Attached files
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| 8-K - FORM 8-K - EATON VANCE CORP | v473904_8k.htm |
Exhibit 99.1
News Release
| Contacts: | Laurie G. Hylton 617.672.8527 |
Daniel C. Cataldo 617.672.8952
Eaton Vance Corp.
Report for the Three and Nine Month Periods Ended July 31, 2017
Boston, MA, August 23, 2017 – Eaton Vance Corp. (NYSE: EV) today reported earnings per diluted share of $0.58 for the third quarter of fiscal 2017, an increase of 5 percent from $0.55 of earnings per diluted share in the third quarter of fiscal 2016 and a decrease of 6 percent from $0.62 of earnings per diluted share in the second quarter of fiscal 2017.
The Company reported adjusted earnings per diluted share(1) of $0.62 for the third quarter of fiscal 2017, up 11 percent from $0.56 of adjusted earnings per diluted share in the third quarter of fiscal 2016 and unchanged from $0.62 of adjusted earnings per diluted share in the second quarter of fiscal 2017. In the third quarter of fiscal 2017, adjusted earnings differed from earnings under U.S. generally accepted accounting principles (GAAP) by $0.03 per diluted share to reflect $5.4 million of costs associated with retiring $250 million aggregate principal amount of 6.5 percent senior notes due October 2, 2017 (2017 Senior Notes) and $0.01 per diluted share to reflect $3.5 million of structuring fees paid in connection with the $210 million initial public offering of Eaton Vance Floating-Rate 2022 Target Term Trust (2022 Target Term Trust) during the quarter. In the third quarter of fiscal 2016, adjusted earnings differed from GAAP earnings by $0.01 per diluted share to reflect $2.3 million of structuring fees paid in connection with the $215 million initial public offering of Eaton Vance High Income 2021 Target Term Trust (2021 Target Term Trust) in the third fiscal quarter of last year. Adjusted earnings per diluted share matched GAAP earnings per diluted share in the second quarter of fiscal 2017.
Net gains and other investment income related to seed capital investments contributed $0.01 to earnings per diluted share in the third quarters of fiscal 2017 and fiscal 2016, and $0.02 to earnings per diluted share in the second quarter of fiscal 2017. Costs in connection with employee terminations, special fund expense reimbursements and one-time legal and investigative costs as described below reduced earnings by $0.03 per diluted share in the third quarter of fiscal 2017 and $0.01 per diluted share in the third quarter of fiscal 2016. Such costs were negligible in the second quarter of fiscal 2017.
Consolidated net inflows of $9.1 billion in the third quarter of fiscal 2017 represent a 9 percent annualized internal growth rate in managed assets (consolidated net inflows divided by beginning of period consolidated assets under management). This compares to net inflows of $7.1 billion and 9 percent annualized internal growth in the third quarter of fiscal 2016 and net inflows of $12.9 billion and annualized internal growth of 14 percent in the second quarter of fiscal 2017. On the basis of net contribution to management fee revenue, the Company’s annualized internal revenue growth rate was 6 percent in the third quarter of fiscal 2017, 3 percent in the third quarter of fiscal 2016 and 7 percent in the second quarter of fiscal 2017.
| (1) | Although the Company reports its financial results in accordance with GAAP, management believes that certain non-GAAP financial measures, specifically, adjusted net income attributable to Eaton Vance Corp. shareholders and adjusted earnings per diluted share, while not a substitute for GAAP financial measures, may be effective indicators of the Company’s performance over time. In calculating these non-GAAP financial measures, net income attributable to Eaton Vance Corp. shareholders and earnings per diluted share are adjusted to exclude items management deems non-operating or non-recurring in nature or otherwise outside the ordinary course of business. These adjustments may include the add back of adjustments made in connection with changes in the estimated redemption value of non-controlling interests in our affiliates redeemable at other than fair value (non-controlling interest value adjustments), and, when applicable, other items such as closed-end fund structuring fees, special dividends, costs associated with retiring debt and tax settlements. Management and our Board of Directors, as well as our outside investors, consider these adjusted numbers a measure of the Company’s underlying operating performance. Management believes adjusted net income attributable to Eaton Vance Corp. shareholders and adjusted earnings per diluted share are important indicators of our operations because they exclude items that may not be indicative of, or are unrelated to, our core operating results, and may provide a better baseline for analyzing trends in our underlying business. |
| 1 |
Consolidated assets under management were $405.6 billion on July 31, 2017, up 21 percent from $334.4 billion of consolidated managed assets on July 31, 2016 and up 5 percent from $387.0 billion of consolidated managed assets on April 30, 2017. The year-over-year increase in consolidated assets under management reflects net inflows of $34.7 billion and market price appreciation of $26.5 billion over the twelve-month period and $9.9 billion of new managed assets gained in the acquisition of the business assets of Calvert Investment Management, Inc. (Calvert) on December 30, 2016. The sequential quarterly increase in consolidated assets under management reflects net inflows of $9.1 billion and market price appreciation of $9.4 billion in the third quarter of fiscal 2017.
“In the third quarter of fiscal 2017, Eaton Vance continued to deliver robust internal growth in managed assets and management fee revenue,” said Thomas E. Faust Jr., Chairman and Chief Executive Officer. “Our distinctive capabilities and strong performance across leading strategies are important differentiators for the Company in what remains a challenging marketplace for investment management.”
Average consolidated assets under management were $395.2 billion in the third quarter of fiscal 2017, up 22 percent from $324.9 billion in the third quarter of fiscal 2016 and up 5 percent from $376.5 billion in the second quarter of fiscal 2017.
Excluding performance-based fees, annualized management fee rates on consolidated assets under management averaged 34.2 basis points in the third quarter of fiscal 2017, down 4 percent from 35.6 basis points in the third quarter of fiscal 2016 and down 1 percent from 34.7 basis points in the second quarter of fiscal 2017. Changes in average management fee rates for the compared periods primarily reflect the ongoing shift in the Company’s mix of business toward lower-fee mandates.
Attachments 5 and 6 summarize the Company’s asset flows by investment mandate and investment vehicle. Attachments 7, 8 and 9 summarize the Company’s ending consolidated assets under management by investment mandate, investment vehicle and investment affiliate. Attachment 10 shows the Company’s average annualized effective management fee rates by investment mandate.
As shown in Attachments 5 and 6, consolidated sales and other inflows were $39.8 billion in the third quarter of fiscal 2017, up 26 percent from $31.6 billion in the third quarter of fiscal 2016 and up 2 percent from $39.0 billion in the second quarter of fiscal 2017.
Consolidated redemptions and other outflows were $30.7 billion in the third quarter of fiscal 2017, up 25 percent from $24.5 billion in the third quarter of fiscal 2016 and up 18 percent from $26.0 billion in the second quarter of fiscal 2017.
As of July 31, 2017, the Company’s 49 percent-owned affiliate Hexavest, Inc. (Hexavest) managed $15.4 billion of client assets, up 7 percent from $14.4 billion of managed assets on July 31, 2016 and $14.5 billion of managed assets on April 30, 2017. Hexavest had net inflows of $0.4 billion in the third quarter of fiscal 2017 versus net outflows of $0.5 billion and $0.6 billion in the third quarter of fiscal 2016 and second quarter of fiscal 2017, respectively. Attachment 11 summarizes assets under management and asset flow information for Hexavest. Other than Eaton Vance-sponsored funds for which Hexavest is adviser or sub-adviser, the managed assets and flows of Hexavest are not included in Eaton Vance consolidated totals.
