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