Eaton Vance Corp. Report for the Three Month Period Ended January 31, 2021

BOSTON, Feb. 24, 2021 /PRNewswire/ -- Eaton Vance Corp. (NYSE: EV) today reported earnings of $0.74 per diluted share for the first quarter of fiscal 2021, which compares to earnings of $0.91 per diluted share in the first quarter of fiscal 2020 and $(0.31) per diluted share in the fourth quarter of fiscal 2020.

The Company reported record quarterly adjusted earnings([1]) of $0.94 per diluted share for the first quarter of fiscal 2021, an increase of 11 percent from $0.85 of adjusted earnings per diluted share in the first quarter of fiscal 2020 and an increase of 7 percent from $0.88 of adjusted earnings per diluted share in the fourth quarter of fiscal 2020.

In the first quarter of fiscal 2021, adjusted earnings exceeded earnings under U.S. generally accepted accounting principles (U.S. GAAP) by $0.20 per diluted share, reflecting the reversal of $70.6 million of compensation expenses and other costs recognized in connection with the proposed acquisition of Eaton Vance by Morgan Stanley announced on October 8, 2020, the reversal of $27.3 million of net excess tax benefits related to stock–based compensation awards, the reversal of $20.1 million of net gains of consolidated sponsored funds and consolidated collateralized loan obligation (CLO) entities (collectively, consolidated investment entities) and the Company's other seed capital investments, and the add-back of $2.2 million of management fees and expenses of consolidated investment entities. Earnings under U.S. GAAP exceeded adjusted earnings by $0.06 per diluted share in the first quarter of fiscal 2020, reflecting the reversal of $4.9 million of net excess tax benefits related to stock-based compensation awards, the reversal of $3.6 million of net gains of consolidated investment entities and other seed capital investments, and the add-back of $2.4 million of management fees and expenses of consolidated investment entities. In the fourth quarter of fiscal 2020, adjusted earnings exceeded earnings under U.S. GAAP by $1.19 per diluted share, reflecting the reversal of $114.9 million of compensation expenses and other costs recognized in connection with the proposed acquisition of Eaton Vance by Morgan Stanley, the reversal of a $21.8 million impairment loss recognized on the Company's investment in Hexavest Inc. (Hexavest), the reversal of $2.9 million of net excess tax benefits related to stock–based compensation awards, the reversal of $1.8 million of net losses of consolidated investment entities and other seed capital investments, and the add-back of $1.7 million of management fees and expenses of consolidated investment entities.

In the first quarter of fiscal 2021, the Company had record quarterly consolidated net inflows of $20.0 billion, representing 16 percent annualized internal growth in managed assets (consolidated net flows divided by beginning of period consolidated assets under management). This compares to net inflows of $6.1 billion and 5 percent annualized internal growth in managed assets in the first quarter of fiscal 2020 and net inflows of $5.2 billion and 4 percent annualized internal growth in managed assets in the fourth quarter of fiscal 2020. Excluding Parametric overlay services, the Company had net inflows of $6.9 billion and 7 percent annualized internal growth in managed assets in the first quarter of fiscal 2021, net inflows of $5.0 billion and 5 percent annualized internal growth in managed assets in the first quarter of fiscal 2020, and net inflows of $4.8 billion and 5 percent annualized internal growth in managed assets in the fourth quarter of fiscal 2020.

The Company's internal management fee revenue growth (management fees attributable to consolidated inflows less management fees attributable to consolidated outflows, divided by beginning of period consolidated management fee revenue) was 8 percent in the first quarter of fiscal 2021 and 5 percent in both the first quarter and the fourth quarter of fiscal 2020.

Consolidated assets under management were a record $584.2 billion on January 31, 2021, up 13 percent from $518.2 billion of consolidated managed assets on January 31, 2020 and $515.7 billion of consolidated managed assets on October 31, 2020. The year-over-year increase in consolidated assets under management reflects $18.6 billion of net inflows, $45.1 billion of price appreciation in managed assets and $2.3 billion of new managed assets gained in the acquisition of the business assets of WaterOak Advisors, LLC (WaterOak) on October 16, 2020. The sequential increase in consolidated assets under management in the first quarter of fiscal 2021 reflects $20.0 billion of quarterly net inflows and $48.5 billion of price appreciation in managed assets.

"In what we expect will be Eaton Vance's last quarterly reporting period as an independent public company, the Company set new records for consolidated net inflows, consolidated ending assets under management, adjusted operating income and adjusted earnings per diluted share," said Thomas E. Faust Jr., Chairman and Chief Executive Officer. "We approach the Company's acquisition by Morgan Stanley with strong momentum across our businesses, and look forward to building on that strength as part of Morgan Stanley Investment Management."

Average consolidated assets under management were $562.2 billion in the first quarter of fiscal 2021, up 10 percent from $509.9 billion in the first quarter of fiscal 2020 and up 9 percent from $516.7 billion in the fourth quarter of fiscal 2020.

Attachments 5 and 6 summarize the Company's consolidated assets under management and net flows by investment mandate and investment vehicle reporting categories. Among investment mandate reporting categories, consolidated net inflows in the first quarter of fiscal 2021 were $13.1 billion for Parametric overlay services, $3.5 billion for fixed income, $2.4 billion for Parametric custom portfolios, $608 million for floating-rate income, $214 million for equity and $191 million for alternative mandates. Annualized internal growth in managed assets for the first quarter of fiscal 2021 was 55 percent for Parametric overlay services, 19 percent for fixed income, 10 percent for alternative, 8 percent for floating-rate income, 6 percent for Parametric custom portfolios and 1 percent for equity mandates. Annualized internal growth in management fee revenue for the first quarter of fiscal 2021 was 51 percent for Parametric overlay services, 21 percent for fixed income, 11 percent for Parametric custom portfolios, 10 percent for alternative, 6 percent for floating-rate income and -1 percent for equity mandates.

By investment affiliate, consolidated net inflows in the first quarter of fiscal 2021 were $14.9 billion for Parametric, $4.0 billion for Eaton Vance Management (EVM), $1.6 billion for Calvert and $(517) million for Atlanta Capital. Annualized internal growth in managed assets for the first quarter of 2021 was 24 percent for Calvert, 19 percent for Parametric, 10 percent for EVM and -8 percent for Atlanta Capital. Annualized internal growth in management fee revenue for the first quarter of fiscal 2021 was 26 percent for Calvert, 9 percent for EVM, 7 percent for Parametric and -13 percent for Atlanta Capital.

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 management fee rates by investment mandate.

As of January 31, 2021, managed assets of the Company's 49 percent-owned affiliate Hexavest were $4.3 billion, down 67 percent from $13.0 billion of managed assets on January 31, 2020 and down 26 percent from $5.8 billion of managed assets on October 31, 2020. Hexavest had net outflows of $2.2 billion in the first quarter of fiscal 2021, $0.5 billion in the first quarter of fiscal 2020 and $0.9 billion in the fourth quarter of fiscal 2020. Attachment 11 summarizes the assets under management and net flows of Hexavest. Other than Eaton Vance-sponsored funds for which Hexavest is the adviser or sub-adviser, the managed assets and flows of Hexavest are not included in our consolidated totals.







