions change. To the extent possible, this supplemental compensation is not dependent on the current earnings of Eaton Vance Corp. The primary consideration in the allocation which takes place at the end of each fiscal year of this pool is the officer's contribution for the year, but the Management Compensation Committee may also take into consideration such other factors as salaries, prior inequities, and comparisons between an Eaton Vance officer's compensation and the compensation of employees performing similar services in competing firms. Some departments may have more rigorous bases for making allocations than others. In any case, the Compensation Committee works closely with the various department heads and/or supervisors in setting individual awards. Officers participating in other incentive programs designed to reward good performance and to be a major part of the executives' income do not normally participate in the PROP. It is expected that officers joining Eaton Vance after April 30th of the year in question will not be included in the PROP. The Management Compensation Committee may allocate some of this pool to non-officers if the Committee decides this is appropriate. The total money in this pool and the Profit Improvement Bonus Plan together may not exceed 75% of the total annual salaries of the executives who might be expected to participate in either or both of the incentive programs. 40 EX-10.9 5 1995 STOCK OPTION PLAN EXHIBIT 10.9 EATON VANCE CORP. 1995 STOCK OPTION PLAN 1. Definitions. As used in this Eaton Vance Corp. 1995 Stock Option Plan, the following terms shall have the following meaning: Board means the Company's Board of Directors. Code means the Internal Revenue Code of 1986, as amended. Committee means a committee comprised of one or more directors of the Company, appointed by the Board of Directors of the Company, responsible for the administration of the Plan, as provided in Section 5. Company means Eaton Vance Corp., a Maryland corporation. Director Option means a nonstatutory stock option granted to a director pursuant to Section 8. Grant Date means the date on which an Option is granted. Incentive Option means an Option that satisfies the requirements of Section 422 of the Code. Market Value means the composite closing price for the Shares for any date. Nonstatutory Option means an Option other than an Incentive Option granted to an employee. Option means an option to purchase Shares granted under the Plan. Option Agreement means an agreement between the Company and an Optionee, setting forth the terms and conditions of an Option. Option Price means the price to be paid by an Optionee upon exercise of an Option. Optionee means a person eligible to receive an Option to whom an Option shall have been granted under the Plan. Plan means this 1995 Stock Option Plan. Shares means shares of $.125 par value Non-Voting Common Stock of the Company. Subsidiary means a subsidiary of the Company, as defined in Section 424(f) of the Code. 41 EXHIBIT 10.9 (CONTINUED) 2. Purpose. The purpose of the Plan is to advance the interests of the Company by strengthening the ability of the Company and its Subsidiaries to attract, retain and motivate directors and key employees by providing them with an opportunity to purchase non-voting common stock of the Company and thus participate in its ownership, including the opportunity to share in any appreciation in the value of that stock. It is intended that some of the Options to be granted will be Incentive Options and others will not be. It is further intended that this Plan will satisfy all of the conditions of Rule 16b-3 under the Securities Exchange Act of 1934, as amended. 3. Effective Date. The Plan became effective on October 12, 1995, the date it was adopted by the Board, provided that the Plan is approved by the stockholders of the Company within one year after that date. Although Options may be granted before such stockholder approval, no Option may be exercised until such approval is obtained and such Options will be null and void if such approval is not obtained by October 12, 1996. 4. Stock Subject to the Plan. The Shares with respect to which Options may be granted under this Plan shall not exceed 600,000 Shares. Any Shares subject to an Option which for any reason expires or is terminated unexercised as to such Shares may again be the subject of an Option. In addition, any Shares purchased by an Optionee upon exercise of an Option which are subsequently repurchased by the Company pursuant to the terms of that Option may again be made the subject of an Option. The Shares delivered upon exercise of Options may be either authorized but unissued Shares or issued Shares reacquired by the Company. 5. Administration. The Board shall appoint a Committee consisting exclusively of at least two directors who are not employees of the Company or any of its Subsidiaries and who have not, within twelve months preceding any action by the Committee, received any option (other than a Director Option) granted by the Company or any Subsidiary. The Plan shall be administered by the Committee. Subject to the provisions of the Plan, the Committee shall have full power to construe and interpret the Plan and to establish, amend and rescind rules and regulations for its administration. Any decision made with respect thereto shall be final and binding on the Company, the Optionees and all other persons. 6. Duration of the Plan. This Plan shall terminate ten years from the original effective date hereof, unless terminated earlier pursuant to Section 14, and no Options may be granted thereafter. 7. Options for Employees. (a) Eligible Employees. Options may be granted to key employees of the Company or of any of its Subsidiaries selected by the Committee. (b) Restrictions on Incentive Options. Incentive Options shall be subject to the following restrictions: (i) Limitation on Number of Shares. To the extent that the aggregate Market Value on the Grant Date of the Shares with respect to which an Option that would otherwise constitute an Incentive Option (when aggregated, if appropriate, with incentive stock options granted before the Option under this Plan or any other plan maintained by the Company or any Subsidiary of the Company) is exercisable for the first time by the Optionee during any calendar year exceeds $100,000, the Option shall be treated as a Nonstatutory Option. 42 EXHIBIT 10.9 (CONTINUED) (ii) 10% Stockholder. If any Optionee to whom an Incentive Option is granted is on the Grant Date the owner of stock (as determined under Section 424(d) of the Code) possessing more than 10% of the total combined voting power of all classes of stock of the Company or any of its Subsidiaries, then the following special provisions shall be applicable to that Incentive Option: (A) The Option Price per Share shall not be less than 110% of the Market Value on the Grant Date; and (B) The Incentive Option shall expire not more than five years after the Grant Date. (c) Price. Subject to the conditions on certain Incentive Options in Section 7(b), the Option Price per Share payable upon the exercise of each Incentive Option shall be not less than 100% of the Market Value on the Grant Date. The Option Price per Share of stock payable upon exercise of each Nonstatutory Option shall be determined by the Committee, provided that the Option Price shall not be less than 50% of the Market Value on the Grant Date. (d) Number of Shares. Each Option Agreement shall specify the number of Shares to which it pertains. (e) Exercise of Options. Subject to the conditions on Incentive Options in Section 7(b), each Option shall be exercisable for the full amount or for any part thereof and at such intervals or in such installments as the Committee may determine at the time it grants the Option; provided, however, that no Option shall be exercisable with respect to any Shares later than ten years after the Grant Date. 8. Options for Directors. On the third Friday of December in each year, each director who is not an employee of the Company and its Subsidiaries shall receive a Director Option to purchase the number of Shares calculated by dividing $25,000 by the Market Value of the Shares on the Grant Date. In the event that on the third Friday of any December, there is not a sufficient number of Shares available to implement fully the preceding sentence, then each such director shall receive a pro rata portion of the Director Option contemplated by the preceding sentence. The Option Price for each Director Option shall be the Market Value on the Grant Date or, in the event there is no Market Value available on the Grant Date, on the date next following the Grant Date for which a Market Value is available. Each Director Option shall become exercisable in four equal installments upon each of the first four anniversaries of the Grant Date. No Director Option shall be exercisable later than ten years after the Grant Date. 9. Terms and Condition Applicable to All Options. (a) Non-Transferability. No Option shall be transferable by the Optionee otherwise than by will or the laws of descent and distribution, and each Option shall be exercisable during the Optionee's lifetime only by him or her. 43 EXHIBIT 10.9 (CONTINUED) (b) Notice of Exercise and Payment. An Option shall be exercisable only by delivery of a written notice to the Company's Treasurer or any other officer of the Company designated by the Committee to accept such notices on its behalf, specifying the number of Shares for which it is exercised. If the Shares are not at that time effectively registered under the Securities Act of 1933, as amended, the Optionee shall include with such notice a letter, in form and substance satisfactory to the Company, confirming that the Shares are being purchased for the Optionee's own account for investment and not with a view to distribution. Payment shall be made in full at the time the Option is exercised. Payment shall be made by (i) cash or check, (ii) if approved by the Committee at the time of exercise, delivery and assignment to the Company of Shares having a Market Value as of the date of exercise equal to the exercise price, (iii) if approved by the Committee at the time of exercise, delivery of the Optionee's promissory note for the exercise price, or (iv) any combination of (i), (ii) or (iii) above. (c) Rights as Shareholder. No Optionee shall have any rights as a shareholder or any claim to dividends paid with respect to any Shares to which the Option relates until the date such Shares are issued to him or her. 10. Termination of Options. Each Option shall terminate and may no longer be exercised if the Optionee ceases to perform services for the Company or a Subsidiary, in accordance with the following provisions: (i) if the Optionee's services shall have been terminated by resignation or other voluntary action, or if such services shall have been terminated involuntarily for cause, all of the Optionee's Options shall terminate and may no longer be exercised; (ii) if the Optionee's services shall have been terminated for any reason other than cause, resignation or other voluntary action before his or her eligibility to retire, and before his or her disability or death, he or she may at any time within a period of three months after such termination of service exercise his or her Options, as applicable, to the extent that the Options were exercisable on the date of termination of service; (iii) if the Optionee's service shall have been terminated because of disability within the meaning of Section 22(e)(3) of the Code, he or she may at any time within a period of one year after such termination of service exercise his Options to the extent that such Options were exercisable on the date of termination of service; and (iv) if the Optionee dies at a time when he or she might have exercised an Option, then his or her estate, personal representative or beneficiary to whom it has been transferred pursuant to Section 9(a) may at any time within a period of one year after the Optionee's death exercise the Option to the extent the Optionee might have exercised it at the time of death; provided, however, that the Committee may, at its sole discretion, provide specifically in an Option Agreement for such other period of time during which an Optionee may exercise an Option after termination of the Optionee's services as the Committee may approve, subject to the overriding limitation that no Option may be exercised to any extent by anyone after the date of expiration of the Option. 44 EXHIBIT 10.9 (CONTINUED) 11. Withholding Taxes; Delivery of Shares. The Company's obligation to deliver Shares upon exercise of an Option shall be subject to the Optionee's satisfaction of all applicable federal, state and local income and employment tax withholding obligations. The Optionee may satisfy the obligations by electing (a) to make a cash payment to the Company, or (b) to have the Company withhold Shares, or (c) to deliver to the Company already-owned Shares with a value equal to the amount required to be withheld. The value of Shares to be withheld or delivered shall be based on the Market Value on the date the amount of tax to be withheld is to be determined. The Optionee's election to have Shares withheld for this purpose will be subject to the following restrictions: (1) the election must be made prior to the date the amount of tax is to be determined, (2) the election must be irrevocable, (3) if the Optionee is subject to liability under Section 16(b) of the Securities Exchange Act of 1934, the election must take place within the period beginning on the third business day following the date of release of the Company's quarterly financial data and ending on the twelfth business day following such date, and (4) the election will be subject to the disapproval of the Committee. 12. Stock Dividends; Stock Splits: Stock Combinations; Recapitalizations. Appropriate adjustment shall be made in the maximum number of Shares subject to the Plan to give effect to any stock dividends, stock splits, stock combinations, recapitalizations and other similar changes in the capital structure of the Company. Appropriate adjustment shall be made in the number, kind, and price of Shares covered by any outstanding Option hereunder to give effect to any stock dividends, stock splits, stock combinations, recapitalizations and other similar changes in the capital structure of the Company after the date the Option is granted. 13. Merger; Sale of Assets; Dissolution. In the event of a change of the Company's Non-Voting Common Stock resulting from a merger or similar reorganization as to which the Company is the surviving corporation, the number and kind of shares which thereafter may be optioned and sold under the Plan and the number and kind of shares then subject to options granted hereunder and the price per share thereof shall be appropriately adjusted in such manner as the Board may deem equitable to prevent substantial dilution or enlargement of the rights available or granted hereunder. If the Board, in its discretion, determines that the Company will undergo a merger or similar reorganization which it will not survive or a sale of all or substantially all it assets, the Board may accelerate, in whole or in part, the vesting and/or exercisability of any outstanding Option granted under this Plan. Except as otherwise determined by the Board, a merger or a similar reorganization which the Company does not survive, or a sale of all or substantially all of the assets of the Company, shall cause every Option outstanding hereunder to terminate, to the extent not then exercised, unless any surviving entity agrees to assume the obligations thereof. 14. Termination or Amendment of Plan. The Board may at any time terminate the Plan or make such changes in or additions to the Plan as it deems advisable without further action on the part of the shareholders of the Company, provided: (a) that no such termination or amendment shall adversely affect or impair any then outstanding Option without the consent of the Optionee holding that Option; (b) no such amendment shall be made to Section 8 more frequently than once in any six-month period, unless an amendment is required in order to comport with the requirements of the Code; and (c) that any such amendment which: (i) increases the maximum number of Shares subject to this Plan, 45 EXHIBIT 10.9 (CONTINUED) (ii) changes the class of persons eligible to participate in this Plan, or (iii) materially increases the benefits accruing to participants under this Plan shall be subject to approval by the shareholders of the Company within one year from the effective date of such amendment and shall be null and void if such approval is not obtained. 46 EX-10.10 6 1986 EMPLOYEE STOCK PURCHASE PLAN EXHIBIT 10.10 EATON VANCE CORP. 1986 EMPLOYEE STOCK PURCHASE PLAN RESTATEMENT NO. 5 1. Purpose. The purpose of this 1986 Employee Stock Purchase Plan (the "Plan") is to provide employees of Eaton Vance Corp. (the "Company"), and its subsidiaries, who wish to become shareholders of the Company an opportunity to purchase Non-Voting Common Stock, par value $.0625 per share, of the Company (the "Shares"). The Plan is intended to qualify as an "employee stock purchase plan" within the meaning of Section 423 of the Internal Revenue Code of 1986, as it may be amended (the "Code"). In addition, the Plan provides certain employees who are not eligible for favorable tax treatment under Section 423 with the right to purchase Shares on a nonqualified basis. 