Jean McGoey Dallas Lundy Constance Wagner Linda Hanson Nora Bernazzani Wayne Saulnier Deborah Bishop William Austin Theresa Thorley Daniel Cataldo Jenilde Mastrangelo
Jane Nussbaum Linda Doherty Thomas Faust Cynthia Clemson Susan Kiewra Lauren Mannone Donna D’Addario Marlo-Jean Tulis Anne Marie Gallagher Stephanie Brady Mary Maestranzi
James Foley Veth Huorn William Gillen Mary Little Kelley Creedon Douglas McMahon Diane Brissette Rosemary Leavitt Scott Page Lynn Ostberg Brian Langstraat James Thebado
Lynne Hetu Mary Byrom Payson Swaffield Michael Weilheimer Karen Zemotel Hugh Gilmartin Amy Ursillo Perry Hooker John Gibson Gregory Parker Hadi Mezher Delores Wood
Julie Andrade Jeffrey Beale Mark Nelson John Murphy Deanna Berry Jane Rudnick Leighton Young Geoffrey Marshall Robert Bortnick Cecilia O’Keefe Louann Penzo Elizabeth Kenyon
Maureen Gemma David Michaud John Trotsky David Olivieri Laurie Hylton Jie Lu Stanley Weiland Margaret Taylor James Womack Kathleen Fryer Jonathan Isaac Kathleen Krivelow
Thomas Luster William Hackney John Pumphrey James Godfrey Katherine Kreider Marie Preston William Cross Lewis Piantedosi Christopher Gaylord David Stein Walter Row
Kelly Williams David McDonald Elizabeth Prall John Macejka Marie Charles Brian Dunkley Leanne Parziale Mark Burkhard Peter Crowley Craig Russ Michelle Green Roseann Sulano
Yana Barton Michael Botthof Kurt Galley Deborah Trachtenberg John Redding Paul O’Neil Kristin Anagnost Duke Laflamme Tiffany Cayarga Sotiria Kourtelidis Joanne Mey Jeffrey DuVall
William Delahunty Gillian Moore Linda Carter John Crowley Michael McGurn Michael Kinahan Daniel Ethier John Ullman Richard Wilson Maria Cappellano Suzanne Marger
Steven O’Brien Noah Coons Daniel Puopolo Adam Weigold Shannon Price Lee Thacker Craig Brandon Kirsten Ulich Charles Reed Stephen Jones Thomas Seto Far Salimian Scott Firth
Catherine Gagnon David Zimmerman Eric Caplinger Andrew Sveen Simone Santiago Robert Breshock Joseph Roman Carolee MacLellan Mary Arutyunyan Shalamar Kanemoto
Jeanene Montgomery Amanda Madison Kiersten Christensen Gregory Walsh Jeremiah Casey Amanda Kokan Donald McCaughey Robert Walton William Bell Lilly Scher Erica Williams
Jeffrey Hesselbein Tina Holmes Ira Baron Timothy McEwen Robert Curtis Lisa Flynn Jared Gray Jeffrey Brown Philip Pace Linda Nishi Xiaozhen Li Michael Allison John Gill Peter Hartman
Elizabeth McNamara Deborah Chlebek Samuel Scholz Stephen Concannon Craig Castriano Bruce McIntosh Christine Bogossian Aamer Khan Michael Nappi Catherine McDermott
Stephen Soltys Randall Skarda Jackie Viars Steven Leveille Kimberly Pacheco Kevin Sullivan Patrick Cosgrove Douglas Rogers James McCuddy Michael Devlin Lidia Pavlotsky
Michael Costello Katharine Walker Aaron Singleton Randall Clark Steven Widder Michelle Baran Troy Evans Michael McLean Paul Rose James Durocher James Putman Coleen Lynch
Elizabeth Johnson Kristen Abruzzese John Santoro Jay McKenney Christopher Berry Linda Bailey James Skesavage Timothy Breer Robert Ellerbeck Deborah Henry David Lochiatto
Daniel Yifru Christopher Mason Brian Herbert Joseph Furey Bradford Godfrey Amy Schwartz Lawrence Fahey Matthew Hereford Katherine Cameron John Greenway Dorothy Kopp
Deidre Walsh Gregor Yuska John Simchuk Charles Kace Michael Cirami Christian Howe Vassilii Nemtchinov Heath Christensen Ralph Hinckley Eugene Lee Peter Campo Christopher Hayes
Lori Miller Paul Nicely Darin Clauson Charles Gaffney Ian McGinn West Saltonstall Ian Schuelke James Reber Meghann Clark Todd Dickinson Maureen Emmerso Earl Brown
Frederick Marius John Brodbine Ronald Randall Sheila Irizarry Mark Milan Laurie Allard Michael Keffer Joshua Lipchin Benjamin Pomeroy William Pannella Kristin Chisholm John Croft
Megan Keaty Noriko Ogawa-Ishii Eileen Tam Edward Bliss Tasha Corthouts Leonard Dolan Susan Martland Deborah Moses Emily Murphy Samuel Perry Mary-Ann Spadafora
Jonathan Treat Kevin Darrow George Nelson Marc Moran Lauren Loehning Jodi Wong David Richman Richard England Melinda Olson Erin Auffrey John Murphy Jamie Babineau
Nicole Hoitt Sharon Gordon Jason Fisher Daniel McElaney Brian Kiernan Christopher Teixeira Joseph Hernandez Charles Manning William Holt Kwang Kim Gordon Wotherspoon
Gary LeFave Barbara Jean Jeffrey Sine Richard Michaels Joseph Daniels Geoff Longmeier Erick Lopez Matthew McNamara Scott Craig Richard Milano Brendan MacKenzie Jamie Mullen
Stewart Taylor Sean Broussard Thomas Tajmajer David Lefcourt Aamir Moin Dennis Carson Anatoliy Eybelman Kathryn McElroy Kevin Connerty Michael O’Brien Bridget Fangueiro
Kelley Baccei Jordana Mirel Raymond Sleight Adam Pacelli Michael Parker Michael Quinn Jeffrey Rawlins Dan Strelow Kimberly Williams Paul McCallick Peter Popovics John Baur
Richard Kelly Joel Marcus Scott Timmerman Timothy Fetter Christopher Marek Michael Reidy Sebastian Vargas Jay Schlott Brian Smith Stephanie Douglas Patrick Gill Eric Stein
Kate Chanoux Marsh Enquist Thomas Guiendon Juliene Blevins-Ehmig Matthew Buckley Eric Robertson Ryan Landers Ross Chapin Walter Fullerton Carla Lopez-Codio Laura Donovan
Ivan Huerta Jennifer Mihara Brittany Barber Rainer Germann Dan Maalouly Coreen Kraysler Louis Membrino Adan Gutierrez Stephen Byrnes Tracey Carter Bernadette Mahoney
David McCabe Michael Striglio Michael Keogh Calixto Perez Daniel Clayton Hemambara Vadlamudi Michaella Callaghan Patricia Greene Nancy Tooke Patricia Bishop Susan Brengle
Francine Craig Gayle Hodus Kevin Taylor Henry Hong Daniel Grover Egan Ludwig Robert Allen Jean Carlos Michelle Berardinelli Paul Bouchey Bernard Scozzafava Andrew Frenette
Brian Taranto Michelle Wu Katherine Kennedy Brian Pomerleau Michael Shea Alan Simeon Adam Bodnarchuk Rhonda Forde Katy Burke Christopher Doyle Melissa Fell
Eleanor McDonough Meghan Moses John Casamassima John Shea Brian Shuell Derek DiGregorio Brian Hassler Michael Turgel Phuong Cam Travis Bohon Aubin Quesnell Michael Roppolo
Annemarie Ng Sean Caplice Melissa Marks Brian Mazzocchi Eric Dorman Brian Coole Steven Kleyn Justin Bourgette Tullan Cunningham Nichole Shepherd Kim Day Steven Pietricola
David Andrews Pamela Gentile Irene Deane Scott Forst Stacey McAllister James Lanza Michael Mazzei Christopher Webber Daniel McCarthy Stuart Muter Tristan Benoit Kerry Klaas
Christopher Sansone Jeanmarie Lee David Gordon David Perry Christian Johnson Nelson Cohn Ryan DeBoe George Hopkins Christopher Hackman Janice Korpusik Collette Keenan
Raphael Leeman Danat Abdrakhmanov Randolph Verzillo Katie McBride Andrew Szczurowski Virginia Gockelman Jessica Savageau Colleen Duffey Marconi Bomfim Bradley Berggren
Lawrence Berman Kenneth Everding Helen Hedberg Jonathan Orseck Kenneth Lyons John Ring Patrick Escarcega Jennifer Johnson Kevin Longacre John Jannino Maureen Renzi
Matthew Witkos Gail Dowd Elaine Peretti Stephanie Rosander Kathleen Walsh Eileen Storz-Salino Brooke Beresh Taylor Evans Trevor Harlow James Kirchner Tatiana Koltsova
Rose-Lucie Croisiere Lance Garrison James Stafford Kyle Johns Ross Anderson Mary Gillespie Kelley Hand Robert Bastien Jake Lemle Robert Greene Donna Drewes Christopher Mitchell
Natasha Paredes Roger Weber Steven Dansreau Tara O’Brien Jaime Smoller Michael Ferreira Gonzalo Cabello Judith Cranna Michelle Rousseau Mary Proler Stephanie McEvoy Andrew Valk
Yingying Liu Laura Maguire Heather Dennehy Christopher Eustance Marc Bertrand Kyle Lee Andrew Waples Sharon Pinkston Sean Kelly Louis Cobuccio Thomas Hardy Scott Weisel
David Hanley Dan Stanger Praveenkumar Rapol Lisa Smith Michael Deich Rey Santodomingo Zamir Klinger John Loy Mary Panza John Cullen Brian Dillon Raya McAnern Albert Festa
Benjamin Finley James Maynard Nathan Flint Rachael Carey Michael Kelly Muriel Nichols Margaret Egan Christopher Nebons James Roccas Alice Li Charles McCrosson Michael Shattuck
Michael Alexander Scott Casey Bernard Cassamajor Eric Cooper Edward Greenaway Samuel Swartz Richard Hein James McInerney Matthew Navins David Guarino Cheryl Innerarity
Avia Johnston Kevin Hickey Michele Sheperd Kathleen Graham Christopher Remington Andrew Beaton Darwin Macapagal Christopher Nabhan Eric Trottier Stephen Daspit
Lauren Kashmanian Wiwik Soetanto Nicholas Vose Lorraine Lake John Murray Velvet Regan Marcos Rojas-Sosa Marie Elliott Luke England-Markun Jennifer Madden Emily Gray
James Maki Kristen O’Riordan Ashley Walsh John Harrington Michael McGrail Robert Osborne Patrick Campbell Brian Eriksen Alexander Martin Timothy Walsh Michael Ortiz
John McElhiney Andrew Collins Sarah Orvin Davendra Rao Timothy Williamson Hydn Vales Brian Blair Anna Zeinieh Dustin Cole Joshua Rolstad Andrew Hinkelman Alain Auguste
Robyn Tice Emily Levine Susan Perry Elizabeth Stohlman Dana Wood Diane Tracey Brian Barney Devin Cooch Joseph Davolio James Evans John Hanna Nisha Patel Jonathan Rocafort
Evan Rourke Robert Runge Robert Salmon Colin Shaw Elizabeth Driscoll Niall Quinn Liselle Aresty Hirotake Yamamoto Mitchell Matthews Patrick Cerrato Jared Guerin
Christopher Harshman Jesse Levin Patrick McCarthy Ryan Walsh Diana Atanasova Antoinette Russell Anthony Gigante Jonathan Futterman Justin Serevitch Justine Abbadessa
Joseph Kosciuszek Kevin Rookey Michelle Graham Thomas Guerriero Kevin Amell Kerianne Austin Jason DesLauriers Eric Filkins Wendy Demessianos Matthew Manning Vibhawari Naik
Jeffrey Selby Kevin Andrade William Kennedy Brian Shaw Lisa Falotico William Buie Nicholas Bender Kelsey Hill Howard Lee Tro Hallajian Deanna Foley Lauren Murphy Michael Kenneally
Marcus Jurado Kha Ta Theodore Hovivian Issac Kuo Stuart Shaw William Jervey Paul Leonardo Timothy Atwill Jessica Hemenway Maeve Flanagan Jeanette Liu Robert Quinn Ingrid Harik
Johnathan Komich Daniel Grzywacz Sandra Snow Sean Bakhtiari Robert Nichols Aaron Burke Sarah Kenyon Chris Sunderland Aida Jovani Derek Jackman Jeffrey Timbas Brian Ventura
Trevor Smith Harsh Vahalia Monica Marois Andrew Geraghty Cyril Legrand Steven DeAlmo Dori Hetrick Alfonso Hernandez Marc Savaria Cameron Murphy Jessica Roeder Hoa Nguyen
Timothy Russo Sabina Duborg Federico Sequeda Rodolfo Galgana Samantha Higgins Geoffrey Underwood Christopher Fortier Robert White James Birkins Jenny Winters Kristen Gaspar
Diane Hallett Madhuleena Saha David Barr William O’Brien Stephen Tilson Timothy Walsh Kelly Maneman Courtney Graham Amarnath Jayam Isabelle Cazales-Evans Charles Cordeiro
Amy Laliberte Thomas Nitroy Deirdre O’Connell Richard Raymond Robert Howell Michael Guertin James Barrett Ryan Gagliastre David Smith Rafika Shibly Duncan Hodnett Andrew Lee
Robert Yocum Anna Semakhin Jarir Mallah Natalie McEmber Charles Turgeon Stephen Kistner Andrew Subkoviak Andrew Haycock Samuel Plotkin Jennifer Klempa Richard Lints
Thomas Shively Brian Dailey David Callard Anne Chaisiriwatanasai John Paolella Anthony Pell Rodrigo Soto Erik Lanhaus Miranda Hill Anthony Zanetti Daryl Johnson Kai Xie
Michael Yip Eric Britt Timothy Giles Arabelle Fedora Darcy Fernandes Justin Brown Kevin Dachille Leidy Hoffman Ross Taylor Christopher McKenzie Jacob Greene Victor Joita
Colleen Lavery Ryan Gallagher Toebe Hinckle Julia LeGacy Monica McGillicuddy Emily Coville Mark Haskell Jason Rendon Carl Thompson Jason Jung Reuben Butler Lauren Gassel
William Howes Syed Rahman Jeffrey Brody Timothy Kierstead Isabel Clark Matthew Murphy Schuyler Hooper Michael Kotarski Michael Wagner Courtney Collura Derek Brown
Pamela Begin Kenneth DeJesus Robert Faulkner David Oliveri Christopher Rohan Charles Glovsky Rebecca Moles Benjamin Garforth Suzanne Hingel Michael Swirski Mark Hogan
Daniel Sugameli Emma Hutchinson Stephen Clarke Nathan Goldman John Northrop Masha Carey Kathryn Johnson Jeremy McLeod Lorenc Demika Peter Lonergan Megan Dooley
Rachael Boggia Kim Le Jeffrey Schenkman Rocco Scanniello Tyler Cortelezzi Adrian Jackson Hottis McGovern Kenneth Zinner Mary Pollard Robert D’Amato Matthew Williams
Brian Arcara Joseph Miller Michael Kincheloe Daniel Sullivan Vinh-Quang Van Ha Jeremy Milleson Robert Allen Stuart Badrigian Cory McGrath William King Colin Looby Anu Ganti
Gregory Johnsen David Chafin Gregory Chalas Yu Fu Justin Wilson David Zigas Kara Boon Matthew Clenney Yanling Zhang Sheila Doherty Robert Holmes Katherine Johnson
Thomas Leonard Jason Vanas Laura Folkestad Steven Pasquantonio James DeCaprio Alexander Paulsen David Pychewicz Frederick Wright Peter Avallone Sachiko McHugh Lori Abboud
Enrico Coscia Steven U Aaron Dunn Jacqueline Poke John Wilton Philip Casalini Candice Flemming Lindsay Mallett John Noble Steven Reece Jason Kritzer David Doggett Collin Weir
Luke Bruno Matthew Gibbons Kirk Heelen Megan Kanter Kevin Liederbach Nicholas Pinhancos Anthony Scalese Lei Chen David Desmond Matthew Furan Teresa Curtis Marquisa Gaines
Bradford Richards Daniel Lee William Lesler Hang Nguyen William Bohensky John Jezowski Leonard Senkovsky Andrius Balta Chad Brown Andrew Dillon Christopher Hearne
Dorothy Jones Dylan Kline Adam White Eric Zeigler Sarah Sheehan Stephannie Workman Qihua Liu Daniel Sunderland Michael Pogson Elaine Sullivan Neil Adams Jennifer Flynn
Laura Nykreim Christopher Loger Alexandra Bielawski Patrick O’Brien Alexander Randall Jennifer Ranahan Jeremy Davis Jill Holland Karl Saur Huong Strong Kathleen Gaffney
Brendan Lanahan Danforth Sullivan Megan Fiorito Teresa Watkins Christopher Brown Cynthia Danger Melissa Perry Michael Spear Dean Graves Bryan Griffin John Moninger
Matthew Sanders Jennifer Casey Bina Desai Harrison Kent Dan Codreanu David Sacco Rachel Deane David Irizarry Mary Anderson Matthew Bailey Gregory Baranivsky Steven Bedell
Alexander Braun Allison Brunette Orison Chaffee Michael Cole Richard Fong Alexander Gomelsky Vladimir Gomelsky Jack Hansen Christopher Haskamp Justin Henne Jane Henning
Hong Huo Thomas Lee Gregory Liebl Matthew Liebl RaeAnn McDonnell Antony Motl Alicia Neese Timothy Post Eric Prawalsky Ashley Schulzetenberg Kelly Shelquist Jay Strohmaier
Denise Timmons Christopher Uhas Mark Wacker Daniel Wamre Alyssa Wiechmann Alex Zweber Mark Saindon Robert Ciro Bryan Sullivan Scott Brindle Brian Gudely Hussein Khattab
Henry Rehberg Jennifer Sireklove Marie DuBose Alexander Macrokanis Robert Cavezza Emily Finn Deborah Flood Jeffrey Boutin Timothy Robey Robert Swidey Mary Barsoom
Benjamin King John Simeone Sarah Castanheira Simon Mui Louise Bradshaw Patrick Duffy Jeffrey Keady A.J. Leimenstoll Seth Paulson Benjamin Spitz Lisa Lau Miguel Salaman
Faisal Zahoor Joshua Lipinski Colleen Barry Milind Kanitkar Kelly Kapp Rachel Schaefbauer Emily Cheng Melanie Kramer Sean Sorensen Robert Cunha Katherine Todd Diane Gordon
Thomas McMahon Michi McDonough Christopher Wisdom Michael Finney Heather Vanis Benjamin Hammes Christopher Burnet Jerome D’Alessandro Raffi Samkiranian Elias Bassila
Brittany Isenhart Jeffrey Norton Adriana Tacu Serena Lee Craig Melillo Todd Johnson Mahesh Pritamani Juliet Todd Patrick Huerta
Chris Smith Mei Chang Matthew Mueller Timothy Nelson Jared Pawelk Matthew Tesone Christopher Belnap Elizabeth McManus
Troy Neville Jeffrey Sayman Caitlin Schlesinger Spencer Swan Charlotte Watkins Christopher Webb Arif Jamal Alexander Amado
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Eaton Vance ANNUAL REPORT2015
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“In my opinion the qualities which dependable management should possess are
“In my opinion the qualities which dependable management should possess are
those solid traits of character – integrity, courage, responsibility and patience.
those solid traits of character – integrity, courage, responsibility and patience.
Given those traits, along with common sense and seasoned judgment, you will
Given those traits, along with common sense and seasoned judgment, you will
have a management that may be depended upon to produce satisfactory results.”
have a management that may be depended upon to produce satisfactory results.”
–Charles F. Eaton Jr.
–Charles F. Eaton Jr.
continued from back cover
Christopher Briant Heather Chapman Bradley Galko Andrew Popp Daniel Saltus James Thorson Marshall Stocker Jared Allen Amanda Lyons Tyler Smith Ryan Cavanaugh Derrick Leung
Jared Proske Sophie Murray Mooneer Salehmohamed Patrick Gennaco Vincent Leon Zachary Camara Christopher Cook Matthew Gile Henry Peabody David Brinker Nicholas Hailey
Benjamin LeFevre Robert Rowe William Turner Charles Norvish Ara Antonio Biana Perez Stephanie Nevin Brian Conley Rachel LeBlanc Anne Mitchell Collin Schrier Nokio Twumasi
Steven Vanne Lisa Brown Megan Pizzitola Amir Vaziri Alan Arrington Kevin Pih Michael Szyska Denise Tinsley Amy Bruckner Mamatha Chilumuthuru Isaiah Petersen Jennifer Diadoo
Victor La Ryan Smith William Spring Daniel Ryan Casey Foskett Caroline Spellman Wenlei Sun Benjamin Adams Qjaquice Brantley Allen Wagner David Butters Erin Canon James Morris
Holly Bragdon Robert Zaccardi David Glen William Reardon Ashley Peterson Michael Askew Diogenes Balsam Nagabhushan Beeram William Peterson Tracy Potorski Jesse Tobiason
Macki Anderson Amy Arslain Ryan Balko Matthew Cullen Michael Hebert Qiwen Liu Laura Sanders Punit Shetty Yi Sun Robert Cruice Craig McHaffie Robert Pellow John Jaje Norio Nishi
Rakshya Sigdel Ricky Valdez Scott Sovine Frank Brannen Lee Bertram Allison Li Jennifer Rodas Jenna Alleva Micaela Curley Joshua Rock Carolyn Cawley Steven Heck Andrea Vaitkus
Ashley Boecker Kimberly Gailun Jacob Homchick Glenn Pardo Raewyn Williams Benjamin Clough Timothy Gaudette Erin Kandamar Elizabeth McDonough Ryan Romano Alba Shkurti
Michael Sullivan Alexis Walsh John Flanagan Patrick Keogh Julie Smith Scott VanSickle Jonathan Needham Jason Chalmers Paul Cocanour Christine Yem Heather Anderson Marc Baumel
Kathryn Salzl Daniel Cozzi Edward Perkin Ashok Nayak Sheila Pechacek Bradford Thomas Andrew Spero Darrell Thompson Joseph Cinar Glenn Fitzsimmons Alexandra Monaco
Christopher Arthur Erin Garlow James Allen Madeline Anderson Dial Boehmer Michael Bortnick Emily Crandall Allison Goldie Blair McGreenery Peter Milinazzo Michael Rabinowitz
Eric Sherman Nicholas Stahelski Jason Nelson Mark Bumann Miles Ferguson Elaina Kenney Donald Schofield Max Chou Patrick Curran Wei Ge Michael Gose Audrey Grant Justin Horner
Kurt Kostyu Joonmo Ku Tiange Lei Connor Lem Michael Lopesciolo Tyler Nowicki Caitlyn Olson Adam Swinney Claudia Phuah Yu Jun Alli Bayko Lauren McAllister Shannon Vincent
Abbas Jaffri Leonard Williams Baharan MacLean Jeffrey Miller Samuel Tripp Douglas Miller Laura Zilewicz Devin Greaney Shannon Bean Alfred Walterscheit Keith Schweitzer Emi Yajima
Katherine Campbell Firoz Kamdar Erin Nygard Lynn Parker Maya Calabrese Alfred Bonfantini Lindsay Dahlstrom Carlos Del Valle-Ortiz Jeffrey Feccia David Grean Jonathan Lahey
Mary New Desmond Gallacher Kimberly Matisoff Branden Tanga Roy Belen Karen Long Onix Marrero Nicolette Mills Clinton Talmo Cory Gately Yuepeng Li Danielle Carr William Murray
Vincent Primavera Mark Reardon Tatyana Ryabchenko Nicole Stenerson Thomas Roslansky Kevin DeVito Matthew Karuza Andrew Scanlon Daniella Simone Michael Penna Azyzah Sasry
David Turk Jackson Bennett Christopher Ferrier Domini Gardner Errol Tashjian Joseph Zeck Malia Bandli Matthew Hildebrandt Amir Aliabadi Brock Griffin Mark Grube Dorothy Maloney
Richard Bissell Steven Abbiuso John Garvey Elizabeth Mattern Omar Yassin Matthew Butorac Kattie Elder Isaac Beckel Matthew Calos Max Chisaka Kristine Delano Holly DiCostanzo
Robert Pieroni Alec Szczerbinski Cory Gorski Alexander Lee Maureen Prassas Michael McDonough Abraham Hyun Joseph Alibrandi William Busch Monica Durango Zachary Ellis
Kathryn Griffin Tyler Pascucci Corinne Pekoske Samuel Reinhart Prachi Samudra Joseph Santullo Jillian Walsh Briton Wheeler Rob Anketell Peter Iodice Jun Li Paul Metheny David Morley
Whitlam Zhang Lynn Mach Lucas Anderson Matthew Johnson Jennifer Kilroy Theodore Zwieg Carolyn Foster Gabriela Paz Riley Allen Diana Granger Hasmid Haro Brian King
Craig Letendre Scott Linari Jennifer Magazu David Mattson Jeffrey Mueller Glenn Bowens Andrew Cantrall Veronika Karova Kyle Shannon Patrice Spencer Bradley Gagnon-Palick
Ryan Jenkins Colin Egan Chelsea Porter Mary Primiterra Russell Smith Kathleen Colangelo Kyle Shanafelt David Miles Elizabeth Royer August Kristoferson Kiva Boddy Kathrine Noll
Nicholas Hunter Ryan Olsen Alexander Payne Helena Racette Bradley Vopni Anne Darlington Adam Homicz Daniel Altchech Tasha Thomas Steven Fahey Juan Garcia Corey O’Connor
Alvaro Tejada Georgia Emms Joseph Hudepohl Amy Hutchinson John Kowalczik John McGinty Jan Mowbray Asim Pandey John Schneider Colt Wolfram Nicholas Burdeau Paul Chang
Mark Collins Christopher Dyer Aidan Farrell Marielle Gallant Brendan Gay Andrew Lebowitz Jake McDougall John McInerney John O’Brien Jeffrey Parsons Christopher Rios Joseph Stanton
Katharine Maretz Alison Wagner Jonathan Alexander Emily Cetlin Peter Correggio Justin David Sean Gildea Kathryn Mohrfeld Matthew Morin Maria van Heeckeren Justin Ziegler
Priyamvada Trivedi Deanna Young Neal Cabanos Jeremy Catt Joshua Schramm Cailly Carroll Kristin Chan John Henry Jonathan Schlaudraff Suresh Sundaram Dane Fickel Carmen Boscia
Gregory Gelinas Peter Smith Sandy Tam Marissa Simmons Beau Bowman Stelios Kousettis Andrew Mangin James McCourt Sarah Millard Patricia Odnakk Joshua Ford Hunter Hayes
Jo-Ellen Kenney Paul Oh Quinn Christofferson Gregory Lawson Sterling Tran Gavin Kennedy Audrey Ford Andrew McKee Raymond Singh Brian Austin Alexander Dyson Babak Sanaee
Julija Rockne Julianne Williams Nicholas Kirsch Hillary Kloeckner Mary Rouse Gregory Bauer Michael Corson Maryanne Cronin Sean Melville Steven Perlmutter Brian Reilly
Robert Ankenbauer Katherine Baker Hannah Gottas Elizabeth Pringle Katelyn Daignault Donandrea Myette Edward Smith Jacqueline Mills Tianchuan Li Henry Meuret Ethan Resnick
Stephanie Uvwo Anna Wheatley Claus Roller Brian Johnson Alex Provencal Emily Santa Fe Abigail Cammack William Bergen Kristin Carcio Stephen Munoz Amelia Wren Alexa Cancela
Tiffany Lee Allen Mayer Samantha Pandolfi Ian Kirwan
About the Cover: The images represent the six principal operating locations of Eaton Vance and its
consolidated subsidiaries: (from left) New York, Atlanta, Boston, Seattle, Minneapolis and London.
2015 Annual Report
2
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1/7/16 6:51 PM
2015 Annual Report
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To Shareholders and Friends of Eaton Vance:
The year ended October 31, 2015 was a challenging period for active asset managers, as investment
trends and business dynamics favored low-cost index investing over active management. Across a range of
investment categories, active managers as a group underperformed their benchmarks, net of expenses. Across
distribution channels, actively managed strategies lost market share to their passive counterparts. Among
other contributing factors, the expanding exchange-traded fund (ETF) market has opened up a convenient and
efficient outlet for index investing that, as yet, has no broad parallel for active strategies.
Because Eaton Vance is primarily an active manager, these unfavorable industry developments adversely
affected our stock performance, financial results and organic revenue growth in fiscal 2015. As described
below, the Company’s strategy includes a series of initiatives to overcome what we expect will remain a
difficult business environment for traditional active managers.
Holders of Eaton Vance nonvoting common stock realized a total return of 0.6 percent in fiscal 2015. For
comparison, other U.S. asset manager stocks returned an average of -12.4 percent and the S&P 500 Index,
2015 Annual Report
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Unfavorable industry
developments
adversely affected our
stock performance,
financial results and
organic revenue
growth in fiscal 2015.
a benchmark of large-cap U.S. stocks, returned 3.0 percent in the same period.
While better than most peer asset managers, our fiscal 2015 stock returns fell
short of U.S. market performance and our own objectives.
Eaton Vance had $2.29 of adjusted earnings per diluted share1 in the fiscal
year ended October 31, 2015, down eight percent from $2.48 in fiscal 2014.
As determined under U.S. generally accepted accounting principles (GAAP), the
Company earned $1.92 and $2.44 per diluted share, respectively, in fiscal 2015
and fiscal 2014. Adjusted earnings differed from GAAP earnings in fiscal 2015
to reflect the payment of $73 million, or approximately $0.37 per diluted share,
to terminate service and additional compensation arrangements for certain Eaton
Vance closed-end funds with a major distribution partner.
In fiscal 2015, the Company’s consolidated revenue decreased three percent
to $1.40 billion, as lower average fee rates more than offset higher average
managed assets. Adjusted to exclude the previously mentioned $73 million
termination payment, operating income was down nine percent from fiscal
2014, reflecting the year’s lower revenue and substantially unchanged expenses.
Adjusted operating margins were 33.7 percent in fiscal 2015 versus 35.8 percent
in fiscal 2014.
Consolidated assets under management were $311.4 billion on October 31,
2015, an increase of five percent from $297.7 billion at the end of fiscal 2014.
Average consolidated managed assets were $303.8 billion in fiscal 2015, also
five percent higher. Due to shifts in business mix, our investment advisory and
administrative fee revenue per dollar of assets managed fell from 43 basis points
in fiscal 2014 to 39 basis points in fiscal 2015, a decline of nine percent.
The Company had consolidated net inflows of $16.7 billion in fiscal 2015, a six
percent internal growth rate (consolidated net inflows divided by beginning-of-
period consolidated assets under management) and our 20th consecutive year
of positive net flows. For comparison, the Company had consolidated net inflows
of $2.8 billion and one percent internal growth in fiscal 2014. Reflecting lower
average fee rates on inflows versus outflows, our internal growth in investment
advisory and administrative fee revenue was minus two percent in fiscal 2015
and minus three percent in fiscal 2014.
Fiscal 2015 net inflows were led by Parametric’s portfolio implementation and
exposure management businesses, with net inflows of $10.8 billion and $9.3
billion, respectively. Investment advisory and administrative fee rates for these
businesses averaged 16 basis points and 5 basis points, respectively, unchanged
from fiscal 2014, but well below the Company’s average fee rate. Relatively low-
fee laddered bond and cash management separate account mandates contributed
approximately $3.6 billion to fixed-income net inflows in fiscal 2015, reducing
fixed-income category average investment advisory and administrative fee rates
from 45 basis points in fiscal 2014 to 43 basis points in fiscal 2015.
1See footnote 1 on page 17.
2015 Annual Report
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Our net outflows in fiscal 2015 were concentrated primarily in two areas: floating-
rate income and Parametric emerging-market equities, with net outflows of
$5.0 billion and $4.7 billion, respectively. In both cases, our flow results were
consistent with weak overall industry trends. Adding the effect of market declines,
our managed assets in these two investment areas fell by $14.6 billion, or five
percent of total consolidated assets under management, in fiscal 2015. Investment
advisory and administrative fee rates for our equity and floating-rate income
categories averaged 64 basis points and 53 basis points, respectively, in fiscal
2015, down one basis point from fiscal 2014.
Comparing fiscal 2015 net flows to fiscal 2014, we saw significant year-over-
year improvement in alternatives and Eaton Vance Management (EVM)-managed
equities, which moved from net outflows of $3.9 billion and $5.3 billion,
respectively, to net outflows of $700 million and $900 million. Within alternatives
and EVM-managed equities, the largest contributors to improved net flows were
global macro and large-cap value strategies.
Also contributing positively to fiscal 2015 equity flows were Parametric’s managed
options and defensive equity strategies, with net inflows of $1.8 billion and $1.4
billion, respectively. Among higher-fee fixed-income mandates, notable contributors
to positive flow results in fiscal 2015 were high yield and multi-strategy income,
with net inflows of $2.0 billion and $1.2 billion, respectively.
To address the challenging environment for traditional asset management that we
expect to continue, Eaton Vance is pursuing four primary strategic initiatives. First,
we are devoting substantial sales and marketing resources to capitalize on the
strong performance of our broad lineup of high-performing active strategies. At the
end of fiscal 2015, 51 Eaton Vance and Parametric mutual funds offered in the
U.S. were rated four or five stars by Morningstar™ for at least one class of shares,
including 20 funds rated five stars. Our top performers include funds in categories
such as mid-cap growth, floating-rate bank loans, high yield and municipal income,
where we have long been recognized as a market leader. Other top performers
include our five star-rated balanced, real estate, short-duration government and
short-duration strategic income funds, which are smaller funds competing in large
categories against incumbent leaders whose performance we dominate. Although
active management is not currently a growth business, our broad range of high-
performing strategies, strong sales and marketing organization, and excellent
distribution relationships position us to expand our active business even if the
overall market continues to stagnate. Active management is a game of winners and
losers, and we are positioned to be a winner.
Our second major active management growth initiative is focused on developing
a comprehensive global and international equity capability within EVM and Eaton
Vance Management (International) Limited (EVMI). Unlike U.S. equity, actively
managed global equity remains a growing market. To date, EVM’s global equity
management has focused largely on a range of high-dividend strategies managed
2015 Annual Report
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Active management
is a game of winners
and losers, and we
are positioned to be
a winner.
Unlike U.S. equity,
actively managed
global equity remains
a growing market.
6
1/11/16 1:17 PM
Custom beta is our
primary approach to
passive management.
for Eaton Vance-sponsored closed-end funds and mutual funds offered in the
U.S. When EVM hired Edward Perkin as its new chief equity investment officer
in fiscal 2014, part of Eddie’s appeal was his extensive international experience
and the potential to build a global equity business under his direction. In June
of this year, Christopher Dyer and Aidan Farrell joined EVMI in London as head
of global equities and small-cap global portfolio manager, respectively, to lead
that effort. Since then, we have hired an additional seven equity professionals
and now have a fully staffed global equity team operating from London, Boston
and Tokyo. In fiscal 2016, we are launching an initial range of new global equity
funds and expect to begin marketing the capabilities of this team to institutions
around the world. While we recognize it will take time to build market awareness,
a competitive performance record and, ultimately, significant new managed
assets, we are confident we have the pieces in place for long-term success.
Including Parametric’s rules-based systematic alpha strategies and the top-down
global equity style of our 49 percent-owned affiliate Hexavest, we now offer three
distinct approaches to global equity management. Their combined capabilities
enable us both to serve the increasing global emphasis of equity investors in the
U.S. and to address equity management opportunities in international markets.
Our third major strategic initiative is focused on the expansion of our “custom
beta” product lineup and distribution. By custom beta, we mean investments that
provide access to an underlying benchmark or market exposure through direct
holdings of individual securities, with customization to meet the client’s needs and
preferences. Compared to “bulk beta” index mutual funds and ETFs, custom beta
separate accounts can provide better tax outcomes, enhanced flexibility in portfolio
composition and greater client control, while avoiding the costs and risks of a
commingled vehicle. Custom beta is our primary approach to passive management.
For many years, Parametric tax-managed core has offered separate account
exposure to a range of equity benchmarks with initial and ongoing tax
management and tax reporting. Parametric has now expanded its custom beta
offerings to incorporate client-specified responsible and impact investing overlays,
as well as a range of available factor tilts such as value, momentum and low
volatility. Increasingly, investors are seeking to combine a passive approach to
equity investing with rules-based portfolio construction to enhance returns and
to support their broader investment objectives. Parametric is a recognized leader
in serving this market. In fiscal 2015, Parametric grew its tax-managed core
business from $22.1 billion to $27.3 billion, an increase of 23 percent. With
an expanded product line and a larger sales effort, we expect continued strong
growth in Parametric custom beta equity in fiscal 2016.
In fixed income, our custom beta offerings currently consist of laddered municipal
and corporate bond portfolios managed by EVM. Here again, we offer clients
customized market exposure through separate accounts holding individual
securities. Value-added elements of the strategy include laddered portfolio
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The fund industry
needs NextShares.
We continue to
work hard to deliver
them, and expect
further progress
in fiscal 2016.
construction, initial credit analysis, ongoing credit oversight, client-specified bond
maturity and credit quality profiles, and institutional buying power. During fiscal
2015, we grew our laddered bond separate account business from $3.4 billion
to $6.2 billion, an increase of 84 percent. With corporate ladders now rolling out
at major broker-dealers and municipal ladders still evidencing strong momentum,
we expect accelerated growth to continue in fiscal 2016.
Our fourth major initiative is the development of NextShares™ exchange-traded
managed funds. NextShares are a new type of actively managed fund combining
features and benefits of mutual funds and ETFs. Similar to ETFs, NextShares have
built-in cost and tax advantages and offer the conveniences of exchange trading.
Like mutual funds, NextShares are fully compatible with active management
because they protect the confidentiality of fund trading information. Eaton Vance
owns the intellectual property underlying NextShares, which we are seeking to
commercialize by developing a family of Eaton Vance-sponsored NextShares
funds and entering into licensing and services arrangements with other investment
managers to support their offering of their own NextShares funds.
One of the highlights of the fiscal year came in November 2014, when the U.S.
Securities and Exchange Commission (SEC) gave notice of its intent to grant EVM
exemptive relief to offer NextShares and the next day approved a new NASDAQ
Stock Exchange (Nasdaq) rule governing the listing and trading of NextShares.
Further regulatory progress came in July, when the SEC approved Nasdaq’s request
to list and trade an initial 18 Eaton Vance NextShares funds. Shortly after the
end of fiscal 2015, the SEC declared effective the registration statements of those
initial funds, the final regulatory step prior to their launch. During the fiscal year,
11 other fund sponsors signaled their intent to offer NextShares by entering into
preliminary licensing and services agreements and by filing requests with the SEC
for exemptive relief, all of which have now been granted.
Our goals for NextShares in fiscal 2016 include the staged introduction of the
first Eaton Vance NextShares funds, supporting the launch of NextShares by
other fund sponsors and working with broker-dealers to gain distribution access.
To offer NextShares, broker-dealers must modify their trading systems to
accommodate the distinctive aspects of NextShares trading. Convincing broker-
dealers to prioritize the necessary investments is the primary challenge facing
our NextShares initiative in fiscal 2016. If we can achieve broad distribution, I
am confident that NextShares have a bright future. Embracing this innovative
new structure is the best opportunity I know for our industry to better the return
experience of active fund investors and thereby address the structural imbalance
that now favors passive over active funds. Simply put, the fund industry needs
NextShares. We continue to work hard to deliver them, and expect further
progress in fiscal 2016.
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The diversity
of investment
approaches
represented by our
affiliates and our
embrace of product
innovation position
us potentially to
lead and drive
some of the most
significant industry
developments.
In addition to the four product-focused initiatives described above, the Company
is engaged in a number of internal projects to improve our operation efficiency,
protect against risk, maintain regulatory compliance and position our investment
teams for continued success. During the fiscal year, we made the difficult
decision to merge the operations of our former Fox Asset Management affiliate
into EVM and to close the Fox office in Shrewsbury, New Jersey. Generating
satisfactory financial results in the current environment requires us to manage our
business highly efficiently.
Over the past year, Eaton Vance said goodbye to a number of long-serving
employees, including three members of our senior management group: David
Stein, chief investment officer of Parametric; Tom Metzold, municipal income
portfolio manager and former co-head of municipal investments; and Walter
Row, equity portfolio manager and former head of EVM’s structured equity
investments. David, Tom and Walter each contributed immeasurably to the
growth and success of Eaton Vance over their long careers, and I wish them well
in all future endeavors.
Looking ahead, we foresee a continuing era of rapid evolution in the business of
investing and the provision of investment advice. Through our NextShares and
custom beta initiatives, we are positioned at the leading edge of some of the
foremost issues and trends facing our industry: the active versus passive debate;
exchange-traded products versus mutual funds; separate accounts versus pooled
entities; and advisory versus brokerage models for serving individual investors
in the U.S. Two hallmarks of the Eaton Vance organization over the years – the
diversity of investment approaches represented by our affiliates and our embrace
of product innovation as a source of competitive advantage – position us not only
to benefit from ongoing industry changes, but potentially to lead and drive some
of the most significant industry developments. This prospect brings the potential
for compelling returns to Eaton Vance shareholders.
To prosper in these challenging times, an investment organization needs both
a winning strategy and a high-performing team. My optimism for the future of
Eaton Vance is based on the great confidence I have in our strategic direction
and, especially, in the 1,448 Eaton Vance employees whose names are listed
on the back of this report. As always, it is their hard work and dedication that
position us for success in the next year and beyond.
Sincerely,
Thomas E. Faust Jr.
Chairman, Chief Executive Officer and President
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Historical Stock Returns
Assets Under Management
as of October 31, 2015
Eaton Vance Corp. was formed by the merger on April 30, 1979 of two Boston-based investment managers:
Eaton & Howard, Inc. founded in 1924, and Vance, Sanders & Company, organized in 1934.
Eaton Vance Corp.
Value of $1,000 invested April 30, 1979
$2,346,724
$10,000,000
1,000,000
100,000
10,000
1,000
4/79
10/85
10/90
10/95
10/00
10/05
10/10
10/15
Assumes reinvestment of all dividends and proceeds of 1995 spinoff of Investors Financial Services Corp.
Sources: FactSet, Eaton Vance.
Best-Performing Publicly Traded U.S. Stocks
April 30, 1979 to October 31, 2015
Rank
Company
Annual Return
1
2
3
4
5
Helen of Troy Limited
Eaton Vance Corp.
L Brands, Inc.
TJX Companies, Inc.
Hasbro, Inc.
Standard & Poor’s 500 Index
Total return with dividends reinvested. Source: FactSet.
23.7%
23.7
22.7
22.7
22.5
11.7
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Assets Under Management
as of October 31, 2015
Consolidated Total: $311.4 billion
by Investment Mandate (in billions)
by Investment Affiliate (in billions)
100%
Alternative $10.2
100%
Floating-Rate Income $35.6
80
60
40
20
0
Fixed Income $52.4
Equity $90.0
Portfolio Implementation $59.54
Exposure Management $63.75
80
60
40
20
0
by Investment Vehicle (in billions)
Open-End Funds
Open-End Funds
Open-End Funds
$74.8
$74.8
$74.8
Private Funds
Private Funds
Private Funds
$26.7
$26.7
$26.7
Closed-End Funds
Closed-End Funds
Closed-End Funds
$24.5
$24.5
$24.5
Hexavest $13.91
Atlanta Capital $17.4
Parametric $152.52
Eaton Vance Management $141.43
Institutional Accounts
$120.0
Retail Managed Accounts
$40.9
High-Net-Worth Accounts
$24.5
1Eaton Vance holds a 49% interest in Hexavest Inc., a Montreal-based investment adviser. Other than Eaton Vance-sponsored funds for which Hexavest is
adviser or subadviser, the managed assets of Hexavest are not included in Eaton Vance’s consolidated totals.
2Includes managed assets of Parametric Risk Advisors LLC.
3Includes managed assets of Eaton Vance Investment Counsel. Also includes approximately $4.1 billion of Eaton Vance-sponsored funds and accounts
managed by third-party advisers under Eaton Vance supervision.
4Includes Parametric centralized portfolio management, tax-managed and custom core, and specialty index mandates.
5Includes Parametric customized exposure management services.
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The Eaton Vance Investment Affiliates
Our principal investment affiliates, Eaton Vance Management, Parametric, Atlanta Capital and Hexavest, offer
a range of distinctive strategies. Investment approaches include bottom-up and top-down fundamental active
management, rules-based systematic alpha investing and implementation of passive strategies. This broad
diversification provides us the opportunity to address a wide range of investor needs and to offer products
and services suited for various market environments.
Eaton Vance Management
History dating to 1924
AUM: $141.4 billion
Fundamental active managers: In-depth fundamental analysis is the primary basis for our investment decision-making across a broad
range of equity, income and alternative strategies.
Equity
Dividend/Global Dividend
Equity Option
Global/International
Global/International Small-Cap
Large-Cap Core
Large-Cap Growth
Large-Cap Value
Multi-Cap Growth
Real Estate
Small-Cap Core
SMID-Cap Core
Tax-Managed
Taxable Fixed Income
Cash Management
Core Bond/Core Plus
Emerging-Market Debt
High Yield
High Yield Short Duration
Inflation-Linked
Investment-Grade Corporate
Laddered Corporate
Mortgage-Backed Securities
Multi-Sector
Preferred Securities
Taxable Municipal
U.S. Open-End Funds
Closed-End Funds
Retail Managed Accounts
Floating-Rate Income
Floating-Rate Loans
Tax-Advantaged/Municipal Income
Laddered Municipal
National
State-Specific
Municipal Income
Floating Rate
High Yield
National
State-Specific
Opportunistic Municipal
Tax-Advantaged Bond
Asset Allocation
Balanced
Global Tactical Asset Allocation
Multi-Asset Income
Alternative
Commodity
Currency
Global Macro Absolute Return
Hedged Equity
Multi-Strategy Absolute Return
Institutional Vehicles
Non-U.S. Funds
Unit Investment Trust
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Alternative and Income
Commodity
Enhanced Income
Risk Parity
Implementation
Centralized Portfolio
Management
Specialty Index
Tax-Managed Core
Exposure Management
Customized Exposure
Management
Taxable Fixed Income
High-Quality Broad Market
High-Quality Intermediate
High-Quality Short Term
Equity
Dividend Income
Emerging Markets
Global
Global Small Cap
International
Tax-Managed
U.S.
Options
Absolute Return
Covered Calls
Defensive Equity
Dynamic Hedged Equity
Equity
Large-Cap Growth
Mid-Large Cap
Small-Cap
SMID-Cap
Founded in 1987
AUM: $152.5 billion
Leaders in engineered portfolio
solutions: Rules-based alpha-seeking
equity, alternative and options
strategies, implementation services
including tax-managed and custom
core equity, centralized portfolio
management and specialty index,
and customized exposure
management services.
Founded in 1969
AUM: $17.4 billion
Specialists in high-quality
investing: Actively managed
high-quality U.S. stock and bond
portfolios constructed using
bottom-up fundamental analysis.
Founded in 2004
AUM: $13.9 billion
Top-down global managers:
Global equity and tactical asset
allocation strategies combining
fundamental research and
proprietary quantitative models.