(1)

Adjusted financial measures represent non-U.S GAAP financial measures. See Attachment 2 for reconciliations to the most directly comparable U.S. GAAP financial measures and other important disclosures.

 

Financial Highlights





(in thousands, except per share figures)















Three Months Ended



January 31,

October 31,

January 31,



2021

2020

2020

U.S. GAAP Financial Measures:







Revenue

$

488,946

$

451,081

$

452,554

Expenses

$

409,424

$

464,737

$

317,835

Operating income (loss)

$

79,522

$

(13,656)

$

134,719

   Operating margin


16.3%


(3.0)%


29.8%

Net income (loss) attributable to







   Eaton Vance Corp. shareholders

$

89,914

$

(35,934)

$

103,985

Earnings (loss) per diluted share

$

0.74

$

(0.31)

$

0.91








Adjusted Non-U.S. GAAP Financial Measures:(1)







Revenue

$

490,917

$

452,485

$

454,479

Expenses

$

327,459

$

309,344

$

316,548

Operating income

$

163,458

$

143,141

$

137,931

   Operating margin


33.3%


31.6%


30.3%

Net income attributable to







   Eaton Vance Corp. shareholders

$

115,269

$

101,503

$

97,947

Earnings per diluted share

$

0.94

$

0.88

$

0.85








Weighted Average Shares Outstanding:







Basic


116,220


110,701


109,380

Diluted


122,279


115,878


114,688









(1) See Attachment 2 for reconciliations between the U.S. GAAP and adjusted non-U.S. GAAP financial measures identified here as well as other important disclosures.

 

First Quarter Fiscal 2021 vs. First Quarter Fiscal 2020 

In the first quarter of fiscal 2021, revenue increased 8 percent to $488.9 million from $452.6 million in the first quarter of fiscal 2020. Management fees were up 9 percent, as a 10 percent increase in average consolidated assets under management more than offset a 1 percent decrease in the Company's consolidated average annualized management fee rate. Performance fees were $0.2 million in both the first quarter of fiscal 2021 and the first quarter of fiscal 2020. Distribution and service fee revenues in the first quarter of fiscal 2021 were collectively up 2 percent from the first quarter of fiscal 2020, reflecting higher average managed assets in fund share classes that are subject to these fees.

Operating expenses increased 29 percent to $409.4 million in the first quarter of fiscal 2021 from $317.8 million in the first quarter of fiscal 2020, reflecting increases in compensation expense, service fee expense, amortization of deferred sales commissions, fund-related expenses and other operating expenses, partially offset by a decrease in distribution expense. The increase in compensation expense primarily reflects $39.6 million of stock-based and other compensation costs and associated payroll taxes recognized in the first quarter of fiscal 2021 in connection with the proposed acquisition of Eaton Vance by Morgan Stanley. The increase in compensation expense further reflects higher salary and benefit expense associated with increases in headcount, higher operating income-based and investment performance-based bonus accruals, and higher sales-based incentive compensation, partially offset by lower severance expenses. The increase in service fee expense reflects higher private fund and Class A service fee payments, partially offset by lower Class C service fee payments. The increase in amortization of deferred sales commissions reflects higher private fund commission amortization. The increase in fund-related expenses reflects higher sub-advisory fees paid, partially offset by a reduction in fund expenses borne by the Company. Other operating expenses increased 69 percent, primarily reflecting higher professional service expenses driven by proxy solicitation fees and other legal and consulting costs associated with the proposed acquisition of Eaton Vance by Morgan Stanley, and an increase in information technology spending, partially offset by lower travel expenses. The decline in distribution expense reflects lower Class C distribution fee payments, up-front sales commission expense, promotional costs and finder's fees, partially offset by higher intermediary marketing support payments. Excluding expenses in connection with the proposed acquisition of Eaton Vance by Morgan Stanley and other adjustments as shown in Attachment 2, operating expenses in the first quarter of fiscal 2021 were $327.5 million, an increase of 3 percent from operating expenses of $316.5 million in the first quarter of fiscal 2020.

Operating income decreased to $79.5 million in the first quarter of fiscal 2021 from $134.7 million in the first quarter of fiscal 2020, primarily reflecting $81.0 million of compensation expense and other costs recognized in the first quarter of fiscal 2021 in connection with the proposed acquisition of Eaton Vance by Morgan Stanley. The Company's operating margin decreased to 16.3 percent in the first quarter of fiscal 2021 from 29.8 percent in the first quarter of fiscal 2020.

As shown in Attachment 2, the Company's operating income on an adjusted basis was a quarterly record of $163.5 million in the first quarter of fiscal 2021, an increase of 19 percent from $137.9 million of adjusted operating income in the first quarter of fiscal 2020. The Company's adjusted operating margin increased to 33.3 percent in the first quarter of fiscal 2021 from 30.3 percent in the first quarter of fiscal 2020.

Non-operating income totaled $41.2 million in the first quarter of fiscal 2021 and $8.4 million in the first quarter of fiscal 2020. The year-over-year increase reflects a $25.1 million improvement in net income (expense) of consolidated CLO entities, primarily driven by gains realized upon the sale of the Company's interests in four CLO entities that the Company no longer consolidates, but continues to manage, and a $7.7 million increase in net gains and other investment income of consolidated sponsored funds and the Company's investments in other sponsored strategies.

The Company's effective tax rate, calculated as a percentage of income before income taxes and equity in net income of affiliates, was 7.5 percent in the first quarter of fiscal 2021 and 22.8 percent in the first quarter of fiscal 2020. The Company's effective tax rate is discussed in greater detail under "Taxation" below.

Equity in net income of affiliates was $0.6 million and $2.3 million in the first quarters of fiscal 2021 and 2020, 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 $22.4 million in the first quarter of fiscal 2021 and $8.9 million in the first quarter of fiscal 2020. The year-over-year change primarily reflects an increase in income earned by consolidated sponsored funds.

The Company's weighted average basic shares outstanding were 116.2 million in the first quarter of fiscal 2021 and 109.4 million in the first quarter of fiscal 2020, an increase of 6 percent. The year-over-year increase reflects new shares issued upon the vesting of restricted stock awards and the exercise of employee stock options. On a diluted basis, the Company's weighted average shares outstanding were 122.3 million in the first quarter of fiscal 2021 and 114.7 million in the first quarter of fiscal 2020, an increase of 7 percent. The change in weighted average diluted shares outstanding further reflects an increase in the dilutive effect of in-the-money options due to higher market prices of the Company's non-voting common stock, partially offset by a decrease in the dilutive effect of restricted stock awards due to the accelerated vesting of restricted stock awards in the fourth quarter of fiscal 2020 in connection with the proposed acquisition of Eaton Vance by Morgan Stanley.