2. Administration of the Plan. The Board of Directors or any committee or person(s) to whom it delegates its authority (the "Administrator") shall administer, interpret and apply all provisions of the Plan. Nothing contained in this Section shall be deemed to authorize the Administrator to alter or administer the provisions of the Plan in a manner inconsistent with the terms of the Plan or the provisions of Section 423 of the Code. 3. Eligible Employees. Subject to the provisions of Sections 7, 8 and 9 below, any individual who has been a full-time employee (as defined below) of (a) the Company or (b) any of its subsidiaries (as defined in Section 424(f) of the Code) the employees of which are designated by the Administrator as eligible to participate in the Plan, for a period of twelve consecutive (12) months prior to an Offering Date (as defined in Section 4 below) is eligible to participate in the offering (as defined in Section 4 below) commencing on such Offering Date. A full-time employee shall mean any employee other than an employee whose customary employment is: (a) 20 hours or less per week, or (b) not more than five months per calendar year. 47 EXHIBIT 10.10 (CONTINUED) 4. Offering Dates and Offering Grants. From time to time, the Company, by action of the Administrator, will grant rights to purchase Shares to employees eligible to participate in the Plan pursuant to one or more offerings (each of which is an "Offering") on a date or series of dates (each of which is an "Offering Date") designated for this purpose by the Administrator. As of each Offering Date, the Administrator will advise each eligible employee of the maximum number of shares that the employee may purchase under the Offering (the "Offering Grant"), which shall be calculated in accordance with the requirements of Section 423 of the Code. 5. Prices. The price per share for each Offering Grant shall be the lesser of: (a) ninety percent (90%) of the fair market value of a Share on the Offering Date on which such right was granted; or (b) ninety percent (90%) of the fair market value of a Share on the date such right is exercised; provided, that the Administrator, in its discretion, may substitute a percentage in either subparagraph (a) or (b) of this Section 5 different from ninety percent (90%), but in no event shall either such percentage be less than eighty-five percent (85%). 6. Exercise of Rights and Method of Payment. (a) Rights granted under the Plan will be exercisable periodically on specified dates as determined by the Administrator. (b) The method of payment for Shares purchased upon exercise of rights granted hereunder shall be through regular payroll deductions or by lump sum cash payment, or both, as determined by the Administrator; provided, however, that payment through regular payroll deductions may in no event commence before the date on which a prospectus with respect to the Offering of the Shares covered by the Plan is provided to each participating employee. No interest shall be paid upon payroll deductions unless specifically provided for by the Administrator. (c) Any payments received by the Company from a participating employee and not utilized for the purchase of Shares upon exercise of a right granted hereunder shall be, at the employee's discretion, either promptly returned to such employee by the Company after termination of the offering to which the payment related, or rolled over and credited to the employee's account and used to purchase shares in the next Offering Period (as defined below). 7. Term of Rights. The total period from an Offering Date to the last date on which rights granted on that Offering Date are exercisable (the "Offering Period") shall in no event be longer than twenty-seven (27) months. The Administrator when it authorizes an Offering may designate one or more exercise periods during the Offering Period; rights granted on an Offering Date shall be exercisable on the last day of each exercise period (each of which is an "Exercise Date") in such proportion as the Administrator determines. 48 EXHIBIT 10.10 (CONTINUED) 8. Shares Subject to the Plan. No more than four hundred twelve thousand (412,000) Shares may be sold pursuant to rights granted under the Plan. Appropriate adjustments in the above figure, in the number of Shares covered by outstanding rights granted hereunder, in the exercise price of the rights and in the maximum number of Shares which an employee may purchase (pursuant to Section 9 below) shall be made to give effect to any mergers, consolidations, or other similar reorganizations as to which the Company is the surviving entity, and any recapitalizations, stock splits, stock dividends or other relevant changes in the capitalization of the Company occurring after the effective date of the Plan, provided that no fractional Shares shall be subject to a right and each right shall be adjusted downward to the nearest full Share. Any agreement providing for a merger, consolidation or other similar reorganization which the Company does not survive shall provide for an adjustment for any then existing rights of participating employees under the Plan. Either authorized and unissued Shares or issued Shares heretofore or hereafter reacquired by the Company may be made subject to rights under the Plan. If for any reason any right under the Plan terminates in whole or in part, Shares subject to such terminated right may again be subjected to a right under the Plan. 9. Nonqualified Feature. An employee who, immediately after a right to purchase Shares is granted hereunder, would own stock or rights to purchase stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company, or of any subsidiary, computed in accordance with Section 423(b)(3) of the Code ("5% owner"), will not be eligible to be granted a right intended to qualify under Section 423 of the Code. However, any employee who is a 5% Owner and who is otherwise eligible to receive a grant under the Plan shall be eligible to receive a grant hereunder that is in accordance with the terms of this Plan except that such right shall not be a right intended to qualify under Code Section 423 but rather shall be a nonqualified right that for federal income tax purposes is intended to be taxable to the grantee under Code Section 83. The Company reserves the right to withhold the issuance of shares pursuant to the exercise of any nonqualified right until the participating employee makes appropriate arrangements with the Company for such tax withholding as may be required of the Company under Federal, state or local law on account of such exercise. 10. Limitations on Grants. (a) No Offering Grant may permit an employee to accrue the right to purchase shares under all employee stock purchase plans of the Company and its subsidiaries at a rate which exceeds twenty-five thousand dollars ($25,000) (or such other maximum as may be prescribed from time to time by the Code) in the fair market value of such shares (determined at the time such right is granted) for each calendar year in which such right is outstanding at any time, as required by the provisions of Section 423(b)(8) of the Code. (b) No Offering Grant, when aggregated with rights granted under any other Offering still exercisable by the participating employee, may permit any participating employee to apply more than fifteen percent (15%) of the employee's annual rate of compensation on the date the employee elects to participate in the Offering to the purchase of Shares. (c) Effective with respect to any Offering Period beginning on or after November 1, 1991, no participating employee shall receive Share certificates issued upon exercise of a right granted hereunder until the earliest of 49 EXHIBIT 10.10 (CONTINUED) (i) the first annual anniversary date of the Exercise Date on which the Shares evidenced by the certificate were purchased, (ii) the participating employee's death, or (iii) the date on which the participating employee presents proof satisfactory to the Company that he or she has either become disabled within the meaning of Section 22(e)(3) of the Code or needs such Shares on account of Hardship (as defined below). The Company or such agent as it designates shall hold such Share certificates in escrow pending their release to the participating employee (or, if the employee has died, to such beneficiary or beneficiaries as the employee has designated in writing during his or her lifetime to the Company, or if the employee has not made such a designation, to his or her surviving spouse, or if none to the employee's estate, without interest). Hardship shall mean the occurrence of one or more of the following events: (I) a death within the participating employee's immediate family, (II) extraordinary medical expenses for one or more members of the participating employee's immediate family which are not covered by insurance programs sponsored by the Company, (III) the education costs of one or more members of the participating employee's family, (IV) the purchase or renovation of a principal place of residence of the participating employee, or (V) such other financial emergency needs as may be approved by the Company on a uniform and nondiscriminatory basis. 11. Limit on Participation. Participation in an offering shall be limited to eligible employees who elect to participate in such offering in the manner, and within the time limitations, established by the Administrator when it authorizes the Offering. 12. Cancellation of Election to Participate. An employee who has elected to participate in an Offering may cancel such election as to all (but not part) of the unexercised rights granted under such offering by giving written notice of such cancellation to the Company before the expiration of any exercise period. Any amounts paid by the employee or withheld from the employee's compensation through payroll deductions for the purchase of Shares shall be paid to the employee, without interest, upon such cancellation. 13. Termination of Employment. Upon the termination of an employee's employment for any reason, including the death of the employee, before any Exercise Date on which any rights granted to the employee under the Plan are exercisable, all such rights shall immediately terminate and amounts paid by the employee or withheld from the employee's compensation through payroll deductions for the purchase of Shares shall be paid to the employee or, if the employee has died, to such beneficiary or beneficiaries as the employee has designated in writing during his or her lifetime to the Company, or if the employee has not made such a designation, to his or her surviving spouse, or if none to the employee's estate, without interest. 50 EXHIBIT 10.10 (CONTINUED) 14. Employees' Rights as Shareholders. No participating employee shall have any rights as a shareholder in the Shares covered by a right granted hereunder until such right has been exercised, full payment has been made for the corresponding Shares and the Share certificate is actually issued. 15. Rights Not Transferable. Rights under the Plan are not assignable or transferable by a participating employee and are exercisable only by the employee. 16. Amendments to or Discontinuation of the Plan. The Board of Directors of the Company shall have the right to amend, modify or terminate the Plan at any time without notice; provided, however, that the then existing rights of all participating employees shall not be adversely affected thereby, and provided further that, subject to the provisions of Section 8 above, no such amendment to the Plan shall, without the approval of the shareholders of the Company, increase the total number of Shares which may be offered under the Plan, change the class of persons eligible to participate in the Plan, or materially increase the benefits accruing to participants under the Plan. 17. Effective Date and Approvals. The Plan originally became effective on October 17, 1986, the date on which the Plan was adopted by the Board of Directors. The amendments made by this Restatement No. 5 shall become effective on January 6, 1995 (the date said amendments were adopted by the Board of Directors). The Company's obligation to offer, sell and deliver its Shares under the Plan is subject to the approval of any governmental authority required in connection with the authorized issuance or sale of such Shares and is further subject to the Company receiving the opinion of its counsel that all applicable securities laws have been compiled with. 18. Term of Plan. No rights shall be granted under the Plan after November 1, 1996. 51 EX-10.11 7 1995 EXECUTIVE LOAN PROGRAM EXHIBIT 10.11 EATON VANCE CORP. 1995 EXECUTIVE LOAN PROGRAM (as revised October 12, 1995) 1. Purpose. The purpose of the Eaton Vance Corp. 1995 Executive Loan Program (the "Program") is to benefit Eaton Vance Corp. and its present or future subsidiaries (together, or separately, the "Company," as the context may require) by enhancing the Company's ability to attract and retain those directors, officers and other key employees of the Company who are in a position to make substantial contributions to the ongoing success of the Company. The Program is intended to complement the incentives now offered by the Company to its executives which allow them to acquire shares of Eaton Vance Corp. Non-Voting Common Stock ("Eaton Vance Stock"). To accomplish this purpose, the Program provides loans to finance exercises of incentive stock options and non-qualified stock options granted under various stock option plans maintained by the Company, including those granted up to and through 1993, all as the Compensation Committee of the Board of Directors of Eaton Vance Corp. (the "Committee") determines. 2. Participation. Participation in the Program shall be limited to those directors, officers and key employees of the Company who are determined by the Committee as being eligible to so participate (the "Participants"). 3. Administration. The Committee shall administer the Program and have exclusive power to determine (a) which directors, officers and key employees shall become Participants, (b) the time or times at which such offer shall be made, and (c) the amount to be loaned to any Participant. The interpretation and instruction by the Committee of any provision of the Program or of any agreement or other matter related to the Program shall be final unless otherwise determined by the Committee or the Board of Directors. The Committee may delegate any of its powers and responsibilities under the Program to the Treasurer of Eaton Vance Corp. 4. Amount Available for Loans. The aggregate amount of loans under the Program and under the Company's 1984 Executive Loan Program which may be outstanding at any one time shall not exceed $10,000,000. All loans under the Program must be made on or before October 31, 2005. 52 EXHIBIT 10.11 (CONTINUED) 5. Terms of Notes. Each loan made under the Program shall be evidenced by a promissory note executed and delivered by the Participant to Eaton Vance Management (the "Note"). Each Note shall be subject to the following terms and conditions: (a) The participant shall be personally liable on the Note. (b) The maximum term to maturity of the Note shall be seven years; provided, however, that the Note shall become immediately due and payable as of the date a Participant ceases to be employed by the Company for any reason other than age, disability or death. (c) Each Note shall provide for the payment of interest at such annual rate as may be set by the Committee, which rate shall not be less than that necessary to avoid the loan being characterized as either (i) carrying "unstated interest" within the meaning of ss.483 of the Internal Revenue Code of 1986, as amended (the "Code") in the case of loans the proceeds of which are used to acquire shares of Eaton Vance Stock from the Company or (ii) a "below-market loan" within the meaning of ss.7872 of the Code in all other cases. (d) The Committee, in its discretion, may require that amounts payable with respect to the Note be secured by collateral of such nature and of such value as the Committee determines. Where the purpose of the loan is to finance the purchase of Eaton Vance Stock, and where the Note is secured, all or in part, by "margin securities" as defined in Regulation G promulgated by the Board of Governors of the Federal Reserve System, the Note shall contain such further terms and conditions as are required by said Regulation G. 6. Effective Date. The effective date of the revised Program is October 12, 1995, the date on which it was approved by the Board. 53 EX-11.1 8 COMPUTATION OF AVERAGE NUMBER OF SHARES EXHIBIT 11.1 Computation of average number of shares outstanding in accordance with Securities and Exchange Commission Act of 1934, Release No. 9083
