-----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, GtnAsUU7SYHhXKVm6ol1bPHwqtqtra2bX8SqYE1gBwMKg3L76l8gc4Gor26NcMvK 53mYmv7dCcH2xnPGSMeXBw== 0000350797-02-000025.txt : 20020821 0000350797-02-000025.hdr.sgml : 20020821 20020821132059 ACCESSION NUMBER: 0000350797-02-000025 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020821 ITEM INFORMATION: Other events FILED AS OF DATE: 20020821 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EATON VANCE CORP CENTRAL INDEX KEY: 0000350797 STANDARD INDUSTRIAL CLASSIFICATION: INVESTMENT ADVICE [6282] IRS NUMBER: 042718215 STATE OF INCORPORATION: MD FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08100 FILM NUMBER: 02744546 BUSINESS ADDRESS: STREET 1: 255 STATE STREET CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6174828260 MAIL ADDRESS: STREET 1: 255 STATE STEET STREET 2: 11TH FLOOR CITY: BOSTON STATE: MA ZIP: 02109 8-K 1 evc8k.txt EATON VANCE CORP. 8-K REPORTING EARNINGS 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): August 21, 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 and nine months ended July 31, 2002, as described in Registrant's news release dated August 21, 2002, a copy of which is filed herewith as Exhibit 99.9 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: August 21, 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 - ----------- ----------- 99.9 Copy of Registrant's news release dated August 21, 2002. Page 4 of 9 EXHIBIT 99.9 - ----------------------------------------------------- NEWS RELEASE - ----------------------------------------------------- Eaton Vance Corp. The Eaton Vance Building {LOGO} 255 State Street, Boston, MA 02109 (617) 482-8260 Contact: William M. Steul - ----------------------------------------------------- August 21, 2002 FOR IMMEDIATE RELEASE --------------------- EATON VANCE CORP. REPORT FOR THE THREE MONTHS AND NINE MONTHS ENDED JULY 31, 2002 BOSTON, MA--Eaton Vance Corp. (NYSE:EV) reported diluted earnings per share of $0.44 in the third quarter of fiscal 2002, the same as reported in the third quarter of fiscal 2001. For the first nine months of fiscal 2002, the Company earned $1.35 per diluted share compared to $1.29 per diluted share last year (before last year's second quarter impairment loss of $0.12 per share). Assets under management of $54.8 billion at the end of the third quarter of fiscal 2002 were $4.4 billion or 9 percent greater than the $50.4 billion under management at the end of the third quarter last year. Asset growth in the twelve months ended July 31, 2002 was the result of the Company's acquisitions of Atlanta Capital Management Company, LLC, and Fox Asset Management LLC, which added $7.9 billion of assets under management on September 30, 2001, and from mutual fund, institutional and separate account net inflows, which added $3.8 billion of assets under management. The total increase of $11.7 billion was off-set in part by declines in the market prices of assets under management of $7.3 billion. In spite of a difficult environment and counter to industry trends, Eaton Vance had positive net flows in the third quarter and first nine months of fiscal 2002 in each of its key product categories--mutual funds, retail managed accounts and institutional/high net worth separate accounts. Net inflows of long-term fund assets and separate account assets in the first nine months of fiscal 2002 were $2.2 billion, compared to $4.8 billion in the first nine months of last fiscal year. Fund net inflows in the first nine months of last year benefited from $2.8 billion of equity fund private placements, compared to $1.3 billion in the first nine months of fiscal 2002. Eaton Vance Management, Atlanta Capital and Fox Asset Management added $1.0 billion of separate account net assets in the first nine months of 2002, approximately half of which resulted from the Company's new managed account initiative. 