Le Lézard
Classified in: Business, Covid-19 virus
Subjects: ERN, CCA

Eaton Vance Corp. Report for the Three and Nine Month Periods Ended July 31, 2020


BOSTON, Aug. 26, 2020 /PRNewswire/ -- Eaton Vance Corp. (NYSE: EV) today reported earnings per diluted share of ($0.01) for the third quarter of fiscal 2020, reflecting a $0.90 per diluted share charge against earnings in connection with a $100.5 million impairment loss recognized during the quarter on the Company's investment in 49 percent-owned affiliate Hexavest Inc. (Hexavest). For comparison, the Company earned $0.90 per diluted share in the third quarter of fiscal 2019 and $0.65 per diluted share in the second quarter of fiscal 2020.

The Company reported adjusted earnings per diluted share(1) of $0.82 for the third quarter of fiscal 2020, a decrease of 7 percent from $0.88 of adjusted earnings per diluted share in the third quarter of fiscal 2019 and an increase of 3 percent from $0.80 of adjusted earnings per diluted share in the second quarter of fiscal 2020.

In the third quarter of fiscal 2020, adjusted earnings exceeded earnings under U.S. generally accepted accounting principles (U.S. GAAP) by $0.83 per diluted share, reflecting the reversal of the $100.5 million impairment loss recognized on the Company's investment in Hexavest, the reversal of $8.5 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, the add-back of $1.6 million of management fees and expenses of consolidated investment entities, and the reversal of $0.2 million of net excess tax benefits related to stock?based compensation awards. Earnings under U.S. GAAP exceeded adjusted earnings by $0.02 per diluted share in the third quarter of fiscal 2019, reflecting the reversal of $4.6 million of net gains of consolidated investment entities and other seed capital investments, the add-back of $2.3 million of management fees and expenses of consolidated investment entities, and the reversal of $0.6 million of net excess tax benefits related to stock-based compensation awards. In the second quarter of fiscal 2020, adjusted earnings exceeded earnings under U.S. GAAP by $0.15 per diluted share, reflecting the reversal of $16.8 million of net losses of consolidated investment entities and other seed capital investments, the add-back of $1.8 million of management fees and expenses of consolidated investment entities, and the reversal of $1.1 million of net excess tax benefits related to stock?based compensation awards.

In the third quarter of fiscal 2020, the Company had consolidated net inflows of $2.7 billion, representing 2 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 $8.0 billion and 7 percent annualized internal growth in managed assets in the third quarter of fiscal 2019 and net outflows of $9.3 billion and -7 percent annualized internal growth in managed assets in the second quarter of fiscal 2020. Excluding Parametric overlay services, the Company had net inflows of $1.2 billion and 1 percent annualized internal growth in managed assets in the third quarter of fiscal 2020, net inflows of $5.3 billion and 5 percent annualized internal growth in managed assets in the third quarter of fiscal 2019 and net outflows of $2.8 billion and -3 percent annualized internal growth in managed assets in the second quarter of fiscal 2020.

The Company's annualized 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 2 percent in both the third quarter of fiscal 2020 and the third quarter of fiscal 2019 and -6 percent in the second quarter of fiscal 2020.

Consolidated assets under management were $507.4 billion on July 31, 2020, up 5 percent from $482.8 billion of consolidated managed assets on July 31, 2019 and up 9 percent from $465.3 billion of consolidated managed assets on April 30, 2020. The year-over-year increase in consolidated assets under management reflects net inflows of $9.3 billion and market price appreciation of $15.3 billion. The sequential quarterly increase in consolidated assets under management reflects net inflows of $2.7 billion and market price appreciation of $39.4 billion in the third quarter of fiscal 2020.

"Supported by positive organic revenue growth and rising equity markets, Eaton Vance's business and financial results have snapped back sharply from the pandemic-related lows of our second fiscal quarter," said Thomas E. Faust Jr., Chairman and Chief Executive Officer. "While significant uncertainties remain, our business momentum is building and our outlook is increasingly optimistic."

Average consolidated assets under management were $484.5 billion in the third quarter of fiscal 2020, up 3 percent from $471.0 billion in the third quarter of fiscal 2019 and up 1 percent from $479.5 billion in the second quarter of fiscal 2020.

As shown in Attachment 10, excluding performance-based fees, annualized management fee rates on consolidated assets under management averaged 30.3 basis points in the third quarter of fiscal 2020, down 5 percent from 31.8 basis points in the third quarter of fiscal 2019 and up 2 percent from 29.7 basis points in the second quarter of fiscal 2020. Changes in average annualized management fee rates for the compared periods primarily reflect shifts in the Company's mix of business.

Attachments 5 and 6 summarize the Company's consolidated assets under management and net flows by investment mandate and investment vehicle reporting categories. 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 July 31, 2020, managed assets of the Company's 49 percent-owned affiliate Hexavest decreased to $6.8 billion, down 49 percent from $13.4 billion of managed assets on July 31, 2019 and down 21 percent from $8.6 billion of managed assets on April 30, 2020. Hexavest had net outflows of $2.7 billion in the third quarter of fiscal 2020, $0.6 billion in the third quarter of fiscal 2019 and $2.2 billion in the second quarter of fiscal 2020. The impairment loss recognized on the Company's investment in Hexavest in the third quarter of fiscal 2020 reflects the net outflows experienced by Hexavest and the associated decline in Hexavest's revenue and profits. The Company remains supportive of Hexavest's leadership and investment approach, and has no plans to change its ownership position in Hexavest. 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


July 31,

April 30,

July 31,


2020

2020

2019

Revenue

$

420,819

$

405,911

$

431,235

Expenses


289,598


283,955


294,100

Operating income


131,221


121,956


137,135

   Operating margin


31.2%


30.0%


31.8%

   Adjusted operating margin(1)


