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Eaton Vance Corp. Reports Operating Results (10-Q)

June 06, 2012 | About:
10qk

10qk

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Eaton Vance Corp. (EV) filed Quarterly Report for the period ended 2012-04-30.

Eaton Vance has a market cap of $2.71 billion; its shares were traded at around $24.63 with a P/E ratio of 13.3 and P/S ratio of 2.2. The dividend yield of Eaton Vance stocks is 3.2%. Eaton Vance had an annual average earning growth of 4.7% over the past 10 years. GuruFocus rated Eaton Vance the business predictability rank of 3-star.

Highlight of Business Operations:

We reported net income attributable to Eaton Vance Corp. shareholders of $100.1 million, or $0.84 per diluted share, in the first six months of fiscal 2012 compared to net income attributable to Eaton Vance Corp. shareholders of $100.0 million, or $0.80 per diluted share, in the first six months of fiscal 2011. We reported adjusted net income attributable to Eaton Vance Corp. shareholders of $109.3 million, or $0.92 adjusted earnings per diluted share, in the first six months of fiscal 2012 compared to adjusted net income attributable to Eaton Vance Corp. shareholders of $121.1 million, or $0.97 adjusted earnings per diluted share, in the first six months of fiscal 2011. The change in net income and adjusted net income attributable to Eaton Vance Corp. shareholders can be primarily attributed to the following:

Distribution plan payments decreased 15 percent, or $7.2 million, to $40.8 million in the first six months of fiscal 2012 from the same period a year earlier, reflecting decreases in average Class A, Class B, Class C, Class R and certain private equity fund assets subject to distribution fees. Class A share distribution fees decreased by 9 percent to $0.3 million, reflecting a decrease in average Class A share assets under management on which distribution fees are paid. Class B share distribution fees decreased by 48 percent, or $3.7 million, to $4.0 million, reflecting a decrease in average Class B share assets under management. Class C share distribution fees decreased by 8 percent, or $2.9 million, to $33.9 million, reflecting a decrease in average Class C share assets under management. Class R share distribution fees decreased by 16 percent, or $0.1 million, to $0.5 million, reflecting a decrease in average Class R share assets under management subject to distribution fees. Private fund distribution fees decreased by 16 percent, or $0.4 million, to $2.1 million, reflecting a decrease in average private fund assets subject to distribution fees. Underwriter fees and other distribution income totaled $4.3 million in the first six months of fiscal 2012, a decrease of 23 percent, or $1.3 million, from the same period a year earlier, primarily reflecting a decrease of $0.5 million in underwriter fees received on sales of Class A shares and a decrease of $0.7 million in contingent deferred sales charges received on certain Class A share redemptions.

Service fee revenue decreased 13 percent, or $9.5 million, to $64.4 million in the first six months of fiscal 2012 from the same period a year earlier, primarily reflecting a 12 percent decrease in average assets under management in funds and classes of funds subject to service fees.

Compensation expense was substantially unchanged in the first six months of fiscal 2012 from the same period a year earlier, reflecting increases in base salaries and employee benefits, stock-based compensation and other compensation offset by a decrease in sales and revenue-based incentives. Base salaries and employee benefits increased by 6 percent, or $4.7 million, primarily reflecting increases in base salaries associated with higher headcount, annual merit increases and an increase in payroll taxes associated with the increase in base compensation. Stock-based compensation increased by 6 percent, or $1.7 million, primarily reflecting the increase in restricted stock grants made in the first quarter of fiscal 2012. Sales and revenue-based incentives decreased by 26 percent, or $7.9 million, reflecting a decrease in our effective sales incentive rate due to changes in sales mix and incentive rates and a decrease in gross long-term sales. Other compensation increased by 79 percent, or $1.5 million, primarily reflecting an increase in severance costs.

Distribution expense decreased by 2 percent, or $1.1 million, to $65.3 million in the first six months of fiscal 2012 from the same period a year earlier, primarily reflecting decreases in marketing expenses associated with intermediary marketing support payments, Class A share commissions, compensation arrangements associated with our closed-end funds and other marketing expenses, partially offset by an increase in Class C share distribution fees. Marketing expenses associated with intermediary marketing support arrangements with our distribution partners decreased by 8 percent, or $1.7 million, to $18.7 million in the first six months of fiscal 2012 from the same period a year earlier, reflecting the overall decrease in sales and average managed assets that are subject to these arrangements. Compensation arrangements associated with our closed-end funds decreased by 3 percent, or $0.2 million, to $8.4 million in the first six months of fiscal 2012, reflecting a decrease in closed-end fund assets subject to those arrangements. Other distribution expenses decreased by 11 percent, or $0.9 million, to $7.9 million in the first six months of fiscal 2012, primarily reflecting a decrease in discretionary marketing and other promotional expenses. Class A share commissions decreased by 15 percent, or $0.5 million, to $2.8 million, reflecting a decrease in certain Class A sales on which we pay a commission. Class C share distribution fees increased by 9 percent, or $2.3 million, to $27.4 million in the first six months of fiscal 2012, reflecting an increase in Class C share assets held more than one year on which these fees are paid.

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10qk
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