First Quarter Fiscal 2021 vs. Fourth Quarter Fiscal 2020

In the first quarter of fiscal 2021, revenue increased 8 percent to $488.9 million from $451.1 million in the fourth quarter of fiscal 2020. Management fees were up 9 percent, primarily reflecting a 9 percent increase in average consolidated assets under management. Performance fees were $0.2 million in the first quarter of fiscal 2021, versus $1.5 million in the fourth quarter of fiscal 2020. Distribution and service fee revenues in the first quarter of fiscal 2021 were collectively up 7 percent from the fourth quarter of fiscal 2020, reflecting higher average managed assets in fund share classes that are subject to these fees.

Operating expenses decreased 12 percent to $409.4 million in the first quarter of fiscal 2021 from $464.7 million in the fourth quarter of fiscal 2020, reflecting lower compensation expense, partially offset by increases in distribution expense, service fee expense, amortization of deferred sales commissions, fund-related expenses and other operating expenses. The decrease in compensation expense primary reflects a reduction in stock-based compensation expense due to the acceleration of $146.0 million of expense recognized in the fourth quarter of fiscal 2020 in connection with the proposed acquisition of Eaton Vance by Morgan Stanley, partially offset by $39.6 million of stock-based and other compensation costs and associated payroll taxes recognized in the first quarter of fiscal 2021 in connection with the proposed acquisition. The decrease in compensation expense further reflects lower operating income-based bonus accruals, partially offset by higher sales-based incentive compensation, higher performance-based bonus accruals and higher salary and benefit expense associated with year-end compensation increases for continuing employees and slightly higher headcount, and seasonal increases in benefit costs and payroll taxes. The increase in distribution expense reflects higher intermediary marketing support payments, partially offset by a decrease in promotion costs and lower Class C distribution fee payments. The increase in service fee expense reflects higher private fund and Class A service fee payments. The increase in fund-related expenses reflects higher sub-advisory fees paid. Other operating expenses increased 52 percent, primarily reflecting higher professional service expenses driven by increases in proxy solicitation fees and other legal costs associated with the proposed acquisition of Eaton Vance by Morgan Stanley. Excluding expenses in connection with the proposed acquisition of Eaton Vance by Morgan Stanley and other adjustments as shown in Attachment 2, operating expenses in the first quarter of fiscal 2021 were $327.5 million, an increase of 6 percent from operating expenses of $309.3 million in the fourth quarter of fiscal 2020.

Operating income (loss) increased to $79.5 million in the first quarter of fiscal 2021 from $(13.7) million in the fourth quarter of fiscal 2020. The sequential change primarily reflects a $73.4 million decrease in compensation expense and other costs recognized in connection with the proposed acquisition of Eaton Vance by Morgan Stanley. The Company's operating margin increased to 16.3 percent in the first quarter of fiscal 2021 from (3.0) percent in the fourth quarter of fiscal 2020.

As shown in Attachment 2, the Company's $163.5 million of adjusted operating income in the first quarter of fiscal 2021 compared to $143.1 million of adjusted operating income in the fourth quarter of fiscal 2020, an increase of 14 percent. The Company's adjusted operating margin increased to 33.3 percent in the first quarter of fiscal 2021 from 31.6 percent in the fourth quarter of fiscal 2020.

Non-operating income totaled $41.2 million in the first quarter of fiscal 2021 versus $7.1 million of non-operating expense in the fourth quarter of fiscal 2020. The sequential change reflects a $28.6 million improvement in net income (expense) of consolidated CLO entities, primarily driven by gains realized upon the sale of the Company's interests in four CLO entities that the Company no longer consolidates, but continues to manage, and a $19.8 million increase in net gains and other investment income of consolidated sponsored funds and the Company's investments in other sponsored strategies.

The Company's effective tax rate, calculated as a percentage of income (loss) before income taxes and equity in net income of affiliates, was 7.5 percent in the first quarter of fiscal 2021 and 36.6 percent in the fourth quarter of fiscal 2020. The Company's effective tax rate is discussed in greater detail under "Taxation" below.

Equity in net income (loss) of affiliates was $0.6 million in the first quarter of fiscal 2021 and $(20.8) million in the fourth quarter of fiscal 2020, respectively. In both the first quarter of fiscal 2021 and the fourth quarter of fiscal 2020, substantially all of the Company's equity in net income of affiliates related to the Company's investment in Hexavest. Equity in net income (loss) of affiliates in the fourth quarter of fiscal 2020 included a $21.8 million impairment loss recognized on the Company's investment in Hexavest.

As detailed in Attachment 3, net income attributable to non-controlling and other beneficial interests was $22.4 million in the first quarter of fiscal 2021 and $2.0 million in the fourth quarter of fiscal 2020. The sequential change primarily reflects an increase in income earned by consolidated sponsored funds.

The Company's weighted average basic shares outstanding were 116.2 million in the first quarter of fiscal 2021 and 110.7 million in the fourth quarter of fiscal 2020, an increase of 5 percent. The increase reflects new shares issued upon the vesting of restricted stock awards and the exercise of employee stock options. On a diluted basis, the Company's weighted average shares outstanding were 122.3 million in the first quarter of fiscal 2021 and 115.9 million in the fourth quarter of fiscal 2020, an increase of 6 percent. The change in weighted average diluted shares outstanding further reflects an increase in the dilutive effect of in-the-money options due to higher market prices of the Company's non-voting common stock, partially offset by a decrease in the dilutive effect of restricted stock awards due to the accelerated vesting of restricted stock awards in the fourth quarter of fiscal 2020 in connection with the proposed acquisition of Eaton Vance by Morgan Stanley.

Taxation

The following table reconciles the U.S. statutory federal income tax rate to the Company's effective income tax rate: 



Three Months Ended



January 31,

October 31,

January 31,



2021

2020

2020

Statutory U.S. federal income tax rate

21.0

%

21.0

%

21.0

%

State income tax, net of federal income tax benefits

4.0


5.8


4.9


Net income (loss) attributable to non-controlling







   and other beneficial interests

(3.6)


2.0


(0.5)


Non-deductible costs related to the proposed







   acquisition of Eaton Vance by Morgan Stanley

8.4


-


-


Other items

0.3


(6.0)


0.8


Net excess tax benefits from stock-based







   compensation plans(1)

(22.6)


13.8


(3.4)


Effective income tax rate

7.5

%

36.6

%

22.8

%









(1) Represents net excess tax benefits from stock-based compensation plans. Amounts have been reduced for executive compensation limitations under Section 162(m) of the Internal Revenue Code.

The net loss experienced by the Company in the fourth quarter of fiscal 2020 resulted in a tax benefit being recognized during the quarter.