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, revenue in the first nine months of fiscal 2002 increased $27.3 million to $399.2 million or 7 percent over the comparable 2001 period. Investment adviser and administration fees increased 16 percent to $213.9 million. Distribution and underwriting fee revenue decreased 3 percent, reflecting the gradual shift in mutual fund assets Page 5 of 9 from Class B to Class A and Class C shares and a reduction in CDSC income associated with lower quarterly bank loan fund tenders. Operating expenses in the first nine months increased $20.9 million to $253.3 million or 9 percent because of higher compensation expense, higher amortization of deferred sales commissions, and higher service fee and distribution fee expense. Compensation expense in the first nine months of fiscal 2002 increased 13 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. As of the end of the third quarter, Eaton Vance had completed the staffing of its 15 person managed account sales team. Amortization of deferred sales commissions in the first nine months of 2002 increased 6 percent due to the on-going sales of mutual fund Class B shares and equity fund private placements and the residual effect of an accounting change mandated in fiscal 1998 and 1999. Service fee expense increased 8 percent because of the growth in mutual fund assets retained more than one year. Distribution fee expense increased 8 percent due to the growth of mutual fund Class C assets. Eaton Vance collects Rule 12b-1 distribution fees on Class C shares and pays such fees to broker/dealers on fund assets retained more than one year. Other expenses increased 7 percent in the first nine months of fiscal 2002, reflecting increased travel and facilities costs and higher information technology expenditures. Operating income for the first nine months of fiscal 2002 increased 5 percent to $145.9 million. Interest income of $7.0 million included $2.0 million of interest received by the Company in the third quarter of fiscal 2002 from the settlement of a fiscal 1993-1995 Massachusetts income tax dispute. Net income increased 4 percent to $97.2 million as compared to the prior year before last year's impairment loss on investments. The Company's effective tax rate was 35 percent in both the first nine months of fiscal 2002 and the first nine months of fiscal 2001. Cash and equivalents and short-term investments were $255.8 million on July 31, 2002 and $210.7 million on October 31, 2001. During the first nine months of fiscal year 2002, the Company repurchased and retired 1,086,700 shares of its non-voting common stock. Approximately 2.7 million shares remain of the current repurchase authorization. Subsequent to the end of the third quarter, on August 13, 2002, Eaton Vance Management, the Company's principal operating subsidiary, repurchased for cash $87.0 million ($134.1 million principal amount at maturity) of its 30-year zero-coupon senior exchangeable notes. Accordingly, this amount was classified as a short-term liability on the July 31, 2002 balance sheet. The notes remaining after the repurchase had an accreted value of $116.5 million on July 31, 2002 ($179.9 million principal amount at maturity). Eaton Vance Management also provided the holders of the remaining notes the option to require their repurchase on November 13, 2002. 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 Nine Months Ended ------------------------------------ --------------------------------- July 31, July 31, % July 31, July 31, % 2002 2001 Change 2002 2001 Change --------- --------- ------- --------- --------- -------- Revenue: Investment adviser and administration fees $ 70,518 $ 64,571 9.2 % $213,896 $184,971 15.6 % Distribution and underwriter fees 40,168 43,579 (7.8) 124,132 127,975 (3.0) Service fees 19,522 20,450 (4.5) 59,809 57,880 3.3 Other income 465 366 27.0 1,330 993 33.9 --------- --------- ------- --------- --------- -------- Total revenue 130,673 128,966 1.3 399,167 371,819 7.4 --------- --------- ------- --------- --------- -------- Expenses: Compensation of officers and employees 25,546 24,527 4.2 77,335 68,314 13.2 Amortization of deferred sales commissions 20,328 20,913 (2.8) 62,765 59,059 6.3 Service fee expense 16,722 15,971 4.7 49,840 46,031 8.3 Distribution fee expense 7,824 7,563 3.5 23,608 21,937 7.6 Other expenses 13,847 12,603 9.9 39,769 37,079 7.3 --------- --------- ------- --------- --------- -------- Total expenses 84,267 81,577 3.3 253,317 232,420 9.0 --------- --------- ------- --------- --------- -------- Operating