October 31, 1995 October 31, 1994 October 31, 1993 PRIMARY Weighted average number of voting and non-voting common shares outstanding 9,211,433 9,196,888 8,446,448 Assumed exercise of certain non-voting stock options based on average market value and shares reserved for issuance under employee stock purchase plan 77,104 276,071 401,883 Weighted average number of shares used in primary per share computations 9,288,537 9,472,959 8,848,331 FULLY DILUTED Weighted average number of voting and non-voting common shares outstanding 9,211,433 9,196,888 8,446,448 Assumed exercise of certain non-voting stock options based on higher of average or closing market value and shares reserved for issuance under employee stock purchase plan 322,774 283,680 429,169 Weighted average number of shares used in fully diluted per share computations 9,534,207 9,480,568 8,875,617
EX-13 9 1995 ANNUAL REPORT EXHIBIT 13.1 1995 Annual Report Eaton Vance Corp. - -------------------------------------------------------------------------------- [PICTURE] - -------------------------------------------------------------------------------- EATON VANCE CORP. SUBSIDIARIES - -------------------------------------------------------------------------------- Eaton Vance Management and its subsidiary, Boston Management and Research, act as investment advisers to the Company's mutual funds as well as to individual and institutional accounts. Eaton Vance Distributors, Inc. markets the Company's mutual funds. Investors Bank & Trust Company provides fiduciary and related banking services to institutions and individuals. Northeast Properties, Inc. invests in income-producing real estate. Cover: Eaton Vance Corp's. headquarters in Boston, Massachusetts. - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- 1994 1995 ================================================================================ (in billions of dollars) Assets Under Management........................... $ 15.0 $ 16.0 Sales of Mutual Funds............................. 3.4 1.6 (in millions of dollars) Revenue........................................... $171.2 $167.9 Net Income........................................ 29.8 30.4 Shareholders' Equity.............................. 165.6 194.5 Per Common Share (in dollars) Net Income........................................ $ 3.14 $ 3.27 Shareholders' Equity.............................. 18.18 20.84 Dividends......................................... 0.60 0.65 ================================================================================ Earnings Per Share (The following table was represented by a graph in the printed book) Fiscal Earnings Year Per Share ---- --------- 1986 ................................ $ 0.81 1987 ................................ 1.35 1988 ................................ 1.37 1989 ................................ 0.99 1990 ................................ 1.03 1991 ................................ 1.74 1992 ................................ 2.49 1993 ................................ 3.09 1994 ................................ 3.14 1995 ................................ 3.27 Dividends Per Share (The following table was represented by a graph in the printed book) Fiscal Dividends Year Per Share ---- --------- 1986 ................................ 0.125 1987 ................................ 0.15 1988 ................................ 0.185 1989 ................................ 0.205 1990 ................................ 0.24 1991 ................................ 0.29 1992 ................................ 0.36 1993 ................................ 0.49 1994 ................................ 0.60 1995 ................................ 0.65 1 - -------------------------------------------------------------------------------- TO SHAREHOLDERS - -------------------------------------------------------------------------------- Eaton Vance Corp.'s fiscal year 1995 net income was a record $30.4 million. Earnings per share of $3.27 were four percent greater than 1994's $3.14 and nine percent greater than 1994's earnings of $3.00 excluding the effect of a change in accounting for income taxes. Dividends per share increased eight percent from $0.60 in fiscal year 1994 to $0.65 in fiscal year 1995. The Company's dividend has increased in each of the last fifteen years and has grown at a compound annual rate of 19 percent since 1980. Average shares outstanding in fiscal 1995 were 9.3 million, two percent lower than the 9.5 million outstanding in fiscal 1994. Assets under management of $16.0 billion on October 31, 1995 were seven percent greater than the $15.0 billion reported at the close of last year. Market appreciation and reinvested dividends more than offset net redemptions of mutual fund shares of $0.5 billion. Although fund sales of $1.6 billion were significantly lower than 1994 sales of $3.4 billion, they improved as the year progressed, with fourth quarter sales more than double those of the first quarter. Because of lower average assets under management in 1995, revenue declined two percent to $167.9 million from $171.2 million in 1994. Operating expenses declined two percent to $120.7 million, and operating income decreased by one percent to $47.2 million. Lower net interest expense and a lower effective tax rate combined to increase income from continuing operations by five percent to $27.0 million. 2 The distribution to Eaton Vance shareholders of Investors Financial Services Corp., the new parent company of Investors Bank & Trust Company, took place on November 10, 1995 after the close of the fiscal year. Net income from discontinued bank operations was $3.4 million in fiscal year 1995, an increase of 26 percent from the $2.7 million in 1994. The distribution will have the effect of concentrating Eaton Vance's activities in the investment management business. Eaton Vance's shareholders will hold a marketable investment in a rapidly growing service organization which, as an independent company, will be released from regulations that burdened it as a subsidiary of a mutual fund management company. Reduced sales of spread commission mutual fund shares in fiscal year 1995 resulted in a strong positive cash flow. Year-end cash and short-term investments equaled $79.1 million versus $24.7 million at the end of fiscal year 1994. A strong balance sheet and positive cash flow will allow Eaton Vance to finance new product development and, depending on market conditions, to grow by acquisition and to repurchase common shares. /s/ Landon T. Clay /s/ M. Dozier Gardner Landon T. Clay, M. Dozier Gardner, Chairman President January 16, 1996 3 - -------------------------------------------------------------------------------- EATON VANCE CORP. - -------------------------------------------------------------------------------- Quarterly High and Low Stock Prices (The following table was represented by a graph in the printed book) Fiscal Year High Low ----------- ---- --- 1986 1/31/86 ............... 12.875 9.625 4/30/86 ............... 15.063 10.500 7/31/86 ............... 11.000 8.000 10/31/86 ............... 10.875 8.250 1987 1/30/87 ............... 15.250 9.313 4/30/87 ............... 16.250 12.000 7/31/87 ............... 13.875 10.625 10/30/87 ............... 13.500 6.500 1988 1/29/88 ............... 9.500 6.500 4/29/88 ............... 11.750 8.875 7/29/88 ............... 11.000 9.625 10/31/88 ............... 10.375 9.375 1989 1/31/89 ............... 11.500 9.875 4/28/89 ............... 13.875 11.500 7/31/89 ............... 12.130 11.000 10/31/89 ............... 14.000 11.000 1990 1/31/90 ............... 14.125 13.250 4/30/90 ............... 14.000 11.000 7/31/90 ............... 11.500 10.625 10/31/90 ............... 11.000 7.625 1991 1/31/91 ............... 9.000 7.875 4/30/91 ............... 12.250 10.750 7/31/91 ............... 12.625 10.500 10/31/91 ............... 14.500 12.250 1992 1/31/92 ............... 18.750 13.750 4/30/92 ............... 19.125 16.000 7/31/92 ............... 17.625 15.625 10/30/92 ............... 23.750 16.500 1993 1/29/93 ............... 38.500 20.500 4/30/93 ............... 37.500 29.000 7/30/93 ............... 36.250 30.750 10/29/93 ............... 41.250 34.250 1994 1/31/94 ............... 38.000 30.500 4/29/94 ............... 37.500 29.250 7/29/94 ............... 30.750 26.500 10/31/94 ............... 34.250 25.500 1995 1/31/95 ............... 32.250 24.500 4/28/95 ............... 32.750 28.250 7/31/95 ............... 34.125 30.000 10/31/95 ............... 39.250 31.750 Price and Dividend Information The Company's non-voting common stock is traded on the over-the-counter market, where it is reported on the NASDAQ National Market System under the symbol EAVN. The stock is also traded on the Boston Stock Exchange. The range of price and the dividend declared on these shares during each quarter of the last two years were as follows: High Low Dividend Quarter Ended Price Price Per Share ================================================================================ January 31, 1994 $38 $30 1/2 $0.14 April 30, 1994 37 1/2 29 1/4 0.15 July 31, 1994 30 3/4 26 1/2 0.15 October 31, 1994 34 1/4 25 1/2 0.16 January 31, 1995 $32 1/4 $24 1/2 $0.16 April 30, 1995 32 3/4 28 1/4 0.16 July 31, 1995 34 1/8 30 0.16 October 31, 1995 39 1/4 31 3/4 0.17 4 - -------------------------------------------------------------------------------- INVESTMENT MANAGEMENT - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1995 HIGHLIGHTS - -------------------------------------------------------------------------------- o Assets under management rose by 7% to $16.0 billion, primarily due to rising bond and stock markets. o Mutual fund assets increased 7% to $14.2 billion. o Mutual fund sales of $1.6 billion were significantly lower than 1994 sales of $3.4 billion but improved as the year progressed. o Eaton Vance Prime Rate Reserves, a continuously offered closed-end bank loan fund, was converted to Hub and Spoke(R) structure, and several new spokes were offered: a level-load version for U.S. investors and both spread and level-load versions for offshore investors. o New funds, Eaton Vance High Yield Municipals and Eaton Vance Information Age, were offered in the fourth quarter. o Ownership in Lloyd George Management was increased to 24%. o Investment counsel assets increased 12% to $1.8 billion. Assets Under Management (in billions) (The following table was represented by a graph in the printed book) Fiscal Assets Year End (in billions) -------- ------------- 1986 ................................ $ 5.4 1987 ................................ 5.4 1988 ................................ 4.9 1989 ................................ 7.1 1990 ................................ 7.3 1991 ................................ 9.4 1992 ................................ 11.3 1993 ................................ 15.4 1994 ................................ 15.0 1995 ................................ 16.0 5 - -------------------------------------------------------------------------------- INVESTMENT MANAGEMENT - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FUND ASSETS INCREASED 7% TO $14.2 BILLION - -------------------------------------------------------------------------------- Sales of Eaton Vance funds, excluding money market funds and reinvested dividends, were $1.6 billion, significantly lower than last year's $3.4 billion. The decline in sales was the result of a reduction in investor enthusiasm for tax-free bonds which occurred because of uncertainties regarding various flat tax proposals under discussion in Washington and because of the unsettling effect of a declining bond market throughout most of the prior year. Also, a strong equity market during 1995 captured investor attention and diminished interest in fixed-income funds. Aided by improving market conditions and the benefit of new fund introductions, fund sales rose steadily throughout the year, and sales in the fourth quarter were more than double those of the first quarter. Breadth of distribution favorably affected last year's sales. The Independent Financial Institutions sales force, which was created in 1989 to supplement distribution through national broker/dealers, produced more than 50% of the Company's fund sales last fiscal year. Stock and bond market appreciation and reinvested dividends of $0.3 billion more than offset $0.5 billion of net redemptions and caused fund assets under management to increase by 7% to $14.2 billion from $13.3 billion in 1994. - -------------------------------------------------------------------------------- PRIME RATE RESERVES SALES ACCELERATED - -------------------------------------------------------------------------------- Prime Rate Reserves regained its sales momentum in 1995 and helped offset the slowdown in sales of tax-free bond funds. Prime Rate Reserves, created in 1989 with an innovative structure as a continuously offered closed-end fund investing in bank loans, was converted to Hub and Spoke format. In addition to the original spread-commission version, a domestic level-load spoke was offered, and 6 both level-load and spread-load spokes were added to Eaton Vance's Medallion family of offshore funds. All four spokes invest in a common hub, which grew in size to $1.4 billion by fiscal year end. - -------------------------------------------------------------------------------- TWO NEW FUNDS WERE INTRODUCED - -------------------------------------------------------------------------------- Eaton Vance High Yield Municipals Fund, introduced in the fourth quarter, invests primarily in below investment grade municipal obligations and thereby achieves a significant yield advantage. The fund builds on the research and management capabilities that Eaton Vance has developed as a manager of $9 billion in municipal bond funds nationwide. The fund complements Eaton Vance's largest fund, Eaton Vance National Municipals. The Eaton Vance Information Age Fund, also offered in the fourth quarter, provides investors a way to participate in the global information revolution. The Information Age Fund, which is sold both in the United States and offshore through various distribution channels under the Hub and Spoke structure, is advised jointly by Eaton Vance and Lloyd George Management. The fund invests in companies which are participants in the creation, processing and distribution of information worldwide and which are expected to grow at above average rates. Assets Under Management by Distribution Method (The following table was represented by a pie chart in the printed book) Spread Commission ................... 67% No Commission ....................... 2% Investment Counsel .................. 11% Exchange ............................ 4% Front End ........................... 12% Level Load .......................... 4% October 31, 1995 7 - -------------------------------------------------------------------------------- INVESTMENT MANAGEMENT - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- OWNERSHIP IN LLOYD GEORGE MANAGEMENT WAS INCREASED - -------------------------------------------------------------------------------- During the year Eaton Vance increased its ownership interest in Lloyd George Management from 6% to 24%. The two firms became affiliated in 1992 with the introduction of the Greater China Growth Fund, which is advised by Lloyd George Management from its headquarters in Hong Kong. Lloyd George Management's expertise in global markets facilitated the subsequent introduction of the Greater India and Emerging Market Funds. The investment management capabilities of Lloyd George Management, with offices in Hong Kong, London, and Bombay, coupled with the introduction of the Eaton Vance Medallion family of offshore funds, allows Eaton Vance both to manage and to distribute mutual funds globally. - -------------------------------------------------------------------------------- INVESTMENT COUNSEL ASSETS GREW - -------------------------------------------------------------------------------- At year end, investment counsel assets under management were $1.8 billion compared with $1.6 billion at the end of the prior period. Most of the gain in assets occurred in the equity holdings of accounts of individuals. The unfavorable trend of institutional account losses continued in fiscal 1995 but moderated substantially from recent years. 8 In general, equity returns were satisfactory, with results close to those of the broad market averages. Particularly gratifying gains were achieved in taxable fixed-income accounts using a distinctive approach utilizing corporate bonds with put options. Here, investment results exceeded clients' return and risk benchmarks for the seventh consecutive year. The focus of the Division's marketing efforts remained on this core bond discipline, where assets and accounts grew. In a promising new area, accounts were opened in a fund for domestic institutions investing in Pacific Basin markets. The fund, marketed and administered by Eaton Vance and managed by Lloyd George Management, enjoyed excellent results in its first year. 9 - -------------------------------------------------------------------------------- INVESTMENT MANAGEMENT - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- OUTLOOK - -------------------------------------------------------------------------------- As 1996 unfolds, it seems unlikely that the outstanding investment returns from both the U.S. stock and bond markets in 1995 will be repeated. However, the U.S. economy continues to perform exceptionally well in comparison with other developed economies, so mutual fund investors can have reasonable expectations of positive returns in 1996. Foreign markets, particularly emerging markets, have achieved valuation levels which make it likely that their relative performance will improve. If so, equity funds introduced by Eaton Vance in recent years--Greater China, Greater India, Emerging Markets and Information Age--should show accelerating growth. Eaton Vance completed the offering of its eighth exchange fund, the Broadmoor Exchange Fund, shortly after the close of fiscal 1995. The fund provides investors a means to diversify large holdings of low-tax-cost stock. Also, an offering of a new U.S. equity growth fund designed to maximize after-tax returns is planned for 1996. These two new funds will increase Eaton Vance's United States equity offerings. Having tax-free funds in more states than any other mutual fund sponsor, and national municipal funds with excellent records, Eaton Vance's position in the tax-exempt market is very strong. Assets Under Management by Asset Class (The following table was represented by a pie chart in the printed book) Non-Taxable Fixed ................... 