31.6%


30.5%


32.4%

Non-operating income (expense)


32,311


(73,364)


5,470

Income taxes


(36,899)


(22,017)


(36,304)

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


(100,244)


1,481


2,235

Net income


26,389


28,056


108,536

Net (income) loss attributable to non-controlling and other beneficial interests


(27,982)


44,002


(6,315)

Net income (loss) attributable to Eaton Vance Corp. shareholders

$

(1,593)

$

72,058

$

102,221

Adjusted net income attributable to Eaton Vance Corp. shareholders(1)

$

91,830

$

89,627

$

99,327

Earnings (loss) per diluted share

$

(0.01)

$

0.65

$

0.90

Adjusted earnings per diluted share(1)

$

0.82

$

0.80

$

0.88

Weighted average shares outstanding:







Basic


109,183


109,224


109,111

Diluted


111,694


111,610


113,464


(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.

Third Quarter Fiscal 2020 vs. Third Quarter Fiscal 2019 

In the third quarter of fiscal 2020, revenue decreased 2 percent to $420.8 million from $431.2 million in the third quarter of fiscal 2019. Management fees were down 2 percent, as a 5 percent decrease in the Company's consolidated average annualized management fee rate more than offset a 3 percent increase in average consolidated assets under management. Performance fees were $0.9 million in the third quarter of fiscal 2020, versus $0.1 million in the third quarter of fiscal 2019. Distribution and service fee revenues for the third quarter of fiscal 2020 were collectively down 5 percent from the third quarter of fiscal 2019, reflecting lower average managed assets in fund share classes that are subject to these fees.

Operating expenses decreased 2 percent to $289.6 million in the third quarter of fiscal 2020 from $294.1 million in the third quarter of fiscal 2019, reflecting decreases in compensation, distribution expense and fund-related expenses, partially offset by increases in service fee expense, amortization of deferred sales commissions and other operating expenses. The decrease in compensation reflects lower operating income-based bonus accruals, lower sales-based incentive compensation and lower severance expenses, partially offset by higher salaries and benefit expenses associated with increases in headcount and higher stock-based compensation expense. The decline in distribution expense reflects a decrease in up-front sales commission expense, a decrease in marketing and promotion costs, lower Class C distribution fee payments and lower intermediary marketing support payments. The decrease in fund-related expenses reflects a reduction in fund expenses borne by the Company, partially offset by higher sub-advisory fees paid. The increase in service fee expense reflects higher private fund service fee payments, partially offset by lower Class A and Class C service fee payments. The increase in amortization of deferred sales commissions reflects higher private fund commission amortization. Other operating expenses increased 5 percent, primarily reflecting increases in information technology spending, facilities expenses and other corporate expenses, partially offset by lower travel expenses.

Operating income decreased 4 percent to $131.2 million in the third quarter of fiscal 2020 from $137.1 million in the third quarter of fiscal 2019. The Company's operating margin decreased to 31.2 percent in the third quarter of fiscal 2020 from 31.8 percent in the third quarter of fiscal 2019. As shown in Attachment 2, on an adjusted basis including the management fee revenue and excluding the operating expenses of consolidated investment entities, operating income was down 5 percent year-over-year. Our adjusted operating margin decreased to 31.6 percent in the third quarter of fiscal 2020 from 32.4 percent in the third quarter of fiscal 2019.

Non-operating income totaled $32.3 million in the third quarter of fiscal 2020 and $5.5 million in the third quarter of fiscal 2019. The year-over-year change primarily reflects an $18.8 million increase in net gains and other investment income of consolidated sponsored funds and the Company's investments in other sponsored strategies, and an $8.0 million improvement in net income (expense) of consolidated CLO entities.

The Company's effective tax rate, calculated as a percentage of income before income taxes and equity in net income of affiliates, was 22.6 percent in the third quarter of fiscal 2020 and 25.5 percent in the third quarter of fiscal 2019. The Company's effective tax rate is discussed in greater detail under "Taxation" below.

Equity in net income (loss) of affiliates was ($100.2) million and $2.2 million in the third quarters of fiscal 2020 and 2019, respectively. Equity in net income (loss) of affiliates in the third quarter of fiscal 2020 included the $100.5 million impairment loss recognized on the Company's investment in Hexavest discussed above. In the third quarter of fiscal 2019, substantially all of equity in net income of affiliates related to the Company's investment in Hexavest.

As detailed in Attachment 3, net income attributable to non-controlling and other beneficial interests was $28.0 million in the third quarter of fiscal 2020 and $6.3 million in the third quarter of fiscal 2019. The year-over-year change reflects an increase in income earned by consolidated sponsored funds, partially offset by a decrease in net income allocated to non-controlling interest holders of majority-owned subsidiaries due to the Company's accelerated repurchase of certain profit and capital interests in Parametric entities held by current and former employees, which settled at the end of the fourth quarter of fiscal 2019.

The Company's weighted average basic shares outstanding were 109.2 million in the third quarter of fiscal 2020 and 109.1 million in the third quarter of fiscal 2019. The year-over-year increase reflects new shares issued upon the vesting of restricted stock awards and the exercise of employee stock options in excess of share repurchases. On a diluted basis, the Company's weighted average shares outstanding were 111.7 million in the third quarter of fiscal 2020 and 113.5 million in the third quarter of fiscal 2019, a decrease of 2 percent. The decline in weighted average diluted shares outstanding reflects a decrease in the dilutive effect of in-the-money options and unvested restricted stock awards due to lower market prices of the Company's shares.