Income 46,406 47,389 (2.1) 145,850 139,399 4.6 Other Income/(Expense): Interest income 3,447 1,563 120.5 6,951 4,785 45.3 Interest expense (1,336) (349) 282.8 (3,514) (1,224) 187.1 Gain (loss) on sale of investments (107) 28 n/a 1,276 (158) n/a Equity in net income of affiliates 207 66 213.6 226 982 (77.0) Impairment loss on investments - - n/a - (13,794) n/a --------- --------- ------- --------- --------- -------- Income Before Minority Interest and Income Taxes 48,617 48,697 (0.2) 150,789 129,990 16.0 Minority Interest (648) - n/a (1,237) - n/a --------- --------- ------- --------- --------- -------- Income Before Income Taxes 47,969 48,697 (1.5) 149,552 129,990 15.0 Income Taxes 16,788 17,043 (1.5) 52,343 45,497 15.0 --------- --------- ------- --------- --------- -------- Net Income $ 31,181 $ 31,654 (1.5) $ 97,209 $ 84,493 15.0 ========= ========= ======= ========= ========= ======== Earnings Per Share: Basic $ 0.45 $ 0.46 (2.2) $ 1.40 $ 1.22 14.8 ========= ========= ======= ========= ========= ======== Diluted $ 0.44 $ 0.44 - $ 1.35 $ 1.17 15.4 ========= ========= ======= ========= ========= ======== Dividends Declared, Per Share $ 0.0725 $ 0.0600 20.8 $ 0.2175 $ 0.1800 20.8 ========= ========= ======= ========= ========= ======== Weighted Average Shares Outstanding: Basic 69,161 68,912 0.4 69,226 69,036 0.3 ========= ========= ======= ========= ========= ======== Diluted 71,194 72,614 (2.0) 71,759 72,269 (0.7) ========= ========= ======= ========= ========= ========
Page 7 of 9 Eaton Vance Corp. Balance Sheet (in thousands) July 31, October 31, July 31, 2002 2001 2001 ---------- ---------- --------- ASSETS Current Assets: Cash and cash equivalents $ 160,845 $ 115,681 $ 83,762 Short-term investments 95,024 95,028 38,276 Investment adviser fees and other receivables 19,911 22,559 14,304 Other current assets 2,237 4,212 2,266 ---------- ---------- --------- Total current assets 278,017 237,480 138,608 ---------- ---------- --------- Other Assets: Investments: Investment in affiliates 6,846 6,995 6,787 Investment companies 17,122 15,565 20,576 Other investments 14,789 14,144 7,918 Other receivables 10 5,829 5,830 Deferred sales commissions 250,454 266,738 271,183 Other deferred assets 5,580 5,131 105 Equipment and leasehold improvements, net of accumulated depreciation and amortization of $10,582, $8,956 and $6,670, respectively 14,233 14,938 13,220 Goodwill 69,464 69,212 - Other intangibles, net of accumulated amortization of $2,347, $871 and $655, respectively 37,793 39,269 1,344 ---------- ---------- --------- Total other assets 416,291 437,821 326,963 ---------- ---------- --------- Total assets $ 694,308 $ 675,301 $465,571 ========== ========== ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accrued compensation $ 24,845 $ 38,358 $ 26,499 Accounts payable and accrued expenses 17,372 20,879 17,724 Dividend payable 5,013 4,955 4,137 Current portion of long-term debt 94,115 7,143 7,143 Other current liabilities 4,912 12,509 8,698 ---------- ---------- --------- Total current liabilities 146,257 83,844 64,201 ---------- ---------- --------- Long-term Liabilities: 6.22% senior note due 2004 7,143 14,286 14,286 1.5% zero coupon exchangeable senior notes due 2031 116,490 201,202 - Deferred income taxes 59,210 73,878 81,156 ---------- ---------- --------- Total long-term liabilities 182,843 289,366 95,442 ---------- ---------- --------- Total liabilities 329,100 373,210 159,643 ---------- ---------- --------- Minority interest 1,485 965 - ---------- ---------- --------- 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, 69,220,824, 68,462,051 and 69,388,814 shares, respectively 541 535 540 Accumulated other comprehensive income 2,963 4,898 4,191 Notes receivable from stock option exercises (3,258) (2,641) (1,864) Deferred compensation (2,375) (3,200) (3,475) Retained earnings 365,851 301,533 306,535 ---------- ---------- --------- Total shareholders' equity 363,723 301,126 305,928 ---------- ---------- --------- Total liabilities and shareholders' equity $ 694,308 $ 675,301 $465,571 ========== ========== =========