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Financial Highlights
| Three Months Ended | ||||||||||||
| (in thousands, except per share figures) | ||||||||||||
| July 31, | April 30, | July 31, | ||||||||||
| 2017 | 2017 | 2016 | ||||||||||
| Revenue | $ | 393,746 | $ | 374,632 | $ | 341,168 | ||||||
| Expenses | 272,715 | 256,712 | 234,443 | |||||||||
| Operating income | 121,031 | 117,920 | 106,725 | |||||||||
| Operating margin | 30.7 | % | 31.5 | % | 31.3 | % | ||||||
| Non-operating income (expense) | (6,039 | ) | 1,223 | (4,131 | ) | |||||||
| Income taxes | (42,462 | ) | (44,654 | ) | (39,781 | ) | ||||||
| Equity in net income of affiliates, net of tax | 2,323 | 3,144 | 2,961 | |||||||||
| Net income | 74,853 | 77,633 | 65,774 | |||||||||
| Net income attributable to non-controlling and other beneficial interests | (7,492 | ) | (5,658 | ) | (2,875 | ) | ||||||
| Net income attributable to Eaton Vance Corp. shareholders | $ | 67,361 | $ | 71,975 | $ | 62,899 | ||||||
| Adjusted net income attributable to Eaton Vance Corp. shareholders | $ | 72,849 | $ | 71,974 | $ | 64,290 | ||||||
| Earnings per diluted share | $ | 0.58 | $ | 0.62 | $ | 0.55 | ||||||
| Adjusted earnings per diluted share | $ | 0.62 | $ | 0.62 | $ | 0.56 | ||||||
Third Quarter Fiscal 2017 vs. Third Quarter Fiscal 2016
In the third quarter of fiscal 2017, revenue increased 15 percent to $393.7 million from $341.2 million in the third quarter of fiscal 2016. Management fees were up 16 percent, as a 22 percent increase in average consolidated assets under management more than offset lower average management fee rates. Performance fees contributed $0.5 million in the third quarter of fiscal 2017 compared to $2.7 million in the third quarter of fiscal 2016. Distribution and service fee revenues collectively were up 10 percent, reflecting higher managed assets in fund share classes that are subject to these fees.
Operating expenses increased 16 percent to $272.7 million in the third quarter of fiscal 2017 from $234.4 million in the third quarter of fiscal 2016, reflecting increases in compensation, distribution expense, service fee expense, amortization of deferred sales commissions, fund-related expenses and other operating expenses. The increase in compensation expense reflects higher sales-based and operating income-based bonus accruals, compensation expenses in connection with the Calvert acquisition, higher salaries and benefits associated with other increases in headcount, higher stock-based compensation and compensation costs associated with employee terminations. Costs associated with employee terminations totaled $3.0 million in the third quarter of fiscal 2017 versus $1.9 million in the third quarter of fiscal 2016. The increase in distribution expense reflects an increase in closed-end fund structuring fees and higher marketing and promotion costs, primarily driven by higher average managed assets and the acquisition of the Calvert business. The increase in service fee expense reflects higher average assets under management in fund share classes subject to service fee payments. The increase in amortization of deferred sales commissions reflects higher commission amortization for private funds, partially offset by lower Class B and Class C commission amortization. The increase in fund-related expenses reflects higher fund subsidies attributable primarily to the addition of the Calvert funds, higher sub-advisory fees paid, an increase in fund expenses borne by the Company on funds for which it earns an all-in fee and $1.9 million in one-time reimbursements made to the funds by the Company in the quarter. The increase in other operating expenses reflects higher travel, communications, information technology, professional services, facilities, charitable and other corporate expenses. Other operating expenses in the third quarter of fiscal 2017 included approximately $0.6 million of one-time legal and consulting costs in conjunction with investigating the fraudulent activities of a former Eaton Vance Management trader, as publically disclosed in April 2017.
| 3 |
Expenses in connection with the Company’s NextSharesTM exchange-traded managed funds (NextShares) initiative were $2.0 million in the third quarter of fiscal 2017 and $2.4 million in the third quarter of fiscal 2016.
Operating income was up 13 percent to $121.0 million in the third quarter of fiscal 2017 from $106.7 million in the third quarter of fiscal 2016. Operating margin decreased to 30.7 percent in the third quarter of fiscal 2017 from 31.3 percent in the third quarter of fiscal 2016. Adjusting to remove the $3.5 million and $2.3 million of closed-end fund structuring fees paid during the third quarters of fiscal 2017 and fiscal 2016, respectively, operating income was up 14 percent and operating margins decreased to 31.6 percent in the third quarter of fiscal 2017 from 32.0 percent in the third quarter of fiscal 2016.
Non-operating expense totaled $6.0 million in the third quarter of fiscal 2017 versus $4.1 million in the third quarter of fiscal 2016. The year-over-year change primarily reflects $5.4 million of costs incurred in connection with retiring the Company’s 2017 Senior Notes in the third quarter of fiscal 2017, partially offset by a $1.2 million decrease in interest expense and a $2.4 million increase in net gains and other investment income from the Company’s investments in sponsored products. The decrease in interest expense primarily reflects the May 2017 retirement of $250 million in aggregate principal amount of the Company’s 6.5 percent 2017 Senior Notes and the April 2017 issuance of $300 million in aggregate principal amount of 3.5 percent senior notes due April 6, 2027 (2027 Senior Notes).
The Company’s effective tax rate, calculated as a percentage of income before income taxes and equity in net income of affiliates, was 36.9 percent in the third quarter of fiscal 2017 and 38.8 percent in the third quarter of fiscal 2016.
Equity in net income of affiliates was $2.3 million and $3.0 million in the third quarters of fiscal 2017 and fiscal 2016, respectively, substantially all relating to the Company’s investment in Hexavest.
As detailed in Attachment 3, net income attributable to non-controlling and other beneficial interests was $7.5 million in the third quarter of fiscal 2017 and $2.9 million in the third quarter of fiscal 2016.
Third Quarter Fiscal 2017 vs. Second Quarter Fiscal 2017
In the third quarter of fiscal 2017, revenue increased 5 percent to $393.7 million from $374.6 million in the second quarter of fiscal 2017. Management fees were up 6 percent, as a 5 percent increase in average consolidated assets under management and three more fee days in the quarter more than offset lower average management fee rates. Performance fees contributed $0.5 million in the third quarter of fiscal 2017 and were negligible in the second quarter of fiscal 2017. Distribution and service fee revenues collectively were up 1 percent sequentially, reflecting higher managed assets in fund share classes that are subject to these fees.
Operating expenses increased 6 percent to $272.7 million in the third quarter of fiscal 2017 from $256.7 million in the second quarter of fiscal 2017, reflecting increases in compensation, distribution expense, service fee expense, amortization of deferred sales commissions, fund-related expenses and other operating expenses. The increase in compensation expense reflects three more payroll days in the third quarter, higher operating income-based bonus accruals, higher salaries associated with an increase in headcount, higher stock-based compensation and other compensation costs associated with employee terminations. Costs associated with employee terminations totaled $3.0 million in the third quarter of fiscal 2017 versus $0.2 in the preceding fiscal quarter. The increase in distribution expense reflects $3.5 million of structuring fees paid in connection with the July 2017 initial public offering of the 2022 Target Term Trust and higher marketing and promotion costs, primarily driven by the increase in average managed assets. The increase in service fee expense reflects higher average assets under management in fund share classes subject to service fee payments. The increase in amortization of deferred sales commissions reflects higher private fund commission amortization, partially offset by lower Class B and Class C commission amortization. The increase in fund-related expenses primarily reflects higher fund expenses borne by the Company on funds for which it earns an all-in fee and $1.9 million in one-time reimbursements made to the funds by the Company in the quarter. Other operating expenses in the third fiscal quarter included approximately $0.6 million of one-time legal and consulting costs in conjunction with investigating the fraudulent activities of a former Eaton Vance Management trader as previously disclosed.
| 4 |
NextShares-related expenses were $2.0 million in the third quarter of fiscal 2017 and $1.8 million in the second quarter of fiscal 2017.