The Company's income tax provision was reduced by net excess tax benefits related to stock-based compensation awards totaling $27.3 million in the first quarter of fiscal 2021, $4.9 million in the first quarter of fiscal 2020 and $2.9 million in the fourth quarter of fiscal 2020. The Company's income tax provision is also impacted by other items, which include non-deductible executive compensation, prior period adjustments primarily related to the filing of tax returns and other differences in the treatment of certain items for book and tax purposes.

As shown in Attachment 2, the Company's calculations of adjusted net income and adjusted earnings per diluted share remove compensation expenses and other costs related to the proposed acquisition of Eaton Vance by Morgan Stanley, remove the impairment losses recognized in the fourth quarter of fiscal 2020 on the Company's investment in 49 percent-owned affiliate Hexavest, exclude gains (losses) and other investment income (expense) of consolidated investment entities and other seed capital investments, add back the management fees and expenses of consolidated investment entities and exclude the tax impact of stock-based compensation shortfalls or windfalls. On this basis, the Company's adjusted effective tax rate was 25.8 percent in the first quarter of fiscal 2021, 27.6 percent in the first quarter of fiscal 2020 and 26.2 percent in the fourth quarter of fiscal 2020.

Balance Sheet Information

As of January 31, 2021, the Company held cash and cash equivalents of $606.1 million and its investments included $20.4 million of short-term debt securities with maturities between 90 days and one year. There were no outstanding borrowings under the Company's $300 million credit facility at such date.

Proposed Acquisition of Eaton Vance by Morgan Stanley

As described above, Eaton Vance and Morgan Stanley announced on October 8, 2020 that they have entered into a definitive agreement for Morgan Stanley to acquire Eaton Vance. Under the terms of the merger agreement, Eaton Vance shareholders will receive $28.25 per share in cash and 0.5833 shares of Morgan Stanley common stock per share of Eaton Vance common stock held. The merger agreement contains an election procedure whereby each Eaton Vance shareholder may elect to receive the merger consideration all in cash or all in stock, subject to proration and adjustment.

The merger agreement also provides for Eaton Vance shareholders to receive a special cash dividend of $4.25 per share of Eaton Vance common stock held. On November 23, 2020, the Eaton Vance Board of Directors declared the $4.25 per share special dividend, which was paid on December 18, 2020 to shareholders of record on December 4, 2020.

Eaton Vance and Morgan Stanley currently expect to complete the proposed transaction no later than early in the second quarter of 2021. Subject to the satisfaction of customary closing conditions, including receipt of necessary regulatory approvals and client consents, the transaction could close as soon as March 1, 2021.

About Eaton Vance Corp.

Eaton Vance Corp. (NYSE: EV) provides advanced investment strategies and wealth management solutions to forward-thinking investors around the world. Through principal investment affiliates Eaton Vance Management, Parametric, Atlanta Capital, Calvert and Hexavest, the Company offers a diversity of investment approaches, encompassing bottom-up and top-down fundamental active management, responsible investing, systematic investing and customized implementation of client-specified portfolio exposures. As of January 31, 2021, Eaton Vance had consolidated assets under management of $584.2 billion. Exemplary service, timely innovation and attractive returns across market cycles have been hallmarks of Eaton Vance since 1924. For more information, 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, the scope and duration of the COVID-19 pandemic and its impact on the global economy or capital markets, the completion of the proposed transaction with Morgan Stanley and the anticipated terms and timing, including obtaining required regulatory approvals, anticipated tax treatment, unforeseen liabilities, future capital expenditures, revenues, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, future prospects, business and management strategies for the management, expansion and growth of the combined company's operations and other conditions to the completion of the acquisition, 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.










Attachment 1

Consolidated Statements of Income

(in thousands, except per share figures)















Three Months Ended









%

%









Change

Change









Q1 2021

Q1 2021



January 31,

October 31,

January 31,

vs.

vs.



2021

2020

2020

Q4 2020

Q1 2020

Revenue:











Management fees

$

430,315

$

396,268

$

394,801

9

%

9

%

Distribution and underwriter fees


18,211


18,215


21,578

-


(16)


Service fees


38,598


34,906


33,939

11


14


Other revenue


1,822


1,692


2,236

8


(19)



Total revenue


488,946


451,081


452,554

8


8


Expenses:











Compensation and related costs


221,402


315,847


171,982

(30)


29


Distribution expense


35,630


35,436


40,003

1


(11)


Service fee expense


34,218


30,542


29,755

12


15


Amortization of deferred sales commissions


6,501


6,400


5,968

2


9


Fund-related expenses


12,125


10,932


11,067

11


10


Other expenses


99,548


65,580


59,060

52


69



Total expenses


409,424


464,737


317,835

(12)


29


Operating income (loss)


79,522


(13,656)


134,719

NM


(41)


Non-operating income (expense):











Gains and other investment income, net


23,816


3,994


16,090

496


48


Interest expense


(5,921)


(5,800)


(5,888)

2


1


Other income (expense) of consolidated












collateralized loan obligation (CLO) entities:












  Gains and other investment income, net


41,768


10,961


15,563

281


168



  Interest and other expense


(18,467)


(16,246)


(17,396)

14


6



Total non-operating income (expense)


41,196


(7,091)


8,369

NM


392














Income (loss) before income taxes and equity











   in net income (loss) of affiliates


120,718


(20,747)


143,088

NM


(16)


Income tax benefit (expense)


(9,009)


7,594


(32,578)

NM


(72)


Equity in net income (loss) of affiliates, net of tax


628


(20,793)


2,325

NM


(73)


Net income (loss)


112,337


(33,946)


112,835

NM


-


Net income attributable to non-controlling











   and other beneficial interests


(22,423)


(1,988)


(8,850)

NM


153


Net income (loss) attributable to











   Eaton Vance Corp. shareholders

$

89,914

$

(35,934)

$

103,985

NM


(14)














Earnings (loss) per share:











Basic

$

0.77

$

(0.32)

$

0.95

NM


(19)


Diluted

$

0.74

$

(0.31)

$

0.91

NM


(19)














Weighted average shares outstanding:











Basic


116,220


110,701


109,380

5


6


Diluted


122,279


115,878


114,688

6


7














Dividends declared per share

$

4.625

$

0.375

$

0.375

NM


NM



 

Attachment 2

Non-U.S. GAAP Information and Reconciliations

Management believes that certain non-U.S. GAAP financial measures, specifically, adjusted operating income, adjusted net income attributable to Eaton Vance Corp. shareholders and adjusted earnings per diluted share, while not a substitute for U.S. GAAP financial measures, may be effective indicators of the Company's performance over time. Non-U.S. GAAP financial measures should not be construed to be superior to U.S. GAAP measures. In calculating these non-U.S. GAAP financial measures, operating income, 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, when applicable, the add back of closed-end fund structuring fees, costs associated with debt repayments and tax settlements, the tax impact of stock-based compensation shortfalls or windfalls, impairment charges, costs in connection with the proposed acquisition of Eaton Vance by Morgan Stanley and other acquisition-related items, and non-recurring charges for the effect of tax law changes. Adjustments to operating income also include the add-back of management fee revenue received from consolidated sponsored funds and consolidated collateralized loan obligation (CLO) entities (collectively, consolidated investment entities) that are eliminated in consolidation and the non-management expenses of consolidated sponsored funds recognized in consolidation. Adjustments to net income attributable to Eaton Vance Corp. shareholders include the after-tax impact of these adjustments to operating income and the elimination of gains (losses) and other investment income (expense) of consolidated investment entities and other seed capital investments included in non-operating income (expense), as determined net of tax and non-controlling and other beneficial interests. Management and our Board of Directors, as well as certain of our outside investors, consider the adjusted numbers a measure of the Company's underlying operating performance. Management believes adjusted operating income, 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 useful baseline for analyzing trends in our underlying business.