Page 8 of 9 Table 1 Asset Flows (in millions) Twelve Months Ended July 31, 2002 Assets 7/31/2001 - Beginning of Period $ 50,392 Long-term Fund Sales/Inflows 9,096 Long-term Fund Redemptions/Outflows (6,693) Long-term Fund Net Exchanges (126) Long-term Fund Mkt. Depreciation (6,552) Long-term Fund Assets Acquired1 650 Separate Account Assets Acquired1 7,205 Separate Accounts Net Flows - Institutional/HNW 709 Separate Accounts Net Flows - Managed Accts 521 Separate Accounts Mkt. Appreciation (795) Change in Money Market Funds 358 --------- Net Increase 4,373 --------- Assets 7/30/2002 - End of Period $ 54,765 ========= 1 Atlanta Capital Management and Fox Asset Management acquired by Eaton Vance on September 30, 2001 Table 2 Assets Under Management By Investment Objective (in millions) ------------------------------------------------------ July 31, October 31, % July 31, % 2002 2001 Change 2001 Change ------------------------------------------------------ Equity Funds $ 23,684 $ 25,277 -6% $ 26,752 -11% Fixed Income Funds 10,573 10,165 4% 9,933 6% Bank Loan Funds 8,415 9,582 -12% 9,612 -12% Money Market Funds 1,492 1,114 34% 1,134 32% Separate Accounts 10,601 10,468 1% 2,961 258% Total $ 54,765 $ 56,606 -3% $ 50,392 9% Page 9 of 9 Table 3 Asset Flows by Investment Objective (in millions) Three Months Ended Nine Months Ended --------------------------- ----------------------------- July 31, July 31, July 31, July 31, 2002 2001 2002 2001 --------------------------- ----------------------------- Equity Fund Assets - Beginning of Period $ 27,540 $ 25,965 $ 25,277 $ 25,439 Sales/Inflows 1,342 1,656 3,773 5,763 Redemptions/Outflows (1,094) (398) (2,326) (1,359) Exchanges (180) 17 (142) (5) Market Value Change (3,924) (488) (2,898) (3,086) --------------------------- ----------------------------- Net Change (3,856) 787 (1,593) 1,313 --------------------------- ----------------------------- Equity Assets - End of Period $ 23,684 $ 26,752 $ 23,684 $ 26,752 --------------------------- ----------------------------- Fixed Income Fund Assets - Beginning of Period 10,397 9,764 10,165 9,501 Sales/Inflows 568 413 1,686 1,401 Redemptions/Outflows (416) (314) (1,074) (941) Exchanges 108 (2) 277 18 Market Value Change (84) 72 (481) (46) --------------------------- ----------------------------- Net Change 176 169 408 432 --------------------------- ----------------------------- Fixed Income Assets - End of Period $ 10,573 $ 9,933 $ 10,573 $ 9,933 --------------------------- ----------------------------- Bank Loan Fund Assets - Beginning of Period 8,830 9,511 9,582 10,058 Sales/Inflows 236 629 792 2,025 Redemptions/Outflows (531) (526) (1,657) (2,033) Exchanges (42) (34) (179) (229) Market Value Change (78) 32 (123) (209) --------------------------- ----------------------------- Net Change (415) 101 (1,167) (446) --------------------------- ----------------------------- Bank Loan Assets - End of Period $ 8,415 $ 9,612 $ 8,415 $ 9,612 --------------------------- ----------------------------- Long-Term Fund Assets - Beginning of Period 46,767 45,240 45,024 44,998 Sales/Inflows 2,146 2,698 6,251 9,189 Redemptions/Outflows (2,041) (1,238) (5,057) (4,333) Exchanges (114) (19) (44) (216) Market Value Change (4,086) (384) (3,502) (3,341) --------------------------- ----------------------------- Net Change (4,095) 1,057 (2,352) 1,299 --------------------------- ----------------------------- Total Long-Term Fund Assets - End of Period $ 42,672 $ 46,297 $ 42,672 $ 46,297 --------------------------- ----------------------------- Separate Accounts - Beginning of Period 11,372 2,976 10,468 3,241 Net Flows - Institutional/HNW Accounts 289 (75) 507 (98) Net Flows - Managed Accounts 206 10 482 19 Market Value Change (1,266) 50 (856) (201) --------------------------- ----------------------------- Net Change (771) (15) 133 (280) --------------------------- ----------------------------- Separate Accounts - End of Period $ 10,601 $ 2,961 $ 10,601 $ 2,961 --------------------------- ----------------------------- Money Market Fund Assets - End of Period 1,492 1,134 1,492 1,134 --------------------------- ----------------------------- Total Assets Under Management - End of Period $ 54,765 $ 50,392 $ 54,765 $ 50,392 =========================== =============================
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