8-K 1 evc8k.txt EATON VANCE CORP. 8-K DATED 2/26/02 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 26, 2002 ----------------- EATON VANCE CORP. ------------------------------------ (Exact name of registrant as specified in its charter) Maryland 1-8100 04-2718215 ---------------------------- ------------------------ ------------------- (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) 255 State Street, Boston, Massachusetts 02109 --------------------------------------- -------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (617)482-8260 ------------- Page 1 of 9 INFORMATION INCLUDED IN THE REPORT Item 5. Other Events ------- ------------ Registrant has reported its results of operations for the three months ended January 31, 2002, as described in Registrant's news release dated February 26, 2002, a copy of which is filed herewith as Exhibit 99.7 and incorporated herein by reference. Page 2 of 9 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 26, 2002 /s/ William M. Steul ----------------------------------------- William M. Steul, Chief Financial Officer Page 3 of 9 EXHIBIT INDEX Each exhibit is listed in this index according to the number assigned to it in the exhibit table set forth in Item 601 of Regulation S-K. The following exhibit is filed as part of this report: Exhibit No. Description ----------- ----------- 99.7 Copy of Registrant's news release dated February 26, 2002. Page 4 of 9 Exhibit 99.7 ------------------------------------------- NEWS RELEASE ------------------------------------------- Eaton Vance Corp. The Eaton Vance Building {LOGO} 255 State Street, Boston, MA 02109 (617) 482-8260 Contact: William M. Steul ------------------------------------------- February 26, 2002 FOR IMMEDIATE RELEASE --------------------- EATON VANCE CORP. REPORT FOR THE THREE MONTHS ENDED JANUARY 31, 2002 Boston, MA--Eaton Vance Corp. reported diluted earnings per share of $0.46 in the first three months of fiscal 2002 compared to diluted earnings per share of $0.44 in the first three months of fiscal 2001, an increase of 5 percent. Assets under management of $59.3 billion at the end of the first quarter of fiscal 2002 were 20 percent greater than the $49.3 billion at the end of the first fiscal quarter last year. Asset growth in the past twelve months benefited from the acquisitions of Atlanta Capital Management Company, LLC and Fox Asset Management, LLC, which added $7.9 billion of assets on September 30, 2001. Long-term fund and separate account net inflows of $5.8 billion more than offset declines of $4.0 billion of assets under management due to market depreciation in the last 12 months. Net inflows of long-term fund assets and separate account assets in the first three months of 2002 were $1.1 billion compared to $1.5 billion in the first three months of last year. Fund net inflows in the first quarter last year benefited from $1.0 billion of equity fund private placements compared to $0.3 billion in the first quarter of fiscal 2002. Atlanta Capital and Fox Asset Management added $0.5 billion of separate account net inflows in the first quarter. Tables 1, 2 and 3 (attached) summarize assets under management and asset flows by investment objective. As a result of greater average assets under management, fiscal 2002 first quarter revenue increased by $10.6 million or 9 percent to $130.7 million over fiscal 2001 first quarter revenue. First quarter operating expenses increased by $8.4 million or 11 percent primarily because of higher compensation expense and higher amortization of deferred sales commissions. Page 5 of 9 Compensation expense increased 24 percent primarily because of the acquisitions of Atlanta Capital and Fox Asset Management and the buildup of the sales infrastructure for the managed account business. Amortization of deferred sales commissions increased 15 percent due to the on-going sales of mutual fund B shares and equity fund private placements, and the residual effect of accounting changes mandated by the SEC in fiscal 1998 and 1999. For a nine month period in fiscal 1998 and 1999, certain sales commissions were required to be expensed rather than capitalized, extinguishing future amortization charges for affected fund assets. Had these changes in accounting not taken place, amortization of deferred commissions would have grown 6 percent from the first quarter of fiscal 2001 to the first quarter of fiscal 2002. First quarter operating income increased 5 percent to $49.5 million and net income increased 4 percent to $33.2 million. The Company's provision for income taxes was 35 percent in the first quarter of fiscal 2002 and in the first quarter of fiscal 2001. Cash, cash equivalents and short-term