Operating income was up 3 percent to $121.0 million in the third quarter of fiscal 2017 from $117.9 million in the second quarter of fiscal 2017. Operating margin decreased to 30.7 percent in the third quarter from 31.5 percent in the second quarter. Adjusting to remove the $3.5 million of closed-end fund structuring fees paid during the third quarter of fiscal 2017, operating income was up 6 percent from the second quarter of fiscal 2016 and adjusted operating margin in the current quarter was 31.6 percent.
Non-operating expense totaled $6.0 million in the third quarter of fiscal 2017 versus $1.2 million of non-operating income in the second quarter of fiscal 2017. The sequential change primarily reflects $5.4 million of costs incurred in connection with retiring the Company’s 2017 Senior Notes in the third quarter of fiscal 2017 and a $3.8 million decrease in net gains and other investment income from the Company’s investments in sponsored products, partially offset by a $1.9 million decrease in interest expense. Net gains and other investment income in the second quarter of fiscal 2017 included a $1.9 million gain recognized upon the release from escrow of payments received in connection with the sale of the Company’s equity interest in Lloyd George Management (BVI) Ltd. in fiscal 2011. The decrease in interest expense primarily reflects the May retirement of the Company’s 6.5 percent 2017 Senior Notes and the April issuance of the Company’s 3.5 percent 2027 Senior Notes.
The Company’s effective tax rate, calculated as a percentage of income before income taxes and equity in net income of affiliates, was 36.9 percent in the third quarter of fiscal 2017 and 37.5 percent in the second quarter of fiscal 2017.
Equity in net income of affiliates was $2.3 million in the third quarter of fiscal 2017 and $3.1 million in the second quarter of fiscal 2017. In the third quarter of fiscal 2017, substantially all equity in net income of affiliates related to the Company’s investment in Hexavest. Equity in net income of affiliates in the second quarter of fiscal 2017 included $3.0 million from the Company’s investment in Hexavest and $0.1 million from the Company’s investment in a private equity partnership.
As detailed in Attachment 3, net income attributable to non-controlling and other beneficial interests was $7.5 million in the third quarter of fiscal 2017 and $5.7 million in the second quarter of fiscal 2017.
Balance Sheet Information
Cash and cash equivalents totaled $550.2 million on July 31, 2017, with no outstanding borrowings against the Company’s $300 million credit facility. Included within investments is $84.5 million of holdings of short-term debt securities with maturities between 90 days and one year. During the first nine months of fiscal 2017, the Company used $100.2 million to repurchase and retire approximately 2.3 million shares of its Non-Voting Common Stock under its repurchase authorizations. Of the current 8.0 million share repurchase authorization, approximately 6.6 million shares remain available.
Conference Call Information
Eaton Vance Corp. will host a conference call and webcast at 11:00 AM eastern time today to discuss the financial results for the three and nine months ended July 31, 2017. To participate in the conference call, please dial 866-521-4909 (domestic) or 647-427-2311 (international) and refer to “Eaton Vance Corp. Third Quarter Earnings.” A webcast of the conference call can also be accessed via Eaton Vance’s website, eatonvance.com.
| 5 |
A replay of the call will be available for one week by calling 800-585-8367 (domestic) or 416-621-4642 (international) or by accessing Eaton Vance’s website, eatonvance.com. To listen to the replay, enter the conference ID number 69359423 when instructed.
About Eaton Vance Corp.
Eaton Vance is a leading global asset manager whose history dates to 1924. With offices in North America, Europe, Asia and Australia, Eaton Vance and its affiliates offer individuals and institutions a broad array of investment strategies and wealth management solutions. The Company’s long record of providing exemplary service, timely innovation and attractive returns through a variety of market conditions has made Eaton Vance the investment manager of choice for many of today’s most discerning investors. For more information about Eaton Vance, visit eatonvance.com.
Forward-Looking Statements
This news release may contain statements that are not historical facts, referred to as “forward-looking statements.” The Company’s actual future results may differ significantly from those stated in any forward-looking statements, depending on factors such as changes in securities or financial markets or general economic conditions, client sales and redemption activity, the continuation of investment advisory, administration, distribution and service contracts, and other risks discussed in the Company’s filings with the Securities and Exchange Commission.
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Attachment 1
Eaton Vance Corp.
Summary of Results of Operations
(in thousands, except per share figures)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||
| % | % | |||||||||||||||||||||||||||||||
| Change | Change | |||||||||||||||||||||||||||||||
| Q3 2017 | Q3 2017 | |||||||||||||||||||||||||||||||
| July 31, | April 30, | July 31, | vs. | vs. | July 31, | July 31, | % | |||||||||||||||||||||||||
| 2017 | 2017 | 2016 | Q2 2017 | Q3 2016 | 2017 | 2016 | Change | |||||||||||||||||||||||||
| Revenue: | ||||||||||||||||||||||||||||||||
| Management fees | $ | 339,866 | $ | 321,629 | $ | 292,814 | 6 | % | 16 | % | $ | 966,148 | $ | 852,739 | 13 | % | ||||||||||||||||
| Distribution and underwriter fees | 20,114 | 19,918 | 18,883 | 1 | 7 | 58,991 | 56,216 | 5 | ||||||||||||||||||||||||
| Service fees | 30,515 | 30,067 | 27,150 | 1 | 12 | 89,493 | 80,203 | 12 | ||||||||||||||||||||||||
| Other revenue | 3,251 | 3,018 | 2,321 | 8 | 40 | 8,705 | 6,856 | 27 | ||||||||||||||||||||||||
| Total revenue | 393,746 | 374,632 | 341,168 | 5 | 15 | 1,123,337 | 996,014 | 13 | ||||||||||||||||||||||||
| Expenses: | ||||||||||||||||||||||||||||||||
| Compensation and related costs | 142,338 | 135,467 | 121,827 | 5 | 17 | 412,940 | 365,856 | 13 | ||||||||||||||||||||||||
| Distribution expense | 37,160 | 32,007 | 31,616 | 16 | 18 | 100,284 | 88,338 | 14 | ||||||||||||||||||||||||
| Service fee expense | 28,630 | 27,827 | 24,831 | 3 | 15 | 83,384 | 73,036 | 14 | ||||||||||||||||||||||||
| Amortization of deferred sales commissions | 4,182 | 4,026 | 3,861 | 4 | 8 | 12,062 | 11,862 | 2 | ||||||||||||||||||||||||
| Fund-related expenses | 14,029 | 11,848 | 8,939 | 18 | 57 | 36,752 | 26,133 | 41 | ||||||||||||||||||||||||