Equity
Canadian
Emerging Markets
European
Global – All Country
Global – Developed
International
Eaton Vance also sponsers U.S. mutual funds managed by third-party managers
LGM Investments/BMO Global Asset Management
Greater India
Richard Bernstein Advisors
Greater China Growth
All Asset Strategy
Equity Strategy
Market Opportunities
Orbimed Advisors
Worldwide Health Sciences
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Key Statistics
Performance Trends
Fiscal Year Ended October 31,
(in $ millions, except per share and employee amounts)
2015
2014
% Change
Ending consolidated assets under management
311,354
297,735
Average consolidated assets under management
303,770 288,206
5%
5%
Gross inflows
Net inflows
Revenue
Operating income
Operating income margin
124,773 106,750
17%
16,684
2,752
506%
1,404
1,450
-3%
400
520
-23%
28.5%
35.8%
-
Net income attributable to Eaton Vance Corp. shareholders
230
304
-24%
Net income margin
16.4%
21.0%
-
Adjusted net income attributable to Eaton Vance Corp. shareholders1
275
310
-11%
Adjusted net income margin
Earnings per diluted share
Adjusted earnings per diluted share1
Dividends declared per share
Cash and cash equivalents
Debt
Employees
Market capitalization
1See footnote 1 on next page.
19.6%
21.4%
-
1.92
2.44
-21%
2.29
1.015
466
574
2.48
0.91
385
574
1,448
1,403
4,170
4,340
-8%
12%
21%
0%
3%
-4%
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Performance Trends
Assets Under Management
(in billions)
Gross Inflows
(in billions)
Net Inflows
(in billions)
$350
300
250
200
150
100
50
$150
120
90
60
30
$25
20
15
10
5
0
'05
'10
'15
0
'05
'10
'15
0
'05
'10
'15
Revenue
(in millions)
Operating Income
(in millions)
Net Income Attributable to
Eaton Vance Shareholders
(in millions)
$1500
1200
900
600
300
$600
500
400
300
200
100
$350
300
250
200
150
100
50
0
'05
'10
'15
0
'05
'10
'15
0
'05
'10
'15
Adjusted Net Income Attributable to
Eaton Vance Shareholders1
(in millions)
Dividends Declared Per Share2
Employees
$350
300
250
200
150
100
50
$2.0
1.5
1.0
0.5
1500
1200
900
600
300
0
'05
'10
'15
0.0
'05
'10
'15
0
'05
'10
'15
1Adjusted net income attributable to EVC shareholders differs from net income attributable to EVC shareholders as determined under U.S. generally accepted accounting
principals (GAAP) due to adjustments in connection with changes in the estimated redemption value of noncontrolling interests in our affiliates redeemable at other than
fair value, closed-end fund structuring fees, payments to end closed-end fund service and additional compensation arrangements, and other items management deems
nonrecurring or nonoperating in nature, or otherwise outside the ordinary course (such as special dividends, costs associated with the extinguishment of debt and tax
settlements). Adjusted earnings per diluted share applies the same adjustments to earnings per diluted share. The Company’s use of these adjusted numbers, including
reconciliations of net income attributable to EVC shareholders to adjusted net income attributable to EVC shareholders and earnings per diluted share to adjusted earnings
per diluted share, is discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included within this Annual Report.
2The Company declared and paid a special dividend of $1.00 per share in fiscal 2013.
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Financial Review
Page
19
Five-Year Financial Summary
20
Management’s Discussion and Analysis of Financial Condition and Results of Operations
63
Consolidated Statements of Income
64
Consolidated Statements of Comprehensive Income
65
Consolidated Balance Sheets
66
Consolidated Statements of Shareholders’ Equity
69
Consolidated Statements of Cash Flows
71
Notes to Consolidated Financial Statements
125
Report of Independent Registered Public Accounting Firm
126
Investor Information
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Five-Year Financial Summary
The following table contains selected financial data for the last five years. This data should be read in conjunction with
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Consolidated Financial
Statements and Notes to Consolidated Financial Statements included elsewhere in this Annual Report.
Financial Highlights
(in thousands, except per share data)
2015
2014
2013
2012
2011
For the Years Ended October 31,
Income Statement Data:
Total revenue
Operating income(1)
Net income(1)
Net income attributable to non-controlling
and other beneficial interests(2)
Net income attributable to Eaton Vance
Corp. shareholders(1)
Adjusted net income attributable to Eaton
Vance Corp. shareholders(3)
Balance Sheet Data:
Total assets(4)
Debt(5)
Redeemable non-controlling
$
$
1,403,563
400,447
238,191
1,450,294
519,857
321,164
$
$
1,357,503
453,007
230,426
1,209,036
392,992
264,768
$
1,248,606
426,232
227,574
7,892
16,848
36,585
61,303
12,672
230,299
304,316
193,841
203,465
214,902
274,990
309,627
262,942
223,331
245,118
$
2,116,471
573,811
$
1,860,086
573,655
$
2,407,249
573,499
$
1,979,491
500,000
$
1,831,300
500,000
interests (temporary equity)
88,913
107,466
74,856
98,765
100,824
Total Eaton Vance Corp.
shareholders' equity
Non-redeemable non-controlling
interests
Total permanent equity
Per Share Data:
Earnings per share:
Basic
Diluted
Adjusted diluted(3)
Cash dividends declared
620,231
655,176
669,784
612,072
460,415
1,725
621,956
2,305
657,481
1,755
671,539
1,513
613,585
889
461,304
$
$
2.00
1.92
2.29
1.015
$
2.55
2.44
2.48
0.910
$
1.60
1.53
2.08
1.820
$
1.76
1.72
1.89
0.770
1.82
1.75
2.00
0.730
(1) Net income and net income attributable to Eaton Vance Corp. shareholders reflects a one-time payment of $73.0 million to terminate
certain closed-end fund service and additional compensation arrangements with a distribution partner in fiscal 2015.
(2) Net income attributable to non-controlling and other beneficial interests reflects an increase (decrease) of $(0.2) million, $5.3 million,
$24.3 million, $19.9 million and $30.2 million in the estimated redemption value of redeemable non-controlling interests in our
majority-owned subsidiaries in fiscal 2015, 2014, 2013, 2012 and 2011, respectively. Net income attributable to non-controlling and
other beneficial interests also includes net income (loss) of $(5.8) million, $(4.1) million, $(8.5) million, $22.6 million and $(34.5)
million, respectively, in fiscal 2015, 2014, 2013, 2012 and 2011 substantially borne by other beneficial interest holders of consolidated
collateralized loan obligation (“CLO”) entities.
(3) Represents a non-U.S. GAAP financial measure. The Company defines adjusted net income attributable to Eaton Vance Corp. shareholders
and adjusted earnings per diluted share as net income attributable to Eaton Vance Corp. shareholders and earnings per diluted share,
respectively, adjusted to exclude changes in the estimated redemption value of non-controlling interests in our affiliates redeemable at other
than fair value ("non-controlling interest value adjustments"), closed-end fund structuring fees, payments to end closed-end fund service and
additional compensation arrangements and other items management deems non-recurring or non-operating in nature, or otherwise outside
the ordinary course of business (such as special dividends, costs associated with the extinguishment of debt and tax settlements). Adjusted net
income attributable to Eaton Vance Corp. shareholders and adjusted earnings per diluted share should not be construed to be a substitute for,
or superior to, net income attributable to Eaton Vance Corp. shareholders and earnings per diluted share computed in accordance with
accounting principles generally accepted in the United States of America. Our use of these adjusted numbers, including reconciliations 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, is discussed in “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” included within this Annual Report.
(4) Total assets on October 31, 2015, 2014, 2013, 2012 and 2011 include $467.1 million, $156.5 million, $728.1 million, $468.4 million and
$481.8 million of assets held by consolidated CLO entities, respectively.
(5) In fiscal 2013, the Company tendered $250 million of its 6.5 percent Senior Notes due 2017 and issued $325 million of 3.625 percent
Senior Notes due 2023. The Company recognized a loss on extinguishment of debt totaling $53.0 million in conjunction with the tender
in fiscal 2013.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report for Eaton Vance Corp. (“Eaton Vance” or “the Company”) includes statements that are
“forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding our
expectations, intentions or strategies regarding the future. All statements, other than statements of historical
facts, included in this Annual Report regarding our financial position, business strategy and other plans and
objectives for future operations are forward-looking statements. The terms “ may,” “will,” “could,”
“anticipate,” “plan,” “continue,” “project,” “intend,” “estimate,” “believe,” “expect” and similar
expressions are intended to identify forward-looking statements, although not all forward-looking statements
contain such words. Although we believe that the assumptions and expectations reflected in such forward-
looking statements are reasonable, we can give no assurance that they will prove to have been correct or that
we will take any actions that may now be planned. Certain important factors that could cause actual results to
differ materially from our expectations are disclosed in Risk Factors of this Annual Report. All subsequent
written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly
qualified in their entirety by such factors. We disclaim any intention or obligation to update or revise any
forward-looking statement, whether as a result of new information, future events or otherwise.
Overview
Our principal business is managing investment funds and providing investment management and advisory
services to high-net-worth individuals and institutions. Our core strategy is to develop and sustain management
expertise across a range of investment disciplines and to offer leading investment products and services through
multiple distribution channels. In executing this strategy, we have developed broadly diversified investment
management capabilities and a highly functional marketing, distribution and customer service organization.
Although we manage and distribute a wide range of investment products and services, we operate in one business
segment, namely as an investment adviser to funds and separate accounts.
Through our subsidiaries Eaton Vance Management and Atlanta Capital Management, LLC (“Atlanta Capital”)
and other affiliates, we manage active equity, income and alternative strategies across a range of investment
styles and asset classes, including U.S. and global equities, floating-rate bank loans, municipal bonds, global
income, high-yield and investment grade bonds. Through our subsidiary Parametric Portfolio Associates LLC
(“Parametric”), we manage a range of engineered alpha strategies, including systematic equity, systematic
alternatives and managed options strategies. Through Parametric, we also provide portfolio implementation and
overlay services, including tax-managed core and specialty index strategies, centralized portfolio management
of multi-manager portfolios and customized exposure management services. We also oversee the management
of, and distribute, investment funds sub-advised by unaffiliated third-party managers, including global, regional
and sector equity, and asset allocation strategies. Our breadth of investment management capabilities supports a
wide range of products and services offered to fund shareholders, retail managed account investors, institutional
investors and high-net-worth clients. Our equity strategies encompass a diversity of investment objectives, risk
profiles, income levels and geographic representation. Our income investment strategies cover a broad duration and
credit quality range and encompass both taxable and tax-free investments. We also offer a range of alternative
investment strategies, including commodity- and currency-based investments and a spectrum of absolute return
strategies. As of October 31, 2015, we had $311.4 billion in consolidated assets under management.
We distribute our funds and retail managed accounts principally through financial intermediaries. We have
broad market reach, with distribution partners including national and regional broker-dealers, independent
broker-dealers, registered investment advisors, banks and insurance companies. We support these distribution
partners with a team of approximately 130 sales professionals covering U.S. and international markets.
20
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We also commit significant resources to serving institutional and high-net-worth clients who access investment
management services on a direct basis and through investment consultants. Through our wholly owned affiliates
and consolidated subsidiaries, we manage investments for a broad range of clients in the institutional and high-
net-worth marketplace in the U.S. and internationally, including corporations, sovereign wealth funds,
endowments, foundations, family offices and public and private employee retirement plans.
Our revenue is derived primarily from investment advisory, administrative, distribution and service fees
received from Eaton Vance and Parametric funds and investment advisory fees received from separate accounts.
Our fees are based primarily on the value of the investment portfolios we manage and fluctuate with changes in
the total value and mix of assets under management. As a matter of course, investors in our sponsored open-end
funds and separate accounts have the ability to redeem their investments at any time, without prior notice, and
there are no material restrictions that would prevent them from doing so. Our major expenses are employee
compensation, distribution-related expenses, facilities expense and information technology expense.
Our discussion and analysis of our financial condition, results of operations and cash flows is based upon our
Consolidated Financial Statements, which have been prepared in accordance with accounting principles
generally accepted in the United States of America (“U.S. GAAP”). The preparation of these financial
statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities,
revenue and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, we
evaluate our estimates, including those related to goodwill and intangible assets, income taxes, investments and
stock-based compensation. We base our estimates on historical experience and on various assumptions that we
believe to be reasonable under current circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities that are not readily available from other sources. Actual results
may differ from these estimates.
Business Developments
In fiscal 2015, we identified four primary near-term priorities to support our long-term growth strategy: 1)
capitalize on our strong investment performance across a broad range of active investment strategies; 2) build
out our global equity capabilities to address identified market opportunities; 3) further develop our custom beta
separate account offerings and distribution; and 4) advance our NextSharesTM exchange-traded managed fund
initiative toward market introduction.
As of October 31, 2015, 51 of our mutual funds were rated 4 or 5 stars by MorningstarTM for at least one class of
shares. Top-performers included funds in categories such as bank loans, mid-cap growth, high yield and
municipal income in which we have well-established, category-leading franchises. Other top-performers, such
as our five star-rated balanced, real estate, short-duration government income and short-duration strategic
income funds, are not currently category leaders, but represent areas of opportunity in large asset classes. A top
strategic priority for fiscal 2016 is to capitalize on strong performance to achieve growth in assets under
management.
Edward J. Perkin, former Chief Investment Officer of International and Emerging Markets Equity for Goldman
Sachs Asset Management in London, joined Eaton Vance Management as Chief Equity Investment Officer in
fiscal 2014, assuming leadership of Eaton Vance Management’s equity management. In fiscal 2015, we
launched an initiative to build out Eaton Vance Management’s global equity capability under Mr. Perkin’s
direction, hiring a new global group leader and senior portfolio manager in London and building a staff of global
team members operating from London, Boston and Tokyo. As they develop a track record and reputation in the
marketplace, we believe the global group can contribute meaningfully to the development of Eaton Vance
Management’s equity business.
16310 annual_cc15.indd 21
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Our custom beta initiative seeks to build on the success we have achieved with Parametric’s tax-managed core
and Eaton Vance Management’s laddered municipal bond separate account offerings. For many years,
Parametric’s tax-managed core strategy has offered customized separate account exposure to client-specified
equity benchmarks with initial and ongoing tax management and tax reporting. Parametric now also offers
clients the ability to customize their exposures to reflect their social values and desired factor tilts.
Complementing Parametric’s custom core equity strategies are Eaton Vance Management’s bond ladders, which
offer clients low-cost fixed income market exposure through separate accounts holding individual securities.
Value-added elements of laddered separate account strategies include initial and ongoing credit analysis,
institutional buying power and, again, customization to fit individual client needs. With significant momentum
achieved in fiscal 2015, we believe these strategies are well-positioned for further growth in fiscal 2016.
In fiscal 2015, we made significant progress in the development of NextShares exchange-traded managed funds.
NextShares are a new type of actively managed fund designed to provide better performance for investors. As
exchange-traded products, NextShares have built-in cost and tax efficiencies. Unlike conventional exchange-
traded funds (“ETFs”), NextShares protect the confidentiality of fund trading information and provide buyers
and sellers of shares with transparency and control of their trading costs. NextShares can offer significant
advantages over both mutual funds and ETFs as vehicles for active investment strategies.
The Company acquired the intellectual property supporting NextShares in November 2010 and subsequently
formed a subsidiary, NextShares Solutions LLC (“NextShares Solutions”), to develop and commercialize
NextShares. The Company’s NextShares business plan includes developing a family of Eaton Vance-sponsored
NextShares funds and licensing the underlying technology and providing related services to other fund sponsors
to support their offering of NextShares.
In December 2014, Eaton Vance Management received exemptive relief from the SEC to permit the offering of
NextShares. The SEC subsequently issued corresponding exemptive relief permitting the offering of NextShares
by 11 other investment advisers that have entered into preliminary license and services agreements with
NextShares Solutions. Also during the fiscal year, the SEC approved a request by the NASDAQ Stock Market
LLC (“Nasdaq”) to adopt a new rule governing the listing and trading of NextShares and approved Nasdaq’s
request to list and trade 18 initial Eaton Vance-sponsored NextShares funds. In December 2015, the SEC
declared effective the registration statements of the initial Eaton Vance NextShares funds, the last regulatory
step required to launch.
The Company expects to begin the staged introduction of NextShares funds in the first calendar quarter of 2016.
Broad market adoption and commercial success requires the development of expanded distribution, the launch
of NextShares by other fund sponsors and acceptance by market participants, which cannot be assured.
Consolidated Assets under Management
Consolidated assets under management were $311.4 billion on October 31, 2015, an increase of $13.6 billion, or
5 percent, from $297.7 billion of consolidated assets under management on October 31, 2014. Consolidated net
inflows totaled $16.7 billion in fiscal 2015, representing an organic growth rate of 6 percent. Market price
declines in managed assets reduced consolidated assets under management by $3.1 billion in fiscal 2015.
Average consolidated assets under management increased by $15.6 billion, or 5 percent, to $303.8 billion for the
year.
During fiscal 2015, the S&P 500 Index, a broad measure of U.S. equity market performance, returned 3.0
percent and the Barclays U.S. Aggregate Bond Index, a broad measure of U.S. bond market performance,
returned 2.0 percent. The MSCI Emerging Market Index, a broad measure of emerging market equity
performance, returned -16.6 percent in the period.
22
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We report managed assets and flow data by investment mandate. In fiscal 2015, we provided an additional
breakout of our assets and flows, separating “Exposure Management” from “Portfolio Implementation.” This
separation better highlights the distinctive aspects of these growing business lines. The “Portfolio
Implementation” category consists of Parametric’s tax-managed core and specialty index strategies and
centralized portfolio management services. The “Exposure Management” category consists of Parametric’s
futures- and options-based customized exposure management services.
Consolidated Assets under Management by Investment Mandate(1) (2)
October 31,
(in millions)
Equity(3)
Fixed income(4)
Floating-rate income
Alternative
Portfolio implementation(5)
Exposure management(5)
$
2015
90,013
52,373
35,619
10,173
59,487
63,689
% of
Total
29% $
17%
11%
3%
19%
21%
% of
Total
33% $
15%
14%
4%
16%
18%
2013
93,585
44,414
41,821
15,212
42,992
42,645
% of
Total
34%
16%
15%
5%
15%
15%
2014
96,379
46,062
42,009
11,241
48,008
54,036
2015
vs.
2014
2014
vs.
2013
-7%
14%
-15%
-10%
24%
18%
3%
4%
0%
-26%
12%
27%
Total
$
311,354
100% $
297,735
100% $
280,669
100%
5%
6%
(1)
Consolidated Eaton Vance Corp. See table on page 27 for managed assets and flows of 49 percent-owned Hexavest Inc., which are not
(1)included in the table above.
(2)Assets under management for which we estimate fair value using significant unobservable inputs are not material to the total value of the
(2)assets we manage.
(3)Includes assets in balanced accounts holding income securities.
(4)Includes assets in cash management accounts.
(5)Portfolio implementation and exposure management categories were previously reported as a single category, implementation services.
Equity assets under management included $31.7 billion, $31.7 billion and $29.4 billion of assets managed for
after-tax returns on October 31, 2015, 2014 and 2013, respectively. Portfolio implementation assets under
management included $40.0 billion, $34.1 billion and $29.7 billion of custom core assets managed for after-tax
returns on October 31, 2015, 2014 and 2013, respectively. Fixed income assets included $30.3 billion, $27.4
billion and $25.8 billion of tax-exempt municipal bond assets on October 31, 2015, 2014 and 2013, respectively.
The following tables summarize our consolidated assets under management and asset flows by investment
mandate and investment vehicle for the fiscal years ended October 31, 2015, 2014 and 2013:
16310 annual_cc15.indd 23
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Consolidated Net Flows by Investment Mandate(1)
(in millions)
Equity assets - beginning of period(2)
Sales and other inflows
Redemptions/outflows
Net flows
Assets acquired(4)
Exchanges
Market value change
Equity assets - end of period
Fixed income assets - beginning of period(5)
Sales and other inflows
Redemptions/outflows
Net flows
Assets acquired(4)
Exchanges
Market value change
Fixed income assets - end of period
Floating-rate income assets - beginning of period
Sales and other inflows
Redemptions/outflows
Net flows
Exchanges
Market value change
Floating-rate income assets - end of period
Alternative assets - beginning of period
Sales and other inflows
Redemptions/outflows
Net flows
Assets acquired(4)
Exchanges
Market value change
Alternative assets - end of period
Portfolio implementation assets - beginning of period(6)
Sales and other inflows
Redemptions/outflows
Net flows
Assets acquired(4)
Exchanges
Market value change
Portfolio implementation assets - end of period
Exposure management assets - end of period(6)
Sales and other inflows
Redemptions/outflows
Net flows
Assets acquired(4)
Market value change
Exposure management assets - end of period
Total fund and separate account assets - beginning of period
Sales and other inflows
Redemptions/outflows
Net flows
Assets acquired(4)
Exchanges
Market value change
Total assets under management - end of period
2015
Years Ended October 31,
2014
2013
2015
vs.
2014
2014
vs.
2013
$
$
$
$
$
$
$
$
96,379
18,082
(22,993)
(4,911)
-
50
(1,505)
90,013
46,062
18,516
(11,325)
7,191
-
52
(932)
52,373
42,009
9,336
(14,376)
(5,040)
(136)
(1,214)
35,619
11,241
3,219
(3,892)
(673)
-
24
(419)
10,173
48,008
18,034
(7,217)
10,817
-
-
662
59,487
54,036
57,586
(48,286)
9,300
-
353
63,689
297,735
124,773
(108,089)
16,684
-
(10)
(3,055)
311,354
$
$
$
$
$
$
$
$
93,585
14,473
(19,099)
(4,626)
-
567
6,853
96,379
44,414
12,024
(11,867)
157
-
96
1,395
46,062
41,821
15,669
(14,742)
927
(145)
(594)
42,009
15,212
3,339
(7,237)
(3,898)
-
(89)
16
11,241
42,992
8,331
(7,449)
882
-
(461)
4,595
48,008
42,645
52,914
(43,604)
9,310
-
2,081
54,036
280,669
106,750
(103,998)
2,752
-
(32)
14,346
297,735
$
$
$
$
$
$
$
$
80,782
16,989
(19,459)
(2,470)
1,572
328
13,373
93,585
49,172
10,881
(14,015)
(3,134)
472
(510)
(1,586)
44,414
26,388
21,729
(6,871)
14,858
3%
25%
20%
6%
NM(3)
-91%
NM
-7%
4%
54%
-5%
NM
NM
-46%
NM
14%
0%
-40%
-2%
NM
-6%
104%
-15%
-26%
-4%
-46%
-83%
NM
NM
NM
-10%
12%
116%
-3%
NM
NM
NM
-86%
24%
27%
9%
11%
0%
NM
-83%
18%
6%
17%
4%
506%
NM
-69%
NM
5%
e not included in the table above.
397
178
41,821
12,864
8,195
(5,688)
2,507
650
(184)
(625)
15,212
30,302
9,674
(5,493)
4,181
32
(118)
8,595
42,992
-
30,167
(21,394)
8,773
32,032
1,840
42,645
199,508
97,635
(72,920)
24,715
34,758
(87)
21,775
280,669
16%
-15%
-2%
87%
NM
73%
-49%
3%
-10%
11%
-15%
NM
NM
NM
NM
4%
58%
-28%
115%
-94%
NM
NM
0%
18%
-59%
27%
NM
NM
-52%
NM
-26%
42%
-14%
36%
-79%
NM
291%
-47%
12%
NM
75%
104%
6%
NM
13%
27%
41%
9%
43%
-89%
NM
-63%
-34%
6%
(1)
Consolidated Eaton Vance Corp. See table on page 27 for managed assets and flows of 49 percent-owned Hexavest Inc., which ar
(2) Includes assets in balanced accounts holding income securities.
(3) Not meaningful ("NM").
(4) Represents assets acquired in the purchase of The Clifton Group Investment Management Company on December 31, 2012.
(5) Includes assets in cash management accounts.
(6) Portfolio implementation and exposure management categories were previously reported as a single category, implementation services.
24
16310 annual_cc15.indd 24
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Consolidated Net Flows by Investment Vehicle(1)
(in millions)
Fund assets - beginning of period(2)
Sales and other inflows
Redemptions/outflows
Net flows
Assets acquired(3)
Exchanges
Market value change
Fund assets - end of period
Institutional separate account assets -
beginning of period(4)
Sales and other inflows
Redemptions/outflows
Net flows
Assets acquired(3)
Exchanges
Market value change
Institutional separate account assets - end of period
High-net-worth separate account assets - beginning of period
Sales and other inflows
Redemptions/outflows
Net flows
Exchanges
Market value change
High-net-worth separate account assets - end of period
Retail managed account assets - beginning of period
Sales and other inflows
Redemptions/outflows
Net flows
Exchanges
Market value change
Retail managed account assets - end of period
Total fund and separate account assets -
beginning of period
Sales and other inflows
Redemptions/outflows
Net flows
Assets acquired(3)
Exchanges
Market value change
Total assets under management - end of period
$
$
$
$
$
$
$
$
Years Ended October 31,
2014
133,401
35,408
(38,077)
(2,669)
-
(32)
3,864
134,564
$
2015
134,564
32,029
(36,330)
(4,301)
-
181
(4,510)
125,934
$
106,443
75,568
(61,569)
13,999
-
(208)
(247)
119,987
22,235
4,816
(2,933)
1,883
(99)
497
24,516
34,493
12,360
(7,257)
5,103
116
1,205
40,917
297,735
124,773
(108,089)
16,684
-
(10)
(3,055)
311,354
$
$
$
$
95,724
59,938
(54,957)
4,981
-
216
5,522
106,443
19,699
3,532
(3,620)
(88)
286
2,338
22,235
31,845
7,872
(7,344)
528
(502)
2,622
34,493
280,669
106,750
(103,998)
2,752
-
(32)
14,346
297,735
$
$
$
$
2015
vs.
2014
1%
-10%
-5%
61%
NM
NM
NM
-6%
11%
26%
12%
181%
NM
NM
NM
13%
13%
36%
-19%
NM
NM
-79%
10%
8%
57%
-1%
866%
NM
-54%
19%
6%
17%
4%
506%
NM
-69%
NM
5%
2014
vs.
2013
18%
-19%
27%
NM
NM
-89%
-35%
1%
121%
46%
74%
-48%
NM
18%
-35%
11%
31%
-26%
-2%
NM
NM
-35%
13%
15%
-4%
-5%
16%
NM
-28%
8%
41%
9%
43%
-89%
NM
-63%
-34%
6%
2013
113,418
43,606
(29,970)
13,636
638
(279)
5,988
133,401
43,338
41,108
(31,548)
9,560
34,120
183
8,523
95,724
15,036
4,763
(3,699)
1,064
(16)
3,615
19,699
27,716
8,158
(7,703)
455
25
3,649
31,845
199,508
97,635
(72,920)
24,715
34,758
(87)
21,775
280,669
(1)
Consolidated Eaton Vance Corp. See table on page 27 for managed assets and flows of 49 percent-owned Hexavest Inc., which are not included
in the table above.
(2) Includes assets in cash management funds.
(3) Represents assets acquired in the purchase of The Clifton Group Investment Management Company on December 31, 2012.
(4) Includes assets in cash management separate accounts.
16310 annual_cc15.indd 25
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The following table summarizes our assets under management by investment affiliate as of October 31, 2015,
2014 and 2013:
Consolidated Assets under Management by Investment Affiliate (1)
Years Ended October 31,
(in millions)
Eaton Vance Management(2)
Parametric
Atlanta Capital
Total
2015
141,415
152,506
17,433
311,354
$
$
$
$
2014
143,100 $
136,176
18,459
297,735 $
2013
144,729
117,008
18,932
280,669
2015
vs.
2014
2014
vs.
2013
-1%
12%
-6%
5%
-1%
16%
-2%
6%
(1)
(2)
Consolidated Eaton Vance Corp. See table on page 27 for m
anaged assets and flows of 49 percent-owned Hexavest Inc.,
which are not included in the table above.
Includes managed assets of wholly owned subsidiaries, as well as certain Eaton Vance-sponsored funds and accounts managed
by Hexavest and unaffiliated third-party advisers under Eaton Vance supervision.
As of October 31, 2015, 49 percent-owned affiliate Hexavest Inc. (“Hexavest”) managed $13.9 billion of client
assets, a decrease of 16 percent from $16.7 billion of managed assets on October 31, 2014. Other than Eaton
Vance-sponsored funds for which Hexavest is adviser or sub-adviser, the managed assets of Hexavest are not
included in Eaton Vance consolidated totals.
The following table summarizes assets under management and asset flow information for Hexavest for the fiscal
years ended October 31, 2015, 2014 and 2013:
26
16310 annual_cc15.indd 26
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Hexavest Assets under Management and Net Flows
(in millions)
Eaton Vance distributed:
Eaton Vance sponsored funds – beginning of period(1)
Sales and other inflows
Redemptions/outflows
Net flows
Market value change
Eaton Vance sponsored funds – end of period
Eaton Vance distributed separate accounts – beginning of period(2)
Sales and other inflows
Redemptions/outflows
Net flows
Exchanges
Market value change
Eaton Vance distributed separate accounts – end of period
Total Eaton Vance distributed – beginning of period
Sales and other inflows
Redemptions/outflows
Net flows
Exchanges
Market value change
Total Eaton Vance distributed – end of period
Hexavest directly distributed – beginning of period(3)
Sales and other inflows
Redemptions/outflows
Net flows
Exchanges
Market value change
Hexavest directly distributed – end of period
Total Hexavest assets – beginning of period
$
$
$
$
$
$
$
$
$
Sales and other inflows
Redemptions/outflows
Net flows
Exchanges
Market value change
Years Ended October 31,
2015
2014
2013
2015
vs.
2014
2014
vs.
2013
227
$
211
$
22
(21)
1
1
229
2,367
535
(488)
47
-
26
2,440
2,594
557
(509)
48
-
27
$
$
$
$
2,669
14,101
$
$
786
(3,503)
(2,717)
-
(105)
11,279
16,695
1,343
(4,012)
(2,669)
-
(78)
$
$
58
(57)
1
15
227
1,574
531
(260)
271
389
133
2,367
1,785
589
(317)
272
389
148
2,594
15,136
1,637
(3,046)
(1,409)
(389)
763
14,101
16,921
2,226
(3,363)
(1,137)
-
911
$
$
$
$
$
$
$
$
37
162
(15)
147
27
211
-
1,381
(33)
1,348
-
226
1,574
37
1,543
(48)
1,495
-
253
1,785
12,073
2,703
(1,853)
850
-
2,213
15,136
12,110
4,246
(1,901)
2,345
-
2,466
16,921
8%
-62%
-63%
0%
-93%
1%
50%
1%
88%
-83%
NM
-80%
3%
45%
-5%
61%
-82%
NM
-82%
3%
-7%
-52%
15%
93%
NM
NM
-20%
-1%
-40%
19%
135%
NM
NM
-16%
470%
-64%
280%
-99%
-44%
8%
NM
-62%
688%
-80%
NM
-41%
50%
NM
-62%
560%
-82%
NM
-42%
45%
25%
-39%
64%
NM
NM
-66%
-7%
40%
-48%
77%
NM
NM
-63%
-1%
Total Hexavest assets – end of period
$
13,948
$
16,695
$
(1) Managed assets and flows of Eaton Vance-sponsored pooled investment vehicles for which Hexavest is adviser or sub-adviser. Eaton Vance
receives management and/or distribution revenue on these assets, which are included in the Eaton Vance consolidated results.
(2) Managed assets and flows of Eaton Vance-distributed separate accounts managed by Hexavest. Eaton Vance receives distribution revenue,
but not investment advisory fees, on these assets, which are not included in the Eaton Vance consolidated results.
(3) Managed assets and flows of pre-transaction Hexavest clients and post-transaction Hexavest clients in Canada. Eaton Vance receives no
investment advisory or distribution revenue on these assets, which are not included in the Eaton Vance consolidated results.
We currently sell open-end mutual funds under the Eaton Vance and Parametric brands in five primary pricing
structures: front-end load commission (“Class A”); level-load commission (“Class C”); institutional no-load
(“Class I,” “Class R6” and “Institutional Class,” referred to herein as “Class I”); retail no-load (“Investor Class”
and “Advisers Class,” referred to herein as “Class N”); and retirement plan level-load (“Class R”). We waive the
front-end sales load on Class A shares under certain circumstances and sell such shares at net asset value. Class
A shares are offered at net asset value (without a sales charge) to tax-deferred retirement plans and deferred
16310 annual_cc15.indd 27
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compensation plans, and to clients of financial intermediaries who charge an ongoing fee for advisory,
investment, consulting or similar services. Class A shares are also offered at net asset value to clients of
financial intermediaries that have entered into an agreement with EVD to offer Class A shares through a no-load
network or platform, to certain separate account clients of Eaton Vance and its affiliates, and to certain persons
affiliated with Eaton Vance.
Consolidated Ending Assets under Management by Investment Vehicle(1)
October 31,
% of
Total
2015
2014
% of
Total
% of
Total
2013
(in millions)
Open-end funds:
Class A
Class B
Class C
Class I(2)
Class N
Class R
Other
Total open-end funds
Private funds(3)
Closed-end funds
Total fund assets
Institutional account
assets(4)
High-net-worth
account assets
Retail managed
account assets
Total separate account
assets
Total
$
23,593
299
8,891
38,168
1,461
516
1,910
74,838
26,647
24,449
125,934
8%
$
26,955
0%
3%
12%
0%
0%
1%
24%
8%
8%
40%
449
9,466
42,073
1,773
445
2,015
83,176
25,969
25,419
134,564
119,987
39%
106,443
24,516
8%
22,235
40,917
13%
34,493
9%
0%
3%
14%
1%
0%
1%
28%
9%
8%
45%
36%
7%
12%
$
29,989
662
9,800
42,331
2,311
373
1,524
86,990
21,500
24,911
133,401
95,724
19,699
31,845
2015
vs.
2014
-12%
-33%
-6%
-9%
-18%
16%
-5%
-10%
3%
-4%
-6%
2014
vs.
2013
-10%
-32%
-3%
-1%
-23%
19%
32%
-4%
21%
2%
1%
11%
0%
3%
15%
1%
0%
1%
31%
8%
9%
48%
34%
13%
11%
7%
10%
13%
11%
19%
8%
185,420
$
311,354
60%
163,171
100%
$
297,735
55%
100%
147,268
$
280,669
52%
100%
14%
5%
11%
6%
(1)
(1)
(2)
(3)
(4)
Consolidated Eaton Vance Corp. See table on page 27 for managed assets and flows of 49 percent-owned Hexavest Inc., which are not
included in the table above.
Includes Class R6 shares.
Includes privately offered equity, fixed income and floating-rate income funds and CLO entities.
Includes assets in institutional cash management separate accounts.
Consolidated average assets under management presented in the following tables represent a monthly average
by investment vehicle and mandate. These tables are intended to provide information useful in the analysis of
our asset-based revenue and distribution expenses. Separate account investment advisory fees are generally
calculated as a percentage of either beginning, average or ending quarterly assets. Fund investment advisory,
administrative, distribution and service fees, as well as certain expenses, are generally calculated as a percentage
of average daily assets.
28
16310 annual_cc15.indd 28
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Consolidated Average Assets under Management by Product(1)
(in millions)
Open-end funds:
Class A
Class B
Class C
Class I(2)
Class N
Class R
Other
Total open-end funds
Private funds(3)
Closed-end funds
Total fund assets
Institutional account
assets(4)
High-net-worth
account assets
Retail managed
account assets
Total separate account
assets
Total
Years Ended October 31,
2015
2014
2013
2015
vs.
2014
2014
vs.
2013
$
25,103 $
370
9,198
40,585
1,561
482
1,810
79,109
26,141
24,956
27,338
571
9,656
42,245
3,888
412
1,795
85,905
23,617
25,395
$
29,550
813
9,814
36,986
1,885
329
923
80,300
19,756
23,945
130,206
134,917
124,001
112,309
99,224
80,028
23,472
20,681
17,521
37,783
33,384
29,701
173,564
$ 303,770 $
153,289
288,206
127,250
251,251
$
-8%
-35%
-5%
-4%
-60%
17%
1%
-8%
11%
-2%
-3%
13%
13%
13%
13%
5%
-7%
-30%
-2%
14%
106%
25%
94%
7%
20%
6%
9%
24%
18%
12%
20%
15%
(1) Assets under management attributable to acquisitions that closed during the relevant periods are included on a
(2)
(3)
(4)
weighted average basis for the period from their respective closing dates.
Includes Class R6 shares.
Includes privately offered equity, fixed income and floating-rate bank loan funds and CLO entities.
Includes assets in institutional cash management separate accounts.
16310 annual_cc15.indd 29
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Consolidated Average Assets under Management by Investment Mandate
October 31,
(in millions)
Equity(1)
Fixed income(2)
Floating-rate income
Alternative
Portfolio implementation
Exposure management
$
2015
2014
93,413 $
49,263
38,238
10,584
52,703
59,569
94,822 $
44,372
43,635
12,555
45,961
46,861
2013
87,355
48,014
33,695
15,034
36,748
30,405
Total
$
303,770 $
288,206 $
251,251
2015
vs.
2014
2014
vs.
2013
-1%
11%
-12%
-16%
15%
27%
5%
9%
-8%
29%
-16%
25%
54%
15%
(1)Includes assets in balanced accounts holding income securities.
(2)Includes assets in cash management accounts.
Results of Operations
In evaluating operating performance, we consider net income attributable to Eaton Vance Corp. shareholders
and earnings per diluted share, which are calculated on a basis consistent with U.S. GAAP, as well as adjusted
net income attributable to Eaton Vance Corp. shareholders and adjusted earnings per diluted share, both of
which are internally derived non-U.S. GAAP performance measures.
We define adjusted net income attributable to Eaton Vance Corp. shareholders and adjusted earnings per diluted
share as net income attributable to Eaton Vance Corp. shareholders and earnings per diluted share, respectively,
adjusted to exclude changes in the estimated redemption value of non-controlling interests in our affiliates
redeemable at other than fair value (“non-controlling interest value adjustments”), closed-end fund structuring
fees, payments to end service and additional compensation arrangements in place for certain Eaton Vance
closed-end funds and other items management deems non-recurring or non-operating in nature, or otherwise
outside the ordinary course of business (such as the impact of special dividends, costs associated with the
extinguishment of debt and tax settlements). Adjusted net income attributable to Eaton Vance Corp.
shareholders and adjusted earnings per diluted share should not be construed to be a substitute for, or superior
to, net income attributable to Eaton Vance Corp. shareholders and earnings per diluted share computed in
accordance with U.S. GAAP. We provide disclosures of adjusted net income attributable to Eaton Vance Corp.
shareholders and adjusted earnings per diluted share to reflect the fact that our management and Board of
Directors, as well as our investors, consider these adjusted numbers a measure of the Company’s underlying
operating performance.
The following table provides a reconciliation of net income attributable to Eaton Vance Corp. shareholders and
earnings per diluted share to adjusted net income attributable to Eaton Vance Corp. shareholders and adjusted
earnings per diluted share, respectively, for the fiscal years ended October 31, 2015, 2014 and 2013:
30
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(in thousands, except per share data)
Net income attributable to
Eaton Vance Corp. shareholders
Non-controlling interest value adjustments(1)
Payments to end certain closed-end fund
service and additional compensation
arrangements, net of tax(2)
Closed-end fund structuring fees, net of tax(3)
Loss on extinguishment of debt, net of tax(4)
Settlement of state tax audit(5)
Adjusted net income attributable to
Eaton Vance Corp. shareholders
Years Ended October 31,
2014
2015
2013
$ 230,299 $ 304,316 $ 193,841
24,320
(204)
5,311
2015
vs.
2014
2014
vs.
2013
-24%
NM
57%
-78%
44,895
-
-
-
-
-
-
-
-
2,851
35,239
6,691
NM
NM
NM
NM
NM
NM
NM
NM
$ 274,990 $ 309,627 $ 262,942
-11%
18%
Earnings per diluted share
Non-controlling interest value adjustments
Payments to end certain closed-end fund
service and additional compensation
arrangements, net of tax
Closed-end fund structuring fees, net of tax
Loss on extinguishment of debt, net of tax
Settlement of state tax audit
Special dividend adjustment(6)
Adjusted earnings per diluted share
$
$
1.92 $
-
2.44 $
0.04
1.53
0.19
-21%
NM
59%
-79%
0.37
-
-
-
-
2.29 $
-
-
-
-
-
2.48 $
-
0.02
0.28
0.05
0.01
2.08
NM
NM
NM
NM
NM
-8%
NM
NM
NM
NM
NM
19%
(1)
Please see page 42 "Net Income Attributable to Non-controlling and Other Beneficial Interests," for a further discussion of the
non-controlling interest value adjustments referenced above.
(2)
Reflects a $73.0 million payment, net of tax, to end certain fund services and additional compensation arrangements for certain
Eaton Vance closed-end funds. See
page 37 for a further discussion.
(3)
Reflects closed-end fund structuring fees, net of tax, associated with the initial public offering of Eaton Vance Municipal Income Term
Trust and Eaton Vance Floating-Rate Income Plus Fund in fiscal 2013.
(4)
Reflects a loss on the Company's retirement of $250 million of its outstanding Senior Notes due in 2017. The loss on extinguishment
of debt, net of tax, consists of the make-whole provision, acceleration of deferred financing costs and discounts tied to the original
issuance, transaction costs associated with the tender offer, the loss recognized on a reverse treasury lock entered into in conjunction
with the tender and accelerated amortization of a treasury rate lock tied to the original issuance.
(5)
Please see page 41, "Income Taxes" fo
r further discussion of the tax settlement adjustment referenced above.
(6)
Reflects the impact of the special dividend paid in the first quarter of fiscal 2013 due to the disproportionate allocation of distributions
in excess of earnings to common shareholders under the two-class method.
We reported net income attributable to Eaton Vance Corp. shareholders of $230.3 million, or $1.92 per diluted
share, in fiscal 2015 compared to net income attributable to Eaton Vance Corp. shareholders of $304.3 million,
or $2.44 per diluted share, in fiscal 2014. We reported adjusted net income attributable to Eaton Vance Corp.
16310 annual_cc15.indd 31
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shareholders of $275.0 million, or $2.29 per diluted share, in fiscal 2015 compared to adjusted net income
attributable to Eaton Vance Corp. shareholders of $309.6 million, or $2.48 per diluted share, in fiscal 2014. The
change in net income attributable to Eaton Vance Corp. shareholders in fiscal 2015 compared to fiscal 2014 can
be primarily attributed to the following:
A decrease in revenue of $46.7 million, or 3 percent, primarily reflecting lower average managed assets
in relatively high fee-rate floating-rate income, alternative and equity mandates, partially offset by
growth in lower fee-rate exposure management, portfolio implementation and fixed income mandates.
An increase in expenses of $72.7 million, or 8 percent, primarily reflecting the payment of $73.0 million
to terminate certain closed-end fund service and additional compensation arrangements in the first
quarter of fiscal 2015. Year-over-year increases in compensation and other corporate expenses were
largely offset by decreases in other distribution expenses, including the amortization of deferred sales
commissions and service fee expenses.
A $1.2 million decline in net investment gains (losses) and other investment income, net, primarily
reflecting increases in net losses recognized on our seed capital portfolio, offset by an increase in
interest and other income recognized on our seed capital portfolio.
A $1.7 million decline in income (expense) of the Company’s consolidated CLO entities.
A decrease in income taxes of $43.5 million, or 23 percent, reflecting a decrease in the Company’s
income before taxes. Consolidated CLO entity income that is allocated to other beneficial interest
holders is not subject to tax in the Company’s provision.
A decrease in equity in net income of affiliates, net of tax, of $4.7 million, reflecting a decrease in the
Company’s net interest in the earnings of sponsored funds accounted for under the equity method.
A decrease in net income attributable to non-controlling interests of $9.0 million, reflecting a decrease
in the annual adjustments made to the estimated redemption value of non-controlling interests in the
Company’s majority-owned subsidiaries redeemable at other than fair value, an increase in net losses of
the Company’s consolidated CLO entities that are borne by other beneficial interests and an increase in
net losses attributable to non-controlling interest holders in the Company’s consolidated sponsored
funds.
Weighted average diluted shares outstanding decreased by 3.4 million shares, or 3 percent, in fiscal 2015
compared to fiscal 2014. The change reflects the impact of shares repurchased over the course of the fiscal year,
partially offset by the impact of employee stock option exercises and the annual vesting of restricted stock.
We reported net income attributable to Eaton Vance Corp. shareholders of $304.3 million, or $2.44 per diluted
share, in fiscal 2014 compared to net income attributable to Eaton Vance Corp. shareholders of $193.8 million,
or $1.53 per diluted share, in fiscal 2013. We reported adjusted net income attributable to Eaton Vance Corp.
shareholders of $309.6 million, or $2.48 per diluted share, in fiscal 2014 compared to adjusted net income
attributable to Eaton Vance Corp. shareholders of $262.9 million, or $2.08 per diluted share, in fiscal 2013. The
change in net income attributable to Eaton Vance Corp. shareholders can be primarily attributed to the
following:
An increase in revenue of $92.8 million, or 7 percent, reflecting a 15 percent increase in consolidated
average assets under management offset by a decrease in our annualized effective fee rate to 50 basis
points in fiscal 2014 from 54 basis points in fiscal 2013 due to a shift in product mix toward lower fee-
rate mandates.
An increase in expenses of $25.9 million, or 3 percent, reflecting increases in compensation, distribution
and service fee expenses, fund-related expenses and other operating expenses, offset by reduced
amortization of deferred sales commissions.
A $3.7 million improvement in net investment gains (losses) and other investment income, net. Net
investment losses in fiscal 2013 include a $3.1 million loss on a reverse treasury lock entered into in
32
16310 annual_cc15.indd 32
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conjunction with the retirement of $250 million of the 6.5 percent Senior Notes due in October 2017
(the “2017 Senior Notes”).
A $3.8 million decline in interest expense, reflecting the retirement of $250 million of the 2017 Senior
Notes and the contemporaneous issuance of $325 million of 3.625 percent Senior Notes due 2023 (the
“2023 Senior Notes”) in fiscal 2013.
The non-recurrence of a $53.0 million loss on extinguishment of debt related to the retirement of the
2017 Senior Notes referenced above.
A $4.3 million decline in other expenses of the Company’s consolidated CLO entities, reflecting a
decrease in interest and other expenses recognized by those entities in fiscal 2014.
An increase in income taxes of $42.8 million, or 30 percent, reflecting an increase in the Company’s
income before taxes, offset by a fiscal 2013 tax adjustment of $6.7 million related to the settlement of a
state tax audit. Consolidated CLO entity income that is allocated to other beneficial interest holders is
not subject to tax in the Company’s provision.
An increase in equity in net income of affiliates, net of tax, of $1.9 million, reflecting an increase in our
proportionate net interest in Hexavest’s earnings and an increase in the Company’s net interest in the
earnings of sponsored funds accounted for under the equity method.
A decrease in net income attributable to non-controlling interests of $19.7 million, reflecting a decrease
in the annual adjustments made to the estimated redemption value of non-controlling interests in the
Company’s majority-owned subsidiaries redeemable at other than fair value, a decrease in net gains
recognized by the Company’s consolidated CLO entities that are borne by other beneficial interests and
a decrease in net income attributable to non-controlling interest holders in the Company’s majority-
owned subsidiaries, offset by an increase in net income attributable to non-controlling interest holders in
the Company’s consolidated sponsored funds.