Effective in the second quarter of fiscal 2020, the Company's calculation of non-U.S. GAAP financial measures was revised to reflect the treatment of consolidated investment entities and other seed capital investments described in the previous paragraph. All prior period non-U.S. GAAP financial measures have been updated to reflect this change.

 

Reconciliation of operating income (loss) to adjusted operating income:

(in thousands, except as noted)
















Three Months Ended










%

%










Change

Change










Q1 2021

Q1 2021


January 31,

October 31,

January 31,


vs.

vs.


2021

2020

2020


Q4 2020

Q1 2020














Total revenue

$

488,946

$

451,081

$

452,554


8

%

8

%













Management fees of consolidated sponsored













funds and consolidated CLO entities(1)


1,971


1,404


1,925


40


2




























Adjusted total revenue

$

490,917

$

452,485

$

454,479


8


8















Total expenses

$

409,424

$

464,737

$

317,835


(12)

%

29

%













Non-management expenses of consolidated













sponsored funds(2)


(922)


(942)


(1,287)


(2)


(28)














Accelerated stock-based compensation expense













related to the proposed acquisition of Eaton Vance













by Morgan Stanley(3)


(5,702)


(145,993)


-


(96)


NM















Other compensation expenses related to the proposed













acquisition of Eaton Vance by Morgan Stanley(4)


(33,943)


-


-


NM


NM















Other costs related to the proposed acquisition of













Eaton Vance by Morgan Stanley(5)


(41,398)


(8,458)


-


389


NM




























Adjusted total expenses

$

327,459

$

309,344

$

316,548


6


3















Operating income (loss)

$

79,522

$

(13,656)

$

134,719


NM

%

(41)

%













Management fees of consolidated sponsored













funds and consolidated CLO entities(1)


1,971


1,404


1,925


40


2














Non-management expenses of consolidated













sponsored funds(2)


922


942


1,287


(2)


(28)














Accelerated stock-based compensation expense













related to the proposed acquisition of Eaton Vance













by Morgan Stanley(3)


5,702


145,993


-


(96)


NM














Other compensation expenses related to the proposed













acquisition of Eaton Vance by Morgan Stanley(4)


33,943


-


-


NM


NM















Other costs related to the proposed acquisition of













Eaton Vance by Morgan Stanley(5)


41,398


8,458


-


389


NM




























Adjusted operating income

$

163,458

$

143,141

$

137,931


14


19


Operating margin


16.3

%

(3.0)

%

29.8

%

NM


(45)


Adjusted operating margin


33.3

%

31.6

%

30.3

%

5


10


 












Attachment 2 (continued)














Reconciliation of income (loss) before income taxes and equity in net income (loss) of affiliates to adjusted income before income taxes and equity in net income (loss) of affiliates and income tax expense (benefit) to adjusted income tax expense:

(in thousands, except as noted)
















Three Months Ended










%

%










Change

Change










Q1 2021

Q1 2021


January 31,

October 31,

January 31,


vs.

vs.


2021

2020

2020


Q4 2020

Q1 2020














Income (loss) before income taxes and equity in net













income (loss) of affiliates

$

120,718

$

(20,747)

$

143,088


NM

%

(16)

%














Management fees of consolidated sponsored













funds and consolidated CLO entities, pre-tax(1)


1,971


1,404


1,925


40


2















Non-management expenses of consolidated













sponsored funds, pre-tax(2)


922


942


1,287


(2)


(28)















Accelerated stock-based compensation expense













related to the proposed acquisition of Eaton













Vance by Morgan Stanley, pre-tax(3)


5,702


145,993


-


(96)


NM














Other compensation expenses related to the 













proposed acquisition of Eaton Vance by













Morgan Stanley, pre-tax(4)


33,943


-


-


NM


NM















Other costs related to the proposed acquisition of













Eaton Vance by Morgan Stanley, pre-tax(5)


41,398


8,458


-


389


NM















Net gains and other investment income related













to consolidated sponsored funds and other













seed capital investments, pre-tax(6)


(24,298)


(3,861)


(13,811)


529


76















Other (income) expense of consolidated CLO













entities, pre-tax(7)


(23,301)


5,285


1,833


NM


NM















Adjusted income before income taxes and equity













in net income (loss) of affiliates

$

157,055

$

137,474

$

134,322


14


17















Income tax expense (benefit)

$

9,009

$

(7,594)

$

32,578


NM

%

(72)

%














Management fees of consolidated sponsored













funds and consolidated CLO entities(1)


505


359


497


41


2















Non-management expenses of consolidated













sponsored funds(2)


236


241


332


(2)


(29)















Accelerated stock-based compensation expense













related to the proposed acquisition of Eaton













Vance by Morgan Stanley(3)


1,461


37,345


-


(96)


NM














Other compensation expenses related to the 













proposed acquisition of Eaton Vance by













Morgan Stanley(4)


8,700


-


-


NM


NM















Other costs related to the proposed acquisition of













Eaton Vance by Morgan Stanley(5)


286


2,164


-


(87)


NM















Net gains and other investment income related













to consolidated sponsored funds and other













seed capital investments(6)


(959)


(722)


(1,715)


33


(44)















Other (income) expense of consolidated CLO













entities(7)


(5,972)


1,352


474


NM


NM















Net excess tax benefits from stock-based













compensation plans(8)


27,281


2,872


4,860


850


461















Adjusted income tax expense

$

40,547

$

36,017

$

37,026


13


10


Effective income tax rate


7.5

%

36.6

%

22.8

%

(80)


(67)


Adjusted effective income tax rate


25.8

%

26.2

%

27.6

%

(2)


(7)


 














Attachment 2 (continued)














Reconciliation of net income (loss) attributable to Eaton Vance Corp. shareholders to adjusted net income attributable to Eaton Vance Corp. shareholders and earnings (loss) per diluted share to adjusted earnings per diluted share:

(in thousands, except per share figures)
















Three Months Ended










%

%










Change

Change










Q1 2021

Q1 2021


January 31,

October 31,

January 31,


vs.

vs.