| Other expenses | 46,376 | 45,537 | 43,369 | 2 | 7 | 133,528 | 127,671 | 5 | ||||||||||||||||||||||||
| Total expenses | 272,715 | 256,712 | 234,443 | 6 | 16 | 778,950 | 692,896 | 12 | ||||||||||||||||||||||||
| Operating income | 121,031 | 117,920 | 106,725 | 3 | 13 | 344,387 | 303,118 | 14 | ||||||||||||||||||||||||
| Non-operating income (expense): | ||||||||||||||||||||||||||||||||
| Gains and other investment income, net | 5,537 | 9,288 | 3,137 | (40 | ) | 77 | 15,319 | 9,766 | 57 | |||||||||||||||||||||||
| Interest expense | (6,180 | ) | (8,065 | ) | (7,342 | ) | (23 | ) | (16 | ) | (21,592 | ) | (22,024 | ) | (2 | ) | ||||||||||||||||
| Loss on extinguishment of debt | (5,396 | ) | - | - | NM | NM | (5,396 | ) | - | NM | ||||||||||||||||||||||
| Other income (expense) of consolidated collateralized loan obligation (CLO) entity: | ||||||||||||||||||||||||||||||||
| Gains and other investment income, net | - | - | 4,467 | - | NM | - | 21,654 | NM | ||||||||||||||||||||||||
| Interest expense | - | - | (4,393 | ) | - | NM | - | (9,107 | ) | NM | ||||||||||||||||||||||
| Total non-operating income (expense) | (6,039 | ) | 1,223 | (4,131 | ) | NM | 46 | (11,669 | ) | 289 | NM | |||||||||||||||||||||
| Income before income taxes and equity in net income of affiliates | 114,992 | 119,143 | 102,594 | (3 | ) | 12 | 332,718 | 303,407 | 10 | |||||||||||||||||||||||
| Income taxes | (42,462 | ) | (44,654 | ) | (39,781 | ) | (5 | ) | 7 | (123,864 | ) | (112,793 | ) | 10 | ||||||||||||||||||
| Equity in net income of affiliates, net of tax | 2,323 | 3,144 | 2,961 | (26 | ) | (22 | ) | 7,973 | 7,847 | 2 | ||||||||||||||||||||||
| Net income | 74,853 | 77,633 | 65,774 | (4 | ) | 14 | 216,827 | 198,461 | 9 | |||||||||||||||||||||||
| Net income attributable to non-controlling and other beneficial interests | (7,492 | ) | (5,658 | ) | (2,875 | ) | 32 | 161 | (16,780 | ) | (22,209 | ) | (24 | ) | ||||||||||||||||||
| Net income attributable to Eaton Vance Corp. shareholders | $ | 67,361 | $ | 71,975 | $ | 62,899 | (6 | ) | 7 | $ | 200,047 | $ | 176,252 | 14 | ||||||||||||||||||
| Earnings per share: | ||||||||||||||||||||||||||||||||
| Basic | $ | 0.61 | $ | 0.65 | $ | 0.57 | (6 | ) | 7 | $ | 1.81 | $ | 1.60 | 13 | ||||||||||||||||||
| Diluted | $ | 0.58 | $ | 0.62 | $ | 0.55 | (6 | ) | 5 | $ | 1.73 | $ | 1.55 | 12 | ||||||||||||||||||
| Weighted average shares outstanding: | ||||||||||||||||||||||||||||||||
| Basic | 111,284 | 110,875 | 109,533 | - | 2 | 110,540 | 110,275 | - | ||||||||||||||||||||||||
| Diluted | 117,051 | 115,962 | 113,810 | 1 | 3 | 115,751 | 114,044 | 1 | ||||||||||||||||||||||||
| Dividends declared per share | $ | 0.280 | $ | 0.280 | $ | 0.265 | - | 6 | $ | 0.840 | $ | 0.795 | 6 | |||||||||||||||||||
| 7 |
Attachment 2
Eaton Vance Corp.
Reconciliation of net income attributable to Eaton Vance Corp.
shareholders to adjusted net income attributable to Eaton Vance Corp.
shareholders and earnings per diluted share to adjusted earnings per diluted share
(in thousands, except per share figures)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||
| % | % | |||||||||||||||||||||||||||||||
| Change | Change | |||||||||||||||||||||||||||||||
| Q3 2017 | Q3 2017 | |||||||||||||||||||||||||||||||
| July 31, | April 30, | July 31, | vs. | vs. | July 31, | July 31, | % | |||||||||||||||||||||||||
| 2017 | 2017 | 2016 | Q2 2017 | Q3 2016 | 2017 | 2016 | Change | |||||||||||||||||||||||||
| Net income attributable to Eaton Vance Corp. shareholders | $ | 67,361 | $ | 71,975 | $ | 62,899 | (6 | )% | 7 | % | $ | 200,047 | $ | 176,252 | 14 | % | ||||||||||||||||
| Non-controlling interest value adjustments | 3 | (1 | ) | (10 | ) | NM | NM | (71 | ) | 123 | NM | |||||||||||||||||||||
| Closed-end fund structuring fees, net of tax(1) | 2,139 | - | 1,401 | NM | 53 | 2,139 | 1,401 | 53 | ||||||||||||||||||||||||
| Loss on extinguishment of debt, net of tax(2) | 3,346 | - | - | NM | NM | 3,346 | - | NM | ||||||||||||||||||||||||
| Adjusted net income attributable to Eaton Vance Corp. shareholders | ||||||||||||||||||||||||||||||||
| $ | 72,849 | $ | 71,974 | $ | 64,290 | $ | 1 | 13 | 205,461 | $ | 177,776 | $ | 16 | |||||||||||||||||||
| Earnings per diluted share | $ | 0.58 | $ | 0.62 | $ | 0.55 | (6 | ) | 5 | $ | 1.73 | $ | 1.55 | 12 | ||||||||||||||||||
| Non-controlling interest value adjustments | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
| Closed-end fund structuring fees, net of tax | 0.01 | - | 0.01 | NM | - | 0.02 | 0.01 | 100 | ||||||||||||||||||||||||
| Loss on extinguishment of debt, net of tax | 0.03 | - | - | NM | NM | 0.03 | - | NM | ||||||||||||||||||||||||
| Adjusted earnings per diluted share | $ | 0.62 | $ | 0.62 | $ | 0.56 | - | 11 | $ | 1.78 | $ | 1.56 | 14 | |||||||||||||||||||
| (1) | For the three and nine months ended July 31, 2017, reflects structuring fees of $3.5 million (net of the associated impact to taxes of $1.4 million) paid in connection with the July 201 initial public offering of Eaton Vance Floating-Rate 2022 Target Term Trust. For the three and nine months ended July 31, 2016, reflects structuring fees of $2.3 million (net of the associated impact to taxes of $0.9 million) paid in connection with the May 2016 initial public offering of Eaton Vance High Income 2021 Target Term Trust. |
| (2) | Reflects the $5.4 million loss on extinguishment of debt associated with retiring the Company’s 2017 Senior Notes in May, net of the associated impact to taxes of $2.1 million. |
Eaton Vance Corp.
Reconciliation of operating income and operating margin
to adjusted operating income and adjusted operating margin
(in thousands)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||
| % | % | |||||||||||||||||||||||||||||||
| Change | Change | |||||||||||||||||||||||||||||||
| Q3 2017 | Q3 2017 | |||||||||||||||||||||||||||||||
| July 31, | April 30, | July 31, | vs. | vs. | July 31, | July 31, | % | |||||||||||||||||||||||||
| 2017 | 2017 | 2016 | Q2 2017 | Q3 2016 | 2017 | 2016 | Change | |||||||||||||||||||||||||
| Operating income | $ | 121,031 | $ | 117,920 | $ | 106,725 | 3 | % | 13 | % | $ | 344,387 | $ | 303,118 | 14 | % | ||||||||||||||||
| Closed-end fund structuring fees | 3,450 | - | 2,291 | NM | 51 | 3,450 | 2,291 | 51 | ||||||||||||||||||||||||
| Adjusted operating income | $ | 124,481 | $ | 117,920 | $ | 109,016 | 6 | 14 | $ | 347,837 | $ | 305,409 | 14 | |||||||||||||||||||
| Operating margin | 30.7 | % | 31.5 | % | 31.3 | % | (3 | ) | (2 | ) | 30.7 | % | 30.4 | % | 1 | |||||||||||||||||
| Closed-end fund structuring fees | 0.9 | - | 0.7 | NM | 29 | 0.3 | 0.3 | - | ||||||||||||||||||||||||
| Adjusted operating margin | 31.6 | % | 31.5 | % | 32.0 | % | - | (1 | ) | 31.0 | % | 30.7 | % | 1 | ||||||||||||||||||
| 8 |
Attachment 3
Eaton Vance Corp.