Weighted average diluted shares outstanding decreased by 0.8 million shares, or 1 percent, in fiscal 2014
compared to fiscal 2013. The change reflects the impact of shares repurchased over the course of the fiscal year,
partially offset by the impact of employee stock option exercises and the annual vesting of restricted stock.
Revenue
Our revenue declined by $46.7 million, or 3 percent, in fiscal 2015, reflecting lower investment advisory and
administrative fees, distribution and underwriter fees, and service fees, partially offset by higher other revenue.
Fee revenue declined despite a 5 percent increase in average consolidated assets under management, as the
revenue impact of growth in lower fee-rate exposure management, portfolio implementation and fixed income
mandates was more than offset by lower average managed assets in higher fee-rate floating-rate income,
alternative and equity mandates.
The following table shows our investment advisory and administrative fees, distribution and underwriter fees,
service fees and other revenue for the fiscal years ended October 31, 2015, 2014 and 2013:
(in thousands)
2015
2014
2013
Years Ended October 31,
$ 1,196,866 $ 1,231,188 $ 1,135,327
89,234
126,560
6,382
$ 1,403,563 $ 1,450,294 $ 1,357,503
85,514
125,713
7,879
80,815
116,448
9,434
Investment advisory and
administrative fees
Distribution and underwriter fees
Service fees
Other revenue
Total revenue
16310 annual_cc15.indd 33
2015
vs.
2014
2014
vs.
2013
-3%
-5%
-7%
20%
-3%
8%
-4%
-1%
23%
7%
33
1/11/16 1:18 PM
Investment advisory and administrative fees
Investment advisory and administrative fees are determined by contractual agreements with our sponsored funds
and separate accounts and are generally based upon a percentage of the market value of assets under
management. Net asset flows and changes in the market value of managed assets affect the amount of managed
assets on which investment advisory and administrative fees are earned, while changes in asset mix among
different strategies and services affect our average effective fee rate. Investment advisory and administrative
fees represented 85 percent of total revenue in fiscal 2015, 85 percent in fiscal 2014 and 84 percent in fiscal
2013.
The decrease in investment advisory and administrative fees of 3 percent, or $34.3 million, in fiscal 2015 from
fiscal 2014 can be primarily attributed to a shift in asset mix driven by the loss of assets in higher-fee investment
mandates and growth in assets in lower-fee investment mandates. This shift in asset mix is reflected in the
decrease in our annualized effective investment advisory and administrative fee rate to 39 basis points in fiscal
2015 from 43 basis points in fiscal 2014.
The increase in investment advisory and administrative fees of 8 percent, or $95.9 million, in fiscal 2014 from
fiscal 2013 can be primarily attributed to the 15 percent increase in average assets under management, offset by
a decline in our average effective fee rates. The decline in our effective investment advisory and administrative
fee rate to 43 basis points in fiscal 2014 from 45 basis points in fiscal 2013 can be primarily attributed to the
impact of a shift in product mix from higher-fee to lower-fee investment mandates.
Average effective investment advisory and administrative fee rates for the fiscal years ended October 31, 2015,
2014 and 2013 by investment mandate were as follows:
(percent of average daily net assets)
2015
2014
2013
Years Ended October 31,
2015
vs.
2014
2014
vs.
2013
Equity
Fixed income
Floating-rate income
Alternatives
Portfolio implementation
Exposure management
Average effective investment advisory
and administrative fee rate
0.64%
0.43%
0.53%
0.63%
0.16%
0.05%
0.65%
0.45%
0.54%
0.62%
0.16%
0.05%
0.65%
0.44%
0.55%
0.64%
0.16%
0.06%
-2%
-2%
-2%
1%
-1%
2%
-1%
1%
-1%
-2%
-2%
-4%
0.39%
0.43%
0.45%
-9%
-4%
Performance fees reflected in the average effective advisory and administrative fee rates shown above totaled
$3.7 million, $8.3 million and $4.4 million in fiscal 2015, 2014 and 2013, respectively.
Distribution and underwriter fees
Distribution plan payments, which are made under contractual agreements with certain sponsored funds, are
calculated as a percentage of average assets under management of the applicable funds and fund share classes.
These fees fluctuate with both the level of average assets under management and sales of sponsored funds and
fund share classes that are subject to these fees.
The following table shows the total distribution payments with respect to our Class A, Class B, Class C, Class
N, Class R and private equity funds for the fiscal years ended October 31, 2015, 2014 and 2013:
34
16310 annual_cc15.indd 34
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(in thousands)
2015
2014
2013
Years Ended October 31,
2015
vs.
2014
2014
vs.
2013
Class A
Class B
Class C
Class N
Class R
Private funds
Total distribution plan payments
$
$
876 $
2,173
64,809
136
1,208
4,267
73,469 $
1,241 $
3,540
67,739
273
1,030
3,874
77,697 $
1,105
5,298
69,081
142
821
3,626
80,073
-29%
-39%
-4%
-50%
17%
10%
-5%
12%
-33%
-2%
92%
25%
7%
-3%
Underwriter commissions are earned on sales of shares of our sponsored mutual funds on which investors pay a
sales charge at the time of purchase (Class A share sales). Sales charges and underwriter commissions are
waived or reduced on shareholder purchases that exceed specified minimum amounts and on purchases by
certain categories of investors. Underwriter commissions vary with the level of Class A share sales and the mix
of Class A shares offered with and without sales charges.
Underwriter fees and other distribution income decreased 6 percent, or $0.5 million, to $7.3 million in fiscal
2015, primarily reflecting a decrease of $0.2 million in underwriter fees received on sales of Class A shares and
a decrease of $0.3 million in contingent deferred sales charges received on certain Class A redemptions.
Underwriter fees and other distribution income decreased 15 percent, or $1.3 million, to $7.8 million in fiscal
2014, primarily reflecting a decrease of $1.2 million in underwriter fees received on sales of Class A shares and
a decrease of $0.3 million in contingent deferred sales charges received on certain Class A redemptions.
Service fees
Service fees, which are paid to EVD pursuant to distribution or service plans adopted by our sponsored mutual
funds, are calculated as a percent of average assets under management in specific mutual fund share classes
(principally Classes A, B, C, N and R). Certain private funds also make service fee payments to EVD. Service
fees are paid to EVD as principal underwriter or placement agent to the funds for service and/or the maintenance
of shareholder accounts.
Service fee revenue decreased 7 percent, or $9.3 million, to $116.4 million in fiscal 2015 from fiscal 2014,
primarily reflecting a decrease in average assets under management in certain classes of funds subject to service
fees.
Service fee revenue decreased 1 percent, or $0.8 million, to $125.7 million in fiscal 2014 from fiscal 2013,
primarily reflecting a decrease in average assets under management in certain classes of funds subject to service
fees.
Other revenue
Other revenue, which consists primarily of sub-transfer agent fees, miscellaneous dealer income, custody fees,
Hexavest-related distribution and service revenue, and sub-lease income, increased by $1.6 million in fiscal
2015, primarily reflecting an increase in Hexavest-related revenue. Other revenue increased by $1.5 million in
fiscal 2014, primarily reflecting an increase in Hexavest-related revenue.
16310 annual_cc15.indd 35
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Expenses
Operating expenses increased 8 percent, or $72.7 million, in fiscal 2015 from fiscal 2014, reflecting increases in
distribution, compensation, fund-related and other expenses, offset by lower service fees and reduced
amortization of deferred sales commissions as more fully described below. Included in distribution expense for
fiscal 2015 is a one-time payment of $73.0 million to terminate certain closed-end fund service and additional
compensation arrangements with a distribution partner. Expenses in connection with the Company’s NextShares
initiative totaled approximately $7.4 million in fiscal 2015, an increase of 97 percent from $3.7 million in fiscal
2014.
The following table shows our operating expenses for the fiscal years ended October 31, 2015, 2014 and 2013:
(in thousands)
Compensation and related
costs:
Years Ended October 31,
2014
2015
2013
2015
vs.
2014
2014
vs.
2013
Cash compensation
Stock-based compensation
$
414,307 $
69,520
400,890 $
60,548
387,343
59,791
Total compensation
and related costs
Distribution expense
Service fee expense
Amortization of deferred sales
commissions
Fund-related expenses
Other expenses
Total expenses
483,827
198,155
106,663
461,438
141,544
116,620
14,972
35,886
163,613
$ 1,003,116 $
17,590
35,415
157,830
930,437 $
447,134
139,618
115,149
19,581
34,230
148,784
904,496
3%
15%
5%
40%
-9%
-15%
1%
4%
8%
3%
1%
3%
1%
1%
-10%
3%
6%
3%
Compensation and related costs
The following table shows our compensation and related costs for the fiscal years ended October 31, 2015, 2014
and 2013:
Years Ended October 31,
2015
2014
2013
$ 217,289 $ 204,935 $ 187,734
59,791
130,359
64,730
4,520
$ 483,827 $ 461,438 $ 447,134
69,520
134,052
57,716
5,250
60,548
137,563
54,989
3,403
2015
vs.
2014
2014
vs.
2013
6%
15%
-3%
5%
54%
5%
9%
1%
6%
-15%
-25%
3%
(in thousands)
Base salaries and employee benefits
Stock-based compensation
Operating income-based incentives
Sales incentives
Other compensation expense
Total
36
16310 annual_cc15.indd 36
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The increase in base salaries and employee benefits in fiscal 2015 reflects the impact of a 4 percent increase in
average headcount to support growth initiatives as well as annual merit increases. The increase in stock-based
compensation in fiscal 2015 reflects higher average headcount, an increase in annual stock-based compensation
awards and the impact of certain employee retirements and terminations. The decrease in operating income-
based incentives in fiscal 2015 reflects lower pre-bonus adjusted operating income. The increase in sales
incentives in fiscal 2015 reflects an increase in compensation-eligible sales. Other compensation expense
increased due to higher severance costs primarily associated with closing our New Jersey-based affiliate Fox
Asset Management LLC (“Fox Asset Management”), as well as additional compensation expense associated
with the expansion of our global investment teams in London.
The increase in base salaries and employee benefits in fiscal 2014 primarily reflects an increase in base
compensation associated with an increase in headcount, annual merit increases and a corresponding increase in
employee benefits. The increase in stock-based compensation in fiscal 2014 primarily reflects the increase in
headcount. The increase in operating income-based incentives in fiscal 2014 reflects higher pre-bonus adjusted
operating income partially offset by a modest decrease in bonus payouts relative to pre-bonus adjusted operating
income. The decrease in sales incentives in fiscal 2014 reflects lower compensation-eligible sales. Other
compensation expense, which decreased year over year, primarily reflects a reduction in signing bonuses paid.
Distribution expense
Distribution expense consists primarily of commissions paid to broker-dealers on the sale of Class A shares at
net asset value, ongoing asset-based payments made to distribution partners pursuant to third-party distribution
arrangements for certain Class C shares and closed-end funds, marketing support arrangements to distribution
partners and other discretionary marketing expenses.
The following table shows our distribution expense for the fiscal years ended October 31, 2015, 2014 and 2013:
(in thousands)
Class A share commissions
Class C share distribution fees
Payments to end certain fund service and
additional compensation arrangements
Closed-end fund structuring fees
Closed-end fund dealer compensation payments
Intermediary marketing support payments
Discretionary marketing expenses
Total
Years Ended October 31,
2015
2014
2013
$
2,628 $
4,264 $
53,462
54,423
6,507
54,631
73,000
-
6,575
41,901
20,589
-
4,614
17,701
40,442
15,723
$ 198,155 $ 141,544 $ 139,618
-
-
18,833
46,950
17,074
2015
vs.
2014
2014
vs.
2013
-38%
-2%
NM
NM
-65%
-11%
21%
40%
-34%
0%
NM
NM
6%
16%
9%
1%
Class A share commissions decreased in fiscal 2015 and fiscal 2014, in both cases reflecting a decrease in
certain Class A sales on which we pay commissions. Class C share distribution fees also decreased in fiscal
2015 and fiscal 2014, reflecting declines in Class C share assets held more than one year. As noted above,
distribution expense for fiscal 2015 includes a one-time payment of $73.0 million to terminate certain closed-
end fund service and additional compensation arrangements with a distribution partner pursuant to which we
were obligated to make recurring payments over time based on the assets of the respective closed-end funds.
The absence of closed-end fund structuring fees in fiscal 2015 and fiscal 2014 reflects the fact that no closed-
end funds were offered during those fiscal years. Closed-end fund dealer compensation payments decreased in
fiscal 2015, reflecting the impact of the termination of the service and additional compensation arrangements
16310 annual_cc15.indd 37
37
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described above and increased in fiscal 2014, reflecting increases in closed-end fund assets under management.
The decrease in marketing support payments to our distribution partners in fiscal 2015 reflects lower average
assets subject to those arrangements. Intermediary marketing support payments increased in fiscal 2014 due
primarily to an increase in average assets subject to those arrangements. Discretionary marketing expenses
increased in fiscal 2015 and fiscal 2014, primarily reflecting an increase in the use of outside agencies in support
of marketing efforts related to NextShares and other strategic initiatives.
Service fee expense
Service fees we receive from sponsored funds are generally retained in the first year and paid to broker-dealers
thereafter pursuant to third-party selling agreements. These fees are calculated as a percent of average assets
under management in certain share classes of our mutual funds (principally Classes A, B, C, N and R), as well
as certain private funds. Service fee expense decreased by 9 percent in fiscal 2015, reflecting a decrease in
average fund assets retained more than one year in funds and share classes that are subject to service fees.
Service fee expense increased by 1 percent in fiscal 2014, reflecting modest increases in average assets retained
more than one year in funds and share classes that are subject to service fees.
Amortization of deferred sales commissions
Amortization expense is affected by ongoing sales and redemptions of mutual fund Class C shares and certain
private funds and redemptions of Class B shares. Amortization expense decreased 15 percent in fiscal 2015,
reflecting a decrease in average Class B shares and Class C shares deferred sales commissions, partially offset
by an increase in deferred sales commissions related to privately offered equity funds. In fiscal 2015, 8 percent
of total amortization expense related to Class B shares, 70 percent to Class C shares and 22 percent to privately
offered equity funds.
Amortization expense decreased 10 percent in fiscal 2014, reflecting a decrease in average Class B shares and
Class C shares deferred sales commissions, partially offset by an increase in deferred sales commissions related
to privately offered equity funds. In fiscal 2014, 9 percent of total amortization expense related to Class B
shares, 83 percent to Class C shares and 8 percent to privately offered equity funds.
Fund-related expenses
Fund-related expenses consist primarily of fees paid to sub-advisers, compliance costs and other fund-related
expenses we incur. Fund-related expenses increased 1 percent, or $0.5 million, in fiscal 2015, primarily
reflecting an increase in other fund-related expenses borne by the Company on funds in which it earns an all-in
fee, offset by decreases in sub-advisory expenses and fund subsidies.
Fund-related expenses increased 3 percent, or $1.2 million, in fiscal 2014, primarily reflecting an increase in
sub-advisory expenses associated with the use of unaffiliated sub-advisers on certain funds, offset by a decrease
other fund-related expenses.
Other expenses
Other expenses consist primarily of travel, professional services, information technology, facilities,
communications and other miscellaneous corporate expenses, including the amortization of intangible assets.
The following table shows our other expense for the fiscal years ended October 31, 2015, 2014 and 2013:
38
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(in thousands)
Information technology
Facilities-related
Travel
Professional services
Communications
Other corporate expense
Total
Years Ended October 31,
$
2015
67,834 $
40,771
16,360
13,854
5,272
19,522
2013
57,040
39,536
14,739
12,415
5,273
19,781
$ 163,613 $ 157,830 $ 148,784
2014
64,051 $
38,761
16,480
12,065
5,250
21,223
2015
vs.
2014
2014
vs.
2013
6%
5%
-1%
15%
0%
-8%
4%
12%
-2%
12%
-3%
0%
7%
6%
The increase in information technology expense in fiscal 2015 over fiscal 2014 can be primarily attributed to
increases in software maintenance fees, market data costs and project-related consulting associated with
budgeted technology projects. The increase in facilities-related expenses can be primarily attributed to an
increase in rent and depreciation expense. The decrease in travel expense relates to a decrease in travel activity.
The increase in professional services expense can be primarily attributed to an increase in corporate consulting
engagements (including engagements related to our NextShares initiative) and external legal costs. The decrease
in other corporate expenses reflects a decrease in other corporate taxes offset by increases in amortization of
intangible assets related to closing Fox Asset Management, and higher corporate membership and professional
development expenses.
The increase in information technology expense in fiscal 2014 over fiscal 2013 can be primarily attributed to
increases in software maintenance fees, market data costs and project-related consulting associated with
budgeted technology projects. The decrease in facilities-related expenses can be primarily attributed to lower
depreciation expense. The increase in travel expense relates to an increase in travel activity. The decrease in
professional services expense can be primarily attributed to a decrease in external legal costs. The increase in
other corporate expenses reflects an increase in amortization of acquisition-related intangible assets and
increases in charitable giving.
Non-operating Income (Expense)
The main categories of non-operating income (expense) for the fiscal years ended October 31, 2015, 2014 and
2013 are as follows:
(in thousands)
Gains (losses) and other investment
income, net
Interest expense
Loss on extinguishment of debt
Other income (expense) of
consolidated CLO entities:
Gains and other investment income, net
Interest and other expense
Total non-operating expense
Years Ended October 31,
2014
2013
2015
$
(31) $
1,139 $
(29,357)
-
(29,892)
-
(2,513)
(33,708)
(52,996)
5,092
(6,767)
(31,063) $
14,892
(14,847)
(28,708) $
14,815
(19,152)
(93,554)
$
2015
vs.
2014
2014
vs.
2013
NM
-2%
NM
-66%
-54%
8%
NM
-11%
NM
1%
-22%
-69%
39
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Gains (losses) and other investment income, net, declined by $1.2 million in fiscal 2015 compared to fiscal
2014, primarily reflecting increases in net investment and foreign currency losses of $2.2 million and $0.1
million, respectively, offset by an increase of $1.2 million in interest income earned. In fiscal 2015, we
recognized $9.2 million of net losses related to our seed capital investments and associated hedges, compared to
$6.9 million of net losses in fiscal 2014.
Gains (losses) and other investment income, net, improved by $3.7 million in fiscal 2014 compared to fiscal
2013, primarily reflecting an increase of $1.7 million in interest income earned, a $1.2 million decline in net
investment losses and a $0.8 million decline in foreign currency losses. In fiscal 2014 we recognized $6.9
million of net losses related to our seed capital investments and associated hedges, compared to $8.2 million of
net losses in fiscal 2013. Gains (losses) and other investment income, net, in fiscal 2013 reflect a loss of $3.1
million recognized on a reverse treasury lock entered into in conjunction with the retirement of the 2017 Senior
Notes.
Interest expense was substantially unchanged in fiscal 2015 compared to fiscal 2014. Interest expense decreased
$3.8 million in fiscal 2014, reflecting the retirement of $250 million of the 2017 Senior Notes and the
contemporaneous issuance of $325 million of the 2023 Senior Notes during the third quarter of fiscal 2013.
Loss on extinguishment of debt of $53.0 million in fiscal 2013 consisted of the tender premium associated with
the retirement of $250 million of the 2017 Senior Notes, acceleration of certain deferred financing costs and
discounts tied to the retired portion of the 2017 Senior Notes, and transaction costs associated with the debt
retirement.
Net losses of consolidated CLO entities were $1.7 million in fiscal 2015. Approximately $5.8 million of
consolidated CLO entities’ losses were included in net income attributable to non-controlling and other
beneficial interests during fiscal 2015, reflecting third-party note holders’ proportionate interests in the net
income (loss) of each consolidated CLO entity. Net income attributable to Eaton Vance Corp. shareholders
included $4.1 million of income associated with the consolidated CLO entities for fiscal 2015, representing
management fees earned by the Company offset by the Company’s proportionate interest in net losses of the
consolidated CLO entities.
Net losses of consolidated CLO entities were $0.3 million in fiscal 2014. Approximately $4.1 million of
consolidated CLO entities’ losses were included in net income attributable to non-controlling and other
beneficial interests during fiscal 2014, reflecting third-party note holders’ proportionate interests in the net
income (loss) of each consolidated CLO entity. Net income attributable to Eaton Vance Corp. shareholders
included $3.8 million of income associated with the consolidated CLO entities for fiscal 2014, representing
management fees earned by the Company offset by the Company’s proportionate interest in net losses of the
consolidated CLO entities.
Net losses of consolidated CLO entities totaled $4.7 million in fiscal 2013, representing $4.3 million of other
losses and $0.4 million of other operating expenses. Approximately $8.5 million of consolidated CLO entity net
losses were included in net income attributable to non-controlling and other beneficial interests, reflecting third-
party note holders’ proportionate interests in the net loss of each entity. Net income attributable to Eaton Vance
Corp. shareholders included $3.8 million of income associated with the consolidated CLO entities in fiscal 2013,
representing management fees earned by the Company offset by the Company’s proportionate interest in net
losses of the entities.
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Income Taxes
Our effective tax rate, calculated as income taxes as a percentage of income before income taxes and equity in
net income of affiliates, was 38.8 percent, 38.0 percent and 40.0 percent in fiscal 2015, 2014 and 2013,
respectively. During fiscal 2013, we reached a settlement with one state to resolve all matters relating to such
state’s audit of our fiscal years 2004 through 2009 for a lump sum payment of $19.6 million. The $19.6 million
payment resulted in a net increase to income tax expense of $6.7 million, equal to the amount of the payment
less previously recorded reserves of $9.3 million and a federal tax benefit on the increased state tax of $3.6
million. Excluding the effect of the consolidated CLO entities’ net income (loss) allocated to other beneficial
interest holders and the impact of the tax settlement, our effective tax rate would have been 38.2 percent, 37.7
percent and 37.3 percent in fiscal 2015, 2014 and 2013, respectively.
Our policy for accounting for income taxes includes monitoring our business activities and tax policies for
compliance with federal, state and foreign tax laws. In the ordinary course of business, various taxing authorities
may not agree with certain tax positions we have taken, or applicable law may not be clear. We periodically
review these tax positions and provide for and adjust as necessary estimated liabilities relating to such positions
as part of our overall tax provision.
Equity in Net Income of Affiliates, Net of Tax
Equity in net income of affiliates, net of tax, for fiscal 2015 primarily reflects our 49 percent equity interest in
Hexavest, our seven percent minority equity interest in a private equity partnership managed by a third party and
equity interests in certain funds we sponsor or manage. Equity in net income of affiliates, net of tax, was $12.0
million, $16.7 million and $14.9 million in fiscal 2015, 2014 and 2013, respectively.
The following table summarizes the components of equity in net income of affiliates, net of tax, for the fiscal
years ended October 31, 2015, 2014 and 2013:
(in thousands)
Investments in sponsored funds,
Years Ended October 31,
2015
2014
2013
2015
vs.
2014
2014
vs.
2013
net of tax
$
315 $
5,245 $
4,821
-94%
9%
Investment in private equity partnership,
net of tax
849
517
369
64%
40%
Investment in Hexavest, net of tax
and amortization
Total
10,857
9,679
$ 12,021 $ 16,725 $ 14,869
10,963
-1%
-28%
13%
12%
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Net Income Attributable to Non-controlling and Other Beneficial Interests
The following table summarizes the components of net income attributable to non-controlling and other
beneficial interests for the fiscal years ended October 31, 2015, 2014 and 2013:
(in thousands)
Consolidated sponsored funds
Majority-owned subsidiaries
Non-controlling interest value
adjustments(1)
Consolidated CLO entities
Net income attributable to non-controlling
and other beneficial interests
(1)
Relates to non-controlling interests redeemable at other than fair value.
Years Ended October 31,
2015
1,752 $
$
2014
318 $
(15,673)
(15,950)
2013
(4,095)
(16,620)
204
5,825
(5,311)
4,095
(24,320)
8,450
2015
vs.
2014
451%
-2%
NM
42%
2014
vs.
2013
NM
-4%
-78%
-52%
$
(7,892) $
(16,848) $
(36,585)
-53%
-54%
Net income attributable to non-controlling and other beneficial interests is not adjusted for taxes due to the
underlying tax status of our consolidated subsidiaries, which are treated as partnerships or other pass-through
entities for tax purposes. Funds and the CLO entities we consolidate are registered investment companies or
private funds that are treated as pass-through entities for tax purposes.
In fiscal 2014, increases in the estimated redemption value of non-controlling interests in Parametric Risk
Advisors and Atlanta Capital redeemable at other than fair value were $1.3 million and $4.0 million,
respectively.
In fiscal 2013, the increases in the estimated redemption value of non-controlling interests in Parametric,
Parametric Risk Advisors and Atlanta Capital redeemable at other than fair value were $10.9 million, $0.5
million and $12.9 million, respectively.
Changes in Financial Condition, Liquidity and Capital Resources
The assets and liabilities of our consolidated CLO entities do not affect our liquidity or capital resources. The
collateral assets of our consolidated CLO entities are held solely to satisfy the obligations of these entities and
we have no right to these assets beyond our direct investment in, and management fees generated from, these
entities. The note holders of these entities have no recourse to the general credit of the Company. As a result, the
assets and liabilities of our consolidated CLO entities are excluded from the discussion of liquidity and capital
resources below.
The following table summarizes certain key financial data relating to our liquidity and capital resources on
October 31, 2015, 2014 and 2013 and uses of cash for the years then ended:
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Balance Sheet and Cash Flow Data
(in thousands)
Balance sheet data:
Assets:
Cash and cash equivalents
Investment advisory fees and other receivables
Total liquid assets
Investments
Liabilities:
Debt
(in thousands)
Cash flow data:
Operating cash flows
Investing cash flows
Financing cash flows
Liquidity and Capital Resources
2015
October 31,
2014
2013
$
$
$
$
$
465,558
187,753
653,311
507,020
$
$
$
385,215
186,344
571,559
624,605
$
$
$
461,906
170,220
632,126
536,323
573,811
$
573,655
$
573,499
Years Ended October 31,
2014
2015
2013
219,867
84,266
(221,446)
$
98,785
185,460
(359,378)
$
116,367
177,028
(293,018)
Liquid assets consist of cash and cash equivalents and investment advisory fees and other receivables. Cash and
cash equivalents consist of cash and short-term, highly liquid investments that are readily convertible to cash.
Investment advisory fees and other receivables primarily represent receivables due from sponsored funds and
separately managed accounts for investment advisory and distribution services provided. Liquid assets
represented 40 percent and 34 percent of total assets on October 31, 2015 and 2014, respectively, excluding
those assets identified as assets of consolidated CLO entities. Not included in the liquid asset amounts are $77.4
million and $157.0 million of highly liquid short-term debt securities with remaining maturities between three
and 12 months held as of October 31, 2015 and 2014, respectively, which are included within investments on
our Consolidated Balance Sheets. Our seed investments in consolidated funds and separate accounts are not
treated as liquid assets because they may be longer term in nature.
The $81.8 million increase in liquid assets in fiscal 2015 primarily reflects net cash provided by operating
activities of $219.9 million, net proceeds from sales and purchases of available-for-sale securities of $59.4
million, proceeds from the issuance of Non-Voting Common Stock of $89.7 million in connection with the
exercise of employee stock options and other employee stock purchases, excess tax benefits of $10.0 million
associated with stock option exercises and $149.2 million from the investing and financing activities of
consolidated CLO entities, offset by the payment of $116.0 million of dividends to shareholders, the repurchase
of $283.4 million of Non-Voting Common Stock, the payment of $20.0 million to acquire additional interests in
Atlanta Capital and Parametric, a $9.1 million contingent payment related to the Company’s acquisition of the
Tax Advantaged Bond Strategies (“TABS”) business and the addition of $11.5 million in equipment and
leasehold improvements.
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The $60.6 million decrease in liquid assets in fiscal 2014 primarily reflects the payment of $105.9 million of
dividends to shareholders, the repurchase of $322.0 million of Non-Voting Common Stock and the payment of
$26.9 million to acquire additional interests in Atlanta Capital, offset by net cash provided by operating
activities of $98.8 million, net proceeds from sales and purchases of available-for-sale securities of $67.9
million, proceeds from the issuance of Non-Voting Common Stock of $88.2 million, excess tax benefits of
$18.6 million associated with stock option exercises and $118.5 million from the investing and financing
activities of consolidated CLO entities.
In fiscal 2013, we issued $325 million of 2023 Senior Notes. The proceeds of the issuance were used primarily
to purchase $250 million in aggregate principal amount of the 2017 Senior Notes. The Company paid $305.4
million to retire the 2017 Senior Notes, which included an early tender premium and accrued and unpaid
interest. Executing these transactions enabled us to stagger the maturities of our debt, with $250 million now
due in 2017 and $325 million due in 2023.
We also maintain a $300 million unsecured revolving credit facility with several banks that expires on October
21, 2019. The facility provides that we may borrow at LIBOR-based rates of interest that vary depending on the
level of usage of the facility and our credit ratings. The agreement contains financial covenants with respect to
leverage and interest coverage and requires us to pay an annual facility fee on any unused portion. We had no
borrowings under our revolving credit facility at October 31, 2015 or at any point during the fiscal year. We
were in compliance with all debt covenants as of October 31, 2015.
We continue to monitor our liquidity daily. We remain committed to growing our business and expect that our
main uses of cash will be paying dividends, acquiring shares of our Non-Voting Common Stock, making seed
investments in new products and strategic acquisitions, enhancing our technology infrastructure and paying the
operating expenses of our business, which are largely variable in nature and fluctuate with revenue and assets
under management. We believe that our existing liquid assets, cash flows from operations and borrowing
capacity under our existing credit facility are sufficient to meet our current and forecasted operating cash needs
for the next twelve months. The risk exists, however, that if we need to raise additional capital or refinance
existing debt in the future, resources may not be available to us in sufficient amounts or on acceptable terms.
Our ability to enter the capital markets in a timely manner depends on a number of factors, including the state of
global credit and equity markets, interest rates, credit spreads and our credit ratings. If we are unable to access
capital markets to issue new debt, refinance existing debt or sell shares of our Non-Voting Common Stock as
needed, or if we are unable to obtain such financing on acceptable terms, our business could be adversely
affected.
We have a “well-known seasoned issuer” shelf registration statement on Form S-3 on file with the U.S.
Securities and Exchange Commission (“SEC”) that registers an unspecified amount of Non-Voting Common
Stock, debt securities, depositary shares, warrants, stock purchase contracts and stock purchase units for future
issuance. We would expect to use the net proceeds of future securities sales under the shelf registration for
general corporate purposes.
Recoverability of our Investments
Our $507.0 million of investments as of October 31, 2015 consisted of our 49 percent equity interest in
Hexavest, positions in Company-sponsored funds and separate accounts entered into for investment and
business development purposes, and certain other investments held directly by the Company. Investments in
Company-sponsored funds and separate accounts and direct investments by the Company are generally in liquid
debt or equity securities and are carried at fair market value. We test our investments, other than equity method
investments, for impairment on a quarterly basis. We evaluate our investments in non-consolidated CLO
entities and investments classified as available-for-sale for impairment using quantitative factors, including how
long the investment has been in a net unrealized loss position, and qualitative factors, including the credit
44
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quality of the underlying issuer and our ability and intent to continue holding the investment. If markets
deteriorate in the quarters ahead, our assessment of impairment on a quantitative basis may lead us to impair
investments in future quarters that were in an unrealized loss position at October 31, 2015.
We test our investments in equity method investees, goodwill and indefinite-lived intangible assets in the fourth
quarter of each fiscal year, or as facts and circumstances indicate that additional analysis is warranted. There
have been no significant changes in financial condition in fiscal 2015 that would indicate that an impairment
loss exists at October 31, 2015.
We periodically review our deferred sales commissions and identifiable intangible assets for impairment as
events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.
There have been no significant changes in financial condition in fiscal 2015 that would indicate that an
impairment loss exists at October 31, 2015.
Operating Cash Flows
Our operating cash flows are calculated by adjusting net income to reflect other significant sources and uses of
cash, certain significant non-cash items and timing differences in the cash settlement of other assets and
liabilities. Significant sources and uses of cash that are not reflected in either revenue or operating expenses
include net cash flows associated with our deferred sales commission assets (capitalized sales commissions paid
net of contingent deferred sales charges received), as well as net cash flows associated with the purchase and
sale of investments within the portfolios of our consolidated sponsored funds and separate accounts (proceeds
received from the sale of trading investments net of cash outflows associated with the purchase of trading
investments). Significant non-cash items include the amortization of deferred sales commissions and intangible
assets, depreciation, stock-based compensation and net change in deferred income taxes.
Cash provided by operating activities totaled $219.9 million in fiscal 2015, an increase of $121.1 million from
$98.8 million in fiscal 2014. The increase in net cash provided by operating activities year-over-year primarily
reflects an increase in the net sales of trading securities and an increase in the timing differences in the cash
settlement of other assets and liabilities, offset by an increase in the net cash used in the operating activities of
our consolidated CLO entities.
Cash provided by operating activities totaled $98.8 million in fiscal 2014, a decrease of $17.6 million from
$116.4 million in fiscal 2013. The decrease in net cash provided by operating activities year-over-year primarily
reflects an increase in the net cash used in the operating activities of our consolidated CLO entities, partially
offset by an increase in deferred taxes and a decrease in the net purchase of trading securities.
Investing Cash Flows
Cash flows from investing activities consist primarily of the purchase of equipment and leasehold
improvements, cash paid in acquisitions and the purchase and sale of available-for-sale investments in
sponsored funds that we do not consolidate.
Cash provided by investing activities totaled $84.3 million in fiscal 2015 compared to $185.5 million in fiscal
2014. The decrease in cash provided by investing activities year-over-year can be primarily attributed to a $9.1
million payment to the sellers of the TABS business in fiscal 2015, offset by a decrease of $8.6 million in the
net proceeds from the sales and purchases of available-for-sale securities and a decrease of $79.6 million in the
net proceeds from the sales of consolidated CLO entities investments.
Cash provided by investing activities totaled $185.5 million in fiscal 2014 compared to $177.0 million in fiscal
2013. The increase in cash provided by investing activities year-over-year can be primarily attributed to a
16310 annual_cc15.indd 45
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decrease in cash utilized for acquisitions in fiscal 2014, offset by a decrease of $32.0 million in the net proceeds
from the sales and purchases of available-for-sale securities and a decrease of $45.0 million in the net proceeds
from the sales of consolidated CLO entity investments. Net cash paid in acquisitions in fiscal 2013 included
payments to the sellers of Clifton and TABS under the terms of the respective acquisition agreements of $72.3
million and $14.1 million, respectively.
Financing Cash Flows
Financing cash flows primarily reflect distributions to non-controlling interest holders of our majority-owned
subsidiaries and consolidated funds, the purchase of additional non-controlling interests in our majority-owned
subsidiaries, the issuance and repurchase of our Non-Voting Common Stock, excess tax benefits associated with
stock option exercises, the payment of dividends to our shareholders and the proceeds and payments associated
with the Company’s debt. Financing cash flows also include proceeds from the issuance of capital stock by
consolidated funds and cash paid to meet redemptions by non-controlling interest holders of these funds.
Cash used for financing activities totaled $221.4 million, $359.4 million and $293.0 million in fiscal 2015, 2014
and 2013, respectively. In fiscal 2015, we paid $20.0 million to acquire additional interests in Atlanta Capital
and Parametric, repurchased and retired approximately 7.4 million shares of our Non-Voting Common Stock for
$283.4 million under our authorized repurchase programs and issued 5.0 million shares of our Non-Voting
Common Stock in connection with the grant of restricted share awards, the exercise of stock options and other
employee stock purchases for total proceeds of $89.7 million. As of October 31, 2015, we have authorization to
purchase an additional 3.2 million shares under our current share repurchase authorization and anticipate that
future repurchases will continue to be an ongoing use of cash. Our dividends declared per share were $1.015 in
fiscal 2015, $0.91 in fiscal 2014 and $1.82 in fiscal 2013. Fiscal 2013 dividends included a one-time special
dividend of $1.00 per share declared and paid in December 2012. We currently expect to declare and pay
quarterly dividends on our Voting and Non-Voting Common Stock comparable to the dividend declared in the
fourth quarter of fiscal 2015.
In fiscal 2015, cash used for financing activities also included $381.5 million in principal payments made on
senior notes, lines of credit and redeemable preferred shares of consolidated CLO entities, as well as $485.2
million related to the proceeds from the line of credit and the issuance of new senior notes and redeemable
preferred shares of those entities. In fiscal 2014, cash used for financing activities included $436.2 million in
principal payments made on senior notes, lines of credit and redeemable preferred shares of consolidated CLO
entities, as well as $429.6 million related to the issuance of new senior notes and redeemable preferred shares of
those entities. In fiscal 2013, cash used for financing activities included $177.5 million in principal payments
made on senior notes of consolidated CLO entities.
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Contractual Obligations
The following table details our contractual obligations as of October 31, 2015:
(in millions)
Operating leases – facilities and equipment(1)
Senior notes
Interest payment on senior notes
Payments to non-controlling interest holders of
majority-owned subsidiaries
Investment in private equity partnership
Unrecognized tax benefits(2)
Payments due by period
Less
than 1
Year
1-3
4-5
Years
Years
21 $
43 $
43 $
-
28
10
-
1
250
40
-
1
2
-
24
-
-
-
More
than 5
Years
246
325
35
-
-
-
$
Total
353 $
575
127
10
1
3
Total
$ 1,069 $
60 $
336 $
67 $
606
Contractual obligations of consolidated CLO entity:
Senior and subordinated note obligations
Interest payments on senior and subordinated
$
409 $
-
$
-
$
-
$
409
note obligations
108
10
20
20
58
Total contractual obligations of consolidated
CLO entity
(1)
$
517 $
10 $
20 $
20 $
467
Minimum payments have not been reduced by minimum sublease rentals of $0.4 million to be received in the future under non-cancelable
subleases.
(2)
This amount includes unrecognized tax benefits along with accrued interest and penalties.
In July 2006, we committed to invest up to $15.0 million in a private equity partnership that invests in
companies in the financial services industry. We had invested $14.5 million of the maximum $15.0 million as of
October 31, 2015. The remaining commitment is included in the table above.
Interests held by non-controlling interest holders of Atlanta Capital and Parametric are not subject to mandatory
redemption. The purchase of non-controlling interests is predicated on the exercise of a series of puts held by
non-controlling interest holders and calls held by us. The puts provide the non-controlling interest holders the
right to require us to purchase these retained interests at specific intervals over time, while the calls provide us
with the right to require the non-controlling interest holders to sell their retained equity interests to us at
specified intervals over time, as well as upon the occurrence of certain events such as death or permanent
disability. As a result, there is significant uncertainty as to the timing of any non-controlling interest purchase in
the future. Non-controlling interests are redeemable at fair value or based on a multiple of earnings before
interest and taxes of the subsidiary, which is a measure that is intended to represent fair value. As a result, there
is significant uncertainty as to the amount of any non-controlling interest purchase in the future. Accordingly,
future payments to be made to purchase non-controlling interests have been excluded from the above table,
unless a put or call option has been exercised and a mandatory firm commitment exists for us to purchase such
non-controlling interests. Although the timing and amounts of these purchases cannot be predicted with
certainty, we anticipate that the purchase of non-controlling interests in our consolidated subsidiaries may be a
significant use of cash in future years.
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We have presented all redeemable non-controlling interests at redemption value on our Consolidated Balance
Sheet as of October 31, 2015. We have recorded the current year change in the estimated redemption value of
non-controlling interests redeemable at fair value as a component of additional paid-in capital and have recorded
the current year change in the estimated redemption value of non-controlling interests redeemable at other than
fair value (non-controlling interests redeemable based on a multiple of earnings before interest and taxes of the
subsidiary) as a component of net income attributable to non-controlling and other beneficial interests. Based on
our calculations, the estimated redemption value of our non-controlling interests, redeemable at either fair value
or other than fair value, totaled $88.9 million on October 31, 2015 compared to $107.5 million on October 31,
2014.
Redeemable non-controlling interests as of October 31, 2015 consisted of third-party investors’ ownership in
consolidated investment funds of $11.9 million, non-controlling interests in Parametric issued in conjunction
with the Clifton acquisition of $18.6 million, non-controlling interests in Parametric issued in conjunction with
the Parametric Risk Advisors final put option of $10.8 million and profit interests granted under the long-term
incentive plans of Parametric and Atlanta Capital of $28.5 million and $16.4 million, respectively, all of which
are redeemable at fair value. Redeemable non-controlling interests as of October 31, 2015 also included non-
controlling interests in Atlanta Capital redeemable at other than fair value of $2.7 million. Redeemable non-
controlling interests as of October 31, 2014 consisted of third-party investors’ ownership in consolidated
investment funds of $8.9 million, non-controlling interests in Parametric issued in conjunction with the Clifton
acquisition of $27.0 million, non-controlling interests in Parametric issued in conjunction with the Parametric
Risk Advisors final put option of $11.7 million, and redeemable interests in profit interests granted under the
long-term incentive plans of Parametric and Atlanta Capital of $33.6 million and $16.2 million, respectively, all
of which are redeemable at fair value. Redeemable non-controlling interests as of October 31, 2014 also
included non-controlling interests in Atlanta Capital redeemable at other than fair value of $10.0 million.
We have included in the table above $4.2 million related to Parametric employees’ exercises of put options
related to indirect profit interests granted under a long-term incentive plan that occurred in September 2015. We
have also included in the table above $5.9 million related to the execution of a put option by the non-controlling
interest holders of Atlanta Capital and Atlanta Capital employees’ exercises of put options related to indirect
profit interests granted under a long-term incentive plan, both of which occurred in September 2015 and settled
in December and November 2015, respectively.
Related to our acquisition of the TABS business in December 2008, we are obligated to make two additional
annual contingent payments based on prescribed multiples of TABS’s revenue for the twelve months ending
December 31, 2015 and 2016. There is no defined floor or ceiling on such payments, resulting in significant
uncertainty as to the amount of any payment in the future. Accordingly, future payments to be made have been
excluded from the above table.
We have the option to acquire an additional 26 percent interest in Hexavest in 2017. There is no defined floor or
ceiling related to this payment, resulting in significant uncertainty as to the amount of any payment in the future.
Accordingly, any future payment to be made has been excluded from the above table until such time as the
uncertainty has been resolved. Although the amounts of this payment cannot be predicted with certainty, we
anticipate that it may represent a significant use of cash in fiscal 2017.
In November 2010, we acquired patents and other intellectual property from Managed ETFs LLC, a developer
of intellectual property in the field of exchange-traded funds. This intellectual property is the foundation of the
Company’s NextShares™ exchange-traded managed funds initiative. The success of NextShares became
reasonably possible when, on December 2, 2014, the SEC issued the Company an exemption from certain
provisions of the Investment Company Act of 1940 to permit the offering of NextShares. The SEC subsequently
granted similar exemptive relief to 11 other fund advisers that have entered into preliminary licensing and
services agreements for NextShares.
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We expect to begin the staged introduction of the first Eaton Vance-sponsored NextShares funds in the first
calendar quarter of 2016. Broad market adoption and commercial success requires the development of expanded
distribution, the launch of NextShares by other fund sponsors and acceptance by market participants, which
cannot be assured.
The terms of the acquisition of the patents and other intellectual property of Managed ETFs LLC include
approximately $9.0 million in aggregate contingent milestone payments that are based on specific events
representing key developments in the commercialization of NextShares. There is no defined timing on these
payments, resulting in significant uncertainty as to when the amount of any payment is due in the future.
Accordingly, future payments to be made have been excluded from the above table until such time as the
uncertainty has been resolved. If and when the milestones are reached, Managed ETFs LLC is also entitled to
revenue-sharing payments that are calculated as a percentage of licensing revenue that we receive for use of the
acquired intellectual property.
Foreign Subsidiaries
We consider the undistributed earnings of certain of our foreign subsidiaries to be indefinitely reinvested in
foreign operations as of October 31, 2015. Accordingly, no U.S. income taxes have been provided thereon. As
of October 31, 2015, the Company had approximately $34.1 million of undistributed earnings in certain
Canadian, UK and Australian foreign subsidiaries that is not available to fund domestic operations or to
distribute to shareholders unless repatriated. Repatriation would require the Company to accrue and pay U.S.
corporate income taxes. The unrecognized deferred income tax liability on these un-repatriated funds, or
temporary difference, is estimated to be $4.0 million. The Company does not intend to repatriate these funds,
has not previously repatriated funds from these entities, and has the financial liquidity to permanently leave
these funds offshore.
Off-Balance Sheet Arrangements
We do not invest in any off-balance sheet vehicles that provide financing, liquidity, market or credit risk support
or engage in any leasing activities that expose us to any liability that is not reflected in our Consolidated
Financial Statements.
Critical Accounting Policies
We believe the following critical accounting policies reflect our accounting policies that require significant
judgments and estimates used in the preparation of our Consolidated Financial Statements. Actual results may
differ from these estimates.
Consolidation of Variable Interest Entities
Accounting guidance provides a framework for determining whether an entity should be considered a variable
interest entity (“VIE”), and, if so, whether our involvement with the entity results in a variable interest in the
entity. If we determine that we do have a variable interest in the entity, we must then perform an analysis to
determine whether we are the primary beneficiary of the VIE. If we determine that we are the primary
beneficiary of the VIE, we are required to consolidate the assets, liabilities, results of operations and cash flows
of the VIE into the Consolidated Financial Statements of the Company.
A company is the primary beneficiary of a VIE if it has a controlling financial interest in the VIE. A company is
deemed to have a controlling financial interest in a VIE if it has both (i) the power to direct the activities of the
VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb the losses
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of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could
potentially be significant to the VIE.
Our evaluation of whether we qualify as the primary beneficiary of a VIE is highly complex. In our analysis, we
must make significant estimates and assumptions regarding future cash flows of the VIE. These estimates and
assumptions relate primarily to market interest rates, credit default rates, pre-payment rates, discount rates, the
marketability of certain securities and the probability of certain outcomes. There is also judgment involved in
assessing whether we have the power to direct the activities that most significantly impact the VIE’s economic
performance and the obligation to absorb losses of, or the right to receive benefits from, the VIE that could
potentially be significant to the entity.
While we believe that our evaluation is appropriate, future changes in estimates, judgments, assumptions and/or
in the ownership interests of the Company in a VIE may affect the determination of the primary beneficiary
status and the resulting consolidation or de-consolidation of the assets, liabilities and results of operations of the
VIE in our Consolidated Financial Statements.
Fair Value Measurements
Accounting standards define fair value as the price that would be received for an asset or the exit price that
would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction
between market participants at the measurement date. The fair value hierarchy established in these standards
prioritizes the inputs to valuation techniques and gives the highest priority to quoted prices in active markets for
identical assets or liabilities and the lowest priority to unobservable inputs.
Assets and liabilities measured and reported at fair value are classified and disclosed in one of the following
categories based on the nature of the inputs that are significant to the fair value measurements in their entirety.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value measurement
hierarchy. In such cases, an investment’s classification within the fair value measurement hierarchy is based on
the lowest level of input that is significant to the fair value measurement.
Level 1
Level 2
Unadjusted quoted market prices in active markets for identical assets or liabilities at
the reporting date.
Observable inputs other than Level 1 unadjusted quoted market prices, such as quoted
market prices for similar assets or liabilities in active markets, quoted prices for
identical or similar assets or liabilities that are not active, and inputs other than quoted
prices that are observable or corroborated by observable market data.