2021

2020

2020


Q4 2020

Q1 2020














Net income (loss) attributable to Eaton Vance













Corp. shareholders

$

89,914

$

(35,934)

$

103,985


NM

%

(14)

%














Management fees of consolidated sponsored













funds and consolidated CLO entities, net of tax(1)


1,466


1,045


1,428


40


3















Non-management expenses of consolidated













sponsored funds, net of tax(2)


686


701


955


(2)


(28)















Accelerated stock-based compensation expense













related to the proposed acquisition of Eaton













Vance by Morgan Stanley, net of tax(3)


4,241


108,648


-


(96)


NM















Other compensation expenses related to the 













proposed acquisition of Eaton Vance by













Morgan Stanley, net of tax(4)


25,243


-


-


NM


NM














Other costs related to the proposed acquisition of













Eaton Vance by Morgan Stanley, net of tax(5)


41,112


6,294


-


553


NM















Net gains and other investment income













related to consolidated sponsored funds and













other seed capital investments, net of tax(6)


(2,783)


(2,100)


(4,920)


33


(43)















Other (income) expense of consolidated CLO













entities, net of tax(7)


(17,329)


3,933


1,359


NM


NM















Net excess tax benefit from stock-based(8)













compensation plans


(27,281)


(2,872)


(4,860)


850


461















Impairment loss(9)


-


21,788


-


(100)


NM















Adjusted net income attributable to Eaton













Vance Corp. shareholders

$

115,269

$

101,503

$

97,947


14


18




























Earnings (loss) per diluted share

$

0.74

$

(0.31)

$

0.91


NM


(19)















Management fees of consolidated sponsored













funds and consolidated CLO entities, net of tax


0.01


0.01


0.01


-


-















Non-management expenses of consolidated













sponsored funds, net of tax


-


0.01


0.01


(100)


(100)















Accelerated stock-based compensation expense













related to the proposed acquisition of Eaton













Vance by Morgan Stanley, net of tax


0.03


0.94


-


(97)


NM














Other compensation expenses related to the 













proposed acquisition of Eaton Vance by













Morgan Stanley, net of tax


0.21


-


-


NM


NM















Other costs related to the proposed acquisition of













Eaton Vance by Morgan Stanley, net of tax


0.33


0.05


-


560


NM















Net gains and other investment income













related to consolidated sponsored funds and













other seed capital investments, net of tax


(0.02)


(0.02)


(0.04)


-


(50)















Other (income) expense of consolidated CLO













entities, net of tax


(0.14)


0.03


0.01


NM


NM















Net excess tax benefit from stock-based













compensation plans


(0.22)


(0.02)


(0.05)


NM


340















Impairment loss


-


0.19


-


(100)


NM




























Adjusted earnings per diluted share

$

0.94

$

0.88

$

0.85


7


11


 






















Notes to Reconciliations:









































(1)   Represents management fees eliminated upon the consolidation of sponsored funds and CLO entities.






















(2)   Represents expenses of consolidated sponsored funds.






















(3)   Represents stock-based compensation expense accelerated pursuant to the terms of the merger agreement with Morgan Stanley and
associated payroll taxes.






















(4)   Other compensation pertains to bonus payments made to employees in lieu of the special divided on outstanding and unvested stock
options and on shares of restricted stock withheld for tax purposes. Amount includes associated payroll taxes.






















(5)   Primarily represents proxy solicitation fees and legal and consulting costs related to the proposed acquisition of Eaton Vance by
Morgan Stanley.






















(6)   Represents gains, losses and other investment income earned on investments in sponsored strategies, whether accounted for as
consolidated funds, separate accounts or equity investments, as well as the gains and losses recognized on derivatives used to hedge
these investments. Stated amounts are net of non-controlling interests where applicable.






















(7)   Represents other income and expenses of consolidated CLO entities.






















(8)   Represents net excess tax benefits from stock-based compensation plans. Amounts have been reduced for executive compensation
limitations under Section 162(m) of the Internal Revenue Code.






















(9)   Represents an impairment loss recognized on the Company's investment in 49 percent-owned affiliate Hexavest.

 









Attachment 3

Components of net income attributable

to non-controlling and other beneficial interests

(in thousands)
















Three Months Ended










%

%










Change

Change










Q1 2021

Q1 2021



January 31,

October 31,

January 31,


vs.

vs.


2021

2020

2020


Q4 2020

Q1 2020














Consolidated sponsored funds

$

20,555

$

1,040

$

7,177


NM

%

186

%













Majority-owned subsidiaries


1,868


948


1,673


97


12















Net income attributable to non-controlling













and other beneficial interests

$

22,423

$

1,988

$

8,850


NM


153









 Attachment 4


Consolidated Balance Sheet


(in thousands, except share figures)






January 31,



October 31,




2021



2020


Assets














Cash and cash equivalents

$

606,101


$

799,384


Management fees and other receivables


279,858



249,806


Investments


558,376



783,246


Assets of consolidated CLO entities:







   Cash


19,674



91,795


   Bank loans and other investments


399,234



2,064,133


   Other assets


7,555



28,044


Deferred sales commissions


62,780



60,655


Deferred income taxes


21,215



33,423


Equipment and leasehold improvements, net


72,171



71,830


Operating lease right-of-use assets


248,923



253,109


Intangible assets, net


118,782



120,175


Goodwill


259,681



259,681


Loan to affiliate


5,000



5,000


Other assets


140,376



129,017


   Total assets

$

2,799,726


$

4,949,298









Liabilities, Temporary Equity and Permanent Equity














Liabilities:














Accrued compensation

$

111,577


$

246,129


Accounts payable and accrued expenses


116,403



83,991


Dividend payable


43,977



42,988


Debt


621,556



621,348


Operating lease liabilities


296,796



301,419


Liabilities of consolidated CLO entities:







   Senior and subordinated note obligations


396,778



1,616,243


   Line of credit


-



43,625


   Other liabilities


13,058



399,562


Other liabilities


61,045



47,454


   Total liabilities


1,661,190



3,402,759









Commitments and contingencies














Temporary Equity:







Redeemable non-controlling interests


197,842



222,854


   Total temporary equity


197,842



222,854









Permanent Equity:







Voting Common Stock, par value $0.00390625 per share:







   Authorized, 1,280,000 shares







   Issued and outstanding, 464,716 and 464,716 shares, respectively


2



2


Non-Voting Common Stock, par value $0.00390625 per share:







   Authorized, 190,720,000 shares







   Issued and outstanding, 117,010,114 and 114,196,609 shares, respectively


457



446


Additional paid-in capital


285,910



176,461


Notes receivable from stock option exercises


(6,288)



(7,086)


Accumulated other comprehensive loss


(59,448)



