SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 25, 2004
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EATON VANCE CORP.
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(Exact name of registrant as specified in its charter)
Maryland 1-8100 04-2718215
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
255 State Street, Boston, Massachusetts 02109
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 482-8260
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Page 1 of 10
INFORMATION INCLUDED IN THE REPORT
ITEM 5. OTHER EVENTS AND REQUIRED FD DISCLOSURE
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Registrant has reported its results of operations for the three months
ended January 31, 2004, as described in Registrant's news release dated February
25, 2004, a copy of which is filed herewith as Exhibit 99.1 and incorporated
herein by reference.
This information is being filed pursuant to Item 5. Other Events and
Required FD Disclosure and is being provided under Item 12. Results of
Operations and Financial Condition.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
Exhibit No. Document
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99.1 Press release issued by the Registrant dated
February 25, 2004.
Page 2 of 10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
EATON VANCE CORP.
(Registrant)
Date: February 25, 2004 /s/ William M. Steul
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William M. Steul, Chief Financial Officer
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EXHIBIT INDEX
Each exhibit is listed in this index according to the number assigned to it
in the exhibit table set forth in Item 601 of Regulation S-K. The following
exhibit is filed as part of this Report:
Exhibit No. Description
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99.1 Copy of Registrant's news release dated February 25, 2004.
Page 4 of 10
EXHIBIT 99.1
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NEWS RELEASE
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Eaton Vance Corp.
The Eaton Vance Building
{LOGO} 255 State Street, Boston, MA 02109
(617) 482-8260
Contact: William M. Steul
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February 25, 2004
FOR IMMEDIATE RELEASE
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EATON VANCE CORP.
REPORT FOR THE THREE MONTHS ENDED
JANUARY 31, 2004
BOSTON, MA--Eaton Vance Corp. reported diluted earnings per share of $0.44 in
the first three months of fiscal 2004 compared to diluted earnings per share of
$0.37 in the first three months of fiscal 2003, an increase of 19 percent.
Assets under management of $83.6 billion at the end of the first quarter of
fiscal 2004 were $27.9 billion or 50 percent greater than the $55.8 billion at
the end of the first fiscal quarter last year. In the 12-month period ended
January 31, 2004, the Company's assets under management were positively affected
by long-term fund and separate account net inflows of $12.6 billion, the
acquisition of Parametric Portfolio Associates, which added assets of $5.3
billion at the close of the transaction on September 10, 2003, and market price
appreciation of $10.2 billion. Gross sales and inflows of long-term funds and
separate accounts in the last 12 months were $21.2 billion, including four
successful closed-end fund offerings that raised a total of $7.5 billion of
assets.
Net fund and separate account inflows of $5.6 billion in the first quarter of
fiscal 2004 compared to net inflows of $1.3 billion in the first fiscal quarter
last year. This year's net inflows benefited from the successful offering of two
closed-end funds, Eaton Vance Senior Floating-Rate Trust and Eaton Vance
Tax-Advantaged Global Dividend Income Fund, which added $2.4 billion of new
assets during the quarter. Tables 1, 2 and 3 (attached) summarize assets under
management and asset flows by investment objective.
As a result of higher average assets under management, fiscal 2004 first quarter
revenue increased by $32.0 million or 26 percent to $157.0 million compared to
fiscal 2003 first quarter revenue of $124.9 million. Investment adviser and
administration fees increased 36 percent to $93.8 million, in line with the
increase in average assets under management. Average assets under management
increased 40 percent to $78.9 billion in the first quarter from $56.3 billion in
the first quarter last year. Distribution and underwriter fees increased 8
percent, reflecting an increase in Class B and C share and private fund assets
under management and an increase in Class A share underwriter commissions.
Service fee revenue increased 22 percent, consistent with the increase in
average Class A, B, C, D share and private fund assets that pay these fees.
Other revenue increased 55 percent primarily as a result of consolidating two
investment companies in which Eaton Vance is the majority shareholder.
Page 5 of 10
Fiscal first quarter 2004 operating expenses increased 23 percent to $106.9
million compared to $86.5 million of operating expenses in fiscal first quarter
2003 primarily because of higher compensation, service fee and distribution
expenses. Compensation expense increased 42 percent principally due to marketing
incentives associated with sales of the two new closed-end funds, increases in
sales of the Company's continuously offered funds and retail managed accounts,
the inclusion of Parametric Portfolio Associates' employee compensation and
higher operating income-based bonus accruals.
Amortization of deferred sales commissions declined 3 percent in the first
quarter of fiscal 2004 compared to the first quarter of fiscal 2003. Service fee
expense increased 22 percent, in line with the increase in service fee revenue.
Eaton Vance collects asset-based service fees from many of its funds and pays
them to the appropriate broker/dealers after one year. Distribution expense
increased 51 percent as a result of increases in sales support expenses, certain
Class A share fund sales commissions, Class C share fund distribution fees and
closed-end fund fees. Other expenses increased 1 percent primarily because of
higher travel, facilities, information technology, legal, recruiting and
consulting expenses offset by lower fund related expenses.