Level 3
Unobservable inputs that are supported by little or no market activity.
Goodwill
Goodwill represents the excess of the cost of our investment in the net assets of acquired companies over the fair
value of the underlying identifiable net assets at the dates of acquisition. We attribute all goodwill associated
with the acquisitions of Atlanta Capital, Parametric and its wholly owned subsidiaries, which share similar
economic characteristics, to a single reporting unit. Management believes that the inclusion of these entities in a
single reporting unit for the purposes of goodwill impairment testing most accurately reflects the synergies
achieved in acquiring these entities, namely centralized distribution of similar products and services to similar
clients. We attribute all goodwill associated with the acquisition of TABS and other acquisitions to a second
reporting unit.
Goodwill is not amortized but is tested annually for impairment in the fourth quarter of each fiscal year by
comparing the fair value of the reporting units to the carrying amounts, including goodwill. We establish fair
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value for the purpose of impairment testing by averaging fair value established using an income approach and
fair value established using a market approach for each reporting unit.
The income approach employs a discounted cash flow model that takes into account (1) assumptions that
marketplace participants would use in their estimates of fair value, (2) current period actual results, and (3)
budget projections for future periods that have been vetted by senior management at the reporting unit level.
Budget projections for future periods are most significantly impacted by assumptions made as to the growth in
assets under management, future revenue run rates and future operating margins. The discounted cash flow
model incorporates the same fundamental pricing concepts used to calculate fair value in the acquisition due
diligence process and a discount rate that takes into consideration our estimated cost of capital adjusted for the
uncertainty inherent in the acquisition.
The market approach employs market multiples for comparable transactions in the financial services industry
obtained from industry sources, taking into consideration the nature, scope and size of the acquired reporting
unit. Estimates of fair value are established using a multiple of assets under management and current and
forward multiples of both revenue and earnings before interest, tax, depreciation and amortization (“EBITDA”)
adjusted for size and performance level relative to peer companies. A weighted average calculation is then
performed, giving greater weight to fair value calculated based on multiples of revenue and EBITDA and lesser
weight to fair value calculated as a multiple of assets under management. Fair values calculated using one-year
and two-year forward and trailing twelve-month revenue multiples, and one-year, two-year and trailing twelve-
month EBITDA multiples are each weighted 15 percent, while fair value calculated based on a multiple of assets
under management is weighted 10 percent. We believe that fair value calculated based on multiples of revenue
and EBITDA is a better indicator of fair value in that these fair values provide information as to both scale and
profitability.
To evaluate the sensitivity of the goodwill impairment testing to the calculation of fair value, we apply a
hypothetical 10 percent and 20 percent decrease to the fair value of each reporting unit. If the carrying amount
of the reporting unit exceeds its calculated fair value, the second step of the goodwill impairment test will be
performed to measure the amount of the impairment loss, if any.
Intangible Assets
Amortized identifiable intangible assets generally represent the cost of client relationships and management
contracts acquired. In valuing these assets, we make assumptions regarding useful lives and projected growth
rates, and significant judgment is required. We periodically review identifiable intangibles for impairment as
events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. If
the carrying amounts of the assets exceed their respective fair values, additional impairment tests are performed
to measure the amount of the impairment loss, if any.
Non-amortizing intangible assets generally represent the cost of mutual fund management contracts acquired.
Non-amortizing intangible assets are tested for impairment in the fourth quarter of each fiscal year by comparing
the fair value of the management contracts acquired to their carrying values. The Company establishes fair
value for purposes of impairment testing using the income approach. If the carrying value of a management
contract acquired exceeds its fair value, an impairment loss is recognized equal to that excess.
Accounting for Income Taxes
Our effective tax rate reflects the statutory tax rates of the many jurisdictions in which we operate. Significant
judgment is required in determining our effective tax rate and in evaluating our tax positions. In the ordinary
course of business, many transactions occur for which the ultimate tax outcome is uncertain, and we adjust our
income tax provision in the period in which we determine that actual outcomes will likely be different from our
estimates. Accounting standards require that the tax effects of a position be recognized only if it is more likely
than not to be sustained based solely on its technical merits as of the reporting date. The more-likely-than-not
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threshold must continue to be met in each reporting period to support continued recognition of a benefit.
Unrecognized tax benefits, as well as the related interest, are adjusted regularly to reflect changing facts and
circumstances. While we have considered future taxable income and ongoing tax planning in assessing our
taxes, changes in tax laws may result in a change to our tax position and effective tax rate. We classify any
interest or penalties incurred as a component of income tax expense.
Management is required to estimate the timing of the recognition of deferred tax assets and liabilities and to
make assumptions about the future deductibility of deferred tax assets. We assess whether a valuation
allowance should be established against our deferred tax assets based on consideration of all available evidence,
using a more-likely-than-not standard. This assessment takes into account our forecast of future profitability,
the duration of statutory carryback and carry-forward periods, our experience with the tax attributes expiring
unused, tax planning alternatives and other tax considerations.
Stock-Based Compensation
Stock-based compensation expense reflects the fair value of stock-based awards measured at grant date, is
recognized on a straight-line basis over the relevant service period (generally five years), and is adjusted each
period for anticipated forfeitures.
The fair value of option awards granted is estimated on the date of grant using the Black-Scholes option
valuation model. The Black-Scholes option valuation model incorporates assumptions as to dividend yield,
volatility, an appropriate risk-free interest rate and the expected life of the option. Many of these assumptions
require management’s judgment but are not subject to significant variability. Management must also apply
judgment in developing an expectation of awards that may be forfeited. If actual experience differs significantly
from these estimates, stock-based compensation expense and our results of operations could be materially
affected.
The fair value of profit interests granted under subsidiary long-term equity plans is estimated on the date of
grant by averaging fair value established using an income approach and fair value established using a market
approach for each subsidiary.
The income and fair value approaches used to establish fair value of subsidiary profit interests mirror those
described in our significant accounting policy for Goodwill as described above.
Non-controlling interests
Certain interests in our majority-owned subsidiaries are puttable at established multiples of earnings before
interest and taxes and, as such, are considered redeemable at other than fair value. The Company’s non-
controlling interests redeemable at other than fair value are recorded in temporary equity at estimated
redemption value and changes in estimated redemption value are recorded in earnings. As a result, net income
attributable to Eaton Vance Corp. shareholders and earnings per basic and diluted share are impacted by changes
in the estimated redemption values of such redeemable non-controlling interests.
Accounting Developments
Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity
In August 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update
(“ASU”) 2014-13, Measuring the Financial Assets and the Financial Liabilities of a Consolidated
Collateralized Financing Entity, which provides a measurement alternative for an entity that consolidates
collateralized financing entities (“CFE’s”). If elected, the alternative method results in the reporting entity
measuring both the financial assets and financial liabilities of the CFE using the more observable of the two fair
value measurements, which effectively removes measurement differences between the financial assets and
financial liabilities of the CFE previously recorded as net income (loss) attributable to non-controlling and other
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beneficial interests and as an adjustment to appropriated retained earnings. The reporting entity continues to
measure its own beneficial interests in the CFE (other than those that represent compensation for services) at fair
value. The new guidance is effective for the Company’s fiscal year that begins on November 1, 2016 and
requires either a retrospective or modified retrospective approach to adoption, with early adoption permitted.
The Company is currently evaluating the potential impact on its Consolidated Financial Statements and related
disclosures.
Consolidation
In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis, which amends
the consolidation requirements in Accounting Standards Codification (“ASC”) 810, Consolidation. Based on the
guidance provided in this ASU, all entities are now within the scope of ASC 810, unless a specific scope
exception applies. Additional amendments remove the presumption that a general partner controls a limited
partnership and place more emphasis on variable interests other than fee arrangements in the consolidation
evaluation of VIEs. This ASU also eliminates the deferral under ASU 2010-10 for certain investment funds. The
new guidance is effective for annual periods, and interim periods within those annual periods, for the
Company’s fiscal year that begins on November 1, 2016 and allows for either a full retrospective or a modified
retrospective adoption approach. Early adoption is allowed, but the guidance must be applied as of the beginning
of the annual period containing the adoption date. The Company is currently evaluating the potential impact on
its Consolidated Financial Statements and related disclosures.
Presentation of Debt Issuance Costs
In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which
changes the presentation of debt issuance costs in the balance sheet. The new guidance requires that debt
issuance costs be presented as a deduction from the carrying amount of the related debt rather than being
presented as an asset. Amortization of debt issuance costs will continue to be reported as interest expense. The
new guidance is effective for the Company’s fiscal year that begins on November 1, 2016 and requires
retrospective application for each prior period presented. Early adoption is permitted for financial statements
that have not been previously issued. The Company is currently evaluating the impact on its Consolidated
Financial Statements.
Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement
In April 2015, the FASB issued ASU 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing
Arrangement, which provides guidance about whether a cloud computing arrangement includes a software
license. The guidance does not change the current treatment for accounting for software licenses or service
contracts. The new guidance is effective for the Company’s fiscal year that begins on November 1, 2016. Early
adoption is permitted. The update allows for either prospective or retrospective adoption. The Company is
currently evaluating the available transition methods and the potential impact on its Consolidated Financial
Statements and related disclosures.
Revenue from Contracts with Customers
In August 2015, the FASB issued ASU 2015-14, Revenue From Contracts with Customers (Topic 606),
Deferral of the Effective Date, which defers the effective date of ASU 2014-09, Revenue from Contracts with
Customers (Topic 606) to November 1, 2018 for the Company, with early adoption permitted as of its original
effective date of November 1, 2017. The new guidance requires either a retrospective or a modified
retrospective approach to adoption. The Company is currently evaluating the available transition methods and
the potential impact on its Consolidated Financial Statements and related disclosures.
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Quantitative and Qualitative Disclosures About Market Risk
In the normal course of business, our financial position is subject to different types of risk, including market
risk. Market risk is the risk that we will incur losses due to adverse changes in equity and bond prices, interest
rates, credit events or currency exchange rates. Management is responsible for identifying, assessing and
managing market and other risks.
In evaluating market risk, it is important to note that most of our revenue is based on the market value of assets
under management. As noted in “Risk Factors” in this Annual Report, declines of financial market values
negatively impact our revenue and net income.
Our primary direct exposure to equity price risk arises from investments in equity securities made by
consolidated sponsored funds, investments in equity securities held in separately managed accounts seeded for
new product development purposes and our investments in sponsored equity funds that are not consolidated.
Equity price risk as it relates to these investments represents the potential future loss of value that would result
from a decline in the fair values of the fund shares or underlying equity securities.
The following is a summary of the effect that a 10 percent increase or decrease in equity prices would have on
our investments subject to equity price fluctuations at October 31, 2015:
(in thousands)
Investment securities, trading:
Consolidated sponsored funds and
separately managed accounts
Investment securities, available-for-sale:
Sponsored funds
Total
Carrying
Value
Assuming
a 10%
Increase
Carrying
Value
Assuming
a 10%
Decrease
Carrying
Value
$ 116,295 $
127,925 $
104,666
15,306
$ 131,601 $
16,837
144,762 $
13,775
118,441
At October 31, 2015, we were exposed to interest rate risk and credit spread risk as a result of approximately
$224.1 million in investments in fixed and floating-rate income funds sponsored or managed by us, debt
securities held by sponsored funds we consolidate, debt securities held in separately managed accounts seeded
for new product development purposes and short-term debt securities held directly by us. Management
considered a hypothetical 100 basis point change in interest rates and determined that an increase of such
magnitude would result in a decrease of approximately $2.2 million in the carrying amount of our debt
investments and that a decrease of 100 basis points would increase the carrying amount of such investments by
approximately $2.2 million.
Currently we have a corporate hedging program in place to hedge currency risk, interest rate risk and market
price exposures on certain investments in consolidated sponsored funds and separately managed accounts
seeded for new product development purposes. As part of this program, we enter into forwards, futures and
swap contracts to hedge certain exposures held within the portfolios of these consolidated sponsored funds and
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separately managed accounts. The contracts negotiated are short term in nature. We do not enter into derivative
instruments for speculative purposes.
At October 31, 2015, we had outstanding foreign currency forward contracts, stock index futures contracts,
commodity futures contracts and total return swap contracts with aggregate notional values of approximately
$27.2 million, $97.2 million, $3.1 million and $49.5 million, respectively. We estimate that a 10 percent
adverse change in market prices would result in a decrease of approximately $41,000, $0.5 million, $7,000 and
$13,000, respectively, in the fair value of open currency, equity, commodity and swap derivative contracts held
at October 31, 2015.
In addition to utilizing forwards, futures and swap contracts, we have also entered into transactions in which securities not
yet purchased have been sold. In our short sales, we have sold securities that have been borrowed from third-party brokers
with the intention of buying back identical assets at a later date to return to the lender, thereby incurring a liability. As of
October 31, 2015, we had $3.0 million included in other liabilities on our Consolidated Balance Sheets related to securities
sold, not yet purchased. We estimate that a 10 percent adverse change in market prices would result in a decrease of
approximately $0.3 million in the value of these securities.
We are required to maintain cash collateral for margin accounts established to support certain derivative positions
and securities sold short, not yet purchased. Our initial margin requirements are currently equal to five percent of the
initial underlying value of the stock index futures contracts and commodity futures contracts. Additional margin
requirements include daily posting of variation margin equal to the daily change in the position value and up to 150
percent of the underlying value of securities sold, not yet purchased. We do not have a collateral requirement related
to foreign currency forward contracts or total return swap contracts. Cash collateral supporting margin requirements
is classified as restricted cash and is included as a component of other assets on our Consolidated Balance Sheets.
At October 31, 2015, cash collateral included in other assets on our Consolidated Balance Sheets totaled $13.1
million.
Direct exposure to credit risk arises from our interest in non-consolidated CLO entities that are included in
investments in our Consolidated Balance Sheets, as well as our interests in consolidated CLO entities that are
eliminated in consolidation. Our CLO entity investments entitle us only to a residual interest in the CLO entity,
making these investments highly sensitive to the default and recovery experiences of the underlying instruments
held by the CLO entity. Our CLO investments are subject to an impairment loss in the event that the cash flows
generated by the collateral securities are not sufficient to allow equity holders to recover their investments. If
there is deterioration in the credit quality of collateral and reference securities and a corresponding increase in
defaults, CLO entity cash flows may be adversely impacted and we may be unable to recover our investment.
Our total investments in non-consolidated and consolidated CLO entities were $4.4 million and $4.6 million,
respectively, as of October 31, 2015, representing our total value at risk with respect to such entities as of
October 31, 2015.
We are subject to foreign currency exchange risk through our international operations. While we operate primarily
in the United States and, accordingly, most of our consolidated revenue and associated expenses are denominated in
U.S. dollars, we also provide services and earn revenue outside of the United States. Revenue and expenses
denominated in foreign currencies may be impacted by movements in foreign currency exchange rates. The
exposure to foreign currency exchange risk in our Consolidated Balance Sheets relates primarily to an equity
method investment and cash and cash equivalents that are denominated in foreign currencies, principally Canadian
dollars. This risk will likely increase as our business outside of the United States grows. We generally do not use
derivative financial instruments to manage the foreign currency exchange risk exposure we assume in connection
with investments in international operations. As a result, both positive and negative currency fluctuations against the
U.S. dollar may affect our results of operations and accumulated other comprehensive income (loss). We do not
enter into foreign currency transactions for speculative purposes.
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Risk Factors
We are subject to substantial competition in all aspects of our investment management business. Our funds
and separate accounts compete against a large number of investment products and services sold to the public by
investment management companies, investment dealers, banks, insurance companies and others. Many
institutions we compete with have greater financial resources than us and there are few barriers to entry. We
compete with these firms on the basis of investment performance, diversity of products, distribution capability,
scope and quality of services, reputation and the ability to develop new investment strategies and products to
meet the changing needs of investors. To the extent that current or potential customers decide to invest in
products sponsored by our competitors, the sales of our products as well as our market share, revenue and net
income could decline.
The investment management industry is highly competitive and investment management customers are
increasingly fee sensitive. In the event that competitors charge lower fees for substantially similar products, we
may be forced to compete on the basis of price in order to attract and retain customers. Rules and regulations
applicable to registered investment companies provide, in substance, that each investment advisory agreement
between a fund and its investment adviser continues in effect from year to year only if its continuation is
approved at least annually by the fund’s board of trustees. Periodic review of fund advisory agreements could
result in a reduction in the Company’s advisory fee revenues from funds. Fee reductions on existing or future
business and/or the impact of evolving industry fee structures could have an adverse impact on our future
revenue and profitability.
The inability to access clients through intermediaries could have a material adverse effect on our business.
Our ability to market investment products is highly dependent on access to the various distribution systems of
national and regional securities dealer firms, which generally offer competing products that could limit the
distribution of our investment products. There can be no assurance that we will be able to retain access to these
intermediaries. The inability to have such access could have a material adverse effect on our business. To the
extent that existing or potential customers, including securities broker-dealers, decide to invest in or broaden
distribution relationships with our competitors, the sales of our products as well as our market share, revenue
and net income could decline. Certain intermediaries with which we conduct business charge the Company fees
to maintain access to their distribution networks. If we choose not to pay such fees, our ability to distribute
through those intermediaries would be limited.
Our investment advisory agreements are subject to termination on short notice or non-renewal. We derive
almost all of our revenue from investment advisory and administrative fees, distribution income and service fees
received from managed funds and separate accounts. As a result, we are dependent upon management contracts,
administrative contracts, distribution contracts, underwriting contracts or service contracts under which these
fees are paid. Generally, these contracts are terminable upon 30 to 60 days’ notice without penalty. If any of
these contracts are terminated, not renewed, or amended to reduce fees, our financial results could be adversely
affected.
Our assets under management, which impact revenue, are subject to significant fluctuations. Our major
sources of revenue, including investment advisory, administrative, distribution and service fees, are generally
calculated as percentages of assets under management. Fee rates for our investment products generally vary by
investment mandate (e.g., equity, fixed income, floating-rate income, alternative, portfolio implementation or
exposure management services) and vehicle (e.g., fund or separate account). An adverse change in asset mix by
mandate or vehicle, independent of our level of assets under management, may result in a decrease in our overall
effective fee rate, thereby reducing our revenue and net income. Any decrease in the level of our assets under
management generally would also reduce our revenue and net income. Assets under management could
decrease due to, among other things, a decline in securities prices, a decline in the sales of our investment
products, an increase in open-end fund redemptions or client withdrawals, repurchases of or other reductions in
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closed-end fund shares outstanding, or reductions in leverage used by investment vehicles. Adverse market
conditions and/or lack of investor confidence in the financial markets could lead to a decrease in investor risk
tolerance. A decrease in investor risk tolerance could result in investors withdrawing from markets or
decreasing their rate of investment, thereby reducing our overall assets under management and adversely
affecting our revenue, earnings and growth prospects. Changes in investor risk tolerance could also result in
investor allocation away from higher fee products to lower fee products, which could adversely affect our
revenue and earnings. Our overall assets under management may not change in tandem with overall market
conditions, as changes in our total assets under management may lag improvements or declines in the market
based upon product mix and investment performance.
Poor investment performance of our products could affect our sales or reduce the amount of assets under
management, negatively impacting revenue and net income. Investment performance is critical to our success.
Poor investment performance on an absolute basis or as compared to third-party benchmarks or competitor
products could lead to a decrease in sales and stimulate higher redemptions, thereby lowering the amount of
assets under management and reducing the investment advisory fees we earn. A decline in investment
performance of any investment franchise could have a material adverse effect on the level of assets under
management, revenue and net income of that franchise. Past or present performance in the investment products
we manage is not indicative of future performance.
Our clients can withdraw the assets we manage on short notice, making our future client and revenue base
unpredictable. Our open-end fund clients generally may redeem their investments in these funds each business
day without prior notice. While not subject to daily redemption, closed-end funds that we manage may shrink in
size due to repurchases of shares in open-market transactions or pursuant to tender offers, or in connection with
distributions in excess of realized returns. Institutional and individual separate account clients can terminate
their relationships with us generally at any time. In a declining stock market, the pace of open-end fund
redemptions could accelerate. Poor performance relative to other asset management firms can result in
decreased purchases of open-end fund shares, increased redemptions of open-end fund shares, and the loss of
institutional or individual separate accounts. The decrease in revenue that could result from any of these events
could have a material adverse effect on our business.
We could be impacted by counterparty or client defaults. As we have seen in periods of significant market
volatility, the deteriorating financial condition of one financial institution may materially and adversely impact
the performance of others. We, and the funds and accounts we manage, have exposure to many different
counterparties, and routinely execute transactions with counterparties across the financial industry. We, and the
funds and accounts we manage, may be exposed to credit, operational or other risk in the event of a default by a
counterparty or client, or in the event of other unrelated systemic market failures.
Our success depends on key personnel and our financial performance could be negatively affected by the loss
of their services. Our success depends upon our ability to attract, retain and motivate qualified portfolio
managers, analysts, investment counselors, sales and management personnel and other key professionals,
including our executive officers. Our key employees generally do not have employment contracts and may
voluntarily terminate their employment at any time. Certain senior executives and the non-employee members
of our Board of Directors are subject to our mandatory retirement policy at age 65 and age 72, respectively. The
loss of the services of key personnel or our failure to attract replacement or additional qualified personnel could
negatively affect our financial performance. An increase in compensation to attract or retain personnel could
result in a decrease in net income.
Our expenses are subject to fluctuations that could materially affect our operating results. Our results of
operations are dependent on the level of expenses, which can vary significantly from period to period. Our
expenses may fluctuate as a result of, among other things, variations in the level of compensation, expenses
incurred to support distribution of our investment products, expenses incurred to develop new products and
16310 annual_cc15.indd 57
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franchises, expenses incurred to enhance our infrastructure (including technology and compliance) and
impairments of intangible assets or goodwill. Increases in our level of expenses, or our inability to reduce our
level of expenses when necessary, could materially affect our operating results.
Our business is subject to operational risk. In the management and administration of funds and client accounts,
we are subject to the risk that we commit errors that cause the Company to incur financial losses and damage
our reputation. Because they involve large numbers of accounts and operate at generally low fee rates, our
portfolio implementation and exposure management services businesses may be particularly susceptible to
losses from operational or trading errors.
Our reputation could be damaged. We have built a reputation of high integrity, prudent investment
management and superior client service. Our reputation is extremely important to our success. Any damage to
our reputation could result in client withdrawals from funds or separate accounts that are advised by us and
ultimately impede our ability to attract and retain key personnel. The loss of either client relationships or key
personnel due to damage to our reputation could reduce the amount of assets under management and cause us to
suffer a loss in revenue or a reduction in net income.
Success of our NextShares initiative is highly uncertain. In recent years, the Company has devoted substantial
resources to the development of NextShares exchange-traded managed funds, a new type of actively managed
fund designed to provide better performance for investors. The Company made significant progress advancing
its NextShares initiative in fiscal 2015 and expects to begin the staged introduction of the initial NextShares
funds in the first calendar quarter of 2016. Broad market adoption and commercial success requires the
development of expanded distribution, the launch of NextShares by other fund sponsors and acceptance by
market participants, which cannot be assured.
Support provided to new products may reduce fee income, increase expenses and expose us to potential loss
on invested capital. We may support the development of new investment products by waiving all or a portion
of the fees we receive for managing such products, by subsidizing expenses or by making seed capital
investments. Seed investments in new products utilize Company capital that would otherwise be available for
general corporate purposes and expose us to capital losses to the extent that realized investment losses are not
offset by hedging gains. The risk of loss may be greater for seed capital investments that are not hedged, or if an
intended hedge does not perform as expected. Failure to have or devote sufficient capital to support new
products could have an adverse impact on our future growth.
We may need to raise additional capital or refinance existing debt in the future, and resources may not be
available to us in sufficient amounts or on acceptable terms. Significant future demands on our capital include
contractual obligations to service our debt, satisfy the terms of non-cancelable operating leases and purchase
non-controlling interests in our majority-owned subsidiaries as described more fully in Contractual Obligations
in Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Annual
Report and in Note 10 in this Annual Report. Although we believe our existing cash flows from operations will
be sufficient to meet our future capital needs, our ability to satisfy our long-term contractual obligations may be
dependent on our ability to access capital markets. Our ability to access capital markets efficiently depends on a
number of factors, including the state of global credit and equity markets, interest rates, credit spreads and our
credit ratings. If we are unable to access capital markets to issue new debt, refinance existing debt or sell shares
of our Non-Voting Common Stock as needed, or if we are unable to obtain such financing on acceptable terms,
our business could be adversely impacted.
We could be subject to losses and reputational harm if we, or our agents, fail to properly safeguard sensitive
and confidential information or as a result of cyber attacks. We are dependent on the effectiveness of our
information and cyber security policies, procedures and capabilities to protect our computer and
telecommunications systems and the data that resides in or is transmitted through such systems. As part of our
normal operations, we maintain and transmit confidential information about our clients and employees as well as
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proprietary information relating to our business operations. We maintain a system of internal controls designed
to provide reasonable assurance that fraudulent activity, including misappropriation of assets, fraudulent
financial reporting and unauthorized access to sensitive or confidential data, is either prevented or detected on a
timely basis. Nevertheless, all technology systems remain vulnerable to unauthorized access and may be
corrupted by cyber attacks, computer viruses or other malicious software code, the nature of which threats are
constantly evolving and becoming increasingly sophisticated. In addition, authorized persons could
inadvertently or intentionally release confidential or proprietary information. Although we take precautions to
password protect and encrypt our mobile electronic hardware, if such hardware is stolen, misplaced or left
unattended, it may become vulnerable to hacking or other unauthorized use, creating a possible security risk and
resulting in potentially costly actions by us. Breach or other failure of our technology systems, including those
of third parties with which we do business, or failure to timely and effectively identify and respond to any such
breach or failure, could result in the loss of valuable information, liability for stolen assets or information,
remediation costs to repair damage caused by the incident, additional security costs to mitigate against future
incidents and litigation costs resulting from the incident. Moreover, loss of confidential customer identification
information could harm our reputation, result in the termination of contracts by our existing customers and
subject us to liability under laws that protect confidential personal data, resulting in increased costs or loss of
revenues. Recent well-publicized security breaches at other companies have led to enhanced government and
regulatory scrutiny of the measures taken by companies to protect against cyber attacks, and may in the future
result in heightened cyber security requirements, including additional regulatory expectations for oversight of
vendors and service providers.
Failure to maintain adequate infrastructure could impede our productivity and ability to support business
growth. Our infrastructure, including our technological capacity, data centers and office space, is vital to the
operations and competitiveness of our business. The failure to maintain an infrastructure commensurate with the
size and scope of our business, including any expansion, could impede our productivity and growth, which
could result in a decline in our earnings.
Failure to maintain adequate business continuity plans could have a material adverse impact on us and our
products. Significant portions of our business operations and those of our critical third-party service providers
are concentrated in a few geographic areas, including Boston, Massachusetts and Seattle, Washington. Critical
operations that are geographically concentrated in Boston and/or Seattle include trading operations, information
technology, fund administration, and custody and portfolio accounting services for the Company’s products.
Should we, or any of our critical service providers, experience a significant local or regional disaster or other
business continuity problem, our continued success will depend in part on the safety and availability of our
personnel, our office facilities, and the proper functioning of our computer, telecommunication and other related
systems and operations. The failure by us, or any of our critical service providers, to maintain updated adequate
business continuity plans, including backup facilities, could impede our ability to operate in the event of a
disruption, which could cause our earnings to decline. We have developed various backup systems and
contingency plans but we cannot be assured that they will be adequate in all circumstances that could arise or
that material interruptions and disruptions will not occur. In addition, we rely to varying degrees on outside
vendors for disaster contingency support, and we cannot be assured that these vendors will be able to perform in
an adequate and timely manner. If we, or any of our critical service providers, are unable to respond adequately
to such an event in a timely manner, we may be unable to continue our business operations, which could lead to
a damaged reputation and loss of customers that results in a decrease in assets under management, lower
revenues and reduced net income.
We pursue growth in the United States and abroad in part through acquisitions, which exposes us to risks
inherent in assimilating new operations, expanding into new jurisdictions and executing on new development
opportunities. Our growth strategy is based in part on the selective development or acquisition of asset
management or related businesses that we believe will add value to our business and generate positive net
returns. This strategy may not be effective, and failure to successfully develop and implement such a strategy
may decrease earnings and harm the Company’s competitive position in the investment management industry.
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We cannot guarantee that we will identify and consummate any such transactions on acceptable terms or have
sufficient resources to accomplish such a strategy. In addition, any strategic transaction can involve a number of
risks, including additional demands on our staff; unanticipated problems regarding integration of operating
facilities, technologies and new employees; and the existence of liabilities or contingencies not disclosed to or
otherwise known by us prior to closing a transaction. As a result, the Company may not be able to realize all of
the benefits that it hoped to achieve from such transactions. In addition, we may be required to spend additional
time or money on integration that would otherwise be spent on the development and expansion of our business
and services.
Expansion into international markets and the introduction of new products and/or services increases our
operational, regulatory and other risks. We continue to increase our product offerings and international
business activities. As a result of such expansion, we face increased operational, regulatory, compliance and
reputational risks. The failure of our compliance and internal control systems to properly mitigate such
additional risks, or of our operating infrastructure to support such expansion, could result in operational failures
and regulatory fines or sanctions. Our operations in the United Kingdom, the European Economic Area,
Australia and Singapore are subject to significant compliance, disclosure and other obligations. We incur
additional costs to satisfy the requirements of the European Union Directive on Undertakings for Collective
Investments in Transferable Securities and the Alternative Investment Fund Managers Directive (together, the
“Directives”). The Directives may also limit our operating flexibility and impact our ability to expand in
European markets. Activity in international markets also exposes us to fluctuations in currency exchange rates,
which may adversely affect the U.S. dollar value of revenues, expenses and assets associated with our business
activities outside the United States. Actual and anticipated changes in current exchange rates may also adversely
affect international demand for our investment products and services, most of which represent investments
primarily in U.S. dollar-based assets. Because many of our costs to support international business activities are
based in U.S. dollars, the profitability of such activities may be adversely affected by a weakening of the U.S.
dollar versus other currencies in which we derive significant revenues.
Legal and regulatory developments affecting the investment industry could increase our regulatory costs
and/or reduce our revenues. Our business is subject to complex and extensive regulation by various regulatory
authorities in jurisdictions around the world. This regulatory environment may be altered without notice by new
laws or regulations, revisions to existing regulations or new interpretations or guidance. Global financial
regulatory reform initiatives are likely to result in more stringent regulation, and changes in laws or regulations
and their application to us could have a material adverse impact on our business, our profitability and mode of
operations. In recent years, regulators in both the United States and abroad have increased oversight of the
financial sector of the economy. Some of the newly adopted and proposed regulations are focused directly on
the investment management industry, while others are more broadly focused, but impact our industry.
In July 2010, the Dodd-Frank Act was signed into law. The Dodd-Frank Act established enhanced regulatory
requirements for non-bank financial institutions designated as “systemically important” by the FSOC. Under a
final rule and interpretive guidance issued by FSOC in April 2012, certain non-bank financial companies have
been designated as SIFIs. Additional non-bank financial companies, which may include large asset management
companies such as us, may be designated as SIFIs in the future. If we are designated a SIFI, we would be
subject to enhanced prudential measures, which could include capital and liquidity requirements, leverage limits,
enhanced public disclosures and risk management requirements, annual stress testing by the Federal Reserve,
credit exposure and concentration limits, supervisory and other requirements. These heightened regulatory
obligations could, individually or in the aggregate, adversely impact our business and operations.
In February 2012, the CFTC adopted certain amendments to existing rules that required additional registrations
in connection with the operation of our mutual funds and certain other products we sponsor that use futures,
swaps or other derivatives. Eaton Vance Management, BMR and Parametric are registered with the CFTC and
the NFA as Commodity Pool Operators and Commodity Trading Advisors and other subsidiaries of the
Company claim exemptions from registration. We may incur ongoing costs associated with monitoring
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compliance with applicable CFTC and NFA requirements, including registration and exemption obligations and
the periodic reporting requirements of Commodity Pool Operators and Commodity Trading Advisors.
Pursuant to the mandate of the Dodd-Frank Act, the CFTC and the SEC have promulgated rules that increase the
regulation of over-the-counter derivatives markets. The regulations require many types of derivatives that were
previously traded over-the-counter to be executed in regulated markets and submitted for clearing to regulated
clearinghouses. Complying with the new regulations may significantly increase the costs of derivatives trading
on behalf of our clients. The Dodd-Frank Act also expanded the CFTC’s authority to limit the maximum long
or short position that any person may take in futures contracts, options on futures contracts and certain swaps.
Final rules implementing this authority may be adopted by the CFTC that could require all accounts owned or
managed by Commodity Trading Advisors like Eaton Vance Management or BMR to be aggregated towards
such “speculative position limits.” Complying with these rules may negatively affect the Company’s financial
condition or performance by requiring changes to existing strategies or preventing an investment strategy from
being fully implemented.
Certain of our subsidiaries are required to file quarterly reports on Form PF for private funds they manage,
pursuant to systemic risk reporting requirements adopted by the SEC. These filings have required, and will
continue to require, significant investments in people and systems to ensure timely and accurate reporting. In
addition, proposals by the SEC in 2015 to revise Form ADV and establish Form N-PORT, which would require
mutual funds to report information about their monthly portfolio holdings to the SEC in a structured data format,
would impose further reporting obligations on us and the funds we manage, if adopted.
In October 2014, the SEC, the Federal Deposit Insurance Corporation, the Federal Reserve and certain other
federal regulators finalized regulations that mandate risk retention for securitizations. The rules are effective for
securitization transactions collateralized by residential mortgages beginning on December 24, 2015, and for all
other securitization transactions beginning on December 24, 2016. Under the final rules, the Company may be
required to hold interests equal to 5 percent of the credit risk of the assets of any new CLO entities that we
manage (unless the CLO entity invests only in certain qualifying loans) and would be prohibited from selling or
hedging those interests in accordance with the limitations on such sales or hedges set forth in the final rule. The
new mandatory risk retention requirement for CLO entities may result in the Company having to invest money
to launch new CLO entities that would otherwise be available for other uses. Such investments would also
subject the Company to exposure to the underlying performance of the assets of the CLO entities and could have
an adverse impact on our results of operations or financial condition.
In 2015, the U.S. Department of Labor re-proposed regulations seeking to change the definition of who is an
investment advice fiduciary under the Employee Retirement Income Security Act of 1974 (“ERISA”) and how
advice can be provided to retirement account holders in 401(k) plans, individual retirement accounts and other
qualified retirement programs. If the regulations are issued with provisions substantially similar to those of the
current draft, they could materially impact the provision of investment services to retirement accounts, which
could negatively effect our results of operations. In late 2015, the SEC proposed new rules addressing liquidity
risk management by registered open-end funds and the use of derivatives by registered open-end and closed-end
funds. If adopted, these rules could limit investment opportunities for certain funds we manage and increase our
management and administration costs, with potential adverse effects on our revenues, expenses and results of
operations.
All of these new and developing laws and regulations will likely result in greater compliance and administrative
burdens on us, increasing our expenses.
Our business is subject to risk from regulatory investigation, potential securities laws, liability and
litigation. We are subject to federal securities laws, state laws regarding securities fraud, other federal and state
laws and rules, and regulations of certain regulatory, self-regulatory and other organizations, including, among
others, the SEC, FINRA, the CFTC, the NFA, the FCA and the New York Stock Exchange. While we have
focused significant attention and resources on the development and implementation of compliance policies,
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procedures and practices, non-compliance with applicable laws, rules or regulations, either in the United States
or abroad, or our inability to adapt to a complex and ever-changing regulatory environment could result in
sanctions against us, which could adversely affect our reputation, business, revenue and earnings. From time to
time, various claims against us arise in the ordinary course of business, including employment related claims.
We carry insurance in amounts and under terms that we believe are appropriate. We cannot guarantee that our
insurance will cover most liabilities and losses to which we may be exposed, or that our insurance policies will
continue to be available at acceptable terms and fees. Certain insurance coverage may not be available or may
be prohibitively expensive in future periods. As our insurance policies come up for renewal, we may need to
assume higher deductibles or pay higher premiums, which would increase our expenses and reduce our net
income.
Changes in corporate tax laws or exposure to additional income tax liabilities could have a material impact
on our financial condition, results of operations and/or liquidity. Tax authorities may disagree with certain
positions we have taken and assess additional taxes. We regularly assess the likely outcomes of these audits in
order to determine the appropriateness of our tax provision. However, there can be no assurance that we will
accurately predict the outcomes of these audits, and the actual outcomes of these audits could have a material
impact on our financial statements. We are subject to ongoing tax audits in various jurisdictions, including
several states. Changes in tax laws or tax rulings could materially impact our effective tax rate.
We could be impacted by changes in tax policy. Changes in U.S. tax policy may affect us to a greater degree
than many of our competitors because we manage significant assets in funds and separate accounts with an
after-tax return objective. We believe an increase in overall tax rates would likely have a positive impact on our
municipal income and tax-managed equity businesses. An increase in the tax rate on qualified dividends could
have a negative impact on our tax-advantaged equity income business. Changes in tax policy could also
adversely affect our privately offered equity funds.
Our Non-Voting Common Stock lacks voting rights. Our Non-Voting Common Stock has no voting rights
under any circumstances. All voting power resides with our Voting Common Stock, all shares of which are held
by officers of the Company and our subsidiaries and deposited in a voting trust (the “Voting Trust”) in exchange
for Voting Trust Receipts. As of October 31, 2015, there were 21 holders of Voting Trust Receipts representing
Voting Common Stock, each holder of which is a Voting Trustee of the Voting Trust. Holders of Non-Voting
Common Stock should understand that such ownership interests have no ability to vote in the election of the
Company’s Board of Directors or otherwise to influence the Company’s management and strategic direction.
Evaluation of Disclosure Controls and Procedures
We evaluated the effectiveness of our disclosure controls and procedures as of October 31, 2015. Disclosure
controls and procedures are designed to ensure that the information we are required to disclose in the reports that
we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time
period specified in the SEC’s rule and forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information we are required to disclose in the reports that we
file or submit under the Exchange Act is accumulated and communicated to our management, including our
Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), to allow timely decisions regarding
required disclosure. Our CEO and CFO participated in this evaluation and concluded that, as of October 31,
2015, our disclosure controls and procedures were effective.
There have been no changes in our internal control over financial reporting that occurred during the fourth
quarter of our fiscal year ended October 31, 2015 that materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
62
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Consolidated Statements of Income
(in thousands, except per share data)
2015
2014
2013
Years Ended October 31,
Revenue:
Investment advisory and administrative fees
$
1,196,866
$
1,231,188
$
1,135,327
Distribution and underwriter fees
Service fees
Other revenue
Total revenue
Expenses:
Compensation and related costs
Distribution expense
Service fee expense
Amortization of deferred sales commissions
Fund-related expenses
Other expenses
Total expenses
Operating income
Non-operating income (expense):
Gains (losses) and other investment income, net
Interest expense
Loss on extinguishment of debt
Other income (expense) of consolidated collateralized
loan obligation (“CLO”) entities:
Gains and other investment income, net
Interest and other expense
Total non-operating expense
Income before income taxes and equity in net income of affiliates
Income taxes
Equity in net income of affiliates, net of tax
Net income
80,815
116,448
9,434
85,514
125,713
7,879
89,234
126,560
6,382
1,403,563
1,450,294
1,357,503
483,827
198,155
106,663
14,972
35,886
163,613
1,003,116
461,438
141,544
116,620
17,590
35,415
157,830
930,437
447,134
139,618
115,149
19,581
34,230
148,784
904,496
400,447
519,857
453,007
(31)
(29,357)
-
5,092
(6,767)
(31,063)
369,384
1,139
(29,892)
-
14,892
(14,847)
(28,708)
491,149
(2,513)
(33,708)
(52,996)
14,815
(19,152)
(93,554)
359,453
(143,214)
(186,710)
(143,896)
12,021
238,191
16,725
321,164
14,869
230,426
Net income attributable to non-controlling and other beneficial interests
(7,892)
(16,848)
(36,585)
Net income attributable to Eaton Vance Corp. shareholders
Earnings per share:
Basic
Diluted
Weighted average shares outstanding:
Basic
Diluted
Dividends declared per share
See notes to Consolidated Financial Statements.
$
$
$
$
230,299
$
304,316
$
193,841
2.00
1.92
$
$
2.55
2.44
$
$
1.60
1.53
113,318
118,155
116,440
121,595
116,597
122,444
1.015
$
0.910
$
1.820
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Consolidated Statements of Comprehensive Income
(in thousands)
Net income
Other comprehensive income (loss):
Change in unrealized gains on derivative instruments, net of tax
Amortization of net gains on derivatives, net of tax
Unrealized holding gains (losses) on available-for-sale investments and
reclassification adjustments, net of tax
Foreign currency translation adjustments, net of tax
Other comprehensive loss, net of tax
Years Ended October 31,
2015
2014
2013
$
238,191
$
321,164
$
230,426
-
13
(1,895)
(28,708)
(30,590)
-
13
1,124
(18,956)
(17,819)
1,227
845
(957)
(5,215)
(4,100)
Total comprehensive income
207,601
303,345
226,326
Comprehensive income attributable to non-controlling and other
beneficial interests
(7,892)
(16,848)
(36,585)
Total comprehensive income attributable to Eaton Vance Corp. shareholders
$
199,709
$
286,497
$
189,741
See notes to Consolidated Financial Statements.
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Consolidated Balance Sheets
(in thousands, except share data)
Assets
Cash and cash equivalents
Investment advisory fees and other receivables
Investments
Assets of consolidated CLO entity:
Cash and cash equivalents
Bank loans and other investments
Other assets
Deferred sales commissions
Deferred income taxes
Equipment and leasehold improvements, net
Intangible assets, net
Goodwill
Other assets
Total assets
Liabilities, Temporary Equity and Permanent Equity
Liabilities:
Accrued compensation
Accounts payable and accrued expenses
Dividend payable
Debt
Liabilities of consolidated CLO entity:
Senior and subordinated note obligations
Other liabilities
Other liabilities
Total liabilities
Commitments and contingencies (Note 20)
Temporary Equity:
Redeemable non-controlling interests
Permanent Equity:
Voting Common Stock, par value $0.00390625 per share:
Authorized, 1,280,000 shares
Issued and outstanding, 415,078 and 415,078 shares, respectively
Non-Voting Common Stock, par value $0.00390625 per share:
Authorized, 190,720,000 shares
Issued and outstanding, 115,470,485 and 117,846,273 shares, respectively
Additional paid-in capital
Notes receivable from stock option exercises
Accumulated other comprehensive loss
Appropriated (deficit) retained earnings
Retained earnings
Total Eaton Vance Corp. shareholders' equity
Non-redeemable non-controlling interests
Total permanent equity
Total liabilities, temporary equity and permanent equity
See notes to Consolidated Financial Statements.
October 31,
2015
2014
$
$
$
465,558
187,753
507,020
162,704
304,250
128
25,161
42,164
44,943
55,433
237,961
83,396
2,116,471
178,875
65,249
32,923
573,811
397,039
70,814
86,891
1,405,602
385,215
186,344
624,605
8,963
147,116
371
17,841
46,099
45,651
65,126
228,876
103,879
1,860,086
181,064
64,598
30,057
573,655
151,982
298
93,485
1,095,139
88,913
107,466
2
2
451
-
(11,143)
(48,586)
(5,338)
684,845
620,231
1,725
621,956
2,116,471
$
460
-
(8,818)
(17,996)
2,467
679,061
655,176
2,305
657,481
1,860,086
$
$
$
$
16310 annual_cc15.indd 65
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16310 annual_cc15.indd 68
1/11/16 1:18 PM
Consolidated Statements of Cash Flows
(in thousands)
Cash Flows From Operating Activities:
Net income
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization
Unamortized gain on derivative instrument
Amortization of deferred sales commissions
Stock-based compensation
Deferred income taxes
Net losses on investments and derivatives
Equity in net income of affiliates, net of amortization
Dividends received from affiliates
Loss on extinguishment of debt
Consolidated CLO entities’ operating activities:
Net (gains) losses on bank loans, other investments and note
obligations
Amortization
Net increase (decrease) in other assets and liabilities,
including cash
Changes in operating assets and liabilities:
Investment advisory fees and other receivables
Investments in trading securities
Deferred sales commissions
Other assets
Accrued compensation
Accounts payable and accrued expenses
Other liabilities
Net cash provided by operating activities
Cash Flows From Investing Activities:
Additions to equipment and leasehold improvements
Net cash paid in acquisition
Cash paid for intangible assets
Proceeds from sale of investments
Purchase of investments
Consolidated CLO entities’ investing activities:
Proceeds from sales and maturities of bank loans and other
investments
Purchase of bank loans and other investments
Net cash provided by investing activities
See notes to Consolidated Financial Statements.
2015
Years Ended October 31,
2014
2013
$
238,191
$
321,164
$
230,426
21,749
-
14,976
69,279
4,784
9,151
(12,734)
15,908
-
(1,625)
3
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-
17,664
60,281
11,382
6,946
(20,274)
16,079
-
1,282
(754)
(141,450)
(114,974)
(1,151)
639
(22,294)
3,466
(2,078)
1,308
21,745
219,867
(11,480)
(9,085)
-
69,946
(10,583)
147,766
(102,298)
84,266
(16,206)
(187,295)
(17,580)
(8,092)
11,140
5,911
(9,287)
98,785
(7,580)
-
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95,788
(27,846)
378,100
(253,002)
185,460
25,397
2,015
19,643
59,285
(7,293)
5,080
(18,020)
16,869
52,996
7,151
(808)
9,943
(30,571)
(251,437)
(18,230)
17,501
22,620
(4,872)
(21,328)
116,367
(6,274)
(86,429)
(300)
107,285
(7,356)
354,806
(184,704)
177,028
16310 annual_cc15.indd 69
69
1/11/16 1:18 PM
Consolidated Statements of Cash Flows (continued)
(in thousands)
Cash Flows From Financing Activities:
Purchase of additional non-controlling interest
Proceeds from issuance of subsidiary equity
Line of credit issuance costs
Debt issuance costs
Proceeds from issuance of debt
Repayment of debt
Loss on extinguishment of debt
Proceeds from issuance of Voting Common Stock
Proceeds from issuance of Non-Voting Common Stock
Repurchase of Voting Common Stock
Repurchase of Non-Voting Common Stock
Principal repayments on notes receivable from stock option exercises
Excess tax benefit of stock option exercises
Dividends paid
Net subscriptions received from (redemptions/distributions paid
to) non-controlling interest holders
Consolidated CLO entities’ financing activities:
Proceeds from line of credit
Repayment of line of credit
Repayment of redeemable preferred shares
Issuance of senior and subordinated notes and preferred shares
Principal repayments of senior and subordinated note obligations
Net cash used for financing activities
Effect of currency rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Supplemental Cash Flow Information:
Cash paid for interest
Cash paid for interest by consolidated CLO entities
Cash paid for income taxes, net of refunds
Supplemental Disclosure of Non-Cash Information:
Increase in equipment and leasehold improvements due
to non-cash additions
Exercise of stock options through issuance of notes receivable
Acquisition of non-controlling interests through issuance of
subsidiary equity
Non-controlling interest call option exercises recorded in other
liabilities
Initial Consolidation of CLO Entity:
Increase in other assets, net of other liabilities
Increase in investments
Increase in borrowings
De-consolidation of CLO Entity:
Decrease in other assets, net of other liabilities
Decrease in investments
Decrease in borrowings
Net Consolidations (De-consolidations) of Sponsored
Investment Funds:
Decrease in investments
Increase in other assets, net of other liabilities
Decrease in non-controlling interests
See notes to Consolidated Financial Statements.