56% Money Market ........................ 1% Bank Loans .......................... 9% Taxable Fixed ....................... 8% Equities ............................ 15% Counsel Assets ...................... 11% October 31, 1995 10 - -------------------------------------------------------------------------------- FIDUCIARY AND RELATED BANKING SERVICES - -------------------------------------------------------------------------------- The distribution to Eaton Vance shareholders of Investors Financial Services Corp. (IFSC), the new parent company of Investors Bank and Trust Company (IB&T), took place on November 10, 1995 after the close of the fiscal year. Eaton Vance shareholders received approximately one share of IFSC for every three shares of Eaton Vance owned on October 30, 1995. The distribution of Eaton Vance's ownership in IB&T provided shareholders publicly traded bank shares and removed from the bank Federal banking law restrictions which imposed constraints on its growth. Net income from discontinued bank operations was $3.4 million in fiscal year 1995, an increase of 26 percent from the $2.7 million reported in 1994. In 1996, Eaton Vance's earnings will not include a significant contribution from the bank. Eaton Vance's earnings over the last five years, excluding bank operations, grew at an annual rate of 24%. The distribution of IFSC was accompanied by an initial public offering of 2,300,000 shares of IFSC Common Stock at $16.50 per share. On November 30, 1995 IFSC closed on the Nasdaq National Market at $19.50. Using the approximate distribution ratio of one bank share for every three Eaton Vance shares, this represented $6.50 per share of Eaton Vance Common Stock. 11 - -------------------------------------------------------------------------------- REAL ESTATE INVESTMENT - -------------------------------------------------------------------------------- Northeast Properties, Inc., owns 670,000 square feet of income producing real estate in Massachusetts, New Hampshire and New York. Revenue from real estate accounted for two percent of total Company revenue in fiscal 1995. Currently there are no new real estate investments planned. In 1996 management will concentrate on increasing occupancy, now at 77 percent, net income and cash flow from owned properties. Rental Property by Property Type (The following table was represented by a pie chart in the printed book) Retail ................................... 262,000 Sq. Ft. Industrial................................ 224,000 Sq. Ft. Office ................................... 184,000 Sq. Ft. October 31, 1995 12 - -------------------------------------------------------------------------------- PRECIOUS METAL MINING - -------------------------------------------------------------------------------- Eaton Vance participates in the development of gold mining properties as a general and as a limited partner in two gold mining partnerships, VenturesTrident, L.P. and VenturesTrident II, L.P. Eaton Vance has a 28 percent interest in VenturesTrident, L.P. and a 19 percent interest in VenturesTrident II, L.P. VenturesTrident, L.P. completed the tenth year of its life in December 1994 and was extended for one year to allow for the orderly liquidation of its holdings. By the end of calendar year 1995 substantially all of the partnership's investments had been distributed to its partners. VenturesTrident, II, L.P. completed its eighth year in December 1995. Distributions to date have been $48.0 million, or 61 percent of contributed capital. The revenue and earnings contributions of these gold mining partnerships to the Company were not significant in fiscal year 1995 and are not expected to be significant in 1996. 13 - -------------------------------------------------------------------------------- EATON VANCE: AN INFORMATION PROCESSOR - -------------------------------------------------------------------------------- Late in fiscal 1995, Eaton Vance introduced the Information Age Fund to invest in companies creating, processing and disseminating information in a worldwide marketplace. Presented below are several examples of how central and pervasive the management and distribution of information is to the creation, marketing and investment management of Eaton Vance's funds. (PICTURE) In the day-to-day management of Eaton Vance's mutual funds, the Company's analysts and portfolio managers screen more than 50,000 worldwide investment alternatives. The process involves analyzing electronically transmitted data, on-site visits to companies and sifting through a vast array of both externally generated and internal proprietary research information. (PICTURE) Broker/dealer and shareholder support groups respond to over 1,000 telephone inquiries per day. Callers are connected to an Eaton Vance Service Representative within 20 seconds or less. In addition, the 24-hour Eaton Vance Automated Voice Response Unit provides both brokers and shareholders access to account balances, transaction history, prices and yields 365 days each year. (PICTURE) The Fund Treasury Department monitors daily price changes for over 5,500 different securities held by Eaton Vance funds. 14 (PICTURE) In 1995 Corporate Communications helped design, produce and distribute copies of several hundred separate pieces of sales information. More than 300 different shareholder reports were prepared for over 650,000 shareholders. Every piece is written and designed on the group's desk-top publishing system. (PICTURE) Compliance with Federal and state securities laws requires the annual preparation and dissemination of registration statement amendments on behalf of over 200 funds. Starting in 1996, the editing of all documents will be done by accessing proofs from computer storage and changes will be electronically transmitted to the printer. (PICTURE) The Eaton Vance HYPO System, run by the Company's Statistical Department, provides brokers and financial planners with the total return performance of the Company's funds. The System uses historical dividends, capital gains and net asset values in computing total return. In addition, the Statistical Department monitors the relative investment performance of over 5,000 other mutual funds. 15 - -------------------------------------------------------------------------------- SUMMARY FINANCIAL AND STATISTICAL DATA - --------------------------------------------------------------------------------
1995 1994 1993 1992 1991 - ------------------------------------------------------------------------------------------------------------------------------------ (in thousands, except per share data) INCOME STATEMENT DATA Revenue: Investment adviser and administration fees $ 85,393 $ 85,769 $ 75,193 $ 68,493 $ 60,899 Distribution income 77,978 80,069 71,651 47,059 26,529 Income from real estate activities 3,357 4,224 3,758 4,056 4,050 Other income 1,194 1,154 1,674 1,103 1,084 - ------------------------------------------------------------------------------------------------------------------------------------ Total revenue 167,922 171,216 152,276 120,711 92,562 - ------------------------------------------------------------------------------------------------------------------------------------ Expenses: Compensation of officers and employees 38,947 39,265 39,668 35,053 28,550 Amortization of deferred sales commissions 50,186 52,794 40,892 27,965 22,516 Other expenses 31,605 31,291 27,576 22,690 18,335 - ------------------------------------------------------------------------------------------------------------------------------------ Total expenses 120,738 123,350 108,136 85,708 69,401 - ------------------------------------------------------------------------------------------------------------------------------------ Operating income 47,184 47,866 44,140 35,003 23,161 - ------------------------------------------------------------------------------------------------------------------------------------ Other Income (Expense): Interest income 2,641 963 856 800 877 Equity in net income (loss) of affiliates (1,382) (289) 3,894 (160) 600 Interest expense (4,702) (5,337) (4,914) (4,893) (4,748) - ------------------------------------------------------------------------------------------------------------------------------------ Income from continuing operations before income taxes and cumulative effect of change in accounting for income taxes 43,741 43,203 43,976 30,750 19,890 Income taxes 16,773 17,393 18,459 12,663 7,782 - ------------------------------------------------------------------------------------------------------------------------------------ Income from continuing operations before cumulative effect of change in accounting for income taxes 26,968 25,810 25,517 18,087 12,108 Income from discontinued operations, net of income taxes 3,408 2,676 1,824 1,220 610 - ------------------------------------------------------------------------------------------------------------------------------------ Income before cumulative effect of change in accounting for income taxes 30,376 28,486 27,341 19,307 12,718 Cumulative effect of change in accounting for income taxes -- 1,300 -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Net income $ 30,376 $ 29,786 $ 27,341 $ 19,307 $ 12,718 ==================================================================================================================================== Earnings per share from continuing operations before cumulative effect of change in accounting for income taxes $2.90 $2.72 $2.88 $2.33 $1.66 Earnings per share from discontinued operations, net of income taxes 0.37 0.28 0.21 0.16 0.08 Cumulative effect of change in accounting for income taxes per share -- 0.14 -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Earnings per share $3.27 $3.14 $3.09 $2.49 $1.74 ==================================================================================================================================== Dividends declared, per share $0.65 $0.60 $0.49 $0.36 $0.29 ==================================================================================================================================== Average common shares outstanding 9,289 9,473 8,848 7,752 7,290 ==================================================================================================================================== BALANCE SHEET DATA Total assets $357,586 $455,506 $425,547 $318,199 $271,990 Long-term debt $ 56,102 $ 60,311 $ 73,228 $ 78,358 $ 63,961 Shareholders' equity $194,520 $165,608 $145,300 $ 75,801 $ 57,881 Shareholders' equity per share $ 20.84 $ 18.18 $ 15.87 $ 10.09 $ 7.81
16 - -------------------------------------------------------------------------------- MANAGEMENT'S DISCUSSION AND ANALYSIS - -------------------------------------------------------------------------------- The Company's primary sources of revenue are investment adviser fees and distribution fees received from the Eaton Vance funds and separately managed accounts. Such fees are generally based on the net asset value of the investment portfolios managed by the Company and fluctuate with changes in the total value of the assets under management. The Company's major expenses, other than the amortization of deferred sales commissions, include employee compensation, occupancy costs, service fees and other marketing costs. Results of Operations Year Ended October 31, 1995 to Year Ended October 31, 1994 Assets under management of $16.0 billion on October 31, 1995 were 7 percent higher than the $15.0 billion reported a year earlier. Market appreciation and reinvested dividends contributed to the increase in the Company's assets under management. Mutual fund sales for the year ended October 31, 1995 of $1.6 billion were 53 percent below the $3.4 billion reported in fiscal 1994. Redemptions of $2.1 billion in 1995 were 17 percent above the $1.8 billion in 1994. Net sales (gross sales minus redemptions), however, improved in every quarter in 1995. On November 10, 1995 the Company completed the spin-off of Investors Financial Services Corp. (IFSC), the new parent company of Investors Bank & Trust Company (IB&T), in a tax-free distribution to Eaton Vance Corp. shareholders. Under the plan of distribution, the Company transferred net banking assets totaling approximately $14.0 million, including $10.1 million in cash and cash equivalents, to the newly formed bank holding company. The banking business has been treated as a discontinued operation in the accompanying consolidated statements of income and cash flows, and fiscal years 1994 and 1993 have been restated to reflect this accounting treatment. Total revenue from continuing operations decreased $3.3 million to $167.9 million in 1995. Investment adviser and distribution fees decreased by $2.4 million in 1995 to $163.4 million from $165.8 million a year earlier. The decrease in investment adviser and distribution fees can be attributed primarily to lower average assets under management in comparison with the same period a year ago and to redemptions in excess of new mutual fund sales early in the year. The impact of the decrease in mutual fund sales on distribution fees was partially offset by an increase in contingent deferred sales charges received on early redemptions. Total operating expenses decreased $2.6 million to $120.7 million in fiscal 1995. Compensation expense of $38.9 million was little changed from the prior year's expense of $39.3 million. Other expenses for fiscal 1995 include a one-time charge of $2.2 million relating to the accrual of a National Association of Securities Dealers (NASD) arbitration panel award in the first quarter of 1995. The Company is vigorously pursuing all legal steps to overturn the arbitration panel's decision. Other expenses for the comparable period a year ago included $1.4 million in development costs associated with two fund products that were not launched in 1994. A decrease in the average dollar value of assets in spread commission funds due to redemptions in excess of mutual fund sales in fiscal 1995 resulted in a decrease in the amortization of deferred sales commissions of $2.6 million. The Company's two gold mining partnerships contributed losses of $1.4 million and $0.3 million during 1995 and 1994, respectively. These losses resulted primarily from fluctuations in the portfolio valuations of the two partnerships. After accounting for management fees, operating expenses and income taxes, the Company's gold mining and energy operations had no impact on total fiscal year 1995 or 1994 earnings. The realization for tax purposes of gold mining losses in fiscal 1995 resulted in a decrease in the Company's effective tax rate on income from continuing operations from 40 percent in 1994 to 38 percent in 1995. 