(63,276)


Retained earnings


720,061



1,217,138


   Total permanent equity


940,694



1,323,685


Total liabilities, temporary equity and permanent equity

$

2,799,726


$

4,949,298








 








Attachment 5


Consolidated Assets under Management and Net Flows by Investment Mandate(1)


(in millions)















Three Months Ended




January 31,


October 31,


January 31,




2021


2020


2020

Equity assets – beginning of period(2)

$

135,174


$

133,008


$

131,895



Sales and other inflows


7,248



5,904



7,806



Redemptions/outflows


(7,034)



(7,016)



(6,182)



  Net flows


214



(1,112)



1,624



Assets acquired(3)


-



2,163



-



Exchanges


90



(101)



3



Market value change


17,057



1,216



5,186

Equity assets end of period

$

152,535


$

135,174


$

138,708

Fixed income assets – beginning of period(4)


73,271



68,955



62,378



Sales and other inflows


8,757



8,546



5,086



Redemptions/outflows


(5,298)



(3,952)



(3,947)



  Net flows


3,459



4,594



1,139



Assets acquired(3)


-



104



-



Exchanges


21



37



23



Market value change


1,889



(419)



722

Fixed income assets end of period

$

78,640


$

73,271


$

64,262

Floating-rate income assets – beginning of period


28,960



28,569



35,103



Sales and other inflows


2,319



1,578



1,689



Redemptions/outflows


(1,711)



(1,458)



(3,046)



  Net flows


608



120



(1,357)



Exchanges


(19)



(22)



(27)



Market value change


916



293



117

Floating-rate income assets – end of period

$

30,465


$

28,960


$

33,836

Alternative assets – beginning of period(5)


7,424



7,467



8,372



Sales and other inflows


742



470



675



Redemptions/outflows


(551)



(560)



(593)



  Net flows


191



(90)



82



Exchanges


(5)



(1)



-



Market value change


91



48



99

Alternative assets – end of period

$

7,701


$

7,424


$

8,553

Parametric custom portfolios assets – beginning of period(6)


176,435



175,039



164,895



Sales and other inflows


12,356



8,680



9,745



Redemptions/outflows


(9,927)



(7,359)



(6,221)



  Net flows


2,429



1,321



3,524



Exchanges


9



86



1



Market value change


23,776



(11)



6,898

Parametric custom portfolios assets end of period

$

202,649


$

176,435


$

175,318

Parametric overlay services assets – beginning of period


94,473



94,350



94,789



Sales and other inflows


37,035



21,238



21,313



Redemptions/outflows


(23,935)



(20,879)



(20,199)



  Net flows


13,100



359



1,114



Exchanges


(107)



-



-



Market value change


4,745



(236)



1,611

Parametric overlay services assets – end of period

$

112,211


$

94,473


$

97,514

Total assets under management – beginning of period


515,737



507,388



497,432



Sales and other inflows


68,457



46,416



46,314



Redemptions/outflows


(48,456)



(41,224)



(40,188)



  Net flows


20,001



5,192



6,126



Assets acquired(3)


-



2,267



-



Exchanges


(11)



(1)



-



Market value change


48,474



891



14,633

Total assets under management end of period

$

584,201


$

515,737


$

518,191












(1)

Consolidated Eaton Vance Corp. See Attachment 11 for directly managed assets and flows of 49 percent-owned Hexavest, which are not included in the table above.












(2)

Includes balanced and other multi–asset mandates. Excludes equity mandates reported as Parametric custom portfolios.












(3)

Represents managed assets gained in the acquisition of the business assets of WaterOak Advisors, LLC (WaterOak) on October 16, 2020.












(4)

Includes cash management mandates. Excludes benchmark-based fixed income separate accounts reported as Parametric custom portfolios.












(5)

Consists of absolute return and commodity mandates.












(6)

Equity, fixed income and multi-asset separate accounts managed by Parametric for which customization is a primary feature; other Parametric strategies may also be customized.

 








Attachment 6


Consolidated Assets under Management and Net Flows by Investment Vehicle(1)


(in millions)















Three Months Ended




January 31,


October 31,


January 31,




2021


2020


2020

Funds – beginning of period

$

181,420


$

176,215


$

174,068



Sales and other inflows


15,435



13,549



11,496



Redemptions/outflows


(10,828)



(9,283)



(9,161)



  Net flows


4,607



4,266



2,335



Assets acquired(2)


-



237



-



Exchanges


10



(4)



-



Market value change


15,000



706



4,136

Funds end of period

$

201,037


$

181,420


$

180,539

Institutional separate accounts – beginning of period


163,677



163,818



173,331



Sales and other inflows


39,658



25,051



23,605



Redemptions/outflows


(27,903)



(25,070)



(25,449)



  Net flows


11,755



(19)



(1,844)



Exchanges


(29)



63



-



Market value change


14,263



(185)



3,771

Institutional separate accounts – end of period

$

189,666


$

163,677


$

175,258

Individual separate accounts – beginning of period


170,640



167,355



150,033



Sales and other inflows


13,364



7,816



11,213



Redemptions/outflows


(9,725)



(6,871)



(5,578)



  Net flows


3,639



945



5,635



Assets acquired(2)


-



2,030



-



Exchanges


8



(60)



-



Market value change


19,211



370



6,726

Individual separate accounts – end of period

$

193,498


$

170,640


$

162,394

Total assets under management – beginning of period


515,737



507,388



497,432



Sales and other inflows


68,457



46,416



46,314



Redemptions/outflows


(48,456)



(41,224)



(40,188)



  Net flows


20,001



5,192



6,126



Assets acquired(2)


-



2,267



-



Exchanges


(11)



(1)



-



Market value change


48,474



891



14,633

Total assets under management – end of period

$

584,201


$

515,737


$

518,191












(1)

Consolidated Eaton Vance Corp. See Attachment 11 for directly managed assets and flows of 49 percent–owned Hexavest, which are not included in the table above.












(2)

Represents managed assets gained in the acquisition of the business assets of WaterOak on October 16, 2020.

 













Attachment 7


Consolidated Assets under Management by Investment Mandate(1)


(in millions)




















January 31,



October 31,


%



January 31,


%





2021



2020


Change



2020


Change

Equity(2)

$

152,535


$

135,174


13%


$

138,708


10%

Fixed income(3)


78,640



73,271


7%



64,262


22%

Floating-rate income


30,465



28,960


5%



33,836


-10%

Alternative(4)


7,701



7,424


4%



8,553


-10%

Parametric custom portfolios(5)


202,649



176,435


15%



175,318


16%

Parametric overlay services


112,211



94,473


19%



97,514


15%

   Total

$

584,201


$

515,737


13%


$

518,191


13%
















(1)

Consolidated Eaton Vance Corp. See Attachment 11 for directly managed assets and flows of 49 percent–owned Hexavest, which are not included in the table above.
