Third Quarter Fiscal 2020 vs. Second Quarter Fiscal 2020

In the third quarter of fiscal 2020, revenue increased 4 percent to $420.8 million from $405.9 million in the second quarter of fiscal 2020. Management fees were up 4 percent, primarily reflecting a 1 percent increase in average consolidated assets under management, a 2 percent increase in the Company's consolidated average annualized management fee rate and the impact of two more fee days in the third quarter of fiscal 2020. Performance fees were $0.9 million in the third quarter of fiscal 2020, versus $2.5 million in the second quarter of fiscal 2020. Distribution and service fee revenues for the third quarter of fiscal 2020 were collectively up 2 percent from the second quarter of fiscal 2020, reflecting higher average managed assets in fund share classes that are subject to these fees.

Operating expenses increased 2 percent to $289.6 million in the third quarter of fiscal 2020 from $284.0 million in the second quarter of fiscal 2020, primarily reflecting increases in compensation and service fee expense, partially offset by decreases in distribution expense, fund-related expenses and other operating expenses. The increase in compensation reflects higher operating income-based and investment performance-based bonus accruals, higher stock-based compensation expense and higher salary and benefit expenses associated with increases in headcount and the impact of two additional payroll days, partially offset by lower sales-based incentive compensation. The increase in service fee expense reflects higher private fund and Class A service fee payments. The decrease in distribution expense reflects a reduction in up-front sales commission expense, partially offset by an increase in marketing costs. The decrease in fund-related expenses reflects lower fund expenses borne by the Company. Other operating expenses decreased 2 percent, primarily reflecting lower travel expenses, partially offset by an increase in other corporate expenses. Amortization of deferred sales commissions in the third quarter of fiscal 2020 was substantially unchanged from the second quarter of fiscal 2020.

Operating income increased 8 percent to $131.2 million in the third quarter of fiscal 2020 from $122.0 million in the second quarter of fiscal 2020. The Company's operating margin increased to 31.2 percent in the third quarter of fiscal 2020 from 30.0 percent in the second quarter of fiscal 2020. As shown in Attachment 2, on an adjusted basis including the management fee revenue and excluding the operating expenses of consolidated investment entities, operating income was up 7 percent sequentially. Our adjusted operating margin increased to 31.6 percent in the third quarter of fiscal 2020 from 30.5 percent in the second quarter of fiscal 2020.

Non-operating income totaled $32.3 million in the third quarter of fiscal 2020 versus $73.4 million of non-operating expense in the second quarter of fiscal 2020. The sequential change reflects an $84.2 million positive change in net gains (losses) and other investment income of consolidated sponsored funds and the Company's investments in other sponsored strategies, a $21.0 million improvement in net income (expense) of consolidated CLO entities and a $0.5 million decrease in interest expense. The decrease in interest expense reflects the repayment of borrowings under the Company's line of credit made in the second quarter of fiscal 2020. Such borrowings were fully repaid before the end of the second quarter.

The Company's effective tax rate, calculated as a percentage of income before income taxes and equity in net income of affiliates, was 22.6 percent in the third quarter of fiscal 2020 and 45.3 percent in the second 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 ($100.2) million in the third quarter of fiscal 2020 and $1.5 million in the second quarter of fiscal 2020. Equity in net income (loss) of affiliates in the third quarter of fiscal 2020 included the $100.5 million impairment loss recognized on the Company's investment in Hexavest discussed above. In the second quarter of fiscal 2020, substantially all of equity in net income of affiliates related to the Company's investment in Hexavest.

As detailed in Attachment 3, net income (loss) attributable to non-controlling and other beneficial interests was $28.0 million in the third quarter of fiscal 2020 and $(44.0) million in the second quarter of fiscal 2020. The sequential change reflects improved income (expense) of consolidated sponsored funds.

The Company's weighted average basic shares outstanding were 109.2 million in both the third quarter and the second quarter of fiscal 2020. On a diluted basis, the Company's weighted average shares outstanding were 111.7 million in the third quarter of fiscal 2020 and 111.6 million in the second quarter of fiscal 2020. The increase in weighted average diluted shares outstanding reflects an increase in the dilutive effect of unvested restricted stock awards due to a decrease in the unrecognized compensation expense on these awards.

Taxation

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


Three Months Ended


July 31,

April 30,

July 31,


2020

2020

2019

Statutory U.S. federal income tax rate

21.0

%

21.0

%

21.0

%

State income tax, net of federal income tax benefits

4.0


8.8


5.0


Net income attributable to non-controlling and other beneficial interests

(3.6)


16.7


(1.3)


Other items

1.3


1.0


1.2


Net excess tax benefits from stock-based compensation plans

(0.1)


(2.2)


(0.4)


Effective income tax rate

22.6

%

45.3

%

25.5

%

The Company's income tax provision for the third quarter of fiscal 2020, third quarter of fiscal 2019 and second quarter of fiscal 2020 includes $0.5 million, $1.1 million and $0.9 million, respectively, of charges associated with certain provisions of the Tax Cuts and Jobs Act that took effect for the Company in fiscal 2019, relating principally to limitations on the deductibility of executive compensation.

The Company's income tax provision was reduced by net excess tax benefits related to stock-based compensation awards totaling $0.2 million in the third quarter of fiscal 2020, $0.6 million in the third quarter of fiscal 2019 and $1.1 million in the second quarter of fiscal 2020.

As shown in Attachment 2, the Company's calculations of adjusted net income and adjusted earnings per diluted share remove the impairment loss recognized in the third 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 27.1 percent in the third quarter of fiscal 2020, 26.4 percent in the third quarter of fiscal 2019 and 24.9 percent in the second quarter of fiscal 2020. On the same adjusted basis, the Company estimates that its effective tax rate will be approximately 26.4 to 26.9 percent for the balance of fiscal 2020 and for the fiscal year as a whole. The Company's actual adjusted effective tax rate for fiscal 2020 may vary from this estimate due to changes in the Company's tax policy interpretations and assumptions, additional regulatory guidance that may be issued and other factors.