17 - -------------------------------------------------------------------------------- MANAGEMENT'S DISCUSSION AND ANALYSIS - -------------------------------------------------------------------------------- Income from discontinued banking operations, net of taxes, increased by 26 percent from $2.7 million, or $0.28 per share, for the year ended October 31, 1994, to $3.4 million, or $0.37 per share, for the year ended October 31, 1995. Assets custodied and administered by IB&T totaled $91.1 billion at October 31, 1995, an increase of $18.7 billion over October 31, 1994. Net income from continuing operations of the Company amounted to $27.0 million for the year ended October 31, 1995, compared to $27.1 million for the year ended October 31, 1994. Earnings per share from continuing operations were $2.90 and $2.86 for 1995 and 1994, respectively. Net income and earnings per share from continuing operations for 1994 included a gain of $1.3 million, or $0.14 per share, resulting from the implementation of Statement of Financial Accounting Standards (SFAS) No. 109. Total assets, excluding discontinued banking operations, increased 5 percent to $343.6 million at October 31, 1995 from $327.9 million at October 31, 1994. Cash and cash equivalents and short-term investments increased by $54.4 million to $79.1 million at October 31, 1995. Investments in affiliates increased by $6.1 million, primarily due to an increase in the Company's investment in Lloyd George Management (BVI) Limited, an independent investment management company based in Hong Kong. Deferred sales commissions decreased $46.8 million to $209.5 million at October 31, 1995 primarily due to amortization and redemptions in excess of new sales in spread commission funds in fiscal 1995. Year Ended October 31, 1994 to Year Ended October 31, 1993 Total revenue from continuing operations rose $18.9 million to $171.2 million from $152.3 million in 1993. This gain was due primarily to increases in investment adviser fees and distribution income which increased $10.6 million and $8.4 million, respectively, in 1994. Both investment adviser fees and distribution income are based on the average net asset values of portfolios managed by the Company, which rose to $15.5 billion for the year ended October 31, 1994, from $13.1 billion for the year ended October 31, 1993. Fund assets under management were increased by net sales of mutual funds of $2.0 billion in 1994 and reduced, primarily, by depreciation in the market value of managed assets of $1.8 billion. Separately managed accounts, in contrast, decreased to $1.6 billion in 1994 from $2.2 billion in 1993. Most of the decrease was the result of the withdrawal of one large public retirement fund client. Gross sales of mutual funds of $3.4 billion for 1994 were down 21 percent from 1993 when the Company achieved record sales of $4.3 billion. Redemptions in 1994 rose 38 percent to $1.8 billion from 1993's redemptions of $1.3 billion. The two major components of total expenses are compensation of officers and employees and amortization of deferred sales commissions. In 1994, total expenses increased $15.2 million to $123.4 million. Compensation expense was little changed from 1993. Larger average dollar value of assets in spread commission funds increased the amortization of deferred sales commissions by $11.9 million. Other expenses rose a total of $3.7 million to $31.3 million in 1994 from $27.6 million in 1993. This increase included $1.4 million in development costs associated with two fund products that were not launched in 1994. Additionally, higher marketing and administrative costs were incurred to increase the distribution of the Company's funds. Portfolio valuations of gold mining investment partnerships contributed net partnership losses of $0.3 million in 1994 in comparison with net partnership gains of $3.9 million in 1993. 18 - -------------------------------------------------------------------------------- MANAGEMENT'S DISCUSSION AND ANALYSIS - -------------------------------------------------------------------------------- Income from discontinued banking operations, net of taxes, increased by 47 percent from $1.8 million, or $0.21 per share, for the year ended October 31, 1993, to $2.7 million, or $0.28 per share, for the year ended October 31, 1994. Net income from continuing operations of the Company amounted to $27.1 million for the year ended October 31, 1994 compared to $25.5 million for the year ended October 31, 1993. Earnings per share from continuing operations were $2.86 and $2.88 for the fiscal years ended October 31, 1994 and 1993, respectively. Net income and earnings per share from continuing operations for 1994 included a gain of $1.3 million, or $0.14 per share, associated with the implementation of Statement of Financial Accounting Standards (SFAS) No. 109. During 1994 the Company's total assets increased significantly. Deferred sales commissions increased to $256.3 million from $240.0 million in 1993 as a result of sales of shares of the Company's spread commission funds. Payment of sales commissions was funded primarily by cash flows from operating activities. The difference between the book and tax accounting treatment for these commissions caused deferred income taxes to increase by $13.7 million. The increase in deferred income taxes was partially offset by the cumulative effect of the change in accounting for income taxes of $1.3 million resulting from the Company's implementation of SFAS No. 109. Liquidity and Capital Resources Cash and cash equivalents, excluding discontinued banking operations, increased by $43.0 million to $67.7 million at October 31, 1995. In addition, the Company had short-term investments of $11.5 million at October 31, 1995. Cash provided by continuing operating activities in 1995 was $72.2 million, compared to $28.7 million in the previous year. The Company's primary sources of cash flows from continuing operating activities were net income from continuing operations of $27.0 million and capitalized sales charges received on early redemptions of spread commission funds of $36.2 million. The primary use of cash was for the payment of $39.8 million of sales commissions associated with the sale of spread commission mutual funds. Cash used for investing in continuing operations was $19.1 million in fiscal 1995. Major uses were the purchase of $11.0 million in short-term investments and an increase in the Company's investment in Lloyd George Management (BVI) Limited, an independent investment management company based in Hong Kong. The Company paid $4.8 million in cash and issued non-voting common stock valued at $2.7 million for the additional interest in Lloyd George Management in fiscal 1995. Significant financing activities during the fiscal year were the repayment of a maturing mortgage note of $6.2 million and the payment of dividends to the Company's shareholders of $5.9 million. On November 17, 1995 a subsidiary of the Company entered into an agreement to retire an existing mortgage with a remaining unpaid balance of $4.0 million at October 31, 1995. Based on the terms of the agreement, the Company expects to realize an extraordinary gain of $1.6 million (net of income taxes of $1.1 million) in fiscal 1996. On November 10, 1995 the Company completed the spin-off of its interest in IFSC in a tax-free distribution to the Company's shareholders. The spin-off resulted in a reduction in shareholders' equity of $14.0 million, which approximated the carrying value of IFSC at the time of the spin-off. At October 31, 1995 the Company had no borrowings under its $75.0 million bank credit facility. 19 - -------------------------------------------------------------------------------- CONSOLIDATED BALANCE SHEETS - -------------------------------------------------------------------------------- October 31, 1995 and 1994
Assets 1995 1994 ==================================================================================================================================== (all figures in thousands) Current Assets: Cash and equivalents $ 67,650 $ 24,681 Short-term investments 11,471 -- Receivable for investment company shares sold 1,156 1,073 Investment adviser fees and other receivables 3,342 2,632 Refundable income taxes 658 -- Net assets of discontinued operations 13,961 -- Other current assets 364 1,233 - ------------------------------------------------------------------------------------------------------------------------------------ Total current assets 98,602 29,619 - ------------------------------------------------------------------------------------------------------------------------------------ Investors Bank & Trust Company Assets: Cash and equivalents -- 9,344 Investment securities (market value $86,172) -- 88,278 Loans, less allowance for loan losses -- 13,570 Accrued interest and fees receivable -- 9,383 Equipment and leasehold improvements, net -- 3,251 Other assets -- 3,780 - ------------------------------------------------------------------------------------------------------------------------------------ Total bank assets -- 127,606 - ------------------------------------------------------------------------------------------------------------------------------------ Other Assets: Investments: Real estate 21,606 22,173 Investment in affiliates 10,113 3,984 Investment companies (market value at October 31, 1994, $5,702) 7,542 4,088 Other investments 2,338 3,208 Notes receivable and receivables from affiliates 3,458 3,139 Deferred sales commissions 209,542 256,326 Equipment and leasehold improvements, net 2,855 3,477 Goodwill (accumulated amortization $2,422 and $2,859, respectively) 1,530 1,886 - ------------------------------------------------------------------------------------------------------------------------------------ Total other assets 258,984 298,281 - ------------------------------------------------------------------------------------------------------------------------------------ Total assets $357,586 $455,506 ====================================================================================================================================
See notes to consolidated financial statements 20 - -------------------------------------------------------------------------------- CONSOLIDATED BALANCE SHEETS - -------------------------------------------------------------------------------- October 31, 1995 and 1994
Liabilities & Shareholders' Equity 1995 1994 ==================================================================================================================================== (in thousands, except share figures) Current Liabilities: Payable for investment company shares purchased $ 1,179 $ 1,096 Accrued compensation 9,341 8,817 Accounts payable and accrued expenses 7,482 4,539 Accrued income taxes 184 1,761 Dividend payable 1,590 1,461 Current portion of mortgage notes payable 4,189 6,449 Other current liabilities 762 688 - ------------------------------------------------------------------------------------------------------------------------------------ Total current liabilities 24,727 24,811 - ------------------------------------------------------------------------------------------------------------------------------------ Investors Bank & Trust Company Liabilities: Demand and time deposits -- 106,909 Other -- 5,214 - ------------------------------------------------------------------------------------------------------------------------------------ Total bank liabilities -- 112,123 - ------------------------------------------------------------------------------------------------------------------------------------ Other Liabilities: 6.22% Senior Note 50,000 50,000 Mortgage notes payable 6,102 10,311 Minority interest in consolidated subsidiary -- 3,113 - ------------------------------------------------------------------------------------------------------------------------------------ Total other liabilities 56,102 63,424 - ------------------------------------------------------------------------------------------------------------------------------------ Deferred income taxes 82,237 89,540 - ------------------------------------------------------------------------------------------------------------------------------------ Commitments and contingencies -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Shareholders' Equity: Common stock, par value $.0625 per share: Authorized, 80,000 Issued, 19,360 shares 1 1 Non-voting common stock, par value $.0625 per share: Authorized, 11,920,000 Issued, 9,315,712 and 9,090,394 shares, respectively 582 568 Additional paid-in capital 53,753 49,595 Unrealized gain on investments 1,186 -- Notes receivable from stock option exercises (3,313) (2,511) Retained earnings 142,311 117,955 - ------------------------------------------------------------------------------------------------------------------------------------ Total shareholders' equity 194,520 165,608 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities and shareholders' equity $357,586 $455,506 ====================================================================================================================================
See notes to consolidated financial statements 21 - -------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF INCOME - --------------------------------------------------------------------------------
Years Ended October 31, 1995, 1994 and 1993 1995 1994 1993 ==================================================================================================================================== Revenue: (in thousands, except per share figures) Investment adviser and administration fees $ 85,393 $ 85,769 $ 75,193 Distribution income 77,978 80,069 71,651 Income from real estate activities 3,357 4,224 3,758 Other income 1,194 1,154 1,674 - ------------------------------------------------------------------------------------------------------------------------------------ Total revenue 167,922 171,216 152,276 - ------------------------------------------------------------------------------------------------------------------------------------ Expenses: Compensation of officers and employees 38,947 39,265 39,668 Amortization of deferred sales commissions 50,186 52,794 40,892 Other expenses 31,605 31,291 27,576 - ------------------------------------------------------------------------------------------------------------------------------------ Total expenses 120,738 123,350 108,136 - ------------------------------------------------------------------------------------------------------------------------------------ Operating income 47,184 47,866 44,140 Other Income (Expense): Interest income 2,641 963 856 Equity in net income (loss) of affiliates (1,382) (289) 3,894 Interest expense (4,702) (5,337) (4,914) - ------------------------------------------------------------------------------------------------------------------------------------ Income from continuing operations before income taxes and cumulative effect of change in accounting for income taxes 43,741 43,203 43,976 Income taxes 16,773 17,393 18,459 - ------------------------------------------------------------------------------------------------------------------------------------ Income from continuing operations before cumulative effect of change in accounting for income taxes 26,968 25,810 25,517 Income from discontinued operations, net of income taxes 3,408 2,676 1,824 - ------------------------------------------------------------------------------------------------------------------------------------ Income before cumulative effect of change in accounting for income taxes 30,376 28,486 27,341 Cumulative effect of change in accounting for income taxes -- 1,300 -- - ------------------------------------------------------------------------------------------------------------------------------------ Net income $ 30,376 $ 29,786 $ 27,341 ==================================================================================================================================== Earnings per share from continuing operations before cumulative effect of change in accounting for income taxes $2.90 $2.72 $2.88 Earnings per share from discontinued operations, net of income taxes 0.37 0.28 0.21 Cumulative effect of change in accounting for income taxes per share -- 0.14 -- - ------------------------------------------------------------------------------------------------------------------------------------ Earnings per share $3.27 $3.14 $3.09 ==================================================================================================================================== Dividends declared, per share $0.65 $0.60 $0.49 ==================================================================================================================================== Average common shares outstanding 9,289 9,473 8,848 ====================================================================================================================================
See notes to consolidated financial statements 22 - -------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS - -------------------------------------------------------------------------------- Years Ended October 31, 1995, 1994 and 1993
1995 1994 1993 ==================================================================================================================================== (all figures in thousands Cash and Equivalents (including IB&T), beginning of year $ 34,025 $ 28,655 $ 9,535 - ------------------------------------------------------------------------------------------------------------------------------------ Cash Flows from Operating Activities: Net income from continuing operations 26,968 27,110 25,517 Adjustments to reconcile net income to net cash provided by (used for) operating activities: Equity in net (income) loss of affiliates 1,382 289 (3,894) Deferred income taxes (8,440) 13,712 17,105 Cumulative effect of change in accounting for income taxes -- (1,300) -- Amortization of deferred sales commissions 50,186 52,794 40,892 Depreciation and other amortization 2,377 2,336 2,334 Payment of sales commissions (39,843) (93,663) (139,339) Capitalized sales charges received 36,218 24,838 17,681 Change in refundable income taxes (658) -- 4,030 Changes in other assets and liabilities 4,033 2,544 2,907 Cash provided by (used for) discontinued operations (8,574) (7,994) 17,022 - ------------------------------------------------------------------------------------------------------------------------------------ Net cash provided by (used for) operating activities 63,649 20,666 (15,745) - ------------------------------------------------------------------------------------------------------------------------------------ Cash Flows from Investing Activities: Distributions from (investment in) partnerships (88) (252) 856 Additions to real estate, equipment and leasehold improvements (1,172) (1,722) (1,748) Net increase in notes and receivables from affiliates (1,121) (465) (512) Net increase in investment companies and other investments (945) (371) (1,357) Investment in affiliate (4,812) -- -- Proceeds from sale of investment securities -- 2,901 -- Purchase of short-term investment (11,000) -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Net cash provided by (used for) investing activities (19,138) 91 (2,761) - ------------------------------------------------------------------------------------------------------------------------------------ Cash Flows from Financing Activities: Proceeds from 6.22% Senior Note -- 50,000 -- Proceeds from note payable to unaffiliated banks -- 70,950 73,800 Payments on notes payable (6,469) (113,573) (78,914) Redemption of subordinated debentures -- (14,169) -- Proceeds from issuance of non-voting common stock 3,351 3,169 47,532 Dividends paid (5,891) (5,342) (3,864) Repurchase of non-voting common stock (1,877) (6,422) (928) - ------------------------------------------------------------------------------------------------------------------------------------ Net cash provided by (used for) financing activities (10,886) (15,387) 37,626 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase in cash and equivalents 33,625 5,370 19,120 - ------------------------------------------------------------------------------------------------------------------------------------ Cash and Equivalents (including IB&T at October 31, 1994 and 1993), end of year $ 67,650 $ 34,025 $ 28,655 ====================================================================================================================================