Fiscal first quarter 2004 operating income increased 31 percent to $50.1 million
and net income increased 19 percent to $30.8 million over the first fiscal
quarter of 2003. Interest income declined by $0.7 million, or 49 percent,
primarily because of lower short-term interest rates and the inclusion of
interest income from two consolidated investment companies in other revenue.
Interest expense increased 15 percent, reflecting $0.2 million of interest
accrued in conjunction with settlement of the Company's IRS audits of fiscal
years 1999 and 2000. The first quarter of fiscal 2003 included a $1.9 million
gain on investments. The Company's provision for income taxes was 36 percent in
the first quarter of fiscal 2004 and 35 percent in the first quarter of fiscal
2003.
Cash, cash equivalents and short-term investments were $262.6 million on January
31, 2004, $242.8 million on October 31, 2003 and $209.5 million on January 31,
2003. The Company's strong operating cash flow in the last 12 months allowed it
to reduce its long-term debt by $5.4 million to $126.3 million and to pay $72.2
million in income taxes, $70.6 million in sales commissions, $57.7 million to
repurchase 1.7 million shares of its non-voting common stock and $27.5 million
in dividends to shareholders. There are no outstanding borrowings against the
Company's $170.0 million credit facility. The Company has sufficient cash and
short-term investments to repurchase a subsidiary's $119.5 million of
convertible notes in the event investors choose to redeem them on the third
anniversary put date, August 13, 2004.
The increases in other current assets and deferred income taxes resulted
primarily from a recent change in IRS regulations allowing mutual fund sponsors
to deduct Class B share sales commissions when paid. These commissions were
previously capitalized and amortized for tax purposes.
During the first three months of fiscal 2004, the Company repurchased and
retired 614,000 shares of its non-voting common stock at an average price of
$36.24 per share, under its repurchase authorization. Approximately 3.2 million
shares remain of the current 4.0 million- share authorization.
Eaton Vance Corp., a Boston-based investment management firm, is traded on the
New York Stock Exchange under the symbol EV.
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This news release contains statements that are not historical facts, referred to
as "forward- looking statements." The Company's actual future results may differ
significantly from those stated in any forward-looking statements, depending on
factors such as changes in securities or financial markets or general economic
conditions, the volume of sales and repurchases of fund shares, the continuation
of investment advisory, administration, distribution and service contracts, and
other risks discussed from time to time in the Company's filings with the
Securities and Exchange Commission.
Page 7 of 10
Eaton Vance Corp.
Summary of Results of Operations
(in thousands, except per share amounts)
Three Months Ended
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January 31, January 31, %
2004 2003 Change
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Revenue:
Investment adviser and administration fees $ 93,750 $ 69,074 36%
Distribution and underwriter fees 39,876 37,005 8
Service fees 21,909 17,925 22
Other revenue 1,438 930 55
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Total revenue 156,973 124,934 26
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Expenses:
Compensation of officers and employees 37,499 26,403 42
Amortization of deferred sales commissions 20,763 21,394 (3)
Service fee expense 18,632 15,273 22
Distribution expense 18,779 12,419 51
Other expenses 11,197 11,057 1
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Total expenses 106,870 86,546 23
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Operating Income 50,103 38,388 31
Other Income/(Expense):
Interest income 788 1,531 (49)
Interest expense (1,651) (1,433) 15
Gain on investments 5 1,874 (100)
Foreign currency loss (18) (95) n/a
Equity in net income (loss) of affiliates 15 (226) n/a
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Income Before Income Taxes and Minority Interest 49,242 40,039 23
Income Taxes 17,727 14,013 27
Minority Interest, Net of Tax 702 117 500
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Net Income $ 30,813 $ 25,909 19
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Earnings Per Share:
Basic $ 0.45 $ 0.37 22
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Diluted $ 0.44 $ 0.37 19
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Dividends Declared, Per Share $ 0.12 $ 0.08 50
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Weighted Average Shares Outstanding:
Basic 68,196 69,163 (1)
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Diluted 70,336 70,495 (0)
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Eaton Vance Corp.