Balance Sheet Information

As of July 31, 2020, the Company held cash and cash equivalents of $878.9 million and its investments included $170.6 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. During the first nine months of fiscal 2020, the Company used $98.9 million to repurchase and retire approximately 2.4 million shares of its Non-Voting Common Stock under its repurchase authorizations. Of the current 8.0 million share repurchase authorization, approximately 4.0 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, 2020. To participate in the conference call, please dial 866-521-4909 (domestic) or 647-427-2311 (international) and refer to "Eaton Vance Corp. Third Fiscal Quarter Earnings." A webcast of the conference call can also be accessed via Eaton Vance's website, eatonvance.com.

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 6157816 when instructed.

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 July 31, 2020, Eaton Vance had consolidated assets under management of $507.4 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, 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


Nine Months Ended









%

%
















Change

Change
















Q3 2020

Q3 2020










July 31,

April 30,

July 31,

vs.

vs.


July 31,

July 31,

%



2020

2020

2019

Q2 2020

Q3 2019


2020

2019

Change

Revenue:


















Management fees

$

369,198

$

354,121

$

375,747

4

%

(2)

%


$

1,118,120

$

1,085,881

3

%

Distribution and underwriter fees


18,141


19,122


21,281

(5)


(15)




58,841


64,425

(9)


Service fees


32,322


30,557


31,855

6


1




96,818


90,801

7


Other revenue


1,158


2,111


2,352

(45)


(51)




5,505


8,405

(35)



Total revenue


420,819


405,911


431,235

4


(2)




1,279,284


1,249,512

2


Expenses:


















Compensation and related costs


156,780


149,072


158,642

5


(1)




477,834


466,072

3


Distribution expense


32,198


33,533


38,070

(4)


(15)




105,734


111,508

(5)


Service fee expense


28,266


26,648


28,037

6


1




84,669


79,475

7


Amortization of deferred sales commissions


6,329


6,289


5,644

1


12




18,586


16,762

11


Fund-related expenses


9,545


10,897


9,715

(12)


(2)




31,509


29,320

7


Other expenses


56,480


57,516


53,992

(2)


5




173,056


160,937

8



Total expenses


289,598


283,955


294,100

2


(2)




891,388


864,074

3


Operating income


131,221


121,956


137,135

8


(4)




387,896


385,438

1


Non-operating income (expense):


















Gains (losses) and other investment income, net


33,671


(50,512)


14,846

NM


127




(751)


35,885

NM


Interest expense


(5,888)


(6,364)


(5,888)

(7)


-




(18,140)


(17,907)

1


Other income (expense) of consolidated collateralized loan obligation (CLO) entities:



















  Gains (losses) and other investment income, net


14,440


(4,841)


18,260

NM


(21)




25,162


45,495

(45)



  Interest and other expense


(9,912)


(11,647)


(21,748)

(15)


(54)




(38,955)


(40,905)

(5)



Total non-operating income (expense)


32,311


(73,364)


5,470

NM


491




(32,684)


22,568

NM





















Income before income taxes and equity in net income (loss) of affiliates


163,532


48,592


142,605

237


15




355,212


408,006

(13)


Income taxes


(36,899)


(22,017)


(36,304)

68


2




(91,494)


(100,998)

(9)


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


(100,244)


1,481


2,235

NM


NM




(96,438)


6,918

NM


Net income


26,389


28,056


108,536

(6)


(76)




167,280


313,926

(47)


Net (income) loss attributable to non-controlling and other beneficial interests


(27,982)


44,002


(6,315)

NM


343




7,170


(23,097)

NM


Net income (loss) attributable to Eaton Vance Corp. shareholders

$

(1,593)

$

72,058

$

102,221

NM


NM



$

174,450

$

290,829

(40)





















Earnings (loss) per share:


















Basic

$

(0.01)

$

0.66

$

0.94

NM


NM



$

1.60

$

2.63

(39)


Diluted

$

(0.01)

$

0.65

$

0.90

NM


NM



$

1.55

$

2.54

(39)





















Weighted average shares outstanding:


















Basic


109,183


109,224


109,111

-


-




109,255


110,553

(1)


Diluted


111,694


111,610


113,464

-


(2)




112,879


114,510

(1)





















Dividends declared per share

$

0.375

$

0.375

$

0.350

-


7



$

1.125

$

1.050

7


 

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 and non-recurring charges for the effect of tax law changes. The adjusted measures also exclude the impact of consolidated investment entities and other seed capital investments. 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 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 excludes the impact of consolidated investment entities and other seed capital investments. Adjustments to U.S. GAAP operating income include the add-back of management fee revenue received from consolidated investment entities that are eliminated in consolidation and the non-management expenses of consolidated sponsored funds recognized in consolidation. Adjustments to U.S. GAAP 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. All prior period non-U.S. GAAP financial measures have been updated to reflect this change.

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 2020

Q3 2020










July 31,

April 30,

July 31,


vs.

vs.