$
$
$
$
$
$
2015
Years Ended October 31,
2014
2013
(19,964)
-
-
-
-
-
-
77
89,699
(77)
(283,372)
2,427
9,979
(116,016)
(26,872)
-
(1,111)
-
-
-
-
162
88,236
(77)
(322,020)
1,853
18,570
(105,848)
(43,507)
1,092
-
(2,940)
323,440
(250,000)
(52,996)
-
119,250
(73)
(73,941)
2,135
20,584
(215,539)
(7,895)
(5,702)
56,977
83,612
(202,357)
-
401,607
(179,166)
(221,446)
(2,344)
80,343
385,215
465,558
28,390
2,388
120,496
389
4,752
-
10,105
(54,578)
207,371
153,745
(3,566)
(1,559)
(4,097)
(21,029)
18,992
(2,623)
$
$
$
$
$
$
-
(247,789)
(60,000)
429,582
(128,362)
(359,378)
(1,558)
(76,691)
461,906
385,215
29,298
7,103
172,119
154
3,549
9,935
11,594
-
-
-
(19,210)
(411,897)
(427,418)
(4,122)
-
(4,111)
$
$
$
$
$
$
-
-
-
-
(177,500)
(293,018)
(547)
(170)
462,076
461,906
28,712
13,220
145,343
379
5,102
-
34,488
(113,731)
424,152
307,789
-
-
-
(92,399)
-
(93,689)
70
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
16310 annual_cc15.indd 70
Business and organization
1/11/16 1:18 PM
Eaton Vance Corp. and its subsidiaries (the “Company”) manage investment funds and provide investment
management and advisory services to high-net-worth individuals and institutions in the United States, Europe
and certain other international markets. The Company distributes its funds and retail managed accounts
principally through financial intermediaries. The Company also commits significant resources to serving
institutional and high-net-worth clients who access investment management services on a direct basis.
Revenue is largely dependent on the total value and composition of assets under management, which include
sponsored funds and separate accounts. Accordingly, fluctuations in financial markets and changes in the
composition of assets under management impact revenue and the results of operations.
Basis of presentation
The preparation of the Company’s consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America (“GAAP”) requires management to make
judgments, estimates and assumptions that affect the amounts reported in the Consolidated Financial
Statements and related notes to the Consolidated Financial Statements. Management believes that the
accounting estimates are appropriate and the resulting balances are reasonable; however, due to the inherent
uncertainties in making estimates, actual results could differ from those estimates.
Payments to end certain closed-end fund service and additional compensation arrangements
During the first quarter of fiscal 2015, the Company made a one-time payment of $73.0 million to terminate
certain closed-end fund service and additional compensation arrangements with a distribution partner. The
payment was included as a component of distribution expense in the Company’s Consolidated Statement of
Income for the fiscal year ended October 31, 2015.
Principles of consolidation
The Consolidated Financial Statements include the accounts of the Company and its controlled affiliates.
The Company consolidates any voting interest entity in which the Company’s ownership exceeds 50 percent
or where the Company has control. In addition, the Company consolidates any variable interest entity
(“VIE”), including the consolidated collateralized loan obligation (“CLO”) entity referred to below, for
which the Company is considered the primary beneficiary. The Company recognizes non-controlling and
other beneficial interests in consolidated affiliates in which the Company’s ownership is less than 100
percent. All intercompany accounts and transactions have been eliminated in consolidation.
The Company may be considered the primary beneficiary of certain CLO entities for which it acts as
collateral manager. In these instances, the Company consolidates the assets, liabilities, results of operations
and cash flows of such entities in the Company’s Consolidated Financial Statements. The assets of
consolidated CLO entities cannot be used by the Company, and senior and subordinated interest holders of
the CLO entities have no recourse to the general credit or assets of the Company. There is generally a one-
month lag between the Company’s fiscal year end and that of consolidated CLO entities for reporting
purposes. There were no intervening events during that one-month period that would materially affect the
Decrease in non-controlling interests
See notes to Consolidated Financial Statements.
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Business and organization
(2,623)
(4,111)
(93,689)
Eaton Vance Corp. and its subsidiaries (the “Company”) manage investment funds and provide investment
management and advisory services to high-net-worth individuals and institutions in the United States, Europe
and certain other international markets. The Company distributes its funds and retail managed accounts
principally through financial intermediaries. The Company also commits significant resources to serving
institutional and high-net-worth clients who access investment management services on a direct basis.
Revenue is largely dependent on the total value and composition of assets under management, which include
sponsored funds and separate accounts. Accordingly, fluctuations in financial markets and changes in the
composition of assets under management impact revenue and the results of operations.
Basis of presentation
The preparation of the Company’s consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America (“GAAP”) requires management to make
judgments, estimates and assumptions that affect the amounts reported in the Consolidated Financial
Statements and related notes to the Consolidated Financial Statements. Management believes that the
accounting estimates are appropriate and the resulting balances are reasonable; however, due to the inherent
uncertainties in making estimates, actual results could differ from those estimates.
Payments to end certain closed-end fund service and additional compensation arrangements
During the first quarter of fiscal 2015, the Company made a one-time payment of $73.0 million to terminate
certain closed-end fund service and additional compensation arrangements with a distribution partner. The
payment was included as a component of distribution expense in the Company’s Consolidated Statement of
Income for the fiscal year ended October 31, 2015.
Principles of consolidation
The Consolidated Financial Statements include the accounts of the Company and its controlled affiliates.
The Company consolidates any voting interest entity in which the Company’s ownership exceeds 50 percent
or where the Company has control. In addition, the Company consolidates any variable interest entity
(“VIE”), including the consolidated collateralized loan obligation (“CLO”) entity referred to below, for
which the Company is considered the primary beneficiary. The Company recognizes non-controlling and
other beneficial interests in consolidated affiliates in which the Company’s ownership is less than 100
percent. All intercompany accounts and transactions have been eliminated in consolidation.
The Company may be considered the primary beneficiary of certain CLO entities for which it acts as
collateral manager. In these instances, the Company consolidates the assets, liabilities, results of operations
and cash flows of such entities in the Company’s Consolidated Financial Statements. The assets of
consolidated CLO entities cannot be used by the Company, and senior and subordinated interest holders of
the CLO entities have no recourse to the general credit or assets of the Company. There is generally a one-
month lag between the Company’s fiscal year end and that of consolidated CLO entities for reporting
purposes. There were no intervening events during that one-month period that would materially affect the
Company’s consolidated financial position, results of operations or cash flows as of and for the year ended
October 31, 2015.
The Company may maintain a controlling interest in an open-end registered investment company that it
sponsors (a “sponsored fund”). Under the specialized accounting guidance for investment companies,
underlying investments held by consolidated sponsored funds are carried at fair value, with corresponding
changes in fair value reflected in gains (losses) and other investment income, net, in the Company’s
Consolidated Statements of Income. Upon consolidation, the Company retains the specialized accounting
treatment of the sponsored fund.
71
managed component (or “series”) of a series trust. All assets of a series irrevocably belong to that series and
are subject to the liabilities of that series; under no circumstances are the liabilities of one series payable by
another series. Series trusts themselves have no equity investment at risk, but decisions regarding the
trustees of the trust and certain key activities of each sponsored fund within the trust, such as appointment of
each sponsored fund’s investment adviser, typically reside at the trust level. As a result, shareholders of a
sponsored fund that is organized as a series of a series trust lack the ability to control the key decision-
making processes that most directly affect the performance of the sponsored fund. Accordingly, the
Company believes that each trust is a VIE and each sponsored fund is a silo of a VIE that also meets the
definition of a VIE. Having concluded that each silo is a VIE, the primary beneficiary evaluation is focused
on an analysis of economic interest. The Company may hold the majority of the shares of a sponsored fund
corresponding to a majority economic interest during the seed investment stage when the fund’s investment
track record is being established or when the fund is in the early stages of soliciting outside investors. The
Company consolidates the fund as primary beneficiary during this period. While the sponsored fund is
consolidated, the Company records fee revenue, but eliminates this fee revenue in consolidation.
The Company regularly seeds new sponsored funds and therefore may consolidate a variety of sponsored
funds during a given reporting period. Due to the similarity of risks related to the Company’s involvement
with each sponsored fund, disclosures required under the VIE model are aggregated, such as those
disclosures regarding the carrying amount and classification of assets of the sponsored funds and the gains
and losses that the Company recognizes from the sponsored funds.
When the Company is no longer deemed to hold a controlling financial interest in a sponsored fund, which
occurs when either the Company redeems its shares or shares held by third parties exceed the number of
shares held by the Company, the Company de-consolidates the sponsored fund and removes the related
assets, liabilities and non-controlling interests from its balance sheet and classifies the Company’s
remaining investment as either an equity method investment or as available-for-sale, as applicable. Because
consolidated sponsored funds utilize fair value measurements, there is no incremental gain or loss
recognized upon de-consolidation.
The extent of the Company’s exposure to loss with respect to a consolidated sponsored fund is the amount
of the Company’s investment in the sponsored fund. The Company is not obligated to provide financial
support to sponsored funds. Only the assets of a sponsored fund are available to settle its obligations.
Beneficial interest holders of sponsored funds do not have recourse to the general credit of the Company.
Consolidation of VIEs
Accounting guidance provides a framework for determining whether an entity should be considered a VIE
and, if so, whether a company’s involvement with the entity results in a variable interest in the entity. If the
Company determines that it does have a variable interest in an entity, it must perform an analysis to
determine whether it is the primary beneficiary of the VIE. If the Company determines it is the primary
16310 annual_cc15.indd 71
With limited exceptions, each of the Company’s sponsored mutual funds is organized as a separately
1/11/16 1:18 PM
Company’s consolidated financial position, results of operations or cash flows as of and for the year ended
October 31, 2015.
The Company may maintain a controlling interest in an open-end registered investment company that it
sponsors (a “sponsored fund”). Under the specialized accounting guidance for investment companies,
underlying investments held by consolidated sponsored funds are carried at fair value, with corresponding
changes in fair value reflected in gains (losses) and other investment income, net, in the Company’s
Consolidated Statements of Income. Upon consolidation, the Company retains the specialized accounting
treatment of the sponsored fund.
With limited exceptions, each of the Company’s sponsored mutual funds is organized as a separately
managed component (or “series”) of a series trust. All assets of a series irrevocably belong to that series and
are subject to the liabilities of that series; under no circumstances are the liabilities of one series payable by
another series. Series trusts themselves have no equity investment at risk, but decisions regarding the
trustees of the trust and certain key activities of each sponsored fund within the trust, such as appointment of
each sponsored fund’s investment adviser, typically reside at the trust level. As a result, shareholders of a
sponsored fund that is organized as a series of a series trust lack the ability to control the key decision-
making processes that most directly affect the performance of the sponsored fund. Accordingly, the
Company believes that each trust is a VIE and each sponsored fund is a silo of a VIE that also meets the
definition of a VIE. Having concluded that each silo is a VIE, the primary beneficiary evaluation is focused
on an analysis of economic interest. The Company may hold the majority of the shares of a sponsored fund
corresponding to a majority economic interest during the seed investment stage when the fund’s investment
track record is being established or when the fund is in the early stages of soliciting outside investors. The
Company consolidates the fund as primary beneficiary during this period. While the sponsored fund is
consolidated, the Company records fee revenue, but eliminates this fee revenue in consolidation.
The Company regularly seeds new sponsored funds and therefore may consolidate a variety of sponsored
funds during a given reporting period. Due to the similarity of risks related to the Company’s involvement
with each sponsored fund, disclosures required under the VIE model are aggregated, such as those
disclosures regarding the carrying amount and classification of assets of the sponsored funds and the gains
and losses that the Company recognizes from the sponsored funds.
When the Company is no longer deemed to hold a controlling financial interest in a sponsored fund, which
occurs when either the Company redeems its shares or shares held by third parties exceed the number of
shares held by the Company, the Company de-consolidates the sponsored fund and removes the related
assets, liabilities and non-controlling interests from its balance sheet and classifies the Company’s
remaining investment as either an equity method investment or as available-for-sale, as applicable. Because
consolidated sponsored funds utilize fair value measurements, there is no incremental gain or loss
recognized upon de-consolidation.
The extent of the Company’s exposure to loss with respect to a consolidated sponsored fund is the amount
of the Company’s investment in the sponsored fund. The Company is not obligated to provide financial
support to sponsored funds. Only the assets of a sponsored fund are available to settle its obligations.
Beneficial interest holders of sponsored funds do not have recourse to the general credit of the Company.
Consolidation of VIEs
Accounting guidance provides a framework for determining whether an entity should be considered a VIE
and, if so, whether a company’s involvement with the entity results in a variable interest in the entity. If the
Company determines that it does have a variable interest in an entity, it must perform an analysis to
determine whether it is the primary beneficiary of the VIE. If the Company determines it is the primary
beneficiary of the VIE, it is required to consolidate the assets, liabilities, results of operations and cash flows
of the VIE into the Consolidated Financial Statements of the Company.
A company is the primary beneficiary of a VIE if it has a controlling financial interest in the VIE. A
company is deemed to have a controlling financial interest in a VIE if it has both (i) the power to direct the
activities of the VIE that most significantly impact the VIE’s economic performance, and (ii) the obligation
to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits
from the VIE that could potentially be significant to the VIE.
72
The Company’s evaluation of whether it qualifies as the primary beneficiary of a VIE is highly complex.
The Company uses two models for determining whether it is the primary beneficiary of a VIE.
16310 annual_cc15.indd 72
1/11/16 1:18 PM
For investments in VIEs other than CLOs that qualify for the deferral afforded by Accounting Standards
Update (“ASU”) 2010-10, Consolidation – Amendments for Certain Investment Funds (the “Investment
Company deferral”), the Company must make significant estimates and assumptions regarding future cash
flows of each VIE to determine whether it has the majority of the risks and rewards of ownership and thus is
the primary beneficiary of these VIEs.
For CLOs, the Company has concluded that it does not qualify for the Investment Company deferral and
therefore the Company must evaluate estimates and assumptions relating primarily to market interest rates,
credit default rates, pre-payment rates, discount rates, the marketability of certain securities and the
probability of certain outcomes. There is also judgment involved in assessing whether the Company has the
power to direct the activities that most significantly impact the VIE’s economic performance and the
obligation to absorb losses of or the right to receive benefits from the VIE that could potentially be
significant to the entity.
While the Company believes its overall evaluation of VIEs is appropriate, future changes in estimates,
judgments and assumptions and/or changes in the ownership interests of the Company in a VIE may affect
the resulting consolidation, or de-consolidation, of the assets, liabilities, results of operations and cash flows
of a VIE.
Segment information
Management has determined that the Company operates in one segment, namely as an investment adviser
managing funds and separate accounts. The Company’s determination that it operates in one business
segment is based on the fact that the Company’s chief operating decision maker (namely, the Company’s
Chief Executive Officer) reviews the Company’s financial performance at an aggregate level. All of the
products and services provided by the Company relate to investment management and are subject to a
similar regulatory framework. Investment management teams at the Company are generally not aligned with
specific product lines or distribution channels; in many instances, the investment professionals who manage
the Company’s funds are the same investment professionals who manage the Company’s separately
managed accounts.
Cash and cash equivalents
Cash and cash equivalents consist principally of cash and short-term, highly liquid investments in money
market funds, commercial paper and holdings of Treasury and government agency securities, which are
readily convertible to cash. Cash equivalents have maturities of less than three months on the date of
acquisition and are stated at fair value or cost, which approximates fair value due to the short-term
maturities of the underlying investments.
beneficiary of the VIE, it is required to consolidate the assets, liabilities, results of operations and cash flows
of the VIE into the Consolidated Financial Statements of the Company.
A company is the primary beneficiary of a VIE if it has a controlling financial interest in the VIE. A
company is deemed to have a controlling financial interest in a VIE if it has both (i) the power to direct the
activities of the VIE that most significantly impact the VIE’s economic performance, and (ii) the obligation
to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits
from the VIE that could potentially be significant to the VIE.
The Company’s evaluation of whether it qualifies as the primary beneficiary of a VIE is highly complex.
The Company uses two models for determining whether it is the primary beneficiary of a VIE.
For investments in VIEs other than CLOs that qualify for the deferral afforded by Accounting Standards
Update (“ASU”) 2010-10, Consolidation – Amendments for Certain Investment Funds (the “Investment
Company deferral”), the Company must make significant estimates and assumptions regarding future cash
flows of each VIE to determine whether it has the majority of the risks and rewards of ownership and thus is
the primary beneficiary of these VIEs.
For CLOs, the Company has concluded that it does not qualify for the Investment Company deferral and
therefore the Company must evaluate estimates and assumptions relating primarily to market interest rates,
credit default rates, pre-payment rates, discount rates, the marketability of certain securities and the
probability of certain outcomes. There is also judgment involved in assessing whether the Company has the
power to direct the activities that most significantly impact the VIE’s economic performance and the
obligation to absorb losses of or the right to receive benefits from the VIE that could potentially be
significant to the entity.
While the Company believes its overall evaluation of VIEs is appropriate, future changes in estimates,
judgments and assumptions and/or changes in the ownership interests of the Company in a VIE may affect
the resulting consolidation, or de-consolidation, of the assets, liabilities, results of operations and cash flows
of a VIE.
Segment information
Management has determined that the Company operates in one segment, namely as an investment adviser
managing funds and separate accounts. The Company’s determination that it operates in one business
segment is based on the fact that the Company’s chief operating decision maker (namely, the Company’s
Chief Executive Officer) reviews the Company’s financial performance at an aggregate level. All of the
products and services provided by the Company relate to investment management and are subject to a
similar regulatory framework. Investment management teams at the Company are generally not aligned with
specific product lines or distribution channels; in many instances, the investment professionals who manage
the Company’s funds are the same investment professionals who manage the Company’s separately
managed accounts.
Cash and cash equivalents
Cash and cash equivalents consist principally of cash and short-term, highly liquid investments in money
market funds, commercial paper and holdings of Treasury and government agency securities, which are
readily convertible to cash. Cash equivalents have maturities of less than three months on the date of
acquisition and are stated at fair value or cost, which approximates fair value due to the short-term
maturities of the underlying investments.
16310 annual_cc15.indd 73
73
1/11/16 1:18 PM
Restricted cash
Restricted cash consists principally of cash collateral required for margin accounts established to support
derivative positions and securities sold, not yet purchased. Restricted cash is included as a component of
other assets on the Company’s Consolidated Balance Sheets and is not available to the Company for general
corporate use. Such derivatives and securities sold, not yet purchased, are used to hedge certain investments
in consolidated sponsored funds and separately managed accounts seeded for product development
purposes. Because the accounts are used to support trading activities, changes in restricted cash balances are
reflected as operating cash flows in the Company’s Consolidated Statements of Cash Flows.
Investments
Investment securities, trading
Marketable securities classified as trading securities consist of investments in debt and equity securities held
in the portfolios of consolidated sponsored funds and separately managed accounts seeded by the Company
for product development purposes, and bank obligations, certificates of deposit, commercial paper and
corporate debt securities with remaining maturities (upon purchase by the Company) ranging from three
months to 12 months.
Investment securities held in the portfolios of consolidated sponsored funds, separately managed accounts
and/or held directly by the Company are carried at fair value based on quoted market prices. Net realized
and unrealized gains or losses are reflected as a component of gains (losses) and other investment income,
net, within non-operating income (expense). The specific identified cost method is used to determine the
realized gains or losses on all trading securities sold.
Investment securities, available-for-sale
Marketable securities classified as available-for-sale consist primarily of investments in shares of sponsored
funds and are carried at fair value based on quoted market prices. Unrealized holding gains or losses (to the
extent such losses are considered temporary) are reported net of deferred tax as a separate component of
accumulated other comprehensive income (loss) until realized. Realized gains or losses are reflected as a
component of gains (losses) and other investment income, net, within non-operating income (expense). The
specific identified cost method is used to determine the realized gains or losses on the sale of shares of
sponsored funds.
The Company evaluates the carrying value of marketable securities classified as available-for-sale for
impairment on a quarterly basis. In its impairment analysis, the Company takes into consideration numerous
criteria, including the duration and extent of any decline in fair value and the Company’s intent with respect
to a given security. If the decline in value is determined to be other-than-temporary, the carrying value of
the security is written down to fair value through net income.
Investments in non-consolidated CLO entities
Investments in non-consolidated CLO entities are carried at amortized cost unless impaired. The excess of
actual and anticipated future cash flows over the initial investment at the date of purchase is recognized in
gains (losses) and other investment income, net, over the life of the investment using the effective yield
method. The Company reviews cash flow estimates throughout the life of each non-consolidated CLO
entity. If the updated estimate of future cash flows (taking into account both timing and amounts) is less
than the last revised estimate, an impairment loss is recognized to the extent the carrying amount of the
investment exceeds its fair value.
74
16310 annual_cc15.indd 74
1/11/16 1:18 PM
Investments in equity method investees
Investments in non-controlled affiliates in which the Company’s ownership ranges from 20 to 50 percent, or
in instances in which the Company is able to exercise significant influence but not control, are accounted for
under the equity method of accounting. Under the equity method of accounting, the Company’s share of the
investee’s underlying net income or loss is recorded as equity in net income of affiliates, net of tax.
Distributions received from the investment reduce the Company’s investment balance. Investments in
equity method investees are evaluated for impairment as events or changes in circumstances indicate that the
carrying amount of such assets may not be recoverable. If the carrying amounts of the assets exceed their
respective fair values, additional impairment tests are performed to measure the amounts of the impairment
losses, if any.
Investments, other
Certain investments are carried at cost. The fair values of cost-method investments are not estimated if there
are no identified events or changes in circumstances that may have a significant adverse effect on the fair
values of the investments.
Fair value measurements
The accounting standards for fair value measurement provide a framework for measuring fair value and
require expanded disclosures regarding fair value measurements. Fair value is defined as the price that
would be received for an asset or the exit price that would be paid to transfer a liability in the principal or
most advantageous market in an orderly transaction between market participants on the measurement date.
The accounting standards establish a fair value measurement hierarchy, which requires an entity to
maximize the use of observable inputs where available. This fair value measurement hierarchy gives the
highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to
unobservable inputs.
The Company utilizes third-party pricing services to value investments in various asset classes, including
interests in senior floating-rate loans and other debt obligations, derivatives and certain foreign equity
securities, as further discussed below. Valuations provided by the pricing services are subject to exception
reporting that identifies securities with significant movements in valuation, as well as investments with no
movements in valuation. These exceptions are reviewed by the Company on a daily basis. The Company
compares the price of trades executed by the Company to the valuations provided by the third-party pricing
services to identify and research significant variances. The Company periodically compares the pricing
service valuations to valuations provided by a secondary independent source when available. Market data
provided by the pricing services and other market participants, such as the Loan Syndication and Trading
Association (“LSTA”) trade study, is reviewed by the Company to assess the reliability of the provided data.
The Company’s Valuation Committee reviews the general assumptions underlying the methodologies used
by the pricing services to value various asset classes at least annually. Throughout the year, members of the
Company’s Valuation Committee or its designees meet with the service providers to discuss any significant
changes to the service providers’ valuation methodologies or operational processes.
Assets and liabilities measured and reported at fair value are classified and disclosed in one of the following
categories based on the nature of the inputs that are significant to the fair value measurements in their
entirety. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value
measurement hierarchy. In such cases, an investment’s classification within the fair value measurement
hierarchy is based on the lowest level of input that is significant to the fair value measurement.
Level 1 Unadjusted quoted market prices in active markets for identical assets or liabilities at the
reporting date.
16310 annual_cc15.indd 75
75
1/11/16 1:18 PM
Level 2 Observable inputs other than Level 1 unadjusted quoted market prices, such as quoted market
prices for similar assets or liabilities in active markets, quoted prices for identical or similar
assets or liabilities that are not active, and inputs other than quoted prices that are observable or
corroborated by observable market data.
Level 3 Unobservable inputs that are supported by little or no market activity.
The Company recognizes any transfers between levels at the end of each quarter.
Derivative financial instruments
The Company may utilize derivative financial instruments to hedge market risk and currency risk associated
with its investments in separate accounts and certain consolidated sponsored funds seeded for new product
development purposes, exposures to fluctuations in foreign currency exchange rates associated with
investments denominated in foreign currencies and interest rate risk inherent in debt offerings. These
derivative financial instruments may or may not qualify as hedges for accounting purposes. In addition,
certain consolidated sponsored funds and separately managed accounts may enter into derivative financial
instruments within their portfolios to achieve stated investment objectives. The Company does not use
derivative financial instruments for speculative purposes.
The Company records all derivative financial instruments as either assets or liabilities on its Consolidated
Balance Sheets and measures these instruments at fair value. Derivative transactions are presented on a
gross basis in the Company’s Consolidated Balance Sheets. For a derivative financial instrument that is
designated as a cash flow hedging instrument, the effective portion of the derivative’s gain or loss is initially
reported as a component of other comprehensive income (loss) and subsequently reclassified into earnings
over the life of the hedge. The ineffective portion of the gain or loss is reported in earnings immediately.
Changes in the fair value of the Company’s other derivative financial instruments are recognized in earnings
in the current period.
Deferred sales commissions
Sales commissions paid to broker-dealers in connection with the sale of certain classes of shares of open-
end funds and private funds are generally capitalized and amortized over the period during which
redemptions by the purchasing shareholder are subject to a contingent deferred sales charge, which does not
exceed six years from purchase. Distribution plan payments received from these funds are recorded in
revenue as earned. Contingent deferred sales charges and early withdrawal charges received from redeeming
shareholders of these funds are generally applied to reduce the Company’s unamortized deferred sales
commission assets. Should the Company lose its ability to recover such sales commissions through
distribution plan payments and contingent deferred sales charges, the value of its deferred sales commission
asset would immediately decline, as would related future cash flows.
The Company evaluates the carrying value of its deferred sales commission assets for impairment on a
quarterly basis. In its impairment analysis, the Company compares the carrying value of the deferred sales
commission asset to the undiscounted cash flows expected to be generated by the asset in the form of
distribution fees over its remaining useful life to determine whether impairment has occurred. If the carrying
value of the asset exceeds the undiscounted cash flows, the asset is written down to fair value based on
discounted cash flows. Impairment adjustments are recognized in operating income as a component of
amortization of deferred sales commissions.
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Income taxes
Deferred income taxes reflect the expected future tax consequences of temporary differences between the
carrying amounts and tax bases of the Company’s assets and liabilities measured using rates expected to be
in effect when such differences reverse. To the extent that deferred tax assets are considered more likely
than not to be unrealizable, valuation allowances are provided.
The Company’s effective tax rate reflects the statutory tax rates of the many jurisdictions in which it
operates. Significant judgment is required in determining its effective tax rate and in evaluating its tax
positions. In the ordinary course of business, many transactions occur for which the ultimate tax outcome is
uncertain. Accounting standards governing the accounting for uncertainty in income taxes for a tax position
taken or expected to be taken in a tax return require that the tax effects of a position be recognized only if it
is more likely than not to be sustained based solely on its technical merits as of the reporting date. The
more-likely-than-not threshold must be met in each reporting period to support continued recognition of the
benefit. The difference between the tax benefit recognized in the financial statements for a tax position and
the tax benefit claimed in the income tax return is referred to as an unrecognized tax benefit. Unrecognized
tax benefits, as well as the related interest and penalties, are adjusted regularly to reflect changing facts and
circumstances. The Company classifies any interest or penalties incurred as a component of income tax
expense.
Equipment and leasehold improvements
Equipment and other fixed assets are recorded at cost and depreciated on a straight-line basis over their
estimated useful lives, which range from three to five years. Accelerated methods are used for income tax
purposes. Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated
useful lives or the terms of the leases. Expenditures for repairs and maintenance are charged to expense
when incurred. Equipment and leasehold improvements are tested for impairment whenever changes in facts
or circumstances indicate that the carrying amount of an asset may not be recoverable.
Certain internal and external costs incurred in connection with developing or obtaining software for internal
use are capitalized and amortized on a straight-line basis over the shorter of the estimated useful life of the
software or three years, beginning when the software project is complete and the application is put into
production. These costs are included in equipment and leasehold improvements on the Company’s
Consolidated Balance Sheets.
Goodwill
Goodwill represents the excess of the cost of the Company’s investment in the net assets of acquired
companies over the fair value of the underlying identifiable net assets at the dates of acquisition. The
Company attributes all goodwill associated with its acquisitions of Atlanta Capital Management, LLC
(“Atlanta Capital”), Parametric Portfolio Associates LLC (“Parametric”) and The Clifton Group Investment
Management Company (“Clifton”), which share similar economic characteristics, to one reporting unit. The
Company attributes all goodwill associated with its acquisitions of the Tax Advantaged Bond Strategies
(“TABS”) business of M.D. Sass Investor Services and other acquisitions to a second reporting unit.
Goodwill is not amortized but is tested annually for impairment in the fourth quarter of each fiscal year by
comparing the fair values of identified reporting units to their respective carrying amounts, including
goodwill. The Company establishes fair value for the purpose of impairment testing for each reporting unit
by averaging fair value established using an income approach and fair value established using a market
approach.
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The income approach employs a discounted cash flow model that takes into account (1) assumptions that
market participants would use in their estimates of fair value, (2) current period actual results and (3) budget
projections for future periods that have been vetted by senior management. The discounted cash flow model
incorporates the same fundamental pricing concepts used to calculate fair value in the acquisition due
diligence process and a discount rate that takes into consideration the Company’s estimated cost of capital
adjusted for the uncertainty inherent in the forecasted information.
The market approach employs market multiples based on comparable publicly traded companies in the
financial services industry, calculated with data from industry sources. Estimates of fair value are
established using a multiple of assets under management and current and forward multiples of both revenue
and earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted for size and
performance of the reporting unit relative to peer companies. A weighting of the value indications is then
performed, giving greater weight to fair value calculated based on multiples of revenue and EBITDA and
lesser weight to fair value calculated as a multiple of assets under management. Fair values calculated using
one-year and two-year forward and trailing twelve-month revenue multiples, and one-year, two-year and
trailing twelve-month EBITDA multiples are each weighted 15 percent, while fair value calculated based on
a multiple of assets under management is weighted 10 percent.
If the carrying amount of the reporting unit exceeds its calculated fair value, the second step of the goodwill
impairment test will be performed to measure the amount of the impairment loss, if any.
Intangible assets
Amortizing identifiable intangible assets generally represent the cost of client relationships, intellectual
property and management contracts acquired. In valuing these assets, the Company makes assumptions
regarding useful lives and projected growth rates, and significant judgment is required. The Company
periodically reviews its identifiable intangible assets for impairment as events or changes in circumstances
indicate that the carrying amount of such assets may not be recoverable. If the carrying amounts of those
assets exceed their respective fair values, additional impairment tests are performed to measure the amounts
of the impairment losses, if any.
Non-amortizing intangible assets generally represent the cost of mutual fund management contracts
acquired. Non-amortizing intangible assets are tested for impairment in the fourth quarter of each fiscal year
by comparing the fair values of the management contracts acquired to their carrying values. The Company
establishes fair value for purposes of impairment testing using the income approach. If the carrying value of
a management contract acquired exceeds its fair value, an impairment loss is recognized equal to that
excess.
Debt issuance costs
Deferred debt issuance costs are amortized using the effective interest method over the related term of the
debt and are included in other assets. The amortization of deferred debt issuance costs is included in interest
expense.
Appropriated retained earnings (deficit)
The Company records appropriated retained earnings (deficit) equal to the difference between the fair value
of consolidated CLO assets and the fair value of consolidated CLO liabilities that can be attributed to
external investors. The amount is recorded as appropriated retained earnings (deficit) since the other holders
of the CLOs’ beneficial interests, not the Company, will receive the benefits or absorb the losses associated
with their proportionate share of the CLOs’ assets and liabilities. For all periods presented, the net changes
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in the fair value of consolidated CLO assets and liabilities that can be attributed to the CLOs’ other
beneficial interest holders have been recorded as net income attributable to non-controlling and other
beneficial interests and as an adjustment to appropriated retained earnings (deficit).
Revenue recognition
Investment advisory and administrative fees
Investment advisory and administrative fees for the funds and investment advisory fees for separate
accounts managed by the Company are recorded in revenue as the services are performed. Such fees are
based primarily on predetermined percentages of the market values of the assets under management. The
Company’s fund investment advisory and administrative fees are calculated principally as a percentage of
average daily net assets. The Company’s separate account investment advisory fees are calculated as a
percentage of either beginning, average or ending monthly or quarterly net assets. Investment advisory and
administrative fees for the funds are earned daily and paid monthly; investment advisory fees for separate
accounts are earned daily and paid either monthly or quarterly. The Company may waive certain fees for
investment and administrative services at its discretion.
The Company has contractual arrangements with third parties to provide certain fund-related services,
including sub-advisory and distribution-related services. Management’s determination of whether revenue
should be reported gross based on the amount paid by the funds or net of payments to third-party service
providers is based on management’s assessment of whether the Company is acting as the principal service
provider or is acting as an agent. The primary factors considered in assessing the nature of the Company’s
role include (1) whether the Company is responsible for the fulfillment of the obligation, including the
acceptability of the services provided; (2) whether the Company has reasonable latitude to establish the
price of the service provided; (3) whether the Company has the discretion to select the service provider; and
(4) whether the Company assumes credit risk in the arrangement.
Pursuant to management’s assessment of the criteria described above, investment advisory and
administrative fees are recorded gross of any sub-advisory payments, with the corresponding fees paid to
any sub-adviser based on the terms of those arrangements included in fund-related expenses in the
Company’s Consolidated Statements of Income.
Distribution, underwriter and service fees
Eaton Vance Distributors, Inc. (“EVD”) currently sells the Company’s open-end mutual funds under five
primary pricing structures: front-end load commission (“Class A”); level-load commission (“Class C”);
institutional no-load (“Class I,” “Class R6” and “Institutional Class,” referred to herein as “Class I”); retail
no-load (“Investor Class” and “Advisers Class,” referred to herein as “Class N”); and retirement plan level-
load (“Class R”). Distribution and service fees for all share classes, as further described below, are
calculated as a percentage of average daily net assets and recorded in revenue as earned, gross of any third-
party distribution and service fee payments made. Distribution and service fees are earned daily and paid
monthly. The expenses associated with third-party distribution and service fee arrangements are recorded in
distribution and service fee expense, respectively, as the services are provided by the third party. These
expenses are also paid monthly.
For Class A shares, the shareholder pays an underwriter commission to EVD of up to 75 basis points of the
dollar value of the shares sold. Underwriter commissions are recorded in revenue at the time of sale. Under
certain conditions, the Company may waive the front-end sales load on Class A shares and sell the shares at
net asset value. EVD does not receive underwriter commissions on such sales. In addition, for most Class A
shares EVD generally receives (and then pays to authorized firms after one year) a combined distribution
and service fee of up to 30 basis points of average net assets annually.
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In January 2012, the Company suspended sales of Class B shares. Additional investment in this share class is
limited to exchanges and the reinvestment of distributions by existing Class B shareholders. EVD continues to
recover dealer commissions previously paid on behalf of Class B shareholders through distribution fees limited
to 75 basis points annually of the average net assets of the Class B shares. In addition, EVD receives, and then
pays to authorized firms, a service fee not to exceed 25 basis points annually of average net assets. Class B
shares automatically convert to Class A shares after eight years of ownership.
For Class C shares, the shareholder pays no front-end commissions and no contingent deferred sales charges on
redemptions after the first year. EVD pays a commission and the projected first year service fees to the dealer at
the time of sale, which together are capitalized and amortized over the first year. EVD receives distribution fees
and service fees at an annual rate of up to 75 basis points and 25 basis points, respectively, of average net assets
of the Class. EVD pays both the distribution fee and service fee to the dealer after one year. Redemptions of
Class C shares within twelve months of purchase are generally subject to deferred sales charges of one percent.
Class I shares are offered at net asset value and are not subject to any sales charges, underwriter commissions,
distribution fees or service fees.
Class N shares are offered at net asset value and are not subject to any sales charges or underwriter
commissions. Class N shares pay a combined distribution and service fee of 25 basis points of average net
assets of the Class annually. EVD pays the service fee to the dealer after one year.
Class R shares are offered at net asset value with no front-end sales charge. The Company receives and then
generally pays to dealers distribution and service fees each of 25 basis points of average net assets of the Class
annually.
Advertising and promotion
The Company expenses all advertising and promotional costs as incurred. Advertising costs incurred were
not material to the Company’s Consolidated Financial Statements in the fiscal years ended October 31,
2015, 2014 or 2013.
Leases
The Company leases office space under various leasing arrangements. As leases expire, they are normally
renewed or replaced in the ordinary course of business. Most lease agreements contain renewal options, rent
escalation clauses and/or other inducements provided by the landlord. Rent expense is recorded on a
straight-line basis, including escalations and inducements, over the lease term.
Earnings per share
Earnings per basic and diluted share are calculated under the two-class method. Pursuant to the two-class
method, the Company’s unvested restricted stock awards with non-forfeitable rights to dividends, which relate
exclusively to restricted stock awards granted on or before November 1, 2012, are considered participating
securities. Under the two-class method, earnings per basic share is calculated by dividing net income available
to Eaton Vance Corp. shareholders by the weighted-average number of common shares outstanding during the
period. The two-class method includes an earnings allocation formula that determines earnings per share for
each participating security according to dividends declared and undistributed earnings for the period. Net
income available to Eaton Vance Corp. shareholders is reduced by the amount allocated to participating
restricted shares to arrive at the earnings allocated to common stock shareholders for purposes of calculating
earnings per share. Dividends declared per share on the unvested restricted shares are equal to the dividends
declared per common share on the Company’s Voting and Non-Voting Common Stock. Earnings per diluted
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share is computed on the basis of the weighted-average number of common shares outstanding during the
period plus the dilutive effect of any potential common shares outstanding during the period using the more
dilutive of the treasury method or two-class method.
Stock-based compensation
The Company accounts for stock-based compensation expense at fair value. Under the fair value method,
stock-based compensation expense, which reflects the fair value of stock-based awards measured at grant
date, is recognized on a straight-line basis over the relevant service period (generally five years) and is
adjusted each period for anticipated forfeitures.
The fair value of each option award granted is estimated using the Black-Scholes option valuation model.
The Black-Scholes option valuation model incorporates assumptions as to dividend yield, volatility, an
appropriate risk-free interest rate and the expected life of the option.
The fair value of profit interests granted under subsidiary long-term equity plans is estimated on the grant
date by averaging fair value established using an income approach and fair value established using a market
approach for each subsidiary. The income and fair value approaches used in the determination of grant date
fair value of profit interests are consistent with those described in Goodwill above.
Tax benefits realized upon the exercise of stock options that are in excess of the expense previously
recognized for financial reporting purposes are recorded in shareholders’ equity and reflected as a financing
activity in the Company’s Consolidated Statements of Cash Flows. If the tax benefit realized is less than the
expense previously recorded, the shortfall is recorded in shareholders’ equity. To the extent the expense
exceeds available windfall tax benefits, it is recorded in the Company’s Consolidated Statements of Income
and reflected as an operating activity on the Company’s Consolidated Statements of Cash Flows.
Foreign currency translation
Substantially all of the Company’s foreign subsidiaries have a functional currency that is something other
than the U.S. dollar. Assets and liabilities of these subsidiaries are translated into U.S. dollars at current
exchange rates as of the end of each accounting period. Related revenue and expenses are translated at
average exchange rates in effect during the accounting period. Net translation exchange gains and losses are
excluded from income and recorded in accumulated other comprehensive income (loss). Foreign currency
transaction gains and losses are reflected in gains (losses) and other investment income, net, as they occur.
Comprehensive income
The Company reports all changes in comprehensive income in its Consolidated Statements of
Comprehensive Income. Comprehensive income includes net income, the change in unrealized gains on
certain derivatives, the amortization of net gains and losses on certain derivatives, unrealized holding gains
and losses on investment securities classified as available-for-sale and foreign currency translation
adjustments, in each case net of tax. When the Company has established an indefinite reinvestment assertion
for a foreign subsidiary, deferred income taxes are not provided on the related foreign currency translation
exchange gains and losses.
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Non-controlling interests
Non-redeemable non-controlling interests consist entirely of unvested interests granted to employees of the
Company’s majority-owned subsidiaries under subsidiary-specific long-term equity plans. These grants
become subject to holder put rights upon vesting and are reclassified to temporary equity as vesting occurs.
Non-controlling interests redeemable at fair value consist of interests in the Company’s consolidated
sponsored funds and certain vested interests held by employees of our majority-owned subsidiaries under
the subsidiaries’ long-term equity plans. The Company’s non-controlling interests redeemable at fair value
are recorded in temporary equity at estimated redemption value and changes in the estimated redemption
value of these interests are recognized as increases or decreases to additional paid-in capital.
Non-controlling interests redeemable at other than fair value consist of certain other interests in the
Company’s majority-owned subsidiaries. These interests are subject to holder put rights and Company call
rights at established multiples of earnings before interest and taxes and, as such, are considered redeemable
at other than fair value. The put and call rights are not legally detachable or separately exercisable and are
deemed to be embedded in the related non-controlling interests. Non-controlling interests redeemable at
other than fair value are recorded on the Company’s Consolidated Balance Sheets in temporary equity at
estimated redemption value, and changes in estimated redemption value of these interests are recorded to the
Company’s Consolidated Statements of Income as increases or decreases to net income attributable to non-
controlling and other beneficial interests.
Loss contingencies
The Company continuously reviews any investor, employee or vendor complaints and pending or threatened
litigation. The Company evaluates the likelihood that a loss contingency exists under the criteria of
applicable accounting standards through consultation with legal counsel and records a loss contingency,
inclusive of legal costs, if the contingency is probable and reasonably estimable at the date of the financial
statements. There are no losses of this nature that are currently deemed probable and reasonably estimable,
and, thus, none have been recorded in the accompanying Consolidated Financial Statements.
2. New Accounting Standards Not Yet Adopted
Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing
Entity
In August 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-13, Measuring the
Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity, which
provides a measurement alternative for an entity that consolidates collateralized financing entities (“CFEs”).
If elected, the alternative method results in the reporting entity measuring both the financial assets and
financial liabilities of the CFE using the more observable of the two fair value measurements, which
effectively removes measurement differences between the financial assets and financial liabilities of the
CFE previously recorded as net income (loss) attributable to non-controlling and other beneficial interests
and as an adjustment to appropriated retained earnings. The reporting entity continues to measure its own
beneficial interests in the CFE (other than those that represent compensation for services) at fair value. The
new guidance is effective for the Company’s fiscal year that begins on November 1, 2016 and requires
either a retrospective or modified retrospective approach to adoption, with early adoption permitted. The
Company is currently evaluating the potential impact on its Consolidated Financial Statements and related
disclosures.
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Consolidation
In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis, which
amends the consolidation requirements in ASC 810, Consolidation. Based on the guidance provided in this
ASU, all entities are now within the scope of ASC 810, unless a specific scope exception applies. Additional
amendments remove the presumption that a general partner controls a limited partnership and place more
emphasis on variable interests other than fee arrangements in the consolidation evaluation of VIEs. This
ASU also eliminates the deferral under ASU 2010-10 for certain investment funds. The new guidance is
effective for annual periods, and interim periods within those annual periods, for the Company’s fiscal year
that begins on November 1, 2016 and allows for either a full retrospective or a modified retrospective
adoption approach. Early adoption is allowed, but the guidance must be applied as of the beginning of the
annual period containing the adoption date. The Company is currently evaluating the potential impact on its
Consolidated Financial Statements and related disclosures.
Presentation of Debt Issuance Costs
In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which
changes the presentation of debt issuance costs in the balance sheet. The new guidance requires that debt
issuance costs be presented as a deduction from the carrying amount of the related debt rather than being
presented as an asset. Amortization of debt issuance costs will continue to be reported as interest expense.
The new guidance is effective for the Company’s fiscal year that begins on November 1, 2016 and requires
retrospective application for each prior period presented. Early adoption is permitted for financial statements
that have not been previously issued. The Company is currently evaluating the impact on its Consolidated
Financial Statements.
Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement
In April 2015, the FASB issued ASU 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing
Arrangement, which provides guidance about whether a cloud computing arrangement includes a software
license. The guidance does not change the current treatment for accounting for software licenses or service
contracts. The new guidance is effective for the Company’s fiscal year that begins on November 1, 2016.
Early adoption is permitted. The update allows for either prospective or retrospective adoption. The
Company is currently evaluating the available transition methods and the potential impact on its
Consolidated Financial Statements and related disclosures.
Revenue from Contracts with Customers
In August 2015, the FASB issued ASU 2015-14, Revenue From Contracts with Customers (Topic 606),
Deferral of the Effective Date, which defers the effective date of ASU 2014-09, Revenue from Contracts
with Customers (Topic 606) to November 1, 2018 for the Company, with early adoption permitted as of its
original effective date of November 1, 2017. The new guidance requires either a retrospective or a modified
retrospective approach to adoption. The Company is currently evaluating the available transition methods
and the potential impact on its Consolidated Financial Statements and related disclosures.
3. Consolidated Sponsored Funds
Underlying investments held by consolidated sponsored funds were included in investments on the
Company’s Consolidated Balance Sheets and classified as trading securities at October 31, 2015 and 2014.
Net investment income or loss related to consolidated sponsored funds was included in gains (losses) and
other investment income, net, on the Company’s Consolidated Statements of Income for all periods
presented. The impact of consolidated sponsored funds’ net income or (loss) on net income attributable to
Eaton Vance Corp. shareholders was reduced by amounts attributable to non-controlling interest holders,
which are recorded in net income attributable to non-controlling and other beneficial interests on the
Company’s Consolidated Statements of Income for all periods presented.
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The following table sets forth the balances related to consolidated sponsored funds at October 31, 2015 and
2014, as well as the Company’s net interest in these funds:
(in thousands)
Investments
Other assets
Other liabilities
Redeemable non-controlling interests
Net interest in consolidated sponsored funds(1)
2015
$ 196,395
6,011
(25,729)
(11,939)
$ 164,738
2014
$ 172,413
19,474
(32,559)
(8,983)
$ 150,345
(1)
Excludes the Company's investment in its consolidated CLO entity, which is discussed in Note 8.
During the fiscal years ended October 31, 2015 and 2014, the Company de-consolidated a total of five and
four sponsored funds, respectively.
4. Investments
The following is a summary of investments at October 31, 2015 and 2014:
(in thousands)
Investment securities, trading:
Short-term debt
Consolidated sponsored funds
Separately managed accounts
Total investment securities, trading
Investment securities, available-for-sale
Investments in non-consolidated CLO entities
Investments in equity method investees
Investments, other
Total investments(1)
2015
2014
$
$
77,395
196,395
56,859
330,649
25,720
4,363
144,137
2,151
507,020
$
$
156,972
172,413
51,660
381,045
30,167
4,033
206,352
3,008
624,605
(1) Excludes the Company's investment in its consolidated CLO entity, which is discussed in Note 8.
Investment securities, trading
The Company seeds new fund and separate account investment strategies on a regular basis as a means of
establishing investment records that can be used in marketing those strategies to retail and institutional
clients. A separately managed account seeded by the Company for product development purposes is not a
legal entity subject to consolidation, but rather an individual portfolio of securities in the Company’s name.