Components of net income attributable
to non-controlling and other beneficial interests
(in thousands)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||
| % | % | |||||||||||||||||||||||||||||||
| Change | Change | |||||||||||||||||||||||||||||||
| Q3 2017 | Q3 2017 | |||||||||||||||||||||||||||||||
| July 31, | April 30, | July 31, | vs. | vs. | July 31, | July 31, | % | |||||||||||||||||||||||||
| 2017 | 2017 | 2016 | Q2 2017 | Q3 2016 | 2017 | 2016 | Change | |||||||||||||||||||||||||
| Consolidated sponsored funds | $ | 3,124 | $ | 1,727 | $ | 343 | 81 | % | 811 | % | $ | 4,836 | $ | 327 | NM | % | ||||||||||||||||
| Majority-owned subsidiaries | 4,365 | 3,932 | 3,233 | 11 | 35 | 12,015 | 9,749 | 23 | ||||||||||||||||||||||||
| Non-controlling interest value adjustments | 3 | (1 | ) | (9 | ) | NM | NM | (71 | ) | 124 | NM | |||||||||||||||||||||
| Consolidated CLO entities | - | - | (692 | ) | - | NM | - | 12,009 | NM | |||||||||||||||||||||||
| Net income attributable to non-controlling and other beneficial interests | $ | 7,492 | $ | 5,658 | $ | 2,875 | 32 | 161 | $ | 16,780 | $ | 22,209 | (24 | ) | ||||||||||||||||||
| 9 |
Attachment 4
Eaton Vance Corp.
Balance Sheet
(in thousands, except per share figures)
| July 31, | October 31, | |||||||
| 2017 | 2016(1) | |||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 550,171 | $ | 424,174 | ||||
| Management fees and other receivables | 201,766 | 186,172 | ||||||
| Investments | 750,168 | 589,773 | ||||||
| Deferred sales commissions | 35,001 | 27,076 | ||||||
| Deferred income taxes | 64,118 | 73,295 | ||||||
| Equipment and leasehold improvements, net | 47,188 | 44,427 | ||||||
| Intangible assets, net | 92,051 | 46,809 | ||||||
| Goodwill | 259,681 | 248,091 | ||||||
| Loan to affiliate | 5,000 | 5,000 | ||||||
| Other assets | 68,891 | 85,565 | ||||||
| Total assets | $ | 2,074,035 | $ | 1,730,382 | ||||
| Liabilities, Temporary Equity and Permanent Equity | ||||||||
| Liabilities: | ||||||||
| Accrued compensation | $ | 151,343 | $ | 173,485 | ||||
| Accounts payable and accrued expenses | 70,878 | 59,927 | ||||||
| Dividend payable | 39,487 | 36,525 | ||||||
| Debt | 618,582 | 571,773 | ||||||
| Other liabilities | 102,625 | 75,069 | ||||||
| Total liabilities | 982,915 | 916,779 | ||||||
| Commitments and contingencies | ||||||||
| Temporary Equity: | ||||||||
| Redeemable non-controlling interests | 189,154 | 109,028 | ||||||
| Total temporary equity | 189,154 | 109,028 | ||||||
| Permanent Equity: | ||||||||
| Voting Common Stock, par value $0.00390625 per share: | ||||||||
| Authorized, 1,280,000 shares | ||||||||
| Issued and outstanding, 442,932 and 442,932 shares, respectively | 2 | 2 | ||||||
| Non-Voting Common Stock, par value $0.00390625 per share: | ||||||||
| Authorized, 190,720,000 shares | ||||||||
| Issued and outstanding, 116,163,127 and 113,545,008 shares, respectively | 454 | 444 | ||||||
| Additional paid-in capital | 77,699 | - | ||||||
| Notes receivable from stock option exercises | (11,205 | ) | (12,074 | ) | ||||
| Accumulated other comprehensive loss | (41,614 | ) | (57,583 | ) | ||||
| Retained earnings | 875,867 | 773,000 | ||||||
| Total Eaton Vance Corp. shareholders’ equity | 901,203 | 703,789 | ||||||
| Non-redeemable non-controlling interests | 763 | 786 | ||||||
| Total permanent equity | 901,966 | 704,575 | ||||||
| Total liabilities, temporary equity and permanent equity | $ | 2,074,035 | $ | 1,730,382 | ||||
| (1) | On November 1, 2016 the Company adopted Accounting Standard Update 2015-03, which requires certain debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability. The October 31, 2016 Balance Sheet shown above reflects the reclassification of $2.2 million of debt issuance costs from Other assets to Debt. |
| 10 |
Attachment 5
Eaton Vance Corp.
Consolidated Assets Under Management and Net Flows by Investment Mandate(1)(2)
(in millions)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| July 31, | April 30, | July 31, | July 31, | July 31, | ||||||||||||||||
| 2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||
| Equity assets – beginning of period(3)(4) | $ | 104,666 | $ | 99,538 | $ | 88,540 | $ | 89,981 | $ | 89,890 | ||||||||||
| Sales and other inflows | 5,745 | 4,998 | 3,763 | 15,955 | 11,488 | |||||||||||||||
| Redemptions/outflows | (4,259 | ) | (4,203 | ) | (3,437 | ) | (14,317 | ) | (11,873 | ) | ||||||||||
| Net flows | 1,486 | 795 | 326 | 1,638 | (385 | ) | ||||||||||||||
| Assets acquired(5) | - | - | - | 5,704 | - | |||||||||||||||
| Exchanges | 7 | 9 | (25 | ) | 60 | (18 | ) | |||||||||||||
| Market value change | 4,039 | 4,324 | 2,985 | 12,815 | 2,339 | |||||||||||||||
| Equity assets – end of period | $ | 110,198 | $ | 104,666 | $ | 91,826 | $ | 110,198 | $ | 91,826 | ||||||||||
| Fixed income assets – beginning of period(4)(6) | 66,881 | 65,136 | 56,356 | 60,607 | 52,465 | |||||||||||||||
| Sales and other inflows | 5,516 | 5,633 | 5,111 | 16,841 | 15,735 | |||||||||||||||
| Redemptions/outflows | (4,178 | ) | (4,490 | ) | (2,711 | ) | (13,006 | ) | (9,991 | ) | ||||||||||
| Net flows | 1,338 | 1,143 | 2,400 | 3,835 | 5,744 | |||||||||||||||
| Assets acquired(5) | - | - | - | 4,170 | - | |||||||||||||||
| Exchanges | (2 | ) | (38 | ) | (3 | ) | (147 | ) | 44 | |||||||||||
| Market value change | 491 | 640 | 618 | 243 | 1,118 | |||||||||||||||
| Fixed income assets – end of period | $ | 68,708 | $ | 66,881 | $ | 59,371 | $ | 68,708 | $ | 59,371 | ||||||||||
| Floating-rate income assets – beginning of period(4) | 36,957 | 34,051 | 32,688 | 32,107 | 35,534 | |||||||||||||||
| Sales and other inflows | 3,567 | 4,337 | 2,008 | 12,874 | 5,398 | |||||||||||||||
| Redemptions/outflows | (2,113 | ) | (1,543 | ) | (2,507 | ) | (6,962 | ) | (8,653 | ) | ||||||||||
| Net flows | 1,454 | 2,794 | (499 | ) | 5,912 | (3,255 | ) | |||||||||||||
| Exchanges | (8 | ) | 34 | 6 | 146 | (44 | ) | |||||||||||||
| Market value change | 351 | 78 | 202 | 589 | 162 | |||||||||||||||
| Floating-rate income assets – end of period | $ | 38,754 | $ | 36,957 | $ | 32,397 | $ | 38,754 | $ | 32,397 | ||||||||||
| Alternative assets – beginning of period(4) | 11,212 | 10,775 | 9,720 | 10,687 | 10,289 | |||||||||||||||
| Sales and other inflows | 1,359 | 1,089 | 1,182 | 3,546 | 3,016 | |||||||||||||||
| Redemptions/outflows | (666 | ) | (745 | ) | (1,009 | ) | (2,351 | ) | (3,076 | ) | ||||||||||
| Net flows | 693 | 344 | 173 | 1,195 | (60 | ) | ||||||||||||||
| Exchanges | - | (5 | ) | (2 | ) | (7 | ) | - | ||||||||||||
| Market value change | (28 | ) | 98 | 70 | 2 | (268 | ) | |||||||||||||
| Alternative assets – end of period | $ | 11,877 | $ | 11,212 | $ | 9,961 | $ | 11,877 | $ | 9,961 | ||||||||||
| Portfolio implementation assets – beginning of period | 86,376 | 80,129 | 66,132 | 71,426 | 59,487 | |||||||||||||||
| Sales and other inflows | 5,869 | 5,806 | 5,857 | 18,160 | 16,801 | |||||||||||||||
| Redemptions/outflows | (2,790 | ) | (3,384 | ) | (2,946 | ) | (9,260 | ) | (7,253 | ) | ||||||||||
| Net flows | 3,079 | 2,422 | 2,911 | 8,900 | 9,548 | |||||||||||||||
| Exchanges | 5 | - | - | 5 | (13 | ) | ||||||||||||||
| Market value change | 3,825 | 3,825 | 3,385 | 12,954 | 3,406 | |||||||||||||||
| Portfolio implementation assets – end of period | $ | 93,285 | $ | 86,376 | $ | 72,428 | $ | 93,285 | $ | 72,428 | ||||||||||