July 31,

July 31,


%


2020

2020

2019


Q2 2020

Q3 2019


2020

2019


Change





















Total revenue

$

420,819

$

405,911

$

431,235


4

%

(2)

%


$

1,279,284

$

1,249,512


2

%





















Management fees of consolidated sponsored funds and consolidated CLO entities(1)


1,193


1,277


1,813


(7)


(34)




4,396


3,614


22










































Adjusted total revenue

$

422,012

$

407,188

$

433,048


4


(3)



$

1,283,680

$

1,253,126


2






















Total expenses

$

289,598

$

283,955

$

294,100


2

%

(2)

%


$

891,388

$

864,074


3

%





















Non-management expenses of consolidated sponsored funds(2)


(1,014)


(1,144)


(1,297)


(11)


(22)




(3,446)


(4,078)


(15)










































Adjusted total expenses

$

288,584

$

282,811

$

292,803


2


(1)



$

887,942

$

859,996


3






















Operating income

$

131,221

$

121,956

$

137,135


8

%

(4)

%


$

387,896

$

385,438


1

%





















Management fees of consolidated sponsored funds and consolidated CLO entities(1)


1,193


1,277


1,813


(7)


(34)




4,396


3,614


22






















Non-management expenses of consolidated sponsored funds(2)


1,014


1,144


1,297


(11)


(22)




3,446


4,078


(15)










































Adjusted operating income

$

133,428

$

124,377

$

140,245


7


(5)



$

395,738

$

393,130


1


Operating margin


31.2

%

30.0

%

31.8

%

4


(2)




30.3

%

30.8

%

(2)


Adjusted operating margin


31.6

%

30.5

%

32.4

%

4


(2)




30.8

%

31.4

%

(2)


 

Reconciliation of income before income taxes and equity in net income of affiliates to adjusted income before income taxes and equity in net income of affiliates:

(in thousands, except as noted)






















Three Months Ended


Nine Months Ended









%

%

















Change

Change

















Q3 2020

Q3 2020










July 31,

April 30,

July 31,


vs.

vs.


July 31,

July 31,


%


2020

2020

2019


Q2 2020

Q3 2019


2020

2019


Change





















Income before income taxes and equity in net income (loss) of affiliates

$

163,532

$

48,592

$

142,605


237

%

15

%


$

355,212

$

408,006


(13)

%





















Management fees of consolidated sponsored funds and consolidated CLO entities, pre-tax(1)


1,193


1,277


1,813


(7)


(34)




4,396


3,614


22






















Non-management expenses of consolidated sponsored funds, pre-tax(2)


1,014


1,144


1,297


(11)


(22)




3,446


4,078


(15)






















Net (gains) losses and other investment income related to consolidated sponsored funds and other seed capital investments, pre-tax(3)


(33,419)


51,489


(12,394)


NM


170




4,258


(27,764)


NM






















Other (income) expense of consolidated CLO entities, pre-tax(4)


(4,528)


16,488


3,488


NM


NM




13,793


(4,589)


NM






















Adjusted income before income taxes and equity in net income (loss) of affiliates

$

127,792

$

118,990

$

136,809


7


(7)



$

381,105

$

383,345


(1)






















Income tax expense

$

36,899

$

22,017

$

36,304


68

%

2

%


$

91,494

$

100,998


(9)

%





















Management fees of consolidated sponsored funds and consolidated CLO entities(1)


308


330


466


(7)


(34)




1,136


925


23






















Non-management expenses of consolidated sponsored funds(2)


262


296


333


(11)


(21)




891


1,041


(14)






















Net (gains) losses and other investment income related to consolidated sponsored funds and other seed capital investments(3)


(1,789)


1,606


(2,474)


NM


(28)




(1,898)


(3,697)


(49)






















Other (income) expense of consolidated CLO entities(4)


(1,170)


4,262


895


NM


NM




3,565


(1,162)


NM






















Net excess tax benefits from stock-based compensation plans


176


1,059


637


(83)


(72)




6,095


3,863


58






















Adjusted income tax expense

$

34,686

$

29,570

$

36,161


17


(4)



$

101,283

$

101,968


(1)


Effective income tax rate


22.6

%

45.3

%

25.5

%

(50)


(11)




25.8

%

24.8

%

4


Adjusted effective income tax rate


27.1

%

24.9

%

26.4

%

9


3




26.6

%

26.6

%

-


 

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 2020

Q3 2020










July 31,

April 30,

July 31,


vs.

vs.


July 31,

July 31,


%


2020

2020

2019


Q2 2020

Q3 2019


2020

2019


Change





















Net income (loss) attributable to Eaton Vance Corp. shareholders

$

(1,593)

$

72,058

$

102,221


NM

%

NM

%


$

174,450

$

290,829


(40)

%





















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


885


947


1,348


(7)


(34)




3,260


2,690


21






















Non-management expenses of consolidated sponsored funds, net of tax(2)


752


848


964


(11)


(22)




2,555


3,037


(16)






















Net (gains) losses and other investment income related to consolidated sponsored funds and other seed capital investments, net of tax(3)


(5,131)


4,607


(7,161)


NM


(28)




(5,444)


(10,743)


(49)






















Other (income) expense of consolidated CLO entities, net of tax(4)


(3,357)


12,226


2,592


NM


NM




10,227


(3,430)


NM






















Net excess tax benefit from stock-based compensation plans


(176)


(1,059)


(637)


(83)


(72)




(6,095)


(3,863)


58






















Impairment loss(5)


100,450


-


-


NM


NM




100,450


-


NM






















Adjusted net income attributable to Eaton Vance Corp. shareholders

$

91,830

$

89,627

$

99,327


2


(8)



$

279,403

$

278,520


-






















Earnings (loss) per diluted share

$

(0.01)

$

0.65

$

0.90


NM


NM



$

1.55

$

2.54


(39)






















Management fees of consolidated sponsored funds and consolidated CLO entities, net of tax


0.01


0.01


0.01


-


-




0.03


0.02


50






















Non-management expenses of consolidated sponsored funds, net of tax


-


0.01


0.01


(100)


(100)




0.02


0.03


(33)






















Net (gains) losses and other investment income related to consolidated sponsored funds and other seed capital investments, net of tax


(0.05)


0.04


(0.06)


NM


(17)




(0.05)


(0.09)


(44)






















Other (income) expense of consolidated CLO entities, net of tax


(0.03)


0.11


0.02


NM


NM




0.09


(0.04)


NM






















Net excess tax benefit from stock-based compensation plans


-


(0.02)


-


(100)


NM




(0.05)


(0.03)


67






















Impairment loss


0.90


-


-


NM


NM




0.89


-


NM










































Adjusted earnings per diluted share

$

0.82

$

0.80

$

0.88


3


(7)



$

2.48

$

2.43


2



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 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.






