As a result, the Company looks through the construct of the portfolio to the underlying debt and equity
securities and treats these securities as trading securities for accounting and disclosure purposes. The
following is a summary of the fair value of investments classified as trading at October 31, 2015 and 2014:
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(in thousands)
Short-term debt
Other debt - consolidated sponsored funds and
separately managed accounts
Equity securities - consolidated sponsored funds and
separately managed accounts
Total investment securities, trading
2015
77,395
136,959
116,295
330,649
$
$
2014
156,972
83,824
140,249
381,045
$
$
During the fiscal year ended October 31, 2015, the Company seeded investments in nine sponsored funds
and 21 separately managed accounts. During the fiscal year ended October 31, 2014, the Company seeded
investments in 15 sponsored funds and one separately managed account.
The Company recognized gains (losses) related to trading securities still held at the reporting date of $(14.7)
million, $(6.9) million and $16.5 million for the years ended October 31, 2015, 2014 and 2013, respectively,
within gains (losses) and other investment income, net, in the Company’s Consolidated Statements of
Income.
Investment securities, available-for-sale
The following is a summary of the gross unrealized gains (losses) included in accumulated other
comprehensive income (loss) related to securities classified as available-for-sale at October 31, 2015 and
2014:
October 31, 2015
Gross Unrealized
(in thousands)
Investment securities, available-for-sale
Cost
$ 19,586
Gains
$
6,450
Losses
(316)
$
Fair Value
25,720
$
October 31, 2014
Gross Unrealized
(in thousands)
Investment securities, available-for-sale
Cost
$ 21,032
Gains
$
9,159
Losses
(24)
$
Fair Value
30,167
$
Net unrealized holding gains (losses) on investment securities classified as available-for-sale included in
other comprehensive income (loss), net of tax on the Company’s Consolidated Statements of
Comprehensive Income were $(8,000), $1.9 million and $(1.5) million for the years ended October 31,
2015, 2014 and 2013, respectively.
The Company evaluated gross unrealized losses of $(0.3) million as of October 31, 2015 and determined
that these losses were not other-than-temporary, primarily because the Company has both the ability and
intent to hold the investments for a period of time sufficient to recover such losses. The aggregate fair value
of investments with unrealized losses was $5.4 million at October 31, 2015. No investment with a gross
unrealized loss has been in a loss position for greater than one year.
The following is a summary of the Company’s realized gains and losses upon disposition of investments
classified as available-for-sale for the years ended October 31, 2015, 2014 and 2013:
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(in thousands)
Gains
Losses
Net realized gains (losses)
2015
2014
2013
$
$
7,828 $
(3,885)
3,943 $
823 $
(904)
(81) $
5,978
(235)
5,743
Investments in non-consolidated CLO entities
The Company provides investment management services for, and has made investments in, a number of
CLO entities that it does not consolidate on its Consolidated Financial Statements. The Company’s
ownership interests in non-consolidated CLO entities are carried at amortized cost unless impaired. The
Company earns investment management fees, including subordinated management fees, for managing the
collateral of the CLO entities. At October 31, 2015 and 2014, combined assets under management in the
pools of non-consolidated CLO entities were $2.1 billion and $2.4 billion, respectively. The Company’s
maximum exposure to loss as a result of its investments in the equity of non-consolidated CLO entities is
the carrying value of such investments, which was $4.4 million and $4.0 million at October 31, 2015 and
2014, respectively. Investors in these CLO entities have no recourse against the Company for any losses
sustained in the CLO structures.
The Company did not recognize any impairment losses on investments in non-consolidated CLO entities in
fiscal 2015, 2014 or 2013.
Investments in equity method investees
The Company has a 49 percent interest in Hexavest Inc. (“Hexavest”), a Montreal, Canada-based investment
adviser. The carrying value of this investment was $142.1 million and $166.0 million at October 31, 2015
and 2014, respectively. At October 31, 2015, the Company’s investment in Hexavest consisted of $5.5
million of equity in the net assets of Hexavest, intangible assets of $27.0 million and goodwill of $116.9
million, net of a deferred tax liability of $7.3 million. At October 31, 2014, the Company’s investment in
Hexavest consisted of $5.9 million of equity in the net assets of Hexavest, intangible assets of $33.5 million
and goodwill of $135.6 million, net of a deferred tax liability of $9.0 million. The investment is
denominated in Canadian dollars and is subject to foreign currency translation adjustments, which are
recorded in accumulated other comprehensive income (loss).
During fiscal 2014, the Company made a contingent payment of $5.0 million to the Hexavest selling group
based upon prescribed multiples of Hexavest’s revenue for the twelve months ended August 31, 2014. The
payment increased equity method goodwill.
The Company has an option, exercisable in fiscal 2017, to purchase an additional 26 percent interest in
Hexavest. As part of the purchase price allocation, a value of $8.3 million was assigned to this option. The
option is included in other assets in the Company’s Consolidated Balance Sheets at October 31, 2015 and
2014.
The Company has a seven percent equity interest in a private equity partnership managed by a third party
that invests in companies in the financial services industry. The Company’s investment in the partnership
was $2.0 million and $4.2 million at October 31, 2015 and 2014, respectively.
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At October 31, 2015, the Company did not account for any Eaton Vance-sponsored funds under the equity
method. The Company had equity method investments in the following Company-sponsored funds at
October 31, 2014:
(dollar amounts in thousands)
Eaton Vance Real Estate Fund
Eaton Vance Focused Growth Opportunities Fund
Eaton Vance Focused Value Opportunities Fund
Eaton Vance Tax-Advantaged Bond Strategies Long Term Fund
Eaton Vance Currency Income Advantage Fund
Total
Equity
Ownership
Interest (%)
2014
Carrying
Value ($)(1)
2014
34%
33%
32%
27%
43%
$
$
11,953
9,559
7,588
6,105
973
36,178
(1) The carrying value of equity method investments in Company-sponsored funds is measured based on the funds’ net asset
values. The Company has the ability to redeem its investments in these funds at any time.
Summarized financial information for the Company’s equity method investees at October 31, 2015 and
2014 and for the years ended October 31, 2015, 2014 and 2013 is as follows:
2015
Other
Investees
Hexavest
Total
Hexavest
2014
Other
Investees
Total
(in thousands)
Balance Sheets
Total assets
Total liabilities
Outside equity interests
$
27,268 $
11,668
10,150
34,912 $
311
32,520
62,180 $
11,979
42,670
30,989 $
13,854
11,290
194,981 $
1,757
152,825
225,970
15,611
164,115
(in thousands)
Statements of Income(1)
Revenue
Operating income (loss)
Net income
(in thousands)
Statements of Income(1)
Revenue
Operating income (loss)
Net income
$
$
2015
Other
Investees
Hexavest
Total
Hexavest
2014
Other
Investees
Total
50,727 $
30,532
22,656
2,172 $
946
28,357
52,899 $
31,478
51,013
57,981 $
34,957
24,876
300 $
(2,337)
43,090
58,281
32,620
67,966
2013
Other
Investees
Total
Hexavest
45,680 $
27,386
20,870
1,241 $
(2,315)
29,665
46,921
25,071
50,535
(1) Statement of income figures are included only for the time in which the investees were accounted for under the equity method.
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The Company did not recognize any impairment losses related to its investments in equity method investees
during the years ended October 31, 2015, 2014 or 2013.
During the years ended October 31, 2015, 2014 and 2013, the Company received dividends of $15.9
million, $16.1 million and $16.9 million, respectively, from its investments in equity method investees.
Investments, other
Investments, other, consist of certain investments carried at cost totaling $2.2 million and $3.0 million as of
October 31, 2015 and 2014, respectively, including a non-controlling capital interest in Atlanta Capital
Management Holdings, LLC (“ACM Holdings”), a partnership that owns certain non-controlling interests of
Atlanta Capital. The Company’s interest in ACM Holdings is non-voting and entitles the Company to
receive a portion of the proceeds when put or call options for certain non-controlling interests of Atlanta
Capital are exercised. The Company’s investment in ACM Holdings decreased to $0.4 million at October
31, 2015 from $1.3 million at October 31, 2014, reflecting the call options exercised in fiscal 2015 as
disclosed in Note 10. Management believes that the carrying value of the Company’s other investments
approximates fair value.
5. Fair Value Measurements
As discussed in Note 1, accounting standards define fair value as the price that would be received for an
asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market
in an orderly transaction between market participants on the measurement date. The accounting standards
establish a fair value measurement hierarchy that prioritizes inputs to valuation techniques and gives the
highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to
unobservable inputs.
The following tables summarize financial assets and liabilities measured at fair value on a recurring basis
and their assigned levels within the valuation hierarchy at October 31, 2015 and 2014:
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October 31, 2015
(in thousands)
Financial assets:
Cash equivalents
Investments:
Investment securities, trading:
Short-term debt
Other debt - consolidated sponsored funds
and separately managed accounts
Equity - consolidated sponsored funds
and separately managed accounts
Investment securities, available-for-sale
Investments in non-consolidated CLO
entities(1)
Investments in equity method investees(2)
Investments, other(3)
Derivative instruments
Assets of consolidated CLO entity:
Bank loan investments
Total financial assets
Level 1
Level 2
Level 3
Other
Assets Not
Held at
Fair
Value
Total
$
14,599 $
39,447 $
- $
- $
54,046
-
77,395
20,822
116,137
71,535
23,544
44,760
2,176
-
-
103
298
-
-
-
-
-
$
130,500 $
-
-
-
-
-
-
-
-
-
-
-
-
4,363
144,137
2,048
-
77,395
136,959
116,295
25,720
4,363
144,137
2,151
298
304,250
584,566 $
-
- $
-
150,548 $
304,250
865,614
Financial liabilities:
Derivative instruments
Securities sold, not yet purchased
Liabilities of consolidated CLO entity:
Senior and subordinated note obligations
Total financial liabilities
$
$
- $
-
5,423 $
3,034
-
- $
397,039
405,496 $
- $
-
-
- $
- $
-
-
- $
5,423
3,034
397,039
405,496
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October 31, 2014
(in thousands)
Financial assets:
Cash equivalents
Investments:
Investment securities, trading:
Short-term debt
Other debt - consolidated sponsored funds
and separately managed accounts
Equity - consolidated sponsored funds
and separately managed accounts
Investment securities, available-for-sale
Investments in non-consolidated CLO
entities(1)
Investments in equity method investees(2)
Investments, other(3)
Derivative instruments
Assets of consolidated CLO entity:
Cash equivalents
Bank loans and other investments
Total financial assets
Level 1
Level 2
Level 3
Other
Assets Not
Held at
Fair
Value
Total
$
19,599 $
60,312 $
- $
- $
79,911
-
156,972
10,799
73,025
86,504
23,600
53,745
6,567
-
-
-
-
-
-
61
4,416
-
-
-
-
-
-
-
-
-
-
-
-
4,033
206,352
2,947
-
8,697
-
-
146,315
$
149,199 $ 501,413 $
-
801
801 $
-
-
213,332 $
156,972
83,824
140,249
30,167
4,033
206,352
3,008
4,416
8,697
147,116
864,745
Financial liabilities:
Derivative instruments
Securities sold, not yet purchased
Liabilities of consolidated CLO entity:
Senior and subordinated note obligations
Total financial liabilities
$
$
- $
-
2,618 $
981
- $
-
- $
-
2,618
981
-
2,672
149,310
-
151,982
- $
6,271 $ 149,310 $
- $
155,581
The Company’s investments in these CLO entities are measured at fair value on a non-recurring basis using Level 3 inputs.
The investments are carried at amortized cost unless facts and circumstances indicate that the investments have been
impaired, at which time the investments are written down to fair value. There was no re-measurement of these assets during
the years ended October 31, 2015 or 2014.
Investments in equity method investees are not measured at fair value in accordance with GAAP.
Investments, other, include investments carried at cost that are not measured at fair value in accordance with GAAP.
Valuation methodologies
Cash equivalents
Cash equivalents include investments in money market funds, holdings of U.S. Treasury and government
agency securities, and commercial paper with original maturities of less than three months. Cash
investments in actively traded money market funds are valued using published net asset values and are
(1)
(2)
(3)
90
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classified as Level 1 within the fair value measurement hierarchy. Treasury and government agency
securities are valued based upon quoted market prices for similar assets in active markets, quoted prices for
identical or similar assets that are not active, and inputs other than quoted prices that are observable or
corroborated by observable market data. The carrying amounts of commercial paper are measured at
amortized cost, which approximates fair value due to the short time between the purchase and expected
maturity of the investments. Depending on the nature of the inputs, these assets are generally classified as
Level 1 or 2 within the fair value measurement hierarchy.
Investment securities, trading – short-term debt
Short-term debt securities include certificates of deposit, commercial paper and corporate debt obligations
with remaining maturities from three months to 12 months. Short-term debt securities held are generally
valued on the basis of valuations provided by third-party pricing services, as derived from such services’
pricing models. Inputs to the models may include, but are not limited to, reported trades, executable bid and
ask prices, broker-dealer quotations, prices or yields of securities with similar characteristics, benchmark
curves or information pertaining to the issuer, as well as industry and economic events. The pricing services
may use a matrix approach, which considers information regarding securities with similar characteristics to
determine the valuation for a security. Depending on the nature of the inputs, these assets are generally
classified as Level 1 or 2 within the fair value measurement hierarchy.
Investment securities, trading – other debt
Other debt securities classified as trading include debt obligations held in the portfolios of consolidated
sponsored funds and separately managed accounts. Other debt securities held are generally valued on the
basis of valuations provided by third-party pricing services as described above for investment securities,
trading – short-term debt. Other debt securities purchased with a remaining maturity of 60 days or less
(excluding those that are non-U.S. denominated, which typically are valued by a third-party pricing service
or dealer quotes) are generally valued at amortized cost, which approximates fair value. Depending upon the
nature of the inputs, these assets are generally classified as Level 1 or 2 within the fair value measurement
hierarchy.
Investment securities, trading – equity
Equity securities classified as trading include foreign and domestic equity securities held in the portfolios of
consolidated sponsored funds and separately managed accounts. Equity securities are valued at the last sale,
official close or, if there are no reported sales on the valuation date, at the mean between the latest available
bid and ask prices on the primary exchange on which they are traded. When valuing foreign equity
securities that meet certain criteria, the portfolios use a fair value service that values such securities to
reflect market trading that occurs after the close of the applicable foreign markets of comparable securities
or other instruments that have a strong correlation to the fair-valued securities. In addition, the Company
performs its own independent back test review of fair values versus the subsequent local market opening
prices when available. Depending upon the nature of the inputs, these assets generally are classified as Level
1 or 2 within the fair value measurement hierarchy.
Investment securities, available-for-sale
Investment securities classified as available-for-sale include investments in sponsored mutual funds and
privately offered equity funds. Sponsored mutual funds are valued using published net asset values and are
classified as Level 1 within the fair value measurement hierarchy. Investments in sponsored privately
offered equity funds and portfolios that are not listed on an active exchange but have net asset values that
are comparable to mutual funds and have no redemption restrictions are classified as Level 2 within the fair
value measurement hierarchy.
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Derivative instruments
Derivative instruments, which include foreign exchange contracts, stock index futures contracts, commodity
futures contracts, total return swap contracts, interest rate swap contracts and interest rate futures contracts,
are recorded as either other assets or other liabilities on the Company’s Consolidated Balance Sheets.
Foreign exchange contracts and interest rate swap contracts are valued by interpolating a value using the
spot foreign exchange rate and forward points, which are based on spot rate and currency interest rate
differentials. Stock index futures contracts, commodity futures contracts, interest rate futures contracts and
total return swap contracts are valued using a third-party pricing service that determines fair value based on
bid and ask prices. Derivative instruments generally are classified as Level 2 within the fair value
measurement hierarchy.
Assets of consolidated CLO entities
Assets of the Company’s consolidated CLO entities include investments in bank loans, debt securities,
money market funds and equity securities. Fair value is determined utilizing unadjusted quoted market
prices when available. Investments in money market funds are valued using published net asset values and
are classified as Level 1 within the fair value measurement hierarchy. Debt and equity securities are valued
using the same techniques as described above for trading securities. Interests in senior floating-rate loans for
which reliable market quotations are readily available are valued generally at the average mid-point of bid
and ask quotations obtained from a third-party pricing service. Fair value may also be based upon valuations
obtained from independent third-party brokers or dealers utilizing matrix pricing models that consider
information regarding securities with similar characteristics. In certain instances, fair value has been
determined utilizing discounted cash flow analyses or single broker non-binding quotes. Depending on the
nature of the inputs, these assets are classified as Level 1, 2 or 3 within the fair value measurement
hierarchy.
Securities sold, not yet purchased
Securities sold, not yet purchased, are recorded as other liabilities on the Company’s Consolidated Balance
Sheets and are valued by a third-party pricing service that determines fair value based on bid and ask prices.
Securities sold, not yet purchased, generally are classified as Level 2 within the fair value measurement
hierarchy.
Liabilities of consolidated CLO entities
Liabilities of the Company’s consolidated CLO entities include debt securities and senior and subordinated
note obligations. Debt securities are valued based upon quoted prices for identical or similar liabilities that
are not active and inputs other than quoted prices that are observable or corroborated by observable market
data. Senior and subordinated notes generally are valued utilizing an income-approach model in which one
or more significant inputs are unobservable in the market. A full description of this valuation technique is
included within the valuation process disclosure below. Depending on the nature of the inputs, these
liabilities are classified as Level 2 or 3 within the fair value measurement hierarchy. As of October 31, 2015,
the liabilities of Eaton Vance CLO 2015-1 include senior and subordinated notes issued at closing of the
entity on October 29, 2105. As a result, these liabilities are valued based on the closing transaction price and
are classified as Level 2 within the fair value measurement hierarchy.
Transfers in and out of Levels
The following table summarizes fair value transfers between Level 1 and Level 2 of the fair value
measurement hierarchy for the years ended October 31, 2015 and 2014:
(in thousands)
Transfers from Level 1 into Level 2(1)
Transfers from Level 2 into Level 1(2)
2015
$
314
29
2014
$
249
1,192
92
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(1)
(2)
Transfers from Level 1 into Level 2 primarily represent debt and equity securities formerly classified as Level 1 for
which unadjusted quoted market prices in active markets became unavailable in the current period.
Transfers from Level 2 into Level 1 primarily represent debt and equity securities formerly classified as Level 2 for
which unadjusted quoted market prices in active markets became available in the current period.
Level 3 assets and liabilities
As discussed more fully in Note 8, the Company de-consolidated Eaton Vance CLO IX on August 1, 2015
and Eaton Vance CLO 2013-1 on May 1, 2014. The following table shows a reconciliation of the beginning
and ending fair value measurements of assets and liabilities valued on a recurring basis and classified as
Level 3 within the fair value measurement hierarchy for the years ended October 31, 2015 and 2014:
2015
2014
Bank loans
and other
investments of
consolidated
CLO entity
Senior and
subordinated
note
obligations of
consolidated
CLO entity
Bank loans
and other
investments of
consolidated
CLO entities
Senior and
subordinated
note
obligations
and
redeemable
preferred
shares of
consolidated
CLO entities
$
801
$
149,310
$
1,245
$
276,476
-
-
(281)
-
(137)
-
-
-
(383)
-
$
-
(4,097)
(2,426)
1,379
-
-
(144,166)
-
-
-
-
-
(183)
-
(1,061)
-
-
800
-
421,523
(419,193)
(1,209)
-
-
75
(128,362)
-
-
$
801
$
149,310
-
$
-
$
35
$
(1,196)
$
$
(in thousands)
Beginning balance
Issuance of senior and subordinated notes
and redeemable preferred shares
De-consolidation of senior and subordinated
notes and redeemable preferred shares
Net gains (losses) on investments and
note obligations included in net
income(1)
Additions(2)
Sales
Amortization of original issue discount
on senior notes
Principal paydown
Transfers into Level 3(3)
Transfers out of Level 3(4)
Ending balance
Change in unrealized gains (losses)
included in net income relating to
assets and liabilities held
(1)
(2)
(3)
Substantially all net gains (losses) on investments, note obligations and redeemable preferred shares attributable to the assets and
borrowings of the Company's consolidated CLO entities are allocated to non-controlling and other beneficial interests on the Company's
Consolidated Statements of Income.
Represents the Company's subordinated interest, which was previously eliminated in consolidation. The Company sold its interest
in the first quarter of fiscal 2015. Refer to Note 8.
Transfers into Level 3 were the result of a reduction in the availability of significant observable inputs used in determining the fair value
16310 annual_cc15.indd 93
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of the securities, including a loan that utilized a discount applied to the demanded yield.
(4)
Transfers out of Level 3 into Level 2 of the fair value measurement hierarchy were due to an increase in the observability of the inputs
used in determining the fair value of certain instruments.
As discussed in Note 8, the senior notes of Eaton Vance CLO IX were paid down in full in the third quarter
of fiscal 2015 in conjunction with a subordinated note holder vote to liquidate the consolidated CLO entity.
The following table shows the valuation technique and significant unobservable inputs utilized in the fair
value measurement of Level 3 liabilities of Eaton Vance CLO IX at October 31, 2014:
October 31, 2014
($ in thousands)
Fair Value
Valuation
Technique
Unobservable
Inputs(1)
Senior and subordinated
note obligations
$
149,310
Income-approach
Prepayment rate
Recovery rate
Default rate
Discount rate
Value/
Range
30 percent
70 percent
200 bps
75-250 bps
(1) Discount rate refers to spread over LIBOR. Lower spreads relate to the more senior tranches in the CLO note structure;
higher spreads relate to the less senior tranches. The default rate refers to the constant annual default rate. The recovery rate is
the expected recovery of defaulted amounts received through asset sales, recovery through bankruptcy restructuring or other
settlement processes. The prepayment rate is the rate at which the underlying collateral is expected to repay principal.
Valuation process
Senior and subordinated note obligations of the Company’s consolidated CLO entities are issued in various
tranches with different risk profiles. The notes are valued on a quarterly basis by the Company’s bank loan
investment team utilizing an income approach that projects the cash flows of the collateral assets using the
team’s projected default rate, prepayment rate, recovery rate and discount rate, as well as observable
assumptions about market yields, collateral reimbursement assumptions, callability and other market factors
that vary based on the nature of the investments in the underlying collateral pool. Once the undiscounted
cash flows of the collateral assets have been determined, the bank loan team applies appropriate discount
rates that it believes a reasonable market participant would use to determine the discounted cash flow
valuation of the notes. The bank loan team routinely monitors market conditions and model inputs for
cyclical and secular changes in order to identify any material factors that could influence the Company’s
valuation method. The bank loan team reports directly to the Chief Income Investment Officer.
Sensitivity to changes in significant unobservable inputs
For senior and subordinated notes issued by the Company’s consolidated CLO entities, increases (decreases)
in discount rates, default rates or prepayment rates in isolation would result in lower (higher) fair value
measurements, while increases (decreases) in recovery rates in isolation would result in higher (lower) fair
value measurements. Generally, a change in the assumption used for the probability of default is
accompanied by a directionally similar change in the assumption used for discount rates and a directionally
opposite change in the assumptions used for prepayment and recovery rates.
Although the Company believes the valuation methods described above are appropriate, the use of different
methodologies or assumptions to determine fair value could result in different estimates of fair value at the
reporting date.
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6. Derivative Financial Instruments
Derivative financial instruments designated as cash flow hedges
During the fiscal years ended October 31, 2015, 2014 and 2013, the Company reclassified into interest
expense $0.2 million, $0.2 million and $0.1 million, respectively, of deferred gains related to a forward-
starting interest rate swap entered into in connection with the issuance of its 3.625 percent senior notes due
June 15, 2023 (the “2023 Senior Notes”). The Company is reclassifying the remaining unamortized gain on
the forward-starting interest rate swap recorded in other comprehensive income (loss) to earnings as a
component of interest expense over the term of the debt. At October 31, 2015, the remaining unamortized
gain was $1.5 million. During the next twelve months, the Company expects to reclassify approximately
$0.2 million of the gain into interest expense.
During the fiscal years ended October 31, 2015, 2014 and 2013, the Company reclassified into interest
expense $0.2 million, $0.2 million and $1.3 million, respectively, of deferred losses related to a Treasury
lock transaction entered into in connection with the issuance of its 6.5 percent unsecured senior notes due
October 2, 2017 (the “2017 Senior Notes”). Amounts for the year ended October 31, 2013 include $0.9
million in interest expense related to the accelerated amortization of the treasury lock tied to the portion of
the 2017 Senior Notes retired on June 28, 2013. The Company is reclassifying the remaining unamortized
loss on the Treasury lock transaction recorded in other comprehensive income (loss) to earnings as a
component of interest expense over the term of the debt. At October 31, 2015, the remaining unamortized
loss was $0.4 million. During the next twelve months, the Company expects to reclassify approximately
$0.2 million of the loss on the Treasury lock transaction into interest expense.
Other derivative financial instruments not designated for hedge accounting
In fiscal 2013, the Company entered into a reverse treasury lock in conjunction with the Company’s tender
offer to purchase up to $250 million of the 2017 Senior Notes. The transaction effectively locked in the
benchmark interest rate to be used in determining the premium above par to be paid to note holders in
conjunction with the repurchase of the 2017 Senior Notes tendered. The reference U.S. Treasury rate
increased during the time the reverse treasury lock was outstanding and the Company recognized a $3.1
million loss upon termination in fiscal 2013. This loss was included in gains (losses) and other investment
income, net, on the Company’s Consolidated Statement of Income.
The Company has entered into a series of foreign exchange contracts, stock index futures contracts,
commodity futures contracts, total return swap contracts, interest rate swap contracts and interest rate
futures contracts to hedge currency risk and market risk associated with its investments in certain
consolidated sponsored funds and separately managed accounts seeded for new product development
purposes. Certain of the consolidated sponsored funds and separately managed accounts may utilize
derivative financial instruments within their portfolios in pursuit of their stated investment objectives.
At October 31, 2015, 2014 and 2013, excluding derivative financial instruments held in certain consolidated
sponsored funds and separately managed accounts, the Company had 28, 39 and 42 foreign exchange
contracts outstanding with four, four and five counterparties with an aggregate notional value of $27.2
million, $16.8 million and $59.1 million, respectively; 1,366, 2,091 and 2,711 stock index futures contracts
outstanding with one counterparty with an aggregate notional value of $97.2 million, $177.3 million and
$200.7 million, respectively; and 56, 566 and 217 commodity futures contracts outstanding with one
counterparty with an aggregate notional value of $3.1 million, $32.3 million and $12.9 million, respectively.
At October 31, 2015, the Company had two total return swap contracts outstanding with one counterparty
with an aggregate notional value of $49.5 million. As of October 31, 2014 and 2013, the Company did not
have any total return swap contracts outstanding. At October 31, 2014, the Company had 122 interest rate
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futures contracts outstanding with one counterparty with an aggregate notional value of $12.4 million.
While the Company had outstanding interest rate futures contracts for certain periods during fiscal 2015, as
of October 31, 2015 and 2013, the Company did not have any interest rate futures contracts outstanding.
While the Company had outstanding interest rate swap contracts for certain periods during fiscal 2015, as of
October 31, 2015, 2014 and 2013, the Company did not have any interest rate swap contracts outstanding.
The number of derivative contracts outstanding and the notional values they represent at October 31, 2015,
2014 and 2013 are indicative of derivative balances throughout each respective year.
The following tables present the fair value of derivative financial instruments, excluding derivative financial
instruments held in certain consolidated sponsored funds and separately managed accounts, not designated
as hedging instruments as of October 31, 2015 and 2014:
October 31, 2015
(in thousands)
Foreign exchange contracts
Stock index futures contracts
Commodity futures contracts
Total return swap contracts
Total
October 31, 2014
Assets
Liabilities
Balance Sheet
Location
Other assets
Other assets
Other assets
Other assets
Fair
Value
133
53
112
-
298
$
$
Balance Sheet
Location
Other liabilities
Other liabilities
Other liabilities
Other liabilities
Fair
Value
540
4,712
43
128
5,423
$
$
Assets
Liabilities
(in thousands)
Foreign exchange contracts
Stock index futures contracts
Commodity futures contracts
Interest rate futures contracts
Total
Balance Sheet
Location
Other assets
Other assets
Other assets
Other assets
Fair
Value
289
2,685
1,442
-
4,416
$
$
Balance Sheet
Location
Other liabilities
Other liabilities
Other liabilities
Other liabilities
Fair
Value
290
1,614
631
83
2,618
$
$
96
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The following is a summary of the net gains (losses) recognized in income for the years ended October 31,
2015, 2014 and 2013:
(in thousands)
Foreign exchange contracts
Stock index futures contracts
Commodity futures contracts
Total return swap contracts
Interest rate futures contracts
Interest rate swap contracts
Interest rate contracts
Total
Income Statement
Location
Gains (losses) and other
investment income, net
Gains (losses) and other
investment income, net
Gains (losses) and other
investment income, net
Gains (losses) and other
investment income, net
Gains (losses) and other
investment income, net
Gains (losses) and other
investment income, net
Gains (losses) and other
investment income, net
2015
2014
2013
$
1,948 $
15 $
1,293
640
(12,902)
(31,861)
3,396
720
842
157
-
(181)
(75)
(21)
-
-
-
-
-
(3,075)
5,939 $ (12,242) $ (32,801)
-
$
7. Fair Value Measurements of Other Financial Instruments
Certain financial instruments are not carried at fair value, but their fair value is required to be disclosed.
The following is a summary of the carrying amounts and estimated fair values of these financial instruments
at October 31, 2015 and 2014:
2015
2014
Carrying
Value
Fair
Value
$
$
2,048 $
6,345 $
2,048
6,345
$ 573,811 $ 600,930
Fair
Value
Level
3
3
2
Carrying
Value
Fair
Value
$
$
$
2,947 $
7,363 $
2,947
7,363
573,655 $ 611,015
Fair
Value
Level
3
3
2
(in thousands)
Investments, other
Other assets
Debt
Included in investments, other, is a non-controlling capital interest in ACM Holdings carried at $0.4 million
and $1.3 million at October 31, 2015 and 2014, respectively (see Note 4). The carrying value of this
investment approximates fair value. Fair value of this investment is determined using a cash flow model that
projects future cash flows based upon contractual obligations, to which the Company then applies an
appropriate discount rate. The fair value of this investment falls within Level 3 of the fair value
measurement hierarchy.
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Included in other assets at October 31, 2015 and 2014 is an option exercisable in 2017 to acquire an
additional 26 percent interest in Hexavest carried at $6.3 million and $7.4 million, respectively. The
carrying value of this option approximates fair value. The fair value of this option is determined using a
Monte Carlo model, which simulates potential future market multiples of earnings before interest and taxes
(“EBIT”) and compares this to the contractually fixed multiple of Hexavest’s EBIT at which the option can
be exercised. The Monte Carlo model uses this array of simulated multiples and their difference from the
contractual multiple times the projected EBIT for Hexavest to estimate the future exercise value of the
option, which is then adjusted to present value. The fair value of this investment falls within Level 3 of the
fair value measurement hierarchy.
The fair value of the Company’s debt has been determined based on quoted prices in inactive markets and
falls within Level 2 of the fair value measurement hierarchy.
8. VIEs
In the normal course of business, the Company maintains investments in sponsored CLO entities, sponsored
funds and privately offered equity funds that are considered VIEs. These variable interests generally
represent seed investments made by the Company, as collateral manager or investment adviser, to launch or
market these vehicles. The Company receives management fees for the services it provides as collateral
manager or investment adviser to these entities. These fees may also be considered variable interests.
Investments in VIEs that are consolidated
Consolidated sponsored funds
The Company invests in investment companies that meet the definition of a VIE. Disclosure regarding such
consolidated sponsored funds is included in Note 3. In the ordinary course of business, the Company may
elect to contractually waive investment advisory fees that it is entitled to receive from sponsored funds.
Such waivers are described in Note 21.
Consolidated CLO entities
As of October 31, 2015, the Company deems itself to be the primary beneficiary of two non-recourse CLO
entities, Eaton Vance CLO 2015-1 and Eaton Vance CLO IX. In developing its conclusion that it is the
primary beneficiary of Eaton Vance CLO 2015-1, the Company determined that it has a more than
insignificant economic interest in the entity by virtue of its 16 percent residual interest, which exposes the
Company to a more than insignificant amount of the entity’s variability relative to its anticipated economic
performance. In its role as collateral manager of the entity, the Company has the power to direct the
activities that most significantly impact the economic performance of the entity. The Company’s variable
interest represents an obligation to absorb losses of, or a right to receive benefits from, the entity that could
potentially be significant to the entity. The Company determined that it is the primary beneficiary of Eaton
Vance CLO IX due to the significance of its variable interest represented by the incentive collateral
management fee. In consideration of these factors, the Company concluded that it is the primary beneficiary
of Eaton Vance CLO 2015-1 and Eaton Vance CLO IX for consolidation accounting purposes.
On November 13, 2014, the Company sold its residual 8 percent interest in Eaton Vance CLO IX to an
unrelated third party and recognized a loss on disposal of $0.3 million. During the third quarter of fiscal
2015, a majority of the holders of the subordinated notes elected to liquidate Eaton Vance CLO IX, with
redemption occurring nearly in full on the scheduled July 20, 2015 payment date. The Company will remain
the collateral manager of Eaton Vance CLO IX through resolution of the disposal of all remaining collateral
assets. The Company is not a related party to the subordinated note holders of Eaton Vance CLO IX and
there are neither explicit arrangements nor does the Company hold implicit variable interests that would
require the Company to provide any ongoing financial support to the entity. While the Company still deems
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itself to be the primary beneficiary of Eaton Vance CLO IX, the remaining net assets of Eaton Vance CLO
IX are not material to the Company’s financial position as of October 31, 2015, and the related income
statement and cash flow amounts for the period from August 1, 2015 to October 31, 2015 are not material to
the Company’s results of operations. As a result, the Company de-consolidated Eaton Vance CLO IX on
August 1, 2015.
On May 1, 2014, the Company sold its 20 percent residual interest in Eaton Vance CLO 2013-1, which it
had initially consolidated on October 11, 2013. Although the Company continues to serve as collateral
manager of the entity and therefore has the power to direct the activities that most significantly impact the
economic performance of the entity, the Company concluded that it was no longer the primary beneficiary
of the entity upon disposition of its 20 percent residual interest, at which time the Company de-consolidated
the entity.
The assets of the consolidated CLO entities are held solely as collateral to satisfy the obligations of the
entity. The Company has no right to the benefits from, nor does the Company bear the risks associated with,
the assets held by these CLO entities beyond the Company’s beneficial interest therein and management
fees generated from the entities. The note holders and other creditors of the CLO entities have no recourse
to the Company’s general assets. There are neither explicit arrangements nor does the Company hold
implicit variable interests that would require the Company to provide any ongoing financial support to the
entities.
Interest income and expense are recorded on an accrual basis and reported as gains (losses) and other
investment income, net, and as interest expense in interest and other expense, respectively, of the
consolidated CLO entities in the Company’s Consolidated Statements of Income for the fiscal years ended
October 31, 2015, 2014 and 2013. Substantially all ongoing gains (losses) related to the consolidated CLO
entities’ bank loans, other investments and note obligations and redeemable preferred shares recorded in
earnings for the periods presented are attributable to changes in instrument-specific credit considerations.
Eaton Vance CLO 2015-1
Eaton Vance CLO 2015-1 began as a warehouse-stage CLO in February 2015. During the warehouse phase,
the company held a 16.7 percent subordinated interest in the entity, which it did not consolidate. The
Company determined that it did not hold the power to direct the activities that most significantly impacted
Eaton Vance CLO 2015-1 during the warehouse phase because that power was shared with the majority
holder of the equity, an unrelated third party. The pricing of Eaton Vance CLO 2015-1 occurred on October
6, 2015, at which time the Company assumed the power to direct the activities that most significantly affect
the financial performance of the entity. As a result, the Company began consolidating Eaton Vance CLO
2015-1 at pricing on October 6, 2015.
The Company irrevocably elected the fair value option for measurement of substantially all financial assets
of Eaton Vance CLO 2015-1 upon initial consolidation. At pricing, the Company entered into a trade
commitment to acquire approximately 16 percent of the subordinated interests to be issued at closing on
October 29, 2015, representing a controlling financial interest in the entity.
The Company did not elect the fair value option on the warehouse line of credit and preferred shares at
pricing, as these liabilities were temporary in nature. The warehouse line of credit and the preferred shares
were extinguished and the new senior and subordinated note obligations were issued at closing on October
29, 2015. The Company irrevocably elected the fair value option for the senior and subordinated note
obligations of Eaton Vance CLO 2015-1 upon their issuance. Although the subordinated note obligations of
Eaton Vance CLO 2015-1 have certain equity characteristics, the Company determined that they should be
recorded as liabilities on its Consolidated Balance Sheet.
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The Company elected the fair value option in these instances to mitigate any accounting mismatches
between the carrying value of the new senior and subordinated note obligations of Eaton Vance CLO 2015-
1 and the carrying value of the assets that are held to provide the cash flows for those note obligations.
Unrealized gains and losses on assets and liabilities for which the fair value option has been elected are
reported in gains (losses) and other investment income, net, of consolidated CLO entities in the
Consolidated Statements of Income.
The following tables present, as of October 31, 2015, the fair value of Eaton Vance CLO 2015-1’s assets
and liabilities that were subject to fair value accounting:
October 31, 2015
CLO Bank Loan Investments
(in thousands)
Unpaid principal balance
Unpaid principal balance
over fair value
Fair value
$
$
Total CLO
bank loan
investments
90 days or
more past
due
306,483
$
-
$
Senior and
subordinated
note obligations
397,039
(2,233)
304,250
$
-
-
$
-
397,039
During the fiscal year ended October 31, 2015, the Company recorded approximately $2.4 million of
organizational and structuring costs and other expenses associated with the closing of Eaton Vance CLO
2015-1 in interest and other expense of consolidated CLO entities in the Company’s Consolidated Statement
of Income.
Changes in the fair values of Eaton Vance CLO 2015-1’s bank loans and other investments resulted in a net
loss of $28,550 for the fiscal year ended October 31, 2015, which was recorded in gains (losses) and other
investment income, net, of consolidated CLO entities on the Company’s Consolidated Statement of Income.
Eaton Vance CLO 2015-1 has note obligations that bear interest at a fixed rate of 4.0 percent, as well as note
obligations that bear interest at variable rates based on LIBOR plus a pre-defined spread ranging from 1.5
percent to 8.1 percent. The principal amounts outstanding of the note obligations issued by Eaton Vance
CLO 2015-1 mature on October 20, 2026. The CLO entity may elect to reinvest any prepayments received
on bank loans or other investments prior to July 2020. Any subsequent prepayments received must be used
to pay down its note obligations. The holders of a majority of the subordinated notes have the option to
liquidate Eaton Vance CLO 2015-1, provided there is sufficient value of the entity’s assets to repay the
senior notes in full.
For the fiscal year ended October 31, 2015, the Company recorded a net loss of $4.2 million related to Eaton
Vance CLO 2015-1. The Company recorded a net loss attributable to other beneficial interests of $4.4
million for the fiscal year ended October 31, 2015. Net income attributable to Eaton Vance Corp.
shareholders was $0.2 million for the fiscal year ended October 31, 2015.
The following carrying amounts related to Eaton Vance CLO 2015-1 were included in the Company’s
Consolidated Balance Sheet at October 31, 2015:
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(in thousands)
Assets:
Cash and cash equivalents
Bank loans and other investments
Other assets
Liabilities:
Senior and subordinated note obligations
Other liabilities
Appropriated deficit
Net interest in Eaton Vance CLO 2015-1
2015
162,704
304,250
128
397,039
70,814
(5,338)
4,567
$
$
The Company had a subordinated interest in Eaton Vance CLO 2015-1 of $4.6 million as of October 31,
2015, which was eliminated in consolidation.
Eaton Vance CLO IX
The Company irrevocably elected the fair value option for all financial assets and liabilities of Eaton Vance
CLO IX upon its initial consolidation on November 1, 2010. Unrealized gains and losses on assets and
liabilities carried at fair value were reported in gains (losses) and other investment income, net, of the
consolidated CLO entities in the Company’s Consolidated Statements of Income. Although the
subordinated note obligations of Eaton Vance CLO IX had certain equity characteristics, the Company
determined that the subordinated notes should be recorded as liabilities on the Company’s Consolidated
Balance Sheet.
The following tables present, as of October 31, 2014, the fair value of Eaton Vance CLO IX’s assets and
liabilities that were subject to fair value accounting:
October 31, 2014
(in thousands)
Unpaid principal balance
Unpaid principal balance
over fair value
Fair value
CLO Bank Loan Investments
Total CLO
bank loan
investments
90 days or
more past
due
144,723
$
500
(3,282)
141,441
$
(500)
-
$
$
Senior and
subordinated
note obligations
165,696
(13,714)
151,982
$
$
On November 13, 2014, the Company sold its residual 8 percent interest in Eaton Vance CLO IX to an
unrelated third party and recognized a loss on disposal of $0.3 million. During the third quarter of fiscal
2015, a majority of the holders of the subordinated notes elected to liquidate Eaton Vance CLO IX, with
redemption occurring nearly in full on the scheduled July 20, 2015 payment date. The Company will remain
the collateral manager of Eaton Vance CLO IX through resolution of the disposal of all remaining collateral
assets. The Company is not a related party to the subordinated note holders of Eaton Vance CLO IX and
there are neither explicit arrangements nor does the Company hold implicit variable interests that would
require the Company to provide any ongoing financial support to the entity. The Company de-consolidated
Eaton Vance CLO IX on August 1, 2015 and removed the associated assets, liabilities and appropriated
retained earnings from its Consolidated Balance Sheet as of that date, as the remaining balances are not
material to the Company’s results of operations or financial condition.
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Changes in the fair values of Eaton Vance CLO IX’s bank loans and other investments resulted in net gains
(losses) of $(3.2) million, $(2.4) million and $0.2 million for the fiscal years ended October 31, 2015, 2014
and 2013, respectively, while changes in the fair value of Eaton Vance CLO IX’s note obligations resulted
in net gains (losses) of $5.1 million, $(1.2) million and $(10.0) million, respectively, for the fiscal years
ended October 31, 2015, 2014 and 2013. The combined net gains (losses) of $1.9 million, $(3.6) million and
$(9.8) million, respectively, for the fiscal years ended October 31, 2015, 2014 and 2013 were recorded in
gains (losses) and other investment income, net, of consolidated CLO entities on the Company’s
Consolidated Statements of Income for these periods.
During the fiscal years ended October 31, 2015, 2014 and 2013, $144.2 million, $128.4 million and $177.5
million, respectively, of prepayments were used to pay down the entity’s note obligations. The entity’s
senior notes were paid down in full as a result of a majority of the holders of the subordinated notes electing
to liquidate Eaton Vance CLO IX during the third quarter of fiscal 2015.
For the fiscal years ended October 31, 2015, 2014 and 2013, the Company recorded net gains (losses) of
$2.0 million (including the loss on disposal of its subordinated interest of $(0.3) million), $(2.2) million and
$(7.3) million, respectively, related to Eaton Vance CLO IX. The Company recorded net losses attributable
to other beneficial interests of $1.4 million, $5.1 million and $11.1 million for the fiscal years ended
October 31, 2015, 2014 and 2013, respectively. Net income attributable to Eaton Vance Corp. shareholders
was $3.4 million, $2.9 million and $3.8 million for the fiscal years ended October 31, 2015, 2014 and 2013,
respectively.
The following carrying amounts related to Eaton Vance CLO IX were included in the Company’s
Consolidated Balance Sheets at October 31, 2014:
(in thousands)
Assets:
Cash and cash equivalents
Bank loans and other investments
Other assets
Liabilities:
Senior and subordinated note obligations
Other liabilities
Appropriated retained earnings
Net interest in Eaton Vance CLO IX
2014
8,963
147,116
371
151,982
298
2,467
1,703
$
$
The Company had a subordinated interest in Eaton Vance CLO IX of $1.4 million as of October 31, 2014,
which was eliminated in consolidation.
Eaton Vance CLO 2013-1
Eaton Vance CLO 2013-1 began as a warehouse stage CLO in December 2012. During the warehouse stage,
all of the subordinated interests of the entity in the form of redeemable preferred shares were controlled by
affiliates of an investment manager unrelated to the Company. The Company irrevocably elected the fair
value option for measurement of substantially all financial assets of Eaton Vance CLO 2013-1 upon its
initial consolidation on October 11, 2013, when the senior note obligations and redeemable preferred shares
of the CLO were priced. At pricing, the Company entered into a trade commitment to acquire 20 percent of
the redeemable preferred shares of the entity to be issued at closing on November 13, 2013, representing a
variable, although not beneficial, interest in the entity.
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The Company did not elect the fair value option on the warehouse line of credit and redeemable preferred
shares at pricing, as these liabilities were temporary in nature. The warehouse line of credit and the
redeemable preferred shares were extinguished, and new senior note obligations and redeemable preferred
shares were issued, at closing on November 13, 2013. The Company irrevocably elected the fair value
option for the senior note obligations and redeemable preferred shares of Eaton Vance CLO 2013-1 upon
their issuance.
Unrealized gains and losses on assets and liabilities for which the fair value option was elected are reported
in gains and other investment income, net, of the consolidated CLO entities in the Company’s Consolidated
Statement of Income.
On May 1, 2014, the Company sold its 20 percent residual interest in Eaton Vance CLO 2013-1, which it
had initially consolidated on October 11, 2013. The Company continues to hold a $1.4 million beneficial
interest in note obligations issued by Eaton Vance CLO 2013-1, which is carried at amortized cost. The
Company considered the collateral management fees that it receives from CLO 2013-1 and determined that
these fees are not significant to the VIE. Although the Company continues to serve as collateral manager of
the entity and therefore has the power to direct the activities that most significantly impact the economic
performance of the entity, the Company concluded that it was no longer the primary beneficiary of the entity
upon disposition of its 20 percent residual interest, at which time the Company deconsolidated the entity and
derecognized the associated assets, liabilities and appropriated retained earnings from its Consolidated
Balance Sheet as of that date. The Company recognized a loss of $19,000 on de-consolidation, which is
included in gains (losses) and other investment income, net, on the Company’s Consolidated Statement of
Income for the fiscal year ended October 31, 2014.
During the fiscal year ended October 31, 2014, approximately $4.8 million of organizational and structuring
costs associated with the closing of Eaton Vance CLO 2013-1 were recorded in interest and other expense of
consolidated CLO entities in the Company’s Consolidated Statement of Income.
Changes in the fair values of Eaton Vance CLO 2013-1’s bank loans and other investments resulted in net
losses of $39,000 and net gains of $2.6 million during the fiscal years ended October 31, 2014 and 2013,
respectively, while changes in the fair value of Eaton Vance CLO 2013-1’s note obligations resulted in net
gains of $2.4 million during the fiscal year ended October 31, 2014. The combined net gains of $2.4 million
and $2.6 million, respectively, for the fiscal years ended October 31, 2014 and 2013 were recorded as gains
and other investment income, net, of consolidated CLO entities on the Company’s Consolidated Statements
of Income.
For the fiscal years ended October 31, 2014 and 2013 the Company recorded net income of $2.0 million and
$2.6 million, respectively, related to Eaton Vance CLO 2013-1. The Company recorded net income
attributable to other beneficial interests of $1.1 million and $2.6 million, respectively, for the fiscal years
ended October 31, 2014 and 2013. Net income attributable to Eaton Vance Corp. shareholders was $0.9
million during the fiscal year ended October 31, 2014. Since the Company held no beneficial interest during
the year, there was no income attributable to Eaton Vance Corp. shareholders for the fiscal year ended
October 31, 2013.