(2)

Includes balanced and other multi–asset mandates. Excludes equity mandates reported as Parametric custom portfolios.
















(3)

Includes cash management mandates. Excludes benchmark-based fixed income separate accounts reported as Parametric custom portfolios.
















(4)

Consists of absolute return and commodity mandates.
















(5)

Equity, fixed income and multi-asset separate accounts managed by Parametric for which customization is a primary feature; other Parametric strategies may also be customized.




























Attachment 8


Consolidated Assets under Management by Investment Vehicle(1)


(in millions)




















January 31,



October 31,


%



January 31,


%





2021



2020


Change



2020


Change

Open-end funds

$

120,161


$

108,576


11%


$

108,290


11%

Closed-end funds


24,793



23,098


7%



24,873


0%

Private funds(2)


56,083



49,746


13%



47,376


18%

Institutional separate accounts


189,666



163,677


16%



175,258


8%

Individual separate accounts


193,498



170,640


13%



162,394


19%

   Total

$

584,201


$

515,737


13%


$

518,191


13%
















(1)

Consolidated Eaton Vance Corp. See Attachment 11 for directly managed assets and flows of 49 percent–owned Hexavest, which are not included in the table above.
















(2)

Includes privately offered equity, fixed and floating-rate income, and alternative funds and CLO entities.




























Attachment 9


Consolidated Assets under Management by Investment Affiliate(1)(2)


(in millions)




















January 31,



October 31,


%



January 31,


%





2021



2020


Change



2020


Change


Eaton Vance Management(3)(4)

$

169,278


$

154,394


10%


$

149,994


13%


Parametric


356,621



310,183


15%



320,848


11%


Atlanta Capital


27,698



24,963


11%



25,552


8%


Calvert(5)


30,604



26,197


17%



21,797


40%


   Total

$

584,201


$

515,737


13%


$

518,191


13%
















(1)

Consolidated Eaton Vance Corp. See Attachment 11 for directly managed assets and flows of 49 percent-owned Hexavest, which are not included in the table above.
















(2)

The Company's policy for reporting managed assets of investment portfolios overseen by multiple Eaton Vance affiliates is to base the classification on the strategy's primary identity.
















(3)

Includes managed assets of Eaton Vance-sponsored funds and separate accounts managed by Hexavest and unaffiliated third-party advisers under Eaton Vance supervision.
















(4)

Includes managed assets gained in the acquisition of the business assets of WaterOak on October 16, 2020.
















(5)

Includes managed assets of Calvert Equity Fund, which is sub-advised by Atlanta Capital, and Calvert-sponsored funds managed by unaffiliated third-party advisers under Calvert supervision.

 




Attachment 10


Average Annualized Management Fee Rates by Investment Mandate(1)(2)


(in basis points on average managed assets)










Three Months Ended






%

%






Change

Change






Q1 2021

Q1 2021



January 31,

October 31,

January 31,

vs.

vs.



2021

2020

2020

Q4 2020

Q1 2020


Equity(3)

57.3

56.4

57.0

2%

1%


Fixed income(4)

40.2

40.4

41.4

0%

-3%


Floating-rate income

48.9

49.1

49.9

0%

-2%


Alternative(5)

68.3

70.5

64.5

-3%

6%


Parametric custom portfolios(6)

16.0

15.5

15.2

3%

5%


Parametric overlay services

4.8

5.1

4.9

-6%

-2%


  Total

30.4

30.5

30.8

0%

-1%








(1)

Excludes performance-based fees, which were $0.2 million in the three months ended January 31, 2021, $1.5 million in the three months ended October 31, 2020 and $0.2 million in the three months ended January 31, 2020.








(2)

Excludes management fees earned on consolidated investment entities that are eliminated in consolidation, which were $2.0 million in the three months ended January 31, 2021, $1.4 million in the three months ended October 31, 2020 and $1.9 million in the three months ended January 31, 2020. The managed assets and flows of consolidated investment entities are reflected in our consolidated totals.








(3)

Includes balanced and other multi–asset mandates. Excludes equity mandates reported as Parametric custom portfolios.








(4)

Includes cash management mandates. Excludes benchmark-based fixed income separate accounts reported as Parametric custom portfolios.








(5)

Consists of absolute return and commodity mandates.








(6)

Equity, fixed income and multi-asset separate accounts managed by Parametric for which customization is a primary feature; other Parametric strategies may also be customized.

 


Attachment 11


Hexavest Inc. Assets under Management and Net Flows


(in millions)

















Three Months Ended





January 31,


October 31,


January 31,





2021


2020


2020

Eaton Vance distributed:









Eaton Vance sponsored funds – beginning of period(1)

$

56


$

93


$

152



Sales and other inflows


1



1



3



Redemptions/outflows


(7)



(37)



(26)



   Net flows


(6)



(36)



(23)



Market value change


7



(1)



1

Eaton Vance sponsored funds end of period

$

57


$

56


$

130

Eaton Vance distributed separate accounts –










    beginning of period(2)

$

479


$

584


$

1,563



Sales and other inflows


-



-



6



Redemptions/outflows


(265)



(94)



(22)



   Net flows


(265)



(94)



(16)



Market value change


66



(11)



19

Eaton Vance distributed separate accounts – end of period

$

280


$

479


$

1,566

Total Eaton Vance distributed – beginning of period

$

535


$

677


$

1,715



Sales and other inflows


1



1



9



Redemptions/outflows


(272)



(131)



(48)



   Net flows


(271)



(130)



(39)



Market value change


73



(12)



20

Total Eaton Vance distributed – end of period

$

337


$

535


$

1,696

Hexavest directly distributed – beginning of period(3)

$

5,311


$

6,129


$

11,640



Sales and other inflows


13



23



96



Redemptions/outflows


(1,933)



(751)



(554)



   Net flows


(1,920)



(728)



(458)



Market value change


607



(90)



114

Hexavest directly distributed – end of period

$

3,998


$

5,311


$

11,296

Total Hexavest managed assets – beginning of period

$

5,846


$

6,806


$

13,355



Sales and other inflows


14



24



105



Redemptions/outflows


(2,205)



(882)



(602)



   Net flows


(2,191)



(858)



(497)



Market value change


680



(102)



134

Total Hexavest managed assets – end of period

$

4,335


$

5,846


$

12,992













(1)

Managed assets and flows of Eaton Vance-sponsored funds 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 consolidated assets under management, flows and average annualized management fee rates reported in Attachments 5 through 10.













(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 consolidated assets under management, flows and average annualized management fee rates reported in Attachments 5 through 10.













(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 consolidated assets under management, flows and average annualized management fee rates reported in Attachments 5 through 10.

 

Cision View original content:http://www.prnewswire.com/news-releases/eaton-vance-corp-report-for-the-three-month-period-ended-january-31-2021-301234642.html

SOURCE Eaton Vance Corp.

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