(4)

Represents other income and expenses of consolidated CLO entities.






















(5)

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

 

Attachment 3

Components of net income (loss) attributable

to non-controlling and other beneficial interests

(in thousands)





















Three Months Ended


Nine Months Ended









%

%
















Change

Change
















Q3 2020

Q3 2020









July 31,

April 30,

July 31,


vs.

vs.


July 31,

July 31,

%


2020

2020

2019


Q2 2020

Q3 2019


2020

2019

Change




















Consolidated sponsored funds

$

26,500

$

(45,276)

$

2,760


NM

%

860

%


$

(11,598)

$

13,323

NM

%




















Majority-owned subsidiaries


1,482


1,274


3,555


16


(58)




4,428


9,774

(55)





















Net income (loss) attributable to non-controlling and other beneficial interests

$

27,982

$

(44,002)

$

6,315


NM


343



$

(7,170)

$

23,097

NM


 

 Attachment 4

Consolidated Balance Sheet

(in thousands, except per share figures)




July 31,



October 31,



2020



2019

Assets












Cash and cash equivalents

$

878,875


$

557,668

Management fees and other receivables


231,115



237,864

Investments


657,444



1,060,739

Assets of consolidated CLO entities:






   Cash


51,854



48,704

   Bank loans and other investments


1,484,671



1,704,270

   Other assets


19,145



28,039

Deferred sales commissions


59,622



55,211

Deferred income taxes


55,127



62,661

Equipment and leasehold improvements, net


71,251



72,798

Operating lease right-of-use assets


257,700



-

Intangible assets, net


72,956



75,907

Goodwill


259,681



259,681

Loan to affiliate


5,000



5,000

Other assets


77,956



85,087

   Total assets

$

4,182,397


$

4,253,629







Liabilities, Temporary Equity and Permanent Equity












Liabilities:












Accrued compensation

$

173,311


$

240,722

Accounts payable and accrued expenses


71,063



89,984

Dividend payable


55,600



55,177

Debt


621,139



620,513

Operating lease liabilities


306,493



-

Liabilities of consolidated CLO entities:






   Senior and subordinated note obligations


1,170,800



1,617,095

   Other liabilities


298,282



51,122

Other liabilities


24,912



108,982

   Total liabilities


2,721,600



2,783,595







Commitments and contingencies












Temporary Equity:






Redeemable non-controlling interests


185,510



285,915

   Total temporary equity


185,510



285,915







Permanent Equity:






Voting Common Stock, par value $0.00390625 per share:






   Authorized, 1,280,000 shares






   Issued and outstanding, 464,716 and 422,935 shares, respectively


2



2

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






   Authorized, 190,720,000 shares






   Issued and outstanding, 114,173,283 and 113,143,567 shares, respectively


446



442

Additional paid-in capital


49,122



-

Notes receivable from stock option exercises


(7,153)



(8,447)

Accumulated other comprehensive loss


(63,132)



(58,317)

Retained earnings


1,296,002



1,250,439

   Total permanent equity


1,275,287



1,184,119

Total liabilities, temporary equity and permanent equity

$

4,182,397


$

4,253,629

 

Attachment 5


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


(in millions)





















Three Months Ended


Nine Months Ended




July 31,


April 30,


July 31,


July 31,


July 31,




2020


2020


2019


2020


2019

Equity assets ? beginning of period(2)

$

122,273


$

138,708


$

125,869


$

131,895


$

115,772



Sales and other inflows


6,587



8,316



6,749



22,709



18,019



Redemptions/outflows


(8,757)



(8,793)



(5,130)



(23,732)



(15,161)



  Net flows


(2,170)



(477)



1,619



(1,023)



2,858



Exchanges


(19)



(205)



(43)



(221)



(1)



Market value change


12,924



(15,753)



1,551



2,357



10,367

Equity assets ? end of period

$

133,008


$

122,273


$

128,996


$

133,008


$

128,996

Fixed income assets ? beginning of period(3)


61,347



64,262



58,531



62,378



54,339



Sales and other inflows


8,573



7,898



5,237



21,557



17,019



Redemptions/outflows


(4,080)



(7,719)



(3,495)



(15,746)



(12,813)



  Net flows


4,493



179



1,742



5,811



4,206



Exchanges


51



154



69



228



466



Market value change


3,064



(3,248)



626



538



1,957

Fixed income assets ? end of period

$

68,955


$

61,347


$

60,968


$

68,955


$

60,968

Floating-rate income assets ? beginning of period


27,822



33,836



39,750



35,103



44,837



Sales and other inflows


1,495



1,937



1,772



5,121



7,417



Redemptions/outflows


(2,068)



(5,096)



(2,963)



(10,210)



(13,098)



  Net flows


(573)



(3,159)



(1,191)



(5,089)



(5,681)



Exchanges


4



(119)



(38)



(142)



(361)



Market value change


1,316



(2,736)



(182)



(1,303)



(456)

Floating-rate income assets ? end of period

$

28,569


$

27,822


$

38,339


$

28,569


$

38,339

Alternative assets ? beginning of period(4)