Investments in VIEs that are not consolidated
Sponsored funds
The Company classifies its investments in certain sponsored funds that are considered VIEs as either equity
method investments (generally when the Company owns more than 20 percent but less than 50 percent of
the fund) or as available-for-sale investments (generally when the Company owns less than 20 percent of the
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fund) when it is not considered the primary beneficiary of these VIEs. The Company provides aggregated
disclosures with respect to these non-consolidated sponsored fund VIEs in Note 4.
Non-consolidated CLO entities
The Company is not deemed the primary beneficiary of several CLO entities in which it holds variable
interests. In its role as collateral manager, the Company often has the power to direct the activities of the
CLO entities that most significantly impact the economic performance of these entities. In developing its
conclusion that it is not the primary beneficiary of these entities, the Company determined that, for certain
of these entities, although it has variable interests in each by virtue of its residual interests therein and the
collateral management fees it receives, its variable interests neither individually nor in the aggregate
represent an obligation to absorb losses of, or a right to receive benefits from, any such entity that could
potentially be significant to that entity. Quantitative factors supporting the Company’s qualitative
conclusion in each case included the relative size of the Company’s residual interest (in all but one instance
representing less than 6 percent of the residual interest tranche and less than 1 percent of the total capital of
the entity) and the overall magnitude and design of the collateral management fees within each structure.
Non-consolidated CLO entities had total assets of $2.1 billion and $2.4 billion as of October 31, 2015 and
2014, respectively. The Company’s variable interests in these entities consist of the Company’s direct
ownership in these entities and any subordinated management fees earned but uncollected. The Company’s
investment in these entities totaled $4.4 million and $4.0 million as of October 31, 2015 and 2014,
respectively. Collateral management fees receivable for these entities totaled $1.8 million and $2.6 million
on October 31, 2015 and 2014, respectively. In the fiscal year ended October 31, 2015, the Company did not
provide any financial or other support to these entities that it was not previously contractually required to
provide. The Company’s risk of loss with respect to these managed CLO entities is limited to the carrying
value of its investments in, and collateral management fees receivable from, these entities as of October 31,
2015.
The Company’s investment in non-consolidated CLO entities is carried at amortized cost and is disclosed as
a component of investments in Note 4. Income from these entities is recorded as a component of gains and
other investment income, net, in the Company’s Consolidated Statements of Income, based upon projected
investment yields.
Other entities
The Company holds variable interests in, but is not deemed to be the primary beneficiary of, certain
sponsored privately offered equity funds with total assets of $12.7 billion and $11.3 billion as of October 31,
2015 and 2014, respectively. The Company has determined that these entities qualify for the deferral
afforded by ASU 2010-10, Consolidation – Amendments for Certain Investment Funds, and thus assesses
whether it is the primary beneficiary of these entities based on the Company’s exposure to the expected
losses and expected residual returns of the entity. The Company’s variable interests in these entities consist
of the Company’s direct ownership therein, which in each case is insignificant relative to the total ownership
of the fund, and any investment advisory fees earned but uncollected. The Company held investments in
these entities totaling $2.2 million and $6.6 million on October 31, 2015 and 2014, respectively, and
investment advisory fees receivable totaling $0.7 million and $0.6 million on October 31, 2015 and 2014,
respectively. In the fiscal year ended October 31, 2015, the Company did not provide any financial or other
support to these entities that it was not contractually required to provide. The Company’s risk of loss with
respect to these managed entities is limited to the carrying value of its investments in, and investment
advisory fees receivable from, the entities as of October 31, 2015. The Company does not consolidate these
VIEs because it does not hold the majority of the risks and rewards of ownership.
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The Company’s investments in privately offered equity funds are carried at fair value and included in
investment securities, available-for-sale, which are disclosed as a component of investments in Note 4. The
Company records any change in fair value, net of income tax, in other comprehensive income (loss).
9. Equipment and Leasehold Improvements
The following is a summary of equipment and leasehold improvements at October 31, 2015 and 2014:
(in thousands)
Equipment
Leasehold improvements
Subtotal
Less: Accumulated depreciation and amortization
Equipment and leasehold improvements, net
2015
2014
$
$
75,492 $
56,364
131,856
(86,913)
44,943 $
71,367
53,796
125,163
(79,512)
45,651
Depreciation and amortization expense was $11.4 million, $10.9 million and $13.0 million for the years ended
October 31, 2015, 2014 and 2013, respectively.
10. Acquisitions, Goodwill and Intangible Assets
Atlanta Capital Management, LLC (“Atlanta Capital”)
In fiscal 2015 and 2014, the Company purchased an additional 0.4 percent and 0.3 percent profits interest in
Atlanta Capital for $0.5 million and $0.3 million, respectively, pursuant to the put and call provisions of the
Atlanta Capital Plan. Please see Note 12 for additional information related to the Atlanta Capital Plan.
In fiscal 2015, the Company purchased an additional 1.4 percent profit interest for $6.8 million pursuant to
the terms of the original acquisition agreement, as amended. In fiscal 2014, the Company purchased an
additional 1.3 percent profit interest and a 0.1 percent capital interest in Atlanta Capital for $6.6 million
pursuant to the terms of the original acquisition agreement, as amended. The purchase price in each instance
was based on a multiple of Atlanta Capital’s earnings before taxes for the relevant fiscal period.
As of October 31, 2015, non-controlling interest holders of Atlanta Capital retained a 1.6 percent profit
interest in Atlanta Capital associated with the original acquisition. Pursuant to the terms of the original
acquisition agreement, as amended, the non-controlling interest holders of Atlanta Capital have the right to
sell an additional 0.1 percent profit interest in Atlanta Capital to the Company at a multiple of Atlanta
Capital’s earnings before taxes for the fiscal year ended October 31, 2016. To the extent that the put is not
fully exercised based on fiscal 2016 results, non-controlling interest holders have the opportunity to sell the
0.1 percent profit interest, less any portion sold in prior years, based on the financial results of Atlanta
Capital for each fiscal year thereafter. Also pursuant to the terms of the original acquisition agreement, as
amended, the Company has the right to purchase 100 percent of the profit interests related to the original
acquisition retained by non-controlling interest holders as of October 31, 2017 and annually thereafter, at
prices based on the financial results of Atlanta Capital for those fiscal years. Neither the exercise of the puts
nor the exercise of the calls is contingent upon the non-controlling interest holders of Atlanta Capital
remaining employees.
Total profit interests in Atlanta Capital held by non-controlling interest holders, including direct profit
interests related to the original acquisition as well as indirect profit interests issued pursuant to the Atlanta
Capital Plan, decreased to 13.1 percent on October 31, 2015 from 13.8 percent on October 31, 2014,
reflecting the exercise of puts and calls as described above, as well as the grant of an additional 1.1 percent
profit interest to employees of Atlanta Capital pursuant to the terms of the Atlanta Capital Plan in fiscal
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2015. Non-controlling interest holders did not hold any capital interests in Atlanta Capital as of October 31,
2015. Total capital interests in Atlanta Capital held by non-controlling interest holders as of October 31,
2014 were 0.1 percent.
Parametric Portfolio Associates LLC (“Parametric”)
In November 2013, the non-controlling interest holders of Parametric Risk Advisors entered into a Unit
Acquisition Agreement with Parametric to exchange their remaining ownership interests in Parametric Risk
Advisors (representing a 20 percent ownership interest in the entity) for additional ownership interests in
Parametric Portfolio LP (“Parametric LP”), whose sole asset is ownership interests in Parametric. The
Parametric LP ownership interests issued in the exchange, representing a 0.8 percent profit interest and a 0.8
percent capital interest, contain put and call features that become exercisable over a four-year period starting
in 2018. As a result of this exchange, Parametric Risk Advisors became a wholly owned subsidiary of
Parametric.
In December 2012, Parametric acquired Clifton. As part of the transaction, the Company issued indirect
ownership interests in Parametric LP to certain former Clifton employees. These indirect interests,
representing a 1.9 percent profit interest and a 1.9 percent capital interest, are subject to certain put and call
features that are exercisable over a four-year period that began at closing. In January 2015, the associated
holders exercised a put option and the Company exercised a call option with respect to the Parametric LP
ownership interests issued in conjunction with the Clifton acquisition, resulting in the Company’s
acquisition of an indirect 0.5 percent profit interest and a 0.5 percent capital interest in Parametric for a total
of $6.7 million.
In fiscal 2015 and 2014, the Company purchased additional 0.5 percent and 0.5 percent profit interests in
Parametric for $4.2 million and $5.7 million, respectively, in transactions under the Parametric Plan. Please
see Note 12 for additional information related to the Parametric Plan.
Total profit interests in Parametric held by non-controlling interest holders, including indirect profit interests
issued pursuant to the Parametric Plan, decreased from 7.9 percent as of October 31, 2014 to 7.4 percent as
of October 31, 2015, reflecting the transactions described above, as well as the grant of 0.5 percent profit
interest to employees of Parametric pursuant to the terms of the Parametric Plan in fiscal 2015. Total capital
interests in Parametric held by non-controlling interest holders decreased from 2.7 percent as of October 31,
2014 to 2.2 percent as of October 31, 2015.
Tax Advantaged Bond Strategies (“TABS”)
In fiscal 2009, the Company acquired the TABS business of M.D. Sass Investors Services, a privately held
investment manager based in New York, New York for cash and future consideration. Subsequent to
closing, the TABS business was reorganized as the Tax-Advantaged Bond Strategies division of Eaton
Vance Management. The acquisition was completed prior to the change in accounting for contingent
purchase price consideration. Accordingly, all contingent purchase price payments related to this acquisition
are treated as adjustments to the purchase price allocation.
During fiscal 2015, the Company made a contingent payment of $9.1 million to the selling group based
upon prescribed multiples of TABS’s revenue for the twelve months ended December 31, 2014, increasing
goodwill by the payment amount, as the acquisition was completed prior to the change in accounting for
contingent purchase price consideration.
The Company is obligated to make two additional annual contingent payments to the selling group based on
prescribed multiples of TABS’s revenue for the twelve months ending December 31, 2015 and 2016. All
future payments will be in cash and will result in an addition to goodwill. These payments are not contingent
upon any member of the selling group remaining an employee of the Company.
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Goodwill
The changes in the carrying amount of goodwill for the years ended October 31, 2015 and 2014 are as follows:
(in thousands)
Balance, beginning of period
Goodwill acquired
Balance, end of period
October 31,
2015
228,876 $
9,085
237,961 $
$
$
2014
228,876
-
228,876
All acquired goodwill is deductible for tax purposes.
The Company completed its most recent goodwill impairment testing in the fourth quarter of fiscal 2015 and
determined that there was no impairment in the carrying value of this asset as of September 30, 2015. To
evaluate the sensitivity of the goodwill impairment testing to the calculation of fair value, the Company
applied a hypothetical 10 percent and 20 percent decrease to the fair value of each reporting unit. Based on
such hypothetical scenarios, the results of the Company’s impairment testing would not change, as the
reporting units still had an excess of fair value over the carrying value under both hypothetical scenarios.
There were no significant changes in the assumptions, methodologies or weightings used in the Company’s
current year goodwill impairment testing.
No impairment in the value of goodwill was recognized during the years ended October 31, 2015, 2014 and
2013.
Intangible assets
The following is a summary of intangible assets at October 31, 2015 and 2014:
October 31, 2015
(dollars in thousands)
Amortizing intangible assets:
Client relationships acquired
Intellectual property acquired
Trademark acquired
Non-amortizing intangible assets:
Mutual fund management contracts acquired
Total
Weighted-
average
remaining
amortization
period
(in years)
8.8
10.6
4.2
Gross
carrying
amount
Accumulated
amortization
Net
carrying
amount
$
$
133,927 $
1,000
900
(86,419) $
(319)
(364)
47,508
681
536
6,708
142,535 $
-
(87,102) $
6,708
55,433
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October 31, 2014
(dollars in thousands)
Amortizing intangible assets:
Client relationships acquired
Intellectual property acquired
Trademark acquired
Non-amortizing intangible assets:
Mutual fund management contracts acquired
Total
Weighted-
average
remaining
amortization
period
(in years)
9.3
11.6
5.2
Gross
carrying
amount
Accumulated
amortization
Net
carrying
amount
$
$
133,927 $
1,000
900
(76,918) $
(255)
(236)
57,009
745
664
6,708
142,535 $
-
(77,409) $
6,708
65,126
No impairment in the value of amortizing or non-amortizing intangible assets was recognized during the years
ended October 31, 2015, 2014 or 2013.
Amortization expense was $9.7 million, $9.4 million and $9.2 million for the years ended October 31, 2015,
2014 and 2013, respectively. Estimated amortization expense to be recognized by the Company over the next
five years is as follows:
Year Ending October 31,
(in thousands)
2016
2017
2018
2019
2020
11. Debt
Senior notes due 2017
$
Estimated
amortization
expense
8,647
8,534
8,505
4,529
3,508
During fiscal 2007, the Company issued $500 million in aggregate principal amount of 6.5 percent
unsecured senior notes due October 2, 2017 (“2017 Senior Notes”). Interest is payable semi-annually in
arrears on April 2 and October 2 of each year. There are no covenants associated with the 2017 Senior
Notes.
During fiscal 2013, the Company announced a tender offer to purchase for cash up to $250 million in
aggregate principal amount of the outstanding 2017 Senior Notes and ultimately accepted for purchase $250
million of the 2017 Senior Notes (“Tendered Notes”) on June 28, 2013. Pursuant to the terms of the
Indenture that governs the 2017 Senior Notes, the consideration paid to the holders of the Tendered Notes,
which totaled $301.5 million, was calculated as the sum of the present values of the remaining scheduled
payments of principal and interest through October 2, 2017, discounted to June 28, 2013 using a reference
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U.S. Treasury security rate (0.625 percent U.S. Treasury Notes due September 30, 2017) plus 30 basis
points. The holders of the Tendered Notes were also paid $3.9 million in interest that accrued from April 2,
2013 (the last interest payment date) through June 28, 2013.
During fiscal 2013, the Company recognized a $53.0 million loss on extinguishment of debt, which includes
the tender premium paid ($51.5 million excess of the Consideration Amount over the $250 million face
amount of the 2017 Senior Notes tendered), acceleration of certain deferred financing costs and original
issue discount associated with the Tendered Notes, and transaction costs associated with the tender offer.
The remaining $250 million in aggregate principal amount of the 2017 Senior Notes is due October 2, 2017.
Senior notes due 2023
During fiscal 2013, the Company issued $325 million in aggregate principal amount of 3.625 percent ten-
year senior notes due June 15, 2023 (“2023 Senior Notes”), resulting in net proceeds of approximately
$321.3 million after underwriting discounts and transaction fees. Interest is payable semi-annually in arrears
on June 15th and December 15th of each year. At October 31, 2015 and 2014, the carrying value of the 2023
Senior Notes was $323.8 million and $323.7 million, respectively. The 2023 Senior Notes are unsecured and
unsubordinated obligations of the Company. There are no covenants associated with the 2023 Senior Notes.
Corporate credit facility
The Company entered into a $300 million senior unsecured revolving credit facility on October 21, 2014. The
credit facility has a five-year term, expiring on October 21, 2019. Under the facility, the Company may borrow
up to $300 million at LIBOR-based rates of interest that vary depending on the level of usage of the facility and
credit ratings of the Company. The credit facility is unsecured, contains financial covenants with respect to
leverage and interest coverage, and requires the Company to pay an annual commitment fee on any unused
portion. As of October 31, 2015, the Company had no borrowings under its unsecured revolving credit facility.
12. Stock-Based Compensation Plans
The Company’s stock-based compensation plans include the Omnibus Incentive Plans, defined as the 2013
Omnibus Incentive Plan, as amended and restated (the “2013 Plan”) and the 2008 Omnibus Incentive Plan,
as amended and restated (the “2008 Plan”); the Employee Stock Purchase Plans, defined as the 2013
Employee Stock Purchase Plan (the “Qualified ESPP”), the 2013 Nonqualified Employee Stock Purchase
Plan, as amended and restated (the “Nonqualified ESPP”) and the 1986 Employee Stock Purchase Plan; the
Employee Stock Purchase Incentive Plans, defined as the 2013 Incentive Compensation Nonqualified
Employee Stock Purchase Plan, as amended and restated (the “Incentive ESPP”) and the 1992 Incentive
Plan – Stock Alternative; the Atlanta Capital Management Company, LLC Long-term Equity Incentive Plan
(the “Atlanta Capital Plan”); and the Parametric Portfolio Associates LLC Long-term Equity Incentive Plan,
as amended and restated (the “Parametric Plan”). The Company recognized compensation cost related to its
plans for the years ended October 31, 2015, 2014 and 2013 as follows:
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(in thousands)
Omnibus Incentive Plans:
Stock options
Restricted shares
Phantom stock units
Employee Stock Purchase Plans
Employee Stock Purchase Incentive Plans
Atlanta Capital Plan
Parametric Plan
Total stock-based compensation expense
2015
2014
2013
$
17,606 $ 16,291 $
41,789
241
624
512
2,534
6,214
35,672
267
607
393
2,360
4,958
$
69,520 $ 60,548 $
14,945
32,894
506
1,235
308
3,071
6,832
59,791
The total income tax benefit recognized for stock-based compensation arrangements was $23.3 million,
$20.5 million and $19.3 million for the years ended October 31, 2015, 2014 and 2013, respectively.
Omnibus Incentive Plans
The 2013 Plan, which is administered by the Compensation Committee of the Board and replaced the 2008
Plan, allows for awards of stock options, restricted shares and phantom stock units to eligible employees and
non-employee Directors. Options to purchase Non-Voting Common Stock granted under the 2013 Plan
expire ten years from the date of grant, vest over five years and may not be granted with an exercise price
that is less than the fair market value of the stock as of the close of business on the date of grant. Restricted
shares of Non-Voting Common Stock granted under the 2013 Plan vest over five years and may be subject
to performance goals. These performance goals generally relate to the achievement of specified levels of
adjusted operating income. Phantom stock units granted under the 2013 Plan vest over two years. The 2013
Plan contains change in control provisions that may accelerate the vesting of awards. A total of 18.5 million
shares of Non-Voting Common Stock have been reserved for issuance under the 2013 Plan. Through
October 31, 2015, 2.5 million restricted shares and options to purchase 4.6 million shares have been issued
pursuant to the 2013 Plan.
Stock options
The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option
valuation model. The Black-Scholes option valuation model incorporates assumptions as to dividend yield,
volatility, an appropriate risk-free interest rate and the expected life of the option. Many of these
assumptions require management’s judgment. The dividend yield assumption represents the Company’s
expected dividend yield based on its historical dividend payouts and the stock price at the date of grant. The
Company’s stock volatility assumption is based upon its historical stock price fluctuations. The Company
uses historical data to estimate option forfeiture rates and the expected term of options granted. The risk-free
rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve at the time
of grant.
The weighted-average fair values per share of stock options granted during the years ended October 31,
2015, 2014 and 2013 using the Black-Scholes option valuation model were as follows:
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Weighted-average grant date fair value
of options granted
2015
2014
2013
$10.13
$13.25
$7.69
Assumptions:
Dividend yield
Volatility
Risk-free interest rate
Expected life of options
2.3% to 2.7%
27% to 34%
1.7% to 2.1%
6.7 years
2.1% to 2.4%
36% to 37%
2.1% to 2.4%
6.9 years
2.8% to 5.5%
36% to 37%
1.2% to 2.1%
7.1 years
Stock option transactions under the 2013 Plan and predecessor plans for the year ended October 31, 2015
are summarized as follows:
(share and intrinsic value figures in thousands)
Options outstanding, beginning of period
Granted
Exercised
Forfeited/expired
Options outstanding, end of period
Weighted-
Average
Exercise
Price
30.49
36.99
25.04
36.33
32.23
Shares
21,892 $
2,782
(3,500)
(98)
21,076 $
Options exercisable, end of period
12,829 $
31.68
Vested or expected to vest at October 31, 2015
21,044 $
32.22
Weighted-
Average
Remaining
Contractual
Term
(in years)
Aggregate
Intrinsic
Value
4.9 $ 126,237
3.2 $
89,994
4.9 $ 126,202
The Company received $82.9 million, $81.2 million and $113.6 million related to the exercise of options for
the fiscal years ended October 31, 2015, 2014 and 2013, respectively. Options exercised represent newly
issued shares. The total intrinsic value of options exercised during the years ended October 31, 2015, 2014
and 2013 was $46.2 million, $59.9 million and $86.3 million, respectively. The total fair value of options
that vested during the year ended October 31, 2015 was $20.0 million.
As of October 31, 2015, there was $44.0 million of compensation cost related to unvested stock options
granted under the Omnibus Incentive Plans not yet recognized. That cost is expected to be recognized over a
weighted-average period of 2.3 years.
In November 2015, the Company granted options to purchase 3.1 million shares of the Company’s Non-
Voting Common Stock under the 2013 Plan at a price of $36.76 per share, the then current trading price of
the underlying securities.
Restricted shares
The Company’s restricted share awards are generally subject to graduated vesting schedules. Compensation
expense is adjusted for estimated forfeitures and is recognized on a straight-line basis over the service
periods underlying the awards. As of October 31, 2015, there was $86.7 million of compensation cost
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related to unvested awards granted under the Omnibus Incentive Plans not yet recognized. That cost is
expected to be recognized over a weighted-average period of 2.7 years.
A summary of the Company’s restricted share activity for the year ended October 31, 2015 under the
Omnibus Incentive Plans is presented below:
(share figures in thousands)
Unvested, beginning of period
Granted
Vested
Forfeited
Unvested, end of period
Shares
3,784
1,420
(1,100)
(116)
3,988
Weighted-
Average
Grant Date
Fair Value
32.08
37.45
30.24
34.52
34.43
$
$
The total fair value of restricted stock vested for the years ended October 31, 2015, 2014 and 2013 was
$33.3 million, $35.9 million and $20.6 million, respectively. In November 2015, the Company awarded a
total of 1.2 million shares of restricted shares under the 2013 Plan at a grant date fair value of $36.76 per
share.
Phantom stock units
During fiscal 2015, 7,180 phantom stock units were issued to non-employee Directors pursuant to the 2013
Plan. Because these units are contingently forfeitable, compensation expense is recorded over the forfeiture
period. The total liability paid out associated with phantom stock during the fiscal years ended October 31,
2015, 2014 and 2013 was $0.3 million, $0.5 million and $0.3 million, respectively. As of October 31, 2015,
there was $0.1 million of compensation cost related to unvested awards granted under the 2013 Plan not yet
recognized. That cost is expected to be recognized over a weighted-average period of one year.
Employee Stock Purchase Plans
The Qualified ESPP and the Nonqualified ESPP, which are administered by the Compensation Committee
of the Board and replaced the 1986 Employee Stock Purchase Plan, permit eligible employees to direct up to
a maximum of $12,500 per six-month offering period toward the purchase of Non-Voting Common Stock at
the lower of 90 percent of the market price of the Non-Voting Common Stock at the beginning or at the end
of each offering period. The Qualified ESPP qualifies under Section 423 of the U.S. Internal Revenue Code
of 1986, as amended (“Internal Revenue Code”). A total of 0.4 million and 0.1 million shares of the
Company’s Non-Voting Common Stock have been reserved for issuance under the Qualified ESPP and
Nonqualified ESPP, respectively. Through October 31, 2015, 0.2 million shares have been issued pursuant
to the Qualified ESPP and Nonqualified ESPP.
The Company received $3.3 million, $3.7 million and $3.5 million related to shares issued under the
Employee Stock Purchase Plans for the years ended October 31, 2015, 2014 and 2013, respectively.
Employee Stock Purchase Incentive Plans
The Incentive ESPP, which is administered by the Compensation Committee of the Board and replaced the
1992 Incentive Plan – Stock Alternative, permits employees to direct up to half of their incentive bonuses
and commissions toward the purchase of the Company’s Non-Voting Common Stock at the lower of 90
112
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percent of the market price of the Non-Voting Common Stock at the beginning or at the end of each
quarterly offering period. A total of 0.6 million shares of the Company’s Non-Voting Common Stock have
been reserved for issuance under the Incentive ESPP. Through October 31, 2015, 0.2 million shares have
been issued pursuant to the plan.
The Company received $3.5 million, $3.3 million and $2.1 million related to shares issued under the
Employee Stock Purchase Incentive Plans for the years ended October 31, 2015, 2014 and 2013,
respectively.
Atlanta Capital and Parametric Plans
The Atlanta Capital and Parametric Plans allow for awards of profit units of Atlanta Capital and Parametric
to key employees of each entity, respectively. Profit units granted under the Atlanta Capital and Parametric
Plans vest over five years and entitle the holders to quarterly distributions of available cash flow. Fair value
of the awards is determined on the grant date utilizing an annual appraisal of each entity. The annual
appraisal is developed using two models, an income approach and a market approach, as described in Note
1. These models utilize appropriate discount rates as well as relevant investment management industry
market multiples. Vested profit units are redeemable upon the exercise of limited in-service put rights held
by the employee or call rights held by the Company. The call rights held by the Company entitle the
Company to repurchase the profit units at the end of a ten-year call period and each year thereafter, and
upon termination of employment. Execution of the puts and calls takes place upon availability of the annual
appraisal to ensure the transactions take place at fair value. Profit units are not reserved for issuance; the
number of profit units authorized for awards is determined annually by the Company on the first calendar
day of the fiscal year. The awards under the Atlanta Capital and Parametric Plans are accounted for as
equity awards.
In the year ended October 31, 2015, approximately 25,400 profit units of Atlanta Capital were issued to
certain employees of that entity pursuant to the Atlanta Capital Plan at a weighted-average per unit price of
$142.47. Because the units are contingently forfeitable, compensation expense is recorded on a straight-line
basis over the forfeiture period of five years. As of October 31, 2015, there was $6.2 million of
compensation cost related to unvested awards granted under the plan not yet recognized. That cost is
expected to be recognized over a weighted-average period of 3.2 years. Through October 31, 2015,
approximately 266,600 profit units have been issued pursuant to the Atlanta Capital Plan.
In the year ended October 31, 2015, approximately 3,400 profit units of Parametric were issued to certain
employees of that entity pursuant to the Parametric Plan at a weighted-average per unit price of $2,194.83.
Because these units are contingently forfeitable, compensation expense is recorded on a straight-line basis
over the forfeiture period of five years. As of October 31, 2015, there was $9.6 million of compensation cost
related to unvested awards granted under the plan not yet recognized. That cost is expected to be recognized
over a weighted-average period of 3.2 years. Through October 31, 2015, approximately 35,400 profit units
have been issued pursuant to the Parametric Plan.
In November 2015, the Company granted a total of 30,690 profit units at a grant date fair value of $135.59
per unit pursuant to the Atlanta Capital Plan and a total of 3,358 profit units at a grant date fair value of
$2,035.91 per unit pursuant to the Parametric Plan.
Stock Option Income Deferral Plan
The Company has established an unfunded, non-qualified Stock Option Income Deferral Plan to permit key
employees to defer recognition of income upon exercise of non-qualified stock options previously granted
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by the Company. As of October 31, 2015, options to purchase 0.2 million shares have been exercised and
placed in trust with the Company.
13. Employee Benefit Plans
Profit Sharing and Savings Plan
The Company has a Profit Sharing and Savings Plan for the benefit of substantially all employees. The
Profit Sharing and Savings Plan is a defined contribution profit sharing plan with a 401(k) deferral
component. All full-time employees who have met certain age and length of service requirements are
eligible to participate in the plan. The plan allows participating employees to make elective deferrals of
compensation up to the plan’s annual limits. The Company then matches each participant’s contribution on
a dollar-for-dollar basis to a maximum of $1,040 per annum. In addition, the Company may, at its
discretion, contribute up to 15 percent of eligible employee compensation to the plan, up to a maximum of
$39,000, $38,250 and $37,500 per employee for the years ended October 31, 2015, 2014 and 2013,
respectively. The Company’s expense under the plan was $22.7 million, $21.8 million and $19.8 million for
the years ended October 31, 2015, 2014 and 2013, respectively.
Supplemental Profit Sharing Retirement Plan
The Company has an unfunded, non-qualified Supplemental Profit Sharing Retirement Plan whereby certain
key employees of the Company may receive profit sharing contributions in excess of the amounts allowed
under the Profit Sharing and Savings Plan. Participation in the Supplemental Profit Sharing Retirement Plan
has been frozen and is restricted to employees who qualified as participants on November 1, 2002. The
Company did not make any contributions to the plan in fiscal 2015. Participants in the Supplemental Profit
Sharing Retirement Plan continue to earn investment returns on their balances commensurate with those
earned in the employer-directed portion of the Profit Sharing and Savings Plan. The Company’s expense
under the Supplemental Profit Sharing Retirement Plan for the years ended October 31, 2015, 2014 and
2013 was $1,486, $21,576 and $38,302, respectively.
14. Common Stock
All outstanding shares of the Company’s Voting Common Stock are deposited in a voting trust, the trustees of
which have unrestricted voting rights with respect to the Voting Common Stock. The trustees of the voting trust
are all officers of the Company. Non-Voting Common shares do not have voting rights under any
circumstances. In fiscal 2015, the Company issued 13,927 shares and repurchased 13,927 shares of its Voting
Common Stock.
The Company’s current Non-Voting Common Stock share repurchase program was announced on April 15,
2015. The Board authorized management to repurchase and retire up to 8.0 million shares of its Non-Voting
Common Stock on the open market and in private transactions in accordance with applicable securities laws.
The timing and amount of share purchases are subject to management’s discretion. The Company’s share
repurchase program is not subject to an expiration date.
In fiscal 2015, the Company purchased and retired approximately 4.8 million shares of its Non-Voting
Common Stock under the current repurchase authorization and approximately 2.6 million shares under a
previous repurchase authorization. Approximately 3.2 million additional shares may be repurchased under
the current authorization as of October 31, 2015.
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15. Non-operating Income (Expense)
The components of non-operating income (expense) for the years ended October 31, 2015, 2014 and 2013
were as follows:
(in thousands)
Non-operating income (expense):
Interest and other income
Net losses on investments and derivatives
Net foreign currency losses
Gains (losses) and other investment income, net
Interest expense
Loss on extinguishment of debt
2015
2014
2013
$
9,346 $
(9,151)
(226)
(31)
(29,357)
8,182 $
(6,946)
(97)
1,139
(29,892)
-
-
6,514
(8,154)
(873)
(2,513)
(33,708)
(52,996)
Other income (expense) of consolidated
CLO entities:
Interest income
Net gains (losses) on bank loans, other investments,
note obligations and preferred shares
Gains and other investment income, net
Structuring and closing fees
Interest expense
Interest and other expense
Total non-operating expense
3,467
16,174
21,966
1,625
5,092
(2,359)
(4,408)
(6,767)
(1,282)
14,892
(4,847)
(10,000)
(14,847)
(19,152)
(19,152)
$ (31,063) $ (28,708) $ (93,554)
(7,151)
14,815
-
16. Income Taxes
The provision for income taxes for the years ended October 31, 2015, 2014 and 2013 consists of the
following:
(in thousands)
Current:
Federal
State
Deferred:
Federal
State
Total
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2015
2014
2013
$ 117,682 $ 149,999 $ 121,373
29,816
20,837
25,329
4,614
81
(6,347)
(946)
$ 143,214 $ 186,710 $ 143,896
10,653
729
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Deferred income taxes reflect the expected future tax consequences of temporary differences between the
carrying amounts and tax bases of the Company’s assets and liabilities. The significant components of
deferred income taxes are as follows:
(in thousands)
Deferred tax assets:
Stock-based compensation
Compensation and benefit expense
Deferred rent
Differences between book and tax bases of investments
Differences between book and tax bases of property
Federal benefit of unrecognized state tax benefits
Other
Total deferred tax asset
Deferred tax liabilities:
Deferred sales commissions
Differences between book and tax bases of goodwill
and intangibles
Differences between book and tax bases of property
Unrealized net holding gains on investments
Unrealized gains on derivative instruments
Total deferred tax liability
Net deferred tax asset
2015
2014
$
$
$
$
$
69,133 $
5,190
12,776
9,268
-
883
460
97,710 $
68,775
4,977
4,349
1,130
1,231
827
355
81,644
(9,760) $
(6,899)
(36,855)
(6,117)
(2,380)
(434)
(55,546) $
42,164 $
(25,008)
-
(3,212)
(426)
(35,545)
46,099
The Company records a valuation allowance when necessary to reduce deferred tax assets to an amount that
is more likely than not to be realized. No valuation allowance has been recorded for deferred tax assets,
reflecting management’s belief that all deferred tax assets will be utilized.
The following table reconciles the Company’s effective tax rate from the U.S. federal statutory tax rate to
such amount for each of the years ended October 31, 2015, 2014 and 2013:
2015
2014
2013
35.0 % 35.0 % 35.0 %
3.8
(0.8)
0.8
-
-
3.5
(0.8)
0.4
-
(0.1)
3.3
(1.2)
0.8
1.9
0.2
38.8 % 38.0 % 40.0 %
Federal statutory rate
State and local income tax, net of
federal income tax benefit
Non-controlling interest
Stock-based compensation
State audit settlement
Other
Effective income tax rate
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The exercise of non-qualified stock options resulted in a reduction of taxes payable of approximately $10.0
million, $18.6 million and $20.6 million for the years ended October 31, 2015, 2014 and 2013, respectively.
Such benefit has been reflected as a component of shareholders’ equity.
The changes in gross unrecognized tax benefits, excluding interest and penalties, for the years ended
October 31, 2015, 2014 and 2013 are as follows:
(in thousands)
Beginning Balance
Additions for tax positions of prior years
Additions based on tax positions related to current year
Reductions for tax positions of prior years
Reductions for settlements with taxing authorities
Lapse of statute of limitations
Ending Balance
2015
1,798 $
437
62
(130)
-
(67)
2,100 $
$
$
2014
2013
857 $
1,117
-
(176)
-
-
1,798 $
9,538
324
55
-
(8,752)
(308)
857
The total amount of unrecognized tax benefits as of October 31, 2015, 2014 and 2013 that, if recognized,
would impact the effective tax rate is $2.1 million, $1.8 million and $0.9 million, respectively.
In the years ended October 31, 2015, 2014 and 2013, the Company recognized $0.1 million, $0.2 million
and $0.2 million, respectively, in interest and penalties in its income tax provision. Accrued interest and
penalties, which are included as a component of unrecognized tax benefits, totaled $0.8 million, $0.7 million
and $0.5 million at October 31, 2015, 2014 and 2013, respectively.
The Company believes that it is reasonably possible that approximately $1.0 million of its currently
remaining unrecognized tax benefits, each of which are individually insignificant, may be recognized within
the next 12 months as a result of a lapse of the statute of limitations and settlements with state taxing
authorities.
The Company considers the undistributed earnings of certain of its foreign subsidiaries to be indefinitely
reinvested in foreign operations as of October 31, 2015. Accordingly, no U.S. income taxes have been
provided thereon. As of October 31, 2015, the Company had approximately $34.1 million of undistributed
earnings in certain Canadian, UK and Australian foreign subsidiaries that are not available to fund domestic
operations or to distribute to shareholders unless repatriated. Repatriation would require the Company to
accrue and pay U.S. corporate income taxes. The unrecognized deferred income tax liability on these un-
repatriated funds, or temporary difference, is estimated to be $4.0 million. The Company does not intend to
repatriate these funds, has not previously repatriated funds from these entities, and has the financial liquidity
to permanently leave these funds offshore.
During fiscal year 2013, a state tax authority and the Company agreed to settle all matters relating to the tax
authority's audit of the fiscal years ended October 31, 2004 through October 31, 2009 in exchange for a
lump sum payment of $19.6 million. The $19.6 million payment resulted in a net increase to income tax
expense in fiscal 2013 of $6.7 million, equal to the amount of the payment less previously recorded reserves
of $9.3 million and a federal tax benefit on the increased state tax of $3.6 million.
The Company is generally no longer subject to income tax examinations by U.S. federal, state, local or non-
U.S. taxing authorities for fiscal years prior to fiscal 2011.
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17. Non-controlling and Other Beneficial Interests
Non-controlling and other beneficial interests are as follows:
Non-redeemable non-controlling interests
Non-redeemable non-controlling interests consist entirely of unvested interests granted to employees of the
Company’s majority-owned subsidiaries under subsidiary-specific long-term equity plans. These grants
become subject to put rights upon vesting and will be reclassified to temporary equity as vesting occurs.
Redeemable non-controlling interests at other than fair value
As of October 31, 2015, redeemable non-controlling interests at other than fair value consist of interests in
Atlanta Capital retained by selling shareholders at the time of acquisition. The Company’s purchase of
these remaining non-controlling interests, which are not subject to mandatory redemption, is predicated on
the exercise of a series of puts held by non-controlling interest holders and calls held by the Company.
These put and call rights are not legally detachable or separately exercisable and are deemed to be
embedded in the related non-controlling interests. The puts provide non-controlling interest holders the right
to require the Company to purchase these retained interests at specific intervals over time, while the calls
provide the Company the right to require the non-controlling interest holders to sell their retained equity
interests to the Company at specific intervals over time, as well as upon the occurrence of certain events
such as death or permanent disability. As a result, there is significant uncertainty as to the timing of any
non-controlling interest purchases in the future. The value assigned to the purchase of a non-controlling
interest is based, in each case, on a multiple of earnings before interest and taxes of Atlanta Capital at
specified points in the future. As a result, these interests are considered redeemable at other than fair value
and changes in the redemption value of these interests are recognized in net income attributable to non-
controlling and other beneficial interests.
Net income attributable to non-controlling and other beneficial interests reflects a decrease of $0.2 million
in fiscal 2015 in the estimated redemption value of redeemable non-controlling interests in Atlanta Capital;
net income attributable to non-controlling and other beneficial interests in fiscal 2014 reflects an increase of
$5.3 million in the estimated redemption value of redeemable non-controlling interests in Atlanta Capital
and Parametric Risk Advisors; net income attributable to non-controlling and other beneficial interests in
fiscal 2013 reflects an increase of $24.3 million in the estimated redemption value of redeemable non-
controlling interests in Atlanta Capital, Parametric and Parametric Risk Advisors. Non-controlling interests
in Parametric Risk Advisors redeemable at other than fair value were fully redeemed in fiscal 2014; non-
controlling interests in Parametric redeemable at other than fair value were fully redeemed in fiscal 2013.
Any future payments made to the non-controlling interest holders of Atlanta Capital upon execution of the
puts and calls described above will reduce temporary equity.
Redeemable non-controlling interests at fair value
Interests in the Company’s consolidated funds and vested interests granted to employees of the Company’s
majority-owned subsidiaries under subsidiary-specific long-term equity plans are considered redeemable at
fair value. Future changes in the redemption value of these interests will be recognized as increases or
decreases to additional paid-in capital. Any future payments made to these non-controlling interest holders
will reduce temporary equity.
The components of net income attributable to non-controlling and other beneficial interests for the years
ended October 31, 2015, 2014 and 2013 were as follows:
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(in thousands)
Consolidated funds
Majority-owned subsidiaries
Non-controlling interest value adjustments(1)
Consolidated CLO entities
Net income attributable to non-controlling and
other beneficial interests
2015
1,752 $
$
2014
318 $
(15,673)
204
5,825
(15,950)
(5,311)
4,095
2013
(4,095)
(16,620)
(24,320)
8,450
$
(7,892) $ (16,848) $ (36,585)
(1) Relates to non-controlling interests redeemable at other than fair value.
18. Accumulated Other Comprehensive Income (Loss)
The components of accumulated other comprehensive income (loss), net of tax, for the years ended October
31, 2015, 2014 and 2013 are as follows:
$
$
$
(in thousands)
Balance at October 31, 2012
Other comprehensive income (loss)
before reclassifications and tax
Tax impact
Reclassification adjustments, before tax
Tax impact
Net current period other comprehensive
income (loss)
Balance at October 31, 2013
Other comprehensive income (loss)
before reclassifications and tax
Tax impact
Reclassification adjustments, before tax
Tax impact
Net current period other comprehensive
income (loss)
Balance at October 31, 2014
Other comprehensive loss before
reclassifications and tax
Tax impact
Reclassification adjustments, before tax
Tax impact
Net current period other comprehensive
income (loss)
Unamortized
net gains
(losses) on
derivatives(1)
(1,424)
$
Net unrealized
holding gains
(losses) on
available-for-
sale
investments(2)
5,461
Foreign
currency
translation
adjustments(3)
(114)
$
Total
$
3,923
2,015
(788)
1,246
(401)
3,455
(1,321)
(5,004)
1,913
(8,428)
3,213
-
-
(2,958)
1,104
(3,758)
1,512
2,072
648
$
(957)
4,504
$
(5,215)
(5,329)
$
(4,100)
(177)
-
-
22
(9)
1,735
(690)
131
(52)
(15,984)
(2,972)
-
-
(14,249)
(3,662)
153
(61)
13
661
$
1,124
5,628
$
(18,956)
(24,285)
(17,819)
(17,996)
$
-
-
22
(9)
13
(8)
3
(2,992)
1,102
(28,877)
(115)
463
(179)
(28,885)
(112)
(2,507)
914
(1,895)
(28,708)
(30,590)
Balance at October 31, 2015
$
674
$
3,733
$
(52,993)
$
(48,586)
(1) Amounts reclassified from accumulated other comprehensive income (loss), net of tax, represent the amortization of net gains (losses)
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on interest rate swaps over the life of the Company's Senior Notes into interest expense on the Consolidated Statements of Income.
(2) Amounts reclassified from accumulated other comprehensive income (loss), net of tax, represent gains (losses) on disposal of
available-for-sale securities that were recorded in gains (losses) and other investment income, net, on the Consolidated Statements
of Income.
(3) Amounts reclassified from accumulated other comprehensive income (loss), net of tax, represent the realization of foreign currency
translation losses on a consolidated sponsored fund denominated in Euros that was deconsolidated during fiscal 2015. These
amounts were recorded in gains (losses) and other investment income, net, on the Consolidated Statements of Income.
19. Earnings per Share
The following table sets forth the calculation of earnings per basic and diluted share for the years ended
October 31, 2015, 2014 and 2013 using the two-class method:
(in thousands, except per share data)
Net income attributable to Eaton Vance Corp.
shareholders
Less: Allocation of earnings to participating
restricted shares
Net income available to common shareholders
2015
2014
2013
$ 230,299
$ 304,316 $ 193,841
3,885
$ 226,414
7,611
7,124
$ 296,705 $ 186,717
Weighted-average shares outstanding – basic
Incremental common shares
Weighted-average shares outstanding – diluted
113,318
4,837
118,155
116,440
5,155
121,595
116,597
5,847
122,444
Earnings per share:
Basic
Diluted
$
$
2.00
1.92
$
$
2.55 $
2.44 $
1.60
1.53
Antidilutive common shares related to stock options and unvested restricted stock excluded from the
computation of earnings per diluted share were approximately 7.8 million, 5.1 million and 3.0 million for
the years ended October 31, 2015, 2014 and 2013, respectively.
20. Commitments and Contingencies
In the normal course of business, the Company enters into agreements that include indemnities in favor of
third parties, such as engagement letters with advisors and consultants, information technology agreements,
distribution agreements and service agreements. In certain circumstances, these indemnities in favor of third
parties relate to service agreements entered into by investment funds managed and/or advised by Eaton
Vance Management or Boston Management and Research, both wholly owned subsidiaries of the Company.
The Company has also agreed to indemnify its directors, officers and employees in accordance with the
Company’s Articles of Incorporation, as amended. Certain agreements do not contain any limits on the
Company’s liability and, therefore, it is not possible to estimate the Company’s potential liability under
these indemnities. In certain cases, the Company has recourse against third parties with respect to these
indemnities. Further, the Company maintains insurance policies that may provide coverage against certain
claims under these indemnities.
The Company and its subsidiaries are subject to various legal proceedings. In the opinion of management,
after discussions with legal counsel, the ultimate resolution of these matters will not have a material effect
on the consolidated financial condition, results of operations or cash flows of the Company.
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In November 2010, the Company acquired patents and other intellectual property from Managed ETFs LLC,
a developer of intellectual property in the field of exchange-traded funds. This intellectual property is the
foundation of the Company’s NextShares™ exchange-traded managed funds initiative. The success of
NextShares became reasonably possible when, on December 2, 2014, the SEC issued the Company an
exemption from certain provisions of the Investment Company Act of 1940 to permit the offering of
NextShares. The SEC has subsequently granted similar exemptive relief to 11 other fund advisers that have
entered into preliminary licensing and services agreements for NextShares.
The terms of the acquisition of the patents and other intellectual property of Managed ETFs LLC include
approximately $9.0 million in aggregate contingent milestone payments that are based on specific events
representing key developments in the commercialization of NextShares. There is no defined timing on these
payments, resulting in significant uncertainty as to when the amount of any payment is due in the future. If
and when the milestones have been accomplished, Managed ETFs LLC is also entitled to revenue-sharing
payments that are calculated based on a percentage of licensing revenue that the Company receives for use
of the acquired intellectual property.
The Company has entered into transactions in financial instruments in which it has sold securities, not yet
purchased, as part of its corporate hedging program. As of October 31, 2015 the Company has $3.0 million
included within other liabilities on its Consolidated Balance Sheet related to securities sold, not yet
purchased.
The Company leases certain office space and equipment under non-cancelable operating leases. The office
space leases expire over various terms that extend through 2034. Certain of the leases contain renewal
options. The lease payments are recognized on a straight-line basis over the non-cancelable term of each
lease plus any anticipated extensions. Rent expense under these leases in fiscal 2015, 2014 and 2013 totaled
$21.5 million, $20.7 million and $20.0 million, respectively. Future minimum lease commitments are as
follows:
Year Ending October 31,
(in thousands)
2016
2017
2018
2019
2020
2021 – thereafter
Total
Amount(1)
21,428
21,006
21,635
21,880
20,884
245,746
352,579
$
$
(1) Future minimum lease payments have not been reduced by minimum sublease rentals of $0.4 million due in the future.
The Company subleases certain office space under operating leases that expire over various terms. The
sublease payments are recognized on a straight-line basis over the non-cancelable term of the sublease.
Rental income under these subleases totaled $1.3 million, $1.2 million and $1.0 million for fiscal years
ended October 31, 2015, 2014 and 2013, respectively. Future minimum rental payments to be received are
$0.4 million for the fiscal year ending October 31, 2016. There are no future minimum lease payments due
to the Company in periods after fiscal 2016.
Other commitments and contingencies include future payments to be made upon the exercise of puts and
calls of non-controlling interests in Atlanta Capital, puts and calls related to indirect profit interests issued
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pursuant to the Atlanta Capital Plan and the Parametric Plan, as well as the contingent payments to be made
to the selling shareholders of TABS as more fully described in Note 10.