| Exposure management assets – beginning of period | 80,921 | 74,110 | 65,235 | 71,572 | 63,689 | |||||||||||||||
| Sales and other inflows | 17,734 | 17,103 | 13,663 | 56,293 | 37,530 | |||||||||||||||
| Redemptions/outflows | (16,649 | ) | (11,668 | ) | (11,912 | ) | (47,897 | ) | (34,661 | ) | ||||||||||
| Net flows | 1,085 | 5,435 | 1,751 | 8,396 | 2,869 | |||||||||||||||
| Market value change | 757 | 1,376 | 1,421 | 2,795 | 1,849 | |||||||||||||||
| Exposure management assets – end of period(2) | $ | 82,763 | $ | 80,921 | $ | 68,407 | $ | 82,763 | $ | 68,407 | ||||||||||
| Total assets under management – beginning of period | 387,013 | 363,739 | 318,671 | 336,380 | 311,354 | |||||||||||||||
| Sales and other inflows | 39,790 | 38,966 | 31,584 | 123,669 | 89,968 | |||||||||||||||
| Redemptions/outflows | (30,655 | ) | (26,033 | ) | (24,522 | ) | (93,793 | ) | (75,507 | ) | ||||||||||
| Net flows | 9,135 | 12,933 | 7,062 | 29,876 | 14,461 | |||||||||||||||
| Assets acquired(5) | - | - | - | 9,874 | - | |||||||||||||||
| Exchanges | 2 | - | (24 | ) | 57 | (31 | ) | |||||||||||||
| Market value change | 9,435 | 10,341 | 8,681 | 29,398 | 8,606 | |||||||||||||||
| Total assets under management – end of period | $ | 405,585 | $ | 387,013 | $ | 334,390 | $ | 405,585 | $ | 334,390 | ||||||||||
| (1) | Consolidated Eaton Vance Corp. See Attachment 11 for managed assets and flows of 49 percent-owned Hexavest Inc. |
| (2) | Reported consolidated assets under management and net flows exclude client positions in exposure management mandates identified as transitory in nature. As of July 31, 2017, such positions totaled $12.6 billion. |
| (3) | Includes balanced and multi-asset mandates. |
| (4) | In the second quarter of fiscal 2017, the Company reclassified among investment mandates certain managed assets and flows. The above presentation of prior year results has been revised for comparability purposes. The reclassification does not affect total consolidated assets under management or total consolidated net flows for any period. |
| (5) | Managed assets gained in the acquisition of the business assets of Calvert on December 30, 2016. Equity category and total acquired assets under management exclude $2.1 billion of managed assets of Calvert Equity Portfolio sub-advised by Atlanta Capital that were previously included in the Company’s consolidated managed assets as institutional separate account managed assets. |
| (6) | Includes cash management mandates. |
| 11 |
Attachment 6
Eaton Vance Corp.
Consolidated Assets Under Management and Net Flows by Investment Vehicle(1)(2)
(in millions)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| July 31, | April 30, | July 31, | July 31, | July 31, | ||||||||||||||||
| 2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||
| Fund assets – beginning of period(3) | $ | 147,341 | $ | 141,802 | $ | 122,902 | $ | 125,722 | $ | 125,934 | ||||||||||
| Sales and other inflows | 9,736 | 9,959 | 7,571 | 30,664 | 22,807 | |||||||||||||||
| Redemptions/outflows | (7,641 | ) | (7,901 | ) | (6,385 | ) | (24,946 | ) | (22,941 | ) | ||||||||||
| Net flows | 2,095 | 2,058 | 1,186 | 5,718 | (134 | ) | ||||||||||||||
| Assets acquired(4) | - | - | - | 9,821 | - | |||||||||||||||
| Exchanges(5) | 2 | 69 | (24 | ) | 2,186 | (84 | ) | |||||||||||||
| Market value change | 3,296 | 3,412 | 2,295 | 9,287 | 643 | |||||||||||||||
| Fund assets – end of period | $ | 152,734 | $ | 147,341 | $ | 126,359 | $ | 152,734 | $ | 126,359 | ||||||||||
| Institutional separate account assets – beginning of period | 149,044 | 139,309 | 126,620 | 136,451 | 119,987 | |||||||||||||||
| Sales and other inflows | 21,227 | 20,592 | 19,501 | 66,452 | 51,341 | |||||||||||||||
| Redemptions/outflows | (19,109 | ) | (14,426 | ) | (15,225 | ) | (56,984 | ) | (42,072 | ) | ||||||||||
| Net flows | 2,118 | 6,166 | 4,276 | 9,468 | 9,269 | |||||||||||||||
| Assets acquired(4) | - | - | - | 40 | - | |||||||||||||||
| Exchanges(5) | - | - | - | (2,055 | ) | 420 | ||||||||||||||
| Market value change | 3,091 | 3,569 | 3,684 | 10,349 | 4,904 | |||||||||||||||
| Institutional separate account assets – end of period(2) | $ | 154,253 | $ | 149,044 | $ | 134,580 | $ | 154,253 | $ | 134,580 | ||||||||||
| High-net-worth separate account assets – beginning of period | 33,225 | 30,514 | 24,565 | 25,806 | 24,516 | |||||||||||||||
| Sales and other inflows | 3,103 | 2,161 | 903 | 9,827 | 4,583 | |||||||||||||||
| Redemptions/outflows | (1,347 | ) | (937 | ) | (803 | ) | (3,893 | ) | (3,997 | ) | ||||||||||
| Net flows | 1,756 | 1,224 | 100 | 5,934 | 586 | |||||||||||||||
| Exchanges | 4 | (49 | ) | 1 | (31 | ) | (337 | ) | ||||||||||||
| Market value change | 1,454 | 1,536 | 1,157 | 4,730 | 1,058 | |||||||||||||||
| High-net-worth separate account assets – end of period | $ | 36,439 | $ | 33,225 | $ | 25,823 | $ | 36,439 | $ | 25,823 | ||||||||||
| Retail managed account assets – beginning of period | 57,403 | 52,114 | 44,584 | 48,401 | 40,917 | |||||||||||||||
| Sales and other inflows | 5,724 | 6,254 | 3,609 | 16,726 | 11,237 | |||||||||||||||
| Redemptions/outflows | (2,558 | ) | (2,769 | ) | (2,109 | ) | (7,970 | ) | (6,497 | ) | ||||||||||
| Net flows | 3,166 | 3,485 | 1,500 | 8,756 | 4,740 | |||||||||||||||
| Assets acquired(4) | - | - | - | 13 | - | |||||||||||||||
| Exchanges | (4 | ) | (20 | ) | (1 | ) | (43 | ) | (30 | ) | ||||||||||
| Market value change | 1,594 | 1,824 | 1,545 | 5,032 | 2,001 | |||||||||||||||
| Retail managed account assets – end of period | $ | 62,159 | $ | 57,403 | $ | 47,628 | $ | 62,159 | $ | 47,628 | ||||||||||
| Total assets under management – beginning of period | 387,013 | 363,739 | 318,671 | 336,380 | 311,354 | |||||||||||||||
| Sales and other inflows | 39,790 | 38,966 | 31,584 | 123,669 | 89,968 | |||||||||||||||
| Redemptions/outflows | (30,655 | ) | (26,033 | ) | (24,522 | ) | (93,793 | ) | (75,507 | ) | ||||||||||
| Net flows | 9,135 | 12,933 | 7,062 | 29,876 | 14,461 | |||||||||||||||
| Assets acquired(4) | - | - | - | 9,874 | - | |||||||||||||||
| Exchanges | 2 | - | (24 | ) | 57 | (31 | ) | |||||||||||||
| Market value change | 9,435 | 10,341 | 8,681 | 29,398 | 8,606 | |||||||||||||||
| Total assets under management – end of period | $ | 405,585 | $ | 387,013 | $ | 334,390 | $ | 405,585 | $ | 334,390 | ||||||||||
| (1) | Consolidated Eaton Vance Corp. See Attachment 11 for managed assets and flows of 49 percent-owned Hexavest Inc. |
| (2) | Reported consolidated assets under management and net flows exclude client positions in exposure management mandates identified as transitory in nature. As of July 31, 2017, such positions (held as institutional separate accounts) totaled $12.6 billion. |
| (3) | Includes assets in cash management funds. |
| (4) | Managed assets gained in the acquisition of the business assets of Calvert on December 30, 2016. Fund category and total acquired assets under management exclude $2.1 billion of managed assets of Calvert Equity Portfolio sub-advised by Atlanta Capital that were previously included in the Company’s consolidated managed assets as institutional separate account managed assets. |
| (5) | Reflects the reclassification from institutional separate accounts to funds of $2.1 billion of managed assets of Calvert Equity Portfolio sub-advised by Atlanta Capital upon the Company’s acquisition of the business assets of Calvert on December 30, 2016. |
| 12 |
Attachment 7
Eaton Vance Corp.