See notes to consolidated financial statements 23 - -------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - -------------------------------------------------------------------------------- Years Ended October 31, 1995, 1994 and 1993
Non- Notes Voting Additional Unrealized Receivable Total Common Common Paid-in Gain on from Stock Retained Shareholders' Shares Stock Stock Capital Investments Option Exercises Earnings Equity ==================================================================================================================================== (all figures in thousands) Balance, October 31, 1992 7,514 $1 $468 $6,344 $ -- $(1,678) $70,666 $75,801 Add (Deduct): Net income -- -- -- -- -- -- 27,341 27,341 Dividends declared ($0.49 per share) -- -- -- -- -- -- (4,320) (4,320) Issuance of non-voting common stock - On public stock offering 1,380 -- 86 43,810 -- -- -- 43,896 On exercise of stock options 216 -- 14 2,183 -- (648) -- 1,549 For employee stock purchase plan 40 -- 3 666 -- -- -- 669 For employee incentive plan 34 -- 2 768 -- -- -- 770 Repurchase of non- voting common stock (30) -- (2) (926) -- -- -- (928) Collection of notes receivable -- -- -- -- -- 522 -- 522 - ------------------------------------------------------------------------------------------------------------------------------------ Balance, October 31, 1993 9,154 $1 $571 $52,845 $ -- $(1,804) $93,687 $145,300 Add (Deduct): Net income -- -- -- -- -- -- 29,786 29,786 Dividends declared ($0.60 per share) -- -- -- -- -- -- (5,518) (5,518) Issuance of non-voting common stock - On exercise of stock options 141 -- 9 1,742 -- (1,062) -- 689 For employee stock purchase plan 25 -- 2 731 -- -- -- 733 For employee incentive plan 24 -- 1 684 -- -- -- 685 Repurchase of non- voting common stock (234) -- (15) (6,407) -- -- -- (6,422) Collection of notes receivable -- -- -- -- -- 355 -- 355 - ------------------------------------------------------------------------------------------------------------------------------------ Balance, October 31, 1994 9,110 $1 $568 $49,595 $ -- $(2,511) $117,955 $165,608 ====================================================================================================================================
See notes to consolidated financial statements 24 - -------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - -------------------------------------------------------------------------------- Years Ended October 31, 1995, 1994 and 1993
Non- Notes Voting Additional Unrealized Receivable Total Common Common Paid-in Gain on from Stock Retained Shareholders' Shares Stock Stock Capital Investments Option Exercises Earnings Equity ==================================================================================================================================== (all figures in thousands) Balance, October 31, 1994 9,110 $1 $568 $49,595 $ -- $(2,511) $117,955 $165,608 Add (Deduct): Net income -- -- -- -- -- -- 30,376 30,376 Dividends declared ($0.65 per share) -- -- -- -- -- -- (6,020) (6,020) Issuance of non-voting common stock - On exercise of stock options 174 -- 11 2,371 -- (1,258) -- 1,124 For employee stock purchase plan 25 -- 1 674 -- -- -- 675 For employee incentive plan 11 -- 1 293 -- -- -- 294 For investment in affiliate 83 -- 5 2,693 -- -- -- 2,698 Repurchase of non- voting common stock (68) -- (4) (1,873) -- -- -- (1,877) Unrealized gain on investments -- -- -- -- 1,186 -- -- 1,186 Collection of notes receivable -- -- -- -- -- 456 -- 456 - ------------------------------------------------------------------------------------------------------------------------------------ Balance, October 31, 1995 9,335 $1 $582 $53,753 $1,186 $(3,313) $142,311 $194,520 ====================================================================================================================================
See notes to consolidated financial statements 25 - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. Summary of Significant Accounting Policies A. The Company and its subsidiaries operate predominantly in one industry, that being the business of investment management, including portfolio management of regulated investment companies and investment counseling clients. The Company is also engaged in real estate investment, precious metal mining and oil and gas exploration. The consolidated financial statements include the accounts of Eaton Vance Corp. (the "Company") and all of its majority owned subsidiaries. All material intercompany accounts and transactions have been eliminated. B. Cash equivalents consist principally of short-term, highly liquid investments and are recorded at cost, which is equivalent to market value. Cash equivalents of Investors Bank & Trust Company ("IB&T") consist of cash due from banks. C. Investments are accounted for as follows: The Company adopted Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity Securities," effective November 1, 1994. Accordingly, as discussed in Note 4 to the consolidated financial statements, investments in short-term investments, investment companies and certain other investments are classified as available-for-sale and are carried at their estimated fair value with unrealized gains and losses included as a separate component of shareholders' equity. The Company, as a non-managing general partner of certain investment company partnerships, is required to maintain a minimum investment in such partnerships. At October 31, 1995 a minimum investment of $3,227,000 was required under the terms of the partnership agreements. Investments in investment companies held in connection with the Company's activities as principal underwriter are recorded at market value. Investments in affiliates are accounted for by the equity method of accounting. This method requires the Company to record its share of the unrealized gains and losses in the underlying marketable securities of its two gold-mining limited partnerships' portfolios. Effective November 1, 1994 the Company adopted Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," which requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Therefore, real estate properties are carried at the lower of cost or fair value less cost to sell, with depreciation provided using the straight-line method over the estimated useful lives of the assets. There was no material effect on the consolidated financial statements as a result of this change in accounting principle. Other investments are carried at the lower of cost or management's estimate of net realizable value. IB&T investment securities, which consisted solely of debt securities, are stated at cost, adjusted for amortization of premiums and accretion of discounts. Maturities and sales of investment securities are accounted for on a specific identification basis. 26 - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. Summary of Significant Accounting Policies (continued) D. Equipment and leasehold improvements are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization are provided principally by the straight-line method over the estimated useful lives of the related assets, or over the terms of the related leases, if shorter. E. Goodwill represents the excess of the cost of the Company's investment in the net assets or stock of acquired companies over the fair value of the underlying net assets at dates of acquisition. Amortization is provided on a straight-line basis over the estimated useful lives of these assets, not exceeding forty years. F. In connection with the Company's activities as principal underwriter, the sales of shares of investment companies are accounted for on a settlement date basis with the related commission income and expenses recorded on a trade date basis. G. Sales commissions paid to brokers and dealers in connection with sales of shares of certain investment companies are charged to deferred sales commissions and amortized over various periods, none of which exceeds six years. Distribution plan payments received by the Company from investment companies are recorded in income as earned. Early withdrawal charges received by the Company from redeeming shareholders reduce unamortized deferred sales commissions first, with any remaining amount recorded in income. H. Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes, measured by applying currently enacted tax rates. Such taxes relate principally to the recording of sales commissions paid to brokers and dealers, which are deducted currently for tax purposes. I. Earnings per share are based upon the weighted average number of common, non-voting common and non-voting common equivalent shares outstanding. Earnings per common and common equivalent share assuming full dilution have not been presented because the dilutive effect is immaterial. J. Certain prior year amounts have been reclassified to conform to the current year presentation and to reflect the spinoff of IB&T. 27 - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 2. Investment in Affiliates In 1995, the Company increased its investment in Lloyd George Management (BVI) Limited (LGM), an independent investment management company based in Hong Kong, to 24 percent for a combination of cash and 83,381 shares of the Company's non-voting common stock. The value of the stock issued was approximately $2.7 million. In addition, the Company exchanged its 500,000 preferred shares of LGM for 20,250 common shares. The Company's Consolidated Statement of Cash Flows for 1995 excludes the effect of the stock issued and the exchange of preferred for common shares, as these are non-cash investing activities. LGMcurrently manages a series of emerging market mutual funds sponsored by the Company. The Company has an agreement with LGM which governs the manner in which the stock can be disposed. At October 31, 1995 the excess of the Company's investment over its equity in the underlying net assets of LGM was approximately $7.4 million, which is being amortized over a twenty-year period. The Company's investment in affiliates also includes a 79 percent general partnership interest in Fulcrum Management Partners, L.P. (F.M.P.) and an 82 percent general partnership interest in Fulcrum Management Partners II, L.P. (F.M.P.II), both Delaware limited partnerships, of which a principal officer of the Company is the other general partner. F.M.P. and F.M.P.II are 20 percent general partners of VenturesTrident, L.P. (V.T.) and VenturesTrident II, L.P. (V.T.II), respectively, both Delaware limited partnerships formed to invest in equity securities of public and private gold mining ventures. The Company also has a 12 percent limited partnership interest in V.T. and a 3 percent limited partnership interest in V.T.II. In January 1994, V.T.II distributed 1,750,000 shares of Pegasus Gold Corporation, with a value of $42 million, to its partners. The Company's share of this distribution was 159,000 shares with a value of $3.8 million. The Company's Consolidated Statement of Cash Flows for 1994 excludes the effect of this non-cash investing activity. Investment in affiliates includes an $8.5 million and $1.0 million investment in LGM at October 31, 1995 and 1994, respectively, and a $1.6 million and $3.1 million investment in the gold mining partnerships at October 31, 1995 and 1994, respectively. 3. Discontinued Operations On November 10, 1995 the Company completed the spinoff of its banking operations in a tax-free distribution to its shareholders of shares of a newly created holding company for IB&T named Investors Financial Services Corp. (IFSC). Under the plan of distribution, the Company transferred to IFSC approximately $14.0 million of net banking assets, including $10.1 million in cash. Each shareholder of the Company received 2.799 shares of Common Stock of IFSC and .538 shares of Class A Stock of IFSC for each ten shares of Eaton Vance Corp. stock held at the close of business on 28 - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 3. Discontinued Operations (continued) October 30, 1995, which was the record date of the distribution. The consolidated statements of operations and cash flows have been restated to reflect the banking business as a discontinued operation. Revenue applicable to discontinued operations was $57.4 million in 1995, $47.8 million in 1994 and $37.5 million in 1993. Income taxes applicable to discontinued operations were $2.8 million in 1995, $1.9 million in 1994 and $1.2 million in 1993. 4. Investment Securities The Company adopted Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity Securities," effective November 1, 1994. SFAS No. 115 requires that certain investments in debt and equity securities be classified as trading, available-for-sale or held-to-maturity. Securities classified as trading are to be reported at fair value with the corresponding unrealized gain or loss included in income. Securities classified as available-for-sale are to be reported at fair value with the corresponding unrealized gain or loss included as a separate component of shareholders' equity. Securities classified as held-to-maturity are to be recorded at amortized cost. Securities classified as available-for-sale are included in the following balance sheet categories at October 31, 1995 (in thousands):
Gross Gross Estimated unrealized unrealized fair value gains losses Cost ==================================================================================================================================== Current Assets Short-term investments $ 11,471 $ 471 $ - $ 11,000 Investments Investment companies 7,542 2,597 155 5,100 Other investments 1,018 13 604 1,609 - ------------------------------------------------------------------------------------------------------------------------------------ Total $20,031 $3,081 $759 $17,709 ====================================================================================================================================
The adoption of SFAS No. 115 resulted in an increase in shareholders' equity, net of applicable taxes, of $1,186,000 through October 31, 1995. Prior year's financial statements have not been restated to reflect the change in accounting principle. 29 - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 5. Real Estate Investments Real estate investments held at October 31, 1995 and 1994 follow: 1995 1994 - -------------------------------------------------------------------------------- (all figures in thousands) Buildings $ 27,831 $ 27,347 Land 2,457 2,465 - -------------------------------------------------------------------------------- Total 30,288 29,812 Less accumulated depreciation 8,424 7,510 - -------------------------------------------------------------------------------- Net book value 21,864 22,302 Share of accumulated losses in excess of partnership interest (258) (129) - -------------------------------------------------------------------------------- Total $21,606 $22,173 ================================================================================ 6. Equipment and Leasehold Improvements Equipment and leasehold improvements at October 31, 1995 (excluding IB&T) and at October 31, 1994 (including IB&T) follow: 1995 1994 ================================================================================ (all figures in thousands) At cost: Equipment $ 6,723 $ 13,036 Leasehold improvements 323 815 - -------------------------------------------------------------------------------- Total7,046 13,851 Less accumulated depreciation 4,191 7,123 - -------------------------------------------------------------------------------- Net book value $2,855 $ 6,728 ================================================================================ 30 - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 7. Other Liabilities 6.22% Senior Note The Company has a $50 million 6.22% Senior Note due March 2004. Principal payments on the note are due in equal annual installments of approximately $7.1 million, beginning March 1998. The note may be prepaid in part or in whole on or after March 1996. Certain covenants in the Senior Note Purchase Agreement require specific levels of cash flow and net income and others restrict additional investment and indebtedness. Note Payable to Unaffiliated Banks The Company has an unsecured revolving credit and term loan agreement with two unaffiliated participating banks under which the Company may borrow up to $75,000,000. Borrowings under the credit agreement are due in March 1997 and bear interest at a combination of the following rates: the banks' current money market rate (5.9 percent at October 31, 1995), or 1 percent per annum above the banks' Eurodollar rate (6.1 percent at October 31, 1995). In addition, a commitment fee of 0.25 percent per annum is payable on unborrowed amounts. There were no borrowings under this agreement at October 31, 1995. The loan agreement contains various covenants with respect to, among other things, levels of operating cash flow and net income, and allowable additional indebtedness and investments. Mortgage Notes Payable The balance of mortgage notes payable on October 31, 1995 and 1994 follow:
Maturity 1995 1994 ================================================================================================================ (all figures in thousands) Interest Rate 10.18% 1995 $ -- $ 6,200 9.00% 1997 3,961 4,008 Prime +1% (9.75% at October 31, 1995) 1997 1,395 1,437 8.19% 2002 2,230 2,270 60% of Prime (5.25% at October 31, 1995) 2015-2016 2,705 2,845 - ---------------------------------------------------------------------------------------------------------------- Total $10,291 $16,760 ================================================================================================================
These mortgage notes are secured by real property and require monthly or quarterly payments of principal and interest with all unpaid principal due at maturity. At October 31, 1995 non-recourse mortgages totaled approximately $8.9 million. 31 - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 7. Other Liabilities (continued) Principal payments due on mortgage notes outstanding at October 31, 1995 for each of the next five years and in the aggregate thereafter follow: Year ending October 31 Payments Due ================================================================================ (in thousands) 1996 $ 4,189 1997 1,539 1998 195 1999 201 2000 207 Thereafter 3,960 - -------------------------------------------------------------------------------- Total $10,291 ================================================================================ Interest Paid Interest paid by the Company for the years ended October 31, 1995, 1994 and 1993 follows: 1995 1994 1993 ================================================================================ (all figures in thousands) Discontinued banking operations $ 898 $ 807 $ 669 Other 4,708 5,651 5,016 - -------------------------------------------------------------------------------- Total $5,606 $6,458 $5,685 ================================================================================ 32 - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 8. Lease Commitments The Company leases certain equipment and facilities under noncancelable operating leases. Future minimum lease commitments are as follows: Year ending October 31 Amount ================================================================================ (in thousands) 1996 $ 750 1997 771 1998 771 1999 747 2000 701 Thereafter 1,273 - -------------------------------------------------------------------------------- Total $5,013 ================================================================================ Rent expense under these leases in 1995, 1994 and 1993 amounted to $597,000, $599,000 and $585,000, respectively. 9. Fair Value of Financial Instruments The following disclosure of the estimated fair value of financial instruments is made in accordance with the requirements of Statement of Financial Accounting Standards No. 107, "Disclosures about Fair Value of Financial Instruments." The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. The methodologies require management to develop assumptions on such items as discount rates and future cash flows. Accordingly, such fair value estimates are not necessarily indicative of the amounts the Company would realize upon a current market exchange. 33 9.Fair Value of Financial Instruments (continued) The carrying amounts and estimated fair values at October 31, 1995 (excluding IB&T) and at October 31, 1994 (including IB&T) follow:
1995 1994 =========================================================================================================================== Carrying Estimated Carrying Estimated Amount Fair Value Amount Fair Value =========================================================================================================================== (all figures in thousands) Assets: Cash and equivalents $ 67,650 $ 67,650 $ 34,025 $ 34,025 Investments -- Short-term investments 11,471 11,471 -- -- Investment companies 7,542 7,542 4,088 5,702 Investment securities -- -- 88,278 86,172 Other investments 1,018 1,018 1,607 1,607 Loans -- -- 13,570 13,570 Notes receivable and receivables from affiliates 6,771 6,771 5,650 5,650 Liabilities: 6.22% Senior Note $50,000 $48,724 $ 50,000 $ 44,529 Demand and time deposits -- -- 106,909 106,909 Mortgage notes payable 10,291 7,436 16,760 16,548 ===========================================================================================================================
Cash and equivalents -- The carrying amounts of cash and equivalents approximate their fair value. Investments -- The estimated fair values of short-term investments, investment companies, investment securities and certain other investments are based on quoted market prices. Management believes it is impracticable to disclose fair values of certain other investments (carrying amounts of $1,320,000 and $1,601,000 at October 31, 1995 and 1994, respectively) due to the difficulty of predicting future returns and the period in which those amounts will be received. Loans -- Variable interest rate loans are subject to periodic repricing and the carrying amount is a reasonable estimate of fair value. Notes receivable and receivables from affiliates -- The estimated fair value of notes receivable and receivables from affiliates has been calculated by discounting expected future cash flows using management's estimate of current market interest rates for such notes and receivables. Included in this category are "Notes receivable from stock option exercises" which are a component of shareholders' equity on the consolidated balance sheet. 34 - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 9. Fair Value of Financial Instruments (continued) 6.22% Senior Note - The estimated fair value of the Senior Note has been determined by discounting future cash flows using a market interest rate calculated in the same manner as the fixed rate of interest applicable to the note. Demand and time deposits - The carrying value of deposit accounts which are subject to periodic repricing is a reasonable estimate of fair value. Mortgage notes payable - The estimated fair value for mortgage notes payable is based on discounted cash flow analysis using current market interest rates applicable to mortgaged properties. 10. Non-voting Common Stock Options Outstanding options to subscribe to shares of non-voting common stock are summarized as follows:
Shares Option Under Option Price Range ==================================================================================================================== Balance, October 31, 1993 718,684 $ 8.75 - 33.50 Exercised (141,181) 8.75 - 27.25 Granted 159,970 27.375 - 34.00 Cancelled/Expired (4,725) 27.25 - 34.00 - -------------------------------------------------------------------------------------------------------------------- Balance, October 31, 1994 732,748 8.75 - 34.00 Exercised (174,327) 8.75 - 34.00 Granted 133,300 27.75 - 32.25 Cancelled/Expired (22,000) 8.75 - 34.00 - -------------------------------------------------------------------------------------------------------------------- Balance, October 31, 1995 669,721 $ 8.75 - 34.00 ====================================================================================================================
At October 31, 1995 options for 398,529 shares were exercisable. Options for 271,192 additional shares will become exercisable over the next four years. As a result of the spinoff of IB&T (Note 3), all outstanding options to subscribe to shares of the Company's non-voting common stock at November 10, 1995 were adjusted to reflect the decreased value of the stock. Had the adjustment taken place at October 31, 1995 options for 809,129 shares would have been outstanding at prices ranging from $7.24 to $28.14. In December 1995 the Company granted options for an additional 143,770 shares at prices ranging from $28.25 to $31.075. These options will become exercisable over the next three years. 35 - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 11. Employee Benefit Plans Executive Loan Program The Company has established an Executive Loan Program under which a maximum of $10,000,000 is available for loans to certain key employees for purposes of financing the exercise of stock options for shares of the Company's non-voting common stock. Such loans are written for a seven-year period, at varying fixed interest rates (currently ranging from 5.3 percent to 9.5 percent), and are payable in annual installments commencing with the third year in which the loan is outstanding. Loans outstanding under this program at October 31, 1995 and 1994 amounted to $3,313,000 and $2,511,000, respectively. Profit-Sharing Retirement Plan The Company has a discretionary profit-sharing retirement plan for the benefit of substantially all employees of its wholly owned subsidiaries whereby up to 15 percent of eligible compensation of participants may be contributed. The Company has contributed $2,829,000, $2,709,000 and $2,419,000, the maximum amounts permitted under the plan, for the years ended October 31, 1995, 1994 and 1993, respectively. Stock Purchase Plan A total of 412,000 shares of the Company's non-voting common stock was reserved for issuance under an Employee Stock Purchase Plan. The plan permits all eligible full-time employees to direct up to 15 percent of their salaries toward the purchase of Eaton Vance Corp. non-voting common stock at the lower of 90 percent of the fair market value of the non-voting common stock at the beginning or at the end of each six-month offering period. Through October 31, 1995, 309,499 shares have been issued pursuant to this plan. Incentive Plan -- Stock Alternative A total of 300,000 shares of the Company's non-voting common stock is reserved for issuance under the Incentive Plan -Stock Alternative. The plan permits employees and officers to direct up to half of their monthly and annual incentive bonuses toward the purchase of non-voting common stock at 90 percent of the fair market price of the stock. Through October 31, 1995, 68,079 shares have been issued pursuant to this plan. 36 - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 12. Income Taxes Effective November 1, 1993 the Company adopted Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." This statement requires an asset and liability approach for financial accounting and reporting for deferred income taxes. The cumulative effect of the accounting change resulted in a $1.3 million gain or $0.14 per share for the year ended October 31, 1994. Prior year financial statements have not been restated to apply the provisions of SFAS No. 109. Income taxes, as stated as a percentage of income before income taxes, are composed of the following:
1995 1994 1993 =========================================================================================================================== Federal statutory tax rate 35.0% 35.0% 34.8% Increases (decreases) in taxes from: State income tax (net of effect of Federal tax) 3.9 4.9 6.6 (Gains) losses on mining investments (5.4) (0.5) 0.6 Other 4.8 0.9 -- - --------------------------------------------------------------------------------------------------------------------------- Effective tax rate 38.3% 40.3% 42.0% =========================================================================================================================== Taxes on income consisted of: Current: (all figures in thousands) Federal $ 19,505 $ 600 $ -- State 5,708 3,081 1,354 Deferred: Federal (5,459) 13,121 13,783 State (2,981) 591 3,322 - --------------------------------------------------------------------------------------------------------------------------- Income taxes $ 16,773 $ 17,393 $ 18,459 ===========================================================================================================================
Income taxes paid (refunded), excluding IB&T, for the years ended October 31, 1995, 1994 and 1993 were $27,662,000, $3,980,000 and ($5,315,000), respectively. In 1995, the Company utilized a net operating loss carryforward of approximately $25 million to offset current taxable income. In addition, the Company utilized an alternative minimum tax credit carryover of $2.3 million in the current year. 37 - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 12. Income Taxes (continued) Under SFAS No. 109 deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating loss and tax credit carryforwards. The tax effects of significant items comprising the Company's net deferred tax liability as of October 31, 1995 and 1994 are as follows: 1995 1994 ================================================================================ (in thousands) Deferred tax liabilities: Deferred sales commissions $ 81,238 $ 99,393 Differences between book and tax basis of property 1,594 1,645 Differences between book and tax basis of investments 1,138 -- Other 294 199 - -------------------------------------------------------------------------------- Total l84,264 101,237 - -------------------------------------------------------------------------------- Deferred tax assets: Operating loss carryforwards -- 8,93 Tax credit carryforwards -- 2,25 Capital loss carryback 1,547 -- Unrealized losses on gold mining partnerships 2,231 3,521 Other 480 506 - -------------------------------------------------------------------------------- Total 4,258 15,218 - -------------------------------------------------------------------------------- Valuation allowance 2,231 3,521 - -------------------------------------------------------------------------------- Net deferred tax liability $82,237 $89,540 ================================================================================ The net change in the valuation allowance for the year ended October 31, 1995 was $1,290,000. The valuation allowance relates to the unrealized losses on gold mining partnerships. 38 - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 13. Major Customers The major customer that provided over 10% of the total revenue of the Company is as follows:
1995 1994 1993 =========================================================================================================================== (all dollar figures in thousands) Eaton Vance National Municipals Fund Investment adviser fees, distribution plan payments and early withdrawal charges $26,176 $26,086 $24,532 Percent of total revenue 15.6% 15.2% 16.1%
14. Related Party Transactions Investment advisory and distribution income earned from investment companies sponsored by the Company were $161.6 million, $163.8 million and $144.5 million in 1995, 1994 and 1993, respectively. The Company provides management and administration services to VenturesTrident and VenturesTrident II for which it earned fees of $1.7 million, $2.1 million and $2.4 million, in 1995, 1994 and 1993, respectively. Amounts outstanding for these services were $3.2 million and $2.8 million at October 31, 1995 and 1994, respectively, and are included in "Notes receivable and receivables from affiliates." IB&T earned fees from investment companies sponsored by the Company for custodial, bookkeeping and pricing services of $3.1 million, $3.6 million and $3.0 million in 1995, 1994 and 1993, respectively. Investment companies sponsored by the Company had approximately $103.0 million and $2.0 million of cash on deposit at IB&T on October 31, 1995 and 1994, respectively. IB&T has made loans to certain shareholders, officers and employees of the Company totaling $1.6 million, at October 31, 1995 and 1994. 15. Shareholders' Equity On January 6, 1995 the Company's Board of Directors authorized the purchase by the Company of up to 500,000 shares of the Company's non-voting common stock at a cost to be determined at the time of purchase. Through October 31, 1995, 18,000 shares have been acquired under this authorization. 16. Regulatory Requirements Two subsidiaries of the Company are subject to the Securities and Exchange Commission uniform net capital rule (Rule 15c3-1) which requires such subsidiaries to maintain a certain minimum level of net capital (as defined). For purposes of this rule, the subsidiaries had net capital of $53,245,000 and $185,000, respectively, which exceeds their respective net capital requirements of $245,000 and $5,000 at October 31, 1995. 39 - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 17. Comparative Quarterly Financial Information (Unaudited) The 1995 and 1994 comparative quarterly financial information has been restated to reflect the spinoff of IB&T as discontinued operations.