investments were $222.8 million on January 31, 2002 and $210.7 million on October 31, 2001. On December 21, 2001, the Company executed a three-year $170.0 million revolving credit facility with several banks. The primary purposes of the credit facility are to provide the Company with additional liquidity in the event that holders of the zero-coupon exchangeable notes exercise their put options on either the first or third anniversary dates and to provide general working capital availability. There are currently no outstanding borrowings against this facility. During the first three months of fiscal year 2002, the Company repurchased and retired 471,000 shares of its non-voting common stock under its repurchase authorization. Approximately 3.5 million shares remain of the current authorization. Eaton Vance Corp., a Boston-based investment management firm, is traded on the New York Stock Exchange under the symbol EV. This news release contains statements that are not historical facts, referred to as "forward looking statements." The Company's actual future results may differ significantly from those stated in any forward-looking statements depending on factors such as changes in securities or financial markets or general economic conditions, the volume of sales and repurchases of fund shares, the continuation of investment advisory, administration, distribution and service contracts, and other risks discussed from time to time in the Company's filings with the Securities and Exchange Commission. Page 6 of 9 Eaton Vance Corp. Summary of Results of Operations (in thousands, except per share amounts) Three Months Ended ------------------------------------------------- January 31, January 31, % 2002 2001 Change -------------- ------------- ------------ Revenue: Investment adviser and administration fees $ 71,867 $ 61,118 18% Distribution and underwriter fees 36,533 39,407 (7) Service fees 21,783 19,401 12 Other income 499 183 173 -------------- ------------- ----------- Total revenue 130,682 120,109 9 -------------- ------------- ----------- Expenses: Compensation of officers and employees 28,060 22,665 24 Amortization of deferred sales commissions 20,038 17,496 15 Service fee expense 18,272 18,849 (3) Other expenses 14,794 13,788 7 -------------- ------------- ----------- Total expenses 81,164 72,798 11 -------------- ------------- ----------- Operating Income 49,518 47,311 5 Other Income/(Expense): Interest income 1,689 1,808 (7) Interest expense (1,087) (462) 135 Gain (loss) on sale of investments 1,383 (255) n/a Equity in net income (loss) of affiliates (131) 892 (115) -------------- ------------- ----------- Income Before Minority Interest and Income Taxes 51,372 49,294 4 Minority Interest (306) - n/a -------------- ------------- ----------- Income Before Income Taxes 51,066 49,294 4 Income Taxes 17,873 17,253 4 -------------- ------------- ----------- Net Income $ 33,193 $ 32,041 4 ============== ============= =========== Earnings Per Share: Basic $ 0.48 $ 0.46 4 ============== ============= =========== Diluted $ 0.46 $ 0.44 5 ============== ============= =========== Dividends Declared, Per Share $ 0.0725 $ 0.0600 21 ============== ============= =========== Weighted Average Shares Outstanding: Basic 69,042 69,228 (0) ============== ============= =========== Diluted 71,813 72,401 (1) ============== ============= ===========
Page 7 of 9 Eaton Vance Corp. Balance Sheet January 31, October 31, January 31, (in thousands) 2002 2001 2001 -------------- ------------- -------------- ASSETS Current Assets: Cash and cash equivalents $ 129,378 $ 115,681 $ 54,747 Short-term investments 93,399 95,028 47,464 Investment adviser fees and other receivables 23,750 22,559 12,182 Other current assets 3,372 4,212 2,239 -------------- ------------- -------------- Total current assets 249,899 237,480 116,632 -------------- ------------- -------------- Other Assets: Investments: Investment in affiliates 6,864 6,995 7,634 Investment companies 17,862 15,565 22,863 Other investments 14,368 14,144 22,930 Other receivables 5,829 5,829 5,831 Deferred sales commissions 263,035 266,738 251,846 Other deferred assets 5,659 5,131 125 Equipment and leasehold improvements, net of accumulated depreciation and amortization of $9,002, $8,956 and 5,592, respectively 14,556 14,938 13,065 Goodwill 69,258 69,212 - Other Intangibles, net of accumulated amortization of $1,352, $871and $589, respectively 38,788 39,269 1,411 -------------- ------------- -------------- Total other assets 436,219 437,821 325,705 -------------- ------------- -------------- Total assets $ 686,118 $ 675,301 $ 442,337 ============== ============= ============== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accrued