Consolidated Assets under Management by Investment Mandate(1)(2)
(in millions)
| July 31, | April 30, | % | July 31, | % | ||||||||||||||||
| 2017 | 2017 | Change | 2016 | Change | ||||||||||||||||
| Equity(3)(4) | $ | 110,198 | $ | 104,666 | 5 | % | $ | 91,826 | 20 | % | ||||||||||
| Fixed income(4)(5) | 68,708 | 66,881 | 3 | % | 59,371 | 16 | % | |||||||||||||
| Floating-rate income(4) | 38,754 | 36,957 | 5 | % | 32,397 | 20 | % | |||||||||||||
| Alternative(4) | 11,877 | 11,212 | 6 | % | 9,961 | 19 | % | |||||||||||||
| Portfolio implementation | 93,285 | 86,376 | 8 | % | 72,428 | 29 | % | |||||||||||||
| Exposure management(2) | 82,763 | 80,921 | 2 | % | 68,407 | 21 | % | |||||||||||||
| Total | $ | 405,585 | $ | 387,013 | 5 | % | $ | 334,390 | 21 | % | ||||||||||
| (1) | Consolidated Eaton Vance Corp. See Attachment 11 for managed assets and flows of 49 percent-owned Hexavest Inc. |
| (2) | Reported consolidated assets under management exclude client positions in exposure management mandates identified as transitory in nature. As of July 31, 2017, such positions totaled $12.6 billion. |
| (3) | Includes balanced and multi-asset mandates. |
| (4) | In the second quarter of fiscal 2017, the Company reclassified among investment mandates certain managed assets. The above presentation of prior year results has been revised for comparability purposes. The reclassification does not affect total consolidated assets under management for any period. |
| (5) | Includes cash management mandates. |
Attachment 8
Eaton Vance Corp.
Consolidated Assets under Management by Investment Vehicle(1)(2)
(in millions)
| July 31, | April 30, | % | July 31, | % | ||||||||||||||||
| 2017 | 2017 | Change | 2016 | Change | ||||||||||||||||
| Open-end funds(3)(4) | $ | 95,797 | $ | 92,441 | 4 | % | $ | 74,699 | 28 | % | ||||||||||
| Private funds(5) | 32,289 | 30,781 | 5 | % | 27,661 | 17 | % | |||||||||||||
| Closed-end funds(6) | 24,648 | 24,119 | 2 | % | 23,999 | 3 | % | |||||||||||||
| Institutional separate account assets(2)(4) | 154,253 | 149,044 | 3 | % | 134,580 | 15 | % | |||||||||||||
| High-net-worth separate account assets | 36,439 | 33,225 | 10 | % | 25,823 | 41 | % | |||||||||||||
| Retail managed account assets | 62,159 | 57,403 | 8 | % | 47,628 | 31 | % | |||||||||||||
| Total | $ | 405,585 | $ | 387,013 | 5 | % | $ | 334,390 | 21 | % | ||||||||||
| (1) | Consolidated Eaton Vance Corp. See Attachment 11 for managed assets and flows of 49 percent-owned Hexavest Inc. |
| (2) | Reported consolidated assets under management exclude client positions in exposure management mandates identified as transitory in nature. As of July 31, 2017, such positions (held as institutional separate accounts) totaled $12.6 billion. |
| (3) | Includes assets in NextShares funds. |
| (4) | Reflects the reclassification from institutional separate accounts to open-end funds of $2.1 billion of managed assets of Calvert Equity Portfolio sub-advised by Atlanta Capital upon the Company’s acquisition of the business assets of Calvert on December 30, 2016. |
| (5) | Includes privately offered equity, fixed income and floating-rate income funds and CLO entities. |
| (6) | Includes unit investment trusts. |
Attachment 9
Eaton Vance Corp.
Consolidated Assets under Management by Investment Affiliate(1)(2)
(in millions)
| July 31, | April 30, | % | July 31, | % | ||||||||||||||||
| 2017 | 2017 | Change | 2016 | Change | ||||||||||||||||
| Eaton Vance Management(3)(4) | $ | 160,570 | $ | 154,985 | 4 | % | $ | 143,798 | 12 | % | ||||||||||
| Parametric(2)(4) | 213,213 | 201,493 | 6 | % | 171,466 | 24 | % | |||||||||||||
| Atlanta Capital(4)(5) | 21,476 | 20,631 | 4 | % | 19,126 | 12 | % | |||||||||||||
| Calvert Research and Management(5) | 10,326 | 9,904 | 4 | % | - | NM | ||||||||||||||
| Total | $ | 405,585 | $ | 387,013 | 5 | % | $ | 334,390 | 21 | % | ||||||||||
| (1) | Consolidated Eaton Vance Corp. See Attachment 11 for managed assets and flows of 49 percent-owned Hexavest Inc. |
| (2) | Reported consolidated assets under management exclude client positions in exposure management mandates identified as transitory in nature. As of July 31, 2017, such positions (managed by Parametric) totaled $12.6 billion. |
| (3) | Includes managed assets of Eaton Vance-sponsored funds and accounts managed by Hexavest and unaffiliated third-party advisers under Eaton Vance supervision. |
| (4) | In the second quarter of fiscal 2017, the Company reclassified among investment affiliates certain managed assets. The above presentation of prior year results has been revised for comparability purposes. The reclassification does not affect total consolidated assets under management for any period. |
| (5) | Consistent with the Company’s policies for reporting the managed assets and flows of investment portfolios for which multiple Eaton Vance affiliates have management responsibilities, the managed assets of Atlanta Capital indicated above include the assets of Calvert Equity Portfolio, for which Atlanta Capital serves as sub-adviser. The total managed assets of Calvert Research and Management, including assets sub-advised by other Eaton Vance affiliates, were $12.5 billion and $12.1 billion as of July 31, 2017 and April 30, 2017, respectively. |
| 13 |
Attachment 10
Eaton Vance Corp.