1995 ==================================================================================================================================== First Second Third Fourth Full Quarter Quarter Quarter Quarter Year ==================================================================================================================================== (in thousands) ==================================================================================================================================== Total revenue $41,538 $40,733 $42,690 $42,961 $167,922 ==================================================================================================================================== Income from: Continuing operations $ 5,604 $ 5,918 $ 8,522 $ 6,924 $ 26,968 Discontinued operations 799 1,468 512 629 3,408 ==================================================================================================================================== Net income $ 6,403 $ 7,386 $ 9,034 $ 7,553 $ 30,376 ==================================================================================================================================== Earnings per share from: Continuing operations $ 0.61 $ 0.65 $ 0.92 $ 0.72 $ 2.90 Discontinued operations 0.09 0.16 0.06 0.07 0.37 ==================================================================================================================================== Earnings per share $ 0.70 $ 0.81 $ 0.98 $ 0.79 $ 3.27 ====================================================================================================================================
1994 ==================================================================================================================================== First Second Third Fourth Full Quarter Quarter Quarter Quarter Year ==================================================================================================================================== (in thousands) ==================================================================================================================================== Total revenue $42,874 $42,432 $42,495 $43,415 $171,216 ==================================================================================================================================== Income from: Continuing operations $ 7,299* $ 6,941 $ 5,390 $ 7,480 $ 27,110 Discontinued operations 407 695 767 807 2,676 ==================================================================================================================================== Net income $ 7,706 $ 7,636 $ 6,157 $ 8,287 $ 29,786 ==================================================================================================================================== Earnings per share from: Continuing operations $ 0.77* $ 0.73 $ 0.57 $ 0.80 $ 2.86 Discontinued operations 0.04 0.07 0.08 0.09 0.28 ==================================================================================================================================== Earnings per share $ 0.81 $ 0.80 $ 0.65 $ 0.89 $ 3.14 ====================================================================================================================================
* The first quarter of 1994 reflects the cumulative effect of the change in accounting for income taxes of $1.3 million, or $0.14 per share. Income from continuing operations before the cumulative effect of the change in accounting for income taxes was $5,999,000 for the quarter ended January 31, 1994. 40 - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 18. Subsequent Event On November 17, 1995 a subsidiary of the Company entered into an agreement with a mortgage lender to retire a mortgage, with an outstanding balance of $3,961,000, for $1,250,000. The Company will report an extraordinary gain of $1,595,000, net of taxes, in fiscal 1996 as a result of the early extinguishment of debt. 19. Litigation The Company was informed on January 13, 1995 that a National Association of Securities Dealers (NASD) arbitration panel had awarded a former wholesaler for the firm $0.6 million in damages and an additional $1.2 million in punitive damages in response to his claim for wrongful termination of employment. Through October 31, 1995 the Company has accrued $2.2 million, including interest, for these damages. The Company has appealed the decision to the courts and intends to pursue all legal steps to overturn the decision. From time to time, the Company is a party to various employment-related claims, including claims of discrimination, before federal, state and local administrative agencies and courts. The Company vigorously defends itself against these claims. In the opinion of management, after consultation with counsel, it is unlikely that any adverse determination in one or more of such claims would have a material adverse effect on the Company's financial position or results of operations. 41 - -------------------------------------------------------------------------------- INDEPENDENT AUDITORS' REPORT - -------------------------------------------------------------------------------- To the Board of Directors and Shareholders of Eaton Vance Corp. We have audited the accompanying consolidated balance sheets of Eaton Vance Corp. and its subsidiaries as of October 31, 1995 and 1994, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended October 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Eaton Vance Corp. and its subsidiaries as of October 31, 1995 and 1994, and the results of their operations and their cash flows for each of the three years in the period ended October 31, 1995 in conformity with generally accepted accounting principles. As discussed in Note 12 to the consolidated financial statements, effective November 1, 1993, the Company changed its method of accounting for income taxes to conform with Statement of Financial Accounting Standards No. 109. As discussed in Notes 1 and 4 to the consolidated financial statements, effective November 1, 1994, the Company adopted Statements of Financial Accounting Standards No. 115 and No. 121. DELOITTE & TOUCHE LLP Boston, Massachusetts November 21, 1995 42 - -------------------------------------------------------------------------------- EATON VANCE CORP. DIRECTORS AND OFFICERS - -------------------------------------------------------------------------------- Landon T. Clay Chairman of the Board of Directors M. Dozier Gardner President and Director James B. Hawkes Executive Vice President and Director H. Day Brigham, Jr. Vice President, Director and Chairman of the Management Committee John G. L. Cabot Director Benjamin A. Rowland, Jr. Vice President and Director Ralph Z. Sorenson Director Thomas Otis Vice President and Secretary Laurie G. Russell Vice President and Internal Auditor John P. Rynne Vice President and Corporate Controller William M. Steul Vice President and Chief Financial Officer 43 - -------------------------------------------------------------------------------- INVESTOR INFORMATION - -------------------------------------------------------------------------------- Eaton Vance Corp. and Form 10-K Eaton Vance Corp. has filed an Annual Report on Form 10-K with the Securities and Exchange Commission for the 1995 fiscal year. For a copy of that Report, which is available free of charge to shareholders of Eaton Vance Corp. upon request, or other information regarding the Company, please contact: William M. Steul, Chief Financial Officer Eaton Vance Corp. 24 Federal Street Boston, MA 02110 (617) 482-8260 Transfer Agent and Registrar The First National Bank of Boston is the Transfer Agent and Registrar for the Company's common stock and maintains shareholder accounting records. The Transfer Agent should be contacted on questions of changes in address, name or ownership, lost certificates and consolidation of accounts. When corresponding with the Transfer Agent, shareholders should state the exact name(s) in which the stock is registered and the certificate number, as well as pertinent account information. Contact: The First National Bank of Boston Shareholder Correspondence, Mail Stop 45-02-09 Post Office Box 644 Boston, MA 02102-0644 (617) 575-3400 Auditors Deloitte & Touche LLP 125 Summer Street Boston, MA 02110 (617) 261-8000 44 Eaton Vance Corp. 24 Federal Street Boston, MA 02110 EX-21.1 10 LIST OF SUBSIDIARIES EXHIBIT 21.1 List of Subsidiaries As of October 31, 1995* State or Jurisdiction Name Under Which First Tier Subsidiaries of of Incorporation or Subsidiary Does Eaton Vance Corp. Organization Business Eaton Vance Management Massachusetts Same Fulcrum Management, Inc. Massachusetts Same Investors Bank & Trust Company Massachusetts Same MinVen, Inc. Massachusetts Same Certain Subsidiaries of Eaton Vance Management Eaton Vance Distributors, Inc. Massachusetts Same Northeast Properties, Inc. Massachusetts Same Boston Management and Research Massachusetts Same * The names of certain subsidiaries have been omitted in this list inasmuch as the unnamed subsidiaries, considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary as of the Company's fiscal year ended October 31, 1995. 99 EX-23.1 11 INDEPENDENT AUDITORS' CONSENT EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in the Registration Statements listed at Exhibit 99.2 of Eaton Vance Corp. (the Company) on Forms S-8 and S-3 of our report dated November 21, 1995 appearing in the Annual Report on Form 10-K of the Company for the year ended October 31, 1995. DELOITTE & TOUCHE LLP Boston, Massachusetts January 23, 1996 EX-27 12 FINANCIAL DATA SCHEDULE
5 0000350797 EATON VANCE CORP. 1000 YEAR OCT-31-1995 OCT-31-1995 67650 11471 4498 0 0 98602 2855 0 357586 24727 0 0 0 583 193937 357586 0 167922 0 0 120738 0 4702 43741 16773 26968 3408 0 0 30376 3.27 3.27
EX-99.1 13 TERMINATION OF PARTNERSHIP EXHIBIT 99.1 VENTURESTRIDENT L.P. 24 Federal Street, Boston, MA 02110 (617) 482-8260 December 15, 1995 TO THE LIMITED PARTNERS OF VENTURESTRIDENT: In accordance with the VenturesTrident, L.P. Limited Partnership Agreement, dated February 28, 1985, as amended, the General Partners plan to terminate the Partnership effective December 31, 1995. In December, the Partnership's shares of Dakota Mining Corporation and Golden Queen Mining Co., Ltd., are being distributed. Certificates representing your distributions will be mailed separately by the Montreal Trust, the transfer agent, and information on these companies is enclosed. These distributions represent all of the Partnership's holdings of Golden Queen and Dakota Mining after the payment of accrued fees. These fees were paid in shares of Dakota Mining, and Golden Queen, calculated as of November 30, 1995, on the basis of the average of the preceding 20 day trading prices. The Partnership Agreement makes provision for the General Partner to act as liquidator for remaining Partnership assets in 1996. In accordance with this, the General Partners plan to complete the liquidation of VenturesTrident's holdings of Olympic Mining as soon as possible in 1996. The proceeds of this liquidation together with any cash in the Partnership, net of closure costs, will be distributed to Partners as soon as practicable, probably in the First Quarter of the year. 1995 TAX EFFECTS: The Partnership estimates Limited Partners will realize $24.2 MM of capital losses in 1995, which is equivalent to $0.75 for each dollar subscribed. To determine estimated 1995 capital loss, each Limited Partner should multiply this ratio times his total subscription. This figure is an estimate only, and is provided for tax planning purposes. If there are any questions, please contact either Jack Rynne at Eaton Vance (617-482-8260) or Chris Thompson at Castle Group (303-298-1608). The final amount will be reported in the K1 for 1995, which will be distributed in 1996. GOLDEN QUEEN MINING COMPANY LIMITED (T.S.E. Stock Symbol: GQM): Golden Queen is publicly listed and trades on the Toronto Stock Exchange (T.S.E. Stock Symbol: GQM). It owns 100% of a significant gold deposit near Mojave, California, 110 miles north of Los Angeles. VenturesTrident and VenturesTrident II own 10% and 29%, respectively, of the Company. Over $11 million has been spent on the project in the last seven years by the Company in defining a deposit which when the current drilling program is completed in the early weeks of 1996, is expected to contain proven and probable reserves of over 750,000 ounces. Mr. Steve Banning, an experienced mine executive with a successful record of developing open pit heap leach gold operations, has been hired as CEO of the Company. The permitting and construction process is likely to take 24-28 months from December, 1995. Golden Queen's Board considered a sale of the Company or all of its assets in 1995; however, analyses have shown that shareholder value is much greater if the Company develops the project itself. Successful development of the mine should produce significantly higher share values. The General Partner recommends that the Limited Partners hold the stock that they will receive. 101 EXHIBIT 99.1 (CONTINUED) Enclosed are the most recent Annual Report, Press Releases and other descriptive information on the Company. DAKOTA MINING CORPORATION (A.S.E. & T.S.E. STOCK SYMBOL: DKT): Dakota Mining is a public company and trades on the Toronto and American Stock Exchanges. Intended originally as the flagship vehicle into which the principal interests of VenturesTrident were merged to create a significant diversified new gold mining company, Dakota has been bedeviled by operating difficulties, unexpected delays and changing environmental regulations that have prevented realization of operating plans. Dakota's principal asset is the large, low grade sulfide gold reserve of 1.6 MM ounces at Gilt Edge near Lead, South Dakota. Successful development is contingent on obtaining permits to build and operate the project. This is not likely in the near future. On the same property, the Company has the smaller Anchor Hill oxide deposit, containing 222,000 ounces for which permits should be available shortly. These reserves can be mined and processed through the Company's existing facilities at Gilt Edge in 1996-1999. The Company also has a 40% interest in the Golden Reward Mine in South Dakota. This operation produces approximately 55,000 ounces a year, most recently at cash costs between $220 and $240 per ounce. In addition, Dakota owns 100% of the Stibnite Mine in Idaho, which returned to operation in 1995, and is expected to produce at an annualized rate of 30 to 40,000 ounces per year for the next few years. The potential for further reserve extensions at Stibnite is excellent. Enclosed are 10K and 10Q reports, the 1995 Annual Report, and a brokerage research report on the Company. Dakota has a growing production profile for 1996 and 1997. Its market price is likely to improve as production gains are reported and Dakota is quite leveraged to the gold price because of the large undeveloped reserves. OLYMPIC MINING: VenturesTrident owns 2.2 million shares of Olympic Mining, plus a note of $201,476, which including accrued interest to November, 1995, totaled $283,255. Olympic is negotiating to sell its principal assets to a competitor. Net proceeds are likely to be sufficient for VenturesTrident to recover its note plus most of the interest. This transaction will not close until early 1996, and if it takes place, proceeds will be distributed as soon as possible thereafter. Should you have any questions, please feel free to contact any of the following: Landon T. Clay, General Partner (617) 482-8260 Jack Rynne, Eaton Vance (617) 482-8260 Chris Thompson, Castle Group, Inc. (303) 298-1608 Alan R. Bell, CEO - Dakota Mining (303) 573-0221 Steve Banning, CEO - Golden Queen (509) 891-9139 Sincerely, /s/ Landon T. Clay Landon T. Clay General Partner 102 EX-99 14 OPEN REGISTRATION STATEMENTS EXHIBIT 99.2 EATON VANCE CORP. OPEN REGISTRATION STATEMENT Registration Statement Filing Date Consent Date Filing Number - ---------------------- ----------- ------------ ------------- Form S-3 June 28, 1995 June 22, 1995 33-60649 Form S-8 June 27, 1995 June 22, 1995 33-60617 Form S-8 December 1, 1994 December 1, 1994 33-56701 Form S-8 June 8, 1994 June 8, 1994 33-54035 Form S-8 March 8, 1994 March 4, 1994 33-52559 Form S-8 April 23, 1992 April 21, 1992 33-47405 Form S-8 April 23, 1992 April 21, 1992 33-47403 Form S-8 April 23, 1992 April 21, 1992 33-47402 Form S-8 April 23, 1992 April 21, 1992 33-47401 Form S-3 February 13, 1992 February 11, 1992 33-45685 Form S-8 September 16, 1991 September 16, 1991 33-42667 Form S-8 October 11, 1989 October 5, 1989 33-31382 Form S-8 April 10, 1987 April 8, 1987 33-13217 -----END PRIVACY-ENHANCED MESSAGE-----