compensation $ 16,473 $ 38,358 $ 11,683 Accounts payable and accrued expenses 20,562 20,879 16,978 Dividend payable 5,035 4,955 4,153 Current portion of long-term debt 7,143 7,143 7,143 Other current liabilities 23,741 12,509 18,013 -------------- ------------- -------------- Total current liabilities 72,954 83,844 57,970 -------------- ------------- -------------- Long-term Liabilities: 6.22% senior note due 2004 14,286 14,286 21,429 1.5% zero coupon exchangeable senior notes due 2031 201,950 201,202 - Deferred income taxes 68,259 73,878 94,770 -------------- ------------- -------------- Total long-term liabilities 284,495 289,366 116,199 -------------- ------------- -------------- Total liabilities 357,449 373,210 174,169 -------------- ------------- -------------- Minority interest 1,271 965 - -------------- ------------- -------------- 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, 69,524,531, 68,462,051 and 69,186,567 shares, respectively 543 535 541 Accumulated other comprehensive income 3,899 4,898 5,217 Notes receivable from stock option exercises (2,496) (2,641) (2,278) Deferred compensation (2,925) (3,200) (4,025) Retained earnings 328,376 301,533 268,712 -------------- ------------- -------------- Total shareholders' equity 327,398 301,126 268,168 -------------- ------------- -------------- Total liabilities and shareholders' equity $ 686,118 $ 675,301 $ 442,337 ============== ============= ==============
Page 8 of 9 Table 1 Asset Flows (in millions Twelve Months Ended January 31, 2002 Assets 1/31/2001 - Beg. of Period $ 49,312 Long-term Fund Sales/inflows 10,995 Long-term Fund Redemptions/Outflows (5,831) Long-term Fund Net Exchanges (145) Long-term Fund Mkt. Depreciation (4,248) Long-term Fund Assets Acquired(1) 650 Separate Account Assets Acquired(1) 7,205 Separate Accounts Net Flows 645 Separate Accounts Mkt. Appreciation 200 Change in Money Market Funds 489 --------------- Net increase 9,960 --------------- Assets 1/31/2002 - End of Period $ 59,272 =============== Table 2 Assets Under Management By Investment Objective (in millions) -------------------------------------------------------------------------------- January 31, October 31, % January 31, % 2002 2001 Change 2001 Change -------------------------------------------------------------------------------- Equity Funds $27,459 $25,277 9% $26,327 4% Fixed Income Funds 10,302 10,165 1% 9,855 5% Bank Loan Funds 9,185 9,582 -4% 9,343 -2% Money Market Funds 992 1,114 -11% 503 97% Separate Accounts 11,334 10,468 8% 3,284 245% -------------------------------------------------------------------------------- Total $59,272 $56,606 5% $49,312 20% ================================================================================
Table 3 Asset Flows by Investment Objective (in millions) Three Months Ended ------------------------------- January 31, January 31, ------------ ------------------ 2002 2001 ------------------------------- Equity Fund Assets - Beg. of Period $ 25,277 $ 25,439 Sales/Inflows 1,250 2,197 Redemptions/Outflows (632) (418) Exchanges 24 10 Market Value Change 1,540 (901) ------------------------------- Net Change 2,182 888 ------------------------------- Equity Assets - End of Period $ 27,459 $ 26,327 ------------------------------- Fixed Income Fund Assets - Beg.of Period 10,165 9,501 Sales/Inflows 585 499 Redemptions/Outflows (321) (336) Exchanges 151 24 Market Value Change (278) 167 ------------------------------- Net Change 137 354 ------------------------------- Fixed Income Assets - End of Period $ 10,302 $ 9,855 ------------------------------- Bank Loan Fund Assets - Beg. of Period 9,582 10,058 Sales/Inflows 294 509 Redemptions/Outflows (588) (918) Exchanges (97) (156) Market Value Change (6) (150) ------------------------------- Net Change (397) (715) ------------------------------- Bank Loan Assets - End of Period $ 9,185 $ 9,343 ------------------------------- Long-Term Fund Assets - Beg. of Period 45,024 44,998 Sales/Inflows 2,129 3,205 Redemptions/Outflows (1,541) (1,672) Exchanges 78 (122) Market Value Change 1,256 (884) ------------------------------- Net Change 1,922 527 ------------------------------- Total Long-Term Fund Assets - End of Period $ 46,946 $ 45,525 ------------------------------- Separate Accounts - Beginning of Period 10,468 3,241 Net Flows 477 (10) Market Value Change 389 53 ------------------------------- Net Change 866 43 ------------------------------- Separate Accounts - End of Period $ 11,334 $ 3,284 ------------------------------- Money Market Fund Assets - End of Period 992 503 ------------------------------- Total Assets Under Management - End of Period $ 59,272 $ 49,312 =============================== Page 9 of 9