Average Annualized Management Fee Rates by Investment Mandate(1)(2)(3)
(in basis points on average managed assets)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||
| % | % | |||||||||||||||||||||||||||||||
| Change | Change | |||||||||||||||||||||||||||||||
| Q3 2017 | Q3 2017 | |||||||||||||||||||||||||||||||
| July 31, | April 30, | July 31, | vs. | vs. | July 31, | July 31, | % | |||||||||||||||||||||||||
| 2017 | 2017 | 2016 | Q2 2017 | Q3 2016 | 2017 | 2016 | Change | |||||||||||||||||||||||||
| Equity(4) | 61.5 | 62.1 | 62.7 | -1 | % | -2 | % | 62.1 | 62.5 | -1 | % | |||||||||||||||||||||
| Fixed income(4) | 37.7 | 38.5 | 39.8 | -2 | % | -5 | % | 38.3 | 40.2 | -5 | % | |||||||||||||||||||||
| Floating-rate income(4) | 50.7 | 51.6 | 51.5 | -2 | % | -2 | % | 51.5 | 51.8 | -1 | % | |||||||||||||||||||||
| Alternative(4) | 63.2 | 63.2 | 63.4 | 0 | % | 0 | % | 63.0 | 63.0 | 0 | % | |||||||||||||||||||||
| Portfolio implementation | 14.6 | 14.5 | 14.8 | 1 | % | -1 | % | 14.6 | 15.0 | -3 | % | |||||||||||||||||||||
| Exposure management(2) | 5.1 | 5.1 | 5.2 | 0 | % | -2 | % | 5.1 | 5.2 | -2 | % | |||||||||||||||||||||
| Consolidated average annualized fee rates | 34.2 | 34.7 | 35.6 | -1 | % | -4 | % | 34.7 | 36.0 | -4 | % | |||||||||||||||||||||
| (1) | Excludes performance-based fees received, which were $0.5 million and $2.7 million for the three months ended July 31, 2017 and July 31, 2016, respectively, negligible for the three months ended April 30, 2017 and $0.6 million and $2.8 million for the nine months ended July 31, 2017 and July 31, 2016, respectively. |
| (2) | Excludes management fees attributable to client positions in exposure management mandates identified as transitory in nature. |
| (3) | In the second quarter of fiscal 2017, the Company modified its methodology for calculating average annualized management fee rates for quarterly periods to remove the effect of variations in the number of days in a given quarter. The above presentation of prior year results has been revised for comparability purposes. |
| (4) | In the second quarter of fiscal 2017, the Company reclassified among investment mandates certain managed assets. The above presentation of prior year results has been revised for comparability purposes. |
| 14 |
Attachment 11
Eaton Vance Corp.
Hexavest Inc. Assets under Management and Net Flows
(in millions)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| July 31, | April 30, | July 31, | July 31, | July 31, | ||||||||||||||||
| 2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||
| Eaton Vance distributed: | ||||||||||||||||||||
| Eaton Vance sponsored funds – beginning of period(1) | $ | 262 | $ | 255 | $ | 226 | $ | 231 | $ | 229 | ||||||||||
| Sales and other inflows | 29 | 13 | 1 | 62 | 13 | |||||||||||||||
| Redemptions/outflows | (147 | ) | (19 | ) | (7 | ) | (174 | ) | (32 | ) | ||||||||||
| Net flows | (118 | ) | (6 | ) | (6 | ) | (112 | ) | (19 | ) | ||||||||||
| Market value change | 7 | 13 | 11 | 32 | 21 | |||||||||||||||
| Eaton Vance sponsored funds – end of period | $ | 151 | $ | 262 | $ | 231 | $ | 151 | $ | 231 | ||||||||||
| Eaton Vance distributed separate accounts – beginning of period(2) | $ | 2,138 | $ | 2,666 | $ | 2,557 | $ | 2,492 | $ | 2,440 | ||||||||||
| Sales and other inflows | 455 | 121 | 28 | 725 | 54 | |||||||||||||||
| Redemptions/outflows | (23 | ) | (826 | ) | (59 | ) | (903 | ) | (94 | ) | ||||||||||
| Net flows | 432 | (705 | ) | (31 | ) | (178 | ) | (40 | ) | |||||||||||
| Market value change | 85 | 177 | 132 | 341 | 258 | |||||||||||||||
| Eaton Vance distributed separate accounts – end of period | $ | 2,655 | $ | 2,138 | $ | 2,658 | $ | 2,655 | $ | 2,658 | ||||||||||
| Total Eaton Vance distributed – beginning of period | $ | 2,400 | $ | 2,921 | $ | 2,783 | $ | 2,723 | $ | 2,669 | ||||||||||
| Sales and other inflows | 484 | 134 | 29 | 787 | 67 | |||||||||||||||
| Redemptions/outflows | (170 | ) | (845 | ) | (66 | ) | (1,077 | ) | (126 | ) | ||||||||||
| Net flows | 314 | (711 | ) | (37 | ) | (290 | ) | (59 | ) | |||||||||||
| Market value change | 92 | 190 | 143 | 373 | 279 | |||||||||||||||
| Total Eaton Vance distributed – end of period | $ | 2,806 | $ | 2,400 | $ | 2,889 | $ | 2,806 | $ | 2,889 | ||||||||||
| Hexavest directly distributed – beginning of period(3) | $ | 12,065 | $ | 11,538 | $ | 11,435 | $ | 11,021 | $ | 11,279 | ||||||||||
| Sales and other inflows | 249 | 274 | 308 | 850 | 610 | |||||||||||||||
| Redemptions/outflows | (210 | ) | (201 | ) | (734 | ) | (815 | ) | (1,505 | ) | ||||||||||
| Net flows | 39 | 73 | (426 | ) | 35 | (895 | ) | |||||||||||||
| Market value change | 534 | 454 | 513 | 1,582 | 1,138 | |||||||||||||||
| Hexavest directly distributed – end of period | $ | 12,638 | $ | 12,065 | $ | 11,522 | $ | 12,638 | $ | 11,522 | ||||||||||
| Total Hexavest managed assets – beginning of period | $ | 14,465 | $ | 14,459 | $ | 14,218 | $ | 13,744 | $ | 13,948 | ||||||||||
| Sales and other inflows | 733 | 408 | 337 | 1,637 | 677 | |||||||||||||||
| Redemptions/outflows | (380 | ) | (1,046 | ) | (800 | ) | (1,892 | ) | (1,631 | ) | ||||||||||
| Net flows | 353 | (638 | ) | (463 | ) | (255 | ) | (954 | ) | |||||||||||
| Market value change | 626 | 644 | 656 | 1,955 | 1,417 | |||||||||||||||
| Total Hexavest managed assets – end of period | $ | 15,444 | $ | 14,465 | $ | 14,411 | $ | 15,444 | $ | 14,411 | ||||||||||
| (1) | Managed assets and flows of Eaton Vance-sponsored pooled investment vehicles for which Hexavest is adviser or sub-adviser. Eaton Vance receives management fees (and in some cases also distribution fees) on these assets, which are included in the Eaton Vance consolidated assets under management and flows in Attachments 5 through 9. |
| (2) | Managed assets and flows of Eaton Vance-distributed separate accounts managed by Hexavest. Eaton Vance receives distribution fees, but not management fees, on these assets, which are not included in the Eaton Vance consolidated assets under management and flows in Attachments 5 through 9. |
| (3) | Managed assets and flows of pre-transaction Hexavest clients and post-transaction Hexavest clients in Canada. Eaton Vance receives no management fees or distribution fees on these assets, which are not included in the Eaton Vance consolidated assets under management and flows in Attachments 5 through 9. |
| 15 |