Balance Sheet
(in thousands, except per share figures)
January 31, October 31, January 31,
2004 2003 2003
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ASSETS
Current Assets:
Cash and cash equivalents $ 132,105 $ 138,328 $114,525
Short-term investments 130,527 104,484 94,933
Investment adviser fees and other receivables 30,116 25,922 24,605
Other current assets 23,744 3,583 3,463
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Total current assets 316,492 272,317 237,526
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Other Assets:
Deferred sales commissions 191,228 199,322 228,038
Goodwill 88,979 88,879 69,467
Other intangible assets, net 45,680 46,193 37,110
Long-term investments 37,891 36,490 31,312
Equipment and leasehold improvements, net 11,925 12,411 13,352
Other assets 3,010 3,090 3,277
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Total other assets 378,713 386,385 382,556
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Total assets $ 695,205 $ 658,702 $620,082
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accrued compensation $ 15,892 $ 35,339 $ 9,474
Accounts payable and accrued expenses 20,717 23,822 17,293
Dividend payable 8,157 8,189 5,528
Current portion of long-term debt 7,143 7,143 7,143
Other current liabilities 6,860 8,302 22,807
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Total current liabilities 58,769 82,795 62,245
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Long-Term Liabilities:
Long-term debt 119,180 118,736 124,555
Deferred income taxes 67,401 33,203 43,993
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Total long-term liabilities 186,581 151,939 168,548
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Total liabilities 245,350 234,734 230,793
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Minority interest 26,165 7,691 1,483
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Commitments and contingencies - - -
Shareholders' Equity:
Common stock, par value $0.0078125 per share:
Authorized, 640,000 shares
Issued, 154,880 shares 1 1 1
Non-voting common stock, par value $0.0078125 per share:
Authorized, 95,360,000 shares
Issued, 67,993,447, 68,250,464 and 69,115,168 shares, respectively 531 533 540
Notes receivable from stock option exercises (3,034) (2,995) (3,290)
Deferred compensation (3,600) (1,000) (1,825)
Accumulated other comprehensive income 1,813 1,245 886
Retained earnings 427,979 418,493 391,494
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Total shareholders' equity 423,690 416,277 387,806
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Total liabilities and shareholders' equity $ 695,205 $ 658,702 $620,082
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Table 1
Asset Flows (in millions)
Twelve Months Ended January 31, 2004
Assets 1/31/2003 - Beginning of Period $ 55,750
Long-term fund sales and inflows 17,423
Long-term fund redemptions and outflows (6,518)
Long-term fund net exchanges (63)
Long-term fund mkt. value change 6,828
Long-term fund assets acquired 1 660
Institutional and HNW account inflows 2,585
Institutional and HNW account outflows (1,542)
Insititutional and HNW assets acquired 1 2,772
Retail managed account inflows 1,159
Retail managed account outflows (520)
Retail managed account assets acquired1 1,850
Separate account mkt. value change 3,350
Change in money market funds (90)
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Net change 27,894
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Assets 1/31/2004 - End of Period $ 83,644
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Table 2
Assets Under Management
By Investment Objective (in millions)
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January 31, October 31, % January 31, %
2004 2003 Change 2003 Change
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Equity Funds $ 33,215 $ 28,854 15.1% $ 22,401 48.3%
Fixed Income Funds 18,252 17,801 2.5% 14,601 25.0%
Bank Loan Funds 11,180 9,547 17.1% 7,308 53.0%
Money Market Funds 469 445 5.4% 559 -16.1%
Separate Accounts 20,528 18,397 11.6% 10,881 88.7%
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Total $ 83,644 $ 75,044 11.5% $ 55,750 50.0%
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Table 3
Asset Flows by Investment Objective (in millions)
Three Months Ended
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January 31, January 31,
2004 2003
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Equity Fund Assets - Beginning of Period $ 28,854 $ 22,910
Sales and inflows 3,445 707
Redemptions and outflows (700) (650)
Exchanges 51 (28)
Market value change 1,565 (538)
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Net change 4,361 (509)
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Equity Fund Assets - End of Period $ 33,215 $ 22,401
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Fixed Income Fund Assets - Beginning of Period 17,801 13,302
Sales and inflows 728 1,619
Redemptions and outflows (553) (430)
Exchanges (89) 64
Market value change 365 46
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Net change 451 1,299
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Fixed Income Fund Assets - End of Period $ 18,252 $ 14,601
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Bank Loan Fund Assets - Beginning of Period 9,547 7,687
Sales and inflows 1,983 156
Redemptions and outflows (378) (515)
Exchanges 32 (64)
Market value change (4) 44
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Net change 1,633 (379)
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Bank Loan Fund Assets - End of Period $ 11,180 $ 7,308
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Long-Term Fund Assets - Beginning of Period 56,202 43,899
Sales and inflows 6,156 2,482
Redemptions and outflows (1,631) (1,595)
Exchanges (6) (28)
Market value change 1,926 (448)
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Net change 6,445 411
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Total Long-Term Fund Assets - End of Period $ 62,647 $ 44,310
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Separate Accounts - Beginning of Period 18,397 10,802
Institutional and HNW account inflows 1,097 587
Institutional and HNW account outflows (332) (464)
Retail managed account inflows 504 274
Retail managed account outflows (210) (28)
Separate accounts market value change 1,072 (290)
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Net change 2,131 79
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Separate accounts - End of Period $ 20,528 $ 10,881
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Money market fund assets - End of Period 469 559
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Total Assets Under Management - End of Period $ 83,644 $ 55,750
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1 Parametric Portfolio Associates acquired by Eaton Vance on September 10,
2003
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