Back to GetFilings.com
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