21. Related Party Transactions
Sponsored Funds
The Company is an investment adviser to, and has administrative agreements with, certain sponsored mutual
funds, privately offered funds and closed-end funds for which certain employees are officers and/or
directors. Substantially all of the services to these entities for which the Company earns a fee, including
investment advisory, distribution, shareholder and administrative services, are provided under contracts that
set forth the services to be provided and the fees to be charged. Certain of these contracts are subject to
annual review and approval by the funds’ boards of directors or trustees. Revenues for services provided or
related to these funds for the years ended October 31, 2015, 2014 and 2013 are as follows:
(in thousands)
Investment advisory and administrative fees
Distribution fees
Service fees
Shareholder service fees
Other revenue
Total
$
2015
865,792 $
73,468
116,448
2,641
2,384
2014
900,478 $
77,697
125,713
2,315
2,093
2013
828,441
80,073
126,560
2,522
1,211
$ 1,060,733 $ 1,108,296 $ 1,038,807
For the years ended October 31, 2015, 2014 and 2013, the Company had investment advisory agreements
with certain sponsored funds pursuant to which the Company contractually waived $13.0 million, $12.3
million and $9.6 million, respectively, of investment advisory fees it was otherwise entitled to receive.
Sales proceeds and net realized gains (losses) for the years ended October 31, 2015, 2014 and 2013 from
investments in sponsored funds classified as available-for-sale, including sponsored funds accounted for
under the equity method, are as follows:
(in thousands)
Proceeds from sales
Net realized gains (losses)
$
2015
44,736 $
3,943
2014
79,829 $
(81)
2013
62,263
5,742
The Company bears the non-advisory expenses of certain sponsored funds for which it earns an all-in
management fee and provides subsidies to startup and other smaller sponsored funds to enhance their
competitiveness. For the years ended October 31, 2015, 2014 and 2013, expenses of $22.5 million, $21.7
million and $23.9 million, respectively, were incurred by the Company pursuant to these arrangements.
Included in investment advisory and other receivables at October 31, 2015 and 2014 are receivables due
from sponsored funds of $89.2 million and $94.5 million, respectively.
Employee Loan Program
The Company has established an Employee Loan Program under which a program maximum of $20.0
million is available for loans to officers (other than executive officers) and other key employees of the
Company for purposes of financing the exercise of employee stock options. Loans are written for a seven-
year period, at varying fixed interest rates (currently ranging from 0.9 percent to 3.4 percent), are payable in
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annual installments commencing with the third year in which the loan is outstanding, and are collateralized
by the stock issued upon exercise of the option. All loans under the program must be made on or before
October 31, 2018. Loans outstanding under this program, which are full recourse in nature, are reflected as
notes receivable from stock option exercises in shareholders’ equity, and totaled $11.1 million and $8.8
million at October 31, 2015 and 2014, respectively.
22. Regulatory Requirements
The Company is required to maintain net capital in certain regulated subsidiaries within a number of
jurisdictions. Such requirements may limit the Company’s ability to make withdrawals of capital from these
subsidiaries.
EVD, a wholly owned subsidiary of the Company and principal underwriter of the Eaton Vance and
Parametric funds, is subject to the SEC uniform net capital rule, which requires the maintenance of
minimum net capital. For purposes of this rule, EVD had net capital of $54.2 million, which exceeds its
minimum net capital requirement of $3.7 million at October 31, 2015. The ratio of aggregate indebtedness
to net capital at October 31, 2015 was 1.01-to-1.
At October 31, 2015, the Company was required to maintain net capital in certain other regulated
subsidiaries. The Company was in compliance with all applicable regulatory minimum net capital
requirements.
23. Concentrations of Credit Risk and Significant Relationships
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily
of cash and cash equivalents held. The Company maintains cash and cash equivalents with various financial
institutions. Cash deposits maintained at a financial institution may exceed the federally insured limit.
During the fiscal years ended October 31, 2015, 2014 and 2013, there were no managed portfolios or related
funds that provided over 10 percent of the total revenue for the Company.
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24. Comparative Quarterly Financial Information (Unaudited)
(in thousands, except per share data)
First
Quarter
Second
Quarter
2015
Third
Quarter
Fourth
Quarter
Full Year
Total revenue
Operating income
Net income
Net income attributable to
Eaton Vance Corp.
shareholders
Earnings per Share:
Basic
Diluted
$ 354,930 $ 351,664 $ 355,511 $
50,560 $ 122,221 $ 116,733 $
$
68,974 $
75,893 $
32,509 $
$
341,458
110,933
60,815
$ 1,403,563
400,447
$
238,191
$
$
$
$
29,003 $
70,384 $
68,709 $
62,203
0.25 $
0.24 $
0.61 $
0.58 $
0.60 $
0.57 $
0.55
0.53
$
$
$
230,299
2.00
1.92
(in thousands, except per share data)
First
Quarter
Second
Quarter
2014
Third
Quarter
Fourth
Quarter
Full Year
Total revenue
Operating income
Net income
Net income attributable to
Eaton Vance Corp.
shareholders
Earnings per Share:
Basic
Diluted
$ 360,261 $ 354,061 $ 367,590 $
$ 124,200 $ 125,303 $ 131,178 $
81,269 $
$
76,730 $
78,047 $
368,382
139,176
85,118
$ 1,450,294
519,857
$
321,164
$
$
$
$
71,358 $
74,901 $
77,935 $
80,122
0.59 $
0.56 $
0.62 $
0.59 $
0.66 $
0.63 $
0.68
0.66
$
$
$
304,316
2.55
2.44
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Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Eaton Vance Corp.:
We have audited the accompanying consolidated balance sheets of Eaton Vance Corp. and subsidiaries (the
Report of Independent Registered Public Accounting Firm
“Company”) as of October 31, 2015 and 2014, and the related consolidated statements of income,
comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended
October 31, 2015. These financial statements are the responsibility of the Company's management. Our
To the Board of Directors and Shareholders of Eaton Vance Corp.:
responsibility is to express an opinion on these financial statements based on our audits.
We have audited the accompanying consolidated balance sheets of Eaton Vance Corp. and subsidiaries (the
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board
“Company”) as of October 31, 2015 and 2014, and the related consolidated statements of income,
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance
comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended
about whether the financial statements are free of material misstatement. An audit includes examining, on a test
October 31, 2015. These financial statements are the responsibility of the Company's management. Our
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
responsibility is to express an opinion on these financial statements based on our audits.
assessing the accounting principles used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits provide a reasonable basis for our
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board
opinion.
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes examining, on a test
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
position of Eaton Vance Corp. and subsidiaries as of October 31, 2015 and 2014, and the results of their
assessing the accounting principles used and significant estimates made by management, as well as evaluating
operations and their cash flows for each of the three years in the period ended October 31, 2015, in conformity
the overall financial statement presentation. We believe that our audits provide a reasonable basis for our
with accounting principles generally accepted in the United States of America.
opinion.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial
(United States), the Company's internal control over financial reporting as of October 31, 2015, based on the
position of Eaton Vance Corp. and subsidiaries as of October 31, 2015 and 2014, and the results of their
criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring
operations and their cash flows for each of the three years in the period ended October 31, 2015, in conformity
Organizations of the Treadway Commission and our report dated December 18, 2015 expressed an unqualified
with accounting principles generally accepted in the United States of America.
opinion on the Company's internal control over financial reporting.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the Company's internal control over financial reporting as of October 31, 2015, based on the
/s/ DELOITTE & TOUCHE LLP
criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated December 18, 2015 expressed an unqualified
Boston, Massachusetts
opinion on the Company's internal control over financial reporting.
December 18, 2015
/s/ DELOITTE & TOUCHE LLP
Boston, Massachusetts
December 18, 2015
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Investor Information
Eaton Vance Corp. has filed an Annual Report on Form 10-K with the Securities
and Exchange Commission for the 2015 fiscal year. For a copy of the Company’s
Form 10-K, which is available free of charge to shareholders upon request, or other
information regarding the Company, please contact:
Laurie G. Hylton
Chief Financial Officer
Eaton Vance Corp.
Two International Place
Boston MA 02110
(617) 482-8260
The Company’s Form 10-K and other information about Eaton Vance Corp. are
also available on the Company’s website: eatonvance.com. The Company has
submitted to the New York Stock Exchange a certificate of the chief executive officer
representing that he is not aware of any violation by the Company of New York Stock
Exchange corporate governance listing standards.
Transfer Agent and Registrar
Computershare Investor Services
P.O. Box 30170
College Station, TX 77842-3170
(877) 282-1168
www.computershare.com/investor
The Transfer Agent maintains shareholder account records and should be contacted
regarding changes in address, name or ownership, lost certificates and consolidation
of accounts. When corresponding with the Transfer Agent, shareholders should state
the exact name(s) in which their stock is registered and the certificate number, as
well as other pertinent account information.
Independent Registered Public Accounting Firm
Deloitte & Touche LLP
200 Berkeley Street
Boston, MA 02116
(617) 437-2000
www.deloitte.com
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Directors and Officers
Directors
Ann E. Berman (1,2,3)
Dorothy E. Puhy (1,3)
Thomas E. Faust Jr.
Winthrop H. Smith Jr. (1,2,3)
Leo I. Higdon Jr.*(2)
Richard A. Spillane Jr. (2,3)
Brian D. Langstraat
*Lead Independent Director. Board Committees: 1. Audit, 2. Compensation, 3. Nominating and Governance
Officers
Thomas E. Faust Jr.
Chairman, Chief Executive Officer
and President
Jeffrey P. Beale
Vice President and
Chief Administrative Officer
Daniel C. Cataldo
Vice President and
Treasurer
Laurie G. Hylton
Vice President, Chief Financial Officer
and Chief Accounting Officer
Frederick S. Marius
Vice President, Secretary and
Chief Legal Officer
.
2015 Annual Report
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Our mission and core values
Eaton Vance strives to be the premier investment management organization.
• We seek to provide clients with superior performance, top-quality service and value-
added products across a range of investment disciplines and distribution channels.
• We seek to provide an attractive work environment and fulfilling careers for our
dedicated employees.
• Through the success of clients and associates, we thereby seek to build long-term
shareholder value.
Integrity
Integrity
Integrity
Integrity
Professionalism
Professionalism
Professionalism
Professionalism
Is honest in word and deed.
Is honest in word and deed.
Adheres to the company’s code of
ethics, industry standards of business
conduct and applicable law.
Deals fairly and forthrightly with clients,
colleagues and business partners.
Demonstrates maturity, dedication and a
Demonstrates maturity, dedication and a
strong work ethic.
Behaves appropriately; is respectful of
clients, colleagues and business partners.
Uses the company’s resources wisely.
Teamwork
Teamwork
Teamwork
Teamwork
Client Focus
Client Focus
Client Focus
Client Focus
Works collaboratively with others to
achieve shared goals.
Communicates openly and follows
through on commitments.
Enhances the work experience of
colleagues.
Meets or exceeds client performance
Meets or exceeds client performance
expectations.
Places the interests of clients first.
Creativity/Adaptability
Creativity/Adaptability
Creativity/Adaptability
Creativity/Adaptability
Excellence
Excellence
Excellence
Excellence
Develops business opportunities and
Develops business opportunities and
process improvements.
Achieves outstanding results for
Achieves outstanding results for
clients and shareholders.
Is open and adaptable to change.
Works to achieve personal development.
Advances the record and reputation of
Eaton Vance as an industry leader.
2015 Annual Report
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“In my opinion the qualities which dependable management should possess are
“In my opinion the qualities which dependable management should possess are
“In my opinion the qualities which dependable management should possess are
“In my opinion the qualities which dependable management should possess are
those solid traits of character – integrity, courage, responsibility and patience.
those solid traits of character – integrity, courage, responsibility and patience.
those solid traits of character – integrity, courage, responsibility and patience.
those solid traits of character – integrity, courage, responsibility and patience.
Given those traits, along with common sense and seasoned judgment, you will
Given those traits, along with common sense and seasoned judgment, you will
Given those traits, along with common sense and seasoned judgment, you will
Given those traits, along with common sense and seasoned judgment, you will
have a management that may be depended upon to produce satisfactory results.”
have a management that may be depended upon to produce satisfactory results.”
have a management that may be depended upon to produce satisfactory results.”
have a management that may be depended upon to produce satisfactory results.”
–Charles F. Eaton Jr.
–Charles F. Eaton Jr.
–Charles F. Eaton Jr.
–Charles F. Eaton Jr.
continued from back cover
continued from back cover
Christopher Briant Heather Chapman Bradley Galko Andrew Popp Daniel Saltus James Thorson Marshall Stocker Jared Allen Amanda Lyons Tyler Smith Ryan Cavanaugh Derrick Leung
Jared Proske Sophie Murray Mooneer Salehmohamed Patrick Gennaco Vincent Leon Zachary Camara Christopher Cook Matthew Gile Henry Peabody David Brinker Nicholas Hailey
Benjamin LeFevre Robert Rowe William Turner Charles Norvish Ara Antonio Biana Perez Stephanie Nevin Brian Conley Rachel LeBlanc Anne Mitchell Collin Schrier Nokio Twumasi
Steven Vanne Lisa Brown Megan Pizzitola Amir Vaziri Alan Arrington Kevin Pih Michael Szyska Denise Tinsley Amy Bruckner Mamatha Chilumuthuru Isaiah Petersen Jennifer Diadoo
Victor La Ryan Smith William Spring Daniel Ryan Casey Foskett Caroline Spellman Wenlei Sun Benjamin Adams Qjaquice Brantley Allen Wagner David Butters Erin Canon James Morris
Holly Bragdon Robert Zaccardi David Glen William Reardon Ashley Peterson Michael Askew Diogenes Balsam Nagabhushan Beeram William Peterson Tracy Potorski Jesse Tobiason
Macki Anderson Amy Arslain Ryan Balko Matthew Cullen Michael Hebert Qiwen Liu Laura Sanders Punit Shetty Yi Sun Robert Cruice Craig McHaffie Robert Pellow John Jaje Norio Nishi
Rakshya Sigdel Ricky Valdez Scott Sovine Frank Brannen Lee Bertram Allison Li Jennifer Rodas Jenna Alleva Micaela Curley Joshua Rock Carolyn Cawley Steven Heck Andrea Vaitkus
Ashley Boecker Kimberly Gailun Jacob Homchick Glenn Pardo Raewyn Williams Benjamin Clough Timothy Gaudette Erin Kandamar Elizabeth McDonough Ryan Romano Alba Shkurti
Michael Sullivan Alexis Walsh John Flanagan Patrick Keogh Julie Smith Scott VanSickle Jonathan Needham Jason Chalmers Paul Cocanour Christine Yem Heather Anderson Marc Baumel
Kathryn Salzl Daniel Cozzi Edward Perkin Ashok Nayak Sheila Pechacek Bradford Thomas Andrew Spero Darrell Thompson Joseph Cinar Glenn Fitzsimmons Alexandra Monaco
Christopher Arthur Erin Garlow James Allen Madeline Anderson Dial Boehmer Michael Bortnick Emily Crandall Allison Goldie Blair McGreenery Peter Milinazzo Michael Rabinowitz
Eric Sherman Nicholas Stahelski Jason Nelson Mark Bumann Miles Ferguson Elaina Kenney Donald Schofield Max Chou Patrick Curran Wei Ge Michael Gose Audrey Grant Justin Horner
Kurt Kostyu Joonmo Ku Tiange Lei Connor Lem Michael Lopesciolo Tyler Nowicki Caitlyn Olson Adam Swinney Claudia Phuah Yu Jun Alli Bayko Lauren McAllister Shannon Vincent
Abbas Jaffri Leonard Williams Baharan MacLean Jeffrey Miller Samuel Tripp Douglas Miller Laura Zilewicz Devin Greaney Shannon Bean Alfred Walterscheit Keith Schweitzer Emi Yajima
Katherine Campbell Firoz Kamdar Erin Nygard Lynn Parker Maya Calabrese Alfred Bonfantini Lindsay Dahlstrom Carlos Del Valle-Ortiz Jeffrey Feccia David Grean Jonathan Lahey
Mary New Desmond Gallacher Kimberly Matisoff Branden Tanga Roy Belen Karen Long Onix Marrero Nicolette Mills Clinton Talmo Cory Gately Yuepeng Li Danielle Carr William Murray
Vincent Primavera Mark Reardon Tatyana Ryabchenko Nicole Stenerson Thomas Roslansky Kevin DeVito Matthew Karuza Andrew Scanlon Daniella Simone Michael Penna Azyzah Sasry
David Turk Jackson Bennett Christopher Ferrier Domini Gardner Errol Tashjian Joseph Zeck Malia Bandli Matthew Hildebrandt Amir Aliabadi Brock Griffin Mark Grube Dorothy Maloney
Richard Bissell Steven Abbiuso John Garvey Elizabeth Mattern Omar Yassin Matthew Butorac Kattie Elder Isaac Beckel Matthew Calos Max Chisaka Kristine Delano Holly DiCostanzo
Robert Pieroni Alec Szczerbinski Cory Gorski Alexander Lee Maureen Prassas Michael McDonough Abraham Hyun Joseph Alibrandi William Busch Monica Durango Zachary Ellis
Kathryn Griffin Tyler Pascucci Corinne Pekoske Samuel Reinhart Prachi Samudra Joseph Santullo Jillian Walsh Briton Wheeler Rob Anketell Peter Iodice Jun Li Paul Metheny David Morley
Whitlam Zhang Lynn Mach Lucas Anderson Matthew Johnson Jennifer Kilroy Theodore Zwieg Carolyn Foster Gabriela Paz Riley Allen Diana Granger Hasmid Haro Brian King
Craig Letendre Scott Linari Jennifer Magazu David Mattson Jeffrey Mueller Glenn Bowens Andrew Cantrall Veronika Karova Kyle Shannon Patrice Spencer Bradley Gagnon-Palick
Ryan Jenkins Colin Egan Chelsea Porter Mary Primiterra Russell Smith Kathleen Colangelo Kyle Shanafelt David Miles Elizabeth Royer August Kristoferson Kiva Boddy Kathrine Noll
Nicholas Hunter Ryan Olsen Alexander Payne Helena Racette Bradley Vopni Anne Darlington Adam Homicz Daniel Altchech Tasha Thomas Steven Fahey Juan Garcia Corey O’Connor
Alvaro Tejada Georgia Emms Joseph Hudepohl Amy Hutchinson John Kowalczik John McGinty Jan Mowbray Asim Pandey John Schneider Colt Wolfram Nicholas Burdeau Paul Chang
Mark Collins Christopher Dyer Aidan Farrell Marielle Gallant Brendan Gay Andrew Lebowitz Jake McDougall John McInerney John O’Brien Jeffrey Parsons Christopher Rios Joseph Stanton
Katharine Maretz Alison Wagner Jonathan Alexander Emily Cetlin Peter Correggio Justin David Sean Gildea Kathryn Mohrfeld Matthew Morin Maria van Heeckeren Justin Ziegler
Priyamvada Trivedi Deanna Young Neal Cabanos Jeremy Catt Joshua Schramm Cailly Carroll Kristin Chan John Henry Jonathan Schlaudraff Suresh Sundaram Dane Fickel Carmen Boscia
Gregory Gelinas Peter Smith Sandy Tam Marissa Simmons Beau Bowman Stelios Kousettis Andrew Mangin James McCourt Sarah Millard Patricia Odnakk Joshua Ford Hunter Hayes
Jo-Ellen Kenney Paul Oh Quinn Christofferson Gregory Lawson Sterling Tran Gavin Kennedy Audrey Ford Andrew McKee Raymond Singh Brian Austin Alexander Dyson Babak Sanaee
Julija Rockne Julianne Williams Nicholas Kirsch Hillary Kloeckner Mary Rouse Gregory Bauer Michael Corson Maryanne Cronin Sean Melville Steven Perlmutter Brian Reilly
Robert Ankenbauer Katherine Baker Hannah Gottas Elizabeth Pringle Katelyn Daignault Donandrea Myette Edward Smith Jacqueline Mills Tianchuan Li Henry Meuret Ethan Resnick
Stephanie Uvwo Anna Wheatley Claus Roller Brian Johnson Alex Provencal Emily Santa Fe Abigail Cammack William Bergen Kristin Carcio Stephen Munoz Amelia Wren Alexa Cancela
Tiffany Lee Allen Mayer Samantha Pandolfi Ian Kirwan
Christopher Briant Heather Chapman Bradley Galko Andrew Popp Daniel Saltus James Thorson Marshall Stocker Jared Allen Amanda Lyons Tyler Smith Ryan Cavanaugh Derrick Leung
Jared Proske Sophie Murray Mooneer Salehmohamed Patrick Gennaco Vincent Leon Zachary Camara Christopher Cook Matthew Gile Henry Peabody David Brinker Nicholas Hailey
Benjamin LeFevre Robert Rowe William Turner Charles Norvish Ara Antonio Biana Perez Stephanie Nevin Brian Conley Rachel LeBlanc Anne Mitchell Collin Schrier Nokio Twumasi
Steven Vanne Lisa Brown Megan Pizzitola Amir Vaziri Alan Arrington Kevin Pih Michael Szyska Denise Tinsley Amy Bruckner Mamatha Chilumuthuru Isaiah Petersen Jennifer Diadoo
Victor La Ryan Smith William Spring Daniel Ryan Casey Foskett Caroline Spellman Wenlei Sun Benjamin Adams Qjaquice Brantley Allen Wagner David Butters Erin Canon James Morris
Holly Bragdon Robert Zaccardi David Glen William Reardon Ashley Peterson Michael Askew Diogenes Balsam Nagabhushan Beeram William Peterson Tracy Potorski Jesse Tobiason
Macki Anderson Amy Arslain Ryan Balko Matthew Cullen Michael Hebert Qiwen Liu Laura Sanders Punit Shetty Yi Sun Robert Cruice Craig McHaffie Robert Pellow John Jaje Norio Nishi
Rakshya Sigdel Ricky Valdez Scott Sovine Frank Brannen Lee Bertram Allison Li Jennifer Rodas Jenna Alleva Micaela Curley Joshua Rock Carolyn Cawley Steven Heck Andrea Vaitkus
Ashley Boecker Kimberly Gailun Jacob Homchick Glenn Pardo Raewyn Williams Benjamin Clough Timothy Gaudette Erin Kandamar Elizabeth McDonough Ryan Romano Alba Shkurti
Michael Sullivan Alexis Walsh John Flanagan Patrick Keogh Julie Smith Scott VanSickle Jonathan Needham Jason Chalmers Paul Cocanour Christine Yem Heather Anderson Marc Baumel
Kathryn Salzl Daniel Cozzi Edward Perkin Ashok Nayak Sheila Pechacek Bradford Thomas Andrew Spero Darrell Thompson Joseph Cinar Glenn Fitzsimmons Alexandra Monaco
Christopher Arthur Erin Garlow James Allen Madeline Anderson Dial Boehmer Michael Bortnick Emily Crandall Allison Goldie Blair McGreenery Peter Milinazzo Michael Rabinowitz
Eric Sherman Nicholas Stahelski Jason Nelson Mark Bumann Miles Ferguson Elaina Kenney Donald Schofield Max Chou Patrick Curran Wei Ge Michael Gose Audrey Grant Justin Horner
Kurt Kostyu Joonmo Ku Tiange Lei Connor Lem Michael Lopesciolo Tyler Nowicki Caitlyn Olson Adam Swinney Claudia Phuah Yu Jun Alli Bayko Lauren McAllister Shannon Vincent
Abbas Jaffri Leonard Williams Baharan MacLean Jeffrey Miller Samuel Tripp Douglas Miller Laura Zilewicz Devin Greaney Shannon Bean Alfred Walterscheit Keith Schweitzer Emi Yajima
Katherine Campbell Firoz Kamdar Erin Nygard Lynn Parker Maya Calabrese Alfred Bonfantini Lindsay Dahlstrom Carlos Del Valle-Ortiz Jeffrey Feccia David Grean Jonathan Lahey
Mary New Desmond Gallacher Kimberly Matisoff Branden Tanga Roy Belen Karen Long Onix Marrero Nicolette Mills Clinton Talmo Cory Gately Yuepeng Li Danielle Carr William Murray
Vincent Primavera Mark Reardon Tatyana Ryabchenko Nicole Stenerson Thomas Roslansky Kevin DeVito Matthew Karuza Andrew Scanlon Daniella Simone Michael Penna Azyzah Sasry
David Turk Jackson Bennett Christopher Ferrier Domini Gardner Errol Tashjian Joseph Zeck Malia Bandli Matthew Hildebrandt Amir Aliabadi Brock Griffin Mark Grube Dorothy Maloney
Richard Bissell Steven Abbiuso John Garvey Elizabeth Mattern Omar Yassin Matthew Butorac Kattie Elder Isaac Beckel Matthew Calos Max Chisaka Kristine Delano Holly DiCostanzo
Robert Pieroni Alec Szczerbinski Cory Gorski Alexander Lee Maureen Prassas Michael McDonough Abraham Hyun Joseph Alibrandi William Busch Monica Durango Zachary Ellis
Kathryn Griffin Tyler Pascucci Corinne Pekoske Samuel Reinhart Prachi Samudra Joseph Santullo Jillian Walsh Briton Wheeler Rob Anketell Peter Iodice Jun Li Paul Metheny David Morley
Whitlam Zhang Lynn Mach Lucas Anderson Matthew Johnson Jennifer Kilroy Theodore Zwieg Carolyn Foster Gabriela Paz Riley Allen Diana Granger Hasmid Haro Brian King
Craig Letendre Scott Linari Jennifer Magazu David Mattson Jeffrey Mueller Glenn Bowens Andrew Cantrall Veronika Karova Kyle Shannon Patrice Spencer Bradley Gagnon-Palick
Ryan Jenkins Colin Egan Chelsea Porter Mary Primiterra Russell Smith Kathleen Colangelo Kyle Shanafelt David Miles Elizabeth Royer August Kristoferson Kiva Boddy Kathrine Noll
Nicholas Hunter Ryan Olsen Alexander Payne Helena Racette Bradley Vopni Anne Darlington Adam Homicz Daniel Altchech Tasha Thomas Steven Fahey Juan Garcia Corey O’Connor
Alvaro Tejada Georgia Emms Joseph Hudepohl Amy Hutchinson John Kowalczik John McGinty Jan Mowbray Asim Pandey John Schneider Colt Wolfram Nicholas Burdeau Paul Chang
Mark Collins Christopher Dyer Aidan Farrell Marielle Gallant Brendan Gay Andrew Lebowitz Jake McDougall John McInerney John O’Brien Jeffrey Parsons Christopher Rios Joseph Stanton
Katharine Maretz Alison Wagner Jonathan Alexander Emily Cetlin Peter Correggio Justin David Sean Gildea Kathryn Mohrfeld Matthew Morin Maria van Heeckeren Justin Ziegler
Priyamvada Trivedi Deanna Young Neal Cabanos Jeremy Catt Joshua Schramm Cailly Carroll Kristin Chan John Henry Jonathan Schlaudraff Suresh Sundaram Dane Fickel Carmen Boscia
Gregory Gelinas Peter Smith Sandy Tam Marissa Simmons Beau Bowman Stelios Kousettis Andrew Mangin James McCourt Sarah Millard Patricia Odnakk Joshua Ford Hunter Hayes
Jo-Ellen Kenney Paul Oh Quinn Christofferson Gregory Lawson Sterling Tran Gavin Kennedy Audrey Ford Andrew McKee Raymond Singh Brian Austin Alexander Dyson Babak Sanaee
Julija Rockne Julianne Williams Nicholas Kirsch Hillary Kloeckner Mary Rouse Gregory Bauer Michael Corson Maryanne Cronin Sean Melville Steven Perlmutter Brian Reilly
Robert Ankenbauer Katherine Baker Hannah Gottas Elizabeth Pringle Katelyn Daignault Donandrea Myette Edward Smith Jacqueline Mills Tianchuan Li Henry Meuret Ethan Resnick
Stephanie Uvwo Anna Wheatley Claus Roller Brian Johnson Alex Provencal Emily Santa Fe Abigail Cammack William Bergen Kristin Carcio Stephen Munoz Amelia Wren Alexa Cancela
Tiffany Lee Allen Mayer Samantha Pandolfi Ian Kirwan
About the Cover: The images represent the six principal operating locations of Eaton Vance and its
About the Cover: The images represent the six principal operating locations of Eaton Vance and its
consolidated subsidiaries: (from left) New York, Atlanta, Boston, Seattle, Minneapolis and London.
consolidated subsidiaries: (from left) New York, Atlanta, Boston, Seattle, Minneapolis and London.
2015 Annual Report
2015 Annual Report
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2
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16310 Cover cc15.indd 2
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2015 names.indd 2
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1/7/16 9:27 PM
1/7/16 6:51 PM
Jean McGoey Dallas Lundy Constance Wagner Linda Hanson Nora Bernazzani Wayne Saulnier Deborah Bishop William Austin Theresa Thorley Daniel Cataldo Jenilde Mastrangelo
Jane Nussbaum Linda Doherty Thomas Faust Cynthia Clemson Susan Kiewra Lauren Mannone Donna D’Addario Marlo-Jean Tulis Anne Marie Gallagher Stephanie Brady Mary Maestranzi
James Foley Veth Huorn William Gillen Mary Little Kelley Creedon Douglas McMahon Diane Brissette Rosemary Leavitt Scott Page Lynn Ostberg Brian Langstraat James Thebado
Lynne Hetu Mary Byrom Payson Swaffield Michael Weilheimer Karen Zemotel Hugh Gilmartin Amy Ursillo Perry Hooker John Gibson Gregory Parker Hadi Mezher Delores Wood
Julie Andrade Jeffrey Beale Mark Nelson John Murphy Deanna Berry Jane Rudnick Leighton Young Geoffrey Marshall Robert Bortnick Cecilia O’Keefe Louann Penzo Elizabeth Kenyon
Maureen Gemma David Michaud John Trotsky David Olivieri Laurie Hylton Jie Lu Stanley Weiland Margaret Taylor James Womack Kathleen Fryer Jonathan Isaac Kathleen Krivelow
Thomas Luster William Hackney John Pumphrey James Godfrey Katherine Kreider Marie Preston William Cross Lewis Piantedosi Christopher Gaylord David Stein Walter Row
Kelly Williams David McDonald Elizabeth Prall John Macejka Marie Charles Brian Dunkley Leanne Parziale Mark Burkhard Peter Crowley Craig Russ Michelle Green Roseann Sulano
Yana Barton Michael Botthof Kurt Galley Deborah Trachtenberg John Redding Paul O’Neil Kristin Anagnost Duke Laflamme Tiffany Cayarga Sotiria Kourtelidis Joanne Mey Jeffrey DuVall
William Delahunty Gillian Moore Linda Carter John Crowley Michael McGurn Michael Kinahan Daniel Ethier John Ullman Richard Wilson Maria Cappellano Suzanne Marger
Steven O’Brien Noah Coons Daniel Puopolo Adam Weigold Shannon Price Lee Thacker Craig Brandon Kirsten Ulich Charles Reed Stephen Jones Thomas Seto Far Salimian Scott Firth
Catherine Gagnon David Zimmerman Eric Caplinger Andrew Sveen Simone Santiago Robert Breshock Joseph Roman Carolee MacLellan Mary Arutyunyan Shalamar Kanemoto
Jeanene Montgomery Amanda Madison Kiersten Christensen Gregory Walsh Jeremiah Casey Amanda Kokan Donald McCaughey Robert Walton William Bell Lilly Scher Erica Williams
Jeffrey Hesselbein Tina Holmes Ira Baron Timothy McEwen Robert Curtis Lisa Flynn Jared Gray Jeffrey Brown Philip Pace Linda Nishi Xiaozhen Li Michael Allison John Gill Peter Hartman
Elizabeth McNamara Deborah Chlebek Samuel Scholz Stephen Concannon Craig Castriano Bruce McIntosh Christine Bogossian Aamer Khan Michael Nappi Catherine McDermott
Stephen Soltys Randall Skarda Jackie Viars Steven Leveille Kimberly Pacheco Kevin Sullivan Patrick Cosgrove Douglas Rogers James McCuddy Michael Devlin Lidia Pavlotsky
Michael Costello Katharine Walker Aaron Singleton Randall Clark Steven Widder Michelle Baran Troy Evans Michael McLean Paul Rose James Durocher James Putman Coleen Lynch
Elizabeth Johnson Kristen Abruzzese John Santoro Jay McKenney Christopher Berry Linda Bailey James Skesavage Timothy Breer Robert Ellerbeck Deborah Henry David Lochiatto
Daniel Yifru Christopher Mason Brian Herbert Joseph Furey Bradford Godfrey Amy Schwartz Lawrence Fahey Matthew Hereford Katherine Cameron John Greenway Dorothy Kopp
Deidre Walsh Gregor Yuska John Simchuk Charles Kace Michael Cirami Christian Howe Vassilii Nemtchinov Heath Christensen Ralph Hinckley Eugene Lee Peter Campo Christopher Hayes
Lori Miller Paul Nicely Darin Clauson Charles Gaffney Ian McGinn West Saltonstall Ian Schuelke James Reber Meghann Clark Todd Dickinson Maureen Emmerso Earl Brown
Frederick Marius John Brodbine Ronald Randall Sheila Irizarry Mark Milan Laurie Allard Michael Keffer Joshua Lipchin Benjamin Pomeroy William Pannella Kristin Chisholm John Croft
Megan Keaty Noriko Ogawa-Ishii Eileen Tam Edward Bliss Tasha Corthouts Leonard Dolan Susan Martland Deborah Moses Emily Murphy Samuel Perry Mary-Ann Spadafora
Jonathan Treat Kevin Darrow George Nelson Marc Moran Lauren Loehning Jodi Wong David Richman Richard England Melinda Olson Erin Auffrey John Murphy Jamie Babineau
Nicole Hoitt Sharon Gordon Jason Fisher Daniel McElaney Brian Kiernan Christopher Teixeira Joseph Hernandez Charles Manning William Holt Kwang Kim Gordon Wotherspoon
Gary LeFave Barbara Jean Jeffrey Sine Richard Michaels Joseph Daniels Geoff Longmeier Erick Lopez Matthew McNamara Scott Craig Richard Milano Brendan MacKenzie Jamie Mullen
Stewart Taylor Sean Broussard Thomas Tajmajer David Lefcourt Aamir Moin Dennis Carson Anatoliy Eybelman Kathryn McElroy Kevin Connerty Michael O’Brien Bridget Fangueiro
Kelley Baccei Jordana Mirel Raymond Sleight Adam Pacelli Michael Parker Michael Quinn Jeffrey Rawlins Dan Strelow Kimberly Williams Paul McCallick Peter Popovics John Baur
Richard Kelly Joel Marcus Scott Timmerman Timothy Fetter Christopher Marek Michael Reidy Sebastian Vargas Jay Schlott Brian Smith Stephanie Douglas Patrick Gill Eric Stein
Kate Chanoux Marsh Enquist Thomas Guiendon Juliene Blevins-Ehmig Matthew Buckley Eric Robertson Ryan Landers Ross Chapin Walter Fullerton Carla Lopez-Codio Laura Donovan
Ivan Huerta Jennifer Mihara Brittany Barber Rainer Germann Dan Maalouly Coreen Kraysler Louis Membrino Adan Gutierrez Stephen Byrnes Tracey Carter Bernadette Mahoney
David McCabe Michael Striglio Michael Keogh Calixto Perez Daniel Clayton Hemambara Vadlamudi Michaella Callaghan Patricia Greene Nancy Tooke Patricia Bishop Susan Brengle
Francine Craig Gayle Hodus Kevin Taylor Henry Hong Daniel Grover Egan Ludwig Robert Allen Jean Carlos Michelle Berardinelli Paul Bouchey Bernard Scozzafava Andrew Frenette
Brian Taranto Michelle Wu Katherine Kennedy Brian Pomerleau Michael Shea Alan Simeon Adam Bodnarchuk Rhonda Forde Katy Burke Christopher Doyle Melissa Fell
Eleanor McDonough Meghan Moses John Casamassima John Shea Brian Shuell Derek DiGregorio Brian Hassler Michael Turgel Phuong Cam Travis Bohon Aubin Quesnell Michael Roppolo
Annemarie Ng Sean Caplice Melissa Marks Brian Mazzocchi Eric Dorman Brian Coole Steven Kleyn Justin Bourgette Tullan Cunningham Nichole Shepherd Kim Day Steven Pietricola
David Andrews Pamela Gentile Irene Deane Scott Forst Stacey McAllister James Lanza Michael Mazzei Christopher Webber Daniel McCarthy Stuart Muter Tristan Benoit Kerry Klaas
Christopher Sansone Jeanmarie Lee David Gordon David Perry Christian Johnson Nelson Cohn Ryan DeBoe George Hopkins Christopher Hackman Janice Korpusik Collette Keenan
Raphael Leeman Danat Abdrakhmanov Randolph Verzillo Katie McBride Andrew Szczurowski Virginia Gockelman Jessica Savageau Colleen Duffey Marconi Bomfim Bradley Berggren
Lawrence Berman Kenneth Everding Helen Hedberg Jonathan Orseck Kenneth Lyons John Ring Patrick Escarcega Jennifer Johnson Kevin Longacre John Jannino Maureen Renzi
Matthew Witkos Gail Dowd Elaine Peretti Stephanie Rosander Kathleen Walsh Eileen Storz-Salino Brooke Beresh Taylor Evans Trevor Harlow James Kirchner Tatiana Koltsova
Rose-Lucie Croisiere Lance Garrison James Stafford Kyle Johns Ross Anderson Mary Gillespie Kelley Hand Robert Bastien Jake Lemle Robert Greene Donna Drewes Christopher Mitchell
Natasha Paredes Roger Weber Steven Dansreau Tara O’Brien Jaime Smoller Michael Ferreira Gonzalo Cabello Judith Cranna Michelle Rousseau Mary Proler Stephanie McEvoy Andrew Valk
Yingying Liu Laura Maguire Heather Dennehy Christopher Eustance Marc Bertrand Kyle Lee Andrew Waples Sharon Pinkston Sean Kelly Louis Cobuccio Thomas Hardy Scott Weisel
David Hanley Dan Stanger Praveenkumar Rapol Lisa Smith Michael Deich Rey Santodomingo Zamir Klinger John Loy Mary Panza John Cullen Brian Dillon Raya McAnern Albert Festa
Benjamin Finley James Maynard Nathan Flint Rachael Carey Michael Kelly Muriel Nichols Margaret Egan Christopher Nebons James Roccas Alice Li Charles McCrosson Michael Shattuck
Michael Alexander Scott Casey Bernard Cassamajor Eric Cooper Edward Greenaway Samuel Swartz Richard Hein James McInerney Matthew Navins David Guarino Cheryl Innerarity
Avia Johnston Kevin Hickey Michele Sheperd Kathleen Graham Christopher Remington Andrew Beaton Darwin Macapagal Christopher Nabhan Eric Trottier Stephen Daspit
Lauren Kashmanian Wiwik Soetanto Nicholas Vose Lorraine Lake John Murray Velvet Regan Marcos Rojas-Sosa Marie Elliott Luke England-Markun Jennifer Madden Emily Gray
James Maki Kristen O’Riordan Ashley Walsh John Harrington Michael McGrail Robert Osborne Patrick Campbell Brian Eriksen Alexander Martin Timothy Walsh Michael Ortiz
John McElhiney Andrew Collins Sarah Orvin Davendra Rao Timothy Williamson Hydn Vales Brian Blair Anna Zeinieh Dustin Cole Joshua Rolstad Andrew Hinkelman Alain Auguste
Robyn Tice Emily Levine Susan Perry Elizabeth Stohlman Dana Wood Diane Tracey Brian Barney Devin Cooch Joseph Davolio James Evans John Hanna Nisha Patel Jonathan Rocafort
Evan Rourke Robert Runge Robert Salmon Colin Shaw Elizabeth Driscoll Niall Quinn Liselle Aresty Hirotake Yamamoto Mitchell Matthews Patrick Cerrato Jared Guerin
Christopher Harshman Jesse Levin Patrick McCarthy Ryan Walsh Diana Atanasova Antoinette Russell Anthony Gigante Jonathan Futterman Justin Serevitch Justine Abbadessa
Joseph Kosciuszek Kevin Rookey Michelle Graham Thomas Guerriero Kevin Amell Kerianne Austin Jason DesLauriers Eric Filkins Wendy Demessianos Matthew Manning Vibhawari Naik
Jeffrey Selby Kevin Andrade William Kennedy Brian Shaw Lisa Falotico William Buie Nicholas Bender Kelsey Hill Howard Lee Tro Hallajian Deanna Foley Lauren Murphy Michael Kenneally
Marcus Jurado Kha Ta Theodore Hovivian Issac Kuo Stuart Shaw William Jervey Paul Leonardo Timothy Atwill Jessica Hemenway Maeve Flanagan Jeanette Liu Robert Quinn Ingrid Harik
Johnathan Komich Daniel Grzywacz Sandra Snow Sean Bakhtiari Robert Nichols Aaron Burke Sarah Kenyon Chris Sunderland Aida Jovani Derek Jackman Jeffrey Timbas Brian Ventura
Trevor Smith Harsh Vahalia Monica Marois Andrew Geraghty Cyril Legrand Steven DeAlmo Dori Hetrick Alfonso Hernandez Marc Savaria Cameron Murphy Jessica Roeder Hoa Nguyen
Timothy Russo Sabina Duborg Federico Sequeda Rodolfo Galgana Samantha Higgins Geoffrey Underwood Christopher Fortier Robert White James Birkins Jenny Winters Kristen Gaspar
Diane Hallett Madhuleena Saha David Barr William O’Brien Stephen Tilson Timothy Walsh Kelly Maneman Courtney Graham Amarnath Jayam Isabelle Cazales-Evans Charles Cordeiro
Amy Laliberte Thomas Nitroy Deirdre O’Connell Richard Raymond Robert Howell Michael Guertin James Barrett Ryan Gagliastre David Smith Rafika Shibly Duncan Hodnett Andrew Lee
Robert Yocum Anna Semakhin Jarir Mallah Natalie McEmber Charles Turgeon Stephen Kistner Andrew Subkoviak Andrew Haycock Samuel Plotkin Jennifer Klempa Richard Lints
Thomas Shively Brian Dailey David Callard Anne Chaisiriwatanasai John Paolella Anthony Pell Rodrigo Soto Erik Lanhaus Miranda Hill Anthony Zanetti Daryl Johnson Kai Xie
Michael Yip Eric Britt Timothy Giles Arabelle Fedora Darcy Fernandes Justin Brown Kevin Dachille Leidy Hoffman Ross Taylor Christopher McKenzie Jacob Greene Victor Joita
Colleen Lavery Ryan Gallagher Toebe Hinckle Julia LeGacy Monica McGillicuddy Emily Coville Mark Haskell Jason Rendon Carl Thompson Jason Jung Reuben Butler Lauren Gassel
William Howes Syed Rahman Jeffrey Brody Timothy Kierstead Isabel Clark Matthew Murphy Schuyler Hooper Michael Kotarski Michael Wagner Courtney Collura Derek Brown
Pamela Begin Kenneth DeJesus Robert Faulkner David Oliveri Christopher Rohan Charles Glovsky Rebecca Moles Benjamin Garforth Suzanne Hingel Michael Swirski Mark Hogan
Daniel Sugameli Emma Hutchinson Stephen Clarke Nathan Goldman John Northrop Masha Carey Kathryn Johnson Jeremy McLeod Lorenc Demika Peter Lonergan Megan Dooley
Rachael Boggia Kim Le Jeffrey Schenkman Rocco Scanniello Tyler Cortelezzi Adrian Jackson Hottis McGovern Kenneth Zinner Mary Pollard Robert D’Amato Matthew Williams
Brian Arcara Joseph Miller Michael Kincheloe Daniel Sullivan Vinh-Quang Van Ha Jeremy Milleson Robert Allen Stuart Badrigian Cory McGrath William King Colin Looby Anu Ganti
Gregory Johnsen David Chafin Gregory Chalas Yu Fu Justin Wilson David Zigas Kara Boon Matthew Clenney Yanling Zhang Sheila Doherty Robert Holmes Katherine Johnson
Thomas Leonard Jason Vanas Laura Folkestad Steven Pasquantonio James DeCaprio Alexander Paulsen David Pychewicz Frederick Wright Peter Avallone Sachiko McHugh Lori Abboud
Enrico Coscia Steven U Aaron Dunn Jacqueline Poke John Wilton Philip Casalini Candice Flemming Lindsay Mallett John Noble Steven Reece Jason Kritzer David Doggett Collin Weir
Luke Bruno Matthew Gibbons Kirk Heelen Megan Kanter Kevin Liederbach Nicholas Pinhancos Anthony Scalese Lei Chen David Desmond Matthew Furan Teresa Curtis Marquisa Gaines
Bradford Richards Daniel Lee William Lesler Hang Nguyen William Bohensky John Jezowski Leonard Senkovsky Andrius Balta Chad Brown Andrew Dillon Christopher Hearne
Dorothy Jones Dylan Kline Adam White Eric Zeigler Sarah Sheehan Stephannie Workman Qihua Liu Daniel Sunderland Michael Pogson Elaine Sullivan Neil Adams Jennifer Flynn
Laura Nykreim Christopher Loger Alexandra Bielawski Patrick O’Brien Alexander Randall Jennifer Ranahan Jeremy Davis Jill Holland Karl Saur Huong Strong Kathleen Gaffney
Brendan Lanahan Danforth Sullivan Megan Fiorito Teresa Watkins Christopher Brown Cynthia Danger Melissa Perry Michael Spear Dean Graves Bryan Griffin John Moninger
Matthew Sanders Jennifer Casey Bina Desai Harrison Kent Dan Codreanu David Sacco Rachel Deane David Irizarry Mary Anderson Matthew Bailey Gregory Baranivsky Steven Bedell
Alexander Braun Allison Brunette Orison Chaffee Michael Cole Richard Fong Alexander Gomelsky Vladimir Gomelsky Jack Hansen Christopher Haskamp Justin Henne Jane Henning
Hong Huo Thomas Lee Gregory Liebl Matthew Liebl RaeAnn McDonnell Antony Motl Alicia Neese Timothy Post Eric Prawalsky Ashley Schulzetenberg Kelly Shelquist Jay Strohmaier
Denise Timmons Christopher Uhas Mark Wacker Daniel Wamre Alyssa Wiechmann Alex Zweber Mark Saindon Robert Ciro Bryan Sullivan Scott Brindle Brian Gudely Hussein Khattab
Henry Rehberg Jennifer Sireklove Marie DuBose Alexander Macrokanis Robert Cavezza Emily Finn Deborah Flood Jeffrey Boutin Timothy Robey Robert Swidey Mary Barsoom
Benjamin King John Simeone Sarah Castanheira Simon Mui Louise Bradshaw Patrick Duffy Jeffrey Keady A.J. Leimenstoll Seth Paulson Benjamin Spitz Lisa Lau Miguel Salaman
Faisal Zahoor Joshua Lipinski Colleen Barry Milind Kanitkar Kelly Kapp Rachel Schaefbauer Emily Cheng Melanie Kramer Sean Sorensen Robert Cunha Katherine Todd Diane Gordon
Thomas McMahon Michi McDonough Christopher Wisdom Michael Finney Heather Vanis Benjamin Hammes Christopher Burnet Jerome D’Alessandro Raffi Samkiranian Elias Bassila
Brittany Isenhart Jeffrey Norton Adriana Tacu Serena Lee Craig Melillo Todd Johnson Mahesh Pritamani Juliet Todd Patrick Huerta
Chris Smith Mei Chang Matthew Mueller Timothy Nelson Jared Pawelk Matthew Tesone Christopher Belnap Elizabeth McManus
Troy Neville Jeffrey Sayman Caitlin Schlesinger Spencer Swan Charlotte Watkins Christopher Webb Arif Jamal Alexander Amado
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Eaton Vance ANNUAL REPORT2015
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