7,226



8,553



9,409



8,372



12,139



Sales and other inflows


575



498



466



1,748



2,312



Redemptions/outflows


(622)



(1,182)



(1,109)



(2,397)



(5,648)



  Net flows


(47)



(684)



(643)



(649)



(3,336)



Exchanges


(38)



(14)



9



(52)



(167)



Market value change


326



(629)



256



(204)



395

Alternative assets ? end of period

$

7,467


$

7,226


$

9,031


$

7,467


$

9,031

Parametric custom portfolios assets ? beginning of period(5)


158,696



175,318



153,604



164,895



134,345



Sales and other inflows


9,917



13,896



9,236



33,558



28,499



Redemptions/outflows


(10,385)



(12,596)



(5,449)



(29,202)



(16,445)



  Net flows


(468)



1,300



3,787



4,356



12,054



Exchanges


3



4



3



8



56



Market value change


16,808



(17,926)



1,673



5,780



12,612

Parametric custom portfolios assets ? end of period

$

175,039


$

158,696


$

159,067


$

175,039


$

159,067

Parametric overlay services assets ? beginning of period


87,919



97,514



82,775



94,789



77,871



Sales and other inflows


22,638



29,025



17,307



72,976



48,988



Redemptions/outflows


(21,143)



(35,494)



(14,611)



(76,836)



(44,963)



  Net flows


1,495



(6,469)



2,696



(3,860)



4,025



Exchanges


-



178



-



178



-



Market value change


4,936



(3,304)



908



3,243



4,483

Parametric overlay services assets ? end of period

$

94,350


$

87,919


$

86,379


$

94,350


$

86,379

Total assets under management ? beginning of period


465,283



518,191



469,938



497,432



439,303



Sales and other inflows


49,785



61,570



40,767



157,669



122,254



Redemptions/outflows


(47,055)



(70,880)



(32,757)



(158,123)



(108,128)



  Net flows


2,730



(9,310)



8,010



(454)



14,126



Exchanges


1



(2)



-



(1)



(7)



Market value change


39,374



(43,596)



4,832



10,411



29,358

Total assets under management ? end of period

$

507,388


$

465,283


$

482,780


$

507,388


$

482,780


(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. Amounts for periods prior to fiscal 2020 have been revised to reflect the reclassification of benchmark-based fixed income separate accounts from fixed income to Parametric custom portfolios in the first quarter of fiscal 2020.


















(4)

Consists of absolute return, commodity and currency 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. Amounts for periods prior to fiscal 2020 have been revised to reflect the reclassification of benchmark-based fixed income separate accounts from fixed income to Parametric custom portfolios in the first quarter of fiscal 2020.

 

Attachment 6


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


(in millions)





















Three Months Ended


Nine Months Ended




July 31,


April 30,


July 31,


July 31,


July 31,




2020


2020


2019


2020


2019

Funds ? beginning of period

$

160,404


$

180,539


$

170,962


$

174,068


$

164,968



Sales and other inflows


12,816



14,316



10,084



38,628



34,317



Redemptions/outflows


(10,281)



(17,297)



(8,912)



(36,739)



(33,736)



  Net flows


2,535



(2,981)



1,172



1,889



581



Exchanges


1



(3)



22



(2)



(83)



Market value change


13,275



(17,151)



1,277



260



7,967

Funds ? end of period

$

176,215


$

160,404


$

173,433


$

176,215


$

173,433

Institutional separate accounts ? beginning of period


154,755



175,258



160,460



173,331



153,996



Sales and other inflows


26,296



33,732



20,903



83,633



58,059



Redemptions/outflows


(28,399)



(41,869)



(17,861)



(95,717)



(56,689)



  Net flows


(2,103)



(8,137)



3,042



(12,084)



1,370



Exchanges


-



6



(16)



6



82



Market value change


11,166



(12,372)



1,825



2,565



9,863

Institutional separate accounts ? end of period

$

163,818


$

154,755


$

165,311


$

163,818


$

165,311

Individual separate accounts ? beginning of period


150,124



162,394



138,516



150,033



120,339



Sales and other inflows


10,673



13,522



9,780



35,408



29,878



Redemptions/outflows


(8,375)



(11,714)



(5,984)



(25,667)



(17,703)



  Net flows


2,298



1,808



3,796



9,741



12,175



Exchanges


-



(5)



(6)



(5)



(6)



Market value change


14,933



(14,073)



1,730



7,586



11,528

Individual separate accounts ? end of period

$

167,355


$

150,124


$

144,036


$

167,355


$

144,036

Total assets under management ? beginning of period


465,283



518,191



469,938



497,432



439,303



Sales and other inflows


49,785



61,570



40,767



157,669



122,254



Redemptions/outflows


(47,055)



(70,880)



(32,757)



(158,123)



(108,128)



  Net flows


2,730



(9,310)



8,010



(454)



14,126



Exchanges


1



(2)



-



(1)



(7)



Market value change


39,374



(43,596)



4,832



10,411



29,358

Total assets under management ? end of period

$

507,388


$

465,283


$

482,780


$

507,388


$

482,780


(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.

 

Attachment 7


Consolidated Assets under Management by Investment Mandate(1)


(in millions)




















July 31,



April 30,


%



July 31,


%





2020



2020


Change



2019


Change

Equity(2)

$

133,008


$

122,273


9%


$

128,996


3%

Fixed income(3)


68,955



61,347


12%



60,968


13%

Floating-rate income


28,569



27,822


3%



38,339


-25%

Alternative(4)


7,467



7,226


3%



9,031


-17%

Parametric custom portfolios(5)


175,039



158,696


10%



159,067


10%

Parametric overlay services


94,350



87,919


7%



86,379


9%

   Total

$

507,388


$

465,283


9%


$

482,780


5%


(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, commodity and currency 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)




















July 31,



April 30,


%



July 31,


%





2020



2020


Change



2019


Change

Open-end funds

$

104,948


$

94,717


11%


$

105,614


-1%

Closed-end funds


23,214



21,712


7%



24,307


-4%

Private funds(2)


48,053



43,975


9%



43,512


10%

Institutional separate accounts


163,818



154,755


6%



165,311


-1%

Individual separate accounts


167,355



150,124


11%



144,036


16%

   Total

$

507,388


$

465,283


9%


$

482,780


5%


(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)




















July 31,



April 30,


%



July 31,


%





2020



2020


Change



2019


Change


Eaton Vance Management(3)

$

147,165


$

133,927


10%


$

148,379


-1%


Parametric


310,557



287,426


8%



292,212


6%


Atlanta Capital


24,982



22,645


10%



23,978


4%


Calvert(4)


24,684



21,285


16%



18,211


36%


   Total

$

507,388


$

465,283


9%


$

482,780


5%
















(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 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


Nine Months Ended





%

%









Change

Change









Q3 2020

Q3 2020






July 31,

April 30,

July 31,

vs.

vs.


July 31,

July 31,

%


2020

2020

2019

Q2 2020

Q3 2019


2020

2019

Change

Equity(3)

55.7

55.1

57.1

1%

-2%


56.0

57.1

-2%

Fixed income(4)

40.1

40.1

41.7

0%

-4%


40.4

41.7

-3%

Floating-rate income

49.9

49.8

49.7

0%

0%


49.8

49.8

0%

Alternative(5)

64.3

62.2

66.9

3%

-4%


63.6

61.0

4%

Parametric custom portfolios(6)

15.5

14.5

15.0

7%

3%


15.1

14.7

3%

Parametric overlay services

5.2

4.9

5.2

6%

0%


5.0

5.2

-4%

  Total

30.3

29.7

31.8

2%

-5%


30.3

31.9

-5%


(1)

Excludes performance-based fees, which were $0.9 million in the three months ended July 31, 2020, $2.5 million in the three months ended April 30, 2020, $0.1 million in the three months ended July 31, 2019, $3.6 million in the nine months ended July 31, 2020 and $1.6 million in the nine months ended July 31, 2019.












(2)

Excludes management fees earned on consolidated investment entities that are eliminated in consolidation, which were $1.2 million in the three months ended July 31, 2020, $1.3 million in the three months ended April 30, 2020, $1.8 million in the three months ended July 31, 2019, $4.4 million in the nine months ended July 31, 2020 and $3.6 million in the nine months ended July 31, 2019. 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. Amounts for periods prior to fiscal 2020 have been revised to reflect the reclassification of benchmark-based fixed income separate accounts from fixed income to Parametric custom portfolios in the first quarter of fiscal 2020.












(5)

Consists of absolute return, commodity and currency 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. Amounts for periods prior to fiscal 2020 have been revised to reflect the reclassification of benchmark-based fixed income separate accounts from fixed income to Parametric custom portfolios in the first quarter of fiscal 2020.

 


Attachment 11


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,





2020


2020


2019


2020


2019

Eaton Vance distributed:















Eaton Vance sponsored funds ? beginning of period(1)

$

70


$

130


$

184


$

152


$

159



Sales and other inflows


31



4



3



38



47



Redemptions/outflows


(17)



(42)



(17)



(85)



(45)



   Net flows


14



(38)



(14)



(47)



2



Market value change


9



(22)



-



(12)



9

Eaton Vance sponsored funds ? end of period

$

93


$

70


$

170


$

93


$

170

Eaton Vance distributed separate accounts ?
















    beginning of period(2)

$

1,001


$

1,566


$

2,076


$

1,563


$

2,169



Sales and other inflows


19



24



79



49



103



Redemptions/outflows


(519)



(338)



(414)



(879)



(633)



   Net flows


(500)



(314)



(335)



(830)



(530)



Market value change


83



(251)



4



(149)



106

Eaton Vance distributed separate accounts ? end of period

$

584


$

1,001


$

1,745


$

584


$

1,745

Total Eaton Vance distributed ? beginning of period

$

1,071


$

1,696


$

2,260


$

1,715


$

2,328



Sales and other inflows


50



28



82



87



150



Redemptions/outflows


(536)



(380)



(431)



(964)



(678)



   Net flows


(486)



(352)



(349)



(877)



(528)



Market value change


92



(273)



4



(161)



115

Total Eaton Vance distributed ? end of period

$

677


$

1,071


$

1,915


$

677


$

1,915

Hexavest directly distributed ? beginning of period(3)

$

7,559


$

11,296


$

11,634


$

11,640


$

11,467



Sales and other inflows


30



304



410



430



1,629



Redemptions/outflows


(2,253)



(2,120)



(646)



(4,927)



(2,253)



   Net flows


(2,223)



(1,816)



(236)



(4,497)



(624)



Market value change


793



(1,921)



76



(1,014)



631

Hexavest directly distributed ? end of period

$

6,129


$

7,559


$

11,474


$

6,129


$

11,474

Total Hexavest managed assets ? beginning of period

$

8,630


$

12,992


$

13,894


$

13,355


$

13,795



Sales and other inflows


80



332



492



517



1,779



Redemptions/outflows


(2,789)



(2,500)



(1,077)



(5,891)



(2,931)



   Net flows


(2,709)



(2,168)



(585)



(5,374)



(1,152)



Market value change


885



(2,194)



80



(1,175)



746

Total Hexavest managed assets ? end of period

$

6,806


$

8,630


$

13,389


$

6,806


$

13,389


(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.

 

SOURCE Eaton Vance